The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s. It was the longest, most widespread, and deepest depression of the 20th century. In the 21st century, the Great Depression is commonly used as an example of how far the world's economy can decline. The depression originated in the U.S., starting with the fall in stock prices that began around September 4, 1929 and became worldwide news with the stock market crash of October 29, 1929 (known as Black Tuesday). From there, it quickly spread to almost every country in the world.

The Great Depression had devastating effects in virtually every country, rich and poor. Personal income, tax revenue, profits and prices dropped, while international trade plunged by more than 50%. Unemployment in the U.S. rose to 25%, and in some countries rose as high as 33%. Cities all around the world were hit hard, especially those dependent on heavy industry. Construction was virtually halted in many countries. Farming and rural areas suffered as crop prices fell by approximately 60%. Facing plummeting demand with few alternate sources of jobs, areas dependent on primary sector industries such as cash cropping, mining and logging suffered the most.

Some economies started to recover by the mid-1930s. However, in many countries the negative effects of the Great Depression lasted until the start of World War II.

Start of the Great Depression

Economic historians usually attribute the start of the Great Depression to the sudden devastating collapse of US stock market prices on October 29, 1929, known as Black Tuesday. However, some dispute this conclusion, and see the stock crash as a symptom, rather than a cause, of the Great Depression. Even after the Wall Street Crash of 1929, optimism persisted for some time; John D. Rockefeller said that "These are days when many are discouraged. In the 93 years of my life, depressions have come and gone. Prosperity has always returned and will again." In fact, the stock market turned upward in early 1930, returning to early 1929 levels by April. This was still almost 30% below the peak of September 1929. Together, government and business actually spent more in the first half of 1930 than in the corresponding period of the previous year. On the other hand, consumers, many of whom had suffered severe losses in the stock market the previous year, cut back their expenditures by ten percent. Likewise, beginning in the summer of 1930, a severe drought ravaged the agricultural heartland of the USA.

By mid-1930, interest rates had dropped to low levels. But expected deflation and the continuing reluctance of people to borrow meant that consumer spending and investment were depressed. By May 1930, automobile sales had declined to below the levels of 1928. Prices in general began to decline, although wages held steady in 1930; but then a deflationary spiral started in 1931. Conditions were worse in farming areas, where commodity prices plunged, and in mining and logging areas, where unemployment was high and there were few other jobs. The decline in the US economy was the factor that pulled down most other countries at first, then internal weaknesses or strengths in each country made conditions worse or better. Frantic attempts to shore up the economies of individual nations through protectionist policies, such as the 1930 U.S. Smoot–Hawley Tariff Act and retaliatory tariffs in other countries, exacerbated the collapse in global trade. By late 1930, a steady decline in the world economy had set, which did not reach bottom until 1933.

Economic indicators

Change in economic indicators 1929–32

	USA	Britain	France	Germany
Industrial production	−46%	−23	−24	−41
Wholesale prices	−32%	−33	−34	−29
Foreign trade	−70%	−60	−54	−61
Unemployment	+607%	+129	+214	+232

Causes

There were multiple causes for the first downturn in 1929. These include the structural weaknesses and specific events that turned it into a major depression and the manner in which the downturn spread from country to country. In relation to the 1929 downturn, historians emphasize structural factors like massive bank failures and the stock market crash. In contrast, economists (such as Barry Eichengreen, Milton Friedman and Peter Temin) point to monetary factors such as actions by the US Federal Reserve that contracted the money supply, as well as Britain's decision to return to the Gold Standard at pre–World War I parities (US$4.86:£1).

Recessions and business cycles are thought to be a normal part of living in a world of inexact balances between supply and demand. What turns a normal recession or 'ordinary' business cycle into an actual depression is a subject of much debate and concern. Scholars have not agreed on the exact causes and their relative importance. Moreover, the search for causes is closely connected to the issue of avoiding future depressions.

Thus, the personal political and policy viewpoints of scholars greatly color their analysis of historic events occurring eight decades ago. An even larger question is whether the Great Depression was primarily a failure on the part of free markets or, alternately, a failure of government efforts to regulate interest rates, curtail widespread bank failures, and control the money supply. Those who believe in a larger economic role for the state believe that it was primarily a failure of free markets, while those who believe in a smaller role for the state believe that it was primarily a failure of government that compounded the problem.

Current theories may be broadly classified into two main points of view and several heterodox points of view. First, there are demand-driven theories, most importantly Keynesian economics, but also including those who point to the breakdown of international trade, and Institutional economists who point to underconsumption and over-investment (causing an economic bubble), malfeasance by bankers and industrialists, or incompetence by government officials. The consensus among demand-driven theories is that a large-scale loss of confidence led to a sudden reduction in consumption and investment spending. Once panic and deflation set in, many people believed they could avoid further losses by keeping clear of the markets. Holding money became profitable as prices dropped lower and a given amount of money bought ever more goods, exacerbating the drop in demand.

Secondly, there are the monetarists, who believe that the Great Depression started as an ordinary recession, but that significant policy mistakes by monetary authorities (especially the Federal Reserve), caused a shrinking of the money supply which greatly exacerbated the economic situation, causing a recession to descend into the Great Depression. Related to this explanation are those who point to debt deflation causing those who borrow to owe ever more in real terms.

Lastly, there are various heterodox theories that downplay or reject the explanations of the Keynesians and monetarists. For example, some new classical macroeconomists have argued that various labor market policies imposed at the start caused the length and severity of the Great Depression. The Austrian school of economics focuses on the macroeconomic effects of money supply, and how central banking decisions can lead to over-investment (economic bubble).

Demand-driven

Keynesian

British economist John Maynard Keynes argued in ''General Theory of Employment Interest and Money'' that lower aggregate expenditures in the economy contributed to a massive decline in income and to employment that was well below the average. In such a situation, the economy reached equilibrium at low levels of economic activity and high unemployment. Keynes' basic idea was simple: to keep people fully employed, governments have to run deficits when the economy is slowing, as the private sector would not invest enough to keep production at the normal level and bring the economy out of recession. Keynesian economists called on governments during times of economic crisis to pick up the slack by increasing government spending and/or cutting taxes.

As the Depression wore on, Franklin D. Roosevelt tried public works, farm subsidies, and other devices to restart the economy, but never completely gave up trying to balance the budget. According to the Keynesians, this improved the economy, but Roosevelt never spent enough to bring the economy out of recession until the start of World War II.

Breakdown of international trade

Many economists have argued that the sharp decline in international trade after 1930 helped to worsen the depression, especially for countries significantly dependent on foreign trade. Most historians and economists partly blame the American Smoot-Hawley Tariff Act (enacted June 17, 1930) for worsening the depression by seriously reducing international trade and causing retaliatory tariffs in other countries. While foreign trade was a small part of overall economic activity in the U.S. and was concentrated in a few businesses like farming, it was a much larger factor in many other countries. The average ''ad valorem'' rate of duties on dutiable imports for 1921–1925 was 25.9% but under the new tariff it jumped to 50% in 1931–1935.

In dollar terms, American exports declined from about $5.2 billion in 1929 to $1.7 billion in 1933; but prices also fell, so the physical volume of exports only fell by half. Hardest hit were farm commodities such as wheat, cotton, tobacco, and lumber. According to this theory, the collapse of farm exports caused many American farmers to default on their loans, leading to the bank runs on small rural banks that characterized the early years of the Great Depression.

Debt deflation

Irving Fisher argued that the predominant factor leading to the Great Depression was over-indebtedness and deflation. Fisher tied loose credit to over-indebtedness, which fueled speculation and asset bubbles. He then outlined 9 factors interacting with one another under conditions of debt and deflation to create the mechanics of boom to bust. The chain of events proceeded as follows: #Debt liquidation and distress selling #Contraction of the money supply as bank loans are paid off #A fall in the level of asset prices #A still greater fall in the net worths of business, precipitating bankruptcies #A fall in profits #A reduction in output, in trade and in employment. #Pessimism and loss of confidence #Hoarding of money #A fall in nominal interest rates and a rise in deflation adjusted interest rates.

During the Crash of 1929 preceding the Great Depression, margin requirements were only 10%. Brokerage firms, in other words, would lend $9 for every $1 an investor had deposited. When the market fell, brokers called in these loans, which could not be paid back. Banks began to fail as debtors defaulted on debt and depositors attempted to withdraw their deposits en masse, triggering multiple bank runs. Government guarantees and Federal Reserve banking regulations to prevent such panics were ineffective or not used. Bank failures led to the loss of billions of dollars in assets. Outstanding debts became heavier, because prices and incomes fell by 20–50% but the debts remained at the same dollar amount. After the panic of 1929, and during the first 10 months of 1930, 744 US banks failed. (In all, 9,000 banks failed during the 1930s). By April 1933, around $7 billion in deposits had been frozen in failed banks or those left unlicensed after the March Bank Holiday.

Bank failures snowballed as desperate bankers called in loans which the borrowers did not have time or money to repay. With future profits looking poor, capital investment and construction slowed or completely ceased. In the face of bad loans and worsening future prospects, the surviving banks became even more conservative in their lending. Banks built up their capital reserves and made fewer loans, which intensified deflationary pressures. A vicious cycle developed and the downward spiral accelerated.

The liquidation of debt could not keep up with the fall of prices which it caused. The mass effect of the stampede to liquidate increased the value of each dollar owed, relative to the value of declining asset holdings. The very effort of individuals to lessen their burden of debt effectively increased it. Paradoxically, the more the debtors paid, the more they owed. This self-aggravating process turned a 1930 recession into a 1933 great depression.

Macroeconomists including Ben Bernanke, the current chairman of the U.S. Federal Reserve Bank, have revived the debt-deflation view of the Great Depression originated by Fisher.

Monetarist

Monetarists, including Milton Friedman and current Federal Reserve System chairman Ben Bernanke, argue that the Great Depression was mainly caused by monetary contraction, the consequence of poor policymaking by the American Federal Reserve System and continued crisis in the banking system. In this view, the Federal Reserve, by not acting, allowed the money supply as measured by the M2 to shrink by one-third from 1929–1933, thereby transforming a normal recession into the Great Depression. Friedman argued that the downward turn in the economy, starting with the stock market crash, would have been just another recession. However, the Federal Reserve allowed some large public bank failures – particularly that of the New York Bank of the United States – which produced panic and widespread runs on local banks, and the Federal Reserve sat idly by while banks collapsed. He claimed that, if the Fed had provided emergency lending to these key banks, or simply bought government bonds on the open market to provide liquidity and increase the quantity of money after the key banks fell, all the rest of the banks would not have fallen after the large ones did, and the money supply would not have fallen as far and as fast as it did. With significantly less money to go around, businessmen could not get new loans and could not even get their old loans renewed, forcing many to stop investing. This interpretation blames the Federal Reserve for inaction, especially the New York branch.

One reason why the Federal Reserve did not act to limit the decline of the money supply was regulation. At that time, the amount of credit the Federal Reserve could issue was limited by the Federal Reserve Act, which required 40% gold backing of Federal Reserve Notes issued. By the late 1920s, the Federal Reserve had almost hit the limit of allowable credit that could be backed by the gold in its possession. This credit was in the form of Federal Reserve demand notes. A "promise of gold" is not as good as "gold in the hand", particularly when they only had enough gold to cover 40% of the Federal Reserve Notes outstanding. During the bank panics a portion of those demand notes were redeemed for Federal Reserve gold. Since the Federal Reserve had hit its limit on allowable credit, any reduction in gold in its vaults had to be accompanied by a greater reduction in credit. On April 5, 1933, President Roosevelt signed Executive Order 6102 making the private ownership of gold certificates, coins and bullion illegal, reducing the pressure on Federal Reserve gold.

