Re: Trading With the Enemy, by Charles Higham
Posted: Wed Nov 27, 2013 2:36 am
Chapter 2: The Chase Nazi Account
It was only appropriate that Thomas Harrington McKittrick should have been so amply rewarded by Winthrop Aldrich, John D. Rockefeller's brother-in-law, because Joseph J. Larkin, one of Aldrich's most trusted vice- presidents, in charge of European affairs, figured prominently in The Fraternity.
The Rockefellers' Chase National Bank (later the Chase Manhattan) was the richest and most powerful financial institution in the United States at the time of Pearl Harbor. The Rockefellers owned Standard Oil of New Jersey, the German accounts of which were siphoned through their own bank, the Chase, as well as through the independent National City Bank of New York, which also handled Standard, Sterling Products, General Aniline and Film, SKF, and ITT, whose chief, Sosthenes Behn, was a director of the N.C.B. Two executives of Standard Oil's German subsidiary were Karl Lindemann and Emil Helfferich, prominent figures in Himmler's Circle of Friends of the Gestapo -- its chief financiers -- and close friends and colleagues of the BIS's Baron von Schroder.
Larkin kept the Chase Bank open not only in the neutral countries of Europe and South America but in Nazi- occupied Paris throughout World War II. After Pearl Harbor, Chase's Paris branch provided financial arrangements for the German embassy and German businesses in Paris, under the "guidance" of Emil Puhl's right-hand man at the Reichsbank, Halls-Joachim Caesar, and with the full acceptance of New York.
In common with most members of The Fraternity, Winthrop Aldrich was politically schizophrenic, capable of playing both ends against the middle in the interests of Big Money. On the one hand he was a most generous supporter of Great Britain in her beleaguered state, raising millions for British war relief in a campaign that in 1942 earned him audiences at 10 Downing Street and Buckingham Palace. Yet with great duplicity he turned a blind eye to Larkin's continuances of the Chase interests and banking headquarters in Occupied Paris.
Joseph J. Larkin resembled Aldrich in his immaculate tailoring, perfect manners, austere deportment, and in his dedication to The Fraternity. A distinguished member of a Roman Catholic family, he had received the Order of the Grand Cross of the Knights of Malta from Pope Pius XI in 1928. He was an ardent supporter of General Franco and, by natural extension, Hitler. Morgenthau first suspected him as a fascist sympathizer in October 1936, when Fernando de los Rios, the ambassador of Loyalist Spain, dedicated to Franco's defeat, went to see Larkin to open an account of $4 million. The account was to be used to raise local assistance for the Spanish government, including the Lincoln Brigade. Larkin said firmly that the $4 million account would not be allowed.
Larkin went a step further in the service of fascism. When the Loyalist government deposited a similar amount in the Chase Bank in Paris, Larkin was furious with the subordinate who accepted the account. He immediately contacted the Loyalist emissary in Paris and had him withdraw the deposit. Simultaneously, with the encouragement of Schacht, Larkin took on the Franco account and the Reichsbank account, though the Reichsbank was under the personal control of Hitler. In 1942, introducing a book entitled Patents for Hitler by Gunther Reimann, the lawyer Creekmore Fath wrote:
As war approached, the links between the Rockefellers and the Nazi government became more and more firm. In 1936 the J. Henry Schroder Bank of New York had entered into a partnership with the Rockefellers. Schroder, Rockefeller and Company, Investment Bankers, was formed as part of an overall company that Time magazine disclosed as being "the economic booster of the Rome-Berlin Axis." The partners in Schroder, Rockefeller and Company included Avery Rockefeller, nephew of John D., Baron Bruno von Schroder in London, and Kurt von Schroder of the BIS and the Gestapo in Cologne. Avery Rockefeller owned 42 percent of Schroder, Rockefeller, and Baron Bruno and his Nazi cousin 47 percent. Their lawyers were John Foster Dulles and Allen Dulles of Sullivan and Cromwell. Allen Dulles (later of the Office of Strategic Services) was on the board of Schroder. Further connections linked the Paris branch of Chase to Schroder as well as the pro-Nazi Worms Bank and Standard Oil of New Jersey in France. Standard Oil's Paris representatives were directors of the Banque de Paris et des Pays-Bas, which had intricate connections to the Nazis and to Chase.
Six months before the war broke out in Europe, Joseph J. Larkin brought off his most audacious scheme in the Nazi interest, acting in collusion with the Schroder Bank. Aldrich and the Schroders secured no less than $25 million American for the use of Germany's expanding war economy and accompanied it with a detailed record (supplied direct to the Chase Bank in Berlin for forwarding to the Nazi government) of the assets and background of ten thousand Nazi sympathizers in the United States. The negotiations were engineered with the help of Dr. Walther Funk and Emil Puhl.
In essence, the Nazi government through the Chase National Bank offered Nazis in America the opportunity to buy marks with dollars at a discount. The arrangement was open only to those who wished to return to Germany and would use the marks in the interest of the Nazis. Before any transaction could be made, such persons had to convince the Nazi embassy in Washington that they were bona fide supporters of German policy. They were told in pamphlets sent out by the Chase National Bank in Manhattan that Germany could offer glorious opportunities to them and that marks would provide a hedge against inflation and would have much increased value after victory in the expected war.
