Cause And Effect Of The Panic Of 1893

For big businesses, profit came first then the people. Monopolies controlled the economy. They would act as sponges and just keep absorb profit, engulfing smaller businesses by way of powerful trusts. Many fell victim to the dawn of the trusts, such as George Rice, the owner of Ohio Oil Works, one of the many minor, small-scale companies that was snatched up by Rockefeller's Standard Oil Company. (Doc. H). Big businesses also create recessions. What kick started the Panic of 1873, was the failing of Jay Cooke’s bank, in turn causing Henry Clews bank to fail. The chain reaction kept going and the United States was plunged into the biggest depression it has faced, pre-Great Depression. Prices in everyday commodities such as fuel and food were lowered as a result. (Doc. A). Corporations eating away at the economy by way of trusts and recessions are

These periods of financial panics along with the inelastic money supply had long beleaguered the country. Bank failures, business bankruptcies, and unstable economic development were results of the lack of a central banking system (Federal Reserve System 8th ed. pp. 6-7). The Panic of 1907 was a bank run of epic proportions that exacerbated the problem. Depositors withdrew their savings from the second and third largest banks in the country. These banks were not able to generate enough funds to cover the demand and subsequently closed their doors. Their closings rapidly spread fear across the country leading to one of the largest runs on the banks the nation had ever witnessed (Schlesinger pp. 41).

But the state banks' careless and dangerous credit policies led to huge guess/guessing inWestern lands. By 1837, after Van Buren had become president, banks were clearly in trouble. Some began to close, businesses began to fail, and thousands of people lost their land. This was the Panic of

Why the stock market crashed, was due to two factors, economic and financial. For example economic factors where, poor distribution of wealth, many consumers relied on credit, credit dried up, consumer spending dropped and industries struggled. Financial factors were a threat to the stock market rise in the mid-1920s. Speculation in stock

In the Worsening Crisis record, it involved the “Dred Scott Decision” which arose different conflicts whether the slaves should be freed or not? Regards to “The Panic of 1857”, it was the economic depression caused due to fall in wheat price and contracted credit hurt commercial farmers and overextended railroad investors.(Davidson 399)

The panic of 1907 and the Great Recession of 2007-2009 has both been major economic events in the United States economic history. This paper compares and contrasts these two major events and enables us to understand importance of certain financial institutions and regulations during troubled times in the financial sector. In this paper, both panics of 1907 and 2007 are historically analyzed and compared.

The Panic of 1819 was the nation’s first major economic depression. The Panic of 1819 followed the events of the War of 1812, a period of national liveliness and included the forming of the Second Bank of America. After the War of 1812, the United States economy thrived as chartered State banks that were loosely formed issued redeemable promissory notes that were far beyond specie. The amount of money multiplied rapidly. Eventually, bank notes started to be sold at a discount as foreigners and money brokers profitably claimed the notes for specie. In addition, the Bank of the United States' began to call on branches to redeem other bank obligations. The monetary expansion ended all of a sudden and a lot of bankruptcies came to pass. The aftermath of the War of 1812 included war debt to be fixed, downturns in exports, and lack of demand for both manufactured goods and agricultural goods. There was a plan that was put in place to help repair America’s current economic state such as establishing the Second Bank of the United States to provide credit to citizens and establishing other banks around the U.S. This plan ended up causing a lot of problems such as poor management of the banks and the policies within the United States’ economy.

In 1873, Jay Cooke and Company went under, and it triggered the violent crashing of the economy in a matter of weeks. When the company went under the Stock Market closed for 10 days, during that time factories closed and banks failed. Mass unemployment occurred as a result, and President Grant was widely blamed for the panic. The government did not do very much to aid the panic, and it was even nicknamed the long depression because of its half-decade length. The Panic of 1893 was caused due to the government running out of gold to redeem for paper currency.

During the years of 1893 to 1898, the United States went through an economic depression that severely damaged the economy. The final days of the Harrison administrations consisted of the financial failure of the Philadelphia and Reading Railroad in January of 1893, the United States was in deep trouble. After the financial railroad of Philadelphia and Reading Railroad, the National Cordage Co. Railroad failed in May, the Erie Railroad in July, the Northern Pacific in August, the Union Pacific in October and the Atchison, Topeka and Santa Fe Railroad in December (Watkins, n.d.). There was an average of 24 businesses failing per day in the month of May (Schoonover, LaFeber, n.d.). In addition, the Sherman Silver Purchase Act and the “Billion Dollar Congress” caused the nations gold reserved to decline as the government began to use a bimetallic monetary system.. The nations reserves dropped under $100 million after President Cleveland was sworn in March of 1893. People began to panic and this led to a plunge in the stock market and European investors began to pull their funds from the United States frightened by the weakening economy. This led to a four year depression in which 15,000 companies and 600 banks closed with about one billion dollars worth of bonds defaulted (Schoonover, LaFeber, n.d.).

the Second National Bank of the United States. The Panic of 1819 was a key motivator for the

Money markets slammed on October 1929 and this is what caused the Great Depression to happen. For a length of time the country was at the point where signs of troublesome were shown such as joblessness; which turned out to be a gigantic issue for the Americans as well as for different nations. “By 1933, unemployment was at twenty-five percent” (FDR). Never had the highs been higher and lows been lower for the economy. With cash going away individuals started to live in hardships with no real way to earn money. Hoover being president at the time, had great hopes for the economy of America, once this catastrophe hit he was not necessarily blamed for the troubles happening. The nation reacted to The Great Depression in many ways. People were let down by President Hoover which effected the economy, children began to impact society, and families fell apart. Some people turned to music, while others turned to violence.

The Specie Circular did not stop the rush of speculators from buying land but they could not sell the it forcing them to turn over the land to the banks. The banks could not break even on the loans they gave to the speculators because no one could buy the land from the bank. The inability of the state banks to recover the money they lent out in their loans caused them to fail. Jacksons poor policy that ruined many state banks caused the panic of 1837. The lack of supply of gold and silver in the state banks and the major demand for it, caused by the Specie Circular, forced the banks to stop issuing hard currency. When people came to withdraw their deposits the banks could not give people their money because they ran out of hard currency. It was not until congress agreed to federally fund the state banks with the surplus gained by the land rush that they could end the panic and return people's money in 1838. This panic revealed the true instability of the US economy without a strong National

The first recession in American history triggered by the effects of capitalism, was The Panic of 1873. This crash was caused by some of the same reasons why our market continues to fail to this day. Issues such as the formation of financial bubbles, an imbalance in the regulation of currency and low interest rates all contribute to market failures such as these. In 1873, there was a severe problem with the control that the government had over money. Many people, including Jay Cooke and his investment firm, continued investing their money in railroad construction, gold, silver, stocks, and bonds, with the intention of the return being higher than the risk. Because of this, many factories and businesses had to shut down and unemployment skyrocketed.

economy, people began buying stocks on the margin. They would borrow most of the stock’s price from a stockbroker and only pay a little bit of the price. If the stock prices kept rising, this system would work well, but if the prices fell, people could not pay the loan back. Near the end of the 1929 year, prices were too high, so people wanted to sell their stocks. They thought the prices would lower soon. Stock prices did go lower and people were not buying. They all wanted to sell their stocks. Prices went even lower on October 29, where 16 million stocks were sold. This caused the collapse of the market.

Imagine waking up one morning, only to find out that all your investments and savings are gone. So if your bank that you invested all your money in collapsed, you didn’t get any money back. This is what happened to millions of Americans during the 1930s. This era was called the great depression.