God's Bankers: A History of Money and Power at the Vatican

by Gerald Posner

  3 The OSS used Schwend on so-called bird-dog operations, designed to find wanted Nazis. His code name was Flush. Schwend wrote a long report about his counterfeiting operation for the OSS, but according to the intelligence agency, and its successor the CIA, that report was inadvertently destroyed. The Americans cut Schwend loose in 1946 when they discovered he was running yet another counterfeiting operation in Italy. He ended up in Peru where he produced fake dollars and trafficked in small arms. Cables of December 12, 1966, and August 19, 1969, Memorandum for CIA Deputy Director for Plans, RG 263, Freidrich Schwend Name File, Vol. 2, NARA. See generally Kevin C. Ruffner, “On the Trail of the Nazi Counterfeiters,” Studies in Intelligence (2002), 44, https://www.cia.gov/library/center-for-the-study-of-intelligence/kent-csi/vol40no5/html/v40i5a12p.htm. See also release of “Studies in Intelligence” document by the CIA, September 18, 2014.

  4 Aarons and Loftus, Unholy Trinity, 297; see also Auszug aus den Akten Friedrich Schwendt, RG 242, T-120, Roll 5781, Frame FH297319-55, NARA; Richard Breitman, Norman J. W. Goda, Timothy Naftali, and Robert Wolfe, U.S. Intelligence and the Nazis (Cambridge: Cambridge University Press, 2005). As for the exchange of British sterling in 1945, see John Hooper and Richard Norton-Taylor, “The Pope Has a Problem; The Vatican Is Still Trying to Hide What May Be Ugly Secrets About Nazi Loot,” The Guardian, February 12, 1998, 19.

  5 The Yugoslavian government later claimed that 258 pounds of gold were stolen. An early detailed accounting about the Ustaša looting of gold reserves is a January 1946 intelligence report from James Jesus Angleton. He reported that Ustašan fugitives had fled into Austria with two crates of gold. U.S. Strategic Services Unit report of James Angleton, January 22, 1946, Entry 210, Box 6, RG 226, Location 250/64/28/02, NARA; see also Phayer, Pius XII, the Holocaust, and the Cold War, 211, Aarons and Loftus, Unholy Trinity, 301–2.

  6 Deposition of William E. W. Gowen, Emil Alperin v. Vatican Bank, Case No. C99–04041 MMC, USDC Northern District of California, March 9, 2006, Vol. 4, 759–61, 775.

  7 Bigelow to Glaser, July 19, 1946, Entry 183, Box 27, RG 226,Llocation 190/9/22/05, NARA. Besides his cash, Schwend had buried about 7,000 pieces of gold in a remote stretch of Austrian countryside. But before he could retrieve it and send it to the Vatican or other safe haven, the OSS took it as part of their convoluted bargain with Schwend. See Ruffner, “On the Trail of the Nazi Counterfeiters.”

  8 Argentina: Economic/Safehaven: German Capital Invested in Argentina, Report F-3627-A, RG 260, Office of the Military Government, United States (OMGUS), Property Division, Box 645, Argentina, NARA.

  9 Emerson Bigelow worked for the Strategic Services Unit, an intelligence organization that existed briefly between the winding down of the OSS and the start-up of the CIA. He was not an intelligence officer but rather a financial analyst who sent his report to Harold Glasser, the Treasury Department’s Director of Monetary Research. Bigelow’s memo was declassified on December 31, 1996, as part of the State Department’s normal review of historical documents. In July 1997, the document was released pursuant to a Freedom of Information and Privacy Act request to two television producers, Gaylen Ross and Stephen Crisman, who were filming a two-hour documentary for the Arts and Entertainment Network about how Switzerland handled Nazi gold during and after the war. The State Department released the document too late to be included in the July 26 show, so instead the producers released it to several newspaper reporters and wire services. Bigelow to Glasser, July 19, 1946, Entry 183, Box 27, RG 226, Location 190/9/22/05; Memo from Emerson Bigelow to Harold Glasser, Director of Monetary Research, U.S. Treasury Department, October 21, 1946, RG 226, Entry 183, Box 29, File 6495; also Entry 183, Box 27, RG 226, Location 190/9/22/05, NARA.

