Nazi Gold: The Untold Story

THEY WERE ""A SORT OF CLUB,'' Thomas McKittrick explained. Banking buddies, pals, confidants. He and Emil Puhl and Per Jacobsson. Theirs was a typical old-boy camaraderie of cigars and bar talk and walks along the quiet cobblestoned streets of Basel, Switzerland. It didn't seem to matter that the year was 1943, and they were an American, a Nazi and a Swede. Or that beyond their Swiss sanctuary, a hellfire was raging. Young men were dying by the tens of thousands. Jews packed into cattle cars were crisscrossing Europe toward slaughter, stripped of property that, in one form or another, was often funneled as loot through Switzerland. In fact, these genial clubmen don't appear to have been bothered by their complicity in that horror. They simply went about their work, helping to cash looted gold--gold that they must have known, as officers of the Bank for International Settlements, was stolen by the Nazis from treasuries and cities across Europe. Gold that financed both the war and the Holocaust.

There were a lot of people like that during World War II. Collaborationists, fifth-columnists, ordinary people you would never think of as Nazis, such as McKittrick--president of the BIS, a blue-blooded Harvard man from St. Louis. Under his stewardship, the bank took in gold pirated by the Nazis and laundered it into currency--the Swiss francs and U.S. dollars that Berlin needed to buy raw materials and munitions. That was long ago. But like so many legacies of the war, this, too, still lives. Where did all that gold go? Is it still locked in Swiss bank vaults or somewhere else? And who are its rightful owners?

For years now, a great hunt has been underway for the supposed Nazi cache. Holocaust victims lay claim to some; so do national treasuries. Last spring the decades-old search took on a new urgency when families of Holocaust victims mounted an effort to reclaim accounts of their forebears held by Swiss banks (NEWSWEEK, June 24, 1996). And lately, for the first time, the quest has reached beyond the Swiss. Recently the Clinton administration created a commission to search for any Nazi funds that might have ended up in U.S. Federal Reserve vaults. ""We have to be willing not only to focus the spotlight on Switzerland,'' says Under Secretary of Commerce Stuart Eisenstat. ""We have to be willing to follow the trail of assets into our own treasury.''

That trail, it turns out, leads to the likes of McKittrick. It also suggests that there is no huge stash of Nazi gold in Switzerland. An extensive NEWSWEEK probe discloses that after 50 years of financial sifting by central banks, the loot has scattered worldwide like the treasure of the Sierra Madre. And it's probably almost as irretrievable. Perhaps more important, an examination of numerous wartime documents, including newly declassified allied memos and Swiss bank ledgers, makes it clear that it wasn't just the Swiss, the chief cashiers of Nazi gold, who have something to hide. Many odd parties--neutrals, Allied governments and the ultrasecretive BIS--were involved in laundering Nazi funds or, after the war, withholding stolen assets.

By most reckonings, some two thirds of an estimated $660 million (about $7.8 billion in today's dollars) in stolen Nazi gold passed through Switzerland during the war. That's where the BIS comes in. Founded in 1930, the bank is a quasi-public institution known as the ""central bank for central bankers.'' It never played a bigger role than during World War II, when its key clients were the German Reichsbank and the Swiss National Bank. The bank's president at the time, Thomas McKittrick, traveled freely to Berlin, hobnobbing with Emil Puhl (a Reichsbank vice president and BIS delegate) and almost doing business as usual. Thanks in part to McKittrick and the BIS, Germany's window to the outside financial world never closed.

Washington was outraged by McKittrick's behavior, and, in 1944, it tried unsuccessfully to close down the bank. It all but considered McKittrick a traitor. While the BIS bought little gold from the Nazis itself--a scant $15 million--it was a crucial facilitator, lending the laundering an aura of honor among thieves. ""The BIS was a central transmission place where deals were struck, where the Portuguese representatives would meet the Reichsbank representatives,'' says Harold James, a Princeton University historian. And that's what kept money flowing into Nazi coffers.

Because so many banks were involved, the amount of gold left in Switzerland is probably negligible, contrary to what investigators have until now presumed. A British Foreign Office report made headlines last month by suggesting that the Swiss were still sitting on top of some $400 million in 1945 dollars. And U.S. Sen. Alfonse D'Amato, whose banking committee is investigating the issue, two weeks ago criticized postwar U.S. officials for accepting only a $58 million settlement from the Swiss in 1946.

Documents obtained by NEWSWEEK suggest that both D'Amato and the British are wrong. Like any sharp businessmen with hot goods, the Swiss disposed of much of their gold quickly--through Portugal mainly, but also to Sweden, Spain and other central banks. Probably no more than $140 million remains unaccounted for, and a good portion of that was probably sold onward as well. Nuno Jonet of the Portuguese central bank in Lisbon confirmed that ""we acquired a lot of gold coming from Germany because, as you know, we sold a lot of goods and services to Germany.'' Then he joked, ""I suppose one or two bars are left with swastikas on them, but they're museum pieces.''

No one's laughing, least of all Holocaust victims and other wartime plaintiffs who have filed reparations suits. Despite their mad scramble, the complainants are likely to be disappointed. They may find a few dormant bank accounts here or an extra piece of ""residual gold'' there, but what remains of the known Nazi hoard is worth no more than about $65 million. That's what is on account at the Brussels-based Tripartite Gold Commission, set up after the war to return stolen gold to national treasuries.

None of this money has gone to the Jewish community, which rankles Edgar Bronfman, head of the World Jewish Congress. He has long been negotiating with the Swiss Bankers Association to retrieve dormant bank accounts of the Holocaust dead. ""One of the things that bothers me is how blithe everyone was about Jewish property,'' says Bronfman. ""It was "The Jews are dead, so to hell with 'em.' It wasn't just the Swiss. That was the attitude of everyone''--the Americans, too.

It's a sad denouement, but Bronfman's not giving up. Last week, the WJC released declassified documents showing that the Allies found bags of gold tooth fillings and Passover goblets in a huge cache of Reichsbank gold--$293 million worth--at a salt mine near Merkers, in western Germany, a few days after V-E Day. The cache was mainly handed over to the Tripartite Commission, but has never been fully accounted for.

Nor has the BIS's wartime complicity. Washington forgave it as the cold war descended in the late '40s. In 1947, the Federal Reserve Bank of New York gave it a clean bill of health. McKittrick and his pals moved on. Jacobsson became head of the International Monetary Fund, while McKittrick glided into a cushy post at the then Chase National Bank. His 1970 obit in The New York Times was respectfully headlined, T. H. MCKITTRICK, WORLD FINANCIER. Nothing about helping to finance genocide.

From April 1938 to May 1945, the Nazis seized nearly $800 million in gold.



 U.S. Dollars,



 in millions







German-owned gold



 reserves at the start



 of the war              120 



Belgium                  223



Holland                  164



Italy                     64



France                    53



Austria                   46



Czechoslovakia            33



Hungary                   32



Yugoslavia                25



Poland                    16



Luxembourg                 5







Total                   $781



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