As Liberation neared, French citizens weakened by four years of economic privations demanded the punishment of ‘traitors’ who had profited from their economic distress. Members of the Resistance and the Free French gave ‘illicit profits’ high priority in the purges that would punish traitors and profiteers after Liberation. On 18 October 1944, a decree created departmental committees to confiscate ‘illicit profits’ and impose heavy fines on those who had exploited the German Occupation financially, whether through commerce with the enemy or black market trade with fellow citizens.
The effort seemed to produce a colossal failure. Pierre Mendès France, minister of national economy from September 1944 to April 1945, had wanted black market trafiquants to feel ‘the full force of the law’.Footnote 1 But he predicted in November 1944 that trafiquants and war profiteers would escape the confiscation committees, and worried in January 1945 that this had become inevitable: ‘The country's disappointment will be great when it sees that the immense majority of the nouveaux riches – guilty or not – have escaped any punishment and any repayment’.Footnote 2 Early confiscations, Dorothy Pickles observed in 1946, were ‘ridiculously small’ and left most trafiquants untouched.Footnote 3 British journalist Ronald Matthews judged the revenue expected from confiscations ‘a joke, and not a very good one’.Footnote 4 Alexander Werth considered that Minister of Finance René Pleven ‘had – apart from a few exceptions which received great publicity – made it beautifully easy for the war profiteers to dodge confiscation’.Footnote 5 Most tellingly, civil servants who worked on the confiscation committees believed that ‘the biggest and the most guilty, the crooks in the French black market and the trafiquants in black market deals with the enemy, can pass through the net’, and concluded: ‘it is indisputable that the greatest part of the profits that escaped general taxation, which the confiscation process had tried to seize, escape its grasp’.Footnote 6
When historians have given the matter any attention, they have echoed these negative judgements. Jean-Pierre Rioux's evaluation of the post-war purges mentions illicit profits in passing, only to note that ineffectual state efforts in 1944–5 led to attacks against known trafiquants.Footnote 7 Few local studies tackle the problem; Marc Bergère's study of the Maine-et-Loire is exceptional for its depth and quality of analysis.Footnote 8 Echoing Dorothy Pickles, Peter Novick termed the confiscations a fiasco, stating that French civil servants shared her view and lamenting ‘the almost total absence of information’ on the operations of the confiscation committees.Footnote 9 Extensive records are now available, but historians have only begun to exploit them, hampered by the dispersion of sourcesFootnote 10 (confiscation committees functioned mainly at the departmental level) and the difficulty of finding overall assessments of the long process that began in 1944 and was subject to appeals until 1968. Marc Bergère presented a preliminary balance at a conference in March 2007, arguing that the confiscation process achieved significantly greater success than contemporaries allowed, early judgements in 1946 having coloured subsequent assessments without taking account of the substantial progress achieved once the process of confiscation was seriously underway.Footnote 11
The confiscations disappointed nearly everyone. Archival records now make it possible to understand why this was so, how the confiscation process stalled, and to what degree it failed. In this article we survey (1) the wartime origins of and expectations for the confiscation of illicit profits, (2) the practical difficulties in establishing an effective procedure to identify and confiscate ‘illicit profits’, (3) the politics of confiscation, which established unrealistic expectations at the time of Liberation and produced conflict between popular demands and administrative realities, (4) how the origins of illicit profits influenced the difficulties of confiscation, and (5) why the confiscations produced disillusion on all sides. The state obtained less revenue than expected and saw its efforts to establish a thorough purge frustrated; the public came to believe that most profiteers and trafiquants escaped the confiscation process unscathed; many in the business community felt they had been unjustly vilified and penalized for practices that did not merit punishment.
The failure was relative, however, not absolute. Confiscations and fines did punish many collaborators. The nature of the relative failure reveals a good deal about the transition from war to peace in France, the difficulties in restoring state authority and relaunching the French economy, and the logistical challenges of epuration after four years of intense exploitation. The effort to ‘purge’ illicit profits reproduced problems inherent in all processes of post-war retribution, in a field where the politics of collaboration were less intense and the incidence of collaboration much more widespread.
