The New Zealand Times (PUBLISHED DAILY). THURSDAY, MAY 22, 1879.

New Zealand Times, Volume XXXIV, Issue 5661, 22 May 1879, Page 2

The New Zealand Times (PUBLISHED DAILY). THURSDAY, MAY 22, 1879.

A jiehokial praying for an amendment in the present Bankruptcy Law has been recently addressed to the Prime Minister in England. By competent authorities it has been declared to bo a model instance of what a strong city memorial really, is. This document sets forth in the plainest-possible language the defects of the present law, and the objections raised are so thoroughly applicable to New Zealand that we make the following extracts. The chief defects of the present law are said to be : 1. “It affords new and vici- “ ous facilities to insolvent persons to “ escape from the reasonable control and “ supervision of their creditors, by “private arrangements, wholly beyond “ the jurisdiction of any public Court or “ Judge. And by reason of these facili- “ ties, it is the fact that every year there <{ is an increasing number of cases in

“ which tho grievous and dangerous “ scandal is exhibited of men failing for “ vast liabilities, and finding it easy, in “ consequence of the defects of the pro- “ sent law, to get theii speedy discharge by “ tho payment of no dividend, or a divi- “ dend of some small fraction of a pound, “or even shilling ; and without being “ subjected to any efficient investigation “ of their affairs, or of tho conduct and “ proceedings which have led to their “insolvency. 2. That the present law “ is rendered practically nugatory, by “ leaving to those who have already in- “ curred losses, tho investigation of the “bankrupt’s affairs; and has laid upon “ them the obligation of exposing tho mis- “ conduct of bankrupts, which, in the “ plain interests of public morality and “ commercial policy, should be dealt “ with not as a private matter, but by a “public Court and Judge. Experience “has amply proved that reliance on “ creditors to perform these onerous and “ costly functions is entirely futile. . . “Lastly. The memorialists desire to re- “ present that, in their opinion, great “ public advantage would arise by the “ assignment to an efficient Court and “Judge—which they respectfully but “ earnestly recommend—not only of the “ insolvency business arising from the “failure of private persons and firms, “ but also arising from the failure of “ joint stock companies, as well as from “ the estates of deceased insolvent “ debtors.”

Most of our readers will admit that the above facts are specially applicable to New Zealand, and that the suggestions set forth in the extract are real practical amendments, worthy of the consideration both of the Home ]and of the Colonial Legislature. Many other remedies have been proposed which may have a tendency to prevent the evils which are well known to exist under the present system. Tho most radical innovation which has hitherto come under our notice, and which, so far as we know, has not yet appeared in print, is a proposal to make a complete alteration in the laws affecting debtor and creditor: That the law should declare that it would refuse to grant to the ordinary creditor any power to sue for the recovery of small sums. Credit would then be given by tradesmen to those persons only whose names and reputations commended itself to them. The law relating to the obtaining of money or goods under false pretences would no doubt have to be strengthened and modified so as to embrace numerous cases which now come before the Court as simple actions to recover a debt ; we believe that tho general tendency of the reform would be highly beneficial. Practically it would be a direct blow to the modern practice of giving credit in ordinary every-day trade transactions. The present movement in favor of cooperative trade societies may be broadly explained as a protest against the credit system and a return to cash transactions ; and unquestionably if legislation were introduced under which no ordinary unseacured debt of small amount could be recovered through legal channels, the overgrown credit system, with all its evils, would be completely undermined. If a system of cash payments were once introduced among tradesmen, salaries and wages would have to bo paid both promptly and regularly, and most will agree that this would be a useful innovation. The idea may appear somewhat impractical or Utopian, but it is said that a learned Judge, now occupying a seat upon the New Zealand Bench, when he many years ago acted as Resident Magistrate in the north of this Island, made a practice of granting summonses for paltry debts as seldom as possible, and in fact avoided giving them upon every possible pretext. The dealings within his district were chiefly between Maoris and Europeans, and the learned gentleman’s weakness became in course of time so well known that cash transactions grew to be quite the rule, and storekeepers’ credit was almost unknown.

Whether the above proposal contains any practical element or not, it is evident that the wide-spread system of giving universal general credit is the cause of almost all the numerous bankruptcies which the newspapers have been daily chronicling of late. We write with the “ Bankruptcy Gazette” of the 17th May before us ; and an examination of the schedules would convince tho most sceptical inquirer, that those whose names appear could never have traded so long or have victimised so many, if their creditors had not agreed to accept their names as payment instead of their money. Tho creditors for small sums are in many cases so numerous that it is impossible to believe that one-half of those who gave credit could have had any idea of the number or extent of the unpaid bills of their customers. In other words, they must have expected to make the good debts pay for the bad and leave a profit. Eeady-money shops are few and far between in tho colony ; but we never remember to have heard of the proprietor of a cash business in New Zealand filing his schedule, or oven meeting his creditors.

One other practical suggestion in the direction of reform lias been discussed in some of the English papers. It is that all estates which could not pay up at least 10s. in the £1 should be passed through the Court. A legal examination might reasonably be expected to disclose any doubtful or dishonest trading—a point about which the majority of creditors are utterly careless ; a recent and striking instance is probably still fresh in the recollection of most of our readers. Wo refer to the notorious Bassingtiiwaite case at Christchurch. Certain it is that the honest merchant or tradesman has nothing to fear from the fullest possible examination into his affairs, either at the hands of a legal administrator or in a Court of law.

Our attention has been called to the fact that dividends from insolvent estates are apt to be almost indefinitely delayed. Cases have been mentioned to us in which an estate in this city now two years in liquidation has only paid one small dividend ; another has been named, which has now been about six months in the hands of the trustees, and has paid nothing yet, and the expectant creditors grumble and complain bitterly of the loss and inconvenience which they suffer through the delay.. Want of space precludes hs from entering at any length upon this branch of the subject. Enough has been said to direct public attention to the need for reform. When the want is

once felt, and generally recognised, the first and most important step towards the desired end may bo said to have been taken. .