Nazi Gold

by Douglas Botting

  Many profited from the occupation; a very few hit the jackpot. Those that did seem mostly – for no greater reason, perhaps, than sheer opportunity – to have hailed from OMGB, whose headquarters town was the still-ruined Bavarian capital of Munich and whose sin city was Garmisch-Partenkirchen.

  In October 1945 command of OMGB fell to Brigadier-General (later Major-General) Walter Muller, formerly Third Army’s supply officer. Muller was destined to remain Military Governor of Bavaria throughout the greater part of the period covered by this book and the immediate chief of a number of the senior American officers who take part in our story. He was seen by the Germans with whom he dealt as a rough professional soldier who was both good-hearted and helpful. But he was also touchy at the beginning, when Military Government underwent a transition from a system based on the organisation of the occupying army to a system based on the organisation of German local government, and the Germans never knew whom he would arrest next. Muller’s reign presented a paradox: on the one hand the MPs and the CIC, with their unrestrained powers of arrest, terrorised the populace with arbitrary arrests and mass confiscations of homes; on the other hand widespread crime and corruption flourished as never before or since. No fewer than three of the main divisions of Military Government in Bavaria were seen to be rather less than perfect. One was the Legal Division, which suffered from a shortage of officers adequately qualified in the practice of law and the dispensing of justice. ‘With a military government code of justice and no legal precedents to speak of,’ recalled one CID agent, ‘the law was what in effect the legal section said it was. What a collection of carpetbaggers!’ Another was the Financial Division, whose Chief, Colonel Lord, and his aide from Property Control, Major McCarthy, we have already met in connection with the disposition in Munich of gold and dollar currency recovered (and subsequently mislaid) from the Reichsbank treasure. Yet another was the Transportation Branch, which over a period of several years involved itself in one of the OMGB’s major scandals.

  By late 1946 it had become evident that a staggering number of German civilian automobiles requisitioned by OMGB for the use of the US Army had been stolen or embezzled. Out of over 5,000 vehicles originally requisitioned, only 1,500 could be accounted for. Three thousand five hundred had been illegally disposed of on the black market – enough to equip several army divisions – generally under the subterfuge of having been declared unfit for military use or ‘cannibalised’ for parts. Many of these had then reappeared in the vicinity of Munich with licence plates indicating they had been sold into private ownership, whereas they were or should have been under US military control.

  Alarmingly, it was found that the Transportation Branch of OMGB was staffed, almost to a man, by personnel who were, in the words of the official report, ‘inefficient or dishonest, or both’. This situation, the report continued, ‘has favoured thefts of automobiles and fraudulent transactions in automobiles, which transactions, there is reason to believe, have been, and are still, conducted on a large scale. And this highly unsatisfactory condition will continue as long as crookedness is, as at present, at a premium.’ For all that, most of the extremely serious cases of larceny, embezzlement, forgery and fraud perpetrated by American personnel in Bavaria were not prosecuted by the American High Command – for reasons that will become apparent in due course – and the proper exercise of law and justice was interfered with to an alarming degree in the few cases that did reach the courts. This extraordinary state of affairs should be borne in mind as a background to the curious affair of Garmisch-Partenkirchen, to which town this story now turns.

  It so happened that the Military Government of Garmisch had one of the poorest records for probity and efficiency in the US Zone. Shortly after its capture the town had been made a US Army Recreation Center for American personnel on local leave. Every kind of facility was lavished on it, from hotels and shopping centres to a ski school and a Hollywood-style nightclub, and for a while the whole town became virtually one huge American billet. After the rigours of the war years and the dreary monotony of the ruined cities, Garmisch proved a seductive place for the American officers who ran it, and some of them were all too easily seduced. They were seduced not only by the easiness of the life there but by certain members of the local population who, for their own advantage, put opportunities in their American masters’ way that were both unique and (frequently) irresistible. If some of the Military Government officers who reported for duty in Garmisch were not corrupt before their arrival, they were soon corrupted after it. For these men, the temptations for personal enrichment simply proved too great.

