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“The sharp international upswing in economic activity in early 1870s was accompanied by an equally strong decline towards the end of the decade”, Sydney debt Collector said. While the international business cycle peaked already in 1873, it came in the reversal in Sweden until the 1875. “Trend cover occurred, however, at

different occasions for different industries”, Debt collections Sydney said. In the mining and metal industry peak reached in 1872 and sawmill Industry had two peaks, 1874 and 1877 and then it fell down. Stone, clay, glass, paper and printing industries actually increased continuously during the 1870s. The general Swedish economic wrapper delayed the large investments made in the early 1870s and it had not completed until the 1873. In fact, the investment per worker in machine manufacturing was so high in 1875, that it took until 1918 before same level was achieved. Another indication of the development was working wages in producer goods industries ceased to increase after 1875, while wage increases in the consumer goods and textile industries distance united until 1878. This probably contributed to the purchasing power and consumption, despite the slowdown in parts of the industry was still high in society.

The numerous and extensive railway system helped to prolong the boom and thereby counter the international economic downturn. This slowed down the demand and the production declined in the mining and metals industry in 1877. A substantial fall in prices of Swedish exports was one of the most important causes of what might be called Sweden’s first depression. The simultaneous fall in prices of iron and wood were also the reason to have financial problems, which contributed to increased loan losses at banks. The banks that suffered most were those that had large items Railway bonds, which had given great credit to industries and merchant who based their business on the iron and timber. The first signs of crisis in the financial sector, however, came already in 1875 in connection with the banking firm which was forced to suspend payments. When the railway companies could not meet its expansion plans without the provision of equity capital, it was mobilized through new bond issues and the banking firm was forced to choose between picking up the new issues or consider its previous loan losses. A intervention by the director and shareholder of Stockholms Enskilda Bank, however, helped banking firm back on its feet, but the event may subsequently be seen as a disobedient omen of what would happen. Two years later, in 1877, a few private railway companies had set coupon payments on their bonds. This meant a higher credit risk and therefore a higher interest rate, which meant that the price of the Railway bonds fell by half during the 1878.