Blockade of Germany (1939–1945)

During the early months of the war – the Phoney War – the only place where there was substantial fighting was at sea.^[4] News of the successes achieved by the men of Contraband Control were rarely out of the newspapers, and provided useful propaganda to shore up civilian morale. In the first 15 weeks of the war the Allies claimed to have taken 870,000 tons of goods, equal to 10% of Germany's normal imports for an entire year. This included 28 million US gallons (110,000 m³) of petrol and enough animal hides for 5 million pairs of boots, and did not take account of the loss to Germany from goods that had not been shipped at all for fear of seizure.

German preparations to counter the effects of the military and economic war were much more severe than in Britain. On 4 September a tax of 50% was placed on beer and tobacco, and income tax went up to 50%. For months previously, all able-bodied people in cities had by law to carry out war work such as filling sandbags for defenses and air-raid shelters, and it was now made an offense to ask for a raise in salary or to demand extra pay for overtime.^[27] On 7 September wide-ranging new powers were granted to Heinrich Himmler to punish the populace for 'Endangering the defensive power of the German people'; the next day a worker was shot for refusing to take part in defensive work.^[18] The new legislation, frequently enforced by the Peoples Court, was made deliberately vague to cover a variety of situations, and could be very severe. In time it would lead to the death penalty for such crimes as forging food coupons and protesting against the administration. Shirer recorded in his diary on 15 September that the blockade was already having a direct effect. It had cut Germany off from 50% of her normal imports of nickel, cotton, tin, oil and rubber, and since the war's beginning she had also lost access to French iron ore, making her extremely reliant on Sweden for this vital material.

Germany now looked to Romania for a large part of the oil she needed and to Soviet Union for a wide range of commodities. Apart from allowing Hitler to secure his eastern borders and annihilate Poland, the Nazi-Soviet Pact brought Germany considerable

The Germans maintained an aggressive strategy at sea in order to press home their own blockade of the Allies. Lloyd's List showed that by the end of 1939 they had sunk 249 ships by U-boat, air attack, or by mines. These losses included 112 British and 12 French vessels, but also demonstrated the disproportionate rate of loss by neutral nations. Norway, a great seafaring nation since the days of the Vikings had lost almost half its fleet in World War I, yet now possessed a merchant navy of some 2,000 ships, with tonnage exceeded only by Britain, the US, and Japan. They had already lost 23 ships, with many more attacked and dozens of sailors killed, while Sweden, Germany's main provider of iron ore, had lost 19 ships, Denmark 9, and Belgium 3. The Netherlands, with 75% of her commercial shipping outgoing from Rotterdam to Germany, had also lost 7 ships, yet all these countries continued to trade with Germany. Churchill was endlessly frustrated and bemused by the refusal of the neutrals to openly differentiate between the British and German methods of waging the sea war, and by their determination to maintain pre-war patterns of trade, but stopped short of condemning them, believing that events would eventually prove the Allies to be in the right. He commented;

At present their plight is lamentable and will become much worse. They bow humbly in fear of German threats of violence, each one hoping that if he feeds the crocodile enough the crocodile will eat him last and that the storm will pass before their turn comes to be devoured. What would happen if these neutrals, with one spontaneous impulse were to do their duty in accordance with the Covenant of the League [of Nations] and stand together with the British and French Empires against aggression and wrong?.

The neutral commerce which Churchill found most perplexing was the

The British urgently set to work to find a defence against the magnetic mine and began preparations to recreate the Northern Barrage, established between Scotland and Norway in 1917 as a safeguard against increasing U-boat attacks.^[4] In his war speech to the Empire, Prime Minister Neville Chamberlain declared: "Already we know the secret of the magnetic mine and we shall soon master it as we have already mastered the U-boat", but shortly afterwards two more ships were sunk, bringing the week's total to 24. Evidence that at least part of Germany's attack was with illegal floating mines came when a British freighter was sunk at anchor off an east coast port, when two mines came together and exploded off Zeebrugge, and when a large whale was found near four German mines on the Belgian coast with a huge hole in its belly.^[32] Over the weekend of 18–21 November six other neutral ships were sunk off the English coast, including a 12,000 ton Japanese liner.^[27]

Eventually, a method of de-magnetising ships, known as degaussing was developed, which involved girding them in electric cable, and was quickly applied to all ships. Other means of minesweeping were also developed, whereby the mines were exploded by patrolling ships and aircraft fitted with a special fuse provocation apparatus.

Export ban

From early December 1939 the British began preventing German exports as a reprisal for the damage and loss of life caused by the German magnetic mines.^[32] Chamberlain said that although he realised this would be detrimental to the neutrals, as Norway got nearly all its coal from Germany, the policy was in strict adherence to the rules of law, and that while Germany's use of mines and submarine warfare had already caused many innocent deaths regardless of nationality, no loss of life had been caused by the exercise of British sea power. Before the war, 70% of Germany's export trade was with European countries, mostly the Netherlands, France and England, but the Ministry estimated that Germany's remaining annual exports were worth £44m to South America, £19m to the Far East, £15m to the US, and that although nothing could be done to prevent the overland exports to Scandinavia, Italy, Russia and the Balkans, it was believed that German sea trade could be reduced by 45% by the measure.

Angry at the British export ban, the German Government accused the British of having deliberately sunk the Simon Bolivar, lost on 18 November with the loss of 120 people, including women and children. They advised neutrals to shun British waters and trade with Germany, declaring that because of the defensive minefields and contraband control, British waters were not mercantile fairways subject to the Hague Convention regulating sea warfare, but military areas where enemy ships of war must be attacked. Prompted by Germany, all the neutrals protested, but the overall effect was to slow the flow of neutral shipping to a standstill. The Nazi leadership later grew bullish at the apparent success of the mine strategy and admitted they were of German origin, stating that "our objectives are being achieved".

In Berlin, William Shirer recorded in his diary that there were signs of a rush to convert currency into goods to guard against inflation, but that although the blockade now meant that the German diet was very limited, there was generally enough to eat and people were at that point rarely going hungry. However, it was no longer possible to entertain at home unless the guests brought their own food and though restaurants and cafes still traded they were now very expensive and crowded.^[32] Pork, veal and beef were rare, but in the early months there was still adequate venison, wild pig and wildfowl shot on estates and in forests. Coal was now very difficult to obtain however, and although sufficient crayfish were imported from the Danubian nations to allow an enjoyable festive meal, people went cold that Christmas. In fact, Germany produced large volumes of very high quality coal in the Saar region, but much of it was now being used to produce synthetic rubber, oil and gas. There were reports that Germany, which badly needed to raise foreign currency had been trying to export bicycles and cars to adjacent countries without tyres. The average German worker worked for 10 hours a day 6 days a week; but although he may have had enough money to buy them, most items were not available, and shops displayed goods in their windows accompanied by a sign saying 'Not For Sale'^[18][33]

Such was the belief in the supreme strength of the Royal Navy that some thought that the blockade might now be so effective in restricting Germany's ability to fight that Hitler would be forced to come to the negotiation table.^[34]

Meanwhile, at the beginning of 1940 there were still 60 German merchant ships alone in South American harbours, costing £300,000 per month in port and harbour dues, and Hitler eventually ordered them all to try to make a break for home. Up to the end of February 1940 about 70 had tried to get away, but very few reached Germany. Most were sunk or scuttled, and at least eight foundered on rocks trying to negotiate the way down the unfamiliar and hazardous Norwegian coast. The Germans tended to prefer to sink the ships themselves rather than allow the Allies to capture them, even at risk to those aboard. Such was the case of the Columbus, Germany's third-largest liner at 32,581 tons, and the Glucksburg, which ran herself ashore on the coast of Spain when sighted. Another, the "Watussi", was sighted off the Cape by the South African Air Force and the crew immediately set her on fire, trusting the aircrew to bring aid to the passengers and crew.

