Depressing events: the onset of the great Depression of 1893

1893 opened in optimism with what Dun’s year-end review called “the largest trade ever known, mills crowded with work and all business stimulated by high hopes,” and ended in despair with a “sudden shrinkage of trade, in commercial disasters and depression of industries, the worst for fifty years.”   The depression that began in 1893 developed slowly over the year, amidst continual reassurances that there was nothing to worry about and that things were getting better. Only by the end of the year was the extent of damage becoming clear.

Studies of the 1893 Depression typically trace its start to a sudden fall in January of shares in the giant Distilling and Cattle Feeding Company, generally called the “Whisky trust,” and to the financial collapse in February of the Philadelphia and Reading Railroad Company, both events caused by heavy debt and financial peculation, at a time when there was already concern about declining  gold reserves. The treasury “is practically empty of gold,” ran one report, as quantities of U.S. gold were being shipped overseas to cover foreign obligations, leaving just over $108 million in the treasury. $100 million was regarded as the mostly symbolic yet untouchable reserve necessary to support currency in circulation. Not to worry, said New York financiers and government officials: “To say that the treasury is in a bankrupt condition is absurd,” remarked one bank official. “Economy and retrenchment are all that are needed to make the financial condition of the treasury sound.”

By March the term “stringency” was increasingly used to describe the shortage of money reaching Kansas City: “Bankers have become more careful,” the Kansas City Star reported, “and the calling of loans in the East has resulted in an increased demand for money at Western banks.” It was “merely a flurry which will gradually pass away. There is no talk of a panic,” the paper said before implicitly contradicting itself by adding that there was “no reason for such talk.”  Nevertheless, the Kansas City Times was already talking about financial depression and its principal cause, as the paper saw it: “loss of confidence in promises to pay.” Therefore, the way to avoid a depression, the editors concluded, was simply for everyone to start behaving honorably: “Give assurance that every promise will be redeemed according to the terms of its making” the editors advised.

A more common explanation for market fears and stock market declines was the drain on U.S. gold supplies, caused in part, Democrats claimed, by the$5 1893 Gold Eagle Republican-created Sherman Silver Purchase Act of 1890, which required the Treasury to purchase large quantities of silver with$5 gold eagle front special issues of treasury notes that, in an effort to maintain silver’s value, could be redeemed for either silver or gold. Inevitably, investors at home and abroad bought overvalued silver and exchanged it at a profit for undervalued gold.

“Gold bugs,” as William Jennings Bryan called them, wanted to end the silver purchase law and make gold the sole basis for U.S. currency, while others argued that even if the Sherman Act itself was faulty, silver, along with gold, had been throughout history, “the measure of values and the medium of exchange of all the commodities of the world,”  as the editors of the pro-Republican Kansas City Journal put it.

The demonetizing of silver by the U.S. in 1873 was the result, Journaleditors argued, of a conspiracy “consummated in secret and in the dark,” even though the U.S. was a debtor nation and the world’s largest producer of silver: “It was a crime unequaled in its audacity and unparalleled in its effects, and its authors will receive the execrations of mankind in increasing measure as the years go by.” More than slight suggestions of anti-semitism were often contained in such accusations. As the monetary standard in the U.S. was reduced to gold, prices of leading commodities over the twenty years since 1873 had fallen by thirty to sixty percent as foreign competitors on the silver standard became more competitive.

Stock declines continued intermittently through March and April as gold reserves continued to fall: by April they were down to less than $103 million. There were rumors the Cleveland administration no longer regarded a $100 million reserve as “an absolute necessity,” as the Treasury announced plans to issue bonds to protect the reserve. A New York banker reassured investors that the decline in the reserve was “no occasion for uneasiness” but simply a reflection of the country’s prosperity. In any case, he added, the World’s Fair, the Columbian Exposition in Chicago, would “keep money at home and bring in a good deal of metal.”

The pro-Democratic Star assured its readers that there was no reason to fear for the country’s financial condition in view of “the sound and conservative financial ideas” of the Cleveland administration, in contrast to the largesse of its Republican predecessor.  Nevertheless, the administration was clearly unsure what to do as the gold reserve had by late April fallen over $4 million below the reserve limit while Secretary of the Treasury John  Carlisle dropped the plan to issue bonds, leaving people to guess how low he would let the reserve go before issuing defensive bonds.

The pro-Democrat Kansas City Times insisted that current economic problems were due only to the effects of the Sherman act, and Congressional -- read Republican -- reluctance to repeal it.  The Journal insisted that the Sherman law, passed under the previous Republican administration of Benjamin Harrison, had nothing to do with the decline in the reserve fund, which it insisted was caused mainly by the country’s negative balance of trade with Europe. Thus, repealing the law would have no effect on the gold outflow. Both papers agreed, however, that the country was prosperous and a serious depression unlikely, although the pro-Populist Kansas City Mail pointed out that it wasn’t only the shrinking gold fund that was a problem: the government was running an annual deficit estimated at $10 million, principally due to another example of Republican largesse: post-Civil War pensions being doled out to Union (but not, of course, Confederate) veterans and their families.

