Bankruptcy Through the Ages
[I]t gives to the honest but unfortunate debtor…a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt. Local Loan v. Hunt, 292 U.S. 234, 244 (1934).
At some point in the history of humankind the concept of property and debt emerged. A person might not have the immediate resources to acquire property/goods but could ask another to provide property with the understanding that payment would be provided in part or in full at a later date.
The lender of such property may at times have acted out of a sense of common good or kindness, but more often than not the motivation was the acquisition of more property. A farmer might ask the local miller for a loan of seeds so that he could farm the land and be able to feed his family, or he might ask for the funds to purchase a breeding pair of cattle. Such a loan could easily be repaid after a successful harvest or the birth of a calf.
However, quite often, nature, the gods, or other humans would interfere with the planned harvest and there would not be a means of repayment. How then could the lender obtain re-payment. Another loan could be issued with harsher terms or the individuals property could be seized.
What if the debtor had no property. What the then? Many lenders had debtors or their family sold into slavery or thrown into debtors prisons. Even the "Civilized" cultures of the Romans and the Greeks engaged in this barbaric and inhuman treatment of Debtors who could not pay their debts.
The relationship between bankruptcy, the free market and those ideals expressed in the United States Constitution has been a rocky one in America.
Debtors Prison
For many of the first American colonists, the new territories offered relief from English debtor prisons and/or opportunity to escape the poverty of their homeland. However, the tradition of the European debtors prisons while watered down in part still followed the colonist.
In Europe the use of Debtors prisons was wide spread. The German composer Richard Wagner spent time in a Parisian debtors prison. Miguel Cervantes the author of Don Quixote wrote his celebrated novel while detained in a Spanish debtors prison. Daniel Defoe the author of Robinson Crusoe spent six months in a Debtors prison. In 1644 French playwright Moliere was locked up in the French debtors prison. William Penn the founder of Pennsylvania was imprisoned in a debtors prison as well.
In the the American colonies Charles Peale the painter of George Washington fled a Virgina Debtors prison and moved to Philadelphia. Meriwether Lewis prior to his suicide was facing a possible stint in debtors prison.
Famous People Who Have Used Bankruptcy
- David Crosby
- Larry King
- Cindy Lauper
- Mark Twain
- Jerry Lee Lewis
- Willie Nelson
- Tom Petty
- Wayne Newton
- Frank Lloyd Wright
- Kim Basinger
Federal Reserve
