May 5, 1893: The Panic of 1893

May 5, 1893: The American stock markets crash, an occurrence known as the Panic of 1893. It causes a nasty depression.

The causes can be traced back to 1890, to a wheat crop failure in Argentina. This led to an unsuccessful coup in that country, which led to European investors pulling their money out of the country. Speculations in South Africa and Australia also collapsed, affecting the British Empire, which in turn affected the European continent. 

This led to a run on gold in the U.S. Treasury. This shook the American economy, and led to Grover Cleveland, who had lost the 1888 Presidential election to Benjamin Harrison, defeating Harrison in 1892, and becoming the only President to regain the office.

On February 20, 1893, 12 days before Cleveland's Inauguration, the Philadelphia and Reading Railroad was forced into receivership. Shortly after taking office, Cleveland, a big believer in the gold standard, convinced Congress to repeal the Sherman Silver Purchase Act of 1890, which he thought was the chief cause of the crisis.

It might have been the right thing to do, but it might also have been too late: The European markets were a mess, and European investors sold their stock in American companies, causing the Panic on May 5. The economy fell into a depression, and over the course of the calendar year, 3 more major railroads went bankrupt: The Union Pacific, the Northern Pacific, and the Atchison, Topeka & Santa Fe. (Each of these would reorganize, and survive until Amtrak took over passenger service in 1971, and all still run freight under different corporations today.)

To make matters worse, Cleveland discovered he had oral cancer. Like a previous President, Ulysses S. Grant, he loved cigars, and it caught up with him. Unlike Grant, the tumor was in his palette, not his throat, and was operable.

But, concerned that publicizing his illness would cause people to lose confidence in their President, and thus lose whatever remaining confidence they had in the economy, he had to keep his surgery a secret. On June 30, he took a train to New York, announced as a fishing vacation. On July 1, on a yacht in the East River, away from prying eyes, he was operated on.

The tumor was removed, but when he woke up, he found he couldn't speak. A 2nd surgery had to be performed, to provide him with a rubber substitute for the upper jaw area that was removed. After that, he was fine, and the details of the surgery were not revealed until years after his death.

He was able to return to work quickly, but the economy fell further. The unemployment rate hit 25 percent in Pennsylvania, 35 percent in New York State, and 43 percent in Michigan. U.S. gold reserves fell dangerously low. Cleveland ended up borrowing gold from investment banker J.P. Morgan and the Rothschild banking family, about $65 million worth. (In 2022 money, about $2.1 billion.)

It provided a floor for the economy, but getting off the floor just wasn't happening. Jobs continued to be lost, and wages for jobs that still existed got cut. Farm prices dropped. Shipping was hit hard. Railroads continued to suffer. Labor strife abounded, leading to the Pullman Strike in the Summer of 1894. Cleveland sent the U.S. Army to break it up, since it was interfering with the mail. Constitutionally, it was legal. Morally, it was reprehensible.

People starved. Soup kitchens sprouted up, presaging the later Great Depression of the 1930s. And, as Herbert Hoover did then, Cleveland didn't think the Constitution allowed him to do any more to improve things than he was already doing.

An urban legend, probably not true but meant to allege Cleveland's disinterest in people's suffering, told of him walking out of the White House, and seeing someone eating the grass on the lawn. The man told Cleveland that he was starving. Cleveland told him, "If you're going to eat the grass, you might as well do some good. Go over there, where the grass is longer."

The 1894 election saw the greatest wipeout in American Congressional history. Although the process had begun under Harrison and the Republicans, people had short memories, and blamed Cleveland and the Democrats for it. The Republicans gained 110 seats in the House of Representatives, an all-time record, and took control. They already had control of the Senate, and so they gained just 2 seats there.

By the time the choice had to be made on whether to run again in 1896, the economy's recovery was still slow, and Cleveland believed the Democratic nominee would lose, no matter who it was, and so he stepped aside. Ironically, the winning Republican was William McKinley, then Governor of Ohio, who, as a member of the House in 1890, had written a tariff bill that, along with the Silver Purchase Act written by his home-State colleague, Senator John Sherman (brother of General William T. Sherman), had been one of the major causes of the Panic. So not only did Harrison pretty much get absolved of blame, but so did McKinley.

