1873: The Rothschilds, the First Great Depression, and the Making of the Modern World

Pulitzer-winning economist Ahamed (Lords of Finance) offers an eye-opening investigation of the “first truly significant global financial crisis.” In 1873, the Vienna Stock Exchange, inflated by a speculative real estate bubble, collapsed, affecting “people from every stratum of society.” Soon a “preeminent American investment bank... shuttered its doors,” inspiring runs on banks and further panic-selling. The period of global economic malaise that followed was the first to be referred to as the “Great Depression,” and Ahamed notes that “it is remarkable” how it seems to have set the mold for future crashes. Moreover, while the 1873 crash is “now largely forgotten,” its reverberations, he argues, were immense. The crisis led to “a giant redistribution of wealth” from “debtors to creditors,” as “bankers and financiers” profited “inordinately.” This provoked a general mood of “populist ire.” Around the world, “politics took a darker turn.” In the U.S., the Grant administration’s ineffectual response played a role in “prematurely ending Reconstruction.” In Europe, “novice investors who had lost their savings” sought scapegoats, and “increasingly directed their anger against Jews.” Meanwhile, government debt defaults in the Middle East caused turmoil. Throughout, Ahamed returns to the Rothschilds, owners of “the largest... private European bank,” using their central placement in the events that unfolded as “a natural connective thread.” Granular and deeply researched, it’s an essential new perspective on the link between capitalism’s boom and bust cycles and the emergence of reactionary political movements. (June)