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For The Record  

FTR #578 Darkness at Sunrise: The Interdiction and Cover-Up of Operation Savehaven

Listen: MP3: Side 1  Side 2

Recorded November 26, 2006 REALAUDIO

Allen Dulles

Martin Bormann (right) with Himmler

Introduction: Documenting neutralization of the program to block the Nazi flight capital program during and after World War II, this program highlights the machinations of Allen Dulles in assuring the success of Operation Eagle’s Flight. (Dulles, as well as his brother John Foster, were attorneys for the powerful Wall Street law firm Sullivan and Cromwell, which was deeply involved with the financing of Nazi Germany.)

Having played an essential role in financing Nazi corporate structure, Dulles used his position as a key agent for the Office of Strategic Services to subvert Operation Safehaven—the Treasury Department program designed to block the Nazi capital flight. (The OSS was America’s World War II intelligence service.) After conducting Operation Sunrise–negotiations with the SS in Italy aimed at effecting a separate peace between the Third Reich and the Western allies–Dulles worked with other intelligence veterans and Wall Street movers and shakers to guarantee the continuity of the international cartel system which helped spawn the Third Reich in the first place.

In order to assure the recycling of the Third Reich’s stolen wealth out of Europe and then back to Germany to effect the “economic miracle” of German recovery, Dulles and company created the World Commerce Corporation. In addition, Dulles helped to politically rehabilitate SS general Karl Wolff, his chief partner in the Sunrise negotiations.

The number two man in the SS, Wolff became a key information source for John “Frenchy” Grombach. A former military intelligence officer, Grombach channeled political dirt to Senator Joseph McCarthy’s anti-communist witch hunts. Among McCarthy’s victims were Treasury Department veterans such as Harry Dexter White, who had worked on Operation Safehaven. With Safehaven veterans discredited as “commies,” the coverup of the Nazi money-go-round was complete.

Program Highlights Include: The FBI’s doctoring of the diary of former Secretary of the Treasury Robert Morgenthau (who oversaw Safehaven); the participation of key Morgan partner Edward Stettinius in the World Commerce Corporation; the subversion of Morgenthau aide Lauchlin Currie’s reputation during the McCarthy period; the Wall Street connections of Dulles’ collaborators in the World Commerce Corporation; the postwar career of Dulles’ Sunrise collaborator Lyman Lemnitzer. For a greater understanding of the international cartel system, its relationship to the development of the Third Reich, the Bormann flight capital program and the other topics discussed in this broadcast, see—among other programs—FTR#’s 305, 511, 532, as well as the books available on this website. Be sure to examine the declassified documents chronicling the Bush family’s involvement with Nazi industry before, during and after World War II.

1. Beginning with discussion of Operation Safehaven, the program outlines the Treasury Department’s central role in the attempt at neutralizing the Nazi flight capital program. It was this flight capital program that birthed the Bormann network, the economic component of the Underground Reich.

. . . . As the tide of battle shifted in favor of the Allies in 1943, economic warfare goals began to take into account the concern that Germany would try to hide gold and other assets abroad so they would not be included in war reparations and could be used to re-build Axis strength in the post-war period. The specific goals of Safehaven, as they came to be formulated in spring 1944, were to restrict and prevent German economic penetration beyond Germany, to block Germany from transferring assets to neutral countries, to ensure that German wealth would be accessible for war reparations and for the rehabilitation of Europe, to make possible the return to legal owners of properties looted from countries once occupied by the Germans, and to prevent the escape of strategic German personnel to neutral havens. The overall purpose was to make it impossible for Germany to start another war. . . .

(“U.S. and Allied Efforts To Recover and Restore Gold and Other Assets Stolen or Hidden by Germany During World War”.)

2. During Safehaven, the Department of Treasury was headed by Henry Morgenthau. Morgenthau advocated the de-industrialization of Germany and saw Safehaven as the first step in realizing that goal. How manifestly unsuccessful he was can be evaluated at this point in time.

 . . .Secretary of the Treasury Morgenthau in September 1944 put forward his plan for the political reform of a defeated Germany through punishment, partition, and pastoralization. The radical down-scaling of German economy envisaged under the Morgenthau Plan would rule out any substantial reparations to the victors, except what might be obtained from the dismantlement of what remained of German industry at the end of the war. While President Roosevelt appeared at first to approve of the Treasury plan for a punitive peace for Germany, and he and Prime Minister Churchill went some distance in adopting some of its elements during their wartime meeting at Quebec in September 1944, opposition developed from Secretary of War Henry Stimson who feared it would foster resentment in Germany and give rise to another war with Germany. The State Department also opposed the pastoralization of the Germany economy called for in the Treasury plan and favored a system of controls that would bring Germany into the family of nations. The State Department opposed the deindustrialization of Germany, believing rather that Germany should have a positive role to play in the postwar international economy. The British also opposed the harsh peace plan advocated by Morgenthau. . . .

(Idem.)

3. Another of the Treasury Department officials involved with Safehaven was Harry Dexter White, who was a casualty of Joe McCarthy’s anti-communist witch hunts.

 . . .To provide Embassies with expertise in Safehaven-related issues, on October 31, 1944, Treasury Secretary Morgenthau agreed with Treasury General Counsel Joseph O’Connell and Harry Dexter White, Director of Monetary Research for the Treasury Department, that Treasury-trained financial intelligence officers should be dispatched to supplement the staff of Embassies in response to the increased outflow of Axis capital and goods from the German Reich to neutral havens. . . .

(Idem.)

4. In addition to Harry Dexter White, Lauchlin Currie was another of Morgenthau’s associates in the unsuccessful Safehaven operation. Currie, too, was destroyed in the McCarthy period.

 . . .The arrival of the Currie Mission in Bern in February 1945 represented both a substantive and psychological watershed for the Swiss. Since the Allied landings in June 1944, the German Army had steadily retreated, and for the first time in over four years Switzerland was not surrounded by the German Army, opening the possibility to expand trade and communication with the non-Axis world. The U.S. Legation in Bern judged that public expectations centering on Currie’s visit were bordering on the feverish. . . . Despite official Swiss concern about his mission, Currie was impressed with the popular enthusiasm that greeted his arrival on the first train to Bern from a recently liberated Paris. Throughout his stay, in fact, Currie received red carpet treatment, the details of which appeared in much of his correspondence about the Mission. It is likely that the lavish Swiss hospitality afforded Currie and his colleagues contributed, to some degree, to the optimistic interpretation of the mission’s outcome. . . .

(Idem.)

5. Under the auspices of Safehaven, German industrial representatives in the U.S. and their American collaborators were being wiretapped. President Roosevelt intended to use the information gleaned from those wiretaps to indict the Nazis’ American industrial and financial collaborators. Had he been successful in doing so, many of the most prominent names in American industry and finance would have been convicted at Nuremberg, including the grandfather and great-grandfather of George Bush! Among those collaborators was Allen Dulles, who was centrally involved in financing the Third Reich and in helping the Nazi flight capital program. (For more about Dulles’ role in helping to finance the Third Reich and assist the Nazi flight capital program, see—among other programs—FTR#’s 353, 361, 370532.)

