After the war began going downhill in 1943, gold started to spill out into a variety of Nazi organizations. Each agency handled its bullion in its own way and to achieve its own goals. Foreign Minister Ribbentrop, who had obtained a major part of the stolen Italian bullion, used it to pay for diplomatic operations abroad and for foreign informants.7 Göring’s Four Year Plan and the SS also had their own stashes.
The vast majority of the gold, though, remained in the hands of the central bank. In July and August 1943, the Reichsbank had taken a minor step to decentralize it by shipping twenty tons to eighteen regional bank offices for safekeeping. Some of those, such as Stettin and Frankfur (Oder), were in the eastern part of Germany and were now in the path of the Soviet offensive.
Following the February 3 attack, the Reichsbank officials decided to send most of the remaining gold to Thuringia, a heavily forested area known as the green heart of Germany. It was in the center of the country just north of Bavaria. The central bank quickly delivered a shipment of gold to its office in Erfurt, the capital of Thuringia. Funk advocated moving the bank’s new headquarters there.8
The German economics ministry had already requisitioned the country’s salt mines so that they could be used for underground storage of valuable goods. The first shipment of state documents was sent to Thuringia in May 1944, and the following month, the state library in Berlin dispatched its most precious books, some dating back to the 1500s, to a mine there. By the spring of 1945, nearly two million books were stored and the library of the Prussian State Opera and the Library of Fine Arts were located in twenty-five depositories. The cities of Bremen, Lübeck, and Rostock stored public and private records in the village of Merkers, as did Henschel and Krupp, two major corporations that had strong ties to the Nazi war machine. At one point the Luftwaffe sent 40,000 bottles of liquor there to be used as a stimulant in case of military emergencies. After several incidents of workers getting drunk, however, the liquor was removed.9
Wintershall, Germany’s second largest chemical company after I.G. Farben, had several mines in Thuringia, including one named Kaiseroda in Merkers. Reichsbank officials selected that as the place to store both gold and currency because it was not only one of the largest mines but also had a stable humidity level, which would be important for safeguarding paper currency. Kaiseroda was located 2,000 feet underground and had 30 miles of tunnels, providing excellent protection from Allied bombs. Sitting in the middle of a green valley with hills in the distance, the plant looked like a small village, with a complex of red-brick buildings, bridges, and cobblestone streets. Its billowing smokestacks and giant elevator dominated the rural skyline.
The original plan was to evacuate only Reichsbank valuables, but officials from the Prussian state museums asked to safeguard some of its paintings and other artworks in the complex since it provided more protection than their own facilities. Eventually about one-quarter of the most important works of art from state museums, including engravings by Albrecht Dürer and paintings by Renoir, traveled along with the first shipment of gold. The paintings, often still in their frames, were put in wooden crates that sometimes held several priceless pieces. Eventually about a thousand items were shipped south.10
The Reichsbank staff packed up the gold and other valuables with as much care as possible under the wartime circumstances. Two gold bars were put into individual cloth bags, while gold coins went into their own containers. Bundles of German and foreign currency were put into small gunnysacks. Items were sent to various locations for handling, including gold and silver jewelry that SS guards had taken from concentration camp inmates, which had arrived too late to be sent to the Prussian state mint for smelting into bars.