I
War creates opportunities for exceptional profit. The shift from civilian to war production and the imperative needs of armies at war alters demand in terms of the goods needed and the urgency, and it offers opportunity for exceptional profits in supplying war goods. Demand for war goods rises sharply, and mobilization increases state spending and civilian employment to meet war needs, raising purchasing power and the demand for civilian goods. The need to tax excess profits and control demand for civilian goods was widely recognized during the First World War,Footnote 12 and the French tax on ‘bénéfices de guerre’ instituted in July 1916 laid the ground for tax measures after the Second World War.Footnote 13 Defeat and Occupation altered the range of activities offering substantial profit in France, particularly via collaboration with the Germans. As Henry Rousso noted in his analysis of the post-war purge in France, economic collaboration had been ‘the most important and the most widespread’ form of collaboration.Footnote 14 It took different forms. Some businesses accepted German orders and exported part of their production to Germany (Berliet, Renault). Others worked in France for German military purposes: the construction of aerodromes, barracks, and the Atlantic Wall. Many were less visible – laundering sheets for the Wehrmacht, a taxi firm carrying German customers, a caterer preparing meals for official dinners.Footnote 15 Degrees of collaboration varied from accepting a few German contracts while working mainly for French clients to working exclusively for the Occupation authorities. Working for the Germans often allowed access to raw materials, energy, and transport: particularly important were the R-Betriebe (armament industries) for German rearmament, the V-Betriebe (priority industries) for sectors ‘vital’ to German economic needs (metals, consumer goods), and Speer's creation of the S-Betriebe (protected industries), which produced 80 per cent of their goods for the Reich.Footnote 16
The French economy under occupation was one of administered penury.Footnote 17 Shortages of food, clothing, and fuel, of industrial raw materials and energy, and of basic supplies for commerce produced a culture of widespread illicit activity that made most citizens, producers and consumers, rule-breakers in order to survive. Clandestine transactions spread throughout the French economy, contaminating entire branches of industry, pervasive in agriculture. Violations included charging higher prices, exceeding ration quantities, unauthorized transport of goods, sales without official receipts, and trafficking in ration coupons. According to one inquiry by the Institut National de la Statistique, in some sectors clandestine transactions absorbed 30 per cent and more of total output.Footnote 18
The Germans controlled vital stocks of energy, transport, and raw materials, making some degree of co-operation essential for French firms to survive. The Vichy regime encouraged contracts to supply German needs, and French businesses worked to meet German demands, whether seeking such commerce through ideological conviction or greed for profit, or accepting German contracts to assure survival of their firms, to shield French labour from German conscription, or to continue meeting the needs of their French customers. By the end of 1943, French industrial production had fallen to 50 per cent its pre-war level, and 50 per cent of the reduced output was going to Germany;Footnote 19 percentages were much higher in war industries such as automobiles (60 per cent in 1943), naval construction (82 per cent), building and public works (80 per cent), and aeronautics (100 per cent).Footnote 20 French agriculture likewise contracted sharply, yet delivered large quantities of goods to Germany. France and Ukraine were the two nations targeted by Reich authorities for increased grain exports to supply German civilians.Footnote 21 Civilian survival required finding means to supplement inadequate rations, which allowed adults only 1,200 calories per day in 1941, and less than 900 calories in the spring of 1944.Footnote 22
The Germans used black markets to obtain stocks hoarded in the occupied zone and goods produced for French consumers in the unoccupied zone. Intermediaries for German services made purchases in the southern zone and sent them north across the demarcation line without the sellers, unwilling to supply the Germans, knowing the final destination of the goods.Footnote 23 The more suspect the transaction, the higher the price and the greater the profit. In April 1941 Philippe Pétain, the head of the French state, denounced as immoral the ‘illicit profits that foster black market trade’,Footnote 24 and the Vichy regime fought an extended, losing battle with the black market throughout the Occupation.Footnote 25
Free French forces monitored economic developments in France closely. Vichy efforts to suppress the black market looked feeble, attacking illicit trade between French citizens while ignoring the extensive, highly profitable traffic in black market goods sold to the Germans.Footnote 26 François-Louis Closon, a specialist in financial affairs, reported widespread black market activity and Vichy ‘complacency’ in its battle against black market profiteering in 1943. Immediate action to deal with the black market after Liberation would contrast well with Vichy's complacency: ‘France expects efficacity and honesty on our part, and the black market is the first realm in which we will need to prove ourselves.’Footnote 27 Plans in the summer of 1943 proposed measures to freeze all bank accounts, catalogue new wealth, and impose harsh penalties on all who profited from German purchasing and the economic misery of French citizens.Footnote 28 Those with unexplained fortunes would have their goods seized to punish ‘their anti-French action and their treason’. Such confiscations would also help to reduce currency in circulation in order to avoid ‘une véritable catastrophe financière’.Footnote 29
The liberation of Corsica in October 1943 offered a testing ground for confiscation policy. Italian forces had occupied Corsica in November 1942, affording little time for economic collaboration. Plans to confiscate ‘illicit enrichment’ aimed principally at black market profits. Measures discussed in late 1943 sought to tax excessive increases in wealth, chiefly as a measure to reduce the note circulation and thus reduce inflationary pressures.Footnote 30 Mendès France, knowing that actions in Corsica would set a precedent for France, advocated the complete confiscation of profits from black market trade, traffic in foreign exchange, and commerce with the enemy.Footnote 31 The confiscation decree issued on 8 May targeted wealth gained from commerce with the enemy or violations of price controls and rationing between 1 January 1939 and 1 January 1944.Footnote 32
