From Ohio History Central
The Ohio Life Insurance and Trust Company was a banking institution located in Cincinnati, Ohio, during the 1830s, 1840s, and 1850s. The State of Ohio even deposited some of its funds in this institution for safekeeping. Unfortunately for Ohio and the nation, the Ohio Life Insurance and Trust Company’s New York City office ceased operations in 1857, due to bad investments, especially in agricultural-related businesses. The Panic of 1857 resulted. It was an economic depression that affected the United States during 1857 and 1858. The principal reason for the depression was Europe’s declining purchase of American agricultural products. During the Crimean War in Europe, many European men left their lives as farmers to enlist in the military. This resulted in many European countries 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.
With declining income from agriculture, many Americans became worried at news that the Ohio Life Insurance and Trust Company had ceased operation. Because of the telegraph, news quickly spread across the United States of this business failure. Investors in other companies, already facing declining agricultural profits, withdrew their funds from these other businesses. Numerous businesses failed as a result of the investors’ actions, and thousands of workers became unemployed.
While the Ohio Life Insurance and Trust Company’s failure triggered the Panic of 1857, Ohioans weathered the depression relatively well. Some businesses failed, but most banking institutions survived. The Republican Party, currently in control of the Ohio legislature and governor’s seat, lost some power to the Democratic Party. Governor Salmon P. Chase won reelection in 1857, but the Democratic Party gained control of the Ohio General Assembly. Fortunately for all American citizens, the United States’ economy rebounded during 1859, saving the nation from as serious a depression as occurred during the Panic of 1837.