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German Banking between the Wars: The Crisis of the Credit Banks

Published online by Cambridge University Press:  13 December 2011

Theo Balderston
Theo Balderston
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Theo Balderston is lecturer in economic history atthe University of Manchester.
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Extract

This article argues that the business policies of the German credit banks were only a secondary cause of the troubles that befell them between the wars and that the primary explanation lies in the instability of their monetary environment and of the credit sector's competitive structure. By carefully tracing the impacts of the interwar inflation and stabilization and of the 1931 crisis on the German banking industry, setting them in the context of domestic and international political developments, the article explains the limited choices available to the banks in this period and their relative eclipse during the Third Reich.

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Articles
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Business History Review , Volume 65 , Issue 3: Financial Services , Autumn 1991 , pp. 554 - 605
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Copyright © The President and Fellows of Harvard College 1991

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References

1 1929 may be taken as the last year of post-inflation banking by reconstruction, when balance sheet totals reached approximately their peak prior to their erosion by deposit withdrawals.

2 Cf. Holtfrerich, Carl-Ludwig, “Auswirkungen der Inflation auf die Banken,” in Die Nachwirkungen der Inflation auf die deutsche Ceschichte, ed. Feldman, G. D. (Munich, 1986), 187–209Google Scholar.

3 In this article, I have not had space to consider the mortgage banks or the relationship between the credit banks and the Reichsbank—in particular the Reichsbank's resort to quantitative credit rationing. For a fuller treatment of these subjects and of the “business of banking” in 1913 and during the war, see T. Balderston, “German Banking, 1913–1939,” University of Manchester Department of Economic History Working Paper, no. 2, 1990.

4 Use of the wholesale price index as deflator for Tables 3 and 4 yields lower estimates of real aggregates for 1918, but higher estimates for 1919–22, than the use of dollar exchange rates.

5 Whale, P. Barrett, Joint-stock Banking in Germany: A Study of the German Creditbanks before and after the War (London, 1930), 218Google Scholar.

6 Holtfrerich, Carl-Ludwig, The German Inflation, 1914–1923: Causes and Effects in International Perspective (Berlin, 1986), 246–47CrossRefGoogle Scholar.

7 Ibid., 189-93, 285; Webb, Steven B., Hyperinflation and Stabilization in Weimar Germany (New York, 1989), 56–57Google Scholar; Goldschmidt, Raimund W., Das deutsche Grossbankkapital in seiner neueren Entwicklung (Berlin, 1927), 76Google Scholar.; Whale, Joint-stock Banking in Germany, 217.

8 Total holdings can be gauged from, for example, Holtfrerich, The German Inflation, 67.

9 Lindenlaub, D., Maschinenbauunternehmen in der deutschen Inflation, 1919–1923: Unternehmenshistorische Studien zu einigen Inflationstheorien (Berlin, 1985), 198–202Google Scholar.

10 Holtfrerich, The German Inflation, 67, 190–91.

11 F. Grüger, “Die Wirkungen des Krieges und der Kriegsfolgen auf das deutsche Bankwesen…,” Untersuchung des Bankwesens 1933, part 1, vol. 1: 44f.

12 However, the low and deteriorating real value of shares from 1921 made them uncertain stores of value as well; Webb, Hyperinflation, 86.

13 Stucken, R., Deutsche Geld- und Kreditpolitik, 3d ed. (Stuttgart, 1964), 36–37Google Scholar; Pfleiderer, O., “Die Reichsbank in der Zeit der grossen Inflation…,” in Währung und Wirtschaft in Deutschland, 1876–1975, ed. Bundesbank, Deutschen (Frankfurt/Main, 1976), 167Google Scholar.

14 The Reichsbank's partial rediscount restrictions (Stucken, Deutsche Geld- und Kreditpolitik, 37) do not materially invalidate this argument. See also Goldschmidt, Das deutsche Grossbankkapital, 272.

15 Stucken, Deutsche Geld- und Kreditpolitik, 37; Goldschmidt, Das deutsche Grossbankkapital, 272; Whale, Joint-stock Banking in Germany, 142.

