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Wars can be fought in many different ways. Ultimately, they are resolved on the battlefield. However, there are other ways to try to influence the outcome of a conflict. You can try to destroy their logistical support for their troops. You can attempt to destroy their economic base by burning their agricultural fields or destroying their factories. However, one relatively recent innovation has been to try to destroy an enemy's money supply. Learn more about Operation Bernhard and the Nazi operation to Counterfeit the British Pound Operation on this episode of Everything Everywhere Daily.
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This episode is sponsored by the Tourist Office of Spain. If you've been listening to this podcast long enough, you might think you know Spain well. Think again. There is so much more to Spain than what most people think. In fact, every part of Spain is packed with history and culture. Extremadura in the west is home to fantastic Moorish architecture and Jama Nibirico, the world's greatest pork product. In the north, Galicia Asturias and the Basque country have stunning coastlines, amazing food and unique cultures. The island of Lanzarote in the Canary Islands has a volcanic landscape and the Tabernas desert has been a filming location for many western films. The city of Merida has some of the greatest Roman ruins you'll find, and in Valencia, the home of Paella, you have can even find the Holy Grail. Plan your next trip and learn about all the lesser known gems in Spain@spain.info Once again, that's spain.info.
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You've probably heard the phrase all's fair in love and war. Despite 20th century attempts to make more war civilized and to create rules for armed conflicts. Belligerent parties have tried anything and everything to gain advantage over their opponents. In the ancient world, corpses would sometimes be thrown over walls. When laying siege to a city in an attempt to spread disease to the defenders, Genghis Khan famously tied flames to the tails of cats and sparrows to burn down a city. The entire North Atlantic campaign during the Second World War was an attempt to starve out Britain, and the Allied bombing campaigns were an attempt to destroy Germany's industrial base. It was in this spirit that 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. The idea of destroying a currency as a military tactic wasn't new, but it also wasn't an ancient concept. These efforts were rarely intended to collapse a currency outright, which is extremely difficult, but rather to sow distrust, create inflationary pressure, finance covert operations, or simply to undermine an enemy's financial stability. One of the earliest and most famous examples occurred during the American Revolution when the British authorities flooded the rebellious colonies with counterfeit Continental dollars. The Continental Congress was already printing money without sufficient backing, so British agents saw an opportunity to worsen the inevitable depreciation. Ships, loyalist printers, and even financial networks within the colonies helped distribute large batches of counterfeit bills, contributing to the broader collapse in confidence that made the phrase not worth a Continental a common insult for worthless money. During the American Civil War, the Confederacy faced a similar problem. The Union didn't need to forge Confederate money to destabilize it, because the Confederate government printed so much of its own currency that inflation became unavoidable. Nonetheless, Union operatives and private counterfeiters in the north did produce large amounts of fake Confederate notes, which entered circulation through captured territory and black market activity. The Union tolerated and sometimes quietly encouraged this phenomenon, since the already fragile Confederate financial system could be stressed further. With very little effort, Japan attempted a more formal state directive currency sabotage program during its war in China in the 1930s, Japanese intelligence forged Chinese nationalist currency, especially the widely used Fabi notes, as a way of undermining Chiang Kai Shek's financial base. Japan distributed the forgeries in occupied areas and through its controlled banks. Since the Nationalist government was struggling to stabilize its currency even before the invasion, the influx of Japanese forgeries added to inflationary pressures and helped erode public confidence in Nationalist fiscal management.
