November 26, 1904 — Musical instrument experts took a close look at an old organ in the church of San Valentino in Merano, Italy, in 1967, wanting to find evidence of its age. There were no tell-tale markings but the team was astounded by what they did find – the organ was stuffed with English banknotes. The haul added up to £5 million.
The cash formed a tiny part of a counterfeit fortune produced by the Germans during the Second World War with the intention of causing the British economy to collapse.
The bizarre idea was to drop notes over the UK from aircraft. The Germans reasoned that in those difficult times many people would keep the money rather than handing it in to the authorities and over time this would cause financial chaos.
The plan bore the code name Operation Bernhard after the man chosen to be its mastermind – SS Major (Sturmbannführer) Bernhard Krüger, who was born on this day. Estimates of the value of fake notes printed during the operation range from £132 million to £600 million (about £7 billion today).
Fake they may have been, but the notes were of the highest quality and virtually indistinguishable from the real thing.
Krüger, ordered to use slave labour for the task, toured concentration camps and selected the people he needed – Jews with background skills in printing, engraving and banking.
He then set up a special unit at Sachsenhausen camp, outside Berlin. Printing presses were installed and about 65,000 fake notes were produced each month.
Despite Adolf Hitler's approval, leading Nazi Joseph Goebbels described it as a “grotesque plan,” sharing the view of others that there was nothing to stop Britain retaliating with exactly the same operation. It was doomed, anyway, because after its air warfare Germany simply did not have enough aircraft left to carry out the task.
That’s when SS boss Heinrich Himmler stepped in. Production of the counterfeit money continued but Himmler decided to change its purpose and use it to finance growingly expensive intelligence operations.
So-called businessman Friedrech Schwend was called in to head a massive money-laundering scheme. Schwend, known to have been running illegal currency and smuggling activities since the 1930s, set up his headquarters in Merano and reported directly to Himmler.
Using the fake money across Europe, he would purchase anything of value – gold, diamonds, weapons, property, art, and so on. It was all resold for legal currency at big profits. And from his headquarters in Italy he used couriers to spread counterfeit money throughout the Continent.
In 1945, as Allied soldiers advanced and the war was coming to an end, the forgery operation at Sachsenhausen was shut down.
The inmates were ordered to destroy as much of the machinery and the money, and as many of the records as possible. Unburnt banknotes and printing equipment were loaded on to trucks and taken away.
The SS dumped crates full of the counterfeit money into Lake Toplitz in Austria. Though divers brought up some of it in 1959, much of the money would be undisturbed until 2000 when the submersible used to search the wreck of the Titanic recovered several boxes of notes from the lake floor.
Back in the 1940s, enough of the counterfeit money had crept into general circulation to cause alarm at the Bank of England, which stopped releasing new notes and issued a new design.
After the war Schwend fled to Merano where the church organ revealed its secrets two decades later.
Krüger was detained by the British but released in 1948 without facing charges and he returned to Germany. He died in 1989, aged 84. The UK economy lived to fight another day.
Published: September 26, 2019