In a lighthearted Finance in History series, CFO Magazine follows the thread of Bankruptcy back to its origins.
Here are just a few of the juicy tidbits:
- The word “bankruptcy” comes from an Italian practice of the Middle Ages — “banca rotta” — which means “bench-breaking.” The term describes the punishment administered to businesses that failed: local fiscal authorities came to the market and smashed the bankrupt business’s table.
- The first known effort to regulate bankruptcy appeared in the Code of Hammurabi, which dates to Babylon around the 18th century B.C.. The law stipulated that a bankrupt’s possessions were to be divided among creditors in proportion to the amount of money each was owed.
- By 621 B.C., when Draco ruled Athens, the punishment meted out to “deadbeats” (literally, one who is “completely exhausted”) was death..
- In the 13th century, if you were lucky you might end up a “peon,” a term that originally described a bankrupt person condemned to work without pay for a creditor until the debt was paid off.
If you enjoy history, this is a quick but fun read. Maybe the bankruptcy rules these days aren’t that bad?