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  Rubin had already received a blast of Swiss anger. Over dinner on September 13 with Ernst Schneeberger, a friendly Swiss diplomat in Washington, Rubin was lectured about Swiss neutrality. “It’s no different,” said Schneeberger, “from America’s during the First and the early part of the Second World War.”

  “What about Switzerland’s supplies of guns to the Nazis?” asked Rubin.

  “Switzerland had proposed to ban all weapons supplies on September 1, 1939,” replied Schneeberger, “but the British and French governments protested that they needed Swiss supplies. So Switzerland changed its policy. Afterward, as a neutral, Switzerland had supplied the other side.”

  Rubin was unimpressed. The Swiss always wriggled out of their embarrassment by rejoining with a counterembarrassment. Justifying equal treatment of the Nazis and the Allies revealed the questionable quality of Swiss morality. The Allies’ sanctions were ludicrously described by the Swiss as a “heavy moral burden,” while Stucki’s moral victory over the bankers in July had proved to be pyrrhic.

  In Bern, James Mann was dismayed. At a crisis meeting in the embassy, the Safehaven experts listed all Switzerland’s broken pledges. The promised census and freeze on German property, said Mann, was “a joke.” While Schwab’s officials in the Compensation Office ignored all the evidence of Swiss nationals’ collaboration and their profiting from deception, the Germans were blatantly concealing or selling their property. The Swiss were antagonistic and clearly approved of dishonesty. Compounding the insult, Swiss officials and ministers constantly uttered assurances to American diplomats that Switzerland had not become a safe haven for loot or war criminals and then accused the Allies of waging war against Switzerland. The facts, complained Mann, suggested the contrary: “Switzerland’s policy is to stall as long as they possibly can.” At the end of the meeting, it was agreed that a telegram would be sent to Washington urging a protest, with the threat of sanctions if the Swiss refused to comply.

  Brigadier General B. R. Legge, the U.S. military attaché in Bern, was also furious. The Swiss, Legge reported, were “guilty of dilatoriness and evasion amounting to bad faith in carrying out the provisions of the Currie agreement regarding blocking of German assets.” German property, supposedly “frozen,” was being sold by Swiss middlemen for ridiculously small amounts, while the census of German assets was “inadequate.” Even property that had clearly been looted was not being returned to its owners, complained Legge. Banks were refusing to open safe-deposit boxes known to contain the Nazis’ loot, and while Swiss government officials advised claimants to assert their rights through the tortuous and expensive processes of the civil courts, the possessors were encouraged to sell the loot. The Swiss, he said, were “playing a delaying game,” pleading an inability to modify the five-year limitation on claims just to protect the guilty, hoping that the Allies would tire of the effort. Washington’s resolve, he protested, was weakening. Instead of threatening to impose an embargo on Switzerland, Washington had authorized increased Swiss imports of coal and food. Legge’s protest was circulated in the State Department: “Swiss violations of both the letter and the spirit of the Currie agreement have been multiple and frequent.” But the veracity of Legge’s complaint about Switzerland’s “bad faith” was questioned. Proof, commented John Birch, a State Department official determined to restrain the Treasury crusaders, was needed.

  Birch was holding back a message drafted by Orvis Schmidt to the Bern legation. Critical of Swiss dishonesty, Schmidt suggested an “overall, final approach” to the Swiss with a list of demands and the threat of sanctions. Birch castigated Schmidt’s accurate draft as exaggerated. There was, he advised Rubin, “little value in sending this to Bern.” Sensitive to the change of mood in the department following the first serious disagreements with the Soviet Union concerning the government of Germany, Rubin agreed: “I feel strongly that this should not be sent.”

  Still waiting for a reply to his protest, Mann watched the change of attitude and policy within the embassy. Daniel Reagan, the economic counselor, had been replaced by Harry Conover, an outright opponent of Safehaven and a critic of the Currie mission. Mann’s fierce rows with Conover had become a regular feature of embassy life. The “relaxation on our part,” Mann wrote to Harry White, was causing Safehaven’s “deterioration.” Mann’s new culprits were the British, alias the “weak sisters.” Sir Clifford Norton and Gerald Selous, the new commercial secretary, he wrote, were deliberately “dragging their heels” on Safehaven and spreading rumors that encouraged the Swiss to believe that “the Allies do not mean business.” With distaste, Mann observed Norton being “very clever,” smilingly offering Switzerland an easy ride and soft-pedaling Britain’s antagonism toward Petitpierre because “goodwill and trade” had come to matter more to the British than the wartime objectives. Bluntly, Britain’s motives for adopting “undermining tactics,” Mann believed, were associated with its negotiations to obtain a loan from Switzerland.

