Nazi Gold Read online

  That night, Rubin sensed for the first time the increasing criticism of the crusaders around Washington, “the fire-eaters in the American agencies angered by any conciliatory spirit.” State Department officials were complaining about the crusaders’ lust for vengeance. In particular, there were suspicions about the motives of Sam Klaus and others who were expressing their indignation that the American negotiators had not squeezed the Swiss into submission. Influential voices in Washington were hinting that the United States was pushing just a bit too hard. Any discomfort Rubin felt evaporated when, on April 30, he read Switzerland’s latest offer, described by Stucki as an “extremely generous … voluntary payment.” Insisting that there could be “no question” about the National Bank’s “good faith” over the Belgian gold, the Swiss admitted liability only for SF150 million ($34 million) of the gold, because that was identifiable and in Switzerland’s possession. “Rejected,” said Paul, pushed by Rubin into a cliff-hanger. Stucki did not spot the stress or the cracks. Cut off from support in Bern and isolated among his delegation, he had no alternative but to bow and offer something a little more substantial.

  The following day, May 1, Switzerland’s lofty declarations about the sanctity of private property and its good faith to all nations evaporated. Stucki offered to liquidate all the German assets in Switzerland and divide the proceeds equally with Allies. Paul was attracted by that offer. His official State Department instructions suggested that the United States expected to obtain “a large portion” of Germany’s assets for itself, especially from the Nazi loot, and the whole of IG Farben’s subsidiary in the United States. Paul merely nodded as Stucki turned to the question of gold. His new offer was $50 million, double his first proposal. Again Paul said nothing. McCombe and Charguéraud agreed to wait. Rightly, they expected rising tension in the Swiss embassy. On May 2, Stucki called personally: “SF250 million. On my honor, that is our final offer.” That represented $58.14 million.

  “We’ve got a good case for $88 million,” countered Paul. “Let’s compromise at $75 million.”

  “No,” said Stucki. He had reached his own limit.

  The Allies were split. Charguéraud was against any compromise, while McCombe wanted to accept.

  “What about $70 million?” asked Paul on his next meeting with Stucki.

  “No,” replied Stucki. “$58 million or nothing. And we want a 2 percent collection fee.”

  Paul gasped. Swiss greed was unique: “That’s chiseling! No way!”

  Stucki retreated, but only on the collection fee.

  The talks were stalled. In London, Paul Rügger, the Swiss ambassador, called at 3:30 P.M. on May 3 to ask Sir Orme Sargent, the senior Foreign Office official, to prevent “a complete rupture of negotiations,” which would be “deplorable.” In an obvious ploy to discover whether the Allies were divided, Rügger added, “We need conciliation not least because Stucki’s temperament is too rigid to get around the difficulties he faced.” Bemused, Sargent remained non-committal.

  From Washington, McCombe reported that the Swiss were “kicking violently” in a bid to keep their gold. Stucki was hinting to Allied diplomats that a bitter struggle had erupted among the members of his delegation. Paying any compensation to the Allies, argued Hirs, ignoring Puhl’s confession and fighting for his reputation, was an admission that he had either closed his eyes to Germany’s use of looted gold or had accepted assurances without any proof. On both interpretations, compensation suggested Swiss complicity with the Reichsbank. Stucki should argue either the disingenuous—that Belgian gold had been willingly deposited in Berlin—or the outrageous: that Swiss ignorance had been genuine. Six weeks in Washington had only made the delegates more stubborn. Profoundly isolated, they remained immune to the world’s condemnation of Swiss morality.

  In Bern, on May 6, Petitpierre summoned the U.S. ambassador. Sitting in the west “sunny” wing of the Bundeshaus, Petitpierre, the son of a lawyer who had represented Switzerland’s watchmakers, enjoyed a spectacular view across the meadows toward the Alps. Below his office in summer, hundreds of local citizens swam in the River Aare, giving a somewhat unreal atmosphere to any discussions in the foreign minister’s office, especially when the topic was Switzerland’s secret relationship with the Nazis and the Allies’ irritating demand for explanations about the looted gold. Any compensation payments for the gold, the foreign minister explained, would impose a “heavy burden” on Switzerland. To anyone traveling through the wasteland of Europe, Switzerland’s quest for understanding would find little sympathy, but it seemed that Petitpierre actually believed his plea would evoke sympathy.

