Report on the economies of the occupied territories, including direct payments to Germany for the war and occupation costs, the black markets, trade balances with Germany, and food and supplies delivered to the military

Foreign Labor Staff [Arbeitsstab Ausland]
(Nr. 02051/44g. Kdos. II, Ang., Wannsee, 10 Oct 44.)
Extract from the work of the Research Office for Military
Economy
3 drafts 2nd draft
The financial achievements of the occupied areas up to 31 March 44 (Ffw. 182/44g. Rs.)
KK. The individual areas.
1. The Protectorate.—The exchange of goods between Germany and the Protectorate is no longer regarded as foreign trade. For this reason, the extent of the real surplus produced by the Protectorate, cannot be evaluated. We can only determine the amount of the tribute [Matrikularbeitrag] paid to the Reich by the Protectorate.
Calendar RM—purchasing power rate of exchange Mil. RM—
year Mil. Cr. 100 Cr RM purchasing power
1940 3,000 8.73 262
1941 5,000 8.23 412
1942 8,000 8.07 646
1943 10,000 7.95 795
3 Mos. 1944 2,500 7.95 199
Total 28,500 2,314
Of course the Protectorate has furnished much more than this sum of 2.3 bil. RM during the years it has belonged to the Reich. We need only think of the weapons of all kinds that were taken over by the Wehrmacht, the manpower represented by the armament workers assigned to the Reich, the continual goods deliveries, etc. Of these items, it is known only that the value of the arms captured in 1939 amounted to 648 Mil. Crowns, or 77 Mil. RM in purchasing power as of that date. For the reason re-
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ferred to above, the proportions of the other items cannot be assessed.
The total figure of ca. 2400 mil. RM arrived at here is therefore necessarily too low.
2. The Government General.—The Government General, also, pays a fixed sum, the so-called "defense contribution" [Wehrbeitrag], and has been doing so since the fiscal year 1940/41.
Fiscal year Mil Zl. Mil. RM
1941/42 500 250
1942/43 700 350
1943/44 1300 650
2500 1250
In regard to the exchange of these sums in Zloty, in this case at the official rate of 0.50 RM for 1 Zl., it should be noted that the official prices (retail prices) have scarcely changed since the beginning of 1941. Price increases have occurred only in the cases of certain goods (textiles). The rates of purchasing power resulting from individual prices have approximated, as a rule, the official rate of exchange. In the case of food stuffs, our chief import item from the GG, the purchasing power of the Zl. is rather higher than 50 RPf., whereas for other goods it is considerably less. Black market prices, on the other hand have steadily risen and are many times higher than the official prices. But there is no uniform inflationary [Ueberteurungsfactor] factor such as has been established in the west. The prices range from two to sixty times the normal prices and completely disguise former relationships between goods. For this reason and because the sum of amounts expended upon the black market is unknown, the exchange can be calculated only in terms of the official, and not the black-market, rates. But since army supplies, in particular, were apt to be considerably more expensive than in the Reich, we have reckoned, beginning with 1942/43, a tenth of the total demand at a rate one half lower (1 Zl./ equals 0.25 RM), arriving at the following result:
Official Market Market for special Total Fiscal year Mil Zl. Mil RM Army purchases. Mil. RM.
1941/42 500 250 ...... ... 250
1942/43 630 315 70 17.5 332.5
1943/44 1170 585 130 32.5 617.5
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In 1940/41 the GG was hot held to the payment of a set Sum, but it had to permit the transfer of about 580 Mil Zl. notes of the former Poski Bank from the Reich and other countries to the account of and for the credit of the Reich.
The established clearing debt of the Reich to the GG increased by 28 Mill. RM between the end of Aug 1940 and the end of March 1943. But this low sum is only what remained of the actual clearing debt after a substantial investment of GG— credits in Reich Treasury bonds. As of 31 March of this year, 3,396 mil RM were so invested. The actual clearing debt approximates, then, 3,424 mil. RM.
