Hitler's Beneficiaries: Plunder, Racial War, and the Nazi Welfare State (35 page)

By early 1942, the Slovakian government had sold off 9,987 out of a total of just over 12,000 registered Jewish businesses.
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A further 1,910 had been Aryanized. The Slovakian middle classes profited not only from this direct redistribution of wealth but also from the disappearance of competition. For their part, Slovakian entrepreneurs derived considerable advantage from the new practice of awarding business contracts along racial lines.
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The Slovakian Statistics Office and the Jewish Central Union, an organization created by the Slovakian state, kept tabs on these criminal undertakings. According to statistics compiled by Anton Vasek, the anti-Semitic head of the Jewish division within the Interior Ministry, Jewish assets in Slovakia amounted to some 4.5 billion crowns, or around 387 million reichsmarks. Estimates made by the Statistics Office and the Central Union were lower, ranging from 2.5 to 3 billion crowns.
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But even the conservative estimates must have represented a huge temptation for the Slovakian finance minister in Bratislava, considering that the entire regular Slovakian national budget in 1941 was just over 3 billion crowns, some 500 million of which went toward military expenditures.
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When Slovakia entered the war against the Soviet Union in late July 1941, the government immediately encountered financial problems. Historian Ladislav Lipscher describes how those problems were addressed: “At a meeting on August 25, called by the head of the government and including all major government representatives, serious concerns were raised about deteriorating state finances in the aftermath of Slovakia’s entry into the war against the Soviet Union. The finance minister reported that the deficit in the proposed budget would reach almost 600 million crowns by the end of 1941. To curb inflation, it was decided to raise needed revenues—500 million crowns—by introducing a 15 percent levy on Jewish assets.”

A few days later, on September 9, 1941, the Slovakian government passed a law instituting the levy. The move raised the compulsory contribution from 15 to 20 percent of Jewish assets and, as Germany had done in 1938–39, made the country’s Jewish population collectively responsible for payment. The official justification for the law was that it would have been “grotesquely unfair” to burden Slovakia’s n-Jewish citizens with 500 million crowns in expenses since they were in no way responsible for the war. (In previously setting the levy at 15 percent to raise 500 million crowns, the Finance Ministry estimated the value of Jewish assets at 3.3 billion crowns.) According to Lipscher, the levy failed to achieve its desired effect because Slovakian Jews no longer possessed the necessary resources to pay the fine. In the end, however, it was easily paid off by transferring frozen but not yet confiscated Jewish savings accounts, as well as stocks and bonds, to the national treasury.
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In his 1942 annual report, the governor of the Slovakian National Bank declared that because of German demands for contributions to the war the amount of money in circulation had dramatically increased, to the detriment of the national economy. But he added that the problem would have been far worse “had the Slovakian National Bank not taken neutralizing measures.”
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Foremost among those measures was the dispossession of Slovakian Jews. The sale of their belongings brought revenues into the treasury, allowing it temporarily to check the skyrocketing amount of currency in circulation.

Because Slovakia suffered from a housing shortage, 11,518 Jews in Bratislava were issued notices of evacuation in the winter of 1941–42. By March 1942, 6,720 people had been forced to leave the city and move to internment camps. On March 26, deportations to Auschwitz and Majdanek commenced. Within the space of thirteen weeks, the Slovakian government deported 53,000 of the country’s 89,000 Jews. On May 25, 1942, the state announced a law authorizing such deportations and nationalizing Jewish assets. The deportations were later discontinued after intervention by the Catholic Church.

