Germany's Difficult Economic Inheritance
January 27, 2005
The Third Reich's economy depended heavily on exploiting forced laborers. After World War II, legal battles raged for decades over financial compensation for the victims. But five years ago, a foundation called "Remembrance, Responsibility and the Future" was created to redress the errors of the past -- as far as possible.
"The leading German industrials: IG Farben, Krupp, Flick, Rheinmetall owe the forced laborers something because they worked them to death," said Benjamin Ferencz US chief prosecutor in the Nuremberg Einsatzgruppen case. "'We were lower than slaves,' said one of the forced laborers. 'One tries to preserve slaves. We were like a piece of sandpaper: rubbed a few times, used up and then thrown away to be burned with the garbage. And they were working these people to death as part of a program called 'extermination through work'."
The Einsatzgruppen were SS groups that persecuted and murdered Jews and other civilians behind the frontlines. In the late 1990s, former forced laborers filed a class-action suit against several German companies, including BMW, Daimler-Benz, Deutsche Bank, Siemens and Volkswagen. The plaintiffs' lawyer Edward Fagen said these companies had played an important role in the Holocaust.
Passing the blame
The affected companies feared they would lose billions and hurt their image, since for decades they had refused to compensate victims. They said they had been obliged to employ forced laborers. Former BMW spokesman Erbo Herrmanns thus argued that only the Federal Republic of Germany was bound to pay financial reparations.
"At that time, we paid the wages of our forced laborers to the state. If there are any claims, they have to be directed to the Federal Republic of Germany, as Germany is the legal successor of the Third Reich," Herrmanns said.
According to historian Dietrich Eichholz, many more German companies profited from forced labor in Auschwitz and elsewhere. After the war, German industry's assets were 17 times higher than in 1939. Though the Nazi regime lost the war, industry gained a lot from it. Concentration camps inmates and prisoners of war didn't get any wages. Forced laborers from Poland and the Soviet Union earned a little, while slave workers from western countries received almost as much as German unskilled workers.
"The companies kept the profits and invested a lot of the money during the war, Eichholz said. "There had never been so many investments in German history than during the years 1940 to 1944. These investments became the foundation of West Germany's later economic recovery."
Meager compensation
Forget, repress, reject -- that was the slogan of many companies in postwar Germany when it came to compensation. Out of several hundred firms that used concentration camp prisoners in their workforce, only a few were willing to compensate for health-damages and unpaid wages. IG Farben and Daimler-Benz were two of these rare examples.
However, the financial compensation was meager and paid almost exclusively to Jewish victims. Siemens, for example, only compensated 2,200 of its 50,000 former forced laborers. Medium-sized companies like fashion firm Hugo Boss, which sewed war uniforms, refused to pay, even though they had profited from the forced laborers.
"To give you an idea of the dimensions, in August 1944, there were 8 million foreign laborers and prisoners of war working in the so-called Greater German Reich," explained, historian Ulrich Herbert of the University of Freiburg. "You have to add about 500,000 mostly foreign concentration camp prisoners. That means, that in the summer of 1944, almost 30 percent of all workers in the German economy were foreigners -- foreigners who had been brought to work in Germany against their will."
Altogether, about 12 million forced laborers were displaced from the occupied countries during the war. In 1939, German industry was already short of 1.2 million workers, who had been drafted. To balance this lack of workers, especially as the situation at the eastern frontline worsened in 1943, industry itself demanded new workers to keep up production.
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Firms weren't coerced
Most historians now say that it the Nazi regime didn't make companies employ forced laborers. Many of them acted on their own accord. Firms such as Blohm und Voss, Schering, Deutsche Reichsbahn, Thyssen and Mannesmann made laborers work under horrible conditions, said historian Ulrich Herbert. "The road to the crematorium led through Siemens," recalled a survivor of the Ravensbrück concentration camp.
Yehuda Bauer, director of the International Center for Holocaust Studies in Israel explained why it took so long for the silence to be broken that surrounded companies' wartime activities.
"Public pressure started when the first archives had been opened. People could not pretend anymore that nothing wrong had happened. When talking about forced laborers in Germany, companies used to say: 'They were paid.' That's total nonsense. These people were tortured 12, 14, 16 hours a day and they didn't even get a piece of bread for their work. The SS received payments for the work of the slave laborers, which flowed into private pockets."
After the agreements between Swiss banks and US Jewish organizations in the mid-1990s, those who refused to compensate started falling like dominos. Allianz, Degussa, Deutsche and Dresdner Bank began to settle claims from former forced laborers. Volkswagen and Siemens decided to create a fund to grant survivors individual support.
Like winning the lottery?
In 1998, the newly elected German government coalition of Social Democrats and Greens acted quickly to compensate all forced laborers. A special group was commissioned to hammer out details with the companies involved, and in 1999, the government, representatives of the German business community, the United States and survivors groups from central and eastern Europe came to an agreement.
The next year, the foundation "Remembrance, Responsibility and the Future" was set up and endowed with €5 billion. Half of the money was provided by the German government and German companies paid the rest. More than 6,500 companies have joined the initiative and, although the victims don't have a legal claim to receive compensation and the payments are voluntarily, over 1.5 million forced laborers from about 80 countries have been compensated so far. By summer 2005, almost 2 million people will have received their money.
"Of course, the money is important," commented Michael Jansen, the foundation's former chairman. "Many of the old people from eastern countries like Belarus, the Ukraine or Russia live in poor conditions. For many of those people, the money is like a lottery jackpot. They are thankful because we improve the difficult conditions they are living in."