From "The Story of Money": How a stock market crash gave birth to modern antisemitism

0:00This was the first time that we get this notion that Jewish people are operating some kind of secret financial cabal and using that to control the world. Why do you think these journalists and these kind of Jungers did this? I mean, was it just to sort of have a scapegoat? They were trying to make a name for themselves. That was certainly the case of Bill Elmar. He had tried all sorts of ways to make a reputation. This was just the last of his ventures. Oddly enough, he didn't actually believe what he was writing. He had been married four times. Three of his wives had been Jewish.

0:48Today on the story of money, a financial crash that mutates into pure political poison. And sure, yes, every financial crash leaves people poorer, but some leave something far more dangerous behind. And in this case, it ultimately arguably paved the way to genocide. So Gillian is away this week. But to tell today's story, I'm joined by Liyakit Ahmad. He's the author of Lords of Finance, one of my favourite books on financial history, and now 1873, which covers the numerous financial crises that happened around the world in that fateful year. Lijakit, thanks so much for being here. This is a real pleasure.

1:29Thanks for having me, Robert. So, Lijakit, in today's show, we're going to be talking about how a spectacular stock market crash led to the birth of a new, virulent, modern brand of anti-Semitism. In fact, it was in the wake of this crash that the term anti-Semitism was coined, right? Yes, it was actually coined in 1879 by a rabble-rousing journalist who was trying to use the opportunity to make a name for himself. Well, that sounds sadly very familiar. Well, we're going to be meeting a lot of people along the way. The banker who became the main scapegoat, naturally he was Jewish. The government leaders who failed to quash this pernicious phenomenon when it arose.

2:15and ultimately how Adolf Hitler would exploit these same ideas decades later with terrible, terrible consequences. Welcome to the story of money from the Financial Times. I'm Robin Wigglesworth.

2:41so we're going to get to all those events i mentioned but let's start at the beginning let's go back to 1871 in germany in austria and there's this huge insane never seen before boom happening on the stock markets in both countries at the same time. Liakit, can you tell me, help me paint a picture of what it was like at the time? Well, until then, both the German and the Austrian stock markets were pretty sleepy places. This wasn't London or even Paris at the time. They were small stock markets. Exactly. And from 1871, though, a giant boom develops. Over the next two years, 900 new companies are formed on the Berlin Stock Exchange and 600 on the V &E Stock Exchange.

3:34So the number of companies quoted expanded enormously. Stock prices start going up and new companies go up even more. The total value of the German and Viennese stock markets rise fourfold in a period of two years. There was a real estate boom, so there were lots of real estate companies being formed. Credit was expanding, so there were a whole lot of new banks being formed. But a good portion of these small companies were purely paper companies, established by promoters in order to get money from shareholders. And quite often they would, you know, give journalists shares in return for positive press, right?

4:27Right. Not only journalists, but they also induce minor aristocrats to join their boards to lend their names. The governance of these companies was not of the highest standards. No, no, this does not sound entirely above board. and obviously minor aristocrats and journalists are unfortunately going to be a bit of us of underlying villain of our story today but there was one of course from your book i was delighted to read there was a viennese journalist who made fun of all this stuff he could clearly see where things were going and there's this great quote where he said that companies were founded to transport the aurora borealis in pipelines to saint stephen's square and to win mass sales for boot polish among the natives of the South Sea Islands.

5:13He's clearly mocking this giant boom that started in 1871 and continued until 1873. It became known as the Grundersite, or in English, the Founders' Era, the boom of the founders. It's kind of a hot tech bubble. What caused it? Well, to understand it, you actually have to go back to 1871 and the Franco-Prussian War, which was a war between France and Prussia, engineered by the leader of Prussia, Bismarck. And he was the one who caused the war, hoping that this would be a vehicle for unifying Germany and putting France in its place. And he succeeded on both accounts, right? Very much so. France was defeated on the battlefield in a few weeks.

6:06The German army surrounded Paris and starved it into submission. So France was on its knees. And then they also had to, humiliation upon humiliation, pay a massive indemnity to Germany for having lost the war that Germany tricked them into starting, essentially, right? Exactly. I mean, you mentioned Otto von Bismarck. He's obviously a huge figure in German politics and European, really in the world. Can you tell me a little bit more about him? He was of aristocratic origins, born as a Junker. The Junkers were the political elite of Prussia. Over a 30-year career, by a combination of an incredibly forceful personality and very astute reading of the political tea leaves, he made himself the most important figure in Prussia, even more important than the king and then the Kaiser.