16 Goldschmidt, Das deutsche Grossbankkapital, 37–56, 67, 79. According to Gold-schmidt, 88, the banks raised 400 million marks in extra capital by new issues during the inflation. The residual method by which the value of the banks own capital was calculated leaves a very wide margin of error in this period of uncertain values.

17 Pohl, M., Die Konzentration im deutschen Bankgewerbe (1848–1980), Schriften des Instituts für bankhistorische Forschung, vol. 4 (Franfurt/Main, 1982), 298–99Google Scholar.

18 The depletion of the proprietors' capital of a “south German bank” is charted in Materialien zur Vorbereitung der Bankenenquete, zusammengestellt vom Centralverband des deutschen Bank- und Bankiergewerbes. Als Manuskript gedruckt (n.p., n.d.; [Berlin, 1933]), 120Google Scholar, showing that almost all the loss had occurred by the end of 1919. But credit banks could perhaps, like savings banks, have moved toward index-linked deposits in late summer 1923: Whale, Joint-stock Banking in Germany, 241.

19 Pohl, Die Konzentration, 307ff., 574ff.; cf. Materialien zur Vorbereitung, 105ff.

20 Pohl, Die Konzentration, 307.

21 Grüger, “Die Wirkungen,” 53. Wartime controls on both types of dealing were held to have advantaged Berlin banks, and may have led to a more severe depletion of provincial banks’ capital, thus exposing them to takeover.

22 Untersuchung des Bankwesens 1933, part 2: Statistiken, 58, 60, excluding “Überseebanken” and “Branche- und Hausbanken.”

23 Weber, A., Depositenbanken und Spekulationsbanken: Ein Vergleich deutschen und englischen Bankwesens, 4th ed. (Munich, 1938), 147CrossRefGoogle Scholar: Grüger, “Die Wirkungen,” 54.

24 “Giro” is a system of deposit transfer effected by instructions to the bank holding the deposit rather than by check.

25 Pohl, M., Entstehung und Entwicklung des Universalbanksystems, Schriften des Instituts für bankhistorische Forschung, vol. 7 (Frankfurt/Main, 1986), 70–75Google Scholar; cf. Neumann, , “Die geschichtliche Entwicklung der Sparkassen,” Untersuchung des Bankwesens 1933, part 1, vol. 1: 338, 340Google Scholar.

26 Die deutschen Banken, 1924–1926: Einzelschriften zur Statistik des Deutschen Reiches (Berlin, 1927), 3: 69Google Scholar.

27 On this, see Netzband, K.-H. and Widmaier, H.-P., Währungs- und Finanzpolitik in der Ära Luther, 1923 bis 1925 (Basel, 1964), 96–223Google Scholar.

28 See Müller, F., “Die Reichsbank: Stabilisierung un d Sicherung der Währung,” in Untersuchung des Bankwesens 1933, part 1, vol. 2: 199–203Google Scholar; Netzband and Widmaier, Währungs- und Finanzpolitik, 226–31. See also Webb, Hyperinflation, 69–74.

29 That it was stabilized on free markets in early 1924, while the Reichsbank was still strictly rationing foreign exchange (cf. Müller, “Die Reichsbank”, 199), must indicate confidence that monetary policy aimed to create free convertibility, given the subsequent weakening of this rate in February as the Reichsbank's bill portfolio swelled.

30 Holtfrerich, The German Inflation, 75, 304, 313. Since goldmarks were reckoned by deflating papermarks by the dollar exchange rate, goldmark accounting was equivalent to dollar accounting.

31 On these matters, see McNeil, W. C., American Money and the Weimar Republic: Politics and Economics on the Eve of the Great Depression (New York, 1986)Google Scholar.

32 In fact the banks protested their passivity in this business: cf. A. Lansburgh, “Die Berliner Grossbanken im Jahre 1924,” Die Bank (1925), 268; also Der Banhkredit: Auschuss zur Untersuchung der Erzeugungs- und Absatzbedingungen der deutsche Wirtschaft, V/2 (Berlin, 1930), 84Google Scholar. The last source is skeptical of their protestations. At any rate, the banks took no steps to refuse the credits.

