1931: Debt, Crisis, and the Rise of Hitler

Abstract

Ask anyone when the Great Depression began and the likely answer will be October 1929 with the stock market crash in New York. Tobias Straumann’s book vividly reminds readers that this is not quite right. To be sure, the sell-off triggered a widespread economic downturn, but what turned that into something far worse was the string of bank insolvencies in mid-1931 that began with the Creditanstalt in Vienna, continued with the Darmstädter and National Bank (Danat) in Berlin, culminated in the German government buyouts of the merged Dresdner/Danat and the Commerzbank, and resulted in a general collapse of the gold standard, international trade and capital flows, and industrial production and employment. And those were only the disastrous economic consequences. Inexorably, they bred awful political ones, most notably the ascent of Adolf Hitler. Explaining how and why the implosion happened—or, perhaps more accurately, was not stopped—is Straumann’s chief purpose, and he executes it, for the most part, with admirable clarity and precision. Although the account he provides is unsurprising to specialists, they are not his intended audience, and he has the excuse that the forces at work were neither particularly complicated nor invisible to contemporaries. Indeed, as Straumann shows, one observer at the time, a banker in Zurich named Felix Somary, described what was in store and why well in advance to multiple audiences. But few people believed him.