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The great and apparent importance of commerce to this country was a sufficient reason for the anxiety of the legislature to establish and protect it. But when it was thus established, the very nature of commerce made it necessary to frame laws to regulate and to restrain it. No man embarks in trade, but from a desire of becoming rich. . . . But, among the many who thus pursue the same objects, all are not equally honest. The opportunities of becoming suddenly rich are too various and too flattering always to be resisted. The best men may be tempted by them: dishonest men will eagerly embrace them. The more diffusive our commerce is, the more frequently will these opportunities occur. Where they do not, ingenuity and depravity will create them. To prevent this facility of yielding to temptation, to restrain and to defeat the enterprises of the fraudulent trader, experience has suggested the necessity of enacting positive and severe laws.
James Bland Burges, Considerations on the Law of Insolvency, with a Proposal for a Reform 189-90 (London, T. Cadell 1783).
Exchange Alley, a crowded winding passage in the center of the City of London just south of the Royal Exchange, served as the financial heart of England during the late seventeenth and eighteenth centuries.1 It was there, on the street itself and in the coffeehouses such as Jonathan's and Garraway's,2 that the reviled stockjobbers "gull'd many a Gentleman of his Money and Estate."3 And it was there, on February 10, 1705,4 that two prosperous London cloth merchants, Thomas Brerewood and Thomas Pitkin, met in the Swan Tavern to plot the second stage of a bankruptcy fraud that, when discovered several days later, would hit London with the force of the Bernie Madoff scandal. In nine months, the two conspirators had managed to make off with over £50,000, around $150,000,000 in modern money.5 Creditors, commentators, and legislators were repelled by the odiousness of the scheme.6 England had, so it appears, seen nothing quite like this level of venality before.7
This so-called Pitkin Affair is remembered in the historical literature for its role as a catalyst for a critical alteration in the bankruptcy law.8 Today we tend to think of bankruptcy as a mechanism by...