OPERATION BERNHARD

Probably the most ambitious incident of counterfeiting currency that ever occurred was during World War II under “Operation Bernhard.” Operation Bernhard was a scheme initially devised by Reinhard Heydrich, who was Heinrich Himmler’s right-hand man and whose more notorious contribution to the Nazi war effort was the formulation of the “Final Solution” to murder all of the Jews in Europe. Under Operation Bernhard, the Germans planned to drop from airplanes huge quantities of counterfeit Bank of England notes over the United Kingdom with the goal of devaluating the English currency and destroying that country’s economy.

At that time, notes issued by the Bank of England were printed only on one side with black ink and had the same basic design since 1793. A casual examination of an example would cause one to believe that the currency was fairly simple and primitive and that it would be ridiculously easy to counterfeit. However, in reality, the money was extremely difficult to duplicate. The inked design and the watermark in the paper had hundreds of microscopic security devises incorporated within them which would be apparent only to a knowledgeable bank official with a magnifying glass.The paper was a special flourescent blend made from fibers from plants from the far East. The serial numbers were not randomly generated but were instead specially coded to other features of each bill.

It took Heydrich’s technicians, working with the best brains of German industry, three years to come up with the right recipes for the paper and ink and the correct formula for generating authentic serial numbers. Finally, in 1942, he turned the project over to SS Major Bernhard Kruger to actually start making the money.

Kruger carefully selected Jewish prisoners (eventually, up to about 145 of them) to manufacture the plates and the notes in Barracks No. 19 in the Sachsenhausen concentration camp outside of Berlin. In order to maintain strict secrecy, Barracks 19 and its occupants were isolated by barbed wire and Kruger’s hand-picked guards from the rest of the camp. Relatively speaking (and the key word here is “relatively”), the prisoners in Barracks 19 were treated more leniently than the rest of the camp inmates and had access to luxuries such as food, warm clothing, a radio, and playing cards. However, they still were quite confident that they would be executed once the project was done, and this awareness tainted their whole experience.

The prisoners eventually manufactured some trial notes which appeared reasonably authentic. Kruger arranged to have samples sent to leading Swiss bankers with a fictional story about their source and an inquiry as to whether or not they were counterfeit. The bankers assured him that they were genuine. His crew then printed approximately 9 million bills with a total value of about 135 million pounds in denominations of 5, 10, 20, and 50 pounds (a 10 pound bill would be the equivalent of about $300 today). The counterfeits were incredibly well done, and contained only a couple of extremely minute errors (which the prisoners most likely intentionally put in, at considerable personal risk). The prisoners also folded the notes and rubbed dirt on them so that they would look realistically circulated. 

Due to pressing obligations elsewhere, the Luftwaffe never dropped the currency over England per the original plan. However, much of the money was used to pay spies and purchase materials from other foreign countries willing to accept British pounds. Eventually, some of the bills did make it into circulation in England.

Instead of shredding its old worn-out notes, the policy for centuries for the Bank of England was to file them by serial number in big leather books. One day in 1943, one of its officers attempted to file a counterfeit note only to discover that its slot had already been filled by a retired genuine bill. The Bank freaked out when it realized how exquisitely realistic the counterfeit was. The Bank immediately, but without public fanfare, began to withdraw all of its notes of 5 pounds and greater from circulation and did not re-introduce the denominations until decades later.

Kruger’s crew was too efficient in making the notes, and Kruger told the prisoners to slow down production so that the project would linger on and they would not be executed. In an effort to buy more time, he convinced his bosses that his group should also make U.S. currency. The crew in fact was about to print thousands of high-quality $100 bills, but the end of the war intervened.

When the Sachsenhausen camp was about to be captured by Allied troops, the SS transported the prisoners in Barracks 19 to other camps for execution; however, the prisoners were liberated before they could be killed. The SS dumped the vast majority of the fake money and the counterfeiting equipment into Lake Toplitz in Austria. Some of the money at the lake floated to the surface and washed ashore, where it was used by nearby villagers for kindling or toilet paper. A lot more of the ersatz cash was recovered by divers in 1959.

Kruger escaped but was eventually captured. He did not stand trial for war crimes, primarily because of his “benevolent” treatment of his charges and the fact that he slowed the project down so that they would not be killed. Some of the prisoners themselves were not as charitable, and they pointed out that the completion of the project would have also meant that Kruger himself would most likely have been transferred to the Russian front. They also questioned his humanity and motivation when he allowed six ill prisoners to be shot rather than being taken to the infirmary of the camp where they could have spilled the beans about the project. The naysaying prisoners further were not impressed by Kruger's altruism when he routinely took the best quality examples of the counterfeits for his own personal use.

Operation Bernhard was the subject of the 2007 movie The Counterfeiters, which won the Oscar for the best foreign language film. It was based on the memoirs of Adolph Berger, who was one of the prisoners involved in the countefeiting project. It is worth seeing. 

Today, a genuine counterfeit note (sounds paradoxical, doesn't it) by Bernhard's crew is highly collectible.