top link to the Nazi Hydra link to Election 2000 link to Awards
top link to ABout The White Rose

Nazi Gold
Part 5:Operation Andrew & Sweden's Neutrality and

back buttonhome button

While the military government in the Munich area was beset with corruption, the looting of the Nazi hoard pales in comparison to the money laundered by the neutral countries for the Nazis. However, before looking at the neutral countries, one other aspect of the Nazis must be examined. Although it doesn’t consist of looted funds it figured prominently in the Nazi finance plans. It is perhaps one of the most understood aspects of the war that is oftentimes mistakenly referred to as Operation Bernhard. The true name for the Nazi plot to counterfeit British pounds was Operation Andrew or Andreas. Like a joker in a deck of cards, no one knows for certain the extent of the operation or even how many of the counterfeit notes the Nazis placed in circulation.

The Bank of London had its own reasons to keep mum about the counterfeit bills it found in circulation as the operation was designed to bring about the downfall of the British pound. Operation Andrew was the brainchild of Alfred Nanjocks, a fanatical Nazi. Nanjocks was the officer that simulated the Polish attack on the German radio station that started the war. After occupying the Low Countries, Heydrich transferred Nanjocks to the documents division of the SD because Nanjocks had acquired a reputation of being too reckless and violent for his own good. Forging passports was not to the fanatic’s liking. However, flooding the world in counterfeit currency appealed to him. Nanjocks was envisioning just that, flooding the world with counterfeit British pounds to destabilize the English economy.

Immediately after the British had dropped forged German auxiliary certificates of payment for 50 Reichsfenning Nanjocks, took the idea to Heydrich. The British intent in dropping the forged certificates was the same Nanjocks’, only they aimed to wreck the German economy. Heydrich liked the idea and added to it the forging of American dollars and sought out Hitler’s approval. Hitler refused to approve the idea of forging dollars, for at the time Germany was not at war with the U.S. Funk and other bureaucrats did not like the idea much. Funk worried that by destabilizing the pound it could create a creditor backlash and destabilize the Reichsmark. Funk's worries are astounding. Such a worry can only testify to a large degree of collaboration between the Bank of England and the Nazis, the same applies for the Nazi’s friends on Wall Street and the big money centered banks of New York City. Before the war, the Bank of England did invest and loaned substantial sums in Nazi Germany.

Heydrich assigned the matter to RSHA Bureau IV, which created a new division named SHARP 4 to oversee it. In the summer of 1942, the forging ring was setup inside the Sachsenhausen concentration camp. SS major Fredrich Kruger was selected to head the operation. In Berlin, the operation was known formally as Aktion 1. Using inmate labor the forgery presented no problem. However, the group had a hard time in developing a suitable paper. The work in Sachenhausen was isolated from the rest of the camp. Max Bober, a printer by profession, headed the team of sixty inmates. The Nazis provided the inmates with everything they needed. Sabotage would have resulted in their immediate death. It wasn’t until 1943 that a suitable paper was produced by the Hahnemuhl paper plant. The factory delivered 120,00 sheets a month to the operation. Each sheet would produce eight notes. Even then the counterfeit notes were only mediocre at best. It wasn’t until the Nazis located Salomon Smolianoff, an accomplished counterfeiter that suitable notes could be produced.

Once Smolianoff had corrected the earlier mistakes, print runs of fifteen to twenty hours were ran. The inmates examined each note individually and selected only the best notes. These notes then underwent a procedure of aging to make them look used. The operation produced all denominations, including the hundred pound note. However, the five-pound note made up forty percent of the printing runs. By mid 1943, Kruger’s team had grown to 140 and was turning out about 40,000 notes a month. Unlike the rest of the camp, Kruger’s inmates received adequate food and even a cigarette ration.

The notes produced were divided into four categories: perfect, near perfect, flawed and rejects. The rejects were destroyed, though initially they had planned to air drop them over England. The perfect notes were reserved for German spies to use in neutral countries. The near perfect notes were bundled and provided to the SS to use in occupied countries. The flawed notes were also used in this manner. As the operation continued, the quality of notes improved to such a state that banks throughout the world accepted them. The Bank of England only stumbled across the forged notes. A bank clerk noticed that the two notes she held in her hand had the same serial number. The notes were so good the only means of detection was by matching it to a genuine note with the same serial number of a counterfeit note.

