Question

How did the economic crisis of 1857 contribute to class conflict? To

the outbreak of the Civil War?

Answer 1

The 1857 Panic was a sudden downturn in the US economy that occurred in 1857. A general recession first emerged late in 1856, but in mid-1857 the gradual collapse of the banks and businesses that characterized the panic began. Though there was a brief overall economic downturn, the recovery was uneven, and the lasting effect was more political than economic. The panic started with a lack of confidence in an Ohio bank, but spread as railroads collapsed, and concerns that the US federal government would be unable to pay specie bonds grew. Within one year, more than 5,000 American businesses collapsed, and unemployment was followed by meetings of discontent in urban areas.

Panic and despair gradually spread to Asia, to South America and to the Far East. For a year and a half, no recovery was apparent in the northern parts of the US, and the full effect did not dissipate until the American Civil War. The recession ended a era of growth and optimism that had followed the Mexican- War and the late 1840s gold discovery in California. Gold flooding into the American economy has played a part in allowing the currency to inflate. Changes in global economic activity, triggered by the British-Russian Crimean War, had forced American firms into a competitive global market.

The immediate event that set off the crisis was the failure of the Ohio Life Insurance and Trust Co. branch in New York City on August 24, a major financial force that collapsed after widespread embezzlement. After this case, a number of other losses rattled the public's confidence, including: British investors 'decision to withdraw capital from U.S. banks, raising concerns about overall U.S. economic soundness The collapse in food prices, which spread economic distress in rural areas due to the end of the Crimean War and Russia's re-entry into global markets

There were several separate Civil War Reasons between the North Union and the South Confederacy. Slavery and State Rights were the two main causes of the Civil War. The southern economy was focused on the system of cash crop plantations, which relied on the institution of slavery, while the northern economy was centered on manufacturing and industry, and was not dependent on slaves. The south was worried about the domination of the northern states after the election of Abraham Lincoln and the Republican party, and the potential infringement of state rights.