§ Order for Second Reading read.
§ THE ATTORNEY GENERAL (Sir JOHN HOLKER)
, in rising to move that the Bill be now read a second time, said: Sir, a Bill to consolidate and amend the Law of Bankruptcy has been passed through the other House of Parliament, and I now rise for the purpose of asking this House to consent to the measure being read a second time. As the House is aware, a Bill on the subject of Bankruptcy was introduced in the House of Lords in 1876, and again in 1877. In the latter year, the measure was approved by the noble Lords, and sent down to this House, where it was read a second time, and, as far as I could judge from the discussion which arose, gave almost universal satisfaction. Owing to causes, however, the nature of which I need not explain, the Bill was not proceeded with by the Government. Since the Session of 1877 the subject has been further carefully investigated and considered, and several alterations have been made in the original Bill—I mean the Bill of 1877—which I believe will be found great improvements. The Bill which I ask leave to read a second time is composed of the original measure, with the alterations to which I have referred. There have been several Acts within comparatively recent times designed to alter and improve the Law of Bankruptcy; but it seems an un- 556 fortunate subject, because measure after measure has been attempted, and measure after measure has failed to remedy the evils complained of. I think I need only refer to two of them—the Act of 1861, and the Act of 1869. Prior to the Act of 1861 the system which prevailed, and which had prevailed for some time, was what may be called essentially a system of officialism. The Court of Bankruptcy and the officers of that Court had practically the control of the proceedings, and little or no power was confided to the creditors. In 1861, however, it was thought expedient to make a considerable alteration, and, accordingly, by a Bill introduced by Sir Richard Bethell, then Attorney General, a much greater amount of power was conferred upon the creditors than they had been invested with for some time previously. The measure, however, was not a success, and in 1869 another Bill was brought in by Sir Robert Collier, by which the authority of creditors over the estate of the debtor was still further extended, and their powers still further increased. The Act of 1869 may, indeed, I think, be said to have completely put an end to officialism. This Act was, I consider, a carefully-prepared measure, and one which was founded upon correct principles; for it seems to me that it is only reasonable that when a man becomes bankrupt the creditors should have the right to superintend the winding-up and distribution of the estate, and also the right—within limits—to decide whether their debtor shall be wholly discharged from his liabilities. The Act of 1869, though it was much applauded for a time, was found, by experience, not to work as well as was expected—in that it did not accomplish all that was desired. The truth is, the Act would work well enough, if creditors would only condescend to give themselves a little trouble about their own affairs, and not exhibit the apathy and indifference with regard to them which they do exhibit. It seems to me that when a creditor in England—for our Scotch friends are more prudent, cautious, and canny—is informed that his debtor is unable to pay and obliged to resort to the Bankruptcy Court, he generally, I dare say, gives vent to his feelings in a few passionate exclamations, and some strong language; but having done this, 557 he takes his ledger, writes off the amount owing as a bad debt, and pays no further attention to the matter. This supineness and apathy on the part of creditors, in my opinion, has resulted in much evil, and the administration of the Bankruptcy Law has, I regret to say, of late years became a perfect scandal. There must be something wrong when I find from the Report of the Controller in Bankruptcy that, under the existing system, the cases of compositions of the worst kind—that is, those averaging only a few pence in the pound—were ten times as many in 1878 as in 1870. Furthermore, in 1878, in the case of one-half the total number of compositions, only about 1s. 6d. in the pound was paid, and in cases of liquidations although there was a vast number of them in 1878–6,356—half the liquidating debtors gave up nothing more than as much property as would defray the expenses of carrying out the resolution to liquidate. The object of the present Bill is not in any way to depart from the principle upon which the Act of 1869 is founded, or in any way to take away the power and the control of the creditors, and to revert to any system of officialism; but the Bill is designed to introduce certain safeguards and checks which shall have the effect of preventing the evils which at present arise from the indifference of creditors, and of securing the due management and administration of the estates, and it is also intended in some other respects to place the law upon a more satisfactory footing. The first alteration in the law which is effected by the present measure, and to which I desire to draw attention, has reference to the nature of the proceedings to be instituted against a man who is unable to pay his debts. This alteration, however, as will be perceived, is not one of those to which I have alluded as having been rendered necessary by the apathy of the creditors. At present, if a man is unable to discharge the claims made against him, and a petition is presented by a creditor for the purpose of making him bankrupt, an adjudication in Bankruptcy at once takes place. Perhaps, if the debtor is a person backed by a great number of friends, or if he is not over scrupulous and does not hesitate to resort to unworthy tricks, he may avoid a declaration of Bankruptcy by resorting to a liquidation by arrangement—a 558 gentle and gentlemanly-like process of white-washing, to which I shall presently allude. But if the debtor is not a man of this kind, although he may have fallen into misfortune through no fault of his own, and have been perfectly straightforward and honest in all his dealings, he is at once, before any opportunity of investigating his affairs, and of ascertaining what has been his conduct has been afforded, adjudicated a bankrupt. The result is, that very frequently a man who has shown himself most thoroughly honourable in all his dealings, and at whose door no particle of blame can be laid, finds himself subjected to the stigma of bankruptcy—a stigma which, however lightly it may be regarded by some, is, to the great bulk of men, an occasion of serious annoyance, and to a sensitive mind an occasion of intense suffering. Now, then, the remedy for this evil contemplated by this Bill is this. It is enacted that the first result of a petition in Bankruptcy, either by a creditor against a debtor, or by a debtor against himself—for it is proposed, under the provisions of the measure, that a debtor shall be enabled to petition against himself—shall be, that the property of the debtor shall be vested immediately in a trustee, and consequently secured for the benefit of the creditors; then, that the affairs of the debtor and his conduct shall be subjected to a searching investigation, and that pending this investigation the order for adjudication in Bankruptcy shall be provisional only. Whether the debtor will be adjudicated bankrupt or not will depend upon the result of the investigation of his affairs, and upon the opinion his creditors may be led to form of his conduct. If that opinion is favourable to the debtor, he may be discharged at once without any further proceedings; or it maybe that the creditors will think it right that the debtor's affairs shall be wound up under a deed of arrangement, or that a composition be accepted. The advantage of this provision is, that it necessitates a careful consideration of the debtor's position, and prevents injustice being inflicted; but, at the same time, it at once removes from the debtor the power of dealing with his estate, and secures it at the earliest possible moment for the benefit of the whole of his creditors. Judging from some pamphlets which have been 559 circulated, there appears to be some exception taken, by a good many professional trustees, accountants, and fourth, or fifth-rate solicitors outside this House to this proposal to substitute a Provisional Order for an immediate adjudication in Bankruptcy, and elaborate endeavours have been made to demonstrate that the working of the proposed system would, or might possibly, occasion some additional expense, in that it will increase the number of applications required to be made to the Court. Sir, I have given the matter much consideration, and I am convinced that it is a mere invention of the gentlemen I have referred to, and that, as a rule, no additional expense will result from the adoption of the proposal contained in the Bill; but surely it will be a great improvement, and the removal of a great injustice, to provide that a man shall not be declared a bankrupt until his creditors have had some chance of considering his conduct and of investigating his affairs; and even if it could be shown—which I deny—that this amendment of the existing law may have to be purchased at the risk of slightly increasing the cost of the proceedings in certain exceptional cases, we ought not, I think, to complain. With reference to the proposal to resort to a Provisional Order, in the first instance, that proposal has the sanction of a Committee of gentlemen of the greatest experience in Bankruptcy matters—namely, Mr. Rupert Kettle, Mr. James E. Brougham, Mr. Mansfield Parkyns, Mr. Henry Nicol, and Mr. W. Hackwood—who were, in 1875, appointed to consider the working of the Bankruptcy Act of 1869. In their Report the Committee say—"Proceedings in bankruptcy are now commenced by the action of an individual creditor, who, in most cases, knows nothing of his fellow creditors, nor does he act for or in concert with them. By the proceedings of such single creditor a dilatory and an expensive contest is some, times carried on as to whether or not adjudication of bankruptcy shall be made, and the adjudication is often set aside by the action of the body of the creditors as soon as they can exercise the provisions of Section 28 of the Statute. It is reversing the proper order of events to provide that an adjudication should be made in the first instance and the conduct of the debtor be inquired into afterwards. The result of the inquiry may be, and often is, to find the debtor to be undeserving the stigma of bankruptcy which has been already cast upon him. While preventing the hasty judgment upon uncertain information by which it sometimes happens a 560 debtor seeking liquidation is forced into bankruptcy, or, as more frequently happens, a fraudulent debtor is discharged by vote at the first meeting, we think it would be proper to preserve to the creditors the right to consider, after full and accurate information has been laid before them, the conduct of the debtor and his right to his discharge. We therefore think it desirable that the present mode of instituting proceedings, whether in bankruptcy or liquidation, should be altered so that the first order of the Court, whether upon petition of a creditor or a debtor, should be limited in its operation to the possession and administration of property, and should not in the first instance affect the personal status of the debtor, and that it should be left to a subsequent stage of the proceedings for the creditors, at a meeting to be held for that purpose, to determine whether or not the debtor should be publicly adjudicated bankrupt.The next alteration—and I will make bold to say improvement—of the law effected by the Bill to which I think it necessary to refer, is the abolition, the entire abolition, of liquidations by arrangement. As the House is aware, under the provisions of the 125th section of the Act of 1869, which provides for liquidation by arrangement, a man who is unable to meet his engagements may summon a general meeting of his creditors practically when and where he pleases, and obtain a resolution that his affairs shall