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    German Industrial Productivity and Exploitation of Occupied Europe

    During World War II:

    New Insights from Revised German Import Statistics

    Jonas Scherner

    German Historical Institute, Washington D.C.

    and

    University of Mannheim, Department of Economics

    Abstract

    According to estimates made by the United States Strategic Bombing Survey after World War

    II, German industrial labour productivity grew significantly during the war, especially in 1940

    and 1941. These estimates are based on the assumption that the intermediate inputsale

    ratios in the different industrial sectors remained constant over time. However, after the

    beginning of the war, German armament producers started to outsource the manufacturing of

    intermediate goods to other companies, especially to firms in occupied Europe. In order to

    trace the impact of such outsourcing, German imports are re-estimated on the basis of

    information given about payment flows because the official German import data are highly

    distorted, suggesting that German net imports during the war were almost insignificant.

    Instead, this re-estimation shows that Germany imported a huge amount of goods from

    occupied countries, especially intermediate inputs for the armament production.Consequently, Germanys industrial labour productivity grew much less than assumed by the

    study of the United States Strategic Bombing Survey.

    November 2008

    Preliminary

    Please do not cite without permission

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    1. Introduction

    Based on data provided by the German Armament Ministry, labour productivity in the

    German armament industry during World War II only increased significantly after 1942the

    event known as the so-called armament miracle.1 In this year, Albert Speer was appointed

    armament minister and implemented measures which allegedly caused this growth. However,

    the data provided by the armament ministry has several shortcomings.2 Adam Tooze recently

    questioned whether this data really reflects the production of armaments at least in the first

    years of the war.3 His critique is based on figures of the Industrial Sales Report, a survey

    compiled by the United States Strategic Bombing Survey (USSBS), which was never

    published and which was rediscovered by Tooze.

    According to this report, labour productivity in German industry grew significantly

    throughout the duration of World War II. The growth was particularly impressive during the

    first two years of the war. It was mainly caused by the productivity growth of the metal-

    working sector which included the bulk of German armament industries.In light of these

    figures, and given that the share of armament production on metalworking sectors total

    production made up about 70%, Toozes recent conclusion seems to be plausible, namley that

    labour productivity in the armament industry could not have decreased during the first years

    of warin contrast to what the data of the armament ministry suggest. Otherwise, labour

    productivity of the civilian metalworking production must have increased in an amount not

    1R. Wagenfhr,Die deutsche Industrie im Kriege 1939-1945, Berlin1954, p. 125; D. Eichholtz, Geschichte der

    deutschen Kriegswirtschaft, Vol. 2: 1941-1943, Berlin 1985; R. J. Overy, War and Economy in the Third Reich,

    Oxford 1994, p. 344; W. Abelshauser, Germany: Guns, Butter and Economic Miracles, in: Harrison, M. (ed.),

    The Economics of World War II: Six Great Powers in International Comparison. Cambridge, 122-76.

    2J. Scherner/J. Streb, Das Ende eines Mythos? Albert Speer und das so genannte Rstungswunder, in:

    Vierteljahrschrift fr Sozial- und Wirtschaftsgeschichte, 93, 2006, pp. 172-96.3J. A. Tooze, No Room for Miracles. German Industrial Output in World War II Reassessed in: Geschichte

    und Gesellschaft2005/31,3, pp. 439-44.

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    credible. However, growth rates in 1940 are a little bit misleading: First, the adaption process

    from a peace to a war economy which led to significant productivity losses, as often reported,

    took place during the last four months of 1939. Second, the adaption process meant that at its

    end a big share of workers was re-allocated from civilian sectors which had an under-average

    value-added per worker (such as the textile industry) to industries which had a over-average

    value-added per worker (such as the metalworking sector. Finally, labour productivity

    numbers were calculated on the basis of the survey of workers conducted each May of the

    respective year. Whereas in the years from 1940 on, the May-figure represented more or less

    the average monthly employment figure in the respective year, it also represented the peak of

    employment in 19394, such that the use of this figure led to an underestimate of true labour

    productivity in this year. However, even if we consider that the growth rate of labour

    productivity in 1940 calculated by the Industrial Sales Report is exaggerated, Toozes

    conclusion mentioned above seems to be valid, given that the second highest growth rate of

    the metalworking sectors labour productivity is reported for 1941.

    Table 1: USSBS Estimate of Labour Productivity Growth (% p.a.; 1939-prices)

    1940 1941 1942 1943 1944

    Whole industry9,5 3,1 3,1 5,0 0,5

    Whole industry without

    metal-working sector 6,2 -1,7 1,4 2,3 -8,2

    Metal-working sector13,2 8,6 4,8 7,5 7,0

    Source: National Archives, RG 243, Records of the United States Strategic Bombing Survey, European Survey,

    Special Paper No 8, Industrial Sales, Output, and Productivity, Prewar Area of Germany

    4Bundesarchiv (herafter BArch) R 3901/20238, employment in the industry, fol. 143.

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    This contradiction regarding a fundamental aspect of the German war economythe

    performance of the industrial labour productivity, especially labour productivity growth in the

    armament industrysuggests checking the data: those provided by the armament ministry

    and those employed by the USSBS. In another project, I am checking in conjunction with

    Adam Tooze and Jochen Streb the data of the armament ministry. Here, I am going to check

    the USSBS figures. How were these figures derived? Labour productivity is measured by the

    ratio of real value-added (sales minus value of intermediate inputs) and working hours of the

    workforce. Prices, sales, and working hours were surveyed continuously by the German

    authorities. Intermediate inputs value in the different industries was estimated by employing

    the intermediate inputs-sales ratios erstablished by the industrial census in 1936.5

    However, did the ratio between intermediate inputs and sales really remain constant over

    time? Today we know that in some branches of the German armament industry, especially

    those manufacturing technical complex armaments such as tanks or aircrafts, outsourcing of

    intermediate goods within the metal-working sector (wings of aircrafts or other parts of

    armament goods) increased dramatically during the war, especially at its beginnings, due to

    several reasons.6 Before the war, armament production was concentrated in central Germany

    because these regions were out of the range of foreign aircrafts attacks. However, after the

    5About the industrial census in 1936, see especially R. Fremdling, The German Industrial Census of 1936.

