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Vulture Capitalism in Antebellum America: The 1841 Federal Bankruptcy Act and the Exploitation of Financial Distress

Published online by Cambridge University Press:  13 December 2011

Edward J. Balleisen
Edward J. Balleisen
Affiliation:
EDWARD J. BALLEISEN is a postdoctoral fellow at the University of the Witwatersrand, Johannesburg.
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Abstract

There is, on an average, annually wrecked upon the Florida coast, about fifty vessels…. The great destruction of property consequent upon this state of things, and the hope of gain, have induced a settlement at Key West, where, to adjudicate upon the wrecked property, a court of admiralty has been established. A large number of vessels, from 20 to 30, are annually engaged as wreckers, lying about this coast to “help the unfortunate,” and to help themselves. These vessels are in many instances owned in whole or in part by the merchants of Key West; the same merchant frequently acts in quadruple capacity of owner of die wrecker, agent for the wreckers, consignee of the captain, and agent for the underwriters. Whose business he transacts with most assiduity, his own, or that of others, may be readily inferred.

—“Wrecks, Wrecking, and Wreckees, on Florida Reef,” Hunt's Merchants' Magazine 6 (1842): 349.

Type
Articles
Information
Business History Review , Volume 70 , Issue 4 , Winter 1996 , pp. 473 - 516
Copyright
Copyright © The President and Fellows of Harvard College 1996

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References

1 In the years between 1831 and 1845, salvage crews at Key West received aggregate annual commissions of between $32,040 and $174,132. The handful of lawyers at the Florida wrecking outpost made at least $6,000 a year in the 1840s, their annual retainer from northeastern insurance companies. Local merchants earned far more than salvage crews or attorneys, often gaining title to goods worth tens of thousands of dollars for a small fraction of their value. “Wrecks, Wrecking, and Wreckees,” 349–54; “Key West, and Wrecking for Salvage,” Hunt's Merchants' Magazine 14 (1846): 377–78.

2 The novels that presented tales of great commercial operations gone awry include two by Charles F. Briggs, known to his contemporaries as Franco, Harry—The Adventures of Harry Franco; or, A Tale of the Panic (New York, 1839)Google Scholar; and Bankrupt Stories; or, The Haunted Merchant (New York, 1843). Briggs had first-hand experience with a far more mundane bankruptcy, having failed as a grocery merchant in New York during 1842. See also Jones, John Beauchamp, The City Failure; or, The Mysterious Failure (Philadelphia, Pa., 1851).Google Scholar Fictional accounts of more prosaic bankruptcies were more common, regularly appearing as novels and in short stories published by newspapers and periodicals such as Godey's Lady Book and Graham's Magazine. The most prolific writer of failure tales was T. S. Arthur, more famous for his fictional diatribes against strong drink. Non-fictional analyses of failure appeared with regularity in commercial periodicals such as Hunts' Merchants' Magazine, De Bow's Review, Bankers' Magazine, as well as less specialized periodicals, like the Democratic Review, the American Whig Review, and the North American Review. For an insightful account of antebellum commentaries on financial panics, see Fabian, Ann, “Speculation on Distress: The Popular Discourse of the Panics of 1837 and 1857,” Yale Journal of Criticism 3 (1989): 127–42.Google Scholar

3 A vast and extremely rich literature elucidates these developments. See in particular: Albion, Robert G., The Rise of New York Port (New York, 1939)Google Scholar; Taylor, George Rogers, The Transportation Revolution (New York, 1951Google Scholar; repr., New York, 1977); Lindstrom, Diane, Economic Development in the Philadelphia Region, 1810–1850 (New York, 1978)Google Scholar; Wallace, Anthony F. C., Rockdale: The Growth of an American Village in the Early Industrial Revolution (New York, 1972)Google Scholar; Cochran, Thomas C., Frontiers of Change: Early Industrialism in America (New York, 1981)Google Scholar; Wilentz, Sean, Chants Democratic: New York City & the Rise of the American Working Class, 1788–1850 (New York, 1984)Google Scholar; Porter, Glenn and Livesay, Harold C., Merchants and Manufacturers: Studies in the Changing Structure of Nineteenth-Century Marketing (Baltimore, Md., 1971Google Scholar; repr., Chicago, Ill., 1989); Chandler, Alfred, The Visible Hand: The Managerial Revolution in American Business (Cambridge, Mass., 1977)Google Scholar; Hammond, Bray, Ranks and Politics in America from the Revolution to the Civil War (Princeton, N.J., 1957)Google Scholar; Lamoreaux, Naomi R., Insider Lending: Banks, Personal Connections, and Economic Development in Industrial New England (New York, 1994)CrossRefGoogle Scholar; Horwitz, Morton J., The Transformation of American Law, 1780–1860 (Cambridge, Mass., 1977)Google Scholar; Freyer, Tony, Forums of Order: The Federal Courts and Business in American History (Greenwich, Conn., 1979)Google Scholar; Clark, Christopher, The Roots of Rural Capitalism: Western Massachusetts, 1780–1860 (Ithaca, N.Y., 1990).Google Scholar

