The History of Bankruptcy

Most people dread the word bankruptcy, and they do not even want to think about what would happen should they have to file for bankruptcy. But the word itself does have a fascinating history that many people would find interesting. Even for people who are not in a financially binding situation, studying more about bankruptcy and its origins can be an interesting task. Learning about bankruptcy can also prove useful should the need to know more detailed information ever arise.

The actual origin of the word bankruptcy comes from the Latin. There are two separate words that have different meanings in Latin that when combined together eventually came to make up the word bankruptcy. These words are “bancus,” which means a bench or a table, and “ruptus,” which means broken. It is easy to tell how the two words were combined to make up the modern version of the word bankruptcy. However, there is a rhyme and a reason behind the origin of the word.

In ancient times, some of the first bankers were located in public places, where they conducted their business. These early bankers usually conducted their business at a bench, which they had set up in the public place. If the banker were to fail his customers or if his business was found to be unsound in any way, the banker would be driven out of business or would eventually have to shut down. When the banker was out of business, the bench on which he conducted his dealings would be broken. When the bench was broken, it signified to people in the public place that the banker was no longer good for doing business.

Today, of course, benches are no longer being broken. Instead, the word bankruptcy has been combined from the two ancient Latin words and the broken bench is now signified figuratively by the word bankrupt. When a person or company is bankrupt, they are no longer “good” for doing business, so thus the word actually applies in its full meaning even today. Although having the label of bankrupt is not a desirable goal for anyone, knowing a little history behind the name can make learning about bankruptcy less tedious.