Lecture 7: The Crisis of the 1890’s


 I. The coming of the 1890’s in the US brought with it an overwhelming sense of doom. The Crisis of the 90’s was a series of crises that seemed to threaten the American way of life. 

A. There was first a “spiritual” crisis—not spiritual in the religious sense, but a general feeling that traditional American values were being lost.  

1. On the one hand, this was partly a result of the business consolidation that had occurred since after the Civil War. Large companies had taken over many smaller ones and business was becoming bigger and bigger, and more and more powerful. The gap between rich and poor was wide and getting wider. 

a. This threatened the traditional view of America as an egalitarian, classless society. It also threatened the still-popular Jeffersonian vision of America as a nation of hard-working farmers.  

b. It seemed to many that a permanent upper class was developing, and the power enjoyed by the wealthy in government posed a clear threat to democracy. 

2. On the other, the very opposite also produced a feeling of uneasiness. Most of the new immigrants to the US were from Eastern and Southern Europe. They came to American cities and worked in factories for very low wages. Few of them spoke English and many were Catholic or Orthodox in faith, so they brought with them many ideas and customs that seemed strange to the majority of Americans. Worse still, they resisted assimilation into mainstream culture and developed instead a plethora of ethnic neighborhoods in which their native languages and cultures predominated. To most Americans, these new immigrants posed as much a threat to the American way as did the large businesses. 

a. Particularly alarming to Americans was the popularity of what seemed to be un-democratic and definitely anti-capitalistic ideas among many of the new immigrants. Many were socialist, and starting in the mid-1870s, a Union movement began. The movement became violent as there were no legal avenues for them to express their grievance. Starting in the mid-1880s the number of violent strikes seemed to explode. 

i. The Haymarket Riot of 1886 alerted people to the dangers of unions. Workers at the McCormick Reaper Works (a factory that made farm equipment) decided to go on strike to try to get an 8 hour work day. The workers were infiltrated by a group of anarchists. They held a rally in Haymarket Square in Chicago (May 4, 1886). Toward the end of the rally, after many of the strikers had gone home, the Chicago police chief ordered 176 officers to disperse the remaining 200 workers. In the process, a large bomb exploded killing 7 policemen and wounding 60. 

ii. Following the riot, Chicago police rounded up all known anarchists and socialists in the Chicago area, finally arresting 8 men—who were quickly convicted with little evidence. Four were hanged in 1887, one committed suicide in jail, and the other 3 spent years in prison before they were pardoned.  

iii. The Homestead Strike in 1892 was another which made Americans fear that they had lost control of their country. The workers at Carnegie Steel in Homestead Pennsylvania had already formed a union, but Carnegie’s factory manager, Henry Frick, decided to try to get rid of it it. He hired 300 private police (“Pinkerton Men”) to protect the steel plant then cut wages and fired the union leaders. The workers fought back and 9 strikers and 7 guards were killed as the workers took over the plant. It took 8000 state troops to re-take the plant, which re-opened and gave jobs back only to non-union workers. Despite this, the violence continued for over 4 months.  

c. These and a rash of other strikes made Americans feel like they were at war with each other. Initially, most Americans took the side of the companies, but over time, unions came to be more accepted.  

3. To make matters worse, the “Battle” at Wounded Knee had put an end to the Indian Wars in the American West and there was a general feeling that the “frontier” had been closed. In fact, the US Census Bureau announced that there was no longer a contiguous frontier line in the US in 1890. The implications of this idea were made explicit by historian Frederick Jackson Turner, who published an article called “The Significance of the Frontier in American History,” in 1893.  

a. Turner’s famous “Frontier Thesis,” which remains influential even today, argued that "The existence of an area of free land, its continuous recession, and the advance of American settlement westward explain American development.” The frontier, he suggested, had shaped much of the American character and political institutions—it had been the main factor in the development of American inventiveness because people living on the frontier had to continuously adapt to survive there. Perhaps the most grandiose claim Turner made was that the frontier allowed for democracy to survive where it might otherwise had died long before—because the rugged individualism required by frontier life would never allow Americans to accept centralized government authority. 

b. Many Americans feared that the “loss” of the frontier would have a negative impact on traditional American values and freedoms.  

B. There was also a severe crisis in agriculture that transformed American farmers into radical political activists.

1. The economic situation of farmers had declined steadily since the “Crime of ’73,” when the US went to the gold standard.  

2. We looked at this in more detail last time, but the main point is that the farmers organized their own political party, the People’s Party, which had a significant impact on national politics in the 1890s. 

C. In addition to these crises, there was also a real and severe economic crisis.  

1. The Panic of 1893 was a cyclical downturn in business that came at a time when the nation was already feeling insecure about its future. 

2. It was caused mainly by the continued purchase of silver by the US government—though the US had gone largely to the gold standard, in order to save jobs in the mining industry, it promised to buy silver to use to make coins. 

3. The Sherman Silver Purchase Act of 1890 nearly doubled the commitment of the government to buy silver—and to allow people to exchange silver for gold at banks--even though it had lost much of its value. 

4. With the act, silver continued to lose its value, and because it was the primary source of coins, a period of rapid inflation ensued (because of increased production, silver lost almost half its value, and because people used silver in many everyday transactions, prices had to go up). 

5. Foreign investors recognized the unstable situation and began to pull their investments out of Wall Street. Ordinary people took advantage of the situation and began exchanging large numbers of silver coins for gold.

6. The US government found itself faced with a severe shortage of gold, and the markets began to collapse. Thousands of banks failed, hundreds of railroads went bankrupt, and 20% of working people lost their jobs. The economy would suffer a deep depression, the worst up to that point, until recovery began in 1897.