The equivalent of $4.5 billion of British pounds was eventually shipped to Berlin and then all over the world. Operatives used the forged notes to purchase legitimate objects, which were then resold for stable world currencies. Some notes were distributed to German embassies in the neutral countries and exchanged for local currency. Initial attempts to distribute the notes in a massive way were disastrous. The German military arrested their own agents when they attempted to pass the counterfeit notes, as Action1 was top secret.42

At some point, the underlying mission of Action 1 changed. Himmler and Lt. Grobel, head of Bureau VI, became greedy. They envisioned laundering the notes on a large scale and skimming the profits for their personal benefit. To accomplish the widespread distribution, Friedrich Schwend was brought into the operation. In the 1920s, Schwend was an arms dealer. He married the niece of the Minister of Exterior, Baron von Neurath. Through his wife’s family connections he managed to be appointed as the personal administrator of the extremely wealthy Bunge family. This is the same Bunge family connected with the John F Kennedy assassination that made a small fortune by shorting the market the day Kennedy was murdered. In the 1930s, Schwend was working from New York managing the investments of Bunge & Born.

Schwend was brought into Bureau IV as paymaster of the money-laundering end of the scheme. At this point he was given a false identification as Major Wendig, a legal officer of the Gestapo and a member of the tank corps. In September 1943, Schwend started setting up his network and requested Colonel Josef Spacil to maintain the bookkeeping aspects of the operation. The same Colonel Spacil that was involved in funding Skorzeny as reported earlier in this chapter. Operation Bernhard is limited to this scheme of private enrichment. Schwend was skimming a third of the counterfeit notes for this group.

This operation continued to the end of the war and was very successful. The Bank of England suffered enormous losses. Even with the Russians closing in on Sachenhausen, the operation didn’t shut down. It just moved to southern Germany, near the Austrian border. There it continued operation until about May 3. Some of the last cargo of forged notes ended up at the bottom of Lake Topltz. The boxes were hidden there in a midnight rowboat operation. The boxes were located in 2000. The fate of the balance of the notes is unknown.44

As much as half of the Reichsbank gold remains unaccounted for. Bormann undoubtedly transferred some of it out of Germany; other parts were looted by both top Nazi officials and U.S. personnel. The Nazis used much of the looted gold to buy munitions and raw material from neutral countries. Thus, a brief review of the problems the allies faced in trying to intercede between Nazi Germany and the neutral countries is needed.

Aware that Nazi Germany was disposing of looted property in neutral countries, Britain instigated talks with the other allies. On January 5, 1945, the Inter-Allied Declaration against Acts of Dispossession Committed in Territories under Enemy Occupation or Control was issued. The declaration was the result of the talks and signed by sixteen nations and England. The declaration simply stated that the signature nations reserved the right to declare invalid any transaction concerning property from any of the occupied territories. The declaration was largely a political declaration. Both the Bank of England and the Treasury Department had doubts that the act would achieve the desired results. There was little the allies could do to enforce the declaration without damaging their own economic situation or souring future relations with the neutrals. Technically, the act was restricted to just gold dealings. Others wanted to broaden the scope of the act to include other valuables. It wasn’t until the Gold Declaration of January 5, 1943 that the United States began an aggressive campaign towards the neutrals and their gold dealings.

Of particular concern to the United States was Switzerland. However, the Swiss were slow in responding. It wasn’t till the tide of the war was clearly in the favor of the allies that the Swiss responded. On December 28, 1944, Switzerland announced it had blocked all accounts from Hungary, Slovakia and Croatia. On February 7, 1945 British and American delegates met with Swiss officials in Berne to negotiate an agreement on immediate economic warfare objectives and Swiss exports to Germany. The Swiss in turn wanted help in getting raw materials and food, in the form of import quotas from the Allies and assistance with transit facilities across France. On February 16, Switzerland announced a block on all German assets. On March 8, the Swiss signed an agreement under which the Swiss Government undertook three measures: to ensure the territory of the Swiss Confederation should not be used as a cache for looted assets, to conduct a census of German assets in Switzerland, and to purchase no more gold from Germany except the quantity needed for diplomatic expenses. 45 It wasn’t until three months before the defeat of Nazi Germany that Switzerland took any action against the Nazis and it was only one month before the defeat of the Nazis that the Swiss banned gold trades with the Nazis. The willingness of the other neutrals follows a similar timeline; it wasn’t until it was clear that the Nazis were defeated that they would take any action.

The basis for the recovery of gold and Nazi assets outside of Germany was governed by the declarations issued on June 5, 1945, by the Four Powers and the Report of the Potsdam conference of August 2, 1945, which, stated the Allied Control Council would take such measures as were appropriate to exercise control over German assets abroad, and exercise the right of disposal of such assets. Both acts conferred powers on the Allies that were not easy to exercise and were not well received by many of the neutral countries. Legally, the allied position was weak. Both Sweden and Switzerland were quick to respond that such a demand conflicted both with their own legislation and with their status as neutrals. No agreement in how to deal with the neutrals was reached until December 1945. Even then the agreement was worded weakly to prevail on the neutral countries to return the Nazi assets. However, the agreement offered no guide of how to prevail on the neutrals. The United States wanted to employ sanctions while the British rejected sanctions as unenforceable during peacetime. Eventually, it was agreed the United States would open negotiations with Switzerland in Washington. As leverage over the Swiss, the United States would not unblock Swiss accounts in the United States nor remove Swiss companies from the allied blacklist unless an agreement could be reached. 45 A brief survey of the neutral nations and the problems encountered in each follows.

