Andrew Leonard: The panic of 1857
By way of Brad DeLong, an illuminating short post on the Panic of 1857 by Ari Kelman at The Edge of the West blog. How bad was it?
Commodity prices plummeted, factories shut their doors, railroads declared bankruptcy, hundreds of thousands of people lost their jobs, and land prices deflated. As the economy ground to a halt, immigration dropped in 1858 to its lowest level in more than a decade.
What caused it? A confluence of factors, including the Crimean War, a speculative Western land boom, the newish technology of telegraph wires (damn those newfangled gadgets!), an embezzlement scandal, and the accidental sinking of a ship carrying $2 million of California gold.
I like this post because it reminds us to look for multiple causative factors when trying to explain any discrete event. Conspiracy theories that pin all the blame on one villain -- Goldman Sachs! Phil Gramm! The Community Reinvestment Act! -- tend to miss the gloriously messy complexity of truth.
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