4 In a survey of small-scale enterprises in Boston and New York during the 1840s and 1850s, Stuart Blumin found that roughly a quarter of 135 non-manual businesses ended in bankruptcy, while over two-fifths of a sample of 52 artisans also failed. Blumin, , The Emergence of the Middle Class: Social Experience in the American City, 1760–1900 (New York, 1989), 115.Google Scholar A similar sample by Tony Freyer of businesses in selected Maryland, New Jersey, and Pennsylvania counties during these two decades resulted in a 40% failure rate. Freyer, , Producers Versus Capitalists: Constitutional Conflict in Antebellum America (Charlottesville, Va., 1994), 65.Google Scholar Christopher Clark estimates that between 1842 and 1861 half of all businesses in the Massachusetts towns of the Connecticut River Valley went bankrupt. Clark, The Roots of Rural Capitalism, 217. Finally, Peter Decker has suggested that between 50 and 67% of San Francisco merchants experienced insolvency during the 1850s. Decker, , Fortunes and Failures: White Collar Mobility in Nineteenth-Century San Francisco (Cambridge, Mass., 1978), 92.CrossRefGoogle Scholar For a detailed consideration of the causes and frequency of antebellum business failures, as well as their social and cultural ramifications, see Edward Balleisen, Navigating Failure: Bankruptcy and Commercial Society in Antebellum America (Chapel Hill, N.C., forthcoming).

5 One can think of the entrenchment of wrecking within the antebellum American economy and the shift in publicly expressed attitudes toward wrecking as “institutional changes,” in the sense explored by North, Douglass C. in Institutions, Institutional Change and Economic Performance (New York, 1990).CrossRefGoogle Scholar

6 Warren, Charles, Bankruptcy in United States History (Cambridge, 1935), 3–92CrossRefGoogle Scholar; Beesley, David, “The Politics of Bankruptcy in the United States, 1837–1845” (Ph.D. diss., University of Utah, 1968)Google Scholar; Coleman, Peter, Debtors and Creditors in America: Insolvency, Imprisonment for Debt, and Bankruptcy, 1607–1900 (Madison, Wisc., 1974)Google Scholar; Balleisen, Navigating Failure. In a private assignment for the benefit of creditors, a failed debtor placed his assets in the hands of a trustee or trustees, who then liquidated the assets and distributed the proceeds to creditors. In most states, the failed debtor could make a creditor's access to dividends from the trust dependent on a legal release from any obligation to pay the outstanding part of the claim. State insolvency processes, in those states that provided them, offered bankrupts important but limited means of extinguishing the legal force of their debts. Because of constitutional doctrines adopted by the United States Supreme Court in the 1810s and 1820s, these state insolvency processes had to operate prospectively and they could not affect debts contracted to out-of-state creditors.

7 Warren, Bankruptcy in United States History, 3–22; McCoy, Drew, The Elusive Republic: Political Economy in Jeffersonian America (Chapel Hill, N.C., 1980; repr., New York, 1982), 166–84.Google Scholar

8 For discussions of the politics surrounding the 1841 Act and its judicial interpretation, see: Warren, Bankruptcy in United States History, 23–92; Beesley, “The Politics of Bankruptcy in the United States;” Coleman, Debtors and Creditors in America, 16–30, 269–93; Balleisen, Navigating Failure.

9 In the early 1840s, the Federal District for Southern New York included New York City, Long Island, Staten Island, and eight counties in the lower Hudson Valley. Along with remarkably complete southern New York bankruptcy case files created as a result of the 1841 Act, the New York Regional Branch of the National Archives holds several led gers relating to the sale of bankruptcy assets.

10 The exact number of bankrupts who either applied for relief under the 1841 Act or found themselves the object of an involuntary bankruptcy petition by creditors remains unclear. According to two congressional reports from the latter part of the 1840s, there were a total 41,108 bankrupts in thirty-eight federal districts. Letter from the Secretary of State, in Answer to Resolutions of the House of Representatives,… Relative to the Application and Discharge of Persons under the Bankrupt Law, House Doc. 223, 29th Cong., 1st Sess., 1846; Letter from the Secretary of State, Transmitting Statements Showing Proceedings under the Bankrupt Act, House Doc. 99, 29th Cong., 2nd Sess., 1847. These two reports, however, provide no information about the number of bankrupts in eight federal districts—Delaware, North Carolina, Georgia, Indiana, Missouri, the Eastern District of Tennessee, the Northern District of Mississippi, and the Western District of Louisiana.

11 The large number of bankruptcies that occurred in the midst of the two financial panics and the ensuing deflation would have increased the possibilities for wrecking even in the absence of a federal bankruptcy system. But by consolidating the legal process of handling business failures, directing thousands of failed Americans and their remaining assets to a discrete number of federal courts, the 1841 Act created more structured and less diffuse markets related to insolvency.

12 Congressional Globe, 27th Cong., 1st Sess. (1841), 483. See also the speeches of Senator Anderson and Representative Lumpkin, Appendix to the Congressional Globe, 26th Cong., 1st Sess. (1840), 622; Congressional Globe, 26th Cong. 1st Sess. (1840), 484; and the speeches by Representatives Pope and Williams, Congressional Globe, 27th Cong., 1st Sess. (1841), 330, 334.

13 Journal of Commerce, 1 July 1842. See also Journal of Commerce, 3–4 Feb. 1842; “Regular Operations under the Bankrupt Act,” New York Herald, 5 Feb. 1842; “Expenses in Bankruptcy,” New York Herald, 9 Jan. 1843; “The Bankrupt Law Repealed—The Results,” New York Herald, 6 March 1843.

