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Hitler’s Gold – Part 2

December 29, 2011

Picking up the pieces. 

War makes for ‘collateral damage’. Money, gold, and millions of people and families were scattered to the four winds. Only when the carnage ceased and the debris surveyed could the rebuilding begin. Gold Bullion is always squandered in the funding of a war. Money and credit after 1945 were scarce and on the point of collapse. Today, after the invasion of Iraq etc, the same implications face the US and the West. The role of ‘credit’ is central and economic collapse could be endemic and unavoidable.

Running a war which lasts for more than 10 years brings home the fact that it not only costs a lot of money but that unless the currency used is backed by precious metals “trouble” can be expected in the form of the twin evils of inflation and depression (or deflationary spiral). How Hitler and the Third Reich managed to finance their war is instuctive as it is quite extraordinary.

Prosecuting a war has generally been the preserve of rich nations who either stood to gain more riches or had deep enough pockets to withstand the economic drain. The Third Reich was not rich; it was a debtor nation; and thus had no deep pockets.

This section (Part 2) deals with some of the mechanics of finance, currencies and some of the key players in the stealing of gold by the Third Reich.

Although this article reprises some of the issues covered in Part 1 it does allow the reader an understanding without having to read part one. Those readers who are not interested in the background mechanics may want to jump to the heart of the matter which begins at  “14. Sweden’s Nazi business dealing” below. 

Nations that recklessly waged war without those deep reserves quickly found they paid a heavy price. A modern example is Argentina’s war over the Falklands in 1982. Ten years later economic ruin was visited upon Argentina when it tried to peg the Argentine Peso to the U.S. dollar in an attempt to eliminate hyperinflation – then averaging 325% a year – and stimulate economic growth (1991 to 2002). [1]

Although this article reprises some of topics that were covered in Part One it does allow the reader an understanding without the need to read Part One.

Poorer countries can and have waged war but usually it has been as surrogates to wealthier ones – this was particularly true in Africa during the Cold War era. The Third Reich, however, was no one’s puppet but Hitler’s.

How, in the middle of the last century, did one country, Germany, manage to pull off this manoeuvre without very much gold or hard currency reserves. This has fascinated many. If one had to stereotype Germany it would be that they at least had a ‘plan.’ Arguably, even armed with a plan it all ended in 1945 with political,  military, economic and currency collapse.

Germany’s cause was assisted by the fact that the Nazi leaders were little more than a group of gangsters with criminal and devious inclinations. For example, some of the gold bullion bars found in Frankfurt by the Allies after 1945 were found not to be the required ‘fineness’ of 0.999. The sub-standard bullion was passed off as early, i.e. pre-war ‘Prussian Mint’ bars but were, in fact, re-smelted Belgian gold hi-jacked from Dakar (see Part 1).

Does war bring economic depression ?

What, if any, are the parallels today for America’s involvement in Iraq and the Middle East generally ? Is there a link with the current economic crisis ? Cessation of hostilities, as World War  1 showed, often brings periods of economic / political instability to nations – Russia is a prime example. In Western Europe and the USA, the post 1919 years ushered in some turbulent years. Overshadowing political discourse at the time was the working class embrace of Leninist principles and lunge for power being adopted by labour movements all across Europe (and even the US).

When World War II ended the combatant nations were bankrupt on a scale not seen in World War 1 where Germany was the only clear loser. World War II saw total war and production focused entirely on military output. Economies could not change without injections of cash. To the rescue came the USA which had built up huge gold reserves during the 6 years of conflict. Only it – and not Russia – had the economic and political will to put those devastated countries back on thier feet.

In the event of a Germany victory the Third Reich had a post-war plan (once having spent everyone else’s gold) to abandon gold altogether for central banking purposes. Has America made contingency plans for post war economic instability or did it believe it was “too big to fail” in its war on terror ?

Did America’s plans include gold price fluctuations with possibly dollar devaluation and price inflation ? Did the American government even start with a ‘plan’ or did it just drift into a 10 year long war ?  

The economic crisis the world now faces is potentially greater than that of 1919, and as endenic as the world slump of the 1930s, and worse than the post-1945 world situation because there in no one nation with the necessary political and economic vision to lift other economies. 

In the present circumstances vis-à-vis the dollar and Euro, will a currency collapse be inevitable or avoidable ? Will China continue to sit on the fence ? Are we in the first embrace of hyperinflation as ‘fiat’ currencies debase each other as a conseqenmce of a world built on toxic debt and worthless derivatives ? When ‘push come to shove’ how robust with be the credit default swap (CDS) contracts ? (In the event of a loan default the seller of the CDS agrees to compensate the buyer. But with the value and volume of CDS now greater than national GDPs the likelihood of being unable to pay is high).

The German Weimar Republic and Third Reich faced all these difficulties (and more), and all European countries had the same scenario forced upon them in 1945 and in the years immediately afterwards with devaluations quite common.

The world has therefore been in this position before and the remedities are proven to be not the restricting of trade and protection of markets. Post 2008 ‘austerity measures’, universally adoptd by governments of all persuasions are repeating 1930s mistakes and are not the only answer.

Much has been written on the moral justifications of toppling a dictator, of the political gain, the military tactics and the democratic pay-back and the peace dividend. But what of the economic reverberations of the invasion of Iraq ? Has it all been a terrible waste ? What can we learn from the cost of defeating Nazism ?

Other than the war’s headline cost of trillions of dollars and the casualty figures it would appear that precious little has been written about the collateral damage and broader costs in terms of future standards of living.

There is no shortage of competing totals from competing ‘reports’ published over the years, as to just how much gold was stolen (and wasted) by the Nazis, each one of considerable merit and all having official backing. This article restricts itself to quoting only official or government sources providing total gold values and total gold tonnage – even so, large discrepancies soon become apparent.

1. Neo-Cons based US foreign policy

What passes for American foreign policy would never pass muster anywhere else in the world – save for some dictatorships. It has never been highly rated, never seen as ‘enlightened’ and it has invariably been little more than a blunt instrument of US corporate self-interest e.g. United Fruit Co. and Cuba (when other governments operate  their foreign policy as a national interest rather then a corporate one). Even here there are parallels with the Third Reich.

It was the ‘Neo-Cons’ (new conservative) grouping around Bush that made the case for invading Iraq. But should it come as a surprise that the arch ‘Neo-Con’ Richard Perle should now be said to have “business interests” and aspirations in the Middle East and Israel.

Ivor Catt and I determined at the time of Yugoslavia’s break up (and NATO’s intervention) that ‘Neo-Con’ thinking amounted to little more than neo-colonialism legitimising gunboat diplomacy.

The ‘Neo-Con’ group appear to have believed that they could get the Bush administration to agree to an invasion of Iraq with the promise of future oil revenues. Visiting European capitals in 2002 and 2002, the same message would have been conveyed. On reflection these two Jewish advisers appear to have learnt all the wrong lessons and validated Nazi Germany’s rape of Europe.

Oil has been often been called the world’s black gold and in March 2003 Paul Wolfowitz  (another ‘Neo-Con’ member in the Bush administration) told the House Appropriations Committee that ‘black gold’ would pay for Iraq’s invasion and reconstruction:

  • “ . . .  oil revenue earned by Iraq alone would pay for Iraq’s reconstruction after the Iraq war . . .  [adding that his “rough recollection” was]  . . .. “The oil revenues of that country could bring between $50 and $100 billion over the course of the next two or three years. Now, there are a lot of claims on that money, but … We are dealing with a country that can really finance its own reconstruction and relatively soon”

In Part 1 we saw how Hitler’s successive invasions funded the next territorial acquisition. Both Perle and  Wolfowitz, the sons of New York Polish Jewish families, appear to have adopted this piracy approach to funding America’s military aggression. They appear to have operated with and had support from the unlikely quarter of John Kampfner, editor of the British left-wing periodical The New Statesman.

Were Perle and Wolfowitz beyond reproach and utterly reliable ?  In March 2005, Wolfowitz was nominated by George W. Bushas to be Pres. of the World Bank (not the IMF). This has more than an overtone of the pre-war BIS and the appointment of key staff members.

Within the first year he had broken basic good governance rules of this key world institution and appointed cronies to tax-free salaried jobs. In 2007 he again brought the World Bank into disrepute. Having the moral disposition to break rules and act illegally is one more parrallel with the gangsters that headed up the Third Reich

When capital-hopping in 2002 and 2003 did any European leaders seriously believe what Richard Perle and Paul Wolfowitz were lobbying for, namely, that Iraqi oil revenues from an invaded Iraq would finance the war ?  That is as legitimate and makes as much sense as invading Kuwait for its oil or Switzerland for its gold and bank accounts.

Had it been done before and, did anyone believe them ?

History is a little vague on this point; no one has invaded Switzerland but Germany came close in the 1940s; Saddam Hussein did invade Kuwait for its black gold and was ejected because the US found it unacceptable at the time.  But Germany invaded elsewhere for territorial gain and used the gold stolen in the process to fund the cost of invasion. At the time the world found this wholly unacceptable and some years later the gold had to be repaid (see Part One).

When Poland and Czechoslovakiawere invaded did the US find that asset-stripping unacceptable at the time ?  Richard Perle, as chair of the Pentagon’s Defence Policy Board seems to have had no doubts about about asset-stripping and appropriating Iraq’s oil wealth. In July 2002 he stated:

  • “Iraq is a very wealthy country. Enormous oil reserves. They can finance, largely finance the reconstruction of their own country. And I have no doubt that they will.”

In other words this ‘adventure’ will represent minimal costs to the US.

Perle and Wolfowitz appear to have been working in tandem. The result was the “Bush Doctrine”; a policy of pre-emptive strikes and of ‘preventive wars’ i.e., to depose threats from foreign leaders/countries and thus forestall a possible war. This was explicitly stated in the defence policy document of 2002 which was drafted by Paul Wolfowitz. The same Wolfowitz who had presented the controversial Defense Planning Guidance draft in 1992 (which bore a strong resemblance to subsequent the 2002 paper). A striking resemblance to the 2002 US policy plans is the actual policy executed by Israel Forces in the Gaza Strip and West Bank during this period.

Andrew Marshall, the “influential Director of the Net Assessment Office at the Pentagon”, also recommended that oil revenues be used to defray the cost of the military occupation in Iraq. [2] Was he really ‘influential’ in reaching that conclusion or simply a political realist, given the above ?

To be fair, there is almost a precedent for this in Desert Shield and Desert Storm of 1990-1991 (also known as the First Gulf War). The US military acted as mercenaries, i.e. their military services were paid for, by the Saudi Arabian and Kuwaiti governments. Local regional frictions and religious factions meant that no love was lost between the Saudis and the Iraqis and the last things the Saudis wanted was a longer border with a hostile Iraq.[3]

There might perhaps be embarrassing disclosures buried in the reams of Wikileaks documents revealing pre-payments or ‘back-handers’ for American intervention is international affaires. Maybe we shall never know.

With Wolfowitz’s 2003 prediction of  US$ 100 billion perhaps foremost in their minds, a Congressional delegation led by an apparently unworldly (or mule-ish) Dana Rohrabacher (Rep) was quickly shown the door by the Iraqis in June 2011 when his delegation asked the Iraqis to repay the US$ 3 trillion expended by the US since 2003. [4]

America’s (or Rohrabacher’s) obsession with money did not stop there – apparently the Libyan Rebels were asked for a contribution for US help in rid Libya of Gadaffi but in no uncertain terms Libya gave Rohrabacher his marching orders. [5] 

2. Victors write history

It has long been accepted that history as we know it, is written by the victors  and in the past victorious armies have exacted ‘tribute’ (money) from a subjugated peoples. From the time of the Greek Empire, Persia’s Darius, and then the Romans and finally the British imperial sway a certain format has been followed, usually one of mixing tribute with new local investment.

Certainly, after World War I  the winning sides wrote the peace treaty and imposed “reparations” for Germany to pay and confiscated colonies of the Second Reich, but there was no countervailing  ‘investment’ to weld the defeated nation to the ‘new club’ of world nations and share their values. Inevitably, it didn’t take long for it to become clear that Germany was economically in no position to pay. However, it is only the Third Reich which seems to have categorically taxed its subjugated peoples to fund, a). their own occupation, and b). a future war, i.e. the push into Russia (see Part 1).

After World War II none of the Allies, save Stalinist Russia, demanded “reparations” and in fact they did the very opposite, they gave money to the defeated nation to help rebuild it.

Between the end of World War 1 and World War II there was, of course, the German Third Reich. In this period Germany acquired more gold bullion to back its currency every time it invaded a country; this raised what today would be called it its Triple A ‘credit rating’ allowing it to invade yet another country. Every European country had huge reserves of gold to guarantee its currency (something that is rarely done today).

Invading a country and claiming that Germany’s central bank was therefore the new legitimate owner of the gold found there funded Germany’s aggressive expansion westwards, northwards and eastwards, and gave it the ability to tackle Russia. Both World Wars were fought when Western currencies were linked to the gold standard in some form. 

Gradually, as world trade expanded in the 1950s and control of colonies was lost during the 1960s, fewer and fewer countries could afford to be on the gold standard. The end of the Vietnam War, saw the sole remaining nation, America, de-couple the last vestige of the dollar being linked to gold reserves held at the Federal Reserve.

Since then the world has essentially run on “tick”; with no one daring to say; ‘The Emperor has no clothes.’ Financial instruments, Credit Default Swaps, derivatives, cross-insured reserves etc, backed only by fresh air and a promise to pay in fiat or  paper money, have financed a world trade that has expanded every year since 1945.

3. Eastern Example

Only one obvious example of reparations exacted which funded the original aggression (on an Iraqi scale), springs to mind namely that demanded by Japan from the Qing government of China. Not only did the reparation sum demanded pay for aggression just concluded but was large enough to fund further aggression (see ‘China Sunken Warships – Part 4’). On a smaller scale one could cite the ‘carpetbaggers’ of the American Civil War. 

As a direct result of the Sino-Japan Amity Treaty (1871), Treaty of Shimonoseki (1895), the Triple Intervention (1895) and the Boxer Protocol (1901), China paid Japan 340,000,000 taels of silver. A tael is approx 1.22 Troy ounces (the Western measurement for gold and silver). China paid Japan the equivalent (then) of 510 million Japanese Yen, which represented about 6.4 times the annual revenue of the government of Japan. Not unnaturally this bankrupted China. The payments from the Qing government were used by Japan to pay for the expansion of its Navy (38.2% of the Chinese payment), direct expansion of the Army (15.6%), and development of naval battleships (8.2%).[6]

Compare this ruthless carpet bagging – this bleeding dry of China – with the derisory amounts paid by Japan to PoWs after 1945 as compensation for their sub-human treatment at the hands of the Japanese. British PoW soldiers were paid £76.00 each.

If we take the example of Greece today, her sovereign debt is so great that she is in no position to venture towards war. Had she been financially stronger and had she undertaken such a military campaign then the graph above might represent her economy’s inflation after hostilities had ceased.

Everyone’s life experience is that ‘banks’ will always lend money to those who have it and never to those who need it. With the money from China safely in its vaults, Japan then arranged with France, via the Franco-Japanese Entente of 1907, for the French government’s backing for a $1,000 million to convert out of its high interest loans. Whether measured in today’s money or by 1907 values,  $1,000 million (1 billion) is still a huge amount for a single bilateral agreement.

When peace treaties were signed between China and Japan in 1952 (and then again in 1972) Sinologists calculated Japan would have had to pay 52 trillion Yen in war compensation – an astronomical figure in those days but quite normal in today’s Credit Default Swaps (CDS) world.

Sovereign bankruptcy, as it is now called, is nothing new therefore .

The world has moved on from mocking the Soviet Union and Communism as an obviously flawed model that had no hope of surviving unless constantly given morphine injections, to one where the once-detractors now find themselves is the same sort of pickle. Now itis Capitalism’s turn to be on ‘life support’ and needs an oxygen mask to survive.

Safe as the Bank of England” used to be a maxim of the 19th century when confidence trade good, the country was well run and Britain’s colonies covered the world. But is that true of America today where corporate vested interests are more blatently adulterating legislation which should primarily be for the common good ?

Venezuela’s Pres. Chavos demand for his country’ 160 ton of gold bullion (thought to be about 85% of gold reserves) to be returned has not helped the market confidence. Most, it is believed, is held in Europe and London and can be expected to be returned once security protocols have been agreed (who will insured an $11bn (£7bn) cargo ?).

The transfer would have been a pin-prick had not Gordon Brown and other central bankers not sold off 200 hundred of tons of gold all at the same time – and when its price was at a near record low.[7] Brown raised a mere US$ 3.5 billion in 1999 – 2002. Ten years later the price of gold had risen and that quantity of gold would have been worth over $ 19 billion (approx £12 billion).

Had Venezuela’s gold been held in US, it is argued, the situation for Chavos would have been a lot more difficult. Firstly, the request would face political resistance since the US and Venezuela (‘socialist’ and pro-Cuba) does not enjoy good relationships; and in the eyes of the US, South American governments are inherently wobbly. But overriding that is a second obstacle believed by some influential pundits in the money markets, namely that “the Fed” has not publicised how much gold it actually holds for many years. In fact, it may have none or very little (Ref. Keiser Report, ‘Russia Today’ TV).

This is where history does come to our rescue in the form of the life and times of Hjalmer Schacht, Hitler’s money man (see ‘Weimar Republic’ below). 

4. ‘Command Economy’ theory

Warfare is an extremely expensive enterprise. Fighting has to be financed and sustained warfare is only possible with adequate funding.

In any war raw materials have to be purchased well in advance; sources of supply secured; ships, tanks and aircraft designed and factories built with enough capacity to increase production once war is declared; plus reserves of ‘strategic materials’ have to be built up and the workforce paid.

 How could Germany wage a second World War, so soon after being:

  • decimated by World War One
  • stripped of it overseas territories, e.g.Namibia,Tanganyika, Togoland and in the Pacific; New Guinea, Samoa, the Carolines, Palau, the Marianas, the Marshall Islands and Nauru. etc
  • crippled by reparation payments, and
  • in the teeth of a global recession ?

