NEW BOOK: 1873

In the late 19th century, the world endured a phenomenon never seen before or since: a continuous fall in prices across the globe. The long slide lasted for a quarter-century and was kicked off in 1873 by an international financial crash.

In Ahamed's expert telling, the problems began with a series of seismic movements of money: the 1848 California gold rush, the construction of railroads in the '50s and '60s, the accumulated debts of the U.S. Civil War and the payment of French reparations to newly united Germany after the Franco-Prussian War of 1870. Together these developments stimulated decades of growth.

Soon, more people had more cash to invest in more risky things like foreign stock markets. International loans ballooned and governments, especially in the Middle East, borrowed cheap money to fund ambitious projects of varying degrees of plausibility. Stock and banking bubbles inflated in Vienna, Berlin and New York, and they burst the way bubbles often do, when some big, corrupt firms went spectacularly bankrupt. At the same time, the custodians of the financial world made a tremendous mistake: They demonetized silver and moved to a pure gold standard.

As Ahamed writes, it was "a precipitous and totally unnecessary reordering of the global currency system." Without silver in the mix, there was less money in circulation overall, and prices fell. Falling prices meant "a giant redistribution of wealth from debtors to creditors" that darkened the fortunes of people across the world — from farmers around the Great Lakes who suffered when wheat prices dropped to Central European aristocrats who had sacrificed their inheritances to buy dubious stocks.

The late-Victorian economy was, Ahamed explains, "like a car being driven with one foot on the accelerator and the other on the brake." Political crises proliferated. The Ottoman Empire lost control of its financial system and, in 1876, its deposed leader, Sultan Abdülaziz, slit his wrists. Egypt, unable to repay loans to London bankers, was occupied by the British Empire, which forced it to sell its control of the Suez Canal.

In the United States, President Grant vetoed a monetary stimulus bill, which fractured the dominant Republican Party and, along with a series of scandals involving his cabinet and his family, left his administration wallowing in a "miasma of corruption." The 1876 election was a thicket of fraud and back-room dealing that ended with Rutherford B. Hayes in office. As part of a deal for Southern electoral votes, his administration ended the military occupation of the former Confederacy, paving the way for the rise of Jim Crow.

To read the complete article, see:
How the Gilded Age Economy Broke the World (https://www.nytimes.com/2026/06/01/books/review/1873-liaquat-ahamed.html)

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