“There is a tendency now to regard crises (…) as a purely economic phenomenon. From this perspective, the crisis began with the pressure in financial markets (…) and ended with signs of economic recovery (…) However, it is a mistake to view this crisis – or any other – purely in economic terms. The story, as revealed here, was much more complicated, and therefore more prolonged, than that. The economic collapse quickly spawned other problems that were, on their own account, equally dire. In state capitals and in Washington, old animosities that were suppressed in years of prosperity were suddenly re-exposed. Legislative deadlock provoked questions about the capacity of (…) democratic systems to act authoritatively in critical moments. Riots and rebellions in many parts of the country raised similar questions about the capacity to maintain social order. Even foreign policy was destabilized” (204-205)

“In a sense, there was a parallel between the economic and the non-economic aspects of the crisis. The key feature of a financial panic is the sudden dissolution of trust within the business community. With the collapse of trust, the vast and delicate web of commercial transactions collapses and economic activity grinds to a halt. As the economy declines, however, the breakdown of trust becomes more general. Legislators and political executives stop trusting one another. Employers and workers, landlords and tenants, neighbors of different races and ethnicities – all stop trusting one another. Even among nations, trust declines and is displaced by rancor and antagonism, An initial problem of decaying commercial trust degenerates into a broader and more difficult problem of decaying social and inter-societal trust.” (205.)

“Economic distress encouraged social unrest. (…) And the question, again, was what should be done to preserve order under such circumstances? Initially, popularly elected governments tended to temporize about the use of force to preserve order, but when the threat became serious, force was invariably deployed. Dissent was tolerated only if it was channeled through established institutions. To preserve order, martial law was declared, the state militia and federal troops were rallied; mass arrests were made; and heavy sentences, including capital sentences, were levied. And if the capacity to suppress disorder did not exist, it was created” (206)

“We cannot gauge the significance of a crisis by looking only at aggregate economic data. The (…) crisis was a political and cultural phenomenon as well. Economic uncertainty and stagnation produced unprecedented political and social instability. Voter turnout reached levels never seen before, and rarely seen since. Incumbent politicians were enthusiastically hoisted from office, and so were their unlucky successors. Anti-government violence – sometimes planned, sometimes not – broke out across the country. There was a widely shared feeling that the country had lost its way. The descent from the boom times (…) was taken as evidence of a moral failure.” (p8.)

“riots and rebellions posed an obvious challenge to the social order. There was a fear of moral as well as political dissolution. Something essential about the country’s character appeared to be unraveling.” (p9.)

A summary. “There was institutional change: new restrictions on the role of state governments, undertaken to reassure foreign investors and avoid a reprise of default; an expansion of police power, in response to domestic disorders caused by economic disruption; and an expansion of presidential power, partly as a consequence of legislative disfunction (…) And, at the same time, there was ideational change: that is, a transformation in conventional wisdom about the role of government, which explained why institutional adaptations were necessary, and which emphasized the need to restore order in the midst of economic, political, and social crisis. Many of these institutional adaptations persist today, albeit with modifications demanded by later events. (209.)

“the idea of a police force – a civic army as it was called – was itself imported from Britain.” (207)

From the intro and conclusion to Alasdair Roberts, America’s First Great Depression: Economic Crisis and Political Disorder After the Panic of 1837

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