7:08His forceful personality was sort of, I mean, it was an odd personality. He was thin-skinned. He was given to towering rages. He ate and drank to excess, and he was a terrible hypochondriac. He suffered from insomnia. does not sound like an astute political genius. Sounds like a very bad mix of things. I have some sympathy with the eating and drinking to excess. Yeah. And nobody's going to make me lead Germany that way. But he actually used his personality very effectively because he would threaten to resign. And he, in effect, had the emperor under his thumb by his constant threats of resignation.

7:59And his goal after the war was to... Against France in 1971, right? Yes, was to hobble France financially and leave it permanently weakened. So ensuring German or the new unified German state also, amazingly, it was announced in Versailles, right, after the war, the unification of Germany, to make that the dominant power, the undisputed dominant power on continental Europe of the era. Yeah, very much so. The financial indemnity was part of that strategy. But he may be a political genius, but by his own admission, he knows nothing about money. So he enlists his private banker and close friend to help him come up with how much money he should extract from France.

8:58And his personal banker is a man by the name of Gershon von Bleikroder. Okay, so this Gerson von Blikroder, he's obviously an important character that we're going to be hearing a lot about because he's kind of the unfortunate, crucial figure in terms of the rise of anti-Semitism that happens after this boom ends, as most booms do. And he was Bismarck's basically personal banker, right? He was a guy that helped come up with a number for the indemnity that France had to pay, the war reparations that France had to pay Germany after the war as part of the peace settlement, essentially, right? Yes.

9:40And let me tell you a few things about him. The most important thing to know about him was that he was Jewish, which was unusual to have that important a person in the German hierarchy be Jewish. He came from modest origins. His grandfather had come to Berlin to be the grave digger for the local Jewish community. Oh, wow. His father established a connection with the Rothschilds and became a banker. And so Gershon von Bleikroder inherited, to some degree, his bank. That's pretty impressive going in within two generations from being a gravedigger to being essentially the personal banker to the most powerful man in Europe, one of the most powerful people in history.

10:34He must have been an incredibly clever man as well. Well, he was, but he parlayed his connection to Bismarck to make himself one of the richest men in Germany. And Bismarck really depended on him. He's not only a very wealthy man, he's given a title. So in 1871, he becomes Gershon von Bleikroder. He was the second Jewish person to be titled. Blake Rode helps Bismarck determine the size of the reparations to be imposed on France. How does he do that, though? He consults lots of other bankers. And they come up with a range of recommendations that go from the equivalent of$600 million, to six billion dollars which is 100 percent of france's gdp so it's a giant amount yes and uh so it's not an especially scientific process it ends up in bismarck's hands and he comes up with a number and he picks it out of thin air it's a billion dollars or five billion french francs Wow.

12:01But that's still, I mean, OK, so it's not the six billion that they could have had floated out there as well, but it's still an enormous sum for the era. I think it's something like one point two trillion dollars today. Right. Exactly. Yeah. Yeah. Yeah. Wow. And it's 20 percent of France's GDP. So it's it's just a giant sum. How does that money basically end up in the German and Austrian stock market? Well, so the Germans' authorities are bewildered by what to do with all this money. And some of it they pay towards further building up their military. Some they put into infrastructure. Some they put into accumulating gold.

12:48but the half of it goes to the individual German states to pay off their debts. And they paid off their debts by redeeming bonds they'd issued. So suddenly the public, the German public, which thought they had state bonds in their portfolios, suddenly found themselves with torrents of cash. and it is this cash that feeds the stock market bubble. That makes sense. If you put half a yard into ordinary people's hand at a time like that, obviously it is going to start circulating quite quickly. We saw what happened with COVID checks. So they redeemed all the bonds and all the money just flowed into, you know, maybe initially some well-intentioned ideas and stock market companies, but eventually just complete frauds.

