Grey Wolf: The Escape of Adolf Hitler Part 2

ON THE DAY THAT VICHY FRANCE WAS OCCUPIED, the German Sixth Army's last a.s.sault through the rubble of Stalingrad ground to a halt in the appalling conditions of the Wehrmacht's second Russian winter. At the end of their enormously extended lines of supply, ammunition and all other essentials were running short. One week later, on November 19, Gen. Georgi Zhukov launched Operation Ura.n.u.s with major offensives to the north and south of Stalingrad. By November 22, the Sixth Army was surrounded. Out of bravado or sheer ignorance, Marshal Hermann Goring promised Hitler that his Luftwaffe could supply the trapped army by air. The daily minimum requirement of supplies needed to sustain the Sixth was 550 tons, but the Luftwaffe rarely exceeded 300 tons and, as the weather worsened, with temperatures dropping to 22F in mid-January, deliveries diminished to just 30 tons a day. The freezing German soldiers subsisted on a few slices of bread and a small hunk of horse meat daily and were soon suffering from dysentery and typhoid. The fighting continued until February 2, when the last defenders inside the Red October Factory laid down their arms. The German forces suffered 750,000 casualties over that dreadful Russian winter, and of the 94,000 who were captured at Stalingrad just 5,000 would ever see Germany again.

The Red Army had paid an immense price for the defense, encirclement, and final recapture of Stalingrad, losing almost 500,000 killed or missing and a staggering 650,000 wounded-to say nothing of a further 40,000 civilians dead. Yet these horrendous sacrifices had bought the Soviet Union a genuinely pivotal victory. For the first time, a whole German army had been decisively beaten and then destroyed on the battlefield. To mark this unprecedented reverse on the Eastern Front, Radio Berlin played somber music for three days, but it would take much longer than that for the German people to come to terms with the catastrophe. The prestige of the Red Army soared, both in the Motherland and in the Western democracies. Basking in the glory of the victory at the city named after him, Stalin grew in stature both at home and abroad-and his repeated demands for the opening of a second front in Europe by the Western Allies, to relieve the pressure on the Soviet Union, became more insistent.

IN JANUARY 1943, ALL THE GREAT POWER LEADERS had been invited to attend a conference in the Moroccan coastal city of Casablanca. Stalin declined, since the battle for Stalingrad was then reaching its climax. Between January 14 and 24, President Roosevelt and Prime Minister Churchill, together with the Combined Chiefs of Staff, met at the Anfa Hotel to decide the future strategy for the war in the West and in the Pacific. Churchill was anxious for the war in Europe to be given top priority and his view prevailed. More resources were to be allocated to fight the Battle of the Atlantic, since Britain's very survival and America's ability to deploy armies in Europe depended on defeating the U-boat threat. Despite Stalin's urgings, the outcome of the disastrous Dieppe raid in August 1942 had confirmed that a major landing on the coast of mainland Northwest Europe simply was not feasible during 1943. Instead, once the antic.i.p.ated victory in North Africa was achieved, Allied forces were to invade first the island of Sicily and then Italy.

In order to mollify Stalin, the Western Allies issued the Casablanca Directive, which dealt with the closer coordination of the strategic bombing offensive against Germany by the Royal Air Force and the U.S. Army Air Force. The objective set for the Joint Bombing Program was "the progressive destruction and dislocation of the German military, industrial, and economic system, and the undermining of the morale of the German people to the point where their capacity for armed resistance is fatally weakened." The priority targets were U-boat construction yards and operating bases, followed by the German aircraft industry, the transportation system, and all oil-producing facilities. The USAAF retained its faith in daylight precision-bombing missions against specific point targets while the RAF preferred area bombing by night. This combined Operation Pointblank would condemn Germany to round-the-clock aerial bombardment on an unprecedented scale, testing the will of the German people to the utmost.

However, there was one aspect of the Casablanca Conference that did not meet with full accord. President Roosevelt retained a deep disgust for the German military caste that he dismissed as "the Vons," and he would not countenance any sort of deal with a German government short of unconditional surrender. Neither Churchill nor the Combined Chiefs of Staff were at ease with such a strategy, but Roosevelt remained adamant and in this his will prevailed, just as Churchill's had over the planned Italian campaign. Citing the implacable resolve of Ulysses S. Grant-"Unconditional Surrender Grant"-during the American Civil War, Roosevelt required a complete and unequivocal victory over Germany. There was to be no repeat of the armistice that had ended the Great War with German troops still on French soil. Its result had been a widespread illusion during the interwar years that the German army had remained undefeated on the battlefield and that Germany was only forced to capitulate by devious politicians.

Objections to the policy of unconditional surrender were advanced by, among others, Roosevelt's U.S. Army chief of staff, Gen. George C. Marshall, and his rising field commander Gen. Eisenhower, on the grounds that it would inevitably increase the resolve of German armies on the battlefield. The intelligence community recognized that the policy would effectively scupper any real dialogue with or support for the resistance movement inside Germany, since its leaders would know that even the death of Hitler would not spare their country from utter ruin and humiliation. As Allen Dulles wrote, "We rendered impossible internal revolution in Germany, and thereby prolonged the war and the destruction." Apart from Stalin, the only belligerent leaders whose interests were served by this decision were the n.a.z.i hierarchy.

Chapter 3.

THE BROWN EMINENCE.

AFTER THE STAGGERING SETBACKS of Stalingrad and North Africa, it was vital to galvanize the dispirited German people for a protracted war. Hitler's complete military strategy had been predicated on a short conflict of conquest before the material superiority of his opponents-France and Britain, then the Soviet Union-became overwhelming. The era of rapid victories in 193842 had allowed Germany to loot raw materials, agricultural production, and industrial capacity from Czechoslovakia, Poland, Denmark, Norway, Holland, Belgium, France, Yugoslavia, Greece, and the western USSR. These years of pillage had delayed the tipping point after which the imbalance of resources between the Allies and the Axis became at first chronic and then terminal; but they had gained Germany only capital-not a revenue stream-and the point of no return had now been reached.

n.a.z.i Germany entered spring 1943 with no coherent overall military strategy to prosecute the war further. The failure of the invasion of the USSR was already obvious for the world to see. In May 1943, due to a combination of Allied technical and operational advances, the monthly losses suffered by U-boats in the Atlantic suddenly tripled. This forced Adm. Donitz to withdraw his wolf packs from the convoy lanes for three months; they would never recover their dominance. In June and July 1943, the first RAF Thousand-Bomber raids devastated cities such as Essen, Cologne, and Hamburg, and during that summer USAAF daylight raids penetrated deep into Germany to hit industrial targets, drawing Luftwaffe fighter squadrons back from other fronts. In July, the defeat of a new German offensive around Kursk in the Ukraine finally crushed any hope of regaining the initiative on the Eastern Front. Also in July, the Western Allies successfully invaded Sicily, and in September, Italy became the first of the Axis nations to sue for peace. In the coming winter nights the RAF's baleful focus would shift to Berlin itself-in November alone, 400,000 Berliners were rendered homeless. Despite occupying most of Europe, German forces were now wholly on the defensive and trapped in a war of attrition, reduced to waiting, with dwindling resources, for the Allies to unleash new offensives in the east, the south, and the west. Moreover, there was simply no coherent mechanism for addressing Germany's situation. The Fuhrer's word was absolute and there was no one in the n.a.z.i hierarchy or the armed forces to contradict him.

