The fate of the assets of victims of Nazism deposited in Swiss banks has been called the "final chapter of the history of the Second World War and the Holocaust."
On Dec. 11 the House Banking Committee, chaired by Rep. James Leach (R-Iowa), held hearings on this issue. One of the 12 witnesses appearing before the Committee was James H. Hutson, chief of the Library's Manuscript Division. Mr. Hutson was on the final panel with two other historians. Mr. Hutson, who was the curator of the library's "Sister Republics" exhibition in 1991, which explored Swiss-American relations from 1776 until the present, has written on issues relating to the history of Switzerland and the United States.
As the hearings made clear, many people used neutral Switzerland as a safe haven for their property before and during World War II. The Nazi government deposited in the Swiss National Bank gold looted from other governments, which the Allies estimated at a minimum of $130 million; the Swiss handed over $58 million of this looted gold in 1946.
German citizens, including Nazis, transferred large amounts of others' assets to Swiss banks for safekeeping, such as currencies, securities and other paper assets, works of art, jewelry, etc. Estimates of the amount of these "private" assets run as high as $6 billion, although most calculations are considerably lower. At the Washington Conference of May 1946, the Swiss agreed to liquidate these assets and give the Allies one-half of the proceeds; after protracted negotiations the Swiss, in 1952, paid the Allies approximately $34 million as their share of the liquidated private assets.
A third group using Swiss banks as a safe haven were European Jews and others, who, as the threats of Nazism loomed during the 1930s, deposited their assets in banks throughout Switzerland. Most of these people did not survive to claim their assets nor did they leave heirs to inherit them. Thus at the end of World War II there came into being a large class of property, or "heirless assets, in Swiss banks, for which there was no identifiable owner or heir. A related term, "dormant accounts" refers to property in Swiss (or other banks) for which no claimant has come forward for a long time; in most - but not all - cases of dormant accounts, the original owner is dead and heirs have not come forward.
These disappointing results led to the May 2 establishment, by the Swiss Bankers Association, the World Jewish Congress and the World Jewish Restitution Organization, of a so-called Independent Commission of Eminent Persons, chaired by former Federal Reserve Chairman Paul Volcker. The commission was charged with conducting an audit of all dormant accounts in all Swiss banks. Mr. Volcker, who appeared at the hearings, asserted that his commission had retained the services of three "Big Six" accounting firms that pledged to assign to the project individuals expert in "forensic" accounting.
Mr. Volcker and Georg Krayer, chairman of the Swiss Bankers Association, who also addressed the hearings, warned against premature optimism on behalf of Holocaust victims' heirs because of the difficulties of establishing that these heirs were actual owners of the accounts. Lack of documentation - Nazi extermination camps did not, of course, issue death certificates - the disappearance of records in the general chaos of World War II, the use of numbered accounts, pseudonyms and third parties (some of whom, Mr. Volcker observed, may have been corrupt) were stressed, cautions which became all the more poignant when two daughters of Holocaust victims testified about their difficulties prying assets loose from Swiss banks which they attributed more to a lack of goodwill than to a lack of proper credentials.
Sen. Alfonse D'Amato (R-N.Y.) and Edgar Bronfman, president of the World Jewish Restitution Organization, recommended to Mr. Volcker and others that they work quickly, in view of the large number of Holocaust claimants who are elderly. The tension between those urging haste and those urging deliberation, lest the credibility of the investigations be compromised by superficiality, was palpable throughout the hearings.
Mr. Volcker concluded his testimony by announcing that his commission hoped to issue a final report in the summer of 1998. Neither Mr. Volcker nor any other participant was prepared to estimate how much money in Swiss dormant accounts might still be due to Holocaust victims and their heirs. Mr. Bronfman drew a contrast between how much money might now be in the accounts and how much was originally deposited in them, the latter sum being very large, in his opinion.
A Swiss envoy, Ambassador Thomas Borer, announced during the hearings that his government had decided to appoint, no later than Dec. 13, an Independent Commission of Experts who will "conduct a comprehensive investigation into all aspects of Switzerland's role as a financial center during and around the war years and its relations with Nazi Germany." The commission, to be composed of Swiss and foreign historians and judges, will have sweeping powers, including access to all banks records. It will be expected to issue a final report in two to three years. Mr. Borer stressed his government's intention to determine the full truth as soon as possible and to see that Holocaust victims received their just due, again as soon as possible.
The historians' panel, including Mr. Hutson; Arthur Smith, professor of history emeritus at UCLA; and Jacques Picard of the Swiss College of Technology at Bienne, concluded the hearings and fielded queries from the members on various questions of historical fact and interpretation.
Mr. Hutson's statement, which follows, was entered into the record and provides a historical context for the issues discussed at the hearing.
Thank you, Mr. Chairman. My name is James Hutson. I am the chief of the Manuscript Division, Library of Congress.