Blood diamonds” have shown the general public how small nation wars and border spats are funded. But who has paid for the scores of wars and insurrections and terrorist groups that erupted during the 1960s and 1970s ? Without indigenous finance – as in the case of blood diamonds – the answer has to be proxy wars paid for by the then two superpowers.

On the global scale the prevailing view in the 1960s of a command economy  waging war didn’t really make total sense and this serves to underline how incomplete and unconvincing was the 1960s grasp of the essentials  – the seed corn – necessary for the financing of total warfare.

Post-war (1945)  history books portrayed the Germany of the 1920s and 1930s as ravaged by hyperinflation, its economy broken and unable to function – so the turnaround by 1936 or even 1939 was all the more unconvincing (the more so when the social excesses of alcohol and drug abuse are factored in from Social Science sources).

Command economies such as the Third Reich and the Soviet Union can only work when the centralised state issues ‘credits’ to be used as money to jump start economic activity in factories. Germany, under Hjalmer Schacht, secretly issued “Mefo Bills”, or credits, to enable Germany’s re-arming (see Weimar Republic below). This was so successful that it threatened to crowd out normal commerce and factory production and on that basis Schacht resigned.

 America and ‘the West’ are, however, stuck. They have a debt crisis and a reducing tax base (unemployment) but no excuse to introduce a command economy that could trade with the rest of the world. The issuing of yet more redeemable debt in the form of ‘bonds’ to pay current debts which seems to be the EU’s only option, is no solution, especially when interest rates (long and short term) are unattractively low. Of all countries Germany knows better than most where this will eventually lead.

Will this lead to a revaluation of gold and/or a De Gaulle type revaluation of world currencies ? French francs were replaced by New Francs (NF) at the rate of 1 NF  to 100 old Franc in Jan 1960. This did not however, arrest the side of the Franc and by 2002 one NF was worth just 0.2 Euros).

5.  Weimar Republic

 Hjalmer Schacht was a German economist, banker, liberal politician, and co-founder of the German Democratic Party.

During the Weimar Republic he served as the Currency Commissioner and President of the Reichsbank He was opposed to Germany’s World War I reparation obligations.

Left: Hjalmer Schacht (1877 –1970)

When Hitler came to power in 1933 Schacht remained as President of the Reichsbank but also became Minister of Economics (courtesy of his friendship with Goering). Thus, Schacht helped implement Hitler’s key policies of re-development, re-industrialisation, and re-armament. And it was Schacht organised the letter signed by Germany’s leading industrialists that urged Hindenburg to appoint Adolf Hitler as Chancellor.

The Jewish question was a hot topic in Germany even as early as 1934. There could perhaps be no stranger bedfellows than the sight of the anti-semitic Schacht and the Jew hating Nazis Party working with the World Zionist Organisation in paying to hirie of ships to illegally send Jews from Europe to Palestine. [8]

Schacht was forced later out of the government by disagreements with Hitler and other prominent Nazis in December 1937.[9]  He therefore had no direct role during World War II (though, arguably, he made it possible).

Schacht contribution to world finance was the “Rentenmark” (literal translation; “Debt Security Mark”). He created the Rentenmark, or RM, which was a currency issued on 15 November 1923 to stop German hyperinflation of 1922 and 1923, and the Rentenmark replaced the Deutsche Mark.

As a result of the economic crises in Germany after World War I and the lack of gold to back the currency the Rentenbank, which issued the Rentenmark, mortgaged land and industrial goods worth 3.2 billion Rentenmark to back the new currency (collateral).

The Rentenmark was introducedat a rate 1 Rentenmark = 1,012 Deutsche Mark, establishing an exchange rate of 1United States dollar = 4.2 RM.

And perhaps because it was subdivided into 100 Rentenpfennig, the Rentenmark which was only designed as a temporary currency and was not legal tender became accepted by the population and effectively snuffed out inflation.

Following that turn around, the Reichmark with which many of us are familiar became the new legal tender on 30 August 1924, and was equal in value to the Rentenmark.

  • NB: The Rentenbank and Rentenmark continued to exist after 1924 and the notes and coins continued to circulate. The last Rentenmark notes were valid until 1948.

The Rentenmark is of more than passing historical interest since in some ways it parallels the American experience of sub-prime loans and the housing bubble of the 2000s. As national debt increased and real money (gold) became scarce these housing loans were spliced and diced with good asset loans resulting in what was by 2008 known as “toxic loans” which then  infected all debt in every country and currency. Whereas the notional paper value of Rentenmark of the 1930s thrived since it was surrounded by a sea of gold standard its modern equivalent had no such sea of gold to insulate it and mark it out as savable.

Bereft of gold after 1919, it was again Schacht who came up with another ingenious method of funding Germany’s rearmament in the 1930s. To lessen the pressure of rearmament on the Reichsmark and the economy generally he created whatwere called “Mefo Bills”. Mefo stood for “Metallurgische Forschungsgesellschaft” which was a fictitious limited liability company that issued bills of exchange which paid 4% interest and could be redeemed in Reichsmarks. Mefo Bills were a ‘shadow’ or parallel currency. They were issued as a form of payment solely to armaments companies and by using this method rearming could be undertaken without contributing to the overall indebtedness of the Reich.

The majority of Germany’s rearmament was thus undertaken between 1935 and 1939 and was paid for with Mefo bills. This regime  of Mefo bills was so well hidden from public gaze that the total amount issued is still unknown today. The existence of the Mefo bills was not discovered by the Allies until after the war which indicates a successful hiding or perhaps a classified state secret status.

Traditionally in economics the money supplywas measured as currency in circulation and money in bank deposit accounts (but excluding gold and cash in reserves held in vaults). Known variously as “M0, M1, M3” etc  this adherence began to be abandoned in the 1970s as largely irrelevant to what was thought to be the real levers which controlled a modern economy.

It is possible that the Rentenmark & Reichsmark experiment will be reenacted by some country sometime in the future.

6. Hyperinflation

During Hjalmer Schacht’s remarkable tenure at the Reichsbank in the 1920s and 1930s he was able to bring inflation under control and avert an economic disaster in 1923 ( which was the worst year for hyperinflation).

It can be said that the monetary policy spearheaded by Hjalmar Schacht – the central bank governor – together with the fiscal policy of German Chancellor Gustav Stresemann and Finance Minister Hans Luther brought the inflation in Germany to an end. Although a Nazi supporter and a key facilitator among German industrialists who originally funded Hitler, Hjalmar Schacht fell out of favour with those surrounding Hitler and eventually he was removed as President of the Reichsbank in January 1939.

It is said that documents discovered after 1945 reveal that Hjalmer Schacht’s tenure at the Reichsbank began firstly with bringing the economy back from the brink of total collapse followed by a programme he initiated of hiding, or at least veiling, gold reserves. By 1939 these secret reserves amounted to 7 times the expected amount of 500 million marks and no doubt provided a very useful ‘war chest.’

There are hints by various sources and deductions to be made from the sub-test of contemporary articles that after World War I the gold reserves of Germany were far from exhausted, which was the picture conveyed to the Allies in 1919 and in subsequent economic textbooks. Due to the federal nature of Germany with self admistered states (Länder ) existing within the German state, e.g. Lower Saxony, Bavaria, Westphalia etc, gold reserves could have been kept off balance sheet at regional state banks with next to nothing officially recorded at the Berlin central bank (but this is supposition).

For instance, if we look at figures for 1923, the German bank interest rate it rose to 19% in January, then 30% in April, and 90% in September. In this period 6 million gold marks were lost from the reserves of the Reichsbank. The effect of convulsive price and wages increases meant tradesmen did not know how to establish prices, and often simply shut up shop:

  • For these reasons, in a single day in June, 6 million gold marks were lost to the reserves in ‘another of the Reichsbank’s convulsive and desperate attempts’, as Mr Joseph Addison put it, ‘to bolster the Mark by throwing foreign currency on the market — in this case with the object of bringing the dollar below 100,000.’ – German Weimar Republic in the early 1920s and the U.S. – Troubling similarities

The parallel with today is that ‘quantitative easing’ or to put it bluntly, the printing of money as a temporary solution, only adds to long term inflation. It drives down wages and increases commodity/food prices. Fixing wage increases to the retail price index (RPI) becomes redundant since the smart option used by company CEOs is to increase their wages by the same proportion as the money supply. If today’s quantitative easing’ amounts to 15% then wages pegged to the RPI will see a living standard fall off 10% whereas CEO’s yearly pay increases of 20% will see them 5% better off than the year before.

It is crucial to realise that this is probably what is happening in the world economy today (2011), and yet the pain of price increases felt by present day tax payers is only fractional to the 1930s.

Germany’s “war chest” in terms of gold bars  is today (2011) the largest in Europe; it surpasses that of France and dwarfs that of  Britian’s. Any post-war economic picture involve a degree of both recession and inflation. This was true in 1919 and again in 1945 when a European Recovery Programme (aka the Marshall Plan), had to be set up to support collapsing European national economies – the result of Nazi Germany’s squandering of gold on war materials. Is the present post-war economic picture a result of idiotic financials dealings by institutions coming home to roost, or the by-product of wars in theMiddle East?

After the Vietnam War, America and the rest of the world felt the paradigm changes and had to adjust. War appears to create an economic void whenever it ceases. However, there was enough money and confidence in the financial world system to smooth out the temporary blip. This is not true for 2011 – when forces are withdrawn from Iraq, and with a depressed world economy. The adjustment will be sharper and there will be little government money or latitude in the ‘money markets’ to soften the effects. America may be facing a financial situation akin to France’s after her withdrawal from Indo-China 1954, followed by her withdrawal from Algeria in 1962 (see New Franc above).

7. Gold Reserves

Most of Western Europe had overseas colonies during the 19th century and Europe grew rich from trade with its colonies and trade between its colonies and the rest of the world.  Some of these colonies also had gold mines so the build-up of gold reserves was reasonably inexpensive. Belgium, for instance, had huge gold reserves relative to its size even though it had only the central Congo as a colony.

Britain and France were much better placed with gold mines in southern and western Africa and, for Britain, additional gold mines in Australia and Canada. Holland, by contrast, had relied more on the spice trade and overseas merchant trade generally to invest and yield profits. Per capita, Dutch gold reserves were in the same league as Belgium’s.

Germany on the other hand, while it had pretentions of empire, had no substantial gold mines (or access to any), though it did have diamond deposits in Namibia – part of the German Second Reich. But Germany never properly invested in its colonies which were poorly managed and so the returns were scant. For example, in 1914, 60% of German foreign investment was in Europe, as opposed to just 5% of British investment. Germany came to the colonial game late in the day and was never fully au fait with how to play her imperial role, e.g. Boer War 1902, Bosnia and Herzegovina 1908. As a result she succeeded in upsetting countries both both inside Europe and overseas, e.g. Russia, Japan, US, Britain and France and by 1914 was more or less standing alone.

(NB. Germany’s post-Bismarck foreign policy continues to make monumental blunders – even after re-unification in 1990 – such as its precipative recognition of Slovenia and Croatia in July 1991 which led to a 10 year long Balkans War. The US and UK who cautioned against such a move, were together with NATO, left to pick up the pieces. Conveniently the post-1945 German Constitution forbids it from sending combat troops overseas. Germany’s connection with Slovenia and Croatia go back to the First World War and the mid 1930s and in the 2000’s they were able to build a coalition among leading EU countries to oppose the US and UK. Srebrenica, as just one war atrocity, was the result).

Germany’s industrialisation, though rapid, began only after 1850 and its foundation was the coal, iron (and later steel) based in the Ruhr. This wealth was later doubled by the creation of a leading chemicals industry. In just 10 years its negligible Navy had grown by 1900 to be second only to Britain’s in size.

Germany haemorrhaged gold and its reserves were hit hard in the First World War and by July 10th 1923, Germany’s free gold reserve had fallen to the equivalent of £35 million pounds (approx. US$ 140 million @ $4:£1). Another loss of 50 million gold marks was suffered during the week which ended on July 14th in trying to support paper money and having to cover indispensable imports using the gold reserves.

  • “If  intervention continued at the then level of 10 million gold marks daily, bankruptcy would come within 60 days: the reserves had already taken as much as they could stand.”

At ‘close of business’ in Dec 1922 Germany’s central bank might have had in the region of 656 million marks in gold reserves (600 + 50 + 6 but sources do vary). In addition to this there was the 200 million gold marks had been set aside to guarantee the Reich dollar Treasury bills (i.e. 856 million marks in gold or near-gold). [10]

However, this might be misleading the term Gold mark and the Mark were interchangeable terms in the German Empire from 1873 to 1914. The Papiermark refers to the German currency from the 4th August 1914 when the link between the Mark and gold was abandoned. Terminology, however, can die slowly and caution has to be exercised in that originating sources are themselves not confusing the pre and post 1914 terms.

Given that scale of uncertainty one authoritative sources states that at the beginning of World War 1 the German Reichsbank reserves in the region of 3.7 billion Gold Marks plus 1 million Marks of silver. Listed separately were 400 million Marks of gold bullion or foreign coin currencies. The conclusion is that the pre-inflation amount of currency held as Goldmarks in Germany was approx. 4 billion (but this could include paper money).

After the inflationary period Germany’s metallic reserves [gold & silver bullion ?]  were approx. 500 million Marks. The Goldmark was on a gold standard with 2,790 Marks equal to 1 kilogram of pure gold (1 Mark = 358 mg).

Throughout this narrative many figures will be quoted – some will be in dollars, some in Sterling, some in Reichsmarks. The result is general confusion for even where texts specify all values in, say, dollars the dollar value of 1945 is different to that of today and is different again for the year the source was published. And over a 10 and 20 year period the price of gold has fluctuated. The only ‘more certain’ measure is that of weight and the Table (above right) shows the gold reserves of leading European Treasuries (and a few others) in metric tonnes before and after World War II.

By 1973 most European countries had more than made up for their wartime losses – except for Britain which among other things was still paying off its wartime loans to the US. On 31st Dec 2006 Britain made the last payment of $83m (£45.5m) for loans from World War II ( ).

For its World War I debts Britain still owed the US about £866m at 1934 exchange rates (or about US $4.4bn at 2006 values and if adjusted for inflation about £225bn). The Wall St Crash saw an end to Britain’s repayments and this was consolidated by a debt moratorium ordered by Pres. Herbert Hoover for all the US’s debtor nations which was never reactivated.

From 1900 to 1933, the United States adhered to a gold standard as well, with the value of the dollar being fixed at a price of one-twentieth ounce (troy weight) of gold. The Goldmark, therefore, had a value of approximately U.S. $0.25 (25 cents).

World War I reparations owed by Germany were stated in Gold marks in 1921, 1929 and 1931. Germany’s present day gold reserves are thought  to be the laregest of any nation in Europe. Current (2009-10) national gold reserves will be covered in a separate paper. However, there is speculative talk of them being hypothicated by the US Federal Reserve which is where the majority of the gold has been kept for many years.

8. The Dollar / Pound exchange rate

In 1940, an agreement between Britain and the U.S.A. pegged the pound Sterling to the U.S. dollar at a rate of £1 = $4.03.

Half the world’s trade was paid for in Sterling before 1939. Sterling, as a currency had to have substantial reserves of gold etc, to project the confidence needed for the money markets and commodity exchanges around the globe.

In 1945 the incoming Labour government found the reserves so depleted by World War II that Sept 1949 it had to devalue the pound Sterling by 30.5% to £1 = $2.80 (these were the ‘Austerity’ years when rationing was actually worse than during the war).

During the early 1960s Sterling again came under pressure and was eventually devalued by 14.3% to £1 = $2.40 on 18 Nov 1967

Sterling has suffered as series of mini-devaluations since then, including one in 1979. The current topsy-turveyworld economy of 2011 means that Sterling as well as other currencies has effectively been mildly devalued as China ratcheted up its production capacity which has depressed demand for indigenously made (more expensive) goods and has lead to a flattening of employment prospects in the West.

Confusingly, some historical documents refer to gold at ‘£35 per oz’ and others at ‘$35 per oz.’-  clearly a significant difference. The figures that appear here are faithfully reproduced and dictated by the source material. Some accounts quantify money / gold in “milliards” (BIS), which is not a misprint for million but means a figure 1,000 times greater, ie a billion.

9. Pre-war years

Foreign Exchange controls were adopted in Germany in Sept 1923 and its Commissioner given the widest powers to seize foreign currency wherever it could be found. Holders of ‘bills of exchange’ or of ‘gold securities’ were ordered to deliver them in exchange for government ‘gold loan scrip’. Within ten days the new Devisenkommissar had assumed the right to also seize gold, silver, platinum and alloys, whether in coin or raw metal (this programme of metal and assets ‘recovery’ manifest itself in the concentration camp regime of later years).

This move was in part occasioned by the realisation that 200 million Gold marks had to be set aside to guarantee the Reich dollar Treasury bills. The driving force for these draconian measures was the inability of Germany to meet is commitments to its citizens and to understand that we have to go back to the preceding decade following the Versailles Treaty.

‘Asset recovery’ then was part and parcel of Germany’s efforts to become and then remain self-sufficient, this is ‘autarkic’ type behaviour and one suspects it could become a psychological compulsion.

Left: Nothing was too trivial. Thousands of spectacle frames collected from camp inmates

State quasi-kleptomania appears to have griped Germany at this point.  Arguably, this imposed austerity and frugality was carried to extremes in the concentration camps. Inmates, thinking that they were being ‘re-settled’ in the East would naturally take with them money and precious metal and gems to maintain an acceptable living standard and or help establish them in future business enterprise. The Nazis capitalised on this and systematically looted anything valuable from the dead. “Action Reinhart” put this process on a formal footing (Appendix 1, instruction letter from Waffen SS letter of 26 Sept 1942).

The following advice / instructions found in Appendix 1 regarding Jewish property  is illuminating. There is an ackowledgement that goods originating from this conduct constitutes theft and will be called stolen . Germany knew, in the case of gold, for example, that it was tainted – so did its Swiss recipients not ask or knew better and preferred not to enquire ?

