Krueger's Men

by Lawrence Malkin

  At least five survivors published memoirs or cooperated in them. The first was Moritz Nachtstern’s, still fresh with anecdote; he returned to work as a stereotyper, employed by Hjemmet (Home), a Norwegian family magazine, and lived until 1969. Adolf Burger worked closely with the police from the time of his return to Prague, publishing his memoirs in Czech and then in German. Avraham Krakowski settled in Brooklyn and resumed work as an accountant, still so pious that his Flatbush neighbors knew him as “the rabbi” even though he wasn’t one. Peter Edel became an author, man of the theater, and novelist celebrated by the Communist government of the German Democratic Republic. Max Groen, whose father had been the prewar manager for 20th Century Fox in the Netherlands, subtitled imported films, which permitted him the leisure to enjoy the café life he loved. To the end of his life Groen insisted he had never doubted for a moment that he would outlast his captors: “I knew the future. I’d be free.” Even his last wish was fulfilled, that death come peacefully and without suffering, as it did one morning in 2004 at his home on a placid Amsterdam canal at the age of eighty-six.

  But the hands-down winners were the tourist operators around the Toplitzsee, who have in recent years turned it into an Austrian Loch Ness, complete with its own website. The lure of sunken treasure made the lake a cynosure for fishermen, divers, and assorted adventurers, not all of whom survived. Only weeks after the war ended, the first catch was made innocently by a real fisherman who hooked a bundle of fake fivers with a face value of £400,000. He turned them over to the American occupation forces. U.S. Navy divers based in Cherbourg also went down that spring but were stopped by the logs that regularly slip down the steep mountainsides and form an interlocking, almost impenetrable mantle floating about a hundred feet below the surface. Others were more determined and less lucky. In 1946, two former engineers from the abandoned naval research station who had been camping on the lip of hills above the lake were found dead in mysterious circumstances. In 1950 two more alumni of the station tried to slither down its steep sides; one lost his grip on the brittle limestone and fell to his death.

  The most ambitious underwater expedition was mounted in 1958 by the German magazine Der Stern. It retrieved a printing press and millions in counterfeit sterling before being stopped by the publisher, possibly on the orders of the Austrian government. This gave rise to persistent stories that Stern’s crew of divers and reporters had located — or was about to — SS records including the numbers of Swiss bank accounts. Representatives of the Bank of England were present when the counterfeits retrieved from the deep were burned in the boilers of the Bank of Austria. Their official report contains no hint of secret accounts that might lead the Old Lady to recover hidden treasure on deposit in Zurich, to which it might be entitled as profit from the counterfeits. In 1963 the Austrian government put the lake off limits to treasure-hunters and conducted its own survey of the bottom with a sounding device and underwater video camera. It declared there was nothing more to be found. Again neither the Bank nor the Yard made mention of any SS records in its reports, and the next year Scotland Yard formally closed the case.

  Predictably, this only intensified the search. Hans Fricke, the underwater biologist, spent three years scouring the bottom in a miniature submarine, filming with the aged Krueger as a passenger on one dive. Fricke discovered more forged pounds, various rockets, missiles, and other detritus of experimental Nazi ordnance, as well as a previously unknown worm that lived without oxygen. Fricke said there was no more to find. Nevertheless, in 2000 the World Jewish Congress, prompted by an Israeli adventurer who declared himself a Mossad operative, advanced most of the $600,000 needed for a month’s sonar mapping of the lake and five weeks of diving for hidden SS archives. The operation was filmed by CBS News. Still, nothing was found aside from a case of beer caps and more counterfeit fivers, the latter on display at the Simon Wiesenthal Museum of Tolerance in Los Angeles.

  As of this writing, yet another undersea adventurer, Norman Scott, who went after the wreck of the Republic, an American Civil War steamship that foundered off the coast of North Carolina with a cargo of gold, has obtained a three-year license from the Toplitzsee’s state proprietors to hunt for gold. He claimed to have turned up new leads in the archives in Washington and Berlin and expressed confidence he would find “something damn big.” After more than half a century, perhaps he will finally recover an underwater Treasure of the Sierra Madre, assuming that it has not blown away.

