Copper Panic of 1789

The Copper Panic of 1789 was a monetary crisis of the early United States that was caused by debasement and loss of confidence in copper coins that occurred under the presidency of George Washington.[1][2]

After the American Revolution, many states began minting their own coins largely in copper. At first the coins were widely accepted and their usage was rarely impeded, whereas several attempts by the British Empire to introduce new coins to the Americas were met with resistance. For several years there were high levels of confidence in these coins and knowledge that they were a high quality copper.[1][2]

As more counterfeiters began production and caused minters to have to debase their coins to remain in business, the value of copper began to fall. Several laws were passed during this time period, including the prohibiting of debased coins from being considered legal tender. The State of New York prohibited the circulation of copper coins entirely. The State of New Jersey in 1787 declared it would no longer accept any legal tender of other states for any debts. This furthered the decline in copper prices, forcing many minters to shut down, leaving only counterfeiters who produced extremely low quality coins.[1][2]

By 1789 the market was completely flooded with debased coppers that were officially illegal and thus caused the citizens to lose all confidence in them. The Federal government attempted to value them at 48 coppers to the shilling, but merchants refused to cooperate and the coins became almost entirely worthless. At the height of the debasement, there was a 430% inflation rate for copper and commerce ceased, forcing several businesses and manufacturers to close down.[1][2]

The situation was alleviated when the Bank of Philadelphia began issuing paper bank notes to replace the copper coins. State governments sought to cooperate with the plan and thus established the small fiat currency as an active medium of trade. With stability returning to the economy the value of copper also rose again, until it was almost back to normal values in most areas. Commerce began to flourish again as the monetary system had confidence restored. This event was largely a factor for the federal government establishing a stronger federal currency standard and initiating more federal taxes to empower a central authority.[1][2]

References

Armstrong, Martin. "When Fiat was the Solution: The Panic of 1789" (PDF). Armstrong Economics: Forecasting the World.
"The Copper Panic and Small Change Notes 1789-1799". Colonial Currency.

Recessions in the United States and United Kingdom
Balance sheet recession Business cycle Chronic inflation Deflation Depression Disinflation Economic expansion U.S. expansions Economic recovery General glut Global recession Inflation Recession Recession shapes Rolling recession Shock Demand Supply Stagflation Yield curve
Commercial Revolution (1000–1760)	Great Slump (1430–1490) Great Frost of 1709
1st Industrial Revolution (1760–1840)	Crisis of 1772 (1772–1774) 1785–1788 Copper Panic of 1789 (1789–1793) Panic of 1796–1797 (1796–1799) 1802–1804 1807–1810 1812 Post-Napoleonic depression (1815–1821) 1822–23 Panic of 1825 (1825–1826) 1828–29 1833–34 Panic of 1837 (1836–1838 and 1839–1843)
1840–1870	1845–46 Panic of 1847 (1847–1848) 1853–54 Panic of 1857 (1857–1858) Panic of 1866 (1865–1867) Black Friday (1869–1870)
2nd Industrial Revolution (1870–1914)	Long Depression (1873–1879) Depression of 1882–1885 1887–88 Baring crisis (1890–1891) Panic of 1893 (1893–1897) 1899–1900 Panic of 1901 (1902–1904) Panic of 1907 (1907–1908) Panic of 1910–1911 (1910–1912) 1913–14
Interwar period (1918–1939)	Post–World War I recession (1918–1919) Depression of 1920–1921 1923–1924 1926–1927 Great Depression (1929–1933) Recession of 1937–1938
Post–WWII expansion (1945–1973)	1945 Recession of 1949 (1948–1949) Recession of 1953 (1953–1954) Recession of 1958 (1957–1958) Recession of 1960–1961 Recession of 1969–1970
Great Inflation (1973–1982)	1973–1975 recession Early 1980s recession (1980–1982)
Great Moderation (1982–2007)	Early 1990s recession (1990–1991) Early 2000s recession (2001)
2007–present	Great Recession (2007–2009) COVID-19 recession (2020–present)

