Between 18, eight banking panics occurred in the money center of Manhattan.
The panics in 1884, 1890, 1899, 1901, and 1908 were confined to New York and nearby cities and states.
The falling gold reserves raised concerns at home and abroad that the United States might be forced to suspend the convertibility of notes, which may have prompted depositors to withdraw bank notes and convert their wealth into gold.
The second source of this instability was that economic activity slowed prior to the panic.
As the Gilded Age progressed, investment in railroads continued, but new projects outpaced demand for new capacity, and returns on railroad investments declined.
In May and September 1873, stock market crashes in Vienna, Austria, prompted European investors to divest their holdings of American securities, particularly railroad bonds.This essay details the crises in 1873, 1884, 1890, and 1893; this set includes all of the crises that disrupted or threatened to disrupt the national banking and payments system.A companion essay discusses the Panic of 1907, the shock that finally spurred financial and political leaders to consider reforming the monetary system and eventually establish the Federal Reserve.The recession raised rates of defaults on loans, which weakened banks’ balance sheets.Fearing for the safety of their deposits, men and women began to withdraw funds from banks.It began with a small number of financial firms in New York City.In May 1884, two firms – the Marine National Bank and the brokerage firm Grant and Ward – failed when their owners’ speculative investments lost value.The panics in 1873, 1893, and 1907 spread throughout the nation.Regional panics also struck the midwestern states of Illinois, Minnesota, and Wisconsin in 1896; the mid-Atlantic states of Pennsylvania and Maryland in 1903; and Chicago in 1905.The firm’s failure threatened its bank, the Bank of North America.Depositors feared the bank would fail and began withdrawing substantial sums. Morgan then convinced a consortium of nine New York City banks to extend aid to the Bank of North America.