The Bank of Canada today released an interim report on the results of a search for records relating to wartime gold transactions. The report is attached, along with a copy of a letter sent today to the Canadian Jewish Congress by Bank of Canada Senior Deputy Governor Bernard Bonin on behalf of Governor Gordon Thiessen. For further information, please call:

On the Interim Report: General media enquiries:
Charles Spencer Pierre Brûlé
Director of Client Services Manager, Public Affairs
Department of Banking Operations Communications Services Dept
(613) 782-8999 (613) 782-7621
or
Bonnie Schwab
Chief , Department of Banking Operations
(613) 782-8792

Interim Report: Search of Records Relating to Gold Transactions

On 11 July 1997, the Bank of Canada launched a search of its wartime gold records. This search was a direct response to reports in recently declassified U.S. government documents that a 1942 transfer of ownership of gold held for safekeeping in its vaults in Canada may have facilitated a separate, parallel transfer in Switzerland of looted Nazi gold between the central banks of Switzerland and Portugal.

The search has focussed not only on Bank of Canada gold transaction accounts, but also on other Bank of Canada records that might help to provide an understanding of the circumstances surrounding the transfer of ownership of the gold stored in Canada.

The relevant documents are now being identified from among large quantities of paper records. The Bank of Canada transactions in question, which were described in the recently released U.S. government documents, have been readily verified from ledgers, and related correspondence has been examined. However, further work will have to be undertaken to identify all the relevant records in the Bank.

To assist in the next phase of this effort, the Bank of Canada has arranged for the assistance of Professor Duncan McDowall of Carleton University, a historian with expertise both in business and financial history and in the wartime period. He will help in identifying documents and he will prepare an independent assessment of the documentary record that will be made public. Additional temporary staff will be assigned full time to expedite the effort.

The Bank's preliminary review of its records indicates that gold owned by the Bank of England was moved to Canada before and during the war for safekeeping at the Bank of Canada. Ownership of a portion of this gold was transferred from the Bank of England's account at the Bank of Canada to the account of the Swiss central bank and later from the Swiss central bank's account to that of the Portuguese central bank. Further transactions transferred ownership of some gold to the account of the central bank of Sweden. All of the transfers were paper transactions on the accounts of the Bank of Canada.

At no time does this gold appear to have left the vaults of the Bank of Canada—only the ownership changed. Furthermore, restrictions were imposed to ensure that the three neutral countries could not physically move the gold back to Europe.

There is no evidence in the documents examined so far about any gold transactions that may have happened in Europe at the same time. Central banks and researchers have been reviewing gold transaction records in a number of other countries in relation to the Nazi gold issue. Though beyond the scope of the search of the Bank of Canada's records, these international efforts may in time shed more light on the broader context surrounding the transfer of ownership of gold held for safekeeping at the Bank of Canada.

Chronology of gold transactions
April 1939 to August 1940 A total of 2,154 tonnes of gold owned by the Bank of England was deposited for wartime safekeeping in the vaults of the Bank of Canada in Ottawa.
Beginning
25 March 1942
To help raise funds to finance England's war effort, the Bank of England instructed the Bank of Canada to transfer ownership of 56 tonnes of British-owned gold to the account of the Swiss central bank in exchange for Swiss francs provided to the British.


The opening of an account at the Bank of Canada for the Swiss central bank followed consultations between the Bank of England and the Bank of Canada and subsequently between the Bank of Canada and the Canadian Department of Finance. The records indicate that the need to raise funds for the war effort was weighed against the risk that gold from allied countries might reach enemy countries through neutral countries.

The Bank of Canada and the Department of Finance agreed with the Bank of England to place restrictions on the ability of the Swiss central bank to physically export the gold to minimize the risk of benefit to the enemy. All transactions on the books of the Bank of Canada were carried out with two conditions:

  • the gold transferred to the Swiss account could not be shipped outside the Western Hemisphere; and
  • ownership of the gold could not be transferred to any continental European country except three neutrals: Portugal, Sweden, and Spain.

These restrictions were maintained for the duration of the war.

The gold transferred to the Swiss account continued to be stored at the Bank of Canada.