During the war, Sweden was openly pro-fascist. However, Sweden was one of the more cooperative countries of the neutrals. The high grade Swedish iron ore formed the basis of a strong and profitable connection between Sweden and the Nazis. The Nazis regarded this supply of ore as vital. So vital, in fact that the Nazis delayed the invasion of the Low Countries in order to invade Denmark and Norway first to protect the shipping route for the Swedish ore.

S & K bearings was another Swedish company that enjoyed a profitable relationship with the Nazis. S & K also presented a special problem for the United States, as the US was equally dependent upon S & K for bearings. S & K did its best in delaying production for war munitions in its US plants. Such a situation presented the Roosevelt administration with a dilemma. The US could impose sanctions on S & K, Sweden, or both. The sanctions would most likely result in a reprisal by S & K in further limiting the production of bearings and disrupt the production of war munitions. A second option for the administration would be to seize the plants for the duration of the war. Such a move would only further the charges of the rampant communism and socialism present in the administration by FDR’s critics. The only other option was to allow S & K to continue with business as usual, which was the course followed. Regardless of who won the war, S & K was sure to win big by supplying both sides with bearings.


There were many other Swedish corporations that enjoyed profitable relationships with the Nazis. However, the one most cherished by the Nazis was the Enskilda bank, owned by the Wallenbergs. With good relationships with a bank the Nazis could borrow funds and launder their stolen gold. Safehaven documents revealed that the US had been tracking the pro-Nazi activities of the Wallenbergs for several years. In February 1945, Morgenthau, in a letter to Secretary of State, Edward Stettinius, charged that Enskilda was making substantial loans to the Nazis without collateral and making covert investments for German capitalists in US industries. Note that Morgenthau's letter confirms Bormann's plan to allow Nazis to invest in the United States as a means of preserving their assets. He further charged that the bank was repeatedly connected with large black market operations. In the letter Morgenthau identified Jacob Wallenberg as strongly pro-Nazi and rebuts the claim that Marcus was pro-Ally. The Wallenbergs were playing both sides, just as S & K was. Raul Wallenberg, a cousin, helped to save 20,000Jews in Budapest. When the Soviet army recaptured Budapest, they arrested Raul as an American spy. In June 1996, the US News and Reports reported in a review of declassified documents that Raul Wallenberg was a spy for the OSS.46

In a Treasury memo dated February 7, 1945 Morgenthau details his concern of the Wallenberg brothers. The text of the memo follows.

"Jacob Wallenberg recently indicated that he was willing to sell to the Germans a Swedish plant in Hamburg for gold provided the price was high enough for possible future complications.

The following facts should be considered in evaluating the impression held in some circles that Marcus Wallenberg is strongly pro-Allied.

A. While Marcus Wallenberg was apparently sympathetic with the allied cause, Jacob Wallenberg, his brother and partner in the Enskilda Bank was known to be sympathetic to and working with the Germans.

B. Jacob Wallenberg was the author of the Swedish-German trading agreement.

C. Jacob Wallenberg is a member of the Permanent Joint Swedish- German Trading Commission and Marcus Wallenberg is a member of the Joint Standing Committee created by the Ango-Swedish Trading Agreement.

D. Marcus Wallenberg came to the United States in 1940 and attempted to purchase on behalf of German interest an American held block of German securities.

E. Enskilda Bank has been repeatedly connected with large block market operations in foreign currencies, including the dollars reported to have been dumped by the Germans.62

Britain and the United States first began to enlist Sweden in the Safehaven program in 1944. Britain was in favor of restricting the program in Sweden to just gold while the US wanted to include other assets as well. The US used trade agreements as an inducement for cooperation. The Riksdag, the Swedish Parliament, voiced its approval of Safehaven and in February 1945, Sweden began an inventory of its gold and foreign currency to see how much was linked to the Nazis. By spring, the British concurred with the Americans and a proposal was drafted for Sweden. The proposal was then used as a basis for talks in Lisbon and Madrid. By summer 1945, Sweden had passed several measures to control German property by restricting its sale or dispersal, and expanded the range of their census to include all types of German property. In January 1946, at the urging of the allies Sweden expanded the laws to include German subsidiaries. In November 1945, Sweden gave the Treasury Department a report on Swedish gold transactions. From the report, the Treasury concluded Sweden had received $22.7 million in gold looted of Belgium origin. The amount was reduced to $17 million.

