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A BRIEF HISTORICAL OVERVIEW OF NAZI REICHSBANK GOLD
by Ray R. Cowdery
Copyright © 1997 by USM Inc. Used with permission. All rights reserved.
Copyright © 1997 by USM Inc. Used with permission. All rights reserved.
While most of us profess to abhor war, most of us also realize that times of war are “good times” for the many people in manufacturing industries that produce bullets, tanks, ships, land mines, body bags, grave stones and other paraphernalia of war. Rarely do we stop to think of the profits made by those who finance the manufacture of the materials used to wage war or the profits made on the exchanges and credits required to purchase these kinds of manufactured goods.
From the dawn of human history until 1930 persons, groups, religions or governments that waged war had logistical problems in the areas of finance, supply, foreign exchange and bank clearances. Appropriating the monetary gold and other valuable property of a defeated enemy was often easy compared with transporting it back to the safety of the homeland of the victorious army. Once there, a local bureaucracy reissued the captured wealth and attempted to exchange it for food, new equipment and other requirements of the conquering army, still busy in the field capturing more loot. Captured loot in excess of the amount needed to fund further conquest was often used to build infrastructure and increase the standard of living of the people who sponsored the victorious army. The glory of Rome resulted mostly from Roman conquests and France’s 19th century glory is traceable to the far-flung looting of her armies.
In anticipation of World War I the government of German Kaiser Wilhelm II began to amass gold secretly to be used to fund the coming war. When war came in 1914 the Germans were able to field a huge, well trained and spectacularly equipped army that quickly overran much of Europe. When the Kaiser’s gold reserves were finally depleted by 1917, his ability to finance the war, and thus to effectively wage war, was over.
In 1930 a major change in international banking practice altered forever the concept of international conquest. A super-legal world-bank called the Bank of International Settlements or BIS (Bank für Internationalen Zahlungsausgleich or BIZ in German and Banque de Reglements Internationaux or BRI in French) had been chartered in Basel, Switzerland by a convention of the central banks of the world’s leading industrialized countries. The BIS enjoyed a unique status and unique privileges, even virtual exemption from Swiss law. The BIS was charged with controlling the storage, and transfer of ownership of gold for the central banks of the world, and its charter provided that, “the bank, its property and assets, and all deposits and other funds entrusted to it shall be immune in time of peace and in time of war from any measure such as appropriation”.
The vital service the BIS performed in the decades after 1930 was to facilitate the process of gold clearing - the adjustment of mutual claims by exchanging them and thereby settling the balances. It was no longer necessary to move tons of gold to handle clearances, as virtually all the worlds’ central bank gold was under the control of the BIS. The theory of clearing gold settlements at the BIS worked even better as a practice, since the BIS reduced most complicated gold exchange transactions to acts of bookkeeping.
In Germany in the early 1930s, Adolf Hitler was campaigning for the election of Nazi candidates to the Reichstag (parliament) and for himself. By January 1933 the Nazis had been elected in great numbers and Hitler had become Chancellor of Germany by a normal, democratic process. With the assistance of Social Democrat and Catholic minorities, the Nazis in the Reichstag passed an “Enabling Act” proposed by Hitler, that gave his government four years of exclusive legislative power. Hjalmar Schacht was quickly appointed by Hitler as president of the Deutsche Reichsbank (German State Bank) and immediately began a hidden gold reserve program like that used by the Kaiser in preparation for World War I. In just a few years of “die Strenge” (austerity) in Germany the Deutsche Reichsbank was able to hide over 500 million Reichsmarks (one Reichsmark = US$ 0.40 in 1940) in monetary gold in secret accounts under Schacht. World bankers were left to assume that Reichsbank gold was equal only to published figures, or around 70 million Reichsmarks.
Through accounts in the Deutsche Reichsbank with names like “Treuhandgesellschaft”, “Konversionskasse”, “Asservat Devisian Reserve” and “Sonderlagerung”, the German government had amassed hidden gold reserves that were truly astronomical for the time. The Nazis very clearly understood the need for financial self-sufficiency as they pursued expansion through conquest. When Austria was joined with Germany in a virtually bloodless coup in March 1938 (a union approved by 97% of Austrians in a plebiscite a few weeks later) all gold in private hands in Austria had to be sold to the government at a rate of RM 3,966.27 per 1000 grains for Austria to come into compliance with German law and to avoid confiscation (a very similar law in the United States required Americans to sell their gold to the US government at a price of just over $30.00 per ounce to avoid confiscation). The private Austrian gold thus sold to the government comprised about 10% of the total of $102,000,000 in gold that the Austrian National Bank agreed to exchange with the Deutsche Reichsbank in Berlin for an equal amount of Reichsmarks.
In the fall of 1938 representatives of England, France and Italy gathered in München (Munich) and agreed with German diplomats that Hitler should have what he wanted of Czechoslovakia. The Deutsche Reichsbank was about to acquire another $44,000,000 in monetary gold. Interestingly, in the case of the Czech gold the Deutsche Reichsbank even offered to pay the Czechoslovakian National Bank for their gold with freely negotiable foreign currency. Even more interesting is the fact that $26,000,000 of the Czech gold was deposited in the Bank of England and had to be released by them to the Germans!
