Nazi Gold

by Bower, Tom

  Bristling with more self-confidence than previously, Borer arrived as the Senate Banking Committee convened on May 15, 1997, intent upon suggesting that Switzerland was no longer the accused but the victim.

  The committee had been summoned to consider a report by Stuart Eizenstat entitled “U.S. and Allied Efforts to Recover and Restore Gold and Other Assets Stolen or Hidden by Germany During World War II.” Compiled by a team of historians who had drawn on the archives of eleven national departments and agencies over seven months, the report described its own findings as “often harsh and unflattering.” Borer entered the crowded committee room and sat in the front row, determined to effectively ignore the report and attack Switzerland’s critics.

  “This report details the greatest robbery in the history of mankind,” said D’Amato in his opening remarks. “It’s an outrage, to put it mildly.” Holding the report, the senator continued, “My friends, it is very clear that the Swiss government did not fulfill its obligations under the treaty (i.e., the Washington Accord) and that it kept billions of dollars illegally and improperly.” D’Amato was echoing the report’s own description: “one of the greatest thefts by a government in history: the confiscation by Nazi Germany of an estimated $580 million of central bank gold”—worth about $5.6 billion in today’s values—and its conclusion that the Allies’ attempt to recover the gold and other stolen assets from the neutrals had failed.

  The committee’s first witness was Eizenstat, who highlighted the fate of the looted gold—an emotional topic—rather than the heirless or German assets in Switzerland. The tall, thin Washington politician delivered his evidence unemotionally, deflating the drama of his disclosure. Holding up one page of the Reichsbank’s accounts, Eizenstat described the inscription of a German clerk fifty-five years earlier, who recorded that 29,996 grams of gold teeth had been delivered by the SS. “This is not an unusual entry,” said Eizenstat. “It is, unfortunately, all too usual.”

  For months, the American historians had sought to prove a gruesome allegation—that the gold teeth yanked from the corpses of gassed Jews had been recycled as anonymous ingots to finance Germany’s war effort. That attempt, Eizenstat claimed, had proved successful. In his monotone voice, he described how the gold stolen from individuals, mostly Jews before or after their murder in Eastern Europe, had been dispatched to an account at the Reichsbank opened under the name of SS Captain Bruno Melmer. Thereafter, according to Reichsbank documents that the historians had discovered, the “Melmer” gold had been added to the mint’s smelting operation. Quoting from Reichsbank documents and the sworn statements recorded by the Americans who interrogated Melmer, Emil Puhl, and Oswald Pohl, the head of the SS’s Economic Administration Office, Eizenstat described how the first shipment of “victim gold,” including dental gold, had been delivered to the Reichsbank on August 26, 1942, accompanied by the mention of one dispatch point—Auschwitz. Thereafter, according to another document, on one occasion in 1943, 37,000 fine grams of gold supplied by the SS were smelted into ingots. The value of the first forty-three out of seventy-eight shipments of gold to the bank was estimated to be worth $1.6 million. The grim image of German bankers utilizing gold—including coins, wedding rings, and dental fillings—confiscated from concentration camp inmates and those just gassed—to resmelt into ingots appeared to be proved. Possibly, suggested Eizenstat some of those ingots were shipped to Bern, but he volunteered that there was no evidence that the Swiss had knowingly accepted “victim gold.” In the report’s judgment, the provable accusations against Switzerland were enough.

  According to the report, the Swiss National Bank had retained $276 million of gold from Germany, worth $2.7 billion in today’s values. Accusing the neutrals, and especially Switzerland, of seeking to profit from the war Eizenstat concluded that their trade especially in the last stages of the conflict, when the thread of invasion had disappeared “had the clear effect of supporting and prolonging Nazi Germany’s capacity to wage war.” Switzerland in particular, the report stated, had “the deepest and most crucial economic relationship with Nazi Germany,” an attitude that it condemned as “most inexplicable.” Even worse, the Swiss bankers’ attitude after the war was categorized as “indifference to the needs of victims of the Holocaust and their heirs,” not least because of Switzerland’s persistent denial that it possessed any looted gold and its resistance to cooperation with the Allies.

