So, I'm honored to welcome Leaket Ahmed back to Politics and Pros for his just released book 1873, which he describes as a prequel to his earlier work, Lords of Finance. The new book is a narrative history of the world's first international crisis, which led to the Great Depression of the 1870s. And the book also gives some muchneeded context to the famous banking family, the Rothschilds, who are at the center of the whirlwind. The book's just out this week and received a great review in the Wall Street Journal as well as in the New York Times, which called it a lively and compelling account of the initial crisis and ensuing turmoil. Ahmed worked at the World Bank in Washington DC and had a 25-y year career as a professional investment manager in London and New York before he turned to writing. His first book, Lords of Finance, the bankers who broke the world, won the Pulitzer Prize for History, the Council on Foreign Relations, Arthur Ross Gold Medal, and the Financial Times best business book of the year. He's a trustee of the Putnham Funds and an adviser to Rock Creek Group and chair of the Sun Valley Writers Conference. He will be in conversation with Steve Weissman, senior editorial adviser at the Peterson Institute for International Economics. Prior to joining Peterson, he was a correspondent, editor, and member of the editorial board at the New York Times. His last position at the Times was chief international economics correspondent. And he's the author and editor of four books, including The Great Tax Wars: Lincoln to Wilson, which received the Hillman Prize for the book that most advances the cause of social justice. Please help me welcome Leakat Ahmed and Steve Weissman. Make sure I don't fall off. Hello everyone. Can you hear me? I think so. Well, it's an honor and a pleasure to be here with my friend Leyaka about this wonderful, readable, compelling book and unique book. Uh there's never been a book about this subject of the first uh global financial crisis. And uh Liyaka uh recently the Wall Street Journal talked about the classic dad book is the one about you give for Father's Day which is usually all about war. Liyaka uh is uh unique in that he doesn't love war so much as financial crisis. He's an expert on crisis maybe because of his long experience at the World Bank. So this uh book tells the basic story of a boom and bust on an intern the first one on an international scale and it it started in Vienna went to New York. Um there led to panic selling all over the world collapse of rulers in Egypt and the Ottoman Empire. And at the end of the book, Leaka, you mentioned something really amazing, which is that Congress held hearings and issued a report on the causes of what was then called the Great Depression. And you read the entire report and found no fewer than 180 causes uh including um even the failure of women's right to vote, which I can believe. Right. Sure. So tell me um what did you find is the cause of this crisis? >> Okay. >> Okay. Thank you Steve. Thank you very much for doing this. Um so um this is actually two stories wrapped around each other. Uh there's one story which is a fairly conventional boom bus story. A 20-year boom that then in the last three years uh goes ary uh ends up in a sequence of u of defaults and crises. So that's the that's one story and then the aftermath of that. Uh but there's a second story uh which I think this book is quite novel has sort of uncovered um and it's quite novel which is that there is a total mess up in the conduct of monetary policy and people most most layman would try to avoid getting into the to the intricacies of monetary policy. and gold and silver. Uh but I thought that I could actually simplify it in such a way um as to illuminate it. And I don't think you understand fully the crisis unless you know both those two dimensions because the idea that in the middle of a financial crisis the great powers of Europe and the US should take steps to tighten monetary policy were uh is u yeah was astounding and it caused a 20year period of declining prices. >> So, uh I congratulate you for your fearlessness, uh you know, to to to try and untangle something like that. And you do do it so brilliantly. I remember when I took an American history course in college, the late 19th century economic uh crises were the black hole. I mean, nobody could understand them. Um, what I found fascinating about your book, I mean there's so many books, one of my favorite is Barbara Tuckman, of course, The Guns of August, where everybody, um, uh, goes to, you know, take undertakes the wrong policies without realizing it and ends up in a war. And John F. Kennedy had all his cabinet read this about uh how people uh blunder into wars. How did people blunder into this crisis? How did so many people, smart people, uh blunder into not seeing the boom that was taking place and then uh carrying out policies that made things worse? >> Okay. Well, in as far as the boom goes, uh