old court-new court controversy in kentucky in the 1820s

One of the more interesting events I've encountered in my research lately is the Old Court-New Court controversy in the early 1820s in Kentucky. Reading through this, you might be struck with some parallels between current debt controversies. And, maybe even ways to get out of them.

It began with debtors unable to meet their obligations (a common theme of social unrest in the early Republic) and deciding to form a party which would stand against the repayment of debts. When this debt relief movement took hold, views on it obviously split into two camps: those representing the creditor interests such as banks who wanted to force payment, and those, in the party, representing debtors who either wanted to delay payment (for, say, a year) or to absolve the debtors of all responsibilities completely.

The situation was made worse from the fact that the cause of the debtors' problems stemmed from a speculative bubble in land in Kentucky that had burst. People had originally taken out loans in order to pay for the land, only to find that when the bubble burst, they owed large sums of money! Thus creditors, who included big insurance companies and banks, were very angry and fought hard against a legislature that had come out in majority support (in both houses of the General Assembly) of the relief party.

The courts, however, declared debt relief to be unconstitutional -- creating a split in the government between the judicial and legislative branch. But unlike most of the early clashes between a society rife with factions on the one hand and "friends of order", the judges, on the other hand, the Debt Relief Party made a radical move by deciding to simply create a completely new court! By the time it was abolished a few years later (once a legislature more strongly against debt relief had come in, and once economic conditions had improved), this "new court" dominated by debt relief interests had heard 77 cases!

Eventually, the cases heard by the New Court were declared null, but Kentucky's brief experience with a dual-court system represents a truly remarkable event in legal history, when people literally took institutions into their own hands to set up an alternative more in line with popular views. While there are many examples of court occupations throughout the history of the Early Republic, nothing quite like this can be found in the history books. It shows what happens when you combine hard times with enormous sums of debt and a government that is insufficiently responsive to majority interests. And, it might just teach us something about current events!

You can read more about the controversy at its Wikipedia site here: http://en.wikipedia.org/wiki/Old_Court_%E2%80%93_New_Court_controversy