[Editor's note: this brief expose was drafted in 2000 as part of the research being conducted at the Presidential Advisory Commission for Holocaust-era Assets (1999-2000). All of the documents produced by the so-called Gold Team of the PCHA are available for consultation at the William J. Clinton Library in Little Rock, AK.]
The US purchased gold at $35 per troy ounce from 1934 to 1968. The US sold gold during that period at $35 per troy ounce. The main instrumentality through which the US purchased gold was the Exchange Stabilization Fund.
The Exchange Stabilization Fund was established in 1934 under the Gold Reserve Act. The Secretary of the Treasury had exclusive control over the Exchange Stabilization Fund. The only official to whom the Secretary of the Treasury had to answer to for America’s gold policy was the President of the United States. Together, these two individuals shared responsibility for gold bought and sold by the United States government through the Exchange Stabilization Fund. Based on the little evidence that we have seen so far, the President was kept apprised of the evolution of US gold policy, and of gold movements in other parts of the world.
The US government displayed little concern between 1934 and 1968 for the origin of the gold that it purchased from foreign central banks. A handful of officials, however, went on record from the late 1930s to the late 1950s to criticize the absence of an official screening policy of these gold inflows. Before the entry of the United States in the Second World War in December 1941, these officials focused their concerns on whether the United States should accept gold originating from German, Italian, and Japanese mints or gold sold by Germany, Italy, and Japan, that may have originated from other mints and fallen into the possession of the aforementioned Axis powers through acts of duress. These officials were also concerned that the Bank of England may have acquired some of this gold in the late 1930s and resold it to the United States as British gold. The same concerns applied to the Bank of France, the Bank of Belgium, and the Swiss National Bank.
During the Second World War, the United States was a net exporter of gold and therefore there was no issue about gold of dubious provenance entering the Federal Reserve system as an acquisition or an earmark.
At the end of the Second World War, the United States government discouraged the acquisition of gold bullion that may have been looted by the Axis powers from the central banks of countries that they occupied and annexed between 1938 and 1945. In particular, the United States government was reluctant to accept gold bullion minted at the Prussian State Mint in Berlin and by the Degussa smelting and refining company. Many of the bars ended up in the monetary reserves of the neutral countries, including Switzerland, Sweden, Spain, Portugal, and Turkey. There was also suspicion that these bars were shipped to the central banks of Latin American countries, in particular, Argentina.
The United States and its allies negotiated with the neutral countries to persuade them to relinquish these looted bars so that they could be placed in a gold pot from which countries that had lost their gold during the war could reclaim at least a portion of their losses through a claims process administered by the Tripartite Commission for the Restitution of Monetary Gold.
These negotiations produced settlements which allowed the signatory countries to resume normal gold trade activities and especially to sell looted gold that they had acquired without fear of having to fight off claims by the governments of formerly occupied countries for the gold that they had lost and which was now in circulation again.
Some of this looted gold was used to obtain economic development loans and was posted as collateral to obtain the needed financing from American commercial banks. Some of this gold was also sold to the Exchange Stabilization Fund in exchange for dollars. This activity lasted from the late 1940s into the early 1960s.
From 1945 to 1955, there were concerns in the Federal Reserve Bank of New York and in the Treasury about the presence of Prussian Mint bars in the earmarked accounts of foreign central banks at the Federal Reserve Bank of New York. An audit conducted by the Federal Reserve Bank of New York in 1955 revealed that there were more than 2,000 Prussian Mint bars on deposit in the earmarked accounts of foreign central banks at the FRBNY. As of 1956, these same officials were less concerned about Prussian mint bars produced before 1945 than they were about Prussian Mint bars produced after 1945 in the newly-established German Democratic Republic (GDR).
