I would like to thank the Committee for the opportunity to testify today as part of our shared pursuit of the truth and quest for justice on behalf of the victims of World War II. I am pleased that this subject, particularly issues surrounding the recovery and restoration of gold and other assets looted by Nazi Germany during World War II, and the acts of restitution which must follow, is not only the focus of our government report released last week, but also a continued concern of this committee. In fact, one of the most crucial explanations as to why this subject has captured the attention and concern of the international community has been the work of this Committee under the leadership of Chairman D'Amato.
Mr. Chairman, your work to push this issue front and center and the work of this Committee and its staff, particularly Greg Rickman, has been critical in our effort to search for the truth. Nearly a year ago, I testified before this Committee on the issue of dormant accounts in Switzerland. That hearing was a landmark in the road towards truth and justice - it was the first public demonstration of the courageous work that has been so critical to our efforts. Together with the leadership of the World Jewish Congress, particularly Edgar Bronfman and Israel Singer, you were there on the ground floor - you have been lone voices in the wilderness. Through sheer energy and determination, you, along with President Clinton who commissioned this study, forced this issue, and raised the consciousness and conscience of the world and of countries who, after 50 years, have now opened up this dark chapter in their histories.
I am here today to discuss the findings from our comprehensive report in the same spirit of cooperation and consultation that has characterized our efforts to date. I want to share with you my thoughts and engage in the important discussion of our next steps to achieve justice.
As you know, last week we issued a preliminary Study, entitled "U.S. and Allied Efforts to Rescue and Restore Gold and Other Assets Stolen or Hidden by Germany During World War II". The report, which was prepared by the State Department's Chief Historian, Dr. William Slany, is the product of an extraordinary seven-month effort on the part of chosen U.S. government agencies I coordinated at the request of President Clinton. Along with a selection of some 200 documents to support the findings, it also includes a summary and an interpretation foreword presenting my own conclusions.
Our mandate from President Clinton was clear. He asked us to describe, to the fullest extent possible, U.S. and Allied efforts to recover and restore gold and other assets stolen from governments and civilians in the countries Nazi Germany overran, and the initially valiant, but ultimately inadequate, steps taken by the U.S. and the Allies to use these assests for assistance to stateless victims of acts of Nazi atrocities and for the reconstruction of postwar Europe. We have done just that in unvarnished terms.
This historical report represents a search for the facts, a quest for understanding and an effort to set the record straight. It seeks neither to defend nor offend any nation. It seeks to clarify so we can move forward, not sensationalize so as to assign blame. It stands as a foundation from which we can work with other nations to collectively resolve matters which for 50 years have been ignored and still need to be addressed.
For this effort, we have classified and transferred between 800,000 and one million pages including previously unavailable OSS, Defense, State, Treasury and Justice Department records. We have also published a guide to all of the 15 million or so pages of relevant documents. This is the largest such effort using the Archive records ever undertaken in the history of that repository and it represents the single largest declassification of documents in their history.
We have been working feverishly since October but let me reemphasize that our report is only a preliminary study. A full picture of the issue and events covered in our report will ultimately depend on the records of other countries and further research through our own materials.
Already, new information has surfaced in concurrence with the release of our Report and in many ways because of our research efforts. For example, at his initiative, I met with Andrew Crockett, Managing Director of the Bank of International Settlements (BIS) just before the release of our Report. He shared with me BIS suspicions that it had received more looted gold from Nazi Germany than was originally thought, and that the gold may have contained some victim gold. Specifically, the BIS received 3.7 tons of gold looted from the Dutch, Belgian and Italian central banks which was often distributed to the Tripartite Gold Commission (TGC). They also question the source of an additional 4.5 tons with markings that they believe were tampered with. After the War, the BIS admitted to 'inadvertently' receiving Nazi gold.
No wartime gold remains at the BIS. The BIS, in a board meeting this Monday, announced it would open all of its historical archives to researchers beginning in July and to the general public by 1998. Diaries being translated may also shed further light on the nature of the deposits and transactions.
This revelation and these actions by the BIS demonstrate both a willingness and spirit of cooperation that should serve as a model and underscore the importance of resolving these remaining issues. We encourage other countries to continue their efforts at setting up historical commissions and releasing appropriate documents as expeditiously as possible so we have the most complete accounting.
