All statements of fact, opinion, or analytis expressedIn Studlee In IntoUltimoe are those of the authors,They do not necessarily reflect °Motel positions orviews of the Central Intelligence Agency or any otherUS Government entity, part or present, Nothing ipthe contents should be oonetrued as asserting orimplying US Government endorsement of an article'stactual statement. and interpretation..

Studies in Intelligence (2000)

DECLASSIFIED AND RELEASED BY

CENTRAL INTELLIGENCE AGENCYSOURCESNETHODS EXEMPT ION3B11,NAZI WAR CRIMESDISCLOGUREACTDATE 2003 2000

Tracking Nazi "Gold"

The OSS and Project SAFEHAVEN

Donald P. Ste ury

The fear was that theGerman political andeconomic leadership,

sensing defeat, would actto secretly transfer blocsof industrial and fiscal

capital to neutralcountries, thereby

escaping confiscationand the reparations bill.

Donald P. Steury is a CIA Officerin Residence at the University ofSouthern California.

By the fall of 1944, it was obviousthat the war in Europe was in itsfinal year. In France, British andAmerican forces had broken out ofNormandy and were driving towardParis and the Rhein. In the East, theSoviet Army was expanding its con-trol westward across Europe. Allover the Continent, Allied domina-tion of the air was complete, and inthe North Atlantic the back of theGerman U-Bootwaffe was finallybroken. Policymakers had started tothink of the peace. Future stabilityseemed to depend on taking mea-sures to ensure that Germanywould not provoke a third worldwar. Already the "German prob-lem" was dominating Alliedpolitical thinking. In the UnitedStates, the War Department and theDepartment of Justice were mak-ing plans and drawing up lists forthe postwar war crimes trials. At theDepartment of the Treasury, Secre-tary Henry Morgenthau hadcompleted his scheme for thewholesale destruction of Ger-many's military and industrialpower and its re-creation as a feu-dal, agrarian state. Moreimmediately, in the wartime For-eign Economic Administration(FEA), a small group of policymak-ers were putting the finishingtouches on Project SAFEHAVEN, anoperation designed to root out andneutralize German industrial andcommercial power wherever itmight be found.

The origins of SAFEHAVEN are tobe found in two memorandumssent from the FEA to the Depart-ments of State and Treasury on 5

and 17 May 1944, proposing aninteragency program to track downand block German assets in neu-tral and nonbelligerent countriesthroughout Europe and theAmericas. The fear was that theGerman political and economicleadership, sensing defeat, wouldact to transfer secretly blocs ofindustrial and fiscal capital to neu-tral countries, thereby escapingconfiscation and the reparationsbill. If this happened, German eco-nomic and industrial power wouldbe largely intact and would act as apower base from Which an unre-pentant German leadership couldbuild a resurgent Fourth Reich in 20years. The military defeat of Ger-many thus would again bemeaningless.

An Ambitious Program

The overriding goal of SAFE-HAVEN was to make it impossiblefor Germany to start another war.Its immediate goals were to forcethose neutrals trading with NaziGermany into compliance with theregulations imposed by the Alliedeconomic blockade and to identifythe points of clandestine Germaneconomic penetration. Implementa-tion of SAFEHAVEN depended onaction in four major areas:

• To restrict German economic pen-etration outside the borders of theReich.

• To prevent Germany from

sequestering assets in neutralcountries.

35

SAFEHAVEN

• To ensure that German assetswould be available for postwarreparations and the rebuilding ofEurope.

• To prevent the escape of thosemembers of the Nazi ruling elitewho had already been markeddown for war crimes trials.2

In August and September 1944,directives were sent out to Ameri-can legations throughout Europeand the Atnericas setting forth thegoals of SAFEHAVEN and instruct-ing Embassy officials to take stepsto implement them.3

It is quite clear that SAFEHAVENplanners had a good idea of whatthey wanted to achieve, but it alsois apparent that they did not havethe slightest idea of how to do it.Although it was evident from theoutset that SAFEHAVEN would beprimarily an intelligence-gatheringproblem, it does not appear to haveoccurred to anyone to consult theintelligence services, which wereexcluded from the planning andimplementation of SAFEHAVENuntil the end of November 1944.4Bureaucratic rivalries predomi-nated. Indeed, SAFEHAVEN wasnearly destroyed by internecinequarrels among the FEA, State, andTreasury, each of which wanted tocontrol the program and to excludethe other two from anyparticipation.

State Versus Treasury

The antagonism between the StateDepartment and the Treasury wasparticularly rancorous and derivedfrom deeper, fundamental

4 4Once the OSS wasbrought into the

SAFEHAVEN fold, all theadvantages of a

centralized intelligenceorganization werebrought to bear.

9differences over postwar policytoward Germany. Reflecting theviews of Secretary Morgenthau,opinion in the Treasury Depart-ment favored a punitive peace thatwould destroy German military andindustrial power once and for all.The State Department was funda-mentally opposed to this, arguingthat a powerful but pacified Ger-many was necessary to maintainstability in Europe and to containthe USSR. Because it cut acrosspolitical as well as economic andfiscal lines of substance, SAFE-HAVEN brought out thesedifferences in a forum in whichthey were incapable of resolution.

Jockeying for position reached apeak in August, when FEA officialSamuel Klaus set out on a factfind-ing tour of Allied and neutralcapitals accompanied only by StateDepartment official Herbert J. Cum-mings, with the TreasuryDepartment deliberately excludedfrom participation. 3 It found outanyway, and two Treasury officialsset out in hot pursuit of the Klausmission, catching up with it in Lon-don. Klaus grudgingly allowedthem to accompany him to Stock-holm, but he refused to permitthem to continue further with hisdelegation. Undeterred, the twoTreasury Department officials fol-lowed Klaus to Spain. This was toomuch for Klaus, who canceled the

remainder of his trip and returned

to Washington.

In his report, filed on 21 October1944, Klaus criticized efforts toimplement SAFEHAVEN to date andcited his belief that Embassy per-sonnel were not devoting sufficientenergy to the project. The situationwas worse in Spain, where USAmbassador Carlton J. Hayes wasaccused of actively blocking imple-mentation of SAFEHAVEN, althoughSpain was "beyond question thecountry in which the most damag-ing SAFEHAVEN activities are goingon and may be expected."6

Both Treasury and State rejectedKlaus's report for their separate rea-sons, and a flurry of bureaucraticmaneuvering dominated SAFE-HAVEN for the rest of the year.

OSS Becomes Involved

Although the end result of thebureaucratic battle was the emer-gence of the State Department asthe organization principally respon-sible for SAFEHAVEN, from theintelligence standpoint the mostimportant step taken was to central-ize intelligence and data collection

in the US Embassy in London. 7 As apart of this move, the decision wasfinally taken to invite the formalparticipation of the OSS. Once theOSS was brought into the SAFE-HAVEN fold, all the advantages of acentralized intelligence organiza-tion were brought to bear. Most

important, dissemination of intelli-gence improved, as did evaluationof the sources from which the raw

intelligence data was collected.

36

SAFEHAVEN

Within the OSS, SAFEHAVEN felllargely under the aegis of the SecretIntelligence (SI) Branch, responsi-ble for the gathering of intelligencefrom clandestine sources insideneutral and German-occupiedEurope. But the unique character ofSAFEHAVEN, which was both anattempt to prevent the postwar Ger-man economic penetration offoreign economies and an intelli-gence-gathering operation, meantthat the OSS counterintelligencebranch, X-2, also had an importantrole to play. SAFEHAVEN thusemerged as a joint SI/X-2 opera-tion shortly after its inception,especially in the key OSS outpostsin Switzerland, Spain, and Portu-gal, with X-2 not infrequentlyplaying the dominant role." X-2 wasparticularly active in reporting onclandestine German projects toacquire important economic andindustrial assets in neutral coun-tries. These efforts intensified asGermany's military fortunes waned,especially from September 1944onward, as the advance of Alliedarmies threatened to sever Ger-many's land links with importantsources of strategic materials insoutheastern Europe and the Ibe-rian Peninsula.

