Hostname: page-component-586b7cd67f-t8hqh Total loading time: 0 Render date: 2024-11-27T16:19:29.410Z Has data issue: false hasContentIssue false
  • English
  • Français

Making Sense of Financial Crisis and Scandal: A Danish Bank Failure in the First Era of Finance Capitalism

Published online by Cambridge University Press:  18 February 2015

Per H. Hansen
Get access Rights & Permissions [Opens in a new window]

Abstract

In this paper I discuss a dramatic financial collapse and scandal in Denmark in the interwar period. I analyze the asset price bubble from 1914 to 1920 and the subsequent failure in 1922 of Scandinavia's largest bank, the Danish Landmandsbanken, as well as the downfall of its CEO Emil Glückstadt. I discuss the sense-making process, first during the bubble and then following Landmandsbanken's collapse and Glückstadt's fall from power in 1922, and finally until the introduction of a new bank act in 1930. I further argue that such crises and scandals force contemporaries to make sense of the dramatic fall from the top of society of these icons and of their role in the collapse of their banks. I view the sense-making process as centered on the construction of narratives that explain the crisis and enable or constrain institutional response to the crisis. To conclude, I argue that the process of sense-making in the case of Landmandsbanken can be generalized as the way in which society enforces norms and values in cases of dramatic financial crisis and scandal.

Type
Articles
Information
Enterprise & Society , Volume 13 , Issue 3 , September 2012 , pp. 672 - 706
Copyright
Copyright © The Author(s) 2011. Published by Cambridge University Press on behalf of the Business History Conference. All rights reserved.

