Sherrie L. Smith
Instructor: Laura Perry
US History II (R62-S12C)
February 4th, 2012
In 1890s the depression played a large role of political tension. Government responses to depression during the 1890s exhibited elements of complexity, confusion, and contradiction. Yet they also showed a pattern that confirmed the transitional character of the era and clarified the role of the business crisis in the emergence of modern America.
As demand for American goods and crops decreased, falling prices affected both the agricultural and manufacturing sectors. Corn, wheat, and cotton farmers responded by planting more, which only worsened the problem. The railroad industry, which had helped drive the American economy in prior decades, slowed as railroad companies overextended themselves and became unpopular among Americans due to monopolistic practices. As confidence in the US economy wavered, the stock market crashed, pushing companies into bankruptcy. Because paper currency had to be backed by gold, people did not have much faith in paper currency and traded it in for gold. With gold reserves depleted, banks asked debtors to pay off their loans. The purchasing power of Americans decreased, leading to the closure of factories and failure of companies which caused the American public to lose faith in the government.
The depression was a major issue in the debates over Bimetallism. The Republicans blamed the Democrats and scored a landslide victory in the 1894 state and Congressional elections. The Populists lost most of their strength and had to support the Democrats in 1896. The presidential election of 1896 was fought on economic issues and was marked by a decisive victory of the pro-gold, high-tariff Republicans led by William McKinley over pro-silver William Jennings Bryan.
The US economy finally began to recover in 1897. With the Gold Standard Act establishing gold as the standard of currency the US economy began to recover in the...