The Politics of Depression Summary and Analysis

Grant's second term witnessed an economic colapse in the form of a national depression. The quick expansion of the railroads had been fueled by widespread speculation. When bonds in the Northern Pacific Railroad became worthless in 1872, the large bank that was trying to market them went under, crippling the banking industry. A panic ensued and thousands of business, including over half of the railroads, failed.

Workers and farmers were especially hard hit by the depression, which lasted through most of the 1870s and had effects that lasted until the turn of the century, Foner argues. Labor movements and agricultural organizations like the Grange gained in strength and several small political parties that emerged out of the dissatisfaction with economic policies found local success.

Part of the Republican response to the depression was to adopt monetary...