Nazi Gold Read online

  Three flaws had undermined the Allied investigation. First, all the Reichsbank’s gold shipments to Liechtenstein were ignored. Second, the Reichsbank’s shipment of Dutch gold to Switzerland was wrongly estimated to be $100 million instead of $161 million because the Dutch government was unaware of the facts and the Swiss did not reveal that clearly marked Dutch gold had arrived in Bern. Third, the French investigation was poor. After overlooking some files about the fate of the Belgian gold, the French investigators had ignored the German records describing the conversion of the Dutch gold.

  The mistakes and the divergent motives of the three Allied negotiators were sensed by Stucki. The British, uninterested in the gold, caused little anxiety. The French, having compensated the Belgians for the loss of their gold, were obviously troublesome. The Americans, motivated by anger, were campaigning for justice—theirs was the most difficult argument to deflect.

  One cause of the Americans’ anger was Rappard’s broken promise to Currie on March 8, 1945, to restore the looted gold, especially the 110 tons of Belgian gold accepted by Switzerland in 1943 after its rejection by Sweden. Angered by that dishonesty, the U.S. Treasury had wanted to dispatch experts to Bern in December to investigate the National Bank’s records and inspect the vaults. The British were appalled by the suggestion. W. A. Brandt had warned John Winant, the American ambassador in London, that approaching the Swiss at that stage would be “a great mistake.” The Swiss would never allow foreigners to pry into their secrets. Surprise, he said, would be an “important weapon” in the future negotiations to defeat Switzerland’s “incontestable ground that they acquired the gold in good faith as an ordinary business transaction before the allies made their looted-gold declaration.” Winant persuaded the Treasury in Washington to agree. Three months later, Paul and Rubin eagerly awaited the chance to expose Switzerland’s chicanery.

  The Swiss officials arrived in Washington with different degrees of knowledge. Stucki disbelieved allegations that the National Bank had knowingly accepted looted gold. Rappard suspected that it had but was prepared to reject any such allegation by the Allies. The implication that, by melting the looted gold, the Germans must have known that their possession was illegal was ignored. Alfred Hirs knew the truth, not least after a recent detailed briefing from Maurice Frère, the director of the Belgian central bank, but he presented himself as a nonspeaking technician, present merely to give advice. Hirs’s position was inflexible: his bank was not guilty and its directors refused even to consider admitting an error. Just before the start of the session on gold, Paul buttonholed Stucki in a corner of the conference room. “Take care,” advised the American lawyer. “We can prove that Switzerland knew the gold was stolen.” Stucki shrugged. His dislike of Americans and their way of life encouraged him in his skepticism.

  Stucki opened with one concession: “We agree that gold worth SF7 million was tainted.” The ingots had arrived, following the agreement with Emil Puhl, just before the collapse of Germany. But in reply to Paul’s allegation that Switzerland had knowingly accepted over $200 million of looted gold, Stucki was adamant. The gold that the Swiss had accepted during the war from the Reichsbank, worth $376 million (SF1,638 million), was not looted. “Those statistics are wrong,” answered Paul dismissively, suspecting a deliberate falsification of Swiss records and a bogus interpretation of the Reichsbank’s reserves.

  Brushing that riposte aside, Stucki glared at Charguéraud, always sensitive about France’s wartime record. Switzerland, said Stucki, did not believe that the Belgian gold had been looted by Germany. France, he charged, had “stolen” Belgium’s gold. “We will not recognize,” he added, “that a legal or moral obligation is incumbent upon Switzerland or the Swiss National Bank to restore any of that gold.” Inflamed by Stucki’s fanciful tale, Charguéraud countered, “The Swiss National Bank did not seem to have taken the most elementary precautions before accepting the gold offered by the financial authorities of the Third Reich.”

  All eyes shifted toward Hirs. Uncomfortable in the spotlight, he mumbled, “I’m not here to defend the National Bank. However, we have never handled looted gold.”

  The questioning was delegated to Marcel Vaidie of France, the finance attaché in Bern. “Well, how much gold did Switzerland receive, and how did you try to establish its provenance?” he asked.

  “I have no evidence that we accepted looted gold, and we have numerous assurances that the gold we received was not looted.”

  “From whom?” asked Vaidie.

