Banking Secrecy and Nazi Gold

I try to deconstruct events, to determine what the real issues are.

Take the case of the ongoing flap over Switzerland and claims that Swiss
banks hid gold, jewels, and other forms of money for high-ranking Nazis.
Adding to the flap--actually, making it a newsworthy event--is the
allegation, probably true, that some of the gold was taken from Jews and
others sent to extermination camps.

(A further claim, not related to the Nazi claim directly, is that the bank
accounts of those who perished in the war were not made available to heirs,
that in some cases the banks even liquidated the accounts and used the
money for (unspecified) purposes. I know little about this particular
claim, and won't discuss it further.)

OK, so it's clear to all right-thinking persons what should be done:
Switzerland should return the money to the heirs of those killed by the
Nazis.

Ah, but it's not so clear to me. I guess I'm not a right-thinking person.

First, it is not a matter of "Switzerland" having done something, it is a
matter of several major banks and dozens (I presume) of lesser banks. It is
Credit Suisse, Union Bank, etc. who presumably took in deposits, with
numbered accounts (perfectly legal by Swiss law at the time), not the
"state of Switzerland."

Second, how could the _provenance_ of the deposits be determined by, say
Credit Suisse? How could Hans the Banker taking a deposit from Fritz the
Depositer somehow know that the money Fritz was depositing was from money
seized from Jews? For all Hans knew, especially in 1939-43, before any real
knowleedge of the extermination of Jews became available (and such
knowledge was still rare, as any examination of the newspapers of the day
will show), the money was from German families seeking to protect their own
assets, or was even money siphoned from the German war effort, and so on.

Third, the notion that "Switzerland must do something!" is pernicious and
inimical to banking secrecy and basic privacy issues. A drumbeat is
building which will serve to undermine banking secrecy around the world.

(Now what happened to the Jews in Europe was horrible, depicable, etc. It
was an example of the power of the total state to order the liquidation of
some religious or ethnic faction. But the horror of the liquidation of
millions of Jews, or millions of Chinese, or millions of Tutsis/Hutus,
etc., must not be an excuse for expanding the power of states still
further. That circular logic will ultimately kill even more in factions out
of favor.)

This issue relates to Chaumian anonymous cash, of course. One can imagine
various scenarios by which crypto anarchy is used to transfer funds, etc.
Left as an exercise for the imaginative.

As the "Nazi Gold" story continues to build, expect "Swiss bankers" to be
added to the list of the "Horsemen." (Swiss bankers always have been viewed
with some suspicion--and admiration. Usually related to their "sheltering"
of funds from dictators and mobsters. And their has long been the hint of
complicity with the Reich in some areas. But now the move is on to
associate Swiss banks with the Holocaust more explicitly.)

I suspect the U.S. pressure on Swiss banks has a political dimension
related to forcing a New World Order on international banking. The U.S.
wants banking secrecy subject to U.S. control (so that banks like Castle
Bank, Nugan Hand Bank, Banco Ambrosiano, BCCI, and the Bank of America can
continue to be used for U.S. interests, and only U.S. interests).

The Jews killed by the German state in the war are dead and gone. Most of
their money is irretrievably gone. The clamor to break banking secrecy and
"force" the banks to disclose all records is part of a larger political
game.

--Tim May


There's something wrong when I'm a felon under an increasing number of laws.
---------:---------:---------:---------:---------:---------:---------:----
Timothy C. May              | Crypto Anarchy: encryption, digital money,
tcmay@got.net  408-728-0152 | anonymous networks, digital pseudonyms, zero
W.A.S.T.E.: Corralitos, CA  | knowledge, reputations, information markets,
Higher Power: 2^1398269     | black markets, collapse of governments.
"National borders aren't even speed bumps on the information superhighway."

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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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Tim May wrote:
> I try to deconstruct events, to determine what the real issues are.
> 
> Take the case of the ongoing flap over Switzerland and claims that Swiss
> banks hid gold, jewels, and other forms of money for high-ranking Nazis.
> Adding to the flap--actually, making it a newsworthy event--is the
> allegation, probably true, that some of the gold was taken from Jews and
> others sent to extermination camps.

