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

by George M. Taber

  Dresdner Bank, another major German financial institution, bought a total of 5.8 tons of gold from the Nazis. It made money buying gold at international prices and then selling it for a much higher level especially in Turkey. Some of that was concentration camp gold. Dresdner was the favorite bank of the SS’s Heinrich Himmler. During the war it gobbled up Bohemian Discount Bank in Prague, Societa Bancara Romana in Bucharest, Handels- und Kreditbank in Riga, Kontinentale Bank in Brussels, and Banque d’Athenes in Greece. In addition, it gained majority control of Croatian Landerbank and Kommerzialbank in Kraków and Deutsche Handels- und Kreditbank in Bratislava. It likewise took over French interests in the Hungarian General Bank and the Greek Credit Bank, and it founded the Handelstrust West in Amsterdam. Dresdner also controlled the Banque Bulgare de Commerce in Sofia and Deutsche Orient-Bank in Turkey. Dresdner still had in its vaults 4.2 tons of gold on the day the Reich surrendered.27

  Another crucial partner for the Nazi gold program was Degussa, the precious metals company, which played a major role in German economic history. When Bismarck founded the empire in 1871 following the Franco-Prussian War, the new nation needed a central bank since the national government had eliminated the currencies of the country’s principalities. At that time, Degussa was a small privately-owned firm known as Friedrich Roessler Söhne that purified gold and silver. It was located close to the Frankfurt mint. The family firm quickly expanded its operations and become a public company that could handle all of the government’s metal purification. The name Degussa was the acronym of its German initials.28

  The company was a perfect fit for Schacht’s autarky policy, and it received generous government subsidies. Degussa handled most of the government’s smelting operations, which consisted mainly of purifying gold by removing other alloys until it was nearly one hundred percent pure. The process goes back three thousand years. The metal was then turned over to the Prussian Mint, which produced standard-sized gold bars and put on a Reichsbank stamp and serial number. Much of the Dutch and Belgian gold as well as the Melmer jewelry and coins went through Degussa before being sold as German bullion. In order to hide the origin, the date on the bars was backdated. An Allied air attack in March 1944 badly damaged the Degussa facility, putting it out of operation for the remainder of the war. A postwar study of the company’s records showed that it had melted down 2,260 bars of gold. Most of those were originally from Italy, Holland, and Belgium.29

  Chapter Twenty-Seven

  THE ALLIES FINALLY CRACK DOWN

  After the Nazis successfully captured the Italian gold in the fall of 1944, they did not steal a substantial amount more before the end of the war. Berlin officially had been fairly successful in keeping their gold theft out of the general public eye and their laundering operations secret. German financial reserves, both hidden and published, reached a peak in the middle of 1943, when gold holdings stood at about 300 tons, double what they were at their nadir in 1936. Ninety percent of the gold was hidden, and Swiss banks remained a friendly partner, buying and selling Nazi gold and making generous profits.1

  On February 22, 1944, the U.S. government issued the Allied Gold Declaration stating, “The United States would not recognize the transference of title to looted gold which the Axis at any time held or had disposed of in world markets.”2 Britain and the Soviet Union made similar declarations the same day. It was a political document aimed at convincing neutral countries to stop accepting Nazi gold and also getting their cooperation with returning it to the rightful owners. That now cast a long shadow on future bullion transactions.3

  Henry Morgenthau’s treasury department had already been considering for several years how to handle Germany’s economy after the battles were over. He worked closely with Harry Dexter White, who had just come off his great success at the Bretton Woods conference, and Bernard Bernstein, who had previously been on the treasury staff but since October 1941 had been on loan to General Eisenhower. White was now a far different man than the junior professor from a small college who joined the treasury department a decade earlier. While Morgenthau was tired after eleven years at the highest levels of the Roosevelt administration, White was at the peak of his intellectual power and ready to push his policy agenda. In the past he carefully kept his political opinions to himself, but now that Moscow was an ally he no longer held back his views. “The United States had not been doing enough for the Soviet Union,” he said at a morning staff meeting with irritation. He also secretly turned over to the Soviets the American printing plates for the U.S. occupation currency in Germany.4

