A Level History - America - Practice Exam

What significant event characterized the economic crash of 1893?

1. Increase in agricultural exports

2. Failure of major railroad companies

3. Significant government bailouts for businesses

4. Decrease in national unemployment rates

The correct answer is: Failure of major railroad companies

The economic crash of 1893 is primarily characterized by the failure of major railroad companies, which played a pivotal role in triggering the broader economic downturn. During this period, the railroad industry was heavily overbuilt and faced significant financial troubles. When the Philadelphia and Reading Railroad went bankrupt, it sparked a chain reaction that led to the collapse of several other railroads, including the Northern Pacific Railroad. This collapse had dire consequences for the American economy, leading to a severe depression, widespread bank failures, and massive unemployment. The interdependence of railroads and other sectors of the economy meant that the failure of key companies impacted not just those directly involved in the railroad industry but also various associated industries and the overall economic stability. Therefore, the failure of major railroad companies is a crucial event that encapsulated the financial crisis of 1893. The other options do not accurately reflect the circumstances of this economic crash, as agricultural exports were not significantly increasing during this time, governmental bailouts were either minimal or nonexistent, and unemployment actually rose rather than decreased.