Panic of 1893 - Effects

Effects

The severity was great 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", the first populist "march on Washington", was a highly publicized march of unemployed laborers from Ohio, Pennsylvania, and several Western states to demand relief in the form of a jobs program. A severe wave of strikes took place in 1894, most notably the bituminous coal miners' strike of the spring, which led to violence in Pennsylvania, Ohio, and Illinois. Even more serious was the Pullman Strike which shut down much of the nation's transportation system in July, 1894.

The Sherman Silver Purchase Act of 1890, perhaps along with the protectionist McKinley Tariff 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. The Democrats and President Cleveland were blamed for the depression. The decline of the gold reserves stored in the U.S. Treasury fell to a dangerously low level, forcing President Cleveland to borrow $65 million in gold from Wall-Street banker JP Morgan in order to support the gold standard; The Democrats and Populists lost heavily in the 1894 elections, which marked the largest Republican gains in history.

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 for the depression 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 began to recover in 1897. After the election of Republican McKinley, confidence was restored with the Klondike Gold Rush and the economy began 10 years of rapid growth, until the Panic of 1907.