Chasing Gold: The Incredible Story of How the Nazis Stole Europe's Bullion (45 page)

Only a few days after the
Emerald
’s cargo was safely stored in Canada, five more ships left Britain in the biggest British convoy of the war. It was also the largest treasure shipment in history on either land or sea. Two British navy vessels, the battleship
HMS Revenge
and the cruiser
HMS Bonaventure
, departed from the River Clyde in Scotland. In the North Channel between Ireland and Scotland, they met up with three former cruise liners: the
Monarch of Bermuda
,
Sobieski
, and
Batory
. The last two ships belonged to the Free Poland navy. Four destroyers also joined as escorts. The commander of the entire operation was Admiral Ernest Archer, who had taken command of
Revenge
the year before. This would be his fourth bullion voyage. Between them the ships carried a cargo of £450 million. Also on board was a team of British officials on their way to a crucial financial meeting in Washington.

The ship was so full that the captain sent back a message saying, “We are now in a stage where the ship’s chaplain is sleeping on his altar.” The ship carried twelve-inch and fifteen-inch guns as well as an anti-aircraft battery. Sailors slept near the weapons in case of emergency.
Revenge
joined the other vessels in the convoy at 7:00 P.M. The following day, it dropped a depth charge in hopes of hitting a German submarine. Sure enough, the ship’s crew soon saw a huge splash off the port bow.
³³

Two-thirds of the way to Halifax, the
Sobieski
reported mechanical problems and had to slow down. Admiral Archer ordered Captain Jack Egerton Broome, who was now the commander of the
Bonaventure
, to leave the convoy and help the Polish ship. The vessels detoured to the closer landfall at St. John’s, Newfoundland. The three remaining ships stayed on course for Halifax, and tied up there at 1:45 P.M. on July 12. The gold and securities were offloaded to secure vehicles, and it took until 10:00 the next morning to finish the job. At one point, a box broke, and a heavy ingot dropped through a hatchway to the fourth deck. A sailor looked down and shouted, “Is that gold okay?” A middy barked back, “What about our bloody heads!”

With the
Bonaventure
leading the way, the two laggard ships sailed through heavy fog and floating ice for more than two days toward St. John’s. The worried captains knew they would not see an iceberg until they were almost on top of it. The two vessels finally stopped dead for twelve hours and waited for better weather. Finally at 5:15 A.M. on July 12, they separated at the entrance to the St. John’s harbor. The
Bonaventure
headed for Halifax, arriving there the next morning, while the
Sobieski
landed in St. John’s. All five vessels—and their cargo—were now on the safe side of the Atlantic. When his ship docked, Commander Humphrey Jenkins, the executive officer on
Revenge
, told the Bank of Canada’s Sidney Perkins, “I’ll be glad to get rid of this margarine.”

British officers were always watchful to make sure that nothing was lost to sticky fingers during the transport. When the
Revenge
arrived, it appeared that three cases of gold were missing. A bank official thought something might have happened during the loading. A mess steward, who was preparing a drink, overheard the bankers talking about it and said, “Perhaps I’ve got what you’re looking for. I’ve been tripping over something since we left.” He went into the kitchen area and found three boxes stored amid cases of Scotch whiskey. Nothing was missing!

It took five special trains to transfer this mega shipment of bullion from Halifax to Ottawa. Each consisted of ten to fourteen wagons, and 150 cases were loaded on the floor of each coach. Two guards were locked in the cars and watched the valuables during four-hour shifts.
³⁴

The securities were again sent to the three-story basement of the Sun Life building in Montreal. One hundred twenty retired bankers, brokers, and investment secretaries recorded the information about what they nicknamed “our bundles from Britain.” The Buttress Room on the third basement was quickly filled, and bank officials immediately started construction of a new vault that would be sixty feet square and eleven feet high. Officials used 870 old railway tracks to reinforce its three-foot cement walls. Two different keys were required to enter the vault, which trainloads of securities soon filled. It took 900 filing cabinets to store all the stock certificates.

