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Operation Bernhard: Counterfeit Cash in WWII

An outrageous German plot to flood the British economy with £1.3 billion worth of forged bank notes during World War II failed after the Bank of England found out about the plans. The aim of Operation Bernhard was to destabilise the British economy by raining money down from the skies, literally, with the help of the German Airforce.

Bernhard Kruger was a high-ranking Schutzstaffel (SS) officer and an elite member of the Nazi regime. He had been perfecting his idea since the outbreak of war in 1939. However, it failed, not only because Bank of England officials learned about the scheme almost immediately through a British spy, but also because the logistics of carrying it out proved impossible.

Operation Bernhard

© Public Domain

What was Operation Bernhard?

Kruger intended sending Luftwaffe pilots to drop millions of counterfeit British pounds all over the UK before fleeing back to mainland Europe. The 35-year-old SS Sturmbannführer worked for the Nazi Party Security Service. He believed the British public, impoverished due to the war, would willingly pick them up and spend them.

Kruger was relying on people being so short of money that very few would hand them in to banks or the police. He anticipated that as the forged Bank of England £5, £10, £20 and £50 notes flooded into the UK, they wouldn’t be detected until it was too late and the economy had collapsed.

Drafting the extra labour needed to carry out his devious plans, he used prisoners of war in Sachsenhausen, Auschwitz and other concentration camps.

The forged notes were said to be almost perfect and among the best counterfeits ever made. Kruger had formed a team of 142 counterfeiters, who were all skilled people. Their job was to engrave the complex printing plates and develop the paper, so it felt right and had a realistic watermark. Their most challenging task was to generate valid serial numbers for the notes.

At the time, every banknote issued by the Bank of England was recorded in leather-bound ledgers. Mastering the serial numbers was an integral part of the plan.

Why did Operation Bernhard fail?

The forged banknotes were described by Bank of England clerks as “the most dangerous ever seen” because they were so well-made.

However, even before they went into production, British intelligence was already aware of the plot. A British spy, whose identity was never revealed, informed the government about Operation Bernhard in 1939.

Germany didn’t put the plan into operation until 1942, when Kruger assembled his team of counterfeiters. However, it soon became apparent that despite the near-perfect forged notes being ready for drop-off, there weren’t enough planes to deliver them to Britain in the vast numbers required.

By late 1943, the operation had been transferred to the SS foreign intelligence and around one million notes a month were being printed, but rather than distributing them over Britain, the counterfeits were transferred to a former hotel near Merano in northern Italy, where they were laundered and spent by the Nazis to aid the war effort – used to pay for imports and the German agents’ wages.

The same year, the Bank of England detected the notes were in circulation after some were paid into a British bank in Tangiers, Morocco. Thanks to the practice of the bank notes’ serial numbers being recorded, eagle-eyed clerks spotted that one of the suspect notes had already been recorded earlier.

The forged notes never made it into general circulation in the British economy in large numbers and the Nazis’ plan failed.

What happened after the war?

Sachsenhausen concentration camp was evacuated by the SS on 20th and 21st April 1945, when 33,000 prisoners were ordered to set off walking, with minimal or no food, as news of the Allied liberation of other camps spread.

The evacuation became increasingly disorganised as the Allied troops approached. The groups split up as the guards fled and the prisoners had opportunities to escape.

The counterfeiting team based at Sachsenhausen was transferred to Redl-Zipf concentration camp in Austria, rather than being evacuated on foot.

However, at the beginning of May 1945, it became apparent that Germany was losing the war in Europe. The SS guards were ordered to transfer the counterfeiters to the Ebensee camp, where they were to be exterminated.

There was only one truck to transport the prisoners, so three round trips were needed to take all the counterfeiting team to their final destination. The SS plan was to send them into tunnels and blow them all up together.

The first two truckloads of counterfeiters arrived, and the driver departed to collect the final batch. However, the truck broke down and in the interim, the first two loads of prisoners staged a revolt. When the third and final load of counterfeiters arrived at Ebensee on 4th May, the camp was in turmoil, as the prisoners had refused to go into the tunnels where they were to meet their demise.

Instead, the counterfeiting team dispersed among the other prisoners. The breakdown of the truck and the subsequent revolt at Ebensee saved their lives. None of the team was killed by the SS and the Ebensee POW camp was liberated by US forces on 6th May 1945.

Details of what had happened were revealed by the Jewish Slovak printer Adolf Burger, who had been forced to join the counterfeiting team. After the war, he published his memoirs in several languages to make the world aware of the plot and its failure.

What happened to Kruger?

Kruger was caught and detained by the British after the war. He was then turned over to the French, before being released in 1948 without charge.

Returning to Germany, he appeared before a De-Nazification Court in the 1950s, when some of the former forgers produced statements saying he had saved their lives. This led to his acquittal, and he continued to live and work in Germany until he died, aged 84, in 1989.

Nobody knows what happened to all the forged bank notes, although a large number were found by divers at the bottom of Lake Toplitz, near Ebensee camp, in 1959.

A few entered circulation in Britain and continued to be found for many years afterwards. As a result, bank notes of larger denominations were withdrawn from circulation for many years. The £20 note didn’t return until 1970 and the £50 note was relaunched in 1980.

Remembrance Sunday

Logbook Loans will be joining thousands of other people across the UK and in other parts of the world to commemorate Remembrance Day.

As the most recognised symbol, the red poppy is sold in aid of charity, after hundreds of the flowers bloomed across the former battlefields of northern France and Belgium after the end of the war. A poignant reminder of our war heroes, who must never be forgotten.