Occupied Economies: An Economic History of Nazi-Occupied Europe, 1939-1945 1845204824, 9781845204822

Table of contents :
Cover
Contents
List of Tables and Illustrations
Preface
PART 1: INTRODUCTION
1 Occupied Economies and Total War
2 On Total War
3 Economy, Total War and Nazi Germany
4 The Economies of Occupied Europe
PART 2: EXPLOITATION
5 Exploitation: An Introduction
6 Expansion and Exploitation
7 The Periods of Exploitation
8 Dissimilarities in Occupied Europe
9 The Exploitation of Occupied Europe
10 The Hunt for Labour
11 Exploitation: A Conclusion
PART 3: ECONOMIC LIFE
12 Economic Life during the Occupation: An Introduction
13 Financing Occupation and Exploitation
14 Trade
15 Production
16 Conclusions
PART 4: ECONOMIC CONSEQUENCES OF THE OCCUPATION: CONCLUSIONS
17 Consumption
18 Damage
19 Conclusion
Archives
Internet Sources
Bibliography
Picture Section

Citation preview

Occupied Economies

This book is part of the European Science Foundation (ESF) programme ‘Occupation in Europe: The Impact of National Socialist and Fascist Rule’. ISSN: 1753–7894

The ESF is an independent, non-governmental organization of national research organizations. Our strength lies in the membership and in our ability to bring together the different domains of European science in order to meet the scientific challenges of the future. The ESF’s membership currently includes seventy-seven influential national funding agencies, researchperforming agencies and academies from thirty nations as its contributing members. Since its establishment in 1974, the ESF, which has its headquarters in Strasbourg with offices in Brussels and Ostend, has assembled a host of research organizations that span all disciplines of science in Europe, to create a common platform for cross-border cooperation. We are dedicated to supporting our members in promoting science, scientific research and science policy across Europe. Through its activities and instruments ESF has made major contributions to science in a global context. The ESF covers the following scientific domains: • • • • • • • • • •

Humanities Life, Earth and Environmental Sciences Medical Sciences Physical and Engineering Sciences Social Sciences Marine Sciences Nuclear Physics Polar Sciences Radio Astronomy Frequencies Space Sciences This series includes Vol. 1

Surviving Hitler and Mussolini: Daily Life in Occupied Europe Edited by Robert Gildea, Olivier Wieviorka and Anette Warring Vol. 2

The War for Legitimacy in Politics and Culture 1936–1946 Edited by Martin Conway and Peter Romijn Vol. 3

People on the Move: Forced Population Movements in Europe in the Second World War and its Aftermath Pertti Ahonen, Gustavo Corni, Jerzy Kochanowski, Rainer Schulze, Tamás Stark and Barbara Stelzl-Marx Vol. 4 Facing the Catastrophe: Jews and Non-Jews during the Holocaust Edited by Beate Kosmala and Georgi Verbeeck

Occupied Economies

An Economic History of Nazi-occupied Europe, 1939–1945 Hein Klemann with Sergei Kudryashov With further co-operation of Gabriella Etmektsoglou, Joachim Lund and Nick Terry

London • New York

English edition First published in 2012 by Berg Editorial offices: 50 Bedford Square, London WC1B 3DP, UK 175 Fifth Avenue, New York, NY 10010, USA © Hein Klemann and Sergei Kudryashov 2012 All rights reserved. No part of this publication may be reproduced in any form or by any means without the written permission of Berg. Berg is an imprint of Bloomsbury Publishing Plc. Library of Congress Cataloging-in-Publication Data A catalogue record for this book is available from the Library of Congress.

British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library. PDF ISBN 978 0 8578 5060 7 ISBN 978 1 84520 482 2 (Cloth) 978 1 84520 823 3 (Paper) e-ISBN 978 0 85785 060 7 (institutional) 978 0 85785 061 4 (individual)

www.bergpublishers.com

Contents List of Tables and Illustrations

vii

Preface

xi PART 1: INTRODUCTION

1

Occupied Economies and Total War

3

2

On Total War

9

3

Economy, Total War and Nazi Germany

19

4

The Economies of Occupied Europe

31

PART 2: EXPLOITATION 5

Exploitation: An Introduction

43

6

Expansion and Exploitation

47

7

The Periods of Exploitation

53

8

Dissimilarities in Occupied Europe

61

9

The Exploitation of Occupied Europe

75

10

The Hunt for Labour

119

11

Exploitation: A Conclusion

173

PART 3: ECONOMIC LIFE 12

Economic Life during the Occupation: An Introduction

183

13

Financing Occupation and Exploitation

189

14

Trade

251

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vi • Contents 15

Production

303

16

Conclusions

367 PART 4: ECONOMIC CONSEQUENCES OF THE OCCUPATION: CONCLUSIONS

17

Consumption

373

18

Damage

413

19

Conclusion

433

Archives

441

Internet Sources

443

Bibliography

445

Picture Section

List of Tables and Illustrations Tables Table 8.1 Table 9.1 Table 9.2 Table 9.3 Table 9.4 Table 9.5 Table 10.1 Table 10.2 Table 10.3 Table 10.4 Table 10.5 Table 10.6 Table 10.7 Table 13.1 Table 13.2 Table 13.3 Table 13.4 Table 13.5 Table 13.6

Spread of GDP and Population over German-controlled Europe in 1938 Costs of Warfare or Occupation for Belligerents and Occupied Countries, Respectively, and Their GDPs Contribution of Each of the Occupied Countries to the German War Economy Active German Clearing Accounts, 1940–1944 Contribution of Continental Europe to the German War Effort Percentage of German Needs for Important Materials and Food that was Obtained from Occupied Europe in 1942 Share of Foreign and Forced Labour in Each Branch, 1939–1944 The Importance of Foreign Civilians and Prisoners of War for the German Economy, 1939–1944 The German Labour Market and its Need for Foreign Labour, 1939–1944 Female Labourers as a Percentage of the German Civil Workforce, 1939–1944 Western Europe and the Protectorate as Sources of Forced Labour, 1940–1945 Labour Recruited in Occupied Europe Forced and Foreign Labour, 1939–1945 Issued Reichskreditkassenscheine (RKKS), 1939–1945 Occupation Costs, 1939–1945 German Deficits in Clearing Accounts with Occupied Europe, 1940–1944 Government Expenditures, Costs of Occupation and Taxation in France, Belgium and the Netherlands, 1938–1945 Internal Financial Consequences of the German Occupation in Three Western Occupied Countries, 1938–1944 Expansion of the Banknote Circulation in Germanoccupied Europe

– vii –

63 94 99 102 105 106 121 122 124 126 145 158 161 198 202 210 216 221 223

viii • List of Tables and Illustrations Table 13.7 Table 13.8 Table 13.9 Table 13.10 Table 14.1 Table 14.2 Table 14.3 Table 15.1 Table 15.2 Table 15.3

Table 15.4 Table 15.5 Table 15.6 Table 15.7 Table 15.8 Table 15.9 Table 17.1 Table 17.2 Table 18.1 Table 18.2

Index of Savings and Bank Accounts in Occupied Europe, 1938–1943 Tax Revenues in a Number of Countries during the German Occupation, 1938–1944 Greek Inflation, 1941–1944 Banknote and Money (M1) Circulation in a Number of Occupied Western European Countries, 1940–1945 Real Exports according to Official Trade Statistics Consumer Prices in a Number of Occupied Countries Wages and Consumer Prices at the End of 1943 Dutch Industrial Development, 1938–1948 GDP, Clandestine Production Not Included, 1938–1948 Some Characteristics of the Occupation Period Influencing the Size of the Shadow Economy in Diverse German-occupied European Countries, 1939–1945 Educated Guesses of the Clandestine Production as a Percentage of the Total Production, 1939–1948 GDP, Clandestine Production Included, 1938–1948 Heavy Industry (Arms and Metals) in the Occupied Soviet Territories in 1942 Raw Material Production and Heavy Industry in the Occupied Eastern Territories, 1943 Galician (Polish) Crude Oil Production Deliveries from the Occupied Soviet Territories to the German Army and the Reich until 31 March 1944 Daily Standard Rations in a Number of Countries, 1941–1945 Rations for Germans and Estonians in Estonia, Summer 1943 Casualties, 1938–1945 Development of the Population in a Number of Occupied Countries, 1938–1948

Plates Plate 1 Plate 2 Plate 3 Plate 4

German map of the economic damage by partisans in the USSR, April 1943 Official structure of the German civil occupation regime in the Netherlands, 1940–1942 Actual organization of the German occupation in the Netherlands, 1940–1942 Organization of the German occupation in the Netherlands from 1942 on

226 230 235 237 263 274 275 316 325

328 330 331 344 346 349 352 380 383 418 419

List of Tables and Illustrations • ix Plate 5 Plate 6

Plate 7

French industrial supplies to Germany, September 1940– June 1943 Weekly transports of the French railroads (SNCF) for December 1941, July and December 1942, July 1943 and January 1944 German maps illustrating the imports (red) and exports (blue) of foodstuffs from the occupied countries during the years 1939/40–1943/44 Plate 7A Plate 7B Plate 7C Plate 7D

Plate 8 Plate 9 Plate 10 Plate 11

Corn Edible fats Meat Total in 1,000 ton corn caloric value

Foreign labour in the German Reich by nationalities, 1943 Clearing between Germany and foreign countries The wartime use of the clearing accounts, 1940–1944/45 German imports and exports from the occupied Soviet territories

Figures Figure 1 Figure 2 Figure 3 Figure 4 Figure 5 Figure 6 Figure 7 Figure 8 Figure 9 Figure 10 Figure 11 Figure 12 Figure 13

Dutch industrial production Dutch agrarian production Dutch GDP and national income in real prices Dutch real and available real national income Production of coal in German-controlled Western Europe in 1942 Consumption levels in Germany and in occupied Europe Production for local use after the German occupier took its share Production for local use after the occupier took its share. Clandestine production is included Production for local use after the occupier took its share. Clandestine production is included Number of babies younger than a year old Potential labour force, that is the population from 15 to 64 years old Mortality among adolescents and young adults between 15 and 39 years old Mortality among women between 15 and 39 years old

319 320 323 324 332 400 401 402 405 420 421 422 423

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Preface This book is the result of an experimental project. It is a monographic work but nonetheless the result of cooperation between a substantial number of people and of a considerable number of meetings and discussions. All of this started in team 3 of the European Science Foundation Program Occupation in Europe: The Impact of National Socialist and Fascist Rule. This team, which worked on the sub-theme The Nature and Development of Local Economies (INSFO), was led by Prof. Richard Overy and Prof. Alice Teichova, who were later joined by Prof. Hein Klemann. It had a number of interesting and inspiring meetings, but in the end there was no final publication. At a more or less accidental meeting in Florence, Sergei Kudryashov asked Hein Klemann to do something about it, and together they decided to take the initiative to produce a final publication. Therefore, on 30–31 March 2007 Kudryashov organized a new meeting in Moscow, titled War, Occupation and Economic Development. Occupied Europe 1939–1945. This conference was financed and organized by the German Historical Institute in Moscow. Here, a number of historians from all over Europe discussed papers they wrote on topics concerning the economic development of occupied Europe. Each wrote on the country or countries he or she specialized in. The idea was that Klemann and Kudryashov would use the regional papers written by these specialists from all over the continent to write a monographic study on the economy of occupied Europe as a whole. In the end this proved harder than expected. The papers of Gabriella Etmektsoglou and Joachim Lund as well as the papers Klemann and Kudryashov wrote—Kudryashov’s were written together with Nick Terry—were used for this book, but, as it was the idea to write a thematically organized and not a geographically organized book, hardly anywhere will one find parts longer than a few lines that are taken directly from one of these papers. The papers were very useful nonetheless, if only because it is almost impossible to read the literature from all over Europe, written in so many languages, without the help of such a group of distinguished colleagues. It proved an illusion, however, to think that we just had to reorganize the papers a little. Much additional research had to be done, calculations had to be made, and new problems resulting from the confrontation of the developments in one part of the continent with those in another part had to be analysed. In the end we managed to write a book that gives quite new insights into the development of the economies of continental Europe during the German occupation, the differences between the diverse parts of Europe and the consequences of these differences for the populations of these countries as well as for their post-war

– xi –

xii • Preface recovery. For the final version of this book and most of the calculations, Hein Klemann is primarily responsible. By mentioning the authors of the papers and listing the papers here we want to thank these colleagues. Further we have to thank the European Science Foundation as well as the German Historical Institute in Moscow for their cooperation. Apart from that we have to thank some people who helped us in very many ways. It is hard to say who was most important. Therefore, we mention them in alphabetical order: Jeroen Euwe, Dr Conny Kristel, Martijn Lak, Erik Roosken and Dr Ben Wubs. Hein A. M. Klemann and Sergei Kudryashov Rotterdam/Moscow 2012

List of Papers Clavin, Patricia, ‘Between Planning and Reality: The Post-War Occupation and Reconstruction, 1940–47’ Etmektsoglou, Gabriella, ‘Introduction: German “Großraumwirtschaft” and Southeastern Europe: “Directed Cooperation” or Exploitation?’ Joly, Hervé, ‘The Economy of Occupied France’ Klemann, Hein A. M., ‘Local Economies in Western Europe, 1940–1945’ Klemann, Hein A. M., ‘Exploitation. The German Exploitation of the Economies of Western Europe’ Klemann, Hein A. M., ‘Financing War and Occupation in Western Europe’ Klemann, Hein A. M., ‘Food and Food Distribution in Occupied Western Europe 1940–1945’ Klemann, Hein A. M., ‘Trade in Western Europe, 1940–1945’ Lund, Joachim, ‘The Strength of Institutional Continuity: Germany’s Trade with Denmark and Sweden, 1940–1945’ Terry, Nick, and Sergei Kudryashow, ‘Eastern Europe: Trade’ Terry, Nick, and Sergei Kudryashow, ‘Eastern Europe: Exploitation’ Terry, Nick, and Sergei Kudryashow, ‘Eastern Europe: “Living off the Land” and the Civilian Food Supply’ Wubs, Ben, ‘Multinationals in Occupied Europe’

Part 1. Introduction

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–1– Occupied Economies and Total War In 1939 and early 1940, one of the widely discussed topics in countries across Europe was the question of what to do in the event of a German attack and a possible military occupation. In the Belgian capital of Brussels, the debate focused on the adoption of a so-called opposition irréductible, a policy whereby all those in positions of authority would leave the country, thus hindering the enemy’s exploitation of the nation’s economy. Others in the Cabinet, however, thought such a dramatic policy unrealistic, especially after September 1939, when the German military forces showed their strength and swiftness in overrunning Poland. These realists were in favour of a résistance mobile—a mobile resistance—meaning that they wanted to leave men with authority within the country to lead the Belgian people during a German occupation. In February 1940, the Minister of the Interior, M. H. Jaspar, nonetheless unfolded an even more extreme plan for an irreducible opposition in which the population as a whole would be evacuated, starting with several thousand highly specialized workers, while, at the same time, a number of factories producing strategic goods would be destroyed.1 In fact, when in May 1940 the German attack on Western Europe came, the British envoy in The Hague advised the Dutch government to destroy all strategic factories and stocks and to discard all thoughts of military resistance as it was felt that the country’s military capabilities were too weak to be effective. The British government’s fear was that the enormous Dutch stocks, especially of petrol, and the country’s production capacity— particularly its shipyards, electronics plants and aircraft factories—would fall undamaged into German hands.2 Jaspar’s ideas, however, went much further than destroying stocks and factories. He planned that in the event of a German attack the Belgian population as a whole would retreat behind the country’s second line of defence and clear a substantial part of the country. If necessary they should seek refuge in neighbouring France, a country which Brussels presumed would continue to resist just as it had in the First World War.3 One unexpected consequence of the plan to move skilled members of strategic industries out of the country was that the highly specialized diamond workers and traders from Antwerp were asked to leave the country and resettle near Cognac in France. Since most of these people were Jewish and left the country during the first days of the German invasion in May 1940, they managed to escape internment in Hitler’s death camps. Of course, the reason for getting these people out of the country had been to prevent an important industry from falling into German hands rather

–3–

4 • Occupied Economies than to save lives—at that time, few could imagine the appalling directions that Nazi anti-Semitism would take in the coming years.4 In Belgium in 1940, the hardship and terror of the First World War, less than twenty-five years earlier, were not forgotten: at that time trenches had been dug and defended by both sides throughout the duration of the war, and the country had suffered greatly as major battles were fought out on its soil. Now, it was understandable that the government should want to safeguard its people from another such experience, but as some members of the government realized, an opposition irréductible was not a feasible solution. At the best of times, the total relocation of a population would be a daunting task for any government, requiring both time and space in which to manoeuvre, but to attempt such a feat while under siege would prove an impossibility, especially for a small, densely populated country such as Belgium. The impracticality of such an idea is immediately apparent if one visualizes the effect of millions of refugees—women and children, the sick and the elderly—all on the move at the same time, with fully packed cars and laden carts, prams and bicycles, pets and livestock. The movement of such vast numbers needing food and shelter, guidance and medical assistance would stretch the organizational skills of any government in peacetime; for a small, highly populated country under attack both on land and from the air, with fleeing masses obstructing its roads, making the movement of military convoys impossible, this would be out of the question.5 Nor was the French government likely to welcome a sudden influx of such vast numbers at a time when it was itself engaged in a life-and-death struggle for survival. This aspect was not even considered, however, and as King Leopold III himself was in agreement with the idea of an opposition irréductible, it became the mainstream line of thinking in the Belgian capital during the final months of 1939 and early 1940.6 The consequence of this was not so much that many Belgians actually attempted to escape when enemy troops were approaching—as far as that happened, it was a natural reaction to the fears raised by memories of the events of 1914—but that little, if any, preparation was made to deal with the practical problems that would confront the nation following a German occupation since it was assumed that by such a time the whole population would have escaped. In actual fact, by August 1940, three months after the start of the occupation, only 135,000 of the ten million Belgians had reached the unoccupied part of France—the area ruled by the Vichy government under German supervision—while some 10,000 had been overtaken by Hitler’s armies in the occupied areas.7 When King Leopold capitulated on 28 May, the overwhelming majority of the Belgian people still remained behind. For them a period began that was characterized not only by political occupation but also by harsh economic exploitation. The purpose behind the opposition irréductible plan had been to prevent German exploitation and redirection of the country’s heavily industrialized economy towards the Nazis’ own military war machine. Belgian politicians, remembering only too well the grim effects of the German occupation of their country in the First World War, feared that this would be repeated. After the war, at the Nuremberg trials in 1946, the

Occupied Economies and Total War • 5 Chief Prosecutor for the Soviet Union, General R. A. Rudenko, accused the German governors in ‘all territories occupied’ of performing simultaneously ‘the function of hangman and plunderer’.8 Such economic exploitation was not only a consequence of the aggressive and racist nature of the German National Socialist ideology which claimed that the ethnicity of the Aryan Germanic race was superior to all other races and so, to their minds, exploitation of all inferior races, especially those of Eastern Europe, was justified, but it was also a result of the material demands exacted by the type of warfare that had evolved in the course of the first half of the century. Thus, Hitler’s conquests, especially in Eastern Europe, were motivated by both racism and the acquisition of land and property. The Führer believed it to be the duty of the völkischen German state to acquire sufficient land and resources to provide for the entire ethnic national community and that only when this had been achieved would the German people be recognized as a major power again. When first expounding on his political ideas in the early 1920s, Hitler wrote that it should be the mission of National Socialism to solve the problem of the imbalance between living space and population and that it should be the target of any German foreign policy to obtain sufficient land to feed all its people, not only its current generation, but all future generations to come; moreover, he believed that such space would be found only in Eastern Europe, especially in Russia.9 Although it seems clear from Mein Kampf that from the very beginning of Hitler’s political career in the early 1920s it had been his intention to exploit newly conquered territories, this can only partly explain the degree to which occupied Europe was exploited during the Second World War and the terrible destruction that was set in motion in order to implement this policy. At the start of the war, the German economic policy was dictated by circumstances and the fact that first and foremost the German army had to win the war. The country was never able to implement a policy of massive colonization and incorporate the eastern conquests into its economy, except for some parts of occupied Poland. Only in the first months after the June 1941 attack against the USSR, when it seemed to the German leaders that the war was as good as won, did Hitler and his gang give orders for the extreme measures they considered necessary for the subjugation of the recently overrun territories. These were not just economic measures—material gain was not their only target; the measures adopted also included elements of a severe ethnic cleansing programme. The term ‘ethnic cleansing’ did not in fact come into being until later, in the 1990s, during the conflicts in former Yugoslavia, when the United Nations defined it as the ‘rendering [of] an area ethnically homogeneous by using force or intimidation to remove from a given area persons of another ethnic or religious group’.10 However, this was precisely Hitler’s intention, and he did not hesitate to use the most severe measures to clear some of the occupied territories of Poland and the Soviet Union in preparation for future German settlement. Since, according to the Nazi ideology, the occupied Soviet territories were inhabited by peoples of an inferior race, the Nazi policy resulted in the deaths through deprivation of millions of Russian

6 • Occupied Economies prisoners of war and the starvation of millions of civilians, whose food was taken to supply the needs of the German Wehrmacht. In addition, instructions were issued prior to the start of the military operation for the murder of Jews and Communist Party officials by special mobile task forces (Einsatzgruppen A, B, C and D), together with the destruction of any major factories, machinery and installations that the Red Army had been unable to destroy before being overrun.11 Later, when it became clear to the German High Command by December 1941 that in fact the war was far from won, Berlin was forced to draw in even more resources. Hence, the original Nazi plan for the initial months of occupation, which had been based on their overoptimistic expectation that the war would quickly be won, was thrown into disarray when they tried to incorporate the devastated territories of occupied Europe into their war economy. Apart from the specific German, or rather Nazi, targets for the conquest of territories for future German settlement and agricultural production, the economic exploitation of all available resources became essential from early on in the war for military reasons. The character of warfare in the first half of the twentieth century, with the evolution of war into total war—that is war requiring ever-increasing numbers of personnel together with rapidly escalating needs for improved armaments and supplies— demanded not only military mobilization but also the absolute focusing of a society’s complete economic and technological resources towards warfare. By 1941, Nazi Germany, which was merely a middle-sized power by comparison to the vast regions and capabilities of the United States, the British Empire and the USSR, found itself ranged against all the major powers of the globe and in desperate need of supplies and reinforcements from wherever these could be found. Hence what had started out as a localized war had become total war, with the result that the exploitation of the Nazi-occupied territories had become inevitable. Thus, before the occupation of Europe and its economic consequences are discussed further, it is necessary to consider in more depth the character and development of early twentieth-century warfare.

Notes 1. Herman van der Wee and Monique Verbreyt, Oorlog en monetaire politiek: De Nationale Bank van België, de emissiebank te Brussel en de Belgische regering, 1939–1945. Deel 1: De Nationale Bank van België 1939–1971 (Brussels 2005) 45 et seq. 2. Rianne Bisseling and Mariska Vonk, Handel gedurende de neutraliteitsperiode (Unpublished thesis, Utrecht University, 1997); Rianne Bisseling and Mariska Vonk, ‘Handel gedurende de neutraliteitsperiode’, in: Hein A. M. Klemann (ed.), Mooie jaarcijfers . . . Enige onderzoeksresultaten betreffende de Nederlandse economische ontwikkeling tijdens de Tweede Wereldoorlog (Utrecht 1997) 34–47. 3. Van der Wee and Verbreyt, Oorlog en monetaire politiek, 45 et seq.

Occupied Economies and Total War • 7 4. Eric Laureys, ‘De Joodse diamantdiaspora en de Antwerpse diamantindustrie 1940–1945’, in: Hein A. M. Klemann and Dirk Luyten with Pascal Deloge (eds.), Thuisfront. Oorlog en economie in de twintigste eeuw. Veertiende jaarboek van het Nederlands Instituut voor Oorlogsdocumentatie (Zutphen 2003) 179–191. 5. Without such complications, the mission of the Belgian railways to supply the armed forces while under fire had already proved to be impossible. See: Paul J. G. M. J. van Heesvelde, ‘De Belgische Spoorwegen en de economische oorlogsvoorbereiding’, in: Klemann and Luyten, Thuisfront, 63–74, here 68. 6. Van der Wee and Verbreyt, Oorlog en monetaire politiek, 37 et seq. 7. Der Chef der Militärverwaltung in Frankreich, Lagebericht für den Monat August 1940, http://www.ihtp.cnrs.fr/prefets/de/d0840mbf.html. 8. Nuremberg Trial Proceedings, Vol. 20, One-Hundred Ninetieth Day, Tuesday, 30 July 1946, Morning session, http://avalon.law.yale.edu/imt/07-30-46.asp. 9. Adolf Hitler, Mein Kampf. Zwei Bände in einem Band. Ungekürzte Ausgabe (Munich 1943) 728 et seq. 10. Cathie Carmichael, Ethnic Cleansing in the Balkans: Nationalism and the Destruction of Tradition (London 2002) 2. 11. See: P. Klein and Andrej Angrick (ed.), Die Einsatzgruppen in der besetzten Sowjetunion 1941/4: Die Tätigkeits- und Lageberichte des Chefs der Sicherheitspolizei und des SD (Berlin 1997).

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–2– On Total War ‘The English maintain that the German people are resisting the government’s plans for Total War. The English say that the Germans want capitulation not Total War! I ask you: Do you want Total War?’ In February 1943, Reich Propaganda Minister Joseph Goebbels asked this rhetorical question to a carefully selected German public. It was one of his greatest speeches, received with hysterical enthusiasm by his audience. Shouting ‘Heil! Heil!’ and ‘Führer, order, we will follow!’ while jumping to their feet, stretching right arms in the Nazi salute and singing ‘Deutschland, Deutschland über alles!’ (Germany, Germany above all!), they made it clear that the German people—at least those selected to be there in the packed Berlin Sportpalast—did not want to give up and were prepared to offer everything to win the war.1 Many think when hearing the term ‘total war’ that this was first introduced in this speech by Goebbels, but Albert Speer, the Reich Minister of Armaments and War Production (who appeared prominently in the Deutsche Wochenschau newsreel of Goebbels’s speech), wrote in his autobiography that this step in Germany’s propaganda war was not a private initiative on the part of Goebbels, but a coordinated action between some of the more pragmatic of the German leaders, including Speer himself. On the one hand, these realists tried to motivate the German people into continuing to sacrifice even more than they had already. On the other hand, they wanted to emphasize to other senior Nazis that the time was past for luxury lifestyles or any form of opposition to a policy of total and systematic concentration of all resources and all economic activity on warfare in both Germany and its occupied territories.2 Total war involves not just an army, but the whole of a society. In such a war it is not just a matter of deploying an expeditionary force of limited numbers, but the total capacity of a nation’s resources; in order to win, its wealth, investments, human lives and all production factors must be staked. Conflicts such as these are a recent development arising from that cruellest and most bloodthirsty period of world history, the first half of the twentieth century. The French Revolution had, however, already produced a significant shift in that direction when, for the first time since the religious wars of the sixteenth and early seventeenth century, it introduced people’s armies, while the Industrial Revolution had enabled not only the increased use of arms and ammunition in warfare but also the input of the latest technological knowledge. When in 1793 the 13-year-old Prussian cadet Carl Clausewitz participated in an Austrian-Prussian campaign against the forces of the French revolutionary regime, he noticed that the French state didn’t just send professional soldiers to the front,

–9–

10 • Occupied Economies but also armed substantial parts of its population. Years later, he wrote that ‘war had again suddenly become an affair of the people, and that of a people numbering thirty millions, every one of whom regarded himself as a citizen of the State . . . By this participation of the people in the War, instead of just a Cabinet and an Army, the whole Nation, with its natural weight came into the scale.’3 Now that a revolutionary people was involved, war was no longer limited; the input of men and material, the use of violence and the targets were no longer restricted. In future, wars would be decided by the size of the armies, while in the long run the production capacity of the conflicting parties, and thus the supply of arms and munitions, would become vital as well. It was the nation state that was responsible for the coming into being of such enormous conflicts and this kind of warfare. Bloody battles between peoples fighting for the survival of their nation, race, freedom, ideology or religion replaced the limited conflicts of princes and aristocrats, who had carefully manoeuvred their armies, concerned that the costs not be too high given the important, but limited interests that were at stake. No longer was war just the final outcome of dynastic conflicts over border areas in which the costs should not exceed the value of the disputed territories—guerres en dentelles—but control of the world or at least substantial areas of it was now at stake, together with the survival of a regime based on a specific ideology, or high-minded values such as social liberty and justice, or national/racial survival.4 To motivate the people to give their all in such a conflict, major political ideologies such as nationalism and National Socialism, communism and Western values were used and misused. Eric Hobsbawm was right when he wrote that the twentieth century was an era of religious wars.5 Total wars were a twentieth-century phenomenon. Such conflicts were not just a matter of the numbers involved, as in the Napoleonic era; they were struggles between nations as a whole which, apart from their enormous military inputs, also involved the entire society, economy, technical skills and reserves. As a consequence of the Industrial Revolution, a home front developed that not only maximized economic production by mobilizing all potential factors, including the labour of women, the elderly and juveniles, but also used administrative means to transfer production to those sectors that could maximize output relevant to the war effort. Even in nonoccupied parts of Europe, during the war, the market economy was taken over, if only temporarily, by governmental regulation. With the Revolution in the late eighteenth century, the French people turned against the traditional elites of court, church and aristocracy; they disputed traditional values, cast doubt on the God-given position of the ruling classes and turned the structures of traditional society upside down. As a consequence, the princes and aristocracy of Europe were concerned by the new ideas and developments and were sympathetic towards the French émigrés. In August 1791, the Holy Roman Emperor, Leopold II, brother of the French Queen Marie Antoinette, met with the Prussian King, Friedrich Wilhelm II, at Pillnitz (Dresden). With the events now taking place in France, these two princes, the two most influential continental sovereigns, were

On Total War • 11 anxious to discuss the French situation with the other sovereign heads of Europe. As the possibility of revolution was now threatening the position of all the crowned heads of Europe, an armed intervention to defend the rights of the French King, Louis XVI, needed to be discussed. In 1792 a primarily Austrian-Prussian army attempted to restore both the King and the Ancien Régime (old order) to France. However, the revolutionaries declared their country a republic and imprisoned the King and Queen. A summary trial found Louis guilty of treason, and he was executed by guillotine; Marie Antoinette was executed nine months later. The people of France were mobilized, not only to defend la Patrie and to guarantee her natural borders, but also to liberate the other peoples of Europe from the repressive power of kings and aristocrats.6 In September 1792, the revolutionary French army defeated the allied Austrian-Prussian troops in the Cannonade of Valmy (now in the Marne Department), whereupon the Assemblée Nationale declared that France would liberate all the peoples of Europe from feudality. After the initial victory of Valmy, however, the French armies were less successful, and in 1793 the new republic had to restructure its armed forces. The fact that it chose to reorganize its forces, rather than simply give up, makes it clear that this was a modern-style war in the ideological sense. In such wars, lost battles are no reason to accept compromise or defeat but, on the contrary, an incentive to mobilize more men and resources. One and a half centuries later, in 1941, when Hitler’s armies were approaching the outskirts of Moscow, according to some accounts, Joseph Stalin considered asking for an armistice.7 However, the war between the Soviet Union and Nazi Germany, like the 1793 wars of revolutionary France against the AustrianPrussian armies, was a battle between opposing ideologies confronting each other in a life-and-death struggle. The Soviet leader made this clear in July 1941 when, in his first wartime broadcast to the Soviet people, he said that ‘the war with fascist Germany cannot be considered an ordinary war. It is not only a war between two armies; it is also a great war of the entire Soviet people against a German fascist army.’8 In other words, according to the Soviet dictator this was total war between peoples driven by opposing ideologies which could end only with victory or disaster. Of course, Stalin did not mention the possibility of defeat in his broadcast, but he knew this was the only alternative to complete victory.9 Hitler realized this as well. For him this war with the Soviet Union, even more than the war he was fighting in the West, was an ideological war. He stated this when he justified his attack against the USSR in his speech to the German people on 22 June 1941, declaring that he ‘as responsible Führer of the German Reich, but also as responsible representative of European culture and civilization’ could only react as he did against the serious threat of Soviet expansion for Germany and Europe. After he sketched the extent of the Eastern Front, he declared that it was the task of this front ‘not only to protect individual countries, but to safeguard Europe and to safeguard the whole of it’.10 By destroying the Soviet state, Hitler wanted not only to extend German living space but also to destroy the power of the Jews, which to his

12 • Occupied Economies mind was personified by the Bolshevik Soviet government.11 In other words, his war, just like Stalin’s, was a holy war against a barbaric enemy. Of course, such ideological battles cannot be pursued without the ruination, possibly even total devastation, of the losing country, its regime and ideology, so that even before either side might start to consider a compromise, it is already too late—too much has already been sacrificed, too many young lives lost and too much hate stirred up. In 1793, after the disappointing military setbacks that followed the French success at Valmy, the revolutionary regime had to mobilize all its available resources, with the result that no fewer than a million additional troops were recruited. Similarly, in 1941, there was no way back for Stalin; he, too, had to stake all his resources on eventual victory. The whole of the Soviet economy was mobilized, and all its young men, and in the partisan army even young women, were sent to the front. Even in the Red Army, substantial numbers of women participated not only as nurses behind the lines but also in combat.12 Although the end result for Stalin was an overwhelming victory, it was achieved only with appalling sacrifices. According to a widely accepted estimate, 26.6 million of the Soviet people—13.5 per cent of the entire population—lost their lives. In view of such inconceivable losses of human life, it seems improper to mention the colossal material damage and destructive exploitation of the Soviet economy that were suffered; however, historians of the Second World War all agree that no other country, not even Germany, suffered to the horrendous extent that the Soviet Union did.13 In warfare, as in so many other aspects of European life, the French Revolution had marked a turning point. According to the revolutionary ideas that became widespread, the legitimacy of power no longer came from God or tradition, but from the people. Consequently, foreign royal dynasties fighting revolutionary France were no longer confronted with an army of mercenaries as in the past, but with a people’s army.14 Although Clausewitz had opposed the ideas of the French Revolution, he was a great defender of such armies. According to him the limitations of eighteenthcentury warfare would result in disaster if the enemy no longer kept its war effort within traditional boundaries. Clausewitz did not defend the escalation of warfare, but he could see no alternative. The Prussian officer did not realize that by accepting the people as a point of departure when forming an army, he had implicitly accepted a different relationship between sovereign and people; he was right, though, in believing that the levée en masse (massive recruitment) of the 1793 revolutionaries had let the genie out of the bottle, and it was impossible to put it back. In future, armies would be conscription armies of the people, and as such payment in kind would not be sufficient motivation. The people would need the additional ideological incentive of knowing that they were fighting for a just cause against an outrageous enemy. According to Stalin, ‘the aim of this people’s Patriotic War against the fascist oppressors [is] not only to avert the danger that is hanging over our country, but also to aid all the European peoples who are groaning under the yoke of German fascism’,15 while Hitler wrote to his soldiers on the Eastern Front that ‘the fate of Europe, the

On Total War • 13 future of the German Reich and the existence of our people are in your hands’.16 Warfare was no longer a straightforward venture; it now also involved a moral incentive. Apart from the use of ideology as motivation, an additional aspect of total war was the use of innovative military technology and increased economic mobilization. In this new warfare, production power and industrial capacity were decisive. This became clear for the first time in the course of the Crimean War (1853–1856), when the Russian Tsar was beaten on his own territory by two modern industrial nations— France and Britain—who fought a war thousands of miles from home. Although initially, in this first trench war, the British army still used guns from the Napoleonic era, the Western industrialized nations proved capable of winning this distant struggle against a power that, having suppressed the Central European Revolutions of 1848, seemed to dominate the Continent. France and Britain proved stronger because the industrial-scale production of arms together with their technical advantages was invincible against the mighty, but outdated, tsarist armies.17 During the US Civil War (1861–1865), warfare again became an affair involving the whole population since the prejudice that many European monarchs felt against arming the general population did not exist on the other side of the Atlantic. The war was lengthy and destructive, and of the millions mobilized on both sides, over 600,000 lost their lives.18 It is now a generally accepted fact that—just as in the later total wars—the North won because of its greater economic strength.19 Not only were railroads and telegraphic communication important for a rapid response to the enemy’s movements, but so was the contribution of industrialization and total mobilization. In the North, war expenditures rose to 75 per cent of its 1859 gross domestic product (GDP), while the South spent more than its total GDP for that year on warfare. That the American Civil War contained many aspects of modern warfare is clear from the fact that neither army hesitated to destroy enemy resources or to use violence against civilian targets in order to undermine the morale of the other side.20 Overall, though, the economic effects of this war were limited. The North used its economic superiority to beat the South, but did so without transforming its economy into a modern war setting. There was no mobilization of women to produce ammunition, nor was there a massive movement of factors of production from the civil to the military sectors of the economy as in twentieth-century total warfare.21 Industrial production power, already of the highest importance during the Crimean War, again proved to be the decisive factor in the American Civil War. This only really became apparent in the next century with the Great War of 1914–1918. In that war, it became increasingly obvious that the civilian economy and its production capacity, ignored by Clausewitz, had become of overall importance to the outcome of a military conflict.22 When, in August 1914, war broke out between the major industrial nations of Europe, none of the participants anticipated that the conflict would last long. On the contrary, both sides thought that it would all be over within a few months and that the armies would be back in their homelands before Christmas. Hardly anyone foresaw

14 • Occupied Economies the development of extensive trench warfare with its relentless bloodshed and slaughter.23 Consequently, apart from the British naval blockade of Germany, there were no immediate plans on either side to adapt their economies to a war footing. It became clear that mobilization in itself was creating severe economic problems only when the conscription of vast numbers of the workforce became necessary: civilian society rapidly lost most of its skilled workers, while the military need for a large part of the rail capacity created severe transport problems. In addition, the use of arms and ammunition in this war was much higher than had been expected. The French army’s anticipated requirement of between 13,000 and 14,000 artillery shells a day rose to between 80,000 and 100,000—between five and seven times as many—while the German army expended more ammunition during each day of the Battle of the Marne (6–9 September 1914) than during the entire Franco-Prussian War of 1870–1871.24 Consequently, after a month or so, the ammunition depots were becoming empty. This was not just a French problem; the German and British armies had similar problems. Although not a decisive factor, it was an important moment in the history of warfare. For the first time, skilled workers among the mobilized soldiers were sent back to the factories, as their experience in that capacity was more important for their countries than their fighting power on the front line. The immediate task was to maximize the production of arms and ammunition to attempt to meet the demands of the armies, which were constantly outgrowing the supplies. Not only did the front need more material resources than had been planned, but its demands were rapidly increasing.25 The old idea that war was in itself no reason to change the normal economic order of a nation had to be abandoned. Military needs for men, food, supplies, arms and ammunition had escalated, and in order to meet these needs in the seemingly unlimited quantities demanded without undermining vital production areas, or even the whole society, economic planning became necessary.26 Both sides were moving towards a situation where the only alternative to total mobilization was defeat, but too much had already been sacrificed for this to be an option. Both found themselves in a similar position and had to take measures to mobilize not only all available manpower for military service, but all other factors for war production as well. At the same time, civilian consumption had to be reduced to free up production capacity for the war effort. From now on, a major war meant not only total military mobilization but also overall economic control in order to maximize resources available for military needs. As a consequence, production, and thus wages and profits, peaked, while civil consumption and private investment declined as few consumer goods were available; in addition, machine production and building activity were strictly concentrated on projects of military importance. This disparity between income and spending in the private sector resulted in inflationary tendencies which could largely be suppressed during the war years but would threaten the post-war world once wartime regulatory measures were eased.27 During the war, governments could regain control of excessive purchasing power among the public by increasing taxes, but this was never

On Total War • 15 enough to solve the inflation problem completely. To prevent rampant inflation from developing as a result of increasing demand for the limited supplies of consumer goods, governments introduced rationing and distribution controls into the consumer market, together with price-control measures. These were intended to ensure a fair distribution of essentials, such as food, clothing and fuel, so that the limited supplies of these goods were available to the civil population at reasonable prices. To achieve this, the use, pricing and distribution of raw materials, labour and machinery were also brought under governmental control. Consequently, in a total war, not only all military but also all civil production had to be regulated by governmental measures. When, in November 1917, Georges Clemenceau became Prime Minister of France, his government proposed mobilization of the whole of French society in order to secure victory. In this context, the new Prime Minister used the term guerre intégrale—integral war.28 The term ‘total war’ would be introduced by General Erich Ludendorff, who tried to implement a similar programme on the German side: Ludendorff had, from 1916 on, managed to obtain almost dictatorial power in the German Kaiserreich via the Imperial Army’s High Command.29 In 1923 this former imperial officer was one of the most authoritative participants in Hitler’s Beer Hall Putsch, and in his book Der totale Krieg—The Total War—of 1935, he explained his social Darwinist ideas on warfare. War, he stated, was the normal situation and peace an anomaly. A nation had to prove its value, strength and healthiness by its victories. When it won a war, the nation’s existence was justified. Fighting and winning wars was therefore the most important duty of any nation state. To do that as well as possible, all political power should be handed over to the military. Politicians had to obey the orders of the supreme commander.30 As society should be orientated towards warfare, all able-bodied men should be sent to the front line, while the activity of the remainder of the population should be concentrated on strengthening the nation. Therefore, all labour, capital and other resources should be strictly controlled by the military. In the light of such ideas, it is hardly surprising that at the end of the war, General Ludendorff tried to bring all labour under military discipline.31 In his total war concept, the differences between the civilian and the military labour forces were lessened—it was not just the army but the whole of society and its economy that were at war. The conduct of a war could therefore no longer be decided by generals on the front line alone; when a country had survived a first surprise attack, this was probably not the best place for decisions to be made. The economic strength and the ability of a society at war to direct its economy towards warfare became more and more decisive. Economic historians of the Second World War are therefore inclined to compare the national incomes and productivity of the opposing sides to decide at what point it became clear that the Allies would win. According to Mark Harrison, the outcome was decided in December 1941: although the war still had a long course to run, the USSR was able to launch a counterattack against the German forces and thus proved its capability to survive a first attack, while, at this point, the USA, with all its economic strength, entered the war

16 • Occupied Economies on the side of the Allies. From then on the economic superiority of the Allies was overwhelming.32 Some even claim that Germany had already lost the war as early as August 1941 when the Wehrmacht proved incapable of defeating the USSR in a single blow,33 but most historians agree that December 1941 was the turning point. It was for that reason that Winston Churchill reacted enthusiastically to the Japanese attack on Pearl Harbor.34 Richard Overy, however, warns that ‘God does not always march with the big battalions’. He thinks that the extent to which resources were efficiently deployed played a major role as well.35 It seems clear, nonetheless, that in twentieth-century wars between the world’s major industrial nations, economic capacity had become a vital factor.

Notes

1.

2. 3.

4.

5. 6. 7.

This chapter is based on: Hein A. M. Klemann, ‘Totale oorlog en het thuisfront. Een inleiding’, in: Hein A. M. Klemann and Dirk Luyten with Pascal Deloge (eds.), Thuisfront. Oorlog en economie in de twintigste eeuw. Veertiende jaarboek van het Nederlands Instituut voor Oorlogsdocumentatie (Zutphen 2003) 9–33. ‘Aus der Sportpalastrede Goebbels vom 18. Februar 1943’, in: Hans-Adolf Jacobsen (ed.), Der Zweite Weltkrieg. Grundzüge der Politik und Strategie in Dokumenten (Frankfurt am Main 1965) 213–214. Albert Speer, Erinnerungen (Frankfurt am Main 1969) 269; also: Joachim Fest, Speer. Eine Biographie (Frankfurt am Main 1999) 83–84. Carl von Clausewitz, Vom Kriege. Vollständige Ausgabe im Urtext, drei Teile in einem Band (Bonn 1980 19th ed.) 970–971; translation: Carl von Clausewitz, On War, edited with an introduction by Anatol Rapoport (Harmondsworth 1971) 384–385. H. L. Wesseling, ‘De betekenis van 1914’, in: H. L. Wesseling (ed.), Oorlog lost nooit iets op. Opstellen over Europese geschiedenis (Amsterdam 1993) 56–79, here 72. Eric Hobsbawn, Age of Extremes: The Short Twentieth Century, 1914–1991 (London 1994) 5. Peter Alter, Nationalism (London 1985 2nd ed.) 41; E. J. Hobsbawm, The Age of Revolution 1789–1848 (New York 1962) 102. Richard J. Overy, Russia’s War (London 1998) 96. One of Stalin’s top generals, who was responsible for subversive activity, insists in his memoirs that it was a special disinformation operation. He was ordered to spread this rumour in order ‘to weaken German resolve by saying that the Blitzkrieg had failed and a prolonged war was inevitable’. See: Pavel Súdoplatov, Anatoliĭ Pavlovich Sudoplatov, Jerrold L. Schecter and Leona Schecter, Special Tasks: The Memoirs of an Unwanted Witness, a Soviet Spymaster (Boston 1995) 145–147.

On Total War • 17 8. J. V. Stalin, ‘Radio Address July 3, 1941’, in: J. V. Stalin, On the Great Patriotic War of the Soviet Union (Moscow 1946) 6–17, here 15. 9. Overy, Russia’s War, 79–80. 10. ‘Der Führer an das deutsche Volk. 22. Juni 1941’, in: Der großdeutsche Freiheitskampf. Reden Adolf Hitlers herausgegeben von Reichsleiter Philipp Bouhler. III. Band vom 16. März 1941 bis 15. März 1942 (Munich 1943). 11. Ian Kershaw, Fateful Choices: Ten Decisions That Changed the World 1940– 1941 (London 2007) 66. 12. Catherine Merridale, ‘Culture, Ideology and Combat in the Red Army, 1939–45’, Journal of Contemporary History, 41 (2006) 305–324, here 306. 13. Michael Ellman and S. Maksudov, ‘Soviet Deaths in the Great Patriotic War: A Note’, Europe-Asia Studies, 46 (1994) 671–680, here 672; Overy, Russia’s War, 287–289. 14. Siep Stuurman, Staatsvorming en politieke theorie. Drie essays over Europa (Amsterdam 1995) 117–118. 15. Stalin, ‘Radio Address July 3, 1941’, 15–16. 16. ‘Berlin, den 22. Juni 1941. Adolf Hitler, Tagesbefehl des Führers an die Soldaten der Ostfront’, in: Der großdeutsche Freiheitskampf. 17. M. W. J. M. Broekmeijer, Strategische economie. De economische problemen van de totale oorlog (Amsterdam 1960) 16. 18. Herman M. Hattaway, ‘The Civil War Armies: Creation, Mobilization, and Development’, in: Stig Förster and Jörg Nagler (eds.), On the Road to Total War: The American Civil War and the German Wars of Unification, 1861–1871 (Cambridge 1997) 173–198, here 179. 19. Stanley L. Engerman and J. Matthew Gallman, ‘The Civil War Economy: A Modern View’, in: Förster and Nagler, On the Road to Total War, 217–238, here 217. 20. Ibid. 220–221. 21. Ibid. 246–247; see also: Roger Chickering and Stig Förster, ‘Introduction’, in: Roger Chickering and Stig Förster (eds.), The Shadows of Total War: Europe, East Asia and the United States, 1919–1939 (Cambridge 2003) 1–23, here 12. 22. Broekmeijer, Strategische economie, 28. 23. Gerd Hardach, The First World War 1914–1918 (Harmondsworth 1987) 57–59. 24. Roger Chickering, Imperial Germany and the Great War, 1914–1918 (Cambridge 2003 3rd ed.) 35. 25. Broekmeijer, Strategische economie, 17–19. 26. Hardach, First World War, 77–79. 27. Broekmeijer, Strategische economie, 57. 28. Roger Chickering, ‘Total War: The Use and Abuse of a Concept’, in: Manfred F. Boemeke, Roger Chickering and Stig Förster (eds.), Anticipating Total War: The German and American Experience 1871–1914 (Cambridge 1999) 13–28, here 16. 29. Hans-Ulrich Wehler, Das Deutsche Kaiserreich 1871–1918 (Göttingen 1973) 212 et seq.; Roger Chickering, Imperial Germany and a World without War: The

18 • Occupied Economies

30. 31.

32.

33. 34. 35.

Peace Movement and German Society, 1892–1914 (Princeton 1975) 75; Hardach, First World War, 63 et seq. Erich Ludendorff, Der totale Krieg (Munich 1935) 115. Chickering, Imperial Germany and a World without War, 75; G. Bakker, Duitse geopolitiek 1919–1945 (Assen 1967) 20–21; also: Wehler, Das Deutsche Kaiserreich, 179–181. Mark Harrison, ‘The Economics of World War II: An Overview’, in: Mark Harrison (ed.), The Economics of World War II: Six Great Powers in International Comparison (Cambridge 1998) 1–42; Niall Ferguson, ‘The Second World War as an Economic Disaster’, in: Derek H. Aldcroft and Michael J. Oliver (eds.), Economic Disasters of the Twentieth Century (Cheltenham 2007) 83–132, here 129. David Stahel, Operation Barbarossa and Germany’s Defeat in the East (Cambridge 2009) passim. Winston Churchill, Memoirs of the Second World War, 1939–1945, Vol. 5 (London 1959) 506. Richard J. Overy, Why the Allies Won (London 1995) 4 and passim.

–3– Economy, Total War and Nazi Germany In Germany, rearmament began as early as 1933 when the Nazis usurped power, but it was only from 1936 onwards that rearmament and war preparations became central elements in the Reich’s policy. That year, Hitler founded the Four Year Plan organization, taking economic planning out of the hands of economic specialists such as the internationally respected financial expert Dr Hjalmar Schacht. With the creation of this organization Hitler set up what Ian Kershaw has called a party–state hybrid, and he gave overall responsibility for it, including authority over the central elements of the German economy, to his most prominent and popular comrade, the flamboyant Hermann Göring. Within the Reich, Göring was building his own empire by shamelessly elbowing aside his competitors among the high-ranking party members and state officials in Berlin. His main aim in this struggle was not so much to get things done his way but rather to extend his power.1 With this appointment, he had to do battle with the old leaders of the economy, who considered economic growth and development a target in its own right. In a way, the moment Hitler gave Göring this prime position over the German economy symbolized the end of the period of consolidation of the Nazi state and of the economic recovery that had followed the Depression of the 1930s. According to Richard Overy, until then politics had served the economy. Now the situation became the reverse, and the recovered economy had to serve the political ends of the regime. Göring’s task was to build a powerful, autarkic economy that would make it possible to fight a war without worrying about economic rationality. In his typical fashion, when setting up the new Four Year Plan organization, Hitler did not remove the state and party organizations which until then had been responsible for this aspect of his policy, nor did he take any responsibilities away from them.2 For instance, Schacht kept his position as Reich Minister of Economics until November 1937, when he chose to resign from this post, which by then had become completely eroded. He even continued to hold the position of President of the Reichsbank until 1939. Schacht, who lacked any power in the party, was easy prey for Göring, whose real struggle was with Germany’s main industrialists. He had to put pressure on them to cooperate. In the First World War, the illusion that war would have little effect on trade and industry was soon dispelled. Consequently, in 1936 war preparation included economic preparation, which in Germany meant, apart from a systematic transition from industrial production to war-related production, striving for autarky. The regime tried to manipulate trade so that in the event of an Allied blockade they would

– 19 –

20 • Occupied Economies be able to obtain raw materials and food supplies from countries that were still accessible to Germany and, above all, countries that could be pressured into cooperating because they were within the reach of the Wehrmacht. Hence, the Balkans and some Central European countries became formally or informally part of the German empire.3 Foremost, however, everything possible was done to replace imports by internal production, especially those imports that might be cut off in the event of a blockade. In this context, Göring tried to require the strategic iron and steel industry in the Ruhr area to use German iron ore. This region was the principal industrial centre of Europe for iron, steel and coal, and most of its industrialists were opposed to this idea. They neither considered it efficient to use the low-grade German ore, nor wanted to adopt the new plans for war preparations. In view of the recovery brought about by Schacht, they wanted him to continue to lead Germany back into the free world economy. These leading industrialists had learned their lesson the hard way after the First World War, when they lost enormous foreign investments across the Western world, especially the iron ore mines in Alsace-Lorraine, which reverted to France in 1919. Like Schacht, they thought that peaceful economic development and relatively open markets were in the best interest of both themselves and Germany, and that autarky in preparation for another war was the last thing Germany needed. Of course, like all conservatives, they were in favour of some rearmament, but not as the sole target of German policy. Recovery of the whole economy, including consumption, and thus of consumer industries, was thought to be of the greatest benefit, not just for their companies, but also for the welfare of the German people. In line with these ideas, the board of the Vereinigte Stahlwerke—the United Steel Works, the largest German steel group—wrote a memorandum in August 1937 on the subject of the newly founded Reichswerke Hermann Göring, the state steel company founded by the new Plenipotentiary of the Four Year Plan. In a meeting of iron and steel barons held in Düsseldorf, the heart of the Ruhr area, the protests of these businessmen focused on the state-owned Reichswerke Hermann Göring, making it clear that they disagreed with the growing economic state dirigisme the Nazis had introduced. It was of symbolic importance that the hall where they met was redecorated for the occasion to ensure there was no place for a portrait of the Führer. According to Overy, this showed that after a ‘brief honeymoon’ big business had discovered Nazism to be ‘an increasingly inappropriate structure for their long-term interests’.4 The National Socialist striving for autarky threatened trade, while rearmament and gargantuan state investments undermined financial stability and private capital markets; trade manipulation strengthened inefficient producers at the expense of competitiveness and regulation, and the growing bureaucracy eroded free enterprise.5 In Göring, however, these courageous businessmen had an opponent who interpreted all opposition as a battle for power, and in such contests he was totally unscrupulous, using every means he could to win. In this particular power struggle overall command of the German economy was at stake. While Schacht and

Economy, Total War and Nazi Germany • 21 the Ruhr industrialists saw the economy as being of prime importance in its own right, and thus believed that it should be a matter for businessmen to decide how to develop it further, the Nazis saw economic production as just another instrument in their political power game, to be manipulated like any other. The Ruhr industrialists were confronted with the Nazis’ understanding of the Primat der Politik. The conflict between the Ruhr entrepreneurs and Göring’s new organization would focus on the use of German iron ore. In 1936 Germany was having to import 66 per cent of all its iron ore supplies, as was also the case with almost all petrol, rubber and nonferrous metals. This could make the country particularly vulnerable during an international crisis. Consequently, for the Nazis, who wanted to concentrate their economic policy on war preparation and rearmament—not only to make the Reich a major European power again, as every conservative wanted, but also to wage war—the use of German ore was seen as a strategic and military necessity. Therefore, to the political leadership, the opposition from the Ruhr entrepreneurs was unacceptable. In March 1937, Göring made it clear what was at stake. In a speech to industrial managers, he emphasized that the industry had to move to the use of German-sourced ores and that if they persisted in refusing to cooperate with this, they would have to sell their mines to those who would comply. Since Hitler wanted them ‘to mine as much ore from German soil as may be required for war needs’, ‘the state must take over when private industry had proved itself no longer able to carry on’.6 At the heart of the conflict was that, for Hitler and his inner circle, economic recovery was only a means to achieving their political target—military recovery to create a Greater German Reich—while for the industrialists economic recovery was their sole target. They thought its fragile start should not be threatened by political interference. The promotion of low-grade German iron ore was a strategic move. For the same reason, synthetic rubber, petrol and other substitutes for imported raw materials were developed, and as the chemical industry had an interest in such developments, the business community could easily be split on this. Göring used all means in his power to win this conflict, and the Reichswerke, a state company that would produce iron and steel with German ore, was only one instrument. With the party, the military (of course in favour of maximum rearmament) and parts of industry behind him, Göring made sure that he emerged as the major power of the German economy. The fact that Schacht resigned in November, only a few months after the meeting of the Ruhr industrialists against Nazi dirigisme, showed that Göring had achieved his aim. Schacht was succeeded as Reich Minister of Economics by Walther Funk, a nonentity who would also succeed Schacht as Reichsbank President in 1939. Notwithstanding his high rank, Funk was Göring’s man with little real influence of his own.7 Apart from power, the target was, of course, to ensure the availability of essential supplies of food and raw materials to the German people, so that they would not again be dependent on supply lines that could be cut off by an Allied blockade, as

22 • Occupied Economies had been the situation in the First World War. However, Germany never managed to achieve complete autarky. As a result of the economic depression, German imports decreased by 68 per cent between 1928 and 1934, but after 1934, when the German economy recovered spectacularly, imports recovered as well, although only by 22 per cent. Consequently, German imports stayed at less than 40 per cent of the pre-Depression level, but as the inconvertible Reichsmark made state manipulation of trade not only possible, but even necessary, it is clear that most imports at this time were of strategic importance and therefore necessary in the eyes of the regime.8 Since the 1931 devaluation of the pound sterling, and even before that, the German currency was no longer convertible on international markets. As the Reichsmark exchange rate officially stayed at its gold-parity level (although this was of limited importance as the mark had become inconvertible and it was impossible to exchange the mark for gold or other currencies), it was necessary to overcome the difference between internal and external prices in order to keep some exports going. Introducing export subsidies was the only way to earn the currency needed for the necessary imports. In 1937 this export-subsidy arrangement—the Zusatzausfuhrverfahren—was systemized. A matrix scheme was introduced, making clear how much subsidy would be paid for the export of each product to every individual country. In other words, the export subsidy paid by the German Treasury differed not only per product, but also per country. As most German trade was bilateral—that is the currency earned from exports to a country paid for the imports from that country—manipulating export subsidies allowed the regime to influence the value of goods German importers could buy from each of their trading partners. When, in 1937, the trade with each country was given a ranking, this was determined by the relative importance of the imports from each country to the German nation. This in turn decided the amount of export subsidies paid by Berlin. Thus Berlin tried to keep exports to countries delivering highly ranked imports at a level sufficient to earn enough currency to meet the costs of imports. Of course, no German importer was allowed to use any currency without special permission.9 Thus Berlin made sure that all currency it earned from its subsidized exports was spent on imports that were relevant to the needs of the regime. Consequently, the ranking of any country in the export-subsidy scheme was dependent on its geographical position in relation to Germany, the power Germany had over its economy and the German need for that country’s products. In this way, not only was Germany’s trade limited, but it was also controlled so that the only remaining goods it got in exchange for its exports were of political value. When the war started, Germany still needed to import some goods, but from then on it was almost impossible to obtain any commodities from abroad. The only way to obtain items that it couldn’t produce itself—at least not in sufficient quantities—was by exploiting the countries that became dependent on Germany. By the early 1940s Germany controlled almost the whole of the European Continent, as, in addition to those countries that had been overrun, the remaining ones had either

Economy, Total War and Nazi Germany • 23 been pressed into alliances or were completely surrounded by the aggressive might of the Reich and had little alternative but to supply the German needs. Germany was not even the first nation to prepare for war in the 1930s. In 1931 the Soviet leader Joseph Stalin had justified the extreme industrialization policy of the USSR by pointing out that the country was some fifty to a hundred years behind its neighbours and needed to catch up within the next ten years in order to be able to deal with any future capitalist attack that might come.10 Other countries, seeing the preparations being made, especially in Hitler’s Germany, also began to prepare for war. The March 1936 remilitarization of the Rhineland by Hitler was seen as a threat across Europe, especially as it followed his reintroduction of conscription in 1935, thus ignoring some of the important elements of the Treaty of Versailles. Also in conflict with the Treaty of Versailles was the founding in 1935 of the new Luftwaffe, led by the extremely ambitious Hermann Göring, hero of the Deutsche Luftstreitkräfte—the German Air Force—of the First World War. For many countries these threatening developments were the starting point for mobilization policies as well as economic war preparations. In some countries, such as France and the Netherlands, the problems of the Great Depression remained severe until 1938, however, so that attention had to be focused first on solving the unemployment problem. Nevertheless, even the Dutch were realistic enough to begin a small-scale rearmament programme, while, according to some historians, in France, too, rearmament had been given a central place in the policy of Léon Blum’s Popular Front Government.11 The Dutch Prime Minister Hendrik Colijn still hoped that a coup d’état by the German army could prevent a major war,12 but he agreed that it was necessary to increase military spending. The experience of neutrality during the First World War was sufficient reason for the government, as well as private companies, to take some economic measures in the defence field as well. Stocks were built up, and the government prepared wartime economic regulations. In the same period, some of the smaller countries, such as Belgium, the Scandinavian countries and the Netherlands, were concerned by the League of Nations’ inability to defend the rights of Abyssinia, one of its smaller members—and so strengthened their armed forces in order to defend their own neutrality.13 Thus, by the mid-1930s, some economic preparations for war had already begun in Europe, but this became really important only from 1938 onwards. Then, as supplies of food and raw materials needed to be guaranteed, stocks were built up, with some countries setting up institutions to regulate wartime markets, rationalize the use of raw materials and fuels, and control prices. Not only governments were preparing for war; private companies and individuals were, too, especially after the Munich Agreement of 1938. Many Europeans, remembering the previous Allied blockade, accumulated stocks of essential goods such as tinned food, clothing and household supplies, while companies hoarded raw materials. Both companies and private individuals were also accumulating stocks of cash as a safeguard in case the banks collapsed during military campaigns; consequently, the balances of bank and savings accounts declined.14

24 • Occupied Economies The Second World War was won by the side with the greatest economic capacity and the highest level of economic mobilization. After the war, in a period of increasing wealth in the Western hemisphere, the Soviet economy failed to satisfy the growing demands of its population for consumer goods, although during the war Moscow had managed to maximize its war production to reach levels surpassing even those of Germany, the most highly developed industrial nation in Europe. Britain did the same and during the crucial months of the Battle of Britain was capable of producing more aircraft than its enemy. In the USSR the economic performance was achieved by an incomparable exploitation of its own population. Although partly occupied, Stalin’s empire became the second-largest economic power in the war. The other major power, the United States of America, managed, upon entering the war in 1941, to transfer its tremendous economic potential in a very short time from that of a major producer of consumer goods into a producer of arms on a hitherto-unknown scale.15 The American production methods were so efficient that in this vast country the severe limitations on internal consumption that existed across Europe were virtually unknown. By comparison, Germany, the aggressor, was just a middle-sized power that was attempting to act as a superpower. According to Alan Milward and other historians of his generation, the reason for the Blitzkrieg strategy was that Hitler feared the social problems that would result from complete economic mobilization and its resulting transfer of production capacity from consumer goods to arms. Therefore, Germany could only hope to win if it managed to destroy its superior opponents quickly by using its large, but limited stocks of arms and war materials in surprise attacks immediately when an opportunity presented itself, before the enemy could mobilize and launch a major counter-attack. Therefore, Germany’s conquest of Europe should not be seen as the realization of a pre-planned programme, but as a series of opportunistic steps, using violence whenever its leadership saw a chance to overcome an isolated victim without causing a wide-scale war.16 Nowadays, the idea that the Blitzkrieg was a strategic concept has been abandoned, just like the idea that Germany’s enormous pre-war expenditures on war preparation—which are undisputed—resulted in any military superiority.17 Germany mobilized for total war, although Hitler and his generals did not intend to launch such a war until the late 1940s. They also recognized that Germany could be handicapped by a blockade and would therefore have to find economic support wherever it could—that is by the unscrupulous exploitation of the rest of Europe. That Allied bombardments of civilian targets would strengthen this necessity was unforeseen, as no one in Berlin ever imagined that Göring’s Luftwaffe would fail as completely as it did. Warfare, of course, entails bloodshed, especially on a front line, but during the first half of the twentieth century, this bloodshed became more horrific than anyone could ever have imagined. Battlefields became terrible places where millions of young men were not only slaughtered but completely annihilated, often swallowed up by the mud. In addition to this appalling human sacrifice, the fronts demanded

Economy, Total War and Nazi Germany • 25 ammunition, arms and materials in quantities limited only by the production capacity of the participants and the degree to which their economies could be concentrated towards war. Such wars could be waged only by industrial societies as only they could meet the production targets needed to match the demands of the battlefields. To maximize this military production, civil consumption had to be limited to a minimum—where necessary, to barely subsistence level. All factors of production had to be concentrated on military needs. During the Second World War, Russian men and women were forced from the occupied western regions to those eastern areas of their enormous country that seemed safe from German attacks. There, dismantled factories were rebuilt, and the manufacture of war materials was restarted on such a scale that Soviet military production soon surpassed that of Germany.18 This was made possible only by concentrating all production on warfare. Little housing was available for the people working in these factories, with most of them forced to live in barracks, huts or even holes in the ground; their food supplies were at starvation level; and although they had to face the harsh Russian climate, they had very little in the way of heating or clothing to protect them. In order to supply the Russian front with the enormous quantities of arms and ammunition that were needed, militarystyle discipline was introduced, and working weeks were extended to 66 hours, with only one day off a month.19 Such organization was possible only because the Russian State controlled the use of labour, raw materials and food, in addition to other production factors, and decided what was produced, where and how, and where the output should be directed. In this way, the Soviet system had the advantage that the State already had an enormous grip on production. In addition, its centrally planned economy was able to standardize heavy industrial production on an enormous scale. In the other Allied countries, and also in Nazi Germany, governments or statesanctioned trade unions and employers’ organizations first had to usurp the power in order to be able to regulate all aspects of economic life, but they never managed to obtain a level of control as complete as that in the USSR. In order to maximize the supplies for the troops and, at the same time, guarantee a minimum consumption level for civilians, all resources had to be used. As the war was consuming not only materials but manpower as well, there was a constant need for replacements on the front line and, hence, recruits. This required adaptation on the home front with the result that those who could not be used by the military—old men, women, boys, girls and prisoners of war—were sent to work in factories or on farms. Working hours were lengthened, and humanitarian restrictions on the use of labour, such as prisoners of war, were increasingly ignored. In the First World War, Germany had already used Belgian and Polish forced labourers in such a way that many did not survive, while others were crippled for life. Similarly, France and Britain had recruited labour and troops from their colonies.20 In addition, both sides had used prisoners of war as forced labour. Now, in the Second World War, and especially from 1942 onwards, Germany would systematically use forced labour, political prisoners and prisoners of war in its war industries, while all its occupied

26 • Occupied Economies territories, its allies and, often, countries it had pressed into alliances—including some neutral countries—were unscrupulously exploited.21 In both Germany and the USSR even the inmates of concentration camps were forced to produce arms and ammunition.22 It was not only labour that was concentrated in economic branches of importance to warfare; all other factors of production—raw materials, fuels, machinery and installations—were as well. The productivity of sectors less important in wartime— not just luxury goods production, but also civil building—was limited or even terminated. In some cases, inefficient companies and those producing goods not important to the war effort were either closed or no longer allowed to buy new machinery, use scarce raw materials or use labour that could be better employed elsewhere. To regulate this, the state intervened ever more directly in all aspects of economic life. Consequently, in countries with a free market system, the economy was transferred into a system with strong planning elements. Not only was the governmental bureaucracy expanded, but trade unions and/or employer’s organizations were also brought in to regulate and control parts of the economy. The central government was not only organizing larger areas of production, but also purchasing rapidly growing amounts of the output and so had an increasing need for funds. Expanding production resulted in higher profits and wages, and thus in increased private incomes, but as most production was for military purposes—and thus for the government—there were few consumer goods and services on which to spend these incomes. At the same time, governments lacked the funds to meet the increasing costs of warfare. Tax increases contributed only slightly to solving the problem, and so everywhere government debts continued to increase. In many countries monetary expansion proved the only way to cover state expenditures, but with more currency in circulation, on the one hand, and supplies in consumer markets declining at a time when incomes were growing, on the other, the inevitable result was rising inflation. Apart from increasing taxes to take money out of the market, all governments could do was introduce price controls. When there is a growing amount of money in circulation and prices are kept low, there is no longer a scarcity of purchasing power—the scarcity is of goods and services. Consequently, in shops where there were still items available without distribution marks, people queued to get their share—and the same was true when there was no guarantee that distribution marks would be honoured. In the post-war USSR this was a commonplace phenomenon. The workers were paid good wages, and rents were low, as were food prices, so that many had money in their pockets, but there were never enough consumer goods available to match the purchasing power of the Soviet population. As a consequence, economic circulation stagnated. People wanting to buy consumer goods were instead forced to save. This frustrated purchasing power resulted in corruption, with under-the-counter sales, black markets and illegal stocks. In wartime, when production across Europe was maximized and consumption minimized, the greater share of the output went to the state for military use.23

Economy, Total War and Nazi Germany • 27 Economic regulation, especially price and consumer controls, resulted therefore in clandestine transactions and black markets. When calculating the exploitation of occupied Europe, the fact that production was partly clandestine and therefore not reflected in any statistics should be taken into account. By the early 1940s, the Germans found themselves embroiled in full-scale war, which was something Hitler had not reckoned on when he made his first moves into Poland. War came too early for Germany’s economic war preparation. However, according to Götz Aly, there was another reason for Nazi Germany’s need to exploit occupied Europe. He writes that the German population’s contribution to the overall war costs was only 30 per cent. Seventy per cent was paid by foreigners—that is the occupied countries, forced labourers and Jews—and it was in this way that Hitler managed to keep the German people prepared to follow his policies.24 This, in fact, agrees with Alan Milward’s view that because Hitler feared the social consequences of any impoverishment resulting from rearmament and war, he limited pre-war rearmament to keep the costs of his aggressive policy low. It was, according to Milward, the reason for Hitler’s Blitzkrieg strategy.25 In this respect, Aly emphasizes that it wasn’t only the occupied countries that were used by the German war machine to maintain the German standard of living at a reasonable level, but also those forced into alliances with Hitler and even independent neutral countries.26 He concludes that the average German was neither anti-Semitic nor an ideological Nazi, but was bought. Adam Tooze has rightly described these ideas of Aly as a caricature and not backed by any good qualitative evidence as they should be, while his statistical basis also is little more than a distortion of historical statistics.27 Tooze himself, using the calculations of Mark Harrison, concludes that roughly 25 per cent of the costs of war were borne by occupied Europe.28 These quite reasonable estimations not only weaken Aly’s idea that the Germans were just bought, but also make his remarks that foreigners paid for 70 per cent of the German war costs inexplicable. According to Harrison’s data, in Western Europe alone, in 1938 the combined gross domestic product (GDP) of the economies Germany would later conquer equalled 85 per cent of the German GDP, and there are good reasons to think that that figure is a low estimate.29 In addition, in Central, Eastern and South Eastern Europe, a number of smaller economies were also brought under Nazi control. Tooze’s figure of 25 per cent suggests that the occupied economies made only a very limited contribution to the German war economy. What for the most part is not taken into account in Tooze’s data, however, is the transfer of labour from the occupied countries to Germany. Only when the wages of forced labourers or prisoners of war were paid to their relatives in the occupied countries, which seldom happened, is their contribution to the German war machine included in the data on exploitation. By the end of the war, forced labour accounted for 20 per cent of Germany’s civilian labour force and 25 per cent of its industrial labour force.30 It is clear from this that Tooze’s idea that only 25 per cent of the German war costs were paid by foreigners—or, as will be calculated in

28 • Occupied Economies Part 2 of this book, 22.6 per cent of the total German war expenditures (28.6 per cent when dependent but not occupied Europe is included)—is an underestimation. As will be seen in Part 2, it is difficult to improve on these data, not only because calculating the value of labour is difficult, but also because it wasn’t just labour that had been withdrawn from the production capacity of the occupied countries but their raw materials, fuels and machinery as well. In other words, these valuable resources were lost to the economies of the occupied countries and gained by the Reich, so that the occupied countries became more and more depleted, while Germany was able to keep its own economy going at their expense.

Notes 1. Ian Kershaw, Fateful Choices: Ten Decisions That Changed the World 1940–1941 (London 2007) 59; Richard Overy, Goering (London 2000 2nd ed.) 22 et seq. 2. Overy, Goering, 48; Kershaw, Fateful Choices, 59. 3. Bernd-Jürgen Wendt, ‘Südosteuropa in der nationalsozialistischen Großraumwirtschaft. Eine Antwort auf Alan S. Milward’, in: Gerhard Hirschfeld and Lothar Kettenacker (eds.), Der ‘Führerstaat’ Mythos und Realität. Studien zur Struktur und Politik des Dritten Reiches (Stuttgart 1981) 414–427, here 419; HansErich Volkmann, ‘Außenhandel und Aufrüstung in Deutschland 1933 bis 1939’, in: Hirschfeld and Kettenacker, Der ‘Führerstaat’, 103–143; see also: Alan S. Milward, ‘The Reichsmark Bloc and the International Economy’, in: Hirschfeld and Kettenacker, Der ‘Führerstaat’, 377–413, here 395 and 401. 4. Richard J. Overy, War and Economy in the Third Reich (Oxford 1994) 93–94. 5. Ibid. 96. 6. Ibid. 98. 7. See: Ghitta Sereny, Albert Speer: His Battle with Truth (London 1996 2nd ed.) 293. 8. Statistisches Reichsamt, Monatliche Nachweise über den auswärtigen Handel Deutschlands, 1929–1938 (Berlin 1929–1939). 9. Hein A. M. Klemann, Tussen Reich en Empire. De economische betrekkingen van Nederland met zijn belangrijkste handelspartners, Duitsland, Groot-Brittannië en België en de Nederlandse handelspolitiek, 1929–1936 (Amsterdam 1990) passim. 10. Alec Nove, An Economic History of the USSR (Harmondsworth 1989 4th ed.) 180. 11. Thibault Tellier, ‘Minister van Financiën Paul Reynaud en de Franse oorlogsvoorbereiding’, in: Hein A. M. Klemann and Dirk Luyten with Pascal Deloge (eds.), Thuisfront. Oorlog en economie in de twintigste eeuw. Veertiende jaarboek van het Nederlands Instituut voor Oorlogsdocumentatie (Zutphen 2003) 51–62, here 51; Martin Thomas, ‘French Economic Affairs and Rearmament: The First Crucial Months, June–September 1936’, Journal of Contemporary History, 27 (1992) 659–670; J. A. M. M. Janssen, ‘Kerk, coalitie en defensie in

Economy, Total War and Nazi Germany • 29

12. 13.

14. 15. 16.

17. 18. 19. 20. 21.

22.

23. 24. 25. 26.

27. 28.

het interbellum’, in: G. Teitler (ed.), Tussen crisis en oorlog. Maatschappij en krijgsmacht in de jaren ’30 (Dieren 1994) 42–62, here 55; J. Th. M. Houwink ten Cate, ‘De mannen van de daad’ en Duitsland, 1919–1939. Het Hollandse zakenleven en de vooroorlogse buitenlandse politiek (The Hague 1995) 168 et seq.; P. J. Oud, Het jongste verleden. Parlementaire geschiedenis van Nederland 1918–1940, Part 5, 1933–1937 (Assen 1950) 360; H. J. L. Vonhoff, ‘Defensiepolitiek van liberalen en Vrijzinnig-Democraten in de jaren dertig’, in: Teitler, Tussen crisis en oorlog, 70–87, here 77. The Calvinistic politician Hendrik Colijn was prime minister five times. He is remembered for his rule in the period 1933–1939. Hein A. M. Klemann, ‘Colijns marionet op het Plein’, in: D. Hellema et al. (ed.), De Nederlandse ministers van Buitenlandse Zaken in de twintigste eeuw (The Hague 1999) 127–138. V.d.V., ‘Oorzaken van de recente schaarschte aan middelen op de geldmarkt’, Economisch-Statistische Berichten, 7 February 1940, 98–99. See: Richard J. Overy, Why the Allies Won (London 1995) passim. Burton H. Klein, Germany’s Economic Preparations for War (Harvard 1959) passim; Alan S. Milward, War, Economy and Society, 1939–1945 (London 1977) 23 et seq. Overy, War and Economy, passim. Overy, Why the Allies Won, 169–171. Ibid. 224–232; see also: Margarita Zinich, Budni voennogo liholetya, Vols 1–2 (Moscow 1993). Gerd Hardach, The First World War 1914–1918 (Harmondsworth 1987) 67–69. Ulrich Herbert, ‘Einleitung des Herausgebers’, in: Ulrich Herbert (ed.), Europa und der ‘Reichseinsatz’. Ausländische Zivilarbeiter, Kriegsgefangene und KZHäftlinge in Deutschland (Essen 1991) 7–25; Hein A. M. Klemann, Nederland 1938–1948. Economie en samenleving in jaren van oorlog en bezetting (Amsterdam 2002) 55–58. Richard J. Overy, Russia’s War (London 1998) 228–232; Edwin Bacon, The Gulag at War: Stalin’s Forced Labour System in the Light of the Archives (London 1994). Michael Ellman, Socialist Planning (Cambridge 1989 2nd ed.) 263; Nove, Economic History of the USSR, 372–373. Götz Aly, Hitlers Volksstaat. Raub, Rassenkrieg und nationaler Sozialismus (Frankfurt am Main 2005 4th ed.) 326. Milward, War, Economy and Society, 23 et seq. See: Adam Tooze, ‘Economics, Ideology and Cohesion in the Third Reich: A Critique of Goetz Aly’s Hitlers Volksstaat’, 3, http://www.hist.cam.ac.uk/ academic_staff/further_details/tooze-aly.pdf. Ibid. 4. Ibid. 10.

30 • Occupied Economies 29. Mark Harrison, ‘The Economics of World War II: An Overview’, in: Mark Harrison (ed.), The Economics of World War II: Six Great Powers in International Comparison (Cambridge 1998) 1–42, here 3–8. 30. Werner Abelshauser, ‘Germany: Guns, Butter, and Economic Miracles’, in: Harrison, Economics of World War II, 122–176; own calculations.

–4– The Economies of Occupied Europe The themes of the earlier chapters were those of total war and the economy of National Socialist Germany, but the central question in this book will not be how the German war economy developed, although that subject is so relevant to the theme of this book that it will frequently be discussed. Central to the book is the question of what consequences German occupation and exploitation had for the economies of occupied Europe. As Nazi Germany became increasingly involved in a total war and couldn’t give up, it had to take advantage of all the economic capacity available to it, which meant that the economies of all its occupied and dependent countries were more and more involved in its war economy and severely exploited to strengthen Hitler’s armies. Part 2 considers some of the consequences of Nazi exploitation by looking at Germany’s political expansion and discusses whether this was economically motivated. First, the occupation period will be divided into subperiods, using as a criterion the way in which the economic exploitation of Europe changed. Of course, some aspects of these time divisions are similar to those found in any study of the Nazi economy. However, although there were strong links between the German economy and the occupied economies, and some major alterations in the German war economy had direct consequences for occupied Europe, the correlation between the time divisions in the German economy and those in occupied Europe isn’t straightforward. The way the Nazis administered occupied Europe had all the aspects of the central Nazi management in Berlin. The countries were ruled from within by a combination of local pre-war officials and German governors appointed by Berlin, but in Berlin, over and above these were the competing Nazi Party officials, the military, the state and the SS, none of whom discussed matters or reached decisions together in council, but who all independently implemented their own ideas as far as they could—that is as far as conflict from the competition might allow. Such conflicts were, for the most part, power struggles rather than differences of opinion. Everyone involved in these tussles for power was hoping to strengthen his own position by appearing to be a successful achiever. Nazi Germany had little tolerance for losers. This power struggle in the occupied countries wasn’t confined to the Berlin elite, or the state, military and SS officials. It also involved the internal officials of the occupied territories led by the German governors. As far as they could, these governors tried to keep Berlin officials out of their domain, not only because that was the way power struggles were fought out in the Third Reich, but also because Berlin officials,

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32 • Occupied Economies whatever their position in the capital, seldom had any experience with or consideration for the local population. Thus they made the job of the governors more difficult when it came to controlling the suppressed people, or even attempting to win over the people of a specific country to the idea of a German future. The resulting conflicts between the local governors and Berlin could be especially serious in countries where a high-ranking party official was in charge, rather than a Wehrmacht officer. This influenced the exploitation as well as its time divisions. Eventually, especially after 1942, when both Albert Speer and Fritz Sauckel became dominant personalities in the exploitation, the German representatives in these countries had to accept increasing interference from Berlin. Once the time divisions of the occupation periods have been determined, the geographical divisions of occupied Europe and their dissimilarities in extent of exploitation will be discussed. However, it is almost impossible to consider the situation in individual countries, as during the war the geographical division of Europe into countries or administrative units differed substantially from the division in the interwar period or the division after the collapse of Hitler’s Reich in 1945. Sometimes the German armies reconstructed the pre-1914 borders, but more often than not the German policy resulted in a completely new geographical division, especially in Eastern and Central Europe. This reorganization had already started in 1938 when the Reich incorporated Austria and the Sudetenland, the western border area of interwar Czechoslovakia, which was populated by ethnic Germans. In 1939 Berlin separated the remaining regions of Czechoslovakia. Two days before the German military invasion on 15 March 1939, the Czechoslovakian president, Emil Hácha, was forced to accept not only Slovakian independence, but the surrender of the remaining areas of his country to the Wehrmacht as well. The 65-year-old Hácha was summoned to a meeting in the Berlin Reich Chancellery during which the pressure put on him by Hitler proved too much. He suffered a heart attack. Thus the Slovakian republic— in effect a German vassal state—was created, but not before another German ally, Hungary, had swallowed a substantial part of the newborn country, while Poland had also taken its share of the defenceless rump state. The remaining areas of interwar Czechoslovakia became the Protectorate of Bohemia and Moravia—a territory more or less comparable with the present-day Czech Republic without the Sudetenland border area. Formally, the Protectorate was incorporated into the Reich as well, but it became an autonomous region ruled by a German Reich Protector. Of course, this autonomy did not extend to any participation by the local population. Following the 1939 partition of Poland between Nazi Germany and the Soviets, the existing national and provincial boundaries of interwar Poland were erased and reordered, beginning with the division of Poland into three districts. One of these, put together from the Warthegau, Eastern Upper Silesia, Danzig-West Prussia and the Zichenau, was directly incorporated into the Reich. The German border was moved further eastwards, beyond the 1914 boundary, and the remainder of Germanoccupied Poland, bordering the Soviet-annexed territories of eastern Poland, became

The Economies of Occupied Europe • 33 the General Government with the districts of Krakow, Radom, Warsaw and Lublin. Just as the Protectorate had been, so too the General Government (in fact little more than a third of pre-war Poland, but often referred to as occupied Poland) was de jure incorporated into the Reich, but kept its special status under its Governor-General, Hans Frank, who was a fanatic Nazi racist, anti-Semite and hater of all Slavic people, especially the Poles. When in 1941 the German armies overran the Polish territories annexed by the Soviet Union in 1939, the new oppressors changed the Soviet divisions between southern Lithuania, western Belorussia and western Ukraine. Germany set up a third civilian-administered territory behind the annexed territories and the General Government. Parts of western Belorussia (now Belarus) became part of a new district of Bialystok—a town now in eastern Poland—which became a special autonomous district of East Prussia. Strangely, it was attached to, but never incorporated into, the Reich. Parts of the western Ukraine, however, became part of the newly created district of Galicia (Galizien) that was conjoined to the General Government. The remaining civil-administered eastern territory now became part of two Reich Commissionerships: the Reichskommissariat Ostland (East Land) incorporating the three Baltic States of Estonia, Latvia and Lithuania—countries that had been independent in the interwar period and were acquired by Stalin only in June 1940—along with the newly created Weißruthenien (White Ruthenia)—in itself a combination of pre-war Polish territories and the Soviet republic Belorussia. Finally, the Reichskommissariat Ukraine incorporated some former Polish territory as well as the former Ukrainian Soviet districts of Zhitomir, Dnjepropetrowsk, Nikolajew, Kiev and Taurien. Parts of the pre-1939 Ukrainian Soviet republic had since November 1940 been administered by Romania, a German ally, as the Transnistrien district. In the autumn of 1941, plans to extend the German network of Reich Commissionerships on Soviet soil further eastwards stalled as a consequence of military developments. Alfred Rosenberg, a racist fanatic whom Hitler appointed Reich Minister for the Occupied Eastern Territories, originally wanted four Reich Commissionerships on Soviet soil. Apart from Ostland, which the Baltic-born Rosenberg saw as a territory to be Germanized through massive colonization by German farmers, he founded the Reich Commissionership Ukraine and planned a Reich Commissionership Caucasus, but the last didn’t materialize. These two territories—the Reich Commissionerships Ukraine and Caucasus—were intended to become buffers between Germany and Russia. In Russia itself, Rosenberg had planned a Reich Commissionership Muscovy,1 but again this didn’t materialize. Substantial parts of the conquered Soviet territories never became part of a Reich Commissionership. The remainder stayed under the military administration of the three army groups—North, Centre and South. Each of these territories was, in turn, split between army territory and war territory, Heeresgebiet and Armeegebieten. In South Eastern Europe, Yugoslavia was divided up between Germany, Italy, Italianruled Albania and the German allies Hungary and Bulgaria, while some parts became a Croatian puppet state.2 The Ustashas, members of the Croatian Revolutionary

34 • Occupied Economies Movement Ustaša, which before the war had been a terrorist organization, were allowed to establish their own de facto German-controlled state. The northern part of Slovenia, Serbia (in its pre-1912 borders, including a section of Kosovo) and Banat were directly occupied by German military forces. Although Hitler allowed some of his allies to control parts of the former Yugoslavian kingdom and accepted the formal independence of Croatia, he needed all the resources these countries could provide for the German war production, especially the important nonferrous and iron ore mines. Therefore, Berlin made sure that the Reich took control of all important production facilities, even in areas assigned to its allies or satellites. Consequently, production from the copper mines in Serbia; the iron ore mines of Ljubija in northern Bosnia; the steel, coal and chemical plants in north-east Bosnia; and the Bosnian bauxite mines all went to the Reich. To achieve that, Franz Neuhausen, who since the 1930s had been head of the German Nazi Party in Yugoslavia as well as German Consul General in Belgrade, now acted not only as the representative of Göring’s Four Year Plan, but also as General Plenipotentiary for the Serbian economy,3 Plenipotentiary for metal mining in South Eastern Europe and General Plenipotentiary for labour in Serbia. It thus became his duty to obtain as much food and raw materials as possible from Serbia and other parts of pre-war Yugoslavia. He was allowed to use all available means to do this. A personal friend of Hermann Göring, he was not only a clever businessman, but also quite prepared to use violence, so that he probably became the most hated German in Serbia. However, his corruption reached such extremes that in July 1944 Hitler ordered Neuhausen’s arrest, and he was sent to a concentration camp.4 The situation in Greece was comparable to that of Yugoslavia. The Germans occupied only a small part of it. The remaining parts of this country, which was from an economic point of view much more interesting than Yugoslavia, were ruled by Italy and Bulgaria. Again, however, Berlin made sure that the economically important parts were strongly controlled by German hands. While the pre-war borders in Eastern and South Eastern Europe, which for the most part had been drawn only after 1918, were completely changed, there were only limited changes in Western Europe. Belgium lost the small territory of Eupen and Malmédy, which it had annexed from Germany after the First World War, and the Grand Duchy of Luxembourg was incorporated into the Reich. Only France faced relatively important changes to its territory. Although the victory of the Germans in May–June 1940 was rapid, the Wehrmacht did not manage to conquer all of France prior to the 22 June armistice. Consequently, on 25 June, when the German offensive ceased, their front line divided the country into a northern occupied zone and a southern unoccupied zone. In early July, the Germans withdrew from some of the occupied parts—especially in the Lyons region—and for military reasons took over some areas around Bordeaux and along the Atlantic coast down to Spain. To the north, the three departements of Upper and Lower Alsace and Lorraine (now AlsaceMoselle)—which had been disputed since the Franco-Prussian War of 1870–1871 and reverted to France in 1919—were de facto annexed by Germany again in 1940.

The Economies of Occupied Europe • 35 In the wartime statistics, the contribution of these areas of France to the German war economy is therefore not integrated into the German exploitation. Two more departments—the Départements du Nord and Pas-de-Calais: important industrial regions with coal mining, iron and steel industries and textiles and the major city of Lille—were ruled by the German military administration in Brussels and de facto became economically parts of Belgium. Nevertheless, almost all of France—the unoccupied Vichy zone as well as the occupied zone—was supposed to be ruled by the Vichy government. Vichy laws were legally valid for the whole country, provided they were not contrary to specific German regulations for the occupied part. The fact that until November 1942 a part of the country was not occupied by the German Wehrmacht did not mean that its economy was not exploited. It was much more difficult, though, to adapt the French economy in the Vichy zone to the German wishes, so that in this part of France, the exploitation was less extreme, especially as transport problems and lack of fuel added to the complications. However, the whole of France—the Vichy zone and the occupied zone—together had to pay a daily tribute of between 15 and 25 million RM, which was used by the German military to buy the goods and services it wanted from France. In addition, in both the Vichy area and the occupied zone, German inspectors were present to control the production of armaments and ammunition. It was not until November 1942, when the Germans occupied the southern zone as well, that the situation changed, but even then the Vichy regime remained in place. It was only in August 1944, when the Allies forced the Germans out of France and Paris was liberated, that the Vichy role ceased.5 Apart from Vichy France and the German-occupied parts of the country, some small areas of France were occupied by the Italians. Rome declared war on France after the French defeat by the Germans, and Mussolini started his campaign only on 20 June 1940. Thus Rome occupied only a small border region in the Alps without any economic significance, but Hitler allowed Italy to control the armaments production in the unoccupied eastern bank of the Rhône Valley outside Lyons, Avignon and Marseille. In November 1942, when the Germans occupied the Vichy zone, the Fascists took hold of the Eastern Rhône bank as well as the Isle of Corsica, but only until September 1943. After Mussolini’s downfall, the Germans took over these parts of France as well, but at that time Corsica had already been liberated by a people’s revolt supported by the Free French. The resulting geographical reorganization of Europe often makes it impossible to tell which part of the production obtained by the Germans came from which pre-war country, let alone make a general comment on, for instance, the exploitation of Poland, a country spread over at least four wartime administrative units. For this book, occupied Europe will be divided into four main areas: occupied Western Europe, including France, Belgium, the Netherlands and, for the most part, Denmark and Norway; occupied Eastern Europe, including the various parts of pre-war Poland, the Baltic States and occupied Soviet territories; South Eastern Europe—that is the Balkans, including former Yugoslavia and Greece; and, as a special category, the

36 • Occupied Economies Protectorate of Bohemia and Moravia. Sometimes subdivisions are made, or individual countries are discussed, but this geographic division makes it clear that Germany exploited the various parts of Europe in different ways. In Part 2, one of the points discussed will be how these differences in exploitation can be explained. Although Alan Milward is right when he concludes that Nazi racism limited the advantages of conquest,6 it is too simplistic to conclude that the way a country or territory was exploited was purely a consequence of its population’s ranking in the Nazi racist hierarchy. The Nazis had to choose between exploiting an occupied country by taking factors of production—raw materials, machinery and labour—and exploiting it by taking the output of ongoing production.7 As was characteristic for Hitler’s Reich, the decisions made were never straightforward. Not only were diverse institutions, Nazi leaders and bureaucrats involved in struggles to turn decisions their way, but the balance of power between the factions changed all the time, usually resulting in yet new power struggles. What influenced these decisions on the exploitation of the various occupied countries, how this changed over time, how it was organized in different parts of Europe and, as a consequence, what was taken from individual countries will all be discussed in Part 2. In Chapter 9, the material exploitation of occupied Europe will be described, while Chapter 10 is dedicated to the hunt for labour. Here, one of the main limitations of the book will become clear, for although it is difficult to write anything on this subject without discussing the humanitarian consequences of Nazi exploitation, this topic is not a central issue. Central is the question of what it meant for the occupied economies that a substantial part of the labour force was moved around the Continent and that, as a consequence of the increasingly violent way in which this was done, more and more people in the threatened categories went into hiding. In addition, in Part 2 the discussion between Götz Aly and Adam Tooze will be analysed and a new conclusion drawn concerning the occupied countries’ economic contribution. According to that conclusion, occupied Europe contributed about 35 per cent of Germany’s overall war costs. This seems rather low in view of the size of the German economy in comparison to the total economies of these countries. At the same time, it will become clear that the reduction of production levels in the occupied countries was more severe than in most non-occupied countries. In general, the economies of occupied Europe declined, whilst the economies of all the major belligerents, except the USSR, grew. For the occupied countries, the war was costly not only from a humanitarian point of view, but economically as well. In order to restrict the discussion in Part 2 to economic exploitation, rather than include all German measures with economic consequences—and there are few measures taken by an occupier that do not have such consequences—a major criterion is economic rationality. The German policy in the occupied countries in so far as it lacks such rationality, or at least the intention to be economically rational, is not the subject of this book, even when this policy had the most severe economic consequences.

The Economies of Occupied Europe • 37 For instance, an important example is the persecution and murder of the Jewish population of Europe, which cannot be understood as a consequence of even the most evil rationality. Before the Jews were deported to the concentration camps, all across Europe these people were systematically ostracized, their livelihoods destroyed along with their social and economic status, and their property stolen. Only then were they moved to overcrowded ghettos, from where they were transported to the concentration camps from 1942 onwards. Some of these people were used as forced labour—often this was a means of extermination. It is a terrible story that has been told many times and is probably one of the most appalling accounts to come out of the war, but this book is not intended to add to the enormous literature that already exists on this subject as it has been clear from the start that there was no economic reason whatsoever for this policy. For instance, in Western Europe, after the first chaotic weeks of the occupation were over, the Germans paid for what they took, although the funds they used were obtained one way or another from the occupied country. This could be described as robbery, although the victims were not individuals or individual companies, but the country as a whole. In the Netherlands, the only people who were not paid for what they were forced to hand over to the Germans were the Jews and other small groups that the Nazis considered to be racially inferior. More often than not, however, the valuables stolen from the Jewish population were not taken out of the country. Even when they were removed from the country and could not be found after the liberation, the Germans would have paid for them, just as they did for everything else that they took, with money extracted from the country. Of course, payment wasn’t made to the Jewish owner, but to the German-controlled financial institution used to plunder the Dutch Jews, the Liro-Bank. Most of the property taken from the Jewish population was never used by the Germans. Here, just as in all other occupied countries, Berlin created easier ways to obtain the money it needed for its purchases in the occupied territories. Plundering the Jews therefore was not economically motivated, but was the result of irrational, racist hatred of them.8 It was a first step in a process that ended in the German Vernichtungslager—extermination camps—rather than the plunder of an occupied country. Following Part 2’s investigation into the exploitation of the occupied territories, in Part 3 their economic development will be studied. First, in Chapter 13, the way in which the occupation was financed and the consequences for the financial and monetary systems of the occupied countries are examined. As these systems were often used and abused by the Germans, these suffered severely. This had huge consequences for markets as well as for normal economic relations. Inflationary tendencies resulting from enormous money holdings due to the lack of opportunities to spend money threatened economic stability across Europe. Markets provide the subject for Chapter 14; these had to be regulated, but regulating markets caused clandestine black market activity—a development reinforced by the scarcity resulting from the Allied blockade and German withdrawals of production output as well

38 • Occupied Economies as factors of production. To make things worse, Germany tried to manipulate the economic relations between European countries by multilateral clearing, resulting in the economic isolation of individual countries, as this undermined all trade that was not organized by central planning. Since Berlin institutions were the only ones that could organize such planning, and few of these institutions were interested in the trade going on between occupied countries, this meant that, apart from the trade needed to meet German orders, each territory had to solve its own problems, including the problem of how to feed its population. Only when the issue became so severe that it created negative consequences for the Germans did they interfere—often only by suppressing any signs of dissatisfaction. Finally, in Chapter 15, production, including clandestine production for black markets, will be analysed and calculations presented for a number of countries, with educated guesses regarding total production. These calculations are not precise enough to give an exact idea of the economic development in every one of the occupied countries, and it is not possible to get the necessary data for Eastern Europe. The calculations do make it clear, nonetheless, that the economic development, and thus the level of consumption of the local population as well as the situation of the economy at the time of liberation, was strongly influenced by the question of whether a specific country was primarily exploited by appropriating its ongoing production output or by taking—or, for irrational racist reasons, destroying—its production factors and thus undermining its economy. This difference in exploitation was responsible for the differing effects of occupation in Europe. In the final chapters of the book, in Part 4, the consequences of the economic development and wartime exploitation on consumption in the occupied countries and on the post-war economic situation will be analysed.

Notes 1. Alexander Dallin, German Rule in Russia, 1941–1945: A Study of Occupation Policies (London 1957) 402–403; Jonathan Steinberg, ‘The Third Reich Reflected: German Civil Administration in the Occupied Soviet Union, 1941–4’, English Historical Review, 110 (1995) 620–651, here 635–636. 2. In 1939, after Nazi Germany raped Czechoslovakia, Fascist Italy occupied Albania, and the Italian king took the Albanian crown as well. 3. ‘The Trial of German Major War Criminals. Sitting at Nuremberg, Germany, 2nd May to 13th May, 1946. One Hundred and Twenty-Third Day: Tuesday, 7th May, 1946 (Part 5 of 10)’, http://www.nizkor.org/hweb/imt/tgmwc/tgmwc-13/ tgmwc-13-123-05.shtml. 4. Czesław Madajczyk, ‘ “Restserbien” unter deutscher Militärverwaltung’, in: Institute for Contemporary History (ed.), The Third Reich and Yugoslavia 1933– 1945 (Belgrade 1977) 458–476, here 458.

The Economies of Occupied Europe • 39 5. For further reading on Vichy France see, for instance: Eric Conan and Henri Rousso, Vichy. Un passé qui ne passe pas (Paris 1994); Sarah Fishman et al. (eds.), France at War: Vichy and the Historians (Oxford 2000); Bertram M. Gordon, ‘The “Vichy Syndrome” Problem in History’, French Historical Studies, 19 (1995) 495–518. 6. Alan S. Milward, War, Economy and Society, 1939–1945 (London 1977) 152 and 164–165. 7. Hans Umbreit, ‘Les politiques économique allemandes en France’, in: Olivier Dard, Jean-Claude Daumas and François Marcot (eds.), L’Occupation, l’État français et les entreprises (Paris 2000) 25–35, here 27; Patrick Nefors, Industriele collaboratie in België. De Galopindoctrine, de emissiebank en de Belgische industrie in de Tweede Wereldoorlog (Leuven 2000) 64 et seq. 8. For further reading on the plundering of the Dutch Jews see: G. Aalders, Roof. De ontvreemding van Joods bezit tijdens de Tweede Wereldoorlog (The Hague 1999); Begeleidingscommissie onderzoek financiële tegoeden WO-II in Nederland, Eindrapport van de Begeleidingscommissie onderzoek financiële tegoeden WO-II in Nederland, Vols I, II and III (Leiden 1999); Joh. de Vries, Een eeuw vol effecten. Historische schets van de Vereniging voor de Effectenhandel en de Amsterdamse Effectenbeurs 1876–1976 (Amsterdam 1976).

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Part 2. Exploitation

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–5– Exploitation: An Introduction In his highly acclaimed book The Wages of Destruction, Adam Tooze wrote that in 1940 in ‘Belgium, the Netherlands and above all France . . . economic activity collapsed, never to recover’; a year earlier, Götz Aly in his equally remarkable book, Hitlers Volksstaat, having described in great detail the extent of what had been taken from these oppressed countries, commented that the scale of the Nazis’ exploitation spoke for itself.1 These views arise from the concept that plunder was fundamental to the economic policy of the Nazis. According to the German historian Hans Umbreit, however, the Nazis, having occupied most of Europe, could choose between slaughtering the cow and milking her, while the Flemish historian Patrick Nefors is of the opinion that the Germans hesitated regarding whether to take the production factors—in particular raw materials and labour—or their output.2 For every occupied territory and every period, Berlin again had to pick a choice on a continuum between plundering at one extreme and taking the output at the other. The outcome was seldom a balanced policy mix as, apart from the Nazis’ racist motivation, ongoing conflicts within the Nazi hierarchy undermined any systematic exploitation.3 For instance, in 1941 the Wehrmacht’s claim on the industrial output in France competed with the demands of Berlin officials for raw materials.4 It was not uncommon, by way of compromise, for more than one of the Reich’s many parallel institutions, or some of Hitler’s satraps, to implement their own policies independently. The considerations at this stage, therefore, are what exactly was the policy mix that resulted from this turmoil, how was it arrived at and, central to both, what were the consequences of its outcome for the economies of the occupied countries. Berlin didn’t just take arms, raw materials, labour and foodstuffs from these countries; it also took services and goods, which although they at first sight might appear to be of little use militarily, in total war could also contribute to the overall war effort. In the spring of 1943, when Joseph Goebbels gave his Sportpalast speech on total war and Albert Speer tried to implement the ideas expressed in it by intensifying exploitation, Hermann Göring ordered that pubs and bars, at least in Western Europe, should be kept open as such places of amusement offered entertainment for German soldiers.5 Since the services provided by these bars, clubs and brothels were paid for, indirectly, by the occupied countries, the services of these amusement industries were part of their contribution to the German warfare. Although it is clear that arms, military resources and factors of production were of higher importance, here the question is not how important Berlin thought the production or factors of

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44 • Occupied Economies production of an occupied country to be, but what consequences the exploitation and the manner of exploitation had for the economies of these countries. It is clear from the effects of the German forced labour policies that often the detrimental consequences of exploitation were not just economic. However, our concern in this book is not the emotional aspects of compulsory removal of people from their homes and families to hostile regions,6 but rather what economic effects the loss of their labour might have had for their native countries. Concentrating on the economic aspect becomes even more difficult when all over the Continent, especially in the eastern parts, the nihilist Nazi ideology merged with exploitation into destruction. It resulted in the confiscation of food, the dragging away of people and the destruction of industry. In other words, it is not just annihilation as an effect of exploitation that is the subject of this part, but also exploitation as an instrument of extermination. Since the subject of this book is the economic development during the occupation, aspects of the German policy with some economic consequences, but without any economic rationality, are excluded.

Notes 1. Adam Tooze, The Wages of Destruction: The Making and Breaking of the Nazi Economy (London 2007 2nd ed.) 420; Götz Aly, Hitlers Volksstaat. Raub, Rassenkrieg und nationaler Sozialismus (Frankfurt am Main 2005 4th ed.) 166 et seq. 2. Hans Umbreit, ‘Les politiques économique allemandes en France’, in: Olivier Dard, Jean-Claude Daumas and François Marcot (eds.), L’Occupation, l’État français et les entreprises (Paris 2000) 25–35, here 27; Patrick Nefors, Industriele collaboratie in België. De Galopindoctrine, de emissiebank en de Belgische industrie in de Tweede Wereldoorlog (Leuven 2000) 64 et seq. 3. Alan S. Milward, War, Economy, and Society, 1939–1945 (London 1977) 152 and 164–165. 4. Der Militärbefehlshaber in Frankreich. Kommandostab Abteilung Ia. Paris, den 30. September 1941: Lagebericht Augustus–September 1941, http://www.ihtp. cnrs.fr/prefets/; Hein A. M. Klemann, ‘Dutch Industrial Companies and the German Occupation, 1940–1945’, Vierteljahrschrift für Sozial- und Wirtschaftsgeschichte, 93 (2006) 1–22, passim. 5. Aly, Hitlers Volksstaat, 159; ‘Aus der Sportpalastrede Goebbels 18. Februar 1943’, in: Hans-Adolf Jacobsen (ed.), Der Zweite Weltkrieg. Grundzüge der Politik und Strategie in Dokumenten (Frankfurt am Main 1965) 213–214; Albert Speer, Erinnerungen (Frankfurt am Main 1969) 269. 6. See: Gustavo Corni (ed.), Forced Laborers and POWs in the German War Economy. Special Issue of the Annali dellÍnstituto storico italo-germanico in Trento (Bologna 2002); Ulrich Herbert, ‘Labour and Extermination: Economic Interest and the Primacy of Weltanschauung in National Socialism’, Past and Present,

Exploitation: An Introduction • 45 138 (1993) 144–195; Ulrich Herbert (ed.), Europa und der ‘Reichseinsatz’. Ausländische Zivilarbeiter, Kriegsgefangene und KZ-Häftlinge in Deutschland (Essen 1991); B. A. Sijes, De arbeidsinzet. De gedwongen arbeid van Nederlanders in Duitsland, 1940–1945 (The Hague 1990 2nd ed.); Alan S. Milward, ‘French Labour and the German Economy, 1942–1945: An Essay on the Nature of the Fascist New Order’, Economic History Review, 23 (1970) 336–351; Edward L. Homze, Foreign Labor in Nazi Germany (Princeton 1967).

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–6– Expansion and Exploitation The Nazis’ striving for conquest may have been motivated by social Darwinist and racist ideas, but the assumption that territorial expansion was needed to provide industry with markets and raw materials and the country’s population with food, ideas derived from the nineteenth- and early-twentieth-century historical school of economics, was in the protectionist interwar world not completely incorrect.1 Following the publication in 1926 of the second volume of Hitler’s Mein Kampf, in which he expressed his ideas on eastern expansion,2 the Nazis regarded these regions of Europe as Lebensraum: colonial territory to be incorporated progressively as an area for settlers, a storehouse of raw materials and a gigantic granary. In Western Europe, economic motives for conquest were of secondary importance, but by 1938 Austria and the Sudetenland—the border area of Czechoslovakia with a largely ethnic German population—were incorporated, mainly for economic reasons. In these territories, the Reich’s armed forces found new recruits, while the Sudetenland also had important collieries and heavy industry.3 For the same reason, Berlin subjugated the remaining regions of Czechoslovakia in March 1939 and transformed the industrial Czech areas into the Protectorate of Bohemia and Moravia, which was closely linked to the Reich.4 According to an order from Hitler dated 14 March, even before the invasion important mines and blast furnaces in Czech Silesia were supposed to be safely in German hands.5 Western Europe became a victim of National Socialism for military reasons: the Anglo-French declaration of war following the invasion of Poland threatened Hitler’s western flank. Hence, the May 1940 assault on France, Belgium and the Netherlands should be regarded as a purely military operation. As Hitler had written in Mein Kampf, he had to deal with the French forces before he could proceed with his main task in the east—the acquisition of living space in the Slavic regions.6 A year later, in April 1941, political developments forced the German forces to move into the Balkan countries as well. There were, in addition, economic reasons why Hitler considered military action in the Balkans necessary. His interwar Balkan policy can be seen as an attempt to create a Großraumwirtschaft7—greater economic space—which would become an economically controlled, autarkic living space for Hilfsvölker—supporting peoples.8 In 1945 Albert O. Hirschman, the Berlin-born American economist, wrote that the economic dependency of South Eastern Europe on Germany was a consequence of its fragmentation after the collapse of the Habsburg Empire and the crumbling of Russia’s western and Germany’s eastern frontier areas after 1917–1918. According to Hirschman, in

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48 • Occupied Economies 1925, Germany’s first post-war year of some economic stability, its economic power in this part of Europe was already stronger than before 1914.9 Recently, however, Albrecht O. Ritschl has disputed this, claiming that it wasn’t until 1941, when the Wehrmacht brought these countries under military control, that Berlin’s dominance of them became indisputable.10 Whether or not this is so, certainly the Nazis had planned to incorporate Greece, Bulgaria, Hungary, Romania and Yugoslavia into their informal empire at least as early as 1934.11 According to Allan Fisher, writing in 1939 in International Affairs, during the early 1930s, these countries with economies founded upon peasant agriculture . . . found themselves . . . faced by the unpleasant necessity of selling large export surpluses at ruinously low prices. Conveniently, as it seemed to them, Germany came forward at this juncture and offered to buy substantial fractions at nominally higher prices. Payment was forthcoming, however, only in the form of blocked marks, which could be used for purchases of German goods, but for no other purpose, so that in return for the goods exported to Germany, German goods or equivalent aggregate value had to be imported.12

Berlin gained an economically superior position with further control over the Balkans as a result of the 1938 Anschluss, because Vienna remained the financial centre of these regions of Europe, although it had lost its political dominance in 1918.13 Consequently, after 1938, German foreign direct investments controlled several Yugoslavian commercial banks and almost half of the country’s industry. German shares in companies there increased further after the 1940 invasion of Western Europe, when the Nazis made it compulsory for the inhabitants of these newly occupied countries to sell their monetary gold, hard currency and, in some cases, shares in foreign companies. This included important French and Belgian investments in Eastern and South Eastern Europe.14 Berlin thus acquired 80 per cent of the shares owned by France in the Serbian copper mines, Mines de Bor. The money used by the Germans to obtain these shares came from the occupied countries of Western Europe.15 Having conquered most of Europe, they had no intention of paying for their acquisitions. The annexation of Austria strengthened Germany’s grip on strategic sectors in the Balkans, although this made little difference to its trading position, which was already strong.16 In 1935, to Mussolini’s dismay, the Reich replaced Italy as the dominant trading partner of almost all the Balkan countries following the League of Nations’ sanctions against his country. In 1939, 50 per cent of Yugoslavian exports, 64 per cent of Bulgarian exports and 36 per cent of Romanian exports went to Germany. Nevertheless, Mussolini still hoped for Hitler’s recognition of at least Yugoslavia and Greece as part of his sphere of influence. For Berlin, however, these suppliers of nonferrous metals and other raw materials were too important to lose; it was vital, therefore, that in 1939 Belgrade agreed to commit almost its entire output of copper to Germany, together with large quantities of lead, tin and zinc.17 In this way the

Expansion and Exploitation • 49 Reich could cover substantial parts of its needs for raw materials and vital foodstuffs, and because these countries were within the reach of the Wehrmacht, it could prevent any interference with these supplies. With the outbreak of war, it became important for these supply links to be formalized, and so Hungary, Romania and Bulgaria were forced into the Axis, although the latter only in March 1941.18 Now, their mineral and agricultural resources as well as their industries, if not their military forces, were in Hitler’s hands. However, Berlin failed to conclude a treaty with Yugoslavia. On 25 March 1941, only a few days after the Regent, Prince Paul, was forced under severe pressure to sign the Axis Pact, he was replaced on the throne by King Peter II following a coup d’état by Serbian officers backed by massive demonstrations.19 The new regime of the teenage king withdrew all support to the Axis powers. Thus, it plunged the country into war.20 It became clear that Germany would have to fight to secure its position in this part of Europe. German businessmen as well as bureaucrats saw the Balkans as an unofficial empire and, especially after the defeat of France, discussed ways of exploiting this in informal or unofficial publications on a new European order. In order to maintain the Reich’s relationships with both the Italians and the Soviets, and also keep the few remaining neutral countries on board, it was necessary at that time to keep any vague proposals on post-war control under wraps. Therefore, it is not implausible that—as was rumoured—Hitler personally ordered his Reich Minister of Economics, Walther Funk, to conceal his aspirations for a post-war division of Europe.21 With regard to the Balkans, however, by 1940 virtually all the major German companies had already formed far-reaching strategies for the development of this region, and the Reich’s indecision resulted in confusion.22 In addition, in October 1940 Mussolini attacked Greece. For German business, as well as for Hitler, this came as a blow. The Führer tried to prevent the Italians’ planned invasion, provoked by a stage-managed Albanian–Greece border dispute, as he thought it sheer madness. He therefore arranged a meeting with Mussolini, who welcomed him with the words: ‘Führer, we are on the march’.23 It quickly became clear that both Hitler and the Italian generals who warned Il Duce against this policy were right: Rome could not win this war, and Hitler was forced to provide military assistance. He feared that otherwise Britain would gain access to Greek airbases from which the Royal Air Force could attack the Wehrmacht forces when his planned campaign against the Soviets commenced in the spring of 1941.24 Thus, this part of the European Continent also came under Hitler’s power, although his planned attack on the Soviet Union had to be delayed, possibly with fatal consequences for Berlin. Between 1938 and 1941, Germany conquered almost the entire Continent. Only the Iberian Peninsula (which was more or less friendly towards Hitler) stayed neutral, together with Switzerland and Sweden. As these two democracies were both too small for any form of autarky and were totally surrounded by the Axis powers, they became de facto part of the Reich’s informal empire as well. Sweden even allowed German troops to use its railways for military transport purposes. In the West, Britain

50 • Occupied Economies alone survived, probably because the English Channel prevented a full-scale invasion at that stage of the war. In the East, the USSR alone managed to survive such an invasion, but not without shocking losses in human lives and property, and only after a five-month period in which even this gigantic country was on the brink of collapse. The rest of Europe was under Hitler’s domination, and given the huge resources that would be required to keep the war going, it was predictable that the economies of the occupied countries would have to be exploited to the full in order to meet the level of resources that Berlin was going to need.25

Notes 1. See: Karl Dietrich Bracher, Die Deutsche Diktatur. Entstehung, Struktur, Folgen des Nationalsozialismus (Cologne 1969) 28 et seq.; D. E. Kaiser, ‘Germany and the Origins of the First World War’, Journal of Modern History, 55 (1983) 442– 474; Werner Sombart, Die deutsche Volkswirtschaft im neunzehnten Jahrhundert und im Anfang des 20. Jahrhunderts (Berlin 1919 4th ed.) 368 et seq.; Fritz Fischer, Krieg der Illusionen. Die deutsche Politik von 1911 bis 1914 (Düsseldorf 1969 2nd ed.) passim. 2. Adolf Hitler, Mein Kampf. Zwei Bände in einem Band. Ungekürzte Ausgabe (Munich 1943) 726 et seq. 3. Peter Liberman, Does Conquest Pay? The Exploitation of Occupied Industrial Societies (Princeton 1996) 38. 4. Adalbert Polaček, ‘Die Zollgliederung des Protektorats Böhmen und Mähren in das Großdeutsche Reich’, Weltwirtschaftliches Archiv, 55 (1942) 232–258; Hein A. M. Klemann, Waarom bestaat Nederland eigenlijk nog? NederlandDuitsland: Economische integratie en politieke consequenties, 1860–2000 (Rotterdam 2006) 55–57. 5. Richard J. Overy, Goering (London 2000 2nd ed.) 82 and 114; Alice Teichova, ‘Instruments of Economic Control and Exploitation: The German Occupation of Bohemia and Moravia’, in: R. J. Overy, G. Otto and J. Houwink ten Cate, Die ‘Neuordnung’ Europas. NS-Wirtschaftspolitik in den besetzten Gebieten (Berlin 1997) 83–108, here 84–85. 6. Hitler, Mein Kampf, 728 et seq. 7. Bernd-Jürgen Wendt, ‘Südosteuropa in der nationalsozialistischen Großraumwirtschaft. Eine Antwort auf Alan S. Milward’, in: Gerhard Hirschfeld and Lothar Kettenacker (eds.), Der ‘Führerstaat’ Mythos und Realität. Studien zur Struktur und Politik des Dritten Reiches (Stuttgart 1981) 419; Hans-Erich Volkmann, ‘Außenhandel und Aufrüstung in Deutschland 1933 bis 1939’, in: Hirschfeld and Kettenacker, Der ‘Führerstaat’, 81–131. See also: Alan S. Milward, ‘The Reichs Mark Bloc and the International Economy’, in: Hirschfeld and Kettenacker, Der ‘Führerstaat’, 377–413, here 395 and 401.

Expansion and Exploitation • 51 8. Hermann Rauschning, Gespräche mit Hitler (Zürich 1940) 118; Elke Fröhlich (ed.), Die Tagebücher von Joseph Goebbels, Part 2, Diktate 1941–1945, Vol. 8, April–Juni 1943 (Munich 1993) 8 May 1943, 236; Wendt, ‘Südosteuropa in der nationalsozialistischen Großraumwirtschaft’, 419; Volkmann, ‘Außenhandel und Aufrüstung’. 9. Albert O. Hirschman, National Power and the Structure of Foreign Trade (Berkeley 1969 2nd ed.) 92–93 and 102. 10. A. O. Ritschl, ‘Nazi Economic Imperialism and the Exploitation of the Small: Evidence from Germany’s Secret Foreign Exchange Balances, 1938–1940’, Economic History Review, 54 (2001) 324–345, here 344. 11. BA, R2/14066: Reichsstelle für Devisenbewirtschaftung an die Überwachungsstellen, den 11. September 1934, Dev. B 28319/34. 12. Allan G. B. Fisher, ‘The German Trade Drive in Southeastern Europe’, International Affairs (Royal Institute of International Affairs 1931–1939), 18 (1939) 143–170, here 143. 13. Alice Teichova, ‘Vienna’s Changing Fortunes as Financial Centre in Twentieth Century Europe’, in: Eric Bussière et al. (eds.), L’Europe centrale et orientale en recherche d’intégration économique (1900–1950) (Louvain-la-Neuve 1998) 13–30, here 19–20. 14. Otfried Ulshöfer, Einflußnahme auf Wirtschaftunternehmungen in den besetzten nord-, west- und südosteuropäischen Ländern während des Zweiten Weltkrieges insbesondere der Erwerb von Beteiligungen (Verflechtung) (Tübingen 1958) 140–141; L. J. A. Trip, De Duitsche bezetting van Nederland en de financieele ontwikkeling van het land gedurende de jaren der bezetting (The Hague 1946) 28–29; Herman van der Wee and Monique Verbreyt, Oorlog en monetaire politiek: De Nationale Bank van België, de emissiebank te Brussel en de Belgische regering, 1939–1945. Deel 1: De Nationale Bank van België 1939–1971 (Brussels 2005) 245–250. 15. See: Jozo Tomasevich, War and Revolution in Yugoslavia, 1941–1945. Occupation and Collaboration (Stanford 2001) 616 et seq. 16. L’udovít Hallon, ‘Restructuring Industry in Four New Small Countries of Central Europe in the Interwar Period’, in: Timo Myllyntaus (ed.), Economic Crises and Reconstructuring in History: Experiences of Small Countries (St. Katharinen 1998) 125–143, here 126; Magda Adám, ‘Les projets d’intégration français et les états danubiens au début des années trente’, in: Antoine Fleury and Lubor Jílek (eds.), Le Plan Briand d’Union fédérale européenne (Bern 1998) 485–490, here 485. 17. William Grenzebach, Germany’s Informal Empire in East-Central Europe: German Economic Policy towards Yugoslavia and Rumania, 1933–1939 (Stuttgart 1988) 65–172; Franco Catalano, ‘Les ambitions mussoliniennes et la réalité économique de l’Italie’, Revue d’histoire de la deuxième guerre mondiale, 19 (1969) 16 et seq.; Jozo Tomasevich, ‘Foreign Economic Relations,

52 • Occupied Economies

18.

19. 20. 21. 22. 23. 24.

25.

1918–1941’, in: Robert J. Kerner (ed.), Yugoslavia (Berkeley 1949) 172; Holm Sundhaussen, Wirtschaftsgeschichte Kroatiens im nationalsozialistischen Großraum 1941–1945. Das Scheitern einer Ausbeutungsstrategie (Stuttgart 1983) 35; Documents of German Foreign Policy, D IX, no. 237; Reichsamt für Wirtschaftsausbau, Möglichkeiten einer Großraumwehrwirtschaft unter deutscher Führung: ZStAP, film no. 2329, quoted in Dietrich Eichholtz, Zur Kriegsziel- und Okkupationspolitik des faschistischen deutschen Imperialismus gegenüber Griechenland, 1939–1941 (Leipzig 1987) 39; Georg Thomas, Geschichte der deutschen Wehr- und Rüstungswirtschaft (1918–1943/45), edited by Wolfgang Birkenfeld, Schriften des Bundesarchivs 14 (Boppard 1966) 186. Akten zur deutschen auswärtigen Politik 1918–1945, Series D, 1937–1941, Vols 10–13, Die Kriegsjahre, June 23, 1940–December 11, 1941 (Göttingen 1969– 1979) Vol. 12, Part 1, 114, 167; Lee Miller, Bulgaria during the Second World War (Stanford 1974) 45. M. J. Calic, Sozialgeschichte Serbiens 1815–1941. Der aufhaltsame Fortschritt während der Industrialisierung (Munich 1994) 404–421. Ian Kershaw, Hitler 1936–1945: Nemesis (Harmondsworth 2000) 360–362; Calic, Sozialgeschichte Serbiens, 404–421. BA R 43 II/311 339408–339412, Denkschrift zur Errichtung eines Reichskommissariats für Großraumwirtschaft, 31 May 1940. Tomasevich, War and Revolution in Yugoslavia, 613. Field Marshal Wilhelm Keitel, In the Service of the Reich: Memoirs (London 2003) 146–147. Diary Ciano, entry 17 Oktober 1940, in: Hans-Adolf Jacobsen (ed.), Der Zweite Weltkrieg. Grundzüge der Politik und Strategie in Dokumenten (Frankfurt am Main 1965) 87. Richard J. Overy, War and Economy in the Third Reich (Oxford 1994), passim.

–7– The Periods of Exploitation From the outset, the main target for the Nazis in Central, Eastern and South Eastern Europe was economic exploitation. Berlin needed to ensure supplies of raw materials and food from these regions before a major confrontation with the West could result in the cutting off of their overseas supplies. In countries like Austria, the Czech lands and the Balkans, exploitation therefore started right after Germany stretched its power over these parts of Europe, but in Poland and the occupied Soviet Union it did not. The exploitation that began in Poland in 1939 and in the occupied parts of the USSR in 1941 amounted to wholesale scavenging of all the Germans could get their hands on. The destruction that resulted from it, but even more from the Soviet scorched-earth policy, was part and parcel of Hitler’s plan to eliminate the Soviet economy and a substantial part of the Soviet population with it, thus creating space for colonization. As he had written in Mein Kampf and reiterated many times, the target in the conquest of these parts of Europe was the acquisition of land for the resettlement of Aryan farmers.1 However, any massive colonization by Aryan farmers was far off, though some so-called Germanic farmers attempted to find a future in the Reich Commissionership Ostland—the occupied Baltic States and White Ruthenia. Germany itself had no spare manpower with which to populate these areas as all its able-bodied men who were not on the front lines were badly needed in the war industries at home, while the number of volunteers from the so-called Germanic countries was limited: in the Netherlands, where the small Nazi Party (NSB) set up an Ostland company, no more than one to two thousand men went to these territories, dazzled by the bright promises fed to them by the party. In Denmark, where a similar company was set up, and in Belgium and Norway, even fewer were tempted by the idea of a Baltic future.2 While Hitler and his cronies still hoped for a quick victory, ethnic cleansing and stripping these regions of everything worth taking seemed a good way to clear the conquered lands for future Aryan settlement. Whatever the long-term plans for exploitation might have been initially, after the German setbacks in the winter of 1941–1942, Berlin needed all the resources it could obtain. In December 1941, not only did Japanese actions in the Far East draw the USA into the war, but in Eastern Europe it became clear that the Soviet Union, despite the immense destruction inflicted on it by the invading Wehrmacht, was still capable of launching a dangerous counter-attack. It was apparent to those capable of assessing the situation that Germany was in great danger of yet again facing collapse and ruin.3 In addition, the situation for the Allied forces had changed dramatically

– 53 –

54 • Occupied Economies since the fall of France, when all had seemed lost. Their production capacity now massively surpassed that of the Axis. Mark Harrison is convinced that economic strength was the decisive factor in twentieth-century total warfare—and, according to him, from December 1941 on an Allied victory was assured, while Winston Churchill wrote in his memoirs that the attack on Pearl Harbor had delighted him: ‘We had won the war. England would live.’4 This seems a somewhat premature statement for the British Prime Minister to make at that time as he more than anyone was fully aware that the war was going to be a long and bloody one.5 Richard Overy writes that the effectiveness of planning, the extent of economic concentration on war, and strategic and tactical decisions could also be crucial to the outcome.6 Up to a certain point, he is right: heroism, the quality of arms and armies, and strategic decisions might win battles, but such factors were not decisive in the lengthy wars taking place between all highly developed industrial nations of the twentieth century. If an enemy could survive the first battle and recover from a surprise attack, the production capacity became crucial. Germany was proud of its high-quality tanks, but in 1941 most Russian tanks were impervious to German tank attacks and its panzers too strong even for German cannons. The Germans actually were shocked when they noticed that they could hardly destroy them, but it was not an immediate threat as the Soviets lacked radio communication between tanks, and their tank units were not as well trained as the German ones. In contrast to the Wehrmacht, the Red Army initially used its tanks relatively inefficiently, piecemeal, instead of concentrating them in larger units. Soviet tanks were, however, already mass-produced, and the Soviet disadvantages were quickly compensated for as the Red Army learned its lesson after the first battle experience.7 During the war, the cost of producing the T-34, the famous Soviet tank, was reduced to almost a third of its pre-war level.8 Anyway, from 1942 onwards, Hitler’s Reich was no longer facing just Britain and its waning empire; it was now also in contention with the two superpowers—the USSR and the USA. To continue fighting on the scale necessary for such a war, its armies needed the economic backing of the whole of Europe. The events of December 1941 marked the start of a complete change in the exploitation of the occupied countries. If Stalin’s winter offensive did not open Hitler’s eyes to the reality of his situation, it did so for some of those around him, especially his Minister of Ammunition, Fritz Todt, who realized that his country was headed for a disaster similar to that of 1918. He advised the Führer to aim for compromise, but although Hitler didn’t disagree on the seriousness of the situation,9 he thought it too late to attempt any form of settlement. There was no choice left but to continue the battle and accept the possibility of an eventual defeat—and with it the end of the Third Reich. Since, in Hitler’s egocentric way of thinking, the existence of Germany and its people was inextricably bound with his own,10 only a coup d’état could now save the European nations from continuing the struggle to the bitter end. A coup came only two and a half years later, on 20 July 1944—but it failed. It had been clear to many from December 1941 on that the end would be harsh. According to both Sebastian Haffner and Joachim

The Periods of Exploitation • 55 Fest, even Hitler had grasped the fact that his strategy had failed. This was the background behind his decision on 11 December to declare war on the USA.11 Haffner has even emphasized a connection between the persecution and murder of Europe’s Jewish population and Hitler’s awareness that the war was now a lost cause. When he recognized that Germany could not win, he decided to destroy everything and in the process pull down as many of his enemies as possible with him.12 However, Ian Kershaw sees the connection between the expansion of the war and Hitler’s decision—announced to a meeting of party leaders on 12 December 1941, the day after he declared war on the USA—in another way. Ever since the end of the First World War, Hitler had held the Jews responsible not only for that war, but also for an eventual new world war. He was convinced that they would be the instigators of any such new conflict and had threatened that, if and when this new conflict came, the Jews would perish.13 Whatever the reason, his 1942 attempt to turn economic determinism around by intensifying economic exploitation, both in Germany as well as in the occupied territories, guaranteed that across Europe the German ruin would end in maximum destruction. In addition, it should not be forgotten that the idea that further warfare could only prolong and deepen the struggle with its suffering and destruction was not necessarily apparent to those in power in 1942. What may be obvious in hindsight is not likely to have been so at the time, and those Nazi leaders who may have feared a disastrous ending in moments of clear-mindedness or pessimism could at other times hope for a different ending. Walter Naasner called the phenomenon that stopped the Nazis from making a rational analysis of their situation Krisenverdrängung—crisis repression. They just turned a blind eye to the facts and hoped to create miracles by intensifying war production, which explains why they refused to give up.14 After the quarrel between Todt and Hitler resulting from Todt’s statement that he no longer believed victory possible, the Minister was ordered to reorganize war production. He was one of the very few who had had the courage to tell Hitler openly how hopeless the situation was, but his frankness was not appreciated. A few hours after their stormy discussion, Todt’s aircraft crashed, and Albert Speer became his successor.15 Responsibility for the war economy now passed into the hands of a new man, one with powers that even Göring as Plenipotentiary for the Four Year Plan never had. Speer was able to implement the reorganizations that Todt had planned. They proved highly effective.16 According to Adam Tooze, the transformation at the top of the economy had a different character than most historians think, and although his ideas are less new than claimed, he is right when he writes that Speer was not solely responsible for all changes. The fundamental policy changes had already been prepared, and not only by Todt. Reichswerke Director Paul Pleiger had come up with similar ideas to those implemented by Speer and assisted him in their enforcement along with Field Marshal Erhard Milch and Gauleiter Fritz Sauckel.17 Nevertheless, when Speer took control and organized the Zentrale Planung—a central economic planning organization—it

56 • Occupied Economies created a new situation. As the historians Bernhard Kroener, Rolf-Dieter Müller and Hans Umbreit have written, it was not just Speer’s ideas that were crucial, but also his sudden appearance on the scene. As a new face in the Nazi hierarchy he was able to implement ideas that someone like Todt could only have introduced carefully and not without compromises.18 In addition, Speer’s youthful vitality, probably resulting from his unbroken belief in victory, was essential. At any rate, the new policy resulted in increased productivity for Germany and a more efficient use of raw materials. The transformation also caused a more systemized exploitation of occupied Europe, with negative consequences in the West but attempts to restart production in the East.19 Just as, in Germany, the way for Speer’s policy was paved by Todt, in occupied Europe Berlin officials trying to exploit these countries paved his way there. These officials were no longer content with having to place orders with industries in France or the Netherlands and quarrelling with German governors about deliveries. Reorganization in Germany itself implied the introduction of overall central planning. Now production in the occupied countries could be incorporated into this plan. An early proponent of such ideas was Pleiger, who until Hitler came to power was the owner of a small machine factory. From 1937 he became an influential member of Göring’s Four Year Plan and Director of the Reichswerke Hermann Göring. From April 1941, he combined these duties with that of Reich Plenipotentiary for coal and was thus responsible for the planning, production and distribution of fuels. Immediately after Hitler appointed him, Pleiger tried to take control of coal production in occupied Europe as well.20 As coal was still the most important fuel in Europe and the basis of all industrial production, the coal output provided, as Peter Liberman wrote, ‘a ceiling for economic activity in German-dominated Europe’.21 The result of Pleiger’s policy was that the Germans in The Hague, for instance, were confronted with claims for Dutch coal, despite the fact that coal production in the Netherlands had been just enough for domestic use in peacetime. Consequently, in 1942, these forced exports undermined not only domestic consumption, but also Dutch industrial production, even though it was already largely concentrated on meeting German demands.22 As Pleiger thought it more efficient to shut down industry in occupied Western Europe and concentrate production in Germany, the setback in Dutch industry was not considered important. Pleiger lacked the power to accomplish his ideas, however. He could only withdraw substantial quantities of coal from occupied Europe, thus undermining production in the Netherlands and especially France. In recent years, French and Dutch historians subdividing the occupation period according to exploitation methods found remarkable similarities, and most of the elements of their subdivision can be found in Belgium as well.23 The occupation of France started with pillage, pure and simple. Then, the occupier experimented with letting occupied countries produce for its war effort, which resulted in economic recovery and a workable relationship between the occupying power and the occupied. Finally, from 1942 onwards, a hunt for labour and intense exploitation of

The Periods of Exploitation • 57 the remaining production became characteristic.24 The big difference between the exploitation of France and Belgium and that in the Netherlands was that in the latter there was very little of the pillaging that took place during the initial occupation periods in Belgium and France. From August 1940 on, however, the transfer of orders (Auftragsverlagerung) that the overburdened German companies were unable to cope with was central to the exploitation of the whole of Western Europe.25 By passing some of the enormous demands on to the occupied countries, it was possible to concentrate all economies towards the German requirements without the need for any centralized economic planning. Until 1942, the German war economy was far from efficient.26 That was not because economic mobilization was incomplete for socio-political reasons, as historians of an older generation thought, let alone that an incomplete mobilization was the reason for Hitler’s Blitzkrieg.27 The Hobbesian structure of the Reich resulted in every high-ranking Nazi or bureaucrat trying to outdo his rivals and jealously defending his corner, thus making any coordination, let alone a planned economy, impossible. For instance, every individual army corps was permitted to order its own arms or even change specifications at any time. Apart from the army and its offices, there were also Göring and his Four Year Plan, Todt and his Munitions Department, Funk and his Economic Department, the Reich Finance Ministry, the Reichsbank and the business community, each with their own policies. Coordination was impossible, and no one had the power to overrule any of the others. Over and above that was the problem that Göring’s planning had been aimed at starting the war in about 1944; when it actually broke out in 1939, his Four Year Plan proved too inflexible to accommodate the necessary changes. Thus, at a time when all resources needed to be directed towards war production, there were gigantic stocks and hundreds of thousands of workers still occupied in capacity-creating projects that would not come on line until the mid 1940s. In any event, it was only from 1942 onwards that the economy eventually acquired some basic efficiency.28 This chaotic internal structure of Hitler’s Reich also had enormous consequences for occupied Europe.

Notes 1. Adolf Hitler, Mein Kampf. Zwei Bände in einem Band. Ungekürzte Ausgabe (Munich 1943), 726 et seq.; Alexander Dallin, German Rule in Russia, 1941– 1945: A Study of Occupation Policies (London 1957) 379. 2. Adolf Hitler, Hitler’s Table Talks, 1941–1944: His Private Conversations (New York 2000) 12 November 1941, 126–128; David Barnouw, Rost van Tonningen. Fout tot het bittere eind (Amsterdam 1994) 106. Verbal information from Drs. David Barnouw, 26 September 2007. Barnouw is probably the only specialist on the subject. 3. Walter Naasner, Neue Machtzentren in der deutschen Kriegswirtschaft 1942– 1945. Die Wirtschaftsorganisation der SS, das Amt des Generalbevollmächtigten

58 • Occupied Economies

4. 5.

