10 Fascinating Economic Collapses Through History
by
<http://listverse.com/2012/12/26/10-fascinating-economic-collapses-through-history/http://listverse.com/authors/?Richard
Urban>Richard Urban, December 26, 2012
http://www.911forum.org.uk/board/viewtopic.php?p=163407#163407
http://listverse.com/2012/12/26/10-fascinating-economic-collapses-through-history/
Since 2008 the United States has been in economic trouble. The
current debate over the "fiscal cliff" has placed this economic
distress and its origins back on the public radar. In retrospect, the
origins of the housing bubble and Wall Street meltdown seem
inevitable. There have been numerous financial meltdowns in the past
that have their origins in even more bizarre and obviously flawed
schemes. From ancient times to the present we seem to fall for
economic schemes and the disasters that often result. This list takes
a look, in chronological order, at some of the most intriguing
economic collapses of history. We can feel a little better about our
current situation as we consider the mistakes of our ancestors.
10
Diocletian Destroys Rome's Economy
Fourth Century AD
The Roman Empire was in decay when Diocletian became emperor in the
fourth century. The economy was in disarray from a series of costly
wars and previous emperor's building projects that left Rome near
collapse. With Rome's currency worthless, Diocletian introduced a new
system of coinage. At many times in history countries have risked
economic turmoil to artificially increase the value of their
currency. The issue with Diocletian's new money, however, was that it
did the opposite. There was more gold in the coins than the face
value stamped on them; the denomination on the coin lowered its
value. In response to this insane idea most citizens melted the coins
to make use of their higher scrap value. The result was rapid
inflation within the Empire. Diocletian increased problems by placing
a price ceiling on most goods to counter the inflation.
Diocletian's policies caused so much confusion that many Roman
territories simply refused to follow the emperor's edicts. As matters
worsened, Diocletian became the first Roman emperor to voluntarily
leave the throne. His highly flawed economic policies weakened the
cohesion of the empire and the status of emperor in addition to
further damaging Rome's ailing economy.
9
Pazzi Conspiracy and Medici Banking Collapse
1470s
The Medici family was one of the leading families of Renaissance
Italy. They controlled the politics of Florence; served as popes and
assisted the rise of Leonardo DaVinci. The source of the family's
wealth was rooted in the banking worldwide banking system they had
founded in the late fourteenth century. Under the leadership of
Cosimo de' Medici, the bank rapidly expanded and found itself
overstretched by the time of his death. At the same time as the
Medici were stretched to the limit the Pazzi and Salviaiti banking
families attempted to replace them as rulers of Florence. On April
26, 1478, two members of the Medici family were assaulted at Mass in
Florence. Despite the failure of the plot, the Medici were unable to
reassert complete control. The Medici bank was characterized by its
dangerously low cash reserves, usually around 10% of assets.
As the
<http://listverse.com/2012/12/26/10-fascinating-economic-collapses-through-history/http://en.wikipedia.org/wiki/Pazzi#The_Conspiracy>Pazzi
Conspiracy and various wars reduced the competitiveness of the bank,
it approached insolvency. As a result Lorenzo de' Medici taxed the
citizens of Florence in the name of military defense to a near
tyrannical level. Finally, in 1494 the bank collapsed due to this
corruption, faulty investments, and incompetent management. After the
bank collapsed, millions were lost from the Florentine economy and it
took years for a complete recovery. Since the company had also
defrauded the account of Charles VIII of France that paid for dowries
the crisis had worldwide implications. ??
8
Spanish Inflation
1600s
Following Columbus's discovery of the New World, Spain began the
search for gold in the New World. For decades the rich resources of
the Americas made Spain one of the wealthiest nations on earth and
allowed it to create a great empire. By the second half of the
sixteenth century, however, the Spanish had increased mining to
unprecedented levels. Rather counter intuitively this influx of
wealth nearly destroyed Spain. The high levels of freshly minted gold
and silver in Europe drove down the value of money and lead to
hyper-inflation across Europe.
Combined with the wars that Spain fought to protect its empire, the
inflation damaged the economy beyond repair. Instead of reaping great
wealth, Spain ended up defaulting on its debt several times. This
economic turmoil pushed the Spanish Empire into decline and allowed
the British to begin creating an empire of their own.
7
Bermuda's Hog Money
1616-1624
Several powerful trading companies drove the spread of the British
Empire in the seventeenth and eighteenth centuries. Bermuda was
colonized with the help of several of these companies. Once the
colony was established the colonists were put to work making these
companies money. The workers were paid in company credit instead of
wages, similar to coal companies in the nineteenth century. When
Daniel Tucker was appointed governor of Bermuda he abandoned the
credit practiced and introduced his own coins minted from brass.
With the monetary system only worth what Tucker declared it to be,
the colonists overthrew the governor. Complete economic ruin was only
prevented by the fact that Bermuda was an island and isolated. With
no monetary system, the colonists resorted to using tobacco as a form
of currency.
