Panic of 1893
The Reading Railroad failed on February 23, 1893. By May, the National Cordage Company had collapsed in turn, taking the bank that financed it. A run on gold reserves at the US Treasury began in April; by the end of June the country was on the edge of going off the gold standard entirely. Over 500 banks and 15,000 businesses failed. Unemployment reached 18 percent at peak. President Grover Cleveland borrowed $65 million in gold from a syndicate led by J.P. Morgan to keep the Treasury solvent — a dress rehearsal for 1907.
The 1893 panic was politically transformative. It produced the populist movement, William Jennings Bryan's 'Cross of Gold' speech in 1896, and the conviction in much of the country that the gold standard itself was a tool of urban-bank power against agricultural debtors. The Federal Reserve Act of 1913 was, in part, an answer to the 1893 panic that the 1907 panic had reactivated.
03 · American Panics
Between Andrew Jackson and J.P. Morgan, the United States went through six major financial panics. They are often left out of the popular crash canon because no single one of them produced the institutional changes that the 1929 crash later did. But they were each, in their time, severe — and the pattern they established (credit boom, opaque institutions, sudden refusal to pay, contagion via the new communication infrastructure of the era) is the same pattern every later crash has run.
Read the full era →