Chasing Gold: The Incredible Story of How the Nazis Stole Europe's Bullion

by George M. Taber

  Funk and Himmler were now leaving the job of handling the concentration camp valuables to their deputies, and Puhl could expect to receive a phone call from his counterpart in the SS before long. The vice president immediately tried to get out of taking the war booty, calling it “inconvenient” and adding that he didn’t know the consequences of such action. Funk assured him that there would be only a few shipments. In the end, the two men agreed that the Reichsbank would make its services available to the SS. They also decided that SS members would deliver and unpack the material delivered to the bank. The final admonition was that no one was to be told the origin of the goods. Only a dozen or so Reichsbank officials ever knew about the operation.

  Puhl later met with SS Brigade-Führer Karl Hermann Frank and Obergruppenführer Karl Wolff, both high ranking SS officers, to work out the details of the shipments, and all agreed to handle everything verbally and to put nothing in writing. Puhl informed Bank Director Frommknecht, the member of the board in charge of the vault, who called in Albert Thoms, the manager of the Precious Metals Department and the person who would be running the day-to-day operations. Frommknecht explained that the SS would soon be bringing him deliveries, again emphasizing that they came from the “eastern occupied territories.”

  The two men then went to see Puhl, who said that the matter was to be kept “absolutely secret” and that the delivery would include several different types of valuables including jewelry. Puhl warned Thoms that if anyone ever asked him about it, he should not discuss the subject. Thoms was given the names of two SS officers whom he should contact if he had any questions about the upcoming deliveries.

  Thoms protested that he would need to use outside experts to evaluate the material they were talking about, but Puhl said that should be handled some other way. The deputy suggested that the jewelry be dealt with exactly as the bank had treated earlier confiscated Jewish property in the aftermath of Kristallnacht in 1938 by sending it to the Municipal Pawn Shop in Berlin, which would then later forward a payment to the bank. Puhl accepted the proposal.3

  After going back to his office, Thoms called one of the names he had been given and learned that in two weeks SS Hauptsstrumführer Bruno Melmer would deliver the first shipment. The SS had already decided that it would be better if he arrived in civilian clothes, although other soldiers in uniform would accompany him to help move the valuables expeditiously. Bank officials gave the name Melmer to all the deliveries, and a tag with that word was put on each container the SS delivered. Thoms and his staff followed orders and did not put the letters “SS” anywhere in the bank’s books.

  The first shipment arrived on August 26, and the contents were immediately distributed to various bank departments. The currency and stock certificates went to the currency group, while the jewelry and gold coins stayed in the Precious Metals Department. The items generally arrived in battered suitcases, although some were also in canvas bags. Melmer provided his own list of the contents at each delivery, and received a receipt for the goods when he left. Unloading the first shipment took four days, but the second one only two.

  It had been agreed between the bank and the SS that the proceeds of shipments would be deposited in a new SS account at the German Finance Ministry. The code name for the account was Max Heiliger. There was no such person, and it is an example of SS humor since in German the surname means “Holy One.” Max is a common German first name.

  The deliveries were erratic. There was one in August 1942, then three in September and back to one in November. In March 1944, there were four shipments.4 The concentration camp suitcases contained a wide variety of items. One listed simply as Case 71, for example, held 1,536 bracelets made out of gold, silver, and lacquer. In another there were 2,656 gold watchcases. In a third was Polish currency totaling 850,300 zloty. Some contained hundreds of pieces of silverware. Teeth fillings were separated into gold and silver containers, and in one of the early suitcases there was twenty-two pounds of dental silver. The first gold teeth appeared in the November 1942 delivery. Eighteen bags contained bars of silver and gold. There were also gold cufflinks, tiaras, silk stockings, and Passover cups, as well as pearl necklaces. In short, the cases contained anything people who had been told they were being relocated to a new place would have wanted to take with them.

