Tower of Basel: The Shadowy History of the Secret Bank That Runs the World (21 page)

An American intelligence report on the bank’s wartime activities, prepared in December 1945, was even more damning. Much of the report was based on interrogation reports of Emil Puhl, who was singing like the proverbial canary in an effort to save himself from a lengthy prison sentence. Puhl
revealed how the Reichsbank had used the BIS to pull out its money from neutral countries before it was blocked and then traded the rescued funds with the BIS. He said that German officials had wanted McKittrick to be reelected as his opinions were “safely known” and that the BIS was also of great value to the Reichsbank as an “open window to financial information about the outside world.” Much of this information, it seems, was provided personally by McKittrick in his conversations with Emil Puhl. Perhaps the most shocking revelation is that McKittrick, after his return from the United States in May 1943, reported to Puhl directly on “the general picture of the current opinions and financial problems in the United States.” McKittrick, the report notes, also provided Puhl with advance information about the Allied Tripartite Mission to Switzerland in February 1945, when the Allies pushed Swiss officials to freeze Nazi assets and stop trading with Germany.
²⁷

McKittrick was not the only BIS manager providing Puhl with intelligence and acting as a go-between for both sides. When Allen Dulles arrived in Bern, one of the first people he met was Per Jacobssen, the BIS’s economic adviser. The spymaster and the economist were introduced at a charity party hosted by the wives of the American and British ambassadors. Bern, like Lisbon, Madrid, and Stockholm, was crowded with legions of spies, informers, and secret agents, trading in information, gossip, and intrigue. Dulles and Jacobssen had much to discuss.

As a Swedish national and high-ranking BIS official, Jacobssen was of extreme interest to both the Allied and Axis intelligence services. Jacobssen could freely travel to and from Allied and Axis territory. Jacobssen, like his compatriots the Wallenberg brothers, played both sides. When Jacobssen returned from the United States in the spring of 1942, he discussed American attitudes toward Germany with Emil Puhl, the vice president of the Reichsbank.
²⁸

Jacobssen also relayed valuable information about the British General Staff to Puhl. In the summer of 1942, Jacobssen asked Paul Hechler, the head of the BIS’s banking department, who was also a Nazi party member, to pass some news on to Puhl when Puhl next visited Basel: Jacobssen’s
British brother-in-law, General Sir Archibald Nye, had been appointed vice chief of the General Staff. This was valuable intelligence. Both sides carefully watched staff movements among their enemies’ military leadership. The arrival or departure of senior officers could herald new strategies or fresh thinking and herald the rise or decline of a particular commander. Aware that he was breaking a confidence, Jacobssen recorded in his diary that Nye’s promotion should be kept from the press: “Puhl said he was glad to be told. We might make a gentleman’s agreement between Hechler, himself and me not to mention it further. . . . I pointed out that when it was said in London that what I wrote was too friendly to Germany, these journalists obviously did not know who my relatives were.”
²⁹
Thankfully for Jacobssen, “these journalists” also did not know that he was passing valuable military information to the Reichsbank.

Jacobssen, accompanied by Hechler, met Puhl in Zürich on May 1, 1943. Puhl and the Reichsbank wanted information about the different plans circulating in Washington for postwar currencies and trade. Forward-thinking Nazi officials were already planning ahead for the postwar era. They needed to know what the Allies were thinking. As ever, Jacobssen was ready to help. The meeting must be discreet, Hechler emphasized to Jacobssen. “Puhl would of course be suspect if people in Germany heard that he had been in Switzerland to discuss these plans, but Puhl hoped, of course, that still one day it would be possible to come to an arrangement with the enemy,” Jacobssen recorded in his diary.
³⁰
“Arrangements with the enemy” were why the BIS existed. Puhl’s wish was granted. The following month Jacobssen made a speech in Berlin to German commercial bankers, entitled “The Anglo-American Currency Plans,” where he shared his thoughts on Allied postwar economic planning, based on what he had learned in the United States.