In 1991 I wrote a short book on the history of Swiss-American relations and, more recently, a study of the American bombing of Switzerland during the Second World War, which prepared me for the complexity of the issues we are examining today. Virtually everything about the American bombing of Switzerland is controversial. The American and Swiss governments disagreed on the number of attacks - we admitted to 41, they claimed 49 - and the amount of monetary damage inflicted. Competent witnesses on both sides even disagreed over whether the skies were clear or cloudy during the most lethal American attack, that on Schaffhausen on April 1, 1944. New information became available, however, principally through the declassification of American military records, and clarified many dark corners of the story. Let us hope that we have the same good fortune as a mass of fresh documentation surfaces about the Swiss-German relations before and during World War II and about the disposition of the assets of Holocaust victims in Switzerland.
The assets of the Holocaust victims came to the attention of the Allied governments in the context of German assets held in neutral countries. In July 1944, at the Bretton Woods Monetary Conference, the Allied governments asserted that they could not be indifferent to the existence of German assets in neutral countries and could not let these assets enjoy a safe haven in neutral bank vaults from which they might be collected after the war by their German owners and used to fund a resurgence of German military power.
Toward the end of 1944, the American government established its own safe haven program, whose objective was to identify German assets in neutral counties and pressure the neutrals to deny Germans access to those assets. Switzerland, as the largest holder of German assets, was the object of intense pressure from American officials trying to implement the safe haven program.
In October 1945 the Allied Military Government in Germany laid legal claim to German assets in neutral countries, a claim that Switzerland rejected as based on force, not law. Assuming that German assets in neutral countries would be liquidated and put at the disposal of authorities charged with the reconstruction of Europe, the Paris Reparations Conference in December 1945 resolved that $25 million of the liquidated German assets should be devoted to the resuscitation and resettlement of European Jewry. This conference also recommended that assets of Holocaust victims in neutral banks should be turned over to the Allies to relieve the suffering of the Jews. Here, for the first time, an official body addressed itself to the questions of the assets of Holocaust victims in Swiss banks.
At a conference in Washington in May 1946, the Allies and Switzerland negotiated several outstanding issues. One was the question of gold, looted by the Germans from occupied countries and sold to the Swiss National Bank. Although we today have what I regard as reliable figures on how much gold the German Reichsbank sold to the Swiss National Bank, we are not certain how much of this gold was looted, because in common with other European central banks, the Reichsbank underreported its gold reserves in the 1930s, thus creating difficulties estimating how much of the gold it sold to the Swiss came from its own coffers and how much was stolen.
At the Washington Conference the Swiss and the Allies disagreed about how much stolen gold the Swiss had purchased; the Allies finally agreed to receive from the Swiss $58 million, less than half of what they estimated that the Swiss had illicitly bought. At the Washington Conference there was also a dispute about the value of private German assets held in Switzerland. Allied estimates ran three times as high as those of the Swiss negotiators. It was agreed that the Swiss would liquidate German assets and give the Allies one- half of the proceeds.
As an adjunct to the main Washington Agreement, the Allies and the Swiss exchanged letters in which the existence of assets of Holocaust victims in Swiss banks was mentioned and the Swiss agreed to consider turning these over to relief authorities, if there were no legitimate claimants. It should be stressed that the Allies, to my knowledge, never followed up on this exchange with the Swiss and appear to have immediately lost interest in the subject. Perhaps new documentation will be discovered that will give us a better understanding of Allied inaction on this matter.
The initiative in seeking the restitution of the assets of Holocaust victims now fell to Swiss Jewish and other Jewish organizations who began a long series of dialogues with the Swiss government about the problem. In the meantime the Swiss in 1949 concluded a controversial agreement with the Polish government that appeared to convert the assets of Polish Holocaust victims into payments to Swiss citizens as compensation for property expropriated by the Communist government in Poland. This episode and a somewhat similar agreement concluded by the Swiss with Hungary in the following year are still imperfectly understood and are the subject of intense research even as we speak, but at least this much has been recently learned: the Swiss made no immediate payment to the Poles, and in fact no substantial sum of money changed hands until 1975, here again under circumstances that are not now fully understood.
As a result of the continuing dialogue between Jewish organizations and the Swiss government, the Swiss passed a law in 1962 compelling their citizens under the penalty of legal action to report any heirless assets existing in Swiss hands that might belong to Holocaust victims. Assets to the value of 10 million Swiss francs were located by 1964, and 8 million Swiss francs were returned to heirs of Holocaust victims, many of whom were traced by the Swiss authorities using missing persons organizations and the Red Cross. The remaining 2 million Swiss francs were placed in an heirless assets fund that was eventually given to Jewish and other humanitarian organizations in Switzerland.
This hasty sketch brings us to the present moment when the Swiss are again searching, in cooperation with the World Jewish Congress and Chairman Volcker and his investigators, for dormant assets of Holocaust victims. All aspects of the problem before us, as I have indicated, are extremely complex and controversial; some are still not well understood. But there is ample reason to believe that through the intensive research now going on in both the United States and Switzerland we will arrive at a better understanding of these painful and often obscure issues. I think there is ample goodwill on all sides and as a historian I am encouraged to believe that our understanding of the problems can be deepened. This will take time, however, and there may be a need for additional hearings to assess the new information that will surely become available on both sides of the Atlantic.