Not all that the GG furnished was through clearing agreements. For instance, the wages sent out by the Polish laborers employed in the Reich and the POW's were carried by ordinary post and did not go through clearing. Up to the end of March 19 [two digits missing], a total of 100.6 mil. RM was sent, 70.8 of it by civilian workers.
The determined performance of the GG is as follows:
Mil RM
1,200—Defense contribution 290—Return of Zl. notes
3,424—Clearing debt and Reich Treasury investment 71—Sent by laborers 30—Sent by POW's
5,015 Total
3. France—With France we come to the group of countries that pay occupation costs in the real sense. From the time France was first occupied until the end of March 1944, she placed the following sums at the disposal of the Wehrmacht, to the account of occupation costs:
Calendar year Mil RM Mil Fra
1940 1,759 35,180
1941 5,087 101,740
1942 7,872 157,440
1943 9,798 195,960
1st. Quarter of 1944* 2,275 45,500
Total 26,791 535,820
figured per fixed daily contributions.
If one converts the above sums in terms of purchasing power, one arrives at considerably higher values for the first three years. The purchasing power and the rate of exchange did not
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become equalized until the year 1943. But not all goods financed by occupation costs are bought at the official prices; some are paid for at black market prices. One can assume that the black market played a very small role in 1940, since there were still ample stores of supplies available. Only beginning with 1941 is the black market taken into account here, when the inflation [Ueberteurung] factor is placed at 4. In 1942 this figure became 6 (according to Veltjens), and it is estimated at 8 for 1944.
100 frs. equals..............RM
Official on the black market
1940 9.9 —
1941 7.7 1.9
1942 6.4 1.1
1943 6.0 0.6
1944 (Beginning of) 5.0 0.6
Exact documentation concerning the extent of black market purchases is available only for the "Veltjens Action", which in France required 1,555 Mil. RM, or 31.1 Bil. francs at the official rate of exchange. The greater part of the purchases were made in 1942, amounting to about 1,155 Mil. RM. It is estimated that only about 400 Mil. RM were expended in France in 1943. If one converts the 31.1 Bil. francs at the then rate of exchange on the black market, one arrives at the low sum of 318 Mil. RM.
It can be assumed that a part of Wehrmacht expenditures still goes into the black market—a particularly large proportion in the case of personnel expenses, which, during the last years in France, constituted between 18 and 25% of total expenditures. Certainly it is not too high an estimate if it is assumed that one half of personnel expenditures, and so perhaps 10% of all expenditures, went to the black market. It is calculated that 5% was expended in the black market in 1941, since the latter was still of slight importance at that time. Certain Wehrmacht expenditures for material (such as supplies for Wehrmacht installations [Wehrmachtinvestitionen]) may have been made at higher than the official prices, if not at the really high black market prices. In this connection it is assumed here that 10% of material expenditures were made at twice the official prices.
Until a short time ago, the French black market was fed from still another source—the importation of Reich credit notes [Reichskreditkassenscheinen] from the other occupied regions. Although the issuance of Reich credit notes in France had practically ceased in Oct. 40, some of Reich credit notes were cur-
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rently presented with the accounting of occupation costs (1942: 460 Mil. RM; 1943: 1,180 Mil. RM; 1st. quarter 1944: 25 Mil. RM.) Even though a portion of this was issued in France to begin with, it can be assumed that the greatest proportion—we place it at 75% for 1942 and 1943—comes from the other occupied regions; in 1942: 345 Mil. RM, in 1943: 885 Mil. RM. While it is not likely that the entire sums went into the black market, it is thought that 75% of them did.
We obtain, therefore, for:
1942 — 260 Mil. RM
1943 — 660 Mil. RM
1944 — 19 Mil. RM
Altogether, the following amounts were expended in the black market (in Bil. of Francs) :
1941 1942 1943 1944
Veltjens action — 23.1 8.0
Soldiers' purchases 5.1 15.7 19.6 4.5
Importing of Reich credit notes 5.2 13.2 0.4
Total in addition, Wehrmacht 5.1 44.0 40.8 4.9
purchases at higher than official prices — 12.6 15.7 3.6
Total 5.1 56.6 56.5 8.5
Wehrmacht expenditures in France were as follows: Market for special Wehrmacht purchases
Official market Black market total
Year Bil.Fr. Mil.RM. Bil.Fr. Mil.RM. Bil.Fr. Mil.RM. Mil.RM.
