These are samples of the glorious achievements of the insolvent rich. Now let us turn to the shorter and simpler annals of the insolvent poor. For them the maxim, “Si non habet in aere luat in corpore,” is still a living truth, only they hear it as quoted to me once by a poor woman in the words of some Scotch draper: “If I canna ’ave yer brass I’ll tek yer body.” The law is not the same for the speculator who lives extravagantly above his income to the injury of his creditors and the working man on five-and-twenty shillings a week who fails to live within his means. The latter is only in a very limited sense the creature of bankruptcy. The luxury of legal insolvency is almost denied to him. He is ordered to pay his creditor, and the costs his creditor has incurred in obtaining judgment, and the fees of the County Court, at so many shillings a month, and if he fails to pay his instalments his creditor proceeds, at further cost to the debtor, to collect them by means of a judgment summons. Then, upon proof that he has or has had the means to pay the instalments due, he is committed to prison for default. Few citizens, I think, recognise the number of persons who are thus committed to prison. In 1909[2] no less than 375,254 summonses were issued, 234,753 heard, 136,630 warrants issued, and 8,904 debtors actually imprisoned. Nor can it be granted that of those who pay between the issue of the summonses and the day of imprisonment, all, or nearly all, are in a position to pay, in the sense of possessing surplus money sufficient to discharge the debt. Friends and relatives come to the rescue, fresh credit is obtained to pay off the old debt, and thus the result of a committal order is too often to thrust the unfortunate debtor one step deeper into the slough of insolvency in which he is already sinking beyond recovery. At the same time it is of no use railing at the system. The Select Committee of 1893 reported generally in favour of it, mainly, I think, because the working class themselves uphold it. They uphold it for one reason—and a powerful one—because without imprisonment for debt there would be no reckless credit, and without reckless credit there would be no possibility of prolonging a strike after their own accumulated funds began to give way. All that any individual Judge can do is to administer the system with as much sympathy and mercy as is compatible with its honest working, without prejudice to his right of private protest as a citizen against its social iniquity.
Having now pointed out the position of the small debtor in the County Court, I want to draw attention to an existing system of small Bankruptcies known as Administration Orders which are very little used or appreciated by either the Courts or by debtors, but which with some improvements might do much to mitigate the evils of the existing system of imprisonment and check the recklessness with which credit is given to the poor.
This Administration Order was the creation of the Bankruptcy Act of 1883, and in a few words the system may be thus described: Where a debtor has a judgment against him in a County Court and is unable to satisfy it forthwith, and alleges that his whole indebtedness does not exceed £50, he may file a request for an Administration Order. In this request he gives a full list of all his creditors with particulars of their debts, and states whether or not he proposes to pay them in full and by what monthly or other instalments. Notice is given to creditors of the date of hearing, and on that day the Judge either makes or refuses the order, or makes a modified order at his discretion. As soon as the order is made all proceedings against the debtor, in respect of the debts scheduled, are suspended, and the creditors individually cannot attack him. He can, however, if he does not pay his instalments, be committed for default or the order can be rescinded. The fund created by his payments is appropriated—(1) for the Plaintiff’s costs in the action; (2) for the Treasury fees, which are 2s. in the £ on the total amount of the debts; and (3) for the debts in accordance with the order.
This is the system which Mr. Chamberlain, on the second reading of his Bill, March 19th, 1883, described as a system whereby the “small debtor would be in exactly the same position as a large debtor who had succeeded in making a composition with his creditors or in arranging a scheme of liquidation. Although he had not abolished in all cases imprisonment for debt, yet, if these provisions became law, it could be no longer said that any inequality existed in the law as between rich and poor. The resort to imprisonment[3] to secure payment would be much rarer, and a large discretion would be vested in the Judges to arrange for the relief of the small debtor by a reasonable compensation.”
These were brave and wise words, interesting to-day as showing the then intentions of the author of the system, hopeful to-day as suggestive of what may be expected from those in authority when they recognise the failure of the system in achieving the objects for which it was invented.
The advantage of the Administration Order over the individual collection of debts is manifest, but the imperfections in the system are equally manifest. The limit of £50, and the exorbitant Treasury fees to be paid in priority to the dividend to creditors, are of themselves sufficient to account for the failure of the system. Thus it is not surprising to find that in many of the Courts this section of the Act is a dead letter, and the Administration Order is unknown. There is, and I think rightly, a wide discretion given to Judges of the County Courts who are supposed to study the needs and wants of their particular localities, and minister to these wants in a quasi-pastoral spirit. Without the active assistance of Judges and Registrars such a system as this could not be either known to—or understood by—the insolvent poor. Many Judges probably think the system worthless, and in consequence it is not used. Thus in 1909, on two circuits, 5 and 8, Bolton and Manchester, 821 orders were made, while on five large London circuits, 40-44 inclusive, only 37 orders were made. I have myself found a considerable increase in applications for Administration Orders since I have encouraged debtors whose affairs were in a hopeless state, to make their application, and taken occasion to explain to debtors appearing on Judgment Summonses the provisions of the section enabling them to apply. How hopeless is the condition of many of the insolvent poor, and what they are reduced to by reckless credit given to them by some classes of tradesmen may be seen from some of the following cases extracted from the Administration Order Ledgers of Manchester and Salford:—
“M. No. 358.—Labourer; wife; 9 children; 18s. per week; 12 creditors; 7 judgments; debts £40. 9s. 8d. Has nearly finished paying these at 5s. in the £ by instalments of 6s. a month. The Treasury got £3. 4s. Court fees on the 7 judgments, and £4 fees on the Administration Order.
“M. No. 399.—Labourer; 22s. a week; wife; 11 children, two earning 5s. a week; 14 creditors; 10 judgments; debts £44. 16s. 1d. Was paying 10s. in the £ at 10s. per month. Paid £6; order then rescinded. Treasury taking £4. 8s. fees; creditors, £1. 12s. The Treasury had previously had £3. 17s. Court fees on the 10 judgments.
“S. No. 429.—Railway Porter; 16s. 10d. a week; wife and 1 child, aged three; 19 creditors; 13 of the creditors travelling drapers; debts, £33. 10s. Order, 10s. in the £ at 5s. 6d. a month. Before the Order was made he was, under the 9 judgments, bound to pay 39s. 6d. a month, and liable to committal if he failed. The Treasury had already had £3. 4s. 9d. Court fees on the judgments, and will get a further £3. 6s. fees on the Administration Order.
“S. No. 551.—Labourer; wife and 6 children, two earning jointly 10s. per week; wages, 18s. a week; 18 creditors, of whom 11 were travelling drapers; 16 judgments; debts, £20. 10s. 2d. Already liable to pay 35s. a week to different judgment creditors. Order made, 10s. in the £ at 4s. a month. Court fees already paid to Treasury £4. 14s. 3d. Under the Order they will have another £2. In this case the State has added more than 30 per cent. to the original indebtedness of the man in the vain endeavour to make him do what he was unable to do, i.e., pay his debts without the means to pay them.