13:45But who were the investors in this? Who got kind of wrapped up in the bubble? Well, actually, almost everyone. But, you know, the typical German or Austrian burger, middle class burger, had until then kept their life savings in government bonds, and maybe if they were wanting to take some extra risk, in mortgage bonds. And that has all changed in the two years from 1871 to 73. They start investing in all sorts of exotic instruments. But the most popular investment are shares on the stock exchange. So, Liaka, I'm curious, what about the Prussian Juncker class? These were the rulers of the Prussian state that became kind of the core of the enlarged, unified Germany in 1871, right?

14:41What role did the Junkers play in this massive boom? They typically thought that commerce was below them. Yeah, they were landowners, right? They owned farms and castles and stuff like that. Yeah, and they weren't terribly enlightened people. But seeing all this money being made was just too irresistible. So they started leveraging their influence to obtain shares in the new startups at preferential prices. Yeah, I mean, that sounds also incredibly familiar, right? Who was it that said there's nothing so terrible for your mental health as seeing your neighbor get rich? right yeah and this is this is you know if you're a junker seeing a middle class person get rich well while you're languishing travesty yes and i i cannot stand for that oh my unfortunately my german is too rusty to be able to translate to german but i will not stand for it i will say with a junker accent but this seems to be a scenario where at least some people should be sensing some trouble ahead, essentially.

15:53Didn't anybody stop and say this is a little bit mad? Ironically, Bismarck and his banker, Bleikroder, sort of raised some questions about this. Now, Bleikroder had always historically been very conservative in his investment strategy. He never invested in the stock market. And he managed Bismarck's portfolio. So he would always put the money into bonds. And when the bonds were redeemed, he started investing in foreign government bonds. So in Russian state bonds and British securities, but never in the German stock market. Okay, so in two short years, Germany's gone from the high of winning a war against France, which must have felt pretty great, unifying into one state, becoming the preeminent power of continental Europe, to a financial high, the Grunderzeit, the founders boom, because of all these new companies that are getting started, people throwing money at the stock market.

17:08Maybe you can actually help me out with this review. What are the most concerning signs, right? Because, I mean, stocks going up isn't in isolation enough to start worrying about a bubble and a financial crisis. What were the ones that people maybe at the time and certainly in hindsight were obvious signs that things were going completely insane? So three signs. First, part of the boom had been fueled by a liberalization of the regulation on forming companies. And so many of the new companies have not been vetted properly. And, you know, I should say the boards of many of these companies were filled with minor aristocrats and politicians who are happy to lend the prestige of their names in return for fat fees.

18:07I mean, for example, the directors of the Austrian Railroad Company, which included a former minister of the interior, was paid$50 ,000 a year, which is the equivalent of$1.5 million today, to just sit on the board. And there's very little protection against potentially sort of very speculative or fraudulent companies. Yeah, there's no financial conduct authorities. There's no SEC. There's no financial regulator whatsoever at the time. Many of the people buying shares were buying on margin. So they're borrowing money to buy, essentially. Yeah, essentially borrowing from their stockbroker to be able to buy shares.

18:57And that is a very dangerous situation. And then finally, in early 1873, there are signs that stocks have reached a plateau. They stop going up. In fact, there's less and less buying. And all of these new IPOs for startups start accumulating in the books of stockbrokers. okay so people aren't buying shares and the stockbrokers just have to buy the shares of these new companies themselves that is definitely a warning sign yes we have obviously foreshadowed that this does not end well this is a boom that goes from 1871 to 1873 and then it goes kaput or it becomes what i think people at the time called the grunder crack the grunder's crash the founders crash.

19:58How does it all play out, the crash? Well, it starts in Austria, in Vienna. And the irony is that in April 1873, Vienna is thronged with dozens of members of European royalty who are there to celebrate the wedding of the emperor's 16-year-old daughter, Gisela, to the crown prince of Bavaria. Yeah, and who doesn't love a royal wedding, right? Right, exactly. There are balls and dinners every night. And also, everyone is anticipating that there's going to be a giant demand from millions of visitors who are coming to Vienna for the Vienna World Fair. Yeah, these world fairs were essentially gigantic carnivals to celebrate your country, that people come to visit, show off technology, everything your country had to offer.

