The economic fate of Argentina, a foodstuff exporter supporting one of the richest populations just over a century ago, is well known. New Zealand’s late 19th and early 20th century history is similar in many respects. Like Argentina, faraway New Zealand was also exposed to the dramatic fluctuations of commodity prices and financial conditions intrinsic…
The Panic of 1857 was just another of the tumultuous 19th century in American finance. In the western United States, it had begun two years earlier in San Francisco. At the start of 1855, the city still seemed to be booming, growing from a population not much greater than zero a decade earlier into a…
It is easy to think of economic and financial crises that have had stunning political consequences. Sometimes this goes so far as to turn normally arcane fiscal and monetary questions into objects of fierce public debate. The reverse can also happen. Political events can and have changed the context of economic and financial decision-making with…
Excitement is present in all speculative manias. Sometimes this excitement has only financial origins but widespread financial speculation can spring from enthusiasm for technical innovations or trendy fashions, especially those with the broadest popular appeal and relevance. In the late 19th century, the bicycle industry was benefiting from both changes in technology and fashion and…
Boom and bust cycles in securities markets are very familiar and usually ridiculed in retrospect. It is easier to blame the victims of speculative episodes in ‘paper assets’ like stocks and bonds than those ensnared in contracting markets for ‘real property’ like real estate. Crises in real estate markets trouble the minds of observers far…
In ancient Rome, lending was often secured by land, at least in the case of large loans to wealthy landowners. Naturally therefore, the credit and real estate markets were closely linked. These links could help propel large fortunes when times were good and could cause trouble when virtuous cycles gave way to spiraling losses, when…
In search of higher returns elsewhere, European investors in the 19th century increasingly coveted the bonds of South American borrowers. In Argentina, foreign money helped finance national improvements and government deficits. Arranging much of this financing was one of the oldest London merchant banks, Barings Brothers & Co. When the boom years ended and the…
In the early 1790s, the United States was still in the midst of its first presidential administration and still establishing new governing institutions. This process was interrupted briefly by a financial panic in 1792. In a country then just a few years old, expectations for a strong response might not have been high. However, the…
In the early 20th century, several of America’s most famous popular publications on business and finance were launched. Forbes, Barron’s, Fortune, and Business Week all got their start between 1917 and 1929 and all survive with large circulation to this day. They each covered the events of the Great Depression and any of the magazines…
In 1982, the third largest stock market in the world crashed, losing 60% of its value over three months. This occurred not in America or Japan, but in Kuwait. The tiny Persian Gulf state of a million and a half people had become enriched by oil money which flooded into its financial sector from investors…
Perhaps one of history’s best-known financial bubbles was also among the first. The South Sea Bubble, which inflated and popped in 1720, was the product of the “Financial Revolution” which began in Britain in the late 17th century. The crash is at least familiar to many interested in the history of financial crises. For this,…
For as long as money can be borrowed short-term at a rate cheaper than it can be borrowed for longer, banks and borrowers will be incentivized to keep the duration of their liabilities short. While this is economically favorable in the short-run, it carries meaningful risks. Such a maturity mismatch has been the source of…
