From: Duncan Frissell <frissell@panix.com>
Date: Thu, 8 May 1997 05:16:04 +0800
To: Tim May <cypherpunks@cyberpass.net
Subject: Re: Banking Secrecy and Nazi Gold
In-Reply-To: <v03007800af9667d20ad6@[207.167.93.63]>
Message-ID: <3.0.1.32.19970507170555.02655d84@panix.com>
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- From some of my recent writing on the subject:

Nazi Gold, Jewish Accounts 

In the last year, Switzerland has been suffering from a series of attacks on
its record during and since the Second World War.  These articles, TV
stories, U.S. Congressional hearings, and lawsuits deal with two basic
issues.  First, that the Swiss accepted Nazi gold and deposits and performed
various financial services for the Nazi government; and second, that Swiss
banks have kept the dormant accounts of Jewish Holocaust victims and they
have refused to give these funds to their heirs.

There are several important things to note before discussing specifics.

First, many of Switzerland's critics are bitterly opposed to the Swiss
tradition of bank secrecy.  They do not care about the desires of those Swiss
bank customers who like secrecy and they are using these complaints as a
means of attacking bank secrecy.  They would be attacking Switzerland with or
without the specific issues.

Second, these controversies are not new.  The issue of Nazi gold was debated
at length after the war in a dispute between Switzerland and the Allied
Powers.

Third, these two controversies are separate.  The Nazi Gold question concerns
the fact that Swiss banks performed financial services for the German
government and private individuals from Germany during the war.

Some of this money may have been stolen by the Germans.

The Jewish accounts question has to do with the problems some heirs of
holocaust victims have had in obtaining family money they believe to have
been deposited in Swiss Banks before the war.

a) The Critics 

Some of the recent critics of Swiss banking come to the table with "unclean
hands."  US politicians and bureaucrats hate Swiss banks and bank secrecy in
general.

Their motives in this matter are not altruistic.  They want to eliminate
financial privacy so that they can get their hands on any one's money any
time they feel like it.  They will use any "wedge" issue they can create to
attack institutions that protect financial privacy.

Their attitude towards other people's wealth most closely resembles that of
the Nazi government.  Everything should be fair game.

The bad publicity is a political maneuver on their part to make it easier to
get their hands on other people's money.

US anti-privacy bureaucrats are also worried that the growth of electronic
banking via the Internet and other computer networks will allow Swiss Banks
to cheaply and easily offer their traditional protections to people all over
the world.

They know that if the Swiss can electronically expand their banking industry
worldwide, the ability of governments to grab other people's money will be
compromised.

b) The Facts - Nazi Gold 

It is true that Swiss banks, the Swiss government, and many Swiss businesses
dealt with the German government and various German citizens before, during,
and after the war.  They provided financial services to the German government
in the same way that at the peak of the Cold War, they hosted a bank owned by
the Soviet government.

To the Swiss, neutrality has always meant neutrality.  Other neutral nations
such as Sweden, Portugal, Spain, and Turkey traded with Germany as well.  It
was perfectly legal under the then existing international law and it remains
legal today.  International boycotts were unknown 60 years ago and are not
mandatory today.

Note that today the U.S. government and U.S. companies do business with
communist China.  This is the same government which murdered 50-70 million
human beings in the last 50 years.  We are "neutral" vis a vis their crimes
against humanity.  During the Cold War, India and many other countries were
neutral concerneing the Soviet Union.  This neutrality is not generally
attacked today.  

After the war, the U.S. government was very upset with Switzerland.  They
wanted the Swiss to come up with gold that the Nazis had stolen and shipped
via Switzerland or via Swiss banks.  The US government (in a complete
abrogation of its contractual agreements) went so far as to seize large gold
deposits that Swiss banks and the Swiss government had at the Federal Reserve
Bank of New York.  This international depository, which still exists today,
holds gold from banks and governments all over the world and facilitates
large financial transfers among the depositors.

The US government claimed that large amounts of Nazi assets were on deposit
in Swiss banks and that the Allied Powers should get this money.  The Swiss
Banks didn't want to destroy their system of bank secrecy and surrender to
the Allies the sovereignty they had maintained successfully against the
Germans.

The Swiss government maintained that under the Hague Land Warfare Convention
of 1907, cash and valuables of an occupied state - but not of private
individuals - were subject to the occupying state's right to the spoils of
war. Thus, Germany could have acquired gold and other assets from occupied
areas legally, and sold it.  They also said that the Swiss National Bank had
acquired the gold in good faith.

