The severe U.S. financial crisis that began with the failure of Philadelphia’s Jay Cooke & Company in 1873 was the Panic of 1873.
Jay Cooke & Company failed on 18 September 1873 after investors lost confidence in its financing of Northern Pacific Railway. The company had overextended itself promoting railroad bonds, and its collapse exposed broader weaknesses in the banking and railroad sectors. The New York Stock Exchange closed temporarily during the turmoil.
The panic was part of an international financial crisis. In Europe, the failure of Vienna’s stock exchange boom in May 1873 helped spread financial stress. In the United States, railroad bankruptcies, deflation, and reduced investment followed.
The resulting economic depression is often called the Long Depression, although historians debate that label and its exact duration. The 1873 panic should not be confused with the separate Panic of 1893, which also involved railroad failures and a major U.S. downturn.