Chapter 1: Switzerland and "hot money" (1933-1940)
A case of a Jewish manager, changed name - with dark lies some 10,000 Reichsmark (RM) are saved in Switzerland an in the "USA" - probably never fetched -- political events in Europe 1933-1938 - civil war in Spain -- "hot money" - billions are deposed in Switzerland by fear - and fetched - and deposed again -- supplement: not served Jewish bank accounts from 1940 on - billions falling into Swiss hands - no deal with Jewish communities
Translation by Michael Palomino (2013)
from: Peter Balzli: Treuhänder des Reichs. Eine Spurensuche. Werd-Verlag, Zürich 1997
<Switzerland and "hot money"
Nazi terrorism is driving more and more hot money (flight capital) to the Alps. Why the National Bank wants to hinder this at any price.
[Jewish manager Katz - name changed - hiding some 10,000 Reichsmark in Switzerland and "USA" - probably never fetched]
<In autumn 1937 life of Richard Katz * [name changed by personal protection] was in a heavy danger. His wife and his children were living in Prague since 1934 already, but the Jewish merchant was in a jail of Nazi justice since months. Remand prison of Berlin in Moabit District was well known that brutal methods were applied to bring people to speak. There were interrogations without end also with Katz with always the same questions again and again. The authorities were above all interested in his banking relations in Switzerland and the cooperation of his estate enterprise "Erah" with the letterbox company "Alfranco" in Switzerland in Schaffhausen. The legal entry of the "Alfranco" company said that this enterprise would handle financing of construction work and purchasing and selling of territories. Here are some texts of a protocol of an interrogation of November 24, 1937:
"Question: With which foreign bank you or your wife or "Erah" (GmbH, the author) have funds, commercial papers, lock boxes or debts?
Answer: As I said before there are only banking connections with the enterprises R. Damme in Danzig, with Swiss Bank Corporation (Bankverein) in Zurich and with Alfranco AG in Schaffhausen.
Question: In your documents of Swiss Bank Corporation there are charges for a depot of "Erah" at Manhattan Bank in New York and for a depot with another "American" bank. How you explain this?
Answer: "Erah", me or my wife have no accounts, deposits or lock boxes with "American" banks. This can only be a depot of Swiss Bank Corporation (Bankverein) itself where commercial papers of "Erah" have been put." (p.15)
Despite of the destructive interrogations Mr. Katz was not giving the wanted results at all. There were many answers with "I don't know" during months. He wanted to save his skin and his fortune with this. But there were too many points speaking against him.
[1936: When a Jew in Berlin is selling is depot of commercial papers getting 53,000 Reichsmark for it - then the German banking staff is denouncing this at once - some lies about high personal consumption and losses in a casino in Baden-Baden]
In 1936 Richard Katz had deleted his complete depot of commercial papers he had with Bank of Berlin (Berliner Bank) and had got 53,000 Reichsmark for it cash. Such a proceeding was almost a crime in the Third Reich. There was a complete lack of currency in the NS state, and therefore private actions with high fortunes were spied harshly, and already little violations of law were punished rigidly. Above all when there were Jews denounced having committed violations of currency law allegedly this was the pretext for a de facto expropriation. Denouncing was daily [by banking clerks or neighbors etc.]. In the case of Katz his bank was denouncing the action to the responsible authorities immediately. And these authorities were not hesitating. Just a suspicion of a shifting of capital abroad was enough for a detention. Since this time the officials were interrogating him regularly. Their interest was above all the question where the 53,000 Reichsmark had gone. Katz declared that one part of the money had been sent to Prague [for alimentation of his family members there]. For 6,000 to 7,000 Reichsmark he had purchased jewelry, 12,000 Reichsmark he had used himself and the remnant 22,000 Reichsmark he had lost playing in the casino of Baden-Baden.
Nobody was believing the two latter alibis. Above all the story with the casino should be very dangerous for Katz himself. Because with his lies he was underestimating the precision of German justice authorities. Because the result of the investigation was that he really had been some days in Baden-Baden and had visited the casino there. But the interrogated casino staff (croupiers) were stating all that during those days there was no person having lost so high sums. "Thus it has to be submitted that Mr. Katz has no real proof for the mentioned 34,000 RM and has shifted this money abroad without permission", this was the conclusion of an investigator in a provisional report of July 9, 1937.