  “From Poland, Norway, Yugoslavia and Denmark.”

  Noticeably unimpressed, Vaidie recited the history of the Belgian gold.

  “We didn’t know that,” said Hirs.

  “We’ve gone through all the German records and we’ve concluded that Switzerland received at least $200 million of looted gold from Germany. We need details of Switzerland’s transactions with Germany.”

  Stung by the challenge, Hirs dropped the pretense of the humble technician and recounted the statistics of Switzerland’s gold trade, adding, “I admit that the Allied warning in 1943 made no particular impression on me.” After Morgenthau’s February 1944 declaration, warning Switzerland and the neutrals not to buy gold from Germany, Hirs continued, Puhl had been questioned and had “assured us that Germany was not supplying looted gold but was using hidden reserves.” Belying the traditional image of a hard Swiss banker, Hirs presented himself as an honest but gullible broker who believed Puhl’s estimate that the Reichsbank’s “hidden gold reserves” were worth SF2 billion. But his parting shot displayed remarkable insensitivity and arrogance. The Belgian gold, Hirs speculated, might well be stored in the United States or France. The atmosphere soured. The meeting broke up. The Allied negotiators were outraged, but at the Swiss embassy that evening no one discussed the effect of Hirs’s flippancy. Instead, the conversation reflected the resentment that had developed among the Swiss about the number of Jews in the American delegation. Rubin; Oscar Fletcher, the State Department’s gold expert; Walter Surrey; and Warren Silver, also from the State Department, were all Jewish. “Why do I have to negotiate with Jew-boy?” exclaimed Stucki, referring to Rubin. Hirs also had remarked on the “majority of Jews” in the delegation. The resignation of Morgenthau, they had believed, would “gradually demobilize the Jewish lobby” and reduce “the aggression.” But the anticipated benefits, namely better relations with the Americans, had not materialized. Realizing how impolitic it would be even to hint at their common distaste for the Americans, Stucki decided that Hirs should, the following morning, instead attack the French.

  Hirs opened with the familiar and tedious assertions of Switzerland’s honesty and neutrality and its services to the Allies. As he moved on to discuss his personal relations with the Nazis, the atmosphere became charged. “We always regarded Puhl,” stated Hirs, “as a banker whose integrity was above suspicion. He was never considered to be a thief or even a Nazi in the usual sense. He laughed at us for believing enemy propaganda about looted gold and gave us an absolute guarantee that none of the bars being sent to Switzerland was loot.”

  Hirs then switched to an assault on a most sensitive spot. Accusing the French of expecting others to bear the consequences of their collaboration with the Nazis, he blamed France for the loss of the Belgian gold. In particular, he blamed de Boisanger, the president of France’s national bank. “He’s a well-known collaborator,” he smirked, deriding de Boisanger’s wartime visit to Switzerland, “whose warnings in 1943 were a few general and sketchy indications,” which were rightly discounted as “tactics of deception [when] practiced by the Germans.” Looking at Vaidie, he concluded coolly, “After all our checks during the war and recently, the bank has a clear conscience. The blame is on France and its negligence.”

  Vaidie’s fury was redoubled by the presence of Stucki, the impassioned admirer of Marshal Pétain, whose signed photograph the Swiss official had accepted at the end of France’s occupation. The silver-framed photograph now st
ood on his piano in his home in Bern. Such hypocrisy! Only his secret knowledge prevented Vaidie’s anger from exploding. James Mann’s interrogation of Puhl was still unknown to the Swiss; and the Swiss were likewise unaware of the discovery of Puhl’s letters to Walther Funk, the Reichsbank’s president, written during the March 1945 negotiations. Both revealed Switzerland’s eager collaboration with the Nazis.

  The moment for revealing those secrets had now come. “Just look at the Puhl letters to Funk,” Vaidie said. “Look how you collaborated with the Germans.” Calming the Frenchman, Albert Robbins, a British lawyer, revealed Puhl’s interrogation. Holding out a page to Rappard and Hirs, he read the Reichsbank deputy president’s confession that Weber and Hirs—“The second man after Weber,” was Puhl’s description—had been informed that Germany would include looted gold in the shipments to Switzerland. “You didn’t act in good faith,” snapped Robbins. “Puhl warned you that some of the gold was looted. You didn’t take enough care.” A pause was allowed for dramatic effect. “Here’s a man who you have repeatedly said was honest.”

