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Business Law in the modern era is equally as important as the business law conducted in the 18th century. In many ways, the laws and regulations that affect businesses today were shaped directly by those that were put into practice in the 18th century. In fact, the need for a greater focus on business law in the 18th century was due in large part to the Industrial Revolution and the various ways that it impacted how business was conducted.

Debts, Liability, And Taxation

Dealing with business debt in the 18th century was a far different process than it is in the modern era. While today businesses and business owners can file for bankruptcy to help find relief for some or all debt accrued, those living and operating in the 18th century didn’t have the option to take a massive hit to their credit in order to absolve debt.


In the 1700s, an individual or business’s credit was simply a chronicling of their payments and purchases and generally came down to reputation. If a business owner found themselves in a huge amount of debt and was unable to pay it back, they would be carted off to a debtor’s prison until agreements and arrangements could be made in regards to paying back said debt.


Avoiding debt or pulling oneself out of debt as a business in the 18th century may actually have been much easier than it is today. Unfortunately, this was largely due to the fact that business owners in the 1700s faced very few workplace laws that prevented them from exploiting workers or disregarding their safety. It wasn’t uncommon during the Industrial Revolution to see child labor in wide use or employees working incredibly long 12- and even 16-hour work shifts for minimal pay. Because workers were generally uneducated and paid very little, they were unable to use the legal system to their advantage if they were injured on the job.


Additionally, business owners of the 18th century benefited from incredibly lax tax laws. In the early days of what would become the United States, there was no formal national income tax to be heard of. During the Civil War, a national income tax was instated for a short time. But until the 16th Amendment was instituted, it basically came down to individual states to determine how many taxes were paid. Many of the taxes across the Atlantic in Britain seemed to be aimed more at individual households rather than businesses, and while property tax existed in both the colonies and in England, it often unfairly targeted lower-income families

Regulatory Bodies

Today, businesses generally have to get the go-ahead from several regulatory bodies before introducing a new product to market. Whether developing a new medical product for public use, bringing a new automobile to sell publicly, or even producing furniture, businesses have to go through an often rigorous process of verification of safety and legality before they are allowed to begin actually selling a product or provide a service.


In the 18th century, however, things were a bit more relaxed when it came to regulations and rules regarding what products could be sold or who could conduct what type of business. Unlicensed and unregulated medical practice was rampant from independently practicing midwives and nurses to barber-surgeons that practiced low-level surgery in what were often less than sanitary conditions. Snake oil salesmen and flim-flam men hawked ineffective and often dangerous medicines and tools in a market that held little in the way of legal ramifications.


Banking and lending practices were also only loosely regulated with more rural banks lending liberally while urban banking institutions being more discerning in who they decided to lend to. Safety and building codes were almost non-existent which led to widespread fire damage to many businesses and homes of the era. This eventually spurred the creation of the first mutual insurance company in the U.S. wherein members would pay into a fund that would then cover any damage suffered in the event of a fire.

Patent And Copyright Law

During the Industrial Revolution, patent law was thrust into the spotlight as new machines and inventions were being created at breakneck speed. As new, more efficient machines were invented to replace older, less effective means of industrial production, patents were needed to ensure that the inventors received proper credit and payment for their creations. Unfortunately, patent law didn’t really exist in the American colonies until the late 18th century with the passing of the Patent Act of 1790.


The Patent Act of 1790 was considered rather onerous by those seeking patents at the time considering the substantial wait times involved and the loose language used to define what was and wasn’t patentable. This all changed a few short years later with The Patent Act of 1793, which not only clarified what the requirements of a patent were but also made the process far easier than the previous patent act allowed for. This was good news for businesses that wanted to gain a competitive edge in an ever-shifting market caused by the Industrial Revolution.


While it can be tempting to assume that the patent law of today is far more beneficial to aspiring inventors and businesses than it was in the 18th century, it is now worse in some ways. When patent law was first introduced, it rewarded the first to invent a product or idea, whereas modern patent law rewards the first person to file. This can throw a wrench into many business plans if a competitor happens to see leaked plans or develops a functionally identical invention and moves to file first.


Business law has advanced considerably since the 18th century, overall allowing for a much safer and more productive world. While in some ways business may have been easier to conduct in the 1700s, the regulations and laws that have been put in place are intended to ensure that businesses are productive social entities.

About the Author:
Frankie Wallace contributes to a wide variety of blogs and writes about many different topics, including politics and the environment. Wallace currently resides in Boise, Idaho and is a recent graduate of the University of Montana.