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2. Report of findings of the plenipotentiary for special missions
A. Obtaining of war important goods on the black market in the occupied western territories and in Serbia.
I. The black market up to the issue of the order to the plenipotentiary for special missions.
II. Development of the black market since the 1 July 1942.
2. The organization created by the plenipotentiary for special missions.
3. Scope of the previous purchases (per 30 Nov. 1942).
III. The further development
B. Obtaining of harbor installations and machines from shut down plants.
I. Harbor installations
C. Christmas action.
A. Providing of war important goods on the black market in the occupied western territories and in Serbia.
I. The black market up to the issue of the order to the plenipotentiary for special missions.
The beginning of a black market in the occupied territories can already be ascertained in the time before the German troops entered. It started however, on a large scale after the German occupation and as matters were, the occupation authorities could not prevent this.-The following reasons have necessarily led to its rise:
1. The scarcity of goods in consequence of the exploitation and rationing as a result of hoarding as an escape into material values (particularly in metals) and as a result of removal for the purpose of sabotaging the German Military power.
2. The impossibility of enforcing price limits completely and consequently a constant enlargement of the divergence of price between raw materials and finished products on one hand and between goods and wages on the other.
3. The impossibility of controlling the prices on the German model because of the lack of personnel in the German supervisory organizations.
4. The lack of effective support of the counter-measures by the individual administrative state authorities, primarily in France.
5. The inefficient criminal justice of the individual state criminal authorities.
6. The lack of discipline in the civilian population.
This development was accelerated-particularly since the year 1942-by the attitude of numerous offices of the armed forces and other German organizations. The raw materials and finished products needed by these offices could often not be placed at disposal on the desired scale by the home land within the framework of existing priority measures. Consequently it became often actually the practice simply to use the way of supply through the black market. The activity of German agencies on the black market gradually reached an extent which led to increasingly more unbearable conditions; it was daily routine for the black marketeers to offer their goods simultaneously to several offices for sale and that that office which offered the best price received the merchandise so that the individual German formations in this manner not only snatched the merchandise away from one another, but also, inflated the prices.
Finally the black market dealings took a course which gave impetus to the most serious fears with respect to market- and currency policy. The military commanders in France, Belgium and northern France and the Reichscommissar for the occupied territories of the Netherlands therefore took measures during the course of the year 1941 to bring this development to a halt. However, in this respect the lever was not-at any rate not primarily-inserted at the price side because this promised only little success in the face of the internal conditions prevailing in the occupied territories; just as little could a stricter control of prices be considered at that time. The central occupation authorities rather began to do business themselves on the black market, with the aim of slowly gaining control of it and then to kill it gradually. These actions can be viewed as the predecessors of the organization of the Bfs, (Plenipotentiary for special missions) here also the purchased goods were distributed centrally and because the winding up was also executed through the Roges (in France) or through the AWG (in Belgium) and the Bfs. in Holland in conjunction with the department "four year plan" of the Reich commissioner on the one hand and the departments of the Reich on the other. The purchase was at times made through a single purchasing agency. However, such a procedure had to be denied the desired success as long as it was not possible to hold off all the other offices from activity on the black market; it would have been a prerequisite for this, that all central authorities in the Reich had instructed the departments subordinated to them accordingly, but this was only done in part.
Finally, in June 1942 the plenipotentiary for special missions [Bfs] in agreement with all central authorities was ordered to take charge of the seizure and central control of the black markets. With that, the prerequisite for an effective beginning regarding the problem of the black market and with it the struggle against it existed for the first time.
II. Development of the black market since 1 July 1942.
The plenipotentiary for special missions has from the beginning on viewed the purpose of the mission given to him less in presenting the highest possible figures of purchases; the final aim was set rather to combat the black market that is, to bring it to an end.
The starting point had to be however, that as long as in the occupied territories an essential part of the goods existing or produced at all, disappears by reason of inefficient control or various other reasons in the black market, in the interest of supplying the German war economy with the most important raw materials and finished products, as textiles and PX rations, seizure of these goods could not be avoided. One fact is overlooked again and again: that the black market is not a phenomenon evoked through the activity of the plenipotentiary for special missions or other departments, but-as is shown under I-has developed inevitably from the economic situation of the market and will exist and have to be exploited in the German interest as long as no way has been found to break it up completely or at least check it to the extent that the amount of goods caught through it are meaningless within the framework of the total supply. However, the figures given later on in detail show that for the time being there cannot be any question about it.
