Nazi Gold Page 13
“I’m astonished,” exploded Schwab. At the beginning of July, he appealed to Stucki. Both men’s distrust of the banks and their shared dislike of Petitpierre propelled Stucki to challenge Caflisch. The Currie agreement and the decree declaring the freeze had been negotiated by him. The banks would not be allowed to tarnish his honor. Relying on the decree, he ordered the banks to disclose their clients’ names to the Compensation Office. Caflisch seemed to have been defeated. The Compensation Office’s thirty employees, Schwab told Allied diplomats soon after, were finally empowered to start to investigate German camouflage and “register and immobilize all German assets.”
Unaware of that battle and the apparent victory, Leland Harrison sent a pessimistic report to Washington. To break the deadlock, Seymour Rubin, a crusader in the State Department, was dispatched to London.
Born in 1914 in Chicago to an estate agent, Rubin had graduated in law at Harvard and practiced for six years before his appointment as acting director of the State Department’s Office of Economic Security responsible for Safehaven. Like Sam Klaus and the other crusading lawyers, Rubin, a liberal Jew, saw advantages in linking the Jewish claims against Switzerland to the Allies’ demand for reparations from German property. Keeping the two issues interdependent strengthened the case for obtaining the heirless assets and allocating a proportion of the reparations to help the refugees.
In the days after Germany’s surrender, Rubin had argued with local British diplomats against abandoning all sanctions against Switzerland. “We need them to extract the looted assets,” he urged. “Morality demands it.” By threatening to refuse deliveries of coal, oil and food, the British could always subjugate puny Switzerland. British pleas that trade with the neutrals was essential for their country’s economic recovery had been discounted by Rubin as a “flagrant breach of faith.” Britain, he alleged, was planning to undermine the Allies’ unity for reasons of “commercial expediency” and was “sabotaging” Safehaven. Rubin’s arguments prevailed. A “hard core” blacklist of Swiss nationals and corporations, conceded the British, could continue for one more year. Rubin’s first breakfast at the Cumberland Hotel after his arrival in London from the Potsdam conference highlighted the cause of that dispute. Eagerly anticipating a traditional English breakfast, he had found himself gazing at artificial eggs and ersatz sausages. Pushing the plate aside and heading through the bomb-damaged capital to the U.S. officers’ mess at the opulent Dorchester Hotel, the residence of the world’s millionaires in peacetime, Rubin at least understood British concern that alienating the neutrals would jeopardize the reconstruction of the nation’s economy.
But Rubin could not imagine the proportions of the crisis facing Britain. In the euphoria of victory, few understood that since 1940 the British economy had been technically bankrupt. Not only had all the nation’s reserves been spent on the war, but its debts were vast. Compounding the crisis, Britain’s remaining undamaged factories were slow to return to peacetime production and so failed to earn the profits from exports that were needed both to finance vital imports and to repay the loans. Magnifying that burden, Britain was maintaining a vast military and naval presence across the world, accepting responsibility for policing the peace and pacifying the constant outbreaks of turbulence that followed Germany’s and Japan’s defeat. Anguished and exhausted civil servants in London, searching for solutions to solve the perils of Britain’s finances, could understand the moral and political arguments for Safehaven but feared the financial consequences. To attack the neutrals at the expense of Britain’s economy seemed to be nothing but folly to them. That was an attitude that the crusaders could not begin to comprehend.
Rubin arrived at the Foreign Office on August 15 and was shown into an unremarkable room with a worn conference table and shabby chairs. A small man, Rubin did not possess an aura guaranteed to excite curiosity or win attention. His strengths, as with so many crusaders, were his intellect, energy and commitment. Around the table were fourteen British, French and American officials, dedicated like Rubin, but to other causes. Rubin was the nervous salesman facing unrevealing customers. “Thank you very much for coming to London at such short notice,” said Gerald Villiers, the British chairman. “Your contribution is sure to be very valuable.” Rubin understood that the Foreign Office types—like some of his State Department colleagues in Washington—were occasionally anti-Semitic, definitely conservative and always searching for excuses not to vilify the Swiss. Attacking Safehaven as complicated and responsible for confusing the Allies’ political strategy, they echoed views similar to those Rubin had heard in Washington.
