I know it was a liberty—I made it out you were no business man, only a stone-broke painter; that half the time you didn't know anything anyway

Question

(From The Wrecker by Robert Louis Stevenson and Lloyd Osbourne, Chapter XVIII, published 1892)

Passage 287

“Jim,” I said, “you must speak right out. I've got all that I can carry.”

“Well,” he said—“I know it was a liberty—I made it out you were no business man, only a stone-broke painter; that half the time you didn't know anything anyway, particularly money and accounts. I said you never could be got to understand whose was whose. I had to say that because of some entries in the books——”

“For God's sake,” I cried, “put me out of this agony! What did you accuse me of?”

“Accuse you of?” repeated Jim. “Of what I'm telling you. And there being no deed of partnership, I made out you were only a kind of clerk that I called a partner just to give you taffy; and so I got you ranked a creditor on the estate for your wages and the money you had lent. And——”

I believe I reeled. “A creditor!” I roared; “a creditor! I'm not in the bankruptcy at all?”

“No,” said Jim. “I know it was a liberty——”

“Oh damn your liberty! read that,” I cried, dashing the letter before him on the table, “and call in your wife, and be done with eating this truck”—as I spoke, I slung the cold mutton in the empty grate—“and let's all go and have a champagne supper. I've dined—I'm sure I don't remember what I had; I'd dine again ten scores of times upon a night like this. Read it, you blaying ass! . . . ”

“What does it all mean?” cried Jim. “It means we have a champagne supper to-night, and all go to Napa Valley or to Monterey to-morrow . . .

'Make it out' seems to have a special meaning different from 'make out'.

OED has this: link2

to make out, in make, v.¹ transitive. To succeed in accomplishing; to effect, achieve. Now regional exc. colloquial in to make it out: to make shift, get along. See also…

This makes me think 'make it out' has a special meaning but I can't find this in the dictionaries.

There is only one meaning that could work in this context: link3

Cambridge Dictionary:

make out something phrasal verb with make verb UK /meɪk/ US /meɪk/ made | made informal

to say, usually falsely, that something is true: [ + to infinitive ] He made himself out to be a millionaire. [ + to be ] The British weather is not always as bad as it is made out to >be. [ + (that) ] He made out (that) he had been living in Paris all year.

However, this has the pattern 'make out something' and not 'make it out'. Maybe there is an obsolete meaning as well. What does 'make it out' mean in this context?

Answer 1

If you are using the online OED, and you are at make verb¹, you should see a tab (near Etymology, Pronunciation, etc.) for Phrasal verbs. There you can find:

make verb
PV.1. With adverbs in specialized senses.
to make out
III. To succeed, establish, or prove.
III.13. transitive. To claim to have proved, or to try to prove (something to be true); to make to appear, to represent, pretend. With clause as object, or with object and complement, or object and infinitive.
_{Source: Oxford English Dictionary (login required)}

Here are some of the citations shown there:

_{1699   I really thought they would have made it out that this grant was the occasion of the French persecution.
1832   What, Sir, would you make me out a Radical?
1861   It seems they want to make out now that Dick never murdered Hallijohn.
1872   I certainly did not make myself out to be any better than I was.
1935   Come on, Zora, le's go inside and make out we dancin'.}

Note that your examples—I made it out [that] you and I made out [that] you—follow the form of the first citation, except they use a “zero-that” that-clause, as in the last citation.

Answer 2

The Cambridge dictionary definition is the correct one. The presence of "it" is a variant or an irrelevance (remember that the Stevenson work is 100 years old now - languages change).

From the context it is obvious that Jim has told the authorities in the matter of his bankruptcy that the narrator was not a partner, but merely a naive employee, and therefore his assets are not part of the bankruptcy - leaving the narrator with plenty of money instead of owing plenty of money. It also seems that was not actually the case ( based on what the narrator says) so "make it out" means "convince untruthfully".