In summary, the United States government did not have a policy in place to screen out gold bullion that it considered to have been fraudulently acquired by foreign central banks. For reasons of international monetary policy and foreign economic considerations, the United States government opted for a non-discriminatory approach to the buying and selling of gold bullion between 1934 and 1968, while gold was valued at the fixed price of $35 per troy ounce of fine gold.
When the United States acquired gold from foreign central banks, it made sure that, before being deposited in the Secretary’s Special Account at the Federal Reserve Bank of New York, that gold was properly assayed and converted into US Assay Office bars. Hence, there is no question whatsoever about non-US Assay bars being in the possession of the United States government at any given time since the enactment of the Gold Reserve Act and the establishment of the Exchange Stabilization Fund.
When non-US Assay office bars are deposited on earmark in the accounts of foreign central banks at the Federal Reserve Bank of New York, they are under nominal control of the United States government as custodian of these bars, much like a bank is the custodian of our funds when we deposit them in a savings or checking account. But the ownership of these assets still lies with the depositor. Thus, if one accepts this model, the United States government did come into the control of non-US assay office bars deposited in earmark accounts of foreign central banks, which were looted by the Nazis, as early as 1939-1940.
Non-US Assay Office bars and coins came under the control of the United States government in the European Theater of Operations, between 1943 and the early 1950s. As American troops swept through the various theaters of operations in Europe to defeat the Axis powers, they came across different categories of assets that had been looted by Axis troops and officials from their victims and the institutions of the countries that they had occupied and incorporated into the Third Reich.
Different procedures were established in the various theaters of military activity that governed the seizure, storage, classification, and disposal of these assets, including gold bullion. Did assets of victims of Nazi persecution fell into the hands of American troops at this particular time? The answer is affirmative. Did American troops know that these assets belonged to victims of the Nazis? The answer varies according to the level of understanding among these troops of the methods used by the Nazis to wrest valuables from their victims and the extent to which these valuables were processed through the Reich’s monetary and financial institutions to gain access to foreign exchange.
With respect to gold bullion, American troops seized over three hundred million dollars (in 1945 dollars) of gold bullion during their campaign of liberation of Europe. There can never be a true accounting of the exact amount of gold found by these troops, their commanding officers, specialized intelligence units like T-Forces and the Office of Strategic Services (OSS), its successor the Strategic Services Unit (SSU), as well as by the Counter-Intelligence Corps of the Army, and many other sub-units deployed in the field to gain control of enemy territory and administer the peace.
Because it was common practice in Europe to hoard gold bullion, American officials uncovered thousands of coins and small bars as belonging to private citizens. Under Military Government Law 53, the bulk of the privately-owned monetary gold was turned over to the US Military Government authorities in Germany in the immediate post-war years. The so-called Law 53 gold, or monetary gold owned by private individuals, was disposed of in many different ways. Some of it was placed in the gold pot and restituted to claimant countries. Some of it was claimed by the IRO, although we do not know whether the IRO actually obtained Law 53 gold. Most of Law 53 gold was infused into the German economy. Did Law 53 gold belong to victims of Nazi persecution? There can be no doubt of that.
American, British and French troops found the bulk of the monetary gold at the Merkers salt mine complex in Thuringia, Germany. According to traditional recounting of the story, Allied troops stumbled on the gold, our research shows that there is sufficient circumstantial evidence to demonstrate that senior American officers were aware that a substantial amount of gold that they referred to as “treasure” was located in Thuringia. But they were not sure where the Nazis had hidden it. Also, US intelligence reported that the nascent Nazi resistance movement called Wehrwolf hid gold in many places along the path of incoming American troops. This gold was slated for financing their anti-Allied activities in the period of occupation of Germany and Austria.
In the months preceding and following the defeat of Germany, American troops seized many caches of Wehrwolf wealth, as well as the contents of the Merkers mine, troves of gold coins belonging to sundry German government and security agencies in Germany, Austria, and northern Italy. The American military government authorities established a set of procedures to ensure the proper handling of these gold valuables. There is no doubt, however, that an untold amount of gold bullion ended up in the possession of American troops. That is the nature of war. The post-war black market, if anything, confirms this assertion since gold was the preferred currency of exchange to buy food and items like cigarettes, clothes, and other day-to-day items.