take a look around today. Um you know, how many people uh people last year were warning that something bad was going to happen and they've been so badly wrong that they've stopped. Uh so that's that's the first lesson that uh uh and there's there's an old adage that these things uh actually it's not that old but it's was coined by the economist Rudy Dawnbush which is that financial crisis take much longer to happen than you would imagine and when they occur they occur much faster than you imagine. So, so I think that's the first um element that uh people people get tired of predicting doom and being wrong and therefore uh don't stop stop predicting doom. As far as the monetary policy uh angle goes, I don't think people quite understood how this whole thing how this whole machinery worked. And um very roughly, let me at the risk of >> why why why don't we get to that? I I was going to uh let me put it this way as an introduction to what you were about to say, which is that >> you describe and by the way, this book is full of wonderful personalities and not just the intricacies of these policies, but you describe John Sherman, who was Treasury Secretary at the time, going to London and being a misfit and outcast, wearing funny clothes and going to parties and then coming back in 187 73 and they enacted a law that became known as the crime of 1873. So that's so tell us what was the crime of 1873? >> Well, the crime of 1873 was actually hatched in Germany. So um in 1870 uh France and Germany the third and fourth largest powers in the world went to war and as um as part of the peace treaty France was required to pay Germany a billion dollars. Now a billion dollars then is about $1.2 trillion today. Um, so the so Germany receives this giant amount of money, $1.2 trillion, but not satisfied with having defeated France on the um on the field of battle, it decides to to double down and try to hit France while it's down. and essentially sells all its silver and converts the $1.2 trillion equivalent into gold. And this causes silver prices to collapse around the world. Um, at the same time, the US uh the the aforementioned John Sherman, who uh was, I think, known as the I uh the Ohio icicle. >> The Ohio icicle. Yeah. >> Right. uh had had come to Paris to a piece uh to a uh to to the great the great exhibition and was so enchanted entranced by being taken seriously on the world stage. He was introduced to Bismar. He was introduced to uh Napoleon Tuis and you know he had you know he was a provincial guy from uh from the Midwest and he got seduced with this idea that we are going to have a single currency in the world. And so as a consequence, he came back to the US and passed a added a clause to the law that said that silver will no longer be a form of money. And that wouldn't have mattered too much except that at the same time Germany was attacking France, attacking French monetary reserves and the world was disappearing into a crisis. So the comb it was an unfortunate combination of things >> and uh your wonderful description uh of this uh wrongheaded policy caused the Wall Street Journal to accuse you of being a uh in favor of silver currency. Uh and um William Jennings Brian would have been very proud of >> well you know I >> he was the cross you know you shall not crucifi he was against silver much later and his fa most famous speech one of the most famous speeches in America is you shall not crucify America on a cross of gold. So are you a silver guy? >> I totally am a silver guy. So, I should add because we're we're getting caught up with, you know, debates about uh monetary policy, but the most enjoyable thing about researching and writing this book were the characters you came across. Um, and the um and that's true about all history that uh it's not a matter of debating policy. Um it's these characters really bring the past to life. So let me give you a couple. >> Yeah. And I would say that uh you brought them to life in in the book. Uh I don't know which ones you want to talk about first, but this uh crisis that occurred uh and I want to come back to the monetary issue, but uh uh extended all the way to >> We know you're a silver guy. >> Yeah. Yeah. Well, I want to talk before we're done about why the debate, this obscure debate in the late 19th century is exactly the same and is a precursor of the debate we're having today and that caused the ouster of Jay Powell as chairman of the Fed. So, we'll get to that later. But I want to take you back to the Middle East to two of my favorite characters in the book. The ruler of Egypt, the Kadiv is Ismile Pasha uh or the king of Egypt and uh the first Ottoman sultan to uh travel to Europe, Abdul Aziz. Both uh the Ottoman Empire and Egypt uh uh were doomed by this crisis. Tell us how. Okay. So, Kadiv Ismile, he's the he's the most entertaining character in the book. Um, he was um he was essentially an a Middle East princling >> just because he had a 500 room palace >> and and palaces for each of his 14 wives. >> Well, that was that was probably the least of it. He he was um um he had actually been educated in France was expecting to live a sort of the life of a spoiled young princling in Paris. The his father and his brother both died. Um and he was forced to move back to uh to to Cairo. uh the the uh uh the kadiv at the time was his uncle say um and he proceeded to make himself uh the richest man in Egypt. Uh he bought all the best land. Uh he hadn't you know he he his goal was just to accumulate money. When his uncle died, he, you know, everyone was very pleased because he was a very efficient businessman and people thought that he would make a great ruler. Uh, the dilemma was that he only had one goal in mind, uh, to accumulate money for himself and his family. Sound familiar? Um and um and over the years he ran up a debt of $500 million uh for poor little Egypt uh by doing things like building building this he remodeled all of Cairo. Uh he had this ambition to uh to make Cairo a European center modeled on Houseman's Paris. Uh he he built aund actually I've forgotten how many rooms. 150 rooms. >> 500 500 >> 500 rooms. Yes. 500 rooms >> just for himself. >> Yeah. Uh and then he had 14 official wives and countless unofficial wives. And he built a palace for each of them. He also developed an unnatural um infatuation with the wife of Napoleon Tua um Eugene uh Empress Eugenei and she became a fixture in in Cairo society. He would invite her to every social function. She was the guest of honor at the opening of the Sewish Canal. Um, so he, you know, his mind was always on other things, >> you know. Yeah. Go ahead. >> And, um, and $500 million, just to give you an idea, the whole US railroad system during the boom borrowed borrowed a total of $2 billion, of which a billion dollars came from Europe. So Europeans were willing to lend um were willing to lend Kadiv Isma um $500 million, half of what they lend to the US uh and with almost nothing to show for it. Yeah. The We'll talk about the railroad uh boom and bust in a second, but I want to ask you um why did you decide to focus on the Rothschilds? They were considered uh as you write u on a par with the grandest royal families of Europe. They they had started out as smugglers during the Napoleonic war. They then became uh as uh uh as they were as as uh James was called quote the king of bankers and the banker of kings. Um why were they so important to your story? Um they were the richest family in the world in in 1870 they were worth $200 million. So if you translate that into today's terms, multiply by a thou one,200, that gets you to 250 billion, which would have made them the richest family in the world except uh in the la in the last decade they've been overtaken by the Elon Musks and uh other characters like that. >> Sounds ominous, >> right? Um so the and they had built their fortunes solely as bankers. They did they didn't you know they didn't construct anything. They p their primary function was to raise capital and they'd raised capital for uh for the British during the Napoleonic wars and over the years they'd become the most important bankers in the world. They had a uh by 1870 they had four branches uh Britain uh London, Paris, Vienna um and and Frankfurt. You'll notice there's a giant gap there. They had no branch in the US. They had become convinced that doing business with Americans was a losing proposition that you would uh that uh Americans were liars and cheats who would uh default on all their debts. So they ironically became the richest family in the world despite missing out on the uh you know on the the biggest boom in um in uh in in the world economy in the US. Uh but um so >> but they lent uh to other I mean they were affected by by the European >> totally they they they were at the center and look in 1870 the US was just was beginning to become a major economic power. It was a tiny financial power. the the the London Stock Exchange was 10 times the size of the New York Stock Exchange. Uh even France was four times the size of the New York Stock Exchange. So the the US was was a was a financial pygmy at the at the time. >> They had a rep and a representative in the US, right? >> Yeah. Yeah. They they started out with uh with a man named August Belmont. >> August Belmont would be familiar to any New Yorkers here, >> right? >> He of the Belmont racetrack and Belmont Stakes. >> Um yeah. And the the rumor was he that he was um he was a um he was an illegitim illegitimate son of one of the Rodschilds. >> Oh. Um but he he was not he never became a central figure in all of the finances here. The central figure was another astounding character, a man by the name of Jay Cook who u made his fortune helping the US finance itself through the the the Union government. that is finance itself through the uh civil war and by the 1870s had become one of the four or five richest men in the US and had turned his attention