[On September 20th, 1873, the New York Stock Exchange closed for ten days, a key moment in the developing economic crisis that came to be known as the Panic of 1873. So for the 150th anniversary of that moment this week I’ll AmericanStudy a handful of Panic contexts, leading up to a weekend post on 2023 echoes of those histories!]
On how a hugely important labor action was influenced by the Panic, and vice versa.
As I wrote in my recent Labor Day Saturday Evening Post Considering History column, labor unions and labor activism go all the way back to the foundational moments and eras in American history, and became significantly more possible still (at least in legal terms) and thus more widespread after the 1842 Massachusetts Supreme Judicial Court decision I discuss there. But those antebellum labor organizations and actions generally remained local, contained to the specific communities and settings where they originated. It was in the period immediately following the Civil War that a truly national labor movement began to emerge, as illustrated by the August 1866 founding of the National Labor Union in Baltimore and the 1869 creation of the Knights of Labor in Philadelphia. And not too long after, the first truly national labor action took place, the 1877 protests and riots that came to be known collectively as the Great Railroad Strike.
The Great Railroad Strike thus certainly has to be contextualized by both the labor movement’s longstanding presence and its unfolding late 19th century shifts, and it’s in those contexts that I’ve always thought about these 1877 events. But in researching this week’s series, I’ve learned just how much the strike was also influenced by the Panic of 1873 and the resulting depression. As I discussed earlier in the week, the collapse of the railroad boom was a major factor in the Panic itself; moreover, one of the immediate results of the Panic was the September 1873 failure of financier Jay Cooke’s banking and investment company, which was closely tied to railroad bonds and the collapse of which furthered the railroad implosion. Due to these factors (complemented and extended by the usual corporate greed and short-sightedness, natch), railroad companies began to cut workers’ wages consistently and steeply, culminating in three distinct and equally sizeable cuts in 1877 alone. As I discussed in that Saturday Evening Post column, the fight for better wages was always at the heart of the American labor movement, and these post-Panic wage cuts were without question the central cause of the largest and most national labor action to date.
So the Great Railroad Strike of 1877 was clearly interconnected with and even caused by the Panic of 1873—but I would argue that the strike surely played a role as well in helping end the post-Panic economic downturn. Most of the narratives of that 1870s Long Depression I’ve encountered suggest that it simply “ended in 1879” (with some lingering aftereffects, of course), but if American history teaches us anything about economic downturns, it’s that countering and reversing them requires specific and sustained government intervention. And I think it’s no coincidence that the first such sustained federal government response to the Long Depression seems to have begun in late 1877, spurred on by newly elected President Rutherford B. Hayes’ Secretary of the Treasury John Sherman as well as Congressmen like Missouri’s Richard Bland and Senators like Iowa’s William Allison. Government intervention requires both acknowledgment of the problem and a collective appetite for solutions, and I can’t imagine anything providing more clarity on both counts than a nationwide labor strike.
Last 1873 contexts tomorrow,
PS. What do you think?