Chasing Gold: The Incredible Story of How the Nazis Stole Europe's Bullion (5 page)

He then returned to Madrid to work out the final details with Largo Caballero and Negrín. Everyone agreed that the most dangerous part of the ocean journey was going to be around Italy, in particular in the narrow area between Tunisia and Sicily. Defense Minister Indalecio Prieto was brought into the plan, and provided escort ships to follow the Soviet convoy at the beginning of the trip until it reached Odessa on the Black Sea. The Spanish captains of the escort ships would each be given a sealed letter with instructions to open it only if one of the Soviet vessels were attacked at sea. The captains were then to go to the vessel’s aid and bring it to a safe port. Orlov also sent a message to Moscow suggesting that the Soviet navy station warships in the eastern Mediterranean to protect the convoy. He never got a reply, but later learned that Stalin had ordered that to be done.

Orlov received plenty of local help for the job. The Spanish commander at Cartagena provided sixty sailors to move boxes of gold from the cave to the trucks. The Soviet tank brigade officer supplied twenty five-ton trucks and tank men to drive the cargo the five miles from the cave to the docks. Two secret service men were assigned to provide security. Kuznetzov also provided sixty Soviet sailors to move the cargo onto the ships once it reached the harbor.

Orlov worked out the plan to the last detail. The 7,800 cases of gold would be split between four Soviet ships. The most, 2,697 boxes, would be on the
Neva
, and the least, 963 containers, would be on the
Volgoles
. He ordered that each truck carry exactly fifty boxes from the cave so that it would be easier to keep count of the boxes. The containers each weighed 145 pounds and were all the same size: nineteen inches long, twelve inches wide, and seven inches high. Since the Spanish workers were generally short and lightly built, two men were assigned to carry a box.
³⁴
Working from 7:00 P.M. to dawn, the crew loaded the gold over a three-day period.

It was still on October 22, when Orlov’s car led the first convoy of ten trucks toward the harbor. Sitting next to him was Francisco Méndez Aspe, the director general of the Treasury. Each round trip, including the unloading, took two hours. When those vehicles returned to the cave, another ten left for the docks. The transport took place on three moonless nights. Cartagena was also under a blackout because of the danger of German attacks, so neither Orlov’s car nor the trucks could use their lights. Orlov grabbed an hour of sleep when he could.
³⁵

Sixty Spanish sailors during the day remained in the caves with the gold, passing their time listening to dance records and playing cards. They still thought they were guarding munitions. Negrín came one afternoon to check things out, and Orlov showed him some newly arrived Soviet tanks at a nearby camp. None of them had yet been in battle in Spain, and Negrín became emotional as he ran his hand across a tank like a man petting a dog. With his eyes tearing up, he said, “Now we’ll lick them! Now they will do the running! Send our thanks to Stalin, tell him this war will soon be over!”
³⁶

At about 3:30 A.M. on the third night of the gold transports, German aircraft attacked the Cartagena harbor. Orlov was at the cave when it took place, but he could hear explosions hitting the piers. Drivers told him later that bombs had damaged a Spanish ship near the Soviet ones. He decided to speed up the process in order to get his cargo out of the harbor and on its way to Odessa as soon as possible. The last box was loaded on the
Volgoles
just after 10:00 A.M. on October 25. Méndez Aspe and Orlov kept separate records as the boxes were loaded. At the end, the Spaniard counted 7,900, but Orlov had one hundred less. He recognized the discrepancy, but decided not to tell him and to let officials in Moscow settle the problem.
³⁷

Just before the ships were ready to leave, Méndez Aspe asked Orlov for a receipt for the gold, and the Soviet remembered the order he had received in the cable. He casually replied, “A receipt? But,
compañero
, I am not authorized to give one. Don’t worry, my friend, it will be issued by the State Bank of the Soviet Union, when everything is checked and weighed.”
³⁸

Méndez Aspe was visibly upset and impatiently said he wouldn’t be able to explain this to his bosses in Madrid. So a Spanish official was assigned to travel on each of the four vessels as “official chaperones” for the gold. Two Bank of Spain officials who were already at the harbor were told to make the trip. Méndez Aspe then went into Cartagena and dragooned another two Spaniards to go along. The four ended up getting a longer voyage than they expected, since once they arrived they were not allowed to leave the country. With the gold and escorts now on board, the four Soviet ships carrying the Spanish state treasury left the Cartagena docks. The destination was the port of Odessa on the Black Sea. The
Volgoles
sailed out first. The ships in the convoy were as protected as they could be given the war conditions.

