American+Panics

=Recessions & Depressions in American History 1789 - 1900 =

Zack Aranda & Andrea Caballero
Recessions have characterized the American economy ever since its birth in the late 18th century. In fact, any country that has a similar economic structure has suffered through some form of decline. The United States suffered its first recession in 1797, when deflating effects hit the economy from England. After periods of prosperity, a collapse of the economy usually happens. Before an economic depression, the preceding years are marked by extraordinary speculation, carried on by an unsound banking system. Then, a financial panic or a crash of the stock market occurs which makes investors lose confidence. A high level of unemployment is the result. If the panic is short-lived, it is called a recession.

Timeline
 * __Panic of 1792__: Shortly after the founding of the First Bank of the United States in 1791, it overextended bank notes and discounts. Speculators quickly sold their holdings in the bank's shares, leading to the first market securities panic.


 * __Panic of 1797__: Between 1797 and 1800, this recession was caused by the deflating effects of the Bank of England as it crossed into American soil. Commercial real estate markets were disrupted as a result. This was an example of how a recession can spread from country to country. [[image:ANTI-VB1840_thumb.jpg align="left"]]
 * __Depression of 1807__: Between 1807 and 1814, the Embargo Act signed by President Jefferson destroyed a good part of the shipping-related industries. Federalists allowed smuggling while people involved with this industry suffered. It was the first depression since the 1780's.
 * __Panic of 1819__: The Second Bank of the United States contracted its extension of credit, seeking to curb speculation, leading to the first major financial crisis in the United States' economy. Widespread foreclosures, bank failures, unemployment, and a slump in agriculture and manufacturing showed its effects on the entire nation. Southern and western states were hit hardest as banks suspended payments. Commodity prices declined as well. It also marked the end of the great economic expansion after the War of 1812.
 * __Panic of 1819__: The Second Bank of the United States contracted its extension of credit, seeking to curb speculation, leading to the first major financial crisis in the United States' economy. Widespread foreclosures, bank failures, unemployment, and a slump in agriculture and manufacturing showed its effects on the entire nation. Southern and western states were hit hardest as banks suspended payments. Commodity prices declined as well. It also marked the end of the great economic expansion after the War of 1812.
 * __Panic of 1819__: The Second Bank of the United States contracted its extension of credit, seeking to curb speculation, leading to the first major financial crisis in the United States' economy. Widespread foreclosures, bank failures, unemployment, and a slump in agriculture and manufacturing showed its effects on the entire nation. Southern and western states were hit hardest as banks suspended payments. Commodity prices declined as well. It also marked the end of the great economic expansion after the War of 1812.
 * __Panic of 1825__: This stock market crash started in the Bank of England, arising out of speculation investments in Latin America.


 * __Panic of 1837__: Several events led to this panic, mostly from President Jackson's order that attempted to end speculation in western lands by requiring specie for their purchase. The Deposit Act in 1836 ordered surplus in the Treasury to be redistributed to the states. Also, the Second Bank of the United Stated dissolved after Jackson's veto of an act to recharter it in 1832. With specie being depleted by 80%, the public lost confidence and withdrew their deposits. A 6 year downturn began that was the most severe of the 19th century. [[image:wallstreepanic_thumb.jpg align="right"]]


 * __Panic of 1857__: The catalyst for this panic was the failure of the Ohio Life Insurance Company in August, spreading to eastern money centers. Unemployment grew, breadlines formed, and social unrest appeared. The depression was most serious in the industrial northeast and the western wheat belt. However, the cotton belt was less affected as cotton prices were high and banks were sound. The drive for free land began as a result.


 * [[image:image003_thumb.jpg align="left"]]__Panic of 1873__: The collapse of several important eastern firms such as the Jay Cooke and Company precipitated the panic. Excessive railroad construction was also an important factor. Credit inflation and overinvestment in factories and buildings occurred. In the following depression, the majority of banks declined into bankruptcy. Wage reductions led to strikes such as the Great Uprising of 1877 and miner's strikes in Pennsylvania. The depression lasted until 1878.
 * __Panic of 1893__: Railroad overbuilding and shaky railroad financing set off a series of bank failures. The nation also suffered from decreased federal reserves and heavy expenditures, including the purchase of silver under the Sherman Silver Purchase Act of 1890. President [[image:800px-War_of_wealth_bank_run_poster_thumb.jpg align="right"]]Cleveland sought to repeal this act to cure the depression. The act was appealed by October and imports of gold stabilized the monetary situation. Poor European crops stimulated American exports and the importation of gold.
 * <span style="font-family: Verdana,Geneva,sans-serif;">__Panic of 1893__: Railroad overbuilding and shaky railroad financing set off a series of bank failures. The nation also suffered from decreased federal reserves and heavy expenditures, including the purchase of silver under the Sherman Silver Purchase Act of 1890. President [[image:800px-War_of_wealth_bank_run_poster_thumb.jpg align="right"]]<span style="font-family: Verdana,Geneva,sans-serif;">Cleveland sought to repeal this act to cure the depression. The act was appealed by October and imports of gold stabilized the monetary situation. Poor European crops stimulated American exports and the importation of gold.

