Editing Long Depression (section)

==Explanations==
[[Irving Fisher]] believed that the Panic of 1873 and the severity of the contractions which followed it could be explained by debt and deflation and that a [[financial panic]] would trigger catastrophic [[deleveraging]] in an attempt to sell assets and increase capital reserves; that selloff would trigger a collapse in asset prices and [[deflation]], which would in turn prompt financial institutions to sell off more assets, only to further deflation and strain [[capital ratio]]s. Fisher believed that had governments or private enterprise embarked on efforts to [[reflation|reflate]] financial markets, the crisis would have been less severe.<ref name="cycles-5">{{cite encyclopedia|encyclopedia=Business Cycles and Depressions: An Encyclopedia|author=David Glasner, Thomas F. Cooley|publisher=Taylor & Francis|year=1997|isbn=0-8240-0944-4|article=Debt-deflation theory|url=https://archive.org/details/businesscyclesde00glas}}</ref>

[[David Ames Wells]] (1890) wrote of the technological advancements during the period 1870–1890, which included the Long Depression. Wells gives an account of the changes in the world economy transitioning into the [[Second Industrial Revolution]] in which he documents changes in trade, such as triple expansion steam shipping, railroads, the effect of the international telegraph network and the opening of the Suez Canal.<ref>{{cite book 
|title=Recent Economic Changes and Their Effect on Production and Distribution of Wealth and Well-Being of Society
|last=Wells 
|first=David A.
|year=1890 |publisher= D. Appleton and Co.|location= New York|isbn= 0-543-72474-3 |url= https://archive.org/details/recenteconomicc01wellgoog |quote=Recent Economic Changes and Their Effect on Distribution of Wealth and Well Being of Society Wells.
}}</ref>  Wells gives numerous examples of [[Productivity improving technologies (historical)|productivity]] increases in various industries and discusses the problems of excess capacity and market saturation.

Wells' opening sentence:

<blockquote>The economic changes that have occurred during the last quarter of a century{{snd}}or during the present generation of living men{{snd}}have unquestionably been more important and more varied than during any period of the world's history.</blockquote>

Other changes Wells mentions are reductions in warehousing and inventories, elimination of middlemen, [[economies of scale]], the decline of craftsmen, and the displacement of agricultural workers. About the whole 1870–90 period Wells said:

<blockquote>Some of these changes have been destructive, and all of them have inevitably occasioned, and for a long time yet will continue to occasion, great disturbances in old methods, and entail losses of capital and changes in occupation on the part of individuals.  And yet the world wonders, and commissions of great states inquire, without coming to definite conclusions, why trade and industry in recent years has been universally and abnormally disturbed and depressed.</blockquote>

Wells notes that many of the government inquiries on the "depression of prices" (deflation) found various reasons such as the scarcity of gold and silver. Wells showed that the US money supply actually grew over the period of the deflation. Wells noted that deflation lowered the cost of only goods that benefited from improved methods of manufacturing and transportation. Goods produced by craftsmen and many services did not decrease in value, and the cost of labor actually increased.  Also, deflation did not occur in countries that did not have modern manufacturing, transportation, and communications.

Nobel laureate economist [[Milton Friedman]], author of ''[[A Monetary History of the United States]]'', on the other hand, blamed this prolonged economic crisis on the imposition of a new gold standard, part of which he referred to by its traditional name, [[Coinage Act of 1873|The Crime of 1873]].<ref>The Crime of 1873, bit Milton Friedman http://www.unc.edu/~salemi/Econ006/Friedman_Crime_1873.pdf</ref> Additionally, Friedman pointed to the expansion of the gold supply through [[Gold cyanidation]] as a contributor to the recovery.<ref>{{cite journal|author=Milton Friedman | title = A Program for Monetary Stability | journal = Readings in Financial Institutions | url=https://miltonfriedman.hoover.org/friedman_images/Collections/2016c21/Houghton_1965.pdf }}</ref>  This forced shift into a currency whose supply was limited by nature, unable to expand with demand, caused a series of economic and monetary contractions that plagued the entire period of the Long Depression. [[Murray Rothbard]], in his book ''History of Money and Banking of the United States'', argues that the long depression was only a misunderstood recession since real wages and production were actually increasing throughout the period. Like Friedman, he attributes falling prices to the resumption of a deflationary gold standard in the U.S. after the Civil War.