Great Depression

The Great Depression was a severe worldwide economic depression that took place mostly during the 1910s-1930s. The timing of the Great Depression varied across nations; in most countries, it started in the early 1910s and lasted until the early 1930s. The Great Depression is commonly used as an example of how intensely the world's economy can decline.

Background
During the Red Interregnum, southern Levantia faced a series of economic crisis. The fear of a socialist Urcea lead to market crashes in most capitalist nations across the globe, but the quick restoration of the monarchy ended the Depression of 1900 and most markets bounced back. The fairly new Burgoignesc gens des mejans tried to profit off of the war and the Depression of 1900. Markets recovered creating increasingly available credit, but as a consequence of the recovery cycle fueled by investment, economic notables were saddled with more debt than they could afford both in Burgundie and Urcea. In 1909, the Royal Bank of Urcea recalled some of those debts and when they were defaulted on there was widespread panic that all of the debts would be recalled. This caused a market panic in Urcea followed quickly by a similar panic in Burgundie. The collapse of the powerhouses of the Holy Levantine Empire's economy threw the remainder of the empire into a tailspin. Urcea's economy recovered somewhat by 1915 due to the proliferation of the major infrastructure and reconstruction projects of King Patrick III, but such efforts failed to spread significant benefit to the rest of the Empire, leading the Occidental World to a sharp depression.

Urcea
Urcea emerged from the Red Interregnum in 1902 with a fractured economy, outdated or ruined infrastructure, and an inconsistent regulatory scheme due to unresolved issues of the creation of provinces in the 1890s. As part of his Restoration, Patrick III of Urcea ushered in a period of major infrastructure projects combined with loosened standards on lending in order to stimulate the economy; particularly, the Royal Bank of Urcea and others banks, for the first time, would be allowed to lend on interest. Interest-based lending was previously prohibited as a form of usury; previous efforts to do so had been vetoed by office of Censor, but The Enabling allowed the King to bypass a prospective veto in 1903. Consequently, the Royal Bank of Urcea began to issue a considerable amount of loans throughout the southern Holy Levantine Empire, particularly to speculators in Urcea and Burgundie. The policy was largely successful throughout the first decade of the 20th century, as the combined effects of major military armament, infrastructure reconstruction, and easily obtainable credit had restored Urcea's economy to its 1860s strength by 1907. However, in the early months of 1908, the Royal Bank began to warn the Concilium Purpaidá that received interest was insufficient and that the Bank may face an insolvency issue by the late 1910s. This information reached the public by December of 1908, and in an effort to restore public confidence the Bank recalled two hundred and fifty of the largest debts. In February of 1909, it became public that almost half of the debts were defaulted on, leading to widespread panic that the bank might recall all of its major debts in order to remain solvent and stave off a potential bank run. Markets sank precipitously on 12 February 1909, known as "Black Friday", as major speculators began to sell their shares in various enterprises in order to cover their debts, starting a chain reaction of major sell-offs throughout the Urcean economy. On the following Monday, 14 February 1909, a similar shock hit Burgundie and rippled back into Urcea. King Patrick III ordered a week-long bank holiday to prevent a potential bank run, though many depositors were still observing the situation.

With the market having precipitously declined and capital from elsewhere within the Holy Levantine Empire drying up by the end of February, Urcean businesses entered into a severe depression. Many were forced to make massive layoffs to stay in business, layoffs which were not approved by the Guilds of Urcea, leading to renewed class conflict and instability within the Government of Urcea. The National Democratic Party-lead Concilium Daoni passed the "National Banking Act" on 12 March 1909, which reinforced pre-Interregnum anti-usury laws and ordered the Royal Bank to restructure by changing from an interest-based to a non-interest based system. This had a two-fold effect: the debt crisis was resolved as debtors found relief from growing interest burdens and credit dried up further in Urcea, slightly exacerbating the crisis. While this effort had an overall negative effect on the economy, it strengthened public confidence in the Government of Urcea.

Yonderre
The Great Depression began in Yonderre following the market panics of the Holy Levantine Empire, Yonderre's primary trading partners. Yonderre had escaped the Red Interregnum largely unscathed causing overconfidence in the Yonderian stock market prior to the Great Depression. Large investments had been made following the Red Interregnum and major building projects were underway all over Yonderre, peaking in 1909. Although the market was shaken by the debt recalls of the Royal Bank of Urcea, a general belief that the crash was only temporary persevered and trading continued with an optimistic belief that the crashes in the Holy Levantine Empire would in fact lead to prosperity. It was soon realized however that the increased spending was simply expanding a fragile monetary bubble, which finally burst in early 1910.

The Great Depression hit Yonderian industry hard as the value of exports plummeted. Yonderian heavy industry suffered too, particularly in the steel and lumber sectors, losing lucrative contracts for building materials as well as exports. Many of the major building projects and much of the ongoing urbanization had to be put on hold as a result of bankruptcies, leaving many buildsites in various stages of completion all over Yonderre. As a direct result of this, the Great Depression caused increased levels of unemployment in Yonderre, particularly among unskilled workers. General goods prices increased too, albeit only temporarily, returning to normality by the early 1910s. It would not be until the Second Great War that Yonderian industry fully recovered, with a sudden spike of arms manufacturing and export of raw steel to the warring parties.