 . . . . But the one issue upon which Roosevelt was unyielding was his insistence that after the war, the German bankers must stand in the dock at the Nuremberg war crimes trial. This is confirmed by the top-secret White House-Justice Department correspondence files. The plan was to wait until Abs, Krupp, Flick, and the rest of the industrialists were charged. Then Morgenthau would unleash the wiretap Evidence showing that the Nazis had hidden their stolen assets in Switzerland, with the help of Allen Dulles. The whole scandal of Western aid to the Germany economy would unravel. All the slights of the Standard Oil blackmail would be avenged. The sudden release of the Safehaven intercepts would force a public outcry to bring treason charges against those British and American businessmen who aided the enemy in time of war. The targets included not only the Dulles brothers, but Forrestal and major industrialists, such as Henry Ford. From a prosecutor’s point of view, indicting the German bankers first was a brilliant strategy. To save themselves, Herman Abs and Hjalmar Schacht would have to reveal the whole history of their sordid dealings with companies such as Ford Motor. Despite the shields of Swiss banking laws and the layers of corporations that Dulles had erected, he had never anticipated that the Swiss bank codes and cables would ever become public knowledge. Roosevelt and Morgenthau would have hanged him and all his colleagues, forever breaking the power of the pirates of international finance. It was a glorious dream. Yet the scheme completely fell apart because someone tipped off Dulles that he was under surveillance. . . .

(The Secret War Against the Jews: How Western Espionage Betrayed the Jewish People; John Loftus and Mark Aarons; Copyright 1994 [HC]; St. Martin’s Press; ISBN 0-312-11057-X; pp. 77-78.)

6. Again, Allen Dulles would have been in the defendants’ dock at Nuremberg. Dulles was actively involved with helping the Nazis move their money to Argentina.

 . . . Because he learned about the Safehaven intercepts so quickly, Dullest knew that there was no smoking gun against him. His work for the Nazis prior to the war was not illegal, let alone treasonous. His wartime communications with the Nazis, although highly embarrassing, could be excused as an exercise in deception or as part of his intrigues to overthrow Hitler. Although many of his wartime actions were unauthorized, they were not criminal. What was criminal was the way that Dulles was trying to help the German industrialists get their money out at the end of the war. After the Nazis’ 1943 defeat at Stalingrad, various Nazi businessmen realized they were on the losing side and made plans to evacuate their wealth. The Peron government in Argentina was receiving the Nazi flight capital with open arms, and Dulles helped it hide the money. This was more than a violation of the Trading with the Enemy Act; giving aid and comfort to the enemy in time of war was treason. Once again, however, Alien Dulles was one step ahead of his pursuers. . . .

(Ibid.; p. 79)

7. Note that the Vatican helped Dulles move the Nazi money out of Europe and that the Nazi capital helped the Argentine economy soar.

. . . Dulles represented a staggering array of Argentine corporate and political entities before and after the war. President Juan Peron and his family were ardent Catholics and violently anti-Communist, as were many Argentines. In fact, Peron was decidedly pro-Fascist and Argentina was the only South American country that continued relations with the Third Reich well into the war. The Argentine economy boomed with the massive postwar transfer of Nazi flight capital. . . .

(Ibid.; p. 110.)

8. “ . . . Soon after the Safehaven inquiry into his own Nazi money smuggling was buried, Allen Dulles resigned from the OSS and returned to New York to do what he did best: move money illegally for his clients. One of the first names on his client list was a ‘personal matter’ for Thomas McKittrick, the head of the previously Nazi-dominated Bank of International Settlements (BIS) in Switzerland. The BIS had overseen the transfer of Nazi assets to Switzerland. After the war, the Nazis moved the money via the Vatican to Argentina. . . .”

(Ibid.; pp. 83-84.)

9. In order to circumvent Safehaven, protect the Nazi capital flight and, ultimately re-finance the German economy, Dulles recruited William Donovan, head of the OSS, America’s World War II intelligence service. Very closely identified with the Morgan interests, Donovan collaborated with Dulles in the World Commerce Corporation, one of the primary vehicles for effecting the Nazi “money-go-round”.

. . . The ‘old spies’ say that Dulles did not have to try very hard to convince Donovan that Truman was an idiot and that the only hope for the revival of an American intelligence service was to end the Democratic party’s stranglehold on the White House in the 1948 election. In the meantime, Dulles and Donovan agreed that every effort must be made to sabotage the Truman liberals and quietly prepare for the Cold War. To this end, Dulles convinced Donovan to serve on the board of a company that would help rebuild the German economy as a bulwark against communism. Dulles assured his old boss that there were a large number of wealthy South American investors, especially in Argentina, who were willing to help rebuild Germany. Although Donovan did not know it, Dulles had conned him into serving as the front man for the Nazi money launderers. He and Sir William Stephenson from British intelligence joined the board of directors of the World Commerce Corporation, with Allen Dulles, naturally, as their lawyer. The Nazi money flowed in a great circle—out of the Third Reich, through the Vatican, to Argentina, and back to ‘democratic’ West Germany. The source of the miraculous West German economic revival in the 1950’s was the same money that had been stolen in the 1940’s. . . .

(Idem.)

10. Note that the efforts of Dulles, Donovan and the World Commerce Corporation were essential to the economic reconstruction of Germany. Note also, that the investors in the German corporations—including the Wall Street high-rollers that Roosevelt wanted to prosecute at Nuremberg–benefited from the interdiction of Operation Safehaven.

 . . . Few who watch the film Evita would recognize that the Peron family of Argentina worked directly with the Croatian Ustashi to establish a pipeline from the Vatican Bank. As recounted earlier in this book, Ante Pavelic himself, the Croatian Nazi leader, moved to Buenos Aires and became a ‘security adviser’ to the Perons. Laundered through the ‘untraceable’ Vatican Bank, the Nazi treasure moved from Switzerland to South America. There the stolen funds were invested in a number of Argentine businesses whose lawyer was, of course, Allen Dulles. As the final act of the money laundering, Dulles created the World Commerce Corporation to revive trade between Argentina and West Germany. On its board were such notables as William Donovan of US intelligence, and William Stephenson of British intelligence. During the 1950’s, much of the stolen proceeds were laundered back to Germany for the great economic revival of West Germany. In the end, the money went back to the original German companies and their Western investors. . . .

(Unholy Trinity: The Vatican, the Nazis and the Swiss Banks; by John Loftus and Mark Aarons; St. Martin’s Press [SC]; Copyright 1991, 1998 by Mark Aarons and John Loftus; ISBN 0-312-18199; p. 300.)

