GERMAN BLACK MARKET OPERATION IN OCCUPIED FRANCE AND BELGIUM, 1940-1944 by Paul Sanders Dissertation submitted for the PhD degree, Faculty of History, University of Cambridge, October 1999 CONTENTS List of Tables and Figures ....................................................................................................................... 1 Glossary .................................................................................................................................................... 2 Accredited German Black Market Purchasing Agencies in France and Belgium (1942/43) ............. 4 INTRODUCTION .................................................................................................................................... 6 Blitzkrieg and War Production 14 Conquest and Exploitation 20 I. CONTEXTUALISATION: ILLEGAL ECONOMIES AND THE EXPLOITATION OF FRANCE AND BELGIUM DURING THE SECOND OCCUPATION ............................................................... 22 1. Aspects of Black Market Formation in France and Belgium 22 Scarcity and Excess Purchasing Power 22 The Pitfalls of Price and Wage Control 26 Steering the Economies: Resource Management and Contract Transfer 32 2. Dimensions of the Black Economy 39 The Agricultural Black Market 40 The Industrial Black Market 46 The Retail Sector 52 Investment and Speculation 54 3. The Indigenous Administrations 56 Economic Control 56 Tolerance, Impotence and Inner Stability 60 4. The Case of the Civilian Populations - The French Example 64 5. From Pillage to Purchase: German Black Market Rationale 74 Surplus Cash and Procurement 77 Fund Mismanagement 81 II CHRONOLOGY: POLICY AND PRACTICE OF GERMAN BLACK MARKET EXPLOITATION ..................................................................................................................................... 85 1. German Initiation to the Black Economy (1940/41) 85 2. The Technicalities of German Black Market Purchasing - The Belgian Example (1942/43) 98 The Specifics of the Brussels Militärverwaltung 98 First Centralization Attempts under the Military Administration 101 The Veltjens Purchasing Campaign 104 The Creation of a Black Market Surveillance Agency ( ÜWA ) 106 The Naujocks Section 108 Inter-German Dissension 109 4. The Ban on Officially-Backed Black Market Involvement (Spring 1943) 116 5. The Introduction of New Standards in Resource Management 130 6. German Black Market Operations after the Interdiction Order (1943/44) 138 7. The German Police and the Subterranean Universe in France (1943/44) 143 CONCLUSION ......................................................................................................................................... 156 Assessment of German Black Market Operations 156 System Theory 161 1 APPENDIX: Theoretical Treatise of Black Markets ............................................................................ 167 Tables and Figures ................................................................................................................................... 176 Archival Sources ...................................................................................................................................... 180 Printed and Audio-Visual Sources .......................................................................................................... 191 2 LIST OF TABLES AND FIGURES Table 1. French nominal and real national income (in billion ffrs), 1938-1943 Table 2. Percentage of the Belgian and German share in world metal production (1938) Table 3. French subventions (1943) Table 4. Repression of black market and price regulation offences in France, 1942-43 Table 5. Comparison of black market prices (RM/kg) in early 1943 Table 6. Mortality rate changes in France, 1941-43 Table 7. Food parcel distribution in France (1941) Table 8. Number and nature of economic offences uncovered by the French gendarmerie in March 1944 Table 9. German purchases on the black market in France (in billion ffrs) Table 10. Approximate comparison of German black market expenditure in France and Belgium, 1940-1944 Table 11. Early Abwehr purchases in France (up to February 1941) Table 12. German food demands (in 1,000 tons) against France, 1942/43 Table 13. 