I was reading an entry on a blog called Restaurant-ing through history today, and noticed that an article about restaurants during the 1870s referred to that period as a depression. Of course, the United States and the global economy have gone through many contractions, but it was comforting to know that there have been worse periods, economically, than the present. A wikipedia.org article sheds some light on what was at the time called the "Great Depression".
To summarize the wikipedia article, the depression followed on the heels of what is called the Second Industrial Revolution, which saw the development of new technologies such as railroads, the Bessemer steel-making process, and the telegraph. A bubble had been created following France's 1870 defeat in the Franco-Prussian War, which burst when the Vienna Stock Exchange collapsed on May 8, 1873. In the United States, the Panic of 1873 came in September, when a large banking firm collapsed over the failure of a bond issue for a railway company.
One policy response by many governments to this crisis was implementing protective tariffs. This is a measure that has been murmured even today, as the United States government seeks new trade agreements with manufacturing countries such as South Korea. The struggle for markets between many industrialized nations also helped spur on the imperialism and colonialism of the late 19th century.
So what can this period tell us about the solution, or nature, of our current crisis? Unsurprisingly, economists are divided on what conclusions to draw about the causes of the depression, or even when it ended. A few students of the depression say it may have ended as soon as 1875. Other scholars have said that a return to the gold standard for US monetary policy helped end the depression by stabilizing currency, and thus capital.
Economics is one of those arcane sciences that allows for different interpretations of the observable data generated by a complex of processes. It's worth our while to listen in on the discourse among the adepts of this strange business, even if a complete understanding eludes us. But the next time I look at a Victorian house, or some other relic of the gilded age, I'll remember that it was created in a period not too unlike our own, of economic instability and social upheaval, and imperialism.