As a result, there was a rush on marks. On February 15, 1939, there was a summit meeting at the Chase in New York of representatives of both Chase and Schroder banks on what was known as the Ruckwanderer (Reimmigrant) scheme. Alfred W. Barth was the personal representative of Winthrop Aldrich and Joseph J. Larkin, while E. H. Meili of J. Henry Schroder represented that side of the association. At the meeting the members discussed a proposal that the Reichsbank should send a special representative to the Nazi consulate in New York, which served as the headquarters of the Gestapo and had its accounts at the Chase. The American group decided that they should not take such a risk because their importing such a person might reveal to the American public that they were supporting Nazis. The minutes show that it was decided to "let well enough alone" and to conduct future business on behalf of Berlin through
The bankers agreed that special attention should be focused on shopkeepers, factory workers, and others with little money but great potential for Germany. They should be able-bodied young men and women of pure Aryan stock. Above all, the present meeting must never come to the attention of the American government. The minutes of the meeting state:
Thus, the Chase directors and the barons von Schroder were afraid that if Morgenthau discovered the true facts, the U.S. government might take measures detrimental to the German government. It was an act of total collaboration with the Nazis.
In May 1940 a prominent diamond merchant in New York City, Leonard Smit, began smuggling commercial and industrial diamonds to Nazi Germany through Panama. Smit's company was theoretically Dutch, which placed it under the provenance of the Nazis, but its stock was in fact owned by the International Trading Company, which was located in Guernsey in the Channel Islands. President Roosevelt had issued a freezing order precluding the shipment of monies to Europe, especially if these might seem to be to the advantage of the Axis. A few days after the Smit account was frozen, Chase officials unblocked the funds at Smit's request. The funds flowed out to Panama, allowing diamonds to be sent through the Canal Zone to Berlin.
On June 17, 1940, when France was collapsing, Morgenthau via Roosevelt again blocked the French account to prevent money going to the enemy. Within hours of the blocking, somebody at Chase authorized the South American branches of the Banque Francaise et Italienne pour l'Amerique du Sud to transfer more than $1 million from New York to special accounts in the Argentine and Uruguay. The Banque was 50 percent owned by the Banque de Paris et des ays-Bas (a Chase and Standard affiliate), and 50 percent owned by the Mussolini-controlled Banca Cornrnerciale Italiana. In South America, these banks were working partly for the Axis. Larkin continued to permit free withdrawals from the special accounts even though he knew perfectly well that such accounts were cloaks for Banque Francaise et Italienne funds.
On June 23, 1941, J. Edgar Hoover wrote to Morgenthau: "During the monitoring of foreign funds at the Chase Bank, FBI discovered various payments to oil companies in the United States. There are indications that the Standard Oil Company of New Jersey has been receiving money from German oil sales by order of the Reichsbank." Throughout 1941, The German-American Commerce Association Bulletin, a pro-Nazi publication, repeatedly disclosed connections between the Chase Bank and Emil Puhl at the Reichsbank; it revealed that the Reichsbank maintained its account at the Chase. It also maintained an account at the National City Bank when the Reichsbank was personally under the directorship of Hitler. Any transactions between Winthrop Aldrich and Dr. Walther Funk had to be approved by Hitler in person.
Meanwhile, the Germans were permitted to retain accounts at Chase banks throughout neutral Europe. Reports on these accounts were siphoned through Madrid and Lisbon by special couriers. The U.S. ambassador to Spain held up many of the transshipments of accounts, reporting to the Department of State on trading with Germany.
With the advent of Pearl Harbor, most American firms in Paris closed down for the not surprising reason that their nation was now at war with Nazi Germany. Unfortunately, Joseph J. Larkin and Emil Puhl's right-hand man, Halls-Joachim Caesar, both authorized the retention of the Chase Bank in the Nazi-occupied city for the duration. Otto Abetz, the smooth ambassador to Paris and comptroller of German interests in that city, specifically requested that the Chase manager in Paris, Carlos Niedermann, not close his doors to German business. Such a request was pointless since Emil Puhl and the Chase had already entered into an arrangement that the bank would not close.
The Chase Bank in Paris was the focus of substantial financing of the Nazi embassy's activities throughout World War II with the full knowledge of New York. In order to assure the Germans of its loyalty to the Nazi cause, Carlos Niedermann in Paris and Albert Bertrand and his colleagues in the Vichy branch of Chase at Chateauneuf-sur-Cher were strenuous in enforcing restrictions against Jewish property, even going so far as to refuse to release funds belonging to Jews because they anticipated a Nazi decree with retroactive provisions prohibiting such release. When this matter was drawn to the attention of the New York office by an angry Harry Dexter White in May 1942, Larkin refused to act, since to do so "might react against our interests as we are dealing, not with a theory, but with a situation."
The German administrator Halls-Joachim Caesar reinstated the Chase officials who were suspended as a result of complaints in the Nazi hierarchy. On June 5, 1942, Albert Bertrand wrote Larkin that Niedermann was collaborating still further with the Nazis; on June 16, Bertrand revealed that Niedermann was making arrangements to centralize in the Paris office all deposits, securities, and general records of the branches in France. In September 1942 more deposits were placed. By May 1943, they had virtually doubled. German- controlled funds of some 15 million francs flowed in so that Chase could meet its operating expenses. Chase acted as an intermediary for banks in Brazil and Chile in transmitting to Berlin instructions, transfers, orders, statements, and account details at a time when Brazil was at war with Germany. Brazilian censorship prohibited such communications, and the branches were on Allied blacklists.