The size of the gold and securities transfers declined after the first two trips. The war in the Atlantic continued, but the bulk of the London gold was now safely in Canada. The final transfer of a British navy ship took place in April 1941 aboard the
HMS Resolution
and carried only £3 million in bullion. The last one, on the merchant ship
Ida Bakke
, brought just £1.25 million.

While most of the gold went from London to Halifax, the British also sent significant amounts across the Pacific Ocean to the U.S. and Canada. Between November 1939 and April 1940, forty-eight shipments traveled from Cape Town to Sydney and then on to Canada. There were also deliveries from Bombay and Hong Kong to Honolulu and San Francisco. Those totaled more than £100 million.
³⁵

On June 30, 1940, Sir Frederick Phillips was able to report to his bosses that outside of gold held by individuals only £280 million remained in Britain, and there was a decline of £125 million in just the two previous weeks. Of that, the Bank of England owned only £20 million. The rest was the property of the central banks of Argentina, Belgium, Czechoslovakia, France, Holland, Norway, Poland, Switzerland, and Yugoslavia. Phillips added that the next week two convoys involving battleships and ocean liners would carry £132 million. The rest should be leaving in July, so the great British evacuation was just about over.
³⁶

Only a week after the Nazis invaded Poland in 1939, President Franklin Roosevelt sent a letter to Winston Churchill, who was then First Lord of the Admiralty. The two men had met during World War I, or at least the president thought they did. He said they met in London during World War I, when Churchill was First Lord of the Admiralty and Roosevelt was Assistant Secretary of the Navy. Roosevelt remembered the occasion, but Churchill did not. The First Lord quickly responded to the White House message, signing his answer with the code name: “Naval Person.” Their exchanges continued throughout the war, totaling more than two thousand messages. After Churchill moved to 10 Downing Street to be prime minister, he sent the president a special message, asking if the cable traffic could continue. Churchill that night signed off as “Former Naval Person.”
³⁷

A year into the war, the prime minister was anxious to stop paying for American military equipment with cash on the barrelhead because he knew his country would soon run through all the gold that was now on the western side of the Atlantic. At the end of 1940, Roosevelt suggested that the U.S. send navy ships to South Africa to pick up British gold as payment for some destroyers. Churchill politely, but firmly, rejected the idea. He wrote that loading gold in Cape Town “will disturb public opinion here and throughout the Dominions and encourage the enemy, who will proclaim that you are sending for our last reserves.” Later, though, Britain did ship gold from South Africa to Washington.
³⁸

Despite Britain’s success in getting its gold to North America, the country still faced a desperate financial situation. On August 21, Chancellor of the Exchequer Sir Kingsley Wood sent the war cabinet a brutally candid report entitled “Gold and Exchange Resources.” It was marked “TO BE KEPT UNDER LOCK AND KEY.” It opened with the blunt statement, “I am seriously perturbed by the rate at which our gold and exchange resources are now disappearing.”
³⁹

Wood discussed the issue the following day at a noon cabinet meeting. He showed that between January 1, 1940 and mid-August 1940, the country’s total assets had fallen from £775 million to £490 million, with gold and dollar holdings dropping from £525 million to £290 million. Looking forward to the period from July 1940 to June 1941, he predicted, “We could lose some £800 million of gold and foreign exchange as compared with the previous estimate of £410 million.” He then glumly concluded, “If we continue to lose gold at the rate we have experienced in the last six weeks, we should have none left by the end of December.” Wood once again brought up the possibility of requisitioning British wedding rings and other gold jewelry, but dismissed the idea himself saying that it “would not produce more than £20 million.”
⁴⁰

Germany’s London blitz commenced on September 7, 1940, and the American public began to realize fully what was happening to beleaguered Britain. Edward R. Murrow, a radio reporter for the CBS network, brought the horror of the attacks into America’s living rooms. The America First Committee, whose most prominent member was Charles Lindberg, still opposed getting into the war, but a counter-organization called The Committee to Defend America by Aiding the Allies was beginning to build a following.