In Occupied France, the Conseil National de la Résistance advocated confiscating the property of traitors and black market trafiquants. Its 15 March 1944 programme for the Liberation promised progressive taxes on wealth earned ‘to the detriment of the people and the nation’.Footnote 33 Commerce with the enemy and black market trade were both betrayals of the national interest for personal gain. ‘Those who have died for the country require the elimination of those who have betrayed it’,Footnote 34 the newspaper Résistance proclaimed in January 1943. Belief that trafiquants were traitors even if their traffic had been with French customers was widespread. Luc Capdevila's study of national identity among Bretons in the Liberation period employs the concept of a ‘community of suffering’ during the Occupation. Those who profited from shortages and commerce with the enemy figured, along with collaborators, in a gallery of the ‘bad French’ who had lived well ‘while the good French ate bran’. Trafiquants, in escaping the ‘community of suffering’, had withdrawn from the national community. More than half the denunciations in Brittany accused citizens of economic collaboration and black market traffic (yet economic collaboration figured in only 10 per cent of the cases prosecuted).Footnote 35
In addition to punishing traitors and reducing currency in circulation, the Free French needed to demonstrate the authority and legitimacy of their new administration by establishing judicial procedures and respect for law and order. In London, there was sharp concern that the settling of private accounts and popular demands for justice could bring chaos at Liberation: public reaction could be ‘ferocious and incoherent, if the force which will not fail to erupt is not controlled’.Footnote 36 Vichy officials tracking public opinion in the last months of the Occupation noted fears of violence and civil war, especially in agricultural departments where city dwellers believed the farmers had earned black market fortunes: ‘that creates divisions that will end badly the day that weapons are taken from their hiding places’.Footnote 37 The maintenance of order and a rapid purge of collaborators were essential to satisfy demands within France and to demonstrate de Gaulle's legitimacy to Allied commanders who planned an Allied military government of liberated regions.Footnote 38
As French territory was liberated, public anger and Resistance ‘justice’ directed against collaborators included punishing profiteers and trafiquants. Comités départementaux de libération (CDL) composed of local résistants and notables set their own agendas for local purges, and often resisted orders from de Gaulle's Commissaires de la République. In Brittany and the Côtes-du-Nord, animosity towards profiteers existed in all classes in August 1944: ‘To fail to make them pay up would prompt revolt on the part of all those who have suffered, sometimes cruelly, during the war.’Footnote 39 After a war in which so many had suffered, ‘it mustn't happen that the profiteers, in full impunity, enjoy the colossal riches they have amassed at the expense of poor saps’.Footnote 40 In the Gers, a rural department in south-west France, the CDL imposed ‘war fines’ totalling 8,628,280 francs in September, targeting Armagnac merchants;Footnote 41 the Syndicat des négociants de l'Armagnac negociated a maximum of 100 million francs for CDL taxation of the Armagnac trade.Footnote 42 In Toulouse, the director of Contributions Directes complained that punishing the intrigues of black market trafiquants was one of the principal concerns for local resistance movements.Footnote 43 A representative reported to de Gaulle from south-eastern France that many CDL refused to accept the authority of prefects or Commissaires de la République, determined to impose fines for illicit profits. ‘In a word’, he reported, ‘it's anarchy.’Footnote 44
The Occupation concentrated experience at the local level, creating a sharp conflict between local demands for retribution based on immediate experience and a national need for consistent, centralized control following judicial procedures.Footnote 45 In the Cher, local committees seized goods at checkpoints and acted on letters of denunciation to punish trafiquants, relying on patriotic militias to collect fines. The CDL distributed these funds to widows and local groups supporting deportees and prisoners of war.Footnote 46 Ad hoc fines, arrests, and confiscations produced inevitable inequities, animosity, and injustice, and infringed on the power of the state to enforce laws and tax wartime gains. To restore central control, legislation drafted in August proposed committees to oversee the confiscation of ‘illegitimate profits’ at the department level, investigating anyone cited for violation of economic legislation or who had ‘notoriously gained profits from the war or the enemy occupation’. Excess profits would be confiscated, with profiteers subject to fines of up to three times the amount of profits confiscated.Footnote 47 The confiscation law decided on 27 September and issued by decree on 18 October followed this design. The confiscation of illicit profits was declared a matter of elementary fiscal justice: ‘When the nation has been impoverished, it is inadmissible that some have grown rich at its expense.’Footnote 48
Minister of Finance Aimé Lepercq announced the confiscation plans in conjunction with a new national liberation loan in early November.Footnote 49 The two initiatives were linked by the need to finance the continuing war effort and to begin reconstruction. Illicit profits would be confiscated, but most French investors would be free to subscribe to the 3 per cent loan, not treated as ‘war profiteers’. Illicit profits were defined as profits earned from transactions with or for the enemy, in violation of economic controls, and from measures against French Jews. Departmental committees (CCPI) would have representatives from departmental financial administration and from the CDL. On 12 December René Pleven, who had succeeded Lepercq as minister, reiterated the government's resolve to pursue and punish ‘those who profit from distress’.Footnote 50 He invited businesses to declare their profits before 15 February 1945, which would allow them to retain 10 per cent of the profits if no circumstances required a fine. The CCPI rapidly curtailed measures of popular justice, placing the taxation of commerce with the enemy and black market traffic under central control, but they initiated a confiscation process of greater breadth and complexity than the state was ready or able to administer.
II
Complications set in immediately. France remained at war, its industrial and agricultural productivity impaired, its budget in deficit, and its state administration in disarray. Shortages of personnel, materiel, and finances set narrow limits on what the state could accomplish. Popular demand for justice against profiteers fostered hopes that the CCPI would deliver rapid justice and exemplary punishment, particularly for trafiquants who had escaped penalty thanks to German protection. The 18 October decree, as well as targeting firms and individuals that had violated economic controls, specified that ‘any person having notoriously realized such profits’ could be investigated, inviting the denunciation of anyone believed to have profited during the Occupation.