Simultaneously, Bertrand transferred securities and large sums of money from Vichy to Germany and German- occupied countries abroad via Emil Puhl with Larkin's approval throughout 1942.
The Chase also handled transactions for the Nazi Banco Aleman Transatlantico, which was, according to a Uruguayan Embassy report dated August 18, 1943, "No mere financial institution. It was in actuality treasurer or comptroller of the Nazi Party in South America. It received local party contributions, supervised and occasionally directed party expenditures, received party funds from Germany under various guises and juggled the deposits ... all under the guidance of the German Legations." It was in fact a branch of the Deutsche Oberhessische Bank of Berlin.
Most Nazi businesses in South America handled their affairs through the Banco Aleman. Thus, the German legations throughout Latin America possessed channels for distribution and receipt of Nazi funds. The Paris Chase received large amounts of money from Nazi sources through the medium of the Bank.
Most important of all, the Chase, with the full knowledge of Larkin, handled the accounts of Otto Abetz, German ambassador to Paris, and the embassy itself.
It is interesting to consider what, among other things, Abetz and the German Embassy dealt with during the war. They poured millions of francs into various French companies that were collaborating with the Nazis. On August 13, 1942, 5.5 million francs were passed through in one day to help finance the military government and the Gestapo High Command. This money helped to pay for radio propaganda and a campaign of terror against the French people, including beatings, torture, and brutal murder. Abetz paid 250,000 francs a month to fascist editors and publishers in order to run their vicious anti-Semitic newspapers. He financed the terrorist army known as the Mouvement Synarchique Revolutionnaire, which flushed out anti-Nazi cells in Paris and saw to it they were liquidated. In addition, Abetz used embassy funds to trade in Jewish art treasures, including tapestries, paintings, and ornaments, for the benefit of Goring, who wanted to get his hands on every French artifact possible.
The Chase board in New York could not claim that it was unfamiliar with these activities on the ground that communication with Occupied France was impossible. The purpose of retaining diplomatic relations with Vichy was that the U.S. government could determine what was going on in Occupied France. A constant flow of letters, telegrams, and phone calls between Paris and the Vichy branch of Chase in Chateauneuf-sur-cher kept Albert Bertrand informed, and in return he kept New York informed; Washington was advised by Larkin. Despite some criticism by Nazi comptroller Hans-Joachim Caesar, Vichy had under French law the power to close the Paris branch at any minute if New York so instructed. No such instructions were ever received.
When the local branch of the New York Guaranty Trust Bank refused to deal with the Nazis, Niedermann unsuccessfully urged its managers to agree to the demands. In a report marked 1942 (no month or date), Albert Bertrand wrote to Larkin from Vichy, "The present basis of our relationship with the authorities of Germany is as satisfactory as the modus vivendi worked out with German authorities by Morgan's.** We anxiously sought and actually obtained substantial deposits of German funds ... which funds were invested by Chase in French treasury banks to produce additional income." Reports to New York during the war gave repeated statements by Nazi bank comptroller H-J Caesar of the high esteem in which the German authorities held Chase and even had minutes of meetings between the Chase people and Caesar. In one response from New York, date and signator not given in the secret Treasury report recently declassified, an American officer of the bank in Manhattan described Chase as "Caesar's beloved child." All of this was known to the U.S. Embassy in Vichy, and to Washington. But nothing was done.
A Treasury report in Morgenthau's files dated December 20, 1944, reveals that Carlos Niedermann was an outright collaborator with the Nazi government; that Larkin knew this but took no steps to remove him; that Larkin viewed Niedermann's good relations with the Germans as an excellent means of preserving, unimpaired, the position of the bank in France; that the Nazis took exceptional measures to provide sources of revenue for the bank; that they desired to be friends with the American banks "because they expected that these banks would be useful after the war as an instrument of German policy in the United States"; and that the Chase zealously maintained, with authorization from New York, the account of the German Embassy under Otto Abetz in Paris, "as every little thing helps to maintain excellent relations between Chase and the German authorities."
Meanwhile, on December 24, 1943, Winthrop Aldrich, the Chase, Leonard J. Smit, and his company were indicted for violations of the freezing order on shipments to foreign nationals in the matter of the diamond accounts and Smit and his company paid fines of over $100,000; Smit went to prison for five years. In the midst of the indictments, Aldrich was often closeted with the President, discussing his activities on behalf of Allied war relief.
Attorney General Francis Biddle was miserably slow in dealing with the indictment and bringing the Chase to trial. It was only through Morgenthau and his team of Treasury agents that the matter was brought up at all."
In a note from Harry Dexter White to Morgenthau dated January 24, 1945, White warned that if the Department of Justice "continued in its delaying tactics," the case "would have no meaning." He blamed Biddle for being swayed by "pressures from Chase." Simultaneously, now that Paris had fallen to the Allies, Morgenthau sent a team into Paris to investigate the Chase records. The team discovered a new and shocking fact. It found that at the time of the fall of Paris in June 1940, S. P. Bailey, U.S. citizen and manager of the Paris office, had announced to Larkin that he would "immediately liquidate the branch in the interests of patriotism." Larkin had thereupon revoked Bailey's powers and conferred authority on the known Nazi collaborators who continued in office.
