b) Railroad overexpansion

The Panic of 1893 in the U.S., a severe economic depression, had its main economic cause rooted in railroad overexpansion. The period leading up to the panic saw extensive railroad construction, funded by heavy borrowing and speculative investments. When railroad profits failed to meet expectations, this led to a collapse in railroad financing, triggering bank failures and a stock market crash. The panic highlighted the risks of speculative investment and overextension in emerging industries. It also marked a turning point in economic regulation and the role of the federal government in managing the economy, as it led to increased calls for financial oversight.