1940 35.2 3,480 3,480
1941 96.6 7,440 5.1 100 7,540
1942 100.8 6,450 12.6 400 44.0 480 7,330
1943 139.5 6,980 15.7 395 40.8 240 7,615
1944 37.0 1,850 3.6 90 4.9 30 1,970
Total 26,200 885 850 27,935
The real sum of occupation costs amounted to about 28 Bil. RM. The "loss" through the black market, that can be figured by converting the sums spent in the black market to their relative value in purchasing power in the official market and then subtracting from these the real value of the black market purchases, is estimated to approximate 6.4 Bil. RM. In other words, for value of ca. 900 Mil. RM received on the black market, one
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could have received a value of 7.3 Bil.RM in the official market, had the goods concerned been available in the latter.
In spite of the extent of black market purchasing, the real value of the occupation costs is still above the sum that would be received through conversion at the 5 Pf. rate of exchange (26.8 Bil.RM), since French prices were much lower than German prices at the beginning of the occupation period. The opinion expressed in the recent report of the military commander, namely, that due to black market purchases not even the sum of 26.8 Bil. RM was realized, must therefore be regarded as too pessimistic.
The German clearing debt with France, in which is expressed the value of her external contributions (import surpluses, French workers employed in the Reich), has increased greatly during the occupation years.
Conversion of the clearing debt must be effected at lower rates than at the purchasing power rates referred to above. For, since 1941, the French have levied a duty known as the retenue de péréquation" upon those exports for which higher prices were obtained than could be realized in the domestic market. This shows that export prices were, in part, higher than the French domestic prices. It is of course difficult to estimate the degree of this difference. The mean between the purchasing power rate based upon the domestic price and the rate of exchange is shown here for 1941 and 1942:
From that time when the purchasing power rate approximated the rate of exchange (about 1943), the latter was adopted and it has been retained for the 1st. quarter of 1944. Imports from France have been cheapened to some extent today, it is true, which might suggest conversion at a rate under the (official) rate of exchange, but the sums expended to that end [Verbilligungsbetrage] are still relatively low. Besides, many goods are still imported from France at less than Reich prices.
The clearing debt was as follows:
1941— 6.3
1942— 5.7
Mil. RM purchasing
Mil. Fr. power
from Nov 1940-Aug 1941 from Sept 1941-Aug 1942 from Sept 1942-Aug 1943
8,976 565
28,438 1,621
57,718 2,736
44,128 2,206
from Sept 1943-end of March 1944
Total
7,128
693260—46— 18
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The total demonstrable French contribution is in the vicinity, then, of 35 Bil. RM. This sum does not include all of the French contributions, e.g. captured raw materials valued at about 255 Mil. RM, war booty, or the billeting.
4. Belgium.—From the beginning of the occupation period until 31 March 4 [digit missing] Belgium paid about 5.7 Bil. RM in occupation costs.
RM rate of purehas-Mil. Belg. ing power. Mil. RM pur-Year Fr. 10© B.Fr.=....RM chasing power
1940 29,500 8.6 2,537
1941
1942 19,200 8.0 1,536
1943 15,045 7.7 1,197
Jan/Mar 1944 5,481 7.7 422
Total 5,692
The total given here is probably too high, for the Belgium, too, certain sums regularly reached the black market; at the least, this occurred in the case of personnel expenditures. Belgium's price policy has been definitely more successful than that of France, however, and the extent and prices of the black market accordingly lower. If one reckons with an inflation factor of 3 for 1940 and 1941 and of 6 for the succeeding period and assumes that 1/20 of the amount for the first two years and 1/10 for the remaining period went into the black market, the above
figures may be broken down as follows :
(Official- —market) (Black- —market) Total
Mil. RM Mil. RM Mil. RM
Mil. Fr. pur. pow. Mil. Fr. pur. pow. pur. pow.
