The Panic of 1873 helped begin the long economic downturn known as the Long Depression.
The panic began in the United States after the failure of Jay Cooke & Company on September 18, 1873. The firm had heavily promoted financing for Northern Pacific Railway construction, and doubts about railroad investment spread through financial markets. The New York Stock Exchange closed for ten days, an exceptional response to the crisis.
Bank failures, falling investment, deflation, and unemployment followed in the United States and Europe. The downturn’s length and geographic reach led historians to call it the Long Depression, although definitions of its exact beginning and end vary by country.
The Panic of 1873 was not simply a stock-price event. Railway overbuilding, speculative credit, monetary debates, and international financial connections all contributed. It is also distinct from the Panic of 1857 and the later Panic of 1893.