Chasing Gold: The Incredible Story of How the Nazis Stole Europe's Bullion (57 page)

The peak period of the Nazi gold traffic was between the fourth quarter of 1941 and the first quarter of 1944. That was when they got their hands on the Belgian and Dutch gold. The Swiss franc and gold were the oil that made the machine work. The Germans bought Swiss francs from Switzerland in exchange for gold. The Nazis paid countries supplying them with vital war products in either gold or Swiss francs. The neutrals were happy to take either.
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The gold-for-raw-materials business was no secret. As early as October 1940, American newspapers carried stories about how it worked. In the summer of 1943, the head of the French National Bank, Yves Bréart de Boisanger, presented the Swiss with solid information that stolen Belgian gold, which the French had turned over to the Nazis, was being used in international transactions. The same was true of stolen Dutch gold. Some of the metal now owned by neutrals found its way to the New York Federal Reserve since the American government during the war made no attempt to ascertain its origin.

The system worked for central bank and concentration camp gold. Dutch and Belgian bank gold was smelted and new numbers and dates were added so they looked like old Reichsbank bars. The Nazis smelted private gold in the same way. Three gold bars of the third Melmer delivery, which took place on November 27, 1942, were sold to Switzerland on January 5, 1943. The trade was so advantageous for the Nazis that it soon became unthinkable that they would invade Switzerland. As the Bergier Final Report said, “Switzerland had–in effect–bought its freedom from German attack.”
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After the war, the Swiss government claimed it had not realized that it was dealing in gold stolen from central banks or robbed from concentration camp inmates. That is totally specious. Switzerland during the war was the world’s main gold market, and anyone watching gold transactions would have realized that Berlin’s official pre-war holdings were by then exhausted. The Bergier Report again noted, “Evidence that German gold had been stolen was presented in Swiss newspapers, in particular the
Neue Zürcher Zeitung
, in August 1942.”
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Bergier concluded that by the summer of 1943, there was “irrefutable evidence that the German gold had been looted.”
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In a post-war interrogation, the Reichsbank’s Emil Puhl, who had made gold deals with Swiss officials as late as April 1945, confirmed that the directors of the Swiss National Bank knew that they were accepting stolen Belgian gold.
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In a minor, but still distasteful, example of Swiss complicity with the Nazi regime, Adolf Hitler had his personal bank account at the Union Bank of Switzerland in Bern, where he stored royalties from the sale of
Mein Kampf
.
SS
Lieutenant Max Amann administered the account.
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The Bank for International Settlements was another important partner in the Nazi gold effort, and its role became the subject of major controversy during the war. Since Hjalmar Schacht had played a key role in its birth, he knew exactly how it worked and how Germany could use it. The staff in Basel included dedicated Nazis who promoted Nazi policies up to the very end of the war. It was another convenient channel for the Nazis to launder stolen gold, and during the war the Reichsbank deposited 13.5 tons of bullion with the BIS.
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Although the still young banking institution had been widely criticized for the role it played in delivering a large share of the Czech gold to Berlin in 1939, it continued to do business with Germany. BIS President Thomas H. McKittrick traveled to Berlin after taking over the organization in January 1940 to meet Walther Funk. They had both only recently taken up their jobs. McKittrick throughout the war had cozy relations with Nazi leaders, in particular with Puhl. The American defended his actions by saying that he was protecting an organization that would have a major role in rebuilding Europe after the war. He also had regular contact with Allen Dulles, who was running out of Bern, Switzerland the Office of Strategic Services, the forerunner of the Central Intelligence Agency. McKittrick kept Dulles informed about Puhl’s travels.
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In May 1940 after the invasion of the Low Countries had begun, a large concentration of German military units was spotted just over the border from Basel, where the Bank for International Settlements was located. McKittrick also heard reports that Switzerland was about to be invaded. The bank hastily moved its headquarters and staff eighty miles south to the Grand Hôtel in the village of Château d’Oex. Paul Hechler, the top Nazi at the BIS, told McKittrick, “I think you are the most important man for us to get out of Basel.” The staff remained there until October and then returned to Basel.

