Hitler's Beneficiaries: Plunder, Racial War, and the Nazi Welfare State (14 page)

In practice, Reich occupation authorities responsible for obtaining supplementary food, weaponry, raw materials, or other important resources could “initiate procurements in France” without having to draw funds from their official accounts. All they had to do was acquire RKK certificates and spend them discreetly. But there were limits to this tactic. In July 1943, the intendant director to the commander of the German forces in France called for “the uncontrolled introduction of RKK certificates to be halted,” arguing that the practice was undermining efforts “to regulate the economy and allocate occupation funds.”
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The Wehrmacht directorate complained “that the vast majority of members of the Wehrmacht stationed in France are trying, by every means imaginable, to import RKK certificates into France.” In early December 1943, the certificates were largely withdrawn from circulation under pressure from French and German economists, who sought to stabilize the franc.
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In a 1939 monograph, economist Georg Holzhauer sketched out what would soon become standard practice in the heretofore “almost unknown field” of financing military occupations. “Cash payments,” Holzhauer wrote, “are the best means not only for improving record keeping and procurement, as well as the economic utilization of existing supplies, but for the balanced spreading of burdens caused by the occupying army.” By dispersing such burdens, Holzhauer argued, occupying forces could “easily confiscate many times” what they could by arbitrarily seizing property from individuals. Equally important in maximizing confiscation was “the strict avoidance of payments in kind.” It was crucial to ensure “that [the occupiers] can at all times obtain legal-tender currency for goods and services necessary for the running of war.” Holzhauer recommended that suitable means of payment be introduced to “increase revenues and, with them, surpluses from the occupied territory.”
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In fact, according to one researcher writing in 1941, the introduction of RKK certificates repeatedly elicited “a feeling of satisfaction” in the occupied countries. “The knowledge that equivalent return value is being preserved,” he wrote, allowed subjugated peoples to overlook “the fact that the purchaser is the enemy.” The author of this study, a graduate student named Helmut Karsten, was supervised by the renowned economist Jens Jessen, who would later join the anti-Hitler resistance. Karsten continued: “Requisitions, on the other hand, which in the absence of visible return value are always perceived as acts of plunder, strengthen feelings of national hatred and resentment at economic exploitation and lead to open and covert attempts to strike back at the enemy. The reactions of a populace disadvantaged and enraged by requisitions range from acts of sabotage to guerrilla fighting and open insurgency.”

