THE HIDDEN MILLIONS
One day after Walter Stucki had agreed the essentials of the Washington Accord, on May 13, 1946, Eli Ginzberg, a thirty-five-year-old fast-talking Jewish New Yorker with a doctorate in economics from Columbia University, sailed to England in comfort on the Queen Mary, the world’s most celebrated luxury liner, as the State Department representative for a conference destined to distribute the $25 million and the heirless assets to the refugees. In 1944, as the chief of the logistical office of the Surgeon of the U.S. Army, Ginzberg had read the reports about the extermination camps and, influenced by Moses Abramovitz, had assumed “an obligation to care for the Holocaust victims.” His voyage to London was the fulfillment of that obligation.
Ginzberg’s progress had not been smooth. In the weeks before his departure, the State Department had resisted his appointment. Tinged with anti-Semitism and ambivalent about refugees as “a losing card,” State Department officials knew that the British Foreign Office opposed any conference, while the French were lukewarm. But the department’s opposition collapsed under the onslaught of the crusaders in the Treasury and White House. “We had to push the State Department,” Ginzberg told his friends just three days before his departure. Despite those difficulties, the letter of appointment from John Hildring, an assistant secretary of state, included a ringing exhortation: “This government feels that it has a particular moral obligation to these unfortunate victims of Hitlerite aggression.” Few, however, expected any results. Although Article 8 of the Paris Agreement had established an Inter-Governmental Committee on Refugees, Ginzberg arrived in London knowing that Britain’s “delaying tactics … by raising a host of extraneous issues” reflected its “deep antagonism” to the very idea of such a committee. Five months had elapsed since the original reparation agreement had been signed, and while the condition of the Jewish refugees deteriorated, the French government had failed to convene the five-nation conference in Paris. After his first meetings with the British, the Allies’ lack of interest was confirmed. Ginzberg sought the advice of Sam Burger, the labor attaché at the American embassy. The solution, suggested Burger, was to meet “my good friend Hector McNeil.” McNeil, a junior minister at the Foreign Office, was preparing for a visit to Washington. “It’s all about big prices,” Burger told Ginzberg as they drove at night to McNeil’s home in north London. “The Brits need us.” “I’ll offer him a deal,” laughed Ginzberg, who that day had met David Ben Gurion, the Zionist leader. “None of the Allies,” Ben Gurion had moaned, “want to help us.” Unlike conventional diplomats, Ginzberg was motivated to help his people.
While smoking Ginzberg’s Chesterfields, McNeil was candid about the obstacles: “We don’t want to complicate the Palestinian problem.” Giving money to Jewish refugees to emigrate to Palestine, admitted the minister, would cause extra headaches. Even Ginzberg’s request that 600 children be allowed to emigrate to Palestine was excessive. “Look,” offered Ginzberg in his affable, fast-talking New Yorker manner, “my government wants this settled. If you help me, I’ll help you in your mission to Washington. I’ll write to Hildring and sort you out.” The minister believed him. “That sounds very acceptable,” he replied, speculating that perhaps 250 children could be admitted every month. “You’ve been unnecessarily handsome in understanding our position. We’ll support the conference.” McNeil’s only condition was that the original term in the Paris Agreement—that the money would “be devoted to the rehabilitation and resettlement of non-repatriable victims of German action”—should remain unaltered. Neither Palestine nor the Jewish distribution agencies would be mentioned.
Elated, Ginzberg sought out the three other representatives delegated by the eighteen-nation conference with responsibility for settling the issue: Czech, Yugoslav and French. During an expensive lunch, Kilvana, the Czech, revealed to Ginzberg, “I do everything the Yugoslav tells me.” Over another “fancy” meal, Bartos, the Yugoslav diplomat, explained, “So long as there’s no money for Tito’s enemies, we’ll support you.” The French, Ginzberg decided, would not be a problem: “We’d just given them a big slice of money.” Shuttling between the diplomats in London, Ginzberg, invoking the “deep interest of my government,” had negotiated by June 7 the draft agreement that would be formally considered by the conference in Paris on June 11. The money, it was agreed, would be used not for compensation but for “rehabilitation and resettlement.” Anticipating that he would be able to “guide” Philippe Pérrier’s chairmanship, Ginzberg congratulated himself and traveled to France.
In London, Douglas Mackillop, a Treasury official nominated as the British representative, was irritated by Jewish agitation and complaints. Jewish groups had protested to British officials about their “grievous disappointment” that no special mention had been made in the original Paris Agreement about their plight. Nor, they complained, was there an explicit promise to compensate Jews for the Nazis’ theft of Jewish property worth billions of dollars or an explicit statement of the right of the Jews to administer their own funds. To Mackillop’s annoyance, Jewish petitions and meetings had urged politicians to recognize that “most of the ‘heirless’ property of Nazi victims in neutral countries consists of property belonging to Jews” and it should be secured for their benefit. Now, capping all that irritation, came the arrival of American zeal in the person of Ginzberg. “The United States delegate,” Mackillop noted to his colleagues, “will be a very active-minded young Jew who is by all accounts anxious to secure the handling of all the moneys allocated to Jewish beneficiaries by the Jewish Agency for Palestine and the American Joint Distribution Committee.” Allowing those agencies to administer the funds, he grumbled, was distinctly “unwelcome in view of the record of these organizations in connection with illegal immigration into Palestine.” Worst of all, Ginzberg was guilty of seeking money for Austrian and German Jews and his proposed agreement would distinguish between Jewish and non-Jewish victims.
