Tag Archives: 1840s insolvency

Alas poor debtor!

As part of my avowed intention to explore the experience of financial anxiety during the 1840s, my eye was attracted to this little morsel in the Port Phillip Herald of 10 May 1842:

SHARP PRACTICE. A rather novel mode of obtaining the payment of a debt from an insolvent, has just come under our notice.  A gentleman of our acquaintance, whose change of fortune from affluence to indigence occasioned him so much excitement as to materially effect his intellect, and to leave him at times in a state of perfect imbecility, was a few days since arrested by the Deputy Sheriff at the suit of a Sydney creditor.  Having found the necessary bail he was allowed to occupy a tenement within the Rules. He had not been many days in confinement before his spirits were so materially afflicted as to bring on the malady before alluded to, and under which, we regret to state, he still labours.  In this fit of nature he proceeded to the wharf, but in less than half an hour returned to his prison, thus stepping out of the limits laid down for his safe incarceration.  Having been seen outside the Rules, a party acting as agent for the Sydney creditor, forthwith instructed his solicitor to write to his bail, informing them that as the debtor had exceeded his limits he should hold them liable for the account of the debt and costs, which are very considerable.  Now, for the honor of the Province, we hope such a case will never be brought before a court of justice, for sharper practice we never, in the whole career of our colonial experience, heard of…. An application is about being made to the Judge to release the unfortunate man from confinement upon the score of insanity, and if his Honor has the power, who can doubt his will to extend such an act of mercy?

Well, I’m now mid-way through June 1842, and I haven’t seen any public applications of mercy to the Judge, but perhaps such things did not occur in open court.  I, at least, do wonder about his will to extend such an act of mercy.  Perhaps he’d decide that this was another case of dishonesty and dissembling that he had to “sift to the bottom”: but, then again, perhaps not.  It was exactly this unpredictability that made his courtroom even more anxious than it had to be.  Which Judge Willis would be sitting today?- merciful Willis? or avenger Willis?

A number of things to remark on here:

1. The Port Phillip Herald is being particularly kind in their reportage of this case.  Certainly, they have not held back at all when insolvents have absconded, or indulged in their own “sharp practice” to avoid their debts.  Perhaps the key lies in that this is a “gentleman of our acquaintance” rather than a speculator, embezzler or rascal, as they could have just have easily designated him.

2. This is one of the first references I have found to insanity caused by insolvency.  There are certainly references to insanity and suicide:indeed, the very next issue of the Port Phillip Herald referred to the putrid bodies washing up against the wharf at the end of Elizabeth Street. (I wonder if it was, in fact, this gentleman? I haven’t seen any further mention of him.) There are many coronial inquests into women, in particular, throwing themselves into the Yarra. I wonder what stories lie there.

3. Although there was a strong belief in “British justice”, legislation particularly prior to the 1850s varied between colonies and was not necessarily the same as in England.  This was true of the Insolvency Act in New South Wales, which differed from the English insolvency laws in many fundamental respects.  The legislation was drafted by Justice Burton in 1841and allowed all debtors to take advantage of bankruptcy provisions.  Instead of imprisonment, as under the English act, debtors’ assets were distributed to their creditors, allowing them to resume business quickly.  Unlike the English law, the legislation did not emphasize morality- possibly because it was drafted at a time when many otherwise ‘moral’ people were facing insolvency. Imprisonment for debt was abolished in NSW in 1843 (i.e. after this vignette), predating similar changes to the English law by 26 years.  Justice Willis, however, was critical of Burton’s legislation (perhaps because it was Burton’s legislation and not his own???) and preferred the English approach.

4.  The ‘rules’ were instituted by Justice Willis almost as soon as he arrived in Port Phillip, initially in response to the severe overcrowding in the very small jail.  Rather than being sentenced to jail, minor offenders, bail applicants and insolvents, could be ‘confined to the rules’, which took up quite a large area of the built-up area of central Melbourne.

Bear in mind that at this time, the major development was located mainly along the Collins Street and Elizabeth Street area, rather than eastward along Swanston Street which, although probably regarded as the main thoroughfare through Melbourne today, was almost bushland in the early 1840s.  Confinement to the rules was often not a particular hardship: many people who were declared insolvent actually lived in the area, although it appears that our belaboured gentleman didn’t as he had to rent a ‘tenement’ specially.

5. Finally, we have to trust to our own empathy and imagination to flesh out this little vignette.  We can imagine him standing on the river bank, watching the river swollen with winter rains, weighing up his options, torn between loyalties and honour, then turning away and walking along the unpaved streets back into the rules again.

