Motion, by leave, withdrawn.

had been, owing to the fact that the best MR. ARTHUR MILLS, in reply, said, prizes had been thrown open to briefless he did not wish to reduce the number of lawyers and other outsiders. Then again subjects of examination; but he thought the candidates had no guarantee that their it would be sufficient to examine the canprivileges, curtailed as they already had didates for the service on three or four been, would not be still further shorn of branches of knowledge, irrespective of their the few good things still remaining. It place of education. He also thought that was a well known fact that young civilians the time for the candidates to go out should going to India, on learning the altered be fixed, and not subject to arbitrary state of the service, declared that they had change. After the statement of the right been deceived, and that if they had been hon. Gentleman that the papers would be aware of the manner in which the appoint-published in the appendix of this years' ments, pay, retirements, and pensions had Report, he did not wish to press his been cut down, they would never have left Motion. England at all. Undoubtedly, the first candidates under the competitive system were young men of a superior order; but a change for the worse had rapidly set in, and the young men selected in the present day could not compare with the Haileybury youths for esprit de corps or physique, and did not take anything like the same interest in the service. He held in his hand a pamphlet published upon the most excellent and practical authority, by Mr. W. Nassau Lees, L.L.D., Secretary of the Board of Examiners, Persian Translator to the Government of India, and Principal of the Mahommedan College. The writer of that pamphlet condemned the present system and ridiculed the idea of the candidates being obliged to obtain a certain number of marks, because he said that

"It only lead to young men rushing over to France or to Germany in order that by that means they might acquire a knowledge of the French or German languages, and thus obtain 100 or 150 more marks for their score, which would be of no practical use to them in India."

BANKRUPTCY ACT (1861).

RESOLUTION.

MR. MOFFATT said, he rose to call attention to the Report of the Select Committee on the Bankruptcy Act of 1861 and the existing state of the Laws in regard to Debtor and Creditor, and to move

"That, in the opinion of this House, the Report of the Select Committee on the Bankruptcy Act of 1861 deserves the prompt and serious consideration of Her Majesty's Government." The subject, he said, was a most disagreeable one to all parties-to the debtor who had cheated his creditors, to the creditors who had lost their money, and especially so to that House, seeing that upon the Legislature rested the responsibility of the present system by which fraud was made so easy and profitable to those who chose to take advantage of the Act. Without going back to the time of the Tudors or the early Georges, he would give a brief Dr. Lees was also of opinion that the educa-outline of the history of bankruptcy during tion of Indian Civil Service officers should be commenced and completed in England, to avoid the necessity for their being detained for several months at the capitals of the Indian Presidencies to attend lectures. Mr. Lees further thought that the establishment in England of a college similar to Haileybury would confer a great boon upon the service, and would reduce the Estimates for the Indian Budget by £30,000 per annum, as compared with the present system. He (Mr. Vansittart) did not think the competitive system had answered the expectations of Lord Macaulay and others who had advocated its introduction. Compared with what it was formerly, the service at present was very indifferent; and that was one of the explanations of the difficulty there was in persuading University and other men of superior talents to enter it.

Mr. Vansittart

the latter part of the present century, which would be found exceedingly instructive. Forty years ago bankruptcy cases were under the control of that somewhat slow and expensive tribunal the Court of Chancery, while the creditors managed, and in many cases mismanaged, affairs for themselves, because the assignees were under no official control from the Court. About that time a great bankruptcy reform measure was brought forward by Lord Brougham. That measure, instead of proving a great success, worked most unsatisfactorily. The great alteration was then made, and Commissioners and official assignees were appointed, and thus the matter remained for twenty years. During that period matters went from bad to worse, and it was found that official assignees were at least as expert as creditors' assig

it.

