Chasing Gold: The Incredible Story of How the Nazis Stole Europe's Bullion (17 page)

He was right. Initially, London and Paris blamed the Czechs for the political unrest and leaned on the Prague government to find a peaceful settlement with the Nazis. In May, French and British diplomats pressed the Czechs “to go to the utmost limit” to accommodate German demands.

On May 20, General Keitel sent Hitler the Case Green plan for the military takeover of Czechoslovakia that he had ordered up a month earlier. It presented three options. The first was for an attack without warning that would catch the west by surprise. The second was an invasion after months of diplomatic talks. The third was a “lightning action” following an incident such as an anti-German demonstration in Prague that Berlin would instigate. The Führer favored the third option. Propaganda and economic warfare against the smaller country would also play important roles. At a meeting of his top military and diplomatic leaders Hitler bellowed, “It is my unshakable will that Czechoslovakia shall be wiped off the map.” He ordered his army to be prepared to launch military action against the country no later than October 2. The opening line of the Case Green document that Hitler signed on May 30 read: “It is my unalterable decision to smash Czechoslovakia by military action in the near future.” The new document set the deadline one day earlier, October 1.
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Some of Hitler’s leading generals had doubts about the Czech operation because of their fear that Britain, France, and even the Soviet Union might move militarily to support Prague. The leader of these dissidents in uniform, just as it had been in the case of Austria, was General Ludwig Beck, the army chief of staff. He told General Walther von Brauchitsch, the army’s commander-in-chief, to demand that the Führer stop his reckless military adventures.

Hitler, though, was confident that the western democracies and the Soviet Union would not take up arms to defend Czechoslovakia. On May 14 in London, Prime Minister Neville Chamberlain hosted an “off the record” luncheon for American reporters. He implied clearly that none of the three countries was ready to defend Prague. Although not attributed to Chamberlain, the news soon appeared in New York City papers, and German diplomats forwarded the reports to Berlin. In addition, Sir Nevile Henderson, the British ambassador to Berlin, in early August told a private party in the German capital, “Great Britain would not think of risking even one sailor or airman for Czechoslovakia.” That also quickly made its way to German authorities.
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With war drumbeats starting to sound, General von Brauchitsch summoned the courage to show Hitler the Beck memo outlining the arguments against military action in Czechoslovakia. The Führer’s response was to call a meeting of younger military leaders on August 10 at his Berghof retreat, where he lectured them for nearly three hours on the wisdom of his strategy. Alfred Jodl, the chief of the operations staff of the armed forces high command, wrote in his diary: “Führer becomes furious and flames up.”
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Eight days later, Beck resigned. He was the last general to challenge Hitler until the attempt on the Führer’s life on July 20, 1944, in which Beck also played a major role.