New classical approach

Recent work from a neoclassical perspective focuses on the decline in productivity that caused the initial decline in output and a prolonged recovery due to policies that affected the labor market. This work, collected by Kehoe and Prescott, decomposes the economic decline into a decline in the labor force, capital stock, and the productivity with which these inputs are used. This study suggests that theories of the Great Depression have to explain an initial severe decline but rapid recovery in productivity, relatively little change in the capital stock, and a prolonged depression in the labor force. This analysis rejects theories that focus on the role of savings and posit a decline in the capital stock.

Austrian School

Another explanation comes from the Austrian School of economics. Theorists of the "Austrian School" who wrote about the Depression include Austrian economist Friedrich Hayek and American economist Murray Rothbard, who wrote ''America's Great Depression'' (1963). In their view and like the monetarists, the Federal Reserve, which was created in 1913, shoulders much of the blame; but in opposition to the monetarists, they argue that the key cause of the Depression was the expansion of the money supply in the 1920s that led to an unsustainable credit-driven boom. In the Austrian view it was this inflation of the money supply that led to an unsustainable boom in both asset prices (stocks and bonds) and capital goods. By the time the Fed belatedly tightened in 1928, it was far too late and, in the Austrian view, a significant economic contraction was inevitable. According to the Austrians, the artificial interference in the economy was a disaster prior to the Depression, and government efforts to prop up the economy after the crash of 1929 only made things worse. According to Rothbard, government intervention delayed the market's adjustment and made the road to complete recovery more difficult.

Inequality

Two economists of the 1920s, Waddill Catchings and William Trufant Foster, popularized a theory that influenced many policy makers, including Herbert Hoover, Henry A. Wallace, Paul Douglas, and Marriner Eccles. It held the economy produced more than it consumed, because the consumers did not have enough income. Thus the unequal distribution of wealth throughout the 1920s caused the Great Depression.

According to this view, the root cause of the Great Depression was a global over-investment in heavy industry capacity compared to wages and earnings from independent businesses, such as farms. The solution was the government must pump money into consumers' pockets. That is, it must redistribute purchasing power, maintain the industrial base, but re-inflate prices and wages to force as much of the inflationary increase in purchasing power into consumer spending. The economy was overbuilt, and new factories were not needed. Foster and Catchings recommended federal and state governments start large construction projects, a program followed by Hoover and Roosevelt.

Productivity shock

“It cannot be emphasized too strongly that the [productivity, output and employment] trends we are describing are long-time trends and were thoroughly evident prior to 1929. These trends are in nowise the result of the present depression, nor are they the result of the World War. On the contrary, the present depression is a collapse resulting from these long-term trends.” M. King Hubbert

The first three decades of the 20th century saw economic output surge with electrification, mass production and motorized farm machinery, and because of the rapid growth in productivity there was a lot of excess production capacity and the work week was being reduced.

The dramatic rise in productivity of major industries in the U. S. and the effects of productivity on output, wages and the work week are discussed by a Brookings Institution sponsored book.

Turning point and recovery

Various countries around the world started to recover from the Great Depression at different times. In most countries of the world, recovery from the Great Depression began in 1933. In the U.S., recovery began in the spring of 1933. However, the U.S. did not return to 1929 GNP for over a decade and still had an unemployment rate of about 15% in 1940, albeit down from the high of 25% in 1933.

There is no consensus among economists regarding the motive force for the U.S. economic expansion that continued through most of the Roosevelt years (and the 1937 recession that interrupted it).

The common view among mainstream economists is that Roosevelt's New Deal policies either caused or accelerated the recovery, although his policies were never aggressive enough to bring the economy completely out of recession. Some economists have also called attention to the positive effects from expectations of reflation and rising nominal interest rates that Roosevelt's words and actions portended. However, opposition from the new Conservative Coalition caused a rollback of the New Deal policies in early 1937, which caused a setback in the recovery.

According to Christina Romer, the money supply growth caused by huge international gold inflows was a crucial source of the recovery of the United States economy, and that the economy showed little sign of self-correction. The gold inflows were partly due to devaluation of the U.S. dollar and partly due to deterioration of the political situation in Europe. In their book, ''A Monetary History of the United States'', Milton Friedman and Anna J. Schwartz also attributed the recovery to monetary factors, and contended that it was much slowed by poor management of money by the Federal Reserve System. Current Chairman of the Federal Reserve Ben Bernanke agrees that monetary factors played important roles both in the worldwide economic decline and eventual recovery. Bernanke, also sees a strong role for institutional factors, particularly the rebuilding and restructuring of the financial system, and points out that the Depression needs to be examined in international perspective. Economists Harold L. Cole and Lee E. Ohanian, believe that the economy should have returned to normal after four years of depression except for continued depressing influences, and point the finger to the lack of downward flexibility in prices and wages, encouraged by Roosevelt Administration policies such as the National Industrial Recovery Act.

Gold standard

Economic studies have indicated that just as the downturn was spread worldwide by the rigidities of the Gold Standard, it was suspending gold convertibility (or devaluing the currency in gold terms) that did most to make recovery possible. What policies countries followed after casting off the gold standard, and what results followed varied widely.

Every major currency left the gold standard during the Great Depression. Great Britain was the first to do so. Facing speculative attacks on the pound and depleting gold reserves, in September 1931 the Bank of England ceased exchanging pound notes for gold and the pound was floated on foreign exchange markets.

Great Britain, Japan, and the Scandinavian countries left the gold standard in 1931. Other countries, such as Italy and the U.S., remained on the gold standard into 1932 or 1933, while a few countries in the so-called "gold bloc", led by France and including Poland, Belgium and Switzerland, stayed on the standard until 1935–1936.

According to later analysis, the earliness with which a country left the gold standard reliably predicted its economic recovery. For example, Great Britain and Scandinavia, which left the gold standard in 1931, recovered much earlier than France and Belgium, which remained on gold much longer. Countries such as China, which had a silver standard, almost avoided the depression entirely. The connection between leaving the gold standard as a strong predictor of that country's severity of its depression and the length of time of its recovery has been shown to be consistent for dozens of countries, including developing countries. This partly explains why the experience and length of the depression differed between national economies.

World War II and recovery

The common view among economic historians is that the Great Depression ended with the advent of World War II. Many economists believe that government spending on the war caused or at least accelerated recovery from the Great Depression. However, some consider that it did not play a very large role in the recovery, although it did help in reducing unemployment.

The massive rearmament policies leading up to World War II helped stimulate the economies of Europe in 1937–39. By 1937, unemployment in Britain had fallen to 1.5 million. The mobilization of manpower following the outbreak of war in 1939 finally ended unemployment.

America's entry into the war in 1941 finally eliminated the last effects from the Great Depression and brought the unemployment rate down below 10%. In the U.S., massive war spending doubled economic growth rates, either masking the effects of the Depression or essentially ending the Depression. Businessmen ignored the mounting national debt and heavy new taxes, redoubling their efforts for greater output to take advantage of generous government contracts.

Effects

The majority of countries set up relief programs, and most underwent some sort of political upheaval, pushing them to the left or right. In some states, the desperate citizens turned toward nationalist demagogues—the most infamous being Adolf Hitler—setting the stage for World War II in 1939.

Australia

Australia's extreme dependence on agricultural and industrial exports meant it was one of the hardest-hit countries in the Western world. Falling export demand and commodity prices placed massive downward pressures on wages. Further, unemployment reached a record high of 29% in 1932, with incidents of civil unrest becoming common. After 1932, an increase in wool and meat prices led to a gradual recovery.

Canada

Harshly affected by both the global economic downturn and the Dust Bowl, Canadian industrial production had fallen to only 58% of the 1929 level by 1932, the second lowest level in the world after the United States, and well behind nations such as Britain, which saw it fall only to 83% of the 1929 level. Total national income fell to 56% of the 1929 level, again worse than any nation apart from the United States. Unemployment reached 27% at the depth of the Depression in 1933. During the 1930s, Canada employed a highly restrictive immigration policy.

Chile

Chile initially felt the impact of the Great Depression in 1930, when GDP dropped 14%, mining income declined 27%, and export earnings fell 28%. By 1932, GDP had shrunk to less than half of what it had been in 1929, exacting a terrible toll in unemployment and business failures. The League of Nations labeled Chile the country hardest hit by the Great Depression because 80% of government revenue came from exports of copper and nitrates, which were in low demand.

Influenced profoundly by the Great Depression, many national leaders promoted the development of local industry in an effort to insulate the economy from future external shocks. After six years of government austerity measures, which succeeded in reestablishing Chile's creditworthiness, Chileans elected to office during the 1938–58 period a succession of center and left-of-center governments interested in promoting economic growth by means of government intervention.

Prompted in part by the devastating earthquake of 1939, the Popular Front government of Pedro Aguirre Cerda created the Production Development Corporation (Corporación de Fomento de la Producción, CORFO) to encourage with subsidies and direct investments an ambitious program of import substitution industrialization. Consequently, as in other Latin American countries, protectionism became an entrenched aspect of the Chilean economy.

France

The Depression began to affect France around 1931. France's relatively high degree of self-sufficiency meant the damage was considerably less than in nations like Germany. However, hardship and unemployment were high enough to lead to rioting and the rise of the socialist Popular Front.

Germany

Germany's Weimar Republic was hit hard by the depression, as American loans to help rebuild the German economy now stopped. Unemployment soared, especially in larger cities, and the political system veered toward extremism. The unemployment rate reached nearly 30% in 1932. Repayment of the war reparations due by Germany were suspended in 1932 following the Lausanne Conference of 1932. By that time, Germany had repaid ⅛ of the reparations. Hitler's Nazi Party came to power in January 1933.

Japan

The Great Depression did not strongly affect Japan. The Japanese economy shrank by 8% during 1929–31. However, Japan's Finance Minister Takahashi Korekiyo was the first to implement what have come to be identified as Keynesian economic policies: first, by large fiscal stimulus involving deficit spending; and second, by devaluing the currency. Takahashi used the Bank of Japan to sterilize the deficit spending and minimize resulting inflationary pressures. Econometric studies have identified the fiscal stimulus as especially effective.

The devaluation of the currency had an immediate effect. Japanese textiles began to displace British textiles in export markets. The deficit spending however, proved to be most profound. The deficit spending went into the purchase of munitions for the armed forces. By 1933, Japan was already out of the depression. By 1934, Takahashi realized that the economy was in danger of overheating, and to avoid inflation, moved to reduce the deficit spending that went towards armaments and munitions. This resulted in a strong and swift negative reaction from nationalists, especially those in the Army, culminating in his assassination in the course of the February 26 Incident. This had a chilling effect on all civilian bureaucrats in the Japanese government. From 1934, the military's dominance of the government continued to grow. Instead of reducing deficit spending, the government introduced price controls and rationing schemes that reduced, but did not eliminate inflation, which would remain a problem until the end of World War II.

