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Effects of the Panic of 1893

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The effects of the Panic of 1893 were devastating in Chicago and other industrial and mill towns. The statistics were staggering. Serious conditions led to many social reforms, economic debates and political party upsets.

During the panic and succeeding depression, five hundred banks failed. Fifteen thousand businesses failed. When the Chemical National Bank of Chicago went into bankruptcy, Chicago banks approved the release of clearinghouse loan certificates.

Prices throughout the nation dropped significantly. On Wall Street, stock prices fell, and dividends were greatly reduced. Wages of working people dropped. Rents decreased causing income from real estate to plunge.

Workers lost their jobs in record numbers. Double digit unemployment persisted from 1894 to 1898 and ranged from an average of 11.1% to 18.4% depending on the documentation used. Unemployment in Philadelphia was 25%; in New York unemployment was 35%; and in Illinois the percent of unemployed was about 18%.

In 1894, Chicago’s American Railway Union workers participated in a strike against the Pullman Company. Strikes by unemployed, bituminous coal miners in Pennsylvania, Ohio and Illinois turned violent. Coxey’s army of the unemployed marched on Washington, DC.

To keep from dying of starvation, people chopped wood, broke rocks and did anything they could think of to survive. Soup kitchens were opened. In Detroit Mayor Hazen Pingree started a community garden called “Pingree’s Potato Patch.”

Blame for the panic was placed on Sherman Silver Purchase Act, the Mc Kinley Tariff, President Grover Cleveland and the Democrats. Bimetallism became a subject for debate.

The economy started to improve as unemployment decreased. A flux of gold from the Klondike Gold Rush in 1897 helped to restore confidence. Increased immigration to Chicago and America brought new ideas and hope to the nation.

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