Mr. PERLMAN. You do not have to punish the voluntary bankrupt. Mr. REMINGTON. No; that is true. That is better expressed, that you don't have to punish the voluntary bankrupt, by saying that you can not get a discharge within six years. If he can not, neither ought the one who was put into bankruptcy get a discharge within six years again, and if the fellow that is forced into bankruptcy has 10 days' time within which to file his schedule, so ought the voluntary one, so he can act as quickly as the involuntary ones.

Now, those help. You would be astonished to find what effect this would have in the bankruptcy field. Instead of going straight into bankruptcy as contemplated by the law and putting his affairs in the hands of the court as a voluntary bankrupt, he now goes by these means which have been pointed out, which are wrong.

Now, those measures I approve strongly for helping this putting down of collusive bankruptcy, but I do certainly most earnestly recommend to this committee the adoption of this rule with regard to composition.

I want to say it has been considered by a good many of the Federal judges, and almost without exception they have stated that it is an excellent step, in their opinion. I have in writing here the assertion of Judge Knox that that is the view of the judges of the southern district at the time he spoke of it.

Those are the measures that I would particularly bring before the committee. I approve also of the proposed amendment extending the statute of limitations for making it a crime to conceal from a receiver as well as a trustee. I find a little fault with the wording of the amendment that has just passed the Senate, because it leaves out who the concealment is from, and says it shall be punished for concealment of assets. Well, you always have to have a concealment from somebody. It originally read a concealment from the trustee in bankruptcy. What they really mean to-day is to say concealment from the trustee or receiver. Then that would be proper. I hope that this

Mr. MICHENER. You mean all concealment, all having to do with the bankrupt estate.

Mr. REMINGTON. Yes; but there could only be two really, because it is the duty of the bankrupt to report to the receiver, and he should not conceal anything from the receiver any more than he should from the trustee. But the amendment as it reads now is effective. It does not say that, it does not say concealment from anybody, it just says concealment.

I thank you very much.

Mr. MICHENER. I would like to ask one more question, and that is as to official receivers. In two of the bills there are provisions for official receivers, I think. What is your opinion about passing legislation creating official receivers as contemplated in the report of the Merchants' Association, which I think you have read, and also the report of the Bar Association of New York?

Mr. HAYS. And the American Bar Association also.
Mr. MICHENER. Yes; the American Bar Association.

Mr. REMINGTON. Well, I came more especially upon this branch that I have been talking about; but I do say this; that the striking at the basic evil in bankruptcy will dispense with the necessity of any changing of the bankruptcy law as it is to-day. This bankruptcy law is framed on the democratic principle that creditors should control it, and I do not believe much, if I may say so, in supermen; I don't see any difference between an official receiver appointed by a court, I do not think he is made out of much better clay than other court receivers, they are all appointed by the court. And, in addition, it takes away from creditors any responsibility, and that is not our idea of doing things. Our idea is to extend to the creditors incentives to act, and that is what my proposed amendment does, it gives incentive to creditors to help forward and it gives incentive to creditors to investigate the collusiveness too. I do not believe in going back on the principle on which the bankruptcy law was founded.

In addition to that I do not know that we are so enamoured after all of officials in bankruptcy administration.

Mr. MICHENER. The trouble is with the administration, is it not? Mr. REMINGTON. The trouble is with the administration of the law, and it is also with the punishment of creditors for individual action in collusive bankruptcies which I have just shown how I would try to have corrected. They are really penalized for acting instead of being helped to act.

Mr. MICHENER. But the troubles in administration are due largely to laches on the part of the court; is not that true?

Mr. REMINGTON. Do you believe that if the court got right down and worked hard they could solve these problems?

Mr. MICHENER. Yes. Now, the real trouble, as it occurs to me from the hearing thus far, seems to be in places like New York City. The difficulties seem to be well known; the practices, wrongful prac tices, are matters of common knowledge; attorneys come here, reputable members of the bar come here, and tell us about these practices. You, as an authority on bankruptcy and practicing in New York, know of these things. Now, why would it not be just as well to call these matters to the attention of the courts of New York, and why should not those courts then, acting as courts, take steps to bring about the very thing that you want accomplished?

