The Panic of 1873 began in the United States with the collapse of the banking firm Jay Cooke & Company.
Jay Cooke & Company failed in September 1873 after it could not sell enough bonds to finance Northern Pacific Railway projects. The failure helped trigger bank runs and a severe financial contraction. European financial problems, including the Vienna stock-market crash earlier that year, also formed part of the broader international crisis.
The panic contributed to a prolonged depression in the United States and caused the New York Stock Exchange to close temporarily. It is sometimes called the Long Depression’s starting point, although historians debate the exact boundaries and causes of that depression. The episode illustrates how heavily leveraged railway finance could transmit trouble through banks and markets.