The Panic of 1857 unfolded against a backdrop of rapid economic expansion in the United States, fueled largely by the growth of the railroad industry which had hooked American markets into a vast network of trade. Factors such as over-speculation in railroads and land, coupled with increasing competition in global trade, created an unsustainable bubble. A major blow to the economy was the failure of the Ohio Life Insurance and Trust Company in August 1857, which set off a chain reaction in the financial markets. News of bank failures spread, leading to widespread panic as depositors rushed to withdraw their funds, resulting in a liquidity crisis that crippled the banking system and shut down many businesses. The repercussions were felt nationwide, with Northern states experiencing the brunt of the crisis. Scores of banks collapsed, and thousands of people lost their jobs, while farmers faced plummeting crop prices. The South, however, was somewhat insulated due to its economy being less reliant on credit and more focused on agriculture. By the end of the year, unemployment rates reached alarming levels, prompting social unrest and heightened tensions among already existing sectional divides in the country. This crisis laid the foundation for future economic regulations and reforms in the United States, as it revealed significant flaws in the financial system and investment practices of the time.