Once the convoy of gold ships had departed, Foreign Minister Litvinov sent Vyacheslav Molotov, the Chairman of the Council of People’s Commissars, asking him to get the Spanish ambassador in Moscow to “write a letter to us with a request to receive the gold, but, since he is unable to indicate the weight nor the value of the gold, such letter would be legally meaningless.”
³⁹

Orlov spent the week after the shipment departed on tenterhooks, worrying about whether the vessels and their cargo would safely get through the Mediterranean. As soon as he figured the ships had arrived at their destination, he sent a message to Moscow explaining the difference in totals between him and Méndez Aspe. Nikolai Yezhov, the head of the secret police, replied and asked whether he was sure of his figure.
⁴⁰
Orlov responded that he was “almost certain,” and then received another cable, saying, “Do not worry about figures. Everything will be counted anew in Moscow.” A last message several hours later told him: “Do not mention your figure to anybody.”
⁴¹

The first Soviet ship carrying the gold landed in Odessa on November 2. Local officials were fearful that someone would see the material being offloaded, so they cleared the port and surrounded it with security troops. A team of Soviet secret service officers from Moscow and Kiev carried boxes of gold on their backs to a waiting freight train guarded by one hundred armed men. A Soviet official who participated in the transfer later told Soviet spy Walter Krivitsky that there were enough boxes to cover Red Square from end to end.
⁴²
The first shipment arrived at the Soviet Depository of Precious Metals in Moscow at 3:00 A.M. on November 6, and deliveries continued until 1:00 A.M. on November 7.
⁴³
The street where the agency was located had been closed to traffic and troops guarded the operation.

On November 7, the Spaniards finally received their official receipt for the gold in the form of a four-page protocol that was written in both Russian and French, then the international language of diplomacy. Ambassador Pascua and three of the Spaniards who had accompanied the gold signed for Madrid, while eight Soviet officials signed for their country. It noted that 5,619 standard cases plus 126 partly damaged ones had been delivered to the Precious Metal Depository of the People’s Commissariat for Finance. It also said that the quantities of gold in the boxes did not always agree with the figures on the manifesto.

It was not until February 5, 1937 that Soviet officials finally finished counting the Spanish gold. They calculated that the shipments totaled 453 tons. The cargo contained only thirteen cases of bars. The rest were 60 million gold coins, most of them Portuguese.
⁴⁴

At a dinner in the Kremlin to celebrate the arrival of the Spanish gold, Stalin said, “They will never see their gold again, just as they do not see their own ears.”
⁴⁵

In the aftermath of its defeat in World War I, Germany was an angry and economically decimated nation that spent years on the brink of revolution. Street battles pitting the far left against the far right took place daily around the country, especially in the capital Berlin. Germans agreed on little except their desire to annihilate their opponents and the current government. The victorious Allies, led by France, had inflicted on Germany a Carthaginian peace with the Versailles treaty of 1919 that crushed the country in hopes that it would never again rise to be a military power. That left Germans determined for revenge. The result was nearly two decades of political, social, and economic upheaval that ended in a Nazi dictatorship that brought Adolf Hitler to power in January 1933.

During the period of runaway chaos, Germany had few national heroes. There was one, though, with the unusual name Hjalmar Horace Greeley Schacht. In 1923 he became famous for rescuing the country that stood on the brink of collapse due to one of history’s greatest inflations. Schacht was almost born an American. His father, Wilhelm Schacht, was from Schleswig-Holstein, a border region that in the nineteenth century went back and forth between Germany and Denmark. After the Prussians took it over following the Austro-Prussian War of 1866, Wilhelm left his native land with hopes of starting a new life in America. He became a U.S. citizen on December 11, 1872. Wilhelm Schacht’s hero in his new country was Horace Greeley, the founder of the
New York Tribune
, an ardent foe of slavery and champion of the country’s westward expansion, who wrote in a famous editorial on July 13, 1865, “Go west, young man, and grow up with the country.”

