Credit and Debt in Eighteenth-Century England

An Economic History of Debtors' Prisons

Alexander Wakelam

• Publisher: Routledge
• Year: 2020
• ISBN:
  9780429647925
• Edition: 1
• Topic: Economics
• Subtopic: Economic History
• Index: Economics

Throughout the eighteenth century hundreds of thousands of men and women were cast into prison for failing to pay their debts. This apparently illogical system where debtors were kept away from their places of work remained popular with creditors into the nineteenth century even as Britain witnessed industrialisation, market growth, and the increasing sophistication of commerce, as the debtors' prisons proved surprisingly effective.

Due to insufficient early modern currency, almost every exchange was reliant upon the use of credit based upon personal reputation rather than defined collateral, making the lives of traders inherently precarious as they struggled to extract payments based on little more than promises. This book shows how traders turned to debtors' prisons to give those promises defined consequences, the system functioning as a tool of coercive contract enforcement rather than oppression of the poor. Credit and Debt demonstrates for the first time the fundamental contribution of debt imprisonment to the early modern economy and reveals how traders made use of existing institutions to alleviate the instabilities of commerce in the context of unprecedented market growth.

This book will be of interest to scholars and researchers in economic history and early modern British history.

1 Indebtedness and insolvency in eighteenth-century England

In Southwark, on the afternoon of Thursday 30th May 1728, the trumpeter John Baptist Grano discovered his luck had finally run out. He had been arrested the previous day for his debts and carried to a tavern, probably run by an associate of the bailiff, where he attempted to raise bail while being plied with food and copious amounts of drink at an exorbitant rate. Business had not been good in recent months and Grano’s inability to live within his means (his actual income as a musician being dwarfed by his own presumptions of gentility) had finally stretched the patience of his many creditors. Nevertheless, Grano was at first optimistic about his situation. Debt was not only an occupational hazard for the precariously employed court musician but a way of life to anyone living in London in the eighteenth century. As he had been able to reasonably put off his creditors for some time and had avoided previous brushes with fiscal reality, Grano was confident that his extended social circle would save him by providing sufficient cash to secure bail. However, despite sending for his friends and relatives, his only visitor that day was the bailiff who ‘about 12 … came to tell me that if I was not bayl’d by 5 a Clock that Day they must carry me over to the Marshalsey’. As the clock ticked down and no ‘Brother, relation or Friend came nigh me’, a disappointment Grano found most ‘ungrateful’, he began to accept the inevitability, as so many did across the eighteenth century, of his internment in ‘this hell’ – a debtors’ prison.¹

Sixty-five years later in Lower Thames Street, the firm of Peirce & Tait, dealers in fish, was coming to an end and the partners embarked upon the process of settling outstanding bills. Unlike Grano, the firm had experienced thirty years of wealth and successful trading, yet the partners remained in a highly precarious position as far as their accounts stood. The firm listed all outstanding bills 1763–1793 alphabetically, assigning each to one of three columns titled simply ‘Bad’, ‘Doubtful’, or ‘Good’ with amounts totalling £3258 18s 7d, £1499 6s 9d, and £1265 8½d respectively. Upon accounting for its own debts, the firm calculated that ‘Bonds & Notes of Hand, in joint name of Peirce and Tait’ amounted to £1126 15s 2d, £64 17s 8d, and £1537 19s 1d under the same headings as their own bills. While ‘good’ bills were those that had apparently been or were in the process of being settled and many of those ‘doubtful’ had been paid in part, there still existed a significant disparity in their accounts. While they were theoretically able to settle their own debts, little would be left for the ageing partners in their retirement. However, ‘Bad’ did not prove irretrievable as the firm managed to reduce the total owed to them to just £648 4s 4¼d by the time the account book was abandoned. Many of these debts, both small and large, had lain unpaid for several years and accepting the unpredictability of repayment was just as much a reality of trade for Peirce & Tait as having to live on extended credit was for their customers. However, the rapid turnaround in the accounts regarding recalcitrant debtors demonstrates how effective the application of focus and a significant degree of coercion could be in finally settling accounts, particularly when customers were reminded of the imposing walls of the Marshalsea.²

Grano and Peirce & Tait, separated by nearly three quarters of a century, lived in an England in which vast sums of unsecured credit permeated throughout commercial life. Sometimes it moved at great speed, being settled in hours, and sometimes it accumulated in secret, piling upon itself over time until a debtor could no longer hold demands at bay or was discovered by their executors after death. Some credit transactions were based on contracts poured over by lawyers for months by which thousands of pounds of obligation were agreed. Others depended upon the buyer signing a written promise to pay by a specified date negotiated in a matter of minutes. Many more deals were agreed casually and sealed with merely a handshake or a smile. Credit depended upon reciprocal arrangements, community relations, and generous dealing but it also consisted of a great deal of confidence and bravado as self-interested parties attempted to secure the best possible terms and convince one another of perhaps grander capabilities than they truly possessed in order to compete commercially in a largely informal market. Regardless of its size, the formality of the agreement, or how long it took to settle, credit had one universal truth across the period – those who offered it expected to be paid. Securing repayment of deals inflated by bravado and without defined contracts frequently proved problematic while substantial credit entanglements, involving potentially dozens of actors, put participants at great personal risk meaning both debtor and creditor (when they could be distinguished) risked ruin. Yet it was not a system from which one could choose to abstain, princes and paupers both being beholden to credit’s favours.