nees were in abstracting funds from the or assignment, rather than go to the Court bankrupt's estates. To show how unsatis- of Bankruptcy. The natural consequence factory Lord Brougham's Act was, he need was that every debtor knew perfectly well only state that during twenty years there he had an instrument in his hand by which were no less than eleven Acts of Parlia- he could cheat his creditors, and the only ment passed for the purpose of amending question with him was what was the smallest Eventually, there came the Consolida- amount his creditors would be willing to tion Act of 1849, which, again, had ren- take in lieu of 20s. in the pound. That dered matters worse than they were before. was done in two ways, both of which were Then came the Act of 1861, which had inaugurated by the Act of 1861, by comdone a great deal more harm than good. position or assignment. Composition the That Act expunged the distinction between creditors generally preferred. To give a the trading and the non-trading commu- most striking proof of how this system of nities. The results were somewhat start- allowing debtors to evade their debts was ling, for the trading community had been, telling on the mercantile interests of the in consequence of the manifold evils of the country he might state that in 1863 the system, in a great degree prevented from number of compositions was 640, while in availing themselves of the benefits of the 1864 the number was 1,348. In the last Bankruptcy Court. Owing to the exer- three months of 1864 there were 302 tions of the Lord Chancellor, an inquiry registered deeds compounding for less than had been instituted into the way in which 5s. in the pound, and of these 244, or nearly the surplus fees in bankruptcy were dealt five sixths, were under 3s. in the pound with. They should be paid into the Some were as low as 3d.. 6d., and 8d. in the Bankruptcy Fee Fund. The result of that pound. Anything was taken rather than go inquiry was that, while in 1862-during through the Bankruptcy Court. The great which year there was no inquiry-there mass of the insolvency of the country was was only the sum of £1,300 paid in; it settled under assignments. There was increased in 1863, when there was inquiry, scarcely a week passed without the apto £13,620, and in 1864 to £45,158 pearance in the Money Article" of the The result of the new system was that London newspapers of intimations that in this great country the Bankruptcy such a firm, extensively engaged in buCourt during the year ending the 11th of siness, perhaps only a few months old, October, 1864, collected only £677,536, had suspended payment, and they had on which the official charges amounted to placed their affairs in the hands of an £140,000; leaving to the creditors under accountant a friendly accountant, or all the bankruptcies in the United Kingdom their own solicitor. The accountant or £530,000. In 1843, when the commerce solicitor said to the creditors, Wait; we of the country was not half its present shall inspect the books and tell you what amount, there were 1,112 bankruptcies, will happen. The creditors were kept and the sum collected was £1,067,976. at bay. The friendly solicitor or accounLast year there were 7,200 bankruptcies, tant-many of whom were firms of the and the amount collected and divided among highest respectability-took the books as the creditors was £530,000. And if they they found them, and never inquired beanalyzed the list of bankruptcies for last low the surface of the accounts. Any year, they would find that out of the 7,200 indiscretion, any malversation, any amount bankrupts, 6,600 were made bankrupts on of abstraction from the assets of the their own petition, and only 600 at the estate might pass undiscovered. The instance of their creditors. It would fur- creditors had no means of knowing it. ther appear that of those made bankrupts They were called together, and simply on their own petition, 5,324 paid no divi- told the estate would pay 7s. or 108. in dend at all, and 848 a dividend under the pound; there was an assignment, 28. 6d. in the pound; 5,335 bankrupts got a composition, and there an end of the their discharge, and only 80 out of 7,224 transaction. The result was generally were refused their discharge-a proof either a serious disappointment as between the of marvellous laxity in the law, or of won- estimate first made, and the amount derful honesty in the bankrupts. The paid under the deed. It was not pleapresent position was practically this sant to mention instances, but he knew Wherever there was an estate with any prospect of a dividend the creditors agreed to any course, compromise, composition,

two or three great failures within the last eight months where the accounts looked as if there would be 208. to every

with respect to the benefit of the estate. He thought that principle had been proved to be essentially and fundamentally wrong. He believed the best system would be to leave creditors to manage their own affairs with their debtors, and that the State should interfere with them as little as pos

creditor, and where the debts at the present time might be bought for 28. or 38. per pound. The insolvents passed in this way without any censure, and without the slightest difficulty or trouble to themselves. In many instances the insolvent made a great profit by this mode of settlement. It was a disgrace to the Legis-sible. If the debtor had been guilty of fraud, lature and a discredit to the country that such a state of law should exist. It did exist to an extent the House would hardly believe. He had obtained a return of the deeds registered in the Court of Bankruptcy and in the office of the Chief Registrar during the months of November and December, 1864, showing the amount of stamp and ad valorem duty paid thereon, the amount of property or composition comprised therein or distributable thereunder, and the amount of unsecured debts above £10 comprised therein. He found that in the month of November, 1864, the deeds registered were 455, the amount of estate and effects comprised or distributable was £1,047,700, and the amount of unsecured debts above £10 was £3,938,125. And in December, 1864, the deeds registered were 518, the amount of estate and effects comprised or distributable £1,246,600, and the unsecured debts above £10, £4,049,249. That would be at the rate of £48,000,000 a year. It might be objected that these were months of extreme pressure and exceptions to the general rule; but he had obtained another return which showed that this was rather the normal state in which composition deeds now were. The number of deeds registered in the two months he had named was 973, with a stamp duty of £6,000; while the number for the six months ending 11th April, was 2,800, with a stamp duty of £15,614, and the stamp duty was only a partial test as it extended only up to £80,000. The state of the law as effecting debtor and creditor was as bad as could well be imagined. It was well for the House, then, to inquire what might be the remedy. Very few remedies had been suggested except by the practice in Scotland. It was

