A Rare Set of Counterfeit Bank Notes Printed by Hitler in a Bid to Ruin the British Economy Are to be Auctioned

As early as 1939, the Bank of England became aware of a German scheme to destabilize the British economy by flooding the country with huge amounts of fake bank notes. Hitler had witnessed the damage cause by hyperinflation in Germany after the First World War and evidently hoped to achieve the same conditions in the United Kingdom. It was the largest counterfeiting operation in history.

In 1942 plans were laid to put this scheme into practice and under the code name Operation Bernhard, the first of what was intended to be £134 million in £5, £10, £20 and £50 were printed.

At first the counterfeiting was carried out at the Sachsenhausen Concentration Camp in Germany. After it was evacuated the operation was transferred to Redl-Zipf in Austria, a subsidiary camp of Mauthausen-Gusen concentration camp.

At the beginning of May 1945, the team was ordered to be transferred to Ebensee subsidiary camp, where orders were given that they were to be killed. Their SS guards had only one truck for the prisoners, so the transfer required three round trips. The truck broke down during the third trip, and the last batch of prisoners had to be marched to Ebensee, where they arrived on 4 May. The guards of the first two batches of prisoners fled when the prisoners at the Ebensee camp revolted and refused to be moved into tunnels, where they would have probably been blown up. The counterfeiters then dispersed among the prisoners at Ebensee.

By the time Sachsenhausen was evacuated in April 1945 the printing press had produced 8,965,080 banknotes with a total value of £134,610,810. The notes are considered among the most perfect counterfeits ever produced, being almost impossible to distinguish from the real currency

The initial idea was to drop these banknotes on the UK by aircraft but the Luftwaffe rejected this, claiming that they did not have any spare aircraft for the operation. The notes were then passed onto the foreign intelligence unit of the SS and a large quantity was sent to a former hotel near Meran in South Tyrol, from where they were laundered and used to pay for strategic imports and to help German agents operating in the Allied countries.

The forgeries were first spotted by a clerk at the Bank of England in 1943. In those days the number of every banknote issued by the Bank of England was recorded in large leather-bound legers, which are still kept in the bank’s archives. When the forgeries were examined an official described them as “the most dangerous ever seen”.

The operation was halted by the Germans in 1945 and it is thought that the majority of the notes were dumped in Lake Toplitz in Austria. It is from this stretch of water that divers recovered the four notes that are to be sold.

Some continued in circulation after the war and resulted in the Bank of England withdrawing all notes with a value of more than five pounds. Indeed, it was not until the 1970s that notes with the denomination of £20 started appearing again. Ironically for the Germans, the possession of this money became a major factor in identifying Nazi agents and led to many successful arrests.

Even if the Germans had succeeded in dropping the bank notes onto the UK they might not have had the desired effect. By 1941 Britain was financially on its knees and utterly dependent upon the USA. An increase in money supply could well have helped boost the economy – this indeed is the action taken by the Bank of England recently, which they called “Quantitative easing”. It might even have helped us pay off our debts to the US quicker.

The notes will be auctioned on 18 August 2011, by Mullocks auctioneers at Ludlow Racecourse, Shropshire. The guide price is £1,000 to £1,500.

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