Which American bank’s 1873 failure helped trigger the Panic of 1873 and a worldwide stock-market crash?

Jay Cooke & Company’s failure in September 1873 helped trigger the Panic of 1873 and a worldwide stock-market crash.

Jay Cooke & Company was a major American investment bank that had financed Union government borrowing during the Civil War. After the war, it invested heavily in railroad development, especially the Northern Pacific Railway. On September 18, 1873, the firm suspended operations when it could not sell enough Northern Pacific bonds to meet its obligations.

The failure helped set off a financial panic in the United States. The New York Stock Exchange closed temporarily, credit contracted, and railroad companies suffered severe pressure. The downturn spread internationally, contributing to a long depression that lasted through much of the 1870s.

The Panic of 1873 is sometimes called the Long Depression’s starting point, although historians debate the exact boundaries and causes of that depression. It is also distinct from the Panic of 1907, which involved Knickerbocker Trust and was later associated with J. P. Morgan’s rescue efforts.