The US government also imposed controls on Swiss private holdings in the US
(approx. SFr4.5 billion) to increase its leverage in the negotiations.

Finally, in 1946, under enormous pressure the Swiss delegation offered to
settle all Allied claims by paying a lump sum of SFr. 250 million in gold
(worth today approximately SFr. 1.5 billion), which the Allies accepted,
irrevocably waiving all further claims and deblocking the billions of Swiss
Francs in frozen US accounts.

So in spite of what you may have heard, the question of Nazi gold in Swiss
banks was settled by treaty in 1946.  There is no new information on "Nazi
gold" available today.

In 1946, Switzerland and the Allies disagreed over the amount and the legal
status of gold and other property deposited by the Nazis in Switzerland. 
They still disagree today.

But in 1946 they did agree to settle all claims by a payment of gold so the
U.S. can't reopen this issue without breaking its treaty obligations.

c) The Facts - Jewish Accounts 

Both before and during the war, Jews and other victims of Nazi oppression
opened bank accounts in Switzerland.  Switzerland welcomed this money and,
indeed, passed its bank secrecy law in 1934 in part to protect these accounts
from the totalitarian nations which might want to grab them.

Many thousands of Jews who escaped from Hitler prior to the war, or who
survived the Holocaust, used their Swiss bank accounts to pay for their
escape and start their new lives in the countries into which they fled.

Recent complaints about the status of Jewish accounts in Swiss banks have
mixed in a host of extraneous issues which have to be disposed of before we
can talk about the real question.

First, it is true that Switzerland refused to accept many refugees who were
fleeing the Nazis.  Like the U.S., the U.K. and almost every other nation,
Switzerland used its tight immigration laws to block the escape of many
victims of tyranny.  Most people think this is outrageous.  It is also true,
however, that Switzerland did accept thousands of refugees in the years
between 1933 and 1938 when they decided that they had enough.  During this
same period, the U.S. admitted very few refugees.

But it is irrelevant to the issue of Jewish Bank accounts.

Second, many individual Nazis also used Swiss banks after the war to aid
their escape from Allied authorities.  This establishes nothing except the
neutrality of the Swiss banks.

The real charge is that Swiss banks have blocked attempts by the heirs of
Jewish (and presumably other) account holders to obtain the contents of those
accounts.  These are the children of the many who died in concentration camps
and who came from places where whole families, and indeed whole villages,
were wiped out by Nazi terror or who died in the awesome destruction of that
war.

These heirs have approached Swiss banks to try to find accounts and some have
been frustrated in that attempt.

Note that no one has claimed that they were themselves an account holder and
have been unable to get their money out of their own bank.  These are
children or grandchildren who often lack specific information on the bank
accounts their parents may have held.

There are a number of things one can say about the problems someone without
documentation has getting money out of a 60-year-old bank account.

I recently asked a friend of mine, a former resident of Berlin, about this
problem.  He had been a guest of the German government in Auschwitz for a
time in the 1940s.  Today, living in America, he has the pension which
Germany pays to all concentration camp survivors paid into his Swiss bank
account.  His response: "If it was easy to get money out of Swiss banks, the
Nazis would have gotten all of it."

The fact is that Swiss banks require proof before they part with an account
holder's money.  They are not casual about other people's money like some
institutions in other countries.

Many heirs of the Nazi victims did get their money out of Swiss banks.  They
had proof that the accounts existed and that they were entitled to the funds.
 Unfortunately, others were not able to establish their claims.  The same
thing could happen in America.

All banks end up with dormant accounts over time.  People forget that they
have them or they die without heirs.  Money is often lost in this way.

In the U.S. (and all other Anglo-Saxon legal systems)  dormant accounts are
seized by state governments after a certain period of time and their contents
are blown on whatever schemes the state thinks worthwhile.  This process is
called escheatment.

If an owner finds out about the dormant account later, he can apply to the
state government for the money.

Switzerland does not practice escheatment.  If you give your money to a Swiss
bank, it will be there forever waiting for you and any heirs who have proof
that it's theirs.

The Swiss system is certainly preferable to the American system in this
regard.

Caveat:  Keep good records (including records not located where you live) and
make sure your heirs can find out where your accounts are.

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