Were there any instances of documented deviations of captured gold bullion while in the custody of American troops and officials of Military Government? We have a few cases, but lack of time and resources has prevented us from conducting an exhaustive search for actual cases of misappropriations. The lack of obvious evidence of such diversions points to a small number of documented cases that researchers might come across in the files of the Theater Provost Marshal or of the Criminal Investigative Branch of the Army.
There are, however, several rumors of massive diversions of gold bullion by senior American officers which still warrant further investigation, owing to the magnitude of the amounts involved and the number of individuals involved. One concerns the so-called Mittenwald cache that was uncovered in southern Germany by American troops in early June 1945. The other pertains to gold bullion uncovered by the Third Army in Thuringia in April 1945 and illegally shipped from Europe to the United States in the summer of 1945. These two allegations deserve to be further investigated, only because of the fact that much has been written about them already and some form of closure is required to either confirm or infirm these rumors that cast a pall of suspicion on the US Armed forces.
Did victim gold come into the control of United States troops? The answer is affirmative. Victim gold was abundantly present at the Merkers as well as in more than forty other caches that the United States Army uncovered throughout the theater of operations. How did the United States government determine that the captured gold belonged to Nazi victims? US officials relied on captured German documents to reach these conclusions. In many cases, they assumed that this gold belonged to victims because of the circumstances surrounding its seizure—Axis police and security officials on the run often fled with booty seized from their victims that was easy to carry, namely gold coins, small bars (coin bars), jewels, precious stones, and cash.
How much control did US troops exert over these captured items? The level of control varied from military region to military region throughout the US zones of occupation. There were a number of irregularities noted in Austria where US intelligence operatives were divided over whether to recycle these captured valuables to finance their clandestine operations or if these valuables should be turned over to the proper finance authorities of US military government. As stated earlier, the conditions were ripe for small-scale thefts to occur, owing to varying levels of accountability or lack thereof. But, for the most part, we believe that these valuables were handled properly, for want of any serious evidence pointing in the opposite direction.
US officials, for the most part, considered captured gold bullion as monetary gold, therefore not subject to restitution to individuals or to organizations that provided relief and rehabilitation support to survivors of the Holocaust and to refugees in search of new homes. The Law 53 gold is a case in point. The most controversial aspect of this question involves the hundreds of tons of gold bullion seized by US troops at Merkers and other caches. Although this gold had been incorporated into the monetary reserves of the Third Reich, a cloud of suspicion as to its true origin has not been lifted since its capture.
The Slany report has devoted an entire chapter to this question. Its authors attempted to resolve this sensitive question in as balanced a way as possible. No one disputes the fact that victim gold was incorporated into the monetary reserves of the Third Reich. The argument centers on how much gold was incorporated into these reserves. Again, lack of time and adequate resources has prevented us from reaching some form of closure. We believe that a moral obligation exists to attain such closure. That is why we will make a recommendation along those lines to pursue the research effort into this question. To that end, we will propose a number of methodologies by which to reach a satisfactory level of closure. Hopefully, the symbolic value of such an effort is not lost on our colleagues and on the commissioners. To us, this gold is a constant reminder of the Shoah, how the personal belongings of millions of individuals who perished in the Holocaust became monetized into gold bars and coins to allow the Third Reich to prolong its policy of military conquest and extermination of those individuals whom they stripped of their personal belongings. The presence of these bars and coins in the reserves of central banks throughout the world, including our own, are a testament to the perversity of Nazi policies. We simply owe it to the victims to get the truth out.
The Allies determined that close to two-thirds of the bars found at Merkers were likely to contain traces of victim gold, some in larger quantities than others, depending on the quality of the melt performed either at the Prussian Mint or at the facilities of Degussa, the largest smelting and refining operation in Germany, and perhaps in Europe.
