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37 Com. L.J. 127 (1932)
Origin and History of the Bankruptcy Law

handle is hein.journals/clla37 and id is 125 raw text is: VOLUME 37 MARCH, 1932 Commercial Law Journal C(rioin and Ilistcry (f the Eiankruptcy Law By 0. 0. Vrooman of the Cleveland Bar IHE first mention made of any practice resemb- ling the bankruptcy law, and of which our bank- ruptcy law is the outgrowth, is found in the Bible, in the 15th Chapter of Deuteronomy, before the days of David and Solomon more than three thou- sand years ago, when the Israelites had their sab- batical year of release. This Chapter quite explic- itly states the first law known in history providing for the release of debtors from their debts, and were the popular idea true, the first bankruptcy law. It reads as follows: At the end of every seven years thou shalt make a release. And this is the manner of the release: Every creditor that lendeth aught unto his neighbour shall release it; he shall not exact it of his neighbour, or his brother; because it is called the 'Lord's release.' Of a foreigner thou mayest exact it again: but that'which is thine with thy brother thine hand shall release; Save when there shall be no poor among you; This old Jewish law naturally was to be found, as it necessarily must have been, quite impractical in its operation as the stated seven year approached new business with poor people must have flagged, and old creditors became nervous and impatient. But in those days defects in laws did not require formal amendment for their correction, but were helped out in a way that is a lost art to modern leg- islators-the invocation of divine wrath. The development of commerce and industry in the past several hundred years have brought the merchant and trader into the foreground of our economic life, and the place of the soldier of fortune, who galloped so enticingly through the pages of history, has long since been usurped by the merchant adventurer. The word bankrupt was not used until many hundred years thereafter, and carries us to Italy for its etymology. The word is from the Italian, banca rota, which means benches broken-the custom being in the Middle Ages to break benches and counters of merchants who failed to pay their debts-and to that usage is to be traced the deriva- tion of the word that has come to be attached to the systems of legislation that possess no slight importance in the history of our race. It should be stated, however, that laws respecting insolvency, or the lawful refusal of debtors to discharge their obligations, are older than the word. Such ordin- ances date back at least to the Draconian Code, which was in force six centuries before the Chris- tian Era. In the former days, the merchants of Venice, Genoa and Britain, as well as the older countries, risked their fortunes, in the most literal sense, when they loaded their ships and sent them to sea. The perils of wind and weather, and the great uncer- tainty attendant upon all mercantile ventures in those days made it necessary to devise a method of settlement between creditors and debtors, which would take into account the hazards of business, especially since the law in early times laid a cruel and heavy hand upon any person unable to meet his obligations. IN ancient Rome under the Law of the Twelve Tables, it is said that creditors might even cut the debtor's body into pieces, and each take his pro- portionate share. It is quite likely that the pound of flesh supposed to be exacted by Shylock in Shakespeare's Merchant of Venice, is a direct de- scendent of the Law of the Twelve Tables. In Greece and Rome, and generally among the nations of antiquity, creditors had the power of selling the debtor and his family into slavery. As time went on these primitive ideas were materially modified, and the right to sell the person of a debtor was re- placed by the imprisonment of a debtor in a public prison in default of his debts. But bankruptcy has a more restricted significa- tion, its general principle is to be found in the Cesio- Bonorum (a law which provided for an assignment of debtor's property for the benefit of creditors, which discharged him to the extent of the property ceded only, but exempted him from imprisonment) of the Roman Law during the time of Caesar, under its humane provisions the debtor who surrendered

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