Panic of 1893

One of the worst economic crisis to hit America in the 1890s was the Panic of 1893. The economic crisis was so severe that May 5th 1893 is often referred to as the 'Industrial Black Friday' by historians. Just like the Panic of 1873, this economic crisis too was caused due to bank failures and financial crisis in the railroad companies. This crisis hit America in the year 1893 and it lasted till 1897. The major impact of this crisis was unemployment, the coal mining industries, the lumbering industries, the agricultural industries and various other industrial sectors. This crisis was considered to be the greatest economic crisis ever, that hit America (until the Great Depression). If you are interested in knowing what event triggered the Panic of 1893, or what were the various effects of this economic recession, then read this article further and get all the information that you can get.

Summary and Causes

Before going into the details, let us first learn something in brief about the crisis so that it becomes easier for you to understand what the crisis was actually about. During the 1880s, America was progressing economically and the railroads were also flourishing, new industries were coming up and they started competing with one another. Silver also began to flood the American market. But problem arose when the Philadelphia and Reading Railroad went bankrupt on the 23rd of February, 1893. Stephen Grover Cleveland was the President of America at that time, in fact the company became bankrupt, just ten days before Cleveland's second inauguration. As soon as he took his position, the President directly dealt with the crisis and convinced the Congress to annul the Silver Purchase Act as he felt that this Act was the main cause of the crisis. But conditions began to worsen and fearing the worse, the people of America started withdrawing their money from the banks and this led to the closure of banks as now the banks became bankrupt. Due to a financial panic in the United Kingdom and also due to a fall in trade in Europe, foreign investors sold off American stocks in order to get the American funds that were bought by gold. The National Cordage Company also went into receivership; the value of silver as well as the demand for it went down. One by one several banks and industries went bankrupt, followed by several railroad companies as well.

Unemployment became a major issue and this bought the people out on the streets, protesting and going on strikes. The President did little to help the economy as he felt that the business cycle was a natural occurrence and that politicians should not poke their nose into such matters. The crisis finally came to an end when the Republican candidate, McKinley, became the President and peace was restored again until the Panic of 1907.

Effects

Now that we have seen the causes as well as the summary in brief, let us see what the effects of the Panic were. The section that was mostly affected was that of the farmers. This was due to the fall in the price of those crops that were usually exported; cotton and wheat. A large number of people became unemployed as several industries closed down. People became so frustrated that a protest march was held by the unemployed people from Ohio and this protest march was called the 'Coxey's Army'. The Democrats were the ones who were blamed for this whole crisis. As demand for silver went down, several silver mines also closed down and due to this, the railroads which used to serve the mines also went out of business. People started moving to other cities such as Los Angeles, Portland, Salt Lake City, San Francisco and Seattle. Due to the fall in the mining industries, towns which were completely dependent on the mining industry, went into depression.

Hence, now you know what was the defining moment that started the Panic of 1893 and also what were the effects of this economic crisis. Conditions began to improve after the Republican candidate, McKinley, became the President in the year 1897. The Klondike Gold Rush was introduced and this led to the growth of American economy.