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

  CHASING

  GOLD

  The Incredible Story of

  How the Nazis Stole Europe’s Bullion

  GEORGE M. TABER

  PEGASUS BOOKS

  NEW YORK LONDON

  To Curt Prendergast, my first boss at Time magazine. In the summer of 1966, he asked me to investigate what happened to Belgium’s central bank gold during World War II. That started my long interest in this dramatic saga.

  A NOTE ON THE MAPS

  Maps are not to scale, and intended only for reference to show the movement of gold throughout Europe during the specified time periods.

  CONTENTS

  MAJOR CHARACTERS

  PROLOGUE

  1 • THE GLITTER OF GOLD

  2 • SPANISH PRELUDE

  3 • ADOLF HITLER’S ARGONAUT

  4 • FRANKLIN D. ROOSEVELT’S ARGONAUT

  5 • HERMANN GÖRING GRABS CONTROL

  6 • THE CLUB FOR CENTRAL BANKERS

  7 • AUSTRIA BECOMES THE FIRST EASY PIECE

  8 • AN INSIDE JOB AGAINST CZECHOSLOVAKIA

  9 • MUTINY AT THE REICHSBANK

  10 • POLAND’S LONG ODYSSEY

  11 • NORTHERN LIGHTS GO OUT

  12 • THE WORLD’S FORT KNOX

  13 • DENMARK AND NORWAY FALL QUICKLY

  14 • ITALY CRUSHES ALBANIA

  15 • HOLLAND FALLS IN FOUR DAYS

  16 • BELGIUM AND LUXEMBOURG TRUST FRANCE

  17 • THE FALL OF FRANCE

  18 • THE VATICAN’S SECRET GOLD

  19 • ESCAPE TO CASABLANCA

  20 • BRITAIN ON THE BRINK

  21 • DESTINATION DAKAR

  22 • BALKAN DISTRACTIONS

  23 • THE SOVIET UNION STARES INTO AN ABYSS

  24 • MELMER GOLD

  25 • DRAGGING EVERYTHING OUT ITALIAN STYLE

  26 • PARTNERS IN GOLD

  27 • THE ALLIES FINALLY CRACK DOWN

  28 • RICH DISCOVERY IN A SALT MINE

  29 • THE GÖTTERDÄMMERUNG OF GOLD

  30 • THE END OF A SORDID TALE

  EPILOGUE

  APPENDIX I: STATISTICS OF NAZI GOLD

  APPENDIX II: PARTNERS IN GOLD

  APPENDIX III: POST WAR

  ENDNOTES

  BIBLIOGRAPHY

  ACKNOWLEDGMENTS

  ILLUSTRATIONS

  INDEX

  MAJOR CHARACTERS

  Hubert Ansiaux, Belgian Central Bank official who in May 1940 rescued millions of dollars of his country’s currency and attempted to do the same for its gold.

  Vincenzo Azzolini, president of the Bank of Italy 1931-1944.

  Bernard Bernstein, staff member of Treasury Secretary Morgenthau and then financial aide for General Dwight Eisenhower. He directed the gold recovery operation late in the war.

  Johan Willem Beyen, president of the Bank for International Settlements (1935-1937).

  Robert E. Brett, Captain of the SS Eocene, which rescued the Polish gold in September 1939.

  William C. Bullitt, Jr., the U.S. ambassador in Paris in 1940, who helped get a large share of the French gold to the U.S.

  Basil Catterns, the deputy governor of the Bank of England, who directed British gold shipments.

  Neville Chamberlain, British Prime Minister from 1937 to 1940.

  Winston Churchill, British Prime Minister from 1940 to 1945.

  Count Galeazzo Ciano, Benito Mussolini foreign minister and son-in-law.

  Henryk Floyar-Rajchman, one of the leaders of the Polish gold evacuation program.

  Pierre Fournier, president of the Bank of France in May 1940 and directed the rescue of the French gold.

  Walther Funk, president of the Reichsbank from 1939 to 1945.

  Joseph Goebbels, Minister of Propaganda for Nazi Germany from 1933 to 1945.

  Hermann Göring, second most powerful man in the Third Reich after Hitler. He was head of the Luftwaffe and the Four Year Plan that prepared the country’s economy for war.

  Camille Gutt, Finance Minister of Belgium in 1940, who directed the country’s gold rescue.

