FROM THE ARCHIVES:The "Panic of 1873", also known as the Great Depression until the 1930s usurped the title, was caused by the railway boom and the abandonment of silver as the basis for money by Germany and the US. Advising Irish emigrants not to go there, an American correspondent for The Irish Timeshad a familiar explanation for what happened – Americans had lost the run of themselves. – JOE JOYCE
WHAT HAS brought all this about? The failure of Jay Cooke and Co? Not a bit of it.
No sane man could attribute the present state of this country to the failure of any one banking firm. The truth is just this: the whole population has been living at the height of extravagance. Few have been saving any money. The mass of the people live up to their earnings.
There never was a people who could as truly adopt as a motto, “Let us eat, drink, and be merry, for tomorrow we die,” as the people of these United States. Food, and dress, and pleasure are all that the whole population appear to live for.
The result has been that money has been spent by all as fast as it was earned, and wealth has not, of course, accumulated.
And now, when the testing time comes, there is not money in the country to tide over an unfortunate panic. . The crisis may be reached slowly; an occurrence like Jay Cooke and Co’s failure may hasten its development, but that it must always come, sooner or later, from such a mode of life as this population pursues, there can be no doubt.
The monetary crisis through which this country is now passing is just curing the people of many of the evils which brought it about; and although the means towards this cure may be severe, yet it will result in lasting benefit to all.
Extravagance in the mode of life is already being got rid of. Flash and show, and mere luxuries, are being cut away. The money which went for these is being hoarded-up, but the home is yet the bank for it. The money thus being saved has not found its way into circulation. It is being preserved from the mad waste of the past, but has not yet found its way to create wealth for the future.
The result of this, just today, is to add to the embarrassments in business. Trade is being limited. Demand is small. Money is not circulative. Banks are not receiving deposits. Everyone is doubtful as to the future, and absolute necessaries of life only are dealt in all round. This, again, is working another benefit. Prices are falling everywhere.
Goods are being “marked down” at every “store” in order to try to realize currency by their ready sale. Wages have been reduced over the whole country from 10 to 20 per cent.
Workmen are glad to get anything to do at even these reduced terms.
We were to have “strikes” of various “Trades’ Unions” this “fall”. But these are now heard of no more; and lower wages are gladly accepted.
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