The Creditanstalt
Just as in May 1873 and July 1914, with tension growing among Germany, France, and Britain, the crack, when it came, appeared in Austria.  In the early spring of 1931, a Dutch bank wrote a polite letter to the Creditanstalt in Vienna saying that it was obliged to raise the charge on its acceptance credits from 0.25 percent a month to 0.375 percent. It was a timorous letter, says Beyen, not a prescient one, and the bank was somewhat surprised when the Creditanstalt chose to pay off the loan rather than renew at the higher rate.  Three months later the Creditanstalt could have used the money.


The Austrian economy had been in disarray since the Treaty of St. Germain of 1920.  Its finances had required League of Nations loan assistance, which entailed international supervision between 1922 and 1926…Industrial capital was consumed in the postwar inflation, andfinancial capital in the unsuccessful bear speculation against the French franc in 1924 that produced failures of the Allgemeine Industriebank, the Austro-Polnische Bank, and the Austro-Orientbank, as well as the private Union Bank owned by one Bosel, with grave difficulties for Kolmar& Co., Kettner, and the Brothers Nowak.  Maerz calls this episode "the opening shot of a series of bank failures culminating in the breakdown of the Creditanstalt seven years later."…
In May 1931 losses were still at 140 million schillings, and capital at 125 million plus disclosed reserves of 40 million for a total of 165 million. Under Austrian law, if a bank lost half its capital it had to "turn in its balance sheet," or close down.  In an effort to rescue the Creditanstalt, the government, the National Bank, and the House of Rothschild, the last with help of the Amsterdam branch, furnished 100 million, 30 million, and 22.5 million schillings, respectively.  But the announcement of the support operation on May 11, 1931, started a run, partly foreign, partly Austrian…
By June 5 the credit [for the entire country] was exhausted and the Austrian National Bank requested another.  Still under pressure, the bank raised its discount rate to 6 percent on June 8 and 7.5 percent on June 16. The new credit was arranged by the BIS, by June 14 this time, but subject to the condition that the Austrian government should obtain a two-to-three year loan abroad for 150 million schillings. At this point the French interposed the condition that the Austrian government should abandon the customs union with Germany. The Austrian government refused, and it fell…
The demise of the Creditanstalt and the Austrian government was followed by a run on Germany and an attack on Sterling, which was depreciated a massive 25 percent as a result. Afterwards, central banks began a run on the U.S. dollar, liquidating it for gold. The banks included the Bank of France, the National Bank of Belgium, the Netherlands Bank and the Swiss National Bank. The result was an immediate need to increase the interest rate in the U.S. from 1.5 to 3.5 percent.
These events triggered further panics and bank runs in the U.S.. Later, the U.S. dollar was depreciated and multiple bank holidays were called to contain the panic.  The U.S. economy bottomed only in April 1933.