Useful links:
The US purchased gold at $35 per troy ounce from 1934 to 1968. The US sold gold during that period at $35 per troy ounce. The main instrumentality through which the US purchased gold was the Exchange Stabilization Fund.
The Exchange Stabilization Fund was established in 1934 under the Gold Reserve Act. The Secretary of the Treasury had exclusive control over the Exchange Stabilization Fund. The only official to whom the Secretary of the Treasury had to answer to for America’s gold policy was the President of the United States. Together, these two individuals shared responsibility for gold bought and sold by the United States government through the Exchange Stabilization Fund. Based on the little evidence that we have seen so far, the President was kept apprised of the evolution of US gold policy, and of gold movements in other parts of the world.
The US government displayed little concern between 1934 and 1968 for the origin of the gold that it purchased from foreign central banks. A handful of officials, however, went on record from the late 1930s to the late 1950s to criticize the absence of an official screening policy of these gold inflows. Before the entry of the United States in the Second World War in December 1941, these officials focused their concerns on whether the United States should accept gold originating from German, Italian, and Japanese mints or gold sold by Germany, Italy, and Japan, that may have originated from other mints and fallen into the possession of the aforementioned Axis powers through acts of duress. These officials were also concerned that the Bank of England may have acquired some of this gold in the late 1930s and resold it to the United States as British gold. The same concerns applied to the Bank of France, the Bank of Belgium, and the Swiss National Bank.
During the Second World War, the United States was a net exporter of gold and therefore there was no issue about gold of dubious provenance entering the Federal Reserve system as an acquisition or an earmark.
At the end of the Second World War, the United States government discouraged the acquisition of gold bullion that may have been looted by the Axis powers from the central banks of countries that they occupied and annexed between 1938 and 1945. In particular, the United States government was reluctant to accept gold bullion minted at the Prussian State Mint in Berlin and by the Degussa smelting and refining company. Many of the bars ended up in the monetary reserves of the neutral countries, including Switzerland, Sweden, Spain, Portugal, and Turkey. There was also suspicion that these bars were shipped to the central banks of Latin American countries, in particular, Argentina.
The United States and its allies negotiated with the neutral countries to persuade them to relinquish these looted bars so that they could be placed in a gold pot from which countries that had lost their gold during the war could reclaim at least a portion of their losses through a claims process administered by the Tripartite Commission for the Restitution of Monetary Gold.
These negotiations produced settlements which allowed the signatory countries to resume normal gold trade activities and especially to sell looted gold that they had acquired without fear of having to fight off claims by the governments of formerly occupied countries for the gold that they had lost and which was now in circulation again.
Some of this looted gold was used to obtain economic development loans and was posted as collateral to obtain the needed financing from American commercial banks. Some of this gold was also sold to the Exchange Stabilization Fund in exchange for dollars. This activity lasted from the late 1940s into the early 1960s.
From 1945 to 1955, there were concerns in the Federal Reserve Bank of New York and in the Treasury about the presence of Prussian Mint bars in the earmarked accounts of foreign central banks at the Federal Reserve Bank of New York. An audit conducted by the Federal Reserve Bank of New York in 1955 revealed that there were more than 2,000 Prussian Mint bars on deposit in the earmarked accounts of foreign central banks at the FRBNY. As of 1956, these same officials were less concerned about Prussian mint bars produced before 1945 than they were about Prussian Mint bars produced after 1945 in the newly-established German Democratic Republic (GDR).
In summary, the United States government did not have a policy in place to screen out gold bullion that it considered to have been fraudulently acquired by foreign central banks. For reasons of international monetary policy and foreign economic considerations, the United States government opted for a non-discriminatory approach to the buying and selling of gold bullion between 1934 and 1968, while gold was valued at the fixed price of $35 per troy ounce of fine gold.
