During the years of 1873-79, the United States and most of the nations of Europe suffered an economic depression that began with the panic of 1873. The causes in this country included post-Civil War inflation, a large trade deficit, and property losses in major cities such as Chicago and Boston, who had suffered devastating fires in the preceding years.
Strains on bank reserves resulted in runs on banks in New York, Chicago, San Francisco, and Virginia City, Nevada. The powerful Jay Cooke and Company Bank of Philadelphia failed. Unemployment reached as high as 25 percent. The primary cause of the panic and subsequent depression, however, was speculative investments in railroads.
Sedalia was hit hard by the panic of 1873. A plague of locusts destroyed crops. Smallpox raged throughout the area. In addition to these factors and the nationwide panic, in 1874, Sedalia had $265,000 in bonded indebtedness at 10 percent interest. The state Constitution limited the rate of assessment of property taxes. Sedalia defaulted on the interest payment. Fortunately, O.A. Crandall was able to renegotiate the debt.
The recession continued. In 1877, both the Pacific Railroad and the MK&T Railroad had cut wages for Sedalia workers, which limited the amount of money they were able to spend with local merchants. The workers responded by striking. The loss of their wages during the strike further limited what they could spend. Although the strike ended within the year, the economic impact of all these events hurt Sedalia economy and the willingness of its citizens to invest.
In 1879, Sedalia was trying to fund a narrow gauge railroad from Sedalia to Warsaw. The Sedalia Democrat printed a front page story with elements of an editorial called “The Dark Side.” The story details a problem that arose with the funding of the railroad. Sedalians had pledged money to fund the railroad and had convinced Benton County residents to pledge money to bring the road through their county.
When it came time to actually begin the railroad building project, Sedalia investors claimed they had no confidence in their own project. The promoters of the railroad had promised to pay McPherson and Co., the firm hired to build the road, at least 90 percent of the money that had been pledged. However, some Sedalia businessmen refused to pay what they had promised.
The Democrat criticized them severely, noting that Sedalia had fewer than 50 “enterprising men.” The years when Sedalia could “number her public spirited men in the hundreds” had passed, and Sedalia’s businessmen had grown “miserly and over cautious.” The Democrat criticized Sedalians for maligning Benton County and suggesting it would not be able to raise the money necessary. Benton County did raise the money, and the Democrat castigated Sedalia for its hypocrisy.
Representatives from McPherson and Co. were to be in Sedalia within a week of the article. The Democrat suggested Sedalia would become “the laughing stock of the state,” a title it said the residents deserved because they “had been untrue to themselves, and had deceived those who had confidence in them.”
The article must have had some effect, for within the year work on the narrow gauge Sedalia, Warsaw, and Southwestern Railroad had begun.
Rhonda Chalfant is the president of the Pettis County chapter of NAACP and the Pettis County Historical Society.