14 According to the 1846 and 1847 congressional reports on the operation of the antebellum bankruptcy system, court costs incurred throughout the nation totaled $961,632.55. House Doc. 223, 1846, 31; House Doc. 99, 1847, 8. This figure, however, greatly under-represented the fees received by court officials and newspapers. In addition to the lack of statistics for eight federal districts, two other reporting districts, Maine and Kentucky, provided only partial tallies of court costs.

15 Again, the statistics gathered by the Secretary of State for the House of Representatives are an analytical quagmire, as court clerks differed greatly in what they counted as a measure of the property surrendered by bankrupts. Nonetheless, the congressional reports make clear that in most districts, the amount of money distributed to creditors rarely exceeded the amount paid to court officials by much. In Vermont, judicial costs of $38,808 compared with dividends of $9,819; in the eastern and western districts of Virginia, courts costs of $29,005 and $43,197 compared with dividends of $20,783 and $23,985. In Massachusetts and the eastern district of Louisiana, by contrast, assignees distributed over $1 million to creditors, well in excess of court costs. House Doc. No. 223; House Doc. No. 99.

16 “Expenses in Bankruptcy“; Rules and Regulations in Bankruptcy, Adopted by the Circuit and District Courts of the United States, for the Southern District of New York, January 4, 1842 (New York, 1842), 13–24. The Morning Courier, as the paper with the largest circulation in New York City, won the right to publish the notices of every bankrupt in southern New York. Since the district's rules in bankruptcy required each petitioner to advertise in at least three papers, other city dailies and papers throughout the Hudson Valley also benefited handsomely.

17 “Expenses in Bankruptcy“; Report from the Secretary of State, In Compliance with a Resolution of the Senate, in Relation to the Operation of the Bankrupt Law, Senate Doc. No. 19, 27th Cong., 3rd Sess. (1842), 32, 160; Fees in United States Circuit and District Courts in Admiralty and Bankruptcy Cases, House Doc. No. 172, 27th Cong., 3rd Sess. (1843), 27. In most jurisdictions, court costs ranged between $30 and $50 for a typical bankruptcy application.

18 Rules and Regulations in Bankruptcy, 22–23.

19 “Expenses in Bankruptcy“; Rules and Regulations in Bankruptcy, 13. For examples of bankruptcy estates that generated well-above average costs but which did not yield sufficient funds to merit the distribution of a dividend to creditors, see the southern New York bankruptcy records of: James Alden (Case-File 16, hereafter cited as “C-F”); Pliny Allen (C-F 21); and Edwin Schenk (C-F 1940); Entry 117, Bankruptcy Records, Act of 1841, United States District Court for the Southern Federal District of New York, National Archives, New York City Branch.

20 For examples of the costs incurred in the process of declaring a bankruptcy dividend, see the southern New York bankruptcy records of: David Buffum (C-F 326); Squire P. Dewey (C-F 642); John Rutter (C-F 1913); and Arthur Tappan (C-F 2171). Fees were not uniform in every federal district, but differences were minimal. See House Doc. No. 172, 24.

21 For the commissioners appointed in New York's southern and northern federal districts and in Massachusetts, see Rules and Regulations in Bankruptcy, 38–40; Albany Argus, 26 Jan. 1842; Chandler, Peleg W., The Bankrupt Law of the United States, With an Outline of the System; Together with the Rules and Forms in Massachusetts (Boston, Mass., 1842), 92–93.Google Scholar On the compensation to southern New York bankruptcy officials, see “Expenses in Bankruptcy;” “The Bankrupt Law Repealed—The Results.”

22 Charlemagne Tower to Aurelian Conkling, 15 July 1844, Charlemagne Tower Papers, Columbia University Archives; Radcliff to Thompson, 14 Oct. 1841, Smith Thompson Papers, New York Historical Society.

23 The bankruptcy records of these three beneficiaries of the 1841 Act are to be found in C-F 389 (Campbell); C-F 2125 (Stilwell); and C-F 2378 (Webb). For attacks on Stilwell and Webb for earning so much money for a bankruptcy system that released them from the debts that they owed to their own creditors, see: New York Herald, 7 Feb. 1842; 9 Jan. 1843; Brooklyn Daily Eagle, 10 March 1842; Journal of Commerce, 5 Feb. 1842.

24 Out of a sample of 509 southern New York bankrupts, 57, or just over eleven percent, represented themselves in bankruptcy court. The combination of court costs and legal fees in straightforward cases usually totalled around $75. This sum, while low in comparison with more complicated cases, still constituted a formidable barrier to bankrupts who were truly destitute and who lacked the ability to borrow the funds from friends or family members.

25 C-F 31. Some objecting creditors, chary of throwing good money after bad, placed a limit on the amount of fees that they were willing to spend in opposing a bankrupt. See the records of the New York City bankrupt Samuel Reeve, in which objecting creditors authorized their attorneys to oppose the petition so long as they kept their fees under $50. C-F 1832.

26 For a useful account of typical antebellum law practices, see Friedman, Lawrence, A History of American Law, 2nd ed. (New York, 1985), 306–11.Google Scholar

27 For advertisements by these attorneys, see Morning Courier and New York Enquirer, 8 Feb. 1842, for Platt, Reynolds, and Dutcher; and the Ulster County Republican, 13 July 1842, for Romeyn. Among the bankruptcy cases from which the New York City firm gained work were those of: Angelina Brown (C-F 283); Alpheus Fobes (C-F 774); John Hull and Abraham Smith (C-F 1110); Michael Kerrigan (C-F 1237); and Elijah Prentiss (C-F 1743). Romeyn's clientele was almost exclusively limited to Ulster County, and included: Goodrich Baldwin (C-F 90); the creditors of Henry and Thurston Cutler (C-F 586); William Dorman (C-F 665); Minnar Hyatt (C-F 1136); Jacob Lefever (C-F 1343); Zachariah North (C-F 1650); Uriah Saunders (C-F 1936); and James Tamney (C-F 2169).

