BBC Links
feedback | help
BBC News
The road to riches


Programme five: The Best of Times, the Worst of Times

Peter Jay

In this gloomy vault our past is frozen, as it were, in black and white, appropriate colours for a period of highlights and deep shade. In these stacks are millions of photos which tell the story of the late 19th and early 20th centuries. It was a time of triumphs and of terrible disasters.

We meet those two impostors, first in America. Millions of people left Europe, fleeing poverty and oppression for the American dream. New railways opened a continent and new industries launched the world’s biggest economy. In both America and Europe science began to be systematically applied to industry. The demon of electricity was tamed, yielding power and instant communication - by telegraph and telephone; and factory mass production arrived, offering new mobility, new consumer goods and services and new kinds of fun.

But it paved the way to world war, not once but twice. Economic progress became a form of rivalry between nations. The Road to Riches became a race. Economic nationalism took hold.
It was the best of times and the worst of times.

Scottish soil bred many of the pioneers who built America; and now it welcomes back returning Americans seeking their roots. Sandra Sprague is one of them. Her great-grandfather emigrated in the 19th century.

Sandra and her sister are for the first time visiting Scotland and meeting the family who stayed behind. It was split more than a century ago when Sandra’s great-grandfather, like millions of others in Europe, left home for a better life in America.

Sandra Spargue - with her cousin Betty

Alec Philip your great-grandfather. Was he ranching, or where was he? He was around Hays, Kansas. And he came originally to Victoria Kansas in 1874. Because of the connections with the railroad he also had this building built - when he brought the settlers over they needed some place to live. That’s built of stone isn’t it. Yes we didn’t have a lot of wood and trees in our area and they had to use native materials.
It almost looks like a granite building, a real Scottish granite.
Those were all the brothers and sisters.

Peter Jay

Transplanting himself half way across America must have seemed a pretty desperate gamble to Alec Philip. Yet, however little he realised it, he was helping to lay the foundations of the world’s biggest ever economy. They went because times were hard at home and because land was plentiful in America. Also flowing that way was big money.

And much of it came from here - the City of London. New lands, new markets, new cities, needed capital. Barings bank was one institution which helped to fund such ventures. The Directors backed expansion into world markets. The bank’s ledgers record the names of thousands of investors. Some of the biggest projects were in the United States.

Investors bought bonds like these which offered a good return.

Jane Waller

The bond issues were a means of companies or governments raising an enormous amount of money, money that they didn’t have that kind of capital. It was a means of established European money markets exporting that finance to these, you know, to America which was a developing country, to enable it to finance its infrastructure.

Peter Jay

The greatest early challenge was to finance the huge cost of railways. The Aitcheson, Topeka Santa Fe was one such line. The network eventually linked the two coasts together, from sea to shining sea. Begun in the late 1820s American railways spanned the continent in fifty years, doing for huge land-locked areas what sailing ships had done for the world’s oceans centuries earlier.

For the pioneers the dangers were enormous, but so were the rewards. This track was built in a gorge 1000 foot deep in Colorado’s Rockies. Its purpose - access to silver mines.

Today it carries tourists attracted by its spectacular route. A hundred and thirty years ago the scene was rougher. Building the track in such a narrow gorge was tough enough; but it was made much worse by there being two rival companies fighting each other for the same route, a tale beloved of local historians.

Dan Jepson

The Arkansas River canon is very narrow. Consequently there’s room really for only one rail grade. The two competing companies had no choice but to fight over one piece of property.

For the winner for the company that was able to access this canon and access the mineral fields it was the pot of gold at the end of the rainbow.

Peter Jay

Across America battles broke out over land and the right to build on it, both with native Americans and between rival companies. Here two companies employed private armies to enforce their claims to the land. High in the canyon in stone forts, like this, armed men faced each other in grim defiance, almost to the death.

Dan Jepson

Tensions in the canyon were particularly high in the late 1870s, primarily because we had hundreds of men, heavily armed men here, protecting the interests of their respective rail companies. Very few shots were actually fired here in the canyon, most of the battles occurred in court. The amazing part about this is, that we had not deaths in the canyon…its amazing that no one was killed.

Peter Jay

The railways transformed the territory. Millions of Indians died, building the tracks and to make room for them. But they also brought new-comers, like Sandra Sprague’s great grand-parents. The family still farm the same ranch. British settlers hoped that the buffalo grass of Kansas would fatten their sheep and cattle.