It also turned out that Larkin's staff were sending instructions to the bank direct until six months after Pearl Harbor and that they refused to exercise their right to veto on any transactions from that moment and remained in possession of monthly reports. They even took a step further by having American accounts at Chase in Paris blocked while the Nazi accounts remained open. There are records of Carlos Niedermann and his colleagues being in direct touch with Emil Puhl's office at the Reichsbank, offering to be "at your disposal to continue to undertake the execution of banking affairs in France for your friends as well as for yourselves."
In 1945, as soon as he got wind of Treasury's full-scale inquiry, Aldrich rushed Joseph J. Larkin there to fire Niedermann immediately and clean the nest. He issued statements to the U.S. government that there was "no connection" between Paris and Chase after the United States entered the war. Larkin's so-called job "to get to the bottom of the situation and make the necessary adjustments in personnel" was clearly just a way of covering the fact.
In a telegram marked "Secret" and dated January 12, 1945, the U.S. Embassy in Paris advised Cordell Hull and Henry Morgenthau of a meeting with Larkin. Larkin had done his best to save Aldrich. Greatly agitated, he had told the ambassador,
And then he added a revealing piece of information: "The British government had a good attitude toward British banks abroad. British banks in Paris did big business during the Occupation."
The fact that Britain had also collaborated with Nazi Germany on an official level was scarcely encouraging to the embattled Secretary of the Treasury. However, there is no evidence that he did anything whatsoever about Larkin.
A curious event followed. Aldrich dispatched Alfred W. Barth, the prime negotiator in the transactions of Leonard Smit and the Ruckwanderer scheme, to Europe to clean up any further "misunderstandings" about the role of the Chase in dealing with the enemy. A flurry of memoranda went to and from every department of State and Treasury in 1945 as to whether Barth should be allowed to travel to neutral countries. Apparently one of his purposes was to "uncover secreted German assets"! Morgenthau and White tried without success to stop the mission. Barth proceeded to Spain.
On April 17, 1945, the Chase National Bank of New York -- Aldrich being excused (and Larkin not named) -- was placed on trial in federal court on charges of having violated the Trading with the Enemy Act in connection with its handling of the Smit diamond accounts. In his opening statement, U.S. Attorney John F. X. McGohey charged the bank with having failed to freeze the accounts. Defense Attorney John T. Cahill placed before the jurors a substantial volume crammed with documents purporting to deal with the alleged violations of the regulations. Cahill said, "Operations under freezing orders are complicated. Much more so even than operations under your family rationing books. They are, unfortunately, as involved as operations under the Federal Income Tax Law, and it would be as impracticable for all members of the bank staff to become expert in them as it would for such a group to master all the intricacies of income tax legislation."
In other words, he was saying that the unfreezing of the accounts was due to natural incompetence.
Be that as it may, Cahill overlooked the fact that Smit had already pleaded guilty to trading with the enemy and had paid $110,000 in fines and was serving a jail sentence. Also, that such commitments at the time could scarcely have been unknown to certain officials in the bank.
The trial was complicated and technical. James E. Healey, Jr., vice-president of the Chase National in charge of its Panama branches, testified he had believed that the freeze order was not applicable to the transfer of funds from abroad to the Chase Bank branch in Panama. Fred C. Witty, another vice-president, testified that nothing official had come to his attention to indicate there was anything wrong with the unblocking of the account. Other officers testified that they had never received orders from the Federal Reserve Bank to block any accounts.
Meanwhile, as the trial went on, Winthrop Aldrich, who was not actually prosecuted in the trial, protested wherever he could be heard that the trial was "absurd" and "based on a technicality." On May 5, 1945, at 3:55 P.M., the jury, after twelve hours of deliberation on three weeks of complicated testimony, acquitted the bank. Aldrich expressed his extreme satisfaction in an interview with The New York Times. The matter of the proven dealings of Chase that conclusively established wartime connections with the enemy, including the continuing activities of the Chase Bank in Paris, were neither made public nor were even made the subjects of Senate or Congressional investigation. Once more, the ranks of government closed around The Fraternity. And in 1946, Joseph J. Larkin appointed Albert Bertrand, collaborationist head of the Chase in Vichy, to the board of the Chase in Paris.
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Notes:
* Through, of course, the indispensable Emil Puhl.
** The Morgan Bank also stayed open in Paris throughout the war, with New York's knowledge.
It was only appropriate that Thomas Harrington McKittrick should have been so amply rewarded by Winthrop Aldrich, John D. Rockefeller's brother-in-law, because Joseph J. Larkin, one of Aldrich's most trusted vice- presidents, in charge of European affairs, figured prominently in The Fraternity.
The Rockefellers' Chase National Bank (later the Chase Manhattan) was the richest and most powerful financial institution in the United States at the time of Pearl Harbor. The Rockefellers owned Standard Oil of New Jersey, the German accounts of which were siphoned through their own bank, the Chase, as well as through the independent National City Bank of New York, which also handled Standard, Sterling Products, General Aniline and Film, SKF, and ITT, whose chief, Sosthenes Behn, was a director of the N.C.B. Two executives of Standard Oil's German subsidiary were Karl Lindemann and Emil Helfferich, prominent figures in Himmler's Circle of Friends of the Gestapo -- its chief financiers -- and close friends and colleagues of the BIS's Baron von Schroder.
