Felix Somary
Encyclopedia
Felix Somary was an Austrian-Swiss banker; he is also noted as a student of political economy
. He has been described as "one of the world's greatest currency experts" of his time.
, where his fellow-students included Emil Lederer
, Joseph Schumpeter and Otto Bauer
. During that time he wrote an economics essay which was praised by Luigi Einaudi
. After taking his PhD with Carl Menger
, he worked for the Anglo-Austrian Bank, where he met Ernest Cassel
. From 1910 to 1914 he taught at the Hochschule für Staatswissenschaftliche Fortbildung in Berlin
, and he was also active in promoting commercial ties between Britain, Germany and Austria both in eastern Europe and the Near East
. He later said that without the assassination of Archduke Franz Ferdinand "the large-scale catastrophe [of World War 1] could have been averted, since all causes of the Anglo-German conflict had been eliminated". This opinion was contrary to a commonly held view at the time that the war was the result of Anglo-German imperialism and economic competition.
During World War I
, he reorganized the national bank
of occupied Belgium
; he worked together with Hjalmar Schacht
, of whom he speaks favorably in his memoirs. While in Berlin in March 1916 he co-authored a famous report with Max Weber
. This warned Germany and Austria against intensifying the use of submarine warfare
. Their argument was that intensification might provoke the US into entering the war on the side of Britain, and the consequence of this would be to remove the possibility of a neutral source of post-war credit, which would inevitably be needed by the combatant nations once hostilities had ceased. He also angered Ludendorff
by writing a paper which stated that Poland
could find a natural place in the multinational
Austrian state. In 1919 he entered as a senior partner in Bankhaus Blankart & Co. in Zurich.
After the war, European banks were long
on war bonds, worth absolutely nothing. He realised that the choice was between bankruptcy and hyperinflation
, but although he favoured the former it was the latter which ensued. He had argued his viewpoint at a German association for economists called the Verein für Sozialpolitik. He predicted the Great Depression
, which began in 1929, as early as September 1926 when he gave a lecture warning of the dangers of relying on the US for credit given the protectionist tendencies of that country. It was because of this prediction that he became known as The Raven of Zurich, the raven being a bird associated with dire omens. He was one of several economists who later expressed the view that the depression might not have occurred if there had not been a conjunction of events, including the election of Hitler
in Germany and of Roosevelt
in the US. He was in New York
when the stock market
s were plummeting and, seeing that fellow bankers were buying recklessly, he sent a wire to Zurich telling his associates there to sell all equity
. By 1931 he was so convinced of the economic power exercised by the US that he wrote "It is almost an intolerable thought that the U.S.A. will be the centre of industry, while Europe will act as hotel keeper to Americans."
In the 1930s, he took the Swiss citizenship. He taught at the Heidelberg University as well as in US universities. At Chicago
, he was a guest of his friend Schumpeter, with whom he shared the interest in the theory of the economic cycle. Before the start of World War II
, he tried to convince Baron Rothschild
to take his wealth and his person out of Germany but Rothschild did not listen to him and barely saved himself. In August 1934 he was of the recipients - on a list that "reads like a Who is Who? in business cycle theory", according to Boianovsky and Trautwein - of a paper concerning theories of the business cycle, written by Gottfried Haberler
.
He was an advisor to the chief of the Swiss Federal Department of Public Economy, attending a meeting in Washington, D.C. in 1939 when the Swiss government was trying to obtain emergency war supplies from the US government.
He, his wife (an Austrian countess called May Demblin), two sons and a daughter moved to the United States in 1940, taking the last ship bound for the US from Spain. Bela Bartok
was on the same ship, as was the poet and writer Stefan Zweig
, with whom Somary was one of the last people to speak before his suicide.
From 1941 to 1943 he advised the American Department of Defense
on finance issues. He had been consulted regarding the methods that should be deployed in order to establish a sound currency in the European and African war zones, this being seen prior to the allied landings in North Africa and France as an important pre-requisite for achieving economic stability. When they told him that the Americans were thinking of abolishing the Japanese Emperor, he was outraged: "And then – he asked – with whom are you going to sign a peace treaty
?"