The deficit spending had a transformative effect on Japan. Japan's industrial production doubled during the 1930s. Further, in 1929 the list of the largest firms in Japan was dominated by light industries, especially textile companies (many of Japan's automakers, like Toyota, have their roots in the textile industry). By 1940 light industry had been displaced by heavy industry as the largest firms inside the Japanese economy.

Latin America

[[File:Dust Bowl - Dallas, South Dakota 1936.jpg|thumb|right|Buried machinery in a barn lot; South Dakota, May 1936. The Dust Bowl on the Great Plains coincided with the Great Depression. ]] Because of high levels of U.S. investment in Latin American economies, they were severely damaged by the Depression. Within the region, Chile, Bolivia and Peru were particularly badly affected.

Netherlands

From roughly 1931–1937, the Netherlands suffered a deep and exceptionally long depression. This depression was partly caused by the after-effects of the Stock Market Crash of 1929 in the U.S., and partly by internal factors in the Netherlands. Government policy, especially the very late dropping of the Gold Standard, played a role in prolonging the depression. The Great Depression in the Netherlands led to some political instability and riots, and can be linked to the rise of the Dutch national-socialist party NSB. The depression in the Netherlands eased off somewhat at the end of 1936, when the government finally dropped the Gold Standard, but real economic stability did not return until after World War II.

South Africa

As world trade slumped, demand for South African agricultural and mineral exports fell drastically. The Carnegie Commission on Poor Whites had concluded in 1931 that nearly ⅓ of Afrikaners lived as paupers. It is believed that the social discomfort caused by the depression was a contributing factor in the 1933 split between the "gesuiwerde" (purified) and "smelter" (fusionist) factions within the National Party and the National Party's subsequent fusion with the South African Party. Eventually, the gesuiwerde faction of Daniel Malan would go on to form its own party and take over the government after the 1948 election, bringing about the apartheid system of racial segregation which would see an end only in 1994.

Soviet Union

Having removed itself from the capitalist world system both by choice and as a result of efforts of the capitalist powers to isolate it, the Great Depression had little effect on the Soviet Union. A Soviet trade agency in New York advertised 6,000 positions and received more than 100,000 applications. Its apparent immunity to the Great Depression seemed to validate the theory of Marxism and contributed to Socialist and Communist agitation in affected nations.

Sweden

Taking place in the midst of short-lived government and less-than-a-decade old Swedish democracy, events such as those surrounding Ivar Kreuger (who eventually committed suicide) remains infamous in Swedish history. Eventually, the Social Democrats under Per Albin Hansson would form its first long-lived government in 1932 based on strong interventionist and welfare state policies, monopolizing the office of Prime Minister until 1976 with the sole and short-lived exception of Axel Pehrsson-Bramstorp's "summer cabinet" in 1936. During forty years of hegemony, it was the most successful political party in the history of Western liberal democracy.

Thailand

In Thailand, then known as the kingdom of Siam, the Great Depression contributed to the end of the absolute monarchy of King Rama VII in the Siamese revolution of 1932.

United Kingdom

The effects on the northern industrial areas of Britain were immediate and devastating, as demand for traditional industrial products collapsed. By the end of 1930 unemployment had more than doubled from 1 million to 2.5 million (20% of the insured workforce), and exports had fallen in value by 50%. In 1933, 30% of Glaswegians were unemployed due to the severe decline in heavy industry. In some towns and cities in the north east, unemployment reached as high as 70% as ship production fell 90%. The National Hunger March of September–October 1932 was the largest of a series of hunger marches in Britain in the 1920s and 1930s. About 200,000 unemployed men were sent to the work camps, which continued in operation until 1939.

In the less industrial Midlands and South of England, the effects were short-lived and the later 1930s were a prosperous time. Growth in modern manufacture of electrical goods and a boom in the motor car industry was helped by a growing southern population and an expanding middle class. Agriculture also saw a boom during this period.

United States

President Herbert Hoover started numerous programs, all of which failed to reverse the downturn. In June 1930 Congress approved the Smoot–Hawley Tariff Act which raised tariffs on thousands of imported items. The intent of the Act was to encourage the purchase of American-made products by increasing the cost of imported goods, while raising revenue for the federal government and protecting farmers. However, other nations increased tariffs on American-made goods in retaliation, reducing international trade, and worsening the Depression. In 1931 Hoover urged the major banks in the country to form a consortium known as the National Credit Corporation (NCC). By 1932, unemployment had reached 23.6%, and it peaked in early 1933 at 25%, drought persisted in the agricultural heartland, businesses and families defaulted on record numbers of loans, and more than 5,000 banks had failed. Hundreds of thousands of Americans found themselves homeless, and began congregating in shanty towns - dubbed "Hoovervilles" - that began to appear across the country. In response, President Hoover and Congress approved the Federal Home Loan Bank Act, to spur new home construction, and reduce foreclosures. The final attempt of the Hoover Administration to stimulate the economy was the passage of the Emergency Relief and Construction Act (ERA) which included funds for public works programs such as dams and the creation of the Reconstruction Finance Corporation (RFC) in 1932. The RFC's initial goal was to provide government-secured loans to financial institutions, railroads and farmers. Quarter by quarter the economy went downhill, as prices, profits and employment fell, leading to the political realignment in 1932 that brought to power Franklin Delano Roosevelt.

Shortly after President Roosevelt was inaugurated in 1933, drought and erosion combined to cause the Dust Bowl, shifting hundreds of thousands of displaced persons off their farms in the Midwest. From his inauguration onward, Roosevelt argued that restructuring of the economy would be needed to prevent another depression or avoid prolonging the current one. New Deal programs sought to stimulate demand and provide work and relief for the impoverished through increased government spending and the institution of financial reforms. The Securities Act of 1933 comprehensively regulated the securities industry. This was followed by the Securities Exchange Act of 1934 which created the Securities and Exchange Commission. Though amended, key provisions of both Acts are still in force. Federal insurance of bank deposits was provided by the FDIC, and the Glass–Steagall Act. The institution of the National Recovery Administration (NRA) remains a controversial act to this day. The NRA made a number of sweeping changes to the American economy until it was deemed unconstitutional by the Supreme Court of the United States in 1935.

Early changes by the Roosevelt administration included:

Instituting regulations to fight deflationary "cut-throat competition" through the NRA.

Setting minimum prices and wages, labor standards, and competitive conditions in all industries through the NRA.

Encouraging unions that would raise wages, to increase the purchasing power of the working class.

Cutting farm production to raise prices through the Agricultural Adjustment Act and its successors.

Forcing businesses to work with government to set price codes through the NRA.

These reforms, together with several other relief and recovery measures, are called the First New Deal. Economic stimulus was attempted through a new alphabet soup of agencies set up in 1933 and 1934 and previously extant agencies such as the Reconstruction Finance Corporation. By 1935, the "Second New Deal" added Social Security (which did not start making large payouts until much later), a jobs program for the unemployed (the Works Progress Administration, WPA) and, through the National Labor Relations Board, a strong stimulus to the growth of labor unions. In 1929, federal expenditures constituted only 3% of the GDP. The national debt as a proportion of GNP rose under Hoover from 20% to 40%. Roosevelt kept it at 40% until the war began, when it soared to 128%.

By 1936, the main economic indicators had regained the levels of the late 1920s, except for unemployment, which remained high at 11%, although this was considerably lower than the 25% unemployment rate seen in 1933. In the spring of 1937, American industrial production exceeded that of 1929 and remained level until June 1937. In June 1937, the Roosevelt administration cut spending and increased taxation in an attempt to balance the federal budget. The American economy then took a sharp downturn, lasting for 13 months through most of 1938. Industrial production fell almost 30 per cent within a few months and production of durable goods fell even faster. Unemployment jumped from 14.3% in 1937 to 19.0% in 1938, rising from 5 million to more than 12 million in early 1938. Manufacturing output fell by 37% from the 1937 peak and was back to 1934 levels. Producers reduced their expenditures on durable goods, and inventories declined, but personal income was only 15% lower than it had been at the peak in 1937. As unemployment rose, consumers' expenditures declined, leading to further cutbacks in production. By May 1938 retail sales began to increase, employment improved, and industrial production turned up after June 1938. After the recovery from the Recession of 1937–1938, conservatives were able to form a bipartisan conservative coalition to stop further expansion of the New Deal and, when unemployment dropped to 2% in the early 1940s, they abolished WPA, CCC and the PWA relief programs. Social Security, however, remained in place.

Political consequences

The crisis had many political consequences, among which was the abandonment of classic economic liberal approaches, which Roosevelt replaced in the U.S. with Keynesian policies. These policies magnified the role of the federal government in the national economy. Between 1933 and 1939, federal expenditure tripled, and Roosevelt's critics charged that he was turning America into a socialist state. The Great Depression was a main factor in the implementation of social democracy and planned economies in European countries after World War II (see Marshall Plan). Although Austrian economists had challenged Keynesianism since the 1920s, it was not until the 1970s, with the influence of Milton Friedman that the Keynesian approach was politically questioned.

Literature

The Great Depression has been the subject of much writing, as authors have sought to evaluate an era that caused financial as well as emotional trauma. Perhaps the most noteworthy and famous novel written on the subject is ''The Grapes of Wrath'', published in 1939 and written by John Steinbeck, who was awarded both the Nobel Prize for literature and the Pulitzer Prize for the work. The novel focuses on a poor family of sharecroppers who are forced from their home as drought, economic hardship, and changes in the agricultural industry occur during the Great Depression. Steinbeck's ''Of Mice and Men'' is another important novel about a journey during the Great Depression. Additionally, Harper Lee's ''To Kill a Mockingbird'' is set during the Great Depression. Margaret Atwood's Booker prize-winning ''The Blind Assassin'' is likewise set in the Great Depression, centering on a privileged socialite's love affair with a Marxist revolutionary. The era spurred the resurgence of social realism, practiced by many who started their writing careers on relief programs, especially the Federal Writers' Project in the U.S.

Naming

The term "The Great Depression" is most frequently attributed to British economist Lionel Robbins, whose 1934 book ''The Great Depression'' is credited with formalizing the phrase, though Hoover is widely credited with popularizing the term, informally referring to the downturn as a depression, with such uses as "Economic depression cannot be cured by legislative action or executive pronouncement", (December 1930, Message to Congress) and "I need not recount to you that the world is passing through a great depression", (1931).

The term "depression" to refer to an economic downturn dates to the 19th century, when it was used by varied Americans and British politicians and economists. Indeed, the first major American economic crisis, the Panic of 1819, was described by then-president James Monroe as "a depression", and the most recent economic crisis, the Depression of 1920–21, had been referred to as a "depression" by then president Calvin Coolidge. However, ''financial'' crises were traditionally referred to as "panics", most recently the major Panic of 1907, and the minor Panic of 1910–1911, though the 1929 crisis was called "The Crash", and the term "panic" has since fallen out of use. At the time of the Great Depression, the term "The Great Depression" was already used to referred to the period 1873–96 (in the United Kingdom), or more narrowly 1873–79 (in the United States), which has retroactively been renamed the Long Depression.

Other "great depressions"

Other economic downturns have been called a "great depression", but none had been as widespread, or lasted for so long. Various nations have experienced brief or extended periods of economic downturns, which were referred to as "depressions", but none have had such a widespread global impact.

