BANKRUPTCY AND INSOLVENCY (SCOTLAND) BILL—PETITION. (Hansard, 2 May 1854)

LORD BROUGHAM

said, he believed that it would very much astonish the mercantile men of Scotland to hear that the Convention of the Royal Burghs—a very respectable body in its own sphere, without doubt—was in any sense of the word to be taken as representing the mercantile community of that country. These petitioners stated that in Scotland the bankruptcy laws had always proceeded on the principle of allowing the creditors, as alone interested in the matter, to have the whole management and conduct of each bankruptcy. So it was in England, also, till the Act was passed to which he (Lord Brougham) had the good fortune to obtain the assent of their Lordships in 1831. Up to that time the whole management of bankruptcies was in the hands of the creditors, subject, however (and the exception was most material), to the control of the Court; but for which control no lawyer, and, he ventured to say, no trader, in the country, could entertain the slightest doubt that the greatest abuses possible must have occurred, to the injury of the creditor much more than of the bankrupt. By the old system the creditors had the choice of the trade assignee under the Commission, and through the assignee they had the entire control of the funds, and, to a certain degree, the control also of the procedure before the Judge. He would state, for the information of the Convention of Royal Burghs, and not of the merchants of Scotland, because the latter were fully aware of it already, what was the state of things when the bankrupt's affairs were under the management of the creditors, and notwithstanding the wholesome check from the Court. Why, no sooner was the system of appointing an official assignee to co-operate with the trade assignee put in force, than a sum of between 2,000,000l. and upwards was, within a very short space of time, collected and distributed among the creditors, which money had lain, from the supineness of the trade assignees—that was to say, from the supineness of the creditors themselves in the management of their own affairs—in the hands of different bankers to the benefit of the bankers, but 1175 to the loss of the creditors. A member of a great London banking firm had stated in his place in Parliament that his house alone would lose a profit of between 6,000l. and 7,000l. a year by the Bill of 1831 then under discussion in that House because the funds of bankrupts, which, by the negligence of the assignees, used to be allowed to lie in the hands of the banker, fructifying to his advantage, would, under the improved system, be speedily distributed among those who were entitled to them. In fact, in consequence of the new procedure, many bankruptcies were altogether superseded, it being found that 20s. in the pound could be obtained out of the effects for the creditors. When the facts of the case came to be thoroughly known by those who had petitioned that day and yesterday, as they were known by the various mercantile bodies whose petitions he (Lord Brougham) had presented last Session, and this Session also, he hoped that they would open their minds to a more favourable reception of the measure; the object of which had, he must say, been loosely and inaccurately stated by his noble and learned Friend on the woolsack, yesterday, to be to abolish at once the bankruptcy law now existing in Scotland, and to substitute for it the law of England, whereas it preserved the Scotch law, and only introduced those improvements in procedure which had been found so beneficial in England.