June 2, 1998
World War II ended in 1945, but reports of its crimes have not stopped. Today, an interagency group released a study explaining how the Nazis used money in Swiss banks to fuel its war machine. After a background report, Undersecretary of State Stuart Eizenstat, the head of the interagency group, discusses the findings.
MARGARET WARNER: What happened to the hundreds of millions of dollars in gold and other assets stolen by the Nazis during World War II? Some had been looted from banks in European countries invaded by the Germans. Some had come from jewelry, dental fillings and other items confiscated from Jews killed during the Holocaust. Up until now, the main focus has been on Switzerland and the Swiss banks where the Nazis deposited at least $400 million in stolen assets and possibly quite a lot more. That would be worth at least $4 billion in today's currency.
A RealAudio version of this segment is available.
May 7, 1997:
The U.S. releases a preliminary report on the handling of Holocaust victim's assets.
February 28, 1997:
The Swiss government establishes a compensation fund for Holocaust victims.
February 4, 1997:
Secretary Eizenstat and Former Federal Reserve Chairman Paul Volcker discuss Nazi war assets .
December 11, 1996:
Congress holds hearings on Holocaust victim's assets.
Today's State Department supplementary report on Nazi Gold.
Frontline's documentary on Nazi gold.
Sec. Eizenstat's closing statement at the London Conference on Nazi Gold.
In 1996, the World Jewish Congress uncovered newly declassified records at Washington's National Archives--which suggested that some Swiss banks were still holding assets from Holocaust survivors. Thousands of claims were filed by survivors and their families.
"They worked for their money, and it's their money, so why should the Swiss keep it?"
GIZELLA WASHES, HOLOCAUST SURVIVOR: They can't help me to bring my family back but at least justice, because these people, they worked for their money, and it's their money, so why should the Swiss keep it?
MARGARET WARNER: That same year commissions headed by former Federal Reserve Chairman Paul Volcker began an independent audit of these Swiss accounts. Also that year, Congress held hearings to determine what happened to the money deposited in those accounts.
Chairman Paul Volcker
SEN. ALFONSE D'AMATO: Why this hearing now, 50 years. Why not let it go? And let me attempt, if I might, to simply say that because people are entitled to justice.
MARGARET WARNER: Separately, the British government found that the former allies, including the United States, Britain, and France, had recovered more than $50 million in looted gold that had not been returned to its rightful owners. The governments have pledged to set the money aside in a humanitarian fund. In 1997, the Swiss government and three Swiss banks established their own $200 million fund to compensate victims. It is expected to pay out $62 million by the end of July. In May of that year, an 11-agency U.S. government group, headed by then Undersecretary of State Stuart Eizenstat, issued its first report on the scope of stolen Nazi era assets and efforts to recover them. The report said, among other things, that the Swiss banks knew during the war that they were accepting stolen gold and other assets; that they helped the Germans convert it to hard currency, which was used to finance the German war machine; that after the war, the Swiss government deliberately reneged on a 1946 agreement to return assets to European banks and Holocaust victims; and finally the report accused the United States of not pressing the Swiss to do more.
Since then, a separate Swiss commission has also concluded that the Swiss National Bank knew at the time that its new German deposits consisted of looted gold. Still, the Swiss National Bank has refused to negotiate compensation for Holocaust survivors, saying, instead, it will donate $75 million to the Swiss Fund. Today, the Eizenstat group issued a follow-up report, looking at how the Germans actually used the money in the Swiss banks to finance their war effort.
MARGARET WARNER: For more on these findings we're joined now by Stuart Eizenstat. He's now Undersecretary of State for Economic Affairs and heads the U.S. Government group that issued the report.
Welcome, Mr. Secretary.
STUART EIZENSTAT: Thank you, Margaret.
MARGARET WARNER: What did you find particularly concerning the role of other neutral countries, other than Switzerland?
A "seamless web" of stealing gold and selling it to the Swiss banks to buy materials for war.