By May the relatively restrained tone of public discourse over the economy was giving way to alarm, or what the Star called “prophecies of a panic.” Alarmists, the paper reported, were predicting bank failures, stock trading houses falling, the U.S. government going bankrupt and business “crumbling into general chaos.”  The paper dismissed the talk as Wall’s Street’s “annual panic,” caused by a speculative bubble in stocks of giant trusts like the American Sugar Refining Company, whose executives inflated the company’s value to drive up stock prices. The management of other companies, including Distilling and Cattle Feeding and General Electric, engaged in similar dishonest tactics that encouraged the public to buy shares at a high price before using what the paper called “some trick played to force holders of shares to sell out, panic stricken,” at a low price. In such devious tactics the paper found the real reason for the collapse of market values -- not the gold drain or the Sherman law or the government deficit but greed: “Wall Street alone is to blame.” The New York Stock Exchange has become, wrote the editors of the Star, “an institution where gamblers can rob the public through dishonest tricks.”

There’s no danger of a panic, said Ohio Governor and future President McKinley; the economy was just going through one of its“little flurries” that harm mainly the “poorer classes” who rush to take their money from savings banks. People just need to keep calm, said the governor, “and all will come out well in the end.”  But people could be excused for not being reassured during what the Times called “the great bubble-bursting period,” in which collapses were occurring among giant companies like Cordage that the public previously regarded as pillars of the economy, while banks and businesses sought safety from the storm. Still, the paper concluded reassuringly, banks were in good condition and a bank failure in Kansas City “is well nigh impossible.” The recent failure of several banks in the region was due, said the Star, solely to poor management practices: “not one really important failure has occurred.”

As stocks across the board continued to tumble on Wall Street, there was also news of decline in prices in the wheat market, tied to the state of finances. The governor of the Bank of England thought the country was facing “a very serious situation” which would not be solved by repealing the Sherman law. He had his own diagnosis of the causes: “The increase in population and commerce has been so rapid and so great,” he said, “that the output of properly guarded legal tenders has not been sufficient to keep pace with the demands of the country.”

There was no agreement among experts on what the problem was with the economy, whether in fact there was a problem, and if there was, what the causes were, although partisan voices were happy to fault the other party’s policies. The former postmaster general in the Republican Harrison administration thought the problem was that businessmen were feeling uncertain due to the Cleveland administration’s “equivocal policy in regard to tariff and money […].” The previous Republican administration, guided by then U.S. Senator McKinley, had supported high tariffs to promote U.S. industry; Cleveland Democrats promised in the 1890 campaign to lower them but had as yet failed to do so. Democrats thought the problem was “financial stringency,” and blamed the Sherman law, claiming it caused bankers to hoard gold. Far from being “equivocal,” Democratic editors claimed, the Cleveland policy was clear: “He is preparing,” the Star asserted in June, “with all feasible dispatch, to carry out the reforms to which he and his party are committed.[…]” All that is needed to “restore the financial equilibrium and to invigorate trade is that mutual sense of confidence which the partisan pirates are making such a desperate effort to destroy.”

Meanwhile, through May and June ominous effects of the economy’s downward spiral was appearing in the area: miners were on strike in southern Kansas to resist mine operators’ reduction of their wages from $2.50 a day to $1.75; union waiters struck in Kansas City after restaurant owners fired all union men; wages in all industries were falling, although the Journal thought that employees should just bear up under reduced wages. Strikes, the editors thought, “can but make it all very much worse.”  In early June, wheat prices and the gold reserve hit new lows; the Kansas Grain Company, previously considered solid but deeply in debt, failed.

Kansas City seemed to be avoiding the worst of the downturn that was leading to demonstrations and violence in the east. In the opinion of an unnamed local businessman, the city’s real estate crash in the late 1880s had cleansed the scene of “rash investors.” All the local banks, he said, “are comparatively easy, there is nothing to fear from the collapse of wild cat institutions, because they have been pretty well cleaned out, trade is good, our commerce is rapidly expanding […].” Failures are due to bad management but no banks “of recognized standing” had failed in Missouri. Nationally, the Journal reported, “financial skies are brightening,” and all danger will soon be past. The feeling, according to the Star, was that national credit was sound and harvests abundant. The Whisky trust and California banks were “all right” again, the Star reported, and the outlook “much better.”

Still, as July approached, worrying signs were appearing across the country that could not be glossed over with comforting assurances. Stocks were continuing a slow but steady decline, efforts to save the Reading Railroad had failed, the future of Cordage and Sugar trusts were in doubt. Former Kansas Republican senator J.J. Ingalls opined that the country was “on the brink of financial peril” due to lack of confidence among the people, the scarcity of money and increased private debt.  President Cleveland gave a gloomy prediction that repeal of the Sherman silver law, blamed for much of the economic slowdown, would take considerable time. Silver mine owners in Colorado completely shut down mining operations, claiming the mines could not be operated at present price levels, throwing thousands of miners out of work. The economic situation was becoming so perilous that Cleveland, fearful of adding to concerns, had to slip secretly out of Washington in the last days of June to undergo an operation on board a friend's yacht to remove a cancerous tumor in his mouth, a story that would only become public twenty-four years later.

