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The European Debt Crisis
How Portugal Navigated
the post-2008 Financial
Crisis

João Moreira Rato

The European Debt Crisis
 João Moreira Rato

The European
Debt Crisis
How Portugal Navigated the post-2008
Financial Crisis
João Moreira Rato
NOVA IMS
Universidade Nova de Lisboa
Lisbon, Portugal

ISBN 978-3-030-61173-6    ISBN 978-3-030-61174-3 (eBook)

https://doi.org/10.1007/978-3-030-61174-3

© The Editor(s) (if applicable) and The Author(s), under exclusive licence to Springer
Nature Switzerland AG 2020
This work is subject to copyright. All rights are solely and exclusively licensed by the
Publisher, whether the whole or part of the material is concerned, specifically the rights of
translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on
microfilms or in any other physical way, and transmission or information storage and retrieval,
electronic adaptation, computer software, or by similar or dissimilar methodology now
known or hereafter developed.
The use of general descriptive names, registered names, trademarks, service marks, etc. in this
publication does not imply, even in the absence of a specific statement, that such names are
exempt from the relevant protective laws and regulations and therefore free for general use.
The publisher, the authors and the editors are safe to assume that the advice and information
in this book are believed to be true and accurate at the date of publication. Neither the
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Switzerland AG.
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To Inês and to my sons, Francisco and Luís, for their constant
support and patience
 Foreword

Greece looms large in the perception of the European debt crisis, with
Athens the natural focal point of attention. Yet it was far from the only
country to find itself against the ropes in a multi-faceted, multi-pronged
and existential crisis for the common currency project. Portugal was often
the forgotten front, but its success in navigating the tumultuous period
was no less important. João Moreira Rato’s detailed exploration of how
Portugal found itself in dire straits, how it navigated the mess and ulti-
mately managed to slowly rebuild investor confidence regain access to
international capital markets in 2013 is therefore a vital contribution to
the ongoing post-mortem of the European debt crisis—with lessons we
can all learn from.

Global Finance Correspondent, Financial Times Robin Wigglesworth

vii
 Contents

1 Background  1

2 Warming Up 17

3 Investors 35

4 International and Domestic Ecosystems 57

5 Restarting the Engines 71

6 Bumps on the Road 83

7 Final Push 97

8 Success113

Index127

ix
 CHAPTER 1

Background

Abstract This chapter describes the economic situation in Portugal fol-

lowing the Global Financial Crisis. Flows coming from the European
Central Bank via the Target 2 system enabled Portugal to keep twin deficits
in its external and fiscal accounts. It allowed Portugal to continue accumu-
lating domestic and external debt. This accumulation of debt and the neg-
ative evolution of the European government bond market conditions led
Portugal to request financial assistance from the Troika in April 2011. In
doing so, it was following Ireland and Greece, which had requested assis-
tance in 2010. The assistance program was designed with the aim of stabi-
lizing both public and external debt flows. During the first year of the
program, the new government managed to stabilize the macroeconomic
situation. But during the same period, discussions around a second pro-
gram for Greece introduced the possibility of private bondholders haircuts
in Europe. This possibility originated a succession of negative sovereign
rating reactions and government bond prices in the periphery to get to
more distressed levels. In this context, I explain what my motivation was to
join the Debt Management Office. My mission was to design and imple-
ment a plan to re-establish market access for Portuguese government bonds.

Keywords Troika • European debt crisis • Greek PSI • Euro

redenomination risk • Portuguese assistance program • Global
Financial Crisis

© The Author(s), under exclusive license to Springer Nature 1

Switzerland AG 2020
J. M. Rato, The European Debt Crisis,
https://doi.org/10.1007/978-3-030-61174-3_1
2 J. M. RATO

During the first decade of the twenty-first century, in the happy days pre-
ceding the Global Financial Crisis, Portugal had been spending beyond its
means. It had been accumulating a high stock of debt vis-à-vis external
borrowers. Foreign banks, insurance companies, asset managers and mul-
tilateral institutions like the European Investment Bank (“EIB”) had been
accumulating Portuguese private and public debt. The Portuguese econ-
omy was depending on external credit to guarantee a certain level of
domestic economic growth. Portuguese households were buying their
houses with recourse to foreign money. Home ownership increased at a
rapid pace. Local banks would aggressively finance mortgages, repackag-
ing them into securitization vehicles; the vehicles would then issue bonds
and those bonds were then placed with international investors. The banks
were also active in financing corporations, a good share of which either
were developers or offered real estate as collateral for their borrowings.
The banks were financing the gap between credit and deposits by issuing
bonds they would then sell in the international markets. Portugal’s eco-
nomic growth was meek when compared with other Eurozone countries
but even these modest levels of growth were being sustained by external
investors in Portuguese bonds and loans. These bonds took different
names: mortgage-backed securities, SME securitization bonds, senior
bank bonds, subordinated bank bonds, Portuguese government bonds. A
good share of these bonds were originated by the domestic banking sector
and then placed abroad with the assistance of global investment banks.
The Portuguese banks had the highest share of credit not financed by
deposits in Europe. To finance the difference they came regularly to the
international markets with bond offerings; some of these bond programs
took specific domestic names, like the name of a Portuguese horse breed
or the name of Portuguese navigators like Magellan. As in Hollywood
blockbusters, they were issued in series, I, II, III, IV and so on.
In parallel, public sector corporations were financing a good share of
their capital expenditures with recourse to external lenders that were bank-
ing on the Portuguese State’s implicit guarantee. The railways, the subway
companies, counted on loans from the EIB but also from some foreign
banks specialized in public sector loans, like Dexia and Depfa, to keep
their investment levels. Roads were being built with borrowed money
originating in the same sources. By 2016, and following the building pro-
gram preceding 2011, Portugal’s quality of road infrastructure was classi-
fied by the World Economic Forum as the ninth best in the world, just
ahead of Denmark, Taiwan and Finland.
 1 BACKGROUND 3

Portugal had been accumulating external deficits since the second half
of the 1990s but these accelerated with the turn of the century. This, of
course, came in tandem with the accumulation of private credit financed
by foreign investors. As a consequence, external debt kept accumulating.
The economy was addicted to these private external sources of funds.
Households needed them to keep consuming, corporations to finance
their new projects, and in some cases to cover their persistent losses, and
public sector companies to keep investing and building more roads.
In 2003, the government tried to engineer a slowdown but with growth
already quite fragile, it did not persist in its effort. So when the 2008
financial crisis (“the Global Financial Crisis”) closed some of the private
bond and loan markets that the Portuguese banks were using, Portugal
ran the risk of being forced into an uncontrolled adjustment that could
derail the economy very sharply. Without the availability of external financ-
ing sources, imports would have to contract markedly causing a possibly
catastrophic adjustment in domestic consumption and investment.
Luckily for the government of the time, the government bond market
remained open and the European Central Bank (“ECB”) started to play a
bigger role in the European financial markets. As the financing of domes-
tic banks by external private investors decreased sharply, the financing of
the Portuguese external deficits started to rely on the Target 2 balances at
the ECB, central bank credits that replaced private flows from surplus
countries toward deficit countries. These funds from the ECB counterbal-
anced the reduction in external private financing of the domestic banking
sector. They kept the external financing flowing: as a measure of external
dependence, the Portuguese current account deficit reached its peak in
2008. This allowed the Portuguese economy just to muddle through in
2008, with an almost flat economic growth as the access to foreign funds
was maintained. As we have seen, these flows were now different in their
composition. In 2009 the Portuguese economy was contracting almost by
3% but by 2010 it was already experiencing 1.9% growth. How was this
recovery possible given the circumstances?
Given the importance of the role that the Target 2 system played in
keeping external funding to the Portuguese economy after the Global
Financial Crisis, I will try to explain how the system works in a simple way.
Consider a Portuguese corporate that wants to acquire a new fleet of
Volkswagens from Germany. The corporate will ask its bank in Portugal to
4 J. M. RATO

