Some Social and Economic Antecedents of Bankruptcy
The survey of business readjustment, of which this summary is a report of progress, includes two phases: (1) insolvency, and (2) rehabilitation. It is hoped by the analysis of this problem that certain danger signals and guideposts may be indicated for the going concern.' Methods used include the following: 1) an interview with each bankrupt at the bankruptcy court; 2) letters to a minimum of three creditors; 3) in some instances, reference to books2 of the concern; 4) field survey of the neighborhood of the bankrupt; 5) a study of related data; and 6) case and statistical analysis. The neighborhood survey includes interviews with competitors of the failed business man; surveys of the location of the store, of the residence district, a general picture of the physical and social characteristics of the neighborhood in which the debtor conducted his business or carried on his work or in which he lived. Related data include neighborhood barometers such as rentals, factory shutdowns, population and other factors; business standards as practiced by going concerns in that particular district, as well as the success of other forms of operation such as creditor counseling and management. From the employee point of view, consumer financing is a significant point. Included in this report are 86 per cent of the cases appearing before the bankruptcy courts in the period January 7-June 14. This section of the federal court has jurisdiction over Cook and Lake counties in Illinois, the former including the city of Chicago. In order that some of the problems of seasonal significance may be estimated and samples of groups enlarged, cases are still being collected. There are certain dependent factors which may be difficult to separate, such as the relationship between the failure of a retailer and the insolvency of the wholesale concern with which it dealt, or the respective responsibility of partners in failure. Case study and multiple correlations may aid in the weighing of many of these factors. Two distinct types of data are collected, differing in emphasis upon business and consumer problems. The enterpriser has both his business and consumer problems; in addition, a large group of employee bankrupts is almost exclusively consumer in interest.8