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Final report on wartime gold transactions released

The Bank of Canada today released a report by Professor Duncan McDowall of Carleton University entitled Due Diligence: A report on the Bank of Canada's handling of foreign gold during World War II. A summary of the report is attached. A letter from the Governor to the Canadian Jewish Congress is also attached.

The Bank also released a finding aid for related files in its archives and for Department of Finance documents. The Bank will make its files available to researchers and the public.


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 a recently declassified U.S. government document 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.

On 28 July, the Bank issued an interim report based on a preliminary review of its records. It indicated 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.

Recognizing the need for more extensive research into gold transactions on its books during the war, the Bank announced that it had appointed Professor Duncan McDowall, a professional historian with expertise both in business and financial history and in the wartime period, to prepare an independent assessment of the Bank's war-time gold safekeeping activities. Professor McDowall was provided with full access to the Bank's records; staff were assigned to collect and reconstruct the accounting ledgers of the time and to provide whatever assistance he required in his research. Irving Abella, a historian and Immediate Past President of the Canadian Jewish Congress, and Edward Neufeld, professor and former Executive Vice President of the Royal Bank of Canada, agreed to act as a review group for Professor McDowall's report.

How to get the published documents

Prof. McDowall's 120-page report is published in English with a summary in English and French; it is also available on the Bank's Web site. A 60-page finding aid to related files at the Bank of Canada will also be available in English and French in the next few days and will be posted on the Bank's Web site. Paper copies are available through the Bank's publications division. Copies are also available at the Bank's five regional offices in Halifax, Montreal, Toronto, Calgary and Vancouver.

Access to the internal documents

In his research, Professor McDowall had unrestricted access to all documents in the Bank. Including correspondence and routine transaction files, board minutes, ledgers and other books of account, the documents ultimately totalled some 350 files.

In accordance with its commitment in July, the Bank is making all the documents available to the public and researchers, except for information which must be exempt under the provisions of the Access to Information and Privacy Acts. Specifically, personal information will not be released.

As the Bank had no individual clients of its own during this period, this exemption primarily affects a few sales of gold by Canadian residents to the Minister of Finance and records of the individual accounts that held gold with the Bank of England under the "sundry persons" arrangement of 1940-55. While these documents cannot be released, Professor McDowall's report confirms that all individual accounts held on behalf of the Bank of England were successfully resolved in the years following the end of WWII. In other words, there are no outstanding accounts.

The Access to Information and Privacy Acts also require the Bank to consult with foreign governments and central banks before making public any information supplied by them. Permission to release information was received from the central bank of Turkey after the report was printed. Hence the exemption indicated in the tables. This has been updated on our Web site.

The documents will be available to interested researchers at the Bank's archives at its head office in Ottawa. Researchers are invited to register with the Bank's Archivist.


Professor Duncan McDowall, Carleton University
(613) 520-2600 ext. 1389
Louise Nantel, ATIP Administrator
(613) 782-8322
Corrinne Miller, Archivist
(613) 782-8673
Laurette Bergeron, Media Co-ordinator
(613) 782-8782
Charles Spencer, Director of Client Services
(613) 782-8999
Bank of Canada Publications Distribution
234 Wellington St., Ottawa K1A 0G9
Telephone: (613) 782-8248

26 November 1997

Canadian Jewish Congress
Edifice Samuel Bronfman House
1590 Avenue Docteur Penfield
Montreal, Quebec
H3G 1C5

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

Ladies and Gentlemen,

I am pleased to inform you that the Bank of Canada will release tomorrow the report of Professor Duncan McDowall on the handling of gold transactions at the Bank before, during and following the Second World War.

This report is the result of an intensive effort on the part of Professor McDowall and a dedicated team of Bank of Canada staff over the past few months. This work has been carried out as a high priority in recognition both of the seriousness of the concerns that were raised about wartime gold transactions and of the need for the Bank to respond fully in a timely and open way.

As you know, Professor McDowall was provided with full access to Bank of Canada documents and was given the mandate to report independently and publicly on his findings. We will also be providing full access (subject to the constraints imposed by the Access to Information and Privacy Acts) to internal documents for researchers and other interested persons to examine first-hand the source materials for Prof. McDowall's study. We are pleased to share with you and all Canadians the results of Professor McDowall's research.