British economic historians used the term "great depression" to describe British conditions in the late 19th century, especially in agriculture, 1873–1896, a period now referred to as the Long Depression.

The fall of communism in the Soviet Union led to a severe economic crisis and catastrophic fall in the standards of living in the 1990s in the former Eastern Bloc, most notably, in post-Soviet states, that was almost twice as intense as the Great Depression had been in the countries of Western Europe and the U.S. in the 1930s. Even before Russia's financial crisis of 1998, Russia's GDP was half of what it had been in the early 1990s, and some populations are still poorer as of 2009 than they were in 1989, including Ukraine, Moldova, Serbia, Central Asia, and the Caucasus.

Some journalists and economists have taken to calling the late-2000s recession the "Great Recession" in allusion to the Great Depression.

See also

Aftermath of World War I

Cities in the Great Depression

Economic collapse

Entertainment during the Great Depression

Great Contraction

The Dust Bowl

References

Further reading

Ambrosius, G. and W. Hibbard, ''A Social and Economic History of Twentieth-Century Europe'' (1989)

Brown, Ian. ''The Economies of Africa and Asia in the inter-war depression'' (1989)

Davis, Joseph S., ''The World Between the Wars, 1919–39: An Economist's View'' (1974)

Eichengreen, Barry. ''Golden fetters: The gold standard and the Great Depression, 1919–1939.'' 1992.

Eichengreen, Barry, and Marc Flandreau; ''The Gold Standard in Theory and History'' 1997 online version

Feinstein. Charles H. ''The European economy between the wars'' (1997)

Friedman, Milton and Anna Jacobson Schwartz. ''A Monetary History of the United States, 1867–1960'' (1963), monetarist interpretation (heavily statistical)

Galbraith, John Kenneth, ''The Great Crash, 1929'' (1954)

Garraty, John A., ''The Great Depression: An Inquiry into the causes, course, and Consequences of the Worldwide Depression of the Nineteen-Thirties, as Seen by Contemporaries and in Light of History'' (1986)

Garraty John A. ''Unemployment in History'' (1978)

Garside, William R. ''Capitalism in crisis: international responses to the Great Depression'' (1993)

Goldston, Robert, ''The Great Depression: The United States in the Thirties'' (1968)

Haberler, Gottfried. ''The world economy, money, and the great depression 1919–1939'' (1976)

Hall Thomas E. and J. David Ferguson. ''The Great Depression: An International Disaster of Perverse Economic Policies'' (1998)

Kaiser, David E. ''Economic diplomacy and the origins of the Second World War: Germany, Britain, France and Eastern Europe, 1930–1939'' (1980)

Keynes, John Maynard. "The World's Economic Outlook", ''Atlantic'' (May 1932), online edition

Kindleberger, Charles P. ''The World in Depression, 1929–1939'' (1983)

Gernot Kohler and Emilio José Chaves (Editors) "Globalization: Critical Perspectives" Hauppauge, New York: Nova Science Publishers ISBN 1-59033-346-2. With contributions by Samir Amin, Christopher Chase Dunn, Andre Gunder Frank, Immanuel Wallerstein

League of Nations, ''World Economic Survey 1932–33'' (1934)

Madsen, Jakob B. "Trade Barriers and the Collapse of World Trade during the Great Depression", ''Southern Economic Journal'', Southern Economic Journal 2001, 67(4), 848–868 online at JSTOR.

Donald Markwell, ''John Maynard Keynes and International Relations: Economic Paths to War and Peace'', Oxford University Press (2006).

Mitchell, Broadus. ''Depression Decade: From New Era through New Deal, 1929–1941'' (1947), 462pp; thorough coverage of the U.S.. economy

Mundell, R. A. "A Reconsideration of the Twentieth Century", ''The American Economic Review'' Vol. 90, No. 3 (Jun., 2000), pp. 327–340 online version

Rothermund, Dietmar. ''The Global Impact of the Great Depression'' (1996)

Tausch, Arno, with Christian Ghymers. "From the "Washington" towards a "Vienna Consensus"? A quantitative analysis on globalization, development and global governance". Hauppauge, N.Y.: Nova Science Publishers, 2007.

Tausch, Arno and Almas Heshmati (Eds.) "Roadmap to Bangalore? Globalization, the EU's Lisbon Process and the Structures of Global Inequality" Hauppauge, N.Y.: Nova Science Publishers, 2008, with contributions by Franco Modigliani et al..

Taylor, David A. ''Soul of a People: The WPA Writers' Project Uncovers Depression America''. Hoboken, N.J.: Wiley & Sons, 2009.

Tipton, F. and R. Aldrich, ''An Economic and Social History of Europe, 1890–1939'' (1987)

:''For US specific references, please see complete listing in the Great Depression in the United States article.''

External links

Rare Color Photos from the Great Depression – slideshow by ''The Huffington Post''

EH.net, "An Overview of the Great Depression", by Randall Parker.

America in the 1930s Extensive library of projects on America in the Great Depression from American Studies at the University of Virginia

The 1930s Timeline year by year timeline of events in science and technology, politics and society, culture and international events with embedded audio and video. AS@UVA

Great Myths of the Great Depression by Lawrence Reed

Franklin D. Roosevelt Library & Museum for copyright-free photos of the period

An Age of Lost Innocence: Childhood Realities and Adult Fears in the Depression American Studies at the University of Virginia

Great Depression in the Deep South

Soul of a People documentary on Smithsonian Networks

The Great Depression at the History Channel

Category:Business cycle Category:Financial crises Category:1930s economic history

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The term financial crisis is applied broadly to a variety of situations in which some financial institutions or assets suddenly lose a large part of their value. In the 19th and early 20th centuries, many financial crises were associated with banking panics, and many recessions coincided with these panics. Other situations that are often called financial crises include stock market crashes and the bursting of other financial bubbles, currency crises, and sovereign defaults. Financial crises directly result in a loss of paper wealth; they do not directly result in changes in the real economy unless a recession or depression follows.

Many economists have offered theories about how financial crises develop and how they could be prevented. There is little consensus, however, and financial crises are still a regular occurrence around the world.

Types of financial crisis

Banking crisis

When a bank suffers a sudden rush of withdrawals by depositors, this is called a ''bank run''. Since banks lend out most of the cash they receive in deposits (see fractional-reserve banking), it is difficult for them to quickly pay back all deposits if these are suddenly demanded, so a run may leave the bank in bankruptcy, causing many depositors to lose their savings unless they are covered by deposit insurance. A situation in which bank runs are widespread is called a ''systemic banking crisis'' or just a ''banking panic''. A situation without widespread bank runs, but in which banks are reluctant to lend, because they worry that they have insufficient funds available, is often called a credit crunch. In this way, the banks become an accelerator of a financial crisis.

Examples of bank runs include the run on the Bank of the United States in 1931 and the run on Northern Rock in 2007. The collapse of Bear Stearns in 2008 has also sometimes been called a bank run, even though Bear Stearns was an investment bank rather than a commercial bank. The U.S. savings and loan crisis of the 1980s led to a credit crunch which is seen as a major factor in the U.S. recession of 1990–91.

Speculative bubbles and crashes

Economists say that a financial asset (stock, for example) exhibits a ''bubble'' when its price exceeds the present value of the future income (such as interest or dividends) that would be received by owning it to maturity. If most market participants buy the asset primarily in hopes of selling it later at a higher price, instead of buying it for the income it will generate, this could be evidence that a bubble is present. If there is a bubble, there is also a risk of a ''crash'' in asset prices: market participants will go on buying only as long as they expect others to buy, and when many decide to sell the price will fall. However, it is difficult to tell in practice whether an asset's price actually equals its fundamental value, so it is hard to detect bubbles reliably. Some economists insist that bubbles never or almost never occur.

Well-known examples of bubbles (or purported bubbles) and crashes in stock prices and other asset prices include the Dutch tulip mania, the Wall Street Crash of 1929, the Japanese property bubble of the 1980s, the crash of the dot-com bubble in 2000–2001, and the now-deflating United States housing bubble.

International financial crises

When a country that maintains a fixed exchange rate is suddenly forced to devalue its currency because of a speculative attack, this is called a ''currency crisis'' or ''balance of payments crisis''. When a country fails to pay back its sovereign debt, this is called a ''sovereign default''. While devaluation and default could both be voluntary decisions of the government, they are often perceived to be the involuntary results of a change in investor sentiment that leads to a sudden stop in capital inflows or a sudden increase in capital flight.

Several currencies that formed part of the European Exchange Rate Mechanism suffered crises in 1992–93 and were forced to devalue or withdraw from the mechanism. Another round of currency crises took place in Asia in 1997–98. Many Latin American countries defaulted on their debt in the early 1980s. The 1998 Russian financial crisis resulted in a devaluation of the ruble and default on Russian government bonds.

Wider economic crises

Negative GDP growth lasting two or more quarters is called a ''recession''. An especially prolonged recession may be called a ''depression'', while a long period of slow but not necessarily negative growth is sometimes called economic stagnation. Since these phenomena affect much more than the financial system they are not usually considered financial crises as such though there are clearly links between the two.

Some economists argue that many recessions have been caused in large part by financial crises. One important example is the Great Depression, which was preceded in many countries by bank runs and stock market crashes. The subprime mortgage crisis and the bursting of other real estate bubbles around the world also led to recession in the U.S. and a number of other countries in late 2008 and 2009.

Some economists argue that financial crises are caused by recessions instead of the other way around, and that even where a financial crisis is the initial shock that sets off a recession, other factors may be more important in prolonging the recession. In particular, Milton Friedman and Anna Schwartz argued that the initial economic decline associated with the crash of 1929 and the bank panics of the 1930s would not have turned into a prolonged depression if it had not been reinforced by monetary policy mistakes on the part of the Federal Reserve, a position supported by Ben Bernanke.

Causes and consequences of financial crises

Strategic complementarities in financial markets

It is often observed that successful investment requires each investor in a financial market to guess what other investors will do. George Soros has called this need to guess the intentions of others 'reflexivity'. Similarly, John Maynard Keynes compared financial markets to a beauty contest game in which each participant tries to predict which model ''other'' participants will consider most beautiful.

Furthermore, in many cases investors have incentives to coordinate their choices. For example, someone who thinks other investors want to buy lots of Japanese yen may expect the yen to rise in value, and therefore has an incentive to buy yen too. Likewise, a depositor in IndyMac Bank who expects other depositors to withdraw their funds may expect the bank to fail, and therefore has an incentive to withdraw too. Economists call an incentive to mimic the strategies of others ''strategic complementarity''.

It has been argued that if people or firms have a sufficiently strong incentive to do the same thing they expect others to do, then ''self-fulfilling prophecies'' may occur. For example, if investors expect the value of the yen to rise, this may cause its value to rise; if depositors expect a bank to fail this may cause it to fail. Therefore, financial crises are sometimes viewed as a vicious circle in which investors shun some institution or asset because they expect others to do so.

Leverage

''Leverage'', which means borrowing to finance investments, is frequently cited as a contributor to financial crises. When a financial institution (or an individual) only invests its own money, it can, in the very worst case, lose its own money. But when it borrows in order to invest more, it can potentially earn more from its investment, but it can also lose more than all it has. Therefore leverage magnifies the potential returns from investment, but also creates a risk of bankruptcy. Since bankruptcy means that a firm fails to honor all its promised payments to other firms, it may spread financial troubles from one firm to another (see 'Contagion' below).

