The Crisis of 1873-1896: A Myth or a Reality?

The crisis of 1873-1896 is the first general crisis of capitalism. This crisis, which was named as “Great Depression” by contemporaries, manifested itself with a persisting profitability problem arising from secular downward trend in prices and pessimistic investment conditions. However, during the crisis period, volume of production and foreign trade continued to increase with decelerating growth rate. Therefore, some commentators criticised the label of “great depression” in defining this period. However, there was a profitability problem during that period 1873 to 1896. To overcome this profitability problem associated with crisis, some mechanisms were implemented. Among them, protective tariffs, creating monopolies such as trusts and cartels, increasing productivity by developing more efficient management techniques, capital export for controlling raw material resources and markets and geographical division of world among great powers could be mentioned. The crisis of 1873-1896 had extensively affected the British economy which was the hegemonic power of the world economy at that time. In this respect, the outcomes of the crisis were considered in the context of British economy. In this framework, the extent of the crisis was discussed in terms of indicators such as prices, industrial and agricultural production, investments, wages, unemployment and foreign trade of that country.