  George L. Harrison, President of the New York Federal Reserve Bank, 1928-1941.

  Fredrik Haslund, Directed the Norwegian gold rescue, carrying the first shipload all the way to the U.S.

  Adolf Hitler, dictator of Germany from 1933 to 1945.

  Harry Hopkins, trouble-shooter for President Roosevelt, who went to Moscow in July 1941 to meet with Stalin about sending the Soviet Union military aid.

  Georges Janssen, president of the Central Bank of Belgium from 1938 to 1941.

  Princess Juliana, heir to the throne of the Netherlands in 1940.

  L. Werner Knoke, New York Federal Reserve vice president, who handled gold operations.

  Hans Lammers, the head of Hitler’s Reich Chancellery.

  Charles Moreton, a regional French National Bank official who played a major role in rescuing French gold.

  Ignacy Matuszewski, one of two men who directed the evacuation of Polish gold from Warsaw to France.

  Thomas H. McKittrick, president of the Bank for International Settlements during World War II.

  Stefan Michalski, Polish Central Bank board member who traveled with his country’s gold to Dakar in 1940 and also helped rescue it there in 1944.

  Henry Morgenthau, Jr., Secretary of the Treasury and close confidant of President Roosevelt from 1933 from 1945.

  Benito Mussolini, fascist ruler of Italy from 1922 to 1943.

  Juan Negrín, finance minister of Spain who arranged the Spanish gold shipment to the Soviet Union during the Spanish Civil War.

  Montagu Norman, Governor of the Bank of England and the most influential central banker of the era.

  Alexander Orlov, Soviet agent in Spain who handled the Spanish gold shipment to Moscow.

  Domenico Pellegrini Giampietro, Italian Finance Minister who gave the order to turn over Italian gold to the Nazis.

  Sir Frederick Phillips, undersecretary of the British Treasury, who directed Britain’s gold evacuation.

  Pope Pius XII, Roman Catholic pontiff from 1939 to 1958.

  Emil Puhl, vice president of the Reichsbank during the war. He ran the day-to-day operations of the central bank.

  Rudolf Rahn, German Plenipotentiary to the Italian Social Republic after the fall of Mussolini in 1943.

  Friedrich Josef Rauch, the SS Obersturmbannführer who directed the evacuation of the last Nazi gold in Bavaria in May 1945.

  Paul Reynaud, French Premier, 1940.

  Joachim von Ribbentrop, Minister of Foreign Affairs from 1938 to 1945.

  Franklin D. Roosevelt, president of the United States 1933-1945.

  Nicolai Rygg, president of the Norwegian Central Bank in 1940.

  Hjalmar Schacht, Hitler’s leading economic advisor from 1933 to January 1939, when the Führer fired him as president of the Reichsbank.

  Kurt Schuschnigg, Chancellor of Austria in 1938 when Germany took over the country.

  Albert Speer, private architect of Hitler and then Minister of Armaments and War Production from 1942 to 1945.

  Joseph Stalin, dictator of the Soviet Union from 1922 to 1953.

  Albert Thoms, the head of the Reichsbank Precious Metals Department. He directed the movement of Nazi gold from Berlin to Merkers in the spring of 1945.

  L.J.A. Trip, president of the Dutch Central Bank in 1940.

  Harry Dexter White, top aide to Treasury Secretary Henry Morgenthau, Jr. 1934-1945. White was also architect, along with John Maynard Keynes, of the Bretton Woods Conference, whic
h set up the postwar international monetary system. White was an undercover communist agent during that whole time.

  Sir Kingsley Wood, the Chancellor of the Exchequer, who had overall responsibility for the British gold evacuation.

  Queen Wilhelmina, queen of the Netherlands in 1940.

  King Zog of the Albanians, ruled his country from 1928 to 1939.

