Thomas Jefferson died owing the equivalent of millions of dollars, while the richest man in revolutionary America did prison time for not paying his bills. “Debt was an inescapable fact of life in early America,” writes Mann—a fact with considerable political and economic implications.
Bankruptcy, that familiar constant in an age of boom and bust, has a moral as well as financial component. Deservedly or not, in the early days of the American republic, shame and mistrust attached to a debtor who sought shelter and relief under the law, notes the author (Law and History/Univ. of Pennsylvania), quoting a toast offered in the New York debtors’ prison when Congress finally passed a short-lived national bankruptcy bill in 1800: “May the pride of every debtor be to pay his just debts, if ever in his power; and shun offers of credit in future as destructive to his life, liberty, and property.” Yet early Americans depended on the extension of credit to finance new farms, factories, and residences, to tame the frontier, and to bring goods to market. They also depended on the mercy of the courts to keep them out of prison when, as often happened, they failed in their various ventures. Mann offers the instructive case of Robert Morris, the J. P. Morgan of his day, who “embraced debt as the engine of his vast speculations” and refused to “moralize failure.” In the author’s view, Morris perfectly illustrates the reigning attitudes of the time: on the one hand, economic failure was personal failure, but on the other it was simply part of the cost of doing business. Mann also examines the history of national bankruptcy laws, which ran counter to the view held by Jefferson and many other leaders that debt was the province of the individual states and not the federal government.
A fascinating work of economic history that sheds light on daily life in the young Republic.