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Ruth Becker has always looked up to Dora Fabian. When 18-year-old Ruth moves to Berlin in the 1920s, she soon becomes swept up in her cousin Dora's left-wing politics, particularly her campaign to release Ernst Toller, one of the imprisoned leaders of the failed Bavarian Soviet Republic. Germany has been devastated by both the Great War and the reparations imposed on it in the Treaty of Versailles. Nationalist sentiment is running high. Anna Funder's new novel, All That I Am, tells the story of Ruth, Dora and Ernst, along with their comrades Hans Wesemann (later Ruth's husband) and Berthold Jacob. The group campaigns and agitates against the secret rearmament of Germany, the rise and election of Hitler and the dangers of fascism.

The threads of the novel are pulled together by Ruth, now living out her days in Sydney, Australia. She has unexpectedly received a manuscript of Toller's memoirs, dictated before he took his own life in exile in New York. The elderly Ruth reads the memoirs and reflects rather ponderously on the nature of memory and truth, in between transmitting to the reader the details of the political resistance and the intertwined lives of the five characters.

The Sydney sections are largely unnecessary, and feel unsuccessful in the context of the otherwise vivid and fascinating blend of social and political history. Although Funder is deft at plotting within each of the stories, the writing doesn't seem to settle down until shortly before Dora, Hans and Ruth are exiled in London, as if Funder were anxious to reach this point and get on with her real story.

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All That I Am is Anna Funder's debut novel. Her first book, the non-fiction Stasiland, was groundbreaking in both form and content. It was the first book to reveal the true horrors perpetrated by the Stasi. Is it Funder's early commitment to truth-telling, followed by a novel that mixes real events and real people with invented plot and characters, that has so upset the critics?

Many reviewers have asked how we know what is true in the novel, what is made up and what is based in fact. Yet novelists fictionalize real situations all the time without such objections. Perhaps Funder's ethics prevented her from writing this story as non-fiction because only one of its characters (the woman on whom Ruth is based) was alive to give her account, whereas Stasiland was built from extensive interviews with East Germans. Perhaps a historian simply wanted to write a historical novel.

Stasiland demonstrated Funder's clear and elegant writing style along with her passion for, and detailed knowledge of, her subject. Occasionally in this new novel, she veers toward the non-fictional or the overly authorial, with comments such as, "As it turned out, we underestimated the liberation from selfhood the Nazis offered, the lure of mindless belonging and purpose." Now and again, her eagerness to include a particularly interesting snippet from her research gets the better of her writerly instincts, but more often the historical facts are conveyed smoothly and seamlessly through the natural flow of the characters' lives.

The characters come first: At the beginning of their political activities, the friends are more or less ordinary activists, albeit well-known. The danger that their campaigning puts them in increases only gradually, as the political changes in the lead-up to the Third Reich transform them from free-speaking opponents to dangerous dissidents who must be silenced.

Although in Funder's rendering both Wesemann and Toller have an eye to posterity rather more often than does them credit, over all the novel's focus on lives and relationships, rather than the time frame of an event, makes the characters seem more real and somehow less conscious of their own heroism than other fictionalized resistance fighters. Despite some structural problems, this intelligent and well-written novel tells how Nazi power shattered individual lives in ways both mundane and horrific.

Anna Funder Q&A

What made you decide to fictionalize all the research you did for this book, especially after the excellent critical reception of Stasiland?

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I had wanted to write Stasiland as fiction at first, and in fact drafted, very early on, a couple of terrible chapters. They were terrible in their own right, but they were also terrible for reasons that I'd describe as moral and aesthetic. I was writing about people who were alive and walking around the streets of Berlin and other former East German towns, and they had lived through a time which was, almost literally, unbelievable – that humans are capable of such insidious surveillance on the one hand, and of such extraordinary courage and resistance on the other. It was important to me that Stasiland be non-fiction, because I wanted to honour the courage of those people in it.

Also, the first task of a novel is to create a believable world. East Germany was not a believable world! A place where the secret police might break into your apartment and steal dirty underwear to get a sample of your bodily odour to bottle in a jam jar and train a dog to track you. It's just not the kind of credible detail you can put in a novel without stretching credulity, but it's exactly the kind of thing the people I was writing about were dealing with. In that way, the subject matter, and writing so close to history, dictated the non-fiction form.