to financing railroads. And I you know I think um people tend to forget that uh after the civil war uh the US economy just took off like a rocket. Uh and you brilliantly uh mentioned the opening of the transcontinental railroad which opened vistas to the west. Same I didn't realize this the same exact year that the Suez Canal opened and for us India walls same year as the railroad between Bombay and Kolkata and uh this uh presented this was transformational uh and um I don't want to belabor the uh analogy to the transformation of the internet and the uh you data centers, but it's it's irresistible. Well, and you know, there's a nice little anecdote associated with this, which is uh the year that all of these three iconic projects completed. uh they um the a French newspaper remarked that you know it's astounding you can now go across the world in less than 80 days and even drafted a little itinerary for how to do this and a young um French mystery novelist stumbled across this itinerary and a light bulb went on went on went on um in his head and he said that would make a great novel. So three years later 1873 a novel appears around the world in 80 days >> and he didn't think it would make a great movie. It's one of my favorite movies David Nan. Um so uh uh one of the let's let's come back to this uh you know you you've your experience with these crises. I mean how an how how analogous how worried are you that this kind of overbuilding of railroads? They were building railroads to nowhere uh in all over the world it was bound to collapse. How how and how much do are you concerned that we're in the same situation today? Well, um very concerned, but uh the every boom gets overdone. Uh every uh private infrastructure boom, they just build too much. And it's, you know, competitive pressures of one company versus another uh lead them to to fail to take into account what the others are doing. And so it always ends up you always end up with overbuilding. Now predicting when that's going to occur and when that point um is um uh is very hard. I mean for example um in 1870 everyone was saying okay this has gone too far. It took another three years for the for the boom to really get get going. Uh so we could you know it's very easy today to say this is all going to end in tears. Uh the dilemma is you could be two or three years too early. >> And you know in in the 19 in the late 1990s it was very easy to say in 1997 the stock market has gone up too much and it took another two and a half years before it reached its peak. So no one knows when the whole thing has has gone too far. So, I mean, one of the amazing things that I learned from your book, uh, I should have, I suppose, realized it, but was the consequences. Let's talk about the consequences in the United States. The crisis that you describe, the de the depression that it ushered in meant that the Republican establishment that was dominant after the Civil War, every president was on the ropes and the Democrats were able to uh uh resurge or to regain political strength enough uh by uh getting support among the in the agrarian among the farmers especially in the South and the Midwest because they were uh really hit by the uh deflation that was going on. They couldn't pay their debts. They were angry. They returned the Democrats to power. The the election of 1876 was razor thin. The electoral college was uh in a in a crisis. And finally, uh, the 1876 election led to a deal in Washington that ended reconstruction in return for the Republican President Harrison to come to power. And why was that important? the that meant that the the end of reconstruction ushered in Jim Crow in the South and ended the um uh progress that was made for uh black Americans. And uh it it was transformational in American history to think that this was caused by an obscure debate over monetary policy that was won by the wrong side and then led to uh the end of reconstruction. And one could argue that today what we're experiencing is the end of the second reconstruction that occurred in the 1960s, but I won't go into that. But uh tell me um uh how that could happen. >> Well, I don't know how it's going to happen in the future. I think you summarized the issue brilliantly that that you know the the Republicans in 1872 the Republicans looked as if they were going to be the dominant party for the next generation. They controlled both, you know, all both houses of Congress. The presidency uh Grant had won had in the 1872 election. The rep the Democrats didn't even field a candidate. So the 1872 election was between a rep a liberal Republican and a Republican. So there was uh you know it it looked uh as if everything was in going to be in the hands of the Republicans. Instead we got the what what you just described which is this uh essentially almost a revolution in the status of the two parties. But we got something even worse which is we got 20 years of political stalemate. U no single party was