Buying Genocide, Part 2


In the first installment of this series, I discussed two major explanations for the extensive support the Nazis received from virtually the entire German population. One is the view that the majority of ordinary Germans supported the genocide of the Jews because of the historically peculiar breadth and depth of their pre-existing cultural anti-Semitism — it was a virulent “eliminationist” strain (to use Goldhagen’s term) expressing a desire to eliminate Jews from the world. The other view (elaborated forcefully by Groth and others) is that a better explanation lies in the formidable police state that oppressed the German people, as well as the cradle-to-grave propaganda machine that worked on German opinion ceaselessly.

Only a couple of years after Groth’s article, an eminent German historian published a fine book that explored a new theory for German support for the Nazi regime. This book — Aly’s Hitler’s Beneficiaries: Plunder, Racial War, and the Nazi Welfare State — “set the cat among the pigeons,” as Tom Palmerhas put it. Really, I would suggest to Palmer that the book set a lynx among the pigeons.

The systematic plunder of others (especially Jews) and the flow of this plunder into households of average Germans was precisely what made the populace generally compliant and content.

In his preface, Aly recounts that one of the inspirations for his book was Stuart Eizenstat’s efforts to recover damages from the German and Swiss governments for Jews who had their bank accounts and other assets stolen by the Nazis. His only worry about such efforts is that they reinforce a false narrative — that only German industrialists, financiers, and other elites of the German bourgeoisie were responsible for the Holocaust. This wrongly shifts the blame from the German people generally to a relatively few “bad actors.”

On the contrary, Aly’s research has discovered that the systematic plunder of others (especially of course the Jews) and the flow of this plunder into households of average Germans was precisely what made the populace generally compliant and content. The Nazis bought the support of the people. Aly strikes a personal note by saying that when he asked relatives who lived through the regime, they cheerfully admitted that they were well-provisioned with clothes, food, jewelry, shoes, and other goods by family members serving in the German military abroad, and that the antique furniture he had inherited was undoubtedly pelf purloined from Dutch Jews. Aly holds that “Hitler was able to maintain general morale by transforming Germany’s military offenses into an increasingly coordinated series of destructive raids aimed at plundering other peoples” (4). Here he quotes Göring’s cynical words, “If someone has to go hungry, let it be someone other than a German.”

More broadly, Aly adds, his work is aimed at helping to explain why the Germans so often tolerated “unprecedented crimes against humanity.” He is admirably accepting of a multicausal (or compound causal) approach. He rightly observes that the powerful racist and anti-Semitic ideology of the regime. But ideology is only a partial explanation, in the sense that traditional German anti-Semitism was no more virulent, nor German nationalism more intense, than those that other nations experienced antecedently — or contemporaneously. And while the regime relied on a powerful propaganda machine to promulgate its general ideology and specific policies, that is only a partial cause of the people’s tacit or overt support. Aly notes (5–6) that even in the medieval pogroms, religious hatred was conjoined with overt plunder, and gives several historical examples. He sums up this point by saying, “While anti-Semitism was a necessary precondition for the Nazi attack on European Jews, it was not a sufficient one. The material interests of millions of individuals first had to be brought together with anti-Semitic ideology before the great crime we now know as the Holocaust could take on its genocidal momentum” (6).

Survivors cheerfully admitted that they were well-provisioned with clothes, food, jewelry, shoes, and other goods by family members serving in the German military abroad.

But this raises the larger question: how could the “obviously deceitful, megalomaniacal, and criminal” Nazi ideology win over the majority of Germans? Here Aly lays out his plan of attack. Part I of his bookexplores the notion that the first reason Nazi ideology had broad appeal was that while it targeted Jews (and some other groups, such as the disabled and the Roma), it was broadly inclusive, redistributing much wealth to underprivileged Aryans. Part II explores an anomaly: while the Nazis waged an unprecedentedly costly war, they managed to arrange it so that their own soldiers and citizens were well fed. Aly examines the financial tricks the regime used to transfer the wealth of the conquered countries to its own armed forces and citizenry. Part III explores the systematic and historically unparalleled plundering of the Jews. Finally, Part IV explores how internal policies (leveling wealth) and external policies (looting the Jews and conquered people) worked to cement widespread popular support, which lasted to the end of its reign.

Aly’s analysis focuses on the socialistic (i.e., redistributionist) aspects of the regime’s policies, because the common explanations — involving a demonic but charismatic Führer, or some conspiratorial clique of racist ideologues, ultra-wealthy elites, high-ranking military, or major industrialists who seduced the German public — are all unsatisfactory. Such explanations shift blame away from the vast number of Germans who supported the regime. And these “explanations” — really, just excuses — cannot account for that popular support, which manifested itself as lack of widespread opposition to the regime and a refusal to accept blame for it after its demise.

Part I begins with an exploration of the National Socialist ideal state. The ideology was hypernationalistic in that it held that nations (in the broad sense of “peoples,” or extended ethnic groups) were unequal — the German people alone being superior. But the socialist side of the ideology was important as well — all “Aryan” Germans are equal, regardless of economic class. As I suggested in an essay on The Triumph of the Will, one of the earliest and most successful of the regime’s propaganda movies explicitly pushed the theme of German unity across class. The dream of a Volksstaat was one of a “socially just state” in Hitler’s phraseology, or what Aly rightly calls a “welfare state for Germans of the proper racial pedigree” (13).

