Reviews of Books

Reviewed by Roger H. Brown, American University

Bruce Mann's fine Republic of Debtors investigates changing public attitudes about debt and debt insolvency in eighteenth-century America and traces the beginnings of American bankruptcy law. The book's central theme is the gradual change from the traditional belief that failure to pay one's debts stemmed from personal moral weakness to a more modern understanding that debt insolvency could easily result from forces beyond an individual's control. Up to 1800, the author contends, this change in understanding applied only to elite businessmen, debtors who had borrowed on a large scale and engaged in high-risk enterprise; insolvent farmers and the poor were still held morally culpable for defaulting on their obligations. The book also examines early experiments by colonial and state governments to legislate limited bankruptcy relief and ends with the 1800 Federal Bankruptcy Act, described as a "milestone in the law of failure" (p. 229). Like most of its colonial and state predecessors, this statute provided bankruptcy relief to a limited category of commercial defaulters; as such it represented "a last expression of a dying Federalist order, even as it embraced the thoroughly modern concept of economic risk" (p. 258). Strenuously opposed by the Jeffersonian Republicans, the law was repealed in 1803.

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Early in the eighteenth century, moralists and ministers maintained with Cotton Mather that too many persons brought "Debts upon themselves, in such a manner, and in such measure, that a Folly nothing short of Criminal, is to be charged upon them" (p. 39). Being in debt as such was widely condemned: by midcentury, however, this harsh judgment was changing. Beckoned by the economy's growth and the allure of profit, ambitious entrepreneurs launched new ventures and underwrote them with increasing amounts of credit drawn from more numerous and distant lenders. At the same time, these undertakings became riskier as the economy grew more volatile and greater numbers of persons and sums of money were involved. Increasingly, men began to realize that business failure could just as well stem from unforeseen and uncontrollable circumstances as from moral or behavioral lapses. At the same time, they realized that socially beneficial enterprise involving high risk could be encouraged by providing a way for failed commercial debtors to start afresh. This changing moral sensibility was directly reflected in legislative statutes. The harshest rigors of debtor's prison were mitigated by colonial statutes that provided for a debtor's oath, which released an impecunious debtor from prison after thirty days, and for insolvency proceedings, which protected against prison, provided all property be turned over to creditors; neither of these measures absolved a man from liability for previous debts, however. During the 1750s, 1760s, and 1770s, the commercial colonies of New York, Rhode Island, Massachusetts, and Connecticut experimented with bankruptcy statutes that provided for discharging debtors from all liability and for distributing their assets among creditors. These short-lived laws reflected both ambivalence and no firm agreement about whether they were wise or fair. Occasionally assemblies granted relief when asked for protection against imprisonment, but "only Rhode Island turned petitions for insolvency or bankruptcy into a more or less routinized system relief," which "was the closest thing to a formal bankruptcy system anywhere in the colonies on the eve of the Revolution" (pp. 76–77).

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