To pay for new railroads and canals, 1830s American corporations and states went on a borrowing binge. Bonds sold to British and other European investors financed many more railroads and canals than were needed, Alasdair Roberts tells us in America’s First Great Depression, the Delancey Place January 9, 2017 selection. Panic ensued as the bonds went into default in the late 1930s.
“‘Great bitterness of feeling is very naturally felt by the mass of investors in American bonds’ the American minister to London reported. ‘Many have by their investments lost all the earnings of active life and the fund on which they relied for their support in old age.’
It made no difference to investors that not all states defaulted. Barings Bank of London’s agent confided to the Boston agent that British investors ‘in their anguish are crying out against American stocks, and we shall never be able to sell any more. . . . I have come to the conclusion not to sell any more American stocks.
Competitor Anthony de Rothschild urged his brothers to sell all U.S. investments. ‘Let us get rid of that blasted country—as much as we profitably can. It is the most blasted and the most stinking country in the world—and we must get rid of it.”