4 - “The End of the World”? The 1931 Crises

Summary

The year 1931 is the focus of this chapter. One scholarly interpretation argues that the crises of 1931 spurred a deep recession into something more profound – the Great Depression. Examination of J.P. Morgan & Co. furnishes strength to this view. The Morgan bank, with a new partner, S. Parker Gilbert, the former Agent-General for Reparations, was an important actor as sequential crises manifested in the spring and summer of 1931. The chapter argues that the Morgan partners made a determined effort to keep the wartime victors together to meet these challenges. France was critical in the Morgan assessment. The partners strove to ensure that the Hoover administration enlisted French help to resolve international economic problems. At the same time, the ruction associated with Britain leaving gold (September 1931) generated tension among the Morgan partners. Contrary to what has been argued, these frictions did not change the internal dynamic of the partnership – Jack Morgan remained in control. Nevertheless, the chapter argues that the 1931 crises weakened the international order massively, in the process inflicting severe damage on J.P. Morgan & Co.