11. In his efforts on behalf of the Bormann capital network, Dulles was able to draw on the resources of Frank Wisner, who became a Deputy Director of the CIA. Wisner, an OSS veteran like Dulles and Donovan, had been a partner in the powerful Wall Street law firm of Carter, Ledyard and Milburn. (At one point Carter, Ledyard and Milburn—which was the legal counsel for the New York Stock Exchange—had two alumni as Deputy Directors of the CIA. Wisner was joined by Harding Jackson.)

 . . . The most important front group was an entity called the World Commerce Corporation established after World War II to rebuild German—South American trade networks. The directors of this corporation were Sir William Stephenson, formerly of British intelligence and General William Donovan, formerly of the OSS. One of the attorneys for World Commerce was Allen Dulles, whose assistant, Frank Wisner, was the State Department’s deputy for currency and economic reform in the American Sector of West Germany. Many of the staff members for the economic reconstruction of occupied Germany came from the same international financial firms which had invested heavily in the pre-war German economy. . . .

(Ibid.; p. 278.)

12. Further underscoring the corporatist element in the interdiction of Safehaven is the fact that Edward Stettinius joined Dulles and Donovan on the World Commerce Corporation. Stettinius was a key Morgan partner and former Secretary of State.

 . . . Ostensibly to promote recovery he [Donovan], William Stephenson, and Edward Stettinius, along with members of the London Hambro family and quite a delegation of other at-large bigshots, had started up the World Commerce Corporation, a Panama-registered entity which seemed to fall somewhere between an import-export combine and a commercially oriented espionage network. Primary among its functions would seem to have been the reequipping and upgrading of the German industrial plant. . .

(The Old Boys: The American Elite and the Origins of the CIA; Burton Hersh; Charles Scribner’s Sons [HC]; Copyright 1992 by Burton Hersh; IBN 0-684-19348-5; p. 229.)

13. The title of the broadcast derives from Operation Sunrise, an attempt by Dulles to negotiate a separate surrender of Nazi forces in Italy. In and of itself a violation of the protocols of the Grand Alliance that joined the USSR, U.S. and U.K. against the Axis, Operation Sunrise helped to drive a wedge between the U.S. and the Soviets. Sunrise appears to have been a key factor in precipitating the Cold War. Dulles’ key negotiating partner on the other side was General Karl Wolff, Himmler’s personal adjutant and the number two man in the SS. As we will see, Wolff was later to contribute to the McCarthy anti-communist witch hunts that, among other things, helped to discredit veterans of the Safehaven program by tarring them with the “commie brush.” Among those who supported excluding the Soviets from the Sunrise negotiations was Averell Harriman, the U.S. ambassador the Soviet Union. Harriman was a partner of the Bush family in their business deals with the Nazis.

. . . When Dulles opened contacts with Wolff in early 1945, the British military command in Italy notified the Soviets that new peace negotiations had begun for a rapid German surrender of northern Italy. The Soviets replied that they were glad to hear this; all that was required under standing Allied agreements on negotiations with the enemy was for a handful of senior Soviet military representatives to monitor the progress of the talks. The U.S. ambassador to Moscow, Averell Harriman, vetoed that. Inviting the Soviets to the negotiations would make the Germans nervous, he contended, and would only encourage the Soviets to insist on participation in other upcoming decisions about the former Axis territories already held by U.S. and British troops. His was one of the most important voices on U.S.-Soviet relations, and his opinion carried the day. . . .

(The Splendid Blonde Beast: Money, Law and Genocide in the Twentieth Century; Christopher Simpson; Common Courage Press [SC]; Copyright 1995 by Christopher Simpson; ISBN 1-5671-062-0 [paper]; p. 202.)

14. Among the military negotiators allied with Dulles was Lyman Lemnitzer, who was to become a character witness for Wolff after the war and, eventually, Chairman of the Joint Chiefs of Staff. He was Chairman of the Joint Chiefs when John F. Kennedy became President. (Listeners familiar with Operation Northwoods should note that that program was developed under Lemnitzer. For more about Northwoods, see FTR#363.)

. . . .Roosevelt and Stalin exchanged increasingly bitter notes as negotiations continued in Switzerland among Dulles, the SS representatives, and a crew of senior U.S. military officers that included Major General Lyman Lemnitzer and General Hoyt Vandenberg. A week after the talks began, Soviet Foreign Minister Molotov sent a note to Harriman in Moscow expressing ‘complete surprise’ that Soviet representatives were still barred from the talks. He said that the situation was ‘inexplicable in terms of the relations of alliance’ between the U.S. and the USSR.’ If the U.S. refused to permit Soviet representatives to participate, Molotov contended, the talks had to be abandoned. . . .

(Idem.)

15. In the text excerpts that follow, note the role of the Sunrise negotiations in exacerbating friction between the U.S. and the Soviets.

. . . Roosevelt wrote directly to Stalin a few days later. The USSR misunderstood what was taking place, he insisted. The talks in Italy were basically a local matter, comparable to that in which the Baltic coast cities of Konigsberg and Danzig had earlier surrendered to the Soviets. Roosevelt seemed to approve Soviet partici­pation in the talks (‘I will be pleased to have at any discussion of the details of surrender . . . the benefit of the experience and advice of any of your officers who can be present. . .’), but he insisted that the talks in Switzerland were an ‘investigation’ of a local German commander’s surrender offer, not a ‘negotiation.’ Time was of the essence, he continued, and the U.S. representatives could not be faulted for being eager to accept the surrender of the German troops they were facing on the battlefield. . . .

(Ibid.; p. 203.)

16. “Stalin escalated the argument. His foreign minister, Molotov, suddenly had new commitments in Moscow and would not attend the founding of Roosevelt’s most cherished postwar project, the United Nations Organization. This was a calculated slight, and both sides knew it. In a new note to FDR, Stalin replied that he was all for profiting from cases of disintegration in the German armies,’ but in this case, the Germans were using the talks to ‘maneuver’ and to transfer troops from Italy to the Eastern Front.’ Roosevelt replied that Soviet actions in Poland and Romania had not lived up to the commitments made at the Yalta Conference less than two months previously. U.S.-Soviet relations had moved rapidly to an ‘atmosphere of regrettable apprehension and mistrust’ owing to the confrontation over Dulles’s talks with the SS, Roosevelt commented, and again insisted to Stalin that the talks were for ‘the single purpose of arranging contact with competent German military officers and not for negotiations of any kind.’ Meanwhile, FDR cabled Dulles in Switzerland and ordered him to present the SS representatives with a take-it-or-leave-it offer of an unconditional surrender. No further negotiation would be permitted, the President said. Stalin seemed to know many of the details of the Dulles-SS talks even before Roosevelt did.

When FDR tried to soothe Stalin with a declaration that the Swiss talks were without political significance, Stalin shot back that ‘apparently you are not fully informed.’ Stalin’s military intelligence agents in Switzerland were ‘sure that negotiations did take place and that they ended in an agreement with the Germans, whereby the German commander on the Western Front, Marshal Kesselring, is to open the front to the Anglo-American troops and let them move east, while the British and Americans have promised, in exchange, to ease the armistice terms for the Germans. I think my colleagues are not very far from the truth,’ he continued. If this perception was wrong, he asked, why were his men still being excluded from the talks? . . .”