  The report concluded, emotionally, that ingots containing “victim gold” had been sold by the Reichsbank to Switzerland, although there was no evidence that the Swiss government had used it after the war to manufacture “Goldvreneli,” the gold coins traditionally given to children as presents—despite a deliberate deceit adopted by the Swiss government, which impressed false prewar dates of manufacture on the coins.

  Having castigated the Swiss, Eizenstat’s report sought to establish whether surviving Jews were entitled to any of the approximately five tons of gold, worth $70 million, still retained by the Allied Tripartite Gold Commission in the gold pool.

  The report stated that fifty-six kilograms of “victim gold,” which the Reichsbank had acquired from the SS, were proved by the bank’s own records to have been the source of the ingots seized by the American army at the Merkers mine. That gold was transferred to the gold pool managed by the Tripartite Gold Commission, to be distributed and returned as monetary gold to Europe’s central banks. In addition, American army records showed that 6,427 gold coins and 10,709 fine ounces of gold bars labeled as belonging to the “Melmer” account and seized in the “Alpine Redoubt” had been transferred to the gold pool rather than to survivors. Yet the gold’s original owners were clearly victims of the Nazis. “The United States consciously decided,” concluded the report, “that their origin should be disregarded.” Contrary to the Allied agreements to restore stolen property to its owners and heirs, the surviving Jews did not become the beneficiaries; instead, the gold was diverted to Europe’s central banks.

  Establishing the motives for that decision was difficult. Significantly, in 1945 the Allies had become entangled in lengthy disputed about the definition of monetary and nonmonetary gold. An initial definition of monetary gold—“the gold which at the time of looting was part of the country’s central bank reserve”—had proved inadequate, and that, according to the report, caused “great confusion and disagreement.”

  The confusion and dispute about definitions were the subject of a second British government report entitled “Nazi Gold,” also published in May 1997. The British admitted that some gold ingots unearthed in Germany had lacked an acceptable stamp of an approved refinery and had been resmelted to the standards of the Bank of England. Hence the chance of identifying the gold’s origin had been destroyed. Soberly, the British report mentioned the incompetence of those Allied officials responsible for caring for the gold in Germany but declared, without offering any proof, that only a “relatively minute” amount of “victim gold” had entered the monetary pool to be divided among the Allies. That admission only confirmed the suspicion that the issue had been ignored in 1945, perhaps even deliberately. The British resmelting, some would later suggest, was a deliberate ploy by bureaucrats to rid themselves of an obstacle in appropriating the “victim gold” due to the Jewish survivors. Nevertheless, even that limited admission decisively influenced the fate of the remaining Nazi gold—worth $70 million—stored by the Commission in vaults in London and New York, and it persuaded the administrators of the Bank for International Settlements in Basel to admit that their wartime predecessors had probably dealt in looted gold and that their archives should, for the first time, be opened for scrutiny. Those concessions were a substantial victory for the Jewish pressure groups, and there was more in Eizenstat’s report to strengthen their claims.

