Which bank’s collapse in 1873 helped spark the Panic of 1873 in the United States?

Jay Cooke & Company’s collapse in September 1873 helped spark the Panic of 1873 in the United States.

Jay Cooke & Company was a major American investment bank that had financed government borrowing during the Civil War. After the war, it invested heavily in railroads, especially the Northern Pacific Railway. When confidence in the railway project weakened, the firm could not sell enough securities to meet its obligations and failed.

The failure shook the New York financial system and contributed to the closure of the New York Stock Exchange for several days. Banking stress, railroad overbuilding, declining commodity prices, and international financial problems deepened the downturn. The resulting depression lasted for years and is often called the Long Depression, although historians debate how that label should be applied.

The Panic of 1873 was not simply a stock-market event. It reflected the risks of speculative infrastructure finance and the close connections between banks, railroads, government debt, and capital markets in the nineteenth century.