Moscow gold
Encyclopedia
Tonne
The tonne, known as the metric ton in the US , often put pleonastically as "metric tonne" to avoid confusion with ton, is a metric system unit of mass equal to 1000 kilograms. The tonne is not an International System of Units unit, but is accepted for use with the SI...
s of gold, corresponding to 72.6% of the total gold reserves of the Bank of Spain, were transferred from their original location in Madrid
Madrid
Madrid is the capital and largest city of Spain. The population of the city is roughly 3.3 million and the entire population of the Madrid metropolitan area is calculated to be 6.271 million. It is the third largest city in the European Union, after London and Berlin, and its metropolitan...
to the Soviet Union a few months after the outbreak of the Spanish Civil War
Spanish Civil War
The Spanish Civil WarAlso known as The Crusade among Nationalists, the Fourth Carlist War among Carlists, and The Rebellion or Uprising among Republicans. was a major conflict fought in Spain from 17 July 1936 to 1 April 1939...
. This transfer was made by order of the government of the Second Spanish Republic
Second Spanish Republic
The Second Spanish Republic was the government of Spain between April 14 1931, and its destruction by a military rebellion, led by General Francisco Franco....
, presided over by Francisco Largo Caballero
Francisco Largo Caballero
Francisco Largo Caballero was a Spanish politician and trade unionist. He was one of the historic leaders of the Spanish Socialist Workers' Party and of the Workers' General Union...
, through the initiative of his Minister of Finance, Juan Negrín
Juan Negrín
Juan Negrín y López was a Spanish politician and physician.-Early years:Born in Las Palmas de Gran Canaria, Negrín came from a religious middle-class family...
. The term also encompasses the subsequent issues relating with the gold's sale to the USSR and the usage of the funds obtained. The remaining fourth of the Bank's gold reserves, 193 tonnes, was transported and exchanged into currency in France, an operation which is also known by analogy as the "Paris Gold".
The term "Moscow Gold" has its origin in anti-Soviet propaganda
Propaganda
Propaganda is a form of communication that is aimed at influencing the attitude of a community toward some cause or position so as to benefit oneself or one's group....
which used the term to discredit the supposed financial support of western trade unions and political parties of Communist ideologies. Before 1935, as the government of Joseph Stalin
Joseph Stalin
Joseph Vissarionovich Stalin was the Premier of the Soviet Union from 6 May 1941 to 5 March 1953. He was among the Bolshevik revolutionaries who brought about the October Revolution and had held the position of first General Secretary of the Communist Party of the Soviet Union's Central Committee...
focused part of its foreign policy towards the promotion of the so-called global communist revolution of the proletariat, English language media (such as Time
Time (magazine)
Time is an American news magazine. A European edition is published from London. Time Europe covers the Middle East, Africa and, since 2003, Latin America. An Asian edition is based in Hong Kong...
magazine) used Moscow Gold to refer to Soviet plans to intensify the activities of the international communist movement, which at the time were manifesting themselves timidly in the United States and the United Kingdom. Also, during the early 1990s the term Moscow Gold was used in France (as l'or de Moscou) in a campaign to disparage the funding of the French Communist Party
French Communist Party
The French Communist Party is a political party in France which advocates the principles of communism.Although its electoral support has declined in recent decades, the PCF retains a large membership, behind only that of the Union for a Popular Movement , and considerable influence in French...
. In reference to the episode of Spanish history, the term was popularized during the Spanish Civil War and the early years of the Francoist régime by the international press.
Since the 1970s this episode of Spanish history has been the focus of many essays and works of literature, many relying on information from official documents and records of the time. It has also been the source of strong controversy
Controversy
Controversy is a state of prolonged public dispute or debate, usually concerning a matter of opinion. The word was coined from the Latin controversia, as a composite of controversus – "turned in an opposite direction," from contra – "against" – and vertere – to turn, or versus , hence, "to turn...
and historical debate, especially in Spain. Disagreements are centred on the political interpretation of its motivations, on its supposed usage, its effects on the development of the conflict, its subsequent influence on the exiled Government of the Republic
Spanish Republican government in Exile
The Spanish Republican government in exile was a continuation of the government of the Second Spanish Republic, which was established in exile after the victory of Francisco Franco's forces in the Spanish Civil War in April 1939...
and on the diplomatic relations between the Francoist government and the Soviet Union.
Historical context
Spanish Civil War
The Spanish Civil WarAlso known as The Crusade among Nationalists, the Fourth Carlist War among Carlists, and The Rebellion or Uprising among Republicans. was a major conflict fought in Spain from 17 July 1936 to 1 April 1939...
began on July 19, 1936, after a failed coup d'état against the government of the Second Spanish Republic
Second Spanish Republic
The Second Spanish Republic was the government of Spain between April 14 1931, and its destruction by a military rebellion, led by General Francisco Franco....
by certain factions of the Spanish Army left approximately a third of the country under the control of the rebel forces. The rebels (also known as the Nationalists) under the leadership of General Francisco Franco
Francisco Franco
Francisco Franco y Bahamonde was a Spanish general, dictator and head of state of Spain from October 1936 , and de facto regent of the nominally restored Kingdom of Spain from 1947 until his death in November, 1975...
established negotiations with Italy and Germany in order to seek material support for the war effort. The Republic also established similar negotiations for the same purpose with France. These initiatives led to the progressive internationalization of the conflict, as the lack of military equipment on both sides necessary to continue the war effort became apparent.
At the start of the Spanish Civil War, the political climate in France was uncertain, with a government dominated by a Popular Front
Popular Front (France)
The Popular Front was an alliance of left-wing movements, including the French Communist Party , the French Section of the Workers' International and the Radical and Socialist Party, during the interwar period...
which included in its majority the centrist Radical Party. Despite French Prime Minister Léon Blum
Léon Blum
André Léon Blum was a French politician, usually identified with the moderate left, and three times the Prime Minister of France.-First political experiences:...
's support for military intervention in favour of the Republic, combined with the support of the French Communist Party
French Communist Party
The French Communist Party is a political party in France which advocates the principles of communism.Although its electoral support has declined in recent decades, the PCF retains a large membership, behind only that of the Union for a Popular Movement , and considerable influence in French...
, the Radical Party was opposed and threatened to remove their support for Blum's government. The United Kingdom equally subscribed to such a view, warning of the risk of obstructing the policy of appeasement
Appeasement
The term appeasement is commonly understood to refer to a diplomatic policy aimed at avoiding war by making concessions to another power. Historian Paul Kennedy defines it as "the policy of settling international quarrels by admitting and satisfying grievances through rational negotiation and...
of the Conservative
Conservative Party (UK)
The Conservative Party, formally the Conservative and Unionist Party, is a centre-right political party in the United Kingdom that adheres to the philosophies of conservatism and British unionism. It is the largest political party in the UK, and is currently the largest single party in the House...
politician Stanley Baldwin
Stanley Baldwin
Stanley Baldwin, 1st Earl Baldwin of Bewdley, KG, PC was a British Conservative politician, who dominated the government in his country between the two world wars...
. Thus, the French government approved on July 25, 1936, a measure prohibiting the sending of any supplies from France to either of the belligerent sides. On the same day in which the policy of non-intervention of the Western democracies was confirmed, Adolf Hitler
Adolf Hitler
Adolf Hitler was an Austrian-born German politician and the leader of the National Socialist German Workers Party , commonly referred to as the Nazi Party). He was Chancellor of Germany from 1933 to 1945, and head of state from 1934 to 1945...
gave his consent for the sending of a first shipment of aeroplanes, crew and technical personnel to the Nationalist side in Morocco. Shortly after, Benito Mussolini
Benito Mussolini
Benito Amilcare Andrea Mussolini was an Italian politician who led the National Fascist Party and is credited with being one of the key figures in the creation of Fascism....
approved the shipment of a load of cargo aeroplanes and other supplies that would be later used to transport the Nationalist troops stationed in Africa to the Nationalist-controlled city of Seville
Seville
Seville is the artistic, historic, cultural, and financial capital of southern Spain. It is the capital of the autonomous community of Andalusia and of the province of Seville. It is situated on the plain of the River Guadalquivir, with an average elevation of above sea level...
on July 29.
