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Operation Bernhard was the codename of a secret Nazi plan devised during the Second World War by the RSHA and the SS to destabilise the British economy via economic warfare by flooding the global economy and the British Empire with forged Bank of England £5, £10, £20, and £50 notes. It was the largest counterfeiting operation in the history of economic warfare, and the first that employed the full technical/scientific and management expertise of a sovereign state to produce and deploy bogus currency with the aim of destabilising an enemy belligerent’s economic standing with its allies, as well as its acceptance by neutral powers.
Britain was especially vulnerable because its war effort was founded upon - and sustained by - its global and Imperial economy. That economy was built upon directly-ruled colonial possessions, self-governing Commonwealth Dominions and the Empire’s currency zone, the Sterling Preference Area. These worked in commerce with neutral powers to acquire the manpower and material necessary to fight a global war. Each of these trading partners accepted the British currency for the exchange of goods and services and maintained their own reserves of it for transactions with, and within the Empire. Confidence in the integrity of this (then global) currency, both in and outside of the Sterling Preference Area, was essential to sustaining the vitality of the Empire, and through it, the war effort. The German operation to undermine the British currency has been dramatised in books, the BBC comedy-drama miniseries Private Schulz and a 2007 Oscar-winning Austrian film, The Counterfeiters (Die Fälscher).
Emmerich Heisenberg, one of the SS Agents in London learned from an article in "Daily News" that Mahinder Mishar from Behar Province in India was caught for counterfeiting British Currency in 1924. Heisenberg sent that newspaper article to his friend and boss Major Bernard Kruger. The plan was directed by, and named after, Schutzstaffel Sturmbannführer (SS Major) Bernhard Krüger, who set up a team of 142 counterfeiters from inmates at Sachsenhausen concentration camp at first, and then from other camps, especially Auschwitz. Beginning in 1942, the work of engraving the complex printing plates, developing the appropriate rag-based paper with the correct watermarks, and breaking the code to generate valid serial numbers was extremely difficult, but 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 plan was to destabilize the British economy during the war by dropping the notes from aircraft, on the assumption that most Britons would collect the money and spend it, thus triggering inflation. This scheme was not put into effect: it was postulated that the Luftwaffe did not have enough aircraft to deliver the forgeries, and by that time the operation was in the hands of SS foreign intelligence. From late 1943, approximately one million notes per month were printed. Many were transferred from SS headquarters to a former hotel near Meran in South Tyrol, Northern Italy, from where they were laundered and used to pay for strategic imports and German secret agents operating in Allied countries. It has been rumoured that counterfeit currency was used to finance the rescue of Benito Mussolini in 1943.
The Bank of England learned of a plot from a spy as early as 1939 and detected forged notes in 1943, which were called "the most dangerous ever seen". Clerks first recorded the counterfeits from a British bank in Tangiers. Every banknote issued by the Bank of England was recorded in large leather-bound ledgers, still in the Bank's archives and it was found that one of the notes had been recorded as having been paid off.[clarification needed] The counterfeiting team turned its attention to US currency, producing samples of one side of $100 bills on 22 February 1945, with production scheduled to start the next day but the Reich Security Head Office (RSHA) ordered the work halted and the press dismantled.
On the evacuation of Sachsenhausen, the counterfeiting team 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 transfer to Ebensee subsidiary camp, where they were to be murdered. Their SS guards had only one truck for the prisoners, so the transfer required three 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. The order was that all the counterfeiters be liquidated together; the delayed arrival of the third batch therefore saved the lives of all of them.
The Ebensee camp was liberated by US forces on 6 May 1945. One of the prisoners, the Jewish Slovak printer-turned-counterfeiter Adolf Burger, later contributed to the awareness of Operation Bernhard with several versions of his memoirs published in Central European languages and in Persian. An English version was published in 2009 as The Devil's Workshop.
After the war, Major Krüger was detained by the British for two years, then turned over to the French for a year. He said they asked him to forge documents but that he refused. He was released in 1948 without charge. In the 1950s he went before a De-Nazification Court, where statements were produced from the forger-inmates whose lives he had been responsible for saving. He later worked for the company that had produced the special paper for the Operation Bernhard forgeries.
After the defeat of the Third Reich, large bundles of fake pounds ended up in the hands of the Jewish underground, which used the forged notes to buy equipment and to bring colonists to Palestine, among them Chaim Shurik, a Polish printer whose 20-page account of his counterfeiting days was written in Hebrew.