In Kansas City, Missouri, city government was cutting its work force in an effort to save money; the Star noted the especially unfortunate case of one city employee who, after being seriously injured in a fall down an open elevator shaft then lost his savings to a bank failure and now was being let go from the auditor’s office. The Times denounced the “croaker, the busybody and the tattler” who were frightening the public. Republican and Democratic newspapers battled over the value of the city giving unemployed workers jobs on public improvement projects, the Times arguing that it was time to call a halt to such projects for the present, the  Journal replying that spending money on public improvements was necessary “to stem the tide of business stagnation.”

Early in July the national bank panic finally began to arrive in Kansas City area banks. The Kansas Bank commissioner estimated that about 25 percent of deposits had been withdrawn, but expressed confidence that all was well. In Kansas City, Missouri, the Kansas City Safe Deposit and Savings bank failed, its operations handed over to receivers amidst assurances from bank officers that depositors would get all their money back and the bank would soon resume business.

A few days later the National Bank of Kansas City, considered one of the city’s strongest banks, suspended operations in what the Times called “one of the greatest shocks Kansas City people have had for years.” The Journal urged readers to “keep cool,” saying the bank had merely suspended, not failed, after being unable to convert securities into cash with sufficient speed to meet the demands of frightened depositors. The Star editors called the run on the National Bank “unnecessary, heartless, cruel,” and accused “selfish and thoughtless people” of forcing the suspension. The Times editors said the National Bank had been “brutally murdered” and urged the people of Kansas City to “stand up and show themselves men who will refuse to stab to the heart their greatest friend,” i.e. bankers.

The National Bank suspension prompted runs the next day on other banks in the area, with three banks suspending payment. “The worst is over,” reported the Journal, claiming to represent the views of “business men, bankers, merchants and capitalists,”  but the scare continued, with overtones of increasing disorder: men were getting into the line of anxious depositors and then selling their places, and when depositors emerged from banks with cash pickpockets awaited.New York Life building Kansas City

A couple of days after the National Bank of Kansas City failure, the Missouri National Bank and Grand Avenue Banks suspended business. The Missouri National Bank suspension came as a “thunderbolt” to bank officials, said the Times, since they had thought themselves fully protected. The Kansas City Mail spoke of “wild scenes on the streets” outside the New York Life building, where the bank was headquartered, with policemen guarding the bank entrance. 

The sudden Kansas City bank panic was mirrored in cities across the country, symptomatic of the fears that had been building up all year. The Journal compared it to an epidemic:   “We thought Kansas City was so sound, her banks so solid, her people so well advised, that there was no danger. But like a clap of thunder in a clear sky it came, and for three days was violent. Then when quiet was restored the Denver people caught it, having traveled there like as if by railway time-table.”

The Comptroller of the Currency in Washington, responsible for taking over suspended banks, assured depositors that not one depositor in any of the suspended national banks in Missouri or Kansas would lose money, but made no such assurance for local banks like the Kansas City Safe Deposit Bank, where depositors were increasingly worried about getting their money. The Star described a mass meeting of depositors from across the social spectrum, including impoverished women, “most of them shabbily dressed,” and several children who had been depositing pennies in the bank for years. Some speakers counseled patience, and a plan was drawn up for depositors to agree to wait a year before demanding their full deposit, with smaller payments to be made sooner. None of the women or children were heard to offer opinions on having to wait up to a  year to get back their meager savings. 

As the panicky month of July ended, the Missouri National and Grand Avenue Banks remained closed, amidst constant assurances they would be back in business soon. When the Bank of Grand Avenue reopened its doors on July 22, it was only with the issuance of interest-bearing certificates promising to release depositors’ money quarterly over a year, with the difference that unlike the Safe Deposit Bank, depositors were not given a vote on the arrangement.

Just as things seemed to be quieting in Kansas City, sudden declines in the stock market following the bankruptcy of the New York, Lake Erie and Western Railroad caused renewed panic among traders in New York: : “The excitement was intense and the slaughter of values has not been paralleled in recent years,” the Star reported.  Unemployed miners were flooding out of Colorado heading east after owners shut down the silver mines; one report described a scene of “a hundred starving men” taking over a train in Nebraska and demanding to be carried east; a squad of police came to the station but refused to expel the men. Most of the men were headed for Omaha en route to Chicago, bypassing Kansas City, but hundreds were arriving in Kansas City on freight trains,  to look for work. “We have got to work, beg or steal,” one miner told a reporter. “I am willing to work, but will not beg – if it comes to the worst I will steal. […] There was no show for us anywhere in Colorado. Pueblo, where we came from, is full of idle men.”