... snip ...

> OK, so it's clear to all right-thinking persons what should be done:
> Switzerland should return the money to the heirs of those killed by the
> Nazis.
> 
> Ah, but it's not so clear to me. I guess I'm not a right-thinking person.

According to americal common law, as I understand it, no one can get
a valid title to the property from someone who did not have such title.

E.g., if you steal Vulis's car and then sell it to me, I will not have
the title to the car and will have to return it back to Vulis (and may
be able to try to recover my loss from you). The same will be true if
you lend the stolen car to me -- he can get it back if he proves that it
is his.

I find that reasoning to be quite good.

Lending stolen money (or stolen golden teeth) to banks is no different
than lending stolen cars.

American law does not have to apply to Switzerland, but I find that 
particular part of it to be just. The issue, of course, is coming up
with the proof.

I will appreciate if someone could correct me.

	- Igor.

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In <199705080050.TAA00821@manifold.algebra.com>, on 05/07/97 at 06:50 PM,
   ichudov@algebra.com (Igor Chudov @ home) said:


>Tim May wrote:
>> I try to deconstruct events, to determine what the real issues are.
>> 
>> Take the case of the ongoing flap over Switzerland and claims that Swiss
>> banks hid gold, jewels, and other forms of money for high-ranking Nazis.
>> Adding to the flap--actually, making it a newsworthy event--is the
>> allegation, probably true, that some of the gold was taken from Jews and
>> others sent to extermination camps.

>... snip ...

>> OK, so it's clear to all right-thinking persons what should be done:
>> Switzerland should return the money to the heirs of those killed by the
>> Nazis.
>> 
>> Ah, but it's not so clear to me. I guess I'm not a right-thinking person.

>According to americal common law, as I understand it, no one can get a
>valid title to the property from someone who did not have such title.

>E.g., if you steal Vulis's car and then sell it to me, I will not have the
>title to the car and will have to return it back to Vulis (and may be able
>to try to recover my loss from you). The same will be true if you lend the
>stolen car to me -- he can get it back if he proves that it is his.

>I find that reasoning to be quite good.

>Lending stolen money (or stolen golden teeth) to banks is no different
>than lending stolen cars.

>American law does not have to apply to Switzerland, but I find that 
>particular part of it to be just. The issue, of course, is coming up with
>the proof.

>I will appreciate if someone could correct me.

It is an intresting approach to justify current action agains the Swiss
Banks. If you could prove that the Swiss received stolen property what
about the "statute of limitations"? Most US crimes require that they be
prosecuted within x # of years ( I think that theft is 7yrs. ). Considering
that this all happened over 50yrs and AFAIK no capital crimes have been
commited by the swiss banks even if they are "guilty" of receiving stolen
property I can hardly see how they can be held accountable now.

- -- 
- -----------------------------------------------------------
William H. Geiger III  http://www.amaranth.com/~whgiii
Geiger Consulting    Cooking With Warp 4.0

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William H. Geiger III wrote:
>    ichudov@algebra.com (Igor Chudov @ home) said:
> >Tim May wrote:
> >> I try to deconstruct events, to determine what the real issues are.
> >> 
> >> Take the case of the ongoing flap over Switzerland and claims that Swiss
> >> banks hid gold, jewels, and other forms of money for high-ranking Nazis.
> >> Adding to the flap--actually, making it a newsworthy event--is the
> >> allegation, probably true, that some of the gold was taken from Jews and
> >> others sent to extermination camps.
> 
> >... snip ...
> 
> >> OK, so it's clear to all right-thinking persons what should be done:
> >> Switzerland should return the money to the heirs of those killed by the
> >> Nazis.
> >> 
> >> Ah, but it's not so clear to me. I guess I'm not a right-thinking person.
> 
> >According to americal common law, as I understand it, no one can get a
> >valid title to the property from someone who did not have such title.
> 
> >E.g., if you steal Vulis's car and then sell it to me, I will not have the
> >title to the car and will have to return it back to Vulis (and may be able
> >to try to recover my loss from you). The same will be true if you lend the
> >stolen car to me -- he can get it back if he proves that it is his.
> 
> >I find that reasoning to be quite good.
> 
> >Lending stolen money (or stolen golden teeth) to banks is no different
> >than lending stolen cars.
> 
> >American law does not have to apply to Switzerland, but I find that 
> >particular part of it to be just. The issue, of course, is coming up with
> >the proof.
> 
> >I will appreciate if someone could correct me.
> 
> It is an intresting approach to justify current action agains the Swiss
> Banks. If you could prove that the Swiss received stolen property what
> about the "statute of limitations"? Most US crimes require that they be
> prosecuted within x # of years ( I think that theft is 7yrs. ). Considering
> that this all happened over 50yrs and AFAIK no capital crimes have been
> commited by the swiss banks even if they are "guilty" of receiving stolen
> property I can hardly see how they can be held accountable now.