able to win the presidency in uh for more than one term. So we got a sequence of um of one-term presidents. Um we got um there was uh unified we only had unified government i.e. the same party in Congress and in um uh controlling the presidency in four out of the next 25 years. Um and um you know this might sound I actually when I started reading about this I was struck by uh how how we've essentially gone through the same thing that since 2008 we've had a sequence of presidential elections where the margins are razor thin um and we've essentially got a 50/50 country much like the 1880s and 1890s But uh it was it's so interesting living through uh American politics today. You can see both parties are struggling to reinvent themselves. And that's really what happened then. But the Democratic Party really did invent itself out of this crisis, I think, and paved the way for Woodro Wilson and the New Deal and uh Democrats supporting free trade and all of that. But there's another >> by the way took 20 years for >> took a long time >> and um but there was a there are a couple of other poisonous uh consequences that I want to discuss with you before we go to questions. One was had to do with the Rothschilds. uh the collapse of the economies of Europe led to uh blaming the Rothschilds and what that translated into was uh virilent anti-semitism. Tell tell us about that. >> So um first of all um uh the word anti-semitism was invented in 1879. by a German Wilhelm and he actually coined the phrase as a as a term of uh as an expression of admiration that uh sort of he he was a rabid ant anti-semite despite three out of his four wives being Jewish. Um he also uh later in life recanted and u so he he had some giant chips on his shoulder. Uh but but the atmosphere in the 1870s was everyone was looking for someone to scapegoat and uh the the Jews were the most convenient scapegoat at hand. Um, and it began in Germany, moved to Austria, and until the 1880s, there was actually relatively little anti-semitism in France. Uh but because of the a as um as this virus transmitted itself around Europe, uh France became a a locust of just the most rabid anti-semitism culminating in the Drafus crisis um in the 1890s. The Rothschilds had always held themselves somewhat aloof. Um they they actually, you know, they never viewed themsel they viewed themselves as so superior that they were convinced they would never be they would never be targeted, I guess. >> Yeah. or or or that they would not be thought of in the same breath as all of these other East European Jews that had come over. And um so they were remarkably complacent. Um and I suppose the other dilemma or the other feature of this whole period was that bankers became were blamed for bringing on the crisis. When the crisis led to declining prices and 20 years of declining prices, the one group that benefited the most were bankers. So the theme de the theme uh developed that bankers do well whatever happens. >> Yeah. >> Does that sound familiar? >> Yeah. So um one other consequence that you mentioned which was fascinating to me was that um the this crisis led to sort of crazies crazies coming out of the woodwork and there were no fewer than six heads of state assassinated in this period. Uh Garfield uh was assassinated. thesar of Russia, Zar Alexandra was assassinated, President Caro of France, the Prime Minister of Spain, Empress Elizabeth of Austria, Hungary, the King of Italy, and finally in the 1890s, the President William McKinley, which was a hugely consequential event because his vice president took office and and his name was Theodore Roosevelt and he then transfor transformed the Republican party himself. So, how this will be my last question, but is was there something what was it about this period that you were fascinated by that made people so crazy? Well, this you know it was extreme populism and uh and so people became prey to conspiracy theories all over the place and governments were viewed as um as evil and out of the six was it six assassinations >> yeah five >> six >> five were from renowned found anarchists and the anarchist movement became a uh became a giant movement throughout Europe and in in the US. And you know, it sort of brings to mind the sort of random assassinations uh or murders that we've had recently. uh the the guy who killed uh I've forgotten his name. Manion was is it the so you know the these were people who were who were killing people >> for no reason except for the symbolism of the act and and anarchists became really quite um you know a an admired group. they were a thing. Well, um I hope uh the audience here and listeners uh uh get the impression that this is a wonderful book uh full of interesting characters and amazing twists and turns. Uh we are now at the hour where we would welcome questions from the audience. Please uh get in line and uh pretend you're asking a question. Uh, and thank you very much. And if you want to identify