On August 1, 1936 the French government forwarded a proposal to the international community for the adoption of a Non-Intervention Agreement in Spain. The British government stated its support for the proposal on August 7. The Soviet Union, Portugal, Italy and the Third Reich also initially subscribed to the agreement, participating in the Non-Intervention Committee
Non-Intervention Committee
During the Spanish Civil War, several countries followed a principle of non-intervention, which would result in the signing of the Non-Intervention Agreement in August 1936 and the setting up of the Non-Intervention Committee, which first met in September...
, established on September 9. However, the latter three nations maintained their material and logistical support to the Nationalist side. The Republican government also managed to acquire supplies from Mexico and the black market.
During the months of August and September 1936 Nationalist forces gained important military victories, consolidating the Portuguese border after the Battle of Badajoz
Battle of Badajoz (1936)
The Battle of Badajoz was one of the first major Nationalist victories in the Spanish Civil War. A series of costly assaults won the Nationalists the fortified border city of Badajoz on August 14, 1936, cutting off the Spanish Republic from neighbouring Portugal and linking the northern and...
on August 14 and closing the Basque-French border after taking control of Irun
Irun
Irun is a town of the Bidasoa-Txingudi region in the province of Gipuzkoa in the Basque Autonomous Community, Spain...
on September 14. These advances coincided with the progressive shift in Soviet policy towards active intervention. The Soviet Union moved to establish diplomatic relations with the Spanish Republic, and appointed its first ambassador to Spain, Marcel Rosenberg
Marcel Rosenberg
Marcel Rosenberg was a Soviet diplomat. The first Soviet ambassador to Spain, he served during the Spanish Civil War.Recalled to the Soviet Union, he was executed during the Great Purge in 1937.-External links:*...
(former Soviet representative to the League of Nations
League of Nations
The League of Nations was an intergovernmental organization founded as a result of the Paris Peace Conference that ended the First World War. It was the first permanent international organization whose principal mission was to maintain world peace...
), on August 21.
Towards the end of September 1936, communist parties of different countries received instructions from the Comintern
Comintern
The Communist International, abbreviated as Comintern, also known as the Third International, was an international communist organization initiated in Moscow during March 1919...
and from Moscow for the recruitment and organization of the International Brigades
International Brigades
The International Brigades were military units made up of volunteers from different countries, who traveled to Spain to defend the Second Spanish Republic in the Spanish Civil War between 1936 and 1939....
, which would enter active combat during the month of November. Meanwhile, the successful conclusion of the Siege of the Alcázar
Siege of the Alcázar
The Siege of the Alcázar was a highly symbolic Nationalist victory in Toledo in the opening stages of the Spanish Civil War. The Alcázar of Toledo was held by a variety of military forces in favor of the Nationalist uprising. Militias of the parties in the Popular Front began their siege on July 21...
on September 27 in favour of the Nationalist side allowed the forces of General José Enrique Varela
José Enrique Varela
José Enrique Varela Iglesias was a Spanish military officer and Carlist noted for his role as a Nationalist commander in the Spanish Civil War.-Early career:...
to concentrate their efforts on the Siege of Madrid.
Throughout the month of October 1936, the Soviet Union shipped material aid to the new Popular Front
Popular Front (Spain)
The Popular Front in Spain's Second Republic was an electoral coalition and pact signed in January 1936 by various left-wing political organisations, instigated by Manuel Azaña for the purpose of contesting that year's election....
Republican government led by Prime Minister Francisco Largo Caballero
Francisco Largo Caballero
Francisco Largo Caballero was a Spanish politician and trade unionist. He was one of the historic leaders of the Spanish Socialist Workers' Party and of the Workers' General Union...
, which included two communist ministers. These actions were then defended by the Soviet ambassador to the United Kingdom, Ivan Maisky, before the Non-Intervention Committee on October 23, by denouncing the aid previously sent by Italy and Germany to Nationalist forces, which also constituted a violation of the Non-Intervention Agreement.
Status of the gold reserves and the Bank
On May 1936, shortly before the start of the Civil WarSpanish Civil War
The Spanish Civil WarAlso known as The Crusade among Nationalists, the Fourth Carlist War among Carlists, and The Rebellion or Uprising among Republicans. was a major conflict fought in Spain from 17 July 1936 to 1 April 1939...
, the Spanish gold reserves had been recorded as being the fourth largest in the world. They had been accumulated primarily during World War I, in which Spain had remained neutral. It is known, thanks to the records and historical documentation of the Bank of Spain, that the reserves in question were, since 1931, located mainly in the central headquarters of the Bank of Spain in Madrid, though some parts were located in various provincial delegations of the Bank of Spain and other minor deposits in Paris. The reserves constituted mostly of Spanish and foreign coins; the fraction of antique gold was less than 0.01% of the total reserves. The amount of gold bullion was insignificant, as the reserves included only 64 ingots.
The value of the reserves was known at the time by various official publications. The New York Times reported on August 7, 1936, that the Spanish gold reserves in Madrid were worth 718 million U.S. dollars
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
at the time. Such figures corresponded to 635 tonnes of fine gold, or 20.42 million troy ounce
Troy ounce
The troy ounce is a unit of imperial measure. In the present day it is most commonly used to gauge the weight of precious metals. One troy ounce is nowadays defined as exactly 0.0311034768 kg = 31.1034768 g. There are approximately 32.1507466 troy oz in 1 kg...
s. According to the statistics of the Bank of Spain as published in the official Spanish government newspaper
Boletín Oficial del Estado
The Boletín Oficial del Estado , Spanish for Official Bulletin of the State, is the official gazette of the Government of Spain. It publishes the laws of the Cortes Generales and the dispositions of the Autonomous Communities...
on July 1, the existent gold reserves on June 30, 1936, three weeks before the start of the conflict, reached a value of 5,240 million Spanish peseta
Spanish peseta
The peseta was the currency of Spain between 1869 and 2002. Along with the French franc, it was also a de facto currency used in Andorra .- Etymology :...
s. Viñas calculated that the 718 million U.S. dollars of 1936 were equivalent, adjusted for inflation indexes, to 9,725 million U.S. dollars in 2005. In comparison, the Spanish gold reserves available in September of the same year were worth 7,509 million U.S. dollars.
In 1936, the Bank of Spain was established as a joint stock company
Joint stock company
A joint-stock company is a type of corporation or partnership involving two or more individuals that own shares of stock in the company...
(as its French and English
Bank of England
The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based. Established in 1694, it is the second oldest central bank in the world...
counterparts) with a capital of 177 million Spanish peseta
Spanish peseta
The peseta was the currency of Spain between 1869 and 2002. Along with the French franc, it was also a de facto currency used in Andorra .- Etymology :...
s, which was distributed among 354,000 nominative shares of 500 pesetas each. Despite not being a state-owned bank, the institution was subject to the control of both the government, which had the power to appoint the Bank's governor, and the Ministry of Finance, which appointed various members of the Bank's General Council.
The Law of Banking Ordination of December 29, 1921, alternatively called Cambó Law ' onMouseout='HidePop("2204")' href="/topics/Francesc_Cambó">Francesc Cambó
Francesc Cambó
Francesc Cambó i Batlle was a conservative Catalan politician, founder and leader of the autonomist party Lliga Regionalista. He was minister in several Spanish governments...
), attempted for the first time to organize the relations within the Bank of Spain as a central bank
Central bank
A central bank, reserve bank, or monetary authority is a public institution that usually issues the currency, regulates the money supply, and controls the interest rates in a country. Central banks often also oversee the commercial banking system of their respective countries...
and as a private bank. The law also regulated the conditions under which the gold reserves could be mobilized by the Bank, which required the preceptive approval of the Council of Ministers
Council of Ministers of Spain
The Cabinet of Spain is a collegiate body composed of the President of the Government , Vice Presidents when existing and the Ministers, and any other member required by law, and in some cases Secretaries of State...
