The black market in France between 1940 and 1949 involved smuggling, organized crime and civil disobedience in both the zone libre and the occupied territories.

Vichy market regulation was the first French attempt at economic planning. The parallel economy undermined the official, centralized, economy that regulating the production, storage, transport, quantity, quality and price of food.

Background

The Great Depression in France started in about 1931 and lasted through the remainder of the decade. The crisis started in France a bit later than other countries.^[2] The 1920s economy had grown at the very strong rate of 4.43% per year, the 1930s rate fell to only 0.63%.^[3] The depression was relatively mild compared to other countries since unemployment peaked under 5%, the fall in production was at most 20% below the 1929 output and there was no banking crisis.^[4]

The banking crisis in France was driven by a flight-to-safety away from banks, which led to a severe and persistent credit crunch.^[5] However, the depression had some effects on the local economy, which can partly explain the 6 February 1934 crisis and, even more so, the formation of the Popular Front, led by the socialist SFIO and its leader, Léon Blum, who won the 1936 elections.

In a 2013 book review, historian Robert O. Paxton wrote:

The historiography of Vichy France since the 1970s has consisted largely of refuting the early postwar view that Marshal Pétain’s regime was an alien import imposed for the moment by Nazi force. ... Recent historians have reinstated Vichy firmly within the continuities of French history. Vichy France reacted to what had gone before, especially to the Popular Front of 1936, and tried to prepare for a postwar world.^[6]

Prewar France was plagued with runaway inflation in the wake of the wage increases agreed to by the administration of Léin Blum after a wave of union unrest shook the country.^[7]

History

From the occupation of France to the end of 1941, the black market, born of diversions from official channels and the creation of clandestine supply chains, was considered shameful. Its principal clients were rich Frenchmen and the occupying forces, which organised purchasing agencies. A myth of hidden abundance led to informing and antisemitism while undermining Vichy, accused of inefficiency, but which nonetheless severely repressed these infractions.

From the end of 1941 to 1943, a "grey market" emerged in which more and more city dwellers travelled into the country for their groceries, as many as two thousand bicyclists a day reported by the prefect of the Ardèche at its height. City-dwellers bought from growers above the fixed payment set for suppliers, but below the urban market rate price. It became common practice and no longer seemed immoral once survival required it, and the Catholic Church no longer condemned it.

Under the law of 15 March 1942, Vichy had de facto tolerated small-scale black market activities and concentrated on large-scale trafficking. The black market and the grey market at that point accounted for between one-fifth and one-half of agricultural production. These transactions were most prevalent near the big cities, especially Paris. The profits mostly went however to large upstream wholesalers and large-scale suppliers rather than to smaller merchants.

In 1943–1944, the black market took on a patriotic aspect. The Germans, who had considerably increased their economic pillage, stopped supplying themselves on the black market and demanded more stringent enforcement from Vichy, in which the paramilitary Vichy milice participated.

The the black market became a massive civil disobedience movement, with more than two million arraignments.^[8] The French Resistance encouraged this, relying on the widespread resentment against Vichy in the countryside. The Vichy authorities for their part depicted resistance fighters as black market bandits.

After the Liberation of France, penalties for black marketeers were a factor in the épuration légale (purge of collaborators) in response to strong public demand. Still, confiscation of illicit profits was slow and incomplete, except for the most notorious black marketeers. The economy improved only slowly and the black market flourished. Supply problems and rationing, and therefore also the black market, continued until 1949.

The black market lingered in the French collective memory until a generation came into its own after thirty years of abundance during the Trente Glorieuses ("glorious 30") from 1945 to 1975. Its memory remains preserved in two major works in particular, Au bon beurre and La Traversée de Paris.

