Nazi Gold Page 10
Elated, Currie and his two colleagues quickly convinced themselves that the Swiss had bowed to the awesome power they represented and had ordered the banks to breach the secrecy laws to discover German assets. That was the first of their mistakes. The banks, anticipating the freeze and aware that it did not affect non-German assets, had already helped their important clients to avoid the Allies’ threat by transferring German-owned assets into accounts under false names, usually English names, with addresses in China or South America. Naturally, the banks deducted a fee for their services, which the client gratefully paid.
Currie’s second mistake was not to understand the timing of the announcement. In Stucki’s calculations, the concession had been approved only after he had been “sure that the Germans could not harm us anymore and we could use their assets to pay off our loans.” Stucki’s timing was calculated to deceive. “We chose the moment carefully,” he explained later, at the end of the negotiations. “If we had frozen the assets before the agreement, then the Allies would have given us nothing in return. If we had imposed the freeze at the end of the negotiations, it would have suggested that we were bowing to Allied demands.” Stucki’s coup disoriented but did not in the end fool the three Allied negotiators.
Within hours of the Swiss announcement, Dingle Foot, a lawyer, had spotted the loopholes. The law, providing numerous exceptions and only gradual enforcement, was glaringly deficient. “It’s more a warning,” Foot exclaimed, “to Germans to hide their wealth and escape future controls.” Stucki was adamant. Switzerland, said the official, was bound by legal obligations and depended upon “vital imports.” Trade with Germany could not be completely halted. Currie and Foot protested. Stucki’s reply was abrupt: “Switzerland is neutral.”
Over the following three weeks, the Allied negotiators were introduced to Swiss intransigence and feigned passion for abiding by the law. Switzerland’s neutrality, repeated Stucki, prevented its compliance with the Bretton Woods Resolution. The Allies’ demand for a census of Axis assets in Switzerland, he explained, breached a Swiss law of 1907 that protected its commercial relations with Germany. Allied investigators would not be allowed to operate in Switzerland. That was a breach of both Switzerland’s neutrality and its sovereignty. The trio of negotiators were flummoxed. British warnings to the crusaders, bitterly resented, had proved justified. The Swiss were unmoved by reports of Allied soldiers dying for democracy. The virtues of sovereignty and the Swiss franc could not give way to sentiment.
Stucki now moved to establish the basis for negotiations. German assets in Switzerland, he declared, which the Americans estimated to be worth $600 million, were valued by the Swiss at only $250 million. Concerning the gold Switzerland had bought, Rappard insisted that the Allies were mistaken. In 1939, Germany possessed more gold than the ingots worth SF1,191 million, which had been delivered since March 4, 1940. “The dates on the ingots,” said Rappard, “are prewar.” Charguéraud, whose government had a keen interest in the fate of the Belgian gold, challenged the credibility of the dates. “It’s not absolute proof,” Rappard conceded, sensing—when Currie had mentioned the possibility of a blockade of food and fuel—that the negotiators’ patience was evaporating. The threat of Allied sanctions, which could so easily cripple Switzerland, could no longer be ignored. Threats had been rewarded by an Allied breakthrough.
To Currie’s relief, at the beginning of March, Stucki offered to sign an agreement. In Stucki’s opinion, he was merely offering the cosmetics of compromise and concessions. In Currie’s opinion, the Allied mission had succeeded.
Under the agreement, signed on March 8, Switzerland undertook that supplying electricity to Germany would cease and that Switzerland’s trade and transport facilities for Germany would be limited to prescribed and minimal amounts. On the critical issue of loot, gold and German assets, Switzerland agreed to purchase no more gold from Germany except for diplomatic purposes; to prevent any more loot from entering the country; to search all German shipments for loot; to prevent Germans from selling their loot or assets; to return looted property and help claimants recover their possessions; and, while maintaining the freeze on all German-owned property, to complete a census of all German property in Switzerland and of German property owned by Swiss nationals. In return, Swiss imports of food, fodder and industrial materials would be allowed transit through France. Currie’s success seemed sealed by an insertion, on Stucki’s insistence, in the concluding statement: “The Swiss government wishes to point out that these restrictions impose heavy sacrifices on Swiss interests.”