21:01They were a big thing right at the time. Totally. So 20 million people were expected, and only 7 million people turned up. On top of which, there's a cholera outbreak in Vienna, and the cab drivers of Vienna go out on strike. Wow, so it's almost like lions and tigers and bears, oh my, but cholera, collapsing visitors and a taxi strike. It sounds like just everything is happening at the same time for the poor Viennes. Right. And then in May of 1873, there is a rumor that the richest man in Vienna, who's Anselm von Rothschild, who's the sort of head of the Rothschild Bank in Vienna, is unloading his stock portfolio.

21:53Ah, okay. Yeah, that must have scared people. I mean, was that the trigger then? It's a combination because then in early May, a banker collapses. So on Friday, May the 9th, the market takes a giant tumble. The index of bank stocks goes down 45 % in a single day. Just in context, it never went down 45 % even during the Great Depression or 2008 in the US. And on the stock exchange, pandemonium breaks out. There are fistfights. The newspapers dub it Black Friday. And then over the next few days, the Berlin stock market falls in sympathy. Not quite so much, 15 to 20 percent. But then it obviously starts cascading in new and ricocheting in new ways.

22:47In an earlier show, we talked about the railway bond bust in America of 1873. And I mentioned how that had been caused by European investors losing their shirts, essentially, on German and Austrian stocks, and then having to dump US railway bonds, and then that causing all sorts of trouble in New York at the time. Is that what happened here, that that was caused by the crash, the Grunderkrack? Yes. I mean, there's an interlude. You get these crashes in May, and then you get this sort of false peace from May until September. And then in September, most famously, Jay Cook and company, they announced that they are no longer able to raise the finance for a second transcontinental railroad.

23:44And Jay Cook was the premier investment bank in the US. That causes panic around the world. You get a second wave in September that sweeps across Europe. And eventually, both Austrian and German stocks are down 40 to 50 percent at the end of the year. OK, wow. So that is a proper crash by any standards. But who loses from this? Who are the biggest losers in the Grunde crack that happened in 1873? Well, in relative terms, it's the hundreds of thousands of middle class investors who piled into the stock market at the height of the bubble. I mean, as often happens, they were the last ones to get in.

24:41Many of them lost all their life savings. You also had a sort of odd thing, which is anyone who bought stocks on margin now owed money to their stockbrokers and they had no way of paying it back. So you got a spate of fake suicides. It was particularly prevalent in Vienna. someone who owed money to a stockbroker would go to a canal, disrobe, dive into the canal so people would think that they'd drown, swim to the other side, get a new set of clothes waiting for them and disappear. And this was a way of avoiding their creditors. Fair enough. I probably wouldn't want to pay back the stockbroker that let me lots of money to invest in essentially worthless, quite often fraudulent shares either.

25:39What about the economic impact of this? Well, there is a long run economic fallout. It's actually surprisingly modest initially. The industrial production in Germany didn't go down dramatically. Railroad construction stayed up in part because it was financed by the government. There's a more pernicious effect over the long haul, which is prices start going down. Deflation. Over the next 20 years, prices, both in Europe and in the US, go down by 40%. And that has some dramatic consequences. Yeah, I mean, quite a lot of people think that falling prices is a good thing. But obviously, it means, you know, companies are making less money, people are making less money.

26:32debts that are fixed in nominal terms, they still stay high. You can easily see how that goes from being a bit of a panic on the stock market to being something that becomes a little bit nastier, more virulent, and maybe chronic in the economy for years afterwards. Well, it fractures societies because essentially there's a whole group of people who believe that they've been hard done by. Well, we're obviously going to be exploring the social fractures that happened. But I'm curious, before we get to that, what happened with Otto von Bismarck? How did he do? Bismarck escapes quite unscathed. But, you know, lots of people have lost money.

27:21And typically, when you start, when they lose money, they start looking for someone to blame. And there was obviously a hunt for a scapegoat. And unfortunately, that did turn very, very ugly. And we're going to be talking about that after the break.

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28:25And we are back. So it's around 1874 by now. The stock markets of Germany and Austria have collapsed the year before, and the economies are getting worse and worse and worse, and people are getting angry. Understandably, they're getting angrier and angrier. And as so often, unfortunately, happens, this anger is getting weaponized by a group of rabble-rousing journalists, journalists sorry about that guys and writers who explicitly decide to blame this financial crash and the economic calamity that followed on the Jewish community. But before we get to that Liakit can you give me some background on the Jewish community living in Germany and Austria around then?

