Schneider had been released from German captivity in June 1947 and finally caught up with Altmann in October. Altmann told him of his plan and Schneider did not like it. In fact he disliked it so much that he asked for the radium back. Altmann refused. He didn’t want to miss out on such a golden opportunity, he said, and besides, he had already pre-spent some of the profits. Hausner and Altmann did their best to persuade Schneider to fall in with their idea. But he would have none of it. He thought he had been hoodwinked. He was furious, so furious that he was prepared to renounce all claim on the radium and report its existence to the police authorities in Munich. And this he did.
The authorities were naturally extremely interested in Altmann’s tiny but formidably valuable radiological treasure and sent a plainclothes policeman down to the White Horse to find out more about it. When he was satisfied that the radium was genuine – how he did this without fatally irradiating himself is one of this story’s more inconsequential mysteries – the plain-clothes man offered Altmann 1,300,000 Reichsmarks for it, the equivalent of $130,000, and when Altmann tried to close the deal he was promptly arrested and taken to Munich for trial by the Military Government Court. Zenta Hausner, it seems, offered to put up bail for her luckless restaurant manager, but she died before the details could be arranged. As for the radium, the FED declined to accept it – they had had enough trouble with a previous radium shipment because of the health hazards involved in handling it – and suggested it should be donated to some hospital or institution where it could be ‘productively employed instead of merely being stored in some Army depository’.
Platinum, uranium and radium were sensationally precious windfalls for the black-marketeers of Garmisch and the Werdenfelser Land. But they were short-lived, one-off phenomena; for regular day-to-day profits the professional racketeers relied on another windfall commodity in rather more continuous supply – narcotics. Narcotics were the ultimate in black-market contraband, then as now. They were the most profitable, in terms of the ratio between volume and profit, and the most perilous, in terms of the ratio between profit and penalty. In the course of time the narcotics problem in Bavaria was to escalate from a breath of rumour to a clamour of scandal. The resulting brouhaha was to become so insistent and so inextinguishable that higher command in the US Zone was eventually compelled to set Army investigators on Garmisch in an attempt to sort out this and other large-scale infringements of public order and military discipline. The outcome of these investigations is the subject of a later chapter. Irrespective of the result, the narcotics traffic had a solid basis in fact.
The original stock of drugs for the post-war narcotics trade derived from the large quantities of morphine, opium, cocaine, etc. held in German hospitals and the warehouses of the German pharmaceutical industry at the end of the war. These drug stocks were purloined by German civilians and American military alike, but since they did not have the necessary contacts of their own they could only distribute their supplies of narcotics through the dealers of the German black market, though later the Americans began to sell the drugs to the USA direct.
One of the biggest stocks of German narcotics consisted of a huge deposit of cocaine left in the Garmisch area by the German Army Medical Corps shortly before the end of the war. This depot was apparently not discovered by the Americans after the occupation and very few people knew of its existence. Those that did know seem to have included a group of Polish ex-POWs from Murnau, near Garmisch. In 1946 the people who had taken possession of the cocaine began to offload it into Italy via Mittenwald and into France via Konstanz at a highly profitable price of $1 per gram. When the reserves of narcotics from German wartime medical sources dried up, other sources had to be found. Some stocks were filched from factories legitimately manufacturing new supplies of narcotic drugs in Darmstadt, Mannheim and Berlin. Large shipments of drugs were also imported from London into north German ports, transported to Munich and thence smuggled across the borders to Italy and France. Small dope rings in Bavaria also resorted to a degree of agricultural or chemical expertise to obtain the base product of their trade; some grew the Asiatic poppy for its opium, others used chemical processes to extract narcotic ingredients from various medications legally purchased in bulk.
The narcotics trade was widespread throughout Upper Bavaria and spilled across the borders into Austria, Italy, Switzerland and France. Though the principal source and concentration point of the traffic was Munich and not Garmisch, as the American investigators had been led to believe, Garmisch nevertheless remained a highly important staging-post on the smuggler’s route south, and additionally possessed a sizeable drug-trafficking population of its own.