After immigrating to the U.S., Wilhelm Schacht got a job at a brewery in Brooklyn and wrote to his girlfriend back home asking her to join him so that they could get married, which they did on January 14, 1872, at the Episcopal Church in Manhattan. The couple stayed in the U.S. for another five years, as Wilhelm bounced from one mediocre job to another and a first son named Eddy was born. In the fall of 1876, Wilhelm packed up his pregnant wife and son and returned to Germany. Shortly after they arrived, a second son was born on January 22, 1877. His father wanted to name the child Horace Greeley Schacht, but his maternal grandmother, who was from Danish nobility, was outraged and insisted that he have the proper Scandinavian first name Hjalmar. The baby’s birth certificate gave his name as Horace Greeley Hjalmar Schacht, but he was always called Hjalmar.
¹

Young Schacht performed well in school and earned a doctorate in economics, while dabbling in journalism. In a country where academic degrees carry great prestige, and someone with two PhDs is called “Doktor Doktor,” he was Dr. Schacht for the rest of his life. He moved into banking at an early age and excelled. Tall, thin, and standing ramrod straight, he could have been a stand-in for Washington Irving’s Ichabod Crane. Schacht had a long neck and generally wore tall starched collars that made him look as if his head were on a platter. He plastered down his hair and parted it in the middle. Pincenez glasses rested just above a neatly trimmed military mustache.

But unlike the charmingly awkward fictional schoolteacher, Schacht’s dour demeanor made him look like a heartless banker who was about to foreclose on farmer Schmidt’s home. He was also an unrepentant showman with an immense ego. He told jokes in four languages and liked to write humorous poems that belied his stiff formality.
²
In January 1938, George Ogilvie–Forbes, the
chargé d’affaires
at the British embassy in Berlin, sent Foreign Minister Anthony Eden a word portrait of the man: “Schacht is composed of the most diverse qualities. Vanity, arrogance, over-weaning ambition, simplicity, good nature, wit, repartee, malice, technical ability, inconsistency alternate with kaleidoscopic effect in his complex character.”
³

Schacht was a strict classical economist and follower of Adam Smith, David Ricardo, and John Stuart Mill. They all advocated limited government in a free economy and thought that the market would regulate itself. He, and they, also believed firmly in the importance of gold. In his book
Gold for Europe
, Schacht wrote, “Money, to be internationally stable, must be based upon a commodity which, independent of governmental and economic influence, is in demand and accepted everywhere and at any time. Of such commodities, gold is the one that has best stood the test of time.” Schacht could have been listening to the nineteenth century British economist David Ricardo, who once wrote, “Gold, though of little use compared with air or water, will exchange for a great quantity of other goods.”
⁴

The German was also a fierce advocate of national self-sufficiency that economists still called the Schachtian system. Similar to the mercantilism that reigned from the sixteenth to eighteenth centuries, this called for a country to produce at home as much as possible of the goods and services it needed and import only those that it could not make locally. Following that strategy, Germany would shepherd its gold, the internationally accepted form of payment, and also build up stashes of world currencies such as the British pound and American dollar. Then it would have sufficient funds to buy the products it couldn’t make.

Hjalmar Schacht rose to national esteem during the national trauma that followed World War I. Inflation began picking up in April 1918 shortly after the conflict ended, and blasted off to hyper levels in May 1922, when prices increased more than fifty percent in just that one month. Government expenditures in 1923 totaled six quintillion Reichsmark (the number six followed by eighteen zeros). Central bank printing presses turned out bank notes in ever-higher denominations that quickly became almost worthless. In November the government introduced the 100-trillion Reichsmark note. The government printed money on only one side of the paper in order to turn it out more quickly. The inflation wildfire sucked air out of civilized society. Food fights broke out between farmers, who hoarded their products, and city dwellers. Consumers resorted to barter. People paid their dental bills with condensed milk, and the Ministry of Finance gave its staff potatoes in lieu of cash. On November 1, 1923, a loaf of bread cost 3 billion marks, a pound of meat 36 billion marks, and a glass of beer 4 billion marks. Germans looking for a scapegoat turned on each other, and anti-Semitism ran rampant. The middle class was ruined, while currency speculators enriched themselves and flaunted their wealth. Gold became the only means of payment in which people believed, and prices in stores were often listed in both Reichsmark and gold. Schacht, the managing director of the Danat Bank, became so fearful for the safety of his wife and two young children that he sent them to live in Switzerland.