1940 ) 1941 j 1942 28,025 2,410 1,475 43 2,453
17,280 1,382 1,920 26 1,408
1943 13,540 1,043 1,505 20 1,063
Jan/Mar 1944 4,933 380 548 7 387
Total 5,215 96 5,311
In comparison with the occupation costs, the clearing debt is '
very high, at least when regarded from the standpoint of the relationship in France. In Belgium it amounts to about % of the occupation costs, whereas it totals only 14 in France.
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It increased as follows:
from 12 July 40-31 Aug. 40 by 21 Mil. RM
from Sept 40-end of Aug 41 by 383 Mil. RM
from Sept 41-end of Aug 42 by 974 Mil. RM
from Sept 42-end of Aug 43 by 1,898 Mil. RM
from Sept 43-end of Mar 44 by 1,012 Mil. RM
Total 4,288 Mil. RM
These RM sums determined with the aid of the official rate of exchange also must be converted to the rate of purchasing power and these must be taken into account the sum of the official black market purchases (Veltjens Action), 'amounting to 267 Mil. RM, let us say for the sake of simplicity, that the black market action took place entirely within the 4th year of the war economy, even though it began somewhat earlier (mid June 42). The increase of the clearing debt may be broken down as follows:
(Official—market) (Black—market)
Year of war economy
Mil. RM Mil. RM Total
Mil. B. Pr. pur. pow. Mil. B. Fr. pur. pow. Mil. RM
1939-40 265 24 24
1940-41 4,789 397 397
1941-42 12,171 974 974
1942-43 20,388 1,570 3,338 43 1,613
Sept 43 Mar 44 12,650 974 A 974
Total 3,939 43 3,982
The sum total of Belgium's contribution, then, amounts to about 9,300 Mil. RM. (not including Belgium's gold deliveries.)
5. The Netherlands.—The Netherlands is the only country that not only paid for internal occupation costs, for the subsistence of the troops and other occupation needs, but also contributed to the external costs of occupation. The sums for the latter were paid in part in gold—some time ago the gold reserves were exhausted—and for the rest in Reichsmark. The Reichmark sums probably originated in foreign trade. To the extent of the latter payments it was possible to import goods from Holland without payment, a procedure that calls to mind English imports from Canada.
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Internal occupation costs 1 hfl. = 1.32 RM Mil. RM External occupation costs Mil. RM Total occupation costs Mil. RM
1940-41 1,360 . 1,360
1941-42 1,640 950 2,590 .
1942-43 1,640 600 2,240
1943-44 1,640 600 2,240
Total 6,280 2,150 8,430
If one evaluates the internal occupation costs by the obtaining rate of purchasing power, one arrives at the following sums:
Reichsmark —actual purchasing power 1 hfl.=... RM Internal occupation costs Mil. RM Total occupation costs Mil. RM
1940-41 1.46 1,030 1,500
1941-42 1.30 1,240 1,610
1942-43 1.26 1,240 1,560
1943-44 1.27 1,240 1,570
Total 6,240
After a considerable initial rise in prices in Holland, the purchasing power was successfully held close to the official rate of exchange. The black market prices, however, are especially high. The inflation factor for 1942 is given as 4, while it is estimated at 8 for 1943 and at 10 for 1944.
Probably one-half of the payments made to personnel, which lately constituted ca. 25% of total expenditures, found its way into the black market, and some of the payments for material have been made at higher than official prices (Army purchases of wood, etc.) As in the case with France, we calculate that since 1942-43 10% of expenditures for supplies and equipment made at twice the official prices.
On the basis of the above suppositions, the following accounting can be made:
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Official—market Mil. Hfl. Mil. RM.
