BANKRUPTCY 
 
 LEGISLATION. 
 
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20 Wellington Street East, 
 
 Toronto, 21st February, 1885. 
 HENRY W. DARLING, ESQ., 
 
 President of the Board of Trade of t/ie Citji of Toronto, 
 My Dear Mr. Darlin(i, — 
 
 I shall offer no apology or excuse for addressing to you 
 this pamphlet upon Bankruptcy Legislation, as our long and 
 intimate acquaintance has evidenced the interest you feel, and the 
 laborious care you uniformly take — first, to study, and then to 
 advocate the adoption of such measures as are beneficial to 
 those whose interests you have so often been chosen to protect. 
 
 My use of the pen, at best, is but feeble, and my hesitancy to 
 address you as the representative of the Board of Trade only over- 
 come, by a profound belief in the truth of the propositions I make. 
 May I venture to hope that my treatment of them is worthy of 
 your study and advocacy. 
 
 What I wish to bring about is the contemplation of Insolvency 
 Law as a measure more calculated to protect the creditor than the 
 debtor — in affording the former much wider and more practical 
 means of detecting and punishing fraud than the absence of such 
 law permits, and at the same time securing to the latter this glimmer 
 of light amidst the wreck of failure and distress ; that integrity and 
 honesty (established by such evidence as intelligent, honest men 
 should be ?h\e to produce), will open an avenue of escape from the 
 positive slavery of irretrievable debt ; and I cannot in more forcible 
 language paint this distinction than by quoting these words by an 
 old statesman : 
 
 " It is a distinction to be plainly set and persisted in throughout, 
 — between misfortune and crime, between honest poverty and fraud, 
 between contumacious resistance of a just demand, and innocent — 
 because unavoidable — inability to satisfy it, between the want of 
 power and the want of will to do what every honest man does freely 
 of his own accord." 
 
 Yours truly, 
 
 E. R. C. CLARKSON. 
 
 55894 
 
BANKRUPTCY LEGISLATION. 
 
 The law of bankruptcy is founded upon the principle — that when 
 a man becomes insolvent — the property then remaining to him, 
 rightfully belongs to his creditors, and should be distributed 
 amongst them towards satisfaction of their claims — the debtor being 
 r( leased from future liability in respect of his debts — providing his 
 i insolvency is the result of circumstances beyond his control, and 
 ' NOT the result of extravagance, reckless trading, or dishonest 
 motives. 
 
 This law, evolved out of the criminal code, in answer to the 
 necessities of a widely spread industrial life, and in application of 
 I the purest, most abstract, and profound principles of legal science to 
 the sudden and perplexing exigencies of trade, is intended as a means 
 of protection to debtor antl creditor alike — to relieve the former from 
 pressure, which, by his own efforts he would not, in all human pro- 
 bability, be likely to overcome — to secure to the latter immediate 
 control of the debtor's estate, to avoid unjust preferences, and pre- 
 vent the waste which ensues when creditors are compelled to pro- 
 tect their interests through the ordinary channels of the common 
 law. 
 
 The effectiveness of this measure, as a whole, depends, like all other 
 laws, upon the effectiveness of each of its main constituent parts. If 
 the means adopted for the utilization of any new law, be inadequate, 
 that law, working lamely, goes but partially into effect, and in no 
 instance can this truth be said to have appUed with greater force, 
 than in reference to bankruptcy legislation. The costly experience 
 of years has provided us with a practical, exact and beneficial sys- 
 tem for the equitable distribution of insolvent estates, in the bill 
 lately revised and improved by the special committees of the 
 Boards of Trade, but in regard to the means adopted for the release 
 of the debtor, we feel that our legislation in the past has been un- 
 satisfactory, uDJust, and largely calculated to degrade the general 
 tone of moral sentiment and energy. 
 
