The U.S. financial panic that began in 1893 after the Philadelphia and Reading Railroad failed was the Panic of 1893.
The railroad company’s collapse helped trigger a wider loss of confidence in American banks, businesses, and railroads. Many rail lines had expanded rapidly with borrowed money, leaving them vulnerable when profits and investment weakened. The failure of the Reading Railroad was followed by other major corporate and banking failures.
The crisis produced a severe depression in the United States. Unemployment rose, thousands of businesses and banks closed, and railroad failures spread through the economy. The panic also intensified political arguments over the gold standard and the role of silver in the monetary system.
The Panic of 1893 is sometimes confused with the Panic of 1873, which helped start the Long Depression, or the Panic of 1907, which later encouraged creation of the Federal Reserve. Its effects were international, but the American railroad and banking crisis gave it its defining character.