A lively, comprehensive history of financial crashes in American history-and a concise explanation of the little-understood principles that caused them all. Pundits will argue that the 2008 financial crisis was the first crash in American history driven by consumer debt. But in this spirited, highly engaging account, Scott Reynolds Nelson demonstrates that consumer debt has underpinned almost every major financial panic in the nation's history. From William Duer's attempts to profit off the country's post-Revolutionary War debt to an 1815 plan to sell English coats to Americans on credit, to the debt-fueled railroad expansion that precipitated the 1857 crash: in each case, the chain of banks, brokers, moneylenders, and insurance companies that separated borrowers and lenders made it impossible to distinguish good loans from bad. Bound up in this history are stories of national banks funded by smugglers, fistfights in Congress over the gold standard, America's early dependence on British bankers, and how presidential campaigns were forged in controversies over private debt.
Nelson, a professor of history at the College of William and Mary, analyzes the financial crises that propelled the economic evolution of the United States from the earliest years of the republic through the early 20th century, explaining that virtually every one (save the Great Depression) was propelled by excessive consumer debt. His lucid depictions of busted bonds, currency spirals, and foreign trade imbalances ably demonstrate the role of "the farmers, artisans, slaveholders, shopkeepers, and wholesalers whose borrowing had fueled the booms and busts," while charting the evolution of the country from a borrowing nation for a century and a half after independence to a world lender after WWI. Nelson is unsparing in accounts of the shaky fiscal infrastructure through the 19th century, observing that the postrevolutionary economy was based on spending binges for fashionable "monkey jackets," government land sales, and supplying cotton to British mills, the consequences of which devastated consumers, small businessmen, major financial institutions, and eventually the nation as it plunged toward civil war. This astute account of economic disruption and disaster through the Great Depression is a useful and engaging perspective on our propensity for repeating our financial mistakes. Agent: Deidre Mullane, Mullane Literary. (Sept.) (c) Copyright PWxyz, LLC. All rights reserved.
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September 04, 2012
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