The decree of 18 October set no time limit for the conficsation process, nor did it allow public notice of its enquiries prior to confiscation decisions. Based on Vichy legislation to punish tax fraud, it gave broad powers to investigate anyone suspected of illicit gains and made all illicit profits subject to complete confiscation.Footnote 51 Rapid action was essential to centralize state control, to satisfy public demand for exemplary punishment, and to seize the evidence needed to determine profits and procure the assets needed to pay confiscations and fines. Commissaires de la République authorized to block the bank accounts of collaborators recognized the need to strike quickly and mercilessly against ‘those who profit from public misery, who, without having collaborated in the strict sense of the word, have nonetheless earned scandalous fortunes’. But their means were limited and trafiquants acted quickly to conceal profits and falsify bookkeeping.Footnote 52 The actions of Monsieur Monglat, Marcel Aymé's fictional wine wholesaler who made billions as a middleman buying and selling goods for the Germans in Uranus, would not have been unusual. Monglat bought paintings, antique furniture, and anything else from typewriters and binoculars to a suit of armour, to invest his cash in real goods and conceal his huge profits.Footnote 53 Similar measures were taken by trafiquants to conceal black market profits long before Liberation.Footnote 54 Any delay, one inspector noted in December 1944, ‘can only favour the establishment of falsified accounts and the dissimulation of assets’.Footnote 55 But delay and dissimulation had been taking place for months already, well ahead of state efforts to confiscate profits.
Both the public and the state expected the new CCPI to produce immediate results. But the creation of departmental committees took time: Vichy's regional committees to investigate tax fraud had their life prolonged to cover illicit profits while the new committees were set in place.Footnote 56 State officials assigned to co-ordinate the confiscation process reported great public impatience with the delays in bringing notorious trafiquants to justice, and fears that most would escape unpunished.Footnote 57
Yet the confiscation committees faced daunting initial difficulties. Simply organizing the eighty-eight committees and arranging staff and office space took time. The committees borrowed skilled investigators from state financial administrations, principally from the Contributions Directes. In January 1945 it was thought that 800 to 1,000 investigators would be needed for all of France. By June more than 900 worked full time and progress reports repeatedly complained of the insufficient number of investigators.Footnote 58 In the Department of the Seine, where German purchasing had been centralized, two committees established in 1944 proved insufficient and were increased to six in January 1945, then to twelve in December 1946. An analysis in May 1946 found that the Seine had sufficient investigators for its six committees, which could decide 5,000 cases a year; but that the estimated 30,000 cases would take six years to complete.Footnote 59 At their current rate of advance, another report estimated, ten years would be needed to process cases in the Paris region.Footnote 60 Hopes for a rapid economic purge had to be abandoned. The forecasts for the number of cases nationally climbed from 20,000 in early 1945 to as many as 150,000 in November 1945.Footnote 61
The committees had not been designed to deal with this volume of business. As Finance Inspector Guyot noted, surveying the work of thirteen CCPI in his division, ‘the number of cases to investigate has very rapidly exceeded the possibilities for our investigation personnel, not just in the near future, but even in the long term’.Footnote 62 The Contrôle économique (CE) had a key role to play, having enforced controls and recorded infractions during the Occupation, but cutbacks in CE staff limited their aid. The CE brought 110,000 cases to the attention of the CCPI, accounting for 30 per cent of their prosecutions, and fines and confiscations worth nearly 46.5 billion francs.Footnote 63 But this effort fell far short of the need for their help.
CCPI investigations were slowed by many factors. The number of investigators was the most significant, but materiel resources were inadequate as well, particularly transport. Commerce with the Germans and black market traffic had involved not only the transport of goods over long distances, but also the dissimulation of earnings, often through holding companies in Monaco.Footnote 64 Gathering evidence required research throughout France, and in company and military records in Germany and Belgium. Investigators relied on public transit or used their own vehicles, with shortages of fuel and tyres compounding their difficulties. The minister of finance urged prefects to supply CCPI with automobiles, fuel, and permits, but provided no funds to do so.Footnote 65 Committees complained of shortages of secretarial staff, office space, typewriters, and forms.
Many of the materiel problems were resolved as work advanced in 1945. As the CCPI took stock of the work accomplished and the task ahead in 1947, the fundamental difficulty was the number of cases to be processed. The CCPI had been conceived as exceptional fiscal committees intended to act ‘ with more speed and vigour than precision’.Footnote 66 But there was no easy trade-off between rapidity and precision. Respect for ‘republican legality’ required precision in gathering evidence, the calculation of profits, and allowing subjects the right to contest evidence and appeal committee decisions.Footnote 67 Since investigations required detailed research, limiting the number of cases was the only way to accelerate the confiscation process. Committees had been asked to begin with the most important cases; they were encouraged in 1947 to pursue only cases that would result in confiscations greater than 100,000 francs.Footnote 68 In the Department of the Seine, investigations of an estimated 30,000 cases would be limited to those involving more than 500,000 francs or notorious profiteers. Tax offices would tackle smaller cases.Footnote 69 In 1943, one observer had judged that war profiteers believed themselves so numerous that it would be impossible to punish them all after the war.Footnote 70 Indeed, the resolve to confiscate all illicit profits retreated steadily in the face not only of logistical difficulties, but also the political pressures to end confiscations.
