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To: x

I'm find that modern historians of 19th century America enjoy mocking Horatio Alger and his "rags-to-riches" stories, dismissing them as cover for the robber barons.

My prof told me that it is a "consensus" that the 1874 and 1893 panics/depressions are bookends of a larger economic downturn. I'm having a heluva time believing that. Are you familiar with this thought? Whatever basis they're using for comparison cannot, simply cannot, account for the enormous growth in wealth and business during that same period.

My understanding of the 1893 panic is that it was monetary. If so, it cannot possibly have anything to do with 1874.


90 posted on 04/26/2006 5:50:19 PM PDT by nicollo (All economics are politics)
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To: nicollo
Could be a "long wave" theory, or more likely a reference to 19th century monetary deflation. Wikipedia's article on deflation has a reference to "The Great Sag of 1873-96." Apparently the Alaska gold discoveries helped end it. Deflation looks to be a voguish topic now: the new Fed chief Bernanke has written about deflation, and the Japanese are very interested in it because of their recent experience.

One panic or slump followed twenty years later by another looks to be average -- even above average. I guess the question is whether the deflation was something catastrophic, or whether it was something moderate and manageable, like inflation today. You might want to look into the question more deeply, but it looks clear enough that deflation didn't preclude real economic growth or rising living standards in the late 19th century. But of course, the deflation did hurt debtors -- above all farmers -- just as hyperinflation has hurt creditors.

What makes societies like the US different from those like Denmark is ethnic diversity. A large part of the lowest quintile here is composed of recent immigrants -- even illegals. Their children will have better lives than their parents, but it's less likely in a heterogeneous society that many of them could jump into the top quintile in a generation than in a homogeneous society -- and the Scandinavian have long been very homogeneous. There's a little more inertia than might exist in a less diverse society. Great mobility does happen here though.

108 posted on 04/26/2006 10:33:08 PM PDT by x
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