‘1873’ Review: When the World Went on Sale

In the railway age, a productivity boom and an investment bubble led to falling prices—and panicked bankers

By James Grant. He reviewed the book 1873: The Rothschilds, the First Great Depression, and the Making of the Modern World by Liaquat Ahamed. Excerpts:

"Friday, May 9, 1873—prices on the Vienna Stock Exchange plunged by 45%."

"In 1878, confronting the lowest prices for pig iron since colonial times, American ironmasters wondered if the smokestacks on their idled blast furnaces might serve a higher use as astronomical observatories."

"Prices fell in the final quarter of the 19th century in good part thanks to a transportation revolution that unified the world’s commodity markets and to a wave of factory mechanization that collapsed production costs."

"William Graham Sumner, in his “History of American Currency” (1874), had denounced the Supreme Court’s legal-tender decisions of 1870-71, which affirmed the constitutional right of the government to issue paper money irredeemable in gold or silver."

"In 1874 Congress passed the so-called Inflation Bill, which would have expanded the supply of government-issued greenbacks. President Grant vetoed it."

"To governments on both sides of the Atlantic, “specie” increasingly meant gold—not silver and gold together, but the single standard of gold alone. Overindebted railroad builders and heavily mortgaged farmers demanded a less rigorous, more forgiving silver unit"

"Out of 70 bubble-era Viennese banks, only eight survived the collapse. The U.S., not so roughly handled, suffered a 21% fall in share prices and 100 failed banks in comparison to 3,400 solvent survivors."

"Debtors suffered, to be sure" (when we have deflation or wide spread falling prices, it is harder for debtors to earn the dollars to pay back their loans)

"wage-earners—in textile manufacturing and railroading, to pick two examples—gained by the steady appreciation in the purchasing power of their hard-earned money"

"when the 1896 presidential election pitted the soft-money populist, William Jennings Bryan, against William McKinley, the hard-money Republican, McKinley won the electoral majority, 271 to 176, and the popular vote, 51% to 46.7%, besides. So much for class conflict in gold-standard America." 

Related posts:

Is There Economic And Political Meaning In "The Wizard of Oz?" (2026) (Some scholars say that it was about politics and economics in the late 1800s, including the issues with gold and silver)

Monetary Policy and the Great Crash of 1929: A Bursting Bubble or Collapsing Fundamentals? (2025)