Chasing Gold: The Incredible Story of How the Nazis Stole Europe's Bullion (55 page)

Four days later, the Italian government declared Rome to be an open city in hopes of avoiding Allied air attacks. The country was still nominally in the hands of Italian Fascists, but the Germans in early September took over both the capital and the central part of the nation. Hitler named Rudolf Rahn, a career foreign service officer who had just been appointed ambassador, to take up the new post of plenipotentiary in Italy. The Germans were now effectively running the country, and Rahn was the new boss.

Four German organizations were soon anxiously looking to get their hands on the Italian gold: Himmler’s
SS
, Hermann Göring’s Four Year Plan, Joachim von Ribbentrop’s Foreign Office, and Walther Funk’s Reichsbank. Ribbentrop had not previously been a major player in confiscating central bank gold, but this time he demanded to be part of the action because he was desperately looking for ways to finance his spying operations abroad. His people operated all over Europe and the Middle East under the cloak of diplomacy, and bullion was the coin of the realm for their operations.

Ribbentrop became the strongest of the four because his man Rahn was the top official on the ground in Italy. The Reichsbank’s Funk had little clout in Berlin; his role by then was largely technical and dealt with gold shipments. Göring, whose influence had slipped badly after his failure to defeat Britain in the summer of 1940, wanted to ship the bullion immediately to Berlin, where it would reside at the Reichsbank but be under his control. Himmler also tried to get into the action, but was excluded. Rahn successfully argued that the Germans could not risk the total collapse of the Italian economy and the chaos that might ensue if the bullion were moved to Germany. He also recognized that he would be more powerful if the treasure remained under his control in Italy.

The leaders of the Italian Social Republic and the Germans easily agreed that their immediate priority was to get the bullion out of Rome and up to northern Italy, where it would be far from invading Allied forces. An exception was made, though, for 2.3 tons of Albanian gold, which the Italians had captured during their invasion of that country in April 1939. It had simply been sitting in the Italian central bank vaults since then. That was immediately packed up into fifty cases and sent to Berlin on September 17, 1943.
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The Nazis were not the only ones with their eyes on the Italian gold. The Bank for International Settlements also closely monitored the situation. Officials there were nervous about the bullion because that was a guarantee for their investments in Italian financial markets. Shortly after the BIS began operations in 1930, it made investments in member countries including Italy. Those were backed by Swiss gold francs, and at the beginning of World War II were valued at 54.5 million Swiss gold francs or $18 million. The bank was now anxious to protect its investment in Italy.
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BIS boss Thomas McKittrick on September 9, sent Azzolini, who was an ex-officio BIS board member as well as head of the Italian central bank, a message about his organization’s concerns. McKittrick followed that up the next month with a formal demand that the Bank of Italy immediately ship three tons of gold to the BIS. He wrote that this was being done because of Italy’s “uncertain future.” The Basel institution actually just wanted to make sure the bullion didn’t fall into either Allied or Axis hands. Raffaele Pilotti, a top BIS official and also an Italian, traveled to Rome to discuss the issue with Azzolini, who was outraged at the request. He protested that it was an insult and had never been asked of any other BIS member. Gradually, though, the Italian banker began to realize that if he did not agree to the offer, all of Italy’s bullion would end up in Berlin. It was better to keep at least some in a different secure place.
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Anticipating that the Nazis would soon be coming for the Italian gold, Niccolò Introno, the Italian bank’s deputy director general, came up with an ingenious plan to protect at least some of it. He proposed to Azzolini in the middle of September 1943 that they hide the bullion by constructing a false wall in the bank’s underground vault. They could build it in such a way that there would be a new entry into the vault that would camouflage the change. In another ruse, bank officials would backdate documents to show that they had sent bullion to Potenza, a town in southern Italy that was under heavy bombing and would probably soon be in Allied hands.