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Bibliography of Works Cited

Books

Akerlof, George, and Shiller, Robert J. Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism. Princeton, NJ: Princeton University Press, 2009.Google Scholar
Baker, George P., and David smith, George The New Financial Capitalists. Kohiberg, Kravis Roberts and the Creation of Corporate Value. new York: Cambridge University Press, 1998.Google Scholar
Bankkommissionen. Beretning Om Forhoidene I Den Danske Landmandsbank, Hypothek- Og Vekseibank M.M. Afgivet Af Den Ved Kgi. Ordre Af 21. September 1922 Nedsatte Kommission. København: G.E.C. Gad, 1924.Google Scholar
Birck, Lauritz V. Under Højkapitaiismen. København: Martins Forlag, 1935.Google Scholar
Birck, Lauritz V. Verdenskrisen Og Danmark. København: Gyldendalske Boghandel, 1922.Google Scholar
Brandeis, Louis D. Other Peopie’s Money: And How the Bankers Use It. 2009 ed. Mansfield Centre, CT: Martino Publishing, 1914.Google Scholar
Chernow, Ron. The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance. New York: Grove Press, 1990.Google Scholar
Chernow, Ron. The Death of the Banker. The Deciine and Fall of the Great Financial Dynasties and the Triumph of the Small Investor. First ed. New York: Random House, 1997.Google Scholar
Cohen, William D. House of Cards: A Taie of Hubris and Wretched Excess on Waii Street. New York: Random House, 2009.Google Scholar
Friedman, Milton, and Schwartz, Anna J. A Monetary History of the United States, 1867–1960. Princeton, NJ: Princeton University Press, 1963.Google Scholar
Gejl, Ib. Indenfor Snorene. Fondsbørsvekseierernes Historie - Især Til 1945. Århus: Erhvervsarkivet, 1989.Google Scholar
Grossman, Richard S. Unsettied Account. The Evoiution of Banking in the Industriaiized Worid since 1800. Princeton, NJ: Princeton University Press, 2010.Google Scholar
Hamilton, Stewart, and Micklethwait, Alicia Greed and Corporate Faiiure. The Lessons from Recent Disasters. New York: Palgrave MacMillan, 2006.Google Scholar
Hansen, Per H., På Giidebanen Tii Den Bitre Ende. Dansk Bankvæsen IKrise, 1920–1933. Odense: Odense Universitetsforlag, 1996.Google Scholar
Hansen, Per H., and Mørch, Søren Den Danske Bank. First ed. Viby: Forlaget Centrum, 1997.Google Scholar
Hilferding, Rudolf. Das Finanzkapitai. Eine Studie Über Die Jüngste Entwickiung Des Kapitaiismus. Wien, 1910.Google Scholar
Ho, Karen. Liquidated. An Ethnography of Waii Streeet. Durham, NC: Duke University Press, 2009.Google Scholar
Hoffmeyer, Erik, and Olsen, Erling Dansk Pengehistorie, 1914–1960. Vol. 2. København: Danmarks Nationalbank, 1968.Google Scholar
Horwitz, Alfred. Minut-Miiiionserer. økonomiske Tidsbiiieder Fra Krigs- Og Efterkrigsaarene. København: Levin & Munksgaard, 1923.Google Scholar
Kahneman, Daniel. Thinking, Fast and Siow. New York: Farrar, Straus and Giroux, 2011.Google Scholar
Kindleberger, Charles P., and Aliber, Robert Z. Manias, Panics and Crashes. A History of Financiai Crises. 6th ed. New York: Palgrave MacMillan, 2011.Google Scholar
Lakoff, George. The Poiiticai Mind. Why You Can’t Understand 21st-Century Poiitics with a 18th-Century Brain. London: Viking Press, 2008.Google Scholar
Linde, Charlotte. Working the Past. Narrative and Institutionai Memory. New York: Oxford University Press, 2009.Google Scholar
Mørch, Søren. Det Store Bankkrak. København: Gyldendal, 1986.Google Scholar
Nielsen, Axel. Bankpoiitik. Forste Del: Beskrivelsen. København, 1923.Google Scholar
Pedersen, Jan. Danmarks økonomiske Historie, 1910–1960. København: Multivers Academic, 2009.Google Scholar
Preda, Alex. Framing Finance. The Boundaries of Markets and Modern Capitaiism. Chicago: University of Chicago Press, 2009.Google Scholar
Reich, Robert. Supercapitaiism. The Transformation of Business, Democracy, and Everyday Life. New York: Alfred A. Knopf, 2007.Google Scholar
Reinhart, Carmen M, and Rogoff, Kenneth S. This Time Is Different. Eight Centuries of Financiai Folly. Princeton, NJ: Princeton University Press, 2009.Google Scholar
Schumpeter, Joseph. The Theory of Economic Deveiopment. An Inquiry into Profits, Capitai, Credit, Interest, and the Business Cycie. Cambridge, MA, 1934.Google Scholar
Shiller, Robert J. The New Financiai Order. Risk in the 21st Century. Princeton, NJ: Princeton University Press, 2003.Google Scholar
Sinn, Hans-Werner. Casino Capitaiism. How the Financiai Crisis Came About and What Needs to Be Done Now. Oxford, UK: Oxford University Press, 2010.Google Scholar
Smith, Roy, and Walter, Ingo Governing the Modern Corporation: Capitai Markets, Corporate Controi and Economic Performance. New York: Oxford University Press, 2006.Google Scholar
Sorkin, Andrew Ross. Too Big to Fall: The Inside Story of How Waii Street and Washington Fought to Save the Financiai System and Themseives. New York: Penguin, 2009.Google Scholar
Stenografisk Referat Af Domsforhandiingen Ved Østre Landsret I Sagen Mod Forhenvrende Direktører Og Bestyreisesmediemmer I Den Danske Landmandsbank, Hypothek- Og Vekseibank. København: Berlingske Tidendes Officin, 1923.Google Scholar
Tett, Gillian. Fooi’s Goid: How the Boid Dream of a Small Tribe at J.P. Morgan Was Corrupted by Wall Street Greed and Unieashed a Catastrophe. New York: Free Press, 2009.Google Scholar
Trouillot, Michel-Rolph. Siiencing the Past: Power and the Production of History. Boston: Beacon Press, 1995.Google Scholar
Ussing, Carl. Nationaibanken 1914–1924. København, 1926.Google Scholar
Ussing, Carl. Universitetet Og Nationaibanken. København, 1931.Google Scholar
Villette, Michel, and Vuillermot, Catherine From Predators to Icons. Exposing the Myth of the Business Hero. US. Published in French in 2005 ed. Ithaca, NY: Cornell University Press, 2009.Google Scholar
Weick, Karl. Sensemaking in Organizations. Thousand Oaks, CA: Sage, 1995.Google Scholar