make a transfer to Volkswagen’s bank in Germany to process the payment

implied by this transaction. Both banks have accounts in their respective
central banks. The Portuguese bank submits the payment instructions to
Target 2. The Portuguese bank account will show a debit in the system
and the German bank account will show, symmetrically, a credit. As a
result of this transaction, the Bank of Portugal will generate a liability to
the ECB and the Bundesbank a credit to the ECB. Target 2 balances rep-
resent the aggregate difference of these debits and credits between national
central banks all over Europe. A country like Portugal that continued to
accumulate external deficits, exporting less than it imports, and given
these deficits were no longer financed by private flows, would accumulate
negative balances in the Target 2 system. After 2008, external deficits of
European peripheral countries like Portugal were financed by central bank
funding. The National Central Bank was financed through Target 2 by the
central banks of countries that had external surpluses like Germany and
the Netherlands. After 2009, private flows toward deficit countries had
dried out and were actually flowing to safe havens like Germany. Anyway,
this system allowed Portugal to continue to accumulate external deficits
after the Global Financial Crisis. These were only corrected after the coun-
try followed the economic and financial adjustment measures prescribed
by the Troika.1 As you may expect, in case you do not remember the pub-
lic debate at the time, Target 2 balances created some discomfort for the
authorities in the surplus countries, even if the matter was too technical to
be understood by the majority of the public opinion. The system allowed
deficit countries to avoid a deep adjustment in their domestic consump-
tion and investment patterns.
To keep the economy from contracting further following the 2009 cri-
sis and to stabilize it in 2010, the Portuguese government decided, at the
time, to increase expenditures and embark in record budget deficits; 2009
saw a big increase in government expenditures as a percentage of GDP
after a few years of contraction and a small increase in 2008. These policies
culminated in record government deficits in 2009 and 2010. They were
intended to compensate for the impact in the contraction of private credit
growth coming from the higher prudence on the part of the banks, for

1
Troika: name given to the group of three institutions involved in the design and monitor-
ing of the assistance programs in Europe during the peripheral debt crisis. The group con-
sisted of the International Monetary Fund (“IMF”), the European Commission and
the ECB.
 1 BACKGROUND 5

which their usual financing sources had dried. This kept the economy
going, surviving the threat of a sharp contraction, as the government and
the public sector companies engineered more spending, with the corre-
sponding external deficits financed by the Target 2 system.
As a consequence of these policies, direct government debt increased
during the period due to the accumulation of deficits. In addition, the
State accumulated debt outside of the direct public debt perimeter through
public sector companies, as a good share of them were loss making. During
this period, the government embarked on a massive school building pro-
gram and continued to build roads and tunnels. From 2007, before the
financial crisis, to 2010, the public debt in percentage of GDP increased
by more than 35 percentage points.
As expected, the market conditions in which this debt was placed were
getting worse and worse, in a process that mimicked what happened with
other peripheral Europe sovereigns following the Global Financial Crisis.
After the disclosure of a massive budget deficit in 2009, Greece had
requested support from the Troika in April 2010. In the meantime,
Ireland, suffering from the aftershocks of the Global Financial Crisis and
its impact on the banks, saw a massive accumulation in public debt and
had to ask for external support from the Troika in November 2010. The
yields on Portuguese government bonds, or the interest the State had to
pay annually to investors on freshly issued bonds, started 2010 close to 4%
but ended the year close to 7%. The fact that rating agencies started to
reduce the rating attached to these sovereign bonds did not help.
In early January 2009, Portugal was considered a AA quality by the
three most widely used rating agencies, Moody’s, Fitch and S&P, close to
the current rating notation for France. During that month, S&P down-
graded Portugal to A+ and in March 2011 to BBB−, just above investment
grade. Below investment grade, the rating is considered speculative grade,
and a proportion of buy and hold institutional investors in government
bonds, like insurance companies, pension funds and more conservative
mutual funds, become constrained by their own investment rules, in their
capacity to hold the bonds in the portfolios. Potentially, there will be a lot
of forced sellers of the bonds at that point. Some of these constraints on
investors’ capacity to hold speculative grade bonds depend on at least two
rating agencies. In consequence, most investors become forced sellers
when two agencies downgrade the sovereign from investment grade to
speculative grade, although they may start selling in anticipation.
6 J. M. RATO

Moody’s downgraded Portugal to A1 in July 2010 and then closer to

speculative grade in April 2011, Baa1 (Baa3 is the last rating in investment
grade). And Fitch downgraded Portugal to A+ in December 2010, just
before Christmas, and then to BBB− on 1 April 2011.2 So, from 2009 to
2011, when Portugal had to request for assistance from the Troika, a
gradual but sustained process of rating downgrades was taking place. It
became clear that the rating agencies’ perception of the Portuguese gov-
ernment’s credit quality was decreasing.
During the previous decade, Portuguese government bonds had been
sold to investors located in Europe, to French, German and UK institu-
tions including banks, asset managers and insurance companies. The latter
would buy these bonds and hold them in their books. The Portuguese
investors represented, generally, only around 10–20% of investment in
new Portuguese government bonds.
This started to change in 2010. In February 2011, the Treasury and
Debt Management Office for Portugal (“IGCP”), which had the respon-
sibility to execute the issuance of new bonds, came to the market with a
new five-year bond. This bond offered a coupon of 6.4%. As it was sold at
a discount, the yield on the bond was even a bit higher (6.46% in reality).
This level of annual interest, paid to investors by a country with a level of
debt expected to cross 100% of GDP during that same year and with a
clear positive public debt trend, worried most investors. The fact that
Portugal was willing to pay a yield of that magnitude to investors was per-
ceived as a sign of despair given the circumstances. It showed that the need
was there to keep going to the market whatever the conditions. And as we
will see later, it is never good to make it clear to investors that you really
need market support to survive. This effect was re-enforced given the sov-
ereign was on a negative path in terms of debt accumulation and
given adverse external market circumstances. Keep in mind that by the
beginning of 2011 investors had already seen a similar process unfolding
in Greece and Ireland. Both countries had been through a process of
increasing public debt and deteriorating market conditions and both pro-
cesses culminated with the need for external public support.

2
Rating agencies attribute grades to issuers according to their views of their credit quality,
based on quantitative and subjective criteria. The highest quality starts at AAA for S&P and
Fitch and Aaa for Moody’s and decreases to AA+ and Aa1 and then all the way to C if the
issuer has not defaulted in its obligations.
 1 BACKGROUND 7

In addition to the issuance of Portuguese government bonds with a

remaining life of more than one year, the Portuguese Treasury issues
Treasury Bills that mature in less than one year. At the beginning of 2011,
these bills were placed mostly with Portuguese banks. Domestic banks
would bring the bills to the ECB as collateral for funding. Even so, the
cost of these very short term instruments increased substantially: from an
average of 1.6% in 2010 to 4.9% in 2011 for three-month Treasury Bills.
It became clear that the banks had less and less capacity to absorb the
needs of the Portuguese Treasury.
Market closure, which meant that international investors were no lon-
ger willing to buy new issuances of Portuguese government bonds what-
ever their maturities,3 was hovering on the horizon. In these circumstances,
Portugal would only be able to issue very short bonds (three months,
six months) and only to domestic investors. These bonds are normally
kept for liquidity reasons, a way to invest balances that need to be easily
converted into cash to honor short-term commitments besides being
used as collateral for funding from the ECB. Domestic banks, at the
time, would take these bonds and finance them at the ECB and keep the
difference between the cost of funds and the yield on the bonds. When
that was the case, the ECB would be indirectly financing the Portuguese
government. As expected, the ECB was not willing to do that indefi-
nitely. If that was going to be the case, they preferred to contact the
authorities and advise them to ask for a formal support program like the
Irish and the Greeks had done before. As a consequence, the incapacity
to issue bonds with maturities higher than one year was pushing the
Portuguese government into a corner. The government, to refinance the
existing bonds and to pay for its budget deficits, had to look for alterna-
tive sources of funding: the Troika was the available candidate. The
domestic banks could have been an alternative, up to a certain point, but,
as seen above, they were still dealing with a process of reducing their
investments following the Global Financial Crisis and had limited capac-
ity to invest in medium to long term government bonds. Actually, there
are multiple indications that they were reaching capacity and it was under
their recommendation that the Minister of Finance eventually advised
the Prime Minister to ask for the Troika’ s support following the foot-
steps of Ireland and Greece.