  Thoms passed along as much of the Melmer deliveries as he could to other organizations, without telling them the origin of the goods. Jewelry went to the Municipal Pawn Shop in Berlin, as he had suggested. Items in good condition, such as gold bars, were sent directly to the Prussian Mint, where they were melted and given predated identification numbers to hide their original identity. Boxes of gold wedding rings also went to the Prussian Mint. Lower quality gold from other jewelry went to Degussa, a German precious metal company, which smelted it into higher-quality bars. Several Reichsbank officials were charged with handling other specific goods.5

  After the first shipment arrived at the Reichsbank, Oswald Pohl of the SS called Emil Puhl and asked him if he knew about the deliveries. The banker said yes, but then added that he did not want to talk with him about it on the phone. He asked the SS officer to come to his office so they could discuss the matter in person. Pohl arrived with an assistant and said that he already had a large quantity of jewelry in Berlin and wondered if he could bring it to the bank. Puhl replied that he would try to arrange it. After the war, the bank managing vice president told interrogators that he informed the board of directors about the first shipment at its next meeting. No one raised any objections to this new work with the SS.6 Bruno Melmer personally delivered all of them until late in the war, when Sturmführer Furch took over the job.

  In early 1943, some of the packages began carrying stamps identifying them as Lublin or Auschwitz. The Reichsbank staff knew that those were the names of death camps. Puhl rarely visited Thoms and his operation, but on one occasion Funk had a dinner for Oswald Pohl, the Himmler aide. Before they ate, Emil Puhl took the concentration camp inspector down to the cellar vaults so that he could see the suitcases of looted valuables that his men were bringing to the bank.7 After a few months of deliveries, Puhl telephoned Thoms and asked him how the operation was going. The vice president said that he thought they would soon be over. Thoms replied that it looked to him like they were increasing.

  When the Allied bombing of Berlin became devastating and targeted, it was more and more difficult to handle the shipments of prison camp gold and other valuables. Piles of unopened suitcases began to stack up in the Reichsbank basement. Degussa’s main facilities were destroyed by Allied attacks in late 1944, and it could no longer smelt gold.

  Thoms told American interrogators that the total value of all of the deliveries was about ten million marks, but he was likely underestimating it. At the official 1940 dollar-mark exchange rate of 2.5, that would have been the equivalent of $4 million. Bernstein calculated the Melmer proceeds from the deliveries at $10 million. While most of the bullion was in small amounts, 125 pounds came in the form of bars. Later post-war estimates ranged between $2.5 million and $5.0 million, but no one knows for certain. In addition, there were 6,427 gold coins. Those two categories alone amount to nearly eleven tons. The theft of valuables from people on their way to death camps ranks among the most despicable of the many Nazi atrocities. The seventy-sixth and last Melmer delivery arrived at the Reichsbank on January 27, 1945.8

  Eisenhower was not comfortable with money and gold issues, but he had someone to handle them for him. In the summer of 1942, General Eisenhower sent Secretary of War Henry L. Stimson a message saying that he would need an expert to handle financial and monetary issues when American armies began invading Nazi-held parts of North Africa and Europe. Stimson picked up the phone and asked Morgenthau if he had someone for Eisenhower. The Secretary of the Treasury replied that Bernie Bernstein, his assistant general counsel, was just the man. Morgenthau thought he had both the youth and the experience needed for the obviously demanding job. Bernstein immediately rec
eived the rank of Lt. Colonel and was soon working for Eisenhower in London. When allied forces soon invaded North Africa and Italy, Bernstein handled delicate occupation issues such as local currency values and military script.