22 April
and
5 May 1942
In two transactions, at the request of the Swiss central bank, the Bank of Canada transferred ownership of a total of 4 tonnes of gold from the account of the Swiss central bank to that of the central bank of Portugal, subject to the restrictions mentioned above. The opening of the account for the Portuguese central bank followed consultations with the Department of Finance.
19 Sept. 1944 The Bank of Canada acted on a similar request to transfer a further 2 tonnes of gold from the Swiss account to that of the Portuguese central bank, subject to the same restrictions as in 1942.
7 September
and
2 October 1944
The Bank of Canada acted on a request to transfer a total of 1.5 tonnes of gold from the Portuguese account to that of the Swedish central bank. The account for the Swedish central bank was opened following consultations with the Department of Finance and was subject to the same restrictions.

Related questions

It should be noted that gold was an important medium of exchange during this period and was frequently used in commercial transactions to purchase goods or assets or to repay liabilities.

In keeping with accepted practice among central banks, the ledgers of the Bank of Canada as transfer agent in such transactions would normally contain a record only of the actual transactions made on the instructions of its central bank clients, and not of any transactions that the counterparties might have made elsewhere.

The search of other Bank of Canada records for information on the circumstances surrounding the transactions has to date shed no light on possible reasons for the Swiss and Portuguese central banks requesting the gold transfers in question. The records give no indication that there were any perceptions or concerns that the transfers might have been related to transactions elsewhere.

As noted, the records indicate awareness of the risk that gold might reach enemy countries through neutral countries; this concern is reflected in restrictions placed on the physical movement of the gold. The records indicate that officials involved in the transactions were careful to follow established procedures, including consulting with the Department of Finance before opening gold accounts with the central banks of Switzerland, Portugal, and Sweden.

A key concern in examining the Bank's records is to confirm that Canada neither physically received gold from Switzerland or Portugal nor shipped gold to those countries during the war. There is no evidence in our review to date of any such transactions and also no evidence that gold bars looted in Europe by the Nazis ended up in the vaults of the Bank of Canada. To make our review of this question more complete, the Bank of Canada is in the process of comparing its records with those of other central banks.

Next steps

The Bank of Canada recognizes the need for more extensive research into the questions that have been raised about gold transactions on its books during this period.

The Bank intends to make archival information publicly available as soon as possible to facilitate further research in this area. However, this will take time. The work relates to a relatively small number of relevant documents contained in a large quantity of paper records -- about 50 cubic feet. In addition, many archival documents have never been declassified, and care will be required to conform to privacy and access legislation and other statutes that may apply.

The next phase of the research effort will be assisted by Professor Duncan McDowall of Carleton University, a professional historian with expertise both in business and financial history and in the wartime period. Professor McDowall will have full access to Bank of Canada and Department of Finance documents. He will identify and review documents and prepare an independent assessment that will be made public. Additional temporary staff will be assigned full time to expedite the effort. An external review group will be established to comment on the final draft of Professor McDowall's report.


Bank of Canada — Banque du Canada
Ottawa    K1A 0G9


Bernard Bonin
Premier sous-gouverneur
Senior Deputy Governor


28 July 1997

Canadian Jewish Congress
Edifice Samuel Bronfman House
1590 Avenue Docteur Penfield
Montreal, Quebec
H3G 1CS

Attention:
Goldie Hershon, National President
Irving Abella, Immediate Past President
Myra Giberovitch and Nathan Leipciger, Co-Chairs,
National Holocaust Remembrance Committee

Ladies and Gentlemen,

In his response on July 11, 1997 to your letter of the same day, Governor Thiessen undertook to get back to you as soon as possible with results of a search of Bank of Canada records on gold transactions during the war. In the Governor's absence, I am following up today on his behalf.

An intensive search of our records has been carried out over the past two weeks to verify transactions described in recently declassified U.S. government documents. A great deal more work remains to be done to ensure that all relevant records related to these transactions have been found and reviewed.

As Governor Thiessen made clear, it is important for the Bank to respond in a timely and open way to the concerns that have been raised. With that in mind, we are today releasing an initial report of our findings. While these are preliminary results which by no means answer all the questions that have been raised, we believe they throw some light on the manner in which wartime gold transactions were conducted at the Bank of Canada.

To assist in the next phase of the research effort, the Bank of Canada has arranged for the assistance of a professional historian, Professor Duncan McDowall of Carleton University, who has expertise both in business and financial history and in the wartime period. He will help in identifying documents and will prepare an independent assessment of the documentary record that will be made public. We are pleased to have the full co-operation of the Department of Finance in making available records that they may have to help complete Professor McDowall's report on the subject. As this work proceeds, we will move forward with the task of declassifying records so that they may be made publicly available for further research in this area.

We look forward to sharing with you and all Canadians the results of Professor McDowall's research into the serious questions that have been raised.

Yours sincerely,
( signed by)

Bernard Bonin