Yours sincerely,

(signed by Gordon Thiessen)


The issue of "Nazi gold" has galvanized the Western world since 1995. Through a conjuncture of activism on the part of the World Jewish Congress and American Senator Alfonse D'Amato, chair of the Senate Banking Committee, the long-unresolved issue of where an alleged US$580 million in gold looted by the Axis during World War II went has come to life with a vengeance. Much of this gold had been plundered during the early stages of the war from the vaults of European central banks that had fallen under the heel of the German army. A portion of this monetary gold — state-owned gold used to support a country's monetary operations — had been recaptured by the Allies in the dying months of the war and repatriated to its rightful owners. A greater portion, however, proved untraceable, largely because it had been laundered by means of surreptitious refining and transfer to banks in the neutral countries of Europe — Switzerland, Portugal and Sweden. Much of the trade in looted gold supported Germany's acquisition of foreign raw materials and equipment to run its war machine. By the end of the war, therefore, much of this looted gold was in fact in the hands of neutral countries.

The question of looted gold had other dimensions. There was a significant amount of non-monetary gold — gold plundered from individuals caught in the trap of war — mingled with the looted monetary gold. Most worrisome was evidence that some of this non-monetary gold was stripped from the Jewish victims of Nazi death camps. This sinister gold had also passed through the mill of Nazi refining and had been filtered through bank accounts and commercial transactions with European neutral banks. These same banks also became the focus of another financial legacy of the war: the issue of dormant bank accounts and so-called "heirless assets." As appeasement failed in the late 1930s, many Europeans, principally German Jews, sought some financial insurance in the face of the impending conflict by placing some or all of their assets in bank accounts in safe-haven countries like Switzerland. The appalling extermination inflicted upon these same people by the Holocaust made the postwar restitution and disposition of these assets a problematic process, especially given the secretiveness of the initial deposits and the cocoon of secrecy that the Swiss banking system erected around foreign accounts.

In the late stages of the war, the Allies made a concerted attempt to locate and repatriate gold looted by the Axis. Declarations were issued warning of the consequences of trading or taking possession of looted gold and, as peace neared, more active efforts were launched to actually reclaim "Nazi gold." The American Safehaven program spearheaded this campaign. Much of the attention fell on Switzerland. The Swiss central bank, the Banque Nationale Suisse, had bought more gold from the Germans than any other country. The Swiss had also acted as Germany's principal trade conduit to non-Axis economies. And Switzerland's commercial banks had also commanded a near-monopoly on safe-haven bank accounts held by victims of the war and with the return of peace these banks found themselves under pressure to restore deposits to their legal owners. Emerging beside this negotiation was the thorny issue of "heirless assets," the disposition of assets for which there now appeared to be no living claimant. Through the late 1940s, Allied governments, principally those of the United States, Britain and France, therefore engaged in prolonged negotiations with the European neutral powers that had maintained financial ties with the Axis. Some restitution of gold was made to the central banks of once-occupied countries. Some distribution of "heirless assets" was made to stateless refugees. But much of the looted gold remained elusive, and the rights of account holders and heirs of personal accounts in neutral banks were by and large overlooked by Allied negotiators. By the early 1950s, emerging new issues of European and Cold War diplomacy tended to shunt the issue of looted gold to the sidelines of big-power statecraft.

The end of the Cold War in the early 1990s, the crumbling of the East Bloc and the determination of the World Jewish Congress to bring justice to some of the long-suffering Jewish community all combined in 1995 to reignite interest in the question of looted gold and dormant bank accounts. Once again, Switzerland was the fulcrum of the debate. The tone of the controversy was set by a powerful mixture of politics, morality and history. After a brief and disastrous reprise of denial and obfuscation by Switzerland's bankers, the universal response to the issue has become one of inquiry and restitution. The means to this end has largely been historical investigation. Formal historical commissions have been active in Switzerland, Portugal, Sweden, Britain and the United States. These commissions have focused not only on the wartime activities of central and commercial bankers, but also on the broader picture of Allied and Axis diplomacy and war bureaucracy. Archives have been scoured, evidence taken and reports produced — most noticeable to date has been the mammoth Eizenstat report produced by the American government at President Clinton's behest. The process of restitution has also begun. The Swiss Bankers' Association has finally begun a thorough identification of dormant bank accounts on the books of its members, thereby allowing long-frozen assets to be reunited with their rightful owners.

