1890\'s Depression and Political Tensions

1890's Depression And Political Tensions

Brief history of 1890s depression

America has experienced economic downturns more than once with the 1830 and the 1893 being crowned as the worst. This affected the domestic, international, political and social responses of the people. It was accompanied by violent strikes, rise of political movements and micro- economic policies. The National Bureau of economic research estimated that the economic contraction had started early January 1893 and lasted up to June 1894. (Whitten 2010)

Effects of the depression on political tensions of the time

Massive unemployment; the unemployment rate during the 1890s depression was very severe as it exceeded 10% in more than five consecutive years earlier on measured. When the depression hit the economy, only few families were self-sufficient. The labor force in the agriculture sector had fallen from 74% to about 40% in 1890 as the economy was shifting from agrarian economy to industrial economy. When the industrial sector began to slow down, leading to decline in railroads expansions, constructions, the reality of unemployment began to bite the nation. This was further worsened by the fall in agricultural prices which affected commerce resulting to business failures. As a result, there was widespread suffering which culminated in labor and political struggles.

Trade and investment flows; the construction of railway roads opened up majority of agricultural areas linking it to international markets. However, when the slowdown of the rail construction began, the trade was adversely affected as international prices of commodities like cotton, wheat and corn began to fall due to stiff completion. The diversification and use of new technology enhanced more economic independence through exports but the federal government started to experience deficits as a result of reduction in output. The consequent reduction in output affected clearing banks and other important sectors like the building and the construction industry. At the time of Grover Cleveland inauguration ceremony to presidency drew near in March 1893, the economy had started showing other weaknesses including drought and overproduction. Investors speculated that their yield in investment will be checked in downward turn thus reducing the agricultural investments. With this kind of reality, political antagonism began to heighten towards railroads and this just worsened the situation. For instance, the iron and steel industries felt the impact of falling railroads investment which was imperative in creating new markets for suppliers (Whitten 2010).

Strengthened the farmers' alliance; the farmers' alliance had its roots from the economic depression and turmoil of 1870s. Its main aim was to discuss grievances and needs affecting rural population involved in agricultural activities. The alliance debated on political issues such monetary policies, education and reforms. By 1890, the alliance gained much higher popularity as many families joined the alliance to air out their views and assert some political influence. During this year, the alliance became political demanding slackening of the rigid monetary policies that exploited and burdened them with high debts. The alliance men guided by the William A. Peffer formed the Kansas People's Party which drew a lot of following. In effect, senators who were hostile to the alliance goals were unseated. The political landscape began to change dramatically as more alliances and reform groups entered the political arena in bid to create a platform for change in banking, agricultural and transportation sectors.(Answers 2012)