Bank of England helped launder Nazi gold, archives reveal

Details revealed by the Bank of England this week show that Britain's 'Old Lady' helped Nazi robbers to launder gold grabbed from Czechoslovakia more than 70 years ago, when the Second World War was just brewing.

Bank of England records made public on Tuesday detailed its involvement in the transfer and sale of gold stolen by Nazis after the Czech invasion.

The gold had been deposited during the 1930s with the Bank of International Settlements (BIS), the then 'Central Bankers' Bank', as the Czechoslovak government faced a growing threat from Germany.

The document details how a request was made in March 1939 to transfer gold, then worth £5.6 million, from a Czech National Bank account at the BIS to an account operated by Germany's Reichsbank.

Some £4 million of this gold went to banks in the Netherlands and Belgium, while the rest was sold in London.

The then UK Chancellor of the Exchequer Sir John Simon had asked the governor of the bank, Montagu Norman, if it was holding any of the Czech gold in May 1939, two months after the Nazi invasion of Czechoslovakia.

"The governor in his reply (30th May) did not answer the question, but pointed out that the Bank [of England] 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 documents say.

A further transaction was made that June – despite concerns being raised by Simon. On that occasion, there were sales of gold to the value of £440,000 and a £420,000 shipment to New York.

The BoE's account of these transactions was written in 1950 and published online on Tuesday following the first stage of the digitalisation of the bank's archive.

The bank admitted that the incident involving the Czech gold "still rankled" at the outbreak of World War II "and for some time afterwards".

"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," it adds.

"On the BIS enquiring, however, what was causing delay and saying that inconvenience would be caused because of payments the next day, the Bank of England acted on the instructions without referring to the law officers, who, however, subsequently upheld their action."

The Nazis under Adolf Hitler invaded Czechoslovakia in September 1938. In March the following year, the BIS asked the Bank of England to switch £5.6 million worth of gold from an account for the Czech National Bank to one belonging to the Reichsbank.

Much of the gold - nearly 2,000 gold bars - was then "disposed" of in Belgium, Holland and London. The BIS was chaired at the time by Bank of England director, German Otto Niemeyer.

In the official history, the bank insisted that it would have been "wrong and dangerous" for the future of BIS if Governor Montagu Norman had taken any other course of action. It claimed the UK and French governments would have breached peace treaties if they had blocked the move.