It was founded on 1 January 1876. The Reichsbank was the central bank of Prussia, under close control by the Reich government. Its first president was Hermann von Dechend. Before unification in 1871, Germany had 31 central banks - the Notenbanken. Each of the independent states issued their own money. In 1870, a law was passed that forbade the formation of further central banks. In 1874, a draft banking law was introduced in the Reichstag. After several changes and compromises, the law was passed in 1875. Despite the creation of the Reichsbank, however, four of the Notenbanken - Baden, Bavaria, Saxony and Württemberg - continued to exist until 1914. The Reichsbank experienced both stable and volatile periods . Until World War I, the Reichsbank produced a very stable currency called the Goldmark. The expenses of the war caused inflationary pressure and the mark started to decrease in value. The defeat of Imperial Germany in 1918, the economic burden caused by the payment of war reparations to the Allies, and the social unrest in the early years culminated in the German hyperinflation of 1922–23 ]. The mark, formerly backed by gold, evolved into the Papiermark, backed by nothing . Economic reforms, such as the issue of a new provisional currency - the Rentenmark - and the 1924 Dawes Plan, stabilised German monetary development and thus the economic outlook of the Weimar Republic. One of the key reforms caused by the Dawes Plan was the establishment of the Reichsbank as an institution independent of the Reich government. On 30 August 1924, the Reichsbank began issuing the Reichsmark, which served as the German currency until 1948.
Nazi period
The seizure and consolidation of power by the Nazis during the years of the Third Reich also greatly affected the Reichsbank. A 1937 law re-established the Reich Government's control of the Reichsbank, and in 1939, the Reichsbank was renamed the DeutscheReichsbank and placed under the direct control of Adolf Hitler, with Walther Funk as the last president of the Reichsbank, from 1939 to 1945. The bank benefited by the theft of the property of numerous governments invaded by the Germans, especially their gold reserves and much personal property of the Third Reich's many victims, especially the Jews. Personal possessions such as gold wedding rings were confiscated from prisoners, and gold teeth torn from dead bodies, and after cleaning, were deposited in the bank under the false-name Max Heiliger accounts, and melted down as bullion. The defeat of Nazi Germany in May 1945 also resulted in the dissolution of the Reichsbank, along with other Reich ministries and institutions. The explanation of the disappearance of the Reichsbank reserves in 1945 was uncovered by Bill Stanley Moss and Andrew Kennedy, in post-war Germany. In April and May 1945, the remaining reserves of the Reichsbank – gold, cash, and precious stones and metals such as platinum – were dispatched by Walther Funk to be buried on the Klausenhof Mountain at Einsiedl in Bavaria, where the final German resistance was to be concentrated. Similarly, the Abwehr cash reserves were hidden nearby in Garmisch-Partenkirchen. Shortly after the American forces overran the area, the reserves and money disappeared. Funk would be tried and convicted of war crimes at the Nuremberg trials, not least for receiving money and goods stolen from Jewish and other victims of the Nazi concentration camps. Gold teeth extracted from the mouths of victims were found in 1945 in the vaults of the bank in Berlin. The Allied occupation authorities became responsible for German monetary policy in the immediate postwar years. In this role, the Allies continued to issue Reichsmarks as the German banking system was gradually restored. In 1948, the Reichsmark ceased to exist owing to the introduction of the Deutsche Mark in the West and the East German mark in the East. In West Germany, monetary policy was taken over by the Bank deutscher Länder and later by the Deutsche Bundesbank. In East Germany, this role was assumed by the Deutsche Notenbank.
