PANEL: Debtors, Creditors, and Bankrupts in Victorian Anglo-America
Saturday, October 24, 3:30-5:00Chair: Tony Freyer, University of Alabama School of Law
Discipline and Punish: The Transformation of English Insolvency in the Industrial Age
Margot Finn, Department of History, Emory UniversityLegal and economic historians of eighteenth- and nineteenth-century English debt relations have traditionally emphasized the significance of the distinction between bankruptcy and insolvency proceedings. From the middle ages to the Victorian era, the procedures of bankruptcy provided substantial merchants with a legal mechanism for avoiding full payment of their business obligations, whilst affording these privileged tradesmen immunity from imprisonment for debt. Until the 1860s, however, lesser tradesmen and private individuals were ineligible for bankruptcy. Subjected instead to the relative rigors of the insolvency courts, these debtors--in sharp contrast to commercial bankrupts--confronted substantial difficulties in seeking to liquidate their debts at law, and typically suffered incarceration in a debtors' prison prior to their release from the legal system's grasp.
By emphasizing the distinction between the Bankruptcy Court and the Court for the Relief of Insolvent Debtors, however, scholars have tended to overlook the significant disjunctures that operated within the system of insolvency itself. This paper seeks to redress this imbalance. It does so by analyzing the evolution of two complementary trends within the English law from ca. 1800 to 1860: the expansion of summary small claims courts (both courts of conscience and county courts) and the effort to subject debtors imprisoned by these courts to discipline within the prison. Insulated from punishment within the prison for centuries, superior court insolvents enjoyed a relatively privileged position. The rise of summary small claims courts--and the accompanying increase of the number of imprisoned debtors drawn from the working classes--changed this situation dramatically in the nineteenth century. By integrating the history of small claims law with the history of insolvency and bankruptcy, I seek to expand our understanding of the social basis of legal change in industrial England.
Reconstructing the Law of Failure: The 1841 Federal Bankruptcy Act and the Culture of Debtor-Creditor Relations in America
Edward J. Balleisen, Department of History, Duke UniversityThroughout most of the nineteenth century, the United States lacked a federal bankruptcy process, largely as a result of widespread fears about the expansion of federal jurisdiction that such a process would require. In 1841, however, a Whig-dominated Congress passed a federal bankruptcy statute into law, partly in the hope of attracting the political support of thousands of Americans who had failed in the wake of the Panics of 1837 and 1839. The Whigs further wished to remold America's culture of commercial exchange in line with the dictates of a national economy and New Light Protestantism, encouraging the equal treatment of creditors in cases of financial failure and greater caution on the part of both creditors and debtors. The 1841 Act remained on the books only a year and a half, as complaints about expensive bankruptcy administration, excessively easy treatment of failed debtors, and deleterious impacts on the supply of business credit fueled a successful Democratic campaign to repeal the legislation.
The history of the short-lived 1841 Bankruptcy statute offers rich perspectives on the complex interactions between commercially-minded debtors and creditors in antebellum America, including their contributions and responses to a changing legal environment. Numerous bankrupts and creditors strove to shape the bankruptcy legislation under consideration by the 27th Congress, and to guide the federal bench in interpreting and applying the statute's ambiguities after its passage. Bankrupts won most of these political and legal battles; the 1841 Act accordingly shifted the balance of legal power markedly in favor of the insolvent debtor, with important implications for the tenor of the private negotiations that often settled the terms of a bankruptcy. Creditors nonetheless continued to possess significant legal levers in cases of failure, which the most savvy among them did not hesitate to exploit. This case study thus underlines the crucial importance of examining the role of litigants as well as legislators and judges in shaping antebellum American law.
In addition, the implementation of the 1841 Act suggests the limited ability of antebellum reformers to use the law as a means of refashioning the culture of economic exchange. The legislation only partially achieved its fundamental goal of mandating equal treatment of creditors in cases of bankruptcy, both because diligent creditors continued to find ways to compel preferential payments, and because embarrassed debtors continued to place an extremely high priority on shielding relatives and close business associates from the consequences of failure. In other words, many bankrupts and their creditors retained normative visions of their respective rights and duties that conflicted with the presuppositions animating the new law of bankruptcy.
The Demise of Canadian Bankruptcy Law, 1867-1880: A Comparative View
Thomas G. W. Telfer, University of Auckland Faculty of LawFollowing Confederation, the Canadian government exercised its constitutional jurisdiction over "bankruptcy and insolvency" and passed national bankruptcy laws in 1869 and 1875. However, the federal government repealed the legislation in 1880 and abandoned the field for almost forty years. The paper offers explanations for repeal and discusses comparative developments in the United States and England. Opponents of bankruptcy law raised arguments of individual responsibility to repay debts and the immoral nature of the bankruptcy discharge. In a predominantly rural and local economy, where character played a vital role in credit decisions, arguments grounded in morality had great appeal. By way of contrast, advocates of a national law focused on the advantages that bankruptcy law offered to creditors who traded beyond local markets. Arguments in favour of bankruptcy law were premature and repeal in 1880 was emblematic of the weakness of the national economy. However, the explanation for repeal does not rest solely on economic factors and the nature of credit relationships.
Bankruptcy law debates took place within a specific legal and constitutional context. The legacy of English bankruptcy law as a crime contributed to the unpopularity of the legislation and thus defined the parameters of the debate. Further, English and American repeal movements of the 1870s coincided with the Canadian debates. Finally, like the US Constitution, the federal nature of the British North America Act allowed the Canadian government to abandon the field to the provinces rather than struggle on with reform at the national level.
Comment: Bruce Mann, Law School and Department of History, University of Pennsylvania