This was written before the previous essay, which was about the economy of Nazi Germany, but is better read after it. This piece is about the compromises Switzerland had to make to live next to Nazi Germany, and how it managed to keep the Nazis out, all through the war. I reviewed the book because it was a fascinating history, and also to prod libertarians think about the limits of their creed, which opposes conscription. Here, I thought, conscription was warranted.
The piece ran in Liberty, March 2001.
Review of Angelo M. Codevilla, Between the Alps and a Hard Place: Switzerland in World War II and the Rewriting of History, Regnery, 2000.
In 1995 a campaign of vilification against Switzerland was begun in the U.S. news media. Information had come out, it seemed, that the Swiss had cooperated with Nazi Germany during the war, that it that it had manufactured armaments for sale to the Wehrmacht, that it had taken Nazi gold, and that Swiss banks had taken the deposits of thousands of foreign Jews. When the depositors or their surviving relatives came to collect the deposits after the war, the banks demanded passbooks and other documents that no longer existed. The bourgeois Swiss, with their wristwatches and chocolate bars, had built their prosperity as accomplices to the Holocaust.
There was a demand for money. The heirs of the account-holders should be paid. And there should be compensation generally for the whole disgraceful episode.
On August 12, 1999, the two largest banks in Switzerland agreed to pay $1.25 billion, and the campaign of vilification suddenly ended.
Had these two banks sat on $1.25 billion in stolen assets? Actually no, writes Angelo M. Codevilla, professor of international relations at Boston University. Actually, there had been several efforts to track down account holders over the years, the latest being a commission headed by Paul Volcker, the former chairman of the Federal Reserve Board. Actually, the $1.25 billion bore no relationto money owing to any victim.
Actually, he writes, it was a shakedown.
Part of Between the Alps and a Hard Place is Codevilla’s argument that the campaign against Switzerland was a legal hold-up of two Swiss banks by Edgar Bronfman, president of the World Jewish Congress and, not coincidentally, the largest family donor to the Democratic Party. In Codevilla’s account, Bronfman used high-priced attorneys, a State Department undersecretary, a U.S. senator, the U.S. press, a federal judge in Brooklyn, and the comptroller of the New York City government, who threatened to contest the merger of the two Swiss banks unless they settled the lawsuit. And because the two banks earned about $4 billion in profit each year from New York, they agreed to pay $1.25 billion to make Bronfman and his lawsuit go away.
Officially, this was not a U.S. government demand, but unofficially it was. “What the Clinton Administration did to Switzerland amounted to extending abroad the American interest-group process, by which government officials purchase the support of some citizens by renting to them the power to impose costs on others,” Codevilla writes.
I found this part of the story interesting because I once interviewed one of the high-priced lawyers, who explained to me the legal theory under which it was filed. He used a law passed in the 1700s called the Alien Tort Act, which had been pretty much forgotten for 200 years, and something else called customary international law, which evolved out of the Nuernburg trials. The theory behind his claim would justify many others, he said, including suing 150-year-old U.S. corporations for having benefited from slavery.
But that was the least interesting part of the book. More fascinating was the tale of how the Swiss kept their freedom and independence in World War II. From 1933, Switzerland had a border with Nazi Germany. It watched as Germany invaded every otherterritory with a German-speaking population. From 1940 to 1945 Switzerland was surrounded by warlike states much larger than it was. And yet it managed to have the Nazis respect its territory.
How did the Swiss do it? The common answer is that Switzerland was in the Alps, and would have been too much trouble to take over. And that’s correct, Codevilla writes, but not just because of some mountains. It was the Swiss bloody-minded determination to hole up the army in those mountains, leaving three-quarters of the population undefended. The plan was to admit no countrymen into the Alpine Redoubt. Moreover, the army was willing to fight to the death knowing that it had nowhere to retreat and would inevitably lose.
No other country in Europe was so obviously willing to do that. Swiss patriotism had to do with its identity as a political nation rather than an ethnic group, with a tradition of independence that went back centuries. Far more than the Germans, the Swiss had been strongly influenced by classical liberalism. The Swiss government, however, had increased its powers during World War I and the Depression and had intervened in the economy to create employment. The resulting bureaucracy, the industrialists and the labor unions, were willing to accommodate the Nazi New Order to an alarming extent. The more traditional Swiss church and Swiss military were far less willing to bend. “The political will to resist Nazi Germany and assert the old Swiss decencies resided far more in ordinary people than in sophistictes,” Codevilla writes.
