Black Swan: Economic Crises, Volume I

Table of Contents

1. Frontmatter

2. Chapter 1. General Overview of Crisis Models and Financial Crises

   Bernur Açıkgöz, Tuğberk Çiloğlu

   Abstract

   This chapter will initially discuss the crisis models to better understand all the financial, fiscal and economic crises in world history. Considering the history of the world, each crisis, compared with the previous ones, has been based on different reasons and emerged in different economic environments. Therefore, new views and models have been put forward to explain new crises. However, these models are not interchangeable; they are rather complementary models.

3. Chapter 2. Dutch Tulip Mania: Tulip Crisis

   Alper Öztürk

   Abstract

   Considering world history from the fifteenth century; geographical discoveries have positively affected the economic functioning of European States. However, in the sixteenth century, the European economy did not exist much, and even the agricultural sector, where the highest production was made, declined. Later, the European States, especially the Netherlands, implemented modern agricultural practices, and this development brought about a change in monetary processes as a reflection of the improvement in agriculture. By the seventeenth century, European States underwent a great change with the reform and renaissance movements and the spread of colonialism. The transformation of European States into central states at the end of the seventeenth century and mostly at the beginning of the eighteenth century and the large amount of gold and silver stocks brought from the colonial lands positively affected their economies and these states began to have a say in the world economy in proportion to their economic power. The abundance of these monetary resources brought along the European States to act in line with different economic processes. This chapter addresses the causes, occurrences and consequences of the first period crises, which can be called the first real economic crises between the seventeenth and nineteenth centuries.

4. Chapter 3. Bengal Bubble (1669–1772) and East India Syndrome (1669– –)

   Mevza Kurtulmuşlar, Halis Kıral

   Abstract

   The colonization process of fertile lands and countries in terms of production emerges as a fact witnessed in terms of both economy and political history. The Bengal Bubble in 1769 was also a result of the colonization process. However, when the Bengal Bubble crisis is examined, many firsts are observed in terms of economic history. Until this date, 1979, the country's governments were responsible for the devastating results of the colonization process. The most important factor in the colonization process that led to the Bengal crisis is the East India Company, which is a private company, unlike the others. Another distinguishing feature is that the first stock bubble in history was observed together with the Bengal bubble. It should not be overlooked that political figures also contributed to the said stock increase. Between 1757 and 1769, the overvaluation of the shares of the East India Company and a subsequent collapse gave its name to the financial crisis in question. The financial crisis in the company's stocks led to the collapse of the economy of the Bengal region, the inhibition of cotton and textile production and the subsequent Bengal Famine and, unfortunately, a syndrome that will not be erased from the memories of the society. This sudden decline in company shares, the structural economic crisis it caused, and its long-term effects take its place as the first case that strengthens the criticism about the limitation of the empowerment of international companies.

5. Chapter 4. The Danish State Bankruptcy of 1813

   Merve Dilara Boyner, Bernur Açıkgöz, Burhanettin Onur Kireçtepe

   Abstract

   In the background of major crises and bankruptcies, there is a series of events that dragged states into this situation. The devastating effects of the wars that lasted until 1813, and especially the Napoleonic War, lay behind the declaration of bankruptcy of the Danish State in 1813. In the 1700s and 1800s, when the wars were intense, the common problem of almost all the countries of the world was the financing of the increased defence expenditures during the war. Although Denmark was seen as a strong economy with commercial success in the said period, wrong decisions, monetary and political instability, high inflation made a great economic collapse inevitable. In the study, first, the effect of the Napoleonic Wars will be examined in terms of Denmark, and then the banking system that developed in Denmark and the reasons for the economic collapse will be included. Finally, the financial reforms announced after the crisis and the subsequent developments will be discussed.

6. Chapter 5. 1873–1896 Long Depression

   Muhammet Kaya

   Abstract

   The economic crisis of 1873–1896 is considered to be the first serious crisis that lasted for a long time on the international financial and trade system, which felt its effects in many countries and continents, albeit with different weights. The crisis consists of a series of financial crises that lasted from 1873 to 1896 but also included periods of recovery and decline during this period. The main feature of the period is the end of the “good years” period, which is attributed to the years 1846 to 1873, especially for England, and the unstoppable fall in product prices. In this period, while production and economic activities increased unsteadily, the price level tended to decrease with the same instability. Again, the said period includes the period when another crisis, the British agricultural crisis, was experienced in terms of the British agricultural sector. The most important result of the 1873–1896 crisis is considered to be the loss of the world industrial leadership, which England had maintained as a dominant power until the crisis, to Germany and the USA, which emerged as new industrial powers.

7. Chapter 6. Australian Banking Crisis of 1893

   Muhammet Kaya

   Abstract

   The Australian banking crisis of 1893 which is considered to be a long and intensely felt event in Australian history is an interesting example in terms of the history of the world economic crises in terms of showing the negative results that the free banking system may cause. The causes of the crisis are explained in the literature depending on internal and external causes. With this, the fact that Australian banks, which are almost not subject to any restrictions, turned to highly profitable land and mortgage banking apart from their normal banking activities, is shown as the main factor shaping the crisis.

8. Backmatter