Combining the Reichs-kreditmark with the Ruble.
The greatest financial mistake which we could have made was to combine the Reichsmark, respectively the Reichskreditmark with the Ruble, similarly as Japan had done with its leveling, in connection with the Chinese dollar, until after severe set-back, it was at last recognized that this had been the greatest mistake which could have been made at all by the Japanese financial policy.
The Reichskreditmark, which, not only in the Eastern, but also in other occupied territories, is the medium of exchange which the combat soldier accepts as standard salary, is today actually of inflationary value. Her fate depends on the Ruble, which is entirely beyond our control. Today there is no German office which could determine in which amounts the Ruble is circulating, which amounts, thru robbing of the inhabitants, have come into additional circulation at the Finance Offices and which amounts are brought in by the Bolshevists through the Front, into the occupied territory.
We therefore made the same mistake with the same repercussion. Just as Japan, after several years of the Chinese-Japanese war, decided to withdraw from the former use of enemy currency, we too shall have to take that step. The quicker this happens, the better it will be.
The Karbovanetz Experiment.
The introduction of the Karbovanetz in the Ukraine, put through as an attempted solution, must be recognized as such, although it, as local experts of the Reichscommissariat themselves confirm, was a useless attempt. It is so because a partial solution is senseless in the huge Eastern Area and the Karbovanetz is meaningless as long as the other immense territories retain the Ruble.
The attempt was also doomed to failure because currency problems can only be solved together with the consumer goods problem. One can determine and control mediums of exchange; nothing is changed in the price fixing, as long as not even a half way satisfactory consumers goods offer opposes the continuous flow of mediums of exchange to the working country—and city inhabitants.
The currency political experiment, taken as a whole, must therefore be considered as a failure in the Ukraine. It has only brought unrest to the people. Above all, the fact that large banknotes are not redeemable in Karbovanetz, has resulted in the transport of money into the other sections, where the notes are changed into small coins.
Central Solution of Currency Problem.
This case proves particularly well that such efforts towards solution should be conducted only centrally, never locally. This example is further proof that, as all the General officers of the Army sector and Army groups had informed the reporter the greatest danger in the Eastern area was the lack of a central leadership in the Civilian Administration.