In fact, the inception of SAFE-HAVEN meant little more than aredirection of intelligence assetsalready dedicated to the collectionof economic intelligence. The OSShad been collecting economic intel-ligence similar to that required bySAFEHAVEN since 1942 as a part ofthe general effort to understand thefunctioning of the German wareconomy. Gold transfers in particu-lar were a key part of thateconomy. Suffering from an acute

66German efforts to

acquire foreign currencyand convert it to war

materials becameincreasingly covert as

Allied victoryapproached.

99shortage of certain key strategicresources since the proclamation ofthe Four-Year Plan and the onset ofautarky in 1936, the German arma-ments industry increasingly had hadto resort to specie payments or bar-ter agreements to pay for importsof these materials since before theoutbreak of the war. Conquest ofEurope had done little to alleviatemost of these shortages.

Moreover, due to the inefficiency ofthe Nazi regime—full mobilizationfor war production had not beenachieved until 1944—the war pro-duction index for that year wasnearly three times that of 1941,itself a significant increase over1939-40. 9 Paradoxically, therefore,the German appetite for oil, high-grade iron ore, wolfram (tungstenore), and other strategic materialsgrew insatiably, even as Germanindustry reeled under the onslaughtof the Allied strategic bombingcampaign and the territory underGerman control shrank.

In their search for war materials,Nazi leaders extended their netthroughout Europe. High-gradeiron ore and copper was importedfrom Sweden; iron ore fromPoland, Austria, and Spain; wol-fram from Portugal and Spain; andchromium from Turkey. Voluntarilyor involuntarily, every nation inEurope fed the German war

machine with the raw materials it

needed to function. Switzerland,

however, was the central connect-

ing link.

The Importance of Switzerland

In Nazi Europe, neutral Switzer-

land carried out business as usual,

providing the international bank-

ing channels that facilitated the

transfer of gold, currencies, and

commodities between nations.

Always heavily dependent on Swiss

cooperation to pay for imports, the

Reich became even more so as theultimate defeat of the National

Socialist regime became obvious

and neutrals grew more wary of

cooperating with the Axis belliger-

ents. Since early 1943, Swiss

cooperation had become essential

as other neutrals responded to

Allied pressure and refused to

exchange war materials for specie.

As defeat loomed, neutrals also

became increasingly reluctant to

accept payment in Reichsmarks.

This left payment in foreign cur-

rency, of which Nazi Germany hadprecious little after nearly a decade

of autarky and war.

In this critical situation, the Swiss

banks acted as clearinghouses

whereby German gold—much of

which was looted from occupied

countries could be converted to a

more suitable medium of exchange.

An intercepted Swiss diplomatic

cable shows how, allegedly with-

out inquiring as to its origin, the

Swiss National Bank helped the

German Reichsbank convert some

37

SAFEHAVEN

Electro-Bank; and Swedish econo-mist and Economic Adviser to theBIS, Dr. Per Jacobsson, who wasclose to (the surprisingly exten-sive) Japanese diplomatic andbusiness circles in Switzerland. In1945, Jacobsson provided informa-tion that helped to scuttle aJapanese attempt to buy vitallyneeded ball bearings in Swedenand later served with Maurice Vil-lars as a mediator for Japanesepeace feelers put forward inSwitzerland. 17

Such contacts were clearly impor-tant, but it also seems clear that thehigh value Dulles attributed tothem—whether because of hissocial prejudices or his concern forthe intelligence they provided—made him wary of intelligenceactivities such as SAFEHAVEN.Moreover, Dulles looked forward toa postwar settlement that envi-sioned the United States workingclosely with European business andbanking circles to reshape Westernand Central Europe according toAmerican interests. Finally, Dullescould legitimately claim that hisstaff was already overburdened bythe collection of strategic and mili-tary intelligence. On 28 December1944, following receipt of the OSSmemorandum regarding coopera-tion with State's SAFEHAVENproject, he cabled Washington:

Work on this project requiredcareful planning as it mightdefeat direct intelligence activi-ties and close important channelsfor German Today we mustfish in troubled waters and main-tain contacts with personssuspected of working with Nazison such matters. For exam-ple,... both 49618 and X-2 here

• can be useful under cover butbelieve idea of working practi-cally as agents of CommercialAttache and Consul General Zur-ich, on this project would beunwise. Further, to deal effec-tively with matter, it wouldrequire special staff with newcover.... At present we do nothave adequate personnel to doeffective job in this field and meetother demands. '9

Strategic Intelligence

In part because Dulles was alreadyfully occupied with his existingrequirements for strategic intelli-gence reporting, in part, no doubt,because of his unwillingness to

give SAFEHAVEN material the atten-tion Washington believed it

deserved, responsibility for this taskin Bern was delegated to X-2. 20 For-tuitously, the restoration of accessto Switzerland through France inNovember 1944 made it possible

for the first X-2 operative in Swit-

zerland to enter the country by theend of the year. n By January 1945,X-2 was up and running in Switzer-

land, and by April it was able to

provide OSS Washington with anextensive summary of Nazi gold

and currency transfers arranged via

Switzerland through most of the

war." According to X-2, theseincluded:

• Gold and bonds looted by the

Nazis from all over Europe and

received by certain Swiss banks.

• Funds sent by the Deutsche

Verkehrs-Kreditbank of Karlsruhe

to Basel.

• Securities held in Zurich by pri-vate firms for the Nazi Party.

• Large quantities of Swiss francscredited to private accounts invarious Swiss banks.

• Money and property held inLiechtenstein.

• More than 2 million francs heldby the Reichsbank in Switzerland.

• Forty-five million Reichsmarksheld in covert Swiss bankaccounts.

Apart from the obvious officialtransactions, these sums werebrought in by German and Swissbanks and business organizations.X-2 reported only a few caseswhere private individuals, some ofwhom were believed to be withGerman intelligence organizations,participated. Methods usedincluded smuggling, diplomaticpouches, undercover exchange offoreign currencies, Swiss bankaccounts and trusts, sales of paint-ings and other valuables, and theblack market.23

From the end of 1944, SAFEHAVENreporting originated by X-2appeared alongside other reportingprovided by Dulles's SI operation inBern. Although Dulles's SI organi-zation provided substantialSAFEHAVEN intelligence materia1,24it was swamped in a sea of otherreporting on strategic and militarytopics: war damage to Germanindustry; the status of German syn-thetic oil refining operations; howthe German Reichsbahn was main-taining rail services despiteextensive bomb damage; order-of-battle and operational intelligence

39

SAFEHAVEN

Electro-Bank; and Swedish econo-mist and Economic Adviser to theBIS, Dr. Per Jacobsson, who wasclose to (the surprisingly exten-sive) Japanese diplomatic andbusiness circles in Switzerland. In1945, Jacobsson provided informa-tion that helped to scuttle aJapanese attempt to buy vitallyneeded ball bearings in Swedenand later served with Maurice Vil-lars as a mediator for Japanesepeace feelers put forward inSwitzerland. 17

Such contacts were clearly impor-tant, but it also seems clear that thehigh value Dulles attributed tothem—whether because , of hissocial prejudices or his concern forthe intelligence they provided—made him wary of intelligenceactivities such as SAFEHAVEN.Moreover, Dulles looked forward toa postwar settlement that envi-sioned the United States workingclosely with European business andbanking circles to reshape Westernand Central Europe according toAmerican interests. Finally, Dullescould legitimately claim that hisstaff was already overburdened bythe collection of strategic and mili-tary intelligence. On 28 December1944, following receipt of the OSSmemorandum regarding coopera-tion with State's SAFEHAVENproject, he cabled Washington:

Work on this project requiredcareful planning as it mightdefeat direct intelligence activi-ties and close important channelsfor German SL... Today we mustfish in troubled waters and main-tain contacts with personssuspected of working with Nazison such matters. For exam-ple,... both 49618 and X-2 here

can be useful under cover butbelieve idea of working practi-cally as agents of CommercialAttache and Consul General Zur-ich, on this project would beunwise. Further, to deal effec-tively with matter, it wouldrequire special staff with newcover.... At present we do nothave adequate personnel to doeffective job in this field and meetother demands. 19

Strategic Intelligence

In part because Dulles was already

fully occupied with his existingrequirements for strategic intelli-gence reporting, in part, no doubt,because of his unwillingness togive SAFEHAVEN material the atten-

tion Washington believed itdeserved, responsibility for this task

in Bern was delegated to X-2. 20 For-tuitously, the restoration of accessto Switzerland through France inNovember 1944 made it possiblefor the first X-2 operative in Swit-

zerland to enter the country by theend of the year. 2 ' By January 1945,

X-2 was up and running in Switzer-

land, and by April it was able to

provide OSS Washington with anextensive summary of Nazi gold

and currency transfers arranged via

Switzerland through most of the

war. 22 According to X-2, these

included:

• Gold and bonds looted by the

Nazis from all over Europe and

received by certain Swiss banks.