Larkin kept the Chase Bank open not only in the neutral countries of Europe and South America but in Nazi- occupied Paris throughout World War II. After Pearl Harbor, Chase's Paris branch provided financial arrangements for the German embassy and German businesses in Paris, under the "guidance" of Emil Puhl's right-hand man at the Reichsbank, Halls-Joachim Caesar, and with the full acceptance of New York.
In common with most members of The Fraternity, Winthrop Aldrich was politically schizophrenic, capable of playing both ends against the middle in the interests of Big Money. On the one hand he was a most generous supporter of Great Britain in her beleaguered state, raising millions for British war relief in a campaign that in 1942 earned him audiences at 10 Downing Street and Buckingham Palace. Yet with great duplicity he turned a blind eye to Larkin's continuances of the Chase interests and banking headquarters in Occupied Paris.
Joseph J. Larkin resembled Aldrich in his immaculate tailoring, perfect manners, austere deportment, and in his dedication to The Fraternity. A distinguished member of a Roman Catholic family, he had received the Order of the Grand Cross of the Knights of Malta from Pope Pius XI in 1928. He was an ardent supporter of General Franco and, by natural extension, Hitler. Morgenthau first suspected him as a fascist sympathizer in October 1936, when Fernando de los Rios, the ambassador of Loyalist Spain, dedicated to Franco's defeat, went to see Larkin to open an account of $4 million. The account was to be used to raise local assistance for the Spanish government, including the Lincoln Brigade. Larkin said firmly that the $4 million account would not be allowed.
Larkin went a step further in the service of fascism. When the Loyalist government deposited a similar amount in the Chase Bank in Paris, Larkin was furious with the subordinate who accepted the account. He immediately contacted the Loyalist emissary in Paris and had him withdraw the deposit. Simultaneously, with the encouragement of Schacht, Larkin took on the Franco account and the Reichsbank account, though the Reichsbank was under the personal control of Hitler. In 1942, introducing a book entitled Patents for Hitler by Gunther Reimann, the lawyer Creekmore Fath wrote:
Since the middle thirties, whenever a German business group wanted to make an agreement with any business concern beyond the borders of Germany, it was required first to submit a full text of the proposed agreement to the Reichsbank. The Reichsbank rejected or rewrote until the agreement met its approval. The Reichsbank approved no agreement which did not fit into the plans of the Nazi State and carry that state another step toward its goal of world domination. In other words, any American firm which reached an agreement or dealt with a German firm ... was dealing ... with Hitler himself.*
As war approached, the links between the Rockefellers and the Nazi government became more and more firm. In 1936 the J. Henry Schroder Bank of New York had entered into a partnership with the Rockefellers. Schroder, Rockefeller and Company, Investment Bankers, was formed as part of an overall company that Time magazine disclosed as being "the economic booster of the Rome-Berlin Axis." The partners in Schroder, Rockefeller and Company included Avery Rockefeller, nephew of John D., Baron Bruno von Schroder in London, and Kurt von Schroder of the BIS and the Gestapo in Cologne. Avery Rockefeller owned 42 percent of Schroder, Rockefeller, and Baron Bruno and his Nazi cousin 47 percent. Their lawyers were John Foster Dulles and Allen Dulles of Sullivan and Cromwell. Allen Dulles (later of the Office of Strategic Services) was on the board of Schroder. Further connections linked the Paris branch of Chase to Schroder as well as the pro-Nazi Worms Bank and Standard Oil of New Jersey in France. Standard Oil's Paris representatives were directors of the Banque de Paris et des Pays-Bas, which had intricate connections to the Nazis and to Chase.
Six months before the war broke out in Europe, Joseph J. Larkin brought off his most audacious scheme in the Nazi interest, acting in collusion with the Schroder Bank. Aldrich and the Schroders secured no less than $25 million American for the use of Germany's expanding war economy and accompanied it with a detailed record (supplied direct to the Chase Bank in Berlin for forwarding to the Nazi government) of the assets and background of ten thousand Nazi sympathizers in the United States. The negotiations were engineered with the help of Dr. Walther Funk and Emil Puhl.
In essence, the Nazi government through the Chase National Bank offered Nazis in America the opportunity to buy marks with dollars at a discount. The arrangement was open only to those who wished to return to Germany and would use the marks in the interest of the Nazis. Before any transaction could be made, such persons had to convince the Nazi embassy in Washington that they were bona fide supporters of German policy. They were told in pamphlets sent out by the Chase National Bank in Manhattan that Germany could offer glorious opportunities to them and that marks would provide a hedge against inflation and would have much increased value after victory in the expected war.
As a result, there was a rush on marks. On February 15, 1939, there was a summit meeting at the Chase in New York of representatives of both Chase and Schroder banks on what was known as the Ruckwanderer (Reimmigrant) scheme. Alfred W. Barth was the personal representative of Winthrop Aldrich and Joseph J. Larkin, while E. H. Meili of J. Henry Schroder represented that side of the association. At the meeting the members discussed a proposal that the Reichsbank should send a special representative to the Nazi consulate in New York, which served as the headquarters of the Gestapo and had its accounts at the Chase. The American group decided that they should not take such a risk because their importing such a person might reveal to the American public that they were supporting Nazis. The minutes show that it was decided to "let well enough alone" and to conduct future business on behalf of Berlin through
the employment of numerous agents and sub-agents who operate through the country. These agents and sub-agents in cooperation with their respective principals, ourselves, can go a long way towards educating Germans in exile and those sympathetic to the Nazi cause through extensive newspaper advertising campaigns, radio broadcasts, as well as through literature, etc. ...
