Panic of 1796-1797

The Panic of 1796–1797 is a series of downturns in Atlantic credit markets that lead to broader commercial downturns in both Britain and the United States.

In the U.S., problems first emerge when the Bubble of land speculation bursts in 1796.

The crisis deepens into a broader depression when the Bank of England suspends specie payments on February 25, 1797 under the Bank Restriction Act 1797.

The Bank's directors fear insolvency when English account holders, who are nervous about a possible French invasion, begin withdrawing their deposits.

In combination with the unfolding collapse of the U.S. real estate market, the Bank of England's action has 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 has 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 includes the famed financier of the revolution Robert Morris and his partner James Greenleaf, who are investors in a large tract of land in the Adirondacks of upstate New York.

James Wilson is forced to spend the rest of his life literally fleeing from creditors until he dies at a friend's home in Edenton, North Carolina.

George Meade, the grandfather of the American Civil War general George Gordon Meade, is ruined by investments in Western land deals and dies in bankruptcy due to the panic.

Henry Lee III’s fortune is reduced by speculation with Robert Morris.

The scandals associated with these and other incidents result in the U.S. Congress passing the Bankruptcy Act of 1800.

The Bankruptcy Act of 1800 will later be repealed after its three-year duration expires in 1803

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