Hello, my name is Andrew Keane. Welcome to Keen on America, the daily interview show about the United States. Hello everybody. It's Tuesday the 2nd of June 2026. Yesterday we had the uh British novelist Alexander Starret on the show. He's the author of a very well-reed new book Drayton and McKenzie, a novel about uh the 2008 crash. It got shortlisted for the Financial Times Business Book of the Year last year, the first time they've shortlisted a novel for many years. Uh it's a book about 2008. And as Alexander Starret argued in another piece that he wrote for the London Times, the 2008 crash ruined the lives of his generation of the millennials. And when it comes to global crashes, there are a few people uh more uh informed, knowledgeable, wise about global crashes than my guest Leakat Ahmed. Uh he's the author of the Pulit surprisewinning Lords of Finance, a book about uh the great crash of the 1930s or the Great Depression of the 30s, which he actually wrote during the 2008 crash. And he has a new book out. It's called 1873, the Rothschilds, the first great depression and the making of the modern world. He's joining us from somebody else's home in Washington DC. The book is out today. Leakat, uh, congratulations on the new book. >> Thank you. >> You seem a very cheerful fellow, Leat. What is it about global depressions that get you so excited? I mean, this book's taken you many years. The other book was massively acclaimed. As I said, it won the uh not the Nobel Prize, but the closest thing to a Nobel Prize for writers, uh, uh, the uh, uh, the Pulit surprise. Uh, what is it about Great Depressions that get your blood running? >> Um, well, most people assume that I must be some sort of missthrop uh who takes great pleasure in sort of mass suffering and actually people who know me um real uh know that I'm actually I have a very sunny disposition with and a very positive outlook on life. So the reason that I find financial crisis so fascinating is that when you're writing economic history, things happen quite slowly. Takes decades for things to move. But every so often history speeds up and you suddenly get what what happen what typically takes a decade to happen happens in a few months and uh you know companies go under people uh people go bankrupt so I um I and it's it's I suppose the closest that a economic historian can come to the sort of action that a military historian writes about. >> Yeah. Uh and I think Lennon said something about history speeding up sometimes that a week sometimes is a decade or a century and sometimes >> century is a week and vice versa. >> Yeah. Yeah. So that that's the principle and that's what that's what motivates me to focus on financial crisis. Now I I can't claim to be an expert because I've only written two books about them. So um >> well certainly more of an expert than I am and most of our I think all our audience. Um, as I said, the Lords of Finance won the Puliter Prize partially for your economic wisdom, but also for your human your portrayal of the the the humans, the leading humans involved in this catastrophe. Um, uh, Alexander Sturk talked about 2008 that the crash ruining their lives. There's the human dimension to all this too, isn't I mean it might be fun for an economic historian like you to write about it um leak but uh it's a pretty miserable experience to live through one of these things. >> Yeah. Although you know both uh Lords of Finance and um uh this new book 1873 is is less about the people affected and more about the decision makers. So, uh, Lords of Finance was about four central bankers, um, and the crazy and the sequence of errors they made, uh, in the leadup to 1929. And the same thing is sort of true less so in 1873 that it uh it documents the buildup uh the the errors that the authorities allowed to h happen. Um they were less they were much less hands-on in those days. So um and then the uh and then the aftermath and uh 1873 this new book I focus very much on um on the after on sort of the next 10 15 years um aftermath uh because it's it was so devastating both in the US in Europe and across the world. >> Yeah. And of course, uh, at least according to Wikipedia, the the long quote unquote long depression that was triggered by the crash of 1873 may have lasted till March 1879 or other economists argue that it ended in 1899, so it's still highlyable its impact. Um the subtitle of of of the new book uh Leat is uh the Rothschilds who we'll come to later uh the first great depression and the making of the modern world. Why was this the first great depression? What was the state of the global economy to create this great depression and of course the making of modernity? So um in 1870 we had three iconic projects that got um um that were completed. Uh we had the completion of the transcontinental railroads in the US. We had the completion a few