The United States Secret Service

Walter S. Bowen, Harry Edward Neal

• Publisher: Red Kestrel Books
• Year: 2019
• ISBN:
  9781839740398
• Topic: History
• Subtopic: Military & Maritime History
• Index: History

The United States Secret Service, first published in 1960, is a fascinating look at the activities of this branch of the Treasury Department. From the establishment of the Service through the 1950s, the book examines the Service's history: from assassination attempts and protecting the President, to crime-fighting responsibilities such as finding counterfeit currency, investigating fraud and government corruption. Several chapters describe efforts by the Nazis and the Soviet Union to produce high-quality counterfeit currency in an effort to destabilize the U.S. economy. Included are 12 pages of illustrations. Authors Waler Bowen and Harry Neal were long-time members of the Service.

1 — Der Führer’s Biggest Fraud

In 1939 Delbruckstrasse was a quiet residential street in the Charlottenburg quarter of Berlin. The mansion at No. 6 was actually a dignified branch office of the Reichsdruckerei, the German equivalent of the U.S. Bureau of Engraving and Printing, but it resembled many large homes in the neighborhood—until Adolf Hitler loosed his legions to conquer the world. Then the house at No. 6 Delbruckstrasse shed its aura of tranquility. Government officials paraded in and out of its austere entrance at all hours of the day and night, mingling with somber-faced officers wearing the black shirts of the Schutzstaffel (SS). In this once-quiet house important members of the Third Reich concocted paper plans for a paper weapon that conceivably would wreak more havoc than any gun, army, or explosive.

They would produce millions of counterfeit notes—enough to disrupt and scuttle the economic systems of their enemies. The resulting panic would be worth a score of victories on the battlefield.

The plot was simple, but transforming fancy into fact presented certain problems that were more complex. The counterfeit money must be perfect enough to defy detection, even by experts, and any intelligent person could understand that a counterfeit was merely a copy of an original and that no copy could be exactly like the original in every microscopic respect. Perfection was of paramount importance. Clearly, the success of this bold scheme must depend on the skills of experts in many fields—photography, etching, engraving, papermaking, watermark manufacture, printing, and others.

Responsibility for this paper sabotage was placed on the gold-braided shoulders of two minions of Dictator Hitler—Reichsführer Heinrich Himmler, Chief of the infamous Gestapo, and his deputy, Ernst Kaltenbrunner.

Himmler himself had none of the required talents for this unusual assignment. His closest association with counterfeiting was the toothbrush mustache he trimmed to look as much like Hitler’s as possible. Nevertheless he assembled a representative of the Reichsdruckerei and four specialists in the graphic arts and told them to make some counterfeit 1-pound notes of the Bank of England.

To the credit of the men it should be said that they may have considered this task distasteful, for they were reputable folk and not criminals at heart. At any rate, they failed to produce imitations that could fool anybody.

“The paper is not good,” they said. “It is not at all like the genuine English banknote paper, and it does not take the printing well.”

Herr Himmler set another team to work on the production of better banknote paper. The government’s technical research laboratories analyzed the genuine paper and created various experimental formulas in attempts to duplicate it, watermark and all. The manufacturing experiments were carried out in the Mahnemuhle Paper Mill at Dassel, where six long-time employees were assigned to this task exclusively and threatened with death if they so much as whispered one word to any other person about the nature of their work.

The threats were delivered in person by Sturmbannführer Bernhard Kruger, who was destined to play a starring role in the drama of fakery that was just beginning. Kruger was in his forties, short (about 5 feet 6 inches) but well proportioned, with dark hair parted on the left side, dark eyes, a wide, sensuous mouth, and a square chin that gave his jaw a grim carved-stone appearance. Herr Kruger was chosen by Ernst Kaltenbrunner to supervise the secret activities of the counterfeiting department, designated officially as AMT-F-4, but referred to in correspondence by the code word “Bernhard,” a dubious tribute to the new commandant and his first name.

Many trials and failures at the Mahnemuhle Mill produced samples of banknote paper of increasing quality, and in 1942 the experts assured Herr Kruger and Herr Himmler that their experiments would soon result in a perfect product.

Himmler then used the one great asset he possessed to advance the conspiracy. The asset was power, and he had plenty of it. In his concentration camps were thousands of men, women, and children—mostly Jews—whose hopes and fears and loves and prayers died with them daily in the gas chambers, or on the electrified barbed-wire camp enclosures, or in filthy, crowded shacks where they succumbed to starvation or disease.

Surely among these hordes of despairing prisoners there were some who had once made their livelihoods as engravers, or photographers, or by other skillful use of their fingers; and just as surely, those who were sufficiently adept would welcome an opportunity to prolong their lives by engaging in a project which would contribute notably to the glory of the Third Reich. Welcome it or not, they would do it or die.