 It cannot be denied that some regular system is required for the 
 equitable distribution of insolvent debtors' estates. The want of it 
 is subversive of fair play and common justice — Fraudulent and un- 
 just preferences, trumped up claims, snap judgments and scheming 
 unparalleled, is now so common, that the public voice is raised in 
 condemnation of these practices both at home and abroad. And 
 even where estates are transferred to trustees for liquidation in the 
 
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 interosts of creditors geuernlly, wc tiiul that tlic lack of direct con- 
 troi by creditors teiiils to a loose iiiid irregnhir iidministratioii of 
 these trusts. The trustee has, practically, absolute control — this iimy 
 be beneficially exercised, and it may not, but it is an ill advised policy 
 which allows any one to assume a position of public trust, without 
 recognized and regular rules tor his guidance and a dctiued respon 
 sibility for his actions — as matters are — the ojiportuuities for the 
 procuring of wrong are manil'old. The trusteeas a rule isthe appointee 
 of the bankrupt, and what injustice may be wrought by a preju- 
 diced trustee in the admission of fictitious claims, the improper 
 scheduling of assets, and the sale of the same to meet the wishes of 
 the debtor, without the necessity of adopting the views of creditors, 
 who arc the beneficiaries, and whose advice is necessary to the 
 obtaining of satisfactory liquidation ; I leave the public to judge. 
 
 H.Jviug thus briefly referred to that part of bankruptcy law 
 whicli treats of the disposition of the debtor's estate, let us turn to 
 the question of discharge from debt. I have never hesitated to ex- ' 
 press my firm conviction, a conviction based upon many years' 
 experience obtained as a disinterested official occupying an inde- 
 pendent position between honest and dishonest insolvents and ex- 
 acting and fair-minded creditors, — witnessing again and again the 
 inward working of these cases, and watching their ultimate effect, 
 and 1 believe a healthy tone of moral sentiment is better preserved, 
 without, rather than with an administration of the right of granting 
 release, such as we have experienced in the past. 
 
 And I further believe that the great mass of our merchants, as 
 creditors, have been fully as much, if not more to blame, for this 
 unsatisfactory result than the halting and purblind policy pursued 
 by those charged with the exercise of this right. 
 
 Curious as it may seem it is no less the fact, that those debtors 
 who have been freed horn obligation in respect of their debts, wore 
 so released without any, or at best, the most trivial regard to the 
 fact, whether or not tbeir conduct entitled them to such concession, 
 a perfunctory matter of form application to a County Court judge 
 being sufticient to secure release from debt, and the many instances 
 we can call to mind of most dishonest persons being so released, 
 must, upon consideration show us that the means we have so far 
 adopted in this relation have been woefully inadequate, and not 
 alone inadequate but productive of evils which a better know- 
 ledge of the true policy of this law would have prevented. 
 
 The determent of fraud has been largely prevented by a too liberal 
 use of the power givtui a certain majority of creditors to bind the 
 minority to composition settlements. The debtor can always see 
 a higher value in his assets than others, and those who wished to 
 turn the uses of this law to the procuring of settlements, which a 
 
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 I'uU investigation into their conduct would ])rGvent, could con- 
 ceal a portion of the assets, and meeting tlicir creditors, otl'er by 
 wny of composition more than a liquidation would produce. 
 This h verage added to the trouble, cost and uncertainty of an in- 
 vestigation, was in the great majnrity of instances too power- 
 ful to be resisted, and thus [julpablc frauds were condoned and the 
 true intent of the measure prostituted. As a consequence, many 
 h.ave fallen into the error of supposing that the effect of all 
 oankruptcy legislation imist be more perniciouj than otherwise, but 
 1 hope yet to show that these conditions arise from an improper 
 conception of the ground upon which this law is based, -that the 
 application of proper remedies is not only possible, but practicai»le, 
 and upon adoption, will lid our ranks largely of this fungus growth 
 and prove a means of protection rather than piracy. A means of 
 deterring outrage 1)}^ [)unishnient, and encouraiiing obedience by 
 reward, by which neither the misconduct of insolvent men can be 
 overlooked, nor their grievances forgotten. 
 