A whole farm could be bought here for the price of a single acre back home. The cattle were brought from Britain and Alec Philip and his wife (who followed from Scotland later) began to build a new life. They followed a man called George Grant, an adventurer who took the railway across the prairie, bought up a plot of land and sold it to settlers..

Sandra Spargue

George Grant who fell in love with this country as he travelled though here in 1872, and he had the idea he wanted to buy all this land from the Kansas Pacific Railway and sell it to immigrants that would come over here. And George Philip, who was Alex’s brother, was one of the first ones to come over in 1873 when he first brought all his English colonists over, and George was the first one off the train, he stepped off the train very first. And he, I’m sure, had written home many, many times telling his family how wonderful it was over here, and seemed to enjoy it, and so the next year, which would have been 1874, Alex, our great-grandfather, and two other brothers came over too, also to Victoria to live here.

We admire him quite a bit for being, the, having the foresight to come over here, and sticking it out, and staying here, and having the foresight to purchase land.

Peter Jay

That land fed more than cattle - it produced wheat - by the thousands of acres. And still does today. The Philips bought more and more land until their ranch stretched to the horizon. Soon wheat from across the United States was being shipped to America’s booming cities, and on to Europe. Again and again along the Road to Riches we have seen a food surplus - that’s more food than the farmers themselves can eat - fuelling the next economic leap forward. This time the surplus was supercharged by an idea.

Sandra Spargue

I think America means freedom and independence and maybe a lot more opportunity of course for somebody that is looking for, and is enthusiastic, about life, and wanting to improve themselves. And I think America has always been known as the land of opportunity, and I believe that’s what they thought also.

Peter Jay

New York! The ultimate melting pot and the portal through which so many of America’s immigrant millions entered the New World. They came then from Europe, where they had been slaughtering one another since time immemorial.

In America they changed. As a journalist and as a diplomat working here I often puzzled over this transformation. So, I decided to ask an old friend about it. Mr Secretary, Henry, how nice to see you? My friend now has a famous face and famous voice, having become for a while one of the most powerful men in the world But in the 1930s he arrived from Germany as an obscure immigrant.

Henry Kissenger

This is the street where I lived

Peter Jay

The buildings are more recent presumably

Henry Kissenger

These are sort of - they existed then. These are mostly the way they were. In those days it was an upper working class lower middle class, many German Jewish people.

Peter Jay

Talk a little about the impact on Europeans of making that huge decision, to leave home to cross a dangerous or risky ocean and to look for a new life in a continent about which they knew very little.

Henry Kissenger

Something fundamental changed, first of all they thought of America as the land of great opportunity, economically, unrestricted by the European classes that, so the overwhelming majority believed that they could start a new life here. Then a more intellectually oriented minority, which probably set the tone, believed that America had superior values, and that in America you could live in a way that was precluded in Europe, and therefore this American myth, of the shining city on the hill, the country whose institutions are automatically relevant to the rest of the world, it’s permeated America to this day.

Peter Jay

Thus was born the American dream, as a justification for the fantastic gamble of crossing the Atlantic in search of a less awful life.

One penniless immigrant fulfilled the dreams of all the others. His father had lost his job in Scotland and the boy was sent to America where he built the world’s largest steel empire. Eventually he sold out to the world’s best known banker. And Mr JP Morgan who normally never left his office, got into his carriage in Wall Street and drove six miles up this house, where he handed over a cheque for 450m dollars, saying you are now the richest man in the world. His name was Andrew Carnegie.

Carnegie built this house when he made New York his headquarters.. This is where Mr Morgan walked up the steps. Today his great grandson shows me round. Carnegie made his fortune making steel for the railway boom. Ruthless businessman though he was he cherished science, which at that time was spearheading a new industrial age.

Miller Carnegie

He was a young boy when his father’s business went under, because of the advent of the steam loom. He saw first hand what resisting technology would do to a business, and to the life of a businessman. And he was bound and determined himself never to resist technology, but far from not just resisting technology he embraced it, he embraced the new technologies and would always spend a dollar if it meant improving the cost of production or improving just the means of production. So embracing technology ran through his business life right until the day he sold the business.

Peter Jay

He had by then created something entirely new, big business. Steel, as from this very Carnegie factory, was unifying a continent and forging an industrial giant. Not only railways, but also bridges, skyscrapers and a thousand other construction projects gobbled it up. But the greatest leap along the road to riches at that time was the use of science, above all electricity.