be wound up by liquidation, and not in Bankruptcy. I am not going to say that all liquidations are to be condemned; far from it. Many of them, no doubt, are conducted in a satisfactory manner. Innocent debtors obtain their release without being compelled to submit to the disgrace, or fancied disgrace, of bankruptcy, and the estates are properly distributed among the creditors; and, perhaps, I may lay down that, as a rule, liquidations would be unobjectionable if debtors were incapable of resorting to unworthy contrivances to secure the votes of the creditors and those who represent them, and if creditors would decline to allow themselves to be made use of as tools to forward the views of their debtors. Unfortunately, however, it often happens that a liquidation is only used as the means for procuring a comfortable discharge for a culpable and, may be, a fraudulent debtor; and, on the other hand, often ends in a shameful waste of his estate. The reason why this result is brought about may be ascertained without much difficulty. The debtor has power, as I have 561 said, to convene the meeting of his creditors wherever and whenever he pleases, and it is obviously his interest to summon it at an inconvenient time, and probably at an inconvenient place. The creditors are apathetic as usual, and do not care to attend themselves, but are content to confide their votes and interests to persons whom they appoint their proxies. In the meantime the debtor and his accountant are active; they get a few friendly creditors, or perhaps persons who merely pretend to be creditors, to attend the meeting. The support of the proxy-holders is begged, or perhaps more frequently bought, and the debtor and his supporters are placed in complete command of the situation; and, being in this position, they appoint a trustee who is simply their tool, and the trustee appoints a solicitor, who is also to be a creature of the debtor. Of course, the consequence is, that whatever misconduct the debtor may have been guilty of is carefully concealed from the public. He obtains his release as a matter of course, has perhaps a considerable allowance voted to him, and then the trustee, who is, in many cases, at the same time, the accountant of the debtor, proceeds to realize the estate and to deal with it—that is to say, to transfer as much of it as he possibly can to his own pocket, and to the pockets of those in his service, and those whom he is desirous of favouring. If the creditors cannot be induced to attend to their own affairs, of course the result is, that the debtor and the debtor's friends do as they like, as I have shown. Perhaps hon. Gentlemen may ask—" How can it be that such waste of the estate is permitted?" The answer is, that under the present law, if the creditors are indifferent, there is no check upon the proceedings of the trustee, as there is no provision in the Act of 1869 for the audit of the accounts in cases of liquidation by arrangement. Now, Sir, if such cases as those which I have just described, in colours, I suspect, sadly too subdued, occurred only rarely, perhaps there would be no great necessity for complaint; but I regret to say that they happen over and over again, and have given rise to a great public scandal. The remedy which we propose for this evil is one of a very simple, but, at the same time, of a very comprehensive character. It is no half-measure, but it 562 involves the entire sweeping away of liquidation by arrangement. It must not, however, be supposed that under the present Bill no arrangement will be admissible between a debtor and his creditors without resort to Bankruptcy. The truth is, there are very elaborate provisions for such arrangements; but these arrangements are to be effected by deeds, which may be objected to by any of the creditors, and are not to be valid until confirmed by the Court. Moreover, it will be required that the creditors shall not only give their assent to these deeds, but that they shall show their assent by affixing their signatures personally to the instrument. This will have the effect of forcing creditors to attend to their own affairs, and it will also preclude their giving assent to arrangements with which they are not thoroughly acquainted. There is another evil in the present law to which I think I ought to allude. It arises out of the enactments with respect to compositions. Under Section 126 of the Act of 1869, the creditors of a debtor unable to meet his debts may, without proceedings in Bankruptcy being resorted to, by an extraordinary resolution resolve that a composition shall be accepted. This resolution, which binds creditors who dissent, is passed and confirmed at meetings where those holding proxies for creditors can vote as well as creditors themselves. The consequence is, that compositions are constantly accepted which ought not to be accepted, and minorities are forced to submit to unfair and inadequate terms fixed, perhaps, by persons who have really no interest in the matter. Now, the Bill will remove this source of injustice, because, under it, if compositions are accepted, they must be compositions agreed upon and fixed by deed, which is not to be binding unless the Court shall be satisfied with regard to it, and, moreover, it must be a deed signed by the creditors, and not by their proxies. There is, moreover, ample opportunity given to the minority of the creditors to object to a composition which they may think unreasonable. Besides the alterations in the existing law to which I have already alluded, the Bill makes several others which are of great importance. I will not refer to them all, for time will not permit; but I must say a word on one or two. There is a provision that the accounts of all trustees, whether trustees 563 under bankruptcies, or trustees under deeds of arrangement, shall be subject to audit and be periodically and thoroughly overhauled. Then, again, it is enacted that limits shall be put upon the charges of the trustees, and that it shall not be competent for the committee of inspection to vote any amount of remuneration or sanction any amount of expenditure they may think proper. Furthermore, it is provided that all unclaimed dividends shall be periodically paid over by the trustees in whose hands the monies may be to persons duly appointed to collect the same on behalf of the Crown. Under the present law, these sums, often very large, and amounting probably in the aggregate to some millions, remain in the hands of the trustees, who, of course, are not particularly anxious to hand them over to anyone, or to find out the persons who are entitled to them. Now, these sums would be paid to the Government, and taken for the general good of the community, of course making due provision for their being paid over to the persons entitled on the claim being proved. In that way, they would not be left as now in the pockets of persons who have no possible claim to them. Again, there is a clause in the Bill which enlarges the area of the district of the London Bankruptcy Court; and with regard to that Court itself, there is also an important alteration, which I will refer to very briefly. Under the Act of 1869 there was a Judge appointed called the Chief Judge in Bankruptcy, and it was enacted that he should preside over the London Bankruptcy Court. Now, without in the slightest degree wishing to cast any reflection upon the Judge who holds that Office, I wish to point out that the duties of that Office have been carried out in a way which can scarcely have been contemplated by the Legislature. I should imagine that it was the intention of the Legislature that the Chief Judge was really to be the Judge by whom all questions of importance were to be heard and decided. In practice, however, this has not been done, but the Chief Judge in Bankruptcy has delegated his powers to the Registrars; and now he transacts only a very limited amount of original business, but occupies such portion of his time as is devoted to bankruptcy work in hearing appeals from the decisions of those Re- 564 gistrars, or from the County Courts, which are the provincial Courts of Bankruptcy. That system has been the subject of much complaint from the commercial community, and a provision has been inserted in the Bill by which the practice is not to prevail any longer; but the Chief Judge in Bankruptcy is to be under an obligation to dispose of all business of importance, whether original or appellate. Moreover, it is proposed that the London Bankruptcy Court shall be made a branch of the High Court of Justice, and the Judge will, therefore, be a Judge of the High Court. Provisions are also inserted in the Bill for the prosecution and punishment of debtors who are guilty of certain specified offences, such as the failure to disclose the estate, reckless trading, and the want of proper books of accounts. A provision is also made for the suspension of the debtor's order of discharge. These, then, are the main provisions of the measure to which I will ask the House to give a second reading. I have, in conclusion, only a word or two to say respecting the Notices of Opposition which I observe appear upon the Paper with reference to the measure. I find to my dismay that my hon. and learned Friend the Member for Dewsbury (Mr. Serjeant Simon) moves its rejection. I do not deny that I was prepared to meet with a certain amount of opposition from those interested in maintaining the present state of things, from trustees, from accountants, and those who were likely to be appointed trustees, as well as from fourth or fifth-rate solicitors, who have fattened upon the system and the lucrative spoil it yields; but I certainly was not prepared to have seen a Notice of Opposition from my hon. and learned Friend, whose sole object in everything he says and does is to advance and secure the interests of the Commonwealth. But I have discovered that my hon. and learned Friend is possessed with a notion which compels him to take his present course. I know my hon. and learned Friend is beyond any suspicion of opposing the Bill from motives of the kind to which I have referred, and I can only suppose that he is going to oppose the measure on grounds which he has before expressed in regard to the existence of any Bankruptcy La w at all. My hon. and learned Friend appears to think that a Bankruptcy Law is altogether a mistake, and that a man 565 should be made to retain his liabilities to the end of his life, or until he has discharged them—in fact, that a man should not be allowed to resume trading until he had paid his debts. I can scarcely think such a view will be accepted by the House. I believe it is necessary to have some Bankruptcy Law, and I hope, if the House should come to that conclusion, my hon. and learned Friend will agree that the present Bill is the best which can be devised. The next and only other Notice on the Paper referring to the Bill is a Notice of the hon. Member for Kendal (Mr. Whitwell) to refer the Bill to a Select Committee—a desire which I believe is shared in by the hon. Member for Liverpool (Mr. Rathbone). My anxiety is that the Bill should be passed; and, if I were not hampered and embarrassed by that anxiety, I would willingly say, by all means let the matter go before a Select Committee. But I think it probable that such a course would only lead to a protracted inquiry, for in a Bill of this kind, no doubt, in a Select Committee each Member of the Committee would have a chance of airing his own particular crotchet, and perhaps of getting it accepted; but would the House accept the decision of the Committee and agree that it should be binding? I think the House would do no such thing, and, therefore, I am altogether against a Select Committee. We have had. a recent instance of how the House has treated a Bill which has been referred to a Select Committee. All I can say to the hon. Gentlemen who ask for a reference to a Select Committee is that I would willingly consent to their proposal if they can give me a guarantee that the House will accept the views which that Committee may express. I beg now, Sir, to move the second reading of the Bill.
§ Motion made, and Question proposed, "That the Bill be now read a second time."—(Mr. Attorney General.)