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With that, the Nazi scheme began in 1939, when the idea emerged Within German intelligence circles. In early 1940, the Nazi National Security Service initiated what became known as Operation Andreas, named for either the Cross of St Andrew on the British flag or simply as a cryptic code designation. Reinhard Heydrich received Hitler's approval and established a counterfeiting unit with explicit instructions that the notes must be perfect copies, indistinguishable even to expert examination. The operation was placed under SS Major Alfred Naujax, with daily operations managed by Albert Langer, a mathematician and codebreaker. Naujax was already notorious as the man allegedly responsible for staging the false flag operation that provided Germany's pretext for invading Poland. His team faced three monumental one, replicating the distinctive rag paper used by the bank of England, two, creating identical printing plates and and three, cracking the complex alphanumeric serial numbering system. The British pound notes of the era presented both opportunities and obstacles. The design had remained largely unchanged since 1855, featuring simple black printing on white cotton rag paper with an image of Britannia. This simplicity made the notes easier to study, but achieving perfection proved extraordinarily difficult. The German engravers struggled particularly with reproducing the vignette of Britannia, which they frustratingly nicknamed Bloody Britannia because of its intricate detail. After seven months of intensive work, the team produced counterfeits that were examined by Swiss banks and even the bank of England itself. With 90% deemed authentic, they discovered that the distinctive paper came from used and cleansed pure linen rags, and they painstakingly matched even the water chemistry to ensure proper appearance under ultraviolet light. However, Operation Andreas proved short lived. By 1940, Naujaks fell out of favor with Heydrich and was removed from his position, subsequently being sent to the Eastern Front. The operation limped along under Albert langer until early 1942, when it was shut down entirely. Estimates suggest the operation produced between half a million and three million pounds in counterfeit notes, most of which never entered circulation. In July 1942, Reich's Fuhrer Heinrich Himmler, revived the counterfeiting scheme with a fundamentally different purpose. Rather than attempting to collapse the British economy by aerial bombardment with fake currency, a plan the Luftwaffe lacked the resources to execute, the new objective was to finance German intelligence operations. Himmler's security services were chronically underfunded and and counterfeit currency offered an attractive means of covering financial shortfalls. The operation was renamed after its new commander, SS Major Bernhard Kruger, who inherited the remnants of Operation Andreas. Searching through the old offices, Kruger found the copper engraving plates and machinery, though some of the watermark gauzes were damaged. More significantly, he received orders to staff the operation using Jewish prisoners from Nazi concentration camps, a decision that would prove both pragmatic and sinister. Kruger visited several concentration camps to assemble his team, selecting prisoners with skills in draftsmanship, engraving, printing and banking. By September 1942, the first 26 prisoners arrived at Sachsenhausen concentration camp, with 80 more following in December. Eventually, the operation employed approximately 140 prisoners housed in specially isolated blocks separated from the rest of the camp by barbed wire fencing. When Kruger met the prisoners, he addressed them using the formal and polite Sie rather than the demeaning du typically used by Nazis when addressing Jews. This relatively respectful treatment continued throughout the operation. The prisoners received extraordinary privileges by concentration camp standards. They received cigarettes, newspapers, extra food rations, a radio and even a ping pong table. Amateur theatrical performances were staged with both guards and prisoners attending, and Kruger provided musicians for entertainment. 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. They had to produce counterfeit notes skillfully enough to prove their worth, yet not so perfect or abundant that the SS might decide that the operation no longer needed them and eliminate them. And this balance was not lost on the prisoners themselves. The work itself was painstaking and sophisticated. Prisoners examined huge qualities of genuine British banknotes in minute detail, discovering over 150 tiny security marks used by the bank of England as anti fraud measures, which they in turn incorporated into their counterfeits. Teams specialized in different aspects. Some worked on paper production, others on printing, and still others on aging the notes to make them look circulated. Fresh prints were aged by prisoners with dirty fingers who would shuffle, thumb, fold and crumple the notes with clerks adding typical British names or bank notations in pencil. Production began in earnest in January of 1943. By 1944, roughly 65,000 forged notes were rolling off the presses every month. The operation achieved remarkable technical success. By the time Sachsenhausen was evacuated In April of 1945, the printing press had produced 8. 