6. 7. 8. 9. 10.

11. 12. 13. 14. 15.

16.

17. 18.

19.

für den Arbeitseinsatz und das Reichsministerium für Bewaffnung und Munition/Reichsministerium für Rüstung und Kriegsproduktion im nationalsozialistischen Herrschaftssystem, Schriften des Bundesarchivs 45 (Boppard am Rhein 1994) 472. Winston Churchill, Memoirs of the Second World War, 1939–1945, Vol. 5 (London 1959) 506. Mark Harrison, ‘Resource Mobilization for World War II: The U.S.A., U.K., U.S.S.R., and Germany, 1938–1945’, Economic History Review, 41 (1988) 171–192, here 171; Mark Harrison, ‘The Economics of World War II: An Overview’, in: Mark Harrison (ed.), The Economics of World War II: Six Great Powers in International Comparison (Cambridge 1998) 1–42. Richard Overy, Why the Allies Won (London 1995) 4 and passim. Ibid. 182–183. Ibid. 182–183; Sovetskiy tyl v Velikoi Otechestvennoy voine. Kniga 2 (Moscow 1974) 114–115. Sebastian Haffner, Anmerkungen zu Hitler (Munich 2001 23rd ed.) 137. Joachim Fest, Der Untergang. Hitler und das Ende des Dritten Reiches. Eine historische Skizze (Berlin 2003 2nd ed.) 56; Albert Speer, Erinnerungen (Frankfurt am Main 1969) 457–458. Joachim Fest, Hitler. II. Der Führer (Frankfurt am Main 1976 2nd ed.) 892– 897; Haffner, Anmerkungen zu Hitler, 139–142. Haffner, Anmerkungen zu Hitler, 139–142. Ian Kershaw, Fateful Choices: Ten Decisions That Changed the World 1940– 1941 (London 2007) 431 et seq. Naasner, Neue Machtzentren, passim. For more on the crash see: Joachim Fest, Speer. Eine Biographie (Frankfurt am Main 1999) 174–175; Ian Kershaw, Hitler 1936–1945: Nemesis (Harmondsworth 2000) 503. On Speer, see: J. K. Galbraith, ‘A Retrospect on Albert Speer’, in: J. K. Galbraith, Economics, Peace and Laughter: A Contemporary Guide (Harmondsworth 1976 3rd ed.) 230–241. Richard J. Overy, War and Economy in the Third Reich (Oxford 1994) 254; Alan S. Milward, War, Economy and Society, 1939–1945 (London 1977) 115– 116. Adam Tooze, The Wages of Destruction: The Making and Breaking of the Nazi Economy (London 2007 2nd ed.) 486 et seq. Bernhard R. Kroener, Rolf-Dieter Müller and Hans Umbreit, Germany and the Second World War, Vol. V/II, Organization and Mobilization in the German Sphere of Power: Wartime Administration, Economy, and Manpower Resources 1942–1944/5 (Oxford 2003) 296. Overy, Why the Allies Won, passim; Harrison, ‘Economics of World War II’, 10; Dallin, German Rule in Russia, 379.

The Periods of Exploitation • 59 20. Overy, War and Economy, 337–341; Patrick Nefors, Industriële collaboratie in België. De Galopindoctrine, de emissiebank en de Belgische industrie in de Tweede Wereldoorlog (Leuven 2000) 168–170. 21. Peter Liberman, Does Conquest Pay? The Exploitation of Occupied Industrial Societies (Princeton 1996) 51. 22. Ibid. 168–169; J. Mensink, De kolenvoorziening van Nederland tijdens den Tweeden Wereldoorlog (Amsterdam 1946) 65–66. 23. Hein A. M. Klemann, Nederland 1938–1948. Economie en samenleving in jaren van oorlog en bezetting (Amsterdam 2002); Arne Radtke-Delacor, ‘Produire pour le Reich. Les commandes allemandes à l’économie française (1940– 1945)’, Vingtième Siècle. Revue d’histoire, 70 (April–June 2001) 99–115; Nefors, Industriële collaboratie in België, passim. 24. Arne Radtke-Delacor, ‘La place des commandes allemandes à l’industrie Française dans les stratégies de guerre nazies de 1940–1944’, in: Olivier Dard, JeanClaude Daumas and François Marcot (eds.), L’Occupation, l’État français et les entreprises (Paris 2000) 12–13. 25. Klemann, Nederland 1938–1948, 55 et seq.; Nefors, Industriële collaboratie in België, 85. 26. Overy, War and Economy, passim. 27. See: Milward, War, Economy and Society, passim; Karl-Heinz Frieser, Blitzkrieg Legende. Der Westfeldzug 1940 (Munich 1995) passim. 28. Overy, War and Economy, passim.

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–8– Dissimilarities in Occupied Europe According to Alan Milward, Nazi racism limited the advantages of conquest.1 From all that is known about Nazism it seems plausible that in the Ukraine or Poland, for instance, ethnic arguments influenced the decision on how to exploit the country: by taking the output or by taking factors of production. It is also clear, however, that in economic matters racism was not all that mattered, or as Jonathan Steinberg wrote: ‘The occupied Soviet Union became an arena in which every conceivable expert—agronomist, economist, racial and genealogical fanatic, technocrat, bureaucrat, student of Russian and Slavic cultures (the Ostforscher), colonizer and crank— attempted to mobilize some element of the great state apparatus to fulfil his visions.’2 Apart from racism, struggles between ambitions, organizations and ideological notions were manifest, and such struggles could be found everywhere. It is too easy to conclude that Nazism was just a racist ideology. Often, individual leaders, the economic needs of the Reich and the military situation, as well as struggles between governors of occupied countries and Berlin officials or Nazi leaders interfering in the war economy, were more important than racism. According to Nazi racists, Czechs, for instance, did not rank higher than Poles, Serbs, Croats or Ruthenians— all mentioned in Mein Kampf in one sentence3—and in 1932 Hitler even expressed a view on Czech territory comparable with his ideas on Poland or the Ukraine: ‘The Bohemian-Moravian basin and the eastern districts bordering on Germany will be colonized with German peasants. The Czechs and the Bohemians we shall transplant to Siberia.’4 The level of economic development and the products the Czechs provided fortified their position, however. Their supposed racial inferiority did not make their machinery, arms, iron, steel or coal inferior. Consequently, Czech workers were fed well, and food rations—that is excluding black market purchases or food items that were freely available and never rationed—were higher than in any other Germanoccupied country and second only to those in the Reich.5 Most, although not all, were even on the same level as in Germany, while the rations of Poles, for instance—also formally incorporated into the Reich but producing less interesting products—were far below those of the Germans.6 That Berlin did not take considerable parts of the Czech foodstuffs—and in 1942–1943 even sent substantial quantities of scarce edible fats to back up the rations of the Czech population—indicates that feeding the Czechs was considered of vital interest.7 In other words, rational arguments could sometimes prevail over racism.

– 61 –

62 • Occupied Economies Economic circumstances, the level of development and productivity differed largely across Europe, which could explain some of the differences in exploitation. Above all, there were substantial distinctions in circumstances, partly as a consequence of the military situation.8 Whether the peoples of Europe were treated according to a crude or even cruel rationality can be examined by looking at these factors. A major problem here, however, is that although Berlin kept pre-war state borders more or less intact in the West, elsewhere the map of Europe was completely redrawn. As a consequence of military action combined with local animosities stimulated by the Nazis, political units that were created after the First World War disintegrated again in 1938, 1939, and 1941. The nationalistic sentiments of minority groups resulted in puppet states that more often than not even agreed to participate in the partition of their neighbours or the sending of troops to fight the Bolshevists. The map of Europe, drawn after the collapse of the Tsar, the Kaiser and the Habsburg Emperor little more than twenty years earlier (see Chapter 3), was now completely revised. This makes it impossible to calculate the intensity of the exploitation per country. A wider perspective is necessary. According to calculations by Angus Maddison completed by Mark Harrison, the 1938 population of the regions of Eastern Europe later occupied by the Nazis— Poland, parts of the USSR and the Baltic States—was 104 million (see Table 8.1); their combined 1938 gross domestic product (GDP) in 1990 Geary-Khamis dollars was $224 billion.9 In the occupied West, including Denmark and Norway, the 1938 GDP was $302 billion, or 35 per cent higher than in the East, while the population was 65 million, 35 per cent lower. In other words, the pre-war per capita production in the western parts of occupied Europe was more than twice that of the eastern parts. In Central Europe—Czechoslovakia and Hungary—the 1938 GDP was $55 billion, while the population was 20 million. Its per capita production was 28 per cent higher than in the East and 77 per cent higher than in the Balkans, but 40 per cent lower than in the West. The 1938 GDP of the Balkans, including countries pressed into an alliance with the Axis, was only a little more than the Central European GDP, but the population was more than double (see Table 8.1). Thus, the region’s per capita production was only slightly more than half that of Central Europe and even 25 per cent lower than that of Eastern Europe. In this part of Europe, internal differences were, however, enormous. The 1938 Greek per capita GDP was only a few dollars below that of Czechoslovakia, and 25 per cent higher than in Poland or the occupied parts of the USSR, while the Yugoslav per capita GDP was half that of Greece and less than in any other European country. It was on a similar level to the more highly developed Asiatic countries like the Philippines or Indonesia.10 As the data are not reliable for more detailed comparisons, this snapshot perspective is all we have, but it does give an idea of the spread of productivity across Europe: Eastern and South Eastern Europe were backward, and Western Europe was modern, while Greece and Central Europe were in between. From the German point of view, therefore, it was rational to commandeer the output of the Western countries

Dissimilarities in Occupied Europe • 63 Table 8.1.

Spread of GDP and Population over German-controlled Europe in 1938

Territory

Production per capita GDP Share of Share of Population (in billions population 1938 GDP Index Value (in millions) of 1990 $) (%) (%) 1990 $ (Average = 100)

Occupied Western Europe

65

302

23

38

4,593

131

Occupied Eastern Europe

104

224

37

28

2,161

62

South Eastern Europe

46

71

16

9

1,563

45

Central Europe

20

55

7

7

2,772

79

Other European alliesa

47

145

17

18

3,068

88

282

797

100

100

3,501

100

Total

a Italy and Hungary. Source: Mark Harrison, ‘The Economics of World War II: An Overview’, in: Mark Harrison (ed.), The Economics of World War II: Six Great Powers in International Comparison (Cambridge 1998) 1–42, here 3 and 7–8; own calculations.

and withdraw labour, machinery and raw materials from Eastern Europe and the Balkans to put these to more efficient use elsewhere. The exception was when the Eastern European or Balkan economies could produce foodstuffs or raw materials that were not available in sufficient quantities in the western regions and it wasn’t viable to relocate the eastern production factors. This simple rationality was pointed out by Hitler in November 1941 in one of his endless table talks, when he said that ‘we have in Europe highly civilized peoples who are reduced to breaking their stones for themselves. On the other side, we have at our disposal those stupid masses in the East. It’s for these masses to perform our humbler tasks.’11 Although this argument is deeply racist, there is some cruel, simplified rationality in withdrawing labour, raw materials and machinery from Eastern Europe and the Balkans to stimulate production in Germany itself, as well as in the occupied Western countries. In Eastern Europe and the Balkans only agrarian production and mining seemed rational. The relative inefficiency of Eastern Europe was not the only reason for extracting labour and raw materials from those regions and production output from the West. Another difference between the occupation of the East and the West is that after the May–June campaign of 1940, the war was over in Western Europe, while fighting continued in the eastern regions. In the West, the war years are remembered as a time of suffering because the historiography all over Europe focuses on aspects in which these years differed from others. The history of the occupation is about suppression, resistance, treason, the persecution of the Jews, slave labour, hiding, hunger and plundering.12 The fact that, in reality, all was quiet most of the time in the West is all but ignored, just like the fact that in Central and Western Europe in

64 • Occupied Economies 1939, or by the summer of 1940, the population could do little but wipe away their tears and carry on with life as before. Obviously, this was not so for the Jewish minority or the gypsies, but by comparison these were tiny minorities. For instance, in France, a country of 42 million in 1938, the Nazis arrested and murdered 83,000 of the 300,000 Jews living there. Of course, this was a monstrous crime and by far the most severe wartime event in these regions, but it threatened only 0.7 per cent of the population. In the Netherlands—the country with the largest Jewish minority of Western Europe—104,000 of its 140,000 Jewish inhabitants were murdered, and this genocide had a substantial impact on cultural life, especially in the capital—but even in the Netherlands Jews were a minority constituting no more than 1.4 per cent of the population, and outside Amsterdam seldom more than 0.5 per cent.13 The Jews were a recognizable minority; nevertheless, it is doubtful whether the Jewish suffering was part of most people’s everyday life. When, on a beautiful Sunday in June 1943, an Amsterdam tradesman noticed that there were no trams running, he realized this meant another raid on the Jews was probably happening. According to his diary, his first worry was that his day off with the family in the countryside would be spoilt. Nevertheless, the Jewish tragedy was noted, and after a minor anti-Semitic remark, the victims were even pitied.14 The gypsies in Western Europe were so few and so isolated that the public seldom noticed what happened to them. Altogether, the Nazis transported between half a million and one million gypsies to the death camps, but from the Netherlands—a country with 10 million inhabitants—only 245 were taken, while from France 30,000 were deported.15 Without trivializing these crimes, it is a fact that most Western Europeans were not involved in such horrors, nor were they caught up in any fighting. The French, Danes and Belgians followed the war from censored newspapers or by tuning in to the forbidden BBC foreign-language programmes. They did not have to undergo the hardships that Belarusians, Poles and Serbs had to endure, or witness the murders of thousands of Jews, Communists, partisans or unfortunate passers-by and onlookers, as was everyday practice in Eastern Europe. For them the hardships of war meant that many staple foods became scarce—white bread was unavailable, and, for most, the breakfast egg was a luxury—and that political parties and unions were prohibited and newspapers censored, but at least in the first years they could continue to live a more or less normal life. Most people therefore participated only in symbolic acts of protest, not in actual resistance.16 Neither heroes nor traitors, they were biding their time. By June 1940, it seemed clear that Adolf Hitler had won his war in this part of the Continent and that liberation was unlikely during one’s lifetime, let alone in the near future. Goebbels rightly boasted that Germany had won on all fronts, and Britain, fighting on alone, seemed incapable of doing anything about it. Western and Central Europe were lost, and their inhabitants, wanting to protect their private lives and material circumstances, adapted themselves to the situation. Even in 1943, a Dutch shopkeeper wrote that all he hoped for was to get through the war without too much damage to his shop.17 So, from the summer of 1940 until at least 1942, but

Dissimilarities in Occupied Europe • 65 for many until 1944, it wasn’t the war that determined daily life, but the same things as before and after the war. People did their work and their business, married, had children and went to school, to church, to the cinema and on holiday; they ate, drank, made love, quarrelled, were ill and in due course died, mostly in their beds like their forefathers before them.18 The war was an unpleasant background, but in Western Europe, for most people, life went on as before with only minor adaptations. Occupied Eastern Europe, however, did not become the colonial hinterland the Nazis hoped to gain, but the rearguard area of the Eastern Front. Here, normal life was impossible for four years as modern warfare in all its horror continued. Partisan activity and the Nazis’ excessive reactions to it broke down any attempt to normalize life or restart production—and not just immediately behind the front lines. The Soviet resistance that halted the German military progress prevented the colonization that Berlin had in mind, and until the Nazi hierarchy became aware that they needed all available resources, plundering was the only economic policy left. The ongoing war and the undulating movements of the front, the targeting and murder of specific groups such as Jews and Communist officials, and the plundering of resources that resulted in starvation, together with indiscriminate cruelties, all made any form of normal life impossible.19 Many historians assume that in the Baltic countries, Belorussia and the Ukraine, Berlin initially had the opportunity to stir up anti-Soviet feelings, but their racism, anti-partisan campaigns and increasingly exploitative policy undermined any such attempts.20 While in the occupied West the non-Jewish majority could reduce the effects of Nazi ruthlessness by obeying German orders, millions starved to death in Eastern Europe because their food was seized to provide for the German troops. Here ‘cooperation [was] no more palatable than resistance’,21 as prisoners of war and partisans, as well as civilians, were subjected to unspeakable cruelties; the peasants who had hoped for the abolition of collective farms with the coming of the Germans were disappointed, just as were the Belarusians and Ukrainians who had been eager for some limited self-government. In addition, Goebbels drummed the anti-Soviet feelings that were already strong among the German officers into the minds of the common soldiers, where they, combined with racism and the men’s fear of the Russian guerrilla attacks, resulted in a ruthlessness that wasn’t exclusively expressed against Jews.22 Ignorance, lack of planning, brutality and violence, together with contempt for the Slavs, regarded as subhuman, destroyed any chance of cooperation from the local population. Many were driven into open or covert resistance.23 According to various estimates, the number of Russian partisans over the course of the war was between 700,000 and 1,300,000, while German estimates range between 400,000 and 500,000, but the German figures accounted only for organized groups. Other estimates are lower, but incomplete.24 The Soviet and Russian estimates are always higher: some sources give numbers as high as 2.8 million for the number of Soviet partisans with their reserves.25 Irrespective of their numbers, the partisans became the chief reason cited in Wehrmacht documents for the food

66 • Occupied Economies deficits in occupied Soviet areas, as they made it impossible for the Germans to live off the land.26 Although the local partisans were often reluctant and inefficient fighters pressed into guerrilla combat by Soviet agents and German terror, and their military strength was limited, these factors hardly reduced their impact.27 Estimates in German records suggest that just over 50,000 Germans were killed by partisans; of these Germans only half were soldiers, while in all over 2.7 million German soldiers fell in battle in the USSR. The impact of partisan activity was, however, increased enormously by the terror that went hand in hand with it. Soon after the invasion, Field Marshal Walther von Reichenau, commanding officer of the army capturing Kiev, wrote that ‘cruel partisans and degenerate women are still being made prisoners-of-war and guerrilla fighters dressed partly in uniform or plain clothes and vagabonds are still being treated as proper soldiers, and sent to prisoner-of-war camps.’28 According to von Reichenau, rounded-up partisans should be publicly executed with placards around their necks telling of their crimes. In September, only a few months after the invasion, orders came in that for every soldier killed by guerrilla fighters, 50 to 100 randomly taken locals were to be executed. In Nazi eyes partisans offered a welcome excuse to kill substantial numbers of inferior and superfluous people. Hitler had already written to the party Secretary, Martin Bormann, in July 1941, stating that ‘partisan war . . . gives us the possibility to wipe out anybody in our way’, a great advantage, as a ‘huge territory must be pacified as quickly as possible. That will take place if we shoot anybody who even glares at us.’29 Before long it became almost common practice to destroy a village just because there was suspicion of partisan activity. The fate of the village Lidice in Czechoslovakia and the French town of Oradour-sur-Glane, both razed to the ground by the Germans while the inhabitants were massacred, is well known, but it is virtually forgotten that, apart from the persecution and murder of millions of Jews and the public execution of Communist officials and many other appalling acts of cruelty, such was the fate of some 250 villages in the Ukraine alone.30 In 1941, that is within six months of the start of the invasion, 700,000 Soviet prisoners of war and 1 million of the 9 million inhabitants of Soviet Belorussia had lost their lives as victims of German violence. More than half of these Belarusians were Jews—before the war 8 per cent of the population of this Soviet republic. Apart from the murder of the Jews, another 350,000 inhabitants were killed in anti-partisan measures.31 Although the resulting terror did not increase sympathy towards the Soviets, it did turn people against the Germans. Thus, from 1942 on guerrilla warfare could develop into an organized instrument of Soviet politics. Officers now came from both the Communist Party and the Red Army, while recruitment was no longer on a voluntary basis.32 In territories where guerrilla activity was punished by terror and mass murder, normal life could no longer exist, and soon partisan warfare made any economic exploitation almost impossible across Eastern Europe and the Balkans. In occupied parts of the USSR, as well as in Poland, the Baltic States, Yugoslavia and Greece, not only was production repeatedly disrupted by guerrilla fighting and by the

Dissimilarities in Occupied Europe • 67 way the occupier treated locals, but substantial areas even fell completely into partisan hands. In April 1943, the Germans drew up a map of the occupied Soviet territories (Plate 1), marking in red the territories where partisan groups had destroyed the economy and in pink those areas with severe damage. In fact, the map shows that in April 1943 more than half of the Ukraine, together with substantial parts of Ostland, and the military territories of Nord and Mitte—especially the wooded areas—were partisan-ruled. This severely limited the Germans’ economic possibilities, and the Wehrmacht had to use force to obtain food supplies.33 Partisan activity wasn’t limited to Soviet territory. As early as 1939 a Polish underground army was formed, which by 1943 numbered some 300,000. In 1942 it turned to guerrilla fighting when, as part of the Generalplan Ost, the fertile country surrounding the city of Zamość (later renamed Himmlerstadt) was selected for resettlement by German farmers. As part of the preparatory clearance 140,000 Polish peasants were removed, and the opportunity was taken to select 45,000 Polish children for an SS Germanizing project. In a desperate attempt to defend their property and children, and as revenge, Polish partisans drove the new German inhabitants away, setting fire to their houses. This went on for several months until eventually the Nazis had to give up their resettlement policy.34 By then guerrilla fighting had greatly increased and even crossed the Reich border into parts of Poland annexed in 1939. In the USSR, some partisans were mobilized by conscription. In Poland, such a system did not develop, but nevertheless the motives were not always as idealistic as recounted in post-war tales. Poverty was an important incentive, which becomes clear from the fact that the Courts of Justice of the Polish Resistance had to try a number of cases of ‘plunder committed by partisans who had slipped into banditry’.35 In Greece and the Balkans—that is Serbia and the non-occupied parts of Yugoslavia (Croatia) and Albania—partisan activity became widespread as well, and as a consequence, German rule became more ghastly than intended. The division of Greece and Yugoslavia into a number of occupation zones ruled by the Germans, Italians or Bulgarians or into puppet states ruled by local Nazi sympathizers resulted in the economic isolation of the individual areas from one another. The effect of this, together with the Allied blockade, the confiscation of stocks and the lack of labour, as so many men either were in the army or became prisoners of war, had by 1941 brought about the collapse of the weak economies of this part of Europe. Soon, normal markets could no longer allocate essential products such as foodstuffs, while the pre-war local state organizations, which elsewhere in Europe regulated markets and prices, all but collapsed after they fell into the hands of untrustworthy regimes. In addition, from February 1941, the Balkans became a supply base for the African front, when German troops under the command of General Erwin Rommel were brought in to support the Italian army in the North African conflict against the British. The German army used all the supplies the Balkans could produce and, by claiming substantial sums as occupation costs, had the economic power to get everything it needed, paying higher black market prices than any local could afford. As a consequence,

68 • Occupied Economies there was little left for local consumption, and as these economies had already suffered severely from the lack of labour and cutting off of overseas imports, disaster resulted. In 1941–1942, a severe famine in Greece caused hundreds of thousands of deaths and created massive opposition to the Germans. The terrible impoverishment, not just in Greece, but also in Serbia and other parts of the divided Yugoslavia, proved a breeding ground for partisan activity, with many making their way into the hills to join in guerrilla combat. By 1941 the Wehrmacht was already using ruthless reprisal measures against Greek fighters. When it was reported that guerrillas had rested in some villages near Salonika, these were burned down and 400 villagers shot.36 Nevertheless, as in Poland, it wasn’t until 1942 that partisan activity really got under way when a group of the Ellinikós Laïkós Apeleftherotikós Stratós (ELAS), the Greek People’s Liberation Army, together with British intelligence agents, blew up part of the railway track between Athens and Thessalonica, interrupting normal supplies to Rommel’s armies for several weeks.37 The resistance army, which was growing in size, was proving to be effective. It developed into an organized army with tens of thousands of fighters. These not only killed some 22,000 German soldiers, but by the spring of 1943 had even caused the collapse of production in the Greek bauxite and chrome mines. The miners fled into the mountains partly to avoid forced labour, but even more so as not to be sent back to the mines and suffer fresh partisan attacks. When the miners were hunted down, it took force to make them return to their jobs. Labour shortages in the strategic mines of the Baltic countries were an economic problem that had begun during the mobilization of September 1939. This problem was solved only towards the end of 1943 when the Germans could use Italian prisoners of war as forced labour after Mussolini was ousted. In Greece and Yugoslavia, as in Poland and the USSR, the guerrilla warfare that developed from the harsh wartime conditions was made worse by the terror created by the German reprisals against the local populations. The Nazis soon decreed that in Greece and Yugoslavia, just as in the USSR, fifty citizens were to be executed for every German soldier killed by partisans. In the aftermath of such an action in 1943, the 117th Jäger Division burned down Kalavryta, a village near Thessalonica, and shot all the men. It is clear that this was no isolated incident, since some 50,000 Greeks were executed in this way during the war.38 By comparison, in the Netherlands, a country occupied for a longer period and with a 22 per cent higher population, a total of 2,800 people were executed—most after September 1944, by which time it had become clear to even the most optimistic German that the war was lost. In France, with a population six times that of Greece, up to February 1944, 2,347 people were sentenced to death and only 1,711 actually executed.39 In Western Europe, terror became more widespread only when, as in the Netherlands after September 1944, the Germans needed to maintain control of a population that knew the war was effectively won. The peoples of Eastern and South Eastern Europe lived with terror from the start. For instance, in Yugoslavia, on 15 October 1941, only six months after the German invasion, the Wehrmacht murdered thousands of Serbs following a partisan

Dissimilarities in Occupied Europe • 69 attack in Kraljevo. Less than a week later, in Kragujevac, thousands of civilians were again executed, including many pupils of a nearby school,40 while in September 1942, during an assault on Josip Tito’s Communists in the Bosnian Mountains, the Wehrmacht massacred 480 people in a clash in which only one German soldier was slain. Jonathan Gumz interpreted this disproportionate ratio as an indication ‘that Wehrmacht violence probably struck unarmed civilians’.41 He explains that the terror created in Serbia was so severe because in the minds of the Wehrmacht commanders, many of whom were Austrians, Nazi racism was combined with traditional Habsburg anti-Serbian feelings. Just as elsewhere, terror proved counterproductive, but although some German officers recognized this, it remained the normal reaction to any incident.42 Partisan warfare also destabilized production in Yugoslavia and prevented the remaining production from falling into German hands. Even before the occupation of 1941, wrecking crews of the Yugoslav army had damaged the Bor copper mines, which were in German eyes the most important Serbian production unit. Reconstruction took until July 1942, but production never reached more than 60 per cent of its pre-war level,43 despite the investment of millions of Reichsmarks into the work. This again was the effect of partisan activity interrupting production and transport.44 It is clear that, apart from racism, the Germans had good reason to concentrate production in Western and Central Europe and to extract resources from Eastern Europe and the Balkans. This was a rational decision since, apart from the labour and machinery used in agriculture and mining, resources from Eastern and South Eastern Europe could be used more efficiently elsewhere. The economies of Western and Central Europe were more highly developed. Even more important from June 1940 on, though, was the fact that everyday life was less disrupted in the West. In Central Europe things had almost returned to normality in 1939, while in France, Belgium and the Netherlands, production had restarted with only minor adaptations by the late summer of 1940. Partisan activity like that in occupied Soviet Russia, Greece and Yugoslavia was all but absent in these countries. Only in France, where from 1941 on wartime conditions became slightly worse than elsewhere in Western Europe as the lack of coal and transport facilities undermined production, did a resistance movement of some significance develop. Nevertheless, there were never more than 400,000 people involved: 2 per cent of the adult population. Fewer than half the people in hiding in the latter period of the occupation were active as resistance fighters, and most of them were unarmed. A substantial number of these joined the resistance only shortly before the liberation.45 From August 1940, daily life and production normalized in France and Belgium, a few months later than in the Netherlands, and the situation was essentially the same in the Protectorate of Bohemia and Moravia. It is precisely the way the Protectorate was exploited that makes it clear that although the Nazi ideology was deeply racist, rationality prevailed in their exploitation of occupied Europe.

70 • Occupied Economies

Notes 1. Alan S. Milward, War, Economy and Society, 1939–1945 (London 1977) 152 and 164–165. 2. Jonathan Steinberg, ‘The Third Reich Reflected: German Civil Administration in the Occupied Soviet Union, 1941–4’, English Historical Review, 110 (1995) 620–651, here 621. 3. Adolf Hitler, Mein Kampf. Zwei Bände in einem Band. Ungekürzte Ausgabe (Munich 1943) 135. 4. Hermann Rauschning, The Voice of Destruction (New York 1940) 38. 5. John Lindberg (League of Nations), Food, Famine and Relief 1940–1946 (Geneva 1946) 21. 6. Czesław Madajczyk, Die Okkupationspolitik Nazideutschlands in Polen 1939– 1945 (Cologne 1988) 596. 7. RGVA, Collection 1458, Inventory 3, File 77, p. 77. 8. Hein A. M. Klemann, ‘Dutch Industrial Companies and the German Occupation, 1940–1945’, Vierteljahrschrift für Sozial- und Wirtschaftsgeschichte, 93 (2006), 1–22. 9. Note that throughout this volume ‘billion’ refers to a US billion, which is a thousand million. 10. Mark Harrison, ‘The Economics of World War II: An Overview’, in: Mark Harrison (ed.), The Economics of World War II: Six Great Powers in International Comparison (Cambridge 1998) 1–42, here 7–8. 11. Adolf Hitler, Hitler’s Table Talks, 1941–1944: His Private Conversations (New York 2000) 12 November 1941, evening, 128. 12. Hein A. M. Klemann, ‘Did the German Occupation (1940–1945) Ruin Dutch Industry?’ Contemporary European History, 17, 4 (2008) 457–481, passim; L. de Jong, Het Koninkrijk der Nederlanden in de Tweede Wereldoorlog (The Hague 1969–1991), Vol. 10b, 1384; Robert Aron, Histoire de Vichy 1940–1944 (Paris 1954); Mark van den Wijngaert et al., België tijdens de Tweede Wereldoorlog (Antwerp 2005); Chris van der Heijden, Grijs verleden. Nederland en de Tweede Wereldoorlog (Amsterdam 2001 2nd ed.); J. Gérard-Libois and José Gotovitch, L´an ´40. La Belgique occupée (Brussels 1971); J. C. H. Blom, In de ban van goed en fout? Wetenschappelijke geschiedschrijving over de bezettingstijd in Nederland (Bergen 1983); Gerhard Hirschfeld, ‘German Occupation of Europe, the Axis “New Order” and Collaboration’, in: Loyd E. Lee (ed.), World War II in Europe, Africa and the Americas, with General Sources: A Handbook of Literature and Research (Westport, Conn. 1997) 267–284. 13. Bob Moore, Victims and Survivors: The Nazi Persecution of the Jews in the Netherlands 1940–1945 (London 1997) 2; Abel J. Herzberg, ‘Kroniek der Jodenvervolging’, in: J. J. van Bolhuis et al. (eds.), Onderdrukking en verzet. Nederland in oorlogstijd, Part III (Arnhem 1949–1954) 5–256, here 247;

Dissimilarities in Occupied Europe • 71

14. 15.

16. 17. 18.

19.

20.

21. 22.

also: Henk Flap, Kathy Geurts and Wout Ultee, ‘De Jodenvervolging in lokaal perspectief’, in: Henk Flap and Wil Arts (eds.), De organisatie van de bezetting (Amsterdam 1997) 31–54, here 49–50; Pim Griffioen and Ron Zeller, ‘Jodenvervolging in Nederland en België tijdens de Tweede Wereldoorlog’, in: G. Aalders et al. (eds.), Oorlogsdocumentatie ’40–’45. Achtste jaarboek van het Rijksinstituut voor Oorlogsdocumentatie (Zutphen 1997) 10–63, here 61 et seq. ‘Handelsvertegenwoordiger, 48 jaar—Amsterdam. 8 Juni 1943’, in: Dagboekfragmenten 1940–1945 (The Hague 1954) 301–308, here 304–305. B. A. Sijes, Vervolging van zigeuners in Nederland 1940–1945 (The Hague 1979); Annemarie Cottaar, Leo Lucassen and Wim Willems, Mensen van de reis. Woonwagenbewoners en zigeuners in Nederland, 1868–1995 (Zwolle 1995) passim. Van der Heijden, Grijs verleden, 271 et seq. ‘Winkelier, 31 jaar—Stad in het Noorden. 21 Maart 1943’, in: Dagboekfragmenten, 253–255. See: Bob de Graaff, ‘Widerstand und Kollaboration in den Niederlanden 1940– 1945’, Jahrbuch Zentrum für Niederlande-Studien, 2 (1991) 71–91, passim; Sytze van der Zee, Voor Führer, volk en vaderland. De SS in Nederland (Amsterdam 1992 5th ed.) 56–57; Bob de Graaff, ‘New Perspectives on the Second World War in Dutch Historiography’, in: Robert S. Kirsner (ed.), The Low Countries and Beyond (Lanham 1993) 207–218. Waclaw Długoboski and Czesław Madajczyk, ‘Ausbeutungssysteme in den besetzten Gebieten Polens und der UdSSR’, in: Friedrich Forstmeier and HansErich Volkmann (eds.), Kriegswirtschaft und Rüstung, 1939–1945 (Düsseldorf 1977) 375–416. See: Catherine Andreev, Vlasov and Russian Liberation Movement: Soviet Reality and Emigré Theories (Cambridge 1987); Joachim Hoffman, Die Ostlegionen 1941–1943: Turkotataren, Kaukasier und Wolgafinnen im deutschen Heer (Freiburg 1976); Martin Dean, Collaboration in the Holocaust: Crimes of the Local Police in Belorussia and Ukraine, 1941–1944 (New York 2000); Bernhard Chiari, Alltag hinter der Front. Besatzung, Kollaboration und Widerstand in Weißrußland 1941–1944 (Düsseldorf 1998); Christian Gerlach, Kalkulierte Morde. Die deutsche Wirtschafts- und Vernichtungspolitik in Weißrußland 1941 bis 1944 (Hamburg 1999); Timothy Mulligan, The Politics of Illusion and Empire: German Occupation Policy in the Soviet Union, 1942–43 (New York 1988); Theo J. Schulte, The German Army and Nazi Policies in Occupied Russia (Oxford 1989). Peter Liberman, Does Conquest Pay? The Exploitation of Occupied Industrial Societies (Princeton 1996) 36–37. See: Daniel Jonah Goldhagen, Hitler’s Willing Executioners: Ordinary Germans and the Holocaust (New York 1996); Alex Hinton, ‘Why Did the Nazis Kill? Anthropology, Genocide and the Goldhagen Controversy’, Anthropology Today, 14 (1998) 9–15.

72 • Occupied Economies 23. Ben Shepherd, ‘Hawks, Doves and Tote Zonen: A Wehrmacht Security Division in Central Russia, 1943’, Journal of Contemporary History, 37 (2002) 349–369, here 352–353; Alexander Dallin, German Rule in Russia, 1941–1945: A Study of Occupation Policies (London 1957) passim; Dieter Pohl, Die Herrschaft der Wehrmacht. Deutsche Militärbesatzung und einheimische Bevölkerung in der Sowjetunion 1941–1944 (Munich 2008). 24. Zawodny’s estimate was 500,000. J. K. Zawodny, ‘Soviet Partisans’, Soviet Studies, 17 (1966) 368–377, here 368. 25. Velikaya Otechestvennaya voina. 1941–1945. Kniga 4 (Moscow 1999) 150–153. 26. Bogdan Musial (ed.), Sowjetische Partisanen in Weißrußland. Innenansichten aus dem Gebiet Baranoviči 1941–1944. Eine Dokumentation (Munich 2004) 22; T77/1197/495–6: WiIn Mitte Chefgr La an WiStab Ost Chefgr La, Erntegefährdung, 19.7.42. 27. Tobias Jersak, ‘Representations of War in the East, 1941–1945: The German Case’, http://www.oslo2000.uio.no/program/papers/s20/s20-jersak.pdf; Bernd Bonwetsch, ‘Sowjetische Partisanen 1941–1944. Legende und Wirklichkeit des “allgemeinen Volkskrieges”’, in: Gerhard Schulz (ed.), Partisanen und Volkskrieg. Zur Revolutionierung des Krieges im 20. Jahrhundert (Göttingen 1985) 92–124. 28. Field Marshal Walther von Reichenau on the ideological mission of the German army in the Soviet Union, October 1941, http://h-net.org/~german/gtext/nazi/. 29. Steinberg, ‘Third Reich Reflected’, 628–629. 30. Volodomyr Kosyk, The Third Reich and Ukraine (New York 1993) 440. 31. Musial, Sowjetische Partisanen in Weißrußland, 15; Steven L. Guthier, ‘The Belorussians: National Identification and Assimilation, 1897–1970, Part 2: 1939–70’, Soviet Studies, 29 (1977) 270–283, here 273. 32. Richard J. Overy, Russia’s War (London 1999 2nd ed.) 143 et seq.; Zawodny, ‘Soviet Partisans’, 369–370. 33. Musial (ed.), Sowjetische Partisanen in Weißrußland, 16. 34. Jozef Garlinski, ‘The Polish Underground State (1939–45)’, Journal of Contemporary History, 10 (1975) 219–259, here 229. 35. Ibid. 242. 36. Mark Mazower, ‘Military Violence and National Socialist Values: The Wehrmacht in Greece 1941–1944’, Past and Present, 134 (1992) 129–158, here 139. 37. Peter D. Chimbos, ‘Greek Resistance 1941–45: Organization, Achievements and Contributions to Allied War Efforts against the Axis Powers’, International Journal of Comparative Sociology, 40 (1999) 251–269, here 258–259. 38. Ibid. 260. 39. Allan Mitchell, Nazi Paris: The History of an Occupation, 1940–1944 (Oxford 2008) 104. 40. Hamburg Institute of Social Research, Crimes of the German Wehrmacht: Dimensions of the War of Annihilation, 1941–1944. An Outline of the Exhibition (Hamburg 2004) 28.

Dissimilarities in Occupied Europe • 73 41. Jonathan E. Gumz, ‘Wehrmacht Perceptions of Mass Violence in Croatia, 1941–1942’, Historical Journal, 44 (2001) 1015–1038, here 1016. 42. Ibid.; Mazower, ‘Military Violence and National Socialist Values’, 139–140. 43. Nikola Živković, ‘The Exploitation of Yugoslav Industry by the Third Reich during World War II’, Studia Historiae Oeconomicae, 14 (1979) 214; RGVA, Collection 1458, Inventory 3, File 77, Table 2. 44. BA Berlin: R 121/742 A, Bericht der Bor A. G. vom 7 June 1946, 34. 45. Liberman, Does Conquest Pay? 48.

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–9– The Exploitation of Occupied Europe Exploitation until the End of 1941 After the Nazis occupied Western Europe, pillaging was the openly expressed objective of Hermann Göring, who was second only to Hitler in the Nazi hierarchy. As Plenipotentiary of the Four Year Plan, he was the most powerful man involved in the German war economy, although not the only force. There was, for instance, serious opposition to the idea of ransacking all the occupied countries, not just among the German authorities in France, Belgium and the Netherlands, but also from the Wehrmacht. The latter’s economic office thought it a waste of resources to undermine economies that could produce supplies for the army, while the governors in the West hoped to win over any Germanic people there to the idea of a future with Germany or even to National Socialism.1 The Germans therefore paid for what they took from Western Europe. As a 1943 German document stated: ‘Although also in the Western areas the booty idea played a major role and we took great stocks of raw materials and food, private properties were not violated.’ This was thought to be more in line with civilized and cultured Western behaviour: ‘Not confiscation but clearance was the slogan.’2 This was the reason for payment, but only individual suppliers were paid, while the cash was obtained by charging the occupied countries. Nonetheless, the fact that the Germans were prepared to pay for goods and services shows their intention to keep production going. It was only during the first few months that exploitation took the form of pillaging, especially in France, where the Wehrmacht in some cases paid with bons de requisition, requisition vouchers.3 From August 1940 on, preparations for the planned invasion of Britain, and especially for the attack on Soviet Russia, required other forms of exploitation. Göring needed to do more to integrate the highly developed Western economies into the German war production machine. In Poland, the choice between looting and getting the economy going again was based on other principles. After Hitler’s attack in 1939, the country was shamefully and intensely, but unsystematically, plundered. To quote the German document of 1943 again: ‘In occupied Poland booty came in the first place and that included all enemy property.’4 Poland was plundered so severely that, according to some, after the first raid, it never contributed to the German war effort again.5 That, however, is not strictly true, as from 1943 on the former Polish region of Upper Silesia became the major coal-producing centre of German-controlled Europe.6 The idea that

– 75 –

76 • Occupied Economies Poland was useless as a supply source after the first raid springs from the fact, often forgotten, that the General Government, commonly seen as occupied Poland, was in fact only a third of the original area of the pre-war country, which had been split up following the 1939 invasion. One part—about a quarter of the original area— was completely incorporated into the Reich. In this area, a substantial proportion of the population was considered ethnic Germans; consequently, there were few ethnic reasons to exclude this region, and from the point of view of the war economy, this was the most interesting part of the pre-war country. It could simultaneously fulfil the function of a heavy-industry base, a light-industry annex and a granary. Upper Silesia, for instance, became vital as the industrial and coal-producing centre it had been before 1918. In this part of pre-war Poland, however, many mines and plants were first returned to their pre-1918 owners. In the General Government, a part of Poland without any heavy or mining industries, the situation was completely different. According to Berlin, there was little here of interest for exploitation, and so there was no reason to ignore Nazi racial prejudices as was done, for instance, in the Czech Protectorate. In March 1940, Hitler’s viceroy in this part of Poland, Governor-General Hans Frank, even expressed the opinion that the Four Year Plan was right in taking all raw materials. Formally incorporating this area into the Reich as well made Poland effectively no longer a sovereign nation, giving Berlin an argument to ignore all rules of international justice. Now it could take what it wanted and could use or maltreat Polish citizens and prisoners of war without bothering about international treaties.7 Raw materials and workers were deported (abtransportiert), and light industries that served only local markets and were of no use to the Nazi strategy were shut down. Berlin needed the Polish resources and, by taking the raw materials of local industries, caused companies to close, thus creating unemployment. This, in turn, could be used as an argument for sending workers to Germany, where full-scale mobilization had created desperate labour shortages (see Chapter 10).8 The scale of plundering of material resources from these territories was shocking. During the first six months, thousands of tons of industrial oils and fats, fabrics, precious metals and scrap; hundreds of thousands of tons of rubber, cellulose, paper, tobacco and cork; and millions of tons of chemicals and precursors were shipped out of the country.9 This is comparable to the haul of goods coming out of the vast regions of the Soviet Union occupied by the Wehrmacht, as recorded in the reports of the Economic Staff East for 1941 to 1942. It illustrates that in the General Government, plunder was in fact the only economic policy and shows that until 1942 ideas on exploiting Eastern Europe remained somewhat in flux. In this, racism played a role, but its influence should not be overestimated. The key reason for the difference in the treatment of this area to that in other parts of Poland lay not in a supposedly inferior population, but in its economic geography. Simply put, where industry of value existed, it was exploited; where industry was of no value to the Nazi strategy, it had to disappear, as its raw materials and labour were needed elsewhere.10 The

The Exploitation of Occupied Europe • 77 disintegration of the General Government’s economy, which had never been very sophisticated, was hardly a problem. Berlin decided it didn’t need its production and therefore considered it a waste to expend resources on keeping this economy going.11 This idea also applied to plans for the occupation of Soviet Russia. In the USSR the mining and other heavy industries, such as the manganese, coal and oil industries of Galicia, Ukraine and Caucasus, were exploited, but here as well industries using raw materials and labour that didn’t supply anything Germany needed had to disappear. As the 1943 document said: ‘Former Russian territories [were] useful as sources of agrarian products and labour, but also to strengthen the weak raw material position of the Festung Europa.’12 The Hunger Plan (Hungerplan), prepared prior to the invasion, was based on these destructive principles. Also called the Backe plan after Herbert Backe, the State Secretary in the Berlin Food Ministry who was born in Tsarist Russia (in Georgia), this plan was designed not only to provide food supplies for the army as well as the home front, but, in addition, by undermining the living conditions of the urban population in the occupied Soviet territories, to cause millions of deaths from starvation. The victims were planned, not collateral damage resulting from war and chaos. As early as 1927, Backe had concluded in his PhD thesis on Russian grain that the superior races who lacked living space should get rid of millions of Russians in order to secure the Ukrainian food surpluses.13 Sometimes the plan is seen as a step in a general de-industrialization of occupied Soviet territory, but such a strategy of de-industrialization never existed at a high level of planning.14 While Christian Gerlach appeared to demonstrate such a plan by pointing to the reduction of production in Belorussian textiles, this only reflected the massive over-capacity in the textile industry across Europe. Despite rapid developments in artificial fibres, without massive imports of cotton and wool, European textiles were bound to decline. Just as in Poland, industries that were using valuable resources but not producing anything useful to the Germans had to disappear. Nevertheless, given the composition of the Wehrmacht staff before the start of Operation Barbarossa, the German army at least hoped to gain substantial quantities of industrial outputs, if only to meet the enormous needs of the army. Many of the industrial experts within the overstaffed army had to be sent home, however, as they had nothing to do. Battle damage had blocked the feasibility of any restoration of production, while Stalin’s scorched-earth policy combined with Hitler’s Vernichtungskrieg—war of annihilation—had finished it off. Berlin’s master plan for Eastern Europe—colonization—was a long-term prospect. Its short-term strategy for the region was plunder and destruction. There had been no consideration as to what should be done with the millions of Soviet soldiers taken prisoner during the first assault. In the USSR, as in the General Government, the Germans were interested only in the agrarian production and what little heavy industry there was; they overlooked the fact that these territories and the prisoners of war incorporated valuable labour until it was too late. As almost all industry in the

78 • Occupied Economies occupied regions of the Soviet Union had been removed or destroyed, only agriculture remained to be exploited. To starve millions of urban civilians and prisoners of war was not considered to be a waste as these people would otherwise eat valuable food resources without producing anything useful to the German war effort. That it was a waste to let these people die, also from a Nazi point of view, became clear only when the war was going less successfully and Berlin had to adapt to that new situation. It was only partly due to military necessity that destruction characterized the occupation policy in these territories; Nazi ideological nonsense and the ambition to clear these lands for Germanic settlers played a role as well. However, the implementation of some of these ideas before the war was won undermined the wartime exploitation.15 Although the first months of exploitation in the West were characterized by plundering as well, there it was based on different principles. By November 1939, Hitler had already ordered preparations to be made for the exploitation of the occupied West. Nonetheless, when, in May and June 1940, the Netherlands, Belgium and France were successively overrun, the occupation began with plundering just as in Poland.16 Göring not only had no idea how to incorporate these economies into his war economy, but was also badly in need of their relatively superfluous—and in the Netherlands even excessive—stocks of raw materials. Above all, however, efficient and systematic exploitation was no easy task. It demanded planning to ensure that the newly conquered economies were incorporated into the production plans of the Third Reich in a rational way. In fact, Göring never managed to realize a rational planned economy for Germany. Consequently, his Four Year Plan lacked the instruments needed to integrate the newly obtained economies systematically into the German war economy. When on 7 June 1940 Hitler announced that the defeat of France should be the point of departure, and Göring took charge of the Western economies, he could only fall back on a slightly civilized version of his Polish policy and give the uniform order to retrieve all raw materials from all occupied territories with the utmost determination.17 Ever since the war had started in September 1939, Göring’s problem had been to produce an economic policy while the economy was only half prepared for war. Moreover, before he could exploit the newly obtained territories, Hitler was already planning new campaigns.18 Plundering was Göring’s way of filling the most pressing gaps.19 He could do that as long as the battles were being won, since few ever asked whether these victories were thanks to, or in spite of, his policy. Following the 1940 victories, Berlin had plans only for some strategic industries, namely the Longwy-Briey iron ore and Douai coal mines. Furthermore, Erhard Milch—the second in command to Göring in the German Luftwaffe—integrated the French aircraft factories into the Luftwaffe’s planning, while individual regiments also ordered all kinds of products from the newly occupied territories.20 This, however, was more of a warfare economy. The troops had immediate needs for products such as food, shoes, items of uniform, vehicle repairs, and so on. It was hardly a planned process and did not result in any regular involvement of the occupied

The Exploitation of Occupied Europe • 79 economies. Numerous attempts by officers and industrialists to achieve a more systematic exploitation, especially in France, the richest prize, had few results. The Commanding Officer—Militärbefehlshaber—in France, General Otto von Stülpnagel, wrote in his report of August 1940 that it ‘is our first duty to take away products from French occupied territories and send these into the Reich’.21 According to postwar estimates, the confiscations amounted to a seventh of all industrial products, a quarter of all raw materials and a tenth of all foodstuffs.22 Taking raw materials, however, was not enough, and Walther Funk, the Reich Minister of Economics, a Göring acolyte, expressed the opinion that France should be reduced to an agrarian country serving the German needs.23 It wasn’t only Göring’s policy that was characterized by the taking of all available products. Wehrmacht divisions also appeared to compete in confiscations. Factories, machinery and all kinds of bits and pieces were taken.24 Apart from that, French citizens were vulnerable to individual German soldiers taking revenge on their archenemy by ‘the requisition of bicycles and sheets from the family linen-cupboard’. Marshal Pétain’s Vichy government even pointed out to the préfets—district officials— that it was their duty to defend French families and companies against unlawful confiscations.25 Nevertheless, there were complaints about the confiscation of raw materials and machinery that crippled efforts to re-establish production, and about the confiscation of food, which undermined plans to organize a systematic fooddistribution system. According to officials, ‘l’Armée Allemande’ considered all such goods as ‘butin de guerre’.26 It wasn’t until December 1940 that requisitions without payment were formally banned, only to begin again in November 1942 when German troops occupied the previously unoccupied parts of the country. After D-Day in 1944, German troops sacked the French for the last time. At that point there were even attempts to dismantle factories and send them to Germany, but the speed of the Allied victories probably limited the success of such projects.27 After 1940, production across Western Europe collapsed as a consequence of destruction, disorder, the psychological effects of defeat and the loss of contracts and pre-war governmental orders. In June, even in the Netherlands where the fighting had lasted only five days, unemployment reached an all-time high,28 while apart from some import substitution, few, if any, initiatives were taken to restart production. Only German exploitation could solve the demand problems resulting from the loss of pre-war governmental orders and overseas exports, but, apart from raw materials, Göring’s Four Year Plan provided no leads as to what should be requested from these countries.29 Inside the armed forces, opinions on what to do sometimes differed even within individuals. In July 1940, General Georg Thomas, leader of the Economic Department of the OKW (Oberkommando der Wehrmacht), ordered that confiscation of resources and machinery should be accelerated, especially in France. The day before, however, he had ordered the use of industrial companies in the West as subcontractors.30 That would be impossible given that individual army divisions, as well as Göring’s Four Year Plan, were taking all they could get from these countries.

80 • Occupied Economies Thomas, an OKW officer, was a member of the combined staff of all the armed forces; as such, he was unpopular among the mainly aristocratic army officers, and as a non-Nazi with little influence in political circles, he lacked the power to oppose them.31 Nonetheless, by suggesting that Western companies should be used as subcontractors, he demonstrated a possible solution to the problem of how to incorporate these economies into the central Reich economy. However, the decision was Göring’s responsibility, but as Thomas was aware, the Plenipotentiary for the Four Year Plan had little knowledge of economics.32 Probably Thomas just expressed his frustrations when demanding a change. Apart from Göring and Thomas, there was a third faction trying to bring the economies of occupied Europe into a central European war economy: the German governors in the occupied countries, whose duty it was to create order.33 To them, complaints that confiscations were paralysing production, especially prevalent in France, were a serious threat. By restarting production, the governors hoped to create jobs and produce sufficient food to meet the population’s needs, thus creating peace and order and, at the same time, getting the output Berlin wanted. In the worst case, if the industries of an occupied country could or would not meet the Wehrmacht’s needs, they could at least produce civilian commodities and free up German companies for military production. Therefore, by only looting, Göring created conflict not only with a relative nonentity such as Thomas, but also with men like Arthur Seyss-Inquart and Josef Terboven, the Reich Commissioners in the Netherlands and Norway.34 Thomas was no problem, but a conflict with a man such as Seyss-Inquart was another matter. In Nazi Germany, high-ranking party members like Seyss-Inquart and Terboven had more authority than an OKW general such as Thomas or aristocratic Prussian army officers such as Otto von Stülpnagel and Alexander von Falkenhausen, the military governors of France and Belgium. Such aristocratic officers more often than not despised the parvenus of the Nazi Party, just as most party leaders hated the old families. Besides that, the officers were appointed by the army, whereas SeyssInquart was appointed by the ultimate source of power in the Reich, Adolf Hitler. The Reich Commissioner got his authority from Hitler, and he reported directly to him. In addition, while the situation in Belgium and France was chaotic during the summer of 1940, Dutch conditions had quickly normalized. Belgium and France had experienced their second German invasion in a lifetime, and stories of German cruelties were well known. Many French and Belgian families had fled ahead of the German invasion, causing chaos across their countries. In the Netherlands, which had remained neutral in the First World War, most people waited to see what would happen. A week after the attack they returned to their jobs. What else could they do? They needed their wages for their families, and so, even if the men themselves would rather have not done so, their wives would see that they returned to work. Thus, from the end of May onwards, normal production in the Netherlands seemed possible again. Consequently, it was Seyss-Inquart who had to battle Göring over the issue of plundering.

The Exploitation of Occupied Europe • 81 The Reich Commissioner, who thought Göring threatened not only his mission, but even his position, made his opinion clear by refusing to obey Göring’s order to send all raw materials to Germany. Instead, he sent limited quantities—about half the stocks.35 The rest he used for Auftragsverlagerung. According to this idea, German companies that could no longer cope with their orders as a result of the high wartime demand transferred parts of these orders to companies in occupied Europe. By August, Dutch companies had already obtained orders worth ƒ375 million (500 million RM). Now, Seyss-Inquart established his Zentralstelle für Öffentliche Aufträge— Central Office for Public Orders—an office in The Hague to promote, organize and administrate all orders from German companies and governmental or military organizations to the Dutch companies. Seyss-Inquart’s policy was similar to Thomas’s ideas of using the industries in occupied Europe as subcontractors. It proved extremely successful. In 1940 alone, the programme resulted in orders worth ƒ900 million (1,200 million RM)—or 14 per cent of the Dutch GDP (gross domestic product). The economy recovered, employment increased and by 1940 profits were the highest since the start of the 1929 Depression. In 1941 employment (excluding jobs on the German side of the border), industrial production and even the GDP were higher than ever before.36 The Reich Commissioner boasted in the Völkischer Beobachter, the leading Nazi paper, in December 1940 that while the pre-war Dutch governments had merely muddled along for almost a decade, he had solved the unemployment problem in half a year!37 He was exaggerating, but it was a fact that by the end of 1940 the economy was booming, and by 1941 industrial employment was higher than ever before. The exploitation, paid for with Dutch resources, had a touch of a badly managed Keynesian policy. It solved the most pressing problems of the real side of the economy, but not without creating enormous financial problems in the long run.38 Nevertheless, Seyss-Inquart showed how to exploit an occupied territory without an overall production plan. Since a systematic plan for the war economy was beyond the scope of the Four Year Plan, Göring ordered the plundering of the economies in Western Europe. As there was no central plan from which to produce subplans for the individual occupied economies, there was no alternative. Thomas was right in his opinion that Göring was not an economist. In addition, even though he was the most powerful man involved with the war economy, Göring struggled with the problem that he was by no means the only power. Producing an overall plan would require close cooperation between at least Göring’s Four Year Plan, Fritz Todt’s Ministry of Ammunition, Thomas’s OKW Economic Office, the Reich Ministries of Economics and Finance and the German business community. Since 1938 Hitler’s Reich had not had a council of ministers of any kind to create cooperation, and as these individuals and institutions were all competing for power, with Göring as one of the toughest elbow-fighters in this competition, any central plan was impossible. Cooperation went against one of the most central characteristics of the Third Reich. Göring, although extremely powerful and combining a number of posts and functions, never obtained the power needed to develop and implement a comprehensive plan for the

82 • Occupied Economies economy as a whole on his own. Consequently, a central economic plan with subplans for each occupied country was not only beyond Göring’s scope, but also beyond the range of Nazi Germany as long as Hitler encouraged a permanent clash of economic and political interests and did not give one of his satraps a clearly superior position in economic matters. Even in August 1940, Göring, now adorned with the title of Reich Marshal, said, when talking about exploiting France, that in previous times it was easier. Then one could simply plunder a subjugated country.39 This was an expression of impotence. Göring could see no alternative, but when Seyss-Inquart showed him how this could be achieved, he was clever enough to take it up and implement it across the occupied West. In July 1940, Hitler decided to invade the USSR the following spring. For that reason undermining the Western European economies became even more unacceptable. Göring therefore now decided to milk the cow, not butcher her. He took advantage of Seyss-Inquart’s successful ideas and introduced Auftragsverlagerung all across nonScandinavian Western Europe. In Paris and Brussels he founded Zentralstellen, now called Zentralauftragstellen (ZAST, Central Offices of Orders). Seyss-Inquart’s organization at The Hague was given the same name.40 The German military governor in France, Otto von Stülpnagel, who had previously written that it was his duty to take all he could to send to Germany, now wrote that Auftragsverlagerung made it difficult to take machinery any longer without damaging German interests and that for the same reason transportation of raw materials would soon come to an end.41 A precondition for the accomplishment of Auftragsverlagerung was collaboration by private companies, but as during the period of plundering a degree of the Nazi ruthlessness had been felt, if only in its mildest forms, most businessmen and officials in the occupied countries had ‘good reasons to believe that collaboration was a lesser evil to resistance’.42 As in the Western parts of Europe, pre-war owners in the Protectorate and the Balkans kept their legal position with some major exceptions, among whom were all Jews. These pre-war owners were manipulated into a position whereby producing for Germany seemed their only option. When a manager refused to do so, he was replaced by a Verwalter—an administrator. His leadership, not his ownership, was taken over. In August 1940, when Göring decided that looting Western Europe was not a solution any more, he made it clear that, apart from transferring orders, Germany should obtain strategic direct investments in the countries there. The Reich Marshal wanted to use the victories to get permanent control over these economies. ‘It is a target of the economic policy to increase the influence on foreign enterprises’, he said, and added that this should be done before the end of the war.43 Verflechtung— interweaving—by obtaining shares in Western companies should therefore result in permanent economic dominance.44 Western European industries were already producing effectively for the German war effort, so it was not the object of Verflechtung to use the ownership for that. Göring wanted to use Germany’s strong 1940 position to guarantee post-war economic control in case of peace through compromise. The Reich Marshal was all but certain of a German victory and knew that purchasing

The Exploitation of Occupied Europe • 83 strategic companies in these countries was possible only as long as they were occupied. This was likely to be the only time that Berlin, lacking hard currency, could use financial tricks to obtain assets for only nominal payments.45 Of course, German companies and banks paid for takeovers of competitors or strategic businesses in occupied Europe, but they paid in Reichsmarks. These flew back to the Reichsbank. Payments in occupied Europe were made in the local currency, obtained through clearing accounts, while the enormous clearing deficits in these accounts were paid from advances from the treasuries of these countries. In fact, Germany forced occupied Europe to provide loans which would be paid off only after Germany won the war. As all purchases were paid for in this or similar ways, Verflechtung also resulted in the transfer of German financial problems to the occupied territories (see Chapter 13 on finance). The programme was never successful, however. From August 1940 on it became clear that Western Europe would produce for Germany, and with the expanding war that was all that mattered. Taking over vital companies just caused a lot of problems with the financial authorities in occupied Europe as well as with the companies, which, more often than not, were already producing for the Germans. Speer, who was interested only in maximizing war production, ended the programme in 1942, but even before that, German companies could obtain foreign direct investments only in individual cases. Control by ownership was, however, never a target in the West.46 If companies were not trusted but were of importance nonetheless— such as large conglomerates like the Anglo-Dutch food company Unilever, the Dutch electronic giant Philips or the French steel company Schneider—or when businessmen refused to participate, a Verwalter was appointed.47 In Belgium some of the businessmen who controlled enormous parts of the industry of this highly industrialized country worked together in a committee led by Alexandre Galopin, Governor of the Société Générale. This company alone already controlled 40 per cent of all Belgian industry. The committee, which was founded by Foreign Minister Paul-Henri Spaak in May 1940, during the two and a half weeks that Belgium was actually fighting, decided to restart production. There was no alternative. It was also decided, however, that they would refuse to build complete armament systems or warships or to invest in areas related to German warfare.48 Furthermore, the committee tried to restrict exports to the level necessary to earn the money Belgium needed to pay for imports of raw materials and foodstuffs.49 Nevertheless, Germany appeared to have no problems with restarting production in any of the Western countries. In July 1940, the Vichy regime had already announced that it no longer had any objections to producing arms for Germany.50 Consequently, from August 1940, the increasing unemployment in France quickly disappeared. Between the end of 1940 and 1941, unemployment declined from 752,000 to 293,000, although only 152,000 Frenchmen found work in Germany.51 Thus, von Stülpnagel’s boast was only a slight exaggeration when he said that he started his job with one million unemployed and had resolved this problem by September 1942. From then on France suffered from labour shortages.52

84 • Occupied Economies In May 1940, just before Hitler selected Seyss-Inquart to rule over the occupied Netherlands, a staff officer working for Alexander von Falkenhausen—the Wehrmacht officer who hoped to become the Militärbefehlshaber for the occupied Netherlands as well as Belgium—warned Dutch officials that they had to solve the unemployment problem; otherwise, his staff would send the jobless to Germany.53 Thereupon, the highest officials who remained behind in the occupied country when the government left, confronted with rocketing unemployment and fearing deportations as had happened in Belgium in 1916, decided to ignore any objections to producing for Germany. The war was lost, and now they had to concentrate on social and economic problems. From then on, the highest national authorities still available in France as well as the Netherlands stimulated production for Germany, while private companies also cooperated. In these two countries, medium-sized family companies that had to take into account their competitors’ actions dominated industrial production. Since these companies could not agree on their stance with their competitors, let alone make firm agreements with them, not accepting orders from the only available customer—the occupier—would threaten the companies’ continued existence. It was this prisoner’s dilemma that made accepting orders, all orders, almost unavoidable. Therefore, in France and the Netherlands, and also in Belgian branches of industry dominated by family companies—for instance Ghent textiles—German orders were accepted with little hesitation. Only big businesses could attempt to take a stand against the Germans. Although Belgian big business was not completely uncooperative, it had the power to limit the quantity of its production and to refuse to produce certain products. Nonetheless, even in Belgium, the economy absorbed the unemployed so quickly that it can only be explained by a rapid recovery. The half a million who were unemployed during the summer of 1940 were reduced to 200,000 by December 1941, and to just 80,000 a year later.54 The fact that some found jobs in Germany cannot explain this rapid absorption of the jobless.55 Between August 1940 and the end of 1941, more than 300,000 new jobs were created. It indicates that even here the economy quickly recovered. By March 1941, it had become clear that in Western Europe Auftragsverlagerung was successful. Altogether, orders worth 3.1 billion RM had been placed. Only half that amount, 1.5 billion RM, went to France, while the Netherlands and Belgium—together little more than half the size of France—got the other half. Nevertheless, that Auftragsverlagerung in France was successful is clear from the fact that orders worth 2.4 billion RM were placed there just a month later.56 Because the Dutch ZAST administered orders worth more than 1,200 million RM in 1940 alone, and from then on a total of 135 million RM monthly, it is plausible that orders worth 1.5 billion RM were placed in the Netherlands in March 1941.57 In other words, Auftragsverlagerung was a success in the Netherlands and France. It doesn’t, however, appear to have been successful in Belgium, as all the registered orders were placed in the other two countries. Somehow, however, the data do not correspond. The low value of the German orders in Belgium according to these calculations cannot explain

The Exploitation of Occupied Europe • 85 the fast decline in unemployment. When one makes an educated guess of the clandestine production (see Chapter 15), the 1940–1941 recovery found in the employment data is seen as well. An under-registration of orders seems to be the only explanation. Probably not all orders—such as, for instance, military orders—were coordinated by the civil ZAST organization. Altogether, it is clear that in the first months after its introduction, Auftragsverlagerung was successful. It was not introduced in Norway and Denmark as well because in these countries the Germans’ prime need—apart from food and raw materials—was for huge coastal fortifications. These alone demanded enormous efforts from these countries, whose economies were small even in comparison to the economies of Belgium and the Netherlands.58 Auftragsverlagerung seemed a successful and efficient way to exploit occupied economies without destroying them. In the Netherlands in 1940 and 1941, the German orders even led to an industrial boom such as the country had not seen for at least ten years, while after August 1940 important parts of the French industry recovered as well and by 1941 were flourishing again.59 In Belgium, production declined in 1940 by around 12 per cent and by another 5 per cent in 1941, but black markets quickly developed here, and consequently a substantial part of the Belgian production disappeared from the statistics.60 Although, according to official data, production declined, employment in mining and metallurgy increased substantially, and overall unemployment disappeared.61 When making an educated guess regarding clandestine production, there is no reason to assume that the economy slumped prior to the end of 1941, except during the period of actual warfare in 1940 (see Chapter 15, Table 15.5). Just as in the Netherlands, the unemployment in Belgium at the start of the occupation can be interpreted as a temporary problem caused by military defeat. It was quickly solved when these countries were absorbed into the German economic system by Auftragsverlagerung. Their economies were stimulated by German war orders. Data on the subject are a little confusing all across Western Europe, but from the unemployment figures it is clear that emphasizing the setback does not give a true picture. There are good reasons to presume that the economies of occupied Western Europe were flourishing and that production for Germany, too, was growing. When Paul Pleiger started his policy of centralizing the assignment of raw materials in order to concentrate production in Germany, The Hague and Paris seemed to have strong arguments to oppose this. In 1941, when Pleiger introduced his policy, the authorities in the occupied West feared that from then on Berlin would make all the decisions on industry, labour, machinery and raw materials. Consequently, they would lose any say not only in the economic policy but also, by implication, in all other aspects of life in the countries administrated by them.62 The ZAST in The Hague, which was still coordinating the transferred orders, tried to demonstrate that this system was efficient,63 but Pleiger was not alone in his belief that taking factors of production was more efficient than transferring orders. In August 1941, General Thomas’s office in The Hague was considering closing down 60 per cent of Dutch industry to solve the German material

86 • Occupied Economies shortages, especially of coal. Superfluous Dutch labour could then be sent to Germany. According to Thomas, transferring orders had been only a temporary solution that should now be replaced by transferring factors of production.64 Reasons to terminate Auftragsverlagerung could be found in France and in Germany itself. In December 1941, when military setbacks created internal problems in the Reich, a more systematic method of exploitation seemed necessary. Under Speer, this led to an economic system with strong elements of central planning. Auftragsverlagerung had been a solution to the problem of exploiting the occupied economies without a central planning system. After the introduction of the new policy with more elements of central planning in Germany itself, this no longer fit. Now, central planning seemed the logical answer to the problem of the exploitation of occupied economies as well. A second and more pressing reason to abolish the ZAST system existed in France, where the transfer of orders had been successful in the first half of 1941 but where, from the summer on, new problems became dominant. Prior to June 1940, no one in Paris had given any thought as to what to do when producers were isolated from overseas contacts; French stocks were limited, and as these were unregistered, important parts could disappear into the black markets, where prices were much higher than official prices. German confiscations therefore hit the country in a sensitive spot. Although production—and even imports of raw materials from North Africa—was still important, this never reached pre-war levels. Shortages, especially of coal, therefore became disastrous very early in the occupation. Internal French problems had increased these. Following the French defeat in 1940, it had already proved difficult to get the coal miners back to work. In 1940 many who had defended their country had become prisoners of war, while others had fled from the Germans. It took until the end of that year before they returned to the mines. There, problems with their nutrition and that of their families, together with problems with auxiliary materials, further damaged productivity.65 In addition, the Germans transferred the major coal-producing centres in the departments of Nord and Pas-de-Calais—the extreme north-western parts of France—governmentally from Paris to Brussels. Thus, French industry needed coal from Belgian-administered territory, and although it was guaranteed that this would be sent, only limited quantities ever came through.66 Revitalizing less productive mines in central France could not compensate for this. In 1942 Belgium produced 62 per cent of all the coal in occupied Western Europe. The Netherlands produced 16 per cent, which in normal years was more or less enough for internal use, while the much bigger French economy produced only 22 per cent. As the German monetary system, in which international trade within German-controlled Europe was financed by multilateral clearing, had in effect destroyed trade between the occupied countries (see Chapters 11 and 14), the French lack of coal could not be solved by normal imports. International markets could not carry out their allocating function any longer, and Berlin was incapable of establishing the planning system needed to compensate for that. As a consequence,

The Exploitation of Occupied Europe • 87 by 1941, the lack of coal in France undermined production not only for internal markets but also for the Germans. Because the mines were not producing what was needed and imports could not solve the shortages, there were growing complaints from all sectors of the economy that the shortage of fuel was blocking production. If Germany wanted to revitalize French production, it would be obliged to deliver the missing raw materials. These were, however, needed just as much in Germany itself. Soon after April 1941, when Hitler appointed Pleiger as Chairman of the state cartel Reichsvereinigung Kohle (Reich Coal Union), this new official took the initiative to do the reverse and take coal out of the occupied countries.67 As a consequence, from June 1941 onwards, full-scale production in France became impossible. Even factories in sectors such as chemicals, iron and steel processing and the cement industry, essential to the German war machine, were temporarily closed.68 In other occupied Western countries these problems were less manifest, but far from unknown. However, as France was by far the most important of the occupied economies, the failure of Auftragsverlagerung in France meant the end of it. The system was probably only really successful in the Netherlands in 1940 and 1941 and in Belgium and France for the first half of 1941. In his report of October and November 1941, von Stülpnagel had written that the value of ZAST orders was falling. German companies withdrew orders as French firms could not fulfil these for lack of fuels, and he concluded that in future the ZAST can only accept orders for V- or Rü-companies [companies with a special position in the German war economy], thus concentrating production for the German war economy (and the most essential French needs) in a few rational producing companies, while production in other companies, as a result of the limited assignment of raw materials and fuels, will slowly come to an end.69

The highest German official in France gave up this form of exploitation except for a few large companies. As he could hardly have been so naive as to hope that Berlin would give up exploitation completely at this crucial moment, it meant that von Stülpnagel accepted that Berlin would take all the factors of production it needed. During the cold winter of 1941–1942, Pleiger’s coal withdrawals resulted in a lack of fuel in the occupied countries. It necessitated the closure of some selected companies in the Netherlands as early as August 1941. Textile companies received coal only if this was required for German orders, beer brewing came to a standstill for several weeks, and electric companies struggled with reduced capacities. Companies without German orders were not allowed to use more than 75 per cent of the electricity they had used in the previous year.70 By his somewhat cunning introduction of a Europe-wide centrally planned coal economy in which he gave Germany priority, Pleiger made Berlin ripe for the implementation of centralizing ideas, even before these became official policy. In November, when von Stülpnagel concluded that Auftragsverlagerung was no longer an efficient way to exploit France, the Rüstungsinspektion Niederlande was ordered to make plans for the concentration of production in a limited number

88 • Occupied Economies of companies. Superfluous companies had to close down to enable a more efficient use of raw materials; workers who lost their jobs could be sent to Germany.71 That an OKW organization could do this shows the decline in power of the German governors in occupied Europe.

The Speer Era In his book on the exploitation of occupied industrial societies, Does Conquest Pay? Peter Liberman wrote: ‘Whatever Germany’s initial plans, the eventual reality of total war dictated the total mobilization of all resources at Germany’s disposal.’72 For that reason, from 1942 Berlin tried to centralize planning to accomplish a full mobilization of all the economic resources of Europe. The new policy included a systematic incorporation of the economies of occupied Europe into the German war planning. This had nothing to do with integrating these into something like a Nazi common market. Berlin just transformed the occupied economies into satellites of its own war economy, developing plans for the use of the resources of each country whose production was to be utilitarian to its own economy. These plans were in themselves nothing but subplans of the overall production plan. It is now a truism to say that the Second World War was won and lost on the Eastern Front. By implication the warfare there consumed the lion’s share of all mobilized resources. Arms and economic goods produced across the whole of the Continent were expended there at an unbelievable pace, establishing a centrifugal economic movement within the Festung Europa. Workers from all over the Continent were dragooned into the German industries in order to fill in for German workers needed to replace the losses inflicted by the Red Army on the Wehrmacht. At the same time, all kind of products from across Europe were sent to the Eastern Front and exhausted there. Even before the 1942 reorientation of the war effort, Western Europe supplied important resources for the Russian campaign, most notably trucks and horses requisitioned to equip the expanded Ostheer. The interdependency with the war in the East became explicit in the financial sphere when the Netherlands was forced to contribute 50 million RM per month towards the war against the Bolsheviks, while the French daily payment was raised from 20 to 25 million RM. This was, as the Vichy Prime Minister Pierre Laval explained, a ‘contribution to the common defence of Europe’.73 It reflected a deeper set of interconnections. According to international law, the Belgian Secretary-General of Finance was right when he thought his country had to pay less for occupation costs when the number of occupying soldiers was cut down because they were needed in the East.74 The Nazi occupation had, however, a completely different character to that foreseen in international treaties. It was not intended as a passing military state of affairs, but as a more or less permanent usurpation of sovereignty. Therefore, international rules limiting the exploitation were ignored, and Europe had to contribute with all it had to the German victory.

The Exploitation of Occupied Europe • 89 Although Berlin exploited all of Europe as efficiently as possible from 1942 on, this was not done everywhere in the same way. Apart from ideological reasons, there were rational reasons for differentiation, and from 1942 on rationality became more prominent in economic matters, while racism and ideological arguments lost some of their weight. As a result, the Western exploitation intensified and was no longer just a matter of taking the output from a stimulated production. In Eastern Europe, though, the destruction and annihilation of resources, including people, was no longer the main policy. Here, production received a more prominent place, but that did not mean that lack of consideration for and waste of human life ever disappeared. The persecution and murder of the Jews, a crime concentrated in the eastern parts of the Continent given the substantial Jewish minorities in Poland and Belorussia, only now began in earnest. That something had changed is clear, however, from the fact that for a militant such as Hans Frank, the Governor-General of Poland, it became an ideological problem as Germany’s economic needs demanded that the Poles were kept sufficiently fed.75 From August 1940 on, Western European production more or less normalized. Companies received German orders that hardly differed from pre-war orders, and there was barely any direct interference in these companies. The Netherlands, where war damage was limited, provides a good example. Plate 2 shows the official organization of the German regime as relevant to Dutch industry. It appears that for all the companies noted, German orders, which had flowed slowly following the 1931 financial crisis, arrived in enormous quantities during the occupation, through the ZAST system. Seyss-Inquart organized this in order to obtain the products that Germany needed and to solve the unemployment problem, but at the same time unexpectedly created a boom. The scarcity of goods resulting from the Allied blockade and the earlier confiscations by the Germans made price control and rationing of raw materials necessary. This was done by Dutch organizations like the Rijksbureaus, offices set up by the pre-war government to organize the rationing of raw materials and to prevent a repeat of the problems of 1917 and 1918. The Reich Commissioner demanded only that raw materials for German orders were available at all times. Plate 2 cannot explain why Seyss-Inquart was involved in plundering resources at all, as it only made winning the Dutch over to National Socialism more difficult. Reality was, however, more complicated than this plate showing the official structure suggests. Plate 3, which gives a more realistic picture, shows that the influence of Berlin was more important. Göring’s long arms, as well as those of the Wirtschaftsrüstungsamt (WiRüAmt, General Thomas’s economic office of the OKW), reached into The Hague, and by May 1940, Seyss-Inquart already found his authority disputed in the same way as every other high-ranking Third Reich official always did. Only four days after Hitler appointed him as Reich Commissioner, General Thomas sent an officer to The Hague, as he feared that Seyss-Inquart would get a total grip on the country, making it impossible to use the highly developed Dutch economy for Wehrmacht orders. Thomas’s officer’s instructions were to press the

90 • Occupied Economies Dutch industry into accepting military orders. To strengthen his position, Thomas involved his enemy, Göring, in getting a Dutch foothold, and together they tried to undermine Seyss-Inquart’s position.76 They did not manage to get the Reich Commissioner on his knees, however, as they were unable to formulate an efficient policy to exploit the occupied country. Beginning in the summer of 1940, the Reich Commissioner was able to win back his position by introducing Auftragsverlagerung, but when Göring took over this policy, introducing it in Belgium and France and seizing much of the authority of the ZAST in The Hague as well, the Reich Marshal proved the most powerful player again. Thomas was side-lined, but nonetheless kept his office in The Hague, the Rüstungsinspektion Niederlande, intact, and when Auftragsverlagerung proved not to be as efficient as hoped, he used this office to implement some steps of a new, more systematic exploitation policy. Early in 1942, elements of central exploitation, already introduced by Pleiger and Thomas’s WiRüAmt, received more significance. In March 1942, a month after Speer came into office, the ZAST in The Hague wrote that in the future it would mediate less between individual German and Dutch firms and instead would spread serial orders from the newly founded Ringe (circles), parts of Speer’s planning organization, between Dutch companies. Thus the Ringe, Berlin organizations that worked out production plans for individual branches, decided what part of the German production plan should be executed in any of the subjugated territories, thus maximizing the use of the capacity at Germany’s disposal.77 The ZAST organizations were ordered to find out what industrial capacity was available, whereupon all companies in Belgium and the Netherlands were ordered to provide the required information. Because France still had a political centre of its own as long as Berlin thought the Vichy regime’s collaboration d’Etat of value, it took more time to implement the system in France,78 but in June 1942, Vichy Prime Minister Pierre Laval together with Albert Speer agreed to found a Deutsches Beschaffungsamt Frankreich (German Purchasing Office France). Now, the new system was implemented there as well. The Deutsches Beschaffungsamt Frankreich was given duties comparable to those of the ZASTs in The Hague and Brussels. Companies all across Western Europe had to provide the Germans with information on their capacity and to accept all German orders. A refusal would mean that the board lost its authority, and the company would be placed under a supervisor. Thus, incomplete exploitation was no longer possible, although in Belgium even this was not enough.79 In 1943, when it became clear that production that had been prohibited was still going on, it was decided that a system called Positive Production Management would be introduced to ensure that any companies not executing German orders were closed. Closing companies that were not producing for Germany was a consequence of the new system that had to guarantee that all available capacity was brought into action for the war economy. Speer’s representative in the Netherlands therefore also decided that industrial companies not working on German orders for at least 50 per cent of their time should be closed,80 while factors of production that were

The Exploitation of Occupied Europe • 91 not immediately needed to fulfil planned production were sent to Germany. Western Europe was now confronted with a policy that had already been implemented in occupied Poland in 1939. Those companies whose production was not of interest to Germany were closed to cut down on the use of raw materials and labour. Activities deemed unnecessary were prohibited. For instance, production of luxuries was shut down, while sales representatives had to find other jobs in more vital areas. When, early in 1943, the Reich Marshal ordered that places of amusement should be kept open as these offered entertainment for German soldiers, he wanted to prevent these businesses from falling victim to this rationalization policy.81 Many other firms found more or less clandestine ways to continue in business. Nevertheless, even before 1943, the decision ‘to make more workers available for the transfer to the Reich by an intensified program of closing companies not essential to the war’ meant that 12,000 companies were closed in France alone,82 while in some Dutch branches of industry more than 50 per cent of the plants were shut down. More often than not, this had little effect on an industry’s overall capacity. In the soap industry, for instance, only 16 of the 140 Dutch factories survived, but those that survived comprised 90 per cent of the industry’s capacity.83 In the same period, civil building was prohibited to economize on labour and building materials needed for fortifications. In France this was implemented in May 1942. The idea spread to the Netherlands and Belgium in the following months.84 Closing companies that were not important to the Germans eventually broke all opposition in Belgium to production for the Reich. Dutch and French family-owned companies had been producing in abundance for the Germans from 1940 on, and now Belgian businesses also saw no alternative anymore. It was obviously too difficult for managers to accept the ruin of their own companies.85 To make sure that all resources were available for the German war economy and to prevent illegal production, the Germans had to have strict control over the use of raw materials and labour. For that reason, the Dutch Rijksbureaus—pre-war institutions set up to rationalize the use of raw materials in case of war—were brought under control by replacing the German supervisors (Referenten) with authorized agents (Bevollmächtigten) of the Berlin Reichsstellen, German institutes controlling the use of raw materials in the Reich itself (see Plate 4). These Reichsstellen thus took over the control of the use of raw materials elsewhere in Europe as well. To do this in line with Speer’s Zentrale Planung, the Reichsstellen themselves became subordinated to his planning organization. As the Bevollmächtigten supervising the Rijksbureaus had the authority to give formal orders, while they themselves were instructed by the Reichsstellen, the use of raw materials in the occupied country was subordinated to Berlin’s planning. In Belgium, this control was organized in the same way. Authorized agents of the Reichsstellen supervised the Warencentralen or Offices Centraux des Marchandises,86 but in Berlin Belgium had become notorious for sabotage. So here the Germans took over the distribution of fuels completely. It was another six months before, in March 1943, the Reichsstellen in France also got agents de liaison in the sections of the Office Central de la Répartition des Produits

92 • Occupied Economies Industriels (OCRPI), an organization with the same job as the Dutch Rijksbureaus.87 In every other aspect Berlin unified and systemized the planning of production and the use of raw materials across Europe.88 The results were remarkable. Early in 1942, before the transformation of its war economy, Berlin claimed about one-third of all the production of occupied France, that is between 20 and 25 per cent of all French production including that of the non-occupied Vichy zone, while it took around 20 per cent of the Dutch production.89 The transformation of the exploitation in 1942 meant for France that from then on Germany took around a third of its industrial production, not including the products of the aircraft industry, food processing and building.90 As French aircraft builders produced only for Germany and, in 1943, provided the Luftwaffe with 6.5 per cent of all its new planes, while almost all of the French building activity was for Germany as well, the German share in the industrial output of France was in fact much higher. Not only was civil building prohibited, but according to an April 1944 memo from the German occupation authorities in Paris, between September 1940 and June 1943, this country was by far the most important industrial supplier for the Germans.91 Plate 5, a graph from this German memo, shows that between September 1940 and June 1943, when the Atlantic Wall was erected, Germany ordered France to build defence works worth about 3.5 billion RM. Withdrawals from France reached their peak in late 1943 and the first half of 1944. According to Arne Radtke-Delacor, at that time some 45 to 50 per cent of all French industrial production fell into German hands, but according to the renowned German statistical specialist Dr Rolf Wagenführ this is an exaggeration.92 It was Wagenführ who during the war set up French industrial statistics to find out what part of the production actually went to Germany and what was still available for further exploitation. Only in the area first occupied was this level of exploitation of 45 to 50 per cent reached. It was, however, less intense in the parts of France that remained unoccupied until 1942. Wagenführ thought that at the end of the occupation 30 to 40 per cent of the entire French industrial output went to the Germans.93 Given the French transport problems, the difficult coal situation and the fact that both problems were worse than anywhere else in Western Europe, this relatively low level of exploitation seems plausible. It is undisputed, nonetheless, that apart from building enormous defence works, France provided bombed German families with new furniture and the Wehrmacht with enormous quantities of uniforms, cars and aircraft. This affects only the numerator of the fraction, however—that is the French production for Germany. It is the denominator—the size of the total French industrial production—that is disputed. Undisputed also, however, is that in 1943 France alone delivered 40 per cent of all the industrial products Germany obtained from across occupied Europe.94 In the Netherlands in 1944, 43 per cent of its total production, including black market goods, or 51 per cent of all legal production, went to Germany.95 This, together with the 30 to 40 per cent of the legal part of French industrial production, is a clear indication that Western Europe was completely integrated into the German war economy. As a

The Exploitation of Occupied Europe • 93 consequence, these countries felt, if not the hardship of war, then at least the scarcity resulting from it. Interfering Berlin officials rarely considered, and moreover did not care, that they undermined these economies by taking factors of production. Nor did they care that as they took a growing part of the remaining output in addition, the share of the production remaining for internal consumption by the population of the occupied countries dropped rapidly. From 1942 and 1943 on, the concentration of fuels, raw materials and labour in Germany resulted in a decline of production everywhere else, with the very special Danish case as the sole exception.96 Local officials, burgomasters and church leaders who petitioned the German authorities in their countries regarding the resulting impoverishment were met with sympathy, but von Falkenhausen, Seyss-Inquart, von Stülpnagel and Terboven had been censured as, according to Berlin, their attitude towards the locals was too friendly.97 By now, the only remaining target of the occupation was maximizing production for the war effort. At least for the time being, targets like winning over the Germanic Dutch or Flemish for a future alongside Germany had become irrelevant. More and more, exploitation in the East and West took the form of taking production factors. This resulted in declining overall production across occupied Europe. As the Germans took an increasing part of the declining output in addition, the impoverishment was severe, even in the western parts of the Continent.98 In Table 9.1 the economic burden of the occupation is calculated by subtracting the costs of occupation from the GDP for two Western occupied countries, France and the Netherlands. The table also shows the costs of warfare for the major belligerents as calculated by Mark Harrison. Finally, an index number is calculated (1938 = 100) of the part of the GDP still available after the costs of occupation and war are subtracted from the production. Because the 1940 costs of defence of the countries that were still independent then are not included, the 1940 burden of France and the Netherlands seems small compared to that of the fighting countries. By 1941 their load became substantial, however, and from 1942 the burden of these countries was in line with those of all but the most intensively mobilized belligerents. That France paid much more than the Dutch in the first years of occupation resulted from the fact that the costs of the occupied countries were calculated by taking the sums these countries paid for German purchases. This is no problem as long as Germany took only the money it needed to pay for these purchases, as it normally did. In France, in the first period of the war, however, the Wehrmacht took more, creating substantial bank accounts in its name. It could not use these because French production had not yet recovered and adapted to the Germans’ needs. Nevertheless, the Vichy government had to pay enormous sums in a period when the French GDP—black market production not included—declined dramatically.99 Beginning in 1942, the year of Speer’s intensified exploitation, the French and especially the Dutch production output slumped as workers were hunted down and sent to Germany, while the costs of occupation as a percentage of the GDP rose to high levels.100 In 1942 France spent 30 per cent of its GDP on occupation costs and the Netherlands

94 • Occupied Economies Table 9.1. Costs of Warfare or Occupation for Belligerents and Occupied Countries, Respectively, and Their GDPs Costs of occupation or warfare as a percentage of the GDP France 1940 1941 1942 1943 1944

20 30 30 49 18

Netherlands 7 19 40 46 42

UK

Germany

Italy

USSR

USA

Japan

15 44 53 52 53

40 52 64 70 —

12 23 22 21 —

17 28 61 61 —

2 11 32 43 45

22 27 33 43 76

USA

Japan

GDP corrected for price developments (1938 = 100) France

Netherlands

UK

Germany

Italy

USSR

1940

82

107

109

136

102

116

115

118

1941

79

101

119

154

100

100

134

117

1942

80

89

122

162

100

76

157

115

1943

80

88

124

173

94

85

181

115

1944

61

74

118

159

80

101

193

108

Available GDP after costs of warfare or occupation (1938 = 100) France

Netherlands

UK

Germany

Italy

USSR

USA

Japan

1940

66

100

93

81

90

96

113

92

1941

55

82

67

74

77

72

119

86

1942

56

53

57

58

78

30

107

77

1943

41

48

59

52

74

33

103

66

1944

50

43

56

—

—

—

106

26

Source: Mark Harrison, ‘The Economics of World War II: An Overview,’ in: Mark Harrison, The Economics of World War II: Six Great Powers in International Comparison (Cambridge 1998) 1–42; League of Nations, Statistical Yearbook, 17 (1942–1944) (Geneva 1945); Angus Maddison, Dynamic Forces in Capitalist Development: A Long-run Comparative View (Oxford 1991); CEPII, Séries lonques macro-économiques, Comptes nationaux en base 1938, http://www.cepii.fr/francgraph/bdd/villa/mode. htm; Filippo Occhino, Kim Oosterlinck and Eugene N. White, ‘How Occupied France Financed its Own Exploitation in World War II’, in: National Bureau of Economic Research Working Papers 12137 (Cambridge, Mass. March 2006); Hein A. M. Klemann, Nederland 1938–1948. Economie en samenleving in jaren van oorlog en bezetting (Amsterdam 2002); own calculations.

40 per cent. The following year France paid 49 per cent and the Netherlands 46 per cent. The latter still lost 42 per cent of all its production in 1944, when it was only partly liberated. These figures mean that, in 1943, of the major belligerents, only Germany and the USSR devoted a substantially greater proportion of their production to warfare than France and the Netherlands, which were forced to pay for the Germans’ purchases in their countries. As the economy slumped and the GDP declined in the

The Exploitation of Occupied Europe • 95 occupied countries, while the economies of the belligerents grew, except for that of the partly occupied USSR (see Table 9.1), these burdens weighed heavy. It is, of course, not correct to presume that in the pre-war period the occupied countries paid nothing for their national defence. Nonetheless, it seems a good measure to take the index of national income, minus the costs of war and occupation, with the GDP in 1938—when all countries were in principle free to use production as they chose—as a base (GDP 1938 = 100). It then becomes clear that, apart from the USSR and, in 1944, Japan (by which time Tokyo had virtually lost the war although it did not want to admit it), all active participants in the war had more than 50 per cent of their pre-war GDP available for expenditures other than warfare all the time, while even in France and the Netherlands, countries reckoned to be among the least severely exploited of occupied Europe, from 1943 on the freely available GDP was far below that 50 per cent level. The combination of declining production and huge levies had terrible consequences for the material well-being of the population, especially from 1942 on. That was so even in those occupied countries where production was reasonably intact. From 1942, it became clear that Germany’s lack of labour, just like its hunger for raw materials, was only partially a result of the war and the high number of men sent to the fronts. It was also a consequence of the inefficient use of resources. When Speer took over, it proved possible to save huge quantities of material and labour by some simple efficiency and centralization. In 1942, for instance, German industry produced 40 per cent more aircraft with just 5 per cent more labour and less raw material. This increase of production and productivity in Germany itself was, however, at least partly brought about by lowering production and productivity in occupied Europe, especially in the West.101 By exploiting occupied Europe more systematically, Germany made it less easy for Western Europeans to cooperate. In 1940 and 1941, for the national authorities, producing for the Germans was a simple way to restart production and create employment; for the German authorities inside these countries it was a way to boost employment and improve welfare and thus bring about goodwill among the local people; for the Reich it guaranteed useful products; and for companies in the occupied countries it was a way to survive. After the national defeat in May and June 1940, local entrepreneurs had to decide whether to restart production. At that time, it was impossible to foresee that Hitler would create additional fronts in South Eastern and Eastern Europe and that Japan would attack the USA, thus destabilizing Germany’s position again. There seemed no alternative other than adaptation to a long, if not permanent German dominance. Britain fought on, but it was very unlikely that the waning British Empire would ever overcome a Germany in control of almost the whole Continent. Dutch historians have described Queen Wilhelmina in her London exile as a heroic woman whose only reaction to the fall of France was the comment that the loss of one ally did not change her opinion.102 Without denying the desperate heroism in this remark, it seems totally unrealistic, maybe even idiotic. Nevertheless,

96 • Occupied Economies many historians emphasize the heroic aspect because all across Europe historians often have an implicitly teleological vision of the war. They seldom write about the fact that in 1940 and the greater part of 1941, the only realistic outcome seemed a long, if not permanent German supremacy. People who still believed in an Allied victory based that belief on hope, not on any realistic analysis. The fact that the Allies eventually won was a result of enormous mistakes and lack of coordination on the part of the Axis powers. It shows that history is not a teleological process—not that those who still believed in an Allied victory after June 1940 were right; realists believed in a German victory. Therefore, in occupied Europe, adaptation seemed the only option. From the end of 1941 onwards, the situation changed. The fact that the first cracks were visible in the myth of Hitler’s invincibility was a reason for Berlin to aim for a more efficient exploitation. It was felt severely by the German population, as well as by the people of Western Europe. There, hundreds of thousands of young men were driven into hiding to avoid being sent to Germany as forced labour. Companies of little value for the German war production were closed, and ever less of the remaining production was available for the civilian population. For local authorities in the occupied countries, both German as well as national, reducing exploitation became a priority. In 1943 a Dutch official wrote to a high-ranking member of the German authorities: ‘The economic subjects and companies, their organizations and the Dutch state organizations regard a provision of the population with what it needs, adapted to the circumstances, as the only justification of their labour and up to a certain level even of any activity at all.’103 In the same period, German officials in France complained about the growing influence of harmful propaganda and wrote that when trains with forced workers left for Germany, the Krauts were cursed openly and ‘The Internationale’ sung.104 Only by an increased supply of consumer goods and termination of the Arbeitseinsatz could the growing opposition be limited, although, apart from economic factors, opposition was fed by the Allied successes. From 1942, systemizing the exploitation resulted in problems typical of a planned economy. As licences were needed for the use of all materials, normal market supply was terminated, and all facets of production had to be planned; fuel, transport facilities and spare parts, although promised, were often not available, while companies seldom had any buffer stocks remaining. In 1942 the German navy complained about non-delivery of machines from a Dutch factory placed under German Verwaltung.105 In turn, the Verwalter complained that he did not receive essential Belgian materials, and he was probably right. There are numerous examples of such coordination problems that could have been partly solved by concentrating production in big companies. Concentration therefore became an essential element of the strategy of the Zentrale Planung, but it was not an overall solution. As late as 1944, officials in occupied Europe still complained about a ‘gap between the raw material coverage on paper and real . . . deliveries’.106 Especially the lack of fuels and transport capacity was a growing problem. By the last months of 1942, transport problems in

The Exploitation of Occupied Europe • 97 France became overwhelming as the railroads lacked the locomotives and wagons to meet transportation needs. Partly this was the result of the Germans’ confiscation of substantial numbers of locomotives and wagons in the early stages of the occupation. It was impossible to meet all transportation requirements as a result of the increased demand for transport facilities for the building materials needed for the huge fortifications, the British attacks that progressively damaged rail materials, and the shortage of petrol and rubber, which made road transport all but impossible. In fact, road transport was prohibited for civil purposes because of the lack of fuel and tyres across Europe.107 The German authorities in Paris complained that this had consequences not just for the internal French economy, including food distribution, but also for deliveries to Germany; however, Berlin was not impressed.108 By early 1944, the French railways had to transport everything that the Germans needed for their gargantuan military building projects as well as everything that would normally go by road. This had to be done with only 50 per cent of its pre-war stock of wagons and 75 per cent of the tank engines. Despite these problems, when Paris asked for rail stock to be returned, the request was refused; Berlin did not change this opinion when the Germans in Paris pointed out that ‘the French economy had become part of the German war economy; it [therefore] is hardly possible any more to terminate internal French transports in favour of German orders. Everywhere serious bottlenecks in transport have developed. Many factories have had to limit or even to stop production for lack of semi-finished products or raw materials.’109 Transport problems were blocking production and as a consequence creating delays in deliveries of vital products such as coal, raw materials and food. This is illustrated in Plate 6, a graph from a 1944 German document, which shows the weekly transports of the SNCF, the French railway, in metric tons during a few months between December 1941 and January 1944. The red parts represent transports primarily in the interest of the Germans (shaded red parts are Wehrmacht transports), while only the yellow parts represent transports primarily in French interests. That is to say, dark yellow or orange parts represent transports to keep French railroads going. As the SNCF was now primarily working for Germany, it seems nonsense to call this a French interest. From the graph it is clear that by December 1941 between 65 and 70 per cent of all French railroad transport was for German interests; by January 1944, this had risen to between 80 and 90 per cent, illustrating how intensely production in France was used, as well as that rail transportation for French internal consumption was all but impossible. As road traffic was completely restricted to German use, only local production and markets were left available for internal consumption. Given the fact that these transport problems were present across Europe, concentrating production factors as labour, raw materials and coal within Germany in order to maximize war production had a certain rationality. At the same time it undermined the economic recovery begun after the 1940 invasion of Belgium and France and cut off growth in the Netherlands.

98 • Occupied Economies

The German Booty What were the economic advantages of occupying Europe? The amount of goods and services that Germany took can provide a part of the answer to this question. One should not forget, however, that workers were also taken to Germany to do all kinds of jobs and even to be exploited as slaves. Probably, the forced labour policy, more than anything else, undermined the economies of some parts of occupied Europe. The next chapter will investigate the Germans’ attempts to persuade young men to accept work in Germany, the exploitation of prisoners of war, and the Arbeitseinsatz—the programme of forced labour for men and, in Eastern European countries, also for women—that resulted in the hunting down of labour and even outright slavery. Then, the consequences these German programmes had for the local economies will be investigated. The question now is what Germany took. This can be answered in a number of ways. One can look at particular products from specific parts of the Continent, or one can try to find out what the overall contribution of the diverse parts of Europe was to the German war machine. It is important to do both as the size of the booty in any occupied country is only to a limited extent an indication of the consequences of exploitation for the local economy and is a weak indication of the consequences of war. Table 9.2 shows what was taken by the Germans from each country, (1) during the occupation as a whole (until the end of 1944), (2) in 1942 and (3) during the period from the start of the occupation until the end of 1943. The first impression is that almost all German booty came from Western Europe, as 79 per cent came from the countries there in 1942, while from the start of the occupation until the end of 1943 it was 89 per cent and during the whole occupation period 81 per cent. In addition, between 4 and 6 per cent came from the Czech Protectorate, but since here German bills were sometimes paid from credits by local banks and it is not certain whether these are included in the data, this possibly is an underestimation. On the other hand, an important part of the payments that the Czechs were forced to make were used to buy shares, not to exploit the country.110 Nonetheless, it is clear from these data that in Western Europe, as well as in the Protectorate, the costs of occupation for Germany were negligible compared to the gains.111 To understand Table 9.2, it should be realized that these data are calculated from the amount of money Germany raised at the expense of each individual country of occupied Europe. As this money was almost always spent immediately in the same country, it provides a measure—the only one we have—of what the Nazis took from each country. It is common knowledge, however, that almost everywhere in the first months of the occupation the occupier confiscated sizeable quantities of goods without payment. This happened even in a Western country such as France. Simple plundering is not included in the data, however, although in some countries it was of importance. Monthly reports of the transportation of goods from Greece and Serbia from the Wirtschaftskommando (Economic Commando) Saloniki make a distinction between purchased commodities (Kaufgut), spoils of war (Beutegut),

The Exploitation of Occupied Europe • 99 Table 9.2.

Contribution of Each of the Occupied Countries in the German War Economy Until end 1942 of 1943 Percentage of total

Until end of 1944

German booty per capita

Population

RM (in Percentage No. (in Percentage billions) of total millions) of total

Index Value RM (Average = 100)

Belgium

12

10

10.3

11

8.3

4

1,241

248

France

46

48

40.1

43

41.4

20

969

193

Denmark

—

3

3.8

4

3.0

1

1,267

253

Netherlands

17

20

14.5

15

9.0

4

1,611

322

4

7

6.9

7

2.9

1

2,379

475

79

89

75.6

81

64.6

31

1,170

234

Norway Total Western Europe Protectorate

6

—

4.2

4

7.5

4

560

112

Greece

2

—

3.5

4

6.3

3

556

111

Serbia

2

2

1.0

1

4.5

2

222

44

Total Balkans

4

2

4.5

5

10.8

5

417

83

General Government

3

7

2.5

3

17.0

8

147

29

Occupied USSR

2

8

6.8

7

87.0

42

78

16

11

9

9.3

10

104.0

50

89

18

100

100

93.6a

100

186.9

100

501

100

Total Eastern Europe Grand total a

Average German booty per capita.

Source: RGVA, Collection 1458, Inventory 3, File 77, p. 109; Willi A. Boelcke, Die Kosten von Hitlers Krieg. Kriegsfinanzierung und finanzielles Kriegserbe in Deutschland 1933–1948 (Paderborn 1985) 108–114; Mark Harrison, ‘The Economics of World War II: An Overview’, in: Mark Harrison (ed.), The Economics of World War II: Six Great Powers in International Comparison (Cambridge 1998) 1–42, here 3 and 7–8; own calculations.

confiscated commodities ( prisenrechtliche Beschlagnahmen) and abandoned goods (herrenloses Gut). This makes it clear that at least in this country a substantial part of the booty was never paid for.112 During the first period of the occupation, in countries whose population was regarded as inferior—Poland and Soviet territory, but not the Protectorate—looting without payment was normal practice. Not only are the data incomplete, but, what is worse, the missing data are not evenly spread. How much was taken without any form of compensation is impossible to know for sure, but according to a 1943 calculation made by the American Board of Economic Warfare at the end of 1941—when most simple wartime plundering had ceased— the value of Nazi plundering and direct confiscations had risen to $36 billion, or around 90 billion RM.113 Other calculations for the war period as a whole go as high

100 • Occupied Economies as between $80 billion and $100 billion (1945 dollars) or 200 to 250 billion RM. These seem to be exaggerations, however.114 Directly after a disaster the damage often seems worse than when one looks back later. The 1943 American calculations included, for instance, takeovers of companies in occupied territories. After the war these were easily nullified, however. In 1986 Christoph Buchheim estimated that the non-paid booty was no more than 1 billion RM—that is around $400 million—but his educated guess did not include all that the Americans had included; for instance it lacked information about real military booty—army items and arms.115 His estimate for raw materials that the Germans did not pay for, or paid extremely low prices for, amounted, however, to 353 million RM, of which 228 million came from Western Europe, 59 million from Eastern Europe and 9 million from the Balkans. This did not include the 80 million RM for explosives and semi-finished products, mainly vehicle spare parts, the army took. Apart from these, the Central German Treasury—the Reichshauptkasse—took 130.6 million RM in hard currency from various European countries: 72 million from Western Europe, 18 million from Russia, 8 million from Poland and 33 million from the Balkans. Buchheim agrees that some categories, especially purchases in the occupied countries with unfavourable exchange rates, are not included. Therefore, he has raised his estimate by another 130 million RM to 1 billion RM.116 In other words, unpaid confiscations were substantial, but as the important takeovers were easy to nullify after the war, and during the war the companies involved would have been exploited to the German advantage anyway, it seemed that these were of greater importance to individual companies than for macroeconomic development. In effect, 1 billion RM would mean little more than 1 per cent of the German booty as calculated in Table 9.2 for the period until the end of 1944. As a number of countries were still occupied at that time, it was probably no more than about 1 per cent for the whole war period. Not so easy to disentangle was the plundering of special categories of people— people who had left the country or were thought of by the Germans as dangerous, such as the Jews. Some property of citizens of annexed territories, such as arable land or farms, could be returned to its pre-war owners after 1945; however, such confiscations could nonetheless be disastrous during the war. For instance, much of the property, including farms and houses, of the 1.5 million Polish citizens who lived in Reich-annexed parts of pre-war Poland and were sent to the General Government, was taken from these people with little compensation and turned over to German settlers. Without doubt this was plunder, but whether it is useful to include this in the German war booty figures for the occupied countries is another matter. According to the 1943 American calculations, confiscations amounting $36 billion by 1941 included the seizing of foreign holdings in banks and safe deposits and Jewish property, together with the takeover of trusteeships (and thus all but formal property rights) of Allied companies, often by the Reichswerke Hermann Göring. It included, for instance, the complete iron, steel and coal industry of the annexed French Alsace-Lorraine.117 Although these companies, just like any property, were

The Exploitation of Occupied Europe • 101 possibly damaged as a result of war, there was little problem in reversing this transfer in 1945. Notwithstanding substantial investments in modernization, the fact that 22 million acres (8.9 million hectares) of Polish farmland and substantial areas in the Protectorate were seized by German farmers was probably damaging for the food production, and it of course worsened the situation for the Polish owners as long as the war lasted.118 Apart from the fact that the money raised by the Reich to pay its bills in the occupied countries did not include confiscations, German investments, when financed by German companies or institutions, often resulted in payments to these territories. As clearing deficits was a way to let occupied Europe pay for Germany’s warfare, the level of these deficits is part of the statistical information on which Table 9.2 is based. At the end of the war, the sum total of Germany’s clearing deficits to the occupied countries was 14.7 billion RM, but in Norway, Greece, the Ukraine and Ostland the German clearing balanced positive at 840 million RM (see Table 9.3). This was not just a consequence of the fact that in some of these countries confiscations without payments were rather important, while in others all occupation costs were paid directly from the treasury; it is also a consequence of the fact that Germany sometimes had to send goods and services to the occupied countries. These could be even more valuable than the goods and services Germany obtained from the clearing. These were always apart from those goods and services paid directly from the treasury of the occupied country. For instance, as a consequence of the enormous defence works along the extremely long Norwegian coast, the occupation costs this country paid were not enough, and Berlin had to use other non-Norwegian resources to complete these. Apart from that, some food transportation was necessary because Norway simply could not feed its population. Consequently, at the end of 1943, this country had a clearing deficit of 160 million RM, of which at the end of 1944 only 22 million was left. Then building slowed down.119 Clearing deficits do not necessarily reflect real transactions. In Greece, for instance, from the start of the occupation, the rather small pre-war German deficit started to grow and peaked at the end of 1942 at 66 million RM. In the final two years alone, Greece built up a deficit of no less than 262 million RM. Nevertheless, the bulk of Greek exports continued to flow to Germany, and Berlin made no real payments.120 During the first years of the war, the swelling German indebtedness reflected the fantastic profits Greek traders made.121 Inflation, mirrored in an index of the Athens cost of living in October 1942 of 15,192 (1940 = 100), influenced export prices, swelling the German clearing indebtedness.122 Escalating German claims in 1943–1944 are nothing but a result of manipulating these prices. The Wehrmacht simply confiscated commodities like minerals and metals, olive oil and tobacco and sold these to German businessmen at pre-war or moderately increased prices. For goods exported to Greece—often to the German troops in Greece—Berlin charged between 150 and 600 per cent more than in 1939 or 1940.123 This dual pricing system did the trick. It reversed the clearing account in Germany’s favour.124 The Yugoslav

102 • Occupied Economies Table 9.3.

Active German Clearing Accounts, 1940–1944 (in millions of RM) Norway

Greece

Yugoslavia

Ukraine

Ostland

1940

13

−6

−47

—

—

1941

60

−59

−57

—

—

1942

91

−66

51

−4

—

1943

160

69

6

280

318

1944

22

262

11

293

264

Source: Figures for Greece 1941–1943, in PA-AA, HaPol I, General Referat für Wirtschafts und Finanzfragen, Dtsch.Verrechnungskasse (1942–1945): Geschäftsberichte der Deutschen Verrechnungskasse; figures for 1940, 1944: Bank of Greece, Ta Prota Penenta Chronia thw Trapezes tes Hellados (Athens 1978) 199 et seq.; Willi A. Boelcke, Die Kosten von Hitlers Krieg. Kriegsfinanzierung und finanzielles Kriegserbe in Deutschland 1933–1948 (Paderborn 1985) 108–114; own calculations.

deficit was caused by similar developments in Serbia and Croatia. In occupied Soviet territory, it is easier to understand the German clearing claims, as all of Europe delivered goods and services to Germany, from where enormous quantities of these were, in turn, sent to the Wehrmacht at the Eastern Front. In addition, in some mining industries in Poland or the occupied USSR, substantial investments by private companies or the Reichswerke were made. These deliveries did little for these countries’ economies as most were used in the battles fought by the German armies. As there is no further information on the exact value of these deliveries, it is impossible to calculate a more accurate figure reflecting the economic contributions of the countries in these parts of the Continent to the German war effort. The vital question is whether these weak aspects affect the information in Table 9.2 so much that the statistics become useless. In the Greek case, the postwar government claimed that Germany had a clearing deficit of 929 million RM, whereas according to German statistics Greece had a deficit of 262 million RM. This means that if the Greek information is correct, which seems unlikely as all across Europe post-war governments exaggerated the damage Germany had done, the credit in Greece would not be 3.5 billion RM, but 4.7 billion RM. Although that seems quite a considerable difference, it only means that the Greek contribution to the overall total taken from occupied Europe was not 3.5 but 4.8 per cent, and the amount per capita 746 RM, not 562 RM. The Greek contribution per capita was between 1.1 and 1.5 times the European average,125 making it clear that Greece, together with the Protectorate, was in a separate category from the other European countries, with a contribution to the German warfare that was somewhere between the Western European level, on the one hand, and that of Yugoslavia and Eastern Europe, on the other. As pre-war productivity in Greece and Czechoslovakia

The Exploitation of Occupied Europe • 103 was also low compared to that of Western Europe, but high compared to Eastern Europe, this seems reasonable. The conclusion must be that the data are incomplete, lacking information on unpaid German confiscations, on German purchases for which too low a price was paid and on the months in 1945 when some countries were still occupied, but that these data are far from worthless. In the first place, the statistics show why the Germans in Western Europe, just as in the Czech Protectorate, kept a more or less normal society going, if not until the end of the war, then at least for a number of years. The fact that increasing parts of their production went to Germany and were only nominally compensated for ruined the financial structure of these countries and undermined consumption, but exploitation by means of taking the output of production nonetheless kept the production itself intact. Of course, it was problematic that Berlin, especially from 1942 on, exercised more and more control and regulation over production, but production continued at a much higher level than official statistics suggest, as recalculations of the Netherlands figures made clear.126 Table 9.2 provides an indication of the booty Nazi Germany took from the various parts of Europe. As was to be expected, Western Europe—the richest and most productive part of the Continent—delivered 80 per cent of the German withdrawals from occupied Europe. If one includes the Protectorate, about 85 per cent of the booty came from countries that together had only 35 per cent of the population. As a consequence, the contribution of Eastern Europe and the Balkans seems negligible. Greece was earlier put in a category with the Czech Protectorate, and that seemed correct at first glance. It contributed more or less the same amount of goods and services to Germany as the Czechs and was of comparable size. However, as the Greek economy was almost completely destroyed in the process, while the Protectorate was treated gently, it seems better to consider Greece as a category of its own. Germany had already plundered the country after the invasion of 1941, but when it became strategically important for the North African campaign, the Nazis managed to pillage it even further, with disastrous consequences. Apart from the triple occupation by Germany, Italy and Bulgaria and the splitting up of the country between the three powers, it was the final act of plunder by Berlin during the North African campaign that all but destroyed the Greek economy. When the dependent but non-occupied countries of Europe are included in the data (Table 9.4), the total German haul rises from 93.6 billion RM to 118.2 billion RM. According to Götz Aly this was 114.5 billion RM, which means that the outcome of his calculations is more or less the same.127 Between the outbreak of war in September 1939 and the dramatic collapse of Hitler’s Reich in May 1945, the total expenditures of the German armed forces (Wehrmachtsausgaben) amounted to 414 billion RM.128 As far as is known, occupied Europe contributed 93.6 billion RM in goods and services. This amounts to 22.6 per cent of the total war costs (see Tables 9.2 and 9.4), while 28.6 per cent of the German war expenditures were paid by the combined countries of Nazi-dependent Europe. Some of the German plunder

104 • Occupied Economies is not included in these data. In some areas no or only partial compensation was paid. Others were still occupied in 1945. Therefore, it seems reasonable to estimate that occupied Europe paid around 25 per cent of the German war costs, and the whole of dependent Europe nearly a third. This is quite a substantial sum, but far below the 70 per cent of the war costs that, according to Aly, was contributed by foreigners (i.e. the occupied countries, forced labourers and Jews).129 It would seem that Aly was exaggerating and that Tooze’s conclusion that about 25 per cent of the costs of war were paid by occupied Europe is correct.130 However, those calculations include only a limited share of the substantial contribution from occupied Europe. For the most part, the data exclude the value of workers from across Europe who were forced to labour in Germany. Only when compensation was paid to the relatives of the workers in a dependent country is their contribution included. Even for the Netherlands, which managed to retain intact a more ordered and regulated society than anywhere else in occupied Europe, this was rather exceptional.131 Thus, it seems that the notion that 25 per cent of the German war costs were paid for by occupied Europe and about a third by dependent Europe is an underestimation. It is possible only to conclude, therefore, that even without the goods and services Germany took from occupied Europe without any, or for too little, payment, and without most of the contribution from foreign labour and the post-1944 contributions, almost a quarter of the economic burden of Germany’s war was shifted onto occupied Europe, while this rises to nearer a third when non-occupied but dependent Europe is included. Table 9.5 makes it clear that, although according to the financial data the contributions of Eastern Europe and the Balkans were relatively unimportant, again that conclusion is too simplistic. Even apart from the substantial number of labourers that came from these countries, this is made obvious by the fact that, although their overall contribution appears to be hardly significant, important quantities of scarce foodstuffs and raw materials came from these occupied territories. For instance, a 1943 German document shows that the cooperation of occupied Western territories in military production was of the highest importance, but that occupied Soviet territories were essential for their manganese ore and Serbia for its bauxite, lead and copper ore.132 Even in 1942—that is after pre-war stocks had already been confiscated the previous year—Germany still took substantial quantities of raw materials and foodstuffs from occupied Europe. By just looking at the quantity of food obtained by Germany and where this came from, it is clear that its war effort could not have been sustained without the contributions extracted from occupied Europe, and especially from the eastern regions. It should be noted that there is no information for Denmark in the table, which was not officially occupied but was taken into protection by the German Wehrmacht and so is not included in the German statistics on which the table is based. Although the overall Danish contribution to Germany was low by Western European standards, and few of its workers were taken to Germany, it was of the utmost importance for its 10–15 per cent contribution to the total German food supply.133

The Exploitation of Occupied Europe • 105 Table 9.4.

Contribution of Continental Europe to the German War Effort Contribution

Country/area Western Europe

RM (in billions) 75.6

Percentage of total contributions 64.0

Percentage of German war expenditures 18.3

Protectorate

4.2

3.6

1.0

Balkan

4.5

3.8

1.1

Eastern Europe

9.3

7.9

2.2

93.6

79.2

22.6

Croatia

2.3

1.9

0.6

Finland

0.1

0.1

0.0

Total, occupied Europe

Spain

0.1

0.1

0.0

Hungary

2.3

1.9

0.6

Italy

12.2

10.3

2.9

Romania

2.3

1.9

0.6

Bulgaria

1.6

1.4

0.4

Slovakia

0.6

0.5

0.1

Albania

0.0

0.0

0.0

Unknown

3.2

2.7

0.8

Total, dependent Europe Grand total

24.6

20.8

5.9

118.2

100.0

28.6

Source: RGVA, Collection 1458, Inventory 3, File 77, p. 109; Willi A. Boelcke, Die Kosten von Hitlers Krieg. Kriegsfinanzierung und finanzielles Kriegserbe in Deutschland 1933–1948 (Paderborn 1985) 108–114; own calculations.

Eastern Europe—occupied Poland, the Baltic countries and the Soviet territories together—also contributed a similar amount, while France’s contribution was smaller but still quite significant. Altogether, therefore, it seems plausible that Germany obtained from occupied Europe some 30 to 35 per cent of all the food needed to feed its home front as well as its armies. The fact that 9 per cent of the German needs for bread and grain supplies, 10 per cent of the meat and 14 per cent of the edible fats came from the relatively poor occupied Soviet territories meant that substantial parts of the food eaten by Germans—its armies as well as civilians—were obtained at the expense of the Ukrainian, Russian and Belarusian populations. The Hunger Plan, with its terrible consequences, may not have been completely successful from a German point of view, but nevertheless it was fatal for these countries, especially for the Jewish people, who were the first to be denied supplies.134 Nevertheless, the Germans didn’t benefit greatly by the situation as they extracted more grain from the Soviet Union by peaceful trade between 1939 and 1941 than they did by force between 1941 and 1944.135 It seems that in this sense war did not pay.

106 • Occupied Economies Table 9.5. Percentage of German Needs for Important Materials and Food that was Obtained from Occupied Europe in 1942 (for food, the harvest year 1942/43)

Meat

Edible fats

18.1

4.6

9.0

1.7

0.1

1.1

0.5

1.2

0.1

5.3

0.5 1.7

Protectorate Eastern territories 0.5 3.3

107.0

19.7

Serbia

22.8

11.3 10.5 17.7

Greece

55.0

Booty Total

Foodstuffs Grain for bread

18.8

1.0

Netherlands

Other

Nickel

Bauxite

Lead

Copper

Chromium ore

Manganese ore

15.3 1.4

Belgium Norway

Nonferrous metals

Cotton

France

Scrap iron

Iron ore

Iron

11.9 12.1 14.3 0.4

5.7

0.2

2.0

6.9 18.4

17.5 6.2

107.0 55.0 11.3 10.5 42.2 43.4

47.8

18.2 22.5 18.5

Source: RGVA, Collection 1458, Inventory 3, File 77, table 2 and p. 81.

Table 9.5 confirms the idea that countries whose overall deliveries were limited, such as the Balkans and occupied Soviet territories, could be vital for some specific deliveries. While iron ore primarily came from the neutral, but more or less dependent Spain and Sweden, occupied Europe delivered substantial parts of the German need for essential nonferrous metals such as manganese from the Ukraine; chromium from Greece; bauxite from France, Serbia and Greece; and nickel from the occupied Soviet territories. According to other sources, the 1942 chrome supplies from the Balkans could even more than cover the German needs.136 Apart from metals, half the cotton the Germans needed was acquired in occupied Europe, mainly from the USSR and France. Altogether, it is too easy to conclude that the contribution to the German war production of Balkan countries like Serbia or Greece, and also of the occupied Soviet Union, was limited, since raw materials of vital importance came from these countries. Plate 7 illustrates the amount of food sent from all over Europe to Germany and its armed forces. Substantial amounts of food, especially corn, came from the occupied USSR. As in these territories most heavy industry was destroyed by the extremely aggressive war or by the dramatic destruction policy of the withdrawing Red Army, as well as by the war of annihilation—Vernichtungskrieg— of the Nazis, almost all the Germans obtained from the conquered territories there was corn. The destruction caused by the actual warfare, the Soviet scorched-earth policy or the German policy during the first months of the occupation was most of the

The Exploitation of Occupied Europe • 107 time difficult to repair or beyond repair at all. The remaining light industry, in so far as it was not destroyed as well, was not the first interest of the occupier. Therefore, Nazi Germany took in the first place food from these countries, or, as a 1943 German document said, ‘former Russian territories [were] useful as sources of agrarian products and labour’.137 The picture is, however, more complex than that, for the occupier not only supplied the Reich from the massive surpluses from the Ukraine—the main foodproducing part of the occupied Soviet territories—but also took quite substantial quantities of foodstuffs to feed the army groups in, for instance, the food-deficit northern region of the Soviet Union. At the same time, the food problems within the occupied USSR only became worse as a result of Soviet partisan successes in the central regions. Therefore, apart from these deliveries from Soviet territories, the Reich received surpluses harvested in the Warthegau—a former Polish district now incorporated into Greater Germany—and, in 1942, from the General Government, where food was spared by assigning extremely low rations to the local Polish people and mass-murdering substantial portions of the Jewish Poles. The same policy was followed a year later in Ukraine. Nonetheless, partisan activity and problems in raising the crops prevented the Wehrmacht from living entirely off the land in the occupied USSR. Both in 1941, and then again in 1943–1944, the German army had to be partly supplied from the Reich itself, which might have meant from the former Polish Warthegau. At the same time substantial quantities of food were taken from other parts of Europe as well. As a consequence of the successes of the Soviet armies, in 1943, Berlin had to move attention to the food imports from France, Denmark and Hungary. In Hungary, these food resources even were one of the motives for the March 1944 invasion of this former ally.138 That Germany, at the moment when it had larger armies than ever before, and therefore needed more foodstuffs than ever, could get no food from anywhere but Europe, as a consequence of the Allied blockade, resulted in scratching provisions from all over the Continent. ‘If I have nothing to eat, I cannot keep fighting,’ Field Marshal Hans von Kluge wrote in 1941,139 while Generalfeldmarschall Milch, member of the board of Speer’s Zentrale Planung, as late as 1944 still wrote the same: ‘Without grub we cannot keep the war going.’140 The maps in Plate 7 give the impression that food was taken very selectively from the occupied Continent, that is only from countries that had superfluous supplies anyway—Denmark or the Netherlands for specific products—or from countries the Germans were hardly interested in. For that reason, the Balkans and the eastern territories had to bleed, as Berlin simply did not care whether the population of, for instance, the General Government or Serbia would survive or not. Especially in those parts of Europe where the Nazis saw the population as inferior, the urgent needs of the population were thought to be irrelevant, but even in France the Germans took more food than the country could spare. In that country, as a consequence of the lack of coal and transport facilities, the exploitation of

108 • Occupied Economies industry partly failed. As the population did not produce the industrial products the occupier needed on the scale it hoped for, this was probably reason enough to demand that France supplied Germany with more food than other Western countries. It resulted not only in lower official food rations than anywhere else in the western part of the Continent, but probably also in lower overall rations. In a postwar League of Nations publication on the food situation during the war, France was put in one category with the Baltic States, Slovakia and Italy, and far below Germany itself, but also far below occupied countries like Denmark, the Protectorate of Bohemia and Moravia, Belgium, the Netherlands and Norway.141 As the French delivered the things Germany needed for its warfare only in limited quantities, Berlin did not care. The occupier made sure, however, that workers producing for them got what they needed. About a quarter of the total German war production was realized in occupied Europe, not including confiscations without any form of payment—common practice in the eastern parts of Europe, but far from unknown in the West. Even countries whose contributions seem limited, however, could be of extreme importance because the small quantity could contain essential foodstuffs or raw materials. As a consequence, from 1942 production across continental Europe, from the North Sea and the Atlantic to the Eastern Front and from the north of Sweden to the Mediterranean, was supporting Germany’s war effort. By rationing and controlling the use of raw materials and fuels, Berlin made production of any goods with no importance for its warfare almost impossible in occupied Europe. Apart from the production necessary for survival, the only production not directed to the German needs was done clandestinely. Even parts of that went back into the war economy, as Germany purchased some of its food and raw materials on black markets across Europe, especially in France and the Balkans. From 1942 on, factors of production in the occupied countries, such as raw materials, machinery and labour that were not useful, or not efficiently used for the German war economy, were taken to Germany. As far as this concerned raw materials or machinery, most of these purchases are reflected in Table 9.2. The most important and most defenceless factor of production—human labour—is not included or only to a very limited extent. In the next chapter the German hunt for labour will be investigated.

Notes 1. Hein A. M. Klemann, ‘Did the German Occupation (1940–1945) Ruin Dutch Industry?’ Contemporary European History, 17 (2008) 457–481, here passim. 2. RGVA, Collection 1458, Inventory 3, File 77, p. 73. Also: Alan Bullock, Hitler and Stalin: Parallel Lives (London 1993 6th ed.) 455 et seq.; Werner Abelshauser, ‘Germany: Guns, Butter, and Economic Miracles,’ in: Mark Harrison (ed.), The Economics of World War II: Six Great Powers in International Comparison

The Exploitation of Occupied Europe • 109

3.

4. 5.

6. 7.

8.

9.

10. 11. 12. 13. 14. 15.

16.

(Cambridge 1998) 122–176, here 156; Richard J. Overy, War and Economy in the Third Reich (Oxford 1994) 29–30. AJ41/397, ‘Questions Economiques’, http://www.ihtp.cnrs.fr/prefets/fr/fzo1308 40dgto.html; Délégué Général du Gouvernement Française dans les territoires occupés à le Maréchal de France, Chef de l’état, rapport du 2 août 1940, http:// www.ihtp.cnrs.fr/prefets/; AJ41 397, ‘L’opinion publique en zone occupée’, 16 October 1940, http://www.ihtp.cnrs.fr/prefets/fr/fzo161040dgto.html. RGVA, Collection 1458, Inventory 3, File 77, p. 73. György Ránki, The Economics of the Second World War (Vienna 1993) 316; Zbigniew Landau, Jerzy Tomaszewski and Wojciech Roszkowsk, The Polish Economy in the Twentieth Century (London 1985) 177. Victor H. Winston, ‘The Polish Bituminous Coal-Mining Industry’, American Slavic and East European Review, 15 (1956) 38–70, here 51–53. ‘[178] Generalgouverneur Hans Frank über die Politik in den okkupierten polnischen Gebieten, 2.3.1940’, in: Wolgang Michalka (ed.), Deutsche Geschichte 1933–1945. Dokumente zur Innen- und Außenpolitik (Frankfurt am Main 2002 2nd ed.) 234–235. Mark Spoerer, Zwangsarbeit unter dem Hakenkreuz. Ausländische Zivilarbeiter, Kriegsgefangene und Häftlinge im Deutschen Reich und im besetzten Europa, 1939–1945 (Munich 2001) 47. Wolfgang Schumann and Ludwig Nestler (eds.), Die faschistische Okkupationspolitik in Polen (1939–1945). Dokumentenauswahl und Einleitung von Werner Röhr. Unter Mitarbeit von Elke Heckert, Bernd Gottberg, Jutta Wenzel und Heide-Marie Grünthal (Cologne 1989) 42. Tadeusz Klosinski, Polityka przemysŀowa okupanta w Generalnym Gubernatorstwie (Poznań 1947). Ránki, Economics of the Second World War, 316. RGVA, Collection 1458, Inventory 3, File 77, p. 74. Adam Tooze, The Wages of Destruction: The Making and Breaking of the Nazi Economy (London 2007 2nd ed.) 477–478. Christian Gerlach, Kalkulierte Morde. Die deutsche Wirtschafts- und Vernichtungspolitik in Weißrußland 1941 bis 1944 (Hamburg 1999) 1126–1143. Richard J. Overy, Russia’s War (London 1998) 83–84; Peter Liberman, Does Conquest Pay? The Exploitation of Occupied Industrial Societies (Princeton 1996) 37–38; Werner Röhr, ‘Zur Wirtschaftspolitik der deutschen Okkupanten in Polen 1939–1945’, in: Dietrich Eichholtz (ed.), Krieg und Wirtschaft. Studien zur deutschen Wirtschaftsgeschichte 1939–1945 (Berlin 1999) 221–251, passim; Dieter Pohl, Die Herrschaft der Wehrmacht. Deutsche Militärbesatzung und einheimische Bevölkerung in der Sowjetunion 1941–1944 (Munich 2008) 64–66. Arne Radtke-Delacor, ‘La place des commandes allemandes à l’industrie Française dans les stratégies de guerre nazies de 1940–1944’, in: Olivier Dard, Jean

110 • Occupied Economies

17. 18. 19. 20. 21.

22. 23. 24. 25. 26.

27.

28. 29. 30. 31. 32. 33.

34. 35.

36.

Claude Daumas and François Marcot (eds.), L’Occupation, l’État français et les entreprises (Paris 2000) 12–13; Arne Radtke-Delacor, ‘Produire pour le Reich, Les commandes allemandes à l’économie française (1940–1945)’, Vingtième Siècle. Revue d’histoire, 70 (2001) 99–115, here 100; RGVA, Collection 1458, Inventory 3, File 77, pp. 73–74. Alan S. Milward, The New Order and the French Economy (Oxford 1970) 45; Radtke-Delacor, ‘Produire pour le Reich’, 102. Overy, War and Economy, passim. Richard J. Overy, Goering (London 2000 2nd ed.) 138–139. Radtke-Delacor, ‘Produire pour le Reich’, 101. Der Chef der Militärverwaltung in Frankreich, Paris, am 2. September 1940: Lagebericht für den Monat August 1940, http://www.ihtp.cnrs.fr/prefets/de/ d0840mbf.html. Liberman, Does Conquest Pay? 43. Milward, New Order, 46–47. Patrick Nefors, Industriële collaboratie in België. De Galopindoctrine, de emissiebank en de Belgische industrie in de Tweede Wereldoorlog (Leuven 2000) 83–84. ‘L’Opinion publique en zone occupée’; ‘Etat des esprits en zone occupée’, 28 October 1940, http://www.ihtp.cnrs.fr/prefets/fr/fzo281040dgto.html. ‘Questions économiques’, http://www.ihtp.cnrs.fr/prefets/fr/fzo130840dgto. html; ‘L´Ambassadeur de France à le Maréchal de France’, 2 August 1940, http:// www.ihtp.cnrs.fr/prefets/. AN, AJ 40/ 444, Der Militärbefehlshaber in Frankreich, Paris, den 13. Juli 1944, Lagebericht für den Monat Juni 1944, http://www.ihtp.cnrs.fr/prefets/de/ d0644mbf.html; J. F. Bell, ‘Problems of Economic Reconstruction in France’, Economic Geography, 22 (1946) 54–66, here 62–63. Hein A. M. Klemann, Nederland 1938–1948. Economie en samenleving in jaren van oorlog en bezetting (Amsterdam 2002) 68. Nefors, Industriële collaboratie in België, 83–84. Radtke-Delacor, ‘Produire pour le Reich’, 102–103. Ian Kershaw, Hitler 1936–1945: Nemesis (Harmondsworth 2000) 225. Bullock, Hitler and Stalin, 590; also: Overy, War and Economy, passim; Golo Mann, Deutsche Geschichte 1919–1945 (Frankfurt am Main 1986) 166–167. Hein A. M. Klemann, ‘Dutch Industrial Companies and the German Occupation, 1940–1945’, Vierteljahrschrift für Sozial- und Wirtschaftsgeschichte, 93 (2006) 1–22. Ibid. 7 et seq.; Klemann, Nederland 1938–1948, 58 et seq. See: Enquêtecommissie regeringsbeleid 1940–1945, Verslag houdende de uitkomsten van het onderzoek. Deel 2C. Verhoren. Zitting van donderdag 17 juni 1948, Subcommissie 1 (The Hague 1949–1973) 364–365. Klemann, Nederland 1938–1948, 76–77 and 438.

The Exploitation of Occupied Europe • 111 37. Ernst Ermann, ‘“VB”-Gespräch mit Seyss-Inquart. Wie steht es in den Niederlanden?’ Völkischer Beobachter, 1 December 1940. 38. The comparison of the Nazi occupation policy in this period with a Keynesian policy is also made by Per Hansen: Per H. Hansen, ‘“Business as Usual?” The Danish Economy and Business during the German Occupation’, in: Harold James and Jacob Tanner (eds.), Enterprises in the Period of Fascism in Europe (Aldershot 2002) 115–143, here 121. 39. Milward, New Order, 77. 40. Klemann, Nederland 1938–1948, 76–77; see: Hans Umbreit, ‘Les politiques économique allemandes en France’, in: Dard, Daumas and Marcot, L’Occupation, l’État français et les entreprises, 25–35, here 28. 41. Paris, den 2. Okt. 1940, Der Chef des Verwaltungsstabes: Lagebericht Monat September, http://www.ihtp.cnrs.fr/prefets/de/d0940mbf.html. 42. Liberman, Does Conquest Pay? 36–37. 43. Otfried Ulshöfer, Einflußnahme auf Wirtschaftunternehmungen in den besetzten nord-, west- und südosteuropäische Ländern während des Zweiten Weltkrieges insbesondere der Erwerb von Beteiligungen (Verflechtung) (Tübingen 1958) 41; Milward, New Order, 50–51. 44. Niod Amsterdam 47 Defisenreferat 40–44 R 8I: Monetaire zaken 1/3/’41. 45. Ulshöfer, Einflußnahme auf Wirtschaftunternehmungen, 41. 46. Ibid. 140–141. 47. Ben Wubs, Unilever between Reich and Empire 1939–1945: International Business and National War Interests (Rotterdam 2006); Ivo J. Blanken, Onder Duits beheer. Geschiedenis van Philips electronics N.V. Deel IV (1935–1950) (Zaltbommel 1997). 48. See: Dirk Luyten, ‘De “opdracht” van de regering aan het Galopin-komitee op 15 Mei 1940’, Cahiers-bijdragen van het Navorsings- en Studiecentrum voor de Geschiedenis van de Tweede Wereldoorlog, 16 (1994) 163–171; Nefors, Industriële collaboratie in België, passim; Herman van der Wee and Monique Verbreyt, The Generale Bank 1822–1997: A Continuing Challenge (Tielt 1997) 242 et seq.; Dirk Luyten, ‘The Belgian Business Elite: Economic Exploitation and National Socialist Corporatism’, in: James and Tanner, Enterprises in the Period of Fascism, 195–218. 49. Dirk Luyten, ‘Economie’, in: Paul Aron and José Gotovitch (eds.), Dictionnaire de la Seconde Guerre mondiale en Belgique (Brussels 2008) 151–155, here 152. 50. Radtke-Delacor, ‘Produire pour le Reich’, 103. 51. Militärbefehlshaber in Frankreich, Lagebericht Monat Juni–September 1942, http://www.ihtp.cnrs.fr/prefets/. 52. Militärbefehlshaber in Frankreich, Der Chef des Verwaltungsstabes: Lagebericht Monat Juni–September 1942, http://www.ihtp.cnrs.fr/prefets/.