The Swiss banks did not commit any crimes, or at least I do not see any
crimes having been committed. They simply (in my view, if the cold facts
are true and convincing) are in possession of stolen property, which has
to be returned to their owner or their owners' estates or something like
that.

It is, like, if I buy a stolen car, as long as I was not aware or any
impropriety, I cannot be prosecuted (is that correct?). But the owner 
can take my car back regardless of how long I had it. It is not intended
to be a punishment, but rather a restoration of the original ownership.

This principle, among other things, seeks to discourage people from buying
stolen goods.

Again, please correct me if I am mistaken.

	- Igor.

ichudov@algebra.com (Igor Chudov @ home) writes:
> E.g., if you steal Vulis's car and then sell it to me, I will not have
> the title to the car and will have to return it back to Vulis (and may
> be able to try to recover my loss from you). The same will be true if
> you lend the stolen car to me -- he can get it back if he proves that it
> is his.

Timmy C"you know what" May is a car thief too?????????????

---

Dr.Dimitri Vulis KOTM
Brighton Beach Boardwalk BBS, Forest Hills, N.Y.: +1-718-261-2013, 14.4Kbps

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At 07:50 PM 5/7/97 -0500, Igor Chudov @ home wrote:
>According to americal common law, as I understand it, no one can get
>a valid title to the property from someone who did not have such title.
>
>E.g., if you steal Vulis's car and then sell it to me, I will not have
>the title to the car and will have to return it back to Vulis (and may
>be able to try to recover my loss from you). The same will be true if
>you lend the stolen car to me -- he can get it back if he proves that it
>is his.

The thief's ownership of personal property is good against the whole world
save the true owner. 

"18. In general, possession constitutes the criterion of title of 
personal property, because no other means exist by which a knowledge of the 
fact to whom it belongs can be attained. A seller of a chattel is not, 
therefore, required to show the origin of his title, nor, in general, is a 
purchaser, without notice of the claim of the owner, compellable to make 
restitution; but, it seems, that a purchaser from a tenant for life of 
personal chattels, will not be secure against the claims of those entitled 
in remainder. Cowp. 432; 1 Bro. C. C. 274; 2 T. R. 376; 3 Atk. 44; 3 V. & B. 
16."

http://www.constitution.org/bouv/bouviert.txt  (Bouvier Law Dictionary a fun
Net resource) 

In the case of money (including gold) and other fungible commodities it can
be very hard to determine who owns what once it is out of possession because
it all looks alike.

>Lending stolen money (or stolen golden teeth) to banks is no different
>than lending stolen cars.
>
>American law does not have to apply to Switzerland, but I find that 
>particular part of it to be just. The issue, of course, is coming up
>with the proof.

Most of the assets involved (by volume and value) were the property of
governments that had been conquered by Germany or property confiscated from
German citizens.  Unfortunately, German citizens (like American citizens) are
not protected by international law from predation by their own government. 
Private citizens of conquered countries would be protected but proof will be
hard.  

All of these issues were debated at length in 1946 and settled by the
Washington Agreement.  The U.S., Britain, and France sat on the gold that
Switzerland transferred to it for 50 years (in the basement of the FRB NYC)
parcelling it out in dribs and drabs mostly to the treasuries of the
conquered nations.  They still have a fair chunk of it  and are trying to
figure who to give it to.  I guess holding other people's gold is OK some of
the time.

