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The Insidious Aims of the Nazis' Operation Bernhard

They had a secret plan to forge British bank notes.

holocaust survivor Adolf Burger poses with a forged British bank note from Operation Bernhard
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  • Adolf Burger, one of the Holocaust survivors who was involved in Operation Bernhard.Photo Credit: Wikimedia Commons

At the height of World War II, the Bank of England was compelled to withdraw from circulation all high denomination British banknotes following a dramatic increase in the amount of counterfeit currency in circulation. It transpired that many of these fake notes were not the work of opportunist home-grown criminals, looking to benefit from the uncertainty caused by war, but instead formed part of a major project, code-named Operation Bernhard, devised by the Nazis to destabilize the British economy. 

The Nazis first came up with the idea of using known counterfeiters to forge British banknotes not long after the war broke out in 1939. By early the following year, a team of skilled forgers had been assembled in Berlin to work on the project, code-named Operation Andreas, under the leadership of SS officer, Alfred Naujocks. He enjoyed a high profile at the time, as the man who had reportedly staged a fake anti-German protest at a radio station in early September 1939, which the Nazis then used as justification for the invasion of Poland. Thus, his appointment indicates the importance attached to Operation Andreas. 

Naujocks’ newly assembled unit in Berlin enjoyed some initial success in forging Britain’s distinctive white £5 note, the iconic design of which had remained virtually unchanged for almost a century, but his tenure at the helm of Operation Andreas did not last long. By 1941, he had spectacularly fallen out with his superior, Reinhard Heydrich, and was summarily dispatched to join the fighting on the Russian front. The unit was closed shortly afterwards and most of the counterfeit notes produced under Operation Andreas never reached circulation.

SS leader Heinrich Himmler was, however, reluctant to shelve the project altogether. In July 1942, it was revived under the new codename of Operation Bernhard, so called in honor of the SS officer appointed to lead it, Major Bernhard Krueger. The original plan had been to use the Luftwaffe to drop large quantities of counterfeit notes across the length and breadth of the U.K., thus allowing the fake currency to flood the market. However, by this stage of the war, the Luftwaffe no longer had the resources to undertake such an ambitious operation, so this was shelved in favor of a newer and more subtle approach. The counterfeit money was now to be used to finance the espionage activities of the SS.

Krueger was charged with assembling a fresh team of counterfeiters from an entirely different background to those that had worked on the original project. He scoured the Nazi concentration camps in search of prisoners with the necessary skills, selecting those with experience in a range of professions from printing and engraving to banking. 

Just over 140 workers were selected for Operation Bernhard at the Sachsenhausen concentration camp, just north of Berlin. Reflecting the secrecy of the operation, they were housed in a barracks (Blocks 18 and 19) separated from the rest of camp by a barbed wire fence.

The prisoners in Blocks 18 and 19 received preferential treatment in comparison to the awful conditions experienced by others who had the misfortune to end up in the Nazis’ notorious death camps. Some would later recall being given luxuries like tobacco and radios. Yet their survival ultimately depended on achieving a fine balance between producing sufficient quantities of high-grade counterfeit currency to keep their Nazi captors happy, but not becoming so successful that they became superfluous to the operation. 

It is impossible to quantify just how many counterfeit British banknotes were produced at Sachsenhausen in the period from early 1943 to 1945 when the unit was in operation, although even conservative estimates of their likely total face value start at around £130 million. However, emphasis was placed on quality and not just quantity. The notes produced by the unit are generally recognized as being among the best counterfeit currency ever produced. 

Attention to detail proved key to the success of the operation. One of the first jobs with which the prisoners were tasked was to examine huge quantities of genuine British banknotes in minute detail. By so doing, they discovered examples of more than 150 different tiny security marks, used by the Bank of England as an anti-fraud measure, and thus were able to incorporate them into their own counterfeit notes.

The unit also excelled at creating a plausible alternative to the distinctive white cotton-rag paper on which British banknotes had been printed for many decades. Such was the emphasis on fine detail that one team of prisoners was even given the specific task of repeatedly handling and folding counterfeit notes to replicate the effects of wear and tear seen on genuine circulated currency.

The next stage of Operation Bernhard involved a huge money laundering operation, much of which was centered around Schloss Labers, an SS-run establishment on the outskirts of Merano in northern Italy, the objective of which was to exchange the counterfeit money for genuine Swiss francs or US dollars. The forged notes were also used to pay SS agents and collaborators, and for the purchase of weapons and other supplies from black marketeers. 

The counterfeiting operation may well have escaped detection altogether if it had not been for one fatal flaw in the plan. All British banknotes were allocated a unique alphanumeric code, which was then recorded in a ledger. This meant that it was possible to keep track of all notes, even those subsequently withdrawn from circulation. Try as they might, the Nazis were unable to crack the coding system used by the Bank of England, meaning that they had no alternative other than to reuse serial numbers from existing banknotes. 

As more and more of the forged currency entered circulation, the Bank of England became aware of the existence of notes that to all intents and purposes seemed genuine, but, in fact, bore serial numbers that had already been withdrawn. In response, it took the unprecedented step of withdrawing from circulation all banknotes with a face value of £10 and above.

The Nazis considered their operation to produce counterfeit British currency to have largely been a success, and so turned their attention to the forgery of US banknotes. Survivors would later reveal that the effort to produce a convincing dollar note proved more difficult, particularly when it came to imitating the paper used in US currency. A Jewish Slovak printer, Adolf Burger, who later published an extraordinary memoir of his experiences called The Devil’s Workshop, recalled that the prisoners also deliberately stalled the process as much as they dared. 

As the Allied advance through Western Europe gained momentum during the winter of 1945, activities at Sachsenhausen were halted. The prisoners, along with the equipment, were evacuated to Redl-Zipf, a top-secret SS installation high in the Austrian Alps, but they never resumed production there. 

By early May, it became evident that liberation by US forces was only a matter of days away, and the focus switched to destroying as much evidence of the secret operation as possible. Many of the counterfeit notes were reported to have been burned. As for the remainder of the forged currency and the printing plates used in Operation Bernhard, their location remained unconfirmed for several years.

In all too predictably ruthless fashion, the Nazis now set in motion plans to kill the prisoners who had worked on Operation Bernhard. They were to be transported to the nearby Ebensee camp where they would be murdered en masse. Crucially, their SS guards had only one truck available, meaning that it took three return trips to transport all the men there. The truck broke down on the third and final journey to Ebensee, meaning that the guards had to march the prisoners the rest of the way.

This delayed their arrival just long enough to coincide with the liberation of the Ebensee camp by US forces, so the Nazis fortunately had no time to carry out the planned executions. Had the prisoners not survived, information on the finer details surrounding Operation Bernhard may well have never come to light.

Before capture, the Nazis had dumped a large quantity of forged notes and equipment in Lake Toplitz.  Since the late 1950s, several large-scale searches have been launched to locate this missing treasure trove and there have been some significant finds, including a large haul of forged British banknotes and one of Operation Bernhard’s original printing presses. However, rumors persist that there is more to discover in the 350 ft deep Austrian lake, not least because of the presence of a thick layer of logs close to the bottom which has hampered visibility during previous dives. 

Operation Bernhard remains the most ambitious counterfeiting scheme of its kind ever attempted, both in terms of the quality of the forged notes and the sheer quantity produced. The Nazis, of course, would not have been able to achieve what they did without the forced labor of those concentration camp internees selected to take part in the project. The Allies also owe these brave men a debt of gratitude, as, without their subtle efforts to sabotage the operation, the damage to the British and US economies could have been so much worse and the war with Germany prolonged.