The German regime's response to the disaster of Stalingrad and President Roosevelt's demand for unconditional surrender was a call for "total war." In a widely reported speech given to the Berlin n.a.z.i Party in the Sportpalast (Sports Palace) on February 18, 1943, the Reich minister of propaganda, Dr. Joseph Goebbels, demanded of his audience and the German people their complete commitment to "der totaler Krieg." Warning that "two thousand years of Western history are in danger," Goebbels called for even greater sacrifices in support of the Wehrmacht, the last defenders against the Bolshevik hordes that were threatening the territory and the very cultural ident.i.ty of Europe. To this end, he called for the full mobilization of the German economy and the German people for the exclusive support of the war effort. On the podium with Goebbels was Albert Speer, Reich minister of armaments and war production. Speer was desperate to put the mismanaged German economy on a proper war footing, but was frustrated by a lack of skilled workers. In the face of ever-wider military conscription and Hitler's reluctance to mobilize Germany's women for the same sort of effort that Britain and America had made, much of industry was dependent upon slave labor from the East and conscripted workers from the occupied countries of Europe.

Hermann Goring, that great collector of t.i.tles, had proved equally incompetent in the position of Reich commissioner for the Four-Year Plan as he was in strategic command of the Luftwaffe. Sensing that Goring-after the failure of his boast that he could sustain the Sixth Army at Stalingrad-was falling out of favor with Hitler, Goebbels and Speer tried to persuade Hitler to dismiss him so they could take over control of the domestic economy for more efficient war production. This attempt soon failed, however, in a welter of other plots. In the turmoil following Stalingrad, pent-up rivalries among the hierarchy came boiling to the surface.

Having the ear of Hitler, Party Chief Reichsleiter Martin Bormann suggested that a triumvirate representing the state, the party, and the armed forces be established as a Council of Three with dictatorial powers to control the economy-exactly what Goebbels and Speer were proposing for themselves. They immediately changed tack and now sought an alliance with Goring and Himmler to thwart Bormann. But Himmler was in a separate plot with Bormann to gain more power at the expense of Goring. As the controller of Hitler's personal finances, Bormann finessed the plotters by giving Goring six million reichsmarks to indulge himself away from Hitler's court. In the end, none of these plots succeeded in its object since Hitler was indifferent to such ploys beyond creating divisions among his acolytes.

IN THE WORDS OF DR. OTTO DIETRICH, the Reich press chief, "Hitler created in the political leadership of Germany the greatest confusion that has ever existed in a civilized state." The plots and counterplots of 1943 were a prime example of how Hitler exercised his absolute power by fomenting fierce rivalries among his immediate subordinates so that none could ever acquire sufficient power or influence to challenge the Fuhrer himself. Indeed, such episodes represent the whole n.a.z.i regime in microcosm.

The popular perception holds that the Third Reich was a monolithic totalitarian state that controlled a reluctant population through terror and Teutonic efficiency. While the reign of terror was real enough, the government inst.i.tutions of the Third Reich were in fact ma.s.sively inefficient, hampered by conflicts of interest and muddled chains of command and absurdly wasteful of money, time, and manpower. Hitler showed little interest in or talent for administration; he preferred to wield power through many competing organizations that owed their very existence to his good offices. In line with his conception of creative chaos, different individuals and agencies were given ill-defined responsibilities in closely related fields of activity in everything from postal administration to weapons development. The price demanded for Hitler's support in the resulting turf wars was total personal loyalty. This might earn supplicants a loosely expressed general directive that they could interpret as endorsing their particular agendas. In pursuit of these rivalries, empire building and bureaucratic obstruction were rife and were deliberately encouraged by Hitler, according to his simplistic view that the strongest would prevail through compet.i.tion.

The architecture of the n.a.z.i state machinery defied all logical explanation. Before the war, the operations of government were nominally entrusted to seventeen ministries, yet the last actual cabinet meeting had taken place in November 1937. On August 30, 1939, the Ministerial Council for the Defense of the State had been formed. It was composed of six of Hitler's closest followers and bureaucrats; this body, chaired by Goring, could enact laws at Hitler's will. Commissioners were appointed with broadly defined powers within various areas of government activity, but there was no actual machinery for coordinating their work. Worse, there was at every level a divisive duplication of authority caused by the parallel prerogatives of state and n.a.z.i Party functionaries. Virtually every state body was replicated with a party equivalent, with each vying for resources and favor.

Heinrich Himmler, as national leader of the SS and chief of German police, was already ruler of the entire security and police apparatus, but his ambitions for expanding his SS empire knew no bounds. The whole machinery of government was interpenetrated by Himmler's practice of awarding parallel SS ranks to functionaries of every kind. Adm. Canaris's Abwehr military intelligence department, answerable to the Armed Forces Supreme Command, was a particular target for Himmler's ambition. Its activities were mirrored by the intelligence and counterintelligence branch of the SS, the Security Service-Sicherheitsdienst. This was commanded until June 1942 by Himmler's deputy, SS and Police Gen. Reinhard Heydrich, the head of the Reich Main Security Office. Each agency scrabbled for supremacy at the expense of efficient operations against the common enemy.

Canaris and Heydrich, who shared a mutual love of riding and of music, maintained an ostensibly cordial relationship. They sometimes dined together en famille. The cold-blooded killer Heydrich was also an accomplished violinist and he often played for Canaris's wife. When the professional rivalry became too intense, however, Canaris betrayed Heydrich's movements in Czechoslovakia to Britain's MI6. Two parachutists of the Czech Brigade, Jan Kubis and Jozef Gabcik, threw an ant.i.tank grenade at Heydrich's open-top Mercedes in a Prague street on May 27, 1942. Several fragments and bits of horsehair seat upholstery entered Heydrich's back. He was at first expected to recover from the operation to extract the debris, but the wounds became infected and he died a week later. The death of the central architect of the "Final Solution"-which he had unveiled at the Wannsee conference that January-led to ma.s.s reprisals that killed about 5,000 Czech men, women, and children.

AMONG THE ABHORRENT FIGURES at the pinnacle of the n.a.z.i hierarchy, popular history recalls in particular the flamboyant, drug-addicted Luftwaffe commander in chief Hermann Goring, the occultist security overlord Heinrich Himmler, and the odious propaganda minister and de facto interior minister Joseph Goebbels. In truth, however, the most devious of them all, and the master of palace intrigue, was the relatively faceless party chief Martin Bormann. Hitler's shadow and gatekeeper for much of the Third Reich, Bormann was a figure forever lurking in the background at the Fuhrer's elbow. His battlegrounds were the card-index file and the double-entry ledger. His princ.i.p.al weapon was the teleprinter, through which he issued a torrent of instructions to his ubiquitous regional gauleiters (district leaders). To these party officials, Bormann was known behind his back as the "Telex General."