(Ibid.; pp. 203-204.)

17. Note that Stalin was right—Dulles and crew were indeed attempting to negotiate a separate peace with the Third Reich, in violation of the protocols that governed the alliance between the Soviets, the U.S. and the United Kingdom. Note also that Roosevelt died at this time. Although it is not discussed in detail, Roosevelt died while having his portrait painted by some White (anti-communist) Russians, who didn’t even wait to learn of Roosevelt’s fate after his collapse. Nazi astrologers had predicted that the date on which Roosevelt died would see a change in the Nazi fortunes. Mr. Emory does not believe in astrology and feels that the Nazi astrologers may well have been providing a propaganda assist to the Nazi faithful in anticipation of an attempt on Roosevelt’s life.

. . . .Stalin may have overstated his case, but he was not far off. These were in fact exactly the terms that Cardinal Schuster had proposed and that Dulles had discussed with Wolff. No final deal had been struck, though, and by early April both sides in Switzerland were once again seeking guidance from their respective home offices. By then, though, the German front had begun to collapse throughout Europe, the Red Army was at the gates of Berlin, and Dulles’s grand plan to take Central Europe by way of Trieste had failed. ‘The Bern incident,’ as Roosevelt described it in a last letter to Stalin written only hours before his death, ‘. . . now appears [to have] faded into the past without having accomplished any useful purpose.’ . . .

(Ibid.; p. 204.)

18. Observers and participants in the Sunrise negotiations came away convinced that Dulles had reached an accord with Wolff and his SS counterparts. As will be seen below, they were right.

. . . But FDR’s ban on a formal agreement did not preclude Dulles from making more limited ‘gentlemen’s agreements’ with his SS counterparts for concessions that he saw as advantageous to the OSS or to U.S. geopolitical strategy. The SS delegation, the Swiss intelligence envoys who were serving as go-betweens, and the Soviet agents secretly monitoring the talks each came away from the talks convinced that Dulles had agreed to provide protection and assistance to General Wolff and his SS entourage in exchange for a quick surrender of German troops in Italy, although Dulles would deny this later. . . .

(Idem.)

19. Indicating the treasonous nature of Dulles’ activities is the fact that he continued the Sunrise negotiations even after being ordered to break them off. It was the view of Dulles’ superiors that Wolff’s efforts were an attempt at splitting the alliance. They were right. Dulles was doing the same thing.

. . . Wolff’s ultimately empty promises of a dramatic German surrender that would advance U.S. and British forces far to the east captivated Dulles and his OSS colleagues in Switzerland. Dulles intervened on a half-dozen occasions in an effort to keep the Operation Sunrise negotiations on track, even after the joint U.S.–British military command in Italy ordered him to desist. By the last week of April, senior U.S. and British military commanders in Italy concluded that the Sunrise project was little more than a desperate SS effort to fracture Allied unity, and told Dulles to cut off all contact with Wolff and his emissaries. Nevertheless, Dulles’s top aide Gero von Gaevernitz kept the negotiations open and acted with Dulles’s tacit cooperation to rescue Wolff from Italian partisans. The U.S.-British Combined Chiefs of Staff are known to have opened an investigation into Dulles’s alleged dereliction of duty and refusal to obey orders in connection with the Wolff rescue, but the records of this inquiry have disappeared from OSS and military files and have yet to be rediscovered. . . .

(Ibid.; pp. 204-205.)

20. “The unofficial truce in Italy that took hold as the negotiations went on probably saved lives, if only because ground combat is so brutal that even a few hours’ respite can reduce casualties. But Roosevelt’s conclusion that the negotiations failed to achieve a genuine German surrender in Italy is accurate. As a practical matter, Operation Sunrise contributed considerably more to souring U.S.-Soviet relations, and to enhancing Alien Dulles’s carefully cultivated reputation as a spymaster, than it ever did to winning the war in Europe. [Emphasis added.] Making use of splits in the enemy camp is, of course, among the most basic military tactics, and fundamental to almost any effort to recruit spies. But Operation Sunrise was seriously counterproductive from strategic and political points of view. The U.S. and its allies had formally agreed to forgo use of separate peace negotiations with the Germans in order to more fully ensure the solidity of their coalition. That policy did not make relations with the Germans easier, obviously, but any other approach would likely have facilitated Hitler’s central strategy and last hope in the final years of the war, which was to conquer the Allies by dividing them. Roosevelt’s demand for an unconditional surrender had not sprung from na’ivete or starry-eyed idealism, as some critics have argued, but rather from a tough-minded appraisal of just how much blood would be required to defeat the Axis. The unconditional-surrender policy did not ‘cost’ U.S. lives; it saved them, perhaps by the hundreds of thousands, by guaranteeing that the Soviet Union would carry most of the weight in the war against Hitler.”

(Ibid.; p.205.)

21. The beginning of a symbiotic relationship, Sunrise became the point of departure for a collaborative relationship between Dulles, Wolff and Lemnitzer.

 . . . The more sophisticated Axis defendants soon learned how to make the most of the divisions among the Allies. The postwar careers of the SS men who had negotiated with Alien Dulles during Operation Sunrise provide an example of how symbiotic relationships evolved among the victors and the vanquished during the first years after the war. The Dulles case is interesting not only because it was typical of thousands of less prominent instances, but also because of the symmetry in Dulles’s behavior in the wake of two different genocides—the Armenian Genocide and the Nazi Holocaust—more than two decades apart. . . .

(Ibid.; p. 236.)

22. “ . . . Though Dulles was later to deny it, he extended de facto protection to Karl Wolff and at least two of his assistants, Eugen Dollmann and Eugen Wenner, both of whom were later indicted by Italian authorities for their roles in massacres of Italian partisans and deportation of Italian Jews to Auschwitz. Circumstantial evidence links Dulles to the escape of another of Wolff’s assistants, Walter Rauff, whose rise through SS ranks had been helped by his use of gas trucks to murder thousands of Jewish women and chil­dren on the Eastern Front. . . .”

(Idem.)

23. Dulles and Lemnitzer were character witnesses for Wolff at a de-Nazification procedure. Their testimony prepared the way for Wolff to become a collaborator with elements of Western intelligence.

 . . . In late 1949, the British brought Karl Wolff before a denazification board (not an Allied court) in Hamburg—a move that might be fairly compared to charging the SS leader with traffic violations. Wolff’s Sunrise colleagues turned out in force for the ‘denazification.’ Allen Dulles, Lyman Lemnitzer, and General Terrence Airey each submitted an affidavit on Wolff’s behalf to the German panel; Dulles’s senior aide, Gero von Gaevernitz, testified in person as a defense witness. The board deliberated briefly, determined that the Karl Wolff in the dock was in fact the well-known Nazi and SS leader, then went on to conclude that the time Wolff had served in Allied internment since the war had been punishment enough. Karl Wolff was free to go. . . .