  True to America’s traditions, the report sought to expose Washington’s own culpability regarding the Washington Accord. Despite continuous and acrimonious disputes among the historians and other contributors to th
e report, its final version criticized the United States for “a demonstrable lack of senior-level support for a tough U.S. negotiating position with the neutrals” and “and even greater lack of attention to ensuring implementation of negotiated agreements.” In support of its unconvincing criticism of the American negotiators in 1946 and of the decision to lift sanctions before Switzerland implemented the accord, the report cited a new disclosure: Senator Kilgore, after approving the accord, had personally protested to President Truman that Switzerland had after all acquired $300 million of looted gold during the war. “Justice, decency and plain horse sense,” wrote Kilgore, in a self-contradiction, “require that the Allies reject their proposition of settling for 20 cents on the dollar.” The only beneficiaries, complained the senator, were the “Nazi collaborationists.” Kilgore’s assertion and his plea that negotiations be discontinued were rejected by the acting secretary of state, Dean Acheson, not least because the agreement had already been signed. In a letter from the State Department, Acheson declared that “there was no reasonable evidence that Switzerland had purchased $300 million of gold looted by Germany.” Accordingly, Truman replied to Kilgore on July 3, 1946, that two-thirds of the “fairly provable” looted gold would be returned by the Swiss. In Eizenstat’s opinion, Acheson had been untruthful because the analysis of U.S. government officials’ activities in 1946 suggested the contrary, and “far less was returned” by the Swiss to the Allies. Although that was true, Eizenstat’s historians had ignored the reality of the negotiations—the Anglo-French refusal to continue sanctions and the lack of irrefutable proof to overcome Switzerland’s adamant denial that it possessed looted gold. Those obstacles had proved insurmountable for the negotiators. Similarly, it had proved impossible to extract more looted gold from Portugal and Spain. (Portugal had repaid only $4 million of the $51 million of gold that the Allies sought while Spain retained $30 million.)

  Those “serious shortcomings” by the Swiss, according to Eizenstat, had caused the Holocaust survivors’ grievances to be ignored, since the American government had failed to enforce the implementation of the accord by Switzerland. The reason, as the report analyzed it, was dictated by the cold war. In a presidential policy declaration, NSC 199, approved by Truman on December 9, 1951, Switzerland had been invited “into a closer relationship with the common defense effort of Western Europe.” The explanation for the reconciliation with Switzerland was recorded in a contemporaneous State Department internal memorandum that blamed the accord for having “poisoned our normally good relations with the Swiss,” causing “difficulties in our relations … disproportionate to the intrinsic importance of the matter.” Among the casualties was the search for heirless assets. Eizenstat’s report disclosed a newly declassified exchange between Washington and Bern in 1952—a telegram that damned as “inconceivable” the Swiss denial that any German property in Switzerland had heirs. Forty-five years later, concluded Eizenstat, the consequences were obvious. “The Swiss,” he explained, “never took any steps to fulfill this moral commitment.” He added, “The evidence in this report is incontrovertible.”

  Despite that bill of indictment, Eizenstat, in his own oral presentation of the report, resorted to a traditional State Department stance. Notably, despite the catalogue of criticisms against Switzerland, he refrained from condemning the Swiss government. On the contrary, he called Borer “my distinguished friend” and cautioned D’Amato that it was inopportune to consider “drastic action” against Switzerland, even though “the task [was] to complete the unfinished business of the twentieth century’s most traumatic and tragic events.” Eizenstat knew that D’Amato was “onside” in that endeavor, although he misunderstood the effect of D’Amato’s report in Switzerland.

  In Switzerland, the reaction reflected the nation’s increasing divisions. Those deliberately misinterpreting or condemning the report complained about the continuing misunderstanding of Switzerland’s wartime neutrality, the dangers it faced during the war, and the innocence of the National Bank. The more strident, particularly Christoph Blocher, an aggressive right-wing populist politician, declared that Switzerland had no cause to apologize and denigrated the report as “blackmail” designed to undermine the country. Blocher had already launched a campaign to defeat the $4.7 billion humanitarian fund in a referendum and his chances of his success increasingly appeared to improve. Other Swiss just yawned that the report was, predictably, more of the same. Steeled by the anger of the majority, Borer had arrived at the committee meeting in Washington to echo his country’s hardening hatred of its critics, especially the “Anglo-Saxon media.”

  Sitting in front of the crowded room, which included thirty Orthodox Jewish men, Borer had prepared himself for his important audience: the television viewers in Switzerland, who were watching his performance live. When he was still in Switzerland, Borer had been advised to tell the Americans that before criticizing Switzerland’s wartime neutrality, America should explain why it had remained neutral for the first two years of the war. And Americans should also be asked why Jews were refused refuge and why the U.S. Air Force refused to bomb the railway lines to Auschwitz. In other circumstances, Borer might have ignored those questions, but there were new revelations that further incriminated the Swiss financial community.

