Did the Hitler's regime abolish the interest rates in bank loans?

Discussions on the economic history of the nations taking part in WW2, from the recovery after the depression until the economy at war.
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Marcion
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Did the Hitler's regime abolish the interest rates in bank loans?

Post by Marcion » 28 Dec 2014 02:07

I've browsed the internet but did not find any concrete about this topic.

The eleventh point of the 25-point Plan, stated the will to abolish the interest rates in the german economy (Daher fordern wir: Brechung der Zinsknechtschaft!). But when Hitler took power, did he really abolished the interest rates in the german banking system? If so, which was the way he used to kept the money flowing from banks to enterprises and consumers?

Any information about this subject will be very wellcome.

Thank you in advance.

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Christian Ankerstjerne
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Re: Did the Hitler's regime abolish the interest rates in bank loans?

Post by Christian Ankerstjerne » 28 Dec 2014 03:47

Several points of the 25 point programs were conveniently forgotten once Hitler seized power, including the 11th. The 25 points called for a socialist economy that seems to borrow significantly from Marx, while the economy of Nazi Germany was a fairly classic state capitalist economy, though excessively fueled by debt and rife with nepotism.

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Re: Did the Hitler's regime abolish the interest rates in bank loans?

Post by GregSingh » 28 Dec 2014 14:31

Below is the Germany's Bank Rate according to Bulletin Mensuel de Statistique, Genève 1939.

1927 5.8%
1928 7.0%
1929 7.1%
1930 4.9%
1931 6.9%
1932 5.2%
1935 4.0%
1936 4.0%
1937 4.0%
1938 4.0%

It was quite high in comparison to some other countries, eg. in 1938 US had 1.0%, UK - 2.0%, France - 3.0%
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Re: Did the Hitler's regime abolish the interest rates in bank loans?

Post by Carl Schwamberger » 28 Dec 2014 20:18

GregSingh wrote:...

It was quite high in comparison to some other countries, eg. in 1938 US had 1.0%, UK - 2.0%, France - 3.0%
Notice how the US economy of 1934 - 38 remained stagnate relative to the others. I can't say what cause & effect was in this. Just that the depression dragging out in the US ran in tandem with low interest rates, and state governments that were mostly fiscally conservative.

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Re: Did the Hitler's regime abolish the interest rates in bank loans?

Post by Christian Ankerstjerne » 28 Dec 2014 23:19

There is nothing odd about that. Lowering the interest rate is one of the methods used to boost the economy, so it is logical that the interest rate would be low at a time when the economy hadn't recovered yet.

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Re: Did the Hitler's regime abolish the interest rates in bank loans?

Post by AJFFM » 29 Dec 2014 17:57

Between 37 and 39 the US slipped back into depression (Unemployment in mid 38 was 19%), and a serious one for that, partly because of Roosevelt's premature cuts to public spending while corporate spending was still sluggish coupled with a hike in interest rates in 36-37.

Before that (mid 33 to mid 37) the economy of the US grew quite strongly compared with other countries.
Last edited by AJFFM on 29 Dec 2014 18:01, edited 1 time in total.

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Re: Did the Hitler's regime abolish the interest rates in bank loans?

Post by recidivist » 29 Dec 2014 20:45

GregSingh wrote:It was quite high in comparison to some other countries, eg. in 1938 US had 1.0%, UK - 2.0%, France - 3.0%
The higher German interest rate could also have been a conscious decision to keep the RM strong - in part for prestige reasons, in part to make imports of various strategic materials cheaper, and in part to encourage investments in eg. the armaments sector.

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Re: Did the Hitler's regime abolish the interest rates in bank loans?

Post by AJFFM » 30 Dec 2014 16:46

I forgot to mention Nazi Germany's governments financial situation during this time.

While Unemployment went down considerably Germany's debt rose significantly due to massive government spending. However much of this debt was not financed by Reichsmarks but instead using out of public circulation debt instruments most notably Oeffa Bills. Price and wage controls introduced during an already depressed economy in the early 30s remained and one such way to control prices was high interest rates that encouraged people to save and we all know that Germany remains to this day the only western economy with massive private savings that match Asian private savings rates.

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Re: Did the Hitler's regime abolish the interest rates in bank loans?

Post by ChristopherPerrien » 30 Dec 2014 20:13

The idea that Jews speread the evil of "loan-capitalism and charging interest" was quite prevalent in the Nationalist Socialist viewpoint. Hitler , Goebbels and Streicher, all made numerous mentions of this in their speeches and writings. It was a hold-over from when Christian were forbidden from charging interest based on biblical (New Testament) teachings as it was considered a sin . Islam also held(holds) the same beliefs. This was the original reason why Jews became so prevalent in the banking industry.

Nazism of course opposed anything considered Jewish or Jewish influence, so forbidding the charging of interest was high in the Nazi ideals. However there simply was no way for German banks and business to have no interest loans , when it was so prevalent in the rest of the world by that time. It would have caused an unsustainable out-flow of German money to other countries.

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Re: Did the Hitler's regime abolish the interest rates in bank loans?

Post by GregSingh » 02 Jan 2015 04:05

Some examples:
DR bond offer paying slightly above a Bank Rate.
Agriculture credit offer.
Housing finance offer.

All are from smaller financial institutions trying to get some attention...

None of the credit offers I've seen actually stated interest rate, perhaps they did not have a "product" available for all?
Possibly they worked on case by case basis and offer different conditions to different clients. Sounds normal for business clients, perhaps they did it to individuals as well?
DR bonds offer 1939.jpg
Agriculture credit offer 1939.jpg
Housing finance offer 1941.jpg
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