In December 1941, the character of World War II was irrevocably changed by the German defeat at the Battle of Moscow. Up to this point, Germany had been able to win each of its individual wars in a single campaign, using the Heer's military experience to defeat Germany's enemies one by one and a fixed supply of manpower and military materiel used. The Soviet Union managed to weather the German storm, however, and although its pre-war army had been destroyed, it raised new armies and divisions in time to halt the German advance outside the capital, necessitating a second campaign. 🇧🇷 This fact changed the nature of warfare from a single military operation to a series of campaigns using national economic output to outfit and sustain multiple operations over a period of years. From that moment on, the degree of mobilization of a country's economy was an important factor in winning or losing the war.
Which begs the question: what was the relative size of the German and Soviet economies? Eventually, Germany was able to draw on the resources of an occupied Europe, while the USSR lost vast territories, some 60-80 million people and 40% of its economic base. In contrast, every third "German" soldier who fought on the Eastern Front was not a German citizen.
In 1938 the two economies were quite similar in size, although Germany had a population of 67 million [Maddison] and the USSR 198 million. Since then, Germany has occupied Czechoslovakia, Poland, France, Belgium, the Netherlands, Norway, Denmark, much of the Balkans and Greece, and has maintained trade relations with Switzerland, Sweden, Finland, Italy, Romania, Bulgaria and Turkey. In addition, since June, Germany has occupied the Baltic states, Belarus, most of Ukraine and much of western Russia. To complicate calculations, the empire had grown with the annexations of Austria, Alsace-Lorraine, Luxembourg, Sudetenland, Danzig-West Prussia, and Wartegau.
The most up-to-date estimates I can find are given in Table 1, which shows Germany's gross national product (GNP) and the contribution of the various occupied territories. What this system lacks is international trade and some of the annexed territories have relatively small contributions.
The scheme can be presented as in Figure 1. As seen here, the occupation of most of continental Europe contributed between 10% and 15% to the German economy in each year of the war. It is estimated that the amount gained from direct looting during the course of the war was 1 billion RM, with the largest gain coming from the forced labor of the population in the occupied countries.
To put these estimates into context, it would be best to understand the history behind them.
In March 1944, the Reich Ministry of Finance announced at a press conference that during the war Germany had achieved a trade balance with both its trading partners and the occupied countries [Hunscha 1]. The doctor. Kurt Hunscha, head of the economic department of the Dresdner Bank and member of the Reichsbank [Hunscha 2], further processed these figures towards the end of the war and they appear in the trial files against Albert Speer in Nuremberg. , where the Defense Council tried to downplay the German occupation policy [Nuremberg].
These figures achieved quite a long acceptance when they appeared in 1999 in the English edition of the Military History Research Office (MGFA) in the Official German War History Volume V/II Table I.II.5 p.223 [MGFA 2]. "Germany and the Second World War" Volume 5/II as seen here:
and again in "The Economic Consequences of the War West Germany's Growth Miracle after 1945" by Tamás Vonyó, Cambridge University Press 2018 as Table 4.1 p.154
This would yield the net trade numbers shown below.
However, this seems impressive when compared to the total German GDP which was RM 128,000,000,000 in 1942, even the contribution of Western Europe is 1% and becomes insignificant. Modern commentators have pointed out that there are three main flaws in these figures: they use fixed exchange rates set at rates favorable to the occupiers, that Wehrmacht trade was tax-exempt and therefore unrecorded, and that much of the occupation's traffic never passed through Germany , France, ran companies invaded. Concrete for the Atlantic Wall, or Polish companies supplying munitions to the Eastern Front, or Russian farmers feeding the Eastern Army, and again it's not covered by those numbers.
Modern estimates of the occupied countries' contribution to the German war effort
A decade after Hunscha's research came to light, researchers in individual country studies, such as Alexander Dallin for Russia, have shown that the occupation yielded much larger amounts than shown in the tables above. Alan Milward's "Blitzkrieg Theory" and later "Inefficiency Theory" attempted to explain the German economy and in particular its characteristic lack of early mobilization of the German population. This indicated wholesale exploitation of the occupied countries at the expense of internal mobilization, but it was difficult to formulate solid estimates.
In 1986, Christophe Buchheim increased the estimate of the occupied countries' contribution to 80 million Reichsmarks [Buchheim] over the total Hunscha imports of 36 billion Reichsmarks; However, in 1988 Harrison gave the Occupied Territories' contribution as 1/6 of the total German war effort [Harrison 2], based on Maddison's earlier work. This estimate generally holds to this day with additional work, mainly to add detail to the image.