    Statistics as Preparation for the War, in:Jahrbuch fr Wirtschaftsgeschichte 2005/2, 155-65; R. Fremdling/R.

    Stglin, Die Industrieerhebung von 1936: Ein Input-Output-Ansatz zur Rekonstruktion der

    volkswirtschaftlichen Gesamtrechung fr Deutschland im 19. und 20. Jahrhundertein Arbeitsbericht, in:

    Vierteljahresschrift fr Sozial- und Wirtschaftsgeschichte 90, 416-28. R. Fremdling/H. De Jong, H./M. P.

    Timmer, British and German Manufacturing Productivity Compared: A New Benchmark for 1935/36 Based on

    Double Deflated Value Added, in:Journal of Economic History, Vol. 67, No. 2, 2007, pp. 350-78; J. A. Tooze,

    Statistics and the German State 1900-1945: The Making of Modern Economic Knowledge. Cambridge 2001.6For details, see J. Scherner/J. Streb/J. A. Tooze, Armament Production in the Third Reich, working paper,

    2008.

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    war had started, some problems arose. The military placed a huge amount of armament

    demands on the firms in central Germany, exceeding both the capacities of these plants and

    their workforce. The latter did not seem to be a problem, given that raw materials were mainly

    allocated to the war-production after the war had started, effecting especially metalworking

    companies of the border regions which, as mentioned, produced only civilian goods. These

    companies had to reduce production such that many workers of these companies could be

    released. And based on the law on Dienstverpflichtung enacted in 1938, these workers

    could and were commanded by the authorities to the armament firms in central Germany.

    However, armament producers were not at all satisfied with the performance of these forced

    German workers (Dienstverpflichtete).7 These workers obviously tried to prove their

    incompetence in the hopes that they would be released and returned to their families. Also

    these forced workers were much more prone to sickness than normal workers. 8 This

    unwillingness, coupled with the complaints of regional Nazi leaders of border regions in

    which metalworking companies were threatened to close down due to the lack of military

    orders and the rationing of raw materials for civlian production led, some months after the

    beginnings of the war, to a major change of the procurement policy. The authorities issued an

    order which stated that armaments assembled as a finished product should be produced in

    central Germany, whereas intermediate inputs (such as parts of weapons) should be produced

    also in border regions. This decision was also influenced by the fact that the procurement

    agencies were aware that a division of labour would increase labour productivity in the long

    run.

    7See for example L. Budra/J. Scherner/J. Streb, Fixed-price Contracts, Learning and Outsourcing: Explaining

    the Continuous Growth of Output and Labour Productivity in the German Aircraft Industry during World WarII,Economic History Review (forthcoming).

    8Scherner/Streb/Tooze, Armament Production in the Third Reich.

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    This outsourcing is shown in table 2, citing the example of companies which produced the

    engines of the JU 88 and of firms which were involved in the final assembly of this heavy

    bomber. Notice that the share of the JU 88 on the total German aircraft production between

    1939 and 1943 amounted to about one third and a half, and that the aircraft production had a

    share on total German munitions production of more than 40%.9 The JU 88 production was no

    exception in the aircraft production. Whereas the ratio between suppliers workforce and

    workers of companies involved in final assembly and engine production amounted constantly

    to 0.3 between mid 1936 and summer 1939, it increased sharply after the war had started to

    0.45 until May 1940.10 Also, in the production of another technical complex armament good,

    tank, we can observe a similar development as such shown in table 2.11

    Table 2: Share of intermediate goods in total costs in the German aircraft industry

    Junkers Siebel Mimo Weser ATG

    1939 56% 53% 58% 41% 59%

    1940 63% 66% 64% 47% 58%

    1941 71% 63% 66% 43% 62%

    1942 79% 69% 68% 54% 63%

    1943 88% 72% 72% n.a. 71%

    Source: Budra/Scherner/Streb, Fixed-price Contracts, Learning and Outsourcing.

    9Budra/Scherner/Streb, Fixed-price Contracts, Learning and Outsourcing.

    10Bundesarchiv-Militrarchiv (hereafter BA MA) RL 3/2638; workforce of the aircraft inustries, monthly data,

    1933May 1940. Unfortunately, data for the later period are not avialable.

    11

    See for example the case of the tank producer Alkett. The share of intermediate goods in total costs of thiscompany was about 26% in 1938/39; 38% in 1939/40, and 58% in 1940/41. BArch R 2301/5517; audit reports of

    Alkett.

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    This data clearly suggests that the labour productivity figures calculated by the USSBS by

    employing constant input-sales ratios in the metalworking sector are highly distorted.

    However, the basis, given the data, for calculating the total distortion due to the outsourcing

    in the German armament industry is small. Only data for some single firms, such as reported

    in table 2, is available. However, the final producers did not only outsource to German firms,

    but also to companies in occupied Europe.12 And in this case, as will be shown later, complete

    data is available for analysis.

    The USSBS was aware of the outsourcing to companies in occupied Europe; however, backed

    by the official German Import Statistics it assumed that the impact of foreign deliveries was

    insignificant. However, German imports were dramatically underreported in the official

    statistics. German authorities were aware of this, as noted the Economics Department of the

    Reichsbank in mid 1944: According to confidential information of the German Statistical

    Office the German foreign trade statistics only captures exports correctly, whereas the import

    figures do not reflect in any way true imports.13 The Germans published this data for

    propagandistic purposes, because this data show that Germany did not exploit occupied

    Europe, in contrast to the claims made by the Allies.14 The official data suggests that

    Germanys trade during the war was more or less balanced, and that in the case of some

    occupied countries, such as Poland, Germany was even a net exporter. Moreover, as shown in

    the last line of table 3, net imports from all occupied countries were surprisingly small.

    12For details, see J. Scherner, Europas Beitrag zu Hitlers Krieg. Die Verlagerung von Industrieauftrgen der

    Wehrmacht in die besetzten Gebiete und ihre Bedeutung fr die deutsche Rstung im Zweiten Weltkrieg, in:

    Christoph Buchheim (Ed.), Europische Volkswirtschaften unter deutscher Hegemonie. (forthcoming)

    13BArch R 2/13502, Economics department of the Reichsbank, memo, 8. July 1944

    14

    BA-MA RW 19/3189, Europapress-Wirtschaftsdienst, 6.7.1944, fol. 63; Neue Zricher Zeitung, 30.6.1944,Deutschlands Auenhandel im Krieg, fol. 66; press conference of the German Government, 20.6.1944, fol. 67-

    72.