112 • Occupied Economies 53. Until Hitler decided differently, General von Falkenhausen had orders to rule over the occupied Dutch as well as Belgian territories. In fact, he became the military commander only in occupied Belgium. NA, The Hague, Werkarchief Wentholt 1/XII, 308: Bespreking op 21 Mei 1940 van den Regeeringscommissaris Dr. Ir. Ringers inzake tewerkstelling van werkloozen. 54. Centrale Dienst voor de Statistiek, Statistisch jaarboek voor België en BelgischKongo (Brussels 1938–1949). 55. ‘Chômage’, in: Aron and Gotovitch, Dictionnaire de la Seconde Guerre mondiale, 90–93; ‘Prisonniers de Guerre’, in: Aron and Gotovitch, Dictionnaire de la Seconde Guerre mondiale, 350–353; Etienne Verhoeyen, België bezet 1940–1944—een synthese (Brussels 1991) 204. 56. Paris, den 5. April 1941, Der Militärbefehlshaber in Frankreich: Lagebericht März 1941, http://www.ihtp.cnrs.fr/prefets/. 57. Radtke-Delacor, ‘Produire pour le Reich’, 106; Klemann, Nederland 1938– 1948, 77. According to the report of the Militärbefehlshaber the French part was not 1.6 but 1.5 billion Reichsmarks. Paris, den 7. März 1941, Der Militärbefehlshaber in Frankreich: Lagebericht Februar 1941, http://www.ihtp.cnrs.fr/prefets/. 58. Robert Bohn, ‘Grundzüge der deutschen Wirtschaftsinteressen in Norwegen 1940–45’, in: Joachim Lund (ed.), Working for the New Order: European Business under German Domination 1939–1945 (Copenhagen 2006) 105–113, here 108–109; Hansen, ‘“Business as Usual?”’ passim. 59. Klemann, Nederland 1938–1948, 433; Hervé Joly, ‘The Economy of Occupied and Vichy France: Constraints and Opportunities’, in: Lund, Working for the New Order, 93–103, here 98 et seq.; Radtke-Delacor, ‘Produire pour le Reich’, 112; Klemann, Nederland 1938–1948, 24–25. 60. Angus Maddison, The World Economy: Historical Statistics (Paris 2003) 48–54. 61. Luyten, ‘Economie’, 152–153. 62. Klemann, ‘Dutch Industrial Companies’. 63. Niod Amsterdam, 92, B4: Tätigkeitsberich der ZAST für November und Dezember 1941, den 14. Januar 1942. 64. Niod Amsterdam, 77–85 HSSPF 100b: Vermerk, den 11. August 1941, Stilllegung von Betrieben. 65. Der Militärbefehlshaber in Frankreich Kommandostab, den 31. Juli 1941: Lagebericht Juni/Juli 1941, http://www.ihtp.cnrs.fr/prefets/. 66. Der Militärbefehlshaber in Frankreich, den 30. September 1941: Lagebericht Augustus–September 1941, http://www.ihtp.cnrs.fr/prefets/de/d080941mbf. html#_ftn1. 67. Nefors, Industriële collaboratie in België, 168–169; J. Mensink, De kolenvoorziening van Nederland tijdens den Tweeden Wereldoorlog (Amsterdam 1946) 65–66. 68. Der Militärbefehlshaber in Frankreich, Kommandostab Abteilung Ia, Paris, den 31. Juli 1941: Lagebericht Juni/Juli 1941, http://www.ihtp.cnrs.fr/prefets/de/ d060741mbf.html.

The Exploitation of Occupied Europe • 113 69. Paris, den 30. November 1941, Der Militärbefehlshaber in Frankreich: Lagebericht Oktober/November 1941, http://www.ihtp.cnrs.fr/prefets/de/d101141mbf. html. 70. NA, The Hague, Handel en Nijverheid 9672: Toestand van het Nederlandsche bedrijfsleven gedurende de maand October 1941; Michael Manigrasso and Freek van Valkenhoef, ‘Oranjeboom tijdens de bezetting. Een economische analyse’ (Unpublished paper, Utrecht University, 1999) 10; Niod Amsterdam 92, B4: Tätigkeitsbericht der ZAST Juli–August 1941; Bas L. Levinsohn, De kolencrisis van 1941. Een bestuurskundige case study over de beleidsopvattingen van het ambtelijk middenkader (Utrecht 1991) 46; Figée, Jaarverslagen, 1938–1948. 71. Niod Amsterdam 92b, 1e: Rüstungsinspektion Niederlande, Buch no. 1567/41g 12.5.1941 Zu a 2; NA, The Hague, Handel en Nijverheid 9839: Nota: Overzicht betreffende de concentratie van de Ned. industrie per 8 augustus 1942. 72. Liberman, Does Conquest Pay? 39. 73. L. J. A. Trip, De Duitsche bezetting van Nederland en de financieele ontwikkeling van het land gedurende de jaren der bezetting (The Hague 1946) passim; Umbreit, ‘Les politiques économique allemandes en France’, 34. 74. Herman Van der Wee and Monique Verbreyt, Oorlog en monetaire politiek: De Nationale Bank van België, de emissiebank te Brussel en de Belgische regering, 1939–1945. Deel 1: De Nationale Bank van België 1939–1971 (Brussels 2005) 348–349. 75. Ulrich Herbert, ‘Labour and Extermination: Economic Interest and the Primacy of Weltanschauung in National Socialism’, Past and Present, 138 (1993) 144– 195, here 144–145. 76. J. Th. M. Houwink ten Cate, ‘Generaal Winkelman, secretaris-generaal Hirschfeld en de Duitse bezettingspolitiek in mei–juni 1940’, Bijdragen en Mededelingen betreffende de Geschiedenis der Nederlanden, 105 (1990) 186–230, here 204–205; see as well: Overy, Goering, 119. 77. Niod Amsterdam 92 B4: Tätigkeitsbericht der ZAST für Januar und Februar 1942, Den Haag, den 15. März 1942. 78. Paris, den 7. März 1941, Der Militärbefehlshaber in Frankreich: Lagebericht Februar 1941, http://www.ihtp.cnrs.fr/prefets/. 79. Niod Amsterdam 92 B4: Tätigkeitsbericht der ZAST für Januar und Februar 1942, den 15. März 1942. 80. Niod Amsterdam 93 inv. nr. B4: Tätigkeitsbericht der ZAST für September und Oktober 1942, Den Haag, den 15. November 1942. 81. Götz Aly, Hitlers Volksstaat. Raub, Rassenkrieg und nationaler Sozialismus (Frankfurt am Main 20054) 159; ‘Aus der Sportpalastrede Goebbels 18. Februar 1943’, in: Hans-Adolf Jacobsen (ed.), Der Zweite Weltkrieg. Grundzüge der Politik und Strategie in Dokumenten (Frankfurt am Main 1965) 213–214; Albert Speer, Erinnerungen (Frankfurt am Main 1969) 269.

114 • Occupied Economies 82. Der Militärbefehlshaber in Frankreich, Paris, den 9. November 1942 Lagebericht: Juni/September 1942, http://www.ihtp.cnrs.fr/prefets/de/d060942mbf. html; Der Militärbefehlshaber in Frankreich, Paris, den 27. Januar 1943: Lagebericht Oktober/Dezember 1942, http://www.ihtp.cnrs.fr/prefets/de/d101242 mbf.html. 83. Nefors, Industriële collaboratie in België, 218. 84. Overy, War and Economy, 358; Der Militärbefehlshaber in Frankreich, Paris, den 31.5.42: Lagebericht April/Mai 1942, http://www.ihtp.cnrs.fr/prefets/de/ d040542mbf.html; Luyten, ‘Economie’, 151–155. 85. Nefors, Industriële collaboratie in België, 218–219. 86. Ibid. 219. 87. Radtke-Delacor, ‘Produire pour le Reich’, 109. 88. A. J. van der Leeuw, Huiden en leder, 1939–1945. Bijdrage tot de economische geschiedenis van Nederland in de Tweede Wereldoorlog (The Hague 1954) 70–72. 89. RGVA, Collection 1458, Inventory 5, File 62, p. 75; Klemann, Nederland 1938–1948, 438. 90. RGVA, Collection 1458, Inventory 5, File 62, p. 76. 91. Ibid. 36. 92. Radtke-Delacor, ‘Produire pour le Reich’, 114–115; on the prominent position of Rolf Wagenführ see: J. Adam Tooze, Statistics and the German State, 1900– 1945: The Making of Modern Economic Knowledge (Cambridge 2001) 262 and 284–285. 93. RGVA, Collection 1458, Inventory 5, File 62, p. 74. 94. Radtke-Delacor, ‘Produire pour le Reich’, 114–115. 95. Klemann, Nederland 1938–1948, 438. 96. Niod Amsterdam Doc I, 1080: Mijn beleid tijdens de Duitsche bezetting van Nederland, Ir. S. L. Louwes. 97. Nefors, Industriële collaboratie in België, 118; Klemann, ‘Dutch Industrial Companies’. 98. Klemann, Nederland 1938–1948, 429. 99. CEPII, Séries lonques macro-économiques, Comptes nationaux en base 1938, http://www.cepii.fr/francgraph/bdd/villa/mode.htm. 100. Klemann, Nederland 1938–1948, 112 et seq. 101. Overy, War and Economy, 254 and 360–361. 102. Cees Fasseur, Wilhelmina. Krijgshaftig in een vormeloze jas (Amsterdam 2003 4th ed.) 293. 103. Niod Amsterdam 212a inv. nr. 6c: Nota van Hirschfeld 9/9/43 aan Fischböck overhandigd. Also: H. M. Hirschfeld, Herinneringen uit de bezettingstijd (Amsterdam 1960) 70. 104. Der Militärbefehlshaber in Frankreich, Paris, den 27. Januar 1943: Lagebericht Oktober/Dezember 1942, http://www.ihtp.cnrs.fr/prefets/.

The Exploitation of Occupied Europe • 115 105. HUA Machinefabriek Jaffa 153: Aktennotiz über die Besprechung mit Marineoberbaurat Ziegler, 14.8.1942. 106. The original German reads: ‘Kluft zwischen der Rohstoffdeckung auf dem Papier und echter Eisenanlieferung’. Niod Amsterdam, 212a, 4a: Afd. Econ. Onderz.: De economische toestand van Nederland omstreeks Januari en Februari 1944, 31 Mei 1944. 107. Paris, den 27. Januar 1944, Der Militärbefehlshaber in Frankreich: Lagebericht über Verwaltung und Wirtschaft Okt./Dez. 1943, http://www.ihtp.cnrs.fr/ prefets/de/d101243mbf.html. 108. Der Militärbefehlshaber in Frankreich, Paris, den 27. Januar 1943: Lagebericht Oktober/Dezember 1942, http://www.ihtp.cnrs.fr/prefets/de/d101242mbf.html. 109. Paris, den 27. Januar 1944. Der Militärbefehlshaber in Frankreich: Lagebericht über Verwaltung und Wirtschaft Okt./Dez.1943, http://www.ihtp.cnrs.fr/ prefets/de/d101243mbf.html. 110. Liberman, Does Conquest Pay? 42–43. 111. Ibid. 40. 112. Decree 2040/1942, 31 Dec. 1942, Government Gazette (1943) 1, 55. 113. Jacob Robinson, ‘Transfer of Property in Enemy Occupied Territory’, American Journal of International Law, 39 (1945) 216–230, here 216. 114. Nehemiah Robertson, ‘Problems of European Reconstruction’, Quarterly Journal of Economics, 60 (1945) 1–55, here 10. 115. Christoph Buchheim, ‘Die besetzten Länder im Dienste der deutschen Kriegswirtschaft während des Zweiten Weltkriegs. Ein Bericht der Forschungsstelle für Wehrwirtschaft’, Vierteljahrshefte für Zeitgeschichte, 34 (1986) 117–147, here 145. 116. Ibid. 143–145. 117. Robinson, ‘Transfer of Property’, 218–220. 118. Czesław Łuczak, ‘Landwirtschaft und Ernährung in Polen während der Deutschen Besatzungszeit 1939–1940’, in: Bernd Martin and Alan S. Milward (eds.), Agriculture and Food Supply in the Second World War (Ostfildern 1985) 117–127. 119. Willi A. Boelcke, Die Kosten von Hitlers Krieg. Kriegsfinanzierung und finanzielles Kriegserbe in Deutschland 1933–1948 (Paderborn 1985) 111. 120. BA, AA HaPol IVa Griechenland Handel 6, vol. 1: Griechenland. Der Außenhandel im 2. Halbjahr 1941; A. G. Bakalbasis, He oikonomia tis Hellados kai he organomeni idiotiki protovoulia kata tin periodon tis katochis, 1941–1944 (Athens 1944) 104–105. 121. BA, AA HaPol IVa Griechenland, Handel 11–3, vol: Clearing trade balances on 31 May 1942, p. 1. 122. Bank of Greece, calculations of the Economic Council, quoted in: Dimitrios Delivanis and William C. Cleveland, Greek Monetary Developments 1939–1948: A Case Study of the Consequences of World War II for the Monetary System of

116 • Occupied Economies a Small Nation (Bloomington, Ind. 1949) 179; BA, R 127/17, Aufschleusungssätze, 1 October 1943: 1–4, 9. 123. The Trial of German Major War Criminals: Proceedings of the International Military Tribunal Sitting at Nuremberg Germany, Part 7: February 14, 1946 to February 26, 1946 (London 1947) 148. 124. BA, R 2/30674, ‘Verrechnung zusätzlicher Ausfuhr nach Griechenland’, January 1945, note 395. 125. Stavros Thomadakis, ‘Black Markets, Inflation, and Force in the Economy of Occupied Greece,’ in: John O. Iatrides (ed.), Greece in the 1940s: A Nation in Crisis (Hannover 1981) 68. 126. Klemann, Nederland 1938–1948, 231–232; Niod Amsterdam 212a, 5e: Afd. Economisch onderzoek: De omvang van de Duitsche opdrachten in de industrie in Nederland, Augustus 1944. 127. Aly, Hitlers Volksstaat, 320. 128. Boelcke, Die Kosten von Hitlers Krieg, 98. 129. Aly, Hitlers Volksstaat, 326. 130. Adam Tooze, ‘Economics, Ideology and Cohesion in the Third Reich: A Critique of Goetz Aly’s Hitlers Volksstaat’, 10, http://www.hist.cam.ac.uk/ academic_staff/further_details/tooze-aly.pdf. 131. B. A. Sijes, De arbeidsinzet. De gedwongen arbeid van Nederlanders in Duitsland, 1940–1945 (The Hague 1990 2nd ed.) 426 et seq. 132. See: Liberman, Does Conquest Pay? 37. 133. Joachim Lund, Danmark og den europæiske nyordning. Det nazistiske regime og Danmarks plads i den tyske Großraumwirtschaft 1940–42 (PhD dissertation, University of Copenhagen, 1999) 164–180. 134. RGVA, Collection 1458, Inventory 3, File 77, pp. 74–75; Hartmut Schustereit, ‘Planung und Aufbau der Wirtschaftsorganisation Ost vor dem RußlandfeldzugUnternehmen “Barbarossa” 1940/41’, Vierteljahrschrift für Sozial- und Wirtschaftsgeschichte, 70 (1983) 50–70, here 69. 135. Jonathan Steinberg, ‘The Third Reich Reflected: German Civil Administration in the Occupied Soviet Union, 1941–4’, English Historical Review, 110 (1995) 620–651, here 637. 136. BA, R 7/889: ‘Die Bedeutung des Südostraumes für die deutsche Bergwirtschaft’, Enclosure no. 6: The aggregate output in 1942 was 180,285 tons and in 1943 177,274 tons, but not all of it could be hauled. BA-MA, RW 19/2387:OKW/FwiAmt/Inl 1‚ Chromerz: Förderung und Abtransporte 1942 und 1943,’ geh. Meldungen des W Stabes Südost, table 51. 137. RGVA, Collection 1458, Inventory 3, File 77, p. 74. 138. Laura-Louise Veress, Clear the Line: Hungary’s Struggle to Leave the Axis during the Second World War, edited by Dalma Takacs (Cleveland, Ohio 1995) 209 et seq.

The Exploitation of Occupied Europe • 117 139. T314/929/99 KTB XXXIX AK Qu, 26.6.41; Klaus Schüler, Logistik im Russlandfeldzug. Die Rolle der Eisenbahnen bei Planung, Vorbereitung und DurchFührung des deutschen Angriffs auf die Sowjetunion bis zur Krise vor Moskau im Winter 1941/42 (Frankfurt am Main 1987) 557. 140. Ba R3/1725, Zentrale Planung, Stenogramm der 57. Sitzung, 18.5.44, p. 25. 141. John Lindberg (League of Nations), Food, Famine and Relief 1940–1946 (Geneva 1946) 4–5.

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–10– The Hunt for Labour Introduction At the end of 1941, Hitler declared that the ‘main problem today is a problem of labour. Then the problem of the basic raw materials came: coal and iron. With men, coal and iron one can solve the transport problem.’1 A month earlier, in another of his table talks, the Führer had made his already-cited remark that ‘we’—that is Germany—had on one side ‘highly civilized peoples who are reduced to breaking their stones for themselves. On the other side, we have at our disposal those stupid masses in the East. It’s for these masses to perform our humbler tasks.’ His ramblings continued with the remark that it ‘would be ridiculous not to put some sort of order into this continent’,2 a remark enlarged upon later in December, when he said: ‘If we employ Russian labour it will allow us to use our nationals for other tasks. It’s more worthwhile to take the trouble of knocking the Russians into shape than to fetch Italians from the South, who will say good-bye after six weeks! A Russian is not so stupid, after all that he can’t work in a mine.’3 Such views, common among Nazis, did not match other aspects of their creed, however. Therefore, these met with opposition from the time of the invasion of Poland in 1939. Bringing order to the Continent by having Slavic labour do the menial tasks meant bringing into Germany large numbers of people who, according to the Nazi race theory, were inferiors. In other words, the Nazis were caught between ideological fanaticism and practical problems, which caused ongoing struggles between pragmatists and passionate party and SS members. On 14 December 1942, Hans Frank, Governor-General of the Polish General Government and Hitler’s most prominent legal adviser, expressed this dilemma in a speech to the leaders of the Nazi Party in Poland, when he explained that it would be impossible to both destroy the Polish nation and use its labour as well.4 According to the Polish historian Czesław Madajczyk, this dilemma resulted in the evil decision to destroy at least the Jews, gypsies and Soviet prisoners of war (POWs), while others were safe at least from that fate as long as the war lasted. Among the Nazi leadership there was some disagreement on whether this meant that the Poles working for the German war economy were to be treated as machinery—that is to be used as labour and given basic living conditions sufficient to maintain their productive capacity—or that, through the creation of extreme circumstances, their labour would become the instrument of their destruction. The outcome of the war prevented a clear decision. In other words, the

– 119 –

120 • Occupied Economies difference between the categories of those to be murdered and those seen as inferior but kept alive as useful labour for the Germans would be decided based on the needs at any time.5 Others, however, think that in Hitler’s mind, Jews at least, and probably gypsies too, formed a special category that not only was gradually treated worse than others, but was also regarded as fundamentally different, as he held them responsible not only for the current war, but also for the First World War. In December 1941, when the European war developed into a full-scale global conflict, he decided to destroy them.6 Ideas about destroying the Slavic people of Eastern Europe as well had a different basis. Destruction of the Poles or Belarusians was not delayed until some future point in time because Hitler thought them less evil than the Jews, but because they were considered different. They were treated as animals that still had some value for Germany and therefore were kept alive. That they in the long run had to disappear as well was because they lived on land wanted for Germany. In the long run, if Hitler had won the war, they, too, would have been annihilated along with the Jews and gypsies. In this sense Madajczyk was right.7 Although a systematic Europe-wide labour-recruiting programme didn’t start until 1942, the number of forced and foreign workers in the German economy had already risen from 300,000 to three million by the end of 1941 (Tables 10.1 and 10.2). Across Europe, the labour markets were integrated into that of the Reich, but while the jobless in the eastern parts of the Continent were sent to Germany, the unemployed in Western Europe were just pressured into accepting jobs there if the Germans had no adequate solution to the unemployment in their home countries. From 1942 onwards, however, another four million labourers were taken from all over Europe, primarily to work in German industry (see Tables 10.1 and 10.3), which is where, by the end of the war, 52 per cent of all foreign labour worked. Another 35 per cent was working in agriculture. Altogether, the share of foreign workers in the German labour force grew from less than 1 per cent in 1939 to more than 8 per cent in 1941 and almost 20 per cent in 1944. Hence, every fifth worker was a foreigner and, in industry, every fourth (Table 10.1). Forced and foreign labourers were not the same. Not only was not all foreign labour forced, but some categories among the forced were not foreign. For instance, many Jewish concentration camp inmates were German born, although Hitler had deprived them of their nationality. In other words, there were a number of categories of forced and foreign labourers. Some had a special status: for instance POWs, who accounted for 25 to 35 per cent of all foreign workers and by 1944 5 per cent of all labour in Germany. They were protected by international legislation from the worst forms of maltreatment.8 Soviet POWs, however, never got this protection, as Berlin reasoned that because Moscow had not ratified the treaties, Soviet soldiers were not entitled to this protection.9 Polish POWs lost their status when Germany terminated Poland completely as a sovereign state. Table 10.2, which differs slightly from Tables 10.1 and 10.3 as a result of the rounding off of discrepancies, shows

The Hunt for Labour • 121 Table 10.1.

Share of Foreign and Forced Labour in Each Branch, 1939–1944 Forced labourers as a percentage of the total labour force 1939

1940 1941 1942 1943

Percentage of total forced labour occupied in each branch

1944

1939

1943

1944

Agriculture

1.1

6.4

13.6

17.6

20.3

22.2

40

1940 1941 1942 59

48

48

37

35

Industry

1.6

2.5

8.7

13.3

23.0

25.9

50

32

43

42

52

52

Transport

0.8

1.7

4.5

7.7

12.6

17.4

2

3

3

4

5

6

Others

0.3

0.8

2.1

3.1

4.8

6.2

8

6

6

6

6

7

Total

0.8

3.2

8.4

11.6

17.3

19.7

100

100

100

100

100

100

Source: Werner Abelshauser, ‘Germany: Guns, Butter, and Economic Miracles’, in: Mark Harrison, The Economics of World War II: Six Great Powers in International Comparison (Cambridge 1998) 122–176; own calculations.

the importance not only of foreign civilians, but also of POWs. Concentration camp inmates, however, although also forced to work, are not included in these data. Altogether, there are four categories, namely POWs, concentration camp inmates and foreign workers, with the latter split between forced workers and volunteers. The picture is further complicated by the fact that, over time, some moved from one category to another. For example, Polish and French POWs became civilians, and volunteers who were not allowed to go home at the end of their contract period became forced workers.10 Forced labour can be split again into at least two categories: forced but relatively well-treated workers—Western Europeans and, until 1943, Italians—and people treated as slaves: Poles, Ukrainians and Russians. In between these there were sliding scales. Italians were disliked and seen as inferior, as Hitler’s preceding remark makes clear, but as long as Mussolini was an ally, they were treated reasonably well. As the subject of this book is the economy of occupied Europe, not the German economy, only the effects of the German labour problem for the occupied countries are relevant. The fact that a Flemish forced worker was treated incomparably better than a Russian slave does not concern us here, and neither does the fact that some of the Jews hunted down to be murdered were destroyed by labour. Jews from all over Europe were taken to Germany or German-annexed Poland, imprisoned and killed for ethnic reasons. They were not treated as slaves, for slave owners would have been interested in their survival. Jews were, however, forced to work, not for their productive value but as a method of extermination. Even though some were saved by those who realized the value of their labour, the murder of the Jews is no part of this story as there was no rationality to it.11 Of all the Jews rounded up and transported, only 3 per cent survived the Nazis’ destructive policy. Of these only a minority lived to tell the tale because of their value as labour. However, as the subject of this book is not

122 • Occupied Economies Table 10.2.

The Importance of Foreign Civilians and POWs for the German Economy, 1939–1944 Labourers (in 1,000s)

Germans Foreign civilians

1939

1940

1941

1942

1943

1944

39,114

35,345

33,886

32,267

31,021

29,800

301

803

1,753

2,645

4,837

5,295

0

348

1,316

1,489

1,563

1,831

301

1,151

3,069

4,134

6,460

7,126

3.2

8.3

11.4

17.2

19.3

POWs Total foreigners Foreigners as a percentage of all labour

0.8

Source: Ulrich Herbert, ‘Zwangsarbeiter in der deutschen Kriegswirtschaft 1939–1945, ein Überblick’, in: De Verplichte tewerkstelling in Duitsland 1942–1945. Acta van het Symposium gehouden te Brussel op 6 en 7 oktober 1992 (Brussels 1992) 165–180.

racism, Nazi ideology concerning inferior races and its consequences is relevant here only in as far as it affected the economies of the occupied countries. The question of how the victims of the Nazis’ labour-recruiting policy were hunted down is relevant, however, as the occupied economies were undermined by campaigns that drove young, healthy workers into hiding. Recruiting in the West began by simply offering the unemployed work in Germany. At the end of 1941, when the German army suffered serious setbacks, the gusto to go to Germany for work declined, and the inflow of voluntary labour ceased. The Allied bombardments and the rumours circulating about it raised by the noise of Allied planes passing in the night meant that workers in Western Europe became opposed to the idea of being sent to Germany. Stories about the treatment of their countrymen also drove Eastern Europeans into hiding. As a result the labour needed could be obtained only by force and violence. According to Mark Spoerer there were four ways to recruit foreign labour: 1. 2. 3. 4.

Normal recruiting stimulated by advertising and so on. Pressure added by, for instance, influencing circumstances at home. Conscription of age cohorts. Deportation by violence.12

Throughout occupied Europe, violence was used in order to recruit sufficient labour—at first only in the East, but the more desperate Berlin became, the more violence became the norm elsewhere as well. The consequences of the withdrawal of large numbers of young, healthy people from the occupied economies will be considered, but first, it is important to understand why Germany needed all this additional labour. It might seem that these foreign workers were needed to replace the millions of German workers drafted into the armed forces, but that can be questioned.13

The Hunt for Labour • 123

The German Labour Market In August 1914, when the guns of August tore up the shaky peace, Germany had 1.2 million foreign labourers. In September 1939, when Europe was plunged into war again, there were only 300,000 (Table 10.3). Lack of sympathy for Nazi Germany possibly had some influence here, but finances were the main reason. Hitler inherited an inconvertible Reichsmark from the Weimar Republic, and his regime kept this monetary situation intact, even after 1936 when Hjalmar Schacht thought it was time to reconstruct contacts with international markets. The inconvertible Reichsmark was a good instrument for a high level of autarky. However, as long as the Reichsmark was not exchangeable and foreigners could not transfer their wages, working in the Reich was hardly an option.14 Only those migrating to Germany—not a tantalizing prospect in the 1930s—could keep their jobs. As a result, prior to 1933, cross-border work— which had been common in the highly industrialized Dutch–German border area from the 1860s to 1931—or seasonal work, done by substantial numbers of Polish or Czech farmworkers, had already become impossible. Consequently, Berlin had to keep its economy going with fewer foreign workers than in 1914. However, that is a weak explanation for the hunt for labour as there were many other differences to 1914. After Hitler’s 1933 Machtsergreifung, the recovery defeated unemployment, and the 1936 Four Year Plan even caused an extremely tight labour market. By 1938 unemployment was down to 429,000, or less than 1 per cent. Nowadays, economists consider an unemployment level of less than 3 per cent a problem, as market tensions will then result in a rapid wage explosion. Nevertheless, by February 1939, unemployment had dropped to 200,000, less than half a per cent, meaning that all the remaining unemployed were unemployable, but, even so, by August the figure had declined yet again to 34,000.15 By now, even most of the disabled had a job, but Germany still lacked the manpower to get its harvest in. Normally Polish seasonal workers gave a hand, but in this period of severe political tension, Warsaw prohibited its subjects from working in Germany. Consequently, after the outbreak of war in September, Berlin looked towards the hundreds of thousands of Polish POWs its invasion had created. Of these, 300,000 were sent to the Reich for use as farm labourers. At the same time, in occupied Poland a campaign was started to continue the tradition of seasonal farm labour in Germany. The results were disappointing, and the Nazis then decided to force contracts on entire age groups. It just drove substantial numbers of people into hiding. To get the labour needed, raids in the streets or at the doors of schools, churches and cinemas had already become common by 1940 and 1941. To get rid of restrictions resulting from international treaties, Polish POWs were reclassified as civilians. In June 1941, after the invasion of the USSR, Berlin absorbed all of Poland or made it part of constructions such as Ostland, so that it could claim that since Poland no longer existed, it could not have a national army, and as there was no Polish army, there could be no Polish POWs. Hence, for this category, treaties protecting POWs could be ignored.16

Table 10.3.

The German Labour Market and its Need for Foreign Labour, 1939–1944 No. of labourers (in 1,000s) 1939

1940

1941

1942

Index value (1939 = 100) 1943

1944

1939

1940

1941

1942

1943

1944

Total labour force Agriculture

11,224

10,687

10,721

11,229

11,301

11,185

100

95

96

100

101

100

Industry and transport

18,638

16,464

16,873

16,049

16,536

16,723

100

88

91

86

89

90

Others Total civil labourers Armed forces Grand total

9,554

8,611

8,443

8,350

8,337

8,302

100

90

88

87

87

87

39,416

35,762

36,037

35,628

36,174

36,210

100

91

91

90

92

92

4,757

6,650

8,304

9,810

11,730

12,670

100

140

175

206

247

266

44,173

42,412

44,341

45,438

47,904

48,880

100

96

100

103

108

111 60

German male labour Agriculture Industry and transport Others German males in civil branches Armed forces Total German male labourers

5,055

4,317

3,893

3,614

3,343

3,013

100

85

77

71

66

14,503

12,175

11,494

10,226

8,728

8,480

100

84

79

71

60

58

4,933

3,734

3,464

3,235

3,036

2,780

100

76

70

66

62

56

24,491

20,226

18,851

17,075

15,107

14,273

100

83

77

70

62

58

4,757

6,650

8,304

9,810

11,730

12,670

100

140

175

206

247

266

29,248

26,876

27,155

26,885

26,837

26,943

100

92

93

92

92

92

6,049

5,689

5,369

5,637

5,665

5,694

100

94

89

93

94

94

German female labour Agriculture Industry and transport

3,980

3,887

4,000

3,944

4,242

4,111

100

98

101

99

107

103

Others

4,597

4,810

4,798

4,856

4,899

5,004

100

105

104

106

107

109

14,626

14,386

14,167

14,437

14,806

14,809

100

98

97

99

101

101

Agriculture

120

681

1,459

1,978

2,293

2,478

100

568

1,216

1,648

1,911

2,065

Industry and transport

155

402

1,379

1,879

3,566

4,132

100

259

890

1,212

2,301

2,666

24

67

181

259

402

518

100

279

754

1,079

1,675

2,158

299

1,150

3,019

4,116

6,261

7,128

100

385

1,010

1,377

2,094

2,384

Total German female labourers Forced and foreign labour

Others Total forced and foreign labourers

Source: Werner Abelshauser, ‘Germany: Guns, Butter, and Economic Miracles’, in: Mark Harrison, The Economics of World War II: Six Great Powers in International Comparison (Cambridge 1998) 122–176; Feldgrau.com: Research on the German Armed Forces 1918–1945, http://www.feldgrau.com/index.html (2 July 2008); own calculations.

The Hunt for Labour • 125 Table 10.3 shows that in Germany in 1939, 39.4 million people worked in civilian jobs, while the already-swollen armies employed almost 4.8 million men. From that year on, the escalating military activity required ever more resources and competed with more economic activities for labour, food and materials. In 1940 alone, no fewer than 2 million Germans enlisted. The armed forces grew by 40 per cent, and this expansion went on until the figure reached 12.7 million by 1944. This indicates that in just a few years 7.9 million men were recruited for military service, not allowing for the millions lost through military fatalities. During the war 3.3 million Germans fell in battle,17 while others were taken prisoner or were wounded. As a consequence, the German male labour force, which in 1939 had been 24.5 million men—or 62 per cent of the civilian workforce—decreased by 17.4 per cent in 1940, and continued decreasing by considerable percentages until 1944, when the civilian male labour force was reduced to only 14.3 million or 58 per cent of the 1939 figure (Table 10.3)—an overall decline of the German civilian labour force of 26 per cent. Hence, Berlin had to find new sources of labour. As we have seen, from late 1941 on the war entered another stage. It demanded an integration of the economies of continental Europe into the German war economy. In the summer of that year, the German Labour Office had already concluded that although there were French, Walloon-Belgian and Polish POWs in addition to the hundreds of thousands of forced labourers from Poland and volunteers at work in Germany, and despite the high participation of women, Germany had 2.6 million vital vacancies and no one to fill them. In 1942, at a crucial moment in the war, the number of civilian workers reached its lowest point—10 per cent (3.8 million) below the 1939 level. An immediate victory and demobilization could have solved this problem, but exactly at this point it became clear that victory was further off than ever. Apart from victory, only the employment of more women could solve the problem, but that was an ideological, if not a moral, problem. According to Richard Overy, Germany had few idle women, and, at first sight, he is right: in 1939, 37 per cent of all native workers were female (Table 10.4), compared with only 26 per cent in Britain. However, as there were 28 million women in Germany between the ages of 15 and 65, and only between 14 and 15 million had a job, just 50 per cent of the potential was used.18 Overy thought the comparatively high female labour participation a consequence of low male wage levels, requiring the employment of wives and daughters to prop up the family income, and it is a fact that real wages reached pre-Depression levels only in 1938.19 This seems only a partial explanation, however. As on farms women traditionally worked alongside their husbands, fathers and brothers, the high female labour participation was also caused by the fact that 28 per cent of all civilian employment was still agrarian. In 1939 only 23 per cent of the employees in industry and less than 7 per cent of the employees in transport were female, while in agriculture this was 54 per cent, accounting for 41 per cent of all female employment (Table 10.4). In other words, with an economic structure as in Britain—where just 6 per cent of all employment was

126 • Occupied Economies Table 10.4.

Female Labourers as a Percentage of the German Civil Workforce, 1939–1944 1939

1940

1941

1942

1943

1944

Agriculture

53.9

53.2

50.1

50.2

50.1

50.9

Industry

23.2

25.5

25.0

25.6

26.3

25.0

Transport

6.8

11.7

14.9

18.2

21.8

22.2

Others

48.1

55.9

56.8

58.2

58.8

60.3

Total

37.1

40.2

39.3

40.5

40.9

40.9

Source: Werner Abelshauser, ‘Germany: Guns, Butter, and Economic Miracles’, in: Mark Harrison, The Economics of World War II: Six Great Powers in International Comparison (Cambridge 1998) 122–176; own calculations.

agrarian—German female employment would have been much lower.20 Germany’s high female labour participation mainly resulted from its economic structure; the fact that Overy found a wartime increase in female labour as a proportion of the native civilian labour force just shows that millions of men were absorbed by the forces.21 The only relevant estimate would have been an actual increase in the number of active women, but between 1939 and 1944, a more or less stable number of the total female population between 15 and 65—less than 50 per cent—had a job, mostly in agriculture. The temporary increase in the share of female labour in the labour force—foreigners included—between 1939 and 1940 resulted from a 9 per cent overall decline in civilian workers, composed of a 16 per cent decline in male labour, a 2 per cent decline in female labour and a substantial increase in foreign labour (Table 10.3). Between 1939 and 1941, the number of working women actually declined. As farmers were sent to the front, their wives and daughters hesitated to run the family farm with only some unknown and mistrusted foreign forced workers. At the same time, the number of women working in industry, where they did light, typically female jobs, increased only a little in 1943. Then, during Goebbels’s total war campaign, work became compulsory for some categories of females, but there were many exceptions, especially women with two children younger than 14 years. The campaign therefore hardly created any increase in female labour participation.22 The rise in the number of women in the industrial workforce, from 23 to 26 per cent, resulted from a decrease in the total workforce, not from more women working. After 1940, fluctuations in the numbers of female industrial workers were negligible. This was not just a result of the high pre-war participation, but also of Nazi petit bourgeois opinions on the position of women in society. The gap resulting from the loss of men available for civilian jobs was filled by foreigners. Their numbers grew from 299,000 to 1.2 million between 1939 and 1941. This was not enough. It was traditional in agriculture, and therefore accepted, that women did their share of the work—similarly in shops, administration and domestic service. Across

The Hunt for Labour • 127 Europe, jobs such as postal carrier or conductor in public transport were seen as activities that, for the time being, could be done by women, although few could resist the temptation to make jokes about it. In industry, however, opposition to female labour was strong. When, in 1942, Albert Speer wanted to send all the unused labour, such as the elderly and youngsters, but foremost women, to work in the factories—an idea popular among industrialists as well as army officers—he didn’t consider Dr Werner Mansfeld, Ministerial Director of the Reich Labour Ministry, the man to do the job. Thereupon, Party Secretary and Hitler confidant Martin Bormann pushed the fanatical party man Fritz Sauckel onto the stage as General Plenipotentiary for Labour Deployment. As it was a recognized fact that Speer cared little for ideological nonsense, Bormann hoped that by putting this part of the 1942 reform into the trusted hands of the Thuringian Gauleiter, with whom he had started his party career in 1927, he would be able to outflank the outsider Speer.23 Sauckel’s views on the employment of women were typical of any strong-headed petit bourgeois boaster. He rejected the idea of the recruitment of German women for factory work as he feared that it would undermine not only women’s inner and spiritual life, but even their capacity to bear children.24 Hitler agreed. In his view, slim, long-legged Germanic women were not capable of factory labour, and he added to this that it took plump Russian women for such work.25 It was therefore decided to get the required labour from occupied Europe and to give up ideological objections to bringing Slavic Russians with Bolshevik ideas onto German soil. Sauckel was given the duty of organizing the Arbeitseinsatz programme, and the brutal old party comrade—he had joined the SA in 1922 and the party in 1923— bragged that he would abandon all ‘humanitarian nonsense and, as in the old days in Shanghai, go out to catch people and to drug them with booze and promises in order to get them to Germany’.26 He was eventually hanged for this in Nuremberg. In the meantime Hitler liked it and ordered him to do whatever needed to be done in Germany and the occupied countries to make the labour recruitment programme a success.27 In 1942, his first year in office, Sauckel took 1.9 million labourers from across Europe, and by 1944 he had seized 4 million, equivalent to less than a third of the available German women.28 The Arbeitseinsatz was needed because the Nazis could not set aside their petit bourgeois idea that Germanic women were too fragile for factory work. If Speer had been in charge, many more women would have been recruited, and the civilian labour force could have grown far above the 1939 level. There were still 14 million women between the ages of 15 and 65 who were not working. Although it would have been impossible to recruit them all, it should have been possible to recruit more of them than the 4 million reluctant labourers Sauckel abducted from across Europe to keep the labour force at its low 1941 level. The foreigners forced to work in Germany were, of course, unmotivated, which became clear in March 1944 when Sauckel confessed that of the 5 million foreign labourers in Germany, only 200,000 were there voluntarily.29

128 • Occupied Economies

Recruiting Foreign Labour, 1939–1942 When the occupation started, the labour markets of the occupied countries, often still suffering from unemployment problems from the 1930s Depression, were linked to the tight German labour market. After March 1939, for instance, when Hitler occupied the Czech parts of pre-war Czechoslovakia, 52,000 volunteers found a job in the Reich before the end of June. The Czech unemployed followed the same strategy as they did before Hitler’s annihilation of their republic, but then the number of seasonal labourers was limited by currency problems. Now these problems were solved by monetary tricks. Nevertheless, from the summer on, the numbers of Czech farmhands dwindled, and to prevent losing them all, Berlin had to prohibit the volunteers from returning home again without special permission. Thus the volunteers became forced workers. At the same time, the Germans began regulating the Protectorate’s labour market. Labour conscription was introduced, and Czechs between 16 and 25 years old were forced to do all kinds of drudgery for a two-year period. Further, they were forbidden to change jobs, and employers were not allowed to fire or engage employees without special permission. Finally, wages were regulated. Germany now had complete control of the Protectorate’s labour market,30 but Bohemia and Moravia were not primarily recruiting areas. The Czech Protectorate had to produce heavy industrial products, and as demand for these was rising for military reasons, it became difficult to get factors of production, like labour, from here without damaging the essential production for German warfare. The controlled labour market was therefore used primarily to direct labour to heavy industrial plants and to provide work for unemployed women. No one in Berlin had any objections to Slavic women being engaged in industrial work. Farmworkers were recruited from the rural Slovak part of pre-war Czechoslovakia, which, after March 1939, became a Berlin-controlled puppet state. Substantial numbers of Slovakians worked in the German rural areas during the harvest periods, returning home once the crops were in. However, there were never more than 80,000 of them, and their numbers fell dramatically once the Allies’ bombing of the Reich began.31 As Czech labour was needed in industry, and Slovakians were too few in number, without the Polish workers it was impossible for Germany to harvest its crops. Even before September 1939, Berlin officials were helping Polish seasonal workers to evade Polish rules prohibiting work in Germany.32 In September 1939, when the western parts of Poland were annexed and the General Government was created from what remained after Stalin had taken his slice of the country, Berlin had no need of the production from this remaining part of the former Polish state and did not want to expend food or raw materials on it. The heavy industry of the annexed parts, especially Upper Silesia, was incorporated into the German war production, of course, but apart from that, Berlin’s prime need from Poland was labour. That need was in fact so pressing that Labour Office officials, following the invading armies closely, were starting to register Polish workers in Upper Silesia by 1 September—a few

The Hunt for Labour • 129 hours after the first guns were fired. In the month that followed about 10,000 Polish workers were seized and deported.33 However, the raids were somewhat haphazard, and administrative methods were soon introduced, starting with the registration in the annexed territories of all males between 14 and 70 years old. In order to re-Germanize Upper Silesia, which had been Polish during the interwar period but before 1918 was the second-largest industrial centre of the German Kaiserreich, useful Polish labour was sent to the Altreich—the pre-1938 German territories—while those Poles not capable of useful work were sent to the General Government. In Polish territories annexed to the Reich other than Upper Silesia, local authorities also had to recruit volunteers for work in Germany, as more Poles were badly needed to help with the harvest. For the same reason, 300,000 of the 420,000 Polish POWs were put to work. Those remaining were officers (who, according to international treaties, were not allowed to do any work), so-called insecure elements and Jews.34 The 60,000 Jewish soldiers were not saved by the fact that their labour was valuable. In the first six months following the Polish defeat, 25,000 Jewish Polish soldiers were murdered, while the remaining 35,000 shared the fate of the millions of Jews exterminated in the following years.35 Their labour could have been useful for Germany, as became clear when Berlin started to recruit civilians in the annexed Polish territories. When Germany could not get the numbers needed, the Germans simply seized them from the streets. Those unable to prove they were exempted were deported, and by early 1940, only a few months after the invasion, Poles in the Warthegau—a district annexed to the Reich—had to keep their work registration books and identification cards with them at all times. Even these provided only partial protection, as raids progressively went hand in hand with cruelties such as arson, beatings and other excesses. While in the annexed territories—the parts of Poland to be Germanized and thus stripped of non-German people—the use of force was normal, Hans Frank’s administration in the General Government tried to accomplish its goals by persuasion and cooperation rather than by the use of force. Until 1942, the internal economy of this part of former Poland was neglected. Berlin started to exploit its agriculture and light industry only in 1942 when it became clear that it needed all available resources.36 Until then, the Germans had no idea what to do with this region apart from seizing the labour needed to harvest their crops. It soon became clear that this could not be done without brutalities. Frank, too, had to make labour compulsory for males between the ages of 14 and 70. Further, he had to motivate them to accept seasonal work on German farms by paying wages in Poland itself that were insufficient to survive on. However, rumours soon got around that Polish labour in Germany was treated extremely badly, and voluntary recruitment became impossible. Thereupon, Frank decided in January 1940 to send all unemployed males between the ages of 16 and 50 to Germany. Herbert Backe, State Secretary of the Reich Food Ministry, needed farmworkers so badly that in a meeting in April 1940 he proposed that force should be used to round up the workers. The meeting was attended by Seyss-Inquart,

130 • Occupied Economies who at that time was second in command to Frank in occupied Poland, and he expressed the opinion that the use of force could even be an advantage to the Polish labourers who were caught as their compatriots would no longer be able to blame them when they worked in Germany. Frank, fearing the influence of Allied propaganda, especially in the USA, opposed these ideas, but Seyss-Inquart became enthusiastic and promised to send no less than 10 per cent of the entire population to Germany. Shortly afterwards, Frank gave in, scrapped almost all benefits for the unemployed and introduced labour conscription for work in Germany for men and boys between 14 and 25. If they didn’t voluntarily give themselves up, they were hunted down in increasingly violent raids. This soon resulted in round-ups in which villages were surrounded, hostages taken and cattle driven away. A German police officer used the word Sklaventreiben—slave hunting—in this context. Nonetheless, of the half a million men hoped for, only 200,000 were captured.37 Many more went into hiding, and as a consequence, their labour—although sometimes put to use in clandestine production, especially as farm labour—was almost always, for the most part, lost to the Polish as well as the German economy. In May 1940, Germany invaded Western Europe and captured huge numbers of POWs. This took pressure off Poland as a recruiting area, but in the summer the building and repair of roads in preparation for the attack on the USSR resulted again in an increased demand for labour, now in Poland itself.38 By the end of 1941, the Germans had taken more than one million workers from pre-war Poland, including POWs. As all the Polish POWs were now transferred to the civilian labour force,39 the increased numbers in that category partly resulted from this transfer. The General Government lost 500,000 workers—a little more than 4 per cent of its pre-war population—while 6 per cent of the population of annexed Poland was deported.40 In later years, Poland would again become an important recruiting area, and at the end of 1942, Frank even boasted that his General Government sent proportionately more labourers to Germany than any other country. According to other German data, in 1943 Poland was the second-highest recruiting area for forced labour after the USSR (see Plate 8). As a result, the General Government labour market developed from a relatively free market into a regulated market where the Germans obtained the labour they needed and, when the supply was insufficient, made all kinds of work compulsory. Youngsters, women and the elderly were obliged to work. As Frank did not want the high demand for labour to lead to rising wages and wanted to decide himself where the labour was used rather than accepting the effect of market forces, the supply was controlled by administrative means. Not only were workers assigned to jobs and wages kept low, but to economize on labour, activities that were not useful to the Germans were prohibited.41 Although the precise regulations differed and the time path was much slower in the West, these Polish methods would prove to be a model for all of occupied Europe. There are no statistics on pre-war Polish labour participation, but since in other highly agrarian and predominantly Catholic countries like Italy this was 45 per cent,

The Hunt for Labour • 131 it seems reasonable to presume that it was something like that.42 Therefore, when 6 per cent of the population was forced to work in Germany, as in the annexed parts of Poland, a little less than 12–13 per cent of all labour was taken. In the General Government, where 4 per cent of the population was taken, this was between 8 and 10 per cent of the labour force. Before the German attack on the USSR, about twothirds of the Polish population lived under the German yoke—the other third became victims of Stalin’s annexation policy. Before the war 49.7 per cent of the Poles that later came under German rule lived in what became the General Government.43 Hence, it seems a reasonable estimate that about 11–12 per cent of the potential labour force was deported. When the use of force in labour recruiting became normal in Western Europe, the Germans drove more people into hiding than were ever captured, and in Poland people were massively driven into hiding as well. Therefore, apart from the workers sent to Germany, most of the labour of those driven into hiding was lost for the local economy as well. Consequently, by 1941 in total about 25 per cent of the Polish labour force of the annexed territories had been lost for the local economy. Over and above that, as a result of German economic discrimination introduced almost immediately after the invasion, many Jews—who in pre-war Poland formed about 10 per cent of the population—were forced into inactivity. By October 1939, only a month after the German attack, all Jews’ bank and savings accounts were blocked, while less than two months after the invasion, on 30 October, SS leader Heinrich Himmler ordered the deportation of all the Jews living in the annexed Polish territories to ghettos in the General Government.44 As the Jewish part of the population in this part of Europe was substantially bigger than in any Western European country, the Nazis’ anti-Semitic policy had severe macroeconomic consequences. The areas forming pre-war Poland lost at least 10 per cent of their labour force as a result of German anti-Semitic discrimination alone. Subsequently, in the early part of the war, altogether about 35 per cent of the Polish workforce was lost for Polish production, 25 per cent as a consequence of the German labour policy and 10 per cent as a result of Nazi anti-Semitism. From a German perspective, this was compensated for by an increase in the German labour supply consisting of about 11 per cent of the Polish labour force. As a result of this, at least twice as many labourers were lost in Poland as ever became active in Germany. Thus, this policy would have been advantageous from a German point of view only as the revenues accruing from Polish labour in Germany were more than twice as high as when they were still using the labour of these people in Poland itself for production relevant to German needs. From this perspective it seems plausible that it was profitable to retain labour in the occupied countries only when this labour was needed in agriculture or the mining industries, where the production resources couldn’t be moved. According to Mark Harrison, in 1938 the Polish per capita GDP (gross domestic product) was 42.5 per cent of that in Germany.45 Therefore, when more than twice as many labourers were lost in Poland as were put to work in Germany, this could be rewarding only when Berlin managed to integrate the Polish workers efficiently

132 • Occupied Economies enough into its economy to get an average productivity of the level equal to that of German labourers and when the German costs in terms of internal Polish setbacks in addition to the effects of the lost labour—for instance losses in the form of increased resistance—were negligible. As it is unlikely that the Reich ever met these conditions, even from a German perspective, the forced labour policy was only beneficial in so far as the captured labourers were used in agriculture or mining. What is known is that in 1944 only 31 per cent of the total Polish labour force was used in industry, so that it is likely that at least a substantial part of it was used to keep agriculture going in the eastern parts of Großdeutschland—Germany including the annexed territories.46 Although from the preceding remarks it is clear that the German economic advantages of the labour-recruiting policy in Poland are disputable, the objections against Poles entering the Reich were ideological, never economic. According to original Nazi ideas, Polish territory should be ethnically cleansed by destroying or driving away its population. In 1939 Hitler decided that the General Government—at that time the most eastward territory under his control—was to become a reservoir of unschooled labour and a dumping ground for undesirables expelled from the Reich.47 Reichsführer SS Heinrich Himmler underlined these ideas: ‘Poland should become a place to leave racial inferiors to their fate.’48 It was far from certain from the start, therefore, that the outcome for Polish labour would be that it should be used and not destroyed,49 and even though in the end the Poles were protected by their labour from the fate faced by Jews, gypsies and Soviet POWs, the value of their labour did not protect them from severe maltreatment. That Polish feet polluted German soil was reason enough for Himmler to underline ‘the national political dangers that would arise from this [are] to be combated with appropriately sharp measures’.50 Severe rules were introduced damaging the social and economic position of Poles, even in those newly annexed parts of the Reich where they were a majority. Later, Soviet citizens would be treated according to the same principles. Poles and Soviet citizens had to live in barracks (a measure unenforceable for farm labourers), were paid less for longer hours and were given rations not only smaller than those of the Germans themselves, but also smaller than those of all Western European forced labourers. In 1942 the calorie value of the rations of Poles living in the Warthegau, Upper Silesia, Danzig and West Prussia—Polish territories incorporated into the Reich—was little more than half that of the German rations.51 Ration marks for clothes were completely denied to them, and they received only one pair of wooden shoes a year. In the annexed parts of Poland it became normal not only to pay Poles less than Germans, but also to deny them any access to social security, although they paid taxes and social security premiums. All jobs done by Poles were menial ones, for, as Hitler emphasized, Poles were born for Dreckarbeit— dirty work.52 In 1941 Polish workers even lost the right to complain. Humiliating them became the norm—for instance by stamping their work carts with the image of a pig.53

The Hunt for Labour • 133 To prevent interracial relations, ideological influences or—the gravest danger— sexual contact between Slavic inferiors and German women, people from Eastern Europe were isolated from Germans and workers from other parts of Europe. Any advances and fraternization were to be suppressed to shelter the pure German blood and mind. Therefore, Ostarbeiter—workers from the East—were not allowed to take part in the social life of the country they were forced to work in. Not only was any contact with Germans outside work prohibited, but the Poles were not even allowed to go to German churches. Breaking these rules was severely punished. To limit their contact with German society even further, Polish and Soviet labourers were increasingly housed in closed camps,54 while the German population was warned of the danger of mingling with Poles or Soviets, who had to wear badges. Poles had a badge with a ‘P’ and Soviet citizens a badge with ‘OST’ (East) stitched on their clothes, just as Jews were obliged to wear a Star of David. Above all, any contact with the opposite sex was prohibited. A love affair against all odds between a Soviet POW and a German girl, as described in Heinrich Böll’s novel Gruppenbild mit Dame, was therefore exceptional and most unlikely. As hatred of the Soviets was strong, some gossiper would have turned the romance into disaster. Boris, the Soviet POW, would have been hanged publicly, while Leni, the German girl, would have been sent to prison as she offended the rules of Reinhaltung des deutschen Blutes— keeping clean the German blood. Any Poles or other eastern workers who were found having sexual contact with German women were publicly executed. Then, in 1942, it was decided to limit the risks further by replacing half the males with female workers in the future. Consequently, in these countries recruitment affected women almost as severely as men (Plate 8). Ostarbeiter were put to death not only for sexual contacts with German women, but also for political crimes, while minor offences such as disobeying a foreman or attempting to escape were punished with re-education or concentration camp detention. Compulsory workers from Poland, Belorussia, the Ukraine or Russia—men and women—not only were worse off than any other forced workers except the Jews, but also lost even the most elementary civil rights. Their superiors could do whatever they chose to them, even kill them without many consequences.55 As a result, of the 1.6 million civilian Poles that at any one time were employed as forced workers, 8 per cent did not survive their imprisonment, while 9 per cent of the 2.8 million civilian forced workers from the USSR died during their detention. Of the 1.1 million French civilian workers, who were the worst off of all Western workers, little more than 3 per cent died during their enforced stay in Germany—about the same percentage as that of the German civilian population that fell victim to the Allied bombardments.56 From an economic point of view, the extreme treatment of Polish and Soviet workers was hardly efficient, as rumours of it soon reached the occupied countries, making it difficult to obtain further labour. In September 1944, at its peak, there were about 1.4 million Polish workers in Germany.57 This shows that it was possible to get enormous numbers of labourers from an occupied economy, but not without severe damage to that country’s

134 • Occupied Economies economy and society. As far as Poland was concerned, this did not trouble Berlin. On the contrary, it wanted to destroy the Polish economy to prevent it from using its raw materials and labour. In the long run, even the Polish society should be destroyed, as, in accordance with the Nazi ideology, the Polish land was needed for German settlers. The Western countries were another matter. For the Polish people, notwithstanding the terrible way they were exploited, the fact that so many of them were needed in Germany proved the lesser evil. Fanatical Nazis had even worse in mind: their destruction, in order to free up their land for German settlement. For the time being at least, their labour protected them from such a fate. After the Germans’ successful 1940 campaign in the Western European countries, there were not only French POWs available for work in Germany, but also a large number of civilian workers who had not found jobs after the Great Depression or had lost their jobs as a consequence of the war. Consequently, the German demand for Polish labour decreased.58 In the French countryside, hidden unemployment was substantial. The French labour force diminished during the 1930s, and only partly because foreign workers in France returned to their home countries. During the crisis, many labourers with a rural background returned to their home villages, while traditional migration to the towns came to a halt. In addition, in 1936 the Popular Front government introduced a forty-hour week, which was a very short working week for that period.59 Directly after the military collapse, misallocations, demobilizations and the loss of important military orders from pre-war governments caused considerable unemployment in Western Europe. In June 1940, Dutch unemployment reached 26 per cent, a higher level than even during the Great Depression.60 In these countries, the Germans did not immediately make it compulsory to accept jobs in the Reich. The national authorities were, however, soon put under pressure to use the unemployed to meet German targets. In May, a high-ranking officer, Oberkriegsverwaltungsrat J. Schultze, who would later organize the Arbeitseinsatz in occupied Belgium, warned Dutch officials that unemployment was unacceptable and that if the Dutch did not solve this problem themselves, the Germans would send the jobless to Germany. The threat was taken seriously as the experience of Belgian forced labour during the First World War was still strong in the memory in the Netherlands. It was the main reason for the Dutch to accept the integration of their production in the German war economy.61 Berlin was interested in the production of Western Europe and the Protectorate. Therefore, local labour was used in these countries to German advantage. For the population, accepting orders meant that aggressive recruiting methods could be prevented, at least for the time being. Not only officials accepted a new link between the labour markets of occupied Europe and Germany; the unemployed did as well. Some even went voluntarily to Germany; POWs, however, were forced to work for the enemy. From 1940 on, no fewer than 1.2 million French POWs were working in Germany; officers were not included in this figure as they could not be forced to work. Only limited numbers of POWs from the other Western European countries were

The Hunt for Labour • 135 forced to work. Soldiers of so-called Germanic countries were released during the early weeks of the occupation. In this way, Berlin hoped to win the hearts of the peoples whom the Nazis thought of as being racially related. In the supposedly Germanic countries, this goodwill gesture was in fact a source of unemployment, while at the same time the Germans lost a badly needed source of labour.62 They tried to compensate for this loss by encouraging volunteers, especially the unemployed, to accept work in Germany. In the early years of the war, when it appeared that the Germans had won, this was not completely unsuccessful. Any further resistance seemed useless. In Belgium—where the Dutch-speaking Flemish were seen as Germanic but the francophone Walloons were not—the number of POWs amounted to 65,000 even after all the Flemish were sent home; in addition, 224,000 people—mostly young men—went voluntarily to find work in Germany. This figure is misleading, however, as it is not corrected for those who returned home at the first opportunity.63 The Belgian food problems and high unemployment motivated many to try their luck in Germany, just as the expected high wages did, but by the summer of 1941 only 144,000 were still there. Most of them were construction or metal workers, or unskilled labourers. The other 82,000 returned home. According to a German document, there, in Belgium itself, another 86,000 workers did jobs exclusively in the German interest, probably building airfields or fortifications.64 After the collapse of the Belgian army, apart from the unemployment problem, the harsh food situation was the major motivation for Belgian volunteers. All across Europe, poor living conditions motivated people to try their luck in Germany where there were jobs, good wages and—as it seemed that Germany had won the war—a great future. Only the entrance of new belligerents into the war in 1941 would undermine this illusion. It was in those early years of the war that some 224,000 Belgians volunteered for work in Germany, while 250,000 Dutch accepted work there in the second half of 1940 and early 1941.65 In June 1940, Dutch workers who had lost their jobs as a result of the depressed situation following the capitulation even queued for jobs in Germany. For them, it seemed the war was lost. After the Depression of the 1930s many were keenly aware of the effects of unemployment for themselves and their families. So they leapt at the chance of work in Germany. Apart from crossborder workers, Nazi sympathizers and adventurous youngsters, the unemployed from all over Europe did the same. In the Netherlands, the recovery of cross-border work, encouraged by the fact that crossing the border every day provided a great opportunity for lucrative smuggling, explains the high number of volunteers during this period, together with the fact that in May and June unemployment peaked at levels it had not reached even in the 1930s. Nonetheless, according to a German report, no more than 165,000 Dutch labourers were actual working in Germany in June 1941.66 Developments in the Netherlands were similar to those in Belgium, while in occupied Denmark and Norway, the fortification of the endless coastlines was so important that the Germans didn’t attempt to recruit any labour in these occupied Scandinavian countries.67

136 • Occupied Economies There were relatively few volunteers from France, partly because there were already 1.2 million men working in Germany as POWs, most of whom were relatively young, as were the volunteers. Nevertheless, according to Karl-Heinrich von Stülpnagel—who in March 1942 had succeeded his cousin Otto as Militärbefehlshaber in Paris—by May 1941 almost 160,000 French labourers had left for Germany, including 33,000 women.68 In 1942, however, only 75,000 were still working there, and it proved hard to find new volunteers as it was now relatively easy for them to find work in their own country. Consequently, volunteers who were not satisfied with German working conditions did not return from leave in their homeland. In 1940 and 1941, the Germans failed to react to such breaches of contract. They tended to be accommodating in the Western European countries, and especially in France, as there they had to bear in mind their relationship with the Vichy government. Nonetheless, until 1942—that is before the hunt for labour really got under way—the Germans obtained about 1.8 million workers from the occupied Western countries, but French and Belgium POWs made up 70 per cent of the total. Notwithstanding the relatively favourable recruiting situation following the capitulation of these countries that totalled around 65 million inhabitants, little more than half a million, less than 2 per cent of the labour force, volunteered to work in Germany.69 Berlin was disappointed, and some officials became impatient to use more aggressive methods. Even before 1942 some pressure was used, but compared with the radical methods already in force in other parts of Europe, this was very limited. In the first years of the occupation, the unemployed were threatened with loss of their unemployment benefits if they did not accept work in Germany, but from the autumn of 1940, the economies in Western Europe began to recover and employment grew, so loss of benefits no longer seemed a problem. Apart from that, local doctors checked the health of those sent to Germany, and it was not too difficult to get a document certifying lack of fitness. In September and October 1940, less than 45 per cent of the Dutch unemployed who were medically checked for German labour service were considered fit.70 With the exception of the French and Walloon-Belgian POWs, those Western Europeans working in Germany were there voluntarily; if they were there against their will, it meant they had not done everything possible to prevent it, in which case it was quite possible for them not to return after a leave. Since a total of 1.8 million Western European POWs and volunteers were working in Germany, the loss of production capacity for their home economies was substantial. The labour force in Western Europe decreased by 6.7 per cent, but apart from the POWs, all had gone more or less voluntarily. There were no raids as in Poland. Labour recruiting in occupied Western Europe was therefore far less destructive, as there was no necessity for those in the West who remained behind to go into hiding.71 Nevertheless, 5 per cent of the German labour force, excluding the armed forces, or about 65 per cent of the foreign labour, came from the Western occupied countries, where the German recruitment policy helped to solve the unemployment problem.72 Apart from Western and Eastern Europeans, POWs from the Balkans were also used as labour.

The Hunt for Labour • 137 As for the Germanic countries, Hitler decided to respect the Greek nation and released all Greek POWs. During the occupation the reputation of the Greek population would fall, but to begin with, the Nazis, influenced by romantic ideas about Greece as the cradle of European Kultur, considered them of high racial rank. In Yugoslavia, however, where the people were Slavic and therefore inferior in Nazi eyes, over 200,000 captured soldiers, mostly Serbs, were sent to work in German agriculture.73 In 1940 the most pressing part of the labour problem was temporarily solved by 3 million foreigners, 59 per cent of whom were soldiers.74 Of these 1.8 million soldiers, 70 per cent were from France and 17 per cent from Poland, although these Poles were no longer registered as POWs. The remaining soldiers were Yugoslavian (11 per cent) and Walloon (3 per cent). The civilian labourers—of whom there were roughly 900,000, not including the POWs who were no longer classified as such— came mainly from Poland where the Germans were already carrying out aggressive recruiting methods. As a consequence, labour recruiting there was more destructive than in any of the other occupied countries, robbing the economy of nearly 25 per cent of its labour force. Berlin seized production factors from all the occupied economies, but it was still not enough to meet the German needs. When in September 1941 the Labour Administration declared that there were 2.6 million vacancies in strategic sectors, Pleiger rightly concluded that as long as German female labour remained sacrosanct, the only source for such numbers would be the USSR. He thereupon decided to send Soviet POWs to the mines, although many German officials and party notables opposed this idea for security reasons. After Germany attacked the USSR, a central tenet of the Nazi creed—namely the Lebensraum idea and racist notions on the inferiority of Slavic people—became an important motive behind Berlin’s actions.75 Autochthonic Slavic peoples were an obstacle to accomplishing the colonization by so-called Aryan farmers. Hence, the Germans deprived them of their potential leaders by putting Communist political commissioners to death, just as had been done in previous years with Polish intellectuals, among whom were many Roman Catholic priests.76 This unsavoury job was undertaken by special task forces—Einsatzkommandos— that had already been instructed before Operation Barbarossa started. Within a year they would murder 90,000 people with the object of reducing the population to a lethargic, leaderless mass that either could be used as low-cost labour or, if need be, could be destroyed.77 The people in these parts of Europe would survive only in so far as they were useful for menial jobs. Therefore, it was a logical step in the German long-term planning to prohibit soldiers from entering Soviet territory to extinguish the fires lit by the withdrawing Red Army. Field Marshal von Reichenau wrote: ‘The troops should be interested in extinguishing fires only as far as it is necessary to secure sufficient accommodation for its own need. Otherwise, the disappearance of symbols of the former Bolshevik rule, even in the form of buildings, is part of the struggle of destruction. Neither historic nor artistic considerations are of any importance in the Eastern territories.’78

138 • Occupied Economies While in the case of Poland from 1939 on the need for labour prevailed over racism, German prejudices prohibited any recruitment in the USSR. Even at the end of 1941, the Nazi Party, as well as the Oberkommando der Wehrmacht (OKW), opposed sending people from the occupied parts of the Soviet Union to Germany, not only for ethnical reasons, but also out of fear of spreading Bolshevik ideas. For that reason, Hitler did not allow any Soviet people on German soil. The value of their labour could therefore not protect them from Nazi excesses. In the summer of 1941, when the Labour Administration announced that Germany had 2.6 million unfulfilled vacancies, industry hoped for a rapid demobilization of the armed forces once the Red Army was destroyed. So Berlin considered that the best course was to allow the ideological notions to prevail. Hence, massive use was made of French and Polish POWs, while Soviet POWs were destroyed. It was only as a result of discussions between the Four Year Plan organization and the Labour Ministry in August 1941 that their use as labour was considered.79 For the time being, the millions of Soviet soldiers captured by Hitler’s armies during the first months of the campaign against the USSR were kept in improvised camps. There they were only a burden to the Wehrmacht and became victims of a regime of destruction by neglect.80 In full view of the horrified population of the occupied Soviet territories, hundreds of thousands of prisoners were simply fenced off with rations far below the minimum needed for survival. The harsh climate and disease epidemics then solved the problem for the Germans of what to do with these millions.81 It was only when all hope of a quick return home for the German soldiers was killed by the proven strength of the Soviet armies that Hitler decided that in some cases Soviet POWs could be deployed, but only up to 120,000 men. It was not enough.82 Production had to be maximized, and it was therefore necessary to use all available labour. Once this became clear in 1942, it was already too late for the 3.4 million Soviet POWs captured in the first months of Operation Barbarossa.83 By that time very few—just 167,000—were deployed. Many of the rest—over 1,725,000—were dead.84 During 1941, the monthly death rate among Soviet POWs was 5.4 per cent, and 1,340,000 died before the end of the year.85 Those not simply murdered were so severely maltreated that by September 1941, when typhus swept through the camps, the death rate was 1 per cent a day. It should be remembered, of course, that, as a result of the Germans’ tactic of encirclement, many of the Russians were already in a poor state before their surrender. This, together with the logistical problems, made it almost impossible to treat these millions in a humanitarian way. However, the fact remains that of the 3.4 million Soviet prisoners captured, only 2.1 million had survived six months later.86 This was primarily the result of the shocking conditions in which these men were kept. If the makeshift camps and lack of basic water and food supplies or of the most elementary hygienic precautions and medical treatment didn’t finish them off, the guards did. It became accepted in the German billets that these ideologically and racial inferiors should be treated harshly and that every incident should be dealt with by shooting some of them.87 In six months an incredible 39 per cent

The Hunt for Labour • 139 were killed or died from abuse. After a further six months, very few of the 3.4 million prisoners remained alive, and hardly any of them—their exact numbers are discussed elsewhere in this chapter—were able to work. Werner Mansfeld, who at that time was responsible for labour recruitment, pointed out in February 1942 that of the 3.9 million Russians captured since the start of Operation Barbarossa, only 1.1 million were still alive and only 400,000 capable of work.88 Spoerer thinks that of the 3.35 million Soviet POWs he counts, 2 million died before February 1942.89 In fact, of the 3.4 million captured in 1941, 1.3 million died before the year was over.90 Notwithstanding these differences, it is clear not only that a heinous crime was perpetrated—a fact thought to be irrelevant in the Third Reich—but also that Germany in doing so had wasted valuable labour it needed badly. German companies assigned Russian POWs in 1942 found them so weak that they were incapable of any work and died in large numbers.91 By 1942 Germany needed all the workers it could get. Compulsory labour seemed a solution, but until then most were POWs. Only in Poland were substantial numbers of civilians hunted down and sent to Germany as compulsory labour. It proved destructive for the Polish economy, while the German advantages were disputable. Nevertheless, as the military situation stood, large numbers of additional POWs could no longer be expected. So the only way to get the labour needed, apart from the conscription of German women, was to use the Polish methods elsewhere in occupied Europe. As Table 10.3 shows, the 3.4 million Soviet prisoners squandered in 1941 and 1942 would have more than equalled 80 per cent of all the foreign labour recruited by Germany from across Europe in the next few years with enormous effort and grave consequences.92 Meanwhile, 14 million German women between the ages of 15 and 65, who easily could have done the work, were allowed to remain idle. The choice not to use Soviet POWs or German women, but to get labour from occupied Europe, would prove most destructive—a fact that could have been anticipated if the situation in Poland had been analysed. The labour-hunting programme that was now introduced not only created animosity and resistance and drove many into hiding, but as a consequence also undermined the economies of the occupied countries. As at least as many workers went into hiding as were captured as forced labourers, this could be efficient only if the occupier could organize their work in Germany so efficiently that labourers sent to Germany would be at least twice as productive for the German war effort there as they would have been when put at work in their home countries. In the case of Poland, it is most unlikely that Berlin managed to do that. In Western Europe it seems impossible. From 1942 on, Germany transformed the economies of occupied Europe into appendages to its war economy by taking all resources it could not use on the spot or thought it could exploit better in Germany. From then on, exploitation concentrated on taking factors of production instead of taking output. It was Sauckel’s task to implement the most important aspect of this programme—the hunt for labour. To do so, he got permission to use the methods previously tried out in Poland across Europe.

140 • Occupied Economies Now, not only were ideological objections against racially inferior labour entering Germany forgotten,93 but many objections against harsh treatment of the Germanic brothers in the West were as well. Nevertheless, some important differences between the treatment of the—according to the Nazi thinking—more highly ranked peoples of Western Europe and the inferior inhabitants of Eastern Europe did not disappear.

The Hunt for Labour, 1942–1945 In 1941 it became clear that the 1.8 million Western Europeans, 1 million Poles and 200,000 Serbs working in Germany (including POWs) were not sufficient to fill the most pressing vacancies. At least 2.6 million more workers were needed, but only after the Soviet Winter Offensive of December and the American entry into the war were some eyes opened and programmes to maximize production started.94 Since it wasn’t just extra workers that were needed but additional troops as well,95 increased recruitment had to be accomplished somehow. Although Albert Speer, now de facto leader of the war economy, opposed unscrupulous recruiting in the occupied territories as he feared for the war production in those countries, other officials started to hunt down people in these countries. Just as before, Nazi ideas on leadership, together with overlapping competences, undermined a clear economic policy. Speer was powerful, but he had to accept, at least for the time being, the undermining of vital aspects of his policy by Sauckel, who had quite different principles. Bormann, who pushed Sauckel to do so, feared Speer, as the latter had a direct line to Hitler and was the only one who could be considered a personal friend of the Führer. By persuading his leader to appoint the trusted Sauckel to organize the Arbeitseinsatz, the party chief manoeuvred a pawn into Speer’s lines in a way characteristic of the struggles for power at Hitler’s court. Nevertheless, although Sauckel threatened to use force if necessary in order to obtain the labour needed from across occupied Europe, he had to cooperate with Speer. Terminating all production of minor importance and checking the efficiency of production methods were the only ways to free up workers for deportation.96 Only Speer’s Zentrale Planung could point out what production or production factors could be lost. Its committees visited companies all over Europe to check on efficiency and so saw not only which companies could be closed, but also which could operate with less labour. In this respect, Speer and Sauckel were forced to work together. On 22 June 1942, in a radio broadcast, Prime Minister Pierre Laval of Vichy France declared that Berlin would release one French POW for every three educated labourers that went voluntarily to work in Germany. It was a last attempt to prevent the consequences of Sauckel’s ordinance of May 1942 to recruit labour by force all over Europe. By declaring that only a German victory could prevent the spread of Bolshevism, Laval still hoped to motivate Frenchmen into volunteering for labour in Germany. It failed again.97 Only 40,000 actually went, while Germany needed

The Hunt for Labour • 141 hundreds of thousands at least. The Vichy regime had to accept force and ordered all men between 18 and 50 and all unmarried women between 20 and 35 to report. Registration made it possible to order them to work wherever this was ‘in the interest of the nation’.98 Both the Vichy government and von Stülpnagel, the German Militärbefehlshaber in Paris, tried to make a success of Sauckel’s first French action. Some 350,000 labourers were to be recruited with the use of less gentle methods. General Karl-Heinrich von Stülpnagel made it quite clear that the time for gentle persuasion was over by ordering the arrest of all men in the nearest factory if many of those summoned failed to be at the railway station on time. After scaling down their ambitions to 250,000, the Militärbefehlshaber could report at the end of the year that the action had been a success: 240,000 men were sent to Germany, of whom 40 per cent were educated and 43 per cent trained labourers.99 To withdraw so many people from a country with only 22,000 unemployed, people were released by closing companies and eliminating production not essential to the war effort. However, given how many educated workers were taken, it seems likely that at least some of the production essential to the war effort was damaged as well.100 In 1942 the Germans took direct control over labour and raw materials in Western Europe. Now, they could decide to close superfluous companies or prohibit activities deemed unnecessary. Luxury production and shops were shut down, while jobs such as sales agents were prohibited.101 Over and above that, by the end of 1942, in France alone 8,000 industrial companies had already been closed.102 In the Netherlands, in some branches of industry even less than 50 per cent of the companies survived, and the situation in Belgium was similar.103 Even more important than the closing of shops and small factories was probably the prohibition of civilian building, initiated in France in May 1942 and spreading across Europe over the next few months. Substantial numbers of workers were thus freed up to build fortifications.104 That this was still not enough became clear when, in 1943, the Germans in Paris decided to adopt ‘a more systematic policy of closing companies of little importance for the war economy’.105 Raw materials and labour—if the men freed up didn’t disappear into hiding—were sent to Germany. Apart from closing companies, Berlin checked their efficiency. These checks by committees of Speer’s Reich Ministry for Armament and Ammunition were not limited to labour, but that was the most important aspect. The committees decided whether employees were superfluous or not.106 Again and again such checks could result in orders to produce more with less labour or even to close down. Of course, superfluous employees were sent to Germany. During 1942 and 1943, in the Belgian iron industry every company was checked at least twice, but some up to seven times!107 In addition, in 1943 all companies in Western Europe were ordered to make production plans corresponding with the German industrial plan or the lebensnotwendigsten (most essential) domestic needs. A company could continue only if the ZAST in Belgium and the Netherlands or the Deutsches Beschaffungsamt in France agreed with the plan.108

142 • Occupied Economies Originally, in Western Europe, working for the enemy seemed to be an opportunity to keep a company going. Now, it became a dangerous activity in a state-controlled economy, and—as not only the use of labour and raw materials was controlled, but prices and markets were regulated as well—producing for the Germans, even from a commercial point of view, was no longer interesting.109 After the war, managers of companies that had produced for Germany often used the argument that they did so to safeguard their workforce from deportation; opponents claimed they did it for profit; in fact, they did it, at least from 1942 on, because it was impossible to do otherwise. In 1940, when the war had seemed lost and the Germans were their only remaining customer, they had sold their souls to the devil. Now it proved impossible to evade the consequences of such a contract. Between the end of 1941 and early 1942, cracks appeared in the belief that Germany had all but won the war. This was the reason that Berlin wanted a more efficient method of exploitation and labour regulation to be introduced across Europe. Men born in certain years were sent to Germany, and students were picked up, while raids took place at the entrances of cinemas, sport events and churches in order to seize those who did not come to the trains when ordered to do so. In Western Europe, only men between the ages of 18 and 45 (later 50), and no women, were sent. This resulted in growing numbers of young men going into hiding. Employees seen as superfluous by the committees had to disappear immediately; otherwise, they would be put on the trains. As a result, tensions in the French labour markets, already high at the end of 1941 when all the employable had found jobs, now resulted in wage claims. These claims were strengthened by the fact that, according to some estimates, real wages were only half their 1939 value, as high prices on the legal markets and even higher prices in the important French black markets had undermined their values. Sauckel prohibited any wage rises, however, as being contrary to the wartime economic policy. Working longer hours was the only way to increase nominal wages. Since the 1939 mobilization, the 48-hour week—which was general across Europe— had also become the norm in France again. Now Sauckel tried to introduce a 54-hour week, but von Stülpnagel was not pushing for it. He feared the political tensions that would result from it. Von Stülpnagel was ever more opposed to Sauckel’s policy, as it resulted in growing animosity against the Germans.110 Although he did not as yet fear unrest, he warned against it.111 In the Netherlands, Seyss-Inquart did try to implement a 54-hour week. The main effect was a sharp decline in productivity.112 Notwithstanding von Stülpnagel’s objections, a second Sauckel action was planned in the period from January to April 1943. Again the occupier demanded 250,000 French labourers, this time by conscripting all men born in 1920–1922. The Vichy regime supported this by introducing a two-year labour conscription, a logical step after it introduced the duty to report. The result was that exactly the number of new workers planned were caught, 250,000. The first two Sauckel actions were successful.113 The third, following directly after the second, was not. The idea was to send another 220,000 men to Germany, but by the end of June only 120,000 had

The Hunt for Labour • 143 been seized, of whom just 105,000 went.114 Tensions between von Stülpnagel and Sauckel now grew. As Sauckel thought the results of the action disappointing, he sent his representative, Julius Ritter, to found his own recruiting offices across France. Thus, he took over this aspect of the German policy in the occupied country, making von Stülpnagel’s position impossible. The Militärbefehlshaber had to keep French society quiet and French production going, while losing all power over one of the most sensitive political items. The Arbeitseinsatz became the sole responsibility of Sauckel and Ritter, men whose sole aim was to fill the German labour needs. Thus they could use unscrupulous recruitment methods without any concern for the political consequences in the occupied country. Ritter did not even hesitate to pay French collaborators to catch labourers.115 A French traitor could get 20–30 RM for every man handed over, which was increased in January 1944 to 30–50 RM.116 The Militärbefehlshaber had to deal with the consequences: internal vacancies could not be filled any more, social tensions grew and more and more people went into hiding, which resulted in growing resistance. In September 1943, von Stülpnagel even complained that French officials were afraid to implement German orders any longer, as they not only knew the public opposed their cooperation with the Germans but were also being threatened by the resistance.117 In Berlin, however, the complaints of men like von Stülpnagel no longer counted for anything. For the Germans as well as the national authorities in the occupied countries, limiting the hunt for labour and returning to a policy of confiscating any remaining output received priority, as the population began to hate the Germans as never before. Now, German officials complained about the influence of dangerous propaganda. For instance, von Stülpnagel wrote that when French trains with forced workers left, the men openly sang the ‘Internationale’ and cursed the Germans.118 Resistance was growing. Von Stülpnagel was right that this could possibly be limited by giving the population more consumer goods or terminating the Arbeitseinsatz. However, the resistance was not fed only by the situation in the occupied countries; the impressive Allied successes, particularly Soviet military successes, also gave the oppressed peoples renewed hope for the future. In 1942 and 1943, when the labour recruitment methods developed in Poland in 1939 and 1940 were step by step introduced to Western Europe, they had in a weakened form similar effects as in Poland: namely undermining of the local economies and societies and thus not just the policy of von Stülpnagel or Seyss-Inquart, but also that of Speer. Since for every worker Sauckel sent to Germany, at least two were lost to the French or Dutch economies, Speer decided to protect the workforce of companies important to the war production in the occupied countries. In 1942 and 1943, half a million workers were sent to Germany from France, while 240,000 went from the Netherlands and 190,000 from Belgium.119 By this time, few went voluntarily anymore, and the numbers going into hiding were higher than those actually deported.120 Altogether, the Sauckel actions in France, Belgium and the Netherlands

144 • Occupied Economies resulted in hundreds of thousands of workers being deported to Germany; it also resulted in the loss of millions of workers to the local economies. An increasing number of companies argued that they needed these workers in the occupied countries for German production, and in the Netherlands the German organizations supervising the Dutch production, the ZAST and Rüstingsinspektion, agreed. From late 1942 on, they almost openly opposed Sauckel’s policy. In France it met its limitations when the third Sauckel action failed. The negative consequences of Sauckel’s actions were the main reason that the economies in the West slumped. Until then they had been recovering from the 1940 invasion and even booming in the Netherlands. As, at the same time, the Germans took ever-growing shares of the remaining production, the occupied countries of Western Europe finally felt the consequences of war and occupation severely. Worse, from a German perspective, was that the policy of hunting down labour, on the one hand, and trying to get as much of the remaining output as possible, on the other, was hardly successful. Not only was it necessary to use more and more force to get the labour needed, but it proved impossible to place individual labourers in the German economy in such a way that their contribution compensated for the loss of at least two labourers in the home country. Local production slumped more rapidly than German production grew. Labour hunting also proved counterproductive as substantial parts of the local production were concentrated on German interests—in France in those years at least a third, and in the Netherlands half the industrial production; in both countries almost all transport was geared to German interests. No miners or farm labourers were recruited, since these were needed for home production. Nonetheless, almost 97 per cent of the recruited Belgians, 91 per cent of the French and 90 per cent of the Dutch were industrial labourers who would have done more or less the same jobs but less unwillingly at home.121 The 246,000 skilled labourers taken from France included tens of thousands of metalworkers. As all French iron, steel and construction industries were incorporated into the German war production, it seems impossible that these were obtained at the cost of factories not working for Germany. As for every labourer taken to Germany at least two were lost to French industry, the policy was counterproductive for the German war effort.122 In 1943, when Speer complained to Hitler that ‘it is a madness if I call up one million men in France . . . I end up with two million workers less there and fifty to a hundred thousand more in Germany’, he was exaggerating the effects of Sauckel’s policy, but he did not give a false impression.123 By taking labour from these countries, Germany undermined its own targets. The problem was caused by the fact that Berlin never managed to devise a clear economic policy. Even in Speer’s period of control, rivalries and overlapping authorities caused contradictions in exploitation methods. Although initially Speer appeared to be dominant, Sauckel’s policy had the greater impact in occupied Europe. He was ordered to recruit only the labour not needed in essential production for Germany, but the Vichy Minister of Industry, Jean Bichelonne, rightly complained to Hitler

The Hunt for Labour • 145 that after every Sauckel action French industrial production slumped.124 As French industrial production was already concentrated as far as possible on German needs, the Germans lost much by this. In 1942 and 1943, occupied Western Europe, with the exception of Scandinavia, lost a substantial part of its labour force. Nevertheless, there were never more than 277,000 Dutch labourers in Germany.125 When the number of those in hiding is calculated from those no longer found in the labour statistics, it means that this country with a labour force of 3.5 million lost at least 552,000 men—or more than 16 per cent of all labour—while according to other calculations some 680,000 labourers (19 per cent) were lost.126 In Belgium, the figure was 456,000, or 13 per cent, while in France—a country with a labour force of 19.5 million in 1938—2.3 million men, or almost 12 per cent of its labour force, were either working in Germany or hiding and thus lost to the French production.127 At the end of the war, Western Europe was supplying 4.9 per cent of the German workforce and a quarter of its foreign labour (Table 10.5). For this important, but limited input into the German war effort, these economies lost 3.3 million hands, or more than 12 per cent of their workforce, primarily industrial labourers. As industrial production in these countries was in fact mainly concentrated on the German warfare, it was counterproductive. Although Western Europe’s contribution to the Arbeitseinsatz was substantial, after 1941 most foreign labour came from Central and Eastern Europe. This seemed

Table 10.5.

Western Europe and the Protectorate as Sources of Forced Labour, 1940–1945 Foreign labourers in Germany

Labour force lost to home country

Percentage of German labour force

Percentage of German foreign labour

No. (in 1,000s)

Percentage of the 1938 labour force

1,284

3.5

18.0

2,271

11.7

Netherlands

255

0.7

3.6

552

16.4

Belgium

256

0.7

3.6

456

12.6

1,795

4.9

25.2

3,279

12.3

267

0.7

3.7

415

12.3

No. (in 1,000s) France

Total Western Europe Protectorate

Source: Nicholas Kaldor, ‘The German War Economy’, Review of Economic Studies, 13 (1945–1946) 33–52, here 37; Hein A. M. Klemann, Nederland 1938–1948. Economie en samenleving in jaren van oorlog en bezetting (Amsterdam 2002) 433; Mark Spoerer and Joachim Fleischhacker, ‘The Compensation of Nazi Germany’s Forced Labourers: Demographic Findings and Political Implications’, Population Studies, 56 (March 2001) 5–21; Angus Maddison, Dynamic Forces in Capitalist Development: A Long-run Comparative View (Oxford 1991) 266–267; Wolfgang Michalka, Deutsche Geschichte 1933– 1945. Dokumente zur Innen- und Außenpolitik (Frankfurt am Main 2002 2nd ed.) 365; Mark Spoerer, Zwangsarbeit unter dem Hakenkreuz. Ausländische Zivilarbeiter, Kriegsgefangene und Häftlinge im Deutschen Reich und im besetzten Europa, 1939–1945 (Munich 2001).

146 • Occupied Economies logical from a German point of view, as Berlin hardly hoped to gain much from the local production there. In these parts of the Continent, only the Protectorate was an important industrial producer for Germany. It is therefore amazing to see that if, as can be supposed, substantial numbers of labourers went into hiding in the Protectorate, just as in Western Europe, when Sauckel started his labour-hunting policy, this resulted in a loss of workers of 12 per cent, just as in the West (Table 10.5). From 1942 on, France, Belgium, the Netherlands and Bohemia and Moravia had to send labour contingents to Germany. Consequently, more than 1.5 million young men went into hiding and were lost to all production apart from clandestine activities.128 In the Protectorate, from September 1941, when the SS fanatic Reinhard Heydrich replaced Konstantin von Neurath as Reich Protector, until Heydrich was assassinated in June 1942,129 more force was used to recruit labour, but initially Heydrich tried to get military orders for the Czech industry. Heydrich had chaired the Wannsee Conference and was the sole administrator of the January 1942 decision to persecute and murder all European Jews. He had an extremely racist attitude toward the Slavic Czechs as well, but nonetheless competed with Sauckel for Czech labour. It was only after his assassination that Sauckel was able to do what he wanted—organize raids on bars and cinemas and, when these did not prove successful enough, introduce conscription of complete age groups. Opposition to deportations was strong. In the case of women, it even resulted in pregnancies, although hiding proved more effective. In the end, however, the economic importance of the region limited Sauckel’s policy here, just as in the West. When, from 1943 on, Allied bombardments threatened German production, the production of steel, weapons and ammunition in the Protectorate became of even greater importance. Therefore, when labour conscription was introduced for Czech men and women between the ages of 18 and 50, it resulted in the obligation for most of them to accept work in nearby factories. Labouring hours were long—up to ten or even twelve hours a day—and holidays were scrapped. Rations, although higher than anywhere else, declined, but just as for the French, Dutch and Belgians, the situation was incomparably better for the Czechs than it was for the Poles or Russians.130 In the Protectorate 600,000 men and women out of a population of around 6.8 million were working directly for the German armament industry and 2 million indirectly. As labour was also compulsory for women, labour participation was high, but even when the labour force was 50 per cent of the population, at least 75 per cent of labourers were working for Germany.131 According to Spoerer and Fleischhacker— whose estimates are often relatively low—the Germans recruited another 420,000 Czechs, although there were never more than 277,000 working in the Reich at any one time (Table 10.5). It is reasonable to guess that this meant that, if one includes those in hiding, the Czech economy lost 415,000 workers, or about 12 per cent of its labour force (Table 10.5). Nonetheless, these figures seem unlikely as even the lowest guess would mean that all labour not working for the Germans was either deported or in hiding. There are discrepancies in the data, but it is clear nevertheless

The Hunt for Labour • 147 that in Bohemia and Moravia—just as in France, Belgium and the Netherlands—the Germans’ policy of hunting down labour only damaged their own interests. Speer hoped to gain more than just forced labour, especially in France, where the men who went into hiding often became members of the Maquis. He therefore agreed with Vichy Minister Bichelonne to end Sauckel’s recruiting policy and to cease hunting down men for forced labour. Instead, military production would be transferred back to Germany and civilian production concentrated in France.132 As a result, from September 1943 on, the number of companies safe from further recruiting campaigns because they worked for Germany or satisfied vital needs of the French population substantially increased. By October there were some 13,000. It made Sauckel’s policy impossible. In this respect it is significant that after Sauckel’s representative, Julius Ritter, was killed by the resistance in September 1943, no replacement was made. Sauckel gave up.133 Furthermore, the French workers producing for Germany were now safe, and as a substantial part of the products they made were not typically war-related, even French patriots could hardly object to it. Speer also introduced the Bichelonne agreement in Belgium and the Netherlands, thus in effect ending the Arbeitseinsatz there as well. From September 1943, Western European labour was concentrated on meeting German orders, if possible civilian orders, leaving German production to concentrate on military orders. Civil industrial production was even prohibited in Germany itself if it was possible to transfer this to any of the occupied countries.134 Objections from German businessmen that this would weaken their post-war competitive strength were ignored. Stimulating civil production even resulted in investments in France, Belgium and the Netherlands, as is clear from the fact that the Dutch production of items as varied as mortar, agricultural lime, rock wool, slag wool, benzyl, dentures, wallboard, carbon paper, toys, picture frames, tools, combs, medical instruments, vitamins, cellophane and batteries only started in the latter period of the occupation.135 In the end, Speer proved stronger than Sauckel, but not before severe and irreparable damage had been done to the production capacity of occupied Europe. Speer had made his agreement with Bichelonne because it seemed better to allow the efficient Western European companies to continue rather than destroy their production in order to obtain a limited number of reluctant workers. The same was true in the Protectorate, where the Reich Minister of Armament and Ammunition also discontinued Sauckel’s recruiting policy. Here, just as in Western Europe, the peak in the number of workers sent to Germany was reached in September 1943, when Speer and Bichelonne made their agreement.136 From then on, the chase for labour took place only in countries where Germany was less interested in the local production. In the Protectorate and the West, except for the Netherlands, the peak number of people working in Germany was reached in 1943.137 After that, Poland and the USSR had to carry the full weight of the labour policy and became the hunting ground in which to round up the millions of labourers Germany needed. Since the people living there were inferiors in the eyes of their predators, their welfare—or

148 • Occupied Economies even survival—was not deemed relevant. This was already clear in Poland as early as 1939 and 1940, but from the time of the occupation of Western Europe, labour recruitment in Poland relaxed. Not only did Germany get huge numbers of French and Walloon POWs, but because of its planned attack on the USSR, from the second half of 1940, Berlin needed even more labour in Poland itself. It was there that the transport facilities for its armies would be brought into shape. It wasn’t until 1942 that it became necessary once more for Berlin to round up Polish labour in order to get the crops in. From mid-1940 until the end of 1941, little labour was recruited in the General Government, but, nevertheless, at this time Poland was hit by one of the most severe enforced mass migration movements of German-occupied Europe. Half a million Poles from annexed Polish territories were sent to the General Government and housed in camps to work for the Germans, mostly as construction workers. Their houses and farms in the annexed parts of Poland were transferred to ethnic Germans. By sending Poles from annexed Polish territory to the General Government, Berlin not only gained farmland and the opportunity to re-Germanize Upper Silesia, but was also able to dispose of people it could not use, mainly Jews. Prior to the Wannsee Conference of January 1942, it hadn’t been decided what to do with these people, although it was clear that they should disappear. Therefore, from October 1939 onwards, the Jewish population in the General Government, as well as annexed parts of Poland, was concentrated in urban ghettos where they were forced to work for German companies. These companies founded small factories in the ghettos and paid extremely low wages. When, in the summer of 1942, as a consequence of the restarting of the German recruiting policy, labour shortages became a problem in the General Government, people from the ghettos not capable of work were sent to concentration camps to be murdered. The ghettos themselves were converted into compulsory labour camps for those who stayed behind, mostly boys and men between 15 and 45.138 In July 1942, however, the radical anti-Semitic Higher SS and Police Leader of the General Government, Friedrich Krüger, made it clear that he wanted to destroy the ghettos altogether. The Wehrmacht had to find other workers for the production that until then had been done in the ghettos. Field Marshall Keitel, Chief of the Oberkommando der Wehrmacht, agreed with Krüger and ordered the replacement of all Jews. Protests were at first ignored. Soon it became clear, however, that it was impossible to replace all Jews without substantial delays in essential military production. As a result, until 1943 at least, ever smaller groups of Jews were allowed to stay alive and work in the German industry.139 The fact that even anti-Semites like Krüger had to admit that some Jewish labour was, at least for the time being, too valuable to destroy makes it clear that the destruction of the Jews, who were a substantial part of the population in both Poland and Belorussia, was a severe setback for the labour force and thus the Polish and Belarusian economies. Since the little industry that the General Government had was almost completely destroyed in the first month of the occupation because Germany needed its raw

The Hunt for Labour • 149 materials and labour, economic activity was low. Therefore, when in 1942 private firms controlled by Sauckel’s Labour Office tried to recruit Poles by promising good opportunities in Germany, many chose to go. One of the things the Germans promised Polish labourers who signed up for work in Germany was that they would be allowed to send 1,000 RM a year to relatives in the General Government. For many families at that time, it seemed a way out of their hardships. It soon proved another illusion. As Sauckel said, he trapped people and drugged them ‘with booze and promises in order to get them to Germany’.140 The 1,000 RM were not paid as such to the labourers’ families in the General Government, but first exchanged at official rates and paid in zloty. It thus lost much of its value before the families received it.141 The Germans’ underhanded behaviour towards the people they needed for important work, especially those seen as being of a lower order, soon backfired on them. Volunteers became unavailable, and Sauckel had to use his aggressive recruiting methods again. By May 1942 the German labour authorities obtained the power to move Polish workers, both men and women, from company to company, and not just within the General Government, but across its borders as well. Thus, every Polish labourer could be sent to any job anywhere in the German war economy.142 According to the Polish historian Czesław Madajczyk, the authorities used this new power not only to obtain labour, but also to get rid of superfluous people from the countryside in preparation for a German Bodenordnung—farmland ordering—a euphemism for replacing and deporting Poles in order to free their land for German settlers.143 However, as most Poles did not obey when ordered to German factories, increasingly cruel raids became the major instrument for recruitment. In July 1942 the power to hunt down labour was transferred to Himmler, who ordered SS Commander Krüger not to hesitate to use every instrument that could be effective in his pursuit. In Western Europe the Arbeitseinsatz had already become a reason for growing dissatisfaction, hiding and resistance. In Poland, where it was used much more viciously, reactions were not limited to non-violent resistance. From 1943 onwards, underground fighters assassinated German officials involved with it. In turn, the Germans took hostages from the families of those refusing to leave or took over family farms. Finally, violence was the only instrument left to force the population to do what the Germans wanted. Across Poland, people were moved from one side of the country to another, had their houses and farms stolen and were hunted down as slaves.144 There was no longer any reason whatsoever for any trust in the authorities. In such a situation, where the population no longer obeys the authorities and doesn’t hesitate to use violence against them, all remnants of normal society, including the economy, collapse. In Poland the economy became divided between local and, according to the Germans, clandestine economies that together were quite substantial. Poland was a country with a considerable number of smallholders and industries using local raw materials. In such branches, almost everything could be produced with the labour of people in hiding, without the authorities having any knowledge of it. Since refusal to

150 • Occupied Economies go to Germany meant loss of rations, a growing part of the population had to survive on this black economy. Hence, the clandestine production was accomplished at the expense of official production. As ration allowances were low, and systematically 43 per cent below those of the Germans, clandestine production had to compensate for any shortfall. Black market production was substantial.145 Apart from black market production and some production necessary to keep local society going on a limited scale, Poland had to produce for Germany. Substantial parts of this production were done by forced labour. As Spoerer wrote, it is impossible to guess how many Poles were forced to work for the Germans during the war. Apart from those sent to Germany—about 1.85 million—Jews were forced to work before they were murdered, and sometimes labour was even an instrument of murder. Poles from the annexed territories who were sent to the General Government were put in forced labour camps, and Poles who were allowed to stay where they lived became at best second-rate citizens in their own country. Nevertheless, the number of Poles recruited to work in Germany between the end of 1941 and the end of the war was relatively limited. According to Madajczyk, in January 1942, over 1 million Poles worked as forced labourers in Germany, and this figure was almost 1.7 million in September 1944.146 Spoerer and Fleischhacker even think there never were more than 1,376,000 Polish forced labourers in Germany at a time.147 Nevertheless, according to calculations based on their data (which are probably low), 14.3 per cent of the non-Jewish Polish labour force was working in Germany, whereas if Madajczyk is right this was 17.2 per cent. The Jews are excluded here, as at this time they were, if not already murdered, isolated in a way that made it impossible for them to do anything but compulsory labour. Because of the recruiting methods that drove people into hiding and even into resistance, at least 30 per cent of the Polish labour force was lost for legal production in Poland as a consequence of this policy, while the anti-Semitic policy claimed another 10 per cent. Because it was decided to use the Jewish part of the Polish population only temporarily before their destruction, it is clear that Poland was not large enough to provide the labour Germany needed. After 1939 and 1940, even the use of the most extreme excesses in recruitment methods delivered only a few more forced labourers. Berlin had to look further eastwards. The numbers needed could only be found in one country, anyway: the occupied parts of the Soviet Union. Partly as a result of the extreme situation the Germans had created by their hunger policy and partly as a consequence of anti-Soviet feelings among Ukrainians and Belarusians, there were more than enough people there who wanted to go voluntarily to work in Germany. Again, however, the Germans couldn’t even manage basic humane treatment of the people in those parts of Europe, thus destroying an important opportunity to obtain what they needed. According to Spoerer, the Nazi regime was forced to set aside long-term ideological ideas for pragmatic economic targets when the Germans’ eastern campaign became a war of attrition.148 The use of Ostarbeiter was not planned before the

The Hunt for Labour • 151 invasion and initially was even prohibited.149 Two years later, in June 1943, the District Commissar in Kasatin (Ukraine) wrote that ‘according to the opinion of those in the highest positions, the provision of workers for the Reich is the most important [emphasis in the original] task in the eastern territories’.150 Berlin’s aim with the Hunger Plan was to get food for feeding their troops by the destruction of substantial parts of the Ukrainian and Belarusian populations. Simply reducing ration allowances in urban areas below the minimum level was sufficient to threaten the lives of millions. In such circumstances, there were obviously plenty of people willing to go any place where they might get enough to eat. So when the Germans started recruiting labourers, there was little shortage of volunteers, even among those who had seen how the Soviet POWs were treated. Prior to 1942, in the USSR the Germans tried to enlist only East Galician Ukrainians. According to the Nazis’ ethnic ideas these were Poles. Further they wanted some farmhands from the Baltic countries. From 1942, however, they started recruiting from among other ethnic groups, and before long hundreds of thousands were being sent to the Reich. As the new workforce was sent to Germany in freight wagons without any food or sanitary facilities, many were already unhappy about their decision before they ever arrived in Germany. The first letters home from volunteers, who before leaving had believed that anything must be better than starvation in the Ukraine or Belorussia, quashed all desire to follow them. Less than six months after the first volunteers had left, all ideas in the Ukraine about going to Germany voluntarily were destroyed. By the middle of 1942, the final blow to the volunteer programme came when, after only a few months’ work in Germany, 150,000 volunteers had to be sent home ill and crippled. Berlin had shot itself in the foot again, or as Jonathan Steinberg concluded—probably only partly correctly—the Low Countries and France, under more civilized regimes, were many times more useful to the Reich than the ‘predatory raid’ on the Soviet Union, which was, according to him, ‘yet another example of the curious blindness of Nazi leaders to reality’.151 Their preference for radical solutions and their inability to behave in a more or less civilized manner towards the people they needed—whatever they thought about them—proved counterproductive for all the Reich’s economic targets in the East. Nevertheless, before the summer of 1942, a million eastern workers were shipped to Germany. As the voluntary programme expired, from mid-1942 on, the occupation regimes in the two Reich Commissionerships of Ostland and Ukraine had to use violence. As usual for the Nazis when dealing with people in these areas of Europe, the most extreme and violent measures, beyond even those seen in Poland, were used to hunt down the labour needed. Between mid-1942 and 1944 mass deportations became characteristic of the Nazi occupation policy in the western parts of the USSR. Initially, labour became compulsory for all men between 15 and 65 and for women between 15 and 45, but in the summer of 1942, two-year labour conscription was introduced for all inhabitants of the Ukraine between 18 and 20,152 while in the following autumn all age limitations were cancelled for compulsory labour. The Germans

152 • Occupied Economies could, however, write order (Verordnung) after order to summon people for work in Germany, but these proved completely useless when not enforced by slave hunting. People were picked up from the streets randomly; no one escaped. Even family members of the German organized police forces were picked up. Forced abortions made pregnant women fit for compulsory labour, and those who were seized after an attempt to hide and were only beaten up were the lucky ones. Shooting them on the spot was quite usual.153 Once the Germans had rounded up a sufficient number, they were forced to walk long distances to a railway station where closed freight wagons took them to Germany. Of course, this policy of violence, lawlessness and lack of rights drove many into hiding, if not into the arms of the partisans.154 Despite this, the Germans managed to capture 2 million Ostarbeiter by mid-1943. To maintain this number, substantial additional recruitment was necessary. The work conditions for these people in Germany were so bad that not only did 10 per cent not survive their German stay, but substantial numbers also had to be returned to their homelands sick and incapacitated.155 That there were few, if any, limitations to the Nazi recruiting practices became clear when, in 1944, substantial numbers of boys and girls between 10 and 18 were seized from the streets in Belorussia to be sent as slaves to Germany.156 Of course, such man-hunting practices resulted in substantial numbers joining the partisans. Liberman concluded that in Western Europe the population could expect reasonable treatment as long as they were more or less cooperative. As a consequence, the dangers of the occupation were limited as long as one kept away from the resistance and opposing the Germans, carried on with normal life and produced what the enemy needed. In Belgium, German officials even accepted some delays in the recovery of production. In Eastern and South Eastern Europe, however, the Germans treated the despised population so badly that resistance was, if not the only way to survive, at least hardly more dangerous than obedience. For obvious reasons the Germans were hated here much more than in the West.157 In Eastern Europe the population was starved to death when the Germans wanted their food; imprisoned soldiers were mass murdered; and unthinkable forms of violence were used to get slave labour. All this proved counterproductive. It only increased resistance, violence and hatred. From 1942 on the threat of guerrilla armies became so severe that some German commanders wanted all slave hunting abolished to limit recruiting opportunities for these guerrilla forces. Others, however, wanted to chase all labour down in the districts with greater guerrilla activity. As almost always in the Third Reich the most extreme measures were implemented.158 In the first months of the invasion, the population of the USSR was ignored as a source of labour, because, from the racial ideological point of view of the Nazi fanatics, it was unacceptable to let these people enter Germany. However, from 1942 on they were hunted in the most unscrupulous way because—apart from German females—they were the only potential source of labour large enough to provide the numbers Berlin needed. Initially, during the period when Germany had not realized

The Hunt for Labour • 153 the usability of the people in the occupied Soviet territories, Nazi racism was an extreme threat. Fanatical National Socialists thought the Slavic population should be removed and thought it a waste of resources to feed these people if their production was of no immediate importance to Germany. The beliefs of Hitler and his henchmen regarding Slavic people—especially Soviet citizens and Poles—were hardly less extreme than their views on Jews. The 3.5 million Soviet POWs suffered most from these ideas. They were left to die from hunger, epidemics and maltreatment. When the Germans changed their views and realized they needed people from Poland and the USSR to solve their labour problems, their way of treating them was still so ingrained with racism that Berlin was unable to visualize any method of recruitment other than the use of extreme violence. The only normal reaction to that was to disappear into hiding. As long as Berlin believed the occupied Soviet territories held no economic value for them, the Russians were the worst treated of all the occupied countries, and when Berlin changed its mind, the people were still subjected to extreme hardship and cruelty. The amazing thing is that the Germans managed to obtain any labour there at all. That another outcome could have been possible is clear from the situation in the Balkans, where the destructive consequences of the Nazi occupation became even more apparent. Here, the Germans eventually had to bring in additional labourers from outside to maintain the limited production it needed from the mining industries. In April 1941, the Germans began recruiting Serbian volunteers, as officials considered the Serbs to be brauchbares Material—usable material.159 As a consequence, apart from 200,000 Yugoslavian POWs, most of whom were Serbians, 78,000 volunteers went to the Reich. Their number had already peaked by January 1942, and by 1944 there were fewer than 38,000 left.160 Serbs went to the Reich voluntarily to avoid being involved in the war between the partisans, the Chetniks, and the forces of the puppet government of General Milan Nedić. As after 1941 the Organisation Todt needed labour in the Balkans as well, work became compulsory for Serbs aged 17 to 45 years as early as December 1941. Nedić’s government introduced a scheme of ‘National Labour Service’ supervised by the Organisation Todt and claimed that this labour was needed for the rebirth and modernization of Serbia.161 As a consequence, in 1943, 40,000 forced workers were employed in Serbia itself, most of them in the mines.162 The exploitation of Serbian labour was not limited to Serbia, however. The Organisation Todt also used Serbians in Croatian bauxite and iron mines, in bauxite mines in Italian-controlled Dalmatia and in Macedonian chrome mines. Just as elsewhere, the labour policy resulted in resistance stirred up by poor working conditions and wages insufficient to meet the cost of consumer goods, almost exclusively available on the black market. People escaped to other parts of the country, hid in the woods and mountains or joined the partisans.163 Actually, so many fled due to the forced labour policy that the local workforce was incapable of covering the needs of the German-controlled parts of the economy. Additional labour had to be brought in, and not only from other parts of former Yugoslavia. Soviet POWs,

154 • Occupied Economies Hungarian Jewish forced workers, Poles, Bosnian Serbs, captured Greek partisans and, from September 1943 on, Italian POWs were needed primarily to keep the copper mines of Bor operating. In 1944 these mines alone employed 80,000 forced foreign workers. Consequently, although half the employed Serbian population worked for the German war economy in Serbia, elsewhere in Yugoslavia or in Germany—in total, over 300,000 men and women—on balance the Serbian economy was a consumer, not a supplier, of forced labour. In Greece, the situation was comparable. Recruiting voluntary labour for the Reich started in January 1942 in Salonika. Volunteers were promised that they would benefit from their choice of going to Germany as this would enable them to take care of their dependents.164 At the same time, pressure was put on Athens to cancel unemployment benefits and withhold ration cards for workers who turned down the opportunity. As a result, between May and November 1942, about 12,000 workers from Salonika (20 per cent women) were transported to Germany, along with another 6,000 recruited from the area south of Salonika. This number was far below the anticipated 50,000.165 The Greeks did not want to work for the Germans, despite the high unemployment rates, and the results of all attempts to recruit volunteers were meagre. In addition, of the first 5,000 volunteers, 1,000 were immediately sent back as unfit. The work in the Hermann-Göring Werke in Linz was too demanding for the starving men.166 In 1942 and 1943, altogether 42,000 Greeks went to Germany to work there, but by January 1945 only 15,000 remained.167 It was an insignificant number compared to the numbers working for the Wehrmacht in Greece.168 The reasons are to be found in the lack of skilled labour, the resistance of the Greek population to drafting and round-ups and the poor physical condition of the underfed Greek workers. In the autumn of 1942, labour shortages in the chromium and bauxite mines in Greece made it clear that the problem that had begun when the Greek army was mobilized in 1939 was still unsolved: Greece lacked the labour needed to keep its economy going. As wages were not adapted to the dramatic inflation, the problem only became worse. From an economic point of view, there was little point in working for a wage any more. In order to keep the mines going, therefore, by 1942 Russian civilian forced workers as well as POWs had to be brought in.169 By then it was decided to introduce civilian labour conscription for men and women between 16 and 45 years, later extended to 65 years, in both the German- and the Italian-occupied zones of Greece.170 Attempts to enforce this were, however, frustrated by a series of strikes and demonstrations that made it necessary to postpone the measures until June of that year.171 Since by now Greece was of strategic importance as the main supply route to General Rommel’s African army, the Organisation Todt even had to bring in labourers from Croatia to construct strategic railroads.172 The German indignation at the Greeks’ refusal to work for them, either in Greece or in Germany, was expressed when the Deutsche Nachrichten in Griechenland—the German-language newspaper in Greece—wrote that the Greeks had forgotten the Führer’s generosity in liberating all POWs.173

The Hunt for Labour • 155

The Booty in Workers In the end the question is: how many labourers did Germany obtain from occupied Europe? Also, the question should be answered whether Europe can be divided into two regions, one characterized by the taking of output, the other by the taking of production factors. In Chapter 9, where the exploitation of Europe was discussed, the conclusion reached was that almost a quarter of the German war expenditures were covered by the occupied countries and, if dependent, but non-occupied countries and so-called allies, such as Hungary and Slovakia, are included, this reaches as much as 30 per cent. As these countries had to meet the production costs of the output intended for Germany themselves, this meant that a substantial amount of their production—altogether worth some 30 per cent of the German war expenditures—went to the Reich. The occupied countries were essential to the German war machine, not for the funds they contributed, but for the output of their production transferred to Germany without payment. Of the total contribution made by occupied Europe to the German war machine, 81 per cent was produced in and financed by Western Europe alone, while this increases to 85 per cent when Western Europe and the Protectorate are taken together. These countries accounted for a third of the population of occupied Europe. When Germany could choose between taking production factors—raw materials and labour—and taking the output of production, it is clear that in the Western countries and the Czech lands, taking the output of a slightly adapted production was central in the exploitation policy. In these countries, it wasn’t just that the kind of production was interesting for the German targets, but also that this production was modern and efficient. It was therefore in the German interest to leave the production apparatus in situ and intact. To this end, the structure of the Third Reich government was a handicap, as the lack of any central platform for discussion of the German economy, together with the ongoing struggle for power between high-ranking officials and organizations of the army, the party and the state, made it impossible to formulate a univocal policy. This Nazi style of government and the tendency to choose the most radical solution that cropped up in Hitler’s surroundings destabilized this means of exploitation by all kinds of attempts to take whatever was available—raw materials, machinery and, foremost, labour—from any occupied country. Nevertheless, in the western parts of the Continent, exploitation by taking the production output and keeping production itself going prevailed. As a consequence, it was to be expected that exploitation of the less productive economies of Eastern and South Eastern Europe would concentrate on the taking of production factors, thus further undermining the productive capacity of these already-weak economies. Because labour was the factor most needed and production output was obtained mainly from Western Europe, one would expect that labour needs would be met primarily from the other parts of the occupied Continent. However, Table 10.6 makes it clear that this was true only to a certain point. Of course, Nazi Germany transported some 3.8 million slave labourers from Poland,

156 • Occupied Economies the Ukraine, Belorussia and other parts of the USSR, not including Jewish victims, and it is a fact that these Poles and Soviet citizens made up more than 50 per cent of all foreign forced and slave workers. That is, however, simply a consequence of the fact that these two countries had more than 50 per cent of the total population of occupied Europe. Table 10.6 shows that, although the Germans captured 9.5 per cent of the labour force of the occupied parts of the Soviet Union and 8.9 per cent of that of Poland—more than in any of the other occupied countries—the percentages in most other occupied countries were only slightly lower. It should be recognized, however, that as Poland no longer existed as a nation and was split up between the General Government, the Reich Commissionerships of Ostland and Ukraine, and Germany itself, together with the fact that a substantial part of its population—the Jews—was murdered, the denominator of the fraction used to calculate this percentage is most uncertain. The same is true for the USSR, partly for the same reason, but also because the territories occupied there were an ever-changing part of the Union fighting for its existence. It is arguable that in Poland 14.3 per cent of the non-Jewish Polish labour force was working in Germany or even as much as 17.2 per cent.174 Nevertheless, the share of the labour force taken to Germany from all the occupied countries— Yugoslavia and Slovakia excepted—was within a margin of little more than one times the standard deviation of the average percentage in Table 10.6—in other words, it is too small to be sure that these differences are any more than purely accidental. When, however, percentages as high as, for instance, 14.3 per cent or even the 17.2 per cent of the Polish labour force are accepted—and such percentages are also available for the Ukraine—then for Poland and probably also for the two Reich Commissionerships of Ostland and Ukraine, the number of forced labourers was significantly higher than the average. Apart from these numbers, the usability of the recruited workers should be compared. Then it becomes relevant that, according to Table 10.3, in 1944 58 per cent of all foreign labour was used for industrial purposes or transport, while only 35 per cent was used in agriculture. According to Spoerer and Fleischhacker even 63 per cent of the forced labour was used in industry, but only 31 per cent of Polish foreign labour. Of the Soviet slaves 64 per cent—no more than average, and fewer than the forced workers from any other country apart from Poland—worked in industry.175 Germany primarily needed industrial labourers, and, among those, the educated and trained were of the greatest value. Consequently, not only was the output obtained from the West more valuable, but also the quality of its labour was. This impression is strengthened by data from France. It leads to the conclusion that while from a German point of view the exploitation of Western Europe was successful, this cannot be said of other parts of the Continent. Apart from some raw materials, Berlin obtained little, if anything, in South Eastern Europe and, relative to its size, little from Eastern Europe. The number of labourers it seized in Eastern Europe—when corrected for the size of the population—is probably only slightly higher than for France, Belgium, the Netherlands or the Protectorate, but there are reasons to believe that the

The Hunt for Labour • 157 better-educated and -trained workers came from the West. The higher number of slave workers from Eastern Europe did not compensate for the much smaller quantities of industrial output obtained there. The reason the Germans never succeeded in the efficient exploitation of Eastern and South Eastern Europe was not only because the economies of these countries were less well developed, but also because in these parts of Europe their methods of obtaining labour and output were so destructive that the economies, as well as the societies based on them, all but collapsed. This was partly the consequence of the Nazis’ fanatical racism that gave rise to the only half-hidden intention to destroy the peoples living in Eastern Europe completely. Even in the western part of the Continent—where the people were, according to Nazi ideology, not inferior—the severity of their recruitment methods and the reactions of the local population to these seriously undermined production and public order and were fatal for any understanding between the occupier and the occupied. The German labourhunting policy proved destructive, while it had limited advantages for the Germans. Given the differences in the way forced foreign labourers as well as captured soldiers from the various parts of Europe were treated, the surprising thing shown by Table 10.6 is that between 6.6 and 9.5 per cent of the labour force were victims of this German policy in almost every occupied country. The conclusion should be that the extreme violence used in Poland, Belorussia and the Ukraine had an enormous impact on these societies, but was hardly effective for the German policy of obtaining a high number of workers. By sending POWs to labour camps, motivating volunteers and using pressure against the unemployed, it was not very difficult to get 7 to 9 per cent of the labourers of any occupied country, but the use of more aggressive methods only initially resulted in higher numbers. Göring’s remarks of August 1942 on the way that Sauckel was carrying out his job of recruitment, made just a few months after the latter started it, are typical of the first period of labour hunting: ‘I do not wish to praise Gauleiter Sauckel. He does not need it. But what he has done in so short a time in order to gather workers and to have them brought to our enterprises is a unique achievement. I must tell everybody, gentlemen, that if each of you applied but one-tenth of the energy applied by Gauleiter Sauckel, it would be easy indeed to fulfil the tasks imposed upon you.’176 Soon, however, Sauckel’s policy would strengthen opposition in the occupied countries, resulting in increasing numbers disappearing into hiding and participating in partisan and resistance movements. Making work in Germany compulsory was effective only for a short initial period when the population in the occupied country did not know how to react. After a few months, however, raids became less successful and produced ever fewer new workers for the war economy. Increasing numbers of people disappeared into hiding. In Eastern Europe, Berlin’s frustration with the unwillingness of Poles, Ukrainians and Russians to work in Germany, combined with its irritation on developments at the fronts, the ongoing partisan activity, Nazi racism and its tendency to solve all problems with violence, together resulted in increasingly aggressive raids. Grotesque violence was used in the hunt for slaves. The effect was that organized society

Table 10.6.

Labour Recruited in Occupied Europe No. of civilian workers, Sept. 1944 (in 1,000s)

Balts

Female labourers (%)

POWs (in 1,000s) —

45

37

Belgians

199

15

Czechs

276

16

Dutch

255

French

646

Italians

Peak no. of civilians (in 1,000s)

Date of peak (month/year)

Total no. of civilian recruits (in 1,000s)

45

0.6

2,736

587

256

3.4

3,633

7.0

—

287

9/43

420

276

3.7

3,375

8.2

8

—

277

6/44

670

255

3.4

3517

7.3

7

638

667

12/43

940

1,284

17.2

19,490

6.6

33

287

9/44

—

35

1,376

9/44

1850

Slovaks

38

45

80

9/41

—

Soviets

2,410

50

253

2,410

9/44

3125

98

26

101

—

—

—

347

—

253

—

—

—

5,977

33

1,370

Totalb

1.6

78

8/43

8

Others

Percentage of labour force

9/44

34

Yugoslavs

Labour force in 1938 (in 1,000s)

45

287

a

Percentage of total foreign labourers

233

57

1,376

Poles

Civilian recruits plus POWs (in 1,000s)

—

6,159

320

4.3

20,217

1.6

1,411

18.9

15,795

8.9

38

0.5

1,195

3.2

2,663

35.7

28,080

9.5

199

2.7

7,245

2.7

600

8.1

—

—

7,347

100

85,066

7.6

The number of Soviet citizens is the number in the occupied territories, 62.4 million. Harrison, ‘Economics of World War II’, 7. The United Kingdom and Italy are not included. Source: Mark Spoerer and Joachim Fleischhacker, ‘Forced Laborers in Nazi Germany: Categories, Numbers and Survivors’, Journal of Interdisciplinary History, 33 (2002) 169–204; Mark Harrison, ‘The Economics of World War II: An Overview’, in: Mark Harrison (ed.), The Economics of World War II: Six Great Powers in International Comparison (Cambridge 1998) 1–42, here 3 and 7–8; Rein Taagepera and Romuald J. Misiunas, The Baltic States: Years of Dependence, 1940–1990 (London 1993, expanded and updated edition) 357; Angus Maddison, Dynamic Forces in Capitalist Development: A Long-run Comparative View (Oxford 1991) 266–267; own calculations. a

b

The Hunt for Labour • 159 and normal production were completely eroded, while counter-violence by partisans, assassinations of German officials, black market activity and various forms of resistance were stirred up. Some Germans were aware of these problems, and a military commander in Russia even advised the complete cessation of slave-hunting raids in the hope of limiting partisan activity by a more reasonable policy. In a period of escalating violence, such ideas were the voice of reason, but came too late. Anyway, in Nazism, those whose first reaction was to reach for their gun were in a better position. All across Europe, but especially in the eastern parts, the Nazi preference for extreme solutions destabilized any attempts to create more or less normal relations between the occupier and the occupied. In mid-1942, the Germans reacted typically in Poland when resistance against being sent to Germany became noticeable for the first time: the SS, which was in fact no more than an armed gang with police authority geared to use violence in any difficult situation, was asked to solve the problem and to use all measures available. From that moment on the growth of the number of Polish labourers in Germany slowed down.177 In 1943 the same could be seen in France and the Netherlands. After Sauckel’s first successes, his third action became a failure. The use of compulsion and violence backfired on him. That the labour policy was destructive for the occupied economies and managed to produce only a slight increase in the number of foreign labourers in the German economy was the reason for Speer to end labour hunting in Western Europe and the Protectorate. Speer cared little if this policy destroyed what was left intact of an ordered society and economy in Russia or the Ukraine; he was, however, against such a policy in France, Belgium and the Netherlands. That was not out of kindness or racism, but simply because he understood the importance of the Western economies for the German warfare. For instance, the Netherlands built ships and France aircraft, and both did it effectively and accurately. That was Speer’s reason to terminate the hunting down of slaves in the Slavic Czech territories as well. Allied bombing raids were threatening the German industry, but the British Royal Air Force and US Air Force bombed their friends only in exceptional circumstances, even when they were producing German arms. Thus Czech weaponry became of growing importance. There was no problem for the Germans in the occupied countries when they recruited volunteers or used pressure to motivate the unemployed to work in Germany. The same was true for the use of POWs. When, however, Sauckel started to conscript whole age groups, close factories and prohibit civil building, sending labour that thus became superfluous across the Rhine and using raids to capture those who did not obey, then signs of resistance became apparent everywhere, discontent intensified, resistance grew and people went into hiding. Even in France, the heartland of occupied Western Europe, armed resistance developed. It was a consequence of Sauckel’s actions. Beginning with his first actions, in the West, the German policy was no longer a danger limited to only specific groups of society, but was aimed at every family with sons, fathers, brothers or husbands in certain age groups. In Eastern Europe everyone was in danger from the start; now the same became true even in Western

160 • Occupied Economies Europe. The enemy was no longer an abstraction, but became a personal threat. People had to go into hiding to protect themselves from the Germans, thus leaving legal society. It meant that for every worker gained for the German war economy, at least two were lost to the economies of the occupied countries. In the West, where most of the work being done was already concentrated on the German war economy, this undermined production for the war effort. It also pushed one of every two threatened workers into a clandestine situation and thus towards resistance. Speer thought it ridiculous to continue this decreasingly effective policy and in September 1943 terminated it in Western Europe and the Protectorate. The hunt for labour that undermined occupied societies all over Europe was effective only in its first, mild phase. Up to 1942 Germany recruited some 3 million foreigners, but most of them were—if not officially—POWs. Together with the Soviet POWs, of whom many had been murdered already in 1941–1942, those foreign labourers already working in Germany before Sauckel started his policy would have been almost enough to fill the gaps in the German labour market. Sauckel’s policy of hunting down complete age groups in hiding, which gave people all over Europe the feeling that they were constantly under threat, destroyed normal societies. In 1943 it was stopped by Speer in the West. He could not prevent, however, a tendency towards economic decline—even in the West—beginning the moment Sauckel implemented his policy. In the East, this destructive policy continued and was carried out to absurd levels. Possibly worst of all is the fact that it was not only ineffective, but unnecessary as well, even from a German point of view. Millions were sent away, went into hiding and were hunted down like slaves for a policy that was pointless, even in the logic of the Third Reich. At the moment that Four Year Plan officials already knew that it was unavoidable to bring millions of Soviets citizens into action to keep the war economy going, the military authorities in the occupied Soviet Union still continued to destroy young and healthy Soviet soldiers by the million. These alone could have solved 80 per cent of the Germans’ labour problem. The unused German female labour force could even have solved the whole problem easily. In the end it was fanatical and ideological notions, not any logical development inherent to total war, that resulted in the waste of energy and resources and an ever stronger resistance to a German occupier that used ever crueller methods to get the labour it wanted, but did not really need. As in Chapter 9, an attempt must now be made to calculate the value of the German booty. To do that, the average 1938 German wages in agriculture and industry have been used to calculate the value of the hunted-down foreign labour (Table 10.7). For the category ‘Others’, no indication of the value of labour exists; therefore, the average of the annual wages in agriculture and industry is taken as an indication. From these calculations, it becomes clear that the value of the German booty in goods and services—93.6 billion RM from occupied Europe, 118.2 billion RM if dependent but unoccupied Europe is included—was far more important than the

Table 10.7. Forced and Foreign Labour, 1939–1945 No. of labourers (in 1,000s) 1939

1940

1941

1942

1943

Value of labour (in millions of RM) 1944

1939

1940

1941

1942

1943

1944

1945

Total

Agriculture

120

681

1,459

1,978

2,293

2,478

81

458

980

1,329

1,541

1,665

555

6,609

Industry and transport

155

402

1,379

1,879

3,566

4,132

228

591

2,029

2,764

5,246

6,078

2,026

18,962

24

67

181

259

402

518

26

72

194

278

431

555

185

1,741

299

1,150

3,019

4,116

6,261

7,128

334

1,121

3,203

4,371

7,217

8,299

2,766

27,311

Others Total

Source: Statistisches Reichsamt, Statistisches Jahrbuch für das Deutsche Reich, 58 (1939–1940) 346 et seq.; Werner Abelshauser, ‘Germany: Guns, Butter, and Economic Miracles’, in: Mark Harrison (ed.), The Economics of World War II: Six Great Powers in International Comparison (Cambridge 1998) 122–176; own calculations.

162 • Occupied Economies much more destructive hunt for labour. The value of the labour taken from all over Europe according to these calculations amounted to 27.3 billion RM for the entire period 1939–1945. Of this booty, only a very limited part—namely the amount of the wages earned by foreign labourers in Germany that was paid out in the occupied countries to relatives of the forced labourers—is included in the already-calculated booty. This share was of little importance, even in the Netherlands. In Eastern and South Eastern Europe, and in the case of POWs, it probably was of even less importance. Consequently, a low guess of the total German booty from all occupied and dependent countries—not including all goods taken without payment or at a negligible value, nor the goods and services taken after 1944—is 145.5 billion RM. As the total German expenditures on its armed forces amounted to 414 billion RM,178 it is clear that it is an exaggeration to say, as Götz Aly did, that the German population paid only 30 per cent of its war costs themselves and that 70 per cent was paid by foreigners. Most of the costs of their war were paid by the Germans themselves. The problem was not that the occupied and dependent countries of Europe had to pay a third of the costs of the war: as the collective 1938 GDPs of all occupied countries were 70 per cent higher than the German figure, this was a bargain.179 The essence of the problem was that the German occupation was so extremely destructive. Apart from the actual warfare and partisan wars, the Arbeitseinsatz was the most destructive element. This becomes clear in Western Europe, where war damage was limited (only in 1944 would more severe damage be suffered, mainly by France), partisan warfare hardly existed and normal society recovered in the second half of 1940 and in 1941. From here the Germans obtained only 24 per cent of their forced labour (Table 10.6). In these countries, until this destructive policy undermined them, the economies were flourishing, although there were some serious problems in France. The whole Arbeitseinsatz policy, including POWs, accounted for only 18.8 per cent of the German booty, thus equalling only 6.6 per cent of the German war expenditures, but especially in the most productive economies of Europe, its results were more destructive than any other element of the German exploitation. In Eastern Europe, where slave hunting and racism combined to produce a disastrous policy, this not only forced the population into hiding to prevent being sent to Germany, where they knew they would be treated extremely badly, but also motivated them to participate in guerrilla warfare.

Notes 1. Adolf Hitler, Hitler’s Table Talks: 1941–1944: His Private Conversations (New York 2000) December 1941, evening, 158. 2. Ibid., 12th November 1941, evening, 127–128. 3. Ibid., December 1941, evening, 158.

The Hunt for Labour • 163 4. ‘Auf Grund dieser Sachlage gewinnt man dann plötzlich die Einsicht, daß man nicht gleichzeitig das Polentum vernichten und anderseits mit der Arbeitskraft des Polentums Berechnungen anstellen kann.’ Czesław Madajczyk, Die Okkupationspolitik Nazideutschlands in Polen 1939–1945 (Cologne 1988) 218. 5. Ibid. 219. 6. Ian Kershaw, Fateful Choices: Ten Decisions That Changed the World 1940– 1941 (London 2007) 431 et seq. 7. Madajczyk, Die Okkupationspolitik Nazideutschlands, 218. 8. Ulrich Herbert, ‘Zwangsarbeiter in der deutschen Kriegswirtschaft 1939–1945, ein Überblick’, in: De Verplichte tewerkstelling in Duitsland 1942–1945. Acta van het Symposium gehouden te Brussel op 6 en 7 oktober 1992 (Brussels 1992) 165–180. 9. Verb.St. d. WiRüAmt beim Reichsmarschall, Wirtschaftsaufzeichnungen für die Berichtszeit vom 15.8. bis 16.9.1941, 003-EC, IMT 36, 105–109. A follow-up conference was held on 19 September with all state secretaries and many other key figures: T77/1086/141. KTB WiStab Ost Chefgr La, 23.9.41, T77/1204/914, Reich Marshal of the Greater German Reich, Plenipotentiary for the Four Year Plan, VP 15437/1, Berlin, 18 September 1941, NG-1853, Case XI, PDB 15C, pp. 10–12; KTB WiRüAmt/Stab, 19.9.41, p. 527; KTB WiStab Ost, 19.9.41. 10. Mark Spoerer and Joachim Fleischhacker, ‘Forced Laborers in Nazi Germany: Categories, Numbers, and Survivors’, Journal of Interdisciplinary History, 33 (2002) 169–204, here 176. 11. Ibid. 176 and 192. 12. Mark Spoerer, Zwangsarbeit unter dem Hakenkreuz. Ausländische Zivilarbeiter, Kriegsgefangene und Häftlinge im Deutschen Reich und im besetzten Europa, 1939–1945 (Munich 2001) 37. 13. Werner Abelshauser, ‘Germany: Guns, Butter, and Economic Miracles’, in: Mark Harrison (ed.), The Economics of World War II: Six Great Powers in International Comparison (Cambridge 1998) 122–176. 14. Klaus J. Bade, ‘Review of Ulrich Herbert: Fremdarbeiter, Politik und Praxis des “Ausländer-Einsatzes”’, Vierteljahrschrift für Sozial- und Wirtschaftsgeschichte, 74 (1987) 98–100. 15. Richard J. Overy, War and Economy in the Third Reich (Oxford 1994) 39 and 50–51. 16. Madajczyk, Die Okkupationspolitik Nazideutschlands, 216; Edward L. Homze, Foreign Labor in Nazi Germany (Princeton 1967) 36–37; Ulrich Herbert, ‘Forced Laborers in the Third Reich: An Overview’, International Labor and Working-class History, 58 (2000) 192–218, here 194; see for data on the number of prisoners of war, forced labourers and working Jews from each country: Mark Spoerer and Joachim Fleischhacker, ‘The Compensation of Nazi Germany’s

164 • Occupied Economies

17. 18. 19.

20. 21. 22.

23. 24. 25. 26.

27. 28. 29.

30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41.

Forced Labourers: Demographic Findings and Political Implications’, Population Studies, 56 (2001) 5–21, here 16–20. Human Losses in World War II, http://ww2stats.com/pop.html. Overy, War and Economy, 49–50 and 305. Dietmar Petzina, Die deutsche Wirtschaft in der Zwischenkriegszeit (Wiesbaden 1977) 189; also: Zentralarchiv für historische Sozialforschung, Universität zu Köln, Historische Statistik, ‘Beschäftigung und Löhne der deutschen Industriewirtschaft 1888–1954’, http://www.histat.gesis.org/ShowTime Series.php?show_hs=184B2665760CD00EC606B609FB2E4EA6&add_hs_ x=1. Abdelmegid M. Farrag, ‘The Occupational Structure of the Labour Force: Patterns and Trends in Selected Countries’, Population Studies, 18 (1964) 17–34. Overy, War and Economy, 304–305. Walter Naasner, Neue Machtzentren in der deutschen Kriegswirtschaft 1942– 1945. Die Wirtschaftsorganisation SS, das Amt des Generalbevollmächtigten für den Arbeitseinsatz und das Reichsministerium für Bewaffnung und Munition/Reichsministerium für Rüstung und Kriegsproduktion im nationalsozialistischen Herrschaftssystem (Boppard am Rhein 1994) 63. Ibid. 32–35. Joachim Fest, Speer: Eine Biographie (Frankfurt am Main 1999) 199. Overy, War and Economy, 309–310; Fest, Speer, 209. Fest, Speer, 200; Jonathan Steinberg, ‘The Third Reich Reflected: German Civil Administration in the Occupied Soviet Union, 1941–4’, English Historical Review, 110 (1995) 620–651, here 638. Naasner, Neue Machtzentren, 36. Ibid. 122. Françoise Berger, ‘L’exploitation de la main-d’oeuvre française dans l’industrie sidérurgique allemande pendant la Seconde Guerre mondiale’, Revue d’histoire moderne et contemporaine, 50 (2003) 148–181, here 151. Spoerer, Zwangsarbeit unter dem Hakenkreuz, 40–41. Ibid. 43. Ibid. 44. Ibid. 46. Madajczyk, Die Okkupationspolitik Nazideutschlands, 217. Spoerer, Zwangsarbeit unter dem Hakenkreuz, 45. RGVA, Collection 1458, Inventory 3, File 77, p. 73. Madajczyk, Die Okkupationspolitik Nazideutschlands, 224. Spoerer, Zwangsarbeit unter dem Hakenkreuz, 46–48; Madajczyk, Die Okkupationspolitik Nazideutschlands, 219 et seq. Madajczyk, Die Okkupationspolitik Nazideutschlands, 216. Ibid. 245–246; own calculations. Ibid. 216–218.