An economic downturn 1840s style

What strange times we live in.  Each night, the news bulletin starts off with the financial report, extending over about ten minutes, then briefly the “other” news, then a return to the usual financial report, sport and weather.  Each morning I unwrap the paper and marvel at the increasing size of the headlines reporting on the latest falls on the Australian Stock Exchange, or Wall Street, or the FTSE,  or the Hang Seng.  How do I even know about such entities?  I think it’s probably indicative of the recent financial bubble that we’ve all been caught up in over the past 10 years,  that even before this crisis, every news bulletin has  the financial report as a staple item each night- I really don’t particularly remember it having such prominence, say, twenty years ago.  Ah, but we’re all investors now-unwittingly and sometimes unwillingly through our compulsory superannuation, and cajoled to “unlock the equity in your home” by drawing back on our mortgages to spend on the sharemarket.

And of course, it’s all on such a global scale.  There’s no shutdown period at all on a sharemarket somewhere- Australia wakes up and looks at what America has done overnight, responds by a rise or a fall on the ASX, the day moves on, that night the UK market responds, the US market responds to that, and it all goes around again.  There’s no sigh of relief of “thank God that’s finished”- although at least the weekend allows a global breather, until the whole merry-go-round starts again on Monday.

Our whole system is predicated on credit in a way that is largely unconscious and invisible to us.  With just-in-time manufacturing, there are no storehouses any more of goods waiting to be sold- instead the credit system balloons forward to buy in a consignment as it is needed right now, retracts when it’s sold only to balloon out again to replenish the shelves next week.  We’re bombarded with “buy now, no deposit!!” advertising; we’re asked as a matter of course for every transaction with a swipe card “will that be on credit?”

And so, conscious of all this, I’ve been thinking about the recession (depression?) in the early 1840s in Port Phillip, and the way it impinged on the worldview of people there at the time.  I surmise that, like me, their understanding at the time was incomplete:no doubt more so, given the four-month delay in any information from Britain compared to our instantaneous communications now, and the dependent state of a colonial economy within the Empire as a whole. What they understood of the financial situation was filtered through the newspapers, gossip, and lived economy of their own experience.

Contemplation of this- and I’m doing quite a bit of reading on this which I shall, dear reader, share with you- is not completely irrelevant to my Judge Willis thesis work.  As sole Resident Judge, he heard all of the civil cases that came to the Supreme Court; he oversaw (but was not directly involved in) the Insolvency Court, and his own propensity to “sift to the bottom of things” characterized his approach to the bankruptcy cases that crossed his bench.  I feel sure that the general ‘anxiety’ and ‘excitement’ of Port Phillip reflected both the economic and political currents of the day, and directly fed into his dismissal.

So how did the Port Phillip communications of the day portray the financial crisis?  Newspapers had always carried a column showing the price of goods on the local market -wheat,  bread, spirits, sperm candles, parsnips etc. (The parsnips have particularly taken my attention because at my local supermarket they have been $5.95 per kilo for the last few months.  For bloody parsnips!!!!! Fine words may butter no parsnips, but obviously $5.95 a kilo will!)  The shipping reports were often followed by correspondence from the wool agents in London, reporting on the wool sales- generally chiding the Australian suppliers for lack of quality, and sighing at the dearth of buyers.

Much of a four-page Port Phillip newspaper of the 1840s was devoted to Court reports, and as the judicial system expanded in Port Phillip, so did the scope for court reporting- the Supreme Court, the Insolvency Court, the Police Bench, Quarter Sessions, the Court of Requests.  The tales of drunkenness and violence that ran through these courts were increasingly supplemented by stories of insolvency, defections from debt, unemployed immigrants, forced sales etc. as we move from 1841 into 1842.

And increasingly as we move from late 1841 into 1842 there are also  the required advertisements of bankruptcy posted in the newspaper, notifying of the first, second or third creditors’ meeting of one bankrupt after another.  By April 1842 (which is where I’m up to at the moment), the Port Phillip Herald regularly published a table of insolvent debtors, their assets and liabilities, and the dates of their scheduled meetings with creditors.  Real estate advertisements spruiked  “we’re at the bottom of the market- so buy now!!” . Occasionally there would be a high-profile insolvency case that demonized a particular individual, surely read  and gossiped about with a sense of schadenfreude by the subscribers to the newspaper.

And all of this occurred within the bullishness and heightened expectations of people who thought they were coming to “Australia Felix” to make their fortunes!