11. The Credit Crisis of 1792 saw the newly formed Bank of the United States, helmed by Alexander Hamilton, rescue the fledgling United States from economic demise
With the opening of the Bank of the United States in February 1791, during the initial public offering investors were presented stock at $25. Demand was high and within weeks stock was being traded for as much as $300. Proving unsustainable, the stock corrected and required a financial intervention by Secretary of the Treasury Alexander Hamilton. By December the price of securities once again began to rise, before crashing in March 1792. Causing panic among investors, and occurring simultaneously with a restriction of credit by the Bank, people hurried to withdraw their money from the newly formed institution.
Responding in a similar fashion to 1791, in late-March Hamilton once again authorized the purchase of securities by the Bank. Hamilton also extended an offer to the Bank of New York to purchase $500,000 of securities to encourage the ailing institution to continue to lend during the crisis, with a similar deal made with the Bank of Maryland. Making further purchases in April, markets regained confidence in the national bank and trading stabilized. Hamilton’s stalwart leadership through the crisis is widely regarded by modern economists as the chief reason it did not escalate beyond control, with his use of the national bank now enshrined as a standard economic fail-safe.