Wall Street's First Corporate Governance Crisis: The Panic of 1826

41 Pages Posted: 20 Apr 2009 Last revised: 11 Sep 2022

See all articles by Eric Hilt

Eric Hilt

National Bureau of Economic Research (NBER); Wellesley College

Date Written: April 2009


In July of 1826, several prominent Wall Street firms abruptly went bankrupt, amid scandalous revelations of fraudulent financial practices by their management. Although mostly forgotten today, these events represented a watershed in the early development of the corporation laws and investor protections governing Wall Street: in the aftermath of the scandals, New York State enacted an extensive package of legislation designed to protect the interests of investors. These statutes were some of the the very first of their kind, and had a lasting influence. This paper analyzes the causes of the failures, and the evolution of the law in response. The analysis highlights the critical role played by scandal-driven legislation in the evolution of investor protections and financial regulations.

Suggested Citation

Hilt, Eric, Wall Street's First Corporate Governance Crisis: The Panic of 1826 (April 2009). NBER Working Paper No. w14892, Available at SSRN: https://ssrn.com/abstract=1391839

Eric Hilt (Contact Author)

National Bureau of Economic Research (NBER)

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Wellesley College ( email )

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