months later of the sewers canal. Um and then a few months later the uh the the TransIndia Railroad uh link linking um Bombay to Kolkata. Um and that that was viewed as a truly significant um event because um a couple of pe a couple of newspapers wrote that for the first time you could go around the world in less than 80 days. uh and a a a French uh novelist happened to stumbled across this article which actually even docu gave a itinerary for for such a >> is this Jules Vern. >> Yes. So Jules Vern is you know was trolling around for ideas about a book. he reads this and says this this would make a great um novel. And so that that was a sort of key um u a key event in the evolution of the global economy. uh and it really signified how integrated the global economy had become um and that is I think why you've had the first global depression or the first global um uh crisis. So um Leakat of course the events that led up to the crash of 29 and the great depression of the 30s was the massive boom of the 20s, the craze boom, the irrational exuberance of the 1920s. Did you have a similar uh irrational experience in the 1860s? Uh we had a rational boom in the 1850s and60s uh and it was actually quite a steady boom. What happened was in 1870 just as these three iconic projects were being completed uh war broke out in Europe between France and Germany >> in 1870. Yes. And >> and which of course result unification of Germany. >> Yeah. The FrancoRussian war. But um so the assumption was this is going to lead to a this is going to lead to massive disruptions in capital markets in trade flow flows and is going to bring this 20-year boom which was a perfectly rational and not irrational uh bubble. uh to a halt. Uh what instead happened uh and no one quite understands why the disruption in the capital markets that occurred from 1870 to 1873 fueled a sequence of bubbles. Uh one was uh the in the US US railroad construction was was uh was was proceeding um at a very strong pace. Uh but suddenly all this capital that was fleeing Europe flowed into the uh flowed into the US and gave the uh railroad boom an extra philillip up. Uh on top of which France was required under the peace treaty to pay Germany a billion dollars. And by the way, a billion dollars in those days would be the equivalent of $1.2 trillion dollars today. And through the help of the Rothschilds, they raised the trillion, you know, the equivalent the $1.2 trillion equivalent in the space of um in the in the space of six months. And all of this money was injected into Germany which caused a massive bubble. Injecting that much money in that that short a space of time caused a massive equity bubble. The uh the equity market in both um Berlin and and the ancillary equity market in Vienna uh went up 200 300%. >> So that's the Rothschild element. We'll come to that in um right specifically in a few minutes. I know you >> and then there was a third bubble which is that there was an explosion in foreign borrowing on the uh on the UK stock market and all sorts of countries came uh to borrow um on the on the capital markets and um you know many of those countries should never have been provided credit but there was so much money uh that was sort of set loose by the FrancoRussian war that was looking for a home. >> So bubbles like uh I know one of the other things you've done in your life is as a senior figure within the IMF and you wrote a book back in 2014 called money and tough love inside the IMF about when you should and shouldn't lend money. So you're not just an academic cut, you're also a man who's practiced the business or the lack of business of lending to companies. It's interesting. You begin your wonderful book, Lords of Finance, with uh a section on the First World War, which you see as being intimately bound up with the crash of the 30s. How central do you think war is when it comes to these great crashes? Is there always some sort of military event triggering economic crashes from the beginning of time? >> Um, you know, I'm not sure. Uh I mean the uh first of all we haven't had that many crashes. I mean the the the if you look at history the truly global crashes were 1873, 1929, arguably 1973. >> Arab-Israeli war of course. >> Yes. And uh 2008. >> Yeah. where there was I mean I there was I guess the Americans were in Iraq and Afghanistan but that's slightly different. >> Yeah. Yeah. So but I don't think that that was not what ended up triggering uh 2008. So uh you know there um so I I don't know two out of three or three out of four um there was a a massive um military uh operation that that probably had some repercussions. Uh Leak, what did the global economy look like at this time? You were educated in the UK. My rather amateurish understanding is that um that the the British Empire was at its pomp uh in the middle of the 19th century in the Victorian age