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  The Swiss Bankers Association was not inclined to make the task any easier. “No Swiss banks,” declared an official on the day that the State Department policy was published, “have ever carried out or collaborated in the transfer abroad of funds belonging to the leaders of the National Socialist party.” That disclaimer was accompanied by a protest by the Bankers Association to the Allies and the suppression in Switzerland of news reports from Washington explaining why $1.9 billion of Swiss assets were frozen in the United States. Walter Sholes, the American consul in Basel, concluded, “it is quite evident that Swiss bankers have no intention of taking the Swiss public into their confidence in matters affecting Swiss banking practices.… The Swiss public continues to remain in the dark on the general subject.”

  The frustration among Treasury and State Department officials was turning to anger. In October 1944, Switzerland had imposed an embargo on exports of war material and frozen some bank accounts in German-occupied countries to prevent the compulsory transfer of possessions to the Nazis, but, protested U.S. Treasury officials, these were meaningless—even insulting—gestures, since the Wehrmacht had now abandoned those countries. In confirmation of Swiss nonchalance, the government in Bern had even rejected during January an Allied offer of raw materials from scarce stockpiles if Switzerland reduced trade with Germany. The offers were ignored. Switzerland still permitted Germany to transport military cargo along its rail network to Italy to be used against Allied soldiers, claiming it was bound by the St. Gotthard Convention. Similarly defiant, it granted Germany loans knowing that there was no chance of repayment, while the German companies supplying coal and steel were allowed to amass Swiss francs in Swiss bank accounts for use after the war. Switzerland’s bankers were confident that the Allies would never discover the secrets because most important German deposits had been registered under Swiss names. The duplicity was not overlooked by Morgenthau and his disciples. Even as they observed Bern’s pretense of complying with Washington’s requirements, they read a new batch of intelligence reports from Europe contradicting Swiss assurances. Their antagonism was inflamed.

  The reports from Switzerland described convoys of trucks traveling from Munich and Nuremberg carrying “large sums” of money and securities to Swiss banks and the German sanatoria in Davos. Other reports mentioned widespread looting by the SS and their transfer of stolen property to Switzerland. There were reports that Göring and Himmler were negotiating with Jean-Marie Musy, a pro-Nazi Swiss politician, to transfer prominent French politicians, including Marshal Pétain, Pierre Laval, Edouard Daladier and Leon Blum, and the king of Belgium to Switzerland if the Nazi leaders were also allowed refuge in the country where their own loot was deposited. Reports from Sweden and Switzerland mentioned a flood of German patent applications, and from Madrid there was a report that fourteen crates of stolen furs, sent from Paris, had arrived via Switzerland. In Washington, the Safehaven officers were convinced that the continent was awash with gangsters, but there was a dearth of real information. Groping in the darkness, the investigators knew that one group in Europe could by themselves stymie Nazi criminality, and they were outraged by their mixture of venality and sanctimoniousness.

  Switzerland’s refusal to cooperate in the final defeat of the Nazis infuriated Morgenthau. At the secretary’s behest, Roosevelt dispatched Lauchlin Currie, the FEA’s deputy administrator and a New Dealer, with Orvis Schmidt to Europe. Although uninvited by the Swiss, they were ordered to arrive in Bern and extract compliance with a list of demands. Both shared the Treasury’s uncompromising attitude, although by now Harry Dexter White’s proposals for reprisals against Switzerland had become draconian.

  In his bid to destroy German power, White was unapologetically prepared also to cripple Switzerland if the government in Bern refused to obey U.S. demands. Without threats, White believed, it was “futile” to expect the Swiss to reveal and control German assets. Sanctions were the only language the Swiss would understand. To intimidate them, White proposed cutting their coal supplies and even pushing the country toward bankruptcy by permanently freezing their $1.9 billion assets in the United States. His ideal solution, he told Morgenthau, would be to advance loans to friendly American investors to buy control of Switzerland’s leading banks. Morgenthau did not demur, even at that outlandish notion. White’s aggression mirrored the common sentiment within the building.

