History Forum / General / What If / September 2009

The Panic of 1873 was a mixture of bad banking, government corruption,
and railroad overstretch. At the start of September '73, rumors swept
Wall Street that the railroad firm Jay Cooke & Co. had bad credit.
That rumor led to a collapse of stocks on Wall Street, a ten day stock
exchange closure in New York and San Francisco, and a 14.5%
unemployment rate three years later, closing 18,000 businesses in
bankruptcy; it led to the Great Railroad Strike of 1877, gave
Democrats Congress for the first time since before the Civil War in
1874, and led to the Compromise of 1876.

At the same time that the rumors spread, the government was set to
loan Jay Cooke & Co. $300 Million; obviously the loan did not go
through. Presuming that the loan precedes the rumors, and the messy
Gilded Age burbles along, Republicans holding Congress through the
1874 election, when Wall Street blows up in early December, from an
approximately similar source--though perhaps somewhat increased in
impact, depending on how the cards fall.

That done, Reconstruction hangs on full-fledged a while longer, and
the Republicans may pick someone different in 1876, either that, or
with Republican control of Congress, the Compromise becomes
unnecessary. That's not to say that the US could continue to occupy
the slaves states indefinitely, but limping along for a few more years
will give us more literate blacks and buy time and energy against Jim
Crow, among other things.

Other thoughts?

Best

L