Lightning. Never twice in the same place, they say. But this is man-made, at the laboratories of the National Grid in Surrey/Leatherhead. Until 150 years ago it was nature in the raw. Then man learned to control and use it.

First we had to understand how it works. Humphrey Davy used it for lighting and Michael Faraday invented the electric motor. So, now, I can plug in to 400,000 volts True I’m wearing a special suit and hanging 40 feet up.

Piece of cake ! Buzzzzzzzz…..

Absolutely amazing, like playing God the Father at the creation. I seem to have survived, but electricity transformed the world in two ways. It supplied instant communications and convenient power, anywhere at any time. And that became part of the second phase of the industrial revolution which also harnessed science and mass production to the new industries that were taking off in Europe and America.

London’s Science Museum has brought together some of the inventions of both the first and second industrial revolutions for an exhibition on how science has shaped the modern world.

The second was a revolution in the types of goods that were produced and the way they were produced. Many of the things that are so familiar to us today were born in this period. Dr Robert Bud

Here we have four icons of the second industrial revolution… The late 19th century, the second industrial revolution is associated with electricity, plastics, chemicals and a whole range of new kinds of materials which had never existed before.

It made possible a revolution in the world economy because goods and people can move vast distances right across the world bringing products to areas that had never had them before, bringing people in very large numbers across the Atlantic or to Australia and giving them a sense also that they’re still connected to back home. So for the first time we lived in a global village, rather than in separated countries

Peter Jay

And at the heart of that global village was London; and its lifeblood was its river. The Thames today still reminds us of the time over a century ago when London’s Docklands was the main market-place of a world economy which was newly unified and growing explosively. Today the warehouses are deserted, awaiting a new fate. They must fit into a Docklands without ships and without trade. At least without the kind of ships and trade that once made this the biggest port in the world.

Chris Ellmers

London was the warehouse of the world. It was a city of ships and those ships traded to every known corner of the world. Every article that had a monetary value whether it was animal vegetable or mineral came into the port of London. It was on a world commodity trade route. So every single item from cotton wool drugs ivory tea spices timber oil came into the port of London. You were assaulted by the sound of obviously quayside cranes hydraulic jiggers in warehouses, ships cranes discharging their cargoes, men pushing and pulling trucks and trolleys of all descriptions, with strangely shaped cargoes on board. You couldn’t fail to see that London was obviously the centre of a huge great sea-borne network. There were hundreds of ships and hundreds and hundreds of barges and tugs within eyeshot of you.

Peter Jay

That network was part of a world where trade and money moved freely; and governments believed in low tariffs. Britain, with its empire, was at its hub. The opulent splendour of the Foreign Office policed the world; and the India Office next door ruled an empire which supplied Britain with markets and materials, as well as mutinies and malaria.

The empire-builders still look down; but no subjects now look up. As well as free trade the world economy in those days had another unifying feature, a common and stable form of money. Its core lay in the City of London where the Bank of England upheld the Gold Standard that had defined the value of the English pound, the most used currency in world trade.

We’re now in the deepest recesses of the Bank of England, where they keep the gold which is part of Britain’s official reserves. So much of it, tons and tons, millions and millions of pounds, it makes your fingers itch and your pulse race. And its this gold that backed the bank of England’s pledge for nearly 200 years to convert any pounds that were offered to it at a fixed price into gold. And that was the bedrock of the gold standard, which in turn was the heart of the international monetary system. Sound money helped trade and investment.

In retrospect the middle of the nineteenth century seems like a golden age with a world economy that was open, stable and prosperous. Yet it wouldn’t last. As Britain industrialised other nations became convinced that to match the power of the British empire they too must find the key to economic growth.

This map, dating to the beginning of the 20th century, shows why. The red bits are under British rule; and the naval and military strength which held such an empire together were attributed to the wealth of British commerce and industry. If it was good for Britain, why not for Germany too ?

So, industrial growth became for Germany a goal of state policy.

The great Bismarck himself , the architect of the German nation, used tariffs to encourage the growth of the German coal and steel industries. [Re-CUE] The struggle for industrial leadership was seen as but one aspect of the wider political struggle for domination - even survival - among the great powers of that time.

Then the German Admiral Tirpitz persuaded the Kaiser that German industry could now build a strong enough navy to protect Germany’s overseas interests and to place it among the four world powers, with America, Russia and Britain. This town and dockyard, Wilhelmshaven, took off as a result.

