The Panic of was an economic depression in the United States. It began in February and officially ended eight months later, but the effects from it continued to be felt until The Panic of deeply affected every sector of the economy and produced political upheaval that led to the political realignment and the presidency of William McKinley.
The Panic of has been traced to many causes, one of them pointing to Argentina; investment was encouraged by the Argentine agent bank, Baring Brothers. However, the wheat crop failure and a failed coup in Buenos Aires ended further investments.
In addition, speculations in South African and Australian properties also collapsed. Because European investors were concerned that these problems might spread, they started a run on gold in the U. Specie was considered more valuable than paper money; when people were uncertain about the future, they hoarded specie and rejected paper notes. During the Gilded Age of the s and s, the United States had experienced economic growth and expansion, but much of this expansion depended on high international commodity prices.
Exacerbating the problems with international investments, wheat prices crashed in During the s, American railroads experienced what might today be called a " bubble ": investors flocked to railroads, and they were greatly over-built.
One of the first clear signs of trouble came on 20 February , [ 5 ] twelve days before the inauguration of U. President Grover Cleveland , with the appointment of receivers for the Philadelphia and Reading Railroad , which had greatly overextended itself. As concern for the state of the economy deepened, people rushed to withdraw their money from banks, and caused bank runs.