yourself, please go ahead. >> My name is Caroline Pofflin. I'm a physician and an attorney. My question is about US history because what I remember, well, let me put it let me put it as a question, whoever was in charge, I mean, what I I remember the I don't remember it. I remember reading about the guilded age and that was a Republican age. That was McKinley. Um, and I assume there were Republicans before that. The the the thing that the similarity between then and now is that the country was run by business. That was the Republican party of McKinley, big business, the bankers, the I'm from New England, uh, all those people who lived in Rhode Island in the summer. um the Robert Barretts >> and that's what we have now and they're running the country. >> So uh you want to respond to that? It's not really question. >> Look, I don't think I don't think you can take periods in history and neatly transpose them to now. So I don't know 1873 that was not the guilded age. >> No, >> we we were in a depression, >> right? uh the Republicans were not in power for 20 years. They actually lost power. So >> 1890 >> in the 1890s. So maybe we're this is we're currently in a in a time that's more comparable to the 1890s. >> Next question. Thank you. >> Thank you. I enjoyed it very much. Um well I would like to take a period your period from the past and transpose it forward at least a few decades but not to the not to the present time. Um I believe you you cover the uh sort of demise of the Ottoman Empire or and ultimately few decades later there's an assassination and so forth that's uh that takes place then which I guess has some relationship to the um the problems of the of the Ottoman Empire which there were many over a long period of time. So is there a connection between the two? Well, you know, this pi this the uh the period of history I'm writing about is the first decline the the first step in the decline of the Ottoman Empire when it went bankrupt in 1876. It lost all of its European provinces uh to a combination of Germany and um and the Hapsburgs. So it uh which which was more than half its revenues. So it was sliced in half but it continued to hobble along for the next 25 30 years. Um and then uh when I I mean I'm not sure how I would try to relate what happened to the Ottoman Empire with you know the assassination of France Ferdinand in 1914. So I you know this um I wouldn't try to link too much of what happened in 1876 to what happened 40 years later. I always say that you know history um you can divide up history into two types or you can divide up historians into two types of historians. Those who detect a certain pattern >> and you know say you know rising powers always confront you know uh established powers booms always lead to bust >> right >> and then there's another class of historians which who view history as essentially one damn thing after another. And this book is very much in the in the tradition of one damn thing after another. And most damn things after another are unpredictable. >> Okay. With the exception of boom and bust in this case, >> right? >> But uh but the uh pattern of boom and bust is is a cycle of history. I I think you >> it is but it it's not a very predictable cycle. >> No. Yeah. Well, >> hi there. Um, please. >> I've been working in financial services for like 15 years and we're constantly thinking about >> Oh, we're constantly thinking about dollarization and ddollarization. I know it's off topic relative to your book, but I'd love to kind of get your thoughts on on that. um particularly as like remimi is being is starting to be rolled out a little bit and clearing some transactions but is it just a matter of the US having the largest economy consuming more than we produce and things goods being sent here I I'd be very curious >> I don't think it's off topic uh >> you know I mean I'm happy to address it I I don't >> maybe address it this way leak that uh you know the concern about uh the dollar losing its supremacy is causing those who are concerned about that are are the advocates of hard money and higher interest rates which is the the modern day equivalent of the gold bugs from your era. So what do you think? >> Yeah. No, I think that's actually God thanks for the out. >> Uh yes I mean the look what what are the risks that the dollar loses its status? Now we have the pound as a example of a country that went from being in in 1914 the pound was the dollar. Everyone uh everyone denominated everything in pounds. All trade was uh was was denominated in pounds. People kept their reserves in pounds. Sterling most borrowing was was done in pounds. Uh 10 years later, um the dollar had essentially had taken over half and by 19 by the beginning of the Second World War, the pound had had essentially disappeared as a as a as an important currency except for the except for the British Empire. Uh so why did that happen? just a sequence of giant monetary policy mistakes by the British. And so the