Churchill on the afternoon of May 15 sent Roosevelt his first message in his capacity as prime minister. He bluntly wrote, “We shall go on paying dollars for as long as we can, but I should like to feel reasonably sure that when we can no more, you will give us the stuff all the same.” Both leaders knew that nothing could happen until the U.S. got through the quadrennial national circus known as the presidential election. Roosevelt was running for an unprecedented third term.
⁴¹

Behind the scenes in Washington, administration policy makers were busy looking for new ways to help Britain, even though they could not talk about it in public because of the upcoming election. Treasury Secretary Henry Morgenthau took the lead. In June, he asked the British to send a team of top officials to discuss both the country’s financial needs and its finances. London sent Sir Frederick Phillips. During the candid talks, he admitted that at the current rate of war spending, Britain by June 1941 would need “massive assistance.”

Lord Lothian, the British ambassador to Washington, tipped off the American public to a change in British policy shortly after Roosevelt’s election victory in November. It came in the form of a well-planned quip to reporters. The diplomat had been in London working on a strategy for how to deal with the Americans after the election. Nazi bombings were raining down on the British capital day and night. During a long flight back to the U.S. aboard a Pan Am Clipper, Lothian pondered what he would say to the reporters he knew would greet him when he landed at New York’s LaGuardia Airport. He finally decided to let it all hang out. After disembarking on November 25, he flippantly told them: “Well, boys, Britain’s broke. It’s your money we want.”
⁴²

Roosevelt was furious and let the British embassy know it. The ambassador’s aides admonished him for the undiplomatic comment, but he replied, “I know I shall get my head washed in London and in Washington, but it’s the truth, and they might as well know it.” One of his deputies later wrote, “Never was an indiscretion more calculated.”
⁴³

At that time, Britain had already spent nearly $5 billion to buy U.S. weapons. The country didn’t have much left in the kitty, and that could not be disposed of quickly or easily. As Churchill explained in his memoirs, “Up to November we had paid for everything we had received. We had already sold $335 million worth of American shares requisitioned for sterling from private owners in Britain. We have paid out over 4,500 million dollars in cash. We had only 2,000 million left, the greater part in investment, many of which were not readily marketable. It was plain that we could not go on any longer in this way. Even if we divested ourselves of all our gold and foreign assets, we could not pay for half we had ordered, and the extension of the war made it necessary for us to have ten times as much.”
⁴⁴

After his long and tiring presidential campaign, Roosevelt on December 3, left on a long trip to the Caribbean aboard the
USS Tuscaloosa
with Harry Hopkins, his global troubleshooter. Hopkins was so close to the president that he actually lived in the White House. Before joining the New Deal, he was a social welfare worker in New York City. His first job for Roosevelt was fighting unemployment, but gradually he drifted to foreign affairs. FDR ran the big foreign policy issues out of the White House, calling on his special aide Harry Hopkins and to a lesser degree Sumner Welles, Undersecretary of State to handle the crucial problems. Hopkins was very sickly, having had an operation for cancer of the stomach in 1937, and also suffered from malnutrition. He spent a lot of time in and out of the hospital.

While relaxing on the cruise, the two men discussed the European war. The president on December 9 received by navy seaplane a four-thousand-word memo from Winston Churchill that was perhaps their most momentous correspondence of the whole war. As a consummate political tactician, the prime minister had timed it to arrive shortly after the election.

No British document during the war was more carefully crafted than Churchill’s four-thousand-word plea for financial help. The prime minister had supreme confidence in his own eloquence, but this time he was open to editing. The first draft, for example, raised the possibility that Britain might invade the Irish Republic to occupy its ports in order to wage the Atlantic war. Ambassador Lothian warned him that even such a suggestion would outrage the large Irish-American community and hurt Britain’s cause. That paragraph was dropped. Another sentence said, “I should not myself be willing even in the height of this struggle to divest Great Britain of every conceivable saleable asset.” Upon second thought, Churchill realized that Britain had to be willing to put everything on the line. That also fell by the wayside.

In the final draft, Churchill confidently wrote: “The danger of Great Britain being destroyed by a swift overwhelming blow has for the time being very greatly receded.” He did not ask for the U.S. to send troops to Europe, writing, “Shipping, not men, is the limiting factor.” Accompanying the memo was a statistical supplement that spelled out in detail the British naval losses from June 2, 1940 to November 24, 1940. It was a bleak picture: Britain had lost 372 ships.