The Panic of 1873
The Panic of 1873 was an event responsible for a major economic depression that affected Europe and the United States from that year until 1879, caused predominantly by concerns surrounding silver. It hurt British economic leadership and helped to hurt Reconstruction, among other policies, in the United States, but its impact was felt around the world.
In the United States, silver was devalued substantially by the Coinage Act of 1873, which put the United States on a gold standard, as opposed to the combined gold and silver standard it was once on. This ended government purchasing of silver and conversion of publicly owned silver into coins, which hurt mining, cut the money supply, and scared investors away from long-term bonds, historically used to raise funds in similar situations.
A major failure then spurred the crisis to get worse. Jay Cooke & Company could not pay for Northern Pacific Railway bonds, at least partially because of raising interest rates and a shrinking money supply. The firm went bankrupt, which then prompted many other banks to fail and for the stock market to close; there were massive layoffs in major cities, almost a quarter of U.S. railroads went bankrupt, and unemployment hit 14 percent within three years of the failure.
All of this, then, prompted railroad strikes, the Republican Party's being ousted from Congress, and the establishment of a Democratic foothold in the South.
In Europe, German overspeculation in the same industries in which Americans had spent far too much (transportation and factories), alongside devaluation of silver and the country's decision to move to the gold standard, spurred on the crisis. This crashed the Vienna Stock Exchange, prompted many banks to fail, and killed speculation as the German Empire was just being established. However, it recovered relatively quickly and without prompting disastrous labor relations. British industry stagnated or decreased while Germany weathered the storm, hurting English trade into the 1900s.
The panic led the Ottoman Empire to begin heavily taxing non-Muslim subjects as they were forced to pay debts and suffered from decreases in production and prices.
The Panic of 1873 led to protection tariffs and moved politicians to institute stricter controls over business to stop such disasters from happening in the future. Nations became more protectionist and many suffered from economic stagnation for some period of time. Regardless, many of the factors that prompted the Panic of 1873 did damage again in 1893, when overbuilt and underfinanced railroads caused a number of banks to fail and crippled the American economy, again prompting furious populist response and almost bringing America back to a silver standard in the election of 1896, when defeated Democrat candidate William Jennings Bryan ran on a pro-silver platform.
The Panic of 1873 is called the Long Depression or the Great Depression in Europe, though that name is reserved for the economic collapse of the late 1920s in the United States. Like most economic panics, it was caused by a major event that changed the global economic landscape—demonetizing silver virtually everywhere within a short period of time—and changed the world economy.
British dominance suffered considerably, helping lead to the shifts allowing for American economic success throughout much of the 20th century; the Ottoman Empire rapidly approached its breakup; and Germany marched towards World War I, in which it suffered brutally. The Panic of 1873, then, can be seen as a catalyst of many events (as well as an event spurred on by a combination of factors). Resolution proved complicated, and, in fact, it is difficult to concretely say whether much of anything was "resolved" in the long term.
Resources:
Jay Cooke: Financier of the Civil War - A multi-volume biography of Jay Cooke, whose failing bank set off the explosions that crippled the American economy.
History of Crises under the National Banking System - A breakdown of pre-1910 American bank failures, including a lengthy analysis of the Panic of 1873.
What is Bimetallism? - An explanation of how gold and silver standards worked.
Political cartoons from 1873 - Cartoons from the period reveal concerns of inflation, restrictions on business, and other anxieties clearly tied to the Panic of 1873.
Annual Report of the Director of the Mint - Economic summary from the 1890s, which then returns to and further clarifies and explains the Coinage act of 1873.