An addition to that agreement—an eight-page letter from Rappard to the Allies—was equally important, both for its admissions and for its deceptiveness. Concerning gold, Rappard assured the Allies that Switzerland’s National Bank had controlled all imports of gold. That clearly was untrue. The future entry of foreigners into Switzerland, he promised, would be strictly controlled. That would also prove false. Finally, he promised the Allied negotiators that the Bankers Association’s regulations, supervised by the National Bank, had prevented any Nazi loot from being deposited in the country. That too was unbelievable, but Rappard’s assurances, concerning stolen assets and the heirless assets of the Jews in Switzerland, were accepted as true. Rappard promised that not only would the Swiss government prevent the country from being used for the “disposal, concealment or reception” of looted assets but, within the framework of Swiss law, “every effort will be given to [help] dispossessed owners to reclaim their assets found in Switzerland.”
Currie’s euphoric telegram to Washington, declaring that after “strong resistance and a stalemate yesterday, the Swiss delegation capitulated today,” aroused jubilation in Washington. Orvis Schmidt’s report to Morgenthau echoed that rejoicing. “The Swiss recognize for the first time in Swiss history that all banks, lawyers, holding companies, etc., will be forced to disclose to the Swiss government the names of the true owners of assets being held through Switzerland. This commitment was obtained with great difficulty and only because the American delegation was adamant.” The Swiss government, Schmidt added, was committed “not to release German blocked assets” without consulting the Allies. Convinced by the report, Morgenthau congratulated Currie for having “thwarted the Nazis’ plan for using Switzerland as a financial hideout.” Only after captured German documents were analyzed two years later did the British realize that the Swiss, and especially Stucki, had practiced “virtual deceit.”
In London, Rappard’s promises were also taken at face value and aroused considerable fears. The crusaders’ zeal for interfering in Swiss banks had originally alarmed Bliss, and the thought that they might have succeeded redoubled his concern. “This will have the effect,” concluded a Downing Street official, “that banks will be compelled to reveal the ownership of numbered accounts in certain cases.” Confirmation of British fears appeared in a Financial Times report from Bern. Swiss bankers, according to the newspaper, had posed an embarrassing question when discussing the amendment of Swiss banking secrecy laws to discover the heirless assets. Were British banks, a spokesman asked, also proposing to allow government access to accounts in British banks to discover any heirless assets? “We need to go slow on this,” commented Eddie Playfair, a spirited senior Treasury official. “We don’t want to be forced to reveal British banking secrets.” As feared, the crusaders were causing damage. “We will be best served not to cooperate with that group,” agreed Bliss. Close to panic, Foot had been instructed in an urgent telegram, “You are not (repeat not) doing anything which would lead to requests for disclosure of information by British banks.”
The Swiss raised the stakes. If the law was changed, a British diplomat was told, an investigation of British accounts in Swiss banks might be automatically authorized. That suggestion was greeted in the British Treasury as “explosive stuff” requiring “great wariness.” Any disclosure of British assets in Swiss banks was “red-hot” and required “very careful handling,” squealed official
s. The potential heresy was twofold: the thought of permitting anyone to pry into British accounts; and the notion that the Swiss considered treating German and Allied assets in Switzerland on an equal footing. Equal treatment, in the British view, was “rejected as irrelevant and insulting.” Altogether, it was the predictable consequence of the troublemakers in Washington. Safehaven, it was agreed, required careful monitoring.
Just one week after the Currie agreement was signed, freezing all German accounts including the Reichsbank’s, Emil Puhl, the Reichsbank’s deputy, arrived in Zurich. Puhl’s brief was to undo Currie’s achievements and reverse what the German called Switzerland’s “bootlicking of the British and Americans.” Wary of Allied sabotage and conscious that his activities were observed by Allied intelligence agents, Puhl was under no illusion that Switzerland’s National Bank would eventually be negotiating with new German bankers. American soldiers had already crossed the Rhine at Remagen near Bonn and were poised to sweep further into the Reich. On the eastern front, the Red Army was close to Berlin. Swiss citizens had scurried home from Germany describing in fearful tones the air raids and the destruction. Even Ernst Weber and Alfred Hirs, having dispatched an emissary to meet the new president of the Banque de France in liberated Paris, had every reason to discount the value of any negotiations with the Reich’s apparatchik. But the fortunes of war had not altered the Swiss bankers’ prejudices. Hirs castigated Pierre Mendès-France, the provisional French finance minister, as “the rich Jew.”