 It is hardly an argument that because unprincipled persons, by 
 reason of discrepancies in the law, which further coiisid(!ration sup- 
 plies Willi a cure, turn to evil these equitable tliough ill-didiued 
 principles, that they should not be legitimately used by the aid of a 
 more explicit and exact interi)retation induced by ex[)erience. All 
 law is directed to the punishment of wrong-doing, but because fraud 
 is nf>t wholly prevented, are we therefore to argue that all law is 
 abortive, and that we are the better without it. The power to 
 relievo debtors from their obligations is the paraiiKjunt feature 
 of bankruptcy law. Unless we can deal with it in such a way as to 
 secure impartiality and a rigid exercise of moral discretion, we may 
 as well desist from further tampering with it. 
 
 The difhculties which beset the obiaining of this condition are 
 manifest. The causes of failure and the avenues of fraud are so 
 multiplied that it is impossible to frame rules to deal with each of 
 them as a separate branch. We can only base the consideration 
 upon which release from debt shall be given, on high moral grounds, 
 vest the power to grant this release in our higher Courts and trust to 
 their discrimhiation to secure the end we seek — in pointed and im- 
 portant divergence from the rule which has hitherto obtained of 
 vesting this great power in the hands of our -Judges of County 
 Courts, many of whom, tramelled by sectional considerations, have 
 in the exercise of this discretion defeated the uses for which 
 it was intended. 
 
 Hitherto, the debtor has had to conform only to a few most 
 inconsequential and perfunctory rules in support of his petition for 
 discharge. No enquiry was made into his conduct, how his losses 
 
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 Imd arisen, or upon wliiito(iuital>li' ^'rounds ho based his ri^-ht to be 
 relievcil. A fcnv unimportant alVulavits, a [letition, the lihng of a 
 few papers, and relief, intended to be coiifcrrod only upon the hon- 
 est, unfortunate trader, was accorded to many whose careers had 
 been publicly and notoriously reckless, iinj)rovidont and dishonest. 
 And in the teeth of this farrical fornnila wo hear pc()i)le say. 
 that it is impossible to prevent dishonest men avoidinj,' the pay- 
 ment of their debts so long as we have an insolvont law. They do 
 not stop to emiuire if that law is exercised in the spirit in which it 
 was conceived, or if the results of its use arise from inherent defects 
 or maladministration. 
 
 Let us set ourselves to discover some plan by which the exercise 
 of this principl'i ol humanity as well as justice cau be worked out. 
 and in a proper understanding of it .show that it cau be made move 
 beneficial than derogatory in its inlli'.encc upon the mor-il comlitiou 
 of trade. Starting upon the basis that insolvent debtors caunot 
 procure release from the fulfilment of their oblij^'ations, unless they 
 show substantial title to it, we venture aliogother upon new groniKl. 
 and may restrict our en((uiry to the consideration of, first: What 
 standard rules shall be passed to secure the production of evidence 
 that such right exists, and, second : The general rules which shall 
 guide the court in the exercise of its discretion, as to whether this 
 right is made sufhcientlv cleur and tenable, and if it be obscure, theu 
 what degree of punishment shall be meted to the insolvent. 
 
 First we lay down as essential that the debtor shall meet his 
 creditors, shall revise the statements of his affairs prepared by the 
 trustee, and shall then verify the same under oath, and be pubHely 
 examined touching the contents thereof, that such examination 
 being concluded, the opinion of creditors in regard thereto, shall 
 be embodied in resolutions?, entered in the minutes, and signed by 
 the debtor and the trustee. 
 
 Such statements must contain as accurate an amount as can be 
 obtamed of the present liabilities and assets of the debtor, in detail 
 and classified. 
 
 The provable, and estimated, but unprovable losses incurred by 
 the debtor, and which contribute to the deficiency in his assets to 
 meet his liabilities. 
 
 The cash capital of the debtor when he commenced business. 
 His yearly personal expenditure, and the number of those to 
 whose support he contributed. 
 
 His yearly business expenditure, under general heads. 
 
 An estimate of the average gross profits of his business, and the 
 yearly totals of his hales. 
 
The several times (if any) when the debtor took stoeic, and en- 
 tirely or partially prepared statements of his affairs, and where 
 these statements now are, the same, if existing, to be produced 
 and left with the trustee. 
 