With characteristic German thoroughness the Nazis maintained records giving the histories of their captives, occupations and all. A list was made of those men with the talents needed, but before the list was used an appeal went out in the name of Der Führer to several camps in the Grosse Reich for volunteers who were engravers, designers, photographers, artists, or printers. All volunteers, however, must be of Jewish blood. The nature of the work was not revealed.

A few men in each camp believed the announcement that they would be given good food and special treatment if they volunteered for this mysterious assignment, but others harbored ugly memories of beatings and bruises, of gnawing hunger, and of corpses of friends and relatives who had been subjected to “experiments” of many kinds. Remembering these things, they had no wish to volunteer, so the orders went out to the camp commanders: “Send us Levy, and Gottlieb, and Bernstein...” Thus was much of the manpower recruited for the counterfeiting plant.

The plant was set up in a special section of the Sachsenhausen Concentration Camp at Oranienburg, not far from Berlin, and the first 7 prisoners, called “haftlinges,” arrived there on August 23, 1942. Suspicion and fear surged through them as they were led to a building isolated from the rest of the camp and surrounded by three separate fences of electrified barbed wire.

Inside the building their fears began to subside. Unlike other camp structures, the interior was clean, there were cots and tables and chairs, and a modern, well-equipped print shop, with camera equipment and a photographic darkroom.

Commandant Kruger “welcomed” the new arrivals and told them bluntly what they were expected to do.

“You are privileged people,” he said. “You have been chosen for a job that is of vital importance to the Third Reich. The Third Reich needs money, and we are going to make it!” The prisoners stared at each other, and Kruger laughed. “You are surprised, eh? I thought you would be. But you are lucky—very lucky. You will eat well. You will listen to music on the radio while you work. You can smoke sometimes—yes, we give you real tobacco! And down there,” he added, pointing, “you can play ping-pong for exercise. As you see, we promised you would live well, and we keep our promises. Nein?”

One of the haftlinges spoke. “You said something about making money. What does this mean, please?”

Kruger laughed again. “It means making money. You will make English money, Danish money, Swedish money, Hungarian, Mongolian—maybe even some Jewish money.” His happy expression gave way to a scowl.

“You will be counterfeiters—the best in the whole world, for this money must be perfect. It must be so good that it will deceive people who are familiar with genuine money, because much of it will be used in neutral countries to buy weapons and supplies for our victorious armies.”

As they stood silently, he shook a pointing finger at their surprised faces. “If you fail,” he went on, “then Germany may lose the war. If Germany loses the war, we will all die. Yes, you and I will die. You do not want to die, and I don’t want to die, so we must help one another to stay alive. We are friends.” He smiled benevolently. “When we have won the war, Der Führer plans to send all of you to a wonderful settlement in the country, where you will be reunited with your families and will live in peace and happiness. Der Führer will be most generous with his appreciation.”

The haftlinges were confined to their isolated compound. Their food was brought into an outer room by a prisoner from another part of the camp. At no time did he ever see a single person in the room. He simply left the food and later went back to get the empty dishes.

There was much conjecture in the camp about what was going on in the mysterious section, but no one outside really knew. The haftlinges were warned that they would be killed immediately if they were found communicating in any way with outsiders. They were guarded by picked SS men who were also cautioned never to speak about anything whatever concerning Project Bernhard. One night two of the guards got drunk and were overheard to mention the secret goings-on. Next day both were court-martialed and sentenced to 15 years in prison. Any guard who was not constantly alert was promptly replaced and sent to the bloody Russian front.

By the end of 1942 there were about 30 haftlinges at work on the counterfeiting project. One of these, a Russian named Sukenik, had frequent coughing spells which led the Nazis to suspect that he might be suffering from tuberculosis. When a medical examination confirmed this suspicion, SS Guard Heinz Beckmann shot Sukenik to death to prevent the spread of infection to the other workmen.

The papermaking group did not succeed in making a perfect imitation of the British banknote paper until 1943, but once they discovered the right process they produced watermarked paper that was the equal of the genuine in every respect. When Himmler and his cohorts approved the product, the first shipment of about a quarter of a million sheets, each large enough for the printed impressions of four English £5 notes, was sent to Sachsenhausen in July. Thereafter, the plant received 50,000 sheets monthly until the end of 1944.

Other types of paper were used for notes of other countries, and various specialists outside the camp produced the plates from which the other counterfeits were printed. The British bills, however, constituted the greatest output, and the plates for these were engraved by a diminutive, shrewd Russian Jew named Sali (Solly) Smolianoff.

Smolianoff, then 50 years old, was the only professional counterfeiter in the compound, and he was no stranger to counterfeiting. Since 1928 he had spent most of his life in jail for manufacturing spurious currencies of various nations, including Great Britain, and it was following the completion of one such sentence in 1942 that he was merely transferred from the prison he left to the Sachsenhausen camp, to make the plates for the British notes.

