This post follows Part 1 on the 19th Century financial panics and their impact on Florida. The first two, The Panic of 1837 and the Panic of 1857 were both covered here. We turn now to 1873. Reconstruction was still in force in the South and would be until close to the end of this Panic, or what would eventually be called The Great Depression before we were visited by the bigger depression in the 1930s. Southerners were struggling with the reality of occupation and few Southerners, black or white, benefited from these years. Like most financial crises this one was a series of events that together destabilized global financial institutions, which in turn wrecked havoc on our ancestors’ lives.
Certainly, the end of the War for Southern Independence (aka Civil War, aka War Between the States) saw rampant inflation, though in the South that had been a problem for the last few years of the War. Coupled with railroad speculation that became overheated and massive fires in Chicago and Boston, the U. S. banks were strained when European economic issues arose from the Franco-Prussian war and the demonetization of silver in both Germany and the U.S. All of these rolled out from 1865 to 1873, each adding its weight to the impending crisis. The tipping point in the U.S. was in September 1873 when a major part of the U.S. banking establishment had to declare bankruptcy due to heavy investment in railroads. This set off a chain of bank failures.
The poor economy created the climate for political change and the Democrats took control of the House in 1874 ensuring President Grant’s vision of Reconstruction would falter. The economic conditions pushed the North away from Reconstruction. And since the South was one of the regional areas heavily pushing railroads, the collapse of the railroad building programs sent many Southern states further into debt causing heavy taxes. Democrats slowly regained control of the Southern states and Reconstruction came to an end in 1877 when Rutherford B. Hayes (R) made a bargain with the Democratic-controlled House. This is a story all by itself but I will say that his opponent, Samuel J. Tilden (D) is a distant relative of mine (we both descend from Nathaniel Tilden, Puritan of Massachusetts) which made learning some of the details of the original messy Florida voting results impacting a Presidential election worth the time. The 1873 Panic finally ended in 1879 and the country began again its journey to the next Panic.
You might have noticed a pattern by this point. About every 20 years, the 19th century saw a deep recession or panic that disrupted the economy of households. It could be pointed out that by the 1840s, the American economy had stabilized from the Revolutionary War and the War of 1812 and industry, commerce and agriculture were all expanding rapidly. The United States was rapidly buying or taking land west of the Mississippi increasing available land for agriculture, immigration was at a steady clip making workers more available for industry, and gold was discovered in California which expanded the money supply. After the War of 1812, international commerce stabilized a bit, making the movement of goods across the Atlantic more reliable. While the War for Southern Independence certainly put a major kink in trade, at least for the South, it soon recovered for most of the country. And with the economic recovery with its heated spending, building, and trading the outcome of collapse is set in motion. That is the nature of capitalism. So by 1893, the nation was once again in a place for an event, or a series of events, to set off a panic.
The 1893 Panic could be said to have started in Argentina in 1890 with a coup and a poor wheat harvest. This started a run on the banks to exchange gold-backed bank notes with gold. By early 1893, the Philadelphia and Reading Railroad was placed in receivership due to significant debt. As the downturn deepened the run on banks increased. The Cleveland administration backed a new bill to repeal the Sherman Silver Purchase Act and initiated protective tariffs, which many blame for making the situation worse. The People’s Party and the several groups that also represented small farmers were a major movement in politics at this time. The agrarian-populist movements were very active in the West and South, where small farmers were struggling. In the South, it was built on the anger felt by small, white, cotton farmers. They were often suspicious and hostile to banks, railroads, large urban areas, gold and of course elites.
By the end of the 1893 Panic in 1897, approximately 500 banks had closed, many farms just ceased to exist and sharecroppers in the South moved to larger urban areas or locations where they could find jobs on farms, in lumber or in turpentine. In addition, about 15,000 businesses failed. Families all across the South and Florida struggled during these years to make enough cash for taxes and the increasing number of items they no longer made on the farm. Sharecroppers were particularly hard hit because if the landowner lost their farm, the sharecropper was out of a home and a crop.
Patterns can be interesting to study. Economic cycles are particularly interesting because they tell us a good bit about ourselves and the social structures we have around us and about our inability to learn from past mistakes. Twenty more years would go by and the Great Depression would descend on the American economy. While the 1893 Panic was bad, the Great Depression made it pale in comparison. It not only hit the economy with much more loss and lasted longer, but it could be said that for the poorer folks in the South, the “recovery” in the intervening years wasn’t all that great so the pain of the Great Depression was even worse. If you are interested in the Great Depression, please see my previous post on the subject.
Knowing when these kinds of disruptions occurred in the economies may help you understand the movement of your ancestors as you explore their lives through records. Unfortunately, we don’t have an 1890 census due to a fire but there could be other records that might help you determine if your ancestors were hit hard by one of these Panics. One clue might be finding them in the agricultural census of 1885, owning a small farm, and by 1900 working as a logger in Baldwin or Escambia Counties. The agrarian-populist movements were very active in the South, especially in cotton areas, and in the Midwest in the wheat growing areas. Monoculture creates a weakness during downturns. My grandmother used to warn about putting all of your eggs in one basket. If the crop grown exclusively for cash has a significant drop in price, you will find yourself in a deep hole.
While digitizing the old Yellow River Church records it was discovered that they were actually inside an old ledger book that had been a membership record for a local unit of one of these agrarian-populist groups. Once I get the church records finished, I do plan on creating better scans of these other records and do a post or two on the members and the minutes that have survived. It would seem reasonable to assume that at least one person overlapped these two entities in the upper Yellow River area. I do recognize some of the names and will also be including some of this in my upcoming book on the upper Yellow River/Oak Grove area of Okaloosa County.
Until Next Time
- Panic of 1873, Wikipedia
- Panic of 1893, Wikipedia
- Populist Movement in the South – Agrarian Revolt – Part 1, InHeritage.org website
- Populist Movement in the South – Agrarian Revolt – Part 2, InHeritage.org website
- Populist Movement in the South – Agrarian Revolt – Part 3, InHeritage.org website
- The Causes of the Panic of 1893 by William Jett Lauck
- Fraud of the Century: Rutherford B. Hayes, Samuel Tilden, and the Stolen Election of 1876 by Roy Morris, Jr.
- History of the Terrible Financial Panic of 1873 by Anonymous
- Hard Times: Economic Depressions in America by Richard Striner