A group met with Chief of Police Thomas Speers to ask for help, but Speers told them there was little work in the city and he could offer them neither railway tickets nor food. The “exodus” from Colorado had just begun, predicted the Times; Chief Speers proposed to meet incoming trains with a “reception committee” that would examine incoming men to determine whether they were “honest workingmen” or “tramps and bums.” If the latter they would be kept moving. The Journal cited a study of what it called the “tramp evil” by a “Professor McCook” that found that the majority of “tramps and bums” had skills and were able-bodied, but were indolent and intemperate and should therefore be placed in “proper places of detention” and denied “indiscriminate charity.”

How Speers and his men could detect indolence and intemperance in the miners flooding into Kansas City isn’t clear, but the Star editors thought the miners deserved “consideration and charity,” and thought it was not proper to meet the travelers “with policemen and clubs” and refuse to let them enter town, “a proceeding of doubtful legality and savoring of inhumanity, since they are not accused of any offense, unless poverty be an offense. […] A tramp now and then will make no difference; better feed a score of tramps than let an honest working man go hungry. Meet the men with a square meal rather than a heavy club.”

Depositors at the Kansas City Safe Deposit and Savings Bank were growing increasingly restive at the prospect of losing some, or possibly all, of their money. A vote was taken to accept a plan for depositors to receive certificates of deposit for 70 percent of their funds, paying 3 percent interest,  payable within up to three years, depending on when the bank’s assets could be realized.  For the remaining 30 percent they would receive stock in the bank; the bank president, James Darragh, spoke in favor of the plan and was received by the crowd with polite applause, said the Times. “Everything now seems bright for the Kansas Safe Deposit and Savings bank,” beamed the paper

Three weeks later the bank’s president and cashier were arrested on charges of grand larceny for having accepted sizeable deposits days before the bank’s failure, knowing the bank would fail. The accused cashier blamed the charges on “a characteristically troublesome element always found in the so-called savings classes,” namely one which is “always suspicious and impetuous. It manifests itself in the runs that are sometimes started on the slightest rumors.”  A month later, in September, it was discovered that the assets of the bank were so much less than had been claimed that depositors would at best recover 45 percent of their money, and probably much less. Bank officers had been fraudulently mortgaging properties for more than they were worth and creating shell real estate companies into which to dump real estate so it would not appear on the bank’s accounts.

The Bank’s president, J.J. Darragh, and Cashier Elmer C. Sattley were indicted on grand larceny charges, Sattley continuing to protest his innocence, as did Darragh. Thirty-eight charges were eventually preferred against each of them. Both were convicted of wrecking the bank. Darragh was sentenced to two years in the penitentiary and Sattley to four years. Interestingly, at the Darragh trial, which did not take place until 1897, a prominent Kansas City politician, William Warner, who was Darragh’s attorney, argued that the jury had been “plugged,” or fixed, by the City Hall “gang” to “make a victim of a man, Darragh, who gave one leg in defense of his country […].”  The prosecutor responded by picturing the homes wrecked by the bank’s failure ; the bank had $2 million in deposits when it failed and only $11,000 cash in its vaults; undoubtedly the people “of all classes, races and of both sexes,” as the Times described the bank’s thousands of depositors,  had little to show for their deposits once the bank’s affairs were wound down.

While debate on repealing the Sherman silver law continued in Washington without result, beyond barrages of partisan rhetoric byCollapse of Pork Corner “silver men” attacking “gold bugs” and threatening to take western and southern states out of the union “unless the senseless war on silver is stopped,” there was every sign that July’s “panic of 1893” was settling relentlessly into economic depression with assistance from swindlers and monopolists happy to take advantage of loose or entirely absent government regulation over business and finance.

Small town bank swindlers had their counterparts in Gilded Age robber barons like pork magnate John Cudahy, who had for months been attempting to keep pork prices high by cornering the pork market. In early August the Cudahy corner collapsed, bringing down with it Cudahy along with several other provision houses, and halving the price of a barrel of pork, in what was called “the most sensational decline” ever reported on the Chicago Board of Trade. The panic in pork brought on panic in the wheat market; it was, said the Star,  “utter demoralization in the provisions market.”

Ad for hard timesWords like “depression,” “crisis,” and “hard times” began to appear regularly in newspaper stories, and even in advertisements. In the east in August, about a third of the textile mills in the textile center of Fall River, Massachusetts, were closed, putting 7,000 employees out of work. By  November, of 99 woolen mills in the East, only ten were working full time, and of 90,000 people previously employed in the mills, only 17,500 were at work. In New York unemployed workers marched, led by 7,000 members of the cloakmakers’ union, who had been out of work most of the year. Of the 9,000 bakers in the city nearly 4,000 were said to be unemployed, suggesting that hard times had reduced even the consumption of bread. Less surprisingly, men were buying fewer cigars: of the city’s 25,000 cigarmakers, 10,000 were out of work.