  In a May 8, 1945 report entitled “SS Loot and the Reichsbank,” Bernstein estimated the value of the Melmer deposits to be $14.5 million.9 In his conclusion he wrote: “The sums estimated by Thoms appear to be an understatement for the loot handled by the Reichsbank since 1942. Certainly they cannot begin to represent the total extent of the operations of the SS economic department, which for 12 years has disposed of the personal and household valuables of millions of racial and political victims of the calculated Nazi policy of extermination.”10

  In Bernstein’s May 1945 monthly report to General Clay, he updated his estimate on the amount of Melmer gold deposited at the Reichsbank. This was based on further interrogations of Albert Thoms and other bank officials. A 1998 study by William Z. Slany, a U.S. State Department historian who did extensive work on the topic for the 1997 London Gold Conference, estimated the amount of looted SS bullion at $4.6 million.11

  There is no doubt that some gold taken from concentration-camp victims has found its way into bars and today sits in the world’s central banks vaults, probably including those of the New York Federal Reserve. Several ingots of Melmer gold were sold to Switzerland and then moved into the traffic of central bank bullion.12 It is impossible, though, to determine how much. When gold is melted down and resmelted, it loses all identification. It would be like trying to identify a grain of wheat in a loaf of bread.

  Chapter Twenty-Five

  DRAGGING EVERYTHING OUT ITALIAN STYLE

  American and British troops scrambled ashore on the island of Sicily on July 10, 1943 to begin the British and American attempt to recapture the European mainland. Churchill, who desperately wanted to go on the offensive, called the area the continent’s “soft underbelly.” Stalin had also been pressing the Americans to launch an offensive to relieve his troops on the eastern front. Only nine days later, the American air force bombed Rome, targeting a steel factory, a freight yard, and the main airport. Those blows ended Benito Mussolini’s final hold on the Italian people. The country’s Grand Council of Fascism, the party’s ruling body, on July 25 voted no confidence in him and asked King Victor Emmanuel to resume his full constitutional powers as leader of the country. Later that day, the king ordered Il Duce arrested. Following the fall of the Italian leader, the Nazis quickly moved ten divisions into Italy to shore up the country in anticipation of an Allied invasion of the mainland.1

  Italian military units moved Il Duce around the country after his arrest and eventually imprisoned him in the Campo Imperatore Hotel at Gran Sasso d’Italia in the Apennine Mountains about eighty miles north of Rome. He did not stay there long. On September 12, SS Lt. Colonel Otto Skorzeny led a Nazi commando unit in gliders that landed near the resort and without firing a single shot overwhelmed 200 carabinieri guards. Skorzeny told Mussolini, “The Führer has sent me to set you free!” Mussolini replied: “I knew that my friend would not forsake me!”2

  The Germans immediately took Mussolini to Berlin, where Hitler was appalled by his one-time mentor’s physical and emotional deterioration. Nonetheless, the Führer made him the leader of a new puppet state called the Italian Social Republic. Its nominal capital was Rome, but that was too close to the invading forces so it operated out of the town of Salò on Lake Garda in northern Italy. Mussolini was now the total tool of Hitler.

  Early in the war, the Italian fascist government had undertaken a study to find a central location in the country where its bullion could be easily protected. At the time it was located at the Banca d’Italia (Bank of Italy) headquarters in Rome at the Palazzo Koch, a palace on Via Nazionale. Mussolini selected the small town of L’Aquila, which was in a narrow valley about sixty miles northeast of Rome. The government began printing paper currency there, but the gold was never moved. With the war going badly for the Italian fascists, officials decided to look for another location. The country’s finance minister argued that it should go to the mountainous Trentino-Alto Adige region north of Venice. Before that could be accomplished, however, Mussolini was ousted. Bank governor Vincenzo Azzolini suggested distributing the bullion among several cities around the country to reduce the risk that the Allies would capture it intact. Marshal Pietro Badoglio, the head of the military, wanted it sent to an Italian bank near the Swiss border, but that too was nixed.3

  At a meeting of the Bank of Italy’s board on July 28, Azzolini pushed through a plan to move the bullion out of Rome, although the destination was still not clear. Less than two weeks later on August 10, 1943, the banker met with General Badoglio to work out the details. The actual creation of the plan went slowly. At one point in September, there was even a proposal to ship the bullion to Sardinia, which the British and Americans had already liberated. Finally the general told Azzolini that he and other bank officials should work out a plan to move it north by train.