  Mann’s despairing assessment was justified. To avoid seeming antagonistic, Norton had objected to any threats of sanctions and himself informally approached Petitpierre on October 12, 1945. Speaking as “an old friend of Switzerland,” Norton said that he was “disturbed” by the lack of Swiss cooperation and by the absence of Swiss “frankness” about German property. Understanding the background to Norton’s self-restraint, Petitpierre appreciated the advantage of encouraging the split between the Allies. There had been “a good deal of delay,” the foreign minister admitted, blaming “disagreements” among the Compensation Office, the bankers and the lawyers about releasing the names of depositors and clients. Norton was unperturbed. Petitpierre’s sympathy for the bankers was barely disguised and that, Norton believed, was to Britain’s advantage.

  Petitpierre’s relations with financiers were close (one of his brothers was a banker, the other a speculator). The revolving door between the Political Department and Switzerland’s banks was well established. Petitpierre regarded Peter Vieli of Crédit Suisse, a former Political Department official, and the other former civil servants who had become employees of the Bankers Association as confidants and associates rather than adversaries. Instinctively, he relied upon bankers, more educated about the real world than government officials, for information, even about the attitudes of foreign governments. Bankers were trusted ambassadors. Particularly pertinent for Britain—and this explained Norton’s sweet talk—was the recent report by Albert Nussbaumer, a Swiss banker who had negotiated on behalf of the Bankers Association in Washington in 1944. In August 1945, during a visit to London, Nussbaumer had called at the Treasury. In a conversation with Hugh Ellis-Rees, the banker was told about Britain’s “friendly attitude” toward Switzerland. Nussbaumer’s report, mentioning the bankrupt nation’s hunger for credit, finally arrived on Ernst Weber’s desk at the National Bank. Weber approved financial support for Britain, a gratifying decision that would not be forgotten in London. Securing that sympathy was Norton’s motive in resisting James Mann and cosseting Petitpierre. However, even Petitpierre was unaware that the evidence substantiating Mann’s outraged claims about Swiss crimes had actually been secured by his own Compensation Office, under its director Max Schwab.

  Suspecting that Swiss bankers, lawyers and corporations were disobeying the law, Schwab, as a dutiful official, sought to discover the cause of the “disagreements” that Petitpierre had mentioned to Norton. In particular, Schwab wanted to know whether Mann’s allegations about the bankers were true. Without telling Petitpierre, he placed telephone taps on a network of suspected Swiss bankers and lawyers. Within weeks, the transcripts confirmed that Swiss bankers and lawyers were helping Germans to hide their property. These isolated instances, Schwab assumed, reflected a widespread conspiracy. He knew that his evidence, in unpatriotic hands, would explode Petitpierre’s facade of concerned assurances that the Compensation Office was trying “to fulfill its extensive and difficult task.” Therefore, he decided, the discovery would not be re
vealed to outsiders—not even, for the moment, to Petitpierre.

  Marooned and frustrated on the outside, Orvis Schmidt of the U.S. Treasury’s Foreign Funds Control, in the midst of a new visit to Switzerland, was incensed by his latest discoveries. There were, he had counted, 214 German-controlled companies in Switzerland. Probably there were many more, and none of them had been brought under the Allies’ control. Switzerland’s secrecy laws, he fumed, were concealing the truth—that the German giants were “honeycombing” the continent with their secret investments. Summoning journalists, he warned that, if Switzerland created difficulty, it was “imaginable” that the Allies would seize Swiss assets in Germany worth $4 billion. The crusaders had declared war.