The Hunt for Labour • 165 42. Angus Maddison, Dynamic Forces in Capitalist Development. A Long-run Comparative View (Oxford 1991) passim; own calculations. 43. Mark Harrison, ‘The Economics of World War II: An Overview’, in: Harrison, Economics of World War II, 1–42, here 3; Madajczyk, Die Okkupationspolitik Nazideutschlands, 234. 44. Warsaw Ghetto Database, http://warszawa.getto.pl/index.php?show=kalendarium. 45. Harrison, ‘Economics of World War II’, 7. 46. Spoerer and Fleischhacker, ‘Forced Laborers in Nazi Germany’, 178. 47. ‘[175] Besprechung zwischen Hitler und Wilhelm Keitel, Chef des Wehrmachtsamts im Reichskriegsministerium, über die Verwaltung Polens, 17.10.1939’, in: Wolgang Michalka (ed.), Deutsche Geschichte 1933–1945. Dokumente zur Innen- und Außenpolitik (Frankfurt am Main 2002 2nd ed.) 234–235. Also: RGVA, Collection 1458, Inventory 3, File 77, p. 73. 48. ‘[179] Heinrich Himmler: “Einige Gedanken über die Behandlung der Fremdvölkischen im Osten,” 15.5.1940’, in: Michalka, Deutsche Geschichte, 1933– 1945, 238–239. 49. Madajczyk, Die Okkupationspolitik Nazideutschlands, 218 et seq. 50. Herbert, ‘Forced Laborers in the Third Reich’, 194. 51. Madajczyk, Die Okkupationspolitik Nazideutschlands, 267 and 287. 52. Ibid. 245. 53. Eugene Davidson, The Trial of the Germans: An Account of the Twenty-two Defendants before the Nuremburg Court (New York 1966). 54. Herbert, ‘Forced Laborers in the Third Reich’, 194. 55. Spoerer and Fleischhacker, ‘Forced Laborers in Nazi Germany’; Ulrich Herbert, ‘Einleitung des Herausgebers’, in: Ulrich Herbert (ed.), Europa und der ‘Reichseinsatz’. Ausländische Zivilarbeiter, Kriegsgefangene und KZ-Häftlinge in Deutschland (Essen 1991) 7–25, here 9–14. 56. Herbert, ‘Forced Laborers in the Third Reich’, 187. 57. Spoerer and Fleischhacker, ‘Forced Laborers in Nazi Germany’, 187. 58. Guy Vanthemsche, ‘De fysionomie van de werkloosheid in België tijdens de jaren dertig (Deel 2)’, Belgisch Tijdschrift voor nieuwste geschiedenis, 20 (1989) 1–106, here 10; G. P. den Bakker and W. van Sorge, ‘Het onbenut arbeidsvolume in het Interbellum’, Economisch- en Sociaal-Historisch Jaarboek, 54 (1991) 212–240. 59. Robert Salais, ‘Why Was French Unemployment so Low during the 1930s?’ in: Barry J. Eichengreen and T. J. Hatton (eds.), Interwar Unemployment in International Perspective (Dordrecht 1988) 247–288; Alan S. Milward, The New Order and the French Economy (Oxford 1970) 261. 60. Hein A. M. Klemann, Nederland 1938–1948. Economie en samenleving in jaren van oorlog en bezetting (Amsterdam 2002) 65. 61. NA, The Hague, Werkarchief Wentholt 1/XII, 308: Bespreking op 21 Mei 1940 van den Regeeringscommissaris Dr. Ir. Ringers inzake tewerkstelling van

166 • Occupied Economies

62.

63. 64.

65. 66.

67.

68. 69. 70. 71.

werkloozen; L. de Jong, Het Koninkrijk der Nederlanden in de Tweede Wereldoorlog (The Hague 1969–1991) part 14, 213–215; Sophie de Schaepdrijver, De Groote Oorlog. Het koninkrijk België tijdens de Eerste Wereldoorlog (Amsterdam 1999 5th ed.) 215 et seq.; Hein A. M. Klemann, Nederland 1938– 1948, 62 et seq. Spoerer and Fleischhacker, ‘Compensation of Nazi Germany’s Forced Labourers’, 17. From older literature it is rather difficult to get exact information about the number of French prisoners of war working in Germany. The data are diverse and hardly reliable. Milward, New Order, 260 et seq.; Alfred Sauvy, La vie économique des Français de 1939 à 1945 (Paris 1978) 140–146; Paul Sanders, Histoire du marché noir 1940–1946 (Paris 2001) 39; Pierre Barral, ‘Agriculture and Food Supply in France during the Second World War’, in: Bernd Martin and Alan S. Milward (eds.), Agriculture and Food Supply in the Second World War (Ostfildern 1985) 89–102, here 89–90. Etienne Verhoeyen, België bezet 1940–1944—een synthese (Brussels 1991) 204. RGVA, Collection 1458, Inventory 16, File 121, Die von der Militärverwaltung gesteuerten, im deutschen Interessen in 1942 aufgebrachten Leistungen Belgiens und Nordfrankreichs, 57; RGVA, Collection 1458, Inventory 16, File 121, Dienstleistungsverkehr, 5; Dirk Luyten, ‘Travail obligatoire’, in: Paul Aron and José Gotovitch (eds.), Dictionnaire de la Seconde Guerre mondiale en Belgique (Brussels 2008) 439–445, here 444. Klemann, Nederland 1938–1948, 432. RGVA, Collection 1458, Inventory 16, File 121, Vermerk betr. Bericht des Reichskommissars Dr. Seyss-Inquart, der 12. Juni 1941, 1; Klemann, Nederland 1938–1948, 432–433. According to Klemann’s calculations, in 1941 there were 134,000 Dutch workers in Germany, while the Reichsarbeitsblatt thought there were only 93,000 in September 1941, but the data of this source are probably too low. Der Einsatz ausländischer Arbeitskräfte in Deutschland. Sonderdruck aus dem Reichsarbeitsblatt (Berlin 1942) 4. According to a German wartime publication, until September 1941 29,000 volunteer workers came from Denmark, among whom were 3,500 women. Der Einsatz ausländischer Arbeitskräfte in Deutschland, 4. Militärbefehlshaber, Lagebericht April–Mai 1942, http://www.ihtp.cnrs.fr/ prefets/de/d040542Mbfhtml#_ftnref191. Harrison, ‘Economics of World War II’, 3 and 7–9. B. A. Sijes, De arbeidsinzet. De gedwongen arbeid van Nederlanders in Duitsland, 1940–1945 (The Hague 1990 2nd ed.) 113. Nicholas Kaldor, ‘The German War Economy’, Review of Economic Studies, 13 (1945–1946) 33–52, here 37; Klemann, Nederland 1938–1948, 433; Spoerer and Fleischhacker, ‘Compensation of Nazi Germany’s Forced Labourers’; Maddison, Dynamic Forces, 266–267; Michalka, Deutsche Geschichte 1933–1945, 365; own calculations.

The Hunt for Labour • 167 72. Kaldor, ‘German War Economy’, 37. 73. Karl-Heinz Schlarp, ‘Ausbeutung der Kleinen: Serbien in der deutschen Kriegswirtschaft 1941–1944’, in: Johannes Bähr and Ralf Banken (eds.), Das Europa des ‘Dritten Reichs’: Recht, Wirtschaft, Besatzung (Frankfurt am Main 2005) 211. 74. Ulrich Herbert, ‘Labour and Extermination: Economic Interest and the Primacy of Weltanschauung in National Socialism’, Past and Present, 138 (1993) 144– 195, here 150. 75. Roswitha Czollek and Dietrich Eichholtz, ‘Die deutschen Monopole und der 22. Juni 1944. Dokumente zu Kriegszielen und Kriegsplanung führender Konzerne beim Überfall auf die Sowjetunion’, Zeitschrift für Geschichtswissenschaft, 15 (1967) 64–76; Roswitha Czollek, ‘Zur wirtschaftspolitischen Konzeption des deutschen Imperialismus beim Überfall auf die Sowjetunion’, Jahrbuch für Wirtschaftsgeschichte, 1 (1968) 141–181; Hartmut Schustereit, ‘Planung und Aufbau der Wirtschaftsorganisation Ost vor dem Rußlandfeldzug-Unternehmung “Barbarossa” 1940/41’, Vierteljahrschrift für Sozial- und Wirtschaftsgeschichte, 70 (1983) 51–70. 76. James D. Morrow, ‘The Institutional Features of the Prisoners of War Treaties’, International Organization, 55 (2001) 971–991, here 984; ‘[153] Richtlinien für die Behandlung politischer Kommissare (“Kommissarebefehl”), 6.6.1941’, in: Michalka, Deutsche Geschichte 1933–1945, 204–205; ‘The Trial of German Major War Criminals. Sitting at Nuremberg, Germany. 7th January to 19th January, 1946. Twenty-Ninth Day: Tuesday, January 8th, 1946 (Part 2 of 10)’, http://www.nizkor.org/hweb/imt/tgmwc/tgmwc-04/tgmwc-04-29-02.shtml. 77. Herbert, ‘Einleitung des Herausgebers’, 9–14; also: ‘[149] Hitler fordert den “ideologischen Vernichtungskrieg” gegen die Sowjetunion, 30.3.1941’, in: Michalka, Deutsche Geschichte 1933–1945, 199–201. 78. Field Marshal Walther von Reichenau on the ideological mission of the German army in the Soviet Union, October 1941, http://h-net.org/~german/gtext/nazi/ (English translation corrected from the German original). 79. Alexander Dallin, German Rule in Russia, 1941–1945: A Study of Occupation Policies (London 1957) 428–429. 80. Herbert, ‘Labour and Extermination’, 150. 81. Spoerer, Zwangsarbeit unter dem Hakenkreuz, 72. 82. Herbert, ‘Labour and Extermination’, 165–166. 83. Between June 1941 and January 1942 the Germans captured 3,412,000 Soviet soldiers. 84. Herbert, ‘Labour and Extermination’, 167. 85. Human Losses in World War II. 86. Ibid. 87. S. P. MacKenzie, ‘The Treatment of Prisoners of War in World War II’, Journal of Modern History, 66 (1994) 487–520, here 508.

168 • Occupied Economies 88. Ibid. 509. 89. Spoerer, Zwangsarbeit unter dem Hakenkreuz, 72. 90. Human Losses in World War II. 91. MacKenzie, ‘Treatment of Prisoners of War’, 509; Homze, Foreign Labor in Nazi Germany, 82. 92. Richard J. Overy, Why the Allies Won (London 1995) passim; Harrison, ‘Economics of World War II’, 10; Ian Kershaw, Hitler 1936–1945: Nemesis (Harmondsworth 2000) 440–443 and 503; Sebastian Haffner, Anmerkungen zu Hitler (Munich 200123) passim; Overy, War and Economy, 252 and 353. 93. Dallin, German Rule in Russia, 428. 94. Herbert, ‘Labour and Extermination’, 166. 95. Overy, Why the Allies Won, passim; Harrison, ‘Economics of World War II’, 10; Kershaw, Hitler 1936–1945, 440–443 and 503; Haffner, Anmerkungen zu Hitler, passim; Overy, War and Economy, 252 and 353. 96. Order of Hitler to Sauckel according to Speer. Albert Speer, Erinnerungen (Frankfurt am Main 1969) 233; further see: Fest, Speer, 198–209; Overy, War and Economy, 309. 97. Berger, ‘L’exploitation de la main-d’oeuvre française’, 151; Pierre Laval, Laval parle. Notes et mémoires rédigés par Pierre Laval dans sa cellule, avec une préface de sa fille et de nombreux documents inédits (Paris 1948) 58. 98. Lagebericht Militärbefehlshaber in Frankreich, Juni–September 1942, http:// www.ihtp.cnrs.fr/prefets/de/d060942mbf.html#_ftn30. 99. Berger, ‘L’exploitation de la main-d’oeuvre française’, 164; Lagebericht Militärbefehlshaber in Frankreich, October–December 1942, http://www.ihtp.cnrs. fr/prefets/de/d101242mbf.html#_ftn107. 100. Lagebericht Militärbefehlshaber in Frankreich, Juni–September 1942, http:// www.ihtp.cnrs.fr/prefets/de/d060942mbf.html#_ftn30. 101. Klemann, Nederland 1938–1948, 85 et seq. 102. Der Militärbefehlshaber in Frankreich, Paris, den 9. November 1942, Lagebericht: Juni/September 1942, http://www.ihtp.cnrs.fr/prefets/de/d060942mbf.html. 103. Patrick Nefors, Industriële collaboratie in België. De Galopindoctrine, de emissiebank en de Belgische industrie in de Tweede Wereldoorlog (Leuven 2000) 218. 104. Overy, War and Economy, 358; Der Militärbefehlshaber in Frankreich, Paris, den 31.5.42: Lagebericht April/Mai 1942, http://www.ihtp.cnrs.fr/prefets/de/ d040542mbf.html. 105. Der Militärbefehlshaber in Frankreich, Paris, den 27. Januar 1943: Lagebericht Oktober/Dezember 1942, http://www.ihtp.cnrs.fr/prefets/de/d101242mbf.html. 106. NA, The Hague, Handel en Nijverheid 9839: Notitie: Concentratie van bedrijven 28 augustus 1942. 107. Nefors, Industriële collaboratie in België, 218. 108. Niod Amsterdam 93, B4: Tätigkeitsbericht der ZAST für Januar und Februar 1943, Den Haag den 15. März 1943.

The Hunt for Labour • 169 109. J. Mensink, De kolenvoorziening van Nederland tijdens den Tweeden Wereldoorlog (Amsterdam 1946) 181; HUA Machinefabriek Jaffa 153: Der Generalkommissar für Finanz und Wirtschaft zu Dr. Ing. Idel, Essen, den 1. Juli 1942. 110. Lagebericht Militärbefehlshaber in Frankreich, April–May 1942, http://www. ihtp.cnrs.fr/prefets/de/d040542Mbfhtml#_ftnref186. 111. Lagebericht Militärbefehlshaber in Frankreich, Juni–September 1942, http:// www.ihtp.cnrs.fr/prefets/de/d060942Mbfhtml#_ftn30. 112. Klemann, Nederland 1938–1948, 271. 113. Naasner, Neue Machtzentren, 122. 114. Lagebericht Militärbefehlshaber in Frankreich, April–June 1943, http://www. ihtp.cnrs.fr/prefets/de/d040643Mbfhtml#_ftnref150. 115. Lagebericht Militärbefehlshaber in Frankreich, June 1944, note 170, http:// www.ihtp.cnrs.fr/prefets/de/d0644Mbfhtml#_ftn170. 116. Naasner, Neue Machtzentren, 118. 117. Lagebericht Militärbefehlshaber in Frankreich, July–September 1943, http:// www.ihtp.cnrs.fr/prefets/de/d070943Mbfhtml#_ftnref177. 118. Der Militärbefehlshaber in Frankreich, Paris, den 27. Januar 1943: Lagebericht Oktober /Dezember 1942, http://www.ihtp.cnrs.fr/prefets/de/d101242mbf. html. 119. Klemann, Nederland 1938–1948, 433; Verhoeyen, België bezet 1940–1944, 205; according to the German authorities in Paris, 122,000 French workers were sent in 1942 and 420,000 in 1943. Der Militärbefehlshaber in Frankreich, Paris, den 31. Januar 1942: Lagebericht Dezember 1941/Januar 1942, http://www.ihtp.cnrs.fr/ prefets/; Der Militärbefehlshaber in Frankreich. Paris, den 27. Januar 1943: Lagebericht Oktober/Dezember 1942, http://www.ihtp.cnrs.fr/prefets/de/d101242mbf. html. 120. Klemann, Nederland 1938–1948, 272 et seq.; Speer, Erinnerungen, 197–198; Der Militärbefehlshaber in Frankreich, Paris, den 27. Januar 1943: Lagebericht Oktober/Dezember 1942, http://www.ihtp.cnrs.fr/prefets/de/d101242mbf.html. 121. Spoerer and Fleischhacker, ‘Forced Laborers in Nazi Germany’, 178. 122. Berger, ‘L’exploitation de la main-d’oeuvre française’, 180. 123. Peter Liberman, Does Conquest Pay? The Exploitation of Occupied Industrial Societies (Princeton 1996) 54. 124. Homze, Foreign Labor in Nazi Germany, 190. 125. Spoerer and Fleischhacker, ‘Forced Laborers in Nazi Germany’, 187. 126. Klemann, Nederland 1938–1948, 275; own calculations. 127. Calculation based on the previously mentioned assumptions: Maddison, Dynamic Forces, 266–267. 128. Klemann, Nederland 1938–1948, 275. 129. Heydrich, who was a fanatic anti-Semite and racist, in 1942 became responsible for the destruction of the Jews. Because his policy was so dangerous, the Allies sent Czech agents to assassinate him. He was shot on 27 May but did not die

170 • Occupied Economies until June. In revenge, Himmler ordered the male population of two Czech villages to be murdered and these towns to be burned down. 130. Spoerer, Zwangsarbeit unter dem Hakenkreuz, 40–43. 131. Ibid. 42. 132. Arne Radtke-Delacor, ‘La place des commandes allemandes à l’industrie Française dans les stratégies de guerre nazies de 1940–1944’, in: Olivier Dard, Jean Claude Daumas and François Marcot (eds.), L’Occupation, l’État français et les entreprises (Paris 2000) 11–24, here 19. 133. Lagebericht Militärbefehlshaber in Frankreich, October–December 1943, note 90, http://www.ihtp.cnrs.fr/prefets/de/d101243Mbfhtml#_ftn90. 134. Niod Amsterdam 93 B4: Tätigkeitsbericht der ZAST für September und October 1943, Dezember 1943. 135. J. A. Freseman Gratama, ‘Het herstel en de ontwikkelingsmogelijkheden van onzen industrie’, Economisch-Statistische Berichten, 24 April 1946, 263– 265. 136. Spoerer and Fleischhacker, ‘Forced Laborers in Nazi Germany,’ 187. 137. Ibid. 187. 138. Spoerer, Zwangsarbeit unter dem Hakenkreuz, 50 et seq.; also: Madajczyk, Die Okkupationspolitik Nazideutschlands, 222. 139. Madajczyk, Die Okkupationspolitik Nazideutschlands, 222–223. 140. Fest, Speer, 200; Steinberg, ‘Third Reich Reflected’, 638. 141. Madajczyk, Die Okkupationspolitik Nazideutschlands, 225. 142. Ibid. 222. 143. Ibid. 225. 144. John Lindberg (League of Nations), Food, Famine and Relief 1940–1946 (Geneva 1946) 21. 145. Klaus-Peter Friedrich, ‘Collaboration in a “Land without a Quisling”: Patterns of Cooperation with the Nazi German Occupation Regime in Poland during World War II’, Slavic Review, 64 (2005) 711–746, here 740. 146. Madajczyk, Die Okkupationspolitik Nazideutschlands, 245. 147. Spoerer and Fleischhacker, ‘Forced Laborers in Nazi Germany’, 187. 148. Spoerer, Zwangsarbeit unter dem Hakenkreuz, 72. 149. Dallin, German Rule in Russia, 428. 150. Steinberg, ‘Third Reich Reflected’, 638. 151. Ibid. 638; Dallin, German Rule in Russia, 430. 152. Spoerer, Zwangsarbeit unter dem Hakenkreuz, 73–75. 153. Ibid. 74. 154. Steinberg, ‘Third Reich Reflected’, 638. 155. Dallin, German Rule in Russia, 431. 156. Spoerer, Zwangsarbeit unter dem Hakenkreuz, 79. 157. Liberman, Does Conquest Pay? 36–37. 158. Spoerer, Zwangsarbeit unter dem Hakenkreuz, 75–76.

The Hunt for Labour • 171 159. Hans Felix Zeck, Erfahrungen mit dem Einsatz südosteuropäischer Arbeiter (Berlin 1943) 13. 160. Spoerer and Fleischhacker, ‘Forced Laborers in Nazi Germany’, 187. 161. Sabine Rutar, ‘Arbeit und Überleben in Serbien: Das Kupfererzbergwerk Bor im Zweiten Weltkrieg’, Geschichte und Gesellschaft, 31 (2005) 101–134, here 118–119. 162. Karl-Heinz Schlarp, Wirtschaft und Besatzung in Serbien 1941–1944. Ein Beitrag zur nationalsozialistischen Wirtschaftspolitik in Südosteuropa (Stuttgart 1986) 216. 163. Rutar, ‘Arbeit und Überleben in Serbien’, 127–128. 164. PA-AA, HaPol IVa Griechenland, Finanzwesen 16, vol. 3: ‘Lohnüberweisungen griechischer Arbeiter’, in: Runderlaß des RWM no. 15/42 D.St./R.St. of 11 February 1942. 165. Reports in BA Potsdam, film nos. 43105, 18730, 43107. 166. PA-AA, HaPol IVa Griechenland, Wirtschaftswesen 1, vol. 2: ‘Tagesordnung für die beim Bevoll. des Reiches für Griechenland am 9. und 10. Juni 1942 stattfindenden Monatsbesprechungen’. 167. Ewerth Lutz, Der Arbeitseinsatz von Landesbewohnern besetzter Gebiete des Ostens und des Südostens im zweiten Weltkrieg (Tübingen 1954) 8, 208. 168. Hadziiossif estimates that only 1.1 per cent of the Greek population capable of gainful employment was used for Reichseinsatz, while 10 per cent worked for the Germans in Greece; see: Christos Hadziiossif, ‘Griechen in der deutschen Kriegsproduktion’, in: Herbert, Europa und der ‘Reichseinsatz’, 201–233, here 226. 169. BA, R 7/1040: Letter of 27 October 1942. 170. See monthly report of the WO Athen for March 1943: ZStAP, film no. 43107, partly printed in Martin Seckendorf and Günter Keber, Die Okkupationspolitik des Deutschen Faschismus in Jugoslawien, Griechenland, Albanien, Italien und Ungarn, 1941–1945 (Berlin 1992) 231. 171. Schlarp, Wirtschaft und Besatzung in Serbien, 415; Zeck, Erfahrungen mit dem Einsatz südosteuropäischer Arbeiter, 4. 172. BA MA, RW 29/106: Situation reports for January and February 1943 from the WO Athen. 173. Deutsche Nachrichten in Griechenland, 13 March 1943. 174. Madajczyk, Die Okkupationspolitik Nazideutschlands, 216. 175. Spoerer and Fleischhacker, ‘Forced Laborers in Nazi Germany’, 178. 176. Nuremberg Trial Proceedings, Volume 20, One-Hundred Ninetieth Day. Tuesday, 30 July 1946, Morning session, http://avalon.law.yale.edu/imt/07-30-46.asp. 177. Madajczyk, Die Okkupationspolitik Nazideutschlands, 245. 178. Willi A. Boelcke, Die Kosten von Hitlers Krieg. Kriegsfinanzierung und finanzielles Kriegserbe in Deutschland 1933–1948 (Paderborn 1985) 98. 179. Harrison, ‘Economics of World War II’, 3 and 7–8; own calculations.

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–11– Exploitation: A Conclusion When Nazi Germany overran Central Europe—Austria and Czechoslovakia—the reasons were at least for a substantial part economic. Berlin hoped to gain heavy industrial capacity, coal mines and, primarily in Austria and Sudetenland, additional troops for its armies. Important mines and substantial parts of the heavy industry of Bohemia and Moravia were taken over. The Skoda car factories, for instance, became subordinated to the Reichswerke Hermann Göring AG, while the economy of the new Protectorate was in fact ruled as if it were just another part of the German economy. Austria simply became part of the Reich. Consequently, the exploitation of these areas of Europe was automatically concentrated on taking the output of ongoing production, thus on keeping these economies going. Taking production factors was initially of minor importance and would become significant in the Protectorate only in 1942 and 1943. The same is true for Western Europe. The conquest of the western parts of the Continent had strategic reasons and no economic motives whatsoever. The decision on what to do with these economies therefore was not clear, apart from the fact that these countries should be exploited. In 1940, however, Berlin had no idea on how to use the recently acquired industrial capacity to its advantage. Although the German economy was more or less regulated and concentrated on war production by the Four Year Plan organization, there was no overall plan for the country’s war economy. Partly this was inherent in the fact that although Göring did everything possible to seize power wherever he met it, his organization was far from the only body involved in the administration of war production. Decision-making in the Third Reich was a process of power politics, and unlike in democratic states, it had nothing to do with debates and discussion among its leaders. To stay on top, every high-ranking Nazi or bureaucrat had to get the better of his rivals and guard his corner jealously, thus making a planned economy impossible. Hitler’s approach only served to stimulate these rivalries as he opposed any setting up of councils to debate problems. After 1938, for instance, the Reich Cabinet never met again, as in such a cabinet Hitler could be confronted with unwanted opposition. Consultations among junior leaders could even result in factions threatening the position of the Führer himself. When the power struggle between the leaders did not result in the desired outcome, or when a matter of high politics was at stake, Hitler made decisions alone, advised only by those he wanted to consult. When problems seemed to be unsolvable, he appointed plenipotentiaries—such as Göring as leader of the Four Year Plan organization. Although such appointments were backed by his

– 173 –

174 • Occupied Economies personal power, and despite the overall authority they appeared to carry, this was not the case in practice as Hitler failed to cancel earlier appointments, thus leaving others free to continue meddling in the same problems.1 In the case of the Four Year Plan, it resulted in ongoing conflicts between Göring and, among others, the Finance Ministry, the Reich Ministry for Armament and Ammunition, the Wehrmacht’s economic department (WiRüAmt) and the German business community. These rivalries made any unambiguous plan for the German war economy impossible. Without a clear central plan for the German economy, it was also impossible to develop individual plans for each of the economies of the newly conquered countries. Therefore, the only possible way of exploiting the newly occupied territories seemed to be a more or less undisguised plundering campaign. In the western parts of the Continent, just as elsewhere, stocks of raw materials and foodstuffs were taken—although at least in the West, the companies who lost these stocks were compensated, but from the resources of their own country. At the same time, the authorities in the occupied countries were warned that their unemployed would be sent to Germany to work in its industry. They were thus forced to accept production for Germany. After the appalling consequences of the German forced labour policy in Belgium and Poland in 1916, it seemed the only way to avoid a repeat of such disastrous effects for their people. In view of the plundering, the German governors in all the occupied countries became worried about their missions. It was their duty to win the locals over to the German side or at least to keep them quiet. Sending the unemployed to Germany would end any hope of success in this respect. They were therefore looking for ways to stimulate the economies of these countries to the German advantage. To achieve that without a central plan, they had to link these economies to the German war economy somehow. It was Seyss-Inquart’s idea of Auftragsverlagerung—the transfer of surplus orders from the overburdened German companies to companies in the occupied territories—that showed the way. General Georg Thomas, head of the Wehrmacht’s economic department, came up with similar ideas at about the same time. As a consequence, from the late summer of 1940 until late 1941, enormous quantities of orders were transferred to France, Belgium and the Netherlands, resulting in the economic recovery of these countries. The situation normalized, and although the rapidly diminishing number of unemployed was put under some pressure to accept jobs in Germany, most of the people, the small Jewish minority excepted, could dry their tears and resume a relatively normal life again. It was clear in 1939 that the situation in Eastern Europe was going to be quite different when two-thirds of Poland fell into German hands. Half of these territories were incorporated into the Reich, while the other half became the so-called General Government. In the annexed parts of Poland, valuable industries and a substantial number of farms were taken over by the Germans. The people who were not of use as cheap labour in the new parts of Germany or elsewhere in the Reich were herded into the General Government. There, those for whom the Germans had no use were

Exploitation: A Conclusion • 175 put into labour camps, while most Jews—10 per cent of the pre-war Polish population— were sent to ghettos, where they were forced to work. As the economy of the General Government was of little use to the German war machine, it was plundered. Huge quantities of raw materials and foodstuffs were taken, thus undermining the light industries of these regions. The Nazis’ aim was to impoverish the population so that it could be used at any time as cheap labour for the Reich. In fact, though, Germany already had an immediate need for them, as such enormous numbers of men had been conscripted into the German army in 1939 that there was now a manpower shortage in the Reich for harvesting the crops from the fields. Huge numbers of Polish labourers were engaged to do the work, and when it became difficult to get enough volunteers, slave-hunting practices, which would be used elsewhere in Europe only from 1942 on, became common in Poland already as early as 1939. The use of Slavic Poles in the German economy was disputed. Nazi fanatics thought it irresponsible to allow these racial inferiors to enter German soil. Although the fact that there was no alternative answer to the labour problem protected these people from the fate of the Jews, it could not protect them from severe discrimination. Poles, and later Soviet citizens, who worked in Germany were isolated as much as possible from the native population. As the Nazi regime had the concept that the German people needed to expand into Eastern Europe, the people there were an obstacle to this. Ideas about destroying them and their economies, either by driving them further east or by letting them die in order to create freedom of movement for the Germans, were quite common at that time. The use of their labour helped save the Poles from this fate, as did industry for the Czechs, but in the USSR Germany saw not only racial inferiors, but also an ideological enemy. Hitler saw everything he hated in the peoples and culture of the Soviet Union, and even when it was not there—a Jewish conspiracy, for instance—he projected it onto this evil empire. Thus there were no objections to the total destruction of the Soviet economy except for some heavy industry, especially extraction industries— such as the rich oil fields of the Caucasus which Berlin hoped to acquire. After the Red Army had been defeated—which was anticipated to be possible within a few months, if not weeks—German settlers would take over the land and rebuild it. Most of the Slavic people living there would only be an obstacle to these plans, although some would be needed to do the inferior, dirty jobs. The fact that a substantial part of the population would die during the conquest of the East presented no problem to the Germans. Any ideas of obtaining labour from occupied parts of the USSR to fill the most pressing vacancies in the German economy were therefore blocked by the fanatics, who thought that bringing Slavic Bolsheviks into Germany was a security threat. Destroying them was not a problem. The labour shortage would be solved with the fall of Stalin’s empire, since this would make the demobilization of the army possible. Hitler himself agreed with these ideas. At that time, Germany was having difficulty in trying to feed its population. This had little to do with the Allied blockade, which was preventing only 10 per cent of

176 • Occupied Economies pre-war continental food consumption from getting through—a shortage that could easily be compensated for by adapting the diet. The main problem was that the military was consuming such an enormous share of the food supplies. In addition, the transportation of food from Germany deep into the USSR would result in major difficulties. This could be avoided by obtaining food from the territories where the war was being fought. In other words, where the attack on Stalin’s Russia was concerned, Berlin decided that the war should feed the war. In practice, this meant that the urban populations of the Ukraine and Belorussia were doomed to starve in order to feed the German armed forces. This was quite simply done by not organizing any food allowances for the local populations or for Soviet prisoners of war (POWs). The army was ordered to let them starve. As a consequence of this and the fact that Slavic Bolsheviks were not allowed to enter German territory, the circa 3.4 million Soviet POWs taken by Germany during the first months of the Russian campaign were left to their fate. Less than half of these young men would survive this nightmare. Although at that time Germany had an enormous manpower shortage, this was thought to be irrelevant since once the Red Army collapsed—and it was the general opinion that it could not hold out much longer—the triumphant soldiers would return home to fill the vacancies. As a result, it was the Soviet counter-attack of December 1941 which, probably even more than the US entry into the war, forced the rethinking not only of the military strategy, but also of the organization of the war economy and the exploitation of occupied Europe. Until early 1942, Germany placed substantial orders in Western Europe, letting these countries produce for its warfare without interfering deeply in their economies. From the Protectorate it also demanded that its industry produce for Germany. Apart from that, the Nazis ensured that in these parts of the Continent, just as everywhere else except the USSR, the unemployed were persuaded to work in Germany. The Germans also tried to motivate volunteers to do the same. In this way, Berlin tied the labour markets of occupied Europe to the tight German labour market. To prevent uncontrolled price and wage inflation resulting from the German demands, the occupier also made sure that where the economies were of any importance, price and wage control programmes were in place. Substantial parts of the Polish population had already been persuaded to go to Germany, mainly to harvest the crops. After the attack on Soviet Russia, the food production of the newly conquered territories was used to feed the German troops, leaving the locals to starve. Apart from food supplies, the economies in these regions, as in South Eastern Europe, were of importance only in so far as they produced raw materials. In 1942 Speer was ordered to exploit German-controlled Europe more efficiently, but at that time his enemies in the German bureaucratic machinery—in this case, the Nazi Party, which feared his growing power—managed to pre-empt his next move when Bormann convinced Hitler to prohibit labour conscription for German women. Since half of all German women between the ages of 15 and 65 were not employed, they were the only realistic source of additional labour, especially as the majority

Exploitation: A Conclusion • 177 of the Soviet POWs had been murdered. The decision not to order German women to accept a job meant that Germany now had no alternative other than to procure the necessary workers from occupied Europe. At that point, the German war economy had obtained three million foreign labourers from across Europe, 60 per cent of whom were POWs. By 1942 it seemed unlikely that the Germans would take further substantial numbers of prisoners, so the required labour force would have to be obtained from the civilian societies of occupied Europe. The result was an unscrupulous hunt for labour organized by Fritz Sauckel. The effects of Sauckel’s policy were counterproductive. Germany managed to acquire just 7–9 per cent of the available local labour from all the countries across occupied Europe, other than the Balkans. Their attempts to get more by using increasing force resulted only in growing opposition, which increased partisan activity and led to the disappearance of those who felt threatened into the neighbouring hills, woods and other hiding places. As a consequence, the economies of the countries where this policy was implemented lost at least twice the number of labourers that ever arrived in Germany. Berlin did not consider that a problem in the Soviet Union and Poland, although the resulting erosion of all German authority stimulated guerrilla warfare. In Western Europe, Speer believed the losses resulting from these raids to be an enormous problem, as the economies of these countries were more and more concentrated towards the German war needs and were included in the Berlin plans. The occupied economies now slumped as they lost enormous amounts of the labour that never arrived in Germany. As Speer’s Zentrale Planung had managed to incorporate these economies more and more into the German economic plan and an evergrowing part of their production went to Germany, weakening these economies was clearly not in the German interests. Therefore, in September 1943, Speer terminated this policy throughout Western Europe and the Protectorate. After the December 1941 downturn in the military situation, Speer was ordered to systematize the exploitation of both the German and the occupied economies. In this crucial period of the war, the ever-continuing struggles for power in the top echelons of the Reich, now especially between Bormann and Speer, compromised any hope of a systematic and unanimous policy. Consequently, the economies of the occupied countries were undermined. Instead of systematic exploitation, which was the target of the 1942 reforms, damaging contradictory tendencies in the German economic policy were implemented in the more highly developed regions of Europe. On the one hand, the Germans regulated and stimulated production to take the output, while on the other hand they were hijacking the factors of production, especially labour. Nevertheless, during the occupation period as a whole, Western Europe and the Czech Protectorate were of utmost importance to the German war economy, producing around 20 per cent of the total German war needs. In addition, some 7 to 9 per cent of the labour force of these countries—almost all industrial labourers, of which a substantial number were educated and skilled—went to Germany to strengthen the economy of this country which was struggling for survival. In the

178 • Occupied Economies less-developed economies of Eastern and South Eastern Europe, Germany was, after some hesitation, interested only in some of their raw materials, foodstuffs and labour. The amount of goods and services obtained from those countries was limited, and this was hardly compensated for by a relatively high influx of labourers from these countries, as had been the original intention. Apart from the warfare itself and the Nazis’ cruel treatment of the local Slav population and Jews, their labour hunts also proved disastrous here. The German historian Hans Umbreit has made it clear that the Nazis, after occupying almost all of Europe, had the choice between slaughtering the cow and milking her, while the Flemish historian Patrick Nefors has observed that during the entire occupation of Europe, the Germans wavered between taking production factors— especially raw materials and labour—and taking production output.2 In each of the occupied countries, the actual policy became a mix between these two extremes. From the German exploitation of occupied Europe it becomes clear that an occupier can gain enormous profits from exploiting any country it occupies as long as this is concentrated on taking the output of a regulated, but more or less normal production process. Not only is such a policy advantageous to the occupier, but the damage done to the occupied country’s economy is limited as well. It is even likely that, as a result of orders from the occupier, the production capacity will grow, although not always in a way that is beneficial after the war. That Western European economies eventually benefited was because the Germans, after a brief period of indecision, chose to exploit these countries in this way. When, however, the removal of production factors is the chosen method, this will in fact result in slaughtering the cow—to the disadvantage of both occupier and occupied. In South Eastern Europe, and especially in occupied Poland (i.e. the General Government) and in the Soviet Union, that was what happened. Apart from undermining these economies, this stirred up so much opposition that it became more difficult to obtain workers in these countries than in the western parts of the Continent. The fact that Speer interfered in the West before Sauckel could drive his policy through to extremes protected those countries from a fate similar to that of Poland and the Balkans. Excluding the goods and services that the Germans either didn’t pay for at all or paid far too low a price for—or took after 1944—overall the Germans obtained at least 22.6 per cent of their war expenditures in goods and services delivered and paid for by occupied Europe. If the dependent, but not occupied European countries are included, this figure becomes 28.6 per cent. Götz Aly’s idea that by exploiting the occupied territories, Hitler was able to pass 70 per cent of his war costs on to foreigners is thus disproved. It was therefore not by bribery that Hitler was able to keep the German people willing to follow him and his aggressive policies.3 At the same time, Tooze’s idea that only 25 per cent of the costs of war were paid for by other economies is an underestimation.4 What is not taken into account in Tooze’s data is the withdrawal of labour from those countries, which was the most destructive element of the Germans’ exploitation. The financial value of the labour obtained was

Exploitation: A Conclusion • 179 probably not much more than 27.3 billion RM, or 6.6 per cent of the German war expenditures. In other words, Berlin managed to pass little more than a third of its war costs (35%) on to other European countries, which seems very little, especially when one takes into account the fact that before the war the overall production of the occupied territories was about 70 per cent higher than the German production. The war, with the Germans’ occupation policies and the resulting partisan activity, was, however, the most destructive in the Eastern and South Eastern regions of occupied Europe, while in the Western countries, at the point when the economies were starting to recover from defeat in the brief military campaign of 1940, the Germans’ introduction of Arbeitseinsatz proved to be destructive as well. The labour-hunting policy was in fact the most destructive element of the Germans’ exploitation policy. In Part 3 of this book we will therefore focus on the actual economic development of occupied Europe.

Notes 1. Ian Kershaw, Fateful Choices: Ten Decisions That Changed the World 1940– 1941 (London 2007) 59 et seq. 2. Hans Umbreit, ‘Les politiques économique allemandes en France’, in: Olivier Dard, Jean-Claude Daumas and François Marcot (eds.), L’Occupation, l’État français et les entreprises (Paris 2000) 25–35, here 27; Patrick Nefors, Industriele collaboratie in België. De Galopindoctrine, de emissiebank en de Belgische industrie in de Tweede Wereldoorlog (Leuven 2000) 64 et seq. 3. Götz Aly, Hitlers Volksstaat. Raub, Rassenkrieg und nationaler Sozialismus (Frankfurt am Main 2005 4th ed.) 326. 4. Adam Tooze, ‘Economics, Ideology and Cohesion in the Third Reich: A Critique of Goetz Aly’s Hitlers Volksstaat’, 10, http://www.hist.cam.ac.uk/academic_staff/ further_details/tooze-aly.pdf.

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Part 3. Economic Life

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–12– Economic Life during the Occupation: An Introduction Germany severely exploited occupied Europe, although the effects of this on the countries’ economies were not necessarily negative for all the countries concerned. Of course, in some cases the exploitation could become extremely destructive, especially where the Germans took not only the output but also the production factors, such as machinery, labour and raw materials. In some cases, they took even the population’s food supplies, which was probably the most destructive policy of all. This was done in a number of Eastern and South Eastern European countries where the Germans were not interested in the survival of the local population when they needed the food elsewhere, usually for their own soldiers. In France, however, where food imports were cut off by the blockade, between 10 and 20 per cent of the food production was also sent to Germany, thus undermining the nutritional levels of the local population.1 In addition, as a result of a shortage of coal supplies and transport facilities, in this country the industrial production for Germany never reached the targets the Nazis required. Not only were labourers hunted down to compensate for this lack of output, but, on top of that, so much food was taken that there was widespread scarcity among the local population. This never resulted in actual famine as it did in other countries, however. For some time, destruction was the characteristic element of the German economic policy in the greater part of occupied Europe, although there were periods when and countries where their methods of exploitation were less destructive and even boosted production. In places where the Germans needed local industries to manufacture specific products, mine raw materials or build fortifications, the economies did not slump at all. Nevertheless, at the end of the hostilities, the whole of the Continent experienced a severe economic setback. From 1942 on, all across occupied Europe—with the exception of the Scandinavian countries—the negative aspects of the exploitation as a consequence of the Arbeitseinsatz programme became apparent, while towards the end of the war in 1944 and 1945, the military activity and partisan wars which between 1941 and 1944 had been limited to Eastern and South Eastern Europe caused considerable damage in countries that for years had been out of reach of any fighting. In addition, the Germans financed the occupation and their exploitation in ways that caused monetary chaos and destabilized currencies, financial markets and banking systems across the Continent. Even where the

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184 • Occupied Economies effects of the Germans’ exploitation did not cause economic collapse, the public experienced severe impoverishment. Due to ignorance of the positive wartime economic developments, the experience of impoverishment felt by almost everyone tended to produce exaggerated memories in the post-war period of the actual scale of economic setback suffered. Partly this had psychological grounds. There were few who had not experienced the hardships of the period, if only minor ones, and no one wanted to be seen as having profited from the wartime situation. Nonetheless, it is a fact that substantial quantities of the production were taken and that, as a consequence, impoverishment was felt everywhere, even in countries where the decline in production was limited to certain periods and minor percentages. This had an enormous influence on the post-war mental picture of the occupation period. On top of that, official statistics published during the war or in the post-war period suggested severe setbacks, even in Western Europe. At best, however, these macroeconomic accounts gave a rough idea of the extent of official production, while the growing clandestine production, sold on the black markets, was nowhere taken into account in any statistics. As a consequence, official statistics have overestimated not only wartime decline, but also post-war recovery, when clandestine production was legalized again. When corrected for this, it seems that in some Western countries, production was kept more or less intact. The reason most people of occupied Europe nonetheless experienced severe impoverishment, including those in the western part of the Continent, will be explained in Part 4, where the consequences of the economic development for the population, as well as the post-war situation, will be described and conclusions will be drawn. Here, in Part 3, the economic development as such is the central theme. However, it is difficult, and at times impossible, to separate the two. The degree to which the actual economy was damaged may have been exaggerated in some countries, but it is a fact that at the end of the war economic decline was general and in some parts of Europe severe. The situation was worst, of course, in the eastern and south-eastern parts. While plundering, and even taking the food needed to feed the local people, was a common practice of the Germans in Poland, the USSR and parts of Yugoslavia, and became normal practice in Greece, the development of employment in Western Europe and the Czech Protectorate, especially during the first years of the occupation, suggests that economic decline and exploitation are not the whole story. In most accounts of the war destruction is emphasized, while for the most part wartime economic recovery in all its aspects tends to get forgotten, if not ignored. In some countries, for instance, investments even increased and were quite substantial during at least some years of the occupation. However, that is not the story that historians want to tell or that the public wants to read.2 In fact, in wartime Western Europe, investments were probably rather important throughout the first years of the occupation, and not only because these were needed for German orders. The first wartime investments often were a reaction to the Allied blockade. Just as in the First World War, the effect of this blockade in cutting off normal supplies motivated businessmen to invest in import-substituting production.

Economic Life during the Occupation • 185 In popular publications and the international literature, the opinion persists that in the western parts of the Continent, just as in the more destructively exploited eastern and south-eastern parts, the economies slumped during the German occupation. This impression was created not just by the impoverishment suffered, but also by the post-war attempts of substantial parts of the population—and even the governments of the former occupied Western European countries—to justify their behaviour. Selfvictimization is a good way to reject responsibility for all the terrible things that happened during the occupation and the war in general.3 For anyone who was not one of the few heroes, the only way to prove that he cannot be blamed for all that happened is by making clear that he, too, was a victim. To victimize oneself could be done by emphasizing the problems and suffering of the war period and ignoring the good things these years also gave to some. Impoverishment was, however, generally felt, partly as a result of the Allied blockade, which isolated the continental countries from their normal supplies, causing a severe decline in the availability of all kinds of products. For the general public, it wasn’t only the small, everyday luxuries, such as coffee, tea, chocolate and tobacco, that were no longer available, but also about 10 per cent of all the food that Europe consumed, thus making it necessary to adapt diets, giving these a more vegetarian and, according to many, boring character. The fact that butter, cheese, eggs, meat and bacon were scarce was in itself enough to give the public the impression that starvation was imminent, even in those countries where only certain products became rare but where in general there was sufficient food. The spoiled Western European public found it hard to adapt to a diet containing more bread, potatoes, beans and vegetables and less butter, eggs, bacon and meat. They feared that they were only one step away from famine. Scarcity was further exacerbated as memories of the experiences of the First World War resulted in stockpiling all across Europe by those who could afford to do so, causing unnecessary shortages for the less fortunate. In the first years of the occupation, declining production was hardly a cause of impoverishment in Western Europe. The main origin of real, rather than imaginary, scarcity was the fact that the Germans seized increasing amounts of the production from each country they occupied. They compensated for this, but the payments were made with funds obtained from the treasuries of the occupied countries or by inflating the money supply of these countries. Thus they not only undermined the financial stability of occupied Europe, but also caused problems in the product markets. Production and thus private incomes—salaries, wages and profits—were high, sometimes even higher than before the war, while the availability of consumer goods was low, since a substantial and growing part of the production was concentrated on the German war needs and the output was taken away. These German withdrawals were paid for by all kinds of tricks in such a way that it became impossible for the occupied countries to get compensating imports for the yields of these exports. Consequently, across Western Europe, the shortages of goods and services were such that, even if basic needs could be met, this was insufficient to satisfy the demands and the growing purchasing power of the people. To prevent inflation, market discrepancies

186 • Occupied Economies were temporarily solved almost everywhere by rationing and price control. As the Western Europeans too felt threatened by the decreasing food supplies and had the feeling, rightly, that they were being unjustly treated by the Germans who took the output of their labour, they were developing their own strategies to correct this. Clandestine production as well as black markets, although smaller than elsewhere, were growing here just as in other parts of Europe where the occupation was producing serious impoverishment and hunger. In this part of the book, the economic development will be investigated, and as a consequence the text will sometimes take on a rather more technical nature. In Chapter 13, the financing of the occupation and exploitation, and the consequences for the monetary and financial markets, is a complicated story, but without an explanation of these technical aspects of the Nazis’ exploitation, it is not possible to understand how they could seize such substantial parts of the occupied countries’ production without completely destroying this production itself. It is only by describing and explaining how the Germans met these costs and adapted the financial markets to their requirements that it is possible to describe the regulation and sometimes annihilation of markets as a consequence of the occupation. As increased regulation combined with loss of confidence between authorities and their subjects will always result in evasion of the unwanted consequences of legislation and regulation, the fact that taxation and market regulation increased everywhere during a period in which all governmental regulation seemed to come from a hostile power resulted in clandestine activity on a substantial, and in some circumstances enormous, scale. People felt that the increasing scarcity of essential goods was caused by the Germans’ withdrawals and thus that they were victims of the unfair German policy. This only strengthened the tendency to transfer production to clandestine markets. In other words, all across Europe, clandestine production and black markets developed, and it was in such markets that substantial and growing parts of the production were sold. These black markets will be discussed in Chapters 14 and 15, the themes of which are trade and production. Regulation undermined normal markets, not only within the individual occupied countries, but also in the international markets of the occupied Continent. Thus it became almost impossible to exchange goods and services between neighbouring countries, and even within pre-war countries that, as a result of the Germans’ reorganization of Europe, had been split into different administrative units. All this increased the problems of the occupied countries and showed again Berlin’s limited grip on the European economy. Apart from some cross-border supplies directly connected to German interests, the occupier never even tried to compensate for the loss of market trade by planning international deliveries. This destruction of trade damaged not only wartime production, but welfare as well. A clear overall economic plan for the whole of the Continent was never implemented, mainly because if any one of the Nazi leaders had developed such a plan and attempted to seize overall power in order to implement it—for instance Albert Speer in 1942—the resulting reaction

Economic Life during the Occupation • 187 among the Nazi hierarchy would have been so aggressive that any power base gained would have been lost again. Chapter 14 will discuss the consequences of the occupation for the market economy, the isolation of the Continent and its individual countries, the regulation of all markets and the resulting development of black markets. Following on from that, Chapter 15 will discuss production, with an attempt to gain some insight into the actual levels of production where it is presupposed, as is found in most occupied countries, that substantial quantities of black market goods came from clandestine production that was never statistically recorded and thus is not reflected in any official statistics. This will make it clear that in Western Europe production was in far better shape than in the other, more destructively exploited parts of the Continent, although France was something of an exception to this. As was seen in Part 2, the Germans never really managed to get this most important occupied economy going again after its 1940 collapse. Lack of coal, railway wagons and transport capacity in general, and the resulting disappointing production, made it difficult for the Germans to get what they wanted out of France. Again, this is mainly a consequence of Germany’s poor organization. The internal struggle for power made it impossible for any central authority to supply the occupied countries with resources that Germany itself was short of, even when these resources would have been put to more efficient use for the Nazi war machine in the occupied country. Thus France lacked the coal and transport facilities needed to keep its production going. Although the French production and living conditions were far better than those in Eastern Europe or the Balkans, they were disappointing in a Western European context. In general, after the short setback created by the initial occupation in the West, a period of recovery and investments followed, making it plausible that at the time of the liberation the production capacity in the West was in much better shape than in other parts of the Continent. Apart from France, which was the most severely exploited of the Western countries and was the only country in Western Europe where serious fighting took place for any length of time, following the Allied invasion in June 1944, the loss of international contacts and the financial effects of the German exploitation were the most severe and difficult problems resulting from the occupation period in the remaining countries in the West.

Notes 1. Alfred Sauvy, La vie économique des Français de 1939 à 1945 (Paris 1978) 145–148. 2. Hein A. M. Klemann, ‘Did the German Occupation (1940–1945) Ruin Dutch Industry?’ Contemporary European History, 17 (2008) 457–481. 3. Ibid. passim.

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–13– Financing Occupation and Exploitation Introduction The Nazis made use of occupied Europe by looting and taking its factors of production as well as by taking the highest-possible quantities of production. For an occupier, looting is simple: he just takes what he wants. Cutting down the trees to get the bananas, however, can prove a bad way to exploit a plantation. Similarly, taking the output without any payments, just like taking factors of production, would soon terminate production. Although, for the most part, in the western and central parts of Europe the Germans adapted production to their needs and took the output, in the eastern countries they just looted everything they could. Nowhere was a clear choice made, however, between these two approaches. This implies that in all the occupied countries, the occupier needed funds to recompense businessmen and companies for what they were taking from them. Berlin neither allowed German production to be exported nor permitted its small gold and currency stocks to be spent for imports from the occupied countries. Until 1945, the term for what was taken—output as well as factors of production—was Beute, booty.1 Consequently, Berlin had to solve the problem of how to pay producers in occupied Europe without any real transfer of value. This had little to do with any legalistic respect for private property or for The Hague Convention of 1907.2 It was just a matter of keeping production going, especially in Western and Central Europe, and persuading the producers in the countries there that cooperation would be the lesser evil. The Germans therefore had to come up with a stratagem for payment without any real cost to Berlin.3 In other words, the funds from which payments to suppliers in occupied Europe would be made would have to be raised from within the country concerned. When Hermann Göring, as Plenipotentiary of the Four Year Plan, decided in August 1940 that looting was no longer a solution in the occupied countries of Western Europe, he ordered German companies to take over strategic industries in the countries there. He was trying to ensure the economic dependency of these countries, even if the war ended in a compromise. Of course, Verflechtung (‘intertwining’) only made the financial problems worse, especially because this high-ranking Nazi also wanted to buy Western-held shares in Central and South Eastern European industries.4 The solutions that were found to resolve the cash problems all made it possible to pay individual suppliers with funds that in one way or another came from the occupied countries themselves. In 1943 the Finanzarchiv, an important

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190 • Occupied Economies German economic journal, openly wrote that in occupied Europe financial and monetary procedures were just a refined requisition policy.5 By its power, Berlin got what it wanted without more than an administrative recognition that it owed the occupied country a certain sum in an unknown future. At the same time, it transferred part of its financial problem to those countries. By paying occupied Europe with money acquired from them, Germany often destroyed any monetary or fiscal balance in these countries in the process. In this chapter we consider the solutions that Germany found to its financial problems in the various occupied regions, what reasons lie behind the choice of solution in any specific country and what consequences this had for the financial and monetary situation of that country. Eastern and South Eastern Europe were a special problem as more often than not the German-organized administrative units in those areas—Serbia, Ostland and the Ukraine—were not independent states before the occupation, while what remained of Czechoslovakia and Poland bore little relationship to the pre-war countries. Consequently, those countries—if they could be described as such—had no independent monetary or fiscal systems, and the Germans had to create their own.

The German Monetary System and the First Occupations From March 1938 on, a few days after the Anschluss—the incorporation of Austria into the Reich—all Austrians had to exchange their shillings into Reichsmarks, while the Österreichische Nationalbank merged with the Reichsbank, and German currency regulations were introduced. Half a year later, after the Munich Conference, the Sudetenland—the German–Czech border area—was also incorporated, and German money and currency regulations were introduced there as well. Austria and Czechoslovakia, countries that had similar monetary problems to Germany in the early 1930s, had in fact regained convertible currencies in 1938.6 Now they were incorporated into the Reichsmark block and thus into a system with a manipulated, inconvertible currency again. During the 1931 Central European financial crisis, Berlin—just like Vienna and Prague—had to accept that its currency had become inconvertible. This was not only the result of the enormous foreign debts, but also of the US banking crises. Since the 1924 Dawes Plan solved Germany’s acute financial problems, US banks had lent $2.5 billion to Germany. From 1929 on, with the developing banking crisis, these banks not only did not lend any more, but even demanded their money back. As, in Germany, short-term loans were used for long-term investments and the Reich needed huge sums in hard currency for reparations, an acute financial breakdown threatened. The electoral victories of the Nazis and Communists, promising to break interest slavery, further undermined confidence, and in the summer of 1931 foreign creditors rushed to get their money back. Devaluation was not an option. As

Financing Occupation and Exploitation • 191 most foreign debts had to be repaid in hard currency, devaluation would result only in higher foreign debts. Decisive for the decision not to devaluate the Reichsmark, however, was that after the hyperinflation of the early 1920s, when the German public learned to identify devaluation with inflation, Germans feared such monetary steps. In June 1931, therefore, Reich President von Hindenburg introduced currency control. From then on, all Germans, companies as well as individuals, were obligated to sell all foreign currency and gold they owned or obtained from international transactions to the Reichsbank. The German central bank paid for it at the official gold-parity exchange rate and limited the amount of currency available for imports to the earnings from exports. During the depth of the Depression, the limited availability of hard currency seemed disastrous, but in fact hardly influenced imports as demand was low anyway. Lack of hard currency became a problem only with the recovery, especially from 1933 onwards, when the new Nazi regime stimulated the economy. Now foreign exporters were confronted with the problem that they did not get their bills paid. This was not because German customers would or could not pay, but because their Reichsmarks could no longer be transferred into hard currency. In 1934, for German trading partners, unpaid exports became a severe problem when Hjalmar Schacht, Hitler’s Minister of Economics, tried to manipulate the situation resulting from the inconvertibility of the Reichsmark. Countries that became victims of Schacht’s manipulations thereupon introduced bilateral clearing with the Reich or otherwise demanded guarantees that the currency Germany earned from its exports to that country was used to pay for its imports. In 1934, for instance, The Hague prohibited all currency transactions with Germany. From then on, imports from this major economic partner were paid for in an account of the Nederlandsch Clearing Instituut; exports to Germany were paid for from that account (see Plate 9).7 On the German side importers paid into the Verrechnungskasse—the Berlin clearing account—and exporters were paid from it. If the payments in compensating clearing institutes were in balance, all transactions were possible without any transfers. However, as Berlin was unable to compete in international markets as a consequence of the overvaluation of the Reichsmark, especially after the September 1931 sterling devaluation, German exports slumped.8 It was only by manipulating subsidies or clearing exchange rates—the latter with countries with inconvertible currencies themselves—that the Nazis kept trade going, but even after the recovery, exports stayed at Depression levels. In 1937, the best pre-war year, they were still 36 per cent per cent below the level of 1929.9 As exports paid for imports, Germany could, when it thought the imports from a specific country interesting, manipulate the trade by paying higher export subsidies or, in the case of a country with an inconvertible currency, accepting a lower bilateral exchange rate. In 1937, after the start of Göring’s economic war preparation policy, this was systematized. Trading partners were classified, and export subsidies adapted to this classification. By keeping the Reichsmark overvalued and playing its game with subsidies and bilateral exchange rates, Berlin

192 • Occupied Economies could limit its overall trade—creating a high level of autarky—while stimulating trade with partners the regime thought to be important.10 For continental Europe, the German monetary isolation meant that Germany, whose economic collapse had been a major source of the Depression throughout the Continent, never was a source of recovery again. To get paid, Germany’s trading partners had to limit their exports to the Reich to the level of their imports from the Reich as these were manipulated by Berlin. Bilateral clearing kept trade going in so far as the Nazi regime was interested. Businessmen or consumers, however, lost almost all grip on trade flows. As a supplier of food and raw materials, South Eastern Europe was thought to be important. The clearing rates of the Reichsmark with the countries there were devaluated. As a result, German products were cheap in the Balkans. This strengthened Germany’s link with these countries, where Berlin hoped to get foodstuffs and raw materials in case of war. After its military successes between 1938 and 1940, Berlin took advantage of its strength, however, and raised the clearing rate of the Reichsmark again.11 From 1941 on, when all of continental Europe—the USSR excepted—became dependent and Berlin no longer had to compensate for any competitive weakness, the old gold exchange rate was reinstated. Now countries throughout continental Europe could buy only in German-controlled Europe anyway, and even then only in so far as it was allowed by Berlin. Consequently, Berlin’s clearing Mark could be appreciated again.12 In 1938 Berlin internalized trade with Austria and Sudetenland, and the Reichsmark became legal tender in these newly won territories. Thus the Nazis could buy everything there without any transfer problems. From an economic point of view, the highly industrialized regions of Moravia and Bohemia, rather than the ethnic German Sudetenland, were the more useful part of pre-war Czechoslovakia. Hence, economic reasons motivated Hitler to absorb these vulnerable remnants of what had once been the most successful among the successor states of the Habsburg Empire. By introducing the Reichsmark into the Sudetenland, Berlin obtained substantial sums of Czech money. In March 1939, when Berlin took over the remains of the republic, these banknotes proved quite useful.13 Berlin nevertheless introduced its own currency there too. From the start, the Czech Central Bank was less than cooperative. It sent all its gold to England. The Czech bankers seemed ready to give their new masters a hard time.14 For his war plans, however, Hitler needed the Czech production capacity immediately. Accepting the Reichsmark therefore became compulsory in the new Protectorate. The Czechs received one Reichsmark for ten crowns—in other words, they had to pay 20 per cent more than the Sudeten Germans some months before. As a consequence, few people exchanged their money voluntarily, but by making it compulsory to accept Reichsmarks, Berlin could buy everything it needed in the Protectorate and, given the exchange rate, at a low price.15 As currency regulation was introduced into the new Protectorate as well, these territories were in fact economically incorporated into the

Financing Occupation and Exploitation • 193 Reich. Later, trade regulations and most of the tax structure were also adapted to the German system. Until March 1939, all conquests became part of Großdeutschland—Greater Germany—but Hitler did not intend to absorb all of Europe into the Reich. Not only did he not have any ambition to rule over all kinds of non-Germanic peoples, but for juridical reasons, such as claims on colonies, it also seemed better to keep the international status quo of some occupied countries formally intact.16 In addition, the introduction of the Reichsmark could easily backfire. To obtain Reichsmarks, the Reich had to borrow on its money and capital markets or inflate its own money supply.17 As long as Berlin regulated its economy, it was virtually impossible to buy anything in the Reich without licences or coupons. Inhabitants of incorporated territories never got such licences or coupons and therefore could do very little with the German banknotes they obtained, except buy German treasury bonds. After the war, however, when some liberalization could not fail to occur, these banknotes would return to Germany and inflate the German money circulation. Therefore, it seemed better to isolate the occupied economies and not introduce the Reichsmark everywhere. In addition, until September 1939, Germany had mainly absorbed German-populated countries; only Bohemia and Moravia were non-Germanic, but the economy there was so important that solving the new financial problem seemed most pressing for these territories. When Hitler conquered Poland, however, this could not be a solution. Poland was a country not only mainly populated by non-Germans, but also of little economic interest except for the parts immediately incorporated by Berlin as new German land. On top of that, Berlin was confronted with a new problem here as this conquest meant the first real military campaign of the Nazis. During their progress into Poland, the Wehrmacht troops needed money, and as they had only Reichsmarks, they simply used those. On 11 September, therefore, just ten days after the invasion, the German military commander in Poland made the Reichsmark legal tender along with the zloty in all conquered Polish territories.18 Just as in the Czech case, the chosen exchange rate of two zloty for every Reichsmark made Poland very economically competitive. By this means, the only financial limits for the Wehrmacht from then on were set by the financial authorities in Berlin. Before long, on 23 September, the military officials solved this problem too, by introducing new banknotes—Reichskreditkassenscheine (RKKS)—which were not brought into circulation by the Reichsbank, but by Reichskreditkassen—Reich Credit Offices. Since the directors of the Bank Polski had fled the country, taking all banknotes and monetary gold with them, as well as the printing plates for banknotes, they had left a monetary vacuum.19 Germany could not even demand that the Poles should pay occupation costs as it first had to create some kind of money supply. However, as the new requisition money was brought into circulation by institutes closely linked to the army, this solved not only this problem, but also all other financial problems of the German armed forces.20

194 • Occupied Economies The RKKS notes, although issued in Reichsmarks, were not exchangeable and were intended for circulation in the occupied territories only.21 In Poland, these notes would prove to be of limited importance, as circulation in the General Government did not exceed the sum of 45 million RM, or 5 per cent of the banknote circulation.22 Because the Reichsmark became the sole legal tender in the former Polish territories incorporated into the Reich, the zloty had to be exchanged there. Thus, Berlin obtained sufficient Polish banknotes to solve its immediate payment problems in the other parts of occupied Poland, especially the General Government. There, purchases were limited anyway. In Bohemia and Moravia, where Berlin needed local production, payment problems had been acute, just as in Upper Silesia, the industrial heart of Poland. In October 1939, this part of pre-war Poland was therefore annexed, and the zloty was immediately replaced by the Reichsmark. In other parts of Poland, the situation became clear only in November, when the new Reich border was drawn. Now, the Reichsmark became the sole legal tender in all annexed parts of former Poland,23 while a new zloty was introduced into the General Government. This was done to prevent old Polish money from the Soviet-occupied territory from inflating the circulation. First of all, in January 1940, notes in denominations of 100 or 500 zloty were withdrawn, while their countervalue was frozen in saving deposits. Next, stamped 100 zloty notes were brought back into circulation. Shortly afterwards it proved necessary, however, to found a new Emission Bank—the Bank Emisyjny w Polsce. This bank took over the Reichskreditkassen in Poland and issued new notes.24 As this bank was German-controlled, its first duty was to finance all German purchases and not—as is the duty of any normal central bank—to guarantee a stable money supply to fortify the national economy. Accordingly, the Allies, as well as resistance fighters, who dismissed the production of the new zloty as robbery, introduced forgeries into circulation. In fact, the Royal Air Force even dropped forged banknotes from aircraft. In 1941, when Galicia—a part of pre-war Poland occupied by the Soviets in 1939—was integrated into the General Government, it became this bank’s duty to exchange roubles into zloty as well. The most amazing aspect of this experiment is that it didn’t end in hyperinflation.25

Reichskreditkassenscheine The Wehrmacht first experimented with RKKS in Poland, and from then on, every time a German soldier entered a shop in newly conquered parts of Europe, he paid for what he took by using RKKS. In 1942 an American journal described the Reichskreditkassen as motorized Banks of Issue, while a post-war historian called them spearheads of the Reichsbank.26 During the campaigns in Poland, Denmark and Norway these institutes were, however, more closely linked to the Wehrmacht than to the German central bank. Reichskreditkassen gave military commanders direct access to

Financing Occupation and Exploitation • 195 all the money they wanted. Only a few days before the Wehrmacht campaign in the West started, a Council of Administration was set up. Issuing RKKS now became a Reichsbank matter, thus guaranteeing its competent organization. Its object was still to provide the army with all the funds it needed during its campaigns. RKKS notes could be used only in the country where they were first issued. To take them into any other country, let alone to Germany itself, was prohibited.27 According to the 1940 Western European capitulation agreements, all military orders could be paid in RKKS. Using normal Reichsmark notes was, however, forbidden.28 That RKKS currency became legal tender did not mean that Germans or Germany ever accepted these notes back again. The exception was in France, where from 1942 onwards the Germans used parts of the occupation costs paid by the Vichy government to buy RKKS notes back again.29 Elsewhere in occupied Europe, central banks had to exchange RKKS into the local currency to keep their circulation clean. In other words, by paying their bills, German soldiers inflated the banknote supply of the country where they happened to be. Of course, one can hardly expect a soldier to be thinking about monetary problems when paying his bill in a shop, pub or brothel. As long as the person he was dealing with was paid, that created a friendly atmosphere.30 Where the money came from was of no concern to the payer or receiver. The introduction of RKKS solved all the financial problems of the Wehrmacht. Not only the small transactions by individual soldiers, but also the orders of its armament departments, could be paid with these notes. For occupied Europe this was a problem. The monetary authorities all over Europe feared that the issuing of RKKS notes would result in an uncontrollable growth of their circulation as the central banks lost all possibility of limiting their distribution. For soldiers of whatever rank spending RKKS notes, monetary arguments were irrelevant. Even in the unlikely case of a military man understanding the subtleties of monetary policy, it was hardly his business. Governor George Janssen of the Banque Nationale de Belgique, therefore, remembering the monetary chaos of 1918, did everything he could to regain a hold on the Belgian banknote circulation and at the first opportunity discussed the problems with the German authorities. Janssen feared the use of RKKS notes not only because of his inability to control their circulation, but also because the Germans could plunder his country limitlessly with this fake money. As Belgium was prepared to pay occupation costs, it was possible for the Germans to pass the bills for Wehrmacht purchases on to the occupied country anyway. Janssen hoped that by paying occupation costs, he could control the German use of money obtained in Belgium, and he therefore demanded that the issuing of RKKS currency should cease.31 His Dutch colleague, L.J.A. Trip, felt exactly the same. These central bankers hoped that they could get sufficient control to prevent the German army from spending money obtained in their countries for anything other than the actual costs of the occupation army. According to international treaties, an occupier was allowed to pass its occupation costs on to the occupied territories, but that did not include all other military costs. Trip was prepared to agree that if the Germans promised not to

196 • Occupied Economies issue any more RKKS currency, he would pay their occupation costs—that is the actual costs of the occupying army—from the Dutch treasury. The reason why these conservative bankers, who feared any growth of government spending like the devil, were ready to pay occupation costs was because the use of RKKS currency gave the Germans complete control over the money supply in these countries. By agreeing to pay occupation costs, they hoped they could regain their grip on the monetary situation again. It proved to be a vain hope.32 For France, which was the most important of the occupied economies, the problems produced by the use of RKKS currency were limited as, from the time of its capitulation, the country was forced to pay the Wehrmacht 20 million RM (400 million francs) a day.33 Thus, francs became available for the German army and its troops, and the use of RKKS was further prohibited. The complaints of some German soldiers that French banknotes were unpractical reflected nothing more than the charming inconvenience that any tourist would have to deal with.34 RKKS payments became unimportant once an occupied country agreed to pay occupation costs, and only occasional small purchases by the soldiers were paid with such notes. For instance, until 1944, small amounts of RKKS entered the Netherlands because soldiers from France going on leave to the Heimat used these notes to pay for their beer in Roosendaal, the Dutch border town where they had to change trains.35 By paying a tribute, central bankers and officials of the finance ministries tried to limit the financial consequences of the occupation. It was hoped that these costs could be paid for by government loans and repaid from increased taxation.36 This, however, could be achieved only as long as German military demands were limited, for instance to the actual occupation costs, in accordance with international agreements. It seemed at first that the problem of the Germans claiming payment for all military purchases, and not just for occupation costs, existed only in the Netherlands. In 1940 German orders there were already 14 per cent of the country’s GDP (gross domestic product). In the same year, Vichy also had to pay a considerable amount of money to the Wehrmacht, but this could not be spent. In his Lagebericht (Situation Report) of May 1941, the Military Governor in Paris wrote that Wehrmacht bank accounts in France held 3.2 billion RM, but that production was still so disrupted there, and output too low following the occupation of 1940, that the Germans were unable to spend all the accrued funds. Nevertheless, Otto von Stülpnagel feared the consequences of any reduction of the French tribute. If he managed, as intended, to increase the French production, the lower sums of money he would then obtain would be insufficient to pay for the deliveries the German army hoped to get from France.37 The French case is the only known example of payments for occupation costs without a direct link to purchases. Normally, the Germans took only sufficient funds to cover the cost of their acquisitions. The more an occupied economy was integrated into the German economy, therefore, the more it had to pay. Hard currency and gold excepted, Berlin did not want money, but liquidities to pay its bills. RKKS was a basic way to take care of this, and so these notes were especially important in areas

Financing Occupation and Exploitation • 197 where military activity was still going on. Most of the time, though, they were taken out of circulation in countries where the situation had more or less normalized and where occupation costs could be taken from the country’s treasury. While RKKS were little used in Western Europe from 1941 on, the notes gained new importance with the fighting in Yugoslavia, Greece and the USSR.38 They proved especially practical in countries where, for whatever reason, normal circulation had collapsed. By the time the attack on Russia began, RKKS worth 1.7 billion RM had been brought into circulation across Europe since the start of the invasion of Poland in 1939 (see Table 13.1). These data probably underestimate the circulation in France as there the situation in 1940 was chaotic, and although RKKS were not issued in the other Western European occupied countries any more, they remained in circulation in France during the whole of that year. According to a Swiss newspaper, even in 1941 these notes were still more common than normal franc notes.39 This would be an illustration of Gresham’s Law that bad money drives out good money. In the Netherlands, RKKS worth 108 million RM were issued, which meant an increase of banknotes in circulation of around 7 per cent.40 In Belgium, where the board of the central bank had fled, taking the gold stock, banknotes and printing plates with them, the Kreditkassen brought almost 250 million RM into circulation, increasing the banknotes in circulation by approximately 12 per cent.41 In France, however, even if the remaining 150 million RM were issued there, the total number of notes in circulation would increase by only 2 per cent.42 This seems to be an indication that the Germans paid for little of what they took from here. If, however, there were really so few RKKS notes used in France as suggested here, it is unclear how it was possible that so many were still in circulation a year later. There are some discrepancies in the data that cannot be explained completely. Since during 1942, 1943 and 1944 the Wehrmacht recovered RKKS with money from the French contribution, it is possible that some of these notes had already been in circulation for a long time, but then there must have been many more than officially registered. Recovering these notes was done only in France, where such transactions amounted to at least 1.4 billion RM (see Table 13.1), but as there were no similar transactions in any other country, it seems plausible that the difference of 1.7 billion in RKKS circulation figures between late 1943 and May 1945 (see Table 13.1) was also caused by taking RKKS out of circulation in France.43 As the German Militärbefehlshaber in Paris complained in 1943 that the French RKKS notes reclaimed between 1942 and 1944 had been illegally brought into circulation from unknown sources, it seems clear that these sources were the main cause.44 Actually, most of these ‘unknown’ sources were not unknown at all, but rather were German military organizations using RKKS to purchase essential products, or simply luxuries, on the French and Belgian black markets. According to Paul Sanders, from 1941 on, the Germans spent 126.7 billion francs (6.3 billion RM) on the French black markets. About 75 per cent of these purchases were made by the German armed forces or organizations of these forces.45 To keep

198 • Occupied Economies Table 13.1.

Until end

Issued Reichskreditkassenscheine (RKKS), 1939–1945 Circulation of RKKS (in millions of RM)

Newly issued RKKS (in millions of RM)

RKKS repaid (in millions of RM)

Country where repaid

Poland

—

—

Western Europe

—

—

—

—

Country where issued

1939

40

40

1940

555

515

June 1941

1,700

1,145

Balkans/USSR

1942

2,664

1,979

USSR/Belgium/France

At least 459

France

1943

3,352

1,292

USSR/Belgium/France

At least 604

France

—

At least 350

France

May 1945

≈3,000

—

Source: RGVA, Collection 1458, Inventory 16, File 12, pp. 81 and 122; Willi A. Boelcke, Die Kosten von Hitlers Krieg. Kriegsfinanzierung und finanzielles Kriegserbe in Deutschland 1933–1948 (Paderborn 1985); Harry H. Bell, ‘Monetary Problems of Military Occupation’, Military Affairs, 6 (1942) 77–88; own calculations.

relations with the Vichy regime workable, and not increase the occupation costs unilaterally, the German authorities recovered the RKKS used in these transactions in the open French market with francs from the occupation costs paid by the French. In other words, as RKKS notes were taken out of circulation again by using the occupation costs, it would seem that France did not contribute more to Germany than was already seen in the discussion on exploitation in Part 2, nor did the Wehrmacht take more than was agreed on with the Vichy government. In Belgium after 1940, as in the Netherlands, some RKKS notes were used by German soldiers on leave from the Eastern Front, but from 1942, as in France, quite substantial quantities of these notes were used illegally by the German armed forces, especially the Luftwaffe, which bought raw materials on the black market to use in the production of military equipment.46 Hitler wanted to maintain good relations with the French government, but in Belgium this was not a concern, and so these notes were not repaid from the occupation costs as in France. As a consequence, they had to be repaid by the Belgian national bank. It is clear from Table 13.1 that RKKS notes were of limited importance in the Polish campaign, as less than 40 million RM of such notes were issued 1939. The resulting growth of the Polish banknote circulation was less than 5 per cent.47 In the West, RKKS appear to have been of greater importance as here the circulation of banknotes increased considerably. Since from the summer of 1940 onwards, apart from the preceding exceptions, no more RKKS notes were issued in Western Europe, it seems plausible that the 1,145 million RM in RKKS brought into circulation in the first half of 1941 were issued in the Balkans and the USSR. In April the Nazis invaded Yugoslavia and Greece after Italy involved these countries in the war. Yugoslavia was first divided into a number of administrative units, some formally independent and some

Financing Occupation and Exploitation • 199 occupied by one of the Axis powers, but all with their own currency and monetary regulations. In Serbia and Greece, apart from RKKS notes, which were used until the end of July, Empfangsbescheinigungen (receipts) were used as ersatz money. This instrument was introduced in Western Europe only on a limited scale, specifically in France. In Serbia the Wehrmacht even paid its bills with Beutegelder—seized cash. The amounts were not very high in these Balkan countries, as is clear from the Greek figures, where RKKS worth 77 million RM were brought into circulation, while for around 5 million RM, receipts were issued. No exact data are available for the other parts of the Balkans, except for Serbia, where receipts worth about 340 million dinar (17 million RM) were brought into circulation.48 As it seems implausible that in the rest of the Balkans enormous sums of RKKS were spent, most of the 1,145 million RM in RKKS that was brought into circulation in the first half of 1941 (Table 13.1) must have been used in the last few weeks of this period, during the campaign in the Soviet Union. The Croatian and Serbian monetary regulations made it possible to take RKKS out of circulation, and from July 1941 on no new RKKS notes were issued in the Balkans. Although the amount of RKKS brought into circulation across the Balkans was limited, the growth of the banknote circulation resulting from it caused the first signs of inflation. In order to prevent any inflationary consequences from the newly issued banknotes, Serbia attempted to control the situation by suppressing the monetary expansion with a strict bank control policy and by freezing savings accounts. The newly founded central bank was of a similar design to that in Poland—namely a bank of issue to finance German purchases—and was led by a Serbian governor appointed by the German General Plenipotentiary for the Economy. He was supervised by another German official who was mainly interested in financing German purchases, not in giving a stable monetary foundation to the Serbian economy. Therefore, limiting the monetary expansion was hard to accomplish.49 In Croatia—formally the Independent State of Croatia—short-term loans by the Ustaše puppet government limited the circulation, but in Serbia such a policy of governmental loans was hardly successful. Even a small increase in the money supply through the issuing of RKKS could be a problem, as became clear in Greece. There, the RKKS worth 82 million RM brought into circulation, although a limited amount of money from a European perspective, pushed up the banknote circulation by approximately 15 per cent.50 Soon after the start of the occupation of Greece, the Reich Ministry of Economics decided that Germany had to refrain from establishing a new central bank. German banks were instructed not to absorb any Greek banks as this could heighten Germany’s economic commitment and result in arguments with Rome.51 Italy was merely asked to recognize an agreement between the Deutsche Bank and the National Bank of Greece, which was used by Berlin as a tool to control the most important fields of production. A similar agreement was signed between the Dresdner Bank and the Bank of Athens.52 This German financial commitment could not, however, prevent a rapid inflation as the banknote circulation swelled at the same time as the production

200 • Occupied Economies collapsed.53 As a consequence of the way the country was exploited, every attempt to limit the inflationary consequences seemed useless.54 The monetary and financial policies were chaotic, partly because the Greek pre-war financial situation was already rather unstable. Mainly, though, it was a consequence of the fact that the Germans had little interest in these economies and just plundered these countries. Although Germany was not occupying the largest parts of these countries, it was the most relevant of the occupying powers from an economic point of view. As a result of the rather accidental military situation in North Africa, the Germans needed to extract much more from Greece and Serbia than had been foreseen or was, in fact, possible when these countries would be exploited in an organized way. The main cause for the chaotic situation was that Berlin did not care about any possible economic collapse as long as these countries provided Germany with what it needed. As a consequence, the living conditions became extremely bad, although conditions were even worse in the occupied parts of the USSR. After the invasion of the Soviet Union, the overall RKKS circulation grew enormously. These notes were intended for the soldiers’ use, and only with the invasion into the Soviet Union did the Germans’ military activity enter its most extreme stage. In the USSR the Germans were confronted with the problem that both in the occupied areas and on the front line, the Soviet Russian monetary or credit system was hardly functioning as the banks and financial institutions had lost all contact with the central Soviet organizations. To compensate for this, apart from roubles, RKKS notes became legal tender at a depreciated exchange rate of ten roubles to one Reichsmark. This kept German army purchases cheap. In the long run, the RKKS seemed no solution. Alfred Rosenberg, the racist fanatic who was appointed by Hitler as Reich Minster for the Occupied Eastern Territories to organize the exploitation of Eastern Europe, intended to establish four Reich Commissionerships on Soviet soil. As he saw monetary policy as a political problem rather than an economic or financial one, he introduced the Reichsmark in Ostland, the territory comprising the Baltic States, some eastern parts of Poland and substantial parts of western Belorussia and Russia. According to the Estonian-born Rosenberg, this territory was to be settled by Germanic farmers and, in the long term, integrated into the Reich. The Reich Commissionership of Muscovy (which was never established) was seen as a non-improvable Russian region that should be kept out of the Reich. Therefore, it could keep its rouble. The Reich Commissionerships of the Ukraine and the Caucasus (the latter was also never established) would form buffer states between Russia and Germany and would also have their own currencies.55 In November 1941, as a consequence of these ideas, currency legislation based on the German model was introduced into Ostland with the Reichsmark becoming legal tender there. Berlin allowed only the use of RKKS notes, which from April 1943 were brought into circulation by the Notenbank im Ostland, the Circulation Bank in Ostland, which replaced the fifteen Reichskreditkassen in the area.56 Ostland did not really get its own currency, although it was supposedly a state, gathered taxes

Financing Occupation and Exploitation • 201 and could therefore pay occupation costs, just as the Western European and Balkan states did.57 Here, RKKS in the new form of Ostlandmarks became real money and not just single-use banknotes printed to allow German troops to confiscate whatever they needed. It was only in Ostland that RKKS notes were used by everyone for all kinds of internal transactions, even to pay taxes to the German-established quasigovernmental organization. In the Ukraine, the situation was a little different. There, a new national currency— the Karbowanez—was introduced. It had the same value as the Soviet rouble and was brought into circulation by the Zentralnotenbank Ukraine—the Central Banknote Bank of the Ukraine.58 The fact that this bank had only a German name—not a Ukrainian one—was typical. This indicates that its first duty was to finance everything the Germans needed, just as it was for the circulation banks in Poland and Serbia. In the Ukraine and in Ostland, occupation costs replaced RKKS as the main source of money for German military purchases, just like elsewhere in occupied Europe where the Germans had established themselves as the controlling power. The country was no longer just a military-ruled front-line area. The RKKS notes were still used in Ostland, but here they became real money. Normally they were in use only during military campaigns and the first chaotic periods of occupation. Consequently, in the end they financed only some 3 to 5 per cent of occupied Europe’s contribution to the German war effort. As the fighting in Eastern Europe lasted much longer than elsewhere, the RKKS notes were of primary importance there. In the Western countries, as well as in Greece and the Protectorate, other forms of financial exploitation became more important.

Occupation Costs By the late summer of 1940, normality was more or less restored in substantial parts of Western Europe. As a consequence, a contribution—known in most of Europe as occupation costs—replaced RKKS as the main source of money with which to pay for the German military orders. According to international law, an occupier is allowed to claim the costs of occupation from the occupied country, but the countries of occupied Europe paid much more than this. In 1941, after ever-increasing demands, occupation costs in Belgium were frozen at 120 million RM (1 billion Belgian francs) a month; in the Netherlands this was 135 million RM (ƒ100 million), while in France it amounted to a monthly sum of 620 million RM (12.4 billion francs).59 This money was borrowed from the Banque de France, which had to create a special Occupation Cost Loan payable to the French state. Since the legal maximum of 70 billion francs (3.5 billion RM) that the French state was sanctioned to borrow from the central bank had already been reached, normal credits were no longer available.60 This rule was circumvented, however, by the new special credit. By 1943 the Vichy government had borrowed another 220 billion francs from the French central bank, or almost 4.2 times the legal maximum. Thus France paid the tribute by

202 • Occupied Economies inflating the banknote circulation. This circulation rose by 193 billion francs, that is almost doubled, during the first two years of the occupation.61 Although a contribution of 400 million francs a day seems an incredible sum, in fact compared to the contributions of the other Western European countries, and corrected for the size of its population, France paid relatively little. Only Norway paid less—21 million RM a month—while Denmark did not pay any costs at all, but the Scandinavian countries instead had to provide dubious credits to the Germans. In the Norwegian case, these credits more than equalled the occupation costs and in fact had the same effect as occupation costs would have had (see Table 13.2). It is clear that the Norwegians paid twice the average amount for Western Europeans, while the Danish costs were comparable to those of Belgium and France (Table 13.2). As the money raised in the form of occupation costs was used to pay for all military expenses inside occupied Europe, a high military demand for cash proved that Table 13.2.

Occupation Costs, 1939–1945 Costs per capita Inhabitants (in millions)

Occupation costs (in billions of RM)

RM

Percentage of the average

41.4

31.6

763

207

Netherlands

9.0

10.1

1,122

304

Belgium

8.3

5.3

639

173

France

Denmark

3.0

2.4

800

217

Norway

2.9

6.9

2,379

645

64.6

56.3

872

236

Protectorate

7.5

4.1

547

148

Greece

6.3

3.8

603

163

Croatia

6.5

1.2

185

50

Total Western Europe

Serbia

4.5

0.9

200

54

Total Balkans

17.3

5.9

341

92

Occupied USSR

87.0

2.5

29

8

General Government

17.0

2.5

147

40

Total Eastern Europe

104.0

5.0

48

13

Total

193.4

71.3

369

100

Source: Willi A. Boelcke, Die Kosten von Hitlers Krieg. Kriegsfinanzierung und finanzielles Kriegserbe in Deutschland 1933–1948 (Paderborn 1985); Hein A. M. Klemann, Nederland 1938–1948. Economie en samenleving in jaren van oorlog en bezetting (Amsterdam 2002); Richard W. Lindholm, ‘German Finance in World War II’, American Economic Review, 37 (1947) 121–134; Angus Maddison, Dynamic Forces in Capitalist Development: A Long-run Comparative View (Oxford 1991); Irina Ognyanova, ‘Nationalism and National Policy in the Independent State of Croatia (1941–1945)’, in: Dorothy Rogers (ed.), Topics in Feminism, History and Philosophy, IWM Junior Visiting Fellows Conferences 6 (Vienna 2000); own calculations.

Financing Occupation and Exploitation • 203 the exploitation, and the adaptation of the occupied economies to the German war needs, was successful. To prevent financial problems for the German army, monthly payments in Belgium were raised from 1 billion to 1.5 billion francs (from 120 million RM to 180 million RM),62 while in the Netherlands extra payments were camouflaged as external occupation costs, a label also used to obtain the part of the country’s gold stock that the exiled government could not send out of the country before the Germans’ arrival. When it became clear that even that amount did not cover all the expenses of the Wehrmacht, the Dutch National Socialist M. M. Rost van Tonningen—President of the Dutch central bank from 1941—proposed an additional payment to the German army, to be interpreted as the Dutch contribution to the defence of the whole of Europe, including the Netherlands, against the Bolsheviks.63 The Germans thought it was an excellent idea. The cost of this to the Netherlands was another 50 million RM a month.64 This idea was also taken up in France, where—as feared by Militärbefehlshaber von Stülpnagel—the reduced occupation costs and the increased purchases of the Wehrmacht did not match. This resulted in financial problems for the Germans. In 1943 the Vichy Prime Minister, Pierre Laval, therefore accepted an increase of 25 million francs a day as a ‘contribution à la défense commune de l’Europe’.65 By 1943 even this wasn’t proving enough, but as there was still some money left in the French Wehrmacht accounts, a further increase was not pressing. Following the Allied invasion in 1944, the German military was again faced with pressing financial problems, but by now the French were no longer prepared to cooperate. In fact, for political reasons, the Vichy government no longer paid all the Germans’ demands.66 According to The Hague Convention, an occupied country is required to pay the costs of a military occupation. Thus, by using the term ‘occupation costs’, Berlin suggested that these payments were its legitimate right, although it was clear they had little to do with the actual costs of occupation. The sums involved could simply not have been spent on the limited number of troops needed to keep an occupied country in check. Although financial experts across Europe knew this, no one could prove it as, of course, Berlin gave no information about the size of its armed forces to the officials of an occupied country.67 In 1941, however, an instruction from the German headquarters, the Oberkommando der Wehrmacht, to the military authorities in Brussels made it clear that they should ransack Belgium. ‘Purchases of all kinds which the military services made in Belgium . . . all of which was designated for other territories’ should be ‘written off as occupation costs’, it said.68 Therefore, when Oscar Plisnier, Secretary-General of the Brussels Finance Ministry, thought that the withdrawal from his country of military formations needed on the Eastern Front meant that Belgium had to pay less, this assumption was wrong.69 By 1940, Vichy officials had already calculated that the occupation costs for France should equal the maintenance of an army of 18 million men. In fact, the actual costs of occupation could not have exceeded 5 per cent of the contribution France had to pay.70 In other words, the occupation costs levied did not reflect the real costs of occupation,

204 • Occupied Economies but rather the German pressure put on the occupied economy, the country’s readiness to accept orders and its capacity to absorb them. This became quite clear in Greece, where, although the Italian forces outnumbered the Wehrmacht 2 to 1, the German army consumed the lion’s share of the contributions.71 The Nazis made it clear to the Italians that, although they were officially equal partners, the Reich could take the bulk of the pickings as it was they who had beaten the Greeks. Under the cloak of occupation costs, the national treasuries of occupied Europe were plundered to pay for all the Wehrmacht wanted in any country. The General Government in Poland paid even more than occupation costs alone, as these regions of Poland, which had been formally part of the German Reich since November 1940, had to pay 1.25 billion RM to the Reichshauptkasse—the Reich Central Treasury—on top of the sum earmarked as occupation costs, because the Germans protected it from the USSR. Another 932 million RM were paid for the German police and security services used to suppress Poland’s population and murder a substantial part of it, including all the Jews.72 If the data from a German 1944 memorandum are used instead of those in Table 13.2, the contribution to the German war machine from these poorest parts of pre-war Poland during the occupation period as a whole was at least 400 RM per inhabitant. It was exactly half as much as Denmark paid, a country whose 1938 GDP per head was 2.3 times higher than that of Poland and which never suffered the same degree of maltreatment.73 In Poland the Germans’ exploitation cut deeply into the basic needs of the population.74 The Wehrmacht took what it needed, and no official in occupied Europe could do anything about it. During the occupation period as a whole, the payments to the German military formations in Western Europe totalled 56.3 billion RM, or 872 RM per capita. Belgium, Denmark and France paid less than the average—639 RM, 800 RM and 763 RM per capita respectively, while the Dutch financial contribution of 1,122 RM per capita was more than a third above the average. Norway was even worse off, as it had to pay for the enormous defence works built by the Organisation Todt, the German state building contractor that built all Autobahnen in Germany before the war and most fortifications all over Europe during the war. The Norwegian financial contribution of 2,379 RM per capita was more than two and a half times the Western European average (Table 13.2).75 As Western Europe and the Protectorate were exploited by keeping production more or less intact and taking the output, high occupation costs were understandable. It is not immediately clear, however, why Greece paid even more than the Czech Protectorate per capita. However, here, just as in Norway, a substantial part of these payments—more than 51 per cent in Greece— were used for building activities; Norway had to build fortifications. In Greece, a great deal was spent on quarters, railroads, storerooms, sick bays, airfields and docks during Rommel’s 1942–1943 African campaign.76 Although the wealthiest of the Balkan nations, with a pre-war per capita income comparable to that of Czechoslovakia, Greece was a third poorer than France, the least wealthy of the occupied Western European countries. It is hardly surprising, therefore, that the excessive spending

Financing Occupation and Exploitation • 205 of the Wehrmacht created financial chaos in the small Greek economy.77 Not only were the supplies for the North African army bought there and paid for from occupation costs, often on the black market, but both armies—the German as well as the Italian—also spent Greek treasury money to obtain raw materials and foodstuffs. Since public funds could not meet these expenses, the state had to borrow substantial amounts from the central bank. The fact that the printing press was used to solve the financial problems of the state had dramatic effects on price levels. Consequently, the 75 million drachmas a month that Athens had to pay to Italy as well as Germany melted away in real terms. Since these payments were insufficient anyway, Greece then had to pay additional sums, according to a German document, ‘for the time being only as advances’.78 It was one of those limitless credits an occupied country was forced to give to the Germans, with little hope of repayment. Between January and October 1942, Athens paid 107.9 billion drachmas to the Wehrmacht as additional payments. Altogether, Greek payments amounted to 123 billion drachmas, which according to the official exchange rate was 2.1 billion RM in a ten-month period. By December 1943, the Wehrmacht had obtained 1,578 billion drachmas, of which no less than 1,499 billion, or 95 per cent, was indirectly paid by the Bank of Greece in newly printed notes. This had strong inflationary effects. From the end of 1942 onwards, Italy and Germany compensated for the inflation their policy created by indexing Greek payments to price levels. After that, nominal payments grew fast, resulting in a negative spiral of rising prices causing increased payments, which in turn resulted in a greater banknote supply and again higher inflation. In 1944, when a German official wrote a report on the financial exploitation of occupied Europe, Greece had already paid 8,691 billion drachmas.79 It is difficult to calculate how many Reichsmarks that was as by that time the drachma was almost worthless. Nevertheless, it is clear that the 603 RM per capita for Greece (Table 13.2) is an enormous underestimation of the Greek contribution paid to the German war machine as occupation costs, but no better data are available. The German armed forces in Greece needed a great deal of money because the military developments at that time made it a strategic position in the Mediterranean. Consequently, Greece was paying for a substantial part of the German military activities in this region. Since Berlin never really planned on a European scale for the costs of creating the military infrastructure needed for its Continent-wide warfare, the occupied countries had to foot the bill wherever necessary. Hence, the Norwegian economy had to bear the costs of the defence works along its endless coast, while the much less wealthy Greek economy was all but completely destroyed by the costs resulting from the North African war. As far as can be traced, all of Greece’s legal production was taken. The funds to pay for this could be financed only by the printing of more banknotes. This resulted in the hyperinflation of 1943–1944.80 Serbia provided the bridge for the military building and supply activity centred in Greece, and as a consequence of the North African campaign, this region of pre-war Yugoslavia, just like Greece, had to pay substantial sums for quarters, fortifications,

206 • Occupied Economies railways and roads. Consequently, Serbia had to pay ever more, and that was possible only by monetary expansion. Just as in Greece, inflation was far from a solution as the German financial demands only increased, causing even more growth in the banknote supply and higher rates of inflation. When the country was occupied in 1941, Serbia paid the German army 150 million Serbian dinars a month; by the autumn this had risen to 300 million dinars, and this was only slightly less the following spring. All this was paid from credits that the newly established Government of National Salvation borrowed from the former Yugoslavian central bank, and thus with newly printed banknotes. On top of these occupation costs, Belgrade paid 1 billion dinars for military investments in 1941, but even this was not enough. Serbia was charged another 3 billion dinars in 1942, which the German-installed government borrowed yet again from the central bank. By now, Berlin demanded a plan to finance at least 50 per cent of the payments through taxation from 1943 onwards. The Germans hoped that the other 50 per cent could be obtained by means of longterm government bonds. Like Greece, Serbia, too, became a victim of the Germans’ failure to plan a Europe-wide economic strategy, especially for the Wehrmacht. The poor country was forced to pay for the fact that the military situation demanded extra fortifications and other military expenses in this part of the Continent. As might be expected, the monetary expansion resulting from this created a strong inflationary tendency. Here again, the Wehrmacht compensated for the resulting depreciation of the monthly occupation payments by demanding even higher amounts. As a consequence, by 1944, according to a German memo, Serbia had paid 1.3 billion RM for occupation costs and some other minor charges.81 In the so-called Ostgebiete—eastern territories—it was clear from the start that these could never pay for all Wehrmacht costs there, as most of the military activity of the Reich was concentrated in this impoverished and war-ridden region. In most of the eastern fighting zones—occupied territories that at times were larger than the two Reich Commissionerships of Ostland and Ukraine together—the Wehrmacht took all it needed without any payment whatsoever or just used RKKS notes. Ostland and Ukraine were territories where Germany had founded central banks and something like a government. These had to pay occupation costs. Here, it was decided in advance how high their Wehrbeitrag—financial defence contributions—should be. Ostland had to pay 50 million RM a month, and the Ukraine 70 million. To make sure these Reich Commissionerships met their obligations, the Wehrmacht sent socalled farbige Schecks—coloured cheques—to the authorities in each of these Commissionerships. During a three-month period, the authorities had to pay their dues for these cheques promptly so that the German army could cover all its expenses. When the sum paid by these cheques was more than the agreed financial defence contribution of the Commissionership, the difference was settled by the Reichshauptkasse in Berlin at the end of each three-month period.82 The arrangement used in the Reich Commissionerships on Soviet territory makes it clear that Berlin could, if it thought it important to do so, use central German funds

Financing Occupation and Exploitation • 207 to solve financial problems in occupied Europe, but in Western and South Eastern Europe Berlin did not want to do this. There, the occupied countries had to make good any shortfall themselves. Thus German monetary expansion could be partly transferred to occupied Europe. It was unfortunate for Greece and Serbia that they were hit extremely hard as a result of military developments, together with the fact that Berlin didn’t consider monetary stability in these countries important enough to finance a part of the burden itself. In the winter of 1943 and spring of 1944, Berlin permitted just 31.9 million RM worth of gold—which came from Greek Jews—to be sold on the Greek stock market in order to limit inflation by taking banknotes out of the market. However, as the Reich Ministry of Finance decided to charge the Greek account for the countervalue of this gold, the effects were negligible.83 In the western parts of Europe that were mainly exploited by taking the output of ongoing production, occupation costs were of prime importance. In Eastern Europe, dominated by a more destructive policy of exploitation, such payments were less significant. Consequently, 90 per cent of all occupation costs came from the West, the Czech territories and Greece. The fact that the data in Table 13.2 differ slightly from those used in the Germans’ 1944 document (used as a source for this paragraph) makes it clear that the accuracy of the figures is doubtful. This should be taken into account, but it does not alter the overall trend.84 The fact that all across Europe occupation costs were higher than allowed according to international law did not mean, however, that the Germans could demand unlimited sums through such payments. Occupation costs, contributions and RKKS notes were used only for military purchases. As Berlin did not need only military equipment, it had to find other resources to pay for consumer goods or purchases by private companies. The inconvertible Reichsmark complicated this but, at the same time, could also be made instrumental.

Clearing All across Europe, the occupation resulted in unbalanced clearing accounts. This was a consequence of the fact that Berlin no longer paid export subsidies—it even prohibited most exports. At the same time, it encouraged German companies to purchase as much as possible in occupied Europe. Consequently, German exports declined while imports increased.85 According to Dutch statistics, between 1939 and 1941 exports to Germany slumped by 55 per cent and imports by 66 per cent.86 Such statistics, however, omit all trade organized and/or transported by the army or using military transport licences. Customs officers of the occupied countries were not allowed to interfere with these. This didn’t apply just to army orders but also to orders of indirect military significance from German companies to subcontractors in occupied Europe (Auftragsverlagerung), which were licensed by military documents as well, just like the related deliveries of raw materials or semi-finished products. Even without considering any smuggling, the statistics therefore reflected only a part of

208 • Occupied Economies the total trade. Consequently, it wasn’t only exports that were higher than statistics suggest, but imports as well.87 Yet it is clear that the exports of the occupied countries grew, while their imports declined. From May 1940 onwards, German exports slumped. As a consequence, little money was paid into the European clearing accounts. Therefore, these accounts were insufficient to pay for the exports of the occupied countries. Nevertheless, when the Germans managed to get production in these countries going again, they took the output, so that delays in payment became a problem for individual companies as well as for the economy of the occupied country as a whole. This was serious even for the Germans as they wanted production to continue. Delayed payments could easily terminate this. In 1940 there was no clearing arrangement between Germany and France or Belgium, but in July the Banque Nationale de Belgique and the Germans agreed to implement one. However, it was only in November that negotiations with the Vichy government resulted in a French–German clearing system. Until then, apart from some transactions paid from German bank accounts in France, normal French exports to Germany were negligible. As the situation in France was chaotic and the economy had almost collapsed, there would probably have been little trade anyway apart from military requisitions.88 Since with clearing systems exports are paid for from import reimbursements, in a period of declining imports, increased exports will result in unbalanced accounts. This can be seen in Plate 10, where exports to Germany have swelled while imports have vanished altogether. (In fact, some imports continued, but this makes the figure easier to understand.) In Belgium, for instance, where during the winter of 1940– 1941 the population was already suffering from hunger, the possibility of using the countervalue of the exports to buy food was a major argument for restarting production.89 Brussels actually got permission to import some food, although on a more limited scale than it had hoped for.90 Most exports from occupied Europe to Germany were, however, paid for from increasingly unbalanced clearing accounts. As a consequence, these accounts frequently held no funds with which to pay for exports. In normal times, exporters would have had to wait until importers of German products replenished the clearing account by paying for their imports, but because such imports on a substantial scale were not likely to occur again until some time after the war, this was no longer an option. Hence, exports from occupied Europe to Germany could no longer be paid for by normal clearing transactions. As this could terminate these exports, it was in the German interest to solve this problem. This was done by ordering the national authorities of occupied Europe to provide compensating credits from their treasuries to the clearing accounts to pay for all deliveries to Germany.91 In Belgium, the credits came from the Banque d’Émission—Bank of Emission, a wartime financial institution—but the treasury guaranteed these credits, and the system was basically the same.92 Each occupied country paid for its own exports to Germany and thus for what they produced for Germany. Apart from the military consequences, this also had interesting financial consequences for Berlin.

Financing Occupation and Exploitation • 209 Although occupied Europe paid for its own exports, German importers nonetheless had to pay into the Verrechnungskasse for all they bought in occupied Europe (Plate 10). Consequently, the account contained money that should have been used to pay for German exports, but as there were few of these, it was superfluous for the time being. It provides a mirror of the enormous, uncollectable claims of occupied Europe on Germany. As the Verrechnungskasse was a subsidiary of the Reichsbank and its accounts were held there, payments by German importers into the clearing system were in fact credits to this bank. These payments limited the need to inflate the German money supply (Plate 10). The Reichsbank would not have to repay these until German exports to Europe had recovered, but that seemed a long time off. The clearing system not only solved the problem of how to pay occupied Europe for non-military orders, but also limited the inflationary pressure on Germany and partly transferred this pressure to occupied Europe. There, the deficits pushed taxation and monetary expansion to ever higher levels as individual firms were paid for their deliveries with money from the treasuries. Berlin introduced not only bilateral, but also multilateral clearing. Even politically independent but economically dependent countries such as Sweden and Switzerland became part of this system. The advantages for Berlin were evident. It made it easy to control trade within Europe and enabled the Germans to lay their hands on all the hard currency the occupied countries earned from any transaction with the nonGerman world. Although they tried to keep some distance, Sweden and Switzerland were, up to a point, almost as economically dependent on the Reich as were Norway or France. Their position was different, however. In 1941, 43 per cent of Swedish exports went to Germany, which in turn supplied 51 per cent of its imports.93 Even more dramatic was the fact that 80 per cent of all Swedish trade was financed through the Verrechnungskasse.94 The economic dependency of Sweden and Switzerland was clear to Washington, which therefore blocked all the bank accounts of these countries, as they had done with those of occupied Europe.95 The fact that the Swiss did all they could to maintain contact with the outside world, even developing a merchant fleet despite being landlocked, didn’t help them.96 Sweden and Switzerland were part of Berlin’s informal empire, although the inconvertibility of the Reichsmark resulted in an important difference between occupied and neutral Europe: Berlin had to pay for its purchases in neutral countries. Consequently, what was considered unimportant production was sometimes stimulated in the occupied countries in order to keep the trade links with these countries going. In the Netherlands, the production of Haarlem Oil—a commodity that according to some has healing properties—developed remarkably, notwithstanding the fact that scarce edible fats were needed in the manufacturing process of something that was little more than a placebo. Substantial quantities of the product were exported to Switzerland, however.97 As Dutch exports were paid through the multilateral Berlin clearing system, the factory got its money from the Netherlands clearing institute— in other words, indirectly from the Dutch treasury. In exchange, the uncollectable

210 • Occupied Economies .

claims of this institute, and thus of the Dutch treasury, on Germany only became greater. The Swiss, however, paid for their imports from the occupied country in the German-Swiss clearing account, thus creating purchasing power in Switzerland for Germany. As products in short supply across the Continent were still available in neutral Switzerland, this was a most valuable arrangement for the Germans. It shows that production within German-ruled territory—even when entirely useless—could still contribute to the German war effort. In this sense, the idea that Switzerland and Sweden were as dependent as Belgium and France was not true, as Berlin could not pay these neutral countries with dubious credits. This was the fundamental difference between trade and requisition.98 It was still possible for the neutral countries to manufacture products without advantage for Germany. As they were forced to accept multilateral clearing, they had to allow Germany, however, to pay for their deliveries with the yields of the efforts of their less fortunate neighbours. Occupied Europe was forced to give Germany enormous credits through its clearing accounts (Table 13.3). By the end of 1940 these credits totalled 743 million RM, of which 55 per cent had come from the Netherlands alone. It gives the impression that the exploitation was most successful there.99 Apart from the fact that war damage was very limited in that country, this resulted from Seyss-Inquart’s pragmatic policy. He got the Dutch production restarted at a time when the situation in France and Belgium was still chaotic. In those countries, production was only slowly restarted in the following autumn.100 In the clearing accounts, the difference between the chaos in Belgium and France and the orderly Dutch recovery was mirrored. In 1940 the Dutch economy was the only Western European economy that was operating normally. It in fact had already created a large clearing surplus before production could restart elsewhere. Later, France and Belgium got clearing surpluses as well, and by the end of 1944 Germany had an overall clearing deficit of 14.9 billion RM in Western Europe

Table 13.3.

German Deficits in Clearing Accounts with Occupied Europe, 1940–1944

France

Western All of Western Europe’s Netherlands Belgium Denmark Norway Europe Europe share (%)

1940

55

405

132

191

-13

770

743

104

1941

812

16

666

384

-60

1,819

1,83

97

1942

2,590

23

1,980

559

-91

5,061

5,324

95

1943

5,780

12

3,883

1,008

-160

10,523

10,342

102

1944

8,532

10

4,976

1,421

-22

14,918

14,754

101

Note: All numbers are in millions of Reichsmarks, except where otherwise indicated. Source: Willi A. Boelcke, Die Kosten von Hitlers Krieg. Kriegsfinanzierung und finanzielles Kriegserbe in Deutschland 1933–1948 (Paderborn 1985); Hein A. M. Klemann, Nederland 1938–1948. Economie en samenleving in jaren van oorlog en bezetting (Amsterdam 2002); Richard W. Lindholm, ‘German Finance in World War II’, American Economic Review, 37 (1947) 121–134, here 129; own calculations.

Financing Occupation and Exploitation • 211 alone (Table 13.3). German deficits with other parts of the Continent were negligible, which did not mean those countries were not being exploited. Just before the occupation of Greece, for instance, the bulk of its exports went to Germany and was financed through a German-Greek clearing account.101 Directly after the start of the occupation, however, Germany imported more than it exported to Greece, just as it did in most of the other occupied countries. Here, however, financing clearing deficits by treasury credits strengthened the growing monetary expansion, causing a surge in the already-high inflation. Given the stable exchange rate between the drachma and the Reichsmark, this influenced export prices. By May 1942, it had resulted in a clearing debt of 79 million RM and high profits for Greek traders.102 As between March 1941 and October 1942 the prices (as reflected in the Athens cost-of-living index) had risen from 116 to 15,192 (1940 = 100) and exports had slumped, German importers, who had to pay the countervalue of all imports into the Verrechnungskasse, were no longer interested in Greek trade.103 However, since the Berlin regime wanted to maximize imports from across occupied Europe while, at the same time, preventing a devaluation of the drachma, there was a serious technical problem. To square the circle, the Reich Finance Ministry and the Greek Ministry of National Economy together formed a German-Greek trading company, Degriges, with the aim of equalizing prices and bringing about an upswing in exports to the Reich.104 As a consequence, from the spring of 1943 onwards, Greece had to pay inflated prices for its imports, while Germany paid the pre-war drachma value for Greek exports.105 The profits of Degriges from equalizing prices were used to pay for occupation costs exceeding the agreed monthly payments.106 This dual pricing system reversed the balance of trade, at least on paper.107 Apart from price manipulation,108 the Greek clearing deficit was caused by deliveries from the Reich of substantial quantities of coal and other essentials to the Wehrmacht in Greece, which were settled through the Greek-German clearing account. As the Wehrmacht never paid with real money for its purchases in any occupied country, these coal deliveries were probably paid from occupation costs.109 According to the clearing balances, the General Government was a net beneficiary of German trade flows as well. This stemmed from the necessity of supplying coal and raw materials to the factories working for Germany there. In all likelihood, much of this surplus came from pre-war Polish territories incorporated into the Reich, such as Upper Silesia. The importance of coal is further emphasized in the case of the Soviet Union. From 1941 to 1943, 27 million tons of coal were used in the German-ruled Soviet territories, while only 7.4 million tons—just 27 per cent of the total—were mined there or found as booty. For local economic purposes, only 2.4 million tons were exported from the Reich to the east, while another 2.1 million tons were exported for use by the Organisation Todt or the Wehrmacht. An enormous 15 million tons was for use by the railways. With a self-sufficiency rate of less than 30 per cent, military operations as well as economic production were dependent on imports of no less than 19.5 million tons, with a substantial part undoubtedly coming

212 • Occupied Economies from Upper Silesia rather than from pre-1938 German territory. The dependency of the economies of occupied Soviet Russia and Poland on imported coal meant that the clearing deficits of the states Germany organized on Soviet soil resulted in large parts from imports used in production whose output was taken by the German army or the Organisation Todt and paid for with RKKS or occupation costs paid by the General Government, Ostland or the Ukraine. This makes it clear that although most clearing deficits were Western European, in other parts of Europe balanced clearings or clearing debts to Germany were a consequence of the way of settling civilian (or presumably civilian) debts through the clearing system and of payments for military deliveries from occupation costs, the RKKS or simply looting. While Germany’s Eastern and South Eastern European clearing accounts became active, the Dutch-German clearing account became insignificant.110 In Table 13.3, exploitation by clearing seemed of foremost importance in France, but as the French population was 75 per cent larger than that of all the other parts of occupied Western Europe combined, this is a distortion. Belgium, which had a fifth of the French population, had a deficit almost half that of France, and even in Denmark the deficit was—if corrected for the size of the population—much higher than in France and only a little less than in Belgium. It was only in Norway that Germany was unable to extract much out of the economy by the clearing system as it was already taking so much through occupation costs. In most countries, deficits became astronomic from 1941 onwards, while in 1942, when Speer intensified the German exploitation of the Continent, this was especially the case in France and Belgium. The clearing deficits were credits given to Germany because the occupied countries lacked the power to refuse to participate in the system. They were forced to give such credits in unlimited quantities. Germany could repay these credits only if and when it won the war, and even then it was questionable whether it would do so. In 1941, however, Berlin was still optimistic about winning and suggested that after the war the occupied countries of Europe would be able to invest the billions profitably in the victorious country. Some Nazis even claimed that the Reichsmark accounts were ‘concentrated purchasing power guaranteed by the labour of the continent’.111 In any event, the outcome was that as a result of occupation costs and clearing accounts, purchases from occupied Europe were no longer limited by any financial or monetary considerations. By its political supremacy, Berlin could pay its bills with money extracted from occupied Europe. From 1941, Berlin found yet another solution to pay for its Dutch purchases by making the inconvertible Reichsmark convertible to guilders. As it was impossible for anyone to use German money for purchases without coupons or special licences, such payments were in fact requisitions compensated for by worthless paper money and unusable bank accounts. The difference between these accounts and the clearing system was that, in the Dutch case, German purchases directly inflated the money supply as the Dutch central bank had to exchange Reichsmarks into guilders. In other countries it was the treasury—and thus the state—that paid for German acquisitions.

Financing Occupation and Exploitation • 213 In these countries, therefore, it seemed possible to finance these payments from less inflationary sources such as taxation or loans. Because the Nederlandsche Bank was the only central bank forced to exchange the worthless Reichsmarks into banknotes that still had some purchasing power, anyone with Reichsmarks could buy anything still available in the Netherlands. Consequently, prices on the Amsterdam stock exchange or in the Dutch art market rose much more than in Belgium or France.112 The Reichsbank President Walther Funk described this as robbery (Raub) when he first heard of these plans,113 and even Rost van Tonningen, President of the Dutch central bank, complained about the effects this would have. According to him, Belgian officials used worthless Reichsmarks to buy pre-war Belgian government bonds in Amsterdam, thus paying off their national debts at a bargain rate. The Dutch authorities could limit such exports only by regulating markets and introducing rationing systems, even when these were not directly necessary for internal reasons. They could do little to prevent smuggling or the export of art (or forgeries) or of bonds.114 The question of why the Dutch received special treatment is unsolved. There are two possible answers. One is based on the idea that the solution chosen was followed only in countries that Berlin wanted to incorporate permanently into the Reich, such as territories lost following the First World War (for instance Eupen and Malmédy in Belgium) or Lorraine and Alsace in France. There, Reichsmarks were introduced. Making the national currency exchangeable into Reichsmarks but keeping it as a local currency was done only in the Protectorate and the Netherlands, countries of extreme economic importance to Germany. To guarantee a close link, the Protectorate became part of the German customs and monetary area, and Reichsmarks became convertible into crowns. The tax systems and customs were also adapted. Czechs were allowed to use their own banknotes, but in all other ways the country became economically part of the Reich.115 Although the Netherlands was not formally incorporated into the Reich, as this would result in the loss of claims on the Dutch colonies, the Netherlands were treated in the same way. A German document of 1944 says that the target was to ‘draw the Netherlands for ever in the German and therewith the European [contrary to overseas] economic space without creating a rash decision on the future fate of the Dutch colonies’.116 The Netherlands had been extremely important to Germany since the late nineteenth century when Rotterdam developed into Germany’s main deep-sea port as it served the most important industrial region of Europe, the Ruhr area. For more than half a century, 80 per cent or more of all the activity of this Dutch port was related to German trade. Although politically independent, it is doubtful whether a Dutch economy as a separate entity could be identified since as early as the 1860s. Nevertheless, it is not true to say that the country was dependent, especially since, from the late nineteenth century on, German industry was also dependent on the Dutch parts of the Lower Rhine economy. Consequently, Berlin wore kid gloves when dealing with the Netherlands and in 1914 kept the country out of the war.117 As long as both countries had free trade, Germany was able to meet many of its

214 • Occupied Economies needs through its smaller partner. As a consequence of the 1931 inconvertibility of the Reichsmark, relations had become complicated, however. Nonetheless, when its production was at full speed, as in the late 1930s, the Ruhr needed transportation on such a scale that only the Rhine and its estuary port of Rotterdam could meet the required capacity. It was therefore unacceptable to Berlin that the Netherlands should fall outside the German currency borders, and possibly this was the reason to make the Reichsmark convertible to guilders in April 1941.118 The Dutch adaptation to the German tax system also seems to point to this. In the second half of the occupation period, new Dutch tax legislation was often translated so directly from the German original that when the Dutch text was not clear or there were doubts regarding its interpretation, it was the German text rather than the Dutch that was the deciding one. Substantial steps were made to incorporate the country into the Reich.119 In 1946 a tax specialist even thought the Netherlands had been a laboratory for a Großwirtschaftsraumpolitik.120 Another possible answer to the question of the Dutch exception lies in the fact that the Dutch economy recovered so quickly that before the end of 1940 the problem of how to pay for the exports of an occupied country had already become urgent in this country. Apart from Dutch exports, Berlin was interested in the Dutch financial market and not just in order to participate in strategic industries. As the Netherlands was the only one of the occupied countries that had participated in the German indebtedness of the 1920s, the Reich Finance Ministry wanted to reclaim the government bonds and other German loans that were placed in the Dutch capital market at that time.121 Altogether, these were valued at about ƒ1.4 billion (1.8 billion RM), with government bonds of 535 million RM.122 As a result of the Stillhalte—the 1931 agreement between Germany and its creditors to transfer only limited interests— their quotation on the Amsterdam stock market was far below par. So, by making the Reichsmark convertible, the Reich Finance Ministry could improve its debt balance by recovering these assets at a bargain rate. Just as elsewhere, the German attempts to obtain a share of companies in the occupied Netherlands were not successful.123 Nevertheless, Berlin managed to lay its hands on Dutch financial assets worth 1.8 billion RM. Apart from government bonds, the German purchases included shares in US and Dutch–Indian companies.124 Attempts were made to pay for these acquisitions through the clearing system, but these met with technical problems and resistance from the national financial authorities in The Hague, but also in Brussels and Paris.125 In June 1940, even before it became obvious that the clearing system offered no solution to this, Seyss-Inquart’s financial man, Dr Hans Fischböck, initiated a plan to make the Reichsmark convertible to guilders. In August, when Göring decided to exploit Western Europe, clearing accounts became the instrument throughout Europe for the acquisition of all Berlin’s needs. Fischböck, however, kept pushing his ideas despite opposition from Dutch officials, the Reichsbank and German juridical specialists. From then until early 1941, a struggle took place in which, as usual among Nazis, practical questions became

Financing Occupation and Exploitation • 215 mixed up with prestige and power politics.126 It was publicly known that Fischböck hoped to end his career as Reichsbank President and Reich Minister of Economics, and possibly because of this he just did not give up, as a victory would strengthen his position in the Nazi hierarchy. After 1940 the Dutch treasury no longer gave much credit to the clearing institute and was even repaid. Between April 1941 and May 1945, however, 4.5 billion RM were exchanged into guilders. Rost van Tonningen bought German treasury bonds for this money.127 The Dutch therefore did not end up with an enormous, uncollectable claim of its clearing account on the Verrechnungskasse, but instead with an equally uncollectable claim by its central bank on the Reichsbank.

Financial and Monetary Consequences of the Occupation Table 13.4 shows the enormous financial problems resulting from the occupation even in the richest, least destructively exploited parts of Europe. In 1943 normal French government spending was 140 per cent higher than in 1938. When corrected for inflation this proves to be mainly a result of price rises. Normal real expenditures rose by just a third. Spending on social security, market regulation, extra policing, fire services and health care all grew, but this also happened in neutral countries like Sweden or Switzerland, while in France and Belgium normal spending, when corrected for price increases, had already peaked by 1940. After that, when the cost of national defence had almost disappeared, expenditures declined. On the other hand, in the Netherlands, where the defence costs had not been very high, while wartime economic regulations were enormous, normal real government spending increased, and declined only from 1942 onwards. On top of these additional internal expenses, the occupied countries also had to pay enormous sums for German purchases. In France, for instance, normal payments were just a third of what the occupied country had to pay from the treasury. French spending corrected for inflation altogether rose by 317 per cent between 1938 and 1943. In the Netherlands this was 140 per cent, and in Belgium 168 per cent (see Table 13.4).128 Berlin’s demand that the occupied countries pay for all of Germany’s acquisitions caused an enormous escalation in spending. Most of the new financial burdens were paid from the state treasuries, but where the Reichsmark became convertible to local currency or the RKKS became legal tender— such as in the Ostland, the Netherlands or the Protectorate—the Reichskreditkassen or Central Bank inflated the banknote circulation by using new notes to pay a substantial part of the costs. The same thing happened in the General Government and Serbia, where German-controlled circulation banks were founded and were ordered to pay for German costs with freshly printed notes. For that reason, in the General Government alone, 14.3 billion zloty in new notes—7.2 billion RM—were brought into circulation.129 However, most German purchases were paid from the

Table 13.4.

Government Expenditures, Costs of Occupation and Taxation in France, Belgium and the Netherlands, 1938–1945 Normal expendituresa

Expenditures resulting from the occupationa

F

N

B

55 66

1,045 1,182

13.2 15.8

1940

110

1,563

25.5

80

1941

123

2,232

19.7

142

1942

133

1,559

20.1

157

1943

135

1,794

21.6

282

1944

165

2,014

20.6

1945

—

3,815

—

1938 1939

Total (1938 = 100)

Percentage of normal expenditures covered by taxes

Expenditures connected with the occupation as a percentage of the budget

Percentage of total expenditures covered by taxes

F

N

B

F

N

B

F

N

B

F

N

B

F

N

B

— —

— —

— —

100 120

100 113

100 120

84 97

89 83

73 60

— —

— —

— —

84 97

89 83

73 60

747

7.7

345

221

252

64

66

21

42

32

23

37

44

16

1,434

24.9

482

351

338

66

67

74

54

39

56

30

41

33

1,915

37.1

531

332

433

72

114

81

54

55

65

33

51

28

1,892

43.0

760

353

489

89

97

80

68

51

67

29

47

27

195

2,267

24.1

662

410

339

74

81

51

55

53

54

34

38

23

—

624

—

—

425

—

—

75

—

—

14

—

—

64

—

Governmental expenditures and costs of the occupation corrected for prices Normal expendituresa

Expenditures resulting from the occupationa

Index total (1938 = 100)

Index tax revenues (1938 = 100)

Taxes as a percentage of the legal GDP

F

N

B

F

N

B

F

N

B

F

N

B

F

N

B

1938

55

1,045

13.2

—

—

—

100

100

100

100

100

100

12

16

14

1939

60

1,159

15.9

—

—

—

109

111

121

110

104

108

19

16

15

1940

94

1,338

22.4

68

639

6.8

294

189

221

154

95

56

20

17

10

1941

88

1,680

14.1

101

1,079

17.8

344

264

241

140

122

123

20

26

32

1942

82

1,095

12.3

96

1,345

22.8

326

233

266

147

135

119

20

36

35

1943

74

1,221

11.8

155

1,288

23.6

417

240

268

162

129

112

23

35

45

1944

64

1,260

8.0

75

1,418

9.3

256

256

131

116

110

48

21

39

27

1945

—

2,321

—

—

380

—

—

258

—

—

60

—

12

16

14

Note: B, Belgium; F, France; N, Netherlands. Amounts of expenditures are given in billions of francs (for France and Belgium) and millions of guilders (for the Netherlands). Source: League of Nations, Statistical Yearbook, 17 (1942–1944) (Geneva 1945); CEPII, Séries lonques macro-économiques, Comptes nationaux en base 1938, http:// www.cepii.fr/francgraph/bdd/villa/mode.htm; Angus Maddison, Dynamic Forces in Capitalist Development: A Long-run Comparative View (Oxford 1991); Hein A. M. Klemann, Nederland 1938–1948. Economie en samenleving in jaren van oorlog en bezetting (Amsterdam 2002); own calculations. a

218 • Occupied Economies treasuries. These became so heavily overburdened that it was impossible to pay everything from increased taxation, and monetary expansion proved the only way out. From 1942, German acquisitions in Western Europe were nearly 50 per cent of the declining GDP.130 As was seen in the chapters on exploitation in Part 2, the cost of this to the average Frenchman or Dane was less than half the amount a Norwegian had to pay and also far less than the Dutch paid. Nevertheless, even in Denmark, Germany created financial problems that per capita equalled the annual income of an unskilled labourer. In other less-developed countries, the contributions to the German warfare were smaller, but more often than not these economies had been weaker to start with, and so their wartime economic setback felt much worse. In France, despite tax increases just before and during the war, taxation paid for little more than 30 per cent of government spending during the occupation. So the French not only had to accept a rise in their national debt of 50 per cent by the end of 1940, but in the following years Vichy saw a further rise of this debt by 150 per cent. By 1944 the French debt had grown by 283 per cent with respect to the 1938 figure (Table 13.5). Although in real terms the increase was only 48 per cent, it nevertheless meant that the national debt, which was already a shocking 109 per cent of the 1938 GDP, had become 278 per cent by 1944.131 During the First World War, Paris had borrowed substantial sums on international capital markets.132 As it no longer had access to these during the Second World War, Vichy had to pay all debts from internal resources. Neither taxation nor borrowing brought in enough to cover these, however, and France had to accept a gigantic monetary expansion, just like any other occupied country. According to Occhino, Oosterlinck and White, the reparations France had to pay were 111 per cent of the French GDP. They considered that this was not particularly high, either compared to the sums spent on warfare by countries actually involved in the fighting or compared to French expenditures during the First World War.133 One of the problems here is that it is not clear which year the GDP data they use represents, but when the 1938 GDP is used as the denominator and the sum of the pricecorrected expenditures resulting from the occupation as the numerator, then France paid 128 per cent of its GDP, which confirms that the calculations were correct.134 In the Netherlands, the Reichsmark became convertible, and so a substantial part of the costs there were covered by the Nederlandsche Bank.135 If corrected for that, then the Dutch paid 118 per cent of their 1938 GDP, or about the same amount as the French.136 If one wants to answer the question of whether these burdens were light compared to those of countries actually fighting, it is important to realize that the real GDP (not including clandestine production) across occupied Europe was declining, while the GDPs of most of the combatants actually grew.137 Exact calculations about the financial burdens of Eastern or South Eastern Europe are impossible to make as no one ever calculated the GDP of political constructions such as Ostland, the General Government or the Protectorate. Nevertheless, even here, Greece survived in more or less its pre-war form and was occupied as such,

Financing Occupation and Exploitation • 219 although by three Axis powers, Germany, Italy and Bulgaria. In this country between 1938 and 1945 the GDP apparently declined by 61 per cent.138 This is somewhat of an exaggeration, of course, as more than 55 per cent of the GDP was agrarian in 1938, and in addition there was substantial black market production, not reflected in any official statistics. Nevertheless, Greek production collapsed, as it did throughout the Balkans.139 This was no reason, however, for the Nazis not to demand huge contributions from the Greeks towards Germany’s war effort. In battle areas, such as Greece became during 1941 and 1942, Berlin had little interest in the consequences of exploitation, especially when the victims were people whom the Nazis considered to be of dubious racial origin. Consequently, according to Günther Altenburg, Hitler’s Plenipotentiary in Greece, the contribution of Greece to the German warfare during the North African campaign amounted to 114 per cent of its national income.140 The funds to pay for this could never be obtained from taxes, and so the 1941 tax rise was symbolic. Since there were few financial markets left in which Greece could borrow the deficit, the German demands for goods and services, including defence works, were met by inflating the banknote supply. The country had done the same to finance its own war against the Italian invader after the October 1940 attack.141 The seeds of inflation had already been sown at that time.142 Although it is impossible to calculate the exact material burden of the occupation as a percentage of the GDP for this region of Europe, Altenburg’s 114 per cent must be too high given that the population survived. From all that is known, however, it is clear that these countries were worse off than countries like France or Belgium. In a period of declining production, it seemed almost impossible to pay for all of Germany’s acquisitions. After raising taxes and modernizing the tax systems, the financial authorities had to borrow gigantic sums on the financial markets, and even that proved not enough. Therefore, they had to borrow directly from the national banks as well. Thus they created monetary expansion and with that the liquidity needed to give the treasuries access to cheap loans. In order to prevent out-of-control and destructive inflation, the financing of all extra expenditures by direct monetary expansion was mostly avoided. Rather, in the first months of occupation, financing these costs by borrowing was in at least some countries possible, as a result of disinvestments. Even when possible, such a policy would have kept interest rates high and would thus be expensive for the state, while it also prevented the inflation needed to keep the real state indebtedness within limits. Throughout Europe, all three sources of money—taxation, national debt and monetary expansion—were used to pay for the Germans’ purchases. France, which before May 1940 reformed its tax system, increased the tax burden of its citizens further during the Vichy period. At the time of liberation, the French nominal tax income had almost tripled since 1938, but corrected for prices it grew only by 62 per cent (see Table 13.4).143 During the same period, the legal part of the French GDP decreased by 25 per cent.144 This meant that between 1938 and 1944—a period of great impoverishment—the real French tax burden doubled; the real tax inflows grew by

220 • Occupied Economies 63 per cent. In the same period, real state expenditures rose by 317 per cent (Table 13.4). In Belgium and the Netherlands, the tax burden grew even faster, while the real tax income was disappointing there as well. Just as in France, taxes were far from enough to meet all Berlin’s demands. As a consequence, exploitation undermined not only production and the standard of living, but also financial and monetary stability.

The First Period During the first period of war and occupation, when private households and companies tried to hoard consumer goods and raw materials, tight financial markets were characteristic. During later periods, the easy supply of money from the central banks to finance the burdens of the state, and the lack of ways in which to spend the money, caused destructive liquidity. Table 13.6 shows that from 1939 on, the circulation of banknotes throughout Europe grew considerably. Before the occupation, in some countries such as France, this was stimulated by hot money streams.145 Since following the 1938 Munich crisis Paris tried to concentrate production on military needs, tensions were created in the financial markets. Labour, raw materials and capital were withdrawn from civil production. Government spending stimulated the war-related sectors of the economy and created full employment. In a time of growing overall production, and thus increased incomes for private households, imports as well as the production of consumer goods were limited; the availability of such goods was restricted. The result was that purchasing power was high, but demand could not be satisfied.146 From September 1939 on, therefore, the tendency was for price levels to rise. Officially, prices were frozen, but price control could not restrain the tension between demand and supply, not even in combination with stable nominal wages. The end of unemployment caused wages to rise, however.147 In France this tension was not the only cause of rising prices, as even the new Finance Minister, Paul Reynaud, could not prevent an enlarged money supply.148 From November 1938 on, when Reynaud became minister, he tried to adapt both the financial policy as well as the social policy to the hard times he was convinced would come. It resulted not only in a policy of tax increases and a strengthening of the treasury by borrowing on money markets, but also in a slightly camouflaged reversal of some of the social measures of the Front Populaire government. The obvious reason was that the republic could not afford a forty-hour week when it was likely to be facing the Germans again in another major war. Reynaud, who anticipated a long war, thought it an absolute necessity to have a strong financial position if France was to have a chance of winning.149 The Daladier government (1938–1940) economized therefore on all non-military costs. At first, this seemed likely to lead to a confrontation with the trade unions, but as a general strike failed and in November 1939 the French Parliament wholeheartedly accepted the reorganization programme, the reaction of the financial markets was strongly positive. After a few weeks, shares rose by

Table 13.5.

Internal Financial Consequences of the German Occupation in Three Western Occupied Countries, 1938–1944 Tax revenue

Loans

Increase in banknote circulation

Total sum available for the treasury in local currency

France Belgium Netherl. (in billions (in billions (in millions of fr.) of fr.) of  )

France Belgium Netherl. (in billions (in billions (in millions of fr.) of fr.) of  )

France Belgium Netherl. (in billions (in billions (in millions of fr.) of fr.) of  )

France Belgium Netherl. (in billions (in billions (in millions of fr.) of fr.) of  )

1938

46

97

1939

64

95

1940

71

53

1941

81

145

1942

96

1943

121

1944

123

926

51

2

979

19

2

231

1,024

139

4

1,113

1,503

113

12

1,527

163

1,778

125

16

172

1,749

172

29

105

1,622

220

13

Taxes (1938 = 100)

–72

0

124

114

99

978

41

5

160

124

102

1,370

106

10

392

316

67

2,529

76

16

570

270

173

3,600

1,652

71

23

920

292

202

4,350

1,794

117

19

444

410

219

3,987

2,321

43

16

1,600

386

134

5,543

Governmental debts (1938 = 100) Belgium

Netherl.

17

Total banknote circulation (1938 = 100) France

Belgium

Total sum available for the treasury (1938 = 100)

France

Belgium

Netherl.

France

Netherl.

France

Belgium

Netherl.

1938

100

100

100

100

100

100

100

1939

138

98

106

115

103

106

138

100

100

100

100

100

127

116

103

159

140

1940

154

55

111

150

124

134

201

157

156

287

186

259

1941

175

149

162

210

156

172

246

220

213

244

412

368

1942

209

168

192

254

191

213

349

309

306

268

541

445

1943

262

177

189

317

232

258

459

378

351

372

626

408

1944

267

108

175

383

321

317

528

201a

512

351

385

567

(Continued)

Taxes corrected for prices (1938 = 100) France

Belgium

Netherl.

Governmental debts corrected for prices (1938 = 100)

Banknote circulation corrected for prices (1938 = 100)

Total corrected for prices (1938 = 100)

France

Belgium

Netherl.

France

Belgium

Netherl.

