Theses Doctoral

The Creation of American Personal Bankruptcy, 1880-1955

Pang, Nicholas

This dissertation examines the social construction of American federal bankruptcy law from the Gilded Age to the post-World War II Era. Across the nineteenth century, federal legislators vociferously debated whether a federal bankruptcy statute would facilitate the extension of business credit across state lines or be employed by creditors to oppress small traders, farmers, and wage earners. After the law’s enactment in 1898, however, this debate largely disappeared. By the period following the Second World War, bankruptcy was an accepted means for working class debtors to obtain debt relief, either immediately or after paying their creditors out of their future wages. Across four chapters, I explore the factors associated with this shift. How did bankruptcy become an accepted part of the American political economy and welfare state?

To answer these questions, I analyze new samples of census-linked bankruptcy petitions in comparison with survey data on working class debtors, a corpus of Congressional speech and media, and archival data on relevant policy actors. Social reformers’ efforts to create “fair” credit markets through Small Loan Laws (SLL), alongside rising bankruptcy rates, ultimately naturalized a conception of bankruptcy as morally “caused” by debtors, apart from creditor choices or malfeasance. As SLLs reduced real interest rates, they also led lenders to collateralize their relative risks through extending credit in states where it was legal to garnish debtors’ wages. In doing so, SLLs inadvertently spurred credit extension based on wages rather than property.

The conception that debtors “caused” bankruptcy, in turn, led Great Depression Era legislators to focus on delineating who was “deserving” of bankruptcy protections and how insolvent individuals could prove their future “creditworthiness” and reenter financial markets. The 1938 Bankruptcy Act established a voluntary wage-earner payment system (Chapter XIII) for “deserving” white men while also formalizing provisions for immediate debt discharge (Chapter VII). Yet when few wage earners decided to “honorably” pay their debts over time, judicial actors in post-World War II America employed Chapter XIII bankruptcy as a debt collection system that reduced lenders’ risks against “undeserving” bankrupts. As Black people increasingly sought debt relief through bankruptcy protections, they were directed to Chapter XIII, irrespective of their economic interests. These payment plans increased the time and money that Black bankrupts needed to pay in order to regain their economic citizenship.

Geographic Areas


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More About This Work

Academic Units
Thesis Advisors
Whitford, Joshua D.
Khan, Shamus
Ph.D., Columbia University
Published Here
August 23, 2023