Swiss Banks

   Following the Nazi “seizure of power” in Germany in January 1933, Jews who feared the worst from the new government attempted to protect their assets by placing funds in Swiss banks. This precaution against an uncertain future was encouraged by a Swiss law that protected the banks’ clients from the scrutiny of the Nazis. During the war, the Swiss banks were recipients of gold from countries under Nazi occupation, as well as from the gold fillings extracted from the teeth of Jewish victims in the death camps. A Schutzstaffel (SS) officer, Captain Bruno Melmer, had the responsibility for collecting gold from the death camps, including Auschwitz, and subsequently a substantial portion of the victims’ gold was sent to Switzerland. In exchange for the gold, the banks provided currency that enabled Germany to continue the war for at least two additional years.

   There is little doubt that the Swiss banks knew, and had few scruples, about dealing in gold looted from banks in countries under German occupation. A report commissioned by the Swiss government in 1998 concluded that Swiss National Bank (SNB) officials were aware that some gold sent to Switzerland from German-occupied areas of Europe was looted and that some of this gold was stolen from Holocaust victims. The Swiss government and SNB officials, however, have since denied that the banks had knowledge at the time that they were accepting victims’ gold. Swiss historians estimate that the amount of gold stolen from the murdered death camp victims and other casualties of Nazi Germany totaled some $146 million at 1945 prices. Recent revelations have disclosed that an estimated $2.8 million (or $2.5 billion at today’s prices) flowed through the so-called Melmer Account. Furthermore, as it became evident that Germany would lose the war, the Swiss accepted the deposits of leading Nazi officials, who placed funds in the Swiss banks as seed money in anticipation of establishing the Fourth Reich. In order to prevent a resurgence of Nazism, the United Nations’ Monetary and Financial Committee met in July 1944 and adopted the “Safehaven” program, which called on the Allies to uncover and prevent the sale of German assets. One stipulation of the Safehaven program required that neutral nations prevent the Nazis from hiding funds and loot in their countries.

   Uncovering the funds that the Nazis deposited in Swiss banks, however, was only one problem the Allies faced at the end of the war. There was also the matter of the deposits made by Jews who had since been murdered by the Nazis, and by survivors of the Holocaust, who came through their terrifying ordeal bereft of proper identification, let alone deposit books, that would enable them to claim the funds placed in the Swiss banks. The absence of death certificates for the victims of the Holocaust enabled the banks to deny that such deposits had ever existed.

   Following the end of World War II, Switzerland, in May 1946, agreed in the Washington Accord to return $5.8 million of gold that Germany had stolen and deposited in Swiss banks. The Swiss also agreed to locate the assets of Jews who were killed in the Holocaust and honor the claims of their relatives. For the next two decades, however, very few Jewish accounts were identified by the Swiss banks. Furthermore, it appears that the Swiss banks claimed the dormant accounts of the Holocaust victims and used the funds as a means of compensating those Swiss whose property had been confiscated in communist countries. For example, in July 1950, the Swiss signed an agreement with the communist government in Hungary whereby the heirless assets of Hungarian Jews would be exchanged for compensation to those Swiss whose property had been confiscated. The Swiss, however, insisted that the Hungarians would have to provide evidence about the existence of heirless assets in Swiss banks. A similar agreement was reached by the Swiss government with Poland, which transferred the heirless assets of Polish Jews to the Polish government.

   In the mid-1990s, however, Jewish organizations, led by the World Jewish Congress, (WJC) demanded a reckoning of the unclaimed deposits. The Swiss banks agreed to investigate the dormant accounts and subsequently announced in February 1995 that the unclaimed deposits totaled $32 million. In April of the same year, United States Senator Alfonse D’Arnato opened hearings in Washington, D.C., into the manner in which the Swiss banks handled the unclaimed accounts. Soon after the D’Amato hearings commenced, a class action against the Swiss banks was filed in New York. The claimants sought $20 billion in restitution from the dormant accounts of the Holocaust victims. The response of the outgoing president of Switzerland, JeanPascal Delamuraz, was to accuse the Jews of attempting to blackmail his country, a statement for which he later apologized. In early 1997, the chairman of one of Switzerland’s largest banks, Credit Suisse, proposed the creation of a fund of $72 million for Holocaust survivors and their relatives. By the end of the year, however, the fund had increased to $600 million when a consortium of Swiss banks and businesses pooled their resources to provide up to $1,000 to each of the eligible Holocaust survivors. The response of Jewish organizations, led by the World Jewish Congress, was to reject this offer as too small a sum. Based on present value, they insisted the figure should be closer to $1.5 billion. By the end of July 1998, despite the mediation of Stuart E. Eizenstadt, the U.S. Undersecretary of State for Economic Development, negotiations between Switzerland’s three major banks and representatives of Holocaust survivors collapsed.

   The threat made by New York, New Jersey, and California to impose sanctions against Swiss banks on 1 September 1998, however, may have been a major factor in the subsequent agreement reached in mid-August 1998, between the Swiss banks and Jewish groups led by the WJC. Accordingly, an estimated $1.25 billion agreement on compensation for unreturned Holocaust-era assets was reached by both parties. The agreement stipulated that the money would be paid out to Holocaust survivors over a three-year period.

   See also Max Herliger Account; Restitution For Holocaust Survivors.