BANKRUPTCY LAWS. When a person is unable to pay his debts in full, the law of civilized countries adopts some means of satis fying the creditors, as far as they can be satis fied, out of the debtor's estate, and relieving the debtor himself from pressure which, by his own efforts, he would not be likely to over come. The debtor having, been declared a bankrupt, his property vests in his creditors for the purpose of being divided ratably among them, and consequently he starts anew, entirely relieved from the obligations thus partially sat isfied. In general terms this is the process of bankruptcy as observed in modern societies. The law of bankruptcy is, in fact, a modern creation slowly evolved out of the Criminal Code in answer to the necessities of a widely spread industrial life.
The early law of Rome, while prohibiting contracts of usury, gave the legal creditors the savage remedy of dividing the carcass of their debtor or selling him and his family into slav ery. The Les Poetelia (about 326 a.c.) enabled a debtor who could swear to being worth as much as he owed to save his freedom by re signing his property; and many years after ward the legislation of Julius Caesar established the cessio bonorum as an available remedy for all honest insolvents. The bankrupt law was slowly developed in England. The first Eng lish statute on bankruptcy (34 and 35 Henry VIII, c. 4) was directed against fraudulent debtors, and gave power to the lord chancellor and other high officers to seize their estates and divide them among their creditors. In Eng land, before 1841, only a tradesman could be a bankrupt. The distinction was then abolished. It was abolished in the United States in 1869. In the United States, Congress alone has power to pass a bankrupt law which shall have author ity throughout the country. The several States may enact such statutes when there is no law of Congress in operation. The first general bankrupt act in the United States was passed in 1800 and was repealed in 1803. In 1841 an other law was put in operation, with a special view of meeting the urgent needs of debtors who had been ruined by the commercial revul sion of 1837-38, and who could receive no ef fectual relief from local laws. This act was
repealed in 13 months, but in the meantime a large number of cases had been disposed of, amounting to 3,250 in Massachusetts alone. An other bankrupt law was passed which took ef fect 1 June 1867. It was framed with great care by a committee of the House of tatives, of which Mr. Jenckes was the chairman and chief working member. Its authors hoped that it would form a permanent addition to the jurisprudence of the country, but it was re pealed within a few years.
An act Ito establish a uniform system of bankruptcy throughout the United States,* was passed by both Houses of the 55th Congress, and by the approval of President McKinley be came a law on 1 July 1898. The question had been brought before Congress for several years, the issue not being between the political par ties, but on the method of legislation, one side favoring the creditor and the other the debtor class. The Nelson bankruptcy bill, which at the first, or special, session of the 55th Congress passed the Senate, failed to receive the consent of the House. The new law was a compromise between the Nelson bill, calculated chiefly to benefit debtors and the Torrey bill, designed i to guard the interests of both creditors and debtors. The adoption of the bill which be came a law was mainly through the long-con tinued efforts of Senator Hoar (Rep. Mass.), aided especially by Senator Nelson (Rep., Minn.), and Representative George W. Ray (Rep., N. Y.). A conference between the two Houses was held, which reached an agreement on 15 June, the report being adopted by the House, 28 June, by a vote of 133 to 53; present and not voting, 24. All the votes against the bill came from the South and the far West. Slight changes to correct defects in this act have since been made through three supplemen tary acts approved 5 Feb. 1903, 15 June 1906 and 25 June 1910, and further supplemented by rulings of the Supreme Court, as to matters of practice, and by official forms of the same court.