The Safehaven Program

As the tide of battle turned decisively in favor of the Allies on the eastern front with the Soviet victory in the Battle of Stalingrad in early 1943 and on the western front with the D-Day invasion in the summer of 1944, the focus of economic warfare against Germany also shifted. While maintaining the fundamental goal of blockading and defeating the Nazi regime, the Allies increasingly aimed their efforts at preventing the enemy from moving its resources outside Germany and precluding the regime's revival at a later time.

The goals of the U.S.- led Safehaven program (as it came to be known since its goal was to deny any safehaven for Nazi looted assets) were to block Germany from transferring assets to Switzerland and the other neutral nations, to ensure that German wealth would be available for the reconstruction of Europe and for the payment of reparations to the Allies, to enable properties looted by the Nazis in occupied Europe to be returned to their owners, to prevent the escape of key German personnel to neutral havens, and above all, to deny Germany the capacity to start another war. There was general agreement within the U.S. Government and with its Allies regarding these overall objectives. But internal differences among U.S. agencies meant the President never received consistent advice about how strenuously to push these Safehaven measures and how far to use wartime economic power to force Switzerland and the other neutrals to adhere to the program. Moreover, splits between the Allies exacerbated the problem.

The Allied Safehaven program was formally launched at the United Nations Monetary and Financial Conference at Bretton Woods in July 1944, the main business of which was the creation of the World Bank and the International Monetary Fund. The delegates also took up measures to prevent Germany from secreting assets in the neutral nations. The Conference adopted Resolution VI, which called for immediate measures by neutral nations to prevent any disposition, transfer, or concealment of looted gold or other assets from the occupied nations of Europe. Resolution VI quickly became the key element in the Allied Safehaven program aimed at the neutral nations.

Bureaucratic conflicts plagued the Safehaven program, the administration of which was shared by the State Department, the Treasury Department, and the Foreign Economic Administration (FEA). Britain, which depended upon wartime commerce with the neutrals and was intent on expanding its postwar trade, was reluctant to match the relatively more aggressive American approach. Partly for this reason, the Safehaven negotiations that the United States and Britain conducted with the neutral nations in 1944-45 proceeded slowly and deliberately.

The Safehaven program achieved many of its goals, including some success in preventing the diversion of Nazi assets abroad--and thus in precluding a postwar Nazi resurgence. The Office of Strategic Services (OSS), the new U.S. wartime intelligence agency carved out of existing executive agencies by the President, gave the American Safehaven project a powerful tool for uncovering the secret underside of German economic relations with the neutrals. Safehaven provided the United States and Britain with unprecedented understanding of the wartime economies of the neutral states. It also set the scene for the postwar efforts by the Allies to achieve restitution and reparation payments for the compensation and recovery of nations that had been occupied by Germany.

Allied efforts to advance Safehaven objectives in Switzerland were especially critical, both because of that nation's location in the heart of Europe and its close financial and commercial ties with Germany. At the end of 1944, State Department senior officials, including Secretary of State Stettinius, reviewed U.S. relations with Switzerland. They concluded that Switzerland's traditional neutrality, its protection of American POWs and other interests, and its humanitarian efforts were of such importance that they overshadowed Switzerland's key role in financing what remained of German commerce. Therefore, they decided that the United States and its Allies should not take extreme measures to force Switzerland to comply with Safehaven objectives--or even to end trade in military goods with Germany and halt transshipments from Germany to Italy. The view of the diplomats at the State Department (shared by the British) was not one shared by FEA, Treasury, or the Justice Department, which favored far more aggressive action to gain Swiss cooperation. The Joint Chiefs of Staff also preferred definitive steps to throttle all commerce with Germany as well as to stop rail transshipments across Switzerland. All agencies deferred, however, to the State Department's diplomatic leadership.

The increasing certainty of the victory of Allied armies ultimately persuaded most of the neutrals to reduce or end trade with Germany and meet Safehaven objectives. According to then-Under Secretary of State Dean Acheson, Switzerland was the slowest to do so. A potential breakthrough with the Swiss came in February 1945 when President Roosevelt's Administrative Assistant Lauchlin Currie led the American delegation to the Allied-Swiss trade and Safehaven negotiations. Britain and the United States welcomed liberated France into these talks, launching the triumvirate that would conduct all postwar negotiations on these issues. Currie and his colleagues seemingly achieved a substantial reduction in Swiss exports to Germany and acknowledgment of Safehaven objectives for the blocking of German assets in Switzerland. But following subsequent discussions with Reichsbank Vice President Emil Puhl, the Swiss reneged on its commitment to the Allies to stop German gold transfers and freeze German assets.

Congressional hearings designed to probe the conduct of Safehaven and to prod the Executive Branch into more aggressive action were held by Senator Harley Kilgore of West Virginia in the summer of 1945. Information from intelligence reports and the Kilgore hearings reveal the record of Swiss reluctance to completely break its ties with Germany even with the end of the War. Allied exchanges with the Swiss through the remainder of 1945 demonstrated Switzerland's unwillingness to embrace Allied proposals to turn German assets in Switzerland to the benefit of ravaged Europe and stateless victims of the Holocaust and other Nazi crimes.

Source: The United States State Department
This document is in the public domain.

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