McKittrick’s first term as BIS president was coming to an end, and it was unclear whether he would be reappointed. Because of wartime conditions, the BIS could no longer hold regular board meetings. German Foreign Minister Ribbentrop felt strongly that McKittrick should be replaced. When Puhl asked Paul Hechler, the top German official in Basel, for his opinion, he responded that it was best to keep the American because he was only an easily managed figurehead. A new person, the two Germans said, might cause the Nazis problems. McKittrick made a dangerous trip back to the U.S. in late 1942 to meet with Washington officials so he could make sure that they approved his reappointment. The Roosevelt administration was still unhappy with the BIS, but no one stopped the move. He stayed at the BIS until 1946, and later went to work with W. Averell Harriman in the startup days of the Marshall Plan.
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Some of the stolen central bank gold that neutral countries and the Bank for International Settlements obtained from Nazi Germany ended up in U.S. and Canada during the war. Countries did not trust leaving it in Europe for fear that it might fall into German hands. During the war, both Washington and Ottawa had a difficult time determining which bullion was legitimate and which was pilfered.

At the Bretton Woods conference in the summer of 1944, which drew up a new global monetary system, the Norwegian delegation introduced a resolution calling for the “liquidation of the Bank for International Settlements in Basel at the earliest possible date.” It also proposed naming a commission to investigate “the management and the transactions of the Bank during the present war.” Harry Dexter White, the American co-chairman of the meeting, approved the initiative, saying, “I think it would be a salutary thing for the world.” Resolution VI of the Bretton Woods final document stated bluntly that “accepting looted gold and concealing enemy assets would not go unpunished.”
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Sweden was another important German partner. At the same time that Ivar Rooth, the head of the Swedish Central Bank, was writing letters to his counterpart at the New York Federal Reserve Bank lamenting his country’s dire economic prospects, he was also doing good business with Berlin.
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Early in the war, Stockholm, for safety’s sake, moved a substantial amount of bullion to southern and western Sweden. It still had seventy-nine percent of its gold reserves in the country in 1939. But then it began shipments to London and New York City. The country’s gold and foreign exchange holdings increased substantially during the conflict. It bought 77 million Swiss francs worth of gold.
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Sweden sold the Nazis large amounts of war material, primarily ball bearings and high-grade iron ore used for munitions. The country at the time had eighty percent of the European market for ball bearings, which were needed for tanks, ships, and guns. The Swedish company SKF (Svenska Kullagerfabriken or Swedish Ball Bearing Factory) sold so many ball bearings to Germany during the war that Europeans jokingly said the initials really stood for Süddeutsche Kugelfabrik (South German Ball Bearing Factory). The Nazis paid for the war goods with gold or Swiss francs. Stockholm also allowed the Nazis to send troops through its country during the invasion of the Soviet Union in 1941.

The Swedish Central Bank did a lively business in bullion with the Nazis. In May 1940, it bought two tons of gold from the Reichsbank. Then a month later, the German bank deposited three more tons in Stockholm. In the fall of that year, it got an additional eight tons. More gold exchanges were made in 1941 and 1942. In some cases, the Swedes were buying the gold with their currency, which the Germans undoubtedly used to finance war. The Reichsbank’s Puhl visited Stockholm in the spring of 1942, and the Swedes soon set up an account in Berlin to hold their gold so that it would not have to be physically moved. Between November 1942 and December 1943, the Swedes acquired 15.5 tons of Nazi gold, and also bought a ton of German gold coins in the summer of 1944. In addition, they also bought large amounts of gold from Switzerland that was probably originally German. A study after World War II showed that in 1943 and 1944 Sweden received stolen Belgian and Dutch gold from Germany. Between 1949 and 1955, Sweden gave back $15 million of looted gold to Holland and Belgium. It also turned over to the Allies $66 million in liquidated assets.
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Foreigners living in Sweden were allowed to hold bank accounts in the country until February 1941, and some refugees left their money there when they departed for a safer location. A study by Swedish banks in the 1960s showed that there had been 9,032 such accounts with balances totaling 3.4 million Swedish crowns. In 1972, the banks donated 1.2 million Swedish crowns to the Swedish Red Cross to start a special fund for the victims of Nazism. As with Switzerland, when the war turned against the Nazis after 1943, the Swedes tried to improve relations with the Allies.
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Portugal and Spain both received substantial amounts of gold from Germany in payment for their shipments of raw material to Berlin. According to Swiss records, Portugal bought 536.6 million Swiss francs worth of bullion, while Spain purchased 185.1 million. The two Iberian Peninsula countries were primarily suppliers of tungsten, a crucial mineral for making weapons-grade armaments. Portugal sent mainly sardines and tungsten to Germany, but Spain shipped a host of minerals in addition to tungsten, including pyrite, zinc, and lead. Lisbon’s trade with Berlin grew substantially during the war, going from only 1.8 percent of the country’s exports in 1940 to 24.3 percent in 1942. Records show that 20.4 tons of Belgian gold ended up in Portuguese hands. A 1940 handwritten note of Antonio Salazar explained how it all worked. He wrote: “The Banco de Portugal has obtained gold seized in the occupied countries. It has paid for this in escudos that can be converted into dollars.”
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Portuguese gold started arriving at the New York Federal Reserve in January 1940, and later the traffic picked up sharply. From January to October the amount of earmarked bullion jumped from eight tons to seventy-four tons. Almost all of that came in the second half of the year. Gold was transported first by train from Berlin to Lisbon and then by ship to New York.

