Overseas surplus-capital investment spawned swindles and scandals across Europe.

Evidence

The first reaction to the saturated home market, lack of raw materials, and growing crises, was export of capital. The owners of superfluous wealth first tried foreign investment without expansion and without political control, which resulted in an unparalleled orgy of swindles, financial scandals, and stock-market speculation, all the more alarming since foreign investments grew much more rapidly than domestic ones. Big money resulting from oversaving paved the way for little money, the product of the little fellow’s work. Domestic enterprises, in order to keep pace with high profits from foreign investment, turned likewise to fraudulent methods and attracted an increasing number of people who, in the hope of miraculous returns, threw their money out of the window. The Panama scandal in France, the Gründungsschwindel in Germany and Austria, became classic examples. Tremendous losses resulted from the promises of tremendous profits. The owners of little money lost so much so quickly that the owners of superfluous big capital soon saw themselves left alone in what was, in a sense, a battlefield. — Hannah Arendt, The Origins of Totalitarianism, 408

Categorization

• QUESTION: Arendt treats the Panama scandal and the Gründerzeit crash as classic cases of foreign-investment swindle — worth verifying the specifics of each to carry concrete examples into later readings.