 A statement of any securities given to creditors within one year 
 prior to the date of insolvency proceedings, the reason why such 
 given, when given and particulars as to amounts, and the circum- 
 Btnuces connected therewith, 
 
 A statement of any purchases or sales of property, real or per- 
 sonal, outside the channel of his ordinary business made by the 
 debtor within two years prior to his insolvency. 
 
 These and other re([uirements which practice will present as 
 desirable, should be laid before the court and considered by it when 
 the debtor appliis for his discharge or for conlirmation of any deed 
 of arrangement proposed between him and his creditors, and the 
 material therein contained supplemented by such other evidence as 
 the debtor can produce that his failure was an honest one, and the 
 granting of his release in accordance with the policy of these laws, 
 should form the groundwork upon which the court should deter- 
 mine if the discbarge should be given, or refused, or withheld, 
 for such period as may be just. 
 
 None of these important matters were the subject of discussion 
 upon past applications for discharge. Then how foolish it must 
 appear, to expect that the right to give such discharge could be ex- 
 ercised beneficially and fairly, without the slightest enquiry as to 
 whether the applicant was entitled to receive it or not. 
 
 In what court in the land are matters disposed of without enquiry 
 into the rights of the litigants ? these are not — cannot be assumed ; 
 they must abide the result of evidence ; then let us adjudge that a 
 bankrupt must bring evidence of his right to be released, and not 
 grant discharges in the flippant and unconscionable manner that 
 has been the rule. 
 
 Let us devote a few minutes to considering the reasons why it is 
 found expedient to provide a means of escape from debt, as set forth 
 above, and to open an avenue of relief to those who are honest, while 
 unfortunate, and whose failure results from causes which could not 
 be controlled. 
 
 I enter upon a consideration of this point preserving the idea that 
 traders alone are brought within the purview of the law. 
 
 The reason of this is, that traders take as a matter of fact, cer- 
 tam partnership interests in the business, or speculations of their 
 debtors. 
 
 A and B are traders. A sells B $1,000 worth of merchandise on 
 credit — that is, A speculates upon B's ability to pay this sum. To 
 the extent of ii's etiects A can make good his claim. The present 
 
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 ability of customers to pay for what they buy is the every day guage 
 of such customer's credit ; it is the sole leasoiiwhy goods are sold 
 on credit. No one sells goods ou the ground that though the pur- 
 chaser has nothing now, his life's labor is pledged to the dischiirge 
 of the debt, and is thus a suflicient security ; the creditor, of course, 
 estimates the ability and honor of his customer, but he does not 
 consider that in the event of these attributes failing there still 
 remains any claim against the produce of his debtor's labor. 
 
 Moreover, as the responsibility of the purchaser decreases, the 
 rate of profit jjlaeed upon the goods he buys is increased, and so 
 we conchule that the creditor trades more or less upon ihe present 
 ability of his debtor to pfty, and regulates his prices accordingly. 
 
 We make another step forward when we throw further restrictions 
 around compositions. "The English JJankrupt Act of 18H8, by 
 "wise provisions largely in this respect, has undoubtedly had a 
 " most beneficial iutluence on trade. The tone of business has been 
 *' better since the scandalous system of easy composition was swept 
 " away. The stringency of the new law gives creditors a kind of 
 " leverage. They know and the debtors also know, well, that there 
 '• IS a practical law behind them." I\ii)i]i\s O'accZ/c, January, 1885, 
 (England). 
 
 No discharge or arrangement by composition should be obtain- 
 able without the sanction of the higher Courts and the production >:i 
 proofs of title to it, and even when sanctioned by the Court it 
 should be in the power of the Court to review the same, within say 
 two years, upon the production of evidence, obtained after such dis- 
 charge was given or deed confirmed. 
 
