independent examination into the cause of each bankruptcy, and the conduct of each bankrupt. Such investigations, perfunctory and inadequate as they generally were, were thrown upon the creditors, contrary to all sound policy or principle. The provisions for the punishment of misconduct were altogether insufficient; and the application of those provisions, instead of being left with responsible authorities, were left almost entirely with the creditors, who in many cases might, no doubt, be interested in hushing up the very questions which they were expected to investigate; while the arrangements for the supervision and control of the persons entrusted with the administration of estates were so defective, that practically they could do what they liked.

To remedy in some measure these manifest evils, the Bankruptcy Act of the present year-the provisions of which are discussed in the following pages-has been passed. It is, roughly speaking, a return to what is commonly called the "official system." In the year 1831 bankruptcy affairs were in a state of chaos, and a system of official administration was introduced, in the form of official assignees attached to the London Courts. After receiving several modifications, however, and being generally condemned, the scheme in question was totally abolished by the Bankruptcy Act of 1869, since which time reliance has been placed on voluntarism, which has been found to be equally impracticable.

In the Act just passed the system of officialism is again resorted to, but the evils which previously rendered its trial a failure have, it is hoped, in the present instance been carefully avoided.

One thing has

been shown most clearly; that is, that the reverse of

the official system, as exemplified in the system of 1869, was a mistake. It was very plausibly argued before the alteration was made that creditors would look after their interests much more keenly than paid officials. It was urged that the wisest course was to trust to the self-interest of the creditors. But it was not seen that the interests of the creditors, though they would be benefited by the prompt payment of a handsome dividend, were more injured than otherwise in dangling after a debtor. In the case of heavy failures and large debts, it might be well worth the creditor's while to devote a considerable amount of time to the recovery of his debt; but in four-fifths of the bankruptcies which occur a busy creditor, in the absence of special circumstances, found it to his advantage to put down what the bankrupt owed him as a bad debt. That being so, the creditors were content to leave their affairs in the hands of anyone who would look after them. A rapacious class of professional trustees grew up in consequence, and along therewith a scandalous proxy system. Notwithstanding many and great scandals in the old official administration, therefore, owing to the mode in which it was formerly conducted, it was doubtless free from a large number of the evils with which creditors have lately had to contend; and it is certain that the dividends were larger under the official than under the voluntary system. The chief reason of the failure of the former official system appears, in fact, to have been that it was only under the control of the Courts, and not of a responsible department. The present Act avoids that difficulty, and at the same time strikes at the root of those evils which have grown up under the voluntary system of 1869, by causing the administration of the

estate in every case to be carried on under the direct supervision of an official nominated by the Board of Trade. In fact, an independent and impartial examination is the cardinal principle of the new bill. The essential points of the scheme are that there must be in cases where a person is unable to pay his debts a public inquiry into the circumstances, and a public official to conduct that inquiry who is attached to one of the departments of state, so as to be responsible to public opinion in the House of Commons.

In the Act this public official is called "an official receiver," and his duties are of the very greatest importance. The appointment of this official receiver immediately follows the presentation of any petition; he will act as chairman of the first meeting, and by him the creditors are thereafter represented until the appointment of a trustee. Further, the duties of this official include an inquiry into the circumstances stated by the creditors, and into the circumstances of the bankruptcy before the Court, including the position of the debtor's affairs and misconduct, if any, during the course of the proceedings. The official receiver is, therefore, to some extent, a public investigator and a public prosecutor, and as such he is the receptacle for information by creditors, especially in such cases where the creditor may be unwilling or unable to prosecute. In all cases the discharge of the bankrupt will be dependent on the report of the official receiver.

A vast reform has been made by the new Act with regard to the old system of composition and liquidation. The evil effects of sects. 125 and 126 of the Act of 1869 are abolished, and with them will disappear some of the inducements formerly offered to the reckless or the

fraudulent trader. By the new Act, the debtor as well as his creditors is allowed to present a petition in bankruptcy, and so in numerous cases hopeless struggles will not be unduly prolonged to the effectual dwindling away of the assets; while the old distinction between traders and non-traders is swept away.

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All proceedings are to be commenced by a bankruptcy petition, leading up to an order of the Court called a receiving order," which shall have one of two results, either composition or arrangement on the one hand, or bankruptcy on the other. In any case the Court thereafter stands between the debtor and his creditors. He must then attend, with his statement of affairs, for public examination, and answer questions on oath. He will, if the creditors think proper, have an opportunity of offering a composition, which, however, cannot be accepted until after the public examination referred to. If no composition is made, or if the Court recalls it, he becomes a bankrupt.

When the bankruptcy has been decided upon "the property of the bankrupt shall become divisible among his creditors, and shall vest in a trustee."

The Board of Trade may object to the appointment of a trustee on the grounds that it has not been made in good faith; that the person selected is unfit; or that he is connected with the bankrupt or his estate in such a manner as to make it difficult for him to act impartially. But in such a case a power of appeal to the Court from the Board of Trade is allowed, if the bankrupt wishes to do so. The trustee must keep proper books, &c., and the Board of Trade will audit all trustees' accounts at least twice a year.

Every debtor is compelled by the Act to give all

assistance in his power to the person charged with the realization of the estate, whether the latter be trustee or official receiver. He is liable to punishment for failure to perform the duties imposed on him, and will be deemed guilty of contempt of Court; and he is also liable to arrest and detention by warrant.

At any time after being adjudged bankrupt, a bankrupt may apply to the Court for an order of discharge. But no application for the discharge of a bankrupt may be heard until the public examination has been concluded; and the Court is to have before it, and to take into consideration, the report of the official receiver, which should contain any statement which he may think necessary to make as to the past conduct of the debtor. The Court may then grant, refuse, or suspend the certificate of discharge, or grant it subject to conditions which the circumstances of the case appear to justify. If a good dividend is shown; if the books have been well kept for three years previously; if the debtor (now bankrupt) has been guilty of no illegitimate trading or vexatious conduct or misdemeanour; and if it is his first bankruptcy, there is every hope of his getting his discharge.

A further necessary provision is made to put an end to one of the greatest evils of the old law under which it appeared almost a matter of indifference to insolvents whether they got their discharge or not. The new Act makes it a misdemeanour for any person who is an undischarged bankrupt to obtain credit to the extent of 207., or upwards, without stating what his position is, and the person so doing may be dealt with and punished accordingly.

Such provisions as those mentioned, especially the