33 During the inflation the banks had already been sensible of foreign competition: Gossweiler, K., Grossbanken, Industrie-monopole, Staat: Ökonomie und Politik des staatsmonopolistischen Kapitalismus in Deutschland, 1914–1932 (Berlin, 1971), 185Google Scholar.

34 Der Bankkredit, 88–98.

35 Numerous sources report this: von Bissing, Freiherr, “Die Schrumpfung des Kapitals…,” Untersuchung des Bankwesens 1933, part 1, vol. 1: 67Google Scholar; O. C. Fischer, “Die fehlerhafte Kreditpolitik,” in ibid., 512.

36 Der Bankkredit, 83–85.

37 Comparison of Die deutschen Banken 1924–1926, 135, col. 3, with 136, last col, implies that at 31 Dec. 1925 foreign bank deposits were 788 million reichsmarks. This was three-quarters of total foreign deposits at that date per my Table 5, col. 2, if these increased linearly between mid-years.

38 Cf. among others, A. Lansburgh, “Die Berliner Grossbanken im Jahre 1927,” Die Bank (1928), 200; Nordhoff, K., “Über die Liquiditätsfrage,” in Untersuchung des Bankwesens 1933, part 1, vol. 1: 488Google Scholar. In M. Pohl's view (Entstehung, 96), about three-quarters of the banks' “deposits at other banks” were held abroad in this period.

39 L. Mellinger, “Auslandsaktiva und Liquiditätspolitik,” Die Bank (1930), 1726.

40 Quotations of the Devisenleihsatz were published regularly in Die Wirtschaftskurve, Frankfurt/Main.

41 Konjunktur-Statistisches Handbuch, ed. Institut für Konjunkturforschung, 2d ed. (Berlin, 1936), 115Google Scholar.

42 For this and the following, see Benning, B., “Der “‘schwarze Freitag’: Eine Untersuchung des Börseneingriffs vom 13.5.27,” in Veesenmeyer, E., Gunzert, B., and Benning, B., Effektenbörse und Volkswirtschaft, Münchener Volkswirtschaftliche Studien, vol. 6 (Jena, 1929)Google Scholar.

43 Cf. Konjunktur-Statistisches Handbuch (1936), 115, with Historical Studies of the U.S.A. From Colonial Times to 1960, 659, and Banking and Monetary Statistics, issued by the Board of Governors of the Federal Reserve System (Washington, D.C., 1943), 485Google Scholar.

44 Cf. von Bissing, “Schrumpfung des Kapitals,” 81; Materialien zur Vorbereitung, 44–47.

45 Wirtschaft und Statistik (1930), 386.

46 For example, Jeidels, Otto, Das Verhältnis der deutschen Grossbanken zur Industrie: Mit bes. Berücksichtigung der Eisenindustrie, 2d unaltered ed. (Munich, 1913), 48, 53Google Scholar; Pohl, Die Konzentration, 171–77.

47 The absolute gap was of course wider. The proportional gap was not wider if one compares merely standard interest rates charged on pre-arranged advances with deposit rates, but it may be wider when one includes the variety of other bank charges (Provisionen) in the cost of borrowing. Cf. Untersuchung des Bankwesens 1933, part 2: Statistiken, 472–73, lines 41, 42; Der Bankkredit, 175–96.

48 Cf. Balderston, “German Banking, 1913–1939,” 22–23.

49 Apparent in, for example, the continued importance of sliding-scale wage contracts, and of life insurance policies contracted in foreign currencies: Vereinigung Deutscher Arbeitgeberverbände, Geschäftsbericht 1925 u. 1926, 202, 213. Cf. James, Harold, The German Slump: Politics and Economics, 1924–1936 (Oxford, 1986), 301Google Scholar.

50 For the changing conditions of the market for German bonds, see Balderston, Theo, The Origins and Course of the German Economic Crisis: November 1923–May 1932 (Berlin, 1992), 207–14Google Scholar.

51 Cf. Materialien zur Vorbereitung, 123.

52 Holtfrerich, The German Inflation, 271–78. About half the deposits at Berlin banks were made by private persons, according to Der Bankkredit, 70–73; cf. Materialien zur Vorbereitung, 132.