Mackillop’s proposal, to find a Jewish group who opposed Ginzberg and manipulate them in Britain’s favor, aroused Waley’s concern. On the eve of Mackillop’s departure to Paris, he was urged by Waley to bear in mind American passion for the idea that the money should be used to resettle Jews, especially in Palestine. Unimpressed, Mackillop coldly ignored the advice.
In Paris, Ginzberg enthusiastically introduced himself to Mackillop. The Scotsman, he decided, was “unexciting” and clearly burdened by the eight children he had fathered. For his part, the British representative was depressed by Ginzberg’s news. The three delegates from France, Czechoslovakia and Yugoslavia, chortled Ginzberg, supported his plan, and so did Hector McNeil, the British Foreign Office minister. “McNeil did not tell me he supported you,” intoned Mackillop, proffering a piece of paper. “Here’s my proposal. Somewhat different from yours.” Ginzberg’s ire was palpable. “Let’s settle our differences in private this evening,” suggested Mackillop in retreat.
That evening Ginzberg confronted the prejudice of the Foreign Office. There could be no mention of the Jews as beneficiaries, insisted Mackillop, nor could the agreement support their resettlement in Palestine, nor could the money be distributed by Jewish organizations. “The money should be distributed by governments,” said Mackillop.
At once excited and furious, Ginzberg bluffed: “My instructions from Washington are to formally withdraw from the conference if any attempt is made to delay distributing the money.” Staggered by the American’s ultimatum, the British official sat quietly as Ginzberg continued, “Involving governments as the distributors means delay, and the Swiss have agreed to advance the money explicitly for those beneficiaries.” Uneasy and acknowledging that he was isolated, Mackillop scrambled together a compromise: the American Joint Distribution Committee and the Jewish Agency would not be mentioned in the formal agreement as administering 90 percent of the fund but could be nominated in associated letters of instruction to the Inter-Governmental Committee on Refugees as the agencies to distribute the money. However, the funds would not be released until there was an approved resettlement program; and, although Palestine would not be mentioned, there could be a phrase indicating that the money was to help the Jews “in finding new and permanent homes.” “Agreed,” Ginzberg said with a smile.
In his report to London, Mackillop would boast that Ginzberg’s plan had been partially sabotaged, but that did not prevent his acceptance of the American’s generosity. Just before signing the agreement on June 14, Ginzberg visited the American embassy’s commissary and brought a box of chocolate bars. “These are for your eight children,” Ginzberg told Mackillop. “But you can have them only after you’ve signed. Otherwise it’ll be seen as a bribe.” Without embarrassment, Mackillop accepted the gift. Later that day he successfully won postponement of a plan to help the Hungarian Jews on the ground that it was “awkward.” The Swiss, commented the Scotsman on his return to London, deserve sympathy for the problems that beckoned. Untroubled, Ginzberg returned to New York content that he had contributed toward the survivors’ relief. All that remained was to secure the money from the neutrals.
Under the Paris Agreement, Philippe Pérrier, the French chairman, had been nominated by the five governments to recover the $25 million and the heirless assets. On the assumption that all of the assets were Jewish in origin, 95 percent, it had been agreed, would be used for Jewish rehabilitation and resettlement. Pérrier’s letter to Bern was dispatched on August 20. Switzerland, like the other neutral countries, was asked to “take all necessary action to facilitate the identification, collection and distribution of these assets which have arisen out of a unique condition in international law and morality.” The Swiss were invited to act with “understanding and energy.”
Choosing France as the representative was in the circumstances not astute. Ever since the Washington Accord had been signed, Swiss politicians had denigrated the French, accusing them of stealing Belgium’s gold, for which Switzerland had had to pay compensation. Outraged by Swiss deceit, Henri Hoppenot, the French ambassador in Switzerland, urged his government to release a dossier proving the Swiss dishonesty. “The present cowardice of the Finance Ministry,” he exclaimed in a coded telegram to Paris, “is a disservice to our prestige and ensures that no one will take our work seriously.” The silence from Paris, Hoppenot knew, was related to the continuing negotiations for loans. By 1949, Switzerland would have loaned SF790 million to European countries and France would receive by far the largest share, SF340 million. Hoppenot’s complaint about the “finance administration’s desire to coddle the powers in the Swiss National Bank” was ignored.
