The World War II Years

On December 7, 1941, hundreds of Japanese fighter planes attacked the American naval base at Pearl Harbor near Honolulu, Hawaii. The Japanese destroyed nearly 20 American naval vessels, including 8 battleships and more than 350 airplanes. More than 2,000 American soldiers and sailors died in the attack. The next day, the United States declared war on Japan. Two days later, Germany and Italy declared war on the United States. The United States reciprocated. Four years later — in 1945 — after more than 15 million people in the military had died worldwide, including more than 400,000 Americans, the war ended.

The WWII years were a very difficult time for NARB and for referees. Several NARB meetings were cancelled, and both NARB and many referees experienced financial difficulties.

For the six-year period from 1937 to 1942, the number of new bankruptcy cases filed in the United States was more than 50,000 annually. In 1943, the number of new cases dropped to 34,711 and the next year to 19,535, an overall decline in the two-year period of approximately 62.5 percent. At NARB’s 1944 annual meeting, there was great uncertainty regarding whether the decline in bankruptcy case filings had touched bottom. Some thought it had, but in 1945 the number of new cases dropped to about 12,000, and in 1946 new filings dropped to 10,196, the lowest number of cases filed in any year since enactment of the Bankruptcy Act of 1898. Although the increase in filings could not be predicted at the time, by 1954 filings
had increased fivefold from the bottom in 1946 to 53,136, and by 1970 to about 200,000.

In 1940, there were 453 Referees in Bankruptcy in the United States. Many joined the military during WWII. The next year, the number of Referees in Bankruptcy declined to 378, and by 1946 the number declined to 334. Although the number of referees declined by about 25 percent between 1940 and 1945, the number of new case filings during the same period declined by about 75 percent.

NARB’s 1943 annual meeting, planned to take place in Toledo, Ohio, was cancelled due to wartime restrictions on travel. No mid-year meetings were held in 1942, 1943, or 1944. By 1944, NARB was suffering financial difficulties attributable to loss of membership. Gloom characterized the atmosphere of the 1944 annual meeting held in Toledo. The income of full time referees had been drastically reduced and many were having difficulty funding their living expenses from their income as referees. The referees considered suspending publication of NARB’s Journal because of a paper shortage.

Edwin L. Covey, Chief of the Bankruptcy Division of the Judicial Conference, and Henry P. Chandler, Director of the Administrative Office of United States Courts, both spoke at the 1944 annual meeting. They demonstrated a spirit of cooperation with NARB and were sympathetic with the wartime plight of referees. The 1945 annual meeting was cancelled because of the war. Addressing referees at the 1946 annual meeting in Richmond, Director Chandler gave assurances that “if indications mean anything . . . bankruptcy will be a permanent part of the federal judicial system.”

Edwin L. Covey
Edwin L. Covey Chief of the Bankruptcy Division of the Judicial Conference

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