STUART EIZENSTAT, Undersecretary of State: What we found is that countries like Spain, Portugal, Turkey, and Sweden provided huge percentages of German war needs for critical materials-products like wolfram, which was used for hardening steel; iron ore from Sweden. And with respect to other countries, this was absolutely vital for the German war effort. We have a quote from Albert Spear, who was the munitions minister for Hitler, saying in 1943 that if the chromate from Turkey is cut off, our whole artillery supply in five to six months will be gone. Prime Minister Salazar from Portugal said he knew in 1944 that if he cut off wolfram exports to Germany, that the war would be shortened substantially. So the fact is that Germany developed a seamless web. They stole the gold; they smelted it into disguised bars; they transferred it to the Swiss National Bank and then they used the Swiss francs they got from it to purchase from these neutrals these critically important war materials without which the war could not have been continued. And, importantly, much of the transit in these products occurred after the point in time when the maximum threat existed of invasion.
MARGARET WARNER: First of all, in these neutrals, were they governments who were doing this dealing, or were they companies in these countries.
STUART EIZENSTAT: The government of Germany was stealing the gold. They were transferring the gold to the Swiss National Bank, which both our report and the Swiss government's own report indicated knew it was dealing in looted gold. And then these critical materials were being supplied with the government's approval. The government of Spain, of Portugal, the government of Sweden and Turkey all sanctioned these directly through trade agreements with the Germans. They knew the value of them. They realized that it was important to stay in the war and yet they continued. Now, in part, that was because they feared invasion. But that fear receded through 1943, and, yet, our report shows that the trade continued well into 1994 and, indeed, for Switzerland their trade in gold continued until the closing days of the war.
MARGARET WARNER: All right. But did these neutral countries know that these assets-- these Swiss banks they were getting to pay for all this material-- was, in fact, derived from stolen gold and other assets?
STUART EIZENSTAT: They did. They got about $240 million-most of it through the Swiss National Bank-in looted gold. The reason that they knew it was looted or had to have known is because the amount of the Germans' own reserves in gold was well known. It was known to be very low, and the allies-the United States-- after '94-- repeatedly warned the neutral countries that you're dealing in looted assets, don't accept the gold; we won't accept any transactions in which you're involved taking the gold, and yet, they continued, despite those repeated warnings.
MARGARET WARNER: All right. So what did you find--I mean, you've touched on this--but why they went ahead and did it?
"Neutrality was not a very clear-cut concept during World War II."
STUART EIZENSTAT: It was a combination of factors. First, legitimate fear of invasion; second, profit; and yet, one of the interesting things we found is that neutrality during the war took a very mixed and not very clear perspective. They were clearly helping the Germans sustain their war effort, as I've described. At the same time the allies were preemptively buying the same products, not because they needed them, because the U.S. could get these products elsewhere, but to keep them out of German hands. And yet, these same countries that were helping sustain the German war effort-- Sweden, for example, with ball bearings and iron ore-helping German shipping to the Baltic and protecting it, having 250,000 separate trips of German troops to and through Sweden during the war- -while this was all occurring, at the same time they were doing some positive things. Two hundred and fifty thousand Jews were saved by these neutrals. And, in that respect, the U.S. actually took fewer refugees than did Spain, which was so pro-axis, even though it was supposedly neutral, it actually had sent its own Blue division to fight with the Wehrmacht on the Eastern front against Russia. So it's a very mixed picture. Neutrality was not a very clear-cut concept during World War II.
MARGARET WARNER: Well, explain that. I mean, why?
STUART EIZENSTAT: Neutrality was an accepted legal tradition, which meant you could trade with both sides. But what happened in World War II is that you had a qualitatively different situation. You had an enemy, Hitler, who was not just another dictator, who was violating human rights on a gross scale in ways that had never been seen before. These countries again to some extent-- at least up to 1943-had a legitimate fear of invasion. But the allies began to feel by the middle of 1943, as they were winning the war and the Germans were retreating, that that was an insufficient excuse. And one of the things we've shown on the chart is the argument the allies used against the argument of the neutrals, who said, we have superior force against us, force major, what can we do-- is that well passed the point at which the allies believed there was a legitimate threat of invasion, the trade, nevertheless, continued. It continued because it was profitable.
MARGARET WARNER: Tell us a little bit about your detective work here. I mean, what's the chain of proof? How are you able to-- how do you know this?
How discovered microfilm proved what the Nazis did.
