The 1893 Depresion

HideShow resource information
View mindmap
  • 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        • Silver Purchase Act repealed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
    • 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
        • 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
      • 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
    • 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
      • 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
      • Manufacturing industries expanded dramatically
        • Supplying Britain and France with steel, uniforms, weapons etc
    • 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)
      • 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
  • 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)
    • Many became tenant farmers and moved to cities looking for work

Comments

No comments have yet been made

Similar History resources:

See all History resources »See all America - 19th and 20th century resources »