1943 German black market expenditure in France (in mill ffrs) Table 14. Shortlist of black market fund attribution in France in January 1943 (in mill ffrs) Table 15. Volume of ZAST contracts in Belgium and Northern France in 1943 (in mill RM) Table 16. RM volume of Veltjens purchases (up to 30-11-1942) Table 17. ROGES black market expenditure in Western Europe and Serbia, 1942-44 Table 18. Final accounts of ÜWA purchases in France and Belgium Figure 1. Closed circuit policy Figure 2. Occupation account balance (in RM) and 10-day fluctuation rate in France, 1940-1943 Figure 3. RKK redemption measured against occupation account balance in France, 1941-1943 Figure 4. Offences registered in the departments Pas-de-Calais and Nord, 1942/43 Figures 5 and 6. Seizures (in kg) in the departments Pas-de-Calais and Nord, 1942/43 3 GLOSSARY bfrs Belgian Francs BCRA Bureau Central de Renseignements et d'Action Free French Intelligence Service BdS Befehlshaber der Sicherheitspolizei und des SD Head of the SIPO-SD DBA Deutsches Beschaffungsamt (in Frankreich) German Procurement Office (in France) ffrs French Francs FK Feldkommandantur Field Commander (smallest unit in German military administration) GFP Geheime Feldpolizei Secret Field Police GESTAPO Geheime Staatspolizei Secret State Police (=section IV of SIPO-SD) HPA Handelspolitischer Ausschuss Commercial Policy Committee HSSPF Höherer SS- und Polizeifuehrer Higher Police and SS Leader KdS Kommandeur der SIPO-SD und des SD SIPO-SD Commander KRIPO Kriminalpolizei Criminal Investigations Branch (=section V of SIPO-SD) KVR Kriegsverwaltungsrat Military Adminstration Councillor MBF Militärbefehlshaber Military Governor MV Militärverwaltung Military Administration * Verwaltungsstab * Administrative Staff (comprising * Kommandostab 'Economic Section' and 'Administrative Section') * Military Staff MVBez Militärverwaltungsbezirk Military Administration District (Intermediate administrative unit of German military government in France) MVCh Militärverwaltungschef Head of Military Administration OB West Oberbefehlshaber West Military High Command West (Combat Troops) OFK Oberfeldkommandantur Higher Field Command (intermediate level administrative unit of German military government in Belgium and 4 Northern France) OKH Oberkommando des Heeres Army High Command OKVR Oberkriegsverwaltungsrat Higher Military Administration Councillor OKW Oberkommando der Wehrmacht Wehrmacht Supreme Command OT Organisation 'Todt' The German paramilitary labour organization RFSS Reichsfuehrer SS und Chef der Deutschen Reich SS Leader and Chief of the Polizei German Police (Heinrich Himmler's official title) RM Reichsmark RMRüKP Reichsministerium für Rüstung und Ministry of Arms and War Kriegsproduktion Production (before September 1943: Ministry of Armaments and Ammunitions) RKK Reichskreditkassenscheine Reich Credit Cashier Notes ROGES Rohstoffhandelsgesellschaft Commercial Raw Material Company RSHA Reichssicherheitshauptamt Reich Security Main Office (headed by Reinhard Heydrich, later Ernst Kaltenbrunner) SD Sicherheitsdienst des Reichsfuehrers SS RFSS Security Service SIPO Sicherheitspolizei Security Police (Merger of GESTAPO and KRIPO in 1936) ÜWA Überwachungsstelle Surveillance Service WIFO Wirtschaftliche Forschungsgesellschaft Economic Research Company WiRüAmt Wirtschaftsrüstungsamt Wehrmacht Economic Armements Office WVHA Wirtschafts-Verwaltungshauptamt SS Main Economic Administration Office (headed by Oswald Pohl) ZAM Zentrale Anmeldestelle Central Declaration Service ZAST Zentrale Auftragsstelle Central Contract Service 5 ACCREDITED GERMAN BLACK MARKET PURCHASING AGENCIES IN FRANCE AND BELGIUM (1942/43) 1 (i) Agencies present in both countries PIMETEX — Ministry of Arms and Ammunitions Procurement Agency . Non-precious metals, industrial diamonds, military engineering materials, machines, tools, foodstuffs. Seat in Paris : 33, avenue des Champs-Elysées PATEWI — Contract Transfer Service of the Reichsführer-SS (in Paris: SS-ESSEX) RFSS-Auftragsverlagerung Textiles, paper, household utensiles, grain seeds and spices. Seat in Paris: 4, rue du général Appert and 27, avenue Marceau Seat in Brussels: Avenue des Cascades Army Medical Supply Unit , Heeres-Sanitätspark 561 Brüssel, Heeres-Sanitätspark 541 Paris Medical equipment Seat in Paris: Fort de Vanves Army Vehicle District XXXII , Heereskraftfahrbezirk XXXII (in Paris: Zentrakraft West ) Automobile spare parts and accessories Seat in Paris: 14, rond-point des Champs-Elysées Seat in Brussels: 60, avenue des Nations (ii) Agencies present in Belgium only - General Goods Company - Purchasing agency of the military governor , Allgemeine Warengesellschaft (AWG-WABEKO, also 'Organisation Schmidt'). All types of goods (excluding those purchased by Pimetex, Heeres-Sanitätspark and Heereskraftfahrbezirk) - H-FUCHS - Bureau "West" of the Air Ministry. Air Force Textile Procurement Agency 1 Institut d'histoire du temps présent (IHTP), Paris. Copies d'extraits d'archives allemandes prises par l'armée américaine en France et en Belgique et conservées à Alexandrie, VA. (Catalogue de microfilms, Série A) Tome III, Bobine 181, Flash 1 : "Abschlussbericht der Überwachungsstelle beim Militärbefehlshaber in Belgien und Nordfrankreich über die legalisierte Ausschöpfung des schwarzen Marktes in Belgien