Editing Operation Bernhard (section)

==Revival under Krüger==
[[File:BernhardCaptivity.jpg|thumb|upright=1.2|[[Schutzstaffel|SS]] [[Sturmbannführer|Major]] [[Bernhard Krüger]], shown after his capture in 1946]]
In July 1942, following changes in the aim of the plan, {{lang|de|[[Reichsführer-SS|Reichsführer]]}} [[Heinrich Himmler]] revived the operation.{{sfn|Malkin|2008|p=32}} Whereas the original plan was to bring about the collapse of the British economy through dropping the notes over the UK, Himmler's new intention was to use the counterfeit money to finance German intelligence operations.{{sfn|Nachtstern|Arntzen|2008|p=27}}{{sfn|Malkin|2008|pp=74–75}} The security services under Himmler's control were poorly funded, and the counterfeit funds were used to cover the financial shortfalls in revenue from the {{lang|de|[[Reichsbank]]}}.{{sfn|Malkin|2008|p=74}}

SS Major [[Bernhard Krüger]] replaced Naujocks; searching through the offices used daily by Operation Andreas, he found the copper engraving plates and the machinery, although some of the wire gauzes used to make the watermarks were bent.{{sfn|Malkin|2008|pp=71–72}} He was ordered to use the Jewish prisoners incarcerated in the [[Nazi concentration camps]],{{sfn|Nachtstern|Arntzen|2008|p=26}} and set up his unit in blocks 18 and 19 at [[Sachsenhausen concentration camp|Sachsenhausen]]. The blocks were isolated from the rest of the camp by additional barbed wire fences, and a {{lang|de|[[SS-Totenkopfverbände]]}} unit was assigned as guards.{{sfnm|Tiley|2007|1p=52|Bower|2001|2p=47|Pirie|1961|3pp=18–19}}

Krüger visited several other concentration camps to assemble the people he needed, primarily [[Forced labour under German rule during World War II|selecting those]] with skills in draftsmanship, engraving, printing and banking.{{sfn|Tiley|2007|p=52}}{{sfn|Pirie|1961|pp=18–19}} In September 1942 the first 26 prisoners for Operation Bernhard arrived at Sachsenhausen;{{sfn|Burger|2009|p=143}} 80 more arrived in December. When met by Krüger, he called them in the formal and polite form {{lang|de|Sie}}, rather than the more demeaning {{lang|de|du}}, which was normally used when the Nazis spoke to a Jew. Several of the prisoners selected later reported that Krüger had interviewed them for the role, and treated them with politeness and good manners.{{sfn|Malkin|2008|pp=86, 87, 90–92}} He also provided the prisoners with cigarettes, newspapers, extra rations and a radio. Prisoners had a [[ping pong]] table, and they would play with the guards and among themselves; evenings of amateur theatricals also took place, staged by the prisoners, with a mixed audience of guards and counterfeiters; Krüger provided musicians for musical numbers.{{sfn|Bower|2001|p=47}}{{sfn|''The Great Nazi Cash Swindle'', 2004|loc=Event occurs at 21:50–22:15}}

[[File:Sachsenhausen concentration camp 0009.jpg|thumb|left|The entrance to [[Sachsenhausen concentration camp]], where the forgers operated]]
The printing equipment was delivered in December, and 12,000 sheets of banknote paper a month began to arrive from Hahnemühle; it was large enough for four notes to be printed on each sheet.{{sfn|Bower|2001|pp=47–48}}{{sfn|Malkin|2008|p=96}} Production of counterfeit notes started in January 1943;{{sfn|Burger|2009|p=143}} it took a year for production to return to the levels achieved in Operation Andreas.{{sfn|Pirie|1961|p=14}}

Each section of the process was overseen by one of the prisoners, and the day-to-day operations were run by Oscar Stein,{{refn|The name is also given as Oskar Stein.{{sfn|Ruffner|2002|p=42}}|group=n}} a former office manager and bookkeeper.{{sfn|Bower|2001|p=48}} Two twelve-hour shifts ensured non-stop production, with around 140 prisoners working.{{refn|Some sources put the number of prisoners involved at nearly 300.{{sfn|Feller|Hamilton|1985|p=1768}}|group=n}} The printed sheets, each containing four notes, were dried and cropped using a steel ruler; the edges were roughened to imitate the [[deckle]] finish of the British notes.{{refn|Deckle is a paper with a rough or slightly feathered edge.{{sfn|Malkin|2008|p=104}}|group=n}} The operation peaked between mid-1943 and mid-1944, with approximately 65,000 notes a month produced from six [[History of printing#Flat-bed printing press|flat-bed printing presses]].{{sfn|Malkin|2008|p=104}}

To age the notes, between 40 and 50 prisoners stood in two columns and passed the notes among them to accumulate dirt, sweat and general wear and tear. Some of the prisoners would fold and refold the notes, others would pin the corners to replicate how a bank clerk would collect bundles of notes. British names and addresses were written on the reverse, as happened with some English notes, and numbers were written on the front – duplicating how a bank teller would mark the value of a bundle.{{sfn|Bower|2001|p=49}}{{sfn|Pirie|1961|pp=87–88}} Four grades of note quality were introduced: grade 1 was the highest quality, to be used in neutral countries and by Nazi spies; grade 2 was to be used to pay collaborators; grade 3 was for notes that were to be possibly dropped over Britain; grade 4 were too flawed to be of use and were destroyed.{{sfn|Bower|2001|pp=48–49}}

