Panic of 1893
This article's lead section may be too short to adequately summarize the key points. (November 2022) |
The Panic of 1893 was an
Causes
The Panic of 1893 has been traced to many causes, one of them pointing to Argentina; investment was encouraged by the Argentine agent bank,
During the Gilded Age of the 1870s and 1880s, the United States had experienced economic growth and expansion, but much of this expansion depended on high international commodity prices. Exacerbating the problems with international investments, wheat prices crashed in 1893.[2] In particular, the opening of numerous mines in the western United States led to an oversupply of silver, leading to significant debate as to how much of the silver should be coined into money (see below). During the 1880s, American railroads experienced what might today be called a "bubble": investors flocked to railroads, and they were greatly over-built.[4]
One of the first clear signs of trouble came on 20 February 1893,
As concern for the state of the economy deepened, people rushed to withdraw their money from banks, and caused bank runs. The credit crunch rippled through the economy. A financial panic in London combined with a drop in continental European trade caused foreign investors to sell American stocks to obtain American funds backed by gold.[9]
The economic policies of President Benjamin Harrison have been characterized as a contributing factor to the depression.[10]
Populists
The People's Party, also known as the 'Populists', was an agrarian-populist political party in the United States. From 1892 to 1896, it played a major role as a left-wing force in American politics. It drew support from angry farmers in the West and South. It was highly critical of capitalism, especially banks and railroads, and allied itself with the labor movement.
Established in 1891 as a result of the Populist movement, the People's Party reached its height in the
Silver
Unemployment rates during the 1890s (rates are per 100 persons)[11] | ||
---|---|---|
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 |
The
A series of bank failures followed, and the
Effects
As a result of the panic, stock prices declined. Five hundred banks closed, 15,000 businesses failed, and numerous farms ceased operation. The unemployment rate hit 25% in Pennsylvania, 35% in New York, and 43% in Michigan. Soup kitchens were opened to help feed the destitute. Facing starvation, people chopped wood, broke rocks, and sewed by hand with needle and thread in exchange for food. In some cases, women resorted to prostitution to feed their families. To help the people of Detroit, Mayor Hazen S. Pingree launched his "Potato Patch Plan", which were community gardens for farming.[14]
President
A rarely talked-about effect is the Love Canal disaster. People who were earlier keen to invest in the Love Canal stopped doing so, which led to the abandonment of its construction. Ultimately the canal ended up being a large toxic waste repository, with severe negative environmental effects. Love Canal remains synonymous with environmental pollution and degradation.
Shipping
The Panic of 1893 affected many aspects of the
Fluctuations in railroad investment after the Panic of 1893
The bad omen of investors switching from equity based stocks to constant return bonds in 1894 was mirrored in the corporate finance actions of railroads which reduced their acquisition of rolling stock. Railroad expansion including capital expenditures rose again in 1895, but slowed in 1897 during another economic trough.[16]
Receivership
In 1893, the total railroad mileage in the U.S. was 176,803.6 miles. In 1894 and 1895, railroads only expanded 4,196.4 miles, although 100,000 miles of rail was added from 1878 to 1896.
Pullman Strike
In 1894, the U.S. Army intervened during a strike in Chicago to prevent property damage.[20] The Pullman Strike began at the Pullman Company in Chicago after Pullman refused to either lower rent in the company town or raise wages for its workers due to increased economic pressure from the Panic of 1893.[21] Since the Pullman Company was a railroad car company, this only increased the difficulty of acquiring rolling stock.
