Were you taught in school that the U.S. Civil War of 1861 was preceded by the first global economic crisis in modern history?
No, no, of course not. History is written by the victors after all.
The Panic of 1857 was fueled by over expansion of the US domestic economy and spread throughout the entire world. The invention of the telegraph had created the world economy by making near instant communications possible. The entire economy was changing due to advancements in tech.
Britain’s economy was accosted by the Bank Charter Act of 1844, which was actually a common sense requirement that circulating money be backed up by gold and silver reserves. Common sense…but it had a rough effect for the next decade, leading to massive monetary problems in that nation.
Meanwhile, American banks were waiting for their own much-needed shipments of silver and gold and were devastated by the sinking of the SS Central America in September of 1857, which helped to provoke the American Panic of 1857.
The banks didn’t recover till the start of the Civil War. Go figure.
The bank failures began with the Ohio Life Insurance and Trust Company, which failed due to bad agricultural investments. You see, the company had been investing in American farm labor because Europe had been utterly dependent on American crops from 1853 to 1856 due to their own farm laborers being involved in the Crimean War. When that war ended, the value of American crops plummeted and the trust company, which had been heavily invested in American crops, failed.
The farmers were caught up in this panic because they’d been making speculative investments of their own. It’s interesting to speculate whether these events would have led to the world’s first modern global economic crash were the telegraph not been invented. But as new technology emerges, the world always suffers a growing pain or two.
The stock market was already suffering from gradual declines due to the failure of N.H. Wolfe and Company, a New York-based flour and grain company, and investor confidence was shaky at best. When Ohio Life Insurance and Trust Company failed in August, that was the last straw. There was a SERIOUS run on the banks.
Commercial credit dried up, the price of grain fell and merchants saw massive decreases in profits. Several railroad lines were forced to shut down, farmers defaulted on mortgages, and merchants had to curtail their purchasing, causing a supply-chain crisis.
Our current situation will paint a similar footnote in history, I’m sure, with the details of our suffering painted in the faintest of lights, if at all. It’s pointless to speculate whether some of the events leading to the panic were intentional (they were). This story simply points out the pattern that exists before every war:
1) An economy is superheated by greed-fueled speculative investment.
2) The largest investors (banks, etc.) find themselves in a pickle because they did their wile, speculative investment with other people’s money.
3) They get a nice easy out in the chaos of war.
But how do they bring the general population to war? Through manipulation of social causes of course…preferably a very just one that the whole population cares about, even if the money powers don’t care at all.
In the case of the civil war, the social cause was slavery. Nevermind that slavery was already on it’s way out, or that they never had any intentions of ending their racist institutions. Time would tell their true intentions as they continued policies of “separate but equal (bullshit),” the Tuskegee experiments and the atrocities committed during the civil rights movements.
A century and a half later, decedents of slaves are still fighting for their rights and to be truly free, as we ALL are now.
At the beginning of every major war, you’ll find a social cause, usually one that make sense at first, but is never solved by the war.
Meanwhile, the only constant fact of war is that the money men fund both sides and solve all of their financial problems that were brought about by their own irresponsible decisions. And they do this by indirectly robbing common investors of their wealth. They’re left holding the bag, so to speak.
But this crime is always lost in the fog of war.
