Hitler's Beneficiaries: Plunder, Racial War, and the Nazi Welfare State (8 page)

Disavowing any interest in the Jewish question, Göring explained why he was getting so deeply involved: “I know no other way to keep my Four-Year Plan and the Germany economy going.” He cautioned the gauleiters against confiscating Jewish-owned belongings for their own personal gain: “The proceeds from Aryanization are to go solely and exclusively to the Reich. That means to its administrator, the finance minister, and to no one else. Only in this way is it possible to carry out the Führer’s rearmament program.” Interior Minister Wilhelm Frick was equally clear in warning local authorities and personal profiteers: “Assets currently in Jewish hands are to be regarded as the property of the German people. Any destruction of or decrease in their value means a decrease in the collective assets of the German people.”
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An edict issued by Göring that month further decreed that the proceeds from the expulsion of Jews from the German economy would go exclusively to the Reich.
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The pogroms of November 9–10, 1938, accelerated the process of turning what had been a vague policy statement into reality. Backing fiscal policy with terror made it possible to implement the long-standing idea—among bureaucratsat the Reichs-bank, the Finance Ministry, and elsewhere—of forcing Jews to convert a sizeable proportion of their assets into government bonds.

This process served as the model for ambitious Aryanizers throughout Europe. Citizens were soon able to purchase confiscated Jewish property not just in Stuttgart but in Prague, Amsterdam, and Paris. Aryanized assets were usually sold off to residents by local authorities, and most of the proceeds were directed, in accordance with the 1938 model, into German state coffers.

The intense interest of finance experts in having Jewish assets converted into government bonds is evident in the debate over the atonement payment of one billion reichsmarks levied on German Jews on November 12, 1938, in the immediate wake of the pogroms. To raise this sum, Jews would clearly have to sell off holdings, including real estate, stocks, and even government-issued bonds. That prospect drew protests from Reichs-bank board member Karl Blessing, who feared “that next week the Jews will begin to sell off hundreds of thousands of Reich bonds to procure the necessary funds.” The levy would be counterproductive, he argued, since such a mass sale would either undermine the value of future bond issues or compel the finance minister to buy back bonds to protect their credibility. Blessing’s objections were answered by a prohibition against the Jews’ selling off their bonds.
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GÖRING HAD a second problem in 1938. Along with figuring out how the government could secure credit, preferably on a long-term basis, he also needed hard currency to import raw materials for the arms buildup and foodstuffs to meet both Germany’s immediate and future requirements, including stores of grain for the impending war. Thus, on July 25, six days before the extended submission deadline, Göring instructed tax authorities to scour Jewish asset declaration forms “with maximum haste” for foreign securities. The holders of these securities were to be ordered “to offer and, if asked, sell them” to the Reichsbank “within a week.”
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Here, too, Jews were to receive nominal compensation in the form of government bonds. A few days later Hans Fischböck, the minister responsible for economic affairs in what had been Austria, requested that a Reichsbank manager be assigned to the currency division of the Jewish Emigration Bureau, an agency created by Adolf Eichmann to help force Jews to leave the country.
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The atonement payment increased state revenues by 6 percent. The money was earmarked to help the government bridge the acute financial shortfall. Earlier that year Schwerin von Krosigk had threatened to freeze expenditures, halt new construction projects, and decrease already allocated budgets to prevent state finances from spiraling out of control. He rallied those affected by the potential cutbacks by quoting Göring: “Solving the problems that face us will be easier if we act as quickly and decisively as possible to ensure the vitality of our nation against all eventualities.”