On February 11, only eight days after the massive bombing that had devastated the Reichsbank building, a special gold train with twenty-two cars left Berlin. Dr. Witte, a member of the bank’s board of directors, and Albert Thoms, the head of its Precious Metals Department, accompanied the shipment. The train arrived in Merkers without any delay, but it took four days to unload and store it in the Kaiseroda mine. The valuables were put into a large storage room with a steel door that could be locked. The room was named simply “number eight.”11
Near the end of February, the Reichsbank closed its gold books in anticipation of the evacuation of the national treasury from Berlin. The closing balance for gold was $256 million.12 The end was near. A second Reichsbank train left Berlin on March 11, this time with only four cars. It carried about $2.5 million Reichsmark of bullion plus large amounts of foreign currency, including Norwegian kroners, Dutch guilders, French francs, and American dollars. Thoms again accompanied the shipment, and Reichsbank Director Frommknicht joined him. This time it took only two days at the mine to unload the smaller shipment.13
Thoms again returned to Berlin to pick up another shipment, but decided to return to Merkers with a truck, which would be more versatile than railroad cars. He left Berlin on March 23 and stopped briefly at Erfurt, but because the city was running out of food pushed on to Merkers. Also joining the Reichsbank group leaving Erfurt were Dr. Werner Veick, the head cashier of the Reichsbank’s Foreign Notes Department, Dr. Otto Reimer, the chief cashier of the Reichsmark Department in Berlin, and a bank employee whose job was to arrange transportation between Berlin and Merkers. The national shortage of currency was growing ever more acute, and the government could not even pay some soldiers in cash. The main job now was to move Reichsmark currency that had already been sent to Merkers back to the capital, so it could be distributed to regional offices. The bank’s previously efficient operation, along with the whole country, was sliding into chaos.14
Easter holiday is one of Germany’s most important holidays, lasting from Good Friday through Easter Monday. In 1945, it ran from March 30 to April 2. Even in wartime, Germans stopped for Easter, and only a few trains ran. The last gold shipment reached Merkers on April 3 at 4:00 in the morning.15
After spending only a few hours in Merkers, the transportation specialist from Berlin drove away from the Kaiseroda mine in a two-and-a-half-ton truck with 200 million Reichsmark in packages of hundred-mark bills plus an additional fifty or so packages of foreign currency. Before leaving, he explained that on his trip back to the capital he would stop at the regional Reichsbank offices in Erfurt, Halle, and Magdeburg to distribute currency.16
With the help of Polish POWs, German bank officials hauled out of the salt mine one thousand bags of currency that each contained one million Reichsmark. The plan was to load it all onto a railroad car in nearby Bad Salzungen and take it to Berlin. The Germans later learned that Allied bombers had destroyed a bridge the train was supposed to go over, closing another escape route. After working all day underground moving bags of paper money, Veick and Frommknicht were dead tired and decided to return to a casino where they were staying for the night. “We’ll have to see what tomorrow brings.”17
The next morning, the two men were back working in the mine, when they learned that American forces would be moving into city shortly. Frommknicht told Thoms, “Let’s go to the entrance and see if we can slip away.” Frommknicht had a driver, and their plan was to leave immediately for Berlin. When the driver arrived, he locked the door to room #8 and gave the key to a guard. He then told Veick to go get his suitcase and return immediately to join him on the trip to Berlin. Veick left quickly, but by the time he returned to the mine, American soldiers had entered Merkers. Frommknicht and Thoms had also disappeared. A mine director said he’d seen them leave on foot, but added, “I don’t believe they will get far.”18
U.S. troops marching through the village just before noon on April 4 saw German civilians unloading bags out of a truck. The G.I.s stopped and asked what was in them, and the locals replied, “currency.” The Americans, though, just kept marching. In the mayhem of war, military units, displaced persons, prisoners-of-war, and civilians were all blending together.
