Thousands of anti-Yoon protesters cheered outside the National Assembly
The credit crisis of 1772 in Britain has been identified by experts and economists as the first contemporary banking crisis associated with the Bank of England. The predicament arose when banker Alexander Fordyce, burdened by extensive debts, escaped to France to evade his financial obligations.
As news spread about the wealthy banker's escape, fear swept across England. People made a run on banks resulting in the collapse of around 30 financial institutions in England and continental Europe.
The transition to a paper currency system in the United States was motivated by the Copper Panic of 1789. This event involved a significant influx of counterfeit copper coins into circulation, leading to the depreciation of authentic copper and undermining public trust in the currency.
After Napoleon emerged victorious in the French Revolutionary War, the United States witnessed a downturn in its wartime economic growth. This sudden change left the US economy vulnerable, and the interference caused by the Barbary pirates from North Africa further worsened the situation. As a result, the States fell into a recession that ultimately led to the initiation of the First Barbary War.
Before the War of 1812, the United States went through a short but significant economic downturn. Thankfully, the increased production to support the war swiftly pulled the economy out of danger.
In 1825, Gregor MacGregor, a Scotsman, successfully executed a remarkable deception that had such a profound impact that it triggered a small economic downturn. MacGregor managed to amass a substantial sum of money by persuading individuals to invest in and purchase land grants for a fictitious Central American nation called Poyais.
During a period when investors sought opportunities in the British stock market for foreign debt investments, MacGregor effortlessly introduced his counterfeit government bonds into the market. Once his deceitful actions came to light, it triggered a significant crisis in Great Britain's financial industry. Witnessing their neighbors lose their hard-earned savings to MacGregor's fraudulent scheme, the public became hesitant about their own investments.
The panic and subsequent recession of 1837 was a result of numerous failures and errors in both the American government and banking system. During a period of quick westward expansion and the privatization of natural resources, land speculations were failing regularly. Additionally, cotton prices experienced a steep decline, severely impacting the economy of the Southern states, which relied heavily on slavery.
The American banking system also suffered as public trust dwindled, leading to a mass withdrawal of savings by many individuals. The Panic of 1873 occurred when Jay Cooke & Co., the biggest financial institution in the United States during that period, closed. They had invested a considerable amount of money in the construction of the Northern Pacific Railway without making any profits.
After the panic, there ensued a depression lasting six years, which was labeled the Great Depression at that time. After the depression of the 1930s commandeered that title, the depression of 1873-79 became known as the Long Depression.
A downturn which started in 1882, brought on by the shrinking of the railroad sector, reached a critical point following the downfall of two key banking establishments in the United States: Marine National Bank and the Grant & Ward firm. To prevent additional financial disaster, the New York Clearing House granted sizeable bailouts to other banks teetering on the edge of collapse. The recessive state was avoided.
The Panic of 1907 was a short but severe economic crisis during which many institutions globally shut down within a few weeks.
The subsequent economic downturn persisted for over a year and played a significant role in the establishment of the Federal Reserve in 1913.
After World War I, the United States faced significant debt and a notable decline in domestic production. In 1920, prices plummeted by 37% and GDP fell by 38%, marking it as one of the most challenging financial years in American history.
It is normal to experience economic downturns like this when transitioning from increased production during wartime to less lucrative output during peacetime. However, the aftermath of World War I had a particularly severe impact. Fortunately, consumerism swiftly rebounded after the 1920 depression, leading to the prosperous era known as the Roaring Twenties.
The Great Depression, considered the worst financial crisis in modern history, started in 1929 with the Wall Street market crash. It had a devastating impact on a whole generation of Americans.
The federal government's inability to provide aid or a course of action propagated this era of hunger, homelessness, economic downturn, and the most severe unemployment period in US history. During the height of the depression, joblessness rose to nearly 25%. Just as in 1933, approximately 4,000 banks were forced to close their doors.
The Recession of 1937, or the Roosevelt Recession, was also one of the most severe economic downturns of the the 1900s. It was partially attributed to the New Deal policies implemented by Franklin D. Roosevelt.
The United States was able to recover from its previous recession through the implementation of the New Deal. However, this resulted in dissatisfaction among Congress due to gaps in the federal budget. Consequently, they introduced extensive austerity measures, creating panic among the public and trading markets.
The gas crisis that took place during the Fourth Arab-Israeli War was a result of conflict and trade restrictions between Western nations supporting Israel and Arab countries producing oil. These Arab states imposed sanctions on the Western countries as a sign of solidarity with the Arab coalition led by Syria and Egypt.
Arab countries reduced their oil exports to Israel's Western partners, resulting in an urgent and severe scarcity of oil and a substantial increase in gasoline prices worldwide.
Later after the gas crisis of 1973, an energy crisis occurred in the aftermath of the Iranian Revolution. The newly established Iranian government quickly modified its oil export policies.
Just like in 1973, the United States suffered from its reliance on foreign oil. The recently established Iranian government significantly reduced the amount and frequency of its oil exports. This resulted in increased prices and shortages not only in the United States but also in other Western nations.
During the 1980s, Latin American countries experienced the "Lost Decade," an international debt crisis. This crisis was marked by high inflation and exorbitant interest rates on loans borrowed from international creditors and investors. As a result, countries like Brazil and Mexico struggled with substantial deficits, with their annual debt payments surpassing their GDP.
The already unstable Argentinian economy faced further challenges when Brazil, Mexico, and Russia—all crucial trade allies—experienced economic collapse.
The economic crisis in Argentina resulted in severe poverty, marking a new low for the country. During the peak of the downturn, the unemployment rate reached almost 20%, with estimates indicating that over 50% of Argentinians fell below the poverty line.
The housing market crash in 2008 was the most severe financial crisis of the 21st century so far, causing significant damage to the global economy for several years afterwards.
Due to the downfall of the housing market in the United States, several major financial institutions, which had been making profits from risky loans, faced the prospect of collapse. This resulted in the loss of homes and billions of dollars of income for almost 10 million Americans.
After the global market crash of 2008, Greece faced more severe consequences compared to other European nations. By 2009, Greece was heavily indebted to other European countries, resulting in an ongoing economic and social crisis that continues to impact the country.
Sources: (Stacker) (Insider)
See also: Successful companies founded during recessions
Explore further to discover the most severe financial collapses in history.
History's most devastating financial crises
Historical financial collapses that changed history
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Financial market failures have been with us for as long as there has been a market. These economic downturns can be attributed to various factors, things such as a declaration of war, the end of a war, bad loans, or simply by the natural course of events. Some recessions are fleeting and insignificant enough to fade from public memory within a few years. Others, however, the Great Depression for example, or the market crash of 2008, have left a lasting impact on global cultures and societies.
Explore further to discover the most severe financial collapses in history.