That winter was harsh, causing the Danube to freeze and heavy snow slowed rail transport, stalling Germany's grain and oil imports from Romania. The UK, having deprived Spain of her exports of iron ore to Germany entered into a deal to buy the ore instead via the Bay of Biscay, along with copper, mercury and lead to enable the Spanish, who were on the verge of famine, to raise the foreign exchange she needed to buy grain from South America to feed her people.

1940

On 17 January 1940 the Minister of Economic Warfare, Ronald Cross said in a speech in the House of Commons:

We have made a good start, we must bear in mind that Germany does not have the same resources she had some 25 years ago. Her resources in gold and foreign currency are smaller; her stocks of industrial raw materials are far smaller. At the end of four and a half months, Germany is in something like the same economic stress she was in after two years of the last war.^[14]

Despite newsreels showing the effectiveness and power of the Nazi Blitzkrieg, which even her enemies believed, Germany was unable to afford a prolonged war. In order to buy from abroad without credit or foreign exchange (cash), a nation needed goods or gold to offer, but the British export ban prevented her from raising revenue. In World War I, even after two years of war Germany still had gold reserves worth 2.5m marks and over 30 billion marks invested abroad, giving her easy access to exports.^[35] By this early stage of World War II, her gold reserves were down to around half a billion marks and her credit was almost nil, so any imports had to be paid for by barter, as with the high-technology equipment sent to Russia or coal to Italy.

In February 1940

On 6 April, after the sinking of the Norwegian mail steamer Mira, the Norwegian Foreign Minister Professor Koht, referring to 21 protests made to belligerents about breaches to her neutrality, made a statement about the German sinking of Norwegian ships by U-boats and aircraft.[36] "We cannot understand how men of the German forces can find such a practice in accordance with their honour or humanitarian feelings". A few hours later another ship, the Navarra was torpedoed without warning, with the loss of 12 Norwegian seamen, by a U-boat which did not stop to pick up survivors.

Intensification of the blockade

Despite impressive statistics of the quantities of contraband captured, by the spring of 1940 the optimism of the British government over the success of the blockade appeared premature and a feeling developed that Germany was managing to maintain and even increase imports. Although the MEW tried to prevent it, neighbouring neutral countries continued to trade with Germany. In some cases, as with the crucial Swedish iron ore trade, it was done openly, but elsewhere, neutrals secretly acted as a conduit for supplies of materials that would otherwise be confiscated if sent directly to Germany.

A third of Dutchmen derived their livelihood from German trade, and Dutch traders were long suspected of acting as middle men in the supply of copper, tin, oil and

American companies were prevented from openly supplying arms to belligerents by the Neutrality Acts, (an amendment was made on 21 September in the form of

But by far the biggest hole in the blockade was in the Balkans. Together Yugoslavia, Romania and Bulgaria annually exported to Germany a large part of their surplus oil, chromium, bauxite, pyrites, oil-bearing nuts, maize, wheat, meat and tobacco. Germany also made big purchases in Greece and Turkey and viewed the region as part of its supply hinterland. Before the war, Britain recognised Germany's special interest in the region and took a very small percentage of this market, but now, via the United Kingdom Commercial Corporation they used their financial power to compete in the Balkans, the Netherlands and Scandinavia, underselling and overbidding in markets to deprive Germany of goods, although Germany was so desperate to maintain supplies that they paid considerably over the normal market rate. As elsewhere, Germany paid in kind with military equipment, for which they were greatly aided with their acquisition of the Czech Skoda armaments interests.

Germany was almost entirely dependent on Hungary and Yugoslavia for bauxite, used in the production of

The British Supreme War Council met in London on 28 March to discuss ways to intensify the blockade. According to The Economist,^[when?] in April 1940 the war was costing the UK£5m per day out of total government expenditure of £6.5 – 7m per day. This was during the phoney war, before the fighting on land and air had begun. The Prime Minister said that, while it was out of the question to purchase all exportable surpluses, concentration on certain selected commodities such as minerals, fats and oil could have a useful effect, and announced a deal for Britain to acquire the entire export surplus of whale oil from Norway. Later Britain signed the Anglo-Swiss Trade Deal, and negotiations for war trade agreements were also concluded with Sweden, Norway, Iceland, Belgium, the Netherlands, and Denmark. Commercial agreements were negotiated with Spain, Turkey, and Greece, aimed at limiting material to Germany.

Chamberlain also indicated that steps were being taken to stop the Swedish iron ore trade, and a few days later the Norwegian coast was mined in Operation Wilfred. But perhaps the most important measure taken at this time was the setting up of the Special Operations Executive (SOE). SOE's origins go back to March 1939 following the German invasion of Czechoslovakia. It was set up by Lord Halifax with funding from the Secret Vote authorised by Prime Minister Chamberlain. In July 1940 Winston Churchill asked the Lord President (Neville Chamberlain) to define its structure and the document held at Kew CAB66/1 Extract 2 thereafter became known as the Charter of SOE. This Charter also defined the relationship of various organs of state including the security and police services with one another and initially the minister was the new Minister of Economic Warfare Hugh Dalton. Though very few people knew of it at the time, the new organisation, the earlier version of which carried out the attempt to dynamite the Iron Gate on the Danube, marked a new direction in the Economic War that would pay dividends later on, providing vital intelligence on potential strategic targets for the offensive bomber campaigns that came later in the war. There were turf wars from time to time with SIS who did not want to risk sources being compromised by SOE sabotage of enemy targets.

Bombing of Germany

Shortly after the German invasion of the Low Countries and France, the British took the first tentative steps towards the opening of a strategic air offensive aimed at carrying the fight to Germany. On 11 May 1940 the RAF bombed the city of Mönchengladbach.^[37] On the night of 15/16 May 1940, RAF Bomber Command, which until that point had been used for little more than attacking coastal targets and dropping propaganda leaflets, set off on a night time raid on oil production and railway marshalling yards in the Ruhr district.

The mining and manufacturing region of the Ruhr, often likened to the

The US now accepted that it needed to increase spending for its own defense, especially with the growing threat of Japan, but there was real concern that Britain would fall before the weapons were delivered.

