by Nicholas Voss

The Republicans were fortunate enough to have been in office throughout most of the 1870s and 1880s, a period of remarkable economic expansion in the United States. Eventually the expansion became driven by speculation, much like the internet bubble of the late 1990s and real estate bubble of the 21st century, except that the industry of choice was railroads.

On 23 February 1893 catastrophe struck. The Philadelphia and Reading Railroad Company filed for bankruptcy; the case set in motion a train of events which eventually derailed the entire US economy. It was a calamity not unlike the one in our own day. The Panic of 1893 is widely believed to have been caused by railroad overbuilding and shaky financing.  The whole affair set off a series of bank failures. Sound familiar?

Compounding the railroad bubble was a run on the gold supply.  It’s purely coincidental, I’m sure, that we see every investment advisor in the country now pushing gold.

The  1893 collapse of banks would trigger the bankruptcy of many other companies. In total over 15,000 businesses and 500 banks failed. Real income of Americans dropped almost 18 percent . According to some estimates, about 17%-19% of the labor force was unemployed. An immediate spike in job loss, combined with the evaporation of life savings, meant that the middle-class could not meet their mortgage obligations. As a result, many walked away from newly built homes.

Got its start in the most difficult of times

Massive joblessness angered the workers that went beyond  protest; indeed, it was a time for radical action.  It was a perfect occasion to organize a Union,  and the National Alliance of Theatrical Stage Employes [sic] – now known as I.A.T.S.E. – did just that. They had their first meeting that same year, 1893.

The country temporarily blamed the Republicans for the worsening economy and re-elected Grover Cleveland, a Democrat,  who had been President once before (Cleveland is the only President to serve two non-consecutive terms).  Democrats also won seats in the House in 1892. This was the first time in twenty years that either party had held the White House and both houses of Congress simultaneously.

But what seemed to be a happy occasion for the Democrats soon proved to be quite the opposite. It meant that their party was now fully in charge.   In charge,  that is, of a failed economy.  The Democrats insisted, for what they thought were obvious reasons,  that the financial disaster was “not of their making.”  

Eventually, the impatient unemployed perceived that the Democrats were unable to turn the economy around as promised during the campaign. The Democrats also raised taxes on anyone “making more than $4,000 per year.”  They were blamed for mismanaging the “inherited” economy  – some say they only made the matter worse. The new administration had to pay the price at the polls. The American people had long forgotten that the Panic technically began while a Republican was sitting in the White House (the Democrat President-elect was only days away from moving into the Oval Office when the Panic assailed the country).

Reorganized and reenergized, the Republicans adopted newly-invented advertising techniques to spread their message. Although the Democrats  were initially ahead in the polls, the GOP put their opponents on the defensive using the latest media and technology. It appears that McKinley was one of the first politicians to make use of Edison’s phonograph. Gigantic parades, rallies,  and live events were organized by the Republicans in every major city, winning the hearts and minds of the people everywhere.  The GOP quickly regained the support of many independents, mostly westerners,  who had abandoned them in the midterm election for a new populist third party. The shift of House seats from Democrats back to the Republicans in 1894 was one of the largest in political history – a miracle not witnessed again until Newt Gingrich led the Republican Revolution exactly one hundred years later.  The Republicans went on to regain the White House for the next three election cycles.

This production company started out selling watches

A little over a century has now passed since the Panic of 1893. It was the worst depression in the nineteenth century.  The economic and political instability of the period seemed to be an unusual time to start a jewelry business, considering there was a run on gold and silver had lost 25 percent of its value.  Yet, a jewelryman from Saint Louis hatches a clever business plan to overcome the difficult times by endeavoring in incentive programs, sales meetings, and travel industries. The E. Maritz Jewelry Manufacturing Company is to later become one of the largest event production companies in the 20th century.

To be continued …