According to a CID informant interrogated in Garmisch gaol there were several dope rings working out of Garmisch. One, which operated between Garmisch, Hamburg, Konstanz, Innsbruck and Bolzano, was run by a group which included a Chinese called Leo and a local German furniture-remover by the name of Virnich. Another, with its headquarters at the White Horse was run by Charlie. It was at the White Horse that Charlie came into contact with his Italian counterpart, a black-market smuggler who ran a similar illegal traffic in various commodities between Italy and Germany and was a go-between for a narcotics ring headed by the historically notorious Mafia gang leader, Lucky Luciano. From 1946 onwards Charlie enjoyed a reputation in both the German and Italian underworlds as a cocaine specialist – individuals would come to him with cocaine samples and Charlie was able to verify their purity and value. He also became associated with a third drug ring in Garmisch, headed by a self-styled Polish Count, former Resistance agent and CIC informant (code named ‘Robert’), and composed almost entirely of ex-Polish Army personnel and DPs intensively engaged in the smuggling of all kinds of black-market goods, including narcotics, between Bavaria and Italy. In normal times the group could have been described as a thriving import-export agency, but under the occupation it was regarded as a gang of crooks. Its membership was largely drawn from among the former inmates of the Polish officers’ prisoner of war camp at Murnau, many of whom had joined in active black-market activity with Jewish survivors and officers of General Anders’ Polish Army. From the US military authorities in Bavaria and from the Polish military authorities in Ancona, Italy, the Poles were able to obtain the necessary permits to enable them to travel between Bavaria and Italy, and in the beginning there was so little official supervision that the traffic was more like trade than smuggling. Valuable furs, jewellery, pictures and objets d’art, as well as narcotics, were shipped to Italy, and textiles, wine and other consumer goods were shipped back from Italy into Bavaria. Several American CIC officers of German or Polish origin participated in the Italian traffic. On a number of occasions the traffic went further afield. Cocaine driven down to Ancona was passed on to Bari, loaded on to a freighter and shipped to Cairo. On these occasions payment in Italy was made in US dollars. Some cocaine was also smuggled into Poland by the Polish ring.
In some respects Munich and Garmisch represented not so much separate hubs of activity as different ends of the same axis. Regarding the Munich-Garmisch ‘axis’, one American investigator – Philip Benzell, Chief Agent of the Munich HQ of the US Army CID – reported in December 1947 that American personnel involved in illegal activities in Upper Bavaria included the Chief of the Investigation and Enforcement Branch, Finance Division, OMGB, John McCarthy, and an officer of the Public Safety Branch, OMGB. ‘While no concrete evidence exists linking them to narcotics trafficking,’ noted Benzell, ‘it is noteworthy that their names have repeatedly and persistently appeared, in other than an official capacity, in this and various other types of investigations conducted in Upper Bavaria. Allegations have been made that the above-named persons are in league with Dr —, a suspected narcotics operator, residing in Garmisch and a “wanted” personality by the Austrian authorities.’ The Americans’ close association with notorious and suspected German personages ‘certainly does not inspire the placing of confidence in them by this law
enforcement agency. Further information is being sought concerning Dr — through an informant, Frau Hausner of Garmisch, who was acquainted with the doctor. Frau Hausner, a suspected narcotics dealer and addict, was the proprietress of the notorious Garmisch café “Weisses Rössl”.’
