Financial+Panic+of+1893

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The Panic of 1893 is a panic that resembles the Panic of 1873 in a couple of ways. The first way it resembles the panic of 1873 is the origin of the whole crisis. Reading Railroad was a major rail line in the eastern line and went into receivership. Once this rail line collapsed it started the major downturn of the economy. Many banks and businesses that relied on the rail line were next to fail. This then caused the stock market to crash, followed by all of the European investor﻿s pulling their money from the U.S. economy, but eventually it crossed the sea to cause a recession in European nations. Unemployment steadily grew, rising from 1 million in August 1893 to 2 million by January 1894 By the middle of the year, the figure had reached 3 million.

 = **__Companies Affected by the Panic of 1893: __** = __** ﻿ Philadelphia and Reading Railroad:**__ Philadelphia and reading railroad was created to build rail lines between its namesake cities. When this company was first chartered in 1833, this rail line mainly carried coal. Soon it expanded into many different types of transpiration like canal and ocean transport. In 1871, company had a net worth of $170 million, and was the largest corporation in the world. This aggressive expansionary policy was the ultimate downfall to the company. Since the US was on a gold standard they could just not print money without the gold to back it up. This did not stop the US Treasury though, President Cleveland was forced to take out a loan. Lucky, President Cleveland was able to get a loan from JPMorgan for $62 million in physical gold.   __﻿__

__**JPMorgan**__

 

Since the US was on a gold standard they could just not print money without the gold to back it up. This did not stop the US Treasury though, President Cleavland was forced to take out a loan. Lucky, President Cleavland was able to get a loan from JPMorgan for $62 million in physical gold.

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<span style="font-family: 'Comic Sans MS',cursive;">__**The National Cordage Company:**__ <span style="font-family: 'Comic Sans MS',cursive;">The National Cordage Company made rope. Before bankruptsy struck the National Cordage Company on May 5, 1893, <span style="font-family: 'Comic Sans MS',cursive;">the Company has $20 million in assets and $10 million in liabilities. The National Cordage Company's stock had <span style="font-family: 'Comic Sans MS',cursive;">sold for $147 per share, but by May the stock was down to $10 per share on the New York market. These kind of <span style="font-family: 'Comic Sans MS',cursive;">crashes became very common in the Panic of 1893, going from a financial high to an all time low.

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<span style="font-family: 'Comic Sans MS',cursive;">__**<span style="font-family: 'Comic Sans MS',cursive;">Pullman Palace Car Company **__ <span style="font-family: 'Comic Sans MS',cursive;">The Pullman Palace Car Company caused the first national strike in U.S. history. The Pullman Company was located in a town called Pullman, just outside of Chicago. When the Financial Panic of 1893 hit the U.S. the Pullman Palace Car Company was forced to cut wages by 25%, but the Company did not lower the prices of goods or services in the town. Every employee of the Pullman Palace Car Company had to live in Pullman, so other options were not available. As financial conditions kept getting worse, workers become more desperate. "On July 6, rioters set fires that ultimately destroyed 700 rail cars and caused $340,000 in damages to the South Chicago Panhandle yards. On July 7, after being assaulted by rioters, a contingent of guardsmen were forced to fire into a crowd; at least 12 people were killed, and dozens more were wounded."

<span style="font-family: 'Comic Sans MS',cursive;"> = **__<span style="font-family: 'Courier New',Courier,monospace; font-size: 110%;">﻿Men who shaped the Panic of 1893: __** = <span style="display: block; font-family: 'Comic Sans MS',cursive; font-size: 140%; text-align: center;">

<span style="font-family: 'Comic Sans MS',cursive;">**__President Cleveland__**:

<span style="font-family: 'Comic Sans MS',cursive;">He was born in New Jersey in 1837, and raised in New York. When Cleveland was 44, he made his appearance onto the political stage. He was elected to the mayor of Buffalo, New York. Later on in life he was elected Governor of New York. Grover Cleveland was elected president in 1893 for his second term. Cleveland was the first democrat elected president after the Civil War, and he also was the only president to leave for 4 years and then return 4 years later to office. In his second term, he had to deal with a big depression. “He decided to deal with the treasury crisis rather than worry about the business crisis, farm mortgage foreclosures, and unemployment.” When railroad strikers violated an injunction, president Cleveland sent federal troops to enforce it. This action taken against the railroad action stirred a cause in many Americans. Many of his policies during the depression were very unpopular, and his party gave up on him in 1896.

