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The Panic of 1893 was a serious economic depression in the United States and began in 1893. The United States of America —commonly referred to as the This panic was an extension of the Panic of 1873, and like that earlier crash, was caused by railroad overbuilding and shaky railroad financing which set off a series of bank failures. The Panic of 1873 was the start of the Long Depression, a severe nationwide economic depression in the United States that lasted until 1879 Compounding market overbuilding and a railroad bubble was a run on the gold supply and a policy of using both gold and silver metals as a peg for the US Dollar value. Gold (ˈɡoʊld is a Chemical element with the symbol Au (from its Latin name aurum) and Atomic number 79 The Panic of 1893 was the worst economic crisis to hit the nation in its history to that point and, some argue, as bad as the Great Depression of the 1930s.

Estimates of Unemployment during the 1890s (Source: Romer, 1984
Year Lebergott Romer
1890 4. 0 4. 0
1891 5. 4 4. 8
1892 3. 0 3. 7
1893 11. 7 8. 1
1894 18. 4 12. 3
1895 13. 7 11. 1
1896 14. 5 12. 0
1897 14. 5 12. 4
1898 12. 4 11. 6
1899 6. 5 8. 7
1900 5. 0 5. 0

Contents

Causes

The 1880s had seen a period of remarkable economic expansion in the United States. In time, the expansion became driven by speculation, much like the "tech bubble" of the late 1990s, except that the preferred industry was railroads. Railroads were vastly over-built, and many companies tried to take over many others, seriously endangering their own stability so to do. One of the first signs of trouble was the bankruptcy of the Philadelphia and Reading Railroad, which had greatly over-extended itself, on February 23, 1893. The Reading Company, usually called the Reading Railroad ( and officially known as the Philadelphia and Reading Rail Road and then the Philadelphia and Events 1455 - Traditional date for the publication of the Gutenberg Bible, the first Western Book printed from Movable Year 1893 ( MDCCCXCIII) was a Common year starting on Sunday (link will display the full calendar of the Gregorian calendar (or a Common [1]

As concern of the state of the economy worsened, people rushed and caused bank runs. A bank run (also known as a run on the bank) occurs when a large number of Bank customers withdraw their deposits because they believe the bank is or might The credit crunch rippled through the economy. Smart european investors only took payment in gold, weakening the US gold reserve, which further dropped the US dollar's value. People attempted to redeem silver notes for gold; ultimately the statutory limit for the minimum amount of gold in federal reserves was reached and U. Silver Certificates were printed for a time in the United States as a form of Paper currency. S. notes could no longer be successfully redeemed for gold. The investments during the time of the Panic were heavily financed through bond issues with high interest payments. The National Cordage Company (the most actively traded stock at the time) went into receivership as a result of its bankers calling their loans in response to rumors regarding the NCC's financial distress. Bankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay their Creditors Creditors may file a bankruptcy petition against As the demand for Silver and Silver notes fell, its price and value dropped. Holders worried about a loss of face value of bonds, and many became worthless.

A series of bank failures followed, and the price of silver fell. The Northern Pacific Railway, the Union Pacific Railroad and the Atchison, Topeka & Santa Fe Railroad all failed. The Northern Pacific Railway was a railway that operated in the north-central region of the United States. The Atchison Topeka and Santa Fe Railway, often abbreviated as Santa Fe, was one of the larger railroads in the United States. This was followed by the bankruptcy of many other companies; in total over 15,000 companies and 500 banks failed (many in the west). About 17%-19% of the workforce was unemployed at the Panic's peak. The huge spike in unemployment, combined with the loss of life savings by failed banks, meant that a once secure middle class could not meet their mortgage obligations. As a result, many walked away from recently built homes. From this, the sight of the vacant Victorian (haunted) house entered the American mindset. [2]

Effects

The 1896 Broadway melodrama The War of Wealth was inspired by the Panic of 1893.
The 1896 Broadway melodrama The War of Wealth was inspired by the Panic of 1893.

The severity was great in all industrial cities and mill towns. Farm distress was great because of the falling prices for export crops such as wheat and cotton. Coxey's Army was a highly publicized march of unemployed men from Ohio and Pennsylvania to Washington to demand relief. Coxey's Army was a protest march by unemployed workers from the United States, led by the populist Jacob Coxey. A severe wave of strikes took place in 1894, most notably the Midwestern bituminous coal strike of the spring, which led to violence in Ohio. Strike action, often simply called a strike, is a work stoppage caused by the mass refusal by Employees to perform work. Even more serious was the Pullman Strike, which shut down much of the nation's transportation system in July, 1894. The

The Sherman Silver Purchase Act of 1890, perhaps along with the protectionist McKinley Tariff of 1890, have been partially blamed for the panic. The Sherman Silver Purchase Act was enacted in 1890 as a United States federal law. The McKinley Tariff of 1890 was what set the average ad valorem Tariff rate for imports to the United States at 48 Passed in response to a large overproduction of silver by western mines, the Sherman Act required the U. S. Treasury to purchase silver using notes backed by either silver or gold. Politically the Democrats and President Cleveland were blamed for the depression. The Democrats and Populists lost heavily in the 1894 elections, which marked the largest Republican gains in history.

Many of the western silver mines closed, and a large number were never re-opened. A significant number of western mountain narrow-gauge railroads, which had been built to serve the mines, also went out of business. The Denver and Rio Grande Railroad stopped its ambitious plan, then under way, to convert its system from narrow-gauge to standard-gauge. The Denver and Rio Grande Railroad, generally referred to as the Rio Grande, became the Denver and Rio Grande Western Railroad in 1920 and is today a Fallen

The depression was a major issue in the debates over Bimetallism. In Economics, bimetallism is a Monetary standard in which the value of the Monetary unit can be expressed as a certain amount of gold or as a certain amount The Republicans blamed the Democrats and scored a landslide victory in the 1894 state and Congressional elections. The US House election 1894 was a realigning election--a major Republican landslide that set the stage for the decisive Election of 1896. The Populists lost most of their strength and had to support the Democrats in 1896. Populism is a discourse which supports "the people" versus "the Elites " Populism may involve either a political philosophy urging social and political The presidential election of 1896 was fought on economic issues and was marked by a decisive victory of the pro-gold, high-tariff Republicans led by William McKinley over pro-silver William Jennings Bryan. The United States presidential election of November 3 1896 saw Republican William McKinley defeat Democrat William Jennings Bryan in a campaign considered by William McKinley Jr ( January 29, 1843 September 14, 1901) was the twenty-fifth President of the United States, and the last For other persons of the same name see William Bryan and William Jennings.

Many people abandoned their homes and came west. The growing railway towns in the west of Seattle, Portland, Salt Lake City, Denver, San Francisco and Los Angeles took in the populations--as did many smaller centers.

The U. S. economy finally began to recover in 1896. After the election of Republican McKinley, confidence was restored with the Klondike gold rush and the economy began 10 years of rapid growth, until the Panic of 1907. The Panic of 1907 also known as the 1907 Bankers' Panic, was a Financial crisis that occurred in the United States when the Stock market fell close to

References

  1. ^ James L. Holton, The Reading Railroad: History of a Coal Age Empire, Vol. I: The Nineteenth Century, pp. 323-325, citing Vincent Corasso, The Morgans.
  2. ^ Hoffman, Charles. The Depression of the Nineties: An Economic History. Westport, CT: Greenwood Publishing, 1970. Page 109.

Primary sources

Secondary sources

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