His book Bankpolitik remains a standard work and was praised by Schumpeter in his Geschichte der ökonomischen Analyse. After the war, he had a role in the birth of Mediobanca
. The Italian large banks were not very enthusiastic about the idea of creating, ex novo, an Italian merchant bank
; Mattioli
, the president of Comit
, turned to Somary for a loan
; Somary said he was willing to give a larger loan, and even to buy stock
. At this point, the Italians convinced themselves that the project was good, and financed it.
One of his sons, Johannes Felix, was the founder and music director of an orchestra and chorus called Amor Artis, which for many years specialised in neglected music from the Baroque and Classical periods.
Political economy
Political economy originally was the term for studying production, buying, and selling, and their relations with law, custom, and government, as well as with the distribution of national income and wealth, including through the budget process. Political economy originated in moral philosophy...
. He has been described as "one of the world's greatest currency experts" of his time.
Life
The son of a lawyer, Somary studied law and economy at the University of ViennaUniversity of Vienna
The University of Vienna is a public university located in Vienna, Austria. It was founded by Duke Rudolph IV in 1365 and is the oldest university in the German-speaking world...
, where his fellow-students included Emil Lederer
Emil Lederer
Emil Lederer was a Bohemian-born German economist and sociologist. Purged from his position at Heidelberg University in 1933 for being Jewish, Lederer fled into exile. He helped establish the "University in Exile" at the New School in New York City.-Biography:Lederer was born in 1882 to a Jewish...
, Joseph Schumpeter and Otto Bauer
Otto Bauer
Otto Bauer was an Austrian Social Democrat who is considered one of the leading thinkers of the left socialist Austro-Marxist tendency...
. During that time he wrote an economics essay which was praised by Luigi Einaudi
Luigi Einaudi
Luigi Einaudi , Cavaliere di Gran Croce decorato di Gran Cordone OMRI was an Italian politician and economist. He served as the second President of the Italian Republic between 1948 and 1955.-Early life:...
. After taking his PhD with Carl Menger
Carl Menger
Carl Menger was the founder of the Austrian School of economics, famous for contributing to the development of the theory of marginal utility, which contested the cost-of-production theories of value, developed by the classical economists such as Adam Smith and David Ricardo.- Biography :Menger...
, he worked for the Anglo-Austrian Bank, where he met Ernest Cassel
Ernest Cassel
Sir Ernest Joseph Cassel, GCB, GCMG, GCVO, PC was a German-born British merchant banker and capitalist.-Biography:...
. From 1910 to 1914 he taught at the Hochschule für Staatswissenschaftliche Fortbildung in Berlin
Berlin
Berlin is the capital city of Germany and is one of the 16 states of Germany. With a population of 3.45 million people, Berlin is Germany's largest city. It is the second most populous city proper and the seventh most populous urban area in the European Union...
, and he was also active in promoting commercial ties between Britain, Germany and Austria both in eastern Europe and the Near East
Near East
The Near East is a geographical term that covers different countries for geographers, archeologists, and historians, on the one hand, and for political scientists, economists, and journalists, on the other...
. He later said that without the assassination of Archduke Franz Ferdinand "the large-scale catastrophe [of World War 1] could have been averted, since all causes of the Anglo-German conflict had been eliminated". This opinion was contrary to a commonly held view at the time that the war was the result of Anglo-German imperialism and economic competition.
During World War I
World War I
World War I , which was predominantly called the World War or the Great War from its occurrence until 1939, and the First World War or World War I thereafter, was a major war centred in Europe that began on 28 July 1914 and lasted until 11 November 1918...
, he reorganized the national bank
National bank
In banking, the term national bank carries several meanings:* especially in developing countries, a bank owned by the state* an ordinary private bank which operates nationally...
of occupied Belgium
Belgium
Belgium , officially the Kingdom of Belgium, is a federal state in Western Europe. It is a founding member of the European Union and hosts the EU's headquarters, and those of several other major international organisations such as NATO.Belgium is also a member of, or affiliated to, many...