Because of Germany's new proximity on the west European coastline and the decrease in shipping traffic, ships which would normally have been used for patrolling the high seas were diverted to more urgent tasks.[41] Britain discontinued its contraband control bases at Weymouth and The Downs and removed all but a skeleton staff from the control base at Kirkwall to continue searching the few ships bound for Sweden, Finland, Russia and her recently annexed Baltic satellites ( Estonia, Latvia and Lithuania surrendered on 21 June 1940 ).

The Navicert system was greatly extended, introducing compulsory Navicerts and ships' warrants in an attempt to prevent contraband being loaded in the first place.^[41] Any consignment going to or from ports without a certificate of non-enemy origin and any ship without a ships Navicert became liable to seizure.

The lost Dutch and Danish supplies of meat and dairy products were replaced by sources in Ireland and New Zealand. Canada held a whole year's surplus of wheat, while the U.S. reserve was estimated to be the greatest in history, but Britain was suffering very heavy shipping losses as a result of expanding U-boat numbers. Virtually all Dutch and Belgian ships not captured by the Germans joined the British merchant fleet, which together with the tonnage contributed by Norway and Denmark added about one-third to Britain's merchant marine, giving them a large surplus of vessels. To prevent the enemy gaining a route to acquire supplies, the occupied countries and the unoccupied (

In course of the Battle of France, the Germans captured 2,000 tanks of various types, including the heavy French Char B1 and British Matildas, 5,000 artillery pieces, 300,000 rifles and at least 4 million rounds of ammunition. These were all available to be reconditioned, cannibalised or stripped down for scrap by the men of Organisation Todt. Despite attempts to transport it away before capture, occupied nations' gold reserves were also looted, along with huge numbers of artworks, many of which have never been recovered.

Occupied countries were subjected to relentless, systematic requisitioning of anything Germany required or desired.^[43] This began with a vast physical looting, in which trains were requisitioned to carry to Germany all movable property such as captured weaponry, machinery, books, scientific instruments, art objects and furniture. As time went on other miscellaneous items such as clothing, soap, park benches, garden tools, bed linen and doorknobs were also taken. The looted goods were taken to Germany mainly by trains, which themselves were mostly kept by Germany.^[44]

Immediate steps were also taken towards the appropriation of the best of the conquered nation's food. Decrees were proclaimed to force farmers to sell their animals and existing food stores, and while in the beginning a percentage of each year's crop was negotiated as part of the

The Germans also gained the occupied country's natural resources and industrial capacity. In some cases these new resources were considerable, and were quickly reorganized for the Nazi war machine. The earlier acquisitions of Austria and Czechoslovakia yielded few natural resources apart from 4m annual tons of iron ore, a good proportion of Germany's need. Austria's iron and steel industry at Graz, and Czechoslovakia's heavy industry near Prague, which included the mighty Skoda munitions works at Pilsen were, though highly developed, as heavily reliant on imports of raw materials as Germany's. The conquest of Poland brought Germany half a million tons of oil per year and more zinc than it would ever need, and Luxembourg, though tiny, brought a well-organized iron and steel industry 1/7th as great as Germany's.

Norway provided good stocks of chromium, aluminum, copper, nickel and 1m annual pounds of molybdenum, the chemical element used in the production of high speed steels and as a substitute for tungsten. It also allowed them to continue to ship high quality Swedish iron ore from the port of Narvik, the trade which Britain tried to prevent with Operation Wilfred. In the Netherlands, they also acquired a large, high tech tin smelter in Arnhem, though the British, foreseeing the seizure, restricted the supply of raw tin leading up to the invasion, so the amount gained was only around a sixth of a year's supply (2,500 tons) for Germany.

But by far the biggest prize was France. German memories of the

Unoccupied France ( Zone libre ) was left with only the rubber industries and textile factories around Lyon and its considerable reserves of bauxite, which because of the British blockade ended up in German hands anyway, giving her abundant supplies of aluminum for aircraft production. Along with the copper and tin she received from Russia, Yugoslav copper, Greek antimony and chromium and its Balkan sources, Germany now had sufficient supplies of most metals and coal. She also had around 2/3 of Europe's industrial capacity but lacked the necessary raw materials to feed the plants, many of them working at low capacity or closed^{[citation needed]} because of RAF bombing, the general chaos and the flight of the populations.

From the beginning of the war, Germany experienced massive labour shortages and as time went by the occupied nations labour forces were virtually enslaved, either to work in factories to supply the Reich or sent to Germany to work in the factories or farms there.^[41] In Germany herself, there was a chronic shortage of men to work the fields and 30,000 agricultural labourers were brought in from Italy along with thousands of Polish slaves. The pre-war stockpiles of goods were running down and more ersatz substitutes were being used. In addition, Germany remained cut off by the blockade from oversea supplies, such as copper from Chile, nickel from Canada, tin and rubber from the East Indies, manganese from India, tungsten from China, industrial diamonds from South Africa and cotton from Brazil. Germany's Axis partner Italy was now also subject to blockade and, heavily reliant on her for coal, became a net drain, but Hitler's main problem was oil, around 12.5m tons of which were needed per year for total war. Besides the Rumanian supply, his own synthetic industry produced 600,000 tons per year, and another 530,000 came from Poland. Russia was known to have enormous reserves of oil and gas but had chronically underdeveloped extraction systems, and though there was talk of German engineers going to reorganize them, it would take around two years before large quantities would begin flowing.^[46]

Battle of Britain

Hitler's best chance of beating the blockade was by knocking Britain out of the war. By far Britain's best weapon was her navy, which not only enforced the blockade, but also, despite the attempts of the U-boats and aircraft, continued to largely control the seas and keep her supplied with most of her needs. Her vast empire gave her formidable resources to draw on, excellent foreign

Prior to the start of

In an effort to force Britain into submission, the Luftwaffe concentrated its efforts on factories, ports, oil refineries and airfields. By mid-August the attacks were becoming increasingly co-ordinated and successful. On 24 August, at the height of the battle, bombers sent to attack Fighter Command installations and oil refineries on the outskirts of London killed civilians in houses in central London through a navigational error, although many believed the bombing was deliberate. In spite of opposition from the air ministry, Churchill ordered the bombing of Berlin in retaliation,^[49] and that night the German capital was bombed for the first time, although there were no fatalities. Britons were pleased as it showed Britain was able to hit back, and the next day Berliners were reported to be stunned and disillusioned; Göring, who had said it would never happen, was ridiculed by both sides. When the bombing continued, the Nazi leadership ordered the Luftwaffe to begin bombing British cities on 7 September in the belief that this would damage civilian morale so much that Britain would sue for peace.^[15][49]

The

France, normally able to feed itself, now had an extra 5 million refugees from other countries to care for.[50] When the Germans stripped the farms of half a million horses and mules for their army, causing a large drop in agricultural productivity, they also took 11% of remaining food stocks, a million tons. The Germans held 1,500,000 French prisoners of war as hostages, feeding them on bread and soup so thin that grass was added to bulk it up, and most items were now heavily rationed, with a worker entitled to a daily diet of only 1,200 calories; many people rode bicycles into the countryside during the weekend to scavenge for food. German soldiers got double rations, but this was still only a modest daily diet, similar to that served to inmates in American prisons.

