by Bower, Tom
Within their closed sanctum, Switzerland’s bankers and industrialists had persuaded themselves that their country was under siege. “Look at the American press reports,” Ernst Speiser, a director of Brown Boveri, the engineering giant, told Stucki and Homberger. “They’re even suggesting that we are trying to sabotage the Washington Accord.” Stucki growled, “We’ll have to hold on to our nerve.” The blame, he said, to general agreement, lay with the American Safehaven team, who were feeding Michael Hoffman, the local New York Times correspondent, with malicious gossip. “It’s all about money, companies and the expansion of American cartels,” Speiser complained. Schwab agreed. Reagan, Conover and Mann were condemned together for sharing anti-Swiss sentiment—motivated solely by the desire to help U.S. corporations seize German assets. Schwab’s misconceptions were mixed with a modicum of reality. The Safehaven team in Bern, he told everyone, was “isolated and cannot count on any support from Washington.” “We’ll go on the offensive soon and deal with them,” snapped Stucki. “Reagan isn’t strong and we’re not helpless.” Homberger’s prediction about the diminution of the Allies’ aggression was turning out to have been correct, weakening the effectiveness of the Compensation Office and presenting an omen for Stucki as his misgivings about the bankers’ honesty were sustained.
In spring 1947, Stucki became disquieted by the discovery that the Kantonalbank, one of Switzerland’s biggest banking chains, had furtively ceased paying interest on foreign accounts ten years earlier. Believing it to be an isolated case, he told Dunant, the Bankers Association’s representative, “I believe we have a duty not to allow the banks’ enrichment to pass unnoticed.” Irritated by Stucki’s moral fervor and keen to minimize the revelation, Dunant soothed, “Only twenty-seven Kantonalbank branches according to the Compensation Office are involved. Very few Germans deposited money in that chain. At most we talking about repaying SF1 million.” The Compensation Office, he suggested, was exaggerating the problem associated with controlling “hot money” in 1937. Yet the implications of Dunant’s limited admission were considerable. Unclaimed deposits in the twenty-seven banks, probably belonging to non-German Jews, were worth, according to the Compensation Office, SF6 million. Among the thousands of individual branches of Swiss banks, the unclaimed deposits could amount to hundreds of millions of francs.
Suspicious of Dunant, Stucki proposed that the question should be referred to a court. Dunant was appalled by that prospect. There were serious disadvantages the banks might suffer, he told Stucki, if that course were pursued. The two agreed to a compromise: a new investigation would be undertaken by the Compensation Office staff. Weeks later, the new investigation revealed an even more distasteful scenario. Swiss banks, discovering that a dormant account belonged to a German or a foreign Jew, had retrospectively deducted the interest paid over many years on savings accounts, anticipating that there would not be a complaint because the depositor could well have been murdered. By any measure, the banks were guilty of a crude theft. Stucki was shocked.
Dunant was forced into the defensive. In a meeting with Stucki on September 9, the bankers’ representative explained, “This wasn’t done only to the Germans but to everyone except Swiss nationals living abroad.” His explanation exposed his loss of contact with reality: “Swiss banks informed all their foreign customers. They all knew what we had done and none of them protested.” The idea that a German or Polish Jew living in the fear of the Gestapo who received a letter about interest payments from a Swiss bank might protest about it was inconceivable to everyone except Dunant and the members of his association. No one pointed out that, to avoid risk, the instructions accompanying practically every foreign account in the Swiss bank forbade the dispatch of any correspondence to the depositor. Letters to the banks’ clients would therefore have been sent to mailboxes inside the bank itself. Stucki’s inveterate suspicions about banks were being reinforced as Dunant’s explanations unfolded.
“There’s clearly a misunderstanding,” said Schwab, interrupting Dunant. “I was present at the National Bank when it was agreed to suspend paying interest to stop ‘hot money’ from coming into Switzerland. It was never the intention to punish savers. The small banks have actually continued paying interest. And it’s particularly crass that interest was retrospectively deducted.”
“We are trustees for the Germans,” insisted Stucki. “We must care for their interests.”
