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

by George M. Taber

  At about the same time, Azzolini learned that the Germans had captured a hoard of Italian government records, and he feared that they had probably learned the size and location of the country’s gold holdings. Potenza still remained under fascist control, and it would be easy to check whether gold was stored there, as they were planning to claim. On the morning of September 20, Azzolini met with Finance Minister Etorre Combi, who told him the Nazis had said that some of the gold had be sent to Berlin immediately, and he had only until 3:00 P.M. to reply. If the bank did not agree, the Germans would simply seize it. Stalling was no longer an option, and Azzolini decided the ploy of the hidden wall was perhaps too clever by half. He ordered the just-finished wall torn down.

  The Bank of Italy’s never-executed trick may have been the inspiration for Robert Crichton’s post-war novel The Secret of Santa Vittoria, in which Italian peasants hide millions of bottles of wine in a communal village cellar in order to keep it out of Nazi hands. The book was made into a movie with the same name that starred Anthony Quinn.

  In the hectic days after the fall of Mussolini, the Italian Central Bank sent small amounts of gold to its branch offices around Italy and to the country’s colonial outposts in Benghazi, Rhodes, and Addis Ababa. Those faced a variety of fates. The Bologna branch received just over one hundred pounds, but there are no records of what happened to it after it arrived. It simply vanished. The Milan office attempted to protect more than a half-ton of bullion by producing documents showing it now belonged to various groups or institutions. During the night of September 7-8, 1943, two lots were hidden in a well, and records were forged to show that it had been shipped to Turin. That gold also simply disappeared.8

  A German military unit finally arrived at the Bank of Italy office early in the afternoon of September 20, with orders to move the gold north by air the next day. A representative of the Reichsbank was to accompany it. Leading the group was Lt. Colonel Herbert Kappler, the SS officer who had rescued Mussolini. The Italians again stalled, and Azzolini insisted that it was much safer to send it by train and that Italians should guard it. His unspoken fear was that if it left by air, the plane could well end up landing in Berlin. The Germans eventually agreed, but insisted that they provide security. Then seemingly just to show who was boss, the Germans the next day sent five tons by air. Between September 22 and 28, 119 tons of gold left Rome on two trains, and were immediately deposited in the vault of the Bank of Italy office in Milan. The shipment included twenty-three tons from countries Mussolini had invaded: eight tons from the National Bank of Yugoslavia, fourteen tons from Vichy France, and one-third of a ton from Greece.9

  Italians still legally had custody of all the treasure in Milan, but Germans effectively controlled it and would determine its fate. Azzolini and the other Italian officials continued to drag their heels as much as they could about further shipments. Once all the gold had arrived safely, the Germans posted guards outside the vaults where it was stored. After Italian officials protested, the soldiers left but the Nazis received three keys to the storage room.

  Always anxious to demonstrate his power, Göring again got back into the action. He demanded that the gold be sent from Milan to a location closer to Germany, arguing that Milan was too vulnerable to Allied bombing. Ribbentrop eventually agreed that it move again on the condition that it remain under the authority of his man Rahn. The Reichsbank at one point got into the debate on the side of Azzolini, who continued his bureaucratic battles to keep it from being moved. He now argued that the Allies could still bomb it even if they moved it into the Alps, and proposed just leaving it in Milan. The Germans by now, though, paid no attention to the Italian central banker.10

  On October 18, less than three weeks after the bullion arrived in Milan, Göring proposed shipping it to the village of Franzensfeste. It was in the Italian Alps area of Trentino-Alto Adige, or as the Germans called it Südtirol, near the Brenner Pass that led to German-occupied Austria. One of Europe’s mightiest fortresses was located there.

  Napoleon in 1805 invaded Austria, and Prince Klemens von Metternich, that country’s long-time foreign minister, always feared a repeat of the humiliation. The Brenner Pass is the lowest mountain route across the Austrian Alps, and thus the most natural invasion road. So shortly after the Napoleonic wars ended in 1815, Metternich proposed building a fortress that could stop a future attack. The Hapsburg Empire began construction on the Franzensfeste Fortress on June 17, 1833, and Emperor Ferdinand I of Austria inaugurated it on August 18, 1838. A railroad link was built in 1867. The area became part of Italy after World War I, and it became known by its Italian name Fortezza.

