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  Eduard von Steiger naturally knew the truth. Just hours before he had greeted the Jewish delegation, at the morning meeting of ministers, Petitpierre had presented the Polish agreement to the Bundesrat and had disclosed the secret clause concerning the heirless assets. Von Steiger, in common with his colleagues, had approved the result of secret negotiations conducted over the previous months. Their incentive had been a lust for profits from war-ravaged Europe, and a need to relieve Switzerland’s persistent shortage of coal.

  In 1945 and 1946, Europe had been starved of fuel. With Germany’s coal mines still severely disrupted and Europe’s roads and railways unrepaired, Switzerland relied upon the Allies’ generosity for supplies. Simultaneously, Swiss industrialists, denied their German markets, were manufacturing in plentiful quantities products that its bankrupt neighbors could not afford. To solve that combined problem, Max Troendle, the hyperactive trade minister, embarked upon an extraordinary blitzkrieg across Europe. Ceaselessly crisscrossing the continent at a time when travel was difficult, Troendle sought markets for Switzerland’s manufacturers and sources of coal. On February 2, 1946, he opened negotiations in Poland, one of Europe’s most plundered nations but also one possessing abundant supplies of fuel. During those early discussions, Poland’s communist officials mentioned that many of the rich among the nation’s two million murdered Jews must have deposited money in Switzerland or have invested in life assurance policies. That money, insisted the Poles, belonged to their motherland. Troendle had little reason to dispute that claim, except that the Swiss government could not simply seize the Jewish money. On the other hand, the Polish communists had confiscated property owned by Swiss nationals and his countrymen were aggrieved about their own losses.

  On June 8, 1946, Troendle outlined to ministers in the Bundesrat the elements of a deal. “The Poles have requested the assets of missing Poles deposited in Swiss banks and insurance companies,” he wrote, “and in a compensation deal, the Swiss debtors [the banks and insurance companies] would be obliged, after a presumption of death, to hand over that money to the Polish government in the form of bilateral compensation. But the Poles would have to promise to repay the money to any depositor or his heirs should there be a claim.”

  Although attractive to ministers, Troendle’s proposal arrived just seventeen days after the Washington Accord had been signed, and the government still felt bound to honor Stucki’s undertakings. Troendle’s recommendation was filed along with a letter sent by the Polish government to Bern on April 4 formally requesting the heirless assets. Six months later, Switzerland’s stance had not changed. In a conversation with Franz Kappeler on January 24, 1947, the Polish ambassador’s request for the heirless assets was rejected. Poland, he was told, could not expect “special treatment.” The ambassador was advised to seek help from the Bankers Association, where the result was a foregone conclusion.

  Two years later, in April 1949, the issue resurfaced. In Warsaw, Troendle was negotiating a new trade agreement to sell Swiss products in return for coal. Once again, the Poles asked for the heirless assets. “Many Poles who died,” said the negotiators, “deposited funds in Switzerland.” Despite the cold war and the Soviet blockade of Berlin, the incentive for the Swiss to satisfy the communists had grown. To those Swiss eager to earn profits, the tension as Western Europe once more fought for democracy was irrelevant. Ingrained among Switzerland’s rulers was the satisfying belief that their country had protected itself from the Nazis and that neutrality would now save the nation from the communists. Morality, scoffed those Swiss industrialists and politicians urging acceptance of Troendle’s latest deal, was the argument deployed and distorted by interfering foreigners. The balance, said Troendle, had tilted in favor of satisfying the Poles. The Allies’ interest in the heirless assets had evaporated, the feeble Jewish protest could be ignored, Swiss nationals were still pressing their claims for compensation, and Poland offered profits and coal. There was every reason to please the Poles and satisfy the Swiss. “At the appropriate time,” the Finance and Political Departments suggested to the government, “we should examine whether the Polish heirless assets could be used to set against Polish compensation for nationalizing Swiss property.” The only outstanding issue was to calculate the amount of Polish deposits that were heirless.