  10 Gowen’s father, Franklin, was assigned at the same time to the State Department’s Vatican mission. During the war, he had served as Myron Taylor’s assistant.

  11 There was some debate among CIC investigators about whether the British troops and priests were authentic or merely Ustašan officers in stolen uniforms and clerical robes. CIC agent Gowen believed that the uniforms were stolen and had been taken from the headquarters of the British 8th Army. Letter from Dr. Jonathan Levy to Rene Brülhart, Autorita di Informazione Finanziaria, March 25, 2013, Re: Offer to Compromise Without Prejudice on the Matter of the Ustaša Treasury; Deposition of William W. Gowen, Emil Alperin v. Vatican Bank, Case No. C99-04041 MMC, USDC Northern District of California, December 12, 2005, 56.

  12 The lieutenant colonel was Ivan Babic, a decorated Ustašan veteran who had fought against Russian troops. Deposition of William W. Gowen, Emil Alperin v. Vatican Bank, Case No. C99-04041 MMC, USDC Northern District of California, December 12, 2005, 45.

  13 Headden, Hawkins, and Vest, “A Vow of Silence,” 34.

  14 Ibid., 34; Declaration of William W. Gowen, Emil Alperin v. Vatican Bank, Case No. C99-4941 MMC, USDC Northern District of California, January 16, 2003, 6.

  15 Aarons and Loftus, Unholy Trinity, 113.

  16 Declaration of William W. Gowen, Emil Alperin v. Vatican Bank, Case No. C99-4941 MMC, USDC Northern District of California, January 16, 2003, 5–6; see also Deposition of William W. Gowen, Emil Alperin v. Vatican Bank, Case No. C99-04041 MMC, USDC Northern District of California, December 12, 2005, 45–47. See also Steinacher, Nazis on the Run, xx, 13.

  17 Wilensky, Six Million Crucifixions, Kindle edition, 3207 of 8032.

  18 Deposition of William W. Gowen, Emil Alperin v. Vatican Bank, Case No. C99-04041 MMC, USDC Northern District of California, March 9, 2006, 796; see also Exhibit, Declaration of William W. Gowen, January 16, 2003.

  19 Declaration of William W. Gowen, January 16, 2003, 15–18. The Foreign Service officer was J. Graham Parsons. He had replaced Gowen’s father, Franklin, as Myron Taylor’s assistant. The elder Gowen left his post in 1945, shortly after his son had arrived in Italy on behalf of the CIC.

  20 Declaration of William W. Gowen, 18.

  21 Letter from Dr. Jonathan Levy to Rene Bruelhart, Autorita di Informazione Finanziaria, March 25, 2013, Re: Offer to Compromise Without Prejudice on the Matter of the Ustašan Treasury.

  22 Deposition of William W. Gowen, Emil Alperin v. Vatican Bank, Case No. C99-04041 MMC, USDC Northern District of California, December 12, 2005, 82–84.

  23 From Vincent La Vista to Herbert J. Cummings, Subject: SAFEHAVEN: FLIGHT OF CAPITAL BY PETACCI FAMILY, Secret, Report No. 11, Rome, June 19, 1946, RG 84, PRFSP, State Department, Rome, Embassy and Consulate, Confidential Files, 1946, 851 AC, Finance Section, 851.5, Box 11, NARA.

  24 Ibid.

  25 Ibid.

  26 Rick Hampson, “Pope Changed the World,” USA Today, April 3, 2005.

  27 Myron C. Taylor to Secretary of State (Edward Stettinius), April 20, 1945, RG 59, Box 28, Entry 1069, Location 250/48/29/05, NARA.