Chicago’s mayor Carter Harrison said there were 200,000 unemployed people in Chicago and predicted that if Congress provided no aid “we will have riots that will shake the country.” Such talk, complained the Star, would only “augment popular discontent […].” The depression would soon be over, the editors opined; in the meantime, the community should pitch in and help the unemployed, in the absence of any significant government programs to do so. By mid-August there were more unemployed people in Missouri than at any previous time. The state labor commissioner estimated that at least a third of workers in the state were without work.

Workers still employed routinely faced wage cuts, with railroad monopolist Jay Gould demanding cuts of 10 percent in all monthly salaries of $100 and upward at his Missouri Pacific Railroad.  Eugene V. Debs, chief organizer of the Brotherhood of Locomotive Firemen and future Socialist Party presidential candidate, accused the company of taking advantage of hard times to push the cut on workers. In Kansas City, the city Comptroller was pushing ahead with a plan to cut salaries by 12 percent for city workers, over the strong objections of influential Fire Chief George Hale. Another sign of hard times came in a Times interview with the “transfer man” at Union Depot, whose job it was to carry passenger luggage. In past times, he said, “Traveling salesmen would come here with eight, ten and sometimes fifteen pieces of baggage, and now […] they only carry one or two trunks.” Retail grocers were no longer giving credit because of hard times and scarcity of currency, and probably because many of their customers were now poorer if not unemployed.

“The unemployed,” wrote the editors of the Star, indifferent to Marx’s dictum of the reserve army of labor, should not be regarded as a permanent class but as an anomaly. It is only recently arrived immigrants, said the editors, who are ignorant of the American dream that today’s unemployed man is tomorrow’s employee, and the employee in due course a boss, since foreigners come from countries where such ideas don’t prevail. The disturbances are really the fault of these foreigners: “It would seem strange,” the editors continued, “if Americans, those born on this soil […] should so lack intelligence as to believe that there is room in our system for what may be called a ‘discontented’ class […] at war with those they style ‘above’ them.”

Such nativist views became more common in public discourse as the depression deepened. In New York in mid-August three thousand working men, “mostly Russians,” according to the Times, became what the paper called “a riotous mob” which took control of a hall, over the objections of its owners, to hold a meeting. The leader of the group complained about discrimination against Russians, saying they should be able to apply for work “on equal terms with Americans or those of any other nation. What he advocated was an appeal to the government to furnish them with work.” The workers passed resolutions against the conduct of the police, who had arrested several of their number; subsequently police attacked the meeting and drove workers from the hall.  In Chicago, “English speaking workmen,” as the papers called them, attacked Polish workers in the stock yards, after a group of “recently arrived Russians and Poles […] goaded by want and approaching destitution,” offered to work there for as little as thirty cents a day.

Anarchists, many of whom were foreign born, were also often blamed for labor strikes and protests. When workers in St. Louis began to talk of a mass march on Washington to pressure the government to create a jobs program, a prominent labor leader distanced the Federation of Labor from the movement, saying it was the result of “the agitation of a lot of cranks, Socialists and Anarchists […] strenuously endeavoring to create trouble.”

In New York,  divisions developed between groups who wanted to put pressure on public officials for a public works program, including the Central Labor Federation, the Socialist Labor party and the United Hebrew Trades, an association of Jewish labor unions, and more radical voices, notably that of Emma Goldman, who is described in one story as delivering “an inflammatory speech advising the hungry to attack bakeries and groceries.” However,  another speaker at the same rally, described as “incendiary,” proposed merely to parade up Fifth Avenue, “to show those rich people how hungry we are. They have money for their luxuries; my wife and yours have had nothing to eat for three days.” Workers in Newark, also led by Socialists and Anarchists, organized a similar parade of the unemployed, preceded by “two black flags with bitter mottoes,” where Goldman also spoke, advising men to “steal bread if they could not get it by working.” In Chicago, 1800 unemployed workmen, “all foreigners,” were addressed by Lucy Parsons “and other noted Anarchists,” who all made “fiery addresses.”

Such stories added to tension and fear at the image of anarchists leading desperate unemployed immigrants on rampages of riots and looting. When Samuel Gompers of the American Federation of Labor called on  New York officials, and those who “control the industries and finances” of the country, to come to the aid of the unemployed he suggested that people “on the verge of starvation,” might turn to crime if ignored. Nothing would be gained by law breaking, Gompers said, thereby suggesting that lawbreaking was on the agenda if the “wealthy classes” responsible for the depression didn’t step forward to help.