28 Among Stuart's clients were voluntary petitioners Cassander Frisbee, William Hillyer, and Abraham Hillyer. William Hillyer worked for Frisbee as a clerk at the time of his application, and was a relative of Abraham. C-Fs 806, 1040, and 1041. Other New York City attorneys who frequently appeared in bankruptcy court include: Addison Dougherty, George Shufeldt, H. M. Western, John Edmonds, Robert Strong, Philip Burrowes, Lewis Benton, Horace Holden, David E. Wheeler, Jonathon Miller, and Richard Reed, and the firms of Brady & Maurice, Burr & Benedict, Burr & Belknap, and Graham and Sanford.

29 For a list of Poughkeepsie's twenty law offices, see Foughkeepsie journal, 29 June 1842. Other lawyers in the lower Hudson Valley who cultivated bankruptcy practices included: Theo Miller, in Columbia County; Asa Jansen, in Orange County; Danforth Olney, in Greene County; John Forsyth and Jonathon Hasbrouck, in Ulster County; and Archibald C. Niven, in Sullivan County. Niven also served as the county's bankruptcy commissioner.

30 The three cases were those of Cassander Frisbee (C-F 806), Carlos P. Houghton (C-F 1082), and Augustus Zerega (C-F 2510). For press coverage of oral arguments and judicial decisions, see Morning Courier and New York Enquirer and New York Herald, 3, 8, 9, 11, 13, 18, 22, 24, 26, and 28 March; 11 and 14 April; 12 June; 9 and 15 Aug. 1842. Among the many other cases in which Joachmissen represented objecting creditors were those of: Aaron Abrahams (C-F 2 1/2); Aaron Butterfield (C-F 374); George Ferguson (C-F 747); Henry McKinstry (C-F 1440); and Harvey Pettit (C-F 1745).

31 For a sample of Clark's caseload, see the bankruptcy records of: David Dodge (C-F 654); Lorraine Freeman (C-F 801); Joseph Lester (C-F 1354); Linus Palmer (C-F 1700); and John Richardson (C-F 1849). Other southern New York attorneys who both petitioned for bankruptcy and developed a bankruptcy practice included Jesse W. Benedict, James Lorimar Graham, Royal Waller, and Clarence D. Sackett.

32 Tower to Charles Sumner, 13 June 1842, Letterbook, 1837–44, Tower Papers. Among Tower's numerous bankruptcy-related clients were: the voluntary petitioners Micah Seabury, Putnam Page, and William Hanley; and the creditors B.F. Jones of Albany, Butler, Farnwell & Co. of Utica, and John Jones of Utica. See box 39, Tower Papers; Tower to David Wright, 22 and 30 Dec. 1842; Aurelian Conkling to Tower, 26 Sept. 1842; Julius Tower to Charlemagne, 18 Feb. and 26 July 1843; and John Jones to Tower, 26 Feb. and 13 March 1844; Tower Papers.

33 Among the attorneys who gained regular bankruptcy work in Boston were: William Dehon, Francis G. Loring, Edward G. Loring, A. H. Fiske, William Gray, Henry H. Fuller, Benjamin R. Curtis, and Peleg W. Chandler. In Philadelphia, bankruptcy lawyers included: John W. Wallace, William Meredith, A. J. Phillips, and Garrick Mallery. See the bankruptcy cases reported in volumes 4–7 of the Law Reporter, and in volumes 1—5 of the Pennsylvania Law Journal. Edward G. Loring was a Master in Chancery under the Massachusetts insolvency system in the late 1830s, while, William Dehon and A. H. Fiske served as insolvency assignees. “Table of Those Persons… Who Have Taken Advantage of the Insolvent Law of 1838,” Law Reporter 2 (1840): 283. Loring was also a Bankruptcy Commissioner, as were William Gray and Peleg Chandler. Chandler, The Bankruptcy Law, 92. In Philadelphia, John W. Wallace was the federal court reporter for the Eastern District of Pennsylvania and William Meredith held the post of United States District Attorney for that same district. Dictionary of American Biography (New York, 1929), 12:549, 19:324. On the business strategies of central Illinois law firms that specialized in bankruptcy, see Oaks, Dallin H. and Bentley, Joseph I., “Joseph Smith and Legal Process: In the Wake of the Steamboat Nauvoo,” Brigham Young University Studies 19 (1979): 177–78.Google Scholar

34 See for example, Kent, James, Commentaries on American Law, 4 vols. (New York, 1827–1830)Google Scholar; Angle, Joseph, A Practical Summary of the Law of Assignments in Trust for the Benefit of Creditors (Boston, Mass., 1835)Google Scholar; Edwards, Charles, On Receivers in Chancery; with Precedents (New York, 1839)Google Scholar; Moore, Jacob B., The Laics of Trade in the United States; Being an Abstract of the Statutes of the Several States and Territories, Concerning Debtors and Creditors (New York, 1840).Google Scholar For a discussion of the emerging nineteenth-century American literature of the law, see Friedman A History of American Law, 322–33.

