After the completion of the transcontinental Union Pacific Railroad in 1869, the public almost immediately requested another, called the Northern Pacific. Jay Cooke banking house needed to raise money for this project, but weakened economic conditions proved the Northern Pacific less attractive to investors. Since railroads were overbuilt, the competition was intense. Meanwhile speculation dominated in railroad securities, as well as in market in general. When the project failed, the connected companies fell as well. Panic started on the New York Stock Exchange forcing the bankers to close trading for ten days. The financial problems returned to Europe, causing a second panic in Vienna and numerous failures in continental Europe before receding. The Long Depression brought instability to the European countries, making international relations worse. For the next two decades, ripple effect from the crisis shook the economies. In the United States recovery began slowly in 1878, after many hardships endured. Read more about the consequences of Long Depression...
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