THE PANIC OF 1893
During the panic an unprecedented 15,252 American businesses went into receivership. By the winter of 1893 about 18 percent of the national work force was without jobs. Those who remained employed found their wages slashed by an average of almost 10 percent.
Without a Federal Reserve System to maintain regional balance, the financial crisis struck the West with particular fury. As eastern money contracted, the normally cash-starved banks of the debtor West collapsed. Of the national bank failures in 1893, only three institutions in the Northeast suspended operations while thirty-eight closed their doors in the South. In the West, however, 115 banks went into receivership--sixty-six in the Pacific states and western territories alone.
Even before the panic, Utah had experienced hard times. During the territorial boom of 1889-90, the value of land and of business and residential property had skyrocketed to as much as ten times pre-1889 prices. Speculators reaped enormous paper profits, and real estate transactions in Salt Lake City alone reach an unprecedented $100,000 daily. To meet voracious demands for credit, nine new banks opened in the city. Then, in December 1890, shock waves from the collapse of London's Baring Brothers bank burst Utah's speculative bubble, and Utahns numbly reaped the harvest from their craze: depressed prices, lowered profits, overextended credit, and tight money.
Still other factors weighed against Utah. The late winter of 1892-93 heavily damaged local agriculture, particularly the important cash-producing wool clip, making 1893 Utah's worst sheep year to date. Even more disastrous for the local money supply, the plummeting price of silver forced the closing of many mines.
At the time, the Church of Jesus Christ of Latter-day Saints remained Utah's leading financial institution. Its fortunes smiled no brighter than the general economy, however. A drop in church tithing revenue--from $878,394 in 1890 to $576,584 in 1893--charted the general economic decline. But the church had more to cope with than diminishing revenue. The Edmunds-Tucker Act of 1887 had financially crippled the church. The law stripped Mormonism of its legal standing and hindered church management, especially the ability to secure loans. By disfranchising many Saints and placing election machinery in the hands of their opponents, the act enabled non-Mormons to gain political control and the ability to transfer city, county, and territorial funds from Mormon to Gentile banks, further undermining the church's ability to obtain local loans. Moreover, by demanding the surrender of all church assets in excess of $50,000, the law deprived the Mormon community of property worth over $1,000,000 as well as revenue and possible loans derived from church property.
These pre-panic times suggested retrenchment; but Mormon leaders followed a different policy. Hoping to stimulate the local economy, the church embarked on such large public-works projects as the completion of the long-delayed Salt Lake Temple, the Saltair Pavilion on the Great Salt Lake shoreline, the Saltair Railway Company, and the Utah Sugar Company. Perhaps as much as $2,000,000 was extended for these purposes--very large amounts at the time.
Thus, when the Panic of 1893 reached Utah, it found--and worsened--an already precarious situation. By the end of June, Utah businessmen began to lay off workers and reduce wages. A half-dozen prominent citizens were bankrupt and many more were on the verge. "I have never witnessed a greater stagnation in business enterprises than has manifested itself during the last month," wrote a prominent Utahn. "Money is not to be had, confidence seems to have disappeared, and credit is denied by nearly all tradesmen. Public works are stopped, and thousands of men are out of employment."
No doubt the panic could have been worse. Fortunately, Utah and Mormonism at the time had the good services of the young businessman and churchman Heber J. Grant. Grant, who almost thirty years later would to succeed to the Mormon presidency, was able to get eastern banks to renew much of the local debt during the worst of the panic. His efforts were instrumental in keeping the two primary Mormon banks, Zion's and the State Bank of Utah, from collapse. Had they gone under, the floodgates would have been opened wide.
For Utah the Panic of 1893 was not simply another financial panic to be briefly endured and weathered. It left deep scars and brought profound results. The rest of the nation could speak of the "Gay Nineties," but the aftermath of the panic in Utah brought a depression that lasted most of the decade. These hard times, as well as Grant's eastern loans, also suggested something new about Utah itself. No longer regionally self-sufficient as per the Mormon pioneer dream, Utah was now very much a part of the national financial structure and at peril to its cycles and development.