Prior “explanations” of Nazism cannot account for its popular support, which manifested itself as lack of widespread opposition to the regime and a refusal to accept blame for it after its demise.

When Hitler achieved power in 1933, he was only 43, and most of the other high-level party members were in their late 20s or early 30s; even to the end of the war, the rank and file of the Party viewed it as an extension of the youth movement. Young people rallied to support the regime — for example, university coeds would volunteer to spend their summers staffing daycare centers in Poland so that the German “settlers” could harvest crops. As Aly notes, people in their 20s often desire independence and challenging work, but also the chance to change the world, and the regime seemed to offer that.

Adding to the National Socialist appeal was a conspicuous imitation of leftist sentiments — remember, the Nazis fought the international socialist parties for the support of the German working and agricultural classes. Not surprisingly, the Nazis borrowed some of their opponents’ ideologies. The converse was also true — leftist parties started to borrow Nazi tropes.

Aly adds a point I find fascinating but paradoxical: the regime got its greatest support when it pushed seemingly contradictory policies, such as preserving tradition while embracing technological advance, or indulging the anti-authoritarian desire to topple the old elites with a desire for an authoritarian, rigid new order, or — most contradictory of all — harmonizing the social classes with committing racial genocide.

Another matter Aly explores is the large degree to which the German bureaucracy — especially civil servants in the Ministry of Economics — was transformed and used by the regime for its own purposes. For example, Göring demanded that German Jews pay an “atonement payment” of a billion reichsmarks in 1938 (about $14.5 billion in today’s money — quite a fine for the 214,000 Jews remaining in Germany at the time). The Finance Ministry immediately instituted a 20% tax on all personal assets of Jews, paid in four installments. The Ministry collected much more than Göring’s original goal.

Young people rallied to support the regime — for example, university coeds would volunteer to spend their summers staffing daycare centers in Poland so that the German “settlers” could harvest crops.

Aly argues that the willingness of the populace and the bureaucracy to support the Nazi regime resulted from the fact that the regime gave people much of what they wanted. It delivered many needed reforms (such as reforms on debt collection), as well as consumer goods (such as cars and vacations) and a number of popular policies (from increasing pension plans to environmental conservation). The regime took care to favor families in tax policy and redistribute wealth to poorer workers and farmers. It especially rewarded the families of military personnel, using such means as freezing their rents.

Aly reports, surprisingly, that the regime did not compel public employees to show absolute devotion to the Party. “Instead, it called for closeness to the common man — an anti-elitist stance that held considerable appeal for twentieth-century European intellectuals” (24).

But all of these popular programs needed funding. In 1935, the Nazis’ finance minister held a meeting in which he asked his staff to devise ways to change the tax system so as to extract maximum resources from the Jews. Proposals focused on denying Jews tax exemptions of various kinds — such as exemptions from the tax on dogs to those for people blinded in military service.

Fascinating as well is Aly’s discussion of the average non-Jewish German’s view of the Nazis as “unifiers.” Of course the Party was intolerant of “socialists [i.e., Marxists], Jews, and nonconformists.” But the post-WWI peace treaties that forbade Austria and Germany from unifying were highly unpopular: if nations of similar culture and language wanted to unite, why should other nations be able to stop them? Indeed, “Hitler always defined himself not just as German chancellor, but as leader of the entire German people, including ethnic Germans living outside the boundaries of the state he ruled” (27).

The willingness of the populace and the bureaucracy to support the Nazi regime resulted from the fact that the regime gave people much of what they wanted.

So Hitler’s early victories — the retaking of the Ruhr, the unification with Austria, and the annexation of the Sudetenland (and later the remainder of Czechoslovakia) — all “cheap” in the sense that Germany did not have to go to war to achieve them — together with the appearance of economic recovery, decisively weakened opposition to Hitler on the home front” (28). Aly adds that the regime was not maintained by force but by popular support, and it accordingly worried about the mood of the people and monitored that mood carefully. He notes that while Communist East Germany employed 190,000 secret police to control 17 million citizens, the Gestapo had in 1937 around 7,000 total staff, to keep tabs on 60 million citizens. In 1936, after an initial spasm of violence and terror against their opponents, the Nazis held only about 5,000 people in concentration camps — many just common criminals and vagrants. Aly notes, “Most Germans simply did not need to be subjected to surveillance or detention” (29).

Again, a big reason for this support was the Nazi focus on uniting the 96% of Germans it held to be racially German by smoothing out class and other social differences. Aly points out that a major tool in leveling differences within the “Aryan tribe” was the various uniformed services — the Hitler Youth, the National Labor Service, and the Wehrmacht. As I observed in my earlier review, wearing a uniform does indeed foster uniformity.

Another tool the regime used to level social differences among ethnic Germans was its move in 1939–1942 — a period when Germany seemed likely to assimilate much of Eastern Europe — to relocate Slavs farther to the East and give their land and other property to Germans. Racial ideology again justified the purchase of support: the Slavs, held to be an inferior race, must be forced to vacate their lands so that the “Aryans” would have “living space.” (The official plans called for 50 million Slavs to be relocated to Siberia, or to be slaughtered outright.) The intention was to give poor German farmers small plots of land, and poor German coal-miners access to vast new lands. As a result, “hundreds of soldiers’ wives dreamed of owning country estates in Ukraine” (31). Again, the idea was to purchase popular support with property stolen from non-Germans.

