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Bankruptcy Act of 1898

July 1, 1898

The U.S. Constitution gave Congress the power to establish a uniform system of bankruptcy, but for much of the nation’s history, no such system existed. Congress passed bankruptcy acts in 1800, 1841, and 1867, but each piece of legislation proved unpopular and was short-lived. Not until 1898 did Congress establish a bankruptcy system that endured. The U.S. district courts were made courts of bankruptcy and given original jurisdiction over all bankruptcy matters, while the Supreme Court and the U.S. circuit courts of appeals were given appellate jurisdiction of controversies arising in bankruptcy cases. The act created the position of referee in bankruptcy – an official appointed by the court to carry out many of its bankruptcy functions whose actions were subject to review by a district judge. The bankruptcy system Congress established in 1898 remained essentially unchanged until the legislature undertook a major revision of the laws in 1978.