Inflation is one of the biggest risks that current and future retirees face. By February 1792, the Bank of United States liabilities exceeded $2.17 million and its discounts were greater than $2.68 million 1 When prices collapsed, loans were called, credit dried up, banks became weak and were about to fail as the Panic took hold and the runs soon emptied the banks reserves. Commodities prices surged upward in a big way, sort of like the 2000 stock prices, only to fall right back down again into a double-dip recession.
In 1834, this might have been the case but in 1837, with over double the paper notes in circulation, they weren’t even close and the inevitable happened, credit dried up. With no more credit, land sales all but vanished and consequently so did the upward pressure on land prices. Now that the support for the massively inflated land prices had vanished, there was only one direction prices could go.. DOWN.
Land prices in the West collapsed, which in combination with disappearing demand, caused businesses, including farms and railroads, to begin to fail. This left political and financial turmoil in its wake, causing even more downward pressures on land values and prices in the West. With the fall in silver prices those investments which were based on silver lost value as well let alone the instability in the markets such a decision causes.
Where the response in 2008 was extreme volatility in the stock markets followed by the final collapse in December 2008, the response in 1857 was similar—economic volatility and inevitable collapse of the economy. Demand for silver from the mines in the Western United States began to drop, together with the fall in silver prices. The high tariffs were part of President Harrison’s downfall in the next election, they drove very high prices in America; he also suffered from an economy on the verge of collapse as well as a split in the Republican party with the Populist wing. It failed big and it brought down the United Copper Company on October 16, 1907.
THIS PANIC WAS the result of several things, 1) the wealthy playing games in the stock market trying to become wealthier, 2) lack of regulation of the stock market, 3) lack of regulation over banks and other financial institutions, and 4) no Federal Reserve, as we know it today. Next on the failure agenda, early in November of 1907, was one of the New York Stock Exchanges largest brokerage houses, Moore & Schley; it was heavily in debt and in danger of collapse. The 1929 Depression started in August 1929, just before the peak of the stock market on September 4, 1929.