The British blockade of the Mediterranean immediately cut Italy off from 80% of its imports. Essential items such as

Even in the normally plentiful Balkan region there were now food shortages caused by an extremely hard winter in the east and flooding of the lower Danube which devastated the agricultural plains and prevented the planting of crops. In Romania, farm hands were still mobilized into the Army and, along with Hungary and Yugoslavia, she needed all the wheat that could be produced, but the Germans made heavy demands on them, backed up by threats.[46]

Until late 1940 Hitler hoped to establish peaceful German

Britain's Bomber Command continued to attack German strategic targets, but the task of bombing Germany was made much harder by the loss of the French airfields as it meant long flights over enemy-held territory before reaching the target.^[51] But the British at this point had no effective means of taking offensive action against the enemy, and began to look towards a renewed bomber strategy. After the German devastation of Coventry, the RAF raided oil refineries in Mannheim city centre on the night of 16–17 December. This was the first "area raid", but photography after the raid showed that most of the 300 bombers had missed the target, and that Bomber Command lacked the means of carrying out precision raids. Even so, a bombing campaign offered the only hope of damaging the German economy,^[16] and directives at the end of 1940 stated two objectives: precision attack on German production of synthetic oil, and an attack on German morale by targeting industrial sites in large cities. In December 1940 Roosevelt, having won an historic third term as president declared that the U.S. would become the "Arsenal of Democracy", providing the weapons Britain and her Commonwealth needed without entering the war herself.

As 1940 drew to a close, the situation for many of Europe's 525 million people was dire. With the food supply reduced by 15% by the blockade and another 15% by poor harvests, starvation and diseases such as influenza,

In January Herbert Hoover's National Committee on Food for the Small Democracies presented the exiled Belgian Government in London with a plan he had agreed with the German authorities to set up soup kitchens in Belgium to feed several million destitute people.[53] Under the plan, the Germans agreed to supply 1m bushels (1 US bushel = 8 US gallons, about 27 kg for wheat) of bread grains each month, and the committee was to provide 20,000 tons of fats, soup stock and children's food. However, Britain refused to allow this aid through their blockade. Their view, which many in America and the occupied countries supported, was that it was Germany's responsibility to feed and provide for the people she conquered,^[54] and that the plan could not avoid indirectly helping Germany; if aid were given, this would free German goods for use elsewhere.

Hoover said that his information indicated that the Belgian ration was already down to 960 calories – less than half the amount necessary to sustain life – and that many children were already so weak they could no longer attend school, but the British disputed this. Even so, many Americans were appalled by the continuing hardship. There were 16m French Americans alone, and by early March at least 15 different organizations – collectively known as the Coordinating Council for French Relief – were distributing aid in France through The American Friends Service Committee, while the Quaker Committee also distributed around $50,000 worth of food, clothing and medical supplies a month throughout France. The

A number of prominent liberals denounced the release of food to France in a letter to United States Secretary of State Cordell Hull. Describing how French industry was working for the Germans and how Hitler had seized 1m tons of French wheat to hold in occupied France, the group believed the move would undermine the blockade and lead to Nazi demands for America to continue feeding other conquered lands. Vichy France's ambassador to the United States, Gaston Henry-Haye, continued to press for a relaxation of the blockade on humanitarian grounds, and the US government found itself in a difficult moral dilemma. The US Foreign Affairs Economist Karl Brandt described how Hitler (and Stalin) used food as a political weapon to destroy internal opposition, reward accomplishment, punish failure and smash their enemies in neutral countries.^[55] He described how the "warrior caste" were given the most, followed by essential workmen (in Berlin, William Shirer and the other foreign journalists were classed as "heavy labourers" and received double rations) while at the bottom prisoners, Jews and the insane got the least. By this time the Nazis had begun executing otherwise healthy mental patients in German institutions, in part to save on food, and there was a clamour from family members to have their loved ones removed.^[18] Brandt said:

Supplies are suddenly cut down regardless of the amount stored to scare the population and extra rations are suddenly granted to boost morale in a bad time. Food statistics are guarded like bomber planes. To the Nazis, food is a beautiful instrument ... for manoeuvring and disciplining the masses.

By this time there were increasing reports of

Despite the effects of her blockade, there was no debate about America's resolve to feed Britain herself, and she was able to, with record harvests. But Britain, having already sold £1 billion of her foreign investments and taken on another £3 billion in loans to pay for war materials was now feeling the financial strain of the war. On 11 March 1941 Roosevelt and Congress passed into law the programme of Lend-Lease, which allowed for the sending of vast amounts of war material to Allied countries, and Churchill thanked the American nation for a 'new Magna Carta'.^[57] Although America did not enter the war for another nine months, she could no longer claim to be completely neutral and Hitler immediately ordered U-boats to attack US vessels. On 10 April the destroyer USS Niblack, which was picking up survivors from a Dutch freighter that had been sunk detected that a U-boat was preparing to attack, and launched depth charges to drive it away. This was the first direct action between Germany and America of World War II. The next day the US began regular patrols at sea.

Effects on South American trade

The world's blockades had a severe impact on patterns of world trade as a whole. On the outbreak of war, many South American countries expected to make big profits supplying the belligerents as in World War I.

On 3 July Stalin announced a "scorched earth policy"; as Soviets forces and people retreated in the face of the Wehrmacht, everything that could not be moved east was to be destroyed. Factories and oil wells were blown up, crops burnt and animals slaughtered so that nothing would be left for the Germans to use.^[8]

Allied aid to Soviet Union

On 2 August 1941 the British signed the

The German attack on Soviet Union prompted the British to attempt an increase in bombing in the belief that the fighter defences would have been thinned out.[16] Attacks on oil targets remained a priority, and successful raids were mounted against Hamburg, Bremen and Kiel in May, with Kiel suffering almost complete production losses. Later attacks on rail transport targets in the Ruhr proved costly because a new radar chain, known as the Kammhuber Line now stretched across the approaches to the Ruhr valley to alert the night fighter defences, which remained considerable. Between May and December the RAF made 105 separate raids over Germany but were unable to make any inroads into industrial capacity and suffered heavy losses in the process.

On 22 June 1941 Churchill proclaimed that Britain would bomb Germany night and day, in ever increasing numbers, but because of the size of Germany and because the fleet continued to be eroded by planes going overseas, Bomber Command remained too weak for effective attacks on the German war machine. The new directives called for attacks on rail transport in the Ruhr to disrupt German economy, but this was a stop gap policy; The planes were too small, carried too light a bomb load and navigation was also shown to be faulty.^[51] Following losses of 10% during a raid on 7 November the RAF was ordered to conserve and build up its forces for a spring offensive, by which time a new navigation aid known as GEE would be available and the Avro Lancaster heavy bomber would be entering service.

