Panic of 1893

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The Panic of 1893 was a brief but severe depression brought about by multiple factors, including the collapse of the Philadelphia & Reading Railroad, and the Sherman Silver Purchase Act, passed three years before. Urban and rural areas were both hit hard, though as the 1890 census showed, for the first time, the majority of Americans did not work on farms.

Coin's Financial School (1894), a famous silverite book; Coin is a boy who outsmarts all the economics professors by showing the wisdom of "bimetallism" (i.e. free silver) and refuting the fallacies about gold

Unemployment reached 20% or higher. Some banks were unable to collect on mortgages, and went bankrupt after foreclosing many homes. Congress under President Grover Cleveland repealed the disastrous Sherman Silver Act in October of 1893.

The Panic of 1893 did have a significant effect, as by the close of 1893, more than 15,000 businesses and more than 640 banks were bankrupt. Large-scale strikes were frequent and often bloody. The Depression formed the backdrop for the intensely contested elections of 1894 and 1896, which both resulted in Republican landslides and the emergence of the Fourth party System.

Estimates of Unemployment during the 1890s[1]
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


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. The investments during the time of the Panic were heavily financed through bond issues with high interest payments (the most actively traded stock at the time) and went into receivership as a result of its bankers calling their loans in response to rumors regarding the NCC's financial distress.

A series of bank failures followed, and the price of silver fell. The Northern Pacific Railway, the Union Pacific Railroad and the Atchison, Topeka & Santa Fe Railroad all failed. This was followed by the bankruptcy of many other companies; in total over 15,000 companies and 500 banks failed (many in the west). About 20%-25% of the workforce was unemployed at the Panic's peak.


The Panic was severe in all industrial cities and mill towns. Farm distress was great because of the falling prices for export crops such as wheat and cotton. Coxey's Army was a highly publicized march of unemployed men from Ohio and Pennsylvania to Washington to demand relief. A severe wave of strikes took place in 1894, most notably the Midwestern bituminous coal strike of the spring, which led to violence in Ohio. Even more serious was the Pullman Strike which shut down much of the nation's transportation system in July, 1894.

The Populist book Coin's Financial School (1894 p. 124) blamed the Rothschild's for controlling the world's money and causing the panic

The most memorable cultural events were the Chicago World's Fair of 1893. The hard times and utopian dreams that characterized the era were immortalized in L. Frank Baum's The Wonderful Wizard of Oz (1900).

The Sherman Silver Purchase Act of 1890 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. Politically the Democrats and President Cleveland were blamed for the depression. The Democrats and Populists lost heavily in the 1894 elections, which marked the largest Republican gains in history.

July 19, 1896 Puck cartoon shows farmer hung up on pole and helpless, his free silver wagon destroyed by the gold express of William McKinley

Many of the western silver mines closed, and a large number were never re-opened. A significant number of western mountain narrow-gauge railroads, which had been built to serve the mines also went out of business. The Denver and Rio Grande Railroad stopped its ambitious plan, then under way, to convert its system from narrow-gauge to standard-gauge.

The depression was a major issue in the debates over Bimetallism. The Republicans blamed the Democrats and scored a landslide victory in the 1894 state and Congressional elections. The Populists lost most of their strength and had to support the Democrats in 1896. The presidential election of 1896 was fought on economic issues, and was marked by a decisive victory of the pro-gold, high-tariff Republicans led by William McKinley over pro-silver William Jennings Bryan.

The U.S. economy finally began to recover in 1896. After the election of Republican McKinley confidence was restored and the economy began 33 years of rapid growth.[2].

Denslow's drawing of scarecrow hung up on pole and helpless, from 1st edition of book, 1900; Denslow probably was inspired by the 1896 Puck cartoon.

See also


Secondary sources

  • Barnes, James A. John G. Carlisle: Financial Statesman (1931)
  • Barnes, James A. “Myths of the Bryan Campaign.” Mississippi Valley Historical Review 34 (December 1947): 383–94. [ in JSTOR]
  • Destler, Chester McArthur. American Radicalism, 1865–1901 (1946) online edition
  • Dewey, Davis Rich. Financial History of the United States (1903) complete edition 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) online edition
  • 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).
  • Hoffmann, Charles. "The Depression of the Nineties." Journal of Economic History 16 (June 1956): 137–64. in JSTOR
  • Hoffmann, Charles. The Depression of the Nineties: An Economic History (1970), the standard history
  • Jensen, Richard. The Winning of the Midwest: 1888-1896 (1971).
  • Kirkland, Edward Chase. Industry Comes of Age, 1860–1897 (1961)
  • Lauck, William Jett. The Causes of the Panic of 1893 (1907) online edition
  • Lindsey, Almont. The Pullman Strike 1942.
  • Littlefield, Henry M. "The Wizard of Oz: Parable on Populism" American Quarterly Vol. 16, No. 1 (Spring, 1964), pp. 47-58 in JSTOR
  • Nevins, Allan. Grover Cleveland: A Study in Courage. 1932, Pulitzer Prize
  • Rezneck, Samuel S. "Unemployment, Unrest, and Relief in the United States during the Depression of 1893–97." Journal of Political Economy 61 (August 1953): 345. in JSTOR
  • Ritter, Gretchen. Goldbugs and Greenbacks: The Anti-Monopoly Tradition and the Politics of Finance in America (1997)
  • Ritter, Gretchen. "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 (August 1997) vol. 31, no. 2, 171-203.
  • Rockoff, Hugh. "The 'Wizard of Oz' as a Monetary Allegory," Journal of Political Economy 98 (1990): 739-60 online at JSTOR
  • 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) online edition
  • White; Gerald T. The United States and the Problem of Recovery after 1893 1982 online edition
  • Whitten, David. EH.NET article on the Depression of 1893

Primary sources

  • Appleton’s Annual Cyclopedia and Register of Important Events for the Year (annual 1893-1897).
  • Baum, Lyman Frank and W. W. Denslow. The Wonderful Wizard of Oz (1900)
  • 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
    • Closson, Carlos C. Jr. "The Unemployed in American Cities," Quarterly Journal of Economics, 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. online at JSTOR
  • Harvey, William H. Coin’s Financial School (1894), 1963 intro. by Richard Hofstadter 1895 edition online
  • Noyes, Alexander Dana. “The Banks and the Panic of 1893” Political Science Quarterly 9 (March 1894): 12–28. in JSTOR
  • Romer, Christina. "Spurious Volatility in Historical Unemployment Data." Journal of Political Economy 94, no. 1. (1986): 1-37. in JSTOR
  • Shaw, Albert. “Relief for the Unemployed in American Cities.” Review of Reviews 9 (January and February 1894): 29–37, 179–91. online edition
  • 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


  1. Source: Romer, 1986
  2. There were small dips before the Great Depression, such as the Panic of 1907 and a sharp recession in 1920-21.