Prelude to a Crisis
Periodic market bubbles, panics, recessions, and depressions have long plagued the world. The Tulip mania in the Netherlands in 1636 and the South Seas bubble in England in 1720 are well-known examples. Similar economic disturbances also erupted in the New World, with ten depressions there between 1762 and 1837. The Panic of 1792 (due to the speculation of William Duer and Alexander Macomb against stock held by the Bank of New York) and recessions in 1796, 1802, 1807, and 1837 were particularly troubling to the new American republic. They were followed by panics in 1857, 1873, 1884, and 1893-the last of which resulted in an economic downturn that lasted until 1897 and was called the “Great Depression” until that title was claimed by the depression of the 1930s.