  “America’s terrorizing the neutrals,” commented Villiers, shaken by the prospect of strife. On October 30, 1945, Allied Law No. 5 was approved in Berlin, confiscating all German property in Switzerland. Only the property belonging to refugees, especially Jews, was exempted from seizure and sale. Overnight, dozens of Swiss lawyers, bankers and businessmen slipped across the border into Germany to consult clients about protecting their property. While Villiers fretted in London, James Mann, delighted by the crusade’s new potency, traveled in early November to an American prison camp for senior Nazis in Germany to find embarrassing evidence that would disabuse the good burghers of Bern if they believed that the war had been fought to make “the world safe for Swiss embroideries.” In a drafty wooden hut, Mann met Emil Puhl, the Reichsbank’s deputy director. Surrounded by suspected war criminals with good reasons to hide their wartime activities, Puhl was by contrast unashamedly forthcoming. To Mann’s delight, the banker boasted that during his negotiations in Bern earlier that year the Swiss had been eager to “maintain a friendly relationship” with the Reichsbank “in the future”—meaning after the war—and had knowingly accepted looted gold. That admission, Mann knew, was an invaluable prize to be treated with care as Swiss behavior became murkier.

  On November 30, Mann, Selous and Marcel Vaidie, the French representative, met Schwab in Zurich to hear about the census of German assets. The divisions among the Allies were more evident than ever. While the French simply sought to extract the highest sum of money from Switzerland, Selous had recently complained to London that British ambivalence on Safehaven was producing the “worst of both worlds.” Max Schwab was also in a predicament: there was government policy and there was the truth. A group of journalists had just been reassured by him that the Allies’ doubts about Switzerland’s goodwill were, “with a clear conscience, unjustified.” The Compensation Office, he insisted, possessed “far-reaching powers” to ferret out concealed funds and plug any loopholes. Supported by new laws, homes would be searched and safe-deposit boxes, now blocked, would if necessary be forcibly opened. But in his conversation with the three Allies, Schwab admitted a different story. The hunt was failing, he confessed, because few were telling the truth and the banks were saying nothing at all.

  Unsympathetic toward Schwab’s dilemma, Mann angrily accused the Swiss of lying. The Compensation Office, he said, was allowing the Jews, the innocents, to suffer while protecting the looters. Schwab urged patience. A new law, he explained, to be published on December 10, would allow the legal owners of looted property the right to reclaim their assets even if the possessor had obtained them in good faith. Some of the problems encountered by the Jews, inextricably entwined with the Allies’ demand for German assets in Switzerland, would be solved. The reality, Schwab knew, was different. Destitute German Jewish refugees were being used as a tool to defeat the Allies, and the government’s intention was to inflame their plight. Among the victims would be Walter Garten.

  Garten, a German Jew from Berlin, had arrived in Switzerland in 1945 from a concentration camp, intending to live in his house in Zurich and to use savings, deposited in a Swiss bank, to recover his health. To his surprise, Compensation Office officials told him that, in compliance with Allied requests and Allied Law No. 5, all German accounts and assets in Switzerland were frozen. Listed for seizure and confiscation by Schwab’s office were Garten’s home and bank deposit, immune over the previous twelve years from the Nazis. Schwab’s edict, based, the Swiss official asserted, on an honest interpretation of the law, had struck the most vulnerable Germans—those 100,000 Jews who had survived the camps. Finding their homes destroyed or denied access to their property by the new residents, they were forced to live in Displaced Persons camps, anxious to build new lives in other countries. Sick survivors of Auschwitz, some even waiting in Switzerland for emigration to Palestine, were left penniless, unable to pay for their tickets to escape the Swiss. Schwab’s other victims were among the 150,000 German Jews who had emigrated to Britain, the United States and Latin America, leaving property, insurance policies, shares and savings in Switzerland. Everything was being seized, and the legal excuse was an Allied law intended to confiscate German property and loot to fund the rebuilding of Europe and finance relief for sick refugees.

