The Panic of 1893 aftermath

The crisis of 1893 can be seen as major event in American history. It was accompanied by violent strikes, the creation of a new political balance, the continuing transformation of the country's economy, major changes in national policy, and far-reaching social and intellectual developments.

Panic had its origin in a loss of confidence in the solvency of the banks. The vital loss of confidence was inspired by a general knowledge of the unhealthy economic conditions in private and in public life, since the speculative character of the investments and loans prevailed in the society. The funds of many of the banks had been risked without much attention to the real threats of the time, which were underestimated.

A true and severe financial crisis lasted from May to November in the 1893. It included precipitous declines in the stock market together with the failure of Wall Street brokerage houses. As the spiral grew the failure of 158 national banks, 172 state banks, and 177 private banks, as well as 47 savings banks and 13 loan and trust companies and 16 mortgage companies followed.

The panic which eventually started in New York over the course of time spread to the entire country. The economic depression in employment and prices lasted until 1897. Had the United States Federal Reserve Bank system existed, the panic probably would have been averted. In conservative business areas the failures have been but a few, either in banking or in other industry sectors. Bad banking practices where the greed dominates over caution inevitably brought disasterous results for those whom used it.

As we know now, Federal Reserve System was developed over twenty years later due to the next big crisis event. At the time many people were forced to abandon their homes and migrate in search of a better life. The growing railway cities in the west of Seattle, Portland, Salt Lake City, Denver, San Francisco and Los Angeles took in the new inhabitants, as did many smaller towns along the way. The economic recovery began in 1897 with a change in government. After the election of Republican McKinley, the Klondike Gold Rush restored the confidence and the economy began 10 years of rapid growth. Gold strikes in the Klondike brought numerous people to Alaska in the 1890s.The gold rush provided many communities in Alaska their start and some of them became an important supply posts or mining center.

Related: Bankers' Panic