Post-World War II Swiss Policies Relating to Holocaust Relevant Issues

Source: The Washington Agreement of 25 May 1946

Near the end of World War II the Allies decided within the context of the "Safe Haven" policy to bring all German foreign assets under their control in order to use them for later reparation payments. In February of 1945 the Swiss Federal Council placed a freeze on all German assets. The USA, Great Britain, and France demanded that Switzerland turn them over to them. Berne took exception to the legality of this demand but felt forced to enter negotiations. It was essential to free assets frozen in the USA since 1941, to end international isolation of the country, and to lift the "blacklist" by which Swiss firms were boycotted for actually or presumably having collaborated with the Germans.

In March of 1946 talks between Switzerland and the three Western Allied Powers (negociating on behalf of 15 other countries) began. However, Germans assets were soon overshadowed by German looted property and gold sold by Germany to the Swiss National Bank. On 25 May 1946 the conference participants finally reached agreement. Switzerland committed itself to pay Sfr. 250 million (carried out in 1947), and the Allies declared in the agreement "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." (Agreement, Article II, 2). The frozen assets of Germans living in Germany should be liquidated and the proceeds divided in half between the three Western Allied Powers and Switzerland. The owners should also be compensated in Reichsmarks. In return, the Allies lifted the "blacklist" in July. Moreover, the USA released all frozen Swiss assets by the end of 1948. Yet the two signatories could not agree on the currency exchange rate to use in compensating former German property owners. Only in 1952 was a definite accord reached with inclusion of the Federal German Republic which had been created in the meantime: In return for waiving their rights to the assets in question, Switzerland transferred to the Allies a redemption sum amounting to Sfr. 121.5 million which was refunded by the FGR for release of German assets. By this act the Swiss Confederation fulfilled ist obligations under the Washington Agreement completely and for good.

Source: The Washington Agreement - the gold question

The historical context - negotiations

During World War II the Swiss National Bank (SNB) received gold from the Allies as well as from the Germans. While the gold purchased from the Allied powers remained on deposit with them, the gold acquired from Germany was transferred to Switzerland.

The question of German gold, i.e. the gold purchased by Switzerland from Germany during World War II, had already been considered during negotiations leading to the Currie Agreement of March 8, 1945; but after that it was discussed in practical terms only during negotiations which took place in the spring of 1946.

The Allies were of the opinion that part of the gold acquired by Switzerland from Germany had been stolen by the latter in the occupied territories, and for that reason should be returned. The Swiss authorities took the view that transactions carried out in good faith by the SNB were legally sound. In view of the fact that the two sides’ legal positions were diametrically opposed, the field in which the negotiations were pursued had to be a political one if a practical solution were to be reached.

After two months of intensive negotiations, the Allies and Switzerland reached a political compromise, which is expressed in Article II, figure 2, of the Washington Agreement. The political nature of the arrangement is clear from the preamble of the agreement in which legal differences between the two parties are recalled before defining the terms of the only accord which was possible under the circumstances.

The Washington Agreement and its implementation

The Swiss government agreed to pay to the Allies the sum of Sfr. 250 million in gold. In exchange, the latter declared that they abandoned, for themselves and on behalf of their banks of issue, all claims against the Swiss government or the SNB in relation to the gold acquired by Switzerland from Germany during the war. Article II, figure 2 in fine print, states expressly that all questions relating to this gold have thus been resolved.

Switzerland paid the sum of Sfr. 250 million on June 6, 1947. As a result of this payment, the question of German gold acquired by Switzerland was resolved definitively, in accordance with the actual terms of the Washington Agreement.

Source: Execution of the Washington Agreement of 1946 by Switzerland

The agreement entered into between the victorious Western Allied Powers ¾ the USA, Great Britain, and France ¾ on one side and Switzerland on the other in Washington on 25 May 1946 covered binding declarations of intent regarding Swiss National Bank gold purchases, treatment of frozen German assets in Switzerland, and frozen Swiss assets in the USA. Also included was the problem of the so-called "blacklist" against Swiss firms imposed by the Allies.

Regarding gold taken over by Switzerland from the German Reichsbank during World War II, satisfaction of Allied demands for Sfr. 250 million in refunds occurred without problems. In turn, the Allies lifted the "blacklist" which discriminated against Swiss firms. Finally the US government complied with its obligation to release Swiss assets frozen in the USA in 1941.

The parties to the Washington Agreement faced the difficult task of implementing its basic principles and declarations of intent. Liquidating German assets in Switzerland posed special difficulty. According to the Swiss view, Germans affected should expressly retain their claims in Swiss francs. Differing views arose on the currency-exchange rate issue. The Allied Powers wanted to pay entitled claimants much less in Reichsmarks than Swiss authorities deemed appropriate. Switzerland resisted the pressure and postponed liquidating German assets. This position caused Switzerland to be reproached for failing to implement the agreement or even wanting to thwart the other parties to the agreement. German currency reform of June 1948 changed conditions basically. The Swiss government maintained its known stance and continued to make liquidation of German assets in Switzerland dependent upon fair compensation.

According to historian Linus von Castelmur (Schweizerisch-alliierte Finanzbeziehungen im Übergang vom Zweiten Weltkrieg zum Kalten Krieg, Zurich 1992), the US- government had already begun to doubt if the agreement could be implemented in summer of 1947. From the end of 1949 the Federal Republic of Germany’s government increasingly entered discussions on carrying out the agreement. Thus the German government in 1951 rejected a compromise proposal worked out between the Allies and Switzerland. As a result of this, Berne began to deal directly with Bonn. To some extent a negotiating triangle resulted. The Federal Republic of Germany played a key role in the amended Agreement of August 1952, although it was not a party to the Washington Agreement. This settlement took effect in spring of 1953. The FRG paid Switzerland Sfr. 650 million for debts of about Sfr. 1.2 billion ("clearing billion") entered into by the defunct German Reich. In turn, the German credits in Switzerland were largely preserved: More than 80% of all German asset holders in Switzerland were released from the agreement without losses.

Since currency reform in the German Western Zone (1948) and creation of the FRG (1949), Allied consideration of the so-called "Safe Haven Policy" took a back seat, given the background of the emerging Cold War. On the other hand, material claims now played a greater role. These were honored as follows: In 1953 Sfr. 121.5 million were paid to settle Allied claims on German assets in Switzerland. Profits from forced administration (conflicts over sequestering) between 1949 and 1954 also amounted to Sfr. 50 million.

Source: Liquidation of German assets: the reasons why Switzerland paid $28 million to the Allies

1. From the frozen assets to the assets subject to liquidation

On February 16, 1945, the Swiss government ordered a freeze on all German assets in Switzerland. On March 8, 1945, in the framework of the « Currie » Agreement (Lauchlin Currie, a personal representative of President Roosevelt), Switzerland decided to take inventory of these frozen German assets.

In the Washington Agreement (May 25, 1946) Switzerland and the Western Allies decided to liquidate assets held in Switzerland belonging to German nationals residing in Germany, compensating the latter in the process, and to authorize unfreezing the following assets:

• those belonging to German nationals residing outside the territory of the former Reich within its frontiers as of December 31, 1937;
• those belonging to persons residing in Austria, Czechoslovakia, the former annexed territories in Eastern Europe, and Danzig;
• those belonging to non-German nationals residing in Germany.

As a result, the estimate of assets subject to liquidation, which was initially $233 million - $250 to $500 million according to the U.S. administration - was reduced by half, amounting to some $116 million.

However, fixing the exchange rate of compensation to be paid to German nationals affected by the liquidation measures, even though the principle had been accepted during negotiations, turned out to be complicated and prevented speedy implementation of the agreement. The German currency was at that time very weak. It is only from June 1948 on, with introduction of the Deutschemark, that it became stable.

2. The 1952 reductions

The difficulties encountered required conclusion of a new agreement on August 28, 1952, which permitted the parties concerned to implement commitments to which they had agreed. This agreement excluded some assets from the liquidation process, in particular those of less than Sfr. 10,000, which affected 80% of the persons concerned. In consequence, the estimated product from liquidation of German assets was then reduced up to $84 million. With the accord of the Western Allies, this agreement turned out to be profitable to the Federal Republic of Germany, since German nationals whose assets were liquidated received two-thirds of their property value.

The second Eizenstat Report indicates : « This meant that the amount to be turned over to the Allies totaled about $42 million. By 1952, even with these exclusions, Switzerland turned over only $28 million, which the Allies accepted for final payment. » (p. xvi)

But one should remember that two successive reductions occurred, both agreed toby the Allies,:

1. In 1952, Switzerland and the Allies agreed to give up one-quarter of this sum in favor of the Federal Republic of Germany which was since 1949 associated to the negotiations and protecting the interests of its nationals. In consequence, there remained about $62.5 million to be shared equally between the two parties in accordance with the distribution plan contained in the Washington Agreement.
2. After a 10% deduction for immediate payment, Switzerland thus paid to the Allies a lump-sum of $28 million on April 2, 1953.