The Economic Crisis of 1857

667 WordsFeb 26, 20183 Pages
The economic crisis of 1857 was a financial fear in the United States, and the worst economic downfall in 20 years. The continuous failure of businesses and banks created a panic in the overall economic recession. As many as 5,000 businesses failed and unemployment was on a rise. Americans panicked because there was a loss of confidence in an Ohio financial institution. Additionally, the railroads begin to fail and there was a fear that the U.S. Government would not be able to pay its obligations. The 1857 economic crisis plummeted because of the failure of a banking institution, Ohio Life Insurance and Trust Company, which was based in Cincinnati, Ohio. This large company had a major financial collapse due to the company’s New York City offices ceasing operations because of bad investments. Because of this financial fall, a chain of other setbacks took place, such as – British investors decided to remove funds from U.S. banks, grain prices fell, and rail routes disseminated which ruined thousands of investors (Huston, 1987). Railroad builders obtained a $5 million loan from the Ohio financial institution and had been defrauded out of millions more by the manager of its New York branch. Ohio Life Insurance was forced into bankruptcy because they were unable to pay its outstanding debt to Eastern bankers. New York bankers panicked for fear that they would not be able to meet their financial obligations, which created a more harsh credit policy. They demanded
Open Document