(Ibid.; p. 242.)

24. “ . . . Officially, the United States, Britain, and the USSR formally agreed at the Potsdam Conference during the summer of 1945 to a tough program of demilitarization, decentralization, and denazification of Germany in general and of the German economy in particular. They also specified that Germany would pay substantial war reparations to the countries it had damaged. The Wolff and Horthy cases suggest that despite such public covenants, clandestine factions inside Western governments already enjoyed sufficient clout in the late 1940s to effectively derail prosecution of Nazi criminals, including those of very high rank, at least in certain circumstances. But this pattern of comfort extended to those who had once organized genocide was not simply some plot by insiders. It was, as will be seen, a structural problem, one that extended de facto amnesties to thousands of men and women who had promoted or profited from mass murder. . . .”

(Ibid.; p. 244.)

25. Eventually, the rehabilitated Wolff began feeding information to “Frenchy” Grombach, a former military intelligence agent who formed a network of operatives who fed information to the CIA, among others. As indicated here, one of Grombach’s major sources in his efforts was Wolff.

 . . . One of Grombach’s most important assets, according to U.S. naval intelligence records obtained under the Freedom of Information Act, was SS General Karl Wolff, a major war criminal who had gone into the arms trade in Europe after the war. . . . Grombach worked simultaneously under contract to the Department of State and the CIA. The ex-military intelligence man succeeded in creating ‘one of the most unusual organizations in the history of the federal government,’ according to CIA Inspector General Lyman Kirkpatrick. ‘It was developed completely outside of the normal governmental structure, [but it] used all of the normal cover and communications facilities normally operated by intelligence organizations, and yet never was under any control from Washington.’ By the early 1950s the U.S. government was bankrolling Grombach’s underground activities at more than $1 million annually, Kirkpatrick has said. . . .

(Blowback; Christopher Simpson; Collier [Macmillan] {SC}; Copyright 1988 by Christopher Simpson; ISBN 0-02-044995-X; p. 236.)

26. Among the primary recipients of Grombach’s and Wolff’s information was Senator Joseph McCarthy, who utilized dirt given him by the network to smear his opponents. Among those who were trashed during the McCarthy period were people involved with Safehaven.

. . . Grombach banked on his close connections with Senators Joseph McCarthy, William Jenner, and other members of the extreme Republican right to propel him to national power. . . .Grombach’s outfit effectively became the foreign espionage agency for the far right, often serving as the overseas complement to McCarthy’s generally warm relations with J. Edgar Hoover’s FBI at home . . . . U.S. government contracts bankrolling a network of former Nazis and collaborators gave him much of the ammunition he needed to do the job. Grombach used his networks primarily to gather dirt. This was the American agent’s specialty, his true passion: political dirt, sexual dirt, any kind of compromising information at all. ‘He got into a lot of garbage pails,’ as Kirkpatrick puts it, ‘and issued ‘dirty linen’ ‘reports on Americans. ‘Grombach collected scandal, cataloged it, and used it carefully, just as he had done during the earlier McCormack investigation. He leaked smears to his political allies in Congress and the press when it suited his purposes to do so. Grombach and congressional ‘internal security’ investigators bartered these dossiers with one another almost as though they were boys trading baseball cards. . . .

(Ibid.; p. 237.)

27. Part of the interdiction of Safehaven was the destruction of the professional reputations of those involved with the effort. As we have seen, Joe McCarthy, Karl Wolff, Grombach and company were deeply involved in the anti-communist witch hunts. Harry Dexter White was among the Safehaven veterans who had their reputations destroyed by McCarthy. Discussing McCarthy’s targets, Fred Cook mentioned the fate of White:

. . . What had they established in that time, at least to their own satisfaction? That out of a total of 2.5 million federal employees, only some seventy-five could even be accused of communist activities. Of this miniscule number, two, Harold Ware and Harry Dexter White, had died. . . .

(The Nightmare Decade; Fred Cook; Random House [HC]; Copyright 1971 by Fred Cook; ISBN 0-394-46270-X; p. 547.)

28. Like Dexter White, Safehaven veteran Lauchlin Currie had his career destroyed in the McCarthy period. McCarthy successfully tarred State Department official Owen Lattimore by noting that Lattimore had edited some of Currie’s correspondence. (Note that Mr. Emory is skeptical of “disclosures” in the 1990’s of Currie’s alleged spying for the Soviets. Note the alteration of former Treasury Secretary Morgenthau’s diaries, dicussed below. There has been a vigorous effort at re-writing history, and Mr. Emory suspects that the accusations against Currie may be part of this.)

 . . . Here are to be found only the puny charges that he [Lattimore] knowingly denied . . . (5) that in 1942 he was requested to and did take care of the correspondence of Lauchlin Currie while Currie was away on a trip . . . .

(Ibid.; pp. 376-377.)

29. Among the events that may have helped to bury history is the FBI’s doctoring of Robert Morgenthau’s diaries. Recall that Morgenthau was Treasury Secretary and Safehaven was initiated under his jurisdiction. Recall, also, that Morgenthau favored the complete de-industrialization of Germany. Might Hoover’s agents have altered information relating to Safehaven?

 . . . Hoover was not only determined to manipulate the news, deciding what the public should or should not know; he also altered history, in the process exacting revenge against one of his most hated enemies, ‘that Jew in the Treasury,’ Henry Morgenthau, Jr. During his nearly dozen years as secretary of the treasury (1934—45), Morgenthau kept a daily diary, which included not only his own recollections of events but also verbatim transcriptions of his meetings and telephone calls. Moreover, as a member of FDR’s ‘inner cabinet,’ he was privy to the behind-the-scenes activities of most of the rest of the government.

According to the historian Jason Berger, it would be difficult to overstate the importance of the Morgenthau diaries to scholars of the New Deal era. As ‘the only source of daily happenings in Washington,’ Berger notes, ‘they are a researcher’s dream.’ For writers ranging from Arthur M. Schlesinger, Jr., to Ted Morgan, they have been an indispensable source of raw history. On leaving office, Morgenthau had given his papers to the National Archives for safekeeping until such time as he decided to make them public. On learning, in 1951, that Morgenthau was discussing publication of the diaries, Hoover struck. . . .

(J. Edgar Hoover: The Man and His Secrets; Copyright 1991 by Curt Gentry; Plume [Penguin Group] {SC}; ISBN 0-452-26904-0; p. 389.)

30. In addition to re-writing history through the doctoring of Morgenthau’s diaries, it appears that operatives may have doctored other memoirs of U.S. politicians. How many other politicians have had their memoirs doctored? How many government agencies beside the FBI have been involved in such operations?

