Themes: Economics, Class
Geographical Scope: NY, PA
Chronological Scope: Mid-18th to early 19th century
Thesis Summary: This cultural history charts several shifts in the colonial economy with respect to how colonists saw debt. Mann distinguishes between two important terms: insolvency, which is the inability to pay a debt, and bankruptcy, which is the release of obligation from that debt. Partially because of the way the barely passing Bankruptcy Act of 1800 was structured to favor large debtors, people in lower socio-economic strata objected. Mann argues that the passage of this Act (and subsequent acts in decades to come) signals a shift in the way people viewed debt from a moral, communal issue to one of impersonal debt management. Also instrumental were the financial difficulties provoked by the Seven Years War. Finally, the religious basis for assessing the moral implications of borrowing also receded during this time. People, at least the white class of men who could afford bankruptcy, saw themselves as entrepreneurs who engaged in acceptable risks. The society Mann describes is one of insufficient specie and one in which all citizens were debtors, all mostly happy to collect interest on debts given the difficulty of collecting the whole sum. Indeed the only time they began to request the whole sum was when they suspected a decrease in their debtors’ ability to pay the entire amount. In a sardonic twist, he demonstrates how “honor” had two definitions: the first backed by capital and the second backed by integrity. The wealthy tended to invoke the latter definition only when they became insolvent.
Chapter Outlines:
1. Debtors and Creditors
- Extending credit a sign of honor / mark of respect or patronage
- Debts are transferrable
- Mortgage = promise to pay on a debt
- Collecting on interest easier than collecting the whole (cash was in short supply)
2. The Law of Failure
- Attitudes begin to shift in creditors’ minds; they begin to accept small payments versus receiving their entire investments
- Seven Years War was pivotal in changing attitudes from moral failure to one of general economic uncertainty
3. Imprisoned Debtors in the Early Republic
- Imprisonment was a common (and imported) phenomenon
- Once in a debtor was in jail, his stay was compounded by suits from additional debtors
- Newspapers begin to reconsider the efficacy of debtors’ prison
4. The Imagery of Insolvency
- Opens with vignette of Joseph Pintard, arrested for debt but celebrates the 4th of July with wine and merriment. Describes his complicated entrepreneurial ventures using debt to support himself.
- Insolvency, while it offered Pintard time to read, threatened men’s sense of their masculinity (created a forced dependence).
5. A Shadow Republic
- Debtors develop their own constitution; remarkably based on principles of Republican freedoms and a conscious social contract.
6. The Politics of Insolvency
- Covers debates on federalizing bankruptcy.
7. The Faces Bankruptcy
- Creditors initiated the action
- It was involuntary (though with voluntary, cooperative elements between creditors and debtors)
- One could not initiate the action as a debtor
- Designed to stop debtors from hiding assets
- Required a full accounting of debtors’ assets
- Debtor able to keep essential items for living
- Declaring bankruptcy was considered an admission of failure
Sources:
Letters and memoirs from and to debtors. Pamphlets, as well.
Historiography:
Keywords:
Moral economy
Insolvency
Bankruptcy
Sin
Risk
Speculation