A failure is the closer, more or less hermetically tight, of a house where pillage has left a few remaining bags of silver. Lucky the man who can get in at a window, slide down a chimney, creep in through a cellar or through a hole, and seize a bag to swell his share! In the general rout, the sauve qui peut of Beresina is passed from mouth to mouth; all is legal and illegal, false and true, honest and dishonest. A man is admired if he “covers” himself. To “cover” himself means that he seizes securities to the detriment of the other creditors. France has lately rung with the discussion of an immense failure that took place in a town where one of the upper courts holds its sittings, and where the judges, having current accounts with the bankrupts, wore such heavy india-rubber mantles that the mantle of justice was rubbed into holes. It was absolutely necessary, in order to avert legitimate suspicion, to send the case for judgment in another court. There was neither judge nor agent nor supreme court in the region where the failure took place that could be trusted.
This alarming commercial tangle is so well understood in Paris, that unless a merchant is involved to a large amount he accepts a failure as total shipwreck without insurance, passes it to his profit-and-loss account, and does not commit the folly of wasting time upon it; he contents himself with brewing his own malt. As to the petty trader, worried about his monthly payments, busied in pushing the chariot of his little fortunes, a long and costly legal process terrifies him. He gives up trying to see his way, imitates the substantial merchant, bows his head, and accepts his loss.
The wholesale merchants seldom fail, nowadays; they make friendly liquidations; the creditors take what is given to them, and hand in their receipts. In this way many things are avoided,—dishonor, judicial delays, fees to lawyers, and the depreciation of merchandise. All parties think that bankruptcy will give less in the end than liquidation. There are now more liquidations than bankruptcies in Paris.
The assignee’s act in the drama is intended to prove that every assignee is incorruptible, and that no collusion has ever existed between any of them and the bankrupt. The pit—which has all, more or less, been assignee in its day—knows very well that every assignee is a “covered” merchant. It listens, and believes as it likes. After three months employed in auditing the debtor and creditor accounts, the time comes for the concordat. The provisional assignees make a little report at the meeting, of which the following is the usual formula:—
Messieurs,—There is owing to the whole of us, in bulk, about a
million. We have dismantled our man like a condemned frigate. The
nails, iron, wood, and copper will bring about three hundred
thousand francs. We shall thus get about thirty per cent of our
money. Happy in obtaining this amount, when our debtor might have
left us only one hundred thousand, we hereby declare him an
Aristides; we vote him a premium and crown of encouragement, and
propose to leave him to manage his assets, giving him ten or
twelve years in which to pay us the fifty per cent which he has
been so good as to offer us. Here is the certificate of
bankruptcy; have the goodness to walk up to the desk and sign it.
At this speech, all the fortune creditors congratulate each other and shake hands. After the ratification of the certificate, the bankrupt becomes once more a merchant, precisely such as he was before; he receives back his securities, he continues his business, he is not deprived of the power to fail again, on the promised dividend,—an additional little failure which often occurs, like the birth of a child nine months after the mother has married her daughter.
If the certificate of bankruptcy is not granted, the creditors then select the permanent assignees, take extreme measures, and form an association to get possession of the whole property and the business of their debtor, seizing everything that he has or ever will have,—his inheritance from his father, his mother, his aunt, et caetera. This stern measure can only be carried through by an association of creditors.
There are therefore two sorts of failures,—the failure of the merchant who means to repossess himself of his business, and the failure of the merchant who has fallen into the water and is willing to sink to the bottom. Pillerault knew the difference. It was, to his thinking and to that of Ragon, as hard to come out pure from the first as to come out safe from the second. After advising Cesar to abandon everything to his creditors, he went to the most honorable solicitor in such matters, that immediate steps might be taken to liquidate the failure and put everything at once at the disposition of the creditors. The law requires that while the drama is being acted, the creditors shall provide for the support of the bankrupt and his family. Pillerault notified the commissioner that he would himself supply the wants of his niece and nephew.
Du Tillet had worked all things together to make the failure a prolonged agony for his old master; and this is how he did it. Time is so precious in Paris that it is customary, when two assignees are appointed, for only one to attend to the affair: the duty of the other is merely formal,—he approves and signs, like the second notary in notarial deeds. By this means, the largest failures in Paris are so vigorously handled that, in spite of the law’s delays, they are adjusted, settled, and secured with such rapidity that within a hundred days the judge can echo the atrocious saying of the Minister,—“Order reigns in Warsaw.”