The Great Panic of 1873
Here's something you probably haven't yet read: The New York Times article (April 9, 1911) on The Great Panic of 1873, as written by Roger Babson.
Fascinating stuff . . .
>
Source:
Roger W. Babson, the Well Known Statistician, Tells of the Business Epochs That Followed That Period of Depression
The New York Times, April 9, 1911
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Monday, October 27, 2008 | 12:00 PM | Permalink
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I have read other economic blogs that wrote that the crash of 1873 mirrors the turbulent times we are in now more than the crash of 1929
Posted by: kuros | Oct 27, 2008 12:14:21 PM
It started in Vienna and spread to Germany and reached the United States afterwards.
They had no derivatives at the time.
Posted by: Philippe | Oct 27, 2008 12:29:26 PM
Thank you very much! That is fantastic. A great synopsis of the times.
1873-93 may need to be referenced as much as the 1930s to put our current situation in perspective.
Out where I live Indians ruled the land in 1873. Nearby Tombstone didn't even exist until an 1877 silver strike got things started. So to realize how developed the financial markets were back then is something I am not always sensitive to.
thanks again.
Posted by: cloudy | Oct 27, 2008 12:35:04 PM
Just how long has this charade, this ruse leading to wealth for the few over the ruination of lives for the many, been going on, anyway? And haven't we learned our lesson yet? Are we daft as a species?
Posted by: tom | Oct 27, 2008 12:35:33 PM
It's interesting that he argues straight out that government attempts to regulate the "natural" cycle of business are foolish and generally make things worse rather than better.
Posted by: super-anon | Oct 27, 2008 12:36:04 PM
I didn't read the article yet, and maybe it's mentioned somewhere in there, but when was this article written?
Posted by: Molecool | Oct 27, 2008 12:39:02 PM
There's another article I'd read a week or two ago that made comparisons between now and the what he and others have called "The Real Great Depression (Panic of 1873)".
http://piggington.com/the_real_great_depression_panic_of_1873
Posted by: DMSteidl | Oct 27, 2008 12:40:26 PM
Ah, just saw it:
The New York Times, April 9, 1911
Posted by: Molecool | Oct 27, 2008 12:40:28 PM
" Are we daft as a species? "
Tom, we are overrated anyway. We hold our species in much too high a regard....
Just consider the wierd responce from concerned citizen as proof....
Posted by: doug | Oct 27, 2008 1:02:53 PM
Article by Arthur Laffer today. The title and subtitle are the following:
The Age of Prosperity Is Over.
This administration and Congress will be remembered like Herbert Hoover.
http://online.wsj.com/article/SB122506830024970697.html
Posted by: DL | Oct 27, 2008 1:11:16 PM
I liked the use of theword "promptitude"
They just don't make words like they used to, or in 1873 speak, "The republic's scrivanators' scrivanations have declined periously, inopportunatating our hapless widows and orphanatons to a most parsimonious state."
Posted by: fresnodan | Oct 27, 2008 1:14:31 PM
I've always had a gut feeling that the distribution of wealth over the course of human history (and, I suspect, pre-history) has remained largely the same; total wealth distributed over total population of the species has fluctuated within a relatively narrow range, from clan chiefs of cave tribes thru Mesopotamian and Mayan god-kings right down thru Rothschilds, Buffets, Gates, Jamie Dimon, et. al.
Can anyone cite any econometrician who has ever attempted to graph wealth distribution since the "beginning"?
Posted by: batmando | Oct 27, 2008 1:19:17 PM
@ConcernedCitizen: You ARE joking, right?
~~~
EDITOR: ConcernedCitizen is a flame baiting, off topic posting troll.
He's gone
Posted by: Jeff M. | Oct 27, 2008 1:24:19 PM
batmando - fascinating question
Posted by: Jason | Oct 27, 2008 1:25:18 PM
@DL: Good article, loved this quote...
"If you don't believe me, just watch how Congress and Barney Frank run the banks. If you thought they did a bad job running the post office, Amtrak, Fannie Mae, Freddie Mac and the military, just wait till you see what they'll do with Wall Street."
Posted by: Mark W | Oct 27, 2008 1:30:40 PM
@DL: In the article, did that charlatan supply-side huckster admit that his little curve is a bunch of crap or just a practical joke?