§ MR. SERJEANT SIMON
in moving, as an Amendment, that the Bill be read a second time upon that day three months, said: If I needed any justification for the course I am taking, and for the views I am about to express, I should find it in the speech we have just heard. My hon. and learned Friend (the Attorney General), referring to the legislation which has taken place on bankruptcy 566 since 1861, said it had been unfortunate. He showed its shortcomings, and, in point of fact, the impossibility of ever passing a satisfactory measure. Sir, I will go further back than the year 1861—I will go back to the first Bankruptcy Act which we had in this country, to the reign of Henry VIII. I will show how utterly futile all attempts at bankruptcy legislation have been during the long period since Bankruptcy Law was introduced down to the present time. By the Statute of Henry VIII, bankrupts were treated and dealt with as criminals. During the following reigns of Queen Elizabeth and James I., to the time of Queen Anne, that continued to be the case. In the Statute of James I., the bankrupt was styled "the offender," and was punished accordingly. In fact, there was a Statute of James I., under which he was liable to be placed in the pillory and have one of his ears cut off. Sir Edward Coke, referring to the system of bankruptcy for which this severe legislation had been deemed necessary, spoke of the Bankruptcy Laws as an "innovation," and declared that "they had brought with them all the crimes and evils of the foreign countries from which they had been imported." From that time down to the present there have been speeches in this House, including the one we have listened to to-day, complaining of the inefficiency of bankruptcy legislation, and of the unremedied and growing evils under it. We have had denunciations of fraudulent debtors, we have heard complaints of the wrongs of creditors; and during the time of which I am speaking, from Henry VIII., down to the present reign, we have had, on an average, no less than one Bankruptcy Statute in every 10 years, and, in the course of the last 40 years, we have had alterations in the Bankruptcy Law, on an average, between every five and six years. Let me show the House, for a moment, what has taken place. In 1825 we had a Bankruptcy Law passed; there was another in 1826, another in 1831, another in 1842, another in 1844, another in 1849, another in 1861, another in 1868, and another in 1869, to say nothing of Bills which have been introduced and which have fallen through. In 1863 the Committee was appointed to which my hon. and learned Friend has referred. It made its Report in 1864, and in 1866 a Bill was intro- 567 duced by the then Attorney General, Sir Roundell Palmer, which fell through, another in 1867 by Sir John Rolt, then Attorney General, which met the same fate, and then one in 1869 by Sir Robert Collier, which was passed; and during the present Parliament we have had in each of the last three years a Bankruptcy Bill introduced either in this or the other House. Now, Sir, after all these attempts at legislation, after all these futile efforts to accomplish what is, or should be, the great and simple object of a Bankruptcy Law, to collect and fairly distribute the assets of an insolvent debtor among his creditors, after all these failures—these egregious failures—of law upon law, one attempt after another to legislate, I venture to put it to the House whether we are not approaching, if we have not yet approached, the time when it will become, if it be not now, our duty to re-consider this whole system of bankruptcy legislation, and to say whether, in the interests of the commercial community, and of commercial morality, it will not be better to put an end to this special legislation altogether? Sir, this idea is not a novel one. I claim no originality for it; I have heard it discussed for many years past. I believe it is gaining ground. I believe it is the opinion of many commercial Gentlemen occupying seats in this House, and whose opinions I hope to hear presently in support of my own. It is an opinion, also, which has been pronounced by high judicial authority, both in this country and in the great commercial community on the other side of the Atlantic—I mean the United States of America. If the House will allow me, I will give them a quotation or two, to justify me, since my hon. and learned Friend has spoken of my views on the subject, as of something quite unheard of, and utterly untenable. Of course, I cannot expect to convince the House to-day, and I do not mean to divide on the question whether we should abolish the Bankruptcy Laws or not. If that had been my intention, I should have placed on the Paper the proper Notice for that purpose; but when we are called upon to consider a new Bankruptcy Law, and to enact a consolidating Statute, it is a fitting occasion, I submit, for calling attention to the subject, and I shall justify myself by the authorities from which I will now 568 proceed to quote. Sir, so far back as Lord Eldon's time, speaking of the Bankruptcy Laws, and what seemed to be their inevitable abuse, Lord Eldon said—"The abuse of the Bankruptcy Law was a disgrace to the community, and it would be better at once to repeal all the Statutes than to suffer them to be applied to such purposes. There was no mercy to the estate. Nothing was less thought of than the object of the Commission. As they were frequently conducted in the country, they were little more than stock-in-trade for the Commissioners, the assignees, and the solicitor.That was said at a time when the administration was wholly in the hands of the creditors. Sir, the same complaint is made to-day; that complaint still exists, and, as I believe, always will exist, legislate how we might. Judging from the past, we shall not be able to produce a system which will be free from Lord Eldon's strictures; and I want to know how long these attempts at legislation are to be repeated, and when we are to achieve success in bankruptcy legislation? But, Sir, in the State of New York, the question of bankruptcy was referred to the Judges. In the Report of the Chancellor and Judges of the Supreme Court of New York to the Legislature of that State, on January 2, 1819, they said—"Judging from their former experience, and from observation in the course of their judicial duties, they were of opinion that an insolvent law was the source of a great deal of fraud and perjury. They were apprehensive that the evil was incurable, and arose principally from the infirmity inherent in every such system. A permanent Insolvent Act made expressly for the relief of the debtor, and held up daily to his view and temptation, had a powerful tendency to render him heedless in the creation of debt and careless as to payment. It induced him to place his hopes of relief rather in contrivances for his discharge, than in increased and severe exertion to perform his duty. It held out an easy, tempting mode of procuring an absolute release to the debtor from his debts, and the system had been, and still was, and probably ever must be, from the very nature of it, productive of incalculable abuse, fraud, and perjury, and generally injurious to the public morals.That was the view of experienced men, Judges of the Supreme Court of the commercial State of New York, to the Legislature of that State. But, says my hon. and learned Friend, to abolish Bankruptcy Laws would be to prevent a man from ever being discharged from his debts and from ever beginning again. 569 Why, does my hon. and learned Friend forget that down to the fifth year of the reign of Queen Anne a bankrupt was never discharged from his debts? The Statute of Anne introduced, for the first time, certificates of discharge, and then only with the consent of the creditors. It was not until the 5th and 6th of the present reign that the power of granting the certificate was taken out of the hands of the creditors and transferred to the Court. Down to this time, the bankrupt's future property remained liable for his debts, unless he received his discharge—that is, his certificate of conformity, from his creditors. My hon. and learned Friend thinks this is something cruel and very hard. Why, it was the law of England down to 1861, in the case of insolvent non-traders, whose future property, notwithstanding their discharge from prison, was, with certain slight exceptions, liable until their debts were paid in full; that is also the state of the law almost throughout the European States, in Germany, in France, in Holland, and in Belgium. A bankrupt's future property remains liable to the claims of his creditors. In Germany, in some of the States—I may mention particularly the State of Westphalia—a bankrupt is not allowed to begin business again until he has discharged all his obligations to his creditors. Again, I will go to the United States of America, and I cannot take a better example, because they are our own kith and kin, and they are a commercial people like ourselves. What is the law in the United States? In the first place, there is no general Law of Bankruptcy there. In 1800, Congress passed a law establishing a uniform system of Bankruptcy throughout the States. The Act was limited to five years, and thence to the end of the next Session; but it was repealed within the period by an Act of Congress of 9th December, 1803. In 1860, an effort was made to re-establish a uniform system; but Congress, upon Constitutional grounds, refused to pass it, as it involved the right of discharging the debtor from his contracts. At length, in 1861, an Act was passed; but on the 3rd March, 1863, it was repealed; and now each State has its own Insolvent Law. Now, what are the provisions of these laws as regards the discharge of the bankrupt from his debts, about which my hon. and learned Friend is so solicitous; in 570 New Jersey, Delaware, Maryland, Tennessee, North and South Carolina, Georgia, Alabama, Mississippi, and Illinois, Insolvent Laws extend to debtors in prison on mesne or final process only, but they do not touch his debts; in Missouri, New Hampshire, Virginia, and Kentucky, to the relief of debtors charged in execution, not to others. In Massachusetts, New York, Connecticut, Rhode Island, Pennsylvania, Ohio, Indiana, Missouri, and Louisiana, it applies to debtors in or out of prison. In New York the debtor is discharged with the assent of two-thirds in value of his creditors on the disclosure and surrender of his property. Connecticut, Ohio, New Jersey, Pennsylvania, Illinois, North Carolina, Tennessee, Georgia, and Missouri, go only to exempting the person of the debtor, and leave his obligations in full force to be discharged out of his future acquisitions. This, I believe, is the limitation of the Insolvent Laws in a vast number of the States. Maryland by an Act of 1774, subjected to the former debts of an insolvent his future acquisition by descent, gift, service, bequest, or in a course of distribution. Therefore, Sir, it is nothing new for an insolvent debtor to remain liable for his debts, even if he go through the process of bankruptcy, or, as in the United States, or, until 1861, in this country, the Insolvent Court. I refer to these cases as an answer to my hon. and learned Friend, who seemed to recoil from the notion that if there were no Bankruptcy Law the consequences would be that a bankrupt would never be released from his debts. In Europe, and in the United States of America, as I have shown, the property of an insolvent debtor remains liable to his creditors. It was the case in this country down, to 1861 as to non-traders; and it was the case down to the 5 & 6 Vict., subject to the will of the creditors, in the case of bankrupt traders. Therefore, the idea is not new. We have made an alteration in this respect; but in the Act of 1869 it was provided that in case of a debtor applying to be discharged from his debts, he should pay 10s. in the pound, and now it is proposed by the present Bill to relax that provision by reducing the amount; but I will deal with that subject hereafter, when the Bill goes into Committee. 571 Bankruptcy Laws in this country, I affirm, have proved beneficial to no one except to the debtor, the assignees, or trustees, the officials of the Court, and lawyers. Tell me an instance in which a creditor has been benefited by the Bankruptcy Law? Why, Sir, complaint has been loud and continuous that the debtor, not to mention trustees and legal advisers, is the person who chiefly gets the benefit of the law, and, generally speaking, not the honest debtor. If there were no Bankruptcy Law, there would be nothing at Common Law to prevent the creditor from making terms with his debtor. There is nothing to prevent all the creditors from relieving their debtor upon such terms as they may think fit. The only reason for a special law is to enable the majority to bind the minority; and upon that point, unless it can be shown that there are high considerations of expediency rendering it necessary, it seems to me to be contrary to justice and sound economy that a majority should prevail, so as to compel a minority to yield up their rights upon a matter of private contract. The whole principle of bankruptcy legislation seems to me to be based on fallacious grounds. What are those grounds? That the uncertainties and vicissitudes of trade are such that an honest man may, through misfortune, become unable to meet his engagements; therefore, the law should step in to do—what? To relieve him from his responsibility to his creditors. Now, as I have said, no special law is necessary to enable creditors to do so, as I believe creditors have been always ready to do in the case of an honest and really unfortunate debtor. But, in the vast majority of cases, you have to deal with dishonest men, or with men whose failure has been the result of their own misconduct, and not of misfortune. The Bankruptcy Laws are an encouragement to such persons. They promote a system of reckless trading and speculation, a readiness amounting to eagerness to give, as well as to take, credit; and, as was pointed out by the Judges in their Report to the Legislature of New York, indifference on the part of debtors in regard to their obligations, and of systematic scheming in order to get rid of them. It is an encouragement to the creditor to give credit loosely, because he has a sort of a vague feeling, 572 though it is utterly unsubstantial, that he shall, somehow, in case of disaster, be able to get something out of the wreck of his debtor's estate. As to the something, we know how small it is from the Report of the Comptroller General, lately presented to the House. It is an encouragement to the debtor to contract debt recklessly, to speculate with his creditor's means, knowing that the profit will be his and the loss his creditor's. If we had no Bankruptcy Laws, the state of things would be simply this—the creditor would look after his debtor, and would not give him too large or too extended a credit; for, when he found that payment was not forthcoming within a reasonable time, he would have recourse to his ordinary legal remedy for the recovery of his debt; and if his debtor proved fraudulent, he would take means to punish him; or if we had a law, such, as they have in some Continental States, under which no bankrupt is allowed to commence business again until he had discharged his obligations, I think we should be far better off than we shall be by any enactment such as the one now proposed. Now, with regard to the present Bill, when my hon. and learned Friend was introducing it, he paid a tribute to the Bill of Sir Robert Collier, and one might have thought that my hon. and learned Friend was introducing a mere Amending Bill to cure certain defects in the present law. Instead of that, we have a Consolidation Bill, proposing important changes. When the present Bankruptcy Act was introduced, it was received with high-sounding praises on both sides of the House, and those praises came chiefly, if not exclusively, from the commercial Members. One hon. Gentleman after another got up and offered his need of praise and congratulations to Sir Robert Collier. But, before two years were over, defects were discovered, and the Act was denounced by the very persons and the class who had been loud in their praises. That Act of 1869 was based upon the evidence of merchants, taken before the Committee of 1863, and, I believe, upon the suggestions of the Associated Chambers of Commerce. It might be said to be the offspring of the Associated Chambers. It was received, as I have said, with high-sounding praises and with congratulations from the commercial Gentlemen in this 573 House, and by the commercial community without. But before two years were over, complaints were loud against it, and dissatisfaction has gone on gaining ground year by year, until, three years ago, the present Government brought in their first Bill. The hon. Gentleman opposite, the Member for Plymouth (Mr. Sampson Lloyd), the President of the Associated Chambers, has himself introduced a Bill, which, I must do him the justice to say, I infinitely prefer to the Bill of the Government. When we see what has been the course of procedure from time to time, when we see the Bill of 1869, introduced with the approval of the commercial classes, prepared, it may be said, under their auspices, yet that it has proved, according to them, an utter failure, I want to know with what hope we can look upon the present Bill? I must say I have none whatever. If this Bill passes, either in its present form, or amended, it will meet with the fate of all previous legislation on the subject. In the course of two or three years, its defects and its faults will be disclosed, and it will be as strongly condemned as the Bill of 1869; and I believe that the time will then have arrived for considering the whole question of the expediency of further legislation, and we shall have before us a Bill to repeal all Bankruptcy Laws, and to put an end to this exceptional legislation. In all legislative attempts hitherto, the object has been to do something to protect the rights of the creditor; but my hon. and learned Friend has taken new ground to-day; he takes upon himself a burden, which, it seems to me, perfectly dreadful for any man to assume—namely, to endeavour by this Bill to "force"—that was his expression—to "force" creditors to look after their interests. Why has the Act of 1869 failed? Because, as my hon. and learned Friend tells us, and as everyone else tells us—because of the indifference of creditors. I do not blame them. I do not reproach them. We know perfectly well, when men in business hear of the failure of a debtor, what the result is. They attend a meeting of creditors; they hear a statement of his affairs, and they come away; they have too much to do to look after a bad debt, and they leave the affair to trustees and accountants. It is because of this negligence of their inte- 574 rests by creditors that the Bankruptcy Act of 1869 has, in a great measure, been a failure. If the mercantile community would agree to spend their time in looking after bad debts, this Act would not have been a failure; but it is not to be expected that men fully laden with business engagements, and with many pressing duties, would spend their time in looking after bad debts. As my hon. and learned Friend has said, they look at their ledger and wipe it off. How, then, is it possible to coerce them, as my hon. and learned Friend proposes to do? This Bill should have been entitled, instead of a "Bankruptcy Bill," a "Bill to compel Mercantile Men to look after their Interests." I believe that no legislation can be brought to bear on men who must, in the nature of the case, leave affairs in bankruptcy in the hands of others, and who are more or less indifferent. We have laws to protect infants under age. We have laws for the protection of persons of unsound mind, incapable of managing their own affairs; but this is the first time the British Parliament has been called upon to pass a law to protect and to compel persons who are capable, perhaps the most capable of any in the community, to look after their own interests. Yet this is what my hon. and learned Friend says it is proposed to do by his Bill. With regard to the alterations in the law which it contains, as to some of them, I am sorry I cannot congratulate my hon. and learned Friend, as his Predecessor was congratulated when he introduced the Bill of 1869. From my hon. and learned Friend's opening remarks upon the present Act, it seems to me that all that was required was the introduction of a few clauses in the shape of an Amending Bill; but it has been thought right to introduce a Consolidating Bill. If it had been an attempt to find remedies for the defect of the existing Act; even if, in some instances, the attempt had failed, I would not have found fault; but the Government have gone out of their way to make alterations upon points about which we have never had complaints. My hon. and learned Friend tells us of complaints arising under the system of liquidation, of the conduct of trustees, and the manner in which estates are made away with; and he says we must find a remedy for these evils. Granted, But whoever 575 complained of the process for adjudicating a debtor a bankrupt? Have the mercantile classes complained? Have the debtors complained? I have never heard a single complaint on the subject. Nothing but the theoretical statement and suggestions of certain persons which have been quoted to-day have we heard; and, acting upon those suggestions, Her Majesty's Government have contrived a scheme by which, if they had wished to play into the hands of the dishonest debtor, they could not have succeeded better. When a man is insolvent, when he is unable to meet his engagements, and commits an act of bankruptcy, common sense demands that, in the interest of the creditors, no time should be lost; that the sooner the adjudication is made the better; and that at this stage the creditor is the only person who should be thought of. What is the present process under the Act of 1869? As soon as a debtor commits an act of bankruptcy you serve a notice on him, and apply to the Court, and upon proving the debt and act of bankruptcy, as prescribed by the law, he is at once adjudicated a bankrupt. If he has not committed an act of bankruptcy, or if he can show reason why he should not be adjudicated, he has the opportunity of stating his case, and of preventing, or annulling, the adjudication. What is the injury to him in being called upon to do that? But, contrast this proceeding with the one proposed by the Bill. Before you can make a man a bankrupt, you are to give him such notice that if he be so minded, he has the opportunity to make away with all his property, to flee the country, and to put his creditors to all kinds of trouble of delay, and expense. He is first to have notice that you are going to take proceedings, and what then? There is to be a provisional order; the creditors are then to meet, and the majority present are to determine whether or not the debtor shall be made a bankrupt, the debtor having also the opportunity of showing why he should not. It may be more logical, as my hon. and learned Friend says, to commence in this way; but, for the practical purposes of legislation, it will defeat the object in view, which should be expedition for the protection of creditors against, in the majority of cases, the fraudulent debtor. My hon. and learned 576 Friend says the Bill has only met with objection from creditors, trustees, and fifth-rate solicitors. Now, I do not know whether he has seen a printed paper drawn up by a gentleman who certainly cannot be designated a fifth-rate solicitor, and who has pointed out how, under this new system proposed, a man could, if dishonestly inclined, and under certain circumstances, with a skilful solicitor by his side, have the proceedings protracted and the adjudication postponed for several weeks, with no fewer than 14 meetings and adjournments in the meantime, all attended with expense to the creditors. My hon. and learned Friend says this will be under very exceptional, very remote, circumstances; but I take issue with him. In cases of bankruptcy you have constantly to deal with tricky, designing men, not honest and unfortunate persons, anxious to do the best for their creditors. There is a semi-official document I have read somewhere that says that out of 1,000 bankruptcies, only one is brought about honestly; I will not put it so severely as that; but, unquestionably, the great majority of bankrupts are men who do not fall within the category of honest or unfortunate men. In such cases, then, it is most desirable to have the proceedings conducted expeditiously; but under this Bill, with the new process proposed, I have no hesitation in saying that a dishonest man in the hands of a clever solicitor, ready to avail himself of all the technicalities and of the opportunities which will be afforded by this Bill, will be able to carry on proceedings for weeks together, before the adjudication can take place. At every step you have meetings involving applications to the Court; no time is prescribed, all is left to arrangement at the will of the debtor and his advisers. And what is the position of the absent creditors, for whom my hon. and learned Friend is so solicitous? Why, the majority present are to determine whether the estate shall be administered in bankruptcy or not? That being the case, it seems that the change in the process for adjudication is the most extraordinary ever heard of. The change is in a matter, too, about which there have been no complaints, but which has worked well, involving no unfairness to the debtor or the absent creditor, a change which alters what is of the first importance 577 as a means to the end—namely, expedition and promptitude, where loss of time must be disastrous. This is one of the great, the cardinal changes, to be effected by the Bill; a change that can and will operate only in aid of the fraudulent debtor. I confess, when the Bill goes into Committee, I shall feel it my duty to propose to strike out all these new clauses, and leave the law as it is; so that, when a debtor has committed an act of bankruptcy, the creditor shall be able to go before the Court and procure an immediate adjudication, leaving the debtor, on whom the onus ought to lie, to set aside the adjudication, if it has been improperly made. Then, my hon. and learned Friend says, with regard to trustees, that the Bill will abolish liquidation. Now, I agree with him that the system of liquidation has worked badly, and is fraught with mischief. But that is the fault of the creditors in most cases, and, to some extent, of the present law. If my hon. and learned Friend had succeeded in removing the evils from the liquidation system I would congratulate him, for he would have rendered a great service to the commercial community; but under the Bill, in place of liquidation, we are to go back to deeds. I must say that I have been astonished at this proposal. Deeds have been prolific of litigation in the past, and no one knows this better than my hon. and learned Friend; yet deeds are to take the place of liquidation. We know from experience of former days how they gave rise to every kind of difficulty, and to technical objections without end, and yet we are to return to them. Does my hon. and learned Friend think that deeds will succeed better now than in the past? But what are the provisions about these deeds? If hon. Members would consider them, they would find that