Answer:
Step-by-step explanation:
The Depression of the 1890s, also known as the Long Depression or the Great Depression of 1893, was a severe economic downturn that lasted from 1893 to 1898 in the United States and had significant global repercussions. Several factors contributed to the crisis:
Overexpansion and Speculation: In the late 1800s, there was significant overexpansion and speculation in the American economy. Railroads, mines, and other industries experienced rapid growth, fueled by excessive borrowing and speculation. As a result, there was an artificial inflation of asset prices, which eventually led to a market correction and financial panic.
Agricultural and Farming Woes: The agricultural sector faced difficulties during this period. Crop prices plummeted due to overproduction, leading to a decline in farm incomes. Farmers were burdened with high debt levels, making it challenging for them to repay loans or invest in their operations.
Monetary Policies: The gold standard, which tied the U.S. currency to the value of gold, was in effect during this time. The government's adherence to the gold standard limited its ability to respond effectively to the economic crisis. Additionally, the shrinking gold reserves exacerbated deflation, as the money supply could not expand to meet economic demands.
Railroad Bankruptcies: The expansion of railroads had been a significant driver of economic growth, but many railroad companies had overextended themselves, leading to bankruptcies and widespread job losses in the sector.
Bank Failures: The economic downturn triggered a series of bank failures. The Panic of 1893 resulted in a run on banks and a loss of confidence in the banking system, leading to numerous bank closures and subsequent impacts on the broader economy.
Decline in Foreign Investment: The depression affected global markets, leading to a decline in foreign investment in the United States. This reduced capital inflow and made it harder for businesses to access credit and funding.
Government Inaction: The government's response to the crisis was slow and inadequate. President Grover Cleveland's administration initially adopted a hands-off approach, which exacerbated the severity of the depression. It was not until 1894 that Congress passed the Wilson-Gorman Tariff Act in an attempt to address some of the economic issues.
Labor Unrest: The economic hardships faced by the working class led to labor unrest and strikes across various industries. The Pullman Strike of 1894, one of the most notable labor disputes of the time, further disrupted the economy and added to the overall turmoil.
These factors, among others, created a complex and severe economic downturn that lasted for several years, causing widespread unemployment, business failures, and hardship for many Americans. The depression eventually began to subside towards the end of the decade, as the economy gradually recovered, but its impacts were felt for years to come.