53 From Die deutsche Zahlungsbilanz, 1924–1933, Wirtschaft und Statistik, supplement 14 (Berlin, 1934)Google Scholar, Gerd Hardach calculated the German export of capital between 1924 and 1930 at 11 billion reichsmarks, and at 6.5 billion reichsmarks in 1931; Hardach, Gerd, “Reichsbankpolitik unter dem Golddevisenstandard” (Dissertation, n.p., n.d.), 213Google Scholar.

54 Pohl, Entstehung, 73.

55 In 1929 about 60 percent of their non–mortgage lending (Personal-kredit) was to artisans (Mittelstand), 20 percent to agriculture, and 17 percent to other individuals: Untersuchung des Bankwesens 1933, part 2: Statistiken, 382; this may be contrasted with my Table 8, cols. 1 and 2.

56 von Bissing, “Schrumpfung des Kapitals,” 75.

57 A competition-limiting agreement was reached between credit and savings banks in 1928: Der Bankkredit, 41; Born, K.-E., International Banking in the 19th and 20th Centuries (Leamington Spa, England, 1984), 248Google Scholar.

58 But Weber, Depositenbanken, 176, also discerned this competitive dynamic before 1914.

59 Der Bankkredit, 75–76. Thus it was similar to the London clearing banks' cartel: Collins, M., Money and Banking in the U.K.: A History (London, 1988), 211–12Google Scholar.

60 Born, K.-E., “Vom Beginn des ersten Weltkrieges bis zum Ende der Weimarer Republic (1919–1933),” in Deutsche Bankengeschichte (Frankfurt/Main, 1984), 3: 88Google Scholar. Having no branches, it was especially successful as a provincial bankers' bank.

61 Hagemann, W., Das Verhältnis der deutschen Grossbanken zur Industrie (Berlin, 1931), 140, 142-43, 164-65, 171Google Scholar; Gossweiler, Grossbanken, 305–6.

62 Fischer, “Die fehlerhafte Kreditpolitik,” 526–27; von Bissing, “Schrumpfung des Kapitals,” 79f.; Born, “Vom Beginn des ersten Weltkrieges,” 116.

63 Gossweiler, Grossbanken, 357–64; it may have also temporarily intensified competition in advances: Balderston, Origins, 160.

64 Die deutschen Banken, 1924–1926, 101, 136, 139. The slight rise in “other advances” reflects the Berlin banks' absorptions of provincial banks, which traditionally had higher advances ratios.

65 Materialien zur Vorbereitung, 35; Fischer, “Die fehlerhafte Kreditpolitik,” 526ff. On the general subject of bank liquidity, see also Henning, F. W., “Die Liquidität der Banken in der Weimarer Republik,” in Währungs- und Finanzpolitische Fragen der Zwischenkriegszeit, Schriften des Vereins für Sozialpolitik, n.f. 73, ed. Winkel, H. (Berlin, 1973)Google Scholar.

66 Materialien zur Vorbereitung, 146ff.; also Rummel, H., “Die Rentabilitätsfrage der Banken, ihre Unkosten, und die Kalkulation,” in Untersuchung des Bankwesens 1933, vol. 1, part 1: 421–74Google Scholar. Cf. Born, “Vom Beginn des Ersten Weltkrieges,” 53–54, 83.

67 von Bissing, “Schrumpfung des Kapitals,” 76; Der Bankkredit, 41–42.

68 Materialien zur Vorbereitung, 120ff., where it appears that by 1929 the German great banks' ratio of liabilities to own capital was similar to that of the English clearing banks. However, once hidden reserves are taken into account (cf. Collins, Money and Banking, 236–38), the English ratio was probably the higher.

69 Pohl, Die Konzentration, 347–57.

70 Ibid., 354; cf. Hagemann, Verhältnis, 26, 158–59; cf. Seidenzahl, F., 100 Jahre Deutsche Bank, 1870–1970: Im Auftrage des Vorstandes der Deutschen Bank AG (Frankfurt/Main, 1970), 315Google Scholar.

