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Panic of 1857

James Buchanan

Panic of 1857: James Buchanan was the 15th American President who served in office from March 4, 1857 to March 4, 1861. One of the important events during his presidency was the financial Panic of 1857.

Definition and Summary of the Panic of 1857
Summary and definition:
The Panic of 1857 was a crisis in financial and economic conditions following a period of over expansion in the United States. The causes were a fall in land prices, the failures of railroad companies and crashing wheat prices due to the declining purchase of U.S. agricultural products in Europe.

The Panic of 1857 for kids
The national economic depression, caused by the Panic of 1857,  engulfed the country for nearly three years further increasing tension in the United States which was on the verge of
American Civil war (1861-1865) over the issue of slavery.

Panic of 1857 for kids: The Collapse of the Ohio Bank
The Panic of 1857 was sparked by the collapse of  a banking institution - the Cincinnati's Ohio Life Insurance and Trust Company. The New York branch of this bank folded on August 24, 1857 and the newly established Telegraph system instantly carried this news right across the nation. Newspapers carried the story, people panicked and tried to get their money, and other banks began to collapse. The picture depicts the run on the Seamen's savings bank.

Causes of the Panic of 1857
The causes of the Panic of 1857 were:

  • People became aware to the financial crisis due to the publicity surrounding the closure of the Ohio bank

  • The value of land in the west fell, the number of migrants decreased, and this caused financial problems with the railroads

  • Railroad securities (stocks) lost their value

  • Over expansion: Important railroad lines went bankrupt refer to Railroads in the 1800s

  • Banks that financed the railroads closed - there were 'runs' on banks and a squeeze on credit

  • Wheat Prices crashed: The end of the Crimean War (October 1853 February 1856) saw the return of men to their homes and an increase in farm produce. This led to a decline in Europe's purchase of agricultural products in the United States. The price of wheat crashed seriously hitting the economy of the Northern states where wheat was being produced in vast quantities due to the recent invention of the Cyrus McCormick reaper

Effects of the Panic of 1857
The Panic of 1857

  • Foreclosures and Bankruptcies of railroads, banks and companies

  • Unemployment soared

  • Tension in the nation increased

  • The Panic of 1857 had a greater effect in the northern states

  • The Southern states believed that the nation were now strongly dependent on their economy and would become more amenable to the needs of slave owners

  • The Panic of 1857 blighted the presidency of James Buchanan

  • It was one of the Causes of the Civil War

The Panic of 1857 for kids
The Panic of 1857 was one of a series of financial crisis to cripple the economy of the United States - refer to the
Panic of 1819, the Bank War and the Panic of 1837 for additional facts and information.

US American History
1850-1865: Secession Era

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