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    Table 3: German foreign trade 1940-44 according to German trade statistics (m. RM,

    current prices)

    1940 1941 1942 1943 1944 Sum 1940-44

    Imports 5021 6925 8691 8258 6827 35,722

    Exports 4867 6840 7559 8558 6767 34,591

    German net imports 154 85 1132 -300 60 1,131

    German net imports from

    occupied countries

    261 256 1,552 1,141 1,999 5,209

    Sources: Statistisches Handbuch von Deutschland, Munich 1949, p. 394 (1940-43); BArch R 3102/6039 (1944);

    BArch R 3/1626a, report about Germanys foreign trade, written for the military court IV in Nuremberg,17.7.1948.

    Yet, this result should have given rise to serious doubts with regard to the official import

    datas credibility, given the financial dues occupied countries were expected to pay to

    Germanyoccupation costs and clearing credits they had to grantmade up during the war

    to a total of about 110 bn. RM. And this calls into question how Germany spent this money

    obviously only a small fraction for financing net imports if we believe that the import

    statistics figures are true. Anyway, official import data is used until today in the literature and

    is normally not questioned. 15 However, as mentioned before, given our patchy knowledge

    about the total amount of outsourcing, our analysis of industrial labour productivity would

    benefit if we could find information about true German imports and the amount of

    intermediate input goods.

    15See for example, A. Ritschl, Nazi economic imperialism and the exploitation of the small: evidence from

    Germanys secret foreign exchange balances, 1938-1940, in:Economic History Review, LIV, 2 (2001), pp.324-

    45; W. Rhr, Forschungsprobleme zur deutschen Okkupationspolitik im Spiegel der Reihe Europa unterm

    Hakenkreuz, in: Bundesarchiv (Ed.), Europa unterm Hakenkreuz, Die Okkupationspolitik des deutschen

    Faschismus (1938-1945), 8, Analysen, Quellen, Register, Heidelberg 1996, p. 25-343, here: 236. However, some

    authors had doubts whether the import statistics is correct. See e.g. W.A. Boelcke,Deutschland alsWelthandelsmacht 1930-1945, Stuttgart 1994, pp. 126-8; B. H. Klein, Germanys Economic Preparations for

    War. Cambridge/Massachusetts 1959.

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    This paper is organized in the following sections: In section 2 we explain why the German

    import statistics do not capture all imports and which imports are not included. In section 3, a

    lower limit of true German imports is estimated employing both the re-discovered detailed

    German clearing statistics and the data of the military authorities about armament goods

    produced abroad, which are collected in several archives. Based on this data, we can illustrate

    how Germany experienced a huge import boom during World War II. German net imports

    from occupied countries did not amount to only 5 bn. RM, as suggested by the official

    German import statistics, rather at least to 35 bn. RM. Huge shares of these imports were

    intermediate inputs for the German armament industry, as shown in section 4. This in turn, as

    will be shown, has important implications for our knowledge about the performance of labour

    productivity in the German industry. Section 5 provides a brief conclusion. The paper is

    mainly based on archival evidence unknown or ignored until today in the literature.

    2. Distortion of the German import statistics

    The German trade statistics were based upon the customs declaration method. Both importers

    and exporters had to declare quantity, type and value of the products exported or imported in

    the German customs area.16 Import values were based on cif-prices, those of export goods on

    fob-prices.17 Importers and exporters had to pay a statistic fee. Customs authorities had a

    control right. On 19.9.1939, a decree of theReichsfinanzminister(Reich Minister of finance)

    established that the so called Wehrmachtgut, i.e. goods ownedby the army or goods which

    were imported to be usedby the army, were exempted of import duties, consumption taxes,

    16The German customs area increased during the war. For details, see Statistisches Reichsamt, Sondernachweis.

    Der Auenhandel Deutschlands, Januar und Februar 1944, Berlin 1944, p. 1; Statistisches Handbuch vonDeutschland, Munich 1949, p. 390.

    17BArch R 3102/3587, Introduction in the Trade Statistics, 1941.

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    and the statistic fee. Further, those goods were to be controlled neither by the customs

    authorities nor to be registered by the import statistics.18 In May 1940, the decree was

    modified, establishing that only such goods fulfil the characteristics ofWehrmachtgutwhich

    are accompanied by soldiers or by persons charged by the army. Also goods, which were

    transported by the railways with a so called Wehrmachtticket, were accepted as

    Wehrmachtgut.19 From the end of 1940 onward, a further modification occurred and the army

    had to certify that the goods imported were really Wehrmachtgut.20

    Why would Wehrmachtgutbe treated differently compared to normal goods? The dominant

    reasons were to accelerate the transport of such goods and to reduce administration costs,

    reasons which overruled the interests of the German authorities to collect import data in an

    accurate way.21 Besides, in the case of goods looted by the army it was normally not possible

    to establish the country of origin.22

    A decree from August 1940 extended the customs duties exemptions to so called armament

    goods (Rstungsgut), i.e. goods which could not only be munitions (or intermediate inputs of

    these) in a narrow definition, but also civilian goods for the German market. The idea was that

    the more civilian goods demanded in Germany were produced abroad, the more German

    companies, which in peacetime manufactured such goods, were enabled to convert their

    18BArch R 3102/10087, finance ministry, decree O 1005 Z6 II, 19.9.1939; BArch R 3102/4051,note, finance

    ministry m, 19.9.1939, fol. 201; finance ministry, Z 2056-120II, 10.3.1942.

    19BA MA RW 19/1903, finance ministry, decree O 1005 Z, 18.5.1940. The same regulations were in force for

    goods looted in the occupied countries and imported by the Wehrmacht. BArch R 3102/3480, German Statistical

    Office (SRA) to customs authorities, 12.9.1940; main customs office Stettin to SRA, 23.8.1941.

    20BArch R 2/58087, customs authorities Nordmark, Kiel, to finance ministry, 25.2.1941, fol. 164-5.

    21

    BA MA RW 19/1903, aviation ministry to finance ministry, 31. 7.1940, fol. 26; economic department of theHigh Military Comand, note, 13.8.1940, fol. 33-4.