At about 9:00 on Friday morning, April 6, U.S. soldiers Pfc Clyde Har
mon and Pfc Anthony Cline were guarding a road about six miles from Merkers, when two women approached them walking through the village of Bad Salzungen about six miles from Merkers. A military curfew was in place, so they should not have been on the road, and that is when the soldiers met with the two women, one pregnant, who revealed the various activities that had been going on at the Kaiseroda mine. It was this mine where the women had seen Germans offloading gold and other valuable things. The next day, the G.I.s went to the mines, blasted the door blocking entrance to a storage room, and found hundreds of bags of gold as well as containers filled with jewelry taken from concentration camp inmates.19
Just before 8:00 P.M. that night, Reichsbank President Funk and his wife Luisa were at their rural home south of Munich in the village of Bad Tölz. Hitler had given the house to him in 1940 for his fiftieth birthday. They were listening to the BBC on the radio, even though that was illegal. BBC correspondent Robert Reed came on the air. The first thing he said was this was his 143rd radio report and that it had been censored. Then he announced: “This morning American soldiers working in a twenty-one-hundred-foot-square salt mine broke through a red brick wall and found one-hundred tons of German gold.”20
Luisa Funk said later that her husband was “heart broken” by the news and told her that everything was now “finished.” A general was supposed to have blown up the mine if enemy forces ever got close to it. The Nazi plan, Funk explained, was that it would have taken two to three years to excavate the gold, and that during that time Germany would be able to stabilize itself politically under Hitler’s leadership. The gold was going to be used to rebuild the country after the war.21
In Berlin that same night, Propaganda Minister Joseph Goebbels learned about the Merkers discovery from United Press, the American news service. He was furious and dictated to a secretary for his diary, “Sad news from Mülhausen in Thuringia. Our entire gold reserves amounting to hundreds of tons and vast art treasures, including Nefertiti, have fallen into American hands in the salt mines there.” He went on to rant against Reichsbank President Walther Funk, saying that the gold and art should never have been moved out of Berlin and that he had “always opposed” the transfer. Goebbels also complained that this had only happened because German trains had not run over Easter, the weekend before.22
Outside Paris the next day, Col. Bernard Bernstein, a member of General Eisenhower’s staff, was enjoying a late Sunday breakfast. He and Ike’s other aides had moved there from London after the liberation of the city the previous August. They were now working out of Louis XIV’s spectacular Versailles Palace in the Grande Écurie (Big Stable). As he walked away from his breakfast in the mess, Bernstein had under his arm a copy of Stars and Stripes, the GI’s daily newspaper. When he arrived at his office, he looked at the front page. The lead story was about the war in the Pacific and carried the headline “Carrier Planes Sink Japs’ Greatest Warship.” Just below that was a report about the European war with the headline “15 Mi. From Bremen.” It was a two-paragraph story in bold type, though, that captured Bernstein’s attention. The headline: “Reich Gold Hoard Captured.” The Associated Press reported that Third Army forces had found 100 tons of gold bullion plus large amounts of French francs and other currencies.23
Only a few minutes later, Bernstein received a phone call from General Frank McSherry, the deputy assistant chief of staff at Eisenhower’s headquarters, which was then located in Rheims, France. The general told Bernstein that General Patton had asked Eisenhower to take over responsibility for the gold. McSherry added that Eisenhower wanted his financial officer to assume charge of it and move the valuable cargo to a more secure location. McSherry then ordered Bernstein to get to Merkers as soon as possible. The original plan was for him to fly to Frankfurt/Main and then proceed by car to Merkers, only eighty miles away. But by then, it was too late in the day to fly that far, so Bernstein flew instead to Rheims to meet with both McSherry and General Lucius Clay, who was due to head the military government in Germany after the war was over. Bernstein met the generals the next morning, and at the end of their talk, Clay asked him if he had any questions. The colonel replied, “Only one, General. May I act as it seems to me to be wisest to do?” Clay replied, “Yes.” Bernstein then left for Frankfurt.24
Even before he got to Merkers, Bernstein had to decide whether to move the gold and artwork to the Ehrenbreitstein Fortress across the Rhine River from Koblenz or to the Reichsbank’s branch in Frankfurt. The fortification had been overlooking the Rhine since 1000 BC, and the current version dated back to the seventeenth century. After visiting both locations, Bernstein picked Frankfurt. Ehrenbreitstein was already full of documents, and it was also considered an inappropriate site for the art. Frankfurt, on the other hand, was a good place for storing both gold and art. An added plus was that the bank was only a mile from the I.G. Farben building, which had already been selected to be the U.S. army headquarters after the war.25