. The Cambó Law stipulated that the Government had the power to approach the entity and solicit the selling of the Bank's gold reserves exclusively to influence the exchange rate of the Spanish peseta and to "exercise an interventionist action in the international exchange and in the regularity of the monetary market", in which case the Bank of Spain would participate in such action with a quantity of gold equal to that dictated by the Treasury.
Historians have questioned the legality of the gold's movement. While authors such as Pío Moa considered that the transfer of gold from the Bank of Spain clearly violated the Law, in the view of Ángel Viñas the implementation of the Cambó Law was strictly followed, based on the testimonies of the last pre-1931 Minister of Finance, Juan Ventosa y Calvell, who before the outbreak of the Civil War judged the application of the current law to be too orthodox, and viewed it as limiting the possibilities of economic growth of the country. According to Viñas, the exceptional situation created by the Civil War caused the change in attitude by the Government with respect to the Cambó Law, which moved on to exercise the necessary measures to carry out a "partial undercover nationalization" of the Bank of Spain.
The intentions of the Republican Government to place in the Bank's management individuals loyal to the Republic were solidified through the Decree of August 4, 1936, which removed Pedro Pan Gómez from the office of First Deputy Governor in favour of Julio Carabias, a move which 10 days later was followed by the removal from office of various council members and high executives. After the transfer of gold to the Soviet Union on November 21, the modification of the General Council was decreed. The Council underwent new modifications until December 24, 1937, when nine council members were substituted for institutional representatives.
Paris gold
_02.jpg)
Burgos
Burgos is a city of northern Spain, historic capital of Castile. It is situated at the edge of the central plateau, with about 178,966 inhabitants in the city proper and another 20,000 in its suburbs. It is the capital of the province of Burgos, in the autonomous community of Castile and León...
, was formed. Both Republican and Nationalist banks claimed to be the legitimate Bank of Spain, both domestically and internationally. The central headquarters of the Bank of Spain in Madrid, and thus its gold reserves, as well as its most important provincial delegations, were kept under the control of the Republican government, while the Nationalists gained control of the provincial delegations within their territory, including Burgos.
On July 26, the newly-formed Government of Prime Minister José Giral
José Giral
José Giral y Pereira was a Spanish politician during the Second Spanish Republic.He had degrees in Chemistry and Pharmacy from the University of Madrid. In 1905 he became professor of chemistry in the University of Salamanca. He founded Acción Republicana with Manuel Azaña...
announced the sending of part of the gold reserves to France. Nationalist authorities, informed by their contacts in France and in Republican territory of the Republican government's intentions, affirmed that such usage of the gold was in violation of the aforementioned Cambó Law, and therefore considered such actions illegal. Nationalist authorities emitted a decree on August 25 declaring the credit operations of the Republican government null and void:
Vincent Auriol
Vincent Auriol
Vincent Jules Auriol was a French politician who served as the first President of the Fourth Republic from 1947 to 1954. He also served as interim President of the Provisional Government from November to December 1946, making him one of only three people who were heads of state of the French...
, French Minister of Finance, and Émile Labeyrie, Governor of the Bank of France, agreed to allow these operations to continue, both because of their antifascist convictions and to strengthen France's own gold reserves and promote the stability of the French franc
French franc
The franc was a currency of France. Along with the Spanish peseta, it was also a de facto currency used in Andorra . Between 1360 and 1641, it was the name of coins worth 1 livre tournois and it remained in common parlance as a term for this amount of money...
. The creation of the Non-Intervention Committee
Non-Intervention Committee
During the Spanish Civil War, several countries followed a principle of non-intervention, which would result in the signing of the Non-Intervention Agreement in August 1936 and the setting up of the Non-Intervention Committee, which first met in September...
did not obstruct the sending of gold to France, and the government of Prime Minister Largo Caballero, formed in September of the same year, continued the former Government's policy. French and British governments disregarded the complaints of Nationalist authorities about the allegedly unlawful use of the gold.
By March 1937, 174 tonnes of fine gold (193 tonnes of crude gold) had been sent to the Bank of France, an amount equivalent to 27.4% of the total Spanish reserves. In exchange, the Republican Ministry of Finance received 3,922 million francs (approximately 196 million U.S dollars), which were used to purchase military materials and provisions. It is known that additional gold, silver and jewellery were smuggled into French territory. These transactions were justified by the Republican government on August 30, in view of the gravity of the situation following the military insurrection, in order to "be able to respond in the extent and intensity necessary to crush the despicable rebellion".
During the last year of the Civil War, 40.2 tonnes of gold deposited in Mont de Marsan were judicially retained, and finally handed over to the Francoist government at the conclusion of the war. This became the only successful claim on the Bank of Spain's gold reserves.
The transfer order and its motivations
On September 13, 1936, the confidential decree from the Ministry of Finance which authorized the transportation of the gold reserves of the Bank of Spain was signed, on the initiative of Minister of Finance of the time, Juan NegrínJuan Negrín
Juan Negrín y López was a Spanish politician and physician.-Early years:Born in Las Palmas de Gran Canaria, Negrín came from a religious middle-class family...
. The decree also called for the Government to eventually answer for their actions to the Cortes Generales
Cortes Generales
The Cortes Generales is the legislature of Spain. It is a bicameral parliament, composed of the Congress of Deputies and the Senate . The Cortes has power to enact any law and to amend the constitution...
(Spain's legislative body), a clause that was never fulfilled:
The decree was also signed by the President of the Republic
President of Spain
Today, Spain is a constitutional monarchy. King Juan Carlos I, the current monarch, is Head of State. The Head of Government has the official title of President of the Government....
of the time, Manuel Azaña
Manuel Azaña
Manuel Azaña Díaz was a Spanish politician. He was the first Prime Minister of the Second Spanish Republic , and later served again as Prime Minister , and then as the second and last President of the Republic . The Spanish Civil War broke out while he was President...
, who would later affirm that the final destination of the reserves was unknown to him. According to Largo Caballero, Azaña was informed afterwards about this decision due to his emotional state and his reserved character towards the operation:
Many authors, such as Viñas, have pointed out that the decision to transfer the gold reserves outside of Madrid was motivated by the rapid advance of the Army of Africa
Spanish Army of Africa
The Army of Africa was a Spanish field army that garrisoned Spanish Morocco from the early 20th century until Morocco's independence in 1956....
(commanded by Nationalist General Francisco Franco
Francisco Franco
Francisco Franco y Bahamonde was a Spanish general, dictator and head of state of Spain from October 1936 , and de facto regent of the nominally restored Kingdom of Spain from 1947 until his death in November, 1975...
) which, since its landing on the Spanish mainland, had incessantly marched forward towards the capital. At the time the decision was taken, the Army of Africa was stationed only 116 kilometres from Madrid, and the efforts made up to that point to halt its advance had not been even partially successful. However, Nationalist forces would not arrive at Madrid until two months later; not because of Republican resistance, but because of Francisco Franco, who decided to deviate his course to aid Nationalist sympathizers in the Siege of Toledo
Siege of the Alcázar
The Siege of the Alcázar was a highly symbolic Nationalist victory in Toledo in the opening stages of the Spanish Civil War. The Alcázar of Toledo was held by a variety of military forces in favor of the Nationalist uprising. Militias of the parties in the Popular Front began their siege on July 21...
in a highly prestigious operation that consolidated Franco's political position and allowed him to be named Head of State by the Nationalist side on September 29, 1936. Madrid withstood the Nationalist offensive until the end of the war, and the Republican government did not relocate to Valencia until November 6.