III
State intervention was essential to ensure that actions against profiteers rendered justice, not revenge. The CCPI established a single, state-run process for confiscating profits, a success easily overlooked in assessing the slow progress and disappointing results of the confiscations process. A legal procedure with the right of appeal required a careful, deliberative process. Committees were instructed to deal first with the most prominent cases, many of which required extensive investigation before decisions could be reached. Cases could not be announced publicly before decisions were reached, so as not to warn associates who might become subject to investigation. Visible progress appeared to be appallingly slow.Footnote 71 Public impatience increased as time passed without visible, striking results. General dissatisfaction with the pace of the purge came up repeatedly in Gendarmerie reports on public opinion: the purge was already criticized in 1944 for being ‘too slow and proceeding according to a justice for peacetime’. Those who suffered under the Occupation recalled that they had been promised a justice ‘rapid, merciless and serene’, and now found that ‘if it is serene, it is not often merciless, and even less rapid’.Footnote 72 The length of the process for illicit profits prolonged anxiety in industry and commerce through uncertainty as to who would be subject to penalties, when, and with what severity.
Early cases were judged harshly to make an example of profiteers. High confiscations and fines appeased public anger to some degree, but they increased the fears of confiscation and the number of appeals, and thus increased the workload of overburdened committees who had to provide initial re-evaluations for the appeals committee (CSCPI). Of the first 98 CCPI decisions in 1944, 55 were appealed.Footnote 73 In 1945, 6,556 decisions were appealed. As the number of decisions rose, the appeals dropped, to 4,940 in 1946 and 5,914 in 1947, then fell off rapidly, but they reached a cumulative total of nearly 25,000 in 1955.Footnote 74 The decline reflected a tempering of passions, as well as the practical consideration that high penalties increased appeals and reduced the rate of recovery of funds. In the Hautes-Alpes, a recovery rate of 17 per cent in 1945 was explained as the result of penalites having been ‘too severe’ at the start and ‘the combative spirit of the debtors’.Footnote 75 Some departments complained of committees overwhelmed by appeals. The CCPI in the Corrèze moderated its penalties, confiscating only part of the illicit profits, to avoid appeals and increase the likelihood of payment.Footnote 76 Finance Inspector Guyot observed a general moderation of fines by April 1945 because of the difficulties in obtaining payment.Footnote 77 As one Commissaire noted, analysing rates of return in 1946, poorer departments with smaller cases tended to have higher rates of recovery; ‘the small penalties are paid very well, those we call “medium” are paid less well, and … the very big ones are not paid at all’.Footnote 78 This supported public belief that the CCPI punished lampistes – the underlings and small fry without the power to avoid punishment.
Planning for the confiscations had not considered their impact on French business. Jean Constant, secretary-general of the Syndicat Général des Industries Mécaniques et Transformatrices des Métaux, complained in February 1945 that the legislation to confiscate illicit profits was ‘a monument of iniquity’. Willing collaborators, he argued, had been a minority deserving punishment, but collaboration had been imposed on most of French industry and had been necessary for industry, workers, and citizens to survive. Industrialists should not be punished for having done ‘what was strictly necessary in order to protect raw materials and French personnel and to provide a minimum of goods for the domestic market’.Footnote 79 Many industrialists and retailers found the confiscation process threatening: the harsh initial fines, uncertainty as to who would be charged, and the duration of the confiscation process hindered their efforts for economic recovery.
The regional directors of Bank of France branches commented critically on the impact of confiscations. Beginning in December 1944, directors reported that the threat of confiscations limited firms' ability to invest and bankers' willingness to lend. Most of French industry and commerce had supplied goods to the Germans. Confiscation would be a slow process that could paralyse industry and commerce; those facing potential confiscations would prefer to pay ‘a fixed penalty, even a high one’, rather than live with prolonged uncertainty that made planning impossible.Footnote 80 Bank directors thought the procedures too slow, the interpretation of illicit profits too broad, and the penalties too harsh. They urged CCPI to distinguish between black market traffic for which there was no excuse, willing commerce with the enemy for profit, and – the most common source of illicit profits – commerce under constraint in order to keep a firm's workers employed: ‘It is unjust to punish them in the same way as those who deliberately sought work from the occupier.’Footnote 81
Directors were also concerned by the effect of severe penalties, which could force the closure of firms needed for economic recovery. In January 1945, they noted that impounded armaments firms in Saint-Etienne had to cease operation despite the need for arms for the ongoing war.Footnote 82 Sectors essential for reconstruction – including metallurgy, aeronautics, construction, and public works – had engaged heavily in collaboration and could be subject to severe penalties. For such firms, the risk of heavy sanctions made banks unwilling to grant credits that were indispensable for economic recovery.Footnote 83 In January 1946, Bank directors summed up the impact of confiscations as having produced a ‘general malaise in industry’ that discouraged initiative and postponed purchasing and investment. Banks tended to withhold credit at a time when the financial needs in industry and commerce had increased significantly.Footnote 84
The National Assembly set a term for confiscations in March 1947, requiring that no new cases be tried after 30 June and that decisions be reached on those underway by 31 December 1947, except in eight departments with populations greater than 800,000. Discussion focused on the need to end the confiscation process, allowing a reasonable time period to conclude the cases underway. No one, Minister of Finance Robert Schuman declared, neither the taxpayer nor the Treasury, should suffer from ‘the length of the procedure’.Footnote 85 A brief to CCPI presidents gave two reasons for the measure: the need to restore normal taxation, and return borrowed tax experts to their administrations, and the need to end the threat of confiscation weighing on French business and limiting economic recovery.Footnote 86
Finance inspectors surveyed CCPI progress to assess whether confiscations could be wound up on this schedule.Footnote 87 Their reports, as well CCPI presidents' reports on how their experience in the confiscation process could assist in setting up new Commissions de taxation d'office (CTO) to tax those reaping profits ‘at the margin of the tax laws’ and escaping taxation, provide a cross-section of CCPI experience, allowing us to draw conclusions about the politics of confiscation as the process was drawing to a close, and to analyse in the next section the origins and use of illicit profits and the difficulties in determining penalties for illicit transactions.
