Causes of US Economic Recession in the Late 19th Century

In the late nineteenth century, the United States experienced periods of economic recession characterized by cyclical financial panics that had lasting impacts on the economy. These downturns were largely attributed to a combination of factors including railroad speculation, fluctuating food prices, and an unbalanced credit-heavy economy.

One of the notable events during this period was the Panic of 1873. This crisis was triggered by the bankruptcy of the investment firm Jay Cooke and Company in September 1873, a result of rampant speculation in railroads. The subsequent stock market crash led to numerous business failures, causing approximately 3 million Americans to lose their jobs. The depression that followed lasted for five years until 1878, profoundly affecting America's farm economy due to the collapse in food prices, leading to widespread poverty in rural areas.

Another significant economic downturn was the Panic of 1893, which set off the greatest depression America had known up to that point, only to be surpassed by the Great Depression in the 1930s. In early May 1893, the New York stock market experienced a sharp decline, followed by panic selling in late June that led to a stock market crash. This sparked a severe credit crisis, resulting in the failure of over 16,000 businesses by the end of 1893, including 156 railroads and nearly 500 banks. Unemployment became rampant, with one in six American men losing their jobs during this period. The severity of the depression prompted protests such as 'Coxey's Army,' where unemployed individuals marched on Washington, demanding government intervention in the form of public works jobs. The leader of this movement, Jacob Coxey, was even imprisoned for his activism.

Overall, the late nineteenth century in the US was marked by economic instability and recurrent periods of recession, fueled by speculative excesses in sectors such as railroads, volatile food prices, and an overreliance on credit. These events underscored the need for financial regulation and a more balanced approach to economic development to mitigate the impact of future economic crises.