The Spanish-American War of 1898 swept aside the last vestiges of the 1890s depression. For a country, war is good for business -- but only if you win.

Cleveland died in 1908, from heart trouble, not from any form of cancer. By that point, his reputation had pretty much been restored, and he was fondly remembered again.

UPDATE: This was the decade known as the Gay Nineties, in this case "gay" meaning "joyful." (Despite the excesses of Oscar Wilde, "gay" was not in-subculture slang for "homosexual" until the 1930s, and wasn't widely used as such until the 1960s.) But, for the most part, it was not joyful.

And the era from the end of the Civil War in 1865 to the rise of Theodore Roosevelt in 1901 became known as the Gilded Age. In a White House press conference on April 19, 2025, Donald Trump said:

You know, our country was the strongest, believe it or not, from 1870 to 1913. You know why? It was all tariff-based. We had no income tax. Then in 1913, some genius came up with the idea of let's charge the people of our country, not foreign countries that are ripping off our country. And the country was never relatively, was never that kind of wealth.

In response, historian Lauren Thompson, author of some books on the period, wrote this on Facebook, citing the Panics of 1873 and 1893:

Do you know what happened between 1870 and 1913? There were two economic panics. Huge ones. Deep, scarring panics where many working people went hungry and jobless. Do you know who was "rich" in that period? The Carnegies. The Vanderbilts. J.P. Morgan, who almost singlehandedly controlled the nation money's supply. Wild swings occurred in the stock market.

Working people were paid pennies. Middle-class people made money, bought homes, and lost them with regularity. There was no economic stability. There was no regulation. Between 1880 and 1905 there were well over 36,000 strikes involving 6 million workers. Do you know what they were striking for? The biggest ask was an 8-hour workday.

Do you know what Congress focused on instead? Passing obscenity law, obsessing about sex and white women's purity. Creating instability in the Philippines, the Carribbean and Latin America via colonialist, eugenic-based projects. Enriching themselves on kickbacks from industries like the railroads. Rejecting appeals for women's suffrage and anti-lynching laws. State governments doubled-down on segregation law and passed laws to try to control what was taught in classrooms.

Sound familiar?

Yes, it does. For 21st Century Republicans, as it was for 1865-1901 Republicans, it's "the usual."

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May 5, 1893 was a Friday. The only major professional sports league in America at the time was baseball's National League, and these games were played in it:

* The New York Giants lost to the Washington Senators, 11-3 at Boundary Field in Washington.

* The Brooklyn Bridegrooms beat the Philadelphia Phillies, 3-1 at Eastern Park in Brooklyn.

* The Baltimore Orioles beat the Boston Beaneaters, 8-2 at Union Park in Baltimore. From 1891 to 1898, one of these teams would win the NL Pennant in each season: The Beaneaters in '91, '92, '93, '97 and '98; and the Orioles in '94, '95 and '96.

* The Cleveland Spiders beat the Chicago Colts, 9-6 at League Park in Cleveland.

* The Cincinnati Reds beat the St. Louis Browns, 3-2 at League Park in Cincinnati.

* And the Pittsburgh Pirates and the Louisville Colonels were rained out at Exposition Park in Pittsburgh. The game was made up as part of a doubleheader on August 10. The Colonels won the opener, 11-6. The Pirates won the nightcap, 14-3.

After the 1899 season, the Senators, the Orioles, the Spiders and the Colonels were contracted out of the NL. The Bridgegrooms -- so named because several of their players had gotten married in a single off-season -- had already bought most of the Orioles' stars, including manager Ned Hanlon, and, for a circus troupe named Hanlon's Superbas, renamed themselves the Brooklyn Superbas. They won Pennants in 1899 and 1900. In 1911, they became the Dodgers.

After 1899, the Pirates bought the Colonels' contracts, including that of Honus Wanger, and won 3 straight Pennants, 1901-03. In 1900, the Browns became the Cardinals. In 1903, the Colts became the Cubs. The American League was founded in 1901, and would have their own teams named the St. Louis Browns, the Baltimore Orioles (the same team, moving to Baltimore in 1954), and the Washington Senators.