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The Panic of 1893 was a serious decline in the economy of the United States that began in 1893 and was precipitated in part by a run on the gold supply.
The Panic was the worst economic crisis to hit the nation in its history to that point. Economic historians are not certain what caused it but point to several possible factors. First, too many 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.S. Notes could no longer be successfully redeemed for gold. Next, the Philadelphia and Reading Railroad went bankrupt. Then, 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. 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. 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 12%-18% of the workforce was unemployed at the Panic's peak.
Estimates of Unemployment during the 1890s
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 |
Source: Romer, 1984
The severity of unemployment 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. A severe wave of strikes took place in 1894, most notably the Pullman Strike which shut down much of the nation's transportation system in July, 1894. The most memorable cultural events were the Chicago World's Fair of 1893. The hard times and utopian dreams that characterized the era were immortalized in L. Frank Baum's ''The Wonderful Wizard of Oz'' (1900).
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 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. The depression was a major issue in the debates over Bimetallism and the presidential election of 1896.
The U.S. economy finally began to recover in 1896. After the election of William McKinley confidence was restored and the economy began ten years of rapid growth, until the Panic of 1907.
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See also
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Secondary sources
Barnes, James A. John G. Carlisle: Financial Statesman (1931)
Barnes, James A. “Myths of the Bryan Campaign.” Mississippi Valley Historical Review 34 (December 1947): 383–94. online at JSTOR
Destler, Chester McArthur. American Radicalism, 1865–1901 (1966)
Dewey, Davis Rich. Financial History of the United States (1903)
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).
Hoffmann, Charles. "The Depression of the Nineties." Journal of Economic History 16 (June 1956): 137–64. online at JSTOR
Hoffmann, Charles. The Depression of the Nineties: An Economic History (1970).
Jensen, Richard. The Winning of the Midwest: 1888-1896 (1971).
Kirkland, Edward Chase. Industry Comes of Age, 1860–1897 (1961)
Lauck, William Jett. The Causes of the Panic of 1893 (1907)
Lindsey, Almont. The Pullman Strike 1942.
Nevins, Allan. Grover Cleveland: A Study in Courage. 1932, Pulitzer Prize
Rezneck, Samuel S. “Unemployment, Unrest, and Relief in the United States during the Depression of 1893–97.” Journal of Political Economy 61 (August 1953): 345. online at JSTOR
Ritter, Gretchen. Goldbugs and Greenbacks: The Anti-Monopoly Tradition and the Politics of Finance in America (1997)
Ritter, Gretchen. "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 (August 1997) vol. 31, no. 2, 171-203.
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)
White; Gerald T. The United States and the Problem of Recovery after 1893 1982
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Primary sources
Appleton’s Annual Cyclopedia and Register of Important Events for the Year (annual 1893-1897).
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. online at JSTOR
Closson, Carlos C. Jr. "The Unemployed in American Cities." Quarterly Journal of Economics, vol. 8, no. 2 (January 1894) 168-217. online at JSTOR
Closson, Carlos C. Jr. "The Unemployed in American Cities," Quarterly Journal of Economics, vol. 8, no. 4 (July 1894): 443-477. online at JSTOR
Fisher, Willard. "‘Coin’ and His Critics." Quarterly Journal of Economics 10 (January 1896): 187–208. online at JSTOR
Harvey, William H. Coin’s Financial School (1894), 1963 intro. by Richard Hofstadter
Noyes, Alexander Dana. “The Banks and the Panic.” Political Science Quarterly 9 (March 1894): 12–28. online at JSTOR
Romer, Christina. "Spurious Volatility in Historical Unemployment Data." Journal of Political Economy 94, no. 1. (1986): 1-37.
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. online at JSTOR
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