The profits of plunder
In the mid-1930s, with Hitler in power and Germany rearming for the epic clash that lay ahead, the Nazis had a problem: They desperately needed dollars to finance American imports.
They found a solution in an elaborate currency trading scheme that funneled Jewish assets to Germans in the United States--with American financial giant Chase National Bank, today known as JPMorgan Chase, leading the way.
American business dealings with the Nazis have slowly come to light in the postwar years. IBM, for example, supplied information-sorting machines that enabled the Nazis to track Jews, and Ford Motor Co. admits that its German subsidiary used slave laborers. But with the release last week of research by Norman Goda, an associate professor of history at Ohio University who had access to newly declassified documents, details have emerged about the currency scheme. The plot proved crucial to support of the German war machine and allowed American companies to knowingly profit from the plundering of Jewish wealth.
The Nazis offered a deal to Germans in the United States: Return home and swap your U.S. dollars for German marks. With unfavorable exchange rates, though, the swaps didn't make financial sense. The Nazis sweetened the deal with exchanges at a rate far above the market value. But somebody had to pay for the higher rate. The Nazis tapped the Jews.
Chase--with Winthrop Aldrich, a future U.S. ambassador to Great Britain who served as president of the War Relief Fund, at the helm--got a cut of the deal. The bank won the right, along with four other companies, to serve as middlemen enlisting Germans in the plan. The firms collected easy commissions of up to 7 percent.
Pillage. While Jews endured increasing persecution, Chase and its fellow banks dickered over commissions and how to expand the business. "The only way they can do this is through stolen money," says Goda. But German success on the battlefield helped, too: The plan really took off in mid-1940, after the Nazis had successfully invaded France, and more Germans living in the United States wanted to return to what they believed would be their victorious homeland.
The scheme ran its course in June 1941, when the United States froze German assets. All told, $22.5 million was raised; for its part, Chase National earned $503,000 in commissions, equal to about $7 million today. But the FBI finally discovered the scheme in October 1940. Later, two Chase executives opened up their files during late-night sessions with the feds. The FBI did obtain valuable counter-intelligence information on Nazi spies and sympathizers, says Goda, but ended up dropping the case after a Chase attorney threatened to reveal sources and methods used by the investigators.
Today, JPMorgan Chase apologizes for the actions of Chase National, calling the scheme deeply troubling. Yet more needs to be done to plumb the shadowy ties between wartime Germany and U.S. banks, says Stuart Eizenstat, author of Imperfect Justice: Looted Assets, Slave Labor, and the Unfinished Business of World War II. "We put so much emphasis on other countries to come clean," he says, "that we have an obligation to do so ourselves." -Christopher H. Schmitt
This story appears in the May 24, 2004 print edition of U.S. News & World Report.
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