Boom and bust diplomacy: the financial crisis of 1873 and U.S. foreign relations

This thesis explains the intertwined financial, diplomatic, and global economic roots of the longest depression in U.S. history. Contrary to existing scholarship that tells the story of the Panic of 1873 as a railroad mania, it shows that the crash resulted from the post-war construction, and eventual collapse, of a transatlantic bubble of imperial imagination. A forcefully crafted yet premature and fragile narrative of rapid national consolidation and commercial expansion guided the rise and fall of investor confidence. Ideas of a reunified country with control over vast amounts of land and resources—and a capacious continental marketplace with growing ties to global trade—offered seemingly unbounded opportunities for financial returns. An instance of capitalist exceptionalism, this convenient projection justified how anticipated profits could defy previous capitalist norms. When investors bought railroad securities with questionable promises, they also bought into a corporatizing sales narrative of the future United States. Nursed by financial and diplomatic elites, this ‘nation brand’ imagined American empire in the vernacular of the market, emphasizing its civilisational worth and financial profitability. The brand manipulated investor confidence, altered risk perceptions, and fuelled the boom. Its collapse, amidst a series of embarrassments that undermined the performance of American creditworthiness and credibility, and attested to the challenges of nation-building, led directly to the bust. The thesis ties the economic phenomenon of a bubble to the grand narratives and quotidian practice of transatlantic brand salesmanship (or ‘boom diplomacy’). In recasting an overly structural view of financial crises, Boom and Bust Diplomacy looks for the ways in which racialised and gendered narratives, elite sociability, and diplomatic credibility created financial knowledge and changed the credit cycle. The social, cultural, and political performance of creditworthiness in the post-Civil War era thus produced the conditions for the spectacular crash of 1873. More broadly, the ongoing financialisation of manifest destiny—as a public-private process of market-making, nation-building, and empire creation—also forged lasting links between the worlds of international investment and U.S. foreign affairs. The ‘brokering’ of transatlantic relations by border-crossing financiers, merchants, consuls, and diplomats not only explains the transition from U.S. debtor to dollar diplomacy in the late-nineteenth century. It ultimately also suggests that between Civil War and World War, both the boom and bust cycle of the U.S. economy and American foreign relations were rooted in the same transnational and transimperial money networks.