Book Review

Edward J. Balleisen's important study of antebellum bankruptcy is not so much a legal history--although there is plenty about lawyers, judges, and law--as it is a social and cultural history. Balleisen analyzes a rich collection of federal bankruptcy records from 1841-43 covering New York's southern district, which encompassed New York City, Long Island, and the lower Hudson Valley. He links a sample of 503 southern New York bankrupts to R. G. Dun credit reports, archival collections, and other records. Although necessarily limited to a few years and one area, the end result is an impressive collective biography of antebellum bankrupts that represents a diverse array of occupations, religions, and family backgrounds.	1
In Part I, Balleisen uses these biographies to understand the reasons why so many individuals failed during the financial upheaval of the late 1830s. Echoing the debates of antebellum commercial moralists, Balleisen considers whether antebellum bankrupts were the helpless victims of a national economic downturn or reckless speculators and spendthrifts who deserved their fate. His analysis reveals that both portraits of bankrupts had a large element of truth. Some bankrupts failed as an inevitable consequence of a deflationary economy that ravaged the nation's credit system or because a trusted associate absconded with the firm's assets. Others failed because they overextended themselves with too little capital or succumbed to a taste for luxury that exceeded their incomes.	2
The debates over the causes of bankruptcy, Balleisen makes clear, had important political implications. The Whig Party--casting bankrupts in the Panics of 1837 and 1839 as the innocent victims of the Democratic Party's failed monetary policies--passed the Bankruptcy Act of 1841. Under the Act, debtors could file for voluntary bankruptcy and turn over their assets to court-appointed assignees, who speedily liquidated assets into ready cash to pay creditors. Creditors could only contest voluntary applications by proving a specific fraud, such as the failure of a debtor to report a particular asset. With federal judges setting a high standard of proof for such claims, creditors found themselves forced to negotiate compromises or risk receiving little for their claims. In most judicial districts, creditors received only one percent or less of their loans. Outraged Democrats successfully pushed to repeal the law in 1843, but only after some 41,000 bankrupts had appeared before federal courts.	3
Debtors were not the only ones to benefit from the Bankruptcy Act of 1841. The Act created an entire cottage industry around financial catastrophe, ranging from newspapers that published official notices to court appointees who sold assets and distributed assets. Balleisen deftly recounts how court appointees--some of whom were former bankrupts themselves--utilized inside information to buy assets at bargain prices. This practice of "wrecking" elicited widespread comment in the antebellum period, including a surprisingly vibrant discourse that saw failure as a natural part of the economy. Wrecking thus became, at least in the eyes of some business writers, "a perfectly honorable way to make money" (160).	4
If wrecking became an honorable way of making a living, the experience of bankruptcy as a whole soured some middle-class Americans on the ideal of independent proprietorship. Balleisen finds that many bankrupts did quite well after obtaining their releases, but nevertheless commercial moralists increasingly extolled the "independence" of salaried employment that avoided the tangles and snarls of a complex credit network. The experience of failure, according to Balleisen, encouraged middle-class men to forgo the risky world of entrepreneurship and enter the relative safety of white-collar employment.	5
There is much to recommend in this innovative study. The writing is extraordinarily clear, with especially lucid descriptions of complex credit and legal institutions. However clear and concise, Balleisen is never simplistic. Unlike much labor and social history, which often revolves around clear-cut dichotomies such as "commercial morality" and "moral economy," Balleisen painstakingly details the complexity of the antebellum credit system and its underlying moral foundations. Businessmen became deeply intertwined in credit networks that stressed mutuality and reciprocity, yet also engaged in strategic behavior that bordered on the fraudulent. Men cherished propertied independence, yet also risked their family fortunes on highly speculative ventures. Commercial moralists celebrated the risk-taking entrepreneur, yet also encouraged young men to work in safe, salaried jobs. Balleisen's focus on particular individual cases allows him to understand, in a satisfyingly concrete way, how these tensions and contradictions unfolded.	6
The same method, however, does not work quite as well when making larger conclusions about trends over time. Balleisen's argument that the experience of bankruptcy helped make salaried, white-collar occupations more acceptable, for example, is not entirely convincing. Bankruptcy may have peaked in the early 1840s, a scenario made all the more plausible because of improved credit reporting in the 1840s and 1850s and a greater reliance on cash instead of credit in the general economy. If that was indeed the case, then entrepreneurship should have become more acceptable at the end of the antebellum period. The fact that many bankrupts were able to pick up the pieces and embark on successful ventures likewise suggests that bankruptcy hardly struck fear into the hearts of the middle class. Fear of failure may have been a contributing factor in the shift to salaried work, but one wonders if other trends--such as higher capital requirements needed to start a new business--were ultimately more important in the relative decline of individual entrepreneurship. It is to Balleisen's credit that his richly detailed portrait of antebellum bankruptcy gives historians a strong starting point to address such issues.	7
John Majewski University of California, Santa Barbara

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