Slovakia was required to pay Germany a fee of 500 reichsmarks for every Jew deported, with the total coming to 26.1 million marks. The sum was included in annual German-Slovakian clearing transactions and increased German spending power and credit flexibility. The Finance Ministry placed the money “at the disposal of the Reich SS leader.”
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According to Slovakian estimates, Germany forcibly extracted some 7 billion crowns in goods and services from its ally during the course of World War II.
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Almost 40 percent of this sum came from the proceeds of the Aryanization of Jewish assets. To curb inflation caused by the war against the Soviet Union and by demands from Germany, the Slovakian National Bank propped up the crown, at least temporarily, by liquidating those assets. But that wasn’t enough.
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As early as 1942, the Reich had to provide the bank with a million reichsmarks in confiscated gold and currency. By 1944, the subsidy had grown to 10 million reichsmarks. The Reich also “placed gemstones and diamonds,” some of which had been seized from Dutch Jews, at the bank’s disposal “for absorption purposes.
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The Reich proceeded in similar fashion with the independent state of Croatia. On April 10, 1941, as the Wehrmacht occupied Zagreb, the Nazi-supported Ustaše movement proclaimed the birth of the new nation, which included Bosnia-Herzegovina. Four days later, the newly formed Croatian government froze bank accounts and deposits belonging to the country’s 30,000 Jews. Sixteen days after that, a special law was issued requiring Croatia’s Jewish minority to register their property and compile detailed lists of assets. A mandatory “Jewish conbution to the needs of the state” quickly followed.
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Most of Croatia’s Jews were sent to concentration camps within the country, where they were killed. A small number went underground or were deported to Auschwitz in the summer of 1942. It was only after that, on October 30, 1942, that the Ustaše government officially confiscated Jewish assets.
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The 1943 Croatian state budget recorded a deficit of 1.25 billion kuna—or 62.5 million reichsmarks. Most state expenditures, according to a 1943 report in the
Frankfurter Zeitung
, were to be covered by “loans as well as revenues from nationalized Jewish assets, which are estimated at some 1.25 billion.”
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A small deficit remained, since a portion of those revenues was reserved for Germany, which charged a fee of 30 reichsmarks for each person—from a total of 4,927—deported to Auschwitz.
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Even before the Axis powers launched their all-out offensive against Greece and Yugoslavia in 1941, German economists were in Bulgaria advising that country’s government. From January 23 to February 1, 1941, a top-secret German commission—led by Hitler’s special envoy Hermann Neubacher—visited the capital, Sofia, to help prepare the financial ground for the impending war.
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On the final day of consultations, Germany and Bulgaria signed an agreement under which the Wehrmacht received what was officially described as a loan of 500 million leva, or around 15.6 million reichsmarks. In addition, Bulgaria agreed to build up its armed forces.
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By March 3, the Reichsbank was already projecting that the loan would have to be increased to 900 million leva, a move that followed on March 25.
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In April, with the war under way against Greece and Yugoslavia, the Reich Credit Bank extracted a further 500 million leva from Bulgaria, bringing the total in loans to 1.4 billion leva.
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The next increase of 500 million came two months later, and this pattern continued until August 1944.
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As a member of the Axis, Bulgaria annexed parts of Thrace and Macedonia after the Wehrmacht’s victory over Greece and Yugoslavia in April and May 1941. As compensation for the Wehrmacht’s “assistance,” Bulgaria was required to assume responsibility for all past and future costs incurred by German forces within Bulgarian territory.

The Bulgarian government budget for 1940 amounted to 8.4 billion leva, an increase of 10 percent over the previous year. The additional expenditures were financed by a general tax hike, a onetime levy for “national security,” and “a significantly higher taxation of upper-income brackets and large capital reserves and sales.” In 1941, the budget grew a further 20 percent, reaching 10.1 billion leva. In parliamentary budget debates, Bulgarian finance minister Dobri Bozhilov justified the expenditures as a necessary response to the war in Europe and promised that “the less privileged segment” of the Bulgarian citizenry would not suffer as the government increased its revenues.
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The government’s actual expenditures in 1941 rose to 17 billion leva because of the annexation of Yugoslav and Greek territories The 1940 budget had been doubled without anything even approaching a corresponding growth in the Bulgarian economy. The government tried to rein in expenditures for 1942, but its efforts failed and a supplementary budget had to be introduced to meet the various demands coming from Germany. Berlin was now insisting on funds to supply German troops fighting in the newly annexed (“liberated”) territories, for the construction of roads and railways between Greece and the Reich for use by the Wehrmacht, and for noncompensated exports to Serbia, which was under German occupation. Applying the same system it had used in occupied countries, Germany reached a deal with the Bulgarian government forcing the national bank in Sofia to deliver, without compensation, all Wehrmacht RKK certificates in circulation to the local Reich Credit Bank. “That practice,” one official in Berlin noted, “is established and has proved itself effective in the past.”
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In addition, Bulgaria was forced to export food and tobacco products to the Reich. In contrast to the procedure in other countries, Germans “paid” for some of these goods—but in a form that was scarcely distinguishable from extortion. Starting in 1941, the Reich settled its clearing debts using war bonds, which were soon to be worthless. The president of the Association of People’s Banks in Sofia hypocritically described this form of grand larceny as “the intervention of the reichsmark for the financial solidity of the Bulgarian currency.” He proudly added that Bulgaria “was the first European country to make an important contribution to the creation of a single European currency.” In fact, the Bulgarian National Bank in Sofia received some 710 million reichsmarks in war bonds in the period before the summer of 1944.
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That was the nominal equivalent of the 22.4 billion leva Germany extorted from its tiny, economically weak ally.