One of the main protagonists in these events, Prime Minister Largo Caballero
Francisco Largo Caballero
Francisco Largo Caballero was a Spanish politician and trade unionist. He was one of the historic leaders of the Spanish Socialist Workers' Party and of the Workers' General Union...
, argued that the transfer of the gold reserves was necessary because of the Non-Intervention Pact and the defection of democratic states previously favourable towards the Republic, which left Madrid under threat from the Nationalist forces.
However, Luis Araquistáin
Luis Araquistáin
Luis Araquistáin Quevedo was a Spanish politician and writer. Member of the Spanish Socialist Workers' Party from a young age, he belonged to the circle of Largo Caballero and Tomás Meabe, of whom he was a close friend.In 1932 he was named ambassador to Germany and in September 1936 ambassador to...
, member of the same political party as Largo Caballero, attributed the events to Soviet constraint.
The intentions of the FAI (Iberian Anarchist Federation
Federación Anarquista Ibérica
The Federación Anarquista Ibérica is a Spanish organization of anarchist militants active within affinity groups inside the Confederación Nacional del Trabajo trade union. It is often abbreviated as CNT-FAI because of the close relationship between the two organizations...
, by its initials in Spanish) of assaulting the vaults of the Bank of Spain to transfer the gold reserves to Barcelona
Barcelona
Barcelona is the second largest city in Spain after Madrid, and the capital of Catalonia, with a population of 1,621,537 within its administrative limits on a land area of...
, the main bastion of the FAI, were also discussed. The anarchists intended not only to protect the gold reserves, but to buy war supplies on their own account. This plan would have been prepared by Diego Abad de Santillán
Diego Abad de Santillán
Diego Abad de Santillán , born Sinesio Vaudilio García Fernández, was an author, economist and leading figure in the Spanish and Argentine anarchist movements.-Early years:...
, one of the most fervent adversaries of Negrín; however, this is considered inaccurate by the libertarian historian Francisco Olaya Morales, who argues that the gold reserves were transferred to Cartagena
Cartagena, Spain
Cartagena is a Spanish city and a major naval station located in the Region of Murcia, by the Mediterranean coast, south-eastern Spain. As of January 2011, it has a population of 218,210 inhabitants being the Region’s second largest municipality and the country’s 6th non-Province capital...
not for security purposes, but because of a preconceived intention to send the gold to Moscow.
While the majority of historians consider Minister of Finance Negrín the primary actor of the transfer (either by his own initiative or by the manipulation of the Soviets, depending on different interpretations), it is not clear who first had the idea of sending the reserves outside of Spain. The British historian Antony Beevor
Antony Beevor
Antony James Beevor, FRSL is a British historian, educated at Winchester College and Sandhurst. He studied under the famous military historian John Keegan. Beevor is a former officer with the 11th Hussars who served in England and Germany for five years before resigning his commission...
cites versions that attribute to the Soviet agent Arthur Stashevski the suggestion to Negrín of establishing a "gold account" in Moscow, due to the threat posed on Madrid by Nationalist forces and the need to purchase matériel
Materiel
Materiel is a term used in English to refer to the equipment and supplies in military and commercial supply chain management....
and raw materials. Beevor also cites Gabriel Jackson and Víctor Alba, who in their book Juan Negrín, attribute the idea to Negrín himself, arguing that the idea took the Soviets by surprise and that Negrín had to carefully explain his plan to the Soviet ambassador. His friend, Mariano Ansó, defended him by affirming that he "could not have been and was not the author of the transfer of Spanish gold to Russia; at most, he was a cooperative of minor importance of the Spanish Lenin [Largo Caballero] and his counsellors, at the head of which was Luis Araquistáin
Luis Araquistáin
Luis Araquistáin Quevedo was a Spanish politician and writer. Member of the Spanish Socialist Workers' Party from a young age, he belonged to the circle of Largo Caballero and Tomás Meabe, of whom he was a close friend.In 1932 he was named ambassador to Germany and in September 1936 ambassador to...
." According to Martín Aceña, it was Stashevski who proposed the deposit of the gold reserves in Moscow. Walter Krivitsky
Walter Krivitsky
Walter Germanovich Krivitsky was a Soviet intelligence officer who revealed plans of signing Nazi-Soviet non-aggression pact before defecting weeks before the outbreak of World War II....
, General of the Red Army
Red Army
The Workers' and Peasants' Red Army started out as the Soviet Union's revolutionary communist combat groups during the Russian Civil War of 1918-1922. It grew into the national army of the Soviet Union. By the 1930s the Red Army was among the largest armies in history.The "Red Army" name refers to...
and responsible for military intelligence in Western Europe at the time, who later fled to the United States, stated that when Stalin decided to intervene in Spain, he wanted to ensure that there was enough gold so as to pay for the Soviet Union's aid to the Republic.
In any case, it was not until the following day, September 14, that the Council of the Bank of Spain (very reduced after the start of the war) was informed of the Government's decision to appropriate the gold and transfer it. Given that the transfer of the gold had commenced hours before the beginning of the session, the Council was unable to prevent such a decision. Nevertheless, the only two stockholder representatives of the Bank of Spain that had not allied themselves with the Nationalists (José Álvarez Guerra y Lorenzo Martínez Fresneda), submitted their resignation. Martínez Fresneda protested, arguing that the transfer was illegal, since the gold was of the exclusive property of the Bank of Spain, and thus neither the State nor the Government could take hold of it; he also pointed out that the gold guaranteed by law the convertibility of Bank notes, and should therefore remain in the security vaults of the Bank:
Appropriation of the gold and its transport to Cartagena
_06.jpg)
Juan Negrín
Juan Negrín y López was a Spanish politician and physician.-Early years:Born in Las Palmas de Gran Canaria, Negrín came from a religious middle-class family...
, Francisco Méndez Aspe. He was accompanied by Captain Julio López Masegosa and 50 or 60 metallurgists and locksmiths.
The vaults where the reserves were kept were opened, and during numerous days Government agents extracted all the gold there deposited. The gold was placed in wooden boxes, and transported in trucks to the Atocha railway station, from where it was then transported to Cartagena
Cartagena, Spain
Cartagena is a Spanish city and a major naval station located in the Region of Murcia, by the Mediterranean coast, south-eastern Spain. As of January 2011, it has a population of 218,210 inhabitants being the Region’s second largest municipality and the country’s 6th non-Province capital...
. The city of Cartagena was chosen because, in the words of historian Angel Viñas, "it was an important naval station, adequately supplied and defended, somewhat distanced from the theatre of military operations and from which the possibility of transporting the reserves through a maritime route somewhere else was available."
The gold was heavily escorted and was transported via railway, according to witnesses of the events. A few days after the extraction of the gold from the Bank of Spain, Bank functionaries retrieved the Bank's silver, valued at a total of 656,708,702.59 Spanish pesetas of the time, which was later sold to the United States and France between June 1938 and July 1939 for a sum slightly more than 20 million U.S. dollars of the time (a portion of the silver was confiscated by French authorities).
With the gold reserves stored hundreds of kilometres away from the fighting fronts, it seemed that the mandate of the confidential decree of September 13 had been fulfilled. The Nationalists, when informed of the movement of the gold, protested against the events. However, on October 15, Negrín and Largo Caballero decided to transfer the gold from Cartagena to Russia.
On October 20, the director of the NKVD
NKVD
The People's Commissariat for Internal Affairs was the public and secret police organization of the Soviet Union that directly executed the rule of power of the Soviets, including political repression, during the era of Joseph Stalin....
in Spain, Alexander Orlov, received a ciphered telegram from Stalin, ordering him to organize the shipment of the gold to the USSR, and he agreed on the preparations with Negrín. Orlov responded that he would carry out the operation with the Soviet tankers that had just arrived in Spain. In his later statement to a United States Senate Subcommittee, he declared the following:
On October 22, 1936, Francisco Méndez Aspe, Director-General of the Treasury and Negrín's "right hand" man, came to Cartagena and ordered the nocturnal extraction of the majority of gold-containing boxes, of an approximate weight of seventy-five kilograms each, which were transported in trucks and loaded onto the vessels "Kine", "Kursk", "Neva" and "Volgoles". According to Orlov:
The gold took three nights to be loaded, and on October 25 the four vessels set out en route to Odessa
Odessa
Odessa or Odesa is the administrative center of the Odessa Oblast located in southern Ukraine. The city is a major seaport located on the northwest shore of the Black Sea and the fourth largest city in Ukraine with a population of 1,029,000 .The predecessor of Odessa, a small Tatar settlement,...