The recession hit bottom in 1933, when Hitler took power, so he got credit for the recovery.

All this was in marked contrast with WWI, during which 400,000 Germans starved to death, and the period of civil unrest and hyperinflation that followed. Between 1914 and 1918, the German average standard of living dropped by two-thirds. The regime was aware of the privation experienced in WWI, and how it undermined support for the war, and it was not going to repeat the mistake.

Aly’s second chapter has the intriguing title, “The Accommodating Dictatorship.” It explains the domestic side of the regime’s purchase of support. When Hitler took power in 1933, 6 million Germans were unemployed, and Hitler promised to put them all back to work. He appeared to accomplish this ambitious goal in just five years. Aly argues, however, that this victory was apparent, not real. He cites figures indicating that while the public came to believe that economic recovery was real, wages were falling. But the recession hit bottom in 1933, when Hitler took power, so he got credit for the recovery. Furthermore, by 1935, the regime had reinstated the draft, remilitarized the Rhineland, officially abrogated the Treaty of Versailles, and withdrawn from the League of Nations: “The early years of Hitler’s rule gave a desperate, belligerent and self-destructive people satisfaction for perceived past affronts.” (37).

But the apparent economic success of the regime was built upon massive borrowing. During the first two years, public debt ballooned by 10.3 billion reichsmarks, or about $144 billion in current dollars. The only taxes raised were those on corporations and the wealthy,and revenues were far below what was needed to fund just the military. Between 1933 and 1939, the regime dumped over 45 billion marks into the military — more than three times the total state revenues for the year 1937. The national debt expanded to 37.7 billion marks. The regime turned increasingly to extracting the money from the Jews. From the time it took power until late 1937, it pursued a campaign of harassment, including forcing Jews to sell their businesses to “Aryans,” aimed at pressuring Jews to emigrate, while it placed increasing restrictions on the ability of emigrating Jews to take assets abroad.

While the regime thus increasingly stole from Jews in a piecemeal fashion, it didn’t pursue a total looting of the Jews as such. But with the takeover of Austria in early 1938, Hitler’s personal economics advisor Wilhelm Keppler was appointed Reich commissioner for Austrian affairs and tasked by Göring with exploiting Austrian natural resources, keeping prices and wages stable, and, more importantly, “Aryanizing” Jewish-owned businesses. The debt caused by the military buildup began to threaten the economy as a whole, so the regime enacted laws requiring native-born Jews to declare all assets worth over 5,000 reichsmarks to the government, creating conditions for the complete confiscation of the assets of Jews fleeing the country, with nothing but state bonds as compensation. In April 1938, Göring met with all Reich ministers to plan “the definitive removal of Jews from economic life” (44). In the face of a worsening financial crisis, the regime sped up its annexation of Czechoslovakia and the war against the Jews. Göring told his assistants that all tangible Jewish assets were to be converted into government bonds, and the proceeds used to fund the regime’s war machine. After the outbreak of war in 1939, this 1938 model of Aryanizing Jewish assets would be applied all over the conquered lands (as Aly shows in deep detail).

But the apparent economic success of the regime was built upon massive borrowing. During the first two years, public debt ballooned.

While the Jews (and later others) were having their assets confiscated, the regime increased its taxes on the wealthiest Germans and the biggest corporations. During all this, middle and lower classes were, by deliberate design, only lightly taxed. The regime was sensitive to its base of support. This led to a long struggle between the regime’s economic realists — who felt that the lower and middle classes needed to shoulder part of the burden of the war — and what I would call the regime’s political realists (especially Hitler and Göring), who wanted to be sure that the regime’s base of support was contented enough to not rebel. Aly documents this strategy. For example, he shows that in 1941, the regime instituted tax breaks for farmers, and actually raised pensions. The latter move was intended to combat the widespread suspicion that “the National Socialists had no time for the elderly and physically weak and wanted them to die off quickly” (56). Aly understands the strategy, observing that when the regime’s ally Mussolini was kicked out by his own countrymen in the summer of 1943, Goebbels called for a renewal of National Socialism to make sure that the lower and middle classes had no material cause for complaint, so no reason to rebel. The focus was now (in 1943) to be on owners of rental property and stocks.

The battle between the economic and the political realists continued even into 1945, as the regime’s demise was clearly and universally apparent. The political realists — who included the Party members at the top of the hierarchy — prevailed. In fact, during the war, “family members of German soldiers had 72.8% of peace-time household income at their disposal. That [was] nearly double what families of American (36.7%) and British soldiers (38.1%) received” (72).

In part II, Aly takes up the subjugation and subsequent exploitation of first Western and then Eastern Europe by the Wehrmacht. Here Aly richly documents the various tricks the regime used to covertly loot lands it conquered. This was a radical form of imperialism, indeed: force the conquered lands to pay for the conquering army that oppressed it. And it was quite a financial trick, indeed.

