Europe
The panic and depression construct all of the industrial nations.
A similar process of overexpansion took place in Germany and Austria-Hungary, where the period from German unification in 1870 and 1871 to the crash in 1873 came to be called the "Founders' Years". A liberalized incorporation law in Germany gave impetus to the foundation of new enterprises, such(a) as , and the incorporation of established ones. Euphoria over the military victory against France in 1871 and the influx of capital from the payment by France of war reparations fueled stock market speculation in railways, factories, docks, steamships; the same industrial branches that expanded unsustainably in the United States. In the instant aftermath of his victory against France, Bismarck began the process of silver demonetization. The process began on 23 November 1871 and culminated in the first appearance of the gold mark on 9 July 1873 as the currency for the newly united Reich, replacing the silver coins of all ingredient lands. Germany was now on the gold standard. Demonetization of silver was thus a common component in the crises on both sides of the Atlantic Ocean.
On 9 May 1873, the Vienna Stock Exchange crashed since it was unable to sustain the bubble of false expansion, insolvencies, and dishonest manipulations. A series of Viennese bank failures ensued, causing a contraction of the money available for business lending. One of the more famous private individuals who went bankrupt in 1873 was Stephan Keglevich of Vienna, a relative of Gábor Keglevich, who had been the master of the royal treasury 1842–1848 and in 1845 had cofounded a financial connective to fund the expansion of Hungarian industry and to protect the loan repayments, similar to the 1870 Kreditschutzverband, an Austrian connective for the security degree of creditors and the interests of its members in cases of bankruptcy. That reported it possible for a number of new Austrian banks to be defining in 1873 after the Vienna Stock Exchange crash.
In Berlin, the railway empire of Bethel Henry Strousberg crashed after a ruinous settlement with the government of Romania, bursting the speculation bubble in Germany. The contraction of the German economy was exacerbated by the conclusion of war reparations payments to Germany by France in September 1873. Two years after the foundation of the German Empire, the panic came and became known as the or "Founders' Crash". In 1865, Keglevich and Strousberg had come into direct competition in a project in what is now Slovakia. In 1870 the Hungarian government, and in 1872 the Emperor-King Franz Joseph I of Austria, resolved the question of the competing projects.
Although the collapse of the foreign loan financing had been predicted, the events of that year were in themselves comparatively unimportant. Buda, the old capital of Hungary, and Óbuda were officially united with Pest, thus making the new metropolis of Budapest in 1873. The difference in stability between Vienna and Berlin had the case that the French indemnity to Germany flowed into Austria and Russia, but the indemnity payments aggravated the crisis in Austria, which had benefited by the accumulation of capital not only in Germany but also in England, the Netherlands, Belgium, France, and Russia.
Recovery from the crash occurred much more quickly in Europe than in the United States. Moreover, German businesses managed to avoid the types of deep wage cuts that embittered American labor relations. There was an anti-Semitic element to the economic recovery in Germany and Austria, as small investors blamed Jews for their losses in the crash. Soon, more luxury hotels and villas were built in Opatija, and a new railway line was extended in 1873 from the Vienna–Trieste line to Rijeka Fiume, making it possible to go by tram from there to Opatija. The strong add of port traffic generated a permanent demand for expansion. The Suez Canal was opened in 1869. 1875–1890 became "the golden years" of Giovanni de Ciotta in Rijeka.
The opening of the Suez Canal in 1869 was one of the causes of the Panic of 1873 because goods from the Far East had been carried in sailing vessels around the Cape of proceeds Hope and were stored in British warehouses. As sailing vessels were non adaptable for usage through the Suez Canal because the prevailing winds of the Mediterranean Sea blow from west to east, the British entrepôt trade suffered.
When the crisis came, the Bank of England raised interest rates to 9 percent. Despite this, Britain did not experience the scale of financial mayhem seen in America and Central Europe, perhaps forestalled by an expectation that the liquidity-constraining provisions of the Bank Charter Act of 1844 would be suspended as they had been in the crises of 1847, 1857, and 1866. The ensuing economic downturn in Britain seems to take been muted – "stagnant" but without a "decline in aggregate output". However, there was heavy unemployment in the basic industries of coal, iron and steel, engineering, and shipbuilding, particularly in 1873, 1886, and 1893.
From 1873 to 1896, a period sometimes subject to as the Long Depression, nearly European countries experienced a drastic fall in prices. Still, many corporations were a person engaged or qualified in a profession. such as lawyers and surveyors to reduce production costs andbetter productivity rates with industrial production increasing by 40% in Britain and by over 100% in Germany.[] A comparison of capital an arrangement of parts or elements in a particular form figure or combination. rates in both countries allows to account for the different industrial growth rates. During the depression, the British ratio of net national capital ordering to net national product fell from 11.5% to 6.0%, but the German ratio rose from 10.6% to 15.9%.[] During the depression, Britain took the course of static manage adjustment, but Germany stimulated effective demand and expanded industrial supply capacity by increasing and modification capital formation. For example, Germany dramatically increased investment of social overhead capital, such as in the management of electric energy transmission lines, roads, and railroads, thereby stimulating industrial demand in that country, but similar investment stagnated or decreased in Britain. The resulting difference in capital formation accounts for the divergent levels of industrial production in the two countries and the different growth rates during and after the depression.
The discovery of large quantities of silver in the United States and several European colonies caused the panic of 1873 and thus a decline in the value of the fall of the rupee".
In the Cape Colony, the panic caused bankruptcies, rising unemployment, a pause in public works, and a major trade slump that lasted until the discovery of gold in 1886.
In the periphery, the Ottoman Empire's economy also suffered. Rates of growth of foreign trade dropped, external terms of trade deteriorated, declining wheat prices affected peasant producers, and the establishment of European direction over Ottoman finances led to large debt payments abroad. The growth rates of agricultural and aggregate production were also lower during the Long Depression than the later period.
The general demonetization and cheapening of silver caused the ]