Debt Failure and the Development of American Capitalism: Bruce Mann's Pro-Debtor Republic

Abstract

Following independence, Americans were unique in the degree to which they countenanced the failure to pay debts. Indeed, from Alexis de Tocqueville to contemporary historians, commentators agree that compared to those in other commercial countries, Americans possess a "strange indulgence" toward bankrupts (Balleisen 2001,13; Skeel2001). Bruce Mann explores the origins of this distinctive pro-debtor bankruptcy attitude that has persisted throughout American history. Examining the cultural consciousness and legalities of bankruptcy in the age of American Independence, he reveals a tension between the entrepreneur's narrow preoccupation with gain and a prevailing confidence that interpersonal relationships could sustain commercial credit (Tomlins and Mann 2001; Blumin 2000; Freyer 2000). Like other commercial peoples of the period, Revolutionary-era Americans identified bankruptcy with Christian precepts, defining it as a moral failing subject to criminal penalties. From Independence on, however, Americans increasingly employed legal rules governing market failure to promote risk taking throughout their economic system of mercantilism governed by public officials who set prices of goods and services, controlled market entry, limited the number offirms, and imposed quality standards. Even so, disputes about bankruptcy law exposed the cultural and