is not paying your debts a sin? -- 12/22/22

Today's selection -- from Republic of Debtors by Bruce H. Mann. Is failing to pay a debt a moral failure and criminal matter that should be punished by jail or worse? Or is it instead a contractual matter, the province of civil courts and the risk management practices of lenders? This question has never fully been settled in any society, and individuals have disagreed vehemently on the issue. And since widespread lending to individuals has existed since the very beginnings of civilization in Mesopotamia, this debate is one of the oldest and most central that societies continually face. In fact, some see this question as the very foundation of the world's great religious and philosophical systems, since language and parables regarding debt are found throughout all of them -- including Christianity (forgive us our debts, as we forgive our debtors), Islam, the Analects of Confucius, and Hinduism and the texts of the Rigveda.

"In the United States, some of our greatest patriots landed in debtor's prison -- including Robert Morris, the Philadelphia merchant who financed major portions of the Revolutionary War, and Henry 'Light-Horse' Lee, the Revolutionary War general and father of Robert E. Lee. And so it was that in 1800, American debtors rejoiced as the first American bankruptcy law was enacted that allowed individuals to discharge their debts without the consequence of jail, but their relief was short-lived as it was repealed in 1803. It was not until 1898, after more false starts, that the first truly modern and durable bankruptcy law was enacted. Nevertheless, imprisonment for debt in the U.S. is on the rise again, with private debt levels near all-time highs and more than a third of U.S. states currently allowing imprisonment for non-payment of fines or debt.

"When news reached the New Gaol in New York late in March 1800 that Congress had passed a bankruptcy bill, the debtors imprisoned there gathered 'to celebrate the auspicious event.' They enjoyed 'a rich repast of social conversation, on the prospect of returning to the world, and the bosom of our relatives and friends,' then drank a series of seventeen formal and volunteer toasts: 'The Bankrupt Law, this Godlike act.' 'God forgive those of our creditors, who have reviled us and persecuted us, and spoke all manner of evil against us, for the sake of money.' 'May imprisonment for debt, with its corrupt and destructive consequences, no longer deface God's image.' '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.' 'May wisdom and justice draw the line between the honest and fraudulent debtor.'

" 'This Godlike act' was the controversial, short-lived Bankruptcy Act of 1800 -- the high-water mark of debtor relief in the eighteenth century. 'Controversial' because it enabled debtors to escape debts they could not repay and, moreover, granted that boon only to commercial debtors whose success had allowed them to amass debts that were beyond the means of less prosperous debtors. 'Short-lived' because it was too ideologically charged to survive the Jeffersonian revolution. The tide of reform quickly receded, but the Act nonetheless marked a transformation in the moral and political economy of eighteenth-century America. Virtually every toast offered in its honor by the debtors imprisoned in New York turned deeply rooted attitudes toward insolvency and bankruptcy on their head. Earlier in the century, bankruptcy relief was not so much controversial as unthinkable. By 1800 debtors and creditors alike desired it.

"Whether a society forgives its debtors and how it bestows or withholds forgiveness are matters of economic and legal consequence. They also go to the heart of what a society values. Consider, for example, Samuel Moody, minister at York, Maine, who in 1715 related to his congregation the scriptural lesson of the widow who approached the prophet Elisha, distressed that 'the Creditor is come to take unto him my two Sons to be bond men.' [A frequent practice in ancient times was to take a debtor's children when loan payments were not made.] When Elisha learned that she had no property left save one pot of oil, he instructed her to gather all the empty vessels she could and fill them from that one pot, which she did. When she returned to Elisha with news of the miracle, he told her, 'Go, sell the oyl, and pay the debt, and live thou and thy children off the rest.'"



Bruce H. Mann


Republic of Debtors


Harvard University Press


Copyright 2002 by the President and Fellows of Harvard College


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