question is, what sorts of giant monetary policy mistakes could we have in the offing that would that would so damage the status of the dollar that we could, you know, that we could actually get a retreat from the dollar? And >> what's the answer? The answer is a crazy monetary policy driven by a crazy president. >> Thank you. >> There's a great story that uh in the Suez crisis when the pound when the US refused to step in to rescue the pound, Harold McMillan who was the chancellor I think of ex-jecker at the time said one day you and the United States will experience the same thing. >> Right. >> Uh go ahead sir. Um thank you. Uh one topic that haven't got an attention it probably deserves is trade policy and this is a hugely important both like in your parallels with today but also in the context of of 19th century where you have a huge debate among economic historians whether trade policy like huge tariff was uh beneficial for American industry or maybe it was harmful for American industry but it was politically very important for sustaining the Republican coalition of the time. What's your view on this issue? I'm not sure the audience heard the question. Yeah, people are shaking their head. The question was how well about trade policy and this usher you know and and the this era was one of uh protectionism, wasn't it? >> Well, it was protectionism in the US. The US was always protectionist. uh Europe was beginning had moved essentially to free trade. Uh so uh both France and Germany uh and actually right across Britain uh right across Europe uh there had been a a giant move towards free trade that the 1873 crisis reversed that. You got protectionism throughout Europe. You already had it in the US. So, it it actually didn't didn't make things worse or it didn't make things much worse. Uh but um but uh but Germany put up tariffs. Uh France put up tariffs. Uh the the French and the uh Italians got into a trade war. um uh the French attack uh got into a trade war with the Swiss. So it it is similar to to the this period I think focusing on the US is actually does not is doesn't give you much insight into uh >> but but this was bad right this trade war I mean bad for the economies. Well, yes. Uh, yes. Full stop. >> Yeah. >> I mean, this was Yeah. >> So, sir, >> in 1873, you um haven't read the book yet, but you say this crisis was made really international and um and bad because of incompetence and the policies of the governments. In your book, Lord of Finance, you say the Great Depression was really made much worse and and could have been resolved differently if the central bankers, the people who were the head of the central bank knew what they were doing. So my question is over time um and certainly Ben Barnicki studied the great depression and uh I'm curious about your assessment of his management of the financial crisis in 2008 but you know do you see the level of expertise and understanding of what causes or has caused these you know international financial crisis um that the knowledge knowled and competence of the individuals that we trust to manage these things has you know gotten >> uh better. >> It's improved enormously. In 2008 the central bankers of the world and in particular Ben Bernani and Tim Gner and all of them essentially saved the world. They should build statues to those guys. Uh so there's no question in my mind that they uh they had a dramatic there's been there's been a giant improvement in the competence of managing economies. uh the dilemma is probably the um when the politics when politics enter into the equation uh I've been using an example in 2008 Hank Pollson was in Beijing >> Treasury Secretary >> yeah he was the Treasury Secretary and he heard a rumor that the Russians approach the Chinese and propose that they both jointly sell all their holdings of US agencies agency debt of the US as a way of forcing the US's hands. The Chinese luckily said no. But financial crisis don't occur in a geopolitical vacuum. And it's not inconceivable to me that we could get a future financial crisis that occurs against a backdrop of a geopolitical crisis that totally constrains what central bankers can do. And the example I always use is France and Germany in 1873. You know, Germany could have been very satisfied with having beaten France and the battlefield uh and said, "Great, we won. They they're going to give us a billion dollars. Uh enough is enough." Instead, they proceeded to double down and attack the global financial system in a way that totally undermine stability for every country in the world. So, you know, countries do crazy things at times for geopolitical reasons. And you know, Bismar is always viewed as this, you know, giant hero who, you know, could see round corners and did a, you know, a brilliant job in managing uh the G geopolitics. But the fact that he imposed this giant fine on France and then doubled down by attacking its uh reserves, I think in indicates that he he hadn't