The Buttonwood Agreement, which takes place on May 17, 1792, starts the New York Stock & Exchange Board now called the New York Stock Exchange.

This agreement, signed by twenty four brokers outside of 68 Wall Street New York under a buttonwood tree, sets a floor commission rate charged to clients and binds the signers to give preference to the other signers in securities sales.

Previously securities exchange had been intermediated by the auctioneers who also conducted more mundane auctions of commodities such as wheat and tobacco.

The earliest securities traded are mostly governmental securities such as War Bonds from the Revolutionary War and First Bank of the United States stock, although Bank of New York stock is a non-governmental security traded in the early days.

The Bank of North America along with the First Bank of the United States and the Bank of New York are the first shares traded on the New York Stock Exchange.

Samuel Blodget, a Boston merchant who moves to Philadelphia  in 1792, has done so in part to seek a commission from President George Washington as superintendent of construction for the new federal city now being built along the Potomac River (an amateur architect, Blodget will later design the First Bank of the United States building in Philadelphia), but also to collaborate on a business venture with former U.S. Postmaster General Ebenezer Hazard, who owns a counting house in the city.

Hazard had previously invested in an idea of Blodget's called the Boston Tontine, a sort of early annuity fund that also acted as a lottery for the last surviving investor.

It failed, but Blodget and Hazard have decided to try again in Philadelphia, at this time the largest city in North America.

They call their new attempt the Universal Tontine Association and this time give it a twenty-one-year lifespan, after which the association will disband and the surviving investors will split what remains of the fund.

The Universal Tontine Association also fails to generate the hoped-for interest.

In November 1792, its investors meet at the Pennsylvania State House (today Independence Hall) to decide what to do with their fund.

On November 12, they adopt a proposal to form a general insurance company, to be called the Insurance Company of North America.

On November 19, the investors adopt articles of association, giving the company the ability to write fire, life, or marine insurance, though initially the investors will focus solely on marine.

The company starts with $600,000 capital, selling shares at $10 each.

Investors subscribe to the first 40,000 shares in eleven days, and on December 10, they meet again at the State House to elect directors.

The directors hold their first board meeting the next day, at Philadelphia's City Tavern.

Here, they elect merchant and underwriter John Maxwell Nesbitt as president and Hazard as secretary.

On December 15, the company opens for business at 119 (now 223) South Front Street.

The first policy is issued to Nesbitt's mercantile firm, Conyngham, Nesbitt & Co., for the ship America on its voyage from Philadelphia to Londonderry.

On December 18, the company petitions the Pennsylvania legislature for a charter of incorporation.

Due to opposition from private underwriters and others, the legislature will take over a year to approve the petition; Governor Thomas Mifflin will sign the charter incorporating INA on April 14, 1794.

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.

The immediate cause of the Panic of 1797 is a series of land speculation schemes that has issued commercial paper backed by claims to Western lands.

The largest such scheme had been created by the Boston merchant James Greenleaf and Philadelphia financiers Robert Morris and John Nicholson.

The new federal capital under construction, Washington D.C., required private investment for development.

By late 1793, a partnership of the three speculators had acquired forty percent of the building lots in the new capital.

Greenleaf had planned to finance these purchases with loans from Dutch banks, but the French invasion of the Netherlands had prevented this.

Lacking funds, the three speculators then formed the North American Land Company in 1795 to consolidate their land holdings from previous speculations.

They planned, once again, to sell stock in this company to European investors.

However, quick sales had failed to materialize as European investors grew wary of American land schemes.

Unclear titles and the poor quality of much of the company’s land had further slowed sales.

Morris and Nicholson had then begun  to finance their purchases by issuing their own notes, which creditors readily accepted because of Morris’s immense financial stature.

These notes had become themselves the subject of speculation, depreciating rapidly as a medium of exchange.

Meanwhile, continued war in Europe had constricted credit, exposing the precariousness of the North American Land Company scheme and others like it.

Rampant business failure had plagued Eastern port cities by late 1796, and land speculators less preeminent than Morris soon found themselves in debtors’ prison.

Among these was James Wilson, whose confinement, combined with rumors of Morris’s imprisonment, had causes panic.

Morris and Nicholson’s notes, by now totaling ten million dollars, had begun trading at just one-eighth their value.

By 1797, their paper pyramid collapses altogether.

Across the Atlantic, British legislation exacerbates the damage wrought by the bursting land speculation bubble.

The monetary strain imposed by the French Revolutionary Wars and withdrawals by panicked depositors have greatly depleted the coin and bullion reserves of the Bank of England.

This prompts Parliament to pass the Bank Restriction Act of 1797, which halts specie payments.

The disruption of access to British gold and silver unravels the Atlantic credit web, hastening the collapse of Morris’s and other speculation schemes.

The Panic of 1796-1797 had caused a pronounced commercial downturn in American port cities that will not relent until after 1800.

Investors in land schemes do not suffer alone.

Shopkeepers, artisans, and wage laborers, all of whom depend on the continuance of overseas commerce, feel the impact as businesses fail between 1796 and 1799.

The panic does not, however, evenly affect the whole economy.

Port cities along the Eastern Seaboard suffer much worse than the rural interior, which has not yet developed the intricate webs of credit and market exchange that will drag it into future panics and depressions.

The panic also reveals the young republic's economic interconnectedness with Europe.

In spite of and perhaps validating the prescient warnings of the dangers of foreign entanglement laid out in George Washington’s Farewell Address, the panic demonstrates that the nascent American economy will be subject to ripples of political turbulence on the European continent, an effect that will later prompt Thomas Jefferson to sign the Embargo Act of 1807.

The imprisonment for indebtedness of such prominent American statesmen as James Wilson and Robert Morris finally compels Congress to pass the Bankruptcy Act of 1800, establishing a framework for creditors and debtors to cooperate in reaching a settlement.

Passed in response to a decade of periodic financial crises and commercial failure, it is modeled after English practice.

Only merchants, bankers, and brokers can petition a creditor.

The bankrupt estate is placed under the control of an assignee chosen by the creditors.

The law is meant as a temporary measure with a five-year sunset clause. 

Though critics, who argue that the law encourages risky investments by reducing the cost of failure, will prevent its renewal in 1803, the act represents a step in the American legal tradition against imprisoning debtors.