In the current economic downturn, the Great Depression has been receiving a great deal of attention. But the longest downturn in the nation's economy was not during the 1930's. It occurred six decades earlier during another depression.
The Panic of 1873 launched a downturn in the U. S. economy which lasted five and a half years. Economic Historian Richard Sylla of New York University says the downturn followed the failure of Jay Cooke & Company, one of the nation's leading investment banks. Jay Cooke earlier sold government bonds to help finance the Civil War. After the war ended, the firm sold railroad bonds until, Sylla says, the railroad expansion apparently exceeded demand, railroads failed to pay the interest on the bonds .investors stayed away and Jay Cooke and company collapsed.
The Ohio Historical Society's Jennifer Rounds is standing in a small, two story wood frame farmhouse in Ohio Village, a re-creation of a small town in the Civil War era. Basing her stories on journals and diaries of those who lived during the time period, Rounds says a central Ohio family living in such a house during the 1870's was fairly self sufficient. They raised crops, chickens and ducks. They might afford cows, so they had meatplus a source of income. Extra butter or milk could be sold or bartered to a neighbor.
Farmers also raised and marketed wheat, cotton, corn and livestock, but Sylla notes deflation reduced what they received for their goods.
Some banks at that time made their own currency. When the Civil War ended, confederate money was worthless, and Rounds says people became increasingly wary.
A lot of people gave up on cash money, says Rounds. They wanted gold or silver or they bartered. She gives examples: "I'll sew you two shirts if you'll give me a chicken. My husband will help you plow your field if you give me 2 dishes."
In addition to precious metals and bartering, credit was used on a regular basis Sylla says farmers and would-be farmers would borrow from mortgage lenders and get short term credit from their banks.
Another type of credit came in the form of running a tab at the general store, but Rounds says likely for no longer than one month. Using the Ohio Village farm family as an example, standing in the 20 foot by 30 foot room that serves as kitchen, dining room, sitting room and multiple other rooms, Rounds says one reason for running a tab might be to save for a more efficient way to cook
"This family only has a fireplace so they would do what's called open hearth cooking. It takes longer and uses a lot more firewood than a wood burning stove. But a wood burning stove is going to run you $40 or $50."
Job losses are part of any serious economic downturn. But Richard Sylla says,so many people were farmers during the 1870's, they likely had work. He says the family farm was something of its own social safety net.
Historical interpreter Jennifer Rounds says some gifts given during holidays reflected the typical farm family's ability to grow and raise what they needed. Women used wool from animals raised by the family. They spun it in the home and crocheted or knitted hats, scarves, mittens and socks. Other gifts could be purchased at the general store. She tells of one account of giving children white sugar for Christmas and leaving it to each child to decide if they wanted to eat it all at once or use it on foods throughout the year.
If availability was a problem, Rounds says pure, white sugar could run as high as $5 a pound, making it a special occasion- only item for most families. For daily use, they purchased less refined brown sugar for about $1 a pound.
From the price of sugar to the price received for the goods they sold, farm families in the Midwest clearly felt the effects of the economic downturn which began in October, 1873 and ended in March 1879. Still, any established farm family would have had what might be called built-in resiliency. They would have had a back-up plan to survive the economic storm. The plan would include techniques honed through practice when real storms, drought, disease or other variables lowered farm output and family income.