Great Collapse

Unemployed workers outside a business in Weisstadt, Werania, in 1917.

The Great Collapse, also known as the Depression of 1913, was a significant period of worldwide economic downturn during the early 20th century, affecting most countries across all continents. The Great Collapse began in 1913 with the collapse of the Weisstadt Stock Exchange, at the time the world's largest, on October 16, 1913, which sent stock prices plummeting, particularly those in Euclea. The Sunrosian Monarchy, a quickly industrialising economy, defaulting on its debts is also considered by economists to be a major cause of the Great Collapse, particularly around the period of the Airdale War.

The quickly fluctuating prices spread to many of Euclea's largest cities, and impacted heavily industrialised countries particularly badly. The Great Collapse is generally said to have ended at the start of the Great War in 1927, although evidence of major economies recovering was observed as early as 1919. To this day, the Great Collapse is the largest depression, both by economic loss and future impact, in history.

The Great Collapse was amplified by the sharp decline in international trade experienced by most Euclean countries as goods and services began to be preserved around 1914, severely affecting countries reliant on international trade, causing worldwide tariffs to rise drastically. Due to this, many trading jobs, such as import and export-related jobs, began extremely fragile, and large amounts of unemployment were seen in these sectors. Physical labour and agricultural jobs were also hit particularly hard by the Collapse, with countries relying on large agricultural outputs, particularly Narozalica in Euclea, experiencing large amounts of economic decline.

Socio-economic effects

Euclea

Narozalica

A workers' rally against the policies of Freček in Koskov, 1919.

In 1913, Narozalica's main exports consisted of agricultural and industrial products. As such, it was hit badly by the Great Collapse, with unemployment reaching as high as 27% in 1918, including a record-high 39% in Velzemia, then a part of the empire, in the same year. Civil unrest increased within the empire throughout the 1910s and in the 1920s, with President Artyom Freček being voted out significantly by the populace for his poor policies regarding the Collapse, to be replaced with the incumbent Vladislav Pudovkin. Pudovkin created funds to help the unemployed and struggling, and employed many people in producing military equipment for the Narozalic Armed Forces, with an estimated 7% of the workforce being employed by the government's military camps in 1923. Increases in poultry and meat produce in the mid-1920s allowed the Narozalic economy to post its first positive numbers in December 1924, the first time economic growth had been witnessed since 1913.

Pudovkin's economic policies are often considered autarky due to the sharp decrease in international trade that followed, as well as the policies of self-reliance that emerged throughout Narozalica's western Euclean sphere, mainly within the empire itself, but included some other countries such as Amathia, who also experienced significant economic decline due to the Collapse.

Sunrosian Monarchy

Rudolph von Waldriek, Chancellor of the Sunrosian Monarchy (1915 - 1921)

The Sunrosian Monarchy had been industrialising quickly under the Adalbertine Monarchy, with renewed vigour since the succession of Adalbert XX to the throne in 1905. This industrialisation was allowed thanks to the continuous contraction of loans that would be quickly reimbursed and contracted again, from both domestic and foreign (particularly Weranic) banks, with the loans considered to be safe for the lenders. The Great Collapse therefore hit Sunrosia especially hard, and most importantly almost the effects were almost felt almost immediately: widespread unemployement peaked at 29.6% by February 1915. A number of leading industrialists, crippled by debts they were unable to pay, formed the Salvation League. The Salvation League came to power in February 1915, by convincing Adalbert XX to dismiss the elected government of chancellor Manfred von Kotzau and appoint their leader Rudolph von Waldriek in his stead.

Under Waldriek and the Salvation League, the Sunrosian Monarchy followed a predominantly autarkic policy. Trade unions that were tolerated again since 1907, protested after wages were significantly cut in 1916, leading to the government to rescind the previous policy and begin repressing them again. Combined with public works spending, unemployment started falling to more reasonable levels. However, the core of the Salvation League's economic policy was an increase in military spending. Funded through deficit financing, its purpose was to enable the Sunrosian military to win wars its neighbours, from which war reparations would then be demanded and that would be used to reimburse Sunrosia's Collapse-related debts. This would be attempted in 1918 with a declaration of war on Estmere leading to the start of the Airdale War, which itself would lead to the collapse of the Sunrosian Monarchy as internal trouble partly resulting from the conflict caused a socialist revolution.