Aly explores the foreign “contributions” that came to Germany. He notes that at the outset of war, despite wage and price controls, the profits of companies and the wages of workers increased, as did the pay awarded to soldiers. But with production more and more focused on the military, there was a gap between purchasing power and what was available to the public. This led to black markets, inflation, and a flight to tangible assets, such as durable goods. The problem grew acute by late 1939, and as the gap widened through 1941, the regime finally decided to export inflation to conquered lands. As one Finance Ministry bureaucrat put it (echoing Göring), “If there has to be inflation, better there than in Germany” (76). Aly notes that pillaging foreign economies thus served two purposes: it kept the regime’s base relatively well-provisioned, and it was a major source of funding for the war machine. Regarding the latter, the regime had the explicit goal of getting any conquered territory to pay for all the costs of military occupation. Aly documents how the regime was able to do this “with unwavering efficiency.”

This was a radical form of imperialism, indeed: force the conquered lands to pay for the conquering army that oppressed it.

In occupied Serbia, for example, the Nazis set up a new Serbian national bank with a new currency and outlawed most currency exchanges, thus forcing people to cash in their real currency for a new one. This temporarily halted inflation — and allowed the Serbs to pay their “contribution for military protection” (as the regime called it, in all the countries it occupied). During the war the regime exacted unprecedented financial tributes from the countries it conquered — tributes that “soon exceeded the total peacetime budgets of the countries in question, usually by 100% and in the second half of the war by more than 200%” (77). Aly shows in detail how this affected Poland, France, Denmark and Norway. By 1943, most of the revenues funding the Nazi war machine came from “contributions” from conquered countries, and from the regime’s “allies” (Bulgaria, Slovakia, and Romania), as well as from foreign slave labor in Germany and the complete dispossession of the Jews.

The regime, as Aly shows, was successful in its clever manipulation of official exchange rates in occupied countries. He documents this in the case of occupied France, Bohemia, and Moravia. This currency manipulation, along with the establishment of “clearing accounts,” helped German consumers and Wehrmacht soldiers as well as the war regime. Soldiers “bought” massive amounts of food and other goods in the countries in which they were stationed and shipped them home to help their families.

Aly explores the use of another financial gimmick the regime employed — “Reich Credit Bank” certificates, which looked like paper money and could be traded by troops for local goods. As one German minister put it, these were really “requisition receipts disguised as money.” The regime had devised a way to take what it needed without incurring the direct wrath of those being relieved of their goods.

When the customs border between Germany and the Protectorates of Bohemia and Moravia was eliminated, German soldiers went on a “purchasing frenzy."

The regime forced allies and conquered countries alike to buy its bonds, and by July of 1944 it owed roughly 29 billion marks (or about $421 billion in today’s dollars) to the bondholders. An internal Nazi report estimated the total value of goods and services taken from the occupied territories from 1939 to 1944 at as much as 100 billion reichsmarks ($1.4 trillion in today’s dollars).

In a chapter called “Profits for the People,” Aly explores other mechanisms of plunder. One of them was direct soldier purchases. For example, German soldiers in the Netherlands were allowed to receive up to $15,000 per month (in today’s dollars) to buy local goods and ship them home. And German soldiers could take as much cash as they wanted when leaving Germany to return to the conquered lands. This led, predictably, to German soldiers buying so many local supplies that shortages ensued, much to the distress of the German occupying authorities. When the customs border between Germany and the Protectorates of Bohemia and Moravia was eliminated, German soldiers went on a “purchasing frenzy,” buying all the Czech goods they could, furniture included.

As Aly puts it, “German soldiers literally emptied the shelves of Europe. They sent millions of packages home from the front. The recipients were mainly women. When one [i.e., an historian such as Aly] asks the now elderly witnesses about this period in history, their eyes still gleam at the memory of the shoes from North Africa, the velvet, silk, liqueurs, and coffee from France, the tobacco from Russia, and the tons of herring from Norway — not to mention the various gifts that poured from Germany’s allies Romania, Hungary, and Italy” (97). Aly quotes numerous letters of German civilians saying in essence that they suffered no privations during the war years.

Aly gives another example: in the words of a French historian, these contrived purchases for the people back home “did significant damage to the French national economy, playing a significant role in the development of the black market and inflation. They were the reason it was increasingly difficult for everyday French people to procure the basic necessities” (99). Aly shows that the same phenomenon occurred in the Baltic States, Russia, Norway, Denmark, and Poland.

In the Wannsee Conference the next year, Heydrich emphasized the need for apartments in driving the decision to exterminate the Jews.

This pervasive pillaging fostered a climate of corruption and crime. Aly quotes extensively from an internal regime report on corrupt conditions in the Ukraine. The report reviews letters written home by German soldiers, and alleges that the Ukraine has become “the Reich’s flea market,” with soldiers writing their families to send cheap jewelry, cosmetics, used clothes, and other junk to be traded with the locals for the best food and produce. All this “sharp trading” was done by the Aryans, the very people who targeted the Jews for annihilation because they were allegedly — sharp traders! Vicious irony, indeed.

The crucial year for the outright dispossession of the Jews was 1941. In that year, “while people in the East were dreaming of a black market El Dorado,” civilians in Germany’s northwestern cities were really hurting from the British bombing. The Gauleiter of Hamburg, Karl Kaufmann, requested of Hitler that the Jews be removed so their apartments could be given to non-Jewish citizens made homeless by the Allied bombs. Hitler immediately made this an order. In the Wannsee Conference the next year, Heydrich emphasized the need for apartments in driving the decision to exterminate the Jews, and in late 1941, the first Jews rounded up were in the cities most bombed.