This chapter discusses why eighteenth-century consumers and businesspeople found credit so attractive and so inescapable, but it also demonstrates how potentially unstable and dangerous such contracting could be. It explores the scholarly well-trodden ground of the ubiquity of credit in the early modern economy while emphasising how precarious much credit was, even when supposedly supported by formal arrangements. It then turns to the problems associated with enforcing such arrangements, analysing the efficacy of available institutions by which vendors could be assured of securing their capital, demonstrating that many of the most obvious legal solutions regularly proved impractical outside of large enterprise and high finance. It was, it is argued, the debtors’ prison which, before nineteenth-century advances in economic practice, represented the most effective response to debt, being (like the credit upon which it was based) innately personal. Yet this system of debt imprisonment was far from a well-designed state institution, instead functioning as a relatively nebulous system of private activity, infected with inefficiency arising from corruption, customary behaviour, and the well-meaning reforms of the “enlightened”. While debtors’ prisons – a medieval institution which remained largely unchanged in the eighteenth century despite revolutions in finance, commerce, industrialisation, and society – were never a perfect solution, for creditors like Pierce and Tait faced with debtors like Grano it regularly proved to be their only option in recovering everyday debt.

**

Daniel Defoe described credit in his Complete English Tradesman of 1725 as the lifeblood of eighteenth-century economic society calling it ‘the foundation, the life and soul of business’; it was, ‘in a private tradesman, … his prosperity’. To Defoe and his readers, credit was far more than a desirable support to trade, allowing it to grow beyond conventional limits – it was essential to the continued existence of commerce itself. Nor was this reliance on credit restricted to cash-poor workmen or international dealers waiting months for goods or payment to cross the Atlantic, Defoe claiming that ‘no Tradesman can be in so good circumstances as to say he … does not stand in need of credit’.³ While Defoe’s almost hagiographical celebration of ‘Lady Credit’ is perhaps the best known, he was one of many voices describing credit as the sustaining force of England’s commercial world, powering the vast increase in wealth that occurred during the eighteenth century.⁴ Arthur Nevil concluded in 1762 that ‘Industry is reared … by Credit and Credit is the Mover … of Commerce’, while in the 1790s William Gordon wrote that ‘credit is the great foundation of commerce’, and the creditors of a Bristol bankrupt declared in 1783 that ‘credit is universally allowed to be the parent and life of trade’ and ‘indispensable in the affairs of men’.⁵ Nor did Defoe’s writings age poorly, being in near constant print throughout the century. When William Wright published his own Complete Tradesman in 1789, he lifted Defoe’s comments on credit almost directly with only minor updating, The Monthly Review still concluding ‘the young tradesman will certainly be much benefited’ by Wright’s book.⁶

The extension of capital on trust has an obvious role in the promotion of economic activity beyond that enabled by existing limited personal wealth in all societies. However, the era of bank loans to facilitate long-term expenditure was a distant future to most early modern businesspeople. Eighteenth-century credit generally did not consist of money lending and bank loans which were heavily restricted by usury laws, though lending capital for interest did occur in this period and particularly consumed concerns about the state’s credit and public debt.⁷ Most private debt instead arose from sales credit, the offering of a product with delayed payment, and almost all exchange, whether it be for goods or services, was based upon it, customers buying luxury goods and daily bread on credit, while employers even paid wages on credit.⁸ This was certainly not an eighteenth-century innovation; credit had always been a feature of English commerce but had proliferated extensively from the late sixteenth century when interpersonal credit outstripped the rate of consumption and filled courts with litigation to resolve commercial disputes.⁹ While the rate of litigiousness declined relatively quickly, the use of credit itself did not abate largely due to the underlying drivers of its use not being remedied, principally the deficiencies in the physical realities of the coinage, credit remaining central to economic life into the nineteenth century.¹⁰

Viable metal currency was in short supply across the period compared to growing commercial demand. The unfitness of the currency was partly a result of the inherent vulnerability of pre-modern coinage to counterfeiting and to clipping in particular by which the quantity of silver within an individual coin was diminished. While ordinary people were likely to take a clipped or debased coin at its face value, the merchants they bought from would not, weighing small currency to determine its true value and hoarding undamaged coins for dealings with other suppliers.¹¹ Where bad coin circulated much of it still might be dead weight in the pocket when attempting to purchase goods in more formal venues than the marketplace, the street, or village alehouse. Even if the coinage had remained unharmed, Craig Muldrew concludes the supply of metal was ‘never anywhere near large enough to meet the needs of the economy’, let alone tackle inflation as commerce began to outgrow the ores upon which it had been based for millennia.^12...

Table of contents

• Cover
• Half Title
• Series Page
• Title Page
• Copyright Page
• Dedication
• Table of Contents
• List of illustrations
• Acknowledgements
• Introduction
• 1 Indebtedness and insolvency in eighteenth-century England
• 2 Enlightened capitalism: use and structure of debtors’ prisons
• 3 Coercive contract enforcement: debtors’ prisons as economic institutions
• 4 The debtor economy: obtaining release from debtors’ prisons
• 5 The Insolvency Acts: when debtors’ prisons failed
• 6 Private enterprise: operating a debtors’ prison
• 7 Reform and the unmaking of debtors’ prisons
• Conclusion
• Bibliography
• Index