| U.S. and Allied Efforts To Recover and Restore Gold and Other Assets Stolen or Hidden by Germany During World War II |
In early February 1945, German officials decided to relocate the German gold reserves to various remote locations south of Berlin. About 400 million Reichsmarks in gold was shipped to Merkers in Thüringia and stored in the neighboring salt mine complex. An additional 50 million Reichsmarks in gold was distributed to branch offices of the Reichsbank in central and southern Germany. Both the Merkers treasure and most of the lesser holdings were captured by U.S. Army forces during the closing days of the war and transported to Frankfurt am Main for security and central accounting. Later comparisons of captured records from the Berlin Reichsbank and U.S. Army inventories at the Frankfurt Reichsbank indicated that "98.6% of the 255.96 million dollars worth of gold" had been found and secured.
In April 1945 U.S troops in Germany found 2,007 containers filled with German Reichsbank gold, foreign currency, and other valuables hidden in a Thüringian mine. Treasury Department official Frank Coe informed Secretary Morgenthau about gold caches that U.S. troops had stumbled upon in German salt mines. Coe indicated that the occupation forces should not look at this captured gold as "war booty." Instead, this bullion should be placed in a reparations fund until final plans were drafted to dispose of it. The discovery of the German gold reserve at the Merkers mine was accidental, but singularly significant because of the quantity of material that was found and because it became the catalyst for the Army to seek and find additional assets hidden elsewhere in Germany.
There was considerable confusion over how much was actually recovered in the mine. A number of factors contributed to this confusion, not least of which was the continuation of combat operations while the cache was discovered and secured. Reports from different sources, both German and American, varied, and this was exacerbated by the inconsistent means of measurement that recorded inventories of the same material. Thus, the initial inventory from the Merkers salt mine recorded such acquisitions as: "Gold Bars, Bullion, 8198"; "Gold Bar - 1"; "Crated Gold Bullion, Boxes 53"; and "Crated Gold Bullion, Long Boxes, 2." But the difference between the (presumably) 8,198 bars of gold bullion and the solitary gold bar was not defined; nor did any records indicate how much gold bullion was in the 53 boxes, or how large these boxes or the "Long Boxes" were. Understandably, the initial surveys focused on a general physical inventory, rather than a detailed financial accounting of what was found.
The first inventory the Army created became the primary document used to prepare the material for shipment from its cache at Merkers to more secure and accessible facilities in Frankfurt. In view of the military and political situation at the time, security was an important issue in the shipment to Frankfurt. Later, when some military authorities suspected that there may have been some pilferage of the Merkers cache because of broken bags of coins and currency, an investigation concluded that all reasonable security measures had been exercised.
A. Establishment and Operations of the Foreign Exchange Depository
The problem of determining exactly what Nazi monetary assets were under Army control was complicated after the Merkers material arrived at the Foreign Exchange Depository (FED), which the Army established at the Frankfurt Reichsbank. In the closing days of the war, additional gold was recovered from all parts of Germany¾ sometimes from banks, sometimes from businesses or individuals, sometimes from soldiers or U.S. Army units. Over a 30-month period, this comprised 91 different "shipments" from a wide variety of locations. All this gold was shipped to Frankfurt, along with other captured assets. It seems that the intent always was to centralize these assets at one site for ease of security, accountability, and disposition. By August 1945, the FED was overloaded, and shipments were suspended temporarily while cultural properties and related non-monetary materials were transferred to other sites in southern and central Germany. The FED resumed receiving captured monetary assets later in August, but not until November 1945 was the FED officially tasked by the 12th Army Group to serve as the central repository for all captured "gold and silver bullion and coin, foreign currencies, foreign securities, precious stones or jewels, jewelry, gold teeth, and other similar valuables."
The Foreign Exchange Depository was frequently referred to as the "Fort Knox of Germany," but it might be more accurate to characterize it as the "Bank of Europe." The captured German and Nazi assets were only a part of the FED’s total operation. It was also responsible for all currency transactions in Germany, receipt for all restricted property (Laws 52 and 53), and funding for all U.S. military activities in Germany, and it seems to have served as the "banker" for several Allied countries as well.
The first chief of the Foreign Exchange Depository was Colonel Bernard Bernstein, a lawyer by education and experience. Colonel Bernstein had served as an attorney with the U.S. Treasury Department from 1933 to 1942, when he resigned his position and went on active duty in the Army in the Coast Artillery Corps. In 1945 he served as the Chief of Finance in the G-5 Division of Supreme Headquarters, Allied Expeditionary Force (SHAEF), where he was able to influence and direct the policies that established the FED and the Army’s control over all captured assets. Bernstein returned to private law practice in 1946.
Colonel Bernstein was assisted by a small group of company grade officers, none of whom seem to have come from the Finance Corps. In fact, most of the officers came from the infantry and cavalry, and a few were from the Regular Army. Personnel turnover, particularly in 1945, was a persistent problem in the FED (at its peak, it seems to have employed about 150 personnel).
