The Swiss, the Gold, and the Dead: How Swiss Bankers Helped Finance the Nazi War Machine

The Swiss, the Gold, and the Dead: How Swiss Bankers Helped Finance the Nazi War Machine


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Responsible for an international firestorm of controversy, this European bestseller examines revelations of how Switzerland bankrolled Nazi Germany's war effort, and then refused to address Holocaust survivors' claims for reparations. Based on records of the German Armaments Ministry and other official documents, The Swiss, the Gold, and the Dead shows how Switzerland laundered gold looted from the banks of occupied Europe and from the bodies of concentration camp victims, and supplied Germany's war economy with sizable loans, weapons, ammunition, and precision instruments. In return, Switzerland was spared the depredations that befell the rest of Europe, and actually profited from its relationship with the Nazis. Jean Ziegler's uncompromising account of Swiss complicity—and his scathing indictment of his own country—make this the definitive book on this highly controversial and emotional subject.

Product Details

ISBN-13: 9780140278583
Publisher: Penguin Group (USA)
Publication date: 03/03/1999
Pages: 336
Product dimensions: 5.16(w) x 7.78(h) x 0.69(d)

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The Bankrupt Fuhrer

WORLD WAR II CLAIMED fifty-two million lives and maimed millions of men, women, and children, driving millions more from their homes. It laid waste to whole tracts of territory, and razed cities in Europe and Asia. It did not, however, devastate the entire world. However frightful the slaughter instigated by Hitler, it never encompassed the whole planet. Almost all of Africa south of the Sahara, the whole of Southern Asia, extensive land masses in Central Asia, the Australian subcontinent, New Zealand and some Pacific archipelagoes, North and South America--all these were spared the bombs and shells that rained down elsewhere.

Throughout the six terrible years that elapsed between Poland's invasion by Fascist armies and the atomic mass murder of the populations of Hiroshima and Nagasaki, the inhabitants of our planet continued to trade, exchange commodities, transfer capital, make payments and purchases, and engage in insurance, transportation and service transactions spanning frontiers and continents.

It is impossible to understand the Swiss Confederation's central role in the slaughterhouse that Continental Europe had become unless we bear in mind the worldwide processes of commerce and freight traffic and the concomitant foreign exchange and barter transactions.

World War II was, first and foremost, a war of aggression and conquest waged by Hitler against Western and Eastern Europe, the Balkans, the Soviet Union, the Scandinavian countries, and the British Isles.

Hitler's Japanese accomplices waged similar wars of aggression in China and Thailand, Indochina and Burma, and throughout the Pacific as far as the western approaches to the North American continent. Fascist Italy invaded the countries bordering the east coast of the Adriatic. All these campaigns and raids by the Axis powers were resisted by the nations under attack.

But another war raged throughout the war years. Scarcely perceptible compared to military developments, deportations, industrial genocide, tank battles, and cities reduced to cinders, this was the trade war. Extremely complex and little documented, it was--unlike the military conflict--genuinely world-embracing. Indeed, some eminent historians believe that its influence on the outcome of World War II was greater than the battle of Stalingrad or the invasions of North Africa, Sicily, Southern France, and Normandy. More decisive, too, than the air war over Britain.

Hitler was never, even at the height of his military successes, able to enforce German independence of the world market. Whatever areas rich in raw materials he conquered in Europe, the Near East, or the Balkans, his munitions industry was always reliant on purchases from outside the German sphere of influence. The economic historian Willi A. Boelcke cites some impressive examples, and the following particulars are taken from his book on the subject.

In 1943 Hitler's munitions industry had to obtain the whole of its manganese requirements from abroad. Manganese is an exceptionally resistant metal, grayish white in color, that melts at a temperature of 1240[degrees] Centigrade. When combined with steel, it produces an alloy of extreme hardness and density used in the manufacture of gun barrels. Most of Germany's manganese was imported from Spain.