On February 11, 1946, the US Embassy informed Sweden of the details of ACC Law 5 vesting the title of German assets in other countries with the occupation authorities and invited a Sweden delegation to Washington. Sweden expressed grave concerns over the claim but agreed to the talk. On April 5, Sweden informed the American embassy that the matter would have to be put to the Riksdag, where it would probably face defeat based on belief that Allied claim was not valid in international law and hence a violation of private property rights. In addition, Sweden requested that their assets in the United States, frozen after the war, be released prior to negotiations and that they be allowed to inspect Swedish property in Germany. The request was denied.

By the end of March, after discussions with Britain and France over German assets inside Sweden, the United States believed they had an almost complete picture of the German assets in Sweden and began to push for negotiations. Formal negotiations began in Washington on May 29. The US delegation was headed by Seymour Rubin, Deputy Director of the State Department’s Office of Economic Security Policy. The British delegation was led by Francis W. McCombe of the Foreign Office. France headed their delegation with Christian Valensi, Financial Counselor of the French Embassy in Washington. Judge Emil Sandstrom headed the delegation from Sweden. From the outset Sweden agreed to the danger of Nazi assets being used to provide a rival of Nazism but contested the validity of the allies’ claim to the assets.

The negotiations continued in a friendly manner and on July 18 both sides reached an agreement. Of the estimated 378 million kroner (about $90.7 million) in German assets in Sweden, Sweden agreed to divide the assets as follows: 50 million kroner (about $12.5 million) would go to the Intergovernmental Committee on Refugees (later the International Refugee Organization), 75 million kroner (about $18 million) would go to the Inter-Allied Reparations Agency (IARA), excluding the amounts the United States, Britain, and France would get; 150 million kroner (about $36 million) would go for assistance in preventing disease and unrest in Germany. The last sum would be used to purchase in Sweden or other countries, essential commodities for the German economy. Moreover, the agreement allowed for Swedish and German owners of liquidated property to be compensated in German currency; allowed for a Swedish mission to travel to the U.S., British, and French Zones of occupied Germany to inspect Swedish properties; called for the release of frozen Swedish assets in the United States (estimated at the time at $200 million); the removal of any "blacklists;" and allowed the Allies to hold in reserve their claims to German properties in Sweden.

In the agreement, Sweden would restitute amounts to 7,555.32664 kilograms of fine gold (approximately $8.1 million), corresponding to the quantity of gold deriving from the Bank of Belgium. Sweden would be held harmless from any claims deriving from transfers from the Swedish Riksbank to third countries of gold to be restituted. Finally, the agreement prohibited the Allies to claims with regard to any gold acquired by Sweden from Germany and transferred to third countries prior to June 1, 1945 or any additional claims after July 1, 1947. In his report, Rubin noted that the talks proceeded smoothly and in the absence of the bitterness.47

Sweden formally ratified the agreement in November, 1946. Shortly before the expiration of the July 1, 1947 deadline for gold claims, the Allies filed a request for the restitution of 638 looted Dutch gold bars (worth about $10 million). Sweden challenged a portion of these claims. The Swedish challenge rested on the claim that some of this gold was acquired before the London Declaration. The allies claimed the agreement included all of the gold acquired. The debate over the Dutch gold continued on into the 1950s. Further negotiations of the Dutch gold were fruitless. Ultimately, Sweden restituted about 6 tons of the gold (about $6.8 million) to the Netherlands in 1955.47

Other problems also arouse in implementing the agreement. Sweden did not turn over the gold specified in the July, 1946 agreement by the March, and 1948 deadline. Additionally, Sweden had expeditiously fulfilled its obligation to the IRO in July 1947. However, it was not as forthcoming with the funds for the IARA. Throughout the period Sweden maintain that Law 5 was invalid.

The latest investigation conducted by a bank appointed commission revealed Sweden accepted 59.7 metric tons of gold from the Nazis. The newly discovered gold bears the same mark as the gold stolen from the Netherlands. The investigation also found 6 tons of gold of undetermined origin that could have possibly came from the victims of the concentration camps. This additional find of gold was missed entirely by the Safehaven operation. Thus far, Sweden has only returned a total of 13.2 tons to Belgium and the Netherlands. The commission turned over its findings to the Swedish government. It was unclear whether that commission would have the power to recommend the restitution of the gold. One of the investigators says Sweden has a moral obligation to return the gold, but not a legal obligation. The report was released in 1997.48