The Fate of Spain

The Belgian Gold Reserves

Letters from Vienna #140

“A similar fate awaited the Belgian gold reserves,” you write “kept in the vaults of the Banque de France. The same Banque de France had refused to transfer the Spanish gold reserves to the Spanish authorities in 1930. Instead those were later handed over to Franco, who was heavily indebted to Nazi Germany...”

Yes, you are perfectly right, which obliges me to quote more LeBor in order to elaborate on this particular topic.

“The fate of the Belgian gold reserves is the most extraordinary” Adam LeBor tells us. “At the end of 1939 the National Bank of Belgium sent more than 200 metric tons of its reserves to France for safekeeping. As the Nazis advanced, France transported the Belgian gold and some of its own to the port of Dakar in West Africa. Fearing an Allied raid, the French authorities then moved the gold inland. After the fall of Paris, Germany ordered the collaborationist French government based in Vichy to send the gold to Marseilles to be taken into the “custody” of the Reichsbank. The gold was then transported by boat, truck, train, and camel train through the Sahara Desert to Algiers. From there it was flown to Marseilles and eventually deposited in the vaults of the Reichsbank.”

“In the summer of 1943 Yves Bréart de Boisanger, the governor of the Bank of France, now under Vichy control, traveled to Basel to warn McKittrick about the fate of the Belgian gold, some of which would doubtless end up in Basel. McKittrick dismissed de Boisanger’s concerns. All the gold received at the BIS had been stamped with the proper markings, he said, and was German, not Belgium. Whether or not he believed this, McKittrick understood that if the bank were to stay in business there was probably no other option than to accept the Reichsbank’s gold shipments. But Auboin, the French manager, sided with his compatriot. The BIS should no longer accept German payments in gold but demand Swiss Francs instead.”

“Auboin was right. The Belgian gold had been melted down at the Prussian Mint and stamped with false identifying numbers and dates between 1934 and 1939. About 1.6 metric tons was used by the Reichsbank to meet its BIS interest payments, as well as 2 metric tons of looted Dutch gold.”

“However, not all the gold melted down at the Prussian Mint originated in the vaults of national banks. The Nazis set up a network of informers and torturers, called the Devisenschutzkommando (DSK), to track down private gold holdings in occupied territories. The stated purpose of the special unit that was handpicked by SS soldiers was to control currency traffic across the Third Reich. Its actual purpose was “the acquisition of gold by any means, including deceit and brutality,” according to British intelligence records. In Paris alone the DSK employed eighty informers, from the “lowest levels of society to the highest circles.” 24 Each received a 10 percent commission, as well as false identity cards and counterfeit American and British currency. Victims were lured with supposed sales of property or land. They were then arrested, beaten, and tortured to reveal how they would pay for such a purchase. The favorite interrogation method of Hugo Doose, who ran the DSK for the Channel Islands, was to break a beer glass over his victim’s head. Ludwig Jaretski, an Austrian living in Paris, “employed burning matches on stripped victims.” 25 Some of the BIS gold had an even more grisly origin, which came from the watches, spectacles, jewelry, and gold teeth of concentration camp victims. This was why, after the war, Emil Puhl, vice president of the Reichsbank and BIS director, would be found guilty of war crimes.”[1]

Spain

Adam LeBor’s revelations about the Spanish gold are even more telling: “Transnational capital” he states “had decided the fate of Spain. The Spanish civil war lasted from July 1936 to April 1939, when the Nationalist army, led by General Franco, finally captured Madrid, the capital, from the left-wing Republicans. Spain is often described as a trial run for the Second World War. It was an exceptionally savage conflict, marked by atrocities on both sides. The airplanes of Germany’s Condor Legion bombed Spanish cities and strafed civilians, perfecting the strategies that would soon be deployed in the Blitzkrieg. But the conflict was also a trial run for newly honed techniques of economic warfare.”

“Money, as much as superior numbers and military forces, helped Franco to victory. Nazi Germany and Fascist Italy provided hundreds of millions of dollars worth of aid. The nationalists understood that finance was a weapon as effective as bullets. They set up their own rival economy, complete with a separate national bank that issued its own currency, also called the peseta. This was a psychological as well as economic assault on the Republic. It was chillingly effective. By July 1937, a year into the war, the Republican peseta was worth three times less in French francs than the fascist version, even though the Republicans were the legitimate government of Spain and controlled the national economy, its currency, and the country’s gold reserves. 20 Inflation was far higher in the Republican zone. Between July 1936 and March 1937 prices doubled in the Republican zone, while in the nationalist zone they rose by only 15 percent. The nationalists steadily corroded the Spaniards’ belief in their currency and, by extension, in their government.”

“Yet arguably, the Republican government’s peseta should have been worth three times the nationalists’ scrip. At the end of 1935 Spain had the fifth-largest gold reserves in the world, after the United States, France, Britain, and the Soviet Union. The BIS annual report for 1936 notes that Spain had gold reserves of 2,225 million gold Swiss francs, nearly three times that of Italy. Much of this had been accumulated during the First World War when Spain remained neutral. For the previous four years the country had enjoyed a current account surplus, much of which had been invested in gold.”

“The country should have been in a prime position to issue bonds, backed by the abundant gold reserves, to finance the economy and the war. Yet as Pablo Martín-Aceña, Elena Martínez Ruiz and María A. Pons, the authors of the paper “War and Economics: Spanish Civil War Finances Revisited,” note the Spanish government did not do so. “The reasons for this decision are controversial: either they were not able to do so because of the political aversion of international banks and financiers, or it was a deliberate policy decision.” Probably it was a mix of both. The country was under an arms embargo. And where would the bonds have been sold? Allen Dulles and his friends on Wall Street had no desire to buttress a government that—from their perspective—was composed of dangerous leftists. Nor would London have been more enthusiastic. Britain also preferred Franco’s fascists to the Republic.”

“So, Spain simply sold its gold reserves. France bought 175 tons and the remainder was purchased by Moscow. The BIS report for 1937 records a fall in Spain’s holdings to an estimated value of 1,600 million gold Swiss francs. 22 The money was used to pay for weapons, aircraft, tanks, food, and other supplies. As neither Spain nor the Soviet Union were members of the BIS, they were not able to use its special facilities for crediting and debiting national banks’ accounts. Instead the gold was physically moved. Spain’s gold reserves were held in the subterranean vaults of the Bank of Madrid. As Franco’s forces advanced on the capital the reserves were transferred to a naval store in Cartagena, on the Mediterranean coast. From there the reserves were loaded onto four Soviet ships and taken to the port of Odessa, to be transported to Moscow on a special train. When the gold was gone, the Bank of Spain sold its silver reserves of 1,225 tons to the United States and France.”[2]

What does this all import? It means that the “democracy” against “Fascism” narrative I was brought up with was always nonsense. The Deep State simply manifests its power in different forms. In some countries the powers that be seem to take the form of “representative democracy” and in others they take the form of “Fascist dictatorship” but to all intents and purposes: they are the same powers wielding the same sword: finance.

This is why we need to be wary of the banks.

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[1] pp.96-97 Tower of Basel, Adam LeBor

[2] pp. 70-72 Ibid