and that their share control of the this this global economy which was increasingly an Anglocentric economy was was was was pretty astonishing. Is that fair? >> You know, I think that's an exaggeration. Uh just just to give you rough numbers, uh the UK economy was $6 billion. Uh the US was catching up fast. It was $5 billion. >> France was $4 billion and Germany was let's say $4 billion. So they were it was actually one of the few times when the four major economic powers were roughly equal in size and you know today the US economy is whatever $30 trillion the next largest is China at 10 to 12 trillion so you know there's a massive discrepancy So it was a multi an economically multip-olar world as it was politically and military in the middle very much so late of the 19th century. In your uh in your book about uh the great crash uh John Maynard Kanes his great great niece was on the show recently. She has a new book out about trade wars. She works for the Financial Times. He's presented as one of the few wise men who got it. Were there people in the 1870s, Leakat, who were the equivalent to canes who understood what was happening? You know, I'm uh I'm not sure that anyone got their heads around totally got their heads around what was going on because um you both had a cra you had a crash which had massive repercussions, but then on top of it, you had this crazy decision by the Germans to double down on their attack in Fr on France. by trying to uh impoverish France by selling all their silver. And France was the largest holder of silver in the world. And it it was sort of the it was a uh it was a self-inflicted wound for the Germans to do this because everyone silver prices fell everywhere including in Germany and it caused a spiral downwards in uh silver prices which then caused a massive contraction in the volume of international reserves. And to do this in the middle of a financial crisis was to was to compound what was an unfortunate sequence of accidents with a crazy economic policy. >> I mean maybe in the long term we can see then French behavior at Versailles as being a kind of revenge. Bismar's always been treated kindly by histori or many historians in history as being a wise realist. The man who united Germany in in your uh in your book Lord of Finance, you present him as someone who understood that Germany shouldn't be a fighting a war on two fronts. Does Bismar have some responsibility for the this in in in economic terms at least this disastrous peace with the French? Yes, he he had no he did not understand economics and by his own admission um and uh when they imposed this billion dollar today the equivalent of a trillion dollars this fine on France. He didn't understand that just imposing a giant fine on a country u actually does you no good because they try and give you they they pour in gold and silver into your country which then causes massive inflation a stock market bubble and it doesn't actually help the it didn't actually help the German economy and in fact left a residue that would last for a decade. >> Markx comes up in your book, not just uh the Rothschilds. Um Marx, who of course fancied himself as an economist, although many people think he was a better philosopher and political theorist, did Markx understand what was happening? Uh no. Markx Mark Marx had been predicting a financial crisis since the 1850s >> in a biblical sense. Of course, Markx was perhaps most mostly influenced by a kind of a biblical theology in his narrative of history. >> Exactly. And so every few years he would predict okay the crisis is now coming and his uh uh I mean people it was so ridiculous he was so ridiculously long wrong for so long that even his pals started making fun of him. >> Well even a clock is right twice a day. Um, >> exactly. >> I joke with Alex when he was on the show that uh in 50 years time people are still going to be talking about a late a crisis of latestage capitalism. This thing's been going on for a couple of hundred years, hasn't it? >> Right. >> Um, what about Mark Twain? He also again not a not a character one would expect the great American writer and humorist a man who understood 19th century America as well as anyone and its booms and bust culture. Twain comes up in this book he's not the kind of figure who would you would expect to see in a in an economic history. What did Twain make of of the 1873? >> You know, he I think understood that the uh the bubble in in railroad construction was having very damaging effects in the US. Um and in fact he and a friend uh collaborated to write a novel which came out in 1873 in early 1873. um the title of which was The Gilded Age. >> Uh the novel was terrible. Uh it, you know, the plot didn't hang together. It was full of minor characters that uh you you know very forgettable minor characters. Uh but what did remain was the title of