Black market (1940-1941)

From November to December 1940 and onwards, the black market became a widespread phenomenon and a major concern for public opinion, which was almost unanimous in its condemnation. Its very existence called into question the policies of the Vichy government, who in turn tried to repress and eventually end it.^[9][10]

Rationing and taxation

Despite the emergence of fraudulent practices as early as autumn 1939, the black market didn't fully take off until autumn 1940, after the defeat and occupation of France and the creation by Vichy between September and December 1940 of a widespread supply and rationing system.^[9]

Shortages in France were in part a direct consequence of the defeat and economic exploitation of France by the Germans after the Armistice of 22 June 1940. France was required to pay exorbitantly ruinous occupation costs (almost as much as the country's 1939 entire budget) that bore no relation to Germans' actual costs. Also, the Germans paid for their purchases in France with special currency pegged at an exchange rate that was artificially advantageous to them, required the French to finance the transportation costs of exports to Germany. What's more, the French economy, cut off from the rest of the world and in a state of disarray, was largely economically inactive at the time,^[11] and had been chaotic and plagued by runaway inflation prior to the Battle of France.

Starting in 23 September 1940, Vichy set up an agricultural supply system and an authoritarian distribution of raw materials and industrial products, based on a controlled pyramid organization. For consumers, this meant rationing of foodstuffs, to ensure a more even distribution and prevent excessive selection by money.^[9]

French people were classified by age or occupation group, according to eight categories^[12][13][14] (see boxed material):

Rationing in Vichy

Announcements of CNAM conferences on gardening and canning (August 1940). BDIC

Rationing card for power at Drancy

Tickets for sugar (1941)

At the time of purchase, they were required to hand in tickets corresponding to the authorized quantity. From autumn-winter 1940-1941, bread, sugar, milk, butter, cheese, oil, meat, coffee and eggs were rationed^[9][15] as was coal.^[16] In 1941, rationing was extended to chocolate, fruit and vegetables, shoes, textiles^{[9] [16][15]} and tobacco, as non-smokers fed the black market^[17]

The quantity of rations offered were insufficient for a healthy diet. For category A (adults), the rations provided around 1,000 calories to 1,500 calories daily, while the needs of an adult man were around 2,200 calories. And often, the stores did not have the quantities necessary for delivery. The population was therefore obliged to supplement their diet by other means for example, going to canteens, gardening, shopping on the farm, receiving parcels and the black market.^[16] Those who did not have access to these additional resources, such as internees in psychiatric hospitals, suffered starvation: 45,000 internees in French psychiatric hospitals died during the Occupation.^[18] In the small Italian occupation zone in France, in Menton, the situation was less serious and rationing did not begin until July 1941.^[19]

Another important element of the administered economic system was the law of 21 October 2194, which imposed a freeze on industrial prices and a tax on agricultural prices for eighty items^[12][20]

Birth of the black market

Diversion within official channels

From the beginning, the creation of the administered system was accompanied by the detour of products from their official sales channels. Wholesalers played on the geographical differences in product pricing. The Service des Contrôles techniques (Technical Inspections Service)^[a] stated that: "some wholesalers seem to want to speculate by directing or diverting their shipments to regions where the prices seem to them the most advantageous".^[22]

On 19 May 1941, Vichy imposed a tax on fruit and vegetables, which had been free of tax until then. Merchants in the Paris region sent telegrams to their provincial suppliers asking them to redirect their shipments to regions where prices were highest. Parisians found themselves deprived of fruit and vegetables for several days. In the end, the authorities had to relent, raising Parisian prices, while the affair, reported in the press as the "telegram affair", stirred up public opinion. Wholesalers also put pressure on retailers to pay them kickbacks, to ensure they were kept supplied.^[22]

Clandestine networks

The black market was also supplied by channels entirely parallel to the official ones, whose sources were the producers themselves. Many of the people who were smugglers were official SNCF employees or retirees, who benefited due to their free access to rail transport. For example, out of 51 official reports drawn up on smuggler's in February 1941 within the Rodez area, 41 concerned railway workers.^[23]

The rural police in Ille-et-Vilaine noted in April 1941 that "on certain market days, the passenger carriages are so crowded with employees and their parcels that it is impossible for a passenger, or even a ticket inspector, to cover part of the carriage".^[24]

