Throughout history, we’ve experienced a number of recessions and depressions as the economy ebbs and flows. A recession is typically defined as a period of negative business growth lasting two consecutive quarters, characterized by a lowering of the GDP (gross domestic product), decreased investment spending, household incomes and business profits and an increase in bankruptcies and unemployment.
A depression is virtually the same as a recession, only longer lasting. Economists joke that a recession is when your neighbor loses his job; a depression is when you lose your job. Economic downturns are no laughing matter however, and can have very real and long-lasting negative impacts on our society. Here are some of the most severe recessions and depressions that have occurred over the centuries.
Crisis of the Third Century
It’s incredible to think that while a depression may seem like it would be a modern problem; economic downturns were occurring as far back as the Third Century. In the days of the Roman Empire, plagues, famine, and warring tribes were all impacting society and combined with the collapse of their economy, which at the time was built mostly on coins, it nearly brought down the Empire entirely.
In order to maintain a large army, soldiers were paid handsomely and each seceding emperor was forced to dole out “accession bonuses” in order to maintain loyalty. They did so by inflating the silver coinage with less valuable metals like bronze and copper, which devalued the coins and heightened the cost of living. By the end of the third century, silver coins had next to no value and bartering became the popular means of acquiring goods.
Citizens were unable to pay their crushing taxes with worthless coins, and civil unrest became widespread; trade routes became dangerous, city dwellers fled to the country to become more self-sustaining, and the economy became more localized as it continued to be throughout the Middle Ages. While the Roman Empire didn’t collapse entirely, its grip on its citizens was loosened and its once magnificent reign was never the same again.