Labor conflicts continued through late August. In Chicago thousands of unemployed marched from Lake Front Park to City Hall, preceded by a brass band. The march was attacked by police after it shut down a major street, leading to a pitched battle between marchers and police that left three police officers and two “rioters” injured.  In Buffalo, unemployed workers, “most of them Poles,” according to the Star, descended on a city market and looted the stalls.  On the New York waterfront, striking longshoremen fought with Italians who’d been brought in to take their place. In Weir City, Kansas, striking coal miners fought with strikebreakers, including African Americans from the South, that the Central Coal and Coke company had imported to work the mines; the striking miners were reported to have accumulated 250 Winchesters in anticipation of a pitched battle. The General Manager of the Kansas and Texas Coal Company announced that the strike against his company was over: “The negroes whom we imported from Alabama are, generally speaking, first-class miners, and we have had little difficulty breaking them in,” he told the Times.

In Kansas City, discussion continued on reducing salaries and the city workforce to make up for budget shortfalls. The city Comptroller, with the support ofChief Hale Mayor Cowherd, proposed a 15 percent salary cut for the fire department, with no personnel cuts. Influential fire chief George Hale strongly opposed the proposal, even though his fire department had consistently overdrawn its budget by large sums;  members of  the joint fire committee of the city council supported Hale. The Star noted that it was now considered “rank treason to talk of retrenchment in the fire department to put it on a basis with other departments of the city government.”

The Star disapproved of the fact that the revered Chief Hale had so little regard for staying within his budget, while other departments had to cut back on salaries and personnel. It was projected by the comptroller that the Fire Department’s budget for 1893 would run over $20,000 above its budget – about half a million dollars in current dollar value. Hale’s proposal was to cut the number of firemen, meaning that some station houses would have to be closed, a proposal he knew would be opposed by the Mayor, who would be blamed for any fire disasters occurring near closed station houses. Hale, who’d allied himself with some of the city’s political bosses including “Big Jim” Pendergast, had the Mayor over a barrel.

In August, the Comptroller’s 15 percent salary cut was reduced to 12 ½ percent for all employees in the public works department, including the fire department, for the rest of the year, with Hale still protesting the cut and offering to surrender half his salary to head off the cuts, providing – a significant proviso –  that “other officials of the city would do the same thing.” Hale may not have been unaware that the city charter prohibited any reduction – or increase – in the salaries of city officials. Once the official plan was announced, city councilmen were besieged on all sides by city workers trying to be exempted from the cuts; councilmen were said to be avoiding coming to City Hall to avoid the importunities. The President of the City Council’s upper house, Peter Tiernan, told city employees that they should be thankful the salary cut would save their jobs: “There is not a firm or corporation in Kansas City that is not taking steps to retrench,” he said, “and a number of the largest institutions of the city are discharging their employes[1] in large numbers during the dull season and it is almost impossible for a man to get a job of any kind. There are hundreds of men just now who would be glad to go to work for a dollar a day.”

The effects of the depression were deepening across the country. The Northern Pacific Railway went into receivership in August, “in consequence of the extraordinary depression of business and the stoppage of shipments along the line,” in the words of a company executive. The railroad’s litany of complaints was echoed by companies across the country: a falling off in earnings, debt payments exceeding revenue, lack of credit due to bank failures, business at a standstill. The three chief packing houses in Kansas City – Swarzschild & Sulzberger packing co Armour, Swift, and Schwarzschild & Sulzberger – proposed to cut wages by 10% “on account of the depression in business and finances,” and if that wasn’t convincing, because Chicago packing houses had made similar reductions, meaning Kansas City would be at a competitive disadvantage.

Some workers went on strike in protest; hundreds of others followed or were laid off. Fear spread at the Argentine smelter about coming layoffs, which the company head, A.R. Meyer, denied. The Hotel Victoria in downtown Kansas City closed and employees discharged after patronage fell off. With winter approaching, city leaders, nervously watching events in other cities such as Chicago,  tried to devise a plan to care for the unemployed poor; for every job advertised there were dozens of applicants, the Mail reported, and charitable organizations such as the Humane society were “taxed to their utmost capacity.”

Even the Columbian World’s Fair in Chicago, which had hoped to attract visitors from around the world to improve the country’s balance of payments, saw attendance down by 25,000 a day. To save money the fair manager, George Davis, had to let go the Exposition Orchestra and its famed musical director, Theodore Thomas. The fair manager complained that the Orchestra cost $1,800: Theodore Thomas“Think of it!” he told a reporter. “Eighteen hundred dollars a day! Why it costs only $1,200 a day to run the great buildings of the exposition,” said Davis, who was not a fan of Thomas’s weighty musical offerings amidst the Fair’s fanciful ambience.