Inevitably this political and economic rivalry bred growing nationalism and lead to military rivalry.

Dr Epkenhans

At the turn of the last century this was the place where many many ships were built. to challenge Great Britain as the supreme world power. EDIT. Without world power status many people thought, EDIT Germany would soon decline and be a poor farming country as a hundred years ago.

Peter Jay

At the end of the 19th century an arms race began, slowly at first. But it accelerated sharply in 1905 when Britain produced its first Dreadnought, bigger, faster and with twice the guns of any previous battleship. Germany hit back.

Dr Epkenhans

This is the battleship Ostfriesland. The Ostfriesland was Germany’s answer to the Dreadnought in 1905, 1906. EDIT It was heavily armoured against gunfire and torpedo attacks and it had higher gun calibres and more guns, heavy guns than all of its predecessors. And by building it the Germans made clear that they were going not only to follow the British royal navy, but to challenge it if possible. And as a result the first arms race in modern history triggered off.

Peter Jay

Across the sea the British government was doing its best to keep one step ahead in the race. Here in the naval dockyards at Portsmouth Dreadnoughts were built at break-neck speed. The first world war had many causes; but the outbreak of nationalism - of which the naval arms race was a vivid symptom - was the most malignant.

For most writers at the time the drift was obvious. The arms build-up and the deteriorating rhetoric pointed the way. A whole raft of books foresaw war, with or without a German invasion, secret or otherwise. One holy fool dissented. In his now infamous work - a best seller in its day - Norman Angell said war was impossible because the world economy had just too much to lose.

How could one man be so wrong? When war came it was unspeakable. Some of the original trenches, where men fought and died, are still there.

There are no words for the hell of this place…or the courage of the men who fought here, or the madness of the men who made them do it. Every evening, at the Menin Gate in Ypres in Belgium, they still remember the dead. Eight million people died in the fighting in World War One. The cost of waging it to governments and in damage to property reached $380 billion, equal to the entire output of the American economy at that time over ten years.

And now thousands every day visit the cemeteries where the dead are buried. This tour bus has come from Britain to remember them. Tyne Cot cemetery near Paschendaele. It’s the largest war cemetery in the world, 12,000 dead soldiers, many still unidentified. Another 35,000 have no grave. They were just blown to bits or drowned in the mud.

Captain Snook

These casualty figures built up and up til by the time they got here, they’d taken half a million casualties. That’s the sadness of Paschendaele, the futility of it, pushing men through swamps, accepting casualties and not stopping, going on and on and on, til we have a result like this, a ridge taken, horrendous casualties and no real strategic gain, just more death in the mud. And that really is the story of WWI, or most of it.

Peter Jay

When the fighting finally stopped, after America had joined the war and tanks had given the western allies a decisive advantage, the armistice was signed here in a railway carriage in a forest in the French countryside.

The First World War came to an end in effect at this table. But the peace treaties which followed it failed completely the first test of peacemaking, to create a world in which all countries can work, trade and grow rich. Instead they laid the foundations of the next world war, by imposing unrealistic financial burdens on Germany, which led to bitter resentment and to economic chaos.

The post-war world was not a pretty picture. Attempts to put the Humpty-Dumpty of the old world economic order together again failed utterly. Instead the peacemakers who met at Versailles wanted revenge, or at least compensation. Germany must be made to pay for the war. But that was an economic absurdity.

Each country chose its own route to a new start. Lenin led Russia to revolution and on to isolation, civil war, Stalin and tyranny. Britain under Chancellor Winston Churchill chose to return to the Gold Standard, which had been suspended in 1914, at the pre-war level .

This meant cutting wages; and British workers reacted in 1926 with a general strike. America chose laissez-faire, the free market without government even to hold the ring. Wall Street boomed - and crashed.

Autumn 1929, the ticker tape tapped out the terrible news. The bubble had burst. This is where it happened - on the floor of the New York Stock Exchange. The most notorious economic event in modern times is commemorated in the Museum of Financial History by a replica of the machine that told the tale.

John Herzog

And this is the actual physical paper tape from the day of the crash in 1929…So we see the opening prices of stocks on the exchange on that day. It tells a great story.

Peter Jay

Obviously the tape gives no measurement of the mood on the floor, what was it like?

