The Credit Crisis of 1772
Historical eventAbout
The Credit Crisis of 1772 was a significant peacetime financial crisis that began in London and spread to Scotland and the Dutch Republic. It was characterized by a rapid expansion of credit and banking, leading to speculation and dubious financial practices. The crisis started in June 1772 with the failure of several London banks, notably after Alexander Fordyce lost a substantial amount on East India Company stock. This triggered a chain reaction of bank failures across Europe, causing widespread financial instability. The crisis had profound effects on the economies of Britain and its colonies. It led to a liquidity crunch, a rise in bankruptcies, and a decline in economic activity. The Bank of England intervened by advancing credits to stabilize the market. The crisis highlighted systemic risks in financial systems and had lasting impacts on relations between Britain and its American colonies, contributing to tensions that eventually led to the American Revolution. It remains a pivotal event in financial history, demonstrating early instances of financial contagion and market intervention.