; he worked together with Hjalmar Schacht
Hjalmar Schacht
Dr. Hjalmar Horace Greeley Schacht was a German economist, banker, liberal politician, and co-founder of the German Democratic Party. He served as the Currency Commissioner and President of the Reichsbank under the Weimar Republic...
, of whom he speaks favorably in his memoirs. While in Berlin in March 1916 he co-authored a famous report with Max Weber
Max Weber
Karl Emil Maximilian "Max" Weber was a German sociologist and political economist who profoundly influenced social theory, social research, and the discipline of sociology itself...
. This warned Germany and Austria against intensifying the use of submarine warfare
Submarine warfare
Naval warfare is divided into three operational areas: surface warfare, air warfare and underwater warfare. The latter may be subdivided into submarine warfare and anti-submarine warfare as well as mine warfare and mine countermeasures...
. Their argument was that intensification might provoke the US into entering the war on the side of Britain, and the consequence of this would be to remove the possibility of a neutral source of post-war credit, which would inevitably be needed by the combatant nations once hostilities had ceased. He also angered Ludendorff
Erich Ludendorff
Erich Friedrich Wilhelm Ludendorff was a German general, victor of Liège and of the Battle of Tannenberg...
by writing a paper which stated that Poland
Poland
Poland , officially the Republic of Poland , is a country in Central Europe bordered by Germany to the west; the Czech Republic and Slovakia to the south; Ukraine, Belarus and Lithuania to the east; and the Baltic Sea and Kaliningrad Oblast, a Russian exclave, to the north...
could find a natural place in the multinational
Multinational state
A multinational state is a sovereign state which is viewed as comprising two or more nations. Such a state contrasts with a nation-state where a single nation comprises the bulk of the population...
Austrian state. In 1919 he entered as a senior partner in Bankhaus Blankart & Co. in Zurich.
After the war, European banks were long
Long (finance)
In finance, a long position in a security, such as a stock or a bond, or equivalently to be long in a security, means the holder of the position owns the security and will profit if the price of the security goes up. Going long is the more conventional practice of investing and is contrasted with...
on war bonds, worth absolutely nothing. He realised that the choice was between bankruptcy and hyperinflation
Hyperinflation
In economics, hyperinflation is inflation that is very high or out of control. While the real values of the specific economic items generally stay the same in terms of relatively stable foreign currencies, in hyperinflationary conditions the general price level within a specific economy increases...
, but although he favoured the former it was the latter which ensued. He had argued his viewpoint at a German association for economists called the Verein für Sozialpolitik. He predicted the Great Depression
Great Depression
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...
, which began in 1929, as early as September 1926 when he gave a lecture warning of the dangers of relying on the US for credit given the protectionist tendencies of that country. It was because of this prediction that he became known as The Raven of Zurich, the raven being a bird associated with dire omens. He was one of several economists who later expressed the view that the depression might not have occurred if there had not been a conjunction of events, including the election of Hitler
Adolf Hitler
Adolf Hitler was an Austrian-born German politician and the leader of the National Socialist German Workers Party , commonly referred to as the Nazi Party). He was Chancellor of Germany from 1933 to 1945, and head of state from 1934 to 1945...
in Germany and of Roosevelt
Franklin D. Roosevelt
Franklin Delano Roosevelt , also known by his initials, FDR, was the 32nd President of the United States and a central figure in world events during the mid-20th century, leading the United States during a time of worldwide economic crisis and world war...
in the US. He was in New York
New York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...
when the stock market
Stock market
A stock market or equity market is a public entity for the trading of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.The size of the world stock market was estimated at about $36.6 trillion...
s were plummeting and, seeing that fellow bankers were buying recklessly, he sent a wire to Zurich telling his associates there to sell all equity
Stock
The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...
. By 1931 he was so convinced of the economic power exercised by the US that he wrote "It is almost an intolerable thought that the U.S.A. will be the centre of industry, while Europe will act as hotel keeper to Americans."