Dunant was nonplussed. His association had confiscated the money from every foreign deposit account, and here was Stucki, with his narrow, legalistic, bureaucratic mind, wanting to make distinctions. “But we can’t make an exception for the Germans,” he exclaimed.
The confusion was compounded in a written report compiled by the Bankers Association. Most interest payments, explained Dunant, were stopped only in May 1946, after the Washington Accord had been signed. His earlier explanation about controlling “hot money” in 1937 had become incomprehensible. Three weeks later, the Compensation Office’s own investigation exposed Dunant’s lies. In a survey of all bank accounts, it was found that the interest payments had varied widely. Only 16.5 percent of all savings accounts, Stucki’s staff reported, were fairly administered, while 35.2 percent of the foreign accounts and 38.9 percent of German accounts were “badly” administered. The discrepancies exposed how the banks were exploiting foreign savers for their own profit.
“The banks acted unscrupulously,” Stucki pointedly told Homberger as they read the report. “I just don’t understand why the Bankers Association uncritically defends a minority of banks.” Dunant, conveniently, was absent. Schwab added his support: “The association swore that all the banks had behaved with absolute honesty. At the last meeting Dunant said he’d shoot this one down.” Even Ott was outspoken: “The banks clearly thought that it was all a theoretical discussion.”
Disdainful of that unanimity, Homberger defended the banks. “Most Germans left their money here for security, not for the interest. Surely we can’t force the banks to pay interest?” Amazed, Stucki replied, “We must protect the Germans. We’ll let a court decide.” Homberger, not to be outflanked as a protector of German interests, also cared for the banks. He spoke on behalf of all of Switzerland’s industrialists, and his solution was unchallengeable by a mere government official: “There’s no hurry. Let’s postpone taking any action.” Stucki accepted defeat. Schwab uttered a cry of despair: “I always tell everyone that we protect the Germans. But I don’t understand why interest should not be paid just because it suits the banks.” Schwab, of course, knew the answer to his own outburst. The banks enjoyed influence and protection among the nation’s power brokers. And there was now a unity of purpose among Dunant, Homberger and most government officials to champion Switzerland’s interests, reassure the Germans, rebut the Allies and ignore the Jews.
11
PERFIDIOUS SWISS
A Jewish conspiracy, Walter Stucki was convinced, challenged and menaced Switzerland. As Switzerland’s relationship with the Allies improved, he became obsessed with the fear that his country’s recovery was hindered by malicious threats and criticism published in British and American newspapers. The conspirators, he believed, were members of the Committee Against the Third World War, whose chairman, he was sure, was Lord Vansittart, the mouthpiece for the Jews.
In fact, Vansittart, an outstanding senior British civil servant, had led the prewar campaign against appeasement and Hitler and in the postwar years was an equally passionate anticommunist. He was not Jewish but a devout churchman, not anti-Swiss, and not associated with the committee. But Stucki’s paranoia, common among his countrymen, effortlessly fed his delusions. “The committee is 80 percent Jewish,” Stucki told Homberger and the bankers. “Its guiding spirit is a French Jew.” Hirsch, identified as a Frenchman involved in its work, had been banned from entering Switzerland. “We’ve got to defend ourselves against dollar imperialism,” agreed the industrialist Ernst Speiser solemnly. Unembarrassed by his articulation of the Nazis
’ doctrine associating Jews, Americans and communists, he added, “The Americans are obstructive.” Brazen anti-Semitism and pro-Nazi sentiments had become common within the Compensation Office. Max Ott, in a discussion about the fate of IG Farben, revealed that “a Galacian Jew called Roth has been nominated by the Americans to receive 25 percent of IG Chemie if he helps them expose the German ownership of the company.” In the league table of disparagement, “Galacian Jews” were classed by anti-Semites at the bottom, living among rats in the sewers. The Compensation Office’s prejudice was intensified by the appointment in February 1947 of Franz Kappeler as a senior officer. Posted during the war to the Swiss embassy in Berlin, Kappeler had voluntarily joined a pro-Nazi organization and frequently boasted of his pro-German sentiments. That reinforcement of prejudice was evident in the Compensation Office’s treatment of the unclaimed possessions of Jews.