This estimate received additional weight in 2006 with the publication of Adam Tooze's book on German economics, The Wages of Destruction, which proposed a replacement theory for the earlier theories of blitzkrieg and inefficiency. Tooze posited that the need to export and earn foreign exchange to buy strategic imports explained the German economy's lack of early mobilization. Similarly, rearmament proceeded sequentially, with initial spending on the Heer to fight the Continental Wars, followed by spending on the Luftwaffe and Kriegsmarine to fight the United States. This book didn't directly address the contribution of the Occupied Territories, but it fit the bigger picture [Tooze].
Six years later, in 2012, Klemann & Kudryashov's book Occupied Economies: An Economic History of Nazi-Occupied Europe, 1939-1945 provided more detail on individual countries' contributions to the German war effort [Klemann] and a detailed account of him Post that is very close to the image I gave at the beginning of this article. While other work by Scherner and others complemented and expanded this view, he finally concluded in 2016 with Scherner & White's Paying for Hitler's War, which, while not making a blanket conclusion, added much information. about individual countries.
From this perspective, the German economy earned around RM 1 billion in taxes and compulsory indemnity loans [Scherner Paying p43] and the occupied territories contributed an additional 20% to their national GDP annually. The most recent estimates appear to be Kilian's 2017 work, which I used in my spreadsheet at the beginning of this article.
Contribution Scale of the Occupied Territories
To understand Germany's effectiveness in harnessing the economies of the occupied territories, it is necessary to understand their relative size before the war and then adjust that potential for various external factors beyond Germany's control.
At the outbreak of war in 1939 Germany had a population of 69 million with an economic output of 7,557 international GDP per capita [Madisson][Harrison 1]. In 1940 Germany conquers Western Europe, adding France, Belgium, Holland, Denmark and Norway, which together have a population of 66 million with a per capita GDP of around 6,000 international dollars. Adding in the earlier conquests of Czechoslovakia and Poland in 1939, the population is 112 million, or a little less than double the German population; However, these countries have a much lower per capita GDP of less than 3,000, making the potential GDP of the German occupied area roughly equal to that of Germany. This is due to the idea of classical economic theory that countries have a basic economic activity aimed at feeding, clothing and housing their citizens and only the fraction above that is freely available for activities like war. Rich countries have a larger proportion of their economies above this baseline and can therefore generate a greater level of potential military activity.
The potential of the occupied territories is not being realized due to several factors:
First, the moment these countries become occupied states, they immediately lose access to their colonies, international trade, and international finance. For example, local trade between France and Spain continues, but British denial of sea lanes prevents access to the rest of the world. This does not recover over time and the fracture was significant, as the French example shows.
Second, due to war damage, population movements, and their own mobilization efforts, these economies suffer from an element of wartime destruction that will recover over time. An example of this is the disruption of coal mining in France, which paralyzed transport and affected the entire French economy.
Third, there is another round of lost potential due to the active and passive resistance of the occupied state, causing extraction problems for the occupier. This situation will tend to worsen over time.
Finally, there is the efficiency of squatter management in managing the squatted economy and mitigating the above factors to some extent, and this obviously varies from country to country. An element of German inefficiency comes from its own organization and structures, but another element comes from the fact that it is at war and cannot devote manpower and resources to running the occupied state and can rely on local personnel.
So what could Germany expect to get out of any economy when the national economy normally allocates 60% of its GDP to military efforts?
Given that these factors would have reduced the potential economic activity of the occupied territories well below pre-war levels, and that from this perspective the rates of depletion would have been well below the German maximum of 60%, given that 20% of Germany's originating from occupied countries seems quite successful, especially since almost all of these countries had a lower pre-war GDP per capita than Germany.
Further evidence supporting this is discussed in Klemann & Kudryashov on attempts in 1941 and 1942 to get French and Dutch companies to supply the Wehrmacht. These attempts failed as local inventories of materials and spare parts ran out as the broader economies could not provide transportation or materials and subcontractors could not supply the semi-finished components. This made it easier for Germany to move the machinery and labor to Germany rather than trying to restart the occupied economies.
With an idea of where our numbers are coming from, it is possible to convert Reichsmarks to international dollars (for simplicity I used the exchange rate of RM2.5 = $1 in 1940 and then US CPI for 1985 prices, seehttps://liberalarts.oregonstate.edu/spp/polisci/research/inflation-conversion-factors-convert-dollars-1774-estimated-2024-dollars-recent-year), which can then be compared in Table 5.17 with the Soviet figures from Harrison's "Accounting for War" [Harrison 3].
This chart is essentially a copy of the chart at the top of this article, which shows Germany's gross national product in gray with the occupied territories' contribution shown as cumulative lines stacked on top. USSR figures are shown on the red dotted line and for comparison and verification I have added Harrison's original 1996 estimate of German GNP as the blue dotted line.
