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

by George M. Taber

  The remaining valuables were worth at least $15 million and consisted of more than 700 gold bars, 34 boxes of printing plates, and 200 containers of blank currency paper. The gold weighed about ten tons, and all the items to be hidden totaled some seventeen tons. No one was any longer conducting detailed inventories.21

  One of the officers at the Gebirgsjägerschule was the son of Hans Neuhauser, the chief forester of the Walchensee area, who owned a two-story house in the woods a short distance southwest of the lake. He agreed to keep the Reichsbank goods in the family storage room, previously a stable, for a short time before they would be moved to a long-term location nearby. It took three days to transfer all the valuables to the Neuhauser house.22

  From there, and with the help of pack mules, the soldiers began re-locating everything up the steep Steinriegel mountain nearby. They moved 364 bags of gold, 25 boxes of it, 96 bags of currency, and 34 packets of blank currency paper. Fearing that the currency and blank paper would not survive being buried in the damp soil, they camouflaged it well above-ground behind logs, timbers, and bushes in a shelter resembling a bunker.

  The gold was next moved to a still higher location on the mountain near the hamlet of Einsiedel. Deep in the woods, the soldiers dug large holes three- to four-yards long, wide and deep, and added wooden planks along the walls to reinforce the hiding places.23 Since gold does not deteriorate even in moist conditions, no one worried about putting it in the damp earth. They carefully hid the location, putting a tree stump and other pieces of natural debris around the spot where they had dug. A few makeshift booby traps were also put in place. The whole process was not completed until April 30. The printing plates for Reichsmark currency now seemed worthless, so the soldiers took them out in a boat and dumped them into the Walchensee.24

  Schwedler wanted to see the gold hiding place and pressed the two colonels to take him there. After walking two hours up the mountain near the lake, they found the hiding spot.

  Only a few days later, American forces marched into the Walchensee area, but they had no idea what riches were stored on the mountains near the lake.25 The Amis, as the locals called them, immediately started arresting males who looked as if they had just discarded their Nazi uniforms. The G.I.s soon heard vague reports about gold transfers between Munich and the Gebirgsjägerschule in Mittenwald. The people who knew what had happened, though, were not talking. When it became known that gold was involved, Allied officers called in help from Colonel Bernstein’s operation. The British also sent a general to assist with the investigation. They worked for weeks piecing together a bit of information here and a piece there. An American officer interrogated Funk about the gold, but he provided nothing because he knew nothing. The Allies were sure that something had taken place near the Walchensee, but they were not sure exactly what or how big was the stash. They also learned that forester Neuhauser had been involved and that Josef Veit, a sanitation worker at the school, and Heinz Rüger, who was on the Mittenwald staff, had helped in moving the gold and currency to the mountains.26

  It took a month for the Americans and British to amass enough details about the hidden gold to start a serious search. Finally on June 6, the American and British soldiers accompanied by Veit and some sawmill workers went by truck to the Walchensee. They walked into the forest near the Neuhauser house and then climbed further up to Einsiedl. Eventually they reached near the summit in the crags above the Obernach power plant. The Americans carried metal detectors. The G.I.s knew that the Germans who had hidden the gold had done their work with the help of pack mules, so they followed stool droppings through the woods. They also found hoof marks. For a long time, the men heard nothing but the sound of their boots clomping on the forest floor. Finally the metal detectors let off loud whistles. The group stopped and looked around. Nearby they saw empty wine bottles and discarded food cans.