Individual economic self-interest and the prospect of profits were effective at neutralizing rebellious sentiments. Citing the experiences of German occupiers in France beginning in the summer of 1940, Karsten concluded: “Thanks to the prospects of further commerce and profits they offer, cash purchases are the best means of stimulating production and procuring replacements for exhausted supplies. The latter advantage depends on the transport of goods from distant regions, thereby opening up supply lines that would have been beyond the troops’ immediate reach. The same is true of concealed supplies, which are suddenly uncovered when people are given the prospect of profitably exploiting them.”
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The practice of occupation forces paying in cash for military goods and services can be traced back to the Union Army in the American Civil War. German and Russian troops had used it as well, in the Franco-Prussian War of 1870–71 and the Balkan wars of 1877–78, respectively.
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During World War I, German forces achieved “optimal results” by purchasing supplies in local currencies.
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Cash payments were in keeping with Article 52 of the Hague Conventions, which allowed occupation forces to requisition goods and services without immediate compensation only in emergency situations. But German efforts to impose a cash-payment system during World War I were erratic and uneven. The chief obstacle was the absence of a reliable exchange-rate mechanism, which produced what Karsten called “currency confusion” in occupied countries. The state, hampered by the lack of a “strictly managed bank apparatus” also failed to devise a “unified plan” for the purchase of goods abroad.
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The exception was in occupied Belgium, where German currency and contribution policies can be seen, in hindsight, as a forerunner of the strategies Germany pursued more comprehensively and systematically in World War II.
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But there was also a major difference. In World War I, the imperial army had introduced German marks and Reichsbank-owned foreign currencies into occupied countries. By contrast, RKK certificates, although issued by the Reichsbank, were based on foreign currencies, whose exchange rates against the mark were set by Germany to its own advantage. In theory the Reich could have eliminated RKK certificates once the occupying forces had established themselves and defeated countries were forced to pay occupation contributions in their own currencies. Yet German field intendants saw the certificates as a secondary currency that could be used at any time to bring pressure on occupied countries’ financial policies. People living under occupation referred to the Reich Credit Banks in their countries as simply “soldiers’ banks.”
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RKK certificates had been stored at the Reichsbank in Berlin since the beginning of the war. Originally, they were intended for domestic use so that the regime could, in case of war, withdraw silver, copper, and nickel coins as quickly as possible from circulation and use those metals for wartime production. The idea of using the certificates abroad was apparently arrived at spontaneously after Germany’s quick defeat of Poland, and it proved a success. In this way, as many scholars have concluded, the Reichsbank developed “a carefully considered instrument of wartime financing, capable of meeting every challenge, from what had been an ad hoc decision.”
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The term “Reich credit bank” was spurious. It was used solely because the words had already been printed on the paper RKK certificates held at the Reichsbank.
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In September 1939, the first “Reich Credit Bank” was established in Poland.
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The board of directors consisted of representatives from the Reichsbank, the Ministries of Economics and Finance, and the Wehrmacht. They were empowered by law to regulate payment and credit systems in occupied regions; in so doing they usurped the de facto rights and duties of central banks. Untroubled by the scruples that normally constrain central bankers, one Reichsbank director, Max Kretzschmann, lauded the RKK certificates as “German currency assistance in occupied regions” and as a means of “reestablishing the possibility of normal life there.”
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Between the summer of 1940 and June 1941, the main administration of the RKK, led by another Reichsbank director, Ernst Scholz, was located in Brussels. Afterward, when the focus of its activities shifted to Eastern Europe, it moved to Berlin.
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Heading up the administrative board was Emil Puhl. He and Kretzschmann, assisted by a highly qualified staff of Reichsbank managers, ran the business affairs of the RKK until 1945. Meanwhile, the Reichsbank assigned experienced civil servants to monitor the central banks of the occupied countries. They were chosen for their ability “to work well” with their colleagues at the Reich Credit Banks.
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In dual capacities, then, the Reichsbank determined currency policies throughout occupied Europe.

For the system to work, Reich officials had “to diligently monitor the central bank in a given occupied territory.” Their goal was to establish a relationship of “trusting cooperation,” exploiting the local knowledge possessed by national banks to prevent “occupation authorities unfamiliar with the country” from making otherwise “unavoidable” mistakes. As part of their subtle but thorough supervision of the banking sector, Reich analysts closely monitored the entire range of activities.
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It quickly became apparent to monitors that the use of local currencies was more advantageous than that of RKK certificates. “All psychological aversion disappears,” wrote Holzhauer, “when the means of payment are familiar. In most cases, there’s no mistrust at all.”
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But the novel ways in which German administrators used the money of occupied countries fundamentally altered its essential character. What had been independent currencies that traded on foreign exchanges—and whose relative values could be supported by national banks and economics ministries—soon degenerated into mere means of payment with no international legitimacy. They had no function, Holzhauer wrote, “particularly at the international level, beyond their own respective economies.” The currency regulations introduced by German bank commissioners expressly prohibited the national banks of occupied countries from exporting their currency into Germany or any other occupied or allied country.
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WITH GERMANY’S victories over France, Holland, Luxembourg, and Belgium, the Reich Credit Banks gained the right to hold and manage securities and other valuables.
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Immediately after the cessation of hostilities with those countries, the Currency Protection Command (Devisenschutzkom-mando, or DSK) in France issued a binding communiqué to banks, requiring them to report all reserves of currency, gold, gemstones, precious metals, and foreign and domestic bonds denominated in foreign currencies. These resources were to be “taken out of circulation for the time being.” To ensure that they were, occupation authorities froze the safety deposit boxes of all bank customers, which could be opened only in the presence of a DSK official.
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Currency protection officials were usually German customs employees, who were subject to the authority of the Reich financial administration.