3
The cash notional, or reference amount on the bond, is repaid at maturity.
8 J. M. RATO

On 7 April 2011, the Portuguese government requested for assistance

from the Troika.
To add fuel to the fire, the budget deficit for 2010, which was initially
expected to come at a very high value of 7.3% of GDP, the target agreed
with the European Commission, was corrected to an even higher value of
9.1% on 23 April. This process reminded investors of the Greek situation.
Greece had experienced, during 2010, massive corrections of its 2009
budget deficit number.4 These corrections contributed to an increase in
market stress for Greek bonds, as investors lost any confidence in the
Greek statistics and in their capacity to provide a truthful picture of the
domestic situation. In addition, in the case of Portugal, part of the upward
revisions were due to sensitive happenings at the time: banking sector
recapitalizations and reclassifications within public expenditure of public
sector and Public Private Partnerships (“PPPs”), including ones linked
to road expenditure. Investors worried, when confronted with these cor-
rections, about two things: lack of transparency in public accounts that
could bring more surprises to the forefront and lack of control in public
expenditure. They had seen it before in other places: reclassification of
debts and expenditures within the State, correcting for past question-
able accounting practices and financial sector liabilities taken over by the
central government.
On 7 May, the economic and financial assistance program was agreed at
a technical level between the Troika and the Portuguese authorities.
When designing the program, as was the case in multiple previous pro-
grams, the lenders are interested in creating the conditions to minimize
the period for which the country under assistance requires funding. They
expect the borrower to be capable of raising funds on its own when the
program ends. For this to happen, you need the borrower to be able to
repay its bonds and to finance all budgetary needs (and other needs that
may arise outside of the budget as, for example, bank recapitalization),
with recourse to the market. That is why a robust sovereign bond market
recovery is so important, for which it is crucial for the country to stabilize
its external accounts such as to regain the interest of external private inves-
tors. As mentioned previously, the countries from Northern Europe were
not comfortable at the time with the accumulation of Target 2 liabilities
by the countries in the European periphery. Portugal had a dual problem:

4
The Greek government deficit was also revised upward in 2010 in what concerned the
years 2006–2008.
 1 BACKGROUND 9

a high and growing stock of external debt and a high and growing stock
of public debt. To deal with both, the program had to be designed to
decrease both deficits, external and public, to induce a slowdown in the
accumulation of public and external debt and to eventually set the country
in the direction of sustained debt reduction.
With these objectives in mind, the program was structured around
three pillars: balanced fiscal consolidation, frontloaded structural reforms
and financial sector stabilization. The third one was crucial to ensure that
State intervention in the banks would be limited and would not weigh
disorderly on public expenditure and public debt. The second one aimed
at strengthening the competitiveness of the Portuguese economy and cor-
porate productivity, to boost exports and correct long-term trade imbal-
ances. Plainly, the program targeted budget deficits (there are explicit
quantitative targets in the program) and external funding needs. Note that
on the third pillar the program mentioned the aim of re-opening access to
interbank and bond markets for banks. If successful, Portugal could
decrease its use of funding coming from the ECB.
The program size was €78 billion, with one-third coming from the
IMF and two-thirds from the European Union. As is usual in these pro-
grams, the cash would be delivered in tranches: €38 billion in 2011, €25
billion in 2012, €10 billion in 2013, €5 billion in 2014. The financing
included the full repayment for all the bonds up to June 2013. From then
on, market access was expected.
Following the program’s announcement, things got worse before they
got better. The prices of the Portuguese government bonds underwent a
more prolonged period of depreciation up to the start of 2012. The annual
yield demanded by investors to buy a five-year Portuguese government
bond in the secondary market went over 20% in January 2012. Remember
how this compares with close to 6.4% for the five-year bonds issued in
February 2011!
The market underperformance was partly due to a change in paradigm
in Europe. Following the negative performance of the Greek program, as
Greece seemed to have fallen into a negative economic spiral, the need for
a second bailout was becoming evident. In Greece, a deeper recession was
increasing the sovereign’s financing needs, as tax revenues suffered and
social contributions grew as a consequence of the higher rhythm of domes-
tic economy contraction. These ever growing financing needs demanded
more financial support from the Troika. As part of this second program,
European authorities were pushing for a haircut on private sector holdings
10 J. M. RATO

of bonds. This haircut could be close to 50%. It presented investors with a

new situation: for the first time European officials accepted that losses on
the bonds of a Eurozone sovereign were possible. The haircut on bonds
held by private sector investors was called Private Sector Involvement
(“PSI”). The theme had been introduced by Schauble on 6 June 2011.5
The question was if more members of the Eurozone would have to fol-
low this precedent. And, as it seemed that the recipe that was being used
in Greece was not working, where would it end? If the Greek program had
no solution following an haircut to private sector holdings of bonds,
would there be a need for the public sector, the ECB and other Eurozone
and European Union countries to take some losses too? If the latter proved
impossible for political reasons and/or the economy failed to stabilize,
would Greece have to leave the euro and start using a new currency to
allow for an economic adjustment? If that was going to be the case, would
it be the only country to have to do so? This generated a new perception
of risk for investors: redenomination risk, the risk that an asset in euros is
redenominated in a new currency with less value for the investor. This risk
seems to have shown up in Europe in 2011 and peaked in the summer of
2012 when Mario Draghi made a speech promising that the ECB would
do “whatever it takes” to ensure the integrity of the euro.6
Portuguese sovereign bonds suffered, as in parallel the Big 3 rating
agencies pushed Portugal to below investment grade. Moody’s was the
first mover on 5 July 2011, bringing Portugal’s rating to Ba2 (below Ba3,
the highest quality rating within the junk status). Fitch followed, pushing
Portugal to BB+ on 21 November; later came S&P, attributing to Portugal
a BB rating on 13 January 2012. But, as explained before, the real limita-
tions for most investors arise when there are two or more downgrades.
Then they will be forced to sell the bonds according to their investment
rules. But the first downgrade can also be read as a signal that more down-
grades from the other rating agencies are to be expected. When you con-
sider the justification for the first of these downgrades, the one effected by
Moody’s, you can sense the impact that the Greek situation, notably the
discussions around the Greek PSI, was having on Portugal:

5
For a chronology, check “The Greek debt restructuring: an autopsy” by Zettelmeyer,
Trebesch and Gulati.
6
Check Roberto De Santis, “A measure of redenomination risk”, ECB Working Paper
Series, April 2015.
 1 BACKGROUND 11