6
Tipper and See-Saw
1621
When countries rapidly increase their debt to finance wars the result
is never good. In the seventeenth century there was no way to insure
effective taxation so the states of the Holy Roman Empire began to
mint money to raise revenue for the Thirty Years Wars. To do this the
empire removed coinage from circulation, melted them down and mixed
them with lower value metals. The name of the crisis refers to the
scales used to weigh the money before it was melted down. These
debased coins were then spent in foreign territories, to limit the
economic damage that might occur to the empire.
Eventually, the debased coins returned to territories of the Holy
Roman Empire in the form of duties and taxes. As the public became
aware of the practice there were riots, soldiers refused to accept
the debased coinage as pay, and seditious pamphlets were distributed.
The money eventually became so worthless children played with the
coins in the streets. The resulting rise in prices also crippled the
economies of many states within the empire.
5
Tulipmania Hits the Netherlands
1636-1637
Perhaps the most bizarre economic crisis on this list, Tulipmania
holds the distinction of being the first recorded economic bubble.
When the tulip flower was introduced to the Netherlands in the early
1600s it became instantly popular. In the first true "consumer craze"
Dutch citizens simply had to have the latest tulip. Since tulips only
grow at certain times of the year, the Dutch set up a future's
market. When tulips were not available consumers could purchase the
rights to tulip bulbs when they became available.
Soon speculators began playing the future's market and drove the bulb
prices to shocking levels. At the height of the bubble some bulbs
sold for the equivalent of an average worker's ten years salary. The
bubble burst in 1637 and the value of tulip bulbs fell back to
previous levels. Just like the stock market crash in 2008, investors
saw their money erased. The bizarre flower driven financial collapse
erased many fortunes and left many investors penniless.
4
South Seas Bubble
1719-1720
The South Seas Bubble shows what can happen when speculators ignore
several important limitations on their schemes. In the early
eighteenth century, the British economy was suffering from government
overspending. As a result, British investors were intrigued by the
stories of plentiful gold in the Americas. To tap these riches, the
South Seas Company was formed and the British monarchy granted it
exclusive trading rights to South America. Despite the fact that
Spain owned South America, making the British edict completely
useless, investors flocked to the company.
The company, despite its obvious limitations, attracted so many
investors that nearly a year's worth of Britain's GDP was invested.
The stock skyrocketed on the British exchange. The company even
investigated investing in the British national debt. Confidence was
so high the Chancellor of the Exchequer had an investment account
worth several hundred thousand pounds with the company. At the end of
1720, the South Seas Company stock was worth roughly 37 million
pounds. Of course Spain refused to allow British adventures to remove
their gold and the stock crashed. The resulting shockwave crippled
the English economy and left many investors completely penniless. An
entire generation of wealth was erased from the British economy.
3
Mississippi Bubble
1716-1720
Britain was not the only country to catch the speculation bug in the
first quarter of the eighteenth century. When Louis XIV died, the
French economy was completely exhausted from financing the wars that
the Sun King had waged across Europe. The treasurer didn't even have
enough gold to mint new coins. John Law, a French government
economist, proposed creating a bank that would print paper money. The
government circulated so much paper money that it was valued at five
times the wealth of France.
To deal with the issue before it destroyed the French economy, Law
informed the French citizenry that the new colony of Louisiana was
filled with gold and an excellent investment opportunity. He hoped
that the investment would allow government to obtain more actual
wealth to solve the problem of the worthless notes. When the promised
mountains of gold failed to appear from Louisiana, the bubble burst
in 1720 and shares were devalued. What followed was a bank run when
the value of Law's currency was halved and devastating inflation that
crippled the French economy.
2
Confederacy Destroys its Economy
1860
During the US Civil War, a major goal of the Confederate army was to
secure diplomatic recognition from European nations. Since cotton was
essential to the economies of England, France, and other nations,
they cut off cotton exports to force recognition. The Union blockaded
Confederate ports but was never able to efficiently limit Confederate
blockade running until late in the war.
Combined with this Union blockade the decision to cut off cotton
exports virtually extinguished Confederate trade revenues. The two
factors lead to rampant inflation that made Confederate currency
virtually worthless. When the Civil War ended, the economy of the
South was in complete ruins.
1
Railroads and Silver Cripple America
1893
The Panic of 1893 was the worst economic crisis in America until the
Great Depression. As railroads became the dominant mode of
transportation in the United States, speculators invested heavily in
the technology. Many railroads simply overextended themselves and
could not cover their expenses with revenues. In 1893, the giant
Philadelphia and Reading Railroad collapsed under its own weight and
declared bankruptcy.
At the same time as the railroads began to feel the damage of their
mistakes, the silver market was rocked. The 1880s witnessed the
discovery of several silver mines and the resulting production drove
the value of silver down. The US Government sought to deal with the
crisis by buying silver in attempt to artificially increase its
value. Once the government stopped purchasing silver the crisis
reached its full height. The resulting depression lasted until 1900
and witnessed the collapse of 16,000 businesses and 17%-19%
unemployment at its peak.
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Please consider seriously the reason why these elite institutions are not discussed in the mainstream press despite the immense financial and political power they wield?
There are sick and evil occultists running the Western World. They are power mad lunatics like something from a kids cartoon with their fingers on the nuclear button! Armageddon is closer than you thought. Only God can save our souls from their clutches, at least that's my considered opinion - Tony
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