Wehrmacht mkt. For special pur. Mil. Hfl. Mil. RM
Black—market Mil. Hfl. Mil. RM
Total
RM
1940-41 1030 1500 . . 1,500
1941-42 1178 1530 . . . . 62 40 1,570
1942-43 992 1248 93 59 156 25 1,332
1943-44 992 1256 93 59 156 20 1,335
Total 5,534 118 85 5,737
Some of the external costs of occupation, too, were connected
with the black market. We refer here to the official black market purchases, which were paid for in Holland by Reichsmark and which came to 160 Mil. RM. If we take the black market rate of
exchange for 1942 as 32 Rpf, that amounts to the sum of 40
Mil. RM. The Reichsmark remittances for 1942 must therefore
be established at 480 Mil. RM instead of 600 Mil. RM. Altogether, we received from Holland the following amounts:
Internal External
occupation occupation Total
costs Mil. RM. costs Mil. RM. Mil. RM
1940-41 1,500 1,500
1941-42 1,570 950 2,520
1942-43 1,332 480 1,812
1943-44 1,335 600 1,935
Total 5,737 2,030 7,767
Since the Netherlands has counted as a domestic currency area [Deviseninland] since 1 April 41, the balance of Dutch contributions in external trade with the Reich cannot be exactly ascertained. That part of the total contribution surpluses which is not covered by the external costs of occupation [ausseren Besetzungskosten] accumulates with the Deutsche Reiehsbank in the Reichsmark account of the Netherlands Central Bank (as of 31 March 44: 5,120 Mil. RM.). The greater part of this, that is, 4,958 Mil. RM., was invested in Reich Treasury bonds.
Since the acquisition of Gulden through the deposit of Reichmark in Germany was not curbed until recently and the control over goods movements was inadequate, it can be assumed that great sums in Gulden—we estimate them to equal 1/5 of the entire Reichsmark account of the Dutch National Bank—were acquired by Germans for buying on the Dutch black market. If
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this sum is equated with the average inflation factor of 6, the real value amounts to 4,260 Mil. RM.
The total of Dutch contributions, accordingly, comes to 12,030 Mil. RM.
6. Denmark.—Denmark is not considered as occupied territory and so pays no occupation costs. The funds needed by the German troops are placed at the disposition of the head administration of the Reichskreditkassen of the Danish Central Bank by way of credits. For the duration of the war, then, at any rate, Denmark made no uniform contribution. The credits so claimed amounted to almost 1.5 bil. RM by 31 March 44.
Occupation costs Mil. Kr. RM purchasing power 100 Kr RM Occupation costs Mil. RM. pur. pow.
1940-41 531 53.1 282
1941-42 437 47.7 208
1942-43 612 47.5 290
1943-44 1391 47.9 666
1446
No estimation is made of the sums going into the black market. It can be assumed, to be sure, that members of the Wehrmacht buy butter and other products at increased prices in Denmark, too, but it is impossible to make any accurate statement concerning this. For the black market seems less widespread and less well organized than in the occupied western regions and more similar to the German black market, with its irregular price structure. As a rule, certainly, the Danish black market prices were far below the German. Therefore, one can not speak of a uniform over-charge or inflation factor, as in France, Belgium and Holland.
Our closing debt to Denmark amounts to about 1,100 Mil. RM. It increased as follows:
from 9 April 40-31 Aug 40 from 1 Sept 40-31 Aug 41 from 1 Sept 41-31 Aug 42 from 1 Sept 42-31 Aug 43 from 1 Sept 43-31 Mar 44
Total
Mil. Kronen Mil. RM purchasing power
297 158
358 171
416 198
560 268
612 293
1,088
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Denmark's total contribution ; then, amounted to ca. 2,530 Million RM.
7. Norway,—The Norwegian economy has borne an especially heavy burden of occupation demands. For this reason the occupation charges had to be limited to only 'a portion of the Wehrmacht expenditures. The remainder is being financed, for the time being, by credits of the Central Bank, placed at the disposition of the head administration of the Reichskreditkassen.