In 1939 the Swiss parliament abdicated its power for the duration of the war. Codevilla, who is
of the “realist” school of foreign policy, says this was not a realistic thing to do. It shut down debate within the government and made it more difficult to overrule bad policy.
But in the Swiss system the federal government is weak. The nation had other voices. In 1940 the head of the Swiss army, Gen. Henri Guisan, had a meeting of the officer corps in the alpine meadow where the original three cantons created the Swiss Confederation 700 years before. On this sacred ground, this politically incorrect warrior told them their Swiss and Christian duty was fight to the last man. He spoke around the country under the auspices of a private foundation called Army and Hearth. Christians also took a hard line against Nazism, in the pulpits and with their own news service.
The Swiss had a free press until 1940, when the government, under Nazi pressure, instituted censorship. It was relatively mild. Factual reporting was OK, but it was forbidden to be overtly anti-German. Fortunately, Codevilla writes, the censor’s job was given to the army, which soon decided that an anti-German press was its friend. Patriots noted that Czechoslovakia and Austria had muzzled their press to please Germany and had been invaded anyway. The Swiss press still had to put up with finger-wagging officials telling it to be careful, and with occasional intrusions by German diplomats, but it played a crucial role.
Germany’s economic lever on Switzerland was its position as monopoly supplier of coal. When France fell, Germany cut off shipments of coal to Switzerland just to make a point. The point was, Swiss industry was to furnish war goods and accept payment in Reichsmark credits. Essentially, this meant the Nazis were getting the war goods for free, with the Swiss government paying exporters with gold-backed francs taxed from the Swiss people. In 1943, after the fall of Stalingrad, the Swiss insisted on being paid in real money: bars of gold. This, writes Codevilla, is “one of history’s finest illustrations of the principle that the value of economic assets depends rather strictly on the balance of power.”
The Swiss also produced war goods for the Allies, mainly watches and jewel bearings for aircraft navigation. After 1941, these were smuggled out through Axis territory. By 1943, 20% of Swiss exports were to Allies—and were paid for in gold deposited at the Federal Reserve Bank of New York. But its use of that gold was subject to Allied economic-warfare bureaucrats. Switzerland was pressured by both sides and did business with both sides. It is what small countries have always done. To believe it could have taken a moral stand and refused to deal with Germany, Codevilla argues, is to be “ignorant of history and of how nations deal with each other when they are serious.”
Nor was Switzerland “enriched” by business with Nazis. From 1940 to 1943, the clearing deficit at the Reichsbank amounted to 7% of Swiss GDP. Add to that the monopoly price the Germans put on coal and essentially 12% of Swiss output was simply taken by Germany. But the countries Germany occcupied typically were squeezed for three to four times that level, so it wasn’t such a bad deal. Consider it Danegeld.
Swiss wages fell sharply during the war. The wealth not paid to labor was paid to the Nazi war machine, to the Swiss army, and lost in the gross inefficiency of Switzerland being cut off from supplies and markets and having to grow its own food.
Codevilla concedes that Switzerland’s behavior toward Jewish refugees was not always the most humane, but argues that it has to be evaluated in historical context. From 1933 to 1938, German Jews were admitted freely, Switzerland being the only European country not to demand visas, but eventually had to move on to Spain, Portugal or overseas. Tens of thousands of Jews arrived in 1938, when the Nazis annexed Austria and staged the Kristallnacht. The first border restrictions were imposed, but many Jews were admitted anyway. On Aug. 13, 1942, Swiss borders were closed to all refugees, on the grounds that the country was full; refugee organizations countered by threatening to go underground and help refugees illegally. The order was partly countermanded. Proportional to its population, Switzerland at war’s end held five times as many Jewish refugees as the United States.
During the war, there were all kinds of individual moral choices the Swiss could make. This is not a book about that; it is about the choices a nation made. Switzerland compromised greatly on matters of money and trade, and much less on its political values. It maintained most of its liberty, though at the cost of universal male conscription. Well, it is one thing to oppose conscription when you have an ocean between you and the enemy, and you are bigger than he is; it is another when he is 30 times your size, and you are separated by nothing more than a small river.
The bottom line on the Swiss strategy is that it was tested in World War II, and it worked. It kept the Swiss independent and largely free. And it kept them alive.