The 1857 worldwide economic crisis that followed the failure of Ohio Life Insurance and Trust Company was the Panic of 1857.
Ohio Life’s New York office failed in August 1857 after revelations of embezzlement. The failure damaged confidence in banks and businesses, while falling railroad investment and weakness in land speculation added pressure. A collapse in the market for railroad securities spread the shock beyond Ohio.
The panic affected the United States, Europe, and other connected economies, making it an early example of an international financial crisis. In the United States, banks suspended specie payments, meaning they stopped exchanging banknotes for gold or silver on demand. Trade and employment then contracted.
The crisis is sometimes remembered for helping intensify sectional tensions before the American Civil War, although it did not cause the war by itself. It also helped expose the fragility of a financial system that lacked a permanent central bank and a uniform national currency.