STUART EIZENSTAT: Well, we've done some very interesting detective work-particularly the Department of Justice-at our request. We were looking for some lost microfilm of the Reich Bank, and we found in a private holding in Vienna, Austria, this lost microfilm. And the analysis by the Justice Department's historians showed that twice as much individual victim gold was credited to the SS account and the Reich Bank than we had thought, about $40 million in today's terms, and that's only the tip of the iceberg, because much of the gold was taken before the SS ever got to take this from concentration camp victims. So it was a real detective story. Finding this microfilm was a tremendous help, and it demonstrated the fact that the Germans not only stole gold from the central banks of the countries it invaded; they took gold from concentration camp victims, re-smelted it into gold bars, so it looked as if it was from their own reserve. But, again, the central banks of all these countries-- Sweden, Switzerland, Portugal, Spain, Turkey-all realized that the gold must have been looted, and the reason was that they knew the low level of German reserves before the war.
MARGARET WARNER: And what is the percentage in terms of all the money we're talking about-the $300 million--how much of that came originally from banks in Europe versus victim gold, as you call it, taken from individuals in the concentration camps?
STUART EIZENSTAT: There's no question, Margaret, that most of it-- the vast majority of it-- came from central banks and not from victims. However, one of the peculiarities after the war is that as the allies swept through Europe and won the war, they also collected this looted gold, put it into an account of the Tri-Partheid Gold Commission-337 tons of its-returned all but six tons to countries from whom it was stolen. In our study we have found that unwittingly the allies were also collecting victim gold and that, therefore, the central banks of the countries have been given back not only their gold but victim gold as well, and so we're now asking the countries-with the $60 million in gold still left-to put it into a new Holocaust survivors' fund, rather than taking it for themselves. One other finding we found was how radically different U.S. policy was from the time of the war to immediately afterward. Of the $240 million in looted gold that Spain, Portugal, Turkey, and Sweden accepted for the trade they were doing with the Germans, only $18.5 million was ever returned to the allies--of the German external assets in their country, only $100 million of about $500 million. Why? Their own intransigence, refusing to return it-one could argue if they were saying that they were going to be invaded, okay, that's true up to at least a point in the war, but after the war, they could have then said we're now going to return all of this loot. They didn't.
MARGARET WARNER: But could they say, well, we-we were selling something for it?
STUART EIZENSTAT: That is precisely what they did say, but because they were warned repeatedly by the allies that they were dealing in looted accounts and that the allies after the war were going to hold them to account-to return it-their argument has much less merit. Now, there was also a change in U.S. policy. We didn't press these neutrals as hard after the war, the reason being that we wanted them to be part of the anti-Soviet effort as the Cold War suddenly took on greater importance than recovering these assets for victims and for the reconstruction of Europe.
How should countries respond to today's report?
MARGARET WARNER: So what do you hope this report generates? What do you want the neutral countries to do-the neutrals-the former neutrals to do?
STUART EIZENSTAT: What we're hoping is that the neutrals will do what they've begun to do. There are now 16 countries, including the five neutrals here, who have set up their own historical commissions, to look at their own past. We've done it through our archives. It's now time for them to look at their archives and their bank records to confirm these figures, as, by the way, the Swiss Bergier Commission has done, even exceeding our estimate. Second, we're hoping that they'll move from just a historical review to try to do justice for the remaining survivors. And so we have asked them not as a legal matter but as a moral gesture to make a contribution into this Nazi relief fund for Holocaust victims. The U.S. is going to be putting $25 million in. We're asking each of the neutrals to consider as a moral gesture doing the same, given their role during the war.
MARGARET WARNER: Briefly, you've been at this for a couple of years now. There's been a huge effort to get to the bottom of it. How successful has it been?
STUART EIZENSTAT: I think it's remarkably successful. We now have funds-a $200 million fund the Swiss have created-we're going to be using most of the $60 million in gold remaining for Holocaust victims. We've gotten 18 countries who are now reexamining their past. We found some new information out about Croatian gold and the Vatican's gold in it. We asked the Vatican to open their archives. I think there's a real cleansing effort as we gold out of the 20th century into the 21st to try to learn-- and this was the purpose of this report to begin with-- the president wanted us to find out what really happened to apportion the war that was not well known, and that is Holocaust era assets. So I feel very good about the fact that there is now a worldwide effort to find out about the past and then to translate that into justice for survivors and education in the future about really what happened to the Holocaust-era assets.
MARGARET WARNER: All right. Well, thank you very much, Mr. Secretary.
STUART EIZENSTAT: Thank you very much, Margaret.