A look back 100 years ago.
A DIGITAL EXHIBITION OF THE SWISS FINANCE MUSEUM ON THE ECONOMY OF THE 1920's.
DANCING, EASINESS AND A SPIRIT OF OPTIMISM
All night long people dance to the sounds of the piano, until the early hours of the morning. Charleston is invented, Jazz flourishes. At the tables in the nightclubs one gambles for money. The smoke of nicotine and opium fills the air. In the sophisticated metropolises of the Western world like Paris, Berlin, London or New York, at least the elite of avant-gardists, beautiful and rich enjoy the euphoric mood of the 1920s.
Marlene Dietrich sings in the movie «The Blue Angel»:
FREEDOM AND LOVE OF LIFE ARE THE FLAVOR OF THE MONTH. MODERNITY AND AWAKENING.
Especially for women: Since almost an entire generation of men is missing due to World War I, old values and conventional structures break down. Women, who replaced men's missing labor during the war, find economic independence for the first time. Likewise, countries such as the USA (1920) and Germany (1918) introduce women's suffrage. In Switzerland, by contrast, women's suffrage celebrates its 50th anniversary this year; it was introduced in 1971.
The term "Roaring Twenties" refers to the period between 1924 and 1929. The term illustrates the economic boom in the 1920s in many industrialized countries and also stands for a heyday of art, culture and science.
TECHNIcAL aCHIEvEMENTS pave the way
IMPORTANT TECHNICAL INVENTIONS
BOOM IN THE GOLDEN DECADE
THE ECONOMY IS BOOMING.
As products become cheaper thanks to more efficient manufacturing methods, demand for the cheaper goods increases. Thus, the level of employment also increases. Many people have jobs, earn money and spend it.
The economy of the USA, which emerges victorious from World War I, booms after a brief recession and also grants loans to Europe. The USA becomes the richest country per capita. In contrast, the European economies had a more difficult post-war period and only begin to flourish around 1924.
The Treaty of Versailles shakes Germany after World War I with reparations payments perceived as harsh: poverty, unemployment, and war trauma are prevalent at the beginning of the Weimar Republic. The violent devaluation of money - inflation - reaches its peak in 1923 in a hyperinflation. The Deutsche mark devalued faster and faster against the dollar.
Then, thanks to the Dawes Plan, Germany also recovers and follows the trend that already prevails in the USA: euphoria on the stock markets. Over 10,000 stock corporations are listed in Germany - an all-time high! Never again are so many stock corporations listed. The speculation bubble takes its course. There are no regulations and no stock exchange supervision yet.
After the end of the war, Switzerland experiences its first economic crisis . Eastern Switzerland is particularly affected, with the textile industry suffering greatly from the lack of foreign demand for luxury products, and never recover to previous form. After the stabilization of the economic situation in Germany from 1924 on, the Swiss economy also recovers somewhat, Migros for example opens its first permanent store in 1926. By the end of the 1920s, Switzerland is already leading in Europe in terms of asset management - even before the introduction of banking secrecy. In contrast to most European countries, prices in Switzerland always remain relatively stable in the 1920s. There is no phase of high inflation or even hyperinflation.
... AND THE ABRUPT END.
An economic downturn brings the turnaround: Price gains fail to materialize. Warnings from financial experts predicting a bursting of the speculative bubble are ignored. Due to the lack of demand, prices begin to fall from mid-October 1929. This quickly leads to a panic among investors, who want to sell their securities quickly in order to be able to repay the loans. Finally, on Thursday, October 24, 1929, prices collapse - the abrupt end of the upswing. This also hits the European stock exchanges. What follows is the world economic crisis of 1929 to 1933.
SECURITIES FROM THE 1920'S
The collection of historical securities contains over 500 securities from the 1920s, by no means all of which are founders' shares. Here is a small selection that, in our view, fit particularly well into the golden twenties - after all, they deal with consumer pleasures, leisure and health.