35 For examples of the printing of the 1841 Act by newspapers, see: the Quincy, Illinois Whig, 14 Aug. 1841; and the Ulster County Republican, 1 Sept. 1841. In southern New York, the Bankruptcy Law was published by Henry Anstice, a specialist in the provision of law blanks and legal stationery. The printer John S. Voorhies put out Judge Betts' Rules and Regulations in Bankruptcy. Anstice, along with competitors Jansen & Bell and Foison & Clayton, printed a wide variety of blank forms for use in bankruptcy proceedings. A few southern New York bankrupts listed the Rules and Regulations in Bankruptcy among their assets. See the asset schedules of George North (C-F 1649); Randolph Reynolds (C-F 1837); and Charles Starr (C-F 2103).

36 “A Member of the Bar,” The Bankrupt Law of the United States, Passed 19 August 1841. With a Commentary Containing a Full Explanation of the Law of Bankruptcy (Philadelphia, Pa., 1841); Staples, J. B., The General Bankrupt Law, with an Introduction, Containing Some Observations Upon Its Constitutionality, Expediency, &c. (New York, 1841)Google Scholar; Bicknell, George A. Jr, Commentary on the Bankrupt Law of 1841, Showing Its Operation and Effect (New York, 1841)Google Scholar; Owen, Samuel, A Treatise on the Law and Practice of Bankruptcy (New York, 1842)Google Scholar; Chandler, The Bankrupt Law of the United States. Both Staples and Bicknell secured work as bankruptcy attorneys in southern New York.

37 The Cayuga Patriot made its bankruptcy reports the focal point of an advertisement in the Albany Argus, predicting that “commissioners and assignees under the act, and attorneys practicing in bankruptcy” would find the weekly edition of the Patriot “indispensable.” Albany Argus, 26 March 1842. Niles' Weekly Register also closely followed the development of American bankruptcy law, publishing an extensive collection of bankruptcy reports on 5 Nov. 1842.

38 “Bankrupt Law,” Law Reporter 4 (1842): 498. In the case of two of the other journals, the provision of bankruptcy reports served as a primary motivation for the launching of a new publication. See New York Legal Observer 1 (1842): 1; Pennsylvania Law journal 1 (1842): 15.

39 Pennsylvania Law Journal 1 (1842): 143–45. John W. Wallace may have been related to one of the Philadelphia law magazine's editors, H. E. Wallace. One can follow the various bankruptcy incarnations of Peleg Chandler in the pages of the Law Reporter, volumes 4—7. Owen dedicated his treatise to Betts “with his permission” and later continued his efforts as a bankruptcy counsellor in New York City. See the bankruptcy records of Joseph Atwill (C-F56).

40 Atherton, Lewis E., “The Problem of Credit-Rating in the Ante-Bellum South,” Journal of Southern History 12 (1946): 535–58Google Scholar; Wyatt-Brown, Bertram, “God and Dun & Bradstreet,” Business History Review 40 (1966): 436–37Google Scholar; Madison, James H., “The Evolution of Credit Reporting Agencies in Nineteenth-Century America,” Business History Review 48 (1974): 165–66CrossRefGoogle Scholar; Norris, James D., R.G. Dun & Co., 1841–1900: The Development of Credit-Reporting in the Nineteenth-Century, (Westport, Conn., 1978), 8–10.Google Scholar

41 Norris, R.G. Dun & Co., 10–12.

42 Norris, R.G. Dun & Co., 14–57; Wyatt-Brown, “God and Dun & Bradstreet,” 437–49; Madison, “The Evolution of Credit Reporting Agencies,” 166–70. The partner who suffered the real estate losses was William W. Campbell, the bankrupt who became a bankruptcy commissioner. C-F 389.

43 Lewis Tappan to Lewis Tappan Stoddard, 6 Feb. 1843, quoted in Wyatt-Brown, Bertram, Lewis Tappan and the Evangelical War Against Slavery (Cleveland, Oh., 1969), 232.Google Scholar See also “The Mercantile Agency,” Hunt's Merchants' Magazine 24 (1851): 46–53; “The Mercantile Agency System,” Bankers' Magazine 12 (1858): 545–49. Tappan's aims shared much in common with supporters of national bankruptcy legislation. These commercial reformers hoped to structure bankruptcy law so as to encourage honorable and prudent behavior by both debtors and creditors. See Balleisen, Navigating Failure.

44 Lewis Tappan provided extensive commentary about the financial difficulties of the Tappans's silk business, as well as his brother's personal bankruptcy, in his biography of Arthur. See The Life of Arthur Tappan (New York, 1871), 279–98. Arthur Tappan's bankruptcy records are in C-F 2171.

45 C-F 448; Noms, R.G. Dun & Co., 8–10; Foulke, Roy A., The Sinews of American Commerce (New York, 1941), 332–34, 366–68.Google Scholar

46 For Dusenberry's bankruptcy records, see C-F 695. The launch of the Commercial Agency is discussed in Norris, R.G. Dun & Co., 27. As of 1851, Woodward & Dusenberry remained in the business; see “The Mercantile Agency,” 46. For Bradstreet's initiation to credit-reporting, see Foulke, The Sinews of Commerce, 297.

47 New York Herald, 2 Feb. 1842.

48 Advertisements placed by booksellers and the Law Reporter itself touted the periodical both for its reports of bankruptcy decisions and its authoritative and wide-ranging bankruptcy registers. See Morning Courier and New York Enquirer, 11 April and 10 June 1842. The New York Legal Observer and the Journal of Commerce also published bankruptcy lists.

