How failing banks paved Hitler's path to power

Apr 16, 2019

A branch of Germany's largest business bank, Deutsche Bank AG, is illuminated with a banknote of Germany's former currency, Deutsche Mark, at the start of the "Luminale, light and building" event in Frankfurt, Germany, March 12, 2016. REUTERS/Kai Pfaffenbach - GF10000343235

How did failing banks contribute to the rise of the Nazis? Image: REUTERS/Kai Pfaffenbach

Hans-Joachim Voth

UBS Professor of Macroeconomics and Financial Markets, Department of Economics, , Zurich University

José-Luis Peydró

ICREA Professor of Economics at UPF, Barcelona GSE; Research Professor and Research Associate, , CREI; and CEPR Research Fellow

Sebastian Doerr

Economist, Innovation and the Digital Economy, Bank for International Settlements

The Big Picture

Explore and monitor how European Union is affecting economies, industries and global issues

A hand holding a looking glass by a lake

Crowdsource Innovation

Get involved with our crowdsourced digital platform to deliver impact at scale

Stay up to date:

European Union

Note: The shaded area indicates the period of the 1931 banking crisis, from the beginning of troubles at Austrian Creditanstalt to the merger between Danatbank and Dresdner Bank. Blue vertical lines show: (A) beginning troubles at Austrian Creditanstalt (May 1931), (B) Nordwolle accounting irregularities discovered and Hoover Moratorium established (June 1931), (C) failure of Danatbank and ensuing bank holidays (July 1931), and (D) forced merger of Danatbank and Dresdner Bank.

Note: This map of Germany shows the geographical distribution of cities with either positive or zero Danat/Dresdner exposure. Blue dots indicate cities with DD exposure, grey diamonds those with no DD exposure.

Note: Average change in firm wage bill from 1929 to 1933 for firms not connected to any of the four largest banks (Other connected), firms connected to Commerzbank and Deutsche Bank (Großbank connected), and firms connected to Danatbank and Dresdner Bank (DD connected)

Note: Panel A shows density of change in city incomes from 1928 to 1934 for cities in bottom, middle, and top tercile of exposure to Danatbank and Dresdner Bank borrowers. Panel B shows density of change in NSDAP vote shares from September 1930 to March 1933 elections.

Note: From Der Stürmer. The caption reads “The Jewish banks and the German Businessman”.

Have you read?

Don't miss any update on this topic

Create a free account and access your personalized content collection with our latest publications and analyses.

License and Republishing

World Economic Forum articles may be republished in accordance with the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Public License, and in accordance with our Terms of Use.

The views expressed in this article are those of the author alone and not the World Economic Forum.