they are to enable an insolvent debtor, without consulting his creditors, but behind their backs, to frame a deed and put it before them for signature. A man is to be allowed to concoct a deed offering a certain minimum amount in the pound, prescribed by the Bill, and all he will have to do will be to get a plausible solicitor, or accountant, or a friend or relative, or a friendly creditor, to say to the creditors—" You had better sign this. Here is a certain composition. You had much better not let the estate go into Bankruptcy; if you do, 578 you will get nothing." Thus, men will be drawn into giving their signatures. I should have thought, if liquidation was to cease and deeds be substituted, in common justice to the creditors they should have the opportunity of deciding whether they would accept a deed, what its terms should be, and what the amount of the composition. But, no; the terms are to be settled by the debtor himself, and the deed prepared beforehand, without notice to the creditors, and then they are to be told, or asked, to sign it. The whole thing is to be concocted and arranged in private, behind the back of the creditors. This is the remedy proposed in place of liquidation. All the debtor will have to do, under the deed clauses, will be to get a solicitor to draw up a deed on any terms he might chose to offer, and take the deed round to the creditors, and get it signed, without any opportunity beforehand for inquiring into the affairs of the bankrupt. If you cannot get creditors now, when meetings are required by law, to look after their own interests, I think I am not putting it too strongly, when I say that creditors will not look after them under the provisions of the Bill in the case of deeds. But the creditors are not to be required to sign the deed itself. They may sign a document, stating that they agree to the tenour or purport of the deed, and that document or form may be framed in a way so as altogether to delude the creditors, and to give them a vague or incorrect idea of the deed. The deed, moreover, is not necessarily to transfer the whole estate, but only a part; and, when signed, the Court is to confirm it. That is, it may be confirmed by the Registrar of the Court, possibly, a practising solicitor, or connected with the solicitor who has prepared the deed, or with the debtor or his friends. This is the remedy of the Government for curing the evils of liquidation. Another point I must refer to. It is one of much importance to commercial classes. By the Bill, a debtor may make himself a bankrupt upon his own petition. We have tried this before. We tried it in the Bill of 1849. It sounds very plausible to say that when a man is in difficulties, and has declared that he cannot pay 20s. in the pound, he should be allowed to petition the Court, and to say—" I will give up all I have to meet 579 the demands of my creditors." If there were none but honest debtors, it would be fair enough to have such an arrangement; but we have had experience in this matter, and that experience tells us of the class of men who go through the Bankruptcy Court. Three-fifths, at least, are not honest or unfortunate; but men who incur debts recklessly, and make away with the property of their creditors. When you are dealing with a class of men of this description, to enable them to say when it suits their convenience, when they have made away with their creditors' property, and secured some of the spoil, to give such persons facilities for obtaining release from their obligations, does appear to me a strange proposition. It will be a sure means of encouraging fraudulent bankruptcies. To show the practical result of this system while it was in operation, I will just refer to some statistics quoted by Lord Hatherley in "another place" in 1877. Speaking of the result of the Act of 1861, by which debtors were enabled to become bankrupts upon their own petitions, it appeared that, during the year ending October, 1869, out of 10,000 adjudicated bankrupts, 7,530 were adjudicated bankrupt on their own petition; and the results, as regards creditors, in the same year, was this—1,695 paid dividends, and 7,346 paid no dividends. The House, then, sees what class of traders it was that availed themselves of the Bankruptcy Court, upon their own petitions, and with what results to the creditors. But we know also, when that state of the law existed, that it put into the mouth of the debtor a continued threat against the creditors. It was a common thing for him to go round to his creditors and say—" I cannot pay 20s. in the pound; I will give you a composition, if you like to take it; if you do not, I will go through the Court." This threat was held over creditors; and, in fact, it was common in the mouths of debtors. And yet this Bill would restore this power to the debtor. I did not mean to detain the House at the length I have done. Personally, the Bankruptcy Law is a matter of no interest to me. I am not a commercial man. Whether the law be good or bad, it is no affair of mine personally speaking; but, as a Member of this House and of a Profession which has for years continually brought the sub- 580 ject to my attention, and representing an important commercial constituency, as I have the honour to do, I have felt it my duty to go into the subject. I have no wish to throw out the Bill. My object has been to bring to the attention of the House the whole course of our bankruptcy legislation, believing, as I do, that we shall have hereafter, and at no very distant time, to consider the question of the expediency of that special legislation known as Bankruptcy Law, with a view to its entire abolition. It is my desire, however, to assist in making the present Bill a useful measure, either before a Select Committee, or by Amendments, which I am ready to propose in Committee of the Whole House. If it were a question whether this Bill should pass or not in its present form, without amendment, I would, unhesitatingly, divide the House; but that is not my wish. My object is to assist my hon. and learned Friend, if he will allow me to do so, by such Amendments as I shall feel it my duty to propose in Committee, in order that we may pass a measure which will be efficient for the protection of those great interests upon which the prosperity of the country largely depend.
MR. OSBORNE MORGAN
in rising to second the Amendment, said, that in the course of his professional life he had learned and unlearned no less than three systems of Bankruptcy Law; and he, therefore, must be pardoned if he naturally looked with suspicion upon any proposal to alter the law for a fourth time. He agreed with his hon. and learned Friend the Attorney General that the history of our bankruptcy legislation was a dismal record of melancholy failures. There must, he (Mr. Osborne Morgan) maintained, be something radically wrong about a system which required to be pulled to pieces once in every six years or so. The hon. and learned Attorney General had attributed the failure of the Act of 1869 mainly to the apathy of creditors in reference to bad debts; but there were other causes to which that failure was due. When the Bill was passed, with an air of triumph through the House, it was said that there had been enough of lawyers' legislation, and that what was wanted was merchants' legislation. The people, it was said, who were most interested in the recovery of the bankrupt's estate 581 were, of course, the creditors. But what fruit had the Act borne? In his Report, the Controller in Bankruptcy said, last year—"The actual loss by bad debts in cases under the Bankruptcy Act will be about £25,000,000 for the year 1878—a somewhat heavy tax on consumers, as it does not include the losses from Scotch and Irish insolvency, joint-stock companies, deceased insolvents, private arrangements, or the many thousands of small insolvencies which are not dealt with under the present Bankruptcy Law.This sum of £25,000,000, he had no hesitation in saying, was a tax levied upon honest men for the benefit of rogues. Before the House proceeded to further legislation, they ought to inquire to what causes was the failure of the Act to be attributed. One, as had been already observed, was the indifference and apathy of creditors about their bad debts. His hon. and learned Friend (the Attorney General) said the Bill before the House would make creditors take care of their own interests; but he (Mr. Osborne Morgan) doubted very much whether this result could really be brought about by any Act of Parliament. Another cause of the failure of the Act of 1869 was the existence of the new class of trustees whom the Act had created—a class whose profession it became to prey, like vultures upon carcasses, upon the estates of insolvent persons, and to get as much as they possibly could out of them. He acknowledged that a clause in the Bill which compelled a trustee to account once in some stated period would have a valuable effect, and to that extent he fully agreed with the Bill. The chief cause of the failure of the Act of 1869 was, however, the extreme leniency of the law to debtors. The law was, in fact, administered in the interest of the debtor, and not in the interest of the creditor, and seemed designed for enabling rogues to prey upon honest men. When he contemplated the facilities which the law, and particularly the Bankruptcy Law, gave for the perpetration of fraud, he wondered that they did not all turn rogues. He was of opinion, in fact, that in this country honesty was not the best policy. Men embarked in reckless enterprizes, or hopeless actions, and if failure resulted they got themselves whitewashed, threw off their liabilities, as they would an old coat, and there the matter ended. The question, therefore, 582 was, would these men be reached by the Bill of his hon. and learned Friend? Some of the clauses in that Bill he could not but approve. He quite agreed that the law should be administered by a Judge who had time to attend to his business. The present Chief Judge (Vice Chancellor Bacon) had only a remnant of his time to devote to bankruptcy matters, and was, therefore, compelled to delegate a large portion of his duties to the Registrars. He was also glad to see that his hon. and learned Friend proposed to do away with proceedings by liquidation. He was, however, afraid that by introducing deeds of arrangement the Bill would really be opening a still greater door to fraud than that provided by liquidation proceedings. Nothing would be easier than to find a solicitor to go round to creditors and get them to agree to a deed which, in some cases, they might not even see. Until some mode should be found of doing away with the process of manufacturing debts, no real step could ever be made towards the prevention of fraud in cases of bankruptcy. He should, to a certain extent, approve the disappearance of proxies; but it must not be forgotten that if proxies were done away with there would practically be little protection left for absent creditors. His great objection to the system of deeds by arrangement was, that they were tolerated by the Act of 1861, and that the system turned out so badly that in 1869, by the universal consent of the House, it was abolished. He objected in the same manner to the 9th clause of the Bill—the clause enabling a man to be made a bankrupt upon his own petition. While, therefore, approving of some clauses of the Bill, he did not believe that it was calculated to meet the evils complained of, and thought that if the Government had no better proposal to submit for the consideration of the House, it would be better to adopt the suggestion of the hon. and learned Member for Dewsbury (Mr. Serjeant Simon), and get rid of the Bankruptcy Law altogether. The Law of Bankruptcy was justified on two grounds, the first of which consisted of an affirmation that it was necessary in order to secure equal distribution among creditors. The second ground upon which the policy of the existing Bankruptcy Law had been defended was, that all legislation on 583 the subject must protect debtors in so far as they were entitled to protection. He admitted the justice of that view; because, as was well known, the tendency of bankruptcy legislation in former times was to deal with debtors in much too lenient a point of view. He could not conceive that there was any practical injustice in leaving a man who had become bankrupt to fight out his case with his creditors, instead of making it a fixed rule of law that certain proceedings should be taken in every case. What was necessary to be done in order to protect honest traders who were driven into bankruptcy was to pass such a law as would put an end to the reckless trading which was at present carried on by men in defiance of a law so loosely made as that it did not, and could not, touch them. Independent of the general question, and of the merits of the Bill itself, he objected to the fact that a measure of this kind, introduced in "another place," and dealing with an important commercial question, had been brought down to the House of Commons—a great number of whose Members were commercial men—at so late a period of the Session, when it would not be possible to discuss it fully; containing, as it did, 159 clauses, which, if the second reading were agreed to, would have to be considered in Committee in the beginning of August, when legal Members of the House would either be out of town or too jaded to pay proper attention to the subject. As that would be a very undesirable state of affairs, he seconded the Amendment. A Bill of the kind could not, if passed, receive the approval of the commercial world, the Legal Profession, or the general public. If, however, it was to be pressed, he trusted that ample opportunity would be given for the discussion of its details in Committee.
