German bankers carrying sacks of money, 1923. Photo by Georg Pahl. Published with permission from the German Federal Archive.

March 5, 1933 was the date of the election that gave the Nazis control of the Reichstag. Because of that, I’d like to discuss Hitler’s rise to power, which is one of the most dramatic and yet unbelievable stories in the history of man.

Hitler is a terrible example of how all of civilization can be irrevocably changed by the presence of one individual. The question is: How could Hitler have done what he did and why did the world let it happen? A study of history shows that the ground was prepared for him. He did not appear in a vacuum.

The German government after the First World War was called the Weimar Republic, controlled basically by two centrist parties, the Social Democratic Party and the Catholic Alliance. Because of the vengefulness of France and England after the war, Germany was required to pay tremendous war reparations. But the armistice allowed the reparations to be paid off in German currency, so in order to meet the payments, the Weimar Republic purposely debased their currency.

In other words, let’s say the German government had to pay a billion marks. A billion marks could, at one time, have been worth a billion dollars, but when you print a billion marks and just throw them out there, then a billion marks is worth ten cents. The Weimar Republic began printing money in denominations of billions and trillions.

That policy effectively knocked the reparations down, but it also destroyed the German middle class. People who had pensions or who lived on fixed incomes were left with nothing. People had to go grocery shopping with wheelbarrows full of money. It has become history’s classic case of hyperinflation. And most of all, it created a large class of dissatisfied people who hated the Weimar Republic.

Nazi propaganda poster that reads, "No one shall go hungry! No one shall go cold!" From the German Propaganda Archive, collected by Professor Randall Bytwerk of Calvin College.

In the midst of this turmoil, arose two extremes, each of whom wanted to topple the Weimar Republic. On the left were the Communists, and on the right were the “volkishe” parties, of which the Nazi party was only one. This was the fissure that cracked open German society. There were violent strikes in the streets, back and forth fighting, rioting, the red flag waving. People were killed. And the people of Germany, who feared Communism and abhor chaos, sided with the “volkishe” parties, who promised to establish law and order. Better to have law and order and break a few heads than to live with that chaos. In fact, part of the Nazis’ early success was that they mobilized most of the leftist street forces and brought them in under their banner. They performed just as well for Hitler as they would have for the Communists. There’s a certain identity of purpose and style with totalitarian dictators.

Hitler still may not have made it. The Nazi party was not a major force in German politics in the 1920’s. But then, destiny intervened with the stock market crash of 1929. The Great Depression wreaked havoc in Germany. Hundreds of thousands of people were unemployed. People were starving. And the Weimar Republic was incapable of dealing with it.

People want instantaneous, easy, solutions. They want a savior. They also want a scapegoat. Hitler provided both. He was the savior, and the Jews were the scapegoat. And that lethal message brought more death and destruction than was seen in all human civilization.

For more on the dramatic yet tragic 20th century, please check out our documentary film series, Faith and Fate.

Baron Edmond de Rothschild

There is a tendency in very wealthy families for some of the children to divest themselves of all business interests and become philanthropists. It was true in the Ford family, the Rockefeller family, and the Carnegie family. It’s almost like repentance for how the money was made. They try to give it back to the people.

Baron Edmond de Rothschild of Paris was in his late twenties when he decided to become a philanthropist. During the Irish potato famine of 1847, he donated more money to the starving Irishmen than some of the most prominent families in Britain who actually drew their income from estates in Ireland, but what he wanted was a Jewish cause. How he found one goes to prove how life is stranger than fiction. Samuel Mohilever, a Yiddish-speaking rabbi from Bialystok, founded a movement called “the Lovers of Zion.” It encouraged Jewish settlement in the Holy Land, and this was well before Herzl’s political Zionism. He heard about the Baron and went to see him in Paris. I don’t know how they communicated. Rabbi Mohilever didn’t speak French, and the Baron didn’t speak Yiddish, but somehow Rabbi Mohilever got through to him, and the Baron invested millions in thirty-nine colonies in the Land of Israel, many of which are thriving cities and towns today – Rishon Le’tzion, Zichron Yaakov, Binyamina, Gedera, Rechovot. In 1882, he opened the Carmel Winery, which remains Israel’s biggest producer of wine. And the Rothschild Foundation continues to distribute millions each year to worthwhile causes.

Carmel Wine Company in northern Israel in the 1890's

Another outstanding Jewish philanthropist, a predecessor to the Baron, was Sir Moses Montefiore. His is not quite a rags-to-riches story, but it’s a combination of fortuitous events. He was born to a Sephardic Jewish family in London in the late 1700’s and was employed as a clerk in the banking house of Nathan Mayer Rothschild. There were no restrictions on insider trading then like there are today, so Montefiore got in on the action. He became an independent millionaire simply because the Rothschild wealth rubbed off on him.