  Charguéraud was resigned to the fact that Switzerland could exert pressure. Ordered by Paris not to accept the Swiss offer but to seek more, Charguéraud reported his fears that Switzerland possessed enough “clout” to cause trouble and “bring out influential big guns in America.” His evidence was the appearance of favorable articles about Switzerland in the Wall Street Journal. Somewhere in New York and Washington, Switzerland’s American friends were moving levers. Some would suspect the Dulles brothers.

  Unknown to Charguéraud, later that day, before the report of Petitpierre’s plea had reached Washington, Paul and Rubin traveled to the Washington home of Senator Harley Kilgore. In widely publicized hearings in the Senate, Kilgore had stressed the importance of controlling any renewed threats posed by Germany to world peace. The politician’s support for any deal, Paul and Rubin recognized, was indispensable. Seated in the senator’s spacious living room, Paul explained how investigators had established that $223 million of the Belgian gold had been transported to Switzerland: $88 million was still in Swiss hands; the rest had been transferred to other countries. “By any reckoning,” said Paul, “Switzerland is proposing to keep one third of the loot.”

  “Only continued sanctions can work,” said Kilgore.

  “The British won’t,” explained Rubin. “Not beyond June 30. The pressure for relaxing controls is increasing all the time.”

  Kilgore nodded: “I’m getting a lot of letters on that.” He added, “We’ve done the best we can. I never thought we’d get more from the Swiss.”

  For two more days Paul fenced with Stucki. On the afternoon of May 8, he sat with Rubin; Fred Vinson, the distinguished economic warrior; and William Clayton, the assistant secretary of state, formerly the United States’ biggest cotton broker. “That was Stucki’s last offer,” said Paul. Poker games, staking the reputation of nations, were not his normal line of business. Above all, he wanted a deal. “We’re risking losing everything,” he told Clayton. Sanctions, everyone agreed, were proving less effective.

  “It’s a lot of cash,” said Clayton.

  “It’s probably as good as we can get,” argued Paul.

  “If we say no, we might be left with nothing,” added Rubin.

  From the State Department came the message that rejection of Stucki’s offer would stoke international recrimination about the United States’ bullying of “a small democratic country.” The French, suggested Paul, should be “pressed” to accept. “Agreed,” said Clayton.

  But Charguéraud was not eager to succumb. In a telegram to Paris marked “Urgent,” he reported that the State Department “insists [that] rapid action is necessary” for acceptance. His own recommendation was to “suspend the negotiations.” His advice was instantly rejected. Tiny Switzerland had won an astonishing deal, paying back $58,140,000, one fifth of the $296 million of looted gold it had accepted. Most would be given to France to repay Belgium. Charguéraud was livid. Stucki, he believed, was a calculating liar who, among many deceptions, had deliberately concealed the shipment of seventy-four tons of gold from Switzerland to Spain.

  Stucki did not reveal any delight when told of the Allies’ acceptance of the deal, despite the end both of the blacklists and of the freeze on Switzerland’s assets in the United States. Instead, on May 21 he insisted that the announcement of the agreement be postponed while a list of complaints
and definitions was negotiated. Under pressure from bankers and industrialists, he was ordered to prevent any further payments beyond the SF250 million for the gold. To allow the Allies to seize a share of German property, Nazi loot and the heirless assets would violate Switzerland’s citadel. Sensing the waning motivation among the Allied negotiators, Stucki planned to exploit the unwary. Words are the armory of lawyers and diplomats, and Stucki insisted on the inclusion and exclusion of apparently innocuous words in the agreement. Paul, Rubin and McCombe incautiously agreed.

