What event began the Panic of 1873 in the United States when Jay Cooke & Company failed?

Jay Cooke & Company’s bankruptcy began the Panic of 1873 in the United States after the firm suspended operations on September 18, 1873.

Jay Cooke & Company was a major investment bank that had financed Northern Pacific Railway bonds. Investors became increasingly worried about railroad speculation and the company’s ability to sell enough bonds. Its failure damaged confidence and helped trigger a financial panic.

The New York Stock Exchange closed temporarily on September 20, 1873, for the first time in its history. The panic spread through banking and railroad markets and was followed by a long economic downturn known in the United States as the Long Depression.

The event had international causes and effects, so the bank’s failure was not the only underlying problem. Excessive railroad expansion, speculative investment, and tight credit all mattered. The 1873 panic is also associated with the Vienna stock-market crash earlier that year.