the book. uh and it struck a chord and it was uh it uh it was converted. He actually rewrote it as a play and it ran as a play in New York and did somewhat better as a play. Uh but it was um it was an attempt to capture uh the the the decline in morality uh because of the boom in railroad construction. >> Markx of course famously wrote about uh 18 the the Paris commune of 1870 that history repeats itself first as tragedy then as fast. When we think about our current boom and inequality and our current guilded age 2.0, are there equivalents? Uh was the boom of the 1850s and60s did it create an enormously wealthy class of capitalists and investors? Lea >> uh yes in a in a word yes. Uh I mean there were um it um not only did it create a um sort of change the redist changed the distribution of income particularly in the US but uh also somewhat in Europe. Um it it u it fueled uh a explosion in borrowing and part of the story that I tell in the book is that behind that explosion in borrowing was the Rothschilds who essentially uh were the inventors of the bond market. But that left the world in 1873 with this overhang of debt. Uh and when things started going south, this overhang of death debt provoked not only bankruptcies but this massive deflation in prices as debtors found themselves increasingly uh overburdened by the rising uh the rising cost of their debts. So let's we've got to the our world the Rothschilds. We did a show um a couple of years ago with the writer Mike Rothschild who has nothing to do with the Rothschilds called Jewish Space Lasers, the Rothschilds and 200 years of conspiracy theories. Um they were very much involved or people who who read and wrote the Protocols of Zion uh uh thought that the Rothschilds were the antichrist. How um introduce us to this Rothschild family, a wealthy Ashkanazi Jewish noble banking family based originally in in Frankfurt. Tell us about them. >> Um well, they were they were more than just wealthy. They were the richest family in the world. >> They were the musks and the uh the bezoses of of of the late 19th century. >> Yes. I mean in in 18 uh in in the early 1870s it's estimated that they were worth 150 to$200 million then uh which you know if you multiply by a th00and is 150 to200 billion dollars uh today and until very recently that would have made them the richest family in history. uh the um the last few years have upended that. We're about to see Elon Musk exceed a trillion. Uh but it you know you cannot underestimate how important they were to the financial the financial situation uh particularly in Europe which was the main which was the main center of capital uh in the 1870s >> and of course they're a Jewish family uh although they certainly weren't uh traditional Orthodox Jews from the ghettos of Eastern Europe. How overt was their Jewishness? >> Uh very overt. Uh they uh they only married uh they would only marry within the faith. uh the the founder there's the founder and then his uh five sons and then there were I don't know 11 grandsons who ran the business of those 11 grandsons because they would only marry within the Jewish faith 10 of them married their first cousins. Um so uh it was it was a very insular family. Um and you know I should add that uh in the 19th century marrying your first cousin was not uh was not quite as exceptional as it is today. Um I don't know Queen Victoria and Prince Albert were first cousins. Uh Albert Although it's quite surprising given how smart the Rothschilds were in amassing money. I'm not sure it generates very smart kids. Um especially in the British family. >> Albert Einstein married his first cousin. Charles Darwin married his first cousin. So uh so it was a it was a common phenomena. >> So how I mean the Jews of course historically in central and eastern Europe lived quite separate lives. They became more integrated in 19th century Germany. There were Markx of course famously wrote about the Jewish question uh and some people see him even if he was the son or grandson of of rabbis from Triier as himself and an anti-semite. Um how how did the Rothschild involvement with this crash how did it trigger or change anti-semitism in central and eastern Europe? Well, the first of all, you know, I should say the Rothschilds were in a class of their own. You know, they they were truly viewed on the on a par with uh the royal families of Europe. Uh they had 150 homes spread across Europe. they uh they you know socialized with kings and uh and even they were they were elevated to the nobility in the 1830s they um in in places like Austria they weren't received at in court at court uh but they were you know they were otherwise you know they had they had a noble status. Um in Britain they Lionel D Rothschild became a member of parliament. Um the next generation there were you know his son was was elevated to the House of