. . . ‘It was a very covert operation,’ a senior agent who headed the raiding party has recalled, ‘damn covert. There were five of us, and we were all sworn to absolute secrecy. We even left the Washington field office by various devious routes. And we’d go in [an out-of-the-way room at the National Archives] at different times so no one would know five agents were in that room. And we were the only ones who had a key.’ Their only equipment, which they carried in their briefcases, was scissors. ‘We literally went through [the diary] with scissors, cutting out any references which would be unfavorable to Mr. Hoover or the FBI. They were just physically excerpted right out of the diary itself.

Our job was to cut out everything which, even by innuendo, might indicate that Mr. Hoover had feet of clay.’ The pages were then retyped and renumbered so that there would be no indication that anything was missing. The whole operation took several weeks. What they left behind for the historians who followed was a history of the New Deal years as approved by J. Edgar Hoover. Although he was not personally involved, the senior agent heard from the Bureau grapevine that President Roosevelt’s papers had been similarly ‘sanitized.’ According to librarians at the Franklin D. Roosevelt Library at Hyde Park, New York, many FBI reports are missing. And still others have been changed. . . .

(Ibid.; pp. 389-90.)

31. Although the information is not in the body of the actual broadcast, it is interesting to contemplate the evolution of the milieu that blocked Operation Safehaven. Dulles became director of the CIA under Eisenhower, while his brother John Foster became Secretary of State. [John Foster Dulles, like Allen, was a partner in Sullivan and Cromwell, the influential Wall Street law firm that played a prominent role in U.S. investment in the Third Reich.] Lyman Lemnitzer became Chairman of the Joint Chiefs of Staff. Wisner became a Deputy Director of the CIA. With the exception of John Foster Dulles (who died in the late 1950’s) all of these people were in office when Kennedy became President, after defeating Richard Nixon, who was part of the same milieu. Nixon, a protégé of Allen Dulles, presided over the Crusade for Freedom, which brought Nazi war criminals into the U.S. for political purposes. (For more about the Crusade for Freedom, see—among other programs—FTR#465.)

Discussion

One comment for “FTR #578 Darkness at Sunrise: The Interdiction and Cover-Up of Operation Savehaven”

  1. http://www.tabletmag.com/jewish-news-and-politics/143053/hitlers-american-banker?all=1

    Meet the American Banker Who Helped Hitler Loot Jewish Gold—While Spying for the OSS

    Thomas McKittrick, head of the Swiss-based Bank for International Settlements, was a key go-between for the Axis and the Allies
    By Adam LeBor|August 30, 2013 12:00 AM|Comments: 8

    After Thomas McKittrick, the former president of the Bank for International Settlements, died in a New Jersey nursing home in 1970, at age 81, the New York Times eulogized him as a world financier. His brief obituary described him as a man sufficiently daring to attend a bank meeting in Switzerland in 1940 “within earshot of a French-German artillery duel,” while his peers voted by proxy instead. But like many obituaries, McKittrick’s death notice was more notable for what it omitted.

    As head of the BIS, headquartered in Basel, from 1940 to 1946, McKittrick played a crucial role in abetting Hitler’s war—and, at the same time, in revealing details about his Nazi colleagues to his friends in Washington, D.C. On McKittrick’s watch, the BIS willingly accepted looted Nazi gold, carried out foreign exchange deals for the Reichsbank, and recognized the Nazi invasion and annexation of conquered countries. By doing so, it also legitimized the role of the national banks in the occupied countries in appropriating Jewish-owned assets. Indeed, the BIS was so indispensable to the overall Nazi project that the vice-president of the Reichsbank, Emil Puhl—who was later tried for war crimes—once referred to the BIS as the Reichsbank’s only “foreign branch.” In the closing months of the war, as American GIs fought their way across Europe, McKittrick was arranging deals with Nazi industrialists to guarantee their profits after the Allied victory.

    But McKittrick was also a key contact between the Allies and the Nazis, passing information back and forth from Washington to Berlin. His relationship with the Third Reich was encouraged both by factions within the State Department and by the leadership of the Office for Strategic Services, the predecessor of the Central Intelligence Agency. He also served as a back-channel between anti-Nazi German business interests and the United States—and ultimately served to help preserve the power of German industry after the war, over the opposition of no less a figure than Treasury Secretary Henry Morgenthau.

    ***

    Born in St. Louis in 1889, McKittrick graduated from Harvard in 1911. He joined the U.S. Army in 1918, at the end of WWI, and was sent to Liverpool, England. There he was seconded to British military intelligence, checking that no spies were using the docks to pass in and out of the country. After the armistice in November 1918, McKittrick was dispatched to France to work with the Allied occupation forces. The following year he returned to New York and started work at Lee, Higginson & Company, then a renowned Boston investment house.

    In 1921, McKittrick was sent to London to work for the firm’s British wing, and he was made a partner. He quickly built up an impressive network of contacts with international connections. Much of his time was spent working on German loans and investments, many of which were arranged by John Foster Dulles, then a lawyer working at the immensely powerful law firm of Sullivan and Cromwell. McKittrick enjoyed his time in London and became a kind of honorary Englishman, complete with a butler who ironed his copy of the Times of London each morning before he read it.

    McKittrick’s involvement with the BIS began in 1931, when he joined the German Credits Arbitration Committee, which adjudicated disputes involving German commercial banks. One of the other two members was Marcus Wallenberg, of Sweden’s Enskilda Bank, who taught McKittrick about the intricacies of international finance. Marcus and his brother Jacob were two of the most powerful bankers in the world. During the war, the Wallenberg brothers used Enskilda Bank to play both sides and harvest enormous profits. (Their nephew Raoul would later save tens of thousands of Hungarian Jews before disappearing into the Soviet gulag, abandoned by his uncles.) In May 1939 McKittrick was offered the position of president of the BIS, which he readily accepted. Once he was in office, Marcus Wallenberg remained his most important mentor, teaching the American banker how to negotiate the delicate path between the opposing European powers—just as the Wallenbergs themselves had so skillfully done.

    At first glance, McKittrick seemed a curious choice to run the world’s most influential bank, especially during wartime. He was a lawyer by training with no direct experience of central banking. But that did not matter, for McKittrick was the ideal contact person between both sides: He was an American, and thus, when he was appointed in 1940, a citizen of a country that was still neutral in the growing war between the Axis and the Allies. He had excellent connections in Washington and on Wall Street, in London and Berlin.

    The BIS was founded in Basel in 1930, where it is still headquartered today. Ostensibly set up as part of the Young Plan to administer German reparations payments for WWI, its real purpose was detailed in its statutes: to “promote the cooperation of central banks and to provide additional facilities for international financial operations.” The establishment of the BIS was the culmination of the central bankers’ decades-old dream to have their own bank—powerful, independent, and free from interfering politicians and nosy reporters. Under the terms of the founding treaty, the bank’s assets could never be seized, even in times of war. Most felicitous of all, the BIS was self-financing and would be in perpetuity. Its clients were its own founders and shareholders—the central banks. The BIS, boasted Gates McGarrah, an American banker who served as its first president, was “completely removed from any government or political control.”