By 1939 Schacht was replaced as head of the Reichsbank by an old Nazi Party member, Walther Funk. Funk wisely put the day-to-day operations of the bank in the hands of vice-president Emil Puhl, a former director, a well-known international banker and close associate of those who ran the BIS in Basel, Switzerland. It was the gold-genius Puhl who was later able to direct the flow of looted gold through the Deutsche Reichsbank to the BIS and thereby into the Nazi war economy of occupied western Europe. It was Puhl who understood that only through close collaboration with the banks in “neutral” countries could the Reichsbank dispose of enough looted gold to insure German military success. Those “neutral” countries were France, Switzerland, Sweden, Spain, Turkey and Portugal.
When the Germans and Russians invaded Poland in September 1939, the Germans found Polish vaults virtually empty. The gold reserves of Poland had been loaded on trains and trucks which traveled through Rumania, Turkey and Lebanon before arriving in France at the end of October 1939.
With the invasion of Belgium, the Netherlands, Denmark, France and Luxembourg in May of 1940 the Germans struck “pay dirt” again. They were able to exchange Reichsmarks for $4,858,000 of Luxembourger gold held at the Bank of France in Marseilles, and through a complicated system which charged the Netherlands for the German occupation, extracted $163,000,000 worth of Dutch gold.
The Belgian National Bank, in anticipation of a possible German invasion, had placed its gold reserves in the hands of the French government for safekeeping. The Bank of France shipped it to French West Africa prior to the French surrender to the Germans after only a few weeks of half-hearted resistance on 25 June 1940.
When French authorities agreed to the German military occupation of northern France (including the capital city of Paris) they decided to move the legitimately elected government of the country from Paris to the old resort city of Vichy in unoccupied southern France. Unbelievably, the French Government entered into negotiations with the Nazi Reichsbank that eventually led to the surrender of the 4,944 sealed boxes of Belgian gold bars with a value of $223,200,000. While the French were sacrificing the Belgian treasury, the great bulk of the $2,000,000,000 of French gold reserves sat safely in the United States, England, Canada and at Fort-de-France on Martinique, well out of reach of the Nazis.
Even before the French handed over the Belgian gold, the Deutsche Reichsbank had been in negotiations with the remaining directors of the Belgian National Bank to purchase it. In the end, the Belgians rejected the German offer, so along with a good deal of Dutch gold, the Belgian gold was secretly taken to the Prussian State Mint in Berlin for resmelting. It quietly became Nazi gold.
While it is true that “gold has no smell”, and thus can be hard to trace, bars of monetary gold are always well-marked with smelt numbers, serial numbers, names and purity, and are registered in the books of the banks that own or hold them. To resmelt gold bars which have provenance is unthinkable specifically because it causes known gold to “disappear” and “creates” new gold. In the hope of avoiding detection at a later date, the Belgian and Dutch gold that the Germans resmelted at the Prussian State Mint in 1942 and 1943 was given German smelt numbers and stamped with dates arbitrarily selected from years before 1939.
Like all the other gold the Nazis possessed, the resmelted Dutch and Belgian gold became the food on which the German war economy fed. When the Germans wished to purchase an element critical to their war effort, ten Swedish machine tools for example, they could open a Reichsbank letter-of-credit in the amount of $10,000 to a manufacturer of those tools in Sweden. The letter-of-credit was essentially a post-dated check payable in gold or in the currency of choice of the manufacturer - anything from Swedish kroner to American dollars - after the manufacturer shipped the ordered machine tools to the Germans. Cashing the letter-of-credit after shipment usually took one of two forms:
a) The Swedish manufacturer would take the Reichsbank letter-of-credit and proof of shipment of the tools to the Swedish Notenbank in Stockholm and be paid $10,000 less bank charges for handling the transaction. The Swedish Notenbank bought gold directly from the Reichsbank throughout the war.
b) The Swedish manufacturer could take the Reichsbank letter-of-credit and proof of shipment of the tools to any local bank and request payment through standard commercial clearing channels. The local bank would “negotiate” the letter-of-credit by mail or courier through the BIS in Basel, Switzerland. Upon submission of proper letter-of-credit paperwork to the Deutsche Reichsbank the BIS would be paid $11,000 in gold. The BIS would credit the account of the Swedish manufacturer’s local bank in the amount of $10,250 ($10,000 for the manufacturer, $250 as the local bank’s profit) and keep $750 for the act of “commercial clearing”. The clearing process is still essentially the same today.
By the middle of 1942 the Nazis had looted, purchased or appropriated virtually every last ounce of monetary gold in Europe. Other sources of gold needed to be found, and an immediate but small reserve came to the Reichsbank in the form of non-monetary gold and other valuables deposited with it by Heinrich Himmler’s “government within a government,” the Schutzstaffeln, or the SS.