  One obstacle, Morgenthau knew, remained: those senior State Department officials opposed to Safehaven. Despite endorsement from many departments, including a letter from General Clayton Bissell, the chief of military intelligence in the Pentagon, urging that Safehaven was “of utmost importance,” the State Department remained cool. Morgenthau suspected that London’s influence should not be underestimated.

  Filled with moral outrage and ready to punish the Swiss, Currie arrived in London on February 1, 1945, to receive an unpleasant surprise. The British were less than lukewarm about joining the mission. Wearied by the discomforts of wartime, lacking the passion of the crusaders and short of the kind of talented intellectuals recruited by Morgenthau’s Treasury Department, officials in Whitehall remained incurably skeptical about Safehaven. “We won’t be going to Switzerland,” Bliss said with a smile. Swiss stubbornness, the Briton told Currie, guaranteed the mission’s failure.

  Unspoken was British concern about the crusaders’ attitude toward Swiss banks. Reports from Switzerland about arguments between British and U.S. intelligence officers concerning the treatment of the Johann Wehrli Bank in Zurich revealed deep disagreements. The basic facts were not in dispute. Despite its steadily declining fortunes since 1914, when Wehrli himself, a member of one of Zurich’s patrician families, had entertained Germany’s kaiser, the bank had revived since Hitler’s accession. Under the direction of Karl Kessler, a Swiss Nazi sympathizer who had met von Ribbentrop and other senior Nazi officials, the bank had counted among its clients the Reichsbank and several big German manufacturers and had served as a conduit for German money to Madrid and South America, while helping German officers obtain visas to enter Switzerland.

  Unlike the activity of the major Swiss banks, Wehrli’s activities had been easily monitored by both British and U.S. intelligence officers. Intercepts revealed Wehrli’s regular telegraphic transfers of money and securities around the world, and an employee had been recruited as an informant. That unusual breach of a Swiss bank’s security had exaggerated the importance of the bank’s affairs but simultaneously exposed the disagreements among the Allies.

  At the request of Walter Ostrow, the U.S. Treasury official in Bern, Wehrli had submitted himself for questioning in the American embassy. The Swiss had little alternative because his failure to oblige could have resulted in blacklisting and freezing of the bank’s activities throughout the world. Ostrow had wanted information and Kessler’s dismissal. Wehrli resisted, concealing the fact that his bank had provided SF42 million to German intelligence officers. Suspicious of the banker’s collaboration, Ostrow recommended that the bank and Kessler be blacklisted. British intelligence officers in Bern were furious. Wehrli, in their opinion, was a “valuable intelligence source.” Ostrow disagreed. Wehrli’s information, the American reported, was worthless. Moreover, he consistently lied. Worst of all, Ostrow believed that Wehrli was being protected by Captain Max Binney, his son-in-law, who was the British vice-consul in Lugano. Claiming that Binney was a dangerous influence on the bank’s behalf in London, Ostrow accused the British of protecting the Swiss relationship with the Nazis. Inevitably, his campaign interested the crusaders in Washington and confirmed British suspicions.

  Britain’s attitude toward Switzerland had shifted ever since Churchill had publicly thanked the Swiss for their assistance in December 1944. Specifically discounting the profits Switzerland was earning, the prime minister had acknowledged “the sole international force linking the hideously sundered nations and ourselves” and praised the neutral with “the greatest right to distinction” as “a democratic state,
standing for freedom in self-defense among her mountains, and in thought, in spite of race, largely on our side.”

  This combination of appreciation for Switzerland and recrimination toward the crusaders confounded Currie. Yet, realizing that his appearance in Bern without the British would signal weakness, he hunted through the capital to find ways of dragging the British, unwillingly if necessary, on to his mission. Calling upon every local U.S. diplomat to support his cause, he pleaded the importance of Bretton Woods and then threatened dire repercussions if the British expected financial assistance from the U.S. Treasury to ward off bankruptcy. One week later, fearing embarrassment and worse, the British government bowed to the pressure. Dingle Foot, the parliamentary secretary at the Ministry of Economic Warfare, was assigned to accompany Currie.