The following drivers prompted Moody’s decision to downgrade and assign

a negative outlook:
1. The growing risk that Portugal will require a second round of official
financing before it can return to the private market, and the increasing
possibility that private sector creditor participation will be required as a
pre-condition.
2. Heightened concerns that Portugal will not be able to fully achieve the
deficit reduction and debt stabilization targets set out in its loan agree-
ment with the European Union (EU) and International Monetary Fund
(IMF) due to the formidable challenges the country is facing in reducing
spending, increasing tax compliance, achieving economic growth and
supporting the banking system.7

The same press release stated: “it is the increasing probability that
Portugal will not be able to borrow at sustainable rates in the capital mar-
kets in the second half of 2013,” which was a pre-condition for the assis-
tance program to be agreed, and was one of the drivers for this decision.
And, in case that risk becomes real, given what was happening in Greece,
Moody’s was expecting that private investors would have to be called in.
According to Moody’s, this new precedent generated by the Greek PSI “is
significant not only because it increases the economic risks facing current
investors, but also because it may discourage new private sector lending
going forward and reduces the likelihood that Portugal will soon be able
to regain market access on sustainable terms.”
As the negotiations surrounding the voluntary losses to be taken by
banks, insurance companies and other private sector investors, which were
fundamental for Greece to achieve a second bailout, dragged, S&P took
the decision to downgrade simultaneously the rating of nine Eurozone
countries including Portugal. S&P stated: “today’s rating actions are pri-
marily driven by our assessment that the policy initiatives that have been
taken by European policymakers in recent weeks may be insufficient to
fully address ongoing systemic stresses in the eurozone.”8 As part of this
rating action, France was stripped for the first time of its AAA rating by
S&P. The rating agency justified its concerns by expressing its doubts that

Moody’s investor service press release for the rating action taken on 5 July 2011.
7

S&P 14 January press release as reported by Reuters on 14 January in Business News,

8

“S&P downgrades nine euro zone countries”.

12 J. M. RATO

Eurozone countries would be able to agree on a plan with enough fire-

power to deal with the Eurozone’s existing financial issues.
Following the S&P decision of January 2012, on 13 February, in
another round of simultaneous downgrades involving multiple Eurozone
countries and justified by continued policy uncertainty in Europe, Moody’s
downgraded Portugal to Ba3, closing the cycle of downgrades for the
Portuguese sovereign. In its decision Moody’s mentions as a driver “the
increased likelihood of a disorderly default by Greece (…) [which] will
very likely make Portugal unable to access long-term market funding in
September 2013 as planned, and increase pressure on the government to
seek a debt restructuring.”9 These rating decisions increased the down-
ward pressure on the prices at which the Portuguese ten-year bonds were
exchanging hands in the secondary market (where already existing bonds
transact), which experienced its bottom in February 2012. The annual
yield differential to the German government bonds (Bunds) yield came
close to a 15% differential. Investors needed to receive a premium of close
to 15% a year to invest on a ten-year Portuguese Bond instead of a German
one. And both countries were part of the same single currency area!
By February 2012, I was living in London and watching these events
unfold from a distance. Following a PhD in economics at the University of
Chicago, with a thesis in financial economics completed in 2000, I had,
like many of my colleagues at the time, decided to pursue a career in
finance, more specifically in fixed income, in London. Fixed income deals
with the markets for bonds and with interest rates, as opposed to equities.
In general, banks included fixed income, commodities and currencies in
the same division. With our PhDs under our arms, we had a lot of demand
to work in derivatives, which was an area within fixed income (and also but
to a lesser extent in equities), that was growing. It was starting to take over
the classic areas linked to plain vanilla bonds as the main source of reve-
nues in fixed income for investment banks. Derivatives allowed users the
flexibility to adapt to different investment profiles and for clients to pro-
tect against different types of risks arising from any specific contingencies.
Since 2000, I had been working in different US investment banks and in
different client-facing roles. I knew how to communicate with investors,
investment banks and other market players. In addition, my economics
PhD allowed me to read the macroeconomic information and understand

9
Moody’s press release of 13 February, “Moody’s adjusts ratings of 9 European sovereigns
to capture downside risks.”
 1 BACKGROUND 13

its dynamics. Throughout my years in London, and even during my years

in Chicago, I had kept in the back of my mind a fascination with economic
policy and an intention to do public service for my country at a given stage
in my career.
At the start of 2012, I could understand the importance for Portugal of
regaining market access and how this was a crucial component of the
adjustment program. It was obvious at the time that for this objective to
be achieved, the Portuguese authorities had to reverse the negative market
perceptions that were only strengthened by the latest rating agencies’
reviews. As we will see throughout the book, these perceptions quickly
become self-fulfilling. If investors avoid your bonds fearing your incapacity
to re-establish market access, how will you obtain the funds that will make
a second Troika bailout program unnecessary? Very quickly, that incapac-
ity becomes a reality and you will need further Troika support. That was
what was happening in the market for Portuguese bonds at the time: a
buyers strike that made it impossible to issue new bonds to finance upcom-
ing bond redemptions, deficits and the surprises still coming out of the
banking sector, public sector companies and PPPs. This buyers strike had
been deepened by the Greek PSI spillovers and the rating agencies’ down-
grades. These downgrades created a lot of forced selling of the bonds. In
addition, at the time, there was a heightened sensitivity on the part of
bank and insurance companies shareholders regarding their exposure to
the bonds of the European periphery. These exposure numbers started
being published regularly by some of the banks and there was pressure on
these financial institutions to show that this exposure was decreasing.
Given the absence of buyers, this reduction in bond holdings was not easy
to achieve and, as we have seen, the prices of the bonds plummeted to
new lows.
I could also see two other processes taking place. The Troika program
was proving successful in Portugal in reducing the negative flows both in
the external and in the fiscal accounts. The second one was the lack of
trust that existed on the part of the government in the existing IGCP
leadership that was inherited from the previous government.
The government had been able to achieve a very strong adjustment in
the government budget deficit at the start of the program and the external
accounts reacted in a spectacular way bringing the external balances very
close to equilibrium in a very short period of time. The program had been
clearly frontloaded in an economic textbook fashion. This is normally
important for an adjustment program to succeed. The highest pain for the
Another random document with
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big sonatas and two concertos. MacDowell’s treatment of the
keyboard can hardly be said to be original, but the concertos, and
among the shorter pieces the Hexentanz prove to be highly effective.
Many of the short pieces, which are grouped together in sets, are
charming. On the whole there is little suggestion of a new spirit in the
work of this composer of a new land. Now and then he uses negro
rhythms, as in the ‘Uncle Remus,’ sometimes he uses Indian
motives, as in the ‘Indian Lodge’ of the ‘Woodland Sketches.’ His
forms and his style are perhaps more akin to those of Grieg, with
whom, indeed, his music will be often compared, than to the earlier
Romantics. Unfortunately, however, instead of in a national idiom, he
speaks in an intensely personal one. Short phrases and rhythms
which are seldom varied seem almost to hamper his music, almost
to clog its movement. On the other hand, as in some of the ‘Sea
Pieces,’ he writes sometimes in a broad and open style, seeming to
shake off the fetters of too intense a mannerism.

Ethelbert Nevin wrote several sets of short pieces, ‘In Arcady,’

‘Venezia,’ and others, which have at least the charm of simple, sweet
melody.

Mr. Arthur Foote and Mrs. H. H. A. Beach have shown themselves

masters of an effective pianoforte style, a mastery that has on the
whole been rare in this country.[41]
 FOOTNOTES:
[38] The third hand part was written for one who did not know how to play the
piano, and has but one and the same note throughout the piece.

[39] Die Neurussische Klaviermusik. In Die Musik, 1903, No. 8.

