In Anna Funder’s All That I Am (Penguin, 384pp; $29.95), Ruth Becker describes the predicament of these writers, politicians, agitators and journalists: “Every three months when we respectfully begged His Majesty the King of England to be allowed to stay, our minds flooded with the things we could not mention in our polite visa application letters, the true reason we could not go home.”

They are beset by dangers on all sides as they struggle to cope with British manners, Nazi intrigue and the collapse of their old selves. Men and women who had known everyone worth knowing in Berlin and “been au courant with news and gossip before it hit the papers” found themselves in exile not only from their country, but their language and their public. Hans Wesemann, an urbane satirist whose unravelling is one thread of Funder’s complex novel, still has all his wits about him but his audience has gone: “Slowly, he lost his sense of public self, and with it his private one evaporated.”

At the heart of All That I Am is a little group of friends who campaign in the mid ’20s for the release of the playwright Ernst Toller, imprisoned for his role in Munich’s brief revolution. There is plain Ruth who falls for the extraordinarily beautiful Hans (“I knew there had been experiments with boys …”); the endlessly capable Dora Fabian who becomes Ernst’s mistress after his release in 1925; and the fine journalist Berthold Jacob. “We were all of us,” Ruth says, “subsumed into an aphrodisiac atmosphere of self-sacrifice.”

These are real people with lives that can be tracked on Wikipedia. In her introduction, Funder writes: “I have made connections and suppositions, for that I take full responsibility.” But not even Ernst Toller is much remembered these days. Funder brings him back to life with few sharp strokes. She is a great sketcher: “A youngish man in a rumpled silk shirt, with wild grey-streaked hair streaming off his forehead.” In prison he wrote four plays, “searing works about the human price of war” that made him a big figure in German theatre and a leading European anti-fascist. By chance he was lecturing in Switzerland the week Hitler became chancellor in 1933.

Who of us would know when to flee? In stories of war and revolution there is a mysterious divide between those who know to go and those who stay and die. Foresight is not enough, nor is having the guts to abandon everything and head for the border. Choosing the time, the moment, is a matter of instinct and of wonder. A couple of weeks into Hitler’s reign, at the far end of a long night in Berlin’s decadent TicTacToe club, Berthold realises trouble for them will come at once. “You’ll have to leave,” he tells them. “I’ll leave tomorrow myself.”

With great courage, Dora hides Ernst’s papers and joins him in Switzerland. Ruth and Hans leave for London: “Hans packed his typewriter, his folio and his evening clothes.” Berthold sets up just over the border in Strasbourg to become a conduit between anti-Nazi agents at home and the free press abroad. Her famous five are now all subject to what Ruth calls “the magic of exile” in London, New York and – for the lone survivor Ruth – “sunstruck” Australia. They must accept poverty and English as they struggle to remake themselves while holding on to who they are. And they must somehow stay true to the cause. “It requires,” says Ruth, as she watches her husband fail on every front, “reserves of strength we might not have.”

Though set in an earlier time and in a different struggle, All That I Am takes us back to the territory of Stasiland (2003), Funder’s brilliantly successful account of the turncoat regime of East Germany. In both books – one fact and one a kind of fiction – moral strength is her core concern: the strength it takes to refuse to fall in with an evil and apparently triumphant regime. She knows how little it takes to fail. Being wanted, being useful, can be temptation enough.

Hans Wesemann was a gadfly without deep political convictions who found himself fearful and frustrated in London, unable to wait, a show-off with no voice, a nobody in a new land. By day he worked in the British Library on the great novel of exile that would remake his name, “but in the afternoons he came back from the reading room like someone who had mislaid himself.”

Funder’s prose has a clarity that’s at times arresting. In language of admirable simplicity she explores the shadowy ambiguities lurking in her characters – ambiguities that have always fascinated her: the good that comes with bad and the bad with good. Holed up in a New York hotel revising his memoirs in the summer of 1939, Ernst Toller lists the private failings that propel his public mission: vanity, sexual betrayal and “a strange pathology of responsibility” that sprang from his guilt-ridden childhood. “Aside from the privileges of class, that is how I came to feel it was up to me to fix things. Because otherwise, it was all my fault.”

By this point Ernst has failed as a Hollywood scriptwriter and is failing in a last public mission: to persuade the United States to allow the SS St Louis to land its cargo of German refugees. The European diaspora is still haunted by the fate of the St Louis, turned away by Cuba, the US and Canada, whose governments didn’t want to deal with another batch of Jews. So the ship returned them to Europe where an estimated 250 people disappeared into the machinery of the Holocaust. The fate of the St Louis is one reason we have the Geneva Conventions protecting refugees.

Toller is tackling his memoirs again because he realises he never properly acknowledged his debt to the woman who saved his manuscripts: “I left my love out.” This is the story of Dora Fabian that survives as loose sheets of paper stuffed into an old copy of the memoirs. The arrival of this bundle out of the blue at Ruth’s flat in Sydney 60 years later is the novel’s point of departure. “In his presence, and hers,” says Ruth, “I am returned to my core self.”

All That I Am is told by Ernst and Ruth chapter about: the ‘I’ of the playwright in New York in 1939 shifting to the ‘I’ of the wise friend Ruth in Bellevue Hill in 2001. So clever. But what is gained by this approach? To my mind a storyteller as prodigiously talented as Funder can tell her story without this elaborate pretence that the story is telling itself. Stasiland was a work of blazing simplicity: Funder went into the wreckage of East Germany, found the story and made it her own. I wish she’d done the same when she shifted from postwar to prewar, from homeland to exile, from fact to fiction.

As All That I Am moves towards its mysterious climax we remain locked out of the minds of Hans and Dora, he perhaps the perpetrator and she certainly the victim of what may have been a Nazi outrage in the heart of London. We see them as we see everything in All That I Am, through the eyes of Ruth and Ernst, privileged witnesses to their fate but still on the outside peering in.

The book is a little like Ruth’s mind. All That I Am is dedicated to the real Ruth – Ruth Blatt (née Koplowitz) – who introduced Funder to these events and also became her friend. Funder has the powers of the old woman already failing when Ernst Toller’s bundle lands on her doorstep. “My mind is a skittish thing,” Ruth says. “It will not open if asked too directly. I must be more cunning, approach sideways at the edge of sleep, to get it to surrender something new. After all, everything in it does belong to me.”