History offers Hope – Can we make 2020 an analog of 1857

April 10, 2020by Hoy Grimm

The comparisons are remarkable.

In the late 1850’s America was undergoing a transportation boom lead by the railroad industry. What started out as local operators laying tracks developed into a national network of interconnected systems. Railroads took advantage of a now-forgotten telecommunication innovation, the telegraph system, to enhance their logistic accuracy. Wall Street financiers were eager to throw capital at the fast growing industry. Eventually all it took was a clever business plan to get funding. These businesses were eventually referred to as Paper Railroads since they owned no tracks or rail cars.

Today electric cars are on the verge of taking over the combustion engine. New cars are packed with technology systems that minimizes stress and driver errors. Our cars are connected to real time data like never before. The first brand that comes to mind in the electric car business is Tesla. It is a business born from eager investors who showered cash into a company with no manufacturing expertise, that sold cars at a loss and occasionally scraped a profit out of the government subsidies paid to electric car manufacturers.

On the back of the railroad and telegraph business successes, the stock market of the 1850’s were roaring like our markets were. Then things changed.

America was awash in wealth from the gold that flooded from the California Gold Rush into the economy. As gold mining activity declined in 1855, bankers started losing faith in paper currencies and began restricting lending activity. By the spring of 1857, the seeds of the Civil War were cultivated in the Dred Scott ruling. Later that summer high-profile bankruptcies of N. H. Wolfe, a huge grain producer, and Ohio Life Insurance & Trust, who owned a big mortgage finance business, fueled deeper concerns. Overseas, the Bank of England suspended the Bank Charter Act of 1944. The act created a formula to back their currencies with gold and silver. Suspending the act meant banks no longer needed gold in reserves.

As communication and travel brought the world closer together it also meant that The Panic of 1857 was the first global financial crisis. It lasted into 1859 When President James Buchanan ordered state banks (well, technically, he “advised” them) to act like the Independent Treasury System a precursor to the Federal Reserve system created in 1913.

The 2020 health crisis is triggering a financial panic which will trigger economic problems. How will we escape this? Will government intervention save us? Will pharmacological advances deliver a cure? We certainly have to work on all of this. Let me offer one more anecdotal “cure” from our nations history.

Enter a missionary to Manhattan named Jeremy Lanphier. After distributing 20,000 flyers inviting New Yorkers to start praying for healing, Lanphier was joined on Fulton Street near the financial district by 6 people who represented 5 different faith denominations on September 23, 1857. God used this humble beginning in a remarkable way.

After 3 weeks the number grew to 40 faithful who urged that they meet daily. Turmoil in the financial markets married to societal and political and on October 10th the stock market got blasted. Within 6 months what began as a weekly prayer group of 6 mushroomed to 10,000 people meeting every day in New York City to pray. Soon the newspapers reported on the gathering and it spread across the country. Businesses would hang signs that said, “We will re-open at the close of the prayer meeting.”

Jeremy Lanphier

The Panic of 1857 ushered in the Revival of 1857-1858 and it started with 6 people.

I awoke this morning at 6:30. Before getting ready to work from home (under our governor’s orders), I turned on my phone to connect with others from my church. A small group of us gather each Wednesday and even now while the church building is unoccupied, we still gather electronically to pray and encourage one another before our day begins. Here’s a short example from Mike Garner a local attorney here, “May our prayers for revival remind us to put feet to our prayers. Lord please use me to reach out in Christ.”

Mike started this group months ago before the health crisis hit. He started it with a handful of men to pray for revival. Why? Historically these revivals come along about every 40-50 years. Each new generation provides an opportunity to seek a Spiritual awakening. “Lord, may the Pandemic of 2020 turn into the revival of 2020-2021, Amen”.

Hoy Grimm

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