Österreichische Postsparkasse, architect Otto Wagner, finished 1906


In both cases the crisis originated in the USA. But for the Great Depression starting in 1929 in the US, there would probably have been no rise of Hitler, no Roosevelt and the Soviet System would not have been regarded as a serious economic rival and alternative to capitalism. The US which had so far been a safe haven in a world of break downs and revolutions was the epicentre of the largest global economic earthquake until then.


Operations of a capitalist economy are never smooth, fluctuations are an integral part of it. A trade cycle of boom and slump was already characteristic of the 19th century capitalist economies. In the 1920s the Russian economist Kondratiev, who later became a victim of Stalin, discerned a pattern of economic development since the end of the 18th century through a series of “long waves” of 50-60 years. He concluded that the wave of world economy was due for its downturn. The last severe downturn had been in the 1870s. Minor trade cycles had been accepted by economists, but the world economy was expected to go on growing and advancing except for sudden short-lived slumps. Only the socialists (Marx) believed that cycles could put the capitalist system at risk. The history of the world economy since the Industrial Revolution had been characterised by accelerating technological progress, continuous economic growth and increasing “globalisation”, namely an elaborate worldwide division of labour. Even between 1929 and 1933 world economic growth did not cease completely, but slowed down. Yet the globalisation of the economy stopped advancing in the inter-war years.…


The Vienna Stock Exchange. Architect: Theophil Hansen, 1874-1877

The Vienna Stock Exchange was founded in 1771 by Empress Maria Theresia as one of the first stock exchanges in the world. Gradually the Vienna Stock Exchange developed into the central capital market of the Habsburg Empire. Originally only government bonds and currencies were traded and the building was open to the public. On some days up to 2,000 people were present. In 1818 The Austrian central bank was the first public limited company that was quoted on the Vienna Stock Exchange. Due to the industrialisation and economic boom in the Habsburg Empire in the course of the 19th century the stock exchange gradually gained international reputation. Consequently a host of companies issued shares there. Due to the empire’s liberal economic policies in the second half of the 19th century unfortunately several unstable businesses were financed via a share issue there, which led to a wave of speculation that culminated in the stock exchange crash of 9th May 1873. In the course of this stock exchange break down nearly half of the public limited companies quoted there disappeared. The recovery took a long time and in the meantime trade was mainly in government bonds. That was the return of the big banks as the main financiers of enterprises. These banks also dominated the capital market and stock exchange trading. Trade on the Vienna Stock Exchange started to pick up once more so that new regulation was needed to. In 1875 the third Stock Exchange Law was passed that guaranteed the complete independence of the Vienna Stock Exchange. Finally in 1877 the new building for the Vienna Stock Exchange was opened, designed by one of the famous architects of the “Ringstrasse”, Theophil Hansen. During this time of consolidation rich financiers dominated the trade in shares there and the bond market was the “playground” of the “privatiers”, the well-to-do upper middle class. During the First World War the Vienna Stock Exchange was closed. At the end of 1919 the trading floors were opened to the public again and immediately experienced a boom which ended in a crash in March 1924. In the following years the shocks of the Great Depression of 1929 greatly hampered trading there. The bankruptcy of banks and the plunge of share prices affected the trade on the Vienna Stock Exchange and the number of visitors declined drastically. Interestingly enough, the New York Stock Exchange crash in October 1929, in fact, had no direct consequences for Vienna.…


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.…