Infographic Template Galleries

Created with Fabric.js 1.4.5 Panic of 1873 A "panic" is a severe financial crisis. For obvious reasons the term is not used any more. Two important laws of economics: 1. When more currency is in circulation, prices go up (inflation).2. When less currency is in circulation, prices go down (deflation). Prelude: 1862: To pay for the Civil War, Congress authorizes the first official use of paper money (greenbacks). More money in circulation causes inflation.1862: To populate the West Congress passes the Homestead Act, which grants land to settlers who work that land for 5 years. Though the land is free settlers go into debt buying equipment, livestock and buildings.1865: After the war Congress passes the Resumption Act to remove greenbacks from circulation. With less money in circulation deflation occurs and farmers can't pay the debt they incurred when prices were higher. Panic: 1873: Banker Jay Cooke sells share in a new railroad, the Northern Pacific. The railroad has more debt than income and its shares become worthless. People and banks who bought shares are bankrupted. Thousands lose all of their money and property. Aftermath: The Northern Pacific failure had a snowball effect on the American economy: - Many wealthy people were suddenly poor. - People who had put money in the failed banks lost all of their savings. - Sudden poverty meant less money in circulation so even more deflation occurred. - Factory workers lost their jobs. - Crop prices dropped,farmers could not make a living. JAG
Create Your Free Infographic!