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Panics, Depressions and Economic Crisis Prior to 1930
The Panic of 1819
Panic and Depression 1832

Panic and Depression 1836

The Panic of 1837

Six Year Depression 1837-1843

The Panic of 1857

Panic and Depression 1869-1871

The Panic of 1873

The Panic of 1893-Financial World

The Panic of 1893-Presidential Papers

The Panic of 1901-Market Fails, Panic Reigns-Part I

The Panic of 1901-Market Fails, Panic Reigns-Part II

The Panic of 1901- At The Stock Exchange

Panic and Depression of 1929

Brief Financial Notes based on 1875-1907

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The first coins ever issued by the United States as a nation were struck by a private contractor in New York City. These coins were called the Fugio Cent, because the word fugio, meaning "I fly" appeared on the head side.



The ticket tape that reports prices outside the Exchange fails increasingly behind. In the offices of J.P. Morgan and Company, where a group of top investment bankers are meeting, cooler heads prevail. In an effort to reverse the tide, Richard Whitney, vice president of the Exchange, is sent to the floor to purchase millions of dollars worth of key stocks. This action is successful and prices begin to steady.

Activity on the Exchange is relatively stable the next day, but on October 28, prices again tumble. This time the bankers do not try to halt the decline. On October 29 panic selling increases. The ticker tape is two and one-half hours behind and by the end of the day a record 16,410,030 shares have been sold, with a total loss in value of 880 issues estimated by The New York Times to exceed $8,000,000,000. Thousands of investors see their fortunes wiped out.

Economists, bankers, and politicians grope to find an explanation. Most believe that the economy is still sound and the market will soon recover. Some say it is merely a momentary psychological aberration. Secretary of the Treasury Andrew Mellon insists that the stock market debacle is an illness that will soon run its course and cure itself. Although there are signs that the problem goes much deeper, most prefer to ignore them. Examination of statistics reveals an increasing unemployment rate during the year prior to the crash and a great decrease in construction activity. Still most industry continues to prosper throughout the year and the automobile companies produce a record 3,000,000 cars.

President Hoover's troubles really began in the late autumn of 1929. The nation had been in the grip of a fictitious stock-market prosperity; and economic experts had been warning their friends privately for many months to get out of the market before the crash came. Stocks had been forced up by speculative buyers to fabulous prices: A.T. and T., for example, to $304 a share and United States Steel to $241. New securities worth $15,000,000,000 had been issued in one year. Trading had increased on the market from $223,000,000 shares in 1920 to 1,124,000,000 shares in 1929. Finally, the stock market crashed on October 23, wiping out an average of more than a billion dollars' worth of paper values a day. 

The previous frenzy of speculation gave way to a mad scramble on the part of everyone to get liquid. Every transaction drove down the market value of what had been considered gilt-edged securities, Gold flowed out of the country and both gold and Federal Reserve notes into the safety deposit boxes of private citizens, Unemployment mounted to more than 7,000,000 with a year, ultimately to the staggering total of 15,000,000 and those who continued to work did so under greatly reduced wage scales. For three and one half years ruinous deflation continued and its paralyzing effects spread to all parts of the world. Millions of people lost savings invested in gilt-edged securities. Millions more were reduced to beggary. Private charity proved incapable of sustaining the destitute. Little by little the totality of the collapse dawned upon an incredulous people. Destitution, despair, and divided counsels prevailed. No man of vision came forward with a program of relief. It was the price a people paid for more than a decade of political stagnation. Economists are pretty generally agreed on the causes of the economic debacle though there is less agreement on the relative importance of each:


1. There was an unbalanced world economy, with European nations staggering under tremendous burdens of debts and taxes, with depleted gold stocks, and with adverse trade balances, World War I purchases, payments on war debts, the fever of speculation, and fear of another European crisis had drawn to the United States the gold which the rest of the world needed for normal business purposes, and tariff walls kept them from getting it back again through normal trade processes.

2. The abnormal business conditions of the war and immediate postwar period had merged, in the United States, into a speculation boom in the late twenties which carried prices, and particularly prices of corporate stocks, far above real values. Year after year larger amounts of bank loans went into the speculative markets instead of into legitimate business channels. Banks were weighted down with government bonds, real estate mortgages based on greatly appreciated valuations, and highly speculative securities.

3. The approach of business and of government to the economic processes had been from the viewpoint of production. The vaunted prosperity had been a corporation prosperity. The problem of consumption had been ignored. Agricultural surpluses piled up as prices of farm products declined until farmers could no longer purchase the products of the factories. The returns from machine production were unevenly distributed. Technological unemployment increased, and year after year, larger amounts of money flowed out of the channels of consumers' trade and into the savings deposits of the relatively well-to-do. In short, the take of capital was too large, and the country was suffering from under consumption not from overproduction.




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