The Third Reich at War

by Richard J. Evans

  This was not least because in the occupied countries in Western Europe, national governments remained in existence, however limited their powers might be, and property laws and rights continued to apply as before. From the point of view of Berlin, therefore, economic cooperation, however unequal the terms on which it was based, was what was required, not total subjugation or expropriation along the lines followed in Poland. The occupation authorities, civil and military, set the overall conditions, and opened up opportunities for German firms, for instance through Aryanization (though not in France, where Jewish property was controlled by the French authorities). All that German companies looking to expand their influence and reap the profits of the occupation could do, therefore, was to ingratiate themselves with the occupying authorities in the attempt to steal a march on their rivals.40 The policy of co-operation dictated from Berlin limited the freedom of action of such companies. It was born not simply of expediency - the desire to win the co-operation of France and other Western European countries in the continuing struggle against Britain - but also of a grander vision: the concept of a ‘New Order’ in Europe, a large-scale, pan-European economy that would mobilize the Continent as a single block to pit against the giant economies of the USA and the British Empire. On 24 May 1940 representatives of the Foreign Office, the Four-Year Plan, the Reichsbank, the Economics Ministry and other interested parties held a meeting to discuss how this New Order was going to be established. It was clear that it had to be presented not as a vehicle of German expansionism but as a proposal for European co-operation. Germany’s policy of trying to wage war with its own resources was clearly not working. The resources of other countries had to be harnessed as well. As Hitler himself told Todt on 20 June 1940: ‘The course of the war shows that we have gone too far in our efforts to achieve autarky.’41 The New Order was intended to reconstitute autarky, self-sufficiency, on a Europe-wide basis.42

  What was required, therefore, as Hermann G̈ring, head of the Four-Year Plan, put it on 17 August 1940, was ‘a mutual integration and linkage of interests between the German economy and those of Holland, Belgium, Norway and Denmark’, as well as intensified economic cooperation with France. Companies such as I. G. Farben leaped in with their own suggestions as to how their own particular industrial needs could be met, as a memo from the company put it on 3 August 1940, by the creation of ‘a large economic sphere organized in terms of self-sufficiency and planned in relation to all the other economic spheres of the world’.43 Here too, as a representative of the Reich Economics Ministry explained on 3 October 1940, circumspection was necessary;

  One can take the view that we can simply dictate what is to happen in the economic field in Europe, i.e. that we simply regard matters from a one-sided standpoint of German interests. This is the criterion which is sometimes adopted by private business circles when they are dealing with the questions of the future structure of the European economy from the point of view of their own particular sphere of operations. However, such a view would be wrong because in the final analysis we are not alone in Europe and we cannot run an economy with subjugated nations. It is quite obvious that we must avoid falling into either of two extremes: on the one hand, that we should swallow up everything and take everything away from the others, and, on the other, that we say: we are not like that, we don’t want anything.44

  Steering such a middle course was roughly the line taken by the visionary economic imperialists who had developed thinking about a German sphere of economic interest - sometimes known as Mitteleuropa, ‘Central Europe’ - before the First World War. It would, economic planners thought, involve the creation of Europe-wide cartels, investments and acquisitions. It might require government intervention to abolish customs barriers and regulate currencies. But from the point of view of German industry, the New Order had to be created above all by private enterprise. European economic integration under the banner of the New Order was to be based not on state regulations and government controls, but on the restructuring of the European market economy.45