Committees reported consistently that shortages of trained investigators had slowed progress, and that high confiscations and fines had increased resistance to their work and reduced the rate of recovery. The shift from an initial, ‘essentially repressive’ trend to a ‘fiscal’ handling of cases had demanded greater care and closer investigation.Footnote 88 Public opinion had shifted as well, from demanding rapid action and harsh fines to indifference, disappointment, and even sympathy for intermediaries who continued to supply goods in parallel markets, particularly food, in a period of continued shortages of basic goods.Footnote 89 The food situation, which most had expected to improve rapidly after Liberation, deteriorated in the period 1945 to 1947. Bank of France directors noted in January 1947 that ‘most workers are less and less willing to accept that, three years after Liberation, the food supply in some towns is inferior to what it was during the German occupation’.Footnote 90 In August 1947 the standard adult bread ration reached its lowest level ever, 200 grams per day. The black market, barter, and the système D (resourcefulness in solving problems) showed spectacular revivals: according to INSEE statistics, in April 1947 French households spent 41 per cent of their food budget on the black market, 29 per cent on free market goods, and 30 per cent on rationed foods.Footnote 91
Enthusiasm for punishing profiteers in some regions turned into disapproval of CCPI actions judged as too harsh.Footnote 92 Abandoning the minor cases (less than 100,000 frs) and speeding committee work to meet the legislative deadline, as well as the delay allowed for departments with more than 800,000 residents, enabled most departments to wind up proceedings by the end of 1947.Footnote 93 Fiscal administrations were eager to recover the personnel they had loaned to the CCPI; industry and commerce wanted an end to investigations that threatened their cash flow and credit opportunities. Inadequate resources and frequent criticism discouraged investigators. Protests in 1947 demonstrated widespread popular discontent with state regulation and taxation, anticipating the Poujadiste unrest of the 1950s. In May 1947, demonstrators attacked state officials and sacked the offices of the Contrôle Économique and the CCPI in Dijon, destroying files and evidence. The demonstration originated as a food protest, but some reports suggested that black market trafiquants and collaborators had planned the attack in order to destroy CCPI files.Footnote 94 The minister of the interior's warning on how to prevent such attacks provided a pertinent comment on the reason for public disillusion with the confiscations: ‘The speed of punishment is in effect one of the essential conditions for the maintenance of Republican legality.’Footnote 95
IV
Illicit profits can be divided into three categories according to their origins: legal commerce with the enemy, illicit commerce with the enemy, and black market operations with French citizens.Footnote 96 Legal commerce was by far the clearest and simplest category to investigate: it generated contracts and receipts that could be used to determine the profits later deemed ‘illicit’. The French Comités d'organisation, which divided German orders among French suppliers, and the Ministry of Industrial Production kept records of German orders.Footnote 97 Wehrmacht construction contracts proved particularly easy to verify, leaving a substantial paper trail as well as having produced activity obvious to local populations.Footnote 98 The retreating German army left more than 10 tons of documentary evidence, and investigators gathered more material in Germany.Footnote 99
Legal commerce had already been taxed, and confiscations were reduced when firms made honest declarations of their profits in late 1944. Committees examined whether firms had sought German contracts or had them imposed, often under threat of seizure of goods and premises. Firms that complied with German orders only under constraint and delayed their delivery of goods were treated lightly, while those that had sought German contracts were subject to fines as well as confiscation. The profits from legal commerce with the enemy were not necessarily high: the Germans insisted on tight price controls. Low prices forced some firms into the black market to cover production costs for German contracts,Footnote 100 and sectors such as hotels in the Var (providing accommodation to Germans) and coalmines in the Loire argued that they had been forced to supply goods and services at prices below cost, leaving no profits to be confiscated.Footnote 101 Far greater profits were reaped in illicit trade.