  28 The Italian communist chief was Palmiro Togliatti. Phayer, Pius XII, the Holocaust, and the Cold War, 135. Pius in part blamed the Allies for the strong postwar power of the Soviets. He was convinced that if America and Britain had not so thoroughly destroyed the Germans, the Russians would not have been able to grab half of Europe.

  29 Cooney, The American Pope, 145, citing undated OSS documents in note 54.

  30 Phayer, Pius XII, the Holocaust, and the Cold War, 141.

  31 Ibid., 238.

  32 Aarons and Loftus, Unholy Trinity, 25.

  33 Pascalina was put in charge of Church Asylum, which focused in large part on German POWs in gigantic Allied makeshift detention camps. See Steinacher, Nazis on the Run, 102. Montini had worked with Draganović during the war as the de facto representative for Croatian refugees. Subject Dr. Krunoslav DRAGANOVIC, Secret: U.S. Officials Only, Date of Info: 1945–1952, Date Acquired: July 1952, Date of Report, July 24, 1952, Approved for release Feb 1998, (262), NARA; see also Phayer, Pius XII, the Holocaust, and the Cold War, 233. The postwar Confraternity of San Girolamo was a charity founded in July 1945 for Croatian refugees. It provided a cover for Draganović to continu
e his work with the Vatican and Monsignor Montini.

  34 The Allies had compiled a Central Registry of War Crimes and Security Suspects (CROWCASS). By the time it was phased out in 1948, it had 85,000 wanted reports and forty book-length reports of wanted criminals. As the largest database of its kind, investigators in a dozen countries used CROWCASS, as well as military and army police files, cross-referencing names against the millions detained in POW or displaced persons’ camps. Christopher Simpson, Blowback: America’s Recruitment of Nazis and Its Effects on the Cold War (New York: Weidenfeld & Nicolson, 1988), 67.

  35 Vatican passports were only for clerics, although a few were issued to Black Nobles. The church’s alliance with the International Red Cross, which was itself under tremendous pressure and operating at full capacity because of the flood of refugees, was natural. Some Red Cross passports used by Nazi fugitives were fake.

  36 See generally Sereny, Into That Darkness, 275–91.

  37 Stephanie Stern, “Papal Responses to the Holocaust: Contrast Between Pope Pius XII and Pope John Paul II,” Colgate Academic Review 8, Article 5 (Fall 2010). Even when Pius was offered opportunities to make up for some of the church’s inaction during the war, he failed to do so. Five months after hostilities ended, the World Jewish Congress’s Gerhart Riegner met with Monsignor Montini and Pius. Riegner pleaded for assistance in finding any Jewish children who might have survived the death camps. He informed the two church leaders that the Nazis had murdered 1.5 million Jewish children. Montini dismissed that as exaggerated. Pius promised the church would help. It did nothing. It was not until 2004 that historians uncovered in France an unsigned letter approved by Pius XII instructing that Jewish children who had been baptized to save them from the gas chambers should be entrusted only to families who agreed to raise them as Catholic. Jewish groups raised an uproar. Vatican spokesman Father Sergio Pagano contended the letter was only meant to apply to “abandoned” children. “It would be another thing if the children were requested back by their parents,” he said. John Thavis, “Vatican Not Impressed with Threat to Sue over Access to Archives,” Catholic News Service, January 28, 2005.

  38 Headden, Hawkins, and Vest, “A Vow of Silence,” 34. Schellenberg was sent later to Great Britain. During extensive interrogations there he gave the most complete accounts of Nazi wartime intelligence. See Ruffner, “On the Trail of Nazi Counterfeiters.”

  39 In a World Peace Rally in New York, Cardinal Spellman told a large crowd that Stepinac’s only crime was “fidelity to God and country.”

  40 Uki Goñi, The Real Odessa: How Perón Brought the Nazi War Criminals to Argentina (London: Granta, 2002), 346; Michael Phayer, “Canonizing Pius XII: Why Did the Pope Help Nazis Escape?,” Ohlendorf testimony in Case 9 Transcripts, RG 238, Entry 92, Box 1, Vol. 2, 510, NARA.

