Manhattan, New York, USA (New York City) (New Amsterdam) (Washington Heights)
1857 - October 13 – Panic of 1857: New York banks close and do not reopen until December 12.

The Panic of 1857 was a severe economic crisis that occurred in the United States. It was one of the most significant financial downturns in the 19th century and had far-reaching effects on the country's economy and society.

The panic had several underlying causes. One of the primary factors was the overexpansion of credit, especially in the railroad and land speculation industries. The construction of numerous railroads and the rapid expansion of western lands were fueled by easy access to credit and speculative investments. However, these investments were often not backed by solid economic fundamentals, leading to a bubble that eventually burst.

Additionally, the Crimean War in Europe (1853-1856) had an impact on the American economy. The war disrupted trade, causing a downturn in exports for the United States and affecting various industries.

The Compromise of 1850, which was an attempt to address issues related to slavery in the newly acquired territories from the Mexican-American War, also played a role in creating economic uncertainty. The contentious debates and uncertainty surrounding the future of slavery led to regional tensions and economic instability.

The Panic of 1857 officially began in August 1857 when the New York branch of the Ohio Life Insurance and Trust Company failed. The failure triggered a chain reaction of bank runs and a general loss of confidence in the banking system. Many banks across the country collapsed, and businesses failed, leading to widespread unemployment and financial distress.

The panic had severe consequences for the American economy. Industrial production plummeted, and unemployment soared. The agricultural sector was hit hard as well, with falling commodity prices and reduced export demand. The South, which was largely dependent on cotton exports, suffered greatly due to reduced global demand for cotton amid the crisis.

The panic also exacerbated the existing tensions between the North and the South, particularly concerning the issues of slavery and states' rights. The economic downturn worsened sectional divisions, foreshadowing the impending Civil War, which erupted just a few years later in 1861.

The federal government initially took a hands-off approach, largely adhering to the laissez-faire economic philosophy of the time. President James Buchanan, who was in office during the panic, opposed direct government intervention to alleviate the crisis.

The Panic of 1857 began to subside by the end of 1858, but the recovery was slow and uneven. It wasn't until the early 1860s when the economy started to rebound, partly due to increased demand for goods during the Civil War.

Overall, the Panic of 1857 had a significant impact on the United States, exposing weaknesses in the financial system and exacerbating political and social tensions that eventually contributed to the outbreak of the Civil War.

October 13, 1857

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