    22BA MA RW 19/1903, Wifo GmbH to High Military Comand (OKW), 18.7.1940, fol. 29.

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    production to armament production.23 In the case of all these goods, customs declarations

    would be normally accepted by the customs authorities without controls in order to accelerate

    transportation.24 Although, as well as in the case ofWehrmachtgut, the statistic fee was not to

    be paid for armament goods, they would be registered in the import statistics. The military,

    the armament ministry, or theReichswirtschaftsministerium (economic ministry) had to

    certify that such goods were to be considered armament goods according to the decree. The

    driving force for the implementation of this decree was the Reich aviation ministry based on

    the desire to exploit the occupied countries for the planned massive expansion of the air

    force.25

    All these decrees led to many misunderstandings during the following years and contributed

    to the fact that real imports exceeded by far those captured by the import statistics. First,

    customs authorities often assumed, due to the fact that no statistic fee had to be paid for

    armament goods, that these were also exempted from the import statistic. 26 Second, the

    concepts ofWehrmachtgutand armament goods often led to a confusion among the

    customs authorities. For example, a letter written at the end of 1941 by the military

    commander of occupied France to the customs department of the Reich ministry of finance

    stated: As observed during an inspection of the German customs authorities at the western

    border, they are sometimes confused with regard to the concept of armament goods.

    Sometimes they assumed that armament goods are the same as Wehrmachtgut and that for

    23BA-MA RW 19/1614, finance ministry to OKW, 7.11.1941, fol. 27.

    24BA-MA RW 19/1603, finance ministry, decree 0 1oo5Z Allg. 190 II, 31. August 1940, fol. 19.

    25BA-MA RW 19/1603, aviation ministry to finance ministry, 31.7.1940, fol. 25-8. Generally about the

    expansion of the airforce from autumn 1940 on and the strategic considerations, see Lutz Budra,

    Flugzeugindustrie und Luftrstung in Deutschland 1918-1945, Dsseldorf 1998; Adam Tooze, The Wages of

    Destruction. The Making and Breaking of the Nazi Economy, London 2006.26

    See for instance BArch, R 3102/4067, General customs office to SRA, 21.3.1941; SRA to General customs

    office, 27.3.1941, Hochtief AG to SRA, 5.6.1941.

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    this reason these goods should not be registered.27 Third, control possibilities during the war

    were reduced compared to peacetime: Often armament goods were transported with army

    trucks without correct customs declarations, i.e. without information regarding quantity,

    weight or value.28 However, sometimes the transport officers were not disposed to allow

    inspections of the customs authorities, emphasizing the urgency of the transport. In other

    cases, the customs authorities accepted the incorrect customs declaration in order to avoid

    traffic hold-ups at the borders.29As a consequence of these procedures, often armament

    goods would not be registered by the import statistics.

    But the concepts ofWehrmachtgutand armament goods were also incorrectly used by

    military authorities for different reasons. The army sometimes misinterpreted the meaning of

    armament goods. They assumed that all imports which eventually were used by the army

    fulfilled the conditions ofWehrmachtgutregardless if these goods were finished armaments

    (such as weapons) or not (such as shell casings or wings of warplanes). In other words, they

    treated also the latter as Wehrmachtgut.30 Often parts of armaments were imported by army-

    owned armament producers or were sent first to acceptance test departments of the army,

    thereby fulfilling the norms of the decree according to which all goods which are ownedby

    27BArch R 2/59000, military commander in France to customs department of the finance ministry, 12.9.1941;

    BArch R 2/58993, Wirtschaftliche Forschungsgesellschaft mbH to finance ministry, 13.6.1941, fol. 148-9;

    customs office Hannover to Reichsfinanzministerium, 7.7.1941, fol. 150-2.

    28See for example BArch R 3102/4068, customs office Wehr to SRA, 2.12.1941; BArch R 2/58986, customs

    office Kln to finance ministry, 1.3.1943.

    29See for example BArch R 2/58088, customs office Niederdonau, Wien, to finance ministry, 19.11.1941, fol.

    26-7; customs office Kln to finance ministry, 27.5.1942, fol. 100.

    30For this interpretation, see BArch R 2/58088, transcript of a meeting in the OKW, 26.10.1943, fol. 379. See

    also BArch R 2/58993, note, May 1941, fol. 109; BArch R 2/58087, OKW to finance ministry, 9.9.1941, fol.

    304; customs office Kassel to finance ministry, 30.9.1941, fol. 309; finance ministry to OKW, 8.10.1941, fol.

    310; R 2/58088, customs office Berlin-Brandenburg to General customs office, 14.7.1942, customs officeDanzig-Westpreuen to finance ministry, 25.7.1942, Bl. 140; finance ministry to Schichau AG, 31.7.1942, Bl.

    142;. BArch R 3102/4067, military procurement agency to SRA, 29.9.1941; SRA, note, 4.10.1941.

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    the army have to be classified as Wehrmachtgut.31 In other cases, the army consciously

    certified imports of intermediate inputs for armaments as Wehrmachtgutin order to avoid

    delays of deliveries. Wehmachtgut, as already mentioned, were not be controlled by the

    customs authorities, and Wehrmachtguthad also a priority compared to other goods in the

    case of transport shortages or transport stops which occurred often.32 The army was interested

    that the firms who were producing armaments receive the parts as soon as possible in order to

    rapidly produce weapons. However, the authorities were aware of the misuse of these

    certificates. In order to provide the incentive for the army officers to correctly certify goods,

    the authorities implemented in 1942 the rule that transportation costs of those goods were to

    be paid automatically by the army, which were delivered by the railways and declared to be

    Wehrmachtgut.33 However, the implementation of this rule did not bring with it the desired

    effect because the officers of the occupation armies who were responsible to issue certificates

    normally assumed that money is no problem.34 In fact, in the case that in an occupied

    country the occupation revenue was exceeded by expenditures, the Germans normally

    increased the amount to be paid by the respective country. Therefore, the officers responsible

    for the expenditure of the occupation army were never able to manage and control expenses in

    31See for example BArch R 8 IX/15, aviation ministry to Firma Mikron Optisch-Przisionsmechanische und

    elektrotechnische Werksttten, Belgrad VII, 7.5.1942;BArch R 2/58087, OKW to finance ministry, 9.9.1941,

    Bl. 304; customs office Kassel to finance ministry, 30.9.1941, fol. 309; finance ministry to OKW, 8.10.1941, fol.

