¹ Besides Lauck's work (New York: Houghton Mifflin Co., 1907)Google Scholar, there are others touching on the Panic and depression: Philbrick, Frank S., “The Mercantile Conditions of the Crisis of 1893,” Nebraska University, University Studies, 2, No. 4 (1902) 299–320Google Scholar, deals mainly with the nature of business failures in 1893; Weberg, Frank P., The Background of the Panic of 1893 (Washington: Catholic University, 1929)Google Scholar examines the forces at work prior to the Panic and parallels Lauck's work; White, Gerald T., “The United States and the Problem of Recovery after 1893,” an unpublished doctoral dissertation (University of California, 1938)Google Scholar, presents a historical view of the depression's major developments; and Rezneck, Samuel, “Unemployment, Unrest, and Relief in the United States during the Depression of 1893–1897,” Journal of Political Economy, LXI (August 1953), 324–45Google Scholar, deals with some socio-economic aspects of the depression.

² Early in the depression a remark in Bradstreet's periodical predicted: “The business year 1893 promises to go into history with heavier net tosses in financial, commercial and industrial circles throughout the United States than in the more severe panic periods in the past eighty years.” Bradstreet's December 30, 1893, P 825. For measures of severity see Hubbard, J. B., “Business Volumes during Periods of Decline and Recovery,” Review of Economic Statistics, XII (November 1930), 181–85Google Scholar; A. R. Eckler, “A Measure of the Severity of Depressions, 1873–1932,” Ibid., XV (May 1933), 75–81; Hart, A. G., Money, Debt, and Economic Activity (New York: Prentice-Hall, Inc., 1948), pp. 259–63Google Scholar; Burns, A. F. and Mitchell, W. C., Measuring Business Cycles (New York: National Bureau of Economic Research, 1946)Google Scholar, chapter 12: chart 74 in particular; Bremer, C. D., American Bank Failures (New York: Columbia University Press, 1935) pp. 25–28Google Scholar, 32; Mitchell, W. C., What Happens During Business Cycles (New York: National Bureau of Economic Research, 1951), pp. 238–39Google Scholar; and Douglas, P. H. and Director, A., The Problem of Unemployment (New York: The Macmillan Co., 1931)Google Scholar,.chapter ii.

³ Douglas and Director, op. cit.; Bremer, op. cit.; Hubbard, op. cit.; Bradstreet's, February 17, 1894, p. 102, and January 1, 1898, pp. 4–5; and U. S. Interstate Commerce Commission, Eighth Annual Report (Washington: U. S. Government Printing Office, 1895), pp. 68–71Google ScholarPubMed. One qualitative aspect of the depression was the widespread labor unrest erupting into bitter strikes such as the Pullman Strike in the summer of 1894. See Bradstreet's April 7, 1894, p. 209; June 2, 1894, p. 337; and July 7, 1894, pp. 418–19, for details of this unrest.

⁴ Burns and Mitchell, Measuring Business Cycles, p. 78.

⁵ The European economies started their downturns in 1890–1891, reached troughs early in 1895, and then expanded to new peaks in 1900. This depression in Europe was also a severe one. Ibid., pp. 78–79.

⁶ U. S. Bureau of the Census, Historical Statistics of the United States 1789–1945 (hereafter referred to as Hist. Stat.) (Washington: U. S. Government Printing Office, 1949), pp. 179Google Scholar, 187, 329, 334, 337, 340, 342; Frickey, E., Production in the United States, 1869–1914 (Cambridge: Harvard University Press, 1947), pp. 54, 64, 117Google Scholar; and Douglas and Director, The Problem of Unemployment, chapter ii. Eckler, “A Measure of the Severity of Depressions,” pp. 75–81, compares the two cycles (1893–1895 and 1895–1899) with other contractions. He ranks all depressions according to severity, treating the two cycles first, as distinct recession periods, and then as one long depression.

⁷ I am grateful to Professor Albert G. Hart for suggesting this view of the period.