Likewise imported was 75.9 percent of its tungsten, also called wolfram. Tungsten--a word of Swedish derivation--is a grayish metal, somewhat softer than steel, that fuses at 3842[degrees] Centigrade. Steel-and-tungsten alloys are used in aircraft manufacture. The world's biggest producer of tungsten is China. But in 1943 that country was indirectly at war with Germany, having been at grips with the Japanese invaders since 1937, so Hitler had to procure his tungsten from Portugal. His munitions industry imported more than 4,000 tons of it in 1943 alone.

Stainless steel is an alloy steel containing chromium, a metallic element essential to the manufacture of ball bearings and used to reinforce shell cases. In 1943 the German munitions industry imported 99.8 percent of its requirements. Here again, however, the main producers were inaccessible. South Africa lay within the British sphere of influence and the Soviet Union was the Third Reich's enemy. That left only Turkey.

What applied to rare metals of strategic importance applied equally to common iron ore. The German munitions industry was structurally deficient even in this respect. German agents spent the entire war scouting around for iron ore, 40 percent of which came from Sweden. The Third Reich obtained diamonds for machine tools from South America, large quantities of oil from Romania, aluminum from Africa and Asia.

The German munitions industry's dependence on foreign supplies of vital strategic raw materials was a crushing burden.

Those who bought on the world market had to pay world market prices, not in homemade Reichsmarks, but in foreign currency and, above all, in gold.

To wage an effective war Hitler needed a banker--more precisely, a respectable, reliable, neutral banker. After running out of foreign exchange and almost out of gold by the time he attacked Poland, Hitler's invasion of the Low Countries, Norway, and other peaceful, prosperous states yielded a sizable quantity of assets. These had to be laundered by an unsuspicious accomplice, and the accomplice, in turn, had to introduce the stolen goods into the world market under a new identity.

The same went for the thousands of gold teeth extracted from their murdered victims by SS thugs, for the detainees' looted wedding rings and articles of jewelry, and for the personal fortunes purloined all over Europe by the Nazis' so-called foreign exchange protection teams.

Switzerland's financial sharps in Zurich, Basel, and Bern fenced and laundered the gold stolen from the central banks of Belgium, Poland, Czechoslovakia, Holland, Luxembourg, Lithuania, Albania, Norway, Italy, and elsewhere. It was they who financed Hitler's wars of conquest. Switzerland, the world's only neutral financial center of truly international standing, accepted Hitler's looted gold throughout the war years in payment for industrial goods or as bullion that was fenced and laundered and exchanged for foreign currency or traded off in other financial centers under new, "Swiss" identity. But for Switzerland's financial services and the willing fences of Bern, the zealous gnomes, Hitler would not have been able to wage his rapacious wars of conquest. Swiss bankers supplied him with the requisite foreign exchange. It was they who financed his wars of aggression.

When Hitler launched his invasion of Poland, the Third Reich was practically bankrupt, an almost financially ruined dictatorship that bluffed the democratic world with a monstrous show of military force. Economically speaking, Germany was down and out when Hitler made his bid for world supremacy.

On January 7, 1939, eight months before the invasion of Poland, Reichsbank President Hjalmar Schacht handed the Fuhrer a remarkable memorandum.

From: President of the Board of the Reichsbank Berlin SW 111, January 7, 1939 Confidential Reichsbank Matter To: The Fuhrer and Reich Chancellor Berlin

The Reichsbank has long drawn attention to the dangers to our currency arising from excessive public expenditure and short-term credit. At the end of 1938 the monetary and financial situation has reached a danger point that renders it our duty to request decisions[....] Accordingly, the overall German monetary situation appears to be as follows:

1. Externally: The Reichsbank possesses no more gold or foreign exchange reserves. The deficit of imports over exports is rapidly increasing. Exports are no longer attaining the value of the imports we require. The reserves formed by the annexation of Austria and the calling-in of external securities and domestic gold coins have been used up. The vast majority of the foreign exchange certificates for imports issued by the supervisory authorities are now no longer covered by guaranteed receipts of foreign currency, and thus present a danger that they will sometime be impossible to meet for want of foreign currency. This would also eliminate our last remaining foreign credit for the importation of goods.