  The structure consisted of massive bunkers and extensive tunnels, where weapons, ammunition, or anything precious could be safely stored. At the entrance were three twelve-foot-tall pillars carved out of granite. Each weighed eighteen tons. Behind the first entrance was a second door built just as solidly. A Hapsburg double-headed eagle looked down menacingly on the courtyard below. One hundred yards from the tunnel entrance stood a small chapel with a steeple. Visitors could reach the fort only via a winding mile-long road that was easily defended. Riflemen had a 360° view of anyone daring to climb the mountainsides. In short, it was the perfect place to store a country’s gold.11

  Berlin went through the formality of asking Mussolini for permission to ship the gold there, and he quickly agreed. A contingent of Germans officials then went from Berlin to Fortezza to examine the facility. They recommended a few minor changes to make it even safer, such as more lighting and a new reinforced wall inside with an iron trellis.12

  On December 13, Finance Minister Domenico Pellegrini Giampietro sent Azzolini a terse order: “According to the agreement reached by the German government and the Italian government, the gold transferred to Milan and deposited there will now be transported to another location in northern Italy in the province of Bolzano, using the same methods that were used in the transfer from Rome to Milan.” Pretending not to understand the direct command, Azzolini responded that there were no facilities in the city of Bolzano where the gold could be stored. When the minister received that message, he picked up the phone and ordered him to ship the bullion, saying sternly, “You must know that if you do not do this, they will seize the gold and take it to Germany.” Fortezza was not an ideal location from the point of view of the Italians, but it was still better than having it in Berlin. On the morning of December 16, the gold left Milan by train. Both SS guards and Italian central bank officials accompanied it.13

  The bullion arrived at its destination that night. According to documents that arrived with it, there were 175 barrels and 20 bags. A group of German soldiers were enlisted to move it into the fortress, but that became too much heavy lifting for them. Fifty Russian prisoners-of-war then took over the job. The gold was stored in rough-hewn caves at the bottom of the towering cliffs. Due to high humidity in the caves, some of the bags were soon damaged.

  The Berlin contingent that had overseen the transfer departed at the end of the following day, but twenty-six German soldiers remained at the fortress to guard the treasure. Two Bank of Italy officials also took up residence.

  The Germans originally demanded that no Italians have anything to do with the Fortezza gold, but they later allowed bank people to monitor the comings and goings into the vault. That did not change the reality that the bullion, which had been on Italian territory while in Rome or Milan, was now officially in Germany, where the Italians had no authority. The Alpenvorland unit of the Wehrmacht controlled that part of the Austrian Alps now and now had ultimate control of Italy’s gold.

  The bullion had hardly arrived in Fortezza before Göring, Ribbentrop and Funk were again fighting over it. The first to act this time was the Reichsbank’s Funk, whose deputy, Puhl, wanted to help out his old BIS colleague Azzolini. In January 1944, the two central bankers met in Moltrasio on Lake Como, where the Bank of Italy now had its headquarters. Paul Hechler, the top German official at the BIS, put
together the plan to ship some of the Italian bullion to Switzerland. Azzolini’s attitude was now totally different than it had been to the first BIS proposal just after the fall of Mussolini. He realized that if the gold did not go to the bank, it would find its way to Berlin. The two men thus quickly worked out details for a shipment to Basel.14

  On April 20, four train cars carrying 23.4 tons of gold left Fortezza. It consisted of 10.8 tons for the Swiss National Bank in Bern, and 12.6 tons that would be dropped off in Basel at the BIS. Five days later, the Italian Central Bank transferred three more tons to the BIS, bringing the total there to 15.8 tons. Azzolini would later claim that he arranged the payments to protect his country’s reputation for fulfilling its legitimate obligations and to guard its international reputation. The deal, though, would not have been done if it had not satisfied the interests of the Nazis, the Italian Fascists, and the BIS. It also showed that the first priority of any central banker is to his institution.15

  Plenty of Italian gold still remained in Fortezza, and Göring, as head of the Four Year Plan, insisted he needed money for “common war operations with Italy,” while the foreign minister said he needed it for “particularly secret operations of the ministry of foreign affairs.” In early January 1944, Göring proposed giving the Italian Social Republic 50 million Reichsmark ($20 million) in exchange for part of the gold. Negotiations soon began, with Mussolini and his Finance Minister Domenico Pellegrini Giampietro representing the Italian side. The Bank of Italy had no role in the talks and was not even informed that they were taking place.