Through all the initial postwar investigations and the more recent rebirth of the "Nazi gold" issue, the word "Canada" has practically never surfaced. Canada played no active role in the late 1940s negotiations with European neutrals, nor did its name ever surface in connection with the trade in looted gold. The massive Eizenstat report issued by the American government earlier this year does not contain a single mention of Canada in connection with the issue of looted gold, despite the survey of over 15 million documents in reaching its conclusions. In July 1997 the silence over Canada's role broke abruptly. A document retrieved by World Jewish Congress researchers in Washington gave rise to the allegation, based on an anonymous late-war intelligence report "from a very confidential source," that the Bank of Canada had been party, by means of paper transfer, to a complex gold transfer involving six tons of gold shuffled between Switzerland and Portugal in 1942. Later in the war, the document alleged, this same gold became part of a second questionable swap between Portugal and Sweden with Canada's central bank again playing the role of intermediary. In a letter forwarding this document and its incriminating allegation to Bank of Canada Governor Gordon Thiessen on July 11, 1997, the Canadian Jewish Congress echoed the opinion of the World Jewish Congress that the gold transfers involving the Bank looked like a "classic money-laundering operation." The Canadian Jewish Congress therefore asked that the Bank of Canada "undertake an investigation to ascertain the involvement of the Bank in these transactions."

The Bank of Canada immediately acquiesced, announcing not only that a thorough internal investigation would be undertaken but also that an outside historian would be asked to complete an independent analysis of the Bank's role in the wartime movement of gold. On August 12, I began this investigation. My mandate was both wide-ranging and unfettered. I was to review all the Bank of Canada's documents related to gold transactions during the period from the founding of the Bank in 1935 through 1950 and to have unconditional access to the Bank's archives and personnel. Since the Department of Finance was also party to the wartime gold transfers in question, Minister of Finance Paul Martin issued similar assurances that the investigation would meet with the unreserved cooperation of his department. The investigation was to culminate in a public report that was "to respond to public concern about possible Bank of Canada involvement in transactions related to looted 'Nazi gold' during and after the Second World War" and at the same time advise the Bank on "the appropriate way to make the records [of the Bank] accessible to other researchers." Under these terms, I commenced the research underlying this report.


This report is rooted in an intensive archival survey of all documents relating to gold transfers facilitated by the Bank of Canada in World War II. The archival search extended well beyond the Bank of Canada into the records of federal government departments and offices that had a role, however remote, in the gold transfers in question. Papers of prominent politicians and senior bureaucrats were also consulted. Oral interviews were conducted with retired Bank of Canada officials who might possibly have had recollections of the Bank's wartime operations. While the project's principal objective was to supply the Canadian perspective on these transfers, a concerted effort was made to contact the European central banks that were party to these transactions and to collect opinions and documents on their roles in these events. To this end, detailed inquiries were submitted to the Bank of England, the Banque Nationale Suisse, the Banco de Portugal and the Sveriges Riksbank in Stockholm. Full and willing cooperation was received from all these bodies and the historical commissions now working on their national investigations into the issue of Nazi gold. The following conclusions can be drawn about the documentary record supporting this report.

