"Long Depression" of 1873-1879

[steve2470]

Last edited Wed Feb 26, 2014, 08:01 PM - Edit history (1)

The Long Depression was a worldwide economic recession, beginning in 1873 and running through the spring of 1879. It was the most severe in Europe and the United States, which had been experiencing strong economic growth fueled by the Second Industrial Revolution in the decade following the American Civil War. The episode was labeled the "Great Depression" at the time, and it held that designation until the Great Depression of the 1930s. Though a period of general deflation and low growth, it did not have the severe economic retrogression of the Great Depression.[1]

It was most notable in Western Europe and North America, at least in part because reliable data from the period are most readily available in those parts of the world. The United Kingdom is often considered to have been the hardest hit; during this period it lost some of its large industrial lead over the economies of Continental Europe.[2] While it was occurring, the view was prominent that the economy of the United Kingdom had been in continuous depression from 1873 to as late as 1896 and some texts refer to the period as the Great Depression of 1873–96.[3]

In the United States, economists typically refer to the Long Depression as the Depression of 1873–79, kicked off by the Panic of 1873, and followed by the Panic of 1893, book-ending the entire period of the wider Long Depression.[4] The National Bureau of Economic Research dates the contraction following the panic as lasting from October 1873 to March 1879. At 65 months, it is the longest-lasting contraction identified by the NBER, eclipsing the Great Depression's 43 months of contraction.[5][6]

In the US, from 1873–1879, 18,000 businesses went bankrupt, including hundreds of banks, and ten states went bankrupt,[7][dead link] while unemployment peaked in 1878, long after the panic ended. Different sources peg the peak unemployment rate anywhere from 8.25%[8] to 14%.

http://en.wikipedia.org/wiki/Long_Depression

Reminds me of 2008 to....now ? It depends on how you calculate UE, of course.

[FarCenter]

1. Yes, the US is currently in a process similar to Britain from 1873 - 1896

US = Great Britain
China = Germany

There was an investment bubble in railroads and iron-hulled steamships in the late '60s and early '70s that parallels the dotcom and real estate bubbles that collapsed in 2001 and 2008. Think of Bessemer steel as parallel with silicon, steam with digital information, and transportation innovations with communications.

Great Britain was the major victor in the Napoleonic Wars and prospered greatly until the 1870s when it became uncompetitive with the new upstart economies, especially the newly unified Germany and the newly opened up United States. The situation of the United States is similar, although it also parallels to some extent Austria-Hungary another victor in the Napoleonic Wars. Austria hosted the Congress of Vienna which established the "new world order" of the nineteenth century, just as the US hosted Breton Woods and the San Francisco conference establishing the UN. Like Austria, the US suffers from a old, complex, unreformed governmental system which is becoming progressively more sclerotic.

[steve2470]

2. good post, thank you nt

[steve2470]

3. any other comments ? nt

[socialist_n_TN]

4. There is a Marxist economics writer named Michael Roberts who.....

has characterized this latest disaster of capitalism as a "Long Depression" for years now. And he often references this period for comparison.

In reality this Long Depression was a capitalist slump of the most severest type. By the rules of the game it was meant to concentrate wealth into fewer hands by destroying capital, both fictitious and real, thus restoring the rate of profit for the capitalists that are left standing. Then 50 years later approximately, you had the Great Depression and then 80 years after that you have the Great Recession. With a TON of minor slumps and contractions in between. And there are still apologists for the system that say that these are "isolated" incidents and are NOT a basic part of the system.

The problem comes when these slumps and especially the big slumps, begin to come with less recovery in between. When this happens, you'll know the system is actually on it's last legs.