António Louca. Nazigold für Portugal: Hitler und Salazar. Wien: Holzhausen, 2002. 281 S. EUR 24.00 (broschiert), ISBN 978-3-85493-060-0.
Reviewed by Robert Whealey (Department of History, Ohio University)
Published on H-German (August, 2006)
A Quadrangle of Wartime Smugglers, 1939-1944
The situation that this book intends to discuss is clear, if perhaps not well known to many readers: Portugal joined Great Britain in World War I and declared war on Germany. Portuguese colonies were dependent on the British and French fleets for protection. Adolf Hitler won major victories in Spain and France in 1939 and in 1940 that caused Portugal to behave quite differently in the Second World War. The Legion Condor operations in Spain (1936-39) gave Hitler a friendly, anti-French and technically neutral Spain for the rest of the war. The French surrender in June 1940 allowed for a new German military frontier that extended all the way to the Pyrenees Mountains. Portugal, under the leadership of the reactionary, quasi-fascist dictator António de Oliveira Salazar, assumed at this point that Hitler's armies would soon force Britain to surrender as well. Neutral Portugal became a non-belligerent state tilting toward Germany, at least until mid-1943, when Anglo-American naval power once again restricted Portugal's access to imports and exports. Probably even as late as July 1944, the Salazar government secretly hoped that Hitler would win the European war (pp. 70, 97-98, 237).
Although António Louçã is a professional Portuguese journalist, he writes this book like a professional economic historian, citing extensive archival sources housed in Germany, together with newly released Swiss archival sources. Louçã's list in the bibliography of sources in German is outstanding. His use of British and American sources is adequate, but more research is needed linking up five (if we include Spain) national economies. Politically, Salazar had been most friendly to Franco's Spain since 1936. The book is a solid, statistically based study with fifteen tables and two figures showing Swiss-German-Portuguese banking connections. The importance to German-Portuguese relations of Swiss banks is key. Banks, mainly in Bern, would accept German gold or foreign exchange for transshipment to Spain and Portugal, while first London and later New York would not accept new German foreign exchange business. Louçã explores the story of a triangle of trade among Portugal, Swiss banks, mainly the Reichsbank in Berlin and many German arms manufacturers. He includes excellent statistics on the foreign exchange positions of Germany, Switzerland and Portugal during 1939-44. The author's statistics on the German-Portuguese trade in minerals are less complete in comparison to his more comprehensive gold and foreign exchange data.
The first phase of the Anglo-German War (September 1939 to June 1940) enabled Portugal to make money by selling sardines, wolfram ore (for tungsten), copper, zinc, lead ores, and olive oil to both the Germans and the British. Even a small bit of natural rubber from Portugal's colonies was helpful to the German military-industrial complex, but wolfram ore was Portugal's main export of value to the Third Reich (p. 31). Tungsten was vital for hardening the steel needed by German factories making heavy tanks, cannons and other war materials. The Reich export of goods to pay Portugal was too little relative to German raw material needs. The escudo was a hard currency backed by gold, while the Reichsmark had only a paper value and had been overvalued since 1933 by Nazi decrees. The future value of the paper Reichsmark depended on Hitler's ultimate military victory throughout Europe. Germany had therefore to pay for the wolfram ore with weapons and munitions, fertilizer, coal, foreign exchange which had gold as its backing or gold bars.
Germany was more dependent on Portugal and Spain for wolfram than the British or the Americans. Initially, Germany obtained most of the Portuguese wolfram because its early military buildup had created surplus cannons for trade. A panicked Salazar at first sought coastal guns against a possible British attack, rather than pounds or even British oil imports. Portuguese and Spanish wolfram increased in value as Chinese, Burmese and Korean wolfram became less available. Although German manufacturers (especially Krupp AG) used the Trans-Siberian Railway to obtain far eastern wolfram, Hitler closed this door by attacking the USSR in June 1941. Thus in 1942-44 wolfram ore "fever" broke out in northern Portugal and northern Spain. Small, speculative prospecting businesses employed 80,000-90,000 Portuguese in the face of rising world prices for tungsten.[1]
In the second phase of the Anglo-German economic war, after the fall of France, Portugal needed either British or German coal and fertilizer. The British were strapped for shipping, and German submarines patrolled the Portuguese coast. In contrast, German coal could be exported via rail through France and Spain to Portugal. The British-German rivalry for Portugal's friendship became more competitive. The British Ministry of Economic Warfare put firms that did business with Germany on a black list. From September 1939 to April 1941, more Spanish than Portuguese firms appeared on the list. British investments and exports to Portugal were substantial, yet the Ministry of Economic Warfare had only a soft enforcement policy. Portugal was Britain's "oldest ally" diplomatically, but perhaps "economic satellite" might be more accurate as a description given the oil, cotton, wheat and manufactured products of every variety Portugal usually imported from Britain.
