The Nazi Series — Geopolitics & Unearned Wealth
There is a grim financial legacy of the Second World War that has yet to be resolved: that of the wealth stolen by the Nazis. This article attempts to delve into a subject, that, after over 77 years, remains in many ways a mystery and sits in stark contrast to the financial issues of the modern day, showing just how ineffective the international community is at resolving thorny historical issues…
To Be Frank
August Franz Frank died on 21st March 1984 at the ripening age of 85. After the Second World War, he had been convicted for his part in the holocaust — but — not the killing. In essence, August was found to be guilty only of the administration of the murdered after they had perished. Although the man made assertions that he had no knowledge of the atrocities being committed against concentration camp internees in Operation Reinhard (Germany’s broad plan to regimentally isolate and then eliminate the Jews and other undesirable groups throughout Europe), he had prepared a memorandum himself detailing the privation being undertaken by the Reich, which was used against him in his trial. For, the Germans at the time had become not just production-line murderers in their design of the Final Solution, they had also become systematic thieves too. The Nazis didn’t just take lives, they also took wealth, and the present day equivalent of billions of dollars was expropriated and looted and then absorbed into the coffers of the Third Reich.
August seems to have been planning to profit personally from the destruction of the people in those concentration camps. It turns out he was a partner — with a man called Georg Lorner — in a leather and textile operation at Dachau. August was acquitted of mass murder and eventually had his life sentence commuted to 15 years. He was released from prison in 1954 and spent the rest of his life in relative obscurity, passed over by the eyes of history. His case is a telling one though. It describes the organized thievery of the Nazis and others, of the victims of the war, a legacy not yet resolved even to this day.
Memos
August Frank is an individual of note essentially because of that said memorandum. His memo of the 26th September 1942 gives historians insight into the commitment the Third Reich showed in its appalling exploitation of its victims. This writer saw firsthand the profound utility of the Nazis on a visit to Auschwitz some years ago and witnessing the immense pile of spectacles, eyeglasses, and monocles on show in their grim but intensely educational museum. It is indeed an egregious testament to fascist despotism, and this too, was blithely laid out in August’s memo.
Variously and in broad strokes, the memo set out the following terms and more: Reichsbank notes would have to go to the Economic and Administrative Main Office. Foreign currency, precious metals or stones, and jewellery and the like (including gold extracted from victims teeth), would go to the SS Economic and Administrative Main Office. Largely anything that could be repaired and repurposed — a watch say, or a wallet — would be supplied as quickly as possible to the troops on the front line, preferably sold, and with proceeds going to the Reich. Clothes, underwear, and footwear was to be sorted and assessed, given to concentration camp inmates and troop exceptions, but ultimately destined for an organization called the Volksdeutsche Mittelstelle, a group concerned with the welfare of ethnic Germans residing outside the fatherland’s borders. Again, preference was for sales to be made and compensation given to the Reich. The list goes on and is impressive in its detail. The memo’s final comment refers to the removal of any “hidden and sewn-in values” in Jewish clothing.
Thievery
In making war, Germany had expended its gold and foreign exchange reserves, such was it’s total focus on militarisation (the global economic depression of the 1930s also played its part). In fact, things were becoming economically critical again for the Nazis by as early as 1939. As pointed out by Medlicott (1978) in The Economic Blockade, by the end of the 1930s, Germany had defaulted on most of its foreign obligations, and was drumming up capital through its command economy. Essentially, the Nazis turned to looting those territories it had captured and extracting assets from the local populations within them, making them indigent. In the initial stages of their conquest, Austria, occupied Czechoslovakia, and Nazi-governed Danzig, significantly shored-up the Third Reich’s ailing economy. All the while, the Germans fudged the data to hide their acquisitions. As the war matured German-held territories expanded and the Third Reich escalated its thievery. For example, it is thought they expropriated $223m and $193m from the governments of Belgium and The Netherlands respectively. These data do not take into consideration that which was stolen from those countries’ citizenry. The overall amount is, to this day, uncertain.
Commodities
The Nazis evolved and honed their totalitarian institutions and doctrines. As they did, the question of the Jews moved further and further forward in their collectively genocidal thoughts. Eventually, the disposal of the Jews as a race in Europe was settled upon, as opposed to uprooting them, and large-scale industrial elimination began, and secondhand valuables and materials became available (such as human hair, horrifically). One commodity that would be highly prized was gold. Gold has always played an integral role in the international monetary system (beginning in Turkey around two and a half thousand years ago as coin). Paper money emerged and so did the gold standard. Early adoption by the British Empire in the first half of the 19th century meant that that monetary system spread far and wide.
