Then came the financial panic of 1857, a time of trouble for individual people, for many businesses and for railroads. A number of railroads were unable to survive, among them the Milwaukee & Mississippi and the La Crosse & Milwaukee.

This was true even though the M&M, by 1858, was rather a substantial operation for the era, with more than 260 miles of track, 43 locomotives, 46 units of passenger equipment (including baggage and express cars) and more than 550 freight cars. Even so, it was weak financially, going bankrupt in 1860.

The La Crosse & Milwaukee defaulted on its obligations in 1858 and 1859, also going bankrupt.

On January 18, 1861, the Milwaukee & Mississippi was offered for sale, with debt of close to $6 million, in addition to which capital stock amounted to about $3.5 million. Three days later the company was acquired for $7.5 million and reorganized as the Milwaukee & Prairie du Chien Railway Company.

The La Crosse & Milwaukee, which had been going through complicated legal maneuvers and problems, lost Byron Kilbourn through resignation in late 1857. After some litigation that lasted for several years, the La Crosse was sold on May 5, 1863, to the newly formed Milwaukee & St. Paul Railway Company.

The Financial Panic of 1857...

...the first

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