We are not the first to face this economic problem, nor will we be the last.
Even some of the founding fathers didn’t think much of financial institutions. Thomas Jefferson called banks “more dangerous than standing armies.”
Bankruptcy laws are very powerful and they are all encompassing. Bankruptcy affects people and small companies in many ways. Other laws must bow to the bankruptcy laws. A divorce, a lawsuit and a foreclosure of property are all put on hold until, and only if, the bankruptcy is no longer in force, or the Bankruptcy Court gives those creditors permission to continue with their actions.
April 4, 1800, Congress passes the Bankruptcy Act of 1800 in order to gain the release of certain power men from debtors’ prison.
The reason for the new bankruptcy laws was so that Robert Morris, and others like him, can be declared bankrupt and released from debtors’ prison, where they are being held under state laws.
Morris’s biographer explains it all like this. “In the spring of 1800, spurred by the string of failures that swept the country—Morris’s being perhaps the largest—Congress passed the nation’s first bankruptcy law. Designed to limit fraud and equalize competing claims, it allowed for the release of major debtors upon the petition of their creditors.”
“In Morris’s case, as might be expected, the negotiations were protracted, but on August 26, 1801, he walked once more through the gates of the Prune Street Jail.”
Morris writes: “I obtained my liberty last evening, and had the inexpressible satisfaction to find myself again restored to my home and family.”
“He’d been released from prison, but not from his debts. The next three months Morris spent in hearings before a panel of bankruptcy commissioners appointed to manage the claims of more than ninety creditors.”
Morris’s contributions to America’s founding and his “indelible impact on the life of its people. His secret agents had supplied the armies of the Revolution, his credit had salvaged its finances, and his faction had fashioned its Constitution.”
“More than that, Morris installed his pragmatic, realist, modernist vision of a free people united by the principles of economic self-interest and not by bonds of state or political authority.”