    310.

    32See for example BArch R 3/3029, military administration in France, instruction for German orders in France,

    fol. 20; BArch R 2/58088, transcript of a meeting in the OKW, 26.10.1943, fol. 379; BA MA RW 32/6, German

    military procurement agency in Italy, monthly report, 30.4.1943, fol. 76.

    33BArch R 2/58088, transportation ministry to finance ministry and to OKW, 29.10.1942. This norm created

    also new confusion among the army. For details, see for example BArch R 2/58088, High Army Comand (OKH)

    to OKW, 2.1943, fol. 354; BArch R 3102/4051, finance ministry, letter, 10.3.1943; BArch R 2/58091, OKH tofinance ministry, 17.12.1943.

    34BA MA RW 7/1710a, OKW to finance department of the OKW, 24.12.1942, fol. 190.

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    an efficient way.35 Also, the fact that authorities of occupied countries did not have the right

    to control those exports which were labeled Wehrmachtgutgenerated an incentive to

    incorrectly certify goods because by doing so the extent of occupied countries exploitation

    could be concealed.36

    In summary, it has been demonstrated that the facts

    (i) that from 1939 on imports of so called Wehrmachtgut(goods ownedby the military or

    goods which were imported to be used directly by the military) were exempted of

    statistical registration;

    (ii) that the several regulations were confusing, and

    (iii) that these regulations were also intentionally interpreted in a very broad way by the

    military authorities who were in charge to issue certificates forWehrmachtgut,

    explain why the German import statistics included less than claimed in the previously written

    literature. This literature relies on the information provided by the Statistical Handbook for

    Germany, published in 1949.37 In this compendium, based on the import statistics of the SRA,

    it is stressed that only import goods which were already usedby the army abroad are not

    included in the import statistics. 38

    However, the import statistics are distorted for further reasons. Normally, imports of country

    A are the goods which are delivered form foreign countries in the customs area of country A.

    These imports are basically registered by the method used in Germany. Yet, during the war,

    exports of foreign countries for the benefit of Germany did not necessarily have to cross the

    35Vgl. z.B. BA MA RW 7/1711a, OKW, instruction for the military finance department in Denmark, 14.1.1944,

    fol. 65-6.

    36H. Umbreit,Der Militrbefehlshaber in Frankreich 1940-1944, Boppard 1968, p. 317; BArch R 2/58993,

    note, May 1941, fol. 109; BA-MA RW 35/262, Final Report of the military government in France, fol 13.37

    See e.g. W.A. Boelcke,Deutschland als Welthandelmacht 1930-1945, Stuttgart 1994, pp. 126-7.

    38Statistisches Handbuch, p. 391.

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    German borders, for example gasoline from Rumania which was directly delivered to the

    German troops at the eastern front.39 Besides, the imports of the so calledProtektorat, i.e.

    Bohemia and Moravia, are not registered in the German import statistics from March 1939 on.

    The same is true for imports resulting from black market purchases of German authorities in

    the occupied countries, which were declared Wehrmachtgut, as well as from black-market

    purchases of German soldiers.

    3. Estimate of true imports

    In order to estimate true imports, we use information provided in different sources about

    payment flows between Germany and foreign countries. One source is the statistics about

    Germanys payments to foreign countries, compiled by the German Statistic Office and the

    Reichsbank. These compilations subdivide all payments made by Germany according to the

    method of payments, i.e. whether payments were for example made in foreign currency or

    within clearing agreements. Also, the use of these payments is broken down, i.e. payments for

    imports of specific goods, for capital transfer, for the supply of services, and so on. 40 Unlike

    the import statistics, the import figures of the payments statistics also include the imports in

    favour of Germany which did not cross the Germanys borders. Unfortunately, import values

    given by the payments statistics and subdivided for different countries are only available for

    1943. This problem, however, can be solved by utilizing the detailed clearing statistics, which

    between 1941 and 1944 are available.41 Due to foreign exchange controls, transactions with

    foreign countries required the permission of the state from the beginnings of the 1930s on.

    39BArch R 2501/7127, economics department of the Reichsbank, The clearing problem, 15.11.1943; BArch R

    3/XX, Industrie, Bl. 11; Statistisches Handbuch, p. 390.

    40

    BArch R 3101/33632, German payments 1943; BArch R 3101/33635, German payments 1942.41

    Politisches Archiv des Auswrtigen Amts (hereafter: PA AA) R 106483, annual reports of the German

    Clearing Bank.

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    Given that during the war almost all payments to foreign countries, especially to occupied

    countries, were made within clearing agreements, the annual clearing statistics can be used as

    a substitute for the payments statistics.42Imports were basically registered by the clearing

    account goods traffic; broken down in subaccounts for each country and for different

    categories of goods (e.g. grain from France; steel from Belgium).

    However, for several reasons, a part of industrial imports in favour of the Wehrmachtwere

    financed in a different way. Both the import values of the payments statistics and the clearing

    statistics include only imports which are made by regular import payments, i.e. payments

    according to the German currency legislation, which were registered by the so called Reich

    entities (Reichsstellen). They do not include payments for imports in favour of the military

    and other state authorities made (i) by the service account of the German Clearing Bank

    (DVK) (exactly subaccount: payments of governmental agencies), and (ii) those made by

    occupation tributes.43

    Originally, occupation tributes should, according to the Hague Convention, only to be used to

    finance the needs of the occupation army.44 Yet, in reality, occupation tributes were also used

    for financing such transactions which could not be subsumed under the needs of the

    occupation army.45 A decree stipulated that least all directdemands the military placed in

    42BArch R 3101/34749, interrogation, 14. Aug. 1945, fol. 5-7; BArch R 184/186, memo of the German Clearing

    Bank (DVK). For example, import fob-values in 1943 according the clearing statistics made up 11.8 bn. RM and

    according to the payments statistics 12.1 bn. RM.

    43BArch R 3101/33641, economic ministry, internal letter, 1.9.1944, foll. 144-5.

    44BA MA RW 7/1711b, OKW to different Reich authorities, 21.10.1941, fol. 154.

