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THE WARRIORS
y LIEUTENANT GENERAL- BISWANATH PANDEY
y MAJOR GENERAL- ANJALI SHAH
y BRIGADIER- DILNAWAZ
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DEPRESSION
IN ECONOMICS , ADEPRESSION IS ASUSTAINED, LONG-TERMDOWNTURN IN
ECONOMICACTIVITY IN ONE ORMORE ECONOMIES. IT ISA MORESEVERE
DOWNTURNTHAN A RECESSION,WHICH IS SEEN BYECONOMISTS AS PARTOF
THEMODERN BUSINESS
CYCLE
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THE LONG DEPRESSION WAS A WORLDWIDE ECONOMIC CRISIS, FELTMOST
HEAVILY IN EUROPE AND THE UNITED STATES.
IT WAS MOST NOTABLE IN WESTERN EUROPE AND NORTH
AMERICA, BASED ON RELIABLE DATA READILY AVAILABLE INTHOSE PARTS
OF THE WORLD.
THE UNITED KINGDOM WAS THE HARDEST HIT; DURING THISPERIOD IT
LOST SOME OF ITS LARGE INDUSTRIAL LEAD OVER THEECONOMIES OF
CONTINENTAL EUROPE.
WHILE IT WAS OCCURRING, THE VIEW WAS PROMINENT THAT THE
ECONOMY OF THE UNITED KINGDOM HAD BEEN IN CONTINUOUSDEPRESSION
FROM 1873 TO AS LATE AS 1896 AND SOME TEXTSREFER TO THE PERIOD AS
THE LONG DEPRESSION OF 187396
INTRODUCTION
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PREVIEW
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CAUSESy Economic problems in Europe promptedthe failure of the
Jay Cooke & Company,the largest bank in the United States.y The
Coinage Act of 1873 also contributedby immediately depressing the
price of
silver, which hurt North American mining
interests.
y The collapse of the Vienna Stock
Exchange caused a depression thatspread throughout the
world.
y Withdrawal of European investment from
investing in US Railroads led to stock
market and banking collapse.
y 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.y 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
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BELIEFy Monetarists believe that the 1873 depressionwas caused
by shortages of gold thatundermined the gold standard
y 1848 California Gold Rush,
1886 Witwatersrand Gold Rush in SouthAfrica and the 1898-99
Klondike GoldRush helped alleviate such crises.
y Other analyses have pointed to developmentalsurges ,
theorizing that the Second IndustrialRevolution was causing large
shifts in theeconomies of many states, imposingtransition costs,
which may also have playeda role in causing the depression.
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GROWTH RATES OF INDUSTRIAL
PRODUCTION (1850s-1913)1850-1873 1873-1890 1890-1913GERMANY 4.3
2.9 4.1
UNITED
KINGDOM
3.0 1.7 2.0
UNITED
STATES
6.2 4.7 5.3
FRANCE 1.7 1.3 2.5
ITALY 0.9 3.5
SWEDEN 3.1 3.5
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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
KINGDOM
8.2 10.4 12.5 16.0 19.6 23.5 29.4
GERMANY 7.2 8.3 10.3 12.7 16.6 19.9 26.4
AUSTRIA-
HUNGRY
7.2 8.3 9.1 9.9 11.3 12.2 15.3
ITALY 5.5 5.9 6.6 7.4 8.2 8.7 9.4
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US GNP PER CAPITA
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STRATEGIESy Non-acceptance of
coinage act
y Good monetary policy
y Proper market surveyby Jay Cooke & Co.
should had beenimplied
y Economicpolicy(Portersmodel).
y Trade with non-european countries
y Lesser duty and taxrate
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HOW TO SURVIVE DEPRESSION?
(BUSINESS POINT OF VIEW)y Q
uick repayment of debty Purchase of necessary supplies
y Storage of important assets
and asset management
y Preference of cash payments instead
of credit cards
y Identifying and clearing high-interest
loans, if anyy Quick shift over to adjustable rates of
interest, if the repayment tenures are
long and cannot be shortened
y Clearance of unsecured debt and
adherence to a debtmanagement
plan.
y Cheaper replacements for expensive
office commodities that weigh heavyon fuel
y Strict adherence to a Budget Plan
and risk management strategies
y Negotiations with suppliers and
clientle, in tandem with the new
budget in place.
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HOW TO SURVIVE DEPRESSION?(INDIVIDUAL POINT OF VIEW)
y Converting liquid savings into goldor silver,
alternatively
y Evaluating the current and possiblefuture prices of secured
stocksand mutual funds
y Purchase of goods and basic foodsupplies, which are easy
andconvenient to store
y Keeping a record of expendituresand income
y Pushing negotiations with regards tomortgage payment and
utilities
y Serious identification of necessitiesand luxuries
y Shopping for discounts and buying inbulk
y
Adoption of the three R's - Reduce,Recycle and Reuse
y Shifting over from a vehicle that eatsinto fuel, to a cheaper
car
y Dealing in cash only; refrain fromthe use of plastic