  On German assets, Stucki committed Switzerland to agree to sell the “property of every description … owned or controlled by Germans in Germany” and “the property of any German who was to be repatriated to Germany.” The agreement applied to German nationals resident in Germany. Believing that Switzerland was therefore obliged to seize and sell all German assets, Paul agreed to include the private property of all “Germans in Germany,” and to divide the proceeds equally between Switzerland and the Allies as reparations. Only Stucki appreciated the loopholes he had introduced. Effectively, the Allies had forsaken any power to implement the accord. Only the Swiss had any rights to investigate, seize and sell the German property and, since refusal to implement the accord bore no sanctions, Stucki had ensured that, legally, Switzerland had no need to do anything.

  Some would later accuse the two American negotiators of naïveté, but they convinced themselves they were securing the best deal. “We relied upon an assumption that it would be in Switzerland’s interest to live up to the agreement, even if compliance was not 100 percent,” Rubin would recall later. But, in their rush to close the deal, Paul and Rubin had also failed to include in the agreement a distinction between Germans and German Jews, the vexed issue still causing such misery to survivors. Rubin believed it was unnecessary. During his discussions with the Swiss, he had been assured that the Jews would not suffer, not least because Stucki had been told that Allied Law No. 5, seizing all German assets in neutral countries, “specifically excluded Jews.” Assuming that an “informal agreement” had been reached with Stucki that excluded Jewish property from the compulsory sale, Rubin did not insist on a specific clause. Stucki and his lawyers were delighted. All that mattered, they knew, was the words, and by omission the agreement was explicit: the persecuted and their persecutors, Jew and Nazi, would continue to be treated alike.

  Rubin was less sanguine about the fate of the heirless assets. Four days before the formal signing of the agreement, he insisted that the Swiss should commit themselves to their recovery in Switzerland and their distribution to the Jews. Stucki resisted. “I cannot,” he said, “commit the government to break the banking secrecy laws.” The Swiss parliament, he explained, would never ratify an accord with that provision. Yet he understood that the State Department, “under the pressure of the Jewish organizations,” would insist that he sign a public declaration about heirless assets. “We could not resist,” he explained later, “so I agreed to accept but put Switzerland under no obligation except to consider the question.” Urged to end the negotiations, Rubin and Paul agreed with Stucki to a formula of words. While Stucki would “recommend to the Swiss government that procedures should be established” to distribute the heirless assets, he in turn would sign a letter to accompany what would be known as the Washington Accord. The words seemed impressive: “My government will examine sympathetically the question of seeking means whereby they might put at the disposal of the three Allied governments, for the purposes of relief and rehabilitation, the proceeds of property found in Switzerland which belonged to victims of recent acts of violence of the late government of Germany, who have died without heirs.”

  To Rubin, it seemed a suitable if not perfect solution. Stucki would personally help claimants recover identified looted property found in Switzerland and hand over the heirless assets to the survivors. Even though the assurance was unenforceable, Rubin reasoned, the Swiss would not want to appear to be enriching themselves at the expense of the victims of the Holocaust. Neither Rubin nor Stucki considered that the letter did not mention the nationality of the Jews whose savings were deposited in Switzerland. “No distinction was made,” acknowledged Stucki, “and it was not discussed.” Since the letter was not legally binding, there seemed no reason to be concerned. Indeed, none of the five notes signed by the Swiss official were more than promises. As a sideshow to the negotiations, they had been approved by the State Department but not even shown to McCombe or Charguéraud. If either man was irritated, he never complained to Rubin. In truth, neither the British nor the French government was concerned about the Jews. Each was interested in securing reparations for its own nation, and both failed to understand that the German assets, the loot and the heirless assets, all depending upon Swiss goodwill, were intertwined.

  Rubin understood that interrelationship. During the last days of the negotiations, he extricated from Stucki the promised contribution to Europe’s reconstruction. In the Washington Accord, Switzerland undertook to advance $12.5 million to the Inter-Governmental Committee on Refugees established under Article 8 of the Paris Agreement in 1945. The money was “to be devoted to the rehabilitation and resettlement of non-repatriable victims of German actions.” On Stucki’s insistence, the payment was mentioned in a lofty promise expressing Switzerland’s “desire to contribute its share to the pacification and the reconstruction of Europe.”