  An agreement was reached on February 5. Rahn signed it for the German side, while Stefiono Mussolini, the secretary general of foreign affairs, and Pelligrini Giampetro, the finance minister, endorsed it for the Italian Social Republic. The accord made “the entire amount of gold owned by the Bank of Italy available to the Ambassador and Plenipotentiary of Greater Germany in Italy.” The seventy-one tons of Italian gold was now officially in the hands of Rahn. Under a new diplomatic agreement, gold worth 141 million Reichsmark ($31.3 million), just under half the total amount, was immediately handed over to Berlin as a “contribution to the joint war effort.” In addition, gold valued at 250 million lira ($12.5 million) was given in “restitution” for the Yugoslav gold, 100 million lira ($3.3 million) went to the German foreign ministry to pay for its undercover operations abroad, and 50 million lira ($2.5 million) was used to settle a Nazi claim against the Italian state. Azzolini did not even learn of the agreement until three weeks after it was signed. The 50.5 tons of gold in 175 sealed boxes and 435 sealed bags left Fortezza on February 29 and arrived in Berlin three days later.16

  When German officials inspected the Fortezza gold, their calculations turned out to be significantly lower than the Italy’s because various boxes or bags did not contain as much metal as was listed. The total shipment was nearly a ton short. The bulk of the gold was nonetheless sent immediately to the Reichsbank since it still had the safest vaults in Berlin. One hundred thirty-five sacks with a combined weight of just over eight metric tons, though, were given directly to the foreign ministry. Ribbentrop was so anxious to get his gold that he sent one of his own officials to meet the train at the Berlin station. He also wanted to make sure he got coins denominated in dollars, francs, and other currencies, which would be easy for foreign ministry agents to use in their secret operations. Ribbentrop also took a few bars.

  Shipping the last Italian gold to Berlin dragged on for many months. Some Italian officials such as Finance Minister Pellegrini Giampietro were willing to hand over the remaining bullion. Others, including Azzolini, were now trying to separate themselves from the gold deliveries to Berlin and from Mussolini’s republic, which seemed to be on the losing side of the war. In May 1944, the Nazis were back demanding that 21.5 metric tons still stored in Fortezza be shipped to Berlin. This time the Reichsbank’s Maximilian Bernhuber handled the negotiations for the Germans, while Azzolini opened them for the Italians. Both he and his successor in the gold talks, Giovanni Orgera, procrastinated, but finally the irate Finance Minister Pellegrini Giampietro ordered the central bank to hand over the bullion.

  On October 21, 1944, the Italians shipped to Berlin 153 barrels and 53 bags of gold coins, weighing in at 21.5 tons. It arrived four days later. That brought the total amount sent in two consignments to 71 tons, but that was still a ton less than the amount recorded by the Bank of Italy. The Germans were beginning to notice that Italian deliveries were always a little lighter than the declared weight, which they passed off as simply Latin inefficiency. From the second shipment, 1,607 bars were delivered to the Prussian Mint and resmelted into bars that were given German identification marks. Another 141 were sent to the Degussa company for refining and made into bars. In total, the Bank of Italy sent 69.3 tons of its own gold to Berlin, in addition to 8.3 tons of Yugoslav bullion and 6.6 that belonged to the Bank of France.17

  Following the latest shipments to Germany, there still remained in Fortezza 153 boxes and 55 sacks totaling 25 tons of gold. When American army forces liberated the area in the spring of 1945, they discovered it and turned it over to the Bank of Italy.18

