The International Financial Crisis from Hoover’s Moratorium Proposal to the Fall of the Labour Government, 1931

  • David Carlton


The Wall Street Crash of October 1929 marked the beginning of the so-called Great Depression which endured in its more severe form until Roosevelt’s ‘New Deal’ and Schacht’s ‘Economic Miracle’ brought alleviation to the United States and Germany. Yet although the Great Depression may be said to have lasted for perhaps four years, it was only in the summer of 1931 that the situation appeared to get entirely out of control. The intense crisis of that period should not, therefore, be seen solely in terms of the sickness of ‘capitalism’, but rather as springing from some other causes of a perhaps less ‘inevitable’ character.1 In fact the principal reason for the intensification of the crisis lay in the irresponsibility of German statesmen who for domestic reasons needed spectacular successes in the revision of the Versailles Treaty. Yet German irresponsibility alone, while the primary factor, was not the whole explanation for the near-calamity of 1931. Difficulties were also caused by French use of financial pressure for political purposes, not only against Germany but also against Austria and Great Britain. Nor were the British and the Americans entirely free from blame, since in both London and Washington powerful elements had concluded that drastic revision was indeed the only answer. The public expression of these views served only to encourage in Berlin precisely those policies which were preventing a stabilisation of the situation.


Financial Crisis Prime Minister Labour Party Telephone Conversation German Leader 
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  1. 1.
    For a differing interpretation, see Elting E. Morison, Turmoil and Tradition: A Study of the Life and Times of Henry L. Stimson (Boston, 1960) pp. 278–83. Great importance is attached to ‘the hidden currents flowing beneath the surface of political history’.Google Scholar
  2. 1.
    For details of the deteriorating situation in Germany at this period, see Karl Erich Born, Die deutsche Bankenkrise 1932: Finanzen and Politik (Munich, 1967) esp. pp. 64–78.Google Scholar
  3. 2.
    On the background to Hoover’s plan, see Bennett, Germany and the Diplomacy of the Financial Crisis, pp. 132–42, 159–62; Henry L. Stimson and McGeorge Bundy, On Active Service in Peace and War (New York, 1948; London, 1949) pp. 57–8.Google Scholar
  4. Louis P. Lochner, Herbert Hoover and Germany (New York, 1960) chap. 6.Google Scholar
  5. 2.
    Ibid. Stimson was fortuitously in Paris on vacation. For an extremely bitter attack on Stimson’s Francophil conduct during his so-called vacation in Europe, see chap. 3 (entitled Wrong-Horse Harry’) in R. N. Current, Secretary Stimson: A Study in Statecraft (New Brunswick, N.J., 1954 ).Google Scholar
  6. 1.
    Vansittart minute for MacDonald, 15 July 1931, Premier, 1/195. There is no evidence that MacDonald responded to Vansittart’s suggestion. Austen Chamberlain was later to say of Norman with much justice that ‘when he talks of catastrophe he does much to produce it’ : Austen Chamberlain to his wife, 3o July 1931, Austen Chamberlain Papers. For studies of this curious figure, see Andrew Boyle, Montagu Norman: A Biography (London, 1967).Google Scholar
  7. Sir Henry Clay, Lord Norman (London, 1957).Google Scholar

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© David Carlton 1970

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  • David Carlton

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