Hitler's Beneficiaries: Plunder, Racial War, and the Nazi Welfare State (29 page)

Occupation authorities and collaborating governments were willing to accept some inflation but would not allow it to spiral out of control. Berlin was also anxious to avoid hyperinflation, which made it difficult, as in the case of occupied Greece, to exploit the resources of a country and establish a cooperative relationship between occupation authorities and the Reich. Occupied countries’ currencies had to retain their function as a means of payment. When inflation began to emerge as a problem, the Reich resorted to the seizure of Jewish wealth. The procedure was kept top secret.

The selling off of Jewish assets was one of several ways of slowing down inflation in occupied Europe and countries allied with Germany. The German government funneled the proceeds from the sale of those assets into individual state treasuries. From there they were transferred to the budgets for occupation costs. The precise system differed from country to country and depended on local political conditions.

Expropriation procedures were shrouded in extraordinary secrecy, which makes them difficult to reconstruct. A case in point is Belgium, where Jews had to be dispossessed directly by the German military commander, after local administrators refused to cooperate. The Nazi ordinances were almost certainly decreed on May 16, 1941, at a meeting in Brussels involving leading occupation officers; Göring’s deputy, Erich Neumann; and high-ranking civil servants from the Reich Finance Ministry. According to the minutes, the sole subject discussed was “the question of occupation costs,” which had to be kept down “because of concerns about currency stability.”
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A fortnight later, the German military commander in Belgium ordered Jews to report their assets. There is reason to believe that at the May 16 meeting the Finance Ministry officials demanded the establishment of a special office for expropriation. The minutes include the following notation: “In addition, we request that a specially authorized agent be assigned. (Deputy Neumann interrupts: ‘That doesn’t require any discussion.’)”
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The appointment of such agents in German-occupied countries was common practice. In November 1944, confronted with resistance in the German-occupied north of Italy, the German commissioner at the Banca d’ltalia wrote that from then on, in Venice and Friuli, “instructions concerning the consolidation of confiscated bank assets of individual Jews are to be forwarded directly to the responsible bank.” To carry out the seizures, German bank commissioner Maximilian Bernhuber sought the aid of the commanding officers of the Security Police and the Security Service.
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The dispossession of citizens of a foreign country for the benefit of the German war chest was planned in conversations involving small groups of senior officials. Under no circumstances was there to be a paper trail. The German civil servants who carried out the orders from above apparently tried to treat the seizures, which violated international law, as discrete measures undertaken by the various occupied countries and territories themselves. Historian Gerhard Aalders has recently concluded that this approach was used in Holland. According to Aalders, German occupational authorities were continually “entering” funds in the books, then “transferring” them to general accounts, realizing “a high degree of success in concealing their actual aims.”
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Serbia is the only country in which enough documentation has survived to make it possible to reconstruct with a fair degree of clarity the decision-making process regarding Jewish assets. Serbian Jews were murdered with extreme rapidity. A scant year after the German invasion, in mid-April 1942, the head of the Wehrmacht military administration summed up the situation: “Months ago I had all the Jewish men we could round up here shot and had the Jewish women and children interned in camps. With the help of the Security Service, I’ve procured a ‘delousing vehicle’ with which the clearing of the camp will be completed for good in around 14 days to 4 weeks.” (The author was referring, of course, to a truck in which women, children, and the elderly would be suffocated by exhaust fumes.) A few weeks later, most of Serbia’s approximately 22,000 Jews were dead. On May 23, the head of the Jewish division in the Foreign Ministry proclaimed: “The Jewish question in Serbia is no longer acute. The only matters left to be settled are legal ones concerning assets.”
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The unit designated to confiscate the assets was Department 17 (later changed to Department 12) of the General Plenipotentiary for the Economy in Serbia; it was headed by a Reichsbank administrator named Hans Gurski. No sooner had units of the Wehrmacht and the SS exterminated Serbia’s Jews than members of the occupational authority and administrators of Göring’s Four-Year Plan began discussing how to utilize the material assets left behind.
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According to a memo dated May 23, 1942, the Foreign Office assumed that these assets, once claims by Germany had been settled, would be put “in a kind of fund to be managed by the Reich.”
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Representatives of the Administrative Commission for Jewish Real Estate and Property also anticipated “the possibility that Jewish assets in Serbia will later fall to the Reich.”
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The majority of administrators saw the revenues to be earned from Aryanization as an advance payment on the as yet unspecified “wartime reparations” Serbia would be forced to make to the aggressor, Germany.

Four-Year Plan administrators had begun lobbying for “exploitation [of assets] for the benefit of the Reich” on March 21, 1942.
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But the Finance Ministry opposed the idea. In May 1942, the ministry’s representative, Christian Breyhan, proposed that “for the sake of order” the revenues “should flow into the Serbian [occupation] budget.” It would then be up to the German military commander in Serbia “to determine what the money would be used for and to transfer it accordingly to the Serbian administration.”
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A month later, a conference was called to debate the issue. The representative from the Foreign Ministry reported: “At a meeting held on June 19 in the Office of the Four-Year Plan in Berlin concerning the liquidation of Serbian Jewish assets, the following was decided. The wealth of Serbian Jews is to be seized for the benefit of Serbia. The seizure is to be made for the benefit of Serbia because a seizure benefiting the Reich would [visibly] violate the Hague Conventions. We Germans will, however, indirectly profit from the revenues.”
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Article 46 of the Hague Conventions prohibited the confiscation of private property in wartime, but that stricture applied only to the occupiers, not the national administration of the occupied country.

