Another much-used stratagem, and one to which we owe the term "serious and legitimate creditor," is that of creating creditors,--just as du Tillet created a banker and a banking-house,--and introducing a certain quantity of Claparons under whose skin the bankrupt hides, diminishing by just so much the dividends of the true creditors, and laying up for the honest man a store for the future; always, however, providing a sufficient majority of votes and debts to secure the passage of his certificate. The "gay and illegitimate creditors" are like false electors admitted into the electoral college. What chance has the "serious and legitimate creditor" against the "gay and illegitimate creditor?" Shall he get rid of him by attacking him? How can he do it? To drive out the intruder the legitimate creditor must sacrifice his time, his own business, and pay an attorney to help him;
while the said attorney, making little out of it, prefers to manage the bankruptcy in another capacity, and therefore works for the genuine credit without vigor.
To dislodge the illegitimate creditor it is necessary to thread the labyrinth of proceedings in bankruptcy, search among past events, ransack accounts, obtain by injunction the books of the false creditors, show the improbability of the fiction of their existence, prove it to the judges, sue for justice, go and come, and stir up sympathy; and, finally, to charge like Don Quixote upon each "gay and illegitimate creditor," who if convicted of "gaiety" withdraws from court, saying with a bow to the judges, "Excuse me, you are mistaken, I am very 'serious.'" All this without prejudice to the rights of the bankrupt, who may carry Don Quixote and his remonstrance to the upper courts; during which time Don Quixote's own business is suffering, and he is liable to become a bankrupt himself.
The upshot of all this is, that in point of fact the debtor appoints his assignees, audits his own accounts, and draws up the certificate of bankruptcy himself.
Given these premises, it is easy to imagine the devices of Frontin, the trickeries of Sganarelle, the lies of Mascarille, and the empty bags of Scapin which such a system develops. There has never been a failure which did not generate enough matter to fill the fourteen volumes of "Clarissa Harlowe," if an author could be found to describe them. A single example will suffice. The illustrious Gobseck,--ruler of Palma, Gigonnet, Werbrust, Keller, Nucingen, and the like,--being concerned in a failure where he attempted to roughly handle the insolvent, who had managed to get the better of him, obtained notes from his debtor for an amount which together with the declared dividend made up the sum total of his loss. These notes were to fall due after the /concordat/. Gobseck then brought about a settlement in the /concordat/ by which sixty-five per cent was remitted to the bankrupt. Thus the creditors were swindled in the interests of Gobseck. But the bankrupt had signed the illicit notes with the name of his insolvent firm, and he was therefore able to bring them under the reduction of sixty-five per cent. Gobseck, the great Gobseck, received scarcely fifty per cent on his loss. From that day forth he bowed to his debtor with ironical respect.
As all operations undertaken by an insolvent within ten days before his failure can be impeached, prudent men are careful to enter upon certain affairs with a certain number of creditors whose interest, like that of the bankrupt, is to arrive at the /concordat/ as fast as possible. Skilful creditors will approach dull creditors or very busy ones, give an ugly look into the failure, and buy up their claims at half what they are worth at the liquidation; in this way they get back their money partly by the dividend on their own claims, partly from the half, or third, or fourth, gained on these purchased claims.
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.