[A confrontation in Baden-Baden provokes even more impossibilities]
Now Mr. Katz was insisting that he had lost so much money with Roulette. Now the Berlin investigation authorities were organizing one more investigation bringing the public enemy to a confession. Some days later they were shifting him from Berlin to the prison in (p.16)
Baden-Baden itself. There they organized a confrontation in the casino. Mr. Katz had to indicate at which tables he had played and which staff member was present there. And this local investigation was showing soon that had had lost his luck since a long time. "Investigating which chances he was covering at the game table and what profits he could win by these chances the accused person could not make any indication. He was declaring that he was partly playing on the full numbers and the rest he was playing on and between the connection stripes putting his chips of a value from 5 to over 100 RM. Mr. Katz could not indicate either to indicate only one of the staff members which was present when he lost his money, but he is stating that the alleged lost sum of 22,000 RM had been changed on the gambling tables into chips", the investigators were writing then, and the case was absolutely clear for them now:
"Considering the facts and the result of investigation Mr. Katz only tried to have an alibi with this casino in Baden-Baden protecting his money which is not present any more. There is no doubt that he had played in the casino normally, but there is no doubt that when a player is loosing over 22,000 RM during four days that he is known as a great player and he gets a special nickname withing the staff members."
Whereas completely convicted Mr. Katz was insisting yet that his version would be true. The investigators were not waiting any more. They were investigating his business relations now. In the center of investigations was again and again Swiss Bank Corporation (Bankverein) in Zurich [with it's headquarters in Basel], the enterprise of "Alfranco" in Schaffhausen, and his eliminated "Erah GmbH". The last one had several territories in Berlin and in Danzig, the former headquarter of Erah. In the indictment of December 16, 1937, the prosecutor came to the conclusion - as it could be expected - that the casino story was not credible. Additionally shifting golden objects and jewelry to Prague were the proof for him "that the accused person was systematically working shifting values in what form ever abroad having capital available. The elimination of "Erah" in Danzig and the transfer of greater parts of the fortune to Mrs. Katz or to other enterprises owned by him like "Alfranco AG" in Schaffhausen shows that the couple was acting together (p.17)
to shift the big part of the capital abroad where the bride Katz was already living."
[Probably penal workhouse for Katz - and the money in Switzerland was probably never fetched]
With this accusation the documents in the case of Katz are finishing. But there are similar cases and it can be admitted that the justice convicted him to a penalty in a penal work house of several years and to a high fine. Whereas there is no entry in the list of Berlin Nazi victims it is probable that he did not survive such a situation during Holocaust times. But according to the documents this is safe: thanks to the stubbornness of Katz the German authorities could not state up to the end to which country the 34,000 Reichsmark had been shifted. It can be submitted that his business relations provoked that the money of Katz was shifted into Switzerland in 1936. And this would not have been a singular case. Switzerland was really flooded by hot money in those times, because the fuse of the tinder box called "Europe" was burning always faster and faster.
[Political events in Europe 1933-1938 - civil war in Spain]
Since the takeover of power in 1933 Hitler was working with a huge armament program [with the help of "America's" armament industry and with the antiknock agent]. Additionally in 1935 he was introducing the general compulsory military service. In the same year Hermann Göring was announcing the racial laws of Nuremberg [the big part of these racial laws were the work of Swiss racist Rudolf Rüdin who got even a reward for this]. Marriages were forbidden and sexual relations between Germans and Jews were forbidden, the laws of German nationality were deprived to people of so called not Aryans [this was a collaboration with the criminal Zionists so they got more "Jews"].
In 1936 Adolf Hitler was showing a little foretaste concerning his territorial projects. On March 7, he gave the order for the "Case Schooling" ("Fall Schulung"). As it was planned since 1935 German Wehrmacht was occupying the demilitarized zone of Rhine Land. Then the situation in Europe was getting worse blow on blow.
[1936: The Italian army in Abyssinia - boycott of coal by England - German coal for Italy - Germany and Italy in the civil war of Spain]
Two months after the victory of Italy in Abyssinia [and then after the English boycott of Italy blocking English coal so Germany had to replace and masses of coal were shifted through Switzerland passing the Gotthard tunnel to Italy] Spain was falling into a civil war in July 1936. Short time after the breakout General Francisco Franco was shouting for help and Germany and Italy were sending troops, and this was a well wanted opportunity for Berlin. They wanted to probe the emergency case. Above all for the young German air force under the command of Hermann Göring Spain should be a testing war. [In Spain the communist troops could announce several council republics and could occupy come city halls which was steered by Stalin in Russia. France and England were quarreling how far an involvement should go. Italy and Germany were making action]. Just in the same year Italy and Germany were founding the "axis Rome-Berlin", and Japan was becoming one more ally of Hitler.
