page_title: Long Depression
section_title: United States
hierarchical_section_title: Long Depression / Course of the depression / United States
caption_attribution_description: English: A chart of real US GNP per capita from 1869 to 1918 (covering the period of the Long Depression and the Gilded Age). Annotations are major financial panics during the period (e.g., Panic of 1893, Panic of 1907). Shaded areas are recessions as determined by the NBER. Data on real GNP comes from The American Business Cycle by Robert Gordon (see here). Population data taken from United States census estimates. Figures were adjusted from 1972 dollars to 2009 dollars using CPI estimates from the Federal Reserve. Chart was generated using Google Charts.
context_page_description: The Long Depression was a worldwide price and economic recession, beginning in 1873 and running either through March 1879, or 1896, depending on the metrics used. It was the most severe in Europe and the United States, which had been experiencing strong economic growth fueled by the Second Industrial Revolution in the decade following the American Civil War. The episode was labeled the "Great Depression" at the time, and it held that designation until the Great Depression of the 1930s. Though a period of general deflation and a general contraction, it did not have the severe economic retrogression of the Great Depression.
  It was most notable in Western Europe and North America, at least in part because reliable data from the period is most readily available in those parts of the world. The United Kingdom is often considered to have been the hardest hit; during this period it lost some of its large industrial lead over the economies of continental Europe. While it was occurring, the view was prominent that the economy of the United Kingdom had been in continuous depression from 1873 to as late as 1896 and some texts refer to the period as the Great Depression of 1873–1896.
context_section_description: In the United States, the Long Depression began with the Panic of 1873. The National Bureau of Economic Research dates the contraction following the panic as lasting from October 1873 to March 1879.  At 65 months, it is the longest-lasting contraction identified by the NBER, eclipsing the Great Depression's 43 months of contraction. Figures from Milton Friedman and Anna Schwartz show net national product increased 3 percent per year from 1869 to 1879 and real national product grew at 6.8 percent per year during that time frame. However, since between 1869 and 1879 the population of the United States increased by over 17.5 percent, per capita NNP growth was lower. Following the end of the episode in 1879, the U.S. economy would remain unstable, experiencing recessions for 114 of the 253 months until January 1901.
  The dramatic shift in prices mauled nominal wages - in the United States, nominal wages declined by one-quarter during the 1870s, and as much as one-half in some places, such as Pennsylvania. Although real wages had enjoyed robust growth in the aftermath of the American Civil War, increasing by nearly a quarter between 1865 and 1873, they stagnated until the 1880s, posting no real growth, before resuming their robust rate of expansion in the later 1880s. The collapse of cotton prices devastated the already war-ravaged economy of the southern United States. Although farm prices fell dramatically, American agriculture continued to expand production.
  Thousands of American businesses failed, defaulting on more than a billion dollars of debt. One in four laborers in New York were out of work in the winter of 1873–1874 and, nationally, a million became unemployed.
  The sectors which experienced the most severe declines in output were manufacturing, construction, and railroads. The railroads had been a tremendous engine of growth in the years before the crisis, yielding a 50% increase in railroad mileage from 1867 to 1873. After absorbing as much as 20% of US capital investment in the years preceding the crash, this expansion came to a dramatic end in 1873; between 1873 and 1878, the total amount of railroad mileage in the United States barely increased at all.
  The Freedman's Savings Bank was a typical casualty of the financial crisis. Chartered in 1865 in the aftermath of the American Civil War, the bank had been established to advance the economic welfare of America's newly emancipated freedmen. In the early 1870s, the bank had joined in the speculative fever, investing in real estate and unsecured loans to railroads; its collapse in 1874 was a severe blow to African-Americans.
  The recession exacted a harsh political toll on President Ulysses S. Grant.  Historian Allan Nevins says of the end of Grant's presidency:
  Various administrations have closed in gloom and weakness ... but no other has closed in such paralysis and discredit as (in all domestic fields) did Grant's. The President was without policies or popular support. He was compelled to remake his Cabinet under a grueling fire from reformers and investigators; half its members were utterly inexperienced, several others discredited, one was even disgraced. The personnel of the departments was largely demoralized. The party that autumn appealed for votes on the implicit ground that the next Administration would be totally unlike the one in office. In its centennial year, a year of deepest economic depression, the nation drifted almost rudderless.
  Recovery began in 1878. The mileage of railroad track laid down increased from 2,665 mi (4,289 km) in 1878 to 11,568 in 1882. Construction began recovery by 1879; the value of building permits increased two and a half times between 1878 and 1883, and unemployment fell to 2.5% in spite of (or perhaps facilitated by) high immigration.
  The recovery, however, proved short-lived. Business profits declined steeply between 1882 and 1884. The recovery in railroad construction reversed itself, falling from 11,569 mi (18,619 km) of track laid in 1882 to 2,866 mi (4,612 km) of track laid in 1885; the price of steel rails collapsed f
caption: Real gross national product per capita of the United States 1869–1918
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