, a Soviet port in the Black Sea
Black Sea
The Black Sea is bounded by Europe, Anatolia and the Caucasus and is ultimately connected to the Atlantic Ocean via the Mediterranean and the Aegean seas and various straits. The Bosphorus strait connects it to the Sea of Marmara, and the strait of the Dardanelles connects that sea to the Aegean...
. Four Spaniards who were charged with guarding the keys to the security vaults of the Bank of Spain accompanied the expedition. Out of the 10,000 boxes, corresponding to approximately 560 tonnes of gold, only 7,800 were taken to Odessa, corresponding to 510 tonnes. Orlov declared that 7,900 boxes of gold were transported, while Méndez Aspe stated there were only 7,800. The final receipt showed 7,800, and it is not known whether Orlov's declaration was an error or if the 100 boxes of gold disappeared.
The travel and its reception in Moscow
Odessa
Odessa or Odesa is the administrative center of the Odessa Oblast located in southern Ukraine. The city is a major seaport located on the northwest shore of the Black Sea and the fourth largest city in Ukraine with a population of 1,029,000 .The predecessor of Odessa, a small Tatar settlement,...
on November 2 — the "Kursk", however, would arrive several days later because of technical problems. One of Walter Krivitsky
Walter Krivitsky
Walter Germanovich Krivitsky was a Soviet intelligence officer who revealed plans of signing Nazi-Soviet non-aggression pact before defecting weeks before the outbreak of World War II....
's collaborators, General of the State Political Directorate
State Political Directorate
The State Political Directorate was the secret police of the Russian Soviet Federative Socialist Republic and the Soviet Union from 1922 until 1934...
, described the scene at the Soviet port as follows:
The gold, protected by the 173rd regiment of the NKVD
NKVD
The People's Commissariat for Internal Affairs was the public and secret police organization of the Soviet Union that directly executed the rule of power of the Soviets, including political repression, during the era of Joseph Stalin....
, was immediately moved to the State Depository for Valuables (Goskhran), in Moscow, where it was received as a deposit according to a protocol, dated November 5, by which a reception commission was established. The gold arrived at the Soviet capital a day before the 19th anniversary of the October Revolution
October Revolution
The October Revolution , also known as the Great October Socialist Revolution , Red October, the October Uprising or the Bolshevik Revolution, was a political revolution and a part of the Russian Revolution of 1917...
. According to Orlov, Stalin celebrated the arrival of the gold with a banquet attended by members of the politburo, in which he was famously quoted as saying, "The Spaniards will never see their gold again, just as they don't see their ears," an expression based on a Russian proverb.
The gold was stored in the Goskhran under military vigilance, and the remaining boxes of gold carried by the Kursk arrived between November 9 and 10. Shortly after, a recount on the total deposits was carried out; initial estimates suggested that the recount would take a year to complete, and despite it having been done with the utmost care, the recount was finalized in less than two months, having begun on December 5, 1936, and completed on January 24, 1937. 15,571 sacks of gold were opened, and 16 different types of gold coins were found inside: pounds sterling
Pound sterling
The pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence...
(sovereign
Sovereign
A sovereign is the supreme lawmaking authority within its jurisdiction.Sovereign may also refer to:*Monarch, the sovereign of a monarchy*Sovereign Bank, banking institution in the United States*Sovereign...
s or half sovereigns) (70% of the total), Spanish peseta
Spanish peseta
The peseta was the currency of Spain between 1869 and 2002. Along with the French franc, it was also a de facto currency used in Andorra .- Etymology :...
s, French franc
French franc
The franc was a currency of France. Along with the Spanish peseta, it was also a de facto currency used in Andorra . Between 1360 and 1641, it was the name of coins worth 1 livre tournois and it remained in common parlance as a term for this amount of money...
s, Louis
Louis d'or
The Louis d'or is any number of French coins first introduced by Louis XIII in 1640. The name derives from the depiction of the portrait of King Louis on one side of the coin; the French royal coat of arms is on the reverse...
, German mark
German mark
The Deutsche Mark |mark]], abbreviated "DM") was the official currency of West Germany and Germany until the adoption of the euro in 2002. It is commonly called the "Deutschmark" in English but not in German. Germans often say "Mark" or "D-Mark"...
s, Belgian franc
Belgian franc
The franc was the currency of Belgium until 2002 when the euro was introduced into circulation. It was subdivided into centimes , 100 centiem or Centime .-History:...
s, Italian lira
Italian lira
The lira was the currency of Italy between 1861 and 2002. Between 1999 and 2002, the Italian lira was officially a “national subunit” of the euro...
s, Portuguese escudo
Portuguese escudo
The escudo was the currency of Portugal prior to the introduction of the Euro on 1 January 1999 and its removal from circulation on 28 February 2002. The escudo was subdivided into 100 centavos....
s, Russian ruble
Russian ruble
The ruble or rouble is the currency of the Russian Federation and the two partially recognized republics of Abkhazia and South Ossetia. Formerly, the ruble was also the currency of the Russian Empire and the Soviet Union prior to their breakups. Belarus and Transnistria also use currencies with...
s, Austrian schilling
Austrian schilling
The schilling was the currency of Austria from 1924 to 1938 and from 1945 to 1999, and the circulating currency until 2002. The euro was introduced at a fixed parity of €1 = 13.7603 schilling to replace it...
s, Dutch guilders, Swiss franc
Swiss franc
The franc is the currency and legal tender of Switzerland and Liechtenstein; it is also legal tender in the Italian exclave Campione d'Italia. Although not formally legal tender in the German exclave Büsingen , it is in wide daily use there...
s, Mexican peso
Mexican peso
The peso is the currency of Mexico. Modern peso and dollar currencies have a common origin in the 15th–19th century Spanish dollar, most continuing to use its sign, "$". The Mexican peso is the 12th most traded currency in the world, the third most traded in the Americas, and by far the most...
s, Argentine peso
Argentine peso
The peso is the currency of Argentina, identified by the symbol $ preceding the amount in the same way as many countries using dollar currencies. It is subdivided into 100 centavos. Its ISO 4217 code is ARS...
s, Chilean peso
Chilean peso
The peso is the currency of Chile. The current peso has circulated since 1975, with a previous version circulating between 1817 and 1960. The symbol used locally for it is $. The ISO 4217 code for the present peso is CLP. It is subdivided into 100 centavos, although no centavo denominated coins...
s, and an extraordinary amount of U.S. dollars. The total deposit was constituted of 509,287.183 kilograms of gold coins and 792.346 kilograms of gold in the form of ingots: thus, a total of 510,079,529.30 gram
Gram
The gram is a metric system unit of mass....
s of crude gold, which at an average of .900 millesimal fineness, was equivalent to 460,568,245.59 grams of fine gold (approximately 14,807,363.8 troy ounce
Troy ounce
The troy ounce is a unit of imperial measure. In the present day it is most commonly used to gauge the weight of precious metals. One troy ounce is nowadays defined as exactly 0.0311034768 kg = 31.1034768 g. There are approximately 32.1507466 troy oz in 1 kg...
s). This amount of gold was valued at 1,592,851,910 gold-pesetas (518 millions of U.S dollars). Additionally, the numismatic
Numismatics
Numismatics is the study or collection of currency, including coins, tokens, paper money, and related objects. While numismatists are often characterized as students or collectors of coins, the discipline also includes the broader study of money and other payment media used to resolve debts and the...
value of the coins was much higher than the amount of gold they contained, but the Soviets disregarded this when calculating its value. The Soviets did, however, scrupulously examine all coins to identify those that were fake, defective, or did not contain enough gold. The Soviets never explained what was done with the rare or antique coins, however it is doubtful that they were melted. Burnett Bolloten
Burnett Bolloten
Burnett Bolloten was a writer and scholar of the Spanish Civil War.-Biography:Son of a Liverpool jeweler, he was born in the UK. Not wishing to follow his father's career, he began to travel around the Mediterranean...
suggests that it is possible that all coins with numismatic value were separated with the intention of gradually selling them on the international market.