• Funds sent by the Deutsche

Verkehrs-Kreditbank of Karlsruhe

to Basel.

• Securities held in Zurich by pri-vate firms for the Nazi Party.

• Large quantities of Swiss francscredited to private accounts invarious Swiss banks.

• Money and property held inLiechtenstein.

• More than 2 million francs heldby the Reichsbank in Switzerland.

• Forty-five million Reichsmarksheld in covert Swiss bankaccounts.

Apart from the obvious officialtransactions, these sums werebrought in by German and Swissbanks and business organizations.X-2 reported only a few caseswhere private individuals, some ofwhom were believed to be withGerman intelligence organizations,participated. Methods usedincluded smuggling, diplomaticpouches, undercover exchange offoreign currencies, Swiss bankaccounts and trusts, sales of paint-ings and other valuables, and theblack market. 23

From the end of 1944, SAFEHAVENreporting originated by X-2appeared alongside other reportingprovided by Dulles's SI operation inBern. Although Dulles's SI organi-zation provided substantialSAFEHAVEN intelligence material, 24

it was swamped in a sea of otherreporting on strategic and militarytopics: war damage to Germanindustry; the status of German syn-thetic oil refining operations; howthe German Reichsbahn was main-taining rail services despiteextensive bomb damage; order-of-battle and operational intelligence

39

SAFEHAVEN

on German forces in Italy and onthe Western Front (for which Bernwas the principal source); politicalintelligence on the Fascist ItalianSocial Republic (the puppet regimefounded in 1944 after Mussolini'sfall from power and subsequentrescue by German commandos);contacts with the German resis-tance; and—not least—from March1945, the negotiations leading tothe surrender of Axis forces inItaly. 25

Lieutenant Casey's Activities

By the end of 1944, reporting onthe Reich from OSS Bern was beingaugmented by material from the SImission in London. Dependent onagent reporting from within Ger-many itself, the intelligencecollection by the sources availableto SI London of necessity wassomewhat problematic until mid-September 1944, when the libera-tion of Paris and much of Franceprovided new avenues for attack-ing the German target. SI Londonmoved to Paris, where it was desig-nated SI European Theater ofOperations (ETO). Its chief wasthen-Navy Lt. William J. Casey. Theson of a Tammany Hall politician,Casey was a feisty Irishman wholacked the family connections of hiscounterpart in Bern.

Casey's vision of the postwar worldsaw the United States playing busi-ness interests in Germany againsteach other and against Communistand Socialist-led labor unions. 26 Hewelcomed an opportunity to col-

lect intelligence showing Naziconnections to supposedly neutral

66By YE Day, X-2 had

identified some 3,000enemy agents in Spain

and more than 400members of enemy

clandestine services.

99business circles as a means of influ-encing these same circles in thepostwar world. As a result, Caseylaunched into SAFEHAVEN withsuch enthusiasm that he had to berestrained by Washington, in acable dispatched on 18 January1945:

...(W)hile SAFEHAVEN Projecthas certain present and poten-tially greaterfuture value, no SIpersonnel which can possibly beused in connection agent pene-tration Germany...should beused for any SAFEHAVEN pur-pose. For this project we can beone of many supporting agenciesDepartment State which hasassumed control and direction.

For agent penetration Germanyfor strategic information and forproper briefing such agents USGovernment can look to OSS SIonly to accomplish its characteris-tic mission.27

This meant that SI ETO wouldlargely confine its SAFEHAVENactivities to the areas already underAllied control. This was already themost fruitful area because, by defi-nition, SAFEHAVEN involved assetsoutside Germany. By the end of themonth, Casey was able to reportthat the "gold project" was underway in Paris, with other plans forSAFEHAVEN work in France,

Belgium, and Holland. Becausethese areas were already occupiedby Allied forces, however, the spe-cial intelligence techniques thatdistinguished OSS operationsproved unnecessary. Casey did notgive up, though; two months later,he reported that "SAFEHAVEN workwith State has shown area to be avaluable field of endeavor, espe-cially because of the potential forleverage with German financial cir-cles, etc., in the future," and "FaganSAFEHAVEN man forEmbassy.. feels us absolutely nec-essary to his work." 2" Nevertheless,SI activity in this area remained afootnote to the efforts of StateDepartment and other personnelalready on the ground. An X-2 "ArtLooting Investigation Unit" pro-duced similar results.29

The Iberian Peninsula

Switzerland remained the financialheart of German gold and cur-rency transactions, but withoutquestion, for OSS the most produc-tive areas of SAFEHAVEN activitywere the other neutral centers ofGerman commercial activity, Swe-den and the Iberian Peninsula. TheOSS mission in Madrid in particularhad had economic intelligence as aprincipal function since its creationin April 1942, despite being "veryconsiderably hampered" untilshortly after VE Day by an Ambas-sador and diplomatic staff hostile toOSS activities. 30 Most OSS opera-tives in Spain were handled out ofLisbon under nonofficial coverbecause the diplomatic staff inMadrid made a practice of identify-ing intelligence agents to the

40

SAFEHAVEN

Spanish police. 31 Consideringespionage against a "friendly" [sic]country 32 to be "un-American,"Ambassador Carlton J. Hayesresented the OSS presence in Spainand insisted on censoring allincoming and outgoing OSS mes-sage traffic to Washington. "For agood many months," the Embassywould not allow OSS Madrid topass on SAFEHAVEN material, oreven economic reporting, toWashington. 33

OSS Madrid nonetheless managedto provide extensive documenta-tion of German commercialtransactions throughout the war. 34

Bills of lading or manifests cover-ing all merchandise shipped toFrance (and thence to Germany)were provided weekly, includingeverything from orange juice towolfram and steel rails. 35 Equallyimportant was documentation ofthe flagrant cooperation given theGerman war effort by the Spanishauthorities, including the use ofSpanish airfields by German air-craft, the covert supply of Germansubmarines in Spanish harbors(Operation MORO), and in mattersof espionage and counterespio-nage by all grades of Spanishofficials. 36 From 1945, X-2 Madridwas able to document German eco-nomic penetration in Spain, illegalcurrency transfers, smuggled worksof art, and plans by French collabo-rators, pro-Nazi individuals, andcovert organizations to use Spain asa postwar hideout—as well as inte-gration of German technicians intothe Spanish military. Nearly 50Spanish firms were identified by X-2 as having been used by Ger-many for espionage purposes. ByVE Day, X-2 had identified some3,000 agents in Spain and more

66By the spring of 1945,OSS collection on the

SAFEHAVEN project wasextensive enough to

warrant a more formaltreatment in the OSS

hierarchy.