Not only were the Jews’ apartments confiscated, but so were their household effects, from their furniture down to their clothes. This policy was extended shortly thereafter to cover fine art, which was confiscated and sold. From France alone, the regime extracted about a million cubic meters of household goods from more than a quarter million Jewish homes. There are similar figures for goods taken from Jews in Belgium, the Netherlands, Czechoslovakia, and elsewhere, and for the wholesale confiscation of containers filled with the household effects of Jews who had emigrated earlier (129). By 1942, the regime was confiscating the containers of household effects of Jews now being sent to the death camps. And the regime bragged about what it was doing — one poster Aly that reproduces has a headline proclaiming that 1,362,945 books were seized, “enough to fully equip 2,600 local libraries” (128). Aly adds that the recipients of these handouts were grateful to the regime, as shown by an outpouring of thank-you notes.

Aly provides a revealing discussion of the regime’s systematic looting of the areas of Western Europe under its control from their fall in 1940 to their liberation in 1945. He describes the various mechanisms the regime used for surreptitious transfer of assets from the occupied population to the regime’s home base, via the hands of occupying German troops, who bought goods to send home. The burden was heavy. Belgium, a nation of about 8.3 million people, whose pre-war state budget was 11 billion francs, was pressed to pay 18 billion francs to the regime for occupation costs. With stolen Belgian money, the regime was able to buy in that country 18,500 motor vehicles, 1,100 locomotives, and 22,000 freight cars — in 1941 alone! That same year the regime was able to steal 41 tons of Belgium’s gold. All this the regime itself carefully documented. During the period in which Belgium was under occupation (1940–1944), its government spent 83.3 billion francs on providing for its own citizens, but had 133.6 billion francs worth of goods and currency taken for occupation costs — not counting the stolen Belgian gold or the loot grabbed from Belgium’s Jews.

By 1942, the regime was redistributing the household effects of Jews sent to the death camps. Recipients of these handouts were grateful to the regime, as shown by an outpouring of thank-you notes.

Statistics are equally striking for the other occupied counties. By 1944, the Netherlands had paid 8.3 billion reichsmarks (about $120 billion today), quite a sum for a nation of 8.8 million citizens to bear. 60% of that money was used to buy goods for the German citizenry. France during the occupation surrendered a staggering 40 billion reichsmarks to the regime (or about $580 billion dollars). Although Germany occupied its erstwhile ally Italy only from 1943 to 1945, it managed to extract the equivalent of 10 billion reichsmarks ($145 billion current dollars) from the hapless country.

Aly does not neglect the role that the Eastern European occupied territories played in the regime’s program of purchased support. He suggests that a huge component was the use of forced — truly, slave — labor. The regime made between 8 and 12 million people work for it, essentially for free and under harsh and dangerous conditions. Most of these forced laborers were from Eastern Europe. They were housed in shabby conditions (for which they were charged), and were paid 15% to 40% lower than German workers. And the regime managed by various schemes to divert much of that pay for the war effort. The workers’ pay was taxed, of course. Also, the regime officially set aside the money for the workers’ families, back in their home countries, paying these families in local currency out of the “occupation charges.” In other words, the home countries were forced to support the workers’ families. The essence of the regime’s con was clearly identified in 1944, by eminent jurist Raphael Lemkin: “The occupied countries not only finance exports to Germany but also pay their own people working in Germany.”[1]

Workers from Poland, Ukraine, and Russia received the worst treatment. Men and women taken prisoner and shipped to Germany to work in the labor camps would have their property liquidated and the money theoretically held in trust for their return, but in practice it was merely confiscated. The conscripted workers were paid low wages, and the Poles in particular had to pay a 15% “supplemental social compensation fee” in addition to an income tax. Poles in agricultural work got as little as 8.5 reichsmarks ($125 in current dollars) to 26.5 reichsmarks ($348) per month. In addition to the special fee, they were assigned to the highest income tax rates (paid by the wealthiest Germans).

Generally, Aly notes, “the amounts deducted from the wages of Jews — as well as of Gypsies and forced laborers from Eastern Europe — were thus more than triple those demanded of German workers. The Reich was able to double its wage tax revenues during the latter half of World War II on the backs of involuntary workers assigned to German industry” (160). There was some internal opposition — that of some people within the regime who feared that exploitation of the forced laborers would lessen their will to work hard and encourage resistance at home. But one economist estimated that, among Polish and Russian workers earning 40 reichsmarks per week, only 10 were left after the various taxes, fees, and charges for room and board in the labor camps.

But even leaving those meager wages in the hands of the forced workers threatened to reduce the availability and increase the prices of consumer goods for the “Aryan” Germans. So the regime devised another scheme: paying the forced laborers in part by special “savings bonds,” which supposedly offered a 2% interest rate but in the end were virtually unredeemable.

Among Polish and Russian workers earning 40 reichsmarks per week, only 10 were left after the various taxes, fees, and charges for room and board in the labor camps.

By these various artifices, the regime was able to pocket 60% to 70% of the forced laborers’ wages, which allowed for stable prices and no shortages and — as Aly shows in detail — in great measure paid for the social welfare programs that benefited “Aryan” workers. Behold National Socialism: it delivered the goods for the national workers in great measure by exploiting the international ones!

