History of Swiss Banking in Term Paper

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The asylum automatically granted under the Swiss constitution was denied for those seeking it for religious reasons. By 1942, only 9,150 foreign Jews were legally resident in Switzerland, an increase of just 980 since 1931. It was the Swiss government that requested the German government to help it identify Jews by stamping all Jewish passports with a prominent letter "J," following the Nuremberg acts in 1935. "By 1942, acting at the behest of Switzerland's establishment and the majority of its people, its authoritarian police apparatus was dedicated to keeping the country 'pure' and to saving it from being 'overrun with Jews'." Until 1942, the working Jewish community in Switzerland was forced by the government to support Jewish refugees.

The other side of the German interest in Switzerland's banks was related to the business of Germany and the looting of conquered countries. By 1941, Germany had exhausted all of its foreign exchange and central bank gold bullion. In June 1941, Germany stopped the transit of Swiss goods through its territories for three weeks. This halted the supplies of coal, iron and steel to Switzerland needed to produce the weapons they were supplying both sides. On July 1, 1941, the Swiss reached an agreement with the German government in the form of the Swiss-German Clearing Agreement. This pact provided massive loans to Germany, disguised as credits, to pay Swiss manufacturers for weapons to fight the war, and was supposed to be balanced at the end of the year. For bankers, the Swiss were surprising lenient with these credits, allowing them to accumulate to 850 million in Swiss Francs by 1942. This relationship allowed the Swiss to the supply the Nazis with much needed war material, without the risk of allied bombing.

In recent years, the looting of Europeans by the Nazis during World War II, particularly Jews, has received much attention. As a result of the financial crisis in Germany in the early 1940's, a massive operation was undertaken to transform looted gold from jewelry and other sources into gold bullion. Swiss banks were the only banks in Europe that would accept this obviously stolen gold. According to recent reports, the Swiss National Bank in Bern knowingly took in about $400 million ($3.9 billion in today's funds) in looted gold between 1939 and 1945, in violation of international law, which prohibits banks from fencing stolen goods. The commissions on these transactions alone netted the Swiss $20 million (about $200 million in today's currency).

The accusations against the Swiss bankers during World War II can be summed up as follows:

Swiss banks accepted both money and gold deposits from refugees from Nazi Germany before and during the war and subsequently placed obstacles in the path of descendants of those killed in the Holocaust wishing to claim such deposits.

The Swiss National Bank accepted gold bars from the Reichsbank, some smelted down from gold stolen from other central banks and some no doubt extracted from Jewish victims in Nazi extermination camps.

Neutral central banks, such as those from Portugal, Spain, Sweden, Turkey and Argentina all accepted Nazi gold, in one form or another, some of it looted, either during or immediately after the war.

The Swiss National Bank, as well as the Bank for International Settlements, based in Switzerland, openly carried out gold transactions between neutral central banks and the Reichsbank during the war, thus facilitating the Nazi war effort.

There can be little doubt that the Swiss enthusiasm for the Nazis' ideas of a new world order allowed them to rationalize their partnership with the Reichsbank. The Bank for International Settlements (BIS) in Basle, in effect the central banks' bank, eagerly accepted Nazi gold looted from European victims during the war, thus facilitating the Nazi's war effort.

Toward the end of the war, the U.S. initiated Operation Safehaven, a joint U.S. State and Treasury effort adopted at Bretton Woods in 1944, to track looted assets into the banks of neutral countries, focusing primarily on Switzerland. It was initiated as a part of Allied military policy. At the end of the war, the Four Powers formally ordered the neutral countries to transfer all property owned by the Axis powers to the Allies. The U.S. Treasury Secretary recommended the liquidation of BIS, but they were fortunate to escape, doing so by making a $4.2 million payment to the Tripartite Gold Commission for distribution to the deprived central banks.

After the war, the Swiss continued to protest their innocence, claiming they had no looted Nazi gold. After several years of discussions, the Swiss National Bank did agree to turn over $58 million to the allies, which was substantially less than the estimated amount of looted gold accumulated by the Bank.