Smolianoff was more happy than sad. “Imagine!” he exclaimed, looking at his SS guards. “Making counterfeit money with police protection!”

When a series of trials finally resulted in perfect plates, production went into high gear. From the presses the counterfeits were dried, baled, and made smooth by “ironing” under terrific pressure. The notes were stacked and the edges rubbed with files to resemble the genuine rough edges, after which they underwent a novel sorting operation.

The most deceptive notes—that is, those in which no printing flaws could be detected—were classed as First Grade, and it was these which were used to buy military supplies in neutral countries.

Notes with only one or two slight detectable errors due to faulty printing were stored in bins as Second Grade—deceptive enough to be used to pay off Nazi spies on missions in foreign countries.

Third Grade notes had inferior watermarks and more than two or three printing flaws, but they were so minor that the currency was considered passable, and the Third Grade went to pay agents in Nazi-occupied countries and also to buy more war matériel in such countries.

The Fourth Grade product could be detected more readily than the other three, provided the notes were examined by experienced money handlers, but it was unlikely that the average British citizen could identify them as counterfeits. Therefore, the Fourth Grade was earmarked to be flown over England and dropped from the air to float down like huge snowflakes in the hope that the British population would retrieve them and launch a spending spree that would plunge the Bank of England—and the nation—into bankruptcy.

That left one more classification—the Fifth Grade. These notes the haftlinges called auschuss, the German equivalent of “junk.” In time the ink could be removed from these by chemical means and the paper could be reduced to pulp so that it could be remade for another try. Meantime, the notes would be held available for possible emergencies.

A complete record was kept of the quantities of notes and of the serial numbers used, after which the sorted packages were handed to special SS men who carried them into the mansion at No. 6 Delbruckstrasse in Berlin, the once-dignified building now surrounded by barbed wire and patrolled by armed sentries.

The haftlinges at Sachsenhausen worked in two shifts of 12 hours each. Their fakery included not only foreign currency, but also counterfeit credentials for spies, forged identity cards of British and French flying officers, phony paybooks of the American Army, and hundreds of rubber stamps like those used in validating official documents of all kinds.

The emphasis, however, was clearly on the British banknotes, which rolled off the presses by the hundreds of thousands. Then, in 1944, Commandant Kruger assembled Smolianoff and the other haftlinges, now numbering 140, and made a startling announcement.

“We will now stop making the English pounds,” he told them. The men glanced at each other, many with the look of fear, as though to say, “Here it comes. Our job is done, and we are to be taken to the gas chambers.”

“Do not worry,” Kruger said. “I did not say we were through working. On the contrary, we have a new job.” Standing erect, with his hands on his hips and smiling broadly, he went on, “Now we will make the American money!”

A babble of voices filled the room. “Listen to me!” Kruger shouted, though not angrily. “If you do this new job as well as the other and get through with it, it will be good for you. I know you are all in fear of death, but if you do your work right I promise that nothing will happen to you while I am chief of this camp. Behind this barbed wire you are no more Jews. You are my fellow workers, and here we work together in the fight for the new Europe. The victory will be ours. Now go and work, and do everything you can so that I will not have to fall on my nose before Himmler. If you disappoint me, or if you do not finish the job, then you will go and die together with me. All my hope is based on you. We will make first the fifty-and hundred-dollar bills, and when they are done we will make the five hundreds, so there will always be enough work for you—don’t worry about that.”

Once again Smolianoff was chosen to make the counterfeit plates for the U.S. money. Smolianoff’s part of the story was revealed after the war, when A. E. Whitaker of the U.S. Secret Service (now Special Agent in Charge of the New York District) found Smolianoff in Rome, Italy, and heard it from his own lips.

“During an ...

Table of contents

• Title page
• TABLE OF CONTENTS
• Foreword
• Preface
• 1 - Der Führer’s Biggest Fraud
• 2 - Wood Could and Did
• 3 - The Busy Mr. Brockway
• 4 - The Ghouls
• 5 - The Black Hand
• 6 - The Chance Takers
• 7 - Robbing the Money Factories
• 8 - Freeing the Peons
• 9 - The Land Thieves
• 10 - The Brown Leather Bag
• 11 - Teapot Dome
• 12 - The Fly
• 13 - Did the Russians Counterfeit Our Money?
• 14 - Protecting the Presidents
• 15 - Secret Service Scrapbook
• 16 - The Badge, the Klan, and Coxey’s Army
• 17 - Triumphs for a Trio
• 18 - The New Era
• 19 - The Pen and Ink Pirates
• 20 - The Secret Service-Then and Now
• Illustrations