  The group immediately began digging, and they pulled from a hole some heavy bags. The booby traps did not explode. Stenciled on the sack were the words Reichsbank Hauptkasse Berlin (Reichsbank Main Cash Desk Berlin) They opened them, and found two gold bars. It was obviously the Gebirgsjägerschule gold, so they continued digging until they had searched the whole area. They ultimately found a rich hoard of bags of gold and sacks of currency. They also uncovered blank currency paper and boxes of jewelry.27

  The prize, though, was the 364 bags that contained 728 gold bars that the Reichsbank staff had brought from Berlin. American Major William R. Girler and Captain Walter R. Dee signed papers acknowledging that they had received them. The two officers estimated that they contained a total of 9.1 tons of gold. Perhaps as many as one hundred gold bars and all the Swiss francs, though, were missing. The contents of the shipment from Berlin had not been counted in weeks, and there is no doubt that much of it was gone. The Americans believed the locals had taken it, while the locals thought the Americans had. Plenty of the Reichsbank gold had obviously slipped away in the mayhem of war and would never be found. It was later estimated that at least a half-ton of bullion and an unknown amount of currency, which might have included more than $120,000 in American dollars, had disappeared.28

  The Bavarian Criminal Investigation Department in the early 1950s did a thorough study of the Walchensee gold and presented its findings on January 8, 1953. By that time, Colonel Pfeiffer and Lt. Colonel Rauch had both immigrated to Argentina, where they lived for many years as successful businessmen working for a metallurgy company. It was always suspected that they had put away enough Reichsbank gold to finance their new life. There were also reports of two American colonels seen just after the war with large rucksacks filled with gold and British pounds. People also claimed to have seen Pfeiffer and Rauch with American officers, who had plenty of valuables. When the owner of a nearby hotel was murdered, there were stories that she had taken part in the plot to steal valuables. One of the Reichsbank officials, who had traveled on the gold train from Berlin committed suicide in 1946, and other bank employees believed that he was the one who took the two bars that ended up in the stovepipe. No one, however, was ever charged in the case.

  After living many years in Argentina, Rauch returned to Bavaria where he spent his last years; Pfeiffer returned to Austria, where he lived until his death. The two men took the complete story of what happened at the Walchensee with them to the grave.

  Over the years since 1945, many stories have surfaced about tons of gold being lost at the Gebirgsjägerschule and the Walchensee. The favorite one among Germans is that the Amis (Americans) had stolen the gold. It also seems that unnamed Bavarians got some. Large amounts of currency, both dollars and pounds, were later dug up, for example, in gardens. No one was ever charged, even after the long and thorough investigation by Bavarian authorities in the early 1950s. Several writers have attempted to unravel the story of the Bavarian gold, without success. Henriette von Schirach, whose husband was the Nazi youth leader and Gauleiter of Vienna, lived in the area after the war and wrote the book The Price of Glory. She called the gold story a “tragicomedy.” The British writer W. Stanley Moss in Gold Is Where You Hide It told a similar tale. Two British writers, Ian Sayer and Douglas Botting, in the 1984 book Nazi Gold did the most exhaustive work, but failed to solve the mystery. They too charged an American cover up. Sayer told the London Gold Conference that more than $3 million had been stolen in Mittenwald and Einseidl. The Gold Team’s final report in 2000 stated, “The Gold Team developed many leads regarding small and large misappropriations of gold bullion by elements of the U.S. Third Army in Germany and by U.S. intelligence agents in Austria and Germany,” but admitted that more research had to be done on “this politically sensitive issue.” That has never done, and there is no doubt that American G.I.s stationed in Bavaria at the end of the war pilfered small amounts of bullion that were later uncovered.29

  In the late 1980s, researchers discovered two gold bars in Bavaria that originally belonged to the Belgian Central Bank, but had been melted down by Degussa and given a date prior t
o 1938. They were perhaps part of the Mittenwald gold. The German government in September 1996 gave them to the Tripartite Commission for the Restitution of Monetary Gold, which sent them to the Bank of England. The proceeds were later distributed to Tripartite claimants.30

  Chapter Thirty

  THE END OF A SORDID TALE

  The final Big Three meeting of World War II took place in the summer of 1945 in Potsdam just outside bombed-out Berlin. The cast sitting around the table this time was dramatically different from the previous one held only five months earlier. Harry Truman was now the U.S. president. Churchill and Labor party leader Clement Attlee initially both participated, but then Churchill left after he lost his country’s parliamentary election. With two novices at the table, Stalin bargained tougher than ever. He was also in a strong position because the Red Army now controlled the Baltic states, Poland, Czechoslovakia, Hungary, Bulgaria, and Romania. The Soviets demanded an enormous amount of reparations from their occupation zone in the now divided country as well as thirty percent of all German external investments and gold. That almost ended the meeting in its tracks.

