The concern for the airlines is warranted, but there is an unfortunate and misguided message in the rush to bail them out. The message is that the U.S. bankruptcy system cannot adequately address the economic fallout from the Sept. 11 atrocities. History tells a very different story. The U.S. bankruptcy laws were forged in disaster over a century ago, and they are better designed to handle a catastrophe than the laws of any other nation in the world. During the 19th century, a series of devastating depressions caused dozens of railroads--which were even more important to American life than the airlines are today--to default on their obligations. Everyone agreed that the railroads had to be kept in business.
The problem was that no one was quite sure how. ..."