71 Pohl, Die Konzentration, 353; cf. Born in “Vom Beginn des Ersten Weltkrieges,” 79–82.

72 Fuller narratives and analyses of the banking crisis are supplied by, for example, Born, International Banking, 257–68; James, The German Slump, 283–314; Gerd Hardach, “Banking and industry in Germany in the interwar period,” Journal of European Economic History, Supplement: “Banks and industry in the interwar period” (1986): 219–24; Born, K.-E., Die Deutsche Bankenkrise (Munich, 1967)Google Scholar.

73 Hardach, Gerd, Weltmarktorientierung und relative Stagnation: Währungspolitik in Deutschland, 1924–1931 (Berlin, 1976), 126–31Google Scholar; cf. Hardach, “Banking and industry,” 221; James, Harold, “The causes of the German banking crisis of 1931,” Economic History Review 37 (1984): 68–87.CrossRefGoogle Scholar

74 For an analysis of this, see Brown, Brendan, Monetary Chaos in Europe: The End of an Era (London, 1988), 235–45Google Scholar.

75 Holtfrerich, The German Inflation, 190–95, 332.

76 Cf. “Kreditbanken und Vertrauenskrise,” Die Bank (1930), 1707.

77 Credit bank deposits: Balderston, “German Banking, 1913–1939,” Table 10; savings bank inpayments (that is, excluding interest credited) per Konjunktur-Statistisches Handbuch (1936), 141.

78 Brüning, Heinrich, Memoiren, 1918–1934 (Stuttgart, 1970), 277Google Scholar; Politik und Wirtschafi in der Krise. Quellen zur Geschichte des Parlamentarismus und der Politischen Parteien, Dritte Reihe, ed. Maurer, I. and Wengst, U., 2 vols. (Dusseldorf, 1980), document 241, 1: 692–95Google Scholar.

79 A. Lansburgh, “Kreditoren-Rückgang,” Die Bank (1929), 447, 453.

80 Annual reports of the Deutsche Bank und Diskonto-Gesellschaft, the Dresdner, and the Danat banks, respectively, reproduced in Die Bank. The text of the De-Di's report puts the loss of domestic deposits through “political crisis” in 1930 at 200 million reichsmarks.

81 Cf. James, “The causes of the German banking crisis.”

82 Der Bankkredit, 85–87, 104.

83 In addition, foreign creditors are said to have considered conversion of mark into foreign currency claims: “Kreditbanken und Vertrauenkrise,” Die Bank (1930), 1707.

84 Balderston, Origins, 166–73.

85 Although there were a number of private bank failures in 1929, and the banks mounted substantial support action for the prices of those securities held in banks' portfolios (A. Lansburgh, “Die Berliner Grossbanken im Jahre 1929,” Die Bank [1930], 565), Lansburgh's survey does not express anxiety about the banks' overall solidity. The Economist's annual Banking Supplement of 10 May 1930 does not refer to the German banks, and its separate report of 28 June 1930, p. 1433, reassures readers regarding the German banks' substantial reserves. The Statist contains no index entry for German banking in the first half of 1930. A. Lansburgh, “Die Berliner Grossbanken 1930,” Die Bank (1931), 449-50, and “Der Run,” Die Bank (1931), 822–23.

86 For example, by Fischer, “Die fehlerhafte Kreditpolitik,” 532, as reported by Weber, Depositenbanken, 232–33. Foreign banking competition may certainly have worsened the quality of the German banks' advances portfolios.

87 Bopp, K. R., “Die Politik der deutschen Reichsbank seit der Stabilisierung,” Weltwirtschaftliches Archiv 42 (1935): 476Google Scholar.

88 Puhl, E., “Der Wiederaufbau des Geld- und Kapitalmarktes,” Untersuchung des Bankwesens 1933, part 1, vol. 2: 219–20Google Scholar.

89 Balderston, Origins, 254–57; McNeil, American Money, 204ff.

90 Öffentlicher Kredit und Wirtschaftskrise, Einzelschriften zur Statistik des Deutschen Reiches, vol. 27 (Berlin, 1933), 26, 28, 31–34Google Scholar.

