Book Review:  Republic of Debtors: Bankruptcy in the Age of American Independence,Book Review

By: Bruce H. Mann (Cambridge, Massachusetts: Harvard University Press, 2002. 344 pp. $29.95 (ISBN: 0–674–00902–9))

“Give us this day our daily bread and forgive us our debts as we forgive our debtors.” Sound familiar? Debt and debtors were important enough to find their way into the Lord’s Prayer, but it has taken Bruce Mann’s Republic of Debtors to give them their due in American historiography. Indebtedness and the cultural use we make of it have been critical to every period of the nation’s history. Mann examines debt in the colonial and early national periods, showing how its redefinition as an economic rather than a moral failing cemented America’s identity as a commercial nation. Republic of Debtors throws open the understudied and terrifically important world of American debt, and deserves to be widely read.1
      It is hard to make this important subject accessible. Mann’s first two chapters relate the different kinds of debt, debt relief, and debt legislation in early America, and, despite his engaging writing and pertinent anecdotes, the trip through bills of exchange and writs of attachment is slow going. Critically, though, his picture of the interweaving of debt and credit in the cash-starved colonies shows a world in which men were enmeshed in an intricate web of financial obligations. “Debt was an inescapable fact of life in early America,” Mann remarks (3).2
      Debt had moral significance for American colonists, and the story picks up considerably in chapter three, when Mann begins to examine the cultural meanings of imprisonment for insolvency. “[I]nability to pay was a moral failure, not a business risk … like other moral failures, such as fornication or drunkenness, it called forth sanctions that to modern eyes were disturbingly punitive” (3). Debtors were imprisoned, and, unlike incarcerated criminals, received no rations and were expected to pay for their maintenance. Some begged to be saved from starvation.3
      Indebtedness introduced strange ideological conflicts in the young republic. The nation championed liberty; debtors were imprisoned. Americans were independent; debtors, dependent. Americans heralded freedom; debtors compared themselves to slaves. The nation demanded manliness; debtors were “unman’d” by their failure (121). Small wonder that debt threatened the fledgling nation. Individual insolvency had national importance, for “when the foundational belief of free Americans was in independence, whatever weakened independence reflected upon the republic itself” (263).4
      The interpretation of debt as moral failure changed dramatically after the Revolution, Mann argues, when unstable currency, expanded commercial activity, and a rash of business failures made Americans redefine business debt as “the downside of entrepreneurial risk … the potential common fate of all merchants” (177). States began to experiment with bankruptcy legislation, but from the beginning it was assumed that such laws would only apply to commercial debtors. Only theirs was an economic failure; individual insolvency was still believed to be the results of profligacy, laziness, addiction to luxuries.5
      It was a small step from state bankruptcy action to national bankruptcy legislation, which quickly led to arguments about the nature of America and the national government. Discussions of national legislation raised Jeffersonian fears that the nation was deteriorating into an overly commercial society. By threatening to establish a national law that took precedence over state laws, the idea of national bankruptcy legislation also represented a strong national government. Bankruptcy became “part of the ideological divide between commerce and agriculture … [and] that between nationalism and federalism as well” (214).6
      The short-lived Bankruptcy Act of 1800 marked the end of “the moral economy of debt as a religious imperative,” at the same time that it revealed “its rebirth in a secularized form.” “The Act was forged in the ideological debates that defined Revolutionary America—issues of commerce and agriculture, vice and virtue, slavery and freedom, dependence and independence, nationalism and federalism—but it settled none of them. It addressed the fundamental question of whether and how a society should forgive its debtors, but the answers it offered were merely provisional. Every subsequent generation, including ours, confronted the question for itself” (254–55).7
      Critical to understanding the American approach to debt, Mann argues, is the American distinction between individual and commercial debt. Early bankruptcy applied only to commercial debtors “because only they could not avoid economic risk. Only they could fail. All other debtors merely grew poorer, their insolvency the result not of risk but of their reach exceeding their grasp.” As Mann points out, this was “an oddly narrow understanding of economic risk, excluding as it did the hazards and chance that could rain economic ruin on farmers, tradesmen, and other non-merchants” (208).8
      This odd disparity in the way Americans view personal and business debt still persists. Corporate failure is perceived as a result of impersonal market fluctuations. Despite “abundant empirical proof that individuals file for bankruptcy for reasons of genuine financial distressed untouched by … fraud or irresponsibility,” (255) individual failure is still seen as a moral failing. Instead of questioning the “economic and political structures that undermined … independence by creating a world in which mere subsistence often requires husbands and wives to work, leaving families vulnerable when they lose a wage-earner to death, illness, injury, divorce or unemployment,” we fall back on “an almost religious belief in the moral neutrality of the market,” which makes “failure individual rather than structural” (263).9
      Now, about those “trespasses”…10
Heather Cox RichardsonWinchester, Massachusetts

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