John Herzog

Well of course I wasn’t there, but I’ve been in markets, similar markets, not as dramatically terrible, and there is a sinking feeling in your stomach that you get knowing that what you have worked for has been dissipated and prices continue to drop and you think that it will never end at that moment. It’s a terrifying experience.

Peter Jay

So terrifying, indeed, that for some there was only one exit strategy. Gallows humour abounded. It was said to be dangerous to walk down Wall Street for fear of falling bodies. People checking in to hotels were supposedly asked whether they wanted to stay or to jump.

This is no place for those suffering from vertigo, and nor was the level of share prices on the eve of the stock market crash in 1929. In fact the actual number of suicides was about average for the time of year, but it might have been much higher if people had known what was going to happen next. Shares prices over the next two years fell 90 percent, shattering the dreams of almost every American, and sparking off the Great Depression, which not only shrank the American economy by a quarter, but also brought mass unemployment to Europe.

Berlin. Still today prosperous Germans in middle life look back with nostalgia on the cabaret scenes of the 1920s. Long before the depression hyper-inflation ravaged Germany in 1923, destroying the currency and shattering the middle classes. The government had printed money to ease the pain of the punitive reparations imposed on the German people.

Laundry-baskets were needed to carry the stacks of worthless Marks, which were used to paper walls, and given to children to make toys.

Even a cab ride cost bundles of money. Today Berlin is Germany’s capital again and bursting with new life. So, to get the feel of the 1920s I was shown round the city in a taxi of that era. It has been said that to destroy a society you only need to debauch its currency. That’s what happened to Germany’s post-war democracy.

Richard Overy

Well 1923 was an extraordinary year for the Germans, their currency collapsed, they expected their government to defend the currency as a priority, but by the end of the year the currency was completely worthless. So people found themselves going down to the shops with huge quantities of money, unimaginable quantities of money, just simply to buy a loaf of bread. The real losers from the inflation were the savers, mainly the middle classes, and they deeply resented the fact that they had been sacrificed, and it really did undermine the legitimacy of the parliamentary regime in Germany.

Peter Jay

Undermined by hyper-inflation German democracy was finally blown apart by its opposite, depression and mass unemployment. This street, the Kurfurstendam, had once been the scene of pre-war café society, as it is today. But from 1929 it witnessed starvation and desperation, paving the way for extremist politics.

Richard Overy

The Great Crash when it came in 1929 was a catastrophe for Germany. EDIT Trade collapsed to half its levels in three years, two fifths of the workforce were unemployed within three years. If you think of it in contemporary terms these are catastrophic figures, quite unprecedented. For a lot of Germans who’d struggled to come to terms with inflation, democracy, the revival of Germany, this was the last straw. So, when Hitler promised to restore German wealth and pride people listened.

Peter Jay

(Adlon Hotel)This Hotel was much favoured by nazi leaders. Their big economic idea was, like the Kaiser’s, that Germany needed the markets and raw materials which Britain got from its empire. But instead of using the navy to create colonies Hitler planned to use the army to grab vast chunks of Europe. He wrote it all down, not in Mein Kampf, but in a secret book.

Richard Overy

There’s quite a telling phrase here, he says the earth is not allotted to anyone, nor is it presented to anyone as a gift, every healthy vigorous people sees nothing sinful in territorial acquisition, but something quite in keeping with nature.

So for Hitler the fact that you were economically impoverished, that you were a poorer state made no difference. The answer was you just went out and took somebody else’s resources.

Nothing sinful in territorial acquisition, there is WWII in a phrase?

Richard Overy

Yes there’s a straight line between Hitler’s economic thinking in the 1920s, the extraordinary rearmament that he sets in train in the 1930s and the outbreak of war.

Peter Jay

The Brandenburg Gate, at the heart of Berlin and of its history. Through this arch in January 1933 Hitler’s stormtroops marched by torchlight heralding his appointment as chancellor of Germany. And even though the economy recovered rapidly over the next five years, his crazed vision of salvation through conquest and empire soon brought world war again. Here as nowhere else on the road to riches the pictures alone tell the story.

War had come again, proof of the failure after world war one to build a peace that worked.
Daily throughout Europe we remember a war that caused human losses approaching fifty million. So in 1945 ended a most calamitous era. Man-made conflict, mainly in Europe, and its natural results had since 1914 killed perhaps 120 million people. There was only one motto for those who came after, Never Again.

Return to programme five
Back to top
Behind the scenes