It is unanimously felt that it would be to the greatest advantage of everyone concerned if ... Berlin would instruct the various consulates in the United States that all inquiries about ... transactions should be referred to ourselves, whose name should be supplied not only to the various consular offices in the U.S. but also to those who inquire at the consulates in respect to the procedure.
The bankers agreed that special attention should be focused on shopkeepers, factory workers, and others with little money but great potential for Germany. They should be able-bodied young men and women of pure Aryan stock. Above all, the present meeting must never come to the attention of the American government. The minutes of the meeting state:
The ensuing publicity and the agitation that has been furthered in certain quarters of this country [against similar schemes] might possibly compel our Department of State to enforce a clearing system between Germany and America, under which monies due to American citizens such as inheritances, etc., would have to be cleared. The results are too obvious: firstly, no benefits are likely to accrue to Germany; secondly, the final outcome might prove disadvantageous from Germany's standpoint.
Thus, the Chase directors and the barons von Schroder were afraid that if Morgenthau discovered the true facts, the U.S. government might take measures detrimental to the German government. It was an act of total collaboration with the Nazis.
In May 1940 a prominent diamond merchant in New York City, Leonard Smit, began smuggling commercial and industrial diamonds to Nazi Germany through Panama. Smit's company was theoretically Dutch, which placed it under the provenance of the Nazis, but its stock was in fact owned by the International Trading Company, which was located in Guernsey in the Channel Islands. President Roosevelt had issued a freezing order precluding the shipment of monies to Europe, especially if these might seem to be to the advantage of the Axis. A few days after the Smit account was frozen, Chase officials unblocked the funds at Smit's request. The funds flowed out to Panama, allowing diamonds to be sent through the Canal Zone to Berlin.
On June 17, 1940, when France was collapsing, Morgenthau via Roosevelt again blocked the French account to prevent money going to the enemy. Within hours of the blocking, somebody at Chase authorized the South American branches of the Banque Francaise et Italienne pour l'Amerique du Sud to transfer more than $1 million from New York to special accounts in the Argentine and Uruguay. The Banque was 50 percent owned by the Banque de Paris et des ays-Bas (a Chase and Standard affiliate), and 50 percent owned by the Mussolini-controlled Banca Cornrnerciale Italiana. In South America, these banks were working partly for the Axis. Larkin continued to permit free withdrawals from the special accounts even though he knew perfectly well that such accounts were cloaks for Banque Francaise et Italienne funds.
On June 23, 1941, J. Edgar Hoover wrote to Morgenthau: "During the monitoring of foreign funds at the Chase Bank, FBI discovered various payments to oil companies in the United States. There are indications that the Standard Oil Company of New Jersey has been receiving money from German oil sales by order of the Reichsbank." Throughout 1941, The German-American Commerce Association Bulletin, a pro-Nazi publication, repeatedly disclosed connections between the Chase Bank and Emil Puhl at the Reichsbank; it revealed that the Reichsbank maintained its account at the Chase. It also maintained an account at the National City Bank when the Reichsbank was personally under the directorship of Hitler. Any transactions between Winthrop Aldrich and Dr. Walther Funk had to be approved by Hitler in person.
Meanwhile, the Germans were permitted to retain accounts at Chase banks throughout neutral Europe. Reports on these accounts were siphoned through Madrid and Lisbon by special couriers. The U.S. ambassador to Spain held up many of the transshipments of accounts, reporting to the Department of State on trading with Germany.
With the advent of Pearl Harbor, most American firms in Paris closed down for the not surprising reason that their nation was now at war with Nazi Germany. Unfortunately, Joseph J. Larkin and Emil Puhl's right-hand man, Halls-Joachim Caesar, both authorized the retention of the Chase Bank in the Nazi-occupied city for the duration. Otto Abetz, the smooth ambassador to Paris and comptroller of German interests in that city, specifically requested that the Chase manager in Paris, Carlos Niedermann, not close his doors to German business. Such a request was pointless since Emil Puhl and the Chase had already entered into an arrangement that the bank would not close.
The Chase Bank in Paris was the focus of substantial financing of the Nazi embassy's activities throughout World War II with the full knowledge of New York. In order to assure the Germans of its loyalty to the Nazi cause, Carlos Niedermann in Paris and Albert Bertrand and his colleagues in the Vichy branch of Chase at Chateauneuf-sur-Cher were strenuous in enforcing restrictions against Jewish property, even going so far as to refuse to release funds belonging to Jews because they anticipated a Nazi decree with retroactive provisions prohibiting such release. When this matter was drawn to the attention of the New York office by an angry Harry Dexter White in May 1942, Larkin refused to act, since to do so "might react against our interests as we are dealing, not with a theory, but with a situation."