But the figures given later on show also that the purchases made on the black market could contribute essentially to the covering of many gaps in the supply of the German war economy without impairing the quota of deliveries in the occupied territories. Therefore the purchases can already for this reason not be refrained from as long as it has not been established that the goods can be secured in another way. The objection that these goods could have been secured anyhow within the frame work of the normal supply-and then much cheaper,-is incorrect. A typical example is the result of the last negotiations with France regarding leathergoods: Upon the desire of the Reichsminister of economics, the chief plenipotentiary for special missions had agreed to stopping the purchases on the leather and hide market, if the French who had complained about the German buying activity on the black market, would oblige themselves to deliver additionally in 1943 the same amount which had been bought in 1942 on the black market; the French declared that they did not feel in a position to do this. The objection mentioned is overlooking the fact that merchandise which had once been withdrawn from production or had been produced illegally, will never again become "white". What is done cannot be undone, the black market is in existence and would also exist without any doubt if not a single German department would work in this field. The black market receives new impulse again and again and that on the one hand from the supply side, and
1. from the large hidden stocks still in existence,
2. from the illegal production which is taking place continuously (this subject will have to be investigated later on more in detail)
3. in France-at any rate up to date-through continuous supply from the unoccupied territory;
on the other hand, at the always increasing scarcity of goods every item finds a buyer, either from the civilian population or industry, or through purchase on the part of the Italians, Swiss, Spaniards; yes, numerous purchases could even be ascertained-in particular in unoccupied France-by the English or-evidently through British instigation-from neutral sources, as for instance the Portuguese which do not serve any other purpose than that of depriving Germany of the merchandise.
The consequence of such sudden cessation of purchases through the organization of the plenipotentiary for special missions would therefore only be that a so far not inconsiderable source of raw materials and war important finished products dries up without achieving on this account the end of the black market. Besides, it has to be doubted with good reason that it would be possible to keep up the prohibition of purchases which was issued to the German departments in the occupied territories, if the delivery by the organization of the plenipotentiary for special missions would suddenly cease. This applies particularly for the cases of the so-called immediate-need [Sofort-Bedarf]. The conception that the black-market will come to an end if no more is bought on the part of the Germans, is incorrect. [Marginal notation in handwriting is inserted here: "Yes, our work has to begin here; with it we hit then the French black-market primarily".]
The central purchasing organization of the plenipotentiary for special missions for instance does not buy agricultural products (only some particularly reasonable items in price have been bought, which however are not at all worth mentioning within the framework of the total supply) and nevertheless the blackmarket is the most significant just on this sector.
It has been explained that further activity on the black-market at the scale up to date will in the long run not be bearable any more for the budget of the Reich. However, in this respect it has to be pointed out that the greatest part of the purchases-that is the ones made in France-have been financed from the French costs of occupation. Of RM 1,107,792,819 - the total amount of purchases, RM 929,100,000 have been financed from French occupational funds. Therefore a debit to the budget of the Reich did not arise to this extent.
The claim that the black market or the activity of German departments on the black market would bring about an increasing decline of the currency in the occupied territories, cannot be recognized as the truth. The decline of the currency which has in part actually occurred already, is not a consequence of the black market, but on the contrary, the inflationary tendencies accompanying the increasing scarcity of goods have evoked the rise of the black market.
At this place it will not be necessary to elaborate on the advantages of a centralized obtaining of the purchases on the black market; only two points of view shall be emphasized:
1. While in the time before the commissioning of the plenipotentiary for special missions, the prices on the black markets rose always further,-for the most part a consequence of the mutual competition of the individual German buyers-it has since been possible, to stabilize the prices of most goods, and this in spite of the fact that the general level of prices in the occupied territories has risen further.
2. While until the commissioning of the plenipotentiary for special missions, the individual German departments received and used the goods purchased by themselves uncontrolled, without regard to the degree of necessity, the distribution now takes place within the scope of total planning by the Reich according to the degree of urgency.
In summarizing, it has to be said that in the face of the supply situation of the Reich, it cannot be refrained from skimming the black market now as before as long as there are still concealed stocks of war important goods. With regard to this higher interest all other points of view have to remain in the background.
2. The organization created by the plenipotentiary for special missions.
In his report at the end of August 1942, the plenipotentiary for special missions has presented in detail the organization created by him for the getting hold of and centralized control of the black market. Therefore here a short review only shall be given.
