Our news media currently bring up the probability of a Greek default. Sometimes, inspired by a deformed history of the Second World War, they also echo recriminations and claims against Germany, and even present Chancellor Angela Merkel in caricatures as a new Hitler. It therefore seems of interest to review an aspect of the behaviour, during that war, of Germany, occupying power, with regard to Greece, from which the Germans had chased out the British in April 1941.
The reality is that in the midst of the worldwide conflict, despite a partisan war and a maritime blockade enforced by the British, Germany sent Greece large quantities of gold in order to quell a catastrophic inflation and to stabilise the Greek currency, efforts that were not without success.
She also sent foodstuffs to Greece so as to stave off a threatening famine, as well as German export goods – and this despite the shortages the German people were beginning to suffer.
Through the intermediary of Sweden, a neutral country, she entered into contact with the British authorities, whom she in the end got to lift the blockade of Greek waters in favour of a Swedish ship loaded with German provisions, which was thus able, each month, to sail from Trieste or Venice and reach Piraeus, the port of Athens, without running the risk of being torpedoed.
At least Baron van Moyland, former Reich foreign secretary, recalled and declared as much to the judges at the Nuremberg tribunal on March 27, 1946, without being contradicted by the adversary.
(According to the official documents of the trial before the International Military Tribunal at Nuremberg: IMT, volume X, p. 119 and volume XI, p. 428-432; passages reproduced below.)
IMT Volume X [p. 119]
27 March 1946 Morning Session
DR. HORN: Witness, you knew Count Ciano. Where and when did you meet him?
VON STEENGRACHT: I knew Count Ciano but not in a political sense, only personally. I cannot remember exactly when I met him; probably it was on the occasion of a state visit. I was working at the time in the Protocol Department in the Foreign Office.
DR. HORN: What experiences did you have with Count Ciano?
VON STEENGRACHT: Since I did not work with him politically, I had no political experience with him.
DR. HORN: Now, another matter. Is it correct that Herr Von Ribbentrop gave orders that under all circumstances the French franc should be sustained against inflation?
VON STEENGRACHT: Such measures can apply only to a time when I was not yet State Secretary. But I know that the basic attitude towards France and all occupied territories was that under all circumstances their currency was to be preserved as far as possible, or rather should be preserved by all means. That is why we often sent gold to Greece in order to attempt to maintain the value of the currency there to some extent.
DR. HORN: What was accomplished in Greece by sending this gold there?
VON STEENGRACHT: By sending gold to Greece we lowered the rate of exchange of foreign currencies. Thus the Greek merchants who had hoarded food to a large extent, became frightened and threw the food on the market, and in this way it was made available to the Greek population again.
DR. HORN: Is it correct that Von Ribbentrop gave strictest orders not to undertake any confiscation in occupied territories but to deal directly only with their governments?
VON STEENGRACHT: If you put the question like that, it is basically correct, but I say, as I said yesterday, that in principle we had no functions at all in the occupied territories, therefore no Power to confiscate, nor was such power within the jurisdiction of other agencies; but it is correct that we negotiated only with the
foreign governments and that Von Ribbentrop had most strictly forbidden us to support any direct measures concerning an occupied country which were carried out by other departments.
DR. HORN: For the time being I have no further questions to put to this witness.
IMT Volume XI, p. 428-432
15 April 1946 Afternoon Session
[The witness Neubacher resumed the stand]
THE PRESIDENT: Have you finished, Dr Kauffmann?
DR. KAUFFMANN: My examination of this witness is finished.
THE PRESIDENT: Does any other member of the Defense want to ask questions?
DR. SAUTER: Mr. President, I have some questions to put which are, of course, not in any way connected with Kaltenbrunner, but which refer to subjects which will have to be dealt with later during the case of the Defendant Funk. Since the witness can be called only once, however, I have no other choice than to put to the witness now these questions, which really ought to be put later.
Witness, you said today that the German Foreign Service had sent you to Romania – I believe – on questions of economy. Is it correct that during the time you were working in Romania, you were also representing and handling economic interests in Greece?
NEUBACHER: In the autumn of 1942, notwithstanding my assignment in Romania, I received a special assignment, together with an Italian financial expert, Minister D'Agostino, to prevent by proper methods the total devaluation of currency and the total disruption of the economic structure in Greece.
DR. SAUTER: Witness, were you suited for such a difficult task by training and previous experience? Please tell us briefly, which posts you held before, so that we can judge whether you were capable of carrying out this task in Greece; but please, Witness, be very brief.