I felt that I'd taken the non-fiction form as far as I could in Stasiland – I'd made non-fiction as moving and evocative as fiction. The one thing I couldn't do was to represent the interior consciousness of my characters. What I mean is, unless they literally told me what they were feeling, I couldn't legitimately go there. With All That I Am, I wanted to do exactly the inverse. I asked myself the same question you're asking me: Why fiction? And the answer is to do with the purpose of fiction itself. Which is to represent what it is to be alive, what it is to be another person. It is the supreme way we have of entering another's consciousness. So that was the main aesthetic and technical aim in All That I Am.

Some critics have been bothered by the blurred line between authentic and imaginary in the novel, much more so than (I think) they would be by other time periods. Why would this time in history elicit such strong emotions in the English-speaking world that using (some) real characters in a semi-fictionalized plot becomes the main issue for many reviewers?

All That I Am is set long before the war, and it tells the story of four very brave people who really, at great risk to themselves, tried to alert the world – and first the British – to Hitler's plans for war. As we know now (and as the reader knows, when she's reading) is that the world wasn't listening. And although there were some very prescient and sympathetic English people, Britain wasn't listening either. This isn't a well-known story or period, and the characters are almost completely unknown – very exciting for me to discover them.

I took a long, hard look at what happened behind the locked door of that apartment in Great Ormond Street in March, 1935. I looked at the inquest, I looked at all the people involved, I looked at what was going on in London and what Hitler was doing to other outspoken opponents, even those who'd managed to escape Germany. It was like putting my old lawyer's head on for a while. And I found the historical record deeply unsatisfactory. It doesn't match the psychology of the people involved, and it doesn't match the facts of what was going on in London and Hitler's Berlin. So I put together, out of real elements, and real people, a new case – a new plot. This was very hard to do, but it means that the novel has a hook into history that is powerful and unsettling and unusual.

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There were a couple of reviewers in the U.K. who, it seemed to me, reading between the lines, were unsettled both by the truth of the British appeasement of Hitler and its shocking effects on my characters' lives, and by the hook into history that the novel very deliberately has. But I have to say that the reception of All That I Am has been pretty overwhelming, generally. The book has been five months on the bestseller list in Australia, twice at No. 1. It's phenomenal, and very moving to me that these characters I've lived with for five years are finding such a contemporary resonance.

Stasiland was received with extreme hostility in parts of the former DDR, which is not surprising when you consider the reach of the Stasi's information network (something like one informant per 6.5 inhabitants). How has the novel been received in Germany?

It won't be out in Germany until 2013, so I'll be able to tell you then. Stasiland had a divided reaction: People who had been in the resistance to the regime – whether active or passive – loved it. There would always be someone at a reading in a former East German city who'd say (after any forbidding ex-Stasi had scuttled out of the room), "Something just like that happened to me, my uncle disappeared," or, "I was refused an education for reasons I was never told," or other, shocking things, and then they'd ask, "Why does it take a foreigner to tell these stories?" On the other side, the ex-communist party members and ex-Stasi really, truly hated the book. They were not at all used to a world where they can be written about without being able to swiftly imprison their critic. In fact, a group of ex-Stasi sued my publisher for some of the (true) things I wrote about them (see page 85 in the English-language versions). But that's a whole other story...

I'm expecting an easier reaction to All That I Am. I could be way wrong, but it is, after all, a book about some incredibly brave and wonderful Germans who resisted Hitler.

There is a lot about memory in the book. Given the distance from the events, as well as the astonishing speed of changes in the European political situation, do you think that people in Germany are beginning to forget? There has been so much war guilt and war writing over the past few decades. Is the urgency starting to fade?

Well, my novel is not about the war. It is set, for the most part, six years earlier than that. It is about seeing what is coming in the political landscape, seeing Hitler's trampling on the democratic freedoms, and doing something about it. It is very hard to be prescient, and only history can tell if you were right. That's what was so interesting to me about writing about that period, for a readership which does, in fact, know what came later, even though most of my characters didn't live to see it.

But in short, no. I think what happened in Germany and Europe in the mid-20th century is shocking to us in Western culture, because Europe is at the heart of our sense of ourselves as civilized. That doesn't fade.

What are the best German-language novels about either 20th-century events in Germany or living under the different totalitarian regimes that ruled Germany during the same period?

Erich Maria Remarque's All Quiet on the Western Front, Gunter Grass's The Tin Drum, Primo Levi's If This is a Man (Italian, originally), any Bertolt Brecht works, any Thomas Mann, Hans Fallada's A Small Circus, Klaus Mann's Mephisto , A Woman in Berlin, by Anonymous, and Edgar Hilsenrath's Der Nazi und der Friseur [The Nazi and the Barber]as well as Nacht [Night]… it's a long, long list.

J.C. Sutcliffe spent last summer living in Germany.

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