Denver Depression of 1893

The Denver Depression of 1893 was an economic depression of Denver, Colorado that began in 1893 after the rapid drop in the price of silver and lasted for several years.

With the Coinage Act of 1873, bimetallism was disestablished by congress and gold was established as the standard. Despite this, the city of Denver, Colorado enjoyed boomtown growth during the late 19th century after the discovery and development of numerous silver mines and the passage of first the Bland-Allison Act of 1878 and then the Sherman Silver Purchase Act of 1890, both of which required the U.S. government to purchase millions of ounces of silver each year. As one historian of the period noted, “Almost all economic pursuits in the state were tied in one way or another to the mining industry; consequently, almost every Colorado resident had a vested interest in its success.” But whereas the silver standard enabled western rural farmers and miners to pay off their debts, bankers in the east were losing money because the circulation of silver was leading to a decline in the value of gold-based money as investors turned in the new silver notes for gold dollars (see also Free silver, silverites). In 1893, those in the west lost the battle, as President Grover Cleveland oversaw the repeal of the Sherman Silver Purchase Act. This caused the prices of silver to fall, and the prices of silver continued to fall further due to an overabundance of the metal when silver was struck in Leadville and in the San Juan Mountains.

Unfortunately, Denver was already suffering economically due to several successive years of droughts and harsh winters that had hurt the agricultural industry. Agricultural distress, coupled with the withdrawal of foreign investors and the over-expansion of the silver mining industries, led Denver to experience its first economic depression.

The collapse of the Silver market beginning in 1893 dropped the price of silver from 83 cents to 62 cents an ounce. Mining companies dropped their wages, yet as one historian reports, due to the overabundance of workers in the area, “employers could easily replace workers unwilling to accept pay cuts.” Then, as the silver mines began to close due to the continued drop in silver prices, unemployed miners and other workers from the Colorado mountains flooded into Denver in hopes of finding work. Seeking to address the growing tensions in Denver, politicians friendly with the silver cause met in Denver on July 12, 1893 to lend support against the repealing of the Sherman Silver Act, but to no avail. People began to withdraw their money from banks in a panic as the price of silver dropped. This caused numerous banks to collapse, as at this point there was no federal insurance to support the money in the banks. Many people in the west thus lost their life savings. And as Denver banks closed, real estate values dropped, smelters stopped working, and the Denver tramways had trouble getting people to ride and pay their fares.

...
Wikipedia