The September 1938 Nazi party rally in Nuremberg offered the opportunity to raise German public opinion to a frenzy over the alleged poor treatment of their fellow countrymen living in Czechoslovakia. Göring called the Czechs a “pygmy race” that was oppressing “cultured people.” Behind them, he said, was “Moscow and the eternal mask of the Jew devil.” Hitler was more cautious, saying that the Czech government had to give “justice” to the Sudeten Germans.
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Paris and London then panicked. The day after Hitler’s speech, Chamberlain sent a message to Hitler proposing that he come to Germany for consultations about finding “a peaceful solution” to the Czech situation. The Prime Minister, who had never before flown, was now ready to rush to see him. A shocked Hitler said, “I have fallen from heaven.”
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The British Prime Minister and the Führer met on September 15 at the chancellor’s retreat in Berchtesgaden. Hitler, as always, did nearly all the talking, demanding that German-speaking Sudetenland become part of the Reich. He said he “would face war, even a world war, for this.” Chamberlain was left speechless and soon proposed splitting Sudetenland off from Czechoslovakia. Chamberlain thought Hitler and he had a confirmed agreement and returned to London to sell the plan to his cabinet and parliament.
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On September 22, Chamberlain returned to Germany for a follow-up meeting with Hitler in Bad Godesberg, a small town on the Rhine near Cologne. He expected it would be just a brief encounter to seal the deal on the basis of their previous talk. Hitler, though, had new demands. He wanted to take over the Sudetenland by October 1 at the latest. The Prime Minister left the session shattered, but returned the next evening for a meeting that began at 10:30. Hitler always bullied best late at night, and an exasperated Chamberlain finally at 1:30 in the morning said he was leaving for London since clearly no agreement was possible. Then in an almost word-for-word repetition of his humiliation of Austrian Chancellor Kurt Schuschnigg only a few months before, Hitler quickly replied, “You are one of the few men for whom I have ever done such a thing. I am prepared to set one single date for the Czech evacuation—October first—if that will facilitate your task.” That, of course, had been Hitler’s deadline all along. It was no concession. Nonetheless, a relieved Chamberlain left after telling Hitler that they had established a “relationship of confidence.”
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Meanwhile, a revolt of German generals was gathering force to stop Hitler from invading Czechoslovakia. Top military brass had little respect for the Nazi leader since he was not from their ranks and had only served as a corporal in World War I. They also feared that Britain and France would launch a military offensive for which they thought they were not yet prepared. Officers led by General Franz Halder, Beck’s successor as army chief of staff, agreed on a plan to arrest Hitler in order to stop a war over Czechoslovakia. The coup was scheduled to take place two days later on September 29.
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Chamberlain spoke to the British people via the BBC at 8:30 P.M. on September 27 and lamented that Europe was preparing for war “because of a quarrel in a faraway country between people of whom we know nothing.”
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He also offered to fly back to Germany for a third time. Two-and-a-half hours later, a conciliatory letter from Hitler arrived. Chamberlain grasped at it like a drowning man reaching for a lifejacket and proposed a four-power meeting in Germany that would include the leaders of Britain, France, Germany, and Italy. Hitler agreed and later sent a message to Chamberlain that no Czech representatives could participate in the conference. The prime minister agreed.

It was during a meeting to coordinate the putsch that Halder received news that Chamberlain, Hitler, and the others had agreed to the summit meeting. The coup of the generals was cancelled, in hopes that a resolution might yet be achieved, and they lost their best chance ever to stop the dictator.

At the Munich meeting Chamberlain and French Premier Édouard Daladier basically caved in to Hitler and Mussolini. Just after 1:00 A.M. on September 30, the four leaders signed an agreement that permitted the German army to march into the Sudetenland the next day, which was exactly Hitler’s target date. On his return to London, Chamberlain proudly proclaimed, “I believe it is peace in our time.”
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Winston Churchill was more perceptive when he told the House of Commons, “We have sustained a total, unmitigated defeat.” The British public, though, cheered Chamberlain and grasped at peace. Following the Munich meeting, Hitler contemptuously considered Chamberlain and Daladier to be pushovers who would never stand up to him.

When the Führer returned to Berlin, he was met with wild ovation. He was not totally happy, however, because he had been itching to show off his military strength and told his
SS
entourage, “That fellow [Chamberlain] spoiled my entry into Prague.” When Hitler later toured the Czech’s Maginot Line, he was stunned by how strong the defenses were and said, “I now understand why my generals urged restraint.”
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Only a few days after Munich, Hitler sent General Keitel a message asking him how soon Germany could take over the rest of Czechoslovakia. The officer replied he could do it by October 11. Hitler didn’t plan to move that fast, but ten days later he received a more detailed plan for “the liquidation of the remainder of Czechoslovakia.” In what was now becoming a pattern, German thugs created unrest in the remaining part of the country in late 1938 and early 1939, and on March 15, Hitler browbeat Czech leaders during another middle-of-the-night confrontation in Berlin. Their president fainted in the middle of the harangue. That same day, German troops marched into Slovakia, and a week later, Ribbentrop and Dr. Vojtech Tuka, the new leader of the puppet Czech state, signed the Treaty of Protection that put the country under German control. A secret protocol gave Germany the rights to exploit the Slovak economy.
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Despite having picked up the Austrian gold, the Nazis were again short of money to finance Hitler’s military adventures. In February 1939, he demanded that the Czech National Bank immediately turn over part of its gold reserve to the Reichsbank. On February 18, Göring sent the urgent message to the German Foreign Ministry: “In view of the increasingly difficult currency position, I must insist most strongly that the 30 to 40 million Reichsmark in gold [from the Czech bank] which are involved come into our possession very shortly; they are urgently required for the execution of important orders of the Führer.”
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Following the German takeover of the rest of Czechoslovakia, Chamberlain realized that his country, which was virtually unarmed, faced a mortal danger. On March 17, he told his country: “We must all review [our national security] position with that sense of responsibility which it greatly demands. Nothing must be excluded from that review which bears upon the national safety. Every aspect of our national life must be looked at again from that angle.”
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At the time of the Munich crisis in September 1938, Czechoslovakia’s gold reserves totaled ninety-five tons, but the Czech government had moved most of it abroad because of the danger Germany posed. Only a little over six tons were in the country’s bank vaults when Nazis troops finally arrived in Prague in March 1939. The rest had been shipped to other European central banks and to the Bank for International Settlements in Basel. An American diplomat in London reported back to Washington that the Germans found that “the cupboard was bare.”

