Hitler's Beneficiaries: Plunder, Racial War, and the Nazi Welfare State (23 page)

On February 9, 1942, General Commissioner for Finance and Economic Affairs Hans Fischböck, the official in charge of the economic exploitation of Holland, proposed to the Finance Ministry a “plan to demand from the Netherlands, in addition to their contributions thus far, a running payment for ‘external occupation costs,’ dated retroactively to July 1, 1941, and amounting to 50 million reichsmarks per month, 10 million of which are to be paid in gold.” Fischböck had already discussed the suggestion in detail with van Tonningen, whom the Nazis had put in charge of the Dutch National Bank. According to Fischböck’s proposal, the Netherlands would pay a “solidarity contribution to the joint struggle” against Bolshevism. Germany’s finance minister concurred enthusiastically, offering “no substantial objections.” On May 2, 1942, Reich Commissioner Arthur Seyss-Inquart asked van Tonningen to transfer the money to the Reich treasury and the gold to the Reichsbank’s Berlin depository. That move earned the finance minister Göring’s “special gratitude for the alleviation of our gold and currency concerns.”
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After defeating France in June 1940, German occupiers divided the country into five zones. Alsace-Lorraine was informally incorporated into the Reich, though never officially annexed. The two northern departments fell under the control of a military commander who also oversaw the administration of Belgium. Italy was allowed to administer a small stretch of territory along the French-Italian border. The main portion of the country was divided into occupied and unoccupied zones (the latter being subsequently occupied in November 1942). Unoccupied France was ruled by the Vichy regime, which collaborated with Germany. In occupied Paris, the Reich installed an administrative staff to assist the military commander. The staff consisted of an administrative and an economics division, the former directed by Werner Best, a senior SS and Gestapo officer, until mid-1942.
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The economics division, whose responsibilities included all financial matters, was headed throughout the occupation by Elmar Michel, a career civil servant from the Economics Ministry.
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In the fall of 1940, he was also given leadership posts in the German Commission on Foreign Trade and the German Currency Commission. His mandate covered all of French national territory.
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Within Michel’s division, Reichsbank director Leopold Scheffler headed the unit devoted to overseeing “currency, credit, and insurance.” He was responsible for monitoring the French Finance Ministry, as well as French banks and insurance companies.
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Carl Schaefer, the former president of the Reichsbank in Danzig and one of the founders of the Reich Credit Bank in occupied Poland, was given responsibility over the Banque de France.

The military administration of occupied France was only part of an elaborate system of governance that expanded as the war progressed—and as the Reich’s appetite for foreign assets increased. The German city of Wiesbaden, headquarters of the Armistice Commission set up by Germany following its invasion of France, became a crucial second power center. Hans-Richard Hemmen, whose services would later prove invaluable in the seizur#8220 Belgian gold, headed the commission. Its primary task was to negotiate with the Vichy regime on matters concerning the whole of France. The Reichsbank maintained an office in Wiesbaden, led by another of its directors, Heinrich Hartlieb.

One final locus of authority was the German embassy in Paris, whose presence in the capital was intended to signal the Reich’s (insincere) acknowledgment of French sovereignty. Embassy staff, who often acted as Hitler’s negotiators on the ground in occupied France, also provided a kind of early-warning system for Berlin. But their influence in setting policies remained limited.

