Fraudulent bankruptcy, it should be noted, had nothing to do with how the debtor became a bankrupt. Thomas Pitkin could have pulled off his scam and yet still not been a fraudulent bankrupt, because fraudulent bankruptcy was committed if, after the creditors put the debtor into bankruptcy (it was not a voluntary procedure), the debtor did not follow the statutes to the letter in turning over his assets and books, submitting to be examined, and otherwise fully cooperating with the bankruptcy commissioners.
What is interesting about the 1706 bankruptcy bill, besides the fact that it arose somewhat accidentally, is that, first, it included not only discharge but also a provision making fraudulent bankruptcy a capital crime for the first time. The interconnection between the carrot of discharge and the stick of the death penalty has not been given much attention. The second interesting thing, related to the first, is that the original draft of the bill, from March 1705, had neither discharge nor capital punishment. The Lords amended the judges' version--which had provided for life imprisonment and regular pillorying--to make fraudulent bankruptcy a felony without benefit of clergy (i.e., a capital crime). That punishment provision actually fell out of the November 1705 draft, but it was replaced in the House bill. Discharge appeared toward the end of the legislative process, though because the House of Commons papers from the period are gone, it's not clear exactly when. What is clear is that there was a certain amount of resistance to the concept. As one merchant said in his testimony before the Lords in opposition to the discharge provision, "on his [the debtor's] oath swearing he delivers up all, he is discharged. The debtor is here made judge, jury and all by his own oath." It's also clear that it was not a new idea. Bankruptcy advocates had been talking about discharge since at least the late 17th century. Discharge proved so unpopular that the following year the Act was amended to make it significantly harder to obtain. For the next century or so, there was the phenomenon of the undischarged bankrupt: the debtor who had given over all his assets to the creditors, made a full disclosure, and still did not get his discharge. Finally, the Act was written with a sunset provision. That was one of the two original amendments put into the March 1705 Lords version, and the clause remained in the final bill. Discharge (and the death penalty) were meant to be temporary, and at one point they were allowed to lapse. But they were reinstated in 1718. Between 1712 and 1813, four men were hanged for fraudulent bankruptcy. Capital punishment was finally abolished in 1820, when punishment was made transportation for life or imprisonment at hard labor for up to seven years. Discharge became a cornerstone of modern bankruptcy law.
And now, my month of guest blogging being up, I will discharge my duty of thanking Mary and Dan for this opportunity. It has been fun.