Black markets were essential to French civilian survival, given inadequate rations. Producers, too, needed alternative sources of supply for scarce raw materials. If bought on the black market, such materials often could be paid for only by end-product sales on the black market. Retailers, too, needed to supplement inadequate official supplies with illicit purchases. Black market trade offered substantial profits and occurred throughout the economy, involving all social strata and all geographic regions. The scale of activity made extensive repression and punishment impracticable; determining profits from such trade required diligence, luck, and speed. Trafiquants generally kept no records of illicit trade or, in the case of established businesses operating on a large scale, kept one set of books for public accountability and alternate sets for illicit trade. Some accountants had no qualms about falsifying financial records.Footnote 102 CCPI investigations, in the many cases of ‘fraudulent accounts’, used evidence of costs, prices charged, pre-war profits, and the train de vie of the individual involved, as well as any records specifying price infractions, to estimate the total illicit profits earned. The burden of proof then fell on the person charged to prove the estimate was inaccurate.Footnote 103 This opened many opportunities for error, for resentment at unjust sanctions, and for the imposition of charges that proved unpayable. Recovery rates remained disappointing as the CCPIs completed their work; several Ministry of Finance notes in 1950 recommended reducing confiscations and fines that would otherwise be unpayable.Footnote 104
Unlike commerce with the enemy, this black market franco-français remained not just active but essential after Liberation. As during the Occupation, neither buyer nor seller had an interest in state interference, particularly for traffic in food that remained a vital part of private food provisioning from 1945 through 1947. Smaller communities often protected black market suppliers against legal and financial punishment by outsiders, as illicit goods served community needs. Inspectors estimated that virtually all farmers and all butchers had earned illicit profits during the war. The extent of this ‘parallel economy’, the difficulty of gathering evidence, and the often minor sums involved made a thorough ‘purge’ unrealistic. The decisions to limit investigations according to the size of confiscation allowed many trafiquants, particularly in agriculture and in food retailing, to escape sanctions.
The largest profits were reaped by trafiquants supplying the Germans with black market goods. The infamous black market ‘kings’, Joseph Joanovici and Michel Szkolnikov, provide the most spectacular cases in a category that included a vast array of middlemen delivering French goods to German purchasing bureaus and catering to individual proclivities, under German protection, untroubled by concerns for bookkeeping, sales receipts, or official controls. Joinovici, supplying scrap metal to the Bureau Otto, amassed a fortune estimated at more than 1 billion francs during the Occupation; Szkolnikov, supplying textiles, gained an estimated fortune of 2 billion francs. Szkolnikov, reported killed in Spain in June 1945, was nonetheless subject to a confiscation of 1,904 million francs and a fine of 2 billion francs in July 1945. Joinovici's CCPI case resulted in a confiscation of 1 billion francs and a fine of 3 billion francs in 1947.Footnote 105
This activity was the most difficult to document, and the most serious in its impact. It not only fostered huge profits, but also provided tools essential for the French black market. German purchasing agencies used black market purchasing to buy goods that had been hoarded or produced for black market sale, and goods bearing no relation to military needs (artwork, Oriental carpets, women's shoes, cosmetics). They equipped French trafiquants with cartes d'acheteurs, circulation permits, fuel coupons for vehicles, passes for transporting goods, and cards to provide immunity from French economic controllers and police. German authorities protected them when French officials caught them, even if their goods had not been intended for German use.Footnote 106 At the end of November 1942, German black market purchases in France totalled more than 18 billion francs.Footnote 107 These purchases ended ‘officially’ in March 1943, but continued unofficially on a significant scale for the duration of the Occupation.
The Contrôle Économique kept records of trafiquants protected by the Germans, providing an important means of identifying targets for the CCPI. But evidence remained problematic, and trafiquants charged according to notoriété publique could not be convicted without real proof, at the very least, that their train de vie had shown a significant increase in income from unidentified sources. Illicit transactions generally took place in cash, without written receipts, and with trafiquants often identified only by a first name, a surname, or a nickname. The law required buyers and sellers to keep transaction records, and the failure to do so or falsified records gave the CCPI authority to estimate the illicit profits involved, with the burden of proof then falling on the subject to explain any inaccuracy in CCPI estimates. In cases with non-existent or falsified records, confiscations were combined with high fines. Although these might prove unpayable, they were sometimes intended to be so, as a means to drive undesirable individuals out of business rather than to gain tax revenue.Footnote 108
In many cases, committees conflated the categories of black market activity and commerce with the Germans, and the overlap was indeed considerable, as German financial and administrative resources encouraged trafiquants to extend their operations in the French black market. Lists of firms engaged in commerce with the enemy and French black market traffic in Saint-Omer (Pas-de-Calais) in December 1944 were virtually identical.Footnote 109 One revealing example of the combination of black market transactions for German and French clients, and the difficulty in gathering evidence, is that of a cosmetics manufacturer famous for its lipstick, investigated for illicit profits in 1946 and subject to a confiscation of 250 million francs and a fine of 375 million francs in July 1948. The firm had shipped large orders of lipstick to Germany as late as August 1944, and developed a complex system for falsifying accounts, manufacturing and delivering goods for black market consumption. The firm's official accounts showed financial losses in the years 1942, 1943, and 1945, but a director who co-operated with the investigation claimed that profits from illicit production and sales had totalled 250 million francs. The sales to German purchasers, more easily documented from German sources, were estimated to have been only 20 per cent of the firm's black market activity, the other 80 per cent sold on the black market in France.Footnote 110 The German share is indicative not of their overall market share for black market goods, but rather of their black market pursuit of products of so little consequence for their war effort.