  For the crusaders, Switzerland’s promise of $12.5 million was a crowning success that was to be matched, according to the Paris Agreement, by the Allies out of the sale of German assets in the neutral countries. When all this was combined with the heirless assets and further contributions from Sweden and Portugal, there was finally money to relieve the suffering of the Jews in the camps in Europe.

  The accord was formally signed on May 25, 1946. No champagne was poured to toast an agreement tainted by suspicion. Paul and Rubin were anxious to complete the formalities; this was a contrast to the relaxed enjoyment they had experienced at a celebratory dinner with the Swedes. “It was always sour with the Swiss,” recalled Rubin, “and the gold turned it worse.” After the formal documents were quickly signed, there were brief nods and muted farewells. The accord, it was feared, might merely be the prelude to further problems. That sentiment was confirmed soon after Stucki arrived home.

  Thanks to the prism through which the Swiss had followed the Washington negotiations, the truth had been distorted and the Allies’ position misrepresented. In near unanimity, Switzerland’s newspapers and politicians publicly lambasted Stucki for humiliating Switzerland, comparing the Allies, especially the United States, unfavorably with Hitler. At least the Nazis, cried Stucki’s critics, had been polite and had acknowledged Swiss neutrality and sovereignty. Decent Switzerland, bayed the chorus, had become the victim of gangsters hustled by Jews. Sensing his vulnerability, Stucki magnified the distortions by bemoaning his personal misfortune. Unable to resist demands for an unjustified admission of guilt as the price for removing the economic sanctions, he complained, Switzerland had yielded to “relentless pressure” to sign an agreement whose terms had been dictated by the Allies.

  Bureaucrats, appreciating that a smoke screen of anger and grief would obscure Switzerland’s embarrassing exposure for dishonestly accepting looted gold, concocted a revised version of history. “The Allies,” scoffed Ernst Nobs, the director of the Ministry of Finance, “are entitled to fight their own wars, but we’re not returning the stolen Belgian gold. We’re just making a generous contribution for the reconstruction of Europe.” Newspapers and gullible politicians were briefed by Nobs and ministers that the Belgian government was suing the French government for compensation in the U.S. courts. “A Swiss lie,” fumed Marcel Vaidie, “just as they lied that they had accepted Reichsmarks from the Germans and not gold.” The Swiss, he said, wanted to “shunt off on to France the entire responsibility for the acquisition of gold looted by the Germans.”

  Although publicly the French collaborators we
re blamed for the German acquisition of looted gold, internally Ernst Weber, the president of the National Bank, and Hirs were criticized for being “completely taken in by Puhl” and for not being honest with Stucki about the Belgian gold. Their real sin was causing an embarrassment by allowing the exposure to take place. Both were forced to retire. That fate, Stucki determined, would not befall him, despite the unusually high opposition vote when parliament ratified the accord on June 27, 1946—by 142 votes to 29.

  Stucki’s reward from Petitpierre for having negotiated the accord was to be given the task of supervising its implementation, harangued from one side by irate bankers and industrialists, and from the other by the United States and Jewish groups. The first draft of his poisoned chalice was being prepared in Paris.

  10

  THE HIDDEN MILLIONS

  One day after Walter Stucki had agreed the essentials of the Washington Accord, on May 13, 1946, Eli Ginzberg, a thirty-five-year-old fast-talking Jewish New Yorker with a doctorate in economics from Columbia University, sailed to England in comfort on the Queen Mary, the world’s most celebrated luxury liner, as the State Department representative for a conference destined to distribute the $25 million and the heirless assets to the refugees. In 1944, as the chief of the logistical office of the Surgeon of the U.S. Army, Ginzberg had read the reports about the extermination camps and, influenced by Moses Abramovitz, had assumed “an obligation to care for the Holocaust victims.” His voyage to London was the fulfillment of that obligation.