99

than 400 members of enemy clan-destine services.37

Operations in Portugal were madeeasier by that country's tradition-ally pro-British stance (despitehaving an authoritarian regime ongood terms with Franco). The localauthorities provided OSS Lisbonwith access to enemy safe-depositboxes held in every bank in Portu-gal except four (which werecovered by the British). 38 In Janu-ary 1945, the Research and AnalysisBranch (R&A) of the OSS used thismaterial to document German goldand foreign currency transactionsfrom January 1943 to December1944. 39 The Portuguese authoritieswere willing to extend cooperationto direct action as well. Acting oninformation largely provided by X-2, at the end of the war the Portu-guese Government sealed up theGerman Embassy and withdrewrecognition from German diplo-matic and consular representation.0By war's end, X-2 files in Lisbonlisted 1,900 enemy agents and 200enemy officials. 41

Sweden

Much as in Spain and Portugal,economic reporting was a staple ofintelligence activities in Swedenfrom the outset of Americaninvolvement in the war. Despite its

liberal democratic traditions, Swe-den was Nazi Germany's largesttrading partner during the war andalmost the sole source of high-grade iron ore and precision ballbearings for the German warmachine. Imports of the latter fromSweden were especially importantfollowing the destruction of theVICE ball bearing plant (itself Swed-ish-owned) at Schweinfurt by theUS Eighth Air Force in August andOctober 1943. 42 OSS operatives inSwedish southern and east coastports monitored the ore traffic andwere able to provide extensivereporting on the rate and size ofSwedish shipments to Germany.43

From December 1943 until hisarrest in May 1944, an OSS agentworking in the shipping office ofthe SKF ball bearing plant in Gote-borg supplied reports on ballbearing shipments to Germany,including serial numbers and quan-tities. Using this information, theKlaus Mission was able to extractan agreement from the SwedishGovernment to stop all future ship-ments of ball bearings to Germany.Intelligence data collected on ironore shipments and exports of ballbearings were not, of course,directly related to SAFEHAVEN, but,because they accounted for muchof Germany's foreign trade withSweden, they provided importantindices that could be used to calcu-late specie and currency transfers.

By late 1944, German economicplanners were desperate enough totry exporting crude petroleum(itself in short supply) to Sweden asa substitute for the specie pay-ments that had funded the iron oreand ball bearing transactions.'" EricErickson, an American-born Swede

41

SAFEHAVEN

working for the OSS, penetratedthe German synthetic oil industryand, in addition to reporting exten-sively on that industry, was able toprovide information on Germangold and currency transactions—perhaps the best example of how itwas possible to derive SAFE-HAVEN material from existing OSSsources of economic and industrial

intelligence.45

By April 1945, X-2, using SI sources

as well as Its own, was able to doc-ument German transactionsconverting Swedish Kronar100,000,000 (about $25 million) ingold and currency into Germangoods (chiefly chemicals, drugs,and textiles) stored in Swedishwarehouses. From at least August1944, low-grade reporting depictedthe German legation in Stockholmselling diamonds looted from theDutch State Bank on orders fromthe German Reichsbank. 46 Addi-tional activity, probably involvingindividuals and private firms, wasdocumented whereby German goldwas either smuggled into Swedenor converted to gasoline or salablegoods. 47 This latter activity was dis-counted—probably correctly—in apostwar message that documentedGerman wartime gold transfers toSweden with official data from theSwedish Riksbank." More difficultto document was the role of Stock-holms Enskilda Bank, owned by

the powerful Wallenberg family,which received more than $4.5 mil-

lion from the Reichsbank between

May 1940 and June 1941 and wassuspected of having acted as a pur-

chasing agent (through

intermediaries) for the GermanGovernment in buying up German

bonds and securities held in New

York. 49

More OSS Participation

By the spring of 1945, OSS collec-tion on the SAFEHAVEN projectwas extensive enough to warrantmore formal treatment in the OSShierarchy. The 30 March 1945 StateDepartment circular warning neu-tral governments not to trade withNazi Germany prompted a resur-gence of effort on the part of theOSS in the collection of SAFE-HAVEN material. A circularmemorandum from the actingDirector of Strategic Services,Edward Buxton, called on OSS to"make a substantial contribution tothis program," albeit with thecaveat that "the collection of mili-tary, political, and other types ofintelligence will continue to be animportant function of this agency."In fulfillment of this goal, OSSchiefs of mission were instructed toreport on the status of SAFE-HAVEN operations in their area. Tobetter direct OSS participation inthe program, an Economic Intelli-gence Collection Unit (Econic) wascreated under John A. Mowinckel,reporting directly to the Director's

office. 5° This unit monitored and,on occasion, synthesized SAFE-HAVEN reporting into detailedreports on specific topics—forexample, a massive report pre-pared at the request of the StateDepartment on the activities of theSwiss firm Johann Wehrli & Co., A.G. (Wehrlibank), a private Swissbanking house with global inter-ests then under investigation by the

Justice Department for its role in

transferring private German assetsoverseas. 51

Donovan's Objective

This move by OSS Washingtonprobably did not have much impacton the SAFEHAVEN intelligenceeffort in the field, which had beenoperating for more than threemonths. Rather, it should be seenas a part of the effort by OSS Direc-tor Brig. Gen. William J. Donovan,to carve out a place for his organi-zation in the postwar world. Tworeports were filed in the Director'soffice at this time that were rele-vant to SAFEHAVEN, both of whichwere critical (at least by implica-tion) of the State Department'sefforts in this area. One, written byR8cA, correctly placed Germanimport and transfer activity in con-text with the development of theGerman war economy since 1933,in effect discrediting the wholenotion of a concerted program tofund a resurgent Fourth Reich usingassets concealed in neutralcountries. 52 The other, prepared byX-2, launched a direct attack onSAFEHAVEN. Noting that "There aremany problems in the SAFEHAVENprogram, mainly due to the inexpe-rience and general lack ofcomprehension on the part of StateDepartment personnel," the X-2report argued that the project con-sumed personnel and resourcesthat might better be used else-where. The basic flaw in theprogram was that it failed to distin-guish between transactions thatwere part of "German power poli-tics" and those that occurred inanother, albeit related context—thatis, the actions of individuals and

42

SA FEHAVEN

individual corporations. Assertingthat "the defeat of the Axis will notend the game of power politicsbetween nations," the report pro-jected that "SAFEHAVEN may turnout to be less important than thecollection of economic, political,and social intelligence in connec-tion with other problems and otherforeign countries.... SAFEHAVENshould be the starting point forlarge-scale and permanent eco-nomic intelligence for theprotection and promotion of oureconomic and political interestsabroad."53

In the intelligence requirementsgenerated by SAFEHAVEN, Dono-van clearly saw an argument for theexistence of a central intelligenceorganization like the OSS after theend of the war. With this in mind,he passed the reports along to Sen-ator Harley Kilgore, then heading aSenatorial investigation of the elimi-nation of German war resources.Nonetheless, such action couldhardly overcome the oppositionthat had been building to Dono-van's idea of a postwar centralintelligence organization since hisfirst proposal was ventilated inSeptember 1943.

Postwar Restructuring

Thus it was that on 20 September1945 the OSS was abolished byExecutive Order and its compo-nent parts absorbed by variousagencies in the Washington bureau-cracy. R&A was absorbed by theState Department's Interim Researchand Intelligence Service, while SIand X-2 were moved into the WarDepartment as the Strategic

66The haste with which the

United States detacheditself from its first centralintelligence organizationat the end of the war thuswas replicated in Project

SAFEHAVEN.

99Services Unit (SSU). On 22 January1946, President Truman created atemporary Central IntelligenceGroup (CIG) as a body for thecoordination of intelligence activi-ties on the national level.Clandestine human-source collec-tion remained in the WarDepartment until the creation of theCIA in 1947.