Articles and Essays

Abolafia, Mitchel Y. “Making Sense of Recession: Toward an Interpretive Theory of Economic Action.” In The Economic Socioiogy of Capitaiism, edited by Victor, Nee and Swedberg, Richard 204–26. Princeton, NJ: Princeton University Press, 2005.Google Scholar
Abolafia, Mitchel Y. “Narrative Construction as Sensemaking: How a Central Bank Thinks. Organization Studies 31, no. 3 (2010): 349–67.Google Scholar
Brasch, Sven. “Sådan Er Det (Drawing).” In Svikmøllen. Copenhagen, 1916.Google Scholar
Carr, David. “Narrative and the Real World. An Argument for Continuity.” History and Theory (1986): 117–31.Google Scholar
Coffee, John. Jr “A Theory of Corporate Scandals: Why the USA and Europe Differ.” Oxford Review of Economic Poiicy 21, no. 2 (2005): 198–211.Google Scholar
de Bondt, Verner. “Bubble Psychology.” In Asset Price Bubbies. The Impiications for Monetary, Reguiatory, and Internationai Poiicies, edited by William, C. Hunter, George G. Kaufman and Michael Pomerleano, 205–16. Cambridge, MA: MIT Press, 2003.Google Scholar
Dore, Ronald. “Financialization of the Global Economy.” Industriai and Corporate Change 17, no. 6 (2008): 1097–112.Google Scholar
Drummond, Helga. “Living in a Fool’s Paradise: The Collapse of Barings’ Bank.” Management Decision 40, no. 3 (2002): 232–38.Google Scholar
Eichengreen, Barry. “Fortifying the Financial Architecture: Unanswered Questions.” Current History, January (2010).Google Scholar
Elliott, Douglas J., and Neil Baily, Martin “Telling the Narrative of the Financial Crisis: Not Just a Housing Bubble.” Brookings, 2009.Google Scholar
Fisher, Irving. “The Debt-Deflation Theory of Great Depressions.” Econometrica, no. 1 (1933): 337–57.Google Scholar
Geertz, Clifford. Thick Description: Toward an Interpretive Theory of Culture.” In The Interpretation of Cuitures, edited by Geertz, Clifford 3–30. London: Fontana Press, 1973. Reprint, 1993.Google Scholar
Hansen, Per H. “Bank Regulation in Denmark from 1880 to World War Two: Public Interests and Private Interests.” Business History 43, no. 1 (2001): 43–68.Google Scholar
Hansen, Per H. “Banking Crises and Lenders of Last Resort: Denmark in the 1920s and the 1990s.” In The Evoiution of Financiai Institutions and Markets in Twentieth Century Europe, edited by Gerald Feldman & Ulf Olsson Youssef Cassis, 20–46. Aldershot, UK: Scolar Press, 1995.Google Scholar
Hansen, Per H. “Finansielle Krisers Efterspil I (Danmarks) Historien, 1857–1930.” Samfundsokonomen Marts, no. 1 (2010): 23–8.Google Scholar
Hansen, Per H. “From Growth to Crisis. The Danish Banking System from 1850 to the Interwar Years.” Scandinavian Economic History Review, no. 3 (1991): 20–40.Google Scholar
Hansen, Per H. “Hvem Har Skylden?” Ræson, no. 2 (2008): 62–5.Google Scholar
Hansen, Per H. “Networks, Narratives, and New Markets: The Rise and Decline of Danish Modern Furniture Design, 1930–1970.” Business History Review 80, Autumn (2006): 449–83.Google Scholar
Hansen, Per H. “Organizational Culture and Organizational Change: A Narrative Analysis of the Transformation of Savings Banks in Denmark, 1965–1990.” Enterprise & Society 8, no. 4 (2007): 920–53.Google Scholar
Hansen, Per H. “Production Versus Currency: The Danish Central Bank in the 1920s.” In Universai Banking in the Twentieth Century. Finance, Industry and the State in North and Centrai Europe, edited by Alice, Teichova Terry, Gourvish and Pogány, Agnes 59–76: Edward Elgar, 1994.Google Scholar
Hay, Colin. “Constructivist Institutionalism.” In The Oxford Handbook of Poiiticai Institutions, edited by Rhodes, R.A.W. Binder, Sarah A. and Rockman, Bert A. Oxford, UK: Oxford University Press, 2006.Google Scholar