Thanks to the BIS’s economic adviser, Allied postwar economic plans were now public knowledge in Nazi Germany. Yet it seems unlikely that Jacobssen gave this speech without the permission of the United States authorities.
As the OSS documents on the Harvard Plan reveal, the US government ensured that the channels to Nazi industrialists and businessmen remained open, even as American and British soldiers walked into a hail of machinegun bullets on the beaches of Normany. Jacobssen’s speech, delivered in German, was translated by the American Legation in Bern and wired to Washington.
³¹
Jacobssen also passed information on to his brother-in-law Archibald Nye that was useful to the Allies. In 1940, after visiting Berlin, Jacobssen wrote to “Arch,” advising Britain and France not to aid Finland in its war with the Soviet Union, as they might soon be on the same side as Russia, fighting the Germans. The letter, said Nye, had been of great value, and he had passed it on to the Foreign Office and intelligence services.
³²
Jacobssen, like McKittrick, considered himself above national loyalties, but his heart at least seemed to be with the Allies. He listened to the nine o’clock news from London every night. When the national anthem was played at the end, he rose and stood at attention.

Meanwhile, German anti-Nazi émigrés believed that Georg von Schnitzler, a board member of IG Farben, used the BIS to communicate with the Allies. Von Schnitzler was certainly well placed to send messages to London and Washington. As the sales and commercial chief of the chemical conglomerate, he was one of the Third Reich’s most powerful businessmen. Von Schnitzler’s boss, Hermann Schmitz, sat on the BIS board. Before von Schnitzler joined IG Farben, he had worked for J. H. Stein, the Cologne bank where Kurt von Schröder was a director, and which ran Special Account “S,” Himmler’s private slush fund. By 1943, like most German industrialists, von Schnitzler understood that the war was lost. Germany would soon fall under international control, hopefully under the Western Allies. The priority was to preserve IG Farben’s factories, sites, and offices so that the chemical conglomerate could quickly resume its dominance after the hostilities were ended.

Von Schnitzler used the BIS to send a message to the Allies that the bombing of German industry had to stop, according to Heinz Pol, who was a former associate editor of the
Vossische Zeitung
, Germany’s paper of
record until it was dissolved in 1934. Pol had excellent sources among German émigrés and in neutral countries. He wrote,

                 
According to information emanating from Lisbon, Schnitzler is said to have drawn up a memorandum, which he has sent to the board of directors of the Bank for International Settlements at Basel, Switzerland. It is not known whether the memorandum arrived in Basel in time for the general meeting, which took place at the beginning of June (the American Mr. McKittrick presiding as usual), but several points raised in the memorandum are known. Schnitzler, the Lisbon sources say, stresses the fact that the term “unconditional surrender” implies that the Germans will still have something to surrender. But if the war of destruction, especially the bombing of the industrial centers in Germany, goes on, then there will be nothing left in the end but ruins and ashes.
³³

Schnitzler’s terms were clear, wrote Pol: “Collaboration on condition that German industry survives.” If the bombs stopped falling, the German industrialists would cooperate with the forthcoming occupation. As none of the IG Farben main sites had been much damaged by bombing so far, von Schnitzler’s offer “might not sound too unreasonable to other industrialists on the side of the United Nations.”
³⁴

THE BIS WAS
used by Japan as a channel to try and negotiate a peace treaty. Japan was a founding member of the bank and kept its links with Basel during the war. In July 1945 two Japanese bankers, Kojiro Kitamura, a board member of the BIS, and Kan Yoshimura, the head of the BIS’s Exchange Section, asked Per Jacobssen if he would act as an intermediary to arrange a peace accord. The Allies demanded unconditional surrender, but the crucial point for Tokyo, the bankers said, was that Japan would retain
the royal family, and ideally, the country’s constitution.
³⁵
Jacobssen, naturally, passed the information to his close friend, Allen Dulles, who took the Japanese proposal to Henry Stimson, the secretary for war. They discussed it in Potsdam on July 20, 1945, but events soon overtook the slow pace of the backdoor diplomacy. On August 6 Hiroshima was destroyed by an atomic bomb, followed by a second one in Nagasaki on August 9. Six days later Japan surrendered.

