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The Politics of Economic Crises: The Panic of 1873, the End of Reconstruction, and the Realignment of American Politics1

  • Nicolas Barreyre (a1)

On September 18, 1873, the announcement of Jay Cooke and Company's bankruptcy sent Wall Street to a panic, and the country to a long, harsh depression. Americans interpreted this economic crisis in the light of the acrimonious financial debates born of the Civil War—the money question chief among them. The consequences transformed American politics. Ideologically ill-equipped to devise cohesive economic policies, political parties split dangerously along sectional lines (between the Northeast and the Midwest). Particularly divided over President U.S. Grant's veto of the 1874 Inflation Bill, the Republican Party decisively lost the 1874 congressional elections. As a Democratic majority in the House spelled the doom of Reconstruction, the ongoing divisions of both parties on economic issues triggered a political realignment. The dramatic 1876 elections epitomized a new political landscape that would last for twenty years: high instability in power at the national level and what has been described as the “politics of inertia.” Therefore, by closely following the ramifications of the 1873 panic, this article proposes an explanation of how an economic crisis transformed into a pivotal political event.

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This article greatly benefited from the comments of many fine scholars who have either read or heard it at different stages. I particularly wish to thank Margo Anderson, Richard Bensel, Pierre Gervais, Jean Heffer, Richard John, and Scott Nelson for their very helpful input.

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This list contains references from the content that can be linked to their source. For a full set of references and notes please see the PDF or HTML where available.

Michael F. Holt , By One Vote: The Disputed Presidential Election of 1876 (Lawrence, KS, 2008)

Morton Keller , Affairs of State: Public Life in Late Nineteenth-Century America (Cambridge, MA, 1977)

Irwin Unger , The Greenback Era: A Social and Political History of American Finance, 1865–1879 (Princeton, 1964)

Charles P. Kindleberger , Manias, Panics, and Crashes: A History of Financial Crises (1978; rev. ed., New York, 1989)

Henrietta M. Larson , Jay Cooke, Private Banker (Cambridge, MA, 1936)

Rendigs Fels , “The Long-Wave Depression, 1873–97,” Review of Economics and Statistics 31 (Feb. 1949): 6973

Herbert G. Gutman , “The Tompkins Square ‘Riot’ in New York City on January 13, 1874: A Re-Examination of Its Causes and Its Aftermath,Labor History 6:1 (1965): 4470

Richard White , “Information, Markets, and Corruption: Transcontinental Railroads in the Gilded Age,” Journal of American History 90 (June 2003): 1943

Stanley Coben , “Northeastern Business and Radical Reconstruction: A Re-Examination,” Mississippi Valley Historical Review 46 (June 1959): 6770

Samuel DeCanio , “Religion and Nineteenth-Century Voting Behavior: A New Look at Some Old Data,” Journal of Politics 69 (May 2007): 339–50

Michael E. McGerr , “The Meaning of Liberal Republicanism: The Case of Ohio,” Civil War History 28 (Dec. 1982): 307–23

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The Journal of the Gilded Age and Progressive Era
  • ISSN: 1537-7814
  • EISSN: 1943-3557
  • URL: /core/journals/journal-of-the-gilded-age-and-progressive-era
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