Which U.S. investment firm failed in September 1873, turning the Panic of 1873 into a major banking crisis?

Jay Cooke & Company failed in September 1873, turning the Panic of 1873 into a major U.S. banking crisis.

The firm had been a leading financier of government bonds and railroad projects. Its business became heavily exposed to the Northern Pacific Railway, whose financing and construction plans required large amounts of capital. When investors lost confidence, Jay Cooke & Company could not sell enough securities to meet its obligations and suspended operations on September 18, 1873.

The failure caused widespread alarm because Jay Cooke was regarded as a powerful and reputable financial institution. The New York Stock Exchange closed temporarily for the first time in its history, from September 20 to September 29. Banks and businesses faced tighter credit, and the downturn spread through the economy.

The firm did not fail because of a single stock-market trading error; its collapse reflected railroad speculation, fragile credit, and weakening investor confidence.