Mr. PERLMAN. Before you answer that, Mr. Chairman, I do not think New York has a monopoly on the vices in bankruptcy.

Mr. MICHENER. So far as it appears before this committee, they apparently have.

Mr. REMINGTON. I want to say in support of the good member's statement that I go about the country a good deal; and while New York has things in exaggerated statute, the same individual, dressed in smaller clothes, is found in every country city. I run across it in various other places. It is human nature, and it comes from the fact that no one has an interest in the whole of the litigation that each of these creditors has but a percentage share; but what is everybody's business is nobody's business, and so it is peculiarly the prey of these evils, and it is going to happen however it comes about, and therefore we must discourage that individual initiative of creditors.

Mr. MICHENER. But the fact that everybody's business is nobody's business is taken care of in communities like New York where a group of individuals are paying particular attention to bankruptcy laws they undertake to take care of everybody's business.

Mr. REMINGTON. Yes.

Mr. PERLMAN. How about Chicago?

Mr. REMINGTON. Just as bad.

Mr. HAYS. And Boston?

Mr. REMINGTON. I don't think Boston is exempt either.

Mr. PERLMAN. I think the committee knows of an Illinois case recently-o

Mr. REMINGTON. I think it goes to smaller cities than those you have mentioned.

Mr. CHRISTOPHERSON. Have you examined the proposed amendment submitted by the American Bar Association?

Mr. REMINGTON. I have; but I do not know that I have seen the most recent one. I did not want to take any part

Mr. CHRISTOPHERSON. I wondered whether you generally indorsed them or not.

Mr. REMINGTON. Well, I am rather careful about what I would say on that. I indorse those specific ones I have mentioned, and I indorse them most heartily, because they tend in the right direction. They don't start everything all over again and give us some more kinds of evils, but they correct in a good old Anglo-Saxon way of molding day by day, year by year, our law; and this is a great jurisprudence, and it has to be molded, and I think by correcting these things we would keep to the basic principles and at the same time do away with those evils.

Mr. MICHENER. You want to improve on the law, but you do not want to change the primary principles; you do not think that the English system would be applicable in this country at this time. Mr. REMINGTON. No.

Mr. MICHENER. We have no administrative board similar to the English Board of Trade, which has sort of general supervision over the general bankruptcy law, and it is your feeling, is it, that the Attorney General's department is not so constituted that it might exercise any supervision akin to that of the English Board of Trade over bankruptcy?

Mr. REMINGTON. I do not know to what extent it could do so. I know one thing, and I am going to be frank. I do not think the Attorney General's office is as active in the prosecution of bankruptcy frauds as it might be with great benefit to the country. Bankruptcy matters seem to get cast aside into the corner, and that happens almost wherever they come up. I don't know why, but bankruptcy matters do have that fate. And yet, on the other hand, the bankruptcy courts are the courts that give to the business communities all through this United States the ideas of what is and what is not right business principles.

Mr. PERLMAN. Right on that point, is it not a fact that under the present administration of the Attorney General's office there has been more activity on the part of the United States attorneys, especially in the southern district of New York, to prosecute fraudulent practices than ever before?

Mr. REMINGTON. You mean the identical oneMr. PERLMAN. I mean under Attorney General Stone and United States Attorney Hayward, have there not been more collusive prosecutions, I mean prosecutions of fraudulent bankruptcy, than before? Mr. REMINGTON. Well, I make a great distinction between Attorney General Stone's regime and the attitude of what it was before. Now, I am going to be frank. I do not believe they have taken up bankruptcy crime with the ability and efficiency and thoroughness that they first manifested; I do not believe so. I can not quite agree with the good Member upon bankruptcy matters in New York previous to Mr. Stone's administration.

Mr. PERLMAN. You have discussed the evils of the administration of the bankruptcy law and collusive bankruptcy and made some suggestions affecting both these questions. Now, is it not a necessary evil also; that a corrupt bankrupt expecting bankruptcy or desiring bankruptcy, will, say, three or four months prior to the bankruptcy, purchase merchandise, not properly account for it, and can we, under the present law, throw the burden on him to properly explain the depletion of his assets or the unusual purchases? Mr. HAYS. In a criminal or civil proceeding?

