Economic Depression of Europe
An economic depression is more severe than a recession due to the fact that a depression involves drastic decline in a national or international economy, characterized by decreasing business activity, falling prices, and high levels of unemployment.
There were economic depressions in Europe that were experienced before and after the 1870 but with a remarkable difference, being that those that were experienced before the 1870s were less costly in terms of life and resources and took relatively lesser period. Indeed it was a commonplace that every part of Europe experienced one sort of economic depression or the other.
One such economic situation before 1870 was the “little ice age” which began in the late 16th century till around 1950s as indicated by Big Site of History (2011). This was a time when a severe cold that could not be withstood by most crops set in most part of Europe. This led to unpredictable harvest and a significant slowdown of population increase though there were exceptions in some areas of Europe.
The other noticeable economic depression that is worth mentioning is one that was caused by recurrent plague in 1665. This was seen as one of the most challenging depressions since it was occasioned by bubonic plague that hit London majorly though its effects were felt allover Europe. It was also known as the Black Death and wiped out well over 100,000 people in London. This had a massive impact on the economy of Europe since the productivity was highly slowed and almost all economic sectors were stalled due to the fleeing of people from London to avoid the plague and the mass death (, 2011).
Europe experienced much more severe economic depressions which had a greater impact after 1870 as compared to economic crisis experienced in Europe during the 17th and the 18th Century. Economic crisis during the 17th century and 18th century include the 17th century general crisis and the global economic crisis of 18th century. After 1870 there were depressions like the 1870s long depression, 1893 economic crisis and the great depression of 1929 to 1940s that was majorly an extension of the American great depression.
One such depression that occurred post 1870 was the 1870s long depression whose effects were felt even in the 1890s depression. European countries by 1870 were so dependent on America which was not the case in the 17th and 18th century particularly when it came to the U.S. stock market. This explains partly why the depressions after 1870s were more severe in terms of impact as compared to the previous ones. The long depression in particular began as a result of building boom that was experienced in Europe particularly in Vienna with loans and mortgages becoming an easy to access thing. Indeed it was such an easy thing to obtain lending that people used even half finished houses as collaterals. The downturn came when Russia and central Europe could not cope with the stiff competition from America in terms of export of wheat and kerosene. Banks stopped dishing out money and the Vienna stock exchange crashed, the ripple effects reached Western Europe (Lisa Sanderson, 2009). The situation was compounded further by the American Panic of 1873, which was an economic depression in America. This predisposed the countries like the European countries that depended upon America economically to severe double negative effects hence making the depression after the 1870 more severe than those before it.
The other depression that hit Europe was the Great Depression that commenced in 1929. And just like the long depression, the effects were much more felt on the ground by most if not all European states. For instance the 1929 Great Depression that hit Europe due to the collapse of the U.S. stock market during the great depression in America showed how dependent European states were on the U.S. stock market. The other factor that made this depression severe on the countries that were involved was the sheer fact that it came hot on the heels of the Great War and the Versailles treaty. At the same time, the New York stock exchange permitted the fast selling off of securities due to unregulated speculations, there was also the rapidly changing democratic systems during the same time and governments in European countries suffered assaults of grand proportions ( Inc., 2010). This meant that at this time Europe had to fight hard to overcome multiple problems that faced it in the already hard financial times hence making it suffer more than in the depressions prior to 1870s where it could be one problem being solved at a time.
Some of the manifestations of the economic depressions in Europe after 1870 that made them to be considered severe that before 1870 are as below:
High levels of unemployment — the economic depressions after 1870s were much more severe and had greater impacts in terms of unemployment levels. While as during the general crisis of the 17th century the unemployment levels were considerably high, during the 1929 great depression in Germany unemployment levels shot up to 30% making this 1929 depression a much more severe than those before 1870s.
Decline in trade-trade during the great depression in Europe declined greatly to only a third of what it used to be. This meant that countries that depended mainly on her were severely affected than ever before for instance Australia was highly affected as compared to the 17th and 18th century crisis. This shows that the economic depressions after 1870s were much more severe and had a greater impact due to the growing nature of interdependency between nations.
Bankruptcy- the depressions after 1870s in Europe were characterized by mass bankruptcy of banks, closure of banks and companies than it had ever featured in the European history. Many banks for instance in the 1930s closed down when people failed to pay back loans which the banks had loaned out heavily. This was deeply felt especially in countries like Germany. The depressions after 1870s were much more severe because the rate of bankruptcy was like never before which resulted into a mass closure of banks something that was not prevalent during the 17th century general crisis.
