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In the Red and in the Black: Debt, Dishonor, and the Law in France between Revolutions

Author(s):Vause, Erika
Reviewer(s):Lemercier, Claire

Published by EH.Net (June 2019)

Erika Vause, In the Red and in the Black: Debt, Dishonor, and the Law in France between Revolutions. Charlottesville, VA: University of Virginia Press, 2019. ix + 324 pp. $45 (cloth), ISBN: 978-0-8139-4141-7.

Reviewed for EH.Net by Claire Lemercier, Center for the Sociology of Organizations, Sciences Po, Paris.

Erika Vause, an Assistant Professor of History and St. John’s University, is passionate about early nineteenth French history and especially the “Revolutions” of the title, those of 1789 and 1848. As she shows, credit — public as well as private — was then hotly and extensively discussed. In order to better understand the economic, political, and cultural stakes of the discussions, Vause focuses on two legal devices that were specific to merchants: debt imprisonment and bankruptcy. After three brief abolitions, imprisoning debtors was finally abrogated in 1867. Bankruptcy law entailed criminal and commercial procedures, depending on suspicions of fraud, and was regularly reformed.

The history of debt imprisonment and bankruptcy is relevant to contemporary debates on economic institutions; the “law and finance” literature has often drawn on legal and financial history to make recommendations for reform. It has always been difficult to balance the idea of attracting creditors thanks to a law that promises punishment to insolvent debtors and the fact that many creditors favor informal arrangements that allow them to recover more money and avoid chain bankruptcies.

In this context, Vause insists on a French peculiarity: the fundamental legal distinction between commercial and civil law, setting merchants apart — something that other continental European countries abolished during the nineteenth century. The legal concept of merchant included all financial, commercial, industrial, and artisanal businesses. In A Revolution in Commerce (Yale University Press, 2007), Amalia D. Kessler explained how the distinction was maintained in the eighteenth century, despite new, more impersonal commercial practices and the abolition of privileges and guilds after 1789.

Vause’s story starts where Kessler’s ended. In Chapter 1, she insists on the fact that revolutionaries of all stripes embraced an ideal of free contractual relations, but embedded it in discourses on commercial honor or virtue; many likened commerce to a public service, implying specific rights and duties. Free contracting was paramount, but public order was at stake and virtue required incentives. The ensuing reforms — the abolition of usury laws; the conservation of commercial courts, with a more solid jurisdiction on bankruptcies; the abolition and restoration of debt imprisonment — therefore do not fall clearly on a of pro-debtor vs. pro-creditor, or liberal vs. interventionist axis.

Chapters 2 and 3 discuss new bankruptcy laws in the context of Napoleonic codification in the early 1800s, and their application before 1830. The laws appear as compromises, and each court interpreted them differently. Even though the criminal procedure was rarely used, bankrupt merchants were stigmatized. Vause focuses on the complications created by the fact of setting merchants apart from other persons. Studying the bankruptcy of the Demiannay Bank (p. 108-117), she shows how difficult it was to define individual liabilities in a context of entanglement between businesses and families. Judgments were based on holistic assessments of personal morality rather than on discussions of strictly economic risk-taking or of accounting skills. A particularly strong cultural trope associated blameworthy bankruptcy with ambitions of social mobility.

Chapter 4 documents debt imprisonment from an astonishing source: journals and petitions published by prisoners, who were surprisingly able to self-organize. In a context of penal reform, they strove to distinguish themselves from other convicts. Chapter 5 addresses debates on debt imprisonment by focusing on an exceptionally thorough statistical study, published in 1836. Vause compares it with her own numbers, based on records of a Lyonese prison. Political and legal debates focused on non-merchants — prodigal sons of wealthy families — allegedly imprisoned in large numbers because they had signed bills of exchange. Vause shows that those were a minority; most prisoners were individual merchants, with higher-status merchants as creditors. She argues that debt imprisonment began to appear less legitimate because it was seen as a consequence of too emotional (not reasonable enough) views on credit.

Chapter 6 addresses the practice of bankruptcy in the 1830s (based on more than 1,000 Parisian files) and the reform of 1838. Vause clearly presents the complicated procedures and the conflicts of interests among creditors, and between them and trustees. She then focuses on companies, from partnerships to corporations: their bankruptcies challenged a law that had been meant to focus on the body and morality of individual merchants.

Chapter 7 (followed by a too brief epilogue about the major reforms of the late 1860s) shows that credit was once again vigorously discussed during the revolution of 1848, with a new focus on access to credit for the owners of small shops and workshops. However, changes in bankruptcy law, according to Vause, opened an era of segmented procedures for small and large, personal and impersonal businesses that made risk-taking easier for the latter, not the former.

I learned a lot in this book, and I found most of Vause’s idea interesting to think about. I would not, however, recommend it to all colleagues interested in the intersections of legal and economic history. Non-specialists of France might sometimes find it difficult to read. (The inordinate quantity of typos does not help.) The second half of the book, from the end of Chapter 3 onward, is clearly written and nicely weaves together legal and political debates, cultural history, and case studies, which is no small feat. (Many historians would have been content to focus on the cultural or political side, with ten times less archival research and an easier to write book.) I cannot say the same about the first chapters, however; I would almost recommend reading the chapters in reverse order.

Economists and social science historians might regret the lack of quantitative evidence. Vause does make the important point that there were extremely few prisoners for debts and bankrupts convicted of fraud, but that the two mechanisms were still deemed important as threats. Other numbers could have made her thesis more compelling, especially as to the differentiation between bankruptcies small and large. Finally, I would have liked the author to engage more explicitly in comparisons between countries or periods. It is of course a lot to ask from a first book, but Vause’s bibliography shows that she knows the relevant works, and her research opens intriguing questions as to the causes and consequences of the having a separate commercial law, no bankruptcy procedure for consumers, etc. I can only hope that the author, without losing her passion for French archives, will in the future engage in such comparative discussions with historians and economists.

Claire Lemercier is a CNRS research professor of history and a member of the Center for the Sociology of Organizations (Sciences Po, Paris). She is the co-author, with Claire Zalc, of “For a New Approach to Credit Relations in Modern History,” Annales HSS, 67-4 (2012) and has extensively studied French commercial institutions, especially commercial courts (see, for example, the working paper “Courts and the Funding of Business in Nineteenth-Century France,” 2017, available online).

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Subject(s):Financial Markets, Financial Institutions, and Monetary History
Government, Law and Regulation, Public Finance
Geographic Area(s):Europe
Time Period(s):18th Century
19th Century