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This Month in Business History

The Panic of 1873

Nancy Lovas, Business Reference and Research Specialist
August 2017

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The Panic of 1873 triggered the first 'Great Depression' in the United States and abroad. Lasting from September 1873 until 1878/9, the economic downturn then became known as the Long Depression after the stock market crash of 1929.

Currency in the nineteenth century was based on specie. Metal money circulated, and banks issued paper banknotes backed by the supply of gold and silver. In the United States, this system began breaking down in the face of financing the Civil War. President Lincoln authorized the printing of paper money, called "Greenbacks," to pay ballooning expenses. Widespread use of fiat External Link money continued into the Reconstruction Era, fueling the rapid expansion of railroads and wild speculation.


Caption: above:
The Great Financial Panic of 1873 - Closing the door of the Stock Exchange on its members, Saturday, Sept. 20th
Prints & Photographs Division
Library of Congress
Reproduction number: LC-USZ62-37423

Banks, especially Jay Cooke and Co. External Link, raised millions of dollars through selling bonds to finance construction. Speculators 'bet' on the railroad, gambling on the fact that settlement and opportunities to make money would follow behind the completed railway. However, construction expenses ballooned and outpaced financing. Efforts to raise more funding failed. When they could no longer pay the bills, Jay Cooke and Co. and other banking houses folded. The collapse of the railway financiers sparked high bank withdrawals, the failure of brokerage firms, and railway construction halted. By September 20th, the New York Stock Exchange suspended trading for the first time.

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Internet Resources

To read contemporary news of the Panic of 1873, search Chronicling America for "Panic 1873" and limit by date for 1873. Sort results by date and read contemporary news of the Panic of 1873.

New York and the Panic of 1873 by Jennifer S. Lee .
New York Times: City Room,. October 14, 2008 External Link

1873: Off the Rails.
Harvard Business School Historical Collections External Link

The Real Great Depression.
Chronicle of Higher Education External Link

Crisis Chronicles: The Long Depression and the Panic of 1873
by Thomas Klitgaard and James Narron.
Federal Reserve Bank of New York: Liberty Street Economics. / External Link

Print Resources

Routledge handbook of major events in economic history., Randall E. Parker and Robert. Whaples, eds. London; New York: Routledge, 2013.
LC Call Number: HB75 .R6748 2013 OVERFLOWJ34
Catalog Record: 2012031239

Includes a chapter by Eric Lomazoff on The panic of 1873.

Townsend, Washington. The causes of the late panic, the dangers of inflation, and the remedy for our financial troubles. Washington, Gov't print. off., 1874.
LC Call Number: HG525 .T74
Catalog Record: ca08000361

Contemporary speech in Congress by Representative Washington Townsend,from Pennsylvania.

Whalen, R. Christopher. Inflated: how money and debt built the American dream Hoboken, N.J.: Wiley, 2011.
LC Call Number: HJ8101 .W43 2011
Catalog Record: 2010028553

A historical look from the early days of the country to the 21st century at the conflicting tendencies of Americans to consider themselves both fiscally responsible and open to opportunities to "get rich quick." Includes a section on the Panic of 1873.

Wicker, Elmus. Banking panics of the Gilded Age. Jefferson, NC: McFarland, 2002.
LC Call Number:
Catalog Record: 99087487
Publisher description
Table of contents

Library of Congress Catalog Searches

Additional works on this topic in the Library of Congress may be identified by searching the Online Catalog under appropriate Library of Congress subject headings. Choose the topics you wish to search from the following list of Library of Congress subject headings to link directly to the Catalog and automatically execute a search for the subject selected. For assistance in locating other subject headings which relate to this subject, please consult a reference librarian.

Banks and banking--United States--History

Bank failures--United States--History


Financial crises--United States--History

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