⁸ Unfortunately, detailed tabulation of fluctuations in gross private domestic investment and its components is not available for the nineties; data revealing investment changes must be pieced together. Inventory, changes, most volatile component of total investment, cannot be reconstructed from presently available data. The role of inventories is thoroughly analyzed in Abramovitz, M., Inventories and Business Cycles (New York: National Bureau of Economic Research, 1950)Google Scholar.

⁹ Mitchell, W. C., Business Cycles and Their Causes (Berkeley: University of California Press, 1941), p. 136Google Scholar. The data on new capital issues are from Commercial and Financial Chronicle: Financial Review (hereafter referred to as Fin. Rev.), 1894, p. 14 and 1899, p. 16.

¹⁰ Cowles, Alfred and assoc, Common-stock. Indexes (Bloomington, Ind.: Principia Press, 1939, 2nd ed.), pp. 62Google Scholar, 66, 492.

¹¹ The four government bond issues during the depression, discussed below, must have had an important impact on the money market.

¹² Kuznets, S., National Product since 1869 (New York: National Bureau of Economic Research, 1946), p. 231Google Scholar.

¹³ Ripley, W. Z., Railroads: Rates and Regulation (New York: Longmans, Green and Co., 1927). PP 34–5Google Scholar; and Hist. Stat., pp. 202–3.

¹⁴ See Campbell, E. G., The Reorganization of the American Railroad System (New York: Columbia University Press, 1938), pp. 24–29Google Scholar and Poor's Manual of Railroads of the United States, 1894–1899 (New York: H. V. and H. W. Poor, n.p.d.)Google Scholar.

¹⁵ Locomotive and railroad car prices declined only a maximum of 7 per cent. This moderate drop, while orders fell off sharply and as efficiency improved, suggests price “stickiness,” a characteristic of oligopolistic industry structure. See Shaw, W. H., Value of Commodity Output since 1869 (New York: National Bureau of Economic Research, 1947), p. 294Google Scholar.

¹⁶ U. S. Industrial Commission, Final Report, XIX (Washington: U. S. Government Printing Office, 1902, pp. 262)Google Scholar, 292–93, 299–300. See also Partington, J. E., Railroad Purchasing and the Business Cycle (Washington: Brookings Institution, 1929), p. 222Google Scholar and Hultgren, T., American Transportation in Prosperity and Depression (New York: National Bureau of Economic Research, 1948), pp. 148–57Google Scholar

¹⁷ Partington, op. cit.

¹⁸ These output figures approximate one sector o£ investment, expenditures on equipment. Data on inventories and construction are not available.

¹⁹ Shaw, Value of Commodity Output, p. 75. Investment in farm equipment was about 20 per cent of total farm investment.

²⁰ Strauss, F. and Bean, L., Gross Farm Income and Indices of Farm Products and Prices in the United States, 1869–1937 (Washington: U. S. Government Printing Office, 1940, p. 32)Google Scholar. See also U. S. Industrial Commission, Report, XI (Washington: U. S. Government Printing Office, 1901), pp. 110–12Google Scholar.

²¹ Only prices of metal and metal products which declined 22 per cent from 1892 to 1894 showed a greater drop. Much of this decline reflected increases in efficiency.

²² U. S. Bureau of Labor Statistics, Index Numbers of Wholesale Prices on Pre-War Base 1890–1927 (Washington: U. S. Government Printing Office, 1928), pp. 2–4Google Scholar; Rogin, L., Tie Introduction of Farm Machinery… (Berkeley: University of California Press, 1931), pp. 190–91Google Scholar, 213–15; and Stanford University, Food Research Institute, Wheat Studies, 2 (June 1926) 239, 260; 14 (November 1937), 70. Sales of public lands paralleled agricultural investment declines. In 1890, sales approximated $6.5 million; by 1897 they were less than $1 million. Hist. Slat., pp. 9, 296.

²³ From 1890 to 1902 electric railways and other surface transportation expanded tremendously: the number of employees and passenger cars used about doubled; mileage and revenuecar-miles increased by over two and a half times; net operating revenues increased almost fourfold. See U. S. Federal Electric Railways Commission, Proceedings, 3 (Washington: U. S. Government Printing Office, 1920), 2Google ScholarPubMed, 221–23, 2,228.

