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The Panic of 1873 was the worst depression the US had ever experienced. The economic downturn began with an overheated railroad finance market. An investment banking firm, Jay Cook & Company had financed construction for a second transcontinental railroad, the Northern Pacific. The project began in 1870. The contraction of the money supply with the return to the gold standard and the retirement of the dollars issued during the US Civil War tightened money markets. When the Northern Pacific required an new cash infusion in 1873, the Jay Cook firm failed to raise the $300 million it required. Cook had tried to float a bond issue for this large sum. This caused his company to collapse and triggered the collapse of other banks as loans they called in failed to happen. This began the Panic of 1873.

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8y ago

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