The Panic of 1873

The Intersection of Wall Street and Broad Street in New York City. September 1873.

Economic crises carry with them hugely devastating results: high rates of unemployment and bankruptcy are emblematic of the more modern ones. Often, a crisis is not precipitated by a flaw in the overall economy but instead a dangerous practice in a sector of that economy. Perhaps that sector has companies or individuals who have undertaken a course of action that threatens the market, and perhaps no authority figure—governmental or otherwise—can curb or stop that dangerous behavior and prevent the damage from being done. By 1873, the American railroad industry had become an industry asking for a crisis: throughout the country—and increasingly in Europe—the American railroad companies had been a popular investment; the lure of high returns was too strong for investors to resist, and the tinderbox for the impending blaze would be the bonds of railroad companies. Those bonds were the sought after investment of the time and had been collateralized—just as a piece of real estate is collateralized for a mortgage—several times over (therefore inflating the value of the bonds, the volume of the railroad bond market, and the risk of the investments). Investors, through their greed, were guaranteeing that when the market did face a disruption—and it inevitably would—that disruption, that spark, would be the beginning of a years-long economic depression.

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Constitution Sunday: Thomas B. Wait to George Thatcher

Portland, Maine, January 8, 1788

When drafting any written constitution or even any law, there is a question of whether every right should be explicitly laid out in the document. Where there are express rights in a constitution—such as the right to freedom of speech—a reader (including judges) may conclude that the list of rights are exhaustive and that there are no rights but those mentioned in that constitution. A reader could also reason that those rights which are expressed in the constitution are not a complete list but only the most important rights and may, in fact, include other rights. Additionally, a constitution may have express prohibitions such as the United States Constitution at Article I, Section 9: “The privilege of the writ of Habeas Corpus shall not be suspended.” Questions of interpretation, such as these, led to debates between friends in the winter of 1787 and 1788, and a letter from Thomas B. Wait to George Thatcher illustrated those debates.

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Crédit Mobilier

The Union Pacific Railroad at the 100th Meridian in 1866. Courtesy: Library of Congress.

Americans’ trust in their government has always ebbed and flowed, and those ebbs and flows have largely depended on whether the government and its officers have acted in ways that earned the trust of its citizens or in ways that led the government to be mired in scandal—therefore sullying its reputation. Some of the largest ebbs in trust have come after officials in the top echelon of government—Senators, Representatives, Presidents and their cabinets—have used their offices for their own benefit. Two months before the election of 1872, news broke of a scandal that would extend well into 1873 and implicate politicians as prominent as the Vice President, and that scandal foreshadowed the ways in which big business and politics would intertwine in not only the Nineteenth Century but the Twentieth and Twenty-First Centuries.

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Constitution Sunday: “The Republican” to the People

“The Republican” to the People

Connecticut Courant (Hartford), January 7, 1788

Throughout the history of the United States, there have been numerous instances where its citizens questioned whether the Constitution and its amendments were sufficiently protecting the liberties of the people. Those questions have led to substantial change—such as the amendments to the Constitution and laws that furthered the Constitution’s objectives, like the Civil Rights Acts—and yet, the American people’s perspective on the Constitution and the liberty it affords has often been one of disenchantment.

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