After Pearl Harbor, Portuguese-German trade entered a third phase. Portugal's gold reserves, placed in New York for safekeeping in December 1939, were frozen for the duration of the war in December 1941, and Portugal was forced to trade with Germany and Spain mostly on a barter basis. Lisbon got some pounds, dollars and escudos from Switzerland. Germany bartered weapons for minerals as much as possible, and only 10 to 20 percent of Germany's mineral needs were paid for with gold-backed foreign exchange. In March 1941, Germany made its first ad hoc wolfram agreement (for six months) with Portugal (pp. 63, 83); it was renewed every six months through June 1944. This trade fostered new Portuguese mining speculations, a quasi-illegal business that depended on the British ambassador's ability to enforce Britain's selective "blockade," because the largest established mines were owned by British companies. Between 1941 and 1944, the Bank of Portugal collected 3,834,134,000 escudos from Germany, translated into 128.8 tonnes (metric tons) of gold. Roughly two thirds of the money came through Swiss banks.[2] The peak year for Portuguese mineral profits was 1942 (tables 9 and 10).
This "German" gold came from the confiscated reserves of the Belgian ($222,900,000), Dutch ($163,800,000) and Austrian ($102,600,000) central banks, along with some private assets seized by the SS and transferred to the German Economics Ministry. An additional $929,800,000 worth of gold came from eleven other conquered countries' central banks and private individual accounts (Table XII). Gold from the private accounts of the "Greater Reich and the New Order" was worth at least $82,000,000--of which $71,800,000 came from Four Year Plan "activities" (Table XIII). Himmler presumably turned his looted assets over to the Four Year Plan, although Louçã discusses this matter only briefly (pp. 162-163). Some property stolen by the SS in August 1942 was disguised as gold from Memel seized from Lithuania after its defeat in Spring 1939, along with another $3 or $4 million private dollars that were transferred to Swiss banks in August 1942 (p. 271).
Portuguese raw material exports to Germany remained significant to the end of the war, not least because British attempts to compete for wolfram proceeded slowly. The British Ministry of Economic Warfare cut off the oil supply to all the Axis powers and rationed it to civilian uses in Spain and Portugal. The ministry set up the United Kingdom Commercial Corporation in October 1940 to buy up Portuguese wolfram (at 170 pounds sterling per tonne) to keep it out of German hands.[3] Economic sanctions were applied very slowly because of Britain's empty pockets from 1939 to March 1941. Even after an Anglo-American wolfram preemptive purchase program was implemented in conjunction with the Lend-Lease Program in November 1941, German military consumption of wolfram continued unabated for another year and half.[4] The American preemptive corporation, the United States Commercial Company, coordinated its activities with the British in June 1942, when the buying of Iberian wolfram accelerated significantly. By January 1942, when the U.S. State Department officially joined the British blockade, Portugal was the country with the most black-listed firms; in March 1944, it was superseded by Switzerland, with 1,220 firms on the Anglo-American black list. German-smuggled imports through these firms peaked in May 1944, with about 1,240 firms doing business in Portugal, Switzerland and Spain. At war's end, Switzerland still had 890 black-listed firms doing business with Germany. Portuguese and Spanish smugglers were completely closed down by the U.S. State Department through Operation Safehaven in May 1945.[5]
Louçã mentions, as a sub-theme, Nazi entrepreneur Johannes Bernhardt, who had earlier built up a number of German state-operated companies throughout the Iberian peninsula. Bernhardt's companies HISMA-ROWAK-SOFINDUS, created in 1936-37, handled some Portuguese exports of wolfram ore through Spain and France from 1939 to 1944.[6] SOFINDUS and ROWAK had an office in Oporto and made contracts with at least three Portuguese mining companies under the directorship of the Lobar Company.[7] According to Louçã, the major connection was between SOFINDUS and Portugal's Minero-Silvílcola (p.71). So there really was a quadrangle of raw material trade, not just Louçã's financial triangle of trade in gold and foreign exchange between Germany, Portugal and Switzerland.