On February 5, 1937 the Spanish ambassador and the Soviet representatives G. F. Grinko, Commissar of Finance, and N. N. Krestinsky, Commissar of Foreign Affairs, signed the final reception act on the deposit of Spanish gold, a document written in French and Russian. Paragraph 2, section 4 of the document stipulated that the Spanish government retained the right of re-exporting or utilizing the gold, and the last clause of the document indicated that the Soviet Union would not be held responsible for the utilization of the gold by Spanish authorities. Said clause established that "if the Government of the Republic ordered the exportation of the gold received as a deposit by the USSR, or utilized said gold in any other way, the responsibility assumed by the People's Commissariat of Finance would automatically be reduced, in whole or in part in proportion to the actions taken by the Government of the Spanish Republic". It was thus clear that the gold reserves deposited in Moscow could be freely employed by the Republic, exporting it or alienating it, and Soviet authorities assumed no responsibility. It is worth noting that the USSR granted the ownership of the gold to the Government of the Republic, instead of to the Bank of Spain, its legally rightful owner.
When, on January 15, 1937, the newspaper of the CNT
Confederación Nacional del Trabajo
The Confederación Nacional del Trabajo is a Spanish confederation of anarcho-syndicalist labor unions affiliated with the International Workers Association . When working with the latter group it is also known as CNT-AIT...
Solidaridad Obrera
Solidaridad Obrera (periodical)
Solidaridad Obrera is a newspaper, published by the Catalonian/Balearic regional section of the anarchist labor union Confederación Nacional del Trabajo , and mouthpiece of the CNT in Spain....
denounced the "absurd idea of sending the gold reserves abroad", the government agency Cosmos published a semi-official note (January 20), affirming that the reserves were still in Spain. Not long after, the disputes between the socialist and communist dominated Republican government and the anarchist organizations and the POUM
Workers' Party of Marxist Unification
The Workers' Party of Marxist Unification was a Spanish communist political party formed during the Second Republic and mainly active around the Spanish Civil War...
would result in the violent clashes of May 1937
Barcelona May Days
Barcelona May Days were a period of civil violence in Catalonia, between May 3 and May 8, 1937, when factions on the Republican side of the Spanish Civil War engaged each other in street battles in the city of Barcelona.Clashes began when units of the Assault Guard – under the...
, ending in an anarchist defeat.
Those involved in the events were soon removed from the scene. Stashevsky and the Soviet ambassador to Spain, Rosemberg, were executed in 1937 and 1938. Orlov, fearing for his life, fled in 1938 to the United States upon receiving a telegram from Stalin. The Soviet Commissars of Finance, Grinko, Krestinsky, Margoulis and Kagan, were executed on May 15, 1938 or disappeared
Forced disappearance
In international human rights law, a forced disappearance occurs when a person is secretly abducted or imprisoned by a state or political organization or by a third party with the authorization, support, or acquiescence of a state or political organization, followed by a refusal to acknowledge the...
in varying ways, accused of being part of the anti-soviet "trotskyist-rightist bloc." Ironically, Grinko was accused of making "efforts to undermine the financial power of the USSR." The four Spanish functionaries sent to supervise the operation were retained by Stalin until October 1938, when they were permitted to leave the Soviet Union to dispersed places aboard: Stockholm
Stockholm
Stockholm is the capital and the largest city of Sweden and constitutes the most populated urban area in Scandinavia. Stockholm is the most populous city in Sweden, with a population of 851,155 in the municipality , 1.37 million in the urban area , and around 2.1 million in the metropolitan area...
, Buenos Aires
Buenos Aires
Buenos Aires is the capital and largest city of Argentina, and the second-largest metropolitan area in South America, after São Paulo. It is located on the western shore of the estuary of the Río de la Plata, on the southeastern coast of the South American continent...
, Washington
Washington, D.C.
Washington, D.C., formally the District of Columbia and commonly referred to as Washington, "the District", or simply D.C., is the capital of the United States. On July 16, 1790, the United States Congress approved the creation of a permanent national capital as permitted by the U.S. Constitution....
and México City
Mexico City
Mexico City is the Federal District , capital of Mexico and seat of the federal powers of the Mexican Union. It is a federal entity within Mexico which is not part of any one of the 31 Mexican states but belongs to the federation as a whole...
, respectively. The Spanish ambassador, Marcelino Pascua, was transferred to Paris.
Use of the deposit
London Stock Exchange
The London Stock Exchange is a stock exchange located in the City of London within the United Kingdom. , the Exchange had a market capitalisation of US$3.7495 trillion, making it the fourth-largest stock exchange in the world by this measurement...
. According to Martín Aceña, 415 tonnes of crude gold (374 tonnes of fine gold) were sold in 1937, then between January and April 1938 another 58 (52) were sold, and out of the remaining gold, 35 (31) tonnes were separated from the original deposit to constitute a second deposit that guaranteed a credit of 70 million U.S. dollars. Thus, by August 1938 a remaining 2 tonnes were still available. The Republic obtained from the selling of the gold a total of 469.8 million U.S. dollars, 131.6 of which remained within the USSR to pay for various purchases and expenses. The Soviets kept 2.1% of the funds in the form of commissions and brokerage, and kept an additional 1.2% in the form of transport, deposit, melting, and refining expenses: in total, slightly less than 3.3%, approximately 14.5 million U.S. dollars. The remaining 72%, 338.5 million U.S. dollars worth, was transferred to the Banque Commerciale pour L'Europe du Nord, or Eurobank, in Paris, the Soviet financial organization in France, property of the Gosbank
Gosbank
Gosbank was the central bank of the Soviet Union and the only bank whatsoever in the entire Union from the 1930s until the year 1987. Gosbank was one of the three Soviet economic authorities, the other two being "Gosplan" and "Gossnab"...
, the national bank of the Soviet Union. From Paris, agents of the Treasury and diplomatic representatives paid for the purchase of matériel acquired in Brussels
Brussels
Brussels , officially the Brussels Region or Brussels-Capital Region , is the capital of Belgium and the de facto capital of the European Union...
, Prague
Prague
Prague is the capital and largest city of the Czech Republic. Situated in the north-west of the country on the Vltava river, the city is home to about 1.3 million people, while its metropolitan area is estimated to have a population of over 2.3 million...
, Warsaw
Warsaw
Warsaw is the capital and largest city of Poland. It is located on the Vistula River, roughly from the Baltic Sea and from the Carpathian Mountains. Its population in 2010 was estimated at 1,716,855 residents with a greater metropolitan area of 2,631,902 residents, making Warsaw the 10th most...
, New York and Mexico, among others.
With the Spanish gold deposited in Moscow, the Soviets immediately demanded from the Republican government payment for the first deliveries of war supplies, which had apparently arrived as a gift to combat international fascism
Fascism
Fascism is a radical authoritarian nationalist political ideology. Fascists seek to rejuvenate their nation based on commitment to the national community as an organic entity, in which individuals are bound together in national identity by suprapersonal connections of ancestry, culture, and blood...
