By Daniel C . Munson

The rescue of the British Expeditionary Force from Dunkirk in the early days of World War II is well-known and dramatic enough to be the stuff of cinema . The evacuation of those men , the backbone of the British army , meant Britain could continue to defend her island nation . At that same time , certain less dramatic yet important financial problems confronted the British .

The HMS Emerald , which carried the gold and securities from Britain to North America during World War II .

The Germans had driven the British to the beaches at Dunkirk , and they now planned a land invasion of Britain . The British had every reason to believe the vast bank deposits in their possession were a prime target . German central bank reserves were low in the late-1930s , drained by German Chancellor Adolf Hitler ’ s many military and infrastructure expenditures , and Germany needed gold and hard cash to pay for its imports of raw materials . Germany ’ s annexation of the small and no longer wealthy country of Austria in March 1938 more than doubled Germany ’ s bank reserves from these low levels . “ Whenever Hitler occupied a country ,” Third Reich historian William Shirer wrote , “ his financial agents seized the gold and foreign holdings of its national bank .”

Yugoslavia bordered Austria in the 1930s . In early May 1939 , a Yugoslavian warship eased into Britain ’ s Portsmouth harbor , bearing much of the country ’ s gold reserves , because at that point Britain was considered a safer spot for those reserves than Yugoslavia .

Britain had long been a haven for such stores of wealth , and its total stores were massive . Its reputation for conservative , discreet and profitable banking practices combined with its well-defended perimeter to make it so . The Bank of England had been storing the wealth of people and combatant countries for hundreds of years . ( George and Martha Washington famously owned Bank of England stock during the Revolutionary War , and the bank quietly paid the dividends to their

24 FINANCIAL HISTORY | Spring 2024 | www . MoAF . org