The Nazi Forging of British Banknotes

Wednesday, 13 November 2013, by Godfrey Wood

Operation Bernhard was a secret Nazi initiative, aimed at destabilising the British economy by Luftwaffe drops, flooding the country with forged banknotes.

 Alfred NAUJOCKS, who devised the ‘Gleiwitz incident’ of August 1939, giving Hitler an excuse to invade Poland and start World War II, passed this counterfeiting plan to Reinhard HEYDRICH. The type of paper, unique British numbering code, and engraving techniques were painstakingly researched, Hitler being informed that the operation, initially called Operation Andreas, would provide ‘authorised facsimiles, rather than forgeries’.

 In Berlin, where counterfeit British postage stamps, passports, and ID cards were also being produced, these linen-based, six-ply, non-fluorescent (under ultra violet) banknotes became available by February 1941. Tested at Basel, they proved to be 90% perfect. Nonetheless, the Nazis did encounter problems, in such matters as perfecting the eyes of Britannia on the notes, adding margin notches (a Bank of England device for cashiers’ ease of counting), and replicating random security features, such as the Bank of England’s use of dots and re-positioned watermarks.

Naujocks, an unscrupulous character, developed The Salon Kitty brothel as a ploy to attract, and spy on, other Nazi officials. However, on compromising the powerful Heydrich, he was swiftly and unceremoniously shipped off elsewhere.

 Bernhard KRÜGER (after whom Operation Bernhard is named), together with some businessmen, had the banknote counterfeiting project revived, drawing from concentration camps 140-odd Jews and dissidents possessing the requisite skills, and promised to keep this group safe, which, effectively, he did.

 One of Krüger’s forgers was Salomon (Solly) SMOLIANOFF, a Ukrainian Jew, competent artist, and brilliant counterfeiter. Under Solly, standards of counterfeiting accuracy reached 90%, and he was moved from Mauthausen to Sachsenhausen in September 1944, in recognition of his usefulness.

 So, how effective was Operation Bernhard? The Nazis, typically, kept a meticulous record of all that was produced, in total approximately £135,000,000 in acceptable notes, yet at least half of this was never circulated. Since the Bank of England’s name was synonymous with respectability, the Nazis were able to utilise counterfeit notes to purchase oil, mining products, and armaments for their war effort, besides buying up businesses owned by Jews who had fled to the USA or Great Britain.

 As the Allies penetrated the Reich, following the D-Day landings, Krüger moved to Mauthausen, then on to Redl-Zipf, destroying all counterfeiting equipment, before reaching Ebensee. An insufficiency of trucks to transport all his Jews meant that 19 had to walk alongside, slowing the convoy to a crawl. With the Americans approaching, the Nazis jettisoned bundles of forged banknotes into Toplitzsee and Grundlsee, two very deep lakes, from which SHAEF divers later retrieved them.

 In conclusion, it can be reported that the Luftwaffe never dropped any counterfeit banknotes on British soil, over 50% of those notes were never used in any case, and purchases for the war effort were ultimately unsuccessful, given Nazi Germany’s unconditional surrender, her consequent territorial losses, and the post-war partitioning of what remained.

Of the protagonists, Naujocks’ profile waned dramatically. Surrendering to the Americans in 1944, and handed over to the British, he was eventually released, settled in Hamburg, and died in 1966. Heydrich was assassinated by Czechoslovak agents in Prague in 1942. Smolianoff, eventually arrested for forgery, settled in Uruguay as an artist, dying in Brazil in 1976. Krüger, disappearing in April 1945, later worked, with characteristically false papers, for the Americans as an interpreter. Surrendering to the British in November 1946, he was eventually handed over to the French, who asked him to forge papers for their agents. Released in 1948, he underwent a ‘denazification’ trial in 1955, but Jews testified in his defence, causing the court to release him within minutes. Becoming a stamp dealer in Switzerland, he died in 1989.

 Godfrey Wood’s fascinating account demonstrated the ingenuity born of wartime need, the talent possessed by many Jews, and the paramount need for the Bank of England to tighten security in its banknote production, since Operation Bernhard had the potential to generate hyperinflation to the extent that, as Godfrey noted, it would require a wheelbarrowful of millions of pounds’ worth of notes to purchase a potato……   

 Stefan Gatward

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