With the end of the war in Europe,first the OSS and then the SSUbegan to shift resources away fromsupport of the SAFEHAVEN pro-gram into other areas, especiallycollection against the SovietUnion. 54 Efforts by FEA and StateDepartment representatives inEurope to revitalize SAFEHAVENran up against the stone wall ofbudgetary limitations. On 20 July1945, SI Paris cabled OSSWashington:

Original definition of Safe Haven,namely tracking down Germancapital and assets abroad, hasbeen very substantially broad-ened by (Klaus) of FEA now inWashington and Fagen ofEmbassy, they claim underinstructions of Washington. Theyhave asked that under SafeHaven we should now gatherintelligence on "external secu-rity" namely, all Germanactivities abroad, cultural and

political as well as economic andfinancial, in short, the entirenon-military SI field of activ-ity.... We pointed out that wewere presently contracting, notexpanding, our activities andthat his wishes and the particu-lar targets he was suggestingrequired substantial additionalpersonnel. 55

Noting that "We would be happy toundertake intelligence operation (ofthis kind) and are physicallyequipped to do so," Washingtonreplied that "...no funds (are) avail-able," and recommended that State"officially urge OSS to procureadditional funds for suchpurposes...... 56 No such pressurewas forthcoming; to the contrary,although SAFEHA'VEN remainedimportant, with the end of the warin Europe the role of intelligencereporting in the project began todiminish. That same month, lack ofTreasury and State interestprompted OSS to begin rolling upeconomic reporting networks in theIberian Peninsula. 57 OSS and SSUreporting on sequestered Germanassets continued under the rubric ofProject JETSAM, but at a muchlower level of effort.

The haste with which the UnitedStates detached itself from its firstcentral intelligence organization atthe end of the war thus was repli-cated in Project SAFEHAVEN. Aselsewhere in the government, how-ever, the trend away from a generalreliance on intelligence sourcesalmost immediately reversed itselfin the postwar follow-on to SAFE-HAVEN, as the Western Alliessought to use the information col-lected in wartime to seek

43

SA FEHAVEN

restoration of those assets looted byNazi Germany.

Settling Accounts

Geography and chance had left theWestern Allies in control of theReichsbank archives, as well as thevast bulk of the gold reservesremaining in Germany at the end ofthe war. With virtually all of Europeeconomically devastated anddependent on US aid for the mostbasic requirements of sustenance,the Western Allies thus were pre-sented with both the opportunityand the means to compel a generalsettling of accounts. Switzerlandwas the most obvious target. 58 TheSwiss had profited mightily fromWorld War II, having taken in (byAllied estimate) $781-785 million inNazi gold, of which $579 million(or 74 percent) had been lootedfrom the victims of Naziaggression. 59 Indeed, the postwarprosperity of Switzerland was basedlargely on the immense profitsmade from Nazi Germany in thewar. On the other hand, for theSwiss, the situation in the immedi-ate postwar period was potentiallydire. Having been geographicallyand economically isolated fromnon-Nazi Europe for nearly fiveyears, the Swiss desperately need toreconstruct the export-based econ-omy that had existed before WorldWar II. This, in large measure,depended on the willingness of theUnited States and its Allies to nego-tiate the trade agreementsnecessary to sustain a viable exporteconomy. Moreover, Switzerlandwas unable to feed itself anddepended totally on the Allies forthe imports of food and fuel it

needed to survive. Thus, there waslittle the Swiss Government coulddo to prevent the Western Alliesfrom imposing the most punitivesettlement necessary to obtain therestoration of looted German gold,should they wish to do so.

In this, the Swiss were indeed for-tunate that they were negotiatingwith the Western Allies and nottheir wartime trading partners.Although the Swiss Governmentwas haunted by fear of the eco-nomic pressure that might beimposed throughout its negotia-tions with the United States, at nopoint did the Allies make use oftheir position to compel an agree-ment. In the end the settlementnegotiated with the Swiss Govern-ment fell afoul of the Cold War andthe consequent shift in postwar pri-orities away from the problemscreated by Nazi Germany. The set-tlement ultimately reached wasessentially unsatisfactory for theAllies: the Swiss agreed to a tokenpayment of $58 million, and a 50-percent share of the value realizedfrom liquidating German assets inSwitzerland.

The negotiations with the SwissGovernment were nonethelessnoteworthy as this was perhaps thefirst time that US diplomacy wassupported by a system of nationalintelligence reporting. Although thesurviving documentation is frag-mentary, it is clear that the Alliednegotiators were fully supported by

the nascent SSU and possibly alsoby communications intelligenceprovided by the Army SecurityAgency, predecessor of theNational Security Agency.ho

Complicated Negotiations

Although preliminaries were underway as of the summer of 1945, thenegotiations themselves did notbegin until early the next year. Inaddition to the intelligence col-lected for SAFEHAVEN, the Allieshad access to the extensive files ofthe Reichsbank and the Auswar-tiges Amt, the German ForeignOffice. They thus had full docu-mentation of the movement oflooted German gold, and espe-cially gold looted from the BelgianNational Bank into Switzerland. TheAllies were particularly indignantover an exchange of lettersbetween the Swiss National Bankand Reichsbankvizeprasident EmilPuhl revealing that the Swiss hadbeen conducting commercial nego-tiations with the Nazi governmentat the same time that they weremaking an agreement with theAllies to block German assets inSwitzerland.8'

As negotiations got under way, thechief of the SSU, Gen. John A.Magruder, finally mobilized the SSUMission in Bern to obtain reportingon Swiss negotiating goals and tac-tics. The head of the Swissdelegation to Washington, Dr.Walter Stucki, was an especiallyimportant target. Priority taskingbegan in March 1946. Two urgentmessages were dispatched fromSSU Washington that month: on the14 h , requesting "...any possibleinformation on instructions particu-larly general line of defense givenStucki," followed by a "priority"request on the 19' h for "...instruc-tions to Stucki delegation rewillingness Suisse permit Allied sei-zure German funds for use for

44

SAFEHAVEN

reparations.... Was committeeallowed latitude for decisionhere?'62

Responding to this task, SSU Berncontacted a "reliable source" closeenough to the Swiss Foreign Officeto report on the thinking of MaxPetitpierre, head of the PoliticalDepartment and the man ulti-mately responsible for negotiatingan agreement with the WesternAllies. The reporting showed Petit-pierre,and a majority of the SwissFederal Council to be "convinced"that granting Allied claims to Ger-man assets was "indispensable."Petitpierre, a Radical Democrat, wassaid to he particularly concernedfor the coming Swiss elections andapprehensive of a conservativereaction to Swiss resumption ofdiplomatic relations with the SovietUnion. On 21 March, he told theSSU source that he earnestlydesired to settle the present misun-derstanding with the United Statesto counterbalance this gesture offriendship toward the East."

The Swiss were further prepared toaccede to the demand that Alliedrepresentatives be admitted to Swit-zerland to track down concealedGerman assets, which the socialistsegment of the Council admittedconsiderably exceeded the officialestimate. According to this report,the most important Swiss demandwas for reimbursement for approxi-mately SFr 500,000,000 in unpaid-for goods shipped to Germany dur-ing the war. This they planned totake from the outstanding balanceof a prewar German loan for build-ing the Gotthard Tunnel and fromGerman investments in the Swiss

railway system.63

44None of the intelligencecollected for SAFEHAVENwas useful in identifying

assets that had beenstolen from Jews andother victims of theHolocaust and Nazi

aggression.

99Although this intelligence waspassed to State Department on 22March, it is far from clear that it hadany immediate effect on theprogress of the negotiations. For along time, the two sides' were toofar apart for any progress to bemade. Dr. Stucki, the head of theSwiss delegation, was a hard bar-gainer whose attitude contrastedsharply with the mbre conciliatoryposture adopted by the Swiss For-eign Office in Bern. He hadconsiderable latitude in negotiatingwith the Allies, and he was deter-mined to make the best possibledeal. Frustrated by the lack ofprogress, Stucki neverthelessretreated slowly and cautiously tohis final negotiating position,apparently adhering strictly to whatmust have been his instructionsbefore he left Bern. 64 He neveronce surrendered any moralground. On the other hand, theintelligence that came out of SSUBern is strong evidence that Petitpi-erre and the Federal Council werewilling to be more flexible thanthey appeared in Washington—pos-sibly even to the extent ofincreasing the sum they were will-ing to offer as restitution.65Moreover, the Swiss were con-cerned the Allies might exploit theirconsiderable economic leverage toforce them into an agreement onunfavorable terms.

