controlled by professional
proxy-holders, in whose hands these documents acquired a marketable value.
They were not only used to vote for liquidation by arrangement instead of
bankruptcy proceedings, but not infrequently the matter took the form of a
bargain between an accountant and a solicitor, under which the former
became trustee and the latter the solicitor in the liquidation, without any
provision for control over expenditure or for any audit of the accounts.
Even where a committee of inspection was appointed to exercise functions of
control and audit, they too were often appointed by the proxy-holders, and
not infrequently shared in the benefits. On the other hand, where the
amount of debts represented by the proxy-holder was insufficient to carry
the appointment of a trustee and committee, the votes could be sold to
swell the chances of some other candidate. Hence ensued a system of
trafficking in these instruments, the cost of which had in the long run to
come out of the estate. The result was that undesirable persons were too
frequently appointed, whose main object was to extract from the estate as
much as possible in the shape of costs of administration. The debtor was
practically powerless to prevent this result. If he attempted to do so he
sometimes became a target for the exercise of revenge. His discharge, which
under liquidation by arrangement was entirely a matter for the creditors,
might be refused indefinitely; and so largely and harshly was this power
exercised under the proxy system, especially where it was supposed that the
debtor had friends who could be induced to come to his aid, that a special
act of parliament was passed in 1887, authorizing the court to deal with
cases where, under the act of 1869, a debtor had not been able to obtain a
release from his creditors. On the other hand, the complaisant debtor,
although he had incurred large obligations in the most reckless manner,
often succeeded in stifling investigation and obtaining his release without
difficulty as a return for his aid in carrying out the arrangement.

The result of such a system could not be other than a failure. After the
act of 1869 had been in operation for ten years, the comptroller in
bankruptcy reported that out of 13,000 annual failures in England and
Wales, there were only 1000 cases (or about 8%) "to which the more
important provisions of the act for preventing abuses by insolvent debtors
and professional agents appl