  Taken aback, Hirs nonetheless brushed aside Rappard’s request for an adjournment. “Puhl was a decent and honest man,” he proclaimed. “Anything he now says should not be believed. Believing Puhl means disbelieving the Swiss.” Stony, distrusting faces stared at Hirs. The banker, unaccustomed to any confrontation outside his citadel in Bern, understood what they were accusing him of: that he and his government had reneged on their solemn agreement with Currie.

  “Do you want to take 500 million Swiss francs of gold,” blurted out Hirs, “and ruin my bank?” That outburst, unexpected and unexplained, caused the atmosphere to freeze. Hirs seemed on the verge of tears. The eight Allied representatives stared across the table in amazement. Until then, no one had suggested that Switzerland should return as much as SF500 million of looted gold. Hirs’s anguish only increased his colleagues’ embarrassment. Robbins broke the silence. “Your concern about your bank,” he said to Hirs with studied gravity, “must be weighed against the suffering of many nations under the greatest tyranny in history.”

  “We won’t need another meeting,” interrupted Rappard. “Please supply us with other examples of looted gold.”

  “You won’t need me anymore,” muttered Hirs, his eyes now filled with tears. Crestfallen and humiliated, the banker shuffled from the room.

  That night, Stucki’s rage exploded across the embassy. Even for Paul Jolles, a junior diplomat well used to the official’s uncontrolled tempers, the violence of his anger was fearful. “You lied!” Stucki screamed at Hirs.

  The banker cowered: “I did lie. I did it to protect you.”

  The following morning, March 29, Stucki seemed to Paul “badly shaken.” An Allied memorandum, delivered during the night, listed Switzerland’s receipt of looted gold. “How much gold do you actually want?” asked Stucki. “Just tell us what you think is the correct amount.”

  “On any hypothesis, at least $200 million of the gold transferred by Germany during the war to institutions in Switzerland was loot,” replied Paul. “And that’s the most favorable interpretation.”

  That night, Stucki received another memorandum from Paul. Dressing his speech up with polite acknowledgments of Switzerland’s uniqueness, Paul threatened that if there was no agreement the Allies could destroy the Swiss economy and might launch a worldwide propaganda campaign exposing Swiss misdeeds. “This is an arrogance we cannot accept,” Stucki ranted to his aides. Jolles stood quietly, realizing the dangers. No American was prepared to speak to the Swiss anymore. “I will not negotiate under threat,” shouted Stucki, ignoring the refusal of the Americans to continue the talks until the Swiss capitulated. Quietly, he had ordered his legal team to seek the advice of Sullivan and Cromwell in New York, where the Dulles brothers were senior partners. Knowing that the Americans derided any notion of Swiss legality, he needed help. The Dulles brothers were proven friends of both the Germans and the Swiss, and their advice would be valuable. But no advice could rescue Stucki from his predicament. It was the moment, he decided, to stage a breakdown of the negotiations.

  Some would speculate that Stucki conjured up the crisis in order to stage a return to Bern so that he could write his own instructions. Others would claim that he sincerely needed to obtain a fresh brief from the government. Both ideas were partly right. Stucki returned to Switzerland on March 30 carrying a stinging memorandum from Paul alleging Swiss greed. The crisis was real.

  Restrictions on reporting by Switzerland’s newspapers meant that few Swiss understood that the three Allies were negotiating on behalf of eighteen nations and that all of them were critical of Switzerland. To the uninformed, Stucki was fighting to protect Switzerland’s sovereignty and the sanctity of private property—whatever the sacrifice. Only insiders realized that the deadlock was caused not just by the dispute over the fate of German property but by allegations over the Nazi gold. Even Petitpierre, Marcel Vaidie would later reflect, was probably unaware of the full facts. “The Swiss delegation,” he judged, “was not being frank with Bern about the negotiations.” The Anglo-Americans were simply bewildered by Stucki’s antics.

  “We are isolated,” Stucki groaned to his colleagues.