When Montefiore became wealthy, he did a very noble thing. He dedicated the rest of his life to philanthropy on behalf of the Jewish people. Like the Baron, he was only in his twenties when he made this decision, and he lived to be 100, so for nearly 75 years, he acted as the representative of the Jewish people in places where no other Jew had influence. He was knighted by Queen Victoria and was a leading member of England’s aristocratic establishment. But he never forgot his Jewish roots, and like the Baron de Rothschild, used his wealth to build up the land of Israel.

There is a famous legend about Sir Montefiore. It is said that in the basement of his palatial home, he kept a coffin, and every night before he’d go to sleep, he’d put on his shrouds and lie in it for a while. He is reputed to have said that it was very good for eliminating arrogance.

Whether that story is true or not, the fact that such a story even exists about him shows us his character and how highly the Jewish people regarded him.

From the philanthropic accomplishments of these great men, we see that there’s no limit to the good that can be done with money. Unfortunately, there’s also no limit to the corrosion it can cause if misused or handled dishonesty. Wealth can be good, and it can be bad. It all depends on what you do with it.

Amschel Mayer Rothschild

In the Middle Ages, the Church, in a misapplication of the Biblical prohibition against charging interest, forbade interest in all instances. The Talmud, in contrast, created an economic system in which loans could be converted into investments, so interest could accrue from them, but under the Christian interpretation, no credit market was possible. The way the Church got around that was by forcing the Jews to become the bankers. Back then, though, they were called “money lenders,” which is a much more pejorative term. “Banker,” at least at one time, represented a term of honor.

Jewish money lending worked as follows. The Count or nobleman of the town would loan money to the Jew, and the Jew in turn would loan money to the non-Jewish peasants. The Jew became the middleman, which was a very dangerous position. The interest rates were usurious in those times – 30% or 40% – so the peasants had a hard time paying anything back. And if the Jew didn’t collect the money, the nobleman would kill him. Therefore, the Jew had to have a large spread in the middle in order to be able to cover his losses and still make a living.

In the 18th century, there was a Jew in Frankfurt Am Main by the name of Mayer Amshel Rothschild. Like many other Jews, he was a money lender, except that among his debtors was the Duke of Bavaria. Rothschild came up with a brilliant idea. He had five sons, so he sent each one to a different country. One went to London, one went to Paris, one went to Vienna, one went to Naples, and one stayed with him in Frankfurt. That created what we today call “international banking.” Until then, if you wanted to send money from Germany to England, how would you exchange the currency? Who in Germany trusted someone in London to do this? The same principle that the Sephardic Jews used in trade, they brought to the next level in a world whose economy had become far more complex.

Because of the trust between the brothers, the Rothschilds created an international banking system, and within a century, they were among the wealthiest families in the world, and they remained so until the Nazis confiscated everything they had. They have since rebuilt themselves, but never to what they once were, relatively speaking. But that became a new concept in the world: that you could have a banking company in Switzerland with offices in New York, London, and Paris, and everybody could do business that way, crossing international borders.

Natan Mayer Rothschild

There is a legend told that on the day of the Battle of Waterloo, Nathan Mayer Rothschild came to the floor of the London Stock Exchange, leaned against a pillar, and started selling. It was well known that the Rothschilds had their own independent sources of information and intelligence, and nobody knew the results of the battle, so when he began to sell, everyone thought that England had lost, and they began selling, too.

That forced a panic in the market. As much as 15%-20% of the value of the stocks fell in about three hours. And after they had fallen so low, Rothschild turned around and began buying. It is said that he knew all along that the Duke of Wellington had defeated Napoleon and that the British market would go up. And when the official news came the next day that the British had won, the market went up 1000 points, making Rothschild even wealthier. It is reputed that on that coup alone, a substantial amount of the Rothschild fortune was made.

That legend has been used against the Jewish people because somehow it doesn’t seem fair. Nevertheless, that was how capitalism operated in those days. But great wealth has a very positive side – charity – and the Rothschilds excelled at it.

Kai Feng Jews

A Christian merchant in 12th century London once remarked, “As long as Isaac of York trusted his brother Jacob of Marseilles, and both of them trusted their cousin Joseph of Jerusalem, all three stood to make a profit.”

That wasn’t true just in the Middle Ages; it was true in the ancient world as well. Back then, everything was paid in coinage, which was a severe hamper on trade. But Jews early on were successful on the silk and spice routes. They had outposts from the Middle East all the way to China, and all because they invented what we today call “letters of credit” or “checks.”