²⁴ See Street Railway Journal, January 1892, p. 29, where the growing distrust of South American and other foreign securities was alluded to with optimistic predictions for street railway securities. European investors were expected to see the advantages in such securities.

²⁵ See stock and bond listings, Financial Review, 1894–99. In Chicago, from 1894 to 1898, there was continuing extension of new surface transportation. Both electric elevated and surface lines grew in the North and West sides; elsewhere new facilities were extended and horsedrawn lines converted. Yerkes formed syndicates to purchase land along the routes, and businessmen in the Loop area started many new stores as the greater Chicago community was integrated. See Hoyt, H., One Hundred Years of Land Values in Chicago (Chicago: University of Chicago Press, 1933), pp. 181–84Google Scholar.

²⁶ Another area in which investment increased was the manufacture of bicycles. From 1890 to 1894 output was valued at a few million dollars. Starting in 1895 output soared and in 1898 approximated $35 million. See Shaw, Value of Commodity Output, p. 49 and U. S. Bureau of the Census, Twelfth Census (1900), X, Manufactures, Pt. IV, p. 325. In Mining the impact of the depression was not severe. Many minerals (copper, anthracite coal and petroleum) declined no more than 5 per cent in output in 1893 after which production grew steadily. Investment probably increased during this period since output increased while the numbers of workers, in many instances, declined. In the Kansas zinc areas, Galena and Empire City, output rose 50 per cent from 1895 to 1896. See Kansas, , Bureau of Labor and Industry, Twelfth Annual Report, 1896 (Topeka, 1897), pp. 45–48Google Scholar and U. S. Industrial Commission, Final Report, XIX, pp. 208, 210, 212, 214, 217, 219.

²⁷ Long, C. D., Building Cycles and the Theory of Investment (Princeton: Princeton University Press, 1940), pp. 152Google Scholar, 154–55 and chapter ix. See also Hansen, A., Business Cycles and National Income (New York: W. W. Norton and Co., 1951)Google Scholar, chapter iii, on building's relationship to the business cycle.

²⁸ These data are derived from Long's monthly index of building permit values, seasonally adjusted by the N.B.E.R. Using B.L.S. wholesale price index of building materials the author then deflated them more nearly to approximate an index of real construction changes. See Hist. Stat., p. 342 and Bureau of Labor Statistics, Index Numbers of Wholesale Prices, pp. 2–6.

²⁹ In Chicago, despite depression declines in real estate and general building, certain types of building thrived. Skyscrapers, a vogue coming into effect just before the World's Fair, were still being built: four were built in 1893; two in 1894. The North and Northwest sides replaced the South side as centers of residential real estate speculation; the depression was “scarcely felt.” See Hoyt, One Hundred Years of Land Values, pp. 152, 179, 181–84.

³⁰ For a view of social conditions during the depression see Rezneck, “Unemployment, Unrest, and Relief,” pp. 324–45, and Feder, L. H., Unemployment Relief in Periods of Depression (New York: Russell Sage Foundation, 1936), pp. 71–188Google Scholar.

³¹ “Consumption” will be used instead of the correct, and cumbersome, term “output destined for domestic consumption” which differs from consumption since inventories are not taken into account. This probably understates actual consumption early in the depression when inventories were most probably reduced. The category, perishables, excludes food products since crop fluctuations are seasonal, not cyclical.

³² See Tebbutt, A. R., “The Behavior of Consumption in Business Depression,” Publication of the [Harvard] Graduate School of Business Administration, XX (August 1933), 1–21Google Scholar.

³³ Shaw, Value of Commodity Output, p. 70.

³⁴ Hist. Stat., p. 26. An annual increase of about 2 per cent would have maintained the perishables consumption level of 1892, a prosperity year.

³⁵ Per capita consumption declined from 1892 levels for some consumer goods, taken at random: canned corn (off 35 per cent), coffee (off 17 per cent), wines (off 40 per cent), and distilled spirits (off 33 per cent). See Burns, A. F., Production Trends in the United States since 1870 (New York: National Bureau of Economic Research, 1934), pp. 284–304Google Scholar and U. S. Department of Agriculture, Yearbook, 1895–98 (Washington, 1896–1899)Google Scholar.