91 Cf. “Landesbanken unter kommunalem Einfluss,” Die Bank (1931), 1046–48.

92 Born, “Vom Beginn des ersten Weltkrieges,” 133.

93 James, The German Slump, 109.

94 See Balderston, Origins, 270, 275–80, 283–86, 291, 309–13.

95 Wirtschaftsdienst 14, part 1 (1929): 803; Der Deutsche Volkswirt 3 (1928–1929): 1244Google Scholar.

96 The history of this is given in Maurer, I., Reichsfinanzen und grosse Koalition: Zur Geschichte des Reichskabinetts Müller 1928–30 (Bern, 1973), 86–107Google Scholar; Leuschen-Seppel, R., Zwischen Staatsverantwortung und Klasseninteresse: Die Wirtschafts- und Finanzpolitik der SPD… 1924–1928/29 (Bonn, 1981), 217–255Google Scholar; Schacht's part is particularly studied in Muller, H., Die Zentralbank eine Nebenregierung: Reichsbankpräsident Schacht als Politiker der Weimarer Republik (Opladen, 1973)CrossRefGoogle Scholar.

97 Cf. the comment of H. Schäffer, Staatssekretar (chief civil servant) at the Reich Finance Ministry, recorded in Maurer, and Wengst, , eds., Politik und Wirtschaft in der Krise, document 186, 1: 534Google Scholar.

98 For example, Maurer, Reichsfinanzen, 64.

99 Cf. Schäffer's assessment of the banks' dilemma in Maurer, and Wengst, , eds., Politik und Wirtschaft in der Krise, document 227, 1: 659–61Google Scholar.

100 Cf. Hardach, “Banking and industry,” 216.

101 Cf. A. Lansburgh, “Die Berliner Grossbanken im Jahre 1928,” Die Bank (1929) 215; cf. the statements of bank directors Mosler and Loeb reported in Heinz Habedank, Die Reichsbank in der Weimarer Republik: Zur Rolle der Zentralbank in der Politik des deutschen Imperialisms, 1919–1933 (Berlin, 1981), 153–54Google Scholar.

102 Konjunktur-Statistisches Handbuch (1936), 133.

103 For contemporary comment, see “Zahlungsstockungen,” in Magazin der Wirtschaft, 11 Aug. 1927; “Devisenpolitik und Geldschöpfung,” in ibid., 2 Feb. 1928; also comments in Die Wirtschaftskurve 6 (1927), 350Google Scholar; Wirtschaftsdienst 12, part 2 (1927): 1321, 1481. On stockbuilding, see Balderston, Theo, “The German business cycle in the 1920s: A comment,” Economic History Review 30 (1977): 160CrossRefGoogle Scholar.

104 Balderston, Theo, “The beginning of the depression in Germany: Investment and the capital market,” Economic History Review 36 (1983): 402Google Scholar.

105 Inasmuch as a repaid advance will reduce advances and deposits by the same absolute amount, thus reducing the advances to short-term liabilities ratio.

106 Lansburgh discerned this sequence as early as 1929: see his “Die Berliner Grossbanken im Jahre 1929,” Die Bank (1930), 564, 566.

107 Der Bankkredit, 168.

108 Hagemann, Verhältnis, 27, 79–81, 185; cf. Weber, Depositenbanken, 265.

109 Hagemann, Verhältnis, 175–82; Weber, Depositenbanhen, 381–82.

110 The considerable bank loans shown to the chemical industry were to the less successful firms, not to I.G. Farben: Hagemann, Verhältnis, 104–5.

111 Der Bankkredit, 168–69.

112 Hagemann, Verhältnis, 124.

113 Ibid., 52–54; it may partly also reflect the greater bureaucratization of the now more centralized credit banks.

114 Materialien zur Vorbereitung, 130; Weber, Depositenbanken, 180ff.

115 In 1933, 46 percent of the total loaned by bill discount and advances by the Berlin great banks was loaned in sums in excess of 1 million reichsmarks (14 percent in the case of provincial credit banks). At the other end of the scale, all credit banks loaned only 781,000 reichsmarks in sums of less than 20,000 reichsmarks. This was about half of the total short-term business and private lending by savings banks—almost all in sums of less than this amount. Untersuchung des Bankwesens 1933, vol. 2: Statistiken, 340–41, 381. Cf. Der Bankkredit, opposite 163.