    45BA MA RW 7/1710a, OKW to different Reich authorities, 2.3.1944, fol. 173. For the different countries, see

    for example BA-MA RW 35/262, Final report of the department of trade, money and insurance of the German

    occupation administration in France, fol. 32, 34, 65; C. Buchheim, Die besetzten Lnder im Dienste derdeutschen Kriegswirtschaft whrend des Zweiten Weltkriegs. Ein Bericht der Forschungsstelle fr

    Wehrwirtschaft, Vierteljahrshefte fr Zeitgeschichte 34, 1986, S. 117-145, here 129-31; BArch R 3101/32287,

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    occupied countries were to be financed by occupation tributes.46 Black market purchases

    made by German soldiers and by German governmental agencies were also financed in this

    way.47

    Why did the Germans violate this principle mentioned above regarding the use of occupation

    tributes? Firstly, clearing debts were debts, which at least in theory had to be redeemed after

    the war. Therefore, different German agencies, especially the finance ministry, did not want

    clearing debts to increase too much.48 Secondly, there were occupied countries, whose

    governments appealing to Art. 56 of the Hague Convention, did not want to see Germany pay

    the cost of armament imports through clearing measures.49 Thirdly, financing with the

    clearing method required more administration efforts than financing with occupation tributes,

    which is why Hans Frank, General Governor of occupied Poland, supported financing as

    much as possible by occupation tributes, emphasizing that in the end the Polish would incur

    anyway all expenses in Poland which would be favourable for the German war economy.50

    Finally, financing exports with occupation tributes was a method consciously employed by

    the Germans in order to conceal from the occupied countries the amount of goods exported in

    Final report of the armistice delegation, Salzburg, 15. 12.1944, p. 12.; BArch R 184/128, DVK to foreign office,

    29.4.1942; BA MA R 19/1602, OKW, economic department note, fol. 20; payment instructions for Belgium, fol.

    79; OKW, internal letter, 14.10.1940, OKW, internal letter, 21.10.1940; OKW, note, 28.4.1941, fol. 55; BArch

    R 2/14117, finance ministry, 26.9.1941, fol. 374.

    46PA AA R 107000, economic ministry, decree, 30.1.1941.

    47See for example PA AA R 129064, internal letter, foreign office, 25.11.1941; OKW to finance ministry,

    26.6.1942.

    48See for example BArch R 3101/33636, fol. 22-3; BArch R 2/14117, aviation ministry to finance ministry,

    11.3.1942, fol. 391. BArch R 3102/3551, Institute of Defence Economy, 3.11.1942, fol. 1-11.

    49

    BArch R 2/14117, note, 17.6.1942, fol. 396-8; BArch R 8 IX/19, economic ministry, decree no. 36/44 D.St./27/44 R. St., 22.8.1944.

    50BA MA RW 7/1710a, note, 22.2.1944, fol. 211-3.

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    favour of Germany, as explicitly emphasized in the case of France.51 For similar reasons,

    imports were also financed via the service account of the clearing operations. 52

    Unfortunately, neither the service account nor occupation tributes are allocated according to

    their use. However, the amount of imports in favour of the Wehrmachtfinanced in this way

    can be estimated in an indirect way by employing further statistics: (i) the statistics of

    armament production in occupied countries; (ii) clearing account goods traffic/clearing

    subaccount: industrial goods imported with currency permissions of the Reich entity for

    Technical Products (Reichstelle fr technische Erzeugnisse) (RTE).

    The statistics of the armament ministry reported monthly figures for the armament production

    between October 1940 and summer 1944 in almost each occupied country.53 Armament

    productions of the countries included in these statistics after summer 1944 were probably

    insignificant for Germany, because from this point of time on, countries were liberated who

    had significantly contributed to Germanys armament production, such as France, Belgium

    and Poland. The statistics of the armament ministry include only industrial orders which were

    exported to Germany. Yet, these statistics do not include the armament production in

    Bohemia and Moravia, Hungary, and Italy. However, other sources provide the information

    necessary for a complete picture of German armament imports.

    51PA AA R 107000, German Embassy, Paris, to foreign office, 13.2.1941; economic ministry to foreign office,

    3.3.1941.

    52With this subaccount also imports of the military were finally financed, which before werefor several

    reasonsprovisionally paid by occupation tributes. BA MA RW 7/1711b, OKW to different military branches,

    26.6.1942, fol. 156; BA-MA RW 19/1602, note, OKW, economics department, 26.8.1940, fol. 3; note, fol. 66;

    OKH, payment instructions for armys industrial purchases in France; BA-MA RL 3/2638, aviation ministry,office Paris, 3.8.1940.

    53For the following, and for the data, see Scherner, Europas Beitrag.

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    For the armaments imports financed by regular import payments, we are able to estimate

    an upper bound. This upper bound relies on the currency permissions issued by the RTE,

    which had to issue these permissions for all industrial orders of the Wehrmachtabroad, which

    were financed by regular import payments.54 Yet, the RTE did not only issue currency

    permissions for armament goods, but also for civilian goods produced mainly by the

    engineering industries, such as sewing machines. Thus, we can conclude that the currency

    permissions issued by the RTE constitute an upper bound of the import of armament goods

    import financed on the basis of the currency legislation. Therefore, we can estimate an lower

    bound for the industrial Wehrmachtimports notfinanced by regular import payments. This

    lower bound is the difference between industrial Wehrmachtorders abroad and the currency

    permissions issued by the RTE.55

    Moving further, we can estimate true imports by adding up the payments made for regular

    imports and the lower bound forWehrmachtimports financed by the service account and by

    occupation tributes. This method is checked with an estimate made by the so called plan

    office. Why did this agency estimate true imports? The plan office (Planungsamt), founded

    in the autumn of 1943 as an agency of the armament ministry, was responsible for planning

    the German imports, which was also a precondition for planning the German balance of

    payments.56 Based on the import plans, the economics ministry, responsible for planning the

    54BA-MA RW 19/2397, OKW, economics department, note, 18.2.1941, fol. 60; BArch R 8 IX/19, economic

    ministry, decree, no. 10/41 D. St./14/41 R. St., 30.1.1941; BArch R 8 IX/15, aviation ministry to RTE, 15.3.44.