 It is argued that it is inexpedient in the interest of public policy 
 to allow a debtor his discharge unless his estate produces to credi- 
 tors a minimum divuh nd of 50 jier cent. J^et us examine into this 
 contention. A debtors estate, if it show the assets at their cost 
 equal to the liabilities, will net one time in ten, if liquidated, pay 50 
 cents on the dollar, and those whose assets are in good conilition 
 saleable at cost or thereabouts— do not as a rule fail ; the great ma- 
 jority struggle on, oftentimes hopelessly against the current, but 
 yet with the best of intentions, and until they see no possible out- 
 let from their dilliculties, and then, properly, they meet their credi- 
 tors. Now we are setting up as the sole basis upon which discharge 
 can be {/iven, the proof of honesty and good faith, and if these condi- 
 tions obtain ; relief is due to the debtor wliether his estate yield 25 
 or 50 cents on the dollar to his creditors ; if these conditions do not 
 obtaiH, then the debtor has to give up all he has and get out— we 
 want none of him, and the Court will refuse him his discharge oven 
 though creditors may wish it. These are so often guided by mone 
 tary advantages in disregard of moral considerations that ihe new 
 
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 proposition to leave the granting of relief to the Court, robs the dis- 
 honest trader of the opportunity of compromising his debts when 
 fraud or other substantial reason for refusing it exists. But carry- 
 ing the argument further, it may fairly be assumed that a trader 
 whose estate, at any time, does not show, in cash, upon summary 
 but impartial and discreet realization, say 25 cents on the dollar, 
 must have been trading when he knew he was insolvent, could not 
 pay his debts, and had no riglit to buy goods while in this condi- 
 tion, and so I believe it would be advisable to provide, that no 
 trader should be relieved except his estate paid that proportion of 
 his debts, unless, say, half in number and two-thirds in value, of his 
 creditors consent thereto ; if this proportion of creditors were 
 agreed that a debtor's failure was not the result of improper mo- 
 tives or imprudent actions, it might fairly be assumed that such 
 did not exist. 
 
 Again it is urged that if severe penalties are attached to the 
 nonpayment of debt, if the debtor is kept such as long as he lives, or 
 until his debts are paid, failures would cease, for men would not 
 venture into trade, seemg this end clearly before them, if unsuccess- 
 ful, and further that if these unsuccessful men were kept out of 
 trade, bad times and periods of depression \s'ould be unknown. 
 
 In early times inability to fulfil legal obligations was treated as a 
 most serious offence. A time there was when creditors were per- 
 mitted the savage remedy of dividing the carcase of their debtor or 
 selling him and his family into slavery, but we do not know that 
 this inhuman severity produced immunity from bad times for 
 severe commercial distress was of frequent occurrence in ancient times. 
 Again we know that imprisonment for debt ran its course for years and 
 we pause to consider what possible benefit can accrue to the creditor 
 in imprisoning his debtor, and thus depriving him of the only means 
 he had of paying his debts, namely, the produce of his labour. 
 The inconsistency and inhumanity of this course, has by the slow 
 process of time been laid bare until at the present time, through the 
 slough of many enactments, used and discarded as imperfectly 
 containing the principles of true life and true liberty, we arrive at 
 the time when the dictates of humanity are found to be worthy of a 
 place amidst the ranks of commerce, and the law of bankruptcy is 
 made a measure of relief to debtor as well as creditor, and is prompt- 
 ed by a keener feeling as well as a readier preception of moral, as 
 well as legal distinctions. 
 
 Deemed just in olden times, we now view with derision and as de- 
 feating the very object of the pursuer, the power which enabled a 
 
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 creditor to confine the person of his debtor in prison, for lack of pay- 
 ment of his debts. At all times the creditor could satisfy his claim up 
 to the extent of his debtor's property, and once this right has been 
 exercised, the conditions cf the debtor's contract are morally ful- 
 filled and the right of the debtor as a free citizen demand that, in 
 the absence of fraud, and chicanery, he should be relieved. 
 
 Great distress has never hitlierto taught, and while the world lasts, 
 it never will teach wise lessons to the masses. Men are as much 
 blinded by the extremes of misery as by the extremes of prosperity. 
 Desperate situations produce desperate councils and desperate meas- 
 ures. Though a man fails, this will not destroy hope or prevent his 
 future usefulness, but give him no hope of relief — keep him in con- 
 tinued servitude, and his better instinct is turned to cunning 
 Where properly or life are at stake men will not compliment or 
 even be influenced by great recommendations — they will consult, 
 the best lawyers and the best physicians wherever they may be. 
 
