NARRATING BANKRUPTCY / NARRATING RISK
NAVIGATING FAILURE: BANKRUPTCY AND COMMERCIAL SOCIETY IN ANTEBELLUM AMERICA By Edward J. Balleisen. University of North Carolina Press, 2001.
REPUBLIC OF DEBTORS: BANKRUPTCY IN THE AGE OF AMERICAN INDEPENDENCE By Bruce H. Mann. Harvard University Press, 2003.
DEBT'S DOMINION: A HISTORY OF BANKRUPTCY LAW IN AMERICA By David A. Skeel, Jr. Princeton University Press, 2001.
Contract making stands at the center of Western law in the modern era. The social contract is the font of our legitimate collective authority.1 The commercial contract releases our economic energies.2 The marriage contract initiates some of our most intimate relations.3 No less a liberal luminary than John Stuart Mill described the purpose of government as "enforcing contracts."4 For Sir Henry Maine, the most distinctive feature of modern political life was the movement "from status to contract."5 And William Graham Sumner announced that "in the United States more than anywhere else, the social structure is based on contract."6
Contract breaking, by contrast, haunts the peripheries of our legal traditions. To be sure, the law of contract making has long concerned itself with the consequences of contract breaking. As Holmes famously noted, the law of contracts leaves a promisor "free to break his contract if he chooses."7 Contract breaking, after all, is what the law of contract breach and contract remedies is all about.8 But western legal systems in the modern era have also developed elaborate mechanisms for absolution from contract obligations. Indeed, there is a major Western power with a long and exceptionally favorable history of such policies toward contract breaking. This nation has written into its constitution the idea that individuals can contract debts, and yet then be allowed to walk away from them. Moreover, there is in this nation a massive administrative apparatus dedicated to facilitating contract breaking. An entire class of judges convenes to oversee contract breaking. A prominent cadre of the bar earns significant fees by reworking old obligations and helping individuals and firms get a fresh start after failing to live up to their agreements. And an entire industry has grown up around the business of reorganizing firms no longer able to meet their debt payments.
This nation, of course, is the United States. For although contract making seems to have animated much of American history, from the ritual enactment of social contractarian ideas in the Declaration of Independence and the Constitution to a Civil War fought over the exclusion of slaves from contract freedoms, we have a long (if recessive) history of legalized contract breaking. The law of failure, a central part of which we call bankruptcy, lurks beneath each and every contractual agreement we make. It lies at the origins of the modern legal profession.9 And, as this review will suggest, it has played an important and revealing role in the development of the American law of risk. It is therefore felicitous that three books on the history of American bankruptcy law have recently appeared after a century in which remarkably little work was done in the field.10 All the more striking that the trio of books should have appeared just as the American economy went into recession and just as significant bankruptcy reforms were debated in Congress. Bruce Mann's Republic of Debtors11 describes the law and culture of debt in the century leading up to the first federal bankruptcy statute in 1800 and its repeal less than three years later. Edward Balleisen's Navigating Failure12 picks up the story with the enactment of a second federal bankruptcy act in 1841, this one repealed after eighteen months. David Skeel's Debt's Dominion13 casts a wide-angle lens across the history of American bankruptcy law, largely focusing on the period since the enactment of federal bankruptcy legislation in 1898. …