Hitler's Beneficiaries: Plunder, Racial War, and the Nazi Welfare State (45 page)

The silent-loan finance economy began on September 12, 1939, with a formal ordinance concerning a supplemental budget for the fiscal year 1939. The ordinance empowered the finance minister to procure “a sum of up to 15 billion reichsmarks through credit for war expenditures.”
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Once begun, the cycle of borrowing was unstoppable. By 1945, the Reich had accumulated 110 billion reichsmarks in debt at commercial German banks, 54 billion at savings and loan institutions, and 25 billion at insurance companies.
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At the same time, it had 33 billion marks in what were euphemistically listed as clearing obligations. In reality, these were loans that the Reich intended to pass off on occupied and allied nations in the event of a German triumph in World War II. (If Germany lost, it would simply default.) The remaining Reich obligations consisted of what economists call “uncovered debts,” a euphemism for obligations paid for by the printing of more money, which the Reich treasury increasingly resorted to late in the war.

The system did indeed function silently—that was its great advantage. But it meant that government finances were always precarious since an ever greater proportion of state revenues consisted of “floating” debts that were not based on long-term credit agreements. The risk, as one financial expert warned in 1944, resided in the fact that “the broad masses of the populace have control over sums in the high billions in short-term notes and even paper money, which they could decide at any minute to withdraw from the market.”
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In contrast to Germany, both Great Britain and the United States financed the war through long-term war bonds. Their success was due to robust propaganda campaigns, such as the Wings for Victory weeks in Great Britain and the “Now—All Together” poster series in the States. One sold-out war-bond concert held on April 25, 1943, at New York City’s Carnegie Hall featured Arturo Toscanini, Vladimir Horowitz, and the NBC Symphony Orchestra and succeeded in raising $11 million in the space of two hours. On the program was Tchaikovsky’s First Piano Concerto.

In Britain, 1.7 billion of the 4.6 billion pounds raised through war bonds by late 1942 came from small investors.
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Relative to the total population, low-income earners in Germany would have had to buy 23.5 billion reichsmarks’ worth of long-term war bonds to equal that level of commitment. (And the regime would have had to have sold 61 billion marks’ worth in total.) Hitler could only dream of such mass support. It would have been inconceivable for Wilhelm Furtwängler, Edwin Fischer, and the Berlin Philharmonic to have performed Beethoven’s Fifth Piano Concerto to convince people to buy war bonds to pay for warplanes, rifles, and heavy artillery.

In the United States and Great Britain, public confidence in the two governments’ ability to win the war was based on their success in activating a broad social consensus. This was not the case in Germany. In early 1943, the economist Bernhard Benning asked with dismay: “Why have we in Germany, who take a backseat to no one in matters of propaganda, refrained [in this area]?”
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Great Britain also instituted regular broad-based tax hikes, which combined with controlled inflation to keep finances solid. Wartime revenues from taxes and duties rose by 336 percent over peacetime receipts in Britain, compared with only 196 percent in Germany.

A significant portion of the Reich’s increased revenues came from its annexed territories, from its exploitation of forced labor, and from profit based on dispossession, financial manipulation, and genocide. It is clear, therefore, that the increase in the tax burden in Great Britain was more than double that in Germany. Moreover, in stark contrast to the situation in Germany, 85 percent of the increased revenues from taxes and contributions came from British citizens earning the modest sum of 500 pounds or less a year.
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In October 1942, fearing “a hopeless devaluation” of the reichsmark, a high-level civil servant at the Reichsbank took the regime to task for its passivity. Not without a measure of respect, he pointed to the English, who “have combated inflation with enviable success by gradually tightening taxes—without damage to the economy or other disadvantages.”
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German financial methods were the monetary equivalent of the blitzkrieg. The only hope was quick success. Unlike in World War I, Reichsbank vice president Emil Puhl reasoned in late 1942, Germany’s financial strategy entailed a grave “point of danger,” having been “bought and paid for” by “transferring to the end of the war [the task of addressing] the currency problem by curbing consumer spending power.”
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As Puhl was making this statement, Germany was being defeated at Stalingrad, a setback that shook the Reich’s reliance on silently financing the war. The Nazi regime had, with the active help of the general public and the private financial sector, perpetrated a huge swindle that could remain concealed only if Germany brought the war to a victorious conclusion. Resounding victory alone would allow the regime to satisfy consumer demand at home while paying off its war debts. The longer the war lasted, the harsher the Reich’s campaign of plunder became and the more brutal and inhuman its treatment of its “enemies.”

