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
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.
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