Economies under Occupation

The hegemony of Nazi Germany and Imperial Japan in World War II

Marcel Boldorf, Tetsuji Okazaki, Marcel Boldorf, Tetsuji Okazaki

• Publisher: Routledge
• Year: 2015
• ISBN:
  9781317506492
• Edition: 1
• Topic: Economics
• Subtopic: Economic History
• Index: Economics

Nazi Germany and Japan occupied huge areas at least for some period during World War II, and those territories became integral parts of their war economies. The book focuses on the policies of World War II aggressors in occupied countries.

The unbalanced economic and financial relations were defined by administrative control, the implementation of institutions and a variety of military exploitation strategies. Plundering, looting and requisitions were frequent aggressive acts, but beyond these interventions by force, specific institutions were created to gain control over the occupied economies as a whole. An appropriate institutional setting was also crucial to give incentives to the companies in the occupied countries to produce munitions for the aggressors. The book explains the main fields of war exploitation (organisation and control, war financing and workforce recruitment). It substantiates these aspects in case studies of occupied countries and gives examples of the business policy of multinational companies under war conditions. The book also provides an account of differences and similarities of the two occupation systems.

Economies under Occupation will interest researchers specialising in the history of economic thought as well as in economic theory and philosophy. It will also engage readers concerned with regional European and Japanese studies and imperial histories.

Introduction

Marcel Boldorf and Tetsuji Okazaki

In spring 1941, the German Wehrmacht prepared the attack on the Soviet Union, planning a war that should devastate the main ideological enemy in Eastern Europe.

At the same time, on 13 April 1941, the Japanese foreign minister Matsuoka travelled to Moscow in order to sign a neutrality pact with the Soviet government, thus ensuring the planned Japanese attack in the Southern Pacific.

This double decision documented that the German Reich and the allied Japanese Empire had different political and strategic aims. Their expansionist strategies directed to different areas, separating the two countries geographically and ideologically. The economic aims of creating a Greater Economic Sphere (Grosswirtschaftsraum) and a ‘Greater East Asian Co-Prosperity Sphere’ could clearly be distinguished from each other. This ‘separation of the world’ between the Germans and the Japanese culminated in 1942, when both empires were at the height of their power. However, conflictual points remained, such as the unsolved question of how to cope with British India. On 18 January 1942, Germany and Japan concluded a contract designating the 70th degree of Eastern length as a demarcation line between the two spheres of influence. The German Marine supervised with eagle eyes that the Japanese did respect the designated line. Moreover, the economic relations between the two powers remained rudimentary. While the German side complained that urgently needed raw materials such as rubber, quinine and tungsten were not delivered in the requested amounts, the Japanese side was disappointed at the limited supply of machinery, steel and chemicals and the like which were expected to be imported from Germany.

Although we can notice a clear separation of the two influence spheres and different modes of expansion and exploitation strategies, this book makes the attempt to compare the occupation regimes during World War II. As the literature is lacking in such Euro-Asian comparisons, the editors decided to arrange a section at the Paris International Business history conference, organised in 2012 by the European Business History Association and the Business History Society of Japan. Its title was ‘Economies under Occupation. The Hegemony of Nazi Germany and Imperial Japan in World War II’. Unfortunately, scholars are usually only working on one of the two fields. That is why the section, as well as this volume that derives from it, presents case studies written by experts. In the conclusion, the editors will try to conclude and make an attempt to compare the two war-based systems of exploitation.

As a framework for comparison, the editors proposed to the authors an outline for the case studies on occupied territories or on specific aspects of occupation. Each chapter on a country should provide a short presentation of the territorial impact of the occupation, the patterns and different stages of occupation and the impact of the local government or the administrative support of collaborating elites. In occupied territories, private property mostly prevailed, but the papers ought to have a closer look at what happened to the property rights. In order to control the occupied economy, institutions arranged by government organisations or semipublic corporations were introduced. They determined the entitlement of input factors such as raw materials, semifinished products or the workforce. Furthermore, a control on foreign trade was established, directing the flow of war goods to the aggressors’ economies as well as checking the imports of commodities from them. By controlling money supply through erecting the quasi-central bank for an occupation area or introducing military scrip, the occupiers monetised occupation costs and procurement costs. Sometimes a price-controlling scheme was established at the same time. In the course of occupation, companies from the aggressor countries took the opportunity to advance in the occupied territories, trying to gain influence in their respective branches. Capital flows were noticed, aiming at buying out allied industries.

The armed forces, however, drove forward, pillaging and plundering the local economies, extracting raw materials and foodstuffs needed for warfare. For the character of the occupation, it was important if this exploitation was imposed by rude military force or by using money, for instance military scrip, in order to pay the damaged companies. A closer look should also be taken at the labour relations: Was there an important transfer of forced workers, for instance prisoners of war? Were wages paid to these people, or were they victims of slave labour? Finally, the chapters should estimate the outcome of the occupation, evaluating foreign trade and the war development of GDP or specific branches relevant to the war.

Brief overview of the chapters

The first two chapters give an outline on the Nazi strategy to build up a Greater Economic Sphere and the Japanese attempt to create a ‘Greater East Asian Co-Prosperity Sphere’. The following overviews deliver a deeper insight into two systematic aspects of exploitation: the financing of occupation and the use of forced labour. For both regions of the world, a selection of countries had then to be made in order to reflect the varieties of occupation patterns. In Europe, France and Belgium represented the Western exploitation regime, which was quite similar to the economic control in Scandinavia, namely in Norway. The protectorate of Bohemia and Moravia was between this North- and West-European pattern and the devastation strategy which the Nazis applied for racial reasons in Eastern Europe. For the latter type, the General Government in Poland was chosen as a striking example.

