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  Soon after Germany’s unconditional surrender on May 8, 1945, Becher was, like many Germans, temporarily arrested. Across Europe, the rejoicing was mixed with recrimination and revenge. In Switzerland, the politicians, industrialists and bankers, anxiously awaiting signals indicating their own fate, sought to repress their emotions. Fearing social unrest and recrimination, the country’s rulers considered mobilizing the army to control protesters, maintaining censorship and continuing the restrictions placed on parliamentary sessions. Limiting democracy in peacetime appealed particularly to those who had sympathized with Germany.

  Under Eduard von Steiger’s control, Switzerland was to mark the end of the war in Europe with solemn church services and muted ringing of church bells. On his strict instructions, there were to be no expressions of joy that Nazi Germany had been defeated, no public meetings, and no thanks for the Allies’ sacrifice. Addressing the nation on the radio, von Steiger gave thanks only that Switzerland had escaped the ravages of war and blessed the self-discipline of the Swiss people and the glory of the Swiss army. The handful of Swiss who had supported the Allies and sought to help the refugees were abandoned as outcasts. Paul Grüninger, the police chief of St. Gall who had offered protection to Jewish refugees, lived in poverty until he died; Carl Lutz, the consul in Budapest, was shunned for impugning Switzerland’s neutrality by protecting Jews; and the Red Cross official whose intervention at the Mauthausen concentration camp in spring 1945 had prevented an SS massacre was condemned for disobeying orders and was forced to emigrate from his country. In May 1945, while awaiting the Allies’ judgment, Switzerland’s rulers sought survival by first suppressing their potential critics.

  6

  CRACKS

  Aggressive, motivated and imbued with a deep sense of rectitude, James Mann, a Kentucky lawyer hired by the Treasury, arrived in Bern on May 15, 1945, as Harry Dexter White’s latest emissary. After one year’s service with the War Refugee Board in Washington, compiling information about Nazi concentration camps, Mann was raring to go and had predicted, “I’m going to bring the Swiss to their knees.” Like all American visitors, he was attracted by the Alpine scenery and Switzerland’s “appearance of quiet, peaceful life,” but less predictable was his encounter with the leisurely atmosphere among the American diplomats in the legation. After two weeks in Bern, Mann was wild with anger. The relationships between the Swiss and the American diplomats, Mann observed, were “impediments to action.” Safehaven was suffocating.

  The butt of Mann’s frustration was Daniel Reagan, the State Department’s counselor for economic affairs nominated as Safehaven’s “coordinator.” Conscientious and cautious, Reagan shared his department’s suspicion of Treasury types like Sam Klaus, whose personality and ambitions threatened to disrupt the smooth diplomacy cultivated with officials in the Political Department. Unwilling to release any control over Safehaven that might harm the United States’ diplomatic relations, Reagan forbade the Treasury men from entering into unfettered conversations with Swiss officials, the U.S. military attaché, or Allen Dulles and his OSS officers.

  The senior Treasury representative in Bern penalized by Reagan’s edict was Walter Ostrow, the crusader. Working from a private house rather than the main embassy building, Ostrow suspected that he was being deliberately denied information. Like the four State Department officials dedicated to Safehaven in the legation, Ostrow was frustrated by Reagan’s reluctance to allow investigations, which obliged the Safehaven team to rely on local British intelligence officers as their best source of credible information. “Herman Kasper left here,” wrote Mann about his predecessor, “with a feeling that his mission had been a failure and that the situation was hopeless.”