Bormann had come to the n.a.z.i Party relatively late, joining only in 1926, so the Alte Kampfer ("Old Fighters") who had supported Hitler in the Munich putsch attempt tended to dismiss him. Nevertheless, he held the party membership number 6088 and was therefore eligible for the Gold Party Badge, awarded to party members with a registration number under 100,000. Bormann's first job was to run the relief fund for the storm troopers of the Sturmabteilungen (SA-the party's brown-shirted uniformed part-time activists) who were injured in brawls and riots. He cannily negotiated reduced premiums to the insurance company concerned while at the same time increasing the contributions from NSDAP members by 50 percent; furthermore, the payment of dues was now compulsory, while any payment of benefits was at Bormann's sole discretion. In short order, this scheme raised 1.4 million reichsmarks in a single year-much to Hitler's delight. The Fuhrer moved Bormann and the SA fund into the NSDAP proper. Bormann now worked at the Brown House, the party headquarters in Munich, where he aspired to taking over the post of party treasurer from Franz Xaver Schwarz.

Meanwhile, he progressed to controlling the finances of the Adolf Hitler Spende der Deutsche Wirtschaft, the "Adolf Hitler Fund of German Business." This AH Fund was originally established as "a token of grat.i.tude to the leader" in order to provide campaign funds and finance for cultural activities within the NSDAP. In reality it became Hitler's personal treasure chest, with revenues gathered from many sources. The most important were the contributions made by industrialists-such as Krupp and Thyssen and of course IG Farben-who were benefiting enormously from German rearmament. In essence, this was a tax amounting to one-half percent of a company's payroll, payable directly to the Fuhrer. In its first year alone, 30 million reichsmarks poured into the coffers of the AH Fund.

In 1929, Bormann married Gerda Buch, the daughter of a senior party official, and on July 3, 1933, he was appointed chief of staff to the deputy Fuhrer, Rudolf Hess. Hess was as uninterested as. .h.i.tler in paperwork, so Bormann's skill in turning Hitler's spontaneous verbal directives into coherent orders was invaluable. The Fuhrer would comment approvingly that "Bormann's proposals are so precisely worked out that I have only to say 'yes' or 'no.' With him, I deal in ten minutes with a pile of doc.u.ments for which with another man I should need hours." On October 10, 1933, Hitler appointed Bormann as a party Reichsleiter or national leader, making him fourth in the n.a.z.i hierarchy behind Hitler, Goring, and Hess. The intertwining of party and state authority, as described above, would henceforth give Bormann all the freedom of maneuver that he needed.

BORMANN'S ABILITY TO INGRATIATE HIMSELF with the Fuhrer was uncanny. He altered his sleeping pattern to coincide with Hitler's and even mimicked his master by eating vegetarian food and avoiding alcohol when they were dining together-although in private he gorged himself on schnitzel, wurst, and schnapps. As one regional gauleiter commented, "Bormann clung to Hitler like ivy around an oak, using him to get to the light and to the very summit." This he achieved after Deputy Fuhrer Hess-already a marginalized figure-embarked on his bizarre solo flight to Scotland on May 10, 1941, apparently to seek a peace agreement with opponents of the British government. Hess's departure from the scene allowed Bormann to get even closer to Hitler. He was now entirely responsible for arranging the Fuhrer's daily schedule, appointments, and personal business. He was always at his master's side and never took a vacation for fear of losing influence. His reward came in April 1943, when he was appointed secretary to the Fuhrer and chief of the party chancellery. The latter post gave him immense influence over the gauleiters who controlled every district (Gau) across the Third Reich. He was now so indispensable that the Fuhrer was prompted to say, "To win this war, I need Bormann."

He also needed Bormann to control his personal finances. At a dinner party with Himmler in October 1941, Hitler had declaimed, "As far as my own private existence is concerned, I shall always live simply, but in my capacity as Fuhrer and Head of State I am obliged to stand out clearly from amongst all the people around me. If my close a.s.sociates glitter with decorations, I can distinguish myself from them only by wearing none at all." This claim of monkish asceticism was not strictly true. Hitler enjoyed a lavish lifestyle at his Bavarian residence, the Berghof, in the mountain village retreat of Berchtesgaden in Obersalzburg munic.i.p.ality. Besides the Berghof itself, separate villas were provided at Obersalzberg for all the notables of the n.a.z.i hierarchy. This compound had all been created for the Fuhrer by Bormann and financed from the AH Fund to the tune of about 100 million reichsmarks. With its splendid views of the Bavarian Alps, the Berghof was. .h.i.tler's favorite retreat. This was where he spent time with his mistress, Eva Braun, and entertained foreign visitors and his close and trusted a.s.sociates-his Berg Leute, or mountain people.

As Otto Dietrich would write, Bormann then a.s.sumed economic and financial direction of the entire "household of the Fuhrer." He was especially attentive to the lady of the house, antic.i.p.ating her every wish and skillfully helping her with the often rather complicated arrangements for social and state functions. This was all the more necessary, since she herself tactfully kept in the background as much as possible. Bormann's adroitness in this matter undoubtedly strengthened his una.s.sailable position of trust with Hitler, who was extraordinarily sensitive about Eva Braun.

There was, however, no love lost between Bormann and Braun; behind his back she called him an "overs.e.xed toad."

With his brilliant business ac.u.men, Bormann found many ways to bolster Hitler's personal fortune. Apart from the considerable income derived from royalties on Mein Kampf-which, since it was required reading in German schools, sold millions of copies-Bormann devised a scheme to capitalize on image rights whereby Hitler received a payment for every use of his likeness, be it on a postcard or even a postage stamp. These monies were paid into a separate Adolf Hitler Cultural Fund to support the performing arts and to purchase paintings for the Fuhrer's personal collection. By the outbreak of war in 1939, Hitler's annual income was immense, but-thanks to a deal that Bormann had arranged with the authorities-he paid no income tax. Like other n.a.z.i leaders, Hitler had foreign bank accounts, including one with the Union Bank of Switzerland in Bern and another in Holland. These accounts received the royalties earned on Hitler's book sales abroad and, more importantly, allowed him to indulge the one pa.s.sion in his life besides politics-his obsession with art.

Chapter 4.

THE RAPE OF EUROPE.

AS A YOUNG MAN IN VIENNA before World War I, Hitler had nurtured ambitions to be an artist and an architect, despite the fierce objections of his overbearing father, Alois Schicklgruber. In 1907, he applied to the Academy of Fine Arts but failed the entrance examination. Desolated, he applied again the following year but was rejected again, his portfolio winning only a cursory glance. This was a turning point in Hitler's life. Attributing his rejection to the panel of academicians being Jews, he nursed a deep embitterment toward the Jewish race, although, ironically, on the few occasions that Hitler ever sold any of his paintings, it was through the Jewish Hungarian art dealer Josef Neumann.