  During the negotiations, Rudolph Speich, the chairman of the Swiss Bank Corporation accompanying Troendle, had told the Poles that the banks held “at least SF2 million” in Polish heirless assets. The origin of Speich’s estimate—an important benchmark in the dispute—was a survey conducted by the Bankers Association and the insurance companies. Speich told Troendle that the bankers had reluctantly agreed to reveal the amount on condition that the heirless assets clause in the agreement remain secret. That request, Petitpierre decided, was unobjectionable. On formally signing the agreement on June 25, 1949, the Swiss government undertook in a secret clause that after July 1, 1954, Switzerland’s banks and insurance companies would release the assets of Polish nationals whose accounts had remained unclaimed and dormant for five years since the end of the war. In return for transferring that money to Account N (for “Nationalization Compensation”), specially opened in Poland’s name at the Swiss National Bank, Poland agreed to pay SF53.5 million in compensation to Swiss nationals for the loss of their property. In effect, Swiss property owners would receive compensation only because the heirless assets of Polish Jews deposited in Switzerland were transfered to Warsaw, although a fig leaf was cleverly provided. The Polish government was required to promise compensation to any Poles who subsequently made claims. Since the Poles would not be given the names of the account holders, the provision was included merely to bestow some legality on the deal.

  Grubby deals did not trouble Adolf Jann, but to the government’s misfortune he did not believe that the Bankers Association had ever approved breaching the secrecy rules to reveal the Polish heirless assets. The government and Speich, he fumed, had deliberately misconstrued the bankers’ opinion to secure the trade agreement. Telling Isenbergh about the secret clause, the banker calculated, might frustrate parliament’s ratification of the agreement, and in the meantime the banks would refuse to cooperate with the government.

  Unaware that the secret was now known to the Jews, Petitpierre’s officials were soon pondering how to overcome the bankers’ intransigence and discover the amount of Polish heirless assets. Alfred Zehnder, the Political Department’s senior official, appointed in 1946 because of his affinity to the bankers, admitted to Stucki, “There are complications.” To avoid jeopardizing the whole agreement, Stucki was ordered to conceal the truth. The Poles were to be told that the heirless assets would be transferred “as soon as the checks were completed.” A carrot would be offered but nothing else.

  Knowing of the deception and of the government’s intention of concluding similar agreements with other communist countries, Stucki was slightly troubled about transferring the Jews’ money to the Poles, but, considering that Swiss law provided for that contingency, he remained silent. The deceit was also bothering von Steiger. The minister was naturally concerned neither by the Jews nor by the subterfuge, but he was aroused by the dissent of others in his department, especially that of Emil Alexander, his legal adviser. Alexander had sent Petitpierre a note, attached to the minutes of the meeting with the Jewish delegation, stating that when he had spoken to the Jewish delegation he had been unaware of the deceit. Although that was probably untrue, Alexander also sent a copy of a note written before the meeting, recommending that there should be no special treatment for the Polish heirless assets or any transfer of those funds to a foreign state before the Swiss government had ordered the banks and others to conduct a proper census of foreign deposits established before the end of the war. Alexander had also minuted Petitpierre to the effect that a trustee should be appointed to transfer any unclaimed money to a committee so that it could be used for humanitarian purposes.

  Alexander’s disquiet was shared by Feli
x Schnyder, an official in Petitpierre’s own department. Jewish groups, Schnyder told Troendle at the same time as Alexander was protesting to Petitpierre, were justified in seeking the heirless assets, not least because of Stucki’s commitment in Washington and because the Polish communists had encouraged renewed persecution of the Jews after the war, forcing more Jews to flee. “Your spontaneous solution based on trade negotiations,” wrote Schnyder, “risks breaking Swiss law, and we might run into similar difficulties with the Washington Accord.” Troendle was also, warned Schnyder, ignoring the real possibility that Poles who were still living in Poland, but were too afraid to contact their Swiss banks, might find that their money had been confiscated as heirless.

  Naturally cautious, Eduard von Steiger was disturbed by the unusual opposition to a simple trade agreement. True or false, Alexander’s alibi was, von Steiger saw, pretty watertight; and, disconcertingly, Felix Schnyder’s objections echoed the complaints of Jann and other bankers. Eight weeks after the meeting with Isenbergh and Rubin, the minister of justice decided it would be politic to distance himself from the secret diplomacy and establish an official alibi. The mechanics he adopted were crass.