  The three leaders signed a final agreement on August 2 that basically let each of the three have power over its occupation zone. The Soviet Union renounced “all claims in respect of reparations to shares of German enterprises which are located in the Western Zones of Germany.” Early in the conference Stalin made a formal claim to some of the gold found at Merkers, saying that he would be satisfied with thirty percent of it. But later he surprised his colleagues by announcing he would make “no claims to gold captured by the Allied troops in Germany.” One can only speculate why Stalin took that unexpected step. Perhaps Soviet troops had already collected substantial amounts of gold on their way to Berlin, and he did not want to share it. Whatever the reason, Moscow was not part of further gold discussions. France was not invited to Potsdam, but Britain and the U.S. created a French zone out of their territory. World War II was over; the Cold War had begun.1

  As a follow-up to the Potsdam summit, the Paris Conference on Reparations took place in November and December 1945. Part III of the conference’s final statement set out the immediate post-war gold policy. The Tripartite Gold Commission was set up to judge the various claims and divide the captured bullion among the victims. James Angell, the leader of the U.S. delegation, argued successfully that the only moral and logical solution was to allot Nazi gold captured by the Allies to countries on the basis of how much they had lost. Allied armies had not collected nearly enough to satisfy all the demands. The participants finally agreed that recovered bullion would be distributed to countries “in proportion to their respective losses of gold through looting or by wrongful removal to Germany.”2 The agreement covered all gold moved after March 12, 1938, the date of the Anschluss. Moreover, any monetary gold recovered from a third country and taken to Germany, such as the Yugoslav or Albanian holdings that wound up in Rome, would also become part of the pool.

  Ten countries submitted claims, which totaled more than twice the amount that had been turned into the Allied gold pool. The ten countries demanding restitution were Albania, Austria, Belgium, Czechoslovakia, Greece, Italy, Luxembourg, Netherlands, Poland, and Yugoslavia. They collectively asked for the return of 735 tons, but the Allies validated only 514 tons. The Trilateral Commission eventually obtained only 336.4 tons of captured gold for distribution to the claimants.3

  There was no attempt to deal with personal gold that the Nazis had seized because it was impossible to track that gold back to its original owners. That, however, became a nagging problem that hung around World War II reparations for years.

  The commission’s first job was to determine the merit of the claims, and it disallowed a large portion of them. In the end, though, there were still fifty percent more claims than the commission had gold. Most of the cases were settled quickly and relatively easily, with more than eighty percent of them resolved between 1947 and 1950. Despite the initial success in quickly distributing most of the bullion to the rightful owners, the organization operated out of Brussels until September 1998. It was an international organization that refused to go out of business.

  By the late 1950s, the only item of importance still on its agenda was the Albanian claim to the gold that Italy had taken in April 1941, when it invaded the country. The Trilateral Commission quickly recognized the Albanian case for the gold, which at first had gone into the Italian Central Bank but then was taken by the Germans when they occupied the country in 1944. Enver Hoxha ruled the People’s Socialist Republic of Albania from 1944 until his death in 1985. The country isolated itself from the rest of Europe and leaned toward communist China.

  A naval incident took place in October 1947 involving two British destroyers, which were seriously damaged by Albanian mines planted in the Channel of Corfu. Gunfire was also exchanged between the two countries. Britain demanded reparations for the damages, but the Hoxha government refused. Britain then blocked the delivery of a ton of Tripartite gold to Albania. The case eventually went to the International Court of Justice, which ruled in favor of the British. The Albanians, though, still refused to pay. The stand-off was only settled in 1996 with the end of the cold war and the death of Hoxha. Britain settled the case. At that point the Tripartite Commission had no outstanding gold claims.

