The Waikato Times AND THAMES VALLEY GAZETTE. TUESDAY, JUNE 3, 1890.

Waikato Times, Volume XXXIV, Issue 2791, 3 June 1890, Page 2

The Waikato Times AND THAMES VALLEY GAZETTE.

TUESDAY, JUNE 3, 1890.

Equal and exact lustico to all men, Of whatsoever state or persuasion, religious or political.

No laws have a more direct influence on the dealings of the mercantile community, than tlioso relating to bankruptcy. Commercial transactions necessitate giving and receiving credit. If credit wore not given and taken to a certain extent, the commerce of the world would be brought to a dead lock. Any laws therefore which alVeet this credit | system, and enact that under certain circumstances all liability attaching to the debtor shall cease must have a must powerful bearing on the business transactions of the whole community, Many .English statesmen, men of deep research, have ere now expressed the opinion that bankruptcy laws are a mistake, and act injuriously un the business relations of life, and that if a man becomes involved in financial difficulties, lie should work out of them again in the best way he can. Wo are not however now concerned in discussing this abstract question. Although an interesting one no doubt it is. A far more practical subject presents itself, namely, our bankruptcy laws as they at present exist. Considerable misconception seems to have arisen of late years as to the proper functions of a Court of Bankruptcy. The popular idea of bankruptcy appears to be, that it is au easy process by which a man, when his creditors become troublesome, can etliciently rid himself of their claims without paying them anything. We feel bound to admit that the past working of our Bankruptcy Act fully justifies this impression. This would seem to indicate that the laws, relating to this important subject, are in some way defective in their operations, and require to be very materially altered.

It should not only ho the function of a Bankruptcy Court to give relief to those who are commercially unfortunate, but it should also be equally a Court for tho distribution of assets. In other words, that as it is within tho province of the Court to grant relief to the debtor, it is also equally its duty to protect tho interest of the creditors and to soe that just distribution is made of whatever property the debtor is possessed. Tc is true that provision is made in tho present Act for such distribution, but in tho great majority of cases, those provisions havo no application whatever : for the simple roason that thoro are no assets. The bankrupt obtains an unconditional order of discharge and tho creditors get nothing. Tho facilities afforded to debtors to rid themselves of their financial embarrassmonts by the present Bankruptcy Act are far too great, the effect of this on the community has been to popularise bankruptcy to such au extent, that is is nosv no

longer looked on as a disgrace, but simply as a matter of overy-day occurrence. Trade of a healthy character cannot exist as long as things are allowed to remain as they are at present. There are many defects iu the present Act. Take for instance the effect of its provisions on orders made on judgment summonses. Before an order is made, the judgment creditor has to satisfy the Court that the defendant has the means wherewith to pay, but will not do so. The difficulty and expense of obtaining such an order is the sad experience of those who have made the attempt. But presuming the Court is satisfied on the point and makes an order for the payment of the debt or in default a term of imprisonment. If the judgment debtor then hies his petition even from within the four walls of Mount Eden, what is the effect of his doing so on the order ? The effect is that ho is released and is in a position to laugh at the Court which had previously ordered him to gaol. Another defect arises from the sweeping nature of the order of discharge. It has been held that if a bankrupt omits a creditor from his list of liabilities, and the creditor has no notice of the bankiuptcy, and therefore no opportunity of proving his claim, the order of discharge nevertheless releases the bankrupt from all liabilities to creditors so situated. Anything more unjust it would be hard to conceive, and it must have been a grave oversight on the part of the framers of the Act. It is clear that the present Act unduly favours people in financial difficulties, and oilers a premium for dishonesty. Let a man be ever so extravagant and reckless in his business relations, provided that he has not been guilty of actual fraud—a thing most difficult to prove—he can become bankrupt with impunity, and leave his creditors with absolutely nothing. This is legislating for the public good with a vengeance. It is well for the community that there is still some lingering feeling of uprightness and honour left. Were it not for this it would be sheer folly for a man to think of paying twenty shillings in the pound. With a credit system in full swing, and a Court of Bankruptcy with open arms waiting to receive him, the commercial rogue is here in his element. A remark made on a public occasion a short time ago, that people iu this colony did not know •the meaning of commercial morality, caused some comment at the time. On whose shoulders rests the responsibility 1 We should be sorry to have to conclude that the provisions of our Bankruptcy Act are the reflection of our legislators' ideas of right and wrong. We are promised a new Bankruptcy Act next session, and not without reason. We trust that for the welfare of our trade and commerce, and for the protection of honest dealing, a more stringent measure will be passed. That whilst a man who lias been embarrassed through misfortune, may enter the Bankruptcy Court with confidence, the extravagant, the reckless and the dishonest man may there be dealt with in a manner that will be a lesson to himself and others. Creditors who generally view the matter from a financial standpoint, rarely oppose a bankrupt on account of the cost. We contend that the court should of its own motion, enquire into the cause of each individual bankruptcy, and should effectually punish those who, through their own carelessness and extravagance, have brought themselves into insolvent circumstances. Further, that no discharge should be granted until a dividend of not less than a lixed amount be lirst paid, unless under exceptional circumstances, such circumstances to be in the discretion of the court.

We have no desire that our legislators should wander from the sphere of politics into the region of religion, but we urge that they should have some regard in legislating for the moral welfare of the community. More stringent bankruptcy iavvs would have the effect of making people more careful in their business concerns, and in their expenditure generally, and would go far to raise our commercial morality, which is now at far too low a standard.