Conversations in Berlin had alerted Rubin to another obstacle. British lawyers were convinced that the Swiss were not legally bound to comply with the Allies’ demands. His tactic would be to present a new Safehaven: no longer just an operation to destroy German financial power but a crusade to confiscate money to help the Nazis’ victims. His audience, Rubin hoped, would be refreshed by his originality. Accepting the strength of the Swiss case, he explained to them that Switzerland should be approached using morality as a argument: “The Allies have suffered tremendous damage. Their armies and civilian populations have suffered severe losses, their properties have been destroyed by enemy bombing, their territories have been looted in order to fight the war against fascism. During this time, the neutrals have to a great extent profited from trade with both the Allies and the Axis. In any case they have avoided similar sacrifices to the Allies.… To rebuild the family of nations, the neutrals should contribute to rehabilitation, and the German assets—which do not belong to the Swiss—can be used for Europe’s reconstruction. And to avoid a drain on the neutrals’ economies, the money raised by selling German assets would be spent in the neutral countries.”
The predictable Swiss reply, continued Rubin, would surely be legalistic: that Switzerland’s claims against Germany had precedence over the Allies’ claims. Since everyone in the room agreed that Switzerland’s wartime loans to the Nazis—over SF1 billion—should not be recognized, he proposed the rebuttal: “Switzerland gave the loans for their own benefit despite Allied warnings. The Swiss chose to accept German orders during the war despite the faint possibility of eventual full repayment. Those loans allowed the Germans to prolong the war against the Allies at the cost of Allied lives and property. There is every moral basis why the neutral claim should rank far below the Allied claims based on reparations.” Rubin sat back. The atmosphere had warmed.
Understanding the incipient antagonism around the room toward the crusaders, Eddie Playfair, the Treasury’s representative, smartly championed Rubin’s plan. Acknowledging that British differences with the Americans were “so many and so acute,” Playfair appreciated the absence of draconian threats: “We cannot simply deny every neutral claim and demand that they hand over all German property. We need to differentiate. We’ll get nowhere if they refuse to cooperate.” Pierre Francfort, the French representative, agreed: “We cannot be too tough.” “Appealing to morality,” chimed Villiers, “is better than brandishing a mailed fist in their faces.” Playfair concluded the session. Playing the morality card against the hardheaded Swiss had appealed to the Treasury official: “The quiet confidence, a manly sob repressed at the thought of our suffering compared to theirs, an honorable suggestion of cooperation in carrying out a program to which no moral creature can object.” The advantages of Rubin’s plan were manifest: “We need to show that we are being just rather than vindictive.”
When the fourteen met again the following day, their earlier enthusiasm had become dimmed by forebodings of the legal obstacles that the Swiss would throw up against the Allies. No government, after all, could force another government to hand over property. Rubin sparked with the solution: the Allies, relying on the terms of Germany’s surrender, had assumed the rights of the German government and could demand the return of German property. His audience again appreciated the proffered solution. Rubin departed encouraged by British suggestions tha
t Switzerland seemed amenable to the Allies, but he nevertheless feared that Britain, financially desperate, intended to placate the Swiss. Naturally Stucki, aware of the U.S. agenda, spotted the advantage of prying the British away from the crusade.
