Friday, September 2, 2016

Panic of 1873

Also referred to as the beginning of the Long Depression.

Many things helped to set the stage for this issue:
The over expansion of the Northern Pacific Railroad
Black Friday panic of 1869
Chicago Fire 1871
Equine Influenza in 1872
The US government going to a gold standard (no longer using silver and gold)
And last but not least the crash of the Vienna Stock Exchange

Here's an account from the strike of 1877 how the panic of 1873 affected salaries.
"The wages paid the men were on the average as follows: Freight conductors before the panic of 1873, per day, $2.14; in 1877, $1.71. Freight brakemen before the panic of 1873, $2.05 to $1.80; in 1877, $1.42 to $1.15. Switchmen before the panic of 1873, $1.90 per day; in 1877, $1.46. Freight firemen before the panic in 1873, $2.55 to $2.05 per day; in 1877, $1.90 to $1.32. Switchmen, $60 per month before the panic in 1873, and $40 to $45 per month in 1877. Yard engineers before the panic in 1873, $2.90 per day and $2.02 in 1877. Yard firemen $1.50 before the panic in 1873, and $1.20 in 1877. On some of the roads there were higher wages, but such roads were exceptions." From the Life of Walter Gresham ©1919

Here's a tiny bit regarding real estate during the Panic of 1873
"Cross-Examination of Robert W. Hyman by Col. Cooper, on behalf of James and Elizabeth G. Couch.

Q. Mr. Hyman, the truth about the matter was, as to outside real estate here, from 1874 or '5' aDout the time of the panic of 1873, there was practically a panic in real estate, wasn't there—outside real estate, so far as making any sales was concerned?

A. Yes, sir.

Q. The panic did not begin to affect real estate until some time after 1873, did it?

A. Yes, sir, it affected it as early as the spring of 1874. I think the panic was in September, 1873.

Q. What was this property worth, say in the fall of 1873, tne 371 acres in section 19, in Cicero?

A. I should judge it was worth eight or nine hundred dollars an acre before the panic of 1873." Taken from Supreme Court Transcript Oct. Term 1889

In another account from the "History of the United States from the compromise of 1850 to The Final Restoration of Home Rule at the South in 1877" ©1920
"The course of the panic emphasizes the truth of my statement at the outset that its prime cause was the excessive railroad building — the putting into roadbed, rails and equipment a large part of the circulating capital of the country and all the money that could be borrowed abroad. But other influences may have served to hasten this panic of 1873, which according to the cyclic theory came four years before it was due. One of these was the waste and impoverishment contingent upon the prosecution of the Civil War;4 another, the immense destruction of property by the great fires of Chicago and Boston."

Authors Comments: It is not unlike what we're experiencing today with the current status of our economy, over spending, over lending and panic...imho it sounds like the ingredients for a recession and at the very worse a depression.

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