Panic of 1013

The Panic of 1013 refers to a brief financial collapse in Picketralia's economy after the last supply of Railtonian money they had received in the Treaty of Pafalia was exhausted.

Background

After the Second Pik Independence War from 971-978, and the dissolution of the Kingdom of Railtown, it was decided at Pafalia from the summit from May 25-29, 978, that Railtown would cede it's remaining land holdings to Moria, and that the new nation of Picketralia would receive all of their money and other resources, which totaled a lot.

The country used most of this money to rebuild the country after the war, and invest in the local economy, and it succeeded, as the Stimpton economy boomed, and the government abolished all forms of tax. However, due to financial mismanagement, there wasn't a plan in place for when the money from Railtown would dry up.

Collapse and Revitalization

Collapse

On January 17, 1013, the remainder of the money was spent on the repairing of a crack in the foundation of Calyur Chapel. By 2:00 pm that day, the government was in a state of emergency due to the lack of what they viewed as "unlimited money", and the beginning of severe economic downturn. Many believed this would be the end of this fledgling nation, but they were resilient.

Bartholomeu II called an emergency meeting of the Picketralian Senate later that day to discuss what they should do. After a 3 day summit, they came up with the Picketralian Economy Revitalization Act of 1013, and it was unanimously passed on January 21, 1013.

It was four fold: first, temporarily nationalize several industries such as agriculture, mining, and fishing until June 5, 1013, at which point it could be discussed again. Second, create two new government services: a public postal service, the Picketralian Postal Service, branded as PikPost, and an unemployment agency to assist low-income and homeless people find work. Third, create a 5% flat tax rate for low income, a 6.5% tax rate on the middle class, and a 7.25% tax rate on the wealthy. And finally, create a temporary government oversight agency to ensure fiscal responsibility and reinvestment protocols. All of this was to be reconsidered on June 5, 1013.

Initial failure and eventual revitalization

The plan initially staggered, and conditions and the economy didn't improve. However, by early March, conditions were on the rise. Initial hesitation about the Picketralian Postal Service lead the government to almost scrap it, but they discovered its potential: sending something to almost anywhere in the world. Profits soared starting the second week of March. The employment agency saw less success, as many found jobs on their own.

In addition, government subsidized industry proved moderately successful, as the lucrative mining industry saw larger profits as business continued. Fishing and agriculture stayed relatively the same, and profits didn't increase nor decrease.

On June 5, 1013, the Picketralian Senate reconvened to discuss the future of the act. As the economy had almost recovered, they created and drafted the Picketralian Economy Finalization Act of 1013. It decreased each tax/income bracket by 0.45%, returned the industries that were nationalized to privatization, kept PikPost and increased it's funding, and abolished the Federal Employment Agency.