Hitler's Beneficiaries: Plunder, Racial War, and the Nazi Welfare State (24 page)

The Reich also forced the French government to pay out francs for purchases made by private German companies in France, while Berlin retained the reichsmark equivalents the companies had paid into a state institution called the German Settlement Bank. On November 9 and 13, 1940, the AEG company in Berlin was allocated the equivalent of 4.3 million reichsmarks in francs for an acquisition spree in France. That same month the Deutsche Bank procured 20.25 million reichsmarks’ worth of francs. On October 23 the Cautio Trust Company in Berlin requested 3 million reichsmarks’ worth of francs, followed by an additional million on November 20, 1.5 million on December 5, and 2 million on December 27. The Dresdner Bank got into the “French business” on December 11 with 2 million reichsmarks’ worth of francs, with a second sum of 3 million following on January 23. The Berliner Handelsgesellschaft, a major private bank in the German capital, followed suit with 1.3 million on January 20, 1941, and a further million on February 11.

Large corporations and individual trading companies had a vested interest not only in covering their ongoing supply needs but also in buying up foreign stocks available on the French market. Banks and trust companies acquired securities on behalf of anonymous clients. To that end, they did business with the Westminster Foreign Bank in Paris, which had been put under receivership, as well as the Banque de Paris et des Pays Bas, the Créit Lyonnais, and Lloyds & National Provincial Foreign Bank.
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(The Westminster Foreign Bank remained, at least initially, their preferred address.) The Prussian State Bank spent a considerable sum of money transferring shares of the Mines de Bor corporation into German hands.
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Stock offerings were passed along for review to the German commissioner of the Westminster Foreign Bank via the German commissioner of the Banque de France. Both the French Currency Protection Command and the economics division of the Military High Command approved such transactions, noting that the stocks that were sold “came from French, and partly Jewish, hands.”
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Like private companies, German government agencies wasted no time tapping into the funds extorted from the French state. On December 5, 1940, the Army High Command drew 20 million reichsmarks from Occupation Costs Account A to purchase general necessities. Shortly before Christmas that year, senior officials in the Propaganda Ministry went on a shopping spree for the equivalent of 750,000 marks, and a Berlin-based association of German goldsmiths helped itself to 500,000 marks.
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On December 17, 1940, the mayors of the cities of Düsseldorf, Essen, and Wupperthal began to make purchases in France. They were followed by the mayor of Frankfurt and the president of the Rhine region on January 20 and 21, respectively. On February 21, 1941, the mayor of Berlin sent an acquisition team, outfitted with 701,000 marks, to. Both te.
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The gourmet food wholesaler Riensch & Held and another food company, Emil Köster AG, bought up delicacies to take the sting out of the privations of wartime. On October 17, 1940, Karl Haberstock, Hitler’s personal art buyer, received 1.5 million francs from Account A. Shortly before that, the Economics Ministry had transferred a sum equivalent to 75,000 marks to the Reich treasury via the bogus General Retailing Corporation.
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Present-day military historians such as Hans Umbreit obscure what really transpired when they write of transactions being “paid for” with the help of “credit taken out against the costs of occupation.”
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Credit is a means of financing purchases, not paying for them, and even though the borrowers repaid the loans, the Finance Ministry didn’t transfer any of the money to France. This practice went on for the entire duration of the occupation and was not subject to negotiation.

The economic consequences for France were severe. As the delegate to the Armistice Commission who was responsible for French finances remarked: “To the extent that products were imported to Germany from France and the purchasing price flowed back into the German Settlement Bank and thereby into the Reichsbank, the French Finance Ministry was forced to take out the equivalent amount in francs in state loans to pay off French creditors. The positive effects this had on the value of the reichsmark were mirrored in the negative effects it had on the value of the French franc.”
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The German Settlement Bank had the same address and telephone number as the Reichsbank, and the two institutions used identical forms, strongly suggesting that the former was a division of the latter. And in fact, the
Handbook for Civil Servants
, published by the Reichsbank in 1941, explicitly stated as much.

When German troops seized control of the northern half of Italy in September 1943, the German Foreign Office immediately issued a memorandum spelling out the relationship between occupation costs and the settling of clearing accounts. The diplomats apparently knew only too well that their plans violated international law and stipulated that the memo “under no circumstances be forwarded in the original.” The document read: “The military situation compels us to transfer or import such large amounts of finished products and raw materials that it would be practically impossible for us to settle accounts via the clearing process. These materials will have to be paid for with money placed at our disposal by the Italian government as a contribution toward war costs. The resumption of clearing activities will become a parallel economic system of compensation and concealment.” By creating the illusion that Germany intended to repay its debts, “the resumption of the clearing system,” which had been abandoned after the overthrow of Mussolini, served “to counteract the suggestion, advanced within Italy and abroad by enemy propaganda, that Germany was ‘plundering’ Italy.”

