Panic of 1893 - wikipedia Panic of 1893 Estimates of the unemployment rate per 100 persons during the 1890s ( Source : Romer, 1986 ) 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 Drawing of frenzied stockbrokers on May 5, 1893, from Frank Leslie 's Illustrated Newspaper The Panic of 1893 was a serious economic depression in the United States that began in 1893 and ended in 1897. It deeply affected every sector of the economy, and produced political upheaval that led to the realigning election of 1896 and the presidency of William McKinley. Contents 1 Causes 2 Populists 3 Silver 4 Effects 5 See also 6 References 7 Further reading 7.1 Contemporary sources 7.2 Secondary sources 8 External links Causes One of the causes for the Panic of 1893 can be traced back to Argentina. Investment was encouraged by the Argentine agent bank, Baring Brothers. However, the 1890 wheat crop failure and a coup in Buenos Aires ended further investments. Because European investors were concerned that these problems might spread, they started a run on gold in the U.S. Treasury. At that time, it was comparatively simple to cash in dollar investments for exportable gold. 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. In 1893, wheat prices crashed. One of the first clear signs of trouble came on February 20, 1893, thirteen days before the inauguration of U.S. president Grover Cleveland, with the appointment of receivers for the Philadelphia and Reading Railroad, which had greatly overextended itself. Upon taking office, Cleveland dealt directly with the Treasury crisis, and successfully convinced Congress to repeal the Sherman Silver Purchase Act, legislation Cleveland felt was mainly responsible for the economic crisis. 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. 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 zenith in the 1892 presidential election, when its ticket, composed of James B. Weaver and James G. Field, won 8.5 % of the popular vote and carried five states ( Colorado, Idaho, Kansas, Nevada and North Dakota ), and the 1894 House of Representatives elections, when it won nine seats. Built on a coalition of poor, white cotton farmers in the South ( especially North Carolina, Alabama and Texas ) and hard - pressed wheat farmers in the Plains states ( especially Kansas and Nebraska ), the Populists represented a radical crusading form of agrarianism and hostility to elites, cities, banks, railroads, and gold. Silver The Free Silver movement arose from a synergy of farming and mining interests. Farmers sought to invigorate the economy and thereby end deflation, which was forcing them to repay loans with increasingly valuable dollars. Mining interests sought the right to turn silver directly into money without a central minting institution. The Sherman Silver Purchase Act of 1890, while falling short of the Free Silver movement 's goals, required the U.S. government to buy millions of ounces of silver above what was required by the 1878 Bland -- Allison Act ( driving up the price of silver and pleasing silver miners ). 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. Investments during the time of the panic were heavily financed through bond issues with high interest payments. Rumors regarding the National Cordage Company 's financial distress ( NCC was the most actively traded stock at the time ) caused its lenders to call in their loans immediately, and NCC went into bankruptcy receivership as a result. The company, a rope manufacturer, had tried to corner the market for imported hemp. As demand for silver and silver notes fell, the price and value of silver dropped. Holders worried about a loss of face value of bonds, and many became worthless. A series of bank failures followed, and the Northern Pacific Railway, the Union Pacific Railroad and the Atchison, Topeka & Santa Fe Railroad failed. This was followed by the bankruptcy of many other companies ; in total over 15,000 companies and 500 banks, many of them in the west, failed. According to high estimates, 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 kept in failed banks, meant that a once - secure middle - class could not meet their mortgage obligations. Many walked away from recently built homes as a result. Effects The 1896 Broadway melodrama The War of Wealth was inspired by the panic of 1893. As a result of the panic, stock prices declined. 500 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 Pingree started `` Pingree 's Potato Patch '' which were community gardens for farming. The Sherman Silver Purchase Act of 1890, perhaps along with the protectionist McKinley Tariff of that year, has been partially blamed for the panic. 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. President Grover Cleveland, a Democrat, was blamed for the depression. He in turn blamed the Sherman Silver Purchase Act. The decline of the gold reserves stored in the Treasury fell to a dangerously low level. This forced President Cleveland to borrow $65 million in gold from Wall - Street banker J.P. Morgan and the Rothschild banking family of England. In the ensuing 1894 elections, the Democrats and Populists lost heavily. The election marked the largest Republican gains in history. See also Denver Depression of 1893 Panic of 1896 Black Friday ( 1869 ) -- Also referred to as the Gold Panic of 1869 Second - term curse Pullman Strike References Jump up ^ Timberlake, Jr., Richard H. ( 1997 ). `` Panic of 1893 ''. In Glasner, David ; Cooley, Thomas F. Business Cycles and Depressions : an Encyclopedia. New York : Garland Publishing. pp. 516 -- 18. ISBN 0 - 8240 - 0944 - 4. CS1 maint : Multiple names : authors list ( link ) Jump up ^ Nelson, Scott Reynolds. 