From Ohio History Central
The Panic of 1857 was a nation economic depression caused, principally, by Europe's declining purchase of U.S. 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 U.S. agriculture 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 in the United States became worried at news that an Ohio corporation, Cincinnati's Ohio Life Insurance and Trust Company, had ceased operation. Thanks to the telegraph, news quickly spread across the United States of this business failure. Investors in the Ohio Life Insurance and Trust Company lost all of their funds invested in this company, leaving many people destitute. Fearing that a similar situation might happen to them, 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. Numerous 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 U.S. citizens, the United States' economy rebounded during 1859, saving the nation from as serious a depression as occurred during the Panic of 1837.
- Huston, James. The Panic of 1857 and the Coming of the Civil War. Baton Rouge: Louisiana State University Press, 1987.
- Stampp, Kenneth. America in 1857: A Nation on the Brink. New York, NY: Oxford University Press, 1990.