  Mann’s complaints echoed Sam Klaus’s damning comments in Washington three weeks earlier. In a blistering memorandum sent to Orvis Schmidt about Switzerland and the Currie agreement, Klaus listed Switzerland’s “omissions,” “disregard” and “complete disregard” in its reaction to protests: “Nothing was done.” The Swiss were not seizing and handing over German and Jewish assets, protested Klaus, and even in Washington Safehaven was disintegrating. Only days after Germany’s surrender, the U.S. Office of Censorship had refused, citing legal and ethical reasons, to continue monitoring the neutrals’ mail and telegraphic communications. Safehaven’s best source of information—the American intercepts—had disappeared. All that remained was a dwindling number of British intercepts and reports by army intelligence and OSS officers in Europe. Even those diminishing sources, Klaus complained, were compromised by the jealousy, misunderstanding and confusion sparked by the rivalry of agencies and personalities in Washington, fighting either to promote or to restrain the program. Without a unified voice, Safehaven was languishing. Schmidt, still basking in the accolades for negotiating the Currie agreement, was unconvinced. Sam Klaus, he jibed, was a “perfectionist.”

  OSS officers, investigating the Swiss-Nazi connection in Europe, also suspected that Safehaven was being sabotaged. The villain, they confided to Drew Pearson, the noted columnist, was Allen Dulles. The OSS’s wartime chief in Bern, they believed, was compromised by his own use of Swiss banks for sensitive transactions, by the potenrial embarrassment if the Swiss were to release details of his private life in Switzerland, and most of all by the Dulles brothers’ legal work in New York and Washington for Nazi corporations and banks. So many senior OSS officers, Pearson’s informants explained, were either related to or employed by the scions of America’s big corporations and major banks—the Mellons and the Morgans—that their instinct would be to forge alliances with incriminated Swiss-Germans rather than orchestrate their harassment.

  Pearson’s publication of that grievance at the end of May coincided with a “strictly confidential” letter sent by Walter Ostrow and James Mann to Harry White in Washington. The Treasury team in Bern, wrote Ostrow, were being “deliberately treated as outsiders and intruders” by Leland Harrison, the ambassador, and Daniel Reagan. Those two State Department officials, alleged Ostrow, “are systematically sabotaging our efforts to look after Treasury interests.” Reagan in particular was accused of disregarding the Currie agreement and Safehaven policy, and reducing Mann’s position to “a continuous perilous act of tightrope walking.” Still denied access to information, Mann himself added that “nothing is ever done” on Safehaven and that the scale of uninvestigated loot was enormous.

  Officially, the Swiss disputed that a hoard of German treasure was hidden in their country, but two sets of official statistics undermined their credibility. The declared deposits in Switzerland’s banks had rocketed from SF332 million in 1941 to SF846 million in 1945, and Switzerland’s gold reserves had doubled from $503 million to $1,040 million. Mann’s suspicions were aroused by notable discrepancies. Whereas the Swiss valued German assets in Switzerland at $250 million, the American embassy’s latest estimate of German investments in Switzerland, private deposits in banks and looted art stored in safe-deposit boxes was over $1 billion. British intelligence had positively identified fifty-three stolen paintings in Switzerland, but Swiss sources had suggested that “hundreds of paintings,” stolen shares and manufactured materials, stocked in Swiss warehouses, were worth at least $500 million. The discovery of gold coins worth $1.5 million in the German embassy’s safe, the remains of the treasury used for German espionage, supported Mann’s perception of hidden loot and Swiss deceit. Asked by Safehaven officers to hand over the looted gold, Swiss officials prevaricated, murmuring their anxieties about establishing the true owners—in Germany.

  Reports of discoveries in Germany of looted gold substantiated the long-feared specter of Nazi plunder. U.S. troops had found, packed with bullion, a twenty-four-carriage train dispatched by the Reichsbank, which had been halted near a mine in Merkers, itself packed with looted treasure. French troops seized a gold train that had been halted en route from Hungary. By early June, the U.S. military government had amassed more than 4,000 boxes and containers filled with over 15,0
00 gold and silver bars, jewelry and coins in fifteen locations originating from concentration camps, the Reichsbank or the SS. Rapidly their inventory grew to include 22,000 gold and silver bars, 3,326 bags of gold coins and 8 bags of gold wedding rings.