From the initial discovery of the Merkers cache to the final disposition of the remaining assets held by the FED in 1950, two issues dominated everything that happened at the former Reichsbank building in Frankfurt: maintaining security of the assets and compiling a complete inventory of everything that the Army was securing there. The reports, memoranda, message traffic, and other documents that discuss these activities comprise a large portion of the archival records.
Armed guards were stationed around the exterior of the complex, and a series of checkpoints restricted access to the building and secured various parts of the interior. Once assets were placed in a secured room or vault, the entrance was locked and sealed. Opening these chambers required the approval of the FED’s higher headquarters, the Finance Division of the Office of the Military Government of Germany, U.S. (OMGUS). The staff of the FED was very sensitive to maintaining firm security of both the building and its contents. Instances of petty theft were reported to the Army’s Criminal Investigation Division (CID)¾ from a stolen light bulb and four bottles of soda to a vandalized sign and an unlocked desk drawer.
All the assets at the Reichsbank building in Frankfurt were held on behalf of the Allied Control Council, a fiduciary responsibility that the FED took seriously. No one in the Army exercised decision-making authority over the disposition of these assets, a point that frequently was made by and to Army personnel. As one Military Government official was informed: "you are advised that the FED is merely the custodian of the property in question and has no power over its disposition or release." The FED received and processed claims from individuals and governments, but its principal responsibility was to secure the assets that it held.
The Army also realized that it had to have a reliable inventory. The initial inventories were adequate for achieving immediate accountability for what was being secured, but Army personnel felt that only specialists could compile more precise data. Both SHAEF/OMGUS and FED personnel sent urgent requests to the United States for qualified experts who could evaluate precious metals, gems, and foreign currencies and securities. The first team of experts, comprised of two officials from the Bank of England and three from the Treasury Department, arrived in June 1945. The team conducted an extensive evaluation of the precious metals, primarily the gold and silver, and prepared a seven-page report. Named the "Howard Report" (for the team leader), it became a primary reference document in conducting subsequent inventories and evaluations of the holdings in the FED.
By August 1945, the FED reported to the Deputy Military Governor that 91 percent of the gold found in Germany and inventoried at Frankfurt came from the Merkers salt mine. The rest came from banking facilities in central and southern Germany, some businesses and individuals, and non-monetary gold from victims of the Holocaust.
Defining how much of the gold the Army held at Frankfurt was monetary gold and how much was non-monetary gold was difficult. Part of the difficulty arose from the use of different measurements in establishing accountability for the material. At varying times, all or parts of the entire cache of jewelry, artifacts, precious metals, and currency were reported in pounds or kilograms, bags or boxes, or monetary value (often dollars and once each in pounds sterling or Reichsmarks); and it included gold, gold bullion, bags of gold, gold coins (from at least 15 countries), gold pieces, and miscellaneous gold. The Army made a conscientious effort to refine its inventories to report accurately what it held and to maintain accountability for the material in its custody. More importantly, a complete accounting history appears to have been maintained for each shipment and its component parts from arrival at the FED in April 1945 to its final disposition in 1948.
Through 1945 and into the first half of 1946, the FED personnel were busy establishing accountability for all the material that was arriving or had arrived at Frankfurt. Once basic accountability was established, the FED began to focus on the higher-valued portions of the total inventory: the monetary gold. One of the other complications in determining the quantity and value of all gold held at the FED were the changing definitions of "monetary gold" and "non-monetary gold." The definitions used in this section are those initially used as guidance for the FED in its accounting and disposition of property: monetary gold consisted of bullion and coins (less numismatic/collectors’ items); non-monetary gold consisted of gold objects looted from private citizens and Holocaust victims (less cultural/religious objects) and rare coins (which had no identifiable institutional or individual owner). Throughout this process, valuations of the FED’s holdings included all assets¾ gold, other precious metals, currencies, securities, gems, jewelry, and associated materials. For the first 18 months of the FED’s existence, all valuations of the gold held at Frankfurt were estimates, and these estimates tended to fluctuate as items were added and refinements made in the inventory process. In some cases, what might have been identified originally as a gold coin might later be called a gold piece, and then recognized as melted dental gold, which would move the item from the monetary category to the non-monetary category. At the same time, more gold that needed to be inventoried and valued was being added to the FED’s holdings.
Beginning in June 1946, the FED employed about a dozen DPs and German civilians to assist them in a comprehensive inventory of all monetary and non-monetary assets by "shipment." Each separate shipment inventory was documented on a form that included the name of the individual conducting the inventory, the security officer, the recorder of the form, and the approving official for that specific inventory. The form also cited the origin of the objects (e.g., "Shipment No. 1" [Merkers]), date of the inventory, type of container the objects were kept in (e.g., "metal box"), a general classification of the objects (e.g., "precious metals, scrap gold"), the location, a container number, a tag number, and a brief description of the objects inventoried (e.g., "1 lot of 4 pieces low grade gold and silver, weight about 25 grams; 1 lot of dental gold 18 and 22 carats, weight about 740 grams"). These individual inventory sheets number in the thousands and provide another accounting of the FED’s holdings.
