The crisis of 1873 was felt in its full force on the New York Stock Exchange, which was obliged to close for two days at the height of the panic in order to stem the tide of liquidation in securities.

The economy is in fact over-expanded, particularly in railroad construction, and the weak link turns out to be the banking house of Jay Cooke and Company, which helped the U.S.  Government finance the Civil War and also underwrote the construction of the Northern Pacific Railroad.
 
 1874
 The depression that began last year begins to abate, but jobs and food are still scarce. Early in the year a grasshopper invasion in the Middle West and a potato-bug blight in the East destroy most of grain, corn, and potato crops, forcing farmers to leave their homesteads in search of work. Frustrated by the inability of the political and industrial leaders to remedy their economic plight, some Americans turn to new forms of political and economic organizations for help. On June 20, Congress passes a currency act fixing the maximum amount of greenbacks in circulation at $382,000,000.
 
 1875
 On January 14, 1875 Congress passes the Specie Resumption Act, reducing the value of greenbacks in circulation from $382,000,000 to $300,000,000 and allowing the resumption of specie payment by January 1, 1879. The bill, twice before recommended by President Grant, is an attempt to balance the inflation desired in the West with the "sound money" policy desired in the East. Business slowly recovering from the depression of 1873, begins to form pools (the pre-cursor of the trust) to fix and maintain prices.
 
 1878
 The grasshoppers which had ravaged the crops in the West are now under control, and settlers begin to farm their lands again. Industry is emerging from the depression that began in 1873. Employment increases. The strikes of the previous year spur many workers to join labor unions emphasizing higher wages and shorter working hours. On February 28, The Bland-Allison Act, requiring the Government to buy between $2,000,000 and $4,000,000 of silver each month to be coined into silver dollars, is passed by Congress over President Hayes's veto. This bill is a compromise with Western farmers and silver miners who had been lobbying for the free and unlimited coinage of silver since large deposits of the metal were discovered in the West in 1876. 
 
 1879
 Freedom of competition gives way to "big-business economy." As competition in industry and transportation grow, businessmen begin to fear the effect of competition on their profits, and devise ways of limiting it. The most successful device within the law is the " Trust," a form of organized business in which corporations entrust their stocks to a board of trustees, who are authorized to act for the component corporations. This device, which several businesses adopt, circumvents many state laws that greatly restrict interstate corporations. The largest and most efficient trust is that organized by John D. Rockefeller, head of the Standard Oil Trust, comprised of the major corporations engaged in refining and transporting petroleum. 
 
 The Hepburn Committee, set up by the New York State legislature, reveals that the Rockefeller interests totally dominate the oil industry, freezing out all competition throughout the entire world. The committee also reports on the chaotic situation in the railroads, revealing extensive price discrimination in different parts of the country. Small merchants and farmers begin to demand greater government regulation of private enterprise. On January 1, The Government resumes specie payments authorized by the Specie Resumption Act of 1875. Despite the fact that greenbacks are now worth their equivalent in gold, Secretary of the Treasury John Sherman, with a gold reserve of over $200,000,000, expresses doubt that there will be a rush to redeem the greenbacks.
 
 1879-1882
 With the great trade revival which followed the resumption of specie payments and the profitable grain harvests of 1879 the New York Stock Exchange entered upon a period of renewed activity. During the year 1880, which marked the climax of the "boom" of that period, trading on the Exchange reached an enormous volume, and the value of seats in the Stock Exchange rose to an unprecedented figure. In 1881, when a reaction in the tide of prosperity began, the New York Stock Exchange reflected the change by a contraction in the volume of business done and by an extensive fall in prices. Speculation by the general public was again rife in 1882, but was checked with great violence by the sudden fall in railway and industrial profits at the close of the year.
 
 1882
 An unprecedented surplus has accumulated in the Treasury of the United States. It exists because taxes and tariffs inaugurated to meet the nation's enormous need for funds during the Civil War have been imposed during the 17 years since the war. As a consequence, Government borrowing, which can be an important outlet for private investments, has been reduced, and idle resources and rising unemployment threaten the economy. In his message to Congress on Dec. 4, President Arthur states that "either the surplus must lie idle in the (Federal) Treasury or the Government will be forced to buy at market rates its bonds not then redeemable, and which under such circumstances cannot fail to command an enormous premium, or the swollen revenues will be devoted to extravagant expenditures, which, as experience has taught, is ever the bane of an overflowing treasury."
 
 The President's fears are realized; swollen Federal funds begin to be tapped for "pork-barrel" bills, providing funds for wasteful and often useless projects. The surplus leads to increasing demands for a reduction in tariffs. The President appoints a commission to study the tariffs. Opposition to President Arthur's no-spending, tariff-reduction policies become loud and persistent. President Arthur also attempts to lessen the magnitude of the spoils system, but encounters stiff opposition from his own party. The Democrats gain control of the House of Representatives in the midterm elections.
 
 1883-1884
 The severe reaction of 1883 was followed by the panic of May, 1884 in which half a dozen Stock Exchange Houses failed and two important banks were compelled to close its doors.
 
 1886-1888
 The period from 1886-1888 inclusive was chiefly marked by the large issues of securities to provide funds for the very extensive railway building then in progress. There were several excited markets on the Stock Exchange, though the tendency at the close of the period was toward depression of values, largely because of the enormous creation of new securities.
 