  Morgenthau and White collaborated so closely on post-war policy toward Germany that it is impossible to know what was Morgenthau’s work, what was White’s, or indeed even what was the Soviet Union’s. There is no doubt that they all shared the belief that Germany should never again dominate Europe. The Soviet Union wanted a weak Germany, so that it could control the continent and expand communism. It could be that White, its undercover agent, was simply following orders. Only four days before Morgenthau and his top aide made a trip to Europe to sell their tough German program, White had a meeting with a Soviet agent who had the code name Kostov.5 White may have honestly believed that turning Germany into a weak, rural nation was the only way to avoid a new war. No one knows for sure, but the similarity of the Soviet view and the Morgenthau-White position was clear. White said at one meeting with British officials devoted to post-war Germany, “Our objective was to see that Germany was never again in a position to wage war. Everything else was incidental to that objective. If, to obtain that objective, it was necessary to reduce Germany to the status of a fifth-rate power, that should be done.”6

  President Roosevelt initially supported that approach, saying, “We have to either castrate the German people, or you have got to treat them in such a manner so they can’t just go on reproducing people who want to continue the way they have in the past.”7 By this time, however, FDR had started to fail physically. When Morgenthau presented him with his plan on Germany, the treasury secretary was shocked by the president’s decline, writing in his diary, “He is a very sick man, and seems to have wasted away.”8

  The State Department, on the other hand, was much more conciliatory toward Germany, arguing that it would be impossible to keep the country down permanently. The strongest cabinet opponent to Morgenthau’s policy was Secretary of War Henry L. Stimson, who said that the plan “would lead to the starvation of thirty million Germans.” He said that Morgenthau assumed that the Germans would live “happily and peacefully” on soup kitchens.9

  By the summer of 1944, however, Allied governments and their intelligence services had learned the broad outlines of the skullduggery. The Foreign Economic Administration, a new cabinet-level operation President Roosevelt launched in 1943 to reduce conflict and confusion among U.S. agencies, first proposed the program. Washington then went seriously into economic warfare by attempting to block Nazi assets located in safe havens abroad. The great impetus was to make sure that there would be no repetition of the sorry tale after World War I. The Allies were determined to prevent another Hitler and another world conflict.

  The shape of post-war Europe was a key issue on the table in September 1944, when Roosevelt met with Churchill in Quebec. Morgenthau gave the president a four-page memo before he left. The title said it all: Program to Prevent Germany from Starting a World War. His plan for breaking up the country was to give a large section of eastern Germany to Poland and a western part to France. There would be an independent South Germany nation, and the Rhineland and Ruhr would be under international control. The plan also had minor humiliating ideas such as that no German would be able wear a military uniform or be in a military parade.10

  The British prime minister at a dinner the first night of the conference tore into Morgenthau’s proposal, calling it “unnatural, unchristian, and unnecessary.” Morgenthau was not used to anyone treating him that way. The treasury secretary later wrote that Churchill slumped down in his
chair and viciously attacked him. “I have never seen him more irascible and vitriolic than he was that night. He used me, so to speak, to draw the venom.” Meanwhile, Roosevelt said little.11

  Churchill, though, was in a weak position because he was once again begging for American help. This time he needed it for his post-war economy. Great Britain had paid a heavy price for fighting the war alone for so long. His nation’s top economist, John Maynard Keynes, warned him ominously that its economic future looked grim because of its heavy debt. Churchill was reduced to asking Roosevelt, in a reference to the White House dog, “What do you want me to do? Get up and beg like Fala?”12

  The prime minister swallowed Morgenthau’s Germany program in order to obtain the financial aid his country desperately needed. The two leaders signed their Top Secret Directive on Germany that stated: “The program for eliminating the war-making industries in the Ruhr and the Saar is looking forward to converting Germany into a country primarily agricultural and pastoral in its character.” Anthony Eden, the British Foreign Secretary, angrily objected.13

