Nazi Gold

by Douglas Botting

  It is regrettable [read the Press hand-out that critics are apparently unwilling to accord consideration to the magnificent performance and full achievement of our Army of Occupation . . . I am satisfied that the Army of Occupation is doing a fine job, making due allowance for the abnormal conditions which prevail in Europe today. The incidence of black-marketing, as well as of crime, drunkenness, and immorality among American personnel stationed in Europe is extraordinarily low.

  The hand-out concluded on a cosy note: ‘America has every reason to be proud of the Army of Occupation and the men and women who compose it. They are serving their country well and merit our full confidence.’

  There was not a single reference to the very serious charges which Reinhardt had made concerning the state of affairs in Garmisch-Partenkirchen. These had evidently been dealt with by the simple but effective expediency of being completely ignored.

  The American press for whom the doctored version of the Taylor Report was intended were not greatly impressed by this. Many papers did not carry the Report. Others thought it was spurious. The Chicago Tribune of 6 May wrote:

  Taylor’s report was described as a ‘whitewash’ in some [Washington] quarters. His findings, it was asserted, bore out earlier charges of considerable corruption and misconduct among military government officials.

  In his letter to Tom Agoston, Reinhardt confirmed the general press reaction:

  90% of the newspapers refused to print it. Going over the report I could see in 16 different places that the report had been written – by Clay’s boys! Furthermore, I learned subsequently how the investigation was rigged, how some of the very people whom Taylor was supposed to investigate had actually done the investigating for him, had taken him in hand, etc. etc.!!! I simply cannot understand how an intelligent man could have been so completely bamboozled and turned in a report that only a nitwit could not recognise as a blatant piece of hogwash.

  And that was that.

  But I still have enough friends in the theater and in certain spots in the Pentagon to learn that there was also an Inspector General’s report on a detailed investigation they made separately. And that report was a lulu! My friends told me about the many, many recommendations for prosecution that that report contained. They were all turned down by the topside boys because a big scandal might break and because too many careers would be ruined.

  If there was anything General Clay liked least it was scandal amongst his own forces in his own zone of Germany, especially after the Kronberg jewel case and the Haig case. Nor could the US Government, at a time of mounting international crisis and threat of all-out war with the Soviets (culminating in June with the Soviet blockade of Berlin and the Allied airlift to counter it), afford any besmirching of the reputation and honour of the American forces in Europe. Germany was the new front line. It was paramount that the American Army in Germany, which was supposed to be a bastion of freedom and the democratic way of life, should be seen to be good and true. The Taylor Report helped to ensure that it would.

  From the day of its release the questions of corruption in the US Zone, of crime in Garmisch, and of the theft of gold and of currency from the former German Reichsbank were dead and buried issues. They ceased to be a matter of formal investigation in the European Theater. They were not raised in the American press again. There were no embarrassing prosecutions either in Europe or in the States. By means of a systematic cover-up and whitewash initiated at the highest levels of the Department of the Army and the European Command the whole scandalous mess was brushed away and hidden from public sight. Investigative dossiers known to have existed on key suspects were destroyed, and the same fate seems to have befallen many of the investigative files and reports kept by the principal investigative agencies involved in the activities described in this book. Many documents still existed, but the archives of these agencies in the US either maintained a stony silence or could not or would not accede to requests for information. Amazingly, the CID – which had 1,500 pages of documents on the Kronberg jewel robbery – claimed to have no papers whatsoever relating to the investigations they had conducted into the gold, dollar, narcotics and murder cases in Garmisch-Partenkirchen between 1945 and 1948. The CIC had very little. The FBI stated that as they had not investigated the matter they could be of no assistance. The CIA could find no records relating to the matter, nor could the United States Secret Service, or the US Treasury or Department of State. The Offices of the Provost Marshal General, the Adjutant General and the Attorney General gave similar negative responses. So did the archives of the Chief of Staff EUCOM and the Civil Affairs Division. Even the most senior officers of the time professed remarkable ignorance of the matter. The then Commander-in-Chief, General Lucius Clay, replied (through his secretary) from New York in 1978 that ‘if $3 million in gold or in US dollars was taken from our area it does not seem possible for this to have happened if it was money belonging to the US’. The then Assistant Secretary of the Army, Gordon Gray, stated in 1977, ‘I don’t have any recollection of any specific allegations of anything.’ The then Military Governor of Bavaria, Murray van Waggoner, could not remember anything about gold and narcotics either. ‘That’s all news to me,’ he told us over the phone from Michigan in 1977. ‘General Clay gave me only one instruction and that was to see to it that the cigarettes didn’t get into the black market. Narcotics? Who was bothered with that?’

  For years official American silence was total. When the Guinness Book of Records first included a version of the Reichsbank robbery in its 1957 edition under the heading ‘Robbery: Biggest Unsolved’, it was unable to elicit any further elucidation of the facts from the official bodies in the USA. As late as 1975 requests for corroboration were met with the same stone-wall from the Department of the Army in Washington:

  Based upon repeated research of the official records of that period occasioned by previous inquiries over a 10-year span [a spokesman replied] United States Army archives regard the Guiness [sic] entry, as an unverified allegation . . . By the way, how are things with the Loch Ness monster these days?