  Pursuing such a goal meant avoiding as far as possible giving the impression that the conquest of Western European countries amounted to nothing more than their economic subjugation and exploitation. At the same time, however, German economic planners were clear that the New Order would be set up above all to serve German economic interests. This involved a sleight of hand that could sometimes be quite sophisticated. Mindful, for example, of the bad name that had clung to the concept of reparations since 1919, the Third Reich did not demand financial compensation from the defeated countries; how could it anyway, since the reparations Germany had had to pay from 1919 to 1932 had been to compensate for the damage done to France and Belgium by the German invasion of these two countries in 1914, and nobody had invaded Germany in 1940. So instead the victorious Germans imposed what were called ‘occupation costs’ on the defeated nations. These were ostensibly meant to pay for the upkeep of German troops, military and naval bases, airfields and defensive emplacements in the conquered territories. In fact, the sums extracted under this heading exceeded the costs of occupation many times over, amounting in the case of France to some 20 million Reichsmarks a day, enough, according to one French calculation, to support an army of 18 million men. By the end of 1943, nearly 25 billion Reichsmarks had found their way into the German coffers under this heading. So enormous were these sums that the Germans encouraged the French to contribute to their payment by transferring shares, and, before long, majority control over vital French-owned enterprises in the Romanian oil industry and Yugoslavia’s huge copper mines had passed to Party-dominated enterprises in Germany such as the ubiquitous Hermann G̈ring Reich Works and the newly established ‘multinational’, Continental Oil.46

  12. The New Order in Europe, 1942

  I V

  What this all reflected was the fact that from the point at which serious preparations began to be made for the invasion of the Soviet Union, ideas of economic co-operation began to take second place to the imperatives of economic exploitation. Some, like Speer, took these ideas relatively seriously.47 But as far as Hitler was concerned, they were little more than a smokescreen. On 16 July 1941, for example, he devoted some attention to a declaration in a Vichy French newspaper that the war against the Soviet Union was a European war and therefore should benefit all European states. ‘What we told the world about the motives for our measures,’ he said, ‘ought . . . to be conditioned by tactical reasons.’48 Saying that the invasion was a European enterprise was such a tactic. The reality was that it would be in Germany’s interests. This had long been clear to the Nazi leaders. As Goebbels declared on 5 April 1940: ‘We are carrying out the same revolution in Europe as we carried out on a smaller scale in Germany. If anyone asks,’ he went on, ‘how do you conceive the new Europe, we have to reply that we don’t know. Of course we have some ideas about it, but if we were to put them into words, it would immediately create more enemies for us.’49 On 26 October 1940 he made it brutally obvious what these ideas boiled down to: ‘When this war is over, we want to be masters of Europe.’50

  By 1941, therefore, the conquered countries of Western Europe were being exploited by the Germans for all they were worth. Most of them had advanced industrial sectors that were intended to contribute to the German war effort. Yet it soon became clear that the French contribution was falling far short of what German economic and military leaders hoped for. Attempts to get French factories to produce 3,000 aircraft for the German war effort repeatedly stalled before an agreement was signed on 12 February 1941. Even after this, production was slowed down by shortages of aluminium and difficulties in obtaining coal to provide power. Only 78 planes were delivered by factories in France and the Netherlands by the end of the year, while at the same time the British had purchased over 5,000 from the USA. The following year, things improved somewhat, with 753 planes delivered to the German air force; but this was only a tenth of the quantity the British got from the Americans. Low morale,
poor health and nutrition among workers, and probably considerable ideological reluctance as well, ensured that labour productivity in French aircraft factories was only a quarter of what it was in Germany. Altogether the occupied western territories managed to produce only just over 2,600 airplanes for German military use during the whole of the war.51

  Even with the addition of the substantial natural resources of the conquered areas of Western Europe, the economy of the Third Reich remained woefully short of fuel during the war. Particularly serious was the lack of petroleum oil. Attempts to find a substitute were unsuccessful. Synthetic fuel production only rose to 6.5 million tons in 1943, from 4 million in four years before. The Western European economies occupied in 1940 were massive consumers of imported oil, producing not a drop themselves, and so they merely added to Germany’s fuel problems as they were abruptly cut off from their former sources of supply. Romania supplied 1.5 million tons of oil a year, and Hungary almost as much, but this was by no means enough. French and other fuel reserves were seized by the occupying forces, reducing the supply of petroleum in France to only 8 per cent of pre-war levels. Germany’s Italian ally consumed further quantities of German and Romanian oil, since it too was cut off from other sources. German oil reserves never exceeded 2 million tons during the entire war. By contrast, the British Empire and the USA provided Britain with over 10 million tons of oil imports in 1942, and twice as much in 1944. The Germans failed to seize other sources of oil in the Caucasus and the Middle East.52