    55These values represent fob figures. For calculating cif-values, we employed the normal cif-fob ratio, which

    can be calculated on the basis of the clearing statistics for each country in the different years.

    56R.-D. Mller, Albert Speer und die Rstungspolitik im Totalen Krieg, in: B. R. Kroener/R.-D. Mller/H.

    Umbreit, Organisation und Mobilisierung des deutschen Machtbereichs. Kriegsverwaltung, Wirtschaft und

    personelle Ressourcen 1942 - 1944/45. Das Deutsche Reich und der Zweite Weltkrieg, Vol. 5/2, Stuttgart 1999,

    pp. 275-776, here p. 505; BArch R 3101/15263, agreement between the economic ministry and the plan office,fol. 142-4. BArch R 3101/33641, internal letter, economic ministry, 1.9.1944, fol. 144-5. About the plan office,

    see R.-D. Mller, Albert Speer, p. 343-8.

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    exports, prepared negotiations between Germany and foreign countries. Yet, planning imports

    required correct information about true imports.57 Given that the German authorities were

    aware of the shortcomings of the import statistics, they decided to estimate true imports. For

    purposes of propaganda, the Reich did not want to publish these statistics.58 However, the

    estimation of detailed true import figures was probably never finished due to military

    events.59Only some rough estimates for some countries exports to Germany in 1943 were

    effectuated.

    Table 4:Estimates for true imports from Belgium and France and official Figures 1943;

    m. RM)

    Belgium France

    Regular German payments for imports1

    1,442 3,098

    + Armament imports paid through the service accountand occupation tributes (cif)

    659 644

    =True imports 2,101 3,742

    Estimates of the plan office 2,200 3,800

    Published official import figures (cif) 681 1,416

    1

    Imports financed by the clearing account goods traffic (cif).

    Source: See text.

    57BArch R 3101/33414, internal letter, economic ministry, 1.8.1944, fol. 7; BArch R 3101/33641, economic

    ministry to SRA, 13.6.1944, fol. 112; economic ministry, draft of a letter, 18.5.1944, fol. 119.58

    BArch R 3101/33641, draft of a letter, 17.5.1944, fol. 119.

    59BArch R 3101/33641, internal letter, economic ministry, 7.9.1944, fol. 110.

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    These estimates were reported in a survey about the German war economy, written by the

    plan office in first half of 1944.60 Unfortunately, the report does not explain the way in which

    these values were estimated. But, we know that the plan office had access to the same data we

    do. The comparison of these estimates with our estimates suggests that the method applied by

    us is appropriate, given that the results are almost the same, as shown in table 4. And both

    estimates exceed by far the official import figures.

    However, this method cannot be employed in order to estimate true imports made from all

    countries in favour of Germany. Neither the Netherlands nor Bohemia and Moravia were

    included in both the payments and the clearing statistics.61 In the case of the Netherlands, this

    is due to the fact that the currency border between the Netherlands and Germany was

    suspended in 1941.62 From this point of time on, imports from Netherlands could be paid in

    RM. The suspension of the currency border, however, did not imply that the customs controls

    between the two countries were suspended. Even if tariffs were also suspended, imports and

    exports until the end of the war were controlled and registered by the customs authorities in

    order to fight the so called war corruption.63Thus, in order to estimate true imports from

    60J. Scherner, Bericht zur deutschen Wirtschaftslage 1943/44. Eine Bilanz des Reichsministeriums fr Rstung

    und Kriegsproduktion ber die Entwicklung der deutschen Kriegswirtschaft bis Sommer 1944. Vierteljahrshefte

    fr Zeitgeschichte, 55, Heft 3, 2007, 499-546.

    61BArch R 184/186, DVK, annual report 1944, Appendix 7.

    62BA MA RW 19/1602, decree, economic ministry, no. 29/41 D.St /13/41 R.St., 31.3.1941, fol.44; BArch R

    184/188, DVK, report about clearing operations.

    63BArch R 3102/SRA to Firma Frans Maas, 24.4.1941. BA MA RW 19/1602, decree, economic ministry, no.

    29/41 D.St /13/41 R.St., 31.3.1941, fol.44; BArch R 43 II/371 b., note, 9.2.1942, fol. 12; G . Aly,Hitlers

    Volksstaat: Raub, Rassenkrieg und nationaler Sozialismus. Frankfurt am Main 2005, S. 168; BArch R 2/58987,

    finance ministry, decree, no. 21/43 D. St./11/43 R. S. , 29.3.1943; BArch R 2/58988, economic ministry to Reich

    entities, 28.6.1943. The currency border between Germany and the Netherlands was re-implemented in 1944;however, without including the Netherlands in the clearing operations. Aly,Hitlers Volksstaat, p. 167; R

    2/56059.

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    the Netherlands, we use the information given by the official import statistics and data

    provided by the occupation administration about finished goods exported to Germany. The

    difference between finished goods officially imported from the Netherlands and the figures

    provided by the occupation administration is added to the official imports. This estimate is

    very close to one made by the plan office for the true imports from the Netherlands in

    1943.64 In the case of Bohemia and Moravia, where not only the currency but also the

    customs borders with the Reich were suspended on October, 1, 1940, import estimates are

    available.65In the case of Italy true imports from 1943 on are estimated in a different way

    than by the method described above because for this country data about the amount of imports

    financed by occupation tributes is available. 66

    Table 5: Estimate of German Import Statistics 1941-44 (bn. RM; Current prices; excluding

    looted goods and black market purchases)

    1941 1942 1943 1944 Sum 1941-44

    Import estimate 12.8 15.5 20.7 17.5 66.5

    Official imports 6.9 8.7 8.3 6.8 30.7

    Sources and method: see text.

    Given these considerations, and relying on the estimate method described above, we are able

    to estimate a lower limit for true imports from all countries between 1941 and 1944. The

    annual aggregation of all countries exports in favour of Germany is shown in table 5. As

    mentioned, occupation tributes were also used for financing imports of goods purchased in

    64The plan office estimated that the value of imports amounted to 1.6 1.8. bn RM in 1943, whereas our method

    led to a value of 1.734 bn. RM. For the amount of finished goods exported in favour of the Germans, see Barch

    R 3101/33188, annual report 1943, fol. 33.

