Financial crisis of 1857 introduction

In the middle of the 19th century a strong financial crisis occurred in the United States. It started in 1857, being influenced by the dealings of the worldwide economy combined with slowing domestic economy. The world was just beginning to develop strong international relations, reestablishing trading routes between Europe and America.

For 3 years the Crimean War had involved European and Asian countries, and many European men left their lives as farmers to enlist in the military. Lack of farmers caused food shortages in many European countries, which began depending upon American crops to feed their people.

With the end of the Crimean War, agricultural production in Europe increased dramatically, as former soldiers returned to their lives as farmers. Of course, increased European food production meant declining purchase of American agricultural products.

The United States economic boom that followed the Mexican War was mostly based on land and railroad speculation, which became rampant throughout the United States. Money was freely flowing to every investment connected with mines, railroads or land, creating an unsustainable growth of the railroads which would eventually culminate in the Long depression, and several different smaller recessions.

As investment money dried up, the speculation bubble collapsed, turning the economic cycle round. Together with several unfortunate events that followed, panic developed on the Wall Street, additionally weakening the state of the economy.

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