  NOTES

  ABBREVIATIONS USED IN THE NOTES

  ACICR ARCHIVES DU COMITÉ INTERNATIONAL DE LA CROIX-ROUGE (SWITZERLAND)

  B/E BANK OF ENGLAND ARCHIVES

  ADM Administration Department

  BNO Bank Note Office

  C Chief Cashier’s Department

  G Governors and Secretary’s Department

  M Museum Holdings

  PW Printing Works

  FDRL FRANKLIN D. ROOSEVELT PRESIDENTIAL LIBRARY

  NARA NATIONAL ARCHIVES AND RECORDS ADMINISTRATION (UNITED STATES)

  RG 56 Records of the Department of the Treasury

  RG 59 Records of the Department of State

  RG 65 Records of the Federal Bureau of Investigation

  RG 72 Records of the Bureau of Aeronautics, U.S. Naval Technical Mission in Europe

  RG 84 Records of the Foreign Diplomatic Posts

  RG 87 Records of the United States Secret Service

  RG 226 Records of the Office of Strategic Services

  RG 242 Records of the Collection of Foreign Records Seized

  RG 243 Records of the United States Strategic Bombing Survey

  RG 260 Records of the Office of the Military Government, Germany

  RG 263 Records of the Central Intelligence Agency

  RG 407 Records of the Seventh Army, G-2

  PRO PUBLIC RECORD OFFICE, THE NATIONAL ARCHIVES (U.K.)

  FO Foreign Office Papers

  HW Government Communications Headquarters Papers

  MEPO Metropolitan Police Papers

  KV Security Service Papers — MI5

  T Treasury Papers

  WO War Office Papers

  SBA SWISS BANKERS ASSOCIATION

  SFA SWISS FEDERAL ARCHIVES

  Page numbers refer to the print edition.

  CHAPTER 1: ATTACK THE POUND THE WORLD AROUND

  3 Wilhelmstrasse: Photographs and descriptions of these prewar ministries, which were destroyed during World War II, can be found online at www.topographie.de/wilhelmstr/. Connoisseurs of financial architecture will note similarities between the prewar German Finance Ministry and the Federal Reserve Bank of New York, constructed in 1924.

  4 Details were put forward: Interrogation of Heinz Jost, chief of SS foreign intelligence until 1941, by Allied officials. Camp 020 Interim Report on the Case of Heinz Karl Maria Jost, May 12–December 5, 1945, Appendix XI, “Forgery of Bank of England Notes,” pp. 16–17, PRO KV 2/104.

  4 ambitious, opportunistic: Höhne, Order of the Death’s Head, 87, 356–58.

  4 The International Criminal Police Commission (ICPC) was known by its German initials, IKPK, in Germany; not until 1956 did the term Interpol come into use. The reconstituted Commission, then housed in Paris, is now based in Lyon. Five presidents of the ICPC — Otto Steinhaeusl (1939–40), Reinhard Heydrich (1940–42), Arthur Nebe (1942–43), Ernst Kaltenbrunner (1943–45), and Florent Louwage (1946–56) — were SS officers and Nazi Party members, as was Paul Dickopf, who served from 1968 to 1972, when his Nazi past caught up with him. Kaltenbrunner, nominally a policeman, was hanged at Nuremberg in 1946 for war crimes.

  4 gaining access to fifteen years of case files: Deflem, “The Logic of Nazification.” Heydrich, then president of the ICPC, was shot by assassins in May 1942 and died the next month. Arthur Nebe, as chief of the Reichskriminalpolizeiamt, became the provisional president for a year, during which he removed all ICPC archives from Vienna to Berlin.

  4 adapt the mobile gas van: “The Development of the Gas-Van i
n the Murdering of the Jews,” Jewish Virtual Library, pp. 4–5, http://www.jewishvirtuallibrary.org/jsource/Holocaust/vans.html.

  5 Nebe proposed mobilizing: The great Nazi hunter Simon Wiesenthal thought Nebe had actually done so. See Wiesenthal’s memoir Justice, Not Vengeance, 253–54.

  5 Federal Bureau of Investigation: Passport forms requested, April 17, 1939; Heydrich circular, October 11, 1940; also, correspondence between Arthur Nebe and J. Edgar Hoover; invitation (with fare reductions and free hotel) to ICPC conference planned for Berlin; Hoover’s internal memo to cut all contact with ICPC, December 4, 1941, NARA, RG 65, FBI–Interpol Files.