29:09They had gone from being essentially a poor rural community on the margins of society to moving into the cities and joining the new prosperous middle class that was developing. So by 1873, they accounted for 4 % of the population of Berlin and even higher, close to 10 % of Vienna. But more importantly, they accounted for a third of the city's doctors and a third of the city's lawyers, Even though there would continue to be discrimination against Jews, their position was becoming transformed. They had got the vote and they were gradually, the social restrictions on what Jews could do were being eliminated.

30:03So the lot is improving a little bit. So going from a heavily discriminated against, very poor community, they are becoming a semi-prosperous middle class, they are playing an important civic role. And although still discriminated against, things are pointing at least roughly in the right direction. And then this crash happens, right? And the media suddenly decides to blame the Jewish community for the losses, the economic calamity that followed. How did that happen? It starts in December 1874. A Prussian journalist named Otto Glagau began publishing a highly sensational series of articles in Die Garten Glaube, which is the most read magazine in Berlin, which essentially blames the Jews.

31:02Otto Glagow had his own personal problems. He'd lost money in an investment scheme, got wrong. He was venting his own personal anger. But he falsely claims that the financial devastation was entirely the result of fraud and speculation orchestrated by Jewish stockbrokers. He falsely claims that 90 % of the German and Austrian stockbrokers are Jewish, which is not true. They were maybe 20 % of the stockbroking community. And he even accuses them of dominating the stock exchanges of Paris and London. So he, you know, he concocts this giant fabric of lies and the articles become incredibly widely read.

32:01People even quote them in Parliament, in the rights tag. The magazine had a circulation of 400 ,000. You know, a very large part of Berlin was reading this stuff. He then compiles these articles into a bestselling book. further spreading the claims. Gosh, I mean, this is when the term anti-Semitism first starts to emerge, right? Yes. I mean, it's actually, it's first coined in 1879 by another journalist, Wilhelm Ma, who publishes a massive bestseller that's The Victory of Judaism Over Germanism. He takes it further. He alleges that there's been a vast 2 ,000-year conspiracy by Jews to dominate European society.

32:54And he claimed that Jewish materialism was poisoning German life. and he coins the term anti-Semitism, which when he coins it, it's a term of approbation. He wants to use it as a sort of scientific term to give racial prejudice a pseudoscientific veneer. Oh, wow. But the whole sort of 1800-year conspiracy stuff, That sounds like it bleeds directly into the infamous protocols of the elders of Zion later on. Another touchstone of the anti-Semitic hate industry, I guess, even today, sadly. This idea that the Jewish people have controlled the world and controlled finance and things like that. More ominously, in 1875, there is a Junker newspaper which then focuses its anger on Gershon von Bleichroder.

34:04Yeah, I suspected that might have been coming at some point. They essentially run a series of articles which say that Bleichroder has controlled Bismarck and that Bismarck has fallen victim to Judenpolitik, which is Jewish policy, and that Bleichroder is the intellectual author of the entire economic policy that has brought this crisis onto Germany. And the article even says it's Jews that actually govern us now. Well, it's fairly awful stuff. I mean, did this come out of the blue? Was this sort of anti-Semitism prevalent among the Junkers at the time then? You know, there'd always been discrimination against Jews.

34:59There'd even been some historical resentment against Jewish bankers in local communities. But it was mainly based on religion. And this was the first time that we get this notion that Jewish people are operating some kind of secret financial cabal and using that to control the world. You know, that was all entirely new. Okay, so that's what flowed from the crash of 1873, the term anti-Semitism, giving it sort of a desperate attempt to give it some scientific veneer, and this kind of crazy conspiracy theories that, you know, sadly are with us still today, that the Jewish people control finance and the world of money and the global economy and all that stuff.