One of the weaknesses of Louçã's account is that he thinks in terms of German-Portuguese relations and tends to play down the importance of Spain. From the standpoint of London, Berlin and Washington, the Iberian peninsula was treated as a single economic unit. The geological location of the wolfram ore beds lies in northern Portugal near the Spanish frontier. A smaller region of wolfram mines is located in Spanish Galicia and Estremadura. The Allies' best countermeasure against German-Portuguese trade was to ration gasoline and crude oil exports to Iberia. The second-best strategy was to buy up wolfram ore and mines for cash. More details on the Spanish wolfram and oil trade can be found in books by Christian Leitz (1995) and Herbert Feis (1948). Neither is included in Louçã's otherwise very extensive bibliography. Louçã's book does explain some things about Portugal's shadowy mineral trade, but somebody else, someday, could write another chapter on Portuguese-Spanish economic relations 1936-45.
In defense of Louçã's extensive research in three banking systems, one must add that both Portuguese and Spanish archives for the 1936-45 period have been very disorganized and secretive. Relations with the Allies were also strained because of an intense fear of communism and the USSR on the parts of both Franco and Salazar. Salazar personally favored maximizing the export of wolfram to Germany to the very end, despite Anglo-American objections (pp. 97-98, 237). At the same time, Salazar insisted to the British ambassador that Portugal was loyal to its British alliance. The British and Americans demanded that the Portuguese government cut off all exports to Germany only in March 1944, rather late in the game (p. 273). In the end, only the conquest of southern France by the U.S. Army in July 1944 cut off wolfram exports to the Reich.[8]
Despite the condition of the archives, it would have been helpful if had Louçã included two more tables on the wolfram trade. The first would show the rise in the world price of the ore from November 1941 through April 1944. A second table might have shown historians the number of tons delivered on a six-month or annual basis. Such a second table would be more difficult to make, but historians and economists do have some scattered information. Here are some preliminary figures for such tables:
PRICES PAID FOR WOLFRAM ORE PER KILOGRAM AND TONNE IN DOLLARS AND PESETAS FROM PORTUGAL AND SPAIN.[9]
YEAR PRICE UNIT 1937 $.80 kilo 1939 7,500 pesetas per tonne 1940 $13-$30 per tonne 1941 $123-$370 per tonne 1942 $ 300 per tonne 125,000-160,000 pesetas per tonne 1943 170,000-275,000 pesetas per tonne 1944 April 180,000 pesetas per tonne 1944 Sept. 20,000 pesetas per tonne
SPANISH AND PORTUGUESE WOLFRAM ORE EXPORTED TO BRITAIN, U.S. AND GERMANY in Tonnes[10]
YEAR U.K & U.S. GERMANY _ 1936 136 tonnes 1937 150 tonnes 1938 119 1939 74 1940 394 1941 20 318 1942 438 (760) 2000-2100 FROM PORT 794 (1,000) 1943 943 (3,035) 2,100 FROM PORT 834.3 (1,300) 1944 Jan-May (500) 1944 Jan-Sept 834.6 1944 Sept 0
NB: Figures in parentheses may include Portuguese exports according to Wheeler.
Louçã agrees with Leitz that 1942 was the peak export year, with 2000-2100 tonnes of wolfram ore delivered to Germany (p. 86). Portugal could demand 65 percent of its payment for the ore in German manufactures and 30 percent in escudos in December 1941. The Portuguese author of this study says that 2,100 tonnes of Portuguese wolfram were exported in 1943 (p. 83). Louçã's weakness on the Portuguese wolfram exports is that his statistics are scattered in citations and not presented in a systematic table.
By April 1943, terms of trade were set in Lisbon as 90 percent German goods and 10 percent foreign exchange (Table IV). Louçã claims that no more Portuguese wolfram was delivered after January 1944 (p. 97). But re-exported Portuguese ore probably, and Spanish ore certainly, continued to arrive in Germany up to August 1944. Salazar assured Franco of continued supplies for Germany in June 1944 (p. 237). SOFINDUS made secret contracts with Spain's Minister of Industry and Commerce, Demetrio Carceller (p. 97).[11] During the Civil War, Carceller, then director of Spain's oil refinery, CEPSA, had good, previously-established contacts with the German Navy.[12] The U.S. State Department economic advisor, Herbert Feis, claimed that Iberian exports to Germany were cut off when the U.S. Army reached the Pyrenees in July 1944. Even as early as June 3, 1943, Karl Clodius, a German official, assuming that the German war was going badly, wrote a memorandum on Germany's export of gold and foreign exchange position. Clodius, a minor German foreign ministry official of the Weimar era who became a conservative economic advisor to the Nazi foreign minister, presented a plan to both Foreign Minister Joachim von Ribbentrop and Hitler: the Reichsbank was to transfer stolen gold mainly to the Swiss Banking Corporation in Bern for transfer to Portugal, Spain and other friendly neutrals (p.9).