The German administrator Halls-Joachim Caesar reinstated the Chase officials who were suspended as a result of complaints in the Nazi hierarchy. On June 5, 1942, Albert Bertrand wrote Larkin that Niedermann was collaborating still further with the Nazis; on June 16, Bertrand revealed that Niedermann was making arrangements to centralize in the Paris office all deposits, securities, and general records of the branches in France. In September 1942 more deposits were placed. By May 1943, they had virtually doubled. German- controlled funds of some 15 million francs flowed in so that Chase could meet its operating expenses. Chase acted as an intermediary for banks in Brazil and Chile in transmitting to Berlin instructions, transfers, orders, statements, and account details at a time when Brazil was at war with Germany. Brazilian censorship prohibited such communications, and the branches were on Allied blacklists.
Simultaneously, Bertrand transferred securities and large sums of money from Vichy to Germany and German- occupied countries abroad via Emil Puhl with Larkin's approval throughout 1942.
The Chase also handled transactions for the Nazi Banco Aleman Transatlantico, which was, according to a Uruguayan Embassy report dated August 18, 1943, "No mere financial institution. It was in actuality treasurer or comptroller of the Nazi Party in South America. It received local party contributions, supervised and occasionally directed party expenditures, received party funds from Germany under various guises and juggled the deposits ... all under the guidance of the German Legations." It was in fact a branch of the Deutsche Oberhessische Bank of Berlin.
Most Nazi businesses in South America handled their affairs through the Banco Aleman. Thus, the German legations throughout Latin America possessed channels for distribution and receipt of Nazi funds. The Paris Chase received large amounts of money from Nazi sources through the medium of the Bank.
Most important of all, the Chase, with the full knowledge of Larkin, handled the accounts of Otto Abetz, German ambassador to Paris, and the embassy itself.
It is interesting to consider what, among other things, Abetz and the German Embassy dealt with during the war. They poured millions of francs into various French companies that were collaborating with the Nazis. On August 13, 1942, 5.5 million francs were passed through in one day to help finance the military government and the Gestapo High Command. This money helped to pay for radio propaganda and a campaign of terror against the French people, including beatings, torture, and brutal murder. Abetz paid 250,000 francs a month to fascist editors and publishers in order to run their vicious anti-Semitic newspapers. He financed the terrorist army known as the Mouvement Synarchique Revolutionnaire, which flushed out anti-Nazi cells in Paris and saw to it they were liquidated. In addition, Abetz used embassy funds to trade in Jewish art treasures, including tapestries, paintings, and ornaments, for the benefit of Goring, who wanted to get his hands on every French artifact possible.
The Chase board in New York could not claim that it was unfamiliar with these activities on the ground that communication with Occupied France was impossible. The purpose of retaining diplomatic relations with Vichy was that the U.S. government could determine what was going on in Occupied France. A constant flow of letters, telegrams, and phone calls between Paris and the Vichy branch of Chase in Chateauneuf-sur-cher kept Albert Bertrand informed, and in return he kept New York informed; Washington was advised by Larkin. Despite some criticism by Nazi comptroller Hans-Joachim Caesar, Vichy had under French law the power to close the Paris branch at any minute if New York so instructed. No such instructions were ever received.
When the local branch of the New York Guaranty Trust Bank refused to deal with the Nazis, Niedermann unsuccessfully urged its managers to agree to the demands. In a report marked 1942 (no month or date), Albert Bertrand wrote to Larkin from Vichy, "The present basis of our relationship with the authorities of Germany is as satisfactory as the modus vivendi worked out with German authorities by Morgan's.** We anxiously sought and actually obtained substantial deposits of German funds ... which funds were invested by Chase in French treasury banks to produce additional income." Reports to New York during the war gave repeated statements by Nazi bank comptroller H-J Caesar of the high esteem in which the German authorities held Chase and even had minutes of meetings between the Chase people and Caesar. In one response from New York, date and signator not given in the secret Treasury report recently declassified, an American officer of the bank in Manhattan described Chase as "Caesar's beloved child." All of this was known to the U.S. Embassy in Vichy, and to Washington. But nothing was done.
A Treasury report in Morgenthau's files dated December 20, 1944, reveals that Carlos Niedermann was an outright collaborator with the Nazi government; that Larkin knew this but took no steps to remove him; that Larkin viewed Niedermann's good relations with the Germans as an excellent means of preserving, unimpaired, the position of the bank in France; that the Nazis took exceptional measures to provide sources of revenue for the bank; that they desired to be friends with the American banks "because they expected that these banks would be useful after the war as an instrument of German policy in the United States"; and that the Chase zealously maintained, with authorization from New York, the account of the German Embassy under Otto Abetz in Paris, "as every little thing helps to maintain excellent relations between Chase and the German authorities."
Meanwhile, on December 24, 1943, Winthrop Aldrich, the Chase, Leonard J. Smit, and his company were indicted for violations of the freezing order on shipments to foreign nationals in the matter of the diamond accounts and Smit and his company paid fines of over $100,000; Smit went to prison for five years. In the midst of the indictments, Aldrich was often closeted with the President, discussing his activities on behalf of Allied war relief.
Attorney General Francis Biddle was miserably slow in dealing with the indictment and bringing the Chase to trial. It was only through Morgenthau and his team of Treasury agents that the matter was brought up at all."