NEUBACHER: I was one of the foremost economic leaders in Austria. At the age of 28 I was a director; at 30 I was the general manager of the Viennese Settlement Corporation; and at the age of 33 I was directing a large combine in the building trade and building material industry. I was an executive of the Austrian National Bank and a member of the Austrian Customs Auxiliary Council. I was a member of the Russian Credit Committee of the City of Vienna and a member of the Commission of Experts for the investigation of the collapse of the Austrian Credit Bank Corporation. Therefore, I was qualified for this task by extensive economic experience.
Moreover, I was quite familiar with the economic problems of the Balkans, since I had last worked on economic questions relating to the Balkans in the central finance administration of I.G. Farben in Berlin.
DR. SAUTER: Witness, several days ago when I visited you in prison, I gave you a report of a commission of the Royal Greek
Government, addressed to the International Military Tribunal, and I asked you to read it and state your opinion. Is this report correct?
Mr. President, it is Exhibit USSR-379, and it has the additional Document Number UK-82.
Witness, in this report of the commission the matter is presented as if the economy of Greece had been entirely destroyed by German authorities and that Greece had been plundered, et cetera. In the end this reflects on the Defendant Funk. Please do not go into detail, but tell us briefly what is your impression in this connection.
THE PRESIDENT: Yes, General Rudenko.
GEN. RUDENKO: Mr. President, I would like to make the following statement before the Tribunal: In regard to the report of the Greek Government, which was presented before the Tribunal by the Soviet Prosecution as provided by Article 21 of the Charter, it seems to me that the question of the Defense Counsel, asking the witness to give his opinion on this particular matter, should be rejected because the witness is not competent to give an opinion on the report of the Greek Government. The Defense Counsel can ask him a concrete question in regard to any particular fact, but that is all.
DR. SAUTER: Mr. President, if it is desired, I can, of course, put the questions individually. It will probably take a little longer, but if the Soviet Russian Prosecution so desires I agree. May I now question the witness? Witness, is it correct...
THE PRESIDENT: Wait a minute. Dr. Sauter, what exactly is it that you want to ask the witness about this report?
DR. SAUTER: The report of the Greek Government, which has been submitted by the Russian Prosecution, states, for instance, that Germany in its occupation of Greece plundered the country and brought about a famine by exporting an excessive amount of goods. It states that the country was charged excessive occupation costs, and that the country was heavily prejudiced by the clearing system, et cetera. Through this witness, who as the economic expert of the German Foreign Office handled these problems in Greece at that time, I propose to prove: First, that these statements are untrue; second, that this state of affairs prevailed already when the German troops marched in and was not created by the German authorities; and, last, that it was the Defendant Funk who tried repeatedly to improve matters for Greece through the clearing system and had considerable amounts of gold brought to Greece.
THE PRESIDENT: Well, can't you put a few short questions to show that the scheme which this witness introduced into Greece was in accordance with international law and was not unfair to Greece? If you could do that, that would meet the case, wouldn't it?
DR. SAUTER: Yes, that is what I wanted to do, and I am sure that the witness would have done so on his own initiative.
Now, then, Witness, are you acquainted with the viewpoint of the German economic authorities, and particularly of the Defendant Funk, in regard to the question of the clearing of debts incurred by Greece and the question of how Greece was to be treated with regard to this clearing system?
NEUBACHER: Concerning the mutual financial charges and obligations, I spoke at one time to the Reich Finance Minister, Schwerin von Krosigk, and it was proposed that at some later date after the war the claims and counter-claims were to be settled on the basis of a common denominator.
DR. SAUTER: And at that time, during the war, how was the question of this clearing dealt with?
NEUBACHER: Regarding the economic events in Greece, I can give you information based on my own observations only, starting with October 1942. At that time, when I first came to Athens, the Greek currency had already been considerably devaluated, and the circulation of banknotes had increased by something like 3,000 percent.
Greece also suffered an economic set-back due to the fact that, in addition to a progressing inflation, an attempt had been made to introduce in Greece a planned economy with ceiling prices along German lines. The result was, of course, that the merchants selling Greek goods suffered losses when they were paid later. On the other hand, when I arrived there the importers of German goods made tremendous profits, because they paid Reichsmark at the rate of 60 on the clearing and resold the goods at a rate of about 30,000. This chaos, due to the inflation in connection with the attempt of introducing a planned economy on the German pattern, could be remedied only by transforming the black market in Greece into a completely free market. The two experts of the Axis Powers introduced this measure with considerable success at the end of October 1942. Within a few weeks all shops and markets were full of goods and foodstuffs; the prices of food dropped to one-fifth and prices of manufactured products to one-tenth. This success could be maintained for 4 months in spite of increasing inflation.