  5 an avid reader of spy stories: Höhne, 215.

  5 the single initial C: The designation originated from the name of Captain (later Sir) Mansfield Cumming of the Royal Navy, the first chief of Britain’s Secret Intelligence Service in modern times. The SIS, also known as MI6 (for military intelligence), was formally established in 1909, with Germany’s naval buildup as its principal target. Cumming initialed his memos with C (or MC) in green ink, and the code name stuck right into the twenty-first century and his successor in the intelligence brouhaha leading up to the Iraq War, Sir Ian Scarlett. Until this was publicly confirmed by the British government in 2005 when it established a Secret Service website (www.sis.gov.uk or www.mi6.gov.uk), no one covered by Britain’s Official Secrets Act could confirm or deny anything about the identity of C, past or present. The name of Stewart Menzies, the World War II chief of the Secret Intelligence Service, was inadvertently disclosed to the British public in 1966, although Heydrich’s SS knew it (but misspelled it “Stuart”), as well as the name of his predecessor. Menzies, whose organization was notoriously penetrated by Communist double agents such as H.A.R. (Kim) Philby, had been a British agent during World War I. Dispatched to Madrid to assassinate Wilhelm Canaris, then a young intelligence officer accurately monitoring Allied shipping in the Mediterranean for U-boat captains, Menzies could not even find Canaris, let alone kill him. No wonder James Bond was a fictional character. The Nazis also knew the address of the SIS and even the location of the nearest Underground station (St. James’s Park), as evidenced by the Nazi handbook for the supposedly imminent invasion of Britain, a copy of which fell into British hands in 1945 and was lodged in the Imperial War Museum in London. See Invasion 1940: The Nazi Invasion Plan for Britain by German general Walter Schellenberg, published in 2000 in cooperation with the museum; and Jörgensen, Hitler’s Espionage Machine, 45.

  5 He had his office: Reitlinger, The SS, 31–35.

  6 The only serious objection: interrogation of Jost, PRO KV 2/104.

  6 Funk, a homosexual former financial journalist: Taylor and Shaw, Penguin Dictionary of the Third Reich, 102–3.

  6 legal advice from the military: Wilson, memorandum on the Tricycle/Artist group, November 20, 1943, NARA, RG 226, entry 119, box 23, folder 177A. The legal adviser to the Oberkommando der Wehrmacht (OKW) was Count Helmut von Moltke, scion of a famous military family and member of the Christian pacifist Kreisau Circle (named after his family’s estate), which believed Nazism could evolve toward postwar social justice. The information in this memorandum from Wilson originated with the British. Tricycle was the code name of Dusko Popov, double agent (see chapter 8). Artist, who provided further information about the forgeries when they started appearing, was Johnny Jebsen, a Danish businessman who worked for the Abwehr out of Lisbon but often traveled to Berlin, according to Breitman et al., U.S. Intelligence and the Nazis, 133 n. 4. Jebsen and Moltke were executed by the Nazis in the final weeks of the war, the former by his SS enemies, who had long believed him (correctly) to be an insufficiently zealous supporter of the Nazis, the latter for his Kreisau connections.

  6 Joseph Goebbels also found: Die Tagebücher von Joseph Goebbels. Im Auftrag des Instituts für Zeitgeschichte und mit Unterztutzung des Staalichen Archivdienstes Russlands, Teil I, Aufzeichnungen 1923–1941, Band 7, Juli 1939–März 1940, bearbeitet von Elke Frölich, Munich, 1998. Translation by Ingeborg Wolfe.

  7 Hitler had refused to endanger: Kindleberger, A Financial History of Western Europe, 405.

  7 a letter from Michael Palairet, chief of the British legation: Palairet to William Strang, Foreign Office, November 21, 1939, B/E PW 17/5. Palairet’s dispatch was ignored for years by the Bank of England’s own historian and others, probably because a typed copy was filed away at its printing works. The original was not immediately found in the British National Archives. The dispatch and Paul Chourapine’s memo were literally unearthed in the Bank’s windowless archives, four levels below busy Threadneedle Street, the principal crossroads of the City of London.

