Great Collapse

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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.


The causes of the Great Collapse are multifaceted, and economists continue to hotly debate their nature. The mainstream consensus within orthodox economics holds that the Great Collapse centers around a significant drop in aggregate demand, resulting in a general glut. The drop in demand, hastened by the collapse of the Weisstadt stock exchange in 1913, precipitated bank runs. Widespread bank failures resulted in massive dropoffs in consumption and investment. Meanwhile, the economy underwent monetary contraction and deflation, which increased the real value of debt, which further disincentivized consumption and investment.

There are broadly two competing theories that attempt to explain the causes of the Great Collapse: the demand-driven theories of the Warminister school and the monetarist explanation. The Warminister school theorized that the Great Collapse was caused primarily by a steep fall in demand. Members of the Warminister school have argued that the crash of the Weisstadt stock exchange led to widespread loss of confidence in the markets. This loss of confidence, the Warminister school argues, prompted firms to refrain from investing in future projects despite low or non-existent interest rates. The Warminister school challenged traditional classical economics, which held that lower interest rates would necessarily beget investment.

The Warminister school argued that the government should undertake expansionary fiscal policy to make up for the losses of consumers and firms. The Warminister school advocated for cutting taxes to allow consumers to spend more in the economy. Instead, many governments elected to reject the Warminister school' advice and instead raised taxes to remedy budget shortages. After the Great War, the Warminister school's economic doctrine became widely disseminated and accepted, becoming the preferred explanation of the Great Collapse.

Monetarists writing in the 1960s and '70s challenged traditional Warminister conceptions on the Great Collapse. The monetarists argue that the Great Collapse was caused by a sharp fall in the money supply. Monetarists contend that the Great Collapse began as a recession, but that the policies of various central banks across Euclea failed to adequately control deflation and actively permitted contractions of the money supply averaging roughly 33~ to 35 percent. Monetarists point to central banks' refusal to lend liquidity to offset bank runs, resulting in the collapse of major financial institutions and over one-third of all banks. Furthermore, central banks' decisions to raise interest rates, according to monetarists, discouraged investment. As a result, individuals were more keen on holding on to money faster than monetary institutions like central banks could react, and therefore the paucity of money encouraged individuals and firms to save as opposed to spend. Monetarists therefore argued for central banks to pursue active monetary policy with the aim of tightly controlling the supply of money.

The monetarist explanation supplanted the traditional Warminister consensus in the seventies, though the latter has seen a recent resurgence given the economic troubles in the early 2000s. Most economists accept that inaction or bad policy on the part of central banks contributed to the collapse worsening. In addition, economists often point to other mitigating factors, such as the gold standard. Debt deflation and the expectations hypothesis, non-monetary theories that build on monetarism, have gained widespread acceptance.


Socio-economic effects



In response to the Great Collapse, the Caldish government devalued its currency and abandoned the gold standard. Taoiseach Saorla Ní Chonaill and her liberal government also implemented policies to support farmers, a result of their entrenched political importance and role in Caldia's largely agrarian economy. However, Ní Chonaill's stopgaps failed to bring adequate relief. Socialists in the country worked to organize a revolution, dividing the Caldish Section of the Workers' International and the country's trade unions. In April 1915, unionized agricultural workers went on strike with the goal of engineering a general strike. During a protest in County Folcthagh, seven strikers were shot by soldiers after they reinforced local police. The incident led to the collapse of the Ní Chonaill government and a snap election which saw the conservative Leannain Mac Seonag become taoiseach. Protectionist agricultural policies were implemented and restrictions were placed on imports. The nation's young heavy industry experienced a period of decline. Factories closed and many industrial workers were out of work, resulting in the establishment of the Social Democratic Party after a split within the RGIO. Pressure from unionized workers resulted in government intervention to support industry. The Caldish shipping industry was particularly impacted by the crisis, the result of a decrease in international trade and rise of tariffs. By the late 1910s, the Caldish economy had mostly recovered.