While the British had deliberately remained silent about heirless assets, convinced that “the atmosphere might not be particularly favorable,” Irwin Mason, a U.S. diplomat, was dispatched to Bern to negotiate the speedy release of the heirless assets. “Moral pressure,” he was told, was the only weapon available.
Max Gottschalk, a foreign affairs consultant for the American Jewish Committee, had discovered during his visit to Switzerland in May 1946 the limitations of moral pressure as a means of obtaining the heirless assets. Meeting Armand Braunschvig, the vice-president of the Swiss Federation of Jewish Associations, Gottschalk was struck by the timidity of the Jewish leaders. Cowed by native anti-Semitism and shamed by the association’s wartime failure to protest more vigorously about the expulsion of foreign Jews, Braunschvig had in 1945 unquestioningly repeated gossip from fellow Jews and Swiss bankers: “There’s not a large amount of heirless assets.” One year after the war, as reports accumulated about missing Jews, Braunschvig revised his assessment. One Swiss shoe manufacturer reported that no word had been heard from any of his Jewish representatives, who were known to control seventy-five bank accounts in Switzerland. Another Swiss reported that the owner of property worth SF2 million had disappeared and his possessions were being administered by a bank. The heirless assets were now estimated to be worth $38 million. Gottschalk questioned whether Swiss law would allow their transfer to the survivors. The Swiss courts, he was initially told, could declare victims dead and authorize the transfer of their assets to survivors. But in May 1946 he heard that under Swiss law the heirless assets would revert to the government of the depositor’s nation.
That unforeseen advice was also sent to Eli Ginzberg by Mason of the State Department. Under Article 22 of a Swiss law of 1891, reported Mason, the Swiss government did not control the “ultimate disposition of assets in Switzerland of foreigners who died without heirs.” However, he said, Switzerland’s secrecy laws would prevent any foreign government from claiming the heirless assets. The only solution would be to secure the agreement of the other countries to waive their claims and call the money “unclaimed funds” rather than heirless assets. Ginzberg’s recommendation was artless: if the other governments refused to oblige, the Swiss government should change its laws.
Ginzberg’s solution seemed unexceptionable to the lawyers in Washington. Pressured by the Jewish lobby, Congress had recently amended the Trading with the Enemy Act to allow European Jews to recover possessions that had been seized as enemy property in the United States by the Alien Property Custodian. No one in the State Department doubted that, with goodwill, the Swiss could find a satisfactory legal remedy, especially after Stucki’s signed promise to “examine the question sympathetically.” With that hope, the State Department wrote to Stucki on July 10. By then, Stucki’s department had received a succession of letters from U.S. diplomats protesting about the plight of former German citizens who were unable to obtain their money from Swiss bank accounts, insurance policies and trusts blocked by the Compensation Office. The latest letter sought an explanation of why the Compensation Office was continuing to demand that claimants produce documentary proof of their loss of German nationality or that a relative had died in the gas chambers. That proof, submitted the State Department, did not exist. Stressing the “entirely unprecedented situation,” Stucki was asked to “recognize the urgent and immediate necessity” of devising procedures to transfer the heirless assets to the survivors.
Regardless of his own difficulties after his return from Washington, Stucki did not dispute Switzerland’s obligation toward the Jews. “There is a moral obligation and I believe that the problem must be pursued with energy,” he noted, proposing that the government introduce a new law to secure and transfer the heirless assets. By then, Stucki was considering a thirteen-page proposal delivered by Dr. Franz-Josef Bienenfeld, a British lawyer representing the World Jewish Congress. Some heirless assets, he suggested, should be immediately freed to help 9,500 Jewish refugees in Switzerland, and the Swiss banks should be protected by a new law from penalization from any future claims for handing over the heirless assets.
Franz Kappeler, a senior official in the Political Department, unquestioningly accepted the need for a solution despite obstacles and conflicting claims. While the Allies expected the neutral countries to give $25 million and the heirless assets to the Jews, he noted, the Polish and Czech governments had asked the Swiss earlier in the year for the assets deposited in Switzerland by their citizens who had died during the war. In summary, Kappeler identified the major obstacle: while the banks needed to establish the amount of heirless assets, they had difficulties in establishing whether or not a depositor was actually dead because so many foreigners had given instructions that they were not to be contacted. Any investigation by the banks to discover whether their customers had survived the war might endanger those people, he wrote. One solution, he suggested, was to retain some of the heirless assets to pay those who reappeared. In the meantime, he expected the amount of heirless assets to be established soon because most of the inheritors of other accounts would claim their deposits. That summary was incontrovertible and fair. Since there was no predetermined legal solution, any settlement required careful thought. Yet in his conclusions, Kappeler, a pro-Nazi during the war, revealed disdain for the Allies’ plan: “It should not be assumed that just because a depositor was Jewish he would have desired that his legacy would be used for repatriable refugees.” Nevertheless, he suggested that a conference of banks, lawyers, notaries, trustees and their associations be summoned for discussions that would lead to legislation.
