Which company’s bankruptcy helped trigger the Panic of 1873 and the Long Depression?

Jay Cooke & Company’s bankruptcy helped trigger the Panic of 1873 and the Long Depression.

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 railroads, especially the Northern Pacific Railway. When investors became unwilling to provide more money for the project, Jay Cooke & Company suspended payments on September 18, 1873.

The failure damaged confidence in banks and railways. The New York Stock Exchange closed temporarily on September 20, and a broader financial crisis followed. Bank failures, falling investment, deflation, and prolonged unemployment affected the United States and other economies.

Northern Pacific Railway was central to the bank’s troubles, but it was not the company whose bankruptcy directly began the panic. Another common confusion is the 1893 panic, which had different immediate causes, including railroad failures and banking stress. The Long Depression lasted for years, though its timing and severity varied by country.