Currency during the Occupation
From Jersey Under the Swastika, an Occupation diary written by Phil Le Sauteur
Within a brief period Jersey felt the impact of currency control. An exchange rate of nine Reichmarks to the Pound sterling was quickly fixed, and after a day or two of the irritating process of settling down, general conditions appeared to reach something approaching the normal. Shopping centres were simply thronged by the hundreds of the occupying troops, who bought rather freely — perhaps too freely — from the well-stocked shops. Everything seemed to indicate a thriving trade. Perhaps the more soberly-minded observer would say that it was panic buying.
An act of real foresight which must be recorded was that of the Banks in shipping over to England all securities at the first sign of impending trouble. As there were no death duties in Jersey, all securities held were of the "bearer" type, and negotiable. These would have been extremely useful to the Germans in their hunt for foreign currency.
Following early after the original fixing of the exchange rate between Pounds and Marks, an order was issued on 8 July 1940, under which the rate was drastically reduced to eight Marks to the Pound. Jersey's famous Sixpenny Income Tax, it was obvious, disappeared for a long time to come. Almost all of the Islands' revenue, chiefly derived from Wharfage Dues on imports and from Income Tax on the English tax-dodging wealthy people and companies, had completely gone, whilst the expenditure side of the Budget included the heavy burden of unemployment as well as the entire cost of the occupying forces. In addition, the Island was being flooded with the special Occupation Marks, which had no pretence to intrinsic value, having been issued as "Victory" money to the troops so that each might get his fair share of loot from the big stocks held by the shops — this money, if we can call it such, being specially printed, was of value only in the occupied territories.
During early September 1940 the rate of exchange was altered, this time to 9.60 Marks to the Pound. This alteration, it would appear, had nothing to do with the relative value of the two currencies, but so as to give an exact exchange between the pfennig and the English copper coinage.
Income tax demands
Income Tax demands at 4 shillings in the Pound were followed by the reassuring news that, for 1941, earned incomes would be subject to 50% surtax on this, and that two years' tax would have to be paid for one year.
Is was made possible about this time to use the Occupation Marks, which the German troops spent in the Island, for the purchase of necessaries in France.
Towards the end of the year, trading conditions became increasingly difficult, owing to the fact that the silver currency was rapidly disappearing from circulation.
Barter became one of the principal methods of transacting business, and it took a lot of money to tempt people into parting with the articles no longer available in the shops. Second-hand cycles were fetching anything up to £30, and in auction sales pullets were worth about 35s, with breeding rabbits at about the same price level. Many men had been tempted by high wages to work for the Germans on their airport extensions, as well as other important jobs — in so doing, they found themselves with plenty of money and relatively nothing on which to spend it — no beer, not many cigarettes and, in many instances, paying reduced rentals for their houses. Taking advantage of the position, many second-hand shops were opened, and many of the shops whose stocks had run low joined in handling second-hand goods, too — clothing, footwear, crockery, vacuum flasks, etc
Before the middle of 1941, Jersey 2s notes were brought into circulation, in order to alleviate the acute shortage of coin change, but only after an equivalent amount of English currency had been withdrawn by orders of the Germans — this to avoid inflation! Presumably the flood of Reich Credit Marks circulating did not, in the German point of view, constitute inflation!
By early October almost all the silver and most of the British paper money were no longer in circulation, so that Marks had to be used much more extensively. The probable explanation of this were the hoarding on the part of the local people, who quite naturally preferred not to hold German currency, and that taken away by members of the German forces — even if each had only taken a coin or two away as souvenirs, the total number of troops which passed through the Island was so great that the amount of currency would have been really considerable. But the Marks with which the troops were paid were of no value in Germany, and it was therefore useless to save or send them home. They preferred to hold English money, preferably silver, realizing that, even if England should lose the war and the Pound depreciate greatly, it would always be worth something.
During 1942, in order to overcome the change problem, more local notes were issued, these being of the following denominations — 20s. 10s. 2s. 1s and 6d. The notes were of attractive designs, each with a reproduction of Mr Blampied's humorous sketches on the reverse. These did not achieve their prime purpose, as most of them were hoarded as soon as issued.
Currency difficulties continued through into 1943, and in the middle of that year, the Germans made a search of all bank safe deposits, and sealed off all such items in the bank strong-rooms. The ostensible reason for this was the freezing of bullion, raw diamonds, etc., which might be used on the ubiquitous black market. The contents of the safe deposits, however, were mostly stuff placed there for safety since the Occupation, and there was comparatively little to interest the Germans.
During the early days of the following March a full-page list of orders was included in the press news, and as far as could be gathered from the mass of wordage, these related merely to the transfer of currency between the various occupied territories. The only point of local interest was the grouping of Jersey and Guernsey, whilst Alderney was regarded as a part of France!