https://en.wikipedia.org/wiki/Panic_of_1857

The Panic of 1857 was a financial panic in the United States caused by the declining international economy and over-expansion of the domestic economy. Because of the invention of the telegraph by Samuel F. Morse in 1844, the Panic of 1857 was the first financial crisis to spread rapidly throughout the United States.^[1] The world economy was also more interconnected by the 1850s, which also made the Panic of 1857 the first worldwide economic crisis.^[2] In Britain, the Palmerston government circumvented the requirements of the Bank Charter Act 1844, which required gold and silver reserves to back up the amount of money in circulation. Surfacing news of this circumvention set off the Panic in Britain.^[3]

Beginning in September 1857, the financial downturn did not last long, but a proper recovery was not seen until the onset of the American Civil War in 1861.^[4] The sinking of SS Central America contributed to the panic of 1857, as New York banks were awaiting a much-needed shipment of gold. American banks did not recover until after the Civil War.^[5] After the failure of Ohio Life Insurance and Trust Company, the financial panic quickly spread as businesses began to fail, the railroad industry experienced financial declines, and hundreds of workers were laid off.^[6]

Because the years immediately preceding the Panic of 1857 were prosperous, many banks, merchants, and farmers had seized the opportunity to take risks with their investments, and, as soon as market prices began to fall, they quickly began to experience the effects of financial panic.^[4]

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Bank run on the Seamen's Savings' Bank during the Panic of 1857

The prices of grain also decreased significantly, and farmers experienced a loss in revenue, causing banks to foreclose on recently-purchased lands. Grain prices in 1855 had skyrocketed to $2.19 a bushel, and farmers began to purchase land to increase their crop supply, which, in turn, would increase their profits. However, by 1858, grain prices dropped severely to $0.80 a bushel.^[20] Many Midwestern towns felt the pressures of the Panic. For example, the town of Keokuk, Iowa, experienced financial strife from the economic downturns of the Panic:

A huge municipal debt magnified Keokuk's problems. By 1858 the town owed $900,000, mostly on railroad bonds, while the value of its taxable property dropped by $5.5 million. Lots that brought $1,000 before the crash now could not be sold for $10. Hard-hit property owners were unable to pay their taxes, and thousands of properties slipped into tax delinquency.^[20]

As a result of such a decrease of prices, land sales declined dramatically and westward expansion essentially halted until the Panic ended. Both merchants and farmers began to suffer for the investment risks that they had taken when the prices were high.^[7]