The 13 Worst Recessions, Depressions, and Panics In American History

Depression of 1807
The Depression of 1807, which lasted about three years, was the result of English trade restrictions combined with the Embargo Act of 1807, which was passed under Thomas Jefferson as a means of preserving neutrality as tensions mounted between England and France. By restricting foreign trade, however, the United States paralyzed its coastal economy and destroyed businesses within the shipping industry. Furthermore, the embargo’s primary aim failed as the country eventually was pulled into the War of 1812.

1815-1821 Depression
The U.S. government had racked up heavy debts during The War of 1812, which cut severely into state banks’ supply of capital. The country was in the midst of a land speculation bubble, and as the banks called in their loans many defaulted, and a number of banks failed. Extreme fluctuations in the value and supply of wheat and cotton crops fueled several consecutive years of high unemployment and a stagnant economy.

Panic of 1837
As the United States continued to push westward and “acquire” Native land, investors saw an opportunity for what seemed to be an infinite supply of cheap real estate to invest in. The bubble burst again and banks called in their loans. A major real estate panic resulted and a crash occurred, which caused more than 40% of America’s banks to fail. While then-president Martin Van Buren was widely blamed at the time, many argue it was Andrew Jackson, who had  earlier removed most of the authority and power from the U.S. central bank and gave smaller banks the freedom to engineer their own demise.

Also Read: The Ten Greatest Labor Strikes In American History

Panic Of 1857
Due in part to the inflation caused by the discovery of gold in California, the recession in 1857 quickly devolved into a panic after the failure of the New York branch of the Ohio Life Insurance and Trust Co.  Consumer confidence was shaken, resulting in a run on the banks and a long-term distrust in the American government and its ability to back paper currency. More than 5,000 banks failed in a little over a year, although most of the trouble took place in the North, as the South stayed afloat thanks to the stability of the cotton market.

Panic of 1873
A series of disasters in the few years before the crash of 1873 weighed heavily on American growth. These included The Great Chicago Fire and the Equine flu epidemic–which demobilized or killed nearly every horse in America, and ground all transportation and industry to a complete halt. A boom in the railroad industry eventually led to a bust, and when banks were left holding thousands of dollars of railroad bonds, a panic occurred. When the bank Jay Cooke & Company failed for this reason, the markets crashed so severely that New York Stock Exchange ceased trading for ten days. 18,000 businesses failed over the course of two years. Unemployment exceeded 14%.

Panic of 1893
1893 saw the results of years of over-extension of railroads and the slowing of general economic expansion across the country.  Finally set off by the bankruptcy of the Philadelphia and Reading Railroad, there was a run on the banks and economic panic ensued. More than 15,000 businesses failed, 500 banks closed, and unemployment remained over 10% for five years, making this the worst U.S. depression up until the Great Depression.

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