When the United States acquired gold from foreign central banks, it made sure that, before being deposited in the Secretary’s Special Account at the Federal Reserve Bank of New York, that gold was properly assayed and converted into US Assay Office bars. Hence, there is no question whatsoever about non-US Assay bars being in the possession of the United States government at any given time since the enactment of the Gold Reserve Act and the establishment of the Exchange Stabilization Fund.
When non-US Assay office bars are deposited on earmark in the accounts of foreign central banks at the Federal Reserve Bank of New York, they are under nominal control of the United States government as custodian of these bars, much like a bank is the custodian of our funds when we deposit them in a savings or checking account. But the ownership of these assets still lies with the depositor. Thus, if one accepts this model, the United States government did come into the control of non-US assay office bars deposited in earmark accounts of foreign central banks, which were looted by the Nazis, as early as 1939-1940.
Non-US Assay Office bars and coins came under the control of the United States government in the European Theater of Operations, between 1943 and the early 1950s. As American troops swept through the various theaters of operations in Europe to defeat the Axis powers, they came across different categories of assets that had been looted by Axis troops and officials from their victims and the institutions of the countries that they had occupied and incorporated into the Third Reich.
Different procedures were established in the various theaters of military activity that governed the seizure, storage, classification, and disposal of these assets, including gold bullion. Did assets of victims of Nazi persecution fell into the hands of American troops at this particular time? The answer is affirmative. Did American troops know that these assets belonged to victims of the Nazis? The answer varies according to the level of understanding among these troops of the methods used by the Nazis to wrest valuables from their victims and the extent to which these valuables were processed through the Reich’s monetary and financial institutions to gain access to foreign exchange.
With respect to gold bullion, American troops seized over three hundred million dollars (in 1945 dollars) of gold bullion during their campaign of liberation of Europe. There can never be a true accounting of the exact amount of gold found by these troops, their commanding officers, specialized intelligence units like T-Forces and the Office of Strategic Services (OSS), its successor the Strategic Services Unit (SSU), as well as by the Counter-Intelligence Corps of the Army, and many other sub-units deployed in the field to gain control of enemy territory and administer the peace.
Because it was common practice in Europe to hoard gold bullion, American officials uncovered thousands of coins and small bars as belonging to private citizens. Under Military Government Law 53, the bulk of the privately-owned monetary gold was turned over to the US Military Government authorities in Germany in the immediate post-war years. The so-called Law 53 gold, or monetary gold owned by private individuals, was disposed of in many different ways. Some of it was placed in the gold pot and restituted to claimant countries. Some of it was claimed by the IRO, although we do not know whether the IRO actually obtained Law 53 gold. Most of Law 53 gold was infused into the German economy. Did Law 53 gold belong to victims of Nazi persecution? There can be no doubt of that.
American, British and French troops found the bulk of the monetary gold at the Merkers salt mine complex in Thuringia, Germany. According to traditional recounting of the story, Allied troops stumbled on the gold, our research shows that there is sufficient circumstantial evidence to demonstrate that senior American officers were aware that a substantial amount of gold that they referred to as “treasure” was located in Thuringia. But they were not sure where the Nazis had hidden it. Also, US intelligence reported that the nascent Nazi resistance movement called Wehrwolf hid gold in many places along the path of incoming American troops. This gold was slated for financing their anti-Allied activities in the period of occupation of Germany and Austria.
In the months preceding and following the defeat of Germany, American troops seized many caches of Wehrwolf wealth, as well as the contents of the Merkers mine, troves of gold coins belonging to sundry German government and security agencies in Germany, Austria, and northern Italy. The American military government authorities established a set of procedures to ensure the proper handling of these gold valuables. There is no doubt, however, that an untold amount of gold bullion ended up in the possession of American troops. That is the nature of war. The post-war black market, if anything, confirms this assertion since gold was the preferred currency of exchange to buy food and items like cigarettes, clothes, and other day-to-day items.