[40] Op. cit.

[41] For a detailed discussion of American composers the reader is referred to

Volume IV of this series.
 CHAPTER X
MODERN FRENCH PIANOFORTE
MUSIC
Classical traditions: Saint-Saëns, and others; C. V. Alkan—César
Franck: his compositions and his style—Vincent d’Indy—Fauré—
The new movement: Debussy and Ravel—Debussy’s innovations:
new harmonies, scales, overtones, pianoforte technique; his
compositions—Ravel differentiated; his compositions; Florent
Schmitt and Eric Satie—Conclusion.

I
By far the most interesting and generally the most significant
developments in pianoforte music since the time of Schumann,
Chopin, and Liszt are those which have taken place in France. Not
only have the French composers greatly enriched the literature for
the instrument with compositions that have a value beyond that
which fashion temporarily lends them; they have refreshed it as well
with new ideas of harmony, and effects, which if they are not
essentially new, are newly extended and applied.

There is still to be observed in France, it is true, a very considerable

loyalty in a group of composers to the style of Chopin, or even more,
to that of Liszt, and a general dependence upon German ideas of
music which have for a century past been so preponderant in the
world as to be considered international. The admirable works of
Camille Saint-Saëns are the result of such a loyalty. He is a great
master of the pianoforte style, endowed, moreover, with a fine sense
of form and a fine imagination. Everything he has written is finished
with care, clear-cut and indisputably effective. There is no piece of
music more grateful from the point of view of the pianist than the
second of his five concertos, that in G minor. This is not only
because the treatment of the solo instrument is clear and brilliant,
but because the themes are worthy of the treatment and of the broad
form which they are made to fill. The writing for the orchestra,
moreover, is not less perfect than that for the pianoforte. But
inasmuch as the harmonies are a familiar inheritance from the past,
and the style an adaptation of an inherited technique, the work
signalizes not an advance in music, but the successful maintenance
of an already high standard. The spirit of it is less emotional and
sentimental than that of other concertos, and more witty and
epigrammatic. Hence it holds a special place as well as a high one,
from which it is hard to think that any change of fashion will ever
remove it.

The short pieces of Cécile Chaminade, Paul Lacombe, François

Thomé, Benjamin Godard, and Paul Wachs may be mentioned in
passing as having won a measure of success.

But the works of another group or two of French composers show an

originality that was at first so startling as to enrage conservative
critics. It is owing to them that pianoforte music seems to have
entered upon a new course of life. One finds the stirring of new
movements in Paris even before the time of Chopin’s arrival there,
due very clearly to the French spirit. Berlioz is growing more and
more to a huge stature in the eyes of historians. The figure of his
countryman and acquaintance, Charles-Valentin Alkan, is more
obscure, but he represents the same spirit at work in the special
branch of pianoforte music. If his compositions have not had great
influence, they none the less give an early example of the working
towards independence of a French pianoforte music.
Alkan (1813-88) was admired as a player and as a composer by
both Chopin and Liszt, and Bülow still later held him in high esteem.
An effort is now under way, encouraged by Isadore Philip, and
others, to draw his compositions from the obscurity into which they
have fallen. They are surprisingly numerous and in many ways
astonishing. They include a great number of transcriptions, of études
and of pieces of extraordinary realism. His harmonies and melodies
suggest Berlioz, with whom he is being more and more compared.
They have often a quality that is in a sense bare. They are unusual
without connoting a rich world of the unexplored. They hint rather at
a deliberate attack upon the old than at the youth of a new system.
The general flow of his harmonies, for example, is familiar. Only now
and then does something unusual obtrude itself with a sort of
harshness. Notice, for example, the chromatic movement of the
doubled inner voice in the cantabile section of the short piece 'Le
tambour bat aux champs.’ Notice, too, the strange starkness of
harmonies in the paraphrase Super flumina Babylonis.

Technically Alkan stands between Chopin and Liszt, and in this

regard his music is very exacting. He demands an equal skill in both
hands. Of the three studies published as opus 76, the first is for the
left hand alone, with long passages of rapid tremolo like that one
finds in the first of Liszt’s Paganini transcriptions. The second is for
the right hand alone, demanding an unrestricted movement of the
arm in long arpeggios and extremely wide chords. Finally the third is
a long piece in unison from beginning to end, far more awkward and
more difficult than the last movement of Chopin’s sonata in B-flat
minor. The three studies opus 15, Dans le genre pathétique, are
veritably huge works. Of these the second, Le vent, is already well
known as one of the effective concert pieces of the new era. The first
and last have the strange titles of Aime-moi and Morte. Twelve
études in minor keys were published as opus 39. One finds again
extraordinary titles, such as Rythme molossique, Scherzo diabolico,
and Le festin d’Europe. All are exceedingly difficult. Some, like the
first, are both startling and interesting as music. There is a more or
less famous study in perpetual motion for the right hand which was
given the title Le chemin de fer, extremely rapid, difficult, and
effective.

The titles throughout all his music are original. Some are easily
understood. ‘The Wind’ and the ‘Railroad’ for instance are fully
explained by the music. In fact the realism of the latter does not stop
with movement. There is to be heard even the pounding of wheels,
the puffing and the whistle of the engine. But what is the meaning of
others, of Neige et lave, Ma chère liberté and Ma chère servitude,
Salut, cendre du pauvre, Fais dodo and J’étais endormie, mais mon
cœur reveillait? On the whole these fantastic titles suggest less the
union of music with poetry or self-conscious sentiment than a sort of
rational, positive realism. There is little in the music that is vague or
sensuous. Most of it is objective rather than imaginative. He has
neither the fire of Liszt, nor the emotion of Chopin, and his
compositions are both spiritually and technically independent of
theirs. He was a terrific worker and he lived apart from men.
Marmontel wrote of him with great respect and some affection.
Oskar Bie thinks of him as a misanthrope. One can hardly speak of
misanthropic music; yet the quality which distinguishes Alkan’s
music is something the quality of an implacable irony. It is strong
stuff, and is likely to prove more logical in itself than any appreciation
or disparagement of it can be made.

CËSAR FRANCK

II
But Alkan’s music must be taken as the manifestation of an
independent spirit, French in its directness, rather than as a source
of stimulation or strength to a further development of a distinctly
French school of pianoforte music. Such a school first centres about
César Franck, who, though he, too, lived in retirement and in an
obscurity which the general public did not attempt to penetrate,
exercised a powerful influence on music in Paris. His compositions
are relatively few in number. There are but two considerable works
for pianoforte alone, and only three more for pianoforte and
orchestra. These, however, are of great beauty and two at least are
masterpieces in music. These are the ‘Prelude, Chorale and Fugue’
for pianoforte alone, and the Variations Symphoniques for pianoforte
and orchestra. The other three, which have elements of greatness
but seem to fall short of absolute perfection, are the ‘Prelude, Aria,
and Finale’ for pianoforte alone, and two symphonic poems for
pianoforte and orchestra suggested by poems of Victor Hugo, Les
Eloïdes and Les Djinns.

The ‘Prelude, Chorale and Fugue,’ and the ‘Symphonic Variations’

may be ranked with the symphony, the violin sonata, the string
quartet and the pianoforte quintet, and are no less a perfect and in
some respects a complete expression of his genius than they. One
finds in them the same ceaseless chromatic shiftings and involutions
of harmony, the same polyphonic treatment of short phrases, the
same structural unity, the same exalted and mystical spirit. In fact
this spiritual quality is perhaps nowhere so gloriously expressed as
in the Chorale movement for the pianoforte.

As a whole the ‘Prelude, Chorale and Fugue’ is flawless in structure.