This report addresses a vital but relatively neglected dimension of the history of the Second World War and its aftermath, one that has become the focus of intense political, diplomatic and media attention over the last year. It is a study of the past, but one that has real implications for the future. The report documents one of the greatest thefts by a goverment in history in the confiscation by Nazi Germany of an estimated $580 million of central bank gold, around $5.6 billion in today's values, along with indeterminate amounts of other assets from individual victims of Nazi atrocities during World War II. Around $400 million of this looted gold went to Switzerland, either to the Swiss National Bank's own account or the amount of other countries at the Swiss National Bank.
The picture which emerges from these pages is often harsh and unflattering, particularly when dealing with the actions and attitudes of the neutral nations. All profited from their economic cooperation with Nazi Germany. Among the neutral countries, Switzerland receives the most attention in this report because of its crucial final role. We have no desire to single out a country that is a robust democracy, a generous contributor to humanitarian efforts and a valued partner of the United States today. But given the purpose and scope of this study, Switzerland figures prominently.
The report also shines a bright spotlight on our own country's shortcomings. America's leadership during and following the war were admirable and commendable. Of course the War would not have been won without the enormous U.S. effort nor could the remarkable rebuilding of Europe have occurred without American leadership. The U.S. Government took the lead in economic warfare against the Axis by initiating the Safehaven program with our allies . The U.S. scored significant successes in blocking German assets in leaving this country and in tracking the flow of Nazi assets, particularly looted gold, to prevent any Nazi resurgence after the War. The U.S. led the reconstruction of Europe through the remarkably generous and successful Marshall Plan. The report however, highlights U.S. and Allied failures in the areas of restitution and compensation during post-war negotiations to retrieve Nazi assets.
While this historical report simply lays out the facts in an objective manner, there are certain conclusions one can draw. I have outlined my own personal conclusions in the Foreword to the report. The report should raise questions and serve as a catalyst for further research and action to address, however belatedly, some small measure of the great injustice that still weighs on so many people today. Let me share with you the major conclusions I reached in my own review as coordinator of this effort.
First, the massive and systematic plundering by Nazi Germany of gold and other assets from conquered nations and victims was no rogue operation. It was systematic, intentional and essential to the financing of the German war machine. The Nazis used neutral countries as banking and financial facilitators. With the Reichsmark largely unusable, to obtain war materials, the Nazis used looted gold, shipped largely to Switzerland, to convert into Swiss francs to help meet their war needs. The German central bank - the Reichsbank - knowingly and willingly received gold plundered from the central banks of the countries the Nazis overran and had a special account - the "Melmer Account" for the SS officer Bruno Melmer, for the deposit of jewelry, watches, even dental fillings of civilian victims of the Holocaust. The gold from monetary and non-monetary gold was smelted or resmelted and its origins often disguised with false markings.
Second, in the unique circumstances of World War II neutrality collided with morality. Too often, being neutral provided a pretext for avoiding moral considerations. Of course, neutrality was historically a well-established principle in international law, but the report makes painfully clear that neutral countries - Argentina, Portugul, Spain, Sweden, Switzerland and Turkey, were slow to recognize and acknowledge that this was not just another war. Most never did. Nazi Germany was a mortal threat to mankind. Their cooperation was motivated in part by fear of invasion although this receded during the latter stages of the War, in part by Nazi sympathies in some countries; and by a desire for profit in all, and helped support and prolong Nazi Germany's capacity to wage war at a time of grievous Allied and civilian casualties.
Third, of all the neutral nations, Switzerland had the most complex role in World War II. Because of the financial role played by the Swiss National Bank and Swiss commercial banks, it had the deepest and most crucial economic relationship with Nazi Germany, involving banking, trade, production and use of its railways. It, like others, had reason to fear Nazi attack. Many of its actions benefitted the Allies. It bought more gold and hard currency from the Allies than from the Nazis; it served as a protecting power for Allied POWs and property, and it provided a crucial intelligence base for the OSS during the war. But without question, Switzerland and other neutral nations benefitted from their trade and financial dealings with the Germans and helped prolong the War effort.
In the second phase of the War, when Nazi Germany's threat to the neutral nations was diminished, commerce with Germany continued. Despite Allied requests, German Assets in neutral nations were not frozen and the neutrals continued to profit form their trading links with Germany.
