Abstract: Bankruptcies and the Development of Structural Interpretations of Failure in the Eighteenth-Century Merchant Republics
Bankruptcy was by no means new in the eighteenth century. Failure was ubiquitous, although the reasons for failures and the interpretations they evoked changed with time and place. Eighteenth-century arm-chair commentators found it easy to condemn bankrupts out of hand, but in cities like Amsterdam, Antwerp, and Hamburg, which lived from commerce and grew wealthy on merchant-banking, bankruptcy remained a considerably more complex and ambiguous issue. The apparently growing dimensions of the problem, particularly after midcentury, however, caused considerable disquietude. Moral condemnation of bankruptcy never abated, but it proved an ever less useful way to account for business failure in a situation where breakdowns appeared to have become organic parts of the very process of growth and expansion. More and more political economists, those who crafted bankruptcy laws or who were commissioned with enforcing them, came to recognize that the very structure of the economic world, and especially the world of international trade and finance, demanded "risk-taking," not only to succeed but simply to survive. The economic realm was thus perceived as inherently unstable and treacherous. Apparently, the very same conditions that nurtured the rapid rise of great houses and the accumulation of vast wealth also sped the disastrous plummet of big economic players whose shipwrecks sucked down smaller craft. While the analysis of "cascading bankruptcies" caused by big crashes presents its own methodological and explanatory difficulties, nonetheless the idea of the "big crash" went hand-in-glove with the development of these newer structural interpretations of economic life. This paper sketches the influence of "big crashes" on the shaping of a new political economy, on business practice, and on commercial law.