There is the greatest economy in the use of musical material. The
unusual scoring of the opening measures, with the melody note
slightly off the beat and the harp-like ornamentation, is the scoring
which characterizes the final, tremendous pages of the Fugue. The
sections of the Prelude which offer contrast to this opening melody
are based upon the subject which later forms the basis of the Fugue.
And the magnificent theme and spirit of the following movement, the
Chorale, is projected, as it were, into the whole last section of the
Fugue. Never, perhaps, was a fugue more splendidly and more fully
developed, nor was the force of a work ever so made to grow and to
culminate in pages of such majestic and triumphant music.

There is a similar use of material in the ‘Prelude, Aria, and Finale,’

but the result is not quite so flawless. The Prelude, here, in spite of
the suave beauty of its chief theme, is loose and episodic in effect.
And it cannot be said that the scoring for the pianoforte is
distinguished or animated. The style is either massive or awkward.
The most beautiful part of the whole work is perhaps the concluding
section of the Aria. The earlier parts of the Aria are skillfully devised,
but the scoring is rather heavy and seems more suited to the organ
than to the piano. But the melody of this concluding section is of
inspired beauty; and as if Franck himself were well aware of its rare
and significant worth, the last pages of the stormy Finale bring it
back, woven with the chief theme of the Prelude.

Technically both works are extremely difficult. The general breadth of

effect, the demand for power and for freedom of the arm, and the
use of octaves—these as well as the use of the very high and very
low registers of the keyboard—all make evident the rather orchestral
idea of the pianoforte which Liszt introduced. Liszt, by the way, was
one of the first to recognize the greatness of Franck. But, though
Franck was at one time a brilliant pianist and was intended by his
father to electrify Europe from the concert stage, he was above all
else an organist. His pianoforte style is most evidently very closely
allied to the organ style. This is particularly noticeable in the
treatment of bass parts, which not only suggest the pedals of the
organ but are often impossible for the small hand to play. The
octaves for the left hand in the Aria, and even more remarkably
those in the Chorale, need not only the independent movement
which the organ pedals can add in polyphony, but seem to call for
the tone color of the low notes on the organ. Frequently, moreover,
as in the second section of the Prelude in the ‘Prelude, Aria, and
Finale,’ such wide stretches as the music demands of the hands, as
well as the general freedom of polyphonic movement, almost require
an instrument with two keyboards.

On the other hand, there are many effects which are brilliantly
pianistic. The flowing figures in the Prelude of the ‘Prelude, Chorale
and Fugue’ are purely pianistic. The tremendous octave passages in
the Finale need the distinct, percussive sound of the pianoforte. And
the upper notes of the Chorale melody, both when it is given alone
and when it is combined with the fugue theme, must have a ringing,
bell-like quality which only the pianoforte can produce.

The treatment of the pianoforte in those works in which it is

supported by the orchestra shows less the influence of the organ
style. Generally Franck had in mind the sonority of the organ and the
movement of music proper to that instrument. In these works the
function of the organ, so to speak, is given to the orchestra; and
hence the pianoforte is free of all responsibility but that of adding its
own special effects to the mass of sound. These are essentially
simple. In the Djinns there is some brilliant rapid work, a few solo
passages of agitated character with wide rolling but not elaborate
accompaniment figures. In the ‘Symphonic Variations,’ very
noticeably a bigger and a finer work, there are solo passages of
great breadth, and nearly all the variations make the piano prominent
by means of its own effects. There are the passages of detached
chords and double notes which seem to tinkle over the first variation,
the remarkably wide spacing in the passage which follows, with the
suggested movement of inner voices and the occasional touch upon
high notes; the flowing figures, with again a suggested richness of
inner voices, which pursue their smooth course over the 'cello solo;
finally the more brilliant effects towards the end, especially those of
the tossing chords, and of the difficult, leaping triplet figures. The
pianoforte and orchestra were never more ingeniously combined
than in those passages which the pianoforte introduces with a sort of
double waltz movement and in which the orchestra subsequently
joins with the theme in a decidedly cross rhythm, leaving the solo
instrument free to add delicately melodious runs.

The structure of the whole work, moreover, is musically interesting.

Though the theme in F-sharp minor, announced simply by the
pianoforte after several pages that are more or less introductory,
may be regarded as the chief theme, there is another distinct and
highly characterized theme—first given fully by the pianoforte in the
magnificent solo passage (C-sharp minor) so prominent in these
introductory pages. This, as well as the chief theme, is elaborately
varied, and is ever and again throughout the work so cleverly
combined with the chief theme, that one must regard the whole
ultimately as a series of double variations.

These few works of César Franck are architecturally the most

imposing for the pianoforte since the last sonatas of Beethoven; and
the ‘Prelude, Chorale and Fugue’ and the ‘Symphonic Variations’ are
surely to be numbered among the most valuable compositions from
which the pianist may draw his delight. They are very nearly unique
in plan and style. The ceaseless shifting of harmonies and
interweaving of short phrases will doubtless seem to many
manneristic and a little irritating. Then, too, they are, in spite of their
breadth and power, mystical, and in that sense, elusive or even
baffling. The weight of the organ style rests on them, and they are
awkwardly difficult and taxing. Yet in spite of these peculiarities they
remain pianoforte music of great dignity, beauty, and nobility.

III
At the basis of the two greatest pianoforte works of César Franck,
one discerns a classical foundation. The harmonies, it is true, are
Romantic and strange; but the ideals are traditional. In the matter of
form there is less a departure from old principles than a further
development of them. They present a few new complications of
structure; but as far as the pianoforte is concerned they have little
new to show in the matter of effect. Their peculiar sonority is that of
the organ, and remains not wholly proper to the pianoforte. On the
whole, then, the music is easily related to that of Beethoven, of Liszt,
and of Wagner. There is no striking departure from that road to which
Beethoven may be said to have pointed.

Nor does one find, on the whole, less traditional loyalty in the
pianoforte compositions of Franck’s pupil, Vincent d’Indy. These are
not numerous. There are only a few sets of short pieces, and but two
works of length. The little sonata, opus 9, is in classical form. There
are three short waltzes in a set called Helvetia, opus 9; a Serenade,
Choral grave, Scherzetto, and Agitato, opus 16, one or two pieces in
classical dance forms, and three little romances in the style of
Schumann, opus 30. Of the last the third is a most successful
imitation of Schumann, resembling passages from the Kreisleriana in
spirit and in technique. None of these short pieces, however, calls for
more than mention, except as they all show a clear but not
distinguished traditional and simple treatment of the keyboard. There
is hardly the harmonic freedom of either Wagner or Franck in them.

The two long pieces are far more distinctly original. The first of these
is a set of three fanciful pieces called Poëmes des Montagnes. The
first of these—Le chant des bruyères—is divided into five parts: the
song of the heather, or the heath, mists, a touch of Weber, a theme
which is to be found in all three movements called La bien-aimée,
and finally the song of the heath again, this time in the distance. The
second movement is again subdivided, this time into dances amid
which la bien-aimée makes a momentary appearance; and in the last
movement—Plein-air—one finds a promenade, thoughts of great
trees (hêtres et pins) on the side of the mountain, la bien-aimée, a bit
of calm before a burst of wind, finally a pair of lovers united. At the
beginning and at the end of the series there are a few broken
chords, vaguely styled Harmonies, and at the very end again there is
a reminiscence of the theme of la bien-aimée.

