The 1873 financial crisis that began with railway speculation and spread across Europe and the United States was the Panic of 1873.
Railway construction had attracted enormous investment in the United States and Europe. When the Vienna stock exchange crashed in May 1873 and the banking firm Jay Cooke & Company failed in September, confidence collapsed. Jay Cooke had heavily promoted bonds for the Northern Pacific Railway.
The panic contributed to a long period of economic weakness often called the Long Depression. In the United States, the New York Stock Exchange closed temporarily, industrial production slowed, and unemployment rose. The effects were international because financial markets and rail investment were increasingly connected.
The Panic of 1873 is sometimes confused with the Long Depression itself. The panic was the acute financial shock, while the depression describes the prolonged economic downturn that followed. Its history also shows how railway enthusiasm could create dangerous speculative bubbles.