Panic+of+1873

 Panic of 1873

 After the Civil War, railroad construction in the United States had been growing and progressing. Investors thought that their industries would expand, and business profits would keep increasing. Northern and southern investors borrowed a lot of money and built new facilities as fast as they could. The railroad industry was one of the nation’s top employers, and railroad mileage doubled itself since 1869. A lot of new tracks were built and laid across the country and many banks invested in railroads because they new they would make money off of them. Some who invested in the new businesses took on more debt then they could afford, especially Philadelphia banking firm Jay Cooke & Company. Not enough investors bought shares in Jay Cooke’s railroad lines to cover his huge construction costs, and he couldn’t pay his debts. In September 1873, Jay Cooke & Company, the nations largest dealer in government securities went bankrupt causing a nation wide panic.

"“Panic, as a health officer, sweeping the garbage out of Wall Street”

In class we studied the Pennsylvania Railroad, which was founded in 1846 and how it was very successful when it ran. It was one of the largest railroad revenues in the U.S and was a large trading corporation. Railroads give thousands of people jobs, so when it stopped running a lot of jobs were lost. Just like the Panic of 1873. After Jay Cooke went bankrupt, 89 railroads went broke, the stock market collapsed for a period of time, thousands of companies folded, and millions of workers lost their jobs. Another thing that lead up to the Panic of 1873 was the Civil War because, there was a lot of money spent during the Civil War, so when the railroads were creating money and jobs a lot of people invested in them.



When the Panic of 1873 occurred I think it took America into a new direction, because no one in America saw a depression like the one that happened in 1873. Now though, I think this event continues along America’s path, because after the Panic of 1873, financial panics have occurred regularly. A series of depressions happened after the Panic of 1873 known as the Long Depression, including the Panic of 1893. Even today the United States is going through a recession where millions of people are losing their jobs. So at first it lead America into a new direction, but now I think it’s a continuation along America’s path, because we’ve seen recessions and depressions often after the Panic of 1873, like the Great Depression in the 1930s.

The Panic of 1873 matters today because I think the Panic of 1873 and the recession today are very similar. Before the Panic of 1873 occurred, the very costly Civil War ended, and there was a lot of money spent on the military. Today we are spending huge amounts of money on the military that is making the national debt larger. Also, both these 2 economic crashes were worldwide, and not just American affairs. So the Panic of 1873 is important today because, people can learn from the Panic of 1873, and get a better understanding of what is going on today. The public tended to blame President Grant and Congress for mishandling the economy during the Panic. Today America is counting of President Obama to straighten every thing out, and get America back on track. 

There were a lot of effects because of the Panic of 1873. Recovery from the crash was faster in Europe than in America. Wage cuts and poor working conditions caused American railroad workers to stop working. This resulted in the Great Railroad Strike of 1877, preventing the trains from moving. And since there was such poor economic conditions voters voted against the Republican Party. The North also headed away from Reconstruction. So even though the Panic of 1873 eventually ended there were a lot of negative effects from it.

Bibliography   Danzer, Gerald A. __The Americans__. Boston: Houghton Mifflin Company, 2006.

"Panic of 1873 -." __Wikipedia, the free encyclopedia__. 08 June 2009 .

"Panic of 1873." __Travel and History__. 08 June 2009 .

"Panic of 1873 (United States history) -- Britannica Online Encyclopedia." __Encyclopedia - Britannica Online Encyclopedia__. 08 June 2009 .