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

Financial panics are endlessly fascinating. From ‘Tulip Mania’ in the Netherlands in the 17th century to the global financial crisis of 2008, the regular booms and busts of market economies have been analysed, celebrated, or regretted. They have always defied rational explanation, exactly because, in the words of Alan Greenspan of the US Federal Reserve Board, they demonstrate ‘irrational exuberance’. That accurately describes today’s boom in artificial intelligence, with far larger investment in data centres than can possibly be justified. We are in the midst of a boom and everyone is waiting for the bust. As always, the speculators hope that this time is different. It never is.

Liaquat Ahamed, a former investment manager, is show more the author of the much praised Lords of Finance: The Bankers Who Broke the World and Precipitated the Crash of 1929, for which he won a Pulitzer Prize in 2010. His new book discusses the stock market crash of 1873, which started with a property boom and slump in Vienna which spread to Berlin, New York, Paris, and London. As in his previous book, Ahamed’s focus is on the men who fostered the market’s exuberance, sometimes through fraud, usually from over-optimism, occasionally from an uncanny ability to forecast the future. There are enjoyable pen portraits of many of them and of the rulers and politicians who borrowed their money.

Read the rest of the review at https://www.historytoday.com/archive/review/1873-liaquat-ahamed-review

Roderick Floud is the author of An Economic History of the English Garden (Penguin, 2020). show less