I just finished Ron Chernow’s The Death of the Banker and here is one of my favorite passages from the book:
In the nineteenth century, England was one of the few nations that had attained the level of prosperity that spawns surplus capital, which spills, in turn, across national boundaries in search of the highest return. For British investors, America was a richly tempting “Third World” country, one loaded with pitfalls and a boorish habit of defaulting on debts…In the 1840s, the rogues’ gallery of sovereign deadbeats included Pennsylvania, Maryland, and other U.S. states. (The most renegade offender, Mississippi, later went so far as to pass a state constitutional amendment prohibiting repayment of its bonds.) Faced with such recalcitrance, many European investors ruled America off-limits to further investing. When Washington dispatched U.S. Treasury agents to solicit a loan from Baron James de Rothschild in Paris in 1842, the banker brusquely expelled these aliens from the office: “Tell them you have seen the man who is at the head of the finances of Europe, and that he has told you that they cannot borrow a dollar. Not a dollar.”
Source: Chernow, R. The Death of the Banker: The Decline and Fall of the Great Financial Dynasties and the Triumph of the Small Investor (New York: Vintage Books, 1997).
- P.S. Highly recommend Chernow’s The House of Morgan