Robert Switky - Wealth of an Empire: The Treasure Shipments that Saved Britain and the World

Wealth of an Empire

RELATED TITLES FROM POTOMAC BOOKS

From Axis Victories to the Turn of the Tide:
World War II, 19391943, by Alan Levine

World in the Balance: The Perilous Months of
JuneOctober 1940, by Brooke C. Stoddard

The Treasure Shipments That Saved Britain and the World

ROBERT SWITKY

2013 by Robert Switky

All rights reserved

Potomac Books is an imprint of the University of Nebraska Press.

Library of Congress

Cataloging-in-Publication Data

Switky, Robert, 1961

Wealth of an empire: the treasure shipments that saved Britain and the world / Robert Switky. First Edition.

pages cm

Includes bibliographical references and index.

ISBN 978-1-61234-496-6 (hardcover: alk. paper)

ISBN (invalid) 978-1-61234-497-3 (electronic) 1. World War, 19391945Economic aspectsGreat Britain. 2. World War, 19391945Naval operations, British. 3. Naval convoysGreat BritainHistory20th century. 4. Bank reservesGreat BritainHistory20th century. 5. Great BritainForeign economic relationsUnited States. 6. United StatesForeign economic relationsGreat Britain. I. Title.

HC 256.4.S85 2013

940.53'1dc23 2013013185

Printed in the United States of America on acid-free paper that meets the American National Standards Institute Z 39-48 Standard.

Potomac Books

22841 Quicksilver Drive

Dulles, Virginia 20166

First Edition

10 9 8 7 6 5 4 3 2 1

In the summer of 1940, a convoy of five Allied ships sailed from Britain to Halifax, Canada, carrying more wealth than the gold extracted from the California gold rush, that formed the Klondike gold rush, the gold hauled out of Mexico by Corts, and Pizarros gold take in Peru combined. The special consignments on board HMS Revenge, HMS Bonaventure, and the ocean liners Monarch of Bermuda, Batory, and Sobieski were part of an operation that consisted of more than three hundred top-secret shipments sent to North America between 1938 and 1941. The gold and financial securities on board these ships helped Britain buy the materials it needed for World War II and prevent the wealth of the British Empire from falling into Nazi hands. Had this special convoy and the other treasure ships been lost at sea orworsecaptured by the Germans, Britain could have been forced to sue for peace with Nazi Germany long before an American declaration of war would shift the wars momentum. In this long-running operation, a select group of government, military, and banking leaders were gambling with their countrys financial and political future as no great power ever had.

The story of the evacuation of so much of Britains wealth is crucial to our understanding of why Britain survived the warand ultimately why the Allies won the war. Britains transfer of wealth took place within a broader financial context in which Britain sustained the Allied war effort until the U.S. Lend-Lease program took effect in 1941. Isolationist sentiment in the United States and legislation passed by Congress in the 1930s put a great strain on Britains finances and indirectly led the country to take great risks with the relocation of its liquid assets.

This story also raises many important questions about what might have been. If some or most of the shipments had been lost or captured, would Britain have been so weak as to pave the way for Hitlers command of all of Europe? Would such an outcome have encouraged Germany and Japan to consider an earlier attack on the United States? Would the United States have chosen to declare war long before Pearl Harbor? Would the Nazis have attacked the Soviet Union sooner?

Despite the enormous military, political, and financial stakes involved, the transfer of Britains wealth to North America is a generally unknown chapter of the war. One might even be tempted to ask if the gold shipments actually took place. Numerous official, declassified documents and eyewitness accounts confirm that the shipments were, in fact, genuine. Historical records on ships, the amount of gold or securities they carried, and the ports of origin and destination are not always precise, but considerable evidence on both sides of the Atlantic attests to the reality of this immensely risky undertaking.

Why, then, the surprising inattention to this operation? First, the documentary evidence covering the shipments is not exhaustive. For good reason, the British and Canadians kept mum about the many phases of the operation, as didalbeit with less diligencethe Americans. When Bank of England and British Treasury officials met to plan the shipments, no secretaries were present and no minutes were taken.

Key political figures left few documentary traces about the operation. Trawling through their writings yields less than a researcher would hope to find. Winston Churchill, a prodigious writer, made only a passing reference to the so-called special shipments in his multivolume work on World War II. Outside of a few declassified British government documentsfrom the Foreign Office, the Treasury, and War Cabinet meetingsChamberlain said nothing specific about the shipments in Selfs analyses.

Similarly, one might have expected to learn important information from the lengthy diary of John Jock Colville, who served as assistant private secretary to both Chamberlain and Churchill. Either Colville or Cadogan (and other midlevel officials) knew of, but kept secret about, the shipments, or they were deliberately kept out of the loop.

Another explanation for the lack of information on this topic is the code of silence among war-era banking representatives. For example, some high-level employees working at the Bank of Canada kept quiet even after the war for fear of losing their jobs or pensions.

Others found the transfer of British wealth unworthy of special attention. At the start of his memoir, for example, Cdr. Oliver Lascelles wrote, I have been consistently nagged at by the family to put down something about what I did in the war. I cant think why but still Im doing my best now as it doesnt seem to be all that interesting or outstanding. This British naval officer, who served on HMS Malaya, did not believe his family would find it interesting that his ship carried tons of gold across the Atlantic to North America. When Lascelles passed away in 1999, his friend Roderick Corries address for the service of thanksgiving for the life of Lascelles only mentioned the gold in passing: Oliver was then posted to the HMS Malaya and the arduous duty of taking our gold reserves across the Atlantic. Then after service in Force H taking convoys to Malta.

Another explanation for the dearth of coverage is negligence amid other facets of the war. World War II is replete with momentous events that have rightly attracted the attention of scholars from around the world. Extensive theoretical debates have taken place over the proximate and underlying causes of the war. Libraries have gorged on works related to Hitlers strategies, motives, and psychology. Innumerable studies have addressed the ideological confrontations between liberal capitalism, fascism, and Marxist-Leninist-Stalinist socialism. The march of events in World War II would eventually submerge the story of the greatest transfer of wealth to this point in history. In the dreadful summer of 1940, as most of the treasure crossed to North America, the great air confrontation between Britain and Germanythe Battle of

The public did not learn about this operation until November 1955, when Pulitzer Prizewinning author Leland Stowe published his research in an article in