Nazi Hydra In America - Part 2: Safehaven Operations

Nazi Gold

Part 2: Safehaven Operations

Before looking at the recovery of other hoards and the Nazis that made it to South America, one must look at the various methods and programs the Allies took to recover Nazi gold. Poland took the first action taken to prevent the Nazis from looting. Polish authorities had moved their gold reserves to Romania before the Nazi invasion of Poland. Unfortunately for the Polish government, the Nazis soon overran Romania and seized the Polish gold reserves.

Several other European countries followed a similar path. France officials at the National Bank shipped their treasure to the United States. At the end of 1939, Belgium authorities entrusted the French with $223 million for safekeeping. Soon after the German invasion of the Low Countries, Belgium urged France to ship their gold to London aboard military cruisers. However, the French transferred the gold to Dakar, in its West Africa colony of Senegal. After the fall of France and negotiations with Vicky France, the Nazis received Belgium gold.

Within the first hour of the Nazi invasion of Holland, Dutch authorities had shipped their gold reserves in Amsterdam to England. The second boat containing the Dutch gold reserves stored in Rotterdam, carrying 11,012 kilograms of gold, struck a mine near the coastline and was marooned. By 1942, the Nazis had recovered most of the gold aboard. Other European countries failed to take any precautions and the Nazis seized their gold reserves as soon as they overran the country. Thus most of the gold reserves in the central banks of Europe fell to the Nazis except for France's and a portion of Holland's.

The first action taken by the United States was Executive Order 8389 signed by Roosevelt on April 10, 1940, freezing the Norwegian and Danish assets in the US. Eventually, every European country was included except for England. Also included in the freezing of assets were China and Japan. By freezing the assets of a country once the Nazis overran it; the Nazis were prevented from using the assets within the United States to further their gain.

In July 1942, the United States issued the blacklist of individuals and companies. This list of Proclaimed List of Blocked Nationals prohibited trade in the Americas with any name appearing on the list. Names appearing on the list were deemed hostile to the defense of the Americas. Throughout the war, names were continually added to the list, which reached several thousand names by the end of the war.

On January 5, 1943, the Inter-Allied Declaration Against Acts of Dispossession Committed in Territories Under Enemy Occupation or Control, better known as the London Declaration, was announced. The measure declared the allies would no longer recognize the transfer of property in occupied countries, even if it appeared legal. The allies were aware the Nazis were forcing people in occupied countries to sell or transfer their property to them. Up to this date, the Nazis had painstakingly created the illusion that such transfers were legal.

On February 22, 1944, the United States announced the Declaration on Gold Purchases. The United States declared that it would no longer recognize the transfer of looted gold from the Axis. The United States further declared that it would not buy gold from any country that had not broken relations with the Axis. England and the Soviet Union made similar declarations.

In July and August of 1944, the Bretton Woods Agreement was reached. The agreement called on the neutral countries to prevent the disposition or transfer of assets in the occupied countries. On August 14, 1944, the US, UK, Swiss War Trade Agreement was reached. The agreement required the Swiss to reduce trade with the Nazis.

On December 6, 1944, Operation Safehaven was organized.

On December 10, 1944, the State Department released a paper urging a soft-line towards Switzerland. This date marks the first step in sabotaging the efforts to return the assets to the victims of the Holocaust. In essence, it is a continuance of the feud between the Treasury Department and the State Department on the terms of peace and the 4Ds program of the previous chapter.

In February 1945, the Yalta Conference agreed that reparations would be exacted from Germany. The conference also established the groundwork for the Allied Reparations Commission.

Operation Safehaven by far is the best known and the largest operation the Allies launched to recover assets looted by the Nazis. Leo T. Crowley, Director of the Foreign Economic Administration (FEA) first proposed the need for a Safehaven organization in a letter, to the Secretary of the Treasury on May 5, 1944. Moreover, William T. Stone, Director of FEA's Special Areas Branch, called for including the British as well as various other US agencies in a letter to Livingston T. Merchant in the State Department, on May 15, 1944. Since Safehaven involved elements from both the State Department and the Treasury; it was plagued from the very beginning by the intense rivalry between the two departments. Safehaven would suffer the same fate as the 4Ds program that led to the hindrance and prosecution of war criminals and the denazification of Germany.