Swiss actions after the War are the least understandable. After the war, despite appeals from Allied negotiators to consider the moral imperative, the Swiss demonstrated an obdurate reluctance to cooperate with Allied efforts to retrieve and redistribute looted gold. Despite repeated Swiss protestations after the War that they had never received any looted Nazi gold, this report is incontrovertible: the Swiss National Bank and Swiss bankers had to know, as the War progressed, that the Reichsbank's own coffers had been depleted, and that the Swiss were handling vast sums of looted gold. In postwar negotiations, Switzerland used legalistic positions to defend their interest, regardless of the moral issues also at stake. They first contended they had purchased Nazi gold in good faith, and only later did they admit to having obtained looted Belgian gold. After long, a difficult and contentious bargaining agreement was reached in the form of the 1946 Washington Accord - obligating the Swiss to return $59 million to the allies, far less than the range of $195-$289 million in looted gold the U.S. Treasury and State Departments estimated was in Swiss national accounts. The Swiss were even less forthcoming in implementing the other part of the Washington Accord - providing the Allies with 50 percent of the liquidated value of the Washington Accord, providing the Allies with 50 percent of the liquidated value of the German assets in Switzerland after the War, in part for the benefit of refugees. Six years later, in 1952, the Allies accepted a total token payment of $28 million compared to Allied estimates of $250 to $500 million in German assets. Even this was effectively paid for by the German-Swiss compensation settlement between the two nations reached at the same time. Until last year, the Swiss banks were notably uncooperative in helping identify dormant bank accounts.
Fourth, American leadership in the post-war negotiations to retrieve Nazi gold and other assets was well intentioned, but unfortunately, limited. There was a demonstrable lack of senior-level support for a tough and consistent U.S. negotiating position with the neutrals. Moreover, there was an even greater lack of attention in emerging implementation of negotiated agreements. Wartime objectives were replaced by new Cold War imperatives, to rebuild postwar Europe and create NATO to contain the Soviet threat. Putting a democratic West Germany on its feet and other security concerns with all neutral countries also took precedence. And yet the U.S. took a far more aggressive position to recovering Nazi gold and German assets than our Allies. Our Allies put an emphasis almost immediately after the War on restoring full commercial cooperation with Switzerland, The British demanded early on to remove restrictions on Switzerland. At the time, they were also hesitant to provide money to Jewish refugees because it would conflict with restrictions on the number of Jewish refugees who could enter Palestine.
Finally, the report concludes from the pattern and practice of Reichsbank re-smelting and other evidence, that some Nazi victim gold was sent abroad and gold from individuals, as opposed to central banks, was also included in the Tripartite Gold Commission (TGC) gold pool. This looted central bank gold was to be redistributed to the governments from whom it was stolen during the War. The decision to define monetary gold by appearance and not origin as well as other evidence obtained in our review has established that the TGC gold pool was tainted with gold from individuals. Although there. is no evidence that Switzerland or other neutral countries knowingly accepted victim gold, the study also provides clear evidence that at least a small portion of the gold that entered Switzerland and Italy included non-monetary gold from individual citizens in occupied countries and from concentration camp victims or others killed before they even reached the camps. Further research could determine whether more was included.
Our mandate from the President in preparing this report was to focus on the fate of Nazi gold and other assets during and after World War II. Because Switzerland was the principal banker and financial broker for Nazi Germany, they figure prominently in our report. However, it is important to touch on the role and actions of the other neutral countries not only in our effort to set the record straight, but also in our shared concern for justice and reconciliation.
Other European neutrals were also important commercial partners of Germany, and Allied efforts to throttle trade and financial exchanges between them and Berlin remained difficult. The United States was also determined to halt German trade and the movement of German assets to Central and South America- Argentina posed a particularly difficult problem in terms of preventing commercial exchanges and war-oriented commerce. To varying degree each of the neutrals cooperated with Nazi Germany for their own economic benefit. Sweden was one of Nazi Germany's largest trading partners, supplying critically-needed iron ore and ball bearings, among other goods. Portugal supplied a variety of vital mineral resources for the Third Reich's war machine, Including the ore for tungsten. Spain maintained an active trade in goods and raw materials. Turkey was Germany's source of very scarce chrome. Argentina's pro-Axis regime failed to control the transfer of German funds from Europe.
Negotiations with most of the other neutral countries were also difficult, contentious, prolonged and produced little, with the exception of those with Sweden which were somewhat more productive. Portugal only provided some $4 million of the some $51 million the Allies initially sought with negotiations dragging on throughout the 1950s. Spain returned only $114,000 in looted gold, despite Allied suspicions that Spain held as much as $30 million in looted gold. The Allies also estimated that some $44 million in German assets and $5 million in looted gold was located in Turkey. However, Turkey never made any payments.
