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”)