The Nazi authorities were so pleased with the results of the operation that twelve prisoners, three of whom were Jewish, were awarded the [[War Merit Medal]] while six of the guards received the [[War Merit Cross]], 2nd class.{{sfn|Littlejohn|Dodkins|1968|p=126}}

[[File:100 USD 1934.jpg|thumb|The [[United States one hundred-dollar bill|US $100 note]] ''(obverse of the 1934 series pictured)'' was considered more difficult to counterfeit because of the complex artwork involved.]]
In May 1944 [[Ernst Kaltenbrunner]], an SS {{lang|de|[[Obergruppenführer]]}} ([[General of the branch]]) in the {{lang|de|[[Reich Security Main Office|Reichssicherheitshauptamt]]}} (Reich Security Main Office; RSHA), ordered that the counterfeiting unit begin to produce forged [[Federal Reserve Note|US dollars]].{{sfn|Pirie|1961|p=158}}{{sfn|Malkin|2008|p=150}} The artwork on the notes was more complex than that of the British currency and caused problems for the forgers. Additional challenges they faced included the paper, which contained minute silk threads, and the [[intaglio (printmaking)|intaglio]] printing process, which added small ridges to the paper.{{sfn|Malkin|2008|pp=150, 151}}

The prisoners realised that if they managed to fully counterfeit the dollars, their lives would no longer be safeguarded by the work they were undertaking, so they slowed their progress as much as they could. The journalist Lawrence Malkin, who wrote a history of Operation Bernhard, writes that prisoners considered this to have the tacit approval of Krüger, who would face front-line duty if Operation Bernhard ended.{{sfn|Malkin|2008|pp=150–151}}{{sfn|Bower|2001|p=52}} In August 1944 [[Salomon Smolianoff]], a convicted forger, was added to the production team at Sachsenhausen to aid the counterfeiting of US dollars, although he also assisted in quality control for the pound notes.{{sfnm|Malkin|2008|1pp=153, 158|Tiley|2007|2p=53|Bower|2001|3pp=48–49}}{{refn|Bower gives the date of Smolianoff's arrival into Sachsenhausen as January 1943.{{sfn|Bower|2001|p=48}}|group=n}} The Jewish prisoners working on the operation at the time complained to Krüger at having to work with a criminal, so he was given his own room to sleep in.{{sfn|Bower|2001|p=48}}

In late 1944 the prisoners had counterfeited the [[obverse and reverse|reverse]] of the dollar, and the obverse by January 1945. Twenty samples of the $100 note were produced—without the serial number, whose algorithm was still being examined—and shown to Himmler and banking experts. The standard of engraving and printing was considered excellent, although the paper used was technically inferior to the genuine notes.{{sfnm|Bower|2001|1pp=52–53|Pirie|1961|2p=163}}{{refn|Dollar bills of the 1940s were half-linen, half-cotton with a transparency standard of 35 per cent; small pinpricks were visible in the paper when it was examined under a microscope. Under the late wartime conditions in which raw materials were growing scarce, it was not possible to produce an exact match for the paper.{{sfn|Malkin|2008|p=96}}|group=n}}

===Laundering and use of the forged notes===
[[File:Labers Castle - South Tyrol.jpg|thumb|Schloss Labers, the SS-run facility where the money was stored]]

The counterfeit money was transported from Sachsenhausen to Schloss Labers, an SS-run facility in the [[South Tyrol]]. It was put through a money laundering operation run by [[Friedrich Schwend]], who had been running an illegal currency and smuggling business since the 1930s.{{sfnm|1a1=Nachtstern|1a2=Arntzen|1y=2008|1p=27|2a1=Malkin|2y=2008|2pp=74–75|3a1=Burger|3y=2009|3p=153}}{{refn|Schwend (sometimes given as "Fritz" and "Schwendt"), also worked under the aliases of Fritz Klemp and an SS major, Dr Wendig.{{sfn|Ruffner|2002|p=46}}{{sfn|Burger|2009|p=153}}|group=n}} He negotiated a deal in which he would be paid 33.3% of the money he laundered; 25% was given to his agents undertaking the work—as payment to them and their sub-agents, and for expenses—leaving him with 8.3%.{{sfn|Bower|2001|p=50}} He recruited what he called "salesmen" in various territories, and built a network of 50 agents and sub agents; some of these were Jewish, deliberately selected because there was less chance that the authorities would consider them to be working for the Nazis. He informed his agents that the money had been seized from the banks of occupied countries.{{sfn|Malkin|2008|pp=129–130}}

Schwend was given two objectives: to exchange the counterfeit money for genuine [[Swiss franc]]s or [[United States dollar|US dollars]], and to assist with the funding of special operations, including buying [[black market]] arms from the [[Yugoslav Partisans]] then selling them to pro-Nazi groups in [[Southeast Europe]]. He also arranged for the counterfeit notes to pay the Turkish agent [[Elyesa Bazna]]—code named Cicero—for his work in obtaining secrets from the British ambassador in [[Ankara]].{{sfnm|1a1=Nachtstern|1a2=Arntzen|1y=2008|1p=27|2a1=Ruffner|2y=2002|2p=46}}{{refn|Bazna realised the notes were forgeries after the war; he sued the West German government for compensation, lost, and died in poverty in Munich in 1970.{{sfn|Nachtstern|Arntzen|2008|p=27}}|group=n}} Counterfeit notes with a [[face value]] of £100,000 were used to obtain information that helped to free the Italian leader [[Benito Mussolini]] in the [[Gran Sasso raid]] in September 1943.{{sfn|Bower|2001|pp=51–52}}