["Hot money" - by a great fear billions are deposed in Switzerland - fetched again - and deposed again]
Swiss banks were feeling now the Fascist war propaganda [and Europe was only in a communist threat in Spain]. Since the crash of 1929 (p.18)
the balances of the banks had sunk massively, but now in Switzerland the sums were rising again. For example there is Swiss Union of Banks (Schweizerische Bankgesellschaft, SBG / UBS): In 1929 there had been 993 million Swiss Francs in the documents, in 1935 only 441.4 million. Then Swiss currency was devaluated and [the Spanish civil war] provoked a change. Within the last three months of 1936 the business report says that there was a "considerable influx of creditor funds" thus the final sum was rising by 31 million Swiss Francs. National clients and clients from abroad began step by step taking and shifting back their funds to Switzerland.
This flood of capital only came to a standstill during the first months of 1937: A part of the German funds was taken away, other funds were shifted back to France for armament programs. During some time also higher sums were shifted to the "USA". But at the latest from the middle of the year on the funds were coming back again to the Alps. The explosive political situation in connection with the collapse of the French currency [Franc] and rumors about a new devaluation of the Dollar and of the Belgium Franc were provoking one more flight into the save haven of Swiss Franc and to Swiss banks. Alone in the second part of 1937 National Bank of Switzerland had to accept currency of a value of half a billion Swiss Francs. Massive liquidations of Swiss accounts abroad and the flood of foreign currency was provoking a collapse of the interest rates. Swiss first class obligations had an interest guarantee of just only three per cent.
[Measures against the "hot money" are rejected by the bank directors - but there are propaganda letters for winning new customers robbing foreign banks their clients]
Switzerland was characterized by "hot money" now. The formerly used slogan was showing the phenomenon. The inflow of hot goods had less to do with economical conditions. "The movement of the funds had it's base neither because of the search of a profit nor were there any currency businesses or a fluctuation at the stock exchange", Neuchatel economist Henri Blumenfeld meant later in his dissertation of 1941. But safety had first priority with this. Many were fearing a currency disaster and monetary actions by the local authorities. Save havens were Holland and above all Switzerland. Since two years there was a bank secret working and there were no currency regulations. But now the bosses of Swiss National Bank (Schweizerische Nationalbank, SNB) had to think about this magnetic effect (p.19)
and they could not solve the problem. The reasons for the flight movements were not important for them. There were just other reasons why this boom of foreign funds in Swiss Francs and the bank notes in the lock boxes meant a danger for the monetary authorities. Their reserves of gold and currency were always getting higher, and this was a danger for currency policy. The leadership of SNB [today UBS] was stating soon: This flood of money has to be stopped. Foreign flight capital should be charged at any price, should be rejected or should be expelled in just another way. But for such a restrictive policy the collaboration of the business banks is needed who accepted and were administrating a big part of the flight capital.
At September 9, 1937, there was a project landing on the table of the Swiss Banker's Association (Schweizerische Bankiervereinigung), a "Gentlmen's Agreement for the reduction of the excess of the foreign funds in Swiss banks and for the fight of piling bank notes in lock boxes". This idea contained harsh measures: precise analysis of foreign clients, stop of giving interest rates for saved money and deposed funds, commission of 1% for any trimester, prohibition of short dated investments, prohibition of the distribution of bank notes and sanctions against banks violating the new rules.
The leading bank directors were considering that these restrictions were going much too far. They were fearing losses for their lucrative private customer's business. On September 16 they met the heads of Swiss National Bank in a conference and they degraded the document to rubbish. According to the banksters only the basic measures of the National Bank had nothing to do with reality. "The banks are convinced that there is not much so called "hot money". According to them the abundance of money is provoked because of the condition that Swiss banks did reduce their engagements abroad by different reasons and are reducing on", the directorate protocol of SNB says. But this was not the complete truth. Because at the same time the banks were distributing on and on propaganda letters to private customers abroad with personal addresses luring more hot money into Switzerland. Due to this practice French tax authorities had some big difficulties already evaluating precise fortunes in France already.
The ideas about measures of National Bank of Switzerland (p.20)
were not at all welcome with the banksters of the private banks. The investigation of all clients was rated principally impossible. Stopping giving interest rates was impossible to accept because these rules could be undermined easily and the identity of the person deposing the money on saving or deposit accounts was not investigated normally. The idea of a commission was rated to be forbidden, the prohibition of short-term funds was unacceptable and so on and so on. The banks were only ready to accept two meager concessions:
First they could agree to plead for a written declaration of lock box owners not piling Swiss bank notes in the lock boxes.
Secondly the National Bank of Switzerland should get the statistical data about foreign fortunes. The last point had the purpose to give SNB the possibility to prove that there were no problems at all and thus also a Gentleman's Agreement was absolutely superfluous. But the banks were also willing in the case of not finding a compromise with SNB to work out a counter proposal.
