Panic of 1857
The Panic of 1857 originated in a prior boom which lasted five years, from 1852 to 1857, and which rested on widespread credit expansion of worldwide consequences. Prices, profits and nominal wages rose, and a stock market boom took place. The boom especially favored mining companies and railroad construction companies (the most important capital goods industries of the period). Moreover speculation became generalized. The first signs of the end of the boom appeared with the start of the decline in mining and railroad profits (the stages furthest from consumption); and the increase in production costs weakened profits further. Subsequently the slowdown impacted the iron, steel and coal industries and the crisis hit. It spread quickly, triggering a worldwide depression. August 22, 1857 was a day of true panic in New York and many banks suspended their operations.
In contrast to the panic of 1837β43, it was mild and quick. The pressure for money passed away in the course of the winter. The liquidation was rapid, and by spring business was again in motion. The New York banks resumed on the 12th of December, and others followed gradually and informally.
- The Independent Treasury: Origins, Rationale, and Record, 1846-1861 (pdf) by H.A. Scott Trask, March 2002
- The Panic of 1837 and the Contraction of 1839-43: A Reassessment of its Causes from an Austrian Perspective and a Critique of the Free Banking Interpretation (pdf) by H.A. Scott Trask, March 2002
- Panic of 1857 on Wikipedia