 1890-1893
 The year 1890 was again marked by great activity and rising prices on the Stock Exchange. This "boom" was checked by the Baring panic of November,1890, in London, which was reflected by a prompt recall of English capital from the United States, and by a New York Stock Exchange panic, in the course of which two or three broker houses failed. From then until the outbreak of the more serious panic of 1893 a shrinkage in business was the chief characteristic of the New York Stock Exchange's history.
 
 1893-1897
 The panic of 1893 was in many respects one of the most dramatic episodes in the Stock Exchange history. There was at one time, during July of that year, talk of repeating the expedient of 1873 and closing the Exchange. This turned out to be unnecessary, as foreign capital came to the market's relief in the moment of emergency. The following year, 1894 was a period of great depression, when the volume of Stock Exchange business fell to the lowest point since 1878. Recovery followed in 1895, when foreign capital was again commanded in connection with the international syndicate to float the United States Government's bond issue and protect the Treasury gold reserve. A panic of smaller proportions swept over the Stock Exchange at the close of this year, in connection with the collapse of the protective operations and the international clash between America and Great Britain over Venezuela. The two ensuing years were chiefly characterized by the reorganization of the great number of important railways which had failed during 1893 and 1894, and whose new securities, largely increased in quantity, were placed through the medium of the Stock Exchange in 1896 and 1897.
 
 1897-1901
 The financial revival which began at the close of the last-named year introduced a new epoch in the history of the New York Stock Exchange-an epoch in all respects the most remarkable of its history. Supply of American capital available for investment purposes seemed suddenly to have become unlimited-largely because of the country's immensely profitable harvests at a time of European famine, but also on account of a wholly unprecedented increase in our general export trade, in manufactures as well as in agricultural products, which gave to our markets a command over foreign capital which they had never before possessed. This increase in capital was made use of by promoters of all kinds of enterprises, and their shares found active reception on the Stock Exchange. A highly excited movement for the rise at the opening of 1899 converged chiefly on shares of industrial companies organized to buy up independent plants. Checked by the excess of the speculators and by an industrial reaction during the Presidential contest of 1900, this movement was renewed with immense force at the opening of 1901.
 
 1901-1903
 At that time all precedents of every kind in Stock Exchange history were broken. Where a few years before, transactions of 200,000 shares a day had been regarded as constituting a large market and half a million shares as a day of extreme activity, scarcely a day now elapsed in which the volume of business did not run from one to two million shares, culminating on April 30, 1901, in transactions of 3,200,000 shares. Prices in the meantime were advancing at a rate which brought the entire financial public into the field as a speculator. 
 
The real force underlying the movement was the purchase of stock companies by other companies which pledged their credit to raise the funds requisite to provide for the purchase. This movement culminated in the famous Northern Pacific corner of May 9, 1901, when the efforts of two rival groups of capitalists to get hold of that railroad property forced its shares to the price of $1000, the stock having never touched $100 until three weeks before. Apprehension that operators who were unable to deliver stock which they had pledged would be dealt with summarily, caused one of the most violent collapses of values in the Stock Exchange's History.
 
Recovery was prompt, and both 1901 and 1902 were characterized by numerous sensational movements for the advance, the second of those years scoring as a rule the higher values. In general, however, it was recognized that high-water mark in Stock Exchange activity had been reached. In the autumn of 1901 and in the fall of 1902 and the early part of 1903 severe reaction in values supervened.
 
 The noteworthy characteristic of the period was the employment of enormously wealthy syndicates to sustain prices for the newly issued shares on the Stock Exchange until the public could be induced to buy. Such syndicates were remunerated at first by large allotments of stock and later by heavy cash payments, the syndicate formed in March, 1901, to "underwrite" the billion-dollar stock issued by the United States Steel Corporation to take up the shares of other steel and iron combinations, pledging itself, in case of necessity, to advance $200,000,000 capital for the purpose.
 
 The stock issue worked out so successfully, however, that only a small fraction of the guarantee was called for, and two years later the original capital subscribed was returned to subscribers, with an additional cash allotment sufficient to raise profits to 200 per cent. A second syndicate, formed in 1902 to underwrite a $50,000,000 bond issue by the same corporation and the conversion of $200,000,000 of its stocks into bonds, fared less fortunately, being obliged to perform the whole of its guarantee at a time of falling prices. In the spring of 1903 it was generally recognized that the extensive employment of the syndicate underwriting plan had "tied up" immense amounts of capital which were usually available in the general market. The investing public having bought very sparingly and the syndicate banking interests being unable to support prices, a very severe and general decline on the Stock Exchange ensued.
 
 1907
 After years of business prosperity, the United States faces a serious financial panic, as big business becomes increasingly alarmed at the thrust of the "trust busting" policies of President Roosevelt. The root of the difficulty is the weakness of the banking and credit system, but the overt beginnings of the panic are a steep decline in the stock market followed by a run on the Knickerbockers Trust Company of New York. Unemployment soars and wage cuts are widespread. The Government moves to ease the crisis by greatly increasing its deposits in the banks, and toward the end of the year J.P. Morgan persuades other capitalists to join him in making loans to preserve the solvency of threatened banks and corporations. On February 26, The U.S. Congress passes a General Appropriations Act, including a provision increasing to $12,000 the annual salaries of Cabinet members, the Speaker of the U.S. House of Representatives, and the Vice President; and to $7,500 the salaries of members of Congress. On March 13, A financial panic begins with a sharp drop of the stock markets.
 

[END OF ARTICLE]