Editing Long Depression (section)

===United States===
{{see also|Panic of 1873}}
[[File:US-GNP-per-capita-1869-1918.png|thumb|300px|[[Real versus nominal value (economics)|Real]] [[gross national product]] [[per capita]] of the United States 1869–1918]]
{| class="wikitable floatright"
|+ Estimated declines in United States manufacturing output in selected sectors (1872–1876)<ref name="cycles">{{cite encyclopedia|encyclopedia=Business Cycles and Depressions: An Encyclopedia|author=David Glasner, Thomas F. Cooley|publisher=Taylor & Francis|year=1997|isbn=0-8240-0944-4|article=Depression of 1873–1879|url=https://archive.org/details/businesscyclesde00glas}}</ref>
|-
! Industry
! % decline in output
|-
| [[Durable goods]]
| 30%
|-
| [[Iron]] and [[steel]]
| 45%
|-
| [[Construction]]
| 30%
|-
| Overall
| 10%
|}

In the United States, the Long Depression began with the Panic of 1873. The National Bureau of Economic Research dates the contraction following the panic as lasting from October 1873 to March 1879.  At 65 months, it is the longest-lasting contraction identified by the NBER, eclipsing the Great Depression's 43 months of contraction.<ref name="NBER1"/><ref>{{Cite journal | doi = 10.2307/1927196 | title = The Long-Wave Depression, 1873–79 | author = Fels, Rendigs | year = 1949 | pages = 69–73 | issue = 1 | volume = 31 | journal = The Review of Economics and Statistics | jstor = 1927196 }}</ref> Figures from [[Milton Friedman]] and [[Anna Schwartz]] show [[net national product]] increased 3 percent per year from 1869 to 1879 and real national product grew at 6.8 percent per year during that time frame.<ref>Milton Friedman, Anna Jacobson Schwartz. A monetary history of the United States, 1867–1960. Princeton University Press, 1971. p. 37</ref> However, since between 1869 and 1879 the population of the United States increased by over 17.5 percent,<ref>{{cite web | title = United States Census | url = http://www2.census.gov/prod2/statcomp/documents/HistoricalStatisticsoftheUnitedStates1789-1945.pdf | access-date =2010-07-19}}  If the census figures are accurate, it is 17.83 percent.</ref> per capita NNP growth was lower. Following the end of the episode in 1879, the U.S. economy would remain unstable, experiencing recessions for 114 of the 253 months until January 1901.<ref name=NBER2>{{Cite web|url=https://www.nber.org/cycles/ |work=National Bureau of Economic Research |title=Business Cycle Expansions and Contractions |access-date=April 3, 2009 |url-status=dead |archive-url=https://web.archive.org/web/20080925210636/https://www.nber.org/cycles/ |archive-date=September 25, 2008 }}</ref>

The dramatic shift in prices mauled nominal wages {{snd}}in the United States, nominal wages declined by one-quarter during the 1870s,<ref name="titan-1">{{cite book|title=Titan|author=Ron Chernow|publisher=Vintage Books|year=1998|location=New York|isbn=1-4000-7730-3|page=[https://archive.org/details/titan00ronc_0/page/160 160]|url=https://archive.org/details/titan00ronc_0/page/160|author-link=Ron Chernow}}</ref> and as much as one-half in some places, such as [[Pennsylvania]].<ref name="appomattox"/> Although real wages had enjoyed robust growth in the aftermath of the [[American Civil War]], increasing by nearly a quarter between 1865 and 1873, they stagnated until the 1880s, posting no real growth, before resuming their robust rate of expansion in the later 1880s.<ref name="cambridge-1">{{cite book|title=The Cambridge Economic History of the United States|url=https://archive.org/details/cambridgeeconomi00stan_1|url-access=registration|publisher=Cambridge University Press|isbn=0-521-55307-5|year=2000|page=[https://archive.org/details/cambridgeeconomi00stan_1/page/223 223]|author8=Stanley L. Engerman, Robert E. Gallman}}</ref> The collapse of cotton prices devastated the already war-ravaged economy of the [[southern United States]].<ref name="reconstruction-3"/> Although farm prices fell dramatically, American agriculture continued to expand production.<ref name="cycles"/>

Thousands of American businesses failed, defaulting on more than a billion dollars of debt.<ref name="appomattox">{{cite book|title=Appomattox to Montmartre: Americans and the Paris Commune|author=Philip Mark Katz|publisher=Harvard University Press|year=1998|isbn=0-674-32348-3|page=167}}</ref> One in four laborers in New York were out of work in the winter of 1873–1874<ref name="appomattox"/> and, nationally, a million became unemployed.<ref name="appomattox"/>