<span style="font-family: 'Comic Sans MS',cursive;"> <span style="font-family: 'Comic Sans MS',cursive;">**__<span style="font-family: 'Comic Sans MS',cursive;">William McKinley: __** <span style="font-family: 'Comic Sans MS',cursive;">William McKinley was nominated by the Ohio Republican Party in 1891 to take the governor's seat of the state. <span style="font-family: 'Comic Sans MS',cursive;">McKinley's first term in office was very uneventful, but in his second term the Panic of 1893 began. The <span style="font-family: 'Comic Sans MS',cursive;">Governor usually sided with the business owners in Ohio, even calling in the militia at times to put down worker <span style="font-family: 'Comic Sans MS',cursive;">strikes. Perhaps his greatest accomplishment, aside from becoming President of the United States in 1897, was <span style="font-family: 'Comic Sans MS',cursive;">the McKinley Tariff. Many people blame the McKinley Tariff, along with the Sherman Silver Purchase Act for the <span style="font-family: 'Comic Sans MS',cursive;">Panic of 1893. The McKinley Tariff increased tariffs on manufactured goods to as high as 49%. "The Act passed with the understanding that Republicans would support the Sherman Silver Purchase Act; this Act allowed the Treasury to purchase the gold and silver output of mines in exchange for notes redeemable in silver or gold." "The tariff led to inflation and failed to help protect American farmers or industry from foreign competition. In fact, agricultural prices continued to drop while farm equipment prices skyrocketed. Additionally, imports dropped which led to a decrease in tariff payments to the treasury."

<span style="font-family: 'Comic Sans MS',cursive;"> = __**<span style="font-family: 'Courier New',Courier,monospace; font-size: 110%;">Comparison of the Panic's of 1873 and 1893: **__ =

<span style="font-family: 'Comic Sans MS',cursive;"> <span style="display: block; font-family: 'Comic Sans MS',cursive; text-align: left;">The Panic's of 1873 and 1893 stemmed from the same problem. Both panics were caused by over-speculation of the railroad industry. In 1873, private investors poured money into the railroad industry in the form of bonds. This led to an over-expansion of the railroads, with little profits in return. Jay Cooke and Company, one of the leading brokerage firms of the time, went bankrupt due to the failure of railroad companies to repay their outstanding notes. Jay Cooke and Company was specifically highly invested in the Northern Pacific Railroad. When the Northern Pacific Railroad announced it was suspending payments on its outstanding loans Jay Cooke and Company was forced to declare bankruptcy. Bankruptcy spread from one company to the next, and unemployment continued to rise. <span style="font-family: 'Comic Sans MS',cursive;"> <span style="display: block; font-family: 'Comic Sans MS',cursive; text-align: left;">The Panic of 1893 was also triggered by a railroad going bankrupt. This time it was the Reading Railroad Company. However, the roots of the Panic of 1893 were deeper. In 1890, a Republican-led Congress passed the Silver Purchase Act, and along with it, the McKinley Tariff. The Silver Purchase Act obligated the American government to exchange gold for the newly mined silver. "This Act assigned a value to the silver that was radically greater than what public markets paid. The results were a serious undermining of U.S. gold reserves and skyrocketing inflation." McKinley Tariff made goods in the United States very expensive. Large companies, such as the Reading Railroad Company and the National Cordage Company went bankrupt and triggered the Panic of 1893. European investors began pulling their money out of the United States, depleting the U.S. gold reserves farther. As the demand for money in America increased, monetary policy remained tight. Employment spiked and companies continued to go bankrupt across America. <span style="display: block; font-family: 'Comic Sans MS',cursive; text-align: left;"><span style="font-family: 'Comic Sans MS',cursive;">﻿ As one can see, the Panic's of 1873 and 1893 were similar; yet the Panics were very different. Some argue that the Panic of 1893 had much more political contributing factors, but nonetheless both panics resulted in a spike in unemployment and wide spread bankruptcies.