A few days after the Berlin meeting, Göring endorsed the objections of the financial administrators and ordered Jewish assets in Serbia confiscated on behalf of Serbia, with an eye toward “providing financial assistance for the Serbian budget, which has been greatly burdened by occupation costs.”
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He also instructed the General Plenipotentiary for the Economy “to hasten the transfer of all managed assets south of the Danube so that Serbia can begin as soon as possible to exploit them.” (North of the Danube, in the region of Bachka, or
, local ethnic Germans had already taken matters into their own hands.) It was also decreed that “the Serbian government must pass a regulation, in the interests of the Serbian state, concerning all assets belonging to Jews who held Serbian citizenship on April 15, 1941.”
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(The Serbian Ministerial Council issued such a ruling on August 26,1942.) Along with strengthening the Serbian dinar and maintaining the appearance of following the Hague Conventions, the occupational authority sought to stabilize the collaborationist government of Milan Nedic “by freeing up Jewish assets for the benefit of Serbia.”
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Indeed, in the latter half of 1942, Serbia was on the brink of financial collapse. “The burdens of war amounted to more than double the regular expenditures in the Serbian budget,” one official reported, “which were themselves partly deficit financed.” From the German perspective, such a state of affairs represented “an extremely serious threat to the currency.”
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Up to that point, monthly occupation costs had run at around 500 million dinars. Serbian Jewish assets amounted to between 3 and 4 billion dinars.
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That was enough to cover occupation costs for six months or to slow inflationary pressure on the Serbian currency for even longer.
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The effect was dramatic. In September 1942, shortly after the Berlin conference, the Foreign Ministry representative was able to report that the issue of “limiting occupational costs” did not “need further exploration at the moment.”
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Cursory pronouncements such as this offer no hint of the top-secret methods Germany used to seize Jewish assets in occupied Europe. Across the continent, German occupiers—and later the collaborating financial administrations and national banks of the occupied countries themselves—thoroughly destroyed any paper trail. Usually through laws passed by the puppet governments, the occupiers turned national institutions into dealers in stolen property. As a result, Jewish assets flowed into national budgets, where the Reich could appropriate the revenues at will. The sinister, secret origins of this source of wealth had simply been erased.

Adolf Hitler and the regent of Hungary, Admiral Miklós Horthy, had a famously contentious relationship, but Germany and Hungary maintained an increasingly cse-knit alliance between 1938 and 1941. Germany needed Hungary for its geostrategic position in southeastern Europe. Hungary needed Germany in order to regain territories it had been forced to cede under the 1920 Treaty of Trianon. In 1938, in what was called the First Vienna Award, Hungary reacquired parts of Slovakia and, a few months later, land in Transcarpathia, a territory in present-day Ukraine. The Second Vienna Award, in 1940, gave Hungary the Romanian region of North Transylvania. In 1941, Hungary acquired the Yugoslav regions of Bachka, Baranya, and Prekmurje. Together with Slovakia and Romania, which were also allied with Germany, Hungary declared war on the Soviet Union in 1941.

From 1943 onward, the Hungarian government sought to steer the country, which was surrounded by German troops, out of the war and reach a separate peace agreement with the Western Allies. As a result, the Wehrmacht occupied Hungary on March 19,1944, installing a Reich special envoy and a cooperative Hungarian government with limited autonomy. In the meantime, the Red Army had advanced to within striking distance of Hungary’s eastern border, and it was only a matter of weeks before the fighting would reach Carpathia. Although Hungary was under German occupation, there was broad consensus among the country’s reactionary-conservative leaders that it had to be defended against the “stampede from the steppe.” Compared with the prospect of Soviet domination, occupation by Nazi Germany seemed the far lesser of two evils.
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Since 1938, the Hungarian government had passed laws discriminating against and partially dispossessing Hungarian Jews. A crucial move in Hungary’s financing of World War II was a law in July 1942 annulling all loans taken out by the government from Jews in World War I. The law gave the government financial room to maneuver in what had become the drawn-out conflict with the Soviet Union. Ostensibly, the annulment was carried out on behalf of a “Fund for Jewish Emigration.”
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In fact, it was an act of expropriation to bolster wartime finances, comparable to similar measures taken in the Protectorate of Bohemia and Moravia, Slovakia, and Germany itself.

In return, the Reich paid off a small portion of its clearing debts for 1943-44 by “repatriating” some 100 million reichsmarks in Hungarian stocks and bonds—something Budapest had vehemently demanded.
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Most of those securities came from bank accounts of dispossessed Jews. In September 1941, for example, securities owned by Julius Zwicker, a Jew from Brno, were confiscated. Among them were Hungarian bonds, issued at 7 percent interest and with a face value of 96,000 dollars. In February 1944, the German treasury paid 182,898.75 reichsmarks into the “Emigration Fund of Prague,” which was supposedly established to help Jews leave the country. This sum was then invested in long-term Reich war bonds. Since the original owner had long since been murdered or had fled abroad, the German treasury could rest assured that it would never have to pay off those war bonds. In reality, the transaction amounted to nothing more than a transfer of funds within the German war chest. The Reich was using assets like those that had belonged to Zwicker to cover its mounting debts to Hungary for petroleum and food.
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(Hungary was, after Romania, the second-largest oil producer in Germany’s sphere of influence.)

On March 20, 1944, one day after German troops invaded Hungary, the Wehrmacht leadership assembled at the garrison town of Jüterbog, just south of Berlin, to sign a treaty of friendship with sesibly, representatives from the Hungarian military. According to the agreement, Germany was to bear the costs of occupying Hungary.
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The German rationale was obvious. Because of the precarious military situation, the Reich wanted to keep expenditures of men and material to an absolute minimum in the newly occupied country. For that, it needed the active cooperation of Hungarian generals and reactionary-conservative forces. Assuming its own costs would allow the Reich to counter opposition from Hungarian nationalist elements. After a few days, Hungary was given partial sovereignty, and both the new Hungarian government and the Hungarian army were treated as allies.