This shows that the economies of Germany and the USSR were of comparable size in 1939 and 1940; However, in 1941/42 the USSR's economy shrank by a third while Germany's economy grew as production from Western Europe accelerated, and by 1942 Germany had double the GDP. compared to the USSR. In the remaining years of the war, the USSR slowly closes this gap, despite the growth of the German economy, as the rate of mining in occupied Europe increases after 1942.
As shown, the latest figures on the German economy and the contribution of occupied Europe show a slightly larger German economy than 1996 estimates, and the occupied component has remained essentially the same since 2012. However, ongoing research has provided a more detailed estimate than previously, with a higher level of detail for individual countries.
The author thanks Stiltzkin and TheMarcksPlan of the Axis History Forum for providing the sources and information used to write this article. See for detailshttps://forum.axishistory.com/viewtopic.php?f=66&t=245879
Christopher Buchheim. The countries occupied in the service of the German war economy during World War II. A report from the Research Center for Defense Economics. Quarterly Journals of Contemporary History 5 - 1https://www.ifz-uenchen.de/heftarchiv/1986_1_5_buchheim.pdf
Goldsmith, R. W., The Power of Victory: Ammunition Production in World War II, Military Affairs, 10 (1946), S. 69-80https://www.jstor.org/stable/1983105?seq=1
Harrison, Mark. The Economy of World War II: Six Great Powers in International Comparison. Cambridge University Press 1997
Harrison, Mark. Resource Mobilization for World War II: US, UK, USSR and Germany, 1938-1945. Economic History Review, 41:2 (1988), pp. 171-192.See AlsoCoronavirus boosts wartime economic thinkingEconomic Recovery: Lessons from the Post-World War II EraThe “war” against COVID-19: what real wars teach us (and don't) about the economic impact of the pandemic.Assessment of the wartime economy of Russia(Video) How Wars are Won & Lost - A Simple Model
Harrison, Mark. War Accounts: Soviet Production, Employment, and Defense Burdens, 1940-1945. Cambridge University Press 1966.
Hunscha, Dr. Kurt. Federal Archives. R 2501/6434 1941. Note to Dr. Kurt Hunscha, Head of the Economics Department at Dresdner Bank, gave a lecture on current issues in international monetary policy Archiv 21a, 75 Berlin Lechtfeld
Hunscha, Dr. Kurt. Federal Archives. R3/1626a Vol. 2 (1936-1944) July 1948 Volume number 2 contains, among other things: “German economic and financial relations with the occupied countries of continental Europe in the period from 1940 to 1944 with comparisons to German foreign trade before the war from 1936 to 1939 .- Copy of Dr. Kurt Hunscha to submit Albert Speer to the Nuremberg trials.
Killian, Jurgen. War at the expense of others: the Reich Treasury and the economic mobilization of Europe for Hitler's war. p.386 Table 60. Walter de Gruyter. Berlin 2017.
Klemann, Hein and Kudryashov, Sergei. Occupied Economies: An Economic History of Nazi-Occupied Europe, 1939-1945. BergLondon 2012
Maddison, Angus: World Population, GDP and GDP Per Capita Statistics, AD 1-2008http://www.ggdc.net/maddison/oriindex.htm
MGFA. The German Reich and the Second World War. Volume 5/1 Organization and mobilization of the German sphere of influence. German publisher Stuggart 1988
MGFA. The German Reich and the Second World War. Volume 5/2: 1942-1944/45. Organization and mobilization of the German sphere of influence. War administration, economy and human resources. German publisher Stuggart 1999.
Milward, Alan. War, Economy and Society. London: Allen Lane, 1977
Nuremberg Trial Records - Red Series: Volume VIII Index Documents Economic Series p. 1029 to p. 1051.https://www.loc.gov/rr/frd/Military_Law/pdf/NT_Nazi_Vol-VIII.pdf
Records of the Nuremberg Trial - Red Series: Volume VII, Page 269, Document EC-86 Country-by-Country Accounting for Occupancy Costshttps://www.loc.gov/rr/frd/Military_Law/pdf/NT_Nazi_Vol-VII.pdf
Ritschl, Albrecht and Spoerer, Mark. The gross national product in Germany according to official statistics on national income and national product 1901-1995. Yearbook of Economic History / Yearbook of Economic History. 38-2 p. 27 1997(Video) The Complex Logistics of Keeping Tanks Fueled (U.S. Army)
Scherner, Jonas & White, Eugene N. Paying for Hitler's War: The Consequences of Nazi Hegemony for Europe. Cambridge University Press 2016.
Scherner, Jonas. The increase in German imports during World War II. New results on the structure of exploitation in occupied Europe based on a reassessment of the German trade balance. Jornal Histórico 294-1 pp. 79-113. 2002
Tooz, Adam. The Wage of Destruction. Cambridge University Press 2006 see additional datahttps://web.archive.org/web/20060926104940/http://www.hist.cam.ac.uk/academic_staff/further_details/wages-of-destruction.html
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