American merchant tonnage
The maritime industry of the United States did not escape the effects of the Panic of 1893. The total gross registered merchant marine tonnage employed in "foreign and coastwise trade and in the fisheries", as measured by the U.S. Census between 1888 and 1893, grew at a rate of about 2.74%. In 1894, U.S. gross tonnage decreased by 2.9%, and again in 1895 by 1.03%.[22]
Rates
In 1894, the rate for a bushel of wheat by rail dropped from 14.70¢ in 1893 to 12.88¢. This rate continued to decrease, reaching a terminal rate in 1901 of 9.92¢ and never reached 12 cents between 1898 and 1910.[19]
Between 1893 and 1894, average shipping rates by lake or canal per wheat bushel decreased by almost 2 cents, from 6.33¢ to 4.44¢. Rates on the transatlantic crossing from New York City to Liverpool also decreased, from 2 and 3/8 pence to 1 and 15/16 pence, but this reflected a continuing trend downward from a high of 3 and 1/8 pence in 1891.[19]
The Morgan-Belmont Syndicate
In February 1895, the
The persistent balance of payments deficit in the 1890s which drained the Treasury gold reserves, caused concern from both domestic and foreign investors that the U.S. would abandon the gold standard. This prompted further gold withdrawals and bond liquidations which exacerbated the deficit. By February 2, 1895, the Treasury's gold reserves fell to approximately $42 million, well below the $100 million level required by the
The full list of syndicate members was not made public, however the contract named
See also
- Australian banking crisis of 1893
- Black Friday (1869) – also referred to as the "Gold Panic of 1869"
- Basic City, Virginia
- Denver Depression of 1893
- The Driver, a 1922 novel set during the panic
- Long Depression
- Panic of 1890
- Panic of 1896
- Second-term curse
References
- ISBN 0-8240-0944-4.
- ^ a b Nelson, Scott Reynolds. 2012. A Nation of Deadbeats. New York: Alfred Knopf, p. 189.
- ^ "The Depression of 1893". eh.net. Retrieved 2019-09-27.
- ^ Daniel Gross, The Bubbles that Built America: the Railroad; accessed 2021.02.25.
- ^ "IN RE RICE". Findlaw.
- ^ 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.
- ^ "Grover Cleveland". The White House. Archived from the original on 2010-09-18.
- ^ "American President: Grover Cleveland: Domestic Affairs". Miller Center. Archived from the original on 2010-10-09.
- ^ a b Whitten, David O. "Depression of 1893". EH.Net Encyclopedia. Archived from the original on 2009-04-27. Retrieved 2009-04-20.
- S2CID 233706114.
- S2CID 15302777.
- ISBN 9781576078662.
- ^ Hoffman, Charles. The Depression of the Nineties: An Economic History. Westport, CT: Greenwood Publishing, 1970. p. 109.
- ^ Parshall, Gerald. "The Great Panic Of '93." U.S. News & World Report 113.17 (1992): 70. Academic Search Complete. Web. 26 Feb. 2013.
- ^ Faulkner, Harold U. (1959). Politics Reform and Expansion: 1890–1900. pp. 143–44, 155–57.
- S2CID 155082457.
- .
- S2CID 154515537.
- ^ a b c "Internal Communication and Transportation" (PDF). United States Census Bureau. 30 Mar 2015.
- S2CID 163078715.
- ISBN 9780226048758.
- ^ "Merchant Marine and Shipping" (PDF). United States Census Bureau. 30 Mar 2015.
- JSTOR 2114113.
Further reading
Contemporary sources
- American Annual Cyclopedia...1894 (1895) online
- Baum, Lyman Frank and W. W. Denslow. The Wonderful Wizard of Oz (1900); see Political interpretations of The Wonderful Wizard of Oz
- Brice, Lloyd Stephens, and James J. Wait. "The Railway Problem." North American Review 164 (March 1897): 327–48. online at MOA Cornell.
- Cleveland, Frederick A. "The Final Report of the Monetary Commission," Annals of the American Academy of Political and Social Science 13 (January 1899): 31–56 in JSTOR
- Closson, Carlos C. Jr. "The Unemployed in American Cities." Quarterly Journal of Economics, vol. 8, no. 2 (January 1894) 168–217 in JSTOR; vol. 8, no. 4 (July 1894): 443–77 in JSTOR
- Fisher, Willard. "‘Coin’ and His Critics." Quarterly Journal of Economics 10 (January 1896): 187–208 in JSTOR
- Harvey, William H. Coin’s Financial School (1894), 1963 (Introduction by Richard Hofstadter). online first edition
- Noyes, Alexander Dana. "The Banks and the Panic," Political Science Quarterly 9 (March 1894): 12–28 in JSTOR.
- Shaw, Albert. "Relief for the Unemployed in American Cities," Review of Reviews 9 (January and February 1894): 29–37, 179–91.
