The credit crisis of 1772 had greatly deteriorated debtor-creditor relations between the American colonies and Britain, especially in the South.

The southern colonies, which produce tobacco, rice, and indigo and export them to Britain, had been granted higher credit than the northern colonies, where competitive commodities are produced.

It is estimated that in 1776 the total amount of debt that British merchants claimed from the colonies equaled ￡2,958,390; southern colonies had claims of ￡2,482,763, nearly eighty-five per cent of the total amount.

Before the crisis, the commission system of trading had prevailed in the southern plantation colonies.

The merchants in London had helped the planters sell their crops and had shipped what planters wanted to purchase in London as returns.

The commission equaled the price of the British goods minus the revenue of the crops.

The planters were usually granted credit for twelve months without interest and at five per cent on the unpaid balance after the deadline.

After the outbreak of the crisis, British merchants urgently called for debt repayment, and American planters faced the serious problem of how to pay the debt for several reasons.

First, because of the economic boom before the crisis, planters were not prepared for large-scale debt liquidation.

As the credit system broke down, bills of exchange were rejected and almost all gold was sent to Britain.

Second, without the support of credit, planters were unable to continue producing and selling their goods.

Since the whole market became crippled, the fallen price of their goods also intensified the pressure on planters.

Owing to the crisis, the colonies have endured hard times to maintain the balance of payments.