Four days later, on August 3, all of Switzerland’s banks, lawyers, notaries and trustees were asked by the Political Department to estimate the amount of heirless assets. While appreciating the work involved, the department added, “It is vital to acknowledge the undertakings given in Washington and the political importance which the Allies attribute to the issue.”
Clearly appalled that the government contemplated a breach of their secrecy, the Bankers Association reacted with a mixture of artful ingenuity and defiance. Mentioning their “surprise” about Stucki’s undertaking on heirless assets—“which we were unaware of until now”—the association curtly listed the legal requirements to establish an heirless asset: namely, documentary proof that the depositor was dead and that there were no heirs. “No,” scribbled the Political Department official, criticizing the association’s conditions as too restrictive. In their counterproposal, the association suggested that the government should ask the Allies what they were doing to discover heirless assets in their countries. “It seems to us that the neutral states cannot do more than the signatories at the reparations conference.”
“That’s true,” commented the official at the Political Department, understanding Switzerland’s position—that the country should implement the accord to the same extent as the Allies. The idea of shifting the fate of the heirless assets onto the Allies shone with advantages.
The Swiss reply on the heirless assets was handed to the French embassy on September 11, 1946. The government, wrote Petitpierre, had studied the Allies’ request “sympathetically” and would consult the federal authorities about the legal issues. In the meantime, the government was undertaking inquiries to discover “the approximate number and amounts of heirless estates in question.”
Guy de Rham, Stucki’s assistant, approached the banks, the insurance companies and the Swiss Lawyers Association for information. The banks and insurance companies were expected to produce estimates of the amount of heirless assets, although the lawyers had instantly refused to breach the confidentiality of their clients. That, followed by the notaries’ similar refusal to cooperate, looked suspicious. In private, Schwab and Stucki had heard whispers that not only banks and corporations but also Swiss individuals—lawyers, business associates, notaries and accountants—had diverted into their own or specially created accounts money held in trust for Jews who had disappeared. By its inaction, de Rham feared, the Swiss government was encouraging more people to steal those dormant accounts. Deciding the fate of the heirless assets had become embroiled with Switzerland’s attitude toward the Jews and the Germans.
On November 1, 1946, Robert Meyer, a respected lawyer in Zurich, called at the Political Department to propose using the heirless assets, which he estimated were worth between SF40 and SF50 million, to help 5,000 Jewish refugees settle in Switzerland. The respect that Meyer’s plan generated outraged lawyers close to Heinrich Rothmund, the director of the Police Department. They were anxious that all foreign Jews should leave the country. Police representatives rushed to de Rham to denounce Meyer as a mere mouthpiece of the World Jewish Congress. His estimate of heirless assets, they said decisively, was too high. “He wants 5,000 to 6,000 Jews to stay in Switzerland out of political rather than humanitarian motives,” Rothmund’s emissaries told de Rham, adding that there was unhealthy competition among Jewish groups to control the heirless assets. The police offered an alternative proposal. To save public funds, the heirless assets should be used, until their removal from Switzerland, to alleviate the “big problem” of caring for the refugees in the spartan camps. Just as they had been during the war, the Jews should be self-financing. Since “the money belonged to the same type of people who would now benefit,” submitted the police, the financial problem at least would be solved.
Four months had elapsed since the accord was signed and the crusaders in the Treasury and State Departments, under pressure from Jewish groups highlighting Swiss obstruction, urged action. Intelligence reports from Europe revealed that, in contrast to the Jews, the 72,000 Germans resident in Switzerland were enjoying uninterrupted Swiss hospitality. Despite American demands that 24,000 suspected Nazis be expelled, only 3,000 incriminated Germans—all political and intelligence operatives—had been ordered to return to Germany. On Swiss criteria, only those who were undesirable to Switzerland were expelled. The Allies’ interest in the German financiers and industrialists was ignored.
Freed from the Allies’ restrictions, Eduard von Steiger, the minister of justice and the police, had also quietly altered the conditions for Germans’ entry into Switzerland, a particular help for former Nazis forbidden by the Allies to travel. Swiss officials, accepting bribes of SF200,000, provided temporary residence permits and “Ersatz Passes” for former Nazis to move clandestinely through Switzerland and disappear beyond the Allies’ control. Among the most favored routes was the regular KLM flight, booked in Swissair offices, to Argentina and Brazil. “The Swiss government,” noted Tom Caruth, the assistant military attaché in Bern, “made a considerable profit getting rid of [the Germans and ensured] that too many questions were not asked.”