  On February 8, 1945, the two flew to Paris to recruit a French representative for the mission. To Currie’s disappointment, French ministers were equally reluctant. Annoying the Swiss, he heard, would endanger France’s supplies of food, wood, paper and chemicals from Switzerland. For other reasons, bewildering to Currie, France was also unwilling to allow supplies to Switzerland to transit across France. But eventually the same entreaties and threats cajoled the French into nominating Paul Charguéraud, a temperamental diplomat, as a member of the mission.

  The trio arrived in Bern by train on February 11. Three thousand spectators, curious to see the first official Allied mission in Switzerland since the outbreak of war, had gathered at the station to cheer. Deliberately grim-faced, Currie climbed slowly into a car, determined that the Swiss should sense that he embodied a threat. But first there was an emollient.

  As a courtesy, Currie delivered a letter from Roosevelt to Eduard von Steiger, Switzerland’s president that year. Expressing understanding for Switzerland’s isolation and its relationship with Germany during the war Roosevelt added, “I know in these circumstances that you will be eager to deprive the Nazis of any further assistance … [while] you will lend every assistance to our efforts in the postwar period to track down and seize the property of our foe.”

  Switzerland had good reason to fear a backlash from Washington. The war had reached a particularly bitter stage. Americans and Europeans were dying in sight of final victory in the cause of freedom while the Swiss, amid tranquillity, continued to trade with the killers. At Eisenhower’s headquarters in Versailles, the military staff was furious that Switzerland, whose motives had been suspect since 1943, was resisting the Allies’ requests to reduce its supplies to the Nazis and was thus prolonging the war. An urgent recommendation had been sent to Washington that Switzerland be frozen into submission by enforcing a complete blockade. The Swiss could only hope that France and Britain, whose unease with U.S. policy was no longer a secret, would temper the Americans’ anger by explaining the realities of life for a small neutral nation and would mitigate the Americans’ outrage about the protection of German plunder by Switzerland. To minimize the accusation further, the Swiss government leaked to journalists the news that all the gold shipped by the Germans to Switzerland had been spent.

  The groundwork for the negotiations had been prepared by Walter Stucki, an ambitious troubleshooter who would dominate Switzerland’s postwar relations with the Allies. Stucki was tall, serious, energetic and overbearing. He had been born in 1888. Although his father and grandfather had been teachers, the family’s background as peasant farmers was never quite forgotten. Despite studying law in Bern, Paris and Munich and speaking good English and French, Stucki was rooted in the glory of insular Swiss neutrality. As an admirer of the eighteenth-century dictatorships, he had been elated by his appointment as ambassador to Vichy France in 1940. Marshal Pétain, France’s military commander in chief in World War I and the leader of the collaborationist government, was Stucki’s idol. Throughout the war, mindful that the French army had in 1940 abandoned its secret treaty obligation to defend Switzerland, Stucki had adopted a suspicious attitude toward France, but his admiration for Pétain had never wavered. In his address in Vichy’s City Hall on the eve of France’s liberation on August 29, 1944, Stucki had shouted that Pétain “is a noble figure … and I wish to put it on record that I shall always remain a great admirer of this great Frenchman who dedicated his life to France.” Although that section of his speech was erased from the recording provided for a radio broadcast, once back in Switzerland Stucki regularly listened to the complete recording of what he deemed to be his finest hour. Regularly invited to regale his countrymen with tales of his service in Vichy, the government official never omitted to praise Pétain and to denigrate the French resistance and the maquis as “bandits.” Invariably, Stucki’s German-speaking audiences agreed.

  Stucki’s return to Switzerland had been marked by unusual political turmoil in the country. Marcel Pilet-Golaz, the pro-German foreign minister, had been replaced by Max Petitpierre, a polite forty-six-year-old private international lawyer, lacking political experience but with strong connections to industry and banking. The unsuccessful candidate for the post, baffled that his seemingly inevitable inheritance had not materialized, was Stucki. His consolation was an appointment as director of the Political Department, the Swiss Foreign Ministry. Effortlessly, he persuaded himself that, despite his subordinate position, the young, weak minister would unquestioningly and gratefully rely upon an experienced director. In any event, as Switzerland’s most powerful civil servant, Stucki took it for granted that he deserved the appointment. In the opinion of a British diplomat, Stucki was “renowned as a man of ability and ambition, but possessed few if any endearing traits. He is much feared and respected, but little liked.”

