of 1873 > Depression of
1893 > Great Depression
Panic of 1873
America experienced an economic boom following
the end of the Civil War. Wall Street banks took part in financing
a massive expansion of industry and the country's railroad system.
Wages for both skilled and unskilled labor rose to their highest
levels ever in the late 1860s and early 1870s. In 1873, however,
the boom turned to bust.
A number of U.S. banks had begun failing in April, but the Panic
of 1873, as it was called, was set off by the failure of Jay Cooke
& Co. on September 18th. It was one of the largest and most
stable financial houses in the country (its projects included
the transcontinental Northern Pacific Railroad). But it had recklessly
overextended itself and issued millions of dollars of worthless
stock. Numerous banks that had lent money too easily and other
overextended financial institutions also failed. The New York
Sock Exchange closed its doors for more than a week.
The Panic marked the beginning of the longest period of economic
contraction the nation had ever experienced - sixty-five months
altogether. In New York, construction was cut in half, both in
terms of number of new buildings and their value. One hundred
thousand people were thrown out of work, nearly one-quarter of
the city's labor force. Ten thousand homeless roamed the city's
streets. Those who still had work suffered a severe drop in wages,
roughly 30 percent across the board. Socialism gained in popularity
throughout the working-class neighborhoods of the city.
But the working class was hard-pressed by the decreased need for
labor and government suppression of any labor organization. In
January of 1874, laborers marched to demand that the city find
them work. But the event culminated in a savage police attack
on the marchers in Tompkins Square. Union membership in New York
actually declined over the period, from 45,000 in 1873 to 5,000
in 1879. Government - federal, state, and local - generally took
the side of employers over employees and did practically nothing
to alleviate the hardship of the unemployed. It took more than
five years for New York City and the nation to finally recover
from the economic malaise.
American Social History Project, Who Built America?
Working People and the Nation's Economy, Politics, Culture, and
Society (New York, 1992)
See also: Rent, Wages, & the Cost
of Living: 1870s; Public Assistance/Outdoor