For the next few years. .h.i.tler lived a vagrant's life "of hardship and misery," as he later recalled in Mein Kampf. His only solace was found in Vienna's many art museums and the city's deep tradition of cla.s.sical music. His musical tastes were catholic-Beethoven, Bruckner, Chopin, Grieg, Schubert, Schumann, and even Mahler and Mendelssohn-but his abiding favorite was Richard Wagner and he knew the opera Die Meistersinger von Nurnberg by heart. Hitler gave up painting after World War 1 as his political career progressed, but he retained an illusion of himself as a great artist throughout his life and his interest in architecture never diminished.

Once in office as chancellor, Hitler pursued his obsession of "racial purity" with ruthless zeal, in parallel with a breakneck program of centralizing all power in the party's hands. The n.a.z.is' election in 1933 was followed almost immediately by their virtual destruction of the German const.i.tution in response to the Reichstag fire and, on the death of President Paul von Hindenburg in August 1934, by Hitler's a.s.sumption of the dual leadership of the n.a.z.i Party and the state as Fuhrer (leader)-a coup d'etat endorsed in a plebiscite by 38 million German citizens. Once parliament and the courts were castrated, the regime enjoyed unfettered power and was free to inst.i.tute a policy of Gleichschaltung (enforced conformity), consolidating its hold over the nation by the elimination or neutering of any organized bodies that were outside the complete control of the n.a.z.i Party. A spate of decrees revoked individual liberties and rights of a.s.sociation, silenced the media, banned rival political parties and free labor unions, and destroyed the independence of regional governments and the judiciary. The death penalty was introduced for a wide range of politically defined "crimes," and there were ma.s.s arrests not only of communist, social democratic, and Jewish activists but also of freemasons, gypsies, h.o.m.os.e.xuals, and any others deemed deviant in the eyes of n.a.z.i orthodoxy. Most of these "pariahs" were incarcerated in the fifty concentration camps that were opened during the n.a.z.is' first year in power.

In April 1933, Julius Streicher, the notorious Jew-baiter and editor of the n.a.z.i weekly newspaper Der Sturmer (The Attacker), orchestrated an economic boycott of Jewish businesses. Dr. Joseph Goebbels, head of the newly founded Reich Ministry for Public Enlightenment and Propaganda, called for the "cleansing by fire" of "un-German" books, particularly those by authors of Jewish background such as Einstein, Freud, Kafka, and Marx-and even the works of the revered German nineteenth-century poet Heinrich Heine, whose tragedy Almansor contains the warning "Where they burn books, they will in the end also burn people." On May 10, a crowd of 40,000 watched the burning of 25,000 books in Berlin's Opernplatz. In November 1933 a national referendum showed that 95 percent of the population approved of n.a.z.i policies, even as their rights and freedoms were being systematically destroyed.

IN THE HEADY DAYS following their electoral victory, the n.a.z.is concentrated on eliminating political opponents of the center and left. Now they had the opportunity to turn on the Jews. By 1934, all Jewish shops were prominently daubed with the word "Juden" or the Star of David, and storm troopers of the SA frequently hung around outside them to discourage customers from entering. Increasingly, Jewish business people were forced to close down as they lost their livelihood. Soon, German Jews were being forced out of the professions and government employment as doctors, lawyers, teachers, scientists, and civil servants. Shops and restaurants refused to serve Jews and they were banned from public parks, swimming pools, and even public transport. German children were imbued with anti-Semitism during school lessons and even during playtime-the object of a popular children's board game was to render particular areas of Germany Juden Frei or "Jew-free."

A major step in the process of "Aryanization" of all aspects of German society was taken on September 15, 1935, with the enactment of the so-called Nuremberg Laws. Henceforth, marriage or s.e.xual intercourse between Jews and Aryans was expressly forbidden, and Jews were deprived of their political rights as citizens. Increasingly, Jews attempted to emigrate to France, Switzerland, and further afield, but they were rarely made welcome and many were refused entry. Out of a total Jewish population of some 525,000, about 170,000 had already left Germany before October 5, 1938, when a decree invalidated their pa.s.sports. The Swiss insisted that German Jews who needed traveling doc.u.ments for emigration purposes be reissued pa.s.sports with a large "J" for ready identification and rejection at the border. Many Jews could not afford the ever-increasing cost of emigration. Those who could were not permitted to take any capital with them, and few had any money left after being forced to sell their homes and businesses at greatly discounted prices to pay the Reichsfluchtsteuer ("escape tax"). Dealers in art and antiquities were specifically targeted, and this enforced liquidation of about 80 percent of such businesses in Germany caused a glut on the market and a sharp slump in prices.

On November 9, 1938, racial violence-sparked by the a.s.sa.s.sination of a German diplomat in Paris by a young Jewish Pole whose family had been deported from Germany-reached new heights. That night Jewish homes, properties, and synagogues across Germany and parts of Austria and the Sudetenland were attacked and burned in the orgy of destruction known as Kristallnacht-"Crystal Night" or the Night of Broken Gla.s.s-from the amount of broken gla.s.s it left carpeting the streets. At least ninety-one Jews lost their lives; another 30,000 were arrested and largely consigned to concentration camps. The survivors were actually forced to pay the material price of this pogrom. Replacing all the broken windows would cost some 25 million reichsmarks, and since almost all plate gla.s.s was imported from Belgium this had to be paid in scarce foreign currency. By now, the avaricious Hermann Goring was in charge of the "Program to Eliminate Jews from German Economic Life" and he decreed that all Jews remaining in Germany were to provide the Reich exchequer with "atonement payments," totaling 1 billion reichsmarks, to cover the costs of repairing the damage. In addition, any insurance payments made to German Jews were confiscated by the state.

KRISTALLNACHT WAS THE CLEAREST WARNING YET to German Jewry of their perilous situation, and, between then and the outbreak of war in September 1939, approximately 100,000 Jews somehow found ways to leave the Reich. Another n.a.z.i legislative novelty was about to suggest that any who were unable or unwilling to do so might find themselves at the mercy of a state prepared to commit ma.s.s murder.

Among the plague of new legislation enacted in 1933 was a law for the compulsory sterilization of people suffering "congenital mental defects, schizophrenia, manic-depressive psychosis, hereditary epilepsy, and severe alcoholism." Germans were not alone in their enthusiasm for the pseudoscience of eugenics, which in the 1920s30s was widely espoused across Europe and America in the interests of "racial hygiene." One of its advocates was John D. Rockefeller, the founder of Standard Oil of New Jersey. It was his Rockefeller Foundation that provided much of the funding for the Kaiser Wilhelm Inst.i.tute, Germany's most prestigious medical school, to carry out studies on "anthropology, eugenics, and human heredity" under the direction of a Swiss psychiatrist and fervent n.a.z.i, Ernst Rudin. A ma.s.s program of sterilization of both the mentally ill and social misfits, as determined by 220 district "hereditary health courts," was inst.i.tuted. Among the several hundred thousand victims were such undesirables as convicts, prost.i.tutes, and even children as young as ten from orphanages.

