“Small debts are like small shot; they are rattling on every
side and can scarcely be escaped without a wound; great debts
are like cannon; of loud noise but little danger.”
—_Dr. Johnson._
The average man—the “man in the street,” as the journalist of to-day
calls him—has no clear notion of the affairs of the County Court. He
reads occasional paragraphs in the evening papers of some amusing
incident, in which the humour of the Plaintiff or Defendant is capped
by the humour of the playful and learned Judge, and the humour of the
reporter, displayed in his dramatic sketch of the litigants, is the
chief motive for the record of the case. I have often been told that my
work must be very amusing, that I must see a great deal of life, and
that County Court cases seem very entertaining, and I have come to the
conclusion that those of the public who never enter a County Court, or
read any sane record of its everyday work, which is too often dull,
wearisome, and painful, and no fit material for paragraphs and headlines,
live in the belief that the occupation of a Judge of a County Court is
a legal form of small beer and skittles, in which the Judge’s part is
to preside with free and easy good humour, and settle disputes with as
much wit and readiness as he happens to possess. No one who has any
experience of the actual proceedings of the Courts would recognise such
a picture as in any way portraying the facts of the case.
In Manchester and Salford I was able to divide the work of the Courts
into two classes, and to keep them distinct from each other. One
contained an increasing number of Bankruptcy, High Court, and other
cases, in which the litigants are of the same class and have the same
legal assistance as in the High Court. The main differences between the
High Court and the County Court in the conduct of such actions, being the
simplicity of the procedure, and the rapidity and punctuality of trial
in the inferior Court. The second, and to my mind the more important, if
less interesting class of cases, was the large mass of debt collecting
cases under £2, which were the original work of Courts created by the
legislature for the “better securing the payment of small debts.” The
first class of work is a somewhat onerous compliment to the ability with
which the County Courts of the country are worked, but the second class
ought always, it seems to me, to be the chief interest and care of County
Court officials. And in the work connected with this smaller class of
cases, the chief result of my experience has been a dull sense of the
enormous mass of misery and wretchedness it is one’s duty to cause, and
the despondent feeling that of necessity oppresses one in the presence of
misfortune, that one can sympathise with, but not to any material extent
alleviate. I should like, therefore, if it be possible to bring home to
the average citizen the hopeless and almost degrading position of the
insolvent poor, and to suggest for his consideration some of the reforms
which, with or without legislation, might assist in bringing about a
better state of things.
To begin with, one may state that there are over a million cases entered
every year in County Courts, to recover debts under £20, and it will
give some idea of how few cases are seriously disputed when I state that
there are only between eleven and twelve thousand cases in which the
Plaintiff fails to succeed, and these latter figures refer to all cases
up to and above the £50 limit. Many cases get settled, some plaints
never get served, but I have no doubt that one is well within the mark
in stating that 98 per cent. of cases under £20 result in judgment for
the Plaintiff. It is clear, therefore, that the Court is to this extent a
collecting agency rather than a Court for the determination of disputes,
and it is, in this respect, that its machinery should be examined. Few
who do not know by personal experience, something of the life of the
poorer class of working men and women, recognise the enormous extent
to which they live and have their being on credit. The extent to which
credit is given, and recklessly given, to men, women, and children, by
the competing tradesmen who supply the working classes, would be an
absurdity if it did not lead to so much misery. As Judge Chalmers put it
in an epigram born of his wide experience of the insolvent poor: “They
marry on credit to repent on Judgment Summonses.”