  • ” . . . .  the following procedure has to be followed with regard to the property carried by them — property, which will in all orders in the future be called goods originating from thefts, receiving of stolen goods, and hoarded goods”

The Third Reich off-set some of it expenditure on warfare by turning concentration camps into ‘profit centres.’ In the various camps SS guards collected millions of Reichsmarks worth of gold, diamonds, US dollar and Sterling, and currencies of all descriptions all of which found their way to Berlin- this included bearer bonds, clothing, hair, spectacles – in fact, no asset was too trivial to be overlooked for stock piling. A modern example of this self-sufficiency rigour or ‘autarkic’ conservation is North Korea.

The thoroughness of Operation Reinhart can be gauged by the ‘under-valuation’ recorded in the letter marked “SS Ref. No. Secret/115” of Spring 1943, and signed by Globocnik, SS Gruppenfuehrer (see Appendix 2). The extraordinary breadth of recovery under Operation Reinhart can be measured in the variety of items recovered and itemised (Appendices 3 – 3D).

The Third Reich also had the advantage over Britain in the 1940s of being able to tax personal  incomes and company profits from hundreds of millions of individuals and tens of thousands of firms rather then a few million individuals and, say, a thousand firms in Britain.

The problem facing both Europe and the US, today in 2011, is that high unemployment has denied governments “the ability to tax “and thus pay off national debt. But it is also a difficulty with which the Weimar Republic wrestled.

What must have been verging on a psychological complex led to a systematic campaign of plundering the property of Nazi victims. The total amount of ‘non-monetary gold’ (defined as gold teeth inmates levered out of corpses) by the SS is estimated to be worth US$ 14.5 million but after the war only $3 million of this looted gold was ever used to help it designated recipients, i.e. UN refugees and DPs (see mandate of Tripartite Gold Commission below). The extent to which concentration camp inmates were relieved of their gold coins and hard currency is staggering – bars of gold and precious “metal bars” to the value of 5.35 million Reichsmarks were recovered by the S.S. together with 843,802 Reichsmarks worth of gold coins – and there is far more, e.g. diamonds, pearls etc,  (see Appendix A).

Overall, an estimated 50% of all looted gold (its value est’d at $ 260 million) was sold abroad, notably to banks in Switzerland, Portugal and Sweden. The rest appears to have remained in Germany. The transfers were facilitated by among others the Dresdner Bank controlled in the 1930s by the fabulously wealthy Swedish financier Ivar Kreuger (see “The Kreuger loan”) and evidence exists which indicates that some non-monetary gold was included in the monetary gold pool used to compensate nation states. After 1945 those countries whose gold reserves had been passed on to the Nazis via the BIS to third party bank accounts (Sweden, Spain etc) received only about 64% of their original looted gold. [11]

10. Dawes Plan of 1921

World War I concluded with reparations set by the Treaty of Versailles. Germany was forced to pay as compensation for war damage, i.e, reparations, the astonishing amount of 269 billion German Gold Marks. However, these ambitious retribution plans were bound to fail and by 1921 this was self-evident.

To help the cash strapped nation reparations were, in 1921, slightly reduced to 226 billion Marks.  However, even this lesser amount could not be met by Germany (in the form of further amounts of coal and steel) and so in 1923 it defaulted on its commitment.

France then ordered its troops to occupy the Ruhr valley which was the centre of the German coal and steel industries thus preventing Germany making any form of coal and steel reparations. This significantly contributed to the hyperinflation that followed.

11. Young Plan of 1929

After the Dawes Plan (above) was put into operation in 1924, it very soon became apparent that Germanycould not meet the huge annual payments, especially over an indefinite period of time.

A committee headed by American Owen Young proposed that Germany’s debt be reduced to payments of 112 billion Gold Marks over a period of 59 years which would be fully paid off by 1988.

The value in US dollars of 1929 was $8 billion and in today’s money (2011) it would be equivalent to US$ 103 billion. This then was the Young Plan of 1929–30.

The Young Plan divided the annual payment, setattwo billion Gold Marks (i.e. US $473 million), into two components, one an unconditional part equal to one third of the sum, and a second part of two-thirds the amount which was “postponable.”

Even supposing that Germany had the where with all to pay the reparations the Wall St Crash of 1929 and the world trade Slump that quickly followed would have made such an option impossible.

However, money, unlike water disappearing into the sands of the Sahara desert did not totally dry up. Emulating today’s dichotmy of huge institional funds yet closed factory gates, vast amounts of money were traded and it is here we come across characters like the Swede Ivar Kreuger who can be said to have invented “off-balance sheet” investments. His form of ‘new’ accounting (a euphemism for dishonesty ?), is commonly used today to disguise (hide) assets and liabilities by the likes of Goldman Sachs, Lehman Brothers and J P Morgan and many others. In the process they defraud their clients.

The world’s money situation which Kreuger inhabited was not unlike that of today (2011) where the amounts of money were concentrated into ever fewer hands and the debt of institutions was off-loaded onto the general population, i.e. the poor or unemployed.

John Steinbeck’s Grapes of Wrathepitomises the process in the 1930s – the poor are ground even further into the dirt by debt; their families and communities broken up by banks foreclosuring on properties of ever-dwindling value but – and this parallels today’s debt situation – the feudal-like system insists the loan be repaid regardless of social repercussions.

12. Germany’s Kreuger Loan

Germany took out a US$ 125 million dollar loan (almost $1.9 billion in today’s currency) in 1930 not with a central bank but with an individual – the fabulously wealthy Swedish businessman Ivar Kreuger. [12] Kreuger had built his fortune on the humblest of traded goods – wooden matches. These profits allowed him to buy banks, e.g. the Deutsche Bank, and set up legitimate as well as fraudulent companies – ‘Ponzi’ schemes were not unknown to him. [13]

Kreuger (b 1880 – d 1932) had made sovereign loans to several European countries before his suicide in 1932 (see Appendix 4). His loan to Germany was predicated on Germany accepting the Young Plan (of 1929) and awarding him the monopoly for matches – he already controlled 70 % of German match production before the loan agreement.

When the first payment to Germanywas due in 1930, Kreuger financial position had by then deteriorated and he no free money available. Luckily, a loan to France for around US$ 75 million was repaid ahead of time and this kept Kreuger afloat, temporarily. 

Part of the Kreuger loan was paid off by Germanyin the autumn of 1940. They paid it to the Riksbank partly in dollars and partly in gold. The Swedish Riksbank retained the payment in gold and then reimbursed the Swedish creditors “by other means” (probably paper currency – RW).

13. Per Jacobssen and the IMF 

Even before a Swedish Commission’s report of 1998 examining her trade with Nazi Germany records showed that Sweden undoubtedly had a close relationship with Nazi Germany both before and during WWII (see below). It has yet to be fully appreciated that it was the Swiss and Swedish trade that made German munitions flow.

The received wisdom was that the Swiss ‘laundered’ Nazi gold once the war had begun and hard currency was needed. The same wisdom of the 1960s never thought but Sweden did it too.  Sweden appears to have been happy to accept German ‘credit’ notes when Germany had no money in the early 1930s and for the rest of the world to believe that misleading analysis.

It was the Swiss, everyone thought, who had ‘laundered’ Nazi gold once the war had begun and hard currency was needed. That was the received wisdom thought the 1960s but Sweden did it too.  But in 1997 a Swedish government Commission looked thoroughly into Sweden’s Nazi business connections and found not only breaches of neutrality but trading with companies once owned by Jews and accepting looted gold as payment for goods. Sweden had happily traded with companies it knew had been confiscated by the Nazis from their Jewish owners and had accepted looted gold as payment for goods.

The name Per Jacobssen (b. 1894 – d. 1963), surfaces only fleetingly in scattered sources regarding the trade between Sweden and Nazi Germany.

Left: Per Jacobssen

From relative obscurity he is appointed head of the International Monetary Fund(IMF) in the 1950s and we only read tracts about him after that date.

However, from 1920 to 1928 – the time of the Dawes and Young plans – he worked at the League of Nations secretariat where he was a member of its Economic and Financial Section. His biography ( states that he took “an active part” in Europe’s “financial reconstruction” (i.e. pre-1930), which was his prelude to a “career of international public service.” Bankers such as Per Jacobssen have since set up foundations, sometimes in their own name, so that they may be remembered as benefactors intent on spreading goodness and enlightenment – but are they vehicles to off-set their inner sense of guilt ?

In 1931 Per Jacobsson moved to the newly-established BIS (Bank for International Settlements) as its head of Monetary and Economic Department. As such “. . . he was responsible for the Bank’s Annual Report, which acquired, under his guidance, a world-wide reputation.” Many would challenge that assessment on the basis that the BIS was, until recently, infamous for its secrecy. BIS Reports of that era are, in the opinion of this author,  not well written or lucid. They instead sometimes obscure and  circuitous at times. Had they been of world class reputation the Allies would have had a far better understanding of its businees affairs, would have been able to block the transfers, and have a better idea of what Germany was up to with the bullion it had confiscated.

When most world currencies were leaving the gold standard, circa 1931, Jacobsson was a member of the Irish Banking Commission, which led to the creation of the Central Bank of Ireland. The Bank of England had previously been responsible for responsible for the newly independent nations’s currency (see “Concurrent Irish Perspectives on the Great Depression”, by Frank Barry and Mary  Daly, Nov 2010).

During World War II he travelled freely and regularly across Germany to his homeland of Sweden. As such he cannot help but have noticed the changes wrought by Nazism to neighbourhoods, town and countries, the confiscation of factories formerly owned by Jews, Slavs and the ‘Untermensch.’

He was also involved in a number of special inquiries into the economic and financial problems of Austria, France, Germany, Italy, and the Netherlands but no dates are given so this could be either pre or post 1945.

Per Jacobsson is said to have “brought great intellectual force and technical experience” to his post and after the 1945 defeat of Germany we can ascribe the excuses and protection deployed by the BIS to be actions he co-ordinated.

After the war the argument put forward by the Swiss and Portuguese  to the Tripartite Commission (see below) to excuse the inexcusable was that they regarded the hand over of the Belgian gold to Nazi Germany as a legal transaction, stressing that the transfer by the French government had been ‘voluntary.’ voluntary.’ The Belgian gold was, in fact, hi-jacked by a puppet regime and under duress handed to Berlin.  By definition that does not create a “good title”. The French government had failed to protect one of its depositor’s assets and everyone knew that.

Antonio Louça and Ansgar Schäfer’s analysis in “Portugal and the Nazi Gold: The “Lisbon Connection” in the Sales of Looted Gold by the Third Reich” make some telling points and one wonders how extensive was the corruption and profit-taking they refer to which gold appears to have triggered:

  • “The chance to acquire the Belgian gold reserves sparked an amazing spurt of criminal enterprise in both the Swiss and Portuguese camps; they pondered all possible angles to minimize any conflict with the Allies while keeping open the door to prospective lucre from trafficking with the Belgian gold.”

Given that Jacobsson had “a wide circle of acquaintances” that over many years included bankers, government officials and political leaders “all round the world” we are free to interpret that liberally. For instance, he was the Japanese government’s natural choice as emissary to open peace negotiations, in Geneva, with the Americans in 1944. Nothing came of them and the war went on into 1945

His name appears on the BIS Annual Accounts for 1944 but by 1947 he is no longer listed. There seems to be a pause in his carer until he moved to the IMF (International Monetary Fund) as its Chairman and Managing Director in December 1956, so we cannot assume he worked at the BIS in the intervening years, ie from 1945 to possibly the 1950s.

Another ‘actor’ on the world stage and one who also sprang  from relative obscurity was Austria’s Kurt Waldheim. How did this Austrian-born and non-descript former Wehrmacht officer escape de-Nazification and was able to become the fourth Secretary-General of the UN from 1972 to 1981 ?

Despite hiding his background Waldheim was later elected as the ninth President of Austria, from 1986 to 1992. Yet the same country jailed David Irving, a renowned military historian in Nov 2005 for questioning the extent of ‘the Holocaust.’ Clearly, Europe in general has a long way to go before it comprehends that free speechmust allow for unfettered discussion of both Nazi and Communist atrocities (in the United States ‘freedom of speech’ is protected by the First Amendment to the Constitution – and in theory it is in the EU).

Waldheim against all reason, denied ever knowing that war crimes were taking place in Bosnia at the height of the battles between the Nazis and Tito’s partisans in 1943, yet he served as an intelligence officer in the Wehrmacht. (having workded in my youth with former Yougoslav partisans that  denial would seem ludirous – Ed).  The pro-Nazi State of Croatia even awarded him a medal for his services (see ref. to Croatia above). Jewish writers claim he worked within earshot of camps where torture and executions took place.

A fellow Swede – and coincidentally also a product as had Jacobssen of Upsalla University, was Ivar Rooth (b. 1888 – d. 1972).

Left: Ivar Rooth (BIS)

Rooth was Governor of the Riksbank, Sweden’s Central Bank from 1929 to 1948 – the years which saw the rise of fascism in Germany. Rooth was also a director of the Bank of International Settlements (BIS) from 1931 to 1933 and from 1937 to 1949 (the crucial years in any estimation). 

Rooth, as Governor of Sweden’s Central Bank  and a BIS director together with fellow Swede and BIS director  Jacobssen, must have had intimate knowledge of where the gold was coming from (death camps) and yet said nothing to  their governments during the war (or immediately after – see  Swedish Commission above).

For many uninterrupted years both the Riksbank and BIS dealt with Nazi Germany’s Reichsbank. At the time Sweden was not embarrassed by its Nazis connections as can be seen by Rooth continued tenure at the Riksbank. Indeed, his ‘distinguished record’ enabled him to be a successful candidate as IMF’s second Managing Director, from 1951–1956. Is it a coincidence that the third IMF’s Managing Director was a fellow Swede and former BIS employee, Per Jacobssen ?

14. Sweden’s Nazi business dealing

In a recent report produced by a Swedish government commission examining Sweden’s business dealing with Nazi Germany the former illusion of a stand-off relationship, of non-collaboration and of benign general disinterest has been dispelled (see “The Commission on Swedish Assets in Sweden at the Time of the WW2”). [14]

At critical moments Germany was unable to pay for the goods Sweden had delivered:

  • “ . . . At this point the idea arose of the Reichsbank selling gold to the [Swedish] Riksbank as a means of obtaining currencies with which to effect payment.”

The Riksbank never asked whose gold it was but after signing an agreement with Germany to accept gold, Sweden’s state bank, the Riksbank received a total of 20.3 tonnes of gold bars and 1.5 tonnes of gold coins (between the summer of 1942 and the summer of 1944). Most of this gold never came to Sweden but was stored abroad until the end of the war (meaning that some was delivered !).

The Swedish Commission was forced to concede that the Riksbank’s gold acquisitions had most probably included gold from the death camps. Fifty years after the event it was able to identify 16.4 tonnes that contained “a minor proportion of gold which had been confiscated or plundered from Jews in other connections.”

  • “The Swedish commercial banks and other Swedish business interests during the war were not prevented by law from dealing in gold. True, export permits were needed from 1940 and import permits from the autumn of 1944,”

Yet ten years earlier when Belgium was still trying to trace part of it stolen gold, the Swedes concluded that all records had been lost and that the items ‘possibly’ in question had be re-crated and re-numbered.

The “Swedish Commission re trading during World War II” also found that Gerrman brokers ‘Otto Wolff’, in concert with the Dutch-based ‘Rebholz Bank’ sold looted securities and overseas assets (Jewish) to Swedish banks such as the Enskilda Bank (see “Nazi Looting: the plunder of Dutch Jewry during WWII”).

Perhaps the most important aspect of Sweden’s concessions to Germany during the World War II was the extensive export of iron ore for use in the German weapons industry, reaching ten million tons per year. In no way could Germanyafford such imports at the time and in no way could such amounts be used for non-beligerant uses, so it suggests that a political alignment or an accommodation was reached.

Explaining rationally Sweden’s wartime actions is difficult Tenuously, Herman Goering (head of the Luftwaffe) is known to have had family ties with Sweden through his first wife, the Baroness Carin von Kantzow (she died in Oct 1931 – his second wife, Emmy, died in June 1973).

But it is more likely that the political parties of both nations shared a common ideal. Racial purity and mass sterilisation were shared polices of the Third Reich and Sweden in the 1930s (400,000 and 40,000 respectively). Germany’s programme ended in 1945 but the latters continued until 1970. Other comparable programme included with mass- employment by the state to create basic infrastructures, e.g. roads. 

Pre-war, British intelligence estimated that German industry relied heavily on Swedish iron ore and a decrease or halt in Swedish ore exports would have had a disastrous effect on Germany’s military efforts. As another war became increasingly unavoidable plans were put in hand by Britain to invade both Norway and Sweden as a means to cut off Hitler’s supplies.

The Norwegian harbour of Narvik provided probably the only sizeable ice-free port on the North Atlantic coast for iron ore that had been transported by the short rail link from Kiruna in Sweden (the Baltic Sea on Sweden’s easterm coast being frozen over for many months of  each year). Both sides in the war had an interest in securing this iron supply for themselves, hence all the fighting was around Narvik. Television documentaries invariably insist on treating this theatre of operations as if it was one of Churchill’s mad bluffs or a sabre-rattling exercise.

It is often supposed that the attempted occupation of Norway, in April – June 1940, by British, Polish and Norwegian forces was a ruse to dilute Nazi aggression or convince Hitler, perhaps irrationally, that the Second Front would come from the North rather than Normandy.

But given the economic dimension and the Scandinavian geography (see map above) had it succeeded it would have opened the way not only to Swedish iron reserves but allowed reinforcement to reach Finland which was then at war with Russia (which was an ally of Germany). As events unfolded it could have also proven a bridgehead for supplies into Russia and saved many ships and their crews from an icy death in the Artic Convoys. Thus, the Norway ‘debacle’ was but Part One of a three part strategy of intervention.

15. The BIS

The need for a separate board or bank to oversee Germany’s compensation payments was first suggested in 1929 by the Young Committee. The international nature of these payments, or settlements, led to the Bank for International Settlement (BIS), being formed in 1930. Given the usual snail- like speed of  bureaucracies and civil servants this was remarkably rapid.