The general control and supervision of the purchasing activity is the task of the supervising offices newly created for this purpose.
a. the supervising office France with its seat in Paris
b. the supervising office Belgium and Northern France with its seat in Brussels
c. the supervising office Belgium and Northern France, Lille branch, with its seat in Lille.
d. the supervising office Netherlands with its seat in the Hague
e. the supervising department Serbia with its seat in Belgrade.
Principle and directives for the execution are on the one hand "the instructions for the winding up of stocks of merchandise of uncertain origin" issued by the plenipotentiary for special missions in agreement with the military commanders of the Reich commissar for the occupied Dutch territories and on the other hand the contracts concluded by the Roges raw material trading company Ltd. with the purchasing organizations. The purchases themselves are made by a restricted number of authorized purchasing organizations, of which there are in France 11, in Belgium 6, in the Netherlands 6 and in Serbia 3. Thereby the total purchasing activity is subordinated to the central supervision of the plenipotentiary for special missions. Each purchasing organization is only authorized for a quite difinite kind of goods. The engagement of a number of purchasing organizations which will on first sight appear comparatively high was necessary, because the black marketeers by experience want to sell for the most part only to certain departments, with which they have cooperated before and because they refuse to cooperate with other buyers whom they did not know previously; it had to be taken care, however, that none of the existing sources dried up. Participation has been prohibited to all other departments by corresponding orders of the central authorities in the Reich and the military commanders of the Reich commissioner.
The financing of purchases and the transportation of the goods will be taken care of by the Reich-owned Roges Ltd.; the goods are then distributed according to the urgency of the individual consumers in agreement with the instructions of the centralized planning or the departments charged by the centralized planning. It is the additional task of the Roges Ltd., to level the purchasing prices down to the German internal price; lower prices, however, will not be granted for deliveries to the armed forces, authorized and-in case of investment goods-to big plants. The adherence to the directives is guaranteed by the fact that the purchasing organizations at each offer may only then perform the transaction, if the supervising department has given its permission through an expert. The experts for their part will make their decision on the basis of the price and quality limits given by the plenipotentiary for special missions or the Reich departments.
3. Scope of the previously made purchases (up to 30/11/1942).
a. Since the beginning of the action (that is since purchases have been directed centralized by the military commander or the Reich commissar with centralized distribution of goods in the Reich).
Up till now since the beginning of the action purchases have been made in the total amount of RM 1,107,792,818.64, of whichin France RM 929,100,000.00
Payment takes place in France from the funds for occupation, in the other countries through clearing.
In the following is a statement of the quantities involved:
66,202 tons to the value of RM 273,078,287.00 of which there are
a. non-ferrous metals 58,742 tons, in particular copper and copper containing material (34,000 tons), lead and lead alloys (14,500 tons), furthermore (in the succession of their quantity) zinc, aluminum, tin, nickel, magnesium, antimony maganese ore;
b. material containing iron (tools, junk, etc.) 7,460 tons.
To the total value of RM 439,040,000.00, of which there are 22,672,000 pieces of linen, suits (particularly workers' clothing), overcoats, etc., 5,488,000 kg yarn and miscellaneous, 40,642,000 m cloth and ribbons, 10,072,000 pairs of gloves, suspenders, etc.
3. Leather, skins, and hides:
To the total value of RM 120,754,000.00, of which there are 5,053,000 kg raw hides, 3,390,000 square feet of finished leather, 1,783,000 pieces of hides, chamois, etc., 801,000 pairs of shoes, and 694,000 kg leather for soles and other shoe soling articles.Furthermore was bought:
The factors leading to excessive raising of prices of essential goods are at the present time the following:France Belgium The Netherlands
Since beginning of the action the following items were bought in France-against payment from occupation funds:Metals RM 248,000,000.00
Since beginning of the action the following items were bought in Belgium-against payment by clearing:Metals RM 13,784,000.00
Since beginning of the action the following items were bought in the Netherlands-against payment through normal bank transactions:Non-ferrous metals RM 6,706,744.00
In Serbia was bought against payment through clearing:
Non-Ferrous metals in the amount of RM 1,125,727.00
The action began here only in the month of November. Up to date the goods charged to the receivers amounted to a total of RM 86,084,910.06
The reasons why, at a total delivery of RM 1,107,792,819.00 no larger quantities could be completely wound up, are various (aggravation of the winding up through the procedure in fixing the prices, difficulties in transportation, lack of personnel). The Plenipotentiary for special missions has instigated measures, in order to accelerate the wind-up in the future.