 That commerce flourishes by circumstances, contingent, transi- 
 tory, almost as liable to change as the wind, is a fact indisputably 
 proved by experience. All our investigations into the subject, estab- 
 lish this by statistics, startling and depressing in the extreme, 
 liarely five per cent, continue successful through life, while in New 
 York the record shows that within the short period of ten years fifty- 
 flve out of a hundred wholesale firms, taken promiscuously from the 
 lists of those engaged in twenty-flve difterent branches of business, 
 failed. 
 
 In the present year of our Lord 1885, we find all the nations of 
 the world suflferinf? from the effects of stagnant industries, — gran- 
 aries full with the fruits of harvest, plentiful the world over. I.aud 
 cheap, iron cheap, cotton, wool, sugar, tea, all the necessaries oi 
 life ;-U) to 40 per cent, cheaper and more plentiful than a few years 
 ago, and in the midst of this, there is a most incessant cry of 
 "bad times," "bad times," and those who so cry include many 
 who are honest, hard working, shrewd, descrvingofsucccss— if these 
 qualities possess any claim to it. 
 
 We extract from an article which appeared recently in a Cana- 
 dian paper, this : 
 
 " If it were possible to conceive of one master mind having the 
 control of all the business of the commercial world, who could so 
 arrange that just the exact amount of goods of all kinds would be 
 manufactured every year which would be needed that year, and 
 that the merchants of each country should import just as much as 
 its inhabitants would need, and that the amount sunk every year 
 m railways, buildings, canals, and other permanent investments, 
 was exactly equal to the savings of the year— if it were possible for 
 such a thing to be done, periodical depressions would be unknown. 
 There would be nothing to produce them. The current of business 
 
1 1 
 
 ■would run on with comparative smoothness, only affected by minor 
 matters, such as the abundance or scarcity of the harvests, or the 
 breaking out of war. liusiness, however, is not and cannot be regu- 
 lated on any such principles. Production, importation, buying, 
 selling, investing, and all similar matters, are rot decided by one 
 mind, but by millions of minds, and it follows, therefore, that busi- 
 ness is governed by that quality which we call the contidence 
 of the public. When manufacturing or tradhig is prosperous 
 those engaged in it enlarge their business, while new capitalists 
 rush in, until the supply soon exceeds the demand. Tlieii comes a 
 crash, and the almost complete loss of the coniidence of the public 
 in that branch of trade. This continues until the annual production 
 is brought below the annual lemand, when a gradual revival takes 
 place, to be followed by the same results as before. The same 
 remarks apply to permanent investments. While confidence lasts 
 more money is devoted to them than the pnnual savings would 
 warrant, but, when confidence is lost, the public will not invest as 
 much a? their savings amount to. It therefore follows that since 
 business is controlled by the caprices of the multitude, periodical 
 depressions can hardly be avoided." 
 
 And this is why we say, " That commerce flourishes by circum- 
 stances, contingent, transitory, almost as liable to change as the 
 wind." 
 
 It is not a petty s])ite evidenced towards petty man ; for failure 
 claims oftentimes those which have seen the greatest affluence. 
 
 Out of all our traders, from the merchant prince down, is there 
 five per cent, who do not trade beyond their capital ? 
 
 It is only fair to suppose that tbe great majority of those who 
 trade, venture some capital and commence business with the honest 
 intention of increasing their means. If so many of these as stat- 
 istics show, cannot avoid failure, should we assign the cause to 
 dishonest motives ? Surely not. 
 
 It appears almost incredible that the lessons of prudence should 
 be no sooner calculated than forgotten. I'rogresa of all kinds is 
 good, but our instinct tells us that there are certain rates of ]U'0- 
 gress which it is necessary to observe, and yet as each generation 
 comes rapidly forward it ])roduces tyros in trade who, despite warn- 
 ings, assert their infallibility and seem determined to buy experi- 
 ence for themselves. It is these men who provoke reckless trading 
 and bring about the downfall of others. 
 