[Finance holding companies in Switzerland: end of 1936: 262 - mid 1937: almost 2,000]
After having presented the ideas of the banks the leaders of the Swiss National Bank were reacting with a lesson of national economy. The positions of gold and currency of 3.4 billion Swiss Francs would be simply not bearable for the National Bank and for the whole country, General Director Ernst Weber meant. For him it was clear that the bankers of the banks were wrong concerning the total amount of the foreign funds in Switzerland. National Bank would be convinced that huge amounts of foreign funds would be stored in Switzerland, but they had gone into different channels [above all into finance holding companies partly not being controlled by the banking law] and they had been disguised in different forms. With these channels and forms Mr. Weber was explaining commercial papers ad above all holding companies which were growing rapidly. When the Federal Board of Statistics was counting 262 of them at the end of 1936 yet then six months later there were almost 2,000 of them already nationalizing foreign capital.
[The threat of President of National Bank Mr. Weber limiting the influx of foreign funds with a new law]
After this little introduction of economic connections Mr. Weber was making his decisive proposal and it should not miss it's effect. According to the minutes of the meeting he was threatening indirectly with legal measures: "When it will not be successful to have an agreement with the banks then the leadership of the National Bank of Switzerland had to declare to the responsible authorities that the responsibility for this always (p.21)
growing risk cannot be taken any more." Weber's message was distinct and did not leave any choice to the bankers. According to the Swiss culture of compromise there was a slightly changed Gentleman's Agreement signed on November 15, 1937, and the banks were sending a newsletter to their foreign clients. In the background was an ice age coming up which was concealed in the official statements. "Fortunately the measures against the not wanted importation of capital were accepted with comprehension", the National bankers were purring in their business report. And also the group of bankers were pretending to be comprehensive for the harsh way of business against the new foreign customers. "The defense is understandable and is headed only against foreign funds streaming into Switzerland without any relation to Switzerland looking for a limited asylum just leaving the country as fast as possible when another safer location has been found in another country. There is enough capital in Switzerland like this and we are not interested in this", Credit Suisse [SKA, today CS] was stating in a monthly report in February 1938.
[The concrete "sanctions" against foreign funds]
Basically the sanctions were determinating that all limited foreign funds should not get interests any more and that the funds should be converted into funds with a limit of 3 months of cancellation period. New money from foreign customers who would accept the new rules was frozen for three months just after the opening of the account. Additionally funds with a duration of less than six months had to shorted by 1% of commission each year. Concerning lock boxes booming according to the political situation the banks were also adapting a little bit. Storing Swiss banknotes in open depots - for the banks transparent depots - by foreigners should be rejected. Foreign possession of lock boxes had to sign a corresponding rejection declaration.
The dimensions of the funds being affected by the new policy against customers can be illustrated for example by SKA. At the beginning of 1938 over than 50 million Swiss Francs were bound with a cancellation period of three months, or they were converted into accounts of foreign currency, or they had been driven out abroad. Post Office Bank had a special agreement with the National Bank (p.22)
and their funds of foreign clients were of about 2.4 million Swiss Franks. But the intervention affecting the foreign customers should be detected as a strike not being worth anything. Financial specialists in the protected paradise of Alps could not or did not want to see and to conceive the anxiety and uncertainty in Europe, nor did they want to have more regulations in project. In 1938 all events of before were put in the shade.
[1938: all sanctions are not working at all - more influx of funds to Switzerland]
The beginning for this was the special case "Otto", the secret nickname for the occupation of Austria by the Wehrmacht [where German Wehrmacht was greeted with flowers - also called "war of flowers"]. In 1934 already SS had organized a coup in Austria against chancellor Engelbert Dollfuss murdering him - but the coup had no success. But after this event the Germans were working again and again and wanted to be the governors of Vienna [and a big majority of Austrians was awaiting the "accession" since 1971]. The last foreplay was organized in the private castle of Hitler, Berghof in Berchtesgaden. By the mediation of Franz von Papen on February 12, 1938, Austrian chancellor Kurt von Schuschnigg was coming there. Hitler [an Austrian also awaiting this "accession" of his homeland] did not want to negotiate but he put Schuschnigg an ultimatum. One month later Hitler was performing the "accession". German Wehrmacht was coming on March 11, 1938. A big part of the Austrians was dancing and singing in the streets. But in the Jewish district of Vienna (Leopoldstadt) panic was breaking out. Thousands of Jews were preparing their flight [which was supported by Zionist organizations to Israel, but] many times to Switzerland.
In the autumn of the same year Hitler was performing his next blow. He was urging for Sudetenland. For a faked peace France and Great Britain were selling their friend Czechoslovakia. On Friday, September 30, English prime minister Neville Chamberlain and French prime minister Edouard Daladier were signing the Munich agreement. Czechs had to accept and Sudetenland was given to Germany now [which had fallen to CSSR in 1919 before by the dictatorial act of Saint Germain Treaty where all people were speaking German].