Lords. So they were they were not in any sense in a ghetto. >> Yeah. I I guess the the closest thing to them these days is George Soros. He made a fortune taking the Bank of England on um as you know. I'm sure you're familiar with Do you know Soros? >> I I I I don't know. Well, I've met him. >> Well, you know, I mean, you know the story as well as anyone. Um, did the Rothschilds make Soros style money out of lending the German uh that their involvement in in this uh in in the peace of 1870. >> Uh they um they made a ton of money uh raising capital for France to pay off Germany. So, and you know, it took everyone by total surprise when they raised a billion dollars in 1870 to pay off the French indemnity. >> But where did they get the money from? >> Well, they they had contacts all around the world, >> right? So, it was a kind of global. So, when it comes to this idea of a a global uh the the great depression, the money itself was also global in a way. we see the emergence of a global economic system all coming together in 18 in the early 1870s >> very much so there was uh there were probably 200,000 300,000 bond holders uh of of pretty uh you know of sort of high netw worth individuals who were the clients of people like the Rothschilds who financed this whole boom were there rough childs, some of the members of the family who were a little concerned about their more and more visible role in this and the fact that I mean I know no one expected this great crash, but they must have understood that they were involved in a massive gamble and it could backfire not just in a financial sense but in a cultural and a political sense. you know, they were actually not participants in the bubble. I mean, they, you know, they raised capital and they were, you know, they'd created this, you know, this giant machinery for raising capital, which is the bond market. Uh, but they were very uh they had had a tradition of avoiding anything that smacked of sort of a mania. So, anything that looked as if it was everyone was piling in, they they immediately became skeptical of. So, they did not lose money in 1873. >> But there it's always the smart money. I'm sure the Dutch mer some of the Dutch investors in the tulip mania, they didn't lose money. It's always the smart guys who come out. Didn't Didn't um >> Didn't Kane sell all his stock before 1929? Yeah, I I've forgotten that story. Yes. >> So, what exactly happened that there was this panic of 1873? I know you focus, as you do in your other wonderful book, Lord of Finance, with the inadequacies, the shortsightedness, the the the human deficiencies of the the leading uh not just economists, but the people in control. We've talked about Bismar. How inadequate was the response of policy economic policy makers to this panic when when the the boom busted? >> Uh totally inadequate. I mean I don't know how what one can say that the uh the actual economic impact of the the downturn was relatively modest in um in the US uh industrial production went down 6%. Which you know is not great but is is you know a a very modest recession. But Brit, the US was historically a boom and bust economy and culture, wasn't it? >> Right. But it so the fact that it only went down 6%. Um and that Germany neither Germany nor uh nor uh Great Britain had a major depression uh was uh was actually quite significant. What was significant was all of this monetary mismanagement on with silver led to a 20year period of falling prices. Eventually prices in the 1890s had fallen by between 30 to 40% compared to where they were in. You have a deflationary crisis as happened recently in Japan. >> Exactly. And it was it was just uh it was so pervasive and it had such damaging consequences for you know I mean the the irony was that in a deflation creditors i.e. bankers and people who own bonds do pretty well and debtors do terribly. Uh so you had a situation where bankers were viewed as having brought on the crisis and then in the 20 years thereafter were blamed for having provoked you know for having benefited from the aftermath. When it comes to blaming bankers, I talked about the protocols of Zion earlier. I'm not sure when they were written at about this point. Um >> I think later 1890s. >> But do you see this crisis as triggering shall we say just as it triggered the modern economic age also modern anti-semitism? I mean we can't >> oh very very much >> the c uh you know we don't necessarily see a straight line between this crisis and the holocaust but certainly it it it it reinvented anti-semitism. Is that fair? >> Uh that is totally fair. Uh it's not a coincidence that the word anti-semitism was first coined in the late 1870s in Germany by someone who view used it as a as a term a positive term. Um and >> who was that? >> William I'm blanking on his name sorry. Um uh but he he um so yes it anti-semitism Jews were