BULL STREET - The art of the Con

Operation Bernhard - Counterfeiting in World War II

Interestingly enough, the Germans were extremely successful in their stab at counterfeiting British and other currencies during World War II, primarily because many of the Jewish prisoners were master engravers and able to make the very complex plates. Moreover, the wily Germans also had a ready-made source of distribution. The phony bills were given to German spies to spend when on they were working on their assignments. Collaborators were heavily paid in this funny money for their efforts on the part of the Fatherland but they were never told that the money that they were being given was home made. This put the turncoats at a double risk, which was unlike Hessian thinking. It would appear that the Nazis believed that the collaborators were highly expendable, but undermining the British monetary system of an order of great importance. In addition, the Germans did not value their productions very highly because they also took bales of the stuff, flew over English Possessions and dumped bales of it out of low flying airplanes. While this operation received little notice, it created massive havoc and almost achieved its goal. 

Unbelievably, the Jews who fabricated the British Notes were very well treated. Moreover, Major Bernhard Kruger, their keeper, nominated many of his moneymakers for serious war decorations. In addition, they were treated in first class fashion at Spechthausen, Germany, although a concentration camp, for the most part, they were treated in far better fashion and the Germans who were guarding them. 

While the production of counterfeit currency was the primary claim to fame by operation Bernard and its fearless leader, Major Kruger, he put the forgers to work copying many different types of currency and documents. In 1940 after a series of odd jobs that had little to do with forgery, Kruger was assigned in September of 1940 to Department VI of the Secret Service.

He was to get U.S., British, and Canadian passports; identity papers for American seamen, wireless operators, and stewards; and identity cards for Canadian airmen. Department VI forged these superbly. He was also charged with looking into the possibility of using the black market in occupied France as a means of distributing the counterfeited pound notes when they would be ready. Kruger lived in the Hotel de Paris on the Boulevard de la Madeleine.”[58]

Early on though, copying the British notes was not as easy a job that had been original thought. They had to have perfect engraving and special paper, but most of the money problems were solved by August of 1942 and mass production plans were put into gear.   Sachasenhausen concentration camp, which was located conveniently only 25 miles from Berlin, was claimed by the Major for his base of operations and Barracks 19 in the camp was to be used for the Jewish prisoners that were to do the final work. Furthermore, Kruger told camp guards that the Jewish prisoners were to be treated “cordially” and they were from that day forward to be considered co-workers in the triumphant National Socialist march toward world domination.[59] You can imagine the astonishment that the guards must have felt on hearing that. When the dust had cleared, thirty men had been brought to the camp to form the original cadre from other interment camps throughout Nazi occupied Europe.

Kruger promised the captives more food than they could eat, entertainment, cigarettes, newspapers, pin-pong, theatrical performances and radios, many of these delights, even high-ranking officials were not even getting.  He continued; they would not be killed and that when Germany won the war, they would be given their own place to live in peace with other German citizens. These men, many of whom had already been put on the list for execution at other facilities, having a new lease on life and finding that the major seemed to be a man of his word, worked diligently for their masters. Solomon Smolianoff who did not arrive in Barracks 19 until some time later was the only profession counterfeiter in the group and yet they had put together a world class team that would eventually get the job done.

When production was finally in full bloom, Germany made the mistake at first of trying to pass the phony British money off in countries under their domination. This had a terrible reverse effect and started to undermine their own subjects and turned out to be about as helpful to their cause as shooting yourself in the foot. Obviously this practice was abandoned early on.

Fredrich Schwend, a German was put in charge of marketing the British notes. He played the vacation and businessman’s circuit by signing on the managers of all of the large hotels in the neutral countries, Sweden, Switzerland, Portugal, Spain, and Egypt. This allowed the managers to make a little extra money with their bosses never being the wiser. The agents that he hired were allowed to keep 25-percent of what they were able to convert. With the counterfeiting distribution plan now being honed close to perfection,  these managers that worked for Schwend made marvelous living during the war. Moreover, when Mussolini was captured in late 1943, the $250,000 in British notes that was used to finance his release was produced at Barracks 19 and delivered through Schwend’s network.

In the unkindest cut of all, the weapons that were sent in for the use by partisan groups fighting the Nazi’s were often turned over to the German’s in exchange for the counterfeited British pounds. Interestingly enough, the Nazi sympathizers never knew that the German friends had jabbed them in the back. However, before the counterfeiting operation had gotten very far, the British Government caught wind of it and stopped printing the ten-pound notes or higher that had become the pride of the barracks. Moreover, the British Government systematically began withdrawing all of these notes from circulation without informing the population in order to avoid a panic. Within two-years, the British had recalled so many of the notes that they disavowed the remainder. However, that only put a small crimp in the operation and by 1944, the number of people working in the Barracks had increased to 140 and the inmates were now creating numerous forms of currency including German Marks for use in areas where partisans working for the Nazis did not want British pounds or American Dollars.

During this period, the prisoners were kept well informed as to what was going on relative to the progress of the war. For instance, they found out that France had been invaded and knew first hand that Berlin was being decimated by allied bombing. The leaders of the counterfeiting ring, for the first time now came to believe that their were now two alternatives available for them to survive the war. They could either be liberated by the allies or be freed by Kruger if Germany won. Decisions were made that the forgers would opt for the first alternative and slow down their work product in order to bring it about more quickly. Unbelievably, Kruger also determined that his best interests were not much different than that of his employees. Once they had completed an acceptable copy of the American currency, Kruger believed that his men would no longer be needed and he would be sent to the Russian Front, where he was convinced that he would become chopped liver.

In spite of delaying tactics, the SS was pushing hard for the counterfeit currency as the Allied armies started closing in.  They were of the belief that the Americans would be far more susceptible to the counterfeit money and it would distract them from their war effort. Eventually, the notes had become just about perfect but by this time, Germany was in such a state of chaos that the country no longer had either the production facilities to manufacture them, the raw materials or the personnel that necessary to complete the task.

American money was produced in some quantity, which many of the counterfeiters believed was going to be used as getaway funds for senior Nazi officials. Moreover, the men from barracks 17 were moved to Mauthausen where the Germans started their cover-up. They had all of the equipment obliterated, the notes burned and the plates destroyed.  On April 23, 1945, Kruger appeared for the last time in front of his men. He drove up to the camp in his elegant Mercedes Benz accompanied as usual by his erstwhile mistress, Hilda Moeller. They carefully took packages of the American counterfeit money, loaded it into their car that was already bulging with the rest of their possessions and drove of into the sunset. Years later, he turned up as poor shopkeeper in a store on the outskirts of Hanover.

However, the SS had now been given orders to liquidate the counterfeiters but through a succession of near miracles, they managed to survive. A large number of the bogus bills were dumped into the local rivers by the retreating Germans in order to hide the evidence. However, the bales were lighter than the water and the money started bobbing up all over the countryside. Locals were aware that although the bills were almost perfect duplicates of the real thing, they were phonies and in consideration of the fact that toilet paper was in short supply in the area that became its first and highest use. For the men that created the money with which Germany hoped to win the war, the end was sweet. Almost all had survived and most found a better life.



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