Our report seeks to set the record straight and lay out the facts in a clear, unvarnished fashion. This report will not answer all of the questions, but it will inform our decision-making and enable us to proceed with a greater knowledge of what really happened during this tragic period of our history and with a clearer understanding of the next steps we need to take in the coming months.
There are some who say that the bad way to move forward, especially in light of the report's revelations, is simply to reopen the 1946 Allied-Swiss Washington Accord, While we exclude no option, we favor a broader approach. What matters most right now is that the countries mentioned in our report have time to absorb these facts and we take a close look at what actions are forthcoming before meeting any definitive judgements,
Three steps should be considered in the coming months to provide compensation to the victims.
First, approximately $70 million remains in a gold pool established by the Tripartite Gold Commission into which gold looted from central banks was placed for redistribution after the War. The gold pool was intended to be made up of purely monetary gold. Our report demonstrates that it was "tainted" by the inclusion of some non-monetary gold taken from individual victims and resmelted into gold bars that were indistinguishable in appearance from the monetary gold bars looted from central banks. For example, the report indicates that coins found in the Merkers salt mine were transferred to the TGC gold pool.
The remaining 5.6 metric tons of TGC gold is supposed to be divided among the claimant countries. But on moral grounds, and because we now know that non-monetary gold was mixed with central bank gold, we believe claimant countries should voluntarily make available a substantial portion of this remaining gold for the surviving victims of the Holocaust and Nazi persecution. Voluntary action would avoid the difficult task of reaching consensus among claimant countries through a renegotiation of the 1946 Paris Reparations Agreement.
Second, other neutral countries that returned far less - In some cases virtually nothing -- of the looted gold and German assets they had after the War might well consider following the lead of Switzerland in establishing funds for victims. These individuals are elderly, and in many cases ill and destitute. Switzerland has begun to recognize its responsibility to help redress these injustices. Major Swiss banks and companies, along with the Swiss National Bank, have established a substantial fund for needy surviving Nazi victims and their heirs. We encourage other Swiss banks to join in this Holocaust Fund. The Government of Switzerland has also proposed establishing an endowment based on a portion of its gold reserve to generate income for survivors and other humanitarian causes. The United States applauds time significant gestures. Due to the fact that there is little time remaining in the lives of these aging survivors, we strongly encourage swift implementation of these funds.
In light of the possibility of a referendum in Switzerland on the establishment of the government humanitarian fund, it is important for private companies to take it upon themselves to initiate actions to bolster and augment the new Holocaust Fund. It is essential that additional companies and banks follow the lead of those few Swiss companies and institutions which have thus far contributed to the fund, to address immediately the needs of those whose lives have been inexorably altered by the painful events of World War II.
It is also important that other neutrals such as Sweden, Spain, Portugal and Turkey follow the Swiss lead and act to do justice the victims of Nazi atrocities.
Third, we must work towards the return of communal property such as schools, churches and synagogues, particularly in Central and Eastern Europe. This includes income producing property which could be used to support funds for victims. The Government of Hungary has undertaken a draw initiative to begin paying compensation, $20-40 a month for the rest of their lives, to over 20,000 Holocaust survivors living in that country. We hope that other countries will follow this sterling example.
One aspect of the study deserves immediate attention and action: the plight of those who were victim not only of war and the Holocaust, but of the sad combination of indifference on the part of the neutrals and inaction by the Allies. The report reveals serious inequities developed in the treatment of victims depending upon where they lived after the war. Beyond immediate emergency resettlement assistance, most governments could not have long term commitments to rehabilitation. The greatest burden of providing ongoing relief fell on private organizations. In administering payment to survivors, we believe special emphasis should be given to those in Central and Eastern Europe and the former Soviet Union who survived both Nazism and Communism. The "double victims" have received little or no compensation from Germany, unlike those survivors who live in the West, some of whom have received monthly pensions.
Apart from these imported financial steps, there is a moral imperative. Each nation involved in these tragic events must finally come to terms with its own past. It is important that a healing process begin, and that genuine reconciliation be achieved. There is reason for optimism - especially with so many countries now willing to honestly confront the past and draw lessons from it. Following the British study of last year and the launch of our own study, Switzerland, Sweden, France, Spain, Norway, the Netherlands, Belgium, Brazil and Argentina have established, or will soon establish, historical commissions to examine their roles in World War II, their relationship with Nazi Germany and their responsibility to return looted property. In particular, we welcome and applaud the steps Switzerland has taken in establishing commissions to canine assets in dormant bank accounts and to review the entire historical relationship between Switzerland and Nazi Germany.