§ Amendment proposed, to leave out the word "now," and at the end of the Question to add the words "upon this day three months."—(Mr. Serjeant Simon.)
§ Question proposed, "That the word 'now' stand part of the Question."
§ MR. SAMPSON LLOYD
said, that notwithstanding the conciliatory speech of the hon. and learned Attorney General, he could not but agree in the view 584 of the hon. and learned Member who had just addressed the House (Mr. Osborne Morgan), that a Bill so important as the one before the House ought not to be presented to the House of Commons so late in the Session. He must also be allowed to express his regret that the Government had not seen fit to introduce the Bill in the first instance to the House of Commons, where practical knowledge of the subject was so much greater than it was in the House of Lords. The Commission which had reported upon it comprised many very eminent names, but purely those of professional men; but if a few of another class had been on it, its recommendations might not have commanded less confidence. As to the Bill itself, if the hon. and learned Gentleman the Attorney General was right in saying that it followed the principles of the Act of 1869—and he (Mr. Sampson Lloyd) was glad to hear him say so—he thought the better way of dealing with the subject would have been to bring in a short amending Bill to remove the blots from that measure, instead of embarking upon sweeping legislation of this kind, and disturbing the enormous mass of decisions which had been arrived at on the interpretations of the provisions of the existing Act, thereby confusing the mercantile world. It was preposterous to proceed with a Bill of 159 clauses at that period of the Session. He should also have been glad if it had been stated further that bankruptcy legislation for England in the future was to follow the lines of the Act passed for Scotland in 1856—an Act which secured speed and economy in the winding up of bankrupt estates. What he feared was, that if the Bill were to pass as it stood at present it would lead to considerably increased expense in administration, besides causing unnecessary litigation in establishing the principles of the law upon this new basis. He quite agreed with the hon. and learned Attorney General in thinking that the Bill was opposed by professional trustees and accountants, and he shared the objection which the hon. and learned Gentleman had to such form of opposition; but he also knew that it was strongly objected to by a large section of the commercial class, which had a right to be heard on a question of that kind. The question, after all, came to 585 be, what they were to do with the Bill at the period of the Session at which they had arrived? He did not think that the Bill should be rejected altogether. It might be amended, so as to evolve order out of the present chaos; and if the Government would only send it to a Select Committee to have it thoroughly examined, with a view to the evolution of wise and beneficial legislation, he should be inclined to support the second reading of the Bill.
§ MR. NORWOOD
could not join in the wholesale denunciation of the Act of 1869, the failure of which was mainly due to the fact that too much power was placed in the hands of trustees. He was of opinion that the Act did not deserve all the blame and the abuse that had been heaped upon it. In many cases the Act worked well enough. It was based upon the rule that creditors should alone decide as to the way in which the assets of bankrupts should be realized and distributed, either by liquidation, bankruptcy, or arrangement. He saw no reason why there should be any interference with that principle, unless it could be shown that a bankrupt had been guilty of fraud, or some other offence against the law as it affected bankrupts. The real fault of the Act, as he had said, was that it gave too much power to the trustees, whereas the Bill now submitted was too much over laden with officialism. If they were to have a new Bankruptcy Act, it ought to be as simple as possible. He would admit that the Bill afforded a basis for improving the law; but while saying that he could not help feeling that there was great force in the observations which had been made as to the late period of the Session at which the Bill had been brought down to the House from "another place" in which it had been introduced. He thought they could do as well without a Bankruptcy Law as with one providing that insolvent debtors were prevented from giving preference to particular creditors. He did not consider there would be sufficient time to pass the Bill that Session, seeing that, in all probability, it would lead to a great deal of contention, in addition to which it bristled with too many difficulties. The Reports of the Controller in Bankruptcy had frequently been referred to; but, with all respect to that gentleman, he 586 took an extreme view of the magnitude of his office. It was a great pity the Government had adopted the form of a Code. They would be all thankful to have a Code like the Merchant Shipping; but he would remind the House that the present Act was a Code. The expense inflicted on the mercantile community was very great. For the first two years after the passing of the Act there was constant litigation as to the interpretation to be placed on words; and here, in this Bill, the Government was about to express the same thing in different language. The commercial community felt so strongly as to the necessity of having an amending Act that they had gone to the trouble of drafting an amending Act. He had the Bill in his hands. It was a short measure, and they believed it would rectify all the evils under the present law. He thought that frequent applications to the Court would be fraught with delay and a cloak for fraud. On one point he desired to be most emphatic. If they were to have a Bankruptcy Bill at all, the existing Act ought to form the basis of a simple and good Bankruptcy Law; and if, under the Judicature Act, they were to have a new Judge appointed, he hoped he would be a strong one, a good commercial lawyer, who could take up a question with commercial knowledge, and let him devote his time entirely to his duties as Bankruptcy Judge, and not be a kind of Jack-of-all-trades on the Bench, having his time frittered away by being sent on Circuit. If such a person were appointed, that would, in itself, be a great improvement, and an important step would be taken. Take it altogether, he did not regard the present law as a bad law; but he thought they would have a worse Bill if they adopted the proposal of the Government. He thought it was too late in the Session to enter into the question in a proper and calm spirit, and he thought it would be wise on the part of the Government to withdraw the Bill.
§ MR. GREGORY
supported the Bill on the ground that a change was most desirable, and because he thought the measure went in the right direction. In his opinion, the Government, in framing the Bill, might have gone a little further; for the Bankruptcy Court, as it now existed, ought to be done away with altogether, and the business of 587 Bankruptcy spread over the Courts of the country. The present system of liquidation by arrangement had led to a good deal of touting for proxies; and the fact was that the result of the meeting of creditors was, generally, a foregone conclusion. He, therefore, cordially agreed in that which was considered one of the main features of the Bill—the substitution of deeds of arrangement for the strange system—if it could be called a system—which they had of liquidation by arrangement. Another matter of some importance was the question of shortening the period for the recovery of debts in Bankruptcy. At present, anyone who chose to sleep on his rights for six years could come in and prove his debts. He did not think it was right. He would venture to propose that that period should be shortened to four years at least. He thought the general principle of a period of six years for the recovery of debts was too long. With one or two exceptions, as to which he should move Amendments, however, he would give his support to the Bill. As to the question of the introduction of the Bill at that late period of the Session, a suggestion had been made that the Bill should be referred to a Select Committtee. He thought that would be a very desirable course, if they could depend on the deliberations of the Select Committee being acceptable to the House when the Bill was returned to it. If the House was content to accept the Bill and take it as it came out of the Committee, he did not know that any better course could be taken. If hon. Members would put their Amendments on the Paper between now and the Motion to go into Committee, the House would then know what Amendments were to be proposed. He thought, in that way, that some arrangement might be made which would materially facilitate the passing of the Bill into law.
§ SIR JOSEPH M'KENNA
also thought the Bill was a considerable step in the right direction. No doubt, it required a certain amount of revision; but that could be done by a Committee of the Whole House, and without the ordeal of a Select Committee. He hoped the Bill would be read a second time; he believed it had been already carefully revised in "another place" and could be well dealt with this Session; and, notwithstanding differences of opinion at 588 present, he thought it would be possible without much delay to get the House to agree to a settlement of the points now in dispute.
§ MR. ANDERSON
said, that he was in Parliament when the present Bankruptcy Act was passed, and he very well remembered taking a considerable part in it; because one of the main objects of Sir Robert Collier, in promoting the Act, was to adopt, to a large extent, the system which then existed in Scotland. He (Mr. Anderson) believed that through his knowledge of the Scotch law he was of some assistance to Sir Robert Collier in carrying out that object, and that the Act then passed was, as far as it went, a very good Act. In some respects it was quite an improvement on the Scotch system, and in other points it adopted the Scotch system; but where it failed and broke down was in management, because they had not been able to import Scotch economy, Scotch management, and Scotch lawyers' charges along with the Scotch system. It was in the matter of cost principally that the thing had broken down in England. In Scotland, very often, it was one of the creditors who was trustee, and the estate was therefore managed economically, and with the interest of the creditors at heart. On the other hand, a bankrupt estate in England was always handed over to professional accountants; and when the new Act was passed the whole thing was simply handed over to the same lot of solicitors and accountants who had practical charge of affairs under the old Act. It was not likely that these men would forego any of their charges, or that they would in any way try to make the new system more economical than the old one was. That was how the new Act had broken down; and in this Bill he saw no trace of any intention to improve that state of affairs. They were still to have a scale of charges arranged by lawyers, for the benefit of lawyers, in which the interest of the public was wholly ignored. He had no hesitation in saying that the charges in the Bankruptcy Court all through, both the lawyers' charges and the accountants' charges, were neither more nor less than an infamous legalized robbery of everybody, and nothing better. Until the House could adopt some system of reducing these charges and fees, and putting it in the power of somebody else than mere 589 lawyers to say what fees were to be, they would not make the system one whit better than it was at present. He was glad to see so many Professional Gentlemen were present to hear what he had to say upon that matter; and he would repeat that the charges were infamously high, and unless they were brought down to something like the level of the Scotch charges there would be no benefit from the Bill. Even with these excessive charges, people who paid them did not get justice. Look, for instance, at the London Bankruptcy Court. The system there had been reduced to one of Registrars. Most of the work was done by those gentlemen, who were a notoriously weak lot of Judges, of no professional standing, and unable to give satisfactory judgments; and if a case was appealed, it went, at least in theory, from a Registrar to the Chief Judge in Bankruptcy. Unfortunately, however, in practice the Chief Judge did not really hear the appeal, which came again before one of these weak Registrars, who simply changed his title for the occasion, and sat as Chief Judge to hear an appeal from a brother Registrar no weaker than himself. That, he thought, was a very improper system; and although, the hon. Member for East Sussex (Mr. Gregory) had suggested various Amendments, he did not think that the Bill could be sufficiently amended to make it satisfactory in that particular. He (Mr. Anderson) did not wish to discuss the details of the measure, or to go largely into the subject with which it dealt; but he did not believe it possible, at that late period of the Session, to make the Bill a satisfactory one. There was a great deal to amend, which would involve an immense amount of discussion. Take, for instance, the Schedule describing a trader. It was copied from the last Act, and was about the lamest and most wretched definition of a trader that ever was heard of. Look at the trades which were put in, and the trades which were left out. Brickmakers, builders, carpenters, and lime-burners were amongst those put in. Those were four trades connected with building; but if four trades connected with building ought to be put in, why not all trades connected with building? Before there could be any lime to burn, it must be taken from a quarry, and yet quarry-owners were 590 not included in the Schedule. Neither were plasterers, plumbers, slaters, nor glaziers, all of whom were connected with building. That was an absurd anomaly. There was another. Cow-keepers and market gardeners were specially mentioned as traders; but farmers and graziers were as expressly excluded. If the cowkeepers were put in, why should the graziers be left out; or if the market gardener was to be put in, why should the farmer be left out? Then, when he came to the manufacturers, he found the Bill just as lame. The only kind of manufacturer who was included in the description of traders was the maker of alum. He would like to ask what there was of a special character in the making of alum to constitute the persons engaged in that business traders more than any other manufacturers? All other manufacturers could only come into the Bill under the vague term of—
§ MR. SPEAKER,
interposing, said, he was bound to point out that the House was now discussing the second reading of the Bill, and the hon. Member's remarks referred to rather minute details, which might be reserved for Committee.
§ MR. ANDERSON
replied, that he thought he was only following the practice which had been indulged in by previous speakers of showing the reasons why he thought it impossible for the House to deal with the Bill at this late period. There were many matters of minute detail which had not been attended to in the Bill. The measure was intended to amend the existing Act; but it ought to amend it thoroughly, if they were now to deal with it at all; and he was simply endeavouring to show by illustration that the Bill did not attempt to amend some of the absurd anomalies in the old law, and that, at that late period of the Session, he did not see how it was possible to make it do so. He would, however, refrain, according to the ruling of Mr. Speaker, from saying anything more about details. The hon. Member for East Sussex suggested that the Bill might with advantage be referred to a Select Committee; but, in his (Mr. Anderson's) opinion, the lateness of the Session was also a bar to dealing with a measure of such magnitude in that manner. If that course were taken, 591 there would be no prospect of having the Bill thoroughly and fairly discussed; and he recommended, for his own part, the hon. and learned Attorney General to be content with having had that discussion, to withdraw the Bill, and to re-introduce it at the beginning of next Session, when it might be referred to a Select Committee, and when it might be possible to come to a satisfactory solution. But at present it was not possible.
§ MR. MUNTZ
agreed in one respect with the hon. Member for Glasgow (Mr. Anderson)—he could not see any prospect of the Bill being passed this Session in a satisfactory manner. It was, no doubt, much needed and anxiously desired; but, without a longer time than seemed available, there was little chance of its being properly considered. Therefore, he trusted that no attempt would be made to go further with it than to refer it to a Select Committee. If the Government would promise to adopt that course, he thought the second reading might be allowed. He considered that, of late years, the tendency of the law had been to do too much for the debtor and too little for the creditor; too much for the dishonest debtor at the expense of the honest creditor; and it was too much in favour of the rogue instead of the honest debtor. Since the passing of the Bankruptcy Act of 1825, they had been going on from bad to worse. That Act was, in his opinion, the most just they had had yet. Under it a bankrupt could only be set at liberty by consent of two-thirds of the amount, or three-fourths of the number of his creditors. The great want under that Act had been a Registrar or Judge in Bankruptcy. All had no w been altered, and dishonest rogues had facilities for cheating their creditors in a scandalous manner. There should be power to stop this, and to force dishonest bankrupts by thorough judicial examination to disgorge their property. There need be no fear for honest debtors. He had never known an honest man who had failed through misfortune who was not treated with leniency, and even with generosity, by his creditors. But the law looked after the rogue. What was necessary was that the proceedings in Bankruptcy should be public. He advocated the reference of the Bill to a Select Committee, which would be best qualified to deal with it and enable it 592 to be passed during the present Session. Some measure of reform was absolutely necessary, and he earnestly trusted that the Government would accept the course which had been suggested to them.
§ MR. RATHBONE
thought that the continuance of the operation of the Bankruptcy Act as it at present stood would bring serious harm to the commercial prosperity of this country. No measure could injure the interests of this country more than a Bill which gave sanction to the evils which were found to prevail in connection with the administration of the Bankruptcy Law. Unfortunately, men, in the rush and haste of life, took their morality from the law; and the law was apt to become, in men's minds, an assertion of what was moral with regard to their actions in certain cases. A Bill of the character and importance of this measure, therefore, ought to be proceeded with with great care and caution; and, in his opinion, it would be impossible, with the Business which the House had before it, at this period of the Session, to give that attention to it which it deserved. But there was a mode by which they might get, practically, the advantage of all the knowledge and experience of those who felt an interest and had had experience in the matter; and, moreover, to obtain what they required, they might simply carry out the recommendations of the Committee which sat last year upon the question of Public Business. There was also the proposal to send the Bill to a Select Committee. He did not, of course, suggest that a Committee should be established consisting of 7 or 14 Members, because there was no reason why such a Committee should not consist of all the practical men of experience in the House who had had anything to do with the operation and administration of the Bankruptcy Act; and it was perfectly possible for a Select Committee to sit at the same time as the other General Committee of the House, as there would be, in future, a good deal of Business that would not require the attendance of a large number of hon. Members. And if a Committee were so constituted, at the same time as the Committee of the Whole House was sitting, the time of hon. Members would not be wasted. He could not but think that that would be a very good arrangement, because, if necessary, the Bill could afterwards 593 proceed through the Committee of the Whole House. He did not, however, think that it would be necessary or desirable that the Bill should go to the Committee after having been dealt with by the Select Committee. If Amendments were required, after the Bill had been before the Committee upstairs, they would still have an opportunity of making them on Report. He ventured to think that that suggestion was worthy of the consideration of the House, and was practically the only one which it was desirable to adopt.
§ SIR HENRY JACKSON
said, that there were many circumstances in the law as it now stood which he would be glad to see altered, and as to which no time should be lost in devising some remedy for the serious evils now existing. The principal cause of the present scandals was the facilities which fraudulent debtors had of making compositions and settlements by arrangement. Fraudulent debts were concocted to cheat the real creditors, and the persons who received the assets in many cases never really accounted for them, or, at least, delayed long to do so. It was perfectly notorious that a clever solicitor and a clever accountant could devise a plan which could be so cut-and-dried before the general meeting that a protesting creditor would be altogether powerless. There were two or three ways of dealing with the difficulty. The whole of the law might be re-considered, or the House might determine which of the two principles of bankruptcy administration was the more desirable—that was to say, it might choose between the principle of former Acts and that of the Act of the year 1869. The question was, whether the whole matter should be left in the hands of the Court or of the creditor? for both plans had been tried, and neither of them had worked satisfactorily. Of course, no one liked to lose money, and as the Bankruptcy proceedings were begun only when a disaster was established it was impossible to please everyone. Now, the officers of the Court of Bankruptcy had satisfied the Legal Officers of the Government as to the reality of the scandal arising from the Act of 1869, and the Government had proposed a plan to remedy the most crying of those evils. He (Sir Henry Jackson), however, regretted that they had combined in one Bill the 594 changes they desired to make, as well as the re-enactment of the existing law. However, he believed the Bill of the Government was the best they could bring forward, taking into consideration the existing principle of the law of the administration of Bankruptcy which had received the sanction of Parliament. The remedy they proposed was to increase the fetters put upon the obnoxious practices of liquidation and composition by arrangement, and the Bill would probably prevent a great many of those scandals. Lord Westbury's Act of 1861 had given great facilities for such frauds; and hon. Members might remember that just before the passing of an Act of Amendment in 1868 there was a great rush of debtors anxious to avail themselves of the old law. In the present case, if the Bill became law, he had no doubt that the result would be the same as in 1868. In the same way, the provisions of the Act as to the laxity and delay of trustees in regard to their accounts would, in all probability, have a highly beneficial effect. Had the Bill been confined to these objects of amending the present law, it could easily have been passed. Harm it could not have done, good it might have done; and next Session they could have dealt with the work of consolidation. Instead, however, of doing that, the Government had made the mistake of passing an ambitious Bill through the other House at an early period of the Session, and had not brought it on for consideration in the House of Commons till July 16, although it re-opened the whole question as it was settled by the Act of 1869. The House would have had no difficulty in passing a measure of amendment, the good effect of which would have been seen next Session; and, had it done so, it would have paved the way for more complete legislation. He thought that the Bill ought to be re-committed pro formâ, and brought back again without its clauses of consolidation. If that were done, it would not matter by what kind of Committee it was discussed, as it would involve no principle, and could be passed easily. He was very anxious indeed to see something done, and the necessity for something to be done was urgent. Although it was a question of only a few months, let them do something at once, for the amount of bad debts being in- 595 curred every year was very serious; and he would put it to the hon. and learned Attorney General whether he could not now re-cast this Bill, so as to leave until next year all that was merely consolidation, and confine the Bill to those points in which the Government knew they were merely amending the existing law? If the Government would do that, he believed that no one would object to it, and they would have the satisfaction of knowing that during the Session they had done some little practical work, for which the commercial community would be grateful.
§ THE CHANCELLOR OF THE EXCHEQUER
said, he would not address the House upon the merits of any of the questions raised by the previous speakers, though he felt that it was a subject of the highest importance to the mercantile community that the Law of Bankruptcy should be amended, and it was desirable to deal, if practicable, with it that Session. There seemed to be a very general consensus of opinion in the House that the time had come when it was desirable to legislate in this matter, and that the Bill presented, at all events, a good opening and foundation for a satisfactory measure. The only question, therefore, was, whether they had time and means to work the Bill through in the ordinary way, and produce a measure which would be satisfactory. He owned that, in consequence of the pressure of other Business, it had been found impossible to bring on the Bill earlier. If a Bill of 159 clauses was to be discussed in the usual way in Committee of the Whole House, and with the fullness and freedom that the importance of the different clauses demanded, it was highly improbable that they would be able to get the Bill through in the present Session. That would be a very disappointing result, not only to the House, but to the country; for this was, undoubtedly, a measure which had been for a long time desired in many quarters. Now came the question, whether they could get through the work before them. There was an old proverb, that "Where there is a will there is a way," and as he believed there was seriously a will on the part of the House, they would endeavour to see if there was a way. Two or three suggestions had been made, and the hon. Member for Liverpool (Mr. Rathbone) 596 had offered one worthy of the consideration of the House—namely, to refer the Bill, not merely to a Select Committee of 15 or 20 Members to go through the measure, which should thereafter go through the ordeal of Committee of the Whole House, but to refer it to some larger Committee, so as to include, as far as possible, all those Members likely to take a leading part in the discussion, and to allow that Committee to deal freely with it, and put it into such a shape as they thought likely to commend it to the House; and if the result of the labours of that Committee should justify such a step, but not otherwise, it would be perfectly possible, and quite within the Rules of the House, that a Motion should be made when the Bill came down from that Committee to negative the ordinary stage of the Committee of the Whole House, and to order that the Bill, amended by the Committee, should be taken into consideration on a day named. If so taken into consideration, it would be open to Members who desired to do so to move Amendments upon the Report. It would be competent, on the other hand, if the result of the labours of the Committee were not satisfactory, and hon. Members thought it desirable that the Bill should go through Committee of the Whole House, to negative the proposal to report it without that stage. But if the Committee were well chosen, and attended by Gentlemen qualified to take part in the discussion, they would be rendering a very great service to the country and the House by relieving them of this labour. He was heartily disposed, on the part of the Government, if the Bill were read a second time, to agree to the proposal to refer it to a Committee in the manner he had described, and steps would be taken to appoint that Committee as soon as possible.
§ SIR HENRY JAMES
thought that, before this serious course was taken, Notice should have been given, so that the Leaders of the House might have been present to consider it. The Government ought not to have waited for a chance suggestion of such a course before determining to recommend it. This was a matter of principle, and one which largely affected the practice and rights of the House. It was a matter of grave doubt whether they should adopt this bureau system at all. Viewed 597 rightly, it involved a resignation by the House of some of its responsibilities. On that subject there might very well be considerable discussion; but no Notice had been given of the course which the Government now intended to take. He did not wish to throw any obstacle in the way of the Bill, but only wished the House to perceive the position in which it stood. Possibly, it might be wise, ultimately, to adopt some such practices, looking to the length of time some Bills had lately taken in Committee; but it ought not to have been left till now to announce the determination to take such a course in reference to the Bill, without leaving time adequately to consider the propriety of setting up such a precedent. He also thought the Government should take the full responsibility of such a step, if it were proposed. If the demand for the Bill were so great as had been represented, the Bill ought to have come on for second reading before the 16th of July; and he did not see that, because of the lateness of the Session, when the Bill was brought before them, the House ought now to be called upon to pass an insufficient Bill, or to delegate their powers in Committee to a Select Committee. The question which had now arisen was a very broad one, and ought not to be discussed at the end of a Sitting.
MR. ASSHETON CROSS
presumed that the object of every hon. Member was not to pass as many measures as possible, but to pass measures as perfect as possible; and, that being so, the only question was in what way the Bill before the House could be improved, so as to get the best measure on the subject of Bankruptcy that could be had. In order to effect that object, the course suggested from the other side of the House seemed to him the best in the circumstances. But the general question of delegating any of the powers of the House to Committee was not now before them. He believed that a large Select Committee would do the work well; but the immediate question before the House was that of the second reading of the Bill, after which the nomination of the Committee might be discussed. He hoped that they would consent to read the Bill a second time.
§ MR. W. E. FORSTER
said, he understood, from what had fallen from his hon. and learned Friend behind him 598 (Mr. Serjeant Simon), that he intended to withdraw his Amendment; that there was, therefore, a general agreement in the House to read the Bill a second time; and that they were now considering what was to be done after they had assented to the second reading. Nobody could deny the great importance of the suggestion of the hon. Member for Liverpool (Mr. Rathbone) in reference to the further stage of the Bill. He (Mr. W. E. Forster) thought, however, that it was a Bill on which the suggestion of the Committee of last year on Public Business could fitly and conveniently be tried. Nothing could be clearer than that the Bill could not be passed in the usual way this Session, and he thought the Government would have done wisely to accept the suggestion of his hon. and learned Friend the Member for Coventry (Sir Henry Jackson); but as the Government did not seem disposed to accept it, they had only the alternative of adopting the other suggestion of the hon. Member for Liverpool, or of seeing the Bill fail of passing this year. No doubt, the proposal involved certain novelties in their procedure. But he was not sure that the suggestion did not point to a very great and desirable reform that would greatly relieve Parliament in its labours. By adopting that course in reference to this Bill they were not pledged to its repetition in other cases, or to the giving up of any of their functions. He did not object to the experiment of a large Committee sitting upstairs being tried in what seemed to be a good case for it, and when there was a general desire to effect legislation. He hoped that the Government would take care to bring on the appointment of the Committee at a reasonable time, and with such notice as would enable the matter to be properly discussed by the House. It would not, he thought, be possible on the appointment of the Committee to pledge the House not to consider the measure in detail; but, still, it would be very unfair to get Members to give up their time to such a Committee, unless there was as much of an understanding as it was possible to obtain that such would be the result; and that could not be arrived at without the Government affording a full opportunity for the consideration of the proposal.
§ MR. A. MARTEN
pointed out that if, after the second reading of the Bill, the 599 House assented to the proposal of the hon. Member for Liverpool (Mr. Rathbone), it would have ample opportunity, when the names of the Members of the Committee were proposed, of saying how it should be constituted. Again, after the Committee had concluded its labours, it would be open to his right hon. Friend the Chancellor of the Exchequer, or any other hon. Member, to move that the Bill be considered on the Report without passing through a Committee of the Whole House. A good precedent for the course recommended by the hon. Member for Liverpool was furnished by the Committee of last year on Parliamentary and Municipal Registration, of which he (Mr. A. Marten) was Chairman. Three Bills on that subject were submitted to the Select Committee, and the Committee in the result produced a Consolidated Bill, which passed through that and the other House entirely unaltered. In that case the stage of Committee of the Whole House was gone through; but as the Bill was without amendment accepted in that stage on the recommendation of the Select Committee, there was no other stage before the third reading. There would, he held, be little difficulty in adopting the present Bill as a Consolidation Bill; because the parts of it which consisted of amendments in the law would be clearly distinguished from the rest of the measure, which re-enacted the existing law.
§ MR. MUNDELLA
believed it was the general wish of the House that the Bill should be read a second time, and that a Committee should be appointed of the kind indicated by the hon. Member for Liverpool (Mr. Rathbone). This was a very good opportunity of trying a great and important experiment in the progress of legislation, which might be fraught with important results in future Parliaments. He presumed that it would be competent for the Committee, if it was found impossible this year to deal satisfactorily with the Consolidation Clauses of the Bill, to deal only with the new provisions. Would it not be well to refer also the second Bankruptcy Bill—that of the hon. Gentleman the Member for Plymouth (Mr. Sampson Lloyd)—before the House, to the same Committee? That Bill had been favourably received by the trading community.
§ MR. SERJEANT SIMON
also urged that the two Bills should be sent to the same Committee. He would withdraw his Amendment.
§ MR. MORLEY
felt it to be only just to the Government to say, in reply to what had fallen from the hon. and learned Member for Taunton (Sir Henry James), that the proposal for a Committee had orginated on his side and met with the general concurrence of both sides of the House. He was quite sure he expressed the sentiments of nine-tenths of the Members of the House who were interested in the question of Bankruptcy, when he said that the proposal, if practicable, would afford a most satisfactory mode of securing this Bill. It was most desirable that the Bill should pass during the present Session, as it would get rid of many of the most flagrant abuses in the practice of Bankruptcy. He considered it would be a great calamity to the commercial classes, if that portion of the Bill which did away with liquidation by arrangement were not secured.
§ MR. BARING
desired to express his entire concurrence in what had just been said. It would be a serious evil if legislation were put off till next year, when there was so much likelihood of instant financial trouble.
§ MR. DILLWYN
feared, at that particular period of the Session, that the experiment of appointing a grand Committee would not have a chance of receiving a fair trial in this case. He considered, therefore, it would be better to postpone the Bill. He thought they had better be satisfied with the present law than legislate in a hurry at the end of the Session.
§ SIR EDMUND LECHMERE
urged the Government to postpone the Bill to a future year, and then to appoint, at an earlier period of the Session, a Select Committee, so as to have that great question thoroughly thrashed out.
§ Amendment, by leave, withdrawn.
§ Main Question proposed, "That the Bill be now read a second time."
§ SIR CHARLES W. DILKE
thought the House ought seriously to consider whether the proposal of the hon. Member for Liverpool (Mr. Rathbone) ought to be entertained so near the close of the Session. The suggestion now made by 601 that hon. Member had been brought before the Committee on Public Business, and did not meet with favour. The present was not the class of Bill which it was proposed by the Public Business Committee thus to treat, and he objected to its being so dealt with.
§ MR. BIGGAR
thought the proposal was so serious that time should be taken to consider it. He, therefore, moved the adjournment of the debate.
§ Motion made, and Question proposed, "That the Debate be now adjourned."—(Mr. Biggar.)
§ THE CHANCELLOR OF THE EXCHEQUER
earnestly hoped that at that hour (25 minutes to 6) they would at least be allowed to read the Bill a second time. It would still remain with the House to decide at its pleasure what course it would take in regard to the appointment of the Select Committee.
§ MR. PARNELL
urged that as the proposal made by the hon. Member for Liverpool (Mr. Rathbone) and accepted by the Chancellor of the Exchequer would, if adopted, establish a precedent which might hereafter be used seriously to cripple the power of a minority, the House ought not hastily to assent to the second reading of the Bill.
§ MR. MORLEY
rose to Order, and asked, whether the Question before the House was not that the Bill be now read a second time, and not the proposition of the hon. Member for Liverpool (Mr. Rathbone)?
§ MR. SPEAKER
said, the immediate Question before the House was that the debate be now adjourned. The hon. Member for Meath was, therefore, in Order in his observations.
§ MR. PARNELL
feared the principle of the proposal, which was all very well for a Bankruptcy Bill, if adopted, would be applied to other measures, such as Irish Coercion Bills. The hon. Member was speaking, when—
§ Debate adjourned till To-morrow.