Occupation Charges Mil. Kr. Credit with theNorges Bank Mil. Kr. Total
1940-41 353 2,132 2,485
1941-42 1,292 1,835 3,127
1942--43 6 months 1943 to March 981 942 1,923
44 ca. 750 ca. 750 ca. 1,500
Expressed in Reichmarks, this equals for the following amounts: Mil. EM EM purchasing power purchasing Mil. Kr. 100 Kr EM power
1940-41 ' 2,485 63.9 1,588
1941-42 3,137 52.8 1,656
1942-43 1,923 52.6 1,011
1948-44 1,500 52.6 789
5,044
This sum of over 5 bil. RM is indeed a large amount, taking into consideration the state of Norwegian economy. Countries with much greater economic resources, such as Belgium, paid little more, and Denmark furnished not even half as much. These large contributions were made possible only through German subsidies [Zuschuesse]. It is not surprising, therefore, that Ger-man-Norwegian foreign trade is balanced in Germany's favor,
i. e. it is a subsidized operation [Zuschussgeschaft]. Since Norway is scarcely in a position to furnish labor forces to Germany, owing to her'own manpower shortage, it is one of the few countries which owe us certain amounts under the clearing arrangement.
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Status of German clearing balance
(in Mil. RM)
31/8/1940 minus 5.6
31/8/1941 plus 111.3
31/8/1942 plus 43.2
31/8/1943 plus 105.3
31/3/1944 . plus 132.3
Increases and decreases in the German demands made on Norway were as follows:
Mil. RM pur- Mil. kronen chasing power
from 9/4/1940-31/8/1940 minus 10 minus 6.4
from 1/9/1940-31/8/1941 plus 205 plus 131.0
from 1/9/1941-31/8/1942 minus 120 minus 63.4
from 1/9/1942-31/8/1943 plus 109 Plus 57.3
from 1/9/1943-31/3/1944 plus 47 plus 24.7
plus 143.2
If this sum of about 140 mil. is subtracted from the occupation charges and credits granted, as presented above, there still remains the very considerable sum of ca. 4,900 mil. RM representing the contribution made by Norway.
8. Serbia * * *
9. Greece * * *
10. Occupied eastern areas.—In determining the value of the contributions of the eastern occupied areas it is expedient to appraise separately the items involved. For occupation payments were made only by the Ostland and the Ukraine, but not by the zone of operations, and only a part of the foreign trade is carried on under clearing arrangements. The goods claimed by the Wehrmacht and the Reich are provided at German wholesale prices. Since the extent of much of the services rendered (quartering and transport) is unknown and the value of only the most important food and raw material deliveries has been determined, the sum arrived at by the addition of the individual items is necessarily too low.
a. Agricultural deliveries totaled just about 4 bil. RM as against German counter contributions of 500 Mil. RM, so that the total value received was in the neighborhood of 3.5 bil. RM.
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b. In the field of industrial contributions very little was achieved. Russian deliveries of raw materials valued at ca. 725 mil. RM are offset by German importations of machinery, tools, and equipment valued at 500 mil. RM and coal deliveries (not counting those to the Wehrmacht and the railways) amounting to ca. 35 mil. RM. There remains a net profit, therefore, of only 190 mil. RM. There should be added the contributions made by the processing industries to the Army of the East (Osthee), here estimated at 500 Mil. RM. The total contributions in the industrial field can therefore be placed at 690 Bil. RM. '
c. Finally, the net profit from the employment of the eastern workers, obtained from laborers remittances and deductions from wages [Ostarbeiterabgabe], must be taken into account.
Workers' remittances 26.5 Mil. RM
Deductions 209. Mil. RM
Total 335.5 Mil. RM
d. The final balance—admittedly incomplete—appears something like this:
Mil. RM
Agricultural contributions 3,500
Industrial contributions 690
Manpower labor value 335
Total . . 4,525
The Russian contributions total, then, 4.5 Bil. RM. This is less than the contributions of most of the countries. France furnished about 7 times as much, Belgium more than twice as much, and the other countries, with few exceptions, also provided more. The figure given appears unbelievably low, in fact, not only in comparison with other countries, but also from an absolute standpoint. The value of all food and raw material deliveries to the Wehrmacht and of the man power employed in the Reich is doubtless not fully represented in this sum of 4.5 Bil. RM, even if ' one subtracts the very considerable German investments in the then Russian economy. The contributions which can not be assessed doubtless run into the billions. They will be taken into consideration in the concluding statement, where all the contributions which can not be statistically evaluated will be summarized.
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