Long Depression
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The Long Depression was an economic depression that affected much of the world from the early 1870s until the mid-1890s.
Some historians do not believe it existed, instead calling it a series of smaller, unconnected economic downturns. Data from this period is not ideal, however, and it is difficult to get exact figures, contributing to the uncertainty.
The Depression was most notable in Western Europe and North America, but this is in part because reliable data from the period is most readily available in those parts of the world. Britain is often considered the hardest hit by the Long Depression, and during this period it lost much of its large industrial lead over the economies of Continental Europe.
The causes of the Depression are also debated. The most immediate cause, and the date that is often used as the start of the Depression, was the collapse of the Vienna Stock Exchange on May 9, 1873. Others have argued the depression was rooted in the Franco-Prussian War that hurt the French economy and forced them to make large reparations payments to Germany. Monetarists believe that the depression was caused by a world shortage of gold that undermined the gold standard. The Second Industrial Revolution was causing large shifts in the economy of many states and the transition costs may also have played a role in causing the depression.
The Long Depression was not a particularly deep one, unlike the more famous Great Depression. The period saw a number of years of growth, but more years of contraction. Throughout the period prices fell and production grew more slowly when compared to earlier and later eras.
Like the Great Depression, the Long Depression saw many nations of the world resort to protectionism to shore up faltering industries. Both Germany and France abandoned free trade. Some also argue that the Long Depression contributed to the revival in colonialism in the late nineteenth century as the western powers sought new markets for their goods.
Besides tariff policy, governments of the time were not closely involved in managing the economy. It was generally believed that it was not the government's role to intervene in the economy, and thus little was done. The absence of a welfare state also meant that recessions had a far smaller effect on governments for they were not obligated to assist those in need.
The Depression is usually believed to have ended by 1897. The global economy grew at an impressive rate from that year to the start of World War I.