History as Reflected in Capital Markets: The Case of World War Ii

Abstract

This paper looks at changes in financial values as reflections of historical events. More specifically, the historical events considered here refer to World War II and the period immediately preceding it. In particular, the time span between Hitler?s rise to power (with his appointment as chancellor of the Reich on 30 January 1933) and the redevelopment of Europe after the war (with the two Marshall-Plan-Conferences in September 1947 held at Paris) is taken into consideration. We analyze the change in the values of national government bonds issued in Swiss Francs and traded on the Swiss bourse during the period 1933 to 1946. While all the nations directly or indirectly involved in WW II heavily interfered in, or closed, their stock and bond exchanges, the Swiss government, for reasons of neutrality, refrained from doing so (except for the two months following the German attack against the West in May and June 1940, when the Swiss bourse did close). The government bond market in Switzerland involved five countries: Germany, Austria, France and Belgium, as well as Switzerland itself.

JEL Classification: N20