By August of 1857 is was evident that something was going very wrong in the American economy. U. S. banks had invested heavily in businesses that were failing. Not only were investors beginning to panic by even small depositors were getting very nervous. The investors were losing heavily in the stock market and railroads were unable to pay their debts. Land speculators who had counted on the construction of new railroad routes were also losing money. People feared financial ruin. Everyone ran to the banks to withdraw their money, people demanded that the debit be paid not in paper money, they wanted gold. A huge shipment of gold was due to reach the banking centers in New York City arriving on a steamer from the gold fields of California by mid-September allowing the banks to pay off some of the debit and steaming the tide of the financial panic. Meanwhile a tropical storm was first observed east of the Bahamas on September 6. It moved slowly northwestward toward the coast of the United States and attained hurricane strength early on September 9. The storm continued travelling northwest along the US coast, becoming a Category 2 hurricane off the coast of Georgia on September 11. On September 13 the cyclone made landfall near Wilmington, North Carolina, but then quickly weakened to a tropical storm and turned eastward into the Atlantic on September 14. Meanwhile, on September 11, the hurricane struck the steamer Central America which sprung a leak and eventually sank in the early morning hours of September 13, 1857 with the loss of 424 passengers and crew. Also, on board the ship were 30,000 pounds of gold bound for the banks of New York City to pay off the depositors. It contributed to what would follow. More than 5,000 American businesses failed within a year, and unemployment was accompanied by protest meetings in urban areas. Eventually the panic and depression spread to Europe, South America and the Far East. No recovery was evident in the northern parts of the United States for a year and a half, and the full impact did not dissipate until the American Civil War revived the economy in the north – and the south took a hundred years to recover.

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