The Reichsbank had for a long time illegally falsified its records to hide the origins of its monetary gold and had engaged in other unethical banking practices. Their success was due in large part to the collaboration of the Swiss, French, Swedes, Portuguese and Spanish who blissfully looked the other way and took the gold regardless of its origins. While those practices were illegal and/or unethical, the Reichsbank was always able to justify the transactions in their bookkeeping (contrary to popular belief, complete copies of Deutsche Reichsbank financial files and account books were captured with Nazi gold in 1945) since the gold obtained was either purchased with Reichsmarks or offset with other bank charges, like occupation costs. Such was not the case with the SS loot. It was not purchased and could not be offset by bank charges in the bookkeeping. It was booty.
SS valuables deposited with the Reichsbank consisted of gold, silver, currency, jewelry, dental gold, gold eye glass frames and other items. Arrangements for the deposit of SS valuables were made verbally at the highest level (between Reichsführer-SS Heinrich Himmler and Walther Funk) with all details handled by the SS-Wirtschafts- und Verwaltungshauptamt (SS-Economic Activity and Central Administrative Authority) which also administered SS enterprises and concentration camps. Although the SS loot arrived at the Reichsbank in sealed boxes, the boxes had to be opened to conduct a receiving inventory. All deliveries of SS loot were entered in the Reichsbank books under the code name “Melmer”. Between August 1942 and March 1945 the SS made 76 deliveries to the Melmer account in the Reichsbank, having an aggregate value of $14,500,000, the great bulk of it in foreign bank notes and gold.
On Saturday 07 April 1945 soldiers of the US 19th Division of General Patton’s Third Army entered the Kaiseroda Potassium Mine in the small village of Merkers, near Bad Salzungen in western Thuringia, Germany. They found paintings and bags of Reichsmarks stacked against steel vault doors that they were unable to open. Returning on 08 April with Army Engineers they blasted a hole in the doors and into a huge chamber filled with bags of gold bar and coin, bales of currency; suitcases of silverware, jewelry, church ornaments and tableware.
While precedent in international law provided that, “any movable property of an enemy becomes the property of the capturing power”, the Americans realized they were only temporary custodians of the greatest treasure ever found. A quick estimate placed the value of the gold alone at more than $241,000,000 based on the established price of US$35.00 per fine ounce. The value today would be something on the order of 33 billion dollars!
The non-monetary SS loot and the monetary gold discovered at the Kaiseroda Mine in Merkers was removed by a convoy of military vehicles to the US Army Foreign Exchange Depository (FED) in Frankfurt am Main. The Merkers discovery represented 91% of all the monetary gold found in Germany at the end of the war, about half of it in gold bars. Ninety-two of the gold bars carried on the Reichsbank books were never found.
Based on the principal that each nation that gave up monetary gold to the Germans deserved to get a proportionate share of any and all German monetary gold recovered at the end of the war, the American, Soviet and British governments advanced the “gold pot” idea. A properly substantiated claim for gold given up to the Germans after 12 March 1938 would constitute a specific percentage of all claims to be made against 100% of the “gold pot” of recovered Nazi gold. It was intended that the gold pot would be divided in ratio among all claimant countries. By the time this idea was ready for implementation, the Soviets had moved on to a new and more pressing agenda in eastern Europe and the French, trying to put their wartime collaboration with the Germans behind them, clambered to join America and Britain as one of the “Big Three” in charge of the gold pot.
On 27 September 1946 statements issued at the highest level by the governments of the United States, Great Britain and France announced that in accordance with Part III of the Paris Agreement on Reparations, they had jointly established the Tripartite Commission for the Restitution of Monetary Gold (Tripartite Commission or TC) to be headquartered in Brussels, Belgium. Monetary gold was defined by the United Nations as “all gold which, at the time of its looting or wrongful removal, was carried as a part of the claimant’s monetary reserve, either in the accounts of the claimant government itself or in the accounts of the claimant country’s central bank or other monetary authority at home or abroad”.
The Tripartite Commission, at the time it began operations, had control of about $330,000,000 in German monetary gold and claims for lost gold exceeding $800,000,000. The job of restitution that was expected to be finished quickly turned out to be a job with no end. The very secret and publicity-shy Tripartite Commission is still in business today!
The $14,500,000 worth of concentration camp booty, including everything from dental gold to jewelry, was a tiny portion of all loot recovered in Germany after the war and was not included in the Allied “gold pot”. The SS loot was placed under the control of the Intergovernmental Committee on Refugees to be used to rehabilitate and resettle victims.
Approximately 74% of the $770,000,000 in Reichsbank gold that Hitler had at his disposal during World War II was “looted” gold. At war’s end the Allies had recovered about $330,000,000, so the remaining $440,000,000 had to be sitting in the bank vaults of the neutral profiteers - France, Switzerland, Sweden, Turkey, Spain and Portugal. The great bulk of it, some $378,000,000, can be traced on Reichsbank books as it passed into the hands of the Swiss National Bank, principal player in the greatest money laundering scheme in history. After the war Switzerland “donated” $58,400,000 to the “gold pot” administered by the Tripartite Commission, and in return the Allies agreed to drop all claims against gold that the Swiss had received from Germany.
This entire overview is Copyright © 1997 by USM Inc. and may not be reprinted or copied for any purpose without the written permission of USM Inc.