Stacked neatly in warehouses across Switzerland lay a mountain of unclaimed luggage and crates, sent by anxious Jews from all over Europe in advance of their uncompleted journeys before and during the war. The aspiring refugees had carefully labeled their possessions for eventual collection. Many undoubtedly contained valuables, pitifully hidden, to finance their owners’ survival. Two years after the war, the Jews’ fate had been long settled. Officials of the American Joint Distribution Committee (AJDC), in conversations with Max Ott of the Compensation Office and with officials in von Steiger’s Ministry of Justice, claimed those possessions as heirless assets to be used for the benefit of the survivors. The response was uniformly negative. Swiss secrecy laws, they were told, prevented anyone but the owners from looking at the labels. No unauthorized person could be allowed access to hunt for a relative’s possessions, nor could these possessions be transferred for the communal use of the Jewish refugees. Since the claimants were dead, the AJDC was told, the luggage would be auctioned to pay the outstanding warehouse costs. The contents could be plundered by the storage companies.
For the demoralized Jews, suffering deteriorating health in the camps during the second winter since their release from concentration camps, hopes were dwindling. Sympathetic banks had advanced loans to the AJDC in the expectation that the $25 million promised by Switzerland in Washington in 1946 would soon be received, but that cash had been spent by the two Jewish refugee agencies while Stucki prevaricated and then refused to advance the first $12.5 million (SF50 million) as agreed. Without funds, the AJDC’s task was becoming impossible. On March 28, 1947, Edward Warburg, its chairman, appealed to Dean Acheson, the acting secretary of state, for help: “We’ve reached the limits of our resources.” Acheson was asked to persuade Switzerland to advance at least $5 million to prevent the “demoralization and deterioration of these victims” in the camps.
On April 16, 1947, Acheson protested to the Swiss about the delay in paying the $12.5 million and asked for an immediate payment of at least $5 million, “in full recognition of the urgent needs of those victims.” Inevitably, the industrialists’ representative Heinrich Homberger was consulted about Switzerland’s response. Conscious of the Allies’ disarray, Homberger urged the Political Department to ignore their threats. Switzerland “must not rush,” he told Stucki. Everything would be solved by playing for time. That policy appealed to Stucki, but realizing that Switzerland’s bankers and industrialists wanted to terminate the accord, he feared the consequences. “The government will never go that far,” he cautioned Homberger. “We’re not strong enough for that. There’d be a huge international press campaign against Switzerland, and that would be very unwelcome.” Patiently, the industrialist manipulated the puppet into an appreciation of the realities of power. By the end, the bombastic official was convinced of his own masterful creation of a new policy. “We’ll be accused of sabotage,” he told Homberger. “We have to work out what alibi we can use.”
Stucki rose to the occasion. Adopting his most solemn pose, he expressed to Gerald Selous, the British commercial secretary, his “deep sympathy” for the refugees, reaffirmed his eagerness to help the victims of Nazism—and regretted that nothing could be done. His excuse had been carefully plotted by officials in Bern. The Jewish refugees, Petitpierre’s department had decided, would be exploited as a bargaining ploy to secure Switzerland’s own claim for German assets.
Stucki’s expression did not betray any cynicism as he unfolded Switzerland’s dilemma to the Englishman. Before any sale of the German assets could begin, so that money could be collected for reparations, he told Selous, a rate of exchange needed to be fixed between the Swiss franc and the Reichsmark. Otherwise, he continued, the German owners might not receive fair compensation for their confiscated property. In the meantime, he concluded regretfully, “nothing can be done.”
The Foreign Office’s reaction to the “bombshell” was to convince itself that Stucki was personally to blame for Switzerland’s gymnastics. “I have been wondering,” commented Villiers, “whether the Swiss political authorities are aware of the tangle that we have got into. Monsieur Stucki is a notoriously obstinate man and may have been keeping the whole business to himself.”