Reviewing the specific measures — including wholesale currency manipulation and food confiscation disguised as food purchases — by which the regime was able to pillage Ukraine and Russia, Aly trenchantly observes, “Even with food rationing, and wartime changes in people’s eating habits, shortfalls occurred. But as it had not done in World War I, the German leadership transferred the burdens of those shortages to people in occupied countries, to disadvantaged minorities, and to Soviet prisoners. The result was famine in Poland, Greece, and especially the Soviet Union; in psychiatric hospitals, ghettos, concentration camps, and POW camps, people starved to death” ( 170). The result, as Aly notes, was also a savage exploitation of Soviet POWs. By 1942, 2 million of the 3.3 million Red Army prisoners had died in the camps or in transit to the camps.

The regime stole a staggering amount from the Soviet territories. In one telling chart, Aly shows that the regime was able to transfer about 106 million Gus (grain units, with 2.5 Gus being what it takes to keep one person alive for a year) from Soviet lands to the Reich in the years 1941–43. Before the invasion, the Soviets produced 101% of the food needed to feed their public. This means that the Germans deprived about 21.2 million Soviet citizens of the food necessary for survival. Aly contrasts reports by German civilians that, until February 1945, no women complained that their children lacked whole milk, with reports of about 4,000 people starving to death a day in Leningrad.

In Part III, Aly focuses on the dispossession of the Jews. Chapter 7 — aptly entitled “Larceny as a State Principle” — tackles the common view that the “Aryanization” of Jewish property benefited German businessmen and bank directors the most. Aly argues that this is a false narrative. He describes in detail how the process took place.

Behold National Socialism: it delivered the goods for the national workers in great measure by exploiting the international ones!

Typically, first in Germany and then throughout occupied Europe, Jewish assets were first nationalized (i.e., seized by the state or occupation forces), then privatized (i.e., sold atbargain prices to non-Jewish individuals). Even selling these goods at bargain prices, however, brought substantial revenues to the state treasuries. In this regard, the 1938 seizure and sale of Jewish assets, which helped the regime to spend like mad building up its war machine without inducing hyperinflation, served as a model for how it would run its conquered territories.

The model proved useful indeed. As the regime imposed onerous “occupation costs” on its conquered territories — costs that in just the first year, according to one Reichsbank study, represented 211% of regular state revenues in France, 200% in Belgium, 180% in Holland, and 242% in Norway — it used the expropriation of Jewish assets to hold off hyperinflation in those countries.It pursued the policy under tight secrecy. Since the liquidation of civilian assets was a complete violation of international law, the regime employed small cadres of trained senior officials to do the actual seizures. Aly notes that in Serbia, where enough documentation remains to reconstruct the process, within one year after the invasion a Wehrmacht administrator reported that he had all the Jewish men rounded up and shot, and all the Jewish women and children suffocated to death by truck exhaust fumes. With Serbia’s 22,000 Jews dead, administrators from the department responsible for implementing Göring’s Four-Year Plan began the seizure and liquidation of their assets. The money flowed first to the Serbian treasury, then to the Nazi treasury as payment for occupation costs. The amount seized was able to cover more than six months of occupation costs, which dramatically lowered inflationary pressures in Serbia for an even longer period.

Aly notes that while ordinarily the expropriation of Jewish assets was done without any cover of law, in 1941 the regime did pass a law — the Reich Citizenship Law — that in one stroke seized the assets of Jews, which in great measure had earlier been forcibly converted into bonds, so it was easy to do. The debts were simply nullified. In 1942, Himmler and Reichsbank President Walther Funk worked out a deal by which all gold, gemstones, and cash taken from the death camp inmates would be given to the Reichsbank, which would then pay the market rate for this loot into a special treasury account (under a fictitious owner, ironically named “Max Heiliger” or “Holyman”). While gold watches were sold domestically, the regime sold jewelry in Switzerland.

Aly describes exactly how in 1941 one Jewish couple (the Uhlmanns) were dispossessed of more than 47,000 reichsmarks, between the emigration tax, the tax on Jewish wealth, and the confiscation of bonds when they fled to Luxembourg. When the regime conquered Luxembourg, they were killed. The money extracted from them “allowed the state to avoid tax increases — equivalent to a 50% hike for eight hundred workers with two children each — that otherwise would have been necessary,” as well as to “absorb some excess spending power in the middle of the war by selling off the Uhlmanns’ possessions” (200).

With Serbia’s 22,000 Jews dead, administrators from the department responsible for implementing Göring’s Four-Year Plan began the seizure and liquidation of their assets.

Aly devotes another chapter to various ways the regime used to launder the money it stole from Jews. He starts by describing how the regime used the puppet it installed in Norway, Vidkun Quisling, to strip Norway’s 2,100 Jews of their possessions. He did this in stages, and was able to put 11 million reichsmarks from the liquidated property into the Norwegian treasury, which then passed to the regime as part of the occupation costs, which then passed into the hands of German soldiers and regime procurement officers. Watches stolen from Jews were given out to German generals, who sometimes gave them away as Christmas gifts to staff and families.

