William Duer’s failed speculation helped trigger the first U.S. stock-market panic in 1792.
Duer was a prominent financier and former government official who borrowed heavily to speculate in bank shares and government securities. When he could not meet his obligations, creditors and counterparties faced losses, and confidence weakened in New York’s young securities market.
The Panic of 1792 spread through financial markets in March and April. Treasury Secretary Alexander Hamilton responded by supporting banks and encouraging purchases of government securities, measures intended to restore liquidity and confidence. The episode was an early demonstration that credit problems at one important participant could spread through interconnected markets.
Duer’s actions were one cause, not the entire explanation. Rapid expansion of securities trading, heavy borrowing, and competition among banks also contributed. The panic helped motivate the creation of the Buttonwood-era market’s more organized institutions and preceded the formal establishment of the New York Stock and Exchange Board.