Chasing Gold: The Incredible Story of How the Nazis Stole Europe's Bullion (49 page)

The Balkans had been a key part of the German economic strategy after Hjalmar Schacht unveiled his New Plan of 1934, which reoriented the Nazi economy toward that region. It was economically poor but rich in the raw materials that the German war machine desperately needed. The Balkan states were geographically close to the Reich and accepted payment in gold. The region produced the crucial raw materials, especially copper, that Harry Dexter White had identified for Morgenthau as crucial for Germany’s war machine. Emil Wiehl, a German Foreign Office economic specialist, in 1939 had said, “Copper is a life and death matter.” A shortage of it in early 1940 hurt both the Luftwaffe and the army, and forced the German navy to curtail U-boat production. Yugoslavia also produced aluminum. Hungary was an important source of bauxite, an aluminum ore. Turkey had large deposits of chromium, exporting 40,000 tons annually to Germany, as well as tungsten, both of which are vital ingredients for making high-quality weapons out of Germany’s low-grade iron ore. But the most important war materiel of all was Romanian oil. The country was Europe’s second biggest producer after the Soviet Union, and Germany’s largest supplier. Despite the success of German chemical companies in making synthetic fuel from coal, petroleum was still essential to keep Nazi tanks rolling, and vastly cheaper than the synthetic option. Between February 9, and March 10, 1943, the Germans sent Romania a total of 30 tons of gold to pay largely for petroleum. In February, Berlin transferred an additional 10.4 tons to Switzerland for Romania, using stolen Belgian gold. Nazi Germany paid a total of $53.8 million for Romanian oil. Some of that bullion also found its way to the U.S. In January 1941, Romania sold 13.8 tons of gold to the New York Fed.
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The Soviet Union, though, was also increasingly active in the Balkans. German Foreign Minister Ribbentrop invited his Soviet counterpart Molotov to a November meeting in Berlin, where he proposed that Germany, Italy, Japan, and the Soviet Union divide the world into large spheres of influence. The talks deadlocked largely because the foreign ministers both had their eye on the Balkans. Molotov insisted the fate of Romania and Hungary was important to Moscow, and wanted to know “what the Axis contemplated with regard to Yugoslavia and Greece.”
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Once back in Moscow, Molotov sent Ribbentrop a formal reply saying that the Soviet Union would join the other three nations only if it could sign a mutual defense pact with Bulgaria and establish a base for land and sea operations near the Dardanelles, which connects the Black Sea and the Mediterranean Sea. Talk of four spheres of influence died a quiet death.

In September of 1940 Hitler postponed plans for the invasion of Britain. On December 18, 1940, Hitler signed off on Operation Barbarossa, the invasion of the Soviet Union. The opening line of the war directive: “The German Armed Forces must be prepared, even before the conclusion of the war against England, to crush Soviet Russia in a rapid campaign.”
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Before the Nazis could turn to Barbarossa, however, they had to clean up the situation in Greece and Yugoslavia. Both countries were worrisome not only because the Soviet Union considered that area to be its backyard but also because the British had an active presence and close relations with both nations. The Germans feared that either London or Moscow could cause trouble in the south at a time when they wanted to be launching a powerful invasion of the Soviet Union through central Europe.

Greece in October 1940 easily halted the Italian invasion and pushed Mussolini’s troops back into Albania. Greece, however, was both politically unstable and diplomatically fickle. King George and many Greeks favored an alliance with Britain, but General Ioannis Metaxas, the country’s dictator, leaned toward the Axis powers. The question was whether the king or the general would stage a coup first.

Yugoslavia was equally in turmoil. Hitler put heavy pressure on Prince Paul, the regent for seventeen-year-old King Peter II, which included a visit to Berchtesgaden. Nazi threats worked, and the country became a member of the Tripartite Pact on March 25. The following day, however, Yugoslav Royal Air Force officers with British inspiration staged a coup in the name of King Peter. After the rebellion, Churchill said the country “had found its soul.”
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On March 27, 1941, Hitler signed War Directive No. 25 ordering a massive attack on Yugoslavia. It stated: “Yugoslavia must be “regarded as an enemy and beaten down as quickly as possible.” The invasion, which included troops from Germany, Italy, Hungary, Romania, and Bulgaria, began on April 6 with the carpet-bombing of Belgrade. The offensive ended on April 17 in Yugoslavia and on April 27 in Greece.
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The Germans were still worried about the British presence on the island of Crete, and on May 20, 1941, they launched
Unternehmen Merkur
(Operation Mercury), an airborne invasion, the first in military history. Both British and German military leaders valued the island because of its proximity to Egypt, the Suez Canal, and the route to India. German paratroopers suffered heavy casualties, but the main airfield on the western side of the island soon fell into Nazi hands, and the whole island was subdued in ten days. Because of the heavy casualties, however, Hitler nixed future airborne invasions.

A memo of the New York Federal Reserve reported on April 19, 1941, that Greece’s gold reserves had been generally estimated to be about 28 tons.
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By the time the Axis armies invaded, the National Bank of Greece had shipped twenty-five tons of gold out of the country to the safety of other central banks, with most of it going to the Bank of England via Egypt. The British sent a navy ship to undertake the operation. Greece had seven tons safely in New York. Some, though, still remained in the hands of private banks and individuals. The national bank as a precaution packed ten cases of valuables that could be readily moved on short notice. They contained both gold and silver coins. The boxes were bound with a steel strapping and marked with the bank’s seal in wax and the letters ETE for the name in Greek of the national bank. There was nearly a ton of gold, and ton-and-a-half of silver.