  41 Catherine Epstein, Model Nazi: Arthur Greiser and the Occupation of Poland (Cary, NC: Oxford University Press USA, 2012), 330–31. Greiser’s case is typical of others in which Pius intervened for clemency. Greiser wrote to Pius and two British politicians—Anthony Eden and Alfred Duff Cooper—he thought might be sympathetic to his appeal to avoid a death sentence. The politicians were smart enough to ignore him. Only Pius responded, asking the Poles to spare Greiser, in part “following the divine example of our Lord, who, on the cross, praying for his executioners.” Greiser had met the Pope (then Secretary of State Pacelli) during a visit to Rome in 1938.

  42 Epstein, Model Nazi, 330; see also Goñi, The Real Odessa, 346.

  43 Glenn Yeadon, The Nazi Hydra in America: Suppressed History of a Century (Palm Desert, CA: Progressive Press, 2008), 276.

  44 Phayer, The Catholic Church and the Holocaust, 154, 201; see also Suzanne Brown-Fleming, The Holocaust and Catholic Conscience: Cardinal Aloisius Muench and the Guilt Question in Germany (Notre Dame, IN: Notre Dame University Press, 2006).

  45 Brown-Fleming, The Holocaust and Catholic Conscience, 88, 188–89; Phayer, Pius XII, the Holocaust, and the Cold War, 136.

  46 Aarons and Loftus, Unholy Trinity, 148–49.

  47 Jakob Weinbacker interview with Gitta Sereny, in Sereny, Into That Darkness, 305–6.

  48 William Gowen and Louis Caniglia, Counter Intelligence Corps, Rome, August 29, 1947, RG 319, Box 173, File IRR XE001109 Pavelić, Location 270/84/1/4, NARA; Antonio Vucetich, El Socorro, Argentina, to Olga Vucetich-Radic, May 6, 1947, RG 59, Box 17, Entry 1068, Location 250/48/29/01-05, NARA. See also for a general discussion Phayer, Pius XII, the Holocaust, and the Cold War, 234–45.

  49 Aarons, Sanctuary, 216–17; Phayer, Pius XII, the Holocaust, and the Cold War, 245–46, 263.

  50 Pavelić was no newcomer to Italy as a fugitive. In 1934 he had found safe haven there after assassinating Serbian King Alexander and the French Foreign Minister. Mussolini refused to extradite him. In 1941 he returned to Croatia to lead the new fascist state.

  51 Phayer, Pius XII, the Holocaust, and the Cold War, 222–23, 225.

  52 Goñi, The Real Odessa, 343, citing CIC memorandum, Life and Work of Dr. Dominik Mandic, October 10, 1946, CIA Operational Files M; Blazekovic, Studia Croatica, 1973, Issues 50–51; Headden, Hawkins, and Vest, “A Vow of Silence,” 34.

  53 Headquarters of Counter Intelligence Corps, Allied Forces Headquarters, APO 512, Subject: Father Krunoslav DRAGANOVIC, Re: PAST Background and PRESENT Activity, February 12, 1947, NARA. San Girolamo was the busiest of the ratline seminaries, but it was not the only one. It catered to Croatian fugitives. Lithuanians went to a Father Jatulevicius on the Via Lucullo, while Hungarians were directed to a small house on Via dei Parione run by Father Gallov. See generally Simpson, Blowback, 179.

  54 Headden, Hawkins, and Vest, “A Vow of Silence,” 34.

  55 Lt. Col. G. F. Blunder, Headquarters, Mediterranean Theater of Operations, to Col. Carl Fritzsche, Assistant Deputy Director of Intelligence, November 8, 1947, RG 319, Box 173, File IRR XE001109 Pavelić, Location 270/84/14, NARA.

  56 Headden, Hawkins, and Vest, “A Vow of Silence,” 34. The British Foreign Office in 1998 denied any involvement in the escape of the Ustašan fugitives, but refused to release any military intelligence records about Pavelić.

