The severe 1893 U.S. financial crisis associated with railroad failures and a run on gold reserves was the Panic of 1893. The collapse of the Philadelphia and Reading Railroad in February 1893 intensified concerns about the solvency of heavily indebted railroads and banks.
As confidence weakened, investors and depositors sought gold. The U.S. Treasury's gold reserves fell sharply, partly because the federal government was required to exchange silver certificates for gold under the Sherman Silver Purchase Act. The crisis contributed to bank failures, business closures, falling agricultural prices, and high unemployment.
The panic became one of the worst economic downturns in nineteenth-century United States history. President Grover Cleveland eventually arranged a private bond issue led by J. P. Morgan to replenish the Treasury's gold reserves. The episode also intensified the national political debate over gold and silver, a debate that became central to the 1896 presidential election.