Which 1873 financial crisis helped launch the Long Depression?

The Panic of 1873 helped launch the Long Depression.

The Panic of 1873 began with financial failures in Europe and the United States, including the collapse of the investment firm Jay Cooke & Company in September. Jay Cooke had helped finance U.S. government debt and railroad construction. When confidence weakened, investors withdrew funds, and the failure spread through banks and businesses.

The crisis hit heavily leveraged railroads especially hard. Railroad companies had expanded rapidly, often relying on borrowed money and optimistic expectations of future traffic. Falling investment and industrial production then contributed to prolonged deflation and unemployment. The resulting international downturn is commonly called the Long Depression, although its timing and severity varied by country.

The Panic of 1873 is not the same as the Great Depression of the 1930s. It was an earlier, long-lasting nineteenth-century crisis that affected the United States and Europe. Some historians also connect it with the end of the post-Civil War railroad boom.