On April 12 and with Axis units consolidating their hold over the country, the Greek National Bank assigned two officials, Nicolas Lavas and Panayotis Tsimicalis, to take over authority of the ten cases and move them to Crete. They soon left the mainland for the Bank branch in Heraklion, the largest city on the island.

In early June 1941, German authorities took over the town and demanded the keys to the vaults in the Bank of Greece’s office. The Nazis then searched the storage area in the presence of the branch manager. On June 17, Major Eberhard von Künsberg also arrived at the bank. He was the head of a special
SS
unit charged with confiscating local artworks and other valuables in invaded countries. The Nazis had great hopes of a rich haul in Greece. Künsberg picked up the ten cases, which in a document were identified as “three cases containing gold and seven cases containing silver.”
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Citizens holding gold coins in Greece were required to deposit them in a semi-state banking institution known by the French name
Caisse des Dépot et Consignations
(Cashier of Deposits and Consignments). They were then given drachmas, the local currency, in exchange for the gold. The Caisse retained the coins in its vaults, and the Germans confiscated them. They included mainly British, Turkish, French, and Italian coins. The Germans later learned of other holdings and picked up small amounts on the Greek mainland in August 1941 and on Crete on April 1944. Another 116 kilograms of gold was found in the Salonika branch of the Bank of Greece, and a total of 12.5 tons was taken from private individuals. Later 6.5 tons of gold was taken from Greek Jews who were deported to Germany and died in concentration camps.
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The Yugoslav government had substantially more gold than Greece, and much of it had left the country before the Axis powers invaded. In early May 1939, and shortly after the Germans had taken control of Czechoslovakia and Memel, the National Defense Council of Yugoslavia decided to move most of the nation’s bullion abroad to London and New York. On May 20, 1939, the Yugoslav destroyer
Beograd
docked in Plymouth Harbor in Britain with 7,344 bars of gold. The Yugoslav attaché in London was there to greet it. The Yugoslavs eventually stored nineteen tons in Britain.
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The United States, though, was the major destination for Belgrade’s gold. The Yugoslavs in June 1940 first sent four shipments to the New York Fed and then later five more. By the end of November 1940, the New York Federal Reserve was holding 17 tons of Yugoslav gold. With the Axis threat rising rapidly, a New York Federal Reserve report in February 1941 estimated that the Yugoslavs still had inside the country “not less than” 131 tons that it wanted to move to a safer location. A month later, Belgrade was so desperate to get bullion out that they sent 22 tons to Argentina and Brazil and also shipped some to the Bank for International Settlements in Switzerland. On March 18, 1941, a Yugoslav shipment arrived at Pier 34 in New York City with seventeen tons of bullion for the Federal Reserve.
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On April 5, the day before the invasion, the National Bank of Yugoslavia told the Bank for International Settlements in Basel to convert all its accounts, including its gold, into dollars and deposit that in the New York Federal Reserve. Two days later, the BIS sent $2.7 million to the Yugoslav account at the New York Federal Reserve.
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The last minute frantic shipments were successful, and by the time the Axis powers controlled Yugoslavia in mid-April, the country had just twelve tons of gold left in the country, which was mostly in coins. Bank officials decided to move nearly ten tons of that to the bank’s Uzice Branch in western Serbia, where it was stored in vaults. The location was close to the Adriatic coast, a potential route for shipping it abroad. Immediately after the Nazi invasion began, several of the National Bank’s managers and the Yugoslav minister of finance traveled to Uzice to check on the bullion.
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With the Germans on the march, the bullion was next shipped nearly 120 miles further west to the town of Mostar. General Miojko Jankovic called the manager of the local branch on April 13 and relayed a wireless order he had just received to send the bullion to Nikši
, a city sixty miles north in Montenegro. During that evening, 204 cases of gold left in trucks headed for the new location. In the town of Bileca, the cargo was transferred to a train. It finally arrived at its destination on April 15.

Bank officials decided to move it by truck to the nearby Trebjesa Grotto, where it would stay until the Yugoslav Air Force could carry it out of the country from an airport in Nikši
. The seven remaining Do-17K bombers in the Yugoslav Air Force flew there to evacuate King Peter II, members of the Yugoslav government, and the gold.
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During that operation, however, only twenty of the 204 cases of the country’s gold reserves were airlifted out. Five Do-17Ks planes were destroyed, and the remaining boxes of bullion remained on the tarmac. The Italians seized them and sent them to the Bank of Italy. After the fall of Mussolini and German occupation of Italy in 1944, they went sent to the Reichsbank.
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Ten boxes of gold had been dispatched by truck to the Ostrog Monastery, a massive structure built into the hillside where Gavrilo V, the Orthodox Patriarch of Yugoslavia, had recently taken refuge. The German First Panzer Group, commanded by Paul von Kleist and known as
Panzergruppe von Kleist
, reached the monastery at 5:00 in the morning on April 25. Accompanying the unit was Wilfred Oven, a war reporter who wrote the following news story:

“The Gestapo in collaboration with the Wehrmacht has discovered an important part of the Serbian State treasure concealed in the inaccessible mountains of Montenegro. The coterie of traitors that surrounded the young King Peter had previously, like so many governments in allegiance to England, endeavored to send their state treasures to the British Isles. That attempt failed in Serbia.