116 This is implicit or explicit in, for example, Der Bankkredit, 155–67; Materialien zur Vorbereitung, 132; Fischer, “Die fehlerhafte Kreditpolitik,” 528ff., etc.

117 The “Macmillan gap” was the difference between the cost and ease of borrowing by large and by small firms, noted by England's Macmillan Committee, which reported in 1931. See esp. Hagemann, Verhältnis, 37ff. Among a large contemporary literature, see also, Lansburgh, A., “Die Finanzierung des Kapitalbedarfs der Mittel- und Kleinindustrie,” in Kapital und Kapitalismus 2, ed. Harms, B. (Berlin, 1930)Google Scholar; Schulz-Kiesar, P., “Das langfristige Kreditproblem der mittleren Industrie,” Bankarchiv 27 (1927–1928)Google Scholar.

118 Cf. Weber, Depositenbanken, 229.

119 Tilly, Richard, “German banking, 1850–1914: Development assistance for the strong,” Journal of European Economic History 15 (1986): 113–52Google Scholar; Tilly, , “Mergers, External Growth, and Finance in the Development of the Large-scale Enterprise in Germany,’ Journal of Economic History 42 (1982): 629ffCrossRefGoogle Scholar; Weber, Depositenbanken, 179–80, 203, 292.

120 Hagemann, Verhältnis, 162–64.

121 Ibid., 160; 134, 142, 169, 171.

122 James, The German Slump, 141–46.

123 Hagemann, Verhältnis, 127–29.

124 H. Irmler, “Bankenkrise,” in Währung und Wirtschaft in Deutschland, 1876–1975, 291.

125 For the following, see Born, “Vom Beginn des ersten Weltkrieges,” 124–37; Stucken, Deutsche Geld- und Kreditpolitik, 92–115; Haase, “Die Krisenmassnahmen des Jahres 1931,” Untersuchung des Bankwesens 1933, part 1, vol. 2.

126 Schuker, Stephen, American “Reparations” to Germany, 1919–33, Princeton Studies in International Finance, vol. 61 (Princeton, N.J., 1988): esp. 73–81Google Scholar.

127 In fact the Reichsbank temporarily purchased good bank advances in August 1931: Haase, “Die Krisenmassnahmen des Jahres 1931,” 71.

128 See Bopp, “Politik,” 146.

129 The banks' purchases of their own shares in autumn 1930, in order to maintain their own value, had much aggravated this problem: Weber, Depositenbanken, 339. This was standard bank practice: for example, regarding 1925, see Goldschmidt, Das deutsche Grossbankkapital, 85.

130 On the negotiations preceding this merger, see Gossweiler, Grossbanken, 381–91.

131 Wandel, E., “Das deutsche Bankwesen im Dritten Reich,” in Deutsche Bankengeschichte 3: 175Google Scholar.

132 Pohl, Die Konzentration, 388.

133 Cf. Weber, Depositenbanken, 68. With due respect to Lüke, R. E., Die Berliner Handelsgesellschaft in einem Jahrhundert deutscher Wirtschaft (Berlin, 1956), 225–26Google Scholar, the BHG suffered deposit losses equal to or more severe than those at other banks—whether “voluntary” or not! Its survival is more likely du e to the greater flexibility of its loans—generally to the largest firms (cf. Untersuchung des Bankwesens 1933, part 2: Statistiken, 350, col. 2).

134 Born, “Vom Beginn des ersten Weltkrieges,” 151–52. In 1939 the Supervisory Office was absorbed by the Reich Economics Ministry: Wandel, “Das deutsche Bankwesen,” 172.

135 Stucken, Deutsche Geld- und Kreditpolitik, 107.

136 Konjunktur-Statistisches Handbuch (1936), 140.

137 Haase, “Die Krisenmassnahmen des Jahres 1931,” 76.

138 Born, “Vom Beginn des ersten Weltkrieges,” 133.

139 Mura, J., “Zur Geschichte des deutschen Sparkassenrechts,” Bankhistorisches Archiv 9 (1983): 16–21Google Scholar; cf. Born, “Vom Beginn des ersten Weltkrieges,” 133–34.