Swiss national Jean Ziegler, who published his own somewhat popular story The Swiss, the Gold and the Dead (1997), adds an introduction to the Louçã's book about the role of German stolen gold and foreign exchange shipped to Swiss banks. Ziegler was mainly interested in a political history that exposed the Swiss government and banks as profiteering and collaborating with Germany. Neither in Ziegler's introduction to Louçã, nor in his own book, is there much statistical information on how the SS confiscated private property, including Jewish property, to be converted into gold bars for export to Portugal. After members of the German army tried to assassinate Hitler on July 20, 1944, Switzerland refused to accept any more gold from Nazi Germany (pp. 273-74).
Notes
[1]. Douglas L. Wheeler, "The Price of Neutrality: Portugal, the Wolfram Question, and World War II," Luso-Brazilian Review 23, no. 1 (1986): 113-114.
[2]. One dollar was worth about 25 escudos for the period 1939-45. The escudo gained in value against the pound from 109 escudos for a pound in 1939 to 100.5 in 1945 (Louçã, table 7). The Reichmark was fixed at 40 cents, but was really worth about 25 cents on the free market in 1939. In 1935, the gold peseta was worth 12.3 cents. After the Civil War broke out, the Spanish Republicans sent their gold reserves to Moscow, so in 1937 the Burgos paper peseta was worth about 7 cents. See Robert H. Whealey, Hitler and Spain: The Nazi Role in the Spanish Civil War 1936-1939 (Lexington: University Press of Kentucky, 1989), 120, 143.
[3]. Christian Leitz, Economic Relations between Nazi Germany and Franco's Spain, 1936-1945 (Oxford: Clarendon Press, 1995), 174.
[4]. Herbert Feis, The Spanish Story: Franco and the Nations at War (New York: Alfred A. Knopf, 1948); the term "preemptive" is called "preclusive" in Feis, 214-219, 253, 255-262; Leitz, Economic Relations, 140, 154, 168, 174-175, 178-183, 189, 195, 197-198.
[5]. Oddly there is nothing in Louçã's account about the State Department's 1945 program, Operation Safehaven, to seize German assets deposited in Spain, Portugal, Turkey, Sweden, Switzerland and even Ireland. See Whealey, Hitler and Spain, Bibliographical Note, 227; Jean Ziegler, The Swiss, the Gold and the Dead, translated by John Brownjohn (New York: Harcourt Brace, 1997), 9, 152-154; Leitz, Economic Relations, 216.
[6]. Louçã, 73, 90; Whealey, Hitler and Spain, includes a chapter on the origins of HISMA-SOFINDUS and Bernhardt's connection to Hermann Göring.
[7]. Wheeler, "The Price of Neutrality,"113.
[8]. Feis, The Spanish Story, 261.
[9]. The statistics in this table are a combination of Feis, The Spanish Story, 168; Leitz, Economic Relations, 174, 176; and Wheeler, "The Price of Neutrality," 118. The peseta, like the Reichsmark, had a fixed paper value and was not backed by gold. The statistics vary between what the British and Americans paid in hard currency and the quasi-secretive peseta-Reichsmark trade with Germany. Leitz uses a different conversion rate from Whealey in note 2 above. What is clear is that Portugal and Spain could charge the Germans more than they had to sell to the gold-blocked countries. The Iberian powers also charged a tax on quasi-legal smuggled sales of ore to Germany. Franco needed to pay off his Civil War debt to Germany, and was more than happy to get foreign exchange and gold. Much of the Portuguese wolfram was transported via Spain.
[10]. The basic source for this table is Leitz, Economic Relations, 176, supplemented by Wheeler,"The Price of Neutrality," 119--with the reminder to reread my note at the bottom of the table: the figures in parenthesis may include Portugal. Also, Wheeler uses long tons and not metric tonnes. Leitz concentrated his research on Spain. Wheeler was looking for a Portuguese export figure, but his statistics came from U.S. and British preemptive purchases and Allied archives sources.
[11]. See Feis, The Spanish Story, 240-244, for more details on this aspect of the trade.
[12]. Whealey, Hitler and Spain, 123-124, 214; nn. 219, 220.
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Citation:
Robert Whealey. Review of Louca, António, Nazigold für Portugal: Hitler und Salazar.
H-German, H-Net Reviews.
August, 2006.
URL: http://www.h-net.org/reviews/showrev.php?id=12200
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