Panics, Depressions, and Recessions

Panic of 1819 (Monroe)

cause(s):

  • overspeculation in the frontier (West)

effect(s):

  • deflation
  • depression
  • bankruptcies
  • bank failures
  • unemployment
  • soup kitchens
  • debtors’ prisons
  • financial paralysis
  • “wildcat” western banks forced to the wall, foreclosed mortgages on farms
  • West hit really hard

Panic of 1837 (Van Buren)

cause(s):

  • rampant speculation
  • get-rich-quick schemes
  • Bank War
  • Specie Circular
  • crop failures
  • British bank failures (caused them to call in foreign loans from U.S.)

effect(s):

  • hundreds of bank collapses
  • drop in commodity prices
  • decrease in sale of public land
  • unemployment
  • Van Buren responded with Divorce Bill (creation of independent treasury)

Panic of 1857 (Buchanan)

cause(s):

  • California gold inflated currency
  • Crimean War overstimulated growing of grain
  • overspeculation in land and railroads

effect(s):

  • failure of over 5k businesses
  • widespread unemployment
  • North hardest hit; South not really affected because of cotton (led to idea of “King Cotton”)

Panic of 1873 (Grant)

cause(s)

  • more railroads, more mines, more factories, more grain fields than the market could handle
  • unpaid loans

effect(s):

  • over 15k businesses bankrupt
  • unemployment
  • loss of savings in banks
  • caused clamor for inflationary policies
  • start of demand for silver coinage

Depression of 1893 (Cleveland)

cause(s):

  • overbuilding
  • overspeculation of railroads
  • labor disorders
  • agricultural depression
  • Sherman Silver Purchase Act 1890

effect(s):

  • about 8k businesses collapsed in six months
  • soup kitchens
  • hobo gangs
  • lasted for four years
  • J.P. Morgan lent $55 mil to the government in gold

Roosevelt Panic of 1907 (TR)

cause(s):

  • panic on Wall Street

effect(s):

  • run-on banks
  • suicides
  • criminal indictments on speculators
  • paved way for reforms (Aldrich-Vreeland Act)

Great Depression (Hoover and FDR)

cause(s):

  • speculation
  • Black Tuesday (stock marketcrash)
  • business depression
  • overproduction of agricultural goods
  • not enough money going to wages and salaries to purchase goods
  • overexpansion of credit
  • European financial collapse from World War I

effect(s):

  • Widespread unemployment
  • Hoovervilles
  • Wage cuts
  • over 5k banks collapsed
  • life savings of citizens gone
  • foreclosures
  • New Deal

Roosevelt recession (1937-1938)

cause(s):

  • new Social Security taxes cut into government payrolls
  • cutback of spending by administration

effect(s):

  • deficit spending
  • Keynesian economics

Early 1980s recession (Reagan’s presidency)

cause(s):

  • federal budget deficit
  • trade deficit
  • falling oil prices
  • decreasing real estate prices

effect(s):

  • severely affected savings and loan institutions and banks
  • leading stock market index dropped 508 points (“Black Monday”)