The narcotics traffic might seem peripheral if it were not foi the significant part it played in the final – and perhaps the most remarkable – episode of the Reichsbank story. Unfortunately the laws of libel prevent the authors from revealing the names of the people involved; nearly all the participants are still alive, none of them has been convicted or made a confession, the CID and CIC agents’ reports and other documents relating to the case are not admissible as evidence in a court of law, many witnesses are dead, others are elderly and scattered around the globe. Though the names of the men and women involved are known to the authors, they can only be referred to by circumlocution: those of German nationality become ‘Garmisch residents of a dubious character’ (which is how the US Army CID described them), those of American nationality become ‘the American major’ and ‘the American captain’. Nevertheless, from surviving documents and personal interviews with both the participants and their close associates it is possible to reconstruct the gist of this extraordinary episode which the authors believe conforms with the truth as far as it can be ascertained.
Ever since the Americans’ recoveries of the Reichsbank gold and currency caches in the region of Garmisch and Mittenwald in the summer of 1945 there had been a persistent rumour in Garmisch that a considerable quantity of American dollars and other currency, and perhaps also some gold (probably in coin form), had escaped the Americans. The dollars were thought to have been part of the Reichsbank foreign currency reserves, or part of another consignment of foreign currency (belonging perhaps to the Abwehr or Brandenburg Division) shipped down from Berlin at the same time.
Exactly how much currency was still around in Garmisch and exactly where it was and how it had got there, was not entirely clear. But all surviving accounts – US Army intelligence reports, eye-witness descriptions and newspaper articles by insiders – agree that it did exist. A CIC estimate in 1946 put it at $100,000. A later estimate, which appeared in the local Garmisch newspaper, the Garmisch-Partenkirchen Tagblatt, a few years later, put the figure much higher: ‘The greater part of the treasure escaped the Americans. Careful estimates of our informant state that at the time about four million dollars were still around.’ Most of this secret hoard, it was alleged, was smuggled into Switzerland by a small group of German civilians and American army officers furnished with Garmisch Military Government travel passes during the two years following the end of the war. Interviewed by the authors in Munich in 1978, a German national who was very close to these matters in 1945 (but prefers that his name is not published now) confirmed that ‘several million dollars in US currency and a large quantity of gold coins were handled in this way. Although he was referring to events of over 30 years before, he was absolutely adamant that there were ‘millions of dollars rather than hundreds, thousands or hundreds of thousands’.
Not long after the end of the war this huge hoard of dollars (and possibly gold coins) had fallen into the hands of a small group of Garmisch residents of dubious character. Not surprisingly their standard of living rose somewhat as a consequence, and they were soon seen driving about in expensive Porsche and BMW motor cars and bestowing lavish gifts on their current girlfriends. A memo by the local Garmisch CIC noted that one of the Germans was known to be passing around £20 English notes dated 1935 and was ‘further mixed up in the disappearance lately of the former Reichsbank currency, which up to this time has not been found’. The Garmisch group were at first at a loss how to dispose of their windfall. The bills were very old and used, and some of them turned out to be large gold dollar bills, a form of currency which had become obsolete in the United States before the war. The first problem was to exchange these obsolete dollars.
The black market was virtually the only place where any ordinary German could exchange foreign currency for marks (or goods). During the early days of the American occupation there were no banks or exchange offices, no official exchange rate or financial market. Possession of foreign currency had been illegal during the Nazi period and was even more strongly prohibited during the first three years of the Allied occupation. Any German who had clung to savings in dollars, pounds or Swiss francs till the end of the war ran the risk of a three- to five-year prison sentence if he or she attempted to exchange them after the war. There was, however, one group of people in Germany who paid scant regard to the laws of Military Government. These were the inmates of the concentration camps and the people of mainly East European nationality from the prisoner of war and forced labour camps – the aggressive, independent, long-suffering, hard-grafting DPs who formed the bedrock of the black market in Germany. Such people readily bought foreign currency, especially dollars, and did business with the US military personnel. Normally they dealt only in the standard regular greenback which they exchanged at the rate of 130 to 140 Reichsmark to the dollar. But the Jews also bought the obsolete gold dollar, at the lesser exchange rate of 100 to 100 Reichsmark to the dollar. The Jews were able to do this as a result of a special dispensation on the part of the US Government which benefited any Jewish concentration camp survivors who were intending immigrants to the United States. As an exceptional privilege Jewish immigrants could exchange their gold dollars on arrival for their full value in greenbacks. This provided the Garmisch group with their one chance of getting rid of the gold dollar bills. A friend of the group agreed to sell $150-worth of mixed green and gold bills at a time on the Jewish black market in Munich ‘as a favour, not a business, to buy food for our consumption’.