The Belgian campaign to steal Jewish assets was carried out by the German military administration, rather than a collaborationist regime. As early as October 1940, the Wehrmacht required its approval for every ordinance concerning Jewish business, the registration of all Jews and all businesses “in which Jews had influence,” and the wholesale removal of Jews from the government. The next month the Wehrmacht ordered the removal of Jews from the economy and the liquidation of their businesses. But throughout the process, the regime managed by various subterfuges to keep a public “façade of legitimacy” over this asset seizure.

In Holland, the regime followed its common course after conquest: the removal of Jews from the economy. By 1941, Dutch Jews had to register their various assets. Shortly thereafter, the liquidation of Jewish assets began, under the color of legitimate governance. Dutch stockholders helped the regime sell about 80% of confiscated Jewish stocks, the proceeds going into state and industrial bonds — which made it appear as a transfer rather than a seizure. But the bonds were soon converted into Dutch government securities and used to cover the costs of occupation. Of the 14.5 billion reichsmarks (or about $210 billion in current dollars) extracted from the Netherlands during its occupation, about 10% came from the country’s tiny Jewish population of 140,000 souls.

Watches stolen from Jews were given out to German generals, who sometimes gave them away as Christmas gifts to staff and families.

The Reich didn’t simply enrich itself; it subsidized its allies. Even in 1940, in the puppet state of Slovakia, laws were passed to “Aryanize” the economy, with the goal of shipping all Jews to Madagascar (Adolf Eichmann’s personal plan). In just the first two years, the Slovakian government liquidated or “Aryanized” nearly all the 2,000 registered Jewish businesses — to the evident advantage of the non-Jewish population. In late 1941, when it went to war with Russia, the Slovakian government decreed a compulsory “contribution” of 20% of the total Jewish wealth under its control. During 1941 to 1942 the Slovakian government deported most of the country’s 89,000 Jews — with 53,000 sent directly to Auschwitz in just the first 13 weeks. Of the 7 billion crowns that Germany stole from tiny Slovakia during the war, 40% came from liquidated Jewish wealth — amazing, considering that Jews constituted only about 3% of the population. The story was the same in the Nazi puppet state of Croatia.

Bulgaria, which had joined the Axis Powers before they began their war with Yugoslavia and Greece in 1941, had to “loan” the Reichsbank nearly 62 million reichsmarks in 1941. It received parts of Thrace and Macedonia in compensation. It then had to cover the total costs of the German forces within its territory. It passed an anti-Semitic law in early 1941 that declared Jews to be foreigners and required them to register all their assets. Over the next two years these assets were pillaged. The Jews in Thrace and Macedonia were shipped to extermination camps in 1943.

Similarly, in Romania, even by 1940 Jewish-owned properties were being confiscated. This accelerated during the next year. By the end of 1942, surviving Romanian Jews were sent to Treblinka and murdered. Himmler was able to boast of settling half a million ethnic Germans in Romania in property once owned by Jews. In the end, the Jews were forced to cover 25% to 33% of the total costs of Romania’s part in the war.

Even the ancient Jewish cemetery in Salonika was cleared of headstones and the land auctioned off for real estate development.

Aly has been able to uncover the fate of the Jews of Salonika, Greece, once a center of Jewish population.This is a story that many Greeks would rather not confront. Crucial to the story is the “Aryanization” of Jewish assets — including twelve tons of gold (worth perhaps $5 billion today). Suffice it to say that the Nazis, along with their Italian and Bulgarian allies, rapidly conquered Greece and divided it into three occupation zones. As the Germans (and Bulgarians) took the produce of the land, the Greek currency started to lose its value. Stories surfaced about Greek children starving. Even Hitler was concerned enough to raise the issue with Mussolini. The Nazis sent in a special emissary to stabilize the situation. His measures “accelerated the ghettoization, dispossession, and deportation of Jews” (250). In October 1942, the Germans were pressing for Greece’s Jewish population, mainly concentrated in Salonika, to be dispossessed. In January 1943, Eichmann’s deputy Gunther flew to Salonika to help the process. Within two months, Jews were forced to declare their assets to the newly created Greek Office for the Management of Jewish Assets. Shortly thereafter — starting March 15, 1943 — deportations of Salonika’s 44,000 Jews began (along with 2,000 additional Jews from nearby), and were completed in a matter of months.

Jewish properties were seized and sold. Even the ancient Jewish cemetery in Salonika was cleared of headstones and the land auctioned off for real estate development. The proceeds were used, as elsewhere, to fund the Wehrmacht. But because of the rapid inflation of Greek currency and the relative poverty of the land, the Nazis focused on wringing as much gold out of the victims. The gold, Aly suggests, was sold by Greek brokers in Athens, and the cash that was raised flowed to the Wehrmacht, which used it to purchase local supplies to feed the troops and to pay the troops themselves. This stabilized the currency. The 46,000 Jews sent for Salonika to Auschwitz yielded 12 tons of gold, which was between two-thirds and three-fourths of the occupation costs. This gold stayed in Greece.

Part IV of Aly’s book, called “Crimes for the Benefit of the People,” draws his themes together and adds a great deal of information on the motives of Nazi minions.

