Credit Administration and Wage Earner Bankruptcies (with D. E. Cooper)

Abstract

Bankruptcies, more than ever and bigger than ever, have followed our credit administration of the past decade. In 1921 our total technical bankrupts were officially reported at 15,200. In 1931, this number reached 60,322. Outstanding in this history are wage and salary earners. In numbers, wage and salary earner bankruptcies increased from 5,928 in 1921 to 29,814 in 1931. Whereas they constituted 39 per cent of the total of our bankrupts in 1921, that ratio had increased to 49 per cent in 1931. In other words, in 1931 almost one-half of our technical bankrupts were wage and salary earners. Furthermore, there is evidence to support the conclusion that a greater percentage of "no-assets" estates is found in our wage and salary earners' bankruptcies than in any other class of bankrupts. Thus, the bankruptcy records for the fiscal year 1930 have been analyzed to show that 84.90 per cent of the estates of wage and salary earners in bankruptcy had no assets and that 98.17 per cent of those estates had assets per estate of less than $500 in value. It may also be observed that all but a small fraction of our wage and salary earner bankruptcies are instituted by a voluntary petition. In 1921, there were 31 involuntary petitions among the 5,928 wage and salary earner bankruptcies; 5,897 were voluntary petitions. In 1931 there were 116 involuntary petitions among the 29,814 wage and salary earner bankruptcies. In common with all bankruptcies, discharges are freely granted: "98 per cent of the mercantile bankrupts and about 99½ per cent of the non-mercantile bankrupts who seek discharges are granted them outright." These percentages have been "practically constant since the earliest days of the act [Bankruptcy Act, 1898] despite the gradual addition of new grounds for denying a discharge."