Re: Banking Secrecy and Nazi Gold

-----BEGIN PGP SIGNED MESSAGE----- - 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. -----BEGIN PGP SIGNATURE----- Version: 4.5 iQCVAgUBM3DurYVO4r4sgSPhAQGKAAP9EfLw9j61/d6aY8qKsaIIrWv8FfWpCvUi PQeDXdZhq/ZPOW8mk6r0PaIZ+5MaJBNJ8JlbHj6epsCRE78IVCMEB2lcnmLujIRP JheeE/3FS+BI+iLezkTTFtbqsI1VUikOFZVocOOa8FslnWFM9Xxt7xg0KfcipjRa CF+sqSt3PVw= =04Uk -----END PGP SIGNATURE-----