Meeting Sir Clifford Norton, the British ambassador, in Bern on August 24, Stucki deftly applied balm to a sensitive diplomat. “This is the moment,” soothed Stucki, “when Great Britain can expect favorable answers to her demands. Never have the Swiss people admired the British people more. Not only the military victories, but the general election showed the world what a living democracy really is. [Attlee’s Labor Party had defeated Churchill in July.] It is a lesson to us all. I feel I am speaking for the whole of Europe when I say that the wind of freedom is blowing again and the whole of Europe realizes that it is to London, and London alone, that we should look for leadership.” The duplicity of that assertion was exposed that very month, when an Allied intelligence officer acquired a secret assessment that had been written in May 1945 by Gerhard Kaehlitz, a Swiss government official, describing Switzerland’s wartime economic relationship with Germany. Kaehlitz had emphasized the advantages the Swiss had gained from the increase of trade that they had enjoyed with the Nazis. But that truth was irrelevant to the British government. Ignoring the Americans’ irritation, Whitehall eased the wartime freeze on Swiss assets in Britain and, encouraged by Swiss compliments, proposed to weaken the Allies’ sanctions. The beneficiaries were Swiss bankers.
7
THE NAZIS’ FRIENDS
Dr. Alfred Schaefer, the managing director of the Union Bank of Switzerland, one of the nation’s biggest, understood the importance of deception in the months after the war as he sought to conceal his bank’s profitable relationship with Nazi Germany. The son of a building contractor, he had been just thirty years old when he was appointed to one of Switzerland’s most influential banking posts. He had always realized that Stucki’s agreement with Currie to weaken the banking secrecy laws threatened to expose embarrassing truths. The Union Bank, he believed, was safe so long as the government resisted the demands of Leland Harrison and the Treasury officials in Bern to implement Stucki’s decision to erode banking secrecy. Yet pressure from the Americans, he feared, backed by the continuing freeze on Swiss property in the United States and the Allies’ ability to control Switzerland’s imports, might prove irresistible.
To combat aggressive Americans like the Kentucky lawyer James Mann, whose dislike of the Swiss was becoming uncontrollable, Schaefer’s staff, like many other Swiss bankers, businessmen and lawyers, were clandestinely traveling to Germany, using entry permits secured by bribes, to “connive” with clients in the efficient concealment of their assets in Switzerland. Despite all the promises uttered to Currie by Stucki and Kohli, and despite Switzerland’s new laws prohibiting undeclared trade with the Germans, British diplomats in Bern observed that the Swiss were seeking “permanently [to] escape the tentacles of the Allies.” Not the least of the discoveries by the Safehaven investigators was that known German companies were unexpectedly listed as Swiss.
The evidence against Schaefer was emerging from a vulnerable point in the conspiracy: sensitive files in Germany to which the Allies enjoyed unrestricted access. American investigators in Bavaria were obtaining confessions from employees of the Munich Reinsurance Company, one of Europe’s biggest insurers, disclosing how their company, using German residents in Switzerland and Swiss nationals who were Nazi sympathizers, had secretly moved funds into Switzerland with the Union Bank’s help. Under the guise of insurance premiums and transfers of shares, UBS had become the company’s “owner” to prevent confiscation by the Allies.
Unaware that the camouflage was disintegrating, on August 30, 1945, Schaefer launched a public offensive against the Allies. Attacking Switzerland’s critics as demagogues, he sanctified banking secrecy as vital to “maintain public order” and akin to the hallowed secrecy protecting priests, doctors and lawyers. Emphatically he told his audience, “Swiss banks have never been a safe haven for Nazi funds.” That sort of funds, the banker insisted, “should not be found in democratic Switzerland.” Skeptics would later note Schaefer’s phrase “should not” rather than “could not.” The banker’s finale was an unexpected invitation. U.S. banks, said Schaefer, should trust the Union Bank’s expertise and its “invaluable services” when considering investments in Europe.
Schaefer’s declamation did not impress William Sullivan, the British commercial attaché in Bern responsible for Safehaven. He understood in the course of that summer that Swiss law was protecting theft, and Stucki’s promise to help Jews recover their possessions had proved to be a “meaningless gesture.” Despite their promises, the diplomat realized, the Swiss were using the five-year statute of limitations to block any pre-1940 claims by Jews. “It transpires,” he reported to London, “that the Swiss have no intention whatsoever of doing anything governmentally about it. The standpoint is that their existing civil law provided machinery for this purpose and that therefore it was up to each dispossessed owner to take individual action in the Swiss courts.” Switzerland’s “dilatory tactics,” he was convinced, were calculated to test the strength of the Allies’ determination and undermine their promises to Currie.
