The Panic of 1893, one of the most severe financial crises in the history of the U.S., peaked on May 4, 1893 as the National Cordage Company, which had aggressively expanded and manipulated its stock, collapsed and declared bankruptcy, triggering a depression that lasted until 1897.
The crisis had started earlier in February 1893 when the Philadelphia and Reading Railroad declared bankruptcy, creating early anxiety. On April 27, 1893 the stock market began a sharp decline. This date is cited by some as the start of the panic.
This was followed by The National Cordage Company going into receivership on May 4, causing a massive sell-off. On May 5, the Dow Jones Industrial Average dropped 24%, sparking the main financial panic starting with a slow down of economic activity and a large decline in U.S. Treasury gold reserves, raising the rates of defaults on loans and weakening banks’ balance sheets. Fearing for the safety of their deposits, the public began to withdraw funds from banks. Fear continued to spread and withdrawals accelerated, leading to widespread runs on banks. The economy remained in recession until the following summer. According to some estimates, industrial production fell by 15.3% and unemployment rose as high as 19%. After a brief pause, the economy slumped into recession again in late 1895. It eventually fully recovered in mid-1897. More
