Final answer:
The Panic of 1857 caused the depression of the late 1850s, which was believed to be triggered by a slump in grain exports post-Crimean War and the withdrawal of European investments, compounded by the overextension of railroads and risky bank lending.
Step-by-step explanation:
Causes of the Depression of the Late 1850s
The depression referred to in the question is the Panic of 1857, a significant economic downturn that affected Northern merchants and workers. Northern merchants believed the causes of this depression included a range of factors. Notably, the end of the Crimean War saw a decline in American grain exports which had briefly soared. Additionally, European investors began to withdraw from American stocks and bonds, adversely impacting the American economy. During the 1850s, economic growth led to increased western land prices, the overextension of railroads, and risky bank loans. These issues culminated in a financial crisis when grain exports dipped and European investments dried up, causing American banks to fail and workers to lose their jobs. Relief efforts were necessary to help the jobless survive through the winter and stave off feared class conflicts. By the following spring, recovery began to take shape.