The Panic of 1893 sends the U.S. …
Years: 1893 - 1893
The Panic of 1893 sends the U.S. economy into an economic tailspin.
One of the causes for the Panic of 1893 can be traced back to Argentina.
Investment was encouraged by the Argentine agent bank, Baring Brothers.
However, the 1890 wheat crop failure and a coup in Buenos Aires ended further investments.
In addition, speculations also collapsed in South African and Australian properties.
Because European investors are concerned that these problems might spread, they start a run on gold in the U.S. Treasury.
Specie is considered more valuable than paper money; when people are uncertain about the future, they stockpile specie and reject paper.
During the Gilded Age of the 1870s and 1880s, the United States had experienced economic growth and expansion, but much of this expansion depended on high international commodity prices.
To exacerbate the problems with international investments, wheat prices crash in 1893.
One of the first clear signs of trouble comes on February 20, 1893, twelve days before the inauguration of U.S. President Grover Cleveland, with the appointment of receivers for the Philadelphia and Reading Railroad, which had greatly overextended itself.
Upon taking office, Cleveland deals directly with the Treasury crisis and persuades Congress to repeal the Sherman Silver Purchase Act, which he feels was mainly responsible for the economic crisis.
As concern for the state of the economy deepens, people rush to withdraw their money from banks, and cause bank runs.
The credit crunch ripples through the economy.
A financial panic in London combined with a drop in continental European trade causes foreign investors to sell American stocks to obtain American funds backed by gold.
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Years: 1893 - 1893
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