It was difficult for Washington toresolve the contrast between themore flexible posture on the goldissue reportedly adopted by theSwiss Foreign Office in Bern withthe firm stance taken by WaltherStucki in Washington. On 27 March,SSU chief General Magruder com-plained to Bern, "Everything [thatthe] Swiss delegation has said todate," contradicted the informationthat had been received from thefield, and requested that SSU Bernimmediately confirm its previousreporting: "Much depends on it." 66

At the end of the month, Stuckireturned to Switzerland to discussthe progress of the negotiationswith the Foreign Office. He spentabout a week in Bern. On 10 April1946, SSU Washington cabled Bernplacing an "urgent" requirement for"Information re Stucki's newinstructions and report of his activi-ties during the week he spent inSwitzerland...."" By this point,however, SSU Bern was reportingall intelligence obtained on Ger-man assets in Switzerland directlyto the Ambassador and was muteon the subject in its communica-tions with SSU Washington. 68 Noreply has been found.69

Reaching Agreement

Over the next two weeks negotia-tions became acrimonious, withboth sides still far apart. On 15April, Stucki expressed his concernthat the United States was obtain-ing information on his instructionsdirectly from a source in Bem. 70 On

23 April, negotiations collapsed,Stucki having walked out of a ses-sion at which the Allies demanded

45

SAFEHAVEN

$130 million for the reconstructionof Europe. Almost immediately,however, Stucki countered with anoffer of SFr 200,000,000 ($46.4million). 7 ' The next day he voicedhis conviction that the State Depart-ment was leaking information fromBern to the American press corpson how far the Swiss were willingto go in making restitution. 72 Whileeach leaks are impossible to con-firm, the negotiators in Washingtonprobably were receiving furtherreporting qn the Swiss negotiatingposture, with information likelybeing provided directly to theAmbassador as it was received. On30 April, Magruder cabled the Bernagain, "What instructions weregiven to Stucki on gold? How farcan he go and how much has hebeen authorized to pay?" 73 The fol-lowing day the-Allies rejected theSwiss offer, upon which Stuck;made his final proposal: SFr250,000,000 ($58.1 million) and halfthe proceeds from liquidating theGerman assets in Switzerland.74Again, no human source reportinghas been found in response toMagruder's cable to Bern, but thistime the American head of delega-tion, Randolph Paul, apparentlywas persuaded that there was nopoint to further negotiations. 75 Aftermuch discussion, on 21 May 1946the Allies accepted Stucki's finaloffer.

Renewed Interest

With the conclusion of the Allied-Swiss negotiations, the files onProjects SAFEHAVEN and JETSAMwere closed, and the operationsthemselves all but forgotten until,just over half a century later, a new

generation of researchers discov-ered them in a renewed search for"Nazi gold." In an effort promptedby the passing of the generationchiefly victimized by the Holocaustand World War II, a team of gov-ernment historians revisited theground covered by the OSS in itsefforts to track down undergroundsources of German industrial andcommercial power. Their task wasto find out what the US Govern-ment knew about Nazi efforts toexploit gold and other valuableslooted from conquered countriesand stolen from individual victimsof the Holocaust to feed the Ger-man war effort. What they found inthe SAFEHAVEN files was a motherlode of intelligence reporting onGerman international cOmmercialand fiscal transactions in 1944 and1945.

Unfortunately, none of the intelli-gence collected for SAFEHAVENwas useful in identifying assets thathad been stolen from Jews andother victims of the Holocaust andNazi aggression. Because of thenature of the transactions, becausekey records remained closed, andbecause the Nazis went to greatlengths to conceal the origins of thegold, currencies, and other valu-ables transferred into neutralcountries, these assets were moreor less anonymous by the time theycame under the purview of SAFE-HAVEN collectors. There wasvoluminous reporting concerningtransfers of gold and currencyamong Nazi Germany, Switzerland,Spain, Sweden, and other coun-tries; efforts to conceal German-owned assets in neutral and non-belligerent countries at the end ofthe war; and attempts to transfer

assets through Spain and Portugalto South America. Although it isnearly certain that gold and othervaluables stolen from EuropeanJews figured in these transactions,these assets probably could neverbe separated from the much largerquantity of booty looted fromEurope as a whole. Nevertheless,apart from documenting the majorchannels of German economicactivity, these findings were valu-able in that they showed US secretintelligence organizations to havebeen assiduous in their support ofUS Government policy. In the finalanalysis, that is what is mostimportant.

Notes:

1.Foreign Relations of the United States(hereafter cited as FRUS), 1944, Vol.II, pp. 215-16.

2. US and Allied Efforts to Recover andRestore Gold and Other Assets Stolenor Hidden by Germany DuringWorld War II (hereinafter EizenstatReport), Preliminary Study (May1997), p. 15.

3. Arthur L. Smith, Jr. Hitler's Gold: TheStory of the Nazi War Loot, (Oxford:Berg Publishers, 1989, 1996), p. 68.

4. Eizenstat Report, p. 15.

5. Ironically, the FEA was administra-tively subordinated to the TreasuryDepartment and made up princi-pally of Treasury Departmentofficials. Klaus's formal title was"Special Assistant to the GeneralCounsel of the TreasuryDepartment."

6. Klaus Report to Currie, Coe, andCox, Franklin D. Roosevelt Library,Franklin D. Roosevelt Papers.Quoted in the Eizenstat report, pp.16-17. See also Margaret Clarke, The

46

SAFEHAVEN

Safehaven Project, Foreign Eco-nomic Administration Study *5(Washington, DC, 1945), p. 46.

7. Eizenstat Report, p. 21.

8 In Bern, for example, SAFEHAVENwas almost exclusively the responsi-bility of X-2, SI being preoccupiedwith political, economic, and mili-tary reporting. In Madrid, thehostility of the US Ambassador tointelligence collection meant that X-2 assumed the task by default. OSSWar Report, Vol. II, pp. 31-35, 283.All citations to this document referto 'the declassified two-volume ver-sion in the possession of the CIAHistory Staff. The entire War Reportis available in one-volume form inAnthony Cave-Brown, The SecretWar Report of the OSS (New York:Berkeley, 1976).

9. Alan S. Milward, The German Econ-omy at War, London: The AthalonePress, 1965; pp. 192-94. See also,idem., "The Reichsmark Bloc andthe International Economy" in H. W.Koch, ed., Aspects of the Third Reich(New York: St. Martin's, 1985), pp.331-59.

10. Bern *246 to Washington, 23 April1946. Intercepted Swiss diplomatictraffic also shows that the Swissknew that they had accepted SFr378,000,000 in looted Belgian gold.This gold had been deposited withthe Bank of France in 1939 and wasturned over to the German Govern-ment by the puppet Vichy regime.Swiss justification for this was that"the only way in which Belgian goldgot into German hands was throughthe Laval government." Washington*256, to Bern; 25 April 1946.

11.A fundamental error committed bythe planners of SAFEHAVEN (as wellas X-2) was the assumption that theactions of individual German corpo-rations and Nazi leaders necessarilyrepresented the policy of theNational Socialist regime. Althoughthere were some attempts by partsof the regime to plan for under-

ground activities after the war (suchas the half-mythical Werwolf pro-gram), they were far less importantthan ever imagined by the SAFE-HAVEN planners. The vast bulk ofthe attempts to conceal wealth inforeign countries detected by theSAFEHAVEN program were initiatedby individuals and individual corpo-rations anticipating the imminentcollapse of the Reich. RG 226, Entry116, Records of the Office of Strate-gic Services; Office of the Director,Microfilm Publication 1642, Reel108; Murphy to Mowinckel, 4 June1945, "X-2 Case Materials Illustrat-ing German SAFEHAVEN Practices."

12.RG 226, Entry 116, Records of theOSS; Office of the Director, Micro-film Publication 1642, Reel 108;Murphy to Mowinckel, 4 June 1945,66 "X-2 Case Materials IllustratingGerman SAFEHA,VEN Practices."