  Surviving records for the period immediately after the German surrender are too fragmentary and confusing to give any clear picture of the web of intrigue and corruption that enmeshed Military Government in Garmisch during that first fall and winter. As early as the beginning of 1946 the unacceptable face of American rule in Garmisch had come to the attention of the military authorities, but bemused investigators were forced to confess that they found the whole situation ‘very confusing’. Enough emerged, however, to indicate that ‘most people in the employ of Garmisch Military Government were making an effort to, and in some cases succeeding in, bettering their positions and obtaining property and probably money illegally’ and that ‘collusion and liaison was employed by German civilian employees and US Army officials for the purpose of self-satisfaction and personal gain’. A subsequent Inspection Report by a colonel from OMGB bluntly concluded: ‘This was the most poorly administered detachment I have seen.’

  In a town as politically and criminally exposed as Garmisch, it might have been expected that the American High Command would have taken quick, firm and decisive action to keep the situation there under control. This, for some reason, they failed to do until the summer of 1947. For a full two years after the end of the war, every imaginable crime was committed in Garmisch, until in time the town bore a closer resemblance to a wild cowboy town in America’s Old West than to a fashionable winter resort in southern Germany. The records speak for themselves. During a period of just over one and a half years. no less than seven officers served as Military Governor in Garmisch. Of these, several – though not all – had to be reassigned for sheer lack of ability or for feathering their own nests. No other Military Government detachment in the US Zone – and there were nearly 150 – had such a high turnover of commanding officers. ‘They changed like a revolving door,’ one CIC agent in Garmisch recalled; ‘they were always being investigated for one thing or another.’ Of a total of 24 American personnel ordered out of Bavaria for prejudicial acts over the period of a year up to the autumn of 1947, four were from Garmisch Military Government, including two Military Governors, one Legal Officer and one Public Safety Officer.

  This, then – the worst-run town in American Germany – forms the unpredictable background for the remainder of our story of the great Reichsbank robbery and its aftermath, a lamentable tale of corruption and cover-up.

  15. The White Horse Inn

  Garmisch-Partenkirchen was quite one of the nicest small towns in Germany. Thanks to Major Pössinger and his fellow Gebirgsjäger officers it had not been laid waste in battle like many other small towns, and it exuded the same discreet air of unostentatious wealth and well-to-do Bavarian Alpine charm after the war that it had enjoyed before.

  Lying in an open mountain basin beneath the snowy ramparts of the Wetterstein range and the highest peak in Germany, the 9,720-foot Zugspitze, Garmisch-Partenkirchen was the principal town of the so-called Werdenfelser Land, a seductively beautiful region of lakes, forests, gorges, waterfalls, snowfields, peaks and Alpine pastures. Originally two separate villages of picturesque narrow streets and pretty Bavarian-style frescoed houses on either bank of a tributary of the River Loisach, Garmisch and Partenkirchen had long grown together as the metropolis of the Bavarian Alps and the leading winter sports resort of Germany. The 1936 Winter Olympics had taken place there, and the high-jump platforms of the Olympic Sk
i Stadium and the great rinks of the Olympic Ice Stadium were still in existence when the war came to an end. Into the latter the Americans threw every German in uniform they could find, and when that was full they herded the remainder into the green expanse of the Kurpark in the centre of the town, while suspected Nazis were locked up in the Gebirgsjäger barracks until such time as they could be processed through.

  There were a great many Germans in captivity in Garmisch in the first weeks and months after the end of the war. The town had been an important staging-post on the route into Austria and the heart of Hitler’s National Redoubt; many Wehrmacht, SS and Hungarian units had straggled here in their southward retreat from the Americans, while many thousands of Nazi functionaries and notable personages (including the Kaiser’s daughter-in-law, the Crown Princess of Prussia and members of the French Vichy Government) had holed up here in the hope of avoiding retribution in suitably comfortable and elegant surroundings. The population of Garmisch swelled enormously during the last days of the war and eventually there were five times the number of people living in the town as there had been in the year before the German collapse. Among the newcomers were many Germans of real wealth – much of it already salted away in Swiss bank accounts till better times returned. Inevitably Garmisch became a gathering-place of adventurers and dealers of all kinds after the war.