Now the two main causes of this reckless system of credit are:—(1) the
keen competition among tradesmen; (2) the existence of imprisonment for
debt. It is not advisable here to say much of trade competition. If it
were a competition to sell the best goods at the most reasonable price it
would perhaps be healthy enough, but it seems to be rather a competition
to give the longest credit for the most inferior article. The largest
classes of competitors are the money lenders, the credit drapers, or
“Scotchmen,” the travelling jewellers, the furniture hirers, and all
those firms who tout their goods round the streets for sale by small
weekly instalments. These of necessity give reckless credit, and, equally
of necessity, collect their monies with much suffering to their poorer
customers. It seems fairly clear that to a working man on small weekly
wages, no credit can be given in any commercial sense. A tradesman, if
he gives credit at all to such a man, ought to give it upon the ground
that he has reason to believe that he is an honest man who can and will
pay his debts. As a matter of fact, the two chief reasons, or rather
excuses, for giving credit are both somewhat weak. Tradesmen will tell
you that they have given a man credit either because he was in receipt of
good wages or because he was out of work. In the first case they ought
clearly to insist upon cash, and the workman ought to get the advantage
of a cash price, and in the second case they should only give credit if
they know the character of the man, unless, of course, they choose to
call it charity, with which the County Court has nothing to do. But in
truth, credit is given without enquiry, recklessly and equally to those
in work and out of work, for necessities, luxuries, and inutilities,
and given at a price which includes the profit of the credit giver, his
costs of making weekly collections, the costs of his debt collector or
solicitor, and ultimately a considerable tribute towards the maintenance
of the County Court.
Now all this is only possible because of the second factor in our
treatment of the insolvent poor, namely, imprisonment for debt. The
insolvent rich—if we may use such a phrase—do not nowadays fear
imprisonment for debt. At the expense of a few pounds borrowed from a
friend, they file their petition in bankruptcy and shake themselves
free of all their creditors as if by magic; for not being traders their
discharge is of little importance to them, and they go absolutely
unpunished. I set down a few cases from an Annual Report of the Board of
Trade for comparison with some other cases, which I propose to set out
later:—
“Bristol. No. 64, of 1896.
Liabilities expected to rank £36,631
Probable value of assets on realisation £100.”
Debtor, younger son of a duke. Creditors, mostly money-lenders
and tradesmen. His expenditure, which included losses by
betting, largely exceeded his income, and knowledge of his
insolvent position for some considerable period was admitted.
“Kingston. No. 21, of 1896.
Liabilities expected to rank £21,741
Probable value of assets on realisation £667.”
Debtor, formerly in the army, lived on his wife’s income, lost
money in Stock Exchange speculations and betting. No income
except £135 derived under marriage settlement.
“No. 471, of 1896.
Liabilities expected to rank £298,166
Probable value of assets on realisation £1,700.”
Debtor, a peer. At the time of his succeeding to estates
in 1864 his liabilities were £30,000, and have apparently
continued to increase in consequence of his expenditure being
larger than his income. His discharge was suspended three years
on account of unjustifiable extravagance in living.
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.
“S. No. 460.—Ostler; wife; no children; 21s. a week; 25
creditors; 9 judgments; debts, £32. 7s. 6d.; 14 of the
creditors travelling drapers. Order, 10s. in the £ at 6s. per
month. Apart from the Order he was bound under the judgments
to pay 22s. a month. Here the Treasury have already had £2.
8s. 6d. Court fees, and will get a further £3. 4s. fees on the
Order.”
In the three last cases the insolvency was chiefly due to a careless
wife. The porter’s wife was quite young and an easy prey for the
travelling draper.
From these cases it is at least clear that if such debtors are to be
left to their various creditors, a large portion of their time will be
spent in evading the service of Judgment Summonses or appearing in Court,
either by themselves, or more usually by wife and baby, to show cause
why they should not go to gaol. Without the assistance of some form of
bankruptcy and discharge their case is hopeless, and their future must be
one of chronic insolvency.
One of the chief objections to the present system raised by creditors
is the exorbitant fees charged by the Treasury. Parliament enacted that
these fees should “not exceed” 2s. in the £ on the total amount of the
debt. The Treasury interpreted this to mean that there should always be
2s. in the £, whatever composition was paid, and ordered accordingly.