For instance, he says, “Before the victims of Nazi looting could be deported from the occupied territories, the German military officers had to agree on and in most cases provide the means of transport. They did this without the slightest objection — and not simply because they hated Jews or were willing to sacrifice the last vestige of their consciences out of a supposedly innate German need for obedience. The officers helped carry out the deportations because the deportations served their own interests” (280). That is, besides the standard explanations for the expulsion and dispossession of the Jews — i.e., widespread German racialist anti-Semitism and the regime’s propaganda “ceaselessly” portraying Jews as a dangerous enemy “fifth column” — the driving motivation for the Wehrmacht’s complicity was the desire to keep troop morale up and keep pushing ahead with the military strategy. This military imperative to seize Jewish and other assets was intensified by the resolve of Nazi economists not to fund more than half the war’s costs by debt.

Aly notes that the various deceitful and opaque means of confiscating Jewish and conquered people’s assets succeeded only too well in hiding the massive dispossession from the notice of humanity. And in setting it up so that Jews had their assets first converted to German asset vehicles, the actual extermination of the Jews was made economically tempting: simply liquidate the creditors! Aly suggests concisely that the Holocaust will never be properly understood “until it is seen as the most single-mindedly pursued campaign of murderous larceny in modern history” (285).

To the reply that the resources seizedcould not have cost more than about 5% of the total wealth in the “German war chest” between 1939 and 1945, Aly observes that this was itself a large amount. I would add that during the period from 1933 to 1939, huge amounts were seized from Germans and Austrians. And seizures could be timed to fund major new offensives, such as the battle of Kursk in 1943.

In setting it up so that Jews had their assets first converted to German asset vehicles, the actual extermination of the Jews was made economically tempting: simply liquidate the creditors!

In the years 1939 to 1945, the regime brought in from occupied lands an astounding 170 billion reichsmarks — about 2.4 trillion euros. Of the total amount of money collected by the regime during this period, about 10% came from taxes on lower and middle class Germans, another 20% from taxes on wealthy Germans, and the remaining 70% from the proceeds of theft. It is precisely this that guaranteed that the regime retained substantial support until the very end.

In a chapter called “Speculative Politics,” Aly explores how the regime was able to render more or less invisible the massive borrowing it carried out, and again how this was done to make the load of the war light on the shoulders of non-Jewish Germans. Then, in the final Chapter, Aly summarizes his view of Nazi socialism as a socialism that radically confiscated assets from targeted groups and used them to fund the war, while enabling the population to live well. He puts the total amount of Nazi wartime revenues stolen from dispossessed Jews, occupied countries, and forced labor at a remarkable 70% of its total war costs (327). His book — all 334 pages of exposition, 59 pages of notes, and 17 pages of references — makes this estimate credible.

Much of the socialized pelf was funneled directly to German civilians in the form of fine food, produce, wine and liqueurs, jewelry, household goods, clothes, toys, books, and candies, making it clear that the regime’s support was based on purchase, as opposed to power or persuasion. “Nothing less than massive popular greed made it possible for the regime to tame the majority of Germans with a combination of low taxes, ample supplies of consumer goods, and targeted acts of terror against social outsiders” (324).

In sum, Aly’s suggestion is that the Germans were not exactly Hitler’s willing executioners, nor were they his unwilling victims; they were instead his willing beneficiaries. From the start, the regime’s elimination of unemployment by massive infrastructure and military spending was financed by the confiscation of the wealth and labor of the Jews. When war got underway, the regime exploited to the ultimate degree the people of conquered countries. It was a regime that pursued a radical racist redistributionism from the first.

The regime’s support was based on purchase, as opposed to power or persuasion.

One of the matters that Aly does not consider is the important role that early computer technology played in the Nazis’ war against the Jews. Henry Hollerith, an employee in the US Census Bureau in the early 1880s, first conceived of using punched cards to record census data. “Hollerith Machines” sorted and counted the millions of cards. The Hollerith Machine Corporation was sold to a conglomerate that eventually became IBM. The German industrialist Willy Heidinger established a subsidiary of the corporation called Dehomag (an acronym for the German Hollerith Machine Corporation) in 1911. Heidinger became an enthusiastic Nazi supporter, and the Nazis appreciated his machines. They used IBM machinery to implement the 1933 census and were thus able to catalogue citizens with partial Jewish ancestry, expanding the count of Jews to 2,000,000. The Nuremberg Laws specified the number of grandparents of Jewish ancestry necessary to be counted as a Jew, and those could now be identified.

At any rate, it was the seizure of wealth that bought the support of the Germans for the regime, rather than the Germans’ pre-existing anti-Semitism. It was this kind of socialism that really won the day. But the thesis requires some additional analytical work, which will be presented in the final installment of this series.

[1]Lemkin is the man who coined the neologism “genocide,” which he did in 1943 or 1944.

Editor's Note: This review-essay is part 2 of a three-part series.

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Robert H. Miller


A fine follow-up to Part I. I hope you read my johnny-come-lately comment to Part I; but I fear that this comment might also be too late for most readers.

Nonetheless, Part II illustrates one of the few insights Karl Marx ever had: that in the realm of the social sciences, when trying to understand human behavior, economic explanations nearly always trump ideological ones.

Ironically, this stands in stark contrast to Ayn Rand's assertion to never underestimate the power of ideology in explaining human behavior.

What you and Aly demonstrate is that although the leaders of the Third Reich were motivated by ideology, they bought the support of the German population through economics.

Well done.

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