Increased – with the collapse of the U.S. stock market, inflation continued to hike. Lending tariffs by banks were also raised since they feared to lend much to people based on the kind of economic climate that prevailed by then. People failed to borrow the expensive loans which severely affected their financial positions. This was unlike the 17th and 18th century economic crisis in terms of intensity where the interbank lending rates never hiked that much. This explains why it is just to say that the economic depressions after the 1870s were deemed to be much more severe in terms of intensity and impact.
Technological change and advancements- the severity of the economic depressions after 1870s was accelerated by the technological advancements and changes of the time. These changes were not dominant in the 17th and 18th century crisis. In a bid for Europe to cope up with the advancements of the time the depressions effects were felt much more. This was so since Europe was striving to acquire the new technology and industrializing so as to reduce imports from America which had advanced than Europe and was producing at half price of Europe.
Increased level of competition- the increased level of unhealthy competition between nations fuelled by the zeal to be the world economic superpower made the impact of the economic depressions much more severe since this led to unethical trading practices and countries imposing restrictions on goods from other countries and unnecessary embargoes. For instance France during the economic depression of 1929 imposed high taxes on imports from other countries so as to make products from domestic companies cheaper.
Business failure- after the 1873 panic where people were puzzled after Jay Cookes failed to repay its debts the currencies got destabilized and most of the businesses feared. They feared loosing all their money through the currency instabilities. Most people therefore resorted to closing their businesses. This affected the development of Europe in much more severe and wide spread manner than the economic crisis of the 17th century.
Increased crimes- as a result of the mass unemployment that came along with the great depression crimes increased in Europe. This was because the masses that were laid of the collapsing banks and businesses still needed upkeep yet they were no longer earning. This meant that some of them had to steal to earn a living. This was not the case during the general crisis of the 17th century. The apparent and significant increase in crime rate during this period as compared to the previous depressions experiences in Europe serve to indicate that the economic depressions had much more severe impacts as compared to the 17th and 18th century economic crisis.
Increased suicidal cases- out of stress on where to get money and change of cost of living drastically after the depressions like in 1983 and 1929 led to an increase in suicidal cases in Europe. This was as a result of being stressed by change of status for the laid off staff as well as life becoming so costly for some people. This explains why it was said that the depressions after 1870 were more severe with greater impact.
Increased job insecurity- during the depression, even among the population that was not laid off, they felt insecure because they did not know whether they were also about to lose their jobs. More so their options and choices became narrower in terms of alternatives to eking life and kept on living in fear of losing their jobs. This was a great impact of the depressions after 1870 especially 1929 as compared to the 17th century general crisis.
Increased household debts- the economic depressions after 1870 were marked with increased house hold arrears. This was because the pressure of loosing work was extended to the domestic levels. Since the families had to feed many people were forced into household arrears. It was also challenging to get businessmen who were willing to extend credit services to their customers.
Increased poverty, social exclusion and inequality- the economic depressions after 1870 especially the great depression of 1929 significantly increased poverty levels in Europe. It was the poor and those made poor through loss of income or housing that were hardest hit by the economic depression. This was because the prices had gone up and their sources of income were no more. It was further exacerbated by the government’s inability to provide the and protection for the poor. This led to a mass imbalance in the social system with those who had some wealth being able to enjoy the services at the expense of the poor people.
Adverse lifestyle changes- due to loss of jobs and closure of big banks and companies especially after the great depression, the lifestyles of people had to greatly change. Most people were forced to adapt a cheaper lifestyle than they were used to before. This was as a result of the drastic change in their the mass unemployment that characterized the season. This explains why the depressions after 1870 in the European history are deemed to have had greater and much more severe impacts as compared to the recessions in the 17th and 18th century.
Alcoholism- the rate of alcoholism increased in Europe significantly in bid to run away from stress. This coupled with increase in mortality irate in countries like Germany and Hungary. This was like never before in the history of Europe. Many people engaged in mass alcoholism which hiked the alcohol related deaths. This was not like the previous economic crisis of the 17th century since in the depression of 1870 the stress levels among the populace was much higher and intense.
In conclusion it is worth to note that through out the European history the effects of the great depression of 1929 have been noted to be the most severe as evidenced by the issues raised above. Up to date the effects of the depression are still felt though Europe has tried to get over it. More to that the depressions though severe than the economic crisis 0f 17th and 18th century left the Europeans with great lessons to learn.
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