Third phase

On the morning of 7 December 1941 the

Because she was an island, the blockade of Japan was a fairly straightforward matter of sinking the transport ships used to ferry materials from the occupied lands to the home islands, and remained a largely American affair.[62] The Japanese began with a barely adequate 6.1m merchant tons which American submarines and aircraft gradually whittled away until only 1.5m tons remained. The steady toll of attrition against her merchant marine was a major factor in Japan's eventual defeat, but the Allies agreed that the situation was far more complex with Germany, where a range of measures including strategic bombing would be required to achieve final victory.

America joins the economic war

In December 1941 the United States joined the economic warfare system that the British had created and administered over the previous two years. The

From the start there was close co-operation between the parallel American and British agencies,[64] over economic warfare measures, intelligence gathering and the later Safehaven Program. The American Embassy in London acted as the base for the American BEW activities in Europe and was organized in March 1942, "to establish a more intimate liaison between the manifold economic warfare activities centered in the Ministry of Economic Warfare and comparable activities in the United States Government." BEW personnel sat on the Blockade Committee on equal terms with their British counterparts, undertaking the routine work of handling Navicerts, ships permits and defining contraband. The embassy division worked with MEW in the development of new war trade agreements and the re- negotiation of existing overseas purchase – supply contracts. Together they attempted to persuade the remaining neutrals – Portugal, Spain, Sweden, Turkey, Switzerland, Ireland (and Argentina) – that by supplying Germany with the materials it needed they were prolonging the war, and over time a number of measures were tried to pressure these countries into reducing or ending trade with the Axis, with varying degrees of success.

Portugal

Like General Franco in Spain, Portuguese President

Britain was Portugal's largest trading partner and had the right to force her to fight on her side under a 500-year-old alliance, but allowed her to remain neutral; in return Portugal allowed credit when Britain was short of gold and escudos, so that by 1945 Britain owed Portugal £322 million. Germany was Portugal's second-largest trading partner, initially paying for exports with consumer goods, but after 1942 increasingly with looted gold, which the Allies warned was liable to confiscation after the war. Portugal also allowed Germany generous credit terms, partly because after the fall of France the presence of a direct land route enabled Germany to threaten Portugal with invasion if she curtailed critical exports. The Allies, who also bought Portuguese tungsten, believed that if they could persuade the Portuguese to stop selling the ore the German machine tool industry would very quickly be crippled and she would be unable to continue to fight. Because Portugal depended on the U.S. for petroleum, coal and chemical supplies, the Allies' economic warfare agencies considered achieving their aim by embargoes, but hesitated because they also wanted access to Portuguese military bases on the Azores.

Spain

Since before the war, pro-Nazi Spain had suffered chronic food shortages which were made worse by the blockade. The Allies used a variety of measures to keep Spain neutral, such as limiting her oil supply and making trade deals at critical times to provide her with much-needed foreign exchange to buy food from South America.^[64] On 23 November 1940 Churchill wrote to Roosevelt to inform him that the peninsula was now near starvation point, and that a US offer to provide a month by month supply of food might be decisive in keeping Spain out of the war.

Spanish companies did important aircraft work for the Germans, Spanish merchants furnished Germany with industrial diamonds and platinum,^[65] and General Franco, still loyal to Hitler because of his support during the civil war, continued to supply Germany with war materials, among them mercury and tungsten. Spain, the world's second-largest producer of tungsten after Portugal, provided Germany with 1,100 metric tons of the ore per year between 1941 and 1943 (between them Spain and Portugal provided 90% of Germany's annual 3500 tons requirement). As a result of Allied economic measures and German defeats, by 1943 Spain adopted a more genuinely neutral policy. The Allied strategy with Spain was identical to that of Portugal: buy enough tungsten to satisfy the export need and prevent the rest reaching the enemy by whatever means. Britain and the US again had the option of launching an oil embargo on Spain but hesitated for fear of pushing Franco to side with Germany militarily.

Sweden

Sweden had long been Germany's main source of high quality iron ore and

The U.S. and Britain were sympathetic to Sweden's difficult position and of her attempts to maintain her neutrality and sovereignty by making important concessions to the Nazis, such as continuing to export timber and iron ore and by allowing the Germans use of their railway system, a privilege which was heavily abused. There was a general belief however, that Sweden went too far in accommodating the Nazi regime.

Despite signing a military alliance with Britain and France in October 1939, Turkey, like Sweden, Spain and Portugal spent the war keeping both sides at arm's length while continuing to supply them with their war needs.[64] Despite the German occupation of the Balkans in spring 1941, no military action was taken against Turkey, who in October 1941 began selling Germany large quantities of chromite ore for the production of chromium. The Turkish chromite ore, which like tungsten was an irreplaceable and essential war material, was the only supply available to Germany, who paid using iron and steel products and manufactured goods in order to draw Turkey into her sphere of influence. Turkey still maintained its good relations with the US and Britain despite the trade, which the economic warfare agencies sought to minimize.

Via its Commercial Corporation, the US engaged in a preclusive buying programme under British direction of its materials, particularly the chromite ore. It also bought commodities, e.g., tobacco, it did not really need,^[65] and sent Turkey's armed forces modern equipment under Lend Lease to replace obsolete equipment, to help maintain her neutrality. In so doing the Allies sought to maintain British influence in Turkey, and when the Allies decided, at the Casablanca Conference in January 1943 to attempt to persuade Turkey to enter the war against Germany, Britain was assigned the role of negotiator. Turkey eventually ended trade with Germany and declared war on her in February 1945.

Argentina

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Although most South American republics were sympathetic to the Allied cause, the

Because of her geographic position and trade with Germany, Switzerland was subject to Allied blockade measures throughout, although she remained able to move imports and other exports such as sugar and benzene overland, mainly to Germany and other countries in the neutral zone. In December 1941 an attempt by the Swiss military to purchase American machine-gun cameras was blocked by Britain's refusal to grant a Navicert,^[65] and in April 1942 the US Board of Economic Warfare considered quotas for Swiss imports from overseas sources, identifying Swiss commodities which might be bargained for. Firms such as the Fischer Steel and Iron Works at Schaffhausen were added to the blacklists because of their exports, causing them to eventually curtail supply and remodel their plant.

Despite the Allied sympathy with Switzerland's position, some individuals and companies actively supported the Nazi cause for financial or ideological reasons. In particular the Swiss were, and continue to be, criticised for the way they aided the shipment of Nazi funds abroad and provided banking facilities for the concealment of looted art treasures and gold, much of it stolen from Jews. In late 1943 safes at a Swiss bank at

The renewed campaign got under way in early March with a "saturation raid" by 200 RAF aircraft on the Renault truck and tank works at Boulogne-Billancourt, near Paris. 623 French people were killed, mostly workers who had gathered outside to cheer the accurate hits.^[45] This was followed by the first of a series of eight raids on Essen which proved a great disappointment. Despite an initial pathfinding force being sent to light up the target area with flares, only one bomb in 20 fell within five miles (8 km) of the town. On the night of 28–29 March the RAF used incendiaries for the first time to hit Lübeck, an old town with many combustible buildings, but although the old town suffered a firestorm, production was back to normal a week later. More disaster followed on 17 April during a daylight "precision" raid on the MAN diesel engine factory in Augsburg. There was little effect on production and, with no fighter cover, 7 of the 12 Lancaster bombers were lost, leading to a return to night bombing.