49 Alphabetical List of Applications for the Benefit of the Bankruptcy Act, (Passed August 19, 1841) Within the Southern District of New York, Carefully Compiled from the Petitions on File in the United States District Clerk's Office (New York, 1843); List of Bankrupts in the United States Court for the Eastern District of Pennsylvania (Pittsburgh, Pa., 1844); and List of Bankrupts in the United States Court for the Western District of Pennsylvania (Pittsburgh, Pa., 1844). Together these three federal districts processed the cases of over 6,300 bankrupts under the 1841 Act.

50 In form and function, bankruptcy lists closely resembled the bank note tables produced by newspapers and specialized banknote reporters, which both identified counterfeit notes in circulation and reported the prevailing market rates of discount on antebellum America's incredible variety of paper money. For the convenience of merchants, the Morning Courier and New York Enquirer placed its bankruptcy lists and bank note tables on the same page of its Saturday edition.

51 Smith was one of 450 applicants in southern New York who did not include his occupation on his bankruptcy application; as a result, lists of southern New York bankrupts only gave his name and residence. Alphabetical List of Applicants, 59. For discussion of geographic mobility among antebellum bankrupts, see Balleisen, Nacigating Failure.

52 An Act to Establish a Uniform System of Bankruptcy Throughout the United States (New York, 1842), Sections 3, 8–11.

53 The overwhelmingly majority of assets sold at bankruptcy sales in southern New York, both at public auction and through private sale, brought $1 or less.

54 For an instructive discussion of both the common disputes over legal titles to land in antebellum America and the antebellum law of mortgage, see Friedman, A History of American Law, 234–48.

55 When bankrupts bought back assets soon after they received a discharge, they probably did so with funds borrowed from relatives or friends.

56 Record of Sales (Sales Book), 13 July 1843 Auction, Entry 127, Bankruptcy Records, Act of 1841, United States District Court for the Southern Federal District of New York, National Archives, New York City Branch (hereafter cited as Sales Book). See also the auction of store stock belonging to the bankrupt dry goods firm of Bromley & Wilson, bought by the former proprietors on 9 Nov. 1842.

57 Bankrupts who purchased book-account debts owed them included: Pliny Allen, a New York City commission merchant and former stove merchant in Troy, New York (Sales Book—27 Dec. 1842 Auction); Edward Norton, a New York City lawyer (Sales Book—1 Nov. 1843 Auction); Theodore Clark, a New York City hatter (Sales Book—13 March 1844 Auction); and Luman Huntoon, a New York City baker (Sales Book—13 June 1844 Auction). These bankrupts all purchased their old claims for less than ten percent of their face value.

58 Examples include: Frederick Gavin Cameron, a New York City oil dealer who bought a patent right in a windlass through a private sale (C-F 384); James McDougall, a New York City merchant who retrieved 490 acres of land in Georgia (Sales Book-1 March 1843 Auction); James Lorimar Graham, a New York City attorney who bought back his interest in a New York City lot, a $4,000 mortgage, and land in upstate New York (Sales Book—28 Nov. 1843 Auction); and William W. Campbell, the bankruptcy commissioner, who reclaimed all his assets, including several mortgaged tracts of land (Sales Book—13 March 1844 Auction).

59 For illustrations of assets purchased by the relatives of bankrupts, see the sale of estates formerly belonging to Joseph Bingham (Sales Book—20 Dec. 1842 Auction); William L. Booth (Sales Book—2 June 1843 Auction); and James G. Cox (Sales Book—1 Nov. 1843 Auction). Bankruptcy lawyers who took the opportunity to buy bankruptcy assets include H. M. Western, Jesse W. Benedict (also a bankrupt himself), Richard Reed, and Phillip Burrowes. See Sales Book, Auctions on 27 Dec. 1842, 13 March 1844, 12 July 1843, and 7 May 1844. For examples of assets bought by a bankrupt's creditor, see the records of David Anderson (C-F 33) and John Simpson McKibbin (C-F 1438), in which creditors bought real estate through private sales; see also the records of James Lorimar Graham (C-F 881) and Sales Book, 28 Nov. 1843 Auction, in which creditor J. F. Delaplaine bought the bulk of Graham's assets. Relatives and lawyers who bought the property of a bankrupt may have been acting either as agents for the bankrupts or for their own benefit.

60 Schermerhorn v. Taiman et al., 14 New York Reports 93 (New York State Court of Appeals: 1856); Deed of Sale, 10 May 1843, box 39, Tower Papers; Clark v. Clark and Hackett, 17 Howard 315 (1854); Oaks and Bentley, “Joseph Smith,” 180–81.

61 The roster of bankruptcy wreckers in New York City includes: J. L. Baldwin, H. P. Freeman, Lucius Field, Elisha Bloomer, J. L. Loomis, G. L. Ford, S. Condict, Edward Conway, E. Griffen, W. S. Dunham, J. L. Brigham, G. Farmer, and several individuals only identified by last names—Schack, Haring, Cone, Ward, Buckley, Tisdale, McMillan, and Coit.

62 For the bankruptcy records of these two wreckers, see C-Fs 203, 751. Bloomer's later career is described in R.G. Dun & Co. Credit Reports, Baker Library, Harvard Graduate School of Business Administration, New York City 368:449.