We also encourage the creation and support of museums, regular conferences and educational curriculum and other means to ensure future generations learn the history of the Second World War, including the nature of their country's relationship with Nazi Germany. A fuller understanding of the realities of the War will ensure that such a tragic event will never be repeated.
Let me emphasize that we strongly favor the truth finding commissions which many countries have created, but these must not be an end unto themselves. We must balance the effort at education and reconciliation for future generations with the immediate concerns of compensation and restitution for those elderly survivors to allow them to live out their lives in dignity and honor.
To move this healing process forward, it is vital that all the facts be made public. The Clinton Administration has made an extraordinary effort to declassify documents that may shed further light on these issues. In addition, the U.S. favors the immediate declassification of all of the Tripartite Gold Commission documents that bear on the origin of the TGC gold pool. The U.S. and other concerned governments would then need to assess the results of this information. It will be important, for example, to have German Reichsbank records available so that we can all reach a more complete understanding of the origin and flow of looted assets.
The U.S. will also explore the idea of an international conference of historians and other experts to exchange information, insights, and documents about the flow of Nazi assets, the relationship with the Third Reich during the war, and measures for finding surviving owners or disposing of heirless property. The British, in their report released last week, also cited for such a conference. Government officials can then profit from historians' efforts to discuss other measures and how we can act on the information and facts gathered. We have, for instance, taken the important step of coming to agreement with the government of Switzerland to share all relevant documents on this subject so that each country may be helped in the search for facts.
This report sought to answer as many questions about this issue and this period of time as possible. But there remain additional unresolved issues which we only briefly mentioned in this report. It is our challenge to work with you in Congress, to work with our Allies and friends around the world to seek a more complete accounting and to continue our search for the truth and justice. This hearing today is part of this very important process. But further investigation is required to gain more complete knowledge and understanding particularly in the following areas:
The disposition of heirless assets in U.S. banks and, indeed, whether there may have been looted Nazi assets in U.S. banks -- including the American affiliate of Swiss-owned banks -- is an important matter which requires further investigation by other institutions, including relevant state authorities. Congress took a hard look at this issue following the War. During the War financial assets owned by enemy-country Citizens had been frozen and there was widespread Congressional support for the return of mined assets owned by Nazi victims. In August of 1946, Congress enacted. an amendment which permitted the return of seized assets to certain victims of various forms of persecution, but the Act did not deal with the problem of those victims who had died heirless. Legislation which would turn over heirless assets of persecuted persons to organizations that would assist surviving persecutees failed in Congress for several years because of the difficult procedures established for restitution and the discrepancies over estimated figures. Subsequent efforts also failed, but eventually, through legislation allotting a sum of $3 million was decreased to a lump sum payment of $500,000 that was provided to the Jewish Restitution Successor Organization.
In a letter to me which you dated March 11, Seymour Rubin, a negotiator at the time of the Washington Agreement stated:
This must be reevaluated and any discrepancy be provided to successor organizations. It will also be important to pursue insurance claims by families of Holocaust victims, as well as securities and artworks, whose policies were confiscated by the Nazis or whose claims were denied due to a variety of circumstances, including the lack of death certificates.
This issue of Nazi gold flows into the United States, possibly tbrough Swiss-owned banks operating in the United States warrants further investigation. Dormant accounts in US banks are turned over to the state in which the bank operates. The state houses these accounts in an identifiable abandoned property account so depositors or their heirs could eventually recover them. We must determine the most appropriate method and process to examine this information. We think this is an appropriate issue for Congress to examine and support your further inquiry and investigation.
Our task in the months ahead is to complete the unfinished business of the twentieth century's
most tragic and traumatic events. Much work remains, but this preliminary study is a major
step forward. Ultimately, the United States, our Allies and the neutral nations should be
judged not so much by the actions or inactions of a previous generation, but by what we do
today and by our generation's willingness to face the past honestly, to help right the wrongs,
and to deal with the injustices suffered by the victims of Nazi aggression. Our hope is that
our work will advance that broader purpose -- to achieve a small measure of justice, however
belatedly, so that surviving victims can live out their remaining years in dignity.
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