Other privileged Germans, allowed to remain in Switzerland, were enjoying such relaxed conditions that the country was condemned in the House of Commons as a refuge for former Nazis. In Lugano’s luxury hotels and villas, Nazi Germany’s former diplomats, arms dealers and SS officers, pampered by newly recruited staff, paraded in expensive cars. In Davos, the location of the German-owned Catholic sanatoria that in wartime had been centers of German espionage, former Nazis who had crossed the border looking impoverished soon tapped into their protected bank deposits to buy new clothes, eat well and rejoin “the anti-Semitic movement.” In their conversations, none voiced any contrition about the past. Rather, they spoke of vengeance against the Americans for the injustice they had suffered. Among the many sources of suspected income were 15 tons of gold bullion, mostly in coins, missing from a Berlin bunker controlled by von Ribbentrop’s Foreign Ministry and 3 tons that had been smuggled across the border into Switzerland at Lake Constance. None of those Germans was pursued as the Jews had been by von Steiger’s police or was subjected to investigation by Compensation Office officials, who were preventing Jews from gaining access to their funds. The accumulation of those reports even persuaded the British and French governments in September to send protest letters to Bern about the Swiss failure to fulfill their promises. The instinctive reaction in Bern was to ignore any criticism, although German influence was beginning to encroach on Switzerland’s attitude toward the accord.
On September 13, Stucki chaired the first meeting of the Swiss commission to implement the accord. Two antagonists faced him across the conference table. Robert Dunant, representing the Bankers Association, was upset and determined to forestall the transfer of 50 percent of the German property, the loot and the heirless assets to the Allies and Jews. Having warned Petitpierre since March that the Currie agreement was dangerous, Dunant, the son of a prominent Swiss diplomat, had ever since unloaded his fellow members’ complaints onto the minister, attacking the government’s opinion that “the Swiss people would not understand if the German assets were left untouched.” In funereal tones, the bankers’ representative expressed his “exceptional regret,” as a Swiss patriot, that the accord had been signed. “It’s contrary to Switzerland’s constitution,” he insisted, “it will undermine Switzerland’s sovereignty, and, most seriously, it will be exploited by the Allies to allow Switzerland’s competitors to discover our commercial secrets.” Stucki understood that the bankers were declaring war on the accord, expecting Switzerland to renege on the agreement.
The second antagonist facing Stucki was Heinrich Homberger of the industrialists’ Vorort, the representative of Switzerland’s most powerful clan. Homberger’s influence was only too evident: he was provided with an office in the Ministry of Economics to facilitate his access to civil servants and ministers in the shaping of Switzerland’s policies.
Stucki’s opening remarks, which ruffled his adversaries’ feathers, showed that he was not easily manipulated: “There’s resistance to the implementation of the accord. We’re getting reports that some financial groups are causing problems in the freeze on private German assets.” Dunant and Homberger knew that the reality was worse than Stucki and Schwab could imagine. Swiss companies that had agreed to become protectors of German companies at the outbreak of the war were refusing to transfer property back to the Germans—either to protect it from seizure or purely for profit. Other Swiss displayed outright greed. “It’s shameful,” said Max Ott of his countrymen’s avarice, “how many people think that they can just take these German assets.”
Unknown to Homberger and Dunant, Schwab’s suspicions about their activities had prompted the Compensation Office to tap a number of telephones. Schwab’s motives were laudable. He was deluged by rumors and unsubstantiated reports, and his only chance of discovering loot and hidden fortunes held by those known to be working closely with the Germans was by taps. Those suspicions nonetheless reinforced the antagonism in the room, signaling to Stucki, whose approach would increasingly reveal his Jekyll-and-Hyde character, that to avoid isolation and allay the financiers’ fears he should switch direction. So, with a hint of skepticism, he began explaining how the implementation of the accord could be delayed. The principal ruse, he suggested, was to argue with the Allies about the exchange rate for calculating the value of the German assets. “We fought like lions in Washington over the exchange rate,” Stucki told Homberger and Dunant. “The Allies are obviously very interested in selling off the German assets as fast as possible, not least because the first SF50 million is to be used for the Nazis’ victims. But so long as the sale hasn’t started, they can’t have the money. So we’ve got a bargaining counter which we shouldn’t waste.”
Homberger warmed to Stucki’s new defiant tone. In cryptic terms understood by everyone present he declared: “I’m pleased with that report. I’ve always wondered whether the accord could ever be implemented. I’ve always believed that fixing the exchange rate will determine everything.” Left unspoken, however, was his anger with Stucki. Germany’s assets in Switzerland, he believed, should not be shared with the Allies but should be used to pay off Germany’s debts to the Swiss state.
Nine days later, at the second meeting, Homberger raised a new demand. German assets in Switzerland, he told Stucki, should also be used to pay off private debts owed to Swiss nationals. “That’s impossible,” protested Stucki, clearly disliking the industrialist’s motives. “The Allies insist on using the money for reconstruction and we must hand over some money to the victims of the Nazis. There’ll be a huge argument with the Allies if we do what Herr Homberger wants.” Homberger was unimpressed: “Your arguments are political and everything will change.” Stucki disagreed. “The accord may be crude; but if it looks as if we are breaking the agreement and representing German interests, it would do us no good and we’d be giving the Allies the chance to take everything.” Stucki knew how to interpret Homberger’s silence. Switzerland’s industrialists were untroubled by the Allies’ feelings or threats.
