118 AGRICULTUKAL DEPEESSION, 1873 TO 1887 



their reasonable profits. Banks engaged in business which 

 lay outside their proper sphere, and linked their fortunes 

 with unscrupulous adventurers. The crash came in 1878, 

 but it had long been inevitable. Events of such raagni- 

 tvide as the Civil War in America, the Franco-Prussian 

 "War, and the French payment of the Prussian war indem- 

 nity necessarily exercised a prodigious influence on the com- 

 mercial world. Prices rose inordinately in England during 

 the excited period from 1871-3. To this rise two circum- 

 stances mainly contributed. The American War had cut 

 off cotton supplies for four years, and during that period 

 all the old produce was sold off, while an actual scarcity 

 was created. Consequently in 1869 capital flowed into the 

 new channel literally in torrents. So, again, an extraordi- 

 nary demand was created for coal and iron to develop the 

 railways of Germany and the United States, while the open- 

 ing of the Suez Canal gave a stimulus to the shipbuilding 

 trade. 



In 1873 the reaction came, though it did not reach 

 England till a year later, Quantities of capital were locked 

 up in unremunerative railways ; taxes had been largely 

 increased to provide for war expenses or maintain huge 

 armaments ; reckless speculation had followed the triumph 

 of Germany. A railway panic set in in America, and dis- 

 astrous failures occurred at Vienna, as well as in Germany 

 and the United States, and they were followed by a fall in 

 wages and in the prices of coal, iron, and other articles. 

 When the reaction reached England it was aggravated by 

 a series of bad harvests, as well as by the political difficul- 

 ties to which the revival of the Eastern Question gave rise. 

 In 1875 great failures like those of Im Thurn & Co., or 

 Alexander Collie, and the default on the Turkish debt 

 aggravated the depression, which was intensified by strikes, 



