When Credit Anstalt, Austria's biggest bank, failed in the spring of 1931, Germany was badly affected as well. This resulted in the strengthening of the anti-democratic Fascist and Nazi movement in Austria and Germany respectively.

Credit Anstalt faced troubles when it swallowed a debt-ridden rival bank, but found it could not solve dissolve the debts during the era of Depression. 70 percent of Austrian trade and industry was dependent on the bank but the government could not help because it was also facing financial woes itself.

Nervous customers of Credit Anstalt and other Austrian banks rushed to withdraw their funds. Fear spread to Germany, causing a bank crisis over there. In July, the giant German Danat-Bank collapsed; other banks followed before the German government had to declare a two-day bank closure, to prevent further withdrawls. In fact, most of the banks remained shut for weeks. Millions lost their life savings.

Meanwhile, Austria had obtained international loans, but in exchange for French help, Austria had to cancel its planned customs union with Germany. This dash both countries’ best hope for economic recovery.

In Germany, the financial panic led many to join the Nazis, from youths bitter about the failure of old-style politics to middle-class Germans, afraid of a communist takeover sparked by the country’s failures.