8,965,080 banknotes with a total value of over £134,000,000. So some estimates place the total production as high as 300 million pounds. The counterfeit pounds were sorted by quality into categories with the highest quality designated for shipment to England through intermediaries in Chicago and Switzerland. The money laundering operation was headed by SS Major Friedrich Schwend, who converted the forged currency into genuine Swiss francs, US doll and other assets through neutral countries including Switzerland, Sweden and Turkey. The counterfeit money financed various Nazi intelligence operations. For example, Counterfeit notes were used to pay Turkish agent Aliza Bazna, codenamed Cicero, for obtaining British secrets from the British ambassador in Ankara. Reports suggest that £100,000 in Operation Bernhard currency helped finance the daring Gran Sasso raid that freed Italian dictator Benito Mussolini in September of 1943. Although this is disputed, British intelligence received early warning about the counterfeiting scheme from an exile with the information then passed to the US treasury and the bank of England. The bank initially believed existing security measures were adequate, but implemented additional safeguards in 1940, including a blue emergency one pound note with a metal security thread. The first counterfeit note was definitively detected in 1943 when it passed through a British bank in Morocco. An eagle eyed bank clerk noticed that the serial number had already been recorded as paid in the handwritten ledgers where every bank of England note was meticulously tracked. This discovery revealed the operation's fatal flaw. Despite their technical brilliance in making the physical notes, the Nazis had been unable to crack the bank of England serial numbering scheme. They were forced to reuse serial numbers from genuine notes. Bank officials declared these counterfeits the most dangerous they'd ever seen. In response, the bank took dramatic action. In 1943, it banned the import of pound notes for the duration of the war, stopping production of new five pound notes and warned the public about counterfeit currency. Most significantly, the bank withdrew from circulation all notes with a face value higher than pound five, a drastic measure that wouldn't be reversed for decades. New 10 pound notes weren't reintroduced until 1964, followed by 20 pound notes in 1970 and 50 pound notes in 1981. Impressed by the success with British pounds, Himmler expanded the mission in 1944 to include counterfeiting American $100 bills. This presented even greater challenges. The US currency paper contained minute red and blue silk fibers. The artwork was more complex than the British sterling and the intaglio printing process, small ridges to the paper. In August 1944, Solomon Somolianoff, a convicted forger who had been counterfeiting currency since 1927, was brought to Sachsenhausen to assist with the dollar project. His arrival caused tensions among the prisoners, many of whom were professional or political detainees who resented working alongside a common criminal. As Allied forces closed in during early 1945, Operation Bernhard entered its final phase. Between late February and early March 1945, all production at Sachsenhausen ceased. The equipment supplies and prisoners were packed and transported to Mauthausen Gusen concentration camp in Austria, arriving on March 12th. There, they were then moved to a series of tunnels to restart production. But the order was quickly rescinded. Prisoners were ordered to destroy the cases of money with undestroyed notes and printing equipment loaded onto trucks and sunk in like toplets and in Lake Grindel Zee. At the start of May, Operation Bernhard was officially terminated and the prisoners were transported to the Eben Zee concentration camp. The final chapter of the story nearly ended in tragedy. Orders were issued for all of the counterfeiters to be killed together at Ibenzee, but the SS guards only had one truck, requiring three round trips. On the third trip, the truck broke down, forcing the last group of prisoners to march to ibensee, arriving on May 4, 1945. By then, guards of the first two groups had fled as US forces were approaching, and the prisoners had dispersed among the 16,000 inmates at Ibenzee. Because the order specified that all counterfeiters be executed together, the delayed arrival of the third batch saved everyone's lives. U.S. forces liberated Ibenzie on May 5, 1945. Operation Bernhard remains the largest and most sophisticated counterfeiting operation ever attempted in history. The notes that were produced were technically brilliant. Modern currency experts can identify them, but only through careful examination of very specific characteristics. While it failed to achieve its original goal of collapsing the British economy, it successfully financed German intelligence operations and left a lasting impact on counterfeiting security measures that persists to this day.
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The executive producer of Everything Everywhere Daily is Charles Daniel. The associate producers are Austin Otkin and Cameron Kiefer. My big thanks go to everyone who supports the show over on Patreon. Your support helps make this podcast possible. And I also want to remind everyone about the community groups on Facebook and Discord. That's where everything happens that's outside the podcast, and links to those are available in the show notes. As always, if you leave a review on any major podcast app or in the above community groups, you too can have it read on the show.