    65BA-MA RW 19/1603, note, OKW, economic department, 14.10.1940, fol. 11; J. Krej, The Bohemian-

    Moravian War Economy, in: M. C. Kaser/E. A. Radice (Hgg.), The Economic History of Eastern Europe 1919-1975, Volume II, Oxfrod 1986, pp. 452-94, here p. 462 Tab. 19.9.

    66Scherner, Europas Beitrag.

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    black markets of occupied countries. Given that detailed annual information is not available

    for all countries, we have chosen not to include such imports in our estimate. However, we

    can assume that such black markets imports in nominal values were considerable: for France

    alone black market purchases amounted to 1 bn. RM in average at least per year. We have

    also neglected to include looted goods transported to Germany, because there is not enough

    data available on this topic.

    4. Implications

    Our estimate shows that true imports were significant for the German economy, citing that

    for example the German GDP between 1941 and 1944 made up to about 500 bn. RM.

    Considering that the financial exploitation of occupied Europe amounted to about 110 bn. RM

    (about 30 bn. enforced clearing credits from occupied countries to Germany and about 80 bn.

    RM occupation tributes), we can see, that according the revised import statistics, financing of

    German net imports had a significant impact. If one includes black market purchases, far

    more than one third of the financial exploitation served to finance the German import surplus

    in contrast to the official numbers, according to which German net imports had only a small

    share on use of the money occupied Europe had to pay to the Germans.

    Table 6: Real Imports and Import Structure (constant 1928-prices)

    Imports

    (1928=100)

    Share of manufactures for

    final use (%)

    Share of manufactures not for final

    use (%)

    1928 100 6.2 6.7

    1936 62 2.8 4.4

    1940 53 2.2 6.0

    1941 109(67) 34.4(11.3) 13.3(9.6)

    1942 121(72) 38.4(22.1) 21.0(12.1)

    1943 147(58) 44.7(23.1) 20.3(9.3)

    Sources and method: see text.

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    But does this nominal import boom also imply a boom in real numbers, given the remarkable

    inflation tendencies we can observe in some occupied and allied countries? Yes! Relying on

    import price indexes calculated by different German agencies, an estimate of real imports

    shows (table 6, estimate in bold letters; official figures in italics) that from the beginnings of

    the war real imports rose dramatically.67 We can also observe that the import structure

    changed significantly: Germany became a country, which predominately imported

    manufactured goods, such that Germanys import structure during the war was more similar

    to Germanys current trade situation than to the import structure before the Great Depression.

    Table 7: The Impact of Occupied Europe on the German Armament Production

    (I)

    Armament production in occupied Europe

    (m. RM; current prices)

    (II)

    (I) in percent of true

    imports

    1940 756 15

    1941 4,226 32

    1942 7,292 47

    1943 8,976 43

    1944 11,397 65

    Source: Scherner, Europas Beitrag.

    Who benefitted from this import boom?not surprisingly the Wehrmacht. Basically, for

    security reasons, often only parts of armament goods were manufactured in occupied

    67For the price index forofficial imports, see Statistisches Handbuch; fort he price index of armament goods,

    see Scherner, Europas Beitrag.

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    countries. 68 About 50% of armament goods produced abroad were not finished weapons but

    such parts. 80% of manufactures not for final use shipped to Germany were parts of

    armaments.

    Maybe the most important implication pertains to our knowledge about labour productivity

    growth in the German industry during World War II. According to our import estimate, the

    metal-working sectors imports of manufactures not for final use (such as parts of armaments)

    amounted to 4.5 bn. RM in 1943 instead of 600 m. RM (official figure). This means that the

    intermediate inputssales ratio of the German metal-working sector increased significantly

    compared to 1936 (industrial census) as a result of the outsourcing of intermediate goods in

    occupied countries metalworking sectors. If we consider this, as shown in table 8, labour

    productivity, both in this sector and in industry as a whole, grew much less than suggested by

    the figures calculated in the Industrial Sales Report of the USSBS.

    Table 8: Labour Productivity in German Industry 1940-44 (% p.a.)1940 1941 1942 1943 1944

    Whole industry (USSBS) 9.5 3.1 3.1 5.0 0.5

    Wohle industry (Re-estimate) 8.7 -0,3 0.9 4.5 -1.1

    Metal-working sector (USSBS) 13.2 8.6 4.8 7.5 7.0

    Metal-working sector (Re-estimate) 11.1 1.2 0.6 7.3 6.0Source: See text.

    One should note that the figure for 1940 is misleading for several reasons besides those

    mentioned already in the introduction. First, outsourcing in occupied countries was still taking

    place on a relatively limited basis in this year. Second, outsourcing within the German

    68Scherner, Europas Beitrag.

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    metalworking sector, which increased heavily when the war started, is not included. But there

    is evidence, based especially on firm level data, that except for 1940 the trend of total

    outsourcing resembled that of the outsourcing in occupied countries. In other words: The

    intermediate goods-sales ratio in the metalworking sector seems to have increased throughout

    the war, but the growth rates were decreasing.So it seems that except for 1940the trend of

    the growth rates of the labour productivity figures estimated in table 8 is reminiscent of the

    trend we would uncovered when one includes data regarding Germanys outsourcing.

    Given these considerations, the result supports the hypothesis that labour productivity in the

    armament industry increased only merely in a significant way during the last years of the

    war.69 This is in line with preliminary results of a research project of Jonas Scherner, Jochen

    Streb and Adam Tooze, who are checking and adjusting the armament ministry figures based

    on monthly data. According to this data, labour productivity was in the annual average more

    or less stagnating during the first years of the war and only increasing later.70

    5. Conluding remarks

    The published German trade statistics underreported significantly true German imports

    because of registration problems. The results of the estimates presented in this paper

    contributes first to our knowledge for which purposes the Germans spent the money occupied

    countries had to pay them. Second, the results of the estimate reveal who benefitted from

    these importsunsuprisingly in a significant and increasing way the Wehrmacht, especially

    because intermediate inputs for armaments were imported in a remarkable amount. And given

    69For this hypothesis, see Scherner/Streb, Das Ende eines Mythos.

    70Scherner/Streb/Tooze, Armament Production in the Third Reich.

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    the import of the latter, it seems finally that labour productivity in the German industry grew

    much less than previously assumed.

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