Panic of 1797 The United States’ first major economic emergency struck in 1797 as a result of a land speculation bubble bursting.
This, combined with the Bank of England withholding payments and the closing of American ports due to a yellow fever epidemic, left economic activity stagnant in the North and caused deflationary effects nationwide through the end of the century.
Land speculation was due in large part to assumptions about which areas of the country would be the most productive for products that ranged from crops to timber.
These assumptions, in turn, were based on the location of land relative to transportation, whether by water, road or rail.
The Committee considers a “recession” or contraction as a period of diminishing (vs diminished) activity and an expansion as a period of increasing economic activity.
Specifically, the Committee identifies a month when the economy reached a peak of activity and a later month when the economy reached a trough.