  In a letter to Petitpierre, von Steiger recited the established facts. First, he informed his colleague, he had discussed with representatives of Jewish groups their demand for the heirless assets. Second, he defined the consequences of Switzerland’s secret agreement with Poland, which had not been revealed to the Jews: “Swiss nationals will receive compensation for the nationalization of their property [from the heirless assets].” Von Steiger asked Petitpierre for confirmation of those facts and for an explanation.

  In a reply the following day, August 4, the minister received his alibi. Petitpierre wrote that he was taking responsibility for the “confidential exchange of letters on compensation which are not to be published” and concluded by saying that similar agreements might be signed with other governments. Three weeks later, von Steiger’s caution was itself proved to have been justified.

  In a short letter to von Steiger dated August 26, 1949, Max Isenbergh denounced the Polish agreement. “It is incompatible with the principles of justice,” he railed, mentioning the transfer of the heirless assets but without revealing his explicit knowledge of a secret clause. To von Steiger, the Jews were worse than irritants. An earlier letter from Bienenfeld pleading that Switzerland should neither forget the mass murder of Jews nor allow the murderers to profit from their crime had prompted the minister’s scoffs about the naïveté of the lawyer. The implications behind Bienenfeld’s concluding speculation—“I am sure that there can be no suspicion that Switzerland would ever want to take any advantage for itself from … the assets”—had scarcely registered. But now Isenbergh’s letter clarified Bienenfeld’s conjecture. Those Jews! thought the minister. After reflection, von Steiger merely acknowledged Isenbergh’s letter and passed the correspondence to Petitpierre with the message that in the future the foreign minister should deal with “this American Jewish Committee.”

  Not only was the secret disclosed, but Petitpierre’s officials knew that they had been exposed as dishonest. “The agreement contradicts what von Steiger told the Jewish delegation,” Franz Kappeler admitted. But even that confession did not inhibit Kappeler’s recommendation that, while there was no choice but to admit that there had been an agreement with Poland, the details should be suppressed. That advice was accepted, but, as a precaution in the event of any questions, the Political Department briefed certain Swiss ambassadors about the background of the agreement.

  In a dispatch to Switzerland’s ambassador in Paris, the department stated that the Allies had placed “no great importance” on the issue of heirless assets and that their ambition to “grab a huge fortune in Switzerland has been abandoned.” Despite the bankers’ opposition, the government, acknowledging that the Poles “placed the greatest importance” on the issue, had signed a secret agreement. “We want to avoid if possible,” the ambassador was told, “any direct contact with international Jewish groups.” Nevertheless, the ambassador was instructed to contact Isenbergh privately and pacify his anger. Six days later, in an urgent telegram, the Political Department’s instructions were canceled. To avoid confirming the secret, ordered Bern, Isenbergh was not to be approached. The Swiss government’s policy had been overturned by Max Oetterli, the aggressive new secretary of the Bankers Association responsible for internal affairs.

  Alerted by Jann and other bankers, Oetterli had raised the alarm in Bern. Any suggestion, warned the secretary, that heirless assets could be surrendered would set a dangerous precedent. To reverse government policy, he had telephoned Troendle during the minister’s visit to Vienna. The agreement, demanded Oetterli, must remain secret. In a crude demonstration of the bankers’ potency, Troendle had instantly telephoned back to Bern demanding that Oetterli’s request be obeyed. At that moment, the secret agreement was known to a handful of politicians and their officials, some senior bankers and industrialists, and the Jews. Parliament was unaware of the secret, and it was Petitpierre’s intention, after withdrawing the messages to the ambassadors, to preserve the politicians’ ignorance. “The agreement with Poland,” the Swiss ambassador in Paris was told, “will not be revealed to parliament.” Adhering to that strategy, on October 7 the government sent an official message to parliament announcing that the trade agreement with Poland emphasized the importance of Polish coal. The secret clause on heirless assets remained unmentioned.

