Europe’s Crumbling Myths – Ronald Zweig – Restitution: Why did it Take 50 Years, or did it?

By 1943 the Allies were convinced they were going to win the war. They started preparing for the invasion of ltaly and for moving into northern Europe. Simultaneously, they initiated detailed contingency planning in many fields. Among these was the care of an estimated 14 million displaced persons in the areas they intended to occupy. These included prisoners of war, slave laborers, voluntary workers, concentration camp inmates and others. Ultimately the number of dis­ placed persons totaled less than half their estimate. According to Ronald Zweig, a Professor of Modern Jewish History at Tel Aviv University, the future of Europe’s surviving Jews was analyzed within this much larger framework.

The Future of the Jewish Survivors

“The planners were hampered by both factual and policy uncertainties. They did not know how many Jews remained alive in Western and Central Europe nor what the situation would be further east. Policy questions included whether the Jews should be dispersed and resettled, like everyone else, throughout Europe, and who would be responsible for rehabilitating their communities. The American and British authorities turned to the one Jewish organization with which the Americans had particularly close relations, the American Joint Distribution Committee (AJDC). The official American position more-or-less came down to ‘what­ ever the American Jewish lobby wants, we will support.’

“One of the Allies’ ideas was to use Jewish communal and heirless private property to resettle the refugees, most of whom were not thought to be Jews. The Jewish organizations vehemently opposed this, arguing that Jewish property should be exclusively used to rehabilitate Jews. When the American and British forces liberated many Jews, the American authorities accepted this position. They had expected far fewer Jewish survivors.”

Claims against Germany

“Discussions were held on the general claims to be brought against  German assets, as reparations for Germany’s having initiated the war. Jewish organizations argued that not only could the Soviet Union, the U.S., Britain and France bring claims against the Germans, but that the Jews could too. The Americans accepted this position, proposing that the Jews receive 2% of whatever reparations payments were made. The British however, strongly opposed this proposal. They said the Jews were not an allied nation and had not fought in that capacity against the Germans, nor did they have a government. They thus should not be entitled to any such assets.”

Zweig claims that the British used this rationalization in line with their approach in their 1939 White Paper. “They considered the idea of a ‘Jewish nation’ a Zionist canard. The British also assumed that much of any money received would go to illegal Jewish organizations in Palestine, such as the Hagana. They did not want to encourage the concept of Jewish nationhood, stating that Jews should be regarded as nationals of the Jewish faith of whatever individual European country they should be resettled in. The Americans rejected these views. They were dominant in the discussions; and they had a tendency to decide things unilaterally and then, more-or-less impose their decisions on the other countries involved.”

The Assets Available

“Among the assets that became available for distribution, were selected German possessions in such neutral countries as Sweden, Switzerland, Portugal and Turkey. It was decided that the Jewish people would receive $25 million of these, plus non-monetary gold found in Germany, which the Germans had stolen from their victims. Major discussions were held on these assets. Initially the non-monetary gold was estimated at many hundreds of millions of dollars (several billions of dollars today) but the amount ultimately available was far less. In the end, the Jewish organizations received not more than 3.5 million dollars from the non-monetary gold account, a tiny fraction of the anticipated sum.

“In 1946 the Americans ran into conflict with the British over the Palestine question. The British had initially said they would accept the conclusions of the Anglo-American Committee of Enquiry, whatever these would be. They then reneged on their commitment to allocate 100,000 certificates for Jewish immigrants to Palestine. The Americans -who saw this as a solution for the displaced persons camps, where less than 100,000 Jewish survivors remained – viewed this British turnabout very negatively. They wanted to give the British a diplomatic slap in the face on the reparations issue, to express their displeasure with the British position on Palestine.

“In the spring of 1946, the Americans convened the ‘Five-Power Conference on Reparations for Non-Repatriable Victims of German Action,’ in Paris, to deal with Jewish reparations. Eli Ginzberg, a previous director of the American United Jewish Appeal (UJA), was appointed chairman. The Conference decided that the Jewish victims would  be represented  exclusively by the AJDC and the Jewish Agency. The money would be first sent to the International Refugee Organization (IRO), which had been established to take care of displaced persons. The IRO, in turn, would send the money to the two Jewish organizations.

“Other organizations, such as the American Jewish Congress and the World Jewish Congress, also tried to play a role in aiding the Holocaust survivors in the displaced persons camps, but did not succeed in obtaining official recognition.”

Palestine and the Fate of the Survivors

“As far as Jewish public opinion was concerned, the two main issues were the battle in Palestine and the fate of the Holocaust survivors.  The status of the AJDC and the Jewish Agency in the Jewish world was strengthened by the importance of the latter issue and non-Jewish recognition of their role in helping the survivors.