Its two main actors (apart from the American chairman), being Montagu Norman, the Governor of the Bank of England, and his German counterpart at the German central bank, Hjalmar Schacht (see photo above).

Until very recently the BIS has preferred anonymity and never sort publicity. Consequently, the world’s general public, from 1935 to 1995, had no idea of its existence or just how pivotal was its role during World War II.  The first notable break in that secrecy was a British TV programme aired by “Channel 4” and by a BBC Timewatch TV programme, circa 1998  (

While the Third Reich publicly rampaged its way across Europe for 6 years the BIS ravished captured national gold reserves (‘fenced’ stolen goods), and where they were not captured, assisted in handing them over to the Third Reich.

The BIS’s website describes itself as ”the central banker’s central bank” which, if true, leads one to ask why is it not active in the money markets today when central banks do not have enough fiat money, reserves or gold to shore up sovereign debts, e.g. Greece, Spain and Italy ?

The League of Nations was effectively hoisted on its own petard when it encouraged the setting up of the BIS which was only supposed to facilitate reparation and gold transfers; it little realised that the gold and money passing though the BIS  would be used to not only finance the world’s biggest war but offer incentives to initiate it. From a public agency designed for the public good to oversee the orderly transfer of gold and securities it

From a public agency designed for the public good to oversee the orderly transfer of gold and securities it immediately operated as a joint stock bank and began making yearly profits. The declared profits totalled millions of dollars yearly. Thus the BIS deprived the giver, Germany, the full value of reparations to the recipients, i.e. France, Britain and America etc.

The BIS charged a commission fee on every transaction and even during the war was recording profits of millions of US dollars. Of the 5 million Swiss gold francs  the BIS earned as Net Profits it distributed over 4 million as dividends to its shareholders, i.e. governments of Japan, Germany, Italy, France and Britain.

Tax-payers who were funding the war saw their sacrifice turned into profits in Switzerland. The BIS should not have allowed itself became a party to the  financing of an ideological war of domination against nations and races, e.g. the Slavs and the Jews.

According to one source the BIS should have officially ceased to operate when WWII began but it was kept ‘open for business’ by (among others) the Swiss shielding the chastity of the BIS behind Swiss ‘Neutrality Laws.’ The impetus for the Swiss is not hard to see, land-locked, a World War would have closed its borders and had a dire effect on its trade, currency and balance of payments.

The Bank for International Settlements (BIS) was an international financial institution enjoying special immunities (Ref. the Hague Agreements, 20th Jan 1930). The founder shareholding members were the central banks of Belgium, France, Germany, Italy, Japan, and Great Britain. Within two years of its founding, nineteen other European central banks had subscribed to the Bank’s capital (the Federal Reserve of the United States did not take up its rights as founder member until 1994). Perhaps the Swiss thought to take advntage of those internationally agreed exceptions (in the same way that the Swiss Olympic Committee is guaranteed a profit from all Olynmpic games and pays no corporate or personal taxes) ?

During the key years of Nazi growth – the period 1933 to 1945 – the board of directors of the BIS  [15] included Walter Funk and Emil Puhl, both prominent Nazi officials. Both were convicted at the Nuremberg trials after World War II. In the 1940s after several years of abstaining from BIS business meetings Japan appointed a director, Yoneji Yamamoto. The BIS Annual Report curiously describes him as representing “Berlin.”

Addendum: Not listed above is Prof. G Bachmann who served as a Director of the BIS from May 1931 until May 1939. Prior to that he was President of the Direktorium of the Swiss National Bank.

Why were the remaining directors who were ‘complicit by association’, not also tried at Nuremberg ?  Only Puhl and Funk received jail terms of 5 years and ‘for life’ respectively. But what did they alone do that was so exceptional ? It would seem their connection with the Nazi Party condemned them not the killing they financed together with the rest of the BIS directors.

Ordinary solders and NCOs posted to concentration camps faced severe jails terms and officers the death penalty after 1945. Ordinary solders are the cannon fodder of war and while it was fashionable to scorn Adolf Eichmann for his ‘just following orders’ defence anyone who has saved in the armed forces knows that how life works.

Ramla prison was where Eichmann was hanged on May 31, 1962 – the same Palestinian town where two Britsih Army sargeants were murdered by Irgun terrorists in 1947 are buried in the British Military Cemetary.

This reminds us how the sinned agasint can themselves quickly become the sinners. It reminds how history and fate can combine into a lethal mixture, leaving a non-descript guard accused of personally killing, or knowing of, or being there when, 28,000 Jews were killed at the Sobibor death camp (91-year-old John Demjanjuk, May 2011). It is contrary to Natural Justice to hold a minor figure responsible for a national shame when higher ranking officers have escaped justice altogether.

So it is not clear why when the BIS was effectively a jointly and severally liable company none of the other directors (equivalent to Camp Commandents) appeared before the Nurenberg Trials for treason and crimes against humanity. Only Walther Funk and Emil Puhl Funk faced the charges of :- 1/. conspiracy to commit crimes against peace ; 2/. planning, initiating and waging wars of aggression; 3/. war crimes and ; 4/. crimes against humanity. Common sense tells us that all BIS directors were equally guilty of those charges.

Among other directors of BIS was Herman Schmitz the director of IG Farben which was heavily involved in Nazi concentration camps and slave labour. Baron von Schroeder was also a BIS director. He was the owner of the J.H.Stein Bank – the bank favoured by the Gestapo to hold their money and ill-gotten ‘deposits.’ One wonders what happened to the directors representing those countries that Germany later invaded. Did their seats and voting powers go to Third Reich appointees ? Was this Per Jacobssen’s role as the banking intellectual and technician in determining that, say, Dutch reserves were by 1940 in the hands of Germany and Holland’s director’s seat was therefore now Germany’s ? Or were the neutral states simply complicit ?

That theory of a reallocation of seats and voting powers in favour of the Axis powers appears not to hold true given the Table above, with the only caveat being that Japan had previously shown no interest in the BIS yet by 1944 it had a director, Yamamoto, on the board. Of the twelve directors, supporters of the Third Reich appear not to have had a majority, though they might have had in 1943, so what explains the BIS’s wartime conduct ? However, the compostion of the ‘voting rights’ found in the BIS 1938 Accounts show the contrary. It would be quite feasible for the majority voting rights to be have been taken over by or at least heavily influenced by the Third Reich’s occupation of the countries entitled to vote (see Appendix 5).

The following Table compares the numbers and probable allegiances in 1943 and 1944 of the BIS directors (blue = probable Nazis). It shows those ‘re-elected’ for 1944 with the blanks to be filled in from the name in the previous table.

The allegiances of neutral directors is not declared but one would pre-suppose this to be critical for the conduct of business.

The integrity of some of the BIS directors has to be questioned. Many in France had to rewrite their past when Petain and Vichy France collapsed. Emmanuel Monick, for instance, listed above, apparently not only ‘helped prepare’ for the Allied ‘Operation Torch’ landings in North Africa but his official position inside Vichy France“. . . .  meant that he was able to smuggle people out of the country, and save the lives of several Jews by helping them to reach the United States” (Vichy France was handing Jews over to the Nazis). 

At a time when the Vichy government realised that Monick did not support them and had recalled him to France, this “politician and banker”  – more accustomed to the Ritz than slum dwelling – then went underground and “participated in many resistance activities.” With such a well known face how did he evade German troops and Vichy gendarmerie to get to the Basle meetings ? Indeed, how did he get from Morocco to Switzerland to make the meetings or make it from a Parisiene ‘resistance fighter’ to Basel Businessman at a time of no petrol, no cars, road checks, ID cards and unreliable trains ?

Did he think that saving several Jews would excuse his part in the BIS financing of the mass murder of Jews, Slavs, Allied soldiers and other ‘undesirables’ ? After the war he too landed on his feet – he became France’s Secretary General of Finance

Maurice Frère, is another case in point. He was originally a Belgian civil servant who only later became Governor of the National Bank of Belgium (NBB) in 1944. However, he was, by 1944, also a BIS director. Two years later (1946) he was chairman and President of the Board of Directors of the BIS in Basel (Switzerland), a post he retained until until 1958. After 1958 he remained working for the BIS.

Apart from the Board of Directors, the BIS had a permanent secretariat which included American born Thomas H. McKittrick as Executive Officer and President of the BIS.  Of the remaining 5 officers one was Per Jacobssen, another was the Secretary General, Italian banker Raffaele Pilotti, and Assistant General Manager Paul Hechler, allegedly Nazi Party memberahip No. 7,686,661.

When the Mussolini regime fell Pilotti and the German Hechler were fearful that 15,795 kgs of gold held in Rome would fall into the hands of the advancing Allies. Pilotti who was in Italy at the time was asked by McKittrick to negotiate with the Bank of Italy. In the same month (Sept 1943), the armistice was signed with the Allies, the Italians and Germans were escorting 119 tonnes of gold from Rome to Milan. The BIS, in Nov 1943, then “instructed” the Bank of Italy to convert all its holdings into gold and move them to safety at their H.Q. in Basel.

How was this overt manipulation and bias possible ? The answer comes in “Central Bank Cooperation at the Bank for International Settlements, 1930-1973” which states that the BIS, ‘proved an extremely useful listening post for the Reichsbank’ and that inside the Basel HQ of the BIS the ‘the Reichsbank could count on a group of excellently trained Reichsbank staff.’

President of the BIS for many years was the American born Thomas McKittrick (b. 1924 – d. 1955), who spent most of his working life in Europe and served on the German Credits Arbitration Committee from 1931 to 1939. He is thought by some (perhaps wildly) to have had Nazi sympathies and links with the OSS, now the CIA. [16] 

By training McKittrick was a corporate lawyer who had been a director of Lee, Higginson & Co. a company that had made substantial loans to the Third Reich. His continued presidency of BIS even after America’s entry into the war (Dec 1941), and was approved by both Germany and Italywith this significant addendum to their Note of Authorisation that: ‘McKittricks’ opinions are safely known to us.’

What is definitely known is that he retired from the BIS and took a job with the Chase Manhatton Bank, itself a bank which reputedly ‘traded with the enemy.’

Montagu Norman is widely regarded as having Nazi sympathies. Reputedly, Peregrin Worsthorne, once Editor of the Daily Telegraph and Norman’s step-son,  said:

  •  “Norman was to the right of Hitler, in terms of his politics”.

Shocking though that may appear to us today it has to be recalled that after 1919 the political world spit into 2 competing ideologies – that of fascism and that of Soviet style communism (a dichotomy repeated during the Cold War). Both used propaganda to mislead on a scale never before seen; both were expansionist but chose differing paths; both subverted the individual to prioritise the state (see Hegel’s writing re: the macro-community of the state versus the micro-community of the family adopted in the 20th century).

  • NB. Georg Wilhelm Hegel (b.1770 – d.1831), the historical inevitability of modern institutions personifying the modern nation state. The Hegelian ideal that sovereignty and idealism ranked above the people who constituted the nation.

In government circles, Marxism, communism and news of the execution of the Tsar and all his family, went beyond the pale of civilised conduct and was widely seen as a contagion without a visible cure. The reaction probably echoed those induced by the appalling excesses of the French Revolution.

Industrial unrest and rebellion was being fermented atMoscow’s direction (agents provocateur) in the 1920s and 1930s not simply in Europe but in the USA too. A class war, as Marx had predicted, looked almost inevitable.  “The complete abolition of the State” was mooted by Lenin at the Third International (1919–1943), also known as the Comintern. From 1939 to 1942 Trade Unionists with strong socialist views sabotaged the Allied war effort in British factories and on the US / Canadian coastal ports. The Comintern was a force to be reckoned with and its activities did not subside until Russia was itself invaded by its ‘friend’ Germany. Therefore, the red scare, the pre-war fear of bolshevism was validated.

For those not enthralled by Moscow, or in their pay, it was perfectly possible in Britain, an d no contradiction was noted, to be either a fascist or a communist and still to put King and country before politics.

During the war the BIS – and by implication Switzerland- nearly fell victim to Nazi overtures. No country had to that date defeated Germany in land encounters and there was a growing feeling in Berlin thatt he BIS was not indispensible. Allied bombing had affected the amounts held in Reich savings accounts and it has to be remembered that Germany was operating what was in effect something equivalent to the Sterling Area, embracing many local currencies and guaranteeing them.

The Reichsbank had sole financial responsibility for Germany’s external funding but it lacked  external, i.e. ‘overseas’ branches which the BIS, Swiss National Bank (SNB) and Bank of England enjoyed. Germany had failed to subjugate Britain in 1940 so what better option, might the German Foreign Ministry have calculated, than to take over a neighbour’s network of overseas branches, i.e. those of the BIS and SNB. Whether this was to be done by territorial invasion, the crossing of the Alps, or by political annexation “Anschluss” (there being many Nazi sympathisers in Switzerland), or merely packing the board of directors is not certain. In any event it must have put pressure on the Swiss National Bank and by implication the Swiss government to be more amenable to German demands.

Per Jacobssen wrote in his diary for Dec 1942, after visiting the Reichsbank in  Berlin that he fully realised that the independent future of the BIS depended on; “Puhl holding the fort.” The battle for the future of the BIS was fought between the German Foreign Ministry versus the Reichsbank backed by the Italian government.

Ribbentrop at the Reich’s Ministry of Foreign Affairs, and reknown for his intellectual shallowness, did not see the BIS as highly useful in a post-war world dominated by a victorious Third Reich. He viewed the BIS as a possible countervailing force to the needs and ambitions to what would be Germany’s monetary and financial world influence. Those directly concerned with the-day-to-day running of the Reichsbank – and to a lesser extent Funk, President of the Reichsbank, believed the BIS to be “indispensible” for war critical imports.

Italy, perhaps in fear of becoming a very junior partner in a Third Reich world used the Bank of Italy to insist in 1939 – 40 that the existence and work of the BIS should continue. In this the Bank of Italy was joined by the Reichsbank. To maintain good relations with Italy the Reich’s Ministry of Foreign Affairs relented and the BIS was saved.

When Per Jacobssen visited the Reichsbank again, in 1943, the official reason given was to discuss the reorganisation of the German banking system. Unofficially, it was to discuss with a select band of Reichsbank officials the defeat of Germany which, from 1942 onwards, looked a near certainty to ‘informed’ people. Jacobssen, Reichsbank officials and a few commercial bankers met to examine the “Anglo-Saxon plans” of Keynes & White for a new post-war currency regime, i.e. Bretton Woods. Funk was not included in this select band since he had prohibited all discussion about “considerations of post-war questions” in 1941 (source: ‘Central Bank Cooperation at the BIS, 1930 – 1973’, p.230).

It is incredible to think that at a time of ‘total war’ between England and Germany, of daylight bombing by the USAF and night time by the RAF,  Montagu Norman could safely take flights across German-occupied Europe to meet his German opposite number in Basel. These regular BIS meetings may even have included a stop-over in Germany for refueling. It might be of historical importance for the Minutes of these meetings were made public.

The secretive nature of the BIS has naturally lead to claims that it actively helped the Germans loot assets from occupied countries during World War II and hide them in Swiss accounts. Even the BIS accounts are secretive or at least opaque in nature. The BIS measure amounts in millions and ‘milliards’ which is not a typing error but means a billion.

Transactions and profits are recorded in “Swiss gold francs” and since the Swiss do not use gold for their currency except for specially issued “20 franc gold pieces”, how are we to value the BIS’s trade ? Should we choose as if in ordinary Swiss francs, or as if in gold and therfore multiply the given total in Francs by twenty ? BIS records show this was a deliberate choice of currency to adopt.

BIS accounts for the year ended March 31st 1948 reveal Net Income (but not total income ) as being 11 million Swiss francs (11,788,994 SF). Fees paid to the Board of Directors were 117,000 Swiss francs (117,608 SF) or approx 17,000 Swiss francs each which, for 1948, was extraordinarily generous. “Executives and staff salaries, allowances” were no less generous given the small number of employees at 1.6 million Swiss francs (1,620,297 SF).

“Net profit” for 1948 was declared to be 9.5 million Swiss francs (9,541,433 SF). See . Current market prices for an average twenty Swiss franc coin (weight 0.1867 troy ozs), in 2011 is £150.

Relatively speaking, “City bonuses” of a million pounds are therefore not something new; not something born of decadence and the 1986 stock market big bang associated with Maggie Thatcher. It was going on quietly in 1944 and 1948.

By 1942 and perhaps conscious of America as a new ally Montagu Norman of the Bank of England made it clear to the BIS that its gold transfers were so large and regular that they must cease. Thomas McKittrick was told that “Great Britain would no longer countenance such gold shipments.”  

At over 200 pages the 1944 BIS report is twice the size of the 1947 edition. Reading it one would be excused for not realising that a world war was raging across Europe and the Pacific. All those employed at the BIS must have seen ‘the writing on the wall’ as we have sen from diary comments above.

The report for 1944 refers to the Allies as the “Anglo-Saxon countries” and notes how:

  • “Sweden and Switzerland have, however, a considerable business with these countries, and this led in 1943, for instance, to an increase in the gold and exchange holdings of the Swiss National Bank by Sw.fcs 630 million and in those of Sweden’s Riksbank by S.Kr. 330 million.”

Curiously little commentary is contained in the BIS Accounts about Sweden and Switzerland’s trade with the Third Reich and payments in gold.  That depth of detail is reserved for the US gold and sliver positions and the UK’s sale of overseas assets to fund its war with Germany.

The total wartime “overseas disinvestment” of the United Kingdom was estmated by the BIS as “probably exceeding £3,700 million in round figures by the end of 1944.”

Space is even found to comment on Red Cross payments that the US and the UK had to make to Germany and Japan for Allied prisoners of war:

  • To meet diplomatic and other payments (including payments to Japan via the Red Cross for prisoners of war) the United Kingdom and the United States have needed substantial amounts in Swiss francs and also, though to a smaller extent — in Swedish crowns. . . .  and they have obtained these amounts up to specified limits through an exchange of dollars, sterling or gold against Swiss or Swedish currency at official rates.

