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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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