2. Domestically: The Reichsbank's assets consist almost entirely of government securities alone (Mefo bills [Metallurgische Forschungsgesellschaft] in the main). The central bank is completely choked with them, and will not, if called upon again by industry, be in a position to grant the requisite loans. Some six billion Mefo bills are held outside the Reichsbank. These could at any time be presented to the Reichsbank for discounting in ready cash, and thus present a constant threat to our currency. On January 1, 1933, banknotes in circulation amounted to 3,560 million Reichsmarks. This figure had risen by March 1, 1938, to 5,278 million Reichsmarks. This increase of around RM 1.7 million in over five years need not arouse misgivings as regards monetary policy because German industrial output almost doubled within the same period and embodies an increase in consumer goods as well as in the production of capital goods. In the period between March 1 and December 31, 1938, however, banknotes in circulation rose to RM 8,223 million, that is to say, not counting those required for Austria and the Sudetenland, by a further RM 2 billion. The figure has, therefore, risen faster in the last ten months than in the whole of the preceding five years. [...]

Backing issued paper money with state-owned land, government bonds, etc., cannot maintain its value, as the history of the assignat economy of the French Revolution very clearly demonstrated.

While an increase in public expenditure was inevitable during our two large-scale foreign policy operations in the Ostmark [Austria] and the Sudetenland, the fact that no restraints on public expenditure policy can be discerned since the end of those foreign policy operations, and that everything tends to suggest that a further increase in public expenditure is planned, renders it our bounden duty to draw attention to its monetary consequences.

It is not our place to prove the extent to which an unrestrained public expenditure policy accords with the revenues and savings of German industry or with the social requirements of the population. It is, however, our responsibility to point out that a further strain on the Reichsbank, whether direct or occasioned by the cornering of the money market elsewhere, cannot be justified.

The undersigned members of the Reichsbank board are cognizant that they have gladly collaborated to the utmost on behalf of our ambitious objectives, but that a halt must now be called. No increase in the production of goods can be achieved by increasing the amount of paper money.

In short, the Reichsbank was at the end of its rope. Hyperinflation and an economy backed by paper money threatened:

The Fuhrer and Reich Chancellor himself has publicly condemned inflation, over and over again, as foolish and futile. We therefore request that the following steps be taken:

1. The Reich, together with all other public authorities, may not undertake any more expenditure, guarantees, and obligations that cannot be effected by raising loans without disrupting the long-term capital market.

2. For the effective implementation of these measures, the Reich minister of finance must reassume full financial control over all public expenditure.

3. Price and wage control must be effectively planned. The defects that have crept in must be eliminated.

4. Calls on the money and capital market must be subject to the decision of the Reichsbank alone.

Board of the Reichsbank

Dr. Hjalmar Schacht Dreyse Vocke Ehrhardt Puhl Hulse Kretschmann Blessing

Schacht's ill tidings seem all the more surprising because, from the banker's point of view, an extremely fortunate event had occurred the previous year: the Nazis had annexed Austria, abolished its national independence, and incorporated it in the Reich as a country, nation, and economic zone. The Osterreichische Nationalbank was taken over, free of charge, by the Reichsbank. Its reserves amounted to some billion gold marks, but not even this injection of gold had restored the Reichsbank to health.

Schacht's message could not have been clearer. There were no gold or foreign exchange reserves left. The Reich was "on the verge of collapse," with a balance-of-payments deficit amounting to several billion marks. Thanks to a policy of unbridled public expenditure, its financial position was "alarming" in the extreme.

Germany's rearmament during the 1930s had reduced unemployment, set the wheels of industry in motion, and transformed the Wehrmacht into Europe's premier military force. It had, however, played havoc with the Reich's finances.

