Sunday, March 24, 2013
SEPTEMBER 13, 1873 – NATION’S BIGGEST BANK, JAY COOKE & COMPANY, BECOMES EFFECTIVELY INSOLVENT
1873 – NATION’S BIGGEST BANK, JAY COOKE & COMPANY, BECOMES EFFECTIVELY INSOLVENT
Congress has passed the Coinage Act earlier in the year, which ended the minting of silver dollars. US money system was, thus, backed only by gold. The effect was similar to other instances in US history when money was backed by gold -- a depression ensued, prices feel, unemployment increased and major banks failed as there wasn’t enough gold to back the money needed to fuel the growing economy. Jay Cooke & Company was the largest bank to fail due to this policy of gold-backed money.