As usual, Puhl planned to overnight at the Schweizerhof, opposite Bern’s railway station, and at the Hotel Baur-au-Lac in Zurich, two of Switzerland’s best hotels. His assistant was Friedrich Kadigien, a German living in Switzerland renowned as a financial adviser to Göring and the SS. Kadigien’s lucrative sideline was converting stolen French francs into Swiss francs and, on behalf of the German government, disposing of the rough and industrial diamonds forcibly collected after 1940 from the 1,200 diamond factories and dealerships owned by Antwerp’s Jews. By then Puhl was well acquainted with the crimes of the SS. Among his responsibilities in the Reichsbank was to supervise the receipt of gold dental fillings and wedding rings torn from the corpses of murdered Jews. The contents of these bags had been smelted into anonymous ingots and also sold to Switzerland.
Ostensibly, Puhl’s “endless discussions” with Weber and Hirs were little different from their many previous encounters negotiating the monthly delivery of gold from the Reichsbank to purchase vital supplies for German industry. As always, the two Swiss officials displayed exemplary courtesy, reaffirming Puhl’s conviction about the strength of German-Swiss relations. Nevertheless, the Swiss bankers were reluctant to satisfy his request that the Reichsbank’s assets be unfrozen. After all, Puhl was asking them to renege on Switzerland’s agreement with Currie, signed just seven days previously, to block all German assets. Constantly reminding Puhl of the changed circumstances was the unprecedented presence during their formal negotiations of two Swiss government officials, Dr. Robert Kohli of the Political Department and Dr. Jean Hotz of the Department of Commerce, who, with Heinrich Homberger, the president of the Vorort, the Swiss industrialists’ powerful union, effectively determined Switzerland’s foreign economic policy.
Nevertheless, Puhl pressed on. His offer was to pay for urgently needed munitions and repayment of German debts with six tons of gold waiting in storage just across the border in Constance. Weber and Hirs were noticeably sympathetic, but the government officials, aware of the Allies’ threats, demanded payment in coal and iron. Their demand revealed that the Swiss were ignorant of the chaos enveloping Germany. The deadlock appeared unbreakable. Yet, quietly, Weber encouraged Puhl to continue negotiating.
Puhl understood Swiss bankers. Anxious for their debts to be repaid, Germany’s friends would urge their government to be flexible and release the Reichsbank accounts. Instinctively, Puhl sought out those bankers, sympathetic to Germany, who had profited from their intimate association with the Third Reich—the presidents of Crédit Suisse, the Union Bank of Switzerland, the Swiss Bank Corporation and the Basler Handelsbank. All those banks had earned fortunes during the war and their presidents were interested in protecting not only their customers’ credit in Germany, but also their future interests. The number of bank presidents prepared to visit Puhl in his hotel, “despite the enemy observing everything,” surprised even the Germans.
Faced with the possibility of receiving no payments—an especially grim prospect for the Swiss creditors, who together were owed SF1 billion—the bankers became attracted by Puhl’s offer of transferring looted gold and Swiss francs, bought with looted gold and deposited in the Swiss National Bank, to cover debts and expenses of SF25 million. After two weeks, under pressure by Swiss businessmen to obtain money, Kohli began speaking to Puhl about the importance of maintaining Switzerland’s “good relations” with Germany despite the inevitability of defeat.
Completion of the transaction was assigned to Hirs. Mindful of the Allies’ warnings about Switzerland’s acceptance of looted gold, Hirs asked Puhl about the source of the six tons stored in Constance. The German admitted that the gold had formerly belonged to one of the occupied European countries. Unperturbed, Hirs did not inquire any further. Possession was all that mattered. Staunchly pro-German, Hirs and the Swiss politicians felt sympathy for the vanquished. Whatever criticisms were uttered by the Allies against the Nazis, the Bank and the Swiss politicians had been dealing with the “good Germans,” whom it was hoped the Allies would respect and trust. For his part, Puhl was pleased to reveal, after signing the secret agreement on March 30, that Hirs “did not ask for any assurances concerning the source of this gold shipment.”
Single-handedly, Puhl had unraveled the Allied blockade of German assets and the Reichsbank’s accounts. Without self-recrimination, the Swiss had agreed to accept delivery of three tons of looted gold and SF10.1 million bought with other looted gold from the Germans—thereby breaching their agreement with Currie. Puhl allowed himself a moment of self-congratulation for his “considerable achievement” and blessed the strength of the German-Swiss relationship, predicting that it “will not stop now.”