<span style="background-color: #008000; color: #ffffff; display: block; font-size: 170%; text-align: center;">Glossary
 * <span style="font-family: Verdana,Geneva,sans-serif;"><span style="color: #0000ff; font-family: Verdana,Geneva,sans-serif;">**Financial Panic** - <span style="font-family: Verdana,Geneva,sans-serif;">a sudden widespread fear concerning financial affairs leading to credit contraction and widespread sale of securities at depressed prices in an effort to acquire cash.
 * <span style="color: #333333; font-family: Verdana,Arial,Helvetica,sans-serif; line-height: 16px;"> <span style="font-family: Verdana,Geneva,sans-serif;"> **<span style="color: #0000ff; font-family: Verdana,Arial,Helvetica,sans-serif;">R ecession** - a <span style="font-family: Verdana,Geneva,sans-serif;">general slowdown in economic activity over a period of time, caused by a decrease in spending.
 * <span style="font-family: Verdana,Geneva,sans-serif;"><span style="color: #0000ff; font-family: Verdana,Arial,Helvetica,sans-serif;">**Depression** <span style="color: #333333; font-family: Verdana,Arial,Helvetica,sans-serif;"> - <span style="color: #000000; font-family: Verdana,Geneva,sans-serif;">severe downturn that lasts several years. Usually marked by <span style="font-family: Verdana,Geneva,sans-serif;">abnormal increases in unemployment, falls in the availability of credit, shrinking output and investment, numerous bankruptcies, and reduced amounts of trade and commerce.
 * <span style="color: #0000ff; font-family: Verdana,Geneva,sans-serif;">**Downturn** - <span style="color: #000000; font-family: Verdana,Geneva,sans-serif;">suggests that the economy is entering into a recession.
 * <span style="color: #0000ff; font-family: Verdana,Geneva,sans-serif;">**Black F**<span style="color: #0000ff; font-family: Arial,Helvetica,sans-serif;">**riday** <span style="color: #000000; font-family: Verdana,Geneva,sans-serif;">- name given to any Friday that an economic calamity has occured.
 * <span style="color: #0000ff; font-family: Verdana,Geneva,sans-serif;">**stock market** - <span style="color: #000000; font-family: Verdana,Geneva,sans-serif;">organized trading of stocks through exchanges. [[image:300px-Panic_of_1873_bank_run.jpg width="227" height="255" align="right"]]
 * <span style="color: #0000ff; font-family: Verdana,Geneva,sans-serif;">**speculation** <span style="color: #000000; font-family: Verdana,Geneva,sans-serif;">- engagement in risky business transactions on the chance of quick or considerable profit.
 * <span style="color: #0000ff; font-family: Verdana,Geneva,sans-serif;">**First Bank of the United States** <span style="color: #000000; font-family: Verdana,Geneva,sans-serif;">- proposed by Alexander Hamilton and chartered by Congress in 1791. Created to handle the financial needs of the new nation. It expired under James Madison in 1811.
 * <span style="color: #0000ff; font-family: Verdana,Geneva,sans-serif;">**Bank of England** <span style="color: #000000; font-family: Verdana,Geneva,sans-serif;"><span style="color: #000000; font-family: Verdana,Geneva,sans-serif;">- Britain's central bank created in 1694 during the reign of King William and Queen Mary. It was established by William Paterson as a private company, lending to the government and acting as its debt manager.
 * <span style="color: #0000ff; font-family: Verdana,Geneva,sans-serif;">**Embargo Act** - <span style="color: #000000; font-family: Verdana,Geneva,sans-serif;">Law passed by Congress and signed by President Jefferson in 1807. This law stopped all trade between America and any other country. The goal was to get Britain and France, who were fighting each other at the time, to stop restricting American trade. The Act backfired, and the American people suffered. The Act was ended in 1809.
 * <span style="color: #0000ff; font-family: Verdana,Geneva,sans-serif;">**Second Bank of the United States** - <span style="color: #000000; font-family: Verdana,Geneva,sans-serif;">chartered in 1816 after the need to finance military operations. President Jackson refused to renew the charter. The bank lasted for 20 years.