The average degree of leverage in the economy often rises prior to a financial crisis. For example, borrowing to finance investment in the stock market ("margin buying") became increasingly common prior to the Wall Street Crash of 1929.

Asset-liability mismatch

Another factor believed to contribute to financial crises is ''asset-liability mismatch'', a situation in which the risks associated with an institution's debts and assets are not appropriately aligned. For example, commercial banks offer deposit accounts which can be withdrawn at any time and they use the proceeds to make long-term loans to businesses and homeowners. The mismatch between the banks' short-term liabilities (its deposits) and its long-term assets (its loans) is seen as one of the reasons bank runs occur (when depositors panic and decide to withdraw their funds more quickly than the bank can get back the proceeds of its loans). Likewise, Bear Stearns failed in 2007–08 because it was unable to renew the short-term debt it used to finance long-term investments in mortgage securities.

In an international context, many emerging market governments are unable to sell bonds denominated in their own currencies, and therefore sell bonds denominated in US dollars instead. This generates a mismatch between the currency denomination of their liabilities (their bonds) and their assets (their local tax revenues), so that they run a risk of sovereign default due to fluctuations in exchange rates.

Uncertainty and herd behavior

Many analyses of financial crises emphasize the role of investment mistakes caused by lack of knowledge or the imperfections of human reasoning. Behavioral finance studies errors in economic and quantitative reasoning. Psychologist Torbjorn K A Eliazonhas also analyzed failures of economic reasoning in his concept of 'œcopathy'.

Historians, notably Charles P. Kindleberger, have pointed out that crises often follow soon after major financial or technical innovations that present investors with new types of financial opportunities, which he called "displacements" of investors' expectations. Early examples include the South Sea Bubble and Mississippi Bubble of 1720, which occurred when the notion of investment in shares of company stock was itself new and unfamiliar, and the Crash of 1929, which followed the introduction of new electrical and transportation technologies. More recently, many financial crises followed changes in the investment environment brought about by financial deregulation, and the crash of the dot com bubble in 2001 arguably began with "irrational exuberance" about Internet technology.

Unfamiliarity with recent technical and financial innovations may help explain how investors sometimes grossly overestimate asset values. Also, if the first investors in a new class of assets (for example, stock in "dot com" companies) profit from rising asset values as other investors learn about the innovation (in our example, as others learn about the potential of the Internet), then still more others may follow their example, driving the price even higher as they rush to buy in hopes of similar profits. If such "herd behavior" causes prices to spiral up far above the true value of the assets, a crash may become inevitable. If for any reason the price briefly falls, so that investors realize that further gains are not assured, then the spiral may go into reverse, with price decreases causing a rush of sales, reinforcing the decrease in prices.

Regulatory failures

Governments have attempted to eliminate or mitigate financial crises by regulating the financial sector. One major goal of regulation is transparency: making institutions' financial situations publicly known by requiring regular reporting under standardized accounting procedures. Another goal of regulation is making sure institutions have sufficient assets to meet their contractual obligations, through reserve requirements, capital requirements, and other limits on leverage.

Some financial crises have been blamed on insufficient regulation, and have led to changes in regulation in order to avoid a repeat. For example, the Managing Director of the IMF, Dominique Strauss-Kahn, has blamed the financial crisis of 2008 on 'regulatory failure to guard against excessive risk-taking in the financial system, especially in the US'. Likewise, the New York Times singled out the deregulation of credit default swaps as a cause of the crisis.

However, excessive regulation has also been cited as a possible cause of financial crises. In particular, the Basel II Accord has been criticized for requiring banks to increase their capital when risks rise, which might cause them to decrease lending precisely when capital is scarce, potentially aggravating a financial crisis.

International regulatory convergence has been interpreted in terms of regulatory herding, deepening market herding (discussed above) and so increasing systemic risk. From this perspective, maintaining diverse regulatory regimes would be a safeguard.

Fraud

Fraud has played a role in the collapse of some financial institutions, when companies have attracted depositors with misleading claims about their investment strategies, or have embezzled the resulting income. Examples include Charles Ponzi's scam in early 20th century Boston, the collapse of the MMM investment fund in Russia in 1994, the scams that led to the Albanian Lottery Uprising of 1997, and the collapse of Madoff Investment Securities in 2008.

Many rogue traders that have caused large losses at financial institutions have been accused of acting fraudulently in order to hide their trades. Fraud in mortgage financing has also been cited as one possible cause of the 2008 subprime mortgage crisis; government officials stated on September 23, 2008 that the FBI was looking into possible fraud by mortgage financing companies Fannie Mae and Freddie Mac, Lehman Brothers, and insurer American International Group. Likewise it has been argued that many financial companies failed in the recent crisis because their managers failed to carry out their fiduciary duties.

Contagion

''Contagion'' refers to the idea that financial crises may spread from one institution to another, as when a bank run spreads from a few banks to many others, or from one country to another, as when currency crises, sovereign defaults, or stock market crashes spread across countries. When the failure of one particular financial institution threatens the stability of many other institutions, this is called ''systemic risk''.

One widely-cited example of contagion was the spread of the Thai crisis in 1997 to other countries like South Korea. However, economists often debate whether observing crises in many countries around the same time is truly caused by contagion from one market to another, or whether it is instead caused by similar underlying problems that would have affected each country individually even in the absence of international linkages.

Recessionary effects

Some financial crises have little effect outside of the financial sector, like the Wall Street crash of 1987, but other crises are believed to have played a role in decreasing growth in the rest of the economy. There are many theories why a financial crisis could have a recessionary effect on the rest of the economy. These theoretical ideas include the 'financial accelerator', 'flight to quality' and 'flight to liquidity', and the Kiyotaki-Moore model. Some 'third generation' models of currency crises explore how currency crises and banking crises together can cause recessions.

Theories of financial crises

Marxist theories

Recurrent major depressions in the world economy at the pace of 20 and 50 years (often referred to as the business cycle) have been the subject of studies since Jean Charles Léonard de Sismondi (1773–1842) provided the first theory of crisis in a critique of classical political economy's assumption of equilibrium between supply and demand. Developing an economic crisis theory become the central recurring concept throughout Karl Marx's mature work. Marx's law of the tendency for the rate of profit to fall borrowed many features of the presentation of John Stuart Mill's discussion ''Of the Tendency of Profits to a Minimum'' (Principles of Political Economy Book IV Chapter IV). The theory is a corrollary of the ''Tendency towards the Centralization of Profits''.

In a capitalist system, successfully-operating businesses return less money to their workers (in the form of wages) than the value of the goods produced by those workers (i.e. the amount of money the products are sold for). This profit first goes towards covering the initial investment in the business. In the long-run, however, when one considers the combined economic activity of all successfully-operating business, it is clear that less money (in the form of wages) is being returned to the mass of the population (the workers) than is available to them to buy all of these goods being produced. Furthermore, the expansion of businesses in the process of competing for markets leads to an abundance of goods and a general fall in their prices, further exacerbating ''the tendency for the rate of profit to fall''.

The viability of this theory depends upon two main factors: firstly, the degree to which profit is taxed by government and returned to the mass of people in the form of welfare, family benefits and health and education spending; and secondly, the proportion of the population who are workers rather than investors/business owners. Given the extraordinary capital expenditure required to enter modern economic sectors like airline transport, the military industry, or chemical production, these sectors are extremely difficult for new businesses to enter and are being concentrated in fewer and fewer hands.

Empirical and econometric research continue especially in the world systems theory and in the debate about Nikolai Kondratiev and the so-called 50-years Kondratiev waves. Major figures of world systems theory, like Andre Gunder Frank and Immanuel Wallerstein, consistently warned about the crash that the world economy is now facing. World systems scholars and Kondratiev cycle researchers always implied that Washington Consensus oriented economists never understood the dangers and perils, which leading industrial nations will be facing and are now facing at the end of the long economic cycle which began after the oil crisis of 1973.

Minsky's theory

Hyman Minsky has proposed a post-Keynesian explanation that is most applicable to a closed economy. He theorized that financial fragility is a typical feature of any capitalist economy. High fragility leads to a higher risk of a financial crisis. To facilitate his analysis, Minsky defines three approaches to financing firms may choose, according to their tolerance of risk. They are hedge finance, speculative finance, and Ponzi finance. Ponzi finance leads to the most fragility.

for hedge finance, income flows are expected to meet financial obligations in every period, including both the principal and the interest on loans.

for speculative finance, a firm must roll over debt because income flows are expected to only cover interest costs. None of the principal is paid off.

for Ponzi finance, expected income flows will not even cover interest cost, so the firm must borrow more or sell off assets simply to service its debt. The hope is that either the market value of assets or income will rise enough to pay off interest and principal.

Financial fragility levels move together with the business cycle. After a recession, firms have lost much financing and choose only hedge, the safest. As the economy grows and expected profits rise, firms tend to believe that they can allow themselves to take on speculative financing. In this case, they know that profits will not cover all the interest all the time. Firms, however, believe that profits will rise and the loans will eventually be repaid without much trouble. More loans lead to more investment, and the economy grows further. Then lenders also start believing that they will get back all the money they lend. Therefore, they are ready to lend to firms without full guarantees of success.

Lenders know that such firms will have problems repaying. Still, they believe these firms will refinance from elsewhere as their expected profits rise. This is Ponzi financing. In this way, the economy has taken on much risky credit. Now it is only a question of time before some big firm actually defaults. Lenders understand the actual risks in the economy and stop giving credit so easily. Refinancing becomes impossible for many, and more firms default. If no new money comes into the economy to allow the refinancing process, a real economic crisis begins. During the recession, firms start to hedge again, and the cycle is closed.

Proutist theories

The salient focus of Proutist theories of financial crisis is inequality and blockages in the rolling of money. These ideas were originally propounded by P.R. Sarkar. The inequality is not just seen in terms of the distribution of income but more importantly in the distribution of wealth. Ravi Batra has written extensively on the evolution in the share of wealth held by the richest one percent of the USA and its link to financial crashes. Earnings inequality in the USA peaked in 1928 and 2007, prior to market tops, which is consistent with this thesis. Another cause of a global financial crisis and depression is blockages in the circulation of money. Indeed, the recovery from the Late-2000s financial crisis has been hampered by unwillingness to lend by banks around the world.

“There are two main causes for economic depressions. First, the concentration of wealth and secondly, blockages in the rolling of money. If the capital is concentrated in the hands of a few individuals or state, the majority of people are exploited by a handful of people. As a result of this process of severe exploitation, a serious explosion takes place. This explosion is known as a depression in the economic world … The second cause: when money that is in the possession of individual or state capitalists stops rolling. Money remains inert or unutilized because those capitalists think that if the money is allowed to roll freely then their profits will decrease, even though it will bring relief to the common masses. The very psychology of the capitalists is to make profit from the rolling of money. When they discover that the investment of money does not bring profit up to their expectations, then they stop rolling the money. This keeps the money immobile or inert in various ways. As the money does not roll, there is no investment, no production, no income and hence no purchasing power, and the situation becomes so dangerous that there are few buyers to buy the commodities.” – P.R. Sarkar, 1987

Coordination games

Mathematical approaches to modeling financial crises have emphasized that there is often positive feedback between market participants' decisions (see strategic complementarity). Positive feedback implies that there may be dramatic changes in asset values in response to small changes in economic fundamentals. For example, some models of currency crises (including that of Paul Krugman) imply that a fixed exchange rate may be stable for a long period of time, but will collapse suddenly in an avalanche of currency sales in response to a sufficient deterioration of government finances or underlying economic conditions.

