Hitler allowed banker Ludwig Rothschild to leave prison and flee to the U.S. on $21 million bail
Anschluss of the gold reserve: the consequences of the merger of the economies of Nazi Germany and Austria
Alexey Volynets
In March-April 1938, Austria was annexed to Nazi Germany - the Anschluss. The German term Anschlus, literally meaning "connection", has since become a household name.
The historical and political aspects of this event over the past 85 years have been covered in a mass of books, therefore we will concentrate on the financial and economic side of the Anschluss. Hitler's troops entered the territory of Austria on March 12, 1938, and five days later, the German mark was declared legal tender on the annexed lands instead of the previous shilling.
On the same day, March 17, the gold reserves of the Oesterreichische Nationalbank, the central bank of Austria, were taken from Vienna to Berlin. For Hitler, this was a very timely and valuable gift. The gold reserve saved by Weimar Germany after the First World War reached 455 tons, but it almost melted during the years of the Great Depression and the most acute banking crisis. Having come to power, Hitler received only 80 tons and over the next five years, due to high military spending, he reduced the stock of the precious metal to 15 tons.
The accession of Austria gave Germany 78.3 tons of pure gold and foreign exchange reserves in the amount equivalent to 10 tons of the precious metal. Already a week after the beginning of the Anschluss, the National Bank of Austria, deprived of gold and foreign exchange reserves, was officially liquidated and attached to the German Reichsbank.
Replacing the Austrian shilling with the German mark took longer - the exchange took place until the end of April 1938 at the rate of 1.5 to 1. For three shillings, the German authorities gave two marks - for citizens of the former Austria it was about a third more profitable than the previous rate. Hitler thus offered a kind of bribe to the Austrians.
However, in addition to the money “carrot”, a whip was also used. By April 1938, the Nazi secret services had arrested about 70 thousand people (slightly more than 1% of the Austrian population). Such a scale of repression in such a short time was unprecedented in the world before. The first convoy from Austria to the Dachau concentration camp, located in close Bavaria, proceeded already on April 1, 1938. Soon the Nazis created almost fifty concentration camps on the territory of the former Austria.
Among those arrested in the spring of 1938 were not only political opponents of the Nazis and the Anschluss, but also the financial and economic leaders of the former Austria. In particular, Ludwig von Rothschild was arrested. He was not only the great-great-grandson of the founder of the Rothschild banking dynasty, the richest Austrian, the owner of the largest palaces in Vienna with unique collections of works of art. Baron von Rothschild was also the main shareholder of Creditanstalt (“Creditanstalt”), the largest bank in Central Europe, which controlled over a quarter of the Austrian financial market and a lot of various assets, including in Germany.
In 1931, at the height of the Great Depression, Creditanstalt was on the verge of bankruptcy, which provoked a banking and then a general economic crisis in Germany. Nazi propaganda then declared Ludwig Rothschild, a banker and a Jew, to be the main culprit of the economic troubles that had hit most Germans painfully.
After spending a year in Hitler's prison, Rothschild was released on a $21 million bail (equivalent to about $700 million today), probably the largest bail in history. The former first banker of Austria immediately emigrated to the United States. The mass of ordinary Jews was far less fortunate.
But the Creditanstalt bank itself, under the rule of the Nazis, did not suffer. 48% of its shares after the liquidation of the Austrian state went to the Nazi Reich. On March 26, 1938, Creditanstalt signed a "friendship agreement" with Deutsche Bank, Germany's largest private bank. Until the end of World War II, the former Rothschild bank was active not only in Austria, which was transformed into seven new provinces of the Reich, but also in all other territories controlled by Hitler - in Germany-allied Bulgaria, in the occupied Czech Republic, in the conquered Yugoslavia and Poland.