The leadership of the Third Reich was not only performing terrorism outside but also inside. Since years there was a horrible campaign against the Jews working [in collaboration with Zionist organizations driving the Jews to emigrate to Palestine, among others with the Ha'avara agreement shifting funds and goods from Germany to Palestine]. Dozens of anti Jewish measures were valid in Germany. But not all parts of the Nazi apparatus were ranked at the same level concerning the destruction of the Jews. According to Holocaust searcher Raul Hilberg above all the party ["the party" of NSDAP] - with the exception of SS - had not fulfilled any decisive (p.23)
function in this matter. Propaganda Minister Joseph Goebbels felt ignored. In this situation a new case in Paris would deliver the wanted pretext for getting more power. On November 7, 1938, a Jewish emigrant Herschel Grynspan had murdered a German staff member of the German embassy in Paris, Ernst vom Rath. Two days later Rath died because of his injuries. There had been another murder three years before when Wilhelm Gustloff had been murdered, leader of the NSDAP in Switzerland. This murder had no consequences. But now after the shots of Paris in 1938 the party [NSDAP] was without mercy. On November 9, Goebbels was organizing riots in the whole country against Jews. Systematically synagogues were burnt [not all, but many were fired by the SA], Jewish shops were looted [windows were broken and during the following weeks the goods were taken step by step, other goods were returned], and 30,000 Jews were detained [being dismissed after some days mostly]. This massacre [which was NOT a massacre but is was a propaganda campaign] was "Crystal Night". Göring got a compensation of the Jewish population of one billion Reichsmark covering the damages of the [SA] bully boys of Goebbels.
[At the same time racist Swiss police leader Rothmund in Berne was inventing together with racist Swiss government member Von Steiger (SVP) together with the German authorities the "Jewish Stamp" which was given to rejected Jewish refugees on the Swiss border so German authorities could detect them sending them directly into concentration camps].
All these dramatic events in 1938 were breaking any law and order in the Swiss National Bank and their clerks. There were temporary shifted funds to Austria and to the "USA", but generally Switzerland remained a top address for hot money. The measures against hot money had no effect, and this was already clear when Wehrmacht occupied Germany. "The constant influx of gold and currency is a clear signal that the Gentleman's Agreement is fulfilling it's purpose only poorly, because the banks are not following the rules, or because the foreign influx of funds is performed on ways which are not under the control of the agreement", states the minutes of the directorate of Swiss National Bank on January 20, 1938, already. In fact many tings were going on where this agreement had no effect, but the National Bank had to know about without any doubt. At one side such well known enterprises like Swiss Trustee Association (Schweizerische Treuhandgesellschaft) were fighting for not being a member of the agreement during months. At the other side the National Bank of Switzerland itself had given the order to the Swiss Banker's Association two months before to make a list with more companies which should be members of the agreement. The bankers were delivering over 200 names then, names of lawyers, of fortune administrators and of notaries who many times were deposing under their own name (p.24)
big foreign funds administrating them. It seems astonishing that suddenly the Swiss National Bank (SNB) did not want to know about this list any more and this list with the additional names was shortened to an absolute minimum.
But also with the control of these originally 200 fortune administrators this agreement had not had any effect because the pressure of the capital was too big - despite of the prohibition of giving interests. But the National Bank wanted to have stronger measures yet. There were several measures under consideration:
There should be moral pressure on the banks, there should be press campaigns against hot money, there should be the control of purchase of goods from the banks for the balance of foreigners, and there should be investigations about the origin of the currency and of the purpose of certain transactions.
The Second Department [of the National Bank] under leadership of Paul Rossy was going farthest in this discussion. Considering that the Gentleman's Agreement had no effect the Bernese seat of the National Bank was pleading for a resolution of the Swiss government. There should be a decree saying that the whole business with foreign customers inclusively holdings should be watched. Additionally the National Bank should have the right performing raids against suspicious offices. In Rossy's plan were also fines and sanctions, and foreigners should loose their rights for funds they had concealed before. Fritz Schnorf, the leader of the Third Department of SNB [Swiss National Bank] was fighting such projects which were like inquisition. This would be an extremist controlled economy of currency. It was the same Mr. Schnorf who had provoked before that the list of 200 additional names had been drastically shortened.
