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Dealing with Economic Failure

Between Norm and Practice (15th to 21st Century)

Edited By Albrecht Cordes and Margrit Schulte Beerbühl

Dealing with economic failure is one of the persistent and ubiquitous features of economic life. This volume brings together international scholars from several academic disciplines – economic and social history, legal history and law. They address a variety of different aspects on economic failure ranging from case studies on bankruptcy, insolvency, speculation, and strategies of coping with economic and financial squeezes. One focus throughout the book is on the in-betweens and the reciprocal impact of law and practice. The timeframe covers the period from the late middle ages to the present day. Irrespective of the temporal, spatial or cultural differences a slow and tedious evolution from a creditor-friendly to a more debtor-friendly perspective can be perceived. The chances for a fresh start have slightly improved.
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Writing in 1697 on bankrupts Daniel Defoe, the author of Robinson Crusoe, thought the English law on bankruptcy “has something in it of Barbarity”. He continues:

It gives a loose to the Malice and Revenge of the Creditor, as well as a Power to right himself, while it leaves the Debtor no way to show himself honest: It contrives all the ways possible to drive the Debtor to despair, and encourages no new Industry, for it makes him perfectly uncapable of any thing but starving.1

With these few words Defoe describes the hardships unfortunate traders faced in early modern England. Defoe suffered from the fate of a bankruptcy himself. After various unsuccessful ventures, among others in the wine trade with Portugal, and underwriting in insurance, he was declared bankrupt for more than £17,000 in 1692. Harassed by recalcitrant creditors he was committed to prison for several months, after a composition had failed, because four of his 140 creditors had refused to consent to an agreement. As the contemporary bankruptcy law contained no provisions for discharge Defoe remained liable with his future earnings. The harshness and cruelty of the law towards the debtor, he argues, “cast [him] out of Human Society, and expos’d [him] to Extremities worse than Death” Moreover, he thought that the bankruptcy laws were not only inhumane to the debtor but also of no advantage to the creditor.2

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