France

Belgium

Netherl. 100

1938

100

100

100

100

100

100

100

100

100

100

100

1939

126

99

104

104

101

107

125

125

117

94

160

137

1940

131

48

95

128

106

118

171

134

137

244

164

222

1941

125

107

122

150

117

123

175

166

152

174

294

277

1942

128

103

135

156

134

131

214

217

188

164

332

312

1943

144

97

129

174

158

141

252

257

192

204

343

278

1944

103

42

110

148

201

122

204

126a

198

136

149

355

Note: ƒ, guilders; fr., francs. 1944: In December 1944, i.e. after the Belgian money purge. Source: League of Nations, Statistical Yearbook, 17 (1942–1944) (Geneva 1945); Centraal Bureau voor de Statistiek, Macro-economische ontwikkelingen 1921–1939 en 1969–1985. Een vergelijking op basis van herziene gegevens voor het interbellum (The Hague 1987); Erik Buyst, ‘New GNP Estimates for the Belgian Economy during the Interwar Period’, Review of Income and Wealth, 43 (1997) 357–375, here 359; Robert J. Barro and José F. Ursúa, ‘Macroeconomic Crises since 1870’, BPEA (2008), Online Appendix, http://www.economics.harvard.edu/faculty/barro/files/MacroCrisesSince1870_08_0614.xls; CEPII, Séries lonques macroéconomiques, Comptes nationaux en base 1938, http://www.cepii.fr/francgraph/bdd/villa/mode.htm; Angus Maddison, Dynamic Forces in Capitalist Development: A Long-run Comparative View (Oxford 1991); Hein A. M. Klemann, Nederland 1938–1948. Economie en samenleving in jaren van oorlog en bezetting (Amsterdam 2002); own calculations. a

Table 13.6. Expansion of the Banknote Circulation in German-occupied Europe

France

Belgium

Netherlands

Norway

Denmark

Poland/ GG

Czechosl./ Protectorate

Yugosl./ Croatia

Greece

Estonia

Latvia

Lithuania

Germany

Billions of francs

Billions of francs

Millions of guilders

Millions of kroner

Millions of kroner

Millions of zloty

Billions of crowns

Billions of dinars

Billions of drachmas

Millions of kroons

Millions of lati

Millions of litas

Millions of RM

1938

109

22

992

477

441

1,406

7.0

6,921

7,239

52

124

142

8.6

1939

149

27

1,152

574

600

1,929

6.3

9,698

9,453

64

150

166

12.8

1940

218

35

1,544

1,040

741

1,263

6.5

13,834

15,369

85

152

186

15.1

1941

267

49

2,114

1,528

842

2,290

9.4

15,281/8,352

48,798

—

—

—

20.6

1942

379

68

3,034

2,137

983

4,150

14.1

22,240

306,000

—

—

—

25.6

1943

498

83

3,478

2,578

1,359

6,465

24.1

43,618

1,276,000

—

—

—

34.7

1944

573

44

5,078

3,023

1,658

10,058

34.8

149,485

2.5E+18

—

—

—

50.1

NetherPoland/ Czechosl./ Yugosl./ France Belgium lands Norway Denmark GG Protectorate Croatia Greecea Estonia Latvia Lithuania Germany (1938 = 100) (1938 = 100) (1938 = 100) (1938 = 100) (1938 = 100) (1938 = 100) (1938 = 100) (1938 = 100) (1938 = 100) (1938 = 100) (1938 = 100) (1938 = 100) (1938 = 100) 1938

100

100

100

100

100

100

100

100

100

100

100

100

100

1939

138

127

116

120

136

137

90

140

131

106

121

117

149

1940

201

157

156

218

168

90

93

200

212

131

123

131

176

1941

246

220

213

320

191

163

134

221/121

674

173

—

—

240

1942

349

309

306

448

223

295

201

588

4,227

—

—

—

298

1943

459

378

351

540

308

460

344

1,154

17,627

—

—

—

403

1944

528

201

512

634

376

715

497

3,955

34,535,156

—

—

—

583

Note: Numbers in italics correspond to the italicized country name in the heading above. GG, General Government. 1944: Billions. Source: League of Nations, Statistical Yearbook, 17 (1942–1944) (Geneva 1945); ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes und der Märkte einzelner Länder’, Jahrbücher für Nationalökonomie und Statistik, 1938–1944; Hein A. M. Klemann, Nederland 1938–1948. Economie en samenleving in jaren van oorlog en bezetting (Amsterdam 2002). a

224 • Occupied Economies 25 per cent and bonds by 15–20 per cent. The decline in the interest rates caused by the rising bonds gave Reynaud the opportunity to consolidate treasury bonds and to convert high-interest public loans into cheaper government bonds. He even managed to convert some international credits to the state railways with interest rates of 4.5–6 per cent into 4 per cent loans on the Dutch and Swiss capital markets.150 The economizing effects were substantial, but these were more than absorbed by the increased military spending.151 Even with tax increases and increased borrowing, the budget still did not balance. To plug the gap, even Reynaud could only inflate the banknote supply and borrow directly from the Banque de France. At the same time, the French state—in need of hard currency to purchase essential raw materials—called for its citizens to return capital to France that had been invested abroad during the 1920s and 1930s. As a result of this, 10 billion francs in foreign currency were brought into France before December 1939. This foreign currency was exchanged in newly printed francs, which further increased the banknote circulation. Inflation became a serious threat. This became worse when, with the outbreak of war in September 1939, the Banque de France granted the Republic a cheap war loan of 25 billion francs. To make that possible, the state suspended the bank’s obligation to guarantee the banknote circulation with gold reserves of more than 35 per cent. From then on, central bank credits to the state to finance the endless war-related expenditures became easier, resulting directly in an inflationary growth of the banknote circulation. The use of the profits of the 1938 revaluation of the gold stock to increase the state expenditures increased this tendency still further. Between the end of 1938 and September 1939, the banknote supply grew by a third, and by June 1940 by yet another 20 per cent. Between 1938 and 1940, it more than doubled (see Table 13.6). Although from September 1939 on prices were officially frozen, an upward trend was undeniable.152 France was not the worst prepared of the countries that fell victim to the war. Reynaud’s policy had strengthened confidence in the Republic’s financial position, and overseas capital had streamed back. As a result, it was possible to issue treasury bonds worth 10.5 billion francs just before September 1939.153 Nonetheless, especially from September 1939, the Republic had to cover its financial needs mainly on the money market. After the start of the war, the capital market was too tight for any further issues.154 Paris had to postpone the introduction of a new 150 billion franc war loan until July 1940. By then the French army had been defeated, and the money had been spent. Therefore, it was too late to borrow anything on the capital market.155 By that time, raising loans had become a problem across Europe. This became clear when in 1939 the issue of a Polish Air Defence loan failed.156 After Munich, it was not only the Polish, but capital providers throughout Europe that were feeling the uncertainty of the times. They no longer wanted to freeze their liquidity in long-term securities.157 In March 1939, when Hitler destroyed Czechoslovakia, the Norwegian state was still able to raise a substantial sum on its capital market,158 but in Germany itself by that time the value of government bonds had slumped by 17 per cent.

Financing Occupation and Exploitation • 225 This made it clear that financial circles did not trust Berlin’s reckless policy.159 Later in 1939 Oslo found itself in the same position and could no longer raise funds. Now, to fill the gap in its budget, Norway too had to inflate its banknote supply (Table 13.6).160 Brussels did not even try to enter the capital market and borrowed all it needed on the money market. In Belgium, which had suffered from serious financial problems during and after the First World War, there was so much mistrust in financial circles that flight of capital became a grave problem. In December 1939, the enormous reclaiming of money from the Belgian banks resulted in a banking crisis and the collapse of the Crédit Anversois, and the Belgian franc depreciated in New York (Table 13.7).161 It was not a typical Belgian experience. In September 1939, financial markets throughout Europe reacted pessimistically with the outbreak of war. In Germany, government bonds lost almost 40 per cent of their market value, and in France the loss was 25 per cent. The Swiss stock exchange was the only one of all the European financial markets that reacted slightly positively to the dramatic political developments.162 Since the situation across Europe was uncertain, capital providers such as savings banks and insurance companies now wanted to be as liquid as possible. In view of this, The Hague proved rather impulsive when, in December 1939, shortly after the outbreak of war—at the same time as the Belgian economy was suffering from a banking crisis—it tried to issue a public loan of ƒ300 million. It became a complete failure, an almost unknown phenomenon in twentieth-century Dutch financial history.163 It wasn’t only capital markets that were tight; in a number of countries, even money markets were. Individuals and companies needed cash and were not prepared to lend their money for even a short period of time. People across the Continent remembered the economic consequences of the Allied blockade in the First World War. They wanted to ensure supplies of essential consumer goods such as soap, tinned food and clothing, while companies hoarded raw materials and semi-finished goods. In addition, fearing the collapse of the banks during military campaigns, companies as well as private individuals wanted to get their hands on their cash.164 Hence, bank and savings accounts declined, as can be seen in Table 13.7, which shows how this happened in Belgium, the Netherlands, Norway, Poland, Czechoslovakia, Yugoslavia, Estonia and Greece. In France, however, this effect was more than compensated for by the recall of overseas capital. In March 1939, when the remaining regions of Czechoslovakia were swept away, Czech withdrawals created a run on the banks, which could only be halted by a restrictive moratorium.165 In September, when France and Britain declared war, financial panic hit Yugoslavia and Greece, as it did Belgium three months later. The public reaction in the Balkans resulted in such enormous withdrawals that Belgrade had to close the banks for a week, after which it was possible to withdraw only limited sums. As a result of these problems in the banking sector, the increasing military expenditures could be financed only by printing new banknotes. This, combined with the private hoarding of banknotes, caused a growth in the circulation of

Table 13.7.

Index of Savings and Bank Accounts in Occupied Europe, 1938–1943 (1938 = 100) Savings accounts

France

Belgium

Netherlands

Norway

Denmark

Czechoslavia/ Protectorate

Estonia

Latvia

1938

100

100

100

100

100

100

100

1939

125

81

95

97

106

97

109

100

100

100

101

92

104

1940

182

99

83

139

113

110

98

103

—

—

1941

304

128

84

—

135

136

—

—

—

—

1942

373

169

99

—

151

—

—

—

—

—

1943

452

242

140

—

181

—

—

—

—

—

Yugoslavia Greece

Bank accounts France

Belgium

Netherlands

Norway

Denmark

Czechoslavia/ Protectorate

Yugoslavia

Greece

Estonia

1938

100

100

100

100

100

100

100

100

100

1939

105

95

95

98

103

88

92

108

92

1940

106

91

81

92

99

91

—

97

—

1941

115

94

80

104

100

108

—

—

—

1942

142

105

94

—

111

—

—

—

—

1943

188

133

133

—

124

—

—

—

—

Source: Hein A. M. Klemann, Nederland 1938–1948. Economie en samenleving in jaren van oorlog en bezetting (Amsterdam 2002); League of Nations, Statistical Yearbook, 17 (1942–1944) (Geneva 1945).

Financing Occupation and Exploitation • 227 Yugoslavian banknotes of 40 per cent in 1939 alone, even more than in France.166 There was little Belgrade could do about it, apart from giving up its defence policy. In 1940 the problem was still the same, with the result that the banknote circulation rose yet again by 43 per cent. To make that possible, Belgrade had to introduce new legislation reinforcing the position of the government against the Central Bank.167 In 1940 the supply of banknotes in circulation rose steeply not only in France and Norway, countries that were overrun and lost their independence, but also in Yugoslavia, where the banknote supply rose even more than in any other European country, apart from neighbouring Greece. Nonetheless, in this year, these two countries stayed neutral for the time being (see Table 13.6). The Yugoslavian cost-of-living index grew by 46 per cent in 1940 and by 58 per cent in 1939 and 1940 together. Consequently, real wages declined by more than a third.168 This led to social discord which resulted in strikes and disorder, bringing wage increases of between 25 and 30 per cent and the postponement of the badly needed tax increases. Consequently, further monetary expansion was the only way to solve the budgetary problems.169 In Greece the situation was more or less the same. In 1939 the banknote circulation rose by 31 per cent (see Table 13.6). In the same year, mobilization was already causing problems that would be characteristic for the Balkans for the duration of the war. Labour shortages caused by the mobilization of the army resulted in a decline in production, making any economic policy or financial stability impossible.170 These problems only grew worse with Mussolini’s attack in October 1940. From then on transport problems threatened the food supplies, causing rising food prices. To prevent a famine, the government had to take over control of supplies, and as Athens had to increase the country’s military expenditures, the number of banknotes in circulation increased yet again. In 1940, when production was undermined by the war, the real GDP slumped by almost 20 per cent, while banknote circulation grew by 65 per cent.171 Financial collapse seemed imminent.

Taxation In some occupied countries of Western Europe, modernizing the tax system was a priority—if not among the national officials, then at least among the Germans. The officials of the central banks and the finance ministries remembered the financial disasters after 1918 and tried to keep monetary circulation in check. For them the problem of how to finance the occupation was a technical one; they saw themselves as the experts to solve it. For that reason, but also out of frustration about the lack of technical financial insights among members of Parliament, officials of the Finance Ministry in the Netherlands were eager to introduce a modernized tax system. Until then all their proposals had been rejected by the Parliament. Now they could do it alone. Until early 1941, when the National Socialist Rost van Tonningen took control of the ministry and the central bank, these civil servants had a free hand; then, the

228 • Occupied Economies tax department became an independent office controlled by German officials who introduced the German tax system.172 After the war, this new system with an almost doubled tax burden was gladly accepted by the Dutch government. The Hague wanted a stronger hold on society and, for that, needed more money.173 The German tax system was not introduced only in the Netherlands, but also in Poland—in the General Government as well as in the German-incorporated parts— and in the Protectorate. As Poland and the Protectorate were formally part of the Reich, this is not surprising. Compared to the pre-war standards, the German level of taxation was high, which meant that with the introduction of the German tax rates, people in these countries had to pay much more than previously.174 However, a higher rate of taxation was necessary not only because taxes financed the occupation costs but also because this was the only way the state could limit the rise of private incomes at a time when supplies of consumer goods had declined. In addition, the inflationary tendencies could be kept in check only by price controls. High incomes, combined with limited availability of consumer goods, resulted in increased spending power and thus a high risk of inflation. Price control was a weak answer to these strong market forces. In 1942 a German official wrote that ‘until now in almost all [occupied] countries an increase in taxation was realized . . . The General Government and the Protectorate are incorporated in the areas that should adapt to the German tax system. In Belgium, France, Serbia and recently also in Greece, tax rises are intended, partly stimulated by us.’175 By September 1940, German officials in France expressed optimism about a reorganization of the French finance ministry that would ‘result in a modernizing of the partly obsolete French budget, tax and customs legislation’. The German plan was not only to modernize the customs and taxation systems, but also to adapt them to their own system.176 In view of the high occupation costs levied against France, it badly needed to increase its income from taxation. Consequently, in 1942 higher rates of taxation were announced along with the introduction of compulsory prepayments for income taxes and a modernization of the tax system on agriculture and small enterprises. As the financial problems of the French state were immense and severe inflation a threatening danger, this could not come too soon.177 The pre-war Daladier government had already raised taxes, but since the start of the occupation, taxation now paid for only a third or less of the total expenses, including those connected with the occupation. Taxes even paid for less than two-thirds of internal French expenses (see Table 13.4). However, for the Germans and taxation experts the October 1942 tax reform was disappointing.178 The Vichy government blocked any fundamental changes to and modernization of the system. Vichy paid most of the costs of the occupation by increasing its debts and by expanding its monetary supply. Of course, German officials were right when they wrote that this would be no solution, but the Vichy government did not want to implement definitive solutions as long as the war lasted.179 The fact that German officers were worried about the increased circulation of banknotes was not sufficient.180 The inference in the French historical literature

Financing Occupation and Exploitation • 229 is that the Vichy ‘wished to avoid financing this significant increase of public expenses’—in other words, the German contribution and clearing deficits—‘by raising taxes’.181 It would be interesting to find out whether the Vichy government was in fact strong enough to implement substantial tax increases. Possibly Vichy officials were just hopeful that at the end of the war occupation costs would be repaid in accordance with international law. At any rate, French taxation more than doubled as a percentage of GDP. The first step towards this had been put in place by the pre-war government, but increases were limited during the occupation. In Belgium and the Netherlands, where taxes had not been changed prior to 1940, the tax burden more than doubled during the German occupation (see Tables 13.4 and 13.8). Table 13.8 shows that throughout Europe governmental taxation revenues rose, but when corrected for rising prices, these increases do not appear to be very substantial. In Belgium in 1943, the 1938 real level of tax revenue was not even reached. This was a consequence of economic decline. The increase in the tax burden was substantial when calculated as a percentage of GDP—that is the GDP before any correction is made for clandestine production (which was, of course, not taxed). By the end of the occupation period, the taxation burden in Western Europe had doubled. In Poland the increase was possibly even higher, since between 1940 and 1943 the nominal tax revenue rose by 50 per cent, but after 1939 all taxes were raised in the General Government, a region that was little more than a third of the pre-war country and not the most interesting part from an economic point of view. Inflation played a part, of course, but for lack of data, it is impossible to correct for that. It seems reasonable to presume that throughout occupied Europe tax burdens rose substantially. Consequently, in 1943, the French paid 89 per cent of their normal expenditures from taxes. In the Netherlands, this was even higher—almost 100 per cent (Table 13.4).182 As, however, internal government spending in the three Western European countries was only a third or less of all expenditures, it was no solution to the financial problems. How dramatic the consequences of the enormous increases in expenditures and the limited increase in taxation were became clear in France. There, by 1940, the financial problems were already out of control. According to the pre-invasion budget of 1940, normal spending of 90 billion francs would be paid from taxation, while a 150 billion franc war loan would cover military expenditures. After the defeat of the French forces, issuing this loan not only became impossible, but expenditures increased further and not only as a result of occupation costs of 75 billion francs. Together with some minor costs, the total state expenditure for 1940 was 350 billion francs, of which only 25 per cent was covered by taxation. The budget for 1941 was even more dramatic; expenditures rose to 270 billion francs, while tax revenues slumped to 60 billion, covering only 22 per cent of the budget.183 Domestic expenditures did not create the problem, but across occupied Europe war expenditures were mainly made up of payments to cover the Germans’ purchases. Although taxation had been substantially increased, this was far from enough to cover these costs.

Table 13.8.

Tax Revenues in a Number of Countries during the German Occupation, 1938–1944 (1938 = 100) Taxes, nominal

Taxes, corrected for price developments

France

Belgium

Netherlands

Poland/ GG

Norway

France

Belgium

Netherlands

Poland/ GG

Norway

1938

100

100

100

100

100

100

100

100

100

100

1939

138

98

106

98

104

126

99

104

98

102

1940

154

55

111

39

155

131

48

95

—

61

1941

175

149

162

71

166

125

107

122

—

119

1942

209

168

192

109

131

128

103

135

—

143

1943

262

177

189

148

133

144

97

129

—

197

1944

267

108

175

149

120

103

42

110

—

180

Note: GG, General Government. Source: Reports of the Militärbefehlshaber in Frankreich, Paris, http://www.ihtp.cnrs.fr/prefets/de/d101242mbf.html; Hein A. M. Klemann, Nederland 1938– 1948. Economie en samenleving in jaren van oorlog en bezetting (Amsterdam 2002); Norges Offisielle Statistikk, Statistisk sentralbyrå, Statistiske Oversikter 1948 (Oslo 1949); ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes und der Märkte einzelner Länder’, Jahrbücher für Nationalökonomie und Statistik, 1938–1944; League of Nations, Statistical Yearbook, 17 (1942–1944) (Geneva 1945).

Financing Occupation and Exploitation • 231

Financial Markets and the Growth of Monetary Circulation Not only was taxation insufficient to pay for the Germans’ expenses, but borrowing on money and capital markets could not solve the problem either. The problem was not lack of financial capital, however. After the Wehrmacht subjected the Continent to Hitler’s power, financial markets across Europe became very liquid again. Shrinking stocks—used, sold or taken over by the Germans and paid for with RKKS or out of occupation costs—could not be rebuilt. This resulted in disinvestments; at the same time, hoarded banknotes were redistributed again.184 During the initial period, there was still a possibility of purchasing and hoarding some essentials, while companies could still initiate new investments or realize planned reinvestments. As a consequence of the Allied blockade, import substitutions—and investments to achieve these—were also needed. In 1941, bank accounts in Belgium were still a little below their 1939 levels, while accounts in the Netherlands were even during 1941 still below their 1939 level, despite a quick recovery (Table 13.7).185 After a time, however, the tight financial markets became liquid again. Much had changed before that happened, however. Most essential consumer goods were available only with distribution coupons; sold or used stocks could not be rebuilt; and regulation made investments ever more difficult. As a result, there was little demand on the financial markets any more, except from the treasuries of the occupied countries that had to pay for most of the German expenses in their countries. Apart from monetary expansion, the growth of bank accounts was also created by disinvestments and the liquidation of stocks. From 1940 on, companies across Europe could not prevent enormous disinvestments of floating capital as the Germans ordered them to sell their stocks, while from 1942 onwards any reinvestment in machinery and building also became almost impossible. This was not just the case for industry, but also for agriculture. The aim of government food rationing everywhere was to direct the population towards a more vegetarian diet, as the production of vegetable foodstuffs such as potatoes and corn demanded far fewer resources than the production of meat or dairy products of equivalent nutritional value.186 In a period of scarcity almost everywhere, apart from areas where the land could only be used to herd animals, a more vegetarian diet guaranteed a better food balance. Farmers were under pressure or even given the order to grow more basic foodstuffs and to plough up their pastures, butcher their livestock and accept substantial losses of investments. Apart from the consequences of black market transactions, specialized agricultural banks were confronted with an enormous inflow of money because farmers and peasants were forced to sell a substantial part of their livestock. Especially farmers breeding chicken or pigs—animals directly competing for foodstuffs with human beings—were often ordered to butcher almost all their livestock and sell the meat.187 It meant from a financial point of view that their investments were liquidated. In countries where the exploitation stimulated production, other sources of growing liquidity were German orders resulting in full employment, while profits were

232 • Occupied Economies good. In other words, everybody had an income, but as very few consumer goods were produced, that became ever more difficult to spend. Of course, inflation undermined real wages, but in these parts of Europe governmental distribution systems restricted consumption, and price controls kept costs relatively low, at least for essential consumer goods. Black market purchases were available, but at these markets supply was limited, and so, more often than not, they were unable to absorb all superfluous cash. Consequently, because of inadequate supplies, incomes could not be spent, while normal market forces to increase prices were suppressed by control systems, creating an ever-growing monetary surplus. As financial experts as well as the general public feared that this would lead to hyperinflation and the value of money would be destroyed, people tried to spend as much as they could, resulting in a boom in business for second-hand shops, art dealers, antique shops, theatres, cinemas, holiday services, and so forth. Nevertheless, many held cash they did not know how to spend. Initially, the stock exchange provided a method of exchanging hard cash for paper investments which it was hoped would still have some value after the war. However, almost everywhere, even in these centres of free capitalism, the Germans limited prices, thus undermining activity in legal stock markets.188 Private households, industrial companies and farmers either earned money or received payment for what they sold, but none could spend it, except on the black market. As a consequence, savings and bank accounts grew, and financial markets became overly liquid (Tables 13.6–13.9). After the defeat in Western Europe in 1940, money not only streamed back to the banks, but also was created on a previously unknown scale. The fact that in 1940 France’s occupation contribution was paid from credits from the Banque de France with newly printed banknotes resulted in a 44 per cent increase in the banknote circulation. It expanded from 149 billion francs in 1939 to 218 billion francs in 1940 (see Table 13.6). The accounts of the four largest banks in France grew by 56 per cent, from 45 billion francs to 66 billion francs, although, according to post-war statistics of the League of Nations, the total bank accounts of all French banks together were stable in this year.189 Until a post-war recovery came, when stock purchasing and investment again became possible, there was very little companies could do with the money that flowed into their tills other than deposit it into a bank. Banks had the same problem, however. They also could do little with all the funds that were streaming into their vaults and even tried to prevent a further inflow of cash by not paying interest, limiting deposits and refusing new clients.190 This situation was only advantageous to the state. As none of the occupied countries could afford to pay the increased expenditures from taxation, over-liquid financial markets seemed a way out. Up to a certain point, the stimulation of liquidity was therefore in the interest of the states as it gave the treasuries access to cheap money and capital and kept the national indebtedness relatively low in real terms. In 1940 the Vichy government demanded a special credit from the Banque de France to finance their German occupation levy. It created an enormous monetary

Financing Occupation and Exploitation • 233 expansion. According to Hervé Joly, the advantage of this policy was that this, combined with the Europe-wide limitations on dividend payments, resulted in substantial financial resources in the hands of industrial companies which could fund their recovery after the war.191 Of course, this was important at that time, but it is doubtful whether this was a planned strategy. Selling treasury bonds to the central bank, and thus getting newly printed banknotes, was simply the only solution to the financial problems of the French state. As a consequence, the quantity of banknotes in circulation grew enormously (Table 13.6), bank accounts increased more than ever before, and despite diminishing interest rates and limits on savings per person, savings accounts were confronted with even more money streaming into them. In 1942 alone, the savings deposited with the French Caisse Nationale d’Épargne increased by 25 per cent, while those of the other important French savings bank, the Caisses d’Épargne Ordinaires, grew by 15 per cent. In the same year, the accounts of the most important French banks rose by 19 per cent, while this had been 26 per cent in the previous year.192 A simple calculation shows that between 1939 and 1942 the bank accounts rose by 135 per cent. Although post-war League of Nations statistics showed a much slower growth, this pattern was not only seen in France; bank accounts in Denmark rose by 19 per cent in 1941 and 14 per cent in 1942. In Norway in 1941 the increase was even greater, at 32 per cent. In other words, from 1941 onwards, all the financial markets across Europe were extremely liquid.193 It became the sole duty of banks to collect money from the general public and lend it to the state. In 1938 treasury bonds in the Netherlands represented only 15 per cent of the debits in the balance sheets of the banks. From 1942 on, this figure had increased to more than 50 per cent, while at the same time bank credits had fallen. Shortly after the start of the occupation, bank balances were already dominated by treasury bonds, but even the state could not absorb all the money available. Already by August 1940, the German supervisor of the Nederlandsche Bank reported that even parts of the bank’s capital were liquid as there was no longer any need for it.194 Both national as well as local German authorities feared this enormous liquidity as it presented a threat to market stability. Nevertheless, apart from black market purchases, the occupier managed to keep price levels under control in most countries. It was only in the Balkans—especially in Greece and Serbia—that inflation got out of hand. During an initial year of plundering, in which isolation from traditional suppliers and a reduced workforce caused Greek production to slump, the Axis provoked mistrust, bordering on resistance. From 1942 on, expenditures on occupation costs and other contributions had a catastrophic impact on inflation. Altenburg, the German Plenipotentiary for Greece, calculated that in the two years of 1941 and 1942, the Greek levy amounted to 114 per cent of the country’s national income. This didn’t include the clandestine part of the production, of course.195 Nonetheless, it was impossible to raise the money needed for the German purchases in Greece from taxation or borrowing. Purchases grew, however, as a consequence of the North African

234 • Occupied Economies fighting and had to be financed by printing additional banknotes. This produced a sharp increase in price levels. Altenburg’s calculations were probably an exaggeration, not only because it would be most unlikely that anyone could have survived if the Germans had in fact extracted goods and services worth even more than the national income, but also because it was, and still is, almost impossible to make a realistic calculation of the total national accounts in a country with so many smallholders and an enormous black economy. Nevertheless, according to the Reichsbank, in order to cover the costs of occupation and exploitation, every Greek citizen had to contribute an annual sum of no less than 936 RM, which was more than in any other occupied country in Europe.196 According to the calculations in Table 13.2, the average Greek paid 603 RM during the entire German occupation, which was far less than the cost to most Western Europeans. It is not possible to explain these discrepancies, but it is clear from the earlier paragraph on clearing that in Greece and some other destructively exploited countries in Eastern and South Eastern Europe the calculations in Table 13.2 do not give a complete picture of what happened. In addition to the monetary contributions, the Axis demanded credits from the Bank of Greece to finance defence works in the country, along with increased payments to the troops and a range of other expenses of the German army there.197 Thus, when corrected for the relatively short period of occupation—from March 1941 until August 1944—even 603 RM a head is 80 per cent more per month than the average Czech payments. Since Czechoslovakia was the only country of comparable wealth in the pre-war period, this would appear to provide a good comparison. The Czech economy was handled carefully, however, because Hitler needed the country’s industrial production. At the same time Greece was treated badly because its economy held little of interest to the Germans. It was only during Rommel’s North African campaign that the collapsing Greek economy became important to the Germans. By that time the Wehrmacht was not only demanding a much bigger share in the Greek production than Greece could afford, but also, to make sure that they could pay for it, had indexed Greek payments for occupation costs to prevent the sum of money they got from being undermined by inflation. As a consequence, the central bank had to print ever more banknotes. The result of this was that from 1942 on there was running inflation which in 1943 and 1944 became hyperinflation (Table 13.9), causing corruption and increased criminality and undermining all that was left of civil society. Apart from organizing a well-functioning rationing and price control system in order to avoid such problems as in Greece from being replicated across Europe, it was necessary to keep economic tensions controlled. So it was of the utmost importance to limit the amount of surplus money in circulation. While funds had increased, supplies of everything else had decreased, and as no one knew what value money would have after the war, many feared that their savings would disappear. Therefore, it was essential to limit the amount of superfluous money people had in their pockets. Money became less and less scarce, while everything else was in short supply. As a result the remaining free

Financing Occupation and Exploitation • 235 Table 13.9.

Greek Inflation, 1941–1944 Prices in Athens (German sources)

Prices in Athens (Bank of Greece)

Cost-of-living index (Bank of Greece)

1941

100

100

100

1942

1,199

350

2,128

1943

13,923

1,518

747

1944

1,257,7618

2,43002E+11

1,625E+13c

a

b

March. October. c November.

a

b

Source: Dimitrios Delivanis and William C. Cleveland, Greek Monetary Developments, 1939–1948: A Case Study of the Consequences of World War II for the Monetary System of a Small Nation (Bloomington, Ind. 1949) 178.

markets were overwhelmed with demand. The idea among large parts of the population that buying all they could get was the only option left to save at least some of their money easily could result in a breakthrough of black markets and monetary and economic chaos. Government organizations could limit this risk, however, by restraining the monetary surfeit and directing it towards the one organization that had an almost unlimited need for it, namely the state. This could be done by borrowing or taxation.

Conclusions The Germans manipulated financial systems across Europe in order to achieve at least three targets. In the first place, they wanted to be able to meet all their requirements in occupied Europe freely, and without any actual transfer of funds from Germany to the occupied countries in payment. They therefore used money obtained one way or another in those countries to pay their bills. In general, this was done in two ways: either by taking the money needed from the treasuries of those countries or by inflating their money supplies. The first method—taking money from the countries’ treasuries—was done by demanding that they should pay in one form or another the cost of the military occupation, which meant in fact that each country should pay all the bills of the occupying forces as well as giving an advantage to those exporters who had a claim on the clearing accounts with Germany. The second way of obtaining payment for the German bills was by inflating the money supply of the occupied countries. This was done by using fake money (Reichskreditkassenscheine), but in the Eastern and South Eastern countries—that is the General Government, Ostland, Ukraine, Serbia and Greece—they also exploited central banks which were often founded by the Germans themselves. This policy could, of course, easily result in

236 • Occupied Economies dangerous levels of inflation, but as these were regions that were of no importance to the Germans, this didn’t present a problem for them. In both the Netherlands and the Czech Protectorate, the Reichsmark was made convertible to local currency, and the central banks in those countries, which had to buy all Reichsmarks offered to them, were manipulated to finance German purchases. Since both these countries were important suppliers, however, the Germans made sure that any inflationary tendencies caused by their policies did not result in disaster. The second target of the Germans’ financial manipulations was to get a hold on the international financial transactions of continental Europe, not only those between Germany itself and the occupied countries, but also any transactions between individual countries and those with the few remaining neutral European countries. By doing this, Berlin hoped to be able to manipulate all the international trade in Europe to its advantage. To this end a system of multilateral clearing was introduced. This policy will be discussed further in Chapter 14 as it had a greater effect on international trade than on the financial situation. The third way in which the Germans manipulated the financial systems of Europe was to ensure that any inflationary tendencies in the occupied countries were at least in proportion to that in Germany itself, thus directing some of the financial consequences of its war policy towards its victims. In Western Europe (see Table 13.10), this policy resulted in an increased supply of banknotes comparable to that in Germany. Since the state treasuries of most of these countries were overburdened by occupation costs and the necessity of paying for the clearing deficits, the war created enormous national debts that appeared threatening, especially in France. In most of the occupied countries in Western Europe, it was not the central bank itself that was used to pay for the German purchases, and certainly not in such a destructive way as in Eastern Europe or the Balkans. If calculated as a share of the GDP or national income, however, the dramatic rise in the French public debt is partly a consequence of the equally dramatic macroeconomic statistics that show very low GDP levels. However, these statistics do not include clandestine production, which became important especially in France. The effect when calculated as a percentage of GDP appears dramatic, as between 1938 and 1944 the French government’s debt increased nominally by 283 per cent (as can be seen in Table 13.5), which is comparable with that of Belgium or the Netherlands. However, when this is corrected for price increases, there is only a 50 per cent increase, which is far less than in most other countries. France used inflation to finance at least a part of its costs. Throughout Europe, public debts increased, but in the short run the gigantic monetary surplus was more problematic. Table 13.10 makes it clear that the Germans managed to spread the monetary expansion equally across Nazi-occupied Western Europe, but everything seems to indicate that the inflationary tendency in Eastern and South Eastern Europe was worse. In the middle of 1944, when France and Belgium were liberated, their banknote circulation reached a level roughly 3.5 times that of the 1940 level, while in Germany itself at that time it was approximately 3.3 times

Financing Occupation and Exploitation • 237 Table 13.10. Banknote and Money (M1) Circulation in a Number of Occupied Western European Countries, 1940–1945 (1940 = 100) Banknote circulation

Total circulation M1

Germany France Belgium Netherlands Norway France Belgium Netherlands 1940

100

100

100

100

100

1941

129

143

119

145

182

1942

170

178

164

200

268

1943

230

254

230

255

372

1944

301

333

282

364

450

End of occupation

549

368

333

500

534

100

100

100

147

117

132

176

158

158

217

212

197

272

267

268

298

309

358

Source: Willi A. Boelcke, Die Kosten von Hitlers Krieg. Kriegsfinanzierung und finanzielles Kriegserbe in Deutschland 1933–1948 (Paderborn 1985); Hein A. M. Klemann, Nederland 1938–1948. Economie en samenleving in jaren van oorlog en bezetting (Amsterdam 2002); Richard W. Lindholm, ‘German Finance in World War II’, American Economic Review, 37 (1947) 121–134; Allan H. Meltzer, ‘The Behavior of the French Money Supply: 1938–54’, Journal of Political Economy, 67 (1959) 275–296; Norges Offisielle Statistikk, Statistisk sentralbyrå, Statistiske Oversikter 1948 (Oslo 1949); Delbert A. Snider, ‘French Monetary and Fiscal Policies since the Liberation’, American Economic Review, 38 (1948) 309–327; Herman van der Wee and Monique Verbreyt, Oorlog en monetaire politiek: de Nationale Bank van België, de emissiebank te Brussel en de Belgische regering, 1939–1945 (Brussels 2005).

the 1940 level. By the end of the war, the German banknote circulation was more than five times as high as the 1940 figure, as it was in Norway and the Netherlands, neither of which had been liberated until then and so had to pay for occupation costs until that point. By then the Dutch monetary expansion was relatively low, although it was still high in 1944. This was a consequence of the fact that in the last months of the occupation, the western, urbanized part of the country was isolated from the rest, which had already been liberated. This caused a severe famine but, at the same time, made it impossible for the Germans to withdraw any further output from the country. The policy of not just demanding goods and services from occupied Europe, but forcing these countries to pay for them as well, resulted in monetary expansion on a scale that in the Western region equalled that in Germany itself. By this means, and also by allowing German institutions and companies who imported from the occupied countries to settle their debts via the Berlin clearing accounts—the Verrechnungskasse, an institution linked to the Reichsbank—the regime could limit the monetary expansion in Germany itself and transfer it partly to the occupied countries. The even more destructive inflation in Eastern Europe and the Balkans was quite acceptable to Berlin as, apart from some raw materials and foodstuffs, the Germans were not interested in the economies of those countries. Thus, Berlin spread the financial burden of its war across the Continent. It is less important whether this was done by collecting contribution payments, by using unbalanced clearing accounts or,

238 • Occupied Economies as in the Dutch and Czech cases, by making the Reichsmark convertible into local currency. The amount of money needed to pay for German acquisitions was simply too high to be financed in another way than by monetary expansion. National authorities could decide either to increase the tax burden as, for instance, the Dutch did, or not to, as the French Vichy government chose. Their choice was between higher taxes or bringing the country into debt. Higher taxation, however, only decreased the funds available on capital and money markets. As these economies—except for their strictly regulated contacts with Germany—were almost completely disconnected from one another by the multilateral clearing system, this limited the amount of money the state could raise on the national financial markets. This made it doubtful whether the French decision not to increase its taxes, as the Germans wanted them to do, had much influence in the long run, because higher taxation would have limited the liquidity on the financial markets. It resulted in higher public debts, but not in an increase in the circulation of banknotes. As Table 13.6 makes clear, the growth of the banknote and monetary circulation was a European phenomenon and a consequence of the way Berlin exploited occupied Europe. Not only did the Nazis take an important part of the labour force and all the raw materials they could get their hands on, together with almost all the industrial production of occupied Europe, but by forcing the occupied countries to pay for all this, they also transferred a substantial part of the German monetary expansion resulting from their war production to these countries as well. By doing so, Berlin destroyed the financial infrastructure of the Continent.

Notes 1. See: Christoph Buchheim, ‘Die besetzten Länder im Dienste der deutschen Kriegswirtschaft während des Zweiten Weltkriegs. Ein Bericht der Forschungsstelle für Wehrwirtschaft’, Vierteljahrshefte für Zeitgeschichte, 34 (1986) 117–147. 2. Jacob Robinson, ‘Transfer of Property in Enemy Occupied Territory’, American Journal of International Law, 39 (1945) 216–230, here 217. 3. Alan S. Milward, The New Order and the French Economy (Oxford 1970) 77. 4. Otfried Ulshöfer, Einflußnahme auf Wirtschaftunternehmungen in den besetzten nord-, west- und südosteuropäische Ländern während des Zweiten Weltkrieges insbesondere der Erwerb von Beteiligungen (Verflechtung) (Tübingen 1958) 41; Milward, New Order, 50–51; Niod Amsterdam: 47 Defisenreferat 40–44 R 8I: Monetaire zaken 1/3/’41. 5. C. Brinkmann, Review of Helmuth Kasten, ‘Die Neuordnung der Währung in den besetzten Gebiete’, Finanzarchiv, 9 (1943) 215–216. 6. J. W. Beyen, Het spel en de knikkers. Een kroniek van vijftig jaren (Rotterdam 1968) 117; B. W. Kranenburg, Hoofdtrekken der overheidsbemoeiïng met het internationale betalingsverkeer in Nederland sinds 31 Juli 1914 (Assen 1937) 28.

Financing Occupation and Exploitation • 239 7. Hein A. M. Klemann, Tussen Reich en Empire. De economische betrekkingen van Nederland met zijn belangrijkste handelspartners, Duitsland, Groot-Brittannië en België en de Nederlandse handelspolitiek, 1929–1936 (Amsterdam 1990) 96 et seq. 8. In Western Europe the clearing rate of the Reichsmark was the gold-standard exchange rate. Consequently, as all countries there devaluated their currencies during the 1930s, the Reichsmark became ever more overvalued. 9. Online-Datenbank HISTAT, http://www.histat.gesis.org. 10. Klemann, Tussen Reich en Empire, 98–100. 11. ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes und der Märkte einzelner Länder während des Jahres 1940 I’, Jahrbücher für Nationalökonomie und Statistik, 154 (1941) 82–115, here 90. 12. ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes und der Märkte einzelner Länder während des Jahres 1941 I’, Jahrbücher für Nationalökonomie und Statistik, 156 (1942) 44–66, here 50. 13. Adalbert Polaček, ‘Die Zolleingliederung des Protektorats Böhmen und Mähren in das Großdeutsche Reich’, Weltwirtschaftliches Archiv, 55 (1942) 232–258, here 246. 14. David Blaazer, ‘Finance and the End of Appeasement: The Bank of England, the National Government and the Czech Gold’, Journal of Contemporary History, 40 (2005) 25–39; Beyen, Het spel en de knikkers, 125–126. 15. ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes und der Märkte einzelner Länder während des Jahres 1939 I’, Jahrbücher für Nationalökonomie und Statistik, 152 (1940) 58–92, here 72. 16. Peter Liberman, Does Conquest Pay? The Exploitation of Occupied Industrial Societies (Princeton 1996) 37–38; Werner Röhr, ‘Zur Wirtschaftspolitik der deutschen Okkupanten in Polen 1939–1945’, in: Dietrich Eichholtz (ed.), Krieg und Wirtschaft. Studien zur deutschen Wirtschaftsgeschichte 1939–1945 (Berlin 1999) 221–251, here passim. 17. Willi A. Boelcke, Die Kosten von Hitlers Krieg. Kriegsfinanzierung und finanzielles Kriegserbe in Deutschland 1933–1948 (Paderborn 1985) 171. 18. ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes, 1939 I’, 70; Czesław Madajczyk, Die Okkupationspolitik Nazideutschlands in Polen 1939– 1945 (Cologne 1988) 603. 19. Harry H. Bell, ‘Monetary Problems of Military Occupation’, Military Affairs, 6 (1942) 77–88, here 86; ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes, 1939 I’, 70; Madajczyk, Die Okkupationspolitik Nazideutschlands, 604. 20. Bell, ‘Monetary Problems of Military Occupation’, 79. 21. Madajczyk, Die Okkupationspolitik Nazideutschlands, 603–605. 22. Ibid. 603; ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes, 1939 I’, 70; own calculations. 23. ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes, 1939 I’, 70.

240 • Occupied Economies 24. 25. 26. 27. 28. 29.

30. 31. 32.

33. 34.

35. 36. 37.

38. 39. 40. 41. 42. 43.

44. 45. 46. 47.

‘Die Entwicklung des internationalen Geld- und Kapitalmarktes, 1940 I’, 95. Madajczyk, Die Okkupationspolitik Nazideutschlands, 607–608. Bell, ‘Monetary Problems of Military Occupation’, 79. Boelcke, Die Kosten von Hitlers Krieg, 108. Ibid. 108–110. Herman van der Wee and Monique Verbreyt, Oorlog en monetaire politiek: De Nationale Bank van België, de emissiebank te Brussel en de Belgische regering, 1939–1945. Deel 1: De Nationale Bank van België 1939–1971 (Brussels 2005) 230. Frederick Strauss, ‘The Food Problem in the German War Economy’, Quarterly Journal of Economics, 55 (1941) 364–412, here 409. Van der Wee and Verbreyt, Oorlog en monetaire politiek, 231–232. L.J.A. Trip, De Duitsche bezetting van Nederland en de financieele ontwikkeling van het land gedurende de jaren der bezetting (The Hague 1946) 18; Patrick Nefors, Industriële collaboratie in België. De Galopindoctrine, de emissiebank en de Belgische Industrie in de Tweede Wereldoorlog (Leuven 2000) 16 et seq. Götz Aly, Hitlers Volksstaat. Raub, Rassenkrieg und nationaler Sozialismus (Frankfurt am Main 2005 4th ed.) 170. AN, AJ 40/444, Paris, den 2. Okt.[ober] 1940, Der Chef des Verwaltungsstabes, Lagebericht Monat September 1940, http://www.ihtp.cnrs.fr/prefets/de/ d101242mbf.html. Niod Amsterdam, 47 Devisenreferat 40–44 inv. nr. 7: De Inspecteur der Invoerrechten en accijnzen, Roosendaal, den 4. Januar 1941, Übersetzung. Trip, De Duitsche bezetting van Nederland, 18. AN, AJ 40/443, Paris, den 31. Mai 1941, Der Militärbefehlshaber in Frankreich, Lagebericht März 1941, http://www.ihtp.cnrs.fr/prefets/de/d101242mbf. html. ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes, 1941 I’, 51; Boelcke, Die Kosten von Hitlers Krieg, 108. Bell, ‘Monetary Problems of Military Occupation’, 79–81. Trip, De Duitsche bezetting van Nederland, 24 and 35. Bell, ‘Monetary Problems of Military Occupation’, 80; Van der Wee and Verbreyt, Oorlog en monetaire politiek, 44 and 233. ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes, 1940 I’, 101. RGVA, Collection 1458, Inventory 16, File 12, pp. 81 and 122; see also: Der Militärbefehlshaber in Frankreich, Lagebericht über Verwaltung u. Wirtschaft, Juli/ September 1943, Paris, den 6. November 1943, http://www.ihtp.cnrs.fr/prefets/. Der Militärbefehlshaber in Frankreich, Lagebericht über Verwaltung u. Wirtschaft, Januar/März 1943, Paris, den 22. April 1943, http://www.ihtp.cnrs.fr/prefets/. Paul W. Sanders, Histoire du marché noir 1940–1946 (Paris 2001) 171. Van der Wee and Verbreyt, Oorlog en monetaire politiek, 459 et seq. ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes, 1939 I’, 70.

Financing Occupation and Exploitation • 241 48. RGVA, Collection 1458, Inventory 3, File 77, Die wirtschaftspolitischen Probleme der besetzten Gebieten, pp. 15–26. 49. ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes und der Märkte einzelner Länder während des Jahres 1941 II’, Jahrbücher für Nationalökonomie und Statistik, 156 (1942) 132–157, here 139. 50. Ibid. 132–157; RGVA, Collection 1458, Inventory 3, File 77, Die wirtschaftspolitischen Probleme der besetzten Gebieten, pp. 15–26; League of Nations, Statistical Yearbook, 17 (1942–1944) (Geneva 1945). 51. PA-AA, HaPol IVa, Griechenland, Finanzwesen, vol. 20.2: Express letter V Ld. 3/33962/42 of 28 August 1942. 52. PA-AA, HaPol IVa, Südeuropa, Großraumwirtschaft vol. 1, ‘Vertrauliches Protokoll vom 14. März 1942’, 95 et seq. The Bank of Athens was the second-largest Greek deposit bank; see: ‘Neue deutsche Bankverbindungen mit Griechenland’, Bank-Archiv, 16 (1941) 333 et seq. 53. ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes und der Märkte einzelner Länder während des Jahres 1942 II’, Jahrbücher für Nationalökonomie und Statistik, 159 (1943) 82–115, passim. 54. RGVA, Collection 1458, Inventory 3, File 77, Die wirtschaftspolitischen Probleme der besetzten Gebieten, pp. 15–26. 55. Alexander Dallin, German Rule in Russia, 1941–1945: A Study of Occupation Policies (London 1957) 402–403; Jonathan Steinberg, ‘The Third Reich Reflected: German Civil Administration in the Occupied Soviet Union, 1941–4’, English Historical Review, 110 (1995) 620–651, here 635–636. 56. Banknote Bank in Ostland. RGVA, Collection 1458, Inventory 3, File 77, Die wirtschaftspolitischen Probleme der besetzten Gebieten, p. 27; Andrew Ezergailis, The German Occupation of Latvia, 1941–1945: What Did America Know? (Riga 2002) 39–42; Joachim Joesten, ‘German Rule in Ostland’, Foreign Affairs, 143 (1943–1944) 143–147. 57. ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes, 1941 II’, 136–137. 58. Dallin, German Rule in Russia, 402. 59. Niod Amsterdam, 47 Devisenreferat 40–44. Kommissar bei der Niederländischen Bank. Notiz. Den 12. Juni 1941. At first France paid more than 20 million RM a day, but negotiations between French officials and the occupier resulted in a reduction. From May 1941 it became 15 million RM. From 1943, when the war became more demanding, France had to pay 25 million RM a day. On average this is 620 million RM per month from July 1940 to August 1944. N, AJ 40/444, Der Militärbefehlshaber in Frankreich, Paris, den 27. Januar 1943, Verwaltungsstab—Zentralabteilung, Gruppe Z 3. Br.[ief]B.[uch]Nr. 411/43 geh.[heim], http://www.ihtp.cnrs.fr/prefets/de/d101242mbf.html; Van der Wee and Verbreyt, Oorlog en monetaire politiek, 233–236. 60. ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes, 1940 I’, 101.

242 • Occupied Economies 61. N, AJ 40/444, Der Militärbefehlshaber in Frankreich, Paris, den 27. Januar 1943, Verwaltungsstab—Zentralabteilung, Gruppe Z 3. Br.[ief]B.[uch]Nr. 411/43 geh.[heim], http://www.ihtp.cnrs.fr/prefets/de/d101242mbf.html; ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes, 1941 I’, 58. 62. Van der Wee and Verbreyt, Oorlog en monetaire politiek, 236. 63. Joh. de Vries, Geschiedenis van de Nederlandsche Bank. Deel V, De Nederlandsche Bank van 1914 tot 1948. Trips tijdperk 1931–1948 onderbroken door de Tweede Wereldoorlog (Amsterdam 1994) 322–323; David Barnouw (ed.), Correspondentie van Mr. M. M. Rost van Tonningen, Deel II, Mei 1942–Mei 1945 (Zutphen 1993) 8 and 58. 64. Hein A. M. Klemann, Nederland 1938–1948. Economie en samenleving in jaren van oorlog en bezetting (Amsterdam 2002) 152. 65. Hans Umbreit, ‘Les politiques économique allemandes en France’, in: Olivier Dard, Jean-Claude Daumas and François Marcot (eds.), L’Occupation, l’État français et les entreprises (Paris 2000) 25–35, here 34. 66. N, AJ 40/ 444, Paris, den 13. Juli 1944, Lagebericht für Juni 1944, http://www. ihtp.cnrs.fr/prefets/de/d0644mbf.html 67. Trip, De Duitsche bezetting van Nederland, 54; about Belgium see: ‘The Trial of German Major War Criminals. Sitting at Nuremberg, Germany 21st January to 1st February, 1946. 39th Day: Monday, 21st January, 1946’, p. 36, http://www. nizkor.org/hweb/imt/tgmwc/tgmwc-05/tgmwc-05-39-09.shtml. 68. ‘Trial of German Major War Criminals’, p. 36. 69. Van der Wee and Verbreyt, Oorlog en monetaire politiek, 352. 70. Liberman, Does Conquest Pay? 47. 71. PA-AA, Sonderbevollmächtigter Südost, Dienst. Athen, vol. 7. 92: Oberregierungsrat Dr. S. Nestler, Das Finanzwesen einschließlich der Besatzungskosten in Griechenland während der deutschen Besatzungszeit 1941–1944; BA-MA, Wi IC 1/9: Altenburg, Stellungsnahme zum Memorandum über Griechenlands volks- und staatswirtschaftliche Lage, 25 Sept. 1941, here 2. 72. RGVA, Collection 1458, Inventory 3, File 77, Die wirtschaftspolitischen Probleme der besetzten Gebieten, pp. 13–14. 73. Mark Harrison, ‘The Economics of World War II: An Overview’, in: Mark Harrison (ed.), The Economics of World War II: Six Great Powers in International Comparison (Cambridge 1998) 1–42, here 7–8. 74. RGVA, Collection 1458, Inventory 3, File 77, Die wirtschaftspolitischen Probleme der besetzten Gebieten, pp. 13–14. 75. Robert Bohn, ‘Grundzüge der deutschen Wirtschaftsinteressen in Norwegen 1940–45’, in: Joachim Lund (ed.), Working for the New Order: European Business under German Domination 1939–1945 (Copenhagen 2006) 105–113, here 109. 76. PA-AA, Büro St.S., Griechenland, vol. 3, 81–88: Telegram no. 277 of 1 September 1942 from Wiehl to von Rintelen.

Financing Occupation and Exploitation • 243 77. Harrison, ‘Economics of World War II’, 7–8; ‘Übersicht der Reichsbank vom 9 April 1943’, in: Martin Seckendorf and Günter Keber, Die Okkupationspolitik des deutschen Faschismus in Jugoslawien, Griechenland, Albanien, Italien und Ungarn 1941–1945 (Berlin 1992) 66. 78. RGVA, Collection 1458, Inventory 3, File 15–16, Bericht des Sonderbevollmächtigten des AA für den Südosten, Dienststelle Athen, von 8.3.44—Nr. 27/44 g -, Hiet: III Ld.II/3/1376/44 g. 79. RGVA, Collection 1458, Inventory 3, File 77, Die wirtschaftspolitischen Probleme der besetzten Gebieten, pp. 15–18. 80. See: Gail E. Makinen, ‘The Greek Hyperinflation and Stabilization of 1943– 1946’, Journal of Economic History, 46 (1986) 795–805. 81. RGVA, Collection 1458, Inventory 3, File 77, Die wirtschaftspolitischen Probleme der besetzten Gebieten, pp. 23–26. 82. Ibid. 27–28. 83. Bank of Greece, Ta Prota Penenta Chronia thw Trapezes tes Hellados (Athens 1978) 201; Angelos Angelopoulos, To Oikonomiko Provlima tis Hellados. Thesi kai Antimetopisi (Athens 1945) 49. 84. RGVA, Collection 1458, Inventory 3, File 77, Die wirtschaftspolitischen Probleme der besetzten Gebieten. 85. See: Niod Amsterdam, 212a inv. nr. 2a: Hirschfeld an Wohlthat, den 21. Juni 1940; NA, The Hague, Handel en Nijverheid 9672: Nota: Toestand van het Nederlandsche bedrijfsleven gedurende de maand October 1941, 24 November 1941; Niod Amsterdam, 212a inv. nr. 4a: Abteilung Wirtschaftsforschung: Die wirtschaftliche Entwicklung in den Niederlanden im Jahre 1941, den 19. Januar 1942; Gerhardt Hirschhfeld, Bezetting en collaboratie. Nederland tijdens de oorlogsjaren 1940–1945 (Haarlem 1991) 164. 86. Centraal Bureau voor de Statistiek (CBS), Economische en sociale kroniek der oorlogsjaren (Utrecht 1947); CBS, Maandschriften (The Hague 1938–1948). 87. Niod Amsterdam, 212a inv. nr. 2a: EVD: De economische toestand in Nederland in Februari 1941, 31 Maart 1941. 88. AN, AJ 40/444, Paris, den 1. Nov. 1940, Lagebericht für Oktober 1940, http:// www.ihtp.cnrs.fr/prefets/de/d1040mbf.html; AN, AJ 40/443, Paris, 3. Dezember 1940, Lagebericht für November 1940, http://www.ihtp.cnrs.fr/prefets/. 89. Dirk Luyten, ‘The Belgian Business Elite: Economic Exploitation and National Socialist Corporatism’, in: Harold James and Jacob Tanner (eds.), Enterprises in the Period of Fascism in Europe (Aldershot 2002) 195–218, here 202. 90. ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes, 1941 I’, 64. 91. Michel Margairaz, ‘La Banque de France, le Trésor et le financement des entreprises en France sous l’Occupation’, in: Dard, Daumas and Marcot, L’Occupation, l’État français et les entreprises, 405–414, here 405; Klemann, Nederland 1938–1948, 103; Niod Amsterdam, 47 Devisenreferat 40–44, inv.nr. 7: Der Kommissar bei der Niederländischen Bank, den 7. August 1940.

244 • Occupied Economies 92. Van der Wee and Verbreyt, Oorlog en monetaire politiek, 259 et seq. 93. Martin Fritz, ‘Swedish Adaptation to German Domination in the Second World War’, in: Lund, Working for the New Order, 129–140, here 131. 94. ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes und der Märkte einzelner Länder während des Jahres 1942 I’, Jahrbücher für Nationalökonomie und Statistik, 158 (1943) 133–171, here 153. 95. ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes, 1941 I’, 64. 96. Ibid. 63. 97. Noord-Hollands Archief, Haarlem, Bedrijfsarchief Waaning & Tilly, 9: Balansboek 1940–1959. 98. ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes, 1941 I’, 63. 99. Boelcke, Die Kosten von Hitlers Krieg, 111; also: NA, The Hague, Archief Ministerie van Financiën, NCI doos 3 en 4, nr. 8 en 9: Kwartaal- en jaarverslagen 1940. 100. Umbreit, ‘Les politiques économique allemandes en France’, 32–33; Nefors, Industriële collaboratie in België, passim. 101. See: PA AA HaPol IVa Griechenland Handel 6, vol. 1: Griechenland-Der Außenhandel im 2. Halbjahr 1941; A. G. Bakalbasis, He oikonomia tis Hellados kai he organomeni idiotiki protovoulia kata tin periodon tis katochis, 1941–1944 (Athens 1944) 104–105. 102. PA AA HaPol IVa Griechenland, Handel 11–3, vol. 1: Clearing trade balances on 31 May 1942. 103. Bank of Greece, calculations of the Economic Council, quoted in: Dimitrios Delivanis and William C. Cleveland, Greek Monetary Developments 1939– 1948: A Case Study of the Consequences of World War II for the Monetary System of a Small Nation (Bloomington, Ind. 1949) table 3, 179. 104. BA, R 127/17, 1–4, 9Aufschleusungssätze, 1 October 1943. 105. PA-AA, Sonderbevollmächtigter Südost, Dienst. Athen, no. 2047, Neubacher to the AA, 17 June 1943 from vol. 8; BA, R 2/311 164 copy of Note Verbale by the Greek Prime Minister to Neubacher, dated 19 April 1944. 106. RGVA, Collection 1458, Inventory 3, File 77, Die wirtschaftspolitischen Probleme der besetzten Gebieten, pp. 15–16. 107. Bank of Greece, Ta Prota Penenta Chronia thw Trapezes tes Hellado, 201; Angelopoulos, Oikonomiko Provlima, 49; BA, R 2/30674, Y 5203/1-679, 705 V of January 1945, ‘Verrechnung zusätzlicher Ausfuhr nach Griechenland’, note 395. To balance its debt, the Reich promised to pay monthly an amount equivalent to 43 per cent of the invoice value of German exports to Greece. 108. Gotzamanês report of 29 September 1942 about the balance of the GreekGerman clearing: HAETE, Series XXXII Occupation, Reconstruction, file 19. 109. BA, R 127/2, 102, Gotzamanês report of 29 September 1942, op. cit.; excerpt from the report of the Greek liberation government presented at the Nuremberg Tribunal as Exhibit USSR 79 (UK 82), quoted in: The Trial of German Major War Criminals. Proceedings of the International Military Tribunal Sitting at

Financing Occupation and Exploitation • 245 Nuremberg Germany, Part 7: February 14, 1946 to February 26, 1946 (London 1947) 148; BA, R 127/12, ‘Aufstellung der an die Wehrmacht zugewiesenen Waren vom 1.12.42 bis 31.5.43’, 171 et seq. 110. Boelcke, Die Kosten von Hitlers Krieg, 110–111. 111. De Nederlandsche Bank, Jaarverslag, 1940–’41 (Amsterdam 1941). 112. G. Aalders, Roof. De ontvreemding van Joods bezit tijdens de Tweede Wereldoorlog (The Hague 1999) 87; Jeroen Euwe, De Nederlandse kunstmarkt 1940–1945 (Amsterdam 2008). See also: ‘Die Entwicklung des internationale Geld- und Kapitalmarktes, 1941 I’, 66. 113. L. Kortenhorst, ‘Strijd met het recht’, in: J. J. van Bolhuis et al. (eds.), Onderdrukking en verzet. Nederland in oorlogstijd, Part II (Arnhem 1949–1954) 219–252, here 246. 114. Trip, De Duitsche bezetting van Nederland, 48–49 and 54 et seq. 115. ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes, 1940 I’, 95. 116. RGVA, Collection 1458, Abschlußbericht der Hauptabteilung Wirtschaft, Den Haag, 15. Januar 1944. 117. Hein A. M. Klemann, Waarom bestaat Nederland eigenlijk nog? NederlandDuitsland: Economische integratie en politieke consequenties, 1860–2000 (Rotterdam 2006) passim; P. M. Kennedy, ‘The Development of German Naval Operations: Plans against England, 1896–1914’, English Historical Review, 89 (1974) 48–76, here 60–61; Paul Moeyes, Buiten schot. Nederland tijdens de Eerste Wereldoorlog, 1914–1918 (Amsterdam 2001) 81. 118. Klemann, Waarom bestaat Nederland eigenlijk nog? passim. 119. Klemann, Nederland 1938–1948, 157 et seq. 120. P. J. A. Adriani, ‘Samenvatting’, in: P.J.A. Adriani (ed.), Fiscale ervaringen in de bezettingstijd 1940–1945 (Amsterdam 1946) 386–423, here 390. 121. Kranenburg, Hoofdtrekken der overheidsbemoeiïng met het betalingsverkeer, 189. 122. Niod Amsterdam, 47 Devisenreferat 40–44 inv. nr. 7. Der Kommissar bei der Niederländischen Bank, den 9. Dezember 1940. The Hauptabteilung Wirtschaft in The Hague thought it was 2 billion RM, or ƒ1.5 billion. Notiz; RGVA, Collection 1458, Abschlußbericht der Hauptabteilung Wirtschaft, Den Haag, 15. Januar 1944. 123. Ulshöfer, Einflußnahme auf Wirtschaftunternehmungen, 140–141; H. M. Hirschfeld, Herinneringen uit de bezettingstijd (Amsterdam 1960) 50–51. 124. CBS, Economische en sociale kroniek der oorlogsjaren, 196–197. 125. Van der Wee and Verbreyt, Oorlog en monetaire politiek, passim. 126. See: Hirschfeld, Herinneringen uit de bezettingstijd, 50. 127. Trip, De Duitsche bezetting van Nederland, 54 et seq. 128. Angus Maddison, Dynamic Forces in Capitalist Development. A Long-run Comparative View (Oxford 1991) 301; CEPII, Séries lonques macro-économiques, Comptes nationaux en base 1938, http://www.cepii.fr/francgraph/bdd/villa/ mode.htm.

246 • Occupied Economies 129. Madajczyk, Die Okkupationspolitik Nazideutschlands, 610. 130. Filippo Occhino, Kim Oosterlinck and Eugene N. White, ‘How Occupied France Financed its Own Exploitation in World War II’, in: National Bureau of Economic Research Working Papers 12137 (Cambridge, Mass. March 2006) 4, http://www.solvay.edu/EN/Research/Bernheim/documents/wp06012.pdf; Klemann, Nederland 1938–1948, 438. 131. League of Nations, Statistical Yearbook, 17; Maddison, Dynamic Forces; Occhino et al., ‘How Occupied France Financed its Own Exploitation’, 4; own calculations. 132. Occhino et al., ‘How Occupied France Financed its Own Exploitation’, 6–7; CEPII, Séries lonques macro-économiques. 133. Occhino et al., ‘How Occupied France Financed its Own Exploitation’; see: Harrison, ‘Economics of World War II’, table 1.8, 21. 134. League of Nations, Statistical Yearbook, 17; CEPII, Séries lonques macroéconomiques. 135. Klemann, Nederland 1938–1948, 438. 136. Klemann, Nederland 1938–1948, 429, 438; League of Nations, Statistical Yearbook, 17. 137. For some years there are a few exceptions. See: Maddison, Dynamic Forces, 212 et seq. 138. Robert J. Barro and José F. Ursúa, ‘Macroeconomic Crises since 1870’, BPEA (2008), Online Appendix: http://www.economics.harvard.edu/faculty/barro/ files/MacroCrisesSince1870_08_0614.xls. 139. Socrates D. Petmezas, ‘Agriculture and Economic Growth in Greece, 1870– 1973’, paper presented at the IEHC 2006 Helsinki conference, session 60, paper 4, http://www.ims.forth.gr/docs/PetmezasTPF.pdf. 140. BA-MA Wi IC 1/9: The German Plenipotentiary of the Reich in Greece, Altenburg, to the German Foreign Office (AA), 25 Sept. 1941. See: BA-MA, Wi IC 1/9: Altenburg, Stellungsnahme zum Memorandum über Griechenlands volksund staatswirtschaftliche Lage, 25 Sept. 1941. 141. See: PA-AA, Sonderbevollmächtigter Südost, Dienst. Athen, vol. 7: Oberregierungsrat S. Nestler, Das Finanzwesen einschließlich der Besatzungskosten in Griechenland während der deutschen Besatzungszeit 1941–1944; ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes und der Märkte einzelner Länder während 1940 III’, Jahrbücher für Nationalökonomie und Statistik, 154 (1941) 202–231, here 212; ‘Die Entwicklung des internationale Geld- und Kapitalmarktes, 1941 II’, 142. 142. Paul Hahn, Die griechische Währung und währungspolitische Maßnahmen unter der Besetzung, 1941–1944, Studien des Instituts für Besatzungsfragen in Tübingen zu den deutschen Besetzungen im 2. Weltkrieg, 10 (Tübingen 1957) 27–32, 39–40 and 50–59; Hermann Neubacher, Sonderauftrag Südost, 1940– 1945. Bericht eines fliegenden Diplomaten (Göttingen 1956) 87–90.

Financing Occupation and Exploitation • 247 143. The year of the French liberation, 1944, is an unreliable year as in diverse countries the collection of taxes failed as a result of actual fighting. 144. Maddison, Dynamic Forces, 213; RGVA, Collection 1458, Inventory 16, File 12, Note: Die Währungsentwicklung in den verbündeten und besetzten europäischen Ländern, 10. September 1944, p. 7. 145. ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes, 1940 I’, 83– 84. 146. ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes, 1939 I’, 77–78. 147. Alfred Sauvy, La vie économique des Français de 1939 à 1945 (Paris 1978) 45. 148. ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes, 1939 I’, 80. 149. Thibault Tellier, Paul Reynaud: 1878–1966: Un indépendant en politique (Paris 2005) passim. 150. ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes und der Märkte einzelner Länder während des Jahres 1938 I’, Jahrbücher für Nationalökonomie und Statistik, 149 (1939) 581–616, here 600–601. 151. ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes, 1939 I’, 80. 152. Ibid. 78–79; ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes, 1940 I’, 101. 153. Thibault Tellier, ‘Minister van Financiën Paul Reynaud en de Franse oorlogsvoorbereiding’, in: Hein A. M. Klemann and Dirk Luyten with Pascal Deloge (eds.), Thuisfront. Oorlog en economie in de twintigste eeuw. Veertiende jaarboek van het Nederlands Instituut voor Oorlogsdocumentatie (Zutphen 2003) 51–62. 154. ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes 1939 I’, 79. 155. AN, AJ 40/443, Paris, den 31. Januar 1942, Lagebericht Dezember 1941/Januar 1942, http://www.ihtp.cnrs.fr/prefets/de/d1241_0142mbf.html. 156. ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes, 1939 I’, 70. 157. ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes, 1940 I’, 84. 158. ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes und der Märkte einzelner Länder während des Jahres 1939 II’, Jahrbücher für Nationalökonomie und Statistik, 152 (1940) 176–209, here 178. 159. Bruno S. Frey and Marcel Kucher, ‘World War II as Reflected on Capital Markets’, Economics Letters, 69 (2000) 187–191, here 190. 160. ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes, 1939 I’, 78. 161. ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes, 1939 I’, 88. 162. Frey and Kucher, ‘World War II’, 190. 163. Klemann, Nederland 1938–1948, passim; ‘De Nederlandse kapitaalmarkt in 1939’, Economisch-Statistische Berichten, 31 January 1940; ‘Emissies in december 1939’, Economisch-Statistische Berichten, 17 January 1940, 52. 164. V.d.V., ‘Oorzaken van de recente schaarschte aan middelen op de geldmarkt’, Economisch-Statistische Berichten, 7 February 1940, 98–99.

248 • Occupied Economies 165. ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes, 1939 I’, 71–73. 166. ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes, 1939 II’, 187. 167. ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes, 1940 III’, 209. 168. League of Nations, Statistical Yearbook, 17. 169. ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes, 1940 III’, 208–210. 170. ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes, 1939 II’, 187. 171. Barro and Ursúa, ‘Macroeconomic Crises since 1870’; ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes, 1940 III’, 213. 172. Klemann, Nederland 1938–1948, 157 et seq.; RGVA, Collection 1458, Inventory 3, File 77, Die wirtschaftspolitischen Probleme der besetzten Gebieten, pp. 75–76. 173. Klemann, Nederland 1938–1948, 174. 174. Richard J. Overy, ‘Mobilization for Total War in Germany 1939–1941’, English Historical Review, 103 (1988) 613–639, here 619; Harrison, ‘Economics of World War II’, 10. 175. RGVA, Collection 1458, Inventory 3, File 77, Die wirtschaftspolitischen Probleme der besetzten Gebieten, pp. 75–76. 176. AN, AJ 40/444, Paris, den 2. Okt.[ober] 1940, Lagebericht für den Monat September, http://www.ihtp.cnrs.fr/prefets/de/d0940mbf.html 177. AN, AJ 40/443, Der Militärbefehlshaber in Frankreich, Paris, den 31. Januar 1942, Lagebericht Dezember 1941/Januar 1942, http://www.ihtp.cnrs.fr/ prefets/de/d1241_0142mbf.html. 178. ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes, 1942 I’, 146. 179. AN, AJ 40/444, Paris, den 27. Januar 1944, Der Militärbefehlshaber in Frankreich, Lagebericht über Verwaltung und Wirtschaft Okt./Dez. 1943, http:// www.ihtp.cnrs.fr/prefets/de/d101243mbf.html. 180. AN, AJ 40/444, Der Militärbefehlshaber in Frankreich, Paris, den 27. Januar 1943, Lagebericht über Verwaltung und Wirtschaft Oktober/Dezember 1942, http://www.ihtp.cnrs.fr/prefets/de/d101242mbf.html. 181. Hervé Joly, ‘The Economy of Occupied and Vichy France: Constraints and Opportunities’, in: Lund, Working for the New Order, 93–103, here 97–99. 182. Klemann, Nederland 1938–1948, 171. 183. AN, AJ 40/444, Paris, den 1. Nov.[ember] 1940, Lagebericht für den Monat Oktober, http://www.ihtp.cnrs.fr/prefets/de/d1040mbf.html; AN, AJ 40/443, Paris, 3. Dezember 1940, Lagebericht für den Monat November 1940, http://www. ihtp.cnrs.fr/prefets/de/d1140mbf.html. 184. ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes, 1940 I’, 94. 185. Ibid. 108; Hein A. M. Klemann, ‘“Belangrijke gebeurtenissen vonden niet plaats . . . ” De Nederlandse industrie 1938–1948’, Bijdragen en Mededelingen betreffende de Geschiedenis der Nederlanden, 114 (1999) 506–552, here 509–510. 186. John Lindberg (League of Nations), Food, Famine and Relief 1940–1946 (Geneva 1946) 4–5.

Financing Occupation and Exploitation • 249 187. Hein A. M. Klemann, ‘“Die koren onthoudt, wordt gevloekt onder het volk . . . ”. De zwarte markt in voedingswaren 1940–1948’, Bijdragen en Mededelingen betreffende de Geschiedenis der Nederlanden, 115 (2000) 532–560; Lindberg, Food, Famine and Relief, 75–76. 188. See: Hans Willems and Frans Buelens, ‘De Tweede Wereldoorlog en de Belgische beurzen’, in: Klemann and Luyten, Thuisfront, 149–162; Joh. De Vries, Een eeuw vol effecten. Historische schets van de Vereniging voor de Effectenhandel en de Amsterdamse Effectenbeurs 1876–1976 (Amsterdam 1976). 189. ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes, 1940 I’, 84 and 101. These four most important French banks were Crédit Lyonnais, Société Générale, National d’ Escompte and Crédit Industriel et Commercial. See also: League of Nations, Statistical Yearbook, 17. 190. Ph. C. M. van Campen, P. Hollenberg and F. Kriellaars, Landbouw en landbouwcrediet 1898–1948. Vijftig jaar geschiedenis van de Coöperatieve Centrale Boerenleenbank Eindhoven (Eindhoven 1949); De Nederlandsche Bank, Financiële instellingen in Nederland in de twintigste eeuw. Balansreeksen en naamlijst van handelsbanken, DNB Statistische Cahiers Nr. 3 (Amsterdam 2002). 191. Joly, ‘Economy of Occupied and Vichy France’, 97 and 99. 192. ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes, 1942 I’, 145– 146. 193. Ibid. 133–171; ‘Die Entwicklung des internationalen Geld- und Kapitalmarktes, 1940 I’, 82–115. 194. Niod Amsterdam, 47: Devisenreferat 40–44 inv. nr. 7: Der Kommissar bei der Niederländischen Bank, den 7. August 1940: Geheim. Notiz 7. August 1940. 195. BA-MA Wi IC 1/9, The German Plenipotentiary of the Reich in Greece, Altenburg, to the Foreign Office (AA), 25 Sept. 1941. Also: BA-MA, Wi IC 1/9: Altenburg, Stellungsnahme zum Memorandum über Griechenlands volks- und staatswirtschaftliche Lage, 25 Sept. 1941. 196. BA Berlin film no. 2308: Übersicht der Reichsbank, 9 Apr. 1943. 197. PA-AA, Sonderbevollmächtigter Südost, Dienst. Athen, vol. 7: Dr. S. Nestler, Das Finanzwesen einschließlich der Besatzungskosten in Griechenland während der deutschen Besatzungszeit 1941–1944; for details: Gabriella Etmektsoglou, Axis Exploitation of Wartime Greece, 1941–1943 (PhD dissertation, Emory University, 1995) chap. 7.

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–14– Trade Introduction One does not have to be a devotee of Friedrich von Hayek to agree that trade needs freedom. It is therefore hardly surprising that during the years when freedom was suppressed, the remains of free trade were hunted down by police forces and survived only in dark corners of narrow streets where sunlight was seldom seen. Clandestine black market transactions were all that was left. This was not just typical for Nazi Germany; trade was also suppressed in Allied countries. During the First World War, Britain—the champion of nineteenth-century free trade—blockaded the Continent, cutting off almost all trade outside Europe, not only by its enemies, but also by the neutral powers, especially from 1917 on. In that year, when the last major neutral power of the Great War—the United States of America—entered the hostilities, the defence of liberal economic principles—that Britain had always defended since the repeal of the Corn Laws in 1846—was left to minor powers such as Sweden, Switzerland and the Netherlands. From then on, the blockading of trade became an accepted wartime practice.1 In British eyes it was just one element of its economic warfare, together with the destruction of strategic economic targets of the enemy and the prevention of enemy access to resources. According to W. N. Medlicott, it is difficult to disentangle the effect of these types of economic hostilities. It is undisputed that during both World Wars blockading was important, especially for Britain.2 Whitehall justified these tactics, which are disputable according to international law, by claiming that as the weaker party in land wars, it could defend itself only by its naval strength. It therefore opposed any international regulation to guarantee wartime trade relations. Such a regulation would undermine the defensive strategic power of the British without, for instance, doing anything against the offensive power of Germany.3 According to Paris, in 1940 London even believed more in blockading the German economy than in giving military assistance to the French army, desperately defending the freedom of France and Europe.4 The fact that from 1917 on every belligerent tried to isolate hostile economies resulted not just from British opinion on the topic, but even more from the fact that in the major conflicts of this period, industrial output became decisive. Since in almost every modern industrial society it was impossible to produce all that was needed without foreign input, and in modern wars production became as important as the strength of the armies (in fact, the two were closely linked), cutting off rival

– 251 –

252 • Occupied Economies supply lines was no less important than fighting hostile forces.5 This is clear from the fact that in some countries, in the more severe of the war years, 60 per cent or more of all production was directly war-related, leaving just enough for civilian society to prevent mass starvation.6 In such circumstances, a factory worker is no longer a civilian but is more a soldier at another front. Of course, it is barbaric to smash up hostile societies by U-boat warfare, preventing food from reaching the enemy’s civilian population by blockading harbours or bombing working-class areas to keep employees out of the factories, but since in warfare production became as important as actual shooting, it is inherent to the principles of total war that civilians are hardly less aggressively attacked than real soldiers. Neither the Axis powers nor the Allies allowed any economic contacts with the enemy or its dependencies. Even contacts with neutrals that had close economic links with the enemy side were hardly allowed. It was for that reason that in June 1940 Winston Churchill warned the desperate French Prime Minister, Paul Reynaud, that whatever France decided—to fight on against the apparently invincible German armed forces or to capitulate—the war would go on. Thus, when London wanted to make the blockade effective, occupied France could not be spared from the hard consequences of this form of British economic warfare. Although Churchill feared this would result in unfriendly feelings among the French people for Britain,7 he saw no alternative. In a total war such as the Second World War, all belligerents try to isolate their rivals from the outside world. Apart from trade, financial, colonial and even scientific or cultural contacts were banned as far as possible. Not even the relations within multinational companies were spared.8 Hence, after the French army collapsed, as had the armed forces of all other Western European countries, hardly anything of the overseas contacts of the European Continent remained intact. Occupied Europe was isolated from almost all overseas supplies from the moment of its surrender to the Nazis. From 1940 until 1942, when the Allies took over French North Africa—the French colonies of Tunisia and Algeria and the French Protectorate of Morocco—supplies from these territories were almost all that was left of Europe’s overseas trade. This limited trade was, however, not unimportant. Even in 1942, when the November invasion of the Allies and the following occupation by the Germans of non-occupied France ended the rule of Vichy France in North Africa, 48 per cent of all French imports came from these colonies on the other side of the Mediterranean. In other words, until then, France—that is German-dominated Europe—obtained significant quantities of food supplies, such as wheat, wine, olive oil, grapes and citrus fruits, as well as fertilizers, from these French territories. Further, only some raw materials and foodstuffs entered Europe via the USSR, until Hitler’s invasion of Russia in June 1941 ended these imports as well. After that, for German-controlled Europe, almost all overseas contacts were lost. From 1941 on, apart from some Allied relief operations that are negligible from this perspective (for instance to save the starving Greek population in 1942 or the

Trade • 253 Dutch in 1945), only the few European neutrals kept some contacts with the outside world. Until Mussolini entered the war in June 1940, some German imports from the Portuguese African colonies were sent through Fascist Italy, while these later went through French North Africa and France. When in 1942 French North Africa was lost as a transit area, Switzerland took over and became the most important transit country for Portuguese and Portuguese colonial imports. The only possible explanation for the tenfold multiplication of Swiss imports from the small Iberian country in 1943 can be that the products Switzerland imported from Portugal were in fact transferred to Germany.9 After 1941 occupied Soviet territory would be a major supplier of foodstuffs, delivering to Hitler’s Dritten Reich—including its armies at the Eastern Front—apart from everything else, 7 million tons of cereals, 2.7 million tons of potatoes and at least 325,000 tons of edible fats before 1943 and 1944, when the Wehrmacht had to clear these territories again. These deliveries were less, however, than Germany got from Soviet exports before its invasion of the socialist empire.10 As governments and businessmen had learned from the First World War, the new war, heralded in 1938 and 1939 by growing political tension, would undercut their trade contacts. Some governments, as well as companies and private individuals, took measures therefore to prevent the most severe economic consequences of a possible war. They built stocks and made plans to adapt production, ration the consumption of vital foodstuffs as well as the use of raw materials and fuels, and control price levels. In addition, they introduced regulations to keep foreign subsidiaries of multinational companies out of hostile hands, even in the event of occupation.11 The next paragraph will consider the problems facing the international trade of occupied Europe, what caused these problems and what consequences they had for the occupied economies. In the literature on the occupied countries, discussions on trade problems all emphasize that overseas contacts were lost, but what is always overlooked is that intra-European trade was diluted as well. Within Nazi-controlled Europe almost all normal trade relations disappeared. This was a consequence of the German economic regulation policy that concentrated only on deliveries from occupied Europe to Germany and did nothing to keep trade going between the occupied countries. The monetary policy Berlin introduced made normal trade between neighbouring countries, and even between two parts of a country divided as a consequence of the German political reorganization of Europe, almost impossible. Thus Berlin destroyed all prospects of solving the problems arising from the collapse of extra-European trade by intensifying intra-European trade and, with that, any chance of a better allocation of scarce products. After the developments of the international markets have been investigated, the consequences of these and of the German exploitation for internal markets will be discussed. In most countries the government tried to regulate markets by organizing a state-controlled distribution system and price control schemes. Sometimes the countries had even already initiated such a policy before the war. As these regulations increased, however, and the relations between governments—German as well as

254 • Occupied Economies national authorities—and populations worsened, many tried to circumvent the rules, especially the new wartime rules that were never completely accepted. Increased taxation, as introduced in many countries during the occupation period, could only aggravate that development. As a consequence, regulated and black markets were a pair of scales rarely in balance. As long as the government managed to keep the regulated markets in hand, and this regulation was more or less accepted, the population could get what it needed for reasonable prices in normal shops, at least in Western Europe. Thus, clandestine markets became important but not dominant. In many occupied countries, however, at one time or another, black markets became widespread, because it became almost impossible to survive on legal rations or because the authorities could no longer convince the population that regulation was in their best interests. The consequences of a breakthrough to the black market were often most destructive. As regulated and black markets are two sides of the same coin, these two ways of distributing goods in short supply will be discussed in one paragraph. First, however, the consequences of the Nazi occupation for international trade are explained.

International Trade As a result of the First World War and the 1930s Depression, nineteenth-century trade patterns were under pressure. These patterns could be characterized by a massive continental import of basic foodstuffs and raw materials, which caused a passive balance of trade with the extra-European world. As the Continent supplied the British Isles with semi-finished products and high-quality foodstuffs, however, active trade balances with the United Kingdom compensated for this. To cut a long story short, continental Europe’s active trade with Great Britain balanced its passive trade with the rest of the world, while Britain’s active trade with the overseas world compensated again for its passive trade with the Continent. By being cut off from the possibility of acquiring raw materials and foodstuffs overseas or exporting highquality food and semi-finished commodities to Britain, continental Europe incurred some serious problems: how could it ever feed its people, obtain the raw materials its industries needed and supply the German armies without overseas imports? On top of that, a main problem for Germany was that it had lost its major trading partner that paid in hard currency—namely Britain. After the successes of the Wehrmacht in Western Europe, how to organize a European Großraumwirtschaft—Greater Economic Space—therefore became another key issue among the top echelons of the Reich. Reich Minister of Economics Walther Funk publicly declared that bilateral custom and currency unions were not the way to do that and suggested the establishment of a central clearing system. By pushing Europe into a multilateral clearing system, he not only solved Germany’s monetary problems aggravated by the loss of its exports to Britain, but also gave the Reich

Trade • 255 a good position from which to exploit the Continent.12 Funk got supervision over all intra-European trade by organizing a Europe-wide trade control system.13 To accomplish that, normal currency transactions were banned, and all European trade was paid through the Berlin clearing system. Consequently, in June 1940, a Nazi diplomat had to explain to the befriended government in Lisbon that Berlin was no longer interested in hard currency. It wanted to be paid through a multilateral clearing system centred in Berlin, along with all trade with its occupied countries.14 For Germany and the countries it subjected, the loss of their overseas contacts resulted in substantial problems. In November 1942, for instance, only 52 per cent of the 1938 Greater German imports and 64 per cent of its exports were still possible. Berlin had lost contact with those countries where the remainder of its 1938 trade had been done. In other words, if Germany was representative of the European Continent as a whole, half the pre-war imports and a third of the pre-war exports would be lost as long as the Allied blockade lasted. Germany was the only country that could compensate itself for this by obtaining more from other countries on the European Continent, but according to the Dutch trade statistics, between 1938 and 1943, 80 per cent of the imports of raw materials into the Netherlands were lost, as were the imports of semi-finished products. Apart from some import substitution by internal production, any compensation seemed impossible.15 For all of Europe, the Allied blockade cut off each country’s relations with a substantial part of its trading partners. This was, however, only the start of the problems. From 1942 on, the Axis quickly lost North Africa and Southern Italy, while in addition all the Soviet territories that had been conquered since 1941 were retaken by the Red Army from 1943 on. Accordingly, the parts of the globe that were still accessible for German trade or the trade of its dependencies rapidly declined. When it became almost certain that the Allies were the best party to put a bet on, Allied diplomatic pressure could speed up this process. Early in 1944, the British, Americans and Soviets persuaded some major neutral suppliers of Germany—namely the Iberian countries, Sweden and Turkey—not to sell any strategic products to the Axis any more. In the same year, the Red Army regained the remaining occupied Soviet territories; France, Belgium and most of the Balkans were also liberated; while those parts of the Netherlands that were still occupied were isolated from the rest of German-controlled Europe. As a consequence, at the end of 1944 only 17 per cent of Germany’s 1938 imports were still possible.16 By now, the situation was hopeless for the Reich, and not only for purely military reasons. Although its production was still high, this could not last as by now it was almost completely isolated and could no longer obtain the essential raw materials and fuels needed to continue the war.17 In 1940, however, it would have been possible to offset at least parts of the economic problems resulting from losing overseas contacts by intensifying intraEuropean trade relations. Indeed, in some European countries, the production of high-quality foodstuffs such as pork, beef, poultry and dairy products—of which substantial parts had gone to Britain before the war—was now limited by governmental

256 • Occupied Economies regulation, while by stimulating the production of cereals and potatoes at the same time, these countries tried to compensate themselves more or less for the loss of imports of basic foodstuffs.18 As a consequence, in countries as diverse as Poland, Norway and Belgium, a substantially higher share of overall nutrition was obtained in the form of vegetarian calories.19 According to 1946 calculations published by the League of Nations, all over Europe the share of vegetarian food in the total calorific intake increased.20 The success of this adaptation to the fact that overseas contacts were lost was, however, not fortified by any increase of intra-European trade or a better intra-European allocation of the scarce resources, nor did Germany introduce any scheme to organize an even spread of the resulting shortages. Governments and governmental officials left behind in the occupied countries were confronted with the problem of how to guarantee a satisfactory standard of nutrition in spite of the drastic decline of foreign supplies. All had to find a solution for this independently. Germany only exacerbated the problem by taking ever more foodstuffs, raw materials and final products from occupied Europe. In 1942 it imported 50 per cent more food than it had done in 1938, but now this all came from Europe, as it no longer had any contacts with overseas suppliers or markets.21 Within the occupied countries, exchanging products in short supply with those where there was a surplus was not a possible solution either. The Nazis willingly ignored the possibility of using multilateral clearing as an instrument to stimulate intra-European trade. All trade flows that remained during the war unilaterally went from occupied Europe to Germany or from Germany to the places where its armies were fighting. Thus, a substantial part of all that was produced within the exploited continent was wasted in a war that was consuming everything and everyone. From all over occupied Europe, deliveries to Germany became the main trade flow. One can get an impression of such trade—in this case for the occupied Soviet territories—from Plate 11. Here German imports and exports seem almost balanced. This seems to imply that trade was not as unilateral as suggested in the preceding. One should, however, not forget that to get some production in extracting industries, and to obtain scarce and essential raw materials by getting mining and oil production going again, investments were badly needed after the destructive battles and their aftermath. Machinery and coal were therefore imported, but only in so far as these imports were considered to be an advantage to production that the Germans were interested in. Although some mining recovered, in order to keep the Ukrainian economy going, coal had to be imported, most of it from Upper Silesia—in other words, from former Polish territories now incorporated into the Reich.22 In the eastern territories—the occupied USSR and Poland—27 million tons of coal were used, of which only 7.4 million tons were locally mined. The remaining tonnage was imported from the Reich. Of this coal, almost all was used by the Organisation Todt, the Wehrmacht or the railways, which were mostly transporting only German goods. This makes it clear that the trade of these occupied countries was completely of German interest. Local interests did not count.

Trade • 257 The fact that the Soviet territories obtained few imports that were in the interest of the local population was to be expected. Apart from supplying raw materials and semi-finished products to factories working for the German warfare and war production, the few cross-border transactions between the occupied countries were all in line with the idea that countries of little importance to the German war production should be neglected in favour of countries of greater importance. The Nazi Großraumwirtschaft was not the free trade area of German-controlled Europe, but a German instrument to obtain what Berlin needed from the occupied countries. The regime developed production plans only as far as the production was directly relevant to its warfare and never tried to plan for civil consumption or the production needed for it on a European scale. At the same time, it suppressed normal trade by its financial policy. Therefore, it was quite common that a specific product was scarce in one occupied country and relatively abundant in another, but arbitrage was impossible. In 1940 Gunnar Hägglöf, a Swedish diplomat and head of the Swedish foreign trade office, proposed free markets for clearing deficits. Hence Swedish exports to Denmark could compensate for Swedish imports from Germany and in one stroke compensate Copenhagen for the Danish exports to its occupier. It seemed a great scheme, but it was quite contrary to the Nazis’ ideas on the exploitation of occupied Europe. Compensation would not just liberate the trade flows Berlin wanted to control, but even result in real payments for imports it wanted to get for free from its occupied countries. Hitler therefore rejected the similar ideas of his befriended colleague António Salazar on Portuguese trade with Denmark, Belgium and the Netherlands.23 Occupied Europe should not get a chance to use its clearing deficits as money. It was only from the neutral countries like Switzerland or Sweden that Germany had to accept that its trading partners bought something with the clearing balances they obtained from their exports to German-controlled Europe. These countries were trading partners; Berlin’s control over them was limited. Therefore, it had to give something in exchange for their exports. The occupied countries were not trading partners, but conquered dependencies that should bleed for Germany. Multilateral clearing was an instrument to let them bleed, as exports paid through multilateral clearing, just as exports to Germany itself, resulted in the loss of the export value for the occupied country, compensated by nothing but even more dubious claims on its suppressor. When the French–German clearing system started in November 1940, exports to Germany from all over continental Europe—occupied or not—were paid within this system. Because exports to Germany were the main trade flows, and imports were all but terminated, in all occupied countries governmental credits were needed to keep the payments of the clearing accounts to the exporters, and thus the production of these exporters, going. Hence, exports were paid by ever-increasing dubious claims on Germany (see Chapter 13). German power made it impossible for an occupied country to obstruct such exports as long as these went to Germany, but by ordering that not just trade with Germany, but all intra-European trade was paid through the

258 • Occupied Economies Berlin clearing system, the Reich created similar problems for exports to other European countries. When a French firm exported wine to Belgium, the French exporter was paid from the French clearing account. To get the money it needed for this, the clearing institute could not wait for post-war compensating exports to France and therefore had to borrow it from the French treasury. In other words, the French state was charged to pay a French exporting company for French exports to another occupied country. In Belgium the importer paid for the French wine in the Brussels clearing account that thus got some money to use as compensation for Belgian exports to Germany. Consequently, in Brussels the clearing account had to borrow less from the national treasury to keep the clearing afloat. In Berlin some money was booked from the frozen account of the importing country—Belgium—to the just as illiquid account of the exporting country—France. By importing from another occupied country, the occupied countries could thus exchange their almost worthless claims on Berlin for merchandise with some real value. In this example, Belgium exchanged a part of its claim on Germany for wine—a product with a real value—while France, the exporter, lost this wine. This loss was borne by the French treasury, which paid the French exporter for it, only to get an even higher dubious claim on Germany in exchange. Just as with exports that went directly to Germany, in the end, the treasury of the exporting country drew the short straw. Therefore, the national as well as the German authorities in the occupied countries had every reason not to allow any exports as long as Berlin did not order them to do so. Under a system of all but complete economic regulation, export controls—the prohibition of exports without special licences—were quite common and effective. As a consequence, the problem of how to feed Europe and keep its industry going without overseas imports was broken down into the questions of how to feed every individual country without any imports and how to regulate the distribution of raw materials. The problem of regulating the distribution of raw materials was, at least from 1942 on, subject to German regulation. Then, Speer’s Zentrale Planung subordinated the Reichsstellen, the institutions that organized the distribution of raw materials inside Germany. This Zentrale Planung gave these Stellen supervision over similar institutes in industrialized occupied Europe: the Warencentralen (Offices Centraux des Marchandises) in Belgium, the sections of the Office Central de la Répartition des Produits Industriels (OCRPI) in France and the Rijksbureaus in the Netherlands.24 Thus, some kind of central planning of the raw material economy was achieved. The question of how to feed the local population was in the first place a problem for the local authorities, however. The Germans took what they needed for the occupation armies and, when a country had the misfortune to become the direct hinterland of the front, also for the armies fighting at that front. In addition, they tried to get some extra food for the Reich. In taking foodstuffs the occupier was less scrupulous when the country was, in German eyes, unimportant as a producer of war materials but, given that, the impression is that the decisions on delivering food to or taking food

Trade • 259 from a country were mainly made ad hoc. Apart from the importance of a country as a producer, the most important criteria were the direct German needs and, related to that, the distance to the front. Except for military production, any form of German central economic planning hardly existed, and as far as it existed, it did not take care of supplies for the population of occupied Europe. Therefore, every country had to solve its own problems for supplying the needs of the local population. This had dramatic consequences. In pre-war Greece, imports provided some 40 per cent of wheat and sugar, as well as considerable quantities of meat—altogether 20–25 per cent of her nutritional needs.25 Consequently, when food deficiencies were no longer supplemented by imports from the USA or Australia, the situation became alarming. It was, however, not the blockade alone that resulted in one of the most severe famines in occupied Europe. The fact that intra-European trade could not compensate for lost overseas contacts can also be blamed. Even the trade between the diverse parts of a country occupied by different Axis powers or partitioned into separate satellite states was broken up. This often happened in the eastern parts of the Continent such as in April 1941, when the spring sowing in Greece was interrupted by the German invasion and the harvests failed.26 On top of that, after the April 1941 capitulation, Macedonia and Thrace, substantial food-producing areas, were placed under Bulgarian rule and separated from the main parts of the country.27 As a consequence, by 1942, far less grain than Greece normally consumed was available to supply the German and Italian zones, where—apart from the occupation armies—89 per cent of the population lived. Nevertheless, German food requisitions continued. According to Map D in Plate 7, Greece obtained some small food supplies from Germany. In fact, this gives a wrong impression, as these statistics did include the deliveries to the German armies in Greece or the neighbouring countries, including the North African army of the German General Erwin Rommel, who was fighting the British General Bernard Montgomery in the Desert War. As early as the winter of 1941–1942, only six months after the German invasion, this situation created starvation among the Greek population. Between August 1941 and April 1942, the death rate in Athens rose by 500–600 per cent, while, after the interruption of inter-island commercial shipping and restrictions on fishing in the Mediterranean war zone, mortality rates on the Greek islands even rose by 800 to 1,000 per cent!28 Of course, the inhabitants became extremely hostile towards the occupiers, and their violent expressions of hate were hard to suppress. In April 1942, the first anniversary of the occupation of Greece, the Deutsche Nachrichten in Griechenland, the German newspaper in Greece, bluntly asked whether the people of Greece, ‘that at this moment only seemed to exist of traders, cheaters, receivers, thieves and lazybones’, were worth saving with food supplies from the Axis powers. The answer given in the article was negative. Despite the fact that the occupation made any normal Greek economic activity all but impossible, the journal wrote: ‘Work and create your own food’.29 It was only when the Allies

260 • Occupied Economies considered sending relief shipments that the Reich Ministry of Food discussed the option of sending limited emergency deliveries to this occupied country, but Von Ribbentrop’s Foreign Ministry argued against it; no political reasons justified supplying the Greeks at the expense of the German people. According to this ministry, no treaty obliged any occupier to feed a conquered population. More interesting in this context is that Göring’s Four Year Plan emphasized that if the Reich was to send food to occupied Europe, it should go to Belgium, the Netherlands or Norway, as these countries were the more important producers for the German warfare.30 Hence, only the 60,000 Greek Wehrmacht employees received additional provisions.31 In the first years of the occupation, Belgium provides another example of a country with food shortages that could have been solved by intra-European trade. Not only did the neighbouring Netherlands still have enough, but the diets in another small Western European country, Denmark—legal but not rationed consumption included—were even excessive.32 As all these countries were highly developed suppliers of Germany’s war machine and all had, according to Nazi racist ideas, high-ranking, so-called Aryan populations, the fact that one had shortages while the other could hardly get rid of its superfluous agrarian output had to do with trade regulation and transport problems. For this, there were no wartime economic or racist reasons. In 1940 Belgium—the most densely populated country of Europe with a relatively small agricultural sector—lacked any food policy. As seen in the introductory chapter, some key figures in the pre-war Brussels Cabinet agreed with Minister of the Interior Jaspar that the whole Belgian population should flee the country if and when the Germans attacked again.33 Therefore, for many officials, any preparation for an occupation seemed superfluous. However, as the food shortages of the Great War were well remembered, private stockpiling caused severe problems from the start. During the 1914–1918 war, an American organization led by Herbert Hoover, later to become US president, provided the hungry country with what it needed from across the ocean. However, as the Allies would never accept such a hole in their blockade again, a repetition of this was considered impossible. The Galopin Committee of Belgian nationalist captains of industry, who had a decisive influence on the wartime economic policy of the country, therefore concluded that only food imports could save the people from starvation. As such imports should be paid for by industrial exports, this conclusion was one of their main arguments to restart production. Belgian exports—mostly to Germany—indeed recovered, but until 1943, the country got little German support for importing foodstuffs from other European countries. In the winter of 1940–1941, for instance, Brussels only got permission to import about a third of the normal inflow of cereals, and subsequently even this was never allowed again. The German as well as the Belgian authorities in Brussels tried to convince Berlin that food imports were really necessary, but Berlin did nothing, although it declared again and again that the problems were well understood.34 As there was simply not enough food in Belgium to feed the population, it was impossible to regulate food production and organize fair distribution.35 Consequently,

Trade • 261 only the well-to-do could adequately fill their stomachs. According to a 1941 sociological research project among 200 working-class families, the diet of these people declined dramatically, notwithstanding substantial black market purchases.36 By the end of 1940 Belgian official diets had already sunk to as low as 1,400 kilocalories a day, and that was not even the lowest it reached. In 1942, after a disappointing harvest, official diets dropped to a trough of 1,000 kilocalories a day.37 In the same period, the Dutch diet never sank below the food poverty line of 2,250 kilocalories per adult male equivalent, while the Danish even had so much food available that the ‘wartime diet . . . was and remained rich to the point of being unhealthy. The diet of many was more than 1,000 kcal above the 2,500 kcal (or thereabouts) currently advocated as healthy.’38 For the Danish people, their main wartime risk was that of becoming too fat. Before April 1940, when the country was occupied, Denmark supplied some neighbouring countries, especially Britain, with all the items needed for a good English breakfast: eggs, butter, cheese, bacon and pork. These foodstuffs were the most important Danish export products. During the war, Germany obtained enormous quantities of such Danish products, but it never got to be as much as went to the British Isles before 1940. Therefore, after substantial numbers of the pigs and poultry were butchered to cope with declining corn imports, and even after exports, the quantities of pork, eggs and butter per Dane were still gargantuan, especially when compared with the wartime consumption in other European countries. Of course, these products would have been most welcome in Belgium. As that country was an important coal producer, bilateral trade between Belgium and Denmark could have solved another major problem, as the Scandinavian country, with its cold winters, had no mines at all and, apart from some peat, hardly any other fuel production.39 Some Dutch problems were similar to the Danish ones, although less pressing. Because the Dutch lost their colonial contacts, cigar makers, for instance, lost their supply of raw tobacco. If normal trade had been possible, they could have obtained at least some tobacco from Belgium. Exports of food from the Netherlands and Denmark would have solved serious Belgian problems, while exports of coal from Belgium to Denmark would have reduced another bottleneck. Multilateral clearing made such trade impossible, however. Of course, in Nazi-controlled Europe, transport facilities were another bottleneck and could have terminated such trade anyway, but when the multilateral clearing system was introduced, the consequences for occupied Europe were simply not among the subjects for consideration. When markets no longer function, planning should do the job, but in the first years planning existed only at national levels. In the occupied countries, the pre-war bureaucracy or the occupation authority tried to cope with scarcity and a monetary overhang by limiting consumption, rationing products and controlling prices, but in this period any Europe-wide planning of production or consumption was a myth. International trade in raw materials hardly existed, as all countries were keen to keep what they had, while Berlin, apart from demanding raw materials for its orders, just

262 • Occupied Economies raided stocks at will. Remaining stocks could, however, still be used for local use, even when this meant that scarce materials were used in private consumption. From 1941 on, Paul Pleiger centralized the distribution as far as coal was concerned, meaning that he tried to make sure that Germany and its armies were supplied first and the industries in the occupied countries producing for Germany would only get their share afterwards. Only what remained after that would become available in the occupied countries for any production and consumption thought important enough to warrant it. From 1942 on, Speer’s organization tackled the problem of Europe-wide planning of the use of raw material by using the Reichsstellen and similar organizations in the occupied countries. Both Speer and Pleiger, however, were only interested in maximizing the war production. Therefore, Speer’s planning organization moved raw materials from one country to another in order to get the materials where they were needed for a specific production. It resulted in trade between the occupied countries, but only in so far as it was important for German orders. Apart from such raw material transactions, trade between the occupied countries went on only in the rare cases where Berlin thought it necessary to use its dominant power to the economic advantage of one of its dependencies. International markets were destroyed, and a planning system for compensating intra-European deliveries was set up only in as far as these were of direct German interest. As a consequence of the Allied blockade, but even more of the German monetary policy, all over Europe imports dropped sharply, while exports—especially to Germany—went on. According to the official statistics, the level of Western European exports (no data are available from other parts of Europe) was depressed, but that was only a consequence of the fact that this statistical information is lacking all trade organized by the German military authorities, and even all transactions using military transport licences (Table 14.1). In fact, exports were much higher, but supplies to the German army as well as imports of raw materials for German military orders were kept out of the published statistics for the simple reason that the statistical offices of the occupied countries got no information about them. Therefore, these export figures contained a diminishing part of the total trade—to be exact, only the trade without any military relevance.40 Table 14.1 shows that even in the countries of Western Europe, where normal society went on more or less, normal exports fell to less than a half, and in some countries to less than a third, of their pre-war levels. Even of these, most went to Germany. Berlin thought of occupied Western Europe as a source of industrial products, just as it saw the rest of Europe as a source of foodstuffs, raw materials, labour and a future supplier of space for resettlement of substantial parts of its population. German exports to occupied Europe, especially of raw materials, fuels and semi-finished products, were limited to resources needed to keep production for Wehrmacht orders and Auftragsverlagerung going. Nonetheless, in occupied Europe even these German supplies were not always available in time. Especially products that Germany itself badly needed, coal, iron, railroad equipment and other transport facilities, were

Trade • 263 Table 14.1. Real Exports according to Official Trade Statistics (i.e. military supplies and Auftragsverlagerung not included) (1938 = 100) Belgium

Denmark

France

Netherlands

Norway

1938

100

100

100

100

100

1939

101

102

97

89

104

1940

45

86

44

46

62

1941

19

53

33

39

45

1942

13

43

49

36

31

1943

20

51

46

37

31

1944

10

52

28

21

28

1945

5

35

10

3

18

Source: Angus Maddison, Dynamic Forces in Capitalist Development. A Long-run Comparative View (Oxford 1991) 312 et seq.; Centraal Bureau voor de Statistiek, Economische en sociale kroniek der oorlogsjaren 1940–1945 (Utrecht 1947); Centraal Bureau voor de Statistiek, Maandschrift, 1938–1948 (for the years 1940–1945 secret appendices are included); Centraal Bureau voor de Statistiek, Jaarcijfers voor Nederland, 1938–1952; own calculations.

often not at hand, or at least not in time, even when they were needed directly for war-related production. Often, the occupier simply took too much of it to Germany or could not supply the occupied country. In other words, in occupied Europe export trade went on and even increased, although most is not visible in trade statistics, while imports declined. The Continent was exploited. The collapse of normal trade had severe consequences for the population of the occupied countries, but this, if not totally ignored, was hardly seen as a German problem. The food supply, just like the supply of other consumer products, was in the first place the responsibility of the authorities in the occupied countries, not of the German occupier. This opinion was explicitly expressed when Berlin was forced to discuss the question of whether to feed the starving Greeks or not. Occupied countries were badly handicapped by the fact that international markets did not function any more. The only markets that still went on and that were regulated by market forces, not by governmental regulation, were illegal markets. In international trade that meant smuggling. In 1943 M. M. Rost van Tonningen, the Nazi President of the Nederlandsche Bank, wrote that in his opinion the 3.5 million RM in the form of German banknotes ( ƒ2.6 million) that streamed into the country every day were the revenues of smuggling affairs.41 If he was right, the balance of the smuggling activities at the Dutch– German border alone was worth the incredible sum of 1,225 million RM a year. German companies that, for example, needed more fuel, required some extra raw materials or semi-finished products, or just wanted to give their labourers some extra

264 • Occupied Economies foodstuffs bought these in Dutch black markets. As late as May 1944, the steel concern Krupp tried to smuggle an important amount of apples across the Dutch–German border,42 while in 1943 near Arnhem—a Dutch border town—a train wagon was found containing 12,000 kilos of fruit that was not registered anywhere. After some investigations it became clear that this fruit was only part of a transaction of almost 200 tons of clandestine fruit being smuggled to Germany.43 Smuggling was not just a matter of romantic small-scale affairs undertaken by unshaven guys without ties, clandestinely passing borders on moonless nights with two kilos of butter, some cigarettes and a bottle of gin and afterwards having a drink with the local country policeman with whom they played cat and mouse while in fact appearing to be good friends. Nevertheless, even small-scale smuggling could result in substantial amounts of trade. In 1943 and 1944, butter cost 100 RM a kilo on the German black market, while on the Dutch market little more than ƒ50 (70 RM) was paid. The increase in the number of cross-border workers in the early occupation years made smuggling hardly a dangerous affair, as every day almost 70,000 Dutch workers crossed the border, which de facto could only be controlled by German customs officials. After the occupier thinned their ranks, the number of Dutch officials was simply too low to do anything, while German customs officers combated such smallscale affairs only when the competition with their own clandestine trade became felt. As long as one did not smuggle arms, harmful propaganda or anything out of Germany, one met with few problems.44 For small-scale smugglers, the greatest risks were soldiers or customs officials who were themselves engaged in smuggling and using their authority to deal with business competitors. The smuggling of a few cigarettes or a pound of butter by locals was nothing but the tip of the iceberg. Apart from such small-scale transactions, there were largescale affairs organized by professional criminals and German companies, but mainly by soldiers. Men with military authority had the advantage that local customs officers were not allowed to check them, while the army equipped them with official papers and transport facilities and—foremost—cigarettes, almost a universal currency in black markets. Just after the war, American and British soldiers took over the clandestine businesses of their German counterparts. In this period, the average US soldier sent home from the terribly impoverished Europe three times the value of their normal pay packets.45 The trick was easy: soldiers were allowed to cross borders, they had trucks and they were seldom controlled by the military police. In November 1945, it became clear that American soldiers in the Netherlands used army trucks on a regular basis for smuggling affairs. They picked up Amsterdam girls to buy butter or eggs in the Dutch countryside, or textiles and shoes in the southern provinces. With this contraband they went to Belgium—Amsterdam and Brussels are less than 200 kilometres apart—where they sold the stuff, had a good time with the girls and invested all remaining profits in tobacco that was sold most profitably back in the Netherlands again.46 An Amsterdam businessman complained that given this competition it was impossible to employ any girls any longer as he could not

Trade • 265 offer them ‘English cigarettes, a high number of holidays and love’.47 According to the Dutch Ministry of Economics, in these early post-war days, black market trade was, in the first place, a soldier’s job.48 During the occupation the situation was little different. Together with Wehrmacht soldiers, the most important smugglers along the Belgian–Dutch border were workers of the Organisation Todt building coastal fortifications on both sides of the border. They used army carts, trucks and even military boats to cross. Their only serious competitors were the German customs officers—Zollgrenzschutz—but when such customs officers arrested a smuggler, most of the time they had little interest in the offenders. It was the booty they were after. In Dutch historiography, smuggling across the Belgian border was more important than clandestine affairs across the German border. Possibly this is because there was more small-scale smuggling by people living in the area. Probably the difference in the early years of the occupation between the well-fed Dutch and the impoverished, hungry Belgians was also a reason for many clandestine affairs.49 As smuggling resulted from differences in the national organization of rationing, price control and the limiting of normal trade resulting from German monetary regulations, there are good reasons to believe that smuggling across this border was important. In Belgium, food rationing and distribution were chaotic. It is easy to blame the pre-war authorities, but it should not be forgotten that this country had about the same population as the Netherlands, but only two-thirds of its land area, while its agriculture was less productive. Even if Brussels had done a perfect job, it could distribute less than two-thirds of the amount of food per capita that the Dutch distributed, and that was simply not enough.50 As the Dutch survived only by a very complicated and almost perfect regulation and reorganization of their food production and food markets,51 it is inexplicable that the Belgians survived reasonably well nonetheless. The only explanation—apart from an increasing consumption of potatoes—is that Belgium obtained important quantities of food from illegal imports. As it had something to export illegally—tobacco—this trade was probably one of the most important non-regulated international trade streams at least in Western Europe. As a consequence of the difference between the almost normal situations in the Netherlands and northern France, and the rather extreme situation in Belgium, especially in the first years of the occupation, much food was smuggled to the latter country. In their reports, northern French local authorities complained about ‘the attitude of the Belgians who, notwithstanding the intense control, continued to withdraw important quantities of merchandise from France to their country’.52 Although it is impossible to verify, let alone quantify such information, it seems reasonable to think that smuggling was of special importance along the Belgian frontiers. There, it compensated for some of the problems resulting from the destruction of legal trade. Probably, the same thing happened along the lengthy border between occupied Norway and neutral Sweden. Although fishing and poaching played a role, it is otherwise inexplicable that the Norwegian population survived the war and even increased by 4 per cent.53

266 • Occupied Economies Quite another aspect—but something there is little information about—is smuggling between the diverse parts of the pre-war countries in Eastern and South Eastern Europe that the Nazis carved apart. In Poland, people from the various parts of the pre-war country—Upper Silesia, the Warthegau and the General Government—were smuggling between each other. The Warthegau, for instance, had superfluous food, while the food situation was dramatically worse in the General Government. The fact that the Warthegau had a mixed German–Polish population made black market activity extremely dangerous, however, as many of the German inhabitants kept a suspicious eye on the behaviour of their Polish neighbours and were quite ready to complain about them to the authorities. As a consequence, especially in the parts of Poland incorporated into the Reich, black market prices were extremely high. Nonetheless, smuggling went on. In Upper Silesia all kinds of products were also smuggled from the Czech Protectorate, stimulated by the low exchange rate of the Protectorate crown.54 The situation within Yugoslavia, Greece and the Soviet Union was probably little different. As there was barely any regulated trade left and the population had to survive, it seems likely that, even more than in the western parts of the Continent, clandestine economic contacts across the borders were well developed. The fact that in this part of Europe most countries were split up, and that it is unlikely that normal trade between the diverse parts of these maltreated countries disappeared, only strengthens this impression. Serbia, for example, a German-occupied part of pre-war Yugoslavia, was a fooddeficit area. The resulting problems only increased when in September 1941 Berlin transferred the eastern province of Srijem to Croatia. The Serbian capital, Belgrade, a town with around a quarter of a million inhabitants but growing substantially as a result of the inflow of refugees from Croatia, by now could hardly be fed any longer. Food imports were badly needed, and as such trade was prohibited, smuggling became the only alternative. Even the German military authorities smuggled food from Srijem to feed their men. Black markets were dominant in these parts of Europe, while partisans, who had control over substantial areas of occupied Soviet and Yugoslav territories, even set up, if not regulated economies, then at least a more or less regular agrarian production. Some of the output was smuggled not only to other parts of the occupied country, but even to the other side of the Front. It kept the economies of these countries going. As, according to an educated guess by Rost van Tonningen, the National Socialist bank president, the value of Dutch illegal trade in 1943 was more than a billion Reichsmarks, it cannot be denied that smuggling was important. Probably, illegal trade between Belgium and the Netherlands and between Belgium and France was even more important than with Germany. Black markets and clandestine production often had destructive consequences for governmental regulation set up to solve the problem that, in these exceptional circumstances, normal trade resulted in an unacceptably unequal distribution of food and other essentials. In Eastern Europe and the Balkans, where the occupier was far less scrupulous with the local economies or

Trade • 267 even with the population, black markets were often the only markets where anything was available for the local populations. Here, participating in black market activity was an absolute necessity to survive. In Western Europe, clandestine trade—often presented as a kind of resistance by black marketeers—was more often than not nothing but a way to make profits by taking scarce products from legal and equal governmental distribution to markets where only the happy few could afford the extreme price levels. That patriotic arguments were only skin deep became clear from the fact that in some markets illegal production reached its peak only after the liberation.55 Smuggling to Belgium was another case. It solved one of the more acute food problems in this part of Europe. That did not mean, however, that this clandestine trade was not motivated by hope for profits, just like all others. As the occupier destroyed intra-European markets, just as it destroyed normal internal markets in Eastern Europe and the Balkans and made little attempt to regulate international markets when this was not in the direct interest of the German war production, none of the occupied countries could depend on imports to satisfy even the most essential needs of its population or its economy. Not only was the normal division of production and the allocation of goods and services by market forces between Europe and the rest of the world destroyed, but also the allocation by market forces and the labour division between the European countries. As a consequence, each country had to solve its own food and other scarcity problems. In Belgium, where it was impossible to provide the population with a more or less adequate food supply, the food distribution became a serious problem and was at times simply too low. Here, illegal trade compensated for the German destruction of intra-European trade a little, giving the Belgian population a possibility to survive. The same is true in some other parts of Europe, especially in eastern and south-eastern parts of the Continent, where the Germans carved up pre-war countries without any consideration for traditional internal trade relations, cutting off territories with food deficits from their traditional suppliers. In Serbia and the Polish General Government, both territories isolated from districts that before the war had been part of the same country, the cutting off of trade caused severe problems for the population that were partly solved by smuggling transactions.

Regulated and Black Markets From the first weeks of the occupation on, prices across Europe were regulated. When the market proved stronger than the rules and it became impossible to keep price levels within certain limits, rationing and the introduction of a state-controlled distribution system were the next step in almost all countries. When such systems were introduced, licences in the form of coupons for consumers became necessary to buy, sell and sometimes even transport essential products. Foodstuffs, clothing, shoes, soap, and foremost raw materials and fuels were rationed. When the rationing

268 • Occupied Economies system included consumer markets, only customers that could hand over a coupon were allowed to buy a certain quantity of a certain product. Upon presentation of the required coupons, such regulated products could be bought at relatively low prices most of the time in normal shops. By presenting a coupon, the customer proved to the shopkeeper that he was entitled to buy a certain quantity of a rationed product. Shopkeepers had to administer these coupons and send them back to a governmental rationing organization. Depending on the number of coupons they sent in, shopkeepers got permission to restock smaller or larger quantities. Thus, a bureaucratic organization could control every step in the chain between the original producer and the final consumer. For raw materials a similar regulation could be ordered. In that case, companies were only allowed to buy, sell, use or transport raw materials with special licences. In the occupied countries from 1942 on, this was done from Berlin by controlling the national institutions set up to regulate and control the use of raw materials.56 Distribution was introduced to regulate markets with supply problems. Apart from the Allied blockade, it was the destruction of intra-European trade, and foremost German extractions and the enormous German wartime demand, that caused these supply problems. Almost every occupied territory was ordered to supply Germany and its army with certain quantities of food. The question of how much each had to deliver was dependent on a number of criteria. In the first place, the more important the industrial production of a country, the less heavily it was charged for food. In the second place, the distance to the Front was a key factor: when a territory was directly behind the Front and had to feed the fighting units of the Wehrmacht, all other criteria were forgotten. Then, it hardly mattered any more where the food came from. In 1941–1942, Greece already had the most severe problems with nourishing its people, but nonetheless it had to supply substantial quantities of food to Hitler’s North African army. It was simply a matter of which was the nearest country where these troops could get what they needed. The fact that this caused a severe famine and thousands of civilian deaths seemed irrelevant. Finally, in countries where the population was Slavic or a substantial part Jewish, or for whatever reason was considered low grade in Nazi racist ideas, Berlin saw no objections to demanding so much food that substantial parts of the people starved to death. In occupied Eastern Europe and the Balkans, Berlin thus knowingly caused famines and large death tolls. As the Soviet peoples were considered little more than animals, this complete indifference to their fate, more than sadism or cruelty, caused the deaths of millions.57 Not only Nazis but also non-party members did not care about the populations of Russia or Poland and even wanted them to die, not because they hated them, but simply to clear the land for post-war German settlers. In Western Europe, the German food policy was primarily one of non-intervention: the occupied country had to solve its own problems. The occupier only seized food to feed its occupation army. Further, it only took what was superfluous anyway: Danish butter or Dutch vegetables. It was only in France, a country having substantial

Trade • 269 problems nourishing its population, that Berlin took some 10 to 20 per cent of the agrarian output, forcing the country to hand over more food than it could spare. The reason for this is not quite clear. Probably the fact that France did not develop into the major industrial contributor to the German war effort Berlin had hoped for played a role. Nonetheless, the occupier did not take so much that it resulted in famines or high mortality rates. Although the output of the French economy was disappointing from a German point of view, it was still more important than the output of any other occupied country. In addition, France was far away from the Front, while its population in general was not considered inferior. Probably the French case is also a reflection of the fact that the German Ernährungspolitik—food policy—was only partly rational. All over Europe it was known that France was still a substantially agrarian country. Therefore, in 1940 some Germans even played with the idea of turning this most important economy of occupied Europe into an archaic country, in the best case able to export some foodstuffs.58 Probably, the fact that France still had a strong agrarian sector was enough for a boaster like Göring, for whom a first impression was often more important than any calm analysis, to demand all the food it could provide. The Netherlands was also an important exporter of high-class foodstuffs before the war, although an importer of enormous quantities of basic foods. Seyss-Inquart, knowing the Nazi top brass from the inside, feared for such reactions among other Nazi leaders. He therefore made sure that guests from Berlin got the impression there was hardly anything to eat in the occupied country and gave them so little that they often were seen in a Hague restaurant directly after they left dinner with the Reich Commissioner.59 Seyss-Inquart feared rumours about rich Dutch dishes, because all German claims on the products available in an occupied country directly influenced the supply on the internal markets of that country. Given the outcome of this policy, it was left to the authorities inside these countries to arrange the distribution of the remaining consumer goods. When considering market regulations in Western Europe in respect of which products should be rationed, the importance of the product for the German war production and/or the well-being of the population, as well as its scarcity, were decisive factors. Apart from that, there were differences for local reasons. In the Netherlands, the experience of scarcity in 1917 and 1918 was a living memory. A repetition of that period was feared, now with a population that had grown by 35 per cent. The pre-war government had therefore already planned, and even partly implemented, a distribution system before the country was involved in any hostilities. The fact that the public knew the market regulations had been introduced by the country’s legitimate pre-war government, and executed by officials of that government, was probably one of the reasons that, even in 1944, a German official could still write that in ‘the Netherlands the black market does not play such an important role as in other occupied countries’.60 This was essentially the same in Denmark, where during the occupation period the pre-war government retained some of its power.61 The fact

270 • Occupied Economies that these countries had almost completely regulated economies was, however, also a consequence of their political culture. Although the Germans were content with the Dutch situation, 20 to 25 per cent of the agrarian production had nonetheless disappeared into black markets already in the period before the 1944–1945 Hunger Winter, while this figure was about 15 per cent in industrial sectors and 10 per cent for the economy as a whole.62 In other words, for most of the war period, the authorities could supervise 80–90 per cent of the economy. The Germans were enthusiastic about that. In almost every other country, the fraction of the economy that went out of control was much higher. In Eastern and South Eastern Europe, for instance, all pre-war preparations for market and price control were destroyed by the splitting up of pre-war states and the fact that the population rightly lacked all confidence in the new regimes. Consequently, the German or Germansympathizing authorities got only a limited grip on the economies. On top of that, in countries like Poland, the occupied parts of the USSR, Greece and Serbia, extreme scarcity resulting in hunger—partly as a result of a willingly introduced hunger policy— made every attempt to implement a systematic market regulation policy futile. Although, during the war, the markets for raw materials and fuels used in the production of consumer goods were replaced more and more by a planning system, while the labour markets were strictly controlled in relation to Sauckel’s Arbeitseinsatz policy, the question of whether the allocation of consumer goods was also organized and planned or, within limits, left to market forces was, up to a certain point, left to the authorities in the occupied countries. That did not mean that these had much freedom to manoeuvre. Guidelines on delivery of food, the main consumer good, laid down in meetings between Göring, Backe and other figures within the military and civilian hierarchies and implemented all across the occupied territories, had an enormous impact in the eastern parts of Europe.63 Although this seems to imply that agriculture and food consumption were planned on a pan-European scale, this was only true in as far as it concerned deliveries to Germany or its armed forces.64 During the occupation, markets all over Europe were regulated. The authorities— who in Western Europe were civil servants remaining from the pre-war government and supervised by the occupier, and in other parts of the Continent were German officials—in the first place ordered all prices frozen. When it proved impossible to keep prices stable any longer, rules on how to calculate new prices according to specific schemes were issued. This price regulation policy was intended to suppress inflationary tendencies, since the monetary policy resulted in an increased money supply all across Europe (Chapter 13). Moreover, in the western parts of the Continent, the growing production resulting from the German military demands caused increased private incomes—wages as well as profits—while the supply of consumer goods declined because the occupier took a fast-growing part of the output. The growth of financial wealth therefore could not result in higher consumption levels. While real scarcity and hunger drove up price levels in Eastern and South Eastern Europe, on Western consumer markets the high purchasing power of the public was

Trade • 271 met with a relatively low supply of consumer goods. The only way to solve this discrepancy—apart from letting destructive inflation do the job—was, in the first place, by suppressing price inflation. Therefore, huge sums of money could not be used as there was nothing to spend it on and price rises were suppressed. This resulted in unwanted savings. As the owners of these savings feared post-war price inflation, this caused extraordinary tensions as well as a growing demand for services that could be produced without using any raw materials. As in this sad wartime period many Western Europeans wanted some entertainment and had the money to get what they wanted, the entertainment businesses of cinemas, sports stadiums, theatres, concerts, dance halls, brothels and holiday accommodation boomed. Some also spent their savings on what was still available in markets where prices could not easily be controlled, such as the markets for art, musical instruments, second-hand books and antiques, thus transferring their money into goods that would still have some value after the war.65 This strong tendency also influenced legal as well as clandestine stock exchanges, while the superfluous cash also caused corruption, clandestine transactions, fraud and above all an unprecedented economic inequality. While a Dutch farmer selling clandestinely produced tobacco did not know what to do with his money but store the banknotes in his barn,66 others saw their incomes slump as most of the time freezing wages was more successful than freezing prices. Consequently, economic tensions grew. The well-to-do with superfluous money drove up black market prices, thus motivating producers to send their products to such markets, while others could not even pay for what was still available on legal markets, let alone buy anything clandestinely. For them it became ever more difficult to obtain what they needed to survive. Price control alone was far off the mark to regulate such tensions. Governmental rationing had to ensure that the short supply of essential consumer goods was distributed in a more or less acceptable way. In other words, free market trade had to be suppressed in order to ensure that supplies of essential goods were available to the less-well-off. However, by doing so, the governmental institutions destroyed, primarily, all opportunities for producers to earn worthwhile sums of money while, at the same time, smothering the purchasing power of wealthy consumers. As these two parties could meet their frustrated economic targets by circumventing the rules, a growing black market was only to be expected. The regulated market system was all but watertight. Its weakest point was that primary products were the most wanted—foodstuffs, raw materials and coal. In the branches where these were produced, the opportunity to estimate the output within limited margins by controlling input—as existed in industry—was impossible. For a farmer or peasant, it was hardly a problem to keep substantial parts of his production out of the books, as far as he had any. As an extra advantage, the production of farmers, fishermen and, for instance, peat workers, was spread over large, sometimes even enormous, areas that were simply impossible to supervise. What happened on the other side of a farmer’s land, or off the coast on board a fishing boat, no one could

272 • Occupied Economies tell. For instance, during the occupation, all along the coast fishermen left substantial parts of their catch near to shore out on the sea. At night, these catches, still in their nets and marked by small beacons, were then picked up from the beach by small boats or were taken after dark to half-forgotten harbours, where controlling officials were never seen.67 The Chamber of Commerce of Quimper (Bretagne, France) concluded therefore that ‘the figures [on caught fish] for the years 1939–1946 should only be used with the highest suspicion’, as in these figures the substantial clandestine wartime production was not accounted for.68 For primary producers the risks of not registering a part of the production were limited, as no one could reasonably blame a fisherman for not catching more fish, or a farmer if his yields were disappointing. When a farmer or fisherman was asked for the causes of the poor production he sold in the legal markets, he could claim that the weather was too dry or too wet, or blame the wind, a thunderstorm, rodents, diseases or lack of fertilizer, some kind of plague among the animals, lack of fodder, or whatever one could think of. Thus, by claiming the harvest was disappointing, clandestine margins in basic production could easily be created. Together with unregistered pre-war stocks, these margins were the basis for further concealed production. In fact, the same was true for all primary production. A mine is easier to control than a farm, but, nonetheless, all over Europe coal mines produced less coal with more labour. At the same time, clandestine coal was available everywhere. Not only farmers and peasants kept a part of the production out of their administration as far as they had any; this was done in all primary production: coal, wood, peat, wool, leather and all other raw materials.69 It was a consequence of overburdening the producers with unwanted and incomprehensible regulations that increased their administrative burden, suppressed their freedom of production and limited their profits. All over occupied Europe non-registered food production was of the highest importance. In the Netherlands, where, according to the Germans, clandestine production was very low in comparison with other occupied countries, it was still between 20 and 25 per cent of the total agrarian production before the hunger years of 1944 and 1945. It is clear that in countries like Belgium and France it was much higher.70 In 1946 the League of Nations wrote: ‘Rationing proved efficient on the whole throughout the war in Germany, Czechoslovakia, Denmark, Sweden and Switzerland, and most of the time also in the Netherlands; it was less successful in Belgium, France and Norway. In Southern and Eastern Europe it ultimately broke down altogether.’71 According to some, in Belgium, where the food situation was problematic, in some years clandestine agrarian production was even around 50 per cent.72 At first sight, this seems a rather extreme guess, but during the Dutch Hunger Winter, black markets became of even higher importance when, as a consequence of the extreme circumstances, governmental distribution broke down.73 In France, such percentages were never calculated, but it was a fact that there governmental distribution and rationing were never successful.

Trade • 273 In Chapter 15, an educated guess of the clandestine markets in diverse occupied countries will be made, and it is clear from these calculations that in certain years the black market in France was probably about 25 per cent of the total national production and around 45 per cent of the agrarian production. A German official memorandum written in September 1944, that is after France was liberated, rightly concluded that during the occupation it had been impossible to survive in that country without clandestine purchases.74 Already in October 1941, a préfet—a local French administrator—wrote more or less the same thing and concluded that black markets should not be suppressed as ‘one cannot attack the small-scale black markets that actually feed the people as long as official rationing is insufficient and badly organized’.75 Black market trade is not just a wartime phenomenon. For individual citizens as well as business communities, increased taxation, a declining understanding between rulers and citizens, and governmental regulation of markets and production are reasons to transfer a more or less important part of the production to clandestine corners where taxation and regulation can get no grip on it.76 All over Europe, the years of occupation were years of a waning trust in rulers, high taxation and increased governmental regulation of production, distribution and price levels, while economic tensions became enormous because of shortages of essential consumer goods and sometimes downright hunger. As those who abided by all the rules had to accept lower wages, profits, incomes and/or consumption levels than those who knew how to circumvent them, clandestine production and black markets sprang up everywhere. In many occupied countries patriotism was used as an argument or justification for this activity, but this was in fact seldom more than a pretext. In reality, the participants were motivated by profits, higher incomes or keeping consumption levels above official rations, but in some parts of Europe and in some years, it was for many simply the only way to survive. Nonetheless, even in these circumstances, at least a substantial part of the suppliers were motivated by the opportunity to make profits. That does not imply that, by doing so, they did not offer others the only way out of a situation wherein living on official rations alone would lead to starvation. In countries and periods where black markets were the only way out, this clandestine activity often also prevented more food from going to the occupier and its armies. Altruism was not unknown and possibly even not uncommon. At least some farmers tried to help their fellow citizens as far as possible. Most of the time, however, it was economic reasoning that motivated suppliers as well as buyers in these markets. On black markets, profits were high, and not only in real hunger areas. People do not like to miss the small luxuries they are used to, while the idea that some of these are absolute necessities—you cannot have breakfast without eggs and white bread, or beans are uneatable without bacon—is widely spread among those who are used to such small comforts. It is therefore quite understandable that, not only in the occupied countries, but wherever people had to miss some products they were attached to, black market trade developed. This was strengthened by the fact that many feared that the limited hardships of today were only one step towards real hunger

274 • Occupied Economies tomorrow. Consequently, not only in the occupied territories, but also in Germany, Great Britain, Japan and even Canada and the USA, such markets became of growing importance.77 For farmers and peasants, illicit markets offered the opportunity to sell agrarian production kept out of the books. Unrecorded industrial production as well as stolen goods could also be easily sold in these markets without any embarrassing questions and for extremely good prices.78 Price control is hard to maintain, especially when parts of the public have enough money to pay more than is allowed and shopkeepers have less to sell than customers demand. Therefore, prices naturally rose. Even on legal markets price levels often went out of control. On top of these internal inflationary tendencies, the occupier often stimulated prices to rise as it never was a problem for the Germans to pay whatever price demanded if they wanted a product for military reasons. After all, the cost of all German military purchases could be met from the occupation costs paid by the treasuries of the occupied countries. In an emergency, German military fake money—Reichskreditkassenscheine (RKKS)—was always a way out, while when some of the German purchases did not go directly to the armed forces, they could be paid for through the clearing, which in fact meant the occupier borrowed the money from the treasury of the occupied country until the war was over. For the Germans, therefore, price levels were irrelevant when doing the shopping for their military forces. That those Germans responsible for keeping the occupied countries under control had other opinions was none of their business. This attitude contributed to the inflationary tendencies in occupied Europe. In France, where the legal supply of consumer goods, especially of food per capita, was smaller than elsewhere in Western Europe, consumer prices tripled between 1938 and the end of 1943, notwithstanding price controls, according to a 1944 German memorandum. This price explosion meant an average rise in the cost

Table 14.2.

Consumer Prices in a Number of Occupied Countries (1938 = 100) 1939

1940

1941

1942

1943

1944

1945

Belgium

101

113

—

—

—

—

—

Denmark

103

128

147

151

152

156

158

France

106

126

148

178

221

271

401

Greece

100

110

126

934

5,093

6.4 E 11

—

Yugoslavia

103

135

183

—

—

—

—

Netherlands Norway

96

113

128

137

141

145

169

102

119

139

147

150

153

155

Source: B. R. Mitchell, International Historical Statistics: Europe, 1750–1993 (London 1998); League of Nations, Statistical Yearbook, 17, 1942–1944 (Geneva 1945); Bank of Greece, Ta Prota Penenta Chronia thw Trapezes tes Hellados (Athens 1978) 199 et seq.

Trade • 275 of living of 25 per cent a year, while wages rose by 75 per cent in the same period, or only 12 per cent a year.79 Although these German data possibly exaggerated the situation slightly—according to official statistics consumer prices rose by only 171 per cent instead of 200 per cent—it is clear that the French price stabilization policy failed (Tables 14.2 and 14.3). If the German series are correct, in each year of the occupation, French working-class families saw their real incomes slump by about 13 per cent, or by 42 per cent in the entire period (Table 14.3). French price inflation increased faster than in any other Western European country, including Belgium, a country where an index on wartime prices is still unavailable, although this 1944 German document provides some information.80 Nonetheless, the French inflation was far less dramatic than in Greece—the only Eastern or South Eastern European country there is any statistical information for. There are, however, indications that the situation in parts of the occupied USSR, Poland and Serbia was also far worse than in France.81 Nevertheless, when one wants to keep the wage level more or less stable, even inflation rates like those in France are unacceptable. Such inflation rates severely undermine the purchasing power of the working classes. This became really dramatic in Greece, where the drachma de facto lost all its value, and in 1944 the cost-of-living index for Athens reached a level of 16,250 billion (March 1941 = 100).82 When, notwithstanding price controls, prices rise rapidly, the only way to make sure that working-class people can buy essential consumer goods without substantial wage raises—which would only increase inflation rates further—is by taking over control of all important markets, from farm or factory to shop. It should then be guaranteed that the prices of essentials thus controlled are kept in hand. The way to do this is a state-controlled rationing system. Thus, price control was simply not

Table 14.3. Country

Wages and Consumer Prices at the End of 1943 (1938 = 100) Consumer prices

Wages

Real wages

Clandestine food prices

Germany

113

124

110

—

France

300

175

58

—

Belgium

150

130–150

±95

1,594

Netherlands

130

100

77

620

Denmark

128

110

86

—

Source: RGVA, Collection number 1458, Inventory 32, File 137, Die Währungsentwicklung in den verbündeten und besetzten europäischen Ländern, Berlin, den 10. September 1944, 7–10 (128–131); P. Scholliers, ‘Strijd rond de koopkracht, 1939– 1945’, in: België, een maatschappij in crisis en oorlog (Brussels 1993) 245–273, here 265; Hein A. M. Klemann, Nederland 1938–1948. Economie en samenleving in jaren van oorlog en bezetting (Amsterdam 2002) 548–549 and 559.