On 26th June 1940, the Bank of England issued a report that contained an assessment of the volume of the gold that had fallen into German hands that it had taken from those countries it had invaded. The war had been in full swing for around 10 months by this time and as a result the report includes Belgium, Denmark, France, ad Norway. In total, it concludes that £708m had been ceded to the Third Reich, with France being the hardest hit having lost £480m (around 68% of that number). Certainly, this sort of reporting by the BoE at such a chaotic time in history, is indicative of the importance of the metal to the Allies and the Axis. Gold is a slippery customer: it can be plied, pressed, and coaxed into a variety of forms whether it be bar, coin, or jewellery. Perhaps more essentially, it can be smelted, and then resmelted, a property that makes its provenance difficult to follow. As gold — and especially then — could be readily exchanged for fluid currencies, it became ubiquitous and intrinsic and highly useful to the belligerent nations of the war.
Neutrality
During the war, a country that perched very close to the action but stayed neutral was Switzerland. One of the primary reasons comes from a decision made by the European powers over 120 years previously during the 1815 Congress of Vienna. The congress marked the conclusion of the Napoleonic Wars and the Swiss have wielded their neutrality as a badge for the most part ever since. During WW2, the Swiss adopted a tactic referred to as armed neutrality. Effectively this meant maintaining a potent army presence on its borders facilitating defence against any nation that trespassed (even though breaches of its borders and airspace did happen from time to time). The Axis powers had devised a plan to invade the Swiss during the war called Operation Tannenbaum but it was never initiated. A consequence of the Swiss’ fence-sitting was that it became a haven for espionage for both camps. Another consequence — as well as a quirk of history — was that the Swiss came to be bankers for the ill-gotten gains of the Third Reich.
The context of that period of history should also be of note too however. The Swiss may well have been spared a good proportion of the havoc of the world’s largest ever conflict but that is not to say that the war didn’t spill on to the country in some fashion or another. And Switzerland knew it lurked in the shadow of a man as volatile and villainous as Adolf Hitler. These hardships and threats will have had a considerable impact on the geopolitical outlook of the nation. It is reasonable to assume that had the Allies lost the war, the Swiss would have lost their freedom too.
Locked Doors
Switzerland has been hailed as the daddy of world banking privacy. Some would call it secrecy. As far back as the 18th century the Catholic elite headed to Geneva in their efforts to hide their transacting with Protestant bankers. In 1713, authorities in Geneva introduced financial safeguards against bankers revealing details about their clients. In February 2022, some 309 years later, a leak of Credit Suisse information revealed that its clients had their hands in money laundering, drug trafficking, torture, corruption, and other serious crimes. Irrespective of the culture of secrecy the Swiss have maintained for centuries, it was only really enshrined into law by the Banking Act of 1934. Since that time only four people have violated it. Christopher Meili in 1997, Bradley Birkenfield in 2007, Rudolf Elmer in 2011, and Herve Falcianai in 2014. An optimist might well note the contemporaneous nature of the violations and have come to hope that a change has occurred in the wider consciousness and reduced the general tolerance for such opaque financial practices. The jury remains hung.
In 1996, the subject of responsibility — both by countries and by individuals — for actions during the war came to the centre of international discussions. Gold became symbolically attached to the suffering of the victims of the Nazis and the role the Swiss played in it naturally became a sore and controversial point of debate. In fact, it was pointed out by Joseph Goebbels in 1944 that such was the relationship between Switzerland and Germany that should Switzerland decide to cut Germany off economically, German gold would become worthless, since there would be no one to sell it to. The Swiss had legitimate reasons for taking gold from the Germans. For one, it needed to maintain a level of gold cover for the convertibility of the Swiss Franc. It needed too, to protect Switzerland’s supply of food and other vital commodities. And, it needed to ensure that the country’s financial sector continued to operate.
At the war’s beginning, the Swiss National Bank (SNB) — the ultimate hub through which the gold would eventually pass — made no realistic attempts to conduct due diligence on where Nazi gold was originating (other than from the Reichsbank). In 1941, the SNB was reasonably aware that the sources of the gold were looted. In 1942, the SNB even considered resmelting German gold. From around 1943 onward, it became evident that the Germans had either confiscated gold from governments they now presided over, or seized it from individuals they persecuted and murdered. Outside pressure then, was the catalyst that drove the SNB to compel the Third Reich to provide assurances that the gold they were shipping was legitimate, and coming from the nation’s prewar reserves. Their change in attitude notwithstanding, the Swiss’ slow uptake of the realities of the Third Reich’s illegal activities came from an attitude of keeping their eyes down and a business-as-usual policy. Ultimately, the SNB continued its policy — despite pressure — until the closing scenes of the war: there were gold transfers as late as April 1945.