DR. SAUTER: Dr. Neubacher, is it true that the Defendant Funk, who was Reich Minister of Economy at that time, proposed during a conversation or in correspondence he had had with you that, in spite of the shortage of goods prevailing in Germany, a considerable amount of goods should be sent from Germany and other European countries, particularly to Greece?
NEUBACHER: Reich Minister Funk, with whom I discussed the difficulties of my task, and I both fully agreed that a maximum of goods should be transported to Greece, and certainly not only food. I secured not only 60,000 tons of food at that time but also German export goods, since it was hopeless to try to stop an inflation or the effects of an inflation on the prices, if there were no supplies. Reich Minister Funk supported exports to Greece with the view to a restoration of normal market conditions with every means at his disposal.
DR. SAUTER: You know, Witness, that since transport from Germany to Greece had become impossible, the Defendant Funk made every effort to have goods transported on neutral ships, furnished with British navicerts, from Germany to Greece in order to combat as far as possible the already impending famine.
NEUBACHER: I think that was between 1941 and 1942 when I had not yet arrived in Greece. In 1943, when shipping in Greek waters had completely stopped for us, because all ships had been torpedoed and the railroads had become the object of incessant acts of sabotage and dynamiting, I, with the help of the Swedish Minister, Alar, who directed the International Relief for Greece, applied for British navicerts for food transports to Greece. The British granted this application, and when our own means of transport had ceased to exist, the Swedish boat Halaren went from Trieste or Venice to the Piraeus once a month, loaded with German food supplies for Greece.
DR. SAUTER: And Funk, the Reich Minister of Economy at that time, played an important part in these actions, did he not?
NEUBACHER: Reich Minister of Economy Funk took a very positive interest in the Greek question, a question which is unique in the history of economy, and he supported me in my efforts with every means at his disposal.
DR. SAUTER: Witness, do you know anything about the fact that the Defendant Funk advocated in particular that the occupation costs should be kept as low as possible, and that he took the view that it would be preferable that a considerable part of the occupation costs should rather be charged to the German account so that Greece should not be overburdened? What do you know about that?
NEUBACHER: I know too little of the details of what happened in Berlin; but at long intervals I reported to Reich Minister Funk about the situation in Greece, and I know that he made my reports the basis for his own interventions. He was perfectly aware of the fact that the Greek economic problem during the war and within the blockade was so infinitely complicated that all efforts had to be made to prevent a complete dissolution of the monetary value and
the economic structure; and he intervened at all times in that respect.
DR. SAUTER: Witness, did Defendant Funk act in such a way that the Greek currency, drachma currency, was devaluated, or that it deteriorated? Or did he, on the contrary, endeavor to back the drachma value, particularly for the purpose of preventing a catastrophic famine? Please state briefly what you know about that.
NEUBACHER: Reich Minister Funk always made every effort in the latter direction. He proved that by enforcing exports to Greece and finally by the grant of a considerable amount of gold for the purpose of slowing down the Greek inflation – which grant, in accordance with the Four Year Plan, involved the gravest sacrifice for Germany.
DR. SAUTER: You say "a considerable amount of gold." There was very little gold in Germany during the war. Can you tell us how large the amount of gold was which the Defendant Funk sent to Greece at that time for the purpose of backing the drachma to some extent and preventing the impending catastrophe? How large was the amount?
NEUBACHER: All told, one and one third million pounds sterling were invested in Greece and Albania, to my recollection.
DR. SAUTER: One and one third million pounds sterling?
NEUBACHER: Greece and Albania got that amount.
DR. SAUTER: And now, Witness, I have a last question. Is it correct that all these efforts on the part of the German economic management and the German Minister of Economy were often frustrated and foiled, particularly by Greek merchants? To quote just one example, there were cases where German factories sold German engines for 60 drachmas to Greek merchants – that is to say, 60 drachmas which had actually no value – and the Greek merchant sold these same engines which they had bought for 60 drachmas from Germans to the German Armed Forces at 60,000 drachmas apiece. These are supposed to be cases which you discovered and on which you reported to the Defendant Funk, and that is why I am asking you whether that is true.
NEUBACHER: I have the following comment to make about that. It did, in fact, happen, but I want to state that the Greek businessmen had to do that in consequence of inflation and the black market. The Greek people are much too intelligent to be caught up in an inflation. Every child there is a businessman. Therefore, the only possible method for counteracting this obvious speculation, which in itself is not dishonest, was that of converting the black market into a totally free market on sound business lines; and that was the end of these experiments.