Paper money was first invented by the Chinese in the 11th century, but evidence of the first check came from the geniza of the Great Ezra Synagogue of Cairo, which dates back to the 9th century. A geniza is a storage room where Jews bury holy writings that are forbidden to be thrown out, but people didn’t just use the geniza for holy writings; they put everything there. Some of the items that were found were of enormous scholarship value, and some of them were just ancient grocery lists. Professor Solomon Schechter, under a grant from Cambridge University, identified over 45,000 different items from the Cairo geniza. One was a child’s report card in which the teacher wrote to the parent, “Your child is an underachiever.” They had those, even in the 10th century.

Cairo Genizah Fragment from Maimonides' son

The check found was written by a Jew from Baghdad to a Jew in Cairo, and it read, “Please give Joseph, the bearer of this check, a hundred coins,” and it’s signed. So good old Joseph didn’t have to walk around with a hundred coins in his pocket. He walked around with that piece of paper, which would result in money. That could only work because the Jew in Cairo trusted the Jew in Baghdad. Usually, the Jews involved were related to each other. And that is why that 12th century non-Jew made that that statement. While everybody else was dragging coinage along with them – and it was dangerous; there were bandits along the way – the Jews carried these “letters of credit.” When a Jew came to Kai Feng, China with a letter from his cousin Solomon in London saying, “Give the guy spices. I’ll settle up with you later,” that was a matter of trust. I don’t think that it is for naught that the American government prints, “In God We Trust” on its bills.

Now as we all know, trust depends upon honesty. Honesty is a given in Jewish Law.

When I first came to Israel to live, my wife and I wanted to carpet one of the rooms in our home. We went to a certain carpet store in Jerusalem owned by a nice Persian Jew. We ordered the carpet, it was delivered, and I paid for it. Everything was fine. We went back to the States for a few months, and when we returned to Israel, we decided to carpet the next room, so I went back to the same store. As soon as I walked into the door, the owner jumped out of his seat like he was electrocuted. He said, “Rabbi Wein, I’ve been looking for you a whole year!”

“Oh, no,” I thought to myself. “The check bounced.”

The man took out his wallet where he had 52 shekel wrapped up in a rubber band with a paper with my name on it. He said, “I refigured the bill. I overcharged you 52 shekel.”

That’s an impressive story, but really, that’s really the way it’s supposed to be. And as we have unfortunately learned in recent times, only within the framework of complete and exacting honesty can the economy function properly.

If anyone has come to this article for financial wisdom or advice, I’d like to disabuse you of that at the onset. I have no more idea than you do as to how this turmoil will finally settle. Hopefully, it will settle soon.

What I want to explore is why the Jewish people has such an intimate connection with finance. In the eyes of the world, that connection is often completely exaggerated, but there’s an element of truth to it. And that element of truth stems from three sources: the Talmud itself; the simple practicality of the types of work that Jews were allowed to do; and the historic association of Jews with great financial enterprises. So let’s take this tour of monetary history together.

The Talmud sees money as an important thing. The Catholic Church, in contrast, preaches poverty as a virtue. Judaism has never done that. The Talmud states, “An impoverished person is like a dead person.” By that, it means that a person who doesn’t have the wherewithal to support himself or to help others is hampered in what he can accomplish.

The state of Israel is a good example of that. If the Jewish people had not invested hundreds of millions of dollars in Israel over the years, how would the state have arisen? How would we have all of the advantages that we now have?

Therefore, the Talmud has a high opinion of wealth. But, as in everything else in Judaism, it’s a matter of balance. Wealth is something, but it is not everything. Therefore, the pursuit of wealth must always be tempered by other values.

In the ancient world, the value of money was equal to the weight of the coin. Was it silver? Was it gold? How many grains? That told you what the coin was worth. But coinage impedes commerce. If you want to buy the Empire State Building for the bargain price of 80 million gold coins, you won’t be able to get on the boat. Therefore, in the ancient and medieval world, finance as we know it today was impossible. There was a limited number of gold and silver coins, but who could carry them all over the world?

The Talmud realized the problem and discusses it. Money basically became a matter of trust between people. It’s a psychological thing. The value of the paper of a $20 bill is worth perhaps a penny. But the bill is worth $20. Why? Because you and I have agreed that somehow, it’s worth $20. Psychologically, we have come to that realization that we will accept the piece of paper as being something of value.

Now that’s a leap of faith that requires a sophistication that was lacking in the ancient and medieval world – except amongst the Jews. The Talmud was very astute in its understanding of the economics of currency. It never viewed currency as an absolute value, but rather as a commodity whose value fluctuated relative to other commodities. The Talmud discusses, for example, how much silver could buy how much gold. It’s all very sophisticated and abstract. And the Talmud was written in the 3rd, 4th, and 5th centuries when the rest of the world had no way of dealing with these problems. And that is a great part of the reason that Jews were at the forefront of finance.