Bank of England helped sell Nazi gold in ‘cold blood’

The Bank of England knowingly helped to sell looted Nazi gold from occupied Czechoslovakia months before the outbreak of World War II, according to experts.

On Tuesday the Bank of England’s archives – published digitally for the first time – reveal that £5.6 million of gold was transferred just days after the Nazi siege of Czechslovakia in 1939, which was one of the catalysts that sparked the war.

While the transfers themselves were known at the time, the archives unmask private letters and telephone conversations where the Bank of England avoided questions over its Czech gold holdings from the Treasury.

The bank sanctioned the transfer of gold – worth an estimated £736.4 million ($1.1 billion) today, according to the Financial Times – between two accounts held by the National Bank of Czechoslovakia and the German central bank, known then as the Reichsbank.

Albrecht Ritschl, professor of economic history at the London School of Economics, told CNN that the Bank of England “in cold blood, and pretending not to know what these accounts were and where the gold was coming from, agreed to the transfer.”

Ritschl said: “From the Czech point of view this was very clearly a breach of trust.”

The Bank of England declined to comment when contacted by CNN.

The archived document claims bank officials suspected but were “not sure” the accounts were Czech and German. However, they believed it was “no business of theirs,” as both accounts were held by the Bank of International Settlements (BIS) – a central bankers’ bank.

But David Blaazer, a historian at the University of New South Wales and author of a study on the Bank of England and Czech gold, told CNN: “There is absolutely no doubt that the Bank knew which numbered BIS account belonged to which central bank.”

Despite an attempt by the British government to block all Czech assets in the UK, the transfer went ahead and the story caused an outpouring of public anger.

Banker for Germany

With the UK heavily exposed to the German debt crisis in 1931, such transfers were part of an “economic appeasement” plan of Nazi Germany by Britain, according to Ritschl.

British Prime Minister Neville Chamberlain was keen to avoid conflict with Adolf Hitler’s Germany after the human cost and economic devastation caused by the First World War.

This culminated in Britain, France, Germany and Italy signing the ‘Munich Pact,’ leading to the annexation of Czechoslovakia and the country’s eventual invasion.

Ritschl said: “This policy started in 1933 when Hjalmar Schacht was reinstalled by Hitler as president of the Reichsbank.

“This was beneficial in the short term for Britain, as Nazi Germany unblocked British assets frozen in Germany,” Ritschl told CNN. “Britain then resumed its traditional role as a banker and insurer for Germany’s foreign trade. As the episode shows, the Nazis had a reliable partner,” he said.

After the gold transfer, the assets were “disposed” of with around £4 million going to the central banks of Belgium and Holland and the remainder sold in London, according to the official report.

Ritschl said the personal friendship between Reichsbank President Hjalmar Schacht and then-Bank of England Governor Montagu Norman may have had a bearing on the bank’s actions at the time.

Government intervention

In May 1939, then British Chancellor of the Exchequer John Simon wrote to Norman to ask whether the bank was still holding Czech gold.

In his reply, Norman did not answer the question but pointed out “that the bank held gold from time to time for the BIS and had no knowledge of whether it was their own property or that of their customers.”

According to Blaazer, the Bank of England could not refuse to follow the order of a customer (the BIS) to transfer gold between its own accounts.

He said: “The bank claimed, and the government accepted, that this particular transaction fell beyond the governments and the banks power.”