By inexorable n.a.z.i logic, the next step was euthanasia or "mercy killing." This program began in 1938 under the auspices of Hitler's personal physician, Dr. Karl Brandt. At first the victims were limited to mentally and physically handicapped children who were killed by lethal injection. But the program was soon extended to handicapped adults and to anyone judged an incorrigible social deviant. When lethal injection proved time-consuming and less than efficient, a bureaucracy of murder was established; this was designated the T4 program after the address of its headquarters at Tiergartenstra.s.se 4 in Berlin. The program was codified in law by decree of the Fuhrer in October 1939. At every mental inst.i.tution false bathhouses were built, where the victims were killed at first by carbon monoxide and later by poison gas.

SOON AFTER KRISTALLNACHT, Goring devised yet more devious schemes from which to profit by forcing German Jews to leave the country. By a decree dated January 1, 1939, all their property and possessions were essentially confiscated by the state. Public Acquisition Offices were set up for "the safekeeping of works of art belonging to Jews," and a subsequent decree demanded the surrender of "any objects in their ownership made of gold, platinum, or silver, as well as precious stones and pearls." This expropriation of Jewish property was the first foreshadowing of the n.a.z.is' future plundering of Europe. After Goring had made his choice of artworks and trinkets, the proceeds from the loot went directly to the coffers of the AH Fund or the Adolf Hitler Cultural Fund. With such resources at his disposal, Hitler was able to indulge his pa.s.sion for paintings.

The Fuhrer's personal taste was bourgeois in the extreme. He loathed all nonrepresentational art and his eye for quality was completely inconsistent. In 1934 he purchased a portrait of his great hero Frederick the Great of Prussia by the Swiss painter Anton Graff (17361813) for the then-considerable sum of 34,000 reichsmarks. It was. .h.i.tler's favorite painting and it traveled with him everywhere. As an example of his more prosaic taste, Hitler paid 120,000 reichsmarks to Hermann Gradl, a painter of idyllic landscapes, to make six large oils for the dining hall of the New Reich Chancellery between 1939 and 1941. Their conventional character may be guessed from Hitler's instructions that this commission was to ill.u.s.trate "the typical appearance of the German Land, in its intertwining of Nature and Culture and its many different guises as Motherland of the German Nation." To adorn the New Chancellery the Fuhrer spent nearly 400,000 reichsmarks on other contemporary artworks of very mixed quality. Although he bought for his own collection paintings by Rubens, Ca.n.a.letto, van Dyck, and Watteau at the behest of his art adviser, Dr. Hans Posse, his favorite painters were actually somewhat obscure German nineteenth- and early twentieth-century artists such as Franz Stuck and Carl Spitzweg, neither of whom has stood the test of time. One of his all-time favorites was Eduard von Grutzner, whose particular specialty was portraits of drunken monks. In a conversation with Albert Speer, Hitler declaimed, "Look at those details-Grutzner is greatly underrated. It's simply that he hasn't been discovered yet. Some day he'll be worth as much as a Rembrandt." This has not proved to be the case.

In one of his first acts as chancellor, Hitler ordered the construction of the House of German Art in Munich to display the finest examples of Germanic painting and sculpture. The task was entrusted to Alfred Rosenberg, the n.a.z.i Party ideologue and chief racial theorist, who was given the grandiose t.i.tle of "Fuhrer's Delegate for the Entire Intellectual and Philosophical Education and Instruction of the National Socialist Party." The fundamental contradiction was, of course, that the n.a.z.i Party was profoundly anti-intellectual and as totally opposed to freedom in the arts as it was to any other sort of independent thinking. Nevertheless, the leadership devoted an inordinate amount of time to cultural matters-as the character Wilhelm Furtw.a.n.gler says in Ronald Harwood's modern play Taking Sides, "Only tyrannies understand the power of art." But Rosenberg's role was twofold; besides finding and glorifying politically acceptable German art, he was to root out all art that did not conform to n.a.z.i ideology or Hitler's personal taste. For fear of losing their jobs, museum directors and curators across Germany were obliged to surrender to the state "purging" committees all works by artists suspected of "degeneracy"-Cubists, Impressionists, Futurists, German Expressionists, Dadaists-and other "un-German" art.

In all, some 16,000 works of art were confiscated from museums across the country. As the new arbiter of artistic merit, Hitler dismissed the works of masters such as Georges Braque, Paul Cezanne, Henri Matisse, and Pablo Pica.s.so as "twaddle," and a new office was set up to implement his demands in the "unrelenting war of purification." All active artists had to submit their work to this Committee for the a.s.sessment of Inferior Works of Art; any works deemed substandard were confiscated without compensation, and artists who ran afoul of the committee were forbidden to purchase painting materials on pain of imprisonment, thus ending their careers. Many artworks were destroyed; for example, on March 20, 1939, 1,004 paintings and sculptures as well as 3,825 drawings, watercolors, and other items were burned during a practice exercise for the Berlin Fire Department.

Predictably, Hermann Goring turned the situation to his pecuniary advantage. All the confiscated works of art from the nation's museums were stored in a warehouse on Kopernikusstra.s.se in Berlin, and when Goring sent his art agent to forage through this Aladdin's cave he came away with a veritable feast of Impressionist paintings, including four by Vincent van Gogh. A single Cezanne and two van Goghs, including Portrait of Dr. Gachet, were sold to a Dutch banker for 500,000 reichsmarks. (In 1990, Portrait of Dr. Gachet sold for $82.5 million.) With the money raised, Goring purchased more Old Masters and his favorite Gobelin tapestries to adorn the walls of his country mansion Carinhall.

Following Goring's example, the other n.a.z.i leaders now profited from the activity of a Commission for the Exploitation of Degenerate Art that released purged artworks onto the international market. Despite their greed, however, the sales of Germany's heritage that were held in London, Paris, and Switzerland from 1937 until early 1939 effectively dumped these despised works. Some extraordinary bargains were to be had: a Paul Klee for $300, now in the Museum of Modern Art in New York; a Kandinsky for $100, now in the Guggenheim Museum in New York; and Henri Matisse's Bathers with a Turtle, purchased by Joseph Pulitzer for 9,100 Swiss francs, which now resides in the St. Louis Art Museum.

The Austrian Anschluss of March 12, 1938, saw Hitler's native country annexed to the Third Reich, to the rapturous enthusiasm of a large part of the Austrian people. Within hours, every public building was bedecked with swastika flags, while gangs of thugs rampaged through the streets hunting down Jews. Two days later, Hitler made a triumphal progress through Vienna. In the meantime, SS officers were pillaging Jewish homes in search of artworks and valuables. They knew exactly where to look since German scholars had been commissioned to prepare catalogs and inventories of private collections across Europe in antic.i.p.ation of Hitler's conquests. The art collections of the Rothschild banking family were primary targets; Baron Alphonse de Rothschild was stripped of 3,444 artworks from his Hohe Warte villa in Vienna and his country estate at Schloss Reichenau, while his elder brother Baron Louis lost 919 pieces to the n.a.z.is. All such items were carefully cataloged and photographed and an extensive inventory was prepared before the chosen pieces were transferred to Germany and the residue to Austrian museums. In the month following the Anschluss, Hitler decided to create the greatest art museum in the world in the city of Linz, close to his birthplace. The Fuhrermuseum was planned to become the repository for all the great works of art looted during the n.a.z.i wars of conquest-except, of course, for those pieces diverted to the private collections of Adolf Hitler, Hermann Goring, and a select few others of the n.a.z.i elite.