. Stashevski demanded from Negrín 51 million U.S. dollars in accumulated debt and expenses for the transport of the gold from Cartagena to Moscow. On the Nationalist side, German and Italian aids also had to be compensated; however, the Germans and Italians allowed Franco to satisfy his debt once the war came to an end. Authors such as Guillermo Cabanellas, Francisco Olaya Morales, and Ángel Viñas criticized the actions and behaviour of the Soviets:
Historians that have had access to the "Negrín dossier" believe that the Soviets did not abuse their position nor did they defraud the Spanish in their financial transactions. Nevertheless, in the words of María Ángeles Pons: "nothing did the Republicans obtain for free from their Russian friends", as all types of expenses and services had been charged to the Government of the Republic. However, authors such as Gerald Howson believe in the existence of a Soviet fraud in the management of the deposit in Moscow, claiming that Stalin intentionally inflated the price of the matériel sold to the Republic by manipulating the exchange of Russian rubles to U.S. dollars and of U.S. dollars to Spanish pesetas, raising the international exchange rates up to 30% and 40%.
The increased power of the communists at the time, taking advantage of the political pressure that the Soviet Union could exert having control of the gold, is occasionally mentioned among scholars. According to José Giral
José Giral
José Giral y Pereira was a Spanish politician during the Second Spanish Republic.He had degrees in Chemistry and Pharmacy from the University of Madrid. In 1905 he became professor of chemistry in the University of Salamanca. He founded Acción Republicana with Manuel Azaña...
, even though the payments for arms and weapons had been fulfilled, the Soviet Union would not send any supplies if the government of the Republic "did not agree to first appoint important communists to police and military positions."
Ángel Viñas reached the conclusion that the gold deposits were exhausted less than a year before the end of the Civil War, being spent entirely on payment for matériel (including the costs of the operation). However, authors such as Martín Aceña and Olaya Morales criticize Viñas' hypothetical models, which in their opinion lack the evidence to fully validate them, therefore it is impossible for the time being to affirm whether Viñas' conclusion is accurate or not. If, in fact, the gold deposits were entirely sold to the Soviet Union, the fate of all the funds generated by the selling of the gold and transferred to the Banque Commerciale de l'Europe du Nord in Paris, remains uncertain, as no documents have been found, neither Soviet nor Spanish, in reference to such operations. According to Martín Aceña, "the investigation on the gold has not been fully closed." In any case, with the gold depleted, the scarce credit of the Republican Ministry of Finance vanished.
Monetary consequences
Lacking a gold reserve to back up the Republican banknotes, and already suffering from significant devaluation, the Government of the Republic began to issue increasing quantities of banknotes with no backing in gold or silver, thereby increasing the overall paper money in circulation. By April 30, 1938, the number of new banknotes in circulation in Republican-controlled areas was calculated to be 12,754 million pesetas, an increment of 265.8% with respect to the 3,486 million of July 17, 1936; by then 2,650 million were in circulation in the Nationalist-controlled territory, in contrast to the approximately 2,000 million of July 1936. These actions caused massive inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
, and led to the amassment of precious metals by the population. While prices increased by 40% in the Nationalist areas, prices sky-rocketed by up to 15-fold in the Republican-controlled areas. Metallic coins began to disappear and were replaced by paper or cardboard circles. Transactions with Republican banknotes became undesirable, as such notes were already highly devalued, and it was further known that, if Franco were to win the War, those banknotes would lose their full value, since they were all newly-issued series placed in circulation from the start of the War (June 1936) onwards. The State was unable to effectively respond to the lack of metallic currency, causing town halls and other local institutions to print their own provisional bonds, some of which were rejected in neighbouring municipalities.
Propaganda from the Nationalist side contended that such inflation had been premeditated and artificially created.
The Republican Government blamed the ills of the economy on the free market, and proposed as its salvation the nationalization of all prices and other changes on the economy in general. A report presented to the plenary session of the Communist Party of March 1937 by José Díaz Ramos openly reflected the position of the party:
On the international scene, the perception that the Republic was experiencing revolutionary anti-capitalist movement began to arise, favoured by the testimony of Spanish businessmen, such as ex-Minister of the Monarchy and active Nationalist supporter Francesc Cambó
Francesc Cambó
Francesc Cambó i Batlle was a conservative Catalan politician, founder and leader of the autonomist party Lliga Regionalista. He was minister in several Spanish governments...
, an individual of great influence in the financial world. Logically, upon having their interests and properties threatened, the financial world, both Spanish and international, positioned itself unequivocally in favour of the Nationalists (as exemplified by the support of Juan March, Ford and Texas Oil to the Nationalist side, or their facilities to obtain credits), thus accelerating the decline in the international value of the Republican peseta.
Republican division in exile
In the last months of the Civil War, a bitter division was formed among Republicans between those who advocated for uniting the Civil War with the imminent Second World War and those wanting to put an end to the conflict by negotiating with the Nationalists. Negrín, at the time Prime Minister and a supporter of continuing the war, had the sole support of the Spanish Communist Party (PCE); all other parties, including practicality the totality of his own, the Spanish Socialist Workers' PartySpanish Socialist Workers' Party
The Spanish Socialist Workers' Party is a social-democratic political party in Spain. Its political position is Centre-left. The PSOE is the former ruling party of Spain, until beaten in the elections of November 2011 and the second oldest, exceeded only by the Partido Carlista, founded in...
(PSOE), opposed him. Indalecio Prieto
Indalecio Prieto
Indalecio Prieto Tuero was a Spanish politician, one of the leading figures of the Spanish Socialist Workers' Party in the years before and during the Second Spanish Republic.-Early years:...
had publicly separated himself from Negrín in August 1937, after his departure from the Government, where he had been Minister of Defence; in a meeting with PSOE's central committee, he violently accused Negrín of ceding to communist pressure to remove him from the government. Since the Autumn of 1938, the antagonism between communists and socialists resulted in violent clashes.
This divide resulted in the coup d'état
Coup d'état
A coup d'état state, literally: strike/blow of state)—also known as a coup, putsch, and overthrow—is the sudden, extrajudicial deposition of a government, usually by a small group of the existing state establishment—typically the military—to replace the deposed government with another body; either...
of Coronel Casado
Segismundo Casado
Segismundo Casado López was a Spanish Army officer in the Second Spanish Republic during the Spanish Civil War.-Early life:...
in March 1939, actively supported from within the PSOE. The provisional government established thereafter expelled the communists and Negrín supporters from the Republican government, instigated the flight of Negrín from Spain and precipitated the end of the Civil War after attempting to negotiate peace with Franco, who only accepted an unconditional surrender. Accused of being a mere marionette of the communists and of having led the Republic to disaster, the issue of the "Moscow gold" was one of the arguments used against Negrín in the controversies that followed.
After the end of the war, the PSOE initiated a slow reconstruction in exile
Spanish Republican government in Exile
The Spanish Republican government in exile was a continuation of the government of the Second Spanish Republic, which was established in exile after the victory of Francisco Franco's forces in the Spanish Civil War in April 1939...
. The party formed around the ideological leadership of Indalecio Prieto
Indalecio Prieto
Indalecio Prieto Tuero was a Spanish politician, one of the leading figures of the Spanish Socialist Workers' Party in the years before and during the Second Spanish Republic.-Early years:...
from his refuge in Mexico, where party supporters of Negrín had been excluded. The exiled PSOE grouped the leaders of the three political leanings that had divided socialism during the conflict, Julián Besteiro
Julián Besteiro
Julián Besteiro Fernández was a Spanish socialist politician and university professor.-Early life:...
, Indalecio Prieto and Largo Caballero, clearly aligned with an anti-communist and anti-Negrín orientation.
Among the exiled, in particular among the dissidents of the PCE, it was affirmed that since the end of the war the gold, or at least part of it, had not been converted into currency to purchase weapons for the Republic, criticizing the opacity of the Negrín administration, that retained all related documentation and refused to give account to the Government in exile. The criticisms of Francisco Largo Caballero, one of the main figures involved, were especially prominent, which, according to Ángel Viñas, constitute "one of the myths that have blackened the figure of Negrín."