13.RG 226, Entry 116, Records of theOSS; Office of the Director, Micro-film l'ublication 1642, Reel 108.Cable: Washington 16234. To 148from Callisen, 19 December 1945.

14, Peter Grose, Gentleman Spy. TheLife of Allen Dulles, (Boston: Hough-ton Mifflin & Co., 1994), pp. 169-70.

15.RG 226, Entry 99, Box 13, Folder 41-I OSS History Office, Cable Digest;23 March 1945, *7387 21 March1945, 110 (Dulles) to Washington.

16.Neal H. Petersen, ed.; From Hitler'sDoorstep: The Wartime IntelligenceReports of Allen Dulles, 1942-1945,(University Park, PA: PennsylvaniaState University Press, 1996, p. 561.)

17.Ibid., pp. 464, 524, 633.

18.Nb., 496 was OSS source MauriceVillars, a General Director of theZurich Electro-Bank.

19.RG 226, Entry 116, Records of theOffice of Strategic Services, Office ofthe Director, Microfilm Publication1642, Reel 108. Cable: Bern 2677, 28December 1944.

20. Because : Switzerland was sur-rounded by Axis territory, it wasimpossible to provide OSS Bernwith personnel to take on addi-tional tasks for most of the war.Until the end of 1944, OSS Bern hada staff of just three intelligence offic-ers, including Dulles. OSS WarReport, Vol. II, p. 273.

21. Ibid., Vol.11, p.283

22. In Operation LAURA, under way byFebruary 1946, X-2 was able to doc-ument quantities of gold shippedfrom Switzerland to the Iberian Pen-insula. Unfortunately, none of thereporting appears to have been pre-served. CIA Job 79-00332A, Box 191,Folder 14, Joyce from Blum "(Bern)X-2 Progress Report," 1 February1946.

23. RG 226, Entry 116, Records of theOSS; Office of the Director, Micro-film Publication 1642, Reel 108;Murphy to Mowinckel, 4 June 1945,"X-2 Case Materials Illustrating Ger-man SAFEHAVEN Practices."

24. Examples: on 26 February 1945,Bern reported that Nazi funds werebeing sent abroad, not through ordi-nary banking channels, but throughother banks, to include the Dresden-erbank, the Fromberg Bank inBerlin, and the Wehrlibank in Swit-zerland (Robert Louis Benson andMichael Warner, ed. Venona: SovietEspionage and the AmericanResponse (Washington, DC: NationalSecurity Agency & Central Intelli-gence Agency, 1996), pp. 219-20);Dulles provided photos of clandes-tinely obtained German reportsdocumenting a December 1944 tripto Bern by Reichsbank Vice Presi-dent Emil Puhl; plans for themanufacture of Nebelwerfer (rocketlaunchers) in Switzerland (both RG226, Entry 123, Box 2 Folder 5); sim-ilar documents describing howGerman gold and Reichsmarksmight be converted to Portugueseescudos through Switzerland (RG226, Entry 123, Box 2 Folder 26); on23 March 1945 a report describing

47

* SAFEHAVEN

how quantities of German goldwere converted into lire by exploit-ing loopholes in Swiss currencylaws (RG 226, Entry 108, Bern B-2118: 23 March 1945); on 16 April1945, a report documenting Ger-man penetration of the Swissconsumer goods industry (RG 226,Entry 108, Report B-2472 16 April1945).

25. RG 226, Entry 108, boxes 4-10 OSSBern files, passim.

26. William Casey, The Secret WarAgainst Hitler (Washington, DC:Regnery Gateway, 1988), pp. 236-37.

27. RG 226, Entry 116, Records of theOSS, Office of the Director, Micro-film Publication 1942, Reel 108.Cable: 4174, to 908 and Casey from154 (Shepardson) 18 January 1945.

28. RG 226, Entry 116, Records of theOSS, Office of the Director, Micro-film Publication 1642, Reel 108.Cable: Paris 9804, 154 (Shepardson)from Casey, Cassady, Acheson; 8March 1945.

29. OSS War Report, Vol. I, p. 196.

30. RR 226, Entry 116, Records of theOSS, Office of the Director, Micro-film Publication 1542, Reel 108.Cable: Paris 9804, 154 (Shepardson)from Casey, Cassady, Acheson; 8March 1945.

31. OSS War Report, Vol. I, p. 196.

32. Although frequently referred to assuch, Spain was not a neutral inWorld War II, but was a "non-bellig-erent" power allied with Germany,Italy, and Japan. In November 1940,Franco's Foreign Minister, RamonSerano Suner, signed a secret proto-col by which Spain became an"adherent" of the Tripartite Pactsigned on 27 September 1940 byGermany, Italy, and Japan (the so-called Rome-Berlin-Tokyo Axis).Spain also agreed to enter the warat some unspecified future date.

Documents on German Foreign Pol-icy, Series D, volume XI, The WarYears: September 1, 1940-January31, 1941; pp. 466-67, 479. See alsoMalcolm Muggeridge, ed.; Ciano'sDiplomatic Papers (London:Odhams Press, Ltd., 1948), pp. 405-08.

33. RG 226, entry 99, Box 20, Folder 64Lisbon 329 Elton from 983: "PresentStatus of Safe Haven in Madrid; andElaboration of King 58 of May 26,1945."

34. For Spain's place in the Nazi wareconomy, see Herbert Feis, SpanishStory (New York: Alfred A. Knopf,1948).

35. OSS War Report, Vol. II, p. 32.

36. Charles B. Burdick, "MORO:' theResupply of German Suhmarines inSpain, 1939-1942," Central Euro-pean History (1970): OSS WarReport, Vol. II, p. 32.

37. RG 226, Entry 116, Records of theOSS; Office of the Director, Micro-film Publication 1642, Reel 108;Murphy to Mowinckel, 4 June 1945,"X-2 Case Materials Illustrating Ger-man SAFEHAVEN Practices."

38. OSS War Report, Vol. H, p. 37.

39. RG 226, Entry 116, Records of theOSS, Office of the Director, Micro-film Publication 1642, Reel 108.Memorandum: Donovan fromDespres, 29 November 1944.

40. RG 226, Entry 116, Records of theOSS, Office of the Director, Micro-film Publication 1642, Reel 108.Cable: Lisbon 7247, 6 May 1945.

41. OSS War Report, Vol. II, p. 36.

42. The German VICE, Vereinigte Kugel-lagerfabriken, A. G., was asubsidiary of Svenska Kullagerfab-riken, (SKF), owned by the SwedishStockholrns Enskilda Bank. AlthoughGerman requirements were met bya combination of domestic produc-

tion and imports from Sweden,about two-thirds of the ball bear-ings used in the German war effortwere, in effect, produced by thesame company. See Martin Fritz,"Swedish Ball Bearings and the Ger-man War Economy," ScandinavianEconomic History Review, (1975).

43. OSS War Report, Vol. II, p. 261. Forthe importance of high-grade Swed-ish iron ore to the German wareconomy, see Martin Fritz, GermanSteel and Swedish Iron Ore, 1939-1945 (Goteborg: Ekanders Boktry-ckeri Aniebolag, 1974) and anexchange among Martin Fritz, Jorg-Johannes Jager, Rolf Karlbom, andAlan S. Milward in ScandinavianEconomic History Review (1965,1967, 1968, 1973).

44. The Germans also envisaged theplan as a means of avoiding Alliedstrategic bombing attacks on theGerman oil industry: refinery pro-duction above and beyondSweden's requirements would be re-exported to Germany. RG 226, Entry116, Records of the OSS, Office ofthe Director, Microfilm Publication1642, Reel 108. Cable: Enclosure No.1 to Stockholm 4393, 28 October1944.

45. OSS War Report, Vol. H, pp. 262-63.Erickson's career (with many fic-tional details) is the subject ofAlexander Klein's Counterfeit Trai-tor (New York: Henry Holt, 1958).