Toward the end of that second meeting, Dunant asked about the fate of the heirless assets. Stucki’s reply was encouraging. Their fate, said the official, would be determined by those sitting around the table. There was no mention of asking Switzerland’s financial community to deliver the results of its investigation initiated by Petitpierre. The subject would not be formally discussed for another two years.
Stucki’s resolute indifference was prompted by the sudden turmoil across the border. News reports were describing a major break in relations between the Western Allies and the Soviet Union on the question of Germany’s economic future. For the first time a permanent division of Germany was being discussed. In the developing struggle to establish Europe’s fate, Switzerland was too unimportant to attract much attention from the Allies.
The reply to the Foreign Office’s mild protest in September had been a question from Stucki calculated to deter any further interest. Britain was asked to supply any information about the heirless assets in Switzerland and to explain how the British government intended to discover the heirless assets deposited in Britain. Gerry Villiers was perplexed. There was no mention of any Allied responsibility in the Paris Agreement, and naturally the British government had not contemplated searching the British banks for those assets—nor did it consider such a search possible. In the absence of banking secrecy laws, inquiries by Jewish survivors without any information were routinely circulated among Britain’s banks, and if the names matched, the bank immediately admitted the existence of an account. All that was required was for the claimants to prove their right to the inheritance. The Swiss, it was clear to Villiers, were “just fishing.” The British could not suggest to the Swiss how else to trace the assets. The best solution, Villiers decided, was to “throw the ball back” to the Americans, such passionate supporters of the cause: “I’ll be interested to see what the result will be.” Six months had elapsed since the Swiss had promised to explain their proposals for the heirless assets. Selous, the commercial secretary in Bern, wanted to know whether he should formally inquire about progress. The consensus in London was to ignore the Swiss query and to remain silent.
In Paris, a similar Swiss inquiry received an obfuscatory reply. Since the nonmonetary gold found in Germany, replied the Quai d’Orsay, had been given to the Jews, the French government was not obliged to introduce legislation to discover and hand over to the victims of Nazism any property deposited in France. This evasion concealed France’s refusal, in contrast to the behavior of the British and U.S. armies, to hand over to the Allied depository all the gold and other valuables whose ownership was now unknown but that had been confiscated from the Jews. Among the valuables shipped to Paris, allegedly for the compilation of an inventory, were 2,500 kilos of gold belonging to Hungary, and cases of jewelry and paintings, seized from Jews, discovered in the Austrian Tyrol. Their fate in France remained unknown.
The Swiss letter to the State Department was cunning: “It would be helpful to the Swiss authorities to know the basis for the allegation of the Allied governments that a considerable number of the victims of the Nazi persecution died without heirs and had their estates in Switzerland.” At the end of the short, polite note was a reference to Poland’s claims to the heirless assets of Polish citizens. In their struggle to find an answer to the main question, State Department officials neither pondered the mention of Poland nor contemplated any amendment of the law to discover the heirless assets in U.S. banks. There were no secrecy laws to prevent a bank’s disclosure of a deposit, and if an account was dormant for ten or more years, it was automatically disclosed in public advertisements. To increasingly beleaguered State Department officials, the minutiae of small sums of money and wartime principles were becoming irrelevant compared with the fate of Europe. Paul Culberston, head of the State Department’s Western European division, shared the British lack of interest in Safehaven. Irreconcilable difficulties with the Soviet government relegated the differences with Switzerland to the status of an unwelcome irritation. Western Europe’s survival depended upon a unity of purpose. Chasing Nazi war criminals and Nazi loot was interfering with the bewildering skirmishes being fought over the evolution of a strategy. The crusaders had become an embarrassment. The United States, Culbertson told William Clayton, assistant secretary of state, in October, was viewed by the Swiss as the “big bad wolf,” not least because too many staff members in the State and Treasury Departments considered the Swiss “a bunch of crooks.” Culbertson wanted to remove the “running sore” with the Swiss and withdraw all but one of the Safehaven personnel in Switzerland. The Swiss should be allowed, he concluded, to run Safehaven. Clayton agreed.
Without telling Rubin, Culbertson dispatched Benjamin Kittridge, a State Department official, to visit Albert Nussbaumer in Zurich. Kittridge confided to the Swiss banker, Petitpierre’s roving ambassador, that his department was “fed up with postwar animosity” and wanted to reestablish a normal relationship with Switzerland. The problems, admitted Kittridge, were caused by “certain personalities among the American delegation in Bern whom he would investigate.” Nussbaumer immediately advised Petitpierre to respond to the “indisputably” pro-Swiss State Department, “who do not agree with the Treasury.” To the minister it appeared that Safehaven was all but dead, not least because the Treasury representatives in Bern were failing to block the sieve as loot disappeared and German property became harder to expropriate. The quest for the heirless assets was suffering in the retreat.