let him be brought before the ordinary tribunals of the country; but the creditors should not have the power to punish the debtor in any way. Under the old law the creditor had power to take the body of the debtor, and that he believed was the least profitable and advantageous resource they could give the creditor. The Committee recommended the abolition of im prisonment for debt that they should take away from the creditor the power of coercing the body of the debtor. They proposed also that the creditors should have the fullest and freest access to the property of the debtor, and that from the moment of insolvency it should vest exclusively in them. The Committee proposed that they should abolish the whole of the present system of bankruptcy, and that they should in lieu thereof give the credi tors the power of choosing their own officers and managing their own affairs themselves, only taking care to supply them with efficient supervision in regard to the officers whom they might employ. This difficulty undoubtedly occurred in settling that question-that it was practically im possible to get the individual creditors to look after their own affairs and those of the general body of the creditors; and consequently the remedy recommended by the Committee was the remedy suggested by the Scottish practice, and which had been sanctioned by a successful experience of ten years. The main change proposed by the Committee, then, was the total abolition, as soon as might be practicable, of the whole system of bankruptcy now existed in practice. One thing, he thought, was quite certain-namely, that a worse system than the present one could not be devised, and any change which surprising how they could make must be for the bet little attention had been given to this sub-ter. The measures proposed received the ject. Take what had occurred before the most careful consideration from the ComCommittee of last Session. The wit-mittee, and he thought the Committee nesses generally had not grappled with the question whether the principle was a right one on which they had heretofore legislated. All the attacks upon Lord Brougham's proposition were on the question of patronage, but nothing was said

Mr. Moffatt

as it

were greatly encouraged in the somewhat bold course which they had adopted by a communication made to them by a noble and learned Lord who had taken a great interest in that subject. The Lord Chancellor had addressed to him, as Chairman

of the Committee, a letter, in which he said

"Is it not a mistake to attempt, in a system of rules for the collection and distribution of the assets of a bankrupt, to create a code for enforcing commercial morality?"

He quite agreed with the noble and learned
Lord as to that. The letter continued

"A very large part of the present bankruptcy

law relates to the manner in which a certificate

debtor and creditor, but he could not understand the State interfering to violate their integrity. He said, let the debtor and creditor settle the matter between themselves; and as to the payment of 6s. 8d. in the pound giving a man a right to a discharge, he did not agree with the Committee. In the matter of assignments he thought it was still more objectionable. However, the recommendations of the Com

Mr. AYRTON, in seconding the Motion, said, he wished to explain the nature of the Resolutions to which his hon. Friend was anxious that the House should then

or discharge shall be granted or refused to a bank-mittee, if embodied in an Act, would, in rupt, to his protection from arrest, to the liability his opinion, produce the greatest possible or non-liability of future acquired property, and benefit to the mercantile interests. He to the punishment of the bankrupt in the event of trusted it was not necessary to urge upon his being found to have committed any act which the bankruptcy law treats as contrary to commer- the Government that on a question so vast cial integrity. This attempt to combine the as that, involving certainly an annual tax punishment of the dishonest or reckless debtor upon commerce of considerably more than with the collection and distribution of his remain- £50,000,000, or about double the yearly ing property is in my judgment a very great mis- charge for the National Debt, the Resolutake. It has led to the most expensive and most unsatisfactory and imperfect part of the present tion which he had ventured to lay on the system. I would abolish it altogether. If a man table was deserving of prompt and serious has committed a fraud, let him be punished by the attention. The hon. Member concluded by existing criminal law. If that be not severe and moving his Resolution. stringent enough, make it more so; but do not attempt to administer criminal law, or quasicriminal law, in bankruptcy. Let this be the law: -On a man becoming bankrupt grant him, on his surrender, protection from imprisonment for debt (so long as that absurdity continues), but let his future estate remain liable to his debts until give a general approval. His hon. Friend he gets a voluntary discharge from his creditors. must have satisfied any one who heard his Let it be his business to obtain such discharge. statement that our present system of bankIf he does not succeed in obtaining a discharge ruptcy law had entirely failed. But if that from all his creditors, let him stand, as to his complete failure was the only result at future estate, in the shoes of those creditors who which Parliament had arrived after devoting have signed his discharge. All other enforcement of penal law, or infliction of penalties, is a mis- itself to that subject for a period of nearly take. At present, two separate functions are 300 years, they must approach that subconfounded the civil and the criminal. The ject with extreme distrust of their own Court of Bankruptcy properly has but one function-the collection and distribution of the debtor's opinions; and he himself should have hesiassets, present and future. The law as it stands tated to advocate the adoption of these first assumes that it is its duty to provide the Resolutions had he not believed that, underhonest bankrupt with a discharge. It has no such lying the whole system of our legislation duty, but having begun with this false principle, on that question, there were some radical it is then entangled in the necessity of inquiring errors which it was the object of the Cominto the man's honesty or dishonesty, by artificial rules which it has constructed for this purpose. mittee to induce the House to abandon. All this is a gross mistake, and has been the The first of those errors was the notion fruitful source of the expense, uncertainty, and that the imprisonment of a debtor at the dissatisfaction that now attend the administra-instance of a creditor was one of the best tion of the bankruptcy law."

