Flooding economies with excessive bank notes... No we're not talking about the US Federal Reserve, we're talking about Hitler and his plan to destroy Britain!
Flooding economies with excessive bank notes... No we're not talking about the US Federal Reserve, we're talking about Hitler and his plan to destroy Britain!
A master plan to collapse the currencies opposing nations, did it work?
With inflation kicking everyone’s ass right now in America, let’s talk about an intentional conspiracy to cause inflation. Unfortunately this one won’t deal with a Federal Reserve rapidly printing trillions for its own economy, but instead a dictator trying to do that to an enemy’s economy.
Official Name
Operation Bernhard - A Nazi economic warfare operation during WWII to devalue British and American currencies.
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Conspiracy Description
Nazi Germany wanted to destroy the British economy, so leaders devised a plan to release millions of forged British bank notes in England. They later added American dollars to the plan. The premise was that they would use Jewish prisoners who specialized in areas critical to currency forgery.
At the time, it was allegedly the greatest counterfeiting plot of all time according to Malkin Lawrence in his wild book, Krueger's Men: The Secret Nazi Counterfeit Plot and the Prisoners of Block 19.
The Details
The Nazis wanted to attack the value of the British pound to collapse the English economy and win the war. According to Lawrence Malkin, author of Krueger’s Men, “if enough counterfeits were circulated to make all pound notes suspect – and it would have taken millions – the British people would have reverted to some primitive form of barter.”
This was not the first time a nation at war considered creating fake currency to destabilize the economy of another country. Roosevelt and Churchill considered similar ideas during World War II. If we rewind a bit further, the British copied French currency to worsen inflation during the French Revolution. And not long before that, Frederick the Great forged money in the hopes of harming some of Prussia’s enemies. But Operation Bernhard was still novel in a certain sense: it was the first time such a plan was attempted in the industrial age, when truly vast quantities of counterfeit bills could be produced.
The plan was originally known as “Operation Andreas.” In early 1940, authorities ordered Alfred Naujocks to develop a factory where the operation could create the forgeries. But the early efforts faced issues quickly. It turned out that British bank notes were actually very difficult to copy effectively. And on top of that, Alfred Naujocks fell out of favor with his superior and was sent away to be a simple soldier before eventually taking a desk job in Brussels.
But wait there’s more!
The Nazis revived the idea in 1942 and renamed the effort “Operation Bernhard” in honor of Bernhard Krueger, the man tapped for the job. He formed a team of 140 Jewish prisoners, including printers and a variety of craftsman, who were forced to work on the project. At the peak of the operation, the prisoners were producing around 650,000 fake British notes each month. These counterfeits were pretty close too. According to Paper Money Guaranty (PMG), there are 28 differences between Bernhard notes and actual British currency from the time.
A portion of the completed forgeries were set aside to be airdropped in England. Other notes were sent to German spies in foreign countries or used to purchase supplies from neutral countries when the German currency was becoming worthless due to inflation. A portion of the forged banknotes were sold on the black market in Spain and Portugal. There were even German spies caught with forged notes (which they thought were real). And with the success of the British forgeries, in 1944 the factory began working on American dollars.
The prisoners worked twelve-hour shifts. They had access to somewhat better food, clothing, and lodgings than the other concentration camp prisoners. But the threat of being killed in the gas chambers was always hanging over their heads. They knew that if the top-secret project was shut down, the Nazis would execute all of them to prevent the secret from spreading. This was also the case if they fully completed the mission. As a result, some of the prisoners had something like a conspiracy within the conspiracy.
They found small ways to sabotage the project and make it take as long as possible: claiming the supplies were not usable or that printed notes weren’t “perfect” enough to be passed on. Some suspected that Krueger knew about, and allowed, their delays because he might be sent to the front if Operation Bernhard came to an end. Krueger’s boss also had his own lil plot going on. He was using the project to finance his own pet projects and personal interests. Now that’s a conspiracy inception.
Krueger also got his own reward. Malkin (the author we mentioned before) writes that “exactly how much money he (Kreuger) skimmed will never be known, but the prisoners always gave him twenty first-class notes from each new series ‘for his personal use.’”
In the end, the Nazis dumped a bunch of the equipment and notes in the Toplitz and Grundlsee lakes. Some of it was recovered by divers and shown in the picture below.
What This Means
The British felt the impact of this operation for decades afterwards even though the Germans never airdropped the money. They actually stopped releasing all bank notes £10 and above in 1943 and only started reprinting those denominations over the next 40 years. According to Peter Bower (from the link in the previous sentence), this was because there was £15-20 million counterfeits in circulation and about £135-300 million notes had been printed in total. Seems like the operation might have been a success then?
Anyways…
While this operation was discovered and reported on, the Nazis couldn’t have been the only country forging bank notes and flooding enemy economies. With a brief search on the wild tool called the internet, we confirm this!
America via the CIA has used this method to weaken Iraqi and Afghan economies. France did this to Guinea in 1958 after it voted for independence from France (it was a colony at the time).
So this is clearly a tactic that has been in use and will be in use in the future. Countries take extensive measures to prevent counterfeiting for good reason. Not only are schemers within the country trying to make some instant fake bucks, but enemies might be trying to cripple their economy via inflation at any time.
Other Crazy Stuff
Links below to some wild stuff we came across while writing this article.
Death of Adolf Burger - He was one of the OG prisoner counterfeiters in Operation Bernhard
A movie was made about this whole shebang - The Counterfeiters
The CIA was like, “YO that’s a dope operation you got there, let’s learn a little more so we can totally not copy you later”. Read the declassified report here.
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