“Panic is very dreadful in Wall Street. Failures are multiplying and no one knows on whom we can depend, or on what.” September 28th
“We seem foundering. Affairs are worse than ever today and a period of general insolvency seems close upon us. Peoples faces in Wall Street seem fearfully gaunt and desperate.” October 10th
“This financial crisis has thrown thousands of the working class out of employment and made it a difficult matter enough to maintain peace and order in the city through the winter.” November 10th
No one speaks with another but that the topic soon turns to the state of the economy and its effects, upon business, upon the personal economies of the conversationalists, upon families and upon former coworkers. The news is of statistics; foreclosures, unemployment, the decline of stocks, the lost value of savings, the national debt. There is much mistrust. Those engaged in finance and securities mistrust the federal government plans to affect a recovery. The federal government mistrusts the leaders of the finance and securities markets.
These quotations might have been taken from any news reports published in the autumn of 2008. But they are from the diary of George Templeton Strong of New York, from the autumn of 1857.
It was the news of 2008 which put me in mind of these observations made by Strong one hundred fifty-one years earlier. Many have referred to the current economic downturn as the worst in a generation. Comparisons have been drawn to the stock market crash of 1929 and the Great Depression that followed. Many Americans now caught up in the current economic reversal have parents who lived through the 1930’s. But only the oldest now living experienced it themselves. And so the Great Depression is our nearest, most relevant touchstone.
But as recent and crippling as it was upon the American people, it does not stand alone.
As in our time, the beginning of the Panic of 1857 was led by the financial sector of the economy:
“The major financial catalyst for the panic of 1857 was the August 24, 1857 failure of the New York branch of the Ohio Life Insurance and Trust Company. It was soon reported that the entire capital of the Trust’s home office had been embezzled.” Library of Congress
“…prominent stocks fell eight or ten per cent in a day, and fortunes were made and lost between ten o’clock in the morning and four of the afternoon.” Harpers Weekly
“Harper’s Weekly for September 12, 1857, took a dim view of dealings on the New York Stock Exchange. They claimed that the greed of speculators underlay the panic…” Library of Congress
“Eventually the panic and depression spread to Europe, South America and the Far East.” Wikipedia, the free encyclopedia
As in our own time, economic reversals bring to light scandal, loss of confidence and fear. As in our own time, the effects spread rapidly around the globe. And as in our own time, there was much speculation as to the cause:
“The Panic of 1857 was a nation economic depression caused, principally, by Europe‘s declining purchase of American agricultural products” Ohio History Central
“Charles Calomiris and Larry Schweikart suggest that “the political struggle between ‘free soil’ and slavery in the territories”, beginning with the Supreme Court’s ruling in the 1857 Dred Scott v. Sandford case, may have helped bring about the Panic. The Court’s decision threatened to open up all western territories to slavery, prompting the bonds of east-west running railroads to plummet in value, which in turn helped motivate a run on the major New York banks” Wikipedia, the free encyclopedia
In fact, 1857 was but one of multiple nineteenth century economic panics; 1819, 1837, 1857, 1873, and 1893 when in May of that year a trust controlling production and distribution of twine was rumored to be insolvent. The Wall Street panic which followed led to the failure of hundreds of bank and thousands of business failures before the end of that year.
In the 2008 economy, the attention of most working people is focused the plummeting value of 401K’s. We’ve looked at people who lost jobs or who, by virtue of the Worker Adjustment and Retraining Notification Act (“WARN”) knew that their jobs would be ending. We’ve heard of those out of work who have exhausted unemployment benefits, who still have no prospects.
We’ve also looked inwardly, at ourselves. And we’ve either silently given thanks that we have so far have been spared, that our jobs continue, that our personal finances are functioning, that we can meet our obligations, that our children are untouched, or we wonder how we will find new jobs, how we will meet obligations, where the bottom is, what we may have to do to survive economically until the corner is turned, until recovery seems more certain and, even when it is, what our futures will hold.
There are those in this time, in this economy, to whom the headlines speak of a reality they are not living. I recently heard of a Seattle collector of race, sports and performance cars who changed the contents of his warehouse showroom within the last year, selling of many of his prior collection and replacing them with new acquisitions, each surely worth many thousands of dollars.
But most of us have been living it. Many are coping; other beset with worry. The history of the Panic of 2008 has been written in the daily news:
“The jump in the US unemployment rate to the highest level in a quarter century last month suggests the recession is deeper than the Obama administration forecasts…”
“Bank of America Corp. is still interfering in the investigation into bonuses given to Merrill Lynch & Co.”
“Investors aren’t buying General Motors’ assurances of a revival any more than they’re buying its cars.”
“State regulators shut down Freedom Bank of Georgia of Commerce Friday, bringing to 17 the number of US banks and savings and loans closed during 2009.”
“When houses on our block sell for $50000 less than we paid for ours — if they even sell at all — I get queasy.”
“Next Friday we’ll get a correction that’ll put the words “double-dip” back into the headlines. When the final figures are produced years from now, historians might just decide that this was just one long downturn — not a series of dips. Hurrah for us! We are part of history.”
The economic reversals that began in 2008 are real. We read the news every day. One way or another, we live the effects, every day. For perspective, our national consciousness goes back to the Great Depression of the 1930s. But pull the lens of history back further, a hundred years, and the perspective changes. How like the Panic of 1857 these reports seem.
In the 2008 version, my personal economy was not immune. I received my 60-day WARN notice. My job in the insurance industry ended, although not as a result of economic reversals but of a corporate acquisition engineered well before the first indications of the bank failures and stock market slide. In fact, the loss of jobs in this company was foreseen by many of us as long as two years before, when the company began posturing and preparing itself to be acquired.
But regardless of the reasons or the causality, I was just as unemployed.
At the beginning of this personal chronicle, I made the observation that “I don’t know what I expected this time of life to be like, but I had not imagined this.”
Which has now taken on yet another meaning.
There is no possibility of looking at life from any perspective, of the history of the American and world economies or the perspective of the last two years, and not take into account what it will mean to us.
Our history is still being written as well.