Revealed: Nazi-looted Czech gold sold by Bank of England

The Bank of England helped the Nazis sell gold looted from Czechoslovakia, a previously unseen document has revealed. It transferred £5.6million of Czech gold on behalf of Germany's Reichsbank after the Nazi invasion in 1939.

The gold was moved from the National Bank of Czechoslovakia's account at the central Bank for International Settlements (BIS) to an account managed on behalf of the Reichsbank, according to a record from the bank's archive. The BIS was set up in 1930 to organize German reparation payments after WW1.

The Nazis invaded Czechoslovakia in September 1938. In March 1939, the BIS, chaired at the time by Bank of England director, German Otto Niemeyer, asked the Bank of England to transfer £5.6m-worth of gold from the Czech national bank account to the one belonging to the Reichsbank. Historians have long believed that Montagu Norman, the Governor of the Bank of England, supported the Nazis until the outbreak of WW2.

"On March 21, 1939, the Chief Cashier received the request to transfer about £5.6m gold from the BIS No.2 Account to their No.17 Account. The bank, although it was no business of theirs, was fairly sure that the No.2 Account was a Czech National Bank Account and they believed, although they were not sure at the time, that No.17 was a Reichsbank. The amount was transferred on the same day and a small further amount on March 22,” the 10-page document, published on the Bank of England’s website explained.

Up to 2,000 gold bars were sold in Belgium and Holland, as well as in the UK.

"Between March 21 and 31, the gold received on the No.17 Account was disposed of, (with) about £4m going to the National Bank of Belgium and the Nederlandsche Bank and the remainder being sold in London."

According to the report, Sir Norman refused to tell the Chancellor whether it still had any of the Czech gold in May 1939. 

"The Governor in his reply did not answer the question, but pointed out that the bank held gold from time to time for the BIS and had no knowledge whether it was their own property or that of their customers. Hence, they could not say whether the gold was held for the National Bank of Czechoslovakia," the report said.

It also showed that the UK government did not thwart the Bank of England in following the instructions from the BIS for fear of violating its obligations under international law. It was considered “wrong and dangerous for the future of BIS or any Member of the Board, particular for a national standpoint, to attempt for political reasons to influence decisions of the President of the BIS.”

The policy changed three months later, when the UK declared war on Germany after its invasion of Poland.

“The Bank should not act upon an order of the Bank for International Settlements if it seems to the Bank to be likely that the order might benefit the enemy,” the Chancellor wrote in his orders to the Bank.

The Bank of England argues its role in the episode was "widely misunderstood" saying that at the outbreak of war and for some time afterwards the “Czech gold incident still ranked.”

“Outside the Bank and the Government the Bank’s position has probably never been thoroughly appreciated and their action at the time was widely misunderstood.” 

On September 29, 1938, Germany, Italy, France, and the UK signed the Munich Pact, which was seen as act of appeasement toward Germany. It permitted Nazi Germany's annexation of Czechoslovakia's areas along the country's borders mainly inhabited by German speakers, for which a new territorial designation "Sudetenland" was coined.

Hitler promised not to claim any other European territory. To prevent confrontation, Great Britain and France accepted his demands. Since Czechoslovakia was not even invited to the conference, it felt betrayed by the UK and France; Czechs and Slovaks call the Munich Agreement the Munich Dictate.

October 1, 1938 was set as the date of Czechoslovakian evacuation of the territory. In March 1939 the Germans marched into Czechoslovakia, making most of the country a German protectorate and subsequently nullifying the Munich Pact.

To avoid war, the USSR signed a non-aggression pact with Germany. On September 1, 1939, Hitler attacked Poland, hoping that the UK and France would not intervene. His bid ultimately backfired, as both countries declared war on Germany, sparking the full-scale outbreak of the worldwide conflict.