Banking — The Root of the Rise of Nazism in 1930s Germany

Alexander Mazen, a student at Union County College in New Jersey, is working toward a degree in communications media. A musician, music producer, and lyricist, Alexander Mazen also has an interest in 1930s German history.

While many factors contributed to the rise of Nazi sentiment in Germany, one study found it to be related to a series of bank failures. Many history scholars believe the seeds of Hitler’s rise were planted long before and the Nazi party arrived. Almost a decade earlier and after WWI, the Treaty of Versailles, more specifically Article 231, contributed to the country’s economy lack of growth, including the reparations the German government was forced to make and the territories and colonies it had to relinquish.

Radical populist thought that would turn into fascism would come just after the onset of the Great Depression. In Germany, this era was considered one of the worst depressions with the economy contracting more than 25 percent and a country experiencing high unemployment.

A banking crisis that happened in 1931 would happen after Danatbank failed-one of the country’s four big financial institutions. The bank’s failure was in part because of a banking crisis that occurred with the Central European bank, which caused deposit withdrawals. This would affect Danatbank, which was dealt another blow when one of its major borrowers defaulted on a loan.

In a series of events, Danatbank’s troubles led to a suspension of deposits and another major bank failure. After a three-week bank holiday, the German economy’s exit from the gold standard, and troubles that brewed between France and Germany related to reparations payments, Danatbank was in the middle of a major crisis.

Ultimately, this crisis led to declining incomes and a sluggish economy. However, the Nazi party’s statement-something repeated often-that “the Jews are [Germany’s] misfortune” was believed to be connected to the fact Danatbank’s leader was prominent Jewish banker Jakob Goldschmidt, which was used to stoke the flames of hate against Jews among Germans and give rise to the Nazis.