Hoff, Christian. “Formuekonfiskation. Wild West Film. I Hovedrollen Dr. Lauritz Birck.” In Svikmøllen. Copenhagen, Denmark, 1923.Google Scholar
Iversen, Martin Jes, and Andersen, Steen “Co-Operative Liberalism : Denmark from 1857 to 2007.” In Creating Nordic Capitaiism: The Business History of a Competitive Periphery, edited by Fellman, Susan Jes Iversen, Martin Hans Sjögren and Lars Thue, 265–334: Palgrave MacMillan, 2008.Google Scholar
Kane, Edward J. “Competitive Financial Reregulation: An International Perspective.” In Threats to Internationai Financiai Stability, edited by Portes, Richard and Swoboda, Alexander K. 111–45. Cambridge: Cambridge University Press, 1987.Google Scholar
Kobrak, Christopher, and Wilkins, Mira “The ‘2008 Crisis’ in an Economic History Perspective: Looking at the Twentieth Century.” Business History 53, no. 2: 175–92.Google Scholar
Koed, Holger. “I Samfundets Tjeneste.” In Bogen Om Birck, edited by Nielsen, Axel 57–80. København: Westermann, 1944.Google Scholar
Lai, Linda. “The Norwegian Banking Crisis: Managerial Escalation of Decline and Crisis.” Scandinavian Journai of Management 10, no. 4 (1994): 397–408.Google Scholar
Lamoreaux, Naomi R. “Scylla or Charybdis? Historical Reflections on Two Basic Problems of Corporate Governance.” Business History Review 83, no. 1 (2009): 9–34.Google Scholar
Lipartito, Kenneth. “Culture and the Practice of Business History.” Business and Economic History 24, no. 2 (1995): 1–41.Google Scholar
Ludvigsen, “Stormen På Sølyst.” In Svikmoiien. Copenhagen, 1923.Google Scholar
Minsky, Hyman. “A Theory of Systemic Fragility.” In Financiai Crises: Institutions and Markets in a Fragiie Environment, edited by Altman, Edward I. and Sametz, Arnold W. 138–52. New York: Wiley, 1977.Google Scholar
North, Douglas C. “Institutions and the Performance of Economies over Time.” In Handbook of New Institutionai Economics, edited by Menard, Claude and Shirley, Mary M. 21–30. Dordrecht, the Netherlands, 2005.Google Scholar
O.T., “Glückstadt, Emil.” In Dansk Biografisk Haandieksikon, edited by Dahl, Svend and Engelstoft, P. 584–5. København: Gyldendalske Boghandel, 1920.Google Scholar
Officer, Lawrence H., and Williamson, Samuel H. “Measures of Worth.” MeasuringWorth, http://www.measuringworth.com/worthmeasures.html.Google Scholar
Safley, Thomas Max. “Business Failure and Civil Scandal in Early Modern Europe.” Business History Review 83, no. 1 (2009): 35–60.Google Scholar
Schwartz, Anna. “Origins of the Financial Market Crisis of 2008.” Cato Journal 29, no. 1 (2009): 19–23.Google Scholar
Schwartz, Anna. “Real and Pseudo Financial Crises.” In Financial Crises and the Worid Banking System, edited by Capie, Forrest and Wood, Geoffrey 11–31. New York: St. Martin’s Press, 1986.Google Scholar
Shiller, Robert J. “The Sickness beneath the Slump.” New York Times, June 11, 2011.Google Scholar
Vestberg, Jens. “Emil Glückstadt.” In Dansk Biografisk Leksikon, edited by Engelstoft, Povl and Dahl, Svend 174–9. Copenhagen: J.H. Schultz Forlag, 1926.Google Scholar
Wallison, Peter J. “Three Narratives About the Financial Crisis.” Cato Journal 31, no. 3 (2011): 535–49.Google Scholar
White, Eugene N. “Before the Glass-Steagall Act: An Analysis of Investment Banking Activities of National Banks.” Expiorations in Economic History 23, no. 1 (1986): 33–55.Google Scholar
White, Lawrence H. “How Did We Get into This Financial Mess?” Cato Institute Briefing Papers, no. 110 (2008), http://www.cato.org/pubs/bp/bp110.pdf.Google Scholar