Jacobssen at least had the excuse that he was a citizen of neutral Sweden to justify his contacts with the Nazi bankers. McKittrick, whose homeland was at war with the Third Reich, did not. Cocooned in Basel, the BIS president seemed to have lost touch with reality, let alone morality. McKittrick had spent the war years in a parallel universe, one in which neutrality meant that the Reichsbank—the financial motor of war, plunder, and genocide—was judged equal to those banks whose assets it had stolen. A place where Puhl, the Reichsbank’s vice president and receiver of stolen goods, was actually helping the victims by keeping their goods in a safe place, and where Puhl—and doubtless Hjalmar Schacht as well—were not the builders and managers of the Nazi economy. Instead they were merely technocratic bankers, who only wanted to “play the game squarely.”

It is hard to judge which is worse: that McKittrick really believed these arguments, or they were a cynical lawyer’s ploy to ward off difficult consequences. McKittrick was certainly nervous about possible consequences of his entanglements with Nazi bankers, especially with Paul Hechler, the head of the banking department, who continued to sign his correspondence “Heil Hitler” throughout the war. Fate came to McKittrick’s rescue when Hechler died in 1945. His death “raises a serious administration problem while solving a political one,” wrote McKittrick to Roger Auboin.
³⁶
But with Allen Dulles covering his back, McKittrick had nothing to worry about. McKittrick traveled to Germany at least twice in 1945 and in September stayed at Allen Dulles’s house in Dahlem, in Berlin. Although McKittrick was still president of the BIS, his laisser-passer
was organized by the OSS and numerous senior American officials received him.

Not everybody shared Dulles’s enthusiasm for the BIS’s president. There was a nasty surprise waiting for McKittrick on his return to Basel. The October 11 edition of the
New York Herald Tribune
carried a scathing attack on the BIS, and the article was reprinted in the
Tribune de Lausanne
, a Swiss newspaper. The article reported that the American occupation authorities in Germany were investigating whether the BIS had supported Germany’s gold operations and helped finance Nazi rule in other countries. McKittrick’s activities during the war were criticized. The bank may be called to give evidence on its gold transactions with Germany during WWII, it added. Hypersensitive as ever to press criticism, and doubtless mindful of his need to find a new job in the United States, McKittrick asked Allen Dulles to take action. The source of the leaks, he suspected, was an American official named Fox, whom McKittrick had met in Frankfurt. Fox was a colleague of Harry White. “White and his associates have taken consistently an extremely unfriendly attitude toward the BIS and the attacks on the bank at the Bretton Woods conference originated with White,” complained McKittrick.
³⁷

Despite the bad publicity and attacks on McKittrick, the bankers at Basel got on with what they knew best: keeping the money moving. Quietly, carefully, barely noticed by the outside world, the BIS returned to business as usual. In December 1946 the bank held its first postwar directors’ meeting. Maurice Frere, the governor of the National Bank of Belgium and BIS board member, traveled to Washington, DC, to lobby US policymakers to free the BIS’s blocked assets and to try to defuse the media attacks. He found a sympathetic hearing. The turning point came in May 1948 when the BIS agreed to return 3.74 metric tons of looted gold to Belgium and the Netherlands. In exchange, the Allied Tripartite Commission, which dealt with Nazi plunder, agreed to drop all future claims against the bank. The US Treasury freed all BIS assets. Frere was elected president of
the BIS, the bank’s first since Thomas McKittrick’s term had come to an end in June 1946. The Bretton Woods resolution calling for the BIS to be liquidated quietly faded away.

MEANWHILE, THOMAS MCKITTRICK
had a lucrative new job. Soon after he stepped down as BIS president in 1946, he was appointed a vice president of Chase National in New York, in charge of foreign loans. McKittrick was even lauded by those whose stolen goods he had purveyed. He was invited to Brussels and decorated with the royal Order of the Crown of Belgium. The honor, noted a press release, was “in recognition of his friendly attitude to Belgium and his services as President of the Bank for International Settlements during World War II.”

          
Our whole concept of the unification of Europe was that it would first contribute to economic unification. Then we hoped to secure an economic-military unity and finally a political unity.
¹