The Great Collapse hit Etruria with catestrophic consequences. As industries came close to failure they were bought out by the banks in a largely illusionary bail-out—the assets used to fund the purchases were largely worthless. Unemployment reached a height of 28.4% in 1918, the government expanded its social welfare to assist the most vulnerable among the masses of unemployed. The 1910s also saw the emergence of State-Church Institutes, a series of hostels and soup-kitchens run jointly by the Etrurian government and the Solarian Catholic Church. This led to a financial crisis peaking in 1916 and the collapse of the centre-left government under President Marco Antonio Spaletta. In the 1916 election, the Liberal Republicans defeated the Moderate Worker's Party and Alessandro Luzzani became president. The new government established the Industrial Recovery and Reform Institute (IRRI) in January February 1916 and took control of the bank-owned companies, suddenly giving Etruria one of the largest state-owned industrial sector in Euclea. The new level of state control led to a series of anti-union laws that reduced their influence significantly within government-held factories but agitated the union movement. The agitation worsened as the IRRI launched mass lay-offs in the most poorly perfoming factories, this in turn fed into the rise of the Etrurian Section of the Worker's Internationale (SEIL). The rise of the SEIL would lead to a series of violent incidents, culminating in the Schiattarella Plan in 1924, which was the violent crackdown and banning of the party.

The reforms of the Luzzani government and the efforts of the IRRI proved successful in hastening recovery and modernising some sectors of industry that had fallen behind other major Euclean powers. Industrial output had returned to 1915-levels by 1923, but overall growth of industrial output was only 75% better than in than 1914. One area where Etruria emerged more productive than before the global downturn, was in industrial chemical production and steel production - here IRRI had reformed and streamlined numerous factories and steel mills toward profit.


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 Tadeusz Czyzewski resigning after losing the confidence of the populace for his poor policies regarding the Collapse later on in his tenure, 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.



The economy of Senria was already weak in 1910. Stalled modernization efforts had left the country with a partially-restructured financial sector and a comparatively weak industrial sector, and the country's economy was largely dependent on the export of agricultural and light industrial goods to Euclean countries, leaving it vulnerable to fluctuations in Euclean markets. For nearly a decade, the country had been in a period of dull, mildly deflationary economic activity. The outbreak of the Great Collapse in Euclea, the accompanied loss of Euclean consumer confidence, and a turn towards protectionist policy in many Euclean polities, plunged Senria into severe economic turmoil, with the next four years dominated by severe deflation and the collapse of both the financial and industrial sectors. This economic turmoil exacerbated political discontent in Senria, ultimately culminating in the outbreak of the Senrian Revolution in 1918.

Asterias and Sublustria

Arucian colonies

In the Colony of Imagua, the impact of the Great Collapse was significant, as the economy was primarily based off of agricultural and manufacturing exports, with exports to Euclea and the Asterias declining. This led to high unemployment, with unemployment peaking in 1917 with 23% of Imaguans being unemployed. Similar effects were found in the Assimas Islands, where 18% of Assimans were unemployed in 1918.



The impact of the Great Collapse in Nuvania was significant, as the economy was based largely on mineral and agricultural exports with comparatively little industrialisation. Exports were primarily to Asteria Inferior and Euclea, with both markets seeing substantial declines. Total exports declined by 65% between 1914 and 1917 and did not reach pre-1913 levels until 1921. Crops such as sugarcane, coffee, and bananas saw massive declines in prices, dropping by as much as 75% by 1915. Mineral exports, particularly iron ore and precious metals, also saw massive declines.

Unemployment rose significantly during this period, with unemployment and poverty particularly affecting Asterianer farmers, who were reliant on exports to sustain their livelihoods, as well as mixed race and indigenous peoples who worked on the farms and in the mines. Poverty increased among these groups based on social and economic status. By 1917, an estimated two thirds of rural and one third of urban Asterianers were living in poverty, compared with around one fifth of the Estmerish population. At least two thirds of mixed race and virtually all indigenous families were also living in poverty.

The social and economic situation lead to significant resentment among much of Nuvania's society, in particular between the Estmerish and Asterianers, lead to outbreaks of violence, which included the Roosverbranding ("Rose Burning") in June 1914, in which significant anti-Estmerish riots took place across the country resulting in thousands of homes and businesses owned by Estmerish people being burned, and 75 deaths. Two armed insurrections, one in 1915 and the other in 1916, occurred in response to the government's imposition of austerity measures. Combined these acts cost the lives of 741 people and caused significant instability.

One of the impacts of the Great Collapse was the increase in Asterianer nationalism, particularly during the period between 1914 and 1918 which saw the government of J.P Hardy solidify support for the Estmerish population. This saw the nationalist faction of the National People's Party (NVP) win by a landslide in the 1918 general election, lead by G.B Van Deventer.