Panic of 1857

Document Type

Syllabus

Publication Date

1-1-2023

Abstract

The 1857 panic was triggered by the unexpected collapse of Ohio’s largest bank, the Ohio Life Insurance, and Trust Company, on August 24, 1857, due to a failure to redeem $5 million in notes for specie after embezzlement and imprudent lending by the general manager of its New York branch. It did business in both Ohio and New York. The New York banks responded to an increased demand for specie generally by reducing credit, which temporarily helped reserves but failed to stem the public’s demand for specie, which was then suspended for all New York banks on October 13. The financial crisis proved short-lived, with New York banks’ specie payments returning in December. Still, the effects on the economy weakened by the end of the Crimean War that had reduced the demand for grain exports and increased import competition in manufactures, especially iron and steel, were longer lived and were especially acute in the West and North, compared to the South. These regional differences continued up to the Civil War, and indeed sectional arguments regarding protective tariffs were partially responsible for Pennsylvania voting Republican in 1860, assuring Lincoln’s victory.

Identifier

85192949611 (Scopus)

ISBN

[9781800377356, 9781800377363]

Publication Title

Elgar Encyclopedia of Financial Crises

External Full Text Location

https://doi.org/10.4337/9781800377363.ch61

First Page

256

Last Page

259

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