Mississippi Bubble,it was touched off by wild speculation in the stock of John Law's colonizing company (see Mississippi Scheme). The first major panic in the United States came in 1819, after the War of 1812. The panic of 1837 was much more severe; it was brought on primarily by irresponsible financial operations in Western lands. Another crisis in 1857 was caused in part by massive European speculation in American railroads. Thus, when the panic struck it affected both Europe and the United States. In 1869 stock manipulations brought on the panic known as Black Friday. In 1873 there was a financial crisis in Vienna, as well as an American panic marking the bitter contest between agrarians (see Populist party), caught by overextended credit, and the financial interests. That conflict continued and was again reflected in the crises that came in the panics of 1893 and 1907. No great panic occurred again until 1929, when the U.S. stock market crash helped to precipitate a worldwide financial crisis. Confidence was not restored until after 1933, and the effects of the panic were felt throughout the Great Depression of the 1930s. Since 1929, central banks have been quick to provide liquidity to falling markets in order to prevent panics. For example, when the New York Stock Exchange dropped over 508 points (22.6%) on Oct. 19, 1987, the Federal Reserve released a large sum of money overnight to meet demands on brokers. In Sept.–Oct., 2008, the Federal Reserve and U.S. Treasury took more drastic and wide-ranging measures to ensure liquidity and stability in a financial system reeling from the effects of a collapsing housing bubble and the resulting credit crunch and accelerating stock market decline.
See M. A. Bernstein, The Great Depression (1989); C. P. Kindleberger, Manias, Panics, and Crashes (1989); C. R. Morris, Money, Greed, and Risk (1999).
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