276 • Occupied Economies enough, and regulation spread. In some countries this was foreseen and the pre-war governments had already prepared such systems. In others, it was hoped that the country could do without, but in the end governmental regulation of at least essential foodstuffs, fuels and raw materials was introduced all over Europe. Such regulation can be effective. This was the case in those countries where there was only some tension, but the situation did not become extreme—for instance, where there was no famine, producers, although complaining, thought the regulation in principle a good solution, and most citizens were cooperative. In Belgium, in the months before the German invasion, there was much discussion in political circles on the idea of an opposition irréductible that should make it hard, if not impossible, to involve the Belgian economy in the German war production. In its most extreme form this meant that the population would leave the country. However, when Belgium capitulated on 28 May 1940, the population was still there. Subsequently, these people had to survive in a country that was little prepared for war conditions.83 There were no government stocks, and although the pre-war government stimulated some private stock building in the last months before the attack, the results were disappointing. The grain stock was not even sufficient to cover the country’s needs until the next harvest, while the preparation of a distribution system for essential consumer goods had all the characteristics of a last-minute improvisation.84 The government of King Leopold III left the Belgians in the lurch. In France the situation was only slightly different. Here it was a consequence of quite another political calculation. France thought it could win the war against its arch-enemy, or at least defend its territory for years to come. Not even in his darkest nightmares did any Frenchman foresee the rapid collapse of his great nation. When, in November 1938, Paul Reynaud became Finance Minister in Daladier’s Cabinet, his target was to prepare the Republic’s finances for war, and to accomplish that he did not hesitate to follow a tough course. The Liberal minister was sure that the next conflict would be long and exhausting, but he did not doubt for a minute that there would be final victory. Therefore, he did not hesitate to take all measures needed. To prepare his country for the coming war, Prime Minister Eduard Daladier thought it his duty not only to take hard measures, but even to reverse a number of the social innovations of Léon Blum’s left-wing Front-Populaire cabinet, although he himself had been Vice-Prime Minister in that ministry. It made him most unpopular among his former political friends, but in order to increase production for the rearmament programme, a 48-hour week was required. Daladier’s Zivilcourage was recognized, but it was his Finance Minister, Reynaud, with his unequivocal belief in a French victory, who made the most impression. ‘We will win, for we are the strongest’, Reynaud said in a famous speech. He was so convinced of the coming victory, and his conviction was so contagious, that in March 1940 he became the new Prime Minister of the Republic—which, with hindsight, was not a position to envy.85 Reynaud was not alone in his conviction that there would eventually be victory for France, and few reckoned with a quick collapse of la Grande Armée that twenty

Trade • 277 years ago had defended the Republic for four years against the same enemy. That nobody could imagine a collapse of France had everything to do with the reality that not only in Paris, but everywhere in Europe, the problems and experiences of the First World War were decisive for the expectations and the preparations for the coming war. Paris prepared for another Battle at the Somme or even another Bataille de Verdun, not for military disaster followed by years of occupation, the exploitation of its economy and isolation from the overseas world by a British blockade. As a result, there seemed no reason either in Belgium or in France to prepare for the economic problems caused by the occupation. After the collapse, in both the French and Belgian societies, the opposition against regulating markets—and especially against a German-inspired economic regulation— was strong. Apart from differences of experience in the previous war, traditional differences in the relation between citizens and government are possibly an explanation for the dissimilarity between these two countries on the one hand, and the Netherlands and Denmark on the other.86 In 1939 France was the only European nation that had not even started to prepare a food-rationing policy, and it wasn’t until September 1940 that coupons became necessary for some products.87 Subsequently, when a governmental rationing policy was introduced, it was seen and valued as a set of humiliating administrative measures enforced onto France by its enemy. However, before any governmental rationing was introduced, most consumers in both Belgium as well as in France had already found their way to rural areas and black markets, and a considerable number of them could cope quite well with wartime scarcity by buying directly from farmers and peasants. Therefore, apart from primary producers and black market traders, wellto-do consumers were also interested in a continuation of this unregulated trade. Farmers were hardly interested in a state-organized distribution system that resulted not only in a lot of bureaucratic interference, but also in the obligation to sell their products for lower prices than they could get elsewhere. On top of that, they often had to sell to new wholesale buyers—bourgeois people from the towns they did not trust.88 In his book on French black markets, Paul Sanders wrote about the ‘grudge of the cultivators against the new collectors of the crops who they saw as suspect profiteers enriching themselves from their labour’.89 Free markets—if it must be illicit free markets—were seen as truly French and national; regulated markets as German and hostile. Subsequently, it was considered an act of patriotism not to sell to legal wholesale buyers, who in France were often administrators of the Vichy government; in Belgium they were officials of the distrusted Secretary-General of Agriculture, Emiel de Winter. Many, therefore, sold as large a share of the production as possible for good prices in illicit markets, instead of for low prices in legal markets.90 The incorrect idea that when food was sold on the black market, the occupiers could no longer lay their hands on it further motivated clandestine trade. It was thought that by selling on the black market, one could do something for France or Belgium, Liberty or Flanders, and at the same time earn a nice sum of money. It was an irresistible combination.

278 • Occupied Economies In Belgium and France state regulation of markets was mistrusted.91 The Germans typically wrote that in France ‘a substantial part of the consumer goods [was] only available on the black market for substantially higher prices’ than officially allowed.92 In respect of Belgium, they wrote that ‘the black market played an evergrowing role in the distribution of essential consumer goods’.93 For consumers the only way to get enough to eat was to extend their meagre rations clandestinely. This was even more so because, as the French public was opposed to any rationing policy, Vichy tried to limit rationing to products for which this was an absolute necessity. During most of the war, in France, potatoes were therefore rationed only locally or were even freely available, but this meant most of the time that this highly nutritional product could only be obtained at astronomically high prices.94 Almost everyone in Belgium and France bought a more or less substantial part of his foodstuffs on the black market, but there was an important difference between the two countries. In France, where agriculture still accounted for 20 per cent of the GDP (gross domestic product) and a majority of the population still lived in the countryside, most people—including the urban population—had personal contacts in the villages. For many urban French families it was a serious problem when in June 1944 the Post Office was no longer able to deliver parcels, making it impossible to get extra foodstuffs from family and friends in their home villages.95 Since October 1941, French farmers had been allowed to send food packages to their urban relatives, who would not have survived without this support.96 The problem that such packages could no longer be sent was quickly solved by the liberation. In highly urbanized Belgium, agriculture amounted to only 8 per cent of the GDP, and private contacts between town dwellers and the countryside were rare.97 Nonetheless, the smuggling of food from the countryside to the towns had become normal practice from the second half of 1940 onwards. A historian wrote: Provisioning and black markets, during the occupation, these became the centres of daily life . . . Normal rations were inadequate to cover the most vital needs. Supplementation with foodstuffs that were only to be obtained on black markets was a necessity . . . The man in the street only bought there the most necessary foodstuffs: bread, flour, potatoes, butter or meat. From the moment deficits and hunger became felt, every day thousands of Belgians went to the countryside to smuggle food back home. Masses of Belgians left their home towns or suburbs, walking, on bicycle, by train or local tramway, with carts or wheelbarrows.98

In 1945 an economist expressed the opinion that in Belgium a consumer had the choice between a small risk if he bought food clandestinely and an enormous risk— the risk of starvation—if he did not. In the Netherlands and Denmark, from the start of the occupation onwards, the situation was completely different. In the First World War, both countries remained neutral. Nevertheless, they became victims of almost complete isolation from the

Trade • 279 outside world as a result of the Allied blockade, especially from 1917 on. In these northern countries, a pragmatic attitude toward the agrarian and food-distribution policy was characteristic. Before the war even started, in Copenhagen as well as in The Hague, it was common opinion that wartime scarcities made it necessary to suspend free-market allocation of at least essential consumer goods such as foodstuffs, fuels, clothes, shoes and soap. A system of governmental rationing and distribution should create a temporary and, in principle, reversible economic equality among all citizens. This should be done by a system of fair and equal distribution of essential goods in short supply. In The Hague, preparations to implement this government-controlled policy started as early as 1936. Then, just after the remilitarization of the German Rhineland, some officials took steps to prepare the country for the approaching war by saving it from anarchy on the markets for essential consumer goods. In Denmark this was done a few years later but, as in the Netherlands, well ahead of the German attack. As a consequence, from the German invasion on, the tasks for the government offices set up to keep the distribution of essential consumer goods going and adapt production and consumption to the circumstances were clear. In the first place, farmers should be motivated to adjust their export-oriented production to the needs of the population. To stimulate them to do so and sell their products in legal markets, price instruments as well as pressure were used. This policy of stick and carrot completely differed from that in France or Belgium, where the attention was unilaterally concentrated on consumer interests. All price increases in the food market were therefore prohibited. Pre-war prices were, however, Depression prices from the 1930s when markets all over the world, and especially food markets, were in distress. Consequently, Belgian and French farmers complained about price levels being too low to earn them a living and sometimes not even enough to get back the production costs.99 The stick alone proved not enough to keep the producers within the system, particularly when farmers could get big carrots on the black market. In Denmark and the Netherlands, after the adaptation of the production to the needs of the population by slaughtering a substantial part of the now superfluous animals and shifting to arable farming, the planned governmental rationing policy could be implemented. To make the system really work, Dutch farmers were allowed to raise the official prices of those products most needed to feed the population. On top of that, the Dutch government had already hoarded a stock of grain before the German invasion that could, if necessary, feed the population for a year and provide enough to bridge the transition period.100 In the food markets in Western Europe, supply problems were caused by the Allied blockade as well as the German obstruction of trade relations between the occupied countries. Supply problems caused by actual fighting and confiscations of land, by the Wehrmacht to train new recruits or by the occupation authorities to transfer the obtained land to German settlers, were unknown or, as far as it concerned actual fighting, only known for relatively short periods of time. Confiscations of food concerned only superfluous foodstuffs. The Danes could not shift all the butter,

280 • Occupied Economies cheese and lard they produced, while the Dutch could not eat all the salad, spinach and cabbage they grew. It was only in France that the occupier demanded more food than the country could reasonably spare, especially after it became clear that the occupier did not manage to get the French industrial production going on the level it had hoped for. The fact that in the first year of the occupation, substantial quantities of food from all the occupied Western European countries (other than Belgium) went to Germany (Plate 7) had to do with the slaughtering of a substantial part of the livestock in order to adapt the agrarian production to internal needs. The resulting quantities of meat and pork were simply too great to be eaten by the populations of these countries themselves. The fact that France had to deliver more food than its population could made feeding the French a more severe problem than feeding most other populations of Western Europe. While supply problems were limited in the West compared to other parts of Europe, demand problems were as severe as everywhere else. From the moment the general public became aware of international tensions, it remembered the deficiencies of the 1914–1918 war period and started to accumulate private stocks. This resulted not only in scarcities, but also in an unfair, class-dependent distribution of the stocks. Only people with substantial savings could afford the necessary purchases. All over Europe, it was private stockpiling, more than anything else, that abruptly created problems on the food markets directly after and even before the German occupation. It was only in the countries where a strict food control and distribution system had been prepared, such as Denmark and the Netherlands, that private hoarding could rapidly be suppressed; in Belgium and France, however, most preparations for market regulation still had to start. Therefore, everyone here could get a part of the small stocks according to their savings, while speculators kept some stocks out of the market to get higher prices when the anticipated scarcity was felt. This speculation in itself meant that it was only a very short while before that happened. At the same time, in neighbouring countries only a few products were relatively scarce. In the winter of 1940–1941, while Belgian rations were already too low for a healthy diet, the Dutch middle classes suffered only from the fact that they had to make do with what probably was a healthier, but less fatty diet than they liked.101 According to all indications, clandestine markets became of growing importance from the start of the occupation in Western Europe, especially in France and Belgium. In France, prices on these markets—where all limits seemed gone—rose at least as high as in Belgium. During the occupation as a whole, the French authorities were not just incompetent at controlling markets, but sometimes even unwilling, as by clandestine production the ‘agricultural sector catered to the population’s desperate need to supplement their wholly inadequate food rations, ensuring that many products remained among the French’.102 Of course, distribution by clandestine markets resulted in a very unequal allocation. Regulation was aimed at limiting high profits and abundant consumption by the fortunate few of the small amount of goods available while accomplishing a fair and even distribution at reasonable prices

Trade • 281 for all. The fact that Vichy proved incapable of achieving such an equalizing policy severely undermined the political authority of the regime of Marshal Philippe Pétain.103 As Kenneth Mouré and Fabrice Grenard wrote: ‘Shortages of food, clothing and fuel, of industrial raw materials and energy, and of basic supplies for commerce, produced a culture of widespread illicit activity that made most citizens—producers as well as consumers—rule-breakers in order to survive.’ This development was not unique to the French.104 Black market food prices in Belgium in 1943 reached a level of almost 1,600 (legal food prices in 1938 = 100) (Table 14.3). The increase of official price indices therefore was only part of the rise in the cost of living. Clandestine markets with astronomic price levels undercut real wages far more than official statistics suggested. All indicate that the setback in the real incomes of French working-class families was far worse than the already dramatic 42 per cent they lost between 1940 and the end of 1943 according to the calculations discussed earlier (Table 14.2). If clandestine prices were as high as in Belgium—a reasonable, although probably slightly low guess—and 25 per cent of French production (Chapter 15) was clandestine, then in 1943 the French consumer price levels—black market prices included—rose to 624 (1938 = 100). Because of the need to buy at least a part of the consumption goods on black markets—in urban areas French official rations were simply too low—in 1943 French real wages fell to a level of 28 (1938 = 100). In the Netherlands, real wages also declined dramatically in that year, but if the same correction method is used as for France, only to a level of 47 (1938 = 100). Although that was in itself more than striking, a serious difference with France was that in the Netherlands it was still possible to live on official rations alone. Not only were these relatively high, but rationing was well organized as well. Black market purchases were not necessary. For less-well-off Dutch families who seldom bought anything clandestinely, real wages were still 77 (1938 = 100).105 In France, a country that for this part of Europe was relatively badly off, as it was necessary, especially for the urban population, to buy on the black market, real wages slumped most dramatically, but even in this country the situation was far better than in any of the countries in the eastern parts of the Continent. In Greece, the rationing system introduced by the Athens puppet regime broke down almost immediately as a result of overall scarcity. Thereupon, the Ministry for Agriculture and Food introduced control over all vital agricultural products by ordering farmers and peasants to deliver a certain amount of products, dependent on the size of their land, at a given price. With this German-style quota and price control system, Athens hoped to obtain the foodstuffs to supply the towns. A major obstacle was, however, the attitude of the smallholders. No less than 1.3 million farmers and peasants—in a population of 7.1 million—produced bread grain. This makes clear some of the problems in Eastern and South Eastern Europe where the production was still overwhelmingly agrarian and for a substantial part existed on very small farms where the authorities could not possibly control what happened. In such circumstances, obstructing the intentions of the regime by simply not doing

282 • Occupied Economies what they demanded was not a problem. The readiness of many Greek smallholders to cooperate had already been destroyed in April and May 1941, just after the invasion, when Axis troops seized their crops and stocks. It only got worse when in Greece, just as in France, governmental regulation ordered the agrarian population to deliver their crops at prices far below free-market levels, often even below costs.106 As a consequence, many farmers hoarded foodstuffs in the hope of better market conditions and sold them privately to black marketeers or even to the Axis military authorities. By sending their crops to black markets, many thought they were committing an act of resistance, because, as they rightly supposed, when they delivered their crops through legal channels, much of it would never reach any Greek towns but would be shipped to the Axis armies in North Africa. As a result, compulsory collections remained unsuccessful, and as hoarding was stimulated by the rocketing inflation and opportunities provided by black markets, this only became worse. As a result, only 10 per cent of what was needed to sustain the urban population was secured.107 Taxation of peasants in kind (10 per cent of their gross output)—and later of threshing (8 to 9 per cent)—was likewise unsuccessful.108 In 1942 taxes yielded only 40,000 tons of corn.109 Now it became clear to others than farmers and peasants that black-marketeering was motivated more by speculation than by patriotism, and the urban population turned against the countryside.110 The dismemberment of Greece into three separate occupational zones was another obstacle to rationing by preventing, for instance, any transportation to the Pireaus area of surplus grain and vegetable produce from the German- and Bulgarianoccupied zones in the north.111 This problem worsened when officials with authorization to cross economic borders had to cope with enormous transport difficulties: all facilities and fuel were controlled by the occupation authorities. Thus, foodstuffs competed for space with fuel and raw materials for industries working on Axis orders and supplies for the North African troops. As a consequence, official food allowances were pitifully inadequate in the towns and often only available on paper. After August 1941 most of the time only bread and rice were available, and in November 1941 the calorific value of actual rations fell to 183 kilocalories a day, less than 10 per cent of what is an absolute minimum. The government attempted to support the population by setting up soup kitchens,112 and the church, the International Red Cross, a number of charity institutions, wealthy Greek industrialists and even the welfare branch of the left-wing Greek Liberation Army organized meals.113 Partisans even requisitioned hoarded foodstuffs to redistribute among the poor.114 Altogether, the funds were too meagre, however, and no more than 150,000 people—less than a quarter of the starving unemployed, refugees and children—could be helped. Because of the extreme scarcity and inability to control distribution and prices, large quantities of food found their way into the storehouses of speculators, who sold just small amounts at fantastic prices. These prices made it impossible for the bulk of the town dwellers to supplement their rations clandestinely on a regular basis.115 To pay black market prices, the middle classes sold their jewellery, gold coins, furniture,

Trade • 283 carpets, paintings, antiques, clothing and even their shoes and beds and finally their houses, often far below pre-war prices. Almost all went to a small number of highpositioned officials, landowners, businessmen, merchants and industrialists doing business with the Germans. Between 1941 and 1944, some 350,000 real estate properties were sold to just 60,000 buyers, meaning that a relatively small number of people bought on average six real estate properties per person.116 In November 1942, food prices even peaked as a result of vigorous speculation in anticipation of another food crisis.117 The lifting of the price controls and a number of other measures by Hitler’s Special Plenipotentiary, in combination with the psychological effects of the Allied victory at El Alamein, however, brought huge amounts of hoarded food onto the market again. Panic-stricken black marketeers tried to unload their stores before the now-expected Allied victory and following peace would ruin their businesses. The negative side of the black market was, however, not the only one. As it was the black economy that provided the only food supply for the urban middle classes, it gave many working-class people an opportunity to make a living as middlemen, just as elsewhere in Europe.118 As it seems probable that during the occupation, the Greek smallholders produced no less than at any other time and only limited quantities of food reached the consumers through official rationing, distributing the food among the population was the task of the black market.119 Given the extreme situation created by the occupiers, this illegal market was a way out. On the question of whether to support or combat Greek black markets, there was sharp disagreement between the German civilian and military authorities. For the military, the black market was a welcome alternative when necessary items could not be obtained legally, especially because the Wehrmacht did not mind paying high prices. They used RKKS or paper drachmas from Greek payments of occupation costs. On top of that, members of the occupation troops themselves became involved in black market transactions. Among Italian officers, this took on such proportions that substantial parts of the merchandise shipped from Italy to Italian forces in Greece ended up on the black market. For instance, no fewer than 20,000 pairs of soldiers’ boots that Italy sent to its army were delivered to the partisans, who paid for them in English pounds.120 German soldiers became involved as well, especially as the Wehrmacht did not adjust the soldiers’ pay in line with the inflationary conditions in Greece. As a consequence, in November 1942 a soldier had to spend four days’ pay for just a box of matches. Therefore, a large number of soldiers suffering from a lack of cash compensated themselves by becoming active in the black markets.121 In Greece rationing failed, but it would be nonsense to blame only the regime in Athens for this. In the extreme circumstances that prevailed in this occupied country, it was hardly possible to feed the people. Often, the Greek famine is seen as a problem of the first two years of the occupation, 1941–1942. Nowadays, it is seen as a lasting problem that went on at least until the liberation. All attempts to provide the population with a minimum of necessities failed. Even clandestine markets collapsed, making it impossible for the bulk of the urban population to supplement their inadequate rations.122

284 • Occupied Economies During the Dutch Hunger Winter, just as during the Greek famine, people went to the countryside trying to persuade farmers to exchange food for jewellery, furniture, bed sheets, musical instruments, bicycles and works of art—or forgeries— while some farmers also accepted sex in exchange for food. As the Dutch famine lasted less than nine months but resulted in clandestine markets absorbing 75 per cent of the food production, it is hardly amazing that in Greece, where such a situation lasted for years, someone wrote: ‘Black market? There wasn’t a white one!’123 Sanders came to a similar conclusion regarding Belorussia. In occupied Soviet territory, just as in Greece, hardly any legal markets were left, and black market prices were so enormous that normal wages lost all purchasing power. That Greek men still did their jobs was only for the little protection these provided against deportation to Germany, but many labourers did not even bother to queue for their wages. The little money they were paid was worthless anyway. Even this was not a typically Greek phenomenon; in 1944 the average daily wage of a qualified Serbian worker was 500–600 dinars, which, given the black market price, meant he had to work for forty days to buy a pair of shoes!124 In Greece the occupier did not want to starve the population. Berlin was merely indifferent and not willing to do anything about the food problems of the Greeks.125 The fact that the country was isolated and could not feed itself did the rest. Belorussia and other parts of the occupied Soviet Union were the targets of the German Hunger Plan to feed the German troops at the expense of the Slavic population. Consequently, here, the fate of the local population and the German soldiers was more closely linked than anywhere else. This hunger policy had already been tested in Poland from 1939 onwards. There, hunger was used to motivate the population to accept work in German agriculture as early as 1939. To that end, daily rations in the General Government were pushed back to just 400–600 kilocalories.126 In the USSR, the occupier did not even want the people for their labour. It was the Nazis’ intention to annihilate the Soviet population, thus obtaining territories to be colonized, but it was obvious from the start (see Chapter 15) that it was in the German interest for some production to continue. When it became clear that the expected victory would not come as fast as hoped for, even restarting some factories and mines became of German interest, and feeding the workers therefore of major importance. As a consequence, in October 1942, official ration cards were uniformly issued to the population in the occupied parts of the USSR.127 Hitherto, the hand-to-mouth conditions experienced in 1941–1942, as well as the original intentions of the Hunger Plan, had made a general, standardized ration card system impossible. Such cards had only occasionally been issued by local civilian authorities or German staff.128 The new regulations introduced the concept of ‘those entitled to rations’, making it clear that those who were not working for the occupier were, at least according to the Germans, not entitled to anything. A year later, when a ‘30 per cent reduction in the number of those entitled to receive food’ was required to match the poor harvest, large numbers of civilians were discovered who, according to the occupier, were in unjust receipt

Trade • 285 of any food rations.129 After that, in the Russian district of Smolensk, which had been incorporated into the Reich Commissionership Ostland, 6,000 were eliminated from the food balance, and similarly 2,000 in Mogilev, 1,500 in the Kholopenichi district and a further 2,000 in the Tolochin district (all three districts are in Belorussia, and hence in Ostland).130 Nonetheless, by January 1943, the food situation had scarcely improved.131 ‘Rations for the working population in the towns are too low’, wrote Hans Tesmer, a German army administrator, in November 1942. ‘An increase can however not be expected. The harvest stocks of the land do not suffice for the supply of the troops. Considerable quantities must be supplied from outside.’132 While in the West, supply problems were limited and in principle could be solved, in Eastern Europe—Poland as well as the USSR—the occupier simply solved supply problems in the food market by creating a hierarchy of those who were to be fed. The local population was the last to be supplied. When it was necessary to obtain more food for the army or for the German home market, Jews and those not working for the Germans were simply denied any rations at all. Just as elsewhere, the official rationing channels were, however, not the only way for food to reach the population.133 In fact, even the rations of those who according to the Germans were entitled to receive food were far below minimum standards. Therefore, town dwellers and villagers alike were engaged in a wide variety of practices to scrape together the sustenance needed to bridge the gap between the official starvation-level rations and a tolerable standard of living. Some of these methods inevitably resembled those already in existence in pre-war Soviet society.134 Connections proved vital to survival. While the war undoubtedly destroyed most, if not all pre-war connections and networks, new forms of blat—the Soviet word for informal contacts, mutual aid and small-scale corruption—swiftly re-emerged, many revolving around the changed power relations created by the presence of the German army and the installation of a new local administration, as these represented new opportunities for theft, trade off the books, black-marketeering and corruption. Unsurprisingly, theft increased dramatically among civilians as well as German troops. In Vyazma, a town in the Russian Smolensk district and so part of Ostland, the Geheime Feldpolizei (GFP)—Secret Military Police—found itself investigating some quite large-scale fencing operations involving the theft of huge numbers of cigarettes, food, clothing, cleaning materials and other goods, in particular by railway and Organisation Todt units.135 By contrast, thefts carried out by Soviet civilians were usually petty. Nonetheless, these were punished with overwhelming severity. In the autumn of 1942, in Vitebsk (Belorussia), two thieves caught stealing potatoes were publicly hanged, a fate which also befell seven men arrested in Orel, a Russian town in the southern military-ruled area, for stealing field post packets.136 Many thefts and burglaries of Wehrmacht property were conducted by little gangs of hungry youngsters—sometimes only 11 years old. In around half the reported cases, their youth did not prevent their execution if caught.137 Tellingly, the receiver was more often an older youth rather than an adult.138

286 • Occupied Economies The distilling of alcohol—a process requiring substantial quantities of food—was also regarded and treated as theft. According to Sheila Fitzpatrick, the traditional peasant practice of distilling samogon—moonshine—declined during the 1930s under pressure from the Soviet authorities.139 During the German occupation, it evidently resumed as the supply of vodka had dried up. In the Vitebsk region, village bathhouses were used as distilleries as early as the autumn of 1941. The initiative to make a certain quantity of vodka available as a premium for good production results could not stop this development.140 After the sale of alcohol was forbidden by the army, this simply drove the trade underground.141 When in 1943 the streets of Roslavl (Russia/Ostland) were overflowing with drunk Russians celebrating Easter, it revealed that all efforts to combat distilling of alcohol had been in vain.142 Some of the increase in the distilling of samogon undoubtedly took place because of the peasants’ reluctance to sell their surpluses. Many peasants soon found that under wartime conditions there was little to buy in exchange for the yields of their products. The near-total lack of consumer goods created a drastic crisis in agricultural prices. When officially requisitioning—part of the quota levied on each hectare planted—the Wehrmacht paid 155 roubles a hundredweight—almost 51 kilos—of grain, of which the peasants received 25. The balance went to the requisitioning organization.143 By contrast, the price of grain in the open market soon soared to levels of between 400 and 1,700 roubles per pood of 16 kilos. In other words, a peasant could get 800 to 3,200 times more for his crops when he sold them on the black market. This hyperinflation was partly caused by the arrival of German troops. Although 90 per cent of their pay was sent home as there was very little of real value to buy, the remaining 10 per cent was spent locally, exerting a devastating inflationary effect. For instance, as early as September 1941, German soldiers offered 2 RM—20 roubles—for a single egg.144 As a result, a surprisingly large amount of money flowed out of towns into the countryside. In 1943 the rural population in the vicinity of Roslavl and Smolensk was literally flush with cash.145 Just as everywhere else in Europe, the agrarian population acquired a much stronger economic position in the occupied Soviet territories as well, but as not only food but all consumer goods were scarce, peasants and farmers could buy very little with the cash they obtained. Inflation led to the emergence of barter as the dominant means of exchange. This also was not just typical for the USSR, but was seen all over Europe. Most commonly, this entailed the trading of clothes and tools from the towns for products from the countryside. In many locations, especially in isolated towns in the north such as Polotsk, Lepel and Vitebsk—all in the Reich Commissionership Ostland—tobacco became the unofficial monetary standard, although in a more sophisticated form than in the classic prison economy. Tobacco was not the actual medium of exchange, but the prices of goods were calculated according to their relation to the price of tobacco. In January and February of 1942, this had curious consequences in Polotsk, when three German infantry divisions from France marched through the town to block a

Trade • 287 breakthrough of the Red Army. The soldiers brought with them considerable quantities of French tobacco, some of which found its way onto the market, driving down the price of tobacco and, with it, halving the black market prices of all other goods.146 Notwithstanding the distortions wrought by inflation and barter, a significant quantity of surplus produce found its way onto the free markets, which paradoxically in German reports were labelled as black markets even though these markets were completely legitimate. Farmers’ markets played such a critical role because the shops run by the town authorities were usually all but empty. As there everything was sold at official prices, nobody was ready to supply these shops. Roslavl, a small town in Ostland, was, for instance, served by seven shops with a total turnover of half a million roubles in January 1943.147 By contrast, in November 1943, at one Sunday market in Borisov (Barysaw), a middle-sized Belorussian town, a total of 21.5 tons of meat was sold, while during the spring of 1943 an estimated 150 head of livestock and 50,000–60,000 eggs were sold on just one market day in Orsha, another middlesized Belorussian town.148 The extreme price differentials between quota and free-market prices caused great concern to the German authorities, yet any attempt to lower free-market prices drove trade off the open market into the genuine black market.149 To combat these tendencies, in some localities trade via middlemen was banned, while black marketeers were sent to labour camps.150 On top of that, Wehrmacht soldiers were forbidden entry to the civilian markets, with Military Police—Feldgendarmerie—posted at the entrances to enforce this order.151 Nevertheless, soldiers played an important role in the black markets. They were inevitably the source of many of the more valuable consumer goods made available. Saccharine tablets from medical stocks were sold in Smolensk; uniforms were dyed a different shade and sold; while German and French luxury goods, from watches at 300–1,000 RM to the highly prized Scho-Ka-Kola (pilot’s survival chocolate ration), and even Knorr soup mixes, received premium prices.152 Occasional interventions by the Sicherheitsdienst (SD)—the Security Service—served only to correct the worst excesses. In Orel (Orjol), a rather large Russian town, in December 1942, ninety traders were arrested for selling Schnaps—gin—while in Gomel, the second town of Belorussia, twelve enterprising Poles who had been conducting a roaring trade in scarce goods in different locations were tracked down and arrested.153 Most German interventions in the markets concerned, however, not price fixing but razzias by the Feldgendarmerie, SD or Grüne Feldpolizei—diverse police and security units—to check papers and arrest suspects.154 Popular attitudes to the black market were contradictory. On the one hand, the market was for many essential as a means of survival; on the other hand, it drained scarce cash, clothing and heirlooms from the urban population. The existence of an underclass of people without a job surviving from black market activities was not just a fabrication of the popular imagination. In Bryansk, a rather large Russian town, hundreds of young men and women disappeared in between registering for ration cards and the issue of these cards when it became clear that this would involve

288 • Occupied Economies another registration, this time with the labour office. Rather than that, they preferred to do without official allocations in order to eke out a living on the black market.155 Just as elsewhere in Europe, such working-class youngsters were found as intermediaries between the urban black market and the countryside. Most working-class families could not afford clandestine purchases from their regular incomes, while many middle-class people did not want to go to farmers to beg for food. All over Europe the solution to these problems was the same: workingclass men and women, especially youngsters, went to the countryside and bought some necessities for themselves and their families and some luxuries to sell again on urban black markets. As middlemen on black markets they earned the money needed for their own purchases.156 The fact that working-class people became middlemen between countryside producers and urban bourgeois consumers, with some of them developing into quite important black market traders, is found all over Europe where supplies were meagre but shortages had not developed into real famine. In the Netherlands, before 1944, black market trade was local. Working-class people purchased foodstuffs—potatoes and vegetables, but principally cheese, eggs, bacon and other animal products—at farms around the towns to resell part of their purchases in their home towns. There was a similar situation in Belgium. Most of the time black market trade was relatively local and organized by workers and youngsters who purchased the foodstuffs at farms outside the cities, in order to resell part on urban black markets. The object of this was in the first place to obtain the money needed for their own black market purchases, but some of the more talented traders became rich on it. In Denmark, another model developed, as there most of the food was produced in Jutland—the thinly populated mainland of the country—while most people lived on the islands. This geographical situation caused serious transport problems, unsolvable for small-scale smugglers. As a consequence, a few years after the war, a colossal mafia-like criminal organization—unique for Denmark—was discovered; throughout most of the war it had organized black market activities on a national scale, corrupting police officers as well as politicians in order to keep out of prison.157 The model of small-scale smuggling by working-class middlemen disappeared only when hunger was threatening. Then, bourgeois men and women forgot their pride and went to the countryside themselves to trade with or beg from farmers and peasants. As long as black markets did not become the prime source of nutrition, bourgeois consumers—or their maids—bought the luxuries that legally were rarely available any more, in urban black markets, which were supplied by working-class middlemen. In France and Belgium, countries with inadequate distribution systems and therefore with more or less serious food problems, although countries that never had a serious famine, it never did come to the point that bourgeois people, driven by despair, had to skim off the countryside themselves. Consequently, in these countries middle-class and well-to-do consumers seldom had any direct contacts with farmers. When the food situation became dramatic, however, and hunger turned to famine, as in the occupied eastern territories, Greece and the Netherlands in 1944 and 1945, the urban population turned in force to foraging in the countryside.158

Trade • 289 According to Dutch post-war sociological research, 62 per cent of all Amsterdam families sent representatives—seldom the whole family—to forage in the countryside. On average the families who participated in this dramatic struggle to survive made no fewer than 13.7 such trips during this nine-month period, and every trip was progressively further from the urban centres than the previous one. The nearby countryside was already emptied in the first months, and, anyway, the population there, confronted everyday with thousands of hungry people begging, buying and stealing all they could get, became nervous, annoyed or even hostile towards these people. Most of them only wanted to sell at extreme prices or, even better, barter against rare valuables.159 Each time a person came home to Amsterdam, the common hiker brought on average the enormous quantity of 42 kilos of food to his or her family— most hikers were women as men were in danger of being picked up by the occupier. Of the 38 per cent of families that did not participate in this movement, 40 per cent— that is 15 per cent of all families—did not because they were not able to for health or social reasons. There were, for instance, many one-parent families with very young children, as a substantial number of men were sent to Germany or went into hiding to protect themselves from that fate. Further, lonely elderly men or women were incapable of undertaking such hunger journeys. Especially for the elderly the situation could become dangerous when they were not looked after by social organizations, charities or the churches.160 Many of the elderly became victims of this brief Dutch famine.161 Nonetheless, even in this situation, there were people rich enough not to have to participate in such raids. Some 23 per cent of the Amsterdam families still had money enough to feed themselves from urban black markets. In the occupied USSR, where these hoarding journeys—Hamsterfahrten—were not a temporary phenomenon as in the Netherlands, but lasted almost the whole of the occupation period, these greatly worried the German administration as these not only creamed off the foodstuffs the Germans wanted for themselves, but also made urban labour, and thus forced labourers, hard to get. ‘The pressure to gather food from the countryside’, Hans Tesmer, the Wehrmacht administrator, observed, caused ‘an unpreventable migration of people urgently needed for labour’.162 Nonetheless, throughout occupied Russia, there were literally thousands on the move.163 Least damaging to the German interests were the mushroom-gathering and berry-picking expeditions extensively practised in the surrounding forests of the Borisov region (Barysaw) in Belorussia.164 In the autumn of 1942, German attempts to control the flight of the population and at the same time restrict the movement of partisans eventually led to a wire fence being erected around the town of Polotsk, Belorussia. Despite such measures, the flight from the towns persisted.165

Conclusion It was not just the loss of worldwide trade as a result of the Allied blockade, together with the loss of contacts with Britain, but also Germany’s wish to get for free all it

290 • Occupied Economies wanted from occupied Europe that motivated Berlin to introduce multilateral clearing. This resulted in trade between the occupied countries of Europe also being diluted. The clearing system only created disadvantages for the exporting countries. As a result, the authorities of these countries—whether they were pre-war national authorities or German governors—in fact prohibited any export trade in as far as such transactions were not ordered by Berlin. By undermining trade between the occupied countries, Germany increased the problems of these countries. Now, every country had to solve its own supply problems, especially those of food. As normal trade was made impossible, the occupier should have used planning to compensate for that, but that was hardly done. All planning capacity was needed to create Europe-wide plans for the German war economy. Inside the occupied countries, at least attempts were made to regulate distribution when the market could no longer solve the distribution problem in a reasonable way. Wherever this was done, a fair distribution of the limited available consumer goods at reasonable prices was the target, while for raw materials, especially from 1942 on, attempts were made to distribute these scarce goods according to the principle that the most important production—and during a war such as the Second World War this was always war production—wherever this took place in the German-controlled Continent, was best supplied. Berlin, however, replaced normal intra-European trade by planning only in as far as it was of importance for its war production. It planned the use of raw materials and fuels, and it planned food in as far as it was needed for its armies or to keep the German population satisfied. When the military problems and, hence, the economic problems became more severe, the regulation and planning of production and of the use of raw materials for its orders to the industries in occupied Western Europe became more sophisticated. From 1942 on, the use of industrial capacity and labour was planned by the Berlin Zentrale Planung, just as the distribution of raw materials was. Any German planning, however, went only as far as it was of importance for the amount of production the Germans could take out of their occupied territories. When planning the food economy of Europe, the point of departure was a hierarchy of those who were supplied. The army was first in importance, especially the fighting units. Soldiers have an enormous capacity to eat. The idea was to feed the armies that were fighting deep in Russia against the Red Army off the land. Because in the end the Germans could not simply deny all food supplies to the people living in the occupied territories, as these people were needed for all kinds of duties in support of the Germans or simply as forced labour, the army could never live entirely off the land. This was also caused by the fact that, as seen in Part 2, a substantial part of the occupied Soviet territories was in fact controlled by Soviet partisans, and it was impossible to get more than limited amounts of food from there. Even in the areas they really controlled, the Germans never managed to obtain the planned supplies. As a consequence, the army needed food from Germany, and this could only be delivered when the rations in Germany itself were decreased or when it took the

Trade • 291 needed foodstuffs from elsewhere. As Göring made clear, it was his intention to let everybody starve all over Europe before the German rations would be lowered again. Those in the occupied countries working for the Germans should, of course, get the food needed to continue, but others, especially when they were—according to racist Nazi ideas—inferior, were considered useless. According to men like Hitler, Goebbels and Rosenberg it was no problem if these people starved to death. When one looks to the food supply from the West, it is clear that—apart from Denmark, which produced much more than could possibly be eaten by its own population—France especially had to bleed. The question of whether the disappointing French industrial production for Germany was sufficient reason to claim extra food from that country is not completely clear, but it would be in line with Göring’s turn of phrase. It is, however, undeniable that many in Germany thought of France as an agrarian country, and that gave them the idea that that country had foodstuffs to spare. France had to deliver between 10 and 20 per cent of its food production, which caused serious scarcity. As Belgium simply had too many people living in too small an area of land to be able to feed them all, it had similar problems. Moreover, both countries had planned little, if any, market regulation. As a consequence, such a regulation never became successful, and in both countries clandestine food production, black-marketeering and, in Belgium, on top of that smuggling from the neighbouring countries became essential to nourish the population. Taking food to feed the armies was, of course, in the first place an Eastern European problem. There, so much food was taken that there simply was not enough left for all to survive. This was no accident, but planned in advance. In some years, there is even a direct link between a disappointing harvest in Germany or unfulfilled deliveries of the food quotas the Germans ordered occupied districts to supply, and the murder of hundreds of thousands of people, especially in occupied Poland and the Ukraine. Most of the victims were Jews. As Gauleiter Erich Koch said after a visit to Hitler in August 1942, where he heard that the food situation in Germany was serious and the missing food should come from the Ukraine: ‘The feeding of the civilian population there is in this situation completely immaterial.’166 It was this attitude that lost millions of people their lives. In this special case, the remaining Ukrainian and Belorussian Jews were murdered as their food was needed for the Wehrmacht.167 That Germany was completely unscrupulous when it needed food was already clear in 1941, when it tried to implement the Hunger Plan directly after it attacked the USSR. Racism was far from the only criterion. When planning took over the allocation of food from market forces, the criteria were more complex. Racism played its role, but the importance of the production of a country also was a relevant criterion, just as the distance to the front was. After the planning had done its job, the way the remaining foodstuffs in an occupied country were allocated was only a concern to Berlin if the remainder were far too little to feed everyone. In such cases it made sure that those doing important work, according to Berlin, got what they needed. In Poland and the occupied Soviet territories, that went so far that workers

292 • Occupied Economies got substantial parts of their rations as canteen food to prevent them from sharing it with their families. Ration cards were only for people useful to the Reich. In most countries, the internal allocation of what was left after the Germans had taken what they wanted was a problem for the occupied countries themselves. Only occasionally did Germany order some food or coal to be sent to a country where problems had gotten out of hand and only when Berlin thought the population of that country was, for economic reasons, important enough to protect. Belgium and the Protectorate got permission to buy food in other European countries, but there was no systematic planning of importing food from parts of Europe where it was superfluous to countries that simply could not feed their people.168 In Greece and Yugoslavia, just as in Eastern Europe, Berlin did not care if the people could not survive because their supply was cut off or the German army needed their food. The occupier did nothing to stop it, but allowed these people to die. It was only to Belgium and the Protectorate, both densely populated countries with rather small agricultural regions, but which were highly industrialized and thus of the highest importance to the German war economy, that, when the problems became unsolvable, the occupier sent extra food from other territories. Nonetheless, from 1940 until 1943 Belgium all but starved, and in France, a country whose industrial productivity was disappointing, Germany even took substantial amounts of food. Belgium and France were the only occupied Western European countries where in every year of the occupation the population declined.169

Notes 1. See on the blockading: W. N. Medlicott, The Economic Blockade, Parts 1 and 2 (London 1952 and 1959); Ramsay Muir, Mare liberum: The Freedom of the Seas (London 1917); Roger Chickering, Imperial Germany and the Great War, 1914–1918 (Cambridge 1998) 92–93; Hein A. M. Klemann, ‘Ontwikkeling door isolement. De Nederlandse economie 1914–1918’, in: Martin Kraaijestein and Paul Schulten (eds.), Wankel evenwicht. Neutraal Nederland en de Eerste Wereldoorlog (Soesterberg 2007) 271–309, here 277. 2. Medlicott, The Economic Blockade, 659; Norman Friedman, Seapower as Strategy: Navies and National Interests (Annapolis 2001) 327, note 23; also: NA, London (Kew) FO 837/5, Committee of Imperial Defence, Handbook of Economic Warfare, 14 August 1939. 3. Muir, Mare liberum, 18. 4. Llewellyn Woodward, British Foreign Policy in the Second World War (London 1962) 77. 5. John Horne, ‘Introduction: Mobilizing for “Total War”, 1914–1918’, in: John Horne (ed.), State, Society and Mobilization in Europe during the First World War (Cambridge 1997) 1–18, here 3; Hein A. M. Klemann, ‘Totale oorlog en

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6.

7. 8.

9. 10. 11.

12. 13. 14. 15.

16. 17. 18.

het thuisfront. Een inleiding’, in: Hein A. M. Klemann and Dirk Luyten with Pascal Deloge (eds.), Thuisfront. Oorlog en economie in de twintigste eeuw. Veertiende jaarboek van het Nederlands Instituut voor Oorlogsdocumentatie (Zutphen 2003) 9–33. Mark Harrison, ‘The Economics of World War II: An Overview’, in: Mark Harrison (ed.), The Economics of World War II: Six Great Powers in International Comparison (Cambridge 1998) 1–42. Woodward, British Foreign Policy, 61. See for instance: Mira Wilkins, ‘Multinationals and Dictatorship: Europe in the 1930s and the Early 1940s’, in: Christopher Kobrak and Per H. Hansen (eds.), European Business, Dictatorship and Political Risk, 1920–1945 (New York 2004) 22–40, here 23–24; Ivo J. Blanken, Onder Duits Beheer. Geschiedenis van Philips Electronics N.V. Deel IV (1935–1950) (Zaltbommel 1997); Lars Heide, ‘Between Parent and “Child”, IBM and Its German Subsidiary, 1910–1945’, in: Kobrak and Hansen, European Business, 150–173; Henry Ashby Turner, General Motors and the Nazis: The Struggle for Control of Opel, Europe’s Biggest Carmaker (New Haven 2005) 155–156; Stephen Howarth and Joost Jonker, Powering the Hydrocarbon Revolution: A History of Royal Dutch Shell, Vol. 2 (Cambridge 2007) 4 et seq.; Ben Wubs, International Business and National War Interests: Unilever between Reich and Empire (New York 2008) passim. António de Oliveira Louçã, Nazigold für Portugal: Hitler and Salazar (Vienna 2002) 94–95. League of Nations, World Economic Survey, 11, 1942/44 (Geneva 1945) 267 and 272. Blanken, Onder Duits Beheer; Wubs, International Business and National War Interests; Howarth and Jonker, Powering the Hydrocarbon Revolution, Vol. 2, 4 et seq.; Hein A. M. Klemann, Nederland 1938–1948. Economie en samenleving in jaren van oorlog en bezetting (Amsterdam 2002) 41 et seq. NA, London (Kew) FO 837/5 Note: Economic Warfare, September 6, 1939. Walther Funk, ‘Wirtschaftliche Neuordnung Europas. Rede am 25. Juli 1940 vor der in- und ausländischen Presse’, Südost-Echo, 36 (1940). Louçã, Nazigold für Portugal, 48. Centraal Bureau voor de Statistiek, Economische en sociale kroniek der oorlogsjaren 1940–1945 (Utrecht 1947) 154; Centraal Bureau voor de Statistiek, Jaarcijfers voor Nederland 1943–1946 (Utrecht 1948). League of Nations, World Economic Survey, 11, 267 et seq. Werner Abelshauser, ‘Germany: Guns, Butter and Economic Miracles’, in: Harrison, Economics of World War II, 122–176. John Lindberg (League of Nations), Food, Famine and Relief 1940–1946 (Geneva 1946) passim; Hein A. M. Klemann, ‘Waarom honger in Europa in de Tweede Wereldoorlog?’ in: Klemann and Luyten, Thuisfront, 113–125.

294 • Occupied Economies 19. 20. 21. 22. 23. 24.

25. 26. 27.

28.

29. 30.

31. 32.

33.

34.

Lindberg, Food, Famine and Relief, 43–45. Ibid. 44. League of Nations, World Economic Survey, 11, 267–269. Alexander Dallin, German Rule in Russia, 1941–1945: A Study of Occupation Policies (London 1957) 378. Louçã, Nazigold für Portugal, 48–49. Arne Radtke-Delacor, ‘Produire pour le Reich. Les commandes allemandes à l’économie française (1940–1945)’, Vingtième Siècle. Revue d’histoire, 70 (2001) 99–115, here 109; Patrick Nefors, Industriële collaboratie in België. De Galopindoctrine, de emissiebank en de Belgische industrie in de Tweede Wereldoorlog (Leuven 2000) 218–219; Klemann, Nederland, 1938–1948, passim. Lindberg, Food, Famine and Relief, 38. League of Nations, World Economic Survey, 10, 1941/42 (Geneva 1942) 58. Bundesarchiv Koblenz (BA), R 2/313: Sôtêrios Gotzamanês, Memorandum über Griechenlands volks- und staatswirtschaftliche Lage (September 1941), table 71. PA-AA, HaPol IVa: ‘Vermerk über die Besprechung Min.Dir. Dr. MoritzKriegsverwaltungsrat Overkott- über die Ernährungslage Griechenlands’, 24 June 1941: Griechenland, Landwirtschaft 26,1; ‘Dringend lösungsbedürftige griechische Wirtschaftsfragen’, 17 June 1941: Ibid., Wirtschaft 2.1.; The Trial of German Major War Criminals, Proceedings of the International Military Tribunal Sitting at Nurenberg Germany (IMT) (London 1947) VII, Doc.UK-82, 579. ‘Wird Griechenland weiterleben? Ein ernstes Wort in letzter Stunde’, Deutsche Nachrichten in Griechenland, 97 (26 April 1942). PA-AA, HaPol Wiehl, Italien, letter of 14 March 1942 to Wiehl: Vol. 14, p. E056562. BA-MA, Wi/IC1. 8, WiRüAmt/L Besprechungsnotiz 13717/41g.17 September 1941 an V. O.: The same argument was used in 1915 regarding Belgium. See Geoffrey Best, Humanity in Warfare: The Modern History of the International Law of Armed Conflicts (London 1983) 228–229. PA-AA, HaPol, 208, Aufzeichnung des Gesandten Eisenlohr betreffend die Getreideversorgung Griechenlands, 24 October 1941; ibid no. 420, 556. Ralf Futselaar, Lard, Lice, and Longevity: A Comparative Study of the Standard of Living in Occupied Denmark and the Netherlands, 1940–1945 (Amsterdam 2007) 114. Herman van der Wee and Monique Verbreyt, Oorlog en monetaire politiek: De Nationale Bank van België, de emissiebank te Brussel en de Belgische regering, 1939–1945. Deel 1: De Nationale Bank van België 1939–1971 (Brussels 2005) 37 et seq. Herman van der Wee and Monique Verbreyt, The Generale Bank 1822–1997: A Continuing Challenge (Tielt 1997) 242 et seq.; Nefors, Industriële collaboratie in België, 92–93.

Trade • 295 35. Lindberg, Food, Famine and Relief, 3. 36. Guillaume Jacquemyns, ‘La Société belge sous l’Occupation allemande (1940– 1944). Privations et espoirs’, in: Paul Strye and Guillaume Jacquemyns (eds.), La Belgique sous l’Occupation allemande (1940–1944). Édition préfacée et annotée par José Gotovich (Brussels 2002) 293–434, here 330 et seq. 37. Anne Henau and Mark van den Wijngaert, België op de bon. Rantsoenering en voedselvoorziening onder Duitse bezetting 1940–1944 (Leuven 1986) 144. Lindberg is more optimistic, but he gives only yearly averages. Lindberg, Food, Famine and Relief, 21. 38. G. M. T. Trienekens, Tussen ons volk en de honger. De voedselvoorziening 1940–1945 (Utrecht 1985); Klemann, Nederland 1938–1948; Futselaar, Lard, Lice, and Longevity, 114. 39. Futselaar, Lard, Lice, and Longevity, 119 et seq. 40. Niod Amsterdam, 212a inv. nr. 2a: EVD: De economische toestand in Nederland in Februari 1941, 31 Maart 1941. 41. L. J. A. Trip, De Duitsche bezetting van Nederland en de financieele ontwikkeling van het land gedurende de jaren der bezetting (The Hague 1946) 48–49. 42. NA, The Hague: DG voor de Prijzen 257: Verslag 31 mei 1944. 43. Niod Amsterdam, 216 map 192h: Gemachtigde voor de Prijzen. Persbericht VP 60 1.12.43. 44. NA, The Hague, DG voor de Prijzen 257: Verslag 31 Mei 1944–30 Juni 1944, Inspectie Arnhem; NA, The Hague, DG voor de Prijzen 257: Verslag Juni 1944; H. van Rooy, Criminaliteit van stad en land. Nijmegen en omstreken (Utrecht 1949) 284. 45. Futselaar, Lard, Lice, and Longevity, 218. 46. NA, The Hague, Economische Controle Dienst: RB voor Tabak en Tabaksproducten aan de Centrale Dienst voor de Economische Controle, 7 November 1945. No. 243 vdH/HS. 47. NA, The Hague, Economische Controle Dienst 8: Nota aan Zijne Excellentie. Concept 29 September 1945. 48. NA, The Hague, Economische Controle Dienst 8: Nota aan Zijne Excellentie. Betr. Zwartehandelbestrijding No. Dir/R./A Concept 29 September 1945. 49. Futselaar, Lard, Lice, and Longevity, 234; P. Spapens and A. van Oirschot, Smokkelen in Brabant (Hapert 1988) 82–83. 50. Futselaar, Lard, Lice, and Longevity, 234. 51. Trienekens, Tussen ons volk en de honger, passim. 52. Synthèse des rapports mensuels des préfets de la zone occupée, Août 1942, http://www.ihtp.cnrs.fr/prefets/fr/fzo0842mi.html; Ministère de l’Intérieur, Synthese des rapports mensuels des préfets de la zone occupée, Juillet 1942, http://www.ihtp.cnrs.fr/prefets/fr/fzo0742mi.html. 53. Norges Offisielle statistikk, Statistisk Årbok for Norge, 69 (1950) 5.

296 • Occupied Economies 54. Czesław Madajczyk, Die Okkupationspolitik Nazideutschlands in Polen 1939– 1945 (Cologne 1988) 601–602. 55. Klemann, Nederland 1938–1948, 249 et seq. 56. Paul W. Sanders, ‘Prélèvement économique: Les activités allemandes de marché noir en France 1940–1943’, in: Olivier Dard, Jean-Claude Daumas and François Marcot (eds.), L’Occupation, l’État français et les entreprises (Paris 2000) 37–67, here 38–40. 57. Karel C. Berkhoff, Harvest of Despair: Life and Death in Ukraine under Nazi Rule (Cambridge 2004) 89. 58. Alan S. Milward, The New Order and the French Economy (Oxford 1970) 46– 47. 59. H. J. Neuman, Arthur Seyss-Inquart. Het leven van een Duits onderkoning in Nederland (Utrecht 19892) 152. 60. RGVA, Collection 1458, Inventory 32, File 137, Die Währungsentwicklung in den verbündeten und besetzten europäischen Ländern, Berlin, den 10. September 1944, 7–8 (128–129). 61. Claus Bundgård Christensen and Ralf Futselaar, ‘Zwarte markten in de Tweede Wereldoorlog. Een vergelijking tussen Nederland en Denemarken’, in: Klemann and Luyten, Thuisfront, 89–112. 62. Klemann, Nederland 1938–1948, 212, 295 and 429. 63. T77/1197/242–3: Ernährungswirtschaftliche Forschungsstelle/H[ah]n an Herrn Staatsminister a.D Riecke, Lieferungen der Heimat an die Wehrmacht im 3. Kriegswirtschaftsjahr 1941/42, 14.9.42; T77/534/1707447–8: Institut für Konjunkturforschung, Vorschläge zur Ernährungswirtschaft, 20.2.42. On the role of the ‘planning intelligentsia’ see also: Götz Aly and Susanne Heim, Vordenker der Vernichtung: Auschwitz und die deutschen Pläne für eine neue europäische Ordnung (Hamburg 2004 2nd ed.). 64. See, for an example: T84/91/1382748–51: Beauftr. VJP, Geschäftsgruppe Ernährung, Abschlussbericht über die Abwicklung der Reichsmarschall-Forderungen im IV. Kriegswirtschaftsjahr für die besetzten Ostgebiete sowie für Frankreich, Belgien, Niederlande, Norwegen, Protektorat Böhmen und Mähren, Generalgouvernement, Serbien—Banat, 7.1.44; see: Hans-Erich Volkmann, ‘Landwirtschaft und Ernährung in Hitlers Europa, 1939–1945’, Militärgeschichtliche Mitteilungen, 1 (1984) 9–74. 65. Klemann, Nederland 1938–1948, 401 et seq.; Jeroen Euwe, De Nederlandse kunstmarkt 1940–1945 (Amsterdam 2008) passim. 66. Gerben Bergman, ‘De bloembollenteelt in de Tweede Wereldoorlog’, in: Hein A. M. Klemann (ed.), Mooie jaarcijfers . . . Enige onderzoeksresultaten betreffende de Nederlandse economische ontwikkeling tijdens de Tweede Wereldoorlog (Utrecht 1997) 107–116. 67. Klemann, Nederland 1938–1948, 211.

Trade • 297 68. J.-C. Fichou, ‘La conserverie de poisson, 1939–1945: Une activité sinistrée?’ Guerres mondiales et conflits contemporains, 207 (2002/3) 61–75, here 72. 69. Klemann, Nederland 1938–1948, passim. 70. RGVA, Collection 1458, Inventory 32, File 137, Die Währungsentwicklung in den verbündeten und besetzten europäischen Ländern, Berlin, den 10. September 1944, 7–8 (128–129); Klemann, Nederland 1938–1948, passim. 71. Lindberg, Food, Famine and Relief, 3. 72. John Gillingham, ‘How Belgium Survived: The Food Supply Problem of an Occupied Nation’, in: Bernd Martin and Alan S. Milward (eds.), Agriculture and Food Supply in the Second World War (Ostfildern 1985) 69–88, here 84; A. B. J. A. Nijdam, Goirle. Een sociografische studie over de criminaliteit en de moraliteit van een grensgemeente rond de Tweede Wereldoorlog (Wageningen 1950) 125–126. 73. Klemann, Nederland 1938–1948, 559. 74. RGVA, Collection 1458, Inventory 32, File 137, Die Währungsentwicklung in den verbündeten und besetzten europäischen Ländern, Berlin, den 10. September 1944, 7–10 (128–131). 75. Vichy Y: Internationale vol.71. Synthèse zone occupée 15 Octobre 1941, http:// www.ihtp.cnrs.fr/prefets/fr/fzo151041dsa.html. 76. M. M. G. Fase, ‘Informele economie en geldomloop. Meting en interpretatie’, in: Geld in het fin de siècle (Amsterdam 1999) 81–113, here 81. 77. Lynne Taylor, ‘The Black Market in Occupied Northern France 1940–4’, Contemporary European History, 6 (1997) 153–176, here 153; Edward Smithies, Crime in Wartime: A Social History of Crime in World War II (London 1982) passim; Owen Griffiths, ‘Need, Greed, and Protest in Japan’s Black Market, 1938–1949’, Journal of Social History, 35 (2002) 825–858. 78. Smithies, Crime in Wartime, 71. 79. RGVA, Collection 1458, Inventory 32, File 137, Die Währungsentwicklung in den verbündeten und besetzten europäischen Ländern, Berlin, den 10. September 1944, 7–10 (128–131). 80. Ibid. 81. BA R29/2, Reichskreditkasse 56, Bericht über Lebenshaltungskosten in Smolensk, 9.1.43; BA R29/160; Bericht über die Sitzung des Verwaltungsrats der Reichskreditkassen am 13.8.41, 3.9.41, pp. 59R, 142R. 82. Bank of Greece, Ta Prota Penenta Chronia thw Trapezes tes Hellados (Athens 1978) 199 et seq. 83. Van der Wee and Verbreyt, Oorlog en monetaire politiek, 45 et seq. 84. Herwig Jacquemyns, België in de Tweede Wereldoorlog. Deel 2. Een bezet land (Antwerp 1982) 53–54. 85. Thibault Tellier, ‘Minster van Financiën Paul Reynaud en de Franse oorlogsvoorbereiding’, in: Klemann and Luyten, Thuisfront, 51–62.

298 • Occupied Economies 86. J. C. H. Blom, ‘Nederland onder Duitse bezetting 10 mei 1940–5 mei 1945’, in: Algemene Geschiedenis der Nederlanden, Vol. 15 (Haarlem 1982) 55–94. 87. Alfred Sauvy, La vie économique des Français de 1939 à 1945 (Paris 1978) 45. 88. Ibid. 113; Taylor, ‘Black Market in Occupied Northern France’, 160. 89. Paul W. Sanders, Histoire du marché noir 1940–1946 (Paris 2001) 69 and 39 et seq. 90. Paul Miry, Zwarte handel in levensmiddelen (Brussels 1946) passim. 91. Sanders, ‘Prélèvement économique’, 37–67, here 38–40. 92. RGVA, Collection 1458, Inventory 32, File 137, Die Währungsentwicklung in den verbündeten und besetzten europäischen Ländern, Berlin, den 10. September 1944, 7–10 (128–131). 93. Ibid. 94. Lindberg, Food, Famine and Relief, 134–135. 95. Der Militärbefehlshaber in Frankreich, Lagebericht über Verwaltung und Wirtschaft für den Monat Juni 1944, http://www.ihtp.cnrs.fr/prefets/. 96. Fabrice Grenard, La France du marché noir (1940–1949) (Paris 2008) 111 et seq. 97. Angus Maddison, The World Economy: Historical Statistics (Paris 2003); CEPII, Séries longues macro-économiques. Comptes nationaux en base 1938, http://www.cepii.fr/francgraph/bdd/villa/mode.htm 98. F. Bauduin, L’économie belge sous l’occupation 1940–1944 (Brussels 1945) 413. 99. Henau and Van den Wijngaert, België op de bon, 54–57; Taylor, ‘Black Market in Occupied Northern France’, 160; Sanders, Histore du marché noir, 39 et seq. and 69. 100. Futselaar, Lard, Lice, and Longevity, 27 et seq.; S. L. Louwes, ‘De voedselvoorziening’, in: J. J. van Bolhuis et al. (eds.), Onderdrukking en verzet. Nederland in oorlogstijd, Part II (Arnhem 1949–1954) 606–646, here 610; Trienekens, Tussen ons volk en de honger, 34–39. 101. Trienekens, Tussen ons volk en de honger, passim. 102. Paul W. Sanders, ‘Economic Draining: German Black Market Operations in France, 1940–1944’, Global Crime, 9 (2008) 136–168, here 156. 103. Fabrice Grenard, ‘Les implication politiques du ravitaillement en France sous l’Occupation’, Vingtième Siècle. Revue d’histoire, 94 (2007) 199–215. 104. Kenneth Mouré and Fabrice Grenard, ‘Traitors, Trafiquants, and the Confiscation of “Illicit Profits” in France, 1944–1945’, Historical Journal, 51 (2008) 969–990, here 973. 105. Klemann, Nederland 1938–1948, 557; Trienekens, Tussen ons volk en de honger, 34–39. 106. PA-AA, HaPol Clodius, Akten betr. Griechenland, vol. 5, E226758: Official figure for 1940, in memorandum of 15 July 1941. 107. Stavros B. Thomadakis, ‘Black Market, Inflation, and Force in the Economy of Occupied Greece’, in: John O. Iatrides (ed.), Greece in the 1940s: A Nation in Crisis (Hannover 1981) 61–80, here 62.

Trade • 299 108. Dimitrios Delivanis and William C. Cleveland, Greek Monetary Developments 1939–1948: A Case Study of the Consequences of World War II for the Monetary System of a Small Nation (Bloomington 1949) 70; A.Y.E./1944/KC/19: Report of 15 July 1942 by the board of directors of the Ella-Turk trading company. 109. A.Y.E./1943–44/KC/Food Supply: Report of 5 December 1943 by Sandström. 110. Mark Mazower, Inside Hitler’s Greece: The Experience of Occupation, 1941– 1944 (New Haven 1993) 57. 111. Carlo Geloso, ‘Due anni in Grecia al Comando della 11. Armata’, in: Archivio dello Stato Maggiore dell Esercito, Ufficio Storico, Cartello 1005 (unpublished typescript, covering the time between April 1941 and May 1943) 55 et seq.; Thomadakis, ‘Black Market’, 65. 112. Georgios Tsolakoglou, Apomnêmoneumata (Athens 1959) 206 et seq. 113. ‘Une soupe populaire au Pirée’, La République, 24 March 1942; Evangelos Papastratos (ed.), Commission de Gestion des envois des vivres du Comité international de la Croix-Rouge en Grèce. Rapport final de son activité, octobre 1941–août 1942 (Athens 1945) 40–49. 114. Thomadakis, ‘Black Market’, 78. 115. A.Y.E./1942/KK/4/II/1: Letter no. 101 of 22 July 1942 from Tsolakoglou to Gotzamanês and no. 554 of 12 September 1942 from the same to Altenburg. 116. ‘Panellinios Homospondia Polesandon ta Akineta ton Epi Katoches’, quoted in: Christos Hadziiossif, ‘Economic Stabilization and Political Unrest: Greece 1944–1947’, in: Lars Bærentzen, John Iatrides and Ole L. Smith (eds.), Studies in the History of the Greek Civil War, 1945–1949 (Copenhagen 1987) 25–40, here 32–33. 117. Thomadakis, ‘Black Market’, 74. 118. Jan Tomasz Gross, Polish Society under German Occupation: The Generalgouvernement, 1939–1944 (Princeton 1974) 109 and 113. 119. Violetta Hionidou, Famine and Death in Occupied Greece, 1941–1944 (Cambridge 2006). 120. BA-MA, RH 19 VII/53, 98: Enclosure 1 to report no. 6311 geh. of 21 May 1943, OBfh. Südost, ‘Italienische Säuberungsmaßnahmen in Griechenland’. 121. See: PA-AA, HaPol Wiehl, Griechenland, Aufbaukosten telegram no. 2757 of 26 November 1942 from Neubacher/Altenburg. 122. Thomadakis, ‘Black Market’, 71f. 123. Violetta Hionidou, ‘Black Market, Hyperinflation and Hunger in Greece, 1941– 1944’, Food and Foodways, 12 (2004) 81–106, here 87. 124. Sabine Rutar, ‘Arbeit und Überleben in Serbien: Das Kupfererzbergwerk Bor im Zweiten Weltkrieg’, Geschichte und Gesellschaft, 31 (2005) 101–134, here 127–128. 125. ‘Wird Griechenland weiterleben?’ 126. Lindberg, Food, Famine and Relief, 39.

300 • Occupied Economies 127. T501/27/794, 796, 1044–6: KTB Berück Mitte Qu, 5.8.42, 25.8.42; cf. Monatsbericht Berück Mitte Abt VII/Kr.Verw. August, 10.9.42. 128. See Ob’iavlenie, n.d, NARB Mogilev 260–1-15, p. 150 (USHMM RG53.005M/2). 129. T77/1141/1177KTB: WiKdo 211 (Orscha) 25–28.5.43. 130. T77/1100/397: WiIn Mitte, Lagebericht Nr. 30, 1.6.43 (Smolensk and Mogilev); T77/1147: WiKdo 212 (Mogilew), Lage- und Tätigkeitsbericht Nr. 17, 18.5.43; Christian Gerlach, Kalkulierte Morde. Die deutsche Wirtschafts- und Vernichtungspolitik in Weissrussland 1941 bis 1944 (Hamburg 1999) 315. 131. T315/1583/821: Lagebericht Sich.Div. 201 Abt VII, 1–31.10.42; T501/27/172: Tätigkeitsbericht PzAOK 3 OQu/Qu.2, 29.1.43. 132. T313/278/8551028: Besprechungspunkte für die Dienstbesprechung am 27.d. Mts [11.42]. 133. See on this: Theo J. Schulte, ‘Living Standards and the Civilian Economy in Belorussia’, in: R. J. Overy, Gerhard Otto and Johannes Houwink Ten Cate (eds.), Die ‘Neuordnung’ Europas. NS-Wirtschaftspolitik in den besetzten Gebieten (Berlin 1997) 169–192. 134. On pre-war rationing and markets see Elena Osokina, Our Daily Bread: Socialist Distribution and the Art of Survival in Stalin’s Russia, 1927–1941 (London 2001). 135. T77/1499/130, Der Heeresfeldpolizeichef im OKH/GenQu/GFP, Monatsbericht der Geheimen Feldpolizei 1–30.6.42; T313/267/8537726–7, 8537741: Tätigkeitsbericht Gruppe GFP 703 Oktober, 24.10.42, November, 28.11.42. 136. FK 815 (V) III, Verfügung, 20.10.42, in: Prestupleniia nemetsko-fashistskikh zakhvatchikov (Minsk 1965) 368 et seq. 137. T312/284/7847014–5, T312/1689/5: Tätigkeitsbericht Gruppe GFP 580 März, 28.3.42, April, 29.4.42; T77/1499/144: Der Heeresfeldpolizeichef im OKH/ GenStdH/GenQu/GFP, Monatsbericht der GFP 1–30.6.42. 138. T312/318/78872999: Tätigkeitsbericht Gruppe GFP 639 April, 26.4.43; T313/279/8573722: Tätigkeitsbericht Gruppe GFP 703 Dezember, 25.12.43. 139. Sheila Fitzpatrick, Stalin’s Peasants: Resistance and Survival in the Russian Village after Collectivization (Oxford 1994) 216. 140. T175/234/2723172: EM 133, 14.11.41; T77/1140/93: Leit. WiKdo Witebsk, Monatsbericht, 27.12.421; T314/1516/495–6: c.f. StOK Newel, Monatlicher Lagebericht, 23.7.43. 141. T312/1347/224, T312/1353/1318, 1306: Gruppe GFP 570, Einsatzplan 12.3.42, 21.2.43, 2.2.43; T77/1142/337: KTB WiKdo Ljubun, 26.10.42; T312/241/7795974–5, 7796254: Lagebericht AOK 4 OQu/VII Dezember 1943, 3.1.44; Januar, 3.2.44. 142. T501/89/1009: Korück 559 Qu, 10-Tagesmeldung der Kommandanturen, 29.4.43. 143. T77/1172/606 WiIn Mitte, Preisfestsetzungen in den besetzten Ostgebieten, 4.10.41: Grüne Mappe, Teil I, 2. Auflage, NG-1409, p. 16; Wolfram Fischer, Deutsche Wirtschaftspolitik 1918–1945 (Opladen 1968) 120–125; Karl Brandt,

Trade • 301 Management of Food and Agriculture in the German-occupied and Other Areas of Fortress Europe: A Study in Military Government (Stanford 1953) 116–120; Gerlach, Kalkulierte Morde, 240–241. 144. BA R29/160: Reichskreditkasse 56, Bericht über Lebenshaltungskosten in Smolensk, 9.1.43; BA R29/2, 59R, 142R: Bericht über die Sitzung des Verwaltungsrats der Reichskreditkassen am 13.8.41, 3.9.41. 145. BA R2/30555: WiStab Ost Chefgr W Allg Wi Gr IV (Fin), Grundsätze für die Bearbeitung des Finanzwesens im Operationsgebiet, 5.2.42; T312/212/7761514AOK 4 OQu, Monatsbericht Juli, 4.8.43. 146. T77/1145/143–4: KTB WiKdo Polozk, 31.3.42. 147. T501/89/977–8: Korück 559 Qu, Meldewesen der Kommandanturen— Monatsbericht, 28.2.43; T77/1142/540: KTB WiKdo i.Ber.d. PzAOK 2, 1.7.42; T77/1145/156: Lagebericht Sich.Div. 201 Abt VII 1–30.6.42, T315/1583/893– 4; KTB WiKdo Polozk, 22.6.42. 148. T312/212/7762617: Lagebericht AOK 4 OQu/Qu.2/VII November, 4.12.43; T77/1141/1176: KTB WiKdo 211 (Orscha), 20.5.43. 149. T77/1145/645: KTB WiKdo Smolensk, 18.4.42; T77/1102/163: KTB-Rückblick HeWiFü Mitte Abt BB, 1.1–31.3.44. 150. T315/1586/1363: Lagebericht Sich.Div. 203 Abt VII/Mil.Verw. Januar, 30.1.43; T501/15/1187–8: Berück Mitte Abt VII/Kr.Verw., Verwaltungsanordnungen Nr. 18, 2.4.42. 151. T315/920/459: StOK Pinsk Ia, Standortbefehl Nr 3, 12.7.41; T175/233/2722122: EM 67, 29.8.41, (Mogilev); T501/66/86–7: OK I/532, Tätigkeitsbericht 1.7–10.7.42 (Rzhev). 152. BA R29/112: Reichskreditkasse 56 Smolensk, Brief eines im Osten stehenden Soldaten über Geld- und Marktverhältnisse im Osten, 25.8.43; T77/1147/613: KTB WiKdo Smolensk, 1.3.42. 153. Tätigkeits- und Lagebericht EG B 15.11–15.12.42, NARB 655–1-3, there 11, 14 (USHMM RG53.002M/5); T315/1680/144 Sich.Div. 221 Ic an Berück Mitte Ic, 1.11.42. 154. T312/315/7882925 Tätigkeitsbericht Gruppe GFP 580 Januar, 26.1.43, (Sychevka); T77/1146/376 c.f. Wochenbericht WiKdo 213 (Borissow) Gruppe Arbeit, 17–23.1.44 (19.1.44). 155. T77/1142/707–9; c.f. EM 179, 11.3.42, T175/234/2723989, WiKdo Orel (PzAOK 2), Lagebericht Nr 12, 21.11.42. 156. Jacquemyns, ‘La Société belge sous l’Occupation allemande’, 320 et seq. 157. Futselaar, Lard, Lice, and Longevity; Bundgård Christensen and Futselaar, ‘Zwarte markten in de Tweede Wereldoorlog’, 89–110. 158. T501/15/1129–30: Lage- und Tätigkeitsbericht Berück Mitte Abt VII/Kr.Verw., 10.6.42. 159. Hein A. M. Klemann, ‘Bezetting en economische macht’, in: Conny Kristel (ed.), Met alle geweld. Botsingen en tegenstellingen in burgerlijk Nederland (Amsterdam 2003) 162–183, passim.

302 • Occupied Economies 160. G. J. Kruijer, Hongertochten. Amsterdam tijdens de hongerwinter (Meppel 1951) passim. 161. Trienekens, Tussen ons volk en de honger, 405–406. 162. T501/27/1044–6: Monatsbericht Berück Mitte Abt VII/Kr.Verw. August, 10.9.42. 163. Der Vertreter des RMO im Stabe der Hgr Nord, Politische und wirtschaftliche Probleme der militärischen und zivilen Verwaltung der besetzten Ostgebiete, 12.42, PS-1381. 164. T77/1145/1049: KTB WiKdo Borissow, 17.5.42; T77/1112/1075: Lagebericht AWiFü AOK 4 16.5–15.6.44. 165. T77/1145/248: KTB WiKdo Polotsk, Monatsübersicht November 1942. For other examples see T77/1141/442: WiKdo Orsha, Lagebericht Nr.3, 28.2.42; T77/489/1653712: Hptm. Schwarz, Erfahrungen als Wi-Kdeur in Borissow, 15.9.43; T77/1140/901 Monatsbericht Leit.WiKdo Witebsk November, 23.11.42. 166. BA R6/70, Vermerk über die Tagung in Rowno von 26–28.8.42, 16. 167. Christian Gerlach, ‘Die Bedeutung der deutschen Ernährungspolitik für die Beschleunigung des Mordes an den Juden 1942’, in: Christian Gerlach (ed.), Krieg, Ernährung,Völkermord. Forschungen zur deutschen Vernichtungspolitik im Zweiten Weltkrieg (Hamburg 1998) 167–257; Gerlach, Kalkulierte Morde, 709–723; BA R6/70, Der Reichsführer-SS, Meldungen an den Führer über Bandenbekämpfung, Meldung Nr. 51 Russland-Süd, Ukraine, Bialystok. Bandenbekämpfungserfolge vom 1.9 bis 1.12.42, 23.12.42, NO-511. 168. Futselaar, Lard, Lice, and Longevity, 234. 169. Angus Maddison, Dynamic Forces in Capitalist Development. A Long-run Comparative View (Oxford 1991) 223 et seq.

–15– Production Introduction In 1938 Jaffa, a machine factory in Utrecht (the Netherlands), was almost bankrupt. According to the balance sheets of the factory, after the lasting depression of the 1930s, the company was 70 per cent financed by debts. In fact, the situation was worse, as it had hardly written down on its assets for years. Large parts of its machinery and inventory that still appeared on the balance sheets as having a considerable value were in fact worthless. The back depreciation amounted to about ƒ850,000, at least ƒ50,000 more than the company’s net value.1 In 1939, after many years of losses, government orders needed for the mobilization of the Dutch army and military war preparation offered a fortunate opportunity to earn a profit again and thus to depreciate the value of the assets considerably. In May 1940, after the five-day German–Dutch war, these military orders of the Dutch government were, however, frozen. With that, Jaffa was not allowed to restart work on the most important part of its backlog of orders. Accordingly, dismissing a substantial part of its workforce seemed the only solution for the machine factory, but after the capitulation, General H. G. Winkelman, the Dutch Commander in Chief, who had orders to administer the country in the name of the Dutch government in exile, prohibited such dismissals. While in 1939 the middle-sized company, with about 300 employees and a balance sheet total of ƒ2.9 million, seemed to be climbing out of the mess again, now a bankruptcy appeared almost unavoidable. On 10 May 1940, Nazi Germany invaded the Netherlands, Belgium and France. Five and a half weeks later even France—the country that twenty-five years earlier offered fierce resistance against the Imperial German Army for four years—had to capitulate to Hitler’s army. The war was lost, and those thinking that the United Kingdom still had a chance to win lived on another planet. Unless the chances of war would give Britain new allies—very unlikely at that moment with US elections coming up in November—the best that could be expected for the British Isles after the forced withdrawal of its troops from France was that it could survive. Four years later, in 1944, the British army would return to the Continent, but that would be possible only with the backing of the Americans, and even that only after large Russian victories had already decimated the German forces substantially, while thousands of kilometres to the east the Soviets still entangled the main body of this great army. In 1940 only poor German preparations for an amphibious operation saved the British

– 303 –

304 • Occupied Economies Isles from an invasion and a destiny like that of France, Belgium and the Netherlands.2 Hendrik Colijn, five times Dutch Prime Minister, was thus right when in June 1940 he wrote an essay entitled ‘On the Border of Two Worlds’, in which he expressed the opinion that it seemed unlikely that the United Kingdom would have any influence on the Dutch future again in the coming period. Colijn thought that until the new century—that is about the year 2000—the Dutch had to accept that Berlin would decide their future.3 The former Prime Minister, who in 1944 died in German imprisonment, would undoubtedly have been relieved to find that he was proved wrong, but the fact that history took a different turn did not mean that his predictions were unrealistic. In history too many factors are of importance to give any reliable predictions of what will happen in more than a very short period of time—and that is even truer when one tries to foresee the outcome of large-scale military conflicts. History is no teleological process. Nevertheless, it is the duty of policymakers as well as businessmen to anticipate the most realistic scenario. The Dutch Queen, Wilhelmina, who, according to her biographer, only wanted to return to her country after Germany was beaten, wrote after the fall of France that ‘in our point of view . . . little has changed, because one ally has fallen out . . . ’4 Such an unrealistic view was not typically Dutch. In his famous speech of 18 June 1940 on the British radio, Charles de Gaulle summoned the French not to give up and, convinced as he was that the French would be among the vanquishers, assured his fellow countrymen that their country had lost only a battle, not the war. His ideas were just as unrealistic as those of the Dutch Queen. In the tradition of wartime historiography, the attitude of both—Her Majesty and De Gaulle—is considered to be heroic.5 Without denying that there is some desperate heroism in keeping one’s belief in liberty, the moral values of Western democracies and the belief in a future where these would be respected again despite everything, it seemed more to the point to question their sense of reality and political insight. In June 1940, there was little reason for the Allies to believe that the war could still be won. Marshal Philippe Pétain and the Dutch Prime Minister Jhr. D. J. de Geer, who both gave up and wanted to find a compromise, hardly win any sympathy. Unimaginative realism seldom does, and their later behaviour only made things worse. They were the more realistic politicians at the time, however. Many historians are still inclined to describe the Second World War as a conflict that all over the world resulted in the most dreadful suffering of the civilian population, the most disgusting bloodshed in battle, and the use of terrible new arms against soldiers as well as civilians, not to speak of racist murder on an unprecedented scale, but a war that in the end could end only in an Allied victory. Probably, the idea of a German triumph and the consequences of such a success simply surpass the imagination of most of them. Nevertheless, it is important to become conscious of the fact that in 1940 and 1941, and for those who had little eye for the economic aspects even in 1942, there were very few reasons to believe in the Allies’ strength and a possible victory by that side. According to Joseph Goebbels’s propaganda, Germany was

Production • 305 winning on all fronts, and Goebbels was right. It was therefore realistic to anticipate a final victory for the Axis. As the realistic outcome in 1940 seemed to be German domination over their countries for at least their lifespan, the remaining governmental officials, mayors, judges, church leaders, businessmen, captains of industry and in the end even every single citizen in the occupied countries of Western Europe, Poland and the Czech parts of former Czechoslovakia had to decide how to cope with such an endless Nazi domination. In Dutch historiography some ministers of the exiled government of Prime Minister D. J. de Geer are condemned as defeatists, people who had no hope for an Allied victory any more.6 In the light of modern research, realists would be a more appropriate description. The Netherlands was conquered by Germany, and all powers that could and would do anything against this were, if not conquered as well, at least not powerful enough. For Jaffa, the Utrecht machine factory, this had enormous consequences. It was faced with fast-approaching bankruptcy, which it could avoid only by restarting its production for the enemy, but an enemy which every realist seemed to know—and all the important pre-war authorities, such as the former prime minister, proclaimed—had already won the war and would rule over Europe for the next decades.7 Companies, institutions and individuals therefore took a German victory into account. In London Queen Wilhelmina could heroically reject every compromise—and did she have an alternative?—but those who lived in the occupied country had to cope with the situation and in one form or another had to find a modus vivendi. To this end economic production was necessary, and in the first half of the 1940s all production on the Continent was advantageous to Germany and its warfare. Even when the occupied countries produced only domestic products, the Germans could economize on such production in Germany and concentrate their own industry on direct war needs. In other words, collaboration was inevitable, and, anyway, as Germany had won the war, producing for its armed forces, although it seemed unsympathetic, in fact hardly mattered. As it is impossible not to produce, the only alternative to economic collaboration was collective suicide. The term collaboration therefore is meaningless, at least in economic history. By using the term collaboration instead of asking why they behaved as they did—as an historian should—he is condemning the people he is writing about. Here the central issue should not even be that. Here the question ought to be to what extent the production of occupied Europe actually continued. It is clear that the idea that economic activity collapsed during the occupation, never to recover, is not true. All over Europe production went on. A clear indication of this is the fact that Berlin obtained a quarter of all goods and services it needed for its warfare from the countries it occupied and, on top of that, another 10 per cent in the form of labour—to a certain extent, forced labour. Immediately after a territory was occupied—that is often before the country it was part of was even beaten—German officials and army officers demanded that workshops and factories were reopened to repair their motor vehicles, planes and ships; to build horse-drawn

306 • Occupied Economies carts; to repair shoes and boots; to make uniform parts; to deliver food and beer for the soldiers; or to equip the offices of the officers. Therefore, it is essential to conceptualize two different forms of economy in occupied Europe: a war economy centring on strategic resources and a warfare economy dedicated to the direct support of the armies in the field or soldiers doing duty in the rear directly behind the front line. Wherever German armies arrived in Europe, a warfare economy immediately restarted production, while after consolidation war production was stimulated where and when the local use of resources seemed more efficient than taking these to Germany. Apart from this, everywhere in Europe some production remained intact for local use, as is obvious from the fact that the greater part of the population survived, even in the most severely hit countries. The historiography on the Second World War focuses on subjects typical for this period: repression, resistance, violence and, above all, the Holocaust, as the prosecution and mass murder of the Jewish population all over Nazi-ruled Europe has come to be known since the late 1970s. If anything is written on the economy, it is on exploitation, impoverishment and hunger. All over Europe one can read that in those years companies were closed, machinery and raw materials taken, and labourers sent to Germany and that there was barely enough left for the local population to survive. The general opinion after the liberation was that the formerly occupied Europe was impoverished, its people starving and its economies smashed, or as in 1945 a Dutch official said to an American newspaper: ‘If I had to describe Holland as it is today in a phrase, I would say that it is empty. There is almost nothing left.’8 New calculations on macroeconomic statistics show, however, that this was simply not true, at least not in the western part of the Continent. For the Dutch, the first years of the occupation were economically even the best in a decade, resulting in such massive investments that in 1945, notwithstanding confiscations by the occupier, the industrial capacity was substantially bigger than in 1939, and there are indications that in most other Western occupied countries this was hardly any different.9 This chapter focuses on the development of production. Recent publications on occupied Western Europe suggest that the decline of economic life is not the whole story and that, in some countries and some years of the occupation period, growth was more characteristic.10 Nevertheless, in popular publications and international literature, the opinion persists that the economies of occupied Europe slumped, and there is little doubt that this was true in the eastern parts of the Continent and in the Balkans. In Belorussia, for instance, between 1.6 and 1.7 million of the 9 million inhabitants fell victim to aggression or hunger; 2 million more were forced to relocate, while everyone in this country suffered from famine and destruction. The situation in the Ukraine was more or less the same.11 In the two and a half years when this country of some 30 million inhabitants was occupied, total casualty figures resulting from warfare, the murder of Jews and Communist Party officials and hunger and starvation were 6.7 million, while on balance 3.5 million people migrated out of the country.12 However, as millions of people survived even in these extremely abused

Production • 307 countries, although the occupier took substantial amounts of food and raw materials, it is clear that some production went on. The simple fact that, while rations may have been meagre, famines were exceptional, makes it clear that in Western Europe consumption—and therefore production for local use—was higher than in the eastern parts of Europe, while the countries there were more important as suppliers of the German war apparatus as well. Consequently, Adam Tooze was wrong when he wrote that in ‘Belgium, the Netherlands and above all France, . . . economic activity collapsed in 1940, never to recover’.13 Here the question should be what production continued, on what scale and what differences there were in the level of production between the diverse parts of the occupied Continent. The main difference between the known statistics and the actual production resulted from the shadow economy that at least partly compensated the setback in registered production. Generally, one can presume that the more severe the decline in the official production and consumption, the higher the illegal production. Most, but not all, of this clandestine production was for the internal market and thus increased internal consumption. Before making estimates on production, it should be emphasized that there are enormous differences between production, welfare and the accessibility of consumption goods. The fact that, in Eastern Europe and the Balkans, German purchases were limited and production collapsed more severely than anywhere else in the suppressed countries of Europe did not necessarily mean that wartime consumption was lower than in the West. Actually it was, but it should be clear that when an educated guess of the size of production is made, and the outcome is much higher than suggested by official statistics, this does not necessarily mean that the consumption of the local population was so much higher than described in many books and articles on the situation in occupied France or Belgium. The Germans took substantial parts of the production with only administrative payment. Therefore, a much smaller part of the production was available for internal use than before the occupation, even when the production was still substantial.

The Problems of Statistics and Clandestine Production Although black markets were not typically a wartime phenomenon, during the war these markets became important. Increased taxation, regulation and a declining understanding between the rulers and the ruled motivate business communities as well as the general public to transfer parts of the production to clandestine corners of society, out of the grip of greedy governmental organizations.14 When prices are kept low in the official sector, but would be much higher if the products could find their own price in a free market, it is evident that the temptation to transfer supplies to free, clandestine markets not only will be great, but will become even greater as the scarcity in the legal markets resulting from black market activities drives up clandestine prices even further. The economists Friedrich Schneider and Dominik Enste are of

308 • Occupied Economies the opinion that a ‘growing shadow economy can be seen as the reaction of individuals who feel overburdened by the state and who choose the “exit option” rather than the “voice option”’.15 The occupation was a period of increased taxation and growing regulation and of waning trust between rulers and ruled. Since circumventing the official regulations would increase incomes and consumption, it is understandable that not only in the occupied countries, but also in the USA, Britain and Germany itself, black markets were growing.16 In that latter country as well as in occupied Europe there was no longer any ‘voice option’. The German regime violently suppressed all opposition in Germany itself as well as in occupied Europe and did not allow any dissent. Therefore, all over the Continent, but especially in Eastern Europe and the Balkans—countries where the economic pressure became most severe—the clandestine economy grew to an overwhelming magnitude. During periods of severe shortages, concealed production could outstrip legal production. Then, it was impossible to suppress black markets any longer without the use of an enormous police force, and that was often not worth the effort. For that reason, from 1943 on, the occupier more or less accepted clandestine markets and production in the occupied USSR and some other eastern territories.17 In these countries, such markets became the main survival route for a population that would otherwise have starved to death as official rations were far below the minimum needed to survive.18 The shadow economy included every economic activity that was not registered, that is real crime as well as legal but unregistered economic activities. According to Edward Smithies, British black markets were supplied from unregistered agrarian production, theft and unrecorded industrial production.19 He is right, but although economic criminality substantially increased, if only because some activities that were illegal in juridical terms were not seen as immoral in the circumstances, most black market activities were in themselves not illegal. The clandestine element lay not in the criminal origin of the value created, but in ignoring wartime regulations and taxation. In official markets, prices were kept low to give the urban population the opportunity to buy rations without raising wages. As a consequence, production often barely provided an income for the producers. After the hard times they had had in the 1930s, they now could ask almost anything for their products on illegal markets, and the temptation of encroachment (namely the transfer of supplies from low-priced official markets to high-priced clandestine markets) was enormous.20 In France, it was common knowledge that farmers producing for legal markets were inundated by regulations and could not even obtain reasonable prices, while producing for clandestine, free and real French markets was highly profitable and liberated them from all kinds of awkward bureaucratic regulations.21 Besides which, the new officials collecting the crops against official prices were mistrusted by most farmers. Accordingly, official crops were higher in parts of France where pre-war wholesale buyers bought the output than in the parts where such mistrusted new officials did the job.22 Black-marketeering resulted not only from differences in legal and illegal

Production • 309 prices, but also from lack of confidence in the bureaucracy and the motives behind the regulations.23 When regulation was new and implemented by unknown institutions set up only during the occupation, the public thought the rules were German motivated. Consequently, when there were no clear indications that the interests of the producers were borne in mind, black markets easily got out of hand. In Greece, for instance, farmers refused to obey the decrees of the deutschfreundliche—German-sympathizing— government, not only because they hoped to get higher profits in black markets, but also because they were convinced—just as were many governmental officials responsible for the collection of the wheat harvest—that they were committing an act of resistance by keeping wheat out of legal markets. Otherwise, they thought, a substantial part of their production would be shipped to Rommel’s army in North Africa. As a result, collecting the crops was unsuccessful. A similar development is seen in Serbia, where penalties were imposed on peasants and provinces not fulfilling their delivery quotas, while products discovered in storage rooms were sequestered. Nevertheless, the greater part of the production was sold in black markets for prices much higher than the official prices or was bartered for clothing and the like. In order to increase the part of the output obtained, a register of producers was compiled, and during the threshing season it was decided how much every one of them could keep for their own consumption. According to Franz Neuhausen—the German Plenipotentiary for the Serbian economy and, from 1943 on, also chief of the military administration—this was most successful. In 1943, 62 per cent more grain and legumes were collected than in the previous year. By March 1944, however, although 90 per cent of the wheat quota from the Banat—an autonomous Serbian region ruled by the German minority—had been fulfilled, only 49 per cent of that of the rest of Serbia was collected.24 Therefore, in the spring of 1944, the occupier, recognizing its limited success, tried to motivate peasants to adopt a more cooperative attitude by offering them scarce consumer goods in exchange for their crops. These examples make clear that in countries as diverse as Serbia and Greece as well as in France and Belgium, illegal economic activities were significant. For the understanding of the occupied economies this is of major importance as it means that all data on production not allowing in some way for clandestine production give an impression of the actual output that is wide of the mark. In illegal production, margins were the crux. In normal times, the input of labour and raw materials gives a good indication of the output, especially in industry. For that reason—and not only because food was needed by everyone—the black industrial production everywhere was small compared to the clandestine agrarian production. In agriculture it was easier to keep a part of the output out of the records than in industry. Nevertheless, clandestine industrial production was found everywhere in occupied Europe as well. For ideological reasons, and also because they were the only specialists, businessmen in all the occupied countries had substantial influence in the organizations set up to regulate the use of raw materials, such as the

310 • Occupied Economies Rijksbureaus, Offices Centraux des Marchandises, OCRPI, and so on. These interest groups could try to keep the input–output ratios on such levels that efficient producers would have some unregistered margins.25 By further limiting waste, reusing it when unavoidable, doing research on surrogates and using old-fashioned techniques that were less efficient with labour—as many were in hiding, there was a substantial number of unregistered labourers, especially after 1942—but more efficient with materials, it became possible to obtain worthwhile margins. Concealing such margins to use in clandestine production or sell in black markets was done everywhere. By more careful measuring, it was possible to cut more shoes from a skin and, while being less critical of the quality and shininess of such materials, to increase the margins by about 10 per cent in each step of the chain of production. The clandestine production of raw materials—in this example, illegally butchered cows and pigs resulting in clandestine leather—only further stimulated illegal production. In the last decade before the war, Dutch shoemaking was transformed into factory production, but most labourers were still trained craftsmen, quite capable of making shoes in their garden shed with just some simple tools. As wages and prices of shoes on legal markets were frozen and raw materials were scarce, factory production was under pressure. Illegal butchering resulted, however, in considerable quantities of illegal hides. As tanning was also only partly industrialized and still often done in small-scale vat tanneries, illegal leather was widely available. The 1942–1943 German policy of centralizing industrial production to get labourers for the Arbeitseinsatz and to economize on raw materials, resulting in the closing of shoe factories, forced labourers into hiding. In this branch the consequence was that they restarted production again as small craftsmen and sold their output on the black markets. This was quite profitable, not only because economies of scale were small anyway, but also because black market prices were between five and fifteen times as high as official prices.26 In the same way that more shoes could be made from a hide, more clothes could be cut out of a piece of cloth by cutting the material more precisely, as well as by being a little less critical of discolouring or other small imperfections in the fabric, while the wool from illegally butchered sheep, as well as the margins in flax production, resulted in some extra materials. Likewise, more clothing was made by reusing old materials. As input was often used as an indication of output and the authorities based their calculations on pre-war experiences, every improvement of efficiency, or less critical attitude resulting in more efficient use of the available material, caused an increase in clandestine production. Moreover, when locally produced raw materials were involved, the input most of the time already had a substantial unregistered margin.27 Producers of raw materials—in agriculture (including tobacco and wool production), mining, forestry, and so forth—could obtain raw materials for clandestine production as long as they had reasonable arguments to explain the low level of official production. Agriculture is mostly seen as the main source of black market

Production • 311 production, but as this was caused by difficulties in calculating the output from the input, other branches processing locally produced raw materials and companies with unregistered pre-war stocks also had good opportunities to operate on black markets. Food processing is a good example. According to Jean-Christophe Fichou, in the Pas-de-Calais region (France) a third of the fish catch was landed illegally. This was limited, however, compared to the clandestine share of production in Bretagne, where many people had a small boat of their own and the coast was sprinkled with uncontrolled and uncontrollable small ports where fish-canning factories could easily obtain clandestine fish.28 Even in mining, margins were important, and it is striking that during the whole of the occupation, all Dutch mining companies employed more labourers, who were working longer hours to get less coal. The excuse the Dutch State Mines (DSM) gave was that, just before the war, the decision was taken to exploit narrower coal layers, but this cannot explain the waning labour productivity of the other companies. Nevertheless, coal production was disappointing, not only in the Netherlands, but everywhere in Europe. In France, the German authorities complained that keeping coal production at the low 1941 level was possible only by regular Sunday shifts. Here, the official reason for low productivity was that problems with the food distribution affected the energy of the miners, while delivery problems for auxiliary materials further undermined productivity.29 Excuses for low production levels were always at hand, but in the end it is amazing that the overall decline of productivity in primary production did not result in harsh German measures, especially as the occupier knew quite well that black markets were flooded with the products of such branches. Apart from margins, materials that in normal times were useless became valuable raw materials and were used in legal as well as illegal production. In mining districts, coal mud and coals found in mine rubbish were used by industrial companies short of fuel as well as by private households, while rye straw was used to make sandals and bags in clandestine factories using people in hiding as labourers, but also to make board in perfectly legal factories to be used in construction. More or less clandestine peat production was also used in factories that no longer obtained fuel through official channels. In barber’s shops even human hair was collected to be used in textiles or as filling in the furniture industry. Illegally cut wood, as well as the branches from legally cut wood, was used in clandestine as well as legal industrial companies, and clandestine building and construction used the remains of buildings destroyed by bombardments or other war activities, as well as all kinds of half-forgotten small stocks. As in those years all over Europe farmers earned a lot of money, and also gave shelter to young men trying to avoid being sent to Germany, many farms got new sheds or stables illegally by the use of the men’s labour and clandestinely bought building materials. Similarly, redecorating a shop was also quite common as shopkeepers were earning more than before the war, not only due to their involvement in black markets, but also for the simple reason that all their purchases were sold at high prices, without any loss through decay or changes of fashion.

312 • Occupied Economies Scarcity influenced the attitude of the public. Customers became less critical of the quality and appearance of finished products, especially in legal markets where the rationing system resulted in the sale of all available goods anyway. Consequently, raw materials that would have been rejected before the war were now used, but only in legal production. Nobody bothered any more when a piece of wood used for a cabinet was full of knots or a piece of cloth for a dress was slightly discoloured. ‘Serious was the deterioration of the quality of commodities: what was the point of taking care of products sold under tax which the customer would be forced to buy? Windfalls went to the legal market, but the apple crop went to the black market’, Louis Baudin wrote just after the war on French wartime consumer markets.30 In other words, during this period of shortages, producers got the opportunity to participate in the shadow economy by producing substantially more with the same amount of raw materials and by not bothering about the quality of their output, as well as by using clandestine raw materials. Clandestine markets were for a large part based on clandestine agrarian and industrial production. In periods of hunger, illegal markets could absorb more than half the agrarian production, while in agriculture across Europe 20–25 per cent clandestine production became a minimum, even in the best-organized societies. Therefore, it is necessary to get an indication of the shadow economy if one wants to get an idea of the size of wartime production. After all, even in countries that in normal times had reliable statistics, wartime macroeconomic series hardly gave a realistic impression of the production. In France, for instance, clandestine transactions absorbed about 35 per cent or more of the food production.31 Therefore, educated guesses of the size of the shadow economy have to be made, but calculating these is no easy job as the most common methods cannot be used. Clandestine production is not exclusively a wartime phenomenon. Even nowadays it is still important to get an impression of clandestine production, especially when comparing countries. To do so, the easiest way is to find discrepancies between aggregated production, on the one hand, and the sum of all incomes or of all spending, on the other, and use these discrepancies as indicators for the size of the clandestine production. For the wartime period, however, complete national accounts are not available anywhere. There are monetary methods for calculating the size of illegal activities using discrepancies between financial statistics and registered production, but these demand not only reliable macroeconomic statistics, but also some kind of stability in monetary and financial developments.32 The way Germany financed its purchases across Europe, however, made such a mess of finances that this method cannot be used either. The same is true, mutatis mutandis, for methods calculating output from the input.33 It is not only impossible to calculate the size of the input, but even if that were possible, it would not give a clear indication of production. People in hiding were often working on farms or doing some not particularly efficient industrial production—spinning or knitting, producing straw sandals or decorative tiles—while others were seriously employed in legal

Production • 313 factories, farms, construction work or shops. Although rare, some completely illegal factories even existed, which developed after the war into legal enterprises. For example, a Dutch village smithy developed into a farm machine factory by using the expertise of Amsterdam labourers, who in normal times had been working in urban machine factories but were now in hiding in the countryside. They repaired, and later built, farm machines that before the war came from the USA.34 In other words, in clandestine production, productivity differed from far below the average to a more or less normal level. Therefore, even if it were possible to calculate the labour input, such data would have been of limited value anyway. Indications of the input of raw materials or semi-finished products would give other problems as such materials were handled with much more care than before the war, resulting in a higher output with the same amount of materials. On top of that new, sometimes unregistered sources of materials were used. In short, as input can only be an indication of the output when it seems reasonable to suppose that the relation between input and output is more or less stable, these methods cannot be used either. Consequently, the only way to get an indication of the shadow economy is by using all kinds of odd information. From such information it is clear that in the Eastern European and Balkan countries, where the occupier had little interest in the survival of the local population, the shadow economy was more important than in Western countries. In the General Government, for instance, legal distribution covered only 35 to 50 per cent of the daily consumption. The rest was obtained illegally, but even including these clandestine purchases, consumption decreased to the barest necessities. In other words, of all the goods the Polish population of the General Government needed to survive, 50 to 65 per cent was obtained clandestinely.35 The Polish historian Czesław Madajczyk concluded that black markets were partly supplied by unregistered, mainly small-scale production, while mass products, like corn or fuels, were brought to black markets by corrupt officials or German soldiers from already-gathered stocks.36 As enormous quantities of mass goods were needed to supply the 12 million inhabitants of the General Government with between 50 and 65 per cent of all they needed, this would imply that major parts of the already-registered and collected commodities obtained to be sent to Germany or the German armies in the East disappeared into clandestine circuits. If that had happened, however, Berlin would have been most alarmed and would have taken countermeasures. Therefore, the possibility that most clandestine products came from stocks already gathered and sold again by corrupt officials and officers is not only contrary to the experience elsewhere in Europe, but also seems most unlikely. That does not mean that this did not happen, but probably in Poland, not just trade, but substantial parts of production were clandestine as well. All over Europe, and especially in countries with many smallholders like Poland, a substantial part of the production was clandestine. In the Netherlands and France, countries where black markets were for most of the time much less important than in Poland or the occupied parts of the USSR,

314 • Occupied Economies farmers hid 20 to 35 per cent of their crops, milk or animals before any official could register them. Governmental measures could do little against this. When in 1942, in Germany itself, Berlin tried to suppress the clandestine butter trade by confiscating butter-making apparatus throughout the countryside, this only publicized the fact that black-marketeering had become a serious problem for the regime.37 The countermeasure was not just rather extreme, but also had little effect and seemed primarily born out of bureaucrats’ frustration with wanting to control everything, but finding out that they hardly managed to do so. In mid-twentieth-century Europe, churns were present at every farm across the countryside, while, at the same time, milk for clandestine butter or cheese could easily be obtained. In the Netherlands, farmers made it quite clear to the authorities that as a result of the decline in the amount of concentrates, their cows gave less milk. They did not tell the same authorities that the average quality of their livestock improved as—to adapt to wartime circumstances—many animals were slaughtered, often as a consequence of governmental measures. As every farmer would, of course, send his least productive animals to the abattoir, this resulted in an illegal milk production proportion of 25 to 35 per cent, most of which was used to make butter.38 That controlling agrarian production could never be really effective, even in Germany itself, became public when a number of German butchers were caught weighing light pigs and slaughtering heavy ones, thus obtaining nice margins of clandestine pork.39 In this chapter, production will be the central theme. The main question is on what level the production took place. As substantial parts of the total production were unregistered, official statistics give only part of the answer. In the Netherlands, however, the 1938–1948 macroeconomic series are recalculated, including a cautious guess at the black market production.40 From these calculations it becomes clear not only that economic decline was limited in some countries, but also what is wrong with official statistics. With that knowledge, it is possible to make an educated guess at the production in other countries as far as there are any macroeconomic series on the legal part of the production. In Eastern Europe and the Balkans, however, Berlin created administrative units like Ostland or the General Government, regions without any independent history or future whatsoever. After 1945 the Second World War became the subject of a patriotic historiography everywhere, but the history of such administrative units was never written, nor has there ever been any attempt to calculate macroeconomic series for these.41 Berlin redrew almost all borders in these parts of Europe, with Greece, although occupied by no fewer than three Axis powers—Germany, Italy and Bulgaria—as the sole exception. Consequently, Greece is the only occupied country in Central, Eastern and South Eastern Europe with a macroeconomic series on the period. It therefore was possible to make an educated guess of at least the Greek wartime GDP (gross domestic product). It gives a limited impression of the differences between macroeconomic developments in the highly developed Western economies and the developments in the less-developed Eastern and South Eastern European economies. To make an educated guess of the

Production • 315 clandestine production, needed to calculate the total production, the Dutch calculations will first be explained.

The Dutch Case In the summer of 1940, Europe’s future seemed to lie in the hands of Germany’s Führer; Germany seemed to be the land of the future. Therefore, adventurous young men from all over Europe were ready to back the German horse. They came to the victorious country and accepted work there as their own countries seemed lost, not just politically, but also economically.42 In the end, however, in a number of countries that lost the first stage of the war and were occupied, the 1940 economic development proved not to be bad at all. In the Netherlands, before August, industrial employment started to grow, to reach an all-time high in 1941, while profitability peaked as it had not done since the late 1920s (Table 15.1). Between 1938 and 1941, 131,000 jobs were created in Dutch industry alone. When agriculture, services and cross-border work are included, dependent employment grew by 24 per cent from 1.6 to 2.0 million full-time jobs.43 At the end of 1940, Reich Commissioner SeyssInquart had good reasons to boast, therefore, that he had solved the unemployment problem.44 After the war this was forgotten. Historians considered it to be propaganda, especially because the official Dutch Statistical Office (Centraal Bureau voor de Statistiek, or CBS) suggested the occupier had solved the unemployment problem by its deportations.45 In fact, of the 393,000 new jobs, only a third were located in Germany, and even half of these were normal cross-border jobs.46 Growing employment was not the only indication that the economy was booming. In 1940, the year the country lost a war and with that its independence, many companies paid higher dividends. Although profits were slightly down again in 1941, they were still substantially higher than since 1929.47 Nevertheless, wartime macroeconomic series of the official CBS (Table 15.1, last column) suggest that from 1940 on industrial production slumped.48 Apart from the short economic setback, this was caused by the fact that the public no longer trusted official institutes and only reluctantly gave information to the governmental CBS. The Hague Ministry of Economics had already concluded before the liberation that the statistical office lacked the information to produce reliable statistics any longer.49 For that reason, the new calculations are based on the fact that production equals the sum of labour and capital incomes before taxation. Social security statistics provided information on the numbers of employees and the sum of the wages in each sector of the Dutch industry. Consequently, the calculations can be too low, but would only be too high in the unlikely case that employers paid more social premiums than they had to. Additionally, the profitability of each industrial sector was reconstructed from annual reports of hundreds of companies spread over all industrial branches. For each company, data on profits, paid interests, reservations and depreciations were

Table 15.1.

Dutch Industrial Development, 1938–1948

Industrial employment

1938 = 100

Profitability of industry (1938 = 100)

Legal industrial productiona

856

100

100

1,584

908

106

123

1,780

1940

904

106

144

1941

987

115

1942

915

107

1943

830

1944

759

1945

689

Full-time jobs (in 1,000s) 1938 1939

Clandestine industrial productiona

Index of industrial production Index (1938 = 100)

Total industrial productiona

New

CBS

0

1,584

100

100

0

1,780

112

113

1,679

18

1,697

107

104

138

1,623

168

1,790

113

81

95

1,263

219

1,482

94

61

97

65

1,128

193

1,321

83

53

89

16

790

256

1,046

66

36

80

16

794

266

1,061

67

27

1946

968

113

132

1,209

166

1,375

87

76

1947

1,103

129

134

1,606

188

1,794

113

97

1948

1,227

143

144

1,805

143

1,948

123

115

a

In millions of 1938 guilders. Note: CBS, Centraal Bureau voor de Statistiek. Source: Hein A. M. Klemann, Nederland 1938–1948. Economie en samenleving in jaren van oorlog en bezetting (Amsterdam 2002); Centraal Bureau voor de Statistiek, Sociale en economische kroniek der oorlogsjaren 1940–1945 (Utrecht 1947); Centraal Bureau voor de Statistiek, Jaarcijfers voor Nederland 1947–1950 (Utrecht 1951).

Production • 317 standardized and an average profitability index was calculated per sector. As the pre-war Netherlands had no taxes on profits, companies had no reason to hide these, which makes it unlikely that pre-war data are too low. It is, however, possible that from 1940 on, when all kinds of new taxes were introduced, companies tried to conceal some returns. Therefore, the outcomes of wartime calculations are more likely to be too low than too high. To link the series of capital and wage incomes, CBS data on the 1938 labour share in enterprise income per sector were used; real production was computed with a newly calculated Paasche price index.50 All these calculations resulted in the conclusion that between 1938 and 1944– 1945, legal industrial production slumped by a dramatic 50 per cent, but not the shattering 73 per cent the CBS calculated. The new series—the legal industrial production series in Table 15.1—does not, however, solve the problem that official statistics, whether from the CBS, from social security organizations, or calculated from the annual reports of companies, never include clandestine transactions. During the occupation, all over occupied Europe black markets flourished, while such markets in Germany, although far from unknown before 1945, boomed only after the fall of the Reich. In Eastern Europe during certain periods, there were few legal markets left, and production for local use was almost completely clandestine. Therefore, Dutch black markets were very limited from an international perspective, until the 1944–1945 Hunger Winter. As black market activity grew during the war, even if all data on legal production had been reliable, the macroeconomic series would still be too low; what is more important, the economic setback that seemed to be reflected by the legal series was not just caused by a real decline of production, but also by the transfer of growing parts of the production to the shadow economy. Consequently, the decline in these series was an exaggeration. For the same reason, post-war growth would appear to be too high as the macroeconomic series of that period reflected a mix of real growth and a renewed registration of previously unregistered production. After 1945, such developments could be seen all over Europe, and in Germany after 1948, when most black markets gradually disappeared.51 When Barry Eichengreen called post-1948 German growth ‘nothing short of miraculous’—according to official statistics, industrial production grew by 50 per cent in just six months—he used series reflecting growth as well as legalizing clandestine production.52 A series without any surcharge for the shadow economy thus gives false impressions, suggesting that wartime economies slumped more dramatically than they actually did; while after the war, when markets were liberated from wartime regulations again, economic growth seemed miraculous because the series then reflected not just real growth, but also the legalizing of clandestine production. In other words, post-war economic miracles were not miracles at all, but statistical errors. To make a cautious and probably too low estimate of Dutch clandestine industrial production, information per sector for 1942 and 1943 was gathered. These years were selected because by that time the first unsteady period of the occupation

318 • Occupied Economies was over and economic regulation was fully developed, while the collapse of the Third Reich, crushing all that was left of organized society all over Europe, was yet to come. Dutch information shows that in these two years, in branches using locally produced raw materials (mining, shoemaking, textiles, food and wood processing) it is a cautious guess that 15 per cent of all production was clandestine. In branches where production was easier to control because they processed raw materials that came from elsewhere, 10 per cent seems a reasonable guess. It should, however, be emphasized that these margins could be accomplished in every step in the production column again. In textiles, for instance, it was possible to gain 10 per cent in spinning and weaving by reusing waste, while tailors could, by cutting fabrics more carefully, gain another 10 per cent. As neither taxation nor regulation of production existed in the Netherlands before 1940, clandestine production was uninteresting and non-existent, apart from some illegal production of gin. The development of black markets over time was reconstructed in agriculture, where a system existed that allowed calculating important parts of the production in two different ways: one based on official registration and thus not including any illegal production; the other on guesses by agrarian specialists spread across the country who based their estimates on the amount of land used for different crops and the condition of each crop a few days before the harvest. As these specialists had already made their estimates for twenty-five years and there was a systematic relation between registered production and these estimates, it seems clear that the deviations between these series, starting only during the occupation, indicate that parts of production were hidden.53 By taking into account the general development of clandestine production, the level of black production in each sector in 1942 and 1943, and the fluctuation between the sectors, it was possible to make reasonable guesses for the development of industrial black market production and thus to reconstruct a probably still rather low, but more realistic industrial production index. Together with the series on agriculture and services, even a GDP index, with clandestine production included, could be calculated.54 The outcome provides a completely new impression of wartime economic development in the Netherlands. After the first months of occupation, production boomed, and it was only from late 1941 on, when Paul Pleiger introduced new forms of exploitation, that this started to decrease. During the occupation as a whole, the economic decline, that is the setback of the GDP—which, according to the CBS, was almost 50 per cent between 1938 and 1944–1945—was in fact less than 20 per cent. Industrial production, which according to the CBS slumped by 73 per cent, in fact dwindled by only 34 per cent. Even in the worst time, the dramatic period of 1944–1945 when the country was split by the Front into the liberated south and a still-occupied north-western part that was cut off from supplies for nine months, the economy did not collapse completely.55 Although employment and profitability grew to previously unseen levels before the end of 1940, directly after the Dutch capitulation production collapsed as a consequence of uncertainty and the scrapping of governmental orders.56

Production • 319 From the late summer of 1940, when business quickly recovered again, an increasing part of production was kept out of the books. Frozen prices, the prohibition of certain transactions, new taxes and mistrust between the Dutch business community and the German occupier—who was seen as the cause of all this bureaucratic misery—were reasons to sell more and more in black markets. The fact that regulation was considered a form of hostile interference, aiming at higher withdrawals, gave a moral justification to such clandestine activities. In the diary of a daughter of a black trader it says: ‘Illegal butchering, that is in fact sabotage. You are keeping meat out of the hands of the Wehrmacht’, but only a few lines below, when she becomes enthusiastic about the profits that were made, her real motivation became clear.57 Figure 1 shows that after the 1939 peak, the 1940 decline in industrial production was limited and in 1941 was more than completely compensated by clandestine production. Including illegal production, industry slightly declined in 1940 to peak in 1941 again, notwithstanding the fact that in the last months of that year Pleiger’s policy, demanding enormous coal deliveries from all over occupied Europe—in fact, an advance on Speer’s 1942 policy—had already resulted in a scarcity of coal in the occupied country. Dutch industrial production slowed down, and from then on until the liberation the discrepancy between legal and total production grew. After the war this did not immediately disappear. It was in fact not the military liberation, but only the economic deregulation and liberalization of the markets in the later 1940s that made black-marketeering less interesting.58

Figure 1 Dutch industrial production (in millions of 1938 guilders). Source: Hein A. M. Klemann, Nederland 1938–1948. Economie en samenleving in jaren van oorlog en bezetting (Amsterdam 2002).

320 • Occupied Economies In Figure 2 the same is done for agriculture. As a result of the cutting off of overseas imports and increased consumption by the army, the civil food consumption across Europe was under pressure, and everyone saw the food shortages as a threat, even if only a single product was in short supply. Black food markets therefore became common. In the Netherlands, long before the 1944–1945 famine, when almost everyone was still quite well fed, black markets absorbed 22–23 per cent of the gross agrarian production. As seeds were taken from the legal production, the clandestine share of the net production was even higher. This was not typically Dutch. All over Europe, farmers and peasants kept substantial parts of their production out of the books and, when asked why harvests were so much lower than before the occupation, pointed out that there was no rope, not enough fertilizer, no shoes or clogs, no flower pots, too few horses, no fuel for tractors and in some countries even a lack of labour. In a way, they were right. Such shortages made their work hard. The question should be, however, did it influence output?59 Although France was still overwhelmingly agrarian, it nonetheless imported 10 to 20 per cent of the food it needed before 1940. It seemed threatening, therefore, that during the war, according to official data, it wasn’t just imports that fell away, but the agrarian production declined as well, and by no less than 30 per cent. On top of that, the occupier took another 10 to 20 per cent of the French food production.60 These figures suggest that the diet of the average Frenchman fell by something like 50 per cent, which seems most unlikely. As all over Europe agrarian families hardly adapted their food consumption, and more than half of Frenchmen still lived in the

Figure 2 Dutch agrarian production (in millions of 1938 guilders). Source: Hein A. M. Klemann, Nederland 1938–1948. Economie en samenleving in jaren van oorlog en bezetting (Amsterdam 2002).

Production • 321 countryside, with these data it is unexplainable that there were any Parisians left to greet General Charles de Gaulle and his Forces Françaises Libres when they triumphantly returned to their capital city in 1944. The only explanation is that the production in fact never fell that dramatically and that the League of Nations was right: French clandestine agrarian production was 35 per cent or more of the total food production. Consequently, the French food production dwindled by only 5 per cent.61 If that is right and French food production hardly declined, the problems caused by diminishing imports and confiscations could have been solved by adapting to a more vegetarian diet, as was done everywhere in Europe. Agrarian production is, just like the production of other sectors, always measured in real money value, but a concentration of production on arable farming resulting in higher nutritional values will almost always cause a setback in real money values. When clandestine production really was about a third, it is interesting to look again at the reasons given for the reduction of the official production. When lack of tractor fuel is used as an explanation for the decline of food production, it should be kept in mind that less than 1 per cent of French farmers had a tractor. Lack of fertilizer was another reason given for lower production, but that explanation shouldn’t be taken too seriously since, although French agriculture was using fertilizers before the war, traditional ways of fertilizing with dung, chalk or scrapings from the woods were still common all over Europe, and in a country with many smallholders such as France were even rather general.62 The main explanation for the fall in the French agrarian output is lack of labour caused by the fact that in 1940 many French farmers and labourers defended their country. The Germans captured no fewer than 630,000 of them, who were sent to Germany as prisoners of war.63 After some releases, the reduction in farmhands was 400,000, or 6 per cent of all farm labour.64 This was dramatic, but was it enough to explain a decline in production of 30 per cent or reason enough to plant only 45 of the 50 million acres (18.2 of the 20.2 million hectares) available? It is more plausible that French farmers were using the fact that the use of land is hard to supervise without exact knowledge of local circumstances. By claiming that 10 per cent was fallow for lack of labour, they could keep a substantial part of their output out of the registered production without further questions being asked.65 Immediately after the Great Depression—which in France lasted until the late 1930s—there were still substantial numbers of hidden unemployed, especially in the countryside. During the occupation the traditional migration of youngsters to the cities—already shrunken during the 1930s—came to a halt.66 In the 1930s there were no jobs. Now there was hardly enough food in the urban centres. Young men and women stayed in their villages, while others even went back to these rural communities, if not because the Vichy regime, motivated by romantic ideas of a nation of small farmers, stimulated this,67 then because there, in the countryside, the food situation was much better than in urban France. On top of that the countryside provided a good hiding place for those evading the Arbeitseinsatz.68 Given these circumstances, it should have been possible to solve the

322 • Occupied Economies problem of the loss of 6 per cent of farm labour. In other words, although there is no doubt that a substantial number of farmers were taken prisoner or that this caused serious problems—if not practical, then at least emotional—there is no reason to think that this, together with some other shortages, can explain a decline of production by 30 per cent.69 Shortages were impractical, but there are no reasons to believe that they made production impossible. In the Netherlands, where before the hunger period even Berlin thought the rationing system was all but perfect, at least 25 per cent of the net food production was never accounted for. With that in mind, one can imagine what percentages were unregistered in less quiet and less well-organized occupied countries. Probably, of all German-controlled Europe, black markets were as small as in the Netherlands only in a few countries with high rations and very good organization—Germany, Denmark and the Protectorate of Bohemia and Moravia.70 Such limited black markets were more or less accepted as an outlet for the frustrations caused by overregulation, high taxation and low official prices. In 1942 even Hitler said that ‘professional black marketeers must be pursued and punished with the utmost rigour, but there is no need to stop trains, hold up motor-cars and badger people because they have bought a couple of eggs off the record. And the peasant who, after having fulfilled the obligations put on him, helps a friend out with a bit from his surplus, need not have the police put on his tracks.’71 Black markets were not limited to such grey activities, however, and in 1942 in Germany even death sentences were published for illegal slaughtering, hoarding and the like.72 According to the League of Nations, in France, Belgium, Poland and Italy— countries with small legal rations and a bureaucracy hardly capable of the job— agrarian clandestine production was much higher than the 20–25 per cent in the Netherlands. Thirty-five per cent or more was common, while John Gillingham thought it was even 50 per cent in Belgium.73 According to Madajczyk, in the Polish General Government 50 to 65 per cent of all the population had to survive on was clandestinely obtained. That this is quite well possible and no exaggeration also becomes clear from data on the Netherlands, where, from September 1944 on, the parts of the country that were still occupied and now isolated from the outside world were hit by a severe famine. Then, black-marketeering boomed, absorbing around 40 per cent of all food production in the country. It was only in September 1944 that the period of starvation began, to end by May 1945. Black markets were peaking, just in this limited period spread over two statistical years, and that only in the part of the country that was actually hit by famine. Consequently, there and then, at least 75 per cent of all food was clandestinely obtained. In Figure 3 the bottom dotted line is the Dutch national income as it was calculated by the CBS shortly after the war.74 The patterned middle line is a newly calculated production series,75 but clandestine production is included only in the solid line. From this it is clear that between 1938 and the wartime low in 1944,

Production • 323

Figure 3 Dutch GDP and national income in real prices (1938 = 100). Source: Hein A. M. Klemann, Nederland 1938–1948. Economie en samenleving in jaren van oorlog en bezetting (Amsterdam 2002).

production did not slump by 50 per cent, but legal production fell by little more than 25 per cent, while if an educated, and probably too low, guess of clandestine production is included, production decreased by only 15 per cent, and even that was only in the hunger years of 1944–1945, when from September to May urban Holland and Utrecht became isolated. Until then, the economic decline was less than 5 per cent compared with 1938 and 10 per cent compared with the 1941 alltime peak. In Figure 4, the solid line represents the newly calculated national income, with clandestine production included. The dashed line is the available national income after the occupier took what he thought was his. It shows that from 1943 on, although the decline in production was limited, the country had to survive on less than 50 per cent of what it was used to before May 1940. This was caused in the first place by German acquisitions that were only paid for by administrative and monetary tricks, not the result of a dramatically slumping production. When the same calculations are made with the CBS national income series—the thinner lines—the available national income (the thin dashed line) would have been only 17 per cent of the 1938 level in 1944, and already by 1943 have reached a level of only 33 per cent of 1938. As most of the Dutch survived the war—the population actually grew—this seems impossible. Although an economic setback is undeniable from 1942 on, it is clear that the poverty everyone felt resulted only to a very limited extent from a decline of production. Compared with 1938, total Dutch production (GDP) decreased by only 14 per cent at most and national income by 18 per cent. Consequently, even in 1944 and 1945 national income was about 80 per cent of its pre-war level. From

324 • Occupied Economies

Figure 4 Dutch real and available real national income (1938 = 100). Source: Hein A. M. Klemann, Nederland 1938–1948. Economie en samenleving in jaren van oorlog en bezetting (Amsterdam 2002).

1942 on, however, at least 40 per cent of the production was taken by the occupier. In the Netherlands, German extractions, not slumping production, caused the wartime poverty everybody remembered.76 The fact that the same story applies in essence to France, for instance, becomes clear from the fact that the occupier took 35.1 billion RM (702 billion francs) worth of goods and services out of that country. The 1938 French GDP was about 395 billion francs,77 but according to the Centre d’études prospectives et d’informations internationales (CEPII), between 1938 and 1943 production slumped by 51 per cent, while Angus Maddison thinks the trough was only reached in 1944 at a level of 50 per cent of that in 1938.78 In 1940 and 1941, France was hardly exploited in a regular way. The Wehrmacht did gather enormous sums from the French tribute but could not spend these, because French production dropped dramatically after it lost the 1940 campaign. Thus, as 1940 hardly counted as a year in which the French were exploited in the sense meant here, and the country was already liberated in 1944, most of the 702 billion francs were spent in 1941, 1942, 1943 and the first half of 1944. This reasoning leads to the conclusion that when the statistical series are correct, the French consumption level would have already fallen back to something like 20 per cent of the pre-war level by 1943. Although the French population decreased slightly between 1938 and 1945 with an annual average of 0.8 per cent,79 with these data it is impossible to explain how, nonetheless, so many survived.80 Paul Sanders as well as Fabrice Grenard think, however, that in France black markets developed from the start of the occupation, and it seems plausible that this is the crux of the problem here as well. Only an educated guess of the clandestine production, making it clear that production actually was much higher than the production registered in official

Production • 325 statistics, can explain that the occupier could take substantial quantities of agricultural and industrial products, while the population, although enduring all kinds of hardships, managed to survive.

Production Statistics Table 15.2 gives indices of the gross domestic production of a number of occupied countries in 1990 Geary-Khamis dollars as published by Angus Maddison.81 These series differ in some aspects from other macroeconomic series, but are best accepted as far as statistics on wartime European history are accepted at all.82 The differences between the countries in these series are enormous. According to Maddison, the French production slumped from the start of the occupation to just 50 per cent of the 1938 level in 1944, while post-war recovery was slow. In Denmark not only was the setback smaller, 19 per cent at most, but recovery had already started in 1942 and by 1944 production was almost at pre-war levels again. Another extreme was Greece, the only non-Western European occupied country with macroeconomic statistics for those years. Here, by 1945, production slumped to little more than a third of its pre-war level. Black market production was higher during the more dramatic wartime circumstances. A collapsing economy or a severe nutritional situation such as occurred, for instance, in Greece, the occupied Soviet territories or Poland caused a relatively high level of clandestine production.83 Until 1944, however, the legal availability of

Table 15.2.

GDP, Clandestine Production not Included, 1938–1948 (1938 = 100) Western Europe

South Eastern Europe

Belgium

Denmark

France

Netherlands

Norway

Greece

Yugoslavia

1938

100

100

100

100

100

100

100

1939

107

105

107

107

107

100

106

1940

94

90

88

94

98

86

—

1941

89

81

70

89

100

73

—

1942

81

83

63

81

96

61

—

1943

80

92

60

79

94

51

—

1944

84

102

50

53

89

43

—

1945

89

94

55

55

100

36

—

1946

95

109

83

92

111

54

—

1947

100

115

90

107

124

70

94

1948

106

118

96

118

134

74

112

Source: Angus Maddison, The World Economy: Historical Statistics (Paris 2003) 48–54.

326 • Occupied Economies essentials in Denmark and the Netherlands was sufficiently good that, although there were black markets, their main function was to adapt rations to the taste of the consumers and to provide producers with an opportunity to vent their frustrations on the overregulation of the markets and low official prices.84 As a result, the decline in production given in official macroeconomic statistics is not only exaggerated, but the exaggeration increases the more dramatic the economic development. As it is the intention here to get an impression of the true production in occupied Europe, an indication of clandestine production is not only necessary because the existing macroeconomic series overestimate wartime economic setbacks, but also because these series overrate the differences between the diverse countries. Black market estimates should, however, be cautious approximations as debunking should not degenerate into trivializing wartime hardships. Therefore, Dutch developments are a good starting point, as in that country the shadow economy was relatively small. With Dutch black markets as a basis, the bias will be low, in some countries probably too low. At the end of the occupation, the Dutch situation became extreme, however, and in 1944–1945 tens of thousands of people starved to death. Therefore, these estimates also provide an indication of the consequences of more extreme developments. The first thing that becomes clear from the Dutch shadow economy is that clandestine production differed per sector. The share of agriculture was especially important as in Dutch agriculture illegal production was already 22–23 per cent (net 25 per cent) even in relatively normal years such as 1942 and 1943, while it was only 15 per cent in industry, and just 10 per cent in trade, transport, and so on.85 Consequently, to obtain a Europe-wide impression of total production by using Dutch data on clandestine production—and thus to get an instrument to complete the statistical data of Maddison with educated guesses of the clandestine production—the shares of each sector in the economy of every occupied country are important indicators. In industry, black production was higher where there was less control of input. From 1942 on, when many young men were in hiding from the German forced labour policy, and military destruction as a result of bombardment provided second-hand building materials, clandestine construction grew. The same is true for other industries: if there was clandestine labour and unregistered or locally produced raw materials, the shadow production grew far beyond the previously mentioned 15 per cent. In addition, black market production is easier in small-scale than in large-scale industries. In black markets, foodstuffs were decisive. On the one hand, there was no production as difficult to control as agrarian production, as the relation between input and output is most uncertain, while, on the other hand, almost all consumers were interested in higher shares in the available food supply, or at least in extras of some specific foodstuffs. As long as the diet was adequate from a nutritional point of view, and the only food problem was that the relatively vegetarian diet was seen as dull and boring, many looked to black markets for more butter, cheese, eggs and meat, while when rations were lean or outright inadequate, demand was concentrated on potatoes, corn or even sugar beets. At any time, cigarettes, alcohol, coffee, tea and other luxury foodstuffs were in high

Production • 327 demand, but as the official rations in some countries were too middle-class for the tastes of the working-class consumers, selling butter to get lard or margarine, or vegetables to get more potatoes, was also quite common.86 Whether this was clandestine differed from country to country. However, demand on illegal food markets was substantial from the moment a product was first rationed. Of all the occupied countries, only in Denmark, the Protectorate and the Netherlands could clandestine food production be kept limited, as in these countries farmers and peasants were willing to participate in the governmental distribution policy because they believed that the organizers would keep an eye on their interests, while, on the other hand, pressure on markets was limited as the nutritional problems were kept in hand. In such circumstances, it was possible to keep the clandestine food production between 20 and 25 per cent. In the Netherlands, where agriculture accounted for 16 per cent of the GDP (Table 15.3), or in Denmark where this was 19 per cent, a black food market of that size meant that the official GDP series should be raised by 4–5 per cent. In Eastern Europe or the Balkans, where agriculture provided 50 per cent or more of the GDP, even when black food production would have been held within such limits, it meant a 10–12 per cent rise of the GDP, while in Poland, with an agrarian share of 39 per cent of the GDP, this would have been 8–10 per cent. In the Polish General Government, however, 50–65 per cent of all food rather than 20–25 per cent was obtained in black markets.87 Thus, if there had been any official macroeconomic series, these would have to be raised by some 20 to 25 per cent just to account for clandestine agrarian production. In the occupied Soviet territories where, as elsewhere in the East, the overwhelming majority of the people lived in the countryside and worked in agriculture, the situation was comparable. An enormous part of the economy was agrarian. As a consequence, the unregistered black corners were substantial. For that reason alone, clandestine activities were much more important than in the western parts of Europe. Table 15.3 provides an indication of some important factors influencing the size of the shadow economy for a number of occupied countries. Of major importance is the share of each sector in the GDP. Another factor was the extent to which governmental regulation was accepted as a legitimate solution to wartime problems. When the regulation was seen as just another German attempt to increase its withdrawals at the expense of the occupied country, clandestine production was much higher than when it was seen as a legitimate governmental attempt to spread shortages evenly across the population. The answer to the problem of how the rationing policy was experienced was greatly influenced by the question of whether the authorities managed to provide the population with reasonable rations. In the Protectorate, Denmark and the Netherlands, rations were at least acceptable most of the time. In these countries, it was perfectly possible to survive on the official rations alone, with only very limited addition of clandestine extras. Nevertheless, even in these countries, in a normal year from a distribution point of view, clandestine agrarian production was 20–25 per cent. In countries such as those in Eastern and South Eastern Europe, France and Belgium,88 where the public saw market regulation as a German instrument of

Table 15.3.

Some Characteristics of the Occupation Period Influencing the Size of the Shadow Economy in Diverse German-occupied European countries, 1939–1945 Belgium

Denmark

France

Netherlands

Norway

Greece

Yugoslavia

Poland

Czechoslovakia

Share of each sector in the 1938 GDP (%) Agriculture

8

19

20

16

12

55

51

39

24

Industry

39

32

39

28

59

9

13

32

35

Other sectors

53

50

41

56

29

36

36

29

41

Occupation period Occupied

June 1940

April 1940

June 1940

May 1940

April 1940

April 1941

April 1941

Sept. 1939

March 1939

Liberated

Sept. 1944

May 1945

Aug. 1944

May 1945

May 1945

Oct. 1944

April 1945

Early 1945

May 1945

—

—

1941–1945

1939–1945

—

1941–1944

Regularly

Not accepted

Not accepted

Other indications Serious shortages Famine Market regulation

1940–1942 — Not accepted

— — Accepted

In towns — Not accepted

From Sept. 1944 1944–1945 Accepted

Accepted

— Not accepted

— — Accepted

Note: Share of sectors in the GDP: Denmark, 1939; Czechoslovakia, 1937. Source: Angus Maddison, The World Economy: Historical Statistics (Paris 2003); CEPII, Séries longues macro-économiques, Comptes nationaux en base 1938, http://www.cepii.fr/francgraph/bdd/villa/mode.htm; Frederic L. Pryor, Zora P. Pryor, Milos Stadnik and George J. Staller, ‘Czechoslovak Aggregate Production in the Interwar Period’, Review of Income and Wealth, 17 (1971) 35–59; Ivan T. Berend, ‘The Failure of Economic Nationalism. Central and Eastern Europe before World War II’, Revue économique, 51 (2000) 315–322; Socrates Petmezas, ‘Agriculture and Economic Growth in Greece, 1870–1973’, paper presented at the IEHC 2006 Helsinki conference, Session 60, paper 4, http://www.helsinki.fi/iehc2006/papers2/Petmezas.pdf; Ingrid Henriksen, ‘Agriculture in Denmark, 1870–1939. From Asset to Liability?’ paper presented at the IEHC 2006 Helsinki conference, session 60, paper 3, http://www.helsinki.fi/iehc2006/papers2/Henriksen.pdf; Ivo Vinski, ‘The Distribution of Yugoslavia’s National Income by Social Classes in 1938’, http://www.roiw.org/1967/259.pdf; Hein A. M. Klemann, Nederland 1938–1948. Economie en samenleving in jaren van oorlog en bezetting (Amsterdam 2002).

Production • 329 exploitation, black production in normal years was 35 per cent in agriculture, 20 per cent in industry and at least 12–15 per cent in other sectors. During the Dutch famine of 1944–1945, throughout the economy the clandestine production peaked, and it even rose to no less than 75 per cent in agriculture. A final indication of the size of the shadow economy, therefore, is scarcity. Consequently, in Table 15.3, periods of severe shortages—when black agrarian production was around 50 per cent—and true famines—when clandestine food production was up to 75 per cent—are indicated as well. If one presumes that the Dutch case provides reasonable indications of the relation between circumstances and black market production, and that it takes one full year of occupation for clandestine markets to develop, one can make an educated guess of black market production, as presented in Table 15.4. It shows that the shadow economy was important all across Europe and that in a number of countries—including France, the most important occupied economy—in the most dramatic years, official statistics underestimated production by up to 25 per cent or more. In 1942 and 1943, when according to these calculations, French clandestine production was 25 per cent, it was only half that level in Denmark and Norway, far below the French or even the Dutch or Belgian size, but in Greece, where the occupation only started in 1941 and black markets developed later, according to this educated guess, clandestine production had already reached a level of 39 per cent. In the Eastern European countries without any wartime macroeconomic series, such as Poland and Yugoslavia, clandestine production was comparable with that of Greece, while the level in Czechoslovakia was—as was the level of exploitation—comparable to the less severe developments in the Western occupied countries (Table 15.4). In other words, where the economy was severely hit by wartime events—for example in isolated or war-stricken areas, countries neglected by the Germans as their economies were not interesting from the Nazi perspective and countries maltreated for racist reasons—the shadow economy was most important. There, the decline in macroeconomic series without corrections for black markets was—as far as known—most severe, but there these official series also greatly overestimated the wartime slump. Table 15.2 shows the real GDP according to official statistics for a number of countries. In Table 15.5 these series are corrected for the estimated clandestine production as shown in Table 15.4. The overall impression is that as long as the shadow economy is not taken into account, production in occupied Europe declined from the start of the occupation until the end, to recover only after 1945. Nevertheless, in most Western European countries, the percentages of decline of official production compared with 1938 were less than 20 per cent, but when the clandestine production is included, 5–10 per cent is more general. In other words, the impact of the occupation on the economic capacity and actual production was limited in the West. The setback was worse only in France, while in the Netherlands, during the Hunger Winter of 1944–1945, a more serious setback is seen. The French case is most interesting as it was a consequence of the fact that, from the second half of 1941 on, the occupier had severe problems in exploiting this economy. Lack of fuels, raw materials and transport facilities

330 • Occupied Economies Table 15.4. Educated Guesses of the Clandestine Production as a Percentage of the Total Production, 1939–1948

France

Belgium

Netherlands

Denmark

Norway

Greece

Yugoslavia

Poland

Czechoslovakia

1939

0

0

0

0

0

0

1940

11

8

1

1

1

0

0

7

1

0

24

8

1941

19

17

7

8

8

1942

25

19

11

12

13

10

16

24

13

23

34

39

1943

26

16

11

12

13

13

36

38

37

13

1944

17

13

18

1945

11

12

17

11

12

39

38

39

13

9

12

27

27

22

10

1946

9

9

1947

7

7

8

7

11

15

15

13

7

7

3

9

10

10

11

1948

3

3

7

5

1

7

6

6

5

3

Source: CEPII, Séries longues macro-économiques, Comptes nationaux en base 1938, http://www.cepii. fr/francgraph/bdd/villa/mode.htm; Frederic L. Pryor, Zora P. Pryor, Milos Stadnik and George J. Staller, ‘Czechoslovak Aggregate Production in the Interwar Period’, Review of Income and Wealth, 17 (1971) 35– 59; Ivan T. Berend, ‘The Failure of Economic Nationalism. Central and Eastern Europe before World War II’, Revue économique, 51 (2000) 315–322; Socrates Petmezas, ‘Agriculture and Economic Growth in Greece, 1870–1973’, paper presented at the IEHC 2006 Helsinki conference, Session 60, paper 4, http://www. helsinki.fi/iehc2006/papers2/Petmezas.pdf; Ingrid Henriksen, ‘Agriculture in Denmark, 1870–1939. From Asset to Liability?’ paper presented at the IEHC 2006 Helsinki conference, session 60, paper 3, http://www. helsinki.fi/iehc2006/papers2/Henriksen.pdf; Ivo Vinski, ‘The Distribution of Yugoslavia’s National Income by Social Classes in 1938’, http://www.roiw.org/1967/259.pdf; Hein A. M. Klemann, Nederland 1938–1948. Economie en samenleving in jaren van oorlog en bezetting (Amsterdam 2002); own calculations.