James Mann, still employed in the American embassy’s Safehaven team and the regular butt of Stucki’s complaints as “obstructive” and guilty of “endless puerilities,” knew that Stucki was simply the front for a cabal. “The Swiss,” he declared, “are going to have to be defeated. We’re going to kick them down.” Eagerly, Mann had responded to an invitation from the American and Canadian delegates at the Inter-Allied Reparations Agency (IARA) in Brussels to discuss how the money could be extracted from Switzerland. To Stucki’s relief, the West’s deteriorating relations with the Soviet Union had paralyzed that initiative. “We could rely on the support of the British and French governments,” Stucki said with a smile, “to block that move.”
By then, although German assets in Switzerland were, according to the Allies, worth $1 billion, only $2.6 million (SF11.5 million) had been raised by the Compensation Office through the sale of houses, cars, machinery and a trout farm. A meeting at the Foreign Office to consider “suggestions for turning the heat on the Swiss” debated the question whether Washington should be asked to refreeze Swiss assets and deny Swiss businessmen visas. Instead, influenced by British diplomats in Bern who, easily seduced by their hosts, excused the Compensation Office’s “admirable work” despite the slow “running in” of a reluctant staff employed in a “blind-alley job,” Villiers reflected that any action would be “likely to stiffen the Swiss in their present attitude.” The State Department’s counterproposal—that Switzerland either sell the property pending agreement on an exchange rate or hand over SF250 million immediately and sell the German property at its own pace—was also dismissed: “We regard the American proposals as altogether impossible.”
Thanks to the British, the Swiss had achieved their purpose—to delay any sale of German property for reparations until Germany’s fate was established. In the meantime, to increase the pressure on the Allies, the Compensation Office’s discrimination against the German Jews was intensified. While Max Ott insisted that all Germans must be treated identically—ordering that the assets of German Jews should be sold off in common with other German property—his decrees were sharply discriminatory. To help Germans secure their property in Switzerland, he proposed that any German who had served in Hitler’s armed forces should be deemed not to have lived in Germany. Yet simultaneously he tightened the regulations preventing German Jews who had returned to Germany from using their money and property. Unashamedly, Stucki endorsed the reinterpretation of the letter he had signed in Washington committing Switzerland to help Jewish refugees. To match the new mood in Bern, he insisted that no distinction in favor of Jews was intended in the confiscation and sale of German assets. “It seems to me that the letter must have equally referred to German Jews,” he told his Compensation Office colleagues. In Washington, Rubin was appalled: “It never crossed the minds of the Allied negotiators to discriminate against those persecuted
in Germany. The Swiss are being difficult.” Swiss lawyers were using the Jews as pawns.
On March 26, 1947, a test case was presented to Stucki. Maria Wilcke, a German Jew who had survived an extermination camp, had found on reaching Switzerland that her bank refused to hand over her savings and was threatening to confiscate the money for reparations. In reply to the State Department’s appeal for help, Stucki wrote: “I must concede that it would be obnoxious if Mrs. Wilcke’s Swiss assets were liquidated, considering her suffering in Germany.” But his words were not matched by any rectification of the grievance.
In justification of the misery Swiss discrimination was causing, Stucki pointed to the Allies’ conduct toward Jews in Germany. In May 1945 Germany had been divided by the four wartime Allies into four zones. Each zone was ruled by an Allied military government, making its own laws by decree. While the three Western Allies increasingly coordinated the economies of their zones, their disagreements over less important issues—such as the restitution of property—delighted Stucki. In the American zone, the military government had decreed that the property of the 100,000 Jews who had lived in the area until 1933 should be restored to the survivors or their heirs. But, despite American pressure, both Britain and France had refused to enact similar legislation in their own zones. The British, controlling a zone where over 100,000 Jews had lived until 1933, had reneged on their earlier support for the Jews. Their military government refused to issue a decree allowing Jews to claim damages from Germans, to use the heirless assets for the relief of survivors, or to allow Jews to recover their own property from the Nazis, who had expelled them from their homes, casting them penniless into the streets. British policy caused the American Jewish Committee (AJC) “deep regret,” but British Jewry had failed to persuade the Labor government to acknowledge the immorality of allowing the survivors, often sick from incarceration in concentration camps, to remain destitute while their tormentors tranquilly enjoyed the benefits of their crime. Whitehall’s agenda was consistent: the Jews should not be allowed even to recover their own money because it might finance their cause in Palestine.