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Panic of 1819
-Lasted Two Years
-Caused by a forced reduction in the money supply by the Second Bank of the US.
-Created a credit crisis and caused deflation. Also, it caused cotton and other prices of good to fall significantly. -
Panic of 1837
-Lasted six years
-Caused by President Jackson's effort to force the use of hard money (money backed by silver or gold). This produced another money supply shortage, which caused real estate and other prices to drop. Moreover, there was credit failure, record unemployment, bank failures, cotton price collapse. The money supply went down 58% and this economic depression was the second longest in US history. -
Panic of 1873
-Lasted 5 years (Also viewed as the start of a 23 year span of economic weakness referred to as the Long Depression)
-Caused mainly by a switch to the Gold Standard. It produced a prolonged money shortage, caused a credit collapse, casued banks to fail. Another economic depression with insufficient money circulating in the economy caused over 18,000 businesses to fail. Overall, after two years of economic recovery, deflation caused the five year depression greatly impacting businesses in the US. -
Panic of 1893
-Lasted for 3 years (end of the Long Depression)
-A shortage of gold caused the currency to be switched back to metal-based, which created deflation, resulting in economic depression. Over 500 banks failed during this depression and unemployment was at 18%. Like previous depressions, commodity prices collapsed, such as the prices of steel, grain, cotton, and timber, and over 15,000 businesses failed.
-Second worst depression in US history-the Great Depression being the first. -
Panic of 1907
-Lasted about 90 days
-Once again a money supply shortage caused another economic depression. Also, banks and stocks failed (lost over 50% of their value). As the money supply contracted, J.P. Morgan was able to convince wealthy New York bankers to act in place of a private Federal Reserve, which aided the banking system and halted this economic collapse. This founded the Federal Reserve System. -
Panic of 1929
-Start of an 11 year depression- the Great Depression.
-Was caused when the Federal Reserve drew down the money supply, when banks needed it to provide liquidity instead.
-There were bank failures, the stock market crashed (on 'Black Tuesday'), and the Great Depression began.
-By the end of 1932 about half of the economy had recovered, but when FDR campaigned for budget changes and regulation, he was not able to make it happen. Therefore, the depression continued for another eight years. -
Continuity and Change
Each one of these depressions was casued by a business cycle contraction, which resulted in deflation. Furthermore, as a result of these recessions banks and businesses failed, unemployment went up, and people spent less (less money cirulating in the economy). The main difference between these depressions was that their fundamental cause varied. For some, the currency backing was changing from metal to gold and silver (or back to metal), and in others, stock markets collapsed or banks failed.
