The Panic of 1873 began after the failure of the banking firm Jay Cooke & Company.
Jay Cooke & Company suspended operations on September 18, 1873. The firm had heavily promoted bonds for the Northern Pacific Railway, and concerns about the railway’s finances helped undermine confidence. The failure was followed by a run on banks and a suspension of trading on the New York Stock Exchange.
The panic spread internationally and was associated with a long period of economic stagnation often called the Long Depression. Germany and Austria had already experienced financial stress after speculative booms, while the United States faced falling investment, business failures, unemployment, and deflation.
The event is sometimes linked mainly to the collapse of the Northern Pacific project, but the wider causes included excessive railway speculation, tight credit, and weaknesses in international finance. It is also distinct from the Panic of 1893, another U.S. crisis involving railways and banking.