The last time I looked into the financial woes of my ancestor George Wreford, I wanted a simple explanation into the change in bankruptcy laws in 1861. I’ve since learned the key to understanding is knowing the difference between bankruptcy and insolvency.
Bankruptcy or Insolvency?
Whether a person was declared bankrupt or insolvent, was dependent on the profession of the debtor.
Only traders could apply for bankruptcy and have access to some kind of relief – an ‘Order of Discharge’ – which would effectively clear the debt, and allow them to rebuild their business or finances. Any money earned after bankruptcy was theirs to keep.
Non-traders were not able to do this, and would be liable for their debts forever. Any future assets or inheritance could be seized by creditors to pay off old debts, and they could be kept in gaol indefinitely.
Why was this case?
It was a long-held belief that financial failure in commerce was a natural risk of business (think: ‘market fluctuations’), whereas failure in private life was a moral or personal failing (think: ‘extravagant lifestyles’). Debtor’s prisons were seen as a punitive measure to discourage living beyond one’s means.
What changed in 1861?
After the new Bankruptcy Act (effective October 1861), non-traders could also apply for bankruptcy – an ‘Order of Discharge’ – so that they, too, could have their debts cleared.
Unfortunately for George, he became insolvent in March 1861 while still under the old laws.
So why would George be considered a non-trader?
The answer seems to lie in the fact that as well as being an innkeeper, butcher, and journeyman butcher, George was also described as a farmer.
Farmers were excluded from bankruptcy because their livelihood depended on the ‘labour of the soil’ and the ‘uncertainty of the seasons’, NOT commercial trade.
So although George was a butcher and innkeeper, his farming defined his primary legal status. This meant the courts viewed his capital as being tied up in land and livestock reared by himself, rather than goods bought and sold. The meat he sold was likely butchered from his own animals rather than animals bought from someone else.
Being a ‘journeyman butcher’ also suggested that he was an employee rather than a business owner, and therefore could not declare bankruptcy.
The Petition
This notice in the London Gazette tells us that George voluntarily declared insolvency. He would have recognised he was in serious financial trouble and filed his own petition, giving over all his assets to the court to pay off his debts. Had he not done this, a creditor could have had George sent to prison and controlled whether he was released.
The ‘Benefit of the Act’