One cannot but find the whole series closely akin to Schumann. The
romanticism is the romanticism of Schumann, carried a step into the
open air and among the mountains, of his devotion to which d’Indy
has left many a proof in music. The fleeting touch of Weber, and
especially that d’Indy should have written Weber’s name over the
measure in which it falls, is again characteristic of the composer who
introduced Paganini and Chopin into his Carnaval. The identification
of a theme with a beloved one is another instance. But even more
definite than these tokens of a certain romanticism is the treatment
of the piano, and even the nature of much of the thematic material.
Le chant des bruyères and La bien-aimée are in the mold of
Schumann. The Valse grotesque recalls in rhythm some of the
Davidsbündler and the first of these Danses rhythmiques is like parts
of the Pantalon and Colombine of the Carnaval.
On the other hand, there is something original and new in the section
called Brouillard. The general mistiness of the harmonies, the long
holding of the pedals with consequent vague obscurity of sound, and
the irregular line of clear points in a sort of melody that is drawn
against this inarticulate accompanying murmur, these indicate new
ventures in pianoforte style. The rhythmical irregularity of the first of
the dances and the irregularity in the form and recurrence of sections
are further signs of the advent of something rich and strange. In fact
the whole work loses somewhat by the frequent suggestion of bold
experiment, and is hardly to be considered equal to the traditional
standard of music, as represented by Schumann, nor sufficiently
successful to establish a new one. Barring the Brouillard, the
treatment of the keyboard lacks distinction.

Far, far different must be the verdict on the Sonata in E, opus 63.
Here, though one still finds a classical ideal of form, there are bold,
clashing harmonies, and endless complexities of rhythm. The
scoring is tremendous, the effect big as an orchestra. The sonata is
in three movements, all of which represent the development of one
central idea. The first movement, which is preceded by a long and
fiery introduction, is made up of a series of variations on this central
idea. A subsidiary idea, which, as in the ‘Symphonic Variations’ of
Franck, was suggested in the introduction, is woven into the music
here and there. The complicated second movement, in 5/4 time,
constantly suggests the subsidiary motives of the first; and in the
last, which shows the broad plan of the classical sonata form, the
theme of the first movement finds a full and glorious expression.

Technically the sonata is extremely difficult. Some of the variations of

the first movement, with their trills, recall the pianoforte style of the
last Beethoven sonatas, however. The interlocking of the hands in
the second movement is in a measure new in effect, though not new
in principle. The scoring of the last movement is not free of
commonplaces.

On the whole, the sonata may be considered modern in harmonies,

melodies, and rhythms, though a more or less classical harmonic
foundation may be detected. The form is obviously a further
development of the principles so clearly exemplified in the works of
César Franck, which were drawn from Bach and Beethoven. It does
not seem unfair to say that the scoring is rather orchestral than
distinctively pianistic; so that the sonata may be considered more
significant as a contribution to music in general than as one to
pianoforte music in particular.

IV
None of the French composers has written more for the pianoforte
than Gabriel Fauré. In his music, too, there is a strong element of
tradition, though as a harmonist he is perhaps more spontaneously
original than d’Indy. He prefers to work in short forms, and he avoids
titles of detailed significance. He has written eleven Barcarolles, ten
or more Nocturnes, nearly as many Impromptus, a set of eight
Preludes, published as opus 103, and a few pieces of nondescript
character including dances and romances. The impression made by
a glance over the pages of this considerable amount of music is one
of great sameness. Fauré’s style is delicate and well adjusted to the
keyboard but there is little to observe in it that is strikingly original.
Nor do the pieces give proof of much development in technique or in
means of expression. There is little trace of the exquisite
impressionism of the songs. The pianoforte music is hardly more
than pleasing, and is only rarely brilliant.

The well-known second impromptu, in F minor, is perhaps the most

interesting and the most original of all his pianoforte pieces. Here is
genuine vivacity, piquancy of style, originality of harmony. But the
other impromptus and the nocturnes have, in spite of certain modern
touches of harmony, a style that is now Mendelssohn, now
Schumann. The eleven Barcarolles rock gently over the keyboard,
the Valses caprices dance lightly along. All is facile and pleasing
salon music, one piece much like the others. The Theme and
Variations, opus 73, is interesting and is well known at the
Conservatoire, and the second of the preludes, opus 103, is
decidedly effective. The fourth Nocturne is full of poetry. In fact there
is poetry in much of his music, but it is on the whole too much in the
same vein.

Finally, after mentioning Pierné, for the sake of a set of short pieces
in delicate style, Pour mes petits amis, and Emanuel Chabrier for the
sake of the Bourrée fantastique, we come to the two men whose
work for the piano has enchanted the world: Claude Debussy and
Maurice Ravel. So far as the pianoforte is concerned, theirs is the
music which has created a new epoch since the time of Liszt and
Chopin, which has signalized the leadership of France in the art of
music.

V
For a discussion of the general musical art of Debussy the reader is
referred to the third volume of this series. His system of harmony
and scales has there been explained. Here we will regard him as a
composer for the pianoforte and attempt only a brief analysis of his
pianoforte style and an appreciation of a few of his compositions. His
pianoforte style has been no little influenced by his conception of
harmony which admits chords of the seventh and ninth among the
consonances. The pianoforte being essentially a harmonic
instrument, composers have spent a great part of their skill in
devising rapidly moving figures which would keep its harmonies in
vibration. Such harmonies have either constituted a music in
themselves, or have furnished a vibrant background behind a
melody or an interweaving of several melodies. The shape of the
figures has been determined by harmony and the figures have been
blended into a general effect by the use of the pedal. One of the
most prominent characteristics of Chopin’s style was the intrinsically
melodious conformation of many of such figures. Hence there is a
suggestion of polyphony in his music; and hence, too, the pedalling
of his music must be most delicately and skillfully done.
With Liszt, on the other hand, such figures rarely had this melodious
significance. They were founded rather flatly on the notes of chords
or on the scale. Hence a mass of notes with little or no individuality.
Such we shall find many of Debussy’s figures to be, and it is indeed
easy to say that there would have been no Debussy had there been
no Liszt. Not only this density, which in the case of Debussy may be
more properly called opaqueness, of figures; but also the free use of
the arms over the keyboard point to a relation of the style of the one
to that of the other. But Debussy’s style is in two features at least
sharply differentiated from that of Liszt.

The first of these is owing to his different conception of harmony.

Liszt’s harmonies are clearly defined, Debussy’s, by contrast, vague.
There are few instances of harmonies in Liszt’s music which are not
related to a tonic scale; Debussy’s whole-tone scale has destroyed
the relation of major and minor keys, even their definitions. With Liszt
the various degrees of the scale suggest their proper harmonies; and
as his melody or his bass moves from one to the other of them, the
harmonies must change to follow it. The harmonic figures must be
constantly moved here and there. Sometimes, as in the first phrase
of the Waldesrauschen, they do not change to follow the melody, it is
true; but in such a case the melody is so conceived as really to
accentuate the notes of the chord on which the accompaniment
figure plays. But with Debussy the progress of the melody entails no
such change of harmony, or at least no such frequent change. Even
if he chooses to conceive a passage as in a clearly defined key, his
fondness for the chord of the ninth plays him in good stead. He can
keep a ninth chord running up and down the keyboard and still enjoy
the proper use of five notes of the scale in melody. And in the case
where he is using the whole-tone scale and has consequently thrown
his music out of all relation to the traditional system of keys, he is
even more free. Therefore, the fingers, not having to find a new
position every measure or so, or even twice in a measure, are let
free, without hindrance, over a wide range of the keyboard.
Furthermore, since having once struck the desired notes within this
range the use of the pedal will sustain the vibration a long time, they
have not to repeat them over and over again with the distinctness
necessary to establish a new harmony, but touch them lightly, or
graze them unevenly. With the result that the sparkle which even in
the dense runs of Liszt was created by the more or less distinct
sound of indispensable notes, is veiled, and the general effect is one
of fluid color.