140 For the following, see Wandel, “Das deutsche Bankwesen,” 178–82; Hardach, “Banking and industry,” 228–31.

141 Wandel, “Das deutsche Bankwesen,” 176.

142 Cf. Fischer, O. C., “Das deutsche Bankwesen”, in Probleme des Deutschen Wirtschaftslebens: Festschrift für H. Schacht, ed. Deutschen Institut für Bankwissenschaft und Bankwesen (Berlin, 1937)Google Scholar. The 4th edition of Weber's Depositenbanken engages the same issue: for example, 235, 266–67, 351–57.

143 Schoenbaum, D., Hitler's Social Revolution: Class and Status in Nazi Germany, 1933–1939, 2d ed. (New York, 1967), 275Google Scholar.

144 Deutsches Geld- und Bankwesen in Zahlen, 1876–1975, ed. Bundesbank, Deutschen (Frankfurt/Main, 1976)Google Scholar, section DII. For an account of the “business of banking’ in the Nazi prewar years, see Abs, H. J. and Schmidt, E. W., “Wandlungen des bankmässigen Kreditgeschafts,” in Probleme und Aufgaben des deutschen Geld- und Kreditwesens: Festschrift für O. C. Fischer, ed. Deutschen Institut für Bankwissenschaft und Bankwesen (Berlin, 1942), 81–97Google Scholar.

145 Irmler, “Bankenkrise, ’ 325; Erbe, R., Das national-sozialistische Wirtschaftspolitik 1933–1939 im Lichte der Modernen Theorie (Zurich, 1958), 135–37, 143–45Google Scholar; Abs and Schmidt, “Wandlungen,” 89. A demand- determined decline in the London clearing banks’ advances ratios during the 1930s is ascertained by Collins, Money and Banking, 253–55. Cf. Weber, Depositenbanken, 197.

146 Industrial fixed investment from Statistisches Jahrbuch für das Deutsche Reich (1938), 566. Deflated by Gewerbliches Inventor (industrial equipment) and Tiefbau (civil engineering works) in 3:1 ratio, from Hoffmann, W. G. et al. , Das Wachstum der deutschen Wirtschaft seit der Mitte des 19 Jahrhunderts (Berlin, 1965), 570Google Scholar.

147 Weber, Depositenbanken, 233–35. Abs and Schmidt, “Wandlungen,” 90ff., indicate that after 1936 bank credit for munitions investment became more frequent.

148 Stucken, Deutsche Geld- und Kreditpolitik, 122–23; cf. Wandel, “Das deutsche Bankwesen,” 157–67. The “me-fo” bills were “armament credits,” drawn by firms such as Krupps and Siemens on a fictitious firm, the Metallurgische Forschungsgemeinschaft. This created specious commercial bills that the Reichsbank could legally discount.

149 Erbe, Wirtschaftspolitik, 65; W. Albers, “Finanzpolitik in der Depression und in der Voll-beschaftigung,” in Währung und Wirtschaft in Deutschland, 362.

150 Schacht had intended them as genuinely self-liquidating out of forthcoming revenues: cf. K. Hansmeyer and R. Caesar, “Kriegswirtschaft und Inflation,” in Währung und Wirtschaft in Deutschland, 378–86.

151 Stucken, Deutsche Geld- und Kreditpolitik, 120–22, 126.

152 Cf. Deutsches Geld- und Bankwesen in Zahlen, section DII, Table 1.09.

153 Irmler, “Bankenkrise,” 324.

154 See also Pohl, Entstehung, 9, on bank caution.

155 London clearing banks also lost ground in the 1930s to other credit institutions, but apparently for different reasons: Collins, Money and Banking, 201–2, 212, 216–17; Pohl, Entstehung, 96.

156 Hoffmann, Wachstum, 509; Deutsches Geld- und Banhwesen in Zahlen, section DII, Table 1.15.

157 Wandel, “Das deutsche Bankwesen,” 3, 166; Erbe, Wirtschafispolitik, 50–53. In curiously similar fashion the London clearing banks also became agents for state financing in the late 1930s: Collins, Money and Banking, 250.

158 This particularly impaired the business of mortgage banks: see H. Kissler, “Der deutsche Immobiliarkredit seit der Inflation,” in Probleme des deutschen Wirtschaftslebens, 220–25, 239.