Economic Recession and Panics

Flashcards covering key concepts about economic recessions, focusing on the panics of 1873, 1893, and 1907, their effects, causes, and lessons learned.

What triggered the Panic of 1873?

Excessive speculation in railroad expansion and unregulated banking practices.

What was a major event that sparked the Panic of 1873?

The collapse of Jay Cooke & Company.

What was one immediate consequence of the Panic of 1873?

A stock market crash and increased business bankruptcies.

How did the Panic of 1873 affect workers?

It led to wage cuts and increased unemployment.

What financial condition contributed to the Panic of 1873?

An unregulated banking system that allowed excessive lending.

What did the Panic of 1873 lead to in terms of government policy?

A push towards government regulation of banking and finance.

What characterized the Panic of 1893?

Over-expansion of railroads leading to overproduction and unsustainable debt.

What external factor worsened the crisis during the Panic of 1893?

Droughts in the Midwest.

Who intervened during the Panic of 1893 to stabilize the markets?

J.P. Morgan.

What was the unemployment rate during the Panic of 1893?

20%.

What major event highlighted labor unrest during the Panic of 1893?

The Pullman Strike of 1894.

What was a major lesson learned from the Panic of 1893?

The vulnerability of an economy dependent on railroads.

What triggered the Panic of 1907?

The collapse of the Knickerbocker Trust Company.

What effect did the Panic of 1907 have on banking?

It led to a lack of confidence resulting in runs on banks.

Who organized a rescue during the Panic of 1907?

J.P. Morgan.

What major outcome was influenced by the Panic of 1907?

The creation of the Federal Reserve System in 1913.

What significant lesson was learned regarding banking during these panics?

The importance of banking regulation.

How did speculation contribute to each of the panics?

Each panic was fueled by excessive speculation, particularly in railroads and banking.

What role did private financiers play during the financial crises?

They intervened to stabilize markets and showed the need for government intervention.

What reforms were prompted as a response to the panics?

The push for financial reform and the establishment of the Federal Reserve System.

What impact did the Panic of 1907 have on monetary policy?

It highlighted the need for monetary policy controls.

What was one short-term impact of the Panic of 1873 on the economy?

Severe hardship for farmers and industrial workers.

How long did the long depression following the Panic of 1873 last?

From 1873 to 1879.

What was one consequence of the collapse of Jay Cooke & Company?

It sparked a chain reaction of bank failures.

What did the Panic of 1907 reveal about the banking system?

The banking system's instability and susceptibility to panic.

What was the overall impact of these financial panics on future regulations?

They contributed to the eventual need for banking reforms.

How did the panics influence economic stability in the U.S.?

They demonstrated the necessity for oversight and regulation of financial institutions.