    Based in a former hotel near Basel’s central railway station, the BIS swiftly made itself into the principal pillar of the new international global financial system at a time of worldwide financial crisis. It organized bailouts for Austria, Spain, and Hungary. It provided banking services for central banks. Its annual reports on the state of the global economy were soon required reading in the world’s treasuries. Every month, the BIS brought together some of the most powerful central bankers in the world, in conditions of extreme secrecy, to discuss the world economy. Reporters were forbidden from even looking into the room where the directors met after they had left. The cabal of central bankers, aided by their numerous friends on Wall Street, including John Foster Dulles, the future American secretary of state, and his brother Allen Dulles, had been instrumental in rebuilding Germany after WWI—a project that continued after Hitler took power in 1933.

    ***

    Before he moved to Basel, McKittrick had established himself as a valuable go-between for the Americans. In October 1939, lawyers for Ernst Hanfstaengl, Hitler’s former propaganda chief, asked McKittrick to provide a character reference for their client. Hanfstaengl, a Harvard graduate, had lived in New York and was well connected in American high society. He returned to Germany to become one of Hitler’s earliest backers. Hanfstaengl was appointed foreign press chief in 1931, and his job was to present a moderate, sophisticated face to journalists. However, his eccentric mannerisms, dry sense of humor, and close connection to Hitler made him enemies, and he fled in 1937, eventually winding up in a British prison camp. McKittrick was ready to declare that the former Nazi spin doctor would not act against British interests if he were set free—although it is unclear how McKittrick could know this. Hanfstaengl was duly released and sent to the United States, where he compiled psychological profiles of Nazi leaders for American intelligence.

    McKittrick was an admirer of the new Germany and, like many in his social and business circles at that time, had an ambivalent attitude toward Jews. After Kristallnacht, the German pogrom of November 1938, he used his contacts to help Rabbi Israel Mattuck, of the Liberal Jewish Synagogue in London, arrange the immigration of German Jews. Mattuck wrote a grateful note thanking McKittrick “most heartily.” Later on, in August 1942, Paul Dreyfus, a Basel banker, asked McKittrick to write a letter of introduction for him to Leland Harrison, the American ambassador to Switzerland. McKittrick obliged but made his feelings about Dreyfus clear in a separate letter to Harrison. “He is, as you will surmise, a Jew, but a good sort who is doing everything he can to help his unfortunate countrymen.”

    McKittrick started work in Basel in January 1940. The outbreak of war in Europe posed existential choices for the BIS management. There were three options: liquidate the bank, downsize and become dormant until the end of hostilities, or remain as active as possible within the bounds of the declared policy of “neutrality.” The directors were unanimous—and already thinking ahead of the needs of transnational capital: The BIS must be kept going to assist with postwar financial reconstruction. McKittrick assured the Swiss authorities that the bank would be neutral and the staff would not “undertake political activities of any sort whatsoever on behalf of any governments or national organizations.”

    The bank was indeed a bizarre island of neutrality. Basel is perched on the northern Swiss border, overlooking both France and Germany. Just a few miles away, Allied and Nazi troops were fighting and dying. But at the BIS, nationals of opposing sides worked together in courteous harmony. Roger Auboin, the manager, was a Frenchman. Paul Hechler, the assistant manager, was a German, a Nazi party member who signed his correspondence ‘Heil Hitler,’ as German law required. Rafaele Pilotti, the bank’s secretary, was Italian. British nationals also worked at the bank. After the fall of France, the BIS and the staff were temporarily evacuated from Basel, in anticipation of a Nazi attack. But the German invasion of Switzerland never materialized. Switzerland was far more useful to the Nazis as a neutral launderer of Nazi gold, a supplier of hard currency, and a financial channel to the rest of the world than as another territory under Nazi rule.

    In any case, McKittrick’s declarations of neutrality soon proved worthless. He and the rest of the bank’s management turned the BIS into a de facto arm of the Reichsbank. This was not a result of inertia, passivity, or bureaucratic sloth. It followed from a series of deliberate policy decisions. The BIS accepted Nazi gold looted from occupied countries such as Belgium until the final days of the war, when even neutral countries refused the plunder. The BIS recognized the forcible incorporation of 10 countries, including France, Belgium, Greece, and the Netherlands, into the Third Reich. The BIS allowed the Nazi occupation regimes to take ownership of those nations’ BIS shares, so that the Axis bloc held 64.7 percent of the bank’s voting stock. Board meetings were suspended, but Annual General Meetings continued, with member banks voting by proxy.

    McKittrick was especially close to Emil Puhl, the Reichsbank vice-president, whom McKittrick described as his friend. Puhl, who was a director of the BIS, was a regular visitor to Basel. In autumn 1941 McKittrick gave Puhl a tutorial on the Lend-Lease program, under which the United States supplied the Allies with arms, ammunition, and other war materiel. The act, passed in March of that year, effectively marked the end of the United States’ policy of neutrality. But America’s entry into the war did not affect McKittrick’s cordial and productive relationship with the Reichsbank. Puhl wrote of McKittrick in September 1942, “Neither his personality nor his manner of conducting business have been any cause for any criticism whatsoever.”

    The Reichsbank greatly valued its relationship with the BIS. Berlin continued to pay interest on the BIS’s prewar investments in Germany, even though that interest contributed to the bank’s dividends, which were paid to its shareholders, including the Bank of England. Thus, through the BIS, Nazi Germany was contributing to Britain’s wartime economy. It was a price worth paying, Puhl believed. Some of the BIS’s dividend payments to shareholders in Nazi-occupied countries went through the Reichsbank, thus giving Berlin access to the foreign exchange transactions and allowing it to charge a fee for its services.

    Hermann Schmitz, the CEO of IG Farben, the giant Nazi chemicals conglomerate, and a BIS board member, sent his sincerest New Year wishes to McKittrick in January 1941. Schmitz wrote, “For their friendly wishes for Christmas and the New Year, and for their good wishes for my 60th birthday, I am sending my sincere thanks. In response, I am sending you my heartfelt wishes for a prosperous year for the Bank for International Settlements.” It would certainly be another prosperous year for IG Farben, one of whose subsidiaries manufactured Zyklon B, the gas used to murder millions of Jews.

    ***

    In the winter of 1942 McKittrick traveled to the United States. His return to New York was the talk of Wall Street. On Dec. 17, 1942, Leon Fraser, an American banker and himself a former BIS president, hosted a dinner for McKittrick at the University Club. Thirty-seven of the United States’ most powerful financiers, industrialists, and businessmen gathered in his honor. They included the presidents of the New York Federal Reserve, the National City Bank, the Bankers’ Trust, and General Electric, as well as a former under-secretary of the treasury and a former U.S. ambassador to Germany. Standard Oil, General Motors, JP Morgan, Brown Brothers Harriman, several insurance companies, and Kuhn Loeb also sent executives. It was probably the greatest single gathering of America’s war profiteers. Many of these companies and banks had, like McKittrick, made fortunes from their connections with Germany, connections that carried on producing profits long after Hitler took power in 1933 and certainly after the outbreak of war in 1939.