Placed in the front line of the dragnet for the plunder and the Jewish money, Max Schwab and Max Ott of the Conservation Office were handicapped. Confronted by the overwhelming hostility of the bankers and industrialists, they could no longer rely on the Political Department for support. Despite his honest but confused intentions, Schwab could not untangle the myriad interlocking local relationships between German and Swiss companies, nor could he penetrate through the secrecy laws to discover the heirless assets or the German assets.
Schwab’s failures to seize German property for the Allies were frequently picked up by Allied intelligence officers in Germany intercepting the mail with Switzerland. Letters addressed to Swiss banks, often coded, revealed Germans illegally entering Switzerland to manage their assets, which should have been sold, or using their funds in blocked accounts to offset debts to each other; other intercepts revealed how Germans were transferring their fortunes out of Switzerland by using Chinese or South American businessmen to buy Swiss products with the Germans’ money. Inside Switzerland—unlike the situation during the war—neither MI6 nor two American intelligence officers, Harvey Ginsberg and James Kronthal, had replicated the Allies’ wartime successes by comprehensively penetrating the Swiss banks, the industrialists’ boardrooms, the Compensation Office or Stucki’s office. Inconsequential intelligence reports to London and Washington mentioned an increase in food parcels sent to Germany, the suspicious activities of a Christian relief organization and the continued presence of suspected Germans, but in total it amounted to ignorance. Schwab and his staff, dubbed “uncooperative” by Selous, revealed nothing. Whenever American or British diplomats submitted examples of undisclosed German assets, Schwab merely replied, “We know about that already.”
Schwab was lying, yet out of the Allies’ sight he was fighting with the banks to reveal the truth about the Allies’ reports. In one case, he had inquired about a German account. The bank replied that on February 16, 1945, the day the freeze was declared, the account did not exist. After persistent questioning, Schwab discovered that just days before February 16, in anticipation of the freeze, the account had been transferred into the name of an Englishwoman living in China and the German had continued drawing on his money by using blank checks signed by the woman. “It is,” admitted Schwab, “a typical case of cloaking.” Although the bank was liable to prosecution and a fine, no action was taken. Even the bank’s refusal to reveal its client’s name remained unpunished. Switzerland’s prosecutors were refusing to administer a law denounced by bankers and their clients as unjust and ridiculous. “We’re not finding much understanding in the courts,” Ott told Stucki. “If the courts refuse to do their job properly,” replied Stucki, “that’s their problem. That must not prevent us from prosecuting.” Ott was not persuaded. His feeling was that “the Germans should be grateful to the Swiss for using the freeze to protect their assets.” Their irreconcilable struggle remained unknown to Allied diplomats in Bern, who witnessed only Stucki’s aggressive defense in the national interest of what he privately condemned.
To denigrate the Allies, Stucki called a press conference in January 1947 to announce that, although the Allies had reported one thousand cases of hidden German assets, only five were unknown to the Swiss government. In Sweden, Rubin had swiftly negotiated an agreement that 74 percent of German assets would be sold and the proceeds handed to the Allies and thence the refugees; by contrast, the Swiss vigorously disputed the value of German assets. Instead of the $1 billion estimated by Allies, the Compensation Office’s valuation was $120 million. Stucki’s department, cajoled by bankers and industrialists, was seeking ruses to avoid implementing the accord and to manifest exemplary fairness toward the Germans as proof of Switzerland’s reliability: “We cannot allow the world to think that the German owners did not get fair compensation.”
Within their closed sanctum, Switzerland’s bankers and industrialists had persuaded themselves that their country was under siege. “Look at the American press reports,” Ernst Speiser, a director of Brown Boveri, the engineering giant, told Stucki and Homberger. “They’re even suggesting that we are trying to sabotage the Washington Accord.” Stucki growled, “We’ll have to hold on to our nerve.” The blame, he said, to general agreement, lay with the American Safehaven team, who were feeding Michael Hoffman, the local New York Times correspondent, with malicious gossip. “It’s all about money, companies and the expansion of American cartels,” Speiser complained. Schwab agreed. Reagan, Conover and Mann were condemned together for sharing anti-Swiss sentiment—motivated solely by the desire to help U.S. corporations seize German assets. Schwab’s misconceptions were mixed with a modicum of reality. The Safehaven team in Bern, he told everyone, was “isolated and cannot count on any support from Washington.” “We’ll go on the offensive soon and deal with them,” snapped Stucki. “Reagan isn’t strong and we’re not helpless.” Homberger’s prediction about the diminution of the Allies’ aggression was turning out to have been correct, weakening the effectiveness of the Compensation Office and presenting an omen for Stucki as his misgivings about the bankers’ honesty were sustained.
