AP US History in 1 Minute Daily: Panic of 1873 (Day 160/309)

Hey APUSHers, let’s chat about the Panic of 1873 as part of my series- APUSH in 1 Minute Daily!

“Out of the Ruins,” Digital Public Library of America

During Grant’s second term an economic disaster shook the nation as banks failed, unemployment and homelessness soared, and people debated the proper role of the government in the economy.

Black Friday on May 9, 1873 at the Vienna stock exchange, Wikimedia Commons

When the stock market crashed in Europe, many European investors sold their investments in American projects, such as railroads. This led many railroad companies to declare bankruptcy.

“The Panic,” Rare Newspapers

One of the largest banks in New York City, Jay Cooke and Company had invested heavily in railroads and subsequently went bankrupt. Americans feared a similar fate would happen to other banks and rushed to get back their deposits. 

The Great Financial Panic of 1873, Wikimedia Commons

The panic set off further bank failures, a significant stock market crash, trade deficits, increased unemployment, and reduced production of industrial goods. 

The Panic of 1873 demonstrated vulnerabilities in the nation’s economic system. The overexpansion of railroads and high level of speculative investments contributed to a long period of economic hardship.

Join me tomorrow as I explain the Election of 1876 and the Compromise of 1877 in the next APUSH in 1 Minute Daily!