Now, in that he believed was contained the whole germ of a thorough reform in the present law of bankruptcy, and also a remedy by which they might make the law of debtor and creditor just and equitable as between them both. He concurred very much, although the Committee did not, in what the Lord Chancellor said in that communication, as to making the discharge of the debtor depend entirely on the acquiescence of the creditors. He could understand the State interfering to maintain the integrity of contracts between

In

means of obtaining the satisfaction of a debt; and it was a little remarkable that in a country like this, which professed so much respect for personal liberty, such an idea should have so long survived. former times when violence prevailed imprisonment might have been a natural remedy in these cases; and, moreover, our system of law in those days did not give the suitor an adequate remedy when he had obtained the judgment of a Court in his favour. The result was that although the creditor had acquired a right he was practically unable to enforce it, because the law

took cognizance only of property which | be able to push to the fullest extent his could be readily seized and sold in the claim against his debtor. Bankruptcy bemarket, but not of other forms of property ing, thus speaking, generally reduced to the which were not capable of being disposed simple condition that a man was unable to of by the officer of the court. Therefore meet the demands which were made upon imprisonment for debt came to be regarded him by his creditors, the Committee were as a means of reaching any property of of opinion that it would no longer be newhich the debtor might be possessed. In cessary to maintain important Courts of Juslater years attempts had been made to ren- tice all over the country for the adminisder various kinds of property available for tration of the law with regard to it. All the payment of debts; but those attempts that would be necessary in 99 cases out of had been comparatively feeble, and recourse 100-he might say, in 999 cases out of continued to be had to the process which 1,000-would be merely an authentic rethe Committee now sought to abolish. It cord of the facts of the status of the was surprising that anybody should be bankrupt, and this it was proposed should found to advocate imprisonment for debt, be made in the country by the County because it seemed to defeat every object Courts, and in the metropolis by a special which a creditor might be supposed to have Court to be constituted for the purpose. in view in commencing a civil proceeding. If The next evil to be cured arose from the the debtor had no property imprisoning him old idea that bankruptcy was in some sort could not serve the creditor, but could only a penal proceeding, which must be pressed prevent the debtor from earning, by his with great rigour against the bankrupt. industry or intelligence, the means of meet- The consequence was that as soon as a ing the demands upon him. If, on the man failed a flight of officers were let other hand, he had property, the remedy loose against him, by whom his property was to search it out and make it available was harried until it was delivered to his in satisfaction of his debts. Again, the creditors shorn of one-t e-third of its amount. system of imprisonment was also mischie- In 99 cases out of 100 the employment of vous, because it lost sight of the line of all this legal machinery was quite needdemarcation between a civil and a criminal less; and the Committee therefore recomproceeding, the former having for its ob-mended that a bankrupt's estate should ject the satisfaction in money or money's worth of some demand; the latter seeking the punishment of the offender by imprisonment more or less severe. Again, imprisoning a person if he were involved in difficulties only added to his embarrassment, and by taking away his power of looking after his affairs tended to the greater devastation of the estate which it was desirable for the sake of the creditors should be preserved. The Committee, for these reasons, came to the conclusion that it was absolutely necessary to sweep wholly away the fallacious system of imprison ment for debt. In the case of a person who attempted to abscond from the country without giving up his property, there would still be power to detain him until he had disclosed it. The next Resolution arose out of the change which the Committee proposed to make. The law was at present applied only to debts above £50, and a large number of debtors would escape if that limit was retained. The Committee came to the conclusion that the provision of the last Bankruptcy Acts as to trader debtor summonses should be extended to amounts below £50; so that while imprisonment for debt was abolished, every creditor would

Mr. Ayrton

remain in his custody until a meeting of creditors had been held to express their opinion as to the best mode of dealing with it, power being given to the Judge to order the immediate disposal of anything that was so perishable that it could not be preserved for even a few days. The next alteration recommended referred to the rights of secured creditors. At present secured creditors who clearly had entirely different interests from those of creditors holding no security, exercised rights as to the disposal of the estate to the full amount of the demands. The result was that they got assignees appointed who were favourable to themselves, and who were not active in investigating what portion of the estate was really available to meet the demands of the unsecured creditors, but connived at the enforcement of their securities. In order to redress this grievance, the Committee proposed that creditors should only interfere in the first steps for the administration of the bankrupt's estate to the extent of their unsecured debts; thus reserving to the unsecured creditors the whole power of directing the administration of the estate.