The Reliability of the Source Material Used in this Report
  • A very complete record of the Bank of Canada's role as a wartime safe-keeper of foreign gold exists. The documents reflect the expected thoroughness of a central banker. There are virtually no gaps in the record.
  • This record is fully complemented by documents in the archives of other federal agencies, notably the Department of Finance, which played a subsidiary role in policy vis-à-vis the safekeeping of foreign gold in Ottawa.
  • There is no evidence whatsoever of document tampering. There is one possible departure in record-keeping practice that led to a gap in the file covering the Bank of England's large wartime account in Ottawa. The gap can, however, be closed by drawing evidence from other document series.
  • The documentary record of the contentious gold swaps of 1942-45 involving Switzerland, Portugal and Sweden through the Bank of Canada reveals absolutely no departure in procedure (e.g., legal transfer documents, gold export permits) from other non-contentious gold accounts.
  • There is ample evidence that the Bank of Canada has in the years since World War II devoted considerable energy to the systematic retention of its records.
  • Original documentation obtained from the Bank of England, the Banque Nationale Suisse, Banco de Portugal and Sveriges Riksbank all tends to confirm the Bank of Canada's documentary record of the events surrounding the swaps of 1942-45.
  • There is a striking absence of marginalia, unusual commentary or other written signs of anxiety in the records concerning these transfers, indicating that they were not viewed in an unusual light by the Canadian participants.
  • Records of senior officials at the Bank of Canada as well as those of prominent Canadian politicians and bureaucrats reveal no undue concern over the swaps in question (e.g., the W.L.M. King diaries or the papers of Finance Minister J.L. Ilsley).
  • The Bank of Canada has accompanied this research with a massive effort to reconstruct its gold ledgers (i.e., the ledgers used to record all gold entering and leaving the Bank's vault) for the years 1935-56. This work is largely complete and will eventually give the Bank the ability to track the majority of gold bars that physically arrived and left the Bank during these years. A statistical synopsis of this reconstruction is appended to this report.
  • A finding aid listing all the documents consulted in the course of this research is available upon request from the Bank of Canada. Some of these documents are already in the public domain (e.g., at the National Archives of Canada), others are still within controlled archives.
  • This report endorses the Bank of Canada's determination to make all the documents consulted during the course of this research available for public consultation. This process is well under way, but cannot proceed any quicker than the provisions of Canada's Access to Information and Privacy Acts dictate. The principle of client confidentiality has necessitated the seeking of permission for the release of documents from the European central banks discussed in this report.