 The difference between progress and hurry, speed, and precipita- 
 tion is here exemplified in the ventures and struggles of those who 
 watch the concurrence of opportunity with calmness, as contrasted 
 with those who endpavour to make the lucky moment they cannot 
 find. Take it, ponder over it, consider it as we will, we must come to 
 
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 the irresistible conclusion that while men trade they deal in uncer- 
 tainties. They may enter it with fair means, strive iu it, save in it. 
 and yet be worsted. Failure may be caused by the insolvency of 
 others, by errors in judgment, hy many causes, — which one cannot 
 control, and yet we may bo honest, have the dearest and strongest 
 ties to stimulate our e::ertiou8, and fail. 
 
 Yet some blame us and talk of the follies of the dunces. Tjiviiig 
 in a highly civlized age, we submit to four courts of appeal in the 
 hearing of litigated questions, .md we see of daily occurrence, the 
 best, purest, and most intellectual of men, divided iu their opiniou 
 as to the meaning of what is laid down in black and white as 
 law. If what is prescribed, therefore, calls for such excellence in its 
 interpretation with such variable results, what theu should we say, 
 if that, which is not only not prescribed, but subject to vast lluctua- 
 tions and iutluenced by occurrences which no human foresight can 
 estimate, provide against, or avoid, prostrates men whose intentions 
 are the purest, and whose labors are the most exerted without 
 result. 
 
 Briefly summarized, we have this; A loose system of granting relief 
 from debts has a tendency to increase reckless trading and the pre- 
 valence of fraud. 
 
 A wise administration of this right will relieve those who evident- 
 ly cannot help failing, and while it refuses this concession to the 
 fraudulent debtor, his estate is novertheless taken from him and 
 ample means provided for punishing him for his contumacy and 
 guilt. 
 
 Whore the loss is great to the creditor, the means of recompense 
 out of the labor of the debtor, fails : the labor of a man under trd)ute 
 to his creditors really implies notliing, while the inhumanity of in- 
 sisting upon such bondage is repulsive to the better feelings of man- 
 kind. 
 
 Until it is found necessary to establish a Court specially consti- 
 tuted to deal wih bankruntcy matters, satisfactoiv results may he ob- 
 tained in the use of the old channel of the County Courts as regards 
 ordinary routine business, but the power to grant discharges and 
 conhrm deeds of compositions should be relegated to the Superior 
 Courts, with right of appeal to the Court of Appeal, only. 
 
 In this connection, the appointment should be made of a Chief 
 Clerk or Master in bankruptcy, who should ho charged wirli the 
 protection of the interests of creditors generally when d(d)tors apply 
 tor release or for coniirmation of deeds of settlement. This oflicer 
 shou d be an expert accountant, well versed in bankruptcy law, and 
 should be paid well in order to attract corai)etent i)prsons to the office. 
 
 His duties should embrace the scrutiny of the debtors' transactions 
 and the employment of all proper means to elicit the fullest infor- 
 
^3- 
 
 mation respecting the applicant's conduct, and principally the ground 
 upon which he bases his right to he released from his obligations. 
 
 In the appointment of such an otticer we would secure a regularity 
 in these matters very desirable to be obtained, and we would find 
 creditors making the most ample representations to liim of tbeir 
 views upon the conduct and dealings of the debtor. It would pro- 
 vide a practical, easily reached, and inexpensive means of deterring 
 fraudulent men from being discharged. We know that when th.s duty 
 is imposed upon the individual creditor, the personal loss of t^ me 
 and money debars him from contesting these matters, when they 
 should be contested to the utmost. 
 
 It is urged that the employment of an official to make such en- 
 quiry into the conduct, affairs and character of applicants for dis- 
 charge, as will, in the public interest, effectually distinguish between 
 the honest and unfortunate, the reckless and the bad, will amount to 
 nothing but a perfunctory, half hearted surveillance ; but I do not 
 fear this result ; it is at least worthy of trial- The supineness of 
 creditors, their unwillingness to follow up with activity and energy 
 the measures necessary to expose the conduct of the fraudulent, is 
 not a thing to be met with barren laments and denunciations, but 
 to be dealt with as one of the leading facts of the problem to be 
 solved. 
 