Aux Galeries Lafayette
Aux Galeries Lafayette, 15.12.1922
Founded in 1895 as a fashion store and transformed in 1899 into the joint-stock company
"Aux Galeries Lafayette"
the department store soon became one of the grands magasins of Paris. In 1912, the magnificent building with the colored glass dome of the Art Nouveau palace opens. Ten years later, in 1922, the department store opened the "La Maîtrise" arts and crafts workshops under the artistic direction of Maurice Dufrêne. The aim of these workshops is to produce works such as furniture, fabrics, carpets, wallpapers or pottery, accessible to large and small budgets.
HOTEL WALDORF-ASTORIA CORPORATION
Hotel Waldorf-Astoria Corporation, 01.09.1929
All the big names stay at the Waldorf-Astoria on Park Avenue in New York. Originally, the Waldorf and the Astoria Hotel - both founded in the 1890s by members of the wealthy Astor family - stood on the site where the Empire State Building now stands. In 1929, they had to make way for the construction project. To finance the new building, the Hotel Waldorf-Astoria Corporation also issued a mortgage bond. Since 1972, the hotel has belonged to the Hilton chain.
Madame Tussaud's (1926) Limited
MADAME TUSSAUD'S (1926) LIMITED, 05.09.1928
Madame Tussauds - the world-famous tourist attraction still bears the name of its founder. Growing up in the Bern household of Dr. Curtius, Marie Grosholtz follows the wax sculptor to Paris, who trains her and later leaves her his collection of wax figures. After the turmoil of the French Revolution, the artist now known as "Marie Tussaud" leaves her husband and a son behind in Paris to earn money in England with a traveling exhibition. From 1802 to 1835, she toured Great Britain until she opened her first permanent exhibition in London. In 1926, her descendants convert the wax museum into a joint-stock company.
Parfums Marcel Guerlain
PARFUMS MARCEL GUERLAIN, 22.12.1924
For generations, the name "Guerlain" has stood for the most exclusive perfumes in the world. From 1828 to 1994, the descendants of Pierre François Pascal Guerlain create a true universe of fragrances. When, in 1923, a competitor unrelated to the family opened his own company in Paris under the name "Parfums Marcel Guerlain," a legal battle ensued that lasted for years. "We have no first name," advertises the long-established original, which today belongs to the luxury goods group LVMH.
Société Internationale des Écoles Berlitz
Société Internationale des Écoles Berlitz, 05.10.1928
Today, mastering different languages and constant further education are prerequisites for a successful career. A pioneer of international language schools is Maximilian Berlitz, who emigrates from the Black Forest to America in 1870. In 1878 he founded his first school, which soon established branches in Europe and later throughout the world. The Société Internationale des Écoles Berlitz in France has existed since 1895. Berlitz died in 1921, bequeathing the language school to his grandson Charles Berlitz, who later became a successful writer.
Gesellschaft für Chemische Industrie in Basel
Gesellschaft für Chemische Industrie in Basel, 20.05.1920
In Switzerland, Alexander Clavel was the first and most important producer of tar dyes (fuchsine). In 1884, he sold his dye factory, founded in 1859, to Bindschelder & Busch, who transformed it into the AG "Gesellschaft für Chem. Industrie in Basel" (Ciba for short - but not in use as an official company name until 1945). In 1900, Ciba produces its first active pharmaceutical ingredients: Vioform, an antiseptic, and Salen, an antirheumatic. In the 1920s, pharmaceuticals are profitable and grow rapidly, so Ciba invests in building up its scientific-pharmaceutical department. Ciba launches several hormone preparations in the 1920s, for example for menstrual and menopausal complaints.
PROFESSOR DR. TOBIAS STRAUMANN ON THE ECONOMY OF THE 1920'S (German).
The 15-minute podcast picks up on the theme of the digital exhibition of the same name at the Swiss Finance Museum and looks at other aspects of economic developments at the time. Insight into the economy of the 1920's is provided by Prof. Dr. Tobias Straumann. He teaches economic history at the University of Zurich and is a former member of the Board of Trustees of the Historical Securities Foundation, which operates the Swiss Finance Museum.