Red Cross payments paid by Germany or Japan to the US and UK  for Axis PoWs finds no space in the accounts – if they existed.

16. Emil Puhl and the BIS

Very little information is available on the internet about Puhl. He is not even listed as one of the “Principal Officials of the Third Reich” at the  Jewish Virtual Library ( Per Jacobssen relied on Puhl to defend the BIS when Puhl was a director and vice-president of Germany’s Reichsbank. At the Nuremberg Trials, he was convicted of war crimes and sentenced to five years’ imprisonment – so one would have thought this merited an entry into “Principal Officials of the Third Reich” but apparently not.

Puhl and Jacobssen agreed in 1940 that it was critical forEurope to have the Swiss franc as, a) an internationally strong currency, b). a “free currency” and, c). that the Swiss should not adopt exchange controls / restrictions. These, one suspects, were the core reasons why Switzerland did not become embroiled in Germany’s colonialisation of  Europe.

However, in terms of Nazi gold policy the importance of Emil Puhl and his role in directing gold operations before and during the war cannot be overstated. His promotion and the positions held indicate he was well connected. At a time when any other similarly placed economy would have quickly ground to a halt, Emil Puhl inverted the intention of the BIS to enable a relatively weak Nazi Germany to prosper and so prolong its European adventures (see US and Non-Neutrality below). Puhl’s name is listed as an Alternate director in the 1943 accounts .

The importance/role of Emil Puhl also hinges on a contradition; if Germany’s gold and foreign exchange reserves had been drained after 1918 and this inhibited economic growth and prevented the acquisition of military equipment or hardware, ie materiel, how without defaulting totally did the Weimar Republic experience an economic bubble of decadence ? 

Curiously, it was the Weimar Republic which ordered the building of the Deutschland class pocket battleships (e.g. Admiral Graf Spee) in the 1920s and by Feb 1929 designs were complete and the first keel laid.

The Nazi economy which followed in the next decade, 1930s, focused almost exclusively on militarisation and re-arming. Perhaps where Schacht had reservations about an over- dependence on militarisation, Puhl had less ?

The Nazi economy of the 1930s, focused almost exclusively on militarisation and re-arming and resorted to whatcan be defined as an autarkic approach to achieve its goals.

During the 1930s Germany’s foreign reserves had been unsustainably low but Germany only completely defaulted on her loans by 1939. The suspicion therefore remains that gold bullion was sent to upwards of 20 different Reichsbank branches either during this period or immediately after World War I. The creation of the Rentenmark and Mefo bills helped ease the economic pain.

Puhl’s business relationships with Joseph Kennedy Snr and many American companies, GM, Chase Manhatton, Coca-Cola etc, bears further separate examination.

In peace time Germany acquired substantial loans from American and British sources. Whether any of these were repaid is not clear.

What cannot be denied and is unambiguous is that Germany acquired more gold bullion to back it currency and pay for raw materials everytime it invaded a new country (see Part 1). Aggression was rewarded with gold bullion from the Treasury of the unfortunate victim state. Aggression funded Germanys’ expansion westwards, eastwards and gave it the ability to tackle Russia.

If the BIS could ever be described as the official, sombre and respectable face of a banking institution bounded by Treaties then its corruption by the war and its ‘gold liquidation’ techniques was its dishonourable face.

The gold liquidation was fed and supplemented by specialised German Army units which would raid High Street shops and loot local banks of all money currency, jewllery and valuables. Anything tradeable such as gemstones, oil paintings, art treasures, tradable securities, e.g. bearer bonds, etc. were all fair game for confiscation and shipped off to Berlin.

Stalin, in common with Hitler, also had designs on the gold reserves of other European countries. Due to it former South American empire the central bank in Madrid held the world’s 4th largest gold reserves in 1936 (estimated at US$ 750 million). For all its rhetoric and diatribes against the capitalist system, Stalin made sure that most of Spain’s US$ 750 million worth of gold bullion was shipped to Moscow during the Spanish Civil War to avoid it falling into fascist hands. During World War II Germany was attempting the same thing.

As part of the German-Russian Non-Aggression Pact of August 1939which the two nominally ‘socialist’ states had signed, the bonus for Stalin was the prospect of Lithuanian and Latvian gold falling into his hands. But delays in trade talks and then Hitler’s invasion into Russia put an end to that ambition.

17. Stockpiling Gold

In 1938 the BIS which had been created in 1930, played a pivotal role in Germany’s acquisition of US$13.5m of the Czechoslovakian state’s gold. When Austria was annexed – also in 1938 – her gold was transferred to the Riechsbank.

The Germans were cleverly mis-using the BIS (Bank for International Settlements) to transfer either physically to Berlin or by crediting the Riechsbank account with other nation’s gold. Britain and the Bank of England found itself forced by treaty to ‘trade with the enemy’; to be complicit in these monetary operations before and during the war. Why it did not void the issue by a cryof ‘ force majeur’ is not known. One would have suposed that no Treaty contract can be valid if it promotes illegal acts, e.g. war and conflict.

Had the BIS refsued to transfer gold and refused to invest its godl and reserves in Germany during the 1930s and 1940s the Second World War would have ended as suddenly as it had begun and millions of lives would have been spared.

The succession of nations which Germany conquered or annexed, beginning with Austria brought a succession of gold fillips to the Reichsbank. In addition to losing their country’s gold bullion reserves each country had to ‘pay rent’ or tribute for the German troops that occupied their country. One source on the internet gives a very detailed breakdown by types of money and the scale of the ‘tribute’ (taxation) demanded from Holland by Germany. Another source, a Chicago newspaper, carried the headline soon after France signed the peace terms with Hitler, that France would have to pay  Germany 400,000,000 French francs a day. With all of its gold shipped overseas this would make the Franc a paper currency in the truest sense of the word. Belgium and Holland (and others) faced the same inflationary dilemma.

The Table below shows the main 5 countries which includes Holland from 1940 to 1943. The total for the first 9 months of 1944, surprisingly, exceeds that for all of 1943.

  •  “In 1943, France paid on an average RM 925 million a month in occupation costs, Holland RM 180 million, Belgium RM 130 million and Denmark RM 45 million, with the greatest relative increase in Denmark, where the amount paid more than doubled from 1942 to 1943.”
  • “The aggregate occupation costs paid in Norway up to the end of 1944 seem to have been about N.Kr. 10-11 milliard, the equivalent of some RM 6,000 million. In Greece about RM 3,300 million appears to have been paid from April 1941 to December 1942 on account of occupation costs . . . .” – Source: BIS, 1944 Accounts.

Not only did US$ 163 m (some put it at US$ 193 m), of the Netherlands gold reserves fall into German hands but the Netherlands had to pay $50m Reichsmarks per month for Germany’s offensive against Bolshevism – of which US$10 million Reichsmarks per month had to be in gold (see also Appendices 2 and 3). 

“War contributions”, the 1944 BIS report tells us, were demanded of Bohemia, Moravia, Poland, the Ukraine Central Bank (March 1942). From April 1943, Finland, Hungary, Slovakia, also had to pay for the local cost of upkeep for the German troops stationed there.

The apparent rise in German revenue from 4 billion marks in the second half  of 1940 to 28,000 billion in the first nine months of 1944 may look like a real income increase but this has to be off-set by internal inflation. The 1949 BIS Accounts estimate that at the beginning of 1933, when National Socialism came to power [i.e. the Nazis] the total paper money in circulation amounted to RM 3.9 billion (3.9 bn Reichsmarks) and that by 1938 this had risen to RM 8.6 billion. However, by the time of the Allied occupation and with no reliable data the BIS estimated that 65 billion Reichsmarks were in circulation by the Spring of 1948.

Europe at the end of 1938 (and excluding the U.S.S.R.) had gold reserves amounting to about $10,400 million. From the BIS Annual report of 1948 we learn that ten years later, ie by the end of 1948, the corresponding reserves were about half as high, ie not exceeding $5,300 million. Britain had seen its holdings halved from $3,450 million (Sept 1938) to $1,610 million (Dec 1948). Switzerland had almost doubled its holdings from $700 million (1938) to $1,390 million (1948). These two countries (Britain and Switzerland), plus Belgium, then held $3,620 million or 70% of Europe’s gold.

This, however, is a false picture since Switzerland has never sought to be anyone’s ally but has put its own interest first.

European Gold Reserves 1938 – 1943 (assuming conversion rate in 1945 of approx. $4 to £1 and gold at £35 aTroy ounce).
Date Country Invaded Gold acquired Est’d gold reserves Weight / comment

Monthly ‘tribute’ 

1938 Austria * $ 13.5m $ 13.5m    
1938 Sudetenland        
1939 Czeckaslovakia * $25 m (£6 m)    
1939 Poland Nil $ 64 m Via Vichy Gov’t  
1939 Danzig * $ 4 m $ 4 m    
1940 Belgium $ 223 m ? 240 tonnes Belgium moved to France  Vichy France
1940 Holland $ 163 m ($ 193 m) $ 163 m   Pay $50m Reichsmarks p/month. $10 m in gold.
1940 France   $ 245 m + $ 260 m in Fed Res. 3,000 cases of gold to Canada  
1940 Luxembourg $ 4.8 m $ 4.8 m    
1940 Norway $ 88 million $ 88 million    
1940 Denmark $ 51 m $ 51 m    
1941 Yugoslavia        
1941 Croatia     Pro fascist  
1944 Finland     Anti Soviet nickel ore  
1941 Greece        
1941 Romania     Pro fascist oil fields  
1941 Latvia        
1941 Russia        
1941 Belorussia        
1941 Ukraine        
1941 Lithuania        
1941 Estonia        
1944 Hungary     Pro fascist  
1941 Bulgaria     Pro fascist  
1939 Albania     By Italy  
1943 Italy £ 88 m £ 88 m Moved to Berlin  
  * These 3 states  netted Nazis US $71m      
Note: Gold is measured in Troy ounces. There are 32,150 Troy ounces in 1 tonne of gold. A metric ton (tonne), is 1,000 kilograms (= 2,205 lbs).  Larger amounts are measured in the US in metric tons;  Europe uses Kilograms.

The BIS report (p.153) puts the gold reserves of the Bank of France in 1948 at $548 million. The work of the Allied Gold Commiossion played a major role in restoring gold to their rightful countries. Other European countries who had elements of their gold holding restored nonetheless had liabilities in ‘clearing accounts’ that had to be offset. European countries had to climb out of a post war recession and depression and would not have been able to do so without the European Reconstruction Programme (ERP) known popularly as the Marshall Plan.

An American report of 1997 (“U.S. and Allied Efforts To Recover and Restore Gold and Other Assets Stolen or Hidden by Germany During World War II – Preliminary Study  is useful in quantifying what gold shipments occurred and the involvement of the BIS and Switzerland (pages v – vii):

  • Between January 1939 and June 30, 1945, Germany transferred gold worth around $400 million ($3.9 billion in today’s 1997 values) to the Swiss National Bank in Bern.
  • Of this amount, the Swiss National Bank bought about three quarters, worth $276 million (worth $2.7 billion at 1997 prices), and the remainder went directly to the accounts of other countries in payment for goods and raw materials.
  • An additional $120 million of German-looted gold was also estimated to be in accounts held in other countriesatthattime.
  • The US State and US Treasury Departments estimated Switzerland handled between US$ 185 million to US$ 289 million in looted gold that was on deposit at the Swiss National Bank at the end of the War.
  • The Swiss argued with the Allies for its repayment to be reduced to only US$ 58 million in gold to which the Allies reluctantly agreed.
  • The deal to repay US$ 58 million in monetary gold (less than half the US$ 185 million to US$ 289 million calculated was owed by the Allies) was promptly paid by the Swiss to the Tripartite Gold Commission (TGC) for redistribution to the claimant countries.
  • However, another part of the Swiss Accord with the Allies, that of the liquidation of hundreds of millions of dollars in German assets, was never fully implemented.
  • Switzerland’s pro-Nazi face was revealed when the Bern government claimed that German companies seized during the War were actually Swiss-owned and demanded that the US unfreeze these ‘German’ assets.
  • At the same time the Bern government would not unfreeze assets of concentration camp victims nor  unfreeze assets (factories etc) of Jews forced to flee abroad.

Within the covers of the above Report Switzerland’s public reputation is comprehensively shattered; in every chapter its probity and true neutrality is called into question. Its public image is put to the sword. with examples of gross ineptness, criminal behaviour, of disregarding accepted international laws, a lack of sensitively, greed, bad taste, poor judgement, profiteering from the final solution and being in denial about the true nature of Germany under the Nazis. As the report puts it, Switzerland was ‘open for business as usual’ regardless of the singularly immoral nature of this particular war.

Astonishing, according to the Eizenstat Report, it even transpires that the idea of putting a “J” in the passport of all Jewish Germans was a Swiss idea they suggested to the Third Reich:

  • “Switzerland persuaded the Nazis to establish the “J” stamp which prevented tens of thousands of Jews from entering Switzerland or other potential sanctuaries.”

The Swiss Government acknowledged as early as 1952 (and has reiterated in recent months [1997] that there were ‘shortcomings in Switzerland’s refugee policies.’

Switzerland actually closed its borders during the War to Jews fleeing deportation fromFrance and Belgium (what price Red Cross impartiality now ?). Recently it has been revealed that Sweden also operated an ‘on/off’ policy with regards letting in  Jewish refugees during the war – relaxing the regulations only when the fate of the war was clear (ref. Raoul Wallenberg’s actions 1944).

About 50,000 Jewish refugees were admitted by the Swiss from 1933 until the end of the War (presumably most before 1938), but Switzerland the price was that the existing Jewish community had to pay for the sustaining the Jews who were admitted after the outbreak of War – The Swiss housed most of these Jewish escapees in ‘labour camps.’

18. Raw Materials

Sufficient money and credit is required to embark on a sustained war. It was – and still is – a common practice for central banks to split their holding of gold and hard currency and make deposits overseas. In recent times Venezuela has asked for the return of its gold from London and New York and modern Germany which has the largest horde of gold among EU countries still has most of it ‘on deposit’ atthe Federal Reserve (unless it has been hypothesised by the US – as some suspect).

The reason for cross-holdings is thatcountries seek to create a ‘stabilisation fund’ modelled on the one pioneered byBritainin 1932 in the form of the Exchange Equalisation Account.

Rearmament programmes which were under way in some European countries were short lived as events overtook government policies.

In pre-war Europe, France’s central bank was a popular option for the central banks of several other European nations.  The Bank of England was also popular, the island was free from any invasion threat, but shipment there meant the additional risk, albeit small, of a sinkage in the Channel. France was seen as safe and secure; France had the impregnable Maginot Line and a huge standing army. What country be safer ?

As it turned out it was a poor choice for many nation’s Treasuries for while the French government ensured  that their 3,000 cases of French gold was safely whisked away to Canada on aboard the battleship Bretagne, escorted by the cruiser Algériein March 1940,  France’s depositing clients were not so lucky. With the Maginot Line overrun by German forces in a twinkling, millions of dollars of other peoples’ money and gold were successfully confiscated.

The Dutch, alarmed by the advance of the Wehrmacht and the earlier Nazi pillaging of Austria and Czechoslovakia, made strenuous effort to get their gold reserives to safety in the UK and the US. A small Pilot’s launch leaving Rotterdam in 1940 with what is said to be only a small part of Dutch gold reserves sank in the ‘New Waterway’ after hitting a German sea mine. A report in 2011 by a Dutch regional public broadcaster, RTV Rijnmond, states that the Pilot launch was loaded with 19,937 gold bars. Most bars were recovered by the Germans at the time. Owing to the size of the boat and the intrinsic weight of gold, if this figure of 19, 937 is correct then the bars must have been quite small, e.g. 500 gram or 1 kilo in size.

By 1940 and into 1941 the only economies with a thriving rearmament programme were Germany and Britain. Russia and America didn’t see the urgent need as they didn’t see themselves as players in any war.

Without Swedish ore, Finnish nickel, Rumanian oil, Spanish manganese, Turkish chromium, and Tungsten from Portugal, the war machine of the Third Reich would have ground to a halt well before 1945. [17] Britain, meanwhile, continued to rely on its empire and commonwealth connections for the same materials. The fundamental difference was that for 6 years Britain was spending its own money and racking up debts in its sole name whereas Germany was using other country’s money and lines of credits.

During the war, neutral Portugalwas one of the centres of tungsten production and essential for metal used in weaponry. Portugalsold the commodity to both Allied and Axis powers and unsurprisingly the price of tungsten on the Portuguese open market increased by some 1,700%. The German name used then for tungsten was Wolfram.   

Portugal became suspicious of German paper currency and Germany had to supply harder currencies, e.g. dollars. But the Portuguese were not convinced and suspected counterfeiting. In a third phase much of the tungsten was purchased with gold bullion the Nazis had looted from the countries they had invaded – the 198 tons of Belgian gold which the Vichy government handed over to Berlin may have been used wholly or part to fund this trade. Eventually, in order to guarantee uninterrupted supplies of tungsten, the fourth and final phase of this sage, saw Germany purchase the mines in Portugal. However, the Portuguese still insisted they pay in gold.

The end of the war in Europe brought an end to these trade and a day of reckoning began. Feeling no doubt under some pressure from the post-war Tripartite Gold Commission’, Switzerland declared as early as May 1946 (12 months after the German surrender), that  it was prepared to pay the sum of 250 million Swiss francs, equivalent to approximately 60 tons of gold to the Belgian National Bank.

Two months later, Sweden paid the Belgian National Bank $8 million in compensation –  roughly equal in value to 7 tons of gold. And in May 1948, Spain finally handed the Allies all the eight gold ingots it had obtained directly from the Reichsbank, amounting to 101 kilograms. Portugal proved the most obdurate in handing back even the smallest amount of its blood stained bounty.

Eventually, in order to guarantee uninterrupted supplies of tungsten Germany purchased the mines in Portugal, however, the Portuguese stipulated they pay in gold.