Article II.2 of the Washing ton Agreement stipulated: 

"The Allied Governments declare on their part that, in accepting this amount,
they
waive in their name and in the name of their banks of issue all claims
against the
Government of Switzerland and the Swiss National Bank in connection with gold
acquired during the war from Germany by Switzerland. All questions relative
to such
gold will thus be regulated." 

Switzerland transferred appox 1,658,000 oz of gold to the Allies with a
current value of $568,750,000.

DCF


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frissell@panix.com writes:
> 
> At 07:50 PM 5/7/97 -0500, Igor Chudov @ home wrote:
> >According to americal common law, as I understand it, no one can get
> >a valid title to the property from someone who did not have such title.
> >
> >E.g., if you steal Vulis's car and then sell it to me, I will not have
> >the title to the car and will have to return it back to Vulis (and may
> >be able to try to recover my loss from you). The same will be true if
> >you lend the stolen car to me -- he can get it back if he proves that it
> >is his.
> 
> The thief's ownership of personal property is good against the whole world
> save the true owner. 
> 
> "18. In general, possession constitutes the criterion of title of 
> personal property, because no other means exist by which a knowledge of the 
> fact to whom it belongs can be attained. A seller of a chattel is not, 
> therefore, required to show the origin of his title, nor, in general, is a 
> purchaser, without notice of the claim of the owner, compellable to make 
> restitution; but, it seems, that a purchaser from a tenant for life of 
> personal chattels, will not be secure against the claims of those entitled 
> in remainder. Cowp. 432; 1 Bro. C. C. 274; 2 T. R. 376; 3 Atk. 44; 3 V. & B. 
> 16."
> 

My problem with Igor's model is that has a "gubmint" that can decide that
although you possess something, you don't have a title to it.

I don't think the cost of having a "gubmint" justifies the convenience(?)
of having one's stolen property recovered.

I point Igor's attention to the two categories of real estate ownership in
traditional Russian legal framework (probably borrowed from Poland and
Germany...) - the kind that cannot be taken away by the state for any
reasn (even as punishment for treason), and the kind that can be taken
away, e.g., for non-paymet of taxes.

---

Dr.Dimitri Vulis KOTM
Brighton Beach Boardwalk BBS, Forest Hills, N.Y.: +1-718-261-2013, 14.4Kbps

Dr.Dimitri Vulis KOTM wrote:
> > "18. In general, possession constitutes the criterion of title of 
> > personal property, because no other means exist by which a knowledge of the 
> > fact to whom it belongs can be attained. A seller of a chattel is not, 
> > therefore, required to show the origin of his title, nor, in general, is a 
> > purchaser, without notice of the claim of the owner, compellable to make 
> > restitution; but, it seems, that a purchaser from a tenant for life of 
> > personal chattels, will not be secure against the claims of those entitled 
> > in remainder. Cowp. 432; 1 Bro. C. C. 274; 2 T. R. 376; 3 Atk. 44; 3 V. & B. 
> > 16."
> > 
> 
> My problem with Igor's model is that has a "gubmint" that can decide that
> although you possess something, you don't have a title to it.

Seems like it is a matter of value judgment.

To stretch your values a bit, suppose that someone steals your car
and I buy it. Suppose also that I have bodyguards so that you would 
not be able to use force to take it back.

Would you be content if you could not (if the system worked according to
your values) sue to get the car back?

> I don't think the cost of having a "gubmint" justifies the convenience(?)
> of having one's stolen property recovered.
> 
> I point Igor's attention to the two categories of real estate ownership in
> traditional Russian legal framework (probably borrowed from Poland and
> Germany...) - the kind that cannot be taken away by the state for any
> reasn (even as punishment for treason), and the kind that can be taken
> away, e.g., for non-paymet of taxes.

This is confiscation of property, ie, something that the owner has a title
to. A stolen car is not a property (as far as i understand it).

	- Igor.