  Reports about bags of wedding rings and scraps of gold, previously dental fillings, horrified the crusaders in Washington. Newsreel film shot by cameramen accompanying the army units liberating the concentration camps and eyewitness reports about those who had survived unlocked emotion, anger and desperation to help over 100,000 sick and homeless Jews, survivors of the camps, who were seeking shelter all across Western Europe. Reports also mentioned the anguish suffered by surviving Jews when they failed to repossess their own property in Germany, Austria and Eastern Europe. There were stories of Jews arriving in Switzerland to recover their savings and property only to be turned away by banks imposing strange stipulations; some people complained that the Swiss government, despite its undertaking to Currie, had not passed the legislation to help claimants retrieve looted possessions. Occasionally mentioned in those reports was another unprecedented imbroglio. Money and property deposited in Switzerland belonged to families obliterated by the Holocaust. Under the laws of all three Western Allies, that property was heirless and its fate was undetermined.

  Heirless assets had been first discussed during 1944 among the lawyers in the war division of the Department of Justice in Washington. Some would credit Herbert Wechsler, an imaginative lawyer, with the inspiration for raising the subject, while others would suggest that Jewish lawyers, talking over a cup of coffee, had been puzzling over the question of how to prevent the U.S. Custodian of Alien Property from seizing the American property of German Jews. By early 1945, all agreed that the money would be best used to help the victims of Nazism, although any plan depended upon British agreement.

  Despite the crusaders’ forthright determination to use the heirless assets to help the Jews, the British were ambivalent. Ever since the German Jews had been dispossessed by the Nazis’ discriminatory legislation and had been officially stripped of their German nationality by a decree of November 21, 1941, Whitehall officials had resisted making any commitment to assist the survivors.

  On April 21, 1944, not long before D-Day, William Frankel of the Board of Deputies of British Jews had called at the Foreign Office to discuss compensation and the restitution of property owned by German Jews in Germany. E. F. Henriques of the Trading with the Enemy Department was less than pleased. “This question may eventually give us more trouble than the whole of the rest of the problem of what to do with Germany,” Henriques noted after Frankel’s visit. “We shall be under very strong pressure (particularly in the United States) to allow Jews not only to stamp on the Germans’ faces—after we have knocked them down—but to strip them naked as well.”

  Henriques’s attitude was shared by his colleagues. For some months they had been drafting directives for the conduct of the Allied armies governing occupied Germany, including guidance about handling claims by Jews to repossess their homes. By May 1944, the officials’ reluctance to help the Jews had been established. Henriques set the tone. It would not be “wise,” he wrote, to force Germans to compensate the Jews. It was important, he continued, to avoid allowing the defeated Germans to think that “the United Nations are formally supporting the claims of the Jews against them or seeking to reestablish the position of the Jews in Germany, which no German is likely to want, however much after the war they may disapprove of Hitler.”

  The Germans, British officials decided, would not be compelled to pay compensation to the Jews or to restore property to the dispossessed—however desirable that might be on moral grounds—because it would be “dangerous to do so.” Instead, the Allies would limit themselves to the abolition of the Nazi laws. To enforce that negative policy, Allied troops were to be ordered to resist pressure from the Jews, although they might encourage, only if the Germans voluntarily agreed, a percentage of compensation as the best the Jews “can expect to receive.” Only if the actual expropriator still possessed the stolen property could the military government, at its discretion, insist on restitution. Henriques’s prejudice appeared to be justified by references in Safehaven reports from Spain and Turkey—all totally unverified—mentioning that Jewish businessmen were cloaking property and money in neutral countries on behalf of German clients. The property rights of the Jews had attracted little sympathy in Whitehall. Even so, once the policy had been agreed on, opposition arose.