In the 1930s, he took the Swiss citizenship. He taught at the Heidelberg University as well as in US universities. At Chicago
Chicago
Chicago is the largest city in the US state of Illinois. With nearly 2.7 million residents, it is the most populous city in the Midwestern United States and the third most populous in the US, after New York City and Los Angeles...
, he was a guest of his friend Schumpeter, with whom he shared the interest in the theory of the economic cycle. Before the start of World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
, he tried to convince Baron Rothschild
Baron Rothschild
Baron Rothschild, of Tring in the County of Hertford, is a title in the Peerage of the United Kingdom. It was created in 1885 for Sir Nathan Rothschild, 2nd Baronet, a member of the Rothschild banking family. He was the first person of the Jewish faith to be raised to the peerage...
to take his wealth and his person out of Germany but Rothschild did not listen to him and barely saved himself. In August 1934 he was of the recipients - on a list that "reads like a Who is Who? in business cycle theory", according to Boianovsky and Trautwein - of a paper concerning theories of the business cycle, written by Gottfried Haberler
Gottfried Haberler
Gottfried von Haberler was an economist. He worked in particular on international trade....
.
He was an advisor to the chief of the Swiss Federal Department of Public Economy, attending a meeting in Washington, D.C. in 1939 when the Swiss government was trying to obtain emergency war supplies from the US government.
He, his wife (an Austrian countess called May Demblin), two sons and a daughter moved to the United States in 1940, taking the last ship bound for the US from Spain. Bela Bartok
Béla Bartók
Béla Viktor János Bartók was a Hungarian composer and pianist. He is considered one of the most important composers of the 20th century and is regarded, along with Liszt, as Hungary's greatest composer...
was on the same ship, as was the poet and writer Stefan Zweig
Stefan Zweig
Stefan Zweig was an Austrian novelist, playwright, journalist and biographer. At the height of his literary career, in the 1920s and 1930s, he was one of the most famous writers in the world.- Biography :...
, with whom Somary was one of the last people to speak before his suicide.
From 1941 to 1943 he advised the American Department of Defense
United States Department of Defense
The United States Department of Defense is the U.S...
on finance issues. He had been consulted regarding the methods that should be deployed in order to establish a sound currency in the European and African war zones, this being seen prior to the allied landings in North Africa and France as an important pre-requisite for achieving economic stability. When they told him that the Americans were thinking of abolishing the Japanese Emperor, he was outraged: "And then – he asked – with whom are you going to sign a peace treaty
Peace treaty
A peace treaty is an agreement between two or more hostile parties, usually countries or governments, that formally ends a state of war between the parties...
?"
His book Bankpolitik remains a standard work and was praised by Schumpeter in his Geschichte der ökonomischen Analyse. After the war, he had a role in the birth of Mediobanca
Mediobanca
Mediobanca is an Italian investment bank founded in 1946 at the initiative of Raffaele Mattioli and Enrico Cuccia to facilitate the post-World War II reconstruction of Italian industry.Enrico Cuccia led Mediobanca from 1946 to 1982...
. The Italian large banks were not very enthusiastic about the idea of creating, ex novo, an Italian merchant bank
Merchant bank
A merchant bank is a financial institution which provides capital to companies in the form of share ownership instead of loans. A merchant bank also provides advisory on corporate matters to the firms they lend to....
; Mattioli
Mattioli
Mattioli may mean:*Carlo Mattioli , Italian race walker*Marcus Mattioli , Brazilian swimmer*Mattiolo Mattioli , Italian author*Pietro Andrea Mattioli , Italian herbalist...
, the president of Comit
COMIT
COMIT was the first string processing language , developed on the IBM 700/7000 series computers by Dr. Victor Yngve and collaborators at MIT from 1957-1965. Yngve created the language for supporting computerized research in the field of linguistics, and more specifically, the area of machine...
, turned to Somary for a loan
Loan
A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower....
; Somary said he was willing to give a larger loan, and even to buy stock
Stock
The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...
. At this point, the Italians convinced themselves that the project was good, and financed it.
One of his sons, Johannes Felix, was the founder and music director of an orchestra and chorus called Amor Artis, which for many years specialised in neglected music from the Baroque and Classical periods.