in in the 1860s and 1870s were becoming totally emancipated in Germany and then the crash and the bubble caused a um a a retrogression and um the um the uh so a revival of anti-semit a new form of anti-semitism form yeah economic anti-semitism >> even France which until then had been relatively immune from anti-semitism then gets infected and which then leads to the Drafus crisis >> right what what what year was the Drafus case >> in the 1890s, early 1890s. >> So from an economic point of view, uh, Lea, why do economists differ on whether the the long depression as a consequence of this panic of 1873, why does some say it ended in 1879, which is a six-year crisis, which don't seem too bad, and some say 1899, which is a quarter of a century. Um because depends whether you're looking at production or prices. >> Well, how do you see it? >> I see it as a long peri I I focus on prices that that's what made uh that's what gave u the global economy uh its malaise that with constantly declining prices it was hard to generate any sort of optimism. Um and as a consequence um the the economy it was in my in the book I describe it as u a global economy which was uh trying to get um going but with one foot on the accelerator and one foot on the brake. >> That's one way of breaking the gearbox which of course they use those days. The >> political consequences uh Ulyses Grant was the US president at the time. I know you talk about its impact on reconstruction on the failure of reconstruction after the civil war in the US. What were the political consequences in the United States of this great >> not this great depression of of the long depression? >> Uh you know actually it was uh they were almost immediate. In 1873 you get a financial crisis. uh uh going into the financial crisis, the Republican party was in the catbird seat. It had just won a it had won the presidency. Um it was uh controlled both houses of Congress. Uh and most people uh in 1872, the Democrats didn't even field a candidate. uh the the two candidates were what a Republican and a liberal Republican. So everyone thought the Republican party would dominate American politics for a generation. the effect of 1873 and in particular of Ulyses Grant sticking to hard his hard money policies as it was at as as the country was going into a a depression and as and most importantly as prices were falling dramatically was to uh the the Democrats reun won the House in 1874 and came close to winning the presidency in 1876 and were only able to win the presidency with one electoral college vote. And that seems to have been the product of a backrooms deal between the Democrats and the Republicans in Congress. Not >> the first or the last I think of that term. >> Yeah. And and the terms of the deal were very simple. Uh the the Democrats said to the Republicans, "We'll give you the presidency, but you have to withdraw all troop all federal troops from the South." And that was the end of reconstruction. And it was only another it took a barely a decade for Jim Crow laws to get. So in other words, Leah Catat, uh we can blame Jim Crow on the Rothschilds. Is that fair? >> No, when that's a little >> we have to be careful again accused of all sorts of things. That was a >> Yeah, that was No, but >> Oh, it had a profound uh it had a profound impact on the US on the history. It's a very interesting counterintuitive interpretation of American second har late 19th century history which often isn't given >> but economic interpretations are always probably the most truthful as as Markx reminds us. What about in the U? What about in the UK? Uh, Lea, what was the impact of this long depression on the on the British economic miracle on the industrial revolution there? Um the the impact was essentially uh that uh as prices were going down everywhere in the world um the UK was slow to adjust and uh >> not for the first or the last time I >> Yeah. And so the US and Germany um so you got a revival in the in the 70 in the 1880s in the global economy though not in prices but uh but the driving the drivers of that were the US and Germany and and not the U uh UK. >> And what about Germany? We mentioned that Bismar may have been in some senses responsible even if he didn't fancy himself as an economist for this rather unwise punitive peace treaty with the French in 1870. Can we see the long depression as forming the background the foundation of bismar social reforms? Of course he's a conservative but he also pioneered a social welfare system in Germany that uh was enormously influential. What was the impact in Germany in political and uh cultural terms of the long depression? Um I think the um um the falling prices uh damaged u the German aristocrats and set the basis for a sort of um u for an anti-democratic Until then, you could actually argue that Germany was becoming more democratic once the