The hot measures against hot money were dropped finally. Instead of this the National Bank of Switzerland was deciding to have a profound talking with the management board of the Baker's Association. During an internal evaluating session before the projected meeting decisive points were described in a very clear way:
"Point 1: There is an insufficient performance with the Gentleman's Agreement. This statement should not be a charge against the banks, but this should be a signal that certain conditions with the banks and their clients have promoted the lacking performance. (Foreign holding companies have often not been treated as such (p.25). Foreign capital under Swiss names with Swiss banks (p.25-26)
could not be registered. The negotiations with foreign customers did delay because no correspondence is allowed to abroad and because there is a time of consideration and so on).
Point 2: Gentleman's Agreement is not strong enough to defend Switzerland from the unwanted foreign funds. Partly there was just a conversion into other forms of value (longer times, titles, bank notes etc.).
Point 3: Additionally the moving of capital between October 1937 and April 1938 has to be considered. Without any doubt in this time there was another influx of capital from France and "USA" to Switzerland; is this Swiss capital? - Is this foreign capital? Basically this influx was bigger than the run-off. For being oriented about the movements in some way more balances should be provided."
At the meeting of May 25, 1938 in Berne the President of the Management Board of SNB, Gottlieb Bachmann, was presenting the following facts to the banks. Gold and currency had risen between end of October 1937 to end of April 1938 by 160 million Swiss Francs. The balances of the end of the year of 72 banks were showing the first time the dimensions of fortunes there was the matter about: The administrated funds of foreigners were totally 1.359 billion Swiss Francs. From these were 716 million in Swiss Francs and 643 million in other currencies. The funds on saving accounts of foreigners were about 100 million Swiss Francs.
Bachmann indicated that the number of 716 million should be corrected yet because from these about 1.8 billion Swiss Francs from national Swiss customers in Swiss currency with 72 banks a certain amount should be possessed by foreigners in fact. These were funds under Swiss code names, or were foreign funds in holding companies having reached the banks.
The banks did not want to know anything about such procedures and were stating at the same time that it could not be forced to them to make investigations about the real origin of the national funds in Swiss currency. The position of the banks was nor astonishing. They wanted to have eliminated the limitations of the agreement as fast as possible. Therefore (p.26)
they were not rejecting a sing a song of praise about this hated agreement. It would not have been without sense, the Banker's Association was arguing. It had hardly provoked any reflux of already existing hot money from Switzerland at all, but it had braked new influx of hot money. The National Bank did not change it's position and declared that the agreement would be valid up to the end of 1938 for sure. Also the fact that the foreign fortunes of 69 registered banks had diminished until the end of June by 119 million Swiss Francs was not changing anything. To the contrary SNB was taking the resolution in August already to prolongate the agreement for one more year until the end of 1939.
Banker's Association was accepting this resolution but was indicating again that the National Bank was overestimating massively the flood of Switzerland with foreign funds. The rise of the levels concerning currency and gold were the consequences of repatriations of Swiss capital as it had been before. Additionally the banks were interpreting the agreement as damaging for their business thus the prolongation would be kept secret. This meant: no communique for the press. But the National Bank of Switzerland was not changing their course.
[Foreign clients are partly rejecting correspondence by reasons of safety]
In January 1939 452 of 537 invited banks and trustees had been enlisted as members of the agreement again. At the first glance this is a high rate, but it's deceiving. Because point number 7 of the agreement, the control of the accumulation of Swiss cash money in the lock boxes was providing some difficulties. The latent danger of war and the German propaganda against the Jews [in collaboration with the Zionist organizations for "driving" as many Jews as possible to Palestine] converted the tresories of the banks into sensible areas and thus became one of the big weak points of the agreement. This was no wonder, because in 1934 the bank secret had been introduced and thus the lock boxes had just a magic attractivity for the clients looking for a safe. Additionally there was another safety measure of many foreign clients: They did not want to have any correspondence because of spying and propaganda in their countries. According to these wishes there were just 204 of 452 institutes giving the wanted confirmation about the so called prohibition of storing of bank notes in lock boxes. 55 institutes could only partly or not contact their clients at all, the clients were resigning their signature, or the declarations were not complete. the rest of 186 institutes was converting into a complete black box and there was simply on reaction concerning point 7. But this was not so important, because at the end (p.27)
not the Gentleman's Agreement was changing the streams of hot money, but the start of war in the European history of the 20th century.
[1939: Occupation of remaining Czechoslovakia and the partition of Poland are provoking new influx of funds to Switzerland]
German troops were occupying remaining Czechoslovakia in March of 1939, and also Memel territory. [Sudeten Germans were the translators now in Prague. Then 4 months of silence followed because of Poland with diplomatic efforts from all sides, but "U.S.A." let Hitler go to the east against communism. Hitler Stalin agreement provoked that Japan suffered a crisis and was breaking off in the fight against communism thus Hitler became a second Napoleon]. On August 30  Hitler was faking an attack with alleged Polish soldiers against the radio studio of Gleiwitz [these were German soldiers disguised as Polish soldiers]. "Poland was shooting this night the first time on our territory with regular soldiers. Since 5:45 am", it was only 4:45 am, "we are answering and since now bomb by bomb is revenged". This text Mr. Hitler was shouting at 10 pm on September 1, 1939, in the Nazi parliament in Berlin. Second World War had become a fact [which was working principally since 1931 already with the war of Japan against China].