ON JUNE 23, 1940, THE DAY FOLLOWING France's humiliating armistice, Hitler conducted a triumphal tour of Paris. He was accompanied by his favorite sculptor Arno Breker, his architect Albert Speer, and several general staff officers, traveling in three G4 Mercedes six-wheel touring cars. Speer recalled that when they visited the famed nineteenth-century Paris Opera house, Hitler "seemed fascinated by the Opera, went into ecstasies about its beauty, his eyes glittering with an excitement that struck me as uncanny." The entourage sped past Madeleine church and the Arc de Triomphe, down the Champs-elysees, past the Eiffel Tower, and on to Les Invalides, where Hitler spent a considerable time at Napoleon's tomb, communing with the previous great European tyrant. At the conclusion of his tour of the City of Light, he stated, "It was the dream of my life to be permitted to see Paris. I cannot say how happy I am to have that dream fulfilled today."

That dream had cost the lives of 27,074 Germans and left another 111,034 wounded, but Allied casualties in the Battle of France were a staggering 2.292 million. The greatest toll was paid by the French, with 97,300 killed and missing, 120,000 wounded, and 1.54 million captured. The latter were doomed to become forced laborers for the German war effort. After this colossal victory, achieved in just six weeks, continental Western Europe lay helpless and ripe for plunder. A galaxy of the world's great art museums had fallen into the hands of the n.a.z.is-the Musees Royaux des Beaux-Arts in Brussels, the Rijksmuseum in Amsterdam, and the Louvre in Paris, as well as a host of provincial galleries and private collections. The greatest h.o.a.rd in the history of military conquest since the time of Napoleon Bonaparte now became subject to the greatest art theft in recorded history.

THE TASK OF PERFORMING this grandest of larcenies fell to Alfred Rosenberg and an organization named after him, the Einsatzstab Reichsleiter Rosenberg fur die Besetzen Gebiete (Special Staff of National Leader Rosenberg for the Occupied Territories) or ERR for short. Rosenberg's role, defined in a personal directive from Hitler, was to comb every public and private collection in the occupied countries and "to transport to Germany cultural goods which appear valuable to him, and to safeguard them there." France, Belgium, and Holland were the responsibility of ERR Dienststelle (Agency) Western, headquartered in Paris. Within a few weeks, a fabulous body of art had been a.s.sembled at the Louvre and the German emba.s.sy awaiting a decision as to final disposal. This included twenty-six "Jewish-owned works of degenerate art," comprising fourteen Braques, seven Pica.s.sos, four Legers, and a Rouault, which were retained for "trading for artistically valuable works."

Even as his Luftwaffe was fighting in the skies over England during the Battle of Britain, Goring was scouring the museums of the Low Countries in his insatiable quest for artistic loot. By October 1940, he had lost his "Channel War," and the contemplated invasion of Britain was canceled. On November 3, he consoled himself with a trip to Paris to view the acc.u.mulated treasures that had been gathered in the Jeu de Paume museum. The haul was so extensive that it took Goring two full days to make his choices-mostly French and Dutch masters from the Rothschild and Wildenstein collections. Above all, he craved the painting t.i.tled The Astronomer by Jan Vermeer, stolen from Baron Alphonse de Rothschild; but as the Fuhrer's collection lacked a Vermeer, Goring was out of luck. In the pecking order of plunderers, Hitler had first choice through his chief art procurer, Dr. Hans Posse, both for his personal collection and for the planned museum at Linz. The diligent and resourceful Posse wrote to Martin Bormann almost every day, in great detail, about his various acquisitions for the Fuhrer and the state of the art market. Second came Reichsmarschall Goring, and after he had taken his pick, then sundry German museums received the remaining spoils.

While the search for Jewish valuables continued tirelessly, with the ready cooperation of officials in Vichy France-even individual safety deposit boxes were opened-the harvesting of conquered Europe was not confined to items of obvious value. In the occupied countries, millions more Jews were now at the disposal of the n.a.z.is, to be registered by their national authorities and to await the bureaucracy of genocide. At any time they were subject to deportation to Germany and on to the concentration camps that spread like plague pits across Eastern Europe. At first, Jewish homes were simply abandoned and then ransacked by neighbors, but the n.a.z.is soon realized that this was a waste of resources. However humble and mundane, furniture and household items could be of benefit to the Reich, where the manufacture of most domestic goods was seriously curtailed in favor of war production.

Accordingly, the ERR set up another division tasked with expropriating all Jewish belongings once their owners had been dispatched to the death camps. This new organization, known as Aktion-M (Project M) for Mobel (furniture), operated across Europe. Once a Jewish family had been expelled from their home, local police under the direction of the n.a.z.is would arrange for vans to collect all the furniture and kitchen appliances, which were taken to a central repository to await shipment to Germany. The Dutch even invented a word for the process-pulsen-after the name of the Amsterdam moving company Abraham Puls & Sons, which was employed by the Dutch police for this task. In one year alone, Project M was responsible for the clearing of 17,235 Dutch homes of items totaling loads of almost 17 million cubic feet; these were crated for dispatch to Germany or to the ethnic German populations living in the occupied Eastern Territories. During 1942, 40,000 tons of furniture were also shipped from France to Germany. A report by ERR Dienststelle Western dated August 8, 1944, records that after 69,512 Jewish homes had been stripped of household goods, it took 674 trains with 26,984 freight cars to carry the plunder to Germany.

THE n.a.z.iS SYSTEMATICALLY LOOTED artworks-using that term to embrace everything from ceramics to church bells and from sculptures to silverware-from every country they occupied, while also inflicting untold destruction on cultural buildings. The Soviet Union lost 1.148 million artworks as the Germans ransacked 400 museums, 2,000 churches, and 43,000 libraries inside Soviet territory. In Poland, some 516,000 individual pieces of art were looted, representing about 43 percent of the country's cultural heritage. Much of this plunder was intended to reside in the Fuhrermuseum at Linz, the symbol of Hitler's artistic vision and the cultural center of the Thousand-Year Reich, which would finally expunge his rejection at the hands of the Academy of Fine Arts in Vienna. In the meantime, however, the Fuhrermuseum existed only in blueprint and tabletop models, and it was essential to protect Hitler's loot from the ever more destructive Allied bombing campaign.