 * <span style="color: #000000; font-family: Verdana,Geneva,sans-serif;"><span style="color: #0000ff; font-family: Verdana,Geneva,sans-serif;">**Deposit Act of 1836** - <span style="color: #000000; font-family: Verdana,Geneva,sans-serif;"><span style="color: #000000; font-family: Verdana,Geneva,sans-serif;">provided for the distribution of approximately $30 million of the $35 million in the U.S. Treasury surplus and to state banks on the basis of each state's representation in Congress. The act ended congressional fights over the surplus, thwarted Western hopes for reduced prices for government land, benefited old states more than the new, and diverted attention from Henry Clay's distribution bill that proposed distributing proceeds of federal land sales to the states. Deposits were halted when the surplus became a deficit during the Panic of 1837.
 * <span style="color: #0000ff; font-family: Verdana,Geneva,sans-serif;">**specie** <span style="color: #000000; font-family: Verdana,Geneva,sans-serif;">- money paid in coinage.
 * <span style="color: #0000ff; font-family: Verdana,Geneva,sans-serif;">**Ohio Life Insurance Company** <span style="color: #000000; font-family: Verdana,Geneva,sans-serif;">- when it failed in 1857 because of bad investments in agriculture-related businesses, it set off a chain effect that resulted in the Panic of 1857.
 * <span style="color: #000000; font-family: Verdana,Geneva,sans-serif;"><span style="color: #0000ff; font-family: Verdana,Geneva,sans-serif;">**Jay Cooke and Company** <span style="color: #000000; font-family: Verdana,Geneva,sans-serif;">- <span style="color: #000000; font-family: Verdana,Geneva,sans-serif;">lasted from 1861 until it overextended itself in railroad securities in 1873 during the Panic of 1873.
 * <span style="color: #0000ff; font-family: Verdana,Geneva,sans-serif;">**inflation** <span style="color: #000000; font-family: Verdana,Geneva,sans-serif;">- a general and progressive increase in prices.
 * <span style="color: #0000ff; font-family: Verdana,Geneva,sans-serif;">**bankr<span style="color: #0000ff; font-family: Verdana,Geneva,sans-serif;">uptcy ** <span style="color: #000000; font-family: Verdana,Geneva,sans-serif;">- inability to discharge all debts.
 * <span style="color: #0000ff; font-family: Verdana,Geneva,sans-serif;">**foreclosure** <span style="color: #000000; font-family: Verdana,Geneva,sans-serif;">- the legal process by which an owner's right to a property is terminated, usually due to default.
 * <span style="color: #0000ff; font-family: Verdana,Geneva,sans-serif;">**deflation** - <span style="color: #000000; font-family: Verdana,Geneva,sans-serif;">the opposite of inflation, where there is decline in price levels.
 * <span style="color: #0000ff; font-family: Verdana,Geneva,sans-serif;">**stagnation** <span style="color: #000000; font-family: Verdana,Geneva,sans-serif;">- prolonged period of slow economic growth.

<span style="background-color: #00ffff; color: #ffffff; display: block; font-size: 170%; text-align: center;">Now Time for Some Fun!!!=) A.1797 B. First Bank of the United States C. President Jefferson D. Panic of 1837 E. recession F. Panic of 1893 G. 1791 H. bank failures I. Bank of England J. Panic of 1873

1. Signed the Embargo Act 2. Railroad overbuilding and shaky railroad financing caused this 3. the slowdown in economic activity over a period of time 4. was established as a private company 5. when first recession was suffered in the United States 6. created to handle the financial needs of the new nation 7. caused by an attempted to end speculation in western lands by requiring specie for their purchase 8. gold stabilized this 9. miner's strikes in Pennsylvania occurred during this Panic 10. the founding of the First Bank of the United States was in this year

http://americanpanics.wikispaces.com/Answers+to+your+fun+activity
 * Here are the answers!**

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