  Coal, which still provided the basic fuel for electricity generation, industrial power and domestic use, was present in Western and Central Europe in huge quantities, but production in occupied countries plummeted as workers slowed down. Some even went on strike in protest against impossibly low food rations and deteriorating conditions. In 1943-4, about 30 per cent of the coal used in Germany came from occupied areas, particularly Upper Silesia, but far more could have been obtained, particularly from the rich coal seams of northern France and Belgium. The British blockade cut off imports of grain, fertilizer and animal fodder from overseas, while German confiscations of these materials from French, Dutch and Belgian farms, together with the drafting of farmworkers into forced labour schemes in Germany, had a disastrous effect on agriculture. Farmers had to slaughter pigs, chickens and other animals in vast quantities because there was nothing to feed them with. The grain harvest in France fell by more than half in the two years from 1938 to 1940. The German occupiers introduced food rationing. By 1941, official rations in Norway were down to 1,600 calories a day, in France and Belgium a mere 1,300. This was not enough for anybody to live off, and, as in occupied Eastern Europe, a black market rapidly emerged, as people began to break the law in order to stay alive.53 All this meant that the addition of the economies of Western Europe did far less than had been hoped to strengthen the German war effort. Not only did productivity in the coalmines decline, but the confiscation of French, Belgian and Dutch rolling stock and railway engines also severely disrupted the movement of coal supplies across the country, hampering industrial production. As coal supplies fell, steelworks, starved of the coke essential for smelting, began to get into trouble as well. Not only was the German economy unable to take much advantage of the acquisition of coalmines in France and Belgium, but conditions in the German mines began to deteriorate too. Matters were not helped by the drafting of many key workers into the armed forces, and attempts to induce men to go down the mines by raising wages were undermined by already long hours, including Sunday working, dangerous conditions and above all the poor food rations on which miners had to subsist.54 All in all, therefore, the German war economy gained far less from the conquest of other European countries than might have been expected.

  All of this reflected, in the end, the primacy of ruthless exploitation dictated by the state. Some economists, such as Otto Br̈utigam, a senior official in Rosenberg’s Ministry for the Eastern Territories, considered that Germany could have extracted far more from the economies of the countries it had conquered, above all in Eastern Europe, if its leadership had followed the ideas of a collaborative economic New Order in Europe rather than policies of racial subjugation, oppression and mass murder.55 Some businessmen and capitalists may have thought along similar lines, but on the whole they took the regime’s policies towards its subject peoples as a given, and tried to gain what they could out of them. This was clearly, as the exiled political scientist Franz Neumann put it during the war, a command economy, a capitalist market economy increasingly subjected to direction and control from above.56 Was it any more than that? Was the Nazi economy moving away from free enterprise capitalism altogether? There is no doubt that, in the course of the war, the regime intervened ever more intrusively in the economy, to an extent that amounted to far more than merely steering it in certain directions, or forcing it to work within the political context of a global war. Price and exchange controls, the regulation of labour and raw materials distribution, the capping of dividends, forced rationalization, the setting and resetting of production targets and much more besides constituted a drastic deformation of the market. The state’s vast and precipitous increase in armaments expenditure distorted the market by pulling resources away from consumer goods production and towards arms-related and heavy industries. Industry thus came increasingly to serve the purposes and interests of an ideologically driven political regime.57