  Also high on the post-war agenda of the Allies was punishment of the countries that had profited from collaborating with the Nazis. There was widespread anger toward several nations that had been nominally neutral, but had either openly or clandestinely helped the German war machine. The most important of those was Switzerland, but the list of alleged offenders also included Sweden, Spain, Portugal, Turkey, and Argentina. Romania had also been a major supporter of the Wehrmacht as a key supplier of petroleum, but it was now in the Soviet sphere, and the west did not seek to punish it economically.

  In early 1946, the U.S., Britain, and France invited Switzerland to send a delegation to Washington to open a discussion about its wartime economic activities. London and Paris did much more business with the Swiss and were less enthusiastic than the Americans about prosecuting them. U.S. officials, by then, had calculated that “at a minimum” the Nazi regime had transferred at least $200 million of looted gold to Switzerland.4 Statistics later released by the Swiss National Bank showed that it was a major buyer of German gold from the last quarter of 1941 through the first quarter of 1944.5 Swiss diplomats blustered and stonewalled for months until the U.S. negotiators were worn down and accepted a settlement for the payment of just $58.1 million. That went into the gold pool. Former Swiss parliamentarian Jean Ziegler wrote in his book The Swiss, the Gold and the Dead that his compatriots “lied their heads off at Washington in 1946.” In 1951, the amount was negotiated down to $28 million.6

  Later negotiations with Sweden, Spain, Portugal, and Turkey took place against the backdrop of the new Cold War. Sweden signed its deal with the Allies in July 1946. William Slany, the chief historian of the Department of State, wrote later that the agreements were “clearly a foreign policy aimed at ensuring normalcy in the gold trade, good relations with the neutral in the pos-war era, and the neutrals in the post-war era and reassuring the New York Federal Reserve that it could continue to buy gold unfettered by considerations of origin.”7

  Spain, Portugal, and Turkey were members of NATO, and the U.S. was putting together military plans for the defense of Western Europe and the Middle East. Sweden remained neutral, but leaned west. The U.S. negotiated a treaty with Spain that permitted it to build a major air force re-supply facility in that country, which was important for the Pentagon. Spain had received $90 million in Nazi gold, but eventually gave the Tripartite Commission a token $114,329. Portugal and the U.S. signed a treaty giving landing rights to the American military in the Azores. Turkey allowed the U.S. to build military bases in its country, which were used for spying on the Soviets during the Cold War. Sweden’s compensation took the form of donations to refugee groups as well
as payment for stationing American and British forces in Europe.

  As a result of these deals, several countries were able to keep their ill-gotten gains from World War II. In the late 1990s, the Clinton Administration put together a group headed by Under Secretary of State Stuart Eizenstat that was called the Presidential Advisory Commission on Holocaust Assets. Unofficially it was known as the Gold Team. It did extensive research on stolen Nazi assets, and was critical of the agreements the neutrals made with Hitler. Switzerland received the most criticism, and it also protested that the deal with Portugal, “effectively washed all looted bars.” Lisbon acknowledged receiving less than four tons of gold. Spain was suspected of getting 94 tons of looted gold between 1942 and 1944, but was held responsible for obtaining only eight bars. The Gold Team report further complained that the Turkish government had been willing to surrender $3.4 million in gold to the Allies, but had never signed the accord. In high dudgeon it said: “To this day the Turkish government has not surrendered a single coin or bar of restitution for the looted gold that it received during the war in payment for chromite and other strategic commodities.”8

  The Eizenstat work was the first serious attempt to examine the fate of private gold during World War II. Worldwide research into that dark corner of World War II was brought together at the London Conference on Nazi Gold in December 1997. Eizenstat also detailed his long work on the subject in his book Imperfect Justice. The meeting made a major contribution to the understanding of an historic tragedy that had previously been almost ignored. The final report pulled back the curtain on the evil of Adolf Hitler, a man of hate. He and his fellow Nazis had attempted to build a Reich that would endure for a thousand years by stealing gold from Europe’s central banks and from millions of concentration camp prisoners.9