V
‘Fiasco’ seemed apt when Dorothy Pickles assessed the paltry results expected from confiscations in 1946. She thought 12 billion francs ‘ridiculously small’; the estimate for 1945 had been 6 billion francs, and the revenue recovered, 5,897 million francs, was only 10 per cent of the confiscations and fines imposed.Footnote 111 By 1950 the total imposed had reached 147 billion francs, and the rate of recovery had improved to 25 per cent,Footnote 112 a far cry from the 800 billion in occupation costs Pickles used as her point of comparison, but not an inconsequential sum. Most revenue came from confiscations, particularly from small and medium impositions; higher confiscations tended to go unpaid, as did the fines imposed (their recovery rate was only 7.5 per cent in early 1948).Footnote 113 By this time, the public had lost interest.
Pickles's judgement, long a basis for negative evaluations, reflected widespread disappointment in 1946. Our review of the confiscation process suggests that the process was not a fiasco, but rather a serious effort to appropriate the gains of those who had profited from the Occupation. It provides a telling case study of the weakness of the state in liberated France and the compromises necessary in the transition from wartime penury to peacetime recovery. There was a huge gulf between popular aspirations for a radical break from the past, with a complete purge of collaborators and profiteers, and the fact of widespread, pervasive economic collaboration and black markets, the slow pace and the complexity of holding trafiquants accountable by legal procedures, and the need to promote recovery and economic growth.
The state lacked the resources to identify, document, prosecute, and collect all illicit profits. Wartime passions to punish traitors demanded satisfaction, and required prompt state intervention to direct retribution through official channels rather than vigilante justice. The CCPI successfully brought economic retribution under state control. But the state lacked the manpower and the material resources to satisfy popular demands for swift justice. The financial administration was overtaxed in taking on the purge of profits in addition to regular fiscal management, the enforcement of controls to manage shortages, and the cutbacks in personnel. The passage of time allowed trafiquants to disguise their wealth, destroy evidence, and evade justice, and it increased public frustrations. Demands for harsh measures relaxed from an initial zeal to punish, to growing frustration, and finally to acceptance. The legislature set a term to confiscation activities in 1947 in order to focus economic resources on recovery. As with the efforts to punish political collaboration in occupied countries, and for denazification in Germany and defascistization in Italy, complete purges were not possible. Compromise and closure were needed to preserve a functioning state and move on from retribution to reconstruction and renewal.
The scale of the problem, seriously understimated at Liberation, meant that success in confiscating profits could only be partial at best. The extent of illicit activity and the difficulties of prosecution demonstrate the importance of German economic exploitation and German use of the black market in France, as well as French civilian and business survival strategies and the development of a culture of illicit commerce to meet essential needs. Traditional values were inverted, highlighting opportunities for rapid gain in transactions outside state economic controls. Those with the means to acquire and transport scarce goods could make a fortune.
Disappointment with the confiscations is not surprising. The process was cumbersome; many profiteers escaped with minimal sanctions. Popular wisdom and press critiques indicated popular resentment, but criticism came from within the state as well. Mendès France predicted this outcome in 1944; finance inspectors repeatedly noted that it was much easier to investigate and punish the small fry. The service co-ordinating investigating economic collaboration claimed in 1946 that the guilty remained largely unpunished and held administrative positions allowing them to sabotage confiscation efforts; punishments tended to target small-scale operators unable to defend themselves.Footnote 114 The confiscation process could have done much better, but it would have required the availability of trained personnel, rapid action to prevent the dissimulation of acquired wealth and destruction of evidence (already taking place during the Occupation), and clear procedures and standards of evidence. In the chaotic conditions of Liberation, the state did not have the personnel, the resources, the knowledge, or the authority to conduct a rapid and effective economic purge. The one area where improvement did not require resources was in publicizing confiscation efforts: keeping the public better informed might have won greater patience and some sympathy for the difficulties of the confiscation process, but it could have compromised continuing investigations. The economic purge needed to be rapid, just, and exemplary: loss of credibility on any one of these factors weakened the other two.
The limited success of the purge of profits should be understood not as a fiasco but as a demonstration of weakness of the state. As Liberation took place, the provisional government needed to demonstrate its ability to assure order and prevent vigilante justice, showing Allied authorities that France could govern itself. As it became clear that reconstruction would be accomplished with only limited help from abroad, ending the economic purge and mobilizing economic resources for recovery took precedence. The confiscation of illicit profits had once been conceived as an end in itself, to punish the ‘mauvais citoyens’ who gained scandalous wealth from the privations of their fellow citizens. It developed as a means to reduce currency circulation, to punish collaboration, and to obtain revenue for an impoverished state. By the spring of 1947, when the state decided to bring it to a close, the process had achieved limited gains and was under attack as an obstacle to the full mobilization of resources for economic recovery. As a fiscal process, distinct from prosecutions for treason or criminal activity, the confiscation of illicit profits held little interest for a public disappointed by its early results. Jules Chauvenau, a former inspector for the Contributions Directes, concluded his 1947 study of illicit profits by asking whether the confiscation efforts had been in vain. Such a conclusion, he stated, would be ‘excessive and immoral’. The effort, even if success was distinctly partial, had been essential to take what profits it could from the hands of trafiquants as a matter of elementary justice and an essential step in restoring the authority of the state.Footnote 115