World wide, Tungsten is found in Russia, Canada, Bolivia, Austria, Portugaland Thailand (then an Axis power). Only Austria and Portugal were within the Reichsmark domain. Germany was discreetly blockaded by sea power, and if it wanted Tungsten from Brazil, Peru or Bolivia etc it would have to use an  intermediary, i.e. Portugal, Sweden and / or the BIS (see Economic Warfare below).

Portugal was only one of two centres extensively used by the Nazis to convert launder money into  war production raw materials. It is estimated that nearly 100 tons of Nazi gold were laundered through Swiss banks, with only 4 tons being returned at the end of the war. Portugal proved more resistant to handing back Nazi gold than even the Swiss.

Page 65 of “U.S. and Allied Efforts To Recover and Restore Gold and Other Assets Stolen or Hidden by Germany During World War II – Preliminary Study [1997]” ( reveals:

  •  “The amount of $276 million in gold was sold [by the Nazis] to the Swiss National Bank during the war, and “the larger part was looted gold.”
  • An additional $138 million was “washed through” the Swiss National Bank and eventually sold to Portugal and Spain.
  • This made a total of $414 million in looted gold sold or transferred to the Swiss National Bank by the Nazis.
  • A separate analysis prepared by James Mann of the Treasury Dept estimated the total monetary gold looted by Germany at $579 million out of a total of $785 million available to Germany after June 30, 1940.
  • Mann determined, from available ledgers of the Reichsbank, that Germany exported “at least” $398 million worth of gold during the war, and of this amount “an absolute minimum” of $185 million must have been looted.
  • Mann concluded that“on the fairest assumptions, the amount of loot [gold] taken by the Swiss from Germany can be estimated at US$ 289 million dollars.”

In papers declassified in Sept 1996 by the British Foreign Office it was known to the intelligence services that the Banco de Portugal maintained three parallel accounts with the Swiss National Bank (SNB).

  •  ‘Account A’ was used to deposit the gold transferred in payment for the purchase of Escudos by the SNB from the Banco de Portugal.
  • ‘Account B’ was reserved for the gold thatthe Banco de Portugal financed with the Swiss francs supplied to it by the Portuguese commercial banks.
  • But “Account C” was the account used byBerlinto transfer gold to be paid directly by the SNB into the Banco de Portugal account in Zurich.

During the course of 1943, at least 20.4 tons of the former Belgian gold reserves found their way to coffers in Portugal courtesy of Berlin.

  • “On January 1, 1939, total Portuguese gold reserves amounted to a mere 63.4 tons; over the course of the war, these swelled by nearly 600 percent, reaching an imposing 356.5 tons as of October 31, 1945.
  • During this period Portugal received at least 123.8 tons net in gold directly or indirectly from the Reichsbank, valued at the time at $139.9 million.” – “Portugal and the Nazi Gold: The “Lisbon Connection” in the Sales of Looted Gold by the Third Reich” by Antonio Louça and Ansgar Schäfer.

In the same American report (at page 129), we discover that “officials at the Bank of Portugal claimed that “no gold whatsoever was ever shipped from Germany to Portugal between April 1938 and May 1945”  ( )

A July 1946 State Department report, based upon Allied reviews of wartime intelligence and investigations of German and Swiss Government and banking institutions, determined that:

  • Portugal had acquired a total of 123,827 kilograms of gold (or roughly 121.87 tons, valued at the time at $143.8 million) from the Swiss National Bank.

Less well known, however, is the huge scope this trade assumed as the war progressed. In 1940, only 1.79 percent of Portuguese exports went to Germanybut by 1942, that share had soared to 24.4%.

One major factor in holding down exports initially appears to have been Portuguese misgivings about supplying goods on credit (unlike Sweden). Indeed, exports only began to climb after the Germans began utilising the Bank for International Settlements – (BIZ, Bank für Internationalen Zahlungsausgleich), and started to draw more frequently on gold and currency reserves seized in the occupied territories in order to pay for raw materials imported from the neutrals such as Portugal.

For easy arithmetic, if one hundred tons of gold (equivalent to 3,215  Troy ounces x 100 tonnes) were accepted by the Swiss and Portuguese, then at 1940 prices this would produce a yield of US$ 112.5 million (321,500 ozs x $ 35  = $112,525,000).

The only other significant neutral country which had ‘significant’ trade dealings with Germany was, of course, Sweden. Sweden’s socialist government of the 1920s had assisted Germany throughout its long struggle to achieve economic viability and for decades one has had to ask “Why ?”, with no prospect of an answer.

We now know the reason why Sweden appeared to be happier than other countries to accept trade on terms of ‘risky’ state credit notes (Mefos) rather than hard currency – it was quietly being paid in looted gold.

The Swedish Commison found that between the summer of 1942 and the summer of 1944, Swedens’s Riksbank received a total of 20.3 tonnes of gold bars plus 1.5 tonnes of gold coins (21.8 tonnes). Of this about 16.4 tonnes was thought  to have contained “a minor proportion of gold which had been confiscated or plundered from Jews in other connections.”

Sweden’s “16.4 tonnes of gold” could be valued at US$ 1.84 million at 1940 prices (some sources put it at US$ 44.16 million at 1940 prices – compared with Switzerland’s US$ 449 million).

(NB.  Overall weight, 21.8 metric tonnes (20.3 + 1.5 tonnes).

1 mt = 3,215 Troy ozs x 21.8mt = 70,087 oz x $35 per oz = $ 2,453,045 

            ‘Tainted’ gold  x 16.4 tonne = 52,726oz  x  $35 per oz = $ 1,845,410

The Governor of the Riksbank initially suspected that there could be coins involved which had be taken from dead Jews (why would he think that?), but that suspicion was dropped after the question had been raised verbally and verbal reassures given that this was not the case.

The market price for gold in late 2011 was US$ 1,600 per Troy ounce. Gold as a “store of value” rarely declines and any gold still held in the reserves of any of these collaborating countries would be worth something ike a 1,000 times more today. Gold more than anything else represents the real purchasing power and price of goods. So, for instance, Sweden’s 527,260 ozs would today be worth in purchasing power terms US$ 843.6 m (US$ 843,616,000) and that must be how the sum of US$ 44.16 million in 1940 should be interpreted.

  • (NB. all the above calculations are ‘rough’ and should not be relied upon as definitive. There is a wide margin of error due to a variety of sources citing differing in amounts involved and differing conversion values, e.g. stated values in dollars vs values in Sterling and the time of publication). Therefore, a conservative or average approach has been adopted.

19. Spain and Franco

Why Spain stayed out of the Second World War (Sept 1939) has always been hotly debated especially after the direct military assistance both Germany and Italy gave to Franco’s rebel forces. Given Russia’s previous involvement with the legitimate socialist Spanish government (ousted by Franco), he may have wanted to reinforce his own internal position by eradicating future political threats to his new regime. Had he joined with Hitler he may have provoked a counter-insurrection to his government by disgruntled left-wing or socialist inclined revolutionaries (or the triggering of the very old Alliance between Portugal and England ?).

Franco and Hitler met face-to-face only once, in Oct 1940, at the secluded railway station of Hendaye in SW France. Though the Civil War was over by 1939, repression and persecution of Spanish trade unionists and opposition politicians lasted for decades in Spain (see ‘Valley of the Fallen’ death toll largely built by political prisoners ). Under General Franco, 132 concentration camps were opened and 541 forced labour battalions created after the Spanish Civil War. Some Spanish PoWs ended up in Guernsey and Alderney as slave workers building Hitler’s Atlantic Wall.

Some historians argue that Franco had ‘unfinished business’ in quelling radicals and in order to stay out of the war he therefore made demands he knew Hitler could not agree to these included demands for food, military equipment, sovereignty of Gibraltar and/or the annexation of French North Africa (as an adjunct to Spanish Morocco).

Franco must have realised that Spain was in no way equipped to handle a 20thcentury war or resist an Allied blockade – and probably Hitler did not want to fight on two European fronts at the same time (however, he had done this before and he must have weighed up the prospects of attacking Gibraltar from the south via friendly Vichy controlled Morocco).

Spain’s historical reliance on gold from the New World had left it unindustrialised – it had only a meagre range of basic industries and a poor infrastructure. Franco had inherited a bankrupt country where the country’s gold had been shipped to Moscow, a currency which was almost worthless and an economy dislocated by war.  Had Franco sided with Germany, “Operation Torch“, the Allied landings in North Africa, would have given Franco many sleepless nights as he pondered where the Allies would strike next.

Did Spain, therefore, deliberately choose not to become entangled in a World War or was she prevented by the thought of a blockade, the kind of which she had seen operated against the peninsular from 1936 – 39 ? Spain’s adoption of a pro-Axis but non-belligerent posture allowed her to trade with companies scattered all across the Third Reich.

Despite adopting a pro-Axis attitude Spain, unlike Portugal, was more compliant in returning Third Reich gold to the Allies after 1945. Nevertheless its non-belligerent posture was not beyond censure. The Spanish link with Nazi Germany existed before the war and this was reaffirmed during the war Spanish naval facilities were made available to German ships – in much the same way that Stalin agreed to a secret U-boat base in northern Russia to harry the Allied Atlantic convoys (“Base North” was a secret German U-boatbase in ‘Zapadnaya Litsa’ bay, west of Murmansk provided by the Soviet Union in 1939).

Spain was to prove useful to the Third Reich in that it could legitimately purchase on the world market materials and commodities that were prohibited to Germany. Thus, Sweden, Spain, Switzerland, and Portugal were Hitler’s purchasing clerks and together Berlin and Basel were its wages clerks.

These 4 counties facilitated Nazi purchasing and payments to 3rd parties, i.e. money laundering, avoiding the belligerent embargoes then in force by the Allies. Payment and commodities could be traded between the outside world and then with each other and then, with a cleaner title, to the Third Reich. But in the case of Spain, was this sufficient ‘payback’ for Germany’s support of Franco during the Spanish Civil War ?

Some historians argue that Franco simply had nothing to offer the Germans; yet others point to the on-going dispute over German mining rights in Spain.  However, this overlooks the menace German troops could have posed to Gibraltar by simply threatening to overrun it from the landward side. This would have broken the strangle-hold the Allies enjoyed in the Mediterranean. Then again, Franco might have seen himself as being usurped once he had served his purpose.

The Swiss ‘Bergier Report’  points out that not only did an estimated $4 billion of the gold go to Switzerland but that about $2.7 to $2.8 billion, was stolen and in addition:

The role of Portugal has featured strongly so far in this narrative. Its conduct and demeanor was different from, say, Spain or Sweden, and for that reason Portugal will be dealt with separately later in this article.

Meanwhile, the Bergier Report’  has highlighted the emergence of a new player, that of Turkey. The role of neutral Turkey was to be part of a scheme to provide the Reichsbank with foreign currency. Axis diplomats and agents were able to finance operations in the  Turkish markets. Nearly $8 million in victim gold from the Melmer account went to the Dresdner Bank and the Deutsche Bank (both privately owned German banks). This gold was then sold on the Turkish free market to provide foreign currency and was made possible by Axis diplomats and agents operating in Turkey. Which then opens up yet another chapter, that of the role of Turkey.

20. The Aftermath

With the imminent fall of Berlin in 1945, Walter Funk, president of the Reichsbank and Reich Minister of Economics, sent ‘most’ of Germany’s remaining gold reserves, worth some $238 million, and a large quantity of the monetary reserves, to a potassium mine at Merkers in the south of the country. This mine was already being used by the SS for hording their miscellaneous looted valuables (for more details see “Nazi Gold These amounts have been entered into tabular form and are shown below (‘Inventory of Captured German Gold’).

One can imagine Hitler’s revulsion of the Soviet Union manifesting itself in denying communist forces at the death of the Third Reich any gold bullion to show as a profit in their hour of victory against him. Simply hiding some or all of Germany’s bullion in a mine would not be the immediate first choice by such a ‘driven’ group of people or its obsessed leader one suspects.

Speculation and conspiracy theories have consequentially always surrounded the triumvirate of South America, Martin Bormann and Nazi gold. Bormann was closely connectd to the Krupp inspired “German Industry’s Adolf Hitler Fund’which over a 1e2 year period collected and administered a fund of 305 million Reichsmarks.

If, as the logic runs, France could spirit away its gold to Martinique, North Africa and the US in 1940 what was there to stop Germany doing the same and depositing it in some friendly country ?

The world’s biggest single transportation of gold was the shipment of £58 million (US$ 232 million) worth of British gold reserves, bonds and stocks to Canada on the British cruiser, HMS Emerald. [18] This was followed by other gold shipments between Oct 1939 and August 1940 by her sister ship valued at £10 million. 

Inventory of Captured German Gold / wealth (inc. confiscated from occupied countries).
Bars of gold bullion  8,198
Boxes of crated gold bullion  55
‘Gold items’  “Hundreds”
Bags of gold Reichsmarks  1,300 +

British gold pounds

 See Above

French gold francs

 See Above
Bags of American $20 gold pieces  711
Bags of valuable coins  9
Boxes of silver plate  63
Bags of silver plate  55
Bags of gold and silver coins + foreign currency  “Hundreds”
Reichsmarks in notes  2.76 billion
Loose silver bars  20
Bags containing silver bar  49
Bag of platinum bars  6 bars
Bags of looted ‘valuables’ from other countries.  110
Estimated value (gold, silver, and currency ) as at Sept 1943  $ 520 million
Opening and Closing balances  
Germany started war with  $120 m
Seized  by   Germany  $ 600 m

Whether the amount of gold bullion recovered by the Allies is the complete amount or whether there are still large amounts ‘salted away’ has been the topic of many books over the years.

Purely from an accountancy point of view the US$ 238 million mentioned above has to be contrasted with the US$ 520 million recovered by US forces in 1945. As if to confirm the view of meticulous record keeping, paperwork found in Berlin showed the closing gold balances of the Precious Metals Department of the Reichsbank to be US$ 255.96 million.

From the Western power, but not the Soviet, we have a record of what it is said they found. The Americans were very much in charge of this operation as the mine came within their jurisdiction and army command.

 The US inventory states that the entire hoard as tallied by the Allies included; 8,198 bars of gold bullion; 55 boxes of crated gold bullion; hundreds of bags of gold items; over 1,300 bags of gold Reichsmarks, British gold pounds, and French gold francs; 711 bags of American $20 gold pieces; hundreds of bags of gold and silver coins and of foreign currency; nine bags of valuable coins; 2.76 billion Reichsmarks in notes; 20 loose silver bars; 40 bags containing silver bars; 63 boxes and 55 bags of silver plate; 1 bag containing six platinum bars; and 110 bags of valuables from various countries. Large quantities of counterfeit currency was printed by the Nazis during the war but none of this is recorded in this listing.

See Table ‘Inventory of Captured German Gold’.

It is beyond the ordinary imagination of most people to visualise 8,000 large bags filled with bullion grade gold. The photo below of one shaftatMerkers –  and there were others running off the main one containing art treasures, currency and silver etc – gives some idea of the enormity of the theft and the painstaking task of making an inventory.

During May and June 1945, US soldiers found further deposits of Reichsbank gold valued at about $11 million. Altogether the Americans reckoned that they recovered 98.6% of the $255.96 million worth of gold shown on the closing balances of the Precious Metals Department of the Berlin Reichsbank. Two percent, or thereabouts ,of gold was still missing and at 1945 prices that gold was worth more than $3 million. This is probably the 2% that was distributed at the 1997 London Conference.

Property confiscated by the S.S. from concentration camp victims consisted of all kinds of gold and silver items, ranging from dental work to cigarette cases, diamonds, gold and silver coins, foreign currencies, and gold and silver bars. To this was added the Reichsbank’s gold.

Did the unravelling of the Third Reich result in no one being in charge of spiriting the bullion to a safe haven ? Given the meticulous nature of German paperwork and the propensity for planning, a detailed plan must, in all likelihoods, have existed.  Or did the military collapse of Germany arrive sooner than expected and they simply ran out of time ? 

Eisenhower’s chief of staff later estimated that the value of the gold, silver, and currency was over $520 million at Sept 1943 prices.

Nazi Germany had long planned to ruin the British economy by printing and flooding the market with the counterfeit pre-war “white” £5, £10 and £20 notes. They had 100 agents ready to put the money into circulation in theUK. Called “Operation Bernhard” it was begun before the war and Jews in the Sachsenhausen concentration camp were forced to forge whatby the war’s end total £134 million worth of notes.

Right: Some of the 8,198 bags of gold found at Merkers

The Bank of England countered by withdrawing all notes with a value of more than five pounds (ironically during and after the war possession of this money became a major factor in identifying Nazi agents and led to successful arrests). The majority of the notes, it is thought, were dumped in Lake Toplitz in Austria at the end of hostilities. From that fate we have to assume that fake Sterling currency was not part of in the US inventory.

After the war an Allied commission known as the Tripartite Gold Commission was set up  in Brussels in Sept 1946 (see below). It estimated that Germany had begun the war with $120 million and seized or commandeered $600 million from conquered nations. We have to recall at this point that Schacht had begun some years beforehand a hidden gold programme which by 1939 had misrepresented Germany’s gold reserves (it was 7 times the expected amount of 500 million marks (documents revealed this in 1945).

Lost forever and therefore missing from these American accounts of 1945 are the BIS’s prewar gold “investments” in Germanywhich exceeded of 7.8 tonnes (is this linked to the Swiss claim that some German factories/assets were actually Swiss owed and could not be “liquidated” for restitution).

 Lost too are the amounts used by the Third Reich for the mundane. For example, between 1939 and 1945, 6 tonnes of gold was used to pay “Payments for postal and railway services.” Also from BIS Annual accounts we learn that another 5 tonnes was withdrawn by the Reichsbank between Nov 1939 and May 1940 (the invasion of Poland and the Low Countries. Half a tonne of gold was swapped with the BIS gold held in Stockholm therefore making its future use elsewhere look “kosher”, to coin a phrase.

Between Nov 1941 and Jan 1942 the Reichsbank sold 1.5 tonnes of gold to the BIS in exchange for Swiss francs. Total withdrawals from the BIS during the war by the Reichsbank amounted to 21.4 tonnes or 2, 1472 kilos (source: Clements 1998). However, this is far from the full story.