In May 1944, Samuel Klaus, Special Assistant to the General Counsel of the Treasury Department, proposed a plan for a fact-finding mission to neutral countries dealing with the problem of hidden Nazi assets. The initial planning for the trip included just Klaus and Herbert J. Cummings, a State Department official. Once the Treasury Department was aware of the trip, the Treasury Department sent several officials to catch up with the Klaus delegation. From August to October, Klaus visited London, Stockholm, Lisbon, Madrid, Barcelona, and Bilbao to encourage implementing the Safehaven program. The mission canceled plans to visit Switzerland and Portugal. The mission was only marginally successful. In his final report, Klaus outlined his current thinking in broad areas of concern, as the excerpt below shows:

"It [Safehaven] is only in its narrowest, and relatively less important, aspects flight of enemy capital. In its most important aspects, it is the use of neutral countries as bases for maintaining the assets, skills, and research necessary for the conversion of Germany to a war basis at an appropriate future date. The hiding out of stolen jewels or pictures, even if it exists, is truly important from the point of view of war crimes retribution. But the presence of I.G. Farben personnel in Spain, the expansion of Siemens production in Sweden, or the presence of German military technicians in Argentina are of more far-reaching significance, and constitute as well the most difficult Safehaven activities."5

Klaus had found the situation in Spain the most troubling. There the US Ambassador, Carlton Hayes was entirely unsympathetic with the Safehaven's investigations, although Spain was the country most damaging to Safehaven's objectives. In fact, the OSS had to operate in Spain out of Portugal due to the ambassador, who would identify to the Spanish police the undercover agents as intelligence agents. Hayes insisted on censoring all incoming and outgoing messages from the OSS. Hayes even blocked transmitting Safehaven material for a time.6 Hayes was definitely friendly to a fault with the Franco regime; however, he is credited for keeping Spain from joining the Axis. Such an alliance probably was never part of the Nazi's plans. Just as Hitler recognized that he needed a neutral Switzerland to obtain foreign currency and launder gold through, the Nazis most likely recognized the need for a neutral port on the Atlantic to receive supplies. A good example, of the dependence of the Nazis on a neutral Atlantic port, was the importation of gasoline through Spain after Hitler invaded the Soviet Union.

Hayes was aware of the importation of oil into Spain. On February 26, 1943, he commented the oil products available in Spain were considerably easier to get than on the East Coast of the United States. Hayes revealed the gasoline and petroleum products available equaled the full capacity of Spain's tanker fleet.43 This gasoline was supplied by none other than Standard Oil, from its oil fields in South America. It also presented the Roosevelt administration with a Pandora's Box of dilemmas. Forcing Standard to stop the shipments mostly likely would have resulted in Standard interrupting the supply of oil to the United States. At one point in the war, Standard had threatened to interrupt the supply. Secondly, the most likely response of US citizens suffering through the limited supply of gasoline available through ration cards would have been to rebel against the rationing system on learning that an American company was supplying the Nazis with oil. A similar commotion could be expected of the troops, many of which were drafted into service. With the President's hands effectively tied, the oil shipments to Spain continued. If you are rich enough, even treason is not considered a crime.

As originally proposed, Safehaven was to be entirely operated by FEA, with guidance from the Treasury Department on the financial and informational side and guidance from the State Department on the policy-setting side. However, the intense rivalry between the State Department and the Treasury Department, and differences with Britain weakened the role of the FEA. Resolution VI of the Breton Woods Conference gave Safehaven firm legal footing. The resolution stemmed from Polish and French proposals about blocking funds in neutral countries to prevent the Nazis from using looted assets. On December 2, Treasury, State, and FEA agreed to the roles of the participating agencies. Each agency was given some measure of individual operational freedom. All the data and intelligence was to be centralized in London.

In the fall of 1944, the long-standing debate over the treatment of neutrals arose between the FEA and State Department. The FEA wanted to keep the controls in place while the State Department wanted to lift the economic blockade after the end of hostilities. By this time, the State Department had the stronger voice in the operation of Safehaven. In October 1944, Morgenthau, Treasury Secretary, Joseph O'Connell, General Counsel for Treasury, and Harry Dexter White, Director of Monetary Research for the Treasury Department, agreed that Treasury---trained agents should be dispatched to supplement the staff of Embassies in neutral countries.

