key term - Panic of 1893

Definition

The Panic of 1893 was a severe economic depression that began in the United States, triggered by the collapse of the Philadelphia and Reading Railroad and a subsequent decline in the stock market. This financial crisis revealed weaknesses in the American economy and significantly affected politics, leading to increased public unrest and demands for economic reform during a time known as the Gilded Age.

5 Must Know Facts For Your Next Test

1. The Panic of 1893 led to the failure of over 15,000 businesses and banks, resulting in widespread unemployment and poverty across the nation.
2. It marked a shift in U.S. monetary policy debates, with calls for the adoption of bimetallism (the use of both gold and silver) gaining traction as a solution to economic issues.
3. President Grover Cleveland's response included repealing the Sherman Silver Purchase Act, which further angered many who were struggling economically.
4. The economic downturn was exacerbated by international factors such as declining European demand for American goods, which highlighted America's dependence on global markets.
5. The crisis helped to spur significant political movements like Populism, as disaffected citizens sought new solutions to their economic woes and demanded reforms.

Review Questions

• How did the Panic of 1893 affect public perception of government responsibility in economic crises?
  • The Panic of 1893 shifted public perception significantly regarding the government's role in managing economic crises. Many Americans began to believe that the government should intervene more actively to stabilize the economy and provide relief for those affected by unemployment and business failures. This new viewpoint was fueled by movements like Coxey's Army, which demanded government action, and contributed to increased political pressure for reforms aimed at addressing economic inequality.
• Discuss the political consequences of the Panic of 1893 in relation to the rise of Populism.
  • The Panic of 1893 had profound political consequences that fueled the rise of Populism. As traditional political parties struggled to address the economic hardships faced by many Americans, disillusioned citizens turned to Populist leaders who promised radical changes. The Populist movement gained momentum by advocating for policies such as monetary reform and government intervention, aiming to represent the interests of farmers and workers who felt neglected during this period of financial turmoil.
• Evaluate how the Panic of 1893 reflects broader economic trends and shifts in American society during the Gilded Age.
  • The Panic of 1893 serves as a critical reflection of broader economic trends and social shifts during the Gilded Age. It highlighted the vulnerabilities within an economy characterized by rapid industrialization, speculative investments, and reliance on fragile financial institutions. The crisis also underscored class divisions as wealth became increasingly concentrated among elites while many Americans faced hardship. This tension between rich and poor led to demands for systemic reforms and greater government accountability, marking a transition towards progressive ideas that would shape future policies.

Related terms

Gold Standard: A monetary system where the value of currency is directly linked to gold, which was a major issue during the Panic of 1893 as debates about currency reform intensified.

Coxey's Army:

A group of unemployed workers led by Jacob Coxey who marched to Washington, D.C., in 1894 to demand government job creation and economic relief in response to the economic hardships caused by the Panic.

Populism:

A political movement that emerged in response to the economic struggles of farmers and working-class Americans during the late 19th century, advocating for reforms such as direct election of senators and monetary policy changes.