Newspapers and Magazines

Birck, Laurits V. “Hr. Emil Glückstadt Som Bankleder.” København, September 18, 1922.Google Scholar
Judt, Tony. “The Wrecking Ball of Innovation.” The New York Review of Books, December 6, 2007.Google Scholar
n/a. “Beretningen Om Kapitalismens Forfærdende Forbrydelser Mod Det Danske Folk.” Social-Demokraten, January 15, 1924.Google Scholar
n/a. “De Nye Direkt0rer I Landmandsbanken.” Beriingske Tidende, October 6, 1921.Google Scholar
n/a. “Den Misbrugte Tillid.” Jyiiands-Posten, September 21, 1922.Google Scholar
n/a. “Det Københavnske Venstre Og Landmandsbanken.” Nationaitidende, September 21, 1922.Google Scholar
n/a. Etatsraad Emil Glückstadt Død.” Beriingske Tidende Aften, June 23, 1923.Google Scholar
n/a. “Etatsraad Glückstadt Afgik I Gaar Ved Døden.” Poiitiken, June 24, 1924.Google Scholar
n/a. “Landmandsbankens Sammenbrud.” Jyiiands-Posten, September 19, 1922.Google Scholar
n/a. “Sammenbrudet Er Et Resultat Af Vor Pengepolitik.” Nationaitidende, September 19, 1922.Google Scholar
n/a. “Konsekvenser.” Borsen, September 19, 1922.Google Scholar
Schovelin, Julius. “Emil Glückstadt in Memoriam.” Nationaitidende, June 24, 1923.Google Scholar
Schovelin, Julius. “Landmandsbankens Fortid Og Fremtid.” Nationaitidende, September 21, 1922.Google Scholar
“To Recast Austrian Finance. Gluckstadt, Danish Banker, Will Undertake Task for Allies.” New York Times, April 5, 1921.Google Scholar
Uchitelle, Louis. “The Richest of the Rich, Proud of a New Gilded Age.” New York Times, July 15, 2007, 1, 18–19.Google Scholar

Unpublished Materials

Buiter, Willem H. “Lessons from the North-Atlantic Crisis.” London School of Economics, 2008.Google Scholar
Nyegaard, Susanne Dyrhoff. “Forbundne Bestyrelser I Danmark, 1919-1933.” Syddansk Universitet, 2003.Google Scholar
Financial statements of Landmandsbanken, Privatbanken and Handelsbanken, 1875–1935.Google Scholar