  9 Herschel Johnson, the highly respected senior career diplomat: Herschel V. Johnson, Deputy Chief of Mission, to Secretary of State, Confidential Memorandum No. 229, February 29, 1940, NARA, RG 59, Central Decimal File (1940–44), London Embassy, Classified General Records, 811.5158/2632.

  9 This kind of obfuscation characterized: In a memo of January 4, 1940, to the Bank’s governors titled “Forgeries,” the chief cashier, Sir Kenneth Peppiatt, recalls the Athens dispatch and other warnings, B/E G 14/27, Committee of Treasury Files, Notes: Forgeries. But in Promises to Pay: The First Three Hundred Years of Bank of England Notes, published for the Bank by Spink (London), in 1994, Derrick Byatt, a career Bank official for forty years, wrote (p. 145) that in December 1939, the Bank had been alerted by the British embassy in Paris that Fernand Romano, “an Italian Jew with British sympathies,” reported the Germans were counterfeiting one-pound notes to circulate only in distant countries, or to give to Germans who wanted to exchange their reichsmarks for foreign currency at 65 to the pound. Romano told his British handlers in Paris he was heading to Switzerland the next month, then vanished. No mention of any other, more detailed warnings appeared in this semiofficial volume. Moreover, the Romano story was not based, strictly speaking, on the Bank’s own files, which apparently had vanished, but on a postwar police report filed in the Bank’s Note Issue Office: C 5/136, Scotland Yard Report 16/1/46. Romano surfaced in 1954, when he wrote on company stationery from Milan to the Metropolitan Police in London demanding a medal and compensation for having told the British embassy in Paris in 1939 about the Germans’ forging pound notes. On June 24, 1954, Scotland Yard noted that it had no evidence of this and rejected Romano’s request. Either the police did not bother to tell the Bank about what Scotland Yard obviously regarded as yet another crank letter, or the Bank was told and simply ignored it. “Production of Bank of England notes ‘BB’ series by Nazi Government during World War II, 1945–64,” PRO MEPO 3/2400.

  10 transferred to the British secret services: Advice in September 2002 to the author from Henry Gillett, Bank of England chief archivist, whose retirement in 2003 has helped make this book possible.

  10 destroyed some records: See Epilogue, p. 203.

  10 “the most successful counterfeiting enterprise”: C. Frederick Schwan [and] Joseph E. Boling, World War II Remembered: History in Your Hands, a Numismatic Study (Port Clinton, Ohio: BNR Press, 1995), 164. The study is known to specialists; when I began my researches, it was the first publication cited to me by William Bischoff, former curator of the numismatic collection of the Newark (New Jersey) Museum.

  10 Between the wars: For more detailed and technical background on which this passage is partly based, see Kindleberger, Financial History of Western Europe, and also Skidelsky, John Maynard Keynes, vol. 2, 180–232.

  11 sailors coming off ships were mobbed: Kindleberger, 318.

  12 they went back on the gold standard: Probably the best way to explain the gold standard, even in this oversimplified manner, is to trace its history. British paper money began as promissory notes for gold that was held in safekeeping by London goldsmiths late in the seventeenth century. What turned these pieces of paper into real money was the Bank of England’s declaration on every note that it “promises to pay the bearer the face value on demand.” As long as confidence in that promise held
firm, paper money was literally as good as gold — and weighed less in your pocket, too. Right up to World War I, the Bank made good on that promise, but ordinary people, observing the huge cost of the war, started hoarding gold coins. His Majesty’s Treasury made up for the shortage of money by issuing notes signed by its chief civil servant, John Bradbury. These notes, known as Bradburys, helped pay for the war but also served to exacerbate suspicion of paper money, and with good reason: During World War I the pound lost half its value to inflation. Even when Britain tried to return to the gold standard, anyone attempting to test the Bank’s promise to exchange notes for gold was first asked to explain why. The minimum redeemable amount was an inconveniently heavy gold bar of 400 ounces, which meant that only the savings of the rich were protected by a gold guarantee. The poor paid in another way: In those days, countries settled foreign trade deficits in gold, so when gold was transferred from England to America, for example, the stock of gold-backed pounds had to be reduced. Money became tight, interest rates rose, business and trade stagnated, and so did wages. The Great Depression forced the world off the gold standard. After 1931, a pound note could be exchanged only for another, although the Bank was so confident of its ability to detect counterfeits that it would exchange even badly damaged or deteriorated notes.