Which investment bank’s failure marked the start of the Panic of 1873 in the United States?

Jay Cooke & Company’s failure marked the start of the Panic of 1873 in the United States.

The prominent Philadelphia-based banking firm declared bankruptcy on September 18, 1873, after it could not sell enough Northern Pacific Railway bonds. The railroad had ambitious expansion plans, but investors became increasingly unwilling to finance railroad construction, especially as doubts grew about profitability and land values.

Jay Cooke’s collapse damaged confidence throughout the financial system. The New York Stock Exchange closed temporarily, banks and businesses failed, and a prolonged depression followed in the United States. The downturn also affected Europe and was connected to broader international financial stresses.

The panic had several causes rather than one isolated failure. Excessive railroad speculation, tight credit, falling commodity prices, and international monetary changes all mattered. Jay Cooke’s bankruptcy is nevertheless used as the clear initiating event for the American phase of the crisis.