Bradley A. Hansen

Commercial Associations and the Creation of a National Economy: The Demand for Federal Bankruptcy Law

Throughout the nineteenth century, merchants and manufacturers involved in interstate commerce sought federal bankruptcy legislation to overcome diverse and discriminatory state laws that raised the cost of credit and impeded interstate trade. In the last two decades of the nineteenth century, they formed a national organization to lobby for bankruptcy legislation. While many scholars have seen the passage of federal bankruptcy legislation as a response to the economic depression of the 1890s, this article shows that it was the formation of this national organization, rather than the economic crisis, that was the primary force behind the Bankruptcy Act of 1898.

The role of path dependence in the development of US bankruptcy law, 1880–1938

This paper provides an illustration of the mechanisms that can give rise to path dependence in legislation. Specifically it shows how debtor-friendly bankruptcy law arose in the United States as a result of a path dependent process. The 1898 Bankruptcy Act was not regarded as debtor-friendly at the time of its enactment, but the enactment of the law gave rise to changes in interest groups, beliefs about the purpose of bankruptcy law, and political party positions on bankruptcy that set the United States on a path to debtor-friendly bankruptcy law. Analysis of the path dependence of bankruptcy law produces an interpretation that is more consistent with the evidence than the standard interpretation that debtor-friendly bankruptcy law was the result of a political compromise in 1898.

Religion, Social Capital, and Business Bankruptcy in the United States, 1921-1932

We consider the value of social capital that derives from membership in a church. American states with larger churchgoing populations had lower business bankruptcy rates from 1921 to 1932, and states in which the churchgoing population was concentrated in few churches had business bankruptcy rates that were lower still. Both voluntary and involuntary bankruptcy were lower in states with higher church membership. The evidence suggests that church membership acted on bankruptcy through a safety net mechanism and not solely through indicating a preference for honouring commitment.

A Failure of Regulation? Reinterpreting the Panic of 1907

Lax regulation enabled trust companies to take excessive risks, according to previous studies of the Panic of 1907, leading to a loss of confidence and massive runs. These studies have, however, given relatively little attention to the historical development of trust companies. This article argues that a more historical perspective can lead to a better understanding of the institutional framework and the actions of trust companies. Depositors did not lose confidence because of inadequate regulation; depositors lost confidence in specific trust companies because of false rumors, and diversity among trust companies hindered cooperation to halt the Panic.

Crisis and Bankruptcy: The Mediating Role of State Law, 1920–1932

The onset of the Great Depression did not spark a surge in personal bankruptcy. For debtors in default, state garnishment law played a significant role in the decision to file for bankruptcy. Only states that made it easy to garnish a debtors wages experienced significant increases in bankruptcy as a consequence of the Depression.

Don't Put the Cart Before the Horse: Teaching the Economic Approach to Empirical Research

When students are taught how to do original research in courses outside economics, they are taught to begin with the collection of data. This is not the approach followed by economists, who typically begin an answer to a research question by developing a model. The model then guides the search for evidence. We argue that the economic approach is more likely to lead to the development of a persuasive argument, and that greater awareness of the contrast between the economic approach and its alternatives can enable economists to improve the teaching of the research process.

The historian's craft and economics

History refers both to the past and to the systematic study of the past. Attempts to make a case for history in economics generally emphasize the first definition. There are benefits from increased attention to the past. This paper argues that significant benefits can be gained from increased attention to the systematic study of the past, the historians craft. The essence of the historians craft is the critical evaluation of sources. Failure to critically evaluate sources has the potential to lead to erroneous conclusions, whether one is using historical documents or more recently created data.

Legal Rules and Bankruptcy Rates: Historical Evidence from the States

Since the early twentieth century, observers have attributed the wide variation in state bankruptcy rates to variation in state legal rules such as garnishment and bankruptcy exemptions. Recent econometric analyses, however, conclude that legal rules do not matter. We explore the impact of legal rules on bankruptcy rates using a new technique—fixed effects vector decomposition—to exploit historical variation in legal rules. The technique allows us to estimate the impact of timeinvariant legal rules in a fixed effects framework. We find that the variation in state legal rules explains much of the variation in state wage earner bankruptcy rates for 1926 to 1932.