  While the shipments were being made, Azzolini had been looking out for himself. He was able to persuade officials of both Germany and the Italian Social Republic to let him go to Rome, but then he never returned north. Rome fell to the Allies on June 5, 1944, and only two days later Italian newspapers began a campaign against him because of his role during the war. On July 10, the British interrogated him and removed him from his position at the Bank of Italy. He was also placed under house arrest. The new Italian government later charged him with collaborating with the enemy and turning the country’s gold reserves over to the Nazis. While in jail for his trial, he worked as the prison librarian. During all that time, the Reichsbank’s Puhl and the staff of the Bank for International Settlements exchanged messages lamenting his treatment and trying to figure out how to help their old friend.19

  Azzolini’s trial took place in three sessions between October 9 and 14, 1944. The state demanded the death penalty, but judges instead gave him thirty years in jail and required him to pay back the Bank of Italy for the losses it had suffered in its branches, which was totally unrealistic. The sentence accused him of being “significantly docile and servile toward the Nazi-fascist regime and not doing anything to save the gold when it was still possible to do so.” He remained in jail until September 1946, when the court considered a plea for amnesty. Judges that time annulled the conviction, saying that he should “cease to be condemned and penalized further.” The judges even praised him, writing, “All the behavior of Azzolini revealed not a willingness to favor the gold plundering by the Germans, but actually an opposing willingness to resist them, using all the shrewdness that the time and the circumstances allowed him to use.”20

  While the Nazi regime was concentrating on capturing the Bank of Italy’s gold, the Nazi SS went after smaller amounts held by Rome’s 12,000 Jews. SS Lt. Colonel Herbert Kappler on September 26, 1944 ordered two of the community’s elders to collect 50 kilos of gold within thirty-six hours. He warned them that if they failed, he would arrest two hundred Jews and send them to the Russian front. Roman Jews reached into their family treasures and also turned in gold from synagogues. When Pope Pius XII heard about the demand, he authorized Catholic churches to make loans of gold to the Jews to help them reach their absurdly high quota. The bullion was quickly collected, although the elders said they were having difficulty raising the amount out of fear that if they said they had it, the Germans would simply ask for more. They ultimately assembled 80 kilos but delivered only 50.3, holding back the rest for later use. An SS Captain at first incorrectly weighed the metal and then lashed at the Jews for not turning over enough. A second weighing showed that they had slightly more than demanded.21

  The gold was shipped to SS headquarters in Berlin addressed to SS General Ernst Kaltenbrunner, Himmler’s deputy. Kappler included with it a
letter reminding the general of the plan to use Jews in Rome as laborers. He received back a strong rebuke saying that the Nazi objective was “the immediate and thorough eradication of the Jews in Italy.” A roundup soon followed. At the end of the war, Allied soldiers found the crate of Jewish gold from Rome still unopened in Kaltenbrunner’s office.22

  Chapter Twenty-Six

  PARTNERS IN GOLD

  Without the help of a few key co-conspirators, the gold the Nazi regime seized from invaded countries would have simply sat untouched and gathering dust in the Reichsbank vaults. It would not have played a major role in helping Hitler achieve his war objectives. Because of those partners, however, Germany was able to turn the stolen bullion into an important tool for waging World War II. A few nominally neutral countries were willing to turn stolen bullion into currencies that could be used to buy crucial war materiel. Without Romanian oil, Portuguese and Spanish tungsten, Turkish chromium, Swedish iron ore, and a few other items, along with key countries such as Switzerland that were willing to facilitate the sales, the German war machine would have ground to a halt long before May 1945. German leaders at the apogee of their power in 1941 were confident that they would continue conquering countries and eventually hold most of the world’s gold. The Reichsbank’s Walther Funk in a speech in Rome on October 20, 1940, said categorically, “By the end of the war, the gold which we need will be ours.”1

  The most important Nazi partner was Switzerland, which accepted a large amount of stolen gold. American officials with access to Reichsbank documents, calculated after the conflict was over that at least $398 million of the $579 million the Nazis stole ended up in Switzerland. Documents uncovered in a Swiss bank investigation of wartime activities confirmed that as early as June 1942, the Swiss Central Bank assumed the gold they had `received from Germany had come from occupied countries. For a while the Swiss even considered melting down bullion they had and turning it into new bars to hide its provenance.2