The Panic of 1857 was a financial panic in the United States caused by the declining international economy and overexpansion of the domestic economy. After the failure of the Ohio Life Insurance and Trust Co. the financial panic quickly spread. Railroad industry experienced financial declines and laid off hundreds of workers. In the beginning of 1857, the European market for goods from western America began to decline. Price of grain also decreased heavily, farmers experience loss in revenue causing foreclosure on recently purchased lands. As a result of price decreases, land sales declined vastly and westward expansion essentially halted until the Panic ended.
Merchants and farmers both began to suffer for the investment risks they took when prices were high. Dred Scott vs. Sanford in 1857 After Scott attempted to sue for his freedom, Chief Justice Roger Taney ruled that Dred Scott was not a citizen because he was an African American and therefore did not have the right to sue in court. The ruling also made the Missouri Compromise unconstitutional and it was clear that the decision would have lasting impact. Soon after the Dred Scott ruling, “the political struggle between ‘free soil’ and slavery in the territories” began.
By 859, the Panic began to level off and the economy had begun to stabilize. President James Buchanan, after announcing that the paper-money system seemed to be at the root cause of the Panic, decided to withdraw the usage of all bank notes under $20. southern economy suffered little whereas northern economy made a slow recovery