  “Do you really think a rich man is ever isolated?” responded Hans Schaffner, a government economist, puzzled by Stucki’s fear of the Americans. “The National Bank was naive but acted in good faith. The Allies are not very friendly. They don’t understand how hard it has been for us. Their behavior is an insult because they’re jealous that we survived and they don’t acknowledge our bravery.” Instructed to tell lies on his own initiative to liquidate the past, Stucki returned to Washington on April 11. Unknown to him, his legacy in Bern was fomenting dissatisfaction.

  Soon after Stucki’s arrival in Washington, a telegram from Petitpierre announced his demotion. His functions would be reallocated to six sections. The Swiss, as Stucki knew, bore a deep dislike for anyone who enjoyed wielding excessive power. But the more serious mark against Stucki was his distrust of bankers. His principal successor, Alfred Zehnder, was like Petitpierre, sympathetic to the requirements of Switzerland’s financiers and less likely to dictate his own terms. The personal humiliation was not reflected in Stucki’s performance when he resumed the negotiations.

  During the break, reminded by the British that the restrictions on Switzerland would have to be removed within seven weeks, Paul and Rubin became uncertain about their tactics. While the State Department’s long silence since the negotiations began confirmed its indifference, some Treasury officials had also become noticeably concerned. Inexperienced in the wiles of diplomacy, Paul had not considered asking the FBI to tap the Swiss telephones to glean an insight into their opponents’ strategy—although Stucki would become convinced that his rooms were bugged. As lawyers, Paul and Rubin were motivated only to argue and win their case. Success would be to deliver a deal. The difference between deals among individuals and deals among governments was barely grasped. The two Americans, driven by the conviction that the Swiss had been dishonest, believed that incontrovertible truth would deliver justice. Under pressure, they embarked on a countdown.

  At the outset of their next meeting, Stucki resumed his customary defiance. “No blame can justifiably be placed on the Swiss National Bank in connection with its purchases of gold,” Stucki told Paul. “Switzerland,” he said, had not knowingly accepted looted gold, and any restoration of looted gold would be “solely decided by the Swiss Federal Tribunal,” the country’s supreme court.

  Paul pushed a bundle of papers toward Stucki. “The same gold which Switzerland accepted from Germany had been rejected as suspicious by the Swedes,” said Paul softly. Startled, Stucki remained silent. That night, Rappard produced a four-page questionnaire for the Allies to explain in detail the fate of the looted gold. The many details he requested were clearly intended to daunt the Allies and complicate the argument. The answers, explicit and damning, were placed on Stucki’
s desk within twenty-four hours. His hopes for room to maneuver were disappearing.

  Soon after resuming his seat in the conference room on April 13, Stucki uttered a confession. Switzerland, he said, had been mistaken in its belief that Puhl was “a decent and honest man.” But even that admission revealed feigned naïveté. Why, asked Stucki, had the Germans gone to such lengths to conceal the origins of the Belgian gold? Paul did not trouble to answer the rhetorical question. He smelled blood. Academic issues were of no interest, he told Stucki: “It’s imperative to come to conclusions quickly.” Stucki, the realist, suggested an offer. Concessions, he said, like giving the Allies a share of the German assets and “a part of the gold” acquired from Germany after February 1943, depended upon an end to discrimination against Switzerland. Paul nodded. The breakthrough was in sight. But then it disappeared. Switzerland, added Stucki, did not “recognize any legal or moral obligation for the restitution of gold [and] Switzerland has never recognized and is not now prepared to recognize that the Belgian gold was looted by Germany.”

  Fearing a new deadlock and the disintegration of the Allies’ unity, Paul pitched the Allied claim low, just $130 million compensation for the traceable Belgian gold. “This is much more than we expected,” said Stucki with puzzling sincerity. His counteroffer, $25 million, was accompanied by a refusal to answer any questions about the movement of gold through Switzerland during the war. “Only Swiss law and the Swiss courts have any jurisdiction over the gold,” he muttered as he rose to his feet. “There’s no purpose in continuing.” The Allies’ moderation and their sincere wish to reach an amicable settlement had failed to achieve anything. A leak to American newspapers reported the deadlock. From London, McCombe was instructed, “Half a loaf is better than no bread and you are authorized to agree to any concession which the Americans and French are ready to grant in order to avoid a breakdown.”