Azzolini approved the plan, but ruled that only half of the gold should be placed behind the false wall. Bullion was then moved into the hidden area, and masons started building the dummy wall, which was completed during the night of September 19. Only a few hours after work was completed, Ambassador Rahn sent Azzolini the official document ordering that the country’s gold be moved immediately to northern Italy. The Nazis dictated that it had to be turned over to their representatives, who would have control of it.
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At about the same time, Azzolini learned that the Germans had captured a hoard of Italian government records, and he feared that they had probably learned the size and location of the country’s gold holdings. Potenza still remained under fascist control, and it would be easy to check whether gold was stored there, as they were planning to claim. On the morning of September 20, Azzolini met with Finance Minister Etorre Combi, who told him the Nazis had said that some of the gold had be sent to Berlin immediately, and he had only until 3:00 P.M. to reply. If the bank did not agree, the Germans would simply seize it. Stalling was no longer an option, and Azzolini decided the ploy of the hidden wall was perhaps too clever by half. He ordered the just-finished wall torn down.

The Bank of Italy’s never-executed trick may have been the inspiration for Robert Crichton’s post-war novel
The Secret of Santa Vittoria
, in which Italian peasants hide millions of bottles of wine in a communal village cellar in order to keep it out of Nazi hands. The book was made into a movie with the same name that starred Anthony Quinn.

In the hectic days after the fall of Mussolini, the Italian Central Bank sent small amounts of gold to its branch offices around Italy and to the country’s colonial outposts in Benghazi, Rhodes, and Addis Ababa. Those faced a variety of fates. The Bologna branch received just over one hundred pounds, but there are no records of what happened to it after it arrived. It simply vanished. The Milan office attempted to protect more than a half-ton of bullion by producing documents showing it now belonged to various groups or institutions. During the night of September 7-8, 1943, two lots were hidden in a well, and records were forged to show that it had been shipped to Turin. That gold also simply disappeared.
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A German military unit finally arrived at the Bank of Italy office early in the afternoon of September 20, with orders to move the gold north by air the next day. A representative of the Reichsbank was to accompany it. Leading the group was Lt. Colonel Herbert Kappler, the
SS
officer who had rescued Mussolini. The Italians again stalled, and Azzolini insisted that it was much safer to send it by train and that Italians should guard it. His unspoken fear was that if it left by air, the plane could well end up landing in Berlin. The Germans eventually agreed, but insisted that they provide security. Then seemingly just to show who was boss, the Germans the next day sent five tons by air. Between September 22 and 28, 119 tons of gold left Rome on two trains, and were immediately deposited in the vault of the Bank of Italy office in Milan. The shipment included twenty-three tons from countries Mussolini had invaded: eight tons from the National Bank of Yugoslavia, fourteen tons from Vichy France, and one-third of a ton from Greece.
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Italians still legally had custody of all the treasure in Milan, but Germans effectively controlled it and would determine its fate. Azzolini and the other Italian officials continued to drag their heels as much as they could about further shipments. Once all the gold had arrived safely, the Germans posted guards outside the vaults where it was stored. After Italian officials protested, the soldiers left but the Nazis received three keys to the storage room.

Always anxious to demonstrate his power, Göring again got back into the action. He demanded that the gold be sent from Milan to a location closer to Germany, arguing that Milan was too vulnerable to Allied bombing. Ribbentrop eventually agreed that it move again on the condition that it remain under the authority of his man Rahn. The Reichsbank at one point got into the debate on the side of Azzolini, who continued his bureaucratic battles to keep it from being moved. He now argued that the Allies could still bomb it even if they moved it into the Alps, and proposed just leaving it in Milan. The Germans by now, though, paid no attention to the Italian central banker.
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On October 18, less than three weeks after the bullion arrived in Milan, Göring proposed shipping it to the village of Franzensfeste. It was in the Italian Alps area of Trentino-Alto Adige, or as the Germans called it Südtirol, near the Brenner Pass that led to German-occupied Austria. One of Europe’s mightiest fortresses was located there.

Napoleon in 1805 invaded Austria, and Prince Klemens von Metternich, that country’s long-time foreign minister, always feared a repeat of the humiliation. The Brenner Pass is the lowest mountain route across the Austrian Alps, and thus the most natural invasion road. So shortly after the Napoleonic wars ended in 1815, Metternich proposed building a fortress that could stop a future attack. The Hapsburg Empire began construction on the Franzensfeste Fortress on June 17, 1833, and Emperor Ferdinand I of Austria inaugurated it on August 18, 1838. A railroad link was built in 1867. The area became part of Italy after World War I, and it became known by its Italian name Fortezza.