A silver man from Denver, visiting Kansas City, predicted revolution ahead if the Senate passed a bill ending the Sherman Silver Purchase Act. It was all so wrongheaded, he told the Journal: “Silver has always been the money of republics – gold the money of slaveocracy.[…] It will be a war of cities and of riots.” More trouble in Chicago on August 30 seemed to verify the prediction: Gatling guns and 12-pound Napoleon field pieces appeared in front of an armory in the center of the city as a crowd of unemployed men and women confronted 1,500 police. A newspaper report spoke of 500 Italians “bent on mischief,” though armed with nothing more than Italian and American flags, and of a larger crowd dispersed by police. It was usual in overheated newspaper reports to call these confrontations with the police “riots,” the unemployed workers a “mob,” and their actions “lawless" and "incendiary,” before blaming the “riot” on foreigners who, as one editorial put it, “had not yet thoroughly assimilated that sense of respect for the constituted authorities which is instinctive with the normal American citizen.”  The August 30th “riot” in Chicago was characterized mainly by speeches and some stone throwing, though without serious injury to police officers.

As the economy crumbled, there were fewer reassuring sentiments from bankers, editors, and business moguls and more  scapegoating and fear mongering aimed at foreigners. The Journal editors called for restricting immigration to keep our “the undesirable and unprofitable class that has been flocking here during recent years.” The paper referred to an oversupply of immigrant “non-producers” as it called them, who come only to save enough money to return to their homeland in relative affluence. They live cheaply, “add little to the demand for the product of American farmers or manufacturers,” and deny jobs to American workers.  Lawmakers, the editors argued, should “provide for the protection of our own people.”

Such nativist diatribes were often directed against Italians and other immigrants from southern Europe.  A baggage agent at Union Station complained that few of the new arrivals passing through Kansas City spoke a word of English and all of them smelled bad – not surprising in view of the length of their journey. The same “America for Americans” note was sometimes sounded in relation to the monetary crisis when England, as a creditor nation, was blamed for the crisis in the U.S., a debtor nation, by hoarding gold; “America needs to legislate for Americans,” argued the Journal’s editors.

Dislike of immigrants often combined with fear of foreign-born anarchists, despite the latter’s tiny numbers and the greater danger to the economy posed by the schemes of monopolists and crooked businessmen like those at the Kansas City Safe Deposit bank or the Lombard Investment Company of Missouri, which went under in September with the assistance of a couple of embezzlers.  A writer to the pro-Populist Kansas City Mail blamed the depression on “millionaire capitalists, who in their selfishness, guided usually by greed, priest or party dictation, are crowding the poor laborers out of work, cutting wages, raising prices and forcing them to bend to their will.” Having denounced the greed of “capitalists,” however, the complaint trails off into vague laments on contemporary lack of “justice and morals,” and calls for better people to run the government. The paper reprinted an article from a Dallas paper reminding readers of Lincoln’s warning against placing capital above labor in the structure of government; corporations, Lincoln wrote, “have been enthroned; an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands, and the republic is destroyed.”  Lincoln’s prediction seemed to be coming true as September ended.

Most newspapers resisted blaming “capitalists” for the financial disaster that was driving so many into poverty and unemployment – 70 percent of workers were said in the Republican Journal to be unemployed in eastern mill towns as well as in Chicago. It was easier to blame the other party’s policies and more sensationilistic to inflate the trivial threat posed by anarchists, “the frowsy-headed fraternity,” as the Kansas City Times liked to call them, into a fearful menace.  Notes sent by “an alleged Anarchist” to uber-wealthy magnates like Collis Huntington and Cornelius Vanderbilt threatening to blow up their Fifth Avenue mansions were front page news; both men were reported to be increasing security. The Anarchist, wrote the editors of the Star, “Is the enemy of society” whose “mission is merely to kill without discrimination. He pretends that his vengeance is aimed against his oppressors, for such he terms the police and military authorities; but in direct defiance of this position he explodes dynamite indiscriminately and counts women and perhaps children among his victims.[..] He is a murderer, pure and simple, the scourge of humanity and the terror of all recognized society.” Societies internationally should combine against “Anarchy as an organization and Anarchists as bomb throwers and assassins,” they concluded.

In Kansas City the occasional businessman or journalist still had the nerve to announce that all was well or would soon be well. An editorial in the StarAllegory of the War in Song argued that “Relatively Kansas City is in excellent condition. The debts of the boom period are for the most part paid […] People are on their feet and in their proper places.” But increasingly there was awareness of the slow damage the depression was doing and the need for some kind of amelioration for the city’s poor and unemployed.  The Industrial Council devised a plan to establish small manufacturing enterprises to put men to work, beginning with starting a shop to give work to unemployed harness and saddle makers. The shop’s products would be given to farmers in exchange for farm products.  The Provident Association, the city’s main provider of assistance to the poor, which received some funds from the city, announced that it was in debt after helping 34,000 people in distress over the past nine months; it issued calls for help and sponsored a performance of "Allegory of the War in Song," one of the noisy stage spectacles depicting the Civil War much beloved by audiences.

As December opened and winter approached, calls for helping the unemployed rose; “Never before in the history of this city were there so many unemployed people, worthy,  but in want,” wrote the editors of the Times. It is “the most deserving who wait the longest before making application for assistance,” the Journal editors claimed, piously distinguishing between worthy and unworthy poor, "and who are most modest in their requests.

