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Sabine Oishi: Nazi Gold & The Gnomes of Zürich

The headquarters of the Swiss banks UBS, left, and Credit Suisse in Zurich. [photo: Karin Hofer / The New York Times]


Deep under the busy shopping streets of Zürich, lie the vaults of most major Swiss banks.

There, a hoard of gold, jewels and priceless art is securely tucked away, guarded, so the joke has long gone, by the gnomes of Zürich, just as the dwarf Alberich still guards the mythical gold of the Nibelungen in Wagner’s opera Rheingold.

          Because of Swiss banking secrecy laws, Swiss banks increasingly attracted both domestic and foreign depositors wanting to shield their wealth from taxation. Starting in the early 1930s, under threat from the rising menace of the Nazi regime, some 60,000 new accounts were opened by those most at risk of persecution, since numbered accounts could not be traced back to their owners, into which gold, jewelry and art were deposited to the tune of several billion dollars. 

            Once the war started, Germany sold much of their “Raubgold”, gold reserves looted from conquered countries to these same banks, in exchange for Swiss francs, the only freely convertible currency at the time outside the American dollar. Further deposits came from the property of Jews and other “enemies of the state”, confiscated by the Nazis, and melted into bullion together with that from wedding rings and tooth gold from millions of death camp victims to conceal its provenance. It is believed that Swiss banks bought $440 million worth of Nazi gold that today would be worth eight billion dollars.

            Towards the end of the war, when German defeat was only a matter of time, a number of high-ranking Nazi’s started stashing away further massive amounts of stolen gold in Swiss banks, some of them on their own account, some to safeguard it against advancing allied troops.

            After the end of the war the allied governments insisted that any moneys deposited in Swiss banks by Nazi Germany had to be handed over. The Swiss government initially resisted these demands, claiming that it would be impossible to identify the source of deposits, while liquidating assets held in personal accounts would go counter to the basic principles of neutrality. In response, Washington froze Swiss assets in the U.S. and blacklisted persons and companies that had traded with Germany.

            After tense negotiations, Switzerland signed the Washington Agreement in 1946 and released moneys from such accounts to the tune of $58 million. But it took a second round of negotiations in 1952, before the Swiss National bank paid another $28 million, as a “voluntary contribution to the rebuilding of Europe”, as well as handing over 7,421 lbs. of “Raubgold” worth $250 million which had been identified as belonging to Belgium. Though it was estimated at the time that this sum represented only 12%-20% of the gold actually deposited by Germany, the Truman administration was eager to settle the case in the overriding interest of postwar recovery and European unity.

             The question of assets of Holocaust victims and their families did apparently not come up during either proceeding.

 It took another fifty years for the full extent of the gold-laundering operation to be exposed, as well as the obfuscation encountered by survivors of Holocaust victims trying to access accounts opened by them. Because claimants could rarely provide death certificates, a majority of their demands were denied—the banks justifying their self-serving refusal with Swiss banking laws. Audits ordered by the Swiss government in 1962, and again in 1995 resulted in the release of only a tiny fraction of the total of these accounts. So in early 1995, the World Jewish Congress instituted a lawsuit against Swiss banks for withholding Jewish assets.

            New York Senator Ambrose D’Amato picked up the matter, chairing two hearings of the U.S. Senate Committee on Banking in 1996. He asked that the 1946 Washington Agreement be renegotiated, so President Clinton tasked Stuart Eizenstat, as his Special Adviser, with looking into the issue. At the same time, a group of Holocaust survivors, filed a class-action suit against Swiss banks in U.S. Federal district court of Eastern New York. 

            The story exploded into one of the major crises in Swiss foreign politics. It was reported in all major US newspaper, as well as the Swiss news media, shocking the Swiss public into awareness of their country’s malfeasance during WWII. While the majority’s first reaction was to favor a quick and open-handed solution, the government initially tried to distance itself from the issue, pointing to the Washington accord as indemnifying it against further pay-outs. However, the pressure of both public opinion and the threat of sanctions prodded it into action. It suspended the banking secrecy law for five years and tasked the banks with handling the lawsuits. 

            The Swiss bankers’ association created a task force jointly with Jewish organizations and headed by the chairman of the US Federal Reserve (the Volcker Committee), that focused on identifying dormant accounts and matching them with lists of Holocaust victims and survivors. Their work, was seriously undermined in 1997, when a bank guard disclosed that the Union Bank of Switzerland, which held one of the largest numbers of the deposits in question, was destroying documentation of Holocaust-era assets while this work was going on.

            At the same time, the Swiss parliament established an international commission to look into the matter (ICE: the Independent Commission of Experts). Its mandate was not only to investigate the volume and fate of assets moved to Switzerland, but to examine the way Switzerland had dealt with the victims of Nazi persecution before, during and after the war. They established different classes of victims to be recompensated, not only those with bank deposits, but also those from whom looted assets might have ended up in Swiss banks. They also included victims who had performed slave labor at “any facility or work site, wherever located, owned, controlled, or operated by any corporation or business headquartered in Switzerland”, as well as those “victims or targets of Nazi persecution who sought entry into Switzerland to avoid persecution and who were either denied entry or, after gaining entry, were deported, detained, abused, or otherwise mistreated.”

            The commission identified 37 Swiss companies with subsidiaries in Germany that used a documented 11,000 slave laborers to make up for a decimated local labor force. A report by Swiss historians, issued in 2000 states baldly that “Every Swiss subsidiary in Germany simply had to use forced labor if it wanted to keep going.” But reading through the testimony of individual victims of slave labor, it becomes painfully clear that a majority of them were treated as inhumanely and kept under conditions as bad as those sent to German owned factories.

            Eizenstat released a comprehensive report in 1997. The Volcker Commission ended its work in 1999 and the ICE released a first interim report in 997, a second one in 1999 and their final one in 2002. 

            In response to the various investigations, the three major Swiss banks involved in the suits, settled them with an offer of $1.25 billion dollars. An agreement was reached in 1998, signed in early 1999, and implemented in August 2000. By that time, the sum had grown to $1.288 billion from contributions of a number of companies implicated in using slave labor. The moneys were disbursed to a total of 458,400 Holocaust victims, with the last payments made in 2015.

            The Swiss government, however, refused to take part in the settlement. Instead it created a “Foundation for Solidarity” seeded with 300-hundred million Swiss francs, drawn from funds accruing from the increased estimate of the value of its gold deposits. Together with a 200-million francs humanitarian fund, established by a bank consortium, its purpose was to compensate Holocaust survivors living all over the world, and was administered jointly with Jewish organizations.

            The issue of artifacts, whether stolen by the Nazis or sent to safety by their legitimate owners, continues to cause difficulties for collectors, art dealers and museum all over the world to this day. And the gnomes of Zürich? They have gone underground again!

Copyright 2023 Sabine Oishi

Originally from Switzerland, Sabine Oishi is the co-author (with Jeanne Simons) of Behind the Mirror: The Story of a Pioneer in Autism Treatment and Her Work with Children on the Spectrum (John Hopkins, 1921). Dr. Oishi is a retired child psychologist, living in Baltimore.

2 comments on “Sabine Oishi: Nazi Gold & The Gnomes of Zürich

  1. Rose Mary Boehm
    March 17, 2023

    Yes, this is so hard to believe, yet so well-known. Not in all the details, of course. How could anyone partake in this horrendous crime and benefit from it. So many did. And as I am connected by DNA I always feel sick to my stomach when I read about those unthinkable crimes of greed.


    • Vox Populi
      March 17, 2023

      Yes, it is amazing how the Swiss bankers could profit from the holocaust, then deny their role.



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