Bernstein then continued on to Merkers, where he visited the gold vault and interrogated two captured Reichsbank officials, Werner Veick, the head cashier of the Reichsbank’s Foreign Notes Department, and Otto Reimer, the chief cashier. Veick claimed that he didn’t know much about the gold, but said that Albert Thoms, who had been captured while trying to escape from Merkers, “knows all.” Reimer admitted that he and other bank employees had loaded one thousand bags of currency with the intent of taking them back to Berlin or to local Reichsbank offices. A bank official also revealed that they now had only about four tons of gold left in Berlin.26
Later that evening, Bernstein left for Patton’s headquarters. After the colonel explained the lay of the land in Merkers to the general, he said he thought the gold should be moved to Frankfurt. Patton confidently told the young subordinate that the Germans were not going to “push me” out of the area and that the gold could simply remain in the mine. Bernstein agreed that the Germans were unlikely to recapture Merkers, but added that under the recent Big Three agreements at Yalta, that area of Germany would be in the Soviet sector of occupation. Bernstein then added, “We certainly want to get all of this out of here before the Russians get here.” Patton was astounded with that information and immediately approved moving the gold to Frankfurt, where it would be safely inside the American zone. The Soviets later demanded that the gold be shipped to them, but Washington ignored the request.27
The following day, Bernstein returned to Merkers and interrogated Dr. Paul Rave, the assistant to the director of the Prussian state museums, who had accompanied the Berlin artworks to the mine. The Germans were cooperating, and everything was starting to fall in place.28
An advance team of the Allied monuments, fine arts, and archives unit had already arrived in Merkers on April 8. They were museum directors, curators, and art historians who were following just behind the conquering armies rescuing artworks that the Nazis had stolen from museums and private collections all over Europe. George Stout, who before the war had been an art conservationist at Harvard’s Fogg Museum, was the leader of the cultural operation. Although only a lieutenant in rank, he was the best American art man in uniform. He had landed at Normandy and traveled with troops rescuing priceless pieces of culture.
A minor turf battle quickly developed between Bernstein’s men and those of Stout. Was this primarily an operation to rescue gold or to protect art? Stout wanted his boss, Britain’s Geoffrey Webb, to come to Merkers to direct the art operation. When Patton learned of that, he sent an order telling Bernstein that this was to be an American-only project. “No damn limeys,” exclaimed the general. The arts men felt they were being treated as second-class citizens, while the gold guys were running the show. The art team, however, were professionals and went to work checking on the conditions in which the art had been stored and preparing to move their part of what had been found in the salt mines. In some cases, they found priceless pieces sitting in pools of water. Many paintings were wrapped only in brown paper, and a few had been ripped during t
ransport.29
Bernstein and Stout together inspected nearby mines where they had been told more art had been stored. Berlin museum experts initially sent pieces to the Ransbach mine one hundred miles west, but the Americans decided it wasn’t an appropriate place and moved them to Merkers. Stout found forty-five cases that contained works by Dürer and Holbein as well as an estimated two million rare books. In the nearby Philippstal mine the Americans discovered countless more old books and maps. They also interrogated Dr. Shawe, a Berlin librarian who was responsible for manuscripts.30
When Bernstein returned to his housing on April 11 after a hard day in the salt mine, a message from Patton was waiting for him. It said that he should be at the entrance of Kaiseroda mine the next morning at 9:00. Bernstein dutifully followed orders, but no one showed up at the assigned time. Finally at about 10:30, a jeep pulled up. On the front was a plaque with five stars. That could be only one person: Five-Star General Dwight Eisenhower. Eisenhower and Generals Patton and Omar Bradley also hopped out of the vehicle. They were all there to inspect the Merkers mine. Bernstein led the group to an old wooden elevator shaft, an ancient contraption that carried them down to the bottom of the mine twenty-one hundred feet below. As the generals descended in the open elevator, Bernstein had a terrible thought: the guy operating it was a German! Bernstein, though, didn’t say anything. Patton quipped that if the cable snapped, “Promotions in the United States Army would be considerably stimulated.” Eisenhower shot back at the irrepressible Patton, “OK, George, that’s enough. No more cracks until we are above ground again.”31
Chasing Gold: The Incredible Story of How the Nazis Stole Europe's Bullion Page 43