The sectors which experienced the most severe declines in output were manufacturing, construction, and railroads.<ref name="cycles"/> The railroads had been a tremendous engine of growth in the years before the crisis, yielding a 50% increase in railroad mileage from 1867 to 1873.<ref name="cycles"/> After absorbing as much as 20% of US capital investment in the years preceding the crash, this expansion came to a dramatic end in 1873; between 1873 and 1878, the total amount of railroad mileage in the United States barely increased at all.<ref name="cycles"/>

The [[Freedman's Savings Bank]] was a typical casualty of the financial crisis. Chartered in 1865 in the aftermath of the American Civil War, the bank had been established to advance the economic welfare of America's newly emancipated [[freedmen]].<ref name="reconstruction-2">{{cite book|title=[[Reconstruction: America's Unfinished Revolution - 1863-1877|Reconstruction: America's unfinished revolution, 1863–1877]]|author=Eric Foner|publisher=HarperCollins|year=2002|isbn=0-06-093716-5|pages=531–532}}</ref> In the early 1870s, the bank had joined in the speculative fever, investing in [[real estate]] and unsecured loans to railroads; its collapse in 1874 was a severe blow to [[African-Americans]].<ref name="reconstruction-2"/>

The recession exacted a harsh political toll on President [[Ulysses S. Grant]].  Historian [[Allan Nevins]] says of the end of Grant's presidency:<ref name=Nevins>[[Allan Nevins|Nevins, Allan]], ''Hamilton Fish: The Inner History of the Grant Administration'' (1936) [https://www.questia.com/PM.qst?a=o&d=94934148 online edition] 2:811{{dl|date=May 2024}}</ref>

{{Quote|Various administrations have closed in gloom and weakness ... but no other has closed in such paralysis and discredit as (in all domestic fields) did Grant's. The President was without policies or popular support. He was compelled to remake his Cabinet under a grueling fire from reformers and investigators; half its members were utterly inexperienced, several others discredited, one was even disgraced. The personnel of the departments was largely demoralized. The party that autumn appealed for votes on the implicit ground that the next Administration would be totally unlike the one in office. In its centennial year, a year of deepest economic depression, the nation drifted almost rudderless.<ref name=Nevins/>}}

Recovery began in 1878. The mileage of railroad track laid down increased from {{convert|2665|mi|km|abbr=on}} in 1878 to 11,568 in 1882.<ref name="cycles"/> Construction began recovery by 1879; the value of building permits increased two and a half times between 1878 and 1883, and unemployment fell to 2.5% in spite of (or perhaps facilitated by) high immigration.<ref name="cycles-2">{{cite encyclopedia|encyclopedia=Business Cycles and Depressions: An Encyclopedia|author=David Glasner, Thomas F. Cooley|publisher=Taylor & Francis|year=1997|isbn=0-8240-0944-4|article=Depression of 1882–1885|url=https://archive.org/details/businesscyclesde00glas}}</ref>

Business profits declined briefly  between 1882 and 1884.<ref name="cycles-2"/> The recovery in railroad construction reversed itself, falling from {{convert|11569|mi|km|abbr=on}} of track laid in 1882 to {{convert|2866|mi|km|abbr=on}} of track laid in 1885; the price of steel rails collapsed from $71/ton in 1880 to $20/ton in 1884.<ref name="cycles-2"/> Manufacturing again collapsed{{snd}}durable goods output fell by a quarter again.<ref name="cycles-2"/> The decline became [[Panic of 1884|a brief financial crisis]] in 1884, when multiple New York banks collapsed; simultaneously, in 1883–1884, tens of millions of dollars of foreign-owned American securities were sold out of fears that the United States was preparing to abandon the gold standard.<ref name="cycles-2"/> This financial panic closed  eleven New York banks, more than a hundred small state banks, and led to defaults on at least $32 million worth of debt.<ref name="cycles-2"/> Unemployment, which had stood at 2.5% between recessions, surged to 7.5% in 1884–1885, and 13% in the northeastern United States, even as immigration plunged in response to deteriorating labor markets.<ref name="cycles-2"/>

The 1880s saw an extraordinarily large expansion of industry, of railroads, of physical output, of net national product, and real per capita income. As Friedman and Schwartz admit, the decade from 1869 to 1879 saw a 3-percent-per annum increase in money national product, an outstanding real national product growth of 6.8 percent per year in this period, and a phenomenal rise of 4.5 percent per year in real product per capita. Even the alleged "monetary contraction" never took place, the money supply increasing by 2.7 percent per year in this period. From 1873 through 1878, before another spurt of monetary expansion, the total supply of bank money rose from $1.964 billion to $2.221 billion{{snd}}a rise of 13.1 percent or 2.6 percent per year. In short, a modest but definite rise, and scarcely a contraction.<ref> Milton Friedman and Anna  J. Schwartz, ''A Monetary History of the United States: 1867–1960'' (1963) pp. 39–44, 87.</ref>