  • NB High value commodities like mercury, industrial diamonds, chrome, uranium oxide, radar equipment, radar detection, radar specialists, infra-red equipment/  specialists or tungsten are not on this list yet in the dying days of the Third Reich commodities like these were sent to Japan by submarine, the U-234. Also included in U-234’s manifest were medical supplies, instruments, lead, mercury, caffeine, steels, optical glass and brass (see also U-219 and U-195, jet engines).

Questions yet to be fully answered relate to the complication caused by the ‘hidden gold programme’ of 1939 mentioned earlier, and if it was 7 times expected amount of 500 million marks has that been taken into account ?

Questions posed by those on the conspiracy fringe – and which have yet to receive a satisfactory answer – relate to the alleged microfilming of the Reichsbank’s Precious Metals Department by the U.S. Army in 1948. It is alleged that:

  • These records have subsequently disappeared in Germany, and there has been a search for them [for] the past two years in the belief they would shed light on how much non-monetary gold (e.g., dental gold) was melted down and mixed with the monetary gold (i.e., central bank gold) and thus indicate how much restitution still should be made to victims of Nazi persecution and their heirs.

In the chaos of defeat and the break down of law and order a wild west atmosphere can quickly develop. There was a scramble not just for gold but for patents relating to chemicals and, for example, technology relating to jet and roclet engines. It has been suggested by some sources that officers with enough ‘pull’ may have profited, e.g. taken the occasional small 100 gram bar or necklace. But these are only ‘speculations’ and it is from the same type of sources that the question arise over the assassination of General George Patton in a Dec 1945 ‘road accident’. Military historian Robert Wilcox in his  2008 book “Target Patton“claims he was silenced for his criticism of Allied war leaders  collusion with the Russians that cost American lives (see also  Or perhaps it was knowing that some gold was being siphoned off ?).

21. Tripartite Gold Commission

Long before VE Day (Victory in Europe) it was obvious that a great deal of money had been spent by Germany to prosecute its war and its global expansion – money it did not have. Germany had sold $300 million in gold to Swiss banks and ‘laundered’ in the region of  US$ 140 million in currency through neutral countries like Portugal and Spain.

With Germany defeated the BIS had no option but to open its books and account for gold transfers. Approx $550 million was owed to claimant countries. Of this amount only £78 million (US$ 312m ?) was paid over to the Tripartite Gold Commission.

The Allies set up the Tripartite Gold Commission (TGC) in Sept 1946, based in Brussels, to trace all the gold confiscated by the Nazis and, where possible, return it to its rightful country or private owners.

Internally the German economy had seen no wage increase since 1936 when a “wage stop” had been imposed (see diagram “Wage rates 1929 – 1949”). This meant that a worker was still being paid only RM 0.95 per hourata time when a single cigarette in the black market (in 1946—47) cost RM 7 (7 Reichsmarks) or more, and one kilogramme (2 lbs) of butter would fetch as much as RM 900.

By June 1945 and certainly by 1946 The Big Four – the 4 occupying powers – had complemented, i.e. integrated, occupation currency with the German Reichsmark which was still in circulation. Germany’s gold reserves were zeroed, and a new currency, the Deutschmark, replaced the Reichsmark (in the West) in 1948. The economy moved from one based on payment by cigarettes to one using a fiat currency.

Externally, Germany held accounts in Spain, Sweden etc that could be ‘liquidated’ to pay compensation. However, of this pool of overseas assets only $128m were liquidated and as at 1996 $78 million was still held by Federal Reserve Bank and some by the Bank of England.

“Restitution” (the giving back of the stolen gold and property and the compensation of countries raped by German invasion), revealed more gold and increased friction between states. After intense pressure over the past 20 years it has subsequently been confirmed that Nazi gold and money had been deposited in Swiss banks since 1945.

The flamboyant lifestyle of Argentina’s Pres. Juan Perón  and his wife Eva in the late 1940s – some have speculated – is said to have been based on what are today called “kick backs” using Germany gold and currency to provide post-war safe havens for former Nazi officials. It is sheer speculation and open to hyperbole that Perón’s wealth included $800 million dollars, 4,600 carats of diamonds and other precious stones, 90 kilograms of platinum and 2,500 kilograms of gold (this level of wealth, if true, could simply be the result of looting of one’s own National Bank, as was the case of the Philippines Pres. Marcos). Or it could be bribery for wartime ‘investments’ and trade, known to have concerned the US, and/or payments from Germany for legitimate or nefarious activities. The war was good for Argentina, and from the $1.7 bn surplus she was able to repay the Bank of England the £1 billion loan from the 1930s.

South America seems to have been the preferred destination of fleeing Nazis such as Eichmann and Josef Mengele (see Rattenlinien, or ratlines . Indeed, Uki Goñi’s 2002 book “The Real Odessa: Smuggling the Nazis to Perón’s Argentina” shows that Peron admits issuing orders to encourage émigrés from Nazi Germany to make their home in the Argentine. One source states that over 10,000 former German military personnel of various ranks made it toSouth America along escape routes (Paul Manning, CBS journalist).

Peron viewed “the Nuremberg process a disgrace, unworthy of the victors” and to a degree he has a point; it was a process of ‘retrospective’ law, tailored to the immediate needs of the situation and self-righteousness – vengeance is never a good recipe for long term justice.

Disputes, naturally, arose between victim governments and the counter-claims by The Big Three powers who had actually spent their own gold reserves prosecuting the war in order to ‘liberate’ Europe and thus had enabled much of the gold to be restored to its rightful owners. Britain alone had sold off over £3,700 million of its “overseas” assets by Dec 1943 to fight the Axis powers (some £1,200 million involved assets in India).

The total amount of gold in bars and coins eventually available to the Commission, and deposited in the Bank of England and the Federal Reserve Bank of New York, was about 337 tonnes.

The claimant countries were Albania, Austria, Belgium, Czechoslovakia, Italy, Greece,  Luxembourg, The Netherlands, Poland, Yugoslavia and Albania. (NB. The USSR, on behalf of Romania, Hungary and the Ukraine, appears to have had no interest in the restitution of national gold reserves).

The work of the Triparite Commission, like so many other quangos, was slow and went on for many years. By way of example, the discussions with Albania were so protracted that they continued through the 1970 and into the 1980s. The Triparite Gold Commission was not able to be stood down (disbanded) until 1998.

After validating all claims and meeting 64% of the values demanded, just 2% of the original pool remained for final distribution – five-and-a-half tonnes of gold worth just under $70 million.

Britain’s F.C.O. (Foreign and Commonwealth Office) released a short note – a report really – in Sept 1996 on the Tripartite Gold Commission for the Restitution of Monetary Gold. The report can be accessed at: 

In 1996, the late Robin Cooke MP, then Britain’s Foreign  Secretary, sponsored an international conference to discuss what to be done with central bank gold confiscated by Nazi Germany (the biggest governmental thefts in history), then worth around $580 million but in 1997 worth $5.6 billion.

In the immediate post-war years the initial Swiss position was that all questions regarding their gold transactions with the Third Reich were settled by a Washington Agreement of 1946, in which Switzerland handed over gold worth (then) 250 million Swiss francs to the Tripartite Gold Commission (see

When the war ended the Allies determined that the Nazis had begun the war with a gold reserve of about $120 million and had seized well more than $600 million in gold from occupied countries, especially Belgium and the Netherlands.

The following Table shows an elementary Profit and Loss Account with no pretentions to accountacy rules but only to assist in understanding the State Dept’s commentary:

The Department of State estimated that the Germans had sold roughly $300 million to Swiss Banks and had laundered about $140 million through Swiss banks for payment of goods fromPortugal and Spain.

Using gold in payment, the Nazis also directly purchased goods from other countries, primarily Sweden and Romania, in the amount of $61 million. [NB this would means that Sweden was known as a much bigger player in the 1940s than the Swedish report concluded in the 1990s]. And it was determined that the U.S. Army had located a total of some $293 million worth of gold.

It is at this juncture that the advent of the Cold War makes itself felt on the restitution process. The degree of pressure the Tripartite Gold Commission in the 1950s was prepared to exert altered given the change in the USSR’s political and military posture. Political bullying, intimidation, strong-arm tactics etc had to give way to the need to find air and naval bases in Western Europe to challenge the Iron Curtain in the East.

Gold restitution is quickly elbowed-off the ‘peacetime’ agenda as the Soviet menace grows almost monthly, e.g. the usurping of democracies in the East, 1946, the Berlin Airlift, 1948, Korea, 1950. For instance, simultaneous negotiations began between the US and Portugal over the possible US military use of Lagens (Lajes) airport in the Azores, essential for refueling and rapidly resupplying a Europe under threat. As a result for the next 60 years Spain, Portugal and Switzerl and are let off the hook. There are no great pressures placed on them to fully comply; token amounts are accepted from them instead as the need for a new set of Alliances became obvious.

The State Dept report of 1946 is convinced that the action of the neutral countries not only prolonged the war and cost tens of thousands of Allied soldier’s lives but made the final two years and the Final Solution, when millions were exterminated, entirely possible.

22. Portugal 

German business duplicity had soured relations with Russia (the sale of technology, warships etc), which led to a rupture and an invasion. A similar pattern of duplicity seems to have befallen Portugal in its dealings with the Third Reich. Initially, trade between Nazi Germany and Portugal was paid for in hard currency, but in 1941 the central Bank of Portugal was able to establish that much of this hard currency was on fact ‘counterfeited’ by the Germans. [19]

The Portuguese leader António de Oliveira Salazar thereafter demanded all further payments in gold. In this way Portugal became the second largest recipient of Nazi gold, after Switzerland. By the middle of the war the German armaments industry was nearly entirely dependent on the supplies from Spain and Portugal.

Antonio Louça and Ansgar Schäfer, in their paper “Portugal and the Nazi Gold: The “Lisbon Connection” in the Sales of Looted Gold by the Third Reich” spell out the situation in 1941. [20]

  • By the spring of 1941, there had been two key changes. One was the Wehrmacht’s occupation of the Balkans. As a result, the Yugoslav state bank, up until then a major recipient of the looted gold, was unable to continue these services.
  • The second was the mammoth upsurge in the Wehrmacht’s need for finished goods and raw materials vital to the war effort – including textiles, boots, foods, and, of course, the munitions component tungsten—in preparation for the massive Russian campaign. Since the price of tungsten on the Portuguese open market had skyrocketed by some 1,700 percent within the span of fifteen months, the German Reich was able to cover its requirements only by a huge increase in outlay.

Tungsten for the German armaments industrywas paid for in the gold which the Nazis had seized from the central banks of Austria, Czechoslovakia, Belgium, the Netherlands and Norway.

Reputedly, the gold transfers were so large and regular that, “It was impossible to conceal the flow of gold to Lisbon from the eyes of Allied intelligence.”

  • “On January 8, 1942, Montagu C. Norman, director of the Bank of England, notified Thomas McKittrick that Great Britain would no longer countenance such gold shipments from the BIS to Portugal.”

‘Neutral’ Portugal now found itself facing a serious dilemma. How could it continue to export goods to Germany and keep the Nazi regime war machine rolling ? If payments through the BIS were to be halted the answer might lie in utilising assets confiscated in the occupied territories. The Economy Ministry, in Berlin, transferred the Belgian gold reserves deposited with the French central bank (thinking they would be overrun, as in 1914).

The 198 tons of Belgian gold was initially transferred for safekeeping to vaults in Dakar (in French controlled West Africa) together with Poland’s gold but by May 1942 the Vichy government of Gen. Petain had repatriated it to Germany (see Table above).

Most of the countries that had collaborated with Nazi Germany in their ‘neutral capacity’ admitted their involvement but to varying degrees, e.g. Spain Switzerland and Sweden. The Tripartite Commission insisted on these countries repaying and transferring their ill-gotten gold. Portugal was alone in its obstinate refusal to admit its part in the wartime trade and refused to refund the looted gold from other countries it had received.

At the outset the Allies demanded that the Portuguese restore 44 tons of Belgian gold, the lion’s share stemming from the looted reserves, to the Belgian central bank. The Portuguese countered by declaring that they were prepared to return only 3 tons. Portugal’s refusal was a very dangerous game to play at the time but they relied on legal technicalities of ownership, provenance and transfer to thwart the Allies demands.

Eventually only the Bretton Woods Agreement (1944) broke the deadlock. To have its currency recognised and be part of the trading world,Portugal would first have to become a signatory to the Bretton Woods Agreement and that meant handing back Nazi gold. But even here a recalcitrantPortugal used an obscure sub-clause to safeguard it right to hold onto Nazi gold. To be part of the Bretton Woods Agreement and the UN Portugal agreed to repay about 7 tons and this as accepted.

To put this derisory amount into context, Germany had sold $300 million in gold to Swiss banks and ‘laundered’ some US$ 140 million through Swiss banks for payment for goods supplied by Portugal and Spain (mostly the former, see Additionally, Portugal was also the one neutral country which refused Allied demands that it liquidate its German assets and hand over the proceeds. As of 1996Portugal had been able to retain much of its Nazi funded investments.

A postscript to the Bretton Woods Agreement  was a 1945 proposal by the US and Norway that the BIS be disbanded because of its complicity with Nazism and replaced by the newly-created IMF. This idea was then abandoned by 1948 but to date no reason has been found for this about face.

23. Ministry of Economic Warfare

Britain opened a Ministry of Economic Warfare as part of SOE in Sept 1939. The structure and techniques were created and administered by the British but were hugely bolstered when America  joined the war. The Allies may not have been able to control all that was happening inside Europe but they could influence it.

Despite all the commodities ‘exported’ to the new German empire (Third Reich) from its new European dominions, the ore from neutral countries such as Sweden and Portugal’s tungsten remained critical.

Britain and the United States knew that Germany could be brought to her knees only by a combination of conventional military operations and economic warfare (commercial starvation). The latter included strategic bombing of German economic assets and depriving Germany of essential raw materials. All six of the European neutrals – Spain, Portugal, Sweden, Switzerland, Turkey, and the Irish Free State had close connections with Germany (the less so in the case of Ireland) but they also had to co-exist with the Allies, upon whom they depended for navigation rights to import and export to keep their economies going.

In addition to the “freezing” of supplies, foreign-owned balances held in the United States were also frozen to hinder the Axis powers – Britain had already operated its own asset freezing programme. Neutral or third party countries did not suffer asset freezing with the exceptions of Argentina’s gold holdings in August 1944 and the gold and dollar holdings of Bolivia. This measure was taken to prevent an enemy or enemy subject from obtaining sustenance or income directly or indirectly from the United States via a third country. German relations with both Argentina and Bolivia were assessed at the time as very close.

Post-war events showing the wealth of the Peron regime, the taking German gold and the hiding of Nazi wanted for trial confirmed earlier suspicions. 

American policy also favoured ‘preclusive buying up of commodities’, both to supply future Allied needs and to prevent them from reaching the Germans, and cooperation with the British developed rapidly. The US Board of Economic Warfare and the British Ministry of Economic Warfare exchanged representatives, and the two preclusive buying and procurement companies operated in tandem. . This was then extended to ‘pre-emptive purchases’ under British guidance.

Geographically, Allied sea power made it virtually impossible for any commodity to reachEuropein large quantities without permission, no formal blockade of German or neutral ports had been proclaimed. In a reversal of traditional blockades every shipment to a neutral country had to be approvedatits source. Using the Empire connections it was easy for Britain to organise a near world wide network of shipping agents to check cargoes and destinations with the US better placed to use its connections in Latin America to cover that side of the globe.

The Allied, i.e. British, relationship with Portugal was particularly fraught. Portugal’s President Salazar was known to be pro-fascist but Britain and Portugal had a military alliance that stretched back 500 years. Its terms included provisions for either state to call on the other to join forces as Allies in any war. Why this option was not exercised is not expounded and deserves greater examination. Perhaps it was the threat of invoking it that held back Portugal’s dictator, Antonio de Oliveira Salazar, from ever commiting to the Nazi cause.

24. The Individual Dimension

History is not composed – as many might suppose – by purely heaven-sent unalterable events but to a large extent history is steered by individuals who influence inevitable events.

Throughout this article various names have appeared and many of them deserve greater examination than space and time here permits, e.g. Ivar Kreuger, Rooth, Puhl etc. Many who were active during the Nazi regime and facilitated its actions avoided Nurenberg and found anonymous but high profile jobs after the war.

Montagu Norman, the Governor of the Bank of England, is one of an international group of players that have come in for much scrutiny over the years. For instance, his right hand man Otto Niemeyer (of German origin) had persistently backed the re-arming of Germany and alleged made loans possible to Germany. Allegedly, too, this duo encouraged financiers in the City of Londonto do the same. [21]  But as pointed out earlier this has to be placed in the context of politics and options of the 1920s and 1930s (comminist unrest even spread to the US), where arguably this course was the lesser of two evils.

If this idea seems strained or fanciful, than we have to recall the political atmosphere of the period, 1935 to 1939, was one where Churchill was in a minority of one and Chamberlain had the full backing of parliament and Whitehall. The government didn’t want to hear Churchill’s warnings that German aircraft production was doubling. Prime Minister Chamberlain, in an attempt to mollify German aspirations after the indignities of the Versailles Treaty signed the Anglo-German Naval Agreement (1935) which permitted Germany to build warships of over 10,000 tons.

Thus it was that Norman felt able to support and help finance Germany’s cause right up until the Declaration of War in Sept 1939.

Before the war it is said that Montagu Norman attended the christening of the son of his German opposite number, Hjalmar Schacht, at the Reichsbank. Was this ‘networking’ and building good relations, hoping to deter German expansionism, or the very opposite ?

It is claimed that during the War Norman met with Schacht on a visit in Germany in July 1942. This alleged visit has always been quickly dismissed by stating thatin 1942 Schacht was in a concentration camp for disagreeing with Hitler (making it impossible for Normanto meet him there). However, documents from the Nuremberg Trials show clearly that Schacht was sent to the concentration camp in 1944 – not 1942.

