Depression of 1893

The Panic of 1893 was a serious economic depression in the United States that began in 1893 and ended in 1897. It deeply affected every sector of the economy, and produced political upheaval that led to the 1896 realigning election and the presidency of William McKinley.

One of the causes for the panic of 1893 can be traced back to Argentina. Investment was encouraged by the Argentine agent bank, Baring Brothers. However, the failure of the 1890 wheat crop and a coup in Buenos Aires ended further investments. Because European investors were concerned that these problems might spread, they started a run on gold in the U.S. Treasury, since it was comparatively simple for them to cash in their dollar investments for exportable gold. During the Gilded Age of the 1870s and 1880s, the United States had experienced economic growth and expansion, but much of this expansion depended on high international commodity prices, and in 1893 wheat prices crashed.

One of the first clear signs of trouble came on February 20, 1893, thirteen days before the inauguration of U.S. president Grover Cleveland, with the appointment of receivers for the Philadelphia and Reading Railroad, which had greatly overextended itself. Upon taking office, Cleveland dealt directly with the Treasury crisis, and successfully convinced Congress to repeal the Sherman Silver Purchase Act, which he felt was mainly responsible for the economic crisis.

As concern for the state of the economy worsened, people rushed to withdraw their money from banks, and caused bank runs. The credit crunch rippled through the economy. A financial panic in the United Kingdom and a drop in trade in Europe caused foreign investors to sell American stocks to obtain American funds backed by gold.

The Populists were a short-lived agrarian-populist political party which appealed politically to wheat farmers in the West and cotton farmers in the South. They saw the resulting panic as confirmation that the values of rootless global finance were assailing traditional American values. Historian Hasia Diner notes:

...
Wikipedia