  Four days later, the Italian government declared Rome to be an open city in hopes of avoiding Allied air attacks. The country was still nominally in the hands of Italian Fascists, but the Germans in early September took over both the capital and the central part of the nation. Hitler named Rudolf Rahn, a career foreign service officer who had just been appointed ambassador, to take up the new post of plenipotentiary in Italy. The Germans were now effectively running the country, and Rahn was the new boss.

  Four German organizations were soon anxiously looking to get their hands on the Italian gold: Himmler’s SS, Hermann Göring’s Four Year Plan, Joachim von Ribbentrop’s Foreign Office, and Walther Funk’s Reichsbank. Ribbentrop had not previously been a major player in confiscating central bank gold, but this time he demanded to be part of the action because he was desperately looking for ways to finance his spying operations abroad. His people operated all over Europe and the Middle East under the cloak of diplomacy, and bullion was the coin of the realm for their operations.

  Ribbentrop became the strongest of the four because his man Rahn was the top official on the ground in Italy. The Reichsbank’s Funk had little clout in Berlin; his role by then was largely technical and dealt with gold shipments. Göring, whose influence had slipped badly after his failure to defeat Britain in the summer of 1940, wanted to ship the bullion immediately to Berlin, where it would reside at the Reichsbank but be under his control. Himmler also tried to get into the action, but was excluded. Rahn successfully argued that the Germans could not risk the total collapse of the Italian economy and the chaos that might ensue if the bullion were moved to Germany. He also recognized that he would be more powerful if the treasure remained under his control in Italy.

  The leaders of the Italian Social Republic and the Germans easily agreed that their immediate priority was to get the bullion out of Rome and up to northern Italy, where it would be far from invading Allied forces. An exception was made, though, for 2.3 tons of Albanian gold, which the Italians had captured during their invasion of that country in April 1939. It had simply been sitting in the Italian central bank vaults since then. That was immediately packed up into fifty cases and sent to Berlin on September 17, 1943.4

  The Nazis were not the only ones with their eyes on the Italian gold. The Bank for International Settlements also closely monitored the situation. Officials there were nervous about the bullion because that was a guarantee for their investments in Italian financial markets. Shortly after the BIS began operations in 1930, it made investments in member countries including Italy. Those were backed by Swiss gold francs, and at the beginning of World War II were valued at 54.5 million Swiss gold francs or $18 million. The bank was now anxious to protect its investment in Italy.5

  BIS boss Thomas McKittrick on September 9, sent Azzolini, who was an ex-officio BIS board member as well as head of the Italian central bank, a message about his organization’s concerns. McKittrick followed that up the next month with a formal d
emand that the Bank of Italy immediately ship three tons of gold to the BIS. He wrote that this was being done because of Italy’s “uncertain future.” The Basel institution actually just wanted to make sure the bullion didn’t fall into either Allied or Axis hands. Raffaele Pilotti, a top BIS official and also an Italian, traveled to Rome to discuss the issue with Azzolini, who was outraged at the request. He protested that it was an insult and had never been asked of any other BIS member. Gradually, though, the Italian banker began to realize that if he did not agree to the offer, all of Italy’s bullion would end up in Berlin. It was better to keep at least some in a different secure place.6

  Anticipating that the Nazis would soon be coming for the Italian gold, Niccolò Introno, the Italian bank’s deputy director general, came up with an ingenious plan to protect at least some of it. He proposed to Azzolini in the middle of September 1943 that they hide the bullion by constructing a false wall in the bank’s underground vault. They could build it in such a way that there would be a new entry into the vault that would camouflage the change. In another ruse, bank officials would backdate documents to show that they had sent bullion to Potenza, a town in southern Italy that was under heavy bombing and would probably soon be in Allied hands.

  Azzolini approved the plan, but ruled that only half of the gold should be placed behind the false wall. Bullion was then moved into the hidden area, and masons started building the dummy wall, which was completed during the night of September 19. Only a few hours after work was completed, Ambassador Rahn sent Azzolini the official document ordering that the country’s gold be moved immediately to northern Italy. The Nazis dictated that it had to be turned over to their representatives, who would have control of it.7