On December 6, 1944, the State Department released its long-awaited Circular Instruction to U.S. Missions about Safehaven matters. The release of the Circular marked the beginning of the political and diplomatic phases of Safehaven under the Department of State.

Collecting data and evaluating the data were largely confined to the OSS. Within the OSS, Safehaven was confined to the SI (Secret Intelligence) and X2 (counter-intelligence) divisions. X2 often played the dominant role within the OSS, especially with the more important neutrals of Switzerland, Portugal, and Spain. X2 was particularly involved in the German effort to transfer looted assets to foreign countries. For the OSS, this meant little more than a redirection of its intelligence operations to obtaining economic data. Cooperation between the OSS and Safehaven was on an informal basis until November 30, 1944. At the end of November, instructions sent out to all OSS stations detailed the intelligence requirement expected to be generated by the Safehaven program. In substance, Safehaven was piggybacking on already active OSS operations.

Under such conditions, it is hardly surprising that Safehaven was dependent on the personalities of the various OSS station chiefs. As already mentioned, the OSS operation in Spain was compromised because of the ambassador. In Switzerland, Allen Dulles was the station chief. Dulles had already been exposed by an earlier operation in a joint program with the British of spying on Americans and was suspected of being sympathetic with the Nazi cause. Dulles had deliberately been sent to Switzerland where he would have the most temptation to help his clients. By the time Dulles had reached Berne, he was aware that he was being watched. Dulles knew he was unable to use official channels to help his clients in the United States. Thus, Dulles used his Vatican connections to help the Nazis and Vatican couriers to help his clients in America, as the Vatican couriers held diplomatic immunity. The Vatican readily agreed to help Dulles in their zeal to regain their own assets in Germany and further their fanatical anti-communism philosophy.

Declassified files show that Slovenian bishop, Gregory Rozman, was trying to arrange the transfer of huge quantities of Nazi-controlled gold and Western currency that had been discreetly secreted in Swiss banks during the war. The bishop had been sent to Berne with the aid of Dulles' friends within the intelligence service. For a few months, the Allies were successful in preventing Rozman from receiving the funds. Then suddenly, Rozman had the funds for his Nazi friends residing in Argentina. Dulles had fixed it. This action may be only the tip of the iceberg. In 1945, the U.S. Treasury Department accused Dulles of laundering the funds from the Nazi Bank of Hungary to Switzerland. Similar charges were made against Dulles' agent Hans Bernd Gisevius, who had worked as an OSS agent while serving at the Reichsbank. The State Department quickly took over the case from the Treasury, after which the investigation was silenced and quickly dropped.7 Gisevius may have also been involved in the ratlines.

In fact, Dulles' career in Berne during WWII is marked by several money laundering cases. After the Nazis tipped Dulles off that the Swiss codes had been broken, Dulles shifted his operation to the banks of Belgium, Luxembourg, and Liechtenstein, using a roundabout route through Japan aided by Vatican couriers. 8 After the end of the war all the banks in these countries refused to allow allied investigators to look at their books. One of Dulles' dirtiest tricks may have been an effort to buy more time to move Nazi gold through Switzerland. A former East Bloc intelligence officer has confirmed that Dulles warned the Nazis the Japanese code had been broken at a crucial time. Shortly after warning the Nazis, the SS suddenly told the High Command to use tighter code security and to stop using the radio. They suddenly stopped using Ultra and switched to couriers. For once, the Allies had no information on the German battle plan. This most likely explains how the German's were able to launch the Battle of the Bulge as a complete surprise.13

Dulles and his comrades certainly exerted a large amount of influence to ensure US investments in Nazi Germany were not seized for repartitions. In Switzerland, the SS had purchased a large amount of stock in American corporations and laundered their money through the Chase and the Corn Exchange banks. Even more brazen was the case of Pan Am clippers hired by W.R. Grace Corporation to transport Nazi gems, currency, stock, and bonds to South America. The operations were the product of Dulles' money laundering for the Nazis. 11 Several American officers readily admit that much of the Nazi gold was never turned over to them. One officer admits to being in a huge vault filled with gold, gems, and currency that never appeared in any US files.9

Dulles had been a backer of Germany for a long time and he envisioned Germany as a bulkhead against the Soviets. The young Lt. William Casey was another OSS agent that shared Dulles' views of a German bulkhead. Casey served in the SI division in France and the Lowlands after they were recaptured. In a report from Paris, Casey wrote that Safehaven was a valuable field of endeavor, especially because of the potential for leverage with German financial circles, etc., in the future. 12 Following the war, Casey entered a career on Wall Street before becoming a director of the CIA under Reagan.