Posted by: Jeff M. | Oct 27, 2008 1:36:12 PM
Seems a lot like karma or the tide or the natural selection of universal balance - you were sitting around the previous 5 years thinking this was too good to be true - now you'll be sitting around for the next 5 lamenting how it can't get any worse - then one day 3-4 years from now - EVEN. Like a Seinfeld episode or a trip to Vegas - only its going to last a decade. Just take a look at new car production and sales the last 5 years - reminds me of the RR of the 1870s that went from 7000 miles of new track to 1700 miles. Think auto is ready to lose 75% of its production capabilities?
Posted by: brad | Oct 27, 2008 1:42:48 PM
@ Concerned Citizen
Kevin Phillips relatively recent Wealth and Democracy?
Posted by: batmando | Oct 27, 2008 1:44:00 PM
@ConcernedCitizen: I worked on Wall Street and I can unequivocally say that no, most of them are NOT "liberals". Trust me. The reason NYC is so "liberal" is not due to anything or anyone on Wall Street. Most on Wall St. tend to slant more conservative/pragmatic, meaning they favor anything that makes THEM money. That's their ideology - MONEY. That's really it in the end for most of them and most tend to worship the false prophets at the alter of the GOP. It's a fact.
Posted by: Jeff M. | Oct 27, 2008 1:47:25 PM
Yes 1873, the peak of reconstruction before "states rights" started rolling away all the protections for anyone with more than a drop of "non-white" blood. The depression was worked through with new slave labor in the South. In the North we had Carnegie and the strike busting Pinkertons. It was your money or your life and no nonsense. From the state legislators to the president it was all about the railroads. Darwin was getting thrown in the mix to prove that being a predator was the natural and correct way of dealing with things in business or anywhere else. When the NYT wrote about this time in 1911, we had made a heap of progress. In the world's fair in 1904 they had Pygmies from Africa on display. They kept one of them afterwards in a zoo cage along with an Orangutan monkey. This Pygmy had been in the Bronx Zoo for 7 years by 1911. He still had 5 years of "life" left. Nobody killed him. He was given the best of care in his zoo cage. He committed suicide in 1916. I can't imagine why. Yeah, we certainly have come a long way. We don't lynch em' any more, do we? We just call them Muslims, commies or Socialist.
Posted by: AGG | Oct 27, 2008 1:53:39 PM
oh god, back in the day when they paid you by the word...
Posted by: Michael Donnelly | Oct 27, 2008 1:55:47 PM
seems like liberals aren't the only ones smoking pot here.
Posted by: lucioloud | Oct 27, 2008 1:58:20 PM
Sound familiar? The same crime is at the scene of every major financial disaster it seems:
Instead, however, of allowing conditions to adjust themselves naturally, the people attempted to bring still greater prosperity by indulging in more unintelligent legislation. Not content with making abnormally large appropriations the Fifty-first Congress began to increase the money in circulation inflate the currency and issue Treasury notes.
Posted by: super-anon | Oct 27, 2008 2:03:17 PM
Another wonderful rendition of this from a historian. This is Dr. Nelson's piece, referenced in the piggington.com post above.
http://chronicle.com/temp/reprint.php?id=477k3d8mh2wmtpc4b6h07p4hy9z83x18
I find the societal responses most interesting - violent demonstrations, destruction of railroads (which were the dot coms of the day), anti-Semitic pogroms in Russia.
Who here hasn't minimally entertained the fanciful thought of turning idiot bankers into lamppost ornaments?
Things are happening in compressed time now, so the time scales are very different than in the 30s. But if things are markedly worse in 4 years, I could see a world where fascism comes to America, "wrapped in the flag and carrying a cross," as Sinclair would put it.
Posted by: ZackAttack | Oct 27, 2008 2:04:38 PM
ConcernedCitizen,
A friend says he keeps his liberal mouth shut at one of the big Wall Street firms -- even now amidst all the hypocritical bailouts -- for fear of being ostracized. That's my one anecdote about how "Republican" the environment is.
I've seen your good posts before. So, I'm confident you're not mindlessly channeling right-wing radio. But, I do fear that the "Wall Street liberal" label is going to be heavily marketed on the air -- "*successfully*". From what I see (the anecdote plus the regular business television coverage that CNBCsucks so properly skewers), I think it's incorrect.
Also, by the way, San Diego tilts to the right, unlike much of the rest of California.
Posted by: wunsacon | Oct 27, 2008 2:13:00 PM
