Rothschilds, Railroads, & Ruin | Liaquat Ahamed on “1873” (New Book!)

June 29, 2026

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5 min read

In 1873, a single year produced a sequence of financial crises in three different financial centers, superimposed on a chaotic reordering of the global monetary system that very few people know about. As economic historian Liaquat Ahamed explains, the story of that year is not just a boom-bust cycle—it is a tale of unnecessary monetary missteps that compounded a financial panic into a twenty-year deflation, reshaping politics and society across the Western world.

The Monetary System That Worked—Until Bismarck Broke It

For fifty years before 1873, the world had relied on a combination of gold and silver as the foundation for money. The system was resilient: when there was a lot of silver, central banks absorbed it; when there was a lot of gold, they absorbed that too. The monetary base grew steadily. At the heart of this bimetallic system were two countries: the United States and France. Britain was on gold; Germany, China, India, Turkey, and Mexico were on silver. France and the US acted as the swing factor, balancing the two metals. Prices were stable throughout the nineteenth century.

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What you'll learn

1 (00:00) **Introduction & Why 1873** - Jack Farley introduces Liaquat Ahamed and his new book on the 1873 crisis.
2 (02:14) **The Monetary Misstep: Germany's Silver Dump** - The pre-1873 world relied on a gold-silver bimetallic system, with France and the US as stabilizers.
3 (07:22) **The Failed 1867 Gold Conference** - A plan for all countries to move to gold was proposed in 1867 but rejected by Britain and France.
4 (09:02) **The Rational Boom (1850-1870)** - A 20-year expansion fueled by the Rothschilds' bond market, channeling British and French savings into global infrastructure (railroads, ports, undersea cables).
5 (10:23) **The Franco-Prussian War & Three Simultaneous Bubbles (1870-1873)** - The war disrupted capital flows and created three perverse bubbles.
6 (14:28) **The Bond Mania & Retail Investors** - Middle-class savers, burned by past equity crashes, poured money into bonds offering 8-10% yields.
7 (21:35) **The US Railroad Boom: Rational to Excessive** - Railroad investment was rational until 1870, then became excessive.

+ Full timestamped outline available in the app

Show Notes

Liaquat Ahamed, legendary financial historian and author, joins Jack to discuss his latest book, "1873: The Rothschilds, the First Great Depression, and the Making of the Modern World.” Ahamed unpacks the 1873 financial crisis, explaining how Germany's abrupt move from silver to gold during a market panic triggered a massive global scramble for precious metals and severe deflation. He details the preceding infrastructure boom driven by the Rothschilds' bond market expansion, which eventually collapsed due to excessive railroad construction and the infamous Credit Mobilier corruption scandal. Transitioning to modern markets, Ahamed compares the 19th-century railway mania to today's trillion-dollar global AI and data center investment boom. He warns that fierce competition in the AI sector could lead to poor returns and a series of mini boom-bust cycles. While expressing concern over modern speculative bubbles in crypto and loose central bank policies, Ahamed remains hopeful that these technological innovations will spark a significant productivity jump. Recorded June 9, 2026.

“1873”: on Publish Penguin Random House: https://www.penguinrandomhouse.com/books/306461/1873-by-liaquat-ahamed/

“1873”: on Amazon: https://www.amazon.com/1873-Rothschilds-Depression-Making-Modern/dp/1594204179

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