Ten London banking houses failed in mid-1772, leading to a credit crunch. During that contraction, surviving London banks called in their outstanding loans to American planters, among others. This hit especially hard among Virginians, who were responsible for some £1.4 million—that is, about half the total debt in the colonies to British merchants.17 To raise the cash to pay their debts, they flooded the market with tobacco, which in turn caused its price to drop by about half, making their finances even worse.18