  Moreover, as time went on, state and Party interests owned a growing proportion of the economy. Practically the whole newspaper and magazine industry had already fallen into Nazi ownership before the war, for instance, and other media, including film studios and book publishers, were similarly largely owned by branches of the Nazi Party organization. In some regions like Thuringia, regional Party bosses had been able to lay their hands on key industries. After 1939, state or Party agencies were able to take over companies with foreign owners whose countries were at war with Germany, and the Aryanization of Jewish firms in occupied countries provided still further opportunities. The state-run Hermann G̈ring Works spread its tentacles ever further in this way. The SS Economy and Administration Head Office under Oswald Pohl mushroomed into a complex network of businesses covering an astonishing variety of fields. The holding company set up by Pohl in 1940, the so-called German Economic Enterprise (Deutscher Wirtschaftsbetrieb), owned or leased and effectively controlled housing corporations, furniture, ceramics and cement manufacturers, a quarry and stone business, munitions works, woodworks, textile factories, book publishers and much more besides. Often these reflected Himmler’s own particular, sometimes rather eccentric personal interests. Thus, for example, Himmler was concerned to reduce alcohol consumption in Germany and particularly in the SS, so he arranged for the Apollinaris mineral water company at Bad Neuenahr, which was British-owned before the war, to be leased from its German trustees to the SS holding company, rewarding it with a large contract to supply mineral water to the SS. The existing manager could not be ousted, but he was forced to work with a deputy appointed by the SS, giving it a large measure of control. Other companies fell under direct ownership. The SS economic empire expanded very quickly as a result of such developments.58 At the same time, however, it had no clear overall conception of what it wanted its role to be. It simply grew by accretion, in a haphazard way, as the example of the Apollinaris mineral water company suggests. Nor was the eventual domination of the German economy a significant aim of the SS; this always took second place to security and racial policy.59 In the last two years of the war, indeed, these latter aims pushed the economic ambitions of the SS into the background.60

  Striking though these developments were, however, they did not do much to alter the fact that Germany was still a capitalist economy, dominated by private enterprise. Regulation was widespread and intrusive, but it was carried out by many different, often competing institutions and organizations.61 Industrial managers and company executives managed to preserve at least some freedom of action, but they were
acutely aware that their autonomy was being increasingly restricted during the war along with the operation of a free market economy, and they were deeply worried that the regime would go over to a fully ‘socialist’, state-run economy; Joseph Goebbels, widely regarded as a ‘socialist’, was a particular bogey-man in this respect, but the growing economic empires of the SS and the Hermann G̈ring Works, among others, were a cause of anxiety as well. Such concerns drove many businessmen and industrialists to co-operate with the regime as much as they could, in order to ward off, as they thought, even more drastic encroachments on their decision-making powers.62

  Thus managers, executives and company chairmen were more than willing to take advantage of the many inducements the state had to offer, most notably of course the provision of lucrative arms contracts. German businesses benefited from the activities of the SS as well. The Dresdner Bank, for example, issued credits to the SS, and senior executives were rewarded by being made officers in the organization. Its services to the SS included providing loans for construction works in Sachsenhausen and finance for the building of Crematorium II in Auschwitz. 63 Huta, the small firm that built the gas vans used to kill Jews at Chelmno and elsewhere, the engineering company of Topf and Sons, who built the gas chambers at Auschwitz, and many other firms were only too happy to profit from the business of death. Some, such as the company that supplied Zyklon-B to Auschwitz, may possibly have been unaware of the use to which their products were being put, but in most cases it was only too obvious. Those who processed the gold from the dental fillings extracted from the corpses of Jews killed at Auschwitz and other death camps can have had few doubts as to the provenance. After collection at the camps, the fillings were sent to a refinery operated by the Frankfurt-based Degussa firm, Germany’s leading company for the processing of precious metals. The gold was melted down and made into bars, along with other gold materials, jewellery and the like, taken from Jews and others in the conquered areas of Europe. Altogether, it has been estimated, Degussa earned about 2 million Reichsmarks from the plundering of the Jews between 1939 and 1945; 95 per cent of the firm’s gold intake between 1940 and 1944 came from loot.64 Degussa earned such profits by selling the gold on via the Reichsbank to finance houses such as the Deutsche Bank.65 The origin of much of this gold was clear enough to those who processed it on the factory floor. The fillings arrived at the Degussa factory for processing, as one worker recalled long after the war, in a condition that made it all too clear where they had come from: ‘The crowns and the bridges, there were those where the teeth were still attached . . . That was the most depressing, the fact that everything was still there. It was probably just like it had been when broken out of a mouth. The teeth were still there and sometimes still bloody and with pieces of gum on them.’66