35:48Exactly. Why do you think these journalists and these sort of Junkers did this? I mean, was it just to sort of have a scapegoat? I mean, to blame somebody for their own losses? The few that did were essentially a bunch of rabble-rousers and opportunists. And, you know, they were trying to make a name for themselves. I mean, that was certainly the case of Wilhelm Ma. He had tried all sorts of ways to make a reputation. and you know this was just the last of his ventures oddly enough he didn't actually believe what he was writing he had been married four times three of his wives had been jewish you know many years later when this was all over he would actually recant and express regret for his views wow so it's just an incredibly cynical pivot to hate as a way of kind of making your name right wow that's uh i mean i'm glad he recanted but that sounds pretty despicable it is though sadly not also unknown in the present day of course but what about bismarck i mean did he try to stop this i mean he was friends with black roda and and surely he would have had an interest in and tamping down on this right he was germany's most powerful man and people saying his strings were getting pulled.

37:11Why didn't he do anything? Bismarck was in this odd position. Blake Rode was his closest friend. His doctor was Jewish. His lawyer was Jewish. So Bismarck was not an anti-Semite. But at this point, after the crash, he faced a political problem. And with Bismarck, everything was about politics until the 1860s and early 1870s he had a close alliance with the liberals yeah he championed jewish emancipation in the 50s and 60s right yes exactly and and he championed liberal policies like free trade but after the crash and the economic troubles that started emerging, and the liberals started losing votes.

38:05So he changed direction and started championing conservatives, all for political reasons to have his majority in parliament secure. And in the process, he ends up embracing anti-Semitism, or he ends up forming an alliance with the conservatives where anti-Semitism is prevalent. So he faces a political problem. Does he sort of rock the boat with his new allies or does he speak out? But as more and more some vitriol starts getting thrown at Blackroder, who's his, like you said, a personal friend. And he clearly has, although he has political experience, he might not want to intervene too much. But at some point he must protect his own friend, right?

39:06Didn't he do anything? Not really. I mean, he did step in to protect himself, because there were a couple of articles where Blake Rode was, name came up, and Bismarck's name was dragged in. And at that point, he did act vigorously. In one case, he had the writers removed from their jobs. In another case, he had the writer prosecuted for libel. But he was trying to play this double game. And he did not have, even though he was personally loyal to Bleichroder, he never publicly revealed his friendship. When his letters were eventually published, his letters with Bleichroder were never made public.

40:01And it was only in the 1950s that we discovered the extent of their relationship. So he was very shy about declaring his friendship with Blankroda. okay well that's quite a travesty really and especially since you know this was as much his fault as anybody else's right it was his war against france that triggered the the war reparations that pumped everything up he was chancellor of germany at the time when the bubble was inflating and he was chancellor when the bubble collapsed right you know he wasn't gonna he wasn't gonna admit that he had been wrong maybe he was quite happy that blikeroder took the fall he might be unhappy as his friend but he'd rather black rhoda for political expediency reasons take the the fall than than himself yeah and look his bismarck remained chancellor of germany for so long because of his ability to read the the political tea leaves so he only survived by by changing position when when it became opportune once black rogner was a uh was a political liability he wasn't going to publicly go out and support it so in the wake of this financial crash this bubble and then crash in 1873 and then 1874 and the economic disaster that unfolded for years afterwards, you have this new form of anti-Semitism that isn't just religious-based, it is based on the idea, the conspiracy theory that the Jewish people control finance and the echelons of power.

41:48How long did that go on for? It permeated certain classes, but it actually began to recede. Because there were lots of people, the crown prince, There were mayors of major cities who actually thought Jews had contributed enormously to Germany and spoke out. So it never became a mass movement. It permeated parts of the court because the Kaiser that followed, Will Helden I, was anti-Semitic. But there were large sections of Germany which were untainted. But I'm curious that given that some of this anti-Semitism had receded by the 1890s, it still seems that those ideas were percolating very much in at least parts of German society and helped form the worldview of Adolf Hitler and a lot of his early supporters in the 1920s, right?

43:03when you also had another major economic dislocation. And those ideas, this idea that the Jewish people control the world and control finance, just came roaring back, right? Yes. I mean, in the 1920s, Germany went through the ringer. It had hyperinflation, and then it had mass unemployment during the Great Depression. And the combination of those two things imposed sort of enormous pain on the German people. So it was a country rife for these ideas to be exploited. Well, again, once again, you want a scapegoat, somebody to blame. And then you had a ready-made one from a previous crisis that you could just resurrect as a bogeyman, essentially.