Only a relatively small proportion of the dollar hoard could be disposed of in this way, however. It became evident that the rest would somehow have to be transferred to Switzerland and properly banked. This, too, was an extremely difficult thing to arrange. Germans were not normally allowed to travel abroad at this time. Even if they could find suitable transportation to the border, the American, French and Swiss border guards would stop them if they did not have official papers. It was essential to obtain passes and travel documents from the American Military Government. It would help to have an American Military Government car as well, and even an American Military Government officer to drive it. Amazingly, this is precisely what the ‘Garmisch residents of dubious character’ managed to arrange. They were able to do so by offering a certain American major, a former infantry officer of hitherto blameless character (and today of impeccable respectability), a 50–50 share in the dollar hoard once it had been safely transported into Switzerland.
This is where the Garmisch narcotics trade came in. As a ‘cover’ for their dollar shuttles into Switzerland the confederates put it about that they were investigating narcotics smuggling in the region on behalf of the US authorities. One of the Germans became a special investigator for Military Government, another (a dope smuggler in his own right) became an informant for the CIC. The American major authorised the trips and one of his subordinates, a captain, issued the necessary official papers. Sometimes the three Germans (two men and a woman) drove into Switzerland on their own with dollars concealed in their car, sometimes they drove across with the American officers in the major’s own official car. The comings and goings of these make-believe sleuths eventually came to the attention of the US Army CID, who noted in a secret report to the C-in-C European Command: ‘Garmisch residents of questionable character were involved in the trafficking of narcotics in the Garmisch area and in other illegal dealings between Garmisch and Switzerland . . . It cannot be established whether such trips were for the express purpose of transporting narcotics; however, from available evidence, the trips were ostensibly not made for any legitimate purpose.’ Photographic copies of letters authorising the three Germans to travel throughout the American and French Zones were in the CID’s possession. ‘The letters autho
rize the three (3) German civilians to carry large sums of money in the currency of various countries and American cigarettes and liquor. Such letters state that these persons were employed on a special mission for the Military Government of Garmisch-Partenkirchen . . . The letters supposedly were issued to the three (3) German civilians who were working as informants and investigators of the narcotics situation in Upper Bavaria.’
CIC reports on some of the confederates’ movements are wildly confusing and mysterious and at this distance no longer make much sense. Through the medium of these surviving intelligence documents we can see the three Garmisch residents collecting a suitcase full of money from a Bavarian castle, picking up a list of dope smugglers from a Munich detective, contacting a Swiss Secret Service man in Konstanz, selling an Englishman a pocketful of diamonds, driving across the Austrian border and living it up on long weekends in Switzerland. During the course of these toings and froings an estimated $2,800,000 in dollar bills were smuggled into Switzerland and safely deposited in Swiss bank accounts. By then the American major was on the point of being demobilised from the Army and the chief of the German confederates was in jail in Garmisch after having been caught crossing the frontier one last time – on this occasion without proper papers. He did not stay in jail for long. Sentenced by the American captain to three weeks’ imprisonment for illegal border crossing, the German was released immediately on the grounds that he had already spent more than three weeks in prison. For some reason he was now in a great hurry. He did not collect his things from his cell, nor does he seem to have returned to his home. Instead he made straight for the Swiss border in his BMW. In 1947 it was still against the law for a German to travel out of Germany and it was only possible to do so with forged documents or genuine travel warrants issued to Germans by the Allied authorities for special reasons. Therefore the German did not drive into Switzerland by car at all – or so he claims.
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