Did The Recession in 1870s Impact The Mining Industry?

Introduction: The 1870s Crisis and Its Reach

The 1870s were marked by a profound global economic shock, remembered historically as the Panic of 1873 and the subsequent Long Depression. Triggered by banking collapses, railroad failures, and speculative bubbles bursting in Europe and North America, the downturn extended well into the 1890s. While industries like railroads, steel, and agriculture bore the brunt of the crisis, the mining industry stood at the center of the storm. Mining—whether of coal, silver, or gold—depended heavily on credit, investment, and commodity markets, all of which were shaken to their core. This article explores in detail Did The Recession in 1870s Impact The Mining Industry?, examining coal miners’ strikes, silver’s demonetization, capital shortages, and regional booms that defied the wider depression.

The Panic of 1873: Setting the Stage

The Panic of 1873 began with the failure of Jay Cooke & Company, a U.S. banking powerhouse deeply tied to railroad financing. Railroads were the largest consumer of coal and metals in the era, and their sudden collapse meant an immediate decline in mining demand. Within months, 89 railroad companies went bankrupt and 18,000 businesses failed across the United States. Unemployment soared to nearly 14% by 1877, squeezing both urban workers and rural communities.

Mining was uniquely vulnerable. Mines required large amounts of capital to sink shafts, purchase equipment, and pay laborers during the long wait before ore turned into profit. With banks unwilling to lend and investors wary, many projects stalled. Mines that had opened optimistically in the early 1870s suddenly faced cash shortages, closures, or wage cuts.

The Silver Question: The “Crime of ’73”

Perhaps the most direct blow to mining came from monetary policy. The Coinage Act of 1873 ended the free coinage of silver in the United States, effectively placing the nation on a gold standard. Silver advocates later denounced this as the “Crime of ’73”, claiming it had been engineered to benefit bankers at the expense of miners and working people.

For silver miners, the timing could not have been worse. With the Panic of 1873 already weakening markets, the loss of a guaranteed outlet at the U.S. Mint led to a sharp decline in silver prices. Many Nevada and Colorado mines, which had thrived during the silver rushes of the 1860s, were forced to shut down. Once-bustling towns became ghostly reminders of the volatility of mining-dependent economies.

Yet, silver was not finished. In the late 1870s, the Bland–Allison Act (1878) partially restored silver purchases by the U.S. government, giving new life to silver mining and fueling the famous Leadville, Colorado boom of 1879. Still, between 1873 and 1878, countless miners faced unemployment and ruin.

Coal Mining in Crisis: Wage Cuts and Strikes

Coal, the backbone of industrial America, was equally hard hit. The collapse of railroads meant declining demand for locomotive fuel, while factories slowed production and consumed less coal. Coal operators responded with wage cuts, sparking some of the most significant labor unrest of the 19th century.

In 1873, coal miners in Ohio and Pennsylvania launched strikes against proposed wage reductions. The strikes dragged on for months but ultimately failed, as companies recruited strikebreakers and leaned on unemployed laborers desperate for work.
In Pennsylvania’s anthracite region, the infamous Long Strike of 1875 saw 20,000 miners walk out after wages were slashed by nearly 20%. The strike ended in defeat, with the once-powerful Workingmen’s Benevolent Association crushed.

The defeats of these strikes highlighted how the recession weakened labor’s bargaining power. With widespread unemployment, operators could easily replace strikers, while local governments often sided with business owners to maintain “order.”

The Chain Reaction: Railroads, Demand, and Mining

Railroads were not only mining’s biggest customers but also its lifeline to markets. The railroad bankruptcies of the 1870s reduced coal shipments and disrupted distribution networks for metals. Mines unable to transport ore economically were forced to close, regardless of their productivity.

The reduction in coal demand rippled outward: fewer locomotives were built, less iron was needed, steel mills slowed, and the demand for iron ore mining contracted. The recession thus created a feedback loop where industries collapsed together.

Labor Unrest and the Great Railroad Strike of 1877

By the late 1870s, years of wage cuts and unemployment had created explosive tension among workers. The Great Railroad Strike of 1877, one of the first nationwide labor uprisings in U.S. history, began with wage reductions in the Baltimore & Ohio Railroad but quickly spread. In Pennsylvania, striking railroad workers were joined by miners, whose grievances were deeply intertwined with those of rail labor.

Riots erupted in places like Reading, PA, where railroad workers, miners, and their supporters clashed with militia. The uprising was eventually crushed, but it signaled that the mining industry’s struggles were inseparable from the broader industrial labor movement of the era.

Regional Exceptions: Booms Amid Busts

While much of the mining industry suffered, the 1870s also produced dramatic exceptions that underscore mining’s dependence on geology as much as economics.

In Nevada, even as many mines closed, the Comstock Lode hit its “Big Bonanza” in 1873, producing immense wealth from a single strike. Investors like John Mackay became millionaires overnight.
In Colorado, the discovery of vast silver deposits near Leadville in 1879 sparked one of the biggest mining booms in American history, reinvigorating the region’s economy despite the ongoing Long Depression.

These cases show that while the recession stifled capital and depressed prices, a sufficiently rich ore discovery could still attract investment and labor, defying broader economic trends.

The human toll of the 1870s mining crisis was profound. Mining towns dependent on single resources often collapsed when mines closed, leading to mass migration. Families left shuttered camps in Nevada or Pennsylvania, seeking opportunities in the West’s new boomtowns.

For those who stayed, life became harsher:

Wages stagnated or declined, and miners often accepted dangerous work for less pay.
Child and immigrant labor increased, as desperate families sought survival.
Communities fractured as strikes failed and unions collapsed under employer pressure.

The social upheaval of the 1870s laid the groundwork for later labor movements, including the rise of the Knights of Labor in the 1880s.

The Long Depression and Mining’s Legacy

The Long Depression stretched nearly two decades, longer than any modern recession. For mining, its legacy was twofold:

Industrial Dependence: Mining’s fortunes were shown to be tightly bound to railroads, banking, and government monetary policy.
Labor Lessons: The strikes of the 1870s revealed both the power and vulnerability of organized labor in extractive industries. Though miners were defeated, their struggles informed future union efforts.

By the early 1880s, the partial recovery of silver, combined with new industrial demand for coal and metals, allowed mining to rebound. Yet the scars of the 1870s lingered in mining communities for decades.

Conclusion: Mining in the Shadow of Recession

So, did the recession in the 1870s impact the mining industry? The evidence is clear: the mining industry was deeply destabilized by the economic crisis of the 1870s. The Panic of 1873 cut off essential capital, the Coinage Act undermined silver, coal miners endured wage cuts and strikes, and railroad failures choked demand. At the same time, geology occasionally defied economics, with massive finds like the Comstock “Big Bonanza” and Leadville’s silver rush creating localized booms amid national bust.

Ultimately, the 1870s recession showed how mining could be both fragile and resilient, buffeted by forces far beyond the control of miners or even local operators. The decade stands as a reminder that extractive industries are not only subject to the cycles of discovery but also to the larger tides of finance, policy, and global trade.

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