As part of the dismemberment of Czechoslovakia, the Germans came up with the creative, but outrageous, argument that the Czechs should pay them in gold for the part of the country Berlin took over under the Munich accord. The rationale was that since the Sudetenland was now part of Germany, the Czechs should give them the gold to back the paper currency that would be circulating in that region. Prague authorities stalled for time, but Berlin kept pressuring to get their hands on the bullion. Berlin sent the Czech government an ultimatum on February 23, 1939, with the threat that the Wehrmacht would invade the country if the bullion were not quickly sent. The Czechs, on March 7, finally caved in. Prague instructed the BIS to send two tons of gold to Berlin and the Swiss National Bank to deliver 12.5 tons of Czech gold.
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After all the transactions, the Czech government still had 74 tons left.
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More than one-third of it was stored in the Bank of England, the traditional location for European bullion storage. Another one-third of its holdings were at the Bank for International Settlements.

The French embassy in Berlin on March 14 tipped off the Czech ambassador in the German capital, that the Nazis were getting ready to take over the Slovak rump state. The French diplomat specifically added that the Germans were anxious to get their hands on all the remaining Czech gold in addition to annexing yet another region of the country. At dawn the next day, German troops crossed the Czechoslovakian border. Accompanying the conquering armies were Dr. Friedrich Müller, a special Reichsbank commissioner, and members of the special commando unit known as
Herresgruppenkommando 3
. When it arrived in Prague, Müller went directly to the headquarters of the Bank of Bohemia and Moravia, the successor of the Czech Central Bank. The soldiers immediately took two bank directors, Peroutka and Malík, into custody. With soldiers pointing pistols at them, Müller demanded that they sign two orders that effectively put the country’s remaining gold under German control.
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Both the Czech and German central banks had accounts at the Bank for International Settlements that were held at the Bank of England. The first directive ordered the BIS to transfer 23.1 tons of Czech gold to the Reichsbank account. The second one instructed the Bank of England to transfer 26.8 tons of bullion that the Czech Central Bank had in London to the BIS account there. Those two accounts comprised all the remaining Czech gold.
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Johan Willem Beyen, the Dutch president of the BIS and manager of day-to-day operations, on March 18 received a telegram with the instructions. According to the bank’s normal procedures, such changes in ownership would have been handled on the same day a transfer order arrived, and the bank’s rules did not allow officials to refuse a member’s instructions. Beyen knew that the Germans had invaded the remaining part of Czechoslovakia, although he was not aware that the gold-transfer orders had been made at gunpoint. He consulted with the institution’s legal advisor about the Bank of Bohemia and Moravia order, who told him the bank had to execute the transactions spelled out in the telegram.
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Shortly after the message arrived in Basel, Beyen received a phone call from Roger Auboin, the BIS general manager. The Frenchman happened to be in Paris on a routine visit to the Bank of France and told Beyen that Pierre Fournier, the head of the bank, had heard about the telegram instructions and wanted to know how Beyen was going to handle it. The Dutchman replied that he would not execute the transfer if he received, before the end of the day, a message from Fournier requesting that the issue be brought before the BIS board.