The structure consisted of massive bunkers and extensive tunnels, where weapons, ammunition, or anything precious could be safely stored. At the entrance were three twelve-foot-tall pillars carved out of granite. Each weighed eighteen tons. Behind the first entrance was a second door built just as solidly. A Hapsburg double-headed eagle looked down menacingly on the courtyard below. One hundred yards from the tunnel entrance stood a small chapel with a steeple. Visitors could reach the fort only via a winding mile-long road that was easily defended. Riflemen had a 360° view of anyone daring to climb the mountainsides. In short, it was the perfect place to store a country’s gold.
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Berlin went through the formality of asking Mussolini for permission to ship the gold there, and he quickly agreed. A contingent of Germans officials then went from Berlin to Fortezza to examine the facility. They recommended a few minor changes to make it even safer, such as more lighting and a new reinforced wall inside with an iron trellis.
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On December 13, Finance Minister Domenico Pellegrini Giampietro sent Azzolini a terse order: “According to the agreement reached by the German government and the Italian government, the gold transferred to Milan and deposited there will now be transported to another location in northern Italy in the province of Bolzano, using the same methods that were used in the transfer from Rome to Milan.” Pretending not to understand the direct command, Azzolini responded that there were no facilities in the city of Bolzano where the gold could be stored. When the minister received that message, he picked up the phone and ordered him to ship the bullion, saying sternly, “You must know that if you do not do this, they will seize the gold and take it to Germany.” Fortezza was not an ideal location from the point of view of the Italians, but it was still better than having it in Berlin. On the morning of December 16, the gold left Milan by train. Both
SS
guards and Italian central bank officials accompanied it.
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The bullion arrived at its destination that night. According to documents that arrived with it, there were 175 barrels and 20 bags. A group of German soldiers were enlisted to move it into the fortress, but that became too much heavy lifting for them. Fifty Russian prisoners-of-war then took over the job. The gold was stored in rough-hewn caves at the bottom of the towering cliffs. Due to high humidity in the caves, some of the bags were soon damaged.

The Berlin contingent that had overseen the transfer departed at the end of the following day, but twenty-six German soldiers remained at the fortress to guard the treasure. Two Bank of Italy officials also took up residence.

The Germans originally demanded that no Italians have anything to do with the Fortezza gold, but they later allowed bank people to monitor the comings and goings into the vault. That did not change the reality that the bullion, which had been on Italian territory while in Rome or Milan, was now officially in Germany, where the Italians had no authority. The Alpenvorland unit of the Wehrmacht controlled that part of the Austrian Alps now and now had ultimate control of Italy’s gold.

The bullion had hardly arrived in Fortezza before Göring, Ribbentrop and Funk were again fighting over it. The first to act this time was the Reichsbank’s Funk, whose deputy, Puhl, wanted to help out his old BIS colleague Azzolini. In January 1944, the two central bankers met in Moltrasio on Lake Como, where the Bank of Italy now had its headquarters. Paul Hechler, the top German official at the BIS, put together the plan to ship some of the Italian bullion to Switzerland. Azzolini’s attitude was now totally different than it had been to the first BIS proposal just after the fall of Mussolini. He realized that if the gold did not go to the bank, it would find its way to Berlin. The two men thus quickly worked out details for a shipment to Basel.
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On April 20, four train cars carrying 23.4 tons of gold left Fortezza. It consisted of 10.8 tons for the Swiss National Bank in Bern, and 12.6 tons that would be dropped off in Basel at the BIS. Five days later, the Italian Central Bank transferred three more tons to the BIS, bringing the total there to 15.8 tons. Azzolini would later claim that he arranged the payments to protect his country’s reputation for fulfilling its legitimate obligations and to guard its international reputation. The deal, though, would not have been done if it had not satisfied the interests of the Nazis, the Italian Fascists, and the BIS. It also showed that the first priority of any central banker is to his institution.
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