Each day, Benzinga takes a look back at a notable market-related moment that occurred on this date.
What Happened? On this day in 1893, U.S. stocks suffered their worst intraday loss in history at the time.
Where The Market Was: The Dow finished the day at 30.02.
What Else Was Going On In The World? In 1893, Thomas Edison completed the world’s first movie studio in West Orange, New Jersey. Lizzie Borden was acquitted of the ax murders of her father and stepmother. A fresh, one-pound beef steak cost 10 cents.
Panic Of 1893: On May 5, 1893, the Dow Jones Index dropped more than 24% from 39.90 to 30.02. It would mark the worst intraday sell-off in U.S. history at the time, a record that would stand until 1929.
The Panic of 1893 was triggered in part by falling gold reserves in the U.S. Treasury. At the time, the U.S. was on the gold standard, meaning U.S. dollars could be redeemed for physical gold. When Treasury gold reserves dropped from $190 million in 1890 to $100 million by 1893, Americans grew concerned that the Treasury might run out of gold and began withdrawing bank notes and converting them to gold, placing extreme strain on the U.S. banking industry and credit markets.
The May 5 sell-off was triggered in part by the bankruptcy of Nation Cordage the day before. General Electric Company GE shares dropped 28% on the day from $80 to $58.
Fortunately for investors, the Panic of 1893 didn’t last for long. By the end of the day, the market nearly completely recovered its losses. GE, for example, closed the session at $78.50.
The Panic of 1893 would ravage the U.S. economy, triggering a severe four-year depression. Roughly 14,000 U.S. businesses closed, and unemployment rose to 20%. The event would mark the worst economic downturn in U.S. history until the Great Depression began in 1929.
Illus. in: Frank Leslie's Illustrated Newspaper, 1893
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