Competing narratives in the Swedish 1929 deposit insurance-debate

In early April 1929, eight Swedish savings banks were declared insolvent and closed due to economic crimes committed by some of their founders. After the crash, the Swedish parliament entered into a month-long debate over whether the state should cover some, all, or none of the losses of the 88,000 depositors of the failed banks. The two main parties, the Right Party, in government, and the Social Democrats, the largest party in parliament, developed competing narratives about the causes of the crash, the motives for state intervention, which depositors should be helped, and with how much public money. This paper provides the first account and analysis of this political debate, which ended with a decision for the state to provide an informal, partial, one-time deposit guarantee. The case is unique in Swedish banking history and demonstrates the importance of analysing policy makers’ narratives to understand state intervention in banking crises.