The Panic of 1873
The economy was on the rise since the end of the Civil War and investors became persuaded that business profits would continually increase. To take advantage of new business opportunities in the South, Northern and Southern investors borrowed large amounts of money to build new facilities as soon as possible.
The downfall was that many who invested in new businesses acquired more debt than they could afford. Jay Cooke, a Philadelphia banker, deeply invested in railroads. In the September of 1873, his banking firm, one of the nation’s largest dealer in government securities, went under. As a result, it set off a domino effect of financial failures know as the panic of 1873. Smaller banks closed making the stock market collapse temporarily. This panic prompted a five-year economic depression in which three million people lost their jobs.
It was a devastating economical event for the entire country. For the Northerners, the panic of 1873 began to make them focus more on their own and national problems rather than the reform of the South. With this distraction in the North, the South became more powerful because less people were paying attention to the cruel discrimination against black Americans in the South.
The downfall was that many who invested in new businesses acquired more debt than they could afford. Jay Cooke, a Philadelphia banker, deeply invested in railroads. In the September of 1873, his banking firm, one of the nation’s largest dealer in government securities, went under. As a result, it set off a domino effect of financial failures know as the panic of 1873. Smaller banks closed making the stock market collapse temporarily. This panic prompted a five-year economic depression in which three million people lost their jobs.
It was a devastating economical event for the entire country. For the Northerners, the panic of 1873 began to make them focus more on their own and national problems rather than the reform of the South. With this distraction in the North, the South became more powerful because less people were paying attention to the cruel discrimination against black Americans in the South.