May 9, 1873. In Europe, in the USA, the stock markets plunged, the crisis, unemployment ... Already.
The Point.fr - Posted on 09 / 05 / 2012 to 00: 00
World depressions follow each other and look alike. In 1873, the crash started in Vienna, went to Berlin, to Paris, then to America!
Crisis ! Crisis ! We have only heard of her for a few years. Horror, oh despair, the stock markets are falling, the economy is collapsing, jobs are disappearing ... it's the end of the world! But no ! It is simply capitalism which is experiencing a small slump ... as it regularly experiences. A good little purge to be able to start again more beautiful. For two centuries, there has been a sacred bundle of crises, crashes, depressions and other treats of the same style. And not just small crises, but huge ones, those that make you believe in the apocalypse. But who remembers it? That of 1929 is still remembered, but it was preceded by many others: in 1873, in 1865, in 1836. Each time, punches in the mouth. The civilized world believes that it can never recover from it and it always picks up, the banks often causing the turmoil rise from their ashes to start a new cycle.
May 9, 1873, panic on the Vienna Stock Exchange. A week after the opening of the Universal Exhibition intended to magnify the reign of the Austro-Hungarian Empire, it is the crash. The speculative real estate bubble in Austria bursts. Within hours, hundreds of banks went bankrupt, ruining hundreds of thousands of small savers. Financial institutions are unable to recover the indiscriminately loaned money to real estate companies and individuals to build in Vienna. Just one edifying example: the Placht and Fels bank is unable to bring together 9 guilders of assets while it has a liability of 000 million guilders. It's unimaginable.
Real estate fever
Once again the bankers pay their total irresponsibility. Like all Austrians, they had the folly of grandeur when France began to pay huge war indemnities after the defeat of 1870. Vienna and many other cities launched huge real estate programs. Individuals followed suit by building buildings and houses. We had to borrow. Financial institutions demanded only that. They started issuing mortgages like a cow that pissed. Speculation soared. When, for a variety of reasons, confidence fell, so it was the stock market and banking rout.
The crisis spread quickly to Germany, whose banks experienced the same real estate fever. For example, between 1871 and 1873, the Berlin Stock Exchange had registered 95 new banks including the Deutsche Bank. Before the collapse, listed real estate establishments paid exceptional dividends of between 10 and 15%. The crash is sweeping these societies like straw. One after the other, the financial groups jump like champagne corks during a princely wedding. The most spectacular bankruptcy is that of the financial Stephan Keglevich who had been the youngest member of the Hungarian Parliament in 1861. In the process, thousands of small investors who thought themselves rich and clever find themselves on the straw, Gros-Jean as before . In Austria, to save the furniture, the banks have a fund of 20 million guilders, but it is dried up faster than an oasis well after the landing of a caravan of camels. According to the newspapers of the time, a thousand small savers committed suicide. No crash for funeral directors.
Cascade of bankruptcies
After cleaning the banks across the Rhine, the crash decides to visit Paris, where there would be another nice real estate bubble to blow up. Indeed, in the wake of the work of Baron Georges Eugène Haussmann, French banks had also played the construction thoroughly. Immediately the wind of terror blows on the Paris Stock Exchange. Émile Zola describes perfectly the misdeeds of the real estate crisis in his novel La Curée. After crunching Paris, the crash feels ready to take America by the throat. In the fall, the New York Stock Exchange, which has been euphoric since the end of the Civil War and especially thanks to the rail boom, begins to falter. Even more than their European counterparts, the American bankers had taken big risks by lending tirant-larigot. When the European crisis arrives, it is the last straw that overflows the already full vase of troubled railways and politico-financial scandals. Trust in the American banking world is collapsing as quickly as Hiroshima under the A bomb.
Bankruptcies are triggered in cascade. The crisis became panic on September 20, 1873, when Wall Street had to close ten days after the bankruptcy of the largest American bank at the time, Jay Cooke. A witness of this time confides that "the economic organization collapsed with accents of primitive cataclysm". The unemployment rate in New York was then 25%. In the big cities, the unemployed demonstrate to demand the opening of public worksites. The police responded immediately with clubs. Many strikes paralyze the country, ending with an exchange of gunfire with private militias hired by the bosses. In central Europe, the depression is also raging, plunging many populations into poverty. Which pass their own rage on the Jews during pogroms. The usual scapegoats. But, let us be reassured, capitalism is cyclothymic. Financial crises eventually run out of steam. Phoenix of modern times, financial institutions are filling in to better tackle the next crisis. Here we are...
Source: http://www.lepoint.fr/c-est-arrive-aujo ... 71_494.php