Walther Bayrhoffer, the Finance Ministry representative within the Reichsbank leadership, warned in his annual report for 1938 that the state of government finances in November was “catastrophic.” “In terms of cash flow,” he wrote, “there is a deficit of 2 billion reichsmarks. There is an immediate danger that the Reich won’t be able to pay its debts.”
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This was precisely the juncture at which the atonement payment was ordered. The financial crunceigso spurred the government to insist that the banks involved in “appropriately” selling off Jewish-owned stocks provide the Reich with emergency credit. The desperate need for funds prompted Alf Krüger, the official responsible for Jewish affairs at the Economics Ministry, to focus on liquid assets in his calculations of reported Jewish wealth. Such assets—which excluded real estate and business assets—totaled 4.8 billion reichsmarks and could be easily confiscated.
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On November 18, 1938, a Foreign Office representative jotted down the following bullet points during a speech Göring gave there: “Reich’s finances in extremely critical condition. Short-term relief firstly from the billion demanded of Jews and also state profits from Aryanization of Jewish businesses.”
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The specifics as to how Jews were to make the atonement payment quickly followed. In a decree on November 21, 1938, the finance minister ordered all German Jews required to declare their assets under the 5,000 reichsmark rule to hand over 20 percent of all holdings. “Without receiving special notification,” they were to pay local tax authorities in four installments, on December 15,1938, and the fifteenth of February, May, and August 1939.
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The resulting 1.1 billion reichsmarks that flowed into the state coffers were recorded as “additional revenues.” Ordinary income for the fiscal year 1938–39 amounted to some 17 billion reichsmarks. Receipts from the Jewish emigration tax and other anti-Jewish discrimination measures can be conservatively calculated at more than 500 million reichsmarks. In sum, then, at least 9 percent of the operating revenues in the Nazis’ final prewar state budget—almost 1.5 billion reichsmarks—came from the proceeds of Aryanization. Compulsory exchanges of currency and Jewish-owned stocks for state bonds, which never appeared on the Finance Ministry’s books, added to the total. The emigration tax alone brought in around one billion marks between 1933 and 1945—the highest annual amount being 342,621,000 marks in the fiscal year 1938–39, the year in which state-sponsored pogroms led the greatest number of German Jews to flee the country.
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Considering what a state today could do with a 9 percent increase in revenue that did not involve increasing the tax burden on its “native” citizenry, we can imagine what a relief the atonement payment and the other discriminatory financial measures against Jewish Germans must have been for the Third Reich’s bookkeepers. The measures also seem to have gone down well with ordinary taxpayers. The
Deutsche Steuer-Zeitung
, a leading tax periodical, reported: “The revenues of the excise tax levied on Jews are going exclusively to the Reich, which will devote them to its general tasks and, in that sense, to the benefit of the German people.”
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The Security Service, perhaps overstating things, noted that, in contrast to the pogroms, the “atonement payment met with approval throughout the populace.”
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After the war, Schwerin von Krosigk would write in his memoirs: “I personally signed off on the atonement payment. But that was where I drew the line.”
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The untruth of that statement is evident in the fact that once the war had begun, Schwerin von Krosigk himself signed a second decree raising the level of personal assets affluent Jews were required to hand over to the state from 20 to 25 percent. The additional 5 percent was payable within four weeks and brought the revenue from the atonement payment to 1,126,612,495 reichsmarks. (Other sources put the total figure at approximately 1.2 billion.)
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The exact percentage of the atonement payment was kept flexible to ensure that Göring’s financial goals were met. In the summer of 1951, a civil servant in the Federal Republic Finance Ministry testified to the American occupation forces: “As a matter of principle, the percentage of contributions was supposed to be elevated until the full amount of the contribution reached one billion marks. If
the individual Jew
falsely reported his assets or refused to pay all or any part of his contribution, the burden was not transferred to the German people but was left
to the Jews among themselves
.”
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GERMANY’S MAJOR commercial banks played a crucial role in helping the government master its dire financial straits and maintain the programs that had made it so popular. On November 14, 1938, the credit division of the Economics Ministry invited the boards of directors of the five biggest Berlin banks—Deutsche Bank, Dresdner Bank, Com-merzbank, Reichskredit Gesellschaft, and Berliner Handelsgesellschaft—to a meeting. According to the protocol, the participants discussed Göring’s decision “to transfer the entirety of Jewish property and material assets from Jewish hands to state and later, perhaps, private ownership.”