  At the end of the war, then, Garmisch-Partenkirchen was an unscathed and inherently well-to-do town in a relatively remote and exceedingly beautiful corner of southern Germany within striking distance of both the Swiss and the Austrian borders – and, of course, the burial caches of the Reichsbank reserves. If it had been a cosmopolitan place before the war, it was doubly so after it. For crowded together within the small confines of the town and the mountain-bound district surrounding it were men and women from every corner of Europe – German and Eastern European refugees, evacuees, enemy prisoners of war, Allied prisoners of war, hospitalised wounded and Jewish survivors of the concentration camps – along with the occupation soldiers from far-off America. As well as German, a whole babel of tongues could be heard in the streets – English, French, Russian, Yiddish, Czech, Polish, Lithuanian and all the languages of the Balkans. In the political and economic chaos that prevailed, people from many nations and from all walks of life – from ex-officers, diplomats and ladies of society to opportunists, rogues and professional crooks – did what was necessary to survive the rigours of peace. In the diversity and audacity of the racketeering that ensued, there were probably few towns in Germany that could compare with Garmisch in the first four years after the war. As the former need of the Garmisch CIC recalled: ‘Garmisch was like the Klondyke. We had every creep you can imagine.’

  In Garmisch, as in the rest of Germany, sheer survival was every German’s topmost priority. For Germany in 1945 was a land of hunger and desperate need, where the simplest, smallest object was unobtainable and the very means of existence had ceased to exist, where everyone lived from hand to hand and mouth to mouth, where the daily fat ration weighed less than an empty match-box and it was calculated that the average German could expect a new dinner plate once in five years, a new pair of shoes once in twelve years, and a new suit once in fifty years.

  The black market existed over most of war-ravaged Europe, but nowhere was it blacker than in Germany. There the basic cause – extreme shortage of consumer goods leading to astronomical prices – was exacerbated by a virtually worthless German currency and a rigid monetarist policy of rationing and price controls imposed by the Allies with the object of preventing the soaring inflation of the kind experienced in Germany after the First World War. This policy had two effects. The first was to paralyse the economy. The second was to abolish one of civilisation’s main foundations – money. In place of money came barter. A Bokhara rug could be bought for 100lb of potatoes, a suckling pig for a piano, a dinner plate for a set of false teeth – anything and anyone, from diamonds to love, for American (or English) cigarettes.

  For three years after the end of the war the cigarette was the most acceptable medium of exchange in Germany. Germany became a cigarette civilisation. There were times when it seemed that the fate of the nation was bound up with such names as Lucky Strike, Camel, Marlboro and Pall Mall. Tobacco plants flowered in Rhineland vineyards and town window-boxes, and two new folk figures of the time appeared – the tobacco baron at one end of the spectrum, and the Kippensammler, the collector of butt ends, at the other. Ten butt ends made one cigarette, and for one cigarette a man could get a whole bottle of Schnapps, and for one bottle of Schnapps he could get two pounds of butter from a country farmer. Germany, it was said, had become a nation of bowed heads.

