2018 Conference blogs – Defining ‘Traders’ in Bankruptcy Proceedings, 1700-1750

Aidan Collins, University of York

Defining ‘Traders’ in Bankruptcy Proceedings, 1700-1750

In 1571, a rather curious provision was entered into English law which attempted to restrict the scope of bankruptcy to certain trades or professions. Commonly known as the ‘trading distinction’, the wording of the statute is worth quoting at length, as bankruptcy only applied to any person, ‘exercising the Trade of Merchandize by way of Bargaining, Exchange, Rechange, Bartry, Chevisance, or otherwise, in Gross or by Retail …  or seeking his or her Trade of Living by Buying and Selling’.[1] On the surface, the wording of this act seems slightly unusual, as every person would have been engaged in an act of ‘Merchandize’ – put simply, everyone buys and while perhaps less frequently, everyone sells in one form or another. However, this provision remained in English law for nearly 300 years, until bankruptcy became applicable to ‘all debtors, whether traders or not’ in 1861.[2] So why was this trading distinction created? And how was this broad definition interpreted prior to the nineteenth century?

In order to answer these questions, our focus must turn to contemporary attitudes towards debt — and particularly credit — in relation to trade. The trading distinction was built upon the assumption that only overseas traders were liable to the sorts of losses, and used the sorts of credit, that the law sort sought to deal with. In this manner, the jurisdiction of bankruptcy was intended to be kept away from the landowning community and limited only to the business world. Perhaps an oversimplified categorisation of a sixteenth-century trader would be any person who was engaged in manufacturing, or the buying and selling of goods on a self-employed basis. In contrast, a non-trader would be any person in employment, engaged in a recognised profession, or occupying the position of landowner or farmer.

However, as we move through the seventeenth century, such distinctions were very hard to maintain and implement in a consistent manner, not least because of the way in which the economy changed and developed during this period. In 1600, if credit was used mostly by merchants, then by 1700 it was widely accepted that credit was vital to all businesses, not to mention being used extensively at home as well. With no legislation being passed that explicitly addressed this issue, judges and lawyers were compelled to work towards their own definitions of a trader. In so doing, much of their attention focused on the particular nature of buying and the particular purpose of selling. For example, one rule stated that you could not be classified as a trader if you did not buy the materials you used. This point can clearly be applied to farmers and landowners who sold the goods they made on their estate, and it was accepted throughout this period that farmers were categorically outside of the jurisdiction of bankruptcy.

Yet, despite attempts by legal experts to try to define and categorise a trader, litigation throughout the eighteenth century demonstrates just how complex this issue had become. One such example can be found from a case entered in the Court of Chancery in 1724.[3] In Hope v Salmon, the suit centres around the occupation of the bankrupt and named defendant John Sabb, who described himself as a yeoman, from Maidstone, Kent. As a prominent farmer, Sabb should have been outside the jurisdiction of bankruptcy. But what is interesting in this suit, is the manner in which the opposing parties attempted to manipulate Sabb’s day-to-day activities for their own benefit. Broadly speaking, as the major creditors, the plaintiffs argued that Sabb was not simply a farmer, but got his principal living through the buying and selling of hops. John Swinnock suggested that Sabb was an ‘esteemed’ dealer in hops, while Samuel Webb claimed Sabb bought and sold hops, ‘by which method he got his Livelyhood’.[4] In contrast, the defendants stated that Sabb had been brought up and educated as a farmer and continued to make his living through the standard activities of a farmer: he rented out several acres of his land, kept cows and sold their milk, and employed a team to work his land and sell a variety of goods, such as corn and hops, at Maidstone market. What is clear from this case, is that the plaintiffs are trying to persuade the court that Sabb was not simply a farmer, but got his principal living through buying and selling, and therefore should be considered a trader within the true intent and meaning of the statutes. Obviously, on the opposing side, Sabb and the other defendants are trying to explain to the court that, as a prominent land owner and farmer, it is clear that Sabb cannot be declared a bankrupt as he is engaged in an occupation that has always been excluded as a non-trader.

This is just one example taken from a range of suits in which the scope, jurisdiction and procedure of bankruptcy are examined in the Court of Chancery. Taken in isolation, these suits give us an insight into the way in which individuals dealt with specific issues and attempted to circumnavigate problems within the bankruptcy process by manipulating the legal system for their own benefit. Taken collectively, they demonstrate that the ideals established by legal experts did not always conform neatly to the practical realties of day-to-day experience. What becomes clear, is that the trading distinction and its subsequent interpretation was far too complex to simply be reduced to a list of acceptable and unacceptable occupations. Even an occupation such as farming — which was excluded almost as an intention of the earliest bankruptcy statutes — contained specific working activities that by the eighteenth century, many considered to be a staple and important part of trade.


[1] 13 Elizabeth I c 7 (1571).

[2] 24 & 25 Victoria CXXXIV.

[3] TNA, C 11/2774/6, Hope v Salmon (1724).

[4] Ibid., deposition of John Swinnock and Samuel Webb.

Aidan Collins is a third year PhD student at the University of York interested in all aspects of the credit-based economy across the seventeenth and eighteenth centuries. His research explores bankruptcy proceedings at different stages of the legal process within Chancery to illuminate social and cultural aspects of financial failure during this period.


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