Willi A. Boelcke estimates that between 1933 and August 1939 the German armed forces swallowed up 51.9 percent of all public expenditure.

How did Adolf Hitler react to the Schacht memorandum? He stormed and raged, beside himself with fury. Criticism of his "economic policy" was intolerable to him. He couldn't grasp that the Reich was insolvent and his war machine threatened with ruin. Hitler's brain, befogged by Aryan racial mania and Germanic Herrenvolk mythology, was quite unable to perceive the financial facts advanced by Schacht.

The Fuhrer promptly dismissed Schacht from his Reichsbank post. Five of the seven directors were also removed, the only ones to remain in office being Puhl and Kretschmann. Hitler's new appointee as president of the Reichsbank and minister of economics was the Nazi big-shot Walther Funk. Emil Puhl became his vice-president.

An alcoholic of unstable character, Funk was financially illiterate, and his forecasts were so inaccurate that they would have bankrupted Croesus himself. But Funk was now the economic supremo of a Third Reich destitute of foreign exchange and dependent on the world market. Disaster was inevitable, especially because Funk became transfixed with awe whenever he entered the Fuhrer's presence.

Boelcke paints the following picture of Funk:

After the outbreak of war, Funk, who made an even more diffident impression, showed himself less and less equal to his post as Reich minister of economics, which was increasingly dependent on the Four-Year Plan and the Party Chancellery. [...]

Whenever he was in Berlin and his capacity for work not overly impaired by his alcoholic excesses, he would spend the morning as Reich minister of economics in his luxurious Unter den Linden office.

Around noon he would leave the ministry and fulfill the, to him, far more congenial function of Reichsbank president in the nearby Reichsbank building. When Funk went to report to Hitler--as State Secretary Landfried noticed on numerous occasions--he would be so impressed by the ideas Hitler evolved that he never got around to voicing his questions at all, even during an audience lasting several hours. Later on, too, when visiting the Fuhrer's headquarters, Funk the Hitler devotee proved to be more of an enthusiastic listener.

Hitler had expounded his "financial theory" to the minister of economics in October 1941: "He is delighted, and says that in ten years Germany will have eliminated the burdens of war without disrupting our internal purchasing power."

The minister happily left it to his representatives or the relevant heads of department and advisers to discuss technical questions at the ministry in accordance with the guidelines of the Four-Year Plan. In his ministerial office Funk surrounded himself with loyal and devoted henchmen. His former chauffeur and friend, Horst Walter, functioned from 1938 to 1943 as head of the ministerial office and drew a head of department's salary. From 1938 onward, Dr. August Schwedler acted as his aide-de-camp and indispensable traveling companion. Being suspicious by nature, Funk never signed autographs on principle; on business trips, his aide would fob off autograph hunters by handing out five-mark bills, which--because Funk was president of the Reichsbank--bore his signature.

Ever wary and disinclined to pit himself against the crafty gnomes of Bern or Zurich, Funk seldom showed his face in Switzerland. The man who dined and conversed with the bank bosses of Zurich and Bern, the Bahnhofstrasse launderers and Paradeplatz speculators in raw materials, was Emil Puhl.

From his office on the second floor of the Reichsbank, Nazi Puhl waged a secret war on Nazi Funk. Puhl never attended tea parties at Berchtesgaden, nor was he summoned to the Reich Chancellery at night. Hand-kisses for Fraulein Eva Braun? Puhl dreamed of them, but only Funk was invited to take tea with the Fuhrer. Only he was privileged to pat Hitler's Alsatian bitch and, attired in lederhosen, to enjoy the view of the Obersalzberg under SS protection. Puhl did not belong to Hitler's inner circle. His only knowledge of the gangster supremo derived from the radio and mass rallies.