In spring 1947, Stucki became disquieted by the discovery that the Kantonalbank, one of Switzerland’s biggest banking chains, had furtively ceased paying interest on foreign accounts ten years earlier. Believing it to be an isolated case, he told Dunant, the Bankers Association’s representative, “I believe we have a duty not to allow the banks’ enrichment to pass unnoticed.” Irritated by Stucki’s moral fervor and keen to minimize the revelation, Dunant soothed, “Only twenty-seven Kantonalbank branches according to the Compensation Office are involved. Very few Germans deposited money in that chain. At most we talking about repaying SF1 million.” The Compensation Office, he suggested, was exaggerating the problem associated with controlling “hot money” in 1937. Yet the implications of Dunant’s limited admission were considerable. Unclaimed deposits in the twenty-seven banks, probably belonging to non-German Jews, were worth, according to the Compensation Office, SF6 million. Among the thousands of individual branches of Swiss banks, the unclaimed deposits could amount to hundreds of millions of francs.
Suspicious of Dunant, Stucki proposed that the question should be referred to a court. Dunant was appalled by that prospect. There were serious disadvantages the banks might suffer, he told Stucki, if that course were pursued. The two agreed to a compromise: a new investigation would be undertaken by the Compensation Office staff. Weeks later, the new investigation revealed an even more distasteful scenario. Swiss banks, discovering that a dormant account belonged to a German or a foreign Jew, had retrospectively deducted the interest paid over many years on savings accounts, anticipating that there would not be a complaint because the depositor could well have been murdered. By any measure, the banks were guilty of a crude theft. Stucki was shocked.
Dunant was forced into the defensive. In a meeting with Stucki on September 9, the bankers’ representative explained, “This wasn’t done only to the Germans but to everyone except Swiss nationals living abroad.” His explanation exposed his loss of contact with reality: “Swiss banks informed all their foreign customers. They all knew what we had done and none of them protested.” The idea that a German or Polish Jew living in the fear of the Gestapo who received a letter about interest payments from a Swiss bank might protest about it was inconceivable to everyone except Dunant and the members of his association. No one pointed out that, to avoid risk, the instructions accompanying practically every foreign account in the Swiss bank forbade the dispatch of any correspondence to the depositor. Letters to the banks’ clients would therefore have been sent to mailboxes inside the bank itself. Stucki’s inveterate suspicions about banks were being reinforced as Dunant’s explanations unfolded.
“There’s clearly a misunderstanding,” said Schwab, interrupting Dunant. “I was present at the National Bank when it was agreed to suspend paying interest to stop ‘hot money’ from coming into Switzerland. It was never the intention to punish savers. The small banks have actually continued paying interest. And it’s particularly crass that interest was retrospectively deducted.”
“We are trustees for the Germans,” insisted Stucki. “We must care for their interests.”
Dunant was nonplussed. His association had confiscated the money from every foreign deposit account, and here was Stucki, with his narrow, legalistic, bureaucratic mind, wanting to make distinctions. “But we can’t make an exception for the Germans,” he exclaimed.
The confusion was compounded in a written report compiled by the Bankers Association. Most interest payments, explained Dunant, were stopped only in May 1946, after the Washington Accord had been signed. His earlier explanation about controlling “hot money” in 1937 had become incomprehensible. Three weeks later, the Compensation Office’s own investigation exposed Dunant’s lies. In a survey of all bank accounts, it was found that the interest payments had varied widely. Only 16.5 percent of all savings accounts, Stucki’s staff reported, were fairly administered, while 35.2 percent of the foreign accounts and 38.9 percent of German accounts were “badly” administered. The discrepancies exposed how the banks were exploiting foreign savers for their own profit.
“The banks acted unscrupulously,” Stucki pointedly told Homberger as they read the report. “I just don’t understand why the Bankers Association uncritically defends a minority of banks.” Dunant, conveniently, was absent. Schwab added his support: “The association swore that all the banks had behaved with absolute honesty. At the last meeting Dunant said he’d shoot this one down.” Even Ott was outspoken: “The banks clearly thought that it was all a theoretical discussion.”
Disdainful of that unanimity, Homberger defended the banks. “Most Germans left their money here for security, not for the interest. Surely we can’t force the banks to pay interest?” Amazed, Stucki replied, “We must protect the Germans. We’ll let a court decide.” Homberger, not to be outflanked as a protector of German interests, also cared for the banks. He spoke on behalf of all of Switzerland’s industrialists, and his solution was unchallengeable by a mere government official: “There’s no hurry. Let’s postpone taking any action.” Stucki accepted defeat. Schwab uttered a cry of despair: “I always tell everyone that we protect the Germans. But I don’t understand why interest should not be paid just because it suits the banks.” Schwab, of course, knew the answer to his own outburst. The banks enjoyed influence and protection among the nation’s power brokers. And there was now a unity of purpose among Dunant, Homberger and most government officials to champion Switzerland’s interests, reassure the Germans, rebut the Allies and ignore the Jews.