43:52Yeah. And it didn't help that many of the politicians who had negotiated the Treaty of Versailles on the behalf of Germany were Jewish. Yeah. No, it does show that, you know, financial crises sometimes lead to these huge societal fractures that you talked about that have these horrific long term consequences. I mean, they leave large sections of the public with the strong feeling that the system does not work and that the cards are stacked against them. I mean, that happened in 1873. It happened in 2008. I mean, it's not totally irrational to argue that someone must be responsible. The problem is who is very common for them to start looking for a scapegoat to blame.

44:47Yeah. But I'm curious, what happened to Bismarck and Black Roda after all this? Did they fall out? How did things shake out for the two of them? Okay, so let me talk about Bismarck first. I mean, as I mentioned, in the 1880s, he treads this fine path. He's allowing anti-Semitism to fester, so it stays under the surface for decades to come. He finally loses his grip on power, though. His position had always depended on his ability to manipulate the Kaiser. And when the Kaiser dies in 1888, and the new Kaiser comes in, who's the grandson. He has very different ideas, mainly to do with foreign policy, not domestic policy.

45:44But he falls out with Bismarck. And eventually, in 1890, Bismarck resigns. And then spends the next eight years in his estate in Prussia, lamenting his lot and dies a very bitter man. As for Blake Rode, he remained Bismarck's personal banker until the very end. Okay, so they didn't fall out over this. No, they didn't. Because Blake Rode understood that he was only protected because of his connection to Bismarck. Bismarck had been essential to his rise, and he wasn't going to lose that one prop. And so for the sake of his own family and his wealth, he continues to ally himself with Bismarck. The problem for him is that the rest of the Jewish community stays with the liberals, and Bismarck has moved in a conservative direction, Bleichroder essentially becomes isolated and loses his leadership position in the Jewish community by remaining with the conservators.

47:06Bleichroder dies in 1893, so he doesn't have long to live. I think it's very instructive that his three sons all become baptized. He essentially cuts his ties with the Jewish community. He wanted to be assimilated back into the full German elite. Very much so. Okay, well, that's quite a sad way of ending it, though I'm somehow glad that Bismarck and Blackruder didn't fall out personally, at least, over Bismarck's tolerance of the anti-Semitic wellspring that came forth after 1873. but turning a bit back to these these social fractures we've talked about that sometimes happen after financial crises why do you think this always happens because this isn't the only time we've seen some sort of economic calamity lead to racial or religious tensions right yeah and i i think it's that financial crises uh reveal a system that doesn't work and people sort of try to figure out who's to blame for the system not working.

48:20And it leads to one, conflicts between debtors and creditors, but it also leads to both on the right and on the left, people looking for groups to blame. Yeah. It's very fertile ground for conspiracy theories. Yeah. So they do reveal something that doesn't work, but then opportunists or misguided people will seize and find some scapegoat that, you know, whatever scapegoat that works in that situation, essentially. Yeah. We saw it in 2008, but in the rise of the Tea Party movement, we saw it in the fracturing on the left. So it is not a happy time for societies. Well, that's obviously quite an unfortunate note to end on, albeit an unfortunately accurate one as well.

49:16Biliyakit, thanks so much for being here today to discuss just one aspect of your tremendous book, which I loved. But yeah, it's been wonderful. Thanks. Well, thank you for having me. Well, that is it for this week's episode of The Sorrow of Money. If you liked this episode, please make sure to subscribe, review the show, comment underneath, all that good stuff. we do read them all. I'm a sad person. I read all the comments. So please be nice to me. I'm Robin Wigglesworth, and we'll see you all here next week.

49:53Hi, it's Gillian here, and I hope you enjoyed today's episode of the story of money. And if you want to hear more, I've got some good news for you. If you're in London in September, Come along and listen to Robin and me at the FT Weekend Festival, recording an episode about what some of the greatest literary figures of history made of the world of finance in conversation with the author David McWilliams. You can buy a ticket with a discount. Just use the code FT podcast. And you can also find all the details about this in the show notes or at FT.com slash festival. It's happening at the FT Weekend Festival on Saturday the 5th of September at Kenwood House in London.

50:40So, hope to see you there.

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