Montagu Norman had married a Priscilla Koch de Gooreynd, who was a disciple of Dame Evelyn Fox – the latter being a long-standing member of the Eugenics movement and both had been working in the Mental Hygiene movement since the 1920’s. The connection with Nazi purity and aesthetics with Eugenics has long been established. [22]

24. US and Non-Neutrality

It is assumed that the US government’s desire to “avoid all foreign entanglements” at all costs would have led to a strict adherence to neutrality – but this is not the case. US firms openly (and secretly) traded with belligerent countries.

Trading with a country which is at war with another is not illegal and not uncommon but there are generally restrictions placed on goods shipped. For instance, a few years earlier in the Spanish Civil War neutrality meant that the government could not buy fighter planes to replace those lost to the Italian airforce and the Luftwaffe.

Instances include, Pratt & Witney engines appearing in Junker made aircraft (e.g. Ju 89) and the British Merlin aero engines built under licence in 1940 by Packard.

The US multinational IBM has a connection with Nazi Germany on an altogether more menacing level. Is machines facilitated the counting of concentration camps inmates and is now accepted history. Edwin Black, an investigative journalist wrote “IBM and the Holocaust” which details the business dealings of the American-based company. It was IBM’s technology, he claims, through the generation and tabulation of “punch cards” based upon national census data that helped the Nazis to efficiently achieve genocide against the Jewish people.

However, the story does not end there – there is far more:

  • In 1942 managers at ‘Standard Oil of New Jersey’ shipped fuel to an oil-starved Germany through neutral Switzerland.
  • Chase Bank in Nazi-occupied Paris and after the Pearl Harbour attack was allegedly doing business worth millions of dollars’ with the enemy and with the full knowledge of Head Office, in Manhattan. [*]
  • Ford trucks, it is claimed, were being built for the German occupation troops in France with authorisation from Dearborn, Michigan.
  • ITT, the international American telephone conglomerate flew out Colonel Sosthenes Behn from New York to Germany via Madrid and Berne to a). help improve Hitler’s communications systems, and b). improve the guidance systems on the V1 and V2 robot bombs that were to fall on London.
  • Another clam involving ITT is that its factories built the Focke-Wulfs that dropped bombs on Allied troops.  While this might be true, if ITT’s factories were overrun by the Germans then what they were  subsequently used for was determined by the Third Reich not ITT.
  • Herman Goering had a cousin in Philadelphia and, it is claimed, that ball bearings crucial to ships, planes and tanks etc were shipped to Nazi Germany using customers in Latin America. This 3rd party agent technique is not uncommon and Britain is known to have resorted to this type of trade. However, the ball bearing shipments are said to have been made with the collusion of the vice-chairman of the U.S. War Production Board. The additional charge is that at the time all ball bearing were desperately needed and American forces were said to be desperately short of them. This matter requires further clarifcation.
  • This last particular arrangement, and others, are said to have been known to Washington at the time and either sanctioned or deliberately ignored.
  • The Schroder Bank, via  Joseph J. Larkin,  made available no less than US $25 million for the use by Germany’s expanding war economy 6 moths before World War II began in Sept 1939. This was probably true of other investers in other countries.
  • Larkin also received a detailed list supplied direct to the Chase Bank in Berlin (forwarded to the Nazi government) of the assets and background of ten thousand Nazi sympathizers living in the United States. These negotiations were engineered with the help of Dr. Walther Funk (see above) and Emil Puhl (see above).[22]

[*] In fact, during the crisis of that era (1940s), bankers never saw themselves as acting criminally or immorally. Rather they believed themslees to be immune, as somehow above and beyond the criminal law and not bound by International Treaties. The present day crisis (2011) has identical characteristics with no charges brought for what is basically fraud and conversion and ‘theft’ by any other name.

25. Present day IMF to here

As IMF Managing Director, Dominique Strauss-Kahn (DSK) welcomed the board decision in April 2008, to sell part of the IMF’s gold reserves which was intended to fund a projected $400 million budget deficit over the next few years. The budget proposal includes sharp spending cuts of $100 million until 2011 that will include up to 380 staff dismissals

As of June 2009, the International Monetary Fund (IMF) held 3,217 tons (103.4 million oz.) of gold, a figure that had been constant for several years.

In the autumn of 2009, the IMF announced it would sell one eighth of its holdings (a maximum of 12,965,649 Troy ounces (403.3 tons) based on a new income model agreed upon in April 2008, and subsequently announced the sale of 200 tonnes to India, 10 tonnes to Sri Lanka, a further 10 metric tonnes of gold was also sold to Bangladesh Bank in September 2010 and 2 tonnes to the Bank of Mauritius (why these countries ahead of any other ? –Ed ). Why, in the teeth of a global catastphe of an economic recession, gold bullion which was so desperately needed for hard-pressed currencies, should be frittered away as if  a productive use of time and valuable resources is baffling.

These gold sales were conducted in stages at prevailing market prices. The IMF maintains an internal book value of its gold thatis far below market value. In 2000, this book value was “XDR 35”, or about US$ 47 per Troy ounce (XDR eqiv. to SDRs and gold priced in Pounds Sterling, i.e. £35 perTroyounce).

As the graph below shows, the traded price for gold was in the region of US$ 900 in 2009 and around US$ 1,700 in 2011. The IMF, it would appear, has been as careless with other people’s money as Gordon Brown was with British taxpayer’s gold ten years earlier (see above).

Gold price performance  – 3 yr (Jan 2009 to Dec 2011)

An attempt to revalue the gold reserve to today’s value has met resistance for different reasons. For example, Canada is against the idea of revaluing the reserve, as it may be a prelude to selling the gold on the open market and therefore depressing gold prices (perhaps it has the Gordon Brown debacle in mind). ‘Quantative easing’ (QE) has entered the lexicon but it is no more than printing more money which everyone knows will lead to inflation in coming years (Weimar Republic). To affect a ‘bolstering’ of reserves – should one be needed – gold bullion can easily be converted into gold coins with thereby command a price much higher than the current market price for gold bars.

The above graphs shows the steady price increase of gold since 2009. With debt, bonds and promissory notes as the only large form of reserves left to many nations, one wonders whether positive action is being taken in the markets to downgrade gold’s attraction – in the graph above a reversal can be seen in the autumn months of 2011. Nowithstanding that, the gold reserves held by the IMF is inventoried at $35 per oz when the real world prove is £1,606 per oz and the banks of Mauritius, Bangladesh, Sri Lanka and India have all got a bargain.

It has been speculated by some that Col. Gadaffi had plans for a competing pan-African currency backed / based, as RT’s Max Keiser suspects, on minerals – the gold, copper, aluminium, diamonds and chrome from Zambia and Zimbabwe (formerly Southern Rhodesia) and other African states. Were plans afoot to re-introduce a gold-backed currency which did not include the US , or migh thave challeged dollar supremacy ?  Might this have contributed to Gadaffis’ downfall ?

Have the markets been manipulated to bring the gold-price down from its 2011 high of US$ 1,900 ?  This would make sense when ‘equities’ have only paper value so long as confidence exists (e.g. Lehman Bros). This would also make sense if most gold listed in Balance Sheets were in ‘futures’, which in reality are accounting phantoms and not natural, proprietary tangible assets and ‘debt’ become re-designated as ‘assets’. This lack of true ownership over limited/rare commodities leads to claims by others to be the true future owners and able to sell on to a third or fourth party. Thus double counting and distortion is introduced into the market.

For all of Libya’s undoubted natural resources and the many years it has accumulated money from oil and gas exports it had, as of 2010, only 144 tons of gold in its reserves. This is modest by both pre-war and post-war European standards.

In our crazy world of new accounting (see Ivar Kreuger), we all may be victims of smoke and mirrors. Only when time has unfolded a little more will we begin to see whether any or all of these are factors have influenced events.




Appendix 1

Chief A/Pr./B.
Journ. No. 050/42 secr.
VS 96/42

26 September 1942

  • To the Chief of the SS Garrison Administration Lublin
    To the Chief of Administration Concentration Camp Auschwitz
    Subject: Utilization of property on the occasion of settlement and evacuation of Jews.

Without taking into account the over all regulations which are expected to be issued during October, pertaining to the utilization of mobile and immobile property of the evacuated Jews, the following procedure has to be followed with regard to the property carried by them — property, which will in all orders in the future be called goods originating from thefts, receiving of stolen goods, and hoarded goods:

  • All money in bills of the Reichsbank will be deposited in Account No. 158/1488 of the WVHA in the Reichsbank.
  • Foreign currency, diamonds, precious stones, pearls, gold teeth and pieces of gold will be transferred to the WVHA for deposit in the Reichsbank.
  • Watches, fountain pens, lead pencils, shaving utensils, pen-knives, scissors, pocket flashlights, and purses will be transferred to the workshops of the WVHA for cleaning and repair and from there will be transferred to the troops (SS) for sale.
  • Men’s clothing and underwear, including shoes will be sorted and checked. Whatever cannot be used by the prisoners in the concentration camps and items of special value will be kept for the troops: the rest will be transferred to VoMi.
  • Women’s underwear and clothing will be sold to the VoMi, except for pure silk underwear (men or women’s), which will be sent directly to the Economic Ministry.
  • Feather –bedding, blankets, umbrellas, baby carriages, handbags, leather belts, baskets, pipes, sunglasses, mirrors, briefcases, and material will be transferred to VoMi. Payment will be arranged later.
  • Bedding, like sheets and pillowcases, as well as towels and tablecloths will be sold to VoMi.
  • All types of eyeglasses will be forwarded for the use of the Medical Authority. Glasses with gold frames will be transferred without the lenses, along with the precious metals.
  • All types of expensive furs, styled or not, will be transferred to the SS-WVHA. Furs of lesser quality will be transferred to the Waffen-SS clothing workshops in Ravensbruck bei Furstenberg in accordance with Order BII of the SS- WVHA.
  • All articles mentioned in paragraphs 4, 5,6 or little or no value will be transferred by the SS-WVHA for the use of the Economic Ministry. With regard to articles not specified in the aforementioned paragraphs, the Chief of the SS-WVHA should be consulted as to the use to be made of them.
  • The prices for the various articles are set by the WVHA. Therefore the price of a pair of used pants will be 3 marks, a woollen blanket – 6 marks. Check that all Jewish stars have been removed from all clothing before transfer. Carefully check whether all hidden and sewn-in valuables have been removed from all the articles to be transferred.

 [signed]    – August Frank

     SS Brigadefuehrer and Brigadier General of the Waffen SS


Appendix 2

“Action Reinhard” (Operation Reinhard)

Recovering State expenditure of running concentration camps

Assessment: GLOBOCNIK, SS Gruppenfuehrer

From: GLOBOCNIK, SS Gruppenfuehrer

The total value of the articles received is, according to the attached list, approximately 18 million Reichsmarks. However, minimum values have been assured, so that the total value is most likely twice as much, quite apart from the value of the articles obtained which are in short supply, such as textiles, of which alone more than 1,900 wagons have been made available to German industry.

[signed] GLOBOCNIK SS Gruppenfuehrer and Lt. General of Police [=]

Assets delivered from Action Reinhard

The following assets from the Action “Reinhard” were delivered to the SS Economic and Administrative Head Office, Berlin, for further transmission to the Reichsbank or to the Reich Ministry of Economics:

a.      Reichsmark sums totaling RM 53,013,133.51

Currency in Bank notes from all the principal countries in the world (half a million dollars being particularly to be noted) to a total value of RM 1,452,904.65

Foreign currency in gold coins to a total value of RM 843,802.75

Precious metals (about 1,800 kg. of gold and about 10,000 kg. of silver in bars) to a total value of RM 5,353,943.00

Other valuables such as jewellery, watches, spectacles, etc. (the number of watches being particularly worthy of note – about 16,000 in working order and about 51,000 requiring repair: they have been placed at the disposal of the troops) RM 26,089,800.00

About 1,000 wagons of textiles to a total value of RM 13,294,400.00

Total RM 100,047,983.91

1,000 wagons of textiles and about another 50% of the above mentioned assets – which still have to be counted and valued – are warehoused here. It should be noted here that the estimated values were based on the officially established rates of exchange or prices, which however would be much higher on the open market, for instance in the sale of precious stones or precious metals abroad, as the flight to investments in articles whose value is not subject to much fluctuation is much greater there than with us. Besides these sales abroad bring us foreign currency. If these prices were taken as a basis of evaluation here, this was done in order to be able to give a picture of the assets delivered; in general this evaluation is not authoritative. The value of the acquisition lies principally in the fact that such large quantities of urgently needed raw materials can thereby be gained and that, on the basis of the assets obtained, foreign currency can be brought in, with which raw materials can in turn be bought by Reich authorities.

[Sgd.] Globocnik SS Gruppenfuehrer and Lieut. General of Police.

____________ 1 detailed list enclosed herewith.

List of Jewish property received for delivery up to 3.2.1943, showing values

[Editor’s Note: The following tables are reproduced as they appear in original German document although accuracy of calculations is questionable.]

[rubber stamp]

Personal Staff Reichsfuehrer SS Ref. No. Secret/115

1.      Cash in hand:

o        RM 16,931,722.01;

o        Delivery SS-Economist, Cracow: RM 31.5 million;

o        SS-Econ.-Admin. Head Office Berlin-(RB): RM 5.58 million;

 [Total]: RM 53 million


Appendix 3

Itemised analysis of foreign currency in notes obtained by the SS from concentration camp inmates as listed above.


Appendix 3A

 Itemised list of gold currency (coins) obtained by the SS from concentration camp inmates as listed above.


Appendix 3B

 Precious Metalsobtained from concentration camp inmates as listed above, and itemised list of gold etc (in bars).


Appendix 3C

Other Valuables

Every item of personal belongings that had a market price or could be re-used was carfully collected and recorded. The official SS list  of these personal belongings is so long that it has had to be broken up into three section so that it could be reproduced in this article.



Appendix 3D

Rags, clothing, undergarments and bed feathers by wagon load recovered from concentration camps.

Lublin, 2/27/1943.


/S/ [?] SS Sturmbannfuehrer

Appendix 4

Kreuger’s Loan to Germany (and to other countries)

Born on March 2, 1880 Ivar Kreuger committed suicide on March 12, 1932. During his lifetime he amassed a fortune from making and selling matches (in much the same way, one supposes, that Rockefeller made his fortune out of the working class by selling them cooking, heating and lighting oil, i.e. Kerosene, aka paraffin).

Kreuger was not averse to Ponzi schemes, i.e. relying on one debtor to pay in time and yield a profit some of which could be passed on to a second investor.

When he made a deal withGermanyfor a $125 million-dollar loan (almost $1.9 billion in today’s currency), he was already linked to the Dresdner Bank and the Deutsche Bank.

His biggest loan yet, to Germany was funded by the French loan being repaid ahead of time. It was made at a time when his financial house of cards was beginning to topple and he probably took the honorable way out.


Appendix 5

BIS voting rights, 1938

Institutions, shown here in blue, represent ‘the Allies’ and it is immediately apparent they are out-voted by those sympathetic to the Third Reich from 1939 – 40 onwards.


[1] To a large extent, the main reason behind this long period of hyperinflation was unsustainable growth of the money supply to finance the large fiscal deficits maintained by successive governments
[3] Whether any other coalition country was ‘hired’ by the Saudis for this enterprise is not known for certain.
[4] Rohrabacher asked to leaveIraq.. “We called theUS embassy yesterday and we told them to ask the congressmen to leaveIraq,” an Iraqi spokesman told AFP, adding, “We don’t want them here. What they said was inappropriate.” – Reuters
[6] One can suppose/speculate that a modestly serious warship might cost in the region of 10 million Yen’s_Republic_of_China_%E2%80%93_Japan_relations#Japan.27s_compensation
[7] Between 1999 and 2002 Brown sold 60% of theUK’s gold reserves
[8] Schacht disliked Jews. In 1934 he arranged with the World Zionist Organization, a deal where German Jews could pay 15,000 Reichmarks to emigrate toPalestine. It is estimated that over the next four years over 170,000 reachedPalestine under this agreement (but we are not told ifBritain had agreed to this exodus. This is another example of insensitive German foreign policy having calamitous effects, e.g. Balkans war as a recently example).
[9] He was imprisoned by the Nazis after the 20 July plot. After the war, he was tried at Nuremberg and acquitted. See
[10] Germany’s gold reserves were, in 1923, effectively down to the equivalent of less than £14 million, too little now with which to establish a new currency in which people could believe.
[11] See ‘Holocaust Educational Trust’    
[13] Named after Charles Ponzi, who in theUS became notorious for using the technique in 1920s.
[14] The Swedish Commission re trading during WW2
[17] “Portugal and the Nazi Gold: The “Lisbon Connection” in the Sales of Looted Gold by the Third Reich” 
[18] At 2009 prices this is thought to represent  approx, US$ 7 billion. See  
[19]  See
[20] ‘Portugal and the Nazi Gold: The “Lisbon Connection” in the Sales of Looted Gold by the Third Reich’by Antonio Louça and Ansgar Schäfer,    
2 Comments leave one →
  1. phil3603 permalink
    April 12, 2012 2:28 pm

    Hello Robert. Hugely fascinating expose and revelations here – particularly in respect of the BIS. Startling, although no great surprise that the highly questionable affairs and ethics of such a darkly incestuous banking organisation and its various executives could have remained below the radar for so many decades without being brought to public enquiry and serious prosecution. Its activities on behalf of the Nazi’s suggest monumental complicity in aiding the continuance of WW2 and Hitler’s vile causes. Impressively detailed and highly researched account you’ve produced here Robert, as well as a great and informative source of introduction for me personally, to this whole wider issue.

    • rwhiston permalink*
      April 12, 2012 4:16 pm

      ‘Monumental complicity’ – I couldn’t put it better myself. It is so monumental IMO that one walks away from actually wanting to descibe it as such. I am glad you find it of use for your other studies. Often I do not have the time to follow certain leads and have to content myeslf with providing good citations and URLs for others to exploit. I find it fascinating how others will will build on the basic info and carry matters to another plane.

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