According to some theories, positive feedback implies that the economy can have more than one equilibrium. There may be an equilibrium in which market participants invest heavily in asset markets because they expect assets to be valuable, but there may be another equilibrium where participants flee asset markets because they expect others to flee too. This is the type of argument underlying Diamond and Dybvig's model of bank runs, in which savers withdraw their assets from the bank because they expect others to withdraw too. Likewise, in Obstfeld's model of currency crises, when economic conditions are neither too bad nor too good, there are two possible outcomes: speculators may or may not decide to attack the currency depending on what they expect other speculators to do.

Herding models and learning models

A variety of models have been developed in which asset values may spiral excessively up or down as investors learn from each other. In these models, asset purchases by a few agents encourage others to buy too, not because the true value of the asset increases when many buy (which is called "strategic complementarity"), but because investors come to believe the true asset value is high when they observe others buying.

In "herding" models, it is assumed that investors are fully rational, but only have partial information about the economy. In these models, when a few investors buy some type of asset, this reveals that they have some positive information about that asset, which increases the rational incentive of others to buy the asset too. Even though this is a fully rational decision, it may sometimes lead to mistakenly high asset values (implying, eventually, a crash) since the first investors may, by chance, have been mistaken.

In "adaptive learning" or "adaptive expectations" models, investors are assumed to be imperfectly rational, basing their reasoning only on recent experience. In such models, if the price of a given asset rises for some period of time, investors may begin to believe that its price always rises, which increases their tendency to buy and thus drives the price up further. Likewise, observing a few price decreases may give rise to a downward price spiral, so in models of this type large fluctuations in asset prices may occur. Agent-based models of financial markets often assume investors act on the basis of adaptive learning or adaptive expectations.

History

A noted survey of financial crises is ''This Time is Different: Eight Centuries of Financial Folly'' , by economists Carmen Reinhart and Kenneth Rogoff, who are regarded as among the foremost historians of financial crises. In this survey, they trace the history of financial crisis back to sovereign defaults – default on ''public'' debt, – which were the form of crisis prior to the 18th century and continue, then and now causing private bank failures; crises since the 18th century feature both public debt default and private debt default. Reinhart and Rogoff also class debasement of currency and hyperinflation as being forms of financial crisis, broadly speaking, because they lead to unilateral reduction (repudiation) of debt.

Prior to 19th century

Reinhart and Rogoff trace inflation (to reduce debt) to Dionysius of Syracuse, of the 4th century BCE, and begin their "eight centuries" in 1258; debasement of currency also occurred under the Roman empire and Byzantine empire.

Among the earliest crises Reinhart and Rogoff study is the 1340 default of England, due to setbacks in its war with France (the Hundred Years' War; see details). Further early sovereign defaults include seven defaults by imperial Spain, four under Philip II, three under his successors.

Other global and national financial mania since the 17th century include:

1637: Bursting of tulip mania^* in the Netherlands – while tulip mania is popularly reported as an example of a financial crisis, and was a speculative bubble, modern scholarship holds that its broader economic impact was limited to negligible, and that it did not precipitate a financial crisis.

1720: Bursting of South Sea Bubble (Great Britain) and Mississippi Bubble (France) – earliest of modern financial crises; in both cases the company assumed the national debt of the country (80–85% in Great Britain, 100% in France), and thereupon the bubble burst.

Crisis of 1772

Panic of 1792

Panic of 1796–1797

19th century

Danish state bankruptcy of 1813

Panic of 1819 – pervasive USA economic recession w/ bank failures; culmination of U.S.'s 1st boom-to-bust economic cycle

Panic of 1825 – pervasive British economic recession in which many British banks failed, & Bank of England nearly failed

Panic of 1837 – pervasive USA economic recession w/ bank failures; a 5 yr ''depression'' ensued

Panic of 1847 – a collapse of British financial markets associated with the end of the 1840s railroad boom.

Panic of 1857 – pervasive USA economic recession w/ bank failures

Panic of 1866 – the Overend Gurney crisis (primarily British)

Panic of 1873 – pervasive USA economic recession w/ bank failures, known then as the 5 yr ''Great Depression'' & now as the Long Depression

Panic of 1884

Panic of 1890 - general economic crisis in Brazil, Argentina and Uruguay due to the economic bubbles burst which recessive effects were felt throughout this decade

Panic of 1893 – a panic in the United States marked by the collapse of railroad overbuilding and shaky railroad financing which set off a series of bank failures

Australian banking crisis of 1893

Panic of 1896 – an acute economic depression in the United States precipitated by a drop in silver reserves and market concerns on the effects it would have on the gold standard

20th century

Panic of 1901 – limited to crashing of the New York Stock Exchange

Panic of 1907 – pervasive USA economic recession w/ bank failures

Panic of 1910–1911

1910 – Shanghai rubber stock market crisis

Wall Street Crash of 1929, followed by the Great Depression – the largest and most important economic depression in the 20th century

1973 – 1973 oil crisis – oil prices soared, causing the 1973–1974 stock market crash

Secondary banking crisis of 1973–1975 – United Kingdom

1980s – Latin American debt crisis – beginning in Mexico in 1982 with the Mexican Weekend

Bank stock crisis (Israel 1983)

1987 – Black Monday (1987) – the largest one-day percentage decline in stock market history

1989–91 – United States Savings & Loan crisis

1990 – Japanese asset price bubble collapsed

early 1990s – Scandinavian banking crisis: Swedish banking crisis, Finnish banking crisis of 1990s

1992–93 – Black Wednesday – speculative attacks on currencies in the European Exchange Rate Mechanism

1994–95 – 1994 economic crisis in Mexico – speculative attack and default on Mexican debt

1997–98 – 1997 Asian Financial Crisis – devaluations and banking crises across Asia

1998 Russian financial crisis

21st century

2000–2001 – Turkish Crises

2001 – Argentine Crises

2001 – Bursting of dot-com bubble – speculations concerning internet companies crashed

2007–10 – Financial crisis of 2007–2010, followed by the late 2000s recession and the 2010 European sovereign debt crisis

See also

Bailout

Flight-to-liquidity

Lender of last resort

Liquidity crisis

Macroprudential policy

Oil crisis

Real estate bubble

Specific:

2000s energy crisis

2007–2008 world food price crisis

''America's Great Depression''

Literature

General perspectives

Walter Bagehot (1873), ''Lombard Street: A Description of the Money Market''.

Charles P. Kindleberger and Robert Aliber (2005), ''Manias, Panics, and Crashes: A History of Financial Crises''(Palgrave Macmillan, 2005 ISBN 9781403936516).

Gernot Kohler and Emilio José Chaves (Editors) "Globalization: Critical Perspectives" Hauppauge, New York: Nova Science Publishers ISBN 1-59033-346-2. With contributions by Samir Amin, Christopher Chase Dunn, Andre Gunder Frank, Immanuel Wallerstein

Hyman P. Minsky (1986, 2008), ''Stabilizing an Unstable Economy''.

Banking crises

Franklin Allen and Douglas Gale (2000), 'Financial contagion'. ''Journal of Political Economy'' 108 (1), pp. 1–33.

Franklin Allen and Douglas Gale (2007), ''Understanding Financial Crises''.

Jean-Charles Rochet (2008), ''Why Are There So Many Banking Crises? The Politics and Policy of Bank Regulation''.

R. Glenn Hubbard, ed., (1991) ''Financial Markets and Financial Crises''.

Douglas Diamond and Philip Dybvig (1983), 'Bank runs, deposit insurance, and liquidity'. ''Journal of Political Economy'' 91 (3).

Luc Laeven and Fabian Valencia (2008), 'Systemic banking crises: a new database'. International Monetary Fund Working Paper 08/224.

Bubbles and crashes

Didier Sornette (2003), ''Why Stock Markets Crash'', Princeton University Press.

Robert J. Shiller (1999, 2006), ''Irrational Exuberance''.

Markus Brunnermeier (2008), 'Bubbles', ''New Palgrave Dictionary of Economics'', 2nd ed.

Markus K. Brunnermeier (2001), ''Asset Pricing under Asymmetric Information: Bubbles, Crashes, Technical Analysis, and Herding'', Oxford University Press. ISBN 0198296983.

International financial crises

Paul Krugman (1995), ''Currencies and Crises''.

Craig Burnside, Martin Eichenbaum, and Sergio Rebelo (2008), 'Currency crisis models', ''New Palgrave Dictionary of Economics'', 2nd ed.

Maurice Obstfeld (1996), 'Models of currency crises with self-fulfilling features'. ''European Economic Review'' 40.

Stephen Morris and Hyun Song Shin (1998), 'Unique equilibrium in a model of self-fulfilling currency attacks'. ''American Economic Review'' 88 (3).

Barry Eichengreen (2004), ''Capital Flows and Crises''.

Charles Goodhart and P. Delargy (1998), 'Financial crises: plus ça change, plus c'est la même chose'. ''International Finance'' 1 (2), pp. 261–87.

Jean Tirole (2002), ''Financial Crises, Liquidity, and the International Monetary System''.

Guillermo Calvo (2005), ''Emerging Capital Markets in Turmoil: Bad Luck or Bad Policy?''

Barry Eichengreen (2002), ''Financial Crises: And What to Do about Them''.

Charles Calomiris (1998), 'Blueprints for a new global financial architecture'.

The Great Depression and earlier banking crises

Milton Friedman and Anna Schwartz (1971), ''A Monetary History of the United States''.

Ben S. Bernanke (2000), ''Essays on the Great Depression''.

Robert F. Bruner (2007), ''The Panic of 1907. Lessons Learned from the Market's Perfect Storm''.

Recent international financial crises

Barry Eichengreen and Peter Lindert, eds., (1992), ''The International Debt Crisis in Historical Perspective''.

Lessons from the Asian financial crisis / edited by Richard Carney. New York, NY : Routledge, 2009. ISBN 9780415481908 (hardback) ISBN 0415481902 (hardback) ISBN 9780203884775 (ebook) ISBN 0203884779 (ebook)

Robertson, Justin, 1972– US-Asia economic relations : a political economy of crisis and the rise of new business actors / Justin Robertson. Abingdon, Oxon ; New York, NY : Routledge, 2008. ISBN 9780415469517 (hbk.) ISBN 9780203890523 (ebook)

2007–2010 financial crisis

Fengbo Zhang (2008): 1. Perspective on the United States Sub-prime Mortgage Crisis , 2. Accurately Forecasting Trends of the Financial Crisis , 3. Stop Arguing about Socialism versus Capitalism .

Robert J. Shiller (2008), ''The Subprime Solution: How Today's Global Financial Crisis Happened, and What to Do About It''. ISBN 0691139296.

