It was the code-name of a secret Nazi plan devised by the RSHA (Reich Main Security Office) and the SS to destabilize the British economy via economic warfare by flooding the global economy and the British Empire with forged Bank of England £5, £10, £20, and £50 notes.
It was the largest counterfeiting operation in the history of economic warfare, and the first that employed the full technical/scientific and management expertise of a sovereign state to produce and deploy bogus currency with the aim of destabilizing an enemy belligerent’s economic standing with its allies, as well as its acceptance by neutral powers.
Britain was especially vulnerable because its war effort was founded upon – and sustained by – its global and Imperial economy. That economy was built upon directly-ruled colonial possessions, self-governing Commonwealth Dominions and the Empire’s currency zone, the Sterling Preference Area. These worked in commerce with neutral powers to acquire the manpower and material necessary to fight a global war. Each of these trading partners accepted the British currency for the exchange of goods and services and maintained their own reserves of it for transactions with, and within the Empire. Confidence in the integrity of this (then global) currency, both in and outside of the Sterling Preference Area, was essential to sustaining the vitality of the Empire, and through it, the war effort.
Major Bernhard Krueger, a meticulously correct SS engineer, ran a production line of Jewish prisoners in Sachsenhausen concentration camp near Berlin. The millions of forged notes they printed were laundered through a Nazi confidence man with the help of Jewish agents who concealed their origins. Toward the end, one of Europe ‘s most accomplished professional forgers, the only career criminal in the operation, was brought in to counterfeit dollar bills.
In London, the arrogant grandees at the Bank of England could not believe their pound notes could be forged with such expertise and in such quantity. In one of the crowning ironies of many, after the war Golda Meir protected a millionaire Jewish money-launderer from British authorities in what was then known as Palestine.
The plan was to destabilize the British economy during the war by dropping the notes from aircrafts, on the assumption that most Britons would collect the money and spend it, thus triggering inflation. This scheme was not put into effect: it was postulated that the Luftwaffe did not have enough aircraft to deliver the forgeries, and by that time the operation was in the hands of SS foreign intelligence. From late 1943, approximately one million notes per month were printed. Many were transferred from SS headquarters to a former hotel near Meran in South Tyrol, Northern Italy, from where they were laundered and used to pay for strategic imports and German secret agents operating in Allied countries. It has been rumoured that counterfeit currency was used to finance the rescue of Benito Mussolini in 1943.
The plot was hatched in Berlin on September 18, 1939, behind the imposing stone facade of what had once been Kaiser Wilhelm’s Finance Ministry. Walther Funk, a pudgy former financial journalist whose principal task was keeping German industry in Hitler’s camp, was the only one to register the least objection because he feared the counterfeit notes would upset his task of milking Hitler’s conquered territories. Josef Goebbels, Hitler’s propaganda minister, was not present but feared the “grotesque plan” might be turned against Germany ‘s own fragile finances by the Allies. In fact, Winston Churchill and Franklin D. Roosevelt toyed with the idea of counterfeiting enemy currency but their advisers rejected it.
Nevertheless, the second-rate minds of Nazi espionage believed they could weaken the pound as the trading standard and store of value underpinning the British Empire. Bullies and incompetents were at first put in charge of the operation. After several false starts, Krueger, a textile engineer, figured out how to match the paper, printing, and design of the impressive British notes. He found his forgers in Jewish death camps on the orders of SS Reichsführer Heinrich Himmler.
Krüger set up a team of 142 counterfeiters from among inmates at Sachsenhausen concentration camp at first, and then from others, especially Auschwitz. Beginning in 1942, the work of engraving the complex printing plates, developing the appropriate rag-based paper with the correct watermarks, and breaking the code to generate valid serial numbers was extremely difficult, but by the time Sachsenhausen was evacuated in April 1945, the printing press there had produced 8,965,080 banknotes with a total value of £134,610,810. The notes are considered among the most perfect counterfeits ever produced, being extremely difficult although not impossible to distinguish from the real thing Some were plucked from Auschwitz by Krueger himself, who courteously addressed them with the formal German Sie.
The SS planned to keep the operation secret by killing them when the job was done. The prisoners worked with the knowledge that they were marked for death when they had finished their jobs. ” From the start, they wondered whether they should stretch out their work and risk execution for sabotage, or perform efficiently and thus hasten their own deaths. No one ever knew for sure where Krueger stood, but by keeping the operation going, he kept himself from being sent to the Russian front. What all these men said and thought as they lived under this sword of Damocles makes chilling, personal drama.
The pound counterfeiting operation ended in 1944. Not wanting to go to the Eastern Front, and mindful of the fate of the concentration camp prisoners in his employ if his factory were closed, Krüger succeeded in establishing a new operation to forge American dollar notes. Instructing his workers to work as slowly as possible, he managed to stall the operation until the war ended, permitting the prisoners to be liberated after they were transferred to camps in Austria in May 1945.
One of the forgers, Adolf Burger survived the war and stated that “Major Krüger was in no way like Oskar Schindler. He was a murderer just like everyone else, six weeks before the war ended he had six people shot just because they were sick. He couldn’t send them to hospital in case they said something about the operation, so he killed them.”
After the war, Major Krüger was detained by the British for two years, then turned over to the French for a year.
He said they asked him to forge documents but that he refused. He was released in 1948 without any charges being pressed, and returned to Germany. In the 1950s, he went before a denazification court, where inmates under his charge at Sachsenhausen provided statements that resulted in his acquittal. He eventually worked for the company that had produced the special paper for the Operation Bernhard forgeries. He died in 1989.
Following the evacuation of Sachsenhausen, the counterfeiting team was transferred to Redl-Zipf in Austria, a subsidiary camp of the Mauthausen-Gusen concentration camp. At the beginning of May 1945, the team was ordered to transfer again, this time to the Ebensee subsidiary camp where they were to be killed together. Their SS guards, however, had only one truck for their prisoners, so the transfer required three round trips. The truck broke down during the third trip, and the last batch of prisoners had to be marched to Ebensee where they arrived on May 4. The guards of the first two batches of prisoners fled when the prisoners at the Ebensee camp revolted and refused to be moved into tunnels where they would have probably been blown up. The counterfeiters then dispersed among the prisoners at Ebensee. The delayed arrival of the third batch therefore saved the lives of all. As a result of the order that all the counterfeiters be exterminated together, none were actually killed.
The Ebensee camp was liberated by US forces on May 6, 1945. One of the prisoners, the Jewish Slovak printer-turned-counterfeiter Adolf Burger, later contributed to the awareness of Operation Bernhard with several versions of his memoirs published in the languages of Central Europe and in Persian.