The interesting history and origin of the word "Bankruptcy"

JasperArt_2023-03-11_10.15.24_3Regarding the current SVB meltdown, the English word "bankruptcy" has its roots in medieval Italy. It comes from the word "banca rotta," which means "broken bench." This term was used when a money lender ran out of funds, and the bench or table they were doing business on was physically broken in half.

The word made its way into the English language via the French word "banqueroute", which is closely related to the Italian and has a similar history and meaning. However, the French term has a more negative connotation than its English counterpart. In French culture, the word "banqueroute" is associated with fraud, deceit, and a lack of moral character.

The concept of bankruptcy dates at least back to Rome. The Romans had a form of bankruptcy, known as "cessio bonorum," which allowed debtors to surrender their property to their creditors in exchange for debt relief. This system was used in Rome until the fall of the Roman Empire.

The first modern bankruptcy law in England, known as the "Statute of Bankrupts," was passed in 1542 during the reign of King Henry VIII.  One purpose of this law was to prevent people who owed money from escaping England. Only creditors could commence a bankruptcy proceeding. This law aided in the collection of debts and did not provide relief to debtors.

The Statute of Bankrupts was amended several times over the years, with the most significant changes coming in 1705 and 1831. These changes expanded the scope of the law to include traders and businessmen of all kinds, rather than just merchants.

The concept of bankruptcy law was also adopted by other countries, including the United States, where it was enshrined in the Constitution. The US Bankruptcy Code was first enacted in 1898 and has been amended several times over the years, most recently in 2005. More at: Bankruptcy in the United States: A Brief History

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