a clue what he was doing. >> Yes. So interesting. Did the I wonder if the anal if you would accept the analogy after World War I where the victors imposed reparations on Germany and just went overboard. >> Yeah. Yeah. I mean, look, uh the I think that's that's another example of people of statesmen doing crazy things economically. >> Well, I think the lesson of your book is that statesmen don't understand economics. Oh, that's >> But anyway, go ahead, sir. >> Uh, Leaka, it's a wonderful to have you come back to Washington and talk about this. I have a question that relates to the uh Rothschilds themselves. Uh, they represent is that the first organized international banking system and how did they interact with the individual countries? so that they could essentially operate at this level without being targeted and sort of it's like the international monetary fund. The second question I have is did the Roshchilds do anything for Israel? >> Okay, both great questions. So the Rothschilds um they um they were they were so important to European finance because they essentially they had provoked the the um they had developed the international bond market and they held the keys to the international bond market. So when France had to pay Oh, sorry. When France had to pay Germany a billion dollars, who did they turn to? The Rothschilds. Now, this the Rothschilds didn't use their own money. They just had a network of clients. And in in this in the one year in a one-year period, they got commitments of $15 billion in those days. So that's the equivalent of $15 trillion. >> Did they take sides uh >> in in in the wars and in the country or were they more distant and and sort of >> there were German Rothschilds and there were French Rothschilds and there were British Rothschilds. So they tried to step uh to stay aloof from taking sides. Now the other question you had was uh the Rothschilds in Israel. Um the fourth generation of the Rothschilds uh actually probably the third Edmund de Rothschild was the first Rothschild who embraced the idea of settle of settling Jews in Israel. So and that occurred in the 1890s. So, >> so that's very late. >> That's much later than than the period that I'm talking about. Uh, this prompts me to read a passage from your book about the fourth generation Rothschild Alfred who had quote infamous dinner parties head were attended by heads of state and prominent bankers where they would mingle with their his theatrical friends or more dubious characters from the demand. A guest might be entertained by Alfred's own private circus ring. He was undoubtedly gay. you write, but he also kept a mistress with whom he fathered a daughter and he was the first Jew to sit on the bank of England. I I wonder if uh a lot of people wanted the Jews to settle in the Holy Land, it would uh from Europe, whether it might have been because they would leave Europe. >> Um yeah, I mean you might be right. Can I just add to Alfred the story? >> Yeah, go ahead. >> Story of Alfred. Uh, you probably know something about him because he he was gay, but he did have a mistress and fathered an illegitimate daughter, Almina. Albina Almina and um she married the Earl of Carnavvern and he was the person who financed um King. >> Yeah. The search for King Tut. So you you've heard of him in that context and you've also seen their house um if you've um if >> if you've watched Downtown Abbey. Is that right? >> That house was their house. So, >> okay. >> Okay. Let's uh take one last question. >> I read your first book. Looking forward to reading your the second one here. Um sounds like from the talk that you just sat down one morning with a nice strong cup of coffee and out came the book. >> Obviously, you're not a writer. >> Tell tell us tell us a little bit about how you work. Oh, I this this book had lots of ups and downs. Uh I went down a couple of rabbit holes. Uh so um the the the danger when you start writing about these people is some of them are so interesting that you end up spending six months on them. So, you know, Carl Marx, he ends up with maybe five pages in the book. >> Yeah, they were fascinating, >> right? >> I mean, there were another 30 pages that I could have written and my editor said, you know, this is it. So um so uh the key is uh to know when is enough >> and and and that there's some very valuable stuff on the cutting room floor which Susan is signaling that we've reached we that we've uh haven't have have had enough. But uh I I just want to say thank you for writing this book. It's an important book. It's a really compelling book. Uh it it opens uh you know a window into a really important part of history. So uh thank you for inviting me to to be here with you. >> Thank you. >> Thank you both. I I want to read the Carl Marks on the cutting floor part. >> That should be your next book. >> It was very entertaining. No wonder >> illegitimate daughter. Ille illegitimate son >> by the maid. Right. >> Thanks everyone.