Talk:Panic of 1792

Needs better sources...

This article badly needs better sources. The ones that are there are difficult to judge as to their authority; they also seem to tell very different stories. The one from Thomas Fleming unintentionally makes Hamilton the originator of the whole panic, as he reportedly leaked the plans to pass a law that would make the scheme profitable. Other sources, like this mention, that it was the first Bank of the United States, that ignited and popped the bubble; the 'Sylla' resource confirms this as well.

That makes Hamilton's saviour role a bit more untrustworthy, to say the least. :) Pestergaines 15:02, 9 January 2011 (CST)

One interesting source seems to be from David J. Cowen, "The First Bank of the United States and the Securities Market Crash of 1792", but I can't seem to find a free online copy (derivative paper here)

Also, there is an interesting mention in Rozeff's The U.S. Constitution and Money, p.91-93, who refers to Cowen's paper above. Pestergaines 17:33, 9 January 2011 (CST)

Rewrote the whole damn thing from scratch using the same resources. Would welcome somebody improving the readability. Pestergaines 18:20, 10 January 2011 (CST)

On second thought, perhaps the article concentrates overly on Hamilton and basically ignores Duer - while Hamilton was the ultimate cause of the crisis, Duer was right in the middle of it (and is a nicely colorful character, too!). Pestergaines 03:10, 11 January 2011 (CST)

Added the reported leak by Hamilton that led to the speculation; hope that it is made clear that one specific source says so (would be nice to have it confirmed by something more solid). Pestergaines 04:08, 11 January 2011 (CST)

Came across some mentions of Duer in Essays in the earlier history of American corporations. For later on. Pestergaines (talk) 14:30, 8 December 2012 (MSK)

Duer's role

For an additional explanation of Duer's role: [1]

"The Slumps That Shaped Modern Finance", in The Economist

"Two things put Hamilton’s plan at risk. The first was an old friend gone bad, William Duer. The scheming old Etonian was the first Englishman to be blamed for an American financial crisis, but would not be the last. Duer and his accomplices knew that investors needed federal bonds to pay for their BUS shares, so they tried to corner the market. To fund this scheme Duer borrowed from wealthy friends and, by issuing personal IOUs, from the public. He also embezzled from companies he ran. The other problem was the bank itself. On the day it opened it dwarfed the nation’s other lenders. Already massive, it then ballooned, making almost $2.7m in new loans in its first two months. Awash with credit, the residents of Philadelphia and New York were gripped by speculative fever. Markets for short sales and futures contracts sprang up. As many as 20 carriages a week raced between the two cities to exploit opportunities for arbitrage. Meet the villain William Duer Born in Devon and educated at Eton, William Duer moved to America as a young man and made a fortune selling supplies to the army. Scams funded his expensive lifestyle: he once sold half the land in Ohio, even though he did not own it. He conned so many people that by the time he ended up in jail, it was said to be the safest place for him. MAR 1792 The jitters began in March 1792. The BUS began to run low on the hard currency that backed its paper notes. It cut the supply of credit almost as quickly as it had expanded it, with loans down by 25% between the end of January and March. As credit tightened, Duer and his cabal, who often took on new debts in order to repay old ones, started to feel the pinch. Rumours of Duer’s troubles, combined with the tightening of credit by the BUS, sent America’s markets into sharp descent. Prices of government debt, BUS shares and the stocks of the handful of other traded companies plunged by almost 25% in two weeks. By March 23rd Duer was in prison. But that did not stop the contagion, and firms started to fail. As the pain spread, so did the anger. A mob of angry investors pounded the New York jail where Duer was being held with stones. Hamilton knew what was at stake. A student of financial history, he was aware that France’s crash in 1720 had hobbled its financial system for years. And he knew Thomas Jefferson was waiting in the wings to dismantle all he had built. His response, as described in a 2007 paper by Richard Sylla of New York University, was America’s first bank bail-out. Hamilton attacked on many fronts: he used public money to buy federal bonds and pep up their prices, helping protect the bank and speculators who had bought at inflated prices. He funnelled cash to troubled lenders. And he ensured that banks with collateral could borrow as much as they wanted, at a penalty rate of 7% (then the usury ceiling)." - Thierry -

Thanks, Thierry! Great find! Pestergaines (talk) 18:36, 6 July 2014 (EDT)