From the perspective of domestic politics, the technique of silently financing the war was characteristic of the Reich’s whole approach to power. The Nazi leadership avoided any sort of public referendum on the war—which the issuing of long-term war bonds might have led to, had they sold poorly. An economist who was involved with war finances at the time later wrote: “Because Hitler didn’t want Reich finances to become the subject of public discussion, he prohibited [us] from publicly taking out loans both in the rearmament phase and during the war itself.” Hitler lacked what postwar German chancellor Ludwig Erhard would call the stature to inform “the people about the enormity of the sacrifice necessary” and “the courage of responsibility.” Hitler, Erhard wrote, favored “games of hide-and-seek” and “disguise.”
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His fear of calling on Germans to make material sacrifices was shared by his ally Mussolini. In 1944, even the German occupiers criticized Il Duce for “never having been able to decide to test the trust of the populace with a loan.”
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The Nazi regime avoided enlightening the German people about even a fraction of the true costs of the war. Early on, the leadership tailored its policies to the traditional willingness among Germans to submit to rule from above, as long as they think they are being well taken care of. Unlike Churchill, Hitler could not afford to deliver “blood, toil, tears, and sweat” speeches. The much celebrated, seemingly omnipotent Führer never saw himself in a position to demand openly that his people entrust him with their savings for five, ten, or twenty years in return for the glorious future he promised. Seen from this perspective, the unity between the German people and the Nazi leadership was an illusion that could not withstand real challenges. If Hitler’s was a dictatorship consent, that consent was not based on an ideological conviction held by the majority of Germans. It was bought and paid for through the systematic bribery of social welfare payments and services. Most of the burdens were borne by foreigners and those deemed foreign to the
Volk
. But in the end, those who accepted the bribes had to bear the costs, too.

As it did with its food provision measures, the Nazi leadership used tax and currency policies to strengthen public trust in the regime, which was by no means stable. Today one would say that the government was “fighting for its credibility.” This was a daily struggle, as Goebbels’s diary and the records of many of Hitler’s decisions attest.

To gauge the public mood during the Third Reich, historians usually rely on reports by Security Service informants, private letters, notations made by Nazi functionaries in their personal diaries, and similar sources. But a more precise way of measuring the highs and lows of public confidence is to look at the rates at which Germans saved money—a social-historical parameter that has been largely neglected as a source of information. This approach not only reflects changes within short spans of time and differences from region to region but also distinguishes between the morale of various social classes over the course of the Third Reich. The data is relatively easy to collect through records at the Reichs-post (which had a savings division), local savings institutions, large banks, and life insurance companies; collating it with major speeches by Hitler and watershed political and military events offers a complex, methodologically sound picture of public opinion. For example, savings, which had been in decline, shot up after the attempted assassination of Hitler by Claus Schenk von Stauffenberg’s group on July 20, 1944. They declined again immediately as of August 1, when it became clear that the coup d’état had failed.

Just as government-compiled statistics on the number of Germans who formally renounced ties to established religions provide a good indication of whether people were prepared to put their full trust in the state, an examination of rates of savings yields precise demographic snapshots. In December 1943, the Security Service carried out such an examination—but it used public opinion surveys instead of the more reliable hard data showing exactly how much money people were depositing in banks for the future.
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A detailed look at the savings rates during World War II is beyond the scope of the present investigation, but a few general conclusions are warranted. Indeed, it is possible to fix the moment at which public confidence in the Hitler regime finally evaporated.