Clandestine stocks

As soon as the Germans were defeated, many producers and traders hid their stocks, particularly of industrial raw materials^[25][26] In the Tarn département, 8,000 tons of wool and cotton were allegedly stored clandestinely to escape the Germans, and then supplied to a clandestine textile industry. When, in autumn 1940, Vichy imposed the declaration of stocks, many were not reported, or were only partially reported, by the companies in possession of them. These stocks, of wood or leather for example, then fed clandestine black market channels.^[25]

Clients

Rich Frenchmen

Originally, the vast majority of the population had no access to the black market, whose prices were too high. Its clients were from the most affluent layers of society, who escaped restrictions on their daily lives. They lived in the richest parts of the country, in Paris and in such tourist destinations as Deauville, Nice and Megève. They bought foods, but also clothes, coal and gasoline.^[27]

These clients frequented restaurants that supplied themselves on the black market and served many more dishes than their tickets permitted, and went well beyond the officially posted menus. In April 1941, a police report pointed out that Le Lido and Fouquet's were using underground suppliers. Restaurant owners went themselves to the country and did their buying there. Luxury restaurants were at first protected because of their German clientele, but in the summer of 1941 an agreement between Vichy and the occupiers officially exempted some ten luxury restaurants in Paris from the rules, including Maxim's, frequented by many Germans including senior Nazi Hermann Göring, the La Tour d'Argent, Fouquet's, the Carlton [fr], the Drouant-Gaillon, and the Lapérouse, frequented by journalists like Jean Luchaire.^[28][27]

Occupation forces

The German occupiers were big clients of the black market. Individual soldiers and civilians made many purchases, benefiting from an artificially advantageous exchange rates (the French franc was fixed at 200 to the Reichsmark).^[29] The way they emptied the stores of food, clothes.and shoes strongly accentuated the shortages and the French quickly nicknamed German soldiers "potato beetles" (French: doryphores).^[30]

German military units themselves organised bulk food purchases from farms, with no regard for regulations. These purchases were particularly numerous during the invasion of France in the spring of 1940, when the speed of the advance over-extended their supply chains. The regions of Normandy and Brittany particularly suffered from this type of military resupply.^[30]

Without coordination or prior planning, the occupier's agents used black market networks to put their hands on stocks of raw materials. The best-known of these buying agencies was bureau Otto, created in the fall of 1940 by an Abwehr officer, Hermann Brandl, nicknamed Otto. Located in the 16th arrondissement with warehouses in Saint-Ouen and Nanterre, bureau Otto, which at the beginning of 1941 employed more than 400 workers, was one of the largest underground networks.^[31][30][32] About 15% of the funds paid to Germany by France during the occupation were spent on black market purchases,^[32] and a "March 1942, a report from the French army’s general staff estimated that "each day the Germans were passing more than 100 million francs worth of merchandise from the free zone to the occupied zone."^[29]

The Germans offered protection and passes to French middlemen like Georges Delfanne,^[33] known under the pseudonym of "Masuy", Henri Lafont, head of the gang at rue Lauriston [fr], which became known as the Carlingue or the "French Gestapo", or Frédéric Martin, known by his pseudonym of Rudy von Mérode. They also used established merchants, competent opportunists who built fortunes, such as Joseph Joanovici in scrap metal or Michel Szkolnikoff in textiles.^{[34][30][35][32]}

Still, the true profiteers were the professionals, Joseph Joanovici and Mandel Szkolnikoff, corrupt businessmen like the fake Baron de Wiet, and errant aristocrats like Marie Tschernitcheff. They headed sophisticated networks, built fortunes and lived large. Thanks to the black market, Szkolnikoff became one of the biggest real estate owners in France, with a hundred-odd exclusive buildings in Paris, luxury hotels in resort towns, a game preserve in Sologne and a chateau in Saône-et-Loire.^[34][36][35]

Major works

Involving the Carlingue: