The first long swing in the export of British capital, which was generated in the late 1850s and early 1860s and punctuated by the 1866 crisis, came to an end in the mid1870s. It had consisted of two trade cycle booms, the credit boom of the first half of the 1860s and the international boom of 1870 and 1873, and the latter was brought to a close by a European financial crisis which began in Vienna in May 1873 and a railroad financial crisis in New York in the September. The English financial system and the London capital markets were affected by the events in Vienna and New York, but there was no major financial panic in Lombard Street in 1873 as there had been in 1866; instead from 1872 to 1876 there was a progressive collapse with a minor crisis in 1875 and a further convulsion in 1878 caused by the failure of the City of Glasgow Bank. The fall in the volume of capital exported was caused by the defaults of various governments on their external obligations and the failure of American railroad companies to pay dividends and interest on their loans. There was an internal commercial crisis in 1875 with a number of important bankruptcies and Giffen has given this account of the growing financial depression of the mid-1870s:

"The following year (1874) was comparatively quiet, but it was marked by great monetary disturbances in South America, and by a great fall in prices both at home, on the Continent and in the United States. In 1875 came renewed disturbances in South America, a renewal of agitation in the United States and Germany, and then the Im Thurn, Aberdare, Collis, Sanderson, and other failures, constituting the commercial


crisis of that year in England. This was in turn succeeded by a great collapse in foreign loans, which had been heralded and partly rehearsed in 1873, on the occasion of the bankruptcy of Spain, and of which the conspicuous incident now was the non-payment of the Turkish debt interest. To all these events succeeded renewed depression and stagnation in trade at home, as well as on the Continent, the crisis in Russia in 1876 being very marked, and the whole continuing till it seemed to have a fresh cause in the apprehension and actual outbreak of the present war. Thus the depression has been widespread and general, Italy, Spain, and France perhaps escaping with little hurt, but Austria, Germany, Russia, the United States, and the South American countries having all been in deep distress."1