um once prices started falling um and um you you uh and ag the big agricultural estates >> uh started facing trouble. uh you had protectionism being introduced. Um and uh Bismar retreated from his alliance with the liberals and from a sort of uh a movement towards free trade. And you got a movement right across Europe of protectionism which was yeah which had damaging effects. the MAGA movement in the 19th century and was it also behind Bismar's war so to speak with the Catholics his culture camp >> you know I don't know enough about German >> so he didn't blame the Jews he blamed the Catholics for this quote >> and then what about the two tottering empires the two sick men of Europe officially of course the Ottoman Empire was the sick man of Europe but the Hapsburgs weren't perhaps quite as sick as the Ottomans but they weren't in a great state. What was the impact on these two great empires of uh >> Well, the the giant the giant impact was on the Ottomans. Uh they were uh in 1874 when people started adding up all of the international sovereign debts. It turned out the biggest borrower was the Ottoman Sultan Abdul Aziz who had accumulated a debt of a billion dollars then which you know uh the idea that bankers were willing to or bond holders were willing to lend a billion dollars to the Ottoman Empire and only you know two billion ion dollars to US railroads. Uh just sort of puts that into perspective that um it was it was ridiculous. The Ottoman >> were the Rothschilds also lending money to the Ottomans? >> No, they you know that was the astounding thing about the Rothschilds. they managed to avoid they had very strict standards about whom they would lend to or it wasn't their money. They were underwriting um they were underwriting bonds which they then sold to their clients, but they had very strict standards and they would not lend uh uh they the the Ottomans approached them many times to be able to borrow and um and um and the Rothschilds said no. Um, in 1873 when the whole thing went south, the Ottoman state was paying 70 cents of every dollar of public revenue to servicing its debt. >> United States today perhaps. >> Well, no. United States. In the United States today, it's 15 cents. So we're a long way from 70 cents. >> So could we argue I mean the Ottoman Empire of course was in massive decline and it was involved in all sorts wars especially the Balkan wars before the first world war. >> Could you argue uh Leat that um that the the great crash of 1873 the panic was the death nail of the Ottoman Empire? Well, it certainly led to the um uh the Russians uh the the Russia Turkey Turkish war which then uh >> in Crimea. >> Yeah. Uh no, post Crimea. Crimea was 1850s. This was 1870s and it essentially hived off all the the Ottomans lost all of their European possessions. So everything in the Balkans that belong to the uh to the um >> the Hatsburgs Bosnia and Serbia became >> Exactly. Yes. So >> the Russians Leat what was the impact on a primarily agricultural economy? >> You know I I don't quite know. Um it uh the Russians certainly gained from the decline of um of the uh you know of the of the Ottoman Empire losing half its half its empire in Europe because some of it went to Russia, some of it went to uh went to the the Hapsburgs. Uh I don't actually know what the impact on Russian economic prospects was. Um it um cuz it you know it it didn't seem to uh Russia was still viewed as this bear trying to move into um to Europe uh to Egypt and the Mediterranean. So it reinforced the idea that the British essentially forgave the Turks threequarters of their debts in order to bolster up the what remained of the Ottoman Empire >> and to prot as a challenge to the Russians of course and then the the English and the Russians ended up on the same side in the first world war. You begin Lords of Finance with the outbreak of the First World War. To what extent is that the final chapter in a sense in your 1873? To what extent did the crisis of 1873 create the conditions for the First World War? >> Uh yeah. No, I think that's that's a reasonable uh position to take. I mean it it's certainly um uh it's it's certainly we actually we got a depression. We then had the last boom from about 1900 to 1913. Um, and that was a universally uh was a true global boom, another true global boom before the whole thing ended um in tears. Was it inevitable that it was going to end in war? No. Um I mean I don't think the first the fir I've always taken the view the first world war was a series of massive misjudgments and that you know it was not that there was nothing foreshadowed in the global boom that was going to cause the first world war to to to break out and then secondly I don't think there was anything uh the the the the crazy economic commitment to of four years of fighting of essentially pointless fighting in Europe was what