  For many millions of Germans the black market was the only means of existence. In time it developed into a well-organised illicit underground economy, based on an eternal triangle of market forces in which the immutable law of supply and demand was worked out between three main groups – the people of the towns, the people of the countryside, and the soldiers of the occupation armies. The starving townspeople traded their valuables (jewellery, watches, furs, Leicas, Zeiss binoculars, objets d’art) for the soldiers’ PX luxuries (coffee, sugar, chocolate, white bread, silk stockings, cigarettes), and the country people traded their surplus food (potatoes, bacon, poultry, flour and eggs) for the townspeople’s valuables or the luxuries they had obtained from the soldiers. After the first post-war harvest the whole of Germany went on the move as the people from the towns flocked into the countryside to exchange their barter goods for the farmers’ produce. Many travelled hundreds of miles on the packed-out trains, often riding on the bumpers or the carriage roofs. Each train had its black-market nickname. The Potato Train ran from the industrial Ruhr to agricultural Lower Saxony. The Calory Express went from hungry Hamburg to the farmlands of Bavaria. The Vitamin Train took Dortmunders out to the cherry harvest around Freiburg, the Nicotine Line ran to the tobacco fields of Pfalz, the Fish Express from the North Sea coast to Berlin.

  The black market was personally and socially corrupting and economically damaging, for no modern industrial society could possibly be organised as a barter system. But for some it provided exceptional opportunities.

  Two categories of people stood to make money on the black market in Germany. The first were the soldiers, whose access to an almost unlimited supply of cigarettes and other luxuries was a potential source of great profit. The second were the big-time operators, the Scheiber or pushers, who ran large, illegal, Mafia-style organisations dealing in the wholesale supply of basic black-market consumer goods or in high risk, high yield commodities like narcotics, industrial chemicals, old masters, precious stones and – perhaps the hottest prime commodity of all – pencillin, or ‘white gold’. These were the men who controlled the black market, who fixed the prices, moved goods around from one Zone to the other by wagon load, kept control of their gangs with the help of ex-professional boxers and other ‘heavies’ and waged a bitter power struggle with their rivals. Some of these organisations were highly sophisticated. The Duisburg Railway Station Gang, for example, had its own headed notepaper with an embossed coat of arms on it and kept typed lists of commodities, with dates and prices, like any legitimate business. Another gang stole complete trains, locomotive and all, which they used to transport enormous consignments of potatoes and other black-market comestibles in bulk.

  One of the most successful black-marketeers was a certain Jewish DP, a former concentration camp inmate, who acquired a million sewing-machine needles that had disappeared from the inventory of the Singer Sewing Machine Co. in Darmstadt while it was under a custodian of the American Military Government. The DP smuggled the needles to Italy, where he sold them to the Necchi Company. Though he only received a nominal sum for the needles, he also received as part of the deal the US sales rights for the Neechi sewing machine. He then emigrated to New York and with a small amount of capital set up a commission order office. Within two years he had made over a million dollars. />
  In Garmisch-Partenkirchen there was no ‘Mr Big’ but rather a loose confederacy of rascals, many of whom were habitués of the same haunt – a notorious establishment called the Weisses Rössl, or White Horse Inn. This was a rectangular, two-storeyed building which stood at right-angles to the long main street known as Bahnhofstrasse, almost opposite the grandest and most expensive hotel in town, the Partenkirchner Hof, and barely a hundred yards from the American Military Government headquarters in the Rathaus on the other side of the street. Along one side of this modest edifice a whitewashed façade bore a typical Bavarian fresco depicting the principal dramatis personae of the popular operetta which had lent its name to this establishment, pride of place being given to a galloping charger, the white horse itself. The other side of the building overlooked the rushing, soapy-looking waters of the River Partnach, which separated Garmisch from Partenkirchen, and, tumbling headlong down a narrow, boulder-strewn gorge beneath a tangled overhang of beech and sycamore trees, would eventually find its way into the distant Danube and Black Sea.

  In 1945 the place was not really an inn. Its function was rather that of a Nachtlokal, a bar-restaurant which stayed open late at night. The building still stands today, albeit under a new name and new management. The original fresco is covered as far as the caves in a luxuriant growth of Virginia creeper which in autumn enlivens an otherwise undistinguished edifice with a spectacular display of crimson foliage. Nowadays the place is part of a popular chain of restaurants serving decent meals at modest prices. In 1945 it was one of the most notorious sinks of iniquity in the whole of Upper Bavaria.