(see Chapter 9) caused these, resulting in a relatively mild exploitation of the French production capacity. As the ongoing struggle for power in Berlin made it impossible to send products scarce in Germany itself to an occupied country, the French economy could not be used by the occupier as the other economies of this part of Europe were. The French share in the population of occupied Western Europe was 64 per cent, and in the 1938 GDP 61 per cent, but as a result of a lack of coal and transport facilities, its contribution to the German war economy was only 53 per cent. This was compensated for—if Berlin could not take the output of an economy, it took the factors of production—by a share of 71 per cent of the labour sent to Germany from Western Europe.89 On top of that the French had to send more food than they could spare. While in the agricultural year of 1941–1942, before the disappointing French contribution had become clear, 15 per cent of the French meat production was sent to Germany, this was increased to 23 per cent the following year once the shortfall became apparent. The figures for cereals were 12 and 17 per cent.90 As a result, France was exploited more destructively than any other country in Western Europe.

Production • 331 Table 15.5.

GDP, Clandestine Production Included, 1938–1948 (1938 = 100) Belgium

Denmark

France

Netherlands

Norway

Greece

1938

100

100

100

100

100

100

1939

107

105

107

107

107

100

1940

103

91

99

106

99

86

1941

107

88

86

107

109

82

1942

101

94

84

98

111

80

1943

95

105

80

96

109

80

1944

97

114

66

87

102

71

1945

101

104

65

86

114

50

1946

104

117

89

104

124

64

1947

108

119

93

117

136

78

1948

110

120

98

128

143

79

Source: Angus Maddison, The World Economy: Historical Statistics (Paris 2003) 48–54; CEPII, Séries longues macro-économiques, Comptes nationaux en base 1938, http://www.cepii.fr/francgraph/bdd/ villa/mode.htm; Frederic L. Pryor, Zora P. Pryor, Milos Stadnik and George J. Staller, ‘Czechoslovak Aggregate Production in the Interwar Period’, Review of Income and Wealth, 17 (1971) 35–59; Ivan T. Berend, ‘The Failure of Economic Nationalism. Central and Eastern Europe before World War II’, Revue économique, 51 (2000) 315–322; Socrates Petmezas, ‘Agriculture and Economic Growth in Greece, 1870–1973’, paper presented at IEHC 2006 Helsinki, Session 60, paper 4, http://www.helsinki.fi/ iehc2006/papers2/Petmezas.pdf; Ingrid Henriksen, ‘Agriculture in Denmark, 1870–1939. From Asset to Liability?’ paper presented at IEHC 2006 Helsinki, session 60, paper 3, http://www.helsinki.fi/iehc2006/ papers2/Henriksen.pdf; Ivo Vinski, ‘The Distribution of Yugoslavia’s National Income by Social Classes in 1938’, http://www.roiw.org/1967/259.pdf; Hein A. M. Klemann, Nederland 1938–1948. Economie en samenleving in jaren van oorlog en bezetting (Amsterdam 2002); own calculations.

In 1942 Berlin wanted France to produce at full speed, but as the raw materials for this were also badly needed in Germany itself, Pleiger’s policy to get as much coal as possible from occupied Europe weakened this pursuit. Although Berlin had the instruments to limit the use of raw materials and fuels within each occupied country from 1942 on, it never organized a regulated, truly Europe-wide raw material economy and did not manage to order deliveries from one occupied country to another. Raw materials leaving an occupied country went to Germany. This was one of the main problems for the French production. Figure 5 shows that in 1942, of all the coal produced in occupied Western Europe, 16 per cent was produced in the Netherlands, making this country almost self-supporting. Here, German withdrawals of coal became a problem in 1942, but as these proved to be against the German interests, it was possible to limit these deliveries in later years. France, however, with almost five times the Dutch population and more than four times the Dutch 1938 GDP, produced only slightly more coal, while the planned coal deliveries from Belgium, a country with a smaller population and GDP than the Netherlands,

332 • Occupied Economies producing more than 60 per cent of all the coal of occupied Western Europe, never came through.91 The more rational economic planners in Berlin were powerful enough to prevent deliveries from the occupied countries when these were not in the German interests, but not powerful enough to organize deliveries to occupied countries when products scarce in Germany were needed there. That it was not just the policies of Speer and Pleiger that undermined French production is clear from the fact that by June 1941, far before these introduced their policy, full-scale production was already impossible for lack of coal. Already at that time factories and building activities, even those essential for the German warfare, were temporarily closed.92 On top of these problems, the 1944 Allied invasion in Normandy and the Battle of France resulted in serious military damage and a further collapse of the French economy. This economy was so severely damaged that post-war recovery, although spectacular according to all available data, did not result in a rapid and complete recovery as in all other Western European countries. While in all other Western European countries in the year after liberation, the economy had reached its pre-war production level again, in France, this was accomplished only in 1949. In the model, clandestine markets and illegal production are linked in the first place with the German political occupation and not with wartime economic regulation and the suppression of free markets. It is therefore presumed that these black economic activities disappeared again after the political liberation. Possibly, this results in a distortion in France. Nevertheless, it seems clear that the French economic setback was worse than the setbacks elsewhere in Western Europe. To make sure that no mistakes are made for this most important occupied economy, the French series are recalculated by using the Séries longues macroéconomiques of the CEPII as well as the series of Robert J. Barro and José F. Ursúa. None of these calculations, however, although giving slightly higher figures than Maddison’s series, results in a different overall impression.93 Because of German

Figure 5 Production of coal in German-controlled Western Europe in 1942. Source: RGVA, Collection 1458, Inventory 3, File 77.

Production • 333 confiscations and an inadequate supply of raw materials (Chapter 9),94 the French economy slumped more than any other Western European economy. It proved a bad starting point for post-war recovery, and this was even worsened by battle damage caused by the military campaign following the invasion by the Western Allies in Normandy.95 From the educated guesses of the clandestine production in Table 15.4, it becomes plain again that the Czech Protectorate was exploited more like a Western European country than like an Eastern one. Keeping the Czech heavy industry going was important. Therefore, the presumed inferior population was fed better than the people in any other occupied country; its society was kept well organized. In France, where according to Nazi standards, the population was relatively high-ranked, but where it proved almost impossible to get the economy going, food was taken, notwithstanding relatively low rations, and the economy was exploited in a relatively destructive way. Consequently, food rations were low, clandestine markets high and resistance grew in scale as well as in violence. On top of that, the French recovery was dramatically slow for Western standards, and according to the official data even the 51 per cent growth of 1946 could not raise production to pre-war levels again (Table 15.2). This enormous growth percentage is another indication that in this country wartime clandestine production was high and the estimates calculated here too low, as even when corrected for black market production, according to the data in Table 15.5, French production grew by an unbelievable 37 per cent in 1946. Even this did not result in a complete recovery, however. The French economy was less stimulated by German orders than the Belgian, Dutch or Norwegian economy. In the Scandinavian occupied countries—Denmark and Norway—where the 1942 Arbeitseinsatz policy was never implemented, the economic setback was small anyway. Until 1942 Berlin seemed little interested in Denmark, and in 1940 and 1941 a setback was undeniable. In 1942, however, Berlin became interested in the Danish food output, and from 1943 on Danish production exceeded all pre-war levels (Table 15.5). In this country, extremely important for its high-quality food production, recovery started at the same time as the German forced labour programme began to undercut production in most other occupied countries in the western part of the Continent. By 1942, the insatiable German need for foodstuffs had become more pressing than ever, causing increased demand for Danish export products such as butter, cheese, pork, bacon and lard. From the new data it also becomes clear that the German orders to Norway to build gigantic fortifications along the coast kept the production of this smallest occupied economy in the West on such a level that there was probably hardly any economic setback (Table 15.5). In 1940, after the war appeared lost, production decreased slightly, to recover again from the end of 1940 on. Although falling a little again in 1944 and 1945, after 1940 it never decreased below the 1938 level. The situation in Belgium and the Netherlands was more or less the same, apart from the fact that from 1942 on these countries became victims of the destructive German forced

334 • Occupied Economies labour policy. Nevertheless, only the Dutch were severely confronted with wartime realities, and then only during the nine months’ Hunger Winter. German exploitation kept the economies of Western Europe going, just as, according to all indications, it did the economy of the Czech Protectorate. In these parts of Europe, France was the only exception. In all occupied Western European countries the economies were incorporated into the German war economy with negative and positive consequences. As up to 50 per cent of the production of these countries was taken by the occupier without any real payments, the fact that production was going on at a level above or only slightly below its pre-war level did not mean that no impoverishment was felt. Production was kept going, however, keeping the economies in a relatively good shape. After these countries were liberated, it made a quick post-war recovery possible. Only the financial problems caused by the occupation and protectionism partly resulting from these financial and monetary problems hindered this recovery. Here, American aid would bring a solution. In France the situation was worse, but the situation was really devastating only in the sole non-Western European country for which there are data—Greece. It was only German demand that kept the economies of occupied Europe going. There were hardly any fuels, labour or raw materials available for a spontaneous economic recovery, especially from 1942 on. The setback was therefore most destructive in the parts of Europe where Berlin was less interested in local production or where the economy was difficult to exploit. For that reason, the Greek macroeconomic setback was incomparably worse than in any Western European country, although the occupation there started later. Nevertheless, as Tables 15.3 and 15.4 make clear, although black markets were found all over occupied Europe, these were more important in countries and periods where and when the economic setback was worse. Therefore, in Table 15.5, the differences in the development of the GDP— clandestine production included—are dramatic but smaller than in Table 15.2. While between 1938 and 1943 the registered French production decreased by 50 per cent, in Greece, where the occupation started a year later and went on until 1945, the overall decline of registered production was almost two-thirds. In this maltreated country, the economy simply seemed to collapse. Even though clandestine production was sizeable, this changes this impression only to a very limited extent. The Greek economy slumped dramatically. When corrected for the shadow economy, the French economic decline in 1944, the worst in Western Europe, was 35 per cent relative to 1938, while the Greek decline was 50 per cent. As Greece also suffered from hyperinflation, corruption, unscrupulous Italian and German confiscations and division into three separate occupation zones, the people were immeasurably worse off than the population of any Western European country. Production series are not available for any other countries of Eastern Europe or the Balkans. All that is known is that there are good reasons to believe that in these countries, the economic setback was much worse and the clandestine production much higher than anywhere in Western Europe, and better comparable to the situation in Greece.

Production • 335 Table 15.4 shows that it seems plausible that in no Western European country was the shadow economy at a level comparable to that of Poland, Yugoslavia or Greece, not even in the Netherlands during the Hunger Winter. The Germans stimulated the economic activity in the western part of the Continent as they were interested in the products of these countries, whereas in Eastern and South Eastern Europe they were interested only in food and some raw materials. Further, they wanted to obtain labour from these countries, at least from 1942 onwards. Notwithstanding this, even the mineral production in Greece, which was highly important to Germany’s war economy, was adversely affected by a lack of machinery and construction tools, electric wiring and welding solder.96 Just as in France, the fact that Berlin was interested in the production of an occupied country didn’t necessarily result in any supplies to keep it going. Even in the Speer years, there was never a really efficient Europe-wide economy, mainly because the ongoing struggles within the German leadership made this impossible. Just as some Germans thought it better to get forced labourers from occupied Europe rather than send their own women to the factories, so delivering raw materials or fuels in short supply from one occupied country to another, or from Germany itself, was complicated and resulted in fierce opposition. As a result, in the last two years of the occupation, lack of liquid assets, raw materials, labour and transport facilities negatively influenced the continuation of production, especially in the eastern parts of the Continent. There, especially during the initial period, destruction had been extremely severe. At least in Poland and the occupied Soviet territories, this was a consequence not only of massive military operations, but also of plans to get rid of the people living there—the so-called useless eaters—and to destroy the economy of these countries. Nonetheless, even in these countries production went on, as is clear from the fact that, notwithstanding the Hunger Plan and extremely low food rations, even in these parts of Europe most people survived. In some industries important for the Germans, production even flourished. To understand what happened there, the distinction made in the introduction to this chapter between a war economy and a warfare economy is essential.

Production in Eastern and South Eastern Europe German planning for Lebensraum in the East envisaged turning the occupied Soviet territories into a de-industrialized agrarian periphery, producing only some raw materials. This aim was entirely forestalled by the Soviet evacuation of industrial plants and by the demolition carried out by the withdrawing Red Army, while military destruction further reduced the productive capacity of these regions. In purely numerical terms, the sum of plants removed from occupied Soviet territory to parts of the country east of the Urals, and thus out of the grip of the Germans, was hardly impressive: of the 1,523 plants evacuated intact in 1941, only 109 came from Belorussia

336 • Occupied Economies and 283 from the Ukraine, while the industrial regions of Moscow and Leningrad, which were never entirely occupied, lost 590 plants between them.97 Evacuation represented only a fraction of the damage sustained, however. While evacuation required planning and coordination, demolition was easy. Initially, it was destruction, therefore, that wrecked the potential of the overrun Soviet territory, but even before that, many towns and cities were simply levelled by the violence of modern warfare. In the first days of war, the centre of Minsk was so completely destroyed that some observers doubted whether the city would ever again take up its role as an administrative and economic centre. Yet Minsk was not the only city assaulted. By early July, Orsha and Smolensk were bombed repeatedly, just as Baranovichi, Mogilev and Vitebsk were. A smaller town, Beshenkovichi, suffered up to 80 per cent destruction, and ground combat then finished off what the Luftwaffe had begun. Battle damage alone presented the occupier with significant problems. German staff surveying the results of war damage, evacuation and the Soviet scorched-earth policy were unanimous in their impression of a systematic devastation. A report from the Vitebsk area ran: ‘As the Liaison Officer of the 9th Army reported, practically the entire industry of the region is destroyed’.98 In Vitebsk itself—a city of 170,000 inhabitants— all industry was ruined, while important textile factories in Vyazma, Smolensk and Orsha were stripped bare of machine tools. Other plants, such as the paper factory in Borisov, would require three to four months to be restored to production. Further eastwards, destruction became progressively more severe as the demolition teams of the Red Army had had more time to do their sad job. The relief among German officials when they got hold of the textile centre of Klintsy, which was more or less intact, was evident: ‘an oasis in the barren district. Hardly any destruction. 80 per cent of the enterprises are in use’.99 Further eastwards, in Russia, destruction resumed. In Bryansk and the neighbouring Ordzhonkidzegrad, enormous plants manufacturing guns and locomotives were evacuated in good time together with a workforce of 30,000 people and 300,000 tons of raw materials, while a gigantic machine tool factory in Orel was found to be empty as well. Consequently, in these territories, the occupier never managed to restart industrial production on a pre-war scale. Only the buildings got a second life, often as prisoner-of-war or civilian internment camps.100 To finish the job, the German occupier initially destroyed much of what was left. Even the populations of the towns behind the front line were reduced. As far as this had not already been achieved by the Soviet evacuation of personnel, this was done by outright famine across the towns of both central and southern Russia as well as in the countryside in the northern regions. In line with Hitler’s idea to create living space by eliminating the local economy and substantial parts of the population, destruction and starvation were everywhere. In retrospect, it is therefore remarkable that it was possible nonetheless to restore any production in the occupied Soviet territories at all. Locally, however, directly after the start of the occupation, economic officials as well as Wehrmacht officers demanded the reopening of workshops and small-scale industries to repair motor vehicles, build horse-drawn carts or repair shoes. Here, therefore, it is essential to use the concept of a war economy as opposed to that of a

Production • 337 warfare economy, an economy dedicated to the direct support of the army. A warfare economy immediately restarted production wherever German armed forces arrived. In 1957 Alexander Dallin already concluded that in the occupied Soviet territories ‘military utility won out on the spot, at the expense of Nazi theory’, meaning that Nazi racism demanding a war of destruction to create space for future Germanic settlements was ignored when the Wehrmacht needed local production.101 As a result, workshops that needed little capital or raw materials recovered, especially in wood processing, brick and peat work, pottery or leather processing. The Russian Kustar system—the peasant-workers engaged in cottage industry—was mobilized for the needs of the German army. Much of the demand for consumer goods for the army was satisfied from such cottage industries or from patchily repaired factories with relatively few workers. Of course, the German demand for the products of these small-scale industries as good as annihilated all industrial production for the civil population in the occupied Soviet Union and severely reduced this in occupied Poland. For instance, the German army in these territories obtained millions of pairs of shoes produced by local craftsmen, who therefore lacked the capacity to produce any shoes for the local people.102 Thus, local production adapted to the German needs. A macabre indication of this reorientation of erstwhile consumer production can be found in a 1942 entry in the war diary of a German military economic section in Eastern Belorussia—the Wirtschaftskommando Mogilev—when the diarist announced that ‘the musical instruments factory as of today will no longer make musical instruments. Henceforth it will produce coffins’; indeed a product the German army would need in these parts of Europe. A warfare economy sprang to life everywhere the German army arrived. Cars, tanks and wagons had to be repaired; horses needed new horseshoes; soldiers needed food, beer, boots, blankets, shoe repairs or leisure; and their officers required all the kinds of products any office in the world needs. Although in the long term, Berlin only wanted land for settlers in Eastern Europe, at least from 1942 on it became clear that it was necessary to harness all the resources of Europe, including those of the eastern parts of the Continent. From that year on, therefore, formal restrictions on certain types of production that had been implemented to make sure that the Soviet economy would not survive were one by one lifted and even something of a coherent plan emerged as a consensus across all German military staffs for the whole of Eastern Europe. This plan was primarily determined, on the one hand, by the availability of appropriate raw material as well as surviving fixed capital and, on the other, by the German demand—in other words, by the everyday needs of the armies fighting in those parts of Europe. It became the primary objective to fulfil the Truppenbedarf—the direct needs of the armed forces. After their first terrible Russian winter, German soldiers required textiles, leather goods, shoes, sleighs, clothing and so on, and, given their number, all was needed in large quantities. The entire gamut of military needs was therefore brought under a general Quartermaster Programme. This procurement programme henceforth brought the entire depth of occupied Eastern Europe, from the Warthegau—a part of pre-war Poland directly incorporated into the Reich—to Orel under one umbrella.

338 • Occupied Economies The symbol of this programme, as well as its flagship artefact, was the Panjewagen, the Eastern European horse-drawn cart, making it clear that this programme mainly exploited small-scale industries and that German expectations were not very high. However, Germany could no longer ignore any production capacity. The Polish General Government became the most productive region in producing Panjewagens; almost 70,000 of such horse-drawn carts were made there. Even with the loss of the easternmost territories by the beginning of 1944, the Quartermaster-General still planned on a monthly production of 10,000 wagons. Given the dependence of the Wehrmacht on horse-drawn transport, the production of altogether more than 200,000 Panjewagens represented a significant boost to the limited mobility of frontline divisions.103 The economic staffs of the German armed forces were right in supervising this production. Conditions in these parts of Europe were such that labour and raw materials could scarcely have been put to a better use. Exploiting these badly maltreated countries, whose productivity was low anyway, was hardly advantageous. On 12 November 1941, fighting in the Soviet Union seemed in a decisive phase. Only a month later it would become clear that the Wehrmacht could not destroy the USSR in one stroke. It was at this time that Hitler made his comments on the ‘highly civilized peoples who are reduced to breaking their stones for themselves’, on one side of the Continent, and the ‘stupid masses in the East’, that should do the humbler tasks.104 Thus the German dictator made it clear that it was his intention to use the people in these parts of Europe—not only in Poland and the parts of the Soviet Union he conquered, but also in the Balkans—as slave labourers. In other words, he wanted mainly factors of production from these countries, not output. Nonetheless, the direct needs of the armies had to be satisfied; this became of major influence. Although, apart from food and some raw materials, Hitler wanted in the first place factors of production, also from the Balkans, in 1941 some Germans had great plans with the newly occupied countries in these parts of Europe, which had already become closely linked to the German economy during the interwar years. After the 1941 fighting in the Balkans, the Reichsgruppe Industrie even established a committee for South Eastern Europe headed by Max Ilgner, a member of the board of IG-Farben and Vice-President of a lobby club for economic interests in South Eastern and Central Europe. His ideas on the industrialization of these regions, improving communication and transport networks to strengthen the backbone of these economies, thus creating a setting for an intensification of mining and agriculture— although contrary to those of the Führer—were shared by a number of major industrialists with ambitions in these parts of the Continent.105 Ulrich von Hassell, an opponent of the German regime, former Ambassador in Rome and at that moment member of the executive committee of the Central European Economic Congress, also held industrialization of the Balkans to be inevitable and defended the view that the Reich should try to direct this development.106 Because the position of Berlin was ambiguous at this time, Ilgner could present such ideas as Reich policy. In fact, the political elite of the Reich just wanted to import primary products from these

Production • 339 countries, but could not make that public out of fear of quarrels with their Italian ally. Consequently, Berlin officials allowed only investments directly reinforcing exports of foodstuffs and raw materials to Germany. Berlin opposed investments directed at a general improvement of the economies of South Eastern Europe. They feared that increased local production would result in higher local consumption instead of exports. Consequently, investments to improve the Hungarian oil industry were backed, as were attempts to adapt the food production in that country to the German needs. Plans for a general improvement of the Hungarian infrastructure were not seen as a direct German interest and were prevented—although Hungary was an ally, not an occupied country.107 The economies in dependent parts of Europe—occupied or not—were backed only in as far as their production had direct positive consequences for the German war production. If it did, or some industries did, some recovery was possible even in Poland and the USSR, especially from 1942 on, although according to the ideology the population was damned to do only the lowest jobs or perish. As long as fighting went on, German demand for almost everything grew, however, especially in these regions. In other words, when the economy demanded it and there were no Jews involved, even Nazis could set aside racism for pragmatic reasons. Apart from the army, the garrison requirements of the military organization behind the front—headquarters, hospitals, training bases, and so forth—created a sizeable demand for all kinds of products. The German army and administration needed consumer goods: from nails to tables, from chairs to glass windows, from wallpaper to bandages, and from uniforms and uniform parts to paint and soap. Further, local workshops and factories were ordered to repair vehicles, build fortifications, repair buildings or deliver shoes and uniform parts. Racism could not stop that. Alongside the production of army equipment, the warfare economy of occupied Eastern Europe was most strikingly characterized by the diversion of considerable resources towards what must be considered purely logistic ends. Contrary to the oft-repeated assertions, the Wehrmacht placed great emphasis on logistics. ‘Supply’—so ran the manual— ‘is a part of warfare.’ Virtually the entirety of industrial production outside the key strategic sectors was orientated towards transport facilities. In much of the occupied USSR, metalworkers no longer found themselves engaged in manufacturing, but were employed on maintenance. Repair workshops sprang up across the entire region. Railway repair facilities tended to exploit Soviet depots, so that the establishment of a number of large-scale repair workshops of German Rail did not detract from other production. The Werlin-Werke—set up as tank repair facilities in early 1942 by a director of Daimler-Benz—afterwards leapfrogged forward to support the advancing troops. The Zentralkraft Ost, an army maintenance organization for motor vehicles established in preparation for Operation Barbarossa, did the same.108 Of even more logistic importance were the railway and construction sectors. In the territory of the Heeresgruppe Mitte (Army Group Centre), the biggest occupied Soviet territories not yet under civil administration, the two largest single employers were the railways and the Organisation Todt—the Reich organization that built

340 • Occupied Economies fortifications and roads all over Europe. Their combined workforces outnumbered employment in industry by two to one. At the end of 1942, the military and civilian railway authorities in central Russia and Belorussia employed 118,000 personnel, of whom just over a quarter—almost 32,000—were German. A few months earlier, the Organisation Todt employed almost 15,000 Germans, 36,000 local civilians and 11,000 prisoners, while in July 1943 it disposed of 57,000 local civilians and prisoners. Direct employment of Soviet citizens by the Wehrmacht was no less extensive. In October 1942, 70,000 civilians worked inside the complex network of supply dumps, hospitals, barracks and repair services. Consequently, at this time, in these territories directly behind the front, only 65,000 out of 220,000 non-agricultural workers were employed in forestry or industry narrowly defined, while over 150,000 worked in lieu of German soldiers, replacing German workers sent out as replacements for captured or lost soldiers. Apart from a warfare economy dedicated to the direct support of the army, even in the East, a war economy centring on strategic resources was of some importance. First came agriculture, however. In the occupied Soviet territories, the Germans registered, up to the summer of 1942, 3,729 sovkhozy (state farms), around 43,000 kolkhozy (farming cooperatives) and approximately 1.8 million private plots. It meant that while the numbers of workers supporting the German warfare economy were counted in the hundreds of thousands, the number of farmers and peasants were counted in the millions. In the agricultural sphere, almost 125,000 German officials— including military personnel—were active, while 150 German firms with 850 managers coming from the Reich operated in this branch. One of the organizations active in it even had around 5,000 German employees, while 700,000 Russians were on its roll. Even that was, however, not very impressive when compared with the 2.6 million Soviet citizens—prisoners of war as well as civilians—working as forced labourers. The output of all this German activity to get the Soviet agriculture producing for them was, however, not actually as easy to obtain as the Germans had hoped. By the summer of 1942, Soviet partisans had already destroyed 15,000 mills and 127 food-processing plants, while they had also eliminated 17 per cent of all dairy farms. In Belorussia, where 80 per cent of all farms were located in the area of the Army Group Centre, 70 per cent of these could operate only partly or could not be used at all due to the resistance activity, with the result that a substantial, and for the German army vital, amount of foodstuffs was lost.109 In the winter of 1943 the partisans even killed forty-one German agrarian leaders—Landwirtschaftsführer.110 Nonetheless, the food production of these territories was essential for Germany. Contrary to the warfare economy and agriculture, which were essential from the start of the animosities and based on small-scale local companies, the war economy only became of importance from 1942 on. As in this part of the economy largescale production was central, Berlin was now confronted with the problem of how to exploit state-owned Soviet companies. All over Europe, exploiting big companies was a problem that could be solved in three ways (see Chapter 9): Germany itself could organize the production by taking over the ownership, or at least the control,

Production • 341 of private companies or by incorporating these into state-owned companies; it could try to persuade pre-war owners to produce for Germany; or it could buy all it needed on the free market.111 In August 1940, when Göring decided that looting, at least in occupied Western Europe, was no longer a solution, he expressed the opinion that the German victories should be used to get permanent economic control over these interesting economies by Verflechtung—interweaving—that is by purchasing shares in Western companies. Thus Germany would get a permanent dominant position.112 Taking over vital companies caused problems, however, with financial authorities in occupied Western Europe as well as with those companies that were already producing for the occupier most of the time. Göring’s policy never was successful, therefore, and as output increasingly became all that mattered for Berlin, the occupier accepted that these companies refused to accept forced takeovers or mergers with German competitors as long as they produced for the Reich. In the Soviet territories, including the parts of Poland and the Baltic States occupied by Moscow in 1939 or 1940, a planning system such as the one Speer tried to implement all over German-ruled Europe was already in place. Although there was some discussion in Berlin on reprivatization, it was never seriously considered on a large scale, not even in territories that had been incorporated into the USSR only in 1939 or 1940—the Baltic States and parts of pre-war Poland—although expropriations were very recent there.113 For instance specially founded German state companies took over enterprises recently expropriated by the Soviets in the Baltic States. Thus, the Landbewirtschaftungsgesellschafts-Ost—the Land Exploitation Company East—took control of the land expropriated by Moscow only a few months before, while food processing fell into the hands of the Zentralhandelsgesellschaft Ost—the Central Trading Company East. Smaller companies were managed by German Verwalter—administrators. It was only in 1943, when the occupier tried to regain some popularity in the Baltics by a propaganda campaign, that some minor privatizations took place in Lithuania, but even then only something like fifty farms returned to their pre-1940 owners.114 In other parts of the Soviet territories there were no previous owners available any more. Consequently, in all former Soviet territories, including those that had been occupied by the Red Army only in 1939 or 1940, manipulating owners to produce for Germany was no option. Here, the Reich had to organize production itself.115 As most territories in this part of Europe were occupied only in 1941 and incorporated into the German war economy only from 1942 on, the crisis managers of the Third Reich played a significant role in planning and exploitation from the start. Paul Pleiger, who was a key figure within the Four Year Plan and was already at this time anticipating the systematic exploitation that is identified in the literature with Albert Speer—was probably the most prominent of these.116 Until 1942, the economy of the Polish General Government was almost neglected. It was in fact nothing but a dumping place for people considered racially inferior who could not be usefully exploited as cheap labour anywhere in the Reich. Until then—that is during the first months of the war in the Soviet Union when Berlin was optimistic about a rapid victory—the

342 • Occupied Economies occupied Soviet territories were mainly used in the warfare economy, and little in the war economy. This was not only for ideological reasons, but also because most of the production capacity had been destroyed. Consequently, the system of Auftragsverlagerung—transference of orders—used in the West that resulted in more or less normal orders from German companies and organizations to local companies was never implemented in the eastern countries. Soviet resources were exploited only by the army demanding food and industrial products for direct use. Apart from agriculture, major parts of production were for that reason directed by uniformed military personnel. Only construction was organized under the umbrella of the Organisation Todt, utilizing state officials from the German motorways to supervise private contract firms. In a similar fashion, the state-owned eastern companies—Ostgesellschaften—issued concessions to private firms in trade, textiles and other branches to exploit Soviet state-run companies. According to Göring’s decree of July 1941 that established these Ostgesellschaften, these state-owned companies should organize the administration of important economic branches in occupied Soviet territories during the transition period by letting German firms operate as trustees.117 It was only from 1942 on, when Berlin tried to restart war production—rather than just warfare production—which in the USSR meant production of heavy industries and mining, that this mixture of state ownership under the aegis of the Reichswerke Hermann Göring and penetration of private capital was used to control the local production. As a consequence, the role of army and civil authorities in these countries, such as the Reich Commissioners of the Ukraine and Ostland, was reduced. Just as it had done with local German authorities in the West from the end of 1941, Berlin minimized the influence of local German administrators, the Army’s Economic Staff East, and the Reich Commissioners, but also of Alfred Rosenberg’s Reich Ministry for the Occupied Eastern Territories. Pleiger and Speer played key roles in this. In mining, the imperialistic Pleiger took over the authority to decide which German company got control as foster-parent—Paten—over former Soviet state companies, while Speer took over these decisions for armament production.118 This centralizing policy resulted, however, only partly from cooperative actions by these two potentates of the new planned German economy and resulted also, as was normal in the Reich, in a severe struggle of power between the two. Just as in 1940, when during the first months of the occupation Göring and his organization proved incapable of exploiting the newly won territories in the West, in the Soviet territories the organization jointly set up by Walther Funk’s Reich Ministry of Economics and Alfred Rosenberg’s Reich Ministry for the Occupied Eastern Territories demonstrated its incompetence in getting the resources that fell into German hands into production again. Reich Minister Speer decided therefore that private German companies and their organizations should be brought into action.119 Thus he created a conflict with Pleiger. This Director-General of the state-owned Reichswerke Hermann Göring led an enterprise with aggressive acquisition targets, and because he was, as Director of the Reichswerke, also in charge of the Berg- und Hüttenbaugesellschaft

Production • 343 Ost—the Mining and Steel Company East—which was a company founded to take over control of Soviet mines, blast furnaces and steel factories, he wanted the exploitation of important Soviet companies to be handed over to his German state companies.120 As Göring had official command of the exploitation of Soviet state property, he could smooth Pleiger’s path and thus fortify the position of the Reichswerke.121 Although Pleiger was, on paper, of a much lower rank, Speer met his match in him. Before going further, it should be emphasized that in these parts of Europe, especially in the occupied Soviet territories, military activity and guerrilla violence made normal business hypothetical anyway, while in Western and Central Europe, business went on during most of the occupation. Whereas normal society more or less survived in the West, here it was completely destroyed. Consequently, normal production too was impossible, and while most of the time in Western Europe investments were initiated by local companies taking advantage of new opportunities, in Eastern Europe only German capital could exploit such chances. As seen earlier, in these areas of Europe, as in the Balkans, apart from branches that produced for the army’s direct needs, the German policy focused on strategic branches that could only produce locally, especially on agriculture and extracting industries. Industrial investments in Poland and former Soviet territories therefore were concentrated in mining and heavy industry. The fact that the Reichswerke became so important resulted not only from Göring’s and Pleiger’s political skills, but also from the fact that private companies had little desire to invest to exploit companies in the conquered Soviet territory as long as the war in this part of Europe was not won. When Speer wanted to push private enterprise, he was not so much defending private interests as fighting his own private war with Göring. In the first place, Speer wanted to reduce the undermining conflicts between private heavy industry and Göring’s state conglomerates. It would be 1943 before the resulting struggle between these Nazi leaders ended in a compromise. Then Pleiger—Göring’s man—became Plenipotentiary for the Eastern economy, but in a subordinated position to Speer’s ministry.122 By then it was already too late. The advance of the Red Army prevented Pleiger from getting any authority. As seen earlier in the part on exploitation, the production from Soviet heavy industry was of minor importance. According to Table 15.6, in all occupied Soviet territories including the Baltic States, only 75,000 to 80,000 workers, from a total population of somewhere between 62 and 87 million, were active in such branches, many of them in companies that were still under construction or repair. According to the numbers of workers, the extraction industries were of even less importance (Table 15.7). Only 20,000 to 25,000 people in all of the occupied Soviet territories were working in such branches. As the German economic policy in the USSR focussed on strategic branches that could only produce locally, such as agriculture and the extracting industries, it is hardly amazing that almost all they obtained was food (Plate 11). Nevertheless, industrial investments in Poland and the former Soviet territories were concentrated in mining and heavy industries. As these territories were not definitively secured, most such investments were done by state-owned companies.123

Table 15.6.

Heavy Industry (Arms and Metals) in the Occupied Soviet Territories in 1942 Location

Name of the enterprise or concern

Production in 1942

No. of staff 11,870

1

Mariupol

Iljich factory

Munitions including ammunition

2

Kamenskoye

Carriage factory Pravda

Locomotives and carriages Construction of new freight cars

3

Dunamunde

Shipyard “Bolderaa” of the Riga carriage factory Vairogs

Barges, ships and ice-breakers

148

4

Riga

Muhlgraben shipyard

Schiffe / ships

330

5

Davidgrodek

Shipyard Davidgrodak

Wooden coasters

170

6

Dombrovitsa

Shipyard for wooden ships

Barges

170

7

Gorodishche

Shipyard for wooden ships

Barges

170

8

Petrikov

Shipyard for wooden ships

Tow-boats, tugboats

170

9

Pinsk

State shipyard

Barges and wooden ships

10

Comel

Shipyard Comel

Barges

281

11

Riechitsa upon Dnepr

Barge shipyard

Barges

139

12

Shatsilki

Shipyard Shatsilki

River boats

13

Vietka

Shipyard Vietka

Barges

14

Kiew / Kiev

USMA shipyard factories

Steam vessels, motorships

4,000

15

Nikolaev

North shipyard

Tankers, freighters.

3,700

16

Nikolaev

South shipyard

Transporters and carriers

6,200

17

Kherson

Concrete shipyard

Building of 93,000 t tankers

1,200

18

Kherson

Shipyard Nikolaev-North and Kherson Ltd.

Fishcutter

1,000

19

Mariupol

Asov steel factory

Motor torpedo-boat

20

Yalta

Shipbuilding yard Yalta

50 tons wooden ships

Total number of staff as far as known

1,500

86

90 30,024

Blast-furnaces and steel factories 21

Libau (Latvia)

Libau’s metallurgical factories

22

Mariupol by Stalino

Metallurgical factory Asovsteel I and II

20,437 tons crude steel

1,707

23

Stalino

Metallurgical factory Stalin

24

Kramatorskaya

Metallurgical factory Kuybishev

25

Makajewka / Makayevka

Metallurgical factory Kirov

26

Rykovo

Metallurgical Fact. Rykovo

27

Dnepropetrovsk

Petrovski factory

28

Dnepropetrovsk

Lenin

29

Dnepropetrovsk

D.S.M.O.

1,786

30

Dnepropetrovsk

Komintern I-III

1,783

31

Dnepropetrovsk

Liebknecht

1,167

32

Dnepropetrovsk

Artem

33

Kamenskoye

Metallurgical factory Kamensk

5,658

34

Krivoy Rog

Factory Krivoy Rog

1,039

35

Zaporozh’ye

Metallurgical factory Zaporozh’ye

1,800

36

Konstantinovka

Metallurgical factory Konstantin

18,400 2,400 720 2,600 2,400 Circa 3,500 tons rude steel

3,427 608

920

726

Aluminium factory 37

Saporoshje / Zaporozh’ye

Aluminium factory

720

Total number of staff working in blast furnaces and metal factories

47,141

Total number of staff working in heavy industry in occupied Soviet territories (as far as known)

77,165

Source: RGVA, Collection 1458, Inventory 35, File 372.

Table 15.7.

Raw Material Production and Heavy Industry in the Occupied Eastern Territories, 1943

Location

Name of the enterprise

Production in 1942

No. of staff in 1943

Remarks

Iron ore industry 1

Krivoy Rog

Gr. Krivoy Rog, 5 mines

2

Saksagan bei Krivoj Rog / Saksagan by Krivoy Rog

Gr. Saksagan, 12 Schachte / Gr. Saksagan, 12 mines

3

Ingulets

Mines Ingulets

4

Verabuvo

Direction Central

5

Zholtaya Reka by Krivoy Rog

Direction North

6,728

Mine started working only at the beginning of 1943

9,400

In construction. Mining started in May 1943

Manganese ore industry 6

Krasno-Grigorievka by Nikopol

Mine A. Eastfield-Maximovka

7

Marganets region Dnepropetrovsk

Mine A. Eastfield-Voroshilov

8

Sholokhovo

Mine A. Westfield-Sholokhovo

184,000 tons magnesium

Zircon ore industry 9

Stretenka region by Stalino

Zircon ore industry Stretenka

4.4 tons zircon (May 1943)

120

Works started April 1943

Phosphorite mining 10

Mardu by Reval

Eosti-Phosphorit

6,200 t phosphor ore with 15% phosphor oxide

732

11

Dunayevetsi by KamenetsPodolsk

Phosphorite industry, production Podolien (patron firm W. De Boer, Hamburg)

12

Rasleti by Krolovets

Phosphorite industry Raslety

13

Seshinskaya by Roslavl

Phosphorite company central

40

Under construction. Extraction since 1943

14

Polpino by Briansk

Phosphorite company central

20

Extraction started only in January 1944

250

1,000 t phosphor ore with 15% phosphor oxide

Extraction since August 1943

120

Shale oil extraction 15

Kivioli

Shale oil factory I and II

16

Kuttyoud

Shale oil factory I and II

17

Kohtla-Yerver

Shale oil factory I and II

18

Sillande

Shale oil factory I and II

19

Kohtla-Goldfields Jewe

Shale oil factory

Total number of staff in extraction industry as far as known Source: Russian Archives Moscow.

From May 1943 on 100,000 tons/month

3,100

Further construction

May 1943: 100,000 a week

Newly built 20,510

348 • Occupied Economies In Eastern Europe, it was only in chemicals and the oil sector that important opportunities were found to mobilize private capital. Large-scale chemical companies in occupied Eastern Europe, however, were only found in parts of Poland already annexed by the Reich in 1939. At the end of 1942, a minuscule total of just 15,000 workers were listed under the rubric of the chemical industry across the entirety of the occupied territories east of the September 1939 Reich border.124 A phosphorous mine in Mstislavl represented a rare strategic contribution from military-administered eastern Belorussia, but it was typical that it was a mine.125 By contrast, the expansion of chemical plants—old and new—in Polish eastern Upper Silesia, which had been Reich territory before 1914 and was incorporated into the Reich again in 1939, represented one of the single greatest wartime investment programmes undertaken by the Third Reich. These investments were concentrated at the IG Farben plant at Monowitz—Auschwitz III—with an attached network of satellite mines within the Auschwitz camp complex.126 That IG Farben did so is typical. As a key company in the chemical industry, this enterprise was, from the start of 1936, in favour of Göring’s autarky policy. Autarky meant that many chemical substitutes for natural raw materials became needed. For the leader of the Four Year Plan, IG Farben was therefore one of the few allies among major German companies. Consequently, IG became deeply involved in the Nazi economic policy. Outside the annexed Polish territories, in the East, only the production of food and some strategic raw materials, especially oil, was important in the eyes of the Nazi leaders. It was an unspoken aim of Operation Barbarossa to obtain oil resources. The foundation of Kontinentale Öl AG—Continental Oil Ltd—a few months before the invasion of the USSR was, however, never followed by the seizure of the Caucasus oil fields.127 Only some substantial oil fields in the North Caucasus were reached, but these were destroyed by the Soviets beyond repair, and the Wehrmacht could not hold the newly obtained territories long enough to restart production.128 Berlin had won only the fields of Galicia as well as Estonia, which were not inconsiderable by Central European standards. In 1942 the Karpathen Öl AG—Carpathian Oil Ltd—was established to oversee an investment programme in the oil fields in the Ukraine. In 1943 Carl Krauch—an IG-Farben Director who combined this job with a high-ranking position in the Four Year Plan organization—approved of investments in these fields worth 59 million RM. As it was Krauch’s duty to make sure IG-Farben also got a central position in the war economy in these newly conquered territories, he obtained a seat on the board of Continental Oil and over-optimistically projected a new investment programme of 92 million RM for 1944.129 Altogether, the results were disappointing.130 As the Wehrmacht never conquered the Caucasus, most of the oil produced in Eastern Europe came from the General Government (Table 15.8). Between 1939 and 1944 Germany extracted altogether 1.4 million tons of crude Polish oil. It was just 2.6 per cent of the 53 million tons of oil extracted, imported or synthesized for the benefit of the German warfare.131 As the total amount of oil Germany produced during the war anywhere in Europe never covered its wartime needs,

Production • 349 Table 15.8. Galician (Polish) Crude Oil Production (in 1,000 tons)

1938

For Germany

For the USSR

Total

—

—

505

1939

34

—

475

1940

125

350

475

1941

242

183

425

1942

378

—

378

1943

401

—

401

1944

201

74

274

Source: Rainer Karlsch, ‘Ein vergessenes Großunternehmen. Die Geschichte der Karpaten Öl-AG’, Jahrbuch für Wirtschaftsgeschichte, 1 (2004) 95–138, here 107.

this was important. Lack of oil prevented, for instance, the active participation of the German navy and limited German air force actions in the entire war. When, by the summer of 1942, Luftwaffe Field Marshal Erhard Milch decided to increase aircraft production, it meant that this branch of the armed forces alone would need 2 million extra tons of fuel a year. The Galician oil, the most important wells won by the German armies in Eastern Europe, was not even sufficient for a quarter of that (Table 15.5). Even with the conquest of the Caucasus, if the Germans had managed to get the oil production going here and the output transported to Germany, this would only have resulted in the production of an extra million tons of crude oil a year.132 Lack of fuels, oil as well as coal, limited Germany’s production and as a consequence its military potential. Even if Operation Barbarossa had been a complete success, these problems could not have been solved. Now, the best that can be said of the oil production won in Eastern Europe is that it was not entirely insignificant. Nonetheless, the extractive industries of Eastern Europe were vital. Of primary importance were the heavy industrial regions in Upper Silesia with their enormous coal and steel production. Further heavy industry along the Dnieper river in the Ukraine, manganese ore mining in Nikopol and coal mining in the Donets were also of importance. Therefore, investment programmes ranging from modest to quite gargantuan were started not only in the parts of Poland reintegrated into the Reich, but also in the Ukraine.133 The success of these differed widely. In the Nikopol manganese ore mines—almost completely destroyed by the withdrawing Soviets— production started again at the end of 1941, but until mid-1942 it was difficult to keep it going. From then on, production grew to reach even higher levels than in the pre-war period, but by early 1943 the military situation was already holding production back. Nevertheless, the Reich obtained more manganese from these sources than it needed for its production of panzer steel. Attempts to restore iron and steel production in these regions were, however, a complete failure. At Krivoi Rog the ore mines,

350 • Occupied Economies like the iron and steel mills, were so badly damaged that these were not producing again until the end of 1942. The production was undermined by the lack of power and machinery. Nevertheless, in 1943 steel production in the Donets area recovered, but the few thousand tons of raw steel a month that the Germans obtained were far short of the 5 million tons a year the Soviets had produced there before Hitler’s attack.134 As the Red Army tried to liberate this industrial centre again in January 1943, and Germans troops had to withdraw during the course of the year, production never reached the levels Berlin had hoped for. With coal the situation was similar. When the Wehrmacht arrived in the Donets mining district, the situation seemed hopeless. Only 25 out of 178 mines were usable, but lack of electricity and labour even made exploitation of these problematic. As recovery of the coal production was essential for the Ukrainian economy, 60,000 Soviet prisoners of war were sent to these mines in June 1942, but this was not enough. Mining recovered a little, but to keep the Ukrainian economy going coal had to be imported from Silesia.135 Nonetheless, it is a fact that the raw material production was one of the most important contributions of the occupied Soviet economy to the German war economy. In particular the Germans badly needed, and could not obtain elsewhere, some of the nonferrous metals that were gained in these territories. Just as the Eastern European production of raw materials and food was useful but seldom satisfactory, the Eastern European contribution to armament and production of army equipment was disappointing. According to the Ivan Programme—a plan to produce arms for the Eastern Front in the Ukraine—the production of ammunition was to be centred in the Donets area and the Polish Radom district.136 In the western USSR, the prime arms factories—the Kharkov tank factory and the Tula arms factory located on the edge of the occupation zone—were, of course, evacuated, demolished or successfully defended by the Soviets, just as were the essential power stations. In order to get the production going, it was necessary to get machinery and raw materials from Germany or Western Europe. Altogether, this resulted in investments in Poland and the occupied Soviet territories valuing 1 billion RM.137 Planning for the Ivan and Ordnance programmes—the latter a supplementary plan to produce other army needs—began, however, only in 1942. It was only then that electric power production was also restored to at least 20 per cent of its pre-war level.138 It is hardly surprising, therefore, that these investments failed to deliver a single round of ammunition before the region had to be evacuated again as a result of the Soviet summer offensive of 1943. This failure makes it clear that a greater effort to expand the marginal armament sector in the occupied Soviet Union would have been a waste of resources.139 By contrast, the Hugo Schneider plants (HASAG) in Radom in the General Government proved extremely productive. However, the Nazis’ forced labour programme, as well as absenteeism caused by foraging on the black markets, threatened these results. In 1942, therefore, HASAG insisted on the use of Jewish forced labour from Auschwitz at its Skarzysko-Kamienna plant. It became the largest forced labour

Production • 351 camp outside the camps of the SS Economic Head Office—SS Wirtschaftsverwaltungshauptamt (WVHA). At any one time, HASAG had up to 7,000 Jewish forced workers at its disposal in this plant,140 thus substantially increasing the armament production in the General Government. Until the Warsaw Uprising of August 1944, the Wespe self-propelled gun—a light tank—was even manufactured exclusively in the Warsaw branch of a German machine factory. Nevertheless, the little evidence there is indicates that in key sectors such as weaponry, ammunition and vehicle production, the General Government contributed at best just a small percentage to the total German armament production. As prior to 1939 Poland lacked any significant armaments industry, this was more than could be expected. Armaments, in a narrow sense, remained the preserve of Central and Western Europe. In line with the guidelines issued to the Economics Staff East, the primary objective across the whole of Eastern Europe was to fulfil direct army needs. The demand for equipment and logistical support had to be satisfied from local sources. It resulted in enormous pressure on agriculture and food resources, while all kinds of other products needed by the armed forces were obtained locally as well. Although it is a fact that this severely undermined local consumption levels, it is nonsense to conclude that the production of these parts of the Continent completely collapsed. Nevertheless, the economy had a setback that was hard to repair and only became worse as probably the most important contribution of the Soviet economy to the German warfare was the enormous numbers of forced labourers. Almost 2.7 million forced Soviet civil labourers or prisoners of war reinforced the German labour force (Table 10.6). It was no less than 36 per cent of the total foreign labour force that the German war economy became more and more dependent on. The way these people were recruited damaged normal conditions in these territories, and clandestine production became of relatively higher importance here than elsewhere on the Continent. According to Table 15.4, Polish clandestine production constituted up to 40 per cent of total Polish production. Apart from its labour contribution, the Soviet economy was important to Germany only as a supplier of some raw materials and food. More than three-quarters of this was needed by the German army fighting in the USSR itself (Table 15.9). Heavy industry was too badly damaged and too poorly maintained by the Germans to become of major importance, while the occupier was little interested in other sectors. The remaining production was needed to keep the population going. As even in these parts most survived, notwithstanding the extremely high death rates that are a statistical reflection of the suffering of the local population, it is clear that this production was still of the greatest importance. In 1941, when production in the occupied Soviet territories had already restarted locally to serve the direct needs of the German army, production in the Balkans collapsed. The limited occupation army did not need much, and Berlin saw these countries as just suppliers of raw materials and food. It was only after the 1941 Soviet Winter Offensive that Berlin became conscious of the fact that here as well the need for sustained support of its war effort could not be satisfied by indiscriminate

352 • Occupied Economies Table 15.9. Deliveries from the Occupied Soviet Territories to the German Army and the Reich until 31 March 1944 (value basis calculated using average German wholesale prices) Value of the supplies (in millions of RM)

Supplies (in 1,000 tons) Products

To the army

To the Reich

Total

Bread grain

2,453

818

3,271

Corn for fodder

2,609

944

3,553

Total grain

5,062

1,762

6,824

To the army

To the Reich

Total

987

344

1,331

Legumes

93

77

170

32

27

59

Potatoes

2,803

16

2,819

148

1

149

Hay and straw

3,756

—

Oils and seeds

146

757

Animal products

625

72

Sugar

162

62

Other products

642

97

Total

147

—

147

903

319

318

637

697

958

113

1,071

224

80

26

106

739

161

26

186

2,832

855

3,686

Source: RGVA, Collection 1458, Inventory 3, File 77.

seizures of all it could use. As a result of seizing raw materials, the official Greek industrial production had already slumped by 1942. The Greek economy was just plundered. Although probably a substantial part of the production was not reflected in official statistics, it is clear that the situation was dramatic.141 By 1942, when the new team of economic managers decided to use the economies of occupied Europe in a different way, it proved too late to repair the dislocations resulting from this short period of preying. Isolation of the diverse parts of Greece and Yugoslavia from each other—the German-occupied parts from the non-occupied parts or from parts occupied by Italy or Bulgaria—as well as the effects of the Allied blockade cutting off normal supplies caused a sharp decline in production and, in Greece, even a deadly famine. Mistrust bordering on active resistance therefore became a problem that was not easily alleviated. The fact that Greece and Yugoslavia were divided among the Axis powers did not prevent the Reich from taking control over all the important production facilities: for instance, the iron ore mines of Ljubija in northern Bosnia; the steel, coal and chemical plants in north-east Bosnia; and the bauxite mines produced for the Reich. In the more important cases, German banks or industrial companies even took over a majority of the ownership.142 To bring that about in the earliest stages of the German expansion, German businesses—including the inevitable Reichswerke—across

Production • 353 Europe, especially in Austria, obtained significant quantities of shares in heavy industry in the Balkans. Apart from confiscations, control over industrial production was obtained by leasing, compulsory purchase or aryanizations—expropriating Jewish owners.143 Apart from that, ownership was taken over by tricks and manipulation. An exposé on the fortune of the most important Greek firm allows a glimpse into such business. In the 1930s Prodromos Bodosakis-Athanasiadis created a huge industrial empire with arms factories, mines and plants in diverse branches of industry.144 The company met the domestic needs for arms production, leaving some surplus for exports. Bodosakis’s contacts with the Greek National Bank and German companies then gave the firm the opportunity to broker direct deals with Rheinmetall-Borsig, a Reichswerke company.145 A majority of Bodosakis’s shares were kept by the National Bank of Greece as security for the firm’s debts. In May 1941, this proved fatal when the occupation authorities pressed the bank to auction the shares, which resulted in a takeover by Second Lieutenant W. Deter, not only a representative of General Thomas’s Economy Office of the Wehrmacht (WiRüAmt), but also Director of Rheinmetall-Borsig.146 The price Deter paid did not even cover the value of the machinery, which was in fact all the Germans were interested in.147 Immediately after the takeover, the WiRüAmt decided to dismantle the factories and ship the machinery to Germany. At that time, many Berlin officials thought the period of transferring orders was over and only wanted factors of productions from the occupied countries, but the German authorities in the occupied countries had other interests. As was to be expected, local German authorities—in this case Hitler’s Plenipotentiary for Greece, Günther Altenburg—asked the Oberkommando der Wehrmacht to rethink the laying off of some 15,000 workers,148 whereupon Berlin agreed to shift some orders to Greece if the Greek government paid the wages of the workers producing spoils of war. This output would immediately be confiscated by the Germans as war booty. This absurd arrangement worked smoothly for some months, but in September 1941 Deter informed Altenburg that unless Athens provided another 200 million drachmas, some 12,000 workers would be fired anyway.149 Athens indeed paid another 100 million drachmas to keep Greek-paid labour producing arms in confiscated factories.150 Low productivity and transport problems nonetheless prompted the WiRüAmt to reconsider the future of the concern again.151 Parts of the plants were then sold to another German company that was to hand over 80 per cent of the machinery to the German aviation industry. It was decided that payments could be dealt with after the war, which meant that the machines were confiscated.152 Until the end of 1943 the remaining plants were used to carry out repairs on behalf of the Luftwaffe, but the Greek position then changed for the worse as a result of the North African military developments. From being a forward supply base, it became a potential battlefield. Therefore, it became necessary to transfer the bulk of the remaining machinery of these enterprises to Belgrade.153 Some German officials now suggested the use of Serbian occupation costs for compensation, but, hard pressed for food, Hermann

354 • Occupied Economies Neubacher, the Special Plenipotentiary envoy in the Balkans, proposed sending Serbian food exports to Greece in exchange. As the Wehrmacht needed the food itself, this was rejected, however.154 The fact that the takeover of companies was an easy route to their dismantling had become clear in 1941 when, in accord with the new ideas on economic planning and exploitation that spread throughout the Third Reich’s bureaucracy in 1941, 500 ammunition, armament and chemistry plants in Serbia and Croatia were taken apart and shipped to Germany. In these countries with low productivity and substantial war damage, confiscating factors of production seemed rational. Although pre-war Greece was not extremely poor or unproductive, lack of coal and raw materials— which would only be supplied more or less regularly again in 1943—severely reduced its productivity, while Yugoslavia was one of the poorest and least productive countries of Europe anyway. Industry was little developed, which is clear from the fact that in Serbia rather small firms such as Sartid with just 1,000 workers and Jesenica with only 315 were the most important plants of the country.155 In both countries, Greece and Yugoslavia, mobilization and war, and the resulting lack of labour, substantially undermined production. Many labourers became soldiers and after the lost war were taken prisoner or became guerrilla fighters. Consequently, it seemed rational to Berlin to use these parts of Europe mainly as sources of food and raw materials. Although industry was of little importance in the Balkans, raw material production was important, and to defend the German interests against Italian claims Berlin had set up a list of companies active in these commodities before the invasion even started. These companies would operate under German control.156 Therefore, immediately upon the combined German, Italian and Bulgarian occupation of Greece, German enterprises were eager to place orders with Greek mines. In this part of Europe that before the war had already been seen as part of the German informal empire, there was none of the hesitation among private firms to invest as there was in the USSR. For instance, Hans-Günther Sohl, Director of Friedrich Krupp AG, had already secured long-term deliveries for up to twenty-five years of the entire production of materials like chrome, bauxite and nickel in 1941.157 In Yugoslavia—that is in Serbia, in Bulgarian-annexed territories and in Croatia—German companies also took control of the mining of antimony, coal, copper, lead, pyrites, chrome and zinc. Production of raw materials, such as the mining of iron ore and nonferrous metals, became important again because German companies invested a total of 308 million RM here,158 although the occupied countries themselves had to supply the needed local currency (see Chapter 13).159 Notwithstanding German investments, however, mineral production was adversely affected by the lack of machinery and construction tools,160 while in the last two years of the occupation a lack of materials and labour as well as transport problems rendered the continuation of production unprofitable. In that period many mines even fell into the hands of the partisans. In the end these territories were barely productive and, contrary to the occupied USSR, not even

Production • 355 important as suppliers of labour. Before the occupation, they contributed substantially to the German economy by delivering foodstuffs and raw materials. During the war, their contributions were disappointing, as war circumstances caused major setbacks in production. One can only conclude therefore that the Axis powers— especially Mussolini—made a major mistake in occupying these countries.

Conclusion All over Europe production went on, but it was only in the Western occupied countries and probably in the Protectorate that there was little decline in production. Here, with the exception of France, the setback seen in official macroeconomic series was for the major part compensated for by clandestine production for black markets. When corrected for that, there are no reasons to believe that the production in these countries sharply declined except during some short periods characterized by special military situations. France was the only exception, which makes it clear that it was not just the intensity, but also the method of German exploitation that was decisive in the economic development of an occupied country. Wherever the Germans concentrated their exploitation on taking the output of production, they kept the economies going and thus the production capacity intact. In parts of Europe where the occupier concentrated on destruction—the USSR—or the taking of factors of production— the Balkans and Poland—the production collapsed and the production capacity was undermined. In the Soviet case even the economic infrastructure was destroyed. As always when Nazis were involved, racism played its role, but as the case of the Czech Protectorate made clear, it is too easy to conclude that Western countries were treated well, while Slavic countries were economically destroyed. Racism was a reason for unscrupulousness and neglecting the interests of the local population completely when, according to a cruel rationality, it was in the German interest to do the nastiest things. In the USSR, the fact that the German policy threatened the chances of survival of many local people was no reason to find other solutions. When the occupier found, however, that it was better for Germany to follow another policy, Berlin treated even Slavic people decently, not for humanitarian reasons but because it was in its interests. Only Jews seemed an exception. These people were to be destroyed even when they were useful for the Reich. Undermining the economies of the occupied Soviet territories, the remains of Poland and the Balkans was done, however, because the Germans thought that at this time it was in their interest. It was only when the fortunes of war were reversed, and the Germans found they now needed these economies, that they realized it was too late. It proved impossible first to butcher the cow and then to milk her. As a result, in Western Europe as well as in the Protectorate of Bohemia and Moravia, a more or less adapted production went on at a more or less normal level. Those countries with modern economies contributed substantially to the German

356 • Occupied Economies warfare. As they were needed, the people living there were allowed a reasonable level of welfare, and the population therefore had a good chance of survival. In Eastern Europe, although the economies did not collapse completely, most people could only survive because of a substantial clandestine production. As these economies were mainly agrarian and there was a sufficient production of illegal consumer goods, especially food, it was possible that the population, or at least most of them, could survive. The mortality rates were nevertheless much higher than in the West, while the fact that the occupier took all factors of production it could get—labour as well as machinery and raw materials—undermined not only production, but even the production capacity. In other words, the occupation undermined these economies in a much more destructive way than in the West. Nonetheless, the occupier obtained much more in the western parts of the Continent than in these countries. In Eastern Europe and the Balkans, the destructive German policy even resulted in a dangerous guerrilla warfare that had not only severe military implications, but also an enormous economic impact. As a subject of further research, it would be interesting to find out how strong the relation was between guerrilla war and economic development. In France, where the economic situation was somewhere in between that of other Western European countries and the eastern part of the Continent, the resistance was more violent than in most Western countries, but incomparably less violent than in Eastern Europe. Of course, the differences in wartime development had consequences not only for what the occupier obtained in the diverse countries, but also for the local population and for the long-term economic development.

Notes 1. HUA 92, Machinefabriek Jaffa, inventarisnummer 121–123 Accountantsrapporten over 1937–1940 en 1942. Nr. 121 rapport. 2. R. J. Overy, Why the Allies Won (London 1995) 13. 3. H. Colijn, Op de grens van Twee Werelden (Amsterdam 1940) 51. 4. Cees Fasseur, Wilhelmina. Krijgshaftig in een vormeloze jas (Amsterdam 2003 4th ed.) 293. 5. Maurice Agulhon, ‘De Gaulle et l’histoire de France’, Vingtième Siècle. Revue d’histoire, 53 (1997) 3–12, here 3. 6. See, for instance: L. de Jong, Het Koninkrijk der Nederlanden in de Tweede Wereldoorlog, Part 9, Londen (The Hague 1979) 50 et seq.; J. Th. M. Houwink ten Cate, ‘Generaal Winkelman, secretaris-generaal Hirschfeld en de Duitse bezettingspolitiek in mei–juni 1940’, Bijdragen en Mededelingen betreffende de Geschiedenis der Nederlanden, 105 (1990) 186–230. 7. Colijn, Op de grens van Twee Werelden, 51. 8. Cited in: Nehemiah Robertson, ‘Problems of European Reconstruction’, Quarterly Journal of Economics, 60 (1945) 1–55, here 10.

Production • 357 9. Hein A. M. Klemann, Nederland 1938–1948. Economie en samenleving in jaren van oorlog en bezetting (Amsterdam 2002) 284 et seq. 10. Karel Davids, ‘De Tweede Wereldoorlog: Een breuk in de economische ontwikkeling in de wereld?’ Tijdschrift voor Geschiedenis, 122 (2009) 464–475; Klemann, Nederland 1938–1948, passim; Per Hansen, ‘“Business as Usual?” The Danish Economy and Business during the German Occupation’, in: Harold James and Jacob Tanner (eds.), Enterprises in the Period of Fascism in Europe (Aldershot 2002) 115–143, here 119; Hervé Joly, ‘The Economy of Occupied and Vichy France: Constraints and Opportunities’, in: Joachim Lund (ed.), Working for the New Order: European Business under German Domination 1939–1945 (Copenhagen 2006) 93–103. 11. Paul W. Sanders, ‘Population Policy and Economic Exploitation: The German Occupation of Byelorussia (1941–44)’, in: Lund (ed.), Working for the New Order, 157–174, here 157–158. 12. Jacques Vallin, France Mesle, Serguei Adamets and Serhii Pyrozhkov, ‘A New Estimate of Ukrainian Population Losses during the Crises of the 1930s and 1940s’, Population Studies, 56 (2002) 249–264, here 261; Karel C. Berkhoff, Harvest of Despair: Life and Death in Ukraine under Nazi Rule (Cambridge 2004) 317–318. 13. Adam Tooze, The Wages of Destruction: The Making and Breaking of the Nazi Economy (London 2007 2 nd ed.) 420. 14. M. M. G. Fase, ‘Informele economie en geldomloop. Meting en interpretatie’, in: M. M. G. Fase (ed.), Geld in het fin de siècle (Amsterdam 1999) 81–113, here 81. See also: Louis Baudin, ‘An Outline of Economic Conditions in France under the German Occupation’, Economic Journal, 55 (1945) 326–345, here 337. 15. Friedrich Schneider and Dominik H. Enste, ‘Shadow Economies: Size, Causes, and Consequences’, Journal of Economic Literature, 38 (2000) 77–114, here 77. 16. Fabrice Grenard, La France du marché noir (1940–1949) (Paris 2008); Owen Griffiths, ‘Need, Greed, and Protest in Japan’s Black Market, 1938–1949’, Journal of Social History, 35 (2002) 825–858; Edward Smithies, Crime in Wartime: A Social History of Crime in World War II (London 1982). 17. Alexander Dallin, German Rule in Russia, 1941–1945: A Study of Occupation Policies (London 1957) 394–395. 18. Sanders, ‘Population Policy and Economic Exploitation’, 171. 19. Smithies, Crime in Wartime, 71. 20. Phrased from: K. E. Boulding, ‘Note on the Theory of the Black Market’, Canadian Journal of Economics and Political Science (1947) 115–118, here 118. 21. Lynne Taylor, ‘The Black Market in Occupied Northern France 1940–4’, Contemporary European History, 6 (1997) 153–176, here 160.

358 • Occupied Economies 22. Paul W. Sanders, Histoire du marché noir 1940–1946 (Paris 2001) 39 et seq. and 69. 23. Boulding, ‘Note on the Theory’, 118; Hein A. M. Klemann, ‘Waarom honger in Europa in de Tweede Wereldoorlog?’ in: Hein A. M. Klemann and Dirk Luyten with Patrick Deloge (eds.), Thuisfront. Oorlog en economie in de twintigste eeuw. Veertiende jaarboek van het Nederlands Instituut voor Oorlogsdocumentatie (Zutphen 2003) 113–125. 24. Jozo Tomasevich, War and Revolution in Yugoslavia, 1941–1945: Occupation and Collaboration (Stanford 2001) 650–651. 25. Baudin, ‘Outline of Economic Conditions’, 339; Henry Rousso and Michel Margairaz, ‘Vichy, la guerre et les entreprises’, Histoire, économie et société, 11 (1992) 337–367, here 341–342; Klemann, Nederland 1938–1948, passim. 26. Klemann, Nederland 1938–1948, 251–254. 27. Ibid. 28. J.-C. Fichou, ‘La conserverie de poisson, 1939–1945: Une activité sinistrée?’ Guerres mondiales et conflits contemporains, 207 (2002/3) 61–75, here 72. 29. See, for instance: Der Militärbefehlshaber in Frankreich, Paris, den 27. Januar 1943: Lagebericht über Verwaltung und Wirtschaft, Oktober/Dezember 1942– 1943, http://www.ihtp.cnrs.fr/prefets/de/d101242mbf.html; Klemann, Nederland 1938–1948, 263. 30. Baudin, ‘Outline of Economic Conditions’, 340. 31. Institut National de la Statistique et des Études Économiques, Enquêtes diverses sur les prix et la consommation de 1942 à 1944 (Paris 1947), cited in: Kenneth Mouré and Fabrice Grenard, ‘Traitors, Trafiquants, and the Confiscation of “Illicit Profits” in France, 1944–1945’, Historical Journal, 51 (2008) 969–990, here 973. 32. Fase, ‘Informele economie en geldomloop’, 84–86. 33. Schneider and Enste, ‘Shadow Economies’, 80. 34. Cor van Stam, Wacht binnen de dijken. Verzet in en om de Haarlemmermeer (Haarlem 1986) 28–29; R. Stokvis, Ondernemers en industriële verhoudingen. Een onderneming in regionaal verband (1945–1985) (Assen 1989) 36. 35. Czesław Madajczyk, Die Okkupationspolitik Nazideutschlands in Polen 1939– 1945 (Cologne 1988) 596–602. 36. Ibid. 596. 37. H. W. Singer, ‘The German War Economy in the Light of Economic Periodicals’, Economic Journal, 51 (1941) 400–421, here 416. 38. G. M. T. Trienekens, Tussen ons volk en de honger. De voedselvoorziening 1940–1945 (Utrecht 1985) 262–266; Hein A. M. Klemann, ‘De legale en illegale landbouwproductie in de jaren 1938–1948’, NEHA-jaarboek voor economische, bedrijfs- en techniekgeschiedenis, 60 (1997) 307–338, here 322–324. 39. H. W. Singer, ‘The German War Economy, XI’, Economic Journal, 54 (1944) 62–74, here 70. 40. Klemann, Nederland 1938–1948, passim.

Production • 359 41. See: A. E. Cohen, ‘Problemen der geschiedschrijving van de Tweede Wereldoorlog (1952)’, in: J. H. C. Blom (ed.), A. E. Cohen als geschiedschrijver van zijn tijd (Amsterdam 2005) 77–110. 42. Klemann, Nederland 1938–1948, 432–433; Hein A. M. Klemann, ‘Did the German Occupation (1940–1945) Ruin Dutch Industry?’ Contemporary European History, 17, no. 4 (2008) 457–481. 43. I.e. not including the self-employed. Klemann, Nederland 1938–1948, 433. 44. Ernst Ermann, ‘“VB”-Gespräch mit Seyss-Inquart. Wie steht es in den Niederlanden’, Völkischer Beobachter, 1 December 1940. 45. Centraal Bureau voor de Statistiek, Economische en sociale kroniek der oorlogsjaren, 1940–1945 (Utrecht 1947) 300. 46. Klemann, Nederland 1938–1948, 431 et seq. 47. ‘Nederlandsche economie in Oorlogstijd’, Keesings Historisch Archief, 11–17 May 1941, 4675. 48. Klemann, ‘Waarom honger in Europa’, 113–125. 49. Niod Amsterdam, 212a, 5e: Afd. Economisch onderzoek: De omvang van de Duitsche opdrachten in de industrie in Nederland, Augustus 1944; Klemann, Nederland 1938–1948, 231–232. 50. Klemann, Nederland 1938–1948, 265–300; also: Hein A. M. Klemann, ‘“Belangrijke gebeurtenissen vonden niet plaats . . . ” De Nederlandse industrie 1938– 1948’, Bijdragen en Mededelingen betreffende de Geschiedenis der Nederlanden, 114 (1999) 506–552. 51. John Gillingham, ‘How Belgium Survived: The Food Supply Problem of an Occupied Nation’, in: Bernd Martin and Alan S. Milward (eds.), Agriculture and Food Supply in the Second World War (Ostfildern 1985) 69–88; Taylor, ‘Black Market in Occupied Northern France’, 153–176; Paul W. Sanders, ‘Prélèvement économique, les activités allemandes de marché noir en France 1940–1943’, in: Olivier Dard, Jean-Claude Daumas and François Marcot (eds.), L’Occupation, l’État français et les entreprises (Paris 2000) 37–67; Sanders, Histoire du marché noir; P. Miry, Zwarte handel in levensmiddelen (Brussels 1946); Claus Bundgård Christensen and Ralf Futselaar, ‘Zwarte markten in de Tweede Wereldoorlog. Een vergelijking tussen Nederland and Denemarken’, in: Klemann and Luyten, Thuisfront, 89–110. 52. Barry Eichengreen, The European Economy since 1945: Coordinated Capitalism and Beyond (Princeton 2007) 72. 53. Trienekens, Tussen ons volk en de honger, 239 et seq. 54. See: Trienekens, Tussen ons volk en de honger; Hein A. M. Klemann, ‘“Die koren onthoudt, wordt gevloekt onder het volk . . . ” De zwarte markt in voedingswaren, 1940–1948’, Bijdragen en Mededelingen betreffende de Geschiedenis der Nederlanden, 115 (2000) 532–560. 55. Klemann, Nederland 1938–1948, 299 and 438; CBS, Sociale en economische kroniek der oorlogsjaren, 24. The Centraal Bureau voor de Statistiek (CBS)

360 • Occupied Economies

56. 57. 58. 59. 60. 61. 62. 63.

64.

65. 66.

67. 68. 69. 70.

gives only a national income series. Klemann calculated national income as well as GDP series, the last declining a few percentage points more than the latter, as in national income the loss of colonial incomes are included. These were not, however, more than a few percentage points. Real wages declined as wages were frozen, while prices were slightly more flexible. ‘Vrouwelijke kantoorbediende, 19 jaar- Amsterdam, 10 Mei 1942’, in: Dagboekfragmenten 1940–1945 (The Hague 1954) 167–169. See also: Grenard, La France du marché noir, 261, 280. Trienekens, Tussen ons volk en de honger, passim. Alfred Sauvy, La vie économique des Français de 1939 à 1945 (Paris 1978) 145–148. John Lindberg (League of Nations), Food, Famine and Relief 1940–1946 (Geneva 1946) 21 and 54. Alan S. Milward, The New Order and the French Economy (Oxford 1970) 261– 262. Ibid. 254 et seq.; Pierre Barral, ‘Agriculture and Food Supply in France during the Second World War’, in: Martin and Milward, Agriculture and Food Supply, 89–102, here 89–90. Sauvy, La vie économique des Français, 140–146; Milward, New Order, 260 et seq. According to Milward the loss of agrarian labour in France was little higher than according to Sauvy. Milward, New Order, 267. Robert Salais, ‘Why Was French Unemployment So Low during the 1930s?’ in: Barry J. Eichengreen and T. J. Hatton (eds.), Interwar Unemployment in International Perspective (Dordrecht 1988) 247–288, here 261; Milward, New Order, 261. Barral, ‘Agriculture and Food Supply’, 94. Milward, New Order, 261. Sauvy, La vie économique des Français, 140–146; Milward, New Order, 260 et seq. Also: Sanders, Histoire du marché noir, 39. Lindberg, Food, Famine and Relief, passim; Joachim Lehmann, ‘Agrarpolitik und Landwirtschaft in Deutschland 1939 bis 1945’, in: Martin and Milward, Agriculture and Food Supply, 129–150; John E. Farquharson, ‘The Management of Agriculture and Food Supplies in Germany, 1944–1947’, in: Martin and Milward, Agriculture and Food Supply, 50–68; Peter Maurer, ‘Landwirtschaft und Landwirtschaftspolitik der Schweiz im Zweiten Weltkrieg’, in: Martin and Milward, Agriculture and Food Supply, 103–116; David F. Smith and Jim Philips, ‘Food Policy and Regulation: A Multiplicity of Actors and Experts’, in: David F. Smith and Jim Philips (eds.), Food, Science, Policy and Regulation in the Twentieth Century: International and Comparative Perspectives (London 2000) 1–16, here 13.

Production • 361 71. Adolf Hitler, Hitler’s Table Talks, 1941–1944: His Private Conversations (New York 2000) 23rd June 1942, midday, 529. 72. H. W. Singer, ‘The German War Economy, VI’, Economic Journal, 52 (1942) 186–205, here 200. 73. Lindberg, Food, Famine and Relief, 21; Gillingham, ‘How Belgium Survived’, 84. 74. As a consequence of the loss of colonial contacts, national income fell slightly faster than GDP, but the effect is too limited to explain the sharp decline of the CBS series. 75. See also: H. J. de Jong, De Nederlandse industrie 1913–1965: Een vergelijkende analyse op basis van de productiestatistieken (Amsterdam 1999); H. J. de Jong, Catching Up Twice: The Nature of Dutch Industrial Growths during the 20th Century in a Comparative Perspective (Berlin 2003). 76. See on that: Klemann, ‘Did the German Occupation Ruin Dutch Industry?’ 77. Paul Beaudry and Franck Portier, ‘The French Depression in the 1930s’, Review of Economic Dynamics, 5 (2002) 73–99, here 75. 78. CEPII, Séries lonques macro-économiques, Comptes nationaux en base 1938, http://www.cepii.fr/francgraph/bdd/villa/mode.htm; Angus Maddison, Dynamic Forces in Capitalist Development. A Long-run Comparative View (Oxford 1991) 213; Angus Maddison, The World Economy: Historical Statistics (Paris 2003) 50; see also: Robert J. Barro and José F. Ursúa, ‘Macroeconomic Crises since 1870’, BPEA (2008), Online Appendix: http://www.economics. harvard.edu/faculty/barro/files/MacroCrisesSince1870_08_0614.xls. 79. Maddison, World Economy, 38. 80. Paul W. Sanders, ‘Economic Draining: German Black Market Operations in France, 1940–1944’, Global Crime, 9 (2008) 136–168, here 139 et seq. 81. Maddison, Dynamic Forces, 213; Maddison, World Economy, 45–54. 82. CEPII, Séries lonques macro-économiques, Comptes nationaux en base 1938; Hansen, ‘“Business as Usual?”’ 115–143; Barro and Ursúa, ‘Macroeconomic Crises since 1870’; Klemann, Nederland 1938–1948. 83. Mark Mazower, Inside Hitler’s Greece: The Experience of Occupation, 1941– 1944 (New Haven 1993) 59 et seq.; Dallin, German Rule in Russia, 394–395; Andrew Ezergailis, The German Occupation of Latvia, 1941–1945: What Did America Know? (Riga 2002) 55. 84. Bundgård Christensen and Futselaar, ‘Zwarte markten in de Tweede Wereldoorlog’, 109–110. 85. Klemann, Nederland 1938–1948, passim. 86. Ralf Futselaar, Lard, Lice, and Longevity: A Comparative Study of the Standard of Living in Occupied Denmark and the Netherlands, 1940–1945 (Amsterdam 2007), passim. 87. Madajczyk, Die Okkupationspolitik Nazideutschlands, 596. 88. See, for instance: Grenard, La France du marché noir, 202.

362 • Occupied Economies 89. Sources: RGVA, Collection 1458, Inventory 3, File 77, p. 109; Willi A. Boelcke, Die Kosten von Hitlers Krieg. Kriegsfinanzierung und finanzielles Kriegserbe in Deutschland 1933–1948 (Paderborn 1985) 108–114; Mark Harrison, ‘The Economics of World War II: An Overview’, in: Mark Harrison (ed.), The Economics of World War II: Six Great Powers in International Comparison (Cambridge 1998) 1–42, here 3 and 7–8; Mark Spoerer and Joachim Fleischhacker, ‘Forced Labourers in Nazi Germany: Categories, Numbers and Survivors’, Journal of Interdisciplinary History, 33 (2002) 169–204; own calculations. 90. Grenard, La France du marché noir, 188–189. 91. Harrison, ‘Economics of World War II’, 7. 92. Der Militärbefehlshaber in Frankreich, Kommandostab Abteilung Ia, Paris, den 31. Juli 1941: Lagebericht Juni/Juli 1941, http://www.ihtp.cnrs.fr/prefets/de/ d060741mbf.html. 93. Maddison, Dynamic Forces, 213; Maddison, World Economy, 50; CEPII, Séries lonques macro-économiques, Comptes nationaux en base 1938; Barro and Ursúa, ‘Macroeconomic Crises since 1870’. 94. Der Militärbefehlshaber in Frankreich, Paris, den 27. Januar 1943: Lagebericht Oktober/Dezember 1942, http://www.ihtp.cnrs.fr/prefets/de/d101242mbf. html; Der Militärbefehlshaber in Frankreich, http://www.ihtp.cnrs.fr/prefets/de/ d080941mbf.html-_ftn1, Kommandostab Abteilung Ia, Paris, den 30. September 1941: Lagebericht Augustus–September 1941, http://www.ihtp.cnrs.fr/prefets/. 95. Der Militärbefehlshaber in Frankreich, http://www.ihtp.cnrs.fr/prefets/de/d080941 mbf.html-_ftn1, Kommandostab Abteilung Ia, Paris, den 30. September 1941: Lagebericht Augustus–September 1941, http://www.ihtp.cnrs.fr/prefets/. 96. BA-MA, RW 29/108: ‘Lagebericht vom 8.7.-14.7.42’. 97. On evacuation see: Eshelony idut na vostok. Sbornik statei i vospominaniya (Moscow 1966); Frederick Kagan, ‘The Evacuation of Soviet Industry in the Wake of “Barbarossa”’, Journal of Slavic Military Studies, 8 (1995) 387–414; Ekonomika sovetskoi Belorussii 1917–1967 (Minsk 1967); comparative study for the Ukraine: Ukrainskaya SSR v Velikoi Otechestvennoi voine Sovetskogo Soyuza. 1941–1945. V 6-ti tomakh. Tom 1 (Kiev 1975) 263–273. 98. Nicolas Terry, The German Army Group Centre and the Soviet Civilian Population, 1942–1944: Forced Labour, Hunger and Population Displacement on the Eastern Front (Thesis, King’s College London, 2006). 99. Ibid. chap. 2. 100. Ibid. chap. 2. 101. Dallin, German Rule in Russia, 377. 102. Ibid. 380. 103. See on this: R. L. DiNardo, Mechanized Juggernaut or Military Anachronism? Horses and the German Army in World War II (London 1991); R. L. DiNardo and Austin Bay, ‘Horse-drawn Transport in the German Army’, Journal of Contemporary History, 23 (1988) 129–142.

Production • 363 104. Hitler, Table Talks, 12th November 1941, evening, 128. 105. Max Ligner, Exportsteigerung durch Einschaltung in die Industrialisierung der Welt (Jena 1938), quoted from H-E. Volkmann, ‘NS-Aussenhandel im “geschlossenen” Kriegswirtschaftsraum’, in: F. Forstmeier and H.-E. Volkmann (eds.), Kriegswirtschaft und Rüstung 1939–1945 (Düsseldorf 1977) 92–130, here 109; Gerhart Hass and Wolfgang Schumann (eds.), Anatomie der Aggression. Neue Dokumente zu den Kriegszielen des faschistischen deutschen Imperialismus im zweiten Weltkrieg (Berlin 1972) 91–99; see: W. Schumann (ed.), Griff nach Südosteuropa. Neue Dokumente über die Politik des deutschen Imperialismus und Militarismus gegenüber Südosteuropa im zweiten Weltkrieg (Berlin 1973) 9. 106. See: ‘Die Neuordnung im Südostraum’, Berliner Monatshefte, 19 September 1941, 601–611. 107. Hans-Erich Volkmann, Ökonomie und Expansion. Grundzüge der NSWirtschaftspolitik (Oldenburg 2003) 37. 108. Erhard Haak, Die Geschichte der deutschen Instandsetzungstruppe. Organisationsgeschichtlicher Überblick von Beginn des 19. Jahrhunderts bis zur Gegenwart (Osnabrück 1986). 109. RGVA, Collection 700, Inventory 1, File 49, pp. 9–11: Summary of the agricultural situation and food production in the eastern territories (before June 1942). 110. RGVA, Collection 700, Inventory 1, File 40, p. 65: Bericht von Staatssekretär Körner. 111. RGVA, Collection 1458, Inventory 3, File 77, pp. 65–62. 112. Niod Amsterdam, 47, Defisenreferat 40–44 R 8I: Monetaire zaken 1/3/’41. 113. Dallin, German Rule in Russia, 389; Ezergailis, German Occupation of Latvia, 38–39. 114. Ezergailis, German Occupation of Latvia, 39; Rein Taagepera and Romuald J. Misiunas, The Baltic States: Years of Dependence, 1940–1990 (London 1993, exp. and updated edition) 53. 115. RGVA, Collection 1458, Inventory 3, File 77, pp. 72–73. 116. Matthias Riedel, Eisen und Kohle für das Dritte Reich. Paul Pleigers Stellung in der NS-Wirtschaft (Göttingen 1973) passim. 117. Dallin, German Rule in Russia, 384. 118. Ibid. 384–386. 119. Bernhard R. Kroener, Rolf-Dieter Müller and Hans Umbreit, Germany and the Second World War, Vol. V/II, Organization and Mobilization in the German Sphere of Power: Wartime Administration, Economy, and Manpower Resources 1942–1944/5 (Oxford 2003) 312. 120. Hermann Kaienburg, Die Wirtschaft der SS (Berlin 2003) 370. 121. Alfred Sulik, ‘Die Eigentumsverhältnisse und die Verwaltungsstruktur der oberschlesischen Industrie’, Studia Historiae Oeconomicae, 14 (1979) 273– 281; Werner Röhr, ‘Zur Rolle der Schwerindustrie im annektierten polnischen

364 • Occupied Economies Oberschlesien für die Kriegswirtschaft Deutschlands vom 1939 bis 1949’, Jahrbuch für Wirtschaftsgeschichte, 4 (1991) 9–58; Matthias Riedel, ‘Bergbau und Eisenhüttenindustrie in der Ukraine unter deutscher Besatzung’, Vierteljahreshefte für Zeitgeschichte, 23 (1973) 245–284. 122. Kroener, Müller and Umbreit, Germany and the Second World War, Vol. V/II, 312–313. 123. Ibid. 124. Tanja Penter, ‘Zwangsarbeit—Arbeit für den Feind. Der Donbass unter deutscher Okkupation, 1941–1943’, Geschichte und Gesellschaft, 31 (2005) 68– 100, here 71. 125. Christian Gerlach, Kalkulierte Morde. Die deutsche Wirtschafts- und Vernichtungspolitik in Weißrußland 1941 bis 1944 (Hamburg 1999). 126. Peter Hayes, Industry and Ideology: IG Farben in the Nazi Era (Cambridge 1987); Franciszek Piper, Arbeitseinsatz der Häftlinge aus dem KL Auschwitz (Oswiecim 1995); Bernd C. Wagner, IG Auschwitz. Zwangsarbeit und Vernichtung von Häftlingen des Lagers Monowitz 1941–1945 (Munich 2000); Sybille Steinbacher, ‘Musterstadt’ Auschwitz: Germanisierungspolitik und Judenmord in Ostoberschlesien (Munich 2000). 127. Dietrich Eichholtz, Krieg um Öl. Ein Erdölimperium als deutsches Kriegsziel 1938–1943 (Leipzig 2006); Rolf-Dieter Müller, Der Wettlauf um das Erdöl. Mitteilungen der Gemeinsamen Kommission für die Erforschung der jüngeren Geschichte der deutsch-russischen Beziehungen (Munich 2005) 35–44. 128. Dallin, German Rule in Russia, 379. 129. Hans-Heinz Kasper, ‘Die Ausplünderung polnischer und sowjetischer Erdöllagerstätten im Gebiet der Vorkarpaten durch den deutschen Imperialismus im zweiten Weltkrieg’, Jahrbuch für Wirtschaftsgeschichte, 2 (1978) 41–64; Rainer Karlsch, ‘Ein vergessenes Großunternehmen. Die Geschichte der Karpaten Oel-AG’, Jahrbuch für Wirtschaftsgeschichte, 1 (2004) 95–138, here 114. 130. Tooze, Wages of Destruction, 451–452. 131. Dietrich Eichholtz, Geschichte der deutschen Kriegswirtschaft, Vol. 2 (Berlin 1985) 354; DRZW 5/2; USSBS Oil Division Report. 132. Tooze, Wages of Destruction, 451–452. 133. Jerzy Jaros, ‘Der Steinkohlebergbau im oberschlesischen Becken während des Zweiten Weltkrieges’, Studia Historiae Oeconomicae, 14 (1979) 239–242; Dietrich Eichholtz, ‘Wirtschaftspolitik und Strategie des faschistischen deutschen Imperialismus im Dnjepr-Donez-Industriegebiet 1941–1943’, Militärgeschichte, 18 (1979) 281–296. 134. Dallin, German Rule in Russia, 378–379. 135. Ibid. 378. 136. Stanislaw Meducki, Przemysl i klasa robotnicza w dystrykcie radomskim w okresie okupacji hitlerowskiej (Warsaw 1981). 137. Kroener, Müller and Umbreit, Germany and the Second World War, Vol. V/II, 209.

Production • 365 138. Willi Boelcke (ed.), Deutschlands Rüstung im Zweiten Weltkrieg. Hitlers Konferenzen mit Albert Speer 1942–1945 (Frankfurt am Main 1969) 244 et seq; Dallin, German Rule in Russia, 379. 139. On Austria see: Norbert Schausberger, Rüstung in Oesterreich 1938–1945: Eine Studie über die Wechselwirkung von Wirtschaft, Politik und Kriegführung (Vienna 1970). 140. Felicja Karaj, Death Comes in Yellow: Skarzysko-Kamienna Slave Labor Camp (Amsterdam 1996); Robert Seidel, Deutsche Besatzungspolitik in Polen. Der Distrikt Radom 1939–1945 (Paderborn 2006). 141. Stavros Thomadakis, ‘Black Markets, Inflation, and Force in the Economy of Occupied Greece’, in: John O. Iatrides (ed.), Greece in the 1940s: A Nation in Crisis (Hannover 1981) 61–80, here 68; ‘Abschlußbericht über die Tätigkeit der Militärverwaltung’, http://www.ihtp.cnrs.fr/prefets/, 118. 142. J. R. Lampe and M. R. Jackson, Balkan Economic History, 1550–1950 (Bloomington, Ind. 1982) 569 et seq. 143. See: ‘Ausarbeitung der Volkswirtschaftlichen Abteilung der IG Farbenindustrie AG’, 14 Mai 1941, in: Wolfgang Schumann (ed.), Griff nach Südosteuropa, 127. 144. Christos Chatziiosif, He giraia selini: He viomichania stin helliniki oikonomia 1830–1940 (Athens 1993) 301. 145. Mogens Pelt, Tobacco, Arms, and Politics: Greece and Germany from World Crisis to World War, 1929–1941 (Copenhagen 1998) 124–126. 146. PA-AA, HaPol Clodius, Griechenland, 4, 468966f; K. Colonel Wendt, ‘Bericht über die Tätigkeit der Abteilung Rohstoff-Allgemein, Unterabteilung Immobilien, Übernahme wichtiger Betriebe in Besitz und Eigentum’; BA-MA, RW 29/32AOK 12/IV Wi, no. 2297 of 31 May 1941 Papapanaos, ‘Juristisches Gutachten’, 30 July 1941. 147. BA-MA, Wi/IC1. 39AOK 12/IV Wi no. 314/41 g. of 22 June 1941 to Ic/AO. 148. PA-AA, Büro St.S., Griechenland, vol. 2: Telegram no. 68 of 4 May 1941, from Altenburg; PA-AA, Büro St.S., Griechenland, vol. 2. 149. BA MA, RW 29/32: Aktennotitz für KTB, 14 September 1941. 150. BA MA, RW 29/94, KTB/WBfh. Südost—V.St. Athen, entry for 19 September 1941: See decree no. 1202 of 9 April 1942: Government Bulletin, 1942, 1, no. 82, 401f. 151. BA MA, RW 19/736: Report no. 35/42 g. of 17 February 1942, WO Athen to the W.Stb. Südosten: BA MA, RW 29/97: Die Bedeutung Südosteuropas für die deutsche Rüstungsindustrie, 8 October 1942. 152. BA MA, Wi/IC1. 1B, part 1: Letter of 19 May 1942 from the Chief of Staff. 153. Mazower, Inside Hitler’s Greece, 71; BA, R 7/2274: Report no. 41653/44 geh. of 2 August 1944, the Wehrmachtintendant Griechenland to the OKW/Ag WV. 154. Letter no. 1374/44 geh. of 14 August 1944, from the Chefintentant/WBfh. Südost to the OKW/Ag WV: Ibid.

366 • Occupied Economies 155. Nikola Živković, ‘The Exploitation of Yugoslav Industry by the Third Reich during World War II’, Studia Historiae Oeconomicae, 14 (1979) 217. 156. ‘Report of 15 May 1941 from Sohl’, in: Dietrich Eichholtz und Wolfgang Schumann (eds.), Anatomie des Krieges. Neue Dokumente über die Rolle des deutschen Monopolkapitals bei der Vorbereitung und Durchführung des zweiten Weltkrieges (Berlin 1969) 330; Muriki Georgiades, ‘Soc. Financiére de Grèce, Soc. Internationale des Mines et de Commerce de minerais’. See enclosure to AOK 12/IV Wi no. 2298 of 31 May 1941: BA-MA, Wi/IC1. 39, 178f. For a list of the contracts signed between Krupp and Greek mineral companies see enclosure to letter no. 480/41 g. of 27 September 1941, from the WBfh. Südost-IV Wi to the OKW/WiRüAmt/Qu III d: BA-MA, Wi/IC1. 7A. 157. ‘Report of 15 May 1941 from Sohl’, in: Eichholtz und Schumann, Anatomie des Krieges, 330. 158. BA Berlin, R 7 VIII/94, 246: Erzeugungsplan der Trepča Mines Ltd. Für 1942/43. 159. BA Koblenz, Ost Dok 18 II/Ia, Abschlußbericht des Generalbevollmächtigten für den Metallerzbergbau Südost, 11 et seq. 160. BA-MA, RW 29/108: ‘Lagebericht vom 8.7.-14.7.42’.

–16– Conclusions Total war demanded a complete integration of all available economic capacity in the war production. For Germany this meant that it had to exploit all of Europe. Almost 25 per cent of all Germany spent on its warfare was taken from occupied Europe, and when the dependent but not occupied countries are included—more or less struggling allies like Slovakia, Hungary or Croatia—this was almost 30 per cent. On top of that it forced more than 7 million labourers from the dependent countries on the Continent into its workforce. As these people were hunted down in ever more violent ways, many others—at least as many as were actually taken to Germany—felt forced to go into hiding. The value Berlin obtained by the hunt for labour was about 10 per cent of its war expenditure, but the damage done to the economies of occupied and dependent Europe was much more. Consequently, Germany got little less than 35 per cent of its military expenditures from occupied Europe, and this was 40 per cent if all of dependent Europe is taken into account. This was not possible without severely damaging the occupied economies, as was the conclusion of Part 2 of this book. In Part 3 the consequences of the war and the German occupation for the economies of occupied Europe have been investigated. From this it has become clear that Europe fell apart in different ways in a number of regions that were exploited, with quite different consequences for the local economies and their populations. In the first place, it is remarkable that notwithstanding the German exploitation, in occupied Western Europe, as well as in the Czech parts of interwar Czechoslovakia, the production—and thus the production apparatus—remained more or less intact. These countries mainly suffered because the occupier took a substantial part of their production, but the fact that it also required these countries to produce as much as possible not only kept their economies going, but even resulted in substantial investments. The only exception in this part of Europe was France, which was, of course, by far the most important to Germany. That country was difficult to exploit as it had hardly any coal or other fuels and to keep its industry going needed these from Germany or other occupied countries. A systematic, Europe-wide planning of the war economy could have assured that this coal was delivered from Germany or another occupied country, for instance Belgium. That was, however, unattainable as a real central economic authority never existed in Nazi Germany. The same was true for the demands of the German representative in France to get more railroad material in order to solve the transport problems hindering the exploitation of the economy. The power of the leaders of the German economy—Göring and Speer—was never strong

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368 • Occupied Economies enough to send scarce products such as coal or transport equipment from Germany to an occupied country. Internal opposition against such steps was too strong. Nazi Germany was a country of boasters, shouting that they would take all they could get from the occupied countries, not of planners. Consequently, it was already clear in 1941 that France lacked the coal and transport capacity needed and could not deliver what the Germans wanted from it, not because the French refused to do so, but because their industry met with some obstacles that could not be surmounted. It had major consequences. In France, just as everywhere else, when Berlin could not obtain industrial products for its warfare, it made sure that it took labour and machinery instead, as well as substantial quantities of food. This could be done only at a terrible cost for the economies that became victims of such a policy. In France, not only did the production plummet deeper than anywhere else in Western Europe, but post-war recovery was slower as well. In most Western countries, according to macroeconomic statistical series, when an educated guess of the illegal production is included, production was already back at its 1938 level in the first full year after the liberation, while in the Scandinavian countries recovery had already started even during the war. In France, however, recovery was slow, and it took at least until 1949 before the 1938 level of production was reached again. Apart from war damage, which was more severe in France than elsewhere in Western Europe as a consequence of the 1944 Allied invasion of Normandy, a destructive way of exploitation causing disinvestments was characteristic up to a certain level. Elsewhere in the western part of the Continent, production was adapted to the isolation of its markets and to the German demands, but it went on. This ongoing production kept the production apparatuses of these countries intact. Therefore, after the war their stocks of raw materials and foodstuffs as well as gold and currency reserves were exhausted, their production was oriented too much to meeting German demands, and their finances were chaotic as a result of the Germans’ way of financing exploitation; however, most of the countries in Western Europe were able to get into production again soon after the end of the occupation. In France this was more problematic, but even here the situation was relatively good compared to the economic chaos and destruction of everything—in some countries even of substantial parts of the population—in Eastern and South Eastern Europe. In the more easterly parts of Europe, an extreme method of exploitation was common. Here, Germany did not take the output, but instead the factors of production. The situation was therefore far worse than in France, the worst-off of the Western occupied countries, if only because France, just like other highly productive Western European countries, was as far as possible exploited by taking the output and not the factors of production. In France, this policy only partly succeeded, and the country therefore also lost much of its labour and foodstuffs, but in Eastern Europe that was the main focus. There, the Germans were really motivated to implement this destructive policy for at least three reasons: first, these countries were low producers

Conclusions • 369 anyway, and so taking their factors of production—mainly labour, but also food— seemed a better way to get what could be obtained rather than letting the countries themselves produce. That it was far worse than in France also had to do with the second motive for this policy: in the Nazis’ exploitation policy, racism always played a role, but their destructive methods of exploitation were never motivated by racism alone. In the western part of the USSR, Germany hoped to find new territory for German settlements. Complete destruction of the local economy, including a substantial part of the population, was therefore considered rational as long as Berlin was convinced that the Soviets would be quickly beaten. The fact that the Germans needed the food of the local non-agrarian population reinforced this. However, in the first months after the invasion it was not only destructive racism that played a role; it was also that Berlin simply did not care whether the Belarusian population survived when Germany needed its food, or whether the Greeks starved as long as the German armies got what they needed. The third, and final, reason why the Germans’ exploitation of these countries was far worse than in the countries in the West of the Continent was that the fronts were near. When German soldiers, especially the fighting units of its armies, needed anything—food in particular—the people in these parts of Europe only got what was left over. Quite often that was simply too little. Clandestine production was higher the more extremely an economy was exploited, which could partly compensate for the most extreme consequences of the German policy. In all the countries of this part of Europe, improvisation was needed for survival. The fact that most people did survive in Poland, Belorussia, Greece and Serbia was in spite of, not because of, any German policy. Food clandestinely produced by millions of smallholders for themselves and their families, and only secondarily for the local black markets, made survival possible. As German policymakers were not interested in these countries, however, hunger in Poland, as well as in the occupied USSR, could be used to decimate those parts of the population thought to be superfluous, and even as an instrument in the Nazi genocide policy against the Jews. Apart from the agriculture needed to feed its troops and obtain some surplus for the German population, the Germans also needed some small-scale industrial production in these countries. The warfare economy demanded all kinds of repair activities, small-scale production of uniform parts, and the like, while from 1942 on, when it became clear that the quick collapse of the Soviet armies had been a pipe dream, the recovery of some industrial production was initiated as well, but apart from some raw materials, it was of little importance. In the whole of the occupied Soviet territories—an enormous area with altogether between 62 and 87 million inhabitants where the front was fluctuating in wave-like movements all the time—only a few hundred thousand workers were active in industry. Almost all important industry was destroyed in the warfare itself, as a result of the Soviet scorched-earth policy, or by the Nazis who expected that after a short war they could build a new economy with German settlers. Agriculture was important, but it was probably even more important for Germany that it could get more than a third of its foreign labourers from these territories. In

370 • Occupied Economies South Eastern Europe, which was eventually exploited in much the same way, they could not even get these. Given the way the Germans financed the occupation and undermined the financial systems all over Europe, it is a miracle that it was only in Greece where galloping inflation resulted. Further, this policy, especially the multilateral clearing system, destroyed almost all international trade between the occupied countries. The countries of Western Europe therefore emerged from the war with their economies isolated from one another. At the same time, they had such enormous national debts and such a superfluous money supply that it was impossible to make the national currencies convertible again. Without convertible currencies any recovery of normal trade relations was impossible; however, contrary to the other parts of the Continent, the productive capacity of these economies was more or less intact. The machinery, labour and firms were still there. It was only in France where these factors had also suffered, although incomparably less than in countries like Belorussia, the Ukraine or Poland, where not only most machinery and industrial installations were destroyed, but even substantial parts of the population, with their local production knowledge, had been lost during the war.

Part 4. Economic Consequences of the Occupation: Conclusions

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–17– Consumption Introduction In a 1946 League of Nations publication, John Lindberg wrote that, during the war, in Germany and the Protectorate of Bohemia and Moravia the calorie levels of urban consumption were slightly lower on the whole than before the war, though not much short of 3000 calories daily per consumption unit. In Belgium, Finland, the Netherlands and Norway, rations varied between approximately 2300–2800 calories per consumption unit a day . . . These figures, although in some cases as much as 20 per cent lower than before the war, do not indicate a truly critical deficiency of calories; but at times local shortages may have been more severe. Levels of roughly 1500–2300 calories per consumption unit were found in the Baltic States, Slovakia, France and Italy, although it is necessary to take into account substantial additions from the black market, particularly in France and Italy. Where such additions were not forthcoming we find pockets of food intake too low to permit of full working capacity and health. In Poland, Greece, parts of Yugoslavia and Albania, distribution was irregular and consumption fell for shorter or longer periods to levels of semi-starvation or outright famine.1

As a consequence of the war and the resulting military demand for food and all kinds of industrial output, as well as the Allied blockade and the German exploitation, the people of Europe had to survive on a level of consumption far below the levels they were used to. Nevertheless, the first impression from the calorific intake mentioned in this citation is rather positive. These levels of calorific intake were, however, not per capita but per consumption unit, a unit comparable to the presentday adult male equivalent.2 As the need for food varies with age, sex and occupation, the consumption unit is more uniform than the individual. As a consequence, the per capita figures of consumption are in general some 25 per cent below the consumptionunit figures used here. In addition, the proportion of the highest-valued (but not always healthiest) foodstuffs—foods of animal origin, particularly meat and eggs— decreased dramatically. Milk consumption was, however, relatively well maintained as cattle and goats were often grazed in fields too wet or too poor to use for anything else. Nonetheless, it was already clear before the war that the main nutrition problem for Europe when cut off from overseas supplies would be the shortage of

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374 • Occupied Economies edible fats. After years of an autarkic policy, Germany still had to import 50 per cent of such fats.3 All over occupied Europe, with only the exception of Denmark, fats and animal products were scarce while the consumption of vegetables, potatoes and brown bread improved—in some countries not only relatively, but even in absolute amounts. Diets, even where these were adequate from a nutritional point of view, were therefore seen as inferior and boring, but in most countries the nutritional composition of the diet, especially in respect of vitamins and minerals, was not much worse than before the war, so Lindberg thought. He even had the impression that the quality of the diet from a purely technical point of view improved in some cases, though it did not mean that people liked it.4 In this chapter these problems will be the central topic. The question will be what consequences the isolation, German confiscations, exploitation and destruction had on the consumption levels in the diverse parts of Europe. For this, differences in agriculture, just like differences in the size of the population compared to the size of the agrarian sector, are very important, but at least as important are differences in pre-war as well as wartime policies. Before the war, the general public’s knowledge of food and nutrition was negligible, and in Western European countries the claims of the specialists calculating the rations, that such large quantities of meat, butter and cheese as the middle classes in Western countries were used to were not just unnecessary but even unhealthy, were mistrusted. Even worse, the knowledge among specialists was limited as well. Nowadays, there are some indications that a very low consumption of edible animal fats can have severe consequences for children and adolescents who are still growing as this will probably undermine their capacity to absorb some vital micronutrients, increasing their susceptibility to certain infectious diseases and even the mortality rate among these young people.5 All over Europe, diets supplied through official rationing systems were adapted to the type of consumer—age, sex, type of work, health, and so on—but as the limited knowledge on nutrition of that time formed the basis of the diets, the idea that animal fats were needed for children was never taken into account. It was simply completely unknown. This probably had severe consequences. The resulting excess wartime mortality among children and adolescents in the Netherlands before the Hunger Winter of 1944–1945 is calculated at something like 100,000.6 In this chapter the question should be what the consequences of the German occupation and exploitation were for consumption levels, for the welfare of the population and, as a consequence, for mortality rates. Of course, in this context, the mortality rates in the occupied countries are relevant only in as far as they were caused by the economic setback resulting from exploitation and the ensuing decline of consumption levels. War and occupation also caused a severe level of mortality as a result of actual warfare, bombardments or partisan activity, while on top of that the Nazi genocide policy against Jews, gypsies and some other groups took the lives of millions, especially, but certainly not exclusively, in the eastern parts of the Continent. Again, these very dramatic and most difficult-to-understand aspects of the war and

Consumption • 375 the Nazi terror are not included in the topics of this book and are discussed only in as far as they had any economic consequences. Here, consumption levels and their consequences are the subjects.

Food During the war period, the cutting off of trade relations with the extra-European world created shortages of raw materials and foodstuffs all across continental Europe. For foodstuffs, however, the resulting shortages were limited. Before the war, continental Europe imported not much more than 10 per cent of its food from the overseas parts of the globe; for the greater part, these were grains and oil seeds needed as basic foodstuffs and also to feed the livestock. Consequently, the Allied blockade was a minor problem in the question of how to feed Europe. A little reduction of waste and misuse, a better-organized use of the soil and especially a more vegetarian diet would have been a more than adequate answer to the limited setback of food supplies caused by the cutting off of all imports by the British. In this respect, it was beneficial that the population was aware from the start that food was in short supply. This in itself eased the effects of the shortages as every housewife took care that the use and storage of food became even more economical than it already was. The type of women’s magazines that were full of knitting patterns, cooking recipes and information on how to make a cosy Sunday morning breakfast now also came up with advice on how to store and cook food more economically—for instance by using shorter cooking times for vegetables—or how to reuse the remains of yesterday’s dinner.7 Even the human body became more efficient with foodstuffs when it became used to a more meagre diet.8 Not only the housewives, but also the traders handled their products with more care. Before the German occupation, some 6 per cent of the total turnover in Dutch grocery shops was lost as a result of foods going bad, containers breaking, vermin and similar problems.9 During the occupation, this waste almost completely disappeared. This was partly a consequence of the public’s less critical attitude and thankfulness for what they could get—no longer complaining when there were some spots on a product; primarily, though, it was the more careful handling by the shopkeeper and his wife of the smaller stocks that did the job. There is no pre-war information on this, but in 1941 the average turnover of stock in a Dutch grocery shop was eight times a year. By 1944, as a consequence of smaller stocks, this became no less than 18 times a year, meaning that the average product spent less than half the time in the shop compared to before. This had two consequences: waste declined, and profits rose substantially.10 Before the war, if reasonable wages had been paid for all labour, including that of assisting wives and children, none of these shops would have been profitable. Just as in most family businesses, unpaid family labour was the basis of their existence.

376 • Occupied Economies During the war, however, these shops became profitable in the economic sense of the word again, most of them for the first time in decades.11 This was not a typical situation for the grocery business or even the food industry, nor for the retail trade. The same was true in wholesale firms, while pharmacies and shops selling items such as clothes, shoes, furniture, earthenware, cutlery and all kinds of other things were also enthusiastic about the fact that they could get a good price for everything without worrying about changes in fashion or loss of value from minor damage.12 Even in private households, the scarcity of those years was good reason to handle everything with the greatest care. Probably, the more economic handling of food by producers, from farmers to retailers, and the less critical and fashionable attitude of consumers were enough to make up for the loss of extra-European imports, at least for food. The same is very likely true for other consumer goods. A concentration on vegetarian food products was in itself also more than enough to solve the food problems resulting from the loss of contacts with the extra-European world. Consequently, the food problems one could find all over the occupied Continent, from mild shortages to real famine, had causes other than the Allied blockade. Nonetheless, the impact of the blockade could be quite severe locally, especially in combination with the loss of intra-European trade contacts (Chapter 14). Apart from supply-side problems, increased demand caused the scarcity. Military operations that destroyed crops and made it impossible to use substantial areas of land for agricultural production were a major problem for the supply side of the market. These problems were concentrated in the central and eastern parts of Europe, especially in Poland, where local farmers had already been driven away during the occupation. It was the German intention that after the war these people should be sent somewhere further east to create Lebensraum for German settlers at the expense of Slavic farmers in Poland and the western parts of the Soviet Union. Some Polish farms were already handed over to German farmers before the war was won. Apart from that, the Wehrmacht claimed land in Poland and the Protectorate as training ground for its recruits.13 In Western Europe, supply problems caused by German settlers or confiscation of land by the Wehrmacht were unknown, while from the summer of 1940 until the summer of 1944 there was little fighting. However, demand was a problem here as well. From the moment the general public recognized and feared international tensions, everyone with cash to spend, remembering the shortages from the last war, started to accumulate private stocks of all kinds of consumer goods. It caused an uneven spread of the available stocks. Another demand problem was the increased consumption of food by specific groups of consumers. There were complaints about the unreasonable amount of food consumed by the Wehrmacht. According to a 1941 monthly report about affairs in the Germanoccupied part of France, the French population ‘complained about the misuse by the German occupation army of the black market for its food supply’.14 Actually, these French were right. German soldiers consumed unbelievable amounts of food, and all

Consumption • 377 over Western Europe, especially in Belgium and France, they used the black market to obtain what they could not easily get another way. This had nothing to do with the German tradition of heavy meals, but enormous food consumption levels were and are typical for the soldiers of every army. A military man will eat much more than he did when he was a civilian. Their officers are inclined to give in to these demands of their men in order to keep morale high. As well as soldiers, some parts of the working classes also ate more than before the war. As a consequence of the disappearance across Europe of an underclass of long-term unemployed, many working-class families could now afford to spend more on food. During the occupation, the number of unemployed fell back to a negligible share of the population—in some countries for the first time since the Great War. With their new jobs, these people had larger budgets and thus a greater demand for food.15 In Western Europe the nutrition problem did not seem that difficult to solve. On the supply side there were sufficient possibilities. With a traditionally high production of animal products and luxuries like wine, it was not too difficult to increase the production of simple calories. It was possible to increase the production of cereals and potatoes and their availability for direct human consumption by butchering a considerable part of the livestock, thus substantially increasing the amount of calories available.16 There were, however, two problems: namely how to motivate farmers to take part in the agricultural transfer programme needed to accomplish this and how to rationalize the distribution of the production inside Europe. The latter problem was dealt with in Chapter 14 on trade. There, it became clear that as a consequence of the German regulation of international payments by multilateral clearing within occupied Europe, normal international trade became virtually impossible. For instance the growing production of vegetables in the Netherlands—a consequence of the fact that smallholders who were victims of the policy of limiting the production of animal products by butchering most pigs and poultry had to find another living—resulted in an increased consumption of green vegetables. Even in the disastrous year of 1944, a year that ended in a terrible famine, Dutch consumers ate 85 per cent more vegetables than they had in 1938.17 Belgium could have used some of these, but legal export was hardly possible as the national authorities, and even the local Germans, took measures against any exports not directly ordered by Berlin because these were never paid. To take another example, notwithstanding the fact that the Danish production and consumption of butter, cheese and pork were extremely high, only Germany could take a share of it. When, as in these cases, the amount that remained in the producing country was still extraordinarily high, there was no alternative for the local population but to eat it all. It was the main reason for the high Dutch consumption of vegetables and the unhealthy, fatty, overample diets in Denmark.18 In Western Europe, the Berlin food policy was primarily a policy of nonintervention. The occupied countries had to solve their own problems. The Germans seized food only to feed the occupation army and in addition some of the superfluous

378 • Occupied Economies products of the producing country, such as vegetables from Holland and cheese, butter and pork from Denmark. It was only in France that Berlin took some 10–20 per cent of the agrarian production. Getting food from France had been a target from the start. In 1940 some German officials even played with the idea of moving the entire French industry to Germany, thus transforming the most important economy of Western Europe into an archaic, agrarian one that would only produce some food.19 In 1941, when it became clear that French industrial production was disappointing, food exports increased.20 These exports undermined the country’s own consumption to irresponsibly low levels. In Western Europe, apart from the isolation from the overseas world, the cause of food shortages was primarily the Germans’ destruction of internal European trade. It was only in France that German demand was of major importance. In Eastern and South Eastern Europe, apart from these problems, warfare, partisan activity and destruction and especially the Germans’ ruthless lack of concern for the interests of the local population were at the root of far more serious problems. Enormous confiscations in order to feed the German armies and also to send food to Germany itself were the results. Although raising the agrarian production and especially its calorific value could easily have been done by encouraging the production of vegetarian foods, official statistics show that the German occupation had a negative effect on the food production. All over Europe, food production declined by about 20 per cent in monetary terms, although probably the calorific value declined far less, at least in the western parts of Europe. A decline of 20 per cent, together with the blockade, would have resulted in food shortages of some 30 per cent. It is common knowledge that all over Europe, it wasn’t the people working on farms or in related areas or the rich who changed their diets. The less-well-off in the urban centres had to pay the price.21 Actually, in most countries, wartime diets were plain, and most people had to survive on a much-reduced and much less popular diet than they were used to. For the Western European middle classes, people who before the war often ate too much, this was not a bad thing for their health, but it was for their spirits. It is this story that, although it seems logical and coherent, in itself is an indication that there is something wrong with the statistics concerning food production and distribution during the Second World War. The working and middle classes saw their diets shrink, but if the availability of food actually declined by 30 per cent and only these urban classes had to carry the burden, it is hard to explain how they survived. Even in the highly urbanized Netherlands, with an agrarian population of no more than some 20 to 25 per cent of the total population, it would mean a decrease in food consumption by the less-well-off urban classes of more than 50 per cent. These data make it unexplainable that most people survived. Although a decline of food production inside occupied Europe by 20 per cent is always explained by the problems confronting farmers, this example makes it clear that this cannot be true. Production actually declined far less, if at all.22 Clandestine production, sold for black market prices, and the price differences between the

Consumption • 379 high-quality pre-war production and the basic foodstuffs produced during the war made up for the difference. People survived but in most countries only by buying clandestine food for extreme prices on black markets. Consequently, the attitudes of the rural population and the urban population towards each other were marked by a growing animosity, especially in countries where the urban shortages were severe and city dwellers had to buy clandestine food to survive. In 1941 a préfet of a district in non-occupied Vichy France wrote: ‘Also there exists nowadays among urban circles a growing animosity against the peasantry and the gap between the cities and the countryside is increasing everyday. People are imagining that peasants are hiding their products and want to take a kind of revenge against the urban population.’23 In the same period, another préfet wrote that the small-scale black market was needed to feed the population.24 Before long some small-scale black-marketeering— grey markets—was even more or less accepted.25 It was the black market that provided a growing part of the food supplies of the urban population. It is clear that the statistics based on official production are incomplete as black market production was an increasing part of the total production (Chapter 15). The apparent wartime decline in production was at least to an important extent just a statistical reflection of the transfer of production from legal to clandestine markets. Because most clandestine production was mainly absorbed by local consumption, this was obviously even more the case if one focuses on consumption. According to official statistics, the food production across Europe was declining. This resulted in a number of countries introducing official rations, which ranged from relatively modest to simply too little for survival (Table 17.1). It is clear, however, that the smaller the official rations, the higher was the black market supply. Nowhere was black market production negligible. For instance, in the Netherlands, where even the occupier was positive about the agricultural and food regulation policy, nonetheless, after little more than a year of occupation, between 20 and 25 per cent of all food production no longer came onto any legal market.26 As legal rations were still enough, black market production here was probably, in the first place, a correction to the forced adaptation to the disliked substantially vegetarian diet implemented by the rationing system. In 1941 the Dutch clandestine paper Vrij Nederland—Free Netherlands—wrote that compared with the situation in Belgium and France, the situation in the Netherlands was still relatively good.27 Notwithstanding this fact, there was a lot to complain about. Middle-class Dutchmen missed their white bread and eggs for breakfast, their bacon, pork and beef for dinner and a good beer or genever after work. They rightly blamed the Germans for this. At the same time, The Hague’s rationing policy obliged the working classes to consume an official diet that was not only too middle-class for their taste, but often too expensive for their purses as well. They did not want margarine or butter but lard, and not so many vegetables, but more potatoes. Nevertheless, by illegally selling some butter and meat coupons and purchasing some lard or extra potatoes at a farm, they managed quite well. From all modern research, it is clear that

380 • Occupied Economies Table 17.1.

Daily Standard Rations in a Number of Countries, 1940–1945 (in kilocalories) 1940

1941

1942

1943

1944

1945

Germany

2,125

2,020

1,845

1,990

1,930

1,671

Belgium

—

1,360

1,365

1,320

1,555

—

France

—

1,300

1,115

1,080

1,115

—

Netherlands

—

1,925

1,805

1,765

1,580

—

Norway

—

1,620

1,385

1,430

1,480

—

Poland

—

845

1,070

853

1,200

—

General Government

—

1,250

1,235

1,135

1,160

—

Baltic lands

—

—

1,305

1,305

1,420

—

Protectorate

2,045

1,820

1,785

1,860

1,740

—

Croatia

—

—

815

905

915

—

Serbia (Belgrade)

—

—

580

1,035

960

—

Note: When the difference between the data from the two sources was less than 100 kilocalories a day, the data from Kroener et al. are taken. Otherwise, the average is taken. Richard Overy found for Germany a standard ration of only 1,412 kilocalories for 1945, while the diet in Berlin was probably even only 800 kilocalories. Such differences are caused by the fact that, especially in the last months of the Third Reich, many data are only of local value. Richard Overy, The Penguin Historical Atlas of the Third Reich (London 1996) 113; Lucius D. Clay, Decision in Germany (New York 1950) 31. Source: Bernhard R. Kroener, Rolf-Dieter Müller and Hans Umbreit, Organisation und Mobilisierung des deutschen Machtbereichs. Teil 5. Organisation und Mobilisierung des deutschen Machtbereichs— Teilband 2: Kriegsverwaltung, Wirtschaft und personelle Ressourcen 1942 bis 1944/45 (Stuttgart 1999) 244; John Lindberg (League of Nations), Food, Famine and Relief 1940–1946 (Geneva 1946); own calculations.

until the winter of 1944–1945, hunger was unknown in this country.28 The situation was worse in France, and even far worse in Belgium during some periods, but there as well the population survived, although, as already seen, even in the Netherlands the mortality rate, especially of children and adolescents, was higher than normal.29 From 1941 on, black production across Europe was at least 20–25 per cent of the total food production, implying that on average the actual consumption was 20–25 per cent more than the rations in Table 17.1 suggest, and in countries with serious shortages at least 35 per cent more. Apart from that, even in the over-regulated Netherlands, no coupons were needed for some foodstuffs such as vegetables. They were still freely available or rationed in another way. Therefore, during the harvest years of 1942–1943 and 1943–1944 when, according to Table 17.1, Dutch rations were between 1,750 and 1,800 kilocalories a day, daily legal consumption per capita was in fact on average between 2,089 and 2,123 kilocalories.30 Including black market purchases, normal users such as a fully grown man, without any special rations for heavy work or bad health, used on average 3,241 kilocalories a day in 1942–1943

Consumption • 381 and 3,187 kilocalories in 1943–1944, but by now reduced purchasing power made the difference.31 In countries where famine hit the population—Greece, Serbia, Poland and the occupied USSR—black market purchases were of incredible importance. According to Table 17.1, at times the official rations in Poland were less than 900 kilocalories a day, which means that in the long run no one could survive on rations alone. These data do not take account of the fact that at times substantial parts of the population, such as Jews, were not entitled to any rations at all. Therefore, Madajczyk’s conclusion that in the General Government 50–65 per cent of all food consumed by the local population was supplied through clandestine channels seems quite plausible. It is the only explanation for the fact that, notwithstanding severe problems and increased mortality rates, most Poles survived.32 The rations presented here for Serbia and Croatia are calculated from information on rations per product given by Lindberg. The outcome in these countries, which also had many smallholders, was even worse than in Poland, and it seems reasonable to presume that the populations here also knew how to survive with clandestine production. However, that is probably too optimistic for Serbia, a food-importing part of the former Kingdom of Yugoslavia, cut off from other parts of that kingdom. The severe problems caused by this are reflected in the disastrous rations for Belgrade in 1942 given in Table 17.1. Although the people will have helped themselves as far as they could, this was a level of consumption directly threatening their chances of survival. As Berlin had little interest in the survival of the Serbs, it first fed any available food to its troops and anyone doing work for the Germans.33 As a consequence, occupied Serbia was extremely badly fed, and Croatia, although it was officially independent, was little better off. There is no available information on general rationing schemes for occupied Russia, but in large urban centres like Kiev, Kursk, Smolensk or Pskov, the average intake obtained through rations was similar to that in Poland or the former Yugoslavia and seldom exceeded 800 kilocalories a day. Kiev, especially, was a focal point of Nazi hatred against all that was Slavic. By 12 August 1941, Hitler had already ordered the annihilation of the city by bombs and gunfire as soon as army supplies allowed. A little more than a month later, in September 1941, Göring said in one of his meetings with Backe and representatives of the army staff that ‘the Gypsy like population’ should not be allowed to consume any of the food captured by the Germans and repeated his statement that ‘in the occupied territories, as a matter of principle only those who work for us must be assured of the appropriate food’.34 Hitler’s idea that in these areas of Europe the occupation of large cities was not desired for any economic reasons should therefore be kept in mind.35 After Himmler visited Kiev, he came to the same conclusion, commenting on the people living there that ‘one could easily do without eighty to ninety percent of them’. It was the general opinion of German officials that in the coming winter ‘at least ten to twenty million of these people’ would starve to death in the region.36 The starvation policy based on just not supplying the cities and sending all food available to the people working for

382 • Occupied Economies the occupier was actively supported by the Wehrmacht and propagated among the soldiers. ‘Each gram of bread or other food that I give to the population in the occupied territories out of good-heartedness, I am withdrawing from the German people and thus my family’, they were told.37 Again, it meant that the survival of the people can only be understood if a substantial part of the diet was obtained through channels other than German-controlled supply lines. Among the urban population of the occupied parts of the USSR, however, many people simply died. The situation was, if not the same, then at least similar all over Eastern and South Eastern Europe. The fact that rations were simply not enough again becomes clear in Table 17.2, showing the 1943 rations in Estonia, given here because it is one of the few countries we have information about. From these statistics one can calculate that Estonians received around 840 kilocalories a day. There was just a small minority of Germans living in Estonia, as after the Molotov-Ribbentrop Pact the Baltic Germans were sent back home to the Reich, and only the Germans from Lithuania were allowed—and more or less pressed—to return to their homes after the German occupation. The rations of the Germans living in Estonia were almost twice as high as those of the Estonians.38 The official explanation was that in comparison to the Germans, the Estonians were in a better position to search for food in the countryside. In fact, with galloping black market prices, many Estonians, too, had severe problems in obtaining what they needed illegally. Just as for Russia, there were no general rationing schemes for Greece, but Lindberg (League of Nations)—who gives no information at all on the USSR—wrote on this and some other Eastern European countries: ‘In Poland, Greece, parts of Yugoslavia and Albania distribution was irregular and consumption fell for shorter or longer periods to levels of semi-starvation or outright famine.’39 These countries and Russia were also the only ones on the Continent where children below the age of three got less than three-quarters of a litre of milk a day.40 Consequently, here the health situation grew worse, and mortality rates rose. The fact that the situation was really severe is known from the Greek famine, the best-known period of extreme hunger of the wartime period. On this, Lindberg wrote that even black market supplies dried up.41 In the Dutch Hunger Winter of 1944–1945—a rather severe, but short famine—the black margin was at least 40–50 per cent of the food production. Such margins are calculated per calendar year, but the hunger period was spread over two years, from September 1944 to May 1945. When corrected for this, it is clear that during the hunger period 75 per cent of all food was obtained clandestinely.42 All over Europe, with the exception of just a few countries, at least during certain periods illegal purchases were needed to survive. As mentioned earlier, in Belgium there were black market levels of 40–50 per cent of the total food consumption in 1941 and 1942. As financial strength (including valuables that could be used for bartering) was not evenly spread, the inequality in wealth became of importance for actual food consumption, and thus in some countries with it the chances of survival. Working-class people often earned their share in clandestine production, however,

Consumption • 383 Table 17.2.

Rations for Germans and Estonians in Estonia, Summer 1943 Weekly rations in grams

Bread

Weekly rations in kilocalories

Germans

Estonians

Germans

Estonians 3,587

2,325

1,700

4,906

Meat

250

250

390

390

Butter

250

180

1,875

1,350

Cereals

175

150

672

576

Condensed milk

42.5

—

234

0

Quark

31

—

47

0

Cheese

47

—

180

Coffee

78

20

Cacao

16

—

Sugar

225

—

Marmalade

175

—

Salt

250

—

Potato flour

125

—

Total calorific value of the weekly rations Total calorific value of the daily rations

0

—

—

—

—

900

0

422 —

0 —

843

0

10,468

5,903

1,495

843

Source: NA, London (KEW) GFM 33. Frame 342469–342471 Aufzeichnung von Wrangell, 10. Juli 1943.

as intermediaries between the countryside and the urban black markets, at least in years of relatively good diets. During such periods, black market production was concentrated more on luxury products. In the Netherlands, even in the early years, illegal potatoes were not unknown, however, but these were no more than 10 per cent of the total potato crops, while the clandestine production of animal products like cheese or butter was already up to 40 per cent.43 People with some money to spare tried to compensate on the black markets for the loss of luxuries from official diets. Black-marketeering, therefore, was also needed for the trade-off between labourers wanting to sell coupons for luxuries that were too expensive for them in exchange for potatoes or other basic foodstuffs, while at the other end of the social ladder, people tried to get more luxuries like meat, cheese, butter and eggs, as well as game or expensive French chateaux wines.44 In a hunger period, people simply needed extra calorific intake. At such times, the black production was concentrated on potatoes, grain or even sugar beets—one of the most important sources of calories in 1944 and 1945 during the famine in the Netherlands. Then, the clandestine production of relative luxuries even declined a little.45 Nevertheless, the elite tried to keep their luxury consumption at the levels

384 • Occupied Economies they were used to, even in the Dutch Hunger Winter. At Christmas 1944—in the middle of this terrible winter when for many a simple potato was a luxury—a rich Rotterdam banker’s family ate a copious Christmas dinner in which the only concession to circumstances was that they ate only six, rather than twelve, oysters a person as a starter.46 In other countries where official rations were relatively high and food production and distribution well organized, as in Germany, Denmark or the Protectorate of Bohemia and Moravia, illegal food markets were more or less the same size as in the Netherlands before the Hunger Winter—20–25 per cent—while in countries where the official rations were rather low, such as France, Belgium, Italy or Poland, black market production was much higher.47 According to the official rations in Table 17.1, the Netherlands had the highest average levels of Western Europe, but Denmark is not in the table. There, an important part of the available food was still free of any regulation, apart from some price control. Most foodstuffs were available rather abundantly. That did not always mean that there was enough for everyone. All across Europe there were attempts to adapt the rations to the special situations, the kind of work, the sex and the ages of the consumers. For example, children’s ration levels varied according to their age and adults’ according to their workloads, while there were special diets for pregnant women or young mothers feeding babies. Apart from that, it was quite common for factories to serve hot meals for their labourers without demanding coupons, while schools gave milk, fruit and/or vitamins to the children. This does not mean that every school or factory had such facilities. There were endless variations between schools, dependent on local authorities, and in factories, dependent on the importance of their production in German eyes, as well as on the social policy of the board. In general, miners all over Europe got some extra food, just as labourers in machine factories, construction or heavy industry did. A problem with all rations was that they were assigned to individuals, but bought by, cooked and eaten in families, where traditionally housewives took care of these activities. These women made sure that their husbands, as they earned most of the family income, got the best of it, that is the men received a more substantial part of the available meat, eggs, butter or cheese. ‘The cheese is for my husband. I cannot expect him to eat sweet toppings on his bread’, a Dutch housewife said to a social worker in Utrecht in 1943. The remark implied that neither she nor her children got the rations assigned to them.48 It is rare that a mother forgot that her children also needed good meals to grow, thus making it almost impossible to get a reasonable share herself. Consequently, it was not uncommon, even in the reasonably well-fed Netherlands, to find a housewife with nutrition-related diseases as a consequence of the fact that she gave too much of the available food to her husband and children. Husbands, who traditionally did not bother with buying, preparing or sharing food, most of the time did not even have to demand the best part, but got it without even noticing it.49 In Denmark, the only other country where there is any information about this phenomenon, it was less noticeable because of its substantially better

Consumption • 385 supplies. Nevertheless, even there it was found that, to economize on the family rations, babies were introduced to solid food at a later age than before the war, implying that the mother had to breastfeed her child for a longer period.50 Not only within families, but also in countries as a whole, the food was not as fairly and evenly distributed as was intended by the distribution systems. Clandestine production caused a very uneven distribution of available resources as well as incomes. It is very hard to find data on this phenomenon, but it is clear that black market trade caused a redistribution of incomes from the urban population to the countryside. Especially in periods of severe shortages, town dwellers had to buy food directly from farmers and peasants, often paying high prices. They either used cash or bartered valuables like jewellery, gold and furniture; at times, even labour or sex was accepted in exchange for food. Again, it is only the Netherlands where there is any information about this phenomenon. From there, however, it is clear that while the available national income in 1943—that is the national income after the Germans had taken what they wanted—was only 50 per cent of the available national income in 1938, the average income of a Dutch farmer had grown by about 20 per cent. In other words, the urban classes had to pay for what the Germans took, as well as for the extra rural income. The share of the agrarian part of the population—at that time little more than 25 per cent of the total population—in the available national income was by then 39 per cent, while it had been only 16 per cent in 1938. In September 1944, when the period of famine started, this even rose as high as 61 per cent.51 As clandestine food prices reached a level of 861 in 1943 (legal food prices in 1938 = 100) and even 2,710 in 1944, it is clear that real wages slumped. When black market purchases are included in the consumption of the wage earners, and black market prices in their cost-of-living price index, real wages (1938 = 100) declined to 19 in 1943 and only 7 in 1944.52 As long as working- and middle-class people could survive on what was legally distributed at regulated prices, this was not really a problem. It meant that they had to survive on a meagre diet, but that their existence was not immediately threatened. When, in 1944 in the Netherlands—and much earlier in other countries, especially in South Eastern and Eastern Europe—surviving on legal rations was no longer possible, the only other solution was using whatever they possessed and whatever means possible to get the food they needed. Now, savings, jewellery, gold, antiques and any other valuables urban people possessed, as well as labour, went to the countryside. Apart from that, theft, violence and everything else that would be called criminal in normal times was used to obtain the food needed. According to Table 17.1, Germany, the Protectorate of Bohemia and Moravia, and the Netherlands had the highest rations of Europe. Between 1940 and 1944, including all legally available food that was not rationed, an average consumption level of 3,000 kilocalories a day was possible only in Germany, Denmark, Bulgaria and the Protectorate. According to the League of Nations, in Belgium, Finland, Norway and the Netherlands this was between 2,300 and 2,800 kilocalories, but in Belgium, there

386 • Occupied Economies were in fact continual complaints that rations were not available. It would seem, therefore, that the League was too optimistic about the nourishment of that country, where, according to a German document, in mid-1941 the average consumer’s rations were less than 1,236 calories. Even this meagre diet was not available all the time, and at times rations were much lower, while 70 per cent of the remaining ration was covered by potatoes alone.53 In all other European countries, including France, total consumption was less. The League, which gave this information, had, however, some ideas about food still being available without coupons, but it knew little about the black markets.54 Nevertheless, the fact that French nutrition was a problem is clear, as here the food intake was already low long before such problems became common in most other Western European countries.55 In May 1941, the miners in the north of France went on strike for a fortnight. Apart from low wages, nutrition problems were the main complaints of these strikers. This strike followed a comparable strike in the Belgian industrial areas among miners and labourers in steel factories that started on the symbolic date of 10 May, exactly a year after the German invasion. At that time, the Germans even feared unrest among the entire population.56 An additional problem was that, although food problems in France were limited and could largely be solved by a more vegetarian diet, a substantial black market partly prevented the necessary agrarian transformation required for that.57 Apart from the German policy, it was difficult, especially in France, to motivate farmers and peasants to adapt their production to wartime needs. According to the League of Nations, the urban populations of France, the Baltic countries and Italy legally got 1,500–2,300 kilocalories a day.58 Before the war the average daily food consumption in France was 3,400 kilocalories, and the conclusion that wartime rations were meagre cannot be denied, nor the fact that black market consumption was important.59 Just as in France, the labourers in Belgium protested against the low level of nutrition and low real wages caused by increased price levels.60 Although it is clear that the French food production did not decline by 30 per cent,61 it is also clear that the country was cut off from its food imports and, as a consequence of the German food policy, was confronted with substantial claims on its production. Together with the German trade policy causing the isolation of the national food markets, this resulted in serious nutritional problems in Belgium and France. Nonetheless, these problems never developed into famines as they did elsewhere. French farmers and peasants neither trusted the governmental collectors of food, nor understood the regulation of production. They thought it all unnecessary. ‘For some time it has been the distribution of eggs that has caused critical remarks. The [Vichy] Ministry of Food Supply, it is said, wants to prohibit 85 per cent of the production. For what reason?’, so the French farmers asked themselves according to a memo of 1941 on the mood among the French population.62 French farmers did not understand that as chickens and human beings were competing for the same foodstuffs, given the circumstances, producing eggs was probably quite profitable, but

Consumption • 387 nonetheless uneconomical. In the Netherlands, a similar policy resulting in the butchering of 90 per cent of the chickens and 65 per cent of the pigs was accepted, although not without complaints.63 This was regarded so differently in France due to the fact that the official distribution policy was not based on any pre-war preparations. Therefore, all measures introduced to adapt agriculture to the circumstances were seen as German, and the French authorities executing this policy never managed to win the confidence of the farmers. One of the reasons for this was that, to protect consumers and suppress inflation, official prices were kept low. Only very slowly were agrarian prices adapted to the legitimate demands of the farmers, who, after the Depression of the 1930s which hit agriculture hard, now wanted to obtain at least some of the advantage of their improved market position. It wasn’t until 1943 that the German authorities in France thought that, compared to industrial prices, food prices were no longer too low. The price adaptation came too late, however, causing a wrong attitude among French peasants and farmers to make a success of the policy needed to keep Europe fed. The French countryside was uncooperative. The fact that France alone of all Western Europe had to supply the Germans with more food than it could actually afford gave the French agrarian population a good argument not to produce for legal markets, thus only making the situation worse. Consequently, substantial parts of the food supply never reached the consumers through official channels, which made it extremely difficult and expensive to survive, especially outside the countryside. In France, the problem that the agrarian population simply refused to sell a substantial part of its production at official prices never was solved.64 In November 1943, the situation in French cities grew even worse, as a result of the growing transport crisis. As almost all transport facilities were working for German services, the French population was obliged to survive on local production, which made life very hard in some urban areas. On top of that, the ‘mangelnde Abgabebereitschaft der Landbevölkerung’—the unreadiness of the population in the countryside to sell their products—became a growing problem.65 The French price policy was meant to protect the consumers, but in the end it was no advantage to the consumers at all. As it was impossible to get sufficient provisions at official controlled prices, consumers had to buy a substantial part of their food at extremely high black market prices. This caused an even greater decline of real wages, but lack of exact data makes this impossible to calculate. In the Netherlands in 1943, real wages were—if clandestine purchases and prices are included—only 19 (1938 = 100). Two years earlier already, real wages in the Netherlands had slumped by more than 40 per cent, and the situation in France was probably worse. In 1942, that is following the important miners’ strike of 1941, there were still complaints about nutritional problems hindering production, even in a sector as critical as coal mining.66 However, French farmers complained about official prices. While manufactured goods were expensive, farmers were not allowed to increase their prices to a comparable level. They had to pay higher taxes nonetheless.67 From their perspective, the black market seemed a reasonable alternative to the legal sale of their products.