caused the great depression. Um, Leah Kat, what about the impact on the left, on not just Marx, but on Lenin uh and the the social democrats in Germany? Um, was this enormously influential, this this long crisis? >> Uh, you know, I don't I I'm not I don't quite know the answer to that. It was it clearly um the because the deflation from 1873 to the 1890s created massive social problems both in Europe and across um and across the US. But they were less to do with workers versus capitalists and much more to do with farmers uh struggling under the burden of debts uh with protectionism. So it was it was much less a sort of c uh u a war um a war of capital versus labor. Yeah. So, they of course always expecting this final crisis. Two more quick questions. Uh, Leakat, you've been very generous with your time. Um, we're always fighting the last war, whether it's a military or economic war. What did economists learn from this crisis that may have indeed been misapplied to the crisis of of the late 20s and 1930s? Uh I think they uh they assumed that um the world was able to deal that it reinforced their view that the gold standard was the right thing even though it was the wrong thing. But >> of course you do Mont people like Montigue Norman who was the head of the Bank of England at time was a a gold standard guy >> right. So uh so I you know it the odd thing I mean if you read that the review of my book in the Wall Street Journal >> Yeah. which just came out a few days ago, >> right? It the same thing appears which is, you know, it was it was fine. The fact that prices went down was actually okay. Um, and I think it reinforced this sort of belief in the gold standard which was which would become a major problem in the 20s and 30s. And final question, uh, and everyone's going to be asking you this, Leat, because you're such a wise man. We live in a a time of economic exuberance. Some people might think it rational. Some others, others will say it's irrational. James Suriweki just recently had a piece in the Atlantic about why stocks keep going up and suggesting that maybe it's not quite as unrealistic as we think. What does your you've you've spent a long time on on this book on L Lords of Finance. So you're an expert on economic crashes on this latest book 1873, the Rothschilds, the first great depression and the making of the modern world. What does this book and this crisis teach us about the 2020s and what we might think of as the the postmodern world? What what are the lessons? So, uh, you know, I suppose the the the closest equ equivalent might have been the boom of the 1920s. And the interesting thing about the boom of the 1920s was until 1927, the boom the the the rise in the stock market was matched by a rise in earnings. So it was perfectly rational. It was from 1927 to 1929, the last two years where the whole thing became untethered. So you know, you've got to be careful about characterizing a whole a whole bull market as a bubble. What instead hap seems to happen is the bull market is um is driven by real fundamentals and real economic growth and uh real earnings. But then people become so enamored w with what they're experiencing that they start projecting this into the future forever. So the 1927 to 29 was the bubble not 1920 to 27. So the question and that happened again in the in the late 1990s we had you know a big improve uh increase in productivity. Uh we it was perfectly rational. The stock market going up was perfectly rational until about 97 n 1997 and 1998 and then it became it went crazy. The dilemma is if you're an investor is the last two years, you know, it may go crazy, but you'll miss out on 30 40% r rises in um returns on on stocks. >> So, in other words, uh and final final question, Leakat, um should we buy anthropic and open AI when they go public later this year? Should we be optimistic or pessimistic about the current AI global boom? >> We should be optimistic about the boom but don't buy the stock. >> Well, wise words from a very wise man. Uh, one of the most important economic books of the year is out today. 1873, the Rothschilds, the first great depression and the making of the modern world. not just smart economic analysis but enormously readable with a a an excellently colorful human dimension. Congratulations Leakata on the book. I know it took you many years and expect you to to get to work again on the next economic catastrophe. Thank you so much. >> Well, thank you for having me, Andrew. >> Hi, this is Andrew again. Thank you so much for listening or watching the show. Uh if you enjoyed it, please subscribe. We're on Substack, YouTube, Apple, Spotify, all the platforms. Uh and I'd be very curious as to your comments as well on what you think of the show, how it can be improved, and the kinds of guests that you would enjoy hearing or listening to in future. Thank you again.