Everything Everywhere Daily – Operation Bernhard

Host: Gary Arndt
Episode Date: December 6, 2025

Episode Overview

This episode explores "Operation Bernhard," the Nazi effort during World War II to undermine the British economy and fund covert operations by producing vast amounts of counterfeit British banknotes. Gary Arndt delves into the historical context, technical brilliance, and human toll behind the largest counterfeiting operation in history, examining its origins, execution, and legacy.

Key Discussion Points & Insights

1. The Role of Economic Warfare in Conflict

• [02:49] Gary introduces the concept of using currency sabotage as a weapon of war, noting various historical attempts to destabilize enemy finances:
  • British counterfeit campaigns during the American Revolution ("not worth a Continental").
  • Union and private counterfeiting against the Confederacy in the American Civil War.
  • Japanese sabotage of Chinese currency in the 1930s.

“These efforts were rarely intended to collapse a currency outright… but rather to sow distrust, create inflationary pressure, finance covert operations, or simply to undermine an enemy's financial stability.”
— Gary Arndt [03:22]

2. Nazi Counterfeiting Schemes: From Operation Andreas to Bernhard

• [05:45] The Nazis initiated Operation Andreas in 1939, aiming for perfection in forging British currency:
  • Oversaw by Reinhard Heydrich and SS Major Alfred Naujax.
  • Extreme technical challenges: replicating the Bank of England’s paper, printing plates, and serial numbers.
  • Early success: Swiss banks and even the Bank of England deemed 90% of the counterfeit notes authentic.
  • The operation produced up to £3 million before being shut down, mostly unused.

3. Transition to Operation Bernhard

• [08:01] Heinrich Himmler revived the plan in 1942 with a new focus—financing intelligence, not direct economic sabotage:
  • Led by SS Major Bernhard Kruger.
  • Used skilled Jewish prisoners from Sachsenhausen concentration camp, offering relatively humane conditions to incentivize meticulous work.

“This seemingly humane treatment served a calculated purpose. The survival of the inmates rested entirely on being useful to their captors, which created a grim paradox.”
— Gary Arndt [10:45]

4. Inside the Counterfeiting Operation

• [10:30]
  • Prisoners meticulously studied real and fake notes, noting over 150 security features.
  • Teams specialized in different production stages: paper-making, engraving, printing, aging, and laundering the money.
  • By 1944, production soared to 65,000 notes per month; total forged pound notes exceeded £134 million (possibly as high as £300 million).
  • Highest-quality notes laundered through neutral countries; SS Major Friedrich Schwend in charge of global money laundering operations.

“Fresh prints were aged by prisoners with dirty fingers who would shuffle, thumb, fold and crumple the notes... clerks adding typical British names or bank notations in pencil.”
— Gary Arndt [11:36]

5. Counterfeiting’s Impact and British Response

• [12:46]
  • Real-world usage: Paid spies like Cicero in Turkey; potentially funded major sabotage operations, e.g., the Gran Sasso raid.
  • British authorities, alerted via exile sources, eventually responded:
    • Introduced new security features (e.g., blue emergency notes with security threads).
    • Detected counterfeit notes by tracking serial numbers—Nazis couldn’t crack this system, leading to serial duplication.
    • Drastic measures: Withdrawal of high-denomination notes during and after WWII.

“The bank withdrew from circulation all notes with a face value higher than five pounds, a drastic measure that wouldn't be reversed for decades.”
— Gary Arndt [14:11]

6. Expansion to American Dollars and Final Days

• [14:39]
  • 1944: Operation expanded to forging $100 bills, a technically harder task due to the complexity and embedded fibers.
  • Prisoners, including expert forger Solomon Smolianoff, struggled but made progress as the war neared its end.
  • March–May 1945: Germans attempted to relocate and destroy evidence, sinking notes and equipment in Austrian lakes as Allies closed in.
  • Last-minute breakdowns in Nazi plans inadvertently saved prisoner lives; U.S. forces liberated survivors.

“Orders were issued for all the counterfeiters to be killed together at Ebensee, but... the delayed arrival of the third batch saved everyone's lives.”
— Gary Arndt [15:55]

7. Legacy & Modern Impact

• [16:40]
  • Operation Bernhard stands as the most ambitious counterfeiting scheme in history—notes were technically brilliant.
  • It failed to crash the British economy but financed clandestine operations and led to significant advances in currency security.
  • Detection of these notes today requires expert analysis.

Notable Quotes & Memorable Moments

• “You've probably heard the phrase: all's fair in love and war. Despite 20th century attempts to make war more civilized... Belligerent parties have tried anything and everything to gain advantage over their opponents.”
  — Gary Arndt [02:49]

• “The Nazis hatched a plan to destroy the British pound in the midst of the Second World War... Debasing the British pound would effectively throw the British economy into chaos and massively hinder their war effort.”
  — Gary Arndt [03:00]

• “They had to produce counterfeit notes skillfully enough to prove their worth, yet not so perfect or abundant that the SS might decide the operation no longer needed them and eliminate them.”
  — Gary Arndt [10:45]

• “Operation Bernhard remains the largest and most sophisticated counterfeiting operation ever attempted in history.”
  — Gary Arndt [16:41]

Timestamps for Important Segments

• 02:49 — Introduction to economic warfare and historical precedents.
• 05:45 — Origins and challenges of Nazi counterfeiting (Operation Andreas).
• 08:01 — Transformation into Operation Bernhard and recruitment of prisoners.
• 10:30 — Life inside the operation and technical achievements.
• 12:46 — Detection by British authorities and their response.
• 14:39 — Expansion to American dollars and the operation’s chaotic end.
• 16:40 — The operation’s legacy in currency security and war history.

Tone & Style

Gary’s narration combines a factual, engaging style with an eye for human detail and technical precision. He maintains an accessible and conversational tone, punctuated with historical anecdotes and thought-provoking commentary.

Summary Takeaways

• Operation Bernhard was a technically brilliant and sinister Nazi plan to destabilize Allied finances and bankroll covert operations during WWII.
• Despite its failure to collapse the British economy, the operation’s legacy endures both for its scale and its impact on currency security worldwide.
• The story highlights both the ingenuity and the inhuman cruelty of wartime innovation, as well as the unintended consequences that saved the lives of its forced laborers.