THE GREAT DEPRESSION: CREDIT-ANSTALT CRISIS 1931

FINANCE AND ECONOMY IN CEE, THE DANUBE REGION: ECONOMIC AND SOCIAL DEVELOPMENTS, , , , , , ,

Former Österreichische Creditanstalt building, architects Gotthilf and Neumann (built 1916-1921)

The Credit-Anstalt crisis played a crucial role in the dramatic economic developments of the 1930s in Europe as the collapse of the Credit-Anstalt affected the largest bank of Austria and at that time also the largest bank east of Germany. The collapse of the Credit-Anstalt in Vienna started the spread of the crisis in Europe and forced most countries off the Gold Standard within a few months. A feeling of financial distrust and insecurity spread from Vienna and led to runs on other banks in Hungary, Czechoslovakia, Romania, Poland and Germany. The collapse in May 1931 set off a chain reaction that led from the run on German banks to withdrawals in London and the devaluation of the pound to large-scale withdrawals from New York and another series of bank failures in the United States. So in brief the news of the crisis of the Credit-Anstalt, the most important bank in Central Europe, shook the whole economic structure of Europe and sent shock waves through the rest of the world.…

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AUSTRIAN FINANCIAL INSTITUTIONS IN CEE DURING THE INTERWAR YEARS

FINANCE AND ECONOMY IN CEE, THE DANUBE REGION: ECONOMIC AND SOCIAL DEVELOPMENTS, , , , , , , ,

Österreichische Postsparkasse, Vienna, founded 1883 “k.k. Österreichisches Postsparkassenamt”, architect: Otto Wagner (built 1904-1912)

As a result of the First World War the persistent shortage of domestic and foreign capital for investment in the economies of Central and Eastern Europe, as mentioned above, worsened. At the same time, due to the devastation of the war the demand for capital rose dramatically. After the collapse of the Austro-Hungarian Empire in 1918 new stock exchanges were established in the successor states of the former empire. The scene had been dominated by the Vienna Stock Exchange and to a much lesser degree the Prague Stock Exchange, founded in 1871. In the 1920s new stock exchanges opened up in Belgrade, Bratislava, Brno, Ljubljana, Warsaw and Zagreb, which competed with Vienna. Their main business was in dealing in securities, bills and foreign currencies and not shares. The same was true for the Vienna Stock Exchange during the interwar years. Only in the years 1926/27 did the currency situation stabilise after the hyper-inflation in the successor states of the Habsburg Empire after the First World War and central banks had been established in all new states. The finances of Austria, Hungary, Poland and Bulgaria were under international supervision and the new central banks had to be independent from the state, but they had to act as lenders of last resort together with the respective governments. Especially in Austria the “Franc Speculation” further destabilised the financial scene.…

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