On January 1955, during the high point of McCarthyism
McCarthyism
McCarthyism is the practice of making accusations of disloyalty, subversion, or treason without proper regard for evidence. The term has its origins in the period in the United States known as the Second Red Scare, lasting roughly from the late 1940s to the late 1950s and characterized by...
, the American magazine Time reported on the accusations of Indalecio Prieto and other exiled Republicans in Mexico towards Juan Negrín and his "complicity" with the Soviets in the "long-buried story of the gold hoard". These circumstances were used by the Francoist government, through its embassies in the United States, France and the United Kingdom, to relaunch its diplomatic conflict with the Soviet Union and expressly accuse the USSR of selling the Spanish gold in the European market, even though Time questioned the feasibility of sustaining said accusations. The Francoist government had been informed in 1938 that the reserves had been exhausted and converted into currency, but persisted in demanding the reimbursement of the gold deposit:
The Negrín dossier
The accounting registries of the operation, known as the "Negrín dossier", have allowed researchers to reconstruct the events after the reception of the Spanish gold reserves in Moscow, when the Soviets melted the coins and transformed them into low gold alloy bars, and in return provisioned the bank accounts of the Republic's Ministry of Finance abroad.Juan Negrín died in Paris towards the end of 1956, and his son Rómulo Negrín, following the instructions of his father, handed over the so-called "Negrín dossier" to the legal counsellor of the Minister of Foreign Affairs, Antonio Melchor de las Heras, "to facilitate the exercise of the actions that may correspond to the Spanish State [...] to obtain the devolution of the cited gold to Spain", according to the testimony of the consul at Paris, Enrique Pérez Hernández. The negotiations with the Francoist government had been initiated by the ex-Minister of Justice and friend of Negrín, Mariano Ansó, by request of Negrín himself, who considered that the documents were the property of the Spanish government. A document dated from December 14, 1956, written and signed by Ansó and forwarded by Negrín's son expressed "the deep preoccupation [of Negrín] for the interests of Spain against those of the USSR" and his fear of "the defencelessness to which Spain was being reduced by being deprived of all justificatory documentation of its rights, in a forced transaction, proceeding, perhaps, from the most vast and important operation carried out by two countries." After enumerating other various issues that "weighed down the spirit of Mr. Negrín", among them the Soviet retention of "important and numerous units of the Spanish merchant fleet", according to Ansó, Negrín held that "in a subsequent account liquidation between Spain and the USSR, his duty as a Spaniard obliged him to an unconditional support of the interest of the nation."
The dossier, an incomplete series of documents related to the deposit and administration of the gold of the Bank of Spain, was sent to Alberto Martín Artajo, Minister of Foreign Affairs, and was forwarded to the Lieutenant Governor of the Bank of Spain, Jesús Rodríguez Salmones, who, without inspecting the papers, ordered them to be stored in the security vaults of the institution. Even though the transfer was made with strict discretion, as Negrín had intended for it to remain an absolute secret, the events soon came into public domain, which instigated passionate controversies. In January 1957, Franco sent a diplomatic commission to Moscow, officially to discuss the repatriation of Spaniards — however, it was suspected that the commission's actual goal was the opening of negotiations for the return of the gold, in light of the documentary evidence uncovered by the Negrín dossier.
The same documentation that Negrín had refused to give to the exiled Republican government for over 15 years was willingly handed over to the Francoist authorities. The President of the exiled Republican government, Félix Gordón Ordás, wrote on January 8, 1957:
In April 1957, Time reported that the Soviet government, through Radio Moscow as well as Pravda
Pravda
Pravda was a leading newspaper of the Soviet Union and an official organ of the Central Committee of the Communist Party between 1912 and 1991....
, assured the Francoist government that the gold reserves deposited in Moscow had been used in their totality by the Republican government to "make payments abroad", and were thus "soon all gone". The Mundo Obrero
Mundo Obrero
Mundo Obrero is the periodical of the Communist Party of Spain . It is edited monthly and contains articles related to the Spanish and international political situations, the opinions of the different bodies of the party as well as relevant party members, and on the activities of the Party and the...
newspaper published on May 15 of the same year the following article:
The note did not include any evidence and contradicted statements issued by prominent members of the Republican government. For example, Negrín had affirmed to José Giral
José Giral
José Giral y Pereira was a Spanish politician during the Second Spanish Republic.He had degrees in Chemistry and Pharmacy from the University of Madrid. In 1905 he became professor of chemistry in the University of Salamanca. He founded Acción Republicana with Manuel Azaña...
in 1938 that two-thirds of the gold deposited in Moscow was still available. Also, since the statements issued were not part of an official notice, the Soviet government could distance itself from what had been affirmed if it were to be deemed appropriate. Indalecio Prieto regarded the declarations of Pravda as false, enumerated the expenses of the Spanish funds in the benefit of the French Communist Party
French Communist Party
The French Communist Party is a political party in France which advocates the principles of communism.Although its electoral support has declined in recent decades, the PCF retains a large membership, behind only that of the Union for a Popular Movement , and considerable influence in French...
and affirmed:
Historiography and myth
Even though the decision to use the gold reserves has not given rise to much debate or interest among historians, its final destination continues to be a motive for controversy. Authors like Viñas, Ricardo Miralles or Enrique Moradiellos defend Negrín, both as head of the Ministry of Finance and as Prime Minister (Viñas considers him "the great Republican statesman during the Civil War") and view that the sending of the gold to the USSR had a political, economic and operative rationale accepted by the Republican government. It was, according to the aforementioned, the only viable option faced with the Nationalist advance and the non-intervention of the Western democracies, making the survival of the Republic possible in an adverse international context. For these authors, without the selling of the reserves, there would not have been the slightest possibility of military resistance. On the other hand, Martín Aceña viewed the sending of the gold as a mistake that cost the Republic its financial capability: the USSR was a distant country, of opaque bureaucracy and financial functioning foreign to international norms and guarantees, in such respect that it would have been logical to send the gold to democratic countries such as France or the United States. With respect to Olaya Morales, exiled anarchist during the Francoist régime, in all of his works he described the administration of Negrín as criminal and denies the arguments and theories of Ángel Viñas, considering the "gold issue" a gigantic fraud and one of the most important factors in the Republican defeat.
Authors like Fernando García de Cortázar, Pío Moa or Alberto Reig Tapia have defined the Spanish episode of the Moscow Gold as mythical, used to justify the disastrous situation of post-war Spain.
See also
- Second Spanish RepublicSecond Spanish RepublicThe Second Spanish Republic was the government of Spain between April 14 1931, and its destruction by a military rebellion, led by General Francisco Franco....
- Popular Front (Spain)Popular Front (Spain)The Popular Front in Spain's Second Republic was an electoral coalition and pact signed in January 1936 by various left-wing political organisations, instigated by Manuel Azaña for the purpose of contesting that year's election....
- Bank of Spain
- Foreign involvement in the Spanish Civil WarForeign involvement in the Spanish Civil WarThe Spanish Civil War had large numbers of non-Spanish citizens participating in combat and advisory positions. Foreign governments contributed varying amounts of financial assistance and military aid to Nationalist forces led by Generalísimo Francisco Franco and those fighting on behalf of the...
- International BrigadesInternational BrigadesThe International Brigades were military units made up of volunteers from different countries, who traveled to Spain to defend the Second Spanish Republic in the Spanish Civil War between 1936 and 1939....
- Spain under Franco
- Romanian TreasureRomanian TreasureThe Romanian Treasure is a collection of valuable objects the Romanian government sent to Russia for safekeeping during World War I. It was only partially returned .-Historical background:...
- Nazi goldNazi goldNazi gold is the gold transferred by Nazi Germany to overseas banks during the Second World War. The regime executed a policy of looting the assets of its victims to finance the war, collecting the looted assets in central depositories. The occasional transfer of gold in return for currency took...