The Panic of 1896 was an economic depression in the United States. This economic depression is considered one of the less serious ones during this time period. The Panic of 1896 was caused by a significant drop in the silver reserves which also impacted the standard of gold. This caused deflation to occur which led to the prices of commodities decreasing. The drop in prices of commodities drove the stock market into a downward trend of new lows until the presidential election of 1896.
The Panic of 1896 is believed to be a continuation of the Panic of 1893. In the Panic of 1896, the drop in gold reserves worsened the effects of the previous panic and led the United States into an economic depression. 1896 was considered to be the end of a long depression that originated due to the Coinage Act of 1873. The Coinage Act of 1873 deprived the value of silver in America. However, the Resumption Act of 1875 established the gold standard. This was a period of deflation in the American economy. During this period, the Populist Party protested the acquisition of the gold standard, and wanted to reinstate the Bimetallic Standard. The Populist Party protested the acquisition of the Gold Standard due to being unable to pay back debts at lower prices. Farmers wanted the Bimetallic Standard as they could sell their produce at a higher price. Another cause of the economic depression was the Sherman Silver Purchase of 1890, which limited the use of silver in the United States economy. The Sherman Silver Purchase was a failure as most buyers redeemed their coins with gold. This caused the American gold reserves to be consumed. The concerns and issues with gold only increased after J.P. Morgan and the Rothschild’s sold gold to the United States Treasury in 1895 after the gold reserves dropped to $60 million. The economy continued to struggle until the Election of 1896.
The Election of 1896 was important due to the Republican victor, William McKinley, leading the United States Economy out of the Panic of 1896. William McKinley’s economic policy was to keep America on the Gold standard. President McKinley signed the Gold Standard Act of 1900, which kept the United States on the Gold Standard. This weakened the bimetallism movement and reduced the public fear of the Gold Standard. The Gold Standard Act of 1900 was vital as it made gold the main standard for retrieving money and stopped bimetallism.
The effects of the Panic of 1896 included the debate of whether or not the United States should continue using the Gold Standard or convert to a Bimetallic Standard. The economic struggles continued after the Panic of 1893, and the 1895 J.P. Morgan Bonds. This increased the American worry about the strength of the United States economy. Another issue that arose was the Populist Party viewing the Rothschild’s, a wealthy Jewish family, as a negative. This led to the emergence of anti-Semitism within the Populist Party. Another effect of the panic was the rise in the American unemployment rate. The American unemployment increased from 13.7% in 1895 to 14.5% in 1896, this continued until 1898.
In conclusion, the final effect of the panic was from 1896–1897 when many elite bankers in Chicago committed suicide due to the failure of the National Bank of Illinois. This was a result of the bank making a $2.4 million loan to the unprofitable Calumet Electric Street Railroad. This loan caused the National Bank of Illinois to collapse as the bank didn’t have the money to pay back its loans. The collapse of the bank severely impacted the United States economy and is considered to be the final devastating blow of the Panic of 1896.