2012. A Nation of Deadbeats. New York : Alfred Knopf, p. 188. Jump up ^ Nelson, Scott Reynolds. 2012. A Nation of Deadbeats. New York : Alfred Knopf, p. 189. Jump up ^ `` IN RE RICE ''. Findlaw. Jump up ^ 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. Jump up ^ `` Grover Cleveland, '' whitehouse.gov Jump up ^ `` Grover Cleveland, '' American President : A Reference Resource, millercenter.org ^ Jump up to : Whitten, David O. `` EH.Net Encyclopedia : Depression of 1893 ''. eh.net. Retrieved 2009 - 04 - 20. Jump up ^ Cynthia Clark Northrup ( 2003 ). The American Economy : Essays and primary source documents. ABC - CLIO. p. 195. Jump up ^ Hoffman, Charles. The Depression of the Nineties : An Economic History. Westport, CT : Greenwood Publishing, 1970. p. 109. Jump up ^ Parshall, Gerald. `` The Great Panic Of ' 93. '' U.S. News & World Report 113.17 ( 1992 ) : 70. Academic Search Complete. Web. 26 Feb. 2013. Jump up ^ Harold U. Faulkner ( 1959 ). Politics Reform and Expansion : 1890 -- 1900. pp. 143 -- 44, 155 -- 57. Jump up ^ Frail, T.A. ( http://www.smithsonianmag.com/history-archaeology/Top-10-Historic-Midterm-Elections.html `` Top 10 Historic Midterm Elections '' Smithsonian.com, Oct. 14, 2010. Jump up ^ Faulkner, Politics Reform and Expansion : 1890 -- 1900 pp. 182 - 83. 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 -- 477 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. The Mississippi Valley Historical Review, Vol. 34, No. 3. 34 ( 3 ) : 383 -- 394. JSTOR 1898096. doi : 10.2307 / 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 -- 164. JSTOR 2114113. 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. American Quarterly, Vol. 16, No. 1. 16 ( 1 ) : 47 -- 58. JSTOR 2710826. doi : 10.2307 / 2710826. Nevins, Allan. Grover Cleveland : A Study in Courage. 1932, Pulitzer Prize. Rezneck, Samuel S. ( 1953 ). `` Unemployment, Unrest, and Relief in the United States during the Depression of 1893 -- 97 ''. Journal of Political Economy. The Journal of Political Economy, Vol. 61, No. 4. 61 ( 4 ) : 324 -- 345. JSTOR 1826883. doi : 10.1086 / 257393. 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. doi : 10.1017 / S0021875897005628. Rockoff, Hugh ( 1990 ). `` The ' Wizard of Oz ' as a Monetary Allegory ''. Journal of Political Economy. The Journal of Political Economy, Vol. 98, No. 4. 98 ( 4 ) : 739 -- 760. JSTOR 2937766. doi : 10.1086 / 261704. Romer, Christina ( 1986 ). `` Spurious Volatility in Historical Unemployment Data ''. Journal of Political Economy. 94 ( 1 ) : 1 -- 37. doi : 10.1086 / 261361. 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 Banking panics in the United States 1792 1796 -- 97 1819 1825 1837 1847 1857 1866 1873 1884 1890 ( Baring crisis ) 1893 1896 1901 1907 1910 - 11 1929 2007 -- 08 Recessions in the United States ( notable recessions in bold ) 1796 -- 99 1815 -- 21 1836 -- 38 and 1839 -- 43 1857 -- 58 1873 -- 1879 1882 -- 85 1893 -- 1897 1907 -- 08 1918 -- 19 1920 -- 21 1929 -- 33 and 1937 -- 38 1949 1953 -- 54 1958 1960 -- 61 1969 -- 70 1973 -- 75 1980 and 1981 -- 82 1990 -- 91 2002 -- 03 2007 -- 09 Stock market crashes 17th century Early stock market crashes in the Dutch Republic 18th century The Mississippi Bubble South Sea Bubble of 1720 Panic of 1792 Panic of 1796 -- 97 19th century Panic of 1819 Panic of 1825 Panic of 1837 Panic of 1847 Panic of 1857 Black Friday ( 1869 ) Panic of 1873 Paris Bourse crash of 1882 Panic of 1884 Encilhamento Panic of 1893 Panic of 1896 20th century Panic of 1901 Panic of 1907 Depression of 1920 -- 21 Wall Street Crash of 1929 Recession of 1937 -- 38 1971 Brazilian markets crash 1973 -- 74 stock market crash Souk Al - Manakh stock market crash ( 1982 ) Japanese asset price bubble ( 1986 -- 1991 ) Black Monday ( 1987 ) Rio de Janeiro Stock Exchange collapse Friday the 13th mini-crash ( 1989 ) 1990s Japanese stock market crash Dot - com bubble ( 1995 -- 2000 ) 1997 Asian financial crisis October 27, 1997, mini-crash 1998 Russian financial crisis 21st century Economic effects arising from the September 11 attacks ( 2001 ) Stock market downturn of 2002 Chinese stock bubble of 2007 United States bear market of 2007 -- 09 Financial crisis of 2007 -- 08 Dubai debt standstill European debt crisis 2010 Flash Crash 2011 Tōhoku earthquake and tsunami ( Aftermath ) August 2011 stock markets fall 2011 Bangladesh share market scam 2015 -- 16 Chinese stock market turbulence 2015 -- 16 stock market crash 2016 United Kingdom EU referendum ( Aftermath ) See also : List of stock market crashes and bear markets History of the United States Timeline Prehistory Pre-Columbian Colonial 1776 -- 89 1789 -- 1849 1849 -- 65 1865 -- 1918 1918 -- 45 1945 -- 64 1964 -- 80 1980 -- 91 1991 -- 2008 2008 -- present Topics American Century Cities Constitution Demographic Diplomatic Economic Education Immigration Medical Merchant Marine Military Musical Religious Slavery Southern Technological and industrial Territorial acquisitions Territorial evolution Voting rights Women Portal Retrieved from `` https://en.wikipedia.org/w/index.php?title=Panic_of_1893&oldid=806477950 '' Categories : 1893 in the United States Financial crises Economic crises in the United States History of the United States ( 1865 -- 1918 ) Stock market crashes 19th - century economic history 1893 in economics Hidden categories : CS1 maint : Multiple names : authors list Talk Contents About Wikipedia Català Dansk Français 한국어 Bahasa Indonesia 日本 語 Polski Português Русский Српски / srpski Suomi Tiếng Việt 中文 Edit links This page was last edited on 22 October 2017, at 08 : 20. 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Question: the cleveland administration responded to the panic of 1893 by
Answer: repeal the Sherman Silver Purchase Act