4 - The Shadow of National Socialism: Karl Blessing and the Bundesbank in 1965

Summary

Chapter four argues that the shadows of the Reichsbank and National Socialism troubled the Bundesbank well into the 1960s. This was in large part because of the central bank’s president, Blessing. After years of using the president’s inter-war record as a source of credibility, the central bank began to see these historical narratives being challenged. Chapter four examines three case studies that centred on Blessing’s questionable past. The chapter documents the re-emergence in the public sphere of Schacht, Blessing’s mentor during the Reichsbank years. The former Reichsbank president used his notoriety to popularise the term ‘third inflation,’ while accusing Blessing of having a role to play in the second one. In 1965, too, news reports emerged in West Germany of the central banker’s past membership in Himmler’s Freundeskreis. These revelations forced the central bank to intervene covertly in the public sphere, with the aim of killing these stories as quickly as possible. These accusations, and the Bundesbank’s difficulty in addressing them, highlight how the legacy of the inter-war era continued to trouble the West German central bank even two decades after the end of the war.