In November 1947, the Allies demanded that 38.3 tons of stolen gold that Portugal had obtained from Nazi Germany be returned to its original owners. The Portuguese contested the ownership of all but 3.9 tons.
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At the end of the war, a U.S. diplomat in Madrid estimated that Spain had received 85 tons of looted gold from Nazi Germany. The Clinton Administration’s Gold Team, which prepared the London Gold Conference of 1997, estimated that Spain received 94 tons of gold between 1942 and 1944.
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In June 1942, ten steel cases of gold that had an estimated weight of a half ton were sent from the French border town of Hendaye to the Bank of Spain in Madrid. From February 1942 and May 1944, sixty tons moved from Switzerland to Spain. Franco in 1945 still received 187 million Swiss francs of laundered German gold in payment for tungsten.
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Romania lived dangerously in the shadow of both Nazi Germany and the Soviet Union, and it was not in a position to stand up to either of them. Berlin wanted Romanian oil to power the Nazi army, air force, and navy. Germany’s big chemical companies had succeeded in manufacturing synthetic oil from coal, but the Wehrmacht needed more than they could produce. Romania in March 1939 signed an agreement with Berlin that allowed the Nazis to take over the development of Romanian natural resources. On December 21, 1939, a further accord obliged the country to furnish Germany with 1.8 million tons of oil in 1940. That was a jump from the 1.2 million the previous year. During the war, Romania increased its gold holdings at the Bank for International Settlements by 96 tons. In February 1943, the Reichsbank transferred thirty tons of gold to Romania. A year later, it sent 10.4 tons to Switzerland that was destined for Bucharest.
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Between July of 1940 and May of 1943, the Reichsbank sent 47.8 tons of gold to the Romanian National Bank. Virtually all of that was to pay for oil, and two-thirds of the gold was stolen Belgian bullion. The Germans in addition deposited 10.4 tons in a Romanian account at a Swiss bank.
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Turkey’s chromium was another crucial raw material for the Nazi war machine. Chromium, the raw material for chrome, has been compared to yeast in bread. You don’t need a lot, but a little is essential. Chrome was used in the production of tanks, cannon barrels, aircraft engines, submarines, and many other war goods. Germany has very little chromium. Turkey, though, had nineteen percent of global output in 1939, which made it the world’s second largest producer after the Soviet Union. Nazi Germany imported 11.7 tons of chromium in 1933; but from January to August 1939, just before the invasion of Poland, it bought 96.2 tons. In 1944, one-third of German chromium imports went into tank production. That kept the Nazi war machine working. Turkey’s central bank gold holdings rose from 27.4 tons in 1939 to 216 tons in 1945. All the new bullion directly or indirectly came from Germany. In July 1942, the Reichsbank sent Albert Thoms and Kurt Graupner, two of its top gold officials, to Turkey to accompany a shipment of two tons of bullion.
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