46. RG 226, Entry 108, Box 316, FolderT-2200, "Germans Selling Diamondsin Stockholm," 11 August 1944. Allwartime intelligence reporting wasgraded according to the reliability ofthe information and the source fromwhich it was obtained. This report isgraded "C-3," almost the lowest pos-sible rating.

47. RG 226, Entry 116, Records of theOSS; Office of the Director, Micro-film Publication 1642, Reel 108;Murphy to Mowinckel, 4 June 1945,"X-2 Case Materials Illustrating Ger-man SAFEHAVEN Practices." For

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SAFEHAVEN

examples, see RG 226, Entry 108,Box 316, Folder 1-2200; "EnemyCapital in Sweden," 14 August1944—also a low-grade intelligencereport, but typical of the kind ofinformation obtained.

48. RG 226, Entry 108, Box 25, Folder143. Dispatch: Stockholm 7063 Sec-retary of State from Ravndal,"Transmission of Information Con-cerning Shipments of Gold BetweenSweden and Germany" SAFE-HAVEN, 20 May 1946.

49. RG 226, Entry 183, Box 27, Folder1547; London 165: SAFEHAVEN No.413, "Financial Contraband, Stock-holm, Enskilda Bank, Stockholm," 8May 1946. See also Gerard Aaldersand Cees Wiebes, The Secret Collab-oration and Protection of theGerman War Industry by the Neu-trals- The Case of Sweden(Amsterdam: Amsterdam UniversityPress, 1996).

50. RG 226, Entry 116, Records of theOSS, Office of the Director, Micro-film Publication 1642, Reel 108.Circular Memorandum for All Strate-gic Services Officers and Chiefs fromActing D/SS (Acting Director of Stra-tegic Services), 16 April 1945.

51. RG 226, Entry 183, Box 21, "Wehrlicombine," n.d. The economic reportwas based on intelligence data tocomplement an audit of the Wehli-bank books by the US firm Price,Waterhouse & Co., conducted underjoint British and American auspices.

52. RG 226, Entry 116, Records of theOSS, Office of the Director, Micro-film Publication 1642, Reel 108.Memorandum: Donovan from Neu-mann via Langer, "GermanEconomic Penetration Abroad," 2June 1945.

53. RG 226, entry 116, Records of theOSS, Office of the Director, Micro-film Publication 1642, Reel 108.Memorandum: Donovan fromGeorge, "RE Rebuilding of GermanEconomic, Political, and Military

Power Positions Abroad by the Eva-sion of Allied Controls over the Exitof German Assets and Personnelfrom Germany (SAFEHAVEN)," n.d.,but context places it in April-June1945.

54.Topics were sometimes similar: inJune 1946, Bern was tasked toreport on the Russian interests ofthe Swiss-owned Oerl ikon Com-pany, earlier a target of SAFEHAVENreporting because of its connec-tions with Germany. SSUWashington *1119, 18 June 1946.

55. RG 226/Entry 134A, Box 9, Folder26. Paris *22534: Shepardson fromSherman, 20 July 1945.

56. RG 226/Entry 134A, Box 9, Folder26. OSS Washington *23584: Hor-ton for Sherman from 154, 28 July1945.

57.12G 226/Entry 134A, Box 9, Folder26. Lisbon #7687: Patina from Grantand Elton, 19 July 1945; OSS Wash-ington *8817. JETSAM. Grant andElton from Patina, 23 July 1945.

58. From Sweden, Spain, Portugal, Tur-key, and Argentina, the WesternAllies sought and obtained the resto-ration of gold and other assetslooted by the Germans. These coun-tries were, however, generallycooperative and the necessaryagreements were more easilyobtained.

59. Eizenstat Report, pp. xi-xii. Toapproximate 1997 gold values, mul-tiply these figures by 9.74. But giventhe devastation of Europe and thewild variations in the standard ofliving from country to country andfrom day to day, there is no simpleway to quantitatively measure thepurchasing power of this amount ofgold or its impact on the worldeconomy as a whole.

60 In what apparently was a continua-tion of collection programsestablished in wartime, the ASA col-lected and read all Swiss diplomatic

telegrams sent in from the summerof 1945 to the summer of 1946. TheSwiss used a variant of the sameENIGMA cipher machine used bythe European Axis in World War II.Their diplomatic traffic thus couldbe read by the means used to readGerman ENIGMA ciphers. This fre-quently took time, however, and itis not clear that these messageswere read in time to be useful to theAllied negotiators.

61. Eizenstat Report, pp. 68-69.

62. RG 226/Entry 134A, Box 9, Folder26. SSU Washington *WASH 2083(Bern) BRUCC from Magruder (14March 1946); *WASH 2159: (Bern)BRUCC for Joyce from Magruder (19March 1946).

63. RG 226/Entry 108A, Box 1, Folder 9.Walter S. Surrey, Esq.; Division ofEconomic Security Controls, Depart-ment of State from Chairman,Reporting Board SSU; 22 March1946.

64. On 26 April, he cabled Bern, "TheAmerican methods of carrying onnegotiations are strange and hardlycomprehensible to us. You shouldtell the Allies that the Delegationhas received final instructions with-out mentioning a figure or hinting atone in any way." Bern (Politique)from Washington (Swiss legation)*310 (26 April 1946) Army SecurityAgency Diplomatic Translations *H-23017 (29 March 1946), *H-231119(25 April 1946), *H-231208 (26 April1946), *H-231271 (25 April 1946),*H-232235 (12 April 1946), *H-234376 (15 April 1946).

65. Army Security Agency DiplomaticTranslation #1-1-232244 (4 May 1946).

66. SSU Washington *WASH 2434:(Bern) BRUCC from Magruder, 27March 1946.

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SAFEHAVEN

67. RG 226/Entry 134A, Box 9, Folder 6.SSU Washington *WASH 2829:(Bern) BRUCC from War Depart-ment Strategic Services Unit, 10April 1946.

68. RG 226/Entry 134A, Box 9, Folder26. SSU Bern *438: War DepartmentStrategic Services Unit from (Bern)BRUCC, 11 APRIL 1946.

69. On 25 March, SSU Washingtoncabled Bern, "State considers Bern337.. valuable and timely. Congratu-lations. Cable any furtherdevelopmints" (RG 226/Entry 134A/Box 9/Folder 26. SSU Washington*WASH 2352: (Bern) BRUCC fromMagruder, 26 March 1946). "Bern337," which apparently was sentbetween 14 and 21 March musthave been the basis for the intelli-gence report that was provided toWalter Surrey at the State Depart-ment (RG 226/Entry 108A, Box 1,Folder 6. Walter S. Surrey, Esq.;Division of Economic Security con-

trols, Department of State fromChairman, Reporting Board SSU; 22March 1946). The original cable,however, has not yet been found inthe Archives. We do not knowwhether further information wasobtained from this source, but SSUWashington cabled Bern on 10April, "Memo from Walter Surrey ofState rates your original material reStucki of utmost value," suggestingthat some additional (as opposed tothe "original") intelligence materialwas obtained later on (RG 226/Entry134A, Box 9, Folder 26. SSU Wash-ington *WASH 2829: (Bern) BRUCCfrom Quinn, 10 April 1946.

70. Army Security Agency DiplomaticTranslation #1+234376 (15 April1946).

71. Army Security Agency Diplomatic

Translation #1-1232831 (25 April1946).

72. Stucki went on to opine that per-haps some diplomaticcorrespondence "which went byordinary airmail in spite of warn-ings, was opened by censorship....Bern (Politique) from Washington(Swiss legation) #305 Army SecurityAgency diplomatic Translation#H232831 (25 April 1946).

73. RG 226/Entry 134A/Box 9/Folder 26.SSU Washington *WASH 3427:(Bern) BRUCC from War Depart-ment Strategic Services Unit, 30April 1946.

74. Arthur L. Smith, Jr. Hitler's Gold: TheStory of the Nazi War Loot (Oxford:Berg, 1996), p. 82.

75. Eizenstat Report, pp. 81-83.

76.The results were published in theEizenstat Report. See above, fn. 2.

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