  PROLOGUE

  In early spring 1945, the Third Army of General George Patton, Jr. was rolling across Germany, crushing the dispirited Wehrmacht in its path. His G.I.s had already scored victories on the Normandy beaches, bailed out the Battle of the Bulge, and crossed the Rhine River into the Third Reich’s Vaterland late in the evening of March 22. In a special message to his men, Patton bragged that between late January and late March, “You have taken over 6,400 square miles of territory, seized over 3,000 cities, towns, and villages including Trier, Koblenz, Bingen, Worms, Mainz, Kaiserslautern, and Ludwigshafen. You have captured over 140,000 soldiers, killed or wounded an additional 100,000, while eliminating the German 1st and 7th Armies. Using speed and audacity on the ground with support from peerless fighter-bombers in the air, you kept up a relentless round-the-clock attack on the enemy. Your assault over the Rhine at 2200 last night assures you of even greater glory to come.”1

  Along the way, the general wrote doggerel verse about warfare such as:

  For in war just as in loving,

  You must always keep on shoving,

  Or you will never get your just reward.2

  On April 4, Patton’s 358th infantry regiment captured Merkers, a village in central Germany about 80 miles northeast of Frankfurt and 180 miles southwest of Berlin. The whole area around there was known for its salt mines. Some of them had thirty miles of tunnels. The area’s dense forests gave it the nickname “the green heart of Germany.” The 358th was in the process of cleaning up pockets of enemy resistance and arresting retreating German soldiers trying to disappear into the sea of refugees. When the G.I.s went through Merkers, they heard rumors that the German Reichsbank had been moving gold there in recent days, but nothing was confirmed, so they moved on and set up a command post in Kieselbach a mile and a half down the road.3

  At 8:45 on the morning of April 6, American military policemen Clyde Harmon and Anthony Klein, two privates first class, were guarding a road, when they stopped a pair of French women entering Kieselbach on foot. They were violating the U.S. army curfew that prohibited civilians from being on the streets. One of the women was obviously well along in her pregnancy. The two explained that they were displaced persons from Thionville in northeastern France and were on their way to a midwife in Kieselbach to deliver the baby. The women were taken to the Provost Marshal’s Office and questioned. Their story seemed honest, and they were offered a ride back to Merkers.4

  PFC Richard Mootz, who spoke German, drove them. When the three entered the town, the soldier asked the women about the huge Kaiseroda mine facility that they were passing. Sitting in the middle of a green valley of rolling hills, it looked more like a steel mill than a mine. There were large brick buildings plus bridges and cobblestone streets. It resembled a small village. Smokestacks and a giant elevator dominated the skyline, but they were no longer operating. The women explained that the Germans had recently stored gold and paintings underground there, adding that it took local citizens and displaced people three days to unload the first train. PFC Mootz passed the information up the chain of command to Colonel Whitcomb, the chief of staff, and Lt. Col. Russell, the military government officer.

  Armed with that information, Russell immediately went to the mine with a few G.I.s where he talked with other displaced people and local Germans, who corroborated the French women’s story. Mine officials told him that the assistant director of the National Galleries in Berlin was also there to care for confiscated artworks. A British POW, who had been captured in 1940 and was working at the mine as a mechanic’s assistant, told Russell that he had helped unload the gold. The soldiers learned that there were five more entrances to the labyrinthine mine, with one of them still behind enemy lines. Russell immediately ordered a tank battalion to guard the entrances and arrested all the mine executives.5

  On April 7 at 10:00 A.M., Lt. Colonel Russell, accompanied by mine officials, soldiers, and Signal Corps photographers, entered the mine. The group immediately noticed at the entrance several hundred bags. When they opened them, they found them full of Reichsmark currency, which the Germans had apparently left behind in their rush to escape. Soldiers later found over a hundred more in another location. They determined that each sack contained one million Reichsmark. They also found a locked steel door and speculated that they would find more valuables behind it. Germans told the G.I.s that it was called simply “room number eight.” At 2:00 P.M., soldiers attempted unsuccessfully to open the vault’s door and then left.

  With all that evidence in hand, Russell interrogated Werner Veick, who worked for the Reichsbank, Germany’s central bank, and said that he had been part of a group that recently brought gold, along with both German and foreign currencies, to the mine from Berlin. He said most of it was stored in the room behind the steel door. Russell quickly sent word to his superiors that there was a vault that reportedly contained gold and other valuables. Eventually the news reached General Patton, who ordered the soldiers to blow off the door the next day and find out what was inside. In the meantime, reinforcements were sent to guard the mine.

  The next morning, a group led by Lt. Colonel Russell was back at the mine to blast their way into the vault. They gathered up both Kaiseroda officials and Paul Ortwin Rave, the curator of the German State Museum, to investigate what was underground. Newspaper photographers and reporters traveling with Patton’s army accompanied them. The soldiers tried at first to get into the room by digging around the door; but when that didn’t work they blew a five-foot hole in a masonry wall.