The paper’s reporter interviewed several applicants for relief at the Provident Association, including some in the sewing room, where “the sincerity of their desire to obtain work by offering them sewing and putting them to work I this room” was tested.  Those who are “willing, industrious, neat and a good sewer, as well as quiet and ladylike” are passed on to an employer.  In newspaper reports on the needy, there were always highly subjective efforts such as this to detect the “unworthy” poor or those who, as the mistress of the sewing room put it, “think they are entitled to anything they see fit to ask for.” The woman was highly offended when one of the applicants tried to publish a letter in a newspaper claiming she had been refused employment.

The city of Pittsburgh, Pennsylvania, was employing 1,000 men on public works projects at ten cents an hour; even if the effect of the policy was to lowerWilling to Work the price of labor, the Star argued, this was better than begging or living on charity, and a result would be improvement of the cities. Not often noted in newspaper reports was that many of the applicants for help were black, since white workers were taking the kinds of ten cent an hour jobs that blacks had done before the depression. The percentage of blacks who were laid off when employers cut back on their workers was much higher than for white workers, the Star noted, adding that  “investigators” for charitable operations believed that “the protection of society requires that some aid be extended to these people."  The job of the “investigators” was to inquire into the legitimacy of applicants’ claims; in one case the Star story mentions, a black woman “wept as she told the story of how her husband had deserted her,” but when investigators visited her home the next day she was found asleep at noon. This was taken as indication that “laziness” was the cause of her poverty. She was denied aid.

Although the only organized method of relief for the needy and unemployed were charities like the Provident Association, there were demands from some quarters that the federal government should step in with aid. The Star thought this would set a “dangerous precedent” by encouraging “paternalism […] It would be opening a door that it would be difficult to close.” Instead, the editors argued, it’s the business of states and communities in which emergencies exist to look after the needy. “The rich and the fortunate” will need to help those in need: “Charity should begin at home,” intoned the editors. Yet individuals and governments alike faced straitened circumstances. The Provident Association was finding that its appeal to citizens for donations was not being answered “as it should have been, as it must be if serious trouble and suffering, which will be a disgrace to our citizens, are to be avoided,” as the Times put it -- reminding people that unrest was possible if something wasn’t done -- so the federal government was struggling with a deficit and contemplating adopting an income tax to make up the difference.

As the year limped to its end, there were efforts to assess the causes and effects of the depression. Most railroad earnings were heavily down, business all over the world was depressed, “the currents of trade everywhere are flowing slowly,” observed the Star editors, while anticipating hopefully that once merchants, farmers, and investors cleaned out their holdings the “filling up process” would begin, followed by a “long era of great prosperity […].” The Journal summarized R.G. Dun’s Weekly Review, which balanced its picture of disaster – mills “stopping in every direction;” unemployment “larger that it has been for many years;” prices of iron, steel, wheat, and pork down; business failures, including seven banks and an iron works company in the past week – with a rosy view that mills were still starting up to meet demand and agricultural exports steady. The Kansas City Mail quoted the opinions of a cleric that hard times were caused by people’s moral failures, namely “extravagance,” the consumption of useless products like tobacco and liquor, and following of “low amusements.” Nonsense, said the Mail, it’s “over-production, bad naturalization and immigration laws,” and what it described, without explanation, as “a vicious ballot system,” that have brought hard times. The main cause of hard times, the editors say, is “defective distribution,” another way of saying income inequality: the laborer produces wealth but gets little of it, most of it being consumed by the payment of the businesses’ debt to bondholders.

Santa Fe systemDebt was certainly a factor in the downfall of some big railroads. The Santa Fe system, “hopelessly in debt,” as the Star put it, went into receivership just before Christmas to get protection from its creditors.  “The railroads,” the arteries and veins of the country’s trade and prosperity, “have suffered more than any commercial interest which was ever engulfed by a wave of disaster,” wrote the Star editors. Over the year, twelve railroads had gone into receivership, and more failures were expected, including the giant Union Pacific system.

The real losers were the stockholders, many of them people who had invested money to buy stock “from which they have never realized the price of a cup of tea,” as one businessman put it. “These great properties have  been exploited by those on the inside, while the great mass of people interested have had to shout for their money.” It’s time, he thought, to organize stockholders and demand attention to their interests, among other things by reducing the rate of the railway bonds from 6 or 7 percent to 4 or 5 percent, something bondholders in New York, who were already organized, would be sure to oppose.

The Star grasped at hope offered by a foreign bond holder that things were not as bad as they could have been – it was all the result of the vast business expansion of preceding years that left so many companies overextended and deeply in debt, so when business contracted by 40 percent or more and international trade by 30 percent over the year the businesses failed.  Whatever the explanation, it had been “the severest period of depression ever experienced,” affecting all aspects of the economy, nor could anyone have known that 1893 would presage seven lean years of the worst depression in U.S. history prior to the Great Depression.

 

 

 



[1] “Employe” was in 1893 the most common spelling of today’s “employee.”