Panic of 1797
Encyclopedia
The Panic of 1796–1797 was a series of downturns in Atlantic credit markets that led to broader commercial downturns in both Britain and the United States. In the U.S., problems first emerged when the Bubble
of land speculation burst in 1796. The crisis deepened into a broader depression when the Bank of England
suspended specie payments on February 25, 1797 under the Bank Restriction Act 1797. The Bank's directors feared insolvency
when English account holders, who were nervous about a possible French invasion, began withdrawing their deposits. In combination with the unfolding collapse of the U.S. real estate market, the Bank of England's action had developing disflationary repercussions in the financial and commercial markets of the coastal United States and the Caribbean through the turn of the century.
By 1800, the crisis had resulted in the collapse of many prominent merchant firms in Boston, New York, Philadelphia, and Baltimore, and the imprisonment of many American debtors. The latter included the famed financier
of the revolution Robert Morris
and his partner James Greenleaf who were investors in a large tract of land in the Adirondacks of upstate New York
. James Wilson
was forced to spend the rest of his life literally fleeing from creditors until he died at a friend's home in Edenton, North Carolina
. George Meade, the grandfather of the American Civil War
general George Gordon Meade was ruined by investments in Western land deals and died in bankruptcy due to the panic. The scandals associated with these and other incidents resulted in the U.S. Congress passing the Bankruptcy Act of 1800. The Bankruptcy Act of 1800 would later be repealed after its three-year duration expired in 1803.
Economic bubble
An economic bubble is "trade in high volumes at prices that are considerably at variance with intrinsic values"...
of land speculation burst in 1796. The crisis deepened into a broader depression when the Bank of England
Bank of England
The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based. Established in 1694, it is the second oldest central bank in the world...
suspended specie payments on February 25, 1797 under the Bank Restriction Act 1797. The Bank's directors feared insolvency
Insolvency
Insolvency means the inability to pay one's debts as they fall due. Usually used to refer to a business, insolvency refers to the inability of a company to pay off its debts.Business insolvency is defined in two different ways:...
when English account holders, who were nervous about a possible French invasion, began withdrawing their deposits. In combination with the unfolding collapse of the U.S. real estate market, the Bank of England's action had developing disflationary repercussions in the financial and commercial markets of the coastal United States and the Caribbean through the turn of the century.
By 1800, the crisis had resulted in the collapse of many prominent merchant firms in Boston, New York, Philadelphia, and Baltimore, and the imprisonment of many American debtors. The latter included the famed financier
Financier
Financier is a term for a person who handles typically large sums of money, usually involving money lending, financing projects, large-scale investing, or large-scale money management. The term is French, and derives from finance or payment...
of the revolution Robert Morris
Robert Morris (merchant)
Robert Morris, Jr. was a British-born American merchant, and signer of the Declaration of Independence, the Articles of Confederation, and the United States Constitution...
and his partner James Greenleaf who were investors in a large tract of land in the Adirondacks of upstate New York
Upstate New York
Upstate New York is the region of the U.S. state of New York that is located north of the core of the New York metropolitan area.-Definition:There is no clear or official boundary between Upstate New York and Downstate New York...
. James Wilson
James Wilson
James Wilson was one of the Founding Fathers of the United States and a signer of the United States Declaration of Independence. Wilson was elected twice to the Continental Congress, and was a major force in drafting the United States Constitution...
was forced to spend the rest of his life literally fleeing from creditors until he died at a friend's home in Edenton, North Carolina
Edenton, North Carolina
Edenton is a town in Chowan County, North Carolina, United States. The population was 4,966 at the 2008 census. It is the county seat of Chowan County. Edenton is located in North Carolina's Inner Banks region. In recent years Edenton has become a popular retirement location and a destination for...
. George Meade, the grandfather of the American Civil War
American Civil War
The American Civil War was a civil war fought in the United States of America. In response to the election of Abraham Lincoln as President of the United States, 11 southern slave states declared their secession from the United States and formed the Confederate States of America ; the other 25...
general George Gordon Meade was ruined by investments in Western land deals and died in bankruptcy due to the panic. The scandals associated with these and other incidents resulted in the U.S. Congress passing the Bankruptcy Act of 1800. The Bankruptcy Act of 1800 would later be repealed after its three-year duration expired in 1803.