The Panic of 1893 touched off a nationwide economic depression that lasted for at least three years, threw millions out of work, and caused banks and businesses to fail across the country. In Colorado and other silver-mining states, the panic was tied to the abrupt collapse of the silver industry after two decades of explosive growth. When silver prices dropped, not only did mines close, so did the businesses that supplied them. The farmers who grew food for mining towns also suffered.
The Panic of 1893 hit Colorado’s mining industry hard, throwing many miners out of work in places such as Leadville and Aspen. The nationwide depression of agricultural prices also hurt Colorado’s farmers. Overall, the Panic of 1893 was a major inflection point in Colorado’s long history of boom-and-bust economic cycles, which began with the fur trade in the early 1800s and continued through the Colorado Gold Rush, the Panic of 1893, and sporadic oil and real estate booms in the twentieth and twenty-first centuries.
Throughout the late nineteenth century, Americans engaged in a national debate over which metal—gold, silver, or both—should back US currency. Support was largely sectional: northerners for gold, southerners and westerners for silver. Most Coloradans, awash in silver booms from Leadville to Aspen and the San Juans, wanted silver coinage. After the Bland-Allison Act of 1878 required the federal government to buy a certain amount of silver each month, Colorado’s annual production of the metal remained steadily above 10 million ounces. By contrast, the state’s gold production was only one-third as valuable (or less) throughout the 1880s.
But the West’s silver boom undermined itself. A glut in the silver market sent prices crashing—down 25 percent at the end of the 1880s—and worried mine owners appealed to Congress for help. The result was the Sherman Silver Purchase Act of 1890, which required the government to buy 4.5 million ounces of silver each month. This increased the government’s silver purchase by 50 percent and was a boon to Colorado and other silver-mining states.
Silver also had the strong backing of the People’s Party of the USA, commonly known as the Populist Party, which emerged during an agricultural depression in the late 1880s. Populists sought to put farmers and working-class people on a more equal political footing with banks and other large businesses. They supported backing the US dollar with silver because it would expand the money supply and result in inflation, yielding farmers higher prices for their crops while reducing the value of debts owed to banks and other creditors. This made the party popular not only in the South and Midwest but also in silver states like Colorado; in 1892 Coloradans elected a Populist governor, Davis Waite, the biggest political victory for the new party anywhere in the nation.
Despite the support of Colorado and several other silver-mining states, third-party Populists lost the presidential election of 1892. After a four-year absence, Democrat Grover Cleveland returned to office for a second term, and he took over a nation on the brink of economic collapse. Years of agricultural depression, the draining of gold in the US treasury (due in part to increased mandatory silver purchases since 1890), and reduced international trade due to the McKinley Tariff of 1890 all contributed to the Panic of 1893.
Along with most other states, Colorado’s depression began in earnest that spring. By July 1893, some 45,000 Coloradans were out of work, as banks closed and railroad companies teetered on the edge of bankruptcy.
While there were multiple causes of the Panic, the reduction of gold reserves in the US treasury got the most attention from lawmakers and the Cleveland Administration. Unlike many in his party, the president was no fan of silver and believed that mandatory silver buying hurt the US economy. Cleveland eventually overcame his own party’s objections, and the Sherman Silver Purchase Act was repealed in October 1893, adding to the economic panic in Colorado and across the silver-mining West.
After the repeal of the Sherman Act, the price of silver dropped by about one-third. Although the repeal was intended to stimulate the national economy, it devastated Colorado’s. Of the silver mining towns, Leadville suffered the most, with ninety mines closed and 2,500 unemployed. Altogether, more than 9,500 jobs dried up in mining towns across the state.
The free-falling economy affected rich and poor alike. Mining millionaires such as Horace Tabor lost their fortunes, while real estate tycoon Henry Brown, could not pay his debts on the new Brown Palace Hotel and was eventually forced to sell the building. Twelve banks failed in Denver alone. Real estate prices plummeted and the population grew restless, traveling around the state looking for any kind of work. Colorado’s suffering was not unique; by December 1893, some 3 million people had lost jobs nationwide, with some trades losing up to 80 percent of their workforces. National unemployment stood at 12.3 percent by 1894 and did not drop below 10 percent until 1899.
Governor Waite could do little to provide relief, as his policies drew substantial opposition from the main parties and Populists held minorities in both chambers of the state legislature. Local communities did what they could. The State Soldiers’ and Sailors’ Home, built in the San Luis Valley in 1889 to house aging Civil War veterans, took in more veterans who were now unemployed. Out-of-work silver miners flocked to the booming Cripple Creek gold district, where mine owners took advantage of the labor shortage; tensions with workers eventually reached a fever pitch during a strike in 1894. Leadville built a large and elaborate Ice Palace in the winter of 1895–96 to attract tourists, even as the local mining industry was beginning to pick back up.
The effects of the economic depression caused by the Panic of 1893 did not fade until 1897, even though mining had somewhat recovered in Leadville and other places. Consolidation helped revive the silver-mining industry. In Colorado, for example, only the largest mining companies were able to make the capital investments necessary to survive the depression, while most smaller outfits went out of business. The large companies then bought up their failing competitors, further solidifying control over the industry. This trend increased corporate power nationwide and eventually led to the famous antimonopoly campaigns of President Theodore Roosevelt in the early 1900s.
The Panic of 1893 produced the worst economic depression in US history to that point. It was known as the Great Depression until that moniker was earned by the economic rupture of the 1930s. Colorado’s mining industry recovered, but the state became less dependent on it than before, as manufacturing and agriculture emerged as important economic pillars. On the plains, agriculture underwent shifts, as the depression forced more farmers to raise cattle and pushed others off their land entirely and into Denver and other cities (the new sugar beet industry eventually revived Colorado agriculture after 1900). The panic even had an effect on Colorado architecture; buildings built after the crash tended to be simpler than the ornate edifices built during the silver boom, perhaps reflecting a newfound humility among the state population.
The memory of the Panic of 1893 eventually faded, as the early 1900s brought the booming sugar beet and manufacturing industries, Colorado Fuel & Iron’s statewide coal empire, and a surge in agricultural demand during World War I. Still, the Panic of 1893 holds lessons for the state that are not always heeded. For instance, by the early 1980s, Colorado’s economy was nearly as dependent on oil shale as it was on silver during the 1890s. When ExxonMobil and other oil companies abruptly abandoned shale production in 1982, Colorado’s economy went into a free fall, suggesting that the state had learned little from past boom-and-bust cycles. Colorado’s economy has since diversified, but the Panic of 1893 still reminds Coloradans that they cannot afford to take any booming industry for granted—whether it is silver in the 1890s, oil in the 1980s, or the current real estate boom along the Front Range.