Across Germany, numerous repositories were created in cave complexes and salt mines where the appropriate conditions of humidity and temperature could be maintained. Thanks to the meticulous records of the ERR and Dr. Hans Posse, Martin Bormann knew the location of every single crate of plunder across the length and breadth of the Third Reich. He was therefore able to inform the Fuhrer of the exact whereabouts of any particular piece, should Hitler wish to view or display it at any time. Bormann himself had little interest in the subject, but he realized the potential value of even "degenerate art" on the world market. He arranged for many pieces to be sold at international auctions held in Switzerland; the funds from these sales were deposited in Hitler's personal account at the Union Bank of Switzerland or in a separate account to purchase essentials for the war effort. Unlike other n.a.z.i leaders, however, Bormann never appropriated state funds for his own personal ends. The rewards he craved were power and control.

Following the occupation of Vichy France in November 1942, this avenue for art sales closed, since international dealers were unable to visit Switzerland and U.S. customs regulations forbade trading with the occupied countries of Europe. Bormann promptly established bogus art dealerships in Latin American locations ranging from Buenos Aires to Mexico City. Degenerate art was now transported to the Americas from Genoa, Italy, on ships sailing under the flags of neutral countries. Many pieces thus continued to reach the American market, and Bormann had the proceeds from these sales salted away in the Banco Aleman Transatlantico and the Banco Germanico in Buenos Aires. The shipping companies involved included the Argentine firm Delfino S.A. and the Spanish line Compania Naviera Levantina; the latter was purchased by a German front company to make supply voyages under the Spanish flag to the beleaguered German forces in Tunisia during the winter of 194243. On their return trips from South America, these vessels brought back much-needed foodstuffs and strategic materials-such as vanadium from Argentina, which was crucial for the production of synthetic fuels. In addition, many crewmen from the Kriegsmarine pocket battleship Admiral Graf Spee, who had been interned in Argentina and Uruguay since their ship was scuttled off Montevideo in December 1939, were carried home to Germany.

The flow of confiscated art from France to Germany continued right up until the Allied advance was threatening Paris in July 1944. By then, 29 major shipments of artworks had been undertaken since 1941, involving 137 freight cars carrying some 4,174 crates of plunder, comprising about 22,000 objects from 203 different collections.

Similar streams of plunder continued to flow from all the other occupied countries of Europe and from the Soviet Union, and even from Italy after its surrender to the Allies in September 1943. Under orders from their t.i.tular chief, the Luftwaffe's Hermann Goring Panzer Division plundered artworks from Naples and all points northward as the German forces gradually retreated up the length of Italy. This industrial-scale looting provided a ma.s.sive infusion of funds to the Third Reich and ama.s.sed for both Hitler and Goring the finest individual collections of art ever known. The plundered art was also to become a vital element in the master plan that Martin Bormann developed as the tides of war turned against Germany: Aktion Feuerland.

Chapter 5.

n.a.z.i GOLD.

FROM THE TIME THAT HITLER a.s.sumed power, rearmament was his top priority, both to reduce unemployment among the German people and to pursue his plans for a short, sharp war of conquest. From as early as 1933, the president of the Reichsbank, Dr. Hjalmar Schacht, created several phantom accounts where gold acquisitions by the Reichsbank were hidden in order to finance German rearmament without alerting the outside world. By the following year, the published gold accounts revealed that the Reichsbank had $80.5 million while the hidden accounts held $27 million. By 1939 this situation had almost been reversed, with published gold reserves down to $28.6 million while the hidden accounts had risen to $83 million. Between September 1, 1939, and June 30, 1945, however, Germany's gold transactions for the purchase of vital raw materials from overseas amounted to the staggering sum of $890 million. The eightfold difference between this amount and the Reichsbank holdings represented the gold bullion and coinage ransacked from every country conquered by the Germans.

During the 1930s, Germany was able to attract credit from many foreign banks and countries to underwrite the modernization of its industry and, by extension, the program of rearmament (see Chapter 1). Similarly, up to the outbreak of war, most countries were willing to accept payment for goods and services in reichsmarks, which were then often used to buy manufactured products from Germany. However, once the U.S. Treasury Department severed financial and commercial links with Germany and occupied Europe after December 1941, payment was demanded in more attractive currencies such as British pounds, U.S. dollars, or Swiss francs. But the most attractive currency of all-then as now-was gold.

By the end of 1942, following its conquest of most of Europe, Germany had an abundance of gold. The central banks of every occupied country were plundered for the benefit of the Third Reich, starting with that of Austria following its annexation in March 1938. The gold reserves of the Austrian National Bank divulged 200,765 pounds of gold bars and coinage, of which some 49,254 pounds were held in the Bank of England; the total value in U.S. dollars was $102,689,215. Czechoslovakia rendered $44 million; the Free City of Danzig, $4.1 million; Holland, $163 million; Luxembourg, nearly $4.858 million; Belgium, $223.2 million; and Italy after September 1943, some $80 million. The amount of gold taken from Greece is not recorded, while that of Yugoslavia was shared between Italy and Germany, some of it being used to establish the Ustae fascist regime in the puppet state of Greater Croatia. Denmark, Norway, and France had made the wise provision of transferring most of their gold reserves to England, America, or Canada before the n.a.z.is invaded.

POLAND'S GOLD WAS SAVED by chance and by the indefatigable efforts of Stefan Michalski, the director of the Bank of Poland. In September 1939, just as the Germans were invading Poland, he personally escorted the gold via train and truck from Warsaw through Romania and Turkey to Lebanon, where it was loaded on a ship bound for Ma.r.s.eille in France. It arrived in Paris by train in October 1939. The gold was then moved to the port of Lorient in Brittany and shipped aboard the French cruiser Victor Schoelcher to Dakar in French West Africa (in the region that is now the country of Senegal). After May 1940, Dakar was also the refuge for the residual gold holdings of France and Belgium's reserves; the latter had been transferred to the Bank of France for safekeeping early in 1940. German demands for the surrender of the Polish and Belgian gold under the terms of the armistice with Vichy France met with months of delay and prevarication. Eventually the French agreed to hand over the Belgian gold, but not the Polish, on the grounds that since that country had been carved up between n.a.z.i Germany and the Soviet Union it was no longer a sovereign state and could not currently honor the credit France had extended to it previously. The diligent Stefan Michalski guarded his charge until the Allied invasion of North Africa in November 1942, when he arranged for a U.S. warship to transport the sixty-five tons of Polish gold to New York to be deposited in the U.S. Federal Reserve Bank.

The saga of the Belgian gold was one of the most extraordinary tales of World War II. On September 23, 1940, the British and Gen. de Gaulle's Free French launched Operation Menace, an unsuccessful attack on Dakar to capture the remaining French gold reserves. Before this fiasco, the Belgian gold-comprising 4,944 sealed boxes weighing some 270 tons-had been moved inland by Vichy French operatives to Kayes, where it arrived on September 20. From there it went by train to Bamako on the Niger River and was transported by riverboats and light trucks upriver to Timbuktu and Gao. The long haul across the Sahara Desert was accomplished by camel train to the railhead at Colomb-Bechar in French Algeria. Once the gold reached Algiers, 120 aircraft flights were needed to transport it to Ma.r.s.eille. It arrived at the Reichsbank in Berlin in May 1942, after a journey lasting twenty months.

