The term 'Nazi' is now commonly explained as being an abbreviation of 'National-Socialist'. That was not always the case.
The use of the term Nazi is a well-established convention in English. It emerged around 1924 among opponents of National Socialism, who borrowed it from the nickname Nazi (from the masculine proper name Ignatz, the German form of Ignatius), meaning “a foolish, clumsy, or awkward person.” The NSDAP briefly adopted the Nazi designation as what the Germans call a “spite word,” but they soon gave this up and generally avoided the term, considering it derogatory. Before 1930, English speakers had called the party members National Socialists, a term that dates from 1923. The use of “Nazi Germany,” “Nazi regime,” and so on was popularized by German exiles abroad. From them, the term spread into other languages and eventually was brought back to Germany after the war.
Anson Rabinbach & Sander L. Gilman (Eds): "The Third Reich Sourcebook", University of California Press: Berkeley, Los Angeles, London, 2013, p 4.
The above is probably not entirely correct regarding the timeline.
For sure it's quite underdeveloped in describing the process and providing evidence for this description.
It seems that in 1922 Kurt Tucholsky connects Austrian provincialism and chauvinism to the political situation in Berlin:
I am neither a relative nor a relative of the accused (we would both strongly forbid it) - but as far as the immigration of foreign elements is concerned, there is one case where I liked to climb onto the Berlin City Hall and, looking at the capital lying at my feet with tears fluttering around my eyes, would say: "You shouldn't have it! Namely the "Nazis" not Berlin.
Don't look at me, reader. Let us quickly agree that by the "Nazis," I mean that certain genre of the Austrian, Moravian, and especially Viennese artist folk, which begins to pollute the above-mentioned Berlin in the most violent way. But we don't want that any more.
I know exactly what an unfortunate role the Poznan-born Berliner plays on journeys ("Det is der Kölner Dom! Haben Se keenen größern?"). But no Berliner has ever been as cheeky and local-chauvinistic as this kind of "Nazis" (which I deliberately don't call Austrian, because Otto Weininger is one and Peter Altenberg and Karl Kraus and Alfred Polgar - but we agree who we mean).
The problem here is that Tucholsky may allude to NSDAP people but uses the term here to insult someone ('them'?) as something like 'stupid Austrian Rednecks'. That is the reason why the following quote has the question mark:
The Illustrierte Lexikon der deutschen Umgangssprache by Heinz Küpper (Stuttgart 1984) states - in analogy with the Historical Dictionary of German Figurative Use by Keith Spalding (Oxford 1984)
"The abbreviation 'Nazi' referred in 1903 to the 'Nationalsozialen' under Friedrich Naumann.
For the National Socialist first (?) documented by Kurt Tucholsky in 1923. In any case, Nazi propaganda minister Dr. Joseph Goebbels is not the creator" (p. 2021). ––
The first known use of the word National Socialist is, by the way, even older; Cornelia Berning ("Vom 'Abstammungsnachweis' zum 'Zuchtwart': Vokabular des Nationalsozialismus", Berlin 1964, p. 138) she proves it for 1887 in the German Adelsblatt.
Under the heading "Fürst Bismarck der erste Nationalsozialist" (Prince Bismarck the First National Socialist), it says:
"The state is not, according to today's party system, a sum of individual wills, but the overall will as an expression of the National Spirit. Therefore, however, he knows, as only One God, also for the present only one reasonable party concept, namely, so one could say, National Socialism with the One Program of the Christian commandment of justice and love. The first representative of such a Unity National Party can be recognized in Prince Bismarck".
(Own translation, links added)
But looking through old newspapers it remains unclear exactly when the term 'Nazi' was so widely understood in Germany as to refer to National-Socialists.
For example, as late as 1925 the Social-Democrat newspaper Vorwärts still contains ads like the following:
( transl Cheerful artist games. Famous stage artists and Nazi Volkmann. The famous entertainer.)
Here it seems to be an abbreviated first name, Ignatz/Ignatius. But it may be quite a high brow satire stage name? Either way, it seems that in newspapers of the first half of the 20s 'Nazi' was either a harmless short form of a common name or referring to the established stage character of 'stupid Austrian'.
The earlier political abbreviation — and content wise: politically not very related — has another etymology:
When did that change?
What is the earliest example of the usage of 'Nazis' to refer clearly and exclusively to the National-Socialists of the NSDAP?
It would be great if there would be an article in a paper at the time explaining to readers that 'Nazis' has a certain meaning (acquired), attached to the political party.