In a note from Harry Dexter White to Morgenthau dated January 24, 1945, White warned that if the Department of Justice "continued in its delaying tactics," the case "would have no meaning." He blamed Biddle for being swayed by "pressures from Chase." Simultaneously, now that Paris had fallen to the Allies, Morgenthau sent a team into Paris to investigate the Chase records. The team discovered a new and shocking fact. It found that at the time of the fall of Paris in June 1940, S. P. Bailey, U.S. citizen and manager of the Paris office, had announced to Larkin that he would "immediately liquidate the branch in the interests of patriotism." Larkin had thereupon revoked Bailey's powers and conferred authority on the known Nazi collaborators who continued in office.
It also turned out that Larkin's staff were sending instructions to the bank direct until six months after Pearl Harbor and that they refused to exercise their right to veto on any transactions from that moment and remained in possession of monthly reports. They even took a step further by having American accounts at Chase in Paris blocked while the Nazi accounts remained open. There are records of Carlos Niedermann and his colleagues being in direct touch with Emil Puhl's office at the Reichsbank, offering to be "at your disposal to continue to undertake the execution of banking affairs in France for your friends as well as for yourselves."
In 1945, as soon as he got wind of Treasury's full-scale inquiry, Aldrich rushed Joseph J. Larkin there to fire Niedermann immediately and clean the nest. He issued statements to the U.S. government that there was "no connection" between Paris and Chase after the United States entered the war. Larkin's so-called job "to get to the bottom of the situation and make the necessary adjustments in personnel" was clearly just a way of covering the fact.
In a telegram marked "Secret" and dated January 12, 1945, the U.S. Embassy in Paris advised Cordell Hull and Henry Morgenthau of a meeting with Larkin. Larkin had done his best to save Aldrich. Greatly agitated, he had told the ambassador,
Aldrich and the board are very much concerned about the situation. The investigation .... I must emphasize that the managing personnel left in Paris were not officers of the Chase Bank ....
Chase New York wants the Chase Bank here open for the use of the Army. My mission is semi- official. I have been temporarily billeted by the Army. I promise my full cooperation with you. The Bank's interests and the government's are identical. Both desire to maintain American prestige in France.
And then he added a revealing piece of information: "The British government had a good attitude toward British banks abroad. British banks in Paris did big business during the Occupation."
The fact that Britain had also collaborated with Nazi Germany on an official level was scarcely encouraging to the embattled Secretary of the Treasury. However, there is no evidence that he did anything whatsoever about Larkin.
A curious event followed. Aldrich dispatched Alfred W. Barth, the prime negotiator in the transactions of Leonard Smit and the Ruckwanderer scheme, to Europe to clean up any further "misunderstandings" about the role of the Chase in dealing with the enemy. A flurry of memoranda went to and from every department of State and Treasury in 1945 as to whether Barth should be allowed to travel to neutral countries. Apparently one of his purposes was to "uncover secreted German assets"! Morgenthau and White tried without success to stop the mission. Barth proceeded to Spain.
On April 17, 1945, the Chase National Bank of New York -- Aldrich being excused (and Larkin not named) -- was placed on trial in federal court on charges of having violated the Trading with the Enemy Act in connection with its handling of the Smit diamond accounts. In his opening statement, U.S. Attorney John F. X. McGohey charged the bank with having failed to freeze the accounts. Defense Attorney John T. Cahill placed before the jurors a substantial volume crammed with documents purporting to deal with the alleged violations of the regulations. Cahill said, "Operations under freezing orders are complicated. Much more so even than operations under your family rationing books. They are, unfortunately, as involved as operations under the Federal Income Tax Law, and it would be as impracticable for all members of the bank staff to become expert in them as it would for such a group to master all the intricacies of income tax legislation."
In other words, he was saying that the unfreezing of the accounts was due to natural incompetence.
Be that as it may, Cahill overlooked the fact that Smit had already pleaded guilty to trading with the enemy and had paid $110,000 in fines and was serving a jail sentence. Also, that such commitments at the time could scarcely have been unknown to certain officials in the bank.
The trial was complicated and technical. James E. Healey, Jr., vice-president of the Chase National in charge of its Panama branches, testified he had believed that the freeze order was not applicable to the transfer of funds from abroad to the Chase Bank branch in Panama. Fred C. Witty, another vice-president, testified that nothing official had come to his attention to indicate there was anything wrong with the unblocking of the account. Other officers testified that they had never received orders from the Federal Reserve Bank to block any accounts.
Meanwhile, as the trial went on, Winthrop Aldrich, who was not actually prosecuted in the trial, protested wherever he could be heard that the trial was "absurd" and "based on a technicality." On May 5, 1945, at 3:55 P.M., the jury, after twelve hours of deliberation on three weeks of complicated testimony, acquitted the bank. Aldrich expressed his extreme satisfaction in an interview with The New York Times. The matter of the proven dealings of Chase that conclusively established wartime connections with the enemy, including the continuing activities of the Chase Bank in Paris, were neither made public nor were even made the subjects of Senate or Congressional investigation. Once more, the ranks of government closed around The Fraternity. And in 1946, Joseph J. Larkin appointed Albert Bertrand, collaborationist head of the Chase in Vichy, to the board of the Chase in Paris.
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Notes:
* Through, of course, the indispensable Emil Puhl.
** The Morgan Bank also stayed open in Paris throughout the war, with New York's knowledge.