Author: Geoff Walsh
Money and power – how financial manipulation played a part in Nazi Germany
In 1942, the Nazis planned to flood the UK with fake bank notes. The object of Operation Bernhard, named after the orchestrator of the plan SS Major Bernhard Kruger, was to create a huge number of fake British bank notes of all denominations, and air-drop them throughout the country. The sudden influx of currency would be picked up and spent by the locals, triggering inflation and economic instability.
The Nazis had some extremely talented artists among their Jewish prisoners and so formed a team of forgers to create templates for £5, £10, £20 and £50 notes. Millions of notes were produced, to a value of around £130 million, close to £5 BILLION in today’s money. Had these notes all been released, especially during a time of rationing and widespread poverty, the consequences could have been disastrous, with sky-rocketing prices and nationwide economic uncertainty compounding the already dangerous situation.
The air drop plan was abandoned due to lack of aircraft and the money was used to pay for war supplies, dramatically reducing the number of fake notes put into circulation. After they had outlived their usefulness the forger teams were marked for death, but a happy twist of fate caused the truck carrying them to their executions to break down, whereupon some prisoners fled. The order was to execute them all together and without the missing prisoners it could not be carried out, so all the forgers survived the war. The British economy took a slight hit but was saved from the hyperinflation seen in Germany after World War I.
The dangers of ‘Mickey Mouse money’
The Japanese used money as a propaganda tool between 1942 and 1945. In preparation for conquest, the Bank of Japan printed bank notes for each country they planned to take over. As each nation state fell to the Japanese army, local currency was abolished and replaced by the Japanese equivalent.
The first victim was the Philippines. In 1940 all local currency was confiscated by the occupying Japanese army and replaced by ‘Japanese Government’ issues pesos. The ‘real’ pesos were used by the Japanese to finance its army. The money was held in disdain by the locals, who quickly coined the phrase ‘Mickey Mouse money’ to describe it.
The Philippines were soon followed by Malaya, Singapore, Borneo, Sarawak (part of modern-day Malaysia) and Brunei, all of which were issue with dollars, then Burma. There was even a note for ¼ rupee. These were all printed in English. The Dutch East Indies, a Dutch colony had Gilder notes printed in Dutch, and the few and far between British colonies (New Guinea, the Solomon Islands and the Gilbert Islands’ were issued with shilling notes.
In a parallel with the Nazis, General MacArthur ordered counterfeit versions of the Japanese Philippines money, and with the help of the Australian national bank printed over 10 million fake notes. The result of this plus the failing Japanese war effort can be seen in the denomination of notes. In 1942 the highest value note was 10 pesos, but by 1945 it was 1000 pesos. The print is noticeably lighter since supply shortages led to the dilution of the ink.
After the Japanese surrender in 1945 the money was worthless. It littered the streets of Asian cities before being burned.
Electronic money and tight financial security
So what does this mean for today’s world? The vast majority of money is electronic, so the best forgers in the world could not make a dent in it. Even assuming a billion sterling were air dropped today, attempting to make any large transaction in cash is viewed as suspicious.
On the other hand the logistics of recalling all currency and printing replacements would make any would-be dictator/disruptor balk, so the notion of changing a £ sign to a yen, mark, euro etc, or adding a few zeroes on a bunch of servers to achieve the same goal is an attractive one. For this reason cyber security has to be top-notch. Today’s financial providers invest millions in algorithms, certificates, keys, etc. to protect users’ data, to the point where a bored teenager with an internet connection can no longer even scratch the surface. Breaches are now so rare that, like plane crashes, they make news headlines on the rare occasions that they happen. A persistent attack on a western bank would have a major disruptive impact, and if sustained could knock confidence in the entire sector.
Are banks doing enough to keep your money safe? Read more in our Opinion Piece: The financial services industry must set a higher standard in the fight against cybercrime [PDF]