Frequent instability characterizes the United States economy …
Years: 1796 - 1796
Frequent instability characterizes the United States economy during the 1780s and 1790s.
Rampant inflation of Continental Currency during the Revolutionary War had given rise to the phrase “not worth a Continental.”
Lacking a stable currency, banks had issued their own notes, and calls for stronger public credit had led to the establishment under the Articles of Confederation of the Bank of North America in 1781.
After the adoption of the Constitution, the First Bank of the United States had succeeded it as a de facto central bank.
Concerns have remained, however, over the strength of public credit as unstable banknotes remain a medium of exchange.
During this time, speculation is the investment of choice, leading to the Panic of 1792.
Former Continental Congressman William Duer had raised large sums of money to invest in bank stock and government securities, novel and financially sophisticated assets whose risks many contemporaries fail to understand.
Duer had soon defaulted on his debts, destroying the savings of many middle- and working-class people.
The ensuing panic causes riots and reignites Congressional debate over a bankruptcy law that will finally produce the Bankruptcy Act of 1800 after the Panic of 1796–97.
Duer and other prominent financiers had then sought to recover their fortunes by applying unprecedented scale to an old concept: land speculation.
This sets the stage for the bubble that will burst in 1797.
Rampant inflation of Continental Currency during the Revolutionary War had given rise to the phrase “not worth a Continental.”
Lacking a stable currency, banks had issued their own notes, and calls for stronger public credit had led to the establishment under the Articles of Confederation of the Bank of North America in 1781.
After the adoption of the Constitution, the First Bank of the United States had succeeded it as a de facto central bank.
Concerns have remained, however, over the strength of public credit as unstable banknotes remain a medium of exchange.
During this time, speculation is the investment of choice, leading to the Panic of 1792.
Former Continental Congressman William Duer had raised large sums of money to invest in bank stock and government securities, novel and financially sophisticated assets whose risks many contemporaries fail to understand.
Duer had soon defaulted on his debts, destroying the savings of many middle- and working-class people.
The ensuing panic causes riots and reignites Congressional debate over a bankruptcy law that will finally produce the Bankruptcy Act of 1800 after the Panic of 1796–97.
Duer and other prominent financiers had then sought to recover their fortunes by applying unprecedented scale to an old concept: land speculation.
This sets the stage for the bubble that will burst in 1797.
