Panic of 1893
Panic of 1893
Crisis. The depression that occurred in the United States in 1893 was the worst in the nation’s history. As the economy became more integrated and centralized, fewer businesses and workers operated outside the influence of national markets and were therefore more vulnerable to the effects of a national downturn. In April 1893 the U.S. Treasury’s gold reserves fell below $100 million, setting off a financial panic as investors, fearing that the country would be forced to abandon the gold standard, scrambled to sell off assets and convert them to gold. This surge of selling rocked a market already unsettled by the spectacular failure of the Philadelphia and Reading Railroad in February; the collapse of the National Cordage Company on 4 May exacerbated the crisis. Banks everywhere began frantically calling in loans, and western and southern banks withdrew substantial deposits from New York banks. Bank failures spread rapidly; some six hundred occurred in the first months, especially in the South and West, rising to four thousand by the end of 1893. An estimated fourteen thousand businesses collapsed during the same period. The economy spent the next four years mired in the worst depression anyone had ever known. “The Americans are a people of magnificent achievements and of equally magnificent fiascoes,” Bankers’ Magazine of London declared as it surveyed the crisis across the Atlantic. “At present they are in the throes of a fiasco unprecedented even in their broad experience.”
Governmental Response. Some fifty railroads went under in the chaos, and since this industry was one of the nation’s largest and since it supported other industries, those failures rippled outwards; more than thirty steel companies collapsed in the wake of the railroad failures. The government, meanwhile, struggled to cope with the crisis, cutting off silver purchases to stem the outflow of its gold supply and in 1895 securing emergency loans in gold from Wall Street syndicates, including $65 million from John Pierpont Morgan and his associates. The bankers charged the government a hefty $7 million for this bailout—a price that angered many spectators. Popular sentiment mounted in opposition to the gold standard and in favor of the free and unlimited coinage of silver. Federal and state governments, in the meantime, with no sustained tradition of social welfare (which came only in the twentieth century), did little to alleviate the effects of the depression on the people.
Unrest. Among the working classes, layoffs and steep wage reductions threw families into desperate straits. As unemployment climbed to 20 percent in 1894, close to 2.5 million jobless men migrated in and out of cities looking for work. Chicago police stationed themselves at the railroad stations to keep tramps from coming into the city. Meanwhile, many of those who remained in the workforce were forced to take sharp pay cuts, provoking widespread labor unrest. By one count more than thirteen hundred strikes, involving 750,000 workers, hit the nation’s factories and mines in 1894 alone, including violent confrontations between workers and authorities at Pullman in Illinois and between workers and authorities at coalfields from Appalachia to Idaho in response to a national strike by the United Mine Workers of America.
Coxey’s Army. Impetus for direct Federal relief for unemployed workers and their families came from a seemingly unlikely source: Jacob S. Coxey, an Ohio steel-mill owner, was forced in the financial panic to lay off forty of his quarry workers. Coxey proposed a Federal public-works program, largely road construction, to provide jobs for the unemployed. He said it could be funded by issuing $500 million in paper money, which would also help the poor by increasing the amount of money in circulation. In order to drum up support for his “Good Roads Bill,” Coxey announced he would “send a petition to Washington with boots on” and led an assemblage of displaced workers on foot from Massillon, Ohio, to the capital; he hoped to have 100,000 marchers. “Coxey’s Army” started off on Easter Sunday 1894 with only about a hundred marchers (including Coxey’s wife, Henrietta, and their son, whom they had named Legal Tender Coxey). By the time they reached Washington on 30 April, though, the pilgrimage had swelled to roughly four hundred, and thousands more had cheered them on as they passed through various towns. In fact, the protest had grown prominent enough to concern the Federal government gravely; President Grover Cleveland announced he intended to use laws prohibiting parades on the Capitol grounds, and on 1 May he had Coxey and two of his lieutenants arrested.
“Insurrection” and Response. Dozens of demonstrations like Coxey’s broke out during this turbulent period. As a “movement” these displays remained scattered and unorganized. But they excited considerable anxiety among conservatives nonetheless, especially when coupled with the attending wave of violent strikes. In fact, many conservative Americans came to fear that the unrest was becoming a general “insurrection.” H. P. Robinson, editor of Railroad Age, wrote in January 1895: “It is probably safe to say that in no civilized country in this century, not actually in the throes of war or open insurrection, has society been so disorganized as it was in the United States during the first half of 1894; never was human life held so cheap; never did the constituted authorities appear so incompetent to enforce respect for the law.” These sentiments strengthened the resolve of company managers and state, local, and Federal authorities to meet the spreading strikes and protests violently, to maintain “order” in the midst of economic chaos.
WORKERS CRY OUT
A statement of the Pullman strikers, addressed to the American Railway Convention, 15 June 1894:
Rents all over the city in every quarter have fallen, in some cases to one-half. Residences, compared with which ours are hovels, can be had a few mttes away at the prices we have been contributing to make a millionaire a billionaire. What we pay $15 for in Pullman is leased for $8 in Roseland; and remember that just as no man or woman of our 4,000 toilers has ever felt the friendly pressure of George M. Pullman’s hand, so no man or woman of us all has ever owned or can ever hope to own one inch of George M. Pullman’s land. Why, even the very streets are his, . ., Water which Pullman buys from the city at 8 cents a thousand gallons he retails to us at 500 percent advance and claims he is losing $400 a month on it. Gas which sells at 75 cents per thousand feet in Hyde Park, just north of us, he sells for $2.25. When we went to tell him our grievances, he said we were all his ’children’ Pullman, both the man and the town, is an ulcer on the body politic. He owns the houses, the schoolhouses, and churches of God in the town he gave his once humble name.
Source: United States Strike Commission Report. Senate Executive Document No. 7 (53rd Congress, 3rd Session.) Washington: Government Printing Office, 1895.
Recovery. Recovery came slowly, but by the middle of 1897 signs began indicating that the economy was stabilizing. But the events of the previous four years had shaken the country. The economy had slipped into recession in 1873, 1884, and 1893, with this final depression being especially destructive. Meanwhile local, state, and Federal authorities had proven inadequate to meet the economic turmoil that seemed to attend this new economy and its fluctuations.
Samuel Rezneck, Business Depressions and Financial Panics (New York: Greenwood Press, 1968).
"Panic of 1893." American Eras. . Encyclopedia.com. (May 26, 2017). http://www.encyclopedia.com/history/news-wires-white-papers-and-books/panic-1893
"Panic of 1893." American Eras. . Retrieved May 26, 2017 from Encyclopedia.com: http://www.encyclopedia.com/history/news-wires-white-papers-and-books/panic-1893
1878-1899: Business and the Economy: Topics in the News
1878-1899: Business and the Economy: Topics in the News
The Department Store
Government Regulation of Big Business
The Homestead Strike
Panic of 1893
The Pullman Strike
The Rise of Big Business
Standard Oil Company
"1878-1899: Business and the Economy: Topics in the News." American Eras. . Encyclopedia.com. 26 May. 2017 <http://www.encyclopedia.com>.
"1878-1899: Business and the Economy: Topics in the News." American Eras. . Encyclopedia.com. (May 26, 2017). http://www.encyclopedia.com/history/news-wires-white-papers-and-books/1878-1899-business-and-economy-topics-news
"1878-1899: Business and the Economy: Topics in the News." American Eras. . Retrieved May 26, 2017 from Encyclopedia.com: http://www.encyclopedia.com/history/news-wires-white-papers-and-books/1878-1899-business-and-economy-topics-news