    But, despite McKittrick’s powerful connections on Wall Street, the BIS was coming under pressure from the Treasury Department, where Henry Morgenthau and his aide, Harry Dexter White, were the bank’s most powerful foes. White was scathing about McKittrick, describing him as “an American president doing business with the Germans while our American boys are fighting the Germans.” The BIS, like all Swiss banks, needed a license to operate in the United States, and it had been revoked in 1941. McKittrick hired John Foster Dulles to get the license unblocked. He also met Morgenthau. The encounter did not go well. Morgenthau walked out after 20 minutes and recommended that McKittrick consult Treasury experts.

    McKittrick was then denied permission to return to Basel. He spent his time while waiting for his passport being debriefed by OSS agents about the intelligence he gleaned from his Nazi contacts. There was a rich haul. Hitler, McKittrick revealed, had become indecisive. “Instead of having a definite plan laid out, and pursuing it relentlessly, he switches from one plan to another,” the OSS report of McKittrick’s interview noted. There were even rumors that he had started drinking. Despite the soaring casualties on the Eastern Front, and the surrender at Stalingrad, most Germans, McKittrick explained, still believed state propaganda. He related how one friend of his in the Reichsbank said he had to get out of Germany every now and again or he would start to believe the propaganda himself.

    Some of the most intriguing material the OSS obtained from McKittrick detailed his role as a back-channel between anti-Nazi Germans and the United States. McKittrick told the OSS that he received “peace feelers” from non- or anti-Nazi Germans twice a month. All of them, however, argued that, even if a deal was made, Germany would remain the dominant European power “with a free hand in the east and a large measure of economic control in western Europe.” McKittrick also strongly emphasized the BIS’s future use in planning the postwar order. “While it does not concern itself with political affairs, it does offer facilities for the discussion of postwar financial and economic questions,” wrote the author of the OSS memo, “and he thinks that a year or two can be saved in getting Europe back to work by informal international conversations under its auspices.”

    McKittrick finally arrived back in Basel in April 1943. Despite his lobbying and John Foster Dulles’ legal advice, the BIS’s request for exemption was denied, and the bank’s funds in the United States remained frozen. There were many in Washington who asked why the State Department had renewed McKittrick’s passport and allowed him to return to Basel, when it was clear that the BIS was aiding the Nazi war effort. The answer was 60 miles south, in Berne, at Herrengasse, 23.

    There, McKittrick’s old friend Allen Dulles ran the Swiss branch of the OSS. McKittrick, also known as OSS codename 644, regularly met with Dulles and American Ambassador Leland Harrison. The three men, McKittrick recalled, talked more freely “in those meetings than at any other time.” Dulles and Harrison wanted to know everything McKittrick knew, especially about Nazi money channels. McKittrick, they discovered, knew a lot. For example, the BIS held gold for the Reichsbank, so sometimes, when the interest was due on the bank’s investments, the BIS simply helped itself to the Nazi gold it held to make up the payments. At other times, the Germans borrowed BIS gold for their dealings with Swiss banks. This cozy arrangement caused no concern at the BIS, said McKittrick, as “we knew that they’d replace it.” McKittrick’s close relationship with Emil Puhl, the vice president of the Reichsbank, was especially valued by Dulles and the OSS.

    OSS telegram 3589-90, sent on May 25, 1944—at a time when thousands of Jews were still being deported every day to Auschwitz, where most were immediately murdered—records Puhl’s fears, not that the war was lost, but that the Reichsbank might lose its privileged position during the reconstruction:

    Not long ago our 644 [McKittrick] had two lengthy conversations with Puhl of the Reichsbank. The latter was extremely depressed, not so much by the idea of Nazi defeat, but by the situation, which Germany will have to contend with later. The Reichsbank has been engaged in work on plans for the reconstruction, and evidently they are unable to see where an effective beginning can be made.

    Declassified OSS documents reveal that McKittrick played a central role in an American psychological-warfare operation known as the “Harvard Plan,” which aimed to undermine the morale of German businessmen—and their support for the Nazi regime. The Stockholm OSS office published a wartime newsletter called “Information for German Business,” the purpose of which was to suggest that cooperation now would pay handsome dividends after the Allied victory.

    On Feb. 1, 1945, David Williamson, an official in the OSS Morale Operations department, wrote to codename 110—Allen Dulles. Williamson suggested to Dulles that he set up a similar psychological-warfare operation in Switzerland. He enclosed some draft material. Notably, all the material had been passed by the State Department before it was to be distributed. It revealed how McKittrick was arranging deals with Nazi industrialists to guarantee their profits after the war was over. “The new agreement will guarantee the German export interests during this second period an export income at least equal to their prewar revenues regardless of the expected break in the German cartel control,” read the document. A second paragraph outlined how, even as Allied airmen were bombing Germany, negotiations were under way to “preserve the industrial substance of the Reich.” Anyone who questioned this was merely a “leftist radical,” according to McKittrick:

    Mr. Thomas H. McKittrick, the American president of the BIS, has announced his decision to continue his efforts for a close cooperation between the Allied and German business world, irrespective of the opposition of certain leftist radical groups; in these efforts he counts on the full assistance of the American State Department. “After the war such agreements will be invaluable,” said McKittrick.

    For Morgenthau and White, such “agreements” were simply treasonous. They wanted the country to be deindustrialized and the power of the German cartels broken forever. For a brief moment, it seemed as though they might triumph. In July 1944 the Allies met at Bretton Woods to plan the postwar financial system. There would be a new International Monetary Fund and an International Bank for Reconstruction and Development. A resolution was passed calling for the dissolution of the BIS “at the earliest possible moment.”

    But the Dulles brothers and their allies, who argued that Germany must be rebuilt as rapidly as possible as a bulwark against the Soviet Union, triumphed over Morgenthau and White. The BIS returned the looted Nazi gold, and the calls for its dissolution faded away. Today, the bank is richer and more inviolable than ever. Last year, the BIS made a tax-free profit of $1.36 billion—an impressive sum for a bank with just 140 customers. Ultimately, McKittrick was proved right: The agreements he brokered were indeed “invaluable.”

    After he stepped down as BIS president in 1946, McKittrick was appointed a vice president of Chase National Bank in New York, in charge of foreign loans. He was even lauded by those whose stolen goods, in the form of looted Nazi gold, he had traded: That same year, McKittrick 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.”

    Additional research by Jay Weixelbaum and Emmanuelle Welch.
    Adapted from Tower of Basel: The Shadowy History of the Secret Bank That Runs the World, published by PublicAffairs.

    ***

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    Posted by Vanfield | September 8, 2013, 11:29 am

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