  There was no way that that Army spokesman could have found and collated the myriad pieces of documentary evidence and eye-witness testimony that eluded even the official investigators in Garmisch in the immediate post-war years. There was no way he could have known of the Flying Fortress that blew the Reichsbank to pieces in the great raid of February 1945, of the flight of the gold and dollar reserves to the illusory safety of the National Redoubt, of its transportation into the Mittenwald hills on the backs of mules and its burial by Colonel Pfeiffer’s men. There was no way he could have known of the piecemeal disappearance of hugely valuable portions of the Reichsbank treasure, or the parts played by Rosenberg-Lipinski, Gottlob Berger, Karl Jacob and Fritz Mielke in its disappearance, or the whereabouts of some $8,000,000 turned in to Major Kenneth McIntyre, or the fate of several million dollars found in the Mittenwald hills by Fritz Rauch, Franz Pfeiffer, Karl Warth, Helmut Schreiber and Helmut Groeger, or the $407,235 taken by Captain Fred Neumann from Hubert von Blücher’s garden, or the two truck-loads of gold bullion found by Albert Singleton, or the $2,000,000 of Reichsbank bank-notes that were never accounted for in the FED, or the dollars and the gold spirited over national frontiers in those first frenzied piping days of peace. There was no way that that Washington spokesman, now so remote in time and place from the events on which he chose to comment, could have done his sums and shown that a mammoth $432,683,469 worth of funds had been stolen from the German Reichsbank, or picked the brains of former German officials and demonstrated that more than six tons of Nazi gold had gone astray, or pieced together all the scattered fragments of evidence that showed the parts played by officers of the SS, the Wehrmacht and the US Army in all these huge, historic heists – crimes of opportunity which were the product of a time and morality shattered by war.

  And since the Department of the Army had officially cleared the name of General Clay’s Army of Occupation in Germany once
and for all, how could that Washington spokesman have uncovered the cover-up and reconstituted the incinerated and shredded files that illuminated the dark gangland days of Garmisch-Partenkirchen and the OMGB? How could he have known about the international narcotics ring financed with stolen Reichsbank money, of the fleets of cars and trucks enough to equip whole armies looted from the Army in Bavaria, of all the scandalous deals and extortions and swindles and embezzlements, the smuggling and big-time black-marketeering, the financial manipulations and top-level illegal expropriations practised by Americans and Germans, separately and in collusion, who found themselves in uniquely privileged positions in a chaotic world – and bowed to temptation.

  When the Reinhardt investigation came to an end with the command decision ‘That no further action be taken and that this case be considered closed’, the United States Army finally evaded the task of fixing responsibility for these crimes or indicting the guilty men. Most of the names that could have been indicted were listed in the Reinhardt memorandum, although even today, because of this country’s libel laws, we still cannot reveal them all. But in the ultimate analysis, perhaps, these names are incidental to our major finding, which is that in countenancing a blatant cover-up of misconduct on the part of some of its senior personnel, the Army made it possible for the perpetrators of the greatest robbery in history and the instigators of some of the Army’s biggest rackets to escape scot free.

  21. The End of the Affair

  This sorry story is not quite done. The American cover-up had left most of the actors still on stage, so to speak. Many of them had yet to say their last lines and make their final bows. Some had their most dramatic exits still to come. Others had new parts to play, and would go out with their names in lights. Only one could be said to have been howled off the stage by the summer of 1948. This was the unfortunate Guenther Reinhardt. The rest of his melancholy tale is told at the end of his long letter to his English reporter friend, Tom Agoston – an agonised apologia pro vita sua which almost makes a tragic hero out of this strange and misunderstood man.

  In December 1948 I was offered a very exciting job with the US Displaced Persons Commission. Because of some very flattering recommendations I had been chosen unanimously among many applicants for a top job in Germany. The salary was very nice. I was appointed, sworn in, got my credentials, my diplomatic passport, my military entry permit and my plane ticket. In addition the largest labour organisation in the country had entrusted me with a mission that had the State Department’s blessing as well as the DP Commission’s.

  As I was sitting with the commissioner to say good-bye the Army phoned. A Lt-Col. Clark in Security Group of Intelligence Division in the Pentagon said that they would not under any circumstances allow me in Germany. That the moment I had landed in Frankfurt they would cancel my military entry permit and send me out of Germany on the next plane. He stated in so many words that this was not a security matter and said specifically that the matter did not involve my loyalty. That I was a trouble-maker – had made charges that caused an investigation which in turn showed my charges wildly exaggerated, etc. etc.

  The commission told me to go over to the Pentagon and straighten the matter out. I got the famous runaround and this Clark character even denied knowing anything about the matter! But some of the colonels who had been in Frankfurt with me told me quite openly that the Army had it in for me because I had ruined so many careers.

  Well, the Army boys invited the chairman of the commission to have a look at their secret dossier on me and told him if after seeing that he still wanted to employ a – character like me it was alright with them and they would withdraw their objections.