  Nazi wartime documents, recently discovered, revealed that the SS, through a secret account at Crèdit Suisse, had laundered loot expropriated from Jews, not least dental gold, through Switzerland. In return for deposits of “victim gold,” money had been transferred from Switzerland to an SS account at the Deutsche Bank in Berlin. In early 1945, the SS had granted a power of attorney over the Swiss account to Alfred Kurzmeyer, a Swiss director of the Deutsche Bank who had taken responsibility for the SS deposits in Switzerland and, after Germany’s defeat, had cared for his German associates. Additional evidence of the Swiss banks’ activities had been provided by Rudolf Hoess, the commandant of Auschwitz, who had declared at his trial that the gold snatched from Jews had been “transferred to Switzerland.” Newly discovered Swiss government documents revealed that the Swiss government had first claimed—falsely, in 1946—that an investigation into those allegations had been undertaken by the banks, but later denied the transfers. [Balzli p. 140. Balzli, Beat, “Treuhaender des Reichs” Werd Verlag 1997.] Other Swiss government documents revealed that Alfred Hirs, director of the National Bank, and Hans Frölicher, the Swiss ambassador in Berlin, had prevented Swiss Jews from recovering their assets from Nazi Germany and German-occupied France, and that both had refused to protect property owned by Swiss Jews from “Aryanization” in occupied Europe. By contrast, at the end of the war, both officials had helped Germans to smuggle their fortunes (much of it originally owned by Jews) into Switzerland for safekeeping. [Balzli p. 65, pp. 69 and 235.] Contrary to the versions propagated in Switzerland over the years, Swiss banks had failed to protect the deposits of foreign Jews from seizure by the Gestapo; and after the war, Swiss courts had patently sought to sabotage litigation by foreigners to recover the value of their stolen stocks and shares that had been traded by Switzerland’s leading banks.

  All those potential embarrassments were ignored as Borer began his testimony to D’Amato with rhetorical complaints about “Swiss-bashing in the media” and the “harsh and negative campaign.” Peppering his speech with mentions of “responsibility” and “moral questions,” Borer complained that Switzerland’s contributions to the Holocaust victims, including a children’s collection of $50,000, were being ignored. “The Swiss, old and young alike,” he said rapidly, “are perplexed and wonder why, in spite of these efforts, they continue to be treated as an international outcast.” Consistently, Borer ignored the criticism that it was not only Switzerland’s activities during the war that aroused concern but, more significantly, its behavior after the war, when there were no threats. Instead, repeating his standard reply to the critics, he mentioned the provision of new funds for the victims and his expectations about learning the truth from
the commission of international historians chaired by Jean-François Bergier. Naturally, Borer ignored the recent revelations that Bergier was employed as a member of a philanthropic foundation financed by Studer’s Union Bank and that Bergier had told an audience in Jerusalem that there was no anti-Semitism in Switzerland. Those conflicts of interest would cast doubt on the possibility of success of a Stalinist notion—that within a few years Bergier could produce, with the help of the disparate historians examining “tons of documents” drawn from the government and the financial institutions, a consensus about Switzerland’s history. Not least of the blemishes on the commission’s neutrality was the British-born historian Harold James, whose German mother had been a secretary in Martin Bormann’s department in Berlin. James’s qualifications for the commission were his professorship at Princeton and his expertise as a historian of banking. Among James’s few publications was a contribution to the Deutsche Bank’s official history, published in 1995. Commissioned to write the chapter about the bank’s activities during the Hitler era, James had succeeded in obfuscating and sanitizing the bank’s wartime association with Nazi crimes, and especially the culpability of Hermann Abs, the director who masterminded the bank’s rampant foreign plunder, its financing of a chemical factory owned by IG Farben in Auschwitz, and its postwar reconstruction. James was clearly a man whom the Swiss could trust.