Financial crises
Banking panic Bear market Commodity price shocks Credit crunch Credit cycle Currency crisis Debt crisis Energy crisis Flash crash Hyperinflation Liquidity crisis Minsky moment Stock market crash
Pre-1000	Crisis of the Third Century (235–284 CE)
1000–1760	Great Bullion Famine (c. 1400–c. 1500) The Great Debasement (1544–1551) Dutch Republic stock market crashes (c. 1600–1760) Kipper und Wipper (1621–1623) Tulip mania crash (1637) South Sea bubble crash (1720) Mississippi bubble crash (1720)
1760–1840	Amsterdam banking crisis of 1763 Bengal bubble crash (1769–1784) Crisis of 1772 Dutch Republic financial collapse (c. 1780–1795) Panic of 1785 Copper Panic of 1789 Panic of 1792 Panic of 1796–1797 Danish state bankruptcy of 1813 Post-Napoleonic Irish grain price and land use shocks (1815–1816) Panic of 1819 Panic of 1825 Panic of 1837
1840–1870	European Potato Failure (1845–1856) Great Irish Famine Highland Potato Famine Panic of 1847 Panic of 1857 Panic of 1866 Black Friday (1869)
1870–1914	Panic of 1873 Paris Bourse crash of 1882 Panic of 1884 Arendal crash (1886) Baring crisis (1890) Encilhamento (1890–1893) Panic of 1893 Australian banking crisis of 1893 Black Monday (1894) Panic of 1896 Panic of 1901 Panic of 1907 Shanghai rubber stock market crisis (1910) Panic of 1910–11
1918–1939	Early Soviet hyperinflation (1917–1924) Weimar Republic hyperinflation (1921–1923) Shōwa financial crisis (1927) Wall Street Crash of 1929 Panic of 1930
1945–1973	Kennedy Slide of 1962
1973–1982	1970s energy crisis (1973–1980) 1973 oil crisis 1973–1974 stock market crash Secondary banking crisis of 1973–1975 Steel crisis (1973–1982) Latin American debt crisis (1975–1982) 1976 IMF crisis 1979 oil crisis Brazilian hyperinflation (1980–1982)
1982–2007	Steel crisis (1982–1988) Brazilian hyperinflation (1982–1994) Souk Al-Manakh stock market crash (1982) Chilean crisis of 1982 1983 Israel bank stock crisis Black Saturday (1983) Savings and loan crisis (1986–1995) Black Monday (1987) 1988–1992 Norwegian banking crisis Friday the 13th mini-crash (1989) Japanese asset price bubble crash (1990–1992) 1990 oil price shock Rhode Island banking crisis (1990–1992) 1991 Indian economic crisis 1990s Swedish financial crisis (1991–1992) 1990s Finnish banking crisis (1991–1993) 1990s Armenian energy crisis (1991–1995) Cuban Special Period (1991–2000) Black Wednesday (1992) Yugoslav hyperinflation (1992–1994) 1992 Colombian energy crisis 1994 bond market crisis Venezuelan banking crisis of 1994 Mexican peso crisis (1994–1996) 1997 Asian financial crisis October 27, 1997 mini-crash 1998 Russian financial crisis 1998–99 Ecuador financial crisis Samba effect (1999) California electricity crisis (2000–2001) Dot-com bubble crash (2000–2004) 2001 Turkish economic crisis 9/11 stock market crash (2001) Stock market downturn of 2002 South American economic crisis of 2002 2002 Uruguay banking crisis 2003 Myanmar banking crisis 2000s energy crisis (2003–2008) 2004 Argentine energy crisis Nigerian energy supply crisis (2005–) U.S. housing market correction (2006–2007) 2007 Chinese stock bubble crash Zimbabwean hyperinflation (2007–)
2007–2009	Financial crisis of 2007–2008 Subprime mortgage crisis U.S. bear market of 2007–2009 Global financial crisis in September 2008 Global financial crisis in October 2008 Global financial crisis in November 2008 Global financial crisis in December 2008 2008 Bulgarian energy crisis 2008 Central Asia energy crisis 2008 Latvian financial crisis 2008–2009 Belgian financial crisis 2008–09 Russian financial crisis 2008–2009 Ukrainian financial crisis 2008–2011 Icelandic financial crisis 2008–2011 Irish banking crisis 2008–2014 Spanish financial crisis Global financial crisis in 2009 Blue Monday Crash 2009 European debt crisis Greek government-debt crisis
2009–2020	2009 Ecuador electricity crisis 2009 Dubai debt standstill Venezuelan banking crisis of 2009–2010 2010 flash crash 2010–2014 Portuguese financial crisis Energy crisis in Venezuela (2010–) 2011 Tōhoku earthquake and tsunami stock market crash August 2011 stock markets fall Black Monday 2011 Bangladesh share market scam 2012–2013 Cypriot financial crisis 2013 Chinese banking liquidity crisis Venezuela economic crisis (2013–) Gaza electricity crisis (2013–) 2014–2016 Brazilian economic crisis Puerto Rican government-debt crisis (2014–) 2014–2017 Russian financial crisis 2015–2016 Chinese stock market turbulence 2015–2016 stock market selloff Zulia energy collapse (2015–) Brexit stock market crash (2016) 2016 Southeastern U.S. gas shortage Venezuelan hyperinflation (2016–) 2017 Sri Lankan fuel crisis Ghana banking crisis (2017–2018) 2018 cryptocurrency crash 2018 Turkish currency and debt crisis 2019 California power shutoffs Lebanese liquidity crisis (2019–)
2020–present	2020 stock market crash 2020 Russia–Saudi Arabia oil price war
List of banking crises List of economic crises List of sovereign debt crises List of stock market crashes and bear markets

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