Thousand bomber raid

Heavy investment had been made in building up the bomber force, but faith in its potential was beginning to wane, and Harris realised a major

In addition, excessive secrecy and a lack of communication between Whitehall departments meant that at exactly the same time that Operation Frankton was under way, and without their knowledge, the SOE were in the final stages of their own attempt to destroy the blockade runners by deploying a team of French agents led by Claude de Baissac, posing as painting contractors who planned to carry explosives onto the ships in their baggage. The explosions caused by the commando mission ruined the preparations of the SOE team, who might well have achieved a far more effective destruction of the blockade running vessels but for the Combined Operations raid.

Even so, the combined Allied air forces and navies eventually began to track down the blockade runners. In late 1942, an 8,000-ton cargo ship was caught in the Indian Ocean, where it hoisted a neutral flag and initially gave the name of a neutral vessel but misspelled the name. When the Allied warships opened fire the crew scuttled the ship, and 78 Germans were captured.

By late 1943 the Germans became so desperate for supplies of key commodities that in one incident they sent a large destroyer force out into the Bay of Biscay to protect ships bringing a cargo into Bordeaux, and lost three vessels (Z27, T25 and T26) to Allied action (Operation Stonewall). By May 1944, 15 blockade runners had been sunk and the traffic had virtually ceased apart from submarines carrying very small cargoes. The MEW stated that 45,000 tons of rubber, 1,500 tons of tungsten, 17,000 tons of tin and 25,000 tons of vegetable oils had been destroyed as well as important far-Eastern drugs such as quinine. The Ministry was also of the view that the strong blockade had probably prevented further large amounts from being transported.^[67]

Greek famine

By early 1942, the food shortages in Greece, which had been invaded by the Germans in April 1941 along with Yugoslavia, and which was now subject to the blockade, reached the famine proportions foreseen by Hoover. With its economy and

Despite past enmity between the two nations, Turkey quickly responded, chartering the SS Kurtulus and, after receiving permission from the British, the ship sailed from Istanbul to Piraeus on 6 October with wheat, maize, vegetables, dried fruits and medicines. Over the next few months, the ship delivered around 6,700 tons of supplies to Greece, but foundered on rocks and sank during her fifth voyage. Despite the humanitarian efforts, by late January 1942 between 1,700 and 2,000 men, women and children were dying in Athens and Piraeus each day, and Italy, which then occupied Greece, was forced to ship 10,000 tons of grain from her meagre domestic supplies, secretly to avoid unrest from her own people. This was still not enough, and eventually international pressure forced Britain to lift its blockade for the first time. In early February, Hugh Dalton of MEW told the House of Commons that Britain and America would send 8,000 tons of wheat to Greece, although there was no guarantee that the relief supplies would find their way to the starving. Dalton said; "There is no guarantee, nor would we pay any attention to one given by the Germans. We are in this case running a risk in view of the appalling conditions caused by the Germans in Greece." From that point on, the Greek Orthodox Church, through its charity efforts in the United States and the International Red Cross, were allowed to distribute sufficient supplies to the Greek people, though the total death toll from the famine was at least 70,000, probably much higher.^[69]

By late 1942, there were claims that Germany was paying for deliveries using forged US dollars and had begun to default on its Romania trade, receiving deliveries while not supplying the much-needed machinery and war materials in return. Spanish suppliers of oranges and mandarins also refused to ship deliveries until they were paid.^[65] With the gradual turn of the war, a number of neutral countries began to take a stiffer line with Germany, in some cases refusing further credit.

1943

1942–43 was another lean year for agriculture in France. Many fertile regions such as the Vexin, the Beauce, and the Brie suffered seriously from drought. The wheat heads were light, straw was short and hay shrivelled in the meadows, causing a lack of animal fodder. In occupied areas, the Germans confiscated 40% of the crop as soon as it became available; the authorities took 40% for the wider population, leaving the farmer with only 20%. In Normandy, Brittany and along the Channel coast, rain spoilt the potato crop and tomatoes and beans did not mature. In other provinces, e.g., Touraine and Burgundy region, the very dry weather left vegetables and even weeds cooked in the ground so people who bred rabbits for meat had to feed them with tree leaves.^[70]

South of the

The MEW continued to receive requests for a partial relaxation of the blockade, often in the belief it would make no appreciable difference to the effect on the enemy, but the pleas were steadfastly refused. The MEW believed that any substantial or widespread relaxation of the blockade would inevitably be exploited by the enemy to his own advantage, and declared that they would "not give him that comfort".[41]

With increasing numbers of heavy Lancaster,

On the night of 16–17 May 1943 the RAF carried out the famous Dambusters raid (

After three years of war Britain had spent £10 billion, and the Chancellor of the Exchequer, Kingsley Wood, had to ask the House of Commons to find another £1 billion to continue.^[13] USAAF airpower increased, concentrating its efforts on aircraft production and repair plants in France, the Netherlands, Belgium and Germany. By late October 1943, the MEW believed that German productivity was down 30%,^[74] and that half the drop had occurred in the previous six months, but the figures showed the limitations of all bombing, saturation or precision. Many of the installations that had previously been reported as wiped out continued to operate.

In early November the MEW published a summary of the position in the occupied lands, giving an assessment of what the Germans were believed to have appropriated from the territories they conquered in 1940 and 1941. The report estimated that more than $12,800,000,000 had been collected from the occupied territories in occupation costs and other direct charges and continued to be collected at a yearly rate of $4,800,000,000. Poland, the country most harshly treated, had suffered the confiscation of all state properties, all central stocks of textiles, food and livestock. 9,000 factories and 60,000 commercial enterprises were taken over for exploitation, and 80% of the 1942 harvest was sent to Germany. Czechoslovakia had lost its grain, its gold reserves, mines, heavy industries and important textile industry. Her total tribute was given as $1,200,000,000. Dutch industry was by now also under complete German control. State expenditures had almost trebled to pay Germany's occupation and other costs and levies. Belgium, whose government was in exile in Britain, had its entire $260,000,000 gold reserves surrendered by the Vichy regime and by the beginning of 1943 the country's entire stock of 1,500 locomotives and 75,000 trucks had been requisitioned. In Yugoslavia, all cars were seized in 1941, and any bicycles that could be found had been taken by 1942. The country had been partitioned and had suffered, like so many others from inflation caused by the occupation mark system. In Norway the Germans requisitioned personal property right down to woollen blankets, ski trousers and windproof jackets, and in Denmark all trade and industry of consequence was now controlled by Germans.^[75]

Troops had also begun seizing furniture and household goods to be shipped back for the use of bombed-out German families. Under Albert Speer, industrial factories were being relocated to Czechoslovakia on a considerable scale, and by the end of 1943, despite a lot of damage to towns – German figures showed that 6.9m people had been bombed out or evacuated – output of war material was greater than ever. In October 1943 the USAAF attacked Ploiești again, but according to German records total loss of petroleum to the end of 1943 had not exceeded 150,000 tons.^[16]

