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One of the first signs of trouble occurred on February 23, 1893, less than two weeks before Cleveland's inauguration, when the Philadelphia and Reading Railroad went bankrupt. After becoming President again, Cleveland dealt successfully convinced Congress to repeal the Sherman Silver Purchase Act, which he to be mainly responsible for the economic crisis. That Act, passed in 1890, required the Treasury to buy a large quantity of silver with a special issue of Treasury (Coin) Notes that could be redeemed for either silver or gold. That plan backfired when investors redeemed the new coin notes for gold dollars after the price of silver dropped. This depleted the government's gold reserves. Cleveland pushed for the repeal of the act to prevent the depletion of the government's gold reserves.
The economy worsened as people rushed to withdraw their money from banks, causing bank runs. A financial panic in the United Kingdom resulted in a drop in trade in Europe which caused foreign investors to sell American stocks to obtain American funds backed by gold.
The crisis gave rise to the Free Silver movement, especially among farmers who wanted to repay their debt with cheaper dollars. As people continued to try to redeem silver notes for gold, the statutory limit for the minimum amount of gold in federal reserves was reached and U.S. notes could no longer be successfully redeemed for gold. The National Cordage Company (the most actively traded stock at the time) went into receivership as a result of its bankers calling their loans in. Banks became more aggressive with their debtors generally. As the demand for silver and silver notes fell, the price and value of silver dropped. Holders worried about a loss of face value of bonds and many became worthless.
A series of bank failures followed, and the Northern Pacific Railway, the Union Pacific Railroad and the Atchison, Topeka & Santa Fe Railroad failed. This was followed by the bankruptcy of many other companies. In total over 15,000 companies and 500 banks, many of them in the west, failed. About 17%–19% of the workforce was unemployed at the Panic's peak. The huge spike in unemployment, combined with the loss of savings kept in failed banks, meant that people could not meet their mortgage obligations. Many walked away from their homes as a result. Numerous farms ceased operation. Soup kitchens were opened to help feed the destitute. The depression especially affected industrial cities and mill towns. Farm distress was also great because of the falling prices for export crops such as wheat and cotton.
A march on Washington, DC, known as "Coxey's Army", was a highly publicized march of unemployed laborers from Ohio, Pennsylvania, and several Western states to demand relief in the form of a jobs program. A severe wave of strikes took place in 1894, the most notable of which was a coal miners' strike which led to violence in Pennsylvania, Ohio, and Illinois. More serious was the Pullman Strike which shut down much of the nation's transportation system in July 1894.
In spite of the adverse affects of the Sherman Silver Purchase Act, the Democrats and President Cleveland were blamed for the depression. The decline of the gold reserves stored in the US Treasury fell to a dangerously low level, forcing President Cleveland to borrow $65 million in gold from Wall-Street banker JP Morgan. The Democrats and Populists lost heavily in the 1894 mid-term elections, which marked the largest Republican gains in history. Many of the western silver mines closed, and many never re-opened. A significant number of western railroads, built to serve the mines, went out of business.
The depression was a major issue in the debates over Bimetallism. The Republicans blamed the Democrats for the depression and scored a landslide victory in the 1894 state and Congressional elections. The presidential election of 1896 was fought on economic issues. William McKinley defeated the pro-silver William Jennings Bryan. The US economy began to recover in 1897 and the economy began 10 years of rapid growth, ending the Panic of 1907.