And now the conditions in the Swiss banking scenery were changing rapidly. The agreement with the banks for rejecting foreign funds was suddenly superfluous. "The directorate can state that under the conditions of today the question rejecting foreign funds in Swiss Frans is not actual any more, and therefore the conditions in the agreements with the banks can be renounced", this is the text of the minutes of the directorate of Swiss National Bank on September 21. But one did not want to renounce on point 7 of the agreement. The banks should go on to plead for declarations of their customers having safe boxes that they would not pile up Swiss bank notes there. Insisting on this point had not only financial political reasons. National Bank of Switzerland was also offering lock boxes and depots of commercial papers in those times. But against foreigners SNB was making a very rigid policy. Already in the beginning of the 1930s these clients were not allowed to retain the dangerous mail about their fortunes in the offices of SNB. Since 1934 the account reports and the safe bulls which should not be sent by normal mail by certain reasons had to be managed by an authorized Swiss agent - with some exceptions.
National Bank of Switzerland wanted to reach that the client was informed in any case and that there was an agent in any case when there was a cancellation of the depot or in other cases. Because with the developing political situation in Europe a certain part of foreign (p.28)
clients was less and less wanted. And after the outbreak of the war SNB wanted to get rid of them really. The most prominent victim of this strategy was the French branch of the Jewish banker's family Rothschild. Their trust had rented a steel box in the Geneva branch of SNB since 1922 for the price of 25,000 Swiss Francs every year. Two months after the capitulation of France in September 1940 the Rothschild family decided - for protecting the fortune of the Germans in the case of doubt - having administered the content of the safes by the Swiss enterprise "Société Anonyme financière de Participations". But this had to be arranged with a change of the contract. "The directorate declares it's agreement to transmit the contract to the company Société Anonyme financière de Participations et de Gérance" in Berne. There is the idea that today it cannot be the task of a National Bank administrating depots for foreign tenants. Thus the directorate is deciding additionally that tenant treaties have to be canceled at the next possible moment and additionally it should be urged that the title depots of the Rothschild group will be distributed and shifted to other banks", the minutes of September 12, 1940 are stating.
[October 1939 until September 1940: NS occupation of Belgium, Holland, Luxembourg, France, and Norway - Switzerland is encircled and much capital is flowing to the "U.S.A." - foundation of Swiss bank branches in New York]
Until this time the capital flows had not appeased but had developed simply in the contrary direction. Already since 1939 National Bank of Switzerland was watching that capital was leaving and had to fear about it's reserves. "The reduction of the stocks with gold and currency of the monetary institute by almost half a billion during 1939 can be explained above all by leaving of foreign hot money and by the necessity of the payment of our highly risen influx", this was the remark of Swiss Banking Union in it's business report. During the months between October 1939 and September 1940 the flight of capital was so massive that the National Bank had some days giving 25 million Dollars during only one day, converted these were 100 million Swiss Francs. Not important if Swiss or foreigner, if companies or national banks, for almost everybody the goal for these funds was "U.S.A." After "U.S.A." had taken a part of European hot money before already the big flood was coming now for them. From 1935 to 1940 the total influx to the "U.S.A." was 7.6 billion dollars passing the Atlantic (p.29).
Since a longer time already this exodus to "U.S.A." was provoking a big harassment for the fortune administrators in Swiss banks. Big Business with really rich private customers from Europe was going on during the 1930s developing a new hot spot in New York in always bigger dimensions, and the bankers form the Alps had no branches there. At the same time the idea to have own branches abroad was a horror for the conservative bosses of Switzerland. But at the latest after Hitler's occupation of remaining Czechoslovakia it was clear for all that the own customers could not be left to the "American" competition any more. Swiss Bank Corporation (Bankverein) [with it's headquarters in Basel, today UBS AG] had opened some months before a branch in New York together with Swiss Bank Corporation - as the first big Swiss bank.