ANY GOLD BULLION STOLEN from the central banks of the occupied countries was easily recognized on the international market, due to particular stampings on each gold bar that revealed its provenance. Accordingly, all looted gold was processed through the Precious Metals Department of the Reichsbank, where it was carefully weighed, cataloged, and stored, either centrally in Berlin or in one of some twenty other branches. When necessary, the bullion was re-smelted at the Prussian State Mint into new bars that were stamped with prewar German markings to disguise their true origins.

Similarly, all the gold items taken from the victims in the extermination camps, such as gold teeth and jewelry, were either sold or melted down and cast into gold bars by the firm of Degussa-Deutsche Gold und Silber Scheideanstalt. The company even had its own smelter at Auschwitz, where it processed on average twenty-four pounds of gold per day: with a hideous symmetry, Degussa and IG Farben jointly owned the chemical production firm Degesch, which manufactured the Zyklon-B tablets used in the gas chambers. The first shipment of prisoners' valuables from the death camps to the Reichsbank was made on August 26, 1942, under the supervision of SS Capt. Bruno Melmer. In November 1942, the tenth shipment to the Reichsbank was the first to include dental gold, and the deliveries continued until the end of the war; some seventy-eight in all. The Reichsbank realized the market value of all the bullion and currency, and the proceeds were deposited in a special SS account under the name of Melmer. Funds were then transferred to an account in the name of Max Heiliger; this account was controlled by SS and Police Gen. Ernst Kaltenbrunner, the successor to Reinhard Heydrich as head of the Reich Main Security Office, and by SS Gen. Oswald Pohl, the chief administrator of the concentration camps. This became a slush fund for the SS leadership, which made large deposits and investments in Switzerland, mainly through the Bank for International Settlements.

Despite its newfound h.o.a.rds of looted gold, n.a.z.i Germany had no direct mechanism of paying for foreign goods, and the transfer of funds or gold bullion to another country required the cooperation of the international banking community. The solution lay on Germany's doorstep, in the financial inst.i.tutions of neutral Switzerland, which had been quick to recognize the commercial opportunities of what was happening in Germany. As early as 1934, Swiss banks had introduced a system of numbered bank accounts to guard the privacy of depositors-particularly Jews wishing to move their wealth out of Germany-from the scrutiny of the n.a.z.i regime. Only the most senior bank officials knew the true ident.i.ties of the account holders. In August 1939 alone, just weeks ahead of the German invasion, some 17,000 transfers were made from Poland for safekeeping in Swiss bank accounts, and once war broke out large numbers of European Jews or their appointed agents came to deposit their savings and valuables in the banks of Basel and Zurich despite Swiss border restrictions to inhibit the entry of Jews. But these Swiss transactions with the prey were small beer compared to the trade in gold that was conducted with the predators.

AT THE OUTSET, THE GERMANS FAVORED the Bank for International Settlements (BIS) based in Basel. As already mentioned, this bank was founded in 1930 for the purpose of overseeing the transfer of German reparation payments to various recipient countries under the provisions of the Treaty of Versailles, but those provisions were repudiated by Germany in 1932. Lacking any form of governmental control, the BIS was owned and run by the central banks of the member countries, including the U.S. Federal Reserve Bank, the Reichsbank, and the Bank of England. Its role was "to promote the cooperation of central banks and to provide additional facilities for international financial operations." By its own charter, it was immune from seizure or prosecution even in times of war. It acted as the prototypical world bank, but was run purely for the benefit of its own members. Indeed, it became a useful club where central bankers and their staffs met once a month in the agreeable surroundings of Basel.

The membership of the BIS board of management was intriguing. The two princ.i.p.al directors were Hjalmar Schacht, former president of the Reichsbank and Reich economic minister, and Sir Montagu Norman, the governor of the Bank of England. These two were long-standing close friends given to extended walks in the woods together. The chairman was the affable Thomas H. McKittrick, a New York banker-c.u.m-lawyer, whose sympathies with the n.a.z.is were well known. The German bias of the BIS was further confirmed by the presence on its board of Dr. Walter Funk, president of the Reichsbank (193945), and his deputy Emil Puhl; Hermann Schmitz, chairman of IG Farben; and Baron Kurt von Schroder, banker to Adolf Hitler and owner of the J.H. Stein Bank of Cologne, whose most noted client was the SS-accordingly, one of the Stein bank's directors was Gen. Ernst Kaltenbrunner.

Baron von Schroder, himself an SS brigadier, was the director of more than thirty other companies, including ITT in Germany. Schroder's Bank of Hamburg was affiliated with the J. Henry Schroder & Co. of London, which acted as the German government's financial agent in Britain from 1938. The latter in its turn owned the J. Henry Schroder Banking Corporation of New York; this concern went into partnership with the Rockefellers in 1936 to become the Schroder Rockefeller & Co. investment bank, of which Allen Welsh Dulles-the future OSS station chief in Bern-was a director. Such was the fraternity of international banking, united in the belief that business must continue even in the depths of a world war.

Up to the outbreak of war in 1939, the BIS channeled funds totaling some 294 million Swiss francs from foreign investors into n.a.z.i Germany, and it continued to a.s.sist the n.a.z.is throughout the war. At the time of the German annexation of the Czech Sudetenland in October 1938, the National Bank of Czechoslovakia in Prague held some $26 million of gold in the BIS account held by the Bank of England in London. In March 1939, after the whole of Czechoslovakia had been occupied, the Germans laid claim to this amount for the Reichsbank. The BIS immediately bowed to German demands, but required the agreement of the Bank of England for completion of the transaction, and Sir Montagu Norman duly arranged this. When the Soviet Union tried the same ploy after occupying the Baltic states of Estonia, Latvia, and Lithuania in 193940, its claim was refused.

DESPITE CLAIMING NEUTRALITY and total probity, the BIS was of vital a.s.sistance to n.a.z.i Germany in its quest for strategic resources-such as rubber from j.a.panese-occupied Malaya, paid for with funds transferred to j.a.pan via the BIS. It was Germany's need for essential raw materials that fueled the money-laundering operations of the BIS and the Swiss banks. Coincidentally, some of the most critical resources were to be found in Europe's neutral countries-Swedish iron ore, Turkish chromium, and Portuguese and Spanish wolfram-the latter being essential for the manufacture of tungsten, which was used to make machine tools and armor-piercing ammunition. Both Portugal and Spain were ruled by fascist dictators sympathetic to the n.a.z.i cause.

Antonio de Oliveira Salazar of Portugal played a canny game, trading with both the Allies and Germany. His regime depended on America for oil and wheat but was willing to sell wolfram by a strict quota system on a cash-and-carry basis that inevitably inflated the cost of the ore-by 1943, wolfram commanded eight times the prewar price, and the Allies alone paid $170 million for wolfram to Portugal and Spain during World War II. While Britain and America paid respectively in pounds sterling and U.S. dollars, Germany was obliged to pay in gold. At the outbreak of the war, Salazar had declared that Port