Abstract

"Reinventing the Bankruptcy Power"

Rafael Pardo, Washington University, St. Louis (pardo@wustl.edu)

U.S. bankruptcy law has been repeatedly reinvented over time in response to changing circumstances. The Bankruptcy Act of 1841 constituted a revolutionary break from its predecessor and had a longer and much more significant life than historians and legal scholars have recognized or appreciated. Although Congress repealed the Act in 1843, the repeal legislation included a savings clause, which provided that any pending bankruptcy cases would remain undisturbed and could be brought to final resolution pursuant to the Act’s terms. Because debtors flooded the 1841 Act system with more than 46,000 cases, the Act’s administration carried on into the 1850s. Importantly, the system commenced and continued operations at a time when the domestic slave trade’s role in the national economy was increasingly expanding. Some 1841 Act cases involved bankrupt plantation owners, which created the opportunity for federal court officials to engage actively in plantation management and profit from the business of slavery while winding down those enterprises. This Article provides an in-depth analysis of manuscript court records from a select group of these cases, highlighting the institutional capacity of federal courts to regulate antebellum slavery through the residual policymaking authority granted to them by Congress under the U.S. Constitution’s bankruptcy clause. This historical episode reveals yet another instance of the “generative dynamic between race and economic innovation” (Park, 2021; p. 29) and thus invites a critical reassessment of the Supreme Court’s analytical framework for determining when Congress has innovated in a way that exceeds the bankruptcy power’s constitutional limits—an inquiry that juxtaposes the contested innovation against the text and history of prior bankruptcy acts and courses of practice thereunder and asks whether the innovation “follow[s] the line of historical and progressive development projected by previous acts” (294 U.S. 648, 672 (1935)).