But there was not only the administration of funds leading Bankverein to this step, but there was another reason yet. The protection of the own investments in the "U.S.A." having reached about 200 million dollars in 1939 could be granted in the case of a war in the best way with a branch in New York. This bank from Basel "was granting a certain autonomy to the Swiss Bank Agency and let a bigger part of currency and effectives for investments", this writes the Swiss economist and bank specialist Marco Durrer in his dissertation in 1985 about the Swiss American financial relations during WWII. Bankverein remained not a long time alone in Big Apple. Credit Suisse [SKA, today CS] was founding an associated company with the name Swiss American Corporation, and the branch of it followed one year later. The third big Swiss bank was not so active on the "American" market, and thus Swiss Union Bank of Switzerland [Schweizerische Bankgesellschaft, today UBS AG] was limiting itself to the minimum only being represented by an agency in New York.
["American" rumors against Swiss banking branches - reflux of funds to Switzerland at the end of 1940 - Jewish funds are officially to "American" owners officially - "U.S.A." blocking all European funds in June 1941]
But Swiss bankers were not welcome with open arms in the west. Because of the successes of Hitler's Wehrmacht and because of strong dependence of Switzerland from Germany - [one had to consider that Germany first was confiscating all Swiss investments in 1933 and then with aryanizations of many German enterprising was giving many enterprising to Swiss managers saving "partners"] - the "Americans" were more and more coming to the conviction that there had to be tight financial and banking connections with the Nazis [but "U.S.A" had given much support to Hitler against Stalin, even any support - and "U.S." policy was playing a classical double standard]. Indications for this mentality against Swiss bankers were enough. Fore example according tu Durrer the National Bank of Germany (Reichsbank) was dissolving it's account with the National City Bank and let shift the sum of the account to a New York branch of Bankverein [this seems to be a safety measure for a boycott of Germany which was organized by Jewish Zionist organizations in New York]. The intention of the "American" authorities to investigate the manners of working of the Swiss branch in New York (p.30)
was heard by rumors and was spread thus to the public. And there were rumors of blocking accounts later. The rumors were provoking a corresponding reaction of the capital streams. Since autumn 1940 the one way street was heading to South "America" and to Switzerland. Swiss and German companies were taking away their funds from the "U.S.A.". But Jewish capital did not flow back to Europe because of the fear from Hitler's troops. If possible the funds were stored on bank accounts of "American" account holders.
[Supplement: 1940: not all Jewish accounts can be served in Switzerland - billions of funds are falling into Swiss hands - no deal with Jewish communities
The statement that Jewish funds had been shifted on accounts of "American" account holders is the official version of Swiss banking liars. Because this was only affecting a little part of it. Truth is another one: In 1940 many Jewish bank accounts and safes and blocks of stocks could not be served by their Jewish holders any more because in 1940 the Jews were in ghettos or concentrations camps or in emergency flats or on the flight already. One part of the Jewish bank accounts and safes in Switzerland were also eliminated and the funds had been handed over to the "men in black" of German SS. With this all Jewish accounts, safes and commercial papers of millions - when not billions - which could not be served any more - were falling to Switzerland since 1945. Of course Swiss banking liars and their agents and the Swiss lawyers do not like to confess this fact. Instead of making a deal with the Jewish communities after 1945 with a percentage for Switzerland Swiss banksters and Swiss lawyers were then robbing the Jewish accounts systematically which were not served any more respectively they were "serving" themselves step by step for not calling attention. With this bank accounts were also may be the accounts and safes of Mr. "Katz" who is described in this chapter above. The main profiters were the members of right extremist political parties of SVP and of the central political parties of economy, FDP. Socialists were forbidden to be in the Swiss government until 1945 and members and "friends" of right wing extremist government member Von Steiger (SVP) were inhibiting enlightenment about Swiss Nazi banking - as it is reported later in this book].
Definitive blockage of Swiss funds and of other European funds in the "U.S.A." was in June 1941. Until this time the stream of funds back to Switzerland was about 50 to 100 million Swiss Francs per month. The client's accounts were rising more and more then. Every year about 20 new banks were created in Switzerland. This flood of funds was provoking a rise of the balance total of all banks by 18 percent up to almost 21 billion Swiss Francs. Switzerland was converting into a financial laundry machine for the Third Reich. Hot money left all cold from one day to another. After the National Bank of Switzerland had taken measures against the influx of foreign hot money there was no question about restrictions any more now. Whereas the reserves of currency and gold were extremely rising again the money from the dominating states of Europe was welcome. A former staff member of Swiss Banking Union [UBS] reports: "During the Second World War I was temporarily keeping the record with the counter marques, thus with the number accounts. We did not know the key for these accounts, but we all knew that there were many Italian and German account holders with them. And there were often movements on with these positions. But mostly there was coming in more than was going out." (p.31)
[The blockage of Swiss and European funds in the "U.S.A." since 1941 was a hypocritical measure to be against the Third Reich within the allies. "American" armament industry was helping in essential things to the Third Reich until April 1945. Book by Charles Higham: Trading with the enemy].