In 1940 and 1941, Germans deposited around one billion marks per month in savings accounts. In 1942, that figure rose to more than 1.5 billion per month.
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The increase can be seen as both a consequence of limited consumer spending opportunities during the war and an expression of basic trust in Hitler’s leadership. In the space of a few years, the amounts in German savings accounts more than tripled, from 15.2 billion to 51.2 billion reichsmarks by 1942. This increase represented “by far the largest amount of growth that Germany ever experienced.”
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Life insurance policies provide an indicator of upper-class Germans’ faith in the future: the total amount of premiums paid annually rose from 1.7 billion to 4.2 billion marks between 1939 and 1941.
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The voluntary savings that paid a significant portion of the daily costs of war were earmarked, in the plans of many Nazi strategists, to bring about “a better balanced structure of wealth in the future,” after Germany had won the war. The money would help “achieve a truly socialist division of personal assets.”
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Here, too, the tendency can be observed within the Nazi state to favor social equality for Germans. The Nazi leadership was also at least partly motivated by a desire to concentrate postwar assets in the hands of workers, so as to take as much consumer spending power as possible off the investment market. Of course, Germans saved their money—whether in the form of savings accounts, supplementary pension plans, or other annuities—for their own purposes. Individual Germans were concerned with putting enough money aside to be able to fulfill their lifelong dreams after the war ended.

Dreams for the future notwithstanding, the savings figures show how much money low-income earners had at their disposal and the extent to which they were, at least implicitly, entrusting it to the Nazi state. In 1942, Deputy Finance Minister Fritz Reinhardt concluded with satisfaction: “There can be no more unambiguous proof of the faith our
Volk
comrades have in the National Socialist leadership and in the stability of the currency than this large increase in savings.”
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Bank representatives saw the trend as an expression of “the will to save in wartime, to save in the interests of victory.”
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One slogan of German banks was “Fight, work, and—save!”
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The huge success of campaigns encouraging ordinary Germans to save their money is all the more impressive considering that interest rates on savings accounts were continually being lowered.
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Although ordinary Germans were kept in the dark about the silent transformation of their savings into artillery, those who chose to invest their money this way must have maintained at least a vague hope that Germany would win the war.

With the reversal of Germany’s military fortunes, mistrust arose between the Reich and its citizens. In the second half of 1943, the rate of growth in savings fell for the first time. The Reich Finance Ministry explained the decline as a by-product of the aerial bombardments, citing the fact that the largest reductions came in hard-hit northwest German cities, while the savings rate had remained constant in the relatively untouched east.
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But it was an alarming development all the same. Instead of decreasing, willingness to save should have grown faster than in the previous year, since German military setbacks had reduced the availability of goods for consumers to spend money on.

In 1943, while the Finance Ministry was registering the initial loss of trust, the Security Service, possibly at the behest of the finance minister, began to devote its attention to the topic of popular confidence and the retreat into investments. Security Service analysts localized the mistrust “as being, now as ever, primarily among the better-situated classes of society.” Informants reported that many of their wealthier
Volk
comrades “were unscrupulously putting their capitalist proclivities into public practice.” Such behavior was followed closely in less well-situated circles.
“The capitalist,”
one Security Service report proclaimed, “is becoming a
‘bad example’
in the eyes of the
broad masses
on the issue of the valheight="1ney.” The Security Service offered a sobering conclusion: “A loss of confidence in the value of money has unmistakably occurred in certain social classes and is being translated everywhere into words and deeds. However, we can still observe the willingness to save as an expression of the general confidence in the value of money; the amount of money saved in the past few months is not proportionate to increased levels of income, past and future, especially among certain segments of the populace.”
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