Switzerland made moves as the wore bore on, and after, to defend its policies on incoming German gold. Initially, they argued their belief that the gold had come from legitimate sources. Then, later, arguments were made that the Swiss’ operations occurred in line with their accepted neutrality. Further still, the argument became that the Nazi invasion was kept at arms length by remaining consistently useful to the German regime: buying gold offset the temptation of the Third Reich to sweep into the country. Eventually it became clear that, as shown in the Washington Agreement in 1946, the Swiss knew the gold was illicit. And, it became clear too, that the Swiss were hiding behind the excuse of neutrality since they were under no obligation to take the gold. Sadly, the Swiss became unable to change their stance either as it would have meant considerable damage to their credibility. On the face of things, there may have been an argument for the Swiss maintaining their safety by utility, but Adolf Hitler and the Third Reich’s regime were capricious and not given to making rational assessments for when and if they invaded a country. It can hardly be argued how Hitler made sane and sober judgements in his decision to invade the largest country in the world — Russia. That decision — perhaps amongst some others — led to the Reich’s eventual demise. If Hitler had been hell bent on invading Switzerland at any point, he would have done it, regardless.
The Simon Wiesenthal Centre — the namesake of the man who became a “Nazi hunter” after WW2 — reported toward the beginning of 2020 how 12,000 names of Nazis who upped sticks to Argentina after the war appeared to have had accounts transferred to Credit Suisse. Many of the names on the list contributed to accounts at the Schweizerische Kreditanstalt, the forerunner to Credit Suisse. A proportion of the names were related to companies that had been blacklisted by the US and the UK during WW2. The accounts themselves are thought to contain monies looted from victims of the Holocaust and under the Nuremberg Aryanization laws in Germany in the 1930s. This is unfortunately somewhat of an indictment of the mentality of the Swiss financial authorities toward the receipt of German gold, and is hardly defensible.
Others
Another country that benefited from the Nazi gold was Portugal. During the war, Portugal was, like Switzerland, neutral. To this end, the Portuguese sold various goods to Germany as well as tungsten, a commodity important to the Reich’s war effort. Once again, where the German bullion was coming from wasn’t clear, nor did Portugal go out of their way to confirm its legitimacy. All indications are that it was expropriated from conquered governments, or looted from the Nazi’s murdered. The New York Times discussed in January 1997 how, once the Nazis had lost the war, acquired Portuguese gold was sold off to primarily China, but also the Philippines and Indonesia. The whole sordid affair came off the back of the Swiss debacle initially, and expanded from there. The extent of the avarice off the back of the conquered and the murdered has come to surprise and upset many. Another country deemed neutral during the war and also under scrutiny is Spain.
Indeed, also in 1997, the Los Angeles Times published an article that discussed a US Government document that had recently come to light linking the Vatican with Nazi Gold dealings. Ultimately, said document describes how plundered Jewish and Serbian gold that was supporting the Fascist Ustasche in Croatia was shipped through Yugoslavia to, and held by, the Vatican, and equated to the modern day equivalent of $170 million (having been 200 million in Swiss francs). It was there apparently for ‘safekeeping’.That document also puts forward some hearsay that the money (having presumably been converted from plundered gold into currency at some point) wended its way to Spain and Argentina through the Vatican ‘pipeline’ where it helped finance the lives of Nazis having fled from post-war Europe. It would make sense as it has been largely established how the Vatican assisted fleeing Nazis to physically escape their would-be captors and the victors of the conflict (known as the Ratline and touched upon in another article by this writer). Needless to say, at the time, the report was dismissed by the Vatican…
Heirs
Apparently, wrenching assets from the groups you are persecuting with violence and murder was not the only way in which money was stolen from victims of the Nazis. In an article published by Haaretz in 2012 (and in what seems a final insult to those people swallowed up by the Nazi machine), Jews, in attempts to save their property from the Reich during the war, opened accounts in Switzerland.
Later, Swiss banks allegedly destroyed records pertaining to the ownership of the accounts of the persecuted. Owners and next of kin were then prevented from claiming their money and assets. It is estimated around 60,000 out of seven million were Jewish accounts and were opened between 1933 and 1945, the intention being to reclaim their deposits once the threat of the Nazis had passed by. The documentation was apparently burned or shredded. The motive behind at least some of the destruction was that the accounts were owned by people who were deceased and any heirs’ or relatives’ locations were not known. Such was the ultimate fate of the valuables and money of those poor people who were eaten by the Nazi machine…
LINKS
https://www.theguardian.com/sustainable-business/avoiding-tax-legal-but-ever-ethical
https://en.wikipedia.org/wiki/August_Frank_memorandum
https://en.wikipedia.org/wiki/Nazi_gold
https://www.gold.org/history-gold/gold-as-currency
https://www.gold.org/sites/default/files/documents/after-the-gold-standard/1940Jjun26.pdf
https://www.warhistoryonline.com/instant-articles/switzerland-neutral-wwii.html
https://en.wikipedia.org/wiki/Federal_Act_on_Banks_and_Savings_Banks
https://en.wikipedia.org/wiki/Banking_in_Switzerland
https://www.wiesenthal.com/about/news/wiesenthal-center-argentina-nazi.html
https://www.nytimes.com/1997/01/10/world/nazi-gold-and-portugal-s-murky-role.html
https://www.latimes.com/archives/la-xpm-1997-jul-23-mn-15484-story.html
https://kgabbot.medium.com/when-the-nazis-are-no-more-e030b2cddfa1