Acting on their own initiative, DSK authorities confiscated the contents of safety deposit boxes owned by “enemies of the Reich.” By August 1940, according to figures from the Reich Credit Bank in Paris, currency protection officials had taken in a half billion reichsmarks’ worth of gold, currency, stocks and bonds, and outstanding claims. The booty included a ton of gold, as well as 389,000 Swiss francs, 850,000 U.S. dollars, and 800,000 stock and bond certificates. One list from the DSK in Bordeaux, which featured names such as Lichtenstern, Leibowitz, Gutwerth, Leibl, and Beck, suggests that the victims were mainly Jewish. (Often the owners of the confiscated goods were simply noted as “unknown”) The assets were then handed over to the Reich Credit Bank in Paris.
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According to a “progress report” made by the DSK in France, the value of confiscated asserts had multiplied by April 30, 1941. The report states that 2.4 tons of gold had been “secured and confiscated,” along with large amounts of gold coins and diamonds, for a total value estimated at 2.85 billion reichsmarks.
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That sum didn’t include substantial caches of foreign stocks and bonds. Ultimately, the Currency Protection Commands succeeded in seizing 53.6 tons of gold in Belgium, France, and Holland alone. The gold was then “transferred by various local DSKs to Berlin.”
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Reich Credit Banks also managed assets expropriated from individual Jews at the local level. In 1942, for example, the Reichskommissariat Ostland (RKO), the administrative authority for the Baltic States, issued a guideline for the “transport of valuables from the noncommercial liquid assets of Jews, enemies of the state, and unknown owners.” They were to be transferred to the Reich Credit Bank in Riga, where they were held on behalf of the RKO’s finance division.
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Entries from the record book in the gold vaults of the Reichsbank concerning transfers from the Reich Credit Banks in Brussels, Antwerp, and Stanisławów tell a similar story.
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The costs of transporting Jews from Germany to the death camps in Eastern Europe, which included food for the journey and return tickets for the train crews, were not paid in precious reichsmarks. A teletype message confirming the departure of 941 Jews from Düsseldorf to eastern Poland contains the following passage: “The transport personnel were given a total of 4,703 reichsmarks in RKK certificates to make necessary payments.”
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The Third Reich thus transferred expenses of this kind to the occupied countries.

By August 1941, the Reich mint had printed RKK certificates with a total value of 5.4 billion marks.
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It is impossible to determine how many certificates were printed in the years that followed. But the system was successful enough that Max Kretzschmann briefed a delegation from Japan in October 1941 on the ins and outs of the German financing system. A short time later, Japanese soldiers were paid in “military yen modeled after the RKK certificates.” In Tokyo, the Bank for the Development of Southern Territories was established to regulate currency matters in occupied China, Korea, Indochina, and the Philippines and “to initiate [those areas’] economic integration.”
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A few weeks after the Japanese delegation’s visit, a group from India inquired about a similar briefing “because they hoped this flexible currency instrument might be useful in their preparations for liberating India and creating an independent Indian sphere of influence.”
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In the spring of 1941, Reichsbank vice president Puhl praised the Reich Credit Banks, characterizing them as his institution’s “rapid-response team.”
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In 1942, excited by “the experiences we’ve had in the past year,” he announced the following guideline: “The issuance of RKK certificates forces an occupied territory to finance the monetary needs of German troops as soon as they have invaded. In addition, the Reich Credit Banks facilitate the financing of clearing transactions between the Reich and the occupied country. In this manner, pressure from both sides is applied to the country’s national bank until it submits and prioritizes the monetary needs of German troops and the advance payments on clearing transactions above its own currency. If a national bank refuses or is unable to do this, a new central bank is founded to take over its tasks.” This was the case in Poland and Belgium, where civil servants had fled the country, transferred gold reserves abroad, sabotaged currency printing presses, and otherwise refused to cooperate.
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