Great question! As with most economic recessions, panics, and depressions the question of why is often multifaceted. The recession of 1873 went by a few monikers including the Long Depression in Europe and the Great Depression in the U.S.

Since you specifically mention the U.S. that is where I'll begin. The U.S. found itself in the 1870s post-Civil War, Reconstruction era, with many self-made, future magnates beginning to amass wealth. Among those included Cornelius Vanderbilt and the wealth acquired from railroads. I mention Vanderbilt and the railroad industry because the U.S. portion of the 1873 Great Depression involved banks closing en masse which speculated heavily in investments in railroads; for example the railroad bubble which burst involved the withdrawal of European investors due to the Vienna stock market crash. Once European investors sold back their bonds, American railroad bonds became unmarketable due to an overabundance, like that of the Northern Pacific Railroad. Lacking the investments necessary to fund railroads, many banks with supplies of investment bonds folded. The most notable of these banks which closed was that of Jay Cooke & Company. Once Cooke & Co. closed their bank, like a domino effect, other banks across America closed once citizens heard of larger banks folding and demanded their money be removed (remember this is before any protections offered like that of FDIC).^(1)

A concurrent factor of the 1873 Great Depression was the demonetization of silver. The U.S. began the move from bimetallism to relying solely on the Gold Standard; "foreign counterparts in Paris had discussed turning away from silver toward a gold standard based on the weight of 25 francs. The move would help standardize currency across international borders..."^(2) Prior to 1873, when the Coinage Act passed in the U.S. there was technically an abundance of silver, at depreciated prices, for those citizens who hoarded it to exchange for gold, which then could be used to buy more silver. Wary of the potential danger of gold prices depreciating because of an overabundance in supply, the U.S. opted to end bimetallism and rely solely on the Gold Standard. "When silver was priced high, the mint saw less action in terms of coinage (the silver was being hoarded because it was seen as valuable). When silver was abundant (supply was high), its value fell (demand was low). This endangered gold, as a person could use silver to buy gold, then sell that gold (most likely abroad) and use the profits from the gold sale to buy an even greater amount of silver (back in the United States). The gold then became hoarded as a result."^(3) To complicate matters further, when those in possession of silver attempted to trade in, they found that the Coinage Act prevented the direct buy-back of silver; greenbacks (dollar bills) could still be exchanged for silver but the amount was capped at a value of five dollars because of the Specie Payment Resumption Act of 1875. This impacted those with heavy debts, which could not be repaid, due to the devaluation of silver and the cap on exchange of greenbacks for silver. Without money returning to banks, the flow of funds in general threw the national economy into a depression.

A recap: A cessation and removal of railroad investments, primarily from Europe, coupled with public panic saw the failure of many banks due to a lack of funds. The flow of funds also was reduced due to the demonetization of silver resulting in the prevention of debt repayment by citizens. Both of these factors contributed to a depression and a period of economic contraction within the United States.

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Meanwhile in Europe, the May 1873 market crash in Vienna triggered a world wide recession/depression. Sensing an economic period of contraction, investors withdrew funds from American projects such as railroads, also triggering a period of economic contraction in America. Though the terms "recession" and "depression" connote dire circumstances, Europe in general fared relatively well off during this period as "total output, commercial turn-over, and national wealth continued to increase, though at a distinctly lower rate of growth" prior and post 1873-1896/7 economic cycles.^(4) Though countries like that of Germany and present day Austria experienced more detrimental effects of the economic downturn, as a whole they retained enough organization to weather prolonged periods of economic stress. One must also look at the structure of the Long Depression, specifically in Germany, to understand how a country weathered prolonged economic contraction without falling apart. "The Great Depression produced a redistribution of national incomes which, through alterations in price relationships, proved in the long run to be beneficial to most consumers and employees...a remarkable advance in the material conditions and the real wage income of the industrial and agricultural workers."^(5) Essentially more wealth was more equally distributed among the citizenry. Also Germany's economic depression was not experienced over consecutive years, but in periodic occurrences: 1873-79, 1882-86, and 1890-94. The country had time to adjust to the cycles of contraction; however, there were also two periods of economic expansion: 1879-82 and 1886-89.^(6)

During this period, pre-World War I era, many central European countries turned their economies inward, domestically, and invested in what we now term the industrial-military complex. Prior to World War I, there essentially was an "arms race" to fortify and integrate the newest technologies into the military might. Great Britain bulked up their navy and invested in amphibious land vehicles--a.k.a. the tank. Germany also invested in the tank and other technologies as well during periods of economic upturn; however, I stop here as this veers past the scope of your original questions and into World War I territory.^(7)

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^(1) Barreyre, Nicolas. "The Politics of Economic Crises: The Panic of 1873, the End of Reconstruction, and the Realignment of American Politics." The Journal of the Gilded Age and Progressive Era 10, no. 4 (2011): 403-23. https://www.usmint.gov/news/inside-the-mint/mint-history-crime-of-1873 https://libertystreeteconomics.newyorkfed.org/2016/02/crisis-chronicles-the-long-depression-and-the-panic-of-1873.html

^(2)^(https://www.usmint.gov/news/inside-the-mint/mint-history-crime-of-1873) ^(;) ^(https://www.treasury.gov/about/education/Pages/Financial-Panic-of-1873.aspx)

^(3)^(https://www.usmint.gov/news/inside-the-mint/mint-history-crime-of-1873)

^(4) Rosenberg, Hans. "Political and Social Consequences of the Great Depression of 1873-1896 in Central Europe." The Economic History Review 13, no. 1/2 (1943): 58-73. (p.59)

^(5) Rosenberg, Hans. "Political and Social Consequences of the Great Depression of 1873-1896 in Central Europe." The Economic History Review 13, no. 1/2 (1943): 58-73. (p.59)

^(6) Rosenberg, Hans. "Political and Social Consequences of the Great Depression of 1873-1896 in Central Europe." The Economic History Review 13, no. 1/2 (1943): 58-73. (p.61)

^(7)Hart, Peter. The Great War: A Combat History of the First World War. Oxford: Oxford University Press, 2013. (Preface and Chp. 1) Blom, Philipp. Fracture: Life and Culture in the West, 1918-1938. New York: Basic Books, 2015. (Introduction)