With Allied occupation of European countries in its first stages, the
monetary problem is one which must be met. Some years ago, the Germans
considered this situation, and perhaps their experience may be of value.
a. The Problem
German occupation of foreign countries has given rise to four different
sets of difficulties in the field of finance.
(1) The collapse of the currency of the invaded country;
(2) Prevention of over-extension of the circulation of German national
money - the Reichsmark;
(3) The re-establishment of local currency, (a) in Russia, (b) in capitalistic countries;
(4) Provision for an army currency that could be used by the troops, anywhere
that German troops might be. In addition, it was desirable from the German
viewpoint, to extract from the occupied territories as much gold and silver that
they could seize to support the German domestic currency, and to prevent an
inflationary price rise in the occupied countries which would add to German difficulties.
b. Rejected Solutions
At first glance, it might have seemed the simplest solution to sweep away
all national currencies, and replace them with one general central European
issue controlled by the Reichsbank. This obvious solution, however, was open to
objection, as the financial status of the occupied or conquered nations varied
greatly -- for example wealthy Holland and poverty stricken Croatia; moreover,
the degree of punishment meted out to conquered peoples differed from one another.
Poland and Greece are being wiped out; Holland, Luxemburg, Denmark and others
will, if possible, be incorporated into the Reich. Therefore no attempt has yet
been made to establish a general currency. Finally, to have extended the use
of the Reichsmark into conquered countries, another apparently natural step, would
have placed German national currency, physically, in the hands of people who were
enemies of the Reich.
c. The Solution Adopted
(1) Reichskreditkassen (Reich Credit Offices)
One of the most interesting German innovations in this war was the
development of special itinerant banks of issue to follow the invading German columns
and establish themselves in the principal cities in the occupied areas.
These banks, the so-called Reichskreditkassen (Reich Credit Offices),
were introduced in the Polish campaign, where they worked in particularly close
conjunction with the army. On the basis of the Polish experience, certain
administrative modifications of the system were made by the decree of 3 May 1940.
A council of administration for the Reichskreditkassen was established at
that time with representation from the Reichsbank, the Finance Ministry, the
Economics Ministry, the Oberkommando, and the Commander-in-Chief of the
army. The Reichsbank provided the greater part of the personnel of the new
Reichskreditkassen and maintained close administrative and technical connections
with them. The head offices were maintained in Berlin, affiliated to the Reichsbank.
(2) Special Currency -- Reichskreditcassenscheine
The Reichskreditkassen were responsible for the issuance of special notes
(Reichskreditkassenscheine) to the armed forces in occupied areas. The notes,
which were issued in denominations of 1, 2, 5, 20, and 50 marks, were legal
tender only in the country in which they were issued and were not negotiable in
other occupied territories or the Reich.
The rate of exchange between the RKK-scheine and the currency of the
occupied country was fixed by the occupation authorities immediately after the
entry of the army. The local banks were required to accept the notes at the
official rate. The use of ordinary German banknotes by the troops was strictly
forbidden, except in those areas such as Danzig, the Polish Corridor, Alsace and
Lorraine which were officially or unofficially incorporated into the Reich.
The RKK-scheine were designed to place the entire burden of the occupation
on the country in which they were issued and to prevent any indirect drain on
German stocks or diversion of German production arising from an unrestricted
filtering-back of notes into the Reich. In addition, it was anticipated that the influx
of the notes into circulation would alleviate the temporary shortage of local
currency resulting from panic hoarding and the exodus of refugees from the area.
This proved to be the case, particularly in Poland and Belgium, where the central
banks followed the established governments into exile and took the note supply
The issuance of RKK-scheine was considered a temporary expedient and
resorted to only for the payment of troops and for the purchase of minor supplies
locally. The actual distribution of the RKK-scheine among the troops was left to
the regular army paymasters, who were issued the currency in advance. The
technical personnel of the Reich Credit Offices was concerned instead, with
extending emergency banking facilities to areas in which the normal monetary and
credit facilities had been disrupted by the occupation.
(3) Reich Credit Offices -- Banking Operation
The Reich Credit Offices were authorized to function as credit institutions
in occupied areas and carry out a wide variety of transactions. This was deemed
necessary to ensure that the German forces would not be hampered by an internal
credit crisis in the occupied area. The offices were permitted to invest in
commercial bills, drafts, and secured advances of a maximum term of six months;
to take non-interest bearing deposits; to hold deposits of securities and other
objects of value; to carry on all types of banking operations, other than the
acceptances business; and to regulate the general flow of money and credit within
the occupied territories.
The scope and length of activity of the Credit Offices subsequent to the
early stages of occupation depended upon local developments. In those areas
which were incorporated promptly and completely into the Reich, the respective
offices of the Reichskreditkassen became branches of the Reichsbank, which
proceeded to take over their assets and liabilities.
In those countries which were stripped of normal monetary and banking
apparatus by the destruction of records and evacuation of essential banks, the
RKK constituted the nuclei for the establishment of new banks of issue. This took
place in Poland, Belgium, and Yugoslavia.
In those areas in which the pre-invasion monetary and banking structure
was left relatively intact, the emergency functions of the RKK were gradually
reabsorbed by the existing statutory central banks.
In all cases, as soon as the occupation was consolidated and the Germans
arrived at a satisfactory agreement with the existing central banks or established
a new central bank, the issue of RKK-scheine was suspended. Thenceforth occupation
troops were paid in local currency made available through the local central bank
out of "occupation costs". Disbursements were through the regular military
channels. RKK-scheine promptly disappeared from circulation, being taken in
exchange against local currency by the central bank for the account of the Treasury
of the occupied state.
The RKK-scheine system as utilized in the 1940 campaigns continued without
major modification until mid-1942, when a new type of special currency,
Wehrmachtbehelfsgeld or "Armed-forces-auxiliary money" was developed.
This auxiliary money was the solution adopted to handle the situation in
certain friendly countries in which the issue of local currency sufficient to cover
the soldiers' pay would seriously disturb the local finances. The first expedient
adopted was to issue special "canteen-money" as part-payment of German troops
in Rumania and Bulgaria. This "canteen-money" was valid only in military canteens,
soldiers' hostels, and similar service organizations.
Later the issue of armed-forces-auxiliary money was begun in Bulgaria. It
consists of a new type of 1, 5, 10, and 50 pfennig notes issued by the
Reichskreditkassen. The notes are issued for internal army purposes, where they
are worth 10 times their "face" value. Outside the army organization they are
worth only face value, which eliminates the danger of their being put into wide
circulation. The auxiliary money differs from the "canteen-money" in that it
can be used by the soldier, without loss, for savings or sending home to his family.
Under the present system, the RKK-scheine are kept in reserve for emergency
use, mainly to provide a currency in areas in which fighting is actually in progress.
In order that their issue can be accomplished without preliminary formalities
should the occasion arise, they have remained legal tender in the occupied countries
although they have de facto been withdrawn from circulation.