Mr. PERLMAN. In both criminal and civil proceedings.

Mr. REMINGTON. That is largely taken care of, I think, now under the rules of evidence. There are a good many decisions that say where you have traced assets into the hands of a bankrupt a short time. before the bankruptcy, and he gives no reasonable account of their disappearance, it should be assumed that they are still in his possession; that is, under the rules of evidence, that a state of affairs shown to have existed a short time ago will be presumed to still exist. And, in fact, that is the basis of, I might say, probably three-fourths of the turnover orders, as they are called to-day. That is the only way they can find out. They say, where are those assets? Well, I lost them gambling. I lost them going across Lake Erie as I had a man say-in February. In that case he said it twice, and then I was very much ashamed of the trustee's attorney when he asked him the third time, and the answer then was that it must have been in May-because there is no boat running in February, when everything is frozen. In other words, the failure to account for assets under the circumstances referred to is to-day, under the rules of evidence applicable for centuries, that is, to-day evidence that he still has those assets, and we act on that right along. I have never believed that by statute you got very far by requiring a man to prove that he owns anything. I know the credit men like to have everything operating without effort; but there has got to be some proof. How is a man going to prove his innocence, for instance, as a matter of discharge? All he has to do is to button up his coat and say "I am innocent," and it is up to the other fellow to prove that he is guilty.

Mr. PERLMAN. Well, is not the bankrupt in a better position to explain what has become of his assets? Our State laws in New York have provided that the possessor of stolen goods has to make a reasonable explanation of how he came in possession of the goods.

Mr. REMINGTON. That is a rule of evidence. I was thinking that was ample enough in bankruptcy to-day, we have so many decisions upon turn over orders.

Mr. PERLMAN. In the State of New York it is not a rule of evidence, it is the statute.

Mr. REMINGTON. True. The State of New York has lots of things that are put in the statutes that might be left in the rules of evidence. That is not the only instance; sometimes you get into trouble by putting them into statutes because that rather limits the rules of evidence than otherwise. I am a great believer in letting the old common law help us if it can. I do not believe in the official receiver, I am sorry to say.

Mr. MICHENER. We are very grateful for your being here. We appreciate that the committee has no authority to subpoena witnesses or to employ outside help and when men of your standing come before us and give us their views we are grateful to them.

Mr. REMINGTON. I thank you and also the other members of the committee for their kind attention, which I certainly appreciate.

STATEMENT OF MR. J. NOBLE HAYES, REPRESENTING THE MERCHANTS' ASSOCIATION OF NEW YORK

Mr. HAYES. Mr. Chairman and gentlemen, I appear here in behalf of the Merchants' Association who instituted a broad inquiry into the whole subject of bankruptcy in 1922.

The Merchants' Association is one of the largest commercial associations, I believe, in the world, and one of the most responsible and energetic. Complaints had so multiplied from members of that association-there are some 20,000-and related members and other persons in regard to the defects in the administration of bankruptcy, not only in New York but throughout the country, and having in mind that anything that affected the honest administration of bankruptcy in great centers such as Chicago, New York, etc., affected the whole country-for New York has become the clearing house of the Nation and a man dealing in Kansas with New York-or any of the Western States-he is dealing with New York concerns. Now, if they go into bankruptcy he has to go there to enforce his claim, and if you are going to demoralize bankruptcy proceedings in these great public centers you are going to affect the whole country. It is like a vicious disease in some part of the body. So in this great Republic it would, anything that affects these great commercial centers affects the whole body politic of the Nation.

I think everybody will agree who have given any attention to this most interesting subject that a sound bankruptcy law has much to do, as Mr. Remington has said, with the business morale of the whole Nation, and a bankruptcy law which is unjust, which is susceptible of converting what was intended as a relief to honest judgment debtors and to honest creditors, to be perverted so it is an instrument of injustice and fraud and oppression, is certainly one of the most detrimental things to national and international commerce that can happen.

Now, having all that in mind, the Merchants' Association appointed this committee, and just one word in regard to the composi tion of that committee. There was an ex-judge of the court of appeals on the committee, and ex-judge of the appellate division: also Mr. Gerard, who was Ambassador to Germany; also Mr. Wickersham, ex-Attorney General of the United States. There