Successive reports of rejected claims convinced Sullivan that Swiss banks were protecting German property while blocking access to property belonging to Jews emerging from the camps. A case pursued by Erwin Haymann, a lawyer in Geneva, seemed typical. Retained by the widow of an Italian Jew murdered by the Germans, Haymann possessed good evidence that SF1 million had been deposited at Crédit Suisse in Geneva. Yet every attempt to secure the money was stalled by the bank.
Swiss insurance companies were also ignoring claims by Jews. German and British Jews possessing life insurance policies taken out with the Basler Lebens Versicherungs Gesellschaft (the Life Insurance Company of Basel) had discovered that the money owed under their policies had been paid out by the company to the Nazis. Without the Jews’ agreement and without any legal obligation to do so, the insurance company had obeyed a 1938 Nazi law and transferred millions of francs to the German government. The Swiss had not even troubled to tell the policyholders. The complaints, arriving after the war, were rejected by the Swiss company as “irrelevant under Swiss law.” Foreign Office officials privately condemned the Swiss as “unscrupulous” but refused to help the claimants.
The obstacles, Sullivan suspected, were maintained deliberately by the Swiss to prevent the restoration of looted assets. Major Swiss companies like Bally Shoes, which had bought Jewish-owned businesses in Germany at bargain rates, risked losing their prizes. A Jew like Frederick Weissmann, the owner of a shoe factory in Berlin before the war, might hope to retrieve his factory—bought for a peppercorn by Bally—but Swiss law would bar his claim.
In Washington, Sam Klaus, Sy Rubin and the other crusading lawyers concluded that the Swiss could be humbled only by passing a special law dealing with two complaints: Switzerland’s treatment of the Jewish claims and its response to the Allies’ demands for German property as reparations. Their legal remedy was inventive. The Allied Commission in Berlin, the lawyers argued, was the government of Germany under the terms of the unconditional surrender. As the government, it should issue a decree declaring that all German property in Switzerland belonged to the occupying armies and insist on its surrender. The instruction that the law be passed was cabled to Berlin in August. “I personally regard this law,” General Eisenhower told Field Marshal Montgomery, “as a most important step in the policy to deal with Germany’s problems as a whole. Early action is imperative.” Any delay, declared Eisenhower, would allow the Germans time to conceal their assets.
Montgomery’s advisers in London stared blankly. “There are just going to be long discussions about the law,” sighed Gerry Villiers at the Foreign Office. “The Swiss will be forced to defend themselves and won’t easily withdraw. It will get us nowhere.” British forebodings that the Allies ha
d no legal right to assume powers greater than those possessed by the defeated Nazi government were dismissed by Eisenhower. “I regret your attitude,” he told Montgomery, brushing British opposition aside.
The pressure from Washington, supported by Paris, to threaten the Swiss was irresistible. “We’ll do it unilaterally if you don’t agree,” scoffed a U.S. Treasury lawyer in London. “Our hands are forced,” conceded Villiers, fearing that any law would simply encourage the Germans and the Swiss to hasten their concealment of the loot. Reports by Sullivan from Bern confirmed the problem. “On what Swiss law do they base their claim?” Stucki had demanded of the Briton.
“They’re perfectly correct.… We haven’t got a leg to stand on,” moaned Henriques after reading Sullivan’s report. The British official’s anger was not directed at the Swiss. “The Americans,” complained Villiers, “have a habit of assuming the propriety and legality of something they do, which if done by anyone else they would regard as highly illegal and unethical.… The difficulty is that the Americans are itching for a fight with the neutrals on this issue.” The Americans, he said, did not understand the consequences: “This will go far in wrecking any chance of success which the Rubin proposal may have.”