b. Since the beginning of the activity by the plenipotentiary for special missions, on the 1/7/1942, the following was bought (up to 30/11/1942):Altogether for RM 840,382,893.00
The figures mentioned above comprise roughly about the same period of time (1/7/ - 30/11, i.e., five months) as the purchasing action of the military commander or the Reichs Commissar before commissioning of the plenipotentiary for special missions (in France 6 months, in Belgium 2 months, in the Netherlands 7 months); the figures are however several times higher (RM 840,382,893.00-in contrast to RM 267,409,926.00). This proves more than anything else that and to what degree, the concentration of purchases on the black market through the organization of the plenipotentiary for special missions and the placing of the purchased goods at the disposal of the total planning of the Reich succeeded.
III. The further development.
There is not any doubt that the black market as such from the viewpoint of political economy is extremely undesirable and that therefore everything has to be attempted to bring it to an end. In this respect it is also necessary that the German purchasing activity be stopped as soon as possible. But on the other hand, as has already been explained above in detail, the delivery of war important raw materials and finished products cannot be refrained from. The plenipotentiary for special missions has therefore made his own suggestions to the departments involved to the effect the purchasing activity be abandoned by degrees if the black market is suppressed by corresponding measures; in this respect it must be certain however, that the quantities of goods which flowed up to date to the black market will now go into the "white" production and into normal trade. Naturally, however, repressive measures have to precede this; only then can the gradual abandoning of the purchasing activity take place in order to impair the total influx of goods as little as possible.
In examining the measures to be taken for the fight against it, a distinction must be made between the sources, from which the black market is fed. First, there are the concealed stores established for most varied reasons whose sale will bring a one time flow of goods. Second, the black market is fed by continuous illegal production. It is certain that with continued duration of the war the second mentioned source will gain more and more in importance; therefore special attention has to be paid to it.
The illegal production has its cause-aside from the general lure of higher prices-in the fact the price divergence between raw materials and finished products has partly become so great that it cannot be bridged any more within the framework of normal production without endangering the solvency of the enterprise. Often the capacity of the enterprise is exploited only incompletely so that the entrepreneur, even if it is only in order to avoid a shut-down, turns to procurement of raw materials illegally in order to produce beyond his quota, that is, illegally. Previously the purchases in unoccupied France which were sent on special routes into the occupied territory, formed a third and considerable source. It remains to be seen, whether it is now possible to supervise production in the up to now unoccupied part of France on a stricter basis so that, here also, the fight against the black market can be initiated.
According to the conception prevailing here, the following measures for the removal of the black market would have to be effected:
1. Enlargement of the price supervision.-As an increase in personnel of the German departments entrusted with the supervision does not or only at a restricted scale seem possible, the administrative authorities of the individual state have to be constrained to show more activity.
2. The enactment of severer penalties for violations against measures of economic management taken in accordance with the German example because only then can the lack of discipline in the civilian population resulting from their individualistic and liberalistic attitude be removed. A supervision of the verdicts of the penal authorities of the individual states seems to be recommendable.
3. The announcement of awards for reporting violations against measures of economic management amounting to a not too small percentage of the value of the objects confiscated on the basis of the report.
4. Engagement of spies and agents provocateurs.
Besides for the prevention of illegal production:
5. Shut down of all plants which are not manufacturing for war purposes.
6. Stricter shut-downs or merger of plants whose capacity is exploited immediately only.
7. Stronger supervision of the production in factories.
8. Stricter scrutiny in the allotment of raw materials for the distribution of orders.
9. A price policy which gives to the enterprises sufficient prices and guarantees them the existence.
In order to create for the purchasing organizations of the plenipotentiary for special missions the basis for purchasing activity on the black-market in the face of the administrative authorities of the individual state in the occupied territories, the plenipotentiary for special missions has in Belgium and in the Netherlands effected a "decree on the clarification of unexplained goods" or a "general decree". Hereby the supervising departments and their purchasing organizations were given simultaneously the possibility of approaching through purchases of goods the source of error in management and control. In accordance with it a suggestion was made by the plenipotentiary for special missions also to Ambassador Hemmen for France, which will result in the issue of such a decree for France also in cooperation with the military commander.