63 Clute's position is mentioned in R.G. Dun & Co. Credit Reports, New York City 374:65. For evidence of Burnham's place, see the 29 Dec. 1856 affidavit of William Coventry H. Waddell in the bankruptcy records of William L. Haskins (C-F 986).

64 Waddell also mentioned the timing of Burnham's resignation in his 29 Dec. 1856 affidavit. For an example of Burnham's activity in buying the property of bankrupts from other wreckers, see the bill of sale from Lucius Field to Burnham and William D. McCarty on 3 June 1843, C-F 751. This bill of sale suggests that Waddell's primary auctioneer, McCarty, may also have speculated in bankruptcy assets. Sales Book, 26 March 1844 Auction.

65 Burnham did not redeem the mortgage himself because he knew that his legal claim to the land was open to question. The holder of the mortgage had foreclosed against the bankrupt, William L. Haskins, in 1848. Since Haskins no longer had title to the property at that time, Burnham knew there was a good chance that the courts in Illinois would set aside the foreclosure. He had won a similar case in New York in 1853, gaining the right to redeem the mortgage on a Brooklyn property that he had purchased at a bankruptcy auction, even though the mortgagee had foreclosed against the bankrupt. In 1856, Burnham retained the services of a Chicago attorney to explore the legal status and market value of the property. Sensing a good speculative opportunity, the lawyer arranged for his father to buy Burnham's interest and then sought to void the earlier foreclosure in federal court. This suit succeeded on the same grounds that Burnham had won in the New York state courts—for a foreclosure of property surrendered by a bankrupt to stand, the mortgagee had to name the assignee, and not the bankrupt, as the owner. C-F 986; Burnham v. De Bevorse et al., 8 Howard Practice Reports 159 (New York Supreme Court, 1853); Barren v. Newberry, 1 Bissel 149 (Federal Circuit Court, Northern District of Illinois, 1857).

66 For illustrations of such speculation in the debts owed by bankrupts, see the southern New York bankruptcy records of James E. P. Dean, where Clute collected a dividend as a creditor after buying up claims (C-F 613); and those of Arthur Tappan, where Burnham did likewise (C-F 2171). Other people also engaged in this kind of speculation. Philip Burrowes, James E. P. Dean's attorney, bought up a number of claims against his bankrupt client, collecting a dividend alongside Clute. See also the bankruptcy records of Jonathon Amory and Henry Leeds, which detail the speculation of attorney Thomas Wilson in debts owed by Leeds (C-F 31). Through the provision of legal advice to Leeds's nephew, Wilson learned that the uncle had fraudulently conveyed real estate to his sister before petitioning for a bankruptcy discharge. The lawyer then bought up several large claims against Leeds and successfully attacked the real estate in New York's chancery court.

67 For the credit reports on these three bankruptcy officials, see: R.G. Dun & Co. Credit Reports, New York City 364:65 (Burnham); 374:65 (Clute); 367:371 (Waddell).

68 The strategies of successful antebellum wreckers make clear that inside information, either about the opportunities presented by particular bankruptcies or about insolvency more generally, dramatically lowered the transaction costs entailed in wrecking. For a useful introduction to the concept of transaction costs, see North, Institutions, Institutional Change and Economic Performance, especially 27–69.

69 Lamoreaux, Naomi, “Banks, Kinship, and Economic Development: The New England Case,” Journal of Economic History 46 (1986): 647–67CrossRefGoogle Scholar; Rohrbough, Malcolm J., The Land Office Business: The Settlement and Administration of American Public Lands, 1789–1837, (New York, 1968Google Scholar; repr. Belmont, Calif., 1990), 145–59, 224–32.

70 Lamoreaux, “Banks, Kinship, and Economic Development,” 650–52; Rohrbough, The Land Office Business, 151–53, 215–32.

71 Gouge, William, A Short History of Paper Money and Banking in the United States (Philadelphia, Pa., 1833), 1: 40, 24, 30.Google Scholar

72 See novel, Frederick Jackson's, A Victim of Chancery; or, A Debtor's Experience (New York, 1841)Google Scholar, which includes an extended portrayal of Mr. Gouge, a lawyer who specializes in buying up claims against bankrupts, getting himself appointed assignee of the insolvent's assets, and then milking the estate for fees and gaining information about assets worth purchasing at auction; and N. Beverly Tucker's story Gertrude, serialized in the Southern Literary Messenger during 1844 and 1845, which chronicles the strategies of the real estate operator Mr. McScrew, who makes a career out of waiting for periodic financial panics, during which he forecloses against anyone unable to meet mortgage payments due him and seeks to find bargains at court-mandated auctions.

73 “Commercial Panic Makers,” Hunt's Merchants’ Magazine 19 (1848): 234. The reproachful cultural interpretation of wrecking bears some resemblance to the treatment of domestic slave traders, who received even greater and far more frequent condemnation from northern novelists and social commentators. See Tadman, Michael, Speculators and Slaves: Masters, Traders, and Slaves in the Old South (Madison, Wisc., 1989)Google Scholar, especially 179–85.