1944

By the beginning of 1944 it was clear that the bomber offensive had not delivered the decisive defeat that was promised, and preparations were well underway for the invasion of Europe. Spain, Portugal and Sweden came under renewed pressure to end sales of vital commodities to Germany.^[64] In January 1944 the MEW estimated that Spain was still selling Germany 100 tons of tungsten a month. The Spanish Minister for Industry and Commerce defended Spain's position, saying that Spain felt it impossible to deny Germany a commodity which had a very high value in wartime. Britain, who also made considerable purchases of Spanish tungsten, favoured a compromise that would allow Spain to maintain her German tungsten exports at the 1943 level, but the United States demanded a complete ban and the oil embargo was eventually reimposed. Spain agreed to reduce the German exports in May 1944, although the Allies discovered that she continued making clandestine shipments, transporting more than 800 tons of tungsten through to July 1944 and not finally ending the trade until the closing of the Franco-Spanish border in August 1944. Portugal also defended her right to neutral trade, fearing German reprisals such as invasion or the bombing of her cities and shipping if she ceased tungsten shipments; however the US Secretary of State Cordell Hull believed that he could have achieved the objective if he had had wholehearted British support.^[64]

Big Week

On 20 February 1944 the USAAF began

Although the Allies kept up the round-the-clock pressure, raiding countless lines-of-communications targets in the build-up to the invasion, they were slow to grasp what German commanders were all too aware of – that Germany had plenty of tanks and aircraft and their real achilles heel was the oil supply.[16] In early March the USAAF raided the Erkner ball-bearing works, scoring 75 direct hits, stopping production for some time, and commenced the "Plan for Completion of Combined Bomber Offensive". The objective now became to halve Axis oil production by attacking the Ploiești oilfields and fourteen synthetic-oil plants in order to deprive Germany of the means to keep its military machines operational.

On 12 May the USAAF hit East German synthetic oil plants at Leuna, Böhlen, Zeitz and Lutzendorf; they were so badly damaged they could supply no oil for several weeks, being hit again later that month before they returned to production. Albert Speer said later that this was a decisive turning point in the war.^[16]

Meanwhile, as a result of the sustained Allied diplomatic pressure, together with the deteriorating German military position, Sweden began to reduce its trade with Germany. But a September 1943 agreement under which she agreed to end ball-bearing exports failed to include a restriction on sales of the high-quality steel used in their manufacture; this allowed the restrictions to be largely by-passed, and the agreement ultimately had little effect on the German war industry. Allied attempts to stop Turkish sales of chromium had begun to have the desired effect, however. In November 1943 Albert Speer declared that without its Turkish chromium imports, Germany's armaments manufacture would come to a halt within 10 months, and Allied threats to subject Turkey to the same economic warfare measures used against other neutrals eventually persuaded her to cease the exports to Germany by April 1944.

Though Germany, with the resources of the conquered territories was still able to produce three times as much steel as Britain,^[76] as a result of military action she was beginning to lose other sources of special metals which could not be replaced. On the eastern front, the Red Army had taken back its manganese mines at Balki, from which the Germans had been getting 200,000 of the 375,000 tons their war industry required each year. In Scandinavia, an important supply of nickel was now prevented from being delivered from Petsamo in Finland, and the mines at Knaben in Norway were no longer providing molybdenum.

Eve of Overlord

During a debate in the

The German armies defending Normandy were badly restricted by their inability to bring up adequate fuel for their tanks and could only make troop and supply movements at night. They were also forbidden by Hitler from withdrawing to better positions a few miles inland, and as a result suffered a relentless barrage of heavy calibre gunfire from British and American battleships moored offshore.

After the initial success of D-Day and the breakout from the Normandy beachhead which followed, the advance began to slow due to the constant difficulties of keeping the vast armies supplied.^[6] The problem was not getting supplies to the continent, but getting them to forward troops, which might be 500 miles (800 km) from supply depots. Each division required 600–700 tons of supplies per day while artillery and mortars used 8 million rounds per month. The speed of advance often meant there was no time to build up an orderly logistical structure and, despite the use of a truck system called the Red Ball Express, for 5 days at the end of August virtually the entire American and British advance came to a complete halt due to a lack of fuel.

The supply problem was worsened by the Allies' failure to capture a deep-water port able to unload large ships. The Germans, employing their scorched-earth policy, destroyed all dock facilities as they withdrew from the occupied territories in order to deprive the Allies of any logistical advantages. By early September the only remaining undamaged deep-water port was Antwerp in Belgium, and the SOE, under the direction of the Ministry of Economic Warfare (MEW) was given the task of ensuring it was captured intact. The operation, known as Counterscorch, involved sending radio operators into Belgium to liaise with the resistance, keeping them informed of Allied movements and supplying them with weapons and ammunition. At the allotted moment the resistance seized the port, keeping the Germans out until the Allies arrived, and Belgium was liberated in less than a week, although the port of Antwerp itself was not fully operational and capable of landing large cargoes until after the Battle of the Scheldt in late November.

The supply problems also led to disagreements, as each commander pressed for his unit to be given priority. The supreme commander of Allied forces, U.S. General Dwight D. Eisenhower wanted to advance on a broad front to overcome the West Wall (Siegfried Line), but instead accepted British General Bernard Montgomery's Operation Market Garden, the plan to try to outflank the West Wall and drive into northern Germany to encircle the industrial Ruhr via the Netherlands. Market Garden was a disaster and did not achieve its main objective, while its few territorial gains actually stretched the supply lines even further.

Loss of Balkan ores

By early October the European military and political position had changed enormously and the MEW provided a statement of Germany's deteriorating position.

Dutch rail strike

Meanwhile, in an attempt to assist the Allies in their liberation of the Netherlands, the exiled Dutch government called for a national rail strike to further disrupt German operations. The German authorities retaliated by placing an embargo on supplies of food into the western parts of the country. This caused severe hardship. By the time the embargo ended in November 1944 an unusually early and harsh winter had set in, leading to the

End of Swedish trade with Germany

In August 1944 Sweden determined that the danger to its merchant and naval vessels engaged in the iron ore trade to Germany had become too great,^[80] and ceased exports in exchange for permission to import some of her own stores of cotton and wool shut off by the Allied blockade. In November all Swedish trade with Germany officially ended. After six months of negotiations, Switzerland also agreed to trim by one third her $60m yearly sales of machine goods and precision instruments to Germany and to cut sales of ball bearings to 10% and ammunition to 5% of the 1942 total.