  • During World War II, Canada played a major role in the earmarking of foreign gold for safekeeping at the Bank of Canada. Between the first rumblings of war in 1938 and peace in 1945, foreign central banks deposited 2,586 tons of gold in Ottawa for safekeeping. For many nations that had fallen under German occupation, this cache of safe gold was the ultimate guarantee of national survival. In particular, the central banks of Belgium, the Netherlands, France, Norway and Poland availed themselves of this unique type of Canadian wartime hospitality. The Bank of England was also a frequent earmarker of gold in Ottawa and in the dark days of 1940 even made plans to create a "shadow" Bank of England in Ottawa that could draw upon Britain's gold cache in Canada. Such deposits involved no profit for Canada beyond small handling charges.
  • The flow of earmarked gold to the Bank of Canada was almost exclusively one-way. Large amounts of gold crossed the Atlantic in the early war period, especially from the Bank of England and the Banque de France. After 1941, virtually no more gold arrived from Europe, with the exception of a shipment of 525 bars from the Bank Polski in London in 1944. During the course of the war, virtually none of the gold stored in Ottawa was shipped back across the Atlantic, with the exception of two small shipments of gold coin returned to England in 1942. All the transactions in question in this report were paper transfers of gold ownership between one central bank account at the Bank of Canada and other central bank accounts. There is therefore no possibility that tainted gold — gold looted by Germany — ever found its way into the Canadian gold stream.
  • The 1942-43 transfer of Bank of England gold earmarked in Ottawa to the Ottawa earmark account of the Banque Nationale Suisse involved 56 tons of gold, a small fraction of the overall wartime deposit of foreign gold in Ottawa. This gold was swapped for Swiss francs delivered to the British in Switzerland. This swap was necessitated by Britain's desperate need for Swiss francs to maintain its trade and diplomatic relationship with Switzerland and was entered into reluctantly by the Swiss. Switzerland already had large quantities of gold stockpiled beyond its borders in London and New York, but this was blocked and of no wartime use to Switzerland. The Swiss accepted the deal only as a pro tem. measure in the hope of keeping stalled trade negotiations with the British alive.
  • To safeguard the gold that had passed from Allied hands to neutral hands under earmark in Ottawa, the Bank of Canada altered the minimal prewar arrangements for foreign gold deposited in Canada to reflect the exigencies of war. The primary concern was that the 56 tons of gold held by Switzerland in Ottawa might find its way back to Europe and ultimately be applied to the ends of the Axis. These conditions stipulated that the gold received by the Banque Nationale Suisse from the Bank of England might be physically exported only to other central banks in the Western Hemisphere or transferred on paper to central banks in the Western Hemisphere and to the central banks of European neutral countries — namely Portugal, Sweden and Spain. These conditions were to apply until the end of hostilities. The Swiss agreed to these conditions.
  • The Bank of Canada's willingness to facilitate such swaps was strongly conditioned by its relationship with the Bank of England. Canada was one of the last Western powers to create a central bank and, since its inauguration in 1935, the Bank of Canada had relied heavily on the guidance of the Bank of England. This relationship was epitomized by the close personal friendship of Bank of Canada Governor Graham Towers and Bank of England Governor Montagu Norman. The Bank of England was, for instance, the first foreign central bank to open — in 1936 — an earmarked gold account in Ottawa. Similarly, the Bank of Canada's first deputy governor was seconded from the Bank of England in 1935. While Towers was never oblivious to protecting Canada's interests, there was an almost filial inclination to respond to England's bidding. This would precondition the Bank of Canada's positive response to Britain's request to facilitate the gold-for-francs swap with Switzerland and other European gold exchanges involving Canada.
  • The 1942 gold-for-francs swap had been preceded by another request from the Bank of England in September 1940. Confronted with an influx of small holdings of gold deposited in English commercial banks by Europeans anxious for the safety of their wealth and well-being, the British asked the Bank of Canada to earmark these deposits of personal gold under the umbrella of its own Ottawa accounts. This was a departure from usual earmark procedure in that it allowed foreign individuals the prerogative of the security of an earmark account well beyond the fray in Europe. Control of the deposits remained in the hands of the Bank of England. A handling charge of 5% of each individual's gold was imposed by the Bank of England and the depositor had to sign an agreement acknowledging that the gold would not be released until after the war, except in extraordinary circumstances approved by the Bank of England. During the course of September 1940 to June 1941, 155 of these so-called "sundry persons" deposits of personal gold at the Bank of England were included in shipments to the Bank of Canada from London. The total deposit was the equivalent of 1,315 bars of gold. Many of the depositors appear — by name and testimonial — to have been European Jewish refugees who had fled their homelands in the early stages of the war. They were generally well-to-do and had left their homelands early enough to avoid the Holocaust. Other deposits appear to have been made by Swiss and other nationals. A small number of the depositors — 34 sundry persons — were able to convince the Bank of England to release their gold in Ottawa before the end of the war. The remaining deposits were all closed after the war without incident or complication. The last deposit was closed in 1955.