74 These ethical strictures permeate both Gouge's A Short History of Paper Money and Banking and Hunt's Merchants' Magazine (up to Freeman Hunt's death in 1858), as well as Hunt's 1856 compilation, Worth and Wealth: A Collection of Maxims, Morak, and Miscellanies for Merchants and Men of Business (New York, 1856). For the lineage of this distinction between productive economic activity and unproductive speculation/ manipulation in American commercial and political culture, see McCoy, The Elusive Republic, 166–84; Weisberg, Robert, “Commercial Morality, the Merchant Character, and the History of the Voidable Preference,” Stanford Law Review 39 (1986): 5–61.CrossRefGoogle Scholar On the significance of the distinction in antebellum America, see Wyllie, Irwin, The Self-Made Man in America (New York, 1954), 70–79Google Scholar; Goodman, Paul, “Ethics and Enterprise: The Values of a Boston Elite,” American Quarterly 18 (1966): 439–49CrossRefGoogle Scholar; Cawelti, John G., Apostles of the Self-Made Man (Chicago, Ill., 1965), 39–75Google Scholar; Weiss, Richard, The American Myth of Success: From Horatio Alger to Norman Vincent Peale (Urbana, Ill., 1968), 36–41Google Scholar; Gerber, David, The Making of an American Pluralism: Buffalo, New York, 1825–1860 (Urbana, Ill., 1989), 55–62.Google Scholar

75 Gouge and Hunt, of course, had very different ideas about how to curb reliance on credit, the former advocating the abolition of incorporated (though not private) banking, and the latter placing his faith in a range of measures, such as bankruptcy laws, credit reporting agencies, the elimination of legal machinery for the collection of debts, and the dissemination of advice against speculative business ventures.

76 Jones, The City Merchant.

77 Freedley, Edwin T., A Practical Treatise on Business: Or How to Get, Save, Spend, Give, Lend, and Bequeath Money, with an Inquiry into the Chances of Success and Causes of Failure in Business (Philadelphia, Pa., 1852).Google Scholar See also Ann Fabian's discussion of an 1859 work, Opportunities for Industry and the Safe Investment of Capital or, A Thousand Chances to Make Money by A Retired Merchant, in “Speculation on Distress,” 134–36.

78 Thus cultural responses to the Panic of 1857 diverged markedly from those to the Panic of 1837. The earlier panic elicited numerous theological interpretations of financial distress as a providential visitation from God, warning Americans to eschew sinful pride and unseemly haste to be rich. In the wake of the latter revulsion, commentators far more commonly discussed the onset of “hard times” within a naturalistic framework, divorcing analysis of political economy from religious considerations. Fabian, “Speculation on Distress,” 131–35. For instructive accounts of the contested manner through which various nineteenth-century economic transformations came to be implicitly accepted by many Americans as “second nature,” see: Kirkland, Edward Chase, Dream and Thought in the Business Community, 1860–1900 (Ithaca, N.Y., 1956Google Scholar; repr. Chicago, Ill., 1990); Zelizer, Viviana A. Rotman, Morals and Markets: The Development of Life Insurance in the United States (New York, 1979)Google Scholar; Fabian, Ann, Card Sharps, Dream Books, and Bucket Shops: Gambling in Nineteenth-Century America (Ithaca, N.Y., 1990)Google Scholar; Cronon, William, Nature's Metropolis: Chicago and the Great West (New York, 1991)Google Scholar; Sheriff, Carol, The Artificial River: The Erie Canal and the Paradox of Progress, 1817–1862 (New York, 1996).Google Scholar

79 In the decades after the Civil War, as commercial thinkers came to terms with both the rise of an industrial economy and the related emergence of Social Darwinism, attitudes toward wreckers and wrecking evolved further, as evidenced by the advice that Secretary of the Treasury Andrew Mellon gave to President Hoover in the aftermath of the 1929 stock market crash. Strongly opposed to the extension of public relief, Mellon advocated that “the government must keep its hands off and let the slump liquidate itself,” a process that would allow “[v]alues [to] be adjusted, and enterprising people [to] pick up the wrecks from less competent people.” Hoover, Herbert, The Memoirs of Herbert Hoover (New York, 1952), 3: 30Google Scholar, quoted in Kindleberger, Charles P., Manias, Panics, and Crashes: A History of Financial Crises (New York, 1989), 154.CrossRefGoogle Scholar Whereas John Beauchamp Jones and Edwin Freedley merely refused to characterize wrecking as filthy, contemptible work, suggesting that it constituted a natural outlet for the human impulse to seek gain, Andrew Mellon viewed the enterprise as fulfilling a crucial economic function. In essence, Mellon did see the wrecker as a vulture capitalist—a specialized scavenger who performed a vital role within the ecology of the marketplace, returning the remains of deceased enterprises to economic circulation.

80 Although wrecking occurred throughout the antebellum period, only in the 1830s did some Americans begin to treat financial scavenging, and especially the buying and selling of assets in bankruptcy estates, as a career. Similarly, only in that decade did entrepreneurs begin to adopt organizational strategies to profit from the widespread experience of bankruptcy, such as through the development of credit-reporting agencies.

81 Not every American at mid-century was equally likely to find complimentary treatments of vulture capitalism compelling. For many members of working-class or farm households, the activities of wreckers would have continued to seem like the epitome of unproductive, manipulative labor. Working-class Americans, moreover, would have been far more likely to think of business failures and financial panics in terms of the unemployment they created, rather than the entrepreneurial possibilities they fostered. On the ideological sensibilities of these groups, see: Keyssar, Alexander, Out of Work: The First Century of Unemployment in Massachusetts (New York, 1986)Google Scholar; Laurie, Bruce, Artisans into Workers: Labor in Nineteenth-Century America (New York, 1989)Google Scholar; Sellers, Charles, The Market Revolution: Jacksonian America, 1815–1846 (New York, 1991)Google Scholar; Clark, The Roots of Rural Capitalism.