BIHAR WARRIORS

PRESENTS
LONG DEPRESSION
(1873)
 THE WARRIORS
LIEUTENANT GENERAL- BISWANATH
PANDEY

MAJOR GENERAL- ANJALI SHAH

BRIGADIER- DILNAWAZ
DEPRESSION

In Economics , a
depression  is a sustained,
long-term downturn in
economic activity in one
or more economies. It is a
more severe downturn
than a recession, which
is seen by economists as
part of the modern
 business cycle
 INTRODUCTION
 The Long Depression was a worldwide economic crisis, felt most heavily
in Europe and the United States.
 It was most notable in WESTERN EUROPE and NORTH AMERICA,
based on reliable data readily available in those parts of the world.
 The UnitED KINGDOM  was the hardest hit; during this period it lost
some of its large industrial lead over the economies of Continental
EuroPE.
 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 Long Depression of
1873–96
 PREVIEW

BACKGROUND
The period receding the depression was dominated by several major
military conflicts and a period of economic expansion.

In Europe, the end of the Franco Prussian war yielded a new political

order in Germany.

New technologies in industry such as the Bessemer Converter were

being rapidly applied; railroads were booming.

In the United States, the end of the American Civil War and a brief post-
war recession (1865–1867) gave way to such an investment boom,
focused especially on railroads on public lands in the West 

CAUSES
Economic problems in Europe prompted
the failure of the Jay Cooke & Company,
the largest bank in the United States.
 The Coinage Act of 1873 also contributed
by immediately depressing the price of
silver, which hurt North American mining
interests.
 The collapse of the Vienna Stock
Exchange caused a depression that
spread throughout the world.
 Withdrawal of European investment from
investing in US Railroads led to stock
market and banking collapse.
 The primary cause of the price depression
in the United States was the tight
monetary policy that the U.S. followed to
get back to the gold standard after the
Civil War.
 The depression was also rooted to be in
the 1870 Franco-Prussian War  that hurt
the French economy and, under the Treaty
of Frankfurt (1871), forced that country to
make large war reparations payments
to Germany
 BELIEF
Monetarists believe that the 1873 depression was
caused by shortages of gold that undermined
the gold standard
 1848 California Gold Rush, 1886 Witwatersrand
Gold Rush in South Africa and the 1898-99 Klondike
Gold Rush helped alleviate such crises.
Other analyses have pointed to developmental
surges , theorizing that the Second Industrial
Revolution was causing large shifts in the
economies of many states, imposing transition
costs, which may also have played a role in
causing the depression.
GROWTH RATES OF INDUSTRIAL
PRODUCTION (1850s-1913)
1850-1873 1873-1890 1890-1913

GERMANY 4.3 2.9 4.1

UNITED 3.0 1.7 2.0

KINGDOM

UNITED 6.2 4.7 5.3

STATES

FRANCE 1.7 1.3 2.5

ITALY 0.9 3.5

SWEDEN 3.1 3.5

GNP OF THE GREAT POWERS OF EUROPE
(in billions USD, 1960 prices)
1830 1840 1850 1860 1870 1880 1890

RUSSIA 10.5 11.2 12.7 14.4 22.9 23.2 21.1

FRANCE 8.5 10.3 11.8 13.3 16.8 17.3 19.7

UNITED 8.2 10.4 12.5 16.0 19.6 23.5 29.4

KINGDOM
GERMANY 7.2 8.3 10.3 12.7 16.6 19.9 26.4

AUSTRIA- 7.2 8.3 9.1 9.9 11.3 12.2 15.3

HUNGRY
ITALY 5.5 5.9 6.6 7.4 8.2 8.7 9.4
US GNP PER CAPITA
 STRATEGIES
Non-acceptance of
coinage act
Good monetary policy
 Proper market survey
by Jay Cooke & Co.
should had been
implied
Economic
policy(Porter’s model).
Trade with non-
european countries
Lesser duty and tax
rate
 HOW TO SURVIVE DEPRESSION?
(BUSINESS POINT OF VIEW)
 Quick repayment of debt
 Purchase of necessary supplies
 Storage of important assets
and asset management
 Preference of cash payments instead
of credit cards
 Identifying and clearing high-interest
loans, if any
 Quick shift over to adjustable rates of
interest, if the repayment tenures are
long and cannot be shortened
 Clearance of unsecured debt and
adherence to a debtmanagement
plan.
 Cheaper replacements for expensive
office commodities that weigh heavy
on fuel
 Strict adherence to a Budget Plan
and risk management  strategies
 Negotiations with suppliers and
clientèle, in tandem with the new
budget in place.
 HOW TO SURVIVE DEPRESSION?
(INDIVIDUAL POINT OF VIEW)
Converting liquid savings into gold or
silver, alternatively
Evaluating the current and possible future
prices of secured stocks and mutual funds
Purchase of goods and basic food
supplies, which are easy and convenient
to store
Keeping a record of expenditures and
income
Pushing negotiations with regards to
mortgage payment and utilities
Serious identification of necessities and
luxuries
Shopping for discounts and buying in bulk
Adoption of the three R's - Reduce,
Recycle and Reuse
Shifting over from a vehicle that eats into
fuel, to a cheaper car
Dealing in cash only; refrain from the use
of plastic