  Among the many dissimilarities between Petitpierre and Stucki was their attitude toward Switzerland’s bankers. Stucki, coming from a patriotic, parochial mountain background, harbored instinctive suspicions toward the nation’s financiers. By contrast, Petitpierre regularly attended the Bankers Association’s annual conferences, a display of respect toward that fraternity, among whose members was one of his brothers. The new minister was therefore inclined to ignore the Allies’ denunciations of Swiss bankers and the allegations about Nazi loot.

  Just two days before Currie arrived in Bern, Petitpierre received a long letter marked “urgent” from Dr. Boris Lifschitz, a respected sixty-six-year-old lawyer with a large practice in Bern. Indignant about Swiss dishonesty, Lifschitz told Petitpierre that Swiss and Liechtenstein bankers and corporations not only had accepted massive quantities of loot—“money, shares and patents”—and other deposits from the Germans on the understanding that they would be returned after the war, but had transferred other fortunes to the United States, Argentina, Brazil, Sweden and Portugal. “Understandably,” Lifschitz wrote, “there is no reason for the banks to change their habits now.” Anxious not to appear a traitor, he insisted that, while he intended no harm, he wanted the minister to be aware of the facts, not least that “Hitler probably did not invade Switzerland because Switzerland and Liechtenstein were considered by the Führer to be his two ‘safes.’” Urging Petitpierre to acknowledge the truth, Lifschitz recommended that he use Currie’s imminent arrival to “rescue Switzerland from an embarrassing position because we cannot avoid handing the hidden assets to the Allies.” The minister was unimpressed. The bankers had long insisted that the Nazi money had already been transferred out of Switzerland. Perhaps it was well hidden. In any event, he ignored Lifschitz’s advice.

  Lauchlin Currie’s opening speech to Stucki on February 13 mixed offers of friendship with hints of threats. “Every hour the war is prolonged,” he told Stucki, “means more lives, and the lives of our young men are very precious to us.” Switzerland, he continued, “furnished great assistance to our enemy [and] alone continues to trade regularly with Germany.” Currie’s implication was clear. Respecting the legality of Switzerland’s neutrality was not a problem, but the Allies would not understand Switzerland’s standing aloof during the final battle: “There can be no question of neutrality of spirit. It
is inconceivable in our view … to maintain an attitude of Olympian aloofness or indifference as to the outcome” of the war. The current issue, concluded Currie, was whether Switzerland would protect the Nazis’ loot and thereby enable them “to preserve the power of the Nazi party and plan again for world domination.”

  Stucki found nothing to sympathize with in Currie’s peroration. Neither his country’s sovereignty nor its right to earn profits was negotiable. On the other hand, an accommodation to secure vital imports of food and raw materials was clearly desirable while Switzerland maneuvered itself away from its alliance with Germany into a new understanding with the Allies. So Stucki, with remarkable self-restraint, appeared to listen with forbearance as Currie concluded that Switzerland’s unequivocal compliance with Resolution VI of Bretton Woods was a minimal requirement.

  Stucki had delegated the negotiations to Professor William Rappard, a U.S.-educated economist who was a teacher at Geneva University and was soon to become known as Stucki’s “ghost.” Beguiled by Rappard’s fluent English and American mannerisms, Currie grew more optimistic as he explained the Allies’ demands. Switzerland, he insisted, should amend the banking secrecy laws, cease transit between Germany and Italy, stop most exports to Germany, freeze all German assets, deliver a complete census of German-owned property in Switzerland, allow Allied investigators to operate in Switzerland and hand over all the looted gold. The headline requirement, he concluded, was reparations: Germany’s loot should be returned to its owners and Germany’s assets should be transferred to the Allies to be used to rebuild Europe.

  Rappard had no mandate or indeed any wish to agree to those demands. Switzerland, he believed, had no reason to apologize for its wartime activities, although the government, sensitive to political realities, understood the advantage of appearing to bend toward the Allies. On February 15, Switzerland’s trade agreement with Germany lapsed. To secure Currie’s goodwill, the government announced the following day a freeze on all German property situated or administered in Switzerland that belonged to any individual or company resident in Germany or German-occupied country.