Concealment and deception were practiced arts among Swiss diplomats. Having taken the measure of Currie’s gullibility, the Swiss diplomats in Washington concealed with an application of thick syrup the deception surrounding the Puhl agreement. Treasury officials were assured by Swiss diplomats that Currie had succeeded. “He gave nothing to the Swiss,” stated Stucki, soft-soaping the Americans. The Treasury officials beamed. Stucki, described as “very influential in Switzerland,” had even sent a “special” message to Washington. “He conveys to you,” reported a Swiss diplomat to an American official, “his best regards and his expression of the highest esteem.”
In the euphoria aroused by the Soviet army’s bombardment, which was creeping ever closer to Hitler’s chancellery, and by the rapid pace of the Anglo-American armies sweeping across the heart of Germany, few Allied officials probed or even noticed Switzerland’s bad faith. In a continent ravaged by war, traumatized by occupation and in peril of starvation and disease, hunting for loot had a low priority.
Sam Klaus and other crusaders had envisaged an ambitious police operation—more akin to a huge dragnet—to hunt down the loot and the looters across Europe, yet sporadic intelligence intercepts were revealing Safehaven’s failure. A “sudden increase in diplomatic mail” reported to be traveling from Spain to South America—from thirteen packages every month to seventy-eight in two weeks—and a convoy of 1,800 Spanish fishing boats traveling southward, carrying ice in their holds to conceal the loot, exposed the impossibility of control. In a note to the British cabinet, Sir Stewart Menzies, the chief of MI6, the intelligence service, warned that the Nazis’ clandestine agencies had deposited “considerable funds in Switzerland” in banknotes and diamonds under the names of private individuals. Gestapo officers, he warned, having smuggled “large amounts of Dutch diam
onds” into Switzerland, were shipping them on to South America.
Menzies’s warning was endorsed by William Cavendish-Bentinck, the chairman of the Joint Intelligence Committee. Safehaven was fundamentally weak, warned Cavendish-Bentinck. Detailed lists had been prepared of German companies hiding property and cash in Switzerland, but there was no single group, he told the Foreign Office, gathering that intelligence and giving instructions to prevent neutral countries from receiving and hiding more German loot. An intelligence group for Safehaven, proposed by Lord Selborne, the minister of economic warfare, had not materialized. The indecision and fears would, Cavendish-Bentinck advised, bear inevitable consequences: “The Germans will have little difficulty hiding and disposing of bearer bonds, shares, gold and precious stones and in hiding the proceeds where we shall never find them.”
In the countryside of southern Germany, declared by Hitler as the Final Redoubt where the Nazis would make their last stand, the SS and Reichsbank officials were finding houses, mines and barns and digging holes in fields across the Bavarian countryside to hide caches of currency, jewels and gold hurriedly transported from Berlin. Quietly, the more wily were entrusting the plunder to Nazi supporters to smuggle across the border into Switzerland.
Among that band of the sly was Kurt Becher. Systematically, the SS officer, having moved from Budapest to Vienna, was blackmailing the rich to deposit funds in his accounts in Switzerland. Among the vulnerable Hungarians was Thomas de Pechy, a thirty-eight-year-old industrialist. While Becher held Pechy’s girlfriend as hostage, the industrialist was dispatched to Switzerland to sell copper and metal products and to deposit over SF1 million in Becher’s account. Pechy arrived in Switzerland on March 6. Inside his car were suitcases filled with securities, jewels and other valuables “belonging” to the SS officer. Staying at the Hotel Baur-au-Lac in Zurich, Pechy telegraphed Becher to announce that his loot was safely deposited. On the payment of more money to a Swiss liaising with the Gestapo, Pechy obtained the release of his girlfriend. Swiss police retrieved the bribe but did not curtail Becher’s activities. The German, immersed in a myriad of deals, had in the meantime sold more copper stored in Germany to Swiss industrialists while traveling with suitcases filled with jewelry, banknotes and gold that would be also deposited in Switzerland. Becher would use that fortune in the postwar years to build a multimillion-dollar wheat-trading empire based in Bremen and would prosper as one of West Germany’s richest businessmen.