  Morgenthau had temporarily won the battle, but when the details of the accord reached American newspapers, the public outspokenly opposed the rural Germany solution and criticized Roosevelt. Such a mean and vindictive program was not the way Americans did things, even after this terrible war. Some people wondered what had happened to a nation whose president after an even more bitter conflict had advocated a policy of “malice toward none and charity for all.” War Secretary Stimpson, Secretary of State Cordell Hull, and Churchill all opposed the Morgenthau plan. Roosevelt, who always knew which way the political winds were blowing, began putting some distance between himself and his close friend.14

  Bernard Bernstein in December 1944 returned to Washington from Europe to lobby for Treasury’s tough approach toward Germany. He had several meetings at the White House and succeeded in tightening up the language in a paper on gold and currency policy toward the Nazis. The new administration text called for “long-term foreign exchange control . . . to eliminate Germany’s war potential, to prevent her re-nazification and to supervise her economic policies.” That policy was put into the U.S. Army’s Financial and Property Control Technical Manual.15

  In early February, the western allies met with Joseph Stalin in Yalta in Crimea. Germany had clearly been defeated, even though the conflict dragged on, and war reparations were the major issue for the Allies. Stalin wanted to take huge amounts of money and machinery out of Germany and to set up a large border buffer zone between the Soviet Union and Germany. Eugen Varga, a leading Soviet economist, proposed that the Allied financial reparations amount to between 800 and 1,000 billion gold rubles. That would have been about eight times the amount demanded of Germany at the end of World War I. Stalin proposed somewhat less, with a disproportionate amount going to Soviet Union because it had lost the most men in the conflict.16

  The Big Three finally papered over their disagreement on reparations, and in the communiqué agreed to disagree until their next meeting after the war had ended. The Soviets thought reparations should be $22 billion, with fifty percent going to them. The final secret protocol stated that all reparations should be paid within two years.17

  Nazi Propaganda Minister Joseph Goebbels seized on the Morgenthau Plan as proof of how the Allies were simply going to “get rid of thirty to forty million Germans.” Hitler railed that it would mean “the uprooting of 15 to 20 million Germans and transport abroad, the enslavement of the rest of our people, the ruination of our German youth, but above all, the starvation of all Germans.” Albert Speer said later that, “the Morgenthau Plan was made to order for Hitler and the Party, insofar as they could point to it for proof that defeat would finally seal the fate of all Germans.”18 General Eisenhower reported that after the proposal became known, German soldiers waged war with “a noticeable and fanatical zeal. The Germans are convinced they are fighting for their very existence.” American intelligence experts thought that the German response to the Morgenthau plan was the German attack in the Ardennes in December 1944 that became known as the Battle of the Bulge attack.19

  Morgenthau had White write a quick book that would appear under Morgenthau’s name entitled Germany is Our Problem. It contained such hyperventilating prose as, “Fanatical young corporals will be dreaming of another chance at world conquest and reminding each other in beer halls. . . . They will get the chance for the industrial leaders of Germany already are laying their plans to mobilize for World War III.”20

  Morgenthau informed Roosevelt that he was working on a book about the German threat that he wanted to show him. The president’s reaction, which he relayed through Eleanor Roosevelt was, “Why a book now?” He later also asked the treasury secretary to delay publication.21

  The president in early April 1945 left for an extended stay in Warm Springs, Georgia to recuperate from his travels. Morgenthau was anxious to make his case for a tough German policy directly to the president, so he traveled there to see his old friend in person. In his diary he wrote, “I was terribly shocked when I saw him, and I found that he had aged terrifically and looked haggard.” The treasury secretary made his pitch, and the president had a jovial talk. Roosevelt told some stories about Germans. He reminded the treasury secretary about a time when Germany’s Hjalmar Schacht cried about his poor country in the Oval Office. Morgenthau wasn’t interested in anecdotes, and said, “Look, Mr. President, I am going to fight hard, and this is what I am fighting for. A weak economy for Germany means that she will be weak politically, and she won’t be able to make another war.” FDR replied that he agreed with him “one hundred percent.”22

  Franklin D. Roosevelt died the next afternoon.