JC Coffee, ‘What went wrong? An initial inquiry into the causes of the 2008 financial crisis’ (2009) 9(1) Journal of Corporate Law Studies 1

Fratianni M., Marchionne F. (2009), ''The Role of Banks in the Subprime Financial Crisis'' available on SSRN: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1383473

Markus Brunnermeier (2009), 'Deciphering the liquidity and credit crunch 2007–2008'. ''Journal of Economic Perspectives'' 23 (1), pp. 77–100.

Paul Krugman (2008), ''The Return of Depression Economics and the Crisis of 2008''. ISBN 0393071014.

"The myths about the economic crisis, the reformist left and economic democracy" by Takis Fotopoulos, The International Journal of Inclusive Democracy, vol 4, no 4, Oct. 2008.

Pezzuto, Ivo (2008). ''Miraculous Financial Engineering or Toxic Finance? The Genesis of the U.S. Subprime Mortgage Loans Crisis and its Consequences on the Global Financial Markets and Real Economy''. In this working paper dated October 7, 2008 Prof. Pezzuto has predicted the EU peripheral debt crisis. ISSN 1662-761X. available on SSRN: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1332784

Nitasha Kaul (2009), "The economics of turning people into things". ''Open Democracy'' 20 April, Available online http://www.opendemocracy.net/article/the-economics-of-turning-people-into-things

Funnell, Warwick N. In government we trust : market failure and the delusions of privatisation / Warwick Funnell, Robert Jupe and Jane Andrew. Sydney : University of New South Wales Press, 2009. ISBN 9780868409665 (pbk.)

Read, Colin, 1959– Global financial meltdown : how we can avoid the next economic crisis / Colin Read. New York : Palgrave Macmillan, c2009. ISBN 9780230222182

The American housing crisis / Susan Hunnicutt, book editor. Farmington Hills, Michigan : Greenhaven Press, c2009. ISBN 9780737743104 (hbk.) ISBN 9780737743098 (pbk.)

United States. Congress. House. Committee on the Judiciary. Subcommittee on Commercial and Administrative Law. Working families in financial crisis : medical debt and bankruptcy : hearing before the Subcommittee on Commercial and Administrative Law of the Committee on the Judiciary, House of Representatives, One Hundred Tenth Congress, first session, July 17, 2007. Washington : U.S. G.P.O. : For sale by the Supt. of Docs., U.S. G.P.O., 2008. 277 p. : ISBN 9780160813764 ISBN 016081376X http://purl.access.gpo.gov/GPO/LPS99198

Davis Polk Financial Crisis Manual

Kolb, Robert (2010). “Lessons from the Financial Crisis: Causes, Consequences, and Our Economic Future” (Robert W. Kolb Series), Publisher: Wiley ISBN 978-0470561775

Dwyer, Gerald P. and Paula Tkac. 2009. "The Financial Crisis of 2008 in Fixed-income Markets" Journal of International Money and Finance 28 (December 2009), 1293–1316, available in working paper version at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1464891.

Paolo Tasca and Stefano Battiston, 2011. "Diversification and Financial Stability" CCSS 11-001 (30 April 2011), available in working paper version at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1878596.

Notes

External links

NYU Stern on Finance – Blog explaining the Financial Crisis (follow link to research blog run by Stern faculty members which deals with financial economics)

Crisis Talk - World Bank blog offering information on the unfolding crisis

Financial Crises: Lessons from History. BBC.

Rescuing our Jobs and Savings: What G7/8 Leaders Can Do – policy proposals from leading economists, sponsored by Centre for Economic Policy Research at VOXEU.org.

Dossier on 2008 financial crisis by Radio France International's English-language service

OECD response to the economic crisis. OECD.

Academic paper about the effect of the financial crisis on the venture capital industry .

The Global Financial Crisis, Developing Countries and Policy Responses Institute of Development Studies (IDS) In Focus Policy Briefing 7.1 March 2009

Davis Polk Financial Crisis Manual

Category:Crisis Category:Economic problems

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This is a list of people whose names in English are commonly appended with the phrase "''the Great''", or who were called that or an equivalent phrase in their own language. Other languages have their own suffixes such as ''e Bozorg'' and ''e azam'' in Persian and Urdu respectively.

In Persia, the title "the Great" at first seems to be a colloquial version of the Old Persian title "Great King". This title was first used by the conqueror Cyrus II of Persia.

The Persian title was inherited by Alexander III of Macedon (336–323 BC) when he conquered the Persian Empire, and the epithet "Great" eventually became personally associated with him. The first reference (in a comedy by Plautus) assumes that everyone knew who "Alexander the Great" was; however, there is no earlier evidence that Alexander III of Macedon was called "''the Great''".

The early Seleucid kings, who succeeded Alexander in Persia, used "Great King" in local documents, but the title was most notably used for Antiochus the Great (223–187 BC).

Later rulers and commanders began to use the epithet "the Great" as a personal name, like the Roman general Pompey. Others received the surname retrospectively, like the Carthaginian Hanno and the Indian emperor Ashoka the Great. Once the surname gained currency, it was also used as an honorific surname for people without political careers, like the philosopher Albert the Great.

As there are no objective criteria for "greatness", the persistence of later generations in using the designation greatly varies. For example, Louis XIV of France was often referred to as "The Great" in his lifetime but is rarely called such nowadays, while Frederick II of Prussia is still called "The Great". A later Hohenzollern - Wilhelm I - was often called "The Great" in the time of his grandson Wilhelm II, but rarely later.

Rulers

Abbas I of Persia (1571-1629), Shah of Iran

Akbar (1542-1605), ruler of the Mughal Empire of South Asia, mainly India

Alain I of Albret (1440-1522), French aristocrat

Alexander the Great (356-323 BC), King of Macedonia, Persia, Greece, Egypt, and all of Mesopotamia

Alexander I of Georgia (1386–1446), King of Georgia

Alfonso III of León (c. 848-910), King of León, Galicia and Asturias

Alfred the Great (848/849-899), King of Wessex

Antiochus III the Great (c. 241–187 BC), ruler of the Seleucid Empire

Ashoka the Great (c. 304–232 BC), Indian emperor of the Maurya dynasty

Ashot I of Iberia “the Great”(died 826/830), presiding prince of Iberia (modern Georgia),

Askia Mohammad I (c. 1442–1538), ruler of the Songhai Empire

Bhumibol Adulyadej (born 1927), King of Thailand

Bolesław I Chrobry (967-1025), sometimes called "the Great", first King of Poland

Bruno the Great (925–965), Archbishop of Cologne and Duke of Lotharingia (also listed in the following section)

Buddha Yodfa Chulaloke (1736-1809), founder and ruler of the Rattanakosin Kingdom (in what is now Thailand)

Cnut the Great (c. 985 or 995-1035), King of Denmark, England, Norway and parts of Sweden

Casimir III the Great (1310-1370), King of Poland

Catherine the Great (1729-1796), Empress of Russian

Chandragupta II (reigned 375-413/415), also known as Vikramaditya, ruler of the Gupta empire in India

Charlemagne (died 814), King of the Franks and Emperor of the Romans

Chulalongkorn (1853-1910), King of Siam (now Thailand)

Chlothar II (584-629), King of Neustria and King of the Franks

Conrad, Margrave of Meissen (c. 1097-1157), Margrave of Meissen

Constantine I (c. 272-337), Roman Emperor

Cyrus the Great (c. 600 BC or 576 BC–530 BC), founder and ruler of the Persian or Achaemenid Empire

Darius the Great (550 – 486 BC), third ruler of the Persian Empire

Devapala (died 850), ruler of the Pala Empire in the Indian subcontinent

Dionysius I, Greek tyrant of Syracuse

Ferdinand I of León and Castile (c. 1015–1065), King of León and Count of Castile

Frederick the Great (1712-1786), King of Prussia

Genghis Khan (1162?-1227), founder and Great Khan of the Mongol Empire

Gero (c. 900–965), ruler of Marca Geronis, a very large march in Europe

Gustavus Adolphus of Sweden (1594-1632), King of Sweden, founder of the Swedish Empire, and noted military leader

Gwanggaeto the Great, King of Goguryeo, one of the Three Kingdoms of Korea

Hanno the Great, the name of three leaders of Carthage, in the 4th, 3rd, and 2nd centuries BC

Henry I, Duke of Burgundy (946–1002)

Henry IV of France (1553-1610), King of France and King of Navarre

Herod the Great (73/74 BC-4 BC), King of Judea

Hugh the Great (898-956), Duke of the Franks and Count of Paris

Hugh Magnus of France (1007-1025), co-King of France

Hugh I, Count of Vermandois (1057-1101)

Humphrey I de Bohun (died c. 1123), Anglo-Norman aristocrat

Ivan III of Russia (1440-1505), Tsar of Russia

John I of Portugal (1358-1433), King of Portugal and the Algarve

John II of Aragon (1398-1479), King of Aragon and, through his wife, King of Navarre

Justinian I (483-565), Byzantine Emperor

Kamehameha I (c. 1758-1819), first King of Hawai'i

Kanishka (died c. 127), ruler of the Kushan Empire in Central Asia and parts of India

Kvirike III of Kakheti (1010-1029), King of Kakheti in eastern Georgia

Kublai Khan (1215-1294), Mongol ruler in the 13th century and Emperor of China; founder of the Yuan Dynasty

Llywelyn the Great (c. 1172–1240), Prince of Gwynedd and de facto ruler of most of Wales

Louis I of Hungary (1326-1382), King of Hungary, Croatia and Poland

Mangrai the Great (1238-1317), Lanna, northern Thailand

Emperor Meiji (1852-1912), Emperor of Japan

Mircea I of Wallachia (1355–1418)

Mithridates II of Parthia (died 88 BC), ruler of the Parthian Empire (in present day Iran)

Mithridates VI of Pontus (134 BC–63 BC), ruler of Pontus and the Bosporan Kingdom

Mstislav I of Kiev (1076-1132), Grand Prince of Kievan Rus

Narai (1633-1688), King of Ayutthaya (in what is now modern Thailand)

Naresuan (1555-1605), King of Ayutthaya

Odo the Great (died c. 735), Duke of Aquitaine

Otto I, Holy Roman Emperor (912-973)

K'inich Janaab' Pakal (603-683), ruler of the Mayan city-state of Palenque

Parakramabahu I of Polonnaruwa (1123–1186), King of Sri Lanka

Peter Krešimir IV of Croatia (died 1075), King of Croatia

Peter the Great (1672-1725), Tsar of Russia

Peter III of Aragon (1239-1285), King of Aragon and King of Sicily

Pompey (106 BC-48 BC), military and political leader of the late Roman Republic, rival of Julius Caesar

Radama I (1793–1828), first king of greater Madagascar

Raja Raja Chola I (c. 947-1014), Indian emperor of the Cholas.

