Long depression of 1873

The Long depression was the first worldwide economic crisis, which happened in 1873. It began with a building boom in Europe, with massive construction levels taking place in Vienna, Paris and Berlin. In the United States the economy was also over-expanded, particularly in railroad construction. But after the Civil War the country needed rebuilding, therefore housing and construction levels grew quickly. Railroads were built at a record rate and everybody considered that this era of prosperity will never end. The idea of growth was destroyed in 1873, with stock market crash which started the Long Depression. The weak link turned out to be Jay Cooke and Company, a large and respected banking house. Cooke had played a large role in financing the Union war effort by marketing federal bonds to farmers and workers. After the war, the company had become the government's agent in financing railroad construction. However, one wrong decision regarding Northern Pacific Railway caused the demise of the banking house and started a nationwide depression. Read more about the Long Depression here...