"Never Did I See So Universal a Frenzy": The Panic of 1791 and the Shaping of Philadelphia

During July, August, and September of 1791, the United States' newly formed financial markets experienced a dramatic bubble in the prices of Bank of the United States (BUS) script and US securities. Philadelphia became the epicenter of the crisis as “grocers, shipkeepers, sea captains, and even prentice boys” mobilized their meager wealth to speculate in financial assets. The subsequent crash saw asset depreciation of well over 50% in a matter of days, and an unprecedented monetary intervention by the Treasury Department led by Alexander Hamilton. Philadelphia’s City Tavern and surrounding neighborhood became a hive of panicked investors, several of whom succumbed to tears, madness, and suicide. As a result of crash’s severity, Philadelphians remained largely inactive during the Panic’s second phase, which took place largely in New York City. Many Philadelphians blamed Hamiltonian Federalism for the destruction wrought by the Panic of 1791. The crisis prompted legislative attempts to ban financial speculation, turned many of Philadelphia’s prominent commercial leaders against the Federalist party, and paved the way for Jeffersonian dominance of America’s Queen City for decades.