The Panic of 1792: Alexander Hamilton and the First US Financial Frenzy

Chris Jarvis was a member of the IMF mission to Albania at the time that nation's pyramid schemes imploded. In this interview he gives us some background to the events, as well as detailing what went wrong. Jarvis wrote a pretty definitive account of the events that led up to the collapse, which formed the basis of much of the Albania episode. He discusses the rise of these schemes in transition economies and the ways in which they might be contained. This replaces the unedited file I inadvertently uploaded earlier. My apologies any listeners who downloaded the thing. 

In late 1996, the pyramid schemes that had taken off after Albania began life as a post-communist, transitional state, began to collapse. Less than six months later, the meltdown would leave thousands dead, the nation on the brink of civil war and huge questions about how some 40% of the country's wealth had been swallowed up in what amounted to little more than Ponzi schemes. This is the story of what happened, why it happened and of the lives that were runined by it. 

This is an account of what some have called the first emerging markets crisis. It features a hero of the war of Venezuelan independence who’s really, really good at retreating, mostly without his troops; then there's the fall of Napoleon and the fallout from that, the hassles involved in moving on to a gold standard, hot IPOs from the era’s hottest industries, and the Greeks. (They defaulted, of course they defaulted.) How could we forget the Greeks?

The US's second attempt at setting up a central bank ended with Pres. Andrew Jackson's veto of the renewal of its charter. In this episode we look at the events leading up to Jackson's decision and at the fallout from it, including a depression on the scale of the Great Depression of the 1930s, several states defaulting and changes to their constitutions. Along the way there's fake news, a trade war, a bank war, high finance and low tricks. We end by bringing Moby Dick into the mix. Enjoy it.   

Following the Panic of 1819 and the subsequent recession, the US's second attempt at a central bank got on with the job of holding the Treasury's money, controlling the currency and regulating the nation's banks. It had some success, though it was widely blamed for causing the Panic and the pain that ensued. Then, in 1824, thanks to what he called the "corrupt bargain," the sort-of-populist candidate Andrew Jackson lost the presidential election and immediately started campaigning for the 1828 rerun, taking aim at elites, banks, bankers and so on. Sound familiar? The Bank of the United States was drawn into the conflict, triggering the "bank war," which of course got personal very fast, and involved horsewhipping (why not?) a duel or two, fake news and other types of skuldggery, as the bank and its boss fought to have its federal charter renewed in the teeth of opposition from the nation's President. Oh, and Leonard Cohen makes an appearance.   This is the second part of the series. In the third and final part, which will drop in the next fortnight, we will deal with the outcome of that battle and the fallout from the "bank war."  

This is Part 1 of a two-part series on the US's second attempt at installing a central bank, setting the scene for the Panic of 1819, a serious depression for which the Second BUS took most of the blame. This was somewhat unfair, but politically toxic. This was to become apparent some years later when the fledgeling central bank's management miscalculated and took a step that was to prove much like handing hostile interests a loaded gun, placing the barrel in its own mouth and inviting them to press the trigger. In this episode I set the scene, going through its birth after the War of 1812, a monster volcanic explosion, what lay behind the speculative boom that led to the Panic of 1819 and the bust -- a depression that lasted until 1821 -- that followed. 

At the end of the 17th Century, Scotland was in a bad place. Failed harvests combined with what amounted to economic sanctions against it by its larger, more powerful English neighbour, part of a more general mercantilist approach to international trade, were strangling its economy. That prompted the Scottish elite to attempt the founding a Scottish colony that would act as an entrée into international trade. Instead, it all went catastrophically wrong, bankrupting the nation and opening the door to union with the neighbour that had helped cause the disaster. This is the story of the Darien Scheme, which cost a small nation its independence. (The audio has been edited to remove a minor inaccuracy.)

Ben Bernanke, eat your heart out. In the year 33 CE the Emperor Tiberius, was forced to take a break from assorted depravities on the island of Capri (not for nothing was he dubbed "the old goat of Capri" by less than objective chroniclers) to head off a financial crisis that threatened the stability of the Roman Empire.  He succeeded. The crisis had deep roots in Roman history and in  Roman politics, roots that included the death and disgrace of the man Tiberius had left in charge when he retired to Capri to indulge his worst instincts. Download the podcast and find out what went down in Rome in the year 33, not long after Christ was crucified. 

In 1792 the antics of an English-born speculator called William Duer sent the newly born US's ramshackle financial system into meltdown as an ill-fated attempt to corner the market in government bonds blew up, ruining the speculators and those who had lent them money, including the Madame of a brothel. The attempt at cornering was made possible by the process of setting up the nation's first central bank. Alexander Hamilton managed to contain the immediate fallout but his arguments in favour of setting up a central bank were weakened and its charter expired after 20 years. However, a mostly modernized financial system was in place by then, which had allowed the nation to go through with the Louisiana Purchase without lasting damage to its finances. 

In this episode, we cover the implosion of the South Sea Co. amid an outbreak of the plague in France, and put it into its context internationally. The affair threatened the throne of George I and prompted a frantic cover-up on the part of the government after the man who was potentially a star witness fled with a green-covered ledger containing the names of those who’d benefitted illicitly. The affair was also the key to the return to the top of Robert Walpole, who used it to devastating effect.