B. Distributing the Gold Recovered in Germany
By October 1947, on the eve of the first release of monetary gold from the "gold pot," most of the major inventories had been completed. At that time the FED reported "more than $260,000,000 of monetary gold, approximately one-half in bar form and one-half in coin." An "agreed valuation of approximately $750,000" in non-monetary gold had already been released to the International Refugee Organization.
From this time forward, the FED’s primary focus was on the disposition of the assets. There were some minor acquisitions in 1948¾ all due to Military Law 53, a directive that essentially forbade German nationals from holding foreign currencies or securities, large amounts of precious gems or jewelry, or precious metals. The inventories for precious metals, currencies, and all assets that comprised the "Nazi loot" were completed. Generally, the only significant inventory activity in 1948 and 1949 dealt with foreign securities and precious gems, principally diamonds, and their eventual restitution to various governments.
The restitution of the captured assets from the Foreign Exchange Depository was a major operation, with numerous meetings to coordinate each shipment, operations orders, extensive message traffic, increased security measures, press releases, and photographic coverage of the event. The FED had engaged in some minor restitution initiatives prior to November 1947. On February 5, 1946, 801 sacks of Russian rubles were released to Soviet military representatives. Other releases included cultural properties, religious objects, and counterfeit English currency.
Hungary received the largest direct restitution of gold from Germany. In early May 1946 the anti-Communist Hungarian Government was informed by the United States that there was no possibility of an Export-Import Bank loan to support the shaky Hungarian economy. During an official visit to Washington in June 1946, Hungarian Prime Minister Ferenc Nagy called upon Secretary of State James Byrnes and Acting Secretary Dean Acheson and formally requested the return of the Hungarian gold reserve of $32 million found in the U.S. Zone of Occupation. Secretary Byrnes, just before his return to Paris for the Paris Peace Conference, initially proposed returning only a portion of this reserve and retaining a portion to satisfy claims of Americans against Hungary. Acting Secretary Acheson on June 15 determined that the United States would return the Hungarian gold reserve held in custody in the U.S. Zone of Germany in order to stabilize the Hungarian monetary system and economy, provided the Hungarian Government assured that it would return any part of the reserve subsequently determined to be looted. An official American train carried the Hungarian monetary gold from Frankfurt to Budapest on August 6, 1946, where it was received ceremoniously by Prime Minister Nagy.
Late in 1947 the restitution of both monetary and non-monetary gold proceeded at a more rapid pace. On September 5 the first shipment of non-monetary gold was released to a representative of the Preparatory Commission of the International Refugee Organization (IRO). One month later, the Tripartite Commission for the Restitution of Monetary Gold directed the Military Governor of the U.S. Zone of Occupation in Germany to release a total of 3,381,560.9146 fine troy ounces of gold to representatives of Belgium, Luxembourg, and the Netherlands. A French representative and his team received 75,794.5985 fine kilograms of gold on November 19, 1947 (this gold was later transferred to Belgium and Luxembourg). Three days later five trucks and one automobile arrived at the Foreign Exchange Depository to receive 541 boxes of gold bars and 550 boxes of gold coins for the Netherlands.
With the restitution to the Benelux countries completed, attention turned to the disposition of the remaining gold. Sometime in the latter half of 1948, 164 gold bars (Prussian Mint) may have been released to Italy, and 953 gold bars may have been released to Austria. These two transactions also may have included gold coins, with a total delivery of 689,295.906 fine ounces for Austria and 286,102.445 fine ounces for Italy. The Tripartite Gold Commission directed the last major release of monetary gold through two contracts with Pan American Airways, which served as the principal carrier. The first flights delivered "approximately 58,705.5410 kilogrammes of monetary gold coins," and the remaining flights delivered "approximately 74,498.64262 kilogrammes of monetary gold coins and/or bars" to the Bank of England in London. As recorded two years later, the first shipment actually comprised 53,234.446 kilograms (valued at $59,903,407) and the second shipment 75,900.028 kilograms (valued at $85,408,426). The 53 individual flights began on June 15 and concluded on August 3, 1948.
Throughout 1948 and 1949 restitution shipments continued, with the IRO receiving the largest amounts of material in March and October 1948. Other restitutions, consisting of some precious metals (not gold) and mostly currencies, were released to several governments. By the end of 1948 the Foreign Exchange Depository was preparing to go out of business. Silver, gems, currency, securities, and an assortment of jewelry and rare metals were released to a variety of countries, and even some German industries. In what appears to be a close-out accounting for the disposal of all FED assets, the last and Acting Chief of the Foreign Exchange Depository submitted a final monetary report to the Office of Economic Affairs in dollar values.
After December 1950 the Foreign Exchange Depository ceased to exist. Its few remaining assets consisted of unclaimed personal items, some platinum bullion, German securities, and an odd assortment of foreign currency and industrial diamonds. This material was transferred to the Bank Deutscher Länder, which had already taken over most of the FED building (the former Frankfurt Reichsbank) a year earlier. Ironically, at least one of the platinum bars and some of the securities had come from the Merkers cache in April 1945. Albert Thoms, the man responsible for shipping the Berlin Reichsbank assets to Merkers, was one of the two representatives for the Bank Deutscher Laender who accepted custody of the FED’s remaining assets.