The participants agreed that the state could raise an additional 5 billion reichsmarks, depending on market conditions, from the atonement payment and other anti-Semitic measures to be taken in the future. But the bankers also foresaw a short-term problem. Banks were no longer issuing credit to German Jews because in the wake of political discrimination they had become “bad risks.” Thus, Jews would be forced to sell stocks, jewelry, and property to raise their shares of the mandatory payment, and that made the bankers nervous since “the headlong rush to sell off” 1.5 billion reichsmarks’ worth of stocks could well cause a “crash in the securities market.” To head off the problem, the bankers argued that groups of stocks should be sold off slowly and cautiously. “To avoid unnecessary effort and to benefit the Reich,” they proposed “freezing the accumulating securities at the institutions of deposit, then selling them off gradually and in methodical fashion, according to the state of the capital market and in the interests of the Reich’s financial administration.”

The Third Reich, however, was broke. To ease that situation, the banks offered “to provide the Reich financial administration with a line of credit secured by Jewish securities to be acquired in the future; the terms could be agreed upon easily.”
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Their offer was eagerly accepted. After the meeting, the government required that all Jewish-owned securities be placed into a “safekeeping” account and thus be frozen.
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This guaranteed that stock values would be protected and that bonds issued by the Third Reich would be kept off the market.

The bank directors were not the ones doing the actual plundering here, but they acted as accessories, helping maximize the efficiency of the dispossession campaign. They were, in effect, fencing stolen goods by turning them into available cash. They were also acting in their self-interest. Deutsche Bank, for example, charged its Jewish customers a service commission of .5 percent, plus an administration fee, on all transactions. Ipolite language of banking, the terms of contract read: “For services rendered in conjunction with the payments of contributions, we hereby present our clients, in this case Jewish holders of safekeeping accounts, with a bill for 1/2% of the total sum involved and no less than 1 reichsmark per entry.”
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The secondary exchange of temporarily nationalized securities meant more business, and the bank possessed a first-purchase option. Most of the proceeds from such transactions, however, benefited the state’s coffers and reduced the burdens that would otherwise have had to be borne by German taxpayers. The same was true for private life insurance policies, the overwhelming majority of which the Finance Ministry cashed in at the precontracted rates.

The bank, acting as a financial custodian with a mandate from the state, managed the securities in the interests of the Reich and to the disadvantage of its former customers. Periodically, it passed the assets on to the Prussian State Bank or the Reichsbank, which sold them off. Those two financial institutions reported the proceeds of such sales on a form entitled “Trade-In of Securities for the Levy on Jewish Assets,” which was submitted to the senior government adviser within the Finance Ministry. The ministry then transferred the corresponding sum of money into an advance receipts account, “Jewish Assets Tax, Security Division,” maintained by the Main Accounting Office. This procedure was adhered to up until the final days of Nazi rule.
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With the stock market rising until autumn 1941, revenues for the Reich also rose—at one point by more than 200 percent.
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In addition, the Reichsbank later sold off securities on stock markets in occupied countries such as France.
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The confiscation of the assets both of Jews in Germany and, during the war, of foreign nationals was necessary because the Nazi leadership desperately wanted to avoid any broad-based tax hikes—the usual means for financing massive military activity. In late 1937 an assistant to Göring outlined a series of tax increases that would be required in the event of war: income and payroll taxes would rise by 50 percent and corporate income tax by 66
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percent, while other forms of earned income would be subjected to an 8 percent hike. Rates for additional income would increase by 30 to 100 percent, and the wealth tax would jump 200 percent.
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Economists who had been studying the issue since 1936 concluded that “a greater involvement of the working classes via a 50 percent hike in wage taxes would be reasonable,” since “all segments of the populace would be burdened in proportion to their incomes.”
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