On the Asian side, first the Japanese struggle to control parts of the Chinese economy is described. Japan already occupied a substantial part of China before World War II, including the north-eastern district (‘Manchuria’), and tried to develop industries to support the war economy. Besides China, Indonesia, Indochina, Burma and the Philippines are chosen for country studies, where different types of collaboration were introduced depending on the preoccupation status of the territories as European or American colonies.

The last section of the book presents the strategies of companies under the conditions of occupation. It enlarges our knowledge about the different types of occupation regimes, but at the same time, it reflects the behaviour of businessmen in a changing framework of regulations which the war economy provided.

I
The system of occupation

2 European economies under National Socialist rule

Marcel Boldorf

1. An outline of the National Socialist Greater economic sphere

During the Second World War, the German Reich as principal aggressor embarked on a continuous territorial expansion that lasted until 1942/43. The prewar di- plomatic successes of the annexation of Austria and North Bohemia (Sudetenland) were swiftly followed by a series of military victories in the western, northern and eastern parts of the Reich. The use of the term Blitzkrieg to describe this first period of the war has been rejected, not only from a strategic military point of view¹ but also with regard to the economic theory that was derived from it. The ideas that the initial military successes were achieved despite an inadequate expansion of economic potential and that the German economy was not fully mobilised have been refuted.² Richard Overy has shown that the level of consumption in the German Reich had already been reduced in the prewar years to facilitate a military buildup. German rates of consumption were lower than those in Great Britain, but the number of people working in the war industry as well as the percentage of aggregate output spent on armaments were higher. The military buildup was given priority long before 1939. Hitler had vehemently demanded complete economic mobilisation as soon as the war broke out and not in 1942 as is often suggested. Overy’s findings discredit the main premise of Alan Milward’s theory that Blitzkrieg was used to ensure that private household consumption would not be jeopardised.³ In addition, it has been shown that the expansion of an industrial foundation for a material-intensive war started much earlier than had been assumed. As early as 1936, more than half of industrial investment was poured into the armaments and autarky sector, and this percentage grew rapidly to more than 70 per cent immediately after the outbreak of war.⁴ Investment remained at this level, and a further increase in 1942 and 1943 is not apparent. In other words, there was no radical change between 1941 and 1942, although the demands faced by the armaments industry were dramatically altered when the Soviet Union was invaded in June 1941.⁵

In the context of continuing military success and advancement into Soviet territory, the German area of control expanded to its maximum size, as shown in Table 2.1. This is based on data provided by the Rüstungsministerium (Ministry of Munitions and Armaments) from 6 December 1943. In line with the peculiarities of NS logic, changes to the territorial borders brought about by the policy of Germanisation are included: Austria, the Sudetenland and the annexed Polish Reich districts (Wartheland, Danzig-West Prussia and Southern East Prussia) were already regarded as German territories. For National Socialists, the Greater German Reich (Großdeutschland) also included areas destined for annexation such as Lorraine (Moselle Departement), Alsace, Luxembourg, former Yugoslavian territories (Untersteiermark, Südkärnten and Oberkrain) and the District of Białystok, under the control of the Chefs der Zivilverwaltung (Heads of the Civil Administration) referred to as CdZ areas.

Table 2.1 Expansion of territory under German control up to and including 1943

		Area (in square kilometres)	Population (in thousands)
TOTAL		3,203,149	267,762
Greater German Reich (Großdeutschland)	German Reich/CdZ areas	680,872	94,630
	Protectorate of Bohemia and Moravia	48,902	7,536
Western sphere of control	France (without Alsace, Moselle and Nord/Pas-de-Calais)	524,050	39,303
	Belgium and Northern	29,280 +	8,238
	France	12,414
	The Netherlands	40,829	9,089
Northern sphere of control	Denmark	42,931	3,903
	Norway	322,599	2,968
Southern sphere of control	Italian Social Republic	167,600	30,000
	Serbia and Montenegro	58,733 +	4,900
		15,219
	Albania	27,538 +	1,106
		14,924
	Greece	129,880	6,736
Eastern sphere of control	General Government 142,207	16,963
	Ostland (Baltic/Belarus)	499,871	15,230
	The Ukraine (including the Crimea)	339,274	25,840
	Wirtschaftsinspektions-Gebiete (Zones of the economic inspections)	106,026	1,320

Sources: Länderschema für die Großraumplanung des Reichsministeriums für Rüstung und Kriegsproduktion vom 6. Dezember 1943, in: H. Umbreit, ‘Die deutsche Herrschaft in den besetzten Gebieten 1942–1945’, in B. Kroener et al. (eds.), Das Deutsche Reich und der Zweite Weltkrieg, vol. 5: Organisation und Mobilisierung des deutschen Machtbereichs, part 2: Kriegsverwaltung, Wirtschaft und personelle Ressourcen 1942–1944/45, Stuttgart: DVA, 1999, p. 7. Statistisches Jahrbuch Deutsches Reich 1941/42, pp. 7–8. Großdeutschland had a population of 102 million compared to 166 million in the occupied territories. The total strength of the German armed forces (including the Wehrmacht, air force, navy and Waffen SS) grew during the war as a result, for example, of the forced recruitment of young men to a maximum of 6.6 million individuals. The 2.5 million-strong reserve army, consisting of command and administrative authorities as well as recruits, reservists and g...

Table of contents

• Cover
• Title
• Copyright
• Contents
• List of Figures
• List of Tables
• Contributors
• 1 Introduction
• I The system of occupation
• II War financing
• III Exploiting the foreign labour force
• IV Incorporation of territories in the war economy
• V Multinationals acting in occupied economies
• Index