In 1946, Dulles's men simply changed their OSS uniforms and became the War Department Strategic Service Unit. Sometimes they were War Department Detachment and others the Document Disposal Unit. In effect, there were two factions leftover of the OSS. One a liberal faction took orders from the President and the other under the control of Dulles. The latter faction was hoping for a conservative victory by Dewey so they could unleash their �migr� army against the Soviets. Dulles had a secret ally in Region IV around Munich, where the Counter Intelligence Corps (CIC) was helping to recruit ex-Nazis.14

Given Dulles' close association with German industrialists, he was unwilling to give attention to Safehaven that Washington expected. In November 1944, with the Allies now in control of France, a land route to Switzerland had been reestablished, which made it possible to send an X2 agent to Berne to help run the Safehaven program there. By April 1945, X2 in Berne had unearthed a large amount of information on Nazi dealings. Included in the dealings:

• Gold and bonds were looted from Europe and received by certain Swiss banks.
• Additional funds sent by the Deutsche Verkehrs-Kreditbank of Karlsruhe to Basel.
• Stocks and bonds were held in Zurich by private firms for the Nazi Party.
• Hoards of Swiss francs credited to private accounts in various Swiss banks.
• Cash and property held in Liechtenstein.
• Over 2 million francs were held by the Reichsbank in Switzerland.
• Forty-five million Reichsmarks were held in covert Swiss bank accounts.15

Such information gleaned in less than four months by the X2 agent only confirms the information that has surfaced over the years that Dulles was working hard for the Nazis in hiding their loot, especially considering Dulles was a friend with the American Director of the Bank for International Settlements and top Nazi banking officials.

After the investigation into his money laundering, Dulles resigned from the OSS and returned to New York. He then sought out Thomas McKittrick the former head of the Bank of International Settlements. The Nazis had moved a large number of their assets from Switzerland to Argentina. Dulles soon went to work for a staggering number of Argentinean clients. Dulles and Donovan agreed that every effort should be made to sabotage Truman and the liberals. To this end, Dulles conned Donovan into serving on the board of the World Commerce Corporation of which Dulles was the lawyer. The Nazi money flowed in a circle from Germany to the Vatican then on to Argentina and then back to Germany. The Argentina economy boomed from the influx of Nazi money. The so-called economic miracle of the 1950s came from the same money the Nazis looted from Europe in the 1940s.10

From the beginning, Safehaven was an ambitious project with several goals besides its immediate goal of forcing the neutral countries to stop trading with the Nazis. The Secondary goals of Safehaven are listed below.

• To restrict German economic penetration outside the borders of the Reich.
• To prevent Germany from sequestering assets in neutral countries.
• To ensure that German assets would be available for postwar reparations and to rebuild Europe.
• To prevent the escape of those members of the Nazi ruling elite who had already been marked down for war crimes trials.15

Although Safehaven was a large and ambitious program, it was terribly understaffed. Until the surrender of the Nazis in May 1944, SI agents assigned to Safehaven had to concentrate first on strategic information before devoting any time to Safehaven. Well-trained additional agents simply were not available. Secondly, Safehaven was plagued from the very beginning with the long-running feud between the Treasury and State departments and to a lesser extent by British hesitation to employ harsh measures. Finally, the success of Operation Safehaven was proportional to the willingness of the neutral countries to comply with the Allies' demands to stop trading with the Nazis. Finally, the operations of Safehaven were oftentimes (during the war and especially after the end of the war) left in the hands of CIC, Counter Intelligence Corps, or the CID Criminal Investigation Division of the military. When Patton's troops rolled into Dachau, there were no officials available to arrest the remaining SS guards, they were simply left to wander away unmolested.