 That which is the business of many is the duty of none. Parlia- 
 iment may direct a whole battery of pains and penalties against the 
 [commitinent of fraud ; but unless this armament is used discreetly, 
 regularly, and without personal intervention of creditors, it will fail 
 in the future as miserably as it has in the past. Creditors require 
 to be protected against their own acts, or non-usance of the 
 remedies upon which they rely for protection. 
 
 We provide that a debtor having given up all he has to his 
 creditor, may be relieved from his obligations upon certain 
 conditions, these embodying proof that the loss which cre- 
 ditors suffer, is not the result of fraud or willful disregard 
 of common-sense business rules. Creditors never will pro- 
 perly attend to tlie enforcii]g of proof that losses are not occasioned 
 by fraud on the part of the debtor. Until this is done the 
 justice of relieving the debtor is not brought out. If any creditor 
 wishes to punish a trader who has been dishonest, he is deterred by 
 the knowledge that his action enures to the benefit of creditors 
 generally, and so we find that this one person is generally wanting, 
 for his liability to incur costs, and the arduousness of his labors 
 arc a practical bar to his pushing the exercise of his rights, when 
 the result, if successful, enures to the benefit of others besides him- 
 self ; and so he lets the matter drop, not wishing to risk the expense 
 and loss of time, the result of which he does not, if successful, wholly 
 
— 14- 
 
 obtain. We know and understand tlie concessory principle of these 
 laws. We do not know, nor can we fully appreciate the coercive force 
 of the same, because we have had no experience in the exercise of this 
 coercion. Hitherto we have used this statute mainly because it eu 
 abled creditors to secure what remained of the estates of insolvents. 
 Mow we are seekinsr in a hijj;her interpretation of the measure, 
 a fuller appHcation of the restrictive powers which it has upon the 
 actions of the debtor. 
 
 Since the repeal of the Insolvent Act of 1H71, the release of the 
 debtor has depended entirely upon the nature of the settlement he 
 has been able or willin^^ to propose to his creditors— practically, it 
 has become a matter of negotiation upon purely monetary grounds, 
 with this result, that those most skillful in the art of deception, by 
 fraudulently preferring one creditor, coercini,' another, and buying 
 up a third," by pitting dishonest gains against the feeble echoes ot 
 morality, have triumphed. Arrangement.s by composition exert a 
 most baneful influence upon trade: they should only be assented to 
 after full and impartial enquiry into the merits, and should not 
 depend upon the mere question of dollars and cents, 1 speak by 
 the book when I say that many wholesale firms, plainly perceiving 
 the disastrous tendency which these exerted U[>on trade, honestly 
 made up their minds to refuse such settlements, and these very 
 men have afterwards, and upon fair trial, acknowledged that they 
 found it impossible to adhere to tlu'se resolves ; not for want of 
 faith in the justice of them, but because individual cti'ort was im- 
 potent to purge the ranks of this unhealthy, demoralizing growth. 
 
 It is no argument to say that the utmost the law can do for 
 creditors is to allow each to pursue his own way in these matters, 
 for this leads to a perpetuation of the evil. 'Hie old hackneyed 
 phrase, "The greatest good of the greatest number," obtains, and 
 that greatest good is shortly this : that we must have a measure 
 which will work in harmony both with the rigor of the common law 
 and the clemency of equity, and not, practically refuse justice, by 
 making its procurement so difficult and arduous that its pursuit is 
 abandoned. 
 
 When a trader fails his estate should be brought under the con- 
 trol of an impartial tribunal. The wishes of the creditors should pre- 
 vail as to the method of realizing upon that estate. It is their 
 property and they know best what should be done with it, but when 
 the debtor asks relief from his obligations, he should be met with this 
 full, fair answer, " Your application, if granted, must be based and 
 depend entirely upon the proof which you can bring that your con- 
 dition is the result of such unfortuitious circumstances as "the equit- 
 able principles of the law recognize as sutlicient grounds for the 
 exercise of its clemency.