Rajendra Chola I (reigned 1014-1044), Tamil King of India

Ramesses II (reigned 1279 BC – 1213 BC), considered the greatest pharaoh of Ancient Egypt

Ram Khamhaeng (around 1237 to 1247-1298), King of Sukhothai (in present day Thailand)

Ramon Berenguer III, Count of Barcelona (1082-1131), also Count of Provence and various other counties

Rhodri the Great (c. 820–878), King of Gwynedd (in present day Wales)

Roman the Great (after 1160-1205), Grand Prince of Kiev

Samudragupta (c. 335–375), ruler of the Gupta empire in the Indian subcontinent

Sancho III of Navarre (c. 992-1035), King of Kingdom of Navarre

Sargon of Akkad (died c. 2215 BC), ruler of the Akkadian Empire

Sejong the Great (1397-1450), Korean king

Shapur II (309-379), king of the Sassanid Empire, Persia

Simeon I of Bulgaria (864/865-927), ruler of the First Bulgarian Empire

Stephen III of Moldavia (1433-1504), Prince of Moldavia (Romania)

Stephen Uroš IV Dušan of Serbia (c. 1308-1355), King of Serbia and Emperor of the Serbs and Greeks

Taksin (1734-1782), King of the Thonburi Kingdom (Thailand)

Timur (1336-1405), better known as Tamerlane, founder of the Timurid Dynasty

Theobald II, Count of Champagne (1090–1151), Count of Blois and of Chartres as Theobald IV, Count of Champagne and of Brie

Theodoric the Great (454-526), King of the Ostrogoths, regent of the Visigoths and a viceroy of the Byzantine Empire

Theodosius I (347-395), Roman emperor

Tigranes the Great (140-55 BC), Emperor of Armenia

Tiridates III of Armenia (285-339), King of Armenia

Umar (c. 586 to 590–644), second caliph of the Muslim Empire

Valdemar I of Denmark (1131-1182), King of Denmark

Valentinian I (364-375), Roman Emperor

Vladimir I of Kiev (c. 958-1015), ruler of Kievan Rus

Vytautas (c. 1350-1430), archduke of the Lithuanian Grand Duchy

William I, Count of Burgundy (1020-1087), Count of Burgandy and Mâcon

William V, Duke of Aquitaine (969-1030), also Count of Poitou

Xerxes I (519-465 BC), King of Kings of the Achaemenid Empire (Persia)

Yu the Great (c. 2200-2100 BC), legendary ruler in ancient China

Religious figures

Abraham the Great of Kashkar (ca. 492-586), monk and saint of the Assyrian Church of the East

Abraham Kidunaia (died c. 366, hermit, priest, and Christian saint of Mesopotamia

Albertus Magnus (1193/1206–1280), medieval German philosopher and theologian

Anthony the Great (c. 251–356), early Christian saint of Egypt

Babai the Great (c. 551–628), Assyrian church leader

Basil of Caesarea (330-379), Greek bishop and theologian

Bruno the Great (925–965), Archbishop of Cologne and Duke of Lotharingia (also listed in the previous section)

Euthymius the Great (377-473), abbot and Roman Catholic and Eastern Orthodox saint

Gertrude the Great (1256-c. 1302), German Benedictine, mystic, theologian and Roman Catholic saint

Pope Gregory I (c. 540-604)

Hiyya the Great, 3rd-century rabbi, Palestine

Pope John Paul II (1920-2005)

Pope Leo I (c. 391 or 400-461)

Macarius of Egypt (c. 300-391), Egyptian hermit

Pope Nicholas I (c. 800-867)

Photius I of Constantinople (c. 810–c. 893), Eastern Orthodox saint and Patriarch of Constantinople

William of Maleval (died 1157), founder of the Catholic congregation of Williamites

Other

Beli Mawr, a figure in medieval Welsh literature and genealogies

Emmy the Great, folk singer

Matteo Rosso the Great, Roman politician and father of Pope Nicholas III

Prokop the Great, Hussite general in Bohemia

See also

Epithet

List of monarchs by nickname

List of nicknames of European Royalty and Nobility: G-I

James, son of Zebedee, also known as James the Greater, one of the twelve apostles of Jesus

Ajax (mythology), called Ajax the Greater

Notes

Category:Monarchs Great, List of people known as The Category:Greatest Nationals Category:Epithets

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Alan Leslie "Fluff" Freeman, MBE (6 July 1927 – 27 November 2006) was a British disc jockey and radio personality in the United Kingdom for 40 years.

Career

Born and educated in Melbourne, Victoria, Australia, Freeman worked as an assistant paymaster/accountant for one of Australia's largest timber companies after leaving school.

Freeman originally wanted to be an opera singer, but decided his voice was not strong enough. In 1952 he was invited to audition as a radio announcer and commenced working for 7LA in Tasmania, known as the teenager's station. Freeman's duties included that of continuity announcer; presenter of musical programmes incorporating opera, ballet and classical music; DJ for the top 100; news reader; quiz master and commercials reader.

After moving to radio station 3KZ in Melbourne, in 1957 he took an agreed nine-month trip around the world with the promise to return to Melbourne by January 1958. He arrived in London, England, and on deciding to stay wrote numerous letters of delay, and later apology, to his former employer.

Freeman started his British career as a summer relief disc jockey on Radio Luxembourg, and continued to present late-evening programmes on the station until the early 1970s.

In 1960 he moved to the BBC Light Programme as presenter of the ''Records Around Five'' show, which was introduced by his signature tune, "At The Sign of the Swinging Cymbal", written by Brian Fahey. In September 1961 he introduced ''Pick of the Pops'' as part of a Saturday evening show ''Trad Tavern''. ''Pick Of The Pops'' became a permanent show in its own right in 1962, with Freeman presenting it until 1972 continuing with his 'Swinging Cymbal' signature tune. At the same time, he was one of the original team of presenters of BBC TV's ''Top of the Pops'', a regular member of the ''Juke Box Jury'' panel, and had a brief stint as compere of the lunchtime pop music show ''Go Man Go'' on the BBC Light Programme in 1963.

In April 1972 Freeman joined the daily presenters on Radio 1, taking over the 3-5 pm show from Terry Wogan- he used "Soul Bossa Nova" by Quincy Jones as his theme. This continued until 1 June 1973. During this time he spotlighted youth clubs and young people, and became Vice-President of the London Association of Youth Clubs. During the 1970s he also presented the Radio 1 series ''Quiz Kid'' on Sunday evenings, which was recorded at Youth and Boys Clubs all over the country; while on Saturday afternoons he presented his ''Rock Show'', featuring heavy and progressive rock and a rundown of the current album chart, from the beginning of July 1973 until the end of August 1978.

He left the BBC to work for Capital Radio from 1979 to 1988, presenting the Top 40 of the 70s, on 31 December 1979. Later reviving ''Pick of the Pops'' on 9 January 1982 (now called ''Pick of the Pops Take Two'' and combining the current Top 15 with an earlier chart) and ''The Rock Show'' previous to that on 7 January 1980. He returned to the BBC and Radio 1 in January 1989 to revive ''The Rock Show'' and ''Pick of the Pops''. This run of ''Pick of the Pops'' ended on 27 December 1992, but he continued to host ''The Rock Show'' until 23 October 1993, when he, with other long-serving DJs, left the station as it was revamped by controller Matthew Bannister.

In December 1993 he presented the ''Alternative Chart Show'' on a trial one-off RSL broadcast by XFM in London. He then hosted ''Pick of the Pops Take Three'' on Capital Gold from April 1994 until January 1997. In 1996 and 1997 he also hosted ''The Rock Show'' on Virgin Radio, and he was heard presenting one-off shows on Classic FM.

He returned to the BBC on BBC Radio 2, taking ''Pick of the Pops'' back to its home from 1997 until 2000. A lifetime love of classical music and particularly opera was developed in the show ''Their Greatest Bits''. But as arthritis got the better of his hands, he handed ''Pick of the Pops'' over to ex-Radio Trent DJ Dale Winton.

He was appointed Member of the Order of the British Empire (MBE) in 1998. In May 2000 he was presented with a Lifetime Achievement award at the Sony Radio Academy Awards.

He died on 27 November 2006 in Brinsworth House, Twickenham, South West London after a short illness. He was 79. His funeral took place on 7 December 2006 at South West Middlesex Crematorium and was attended by DJs Paul Gambaccini, Dave Lee Travis, Nicky Campbell, and his Radio One Top 40 successors Wes Butters, Simon Bates and Richard Skinner.

Personal life

In March 1994 Freeman revealed on breakfast television that he had become celibate in 1981, but had been bisexual. He was memorably described by Graham Chapman as being "...keen on motor bikes and leather and men".

In later years, Freeman suffered from arthritis and asthma from a 60-a-day smoking habit, and he used a Zimmer Frame or motorised wheelchair. He lived at Brinsworth House, a retirement home for actors and performers run by the Entertainment Artistes' Benevolent Fund, until his death.

Style

Freeman's distinctive presenting style included the frequent use of classical music stings between records, and memorable catchphrases such as 'Greetings, pop pickers' (originally 'Hi there, pop pickers!'), 'Greetings, music lovers' (an adaptation of the above for his rock shows), 'Alright? Stay bright!' and 'Not 'arf!'. His style has been parodied, and he was the model for Harry Enfield's character Dave Nice, although he contributed to the satire himself in good grace by appearing on Enfield's show (and Enfield himself praised Freeman in Simon Garfield's book on Radio 1, ''The Nation's Favourite'', by categorising him along with John Peel as "DJs who loved music" as opposed to "DJs who loved the sound of their own voices, like Dave Lee Travis"). For all Freeman's supposed clichés and archetypes in his broadcasting style, he has been regarded as original by fellow broadcasters - when he appeared on John Peel's ''This Is Your Life'', Peel said: "Fluff is the greatest out-and-out disc jockey of them all".

Trivia

Other BBC presenters gave him his nickname "Fluff" early in his career, because in Australia he once turned up for his show in a jumper which had attracted balls of white fluff in a wash.

During the 1960s, Freeman briefly attempted acting, notably in ''Dr. Terror's House of Horrors'', but his limitations were apparent, and in other films he has played himself or a similar character (e.g. Absolute Beginners). He also played God (albeit a God who sat at a mixing desk and said "Alright?") in two episodes of ''The Young Ones'' in 1984.

In 1962 he recorded a dance single, "Madison Time". Released by Decca Records, it was reportedly one of the label's worst-ever sellers and is now, predictably, a rarity and collector's item.

He is impersonated by pop group I, Ludicrous in their song "My Favourite Records".

He introduced the rock band Led Zeppelin to the audience at Earls Court on the 25 May 1975

Robin Gibb (of the Bee Gees) released a single called "Alan Freeman Days" in May 2008.

According to Black Sabbath drummer Bill Ward, the tune "Fluff" from their fifth album, ''Sabbath Bloody Sabbath'' was dedicated to Freeman.

References

External links

Alan Freeman at the Internet Movie Database

Bio and citation at the Radio Academy

Bio at RadioRewind.co.uk including a rare interview with Nathan Morley

Obituaries

Broadsheet

*Times obituary - The Times

*Guardian obituary - The Guardian

*Telegraph obituary - Daily Telegraph

*The Independent - The Independent

Tabloid

*Daily Mail obituary - Daily Mail

*Mirror obituary - The Daily Mirror

*''The Sun'' obituary - ''The Sun''

Other

*- Alan Freeman Tribute

Category:1927 births Category:2006 deaths Category:Australian expatriates in the United Kingdom Category:Australian emigrants to the United Kingdom Category:Bisexual people Category:British radio DJs Category:British radio personalities Category:Classical music radio personnel Category:British radio people Category:Members of the Order of the British Empire Category:LGBT people from England Category:LGBT people from Australia Category:LGBT radio personalities Category:Radio personalities from Melbourne Category:Sony Radio Academy Award winners Category:Top of the Pops Category:Virgin Radio (UK)

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