The career of Dobri Bozhilov illustrates how compliant Bulgarian politicians were in granting the Reich’s wishes. In September 1942, the former finance minister became Bulgaria’s prime minister, a position he held until May 1944. On an official state visit he made to Hitler’s Wolfsschanze field headquarters in the fall of 1943, the Führer dictated a list of loans Bulgaria would have to offer—without any prospect of “comprehensive economic settlement”—to Germany “in the interest of the common struggle that is our fate.” As in Finland, Romania, and Hungary, Hitler invoked a vision of prosperity once the war had been won, promising to “give my friends everything they request” at that point.
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In truth, right up until the bitter final days of the war, the Germans merely took everything they could. Bozhilov’s acceding to their demands made things that much easier.

The agreement reached by Germany and Bulgaria prohibited members of the Wehrmacht from buying up goods while in transit through Bulgaria, but this prohibition was of no real significance. It wasn’t until January 6, 1944, after the military situation had taken a turn for the worse, that Bulgarian customs officials were allowed to inspect the baggage of German troops and the packages they sent through the military postal service. Bulgarian officials had repeatedly complained about “mass shopping sprees,” which had caused “shortages of goods, inflation, and, consequently, bitterness among the Bulgarian population toward German soldiers.”
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In 1942, the proposed Bulgarian budget included a special tax on Jewis wealth for the first time. It was projected to raise some 1.5 billion leva, in comparison with only 628 million to be taken in from increases in regular taxes.
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The anti-Semitic Law for the Protection of the Nation had already been introduced a year earlier, on January 21, 1941. With certain exceptions, Jews were henceforth considered foreigners, prohibited from various types of employment and required to register their entire assets with the Bulgarian National Bank. No sooner had registration been completed in June 1941 than the government decreed that “persons of Jewish background” would have to pay a onetime levy to the Bulgarian treasury. For people with assets of over 200,000 leva (or 6,000 reichsmarks) the rate was 20 percent; for assets of over 3 million leva, it was 25 percent. According to later official estimates, the resulting revenues were projected to top 1.8 billion leva.
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The state imposed other measures of economic discrimination against Jews. In the summer of 1941, it introduced the lev as the sole legal tender in the annexed parts of Macedonia and Thrace. The rate for Jewish residents exchanging drachmas or Yugoslavian dinars was set 30 to 50 percent lower than “for all other depositors.”
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While it was issuing such anti-Jewish legislation, Bulgaria also passed laws dispossessing Greeks who lived in the annexed territories.
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As it turned out, state revenues from the special tax levied on Bulgarian Jews in 1942 amounted to only 709 million leva, or around half of what was expected. In 1943, the government planned to take in an additional 400 million leva from the tax and more than 1.5 billion “from the sale of properties and other valuables.” The German envoy noted in his regular report on Bulgarian finances: “This is no doubt a matter of selling off real estate and securities confiscated from Jewish owners.” The assets in question came from Jewish residents of Macedonia and Thrace, who were deported in the spring of 1943.
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On March 2, 1942, anticipating what was to come, the government had decreed that the assets of emigrating Jews would fall to the state.
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As in Germany, the proceeds from this governmental larceny were recorded as “additional revenues.”