Were there any instances of documented deviations of captured gold bullion while in the custody of American troops and officials of Military Government? We have a few cases, but lack of time and resources has prevented us from conducting an exhaustive search for actual cases of misappropriations. The lack of obvious evidence of such diversions points to a small number of documented cases that researchers might come across in the files of the Theater Provost Marshal or of the Criminal Investigative Branch of the Army.
There are, however, several rumors of massive diversions of gold bullion by senior American officers which still warrant further investigation, owing to the magnitude of the amounts involved and the number of individuals involved. One concerns the so-called Mittenwald cache that was uncovered in southern Germany by American troops in early June 1945. The other pertains to gold bullion uncovered by the Third Army in Thuringia in April 1945 and illegally shipped from Europe to the United States in the summer of 1945. These two allegations deserve to be further investigated, only because of the fact that much has been written about them already and some form of closure is required to either confirm or infirm these rumors that cast a pall of suspicion on the US Armed forces.
Did victim gold come into the control of United States troops? The answer is affirmative. Victim gold was abundantly present at the Merkers as well as in more than forty other caches that the United States Army uncovered throughout the theater of operations. How did the United States government determine that the captured gold belonged to Nazi victims? US officials relied on captured German documents to reach these conclusions. In many cases, they assumed that this gold belonged to victims because of the circumstances surrounding its seizure—Axis police and security officials on the run often fled with booty seized from their victims that was easy to carry, namely gold coins, small bars (coin bars), jewels, precious stones, and cash.
How much control did US troops exert over these captured items? The level of control varied from military region to military region throughout the US zones of occupation. There were a number of irregularities noted in Austria where US intelligence operatives were divided over whether to recycle these captured valuables to finance their clandestine operations or if these valuables should be turned over to the proper finance authorities of US military government. As stated earlier, the conditions were ripe for small-scale thefts to occur, owing to varying levels of accountability or lack thereof. But, for the most part, we believe that these valuables were handled properly, for want of any serious evidence pointing in the opposite direction.
US officials, for the most part, considered captured gold bullion as monetary gold, therefore not subject to restitution to individuals or to organizations that provided relief and rehabilitation support to survivors of the Holocaust and to refugees in search of new homes. The Law 53 gold is a case in point. The most controversial aspect of this question involves the hundreds of tons of gold bullion seized by US troops at Merkers and other caches. Although this gold had been incorporated into the monetary reserves of the Third Reich, a cloud of suspicion as to its true origin has not been lifted since its capture.
The Slany report has devoted an entire chapter to this question. Its authors attempted to resolve this sensitive question in as balanced a way as possible. No one disputes the fact that victim gold was incorporated into the monetary reserves of the Third Reich. The argument centers on how much gold was incorporated into these reserves. Again, lack of time and adequate resources has prevented us from reaching some form of closure. We believe that a moral obligation exists to attain such closure. That is why we will make a recommendation along those lines to pursue the research effort into this question. To that end, we will propose a number of methodologies by which to reach a satisfactory level of closure. Hopefully, the symbolic value of such an effort is not lost on our colleagues and on the commissioners. To us, this gold is a constant reminder of the Shoah, how the personal belongings of millions of individuals who perished in the Holocaust became monetized into gold bars and coins to allow the Third Reich to prolong its policy of military conquest and extermination of those individuals whom they stripped of their personal belongings. The presence of these bars and coins in the reserves of central banks throughout the world, including our own, are a testament to the perversity of Nazi policies. We simply owe it to the victims to get the truth out.
The Allies determined that close to two-thirds of the bars found at Merkers were likely to contain traces of victim gold, some in larger quantities than others, depending on the quality of the melt performed either at the Prussian Mint or at the facilities of Degussa, the largest smelting and refining operation in Germany, and perhaps in Europe.
Useful links: