As previously promised, today's post is an overview of the history of the use of capital punishment for fraudulent bankruptcy in England.
The English instituted capital punishment for fraudulent bankrupts in 1707, but they were not the first to do so. In 1560, Charles IX of France legislated that “All bankrupts and those who failed (feront faillite) fraudulently are to be punished . . . capitally.” The royal ordinance of 1579 seems to have stepped back from the death penalty, but the punishment was reinstated in the royal edict of May 1609 on account of concerns that the multiplication of bankruptcies would lead to the ruin of commerce. Capital punishment remained the legal penalty for fraudulent bankrupts in the 1673 French national commercial code and until the time of the Revolution. In reality, the French courts often tried to avoid sentencing fraudulent bankrupts to death, but the law was not an empty threat. In 1602, two bankrupts were tortured and hanged. In 1637, a fraudulent bankrupt was tortured then condemned to be led around with a signboard around his neck reading, “Fraudulent Bankrupt,” prior to being strangled to death. But some judges preferred a more humane punishment. In 1673, for instance, a prominent bankrupt in Paris was sentenced to be led around by a rope around his neck, carrying a signboard advertising his crime, pilloried for three days, and then enslaved on a galley ship for nine years, and—to add insult to injury—made to pay court costs.
Part of the problem in France was the lack of a clear definition of “bankrupt” or “fraudulent bankrupt.” In principle, anyone responsible for his or her own insolvency—for instance, by extravagant expenditures or knowingly over-extending credit—was a bankrupt, which was a crime (namely theft), as opposed to mere “failure” (faillite), insolvency brought on by circumstances beyond the insolvent’s control, which was a civil wrong and which therefore did not lead to criminal sanctions unless the insolvent person also separately tried to defraud his creditors. But there were obvious line drawing problems, and bankruptcy suits tended to drag out for years.
England did not have the same line drawing problem because the first statute to make bankruptcy a capital crime, 5 Anne c. 17 sec. 18 (1706), defined “fraudulent bankrupt” as a “person who neglects or omits to discover and deliver his, her, or their estates and effects, and in every thing act and do as in this act is directed.” Thus, non-conformity with the bankruptcy statutes was fraud every bit as much as intentionally perpetrating an actual fraud. The punishment for fraudulent bankruptcy was, as the statutes put it, to “suffer as a felon without benefit of clergy.” The usual punishment for felony was hanging; benefit of clergy had by this time evolved into a sort of standard respite for first time offenders. Blackstone has a nice explanation here.
Prior to 5 Anne, the punishments were first, from 1543, that for concealment of assets, the bankrupt “should lose and forfeit double the value of the property; and for non-surrender, that he should be taken and deemed out of the king’s protection, and all his property divided amongst his creditors.” This was the law until 1604 when the commissioners were given the power to arrest bankrupts who did not surrender to them, and bankrupts who committed perjury in their examinations were made to “stand in the pillory for two hours, and have one of [their] ears nailed to the pillory and cut off.”
Several historians of bankruptcy have claimed without much evidence that the first English statute to make fraudulent bankruptcy a hanging offence was motivated by the extraordinary bankruptcy of Thomas Pitkin in 1704. I’ve had a bit of difficulty piecing together the Pitkin affair, but the outlines are these. Pitkin was a dealer in linen cloth, who devised a scheme with his partner, Thomas Brerewood, to purchase large quantities of cloth on account. Pitkin transferred the goods to Brerewood and other accomplices, who secreted them. Pitkin then absconded, leaving debts of over 50,000 £. Brerewood and an agent then connived the creditors, using threats, rumor, litigation, and bribery, into compounding the debt for 8 shilling, 6 pence on the pound (20 shillings to a pound).
By an act of parliament in 1704, Pitkin was threatened with life imprisonment and being pilloried three times a year if he did not appear and submit to the commissioners by May 10, 1705. Pitkin surfaced in Holland, where he was going by the name of Smith. Lucy, one of Pitkin’s creditors, found him in Amsterdam. According to Lucy (but not according to Pitkin—believe whom you will), Pitkin offered him 10,000 £ to let him escape, but Lucy refused, locked him up in the house of friends, and returned to England. There he met with Pitkins’ other creditors and basically blackmailed them into paying him a 1400 £ reward before he would bring Pitkin back to England. On his return, Pitkin did apparently cooperate, and it appears that he succeeded in convincing his creditors that the fraud was primarily Brerewood’s idea.
As for Brerewood, he was indicted for defrauding Pitkin’s creditors and by act of Parliament in 1707, his estate was made liable to the creditors. According to notes in the Old Bailey (London criminal court) records, Brerewood absconded and in 1709 “receiv'd Sentence as follows, viz. that he is to be Imprisoned during Life, and stand in the Pillory 3 times a Year, viz. the first Tuesday in Easter Term, the first Tuesday in Michaelmas Term, and the first Tuesday in Hillary Term between the Hours of 11 and 3 of the same Days at Temple Bar, and the Royal Exchange, as long as he live.”
I tend to think there was more to the 1705 statute instituting capital punishment than just the Pitkin affair, though this might have been the immediate catalyst. I am unsure what sort of influence the French law had in England, since the latter lacked the distinction between faillite and bankruptcy, but the rhetoric of the need for such severe punishments to discourage “fraudulent bankruptcy” (whatever it meant) was similar in both places. Nonetheless, the preambles of English statutes make clear the intention to scare bankrupts into following the statutory bankruptcy rules and working with the bankruptcy commissioners to uncover all of their assets.
In 1718, for example, a new statute (5 Geo c. 24) reinstituted capital punishment for fraudulent bankruptcy shortly after the prior statute had lapsed. In the meantime, said the preamble, “many evil-minded person have . . . bought and taken up on trust and credit divers great quantities of goods, wares and merchandizes, and have thereby and otherwise contracted great debts . . .” and then committed an act of bankruptcy by, for example, selling “the same for less than the value thereof, and thereby rais[ing] ready money” and then absconding and “obliging their creditors to accept of such composition for their respective debts, as such evil-minded persons think fit to give: or [carrying] away their effects beyond the seas, whereby their creditors have been totally deprived of their debts.” Because “many persons have and do daily become bankrupt, not so much by reason of losses and unavoidable misfortunes, as to the intent to oblige their creditors to accept such their unjust proffers and composition, and to defraud and hinder their creditors of their just debts,” the king and Parliament saw fit to reenact the death penalty for fraudulent bankruptcy.
Capital punishment for bankruptcy was abolished by 1 Geo IV c. 115 (1820). In the 113 years that fraudulent bankruptcy was a capital crime, only a handful of people were actually hanged. John Perrott was the most famous of them. The first was Richard Town, a tallow chandler, who tried to export 400 pound’s worth of tallow, as well as himself, to Holland. He was convicted and hanged in 1712. (In 1711, a linen draper named John Restow was also convicted and sentenced to death for trying to abscond with his goods “to some Place beyond Sea,” but I have not yet been able to verify that he was actually executed.) The next bankrupt whom I know to have been hanged was Alexander Thompson, an embroiderer. He apparently had quite a successful business going, and then his house burnt down, destroying all his equipment and stock. He received an insurance settlement, expressed the intent to pay off his creditors, and the next day disappeared back to his native northern Scotland. There he took a second wife, having left his first back in London. This was his undoing, since the Scottish wife’s father heard that Thompson had an English wife, and when Thompson tried to pull off a scheme to convince him that the woman he had been living with in London was not his lawful wife, he was caught and indicted for failing to appear before the commissioners of his bankruptcy, which he claims not to have even known about. The jury did not seem to believe his claim of lack of notice, and convicted him. He was hanged in January 1756.
Then there was Perrott, hanged in 1761 for concealing his effects, and, for London at least, that seems to be it. (A bankrupt may have been executed in York in the early 19th century.) James Bullock, a wine merchant, was convicted and sentenced to death in 1807 for failure to disclose his assets and for concealing “a promissory note for the payment of 300 £, a bank of England note for the payment of 500 £, sixteen silver table spoons, value 8 £, twelve silver dessert spoons, value 5 £, a silver soup ladle, value 2 £, two silver gravy spoons, value 2 £, a book-case, value 5 £, a feather bed, value 6 £, four pillows, value 1 £, 21 s., 6 d., eight blankets, value 4 £, and a tea urn, value 18 s with intention to defraud his creditors.” His case went before the twelve common law justices sitting on appeal in the Exchequer Chamber. No judgment was given, but his sentence was commuted to transportation for life. Bullock then petitioned to the Chancellor to have that sentence superseded. The Chancellor determined that the commission against him was invalid and the suit should never have been brought but did not void the sentence.
It would, of course, be wrong to assume from this list that fraudulent bankruptcy was uncommon. As Basil Montagu (1770-1851), a barrister and prolific writer on bankruptcy and death penalty reform, put it in 1821, “from the year 1732, when the punishment of death for non-surrender or concealment by a bankrupt became law [editorial note: because the earlier statutes had expired, Montagu apparently was unaware of those before 5 Geo II c. 30, to which he makes reference here], there had been at least 40,000 bankrupts: there had not been ten prosecutions, and only three executions; and yet . . . fraudulent bankruptcies and concealment of property were of daily occurrence, were so common as almost to have lost the nature of crime.”
When the committee of the House of Commons took evidence in 1818 pursuant to a reform of the capital punishment provision in the bankruptcy law, several themes were expressed repeatedly. One was that prosecutions for fraudulent bankruptcy were too costly and too difficult to win both because of juror reluctance to sentence a bankrupt to death and because the defendant could be acquitted on the merest technicality. Another was that assignees often did not want to prosecute because putting a bankrupt to death seemed a bit excessive, and therefore bankrupts whom the assignees could prove beyond a doubt to have concealed assets were walking about unpunished, spending their creditors’ money. The third common theme was that the penalty was ineffective, failed to deter bankrupts from acting fraudulently, and therefore should be changed. In his testimony, Montagu made a point that will resonate with the readers of this blog: “I conceive that there is scarcely any person who will think . . . that a man ought to be put to death for the non-delivery of his property; particularly when it is remembered that the offender is not the only person to blame; there must be a feeling in the community, that the imprudent confidence reposed by creditors, is not wholly exempt from censure.”
After hearing testimony of many attorneys and former bankrupts, the committee suggested to the House of Commons, “that the law by which capital punishment is ordered to be inflicted upon fraudulent bankrupts, and upon those who do not surrender, is so severe, and so repugnant to the common sentiments of mankind, that it becomes totally inefficient in its operation, and hence the most flagitious individuals escape with impunity. That it is the opinion of the committee, the severity of the law against bankrupts, in the cases of non-surrender, or for concealment to the amount of 20 £ has a tendency to defeat the object of the Legislature: it is therefore recommended, that so much of the 5 Geo II, c. 30, as subjects persons found guilty of such offenses, or either of them, to suffer as felons without benefit of clergy, should be repealed: and that, in lieu thereof, the punishment of transportation for life, or for any period not less than fourteen years, should be enacted.”
In the end, by a statute of 1820, the punishment was made transportation for life or not less than seven years or imprisonment at hard labor up to seven years.