A study of the impact of the 1930s World Depression on Southwest Chinaintersects with two major controversies in modern Chinese economic history. First, there is still substantial disagreement over the severityof the impact of the Depression on China. The ‘traditional’interpretation inside China has focused on the ‘bankruptcy’ ofthe economy in the 1930s (of which the Depression was one but not the onlycause). While many aspects of the ‘bankruptcy’ and ‘stagnation’theses have more recently been discarded or modified by Chinese scholars,recognition is still made of the gravity of the crisis of the 1930s: China'sleading historian of its modern economy, Wu Chengming, writes in the thirdvolume of the History of Chinese Capitalism: ‘The economiccrisis of 1932–1935 was, with the exception of the wars of invasionlaunched by foreign countries, the single most severe blow to the Chineseeconomy’.