  Exiled governments in London had told British officials that German looting of their national heritage had “aroused profound patriotic resentment” and plans had been prepared to recover the loot. Fearing “double odium” if the Allies failed to help the Europeans and also obstructed their efforts once the Allied armies occupied Germany, British officials admitted that they could no longer “appear indifferent.” The Foreign Office altered its policy. The restoration of any looted property not belonging to Jews would be supported. “Restitution of identifiable property,” commented the Foreign Office’s Jack Coulson with obvious reluctance, “will have to be admitted.” The problem, he said, would be to extract the property from the neutral countries. To help claimants, the neutrals would need to complete a census of German-owned property and that, he sighed, posed another problem. The Swiss might refuse to obey instructions sent by Allied officers in Germany or would find excuses, like suggesting that the property had been encumbered by a debt. “One thing must be accepted,” Coulson stipulated. “It is only where the United Nations writ can run or is admitted that the property can be seized.” Without the neutrals’ cooperation, agreed Coulson’s unenergetic colleagues, there was little hope of recovering any loot.

  The more deeply the British officials pondered the problem, the more their pessimism grew. Restoring looted property, whether Jewish or non-Jewish, had become inextricably entangled with the approved policy of seizing German assets and loot in Switzerland and the other neutral countries for reparations; and the obstacles, political and legal, were enormous. Property could not be seized simply because it was owned by a German, because that German might have lived for years outside Germany, and the complexities of a foreign corporation could nullify the definition of pure German ownership. “Information is so diffuse,” admitted Troutbeck, failing to reconcile the Allies’ ignorance about German investments in the neutral countries with Washington’s enthusiasm that all German property in Switzerland must be turned over to the Allies.

  By March 1945, British pessimism had become defeatism. Simply declaring German or looted property in Switzerland as owned by Allies, declared Eddie Playfair, would not be recognized by the Swiss: “We shall doubtless have to make some bargain with the neutrals to allow them to satisfy some or all of their claims out of German assets before they are willing to surrender to us the balance.” But he anticipated the worst: the Swiss would not recognize the Allies’ orders confiscating German property, and the Germans would similarly disobey the Allies. In tune with his colleagues’ ideas, Playfair introduced a fundamental caveat. German property seized in Switzerland, he declared, should not be used for general relief in Europe but belonged to the Allies as reparations for their losses. That, he knew, was totally contradicted by the United States’ policy of helping the Jews.

  On May 23, 1945, twenty-six American and British officials met at the Ministry of Economic Warfare in an elegant building in Berkeley Square in London’s Mayfair to discuss Safehaven. Their politeness did not disguise their mutual suspicions. While the British and American officials shared a desire “to destroy German assets from motives of security” and a distrust of Switzerland’s intention of grabbing German assets for its own purposes, the British were suspicious of the Americans’ refusal substantially to reduce the blacklists. The Americans, assumed W. A. Brandt, a British economic warrior, wanted to use Safehaven “to make money [by] eliminating German influence.” Brandt’s suspicions had been aroused by Avery Peterson, a diplomat at the U.S. em
bassy, who had asked for British help in hunting down “obnoxious Germans.” That hunt, Brandt suspected, was to suppress commercial competition, which was not in British interests. “In my opinion,” agreed Michael Vyvyan, a Foreign Office official, “the political danger of overseas Germans is grossly exaggerated and it might even be in our interests to have some irritants of this kind in the Western Hemisphere affecting American relations with Europe.” The suspicion was mutual. The Americans knew that the British harbored similar ambitions: “to get financial benefit” from German property. The mistrust, suggested Albert Robbins, a lawyer attached to the Ministry of Economic Warfare, was damaging: “If there’s no cooperation in the field, I fear that the neutral governments may play us off against each other.” The losers could only be the Jews, especially the refugees, denied a government and an army of occupation to champion their cause. The winners could only be the Swiss and the Germans, puffed up by their coup against Currie. The meeting ended with an exchange of platitudes about supporting Safehaven but no agreement about the consequences.