By this time, attacks on German fuel installations had been so successful that September's output was 8% that of April, and supplies were soon exhausted, just when fighter production reached its highest level.^[16] Allied air commanders next began targeting German transport networks. On 24 September the RAF breached the Dortmund–Ems Canal – an inland waterway linking the Ruhr with other areas – with Tallboy bombs, draining a six-mile (10 km) section. The enormous rail marshalling yard at Hamm was badly hit, leaving some 9,000 workers permanently engaged carrying out running repairs. On 12 November the battleship Tirpitz was sunk by RAF Tallboy bombs near Tromsø, Norway. The ship, known as the "Lonely Queen of the North" had seen little action through lack of fuel, and spent much of the war moored in a remote fjord. Around this time the RAF began reducing its attacks on synthetic oil production sites because none of the plants were now operating. Only the sites at Leuna and Polotz were still producing any oil, and though in December limited production restarted, further raids quickly put them out of action for good. Once the oil sites were bombed out in late 1944, transport became the primary target. Allied air power was now unstoppable.

In late 1944 the German army launched the

1945

At the start of the war Germany's transport system, comprising modern autobahns, excellent railways and a complex network of interlinking canals and rivers was among the best in the world.^[16] But after autumn 1943 the connections between industrial centres made attractive bomber targets which when effectively bombed badly affected the distribution of coal, which formed the basis of most military and industrial operations. Soon large parts of Germany's remaining transport network were paralysed, and the Ruhr became economically isolated from the rest of the Reich.

Ultimately it was the sustained Allied bombing of the transport network which broke Nazi resistance.^[16] Despite his incredible efforts at continually reorganising production after each setback, from early 1945 Speer admitted defeat in the armaments battle. German industry was now unable to keep up with the high number of "Top Priority" weapons programmes, such as the production of the V weapons and calls for 3,000 Me 262 jet fighters and bombers per month. However, many factories maintained production right up to the moment Allied forces arrived at the gates.

By now the V1 and V2 launch sites were being increasingly overrun, and with the Allies moving towards the Rhine and the Soviet armies rapidly closing in from the east, large numbers of refugees began to congregate in the cities, creating utter chaos. When severe frost and snow came in January, food was declared the main priority,^[16] although Germany still maintained the ability to defend its vital installations with formidable numbers of anti-aircraft cannons. From early February 1945 railheads, marshalling yards and transport systems of over 200 small towns, such as Hildesheim and Meiningen in West Germany and Jenbach in Austria were attacked in Operation Clarion.

Safehaven Program

With the war all but won, there were increasing reports – mostly based on

The US-led Safehaven Program was launched during the United Nations Conference at Bretton Woods in July 1944,^[82] the same venue that prepared the ground for the modern World Bank and International Monetary Fund (IMF). The program provided for immediate measures to prevent any disposition, transfer, or concealment of looted gold or other assets, to deny any safe haven for Nazi looted assets in neutral countries, and for the eventual return of looted artefacts to their original owners. Most neutrals were eventually persuaded to reduce and end trade with Germany.

The Swedish Government adopted tightened exchange control regulations in November 1944 and made great progress in identifying German properties and eliminating German influences from its economy. However, negotiations for the return of looted gold allegedly sent to Sweden by Germany as payment for goods dragged on for many years. Allied estimates of the value of looted gold ranged between $18.5 million and $22.7 million, but although the British, US and French agreed that Sweden's gold reserves had increased during the war, they were unable to agree how much – if any – of these rises were due to looted gold. Sweden eventually agreed to distribute more than $66 million in liquidated German assets as reparations, including a special $36 million fund at the

Spain acquired a large quantity of gold from Germany, in some cases via Swiss intermediary companies, and negotiations coincided with Allied efforts to ostracize the Franco regime. A number of other countries also downgraded their diplomatic relations with Spain for having openly supported Hitler,^[64] and Spain agreed to return an estimated $25 million in official and semi-official German assets in October 1946. Spain agreed to liquidate some $20–23 million of private German assets on the understanding she would keep around a quarter of the proceeds, and signed an agreement in May 1946 to return $114,329 (101.6 kilograms) out of about $30 million in looted Dutch gold that the Allies had identified at the Spanish Foreign Exchange Institute. The Allies publicly acknowledged that Spain had not been aware it was looted, and later Spain returned $1.3 million in gold bars and gold coins it had seized from German State properties at the end of the War. Negotiations continued, but with the coming of the Cold War the US softened its approach and released over $64 million in assets frozen since the war, and allowed Spain to use its remaining gold as collateral for private loans.

Because of its close financial ties with Germany, Allied representatives were especially keen to achieve Swiss co-operation. Although Swiss-German trade was generally considered to have ceased after November 1944, some companies, such as the Tavaro Munitions factory at Geneva, Switzerland, clandestinely shipped explosives to Germany, and German assets amounting to one billion francs still remained in Switzerland after November 1945. According to Under-Secretary of State Dean Acheson, Switzerland was the last country to fully commit to the aims of Safehaven.^[82] In February 1945, an American delegation sent to Switzerland initially thought it had achieved a substantial reduction in Swiss exports to Germany and an acknowledgment of Safehaven objectives for the blocking of German assets in Switzerland. But following subsequent discussions with Reichsbank Vice President Emil Puhl, the Swiss later reneged on this agreement, and through the remainder of 1945 showed an unwillingness to embrace the Allied proposals to turn German assets in Switzerland towards the benefit of ravaged Europe and stateless victims of the Holocaust and other Nazi crimes. However, because of its excellent humanitarian record and protection of Allied POWs and other interests, the Allies ultimately decided against taking extreme measures against Switzerland.^[64]

Post-war

Following the end of the war in Europe in early May 1945, large parts of Europe lay completely smashed. Acute food, housing and medical shortages continued for some time and around 10 million refugees housed in temporary encampments or on the roads.

In the two emerging superpowers, Soviet Union and America, post-war productivity rose remarkably by 1948, although the reasons were very different. In Russia, great stimulus was given to emerging industries as a result of frenzied war production, helped in part by advanced industrial plants it took from the

Britain's economy was badly hit by the abrupt ending of Lend-Lease a few days after the final defeat of Japan in August 1945. During the war Britain lost many of its lucrative export markets and now confronted an annual balance of payments deficit of £1.2billion.^[13] As in World War I, Britain emerged from the war militarily triumphant but economically poorer (rationing did not end until 1953), and economist John Maynard Keynes was sent to America to negotiate a low-interest emergency loan of £3.75 billion to tide Britain over; the final repayment of £45.5m (then about $83m) was made on 31 December 2006.^[84]

In the former occupied countries, severe inflation – caused in part by the large amount of money hoarded during the war, particularly by collaborators – caused further spiralling food prices and a persisting

The Big Blockade was written and directed by Charles Frend and made by Ealing Studios in collaboration with the Ministry of Economic Welfare. It was made in 1942 in a similar episodic manner to David Lean and Noël Coward's In Which We Serve, but featuring gentle light-hearted propaganda, with a series of sketches designed to illustrate how the British blockade was gradually squeezing the life out of the Nazi war effort. The Big Blockade starred John Mills as "Tom", a member of a bomber crew over Hanover, Leslie Banks as an efficient Ministry of Economic Warfare civil servant, Robert Morley as the Nazi U-boat Captain Von Geiselbrecht, Michael Redgrave as a Russian based in Germany, and various others, such as Will Hay, Ronald Shiner, and Bernard Miles in bit parts.^[88]

Notes