Puhl was an ambitious, industrious, levelheaded individual. Photographs of him also convey a faintly mocking impression. Whether or not he detested his boss, he certainly envied him. Anyone who took tea with the Fuhrer and fantasized with him about the forthcoming thousand years of Germanic world domination belonged to a milieu that had always been inaccessible to the aspiring Emil Puhl.

But Puhl's word was law in the palatial old Reichsbank building in the heart of Berlin. He was its secret ruler. He maintained excellent relations with Himmler, Heydrich, and the Economic Administration Department of the SS. It was Puhl who proposed that the SS executioners open a deposit account at the Reichsbank for the "dead men's gold" from Auschwitz, Maidanek, and Buchenwald.

Emil Puhl was the sympathetic friend and wily business partner of the gold barons of Bern. He knew and appreciated their competence. He was alive to the gnomes' mentality, which had taken shape over the centuries--above all, to their abysmal hypocrisy. He knew that they would perform any service, however cynical, if only they were supplied with an adequate pretext, a "moral" argument in its favor.

He played like a virtuoso on the Swiss neutrality myth. He provided the bank tycoons of Zurich with the fictions they needed to justify their business dealings to themselves and allay their consciences.

Puhl made the gnomes' task easier. Alfred Hirs, a director general of the Swiss National Bank, always took great pleasure in making a note of Puhl's visits to Switzerland. Preserved in the National Bank's archives, several of his memorandums record Puhl's comments on the international situation, Germany's war aims, and the European New Order. They also convey covert admiration on Hirs's part.

The specific nature of bankers was a matter of concern to Voltaire. As one who spent the last twenty-three years of his turbulent life in Geneva and its immediate vicinity, he viewed Calvinist bankers like an entomologist observing rare butterflies. His verdict on them: "If you see a banker jump out of the window, jump after him.... There's sure to be money to be made."

Puhl helped the gnomes to endure their hard lot. The opportunistic, competent type of functionary described by Hannah Arendt, he had joined the Reichsbank as a young man in 1913 and gradually ascended the professional ladder by dint of hard work, self-effacing humility, and strict obedience. Being canny as well, he had joined the Nazi Party just in time.

Walther Funk, listed as one of the major war criminals, sat in the dock at Nuremberg. For unaccountable reasons, Emil Puhl was not sitting beside him. An invited witness for the prosecution, he incriminated Funk to the best of his ability.

According to Puhl, the Reichsbank president (and minister of economics) bore sole responsibility for the SS deposits of dead men's gold at the Reichsbank, for shady deals in looted gold with the Swiss, for raw-materials rackets--for everything. Vice-president Puhl had either known nothing about these things, or, if he harbored suspicions about them, had acted in good faith....

Funk was gravely prejudiced by his former vice-president's testimony on May 15, 1946: the court sentenced him to life imprisonment.

But justice of a kind did prevail. Puhl was, after all, brought before a court at a later stage and sentenced to five years' imprisonment.

Table of Contents

1.Swiss Amnesia3
2.The Defensive Alliance15
Part 1Hitler's Swiss Fences
1.The Bankrupt Fuhrer33
3.The Gold-laundering Machine66
4.Three Sinister Swiss75
5.Willful Ignorance88
Part 2The Murderers
1.The Dakar Raid101
2.Gold from the Death Camps114
Part 3Economic Warfare
1.Switzerland Supplies the Tyrant131
2.Allied Countermeasures143
3.Henry Morgenthau, Jr., and the Safehaven Program152
Part 4Vanquishing the Victors
1.Settling Accounts175
2.The Infuriated Hucksters184
3.The Innocent Guilty191
Part 5The Holocaust Haul
1.The Kind Soul of Europe203
2.Deterrence on the Frontier209
Epilogue: Hope257
Switzerland's Political System283
Memorandum of Understanding284
Federal Act of December 13, 1996286
Appointment of the Independent Committee of Experts289

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Thierry Cohen-Solal

Ziegler paints an usparing picture of Swiss wartime policies in relation to the Nazis. His book brims with revelations that directly refute the views of official historians.

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