³⁶ Shaw, Value of Commodity Output, pp. 72–75.

³⁷ Douglas, P. H., Real Wages in the United States, 1890–1926 (New York: Houghton Mifflin Co., 1930), pp. 108Google Scholar, 132, 135, 143, 168, 197, 205, and Hist. Stat., p. 68. In coal mining, wage rates declined about 23 per cent from 1892 to 1897, but this was an unusual drop as rates in manufacturing, building, and railroading declined within the 5 per cent range. Government employees enjoyed a slight increase in wage rates, while farm laborers took reductions approximating 10 per cent in their weekly rates.

³⁸ Shaw, Value of Commodity, pp. 290–93, and Hist. Stat., p. 235.

³⁹ Lebergott, S., “Earnings of Non-Farm Employees in the United States, 1890–1946,” Journal of the American Statistical Association, 43 (March 1948), 74–93CrossRefGoogle Scholar. Full-time equivalent earnings for each year were deflated by percentage time lost due to unemployment to yield money earnings adjusted for unemployment. These earnings were then adjusted for changes in the cost-of-living index.

⁴⁰ Throughout the nineties, exports of manufactures increased quantitatively and in value. In 1890 manufactured exports comprised less than 17 per cent of total exports; by 1900 they exceeded 30 per cent of the total. Agricultural exports were over 75 per cent of the total early in the nineties; by 1900 they were only 65 per cent of all exports. Hist. Slat., pp. 246–50.

⁴¹ Economist (London), Monthly Trade Supplement, February 13, 1892, p. 1; February 10, 1894, p. 2; February 15, 1896, p. 2. For German exports and imports see Ibid., July 3, 1897, p. 957. Wheat prices declined over 30 per cent from 1892 to 1894 with recovery in 1895 short-lived and no appreciable rise until 1896. From 1892 to early 1894 corn prices dropped about 30 per cent; in 1895 there was a sharp recovery and then in 1896 prices fell by 50 per cent. Stanford University, Wheat Studies, 10 (June-July 1934), 316, 348–49.

⁴² Imports from Europe were over 50 per cent of the total. Since the payments problem related mainly to Europe and England in particular indices of British export and certain American prices suggest the terms of trade. Agricultural and manufactured products represented almost all exports so that prices of farm and metal products reflected changes in those categories. Partly or wholly manufactured imports were 40 per cent of the total. Thus by comparing selected British export prices with the two American indices some notion of changes in terms of trade is obtained. See Hist. Slat., pp. 246–50.

⁴³ Immigration fell off cyclically, affecting immigrant funds brought into the country. See Hist. Slat., p. 33, and Jerome, H., Migration and Business Cycles (New York: National Bureau of Economic Research, 1936), pp. 95–100Google Scholar.

⁴⁴ Foreign investment in the U. S. did not cease suddenly with the depression. There were cross-currents of inflows and outflows of capital. For example, foreign holdings of Union Pacific stock increased by more than 40 per cent in 1893. See Commercial and Financial Chronicle, April 28, 1894, pp. 700–1. New capital issues in England declined each year from 1890 to 1893 a nd not until 1896 did they exceed the 1890 level. See Economist (London), Supplement, February 17, 1894, p. 6, and February 20, 1897, p. 5. Net British capital flowing abroad also fell off markedly: from 1890 to 1895 it dropped from £98 to £40 million. After 1896 there were further declines. See Imlah, A. H., “British Balance of Payments and Exports of Capital, 1816—1913,” Economic History Review, V, No. 2 (1952), 238Google Scholar. Declines in investment in the U. S. also occurred because of more attractive returns, as in Africa.

⁴⁵ Lewis, C., America's Stake in International Investments (Washington: Brookings Institution, 1938), pp. 332–38Google Scholar, 605, and Bacon, N., “American International Indebtedness,” Yale Review, 9 (November 1900), 265–85Google Scholar.

⁴⁶ Ibid., December 17, 1892, p. 1,012.

⁴⁷ New York Times, May 4 and 5, 1893, and Hist. Stat., pp. 273, 349.