  • Almost as soon as the process of swapping English gold for Swiss francs had begun in the spring of 1942, the Banque Nationale Suisse [BNS] began seeking ways to apply the gold it was accumulating in Ottawa to its domestic needs at home, principally the building up of internal gold reserves as a check on Swiss inflation. This desire was limited by the conditions set on the earmark account by the Bank of Canada. An initial attempt to establish Swiss commercial bank accounts in Ottawa and thereby open the way for transfers between off-shore central bank and commercial bank accounts was blocked by vigilant officials at the Bank of Canada. In the wake of this decision, Governor Towers informed the general managers of Canada's chartered banks that it was the government's wish that they stop opening new gold safekeeping accounts for non-residents and to report any future requests for such services to Ottawa. Rebuffed in this direction, the BNS began negotiations with the Banco de Portugal, which had gold accounts with it in Switzerland. In two equal transactions in April and May 1942, the BNS subsequently traded four tons of its earmarked gold in Canada for a similar amount of gold held by the Portuguese earmarked in its vault in Switzerland. Thus, the Swiss succeeded in obtaining the free use of four tons of gold in Switzerland in return for surrendering four tons of assuredly clean gold in Canada. To achieve this swap, the BNS was obliged to pay a steep commission to the Banco de Portugal of 1 1/2% on the first swap and 2 1/2% on the second swap. These commissions reflected the fact that the gold Portugal was obtaining in Ottawa was blocked for the duration of the war. In the wake of these swaps, the BNS board of directors decided to abandon the tactic of offering gold in Ottawa for gold in Europe because the transaction costs were exorbitant. The crucial question of whether the Portuguese gold released to the Swiss was tainted gold of German origin is elucidated by reference to classified British wartime documents drawn from British intercept of cables between the Swiss and Portuguese central banks and from banking records recently released by the Banco de Portugal. These reveal that, while the Banco de Portugal did receive large amounts of Reichsbank gold into its BNS accounts, the gold transferred to the Swiss in 1942 was generally believed to be drawn from an account "thought to be without German taint." There is no absolute assurance that this swapped gold was beyond all possible taint, but this evidence and the complete absence of any indication of concern on the part of Allied bankers involved in the swap indicate that this was likely the case. Once again, national liquidity needs, not schemes to launder dirty German gold, seemed to drive the transaction.
  • In 1944, Portugal itself encountered liquidity problems in its trade with Switzerland and Sweden. Increasingly unable to trade in gold because of the tightening Allied injunctions on looted gold, Portugal was driven to finance its trade with hard currencies like the Swiss franc and the Swedish krona. By August, the value of the Portuguese escudo was plummeting against the franc and the krona. Both the Swiss and Swedish proved reluctant to accept Portuguese offers of gold-for-currency swaps. In desperation, the Banco de Portugal therefore offered the Sveriges Riksbank, Sweden's central bank, clean gold in Ottawa in exchange for kronor. This offer of a ton and a half of gold in September and October of 1944 was accepted by the Swedes on the condition that the Portuguese applied the resultant kronor to the process of Swedish-Portuguese trade alone. Subsequently, the Sveriges Riksbank and the Banco de Portugal agreed to ease Portugal's ongoing exchange needs by using the swapping of gold earmarked in Ottawa back and forth to provide kronor for Lisbon. By the end of this process in September 1945, the Sveriges Riksbank had accumulated two and a half tons of gold previously owned by the Banco de Portugal in Ottawa.
  • One last gold swap rounded out the Bank of Canada's role in gold transfers between neutral European central banks. In the midst of its swaps with the Sveriges Riksbank in September 1944, the Banco de Portugal swapped another two tons of its gold in gold holdings in Switzerland for Swiss gold held in Ottawa. As in 1942, the gold in Switzerland was taken from Portugal's untainted account. This time, Portugal received a smaller commission of only 3/8%, probably because it saw the advantage of topping up its Ottawa reserve of gold at a time when its newly made agreement with Sweden might have required more gold if the escudo's exchange value had continued to deteriorate.
  • With the lifting of all conditions restraining foreign gold on earmark in Ottawa after the war, there was no rush by neutral central banks to clear out their accounts in Ottawa. In fact, all parties to the wartime swaps maintained their Ottawa earmarks well into the peace, often increasing their balances.
  • Throughout all these transactions, officials at the Bank of Canada, usually in consultation with officials at the Department of Finance and the Bank of England, exhibited due diligence in handling these transfer requests from Europe. The context of the times must be borne in mind. These transactions took place at the height of the war, when the pressures of wartime decision-making bore heavily on Ottawa's mandarins. These gold swaps between friendly and neutral central banks constituted fleeting decisions in a myriad of wartime challenges and must be seen in this light. By and large, the decisions taken around Canada's custodianship of foreign gold earmarked in the Bank of Canada conform to the stereotype of the cautious, deliberate and well-balanced demeanour of the senior bureaucrats who have come to be known by history as the "Ottawa men." They never possessed the absolute knowledge or the power to eliminate any possibility that Ottawa might facilitate the movement of looted gold, but their instincts led them to policies that made that possibility remote. In this sense, Canadians can take justifiable pride in the efficient manner in which the rather prosaic service of earmarking of gold was turned to commendable Allied and, at times, humanitarian ends during the war.
Dr. Duncan McDowall
November 1997
Content Type(s): Press, Press releases