The 1893 Depresion
- Created by: mel.maharjan
- Created on: 04-10-14 11:27
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- The 1893 Depresion
- Why did it happen?
- By 1892, business production slowing down
- Farm production and farm prices falling drastically
- Investment in rail roads declines significantly
- Hit steel and coal production
- European economy slowed down
- Less investment in US
- Less opportunity for American farmer and business to sell abroad
- The gold standard
- People redeemed notes into gold since price of silver decreased
- Silver Purchase Act worsened problem since government bought silver and issued notes
- People converting dollars into gold in fear of inflation
- Gold reserves held by federal government fell from $192 million (1892) to $59 million (1893)
- Caused panic in stock market and banking
- 15,000 companies, 74 rail roads, and 600 banks failed
- Effects of the depression
- Unemployment rose from 8% (1893) to 12.5% (1897)
- In some places, a fifth of factory workers had no income to feed families
- Rise in protest and violence (the Pullman Strike of 1894
- Rise in immigration and often blamed for loss of work so tension and violence between ethnic groups grew
- Silver Purchase Act repealed
- Cleveland borrowed $62 million from bankers, like J.P. Morgan to buy gold
- Banks earned $1.5 million profit
- Looks like government helping Wall Street and ignoring poor
- Public taxation used to pay back J.P. Morgan
- Public rise in demand for government to have less laissez faire approach
- Helped development of the Progressive Party
- Unemployment rose from 8% (1893) to 12.5% (1897)
- How did the government respond?
- Theodore Roosevelt (1901-1909)
- Influenced by Progressive ideas
- E.g. in 1902-3 he forced miners and mine owners to come to White House for arbitration (negotiated agreement)
- Gave workers a 10% wage increase
- E.g. in 1902-3 he forced miners and mine owners to come to White House for arbitration (negotiated agreement)
- Talked about 'trust-busting' and giving a 'square deal'
- Wanted more government control over companies and to make financial system more fair
- Doubled number of cases prosecuted under Sherman Anti-Trust Act to 24 (1901-1909)
- Hepburn Act (1906)
- Gave federal government more control over rates companies could charge customers
- Senate opposed many anti-trust measure and Supreme Court reluctant to support some of Roosevelt's cases
- Influenced by Progressive ideas
- William Taft (1909 - 1913)
- Used Sherman Anti-Trust Act to prosecute Standard Oil and American Tobacco
- Clayton Anti-Trust Act (1914)
- Strikes and pickets now legal
- Democrats tightened up on Wall Street
- Woodrow Wilson (1913 - 1921)
- Underwood Tariff Act (1913)
- Reduced tariffs on more than 1,000 goods
- Abolished tariffs of some products
- Made goods cheaper to buy
- Increased tariffs on some luxury goods
- Introduced a graduated income tax
- The Federal Reserve Board
- 12 local boards that controlled money supply to help keep prices stable
- Not very effective at first but became a very important government agency in stabilising economy
- Underwood Tariff Act (1913)
- Theodore Roosevelt (1901-1909)
- The economic impact of WWI
- US entered WWI in 1917
- Government created a War Industries Board under Bernard Baruch and a Food Administration under Herbert Hoover
- Used to ensure war effort was fully supported
- Government created a War Industries Board under Bernard Baruch and a Food Administration under Herbert Hoover
- During 1914 - 1917 European countries fighting and not supplying countries they used to trade with
- US took over these markets, as well as continuing with theirs
- Europe owed massive debts to the US and US made lots of profit on interest
- In 1922 Congress estimated Britain, Italy, and France owed America $22 billion
- America supplied food
- Farmers encouraged to grow in vast quantities
- Through subsidies and high prices farm incomes rose by 30% during war
- Farmers encouraged to grow in vast quantities
- Manufacturing industries expanded dramatically
- Supplying Britain and France with steel, uniforms, weapons etc
- US entered WWI in 1917
- Farming
- Experiences
- Farm prices dropped by 20%
- Prices of wheat dropped from $1.45 per bushel (1866) to $0.49 (1893)
- Result of improved techniques and competition (Canada and Argentina)
- Prices of wheat dropped from $1.45 per bushel (1866) to $0.49 (1893)
- Farm prices dropped by 20%
- Actions
- By 1880's farmers' protest groups (North-western Alliance) developed to pressurise government
- In 1892 several groups joined to form Populist Party
- Little impact on 1892 election
- Southern voters stuck with Democrat
- Workers in eastern cities felt they had little in common with farmers
- In some states, economy improving since drought ended
- In 1896 election, Democrats took some of Populist's ideas
- Criticising government for maintaining gold standard when farmers suffering
- William Jennings Bryan's speech: "Poor being crucified on a cross of gold"
- Democrats lost election but when Wilson was in office, farmers got some help
- 1916 Federal Farm Loan Act
- Gave low cost federal loans to farmers
- 1916 Federal Farm Loan Act
- By 1880's farmers' protest groups (North-western Alliance) developed to pressurise government
- Experiences
- Why did it happen?
- The gold standard
- People redeemed notes into gold since price of silver decreased
- Silver Purchase Act worsened problem since government bought silver and issued notes
- People converting dollars into gold in fear of inflation
- Gold reserves held by federal government fell from $192 million (1892) to $59 million (1893)
- Caused panic in stock market and banking
- 15,000 companies, 74 rail roads, and 600 banks failed
- Farmers couldn't pay debts and lost land
- Farm prices dropped by 20%
- Prices of wheat dropped from $1.45 per bushel (1866) to $0.49 (1893)
- Result of improved techniques and competition (Canada and Argentina)
- Prices of wheat dropped from $1.45 per bushel (1866) to $0.49 (1893)
- Many became tenant farmers and moved to cities looking for work
- Farm prices dropped by 20%
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