To convince major Italian companies to continue delivering products to Germany, prior debts from the period of the German-Italian alliance had to be paid. The unsettled accounts revealed “a significant deficit to the advantage of the Italians.” Clearing that debt, the Foreign Office concluded, meant that a “fixed monthly sum of around 100 million liras,” or 13.2 million reichsmaks, would have to be diverted from the Italian contribution to German occupation costs. That sum could also be increased “if circumstances warranted.” So it was that average Italians paid the debts run up by German contractors to Italian vendors in the years preceding 1943. The authors of the Foreign Office memorandum also trained their sights on the savings that Italian forced laborers and prisoners of war had cobbled together for their families. In addition, since northern Italy was still officially allied with Germany, it would be required to pay a “monthly contribution of between 200 to 250 million liras” for forced laborers as part of its general “contribution toward the costs of war.”
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The total worth of what Germany confiscated from occupied Italy was far greater—the equivalent of around 10 billion reichsmarks. Although Allied troops liberated Italy piece by piece in the eighteen months that followed, the wealthy north remained under German control until near the end of the war. Once Mussolini had been freed from prison and reinstalled as the head of the puppet Repubblica Sociale Italiana, northern Italy was not officially required to pay occupation costs per se, but it was still responsible for what was euphemistically called a “contribution” of 7 billion liras a month to the war effort.
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As they did elsewhere, the Germans calculated the contributions based not on the actual costs of stationing their troops in the country but on their own budgetary requirements. The projected need for 1942-43 was around 81 billion liras.
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The previous budgetary estimate had anticipated significant revenues that Fascist Italy was supposed to extract from the territories it had occupied up until August 1943. It also included income from parts of Italy that the Allies were gradually conquering. Yet despite Fascist Italy’s obvious inability to raise those revenues, the German occupiers continued to use the old budget as the basis for calculating its war contribution.

In March 1944, the chief financial expert for the German agent general in occupied Italy prepared a detailed breakdown of the economic situation. According to his calculations, the populace under German control had a total annual income of 130 billion liras. Out of this, they were expected to contribute 84 billion liras per year, leaving only 46 billion to pay for all public and private expenditures. And that was only part of the story. “In addition to the war contribution,” the author wrote, “Italy also has to pay advances on soldiers’ accommodation, requisitions, damage to Wehrmacht property, and war-related harm to the German people, as well as advances on settlement transactions. We also have to consider Italy’s own wartime obligations (war damage, military pensions, etc.).”
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The treaty dictated by Nazi Germany to the remnants of Fascist Italy on October 23, 1943, removed all obstacles to the continual upward spiral of payments demanded by Berlin. In one of the central passages of that agreement, Italy was required “to provide” the greater German Reich “with a war-costs contribution that meets the economic needs of German organizations.” Whereas in 1940 the German occupiers in France still took the trouble of setting up two separate accounts, to maintain at least the appearance of distinguishing between occupation and nonoccupation costs, the Finance Ministry now declared that what Germany did with Italian money was “our concern alone.” “Insofar as liras can be used for necessary purchases outside Italy and [we can save] the equivalent in reichsmarks,” a ministry report concluded, “this represents a contribution to our external occupation costs.”
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Not surprisingly, the Reich Food Ministry and the Roges company, as well as Göring and the commissioner of the Armaments Ministry under Albert Speer, all availed themselves of considerable sums of liras to make purchases in northern Italy. In the end, a third of occupied Italy’s contributions went toward German arms. The rest was spent on wages for soldiers and military personnel, miscellaneous purchases, and the building of fortifications.
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Germany’s fiscal policies in occupied Italy led to inflation, shortages, and privation. Together with the Allies’ military triumphs, these conditions led more and more Italians to join the partisans or engage in acts of civic protest. In June 1944, for instance, 70,000 workers in Milan and 50,000 workers in Turin went out on strike. Finance Ministry envoy Hubert Schmidt had a ready answer: “A solution to this problem will probably be found only in the form of sending larger numbers of striking workers to German concentration camps.” But on the question of Italian indebtedness, he was at a loss. “The Italian state deficit is in a period of unstoppable growth,” he concluded in August 1944. “Regular revenues for the budgetary year 1943-44 have dropped by around 30 percent over the preceding year and now cover just 14 percent of expenditures.”
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No one knows exactly how many forced laborers worked in the Third Reich, but estimates usually range from 8 to 12 million. Most of these people came from Eastern Europe and toiled under dangerous and inhumane conditions, often in the German arms industry. To preserve appearances abroad and avoid stirring up resistance in occupied countries, German companies paid forced laborers for their work, though the wages were 15 to 40 percent lower than those for German workers. Meanwhile the Finance Ministry tried to get its hands on as much of these workers’ pay as possible, developing a range of schemes for confiscation.

Conditions were somewhat better for people from Western Europe but they, too, were exploited both physically and financially. From 1940 on, the Reich Finance Ministry used every available pretext to divert part of the wages paid to involuntary foreign laborers in Germany to the state treasury. For example, reichsmarks paid by German firms to compensate the families of some 250,000 Belgian workers ended up in a general account kept by the German state. The money was then transferred to the main treasury, while dependents of the Belgian workers received Belgian francs paid from the budget for occupation costs. In other words, German companies paid full wages, only for the treasury to collect—in addition to wage taxes—the portion of their paychecks that workers sent back home. In the end, it was Belgium’s own economy that was paying to support the workers’ families.
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The same practice was applied to laborers from Holland, France, Croatia, Serbia, Bohemia and Moravia, Slovakia, and, later, occupied Italy. Whether people worked voluntarily or involuntarily made no difference. The transactions involved—and similar ones—represented a major source of income for the Germansury. As in the cases described earlier, the Reich’s accountants recorded the receipts under the nebulous heading “General Administrative Revenues.” Writing in 1944, renowned jurist Raphael Lemkin identified the core of what was essentially a gigantic swindle: “The occupied countries not only finance exports to Germany but also pay their own people working in Germany.”
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In the first six months after the French capitulation, for example, more than half a billion reichsmarks owed to families of French workers “employed” in Germany were confiscated by the treasury and paid out in francs from the occupation budget.
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Revenues to Germany soon fell, however, because the number of French citizens working there, voluntarily or involuntarily, significantly declined with the signing of an armistice treaty between the two countries and the return home of French POWs. In the case of Belgium, as with Germany’s allies, money confiscated from foreign workers’ wages was credited to Brussels in the two countries’ clearing account. That made no difference, though, since Germany had little intention of settling its debts.
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