In a few short weeks we will be facing another manufactured crisis and another shutdown.
This is the second time in American History that a conservative extremist faction in congress was trying to destroy the nations constitutional system by holding the government finances hostage in order to “Force” their will on the Executive Branch of our government. The last time in history it was the Democrats.
It has Often been said that unless the lessons of History are learned, History is Doomed to repeat itself. That statement has Never been driven home with such terrifying clarity as it is until we look into the elements and political changes following America’s first great Depression, the Panic of 1873
Economic Historians still debate the underlying causes of this “Great Depression in in the Americas and the globe, Some relate it to Post-war inflation, rampant speculative investments (overwhelmingly in railroads), a large trade deficit, ripples from economic dislocation in Europe resulting from the Franco-Prussian War (1870-1871), property losses in the Chicago (1871) and Boston (1872) fires, and other factors put a massive strain on bank reserves, which plummeted in New York City during September and October 1873 from $50 million to $17 million.
Then, they had a craze goingon in railroad investment that was driven by government land grants and subsidies to the railroads. At that time, the railroad industry was the nation's largest employer outside of agriculture, and it involved large amounts of money and risk. A large infusion of cash from speculators caused abnormal growth in the industry as well as overbuilding of docks, factories and ancillary facilities. At the same time, too much capital was involved in projects offering no immediate or early returns creating a “Railroad Bubble”.
It does not take much if a leap to see the comparison between todays “Housing Bubble” and the “Railroad bubble” of 1873. Both were the results of risky investments and both led to the complete collapse of the economy.
Jay Cooke & Company, the main Railroad Bubble player was the Lehman Brothers of their day.
Needless to say, Jay Cooke and Company Failed just as Leman Brothers did, having invested heavily in the railroads “Bubble” of that day found themselves stuck with several million dollars in Northern Pacific Railway bonds that they couldn't market so they failed. The Failure of Cooke & Co. triggered a chain reaction in the banking industry of their day. You know how the rest of the story went, global chain reaction, bla,bla.
Please head below the orange mushroom cloud to get to the important part
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