So, if a man’s total debts be £50, the Treasury draw £5, whether the
debtor pays 20s. in the £ or 2s. in the £, and draws this in priority
to creditors and whether the Order is fully carried out or not. As we
have seen, the Treasury have often, before the Order is made, drawn
considerable sums on judgments forming part of the Order, and creditors
contend, and I think rightly, that these fees are excessive.
Some time ago I collected the views of the Judges on these fees, and
forwarded them to the Treasury. Speaking generally, they were adverse
to the fees, but the Treasury, although they have the power to mitigate
the fees, cannot see their way to do it. I put this matter in the
forefront of possible reforms, because it can be done by a stroke of the
departmental pen without legislation, and if done would do much to render
these orders more useful to—and therefore less unpopular with—creditors.
I have often pointed out to grumbling creditors that these fees were
probably not intended by Parliament to be exacted, for I have never
thought it part of my duty to apologise for the rapacity of a Government
department. And when I saw the figures for 1909, “Treasury income from
fees on Administration Orders £12,824, money paid to creditors £45,059,”
I could only concur in the view that it was little short of a scandal
that such an income should be drawn by any department out of so miserable
and helpless a class as the insolvent poor, especially when it is done at
the expense of those to whom they owed money.
The Treasury, of course, have a departmental view perfectly sane and
satisfactory after its sort. If I understand the view aright it is
this:—These Orders do not pay their way according to our calculations.
There is an income of nearly £13,000 a year coming to us under an Act of
Parliament, and our duty is to take what is provided, asking no questions
for conscience sake. If one could get beyond the department to the
individuals composing it, and make them realise in the midst of their
great affairs that this sum of £13,000 a year, trumpery but acceptable,
at Whitehall, is a grievous tax in the cottages of the insolvent poor,
some reform would perhaps be made. Indeed, I cannot but think that the
departmental view of the small work of the County Court is altogether
wrong in principle, and that the time is at hand when Parliament should
enforce a more modern view of its duties on the department. The constant
cry is that the Courts do not pay. The answer is that they ought not
to be asked to do so. The toll-bar principle ought to be gradually
abolished, and the Courts of the country ought to be as free to Her
Majesty’s poorer subjects as the high roads. Nowhere is this more true
than in the County Court, where the fees throughout are exorbitant and
excessive, pressing with the greatest harshness on those who are already
over-burdened with debts.
These and other matters have, however, been reported upon by
commissioners and mentioned in Parliament. The only immediate reform
that can be made is the reduction in Treasury fees. That can be done
forthwith and without legislation if Parliament desires it, and ought
to be done without delay. After that it will be time to put forward
a more satisfactory scheme of small bankruptcies, open to all weekly
wage-earners, whatever the amount of their debts, with an official
receiver responsible to the creditors and the Court. Parliament ought
at least to find time to carry out the recommendations of the Select
Committee of the House of Lords in their report on the working of the
Debtors’ Act, printed in 1893. The most important suggestion there made
was: “That the question of costs in respect of Judgment Summonses and
Orders of Commitment is one deserving serious consideration, and that it
would be advisable that a Departmental Committee of the Treasury should
carefully consider the matter as early as possible.” This question of
costs and fees in all small proceedings is one that wants an immediate
and searching investigation and reform of a not wholly departmental
character.
Meanwhile faith, which will remove mountains, enables me to believe that
the Departmental Committee of the Treasury are giving it a wise and most
deliberate consideration. Hope also buoys me up to look forward to a time
when Parliament will amend the Statutes of Limitations in regard to small
debts, curtail imprisonment for debt, and enact at least as favourable
laws for the insolvent poor as exist for the insolvent rich. Charity,
meanwhile, compels me to grieve that so little is done to stop the
reckless credit which is offered to the poorer classes, and to urge the
consideration of such measures as may assist the insolvent poor, who of
all our fellow citizens seem to me to demand pity and sympathy, in place
of punishment, rigour, and harsh laws.