Panic of 1873
The Panic of 1873 was a serious downturn in the economy of the
United States that was precipitated by the bankruptcy on September 18, 1873 of the Philadelphia banking firm
Jay Cooke and Company. It was one of a series of economic crises in the 19th and early 20th centuries.
The end of the
Civil War saw a boom in railroad construction, with 35,000 miles of new track being laid across the country between 1866 and 1873. The railroad industry, at the time the nation's largest employer outside of agriculture, involved large amounts of money and risk. A large infusion of cash from speculators caused abnormal growth in the industry.
Encyclopedia
The Panic of 1873 was a serious downturn in the economy of the
United States that was precipitated by the bankruptcy on September 18, 1873 of the Philadelphia banking firm
Jay Cooke and Company. It was one of a series of economic crises in the 19th and early 20th centuries.
The end of the
Civil War saw a boom in railroad construction, with 35,000 miles of new track being laid across the country between 1866 and 1873. The railroad industry, at the time the nation's largest employer outside of agriculture, involved large amounts of money and risk. A large infusion of cash from speculators caused abnormal growth in the industry. Cooke's firm, like many others, was invested heavily in the railroads.
President
Ulysses S. Grant's monetary policy of contracting the money supply made matters worse. While business was expanding, the money they needed to finance it was becoming more scarce.
Cooke and other entrepreneurs had planned to build a second transcontinental railroad, called the
Northern Pacific Railway. Cooke's firm provided the financing. But on September 18, the firm realized it had become overextended and declared bankruptcy.
The firm's bankruptcy created a domino effect, causing major upset to the economy of the United States. The
New York Stock Exchange closed for 10 days. Of the country's 364 railroads, 89 went bankrupt. A total of 18,000 businesses failed between 1873 and 1875.
Unemployment reached 14 percent by 1876, during a time which became known as the Long Depression..
By 1877, wage cuts and poor working conditions caused workers to strike, preventing the trains from moving. President
Rutherford B. Hayes sent in federal troops in an attempt to stop the strikes. Fights between strikers and troops killed more than 100 and left many more injured. The tension between workers and the leaders of banking and manufacturing lingered on well after the depression itself lifted in the spring of 1879, the end of the crisis coinciding with the beginning of the great wave of immigration into the
United States which would last until the early
1920s.
See also
- Long Depression
- Panic of 1819
- Panic of 1837
- Panic of 1857
- Panic of 1884
- Panic of 1890
- Panic of 1893
- Panic of 1896
- Panic of 1901
- Panic of 1907
- Panic of 1910-1911
