central European government supported lenders
issued debt for municipal, residential and commercial construction
as amplified tales of profit, leverage and real estate values increased
creating a credit induced building boom
until Britain shifted wheat imports from Central Europe and Russia
to lower priced grain from the American Midwest after 1870
followed by other foods, kerosene and livestock
Economic growth stalled
after The Coinage Act of 1873 was signed into law on February 12th
initiating a gold standard by eliminating silver coin production
deflating American money supplies
Vienna’s stock market crashed in May 1873
causing bank to bank lending declines, loss of confidence
financial distress, and higher interest rates
In September 1873, Jay Cooke & Company
a major component of the United States banking establishment
found itself unable to market several million dollars
in Northern Pacific Railway bonds
As Cooke was about to swing a $300 million government loan
…reports circulated that his firm's credit had become nearly worthless
On September 18, the firm declared bankruptcy
Wikipedia
After speculators built beyond utilization capacity
indebted American railroad related companies began defaulting
and US stock markets crashed in late September 1873
as hundreds of banks closed
Those with enough capital reserves
like Andrew Carnegie and John D Rockefeller
acquired bankrupt businesses for substantial discounts
As unemployment rose, business leaders advocated protectionism
elected officials identified and targeted scapegoats
while the working poor protested, embraced religion established unions
and rioted