A second feature which distinguishes the style of Debussy from that

of Liszt is the relative absence in it of the sensationalism of speed.
The sort of run we have been discussing, which may be studied in
the Reflets dans l’eau, or in Pagodes, is as rapid as Liszt’s runs. But
the monotony of it, the lack of change and therefore of emphasized
points, reduces the effect of speed. For speed is chiefly appreciable
between definite points. In fact the background of Debussy’s music
may be compared to mist, while that of Liszt’s is, we might say, more
like a curtain of chain mail.

The effect of this prolongation of harmonies by means of the pedal,

lightly aided by the fingers, and of this lack of sharp contours is to
take from a great part of his music a certain hard substantiality. In
other words, recalling what we said of the qualities of sound in the
pianoforte in the chapter on Chopin, the sonority of his music is one
of after-sounds. Claude Debussy and Maurice Ravel, more than any
composers before them, have consciously made use of this peculiar
quality of the pianoforte.

It is not only their treatment of runs which makes it audible, nor do

they depend only upon the after-sounds of notes which have been
struck. Holding the dampers off the strings for relatively long spaces
allows an almost distinct vibration of overtones or of sympathetic
tones to enter into the mass of sound. Both Debussy and Ravel
count upon this. The notes they write upon the page are but the
starting point of their effects. It is what floats up and away from them
that constitutes the background of their music. One finds in the later
pieces of Debussy not the old-fashioned indication of the pedal, but
such directions as quittez, en laissant vibrer, or laissez vibrer (let the
vibrations continue), which must be intended to attract the ear to
after-sounds. He has even invented a notation of such un-substantial
sound. Here is an example, from Les collines d’Anacapri:

He will fill up a whole measure with notes that find their reason only
in the vague sound of the next measure, as here in La cathédrale
engloutie:

Note also that his spacing of chords, and particularly his strange
doubling of parts, brings overtones into prominence. One hears not
so much a doubling of parts on the keyboard as an accompanying
shadow of sound which is, as it were, cast by them. Witness the
choral passages in La cathédrale engloutie, and the treatment of
chords in Et la lune descend sur le temple qui fut. Here, at the
beginning, one notices too the inclusion within the chord itself of
notes which may properly be considered overtones.

It is true that Schumann experimented with sympathetic vibrations

and overtones, that the player who would give to Chopin its special
charm must have an ear tuned to after-sounds, and that Liszt
experimented with many similar effects and really opened the way
for a treatment of the pianoforte such as that Debussy and Ravel
have perfected. But all earlier experiments were limited by a clear
perception of certain harmonic proprieties. A chord was defined by
the notes struck in it. But in this music of Debussy and Ravel a chord
is not such a restricted thing. It is a potentiality rather than an
actuality. It spreads and grows in after-sounds so that its boundaries
become vague and merge with other boundaries or cross them. So
they have created a pianoforte music that seems almost to have no
dependence upon the mechanical levers and hammers, a sort of
music liberated from the box, and yet the most subtly and intimately
related to the instrument that has been written.

Debussy’s music is by no means all compact of these vague effects.

It is often as clear-cut as crystal, having a netteté hard to match in
other music for the instrument. Witness for example Les jardins sous
la pluie and La sérénade interrompue. In these cases it is plain to
see that he is no less aware of the charm latent in the percussive
quality of tone in the pianoforte than of that in its peculiar after-
sounds. He can be incisive, also, and sharply rhythmical as in La
puerta del Vino, or sparkling as in the Feux d’artifice.

Technically, then, Debussy’s pianoforte style seems to have been

influenced by a clear perception of the two qualities of sound of
which the instrument is capable, and so remarkable has been his
revelation of them that one cannot but feel that they come to our
ears as fresh discoveries. His ingenuity seems inexhaustible and
always successful. He can be rapid without being sensational,
forceful without pounding. Except that an occasional use of chords
suggests the organ or some new mysterious wind instrument, his
music never departs from the piano, to the spirit of which it gives a
new expression. It is extremely difficult to play. It requires the utmost
fleetness and lightness of fingers; and also a perfect freedom of the
arm, for he seems at times to ask the player to touch all parts of the
piano at once. In a measure, however, it may be said of some of his
music that it conforms to types as Liszt’s does, and that
consequently, compared with Bach and Chopin, it is not so difficult.
Nevertheless, by all tokens the music of Debussy, though technically
it springs from Liszt, is going to elude the grasp of most fingers even
as that of Chopin does. Perhaps it is a spiritual rather than a
technical difficulty that stands in the way.

His compositions show signs of a very great development both in his

ideals and his means of expression. An early group comprises a
Nocturne, a Suite Bergamasque, and another suite called Pour le
piano which consists of a Prelude, Sarabande and Toccata. There
are signs in nearly all these pieces of originality and some attempted
departure from traditional commonplaces. The nocturne is hardly
distinguished either in sentiment or in treatment of the piano. Only
the section in 7/8 time is interesting. But in the Suite Bergamasque
one finds a Passepied and the well-known Clair de lune which hint at
the works to come, the former in its piquant scoring and rhythm, the
latter in its harmonies and its employment of the lower and higher
registers. The Toccata is original in harmony also, and well-scored
for the pianoforte. But except in the Clair de lune there is no trace of
the delicate impressionism which has made his better known music
unique.

This comes out strongly in a second group of pieces in which one

may include the L’isle joyeuse, the Estampes and the first series of
Images including the Reflets dans l’eau in which he seems to us to
reach the height of this middle achievement. L’isle joyeuse is a
strange, wild piece, full of his characteristic harmonies, especially
those founded upon the whole-tone scale. It is the longest of his
pieces for the pianoforte, and is rather unsatisfactory in structure.
Perhaps the monotony of key is to blame—for in spite of passages in
whole-tone scales, the whole is very clearly in A major. Yet it must be
said that this very sameness of key intensifies the early languor and
the later Bacchanalian fury—is intoxicating in itself.

The Estampes (‘Engravings’) are among the best of these middle

pieces. A comparison of them with works of an early period, with the
two arabesques or even the Suite Bergamasque, shows an
extraordinary development in Debussy’s art and a change or a more
marked independence in his ideals. There is hardly a trace in the
earlier works of the new expansion in pianoforte technique which
marks the Pagodes, La soirée dans Grenade, and Jardins sous la
pluie. Especially in the first of these pieces the whole range of the
keyboard is blended into effects of a new sonority of sevenths and
ninths. The second is a study in impressionism, in the combination of
a few fragments of melody, harmony and rhythm into a whole of new
poetic intensity. In the former his technique, in the latter his
procedure, are strange and unfamiliar in pianoforte music, yet wholly
successful. Their effectiveness is no doubt largely due to the nature
of his material. The motives of the Pagodes are Oriental, those in La
soirée both Spanish and Moorish. Perhaps for this reason they
sound more exotic than the Jardins sous la pluie, which, in spite of
odd blendings of harmony, is essentially more conventional than its
two companions in the set. Certainly the Jardins is a wholly poetic
and effective piece of keyboard music; but it lacks the originality and
the elusive suggestiveness of the Pagodes and of La soirée.

The Reflets dans l’eau is superior to the Hommage à Rameau and

the Mouvement, with which it is combined in the first series of
Images. Technically it is a masterpiece, and both by the quality of its
themes and its perfection of form is fitted to stand as a piece of
absolute music of rare beauty. The plan of it is logical rather than
impressionistic. It is the development of a single idea, not the
combination of suggestive fragments. Hence it seems to stand as
the most complete result of the art of which the Pagodes and Les
Jardins are representative. In the second series of Images the