  Inside, the soldiers found riches to rival King Solomon’s mines. The room was approximately 75 feet wide, 150 feet long, and had a 12-foot ceiling. Bags of gold bars and gold coins were neatly arranged in rows only a few feet apart. The G.I.s broke the seals of a few bags to confirm the contents and then resealed them. At the back of the room were 207 battered suitcases, boxes, and packages in addition to 18 bags containing gold or silver jewelry, gold watches, and other valuables. Much of it appeared to have been flattened with a hammer to fit as much as possible into the containers. The soldiers speculated it was war loot collected by Nazi soldiers. The boxes actually contained valuables that Gestapo guards had taken from concentration camp inmates on their way to the gas chambers. Bales of currency were stacked along another side of the room. There were also several balances, seemingly to weigh precious metals. Later that day, the group found elsewhere in the mine 550 bags of Reichsmark plus paintings and other museum treasures. They were haphazardly packed in cardboard or wooden containers.6

  General Manton S. Eddy, the commander of the XII Corps, arrived at the mine three hours later and quickly telephoned Patton to report that they had found a huge treasure of gold and artworks. In a rare reaction for a general famous for his oversized ego, Patton decided that the discovery was a political rather than a military matter, and asked General Dwight D. Eisenhower, the commanding general of the Allied European Theater of Operations, to take over responsibility. The Berlin museum paintings and art pieces, which included the famous bust of Empress Nefertiti, were priceless. The gold alone in room number eight was worth $238.5 million. At today’s gold price, that would be about $9 billion. The Merkers mother lode was the largest recovery of stolen property in world history, but the story behind this incredible cache and the plight of Europe’s wartime gold was still to be discovered.7

  Chapter One

  THE GLITTER OF GOLD

  Throughout history the glitter of gold has mesmerized mankind. Gerald M. Loeb, the founding partner of the Wall Street brokerage firm E. F. Hutton, once observed, “The desire for gold is the most universal and d
eeply rooted commercial instinct of the human race.”1 For as long as records have been kept, people have had an obsession with gold that is second only to their preoccupation with sex. Wrote historian Peter L. Bernstein in his book The Power of Gold: “Over the centuries, gold has stirred the passions for power and glory, for beauty, for security, and even for immortality. Gold has been an icon for greed, a vehicle for vanity, and a potent constraint as a monetary standard. No other object has commanded so much veneration over so long a period of time.”2

  Of course, the metal has also had its enemies. The Roman poet Virgil wrote in the Aeneid, “To what extremes won’t you compel our hearts, you accursed lust for gold?” Shakespeare wrote in Romeo and Juliet, “There is thy gold, worse poison to men’s souls, doing more murder in this loathsome world, than these poor compounds that thou mayst not sell.” In December 1921, Thomas Edison called it “an invention of Satan.” The British economist John Maynard Keynes dismissed it as “a barbaric relic.”3

  Gold is beautiful, malleable, and rare. It is also indestructible, which probably accounts for its connection to eternal life. Treasure hunters still today find shiny coins from Spanish galleons that sank in the early 1700s off the coast of Central Florida. Gold does not rust. Even if buried in the ground for thousands of years it still sparkles. The metal is extremely heavy: a cubic foot of it weighs a half-ton. It can be easily turned into products ranging from wedding rings to teeth. It is used in computers and has even gone to the moon. An ounce of gold can be stretched to a string fifty miles in length or made into a sheet measuring one hundred square feet. It can be pounded down into gold leaf one-tenth of the diameter of a human hair. The world’s total gold holdings amount to only about 165,000 tons. A metric ton in the form of a cube is only fifteen inches on each side. All the gold mined in world history would fit into three-and-a half Olympic-sized swimming pools.4

  The ancient Chinese and Egyptians practiced alchemy, a quack science that attempted to turn base metals into gold. King Croesus of Lydia, who ruled the area of modern Turkey, introduced large-scale gold coinage. French historian Fernand Braudel called the metal the “lifeblood of Mediterranean trade in the Second Millennium B.C.”5 Thucydides in the fifth century B.C. wrote admiringly of the Carthaginians, “If willing to help, of all existing states they are the best able; for they have abundance of gold and silver, and these make war, like other things, go smoothly.”6