  Chapter Twenty-Eight

  RICH DISCOVERY IN A SALT MINE

  By the beginning of 1945, the end of the Third Reich was near. The once famed Luftwaffe was history, and Hitler’s promised wonder weapons, the V-1 and V-2 guided missiles, or “flying bombs” as they were called, were too few in number and inaccurate to stop the British and American offensives on the western front or the Soviet one in the east. American, Soviet, and British planes relentlessly pounded Berlin. Even Joseph Goebbels, the German Minister for Propaganda and Enlightenment and the last true believer, recognized the war was over.1 On the morning of January 12, Soviet Marshal Georgi Zhukov, the hero of his country’s defense of Leningrad, launched the final offensive against the Third Reich from the east. His goal: Berlin. The Soviets had 6.7 million men under arms on the eastern front, twice as many as the beleaguered Germans.2 Fierce German resistance initially slowed Zhukov’s attack, but by early February the Soviets were at the Oder River, Germany’s eastern border and fifty miles from the capital.

  A tempting target for Allied bombers was the Reichsbank building in the center of Berlin, where the Germans kept their gold. One of the city’s tallest structures, it stood out on the bank of the Spree River across from the Romanesque Berlin cathedral. Hitler had commissioned the structure in 1933 as an early edifice for his new Berlin. Famed Bauhaus architects such as Walter Gropius and Ludwig Mies van der Rohe entered the design competition, but Heinrich Wolff won. The massive structure of reinforced concrete covered with stone slabs had narrow windows and looked like a bunker. Hitler attended the groundbreaking in 1934, and the building went into service in 1940. It was considered virtually indestructible and a fitting home for Germany’s Fort Knox.

  The Reichsbank headquarters was also an important target for Soviet forces attacking from the east. Lavrentiy Beria, the head of the secret police and Stalin’s closest aide, had assigned General Ivan Serov, his number-two man, to get to the gold at the Reichsbank. He was equal in rank to commanding military officers.3

  In January 1945, Reichsbank President Walther Funk went to Hans Lammers, the head of the Reich Chancellery and Hitler’s gatekeeper, and asked to see the Führer to discuss moving Germany’s gold and the bank’s operations out of Berlin. A few days later, Funk received the reply that H
itler was opposed to that and also turned down a suggestion to move the central bank’s headquarters out of Berlin. Lammers said Hitler would tell him when it was time to do that.4

  A massive attack on Berlin took place before noon on February 3, devastating the capital and the Reichsbank. Nearly a thousand U.S. B-17 bombers dropped thousands of bombs on the city, killing nearly three thousand Berliners and leaving 120,000 homeless.5 Large sections of the Reichsbank were now rubble, and the staff was forced to work in the cellar. The currency printer was destroyed, but the printing plates survived. Nonetheless, a severe currency shortage soon developed, causing the country’s already weak economy to slow down even more. The bank had to scramble to get paper money into circulation at its branch offices.

  The bombing gave new urgency to protecting the Reichsbank’s gold. Funk returned to the Reich Chancellery that same day and this time insisted on seeing the Führer. Lammers let him. Funk explained the situation and said that his prime objective now was to continue to operate the country’s economy, which might be impossible if there were another bombing like that one. Hitler insisted that the bank headquarters remain in Berlin, but agreed that some of the staff could leave the capital.

  Two days later, Funk wrote a memo to his staff telling them what was being done as a result of the “terror raid.” He said Hitler had told him, “No matter what the conditions, the Reichsbank must maintain for the whole of Germany a properly regularized banking system. That is essential for the prosecution of the war, the rationing of the population, and for the financing of the armed forces, state, and party.”6

  Funk believed that the gold was essential not only to the continued financing of the war but also to provide the money for an eventual Fourth Reich that SS Boss Heinrich Himmler had proposed at the end of 1943. That was to be an Alpenfestung (Alpine Fortress) in the area that stretched from Bavaria to northern Italy. The plan was that Germany’s leaders would retreat to that mountainous area and wait for better times. Allied generals learned about the plan and took it very seriously.