  Allied Law No. 5 had targeted for confiscation the property of “Germans in Germany,” meaning those Germans resident in Germany on February 16, 1945, the day the Swiss decree froze all Germany property. The American lawyers who drafted the law had neither intended nor anticipated that German Jews would be affected. Not only were all persecutees specifically excluded on moral grounds, but a Nazi law in 1941 had deprived all German Jews of their nationality—so in 1945 they were stateless. Schwab, encouraged by the Political Department and the banks, denied that interpretation. The Allies, he claimed, had revoked that Nazi law, so the stateless Jews were once more German. Hence a German Jew incarcerated in Dachau or Buchenwald was, under Schwab’s definition, “resident in Germany” in February 1945. Naturally, American lawyers protested. The Allied law, they countered, had repealed the Nazi law but was not retrospective. Stateless Jews were not reinstated as Germans. Schwab was not persuaded. Declaring that mass denaturalization was contrary to Swiss law and therefore invalid, he had decided to ignore the 1941 decree as proof of statelessness and to create legal obstacles for the Jews. Each refugee was obliged to present the original Nazi decree depriving that named individual of his or her German nationality. Without that document, said Schwab, the property of the Jew would be frozen and eventually sold. Insensitively, all individual investigations were delegated to the Swiss police, the same organization that had expelled over 30,000 Jews across the border into the custody of the Gestapo.

  “As a Jew, I suffered but survived the war,” wrote Richard Mathius from Berlin to President Truman, “but I am now destitute except for my savings of SF10,000 in Switzerland. I cannot get at them. It is causing me great suffering which I, as a victim of Hitler, do not deserve. Can you help me?” As the pleas for help from anguished Jews arrived in Washington, Rubin and the other crusaders were dumbfounded. Having lost their relatives, Jews were now being denied their property. German Jews were suffering the same discrimination as the worst German Nazi, except that Swiss sympathizers were helping the Nazis to circumvent the rules. Tens of thousands of homes, businesses, valuables and bank accounts, looted by Nazis, were enjoyed by the criminals while their victims remained penniless and destitute, often even unable to leave Germany. The pledges to Currie had been ignored.

  The Swiss, Rubin suspected, were callously intending to use the property of German Jews as German assets, available for reparations or, even worse, to repay Nazi Germany’s debt to Switzerland. “It’s immoral,” he cried, echoing the desperation of many. “German Jews who became stateless do not want their German nationality restored.” Switzerland, he protested, should be compelled to cease punishing the Jews. The implications for the heirless assets were terrible. Under Switzerland’s new rules, the Jews’ money, deposited in Swiss banks, was to be used to pay off Germany’s debts to Switzerland. The murderers of the Jews would profit from their crime. Alternatively, if the Swiss did not hand over the heirless assets to Germany’s creditors, the money would be taken by the Swiss banks.
r />   Rubin urgently addressed Schwab’s deputy, Max Ott, a lawyer specializing in foreign currency. “It was never intended,” he insisted, “that the persecuted should be affected by the Allied law.” Individual Jews, he pleaded, could not prove their statelessness, because the Nazis had deprived most Jews of their nationality collectively rather than by individual orders. Surely that fact, Petitpierre’s officials were challenged, was provable, just as it was possible to establish whether a German was a former member of the Nazi Party or the SS—the intended targets of the law. Ott was adamant. “It’s impossible,” he replied, “to distinguish between those Germans who had been persecuted and the others.”

  Ott did not reveal that some weeks earlier the Compensation Office had proposed to exclude the property of German Jews from confiscation. Its initiative had been decried by those Swiss interested in protecting the Germans. The pro-Nazi lobby calculated that discriminating against Jews—by refusing to distinguish between Jews and Nazis—would benefit the campaign against the Allie’s confiscation of German assets and the protection of banking secrecy.

  Championing that discrimination against the German Jews was the secretive office within the Political Department called the German Interests Section, or DIV. Based at 78 Willadingweg in Bern, the DIV had been established on May 9, 1945, to care for the interests of Germany against the Allies. Indicative of its intentions, its second director was Dr. Hans Frölicher, the former Swiss ambassador in Berlin, whose appointment was confirmed only after the original candidates, anti-Nazi Germans, had been rejected as untrustworthy. During his service in Berlin, Frölicher had regularly complained to Bern about any Swiss newspaper article he deemed to be unsympathetic toward the Nazis and on his return to Bern, mourning past glories, he made no attempt to disguise his regret about Hitler’s downfall. Protecting German interests against the Allies was his final tribute to the old Reich.