111 Yale L.J. 83 (2001)

This Article proposes a new mechanism for valuing firms in bankruptcy. Under the "senior dilution" mechanism, a court would dilute the reorganized stock issued to senior claimants by issuing additional shares to junior claimants until there was no excess demand for the stock at a price that would implement absolute priority. A "junior diluation" mechanism could also be implemented to provide a market test for proposed reorganization plans of junior claimants by having a court issue additional debt to senior claimants until there was no excess supply of the debt at a price that would implement absolute priority. We show that these mechanisms harnass the private information of the claimants and of third parties to produce distributions consistent with absolute priority. Dilution mechanisms can be superior to other information-harnassing devices (such as an option or auction approach) because they (1) are less susceptible to the problem of junior illiquidity than an option approach proposed by Lucian Bebchuk, (2) are less susceptible to the problem of market manipulation and may better allocate control premia than a partial float proposal by Mark Roe; and (3) may produce fewer transaction costs than a full auction approach proposed by Douglas Baird. Moreover, as a response to the Supreme Court's recent admonition in LaSalle that bankruptcy courts employ market tests more often when creditors dissent to a reorganization plan, the junior dilution mechanism provides a uniquely workable solution within the current statutory framework.

111 Yale L.J. 183 (2001)

According to American public memory, slavery in the United States was peculiar to the South. Unless explicitly reminded of the North's history of slavery, most Americans associate the North with abolitionists rather than slaveholders. Alongside this public memory is the work of professional historians that recognizes that slavery existed in the North during the colonial era but asserts that it was abolished during the late eighteenth century. According to such scholarship, as the Revolutionary War brought ideas of natural rights to the forefront of the American consciousness and as economic realities made Northern slavery increasingly unprofitable, states north of Maryland eliminated slavery through a series of legal measures. Some scholars who advance this narrative portray the abolition measures adopted by most Northern states as immediate and comprehensive, as though these measures effectuated the near-instantaneous eradication of slavery in each state that adopted them.
 
In fact, though the number of slaves in the North declined after the Revolutionary War, slavery continued to exist there well into the nineteenth century. Between 1777 and 1804, all of the states north of Maryland did take steps that would eventually doom slavery within their borders. But only in Massachusetts, Vermont, and New Hampshire were slaves emancipated relatively swiftly, and even in these states abolition measures were ambiguous and their implementation inconsistent. In Pennsylvania, New Jersey, New York, Connecticut, and Rhode Island, state legislatures adopted gradual abolition legislation, which dismantled slavery over a period of half a century.
 
Even histories of the North that distinguish gradual from immediate abolition tend to depict the former as an event rather than as a process. Some accounts elide the decades between the enactment of gradual abolition laws and slavery's actual extinction, as though slavery during this period were unworthy of remark because it was in decline. Other works minimize or foreshorten the history of Northern slavery after the adoption of gradual abolition through imprecise language and sweeping generalities. Still other works ignore the mechanics of gradual abolition laws and their effect on slaves entirely. Historians' cursory treatment of this transitional era insinuates that gradual abolition laws produced slavery's straightforward and timely demise and promotes the image of Northern slavery as fleeting and anomalous.
 
Using Connecticut as a case study, this Note begins where the traditional narrative concludes. Unlike the standard histories of African Americans and of slavery in Connecticut, this Note probes the law of slavery between 1784, when the state adopted gradual abolition, and 1848, when the state's last slaves became free. In particular, this Note challenges the standard account of Connecticut abolition in three respects. First, it presents evidence that Connecticut's 1784 Gradual Abolition Act did not remove slavery from the state in a prompt and orderly fashion. In Connecticut--as in all of those states north of Maryland and south of Massachusetts that enacted gradual abolition laws--slavery's termination was protracted and idiosyncratic. Second, the Note demonstrates that Connecticut's Gradual Abolition Act, while central to the decline of slavery in the state, was only one of several legal and extralegal developments that together caused slavery to disintegrate. Third, this Note considers the experience of Connecticut slaves and their children in the wake of gradual abolition; it examines slavery's stubborn hold on people even as it slowly decayed.
 
Part I examines Connecticut's Gradual Abolition Act of 1784 and reveals that the law freed no slaves. It did promise eventual freedom to the future-born children of slaves, but, under the law, even these beneficiaries remained in servitude until the age of twenty-five. The law reflected the legislature's intent to end the institution of slavery in the state in a way that respected property rights and preserved social order. Part II challenges the notion that the 1784 law alone extinguished slavery in Connecticut. The population of slaves did decrease after 1784, but only because the Gradual Abolition Act was combined with other legal developments, both legislative and judicial, that so cut off the supply of new slaves as to ensure slavery's atrophy. Despite these legal restrictions, individuals continued to introduce new slaves into Connecticut through a variety of means, both lawful and unlawful. Furthermore, neither the 1784 law, nor any other law, emancipated living slaves. These slaves' sole hope for freedom was the voluntary acts of slaveholders. To the extent that statutory law addressed such manumissions, it discouraged rather than promoted it.
 
Part III explores the effect of the Gradual Abolition Act on Connecticut slaves. Even after the enactment of gradual abolition, slaves remained subject to the wills of their masters and constrained by a slave code, a legal regime that controlled and managed slaves. In some senses, the 1784 law made slave life more uncertain because the law created incentives for slaveholders to export their bondspeople from Connecticut. Part IV shows that even the future-born children of slaves, to whom the Gradual Abolition Act promised freedom, did not experience unmitigated salvation. For twenty-five years, such individuals remained "in servitude," bound to their mothers' masters in a state of near-slavery, the contours of which were unsettled. Part V concludes with a summary of the Note's principal arguments and seeks to orient its analysis of abolition in Connecticut within the context of scholarship about Northern abolition more generally.
 
The Gradual Abolition Act of 1784 did not neatly lift slavery from the social landscape of Connecticut. Nor did the Act initiate a linear process of abolition. If one keeps an eye on the law and an eye on those whom its vagaries affected, one begins to discover a turbulent story. Certainly, when measured against the alternative of perpetual slavery, the 1784 statute was a monumental achievement. However, through the eyes of both slaves and free black people, and of those who existed--as this Note will show--in between, the decades following the 1784 Act were bittersweet at best. The slaves who lived during these generations lived in a world of social limbo; for them, "abolition" ushered in an era of confusion and ambiguity rather than unqualified deliverance.