- Stevens, Albert Clark. "An Analysis of the Phenomena of the Panic in the United States in 1893," Quarterly Journal of Economics 8 (January 1894): 117–48 in JSTOR.
Secondary sources
- Barnes, James A. John G. Carlisle: Financial Statesman (1931).
- Barnes, James A. (1947). "Myths of the Bryan Campaign". Mississippi Valley Historical Review. 34 (3). The Mississippi Valley Historical Review, Vol. 34, No. 3: 383–94. JSTOR 1898096.
- Bent, Peter H. (2015), "The Stabilising Effects of the Dingley Tariff and the Recovery from the 1890s Depression in the United States", Crises in Economic and Social History: A Comparative Perspective, pp. 373–390. [1]
- Bent, Peter H. (2015). "The Political Power of Economic Ideas: Protectionism in Turn of the Century America". Economic Thought. 4 (2): 68–79. [2].
- Destler, Chester McArthur. American Radicalism, 1865–1901 (1966).
- Dewey, Davis Rich. Financial History of the United States (1903). online.
- Dighe, Ranjit S. ed. The Historian's Wizard of Oz: Reading L. Frank Baum's Classic as a Political and Monetary Allegory (2002).
- Dorfman, Joseph Harry. The Economic Mind in American Civilization. (1949). vol 3.
- Faulkner, Harold Underwood. Politics, Reform, and Expansion, 1890–1900. (1959).
- Feder, Leah Hanna. Unemployment Relief in Periods of Depression ... 1857–1920 (1926).
- Friedman, Milton, and Anna Jacobson Schwartz. A Monetary History of the United States, 1867–1960 (1963).
- Harpine, William D. From the Front Porch to the Front Page: McKinley and Bryan in the 1896 Presidential Campaign (2006) excerpt and text search
- Hoffmann, Charles (1956). "The Depression of the Nineties". Journal of Economic History. 16 (2): 137–64. S2CID 155082457.
- Hoffmann, Charles. The Depression of the Nineties: An Economic History (1970).
- Jensen, Richard. The Winning of the Midwest: 1888–1896 (1971).
- Josephson, Matthew. The Robber Barons New York: Harcourt Brace Jovanovich (1990).
- Kirkland, Edward Chase. Industry Comes of Age, 1860–1897 (1961).
- Lauck, William Jett. The Causes of the Panic of 1893 (1907). online
- Lindsey, Almont. The Pullman Strike 1942.
- Littlefield, Henry M. (1964). "The Wizard of Oz: Parable on Populism". American Quarterly. 16 (1). American Quarterly, Vol. 16, No. 1: 47–58. JSTOR 2710826.
- Nevins, Allan. Grover Cleveland: A Study in Courage. 1932, Pulitzer Prize.
- ISBN 978-0870046216.
- Rezneck, Samuel S. (1953). "Unemployment, Unrest, and Relief in the United States during the Depression of 1893–97". S2CID 154074481.
- Ritter, Gretchen. Goldbugs and Greenbacks: The Anti-Monopoly Tradition and the Politics of Finance in America (1997)
- Ritter, Gretchen (1997). "Silver slippers and a golden cap: L. Frank Baum's The Wonderful Wizard of Oz and historical memory in American politics". Journal of American Studies. 31 (2): 171–203. S2CID 144369952.
- Rockoff, Hugh (1990). "The 'Wizard of Oz' as a Monetary Allegory". Journal of Political Economy. 98 (4). The Journal of Political Economy, Vol. 98, No. 4: 739–60. S2CID 153606670.
- S2CID 15302777.
- Schwantes, Carlos A. Coxey’s Army: An American Odyssey (1985).
- Shannon, Fred Albert. The Farmer’s Last Frontier: Agriculture, 1860–1897 (1945).
- Steeples, Douglas, and David O. Whitten. Democracy in Desperation: The Depression of 1893 (1998).
- Strouse, Jean. Morgan: American Financier (1999).
- White; Gerald T. The United States and the Problem of Recovery after 1893 (1982).
- Whitten, David. EH.NET article on the Depression of 1893
- Wicker, Elmus. Banking panics of the gilded age (Cambridge University Press, 2006) contents
External links
- Causes of the Business Depression by Henry George; appeared in Once a Week, a New York periodical, March 6, 1894