The international financial crisis that began with the failure of the Ohio Life Insurance and Trust Company in 1857 was the Panic of 1857.
Ohio Life’s failure exposed weaknesses in the expanding American financial system. Railroad securities and land had been heavily promoted during an investment boom, while the failure of the New York branch of the Ohio Life company damaged confidence. A major decline in railroad share prices followed.
The panic spread through the United States and reached Europe and other parts of the global economy. Banks restricted lending, businesses failed, and unemployment increased. The crisis was severe but relatively brief compared with the Panic of 1837.
The economic shock also affected the United States politically. Some historians connect the panic’s sectional effects with the growing tensions that preceded the American Civil War, although the financial crisis itself had multiple international and domestic causes.