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Meeting at Reich Economic Ministry:
Reorganization of European economy

July 22, 1940

Record of meeting held at Reich Economic Ministry under the chairmanship of Minister Walther Funk to discuss Göring’s order of 22 June 1940. Ribbentrop informed Funk on 25 July that he had instructed Carl Clodius, Deputy Director of the Economic Policy Dept. of the Foreign Ministry, to study ‘questions connected with the organization of a Greater European economic area under German leadership’.

The minister began by referring to the order addressed to him by Reichsmarschall Göring on 22 June. The preparatory work to be undertaken under the Minister’s overall direction was to include the following:

  1. Coordination of the incorporated and occupied territories within the Great German economy.
  2. Economic settlement with the enemy states.
  3. Reorganization of the continental economy directed by Germany, and its relations with the world economy.

(…)
 

1. Currency questions

Currency was not a primary factor, but depended on events and economic necessities: Yet theoreticians were always putting forward ideas on currency that had nothing to do with reality. In particular it could only do harm to create a new special currency for Europe. It was unprofitable for currency matters to be discussed in the abstract, especially by unauthorized persons: this could lead nowhere. Before deciding the question of currency we must be clear as to the methods whereby the economy was to be organized after the war. It was wrong to suppose that the free play of market forces would again be allowed, for with an undirected economy there was too much attrition of national economic assets. Instead, the system of price and other controls evolved by Germany in recent years would be to be continued for the time being. It was a fantasy to talk at this stage of a unified economy on a European scale, and in the same way it was harmful to use slogans like ‘currency and customs union’ and expect them to solve all difficulties. A currency or customs union could only be envisaged with a country having a similar standard of life to our own. This was not the case in south-eastern Europe, for instance, and it was not at all in our interest to confer on that area a similar standard of life to ours. This could only impair the efficiency of the local economy. In discussing post-war organization we must always be clear what immediate measures were necessary and what might be called for in the long run.

One difficulty of planning lay in the fact that the Führer’s aims and decisions were not yet known and the military measures against Britain were not yet concluded. We therefore did not know whether the British Empire and its economic influence would remain to any extent or not. Those responsible for preliminary planning should assume that the British economy would continue to exist in some form and would affect the situation at any rate outside Europe. If this assumption should be altered, other proposals would have to be worked out.

2.

A second main problem was the priority of needs. At the end of the war we should not be able at once to satisfy all the needs of the European peoples. There would be a bottleneck in raw materials, foodstuff and fodder. Urgent measures would be necessary to overcome these shortages. If they were successful in a short time, the existing rations system could be brought to an end and the regulations made less severe. The main object of planning was to determine the priority as between economic needs on the home front. If this was not decided and if economic demands were allowed to compete freely, there were bound to be tensions of the same kind as those that had made themselves felt in 1938 and the first half of 1939. It was wrong to suppose that the armaments industry would have nothing to do after the war. On the contrary, Germany would have to keep its armed forces at an appropriate level, and they would thus continue to make considerable demands on the arms industry. In the first years of peace there would probably only be a falling-off in actual war expenses; any further easing in the armaments sector was not to be expected for the time being.

Germany now had the political power to reorganize the European economy in accordance with her own needs. Three was also the political intention to use that power, so that other countries would have to adapt themselves and their economies to our plans and needs. But all our needs could not be met in Europe. The needs of Europe (apart from Russia and Italy) for raw materials were such that, even counting parts of Africa and Asia as colonies, there would still be a considerable import requirement. This requirement must be decreased by intensifying European production: only thus could be regain our economic freedom. But we wanted more than this, as it was the Führer’s especial aim to improve the living standards of German workers. In order to satisfy needs that went beyond the bare minimum, we would have to trade with overseas countries. This was especially clear in the case of mineral oil. By synthetic production we could manufacture enough to cover our peacetime needs, but his was not really necessary. It was sufficient if Germany and the European territories within our reach could manufacture or extract enough for wartime; the additional amount required in time of peace could then be procured by foreign trade.

3. Autarky – yes or no?

It was wrong to put the question whether the new Europe should be based on autarkic principles or not. The answer was rather that independence of foreign markets must be achieved to the extent necessary to safeguard the freedom of Greater Germany. We must therefore be autarkic from the war point of view. Apart from that, there should be freedom of overseas trade in order to meet needs additional to those of war economy. Thus it was not a question of ‘autarky or exports’, but of ‘autarky and exports’.

4. Foreign trade

German foreign trade was based on bilateral arrangements. This had worked well enough so far, but it had the disadvantage that one was tied to a particular partner and could not start importing at will from some other country that might for a time have more of the commodity in question. Hence the bilateral system must be enlarged into a multilateral one. By manipulating prices vis-á-vis the offset-account countries it was possible at the same time to manipulate the currency. This applied to offset transactions in Europe. In international overseas trade, however, a free currency was necessary.

(…)

6. Questions of organization

To enable the other countries in our sphere of interest to take similar measures, which must be agreed with us as a matter of principle, their respective economies must be reorganized. The Reich organization for agriculture could set up corresponding bodies in their other countries, to supervise the whole economic process including production, processing and distribution to consumers. Similar cooperation is to be envisaged in industry and trade.

7. Two groups of countries

The European countries within the German sphere of interest fall into two groups. The first comprises countries with a similar price, wage and salary, tax and income level to ours: e.g. Denmark, Holland and Switzerland. The south-eastern countries form the second group. While the first are to be organized similarly to ourselves and treated more generously in the matter of payments, the others are too different from us for a payments and currency union to be considered. Certainly we must try to have close economic links with France after the war. Russia’s position in relation to the territories under our authority is still uncertain.

8. Summary

Germany’s general post-war objective in Europe is to achieve a large measure of economic liberty while raising the standard of living by means of increased supplies. Thanks to large-scale planning the economy will be free from cyclic variations, and this will have a stimulating effect on all branches of commerce and finance. Thanks to state control of prices, salaries and supplies in the European area the needs of a war economy will be met, while additional peace-time needs will be met with the aid of extensive exports.

(…)

The departmental heads agreed in principle with the Minister’s exposition and stated that his well-thought-out remarks were in general correct and convincing and would serve as a basis for planning in their respective departments.

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