Most important and promising of success for the beginning appears the measure outlined in 2 whereby the initial effort should be made toward commerce and there again first toward retail business. As soon as a number of draconic penalties has occurred, the retail dealers will in their own interest refrain from buying excessively priced merchandise from the wholesalers and manufacturers. The latter face then only the organization of the plenipotentiary for special missions; then it could be started by degrees to let the illegal producers crack up. The plenipotentiary for special missions has in this respect already performed certain preliminary work by directing part of the purchasing organizations to try to approach the manufacturers by eliminating of the black market traders.
The repressive measures mentioned above-particularly under 1 and 2-have to be performed in close cooperation with the individual state authorities; it is recommendable that as soon as possible proper measures be taken on the part of the German occupation authorities. The measures have to be accompanied by purposeful propaganda of press and radio (branding the black market as a crime against one's own people); in order to build psychologically foundation for the strict measures with the population and to rouse it to cooperation.
Further, French and Belgium government - and economic circles-among others also the French chief of government-have lately found it necessary to complain about the organized German purchasing activity. In the face of such representations-aside from various other arguments-it should be pointed out that also on the part of Germany the greatest interest exists in the disappearance of the black market, but its existence is, in the main, the fault of the government authorities themselves, through their incapability in the supervision of prices and their laxity in penal prosecution, whereby, lack of discipline is bred within their own population.
B. Providing of fort installations and machines from shut-down plants.
I. Harbor installations.
A large amount of harbor equipment exists in the occupied western territories, which at the present time is not or is insufficiently used. On the other hand, in the eastern territories as well as partly in the Reich there exists an urgent need for such harbor installations. The plenipotentiary for special missions has therefore received the directive to seize these idle potentialities, in agreement with the departments involved. The determination of the objects to be shipped is up to the Reich commissar for navigation or those needing the goods after confiscation by the responsible navy departments, the plenipotentiary for special missions effect the financial settlement and puts the objects for installation at the disposal of those needing them. So far installations of that kind could already be provided for Oslo and for Hamburg; further transactions are in the process of being executed.
Another task of the plenipotentiary for special missions is the seizure of machines from closed down plants. It is certain that large potentialities, particularly in machine-tools which are badly needed at home for the armament productions, are at the present time still idle. In agreement with the plenipotentiary for special missions, the military commander and the plenipotentiary for the production of machines a so-called "arbitration offices for machines" is anticipated in Belgium and the Netherlands. One of the main difficulties in this field lies in the overcoming of the resistance of both the owner of the plants involved and the individual state authorities in the occupied territories. Here the occupational authorities will have to employ all their initiative in order to break this resistance.
At the end of August 1942 the plenipotentiary for special missions received a further special task, i.e., the providing of Christmas presents for the German people. Initially the action was calculated to amount to RM 300,000,000 (internal price). This task was undertaken immediately with all possible vigor, though it could be foreseen that providing and transportation of such quantities of goods in the comparatively short time available until Christmas could hardly be achieved; as the providing should if possible take place in the normal way-by payment through clearing also in France-and not on the black market, an organization had first to be created in order to master this task.
Actually it was possible to provide goods to the value of approximately RM 244,000,000 (purchase price) up to the 20 December 1942. But on account of the difficulties of transportation occurring in conjunction with the political events in France as well as the procedure necessary for fixing the prices and other reasons, it was impossible to bring all of these goods to Germany and to make them available for sale on time. 2,306 box-cars with 11,138,229 kg and further by ship 6,335 bales of goods with over 100,000 kg arrived in Germany. In the first place they comprise cosmetics, toys and in general gift-articles. Distribution was primarily made in the bomb-damaged regions as well as in the big cities Berlin, Vienna, Hamburg, Breslau, Koeningsberg and in the industrial region of Waldenburg and Upper Selisia. A conclusive report in the Christmas-action will be presented in the course of the month of February. If an identical action should be contemplated in the year of 1943 on the basis of experiences made it would have to be started in the course of the month of March.
Recently a report has been made to the commissioner for the four-year plan on the other fields of activity of the plenipotentiary for special missions insofar as the providing of additional shipping space for war important purposes is concerned.
A report on the special imports by way of blockade running is anticipated.
On the orders issued recently
a. in the field of the so-called "commodity-arbitrage"
b. the economic use made of enemy property, a report shall be rendered at opportune time.Signed: J. Veltjens
Nazi Conspiracy and Aggression Volume IV
Office of the United States Chief Counsel for Prosecution of Axis Criminality
Washington, DC : United States Government Printing Office, 1946