The armistice treaty required France to pay a daily tribute of 20 million reichsmarks—an unprecedented sum—to its occupier. Nonetheless, the Reich Finance Ministry complained that the sum was too modest and lobbied to have it increased. High-ranking ministry officials justified their demands with innocuous-sounding arguments: care, they said, should be taken to avoid “unnecessarily burdening” a later peace treaty “with obligations pertaining to financial matters and money-transfer policies.”
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By January and February 1943, the daily demands of the Wehrmacht, not including the purchasing sprees ordered by Göring and Speer, had reached 29 million reichsmarks. As the administrative council of the Reich Credit Bank ascertained, the total expenditures created “a need for French currency of approximately 35 million reichsmarks a day, or around one billion marks per month.”
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The rampant greed of the occupiers meant a drastic increase in the amount of money in circulation in France. State expenditures for civilian needs in all of France totaled some 130 billion francs per year between 1941 and 1943. Initially, occupation costs amounted to roughly the same, essentially doubling the state’s budget. But in the final two years of the occupation, those costs shot up rapidly. The huge jump in 1943 was a direct result of German military defeats in Eastern Europe and increases in arms production. A similar phenomenon can be observed in all the countries occupied by Germany. At a meeting of Nazi leaders in Berchtesgaden on April 28, 1943, Göring complained that “the financial contributions from France are insufficient.” There was a need, he said, for “a serviceable taxation apparatus to take in direct taxes.” Changing the system, Göring suggested, should be a major priority.
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In addition to daily payments toward occupation costs, France was soon forced to provide hefty clearing advances to finance the export of goods to Germany. Between 1941 and 1943 advances were increased from 20 to 45 billion francs, and budgetary estimates for 1944 reached nearly 90 billion. France was also required to pay for the quartering of German occupiers as well as Italian troops in the southeast of the country. The Wehrmacht raised money by imposing collective fines on individual cities. Nantes, for example, was required to pay an extra 10 million francs in the first nine months of the occupation. In Cherbourg and Bordeaux, the figures were 6 million and 2 million francs, respectively.
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These sums do not include the value of property requisitioned by the Wehrmacht during its surprisingly swift march through the country.

In response to German pressure, French tax revenues increased significantly between 1941 and 1943—from 68.2 to 101 billion francs. But the budget deficit grew just as fast, increasing from 160 to 220 billion francs. The shortfall for 1944 was projected to be 317 billion. As a result of German greed, state expenditures were more than triple normal state revenues.
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How much did France end up handing over to Germany in the course of the occupation? Estimates vary but a fairly accurate picture can be gleaned from the figures provided by several different agencies. According to an official Reichsbank report in the spring of 1944, total occupation costs paid to the Reich by France amounted to 680 billion francs. In addition, 120 billion francs in goods and services were exported to Germany—about half of which had been financed on credit.
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Since the occupation continued for another four months, another 10 percent can be added to this total. After the liberation of France, new finance minister Aimé Lepercq would claim that Germany had bled the country for the equivalent of 900 billion francs.
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The French national debt had risen during the occupation by more than a trillion francs.
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The Bank for International Settlements calculated the occupation costs demanded from France in 1944 to have been 35.25 billion reichsmarks, or 705 billion francs, not including clearing debts. These sums do not include contributions paid by Alsace-Lorraine, which was more or less treated as a part of Germany, or southeastern France, where the money went to Italy.

