Nazi forgeries to take center stage at new Int'l Spy Museum

More than 5000 pieces from Operation Bernhard will be donated to the museum over several years.

By GEORGE MEDOVOY
The Spy Museum in Washington is housed in this historic building in Washington (photo credit: GEORGE MEDOVOY)
The Spy Museum in Washington is housed in this historic building in Washington
(photo credit: GEORGE MEDOVOY)
Operation Bernhard, the story of the Nazi counterfeiting plot seen in the Academy Award-winning movie The Counterfeiters, will get close attention when the new home of the International Spy Museum opens in early 2019 at L’Enfant Plaza in Washington, DC.
Operation Bernhard was the German codename for the Nazi plan to destroy the British economy.
The plan’s goal was to forge enough British banknotes to flood the market and cause an upheaval in Britain’s economy. To produce the fake money, the Nazis used Jewish concentration camp prisoners – artisans, artists and known forgers.
The spy museum will showcase an actual Operation Bernhard printing plate and samples of the forged pound notes – items the Nazis dumped into Lake Toplitz in Austria near the end of the war.
The counterfeit items are part of the espionage collection of Mr. and Mrs. H. Keith Melton, who pledged the donation of their artifacts and archive – the largest private collection in the world – to the spy museum.
Their 5,000-plus pieces, most of which have never been seen by the public, will be donated over the span of several years and triple the size of the museum.
“Spying is so much more than the glamorous profession we see on television and in films,” said Peter Ernest, International Spy Museum executive director.
“When the new facility opens, it will expand on the foundational narrative of the current museum to more fully convey the ever-evolving nature of intelligence and espionage.
“The Meltons’ collection, painstakingly curated from around the globe, makes it possible for us to tell this multifaceted story in a whole new way.”
The remains of the forged British plate and pound notes are a very important part of the Melton collection, which was amassed over a span over 45 years of travels to more than 20 countries.

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“As far as we know, we have the only surviving printing plate that was created by the Nazis to counterfeit British currency under Operation Bernhard,” said Dr. Vince Houghton, historian and curator of the museum. “All of the plates were thrown to the bottom of the lake at the end of the war, a very deep lake, with the assumption that they would never come to the surface again.”
But over time, the containers holding the plates and the currency began to degrade, and the pound notes eventually floated to the surface.
As Dr. Houghton noted, the plate in the Melton collection is the one that degraded the least.
“Actually,” he said, “you can still make out what it looked like. It’s not in perfect shape because it’s 70-plus years old, but you can certainly still make out what it was and you can… see the craftsmanship that went into it, which is extraordinary.”
Dr. Houghton pointed out that the Nazis had two basic goals for producing the counterfeit notes.
One was to finance their own espionage operations to pay off spies in various parts of the world. “So they were able to finance their operations without actually spending real money to do it,” he said. “That was a huge asset…” “But the bigger mission, of course, was to try to destroy the British economy.
You can create not only an influx of money into the economy – you can cause hyperinflation. But also worse-case scenario, if you’re caught doing this, then everyone is suspecting all British money and… that was incredibly important for trade.
“Once you started actually circulating this money throughout Europe… it was only a matter of time until some of it got back into Britain. But even if you didn’t get into Britain, the idea that there were British banknotes that were fake had implications on the British financial system because all of a sudden the confidence in the system itself falls apart.”
The work on the notes by the concentration camp prisoners was superb.
“THESE ARE very, very well-made notes,” said Dr. Houghton. “It’s not like me making a copy of a dollar bill and you can tell from a mile away that it’s fake. These banknotes are almost impossible to pick up by anyone who is not an expert…” The museum’s curator and historian referred to “millions and millions and millions of dollars in fake British pounds,” which could have a “pretty chilling effect” on Britain’s economy.
“Of course,” he said, “that is the German strategy against the British… The Germans aren’t invading Britain anytime soon. They had a plan to do it; it fails miserably when the Battle of Britain goes badly for the Germans. So the idea is: Can we strangle the British economy?” Of course, the British eventually caught on to what the Germans were doing. The British had double agents who were working both sides and brought back information that there was a German plan to counterfeit British banknotes.
“That tipped off the British enough,” noted Dr. Houghton, “that they started paying more attention to their currency.”
The discovery of the pound notes and the plates came at different times. As for the plates, there was more than one mini-submarine expedition that surveyed the bottom of Lake Toplitz over the years.
“Interestingly,” said H. Keith Melton, author, historian and Spy Museum founding board member, “one of the submersibles in the late 1990s was one of the vessels that had gone down for the Titanic.”
Despite having sat at the bottom of the lake since 1945 to approximately 2000, the plate in the collection is in “remarkably good condition,” said Melton. It will be on display at the spy museum with some of the pieces that arguably were printed from it.
The Melton collection includes 5, 10 and 20-pound notes, which are not in mint condition. But that is exactly what the Nazis wanted, said Melton, because they had “a very fascinating process” by which they made the pound notes look used after they printed them.
Thus, they would have 40 to 50 people stand in a circle and literally with dirty hands pass the notes one to another. During this process, the notes would be crumpled, straightened out and perhaps bent at the corners.
“Some of the individuals would actually make notations on the front and back of the bills,” said Melton, “as individuals in commerce and in banks commonly did during the World War II period. It was a very sophisticated process.”
Houghton estimates that the Nazis used “at least dozens” of concentration camp prisoners in the counterfeiting operation.
Melton, an engineer by degree, graduated from the US Naval Academy in 1966 and since his service in Vietnam, he has had what he called “a fascination with clandestine technologies,” traveling the world and finding examples of spy equipment.
In the process he has learned that “intelligence services often thought very similarly.”
“If you found an example of a microdot reader, for example, that one intelligence service used, very likely the others used very, very similar equipment,” said Melton, who has written a number of books dealing with espionage.