  The meeting took place and the commission got scared – told me that they depended so much on the goodwill of the Army – that the Army was doing everything it could to sabotage the DP program in Germany – that if I insisted on keeping my job it would anger the Army and result in adverse effects on the Jewish DPs – so would I please, please resign.

  I went to New York to confer with my friends at the top of the Jewish organisations and they said flatly that there was no alternative but to resign – that I had to do it for the sake of the Jewish DPs.

  What could I do? Of course I resigned.

  Of course in anticipation of going to Germany I had given up all my other work – a nice teaching job, lucrative magazine articles, good lecture work, etc. Naturally I also had completed certain arrangements as to my household, etc. The sudden development left me without a job. For the past six weeks I’ve tried to get back into the swim of things but it has been difficult.

  Nora has had a pretty tough time too. However, I finally got her the job she always wanted and she is very happy working for one of the finest fashion places in NY. She also goes to college at night and is doing remarkably well in her studies. We still can’t get married because of my domestic situation. As you know my wife has been a hopeless invalid for ten years. For the past year and a half she has also become mentally incompetent and more than 80 cents out of every dollar I earn goes for her care and up-keep. NY law does not permit any divorce in such situations as she is not insane in the legal sense of the word: in as much as she is completely paralysed she does not conform to the legal requirement of insanity that she ‘could be a menace to others or herself’.

  Some day things must right themselves after all this long streak of adversity. Then we’ll have a couple of drinks together and a good laugh at the days of ‘Sturm und Drang’ as the Germans would say.

  It is doubtful whether Guenther Reinhardt ever managed to enjoy the ‘good laugh’ he had promised himself and his friend. There was destined to be no decisive upturn in his long streak of adversity. For ten years he worked as a private eye for a San Francisco lawyer called Crum. For another four years he worked as an insurance investigator in New York. Then in 1969, at the age of 63, he suffered a heart attack in St Vincent’s Hospital, New York, and died. So passed the one man who had tried to right American rule in Germany and in the process turned it upside down – and destroyed himself.

  Meanwhile, what of other Americans in this drama? In spite of the blatant attempt of the US Army to cover up the misdemeanours of some of their personnel in Germany, heads did begin to roll – particularly in the so-called ‘Transportation Case’, to which reference has been made earlier in this book. Here there was carnage in Military Government, as a letter dated 3 April 1948 from Colonel Thomas H. Young, of the Inspection Section, to the Director of Military Government in Bavaria indicates:

  This section has conducted investigations which culminated in the removal of approximately forty key individuals from Military Government. It was found that not only were these persons all guilty of conduct calculated to bring discredit upon the service, but many of them were found to have committed serious crimes while in our service. Attention is particularly drawn to an investigation just completed by this section. This investigation revealed the most serious inefficiency, neglect and wrongdoing in the administration of the transport program in Bavaria. This wrongdoing resulted in the failure, for all practical purposes, of this program. This investigation was a means for eliminating from Military Government the unworthy officials responsible for this sad state of affairs. This one investigation alone resulted in formal charges being preferred against fifteen individuals.

  This is strong stuff, and the removal of 40 officials represents the loss of a significant proportion of the total American staff of Military Government in Bavaria. At first sight it even gives the impression of a significant deviation from the general policy of covering up the misdemeanours of the American forces in Germany. But as events proved, there was no deviation. Only one American was brought to trial, along with two Germans and two DPs. The cases of five other Americans were duly processed, found in every respect to be strong cases, and actually referred to a General Court-Martial, only to have the trial blocked in each case by higher authority. One of the five, who faced serious charges of embezzleme
nt and defrauding the US Government, was allowed to resign without prejudice and according to Colonel Young was ‘now roaming over Europe, including the American Zone of Occupation in Germany, with a freedom of movement denied to more than a hundred million other honest Americans’. Three of the five went absent without leave, fled to the USA by air and were allowed to resign – ‘allowing these three individuals to go completely unpunished for offences similar to those for which more deserving Americans in the Theater are now serving several years in prison.’ Only one of the five, a US Army sergeant, ever appeared before a court-martial but, in a scandalous interference with the course of justice, his trial was interrupted on orders from higher military authority. ‘The defence is willing to call several high-ranking officers in the United States Army to testify in this case’, the defence counsel told the court, ‘to indicate that higher authority – EUCOM – has requested that this case and other cases . . . be taken out of the court.’

  This was the sort of thing that gave rise, in Colonel Young’s view, to ‘the confusion and dismay to be found in the minds of the majority of right-thinking, conscientious American personnel in Bavaria . . . Our failure to prosecute known American criminals has raised justifiable doubt in the minds of many Germans as to the impartiality of our justice . . . the alarming leniency of courts, in so far as American personnel are concerned, can be attributed to the miscarriage of justice in the many cases covered by this investigation.’ Colonel Young came to a solemn conclusion in his report, which could be given a far wider application than the transportation case alone. He wrote:

  ‘There has been a failure on the part of higher headquarters to fully support and encourage law enforcement agencies in Land Bavaria. This failure to apply the law . . . has resulted in a lowering of respect for all law in the community and the loss of prestige by the occupying forces in the eyes of the German population and our Allies.’