⁴⁸ Noyes, A. D., Forty Years of American Finance (New York: G. P. Putnam's Sons, 1909), pp. 188–98Google Scholar. While the shape of the Panic must be explained in terms of contemporary conditions, the structural aspects of the banking system provide the basis for understanding its phenomena.

⁴⁹ Ibid., pp. 160–73, 182–87. Another factor in postponing the depression was the 1891 windfall harvest when prices were high due to Europe's drought.

⁵⁰ U. S. Bureau of Foreign and Domestic Commerce, Monthly Summary of Imports and Exports of the United States (after 1898: Monthly Summary of the Foreign Commerce of the United States) 1893–1901, Series on gold flows (Washington: U. S. Government Printing Office, 1893–1901). During the nineties, gold production increased annually, amounting to almost $33 million in 1890 and exceeding $60 million in 1898. In calendar years 1891, 1892, 1894, and 1895 net gold exports exceeded gold production by appreciable amounts. This excess represented gold withdrawn from the banks, the Treasury, and probably from hoards. See U. S. National Monetary Commission, Publications, XXI, Statistics for the United States, 1867–1909 (Washington: U. S. Government Printing Office, 1910), pp. 161Google Scholar, 166, 169–70, and Noyes, Forty Years of American Finance, pp. 253–54.

⁵¹ National Monetary Commission, Statistics for the V. S., pp. 98–108. New York banks are analyzed since only for them are monthly data available.

⁵² Ibid., pp. 74, 98–108.

⁵³ Ibid., pp. 121–24 and New York Times, December 18, 1895.

⁵⁴ National Monetary Commission, Statistics for the V. S., pp. 101–6, 121–26, and Macaulay, F. R.,… The Movements of Interest Rates, Bond Yields and Stock. Prices in the United States since 1856 (New York: National Bureau of Economic Research, 1938), pp. A150–52Google Scholar.

⁵⁵ Certainly the increase in short-term rates had an adverse effect on business, but the decline in investment cannot be directly explained by the rise because investment fell off before general business did and because investment depends more directly on long-term interest rates.

⁵⁶ Macaulay, The Movements of Interest Rates, pp. A64–69, A150–52 and Cowles, Commonstock. Indexes, p. 492.

⁵⁷ National Monetary Commission, Statistics for the U. S., pp. 14, 244.

⁵⁸ Ibid., pp. 253–55, and Noyes, Forty Years of American Finance, pp. 134–35, 224–27. The McKinley Tariff of 1890 revised schedules so that revenues on sugar imports fell off sharply from almost $60 million in fiscal 1889 to about $75,000 in fiscal 1892. In 1894 the passage of the Wilson Tariff hardly ameliorated conditions; not until the Dingley Tariff of 1897 was the revenue situation cleared up.

⁵⁹ National Monetary Commission, op. cit.; Noyes, op. cit.; and Monthly Summary of Imports and Exports, 1893–97. The gold loans had effects similar to a budgetary surplus: reserves were withdrawn from the system.

⁶⁰ Noyes, op. cit., pp. 204–6, and Monthly Summary of Imports, 1893.

⁶¹ These loans were made in gold coin: January 1894, a $50 million 5 per cent bond issue; November 1894, another $50 million 5 per cent issue; January 1895, a $62.5 million 4 per cent issue (half the coin to come from Europe under the Belmont-Morgan Syndicate agreement); and January 1896, a $100 million 4 per cent issue.

⁶² Noyes, op. cit., pp. 207–16, 231–40. The Treasury got much less gold than the total of the loans. Banks and individuals obtained some of the gold to purchase bonds by presenting legal tender notes to the Treasury. By the time of the fourth issue legal tender notes were no longer available in large numbers.

⁶³ Ibid., pp. 234–50.

⁶⁴ Ibid., pp. 249–56. By 1896, the Treasury had replaced most of its short-term, floating debt by a funded debt. Treasury demand obligations (for example, legal tender notes) which had existed in large quantities had been reduced sharply through redemptions. Thus, while some of the gold for the $100 million loan came from the Treasury through redemption, much more, at this time, came from abroad and from public hoards and bank holdings in more usual fashion.