Taken together, these estimates support the conclusion that direct German revenues from France exceeded 800 billion francs, or 40 billion reichsmarks. In the unsentimental estimation of Reichsbank director Hartlieb, the plundering provided “effective relief for the Reich budget and ultimately spared Germany from having to take out credit from the national bank, while also greatly burdening France’s budget and currency.”
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In 1959, Pierre Arnoult, a historian of the occupation, summarized the German technique of maintaining the appearance of fairness by paying for needed goods and services in the local currency. “They didn’t take anything away from us by force,” he wrote. “They purchased everything correctly—but with money they took from us.”
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The French finance minister was required to transfer payments for ongoing occupation costs to the account of the Reich Credit Bank in Paris. Just as individual Germans essentially stole French goods by purchasing them with worthless RKK certificates, the Reich continually raided this occupation fund for expenses that had nothing to do with France. For example, of the 6.5 billion reichsmarks (21.3 million per day) of contributions France paid between January and October 1942, the Reich used 720 million marks to procure “horses, food, and amenities for the eastern troops”—that is, German armies fighting in the Soviet Union. A further 840 million marks were officially allocated for “black market purchases, stocks and bonds, and works of art.”
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The fiduciary basis was laid in the first few weeks after Germany’s invasion. A bank account designated “Occupation Costs France B” was set up to receive funds for the ongoing, considerably inflated expenditures of the Wehrmacht and its soldiers. A parallel account, “Occupation Costs France A,” was established for money that was then “loaned” to finance German attempts at self-enrichment. In the first six months of the occupation, a number of large sums of money were, to use the official lingo, “diverted.” They included 536 million reichsmarks for the famili of “French workers deployed in Germany”; 250 million for the Economics Ministry “for raw materials and the acquisition of partial stock holdings”; 9 million for the Food Ministry “for the purchase of livestock”; and 5 million for the Transport Ministry for the acquisition of a large portfolio, deposited in France, of stocks in the International Sleeper Carriage Company of Brussels.
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The policy division of the Finance Ministry deposited revenues earned in France into Account A for the explicit “use of the Finance Ministry.”
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The Reich used various means to conceal its campaign of plunder and theft. For example, the exchange rate between the franc and the mark, which had been set to benefit German buyers, was selectively manipulated: the official rate was one reichsmark to 20 francs, which represented a 25 percent devaluation of the prewar French currency, but for outstanding German accounts receivable, the prewar exchange rate was used. To take another example, the Finance Ministry pocketed around 5 million reichsmarks in savings left behind by French people expelled from Alsace and Lorraine. And if all else failed, funds could simply be transferred from Account B when Account A ran out of money: on March 3 and October 9, 1941, transfers of 600 and 900 million francs, respectively, were made at the behest of the Finance Ministry.
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“Private” companies and purchases were also used to conceal monies that were in fact going to the Reich. In the short interval between May 16 and October 14, 1942, a Nazi-owned company called Roges, ostensibly founded to trade in raw materials, received transfers of 700 million francs for acquisitions in France. The funds came not via Account A but directly from Account B, which was supposed to be devoted exclusively to costs arising from the occupation.
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Meanwhile, private citizens and officials alike redeemed a total of 2.5 billion reichsmarks in RKK certificates (1.3 billion of them in 1943), which were never recorded from Account A.
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RKK certificates were not handed out for free. They first had to be paid for in reichsmarks, creating revenues for the German treasury.

In September 1943, Nazi armaments minister Albert Speer began to buy French machinery for German factories through a newly founded company called Primetex, for which 300 million francs in start-up money had been secretly siphoned off from the occupation costs budget.
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Primetex operated alongside Roges.
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Its CEO was ministerial director Wilhelm Bender of the Finance Ministry. Its stated mission was “the acquisition and commercial exploitation of confiscated goods in all occupied areas as well as the purchase, storage, and resale of raw materials essential to the war effort.”
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The balance sheets for the Occupation Costs France A account are today held at the French National Archive in Paris. A glance at the accounts for the period 1940 to 1943 reveals a common thread. In all recorded transactions, government offices, companies, and private individuals from Germany paid reichsmark equivalents for major purchases they had made in francs.

The Finance Ministry was at pains to conceal that it simply kept these sums of reichsmarks, while paying for French goods with francs siphoned from the occupation costs budget. Transactions were handled through an intermediary institution in Berlin, essentiall a front, called the General Retailing Corporation. (The Nazi regime used similar letterbox companies, such as the Berlin office of the Central Economic Bank of Ukraine, to exploit Eastern Europe.) Monies transferred to the General Retailing Corporation were forwarded to the Reich treasury, “where they were recorded as budget revenues in Expected Revenues and Expenditures XVII, part XV of the extraordinary [wartime] budget.” Likewise, German investors, firms, and banks that bought French stocks paid the going rate in reichsmarks, which ended up in the German treasury, while French vendors were paid in francs from the budget set aside for occupation costs.
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