388 • Occupied Economies In both France and Belgium, in the period following the lost war, free clandestine markets developed with extremely high prices. The Vichy government had no answer to this. During the economic Depression of the 1930s, in the Netherlands, as well as in Denmark, the agrarian production was already regulated. The target in the Netherlands was to help farmers endure the Depression years. Minimum prices were therefore guaranteed, but during the Depression The Hague did not want to increase the production of foodstuffs for which there were no markets. Therefore, the subsidized high prices were paid only for limited quantities. This implied that even by this pre-war period, a permanent control of the farmers became normal. Thus, at that time farmers and controllers had already got to know each other, and although farmers were seldom enthusiastic about the policy of the government or its agents and complained all the time, they trusted each other, nonetheless. Often such controllers themselves came from the farm, and the higher ranks of the so-called Crisis-Agricultural Organisation were filled with specialists from the Wageningen Agricultural University. Most of the students there were sons of farmers. It was clear that this organization, which during the war would organize the food-distribution policy, knew and understood the countryside.68 Therefore, the farmers trusted that their interests were not forgotten, although these were not the only interests the organization had to reckon with. Dr S. L. Louwes, leader of the Dutch food regulation, started the war by raising legal food prices. He was severely criticized for that, but it made it clear that he looked after the interests of farmers. As a consequence, for Dutch farmers, black markets were not the only way to get rid of the depressed price levels of the 1930s.69 The understanding between farmers and governmental organizations made it possible to obtain almost 80 per cent of all production for legal distribution. Until the Hunger Winter, when the urbanized western part of the country was isolated from its normal supply, Louwes’s organization could therefore handle the immense problems it faced. In Denmark, just as in the Netherlands, a pre-war organization organized the agrarian production and food-distribution policy. In Belgium and France, however, wartime regulation was set up by organizations that were not particularly trusted. It was their job to implement the agrarian production regulations and food distribution at a time when the black market trade was already in full swing. In both countries, but especially in Belgium, the problem of feeding the population was also extremely difficult because there was simply not enough food to fill all stomachs, especially in 1941–1942. The French problems were substantially increased in November 1942 when the Allies conquered the North African French colonies that had supplied the country with essential edible fats, scarce all over Europe. No less than 40 per cent of the fats the French consumed came from these countries, which also supplied France with cereals for human and animal consumption, as well as animal feed, vegetables and fruits. At the same time that France lost its colonies, the German demand for French food increased, and the country had to send more

Consumption • 389 cereals and meat than ever to its suppressor. Now, the German authorities in Paris became worried and wrote that French consumption of foodstuffs like flour, meat, potatoes and sugar was on average only 52 per cent of the German intake and the consumption of fats only 33 per cent.70 As these were the official rations, it again makes clear the fact that the French population was, for a substantial part, fed by clandestinely produced food. A substantial part of the food production was never registered. In the Netherlands, this was somewhere between 20 and 25 per cent of the agrarian output,71 even before the hunger period of 1944–1945. According to some it was up to 50 per cent in Belgium.72 The general opinion is that in France clandestine production was high as well. As a consequence, during the entire occupation period the French authorities were not just incompetent at controlling the markets, but sometimes even unwilling, as by clandestine production the ‘agricultural sector . . . catered to the population’s desperate need to supplement their wholly inadequate food rations’, while it also ensured ‘that many products remained in France’.73 Small-scale black trade—grey markets—was more or less tolerated, and, as a consequence, getting an impression of the overall situation is difficult. Apart from differences between the countryside and urban centres, the country fell apart in a number of different ways.74 As black and grey markets resulted in a very unequal distribution of essentials, it seems absurd that officials nonetheless wrote that black markets should be kept intact. The government should have opposed this not only on principle, but also because of the fact that its political authority was greatly undermined because it was not capable of accomplishing an equalizing distribution policy.75 That it was very hard, if not impossible, to survive without black market goods was a common phenomenon, however, all over Europe, except for just a few countries. This, of course, resulted in extremely high black market prices. In Belgium clandestine food prices were already 623 as early as 1941 (legal food prices in April–June 1940 = 100) and in 1943 even reached a level of 1,594.76 As it was absolutely necessary there to obtain illegal foodstuffs at least until 1943, it would seem that it was only possible for the extremely wealthy to get what was needed, as few others could afford such prices. Black markets had all kinds of negative consequences as they drew everybody into clandestine circles, undermining public morals and good citizenship. It is hardly surprising that in France, as a consequence of the importance of the black markets, there were many complaints about corruption.77 Officials living on frozen salaries also needed sources in order to get their share of the clandestine food production. It was more or less possible to feed the population only if the black markets made up for the official 30 per cent decline in French agrarian production and then only when everybody got at least a small share in that part of the production. In other words, small-scale corruption was needed. Although France and Belgium seemed to have the same problems, in Belgium the situation was actually slightly different. In France the organization failed, and the Germans took too much; in Belgium the production was too small to feed the people

390 • Occupied Economies without substantial imports. The Belgian food problem was unsolvable for any Belgian government, and—although the lack of preparation and chaotic organization made things worse—it seems unreasonable to blame Brussels for its failure to organize a decent distribution. Production was too low, and foreign deliveries ordered by Berlin too small. Of course, guesses that 50 per cent or more of the Belgian agrarian production went to black markets make it clear that it was also impossible for a substantial part of the production to maximize calorific output by a concentration on vegetarian food products like potatoes.78 Consequently, the intake of food—simply calories, no luxuries—declined dramatically in 1940 and 1941. On average, Belgian working-class families ate only half the pre-war amount of potatoes and a third less bread without any compensation by other foodstuffs.79 Within a year, basic nutrition was undercut, and as the German policy made legal trade almost impossible, only smuggling could transfer food from the relatively well-fed French and Dutch to the undernourished Belgians. The destruction of intra-European trade as far as it was not directly of interest for the Germans created an impossible situation for this highly industrialized and urbanized country that had been dependent on imported raw materials and food since the nineteenth century. As far as any of these were of importance for its wartime production, Berlin took care of the raw materials, but for food, the occupied country was left in the lurch. One can blame the pre-war government that did nothing to anticipate the occupation, but it would not have mattered much. Nevertheless, when in 1942 and 1943 Brussels got some grip on the situation again and pressed farmers to concentrate production on potatoes, there was an important improvement. Between October 1942 and April 1943 the black market for basic foodstuffs became substantially less important. In this period, no more than 17 per cent of potatoes were purchased clandestinely.80 Actually, including illegal consumption, the average Belgian now ate 780 grams of potatoes a day, 25 per cent more than before the war.81 The years 1942–1943 and 1943–1944 are known in Belgium as the miraculous herring years. It is commonly believed that the enormous catches and consumption of this fish saved the population from starvation.82 It is a myth, like the consumption of tulip bulbs in the Netherlands during the Hunger Winter. Actually, there were not enough tulip bulbs in the Netherlands or herrings in Belgium to offer more than a limited addition to the diet. The average Belgian ate one kilo of herring a month,83 which, although not unimportant as a source of fats and proteins, was too little to save the population from starvation. The fact that 40 per cent of all Belgian families still had their own kitchen gardens was probably of more importance. Notwithstanding substantial improvements, especially from 1943 onwards until the liberation and even after, the black market was essential to feed the Belgian population. In the Netherlands and Denmark, rations resulted, together with some still freely available foodstuffs and limited clandestine purchases, in a diet that was less than most consumers were used to but, according to all scientific knowledge, not unhealthy. In the Netherlands the food policy was actually based on new scientific ideas

Consumption • 391 about what people needed, but it would take another twenty-five years before such ideas became common opinion after magazines on good health, as well as the cooking and slimming pages of housewives’ magazines, recommended them. The diets meant that most middle-class Europeans ate less, and especially less fatty animal products, while utilising brown bread, more vegetables—if not cooked too long—and fruits would be an improvement. In fact, that was exactly the diet that made it possible to feed the people of Western Europe from its own soil. Therefore, it was what the people got to eat, whether they liked it or not. Nonetheless, all over Europe—excepting Denmark again—mortality, and especially child mortality, increased. According to Ralf Futselaar, hundreds of thousands of war victims have been ignored because hardly anybody noticed that in a specific age group—say, children and adolescents between 2 and 16 years old—mortality rates, which had been decreasing since the late nineteenth century and again after the war, increased during the Nazi occupation. From 1933 on, one can see the same in Nazi Germany, where the end of the Depression and the start of the Third Reich resulted in higher child mortality rates.84 Futselaar found strong indications that a more vegetarian diet as introduced all over Europe was problematic for children. It resulted in deficiencies of some essential micronutrients which probably explains not only the increase of some infectious diseases—for instance tuberculosis—among this age group, but also the higher mortality from these infections.85 If this knowledge had been available at the time, it could have helped to solve the problem by a slight adaptation of the children’s rations, but then again this would not have solved the problem in families where the father was too often the consumer of most of these products that were essential for children. Although sometimes rations were inadequate and not up to the consumers’ liking, the only serious famine in the western parts of Europe, the Dutch Hunger Winter, was a consequence of the military situation rather than of any German policy. In Western Europe, where the countries had to produce for the occupier, consumption was limited as the Germans needed everything, but it was done in line with Göring’s order that everybody in Europe could starve before any lowering of German rations was done. Only people in the occupied countries working for the Germans should get the food necessary to carry out their work. For that reason, these countries, as well as the Protectorate, were relatively well fed. Of all these countries only France was forced to send substantial amounts of food to the occupier. Although this made the situation in France relatively bad, in other parts of Europe the situation was far worse. As seen in Chapters 8 and 15, the 1938 Greek per capita GDP (gross domestic product) was only a few 1990 Geary-Khamis dollars below that of Czechoslovakia, and a quarter higher than the per capita GDP of Poland or the occupied parts of the USSR. The fact that, on average, South Eastern Europe was extremely poor and underdeveloped was caused by the levels of economic development in Yugoslavia, Bulgaria and Albania being more comparable with those of some Asiatic countries than with other European countries. In Greece, as in most other occupied countries, two systems of allocation of provisions began to operate immediately after

392 • Occupied Economies the establishment of the Axis authority: a system of rationing introduced by the regime, which provided rations through coupon arrangements, and a black market run by profiteers, collaborators and members of the occupation armies. Faced with a reduced grain supply and the overall scarcity of foodstuffs, the regime in Athens introduced public control over all vital agricultural products by imposing delivery quotas and price controls. The Ministry for Agriculture and Food endeavoured to collect the available corn in rural areas in order to distribute this in the towns through a system of rationing. In Greece, however, the collection policy modelled on a German pattern of claiming a certain amount of output per acre failed. Just as in France, the attitude of the Greek farmers was a major obstacle. Already uncooperative after confiscations of crops and stocks by the Axis armies in 1941, the 1.3 million smallholders refused to participate in the official food-distribution policy under the occupation regime.86 These small producers evaded all governmental regulations, as here again the peasants were ordered to deliver their crops against prices far below free-market prices. As a consequence of this, and the fact that the enormous number of small producers made all attempts to check their companies illusionary, compulsory collection remained unsuccessful. Only 10 per cent of the corn needed was secured.87 In Greece, official allowances were inadequate and often hardly available. Meat and dairy products disappeared out of the official distribution, while after August 1941 products like olive oil, raisins and sugar were rare, and the total calorific value of all the rations combined was far from adequate.88 Meanwhile, with economic activity significantly reduced for lack of raw materials and fuel, more than half of the working-class men had lost their jobs and could not provide for their families. The government supported them more or less by soup kitchens.89 Not only the unemployed, but the whole urban population, civil servants, bank employees and private-industry employees as well, became dependent on public meals organized by the state or employers. Because of the inability of the regime to exercise control over production and distribution or to enforce official prices, large quantities of food found their way into the storehouses of profiteers who sold them at fantastic prices. As a consequence, the unemployed as well as most other working-class families could not afford to supplement their rations with food from black markets,90 while the middle classes sold everything they possessed to buy the bare necessities.91 In the summer of 1943, the Oberkommando der Wehrmacht, at the insistence of German Foreign Office representatives, ordered that at least the black market transactions by the Wehrmacht should stop, while in August the Greek Ministry of the Interior declared a new campaign against black marketeers. From now on, policemen and gendarmes were rewarded with bonuses of up to 500,000 drachmas for every captured profiteer or violator of the market code.92 It can hardly have done any good to legal security. Nonetheless, in September this law was followed by a decree imposing heavy punishments, including capital punishment, on speculators, that is black marketeers. On top of that, measures were taken to lower food prices. It was, however, not the Athens government, but the National Liberation Front EAM,

Consumption • 393 the Partisan Greek Liberation Army, that fought most effectively against black marketeers, often requisitioning hoarded foodstuffs for redistribution among the poor in the neighbourhoods.93 For the urban population, greed and self-interest became synonymous with black market activity, and even today individuals with such attributes are known as mauragorites—black marketeers. As a consequence, few would acknowledge the positive aspects of the black economy, as a system which provided food supplies for the majority of the middle classes in the cities and an opportunity for a living as middlemen to many unemployed.94 The situation in Greece seemed extreme, but even before the war the parts of the USSR and Poland that were later occupied were substantially poorer than Greece, by about 20 per cent.95 On top of that, wartime developments were even more extreme. For the population of Eastern and South Eastern Europe, food production was the main source of livelihood. On average more than half the working population was engaged in agriculture, compared with about 37 per cent in France, 31 per cent in Denmark and 21 per cent in Germany. According to estimates by British experts, before the war, a Southern or Eastern European peasant grew sufficient food for just 1.5 persons; the comparable proportion in Western Europe was one to four.96 The greater the importance of agriculture in a national economy, the greater was its tendency towards the production and consumption of low-grade foodstuffs. As might be expected, therefore, the consumption of bread and potatoes in Eastern Europe was much higher in proportion to that of Western Europe, while the consumption of meat, fats and milk was less. Not surprisingly, with the arrival and stationing of the Axis armies, consuming enormous amounts of food, the life of the local inhabitants inevitably took a turn for the worse. With minor exceptions, the Soviet population was poor, and, on average, the Polish or Baltic populations were little better off. In comparison to Western standards, people in these parts of Europe had a rather simple lifestyle without luxuries and with many basic commodities being in short supply. In such circumstances, any requisition or plunder affected the chances for survival of millions, while the taking away of personal property—be it a cow or a goat— undermined a family’s chance to survive. This therefore created a hatred that would never be forgotten. German estimates put direct requisitioning of livestock from the farming population in the occupied USSR at 40 per cent of registered figures, and at 20 per cent for other commodities.97 Shortages were inevitable with famine threatening. The entire future of millions depended on a German administration which dreamed of new eastern Lebensraum where there would be little place for the local population. General Thomas, an army bureaucrat who was not even a Nazi, stated: ‘We cannot administer the entire land. The intelligentsia is struck dead, the commissars are gone. Large areas will be left to their own devices.’ In other words, he did not care about the future of the people living there and could not provide any support. As long as they were not needed by the German army or as forced workers in Germany, they could be left to starve.98

394 • Occupied Economies From October 1941 until the spring of 1942—the first winter of the war for the country—the German hunger policy in the occupied parts of the USSR caused a slow famine to unfold among the urban population in parallel to mass starvation among the prisoners of war.99 Mortality among the imprisoned Soviet soldiers rose from 0.3 per cent per day in September to a daily 2 per cent in November and December, before sinking again from 1.4 per cent in January 1942 to 0.5 per cent by March. The famine claimed at least a quarter of a million victims in the region of Army Group Centre alone.100 The causes of this mass death were, however, not solely the effects of food shortages, but included lack of shelter to ward off the freezing temperatures of the Russian winter as well as extreme exhaustion caused by forced marches from the front line to distant camps in the rear. By contrast, the urban population was not robbed of its strength by death marches, nor was it usually deprived of its shelter from the winter cold. These two factors help to explain why mortality among the civilian population did not reach the charnelhouse levels experienced among prisoners of war. Nonetheless, in the winter of 1941–1942, the number of premature deaths among the Soviet civilian population rose horrifically. The greatest suffering existed among inhabitants of the ghettos established in the summer of 1941. Like the prisoners of war, the Russian and Belorussian Jewish population lacked the freedom of movement to visit markets or forage in the countryside. During a discussion about implementing the new order in the East, the German economic and agricultural experts themselves stressed the necessity of the black market since no one had taken care of the supplies of food and consumer goods for the local population.101 As the food situation had already become dramatic after only a few months of occupation, the population in the occupied Soviet territories tried to obtain food in the countryside. It was a reaction seen wherever consumption was reduced to famine levels. Just as elsewhere, the dependency on clandestine food markets and foraging in the country resulted in extremely high prices, and an increase in bartering between farmers and peasants on the one hand and the urban population on the other. The fact that in the 1930s Stalin’s policy of socialist accumulation and forced collectivization suppressed the consumption of farmers and peasants by an unbalanced price system probably made the tensions between the countryside and the urban population more severe here than anywhere else as it had undermined the position of the agrarian communities. That policy was seen by countryside communities as urban, while the Soviet anti-commercial attitude was strong among the urban classes.102 On top of that it is striking to observe the extent to which Russian and Belorussian civil population had internalized Soviet propaganda regarding speculators. In 1944 the Sicherheitsdienst (SD)—the German security service—reported that everywhere among the local population, complaints were heard that traders had ‘already enriched themselves since 1941 as layabouts’.103 A German report for the autumn of 1942 clearly stated that the urban population was right when these people complained about speculation by farmers: the black market

Consumption • 395 and speculation were blossoming and hampering the progress of any reasonable economic measures. Farmers said, however, that the black market provided the only opportunity to get some commodities in exchange for their crops. Two trends made the agricultural community unfriendly towards the Germans and mistrustful of German measures: the rise of compulsory supplies to Germany and the prices of agricultural products. For the entire eastern territories one level of prices was fixed, in which official prices were kept at 60 per cent of the East Prussian price level at most—that is the official prices in East Prussia. It helped the black market as prices there were many times higher. Obligatory deliveries—for which farmers and peasants only got official prices—were fixed by quota per hectare. Normally a farmer had to deliver 50 kilos of wheat per hectare, 65 when the harvest was good, and in the case of a very good harvest even 105 kilos. As the Wehrmacht’s demand for hay, butter and meat, on top of the compulsory deliveries, could never be met anyway, farmers and peasants avoided all official deliveries. As a consequence, the black market was all that was left in which to sell their products.104 The existence of an underclass of spivs surviving from the black market, unregistered by the authorities, was not just a figment of the popular imagination. Greatest popular scorn was, however, reserved for the local collaborating authorities and police. Although the salaries for both the Ordnungsdienst (OD)—Order Service— and local administrators were low, both were placed on the highest-possible ration scales. Yet this did not stop them from robbing the population wherever possible.105 From almost the moment of its establishment by the occupiers in 1941, the OD became a byword for theft and plunder. Mindful of the propaganda damage that was caused by the relentless thievery of the collaborating police, a steady stream of OD men were arrested and sentenced to death for plunder by the German authorities.106 Popular suspicion concerning corruption, nepotism and intrigue within the local administration and directors of enterprises was, if anything, even more pervasive.107 The managers of the town authority shop in Orel were executed after stealing 55 kilos of salt to sell on the black market. As a consequence 1.8 tons of tomatoes rotted.108 In Vitebsk, officials of the economics department of the town administration were arrested en masse in early 1943 for corruption,109 while in bomb-damaged Orsha, blat—informal agreements— and bribes of alcohol were needed to secure access to scarce housing.110 The very high level of corruption can be contrasted with the often pitiful attempts by local authorities and the population at large to deliver any form of charity or welfare. Town authorities reacted best when delivering emergency assistance, especially after Soviet air raids. After Bryansk was heavily bombed in May 1943, church services were held at which a collection of 14,000 roubles was gathered to support those bombed out by the Red Air Force. In Mogilev, 600 civilians rendered homeless by an extremely heavy raid the same month were fed from a public canteen and given emergency housing.111 Yet such instances were rare and often accompanied, as in the previous incident, by complaints from the Germans about the ‘indolence, lethargy and indifference of the majority of the population’.112 Truly voluntary acts

396 • Occupied Economies of charity mostly revolved around collections for the restoration of churches,113 while official welfare was all but non-existent. Supposedly ‘in order not to create prejudices’, German military administration ordinances abolished all pensions by fiat.114 In practice, small pensions were paid out nonetheless, yet these amounted to as little as thirty to fifty roubles a month.115 Such payments were drawn from welfare funds that the town authorities were ordered to establish. These Self-help Associations— Selbsthilfewerke—were underfunded and usually inactive.116 Accident and sickness insurance was not established until relatively late on, even though German economic staff complained at the unfairness of condemning workers injured while labouring on behalf of the German cause to starvation.117 In Orel, relatives of members of the Jüdischer Ordnungsdienst (Jewish order police in the ghettos), Hiwis (Hilfswilliger—voluntary assistants) or Osttruppen (Soviet volunteers in the Wehrmacht) who fell in combat, or collaborating troops who were invalided out of service because of wounds, were eventually authorized pensions of 130 to 200 roubles a month.118 The same principle was applied to dependents of Ostarbeiter—forced labourers from the East.119 The overall extent of payments made was low: in late 1943, the Fourth Army registered just 265 families of Ostarbeiter in the Borisov, Mogilev, Orsha region in receipt of income support payments. It meant that few families of forced labourers got anything.120 In the Bobruisk region, it was discovered that, although the prescribed deductions were being made from the wages of the Ostarbeiter in Germany, their families had yet to receive a single payment. In this instance, the German-directed labour office in Bobruisk turned out to be at fault.121 So frail was the social safety net, and so distorted was the black market in the towns, that the urban population turned to massive foraging (Hamsterfahrt) in the countryside.122 The most common form of foraging was a journey to the countryside or to other towns to steal food from the fields or to trade for it with farmers and peasants. In the occupied USSR, such forays probably even played a greater role in keeping the population alive than the urban black market trade.123 As rural price levels were higher nearer to the urban centres, in some instances hungry people illegally jumped German trains to travel from town to town in order to arbitrate between black markets.124 The journeys into the countryside also caused a considerable pressure on town authorities for travel permits, but when these were not given, many risked arrest, or worse, by travelling without such permits.125 In the occupied Soviet territories foraging trips and black-marketeering were not only officially prohibited as everywhere else, but while a Dutch offender in the Hunger Winter took the risk that his or her foodstuffs might be confiscated—there are, however, also examples of German soldiers helping the desperate people—in the USSR people in a similar situation were in danger of being shot or hanged on the spot.126 This threat could not keep the starving population in town. In April 1943, during a six-day control in Minsk, a quarter of the population was caught, notwithstanding the threat of capital punishment for such offences as foraging in the countryside to feed one’s family. Not even the most severe threats could suppress the demand side of the clandestine market.127

Consumption • 397 When hunger became a serious problem, foraging trips by the urban population resulted in farmers and peasants near urban centres being confronted by enormous numbers of town dwellers who tried to buy, beg or steal anything edible they could get. Farmers and peasants, although full of pity for the early groups of hungry people coming to their farms, quickly got fed up with all these strangers walking into their farmyards. Most bourgeois townspeople were normally arrogant towards these country people and in this period of hunger were not the most reasonable to deal with. Consequently, farmers and peasants quickly lost their sympathy for them when, for instance, they had been deceived or robbed.128 The hungry people seldom took no for an answer and stole what they needed when they could not get it otherwise. Near urban centres, there were also simply too many of them. A farmer near, but not very close, to Amsterdam complained that during the hunger period thousands of people came along every day. He and his family became very stressed by the endless stream.129 Country people confronted with such problems more often than not changed their attitude and asked unreasonable prices or luxuries in exchange for food. In such a situation money will quickly lose its value, and this often resulted in the rural population being only prepared to barter. This was not typical in the occupied Soviet territories. It also happened in Greece, the Netherlands and Poland in periods of famine, provoking sharp antagonism between town and countryside. The urban population in the occupied USSR complained that the rural population disposed of plentiful food supplies, and they expressed anger that they were forced to almost literally sell the shirts off their backs to obtain them—a form of barter soon known as ‘eating clothes’.130 When buying illegal foodstuffs became essential to survive and black markets broke through, the wealthier classes also went on food journeys. In such periods prices rose to astronomic levels, and only a small minority had the money to meet them. An attempt to calculate black market price indices for the Dutch Hunger Winter shows that the food prices in the urbanized parts of the country reached a level of 10,783 (food prices in 1938 = 100). As a consequence, real wages slumped to almost zero when corrected not only for legal but also for illegal prices.131 Barter was the only solution to the problem for many consumers who needed food when paying the inflationary black market prices was impossible. When one reads that in Belgium, for instance, where by as early as the winter of 1940–1941 it had become almost impossible to survive without black market purchases (in 1941 black food prices were already 623 (legal prices in April–June 1940 = 100), reaching a level of 1,594 in 1943), it is too easy to conclude that no one could afford such purchases and that working-class people had to starve.132 Barter was the solution. From complaints about bartering it is clear that in France, from the last months of 1941 on, the situation was already rather severe. Farmers did not want to be paid in cash anymore, but demanded bicycle tyres, shoes or clothing, while doctors and veterinary surgeons demanded eggs or meat. The use of barter—troc in French—was spreading. A synopsis of the reports of the préfets in October 1941

398 • Occupied Economies said: ‘The tendency already seen, to exchange normal trade for barter, is becoming more general and in this very period is expanding to private persons; Merchandise for foodstuffs, foodstuffs for labour, that becomes more and more the normal system, finishing the alarming tendency of the disappearing of money from society.’133 A month later one could read that ‘the use of barter becomes more and more general in the countryside, causing protests among wage earners’.134 Although barter was not liked, it gave the less well-to-do without any access to food resources the opportunity to earn their food by labour or by negotiating a swap with the few valuables they had. In times of hunger, it also resulted in prostitution.135 The fact that by 1941 bartering had already become a normal practice in French black markets indicates that by then clandestine trade was already dominant there. The same is clear from the fact that the occupier bought substantial amounts of products in French and Belgian black markets. In 1941 Göring even tried to make a programme of it, which shows that the black market had its tentacles in every part of the French and Belgian economy. According to recent research, 15 per cent of German purchasing was done clandestinely.136 The enormous size of clandestine production makes it difficult to answer questions on the actual size of French wartime production (see Chapter 15).137 In the occupied Soviet territories, the final form of a journey into the countryside was also the most difficult—leaving the towns for permanent resettlement in the countryside, or at least for as long as the war lasted. That this was a solution also became clear in France where the normal migration of youngsters to the urban centres, and especially to Paris, came to a halt, and many even went back to the villages, if not because the food was better there, then because these small communities provided better shelter for those in hiding against the German labour policy. In Eastern Europe again the dangers were much greater unless the town dweller could find shelter with relatives in ancestral villages or could join an active partisan unit. Such a move was seen as fraught, with all consequences when one was caught. Rural suspiciousness as well as the requirement to register strangers rendered it extremely difficult to blend into village society in the pacified areas. While a great many deserters and stragglers from the encirclement battles of 1941 found a home in many villages in exchange for work, the majority were progressively winkled out during the course of 1942.138 Joining a partisan unit, too, had its risks as most detachments required a probation period before fully accepting a new member. Although this was just in order to identify German infiltrators, it was not unheard of for partisan brigades moving to a new base to execute all probationers before striking camp.139 Notwithstanding those dangers, many saw no other solution. For them, the flight from the towns formed simultaneously a safety valve and a security threat, while it disrupted both labour and food planning alike. Hans Tesmer, administrator of the Army Group Centre, wrote in the early summer of 1942: ‘Pronounced signs of starvation have hitherto only been avoided, because the urban population has migrated in large numbers to relatives and acquaintances in the countryside. The number of migrants can

Consumption • 399 for example in Smolensk be estimated at around 12,000. These people so urgently needed for the extensive labour requirements of the Wehrmacht, must now be got hold of again with much effort from the countryside.’140 This problem of flight from the towns was answered by a series of population displacements deliberately engineered by the German army.

Overall Consumption: Conclusion As a consequence of war and occupation, all over Europe consumption declined. This was not simply a consequence of the decline in production. In some Western countries the Germans actually stimulated production so strongly that, notwithstanding the circumstances, production hardly decreased and actually even grew, at least in some years. The occupier took, however, a growing part of the output without any real payment. In the Netherlands, where there are rather exact new calculations on the wartime GDP, national income and German confiscations per annum, in 1943 production was still on a level of 96 per cent of that of 1938. Such an economic setback of only a few per cent seemed a minor problem in comparison to the horrors of war confronting other parts of Europe. As the occupier took 46 per cent of the remaining production, however, the country was left with only around 50 per cent of what it was spending in the last years before the war.141 On top of that, because, even in the Netherlands, the remaining consumption, especially food consumption, was for a substantial part clandestine—that is bought on black markets and produced specially for such markets—this decline was very unevenly spread. According to the macroeconomic series published by Robert J. Barro and José F. Ursúa containing wartime data on consumption levels across occupied Western Europe as well as in Greece, the decline in consumption spread over Europe in more or less the same way as the decline in production. This means that according to them, at least in some Western countries, the setback in consumption was rather limited (Figure 6). As the production in these countries was kept high only because the Germans were interested in the output, this seems, however, highly implausible. The Germans took an enormous part, especially in the countries where their exploitation caused economic growth. Consequently, the difference between production and local availability of the output was largest in the countries where the production was most stimulated by the occupier. According to the data of Barro and Ursúa, the decline in consumption was severe in the first year of the occupation, especially in Belgium and Greece. There, by 1941, consumption had already reached a level of less than 50 per cent of that in 1938, but after that, in Belgium, consumption stabilized and from 1943 on even slightly recovered. In Greece, consumption declined yet further to reach a level of just 36 per cent of 1938 by 1944 (Figure 6). In the Netherlands, it was only during 1944–1945, the hunger period, that the decline in consumption was as dramatic as in Belgium, but

400 • Occupied Economies

Figure 6 Consumption levels in Germany and in occupied Europe (1938 = 100). Source: Robert J. Barro and José F. Ursúa, ‘Macroeconomic Crises since 1870’, BPEA (2008), Online Appendix: http://www.economics.harvard.edu/faculty/barro/files/MacroCrisesSince1870_08_0614.xls.

in 1943 the level of consumption was still 56 per cent of that of 1938. Of the other occupied Western countries, only the development in France was harsh, but in Denmark consumption declined by just 25 per cent, and this trough was already reached in 1942. From that year on, this Scandinavian country became so important for its occupier that it could get what it needed as long as it sent its precious foodstuffs. As a consequence, from 1942 on, Danish consumption rose again to reach 85 per cent of the 1938 level by 1944. In Norway there was even hardly any decline (Figure 6), according to Barro and Ursúa. Altogether this seems most unlikely. The reason that the Norwegian production was kept at a high level during the war was for a significant part because the Norwegians had to construct enormous defence works for the occupier. As these were handed over to the Germans, and Norway got nothing but some clearing marks in return—and that even only to a limited extent—this activity kept the economy going, but could not prevent consumption levels from falling most dramatically. Therefore, in Figure 7, for the same countries the part of the production available for use after the Germans had taken their part is calculated as a percentage of the 1938 production. In this graph the amount of goods and services taken away by the occupier is deducted from production data as given by Angus Maddison. Dutch data are used to provide an educated guess of the spread over the occupation period of the German confiscations from Table 9.2 (Chapter 9) in the various occupied countries. After this was calculated, the data on confiscations in Reichsmarks are corrected for the price development during the war and recalculated using 1990 Geary-Khamis

Consumption • 401

Figure 7 Production for local use after the German occupier took its share (production in 1938 = 100). Source: Angus Maddison, The World Economy: Historical Statistics (Paris 2003) 48–54; CEPII, Séries longues macro-économiques, Comptes nationaux en base 1938, http://www.cepii.fr/francgraph/bdd/ villa/mode.htm; Frederic L. Pryor, Zora P. Pryor, Milos Stadnik and George J. Staller, ‘Czechoslovak Aggregate Production in the Interwar Period’, Review of Income and Wealth, 17 (1971) 35–59; Ivan T. Berend, ‘The Failure of Economic Nationalism. Central and Eastern Europe before World War II’, Revue économique, 51 (2000) 315–322; Socrates D. Petmezas, ‘Agriculture and Economic Growth in Greece’, paper presented at the IEHC 2006 Helsinki conference, session 60, paper 4, http://www.ims.forth.gr/ docs/PetmezasTPF.pdf; Ingrid Henriksen, ‘Agriculture in Denmark, 1870–1939. From Asset to Liability?’ paper presented at the IEHC 2006 Helsinki conference, session 60, paper 3, http://www.helsinki.fi/ iehc2006/papers2/Henriksen.pdf; Ivo Vinski, ‘The Distribution of Yugoslavia’s National Income by Social Classes in 1938’, http://www.roiw.org/1967/259.pdf; Hein A. M. Klemann, Nederland 1938–1948. Economie en samenleving in jaren van oorlog en bezetting (Amsterdam 2002); own calculations.

dollars. Thus these could be deducted from the Maddison production series as given in Table 15.2. The results are shown in Figure 7. Probably, in most countries the trough is an underestimation as the Dutch were more insensitively exploited in the first years of the occupation than most other occupied countries. Using Dutch data on the spread of the German confiscations over the entire occupation period to make a guess of the same spread in other countries thus resulted in a too flat spread of such confiscations and thus in an underestimation of the trough of the output still available in the occupied countries. Nonetheless, according to these data, 1944 was most dramatic, especially in the Netherlands, where the level of production available after the Germans took what they wanted was only 20 per cent of the 1938 level. The situation in Greece, with 22 per cent, was comparable, while in France and Norway the lowest point was in 1943, with 27 and 24 per cent respectively of the production of 1938. Until 1943, the situation in Belgium was exactly the same as in the Netherlands, with the lowest point at 41 per cent in 1943—the Netherlands

402 • Occupied Economies

Figure 8 Production for local use after the occupier took its share. Clandestine production is included (1938 = 100). Source: Angus Maddison, The World Economy: Historical Statistics (Paris 2003) 48–54; CEPII, Séries longues macro-économiques, Comptes nationaux en base 1938, http://www.cepii.fr/francgraph/bdd/ villa/mode.htm; Frederic L. Pryor, Zora P. Pryor, Milos Stadnik and George J. Staller, ‘Czechoslovak Aggregate Production in the Interwar Period’, Review of Income and Wealth, 17 (1971) 35–59; Ivan T. Berend, ‘The Failure of Economic Nationalism. Central and Eastern Europe before World War II’, Revue économique, 51 (2000) 315–322; Socrates D. Petmezas, ‘Agriculture and Economic Growth in Greece’, paper presented at the IEHC 2006 Helsinki conference, session 60, paper 4, http://www.ims. forth.gr/docs/PetmezasTPF.pdf; Ingrid Henriksen, ‘Agriculture in Denmark, 1870–1939. From Asset to Liability?’ paper presented at the IEHC 2006 Helsinki conference, session 60, paper 3, http://www. helsinki.fi/iehc2006/papers2/Henriksen.pdf; Ivo Vinski, ‘The Distribution of Yugoslavia’s National Income by Social Classes in 1938’, http://www.roiw.org/1967/259.pdf; Hein A. M. Klemann, Nederland 1938–1948. Economie en samenleving in jaren van oorlog en bezetting (Amsterdam 2002); own calculations.

then reached a level of 39 per cent—but while in the next year the Netherlands was split between the liberated area and the area still occupied, Belgium was already completely liberated in 1944. Therefore, this country and Denmark, where recovery started as early as 1943 and the depth of the available GDP for internal use was 63 per cent of the 1938 level, reaching a level of 83 per cent by 1944, were the least badly off among the occupied countries. However, before making a definitive conclusion some more calculations should be made as a substantial and growing part of the production, especially the part used in local consumption, was unregistered and only sold on black markets. In Figure 8 the availability of the overall production, black production included, is calculated as a percentage of the 1938 production. According to these data, the most intensively exploited countries—the Netherlands and Norway—were worst off. Although the Germans kept their production going as they wanted their output,

Consumption • 403 these countries were left in poverty. Now, when clandestine production is taken into account, the situation seemed less bad in France and Greece as both these countries had quite substantial clandestine markets. In France, the lowest point of the freely available production was a little less than 50 per cent of the 1938 level, just as in Greece, while this was only 42 per cent in the Netherlands and 43 per cent in Norway. In Denmark, the available production was never less than 75 per cent (1942) of that in 1938, and it recovered quickly again after the liberation. What is clear from this graph is that in the countries that were most intensively exploited—Norway, the Netherlands and Belgium—available production quickly recovered after the liberation. The explanation is, of course, that although the production output of these countries was taken, their production capacity was kept intact. After the war, when German confiscations ceased and the output of these countries was freely available to them again, there were still a number of severe problems left, such as financial chaos and the lack of transport facilities the Germans had created across Europe, but the extreme poverty of the war years quickly disappeared. A limited recovery of production made possible by renewed supplies of raw materials was enough to do the job. While in those countries where production had continued recovery was relatively easy, this was much harder in Greece and France. Here it was not simply a matter of giving the output of still existing production to the producers again, but the production system itself had been seriously damaged, not just by actual warfare but also by the Germans’ destructive methods of exploitation—the taking of factors of production. Greece, of course, suffered its civil war between 1946 and 1949, but it is nonetheless amazing that the level of production in this country in the first full year after liberation, 1946, was lower than in any other country except France in the first full year after the occupation ended. In both France (in 1945) and Greece (in 1946), production was only 65 per cent of the level of 1938, while in all other countries with macroeconomic series for these years, the levels of post-war production had already reached 100 per cent or more of their 1938 levels in the first full year after liberation. The fact that in the Netherlands the decline in production was limited, and in Denmark, Norway and even Belgium was hardly worth mentioning, did not mean that wartime impoverishment was not real. Actually, it was, in all of these countries except Denmark, at a level of at least 45 per cent. In Norway, the Germans took such an enormous part of the output, and the share of the occupied country in its own production was so limited, that notwithstanding the fact that the production was intact, this Scandinavian country seems to have suffered most of all occupied countries with macroeconomic series. From these data one could even get the impression that the Greeks, so pitied in previous chapters, were less badly off than the population of some of these other countries. That, however, is a mistake. Although during the years of occupation, the impoverishment in France, Belgium and the Netherlands seemed hardly less, or even worse, than in Greece, this is only caused by the fact that in Figure 7 and Figure 8 a comparison is made between

404 • Occupied Economies wartime levels of output left in the occupied country and the 1938 production. When one tries to calculate the real spread of poverty, Greece is by far the worst off among those occupied countries, as pre-war welfare in the western parts of Europe was much higher than in the eastern and south-eastern parts. As seen, with minor exceptions, the Soviet population was not rich at all, and the Polish and Baltic populations were at least on average hardly better off, while the people of Yugoslavia were probably the poorest of Europe. As a consequence, the people of Eastern and South Eastern Europe had a simple lifestyle without any luxuries. In the Soviet territories there were, for instance, people who only tasted chocolate for the first time during the war, thanks to individual German soldiers. In such circumstances, where every luxury is unknown, any requisition or plunder severely hits the chances of survival. Therefore, the calculations presented in Figure 8 are corrected in Figure 9 for the absolute level of the 1938 production, making clear that the countries that were poorest in the pre-war period were worst off during the war as well. Engel’s law teaches that a higher budget will result in more consumption, but in a smaller share of foodstuffs, and especially of basic foodstuffs in consumption. Therefore, the poorer countries of Europe, of which Greece was not even an extreme example, were not only badly off and stayed badly off, but for them the decline in welfare immediately cut down the consumption of essentials, while the richer countries in Western Europe were better able to manage with reduced consumption as they had some luxuries to fall back on. While it seems that in Greece, the only example of a relatively poor country there are statistical data for, the economic decline was little worse than in the rich Western countries (Figure 8), this overlooks the fact that in such a poor country a 50 per cent or so decline in available output cuts deep into the consumption of basic products like food. In even poorer countries like Yugoslavia, Poland and the occupied Soviet territories, this was even worse. In Western Europe, food consumption was not spared, but the decline in consumption in this part of Europe was eased in the first place by the consumption of relatively luxurious foodstuffs like meat, eggs, cheese and butter and in the consumption of clothes, soap, shoes, coal and all kinds of small (often very small) luxuries. It confronted the population with the level of poverty their ancestors left behind somewhere in the nineteenth century. Being confronted with such poverty again cut deep into the consumption of goods that were often hardly seen as luxuries at all. Nonetheless, it seldom immediately undermined their chances to survive. In Eastern and South Eastern Europe the decline of consumption could, however, only cut deep into the basic consumption needed to survive. As shown in Figure 9, it was only in 1943 that the intensely exploited Norway, which according to Western European standards was already a rather poor country before the war, reached a level of poverty comparable to that in Greece, but it only lasted one year. In other words, the simple fact that the eastern and southeastern parts of the Continent were much less developed and much poorer before the war partly explains why the consequences of wartime impoverishment were much worse in these countries.

Consumption • 405

Figure 9 Production for local use after the occupier took its share. Clandestine production is included (unweighted average of the production of these countries in 1938 = 100). Source: Angus Maddison, The World Economy: Historical Statistics (Paris 2003) 48–54; CEPII, Séries longues macro-économiques, Comptes nationaux en base 1938, http://www.cepii.fr/francgraph/bdd/ villa/mode.htm; Frederic L. Pryor, Zora P. Pryor, Milos Stadnik and George J. Staller, ‘Czechoslovak Aggregate Production in the Interwar Period’, Review of Income and Wealth, 17 (1971) 35–59; Ivan T. Berend, ‘The Failure of Economic Nationalism. Central and Eastern Europe before World War II’, Revue économique, 51 (2000) 315–322; Socrates D. Petmezas, ‘Agriculture and Economic Growth in Greece’, paper presented at the IEHC 2006 Helsinki conference, session 60, paper 4, http://www.ims. forth.gr/docs/PetmezasTPF.pdf; Ingrid Henriksen, ‘Agriculture in Denmark, 1870–1939. From Asset to Liability?’ paper presented at the IEHC 2006 Helsinki conference, session 60, paper 3, http://www. helsinki.fi/iehc2006/papers2/Henriksen.pdf; Ivo Vinski, ‘The Distribution of Yugoslavia’s National Income by Social Classes in 1938’, http://www.roiw.org/1967/259.pdf; Hein A. M. Klemann, Nederland 1938–1948. Economie en samenleving in jaren van oorlog en bezetting (Amsterdam 2002); own calculations.

Notes 1. John Lindberg (League of Nations), Food, Famine and Relief 1940–1946 (Geneva 1946) 4–5. 2. See: Ralf Futselaar, Lard, Lice, and Longevity: A Comparative Study of the Standard of Living in Occupied Denmark and the Netherlands, 1940–1945 (Amsterdam 2007). 3. Frederick Strauss, ‘The Food Problem in the German War Economy’, Quarterly Journal of Economics, 55 (1941) 364–412, here 378. 4. Lindberg, Food, Famine and Relief, passim; see also: G.M.T. Trienekens, Tussen ons volk en de honger. De voedselvoorziening 1940–1945 (Utrecht 1985); Hein

406 • Occupied Economies

5. 6. 7.

8.

9. 10.

11.

12. 13.

14. 15.

16. 17. 18. 19. 20. 21. 22.

A. M. Klemann, Nederland 1938–1948. Economie en samenleving in jaren van oorlog en bezetting (Amsterdam 2002); Ralf Futselaar, Lard, Lice, and Longevity. See: Futselaar, Lard, Lice, and Longevity, passim. Ibid. 62–63. Some of these recipes were collected in special wartime cookery books. See: Voorschriften en recepten voor de keuken in oorlogstijd. Wat elke Huisvrouw in tijd van oorlog en distributie moet weten (The Hague n.d.); Reklameheft Oetker ‘Backen in Kriegszeit’ (n.p. 1941). Gerard Trienekens, ‘The Food Supply in the Netherlands during the Second World War’, in: David F. Smith and Jim Philips, Food, Science, Policy and Regulation in the Twentieth Century: International and Comparative Perspectives (London 2000) 117–133, here 121. Economisch Instituut voor den Middenstand, Het kruideniersbedrijf in oorlogstijd (The Hague 1946) 15–16. Stef Böger and Djoke Dam,‘Het kruideniersbedrijf in oorlogstijd’, in: Hein A. M. Klemann, Mooie jaarcijfers . . . Enige onderzoeksresultaten betreffende de Nederlandse economische ontwikkeling tijdens de Tweede Wereldoorlog (Utrecht 1997) 77–86; Klemann, Nederland 1938–1948, 318 et seq. Economisch Instituut voor den Middenstand, Het kruideniersbedrijf, 15–16; Böger and Dam, ‘Het kruideniersbedrijf in oorlogstijd’; Economisch Instituut voor de Middenstand, 20 jaar economisch onderzoek in dienst van de middenstand (The Hague 1951). Klemann, Nederland 1938–1948, 249 et seq. Joachim Lehmann, ‘Agrarpolitik und Landwirtschaft in Deutschland 1939 bis 1945’, in: Bernd Martin and Alan S. Milward (eds.), Agriculture and Food Supply in the Second World War (Ostfildern 1985) 29–50, here 36. Vichy Y Internationale vol. 71. Synthèse zone occupée 15 Octobre 1941 (DSA), http://www.ihtp.cnrs.fr/prefets/fr/fzo151041dsa.html. Hein A. M. Klemann, ‘Waarom honger in Europa in de Tweede Wereldoorlog?’ in: Hein A. M. Klemann and Dirk Luyten with Patrick Deloge (eds.), Thuisfront. Oorlog en economie in de twintigste eeuw. Veertiende jaarboek van het Nederlands Instituut voor Oorlogsdocumentatie (Zutphen 2003) 113–125, here 115. Lindberg, Food, Famine and Relief, passim. Klemann, Nederland 1938–1948. Trienekens, Tussen ons volk en de honger, 370–371; Futselaar, Lard, Lice and Longevity, 108. Alan S. Milward, The New Order and the French Economy (Oxford 1970) 46–47. Fabrice Grenard, La France du marché noir (1940–1949) (Paris 2008) 188–189. Lindberg, Food, Famine and Relief, passim. Alfred Sauvy, La vie économique des Français de 1939 à 1945 (Paris 1978) 145.

Consumption • 407 23. Synthèse des rapports des préfets de la zone libre, Septembre 1941, http://www. ihtp.cnrs.fr/prefets/fr/fzl0941mi.html. 24. Synthèse des rapports des préfets de la zone libre, Octobre 1941, http://www.ihtp. cnrs.fr/prefets/fr/fzl1041mi.html. 25. Grenard, La France du marché noir, passim. 26. Trienekens, Tussen ons volk en de honger, passim. 27. ‘De voedselsituatie in België’, Vrij Nederland, 19 March 1941. 28. Trienekens, Tussen ons volk en de honger; Klemann, Nederland 1938–1948; Futselaar, Lard, Lice, and Longevity. 29. Futselaar, Lard, Lice, and Longevity, 53 et seq.; Human Mortality Database, http://www.mortality.org/; Lindberg, Food, Famine and Relief, 21; Sauvy, La vie économique des Français, 110; G. Jacquemyns, La société Belge sous l’Occupation allemande 1940–1944. Alimentation et état de santé (Brussels 1950) 288–293; Anne Henau and Mark van den Wijngaert, België op de bon. Rantsoenering en voedselvoorziening onder Duitse bezetting 1940–1944 (Leuven 1986) 242. 30. Trienekens, Tussen ons volk en de honger, 361. 31. Ibid. 32. Czesław Madajczyk, Die Okkupationspolitik Nazideutschlands in Polen 1939– 1945 (Cologne 1988) 596. 33. Jozo Tomasevich, War and Revolution in Yugoslavia, 1941–1945: Occupation and Collaboration (Stanford 2001) 707 et seq. 34. Karel C. Berkhoff, Harvest of Despair: Life and Death in Ukraine under Nazi Rule (Cambridge 2004) 164–165. 35. Ibid. 164. 36. Ibid. 165. 37. Ibid. 166. 38. Robert Bohn, Die deutsche Herrschaft in den ‘germanischen’ Ländern 1940– 1945 (Stuttgart 1997) 201. 39. Lindberg, Food, Famine and Relief, 3–7. 40. Ibid. 28. 41. Ibid. 5. 42. The problem with such calculations is that these result in annual data. So the black market production in 1944 and 1945 was 40 per cent and 37 per cent, respectively, but the Hunger Winter was from September 1944 until May 1945. Probably in those months hardly anything was produced legally; Klemann, Nederland 1938–1948. 43. Trienekens, Tussen ons volk en de honger, passim. 44. Futselaar, Lard, Lice, and Longevity, 226 et seq. 45. Klemann, Nederland 1938–1948. 46. Wilbert Verweij, Het dagelijks leven van de Rotterdamse elite tijdens de Tweede Wereldoorlog (Unprinted paper, University of Utrecht, 2000) 5.

408 • Occupied Economies 47. See: Lindberg, Food, Famine and Relief, passim; Lehmann, ‘Agrarpolitik und Landwirtschaft in Deutschland’; John E. Farquharson, ‘The Management of Agriculture and Food Supplies in Germany, 1944–1947’, in: Martin and Milward, Agriculture and Food Supply, 50–68; Peter Maurer, ‘Landwirtschaft und Landwirtschaftspolitik der Schweiz im Zweiten Weltkrieg’, in: Martin and Milward, Agriculture and Food Supply, 103–116; David F. Smith and Jim Philips, ‘Food Policy and Regulation: A Multiplicity of Actors and Experts’, in: Smith and Philips, Food, Science, Policy and Regulation, 1–16, here 13; Lindberg, Food, Famine and Relief, 2–3, 9 and 21. 48. Cited in: Futselaar, Lard, Lice, and Longevity, 95. 49. Ibid. 95–96. 50. Ibid. 96. 51. Klemann, Nederland 1938–1948, 554. 52. Ibid. 545 and 557. 53. RGVA, Collection 500, Inventory 4, File 84, pp. 7–9: Ernährungslage in Belgium (1. Juli 1941). 54. Lindberg, Food, Famine and Relief, 54. 55. Milward, New Order, 290; Paul W. Sanders, Histoire du marché noir, 1940–1946 (Paris 2001) 67 et seq. 56. Niod Amsterdam, 93a 10: Wirtschaftliche Leistung der besetzten niederländischen Gebiete [± juli 1941]. 57. Paul Miry, Zwarte handel in levensmiddelen (Brussels 1946) passim. 58. Lindberg, Food, Famine and Relief, 5. 59. Sauvy, La vie économique des Français, 110. 60. Mark van den Wijngaert et al., België tijdens de Tweede Wereldoorlog (Antwerp 2005) 86–87. 61. Sauvy, La vie économique des Français, 145. 62. AJ41 397 Synthèse zone occupée Mai 1941 (DGTO), http://www.ihtp.cnrs.fr/ prefets/fr/fzo0541dgto.html. 63. Hein A. M. Klemann, ‘De legale en illegale productie in de landbouw 1938– 1948’, NEHA-Jaarboek voor economische, bedrijfs- en techniekgeschiedenis, 60 (1997) 307–338, here 321 and 325–327. 64. Ibid. 65. Der Militärbefehlshaber in Frankreich, Paris, den 6. November 1943: Lagebericht Juli/September 1943, http://www.ihtp.cnrs.fr/prefets/de/d070943mbf.html. 66. Klemann, Nederland 1938–1948, 557; Der Militärbefehlshaber in Frankreich, Paris, den 31.5.42: Lagebericht April/Mai 1942, http://www.ihtp.cnrs.fr/prefets/ de/d040542mbf.html. 67. Synthèse des rapports des préfets de la zone libre, Août 1941, http://www.ihtp. cnrs.fr/prefets/fr/fzl0841mi.html. 68. Trienekens, Tussen ons volk en de honger, 10, 34 and 206; Futselaar, Lard, Lice and Longevity, 89–93.

Consumption • 409 69. L. de Jong, Het Koninkrijk der Nederlanden in de Tweede Wereldoorlog, Vol. 7 (The Hague 1976) 176 et seq.; B. Pruijt, Prijsbeheersingspolitiek: Een onderzoek naar de doelmatigheid van de prijsbeheersingspolitiek tijdens de bezetting, 1940–1945 (Leyden 1949) 157–158 and 161; Niod Amsterdam, 212a inv. nr. 6e: Louwes aan Hirschfeld, 10 December 1942. 70. Der Militärbefehlshaber in Frankreich, Paris, den 27. Januar 1943: Lagebericht Oktober/Dezember 1942, http://www.ihtp.cnrs.fr/prefets/de/d101242mbf.html. 71. Klemann, Nederland 1938–1948. 72. John Gillingham, ‘How Belgium Survived: The Food Supply Problem of an Occupied Nation’, in: Martin and Milward, Agriculture and Food Supply, 69–88, here 84. 73. Paul W. Sanders, ‘Economic Draining: German Black Market Operations in France, 1940–1945’, Global Crime, 9 (2008) 136–168, here 156. 74. Karl Brandt, Management of Agriculture and Food in the German-occupied and Other Areas of Fortress Europe: A Study in Military Government (Stanford 1953) 559. 75. Fabrice Grenard, ‘Les implication politiques du ravitaillement en France sous l’Occupation’, Vingtième Siècle. Revue d’histoire, 94 (2007) 199–215. 76. P. Scholliers, ‘Strijd rond de koopkracht, 1939–1945’, in: België, een maatschappij in crisis en oorlog (Brussels 1993) 245–273, here 265. 77. Hanna Diamond, Women and the Second World War in France 1939–1948: Choices and Constraints (Harlow 1999) 57. 78. Gillingham, ‘How Belgium Survived’, 84; A.B.J.A. Nijdam, Goirle. Een sociografische studie over de criminaliteit en de moraliteit van een grensgemeente rond de Tweede Wereldoorlog (Wageningen 1950) 125–126; Miry, Zwarte handel in levensmiddelen, passim. 79. Jacquemyns, La société Belge sous l’Occupation allemande, 288–293. 80. Ibid. 52, 247 and 254. 81. Ibid. 291. 82. Henau and Van den Wijngaert, België op de bon, 242. 83. Jacquemyns, La société Belge sous l’Occupation allemande, 292. 84. Futselaar, Lard, Lice and Longevity, 83–85. 85. Ibid. 282. 86. PA-AA, HaPol Clodius, Akten betr. Griechenland, Vol. 5, p. E226758: Official figure for 1940, in memorandum of 15 July 1941. 87. Stavros Thomadakis, ‘Black Markets, Inflation, and Force in the Economy of Occupied Greece’, in: John O. Iatrides (ed.), Greece in the 1940s: A Nation in Crisis (Hannover 1981) 61–80, here 62; Dimitrios Delivanis and William C. Cleveland, Greek Monetary Developments 1939–1948: A Case Study of the Consequences of World War II for the Monetary System of a Small Nation (Bloomington, Ind. 1949) 70; A.Y.E./1944/KC/19: Report of 15 July 1942 by the board of directors of the Ella-Turk trading company.

410 • Occupied Economies 88. Dêmêtrios Gatopoulos, ‘Hê Martyrikê Zôê tês Sklavias stên Athêna (kata to etos 1942)’, Historikon Archeion Ethnikês Antistaseôs, 5 (1958/59) 4, 61. 89. Georgios Tsolakoglou, Apomnêmoneumata (Athens 1959) 206 et seq.; Evangelos Papastratos (ed.), Commission de Gestion des envois des vivres du Comité international de la Croix-Rouge en Grèce. Rapport final de son activité, octobre 1941–août 1942 (Athens 1945) 40–59. 90. A.Y.E./1942/KK/4/II/1: Letter no. 101 of 22 July 1942 from Tsolakoglou to Gotzamanês and no. 554 of 12 September 1942 from the same to Altenburg. 91. Thomadakis, ‘Black Markets’, 74 et seq. 92. Decree no. 535 of 30 August 1943: EK, 1943, 1, 1322. 93. Thomadakis, ‘Black Markets’, 78. 94. Jan Tomasz Gross, Polish Society under German Occupation: The Generalgouvernement, 1939–1944 (Princeton 1974) 109 and 113. 95. Mark Harrison, ‘The Economics of World War II: An Overview’, in: Mark Harrison (ed.), The Economics of World War II: Six Great Powers in International Comparison (Cambridge 1998) 1–42, here 7–8. 96. See: NA, MAF 156/394: Estimates of British experts. 97. Theo J. Schulte, The German Army and Nazi Policies in Occupied Russia (Oxford 1989) 92. 98. T77/1086/440–1 KTB WiRüAmt/Stab, 31.7.41, pp.453–8; Chef WiStab Ost, Besprechungen in Berlin am 31.7.41. 99. Christian Streit, Keine Kameraden: Die Wehrmacht und die sowjetischen Kriegsgefangenen 1941–1945 (Stuttgart 1978) 128–190; Christian Gerlach, Kalkulierte Morde. Die deutsche Wirtschafts- und Vernichtungspolitik in Weißrußland 1941 bis 1944 (Hamburg 1999) 796–829. 100. T501/2/409, 439, 459–60, T501/15/893 Tätigkeitsberichte Berück Mitte Qu, 1.10–31.12.41; 1–31.5.42; T78/489/6475051–81, OKH/GenStdH/GenQu/Abt Kr.Verw (Qu4/Kgf), Kriegsgefangenenlage im Operationsgebiet, Stand 1.1– 1.4.42; Streit, Keine Kameraden, 359, note 35; Gerlach, Kalkulierte Morde, 821. Between December 1941 and March 1942, 7,667 prisoners of war died in the region of the 9th Army. T312/282/7844139–295 AOK 9 OQu/Qu.2, Monatsmeldungen über Kriegsgefangenen, 7.1.42, 9.2.42, 10.3.42, 9.4.42. 101. RGVA, Collection 1458, Inventory 3, File 204: Institut für Großraumwirtschaft der Universität Heidelberg, 281–283. 102. Paul Gregory and Mark Harrison, ‘Allocation under Dictatorship: Research in Stalin’s Archives’, Journal of Economic Literature, 43 (2005) 721–761. 103. T77/1112/1086 SK 7b, SD-Berichterstattung für den Monat Mai, 26.5.44. On the criminalization of speculation, see: Elena Osokina, Our Daily Bread: Socialist Distribution and the Art of Survival in Stalin’s Russia, 1927–1941 (London 2001) 106–108 and 182–183. 104. NA, London (Kew), GFM 33/410. 105. T313/305/8581636, T313/316/8594082: Tätigkeitsbericht PzAOK 3 OQu/VII (Mil.Verw.), 13.5.43, 12.4.44.

Consumption • 411 106. T175/233/2722131, T175/234/2723441 EM 67, 29.8.41, EM 148, 19.12.41 (Minsk and Rudnia); T315/1583/928 (Polotsk) Tätigkeits- und Lagebericht EGr B 16–28.2.42, TsGOA 500–1-770, p.19–20 (USHMM RG11.001M/10) (Orel); Lagebericht Sich.Div. 201 Abt. VII/Mil.Verw. 1–30.11.42. 107. T454/98/279–80 AOK 4 Ia/Ic, Vorschläge zur Behandlung der Bevölkerung in den eroberten Ostgebieten, 12.3.42; T77/1112/847 Meldungen aus den besetzten Ostgebieten Nr. 22, 25.9.42, T175/236/2724890 Tätigkeits- und Lagebericht AWiFü AOK 4, 16.6–15.7.43. 108. T313/305/8581636, Tätigkeits- und Lagebericht EGr B, 15.11–15.12.42, NARB 655–1-3, p.6 (USHMM RG53.002M/5). 109. T313/305/8581896, 8581919 Lagebericht PzAOK 3 OQu/VII August, 3.9.43, September, 4.10.43. 110. T77/1141/851 Leit.WiKdo Orscha, Lagebericht Nr. 9, 27.8.42. For further examples see: T77/1147/705, 793 KTB WiKdo Smolensk, 15.7.42, 28.10.42; T77/1147/63, 247 KTB WiKdo Mogilew, 28.9.42, 11.3.43; T313/262/8532363 Tätigkeitsbericht PzAOK 3 OQu/Qu.2, 14.7.42; T77/1128/318 KTB PzAOK 2 IV Wi, 4.8.42. 111. T313/188/7447732 Monatlicher Lagebericht PzAOK 2 OQu/Qu.2/VII, 5.4.43; T77/1147/398–9 Lagebericht WiKdo 212 Juni, 25.6.43; T454/104/926 Monatsbericht Hgr Mitte OQu/Qu.2/VII (Mil.Verw) Mai, 12.6.44. 112. T313/316/8594344 Lagebericht PzAOK 3 OQu/Qu.2/VII (Mil.Verw) April, 3.5.44. 113. T312/1139/557 (Orel) AOK 2 Ic/VAA, Bericht Nr. 30, 24.11.41; T315/1586/277, 292 (Liuban near Starye Dorogi) Lage- und Tätigkeitsbericht FK 550 Kr.Verw. Gr, 25.7–24.8.42, 24.9–24.10.42. 114. T501/15/1084, 1142 Berück Mitte Abt VII/Kr.Verw., Lage- und Tätigkeitsbericht, 14.2.42; Verwaltungsanordnungen Nr. 13, 7.1.42. 115. T77/1147/1097KTB WiKdo Roslawl, April 1942; Lage- und Tätigkeitsbericht der Stadt Mogilew für April 1942, p. 3, NARB Mogilev 260–1-45 (USHMM RG53.0005/2); cf. WiIn Mitte, Lagebericht Nr.17, 3.5.42, T77/1098/1149. 116. T311/233/633 Obkdo Hgr Mitte OQu/VII, Militärverwaltungsanordnungen Nr 1, Stand 1.12.42. 117. T77/1141/740Lagebericht Leit. WiKdo Orscha, 27.4.42; T77/1098/893–4 c.f. WiIn Mitte, Lagebericht Nr. 12, 4.1.42. 118. OKH/GenStdH/Gen d Osttr/Org.Abt, Landeseigene Hilfskräfte im Osten— Hilfswillige, 29.4.43, NO-3810; T313/305/8581897 c.f. Lagebericht PzAOK 3 OQu/VII (Mil.Verw) August, 3.9.43. 119. T77/1086/232 KTB WiStab Ost, 20.12.41. 120. T77/1112/942 Lagebericht AWiFü AOK 4, 16.11–15.12.43. 121. T315/1586/1364–5 Sich.Div. 203 Abt VII/Mil.Verw., Lagebericht Januar, 30.1.43. 122. T501/15/1129–30 Lage- und Tätigkeitsbericht Berück Mitte Abt VII/Kr.Verw., 10.6.42.

412 • Occupied Economies 123. Or so states the assessment of Brandt, Management of Food and Agriculture, 123 et seq. 124. T313/275/8546923–6 PzAOK 3 OQu/Qu.2/Ic/AO (Abw.III), Unberechtigte Benutzung der Eisenbahn durch Landeseinwohner, 30.3.43; T312/1353/1315 Gruppe GFP 570, Einsatzplan, 30.1.43. 125. T501/66/87OK I/532, Tätigkeitsbericht 1.7–10.7.42; Also T312/1689/126 (both Rzhev) Gruppe GFP 580, Lage und Stimmung der Bevölkerung in den besetzten Gebieten, 31.10.42; T454/104/932 Monatsbericht Hgr Mitte OQu/Qu.2/VII (Mil. Verw) Mai, 12.6.44; cf. Schulte, German Army and Nazi Policies, 105–106. 126. Paul W. Sanders, ‘Population Policy and Economic Exploitation: The German Occupation of Byelorussia (1941–44)’, in: Joachim Lund (ed.), Working for the New Order: European Business under German Domination 1939–1945 (Copenhagen 2006) 157–174, here 171–172. 127. T175/235/2724503–4: Meldungen aus den besetzten Ostgebieten Nr 8. 128. Hein A. M. Klemann, ‘Bezetting en economische macht’, in: Conny Kristel (ed.), Met alle geweld. Botsingen en tegenstellingen in burgerlijk Nederland (Amsterdam 2003) 162–183. 129. G. J. Kruijer, Hongertochten. Amsterdam tijdens de hongerwinter (Meppel 1951) 245–246. 130. T175/234/2722796–7, 3178–9 EM 106, 7.10.41, 133, 14.11.41; Svetlana Aleksievich, Poslednie svideteli: Sto nedetskikh kolybelnykh (Moscow 2004) 66. 131. Klemann, Nederland 1938–1948, 557. 132. Scholliers, ‘Strijd rond de koopkracht, 1939–1945’, 265. 133. Synthèse des rapports des préfets de la zone libre, Octobre 1941, http://www.ihtp. cnrs.fr/prefets/fr/fzl1041mi.html. 134. Synthèse des Rapports des Préfets de la zone libre, Novembre 1941, http://www. ihtp.cnrs.fr/prefets/fr/fzl1141mi.html. 135. Chris Krooder, ‘Hongertocht: Verkrachting, voorjaar 1945’, in: Geert Mak (ed.), Ooggetuigen van de vaderlandse geschiedenis in meer dan honderd rapportages (Amsterdam 1998) 283. 136. Paul W. Sanders, ‘Prélèvement économique: Les activités allemandes de marché noir en France 1940–1943’, in: Olivier Dard, Jean-Claude Daumas and François Marcot (eds.), L’Occupation, l’État français et les entreprises (Paris 2000) 37–67, here 41–42. 137. Sanders, Histoire du marché noir, passim. 138. T315/1586/203: Lagebericht Sich.Div. 203 Abt VII/Mil.Verw. Dezember, 30.12.42. 139. T311/220/948: Kav.Rgt. Mitte, Erfahrungsbericht über die Kampftaktik der Partisanen und Möglichkeiten unsererseits die Bandengefahr zu beschränken, 23.6.43, gez. Frhr v. Boeselager. 140. T501/15/1129–30: Lage- und Tätigkeitsbericht Berück Mitte Abt VII/Kr.Verw., 10.6.42. 141. Klemann, Nederland 1938–1948, 438.

–18– Damage Introduction It is impossible to prove that during the occupation period, the part of the output (as a percentage of the pre-war production) that was left for internal use in the occupied countries in Eastern and South Eastern Europe was much lower than in the occupied countries in Western Europe. However, apart from the fact that the knowledge about Eastern and South Eastern Europe is based on the statistics of only one country—the isolated and, for these parts of the Continent, relatively rich Greece—the pre-war level of output per capita in Eastern Europe was far lower than in the western parts of the Continent. Therefore, although the impoverishment was harsh in all occupied countries and the consequences of it were severely felt, it was only in the eastern parts of Europe that it caused extreme deficiencies and a substantial number of deaths. In this chapter, first the demographic consequences of war and occupation in the diverse occupied countries will be investigated. Then some notes will be made on material damage and wartime investments.

Demographic Consequences of the German Occupation and Exploitation The most terrible consequence of the war was the enormous number of people that fell victim to the violence, terror, impoverishment and hunger it caused—in a gigantic number of cases, with deadly consequences. The number of fatalities was high, especially in the eastern parts of Europe, but exact figures are hard to give, as for the countries in these parts of Europe—Poland, the USSR and the states that were or became members of this federation, as well as the Czech territories—regular mortality statistics are available only from 1950 or so onwards.1 The most important country of this region, the USSR, is the biggest problem in this matter. As with everything concerning the Soviet Union, the number of Soviet casualties has long been a matter for political feuding. During the period of Stalin’s rule, the number of Soviet war casualties was given as only 7 million—in itself bad enough but far too low as an estimate of the total number of victims if the intensity of the fighting and the enormity of the warfare destruction are taken into account, together with the terror, hunger and suffering and the huge numbers of murdered Jews, party commissars, partisans and all

– 413 –

414 • Occupied Economies the other people the Germans for one reason or another wanted to get rid of or who were killed in the clashes between the ideologies and the peoples living in these territories. Nonetheless, in March 1946, Josef Stalin himself made this number public. According to Michael Ellman and S. Maksudov, the Soviet leader probably did so for two reasons: in the first place to hide the weakness of the USSR against potential new enemies and in the second place to underline the quality of Stalin’s leadership. It was only after his death, when Nikita Khrushchev (1953–1964) became leader of the USSR, that it was made public that as a result of the Great Patriotic War at least 20 million Soviet citizens—10.2 per cent of the population—lost their lives. Leonid Brezhnev (1964–1982) even talked about more than 20 million victims.2 The Soviet people had to make do with this underestimation until 1989, when Mikhail Gorbachev ordered new research to get a more realistic picture. Then a committee calculated that the Soviet war losses in terms of human lives were around 26.6 million people, a figure made public by Gorbachev in 1990 during a Memorial Celebration in remembrance of the forty-fifth anniversary of the victory of the Red Army over Nazi Germany. Of these 26.6 million victims, just 8.7 million—not even a third— were Red Army soldiers who fell in battle or were murdered as prisoners of war. All the other deaths were civilians, or at least not members of any regular military forces. Since, in June 1941, when the Germans attacked Russia, the Soviet population was 196.7 million, and by December 1945 only 170.5 million were left alive, these figures indicate a loss of 13.5 per cent of the total Soviet population, including those people only incorporated into the USSR in 1939 or 1940. Of the civilian population, more than 10 per cent lost their lives. In those years, the Soviet Union absorbed a substantial part of Poland, the Baltic States, some fractions of Finland and a part of Moldavia (Romanian Bessarabia) in an aggressive attempt to keep the Nazis far away, but also to restore the pre-1914 Russian borders.3 Therefore, when, for instance, the number of Polish casualties is calculated at 5.6 million people including 3 million murdered Jews, it should be taken into account that a substantial number of these—among them many Jews—are also included in the 26.6 million Soviet casualties. Another problem with these Soviet data is that it is not known how many of the civilian victims lived and died in the German-occupied territories. Many also met their end elsewhere in the USSR, where, as a consequence of the war, living conditions were terrible. According to some expert calculations by Ellman and Maksudov—described by them as preliminary—the number of victims in the German-occupied Soviet territories was between 7 and 10 million. One million of these died during the siege of Leningrad, while 3 million more were murdered because they were Jews. However, most of these Jews—some 2 million—actually lived in territories Stalin annexed only in 1939 or 1940, either from Poland or the Baltic States.4 On top of these victims of war and occupation, around 7 million people living in non-occupied Soviet territories became victims of the bad living conditions caused by the war. They were victims of the economic circumstances created by the

Damage • 415 Germans, but also of the way the USSR fought its conflict with Nazi Germany. In other words, according to these experts, more than 40 per cent of all civil Soviet war victims died within Soviet-controlled territories. In 1942 and 1943 no less than 60 per cent of the GDP (gross domestic product) there was directly war-related.5 Consequently, less than 40 per cent of the total production of the USSR (GDP)—which as a consequence of the German conquests declined during the war—was available for non-military investment and consumption. This caused extreme impoverishment, including in the non-occupied parts of the Soviet state. After a peak in consumption, the 1940 rearmament programme had already caused a decline, while in 1941 and 1942, consumption levels fell sharply again. Food consumption slumped, housing was in short supply or lacking altogether, while heating and the most basic clothing were scarce. To keep the economy going, food rations were dependent on an individual’s economic position and status. Between 80 and 90 per cent of the total official food ration consisted of bread, and this was available only to a limited number of labourers. Moreover, rationing covered the consumption of only some 50 per cent of society—in the first place, soldiers and officials. For the remainder, unofficial supplies obtained directly from farms or from more or less clandestine markets were essential for any chance of survival; this was also the case in the non-occupied parts of the Soviet Union. Thus, malnutrition was more or less commonplace, resulting in a sharp increase in tuberculosis and epidemics of diseases such as typhus and typhoid fever. As a consequence, mortality rates became high.6 Later, as more and more of the occupied parts of the country were liberated in the closing stages of the war, the demand for food increased faster than the supply, and the amount of food available per capita diminished even further. Consequently, the very harsh living conditions worsened to the extent that it became increasingly difficult for the vulnerable groups to survive. Initially, the death rate (excluding mortality from hostile action) rose from eighteen per thousand in 1940 (i.e. already little less than 2 per cent) to twenty-four per thousand in 1942; after that, it fell again, probably because so many of the vulnerable people—children, the elderly and the sick—had already died.7 As a consequence of the fact that 13.5 per cent of the Soviet population fell victim to the war, and many millions more were injured, crippled or maimed—altogether at least another 15 million, or 7.5 per cent of the population—at the end of the war more than 20 per cent of the people had died or were permanent invalids. Consequently, in this enormous country, every family was in mourning for lost children, parents, husbands or wives, brothers and sisters, and many were traumatized for life.8 Not even remote parts of the country were spared, such as Siberia, which was further from any front line than countries such as France or Denmark. Nonetheless, there the mortality among the urban population peaked in 1942 at a level of twenty-nine per thousand—almost 3 per cent—while this was twenty-one per thousand—more than 2 per cent—in the countryside.9 The USSR was extremely hard hit by the consequences that modern total warfare had for all aspects of life. It caused high mortality

416 • Occupied Economies among all parts of its population. In the areas of the Soviet Union where the fighting actually took place or which were occupied by the German armies, these figures were even worse. In Belorussia, a German-occupied Soviet republic, between 1.6 and 1.7 million people—about 18 per cent of its 9 million pre-war inhabitants—died of aggression, terror, scarcity or malnutrition, while 2 million more were forced to relocate outside this Soviet state. The number of permanent invalids is unknown, but it seems safe to guess that here at least 25 per cent of the population either died during the war or were crippled for life. All others suffered from the cruel famines, the destruction of the economic infrastructure by warfare, the Soviet scorched-earth policy, the German destruction and confiscations, Sauckel’s labour-hunting policy and partisan combat. The situation was more or less the same in the Ukraine.10 In the two and a half years of occupation, this Soviet republic, with 30.9 million pre-war inhabitants, lost 6.7 million of its people, or no less than 21.7 per cent of its population. Apart from the murder of Communist Party officials, the many Jews living in this part of the USSR and others mistrusted by the occupier, as well as actual warfare and partisan activity, it was hunger and starvation that did the job. On top of that, 3.5 million people left the country.11 In Poland it was essentially the same story. In this country with a pre-war population of 35 million (but split up into several parts during the war and never restored to its pre-war borders again), more than 6 million people—again 17 per cent—lost their lives. According to these data, 2.4 million Polish Jews were murdered, 1.8 million non-Jews fell victim to the Nazis, while another 0.9 million Poles were killed by Soviet terror. A problem with these data is that here all Polish deaths are qualified as victims of actual warfare or terror, but it seems impossible that there were no victims of the extreme economic circumstances at all.12 Other statistics give slightly different estimates, for instance 3 million Polish Jews murdered, including those living in the parts of the pre-war country incorporated by the USSR in 1939. Although exact statistics on Poland are not available, the story is always essentially the same.13 The Jews and intellectuals—including many Catholic priests, who were, just like the Soviet party commissars, potential leaders of the oppressed people—were murdered, and the remaining population, which was used for labour, received such meagre diets that they could survive only if they were assertive, wealthy or strong enough to get a share in the clandestine food production. The fact that it is difficult to get exact statistics is not because there is any doubt about these figures, but because it is hard to decide who is counted as Polish: the population of pre-war Poland in its borders of 1938, the population of the General Government or only the ethnic Poles among the population, wherever they lived. In Table 18.1 the number of casualties of the occupied or partially occupied countries are ordered by rank of losses as a percentage of the pre-war population. In this table all countries listed are the pre-war countries, that is the countries within their pre-1938 borders, and here Poland is worst off, directly followed by Lithuania. The USSR—here without its 1939–1940 conquests and thus with 168.5 million instead

Damage • 417 of the 1941 196.7 million inhabitants—is only third, with a loss of 11.4 per cent of its population. As the Jewish population was not evenly spread over Europe, the German hunt for Jews and their murdering of these people in the concentration camps strongly influenced these data. Most European Jews lived in Poland and the European parts of the USSR, but after Poland, it was the small country of Lithuania that had the highest share of Jews in its population, 7.6 per cent. It is for that reason that this country ranked second when the occupied countries are ordered by the number of victims as a percentage of their population. This, however, is only because the Ukraine and Belorussia were included in the USSR and not seen as independent countries. All these countries had substantial Jewish minorities. In Poland, 9.5 per cent of the population was Jewish, while this was less than 1 per cent in, for instance, Denmark or France.14 As the subject here is not the Holocaust, but the consequences of the economic development for the survival rate, the mortality among the nonJewish civilians is in this context the most interesting figure. This percentage gives a better indication of the most terrible consequences of exploitation. A problem is, of course, that these data include, apart from the victims of impoverishment, also the civil victims of actual warfare as well as the non-Jewish victims of terror. It is nonetheless an indication of the situation in these countries. Eastern European countries like Poland, the USSR, Latvia and Lithuania all lost between 6.1 per cent and 8.5 per cent of their non-Jewish civil population as victims of actual warfare, terror or want. It should be emphasized that in this table, as far as possible, guerrilla and partisan fighters who were killed in battle are reckoned among the military casualties and not included in the number of civilian deaths. For that reason, here, the military casualties of the USSR number 10.7 and not 8.7 million. That figure, mentioned above, includes only soldiers and officers of the Red Army. These enormous percentages of civil, non-Jewish victims make it clear that in these parts of the Continent a strategy of keeping quiet and doing what was demanded by the occupier was hardly less dangerous than participating in resistance and even in actual fighting. Even in Greece or Yugoslavia, two countries described before as suffering from the most terrible wartime conditions—and there are no reasons to doubt that they were—the chance for a civilian to fall victim to actual fighting or wartime circumstances were, at 2.9 to 3.3 per cent, only half as high as in the Eastern European countries. Poland, the occupied Soviet republics and the Baltic countries were the countries that were the most ruthlessly maltreated by the Nazis. In Western Europe the situation was quite different, in line with the differences in circumstances sketched in previous chapters. In countries like France or Belgium, the risk of non-Jewish civilians dying as war victims was around 0.5 per cent and thus less than a tenth of that for a Pole, Russian, Belarusian, Ukrainian, Lithuanian or Latvian. For other Western Europeans—Norwegians, Luxembourgers—this rate was even smaller, and that was also true for the inhabitants of pre-war Czechoslovakia. For Danes such risks hardly existed or were so small—in fact less than 0.47 per cent—that they were statistically almost irrelevant. Of all Western European

418 • Occupied Economies Table 18.1.

Casualties, 1938–1945

Population in 1938 (in millions) Poland Lithuania

35.8 2.5

Casualties (in 1,000s) Military 400 —

USSR

168.5

10,700

Latvia

2

—

Yugoslavia

Casualties as a percentage of the population

Non-Jewish civilians

Jews

Total

Non-Jewish civilians

Total

2,200

3,000

5,600

6.1

15.6

212

141

353

8.5

14.1

11,500

1,000

23,200

6.8

13.8

147

80

227

7.4

11.4 6.7

15.4

446

514

67

1,027

3.3

Greece

7.2

20

209

71

300

2.9

4.2

Estonia

1.1

40

1

41

3.6

3.7

—

Czechoslovakia

15.3

25

63

277

365

0.4

2.4

The Netherlands

8.7

8

92

106

206

1.1

2.4

41.7

212

267

83

562

0.6

1.3

12

52

24

88

0.6

1.0

2

0.5

0.5

France Belgium

8.4

Luxembourg

0.3

Norway

2.9

3

6

1

10

0.2

0.3

Denmark

3.8

1

2

0

3

0.0

0.1

313.6

11,827

15,305

4,851

31,983

4.9

10.2

Occupied Europe

—

2

—

Source: ‘World War II Casualties’, in: AllExperts: Encyclopedia, http://en.allexperts.com/e/w/wo/ world_war_ii_casualties.htm. Fallen partisans are included here in the military casualties.

countries, only in the Netherlands was this risk a little higher. It was a consequence of the high number, for Western Europe, of Jewish victims of Nazi anti-Semitism and of the famine during the last months of the occupation. In that period, this went hand in hand with German terror to keep the population quiet as everybody now expected an Allied victory and many people became almost openly hostile. Compared to the western or even south-eastern parts of the Continent, the number of people that died as a consequence of the war, occupation, ethnic cleansing and the economic circumstances resulting from these was extreme in Eastern Europe. It confirms the impression from the previous chapters that these countries suffered the most of all occupied countries. Table 18.2 gives an impression of the post-war consequences of this increased mortality. That is difficult, however, as Eastern European post-war countries often did not have the same borders as the pre-war countries with the same name. The USSR kept, for instance, its 1940 borders, and, as a consequence, the Baltic States lost their independence for decennia; Poland lost its eastern parts and was compensated by the most eastern parts of Germany—all territories in

Damage • 419 Table 18.2. Development of the Population in a Number of Occupied Countries, 1938–1948 (1938 = 100) 1938

1939

1940

1941

1942

1943

1944

1945

1946

1947

1948

Belgium

100

100

100

99

98

98

99

100

100

101

102

Denmark

100

101

101

102

103

105

106

107

109

110

111

France

100

100

98

94

94

93

93

95

96

97

98

Netherlands

100

101

102

103

104

105

106

107

109

111

113

Norway

100

101

101

102

102

103

104

105

107

108

109

Greece

100

101

103

104

104

103

103

104

105

107

110

Czechoslovakia

100

101

101

100

100

100

100

97

88

83

84

Poland

100

101

97

—

—

—

—

—

77

76

77

Yugoslavia

100

101

101

—

—

—

—

—

—

97

98

Source: Angus Maddison, The World Economy: Historical Statistics (Paris 2003).

Pomerania, Silesia and Brandenburg east of the Oder–Neisse Line and the southern half of East Prussia. To make these newly incorporated German territories really Polish, millions of ethnic Germans were sent to the Allied occupation zones in Germany, while the Polish population of the territory incorporated by the Soviets was sent to the former German parts of the newly founded Polish republic. German minorities in the USSR or Czechoslovakia were also sent to the remaining regions of Germany. Most of them had never lived there before. Therefore, comparing pre-war with post-war demographic data is hardly possible. In Western Europe such problems did not exist. There, during the wartime period, France alone of all Western Europe saw its population decline as a consequence of the loss of Alsace-Lorraine in 1940 and Corsica in 1942. After the war, the country was restored to its pre-war borders, however, just as Belgium and Denmark were. Similarly, Luxembourg regained its independence and also its population. However, although all the lost territories were returned to France, its population never completely recovered, while that of the Belgian people stagnated. In 1940 and 1941, these two countries, Belgium and France, had the most serious food problems of Western Europe. France suffered severe economic problems during the occupation period as a whole. This had serious consequences for the birth rate (Figure 10). In the Netherlands, Denmark and Norway, the occupation started with a slight growth in the number of babies younger than one year old, probably a consequence of the fact that the unemployment rate fell back. In these rather traditional Western European societies this gave young people, who now had jobs, the chance to marry. In Belgium and France a substantial number of men were in the army and later became prisoners of war, while serious food problems raised doubts about the future. Having a baby hardly seemed a good idea in such circumstances. Only after

420 • Occupied Economies 1942, which was a bad food year as a consequence of the disappointing 1941 harvest and therefore a year when all over Western Europe the birth rate declined a little, did this figure start to rise in these two countries as well. Allied successes gave hope again for a future in which one could raise a child in peace. The baby boom started, but in Belgium and France the birth rate had fallen by about 20 per cent since 1938, while during the first years of the occupation this rate had already grown between 5 and 10 per cent in the Netherlands, Denmark and Norway. Previous chapters have already shown that the situation in France was worse than elsewhere in Western Europe and that the occupier took more French labour to work in its industry than from other Western European countries. An important difference was also that, while the soldiers of the so-called Germanic countries were sent home after they had lost their war against Germany, the French armies, as well as Walloon Belgian soldiers, were retained as prisoners of war to be used as forced workers. In Figure 11 this becomes clear by the fact that during the occupation the number of people in the age categories who could have a job—that is all people between 15 and 65 years old (in economic publications mostly indicated as the potential labour force)—actually declined in France. This is not a result of the French loss of territory. In Belgium this category more or less stagnated, while these categories grew in all other occupied Western European countries. Of course, this partly resulted from interwar birth rates, as any growth of this category could only have come from

Figure 10 Number of babies younger than a year old (1938 = 100). Source: The Human Mortality Database, http://www.mortality.org/. French figures are corrected for the wartime loss of territory.

Damage • 421 youngsters born between 1925 and 1930, but most important was wartime mortality among this group, especially amongst the youngest in this category. It is surprising to see that in France the mortality rate among adolescents and young adults between 15 and 39 (Figure 12) was very high. More than other categories, these young men and women were inclined to react through acts of resistance and fight back when the situation became unbearable for their young minds. Apart from that, from 1942 on, these people were the most threatened by the Arbeitseinsatz. Consequently, it was young people—in Western Europe only young men—who fell victim to attempts to avoid this policy by going into hiding and by joining in the increased resistance activity and additionally by the German reaction to the growing unrest in the occupied territories. According to the final report of the German authorities in Paris, it was the Arbeitseinsatz that caused the growing French resistance and the increased influence of the Maquis, especially when the Germans, just before the country was liberated, tried to send all young men born in 1924 to Germany. It resulted in a substantial increase in the resistance.15 As a consequence, in France—the country that fared the worst in Western Europe—the mortality among young people between 15 and 39 years old peaked not only in 1940, as a result of actual warfare, but again in 1943 and 1944, when the situation became rather extreme. Then, the resistance grew and even took on elements of real partisan warfare. When nutrition alone was the problem, the same development would have been seen among elderly

Figure 11 Potential labour force, that is the population from 15 to 64 years old (1938 = 100). Source: The Human Mortality Database, http://www.mortality.org/. French figures are corrected for the wartime loss of territory.

422 • Occupied Economies

Figure 12 Mortality among adolescents and young adults between 15 and 39 years old (1938 = 100). Source: The Human Mortality Database, http://www.mortality.org/. French figures are corrected for the wartime loss of territory.

adults, but in the age category of 40–44 years old the peaks are much lower, while they are almost non-existent in the categories of 45–49 and 50–54 years old.16 The fact that it was not just the Arbeitseinsatz and the resulting hardships among young men who were sent to Germany or went into hiding that caused these developments becomes clear in Figure 13, representing the index of the female mortality among the same age category as in Figure 12. Here, the 1940 peak is lacking as in this period women were not soldiers and so did not fall in battle in the May–June war. The sharp French 1943–1944 peak is, however, seen among women as well, although it is a little less steep. The cause is, of course, the fact that the situation in France became so severe that resistance increased. Hand in hand with that, the German reaction became more aggressive. It is amazing to see that in almost all other Western European countries a peak in the mortality rate for this age category, like that in France, did exist for 1940, but on a much lower level. The Netherlands, Norway and even Belgium were beaten before their armies could lose substantial numbers of soldiers, while Denmark did not defend itself at all, apart from some formal shots. As a consequence, in that country, this peak in the mortality among young men is completely absent. After 1940, all over Western Europe, the mortality of the population as a whole is slightly higher than normal. Only from 1943 on, when the situation became worse as a consequence of the Arbeitseinsatz and the reaction to this by the resistance, did mortality rates increase slightly, especially in the Netherlands. In that country, these graphs peaked spectacularly in 1944 and 1945. That was a consequence of the Dutch Hunger Winter.

Damage • 423

Figure 13 Mortality among women between 15 and 39 years old (1938 = 100). Source: The Human Mortality Database, http://www.mortality.org/. French figures are corrected for the wartime loss of territory.

The data give evidence that an increased number of people were going into hiding and joining in the resistance as a consequence of the growing pressure from the occupier such as, for instance, by the Arbeitseinsatz. This caused a severe increase in mortality rates among adolescents and young adults. It is a fact that had serious economic consequences for the post-war world, but that was especially the case in Eastern Europe, where mortality was much higher. In these parts of Europe, resistance and partisan warfare were most severe, and a substantially higher part of the population was involved than in Western Europe. It seems reasonable, therefore, to presume that in these countries the loss of many relatively young lives, and thus of strong and recently trained labour, was quite substantial, while such losses were also quite high in South Eastern Europe. Even in France, this high wartime mortality was of some macroeconomic importance. Here as well, relatively many people were lost from the category of strong young adults needed to rebuild the country after the war.

Wartime Destruction and Investments While in Eastern and South Eastern Europe a policy of destruction and unscrupulous exploitation was characteristic, in Western Europe the economies were stimulated by German orders, at least in the first years of the occupation. From August 1940 on, it seemed in the interests of Berlin to get the economies of these countries going again. As a consequence, in wartime Western Europe, investments were probably

424 • Occupied Economies rather important throughout the first years of the occupation, and not only because these were needed for German orders. The first Dutch wartime investments actually had little to do with any German orders or booming business, but were a reaction to the Allied blockade. Just as in the First World War, this blockade and the resultant cutting off of normal supplies stimulated businessmen to invest in import-substituting production. One of the first Dutch investments, only a month after the German invasion, was made by Gembo, a writing ink factory that started to produce printing ink, a product that had come from Britain until May 1940. In the same period the cutting off of the import of jute to make bags resulted in investments in a paper bag factory.17 For the same reasons the production of artificial silk and synthetic wool, of chemical products based on salt (especially fertilizers), of synthetic rubber, lignite, peat and earthenware started or increased enormously during the first period of the occupation.18 Furthermore, there were investments in tinned food production as overseas imports were lost,19 and directly after the bombardment of Rotterdam, an increased demand for furniture stimulated investments in this branch as well. In the first years of the occupation, this Dutch industry was already exporting hundreds of thousands of cots and cribs to Germany.20 This new export was not created by German orders, but by the simple fact that after the removal of monetary restrictions, the German market became open again. The enormous German demand did the job. The relations with other European countries were now hindered, however, by monetary problems, and, for instance, trade with a neutral country like Sweden waned, causing investments in the production of matches.21 In 1940 and 1941, the production of toothpaste, farming machines and spare parts for these, synthetic paint, carbide, beer, milk chocolate, earthenware, and so on started or increased to replace imports. In the clothing industry, however, import substitution was only one of the reasons for substantial investments.22 Most investments in this area were motivated by German military orders, which had already become important in some other branches as well. Although during the first years of the occupation machine production for the home market was booming, investments in this branch were in the first place caused by a growing German demand. The growth and building of new shipyards, just like most investments in the chemical and metal industry, were even completely motivated by German military orders. From 1941 on, German orders became the sole reason for almost all investments, as, from then on, legal investments in buildings or machinery were only possible when these were necessary for the German war production. The Danish case suggests that substantial wartime investments were not uniquely Dutch. In that country important investments were made during the German years as well. Denmark, like the Netherlands, was a country that imported overseas materials and processed these to export final industrial and farming products.23 A few years after the war the Danish Industrial Council wrote that during the war ‘the worry that the productive machinery should be reduced in quantity . . . was in no way unfounded.’24 This suggests that the development was dissimilar to that in the Netherlands. The

Damage • 425 Council, however, never published a promised second report about profits, production and employment, and according to the Danish historian Per H. Hansen this was not done ‘because it turned out that industrial firms had been quite profitable, a fact that did not fit into the consensus view that the occupation had caused general hardship, and might not have pleased public sentiment so shortly after the war.’25 Actually, Danish industry invested during the war years, for instance, to solve the problems resulting from the blockade. Hansen gives the example of Danfoss, a firm producing compressors, which got the chance to expand because American and British competition was cut off.26 In later years, investment opportunities declined, but nevertheless, according to the Danish Statistical Bureau, in 1943 real investments in industry were still 70 per cent of the 1939 level and even in 1944 still 52 per cent. The bureau saw this last figure as an indication that companies postponed planned investments to the period after the liberation, and indeed, in 1945 Danish industrial investments were no less than 175 per cent of the 1939 level.27 For Denmark, no data are available on the investments in the first years of the occupation, but because of the German regulations on the use of raw materials, the 1943 and 1944 investments were most likely below the level realized in a free market. As a consequence of the German orders, and also the fact that the economic development of these countries was, up to a certain level, not hindered by many restrictions until 1942, new investments were made in the economies in Western Europe to adapt to the new situation. From 1942 on, Albert Speer’s ministry in Berlin limited such investment possibilities as these used scarce raw materials. Without special licences, civil building was prohibited just as were investments in machinery. In 1942, when the economy tightened in Denmark, firms with investment plans were confronted with such limits. Hansen writes about this that ‘individual companies did whatever possible to keep up investments’ nonetheless, but that ‘as the war progressed it . . . became increasingly problematic to get the necessary machinery in the quality needed’.28 Germany regulated the use of raw materials to optimize its war effort, and it seems doubtful that Speer’s department accepted any Danish use of scarce raw materials except for production important to the German warfare. The suggestion of Phil Giltner that the fact that there were few German direct investments in Denmark during the occupation meant that there were hardly any investments at all is untrue. The same can be said for all of Western Europe. German-initialized investments were important in Austria and Bohemia, where the Four Year Plan invested in heavy industry, just as in Norway where hydroelectric plants, aluminium production and a frozen fish industry were founded. Further, there were German investments in Eastern Europe to get mines and other heavy industries going again, most of the time with very limited results. In these countries, there was probably very little spontaneous investment by local businessmen as the economies were undermined by the way they were exploited. The fact that everywhere in Western Europe German investments were of little importance did not mean, however,

426 • Occupied Economies that overall investments could not be quite substantial.29 In most cases, the German role in such investments was limited, but that did not hinder local businessmen from investing, at least not in the first years of the occupation. Because of the inconvertible Reichsmark, Germany could not finance investments in its occupied territories without taking the money needed for this from these countries. In the Netherlands, therefore, the occupier financed only two major projects: the expansion of the iron and steel industry in IJmuiden and that of the artificial silk industry in Arnhem. Dutch businessmen initiated these projects, but Germany used the occasion to take over important portfolios of the new shares. However, because the Dutch feared German infiltration into their companies, they opposed such takeovers. From a paper by Phil Giltner it is clear that the Danish had the same objections. Given the reaction all over Europe to Göring’s Verflechtung policy, it seems plausible to presume that this was the same everywhere.30 In Western Europe most investments were made by local businessmen, in the first place to produce products the occupied country needed, ones that until 1940 had come from overseas suppliers. Apart from import substitution, the target was to adapt to the new demand, that is, in the years directly after the start of the occupation, the German demand. In the third place, from 1943 on, investments were needed to adapt again to a new German demand for consumer goods. Investments to achieve import substitution as well as to meet German demand were probably made all over occupied Western Europe. In Norway, import substitution must have been important as the country’s enormous merchant fleet left for Allied harbours in April 1940. Thus, this Nordic country was left without the means to bring home all it needed. With the blockade, Norway was isolated from Britain, who, before the war, was its number-one trading partner. Consequently, the Norwegians were confronted with almost-insolvable problems.31 Import substitution could relieve some of these. Until now, little is also known about France in this respect. Probably, French import substitution was of less importance because pre-war imports were relatively small. In this country, however, from 1942 on, a million young men went into hiding from the Arbeitseinsatz, most of the time finding a hiding place in the countryside. In the Netherlands, such young men often helped to modernize and enlarge farms and to rebuild or enlarge barns, and so on. As a consequence of black market sales, but also as a result of disinvestments in livestock, farmers had money. They probably invested some of this in their farms or their land, if only to protect their money from the feared post-war inflation. During the occupation, companies all over Western Europe adapted to new developments resulting from the Allied blockade and the lack of shipping, from the opening of the German market and the solutions found for the convertibility problem. New opportunities resulted from attempts to incorporate occupied territories into the German war economy. In Belgium, big holding companies, led by the Société Générale of Governor Alexandre Galopin, dominated industry in all the areas which were of use to Germany. On the one hand, these tried to get Belgian industry through

Damage • 427 the war but, on the other, thought that making important investments to fortify German war production was a bridge too far. In all other occupied countries—just as in parts of the Belgian industry not controlled by such holdings—individual firms, confronted with a new market situation, reacted by adapting their production.32 Often, this demanded smaller or larger investments. From September 1943 on, the policy of Albert Speer resulted in investments being made again, now in the Western European—non-Scandinavian—consumer goods industry. Speer was quite aware that in this part of Europe the policy of labour hunting implemented in 1942 was counterproductive. This encouraged him to come to terms with the Vichy French Minister Jean Bichelonne and to promise not to hunt down French labour any more as long as the workers were producing for Germany. By concentrating civil production for the whole of Europe in France and transferring military production back to Germany, he hoped to overcome objections against production for Germany in the occupied country. From September 1943 on, the French production for Germany was concentrated on harmless objects.33 The implementation of the Speer–Bichelonne agreement of September 1943 was not limited to France. In Belgium and the Netherlands, the Arbeitseinsatz policy was also ended. Now, in the Western countries, the Germans tried to make labour useful by placing civil orders with the local industry, while German industry concentrated more than ever before on military production. In December 1943, civil production that could be done in the occupied territories was forbidden in Germany itself.34 Consequently, in the occupied countries civil production was encouraged, resulting in expansion and investments in branches that would be important again after the war. In the Netherlands, new industrial production of consumer products started. According to the one author who wrote about this, most of these new industries were lost again in the last months of the occupation because in September 1944 the Allied advance stumbled, dividing the country for nine months into a liberated part and an isolated part that was still occupied.35 It is not clear whether he is right, but as France and Belgium were liberated without such problems, even if he is right and the Dutch investments from these last war years were lost, such investments probably strengthened the post-war consumer goods industry in France and Belgium. For the Netherlands and Denmark, it is possible to prove from statistical data that, notwithstanding destruction and confiscations, between 1939 and 1946 industrial capacity actually grew. Between 1939 and 1943, the Dutch industrial machine capacity measured in horsepower grew by something like 29 per cent. Of course, investments were not limited to horsepower, but it is an indication of the volume of total investments, and the only one there is.36 The biggest increase in horsepower— 43 per cent—is found in metal-processing industries, which suggests that the most important investments resulted from the adaptation of industry to the German desires. After the war, this was a good reason to forget about it as quickly as possible. After the preceding, it seems logical to conclude that in Western Europe, physical damage to the economy resulting from the German occupation was limited and that

428 • Occupied Economies in any case in the Netherlands and Denmark industrial investments were probably of more importance than any damage suffered. In the Netherlands, investments broke down in 1944, but at that time companies were already planning post-war expansion. In Denmark, investments never broke down entirely. Apart from individual companies that suffered severely, in both countries industrial war damage was limited to retardation in repairs and replacements, while all stocks of raw materials were completely used. In France, where little quantitative economic historical research about the war period has yet been done and the debate is still concentrating on collaboration, the attitude of businessmen and legitimacy, it is hard to find out how severe the 1944 situation really was. Nevertheless, by January 1946 it was already clear that ‘the economic damage caused by the Germans . . . was not so great as was originally believed’.37

Conclusions Material damage as well as the loss of human life was most severe in Eastern Europe, rather severe in South Eastern Europe and, from a macroeconomic point of view, relatively unimportant in Western Europe. Here, in most countries the population actually grew, just as did the industrial production capacity. It was only in France that the situation was relatively bad. In South Eastern Europe the loss of civil, non-Jewish human lives—in other words, the number of people who died as a consequence of the methods of exploitation and not as a result of actual warfare or Nazi persecutions—was, however, already at least five times as high as in Western Europe, while in the occupied Eastern European countries this was even ten times as high as in the West. In these parts of Europe, however, the Jews formed a substantial part of the population, and their destruction caused not just personal tragedies, or, from the opposite perspective, was not only an unprecedented crime, but also caused a severe decrease in the population size. On top of that, in this part of the Continent, the economies of the occupied countries were exploited in a most destructive way. After war and terror had already destroyed these countries on a scale unknown in the West, this exploitation broke the back of these not very sophisticated economies. In the USSR, material destruction was monstrous, with 1,710 towns, more than 70,000 villages and six million buildings (including 1,670 churches) being destroyed, ruined or burned. Around 25 million people were made homeless, and the losses during the war years were twenty times greater than the national revenue of 1940. According to some Russian calculations, the USSR lost around 30 per cent of its national wealth.38 No fewer than 31,000 industrial enterprises were demolished, including 1,100 coal pits and 3,000 oil wells, while 17 million head of cattle, 20 million hogs, 27 million goats and 7 million horses were taken to Germany or slaughtered on the spot and eaten by the German soldiers. Further, when ransacking the

Damage • 429 countryside, the Wehrmacht destroyed tens of thousands of collective farms and machine and tractor stations.39 Mark Harrison calculated the loss of production capacity and made a conservative correction to this 30 per cent calculated by the Russians, according to which the USSR lost 25 per cent of its pre-war physical assets. As seen, on top of that, the population itself was badly affected—apart from the enormous number of physical casualties, even those Soviet citizens who survived without injuries had almost all lost relatives in a terrible way. Thus, although the actual loss of human lives was at least 13.8 per cent of the population, the overall loss of human capital was, of course, much higher as this included those crippled for life—not to mention the reproducing power of those who were lost. It seems a conservative guess, therefore, to conclude that the loss of assets and population together resulted in a destruction of production power in the USSR of somewhere near 25 per cent. Given the loss of human life and the amount of destruction, it seems plausible to say that the situation in at least substantial parts of Poland was comparable. While in the Western world the opinion is growing that the war had little if any lasting economic impacts,40 the supply-side shocks to the Soviet economy were of such effect that, according to Harrison, ‘the pre-war trend path was not regained within any relevant time-horizon’.41 The war severely and permanently damaged the economic power of the Soviets. In this light, the early post-war history and the start of the Cold War should be reinterpreted. In the West, apart from France, where a not-unimportant number of young men and women lost their lives and the damage was rather severe by Western standards, the biggest post-war economic problem was the fact that Germany was separated into a number of occupation zones isolated from each other as well as from the surrounding countries, thus isolating the heart of the European economy from that of the rest of the Continent. Another major problem was that Germany left monetary and financial chaos in all the former occupied countries. Even in France, the enormous wartime monetary expansion and the incapacity of the post-war government to deal with it was probably a bigger problem than actual damage. It was already clear by a year after the liberation that here, in the biggest of the former occupied Western European countries, the material damage to industry resulting from the occupation was much smaller than initially thought and that, just as in the Netherlands or Belgium, lack of fuels and raw materials seemed the main problem hampering a quick recovery. Monetary chaos made it impossible to recover the convertibility of the diverse European currencies. The monetary and financial chaos further demanded a sharp increase in taxation, while it blocked normal international economic relations.42 Although the actual damage was limited, since these countries had no hard currency with which to restock and thus restart production, and no production to earn the hard currency needed, American aid was needed to break the vicious circle they were in. These problems were of a completely different kind and magnitude, however, to those facing the eastern and south-eastern parts of the Continent. In these countries, substantial parts of the population—and thus of the human capital—and enormous

430 • Occupied Economies parts of the material assets were lost forever as a result of war and the methods of exploitation—and this damage could never be undone.

Notes 1. The Human Mortality Database, http://www.mortality.org/. 2. Mark Harrison, ‘The Soviet Union: The Defeated Victor’, in: Mark Harrison (ed.), The Economics of World War II: Six Great Powers in International Comparison (Cambridge 1998) 268–301, here 291. 3. Richard Overy, 1939: Countdown to War (London 2010) 13–14. 4. Michael Ellman and S. Maksudov, ‘Soviet Deaths in the Great Patriotic War: A Note’, Europe-Asia Studies, 46 (1994) 671–680, passim. 5. Harrison, ‘Soviet Union’, 287. See also a collection of documents from Stalin’s archive: Sergei Kudryashov (ed.), Voina, 1941–1945. Vestnik Archiva Presidenta RF (Moscow 2010). For more details and discussion see: John Erickson, ‘Soviet War Losses: Calculations and Controversies’, in: John Erickson and David Dilks (eds.), Barbarossa: The Axis and the Allies (Edinburgh 1994) 256–277. 6. Harrison, ‘Soviet Union’, 291–292. 7. Ellman and Maksudov, ‘Soviet Deaths’, 680, note 21; Harrison, ‘Soviet Union’, 292. 8. See: Velikaya Otechestvennaya voina. 1941–1945. Kniga 4 (Vol. 4) (Moscow 1999) 282–284. 9. Harrison, ‘Soviet Union’, 292. 10. Paul Sanders, ‘Population Policy and Economic Exploitation: The German Occupation of Byelorussia (1941–44)’, in: Joachim Lund (ed.), Working for the New Order: European Business under German Domination 1939–1945 (Copenhagen 2006) 157–174, here 157–158. 11. Jacques Vallin, France Mesle, Serguei Adamets and Serhii Pyrozhkov, ‘A New Estimate of Ukrainian Population Losses during the Crises of the 1930s and 1940s’, Population Studies, 56 (2002) 249–264, here 261. 12. See: ‘Poland World War II Casualties’, Project InPosterum, http://www.projectin posterum.org/docs/poland_WWII_casualties.htm. 13. Lucy S. Dawidowicz, The War against the Jews, 1933–1945 (London 1990) 403. 14. United States Holocaust Memorial Museum, ‘Jewish Population in 1933: Population Data by Country’, in: Holocaust Encyclopaedia, http://www.ushmm.org/ wlc/article.php?ModuleId=10005161. 15. Rapport Schlussbericht, see: http://www.ihtp.cnrs.fr/prefets/de/schlussbericht. html#_ftnref122. 16. The Human Mortality Database. Figures corrected for the wartime loss of territory. 17. NA, The Hague, Handel en Nijverheid 8356: Industriebericht 1 juni–15 juli 1946.

Damage • 431 18. ‘Algemeene Kunstzijde Unie’, Keesings Historisch Archief, 1–7 December 1940, 4471 C; Algemeene Kunstzijde Unie (AKU), Arnhem, Jaarverslagen, 1938–1948. 19. NA, The Hague, Handel en Nijverheid 8356: Industriebericht 1 juni–15 juli 1946. 20. NA, The Hague, Handel en Nijverheid 8356, Industriebericht 16 October–1 November 1940. 21. NA, The Hague, Handel en Nijverheid 8356: Industriebericht 16 Juli–8 Augustus 1940. 22. NA, The Hague, Handel en Nijverheid 8356, Industriebericht 16 October–1 November 1940. 23. Phil Giltner, ‘The Success of Collaboration: Denmark’s Self-assessment of its Economic Position after Five Years of Nazi Occupation’, Journal of Contemporary History, 36 (2001) 485–506, here 494 et seq. 24. Per H. Hansen, ‘“Business as Usual?” The Danish Economy and Business during the German Occupation’, in: Harold James and Jakob Tanner (eds.), Enterprises in the Period of Fascism in Europe (Aldershot 2002) 115–143, here 126. 25. Ibid. 126. 26. Ibid. 126. 27. Ibid. 133; corrected for price development with: Angus Maddison, Dynamic Forces in Capitalist Development. A Long-run Comparative View (Oxford 1991) 300–301. 28. Hansen, ‘“Business as Usual?”’ 137–138. 29. Giltner, ‘Success of Collaboration’, 490. 30. Ibid. passim. 31. Alan S. Milward, The Fascist Economy in Norway (Oxford 1972) 40 and 139 et seq. 32. Patrick Nefors, Industriële collaboratie in België. De Galopindoctrine, de Emissiebank en de Belgische industrie in de Tweede Wereldoorlog (Leuven 2000) passim. 33. Arne Radtke-Delacor, ‘La place des commandes allemandes à l’industrie Française dans les stratégies de guerre nazies de 1940 à 1944’, in: Olivier Dard, JeanClaude Daumas and François Marcot (eds.), L’Occupation, l’État français et les entreprises (Paris 2000) 11–24, here 19. 34. Niod Amsterdam 93 B4: Tätigkeitsbericht der ZAST für September und October 1943, Dezember 1943. 35. J. A. Freseman Gratama, ‘Het herstel en de ontwikkelingsmogelijkheden van onzen industrie’, Economisch-Statistische Berichten, 24 April 1946, 263–265. 36. Hein A. M. Klemann, Nederland 1938–1948. Economie en samenleving in jaren van oorlog en bezetting (Amsterdam 2002) 284. 37. J. F. Bell, ‘Problems of Economic Reconstruction in France’, Economic Geography, 22 (1946) 54–66, here 62. 38. Narodnoye Khozyaistvo v Velikoi Otechestvennoi voine (Moscow 1990) 2–53.

432 • Occupied Economies 39. Melvyn P. Leffler, ‘The Cold War: What Do “We Now Know”?’ American Historical Review, 104 (1999) 501–524, here 513; Richard J. Overy, Russia’s War (London 1998) 287–289. 40. See, for instance: Karel Davids, ‘De Tweede Wereldoorlog: Een breuk in de economische ontwikkeling in de wereld?’ Tijdschrift voor Geschiedenis, 122 (2009) 464–475. 41. Harrison, ‘Soviet Union’, 292–293. 42. Bell, ‘Problems of Economic Reconstruction’.

–19– Conclusion In 1945 the New York Times published the previously quoted words of a Dutch official: ‘If I had to describe Holland as it is today in a phrase, I would say that it is empty. There is almost nothing left.’1 After the liberation, this impression was general among the people in all formerly occupied countries, and that is how it is remembered. It was, however, simply not true, at least not in Western Europe. Just after the liberation, when wartime damage was estimated for the first time, everybody was still obsessed with the debris and suffering they just survived and turned a blind eye to the profits and improvements resulting from the German years. Nonetheless, in some countries these were important. Apart from giving a wrong impression, there were good motives for not emphasizing the earnings of the occupation period. Individuals, companies and governments had a variety of practical reasons for accentuating, if not exaggerating, the losses and concealing the profitable business done in the war years. Apart from the fact that nobody became popular if the idea took root that a good profit had been made during the German occupation—not even when nothing had been done that was prohibited by the legitimate government—post-war capital gains taxation and monetary regulations also made it better to keep quiet about any wealth originating in wartime. Governments had similar practical reasons to exaggerate the suffering caused by the German occupation. All countries hoped for compensation and reparations from the Germans, while the Western European countries also wanted support from the Allies, especially the USA. To claim compassion and goodwill from the Allies was easier for a country with a starving population and a destroyed infrastructure than for a country that had done good business with the enemy, even when it had had no alternative and suffered nonetheless. To get a good start in the post-war world, a European country needed to show there had been wartime misery. When in 1945 the Allied press published pictures of healthy Dutch girls celebrating the liberation with American and British soldiers, this raised questions in the British and American media about the real situation in the supposedly starving country. The Dutch government, which had recently returned to The Hague from its British exile, tried to correct this unwanted impression by releasing carefully selected pictures of starving people in the most terrible circumstances, especially of children and the elderly, as these created the most compassion.2 The policy of exhibiting the national needs to stimulate foreign generosity did not stop immediately after the war. Even in 1948, when the recalculation of some macroeconomic data showed that Dutch developments were

– 433 –

434 • Occupied Economies not as bad as feared, the Dutch Minister of Economics, J. R. M. van den Brink, prohibited the publication of these data as they would undermine his position in the Marshall Aid negotiations that had just started.3 After the war, it was immediately clear that the population of Eastern Europe and Russia was incomparably worse off than the people in the western parts of Europe and that these countries had suffered much greater damage. Countries like Poland, Belorussia, the Ukraine, the Baltic States and Russia even lost substantial parts of their population as a consequence of actual warfare, strategic destruction, partisan wars, the banishing and flight of millions of people and the persecution of political opponents and intellectuals, as well as Jews, Sinti, Roma, Poles and others who, according to the Nazis, were inferior people. In 1941, just before the German invasion, the USSR had 196.7 million inhabitants, of whom only 170.5 million survived the conflict. Corrected for normal demographic development, the Soviets lost 26.6 million citizens, or 13.5 per cent of the population, because of the war, and there are calculations showing even worse figures.4 Western European losses were far less dramatic. In this part of the Continent, the population of France was most ruthlessly treated, but—without trivializing the suffering behind these data—it is a fact that this country lost no more than between 1.5 and 2.7 per cent of its people.5 Although severe enough in itself, and notwithstanding that every individual case was tragic and often traumatic for those involved, it is far short of the 10–15 per cent or so that some countries in Eastern Europe lost. If one realizes that these data are reflections of the situation, the way the people were treated and the hunger and despair of the population, then it becomes clear from these figures that Eastern Europe was far worse off than Western Europe. In Belgium, one of the less-well-off Western countries, between 1.0 and 1.6 per cent of the civil population died as a result of the war and the situation during the occupation.6 Here, however, the demographic consequences of warfare, ethnic crimes and malnutrition were already entirely compensated for by normal population growth, while in Norway, Denmark and the Netherlands demographic losses were dwarfed by the normal population growth. In the Netherlands, notwithstanding the fact that here an extremely high percentage of the Jewish population—73 per cent—was deported and murdered and that the occupation ended in a brutal famine, population growth was nonetheless no less than 6.8 per cent.7 These differences cannot be explained only by the fact that the Jews were a much smaller part of the total population in Western Europe than in Eastern European countries like Poland, Belorussia or the Ukraine and that therefore the Nazi genocide against the Jews had less effect on the total size of the population in Western Europe. The differences in exploitation also caused enormous differences in the welfare and thus in the chances of survival of the non-Jewish part of the people. In this, racism played its role, but it was far from the only, and not even the first, motive for treating the peoples in the eastern parts of the Continent so differently. Of course, it mattered that Hitler and his National Socialists thought of some peoples in north-western Europe—the Scandinavian countries, the Netherlands and

Conclusion • 435 the Flemish part of Belgium—as Germanic brothers, while Frenchmen or Walloon Belgians also were thought of as far superior to the Slavic peoples in the East. This, however, was not the reason that for most Western Europeans—excluding the Jewish part of the population and the very small number of gypsies—the occupation was comparatively mild. It mattered more that, apart from a few weeks in 1940, actual fighting was far off until June 1944. Most important, however, was the differences in the methods of exploitation. The highly developed economies in this part of Europe, just like the economy of the Czech territories, were made use of by stimulating the production to meet the Germans’ needs. The output was taken for the German warfare. Keeping this production going therefore was of German interest. Taking factors of production—and that included foodstuffs—was only of secondary importance. In eastern parts of the Continent, the situation was completely different. These countries suffered most severely from the closeness of the front line and, at times, extreme demands of the German fighting units. In Poland, the USSR, and also Greece and Serbia—through which the supply lines to the North African front went—the demands of the German army too often also included the foodstuffs the local population needed to survive. Here, taking the output of ongoing production—apart from agrarian output and some mining—was of minor importance, while taking the factors of production—labour, food, machinery and raw materials, or simply destroying these to prepare the recently gained territories for German settlement, came first. The first calculations of the wartime damage here showed the differences immediately. At the end of the war, the total damage in former occupied territories was estimated at $512 billion, of which Soviet Russia alone accounted for 46 per cent!8 Altogether the Germans took 501 billion RM, an amount of money one can equate with $267 billion if one takes the German Reichsmark as a serious currency until the end of the war. Consequently, the damage suffered by occupied Europe was 92 per cent higher than the sum of the contributions made to the German war economy (Table 9.2). When these figures are corrected, the greatest damage caused by the occupation was done in the USSR. Probably the $512 billion calculated is more or less correct, but the way the Reichsmark is converted to dollars is not, as this inconvertible currency lost all value during the war, as far as it had any to start with. Western Europe was, according to Table 9.2, together with the Protectorate, the greatest supplier to the German war economy, and it is clear that destruction there was limited compared with the eastern parts of the Continent. Nevertheless, also in the western part of Europe, many people had the idea that almost everything was lost. In the individual cases that got the most attention, they were right. There were farms destroyed, factories taken away, bridges and railroads bombed, land flooded and stocks of raw materials or food taken. As a consequence, everybody—black traders and most farmers excepted—experienced a most severe setback in consumption levels. Damage almost always seems worse immediately after a disaster than it later proves to be. In 1945 an official French committee calculated that French reconstruction would cost about 2.4 times the 1938 GDP (gross domestic product).9 In January 1946,

436 • Occupied Economies however, it was already reported that the damage caused by the Germans was not as great as had originally appeared and that, in spite of the wartime damage, bombing and enemy confiscations, 80 per cent of industry was intact. It is unfortunate that it is impossible to find out which 80 per cent of French industry is referred to: that of 1940 or that of the industry just before the Allied invasion of June 1944. In the same way, the 1945 estimate of the damage in Belgium was 2.3 times the pre-war GDP,10 while in the Netherlands, where there was more damage as a consequence of its later liberation—this was 4.2 times the pre-war GDP,11 but as this included all wartime production the occupier had taken, it did not mean that so much of the country’s production equipment was lost. In other words, it seems pretty certain that in all of these countries the damage was overestimated. This was not only because all output taken during the war was calculated as damage, but also because, as in the Netherlands, damage done in 1944 and 1945 was compared with early 1944 capital stocks and afterwards interpreted as damage done to the economy as it was in 1940.12 However, many factors were ignored in these estimates. No one considered the wartime investments made to achieve import substitution, or the adaptation of production to meet the wartime needs, often those demanded by the Germans, or, after 1943, the investments resulting from the opportunity provided when Speer decided not to export labour from Western Europe and the Protectorate any longer, and these countries continued to produce the consumer goods still needed for the German market. As a consequence, it was thought that during the war the production capacity of the occupied countries declined. In the Western countries, however, there are no reasons to believe this was true, at least not in industry and agriculture. Means of transport—railroad materials, cars, lorries and barges—were taken, and roads and railroads badly maintained, while bridges were destroyed in all territories by the Germans defending against the invading Allies. Because only damage, destruction and confiscations were noted while investments were ignored, a completely wrong impression was gained. For instance, in the Netherlands, the one country where there are data about industrial capacity, although severe damage was suffered there during the war, in fact the Dutch industrial capacity grew substantially.13 All that is known about investments in French industry is that these were probably substantial as well since, from August 1940 on, individual industrial companies were recovering and in 1941 even flourishing again, as was also the case in the Netherlands. Import substitution was probably relatively as important in France as anywhere else, but as imports here were rather limited compared to the size of the economy, they were not really impressive. Speer’s 1943 decision to demand consumer goods from occupied Europe was, however, directed at France in the first place.14 Of course, railroads, bridges and harbours were smashed in the 1944 Allied campaign through France, while in the north-western zone, where the 1944 war was most severe, the heavy industry was also severely damaged. However, most roads, railroads, harbours and bridges were soon repaired again by the Allies because they needed them themselves for their military operations and supply, while the Germans were forced to leave France in

Conclusion • 437 such a hurry that they had little time for further destruction or confiscations. French agriculture was not damaged at all. The Germans needed the French food production and therefore had no reason to disrupt it.15 In Chapter 5 on exploitation it is made clear that after occupying the European territories, the Nazis had the choice of either slaughtering the cow or milking her. For every territory occupied and at each stage of its advance, Berlin had to choose between the extremes of either plundering or taking the output of production. However, in the following chapters, it became apparent that the permanent conflicts within the Nazi hierarchy undermined any systematic exploitation so that the outcome was seldom a balanced mix. It was a fact nonetheless that until 1942, when Sauckel started his destructive labour-hunting policy across Europe, the western part of the Continent, together with the Protectorate of Bohemia and Moravia—the Czech territories—was mainly exploited by taking a growing part of the output. Consequently, production was stimulated as a result of German orders. This policy was successful in all of these countries apart from France. Therefore, the decline in production in the Protectorate and in all the countries of Western Europe, other than France, was limited. In France, the Germans simply did not manage to get this form of exploitation going and therefore fell back on a simpler form of misuse by taking substantial quantities of food and also by hunting down more labour than anywhere else in Western Europe. In Eastern and South Eastern Europe, where taking the factors of production—capital and raw materials as well as labour—was, apart from taking foodstuffs, the central element in the exploitation, the German policy caused much more damage. In Eastern Europe, it is hard to separate the damage caused by exploitation from that caused by actual warfare and that caused by racist destruction. For instance, in the first months of the attack against Soviet Russia, not only did the Red Army try to destroy all it had to leave behind, but what was still there after the destructive fighting and the Soviet scorched-earth tactic was ruined by the Germans, who hoped to bring the Kremlin to its knees within just a few months. After the military destruction of Stalin’s empire, Berlin wanted to create space for German colonization on the ruins of these countries, in line with the Führer’s ideas of taking the emptied land for German farmers as he had already written several years earlier in Mein Kampf.16 In a way, this long-term prospect could be seen as a form of economic policy. The fact that Germany planned to do so in the USSR but not, for instance, in France also had strong racist elements. It had to do with the extreme disrespect with which the Nazis regarded the people living in Russia. When they were not needed for their labour, their survival was considered completely irrelevant. As a consequence, in these parts of Europe obeying German orders was hardly less dangerous than resistance. Partisan activity and guerrilla warfare were common; normal society was undermined, and civil life all but disappeared. Eastern Europeans were not in a position to continue with their normal lives and disregard the war. For most Western Europeans, however, obeying German orders and producing what the occupier demanded made

438 • Occupied Economies it more or less possible to go on with their normal lifestyle. The one Western European exception, France, had an intermediate position. In the countryside, people could continue with their normal lives as could those in other parts of Western Europe, but the urban population was badly off as the Germans took too high a share of their food for this to be possible. By the end of the war, the economies of Eastern Europe, especially the Soviet economy, were most severely damaged. Around 22 per cent of the Russian human capital was lost, and it seems reasonable to presume that the situation was more or less the same in Poland, while the south-eastern countries such as Greece and Yugoslavia also suffered severe losses. The material damage of the USSR was even worse, with between 25 and 30 per cent of its pre-war assets lost, and again there is little reason to assume that Poland was much better off. The damage in Greece and Yugoslavia is impossible to estimate, but it seems reasonable to presume that the damage in these countries was also structural, as a substantial part of the pre-war factors of production had been lost, although perhaps not as high a percentage as in Poland or the USSR. In Western Europe this problem simply did not exist. Pre-war stocks were lost; wear and tear caused some damage, especially to the transport infrastructure; but the industrial capacity was bigger than ever before, while—apart from France—the human capital was also completely intact. The economic problems of these countries were technical problems caused by the financial and monetary chaos the Germans left behind.

Notes 1. Cited in: Nehemiah Robertson, ‘Problems of European Reconstruction’, Quarterly Journal of Economics, 60 (1945) 1–55, here 10. 2. G. M. T. Trienekens, Tussen ons volk en de honger. De voedselvoorziening 1940– 1945 (Utrecht 1985) 157. 3. Anne-Marie Kuijlaars, Het huis der getallen. De institutionele geschiedenis van het Centraal Bureau voor de Statistiek en de Centrale Commissie voor de Statistiek, 1899–1996 (Amsterdam 1999) 313–314. 4. Michael Ellman and S. Maksudov, ‘Soviet Deaths in the Great Patriotic War: A Note’, Europe-Asia Studies, 46 (1994) 671–680, here 672; Mark Harrison, ‘The Soviet Union: The Defeated Victor’, in: Mark Harrison (ed.), The Economics of World War II: Six Great Powers in International Comparison (Cambridge 1998) 268–301, here 291; Richard J. Overy, Russia’s War (London 1998) 288. 5. Both figures are from shortly after the war. Paul Vincent, ‘Guerre et population’, Population, 2 (1947) 9–30, here 15; ‘War, Migration, and the Demographic Decline of France’, Population Index, 12 (1946) 73–81, here 78. According to more detailed recent statistics, the French population even declined by 8.6 per cent between 1938 and 1944, to recover almost completely in the first few years after

Conclusion • 439

6. 7. 8. 9. 10. 11.

12. 13.

14.

15. 16.

the war. This decline of almost 5 per cent in 1939 alone was probably for a substantial part caused by the loss of Alsace-Lorraine in 1940, a part of France with 1.9 million inhabitants in the 1930s. In addition, Corsica was lost in 1942. See also: Georges Mauco, ‘The Assimilation of Foreigners in France’, Population Studies, 3 (1950) 13–22; Human Mortality Database, http://www.mortality.org/. Vincent, ‘Guerre et population’, 15; ‘World War II Casualities’, in: AllExperts: Encyclopedia, http://en.allexperts.com/e/w/wo/world_war_ii_casualties.htm. Human Mortality Database; Angus Maddison, Dynamic Forces in Capitalist Development. A Long-run Comparative View (Oxford 1991) 232–235. Robertson, ‘Problems of European Reconstruction’, 10. Ibid. Charles de Visscher, ‘The Reconstruction of Belgium’, International Affairs, 22 (1946) 41–46, here 41; Maddison, Dynamic Forces, 198–199; own calculations. Maddison, Dynamic Forces, 3–4; ‘Uittreksel uit het Memorandum van de Nederlandse Regering nopens haar schadevergoedingseisen jegens Duitsland’, in: J. J. van Bolhuis et al. (eds.), Onderdrukking en verzet. Nederland in oorlogstijd, Part II (Arnhem 1949–1954) 326–327. See for instance: Roof, restitutie, reparatie. Samengesteld in opdracht van het Ministerie van Economische Zaken (The Hague 1947). Hein A. M. Klemann, Nederland 1938–1948. Economie en samenleving in jaren van oorlog en bezetting (Amsterdam 2002) 266; Centraal Bureau voor de Statistiek, Jaarcijfers voor Nederland 1943–1946 (Utrecht 1948) 166 et seq.; J. L. van Zanden and R.T. Griffiths, Economische geschiedenis van Nederland in de 20e eeuw (Utrecht 1989). Hervé Joly, ‘The Economy of Occupied and Vichy France: Constraints and Opportunities’, in: Joachim Lund (ed.), Working for the New Order: European Business under German Domination 1939–1945 (Copenhagen 2006) 93–103, here 98 et seq.; Arne Radtke-Delacor, ‘Produire pour le Reich. Les commandes allemandes à l’économie française (1940–1945)’, Vingtième Siècle. Revue d’histoire, 70 (2001) 99–115, here 112. J. F. Bell, ‘Problems of Economic Reconstruction in France’, Economic Geography, 22 (1946) 54–66, here 62–63. Adolf Hitler, Mein Kampf. Zwei Bände in einem Band. Ungekürzte Ausgabe (Munich 1943) 726 et seq.; Alexander Dallin, German Rule in Russia, 1941–1945: A Study of Occupation Policies (London 1957) 379.

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Archives BA Berlin BA Koblenz BA-MA HUA TNA, London (Kew) NA, The Hague NHA Haarlem Niod Amsterdam PA-AA RGVA T77

T175

T311 T312 T313 T315 T454

T501

Bundesarchiv Berlin—German National Archive, Berlin. Bundesarchiv Koblenz—German National Archive, Koblenz. Bundesarchiv Militärarchiv—German National Archive, Military Archive, Freiburg. Het Utrechts Archief—The Utrecht Regional Archive, The Netherlands. The National Archives, London (Kew). Nationaal Archief, Den Haag—Dutch National Archive, The Hague. Noord-Hollands Archief Haarlem—North-Holland Regional Archive Haarlem. Nederlands Instituut voor Oorlogsdocumentatie— Netherlands Institute for War Documentation, Amsterdam. Politisches Archiv des Auswärtigen Amts, Bonn—Political Archive of the Foreign Office, Bonn, Germany. Rossiyskiy Gosudarstvenniy Voenniy Archiv—German files from the Russian State Military Archive, Moscow. The National Archives, Washington, DC, Microfilm Copies of Records of the German Armed Forces High Command 1914–45. The National Archives, Washington, DC, Microfilm Copies of Records of the Reich Leader of the SS and Chief of the German Police. The National Archives, Washington, DC, Microfilm Copies of German Field Commands Army Groups 22. The National Archives, Washington, DC, Microfilm Copies of German Field Commands Armies. The National Archives, Washington, DC, Microfilm Copies of Records of German Field Commands Panzer Armies. The National Archives, Washington, DC, Microfilm Copies of Records of Army Divisions. The National Archives, Washington, DC, Microfilm Copies of Records of the Reich Ministry for the Occupied Eastern Territories, 1941–45. The National Archives, Washington, DC, Microfilm Copies of Records German Field Commands: Rear Areas, Occupied Territories, and Others.

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Plate 1. German map of the economic damage by partisans in the USSR, April 1943. Note: Red: Economy completely destroyed. Pink: Economy in very serious danger. Source: RGVA, Der Beauftragte für den Vierjahresplan. Collection 700, Inventory 1, File 50, p. 190.

Plate 2. Official structure of the German civil occupation regime in the Netherlands, 1940–1942. Green: German institutions or persons in The Hague. Yellow: Dutch institutions, companies or persons.

Plate 3. Actual organization of the German occupation in the Netherlands, 1940–1942. Blue: Berlin. Green: German institutions or persons in The Hague. Yellow: Dutch institutions, companies or persons.

Plate 4. Organization of the German occupation in the Netherlands from 1942 on. Blue: Berlin. Green: German institutions or persons in The Hague. Yellow: Dutch institutions, companies or persons.

Plate 5. French industrial supplies to Germany, September 1940–June 1943 (in billions of RM). Source: RGVA, Collection 1458, Inventory 5, File 62, p. 36.

Plate 6. Weekly transports of the French railroads (SNCF) for December 1941, July and December 1942, July 1943 and January 1944 (in metric tons). Note: Red shading indicates transportation primarily of German interest; yellow shading indicates transportation primarily of French interest. Source: RGVA, Collection 1458, Inventory 5, File 62, p. 40.

Plate 7. German maps illustrating the imports (red) and exports (blue) of foodstuffs from the occupied countries during the years 1939/1940–1943/1944 (in thousands of tons). Plate 7A Corn. Plate 7B Edible fats. Plate 7C Meat. Plate 7D Corn, fats and meat together expressed in terms of caloric value of 1,000 tons of corn. Source: RGVA, Collection 1458, Inventory 5, File 62.

Plate 8. Foreign labour in the German Reich by nationalities, 1943. The size of each circle represents the number of people coming from a specific country, and the shaded part of each circle represents the number of women. Source: RGVA, Collection 1458, Inventory 5, File 62, p. 40.

Plate 9. Clearing between Germany and foreign countries. Dotted arrows: Financial streams. Straight arrows: Goods and services.

Plate 10. The wartime use of the clearing accounts, 1940–1944/45. Dotted arrows: Financial streams. Straight arrows: Goods and services.

Plate 11. German imports and exports from the occupied Soviet territories (in 1,000 tons). Source: RGVA, Collection 1458, Inventory 49, File 37, p. 19, Vierter Arbeitsbericht der ZentralHandelsgesellschaft Ost.