It is believed that most of the notes produced ended up at the bottom of Lake Toplitz near Ebensee, from where they were recovered by divers in 1959. But examples turned up in circulation in Britain for many years, which caused the Bank of England to withdraw all notes larger than £5 from circulation. A new £5 banknote colored blue was issued on 21 February 1957 and the other denominations were reintroduced on February 21, 1964 (£10), July 9, 1970 (£20) and March 20, 1981 (£50).
German spy Elyesa Bazna (codename "Cicero") was paid with counterfeit notes, sued the German government after the war for outstanding pay and lost the case.
The 2007 Oscar-winning Austrian film, The Counterfeiters (Die Fälscher), tells the story of Salomon Sorowitsch, loosely based on the lives of counterfeiter Salomon Smolianoff and Adolf Burger, a Jewish Slovak book printer who was put to work on Operation Bernhard in Sachsenhausen concentration camp and whose memoirs were turned into the screenplay.
In the British comedy series Goodnight Sweetheart starring Nicholas Lyndhurst, the episode "It's a Sin to Tell a Lie" involves the main characters catching a Nazi spy who was uttering notes, forged by Operation Bernhard, in local pubs and shops in London.
The 1941 novel Traitor's Purse (US title The Sabotage Murder Mystery) by Margery Allingham featured (presumably by coincidence) a similar plot where the forged notes were to be posted to every household in Britain, in parallel with a secretly-planned genuine Government mailing.
"Reichsbank forgeries" are mentioned in the James Bond novel Goldfinger during Bond's interview with a Colonel Smithers of the Bank of England.
- Superdollars – high-quality counterfeit dollars suspected to come from a foreign power
- The Black Island – a Tintin adventure concerning a German-inspired counterfeiting ring in Britain
- Malkin, Lawrence. Krueger's Men: The Secret Nazi Counterfeit Plot and the Prisoners of Block 19 (2006) ISBN 0-316-05700-2 ISBN 978-0-316-05700-4, p184
- Max Garcia, "Befreiung des KZ-Nebenlagers Ebensee: Neue historische Details." Zeitschrift des Zeitgeschichtemuseums Ebensee, 1998.
- Adolf Burger, The Devil's Workshop. 2009. Frontline Books. ISBN 978-1-84832-523-4
- Kalish, Jon (July 4, 2008). "The Counterfeit Saga(s): What Really Happened at Sachsenhausen?". The Forward. Retrieved 2014-01-21.
- "Nazis Try To Raise Fortune From Seabed.". The Canberra Times (ACT : 1926 - 1995) (ACT: National Library of Australia). 27 September 1963. p. 7. Retrieved 27 December 2014.
- Counterf-Hitler: Examples from the £134million in dodgy bank notes Adolf hoped would ruin the British economy expected to fetch £2,000 at auction
- "Bank of England: Withdrawn Banknotes Reference Guide" (PDF). Bankofengland.co.uk.
- Compare records of Smolianoff's 1946 debriefing, PRO MEPO 3/2766, from Lawrence Malkin's website
- Burger, Adolf. The Devils Workshop: A Memoir of the Nazi Counterfeiting Operation. 2009. Frontline Books. ISBN 978-1-84832-523-4
- Burke, Bryan. Nazi Counterfeiting of British Currency during World War II: Operation Andrew and Operation Bernhard (1987) ISBN 0-9618274-0-8 (Limited edition of 1000)
- Delgado, Arturo R. Counterfeit Reich: Hitler's Secret Swindle (2006) ISBN 978-1-4241-0389-8
- Malkin, Lawrence. Krueger's Men: The Secret Nazi Counterfeit Plot and the Prisoners of Block 19 (2006) ISBN 0-316-05700-2 ISBN 978-0-316-05700-4
- Malkin, Lawrence. Hitlers Geldfälscher: Wie die Nazis planten, das internationale Währungssystem auszuhebeln (2006) ISBN 978-3-7857-2249-7 (ab 1.2. 2007)
- Nachtstern, Moritz & Arntzen, Ragnar. Falksmyntner i Sachsenhausen: Hvordan en norsk jøde overlevde holocaust (1949) ISBN 978-82-430-0404-7
- Pirie, Anthony. Operation Bernhard. New York: William Morrow & Company, 1962. [ISBN unspecified]; Library of Congress Card Catalogue Number 62-11353.