  On the same day in Washington, Rubin appealed to the State Department to stop the “tragic travesty of the principles of humanity.” Switzerland’s anti-Jewish policy was supported, Rubin knew, by Britain and France. Beggared by the economic crisis and the humiliating 30 percent devaluation of sterling in September 1949, the British were even prepared to demand a share of unclaimed valuables, probably belonging to murdered Jews, found by Allied armies in 1945 in Italy. The U.S. plan, either to transfer the valuables to the Italian authorities or to hold an auction and give the proceeds to charity, was partially opposed by a British suggestion that any sterling notes discovered among the property should be returned to the British treasury. Rubin protested that Britain’s “attitude on this issue is unconscionable,” although his only solution was further discussions.

  In Bern, Stucki reveled in the reflection that the division among the Allies was playing into Switzerland’s hands. “The British,” he told Petitpierre, “don’t like American dominance.” He boasted about his humbling of a British diplomat who had accused Switzerland of “breaking agreements” and had complained of the Swiss government’s “unreasonableness.” “I put him in his place,” bragged Stucki to his master. Likening the atmosphere of 1949 to that of 1946, he laughed, “was like comparing a sunny June day with a gloomy day in December. The old troublemakers don’t bother us anymore.” Pompously, he refused to advance the remaining SF30 million promised by Switzerland for the Jewish refugees in 1946 (SF20 million had been paid in 1948), dangling the possibility of payment only if the Americans agreed to implement the accord on Swiss terms. “Switzerland,” he crowed, “has done everything to expedite the negotiations with the Allies. Any delays are not our fault.” Giving any further money, he reckoned, would lessen the Allies’ interest in agreeing on a final settlement.

  Sharing Stucki’s delight, Max Ott refined what Isenbergh and other Jewish lobbyists later interpreted as blackmail. “We see the Washington Accord,” Ott told a delegation from the American Jewish Congress, “as an economic, not a political, agreement. Any measures to help the Jews would need a formal amendment to the agreement, approved by all the parties, and ratification by the Swiss parliament.” Since it was next to impossible for such a scenario to be realized, Ott spelled out Switzerland’s solution. The property of German Jews, he said unapologetically, even those who had emerged from concentration camps, would be sold to fund the repayment of Nazi Germany’s debt to Switzerland. Hearing those sentiments, actually spoken in German at a tim
e when so many victims of the Holocaust were still suffering, provoked a shudder among Ott’s visitors. Appealing against such morality was pointless. “Moose” Isenbergh was planning a more combative strategy.

  Five days after Switzerland’s politicians had been misled, Isenbergh approached what he thought were sympathetic Swiss government officials for an explanation. By then, Petitpierre’s plot to divert Isenbergh by encouraging him to pursue his case through the Federation of Swiss Jews—an easy group for Petitpierre’s officials to manipulate—had misfired and, at 10 A.M. on October 15, Isenbergh was greeted by Felix Schnyder and Denise Robert of the Political Department. Schnyder’s criticism of the secret agreement was unknown to Isenbergh, but he suspected that the official was uneasy.

  “You gave assurances that the heirless assets would be used for humanitarian purposes for the survivors,” opened Isenbergh, swallowing his anger but challenging the officials to justify the deceit. “Von Steiger told us emphatically that disposing of the heirless assets would need legislation.”

  “But Poland might use the money for reconstruction,” countered Schnyder impassively. “After all, the country was badly damaged in the war.”

  “To use the money of the victims of persecution for general reconstruction,” replied Isenbergh, “is offensive to our ideas of public morality.”

  “But you don’t know how much of the heirless assets belonged to Jews,” said Schnyder, retaining his professional detachment.

  “But you can find out,” objected Isenbergh. “Under your deal with Poland you will know just that.” Slicing through the Swiss defense and exposing its contradictions was a pleasure for the New York lawyer. Accusingly, he continued, “Switzerland is the only country in Western Europe using the heirless assets in this way. The owners sent their money here to put it beyond the reach of the Polish government. They trusted the reliability of the Swiss banks. This is a failure of the admirable banking standards for which Switzerland is renowned—and falling short of your usual standards of public morality.”