Sunday, January 6, 2019
One damn thing after another................
By summer the storm had passed, and McKinley plunged into his next political adventures: a second gubernatorial term and preparations for an 1896 presidential run. But now the political landscape was entirely changed by economic hard times that hit with a fearsome force. It began in the farm sector, where a real estate boom had drawn in thousands of Eastern investors beguiled by low interest rates and prospects for quick wealth. A $200 investment in Western land had been know to return $2,000 in a few months, historian John D. Hicks reports, adding, "Small wonder that money descended like a flood upon those who made it a business to place loans in the West!" Then came the drought of 1887, and the bubble burst. Farmers couldn't produce sufficient crops to pay the mortgage; money dried up; banks and their borrowers went under. In drought stricken Kansas, half the state's Western farmers pulled up stakes and fled.
The Western farm bust soon undermined the industrial sector, particularly the railroad industry, and panic swept the country. Railroads had been expanding on borrowed money and now couldn't cover the debt service as farm shipments dried up. As railroads declined, so did the rest of industrial America and the big-city Eastern banks. One result was falling stock prices, which precipitated a run on gold supplies as holders of securities cashed out of the market in exchange for gold. By spring the Treasury's gold reserves had dropped below $100 million, considered a minimum confidence level. By year's end, about the time of McKinley's reelection, some 500 banks had failed, more than five times the annual average of the previous five years, and a record 15,242 U. S. companies went bankrupt. Unemployment soared.
-Robert W. Merry, President McKinley: Architect of the American Century