Robert Morris entertained George Washington for dinner in his "cell." Once released, he resumed his career as the new nation's richest man. Before John Pintard moved to New Gaol, he redecorated his cell, had it repainted and upholstered, and shipped in two mahogany writing desks.
Meanwhile, the mass of petty debtors housed in the same institution survived, if at all, amid squalor, filth, and disease. They were often shackled, and lacked heat, clean water, adequate food, or often food of any kind. (You usually had to have the money to buy your own food, clothing, and fuel.) Debtors in these prisons frequently found themselves quite literally dying of debt. And you could end up in such circumstances for trivial sums. Of the 1,162 jailed debtors in New York City in 1787, 716 owed less than twenty shillings or one pound. A third of Philadelphia's inmates in 1817 were there for owing less than $5, and debtors in the city's prisons outnumbered violent criminals by 5:1. In Boston, 15% of them were women. Shaming was more the point of punishment than anything else.
Scenes of public pathos were commonplace. Inmates at the New Gaol, if housed on its upper floors, would lower shoes out the window on strings to collect alms for their release. Other prisons installed "beggar gates" through which those jailed in cellar dungeons could stretch out their palms for the odd coins from passersby.
Poor and rich alike wanted out. Pamphleteering against the institution of debtor's prison began in the 1750s. An Anglican minister in South Carolina denounced the jails, noting that "a person would be in a better situation in the French King's Gallies, or the Prisons of Turkey or Barbary than in this dismal place." Discontent grew. A mass escape from New Gaol of 40 prisoners armed with pistols and clubs was prompted by extreme hunger.
In the 1820s and 1830s, as artisans, journeymen, sailors, longshoremen, and other workers organized the early trade union movement as well as workingmen's political parties, one principal demand was for the abolition of imprisonment for debt. Inheritors of a radical political culture, their complaints echoed that Biblical tradition of Jubilee mentioned in Leviticus, which called for a cancellation of debts, the restoration of lost houses and land, and the freeing of slaves and bond servants every 50 years.
Falling into debt was a particularly ruinous affliction for those who aspired to modest independence as shopkeepers, handicraftsmen, or farmers. As markets for their goods expanded but became ever less predictable, they found themselves taking out credit to survive and sometimes going into arrears, often followed by a stint in debtor's prison that ended their dreams forever.
However much the poor organized and protested, it was the rich who got debt relief first. Today, we assume that debts can be discharged through bankruptcy (although even now that option is either severely restricted or denied to certain classes of less favored debt delinquents like college students). Although the newly adopted US Constitution opened the door to a national bankruptcy law, Congress didn't walk through it until 1800, even though many, including the well-off, had been lobbying for it.
Enough of the old moral faith that frowned on debt as sinful lingered. The United States has always been an uncharitable place when it comes to debt, a curious attitude for a society largely settled by absconding debtors and indentured servants (a form of time-bound debt peonage). Indeed, the state of Georgia was founded as a debtor's haven at a time when England's jails were overflowing with debtors.
When Congress finally passed the Bankruptcy Act, those in the privileged quarters at New Gaol threw a party. Down below, however, life continued in its squalid way, since the new law only applied to people who had sizable debts. If you owed too little, you stayed in jail.
Debt and the Birth of a Nation
Nowadays, the conservative media inundate us with warnings about debt from the Founding Fathers, and it's true that some of them like Jefferson—himself an inveterate, often near-bankrupt debtor—did moralize on the subject. However, Alexander Hamilton, an idol of the conservative movement, was the architect of the country's first national debt, insisting that "if it is not excessive, [it] will be to us a national blessing."
As the first Secretary of the Treasury, Hamilton's goal was to transform the former 13 colonies, which today we would call an underdeveloped land, into a country that someday would rival Great Britain. This, he knew, required liquid capital (resources not tied up in land or other less mobile forms of wealth), which could then be invested in sometimes highly speculative and risky enterprises. Floating a national debt, he felt sure, would attract capital from well-positioned merchants at home and abroad, especially in England.
However, for most ordinary people living under the new government, debt aroused anger. To begin with, there were all those veterans of the Revolutionary War and all the farmers who had supplied the revolutionary army with food and been paid in notoriously worthless "continentals"—the currency issued by the Continental Congress—or equally valueless state currencies.
As rumors of the formation of a new national government spread, speculators roamed the countryside buying up this paper money at a penny on the dollar, on the assumption that the debts they represented would be redeemed at face value. In fact, that is just what Hamilton's national debt would do, making these "sunshine patriots" quite rich, while leaving the yeomanry impoverished.