  57 It took the Vatican fifty years to respond to the charges that it had helped Pavelić escape, and it did so only after Vienna-based Nazi hunter Simon Wiesenthal had released a damning report about the church’s role as Pavelić’s postwar protector. The Vatican’s response? It claimed only that it could not find any evidence of payments to anyone named Pavelić in the records of the IOR. “Vatican Will Attend Nazi Gold Conference in London,” Agence France-Presse, December 1, 1997 See also Yossi Melman, “Pope Paul VI Allegedly Helped Croatian Fascists,” Ha’aretz, January 16, 2006.

  General funding for Croatian refugees also came from the American National Catholic Welfare Council, a charitable organization directed by the U.S. cardinals. Chicago’s Cardinal Samuel Stritch was the best fundraiser, but he had good reason to do so since he oversaw the largest Croatian congregation in the U.S. See generally Phayer, Pius XII, the Holocaust, and the Cold War, 247–48. The CIA declassified what it claimed were the last two pages in its possession about Draganović, but both are completely redacted.

  58 “Ante Pavelic Dies in Madrid at 70,” Reuters, Madrid, December 29, 1959; Aarons and Loftus, Unholy Trinity, 143–50.

  59 Telegram from Weizsäcker to the Foreign Office, Berlin, October 17, 1943, Inland Il Geheim, quoted in full in Katz, Black Sabbath, 215.

  60 Steinacher, Nazis on the Run, 119–20. Disguised as an Austrian refugee organization, the Austrian Liberation Committee and Hudal received financial aid from the American Catholic Bishops Conference among other church groups.

  61 Stangl interview with Gitta Sereny in Sereny, Into That Darkness, 274

  62 Ibid., 289.

  63 Tony Paterson, “How the Nazis Escaped Justice,” Independent Press, January 28, 21=013, 26.

  64 Yitzhak Arad, Belzec, Sobibor, Treblinka: The Operation Reinhard Death Camps (Bloomington, IN: 1987),
Kindle edition, location 4025 of 9931. In 1979, BBC investigative journalist Tom Bower tracked Wagner to Sao Paulo. In an interview, when asked about his savage role at the death camp, said: “I had no feelings, although at the beginning I did. It just became another job. In the evenings we never discussed our work, but just drank and played cards. . . . I feel like an ordinary man, no different from others.” Tom Bower, “The Tracking and Freeing of a Nazi Killer: The Life and Deaths of Gustav Wagner,” The Washington Post, August 19, 1975, E1.

  65 See Holger M. Meding, Flucht vor Nurnberg?: Deutsche und osterreichische Einwanderung in Argentinien, 1945–1955 (Vienna: Köln, Weimar, Wien, Böhlau Verlag, 1992).

  66 Sereny, Into That Darkness, 290.

  67 Interrogation Report on SS-Standartenführer Rauff Walther. CSDIC.SC/15AG/SD 11, May 29, 1945, RG 263, Walter Rauff Name File (note: different spellings of Walther/Walter are as reflected in the files), NARA.

  68 Sworn statement (translated) of Hermann Julis Walter Rauff Bauermeister, Santiago, Chile, December 5, 1962, Simon Wiesenthal Center, Los Angeles; see Aarons and Loftus, Unholy Trinity, 38; see also Simpson, Blowback, 92–94.

  69 Aarons and Loftus, Unholy Trinity, 38.

  70 Kevin Freeman, “Wiesenthal Center Releases Documents Which Link Rauff to Important Figures in the Catholic Church,” Jewish Telegraph Agency, May 9, 1984; see also Simpson, Blowback, 93–94.

  71 Simon Wiesenthal interview with Mark Aarons and John Loftus, Unholy Trinity, 28; Steinacher, Nazis on the Run, 134.

  72 Sereny, Into That Darkness, 319.

  73 Summary Report, by Special Agent Robert Mudd, RG 262, Box 12, Entry A1-86, NARA; see also Phayer, Pius XII, the Holocaust, and the Cold War, 235.