There was also the question of deposits made by Jews in Swiss banks before and during the hostilities. For several decades, individual survivors petitioned and requested information about these accounts with little to no success. In 1974, the Swiss announced that they found 4.68 million Swiss Francs in dormant accounts. This money was divided between two Swiss relief agencies and the Polish and Hungarian governments. In 1996 U.S. Senator Alfonse D'Amato (R-NY) brought this issue to the attention of the U.S. government and hearings were held in the Senate. On February 6, 1997, three Swiss banks, following intense pressure form the U.S., announced they would create a humanitarian fund of 100 million Swiss Francs ($70 million U.S. Dollars). Jewish organizations were critical, however, estimating that there could be billions unaccounted-for. Later that year, the Swiss government created a humanitarian fund of five billion dollars.

Swiss banks still remain a safe haven for those seeking to hide funds, but the Swiss government has made an effort to restore their image after years of disclosures of funds hidden for rogue governments and third world dictators. Its anti-money-laundering laws are among the toughest in the world. Following the attacks on September 11, 2001, they have cooperated with the U.S. government in tracking down funds used by terrorists. In spite of these changes, however they have resisted efforts by other governments to provide information on foreign residents seeking to evade taxes. Switzerland is likely to remain a safe haven for those who wish to hide assts from the eyes of the world.


Bazyler, Michael J. Holocaust Justice: The Battle for Restitution in America's Courts. New York: New York University Press, 2003.

Borowiec, Andrew. "World's leaders gather in Geneva." The Washington Times. http://washingtontimes.com/world/20-5793r.htm.

Bower, Tom. Nazi Gold. New York: Harper Collins, 1997.

Clarke, William. "Nazi Gold: The Role of the Central Banks - Where Does the Blame Lie?" Central Banking, Volume VIII Number 1. Summer 1997. April 22, 2005. http://www.bigeye.com/nazigold.htm.

Gumbel, Peter. "Silence Is Golden: The Swiss banking industry is trying to improve its image. But it still wants to keep mum about accounts held by European Union residents." Time Europe Magazine. Sept. 11, 2002. April 20, 2005. http://www.time.com/time/europe/magazine/article/0,13005,901,00.html.

Junz, Helen B. "Confronting Holocaust History: The Bergier Commission's Research on Switzerland's Past. Jerusalem Center for Public Affairs. May 1, 2003. April 20, 2005. http://www.jcpa.org/phas/phas-8.htm.

Lebor, Adam. Hitler's Secret Bankers: The Myth of Swiss Neutrality During the Holocaust. Secaucus, NJ: Carol Publishing Group, 1997.

Schoppig, Fernand. The Valuable Role Swiss Banks Can Play in Offshore Planning. Journal of Financial Planning. 1987. April 22, 2005. http://www.fpanet.org/journal/articles/1987_Issues/jfpsp87-art5.cfm.

Swiss Bankers Association. April 20, 2005. http://www.swissbanking.org/en/home.htm.

Vincent, Isabel. Hitler's Silent Partners. New York: William Morrow and Company, 1997.

Who were the Huguenots?" Huguenot Society of North America. April 21, 2005. http://www.geocities.com/hugenoteblad/hist-hug.htm.

Wiener, Jon. "Saving History From the Shredder." The Nation. September 6, 1999. April 20, 2005. http://www.thenation.com/doc.mhtml?i=19990906&s=wiener.

World Free Internet. April 20, 2005. http://www.worldfreeinternet.net/news/nws39.htm.

Fernand Schoppig. The Valuable Role Swiss Banks Can Play in Offshore Planning. Journal of Financial Planning. 1987. April 22, 2005. http://www.fpanet.org/journal/articles/1987_Issues/jfpsp87-art5.cfm.

Who were the Huguenots?" Huguenot Society of North America. April 21, 2005. http://www.geocities.com/hugenoteblad/hist-hug.htm.

Swiss Bankers Association. April 20, 2005. http://www.swissbanking.org/en/home.htm.

Vincent, Isabel. Hitler's Silent Partners. New York: William Morrow and Company, 1997, pg. 65.

Ibid, pg. 67.

Bower, Tom. Nazi Gold. New York: Harper Collins, 1997, pg. 20.

Ibid, pg. 21.

Ibid, pg. 139.

William Clarke. "Nazi Gold: The Role of the Central Banks - Where Does the Blame Lie?" Central Banking, Volume VIII Number 1.

Summer 1997. April 22,…[continue]

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