“In April 1945 the American army  discovered a potash mine in Merkers, Thuringia, where valuables were stored, including approximately 150 crates of Jewish assets. There are photographs, taken when these were opened, showing Shabbat candlesticks, kiddush cups, etc. The Americans developed a very broad definition of the ‘non-monetary gold’ to be transferred to the Jewish organizations. It comprised not only gold from teeth and Jewish silverware but also items such as securities, coins and other valuable collectables.

“By 1946 it had already become apparent that the monies set aside for the non-repatriable victims of Nazi persecution were inadequate. In the meantime much heirless Jewish property had been found, mainly real estate but also other assets. For instance, when the Americans liberated the Buchenwald concentration camp, they discovered many Jewish valuables which SS staff members, without the knowledge of their superiors, had hidden in a cave nearby.

“The biggest single discovery of looted Jewish assets was a gold train in Austria. The British declared that since Austria was not Germany, the Jews had no claims there. The Americans said that, as far as the fate of victims’ loot is concerned, Austria should be considered similar to Germany. The one and a half tons of Jewish silverware discovered there were partly sold at auctions. Another part was melted; and the remainder was sent to displaced persons camps to be used in courses teaching various professions to the survivors.”

Communal and Private Properties

“Yet another issue was Jewish communal property. Where no Jewish community remained, the property was transferred to the AJDC and the Jewish Agency. There were many complicated cases. What was to be done with a Jewish community like Augsburg, where 3,000 Jews had lived before the war? It owned substantial property at central locations in the city. After the war, however, the community numbered  a mere 50 Jewish  refugees from Poland.  Should this community be considered the property’s owners, or should the assets be taken over by the AJDC and the Jewish Agency for the more general benefit of Jewish survivors?

“There were many similar dilemmas. Surviving heirs could present their claims for private property; but tens of thousands of houses previously owned by mur­dered Jews without surviving heirs were inhabited by Germans. The Jewish organi­zations tried to convince the American military occupation authorities that such problems had to be resolved.”

Zweig elaborates: “For the Americans, the right to private property was an important principle. They considered returning such property to its rightful owners after the war as part of restoring morality to the world. On the other hand, the Americans wondered whether they should antagonize the Germans, whom they were trying to reeducate to become good democrats.

“So the occupying American, British and French authorities did nothing effective on this issue during 1946–47. The Russians remained equally inactive; but it was rumored that the Soviet authorities had decided  to  return  Jewish­ owned real estate. The Americans had always believed the Jewish pressure was justified, since the property concerned had been stolen from the victims. The possibility that the Russians might precede them shocked the Americans and gave them a great impetus to deal with the matter.

“The German authorities, however, did not want to return any property to the Jews. Ultimately the Americans imposed legislation. In October 1947, a military law was passed requiring all property ‘Aryanized’ by illegal seizure to be returned to the original owners. Current owners would have to prove their legal ownership. This would be tried before German courts; but there was a right of appeal to an American tribunal.”


“The Americans inserted an important clause in the law entitling Jewish restitution ‘successor organizations’ to claim heirless property. It took the Jewish world 10 months to establish a special organization for this purpose. Although many Jewish bodies participated in its establishment, the Jewish Restitution Successor Organi­zation (JRSO) was dominated by the AJDC and Jewish Agency.

“By December 1948 the JRSO had presented 163,000 real estate claims, based on files from German ‘Aryanization’ offices. When the available data was inadequate, the JRSO’s executives went through 1938 telephone books and claimed all properties with a Jewish sounding name! This rather broad and haphazard procedure was deemed necessary because one could always withdraw a claim, but no new claims could be submitted after a certain deadline. Approxi­ mately 40% of the claims presented under this legislation were actually  non-Jewish ones.

“In the period’s disorderly circumstances, the JRSO occasionally won un­justified court cases, although this property was ultimately  returned.  Eventually the procedure became more routine and, for a brief period during the early 1950s, the JRSO became the largest real estate operator in Germany. Expelling Germans from such properties was politically unpopular and various German state governments proposed paying a global sum for the JRSO’s rights, without investigating individual cases in detail.

“The Bavarian government, for instance, reached such a global settlement with the JRSO and paid the money immediately. The Bavarian authorities then proceeded further with the claims themselves, and even made a profit out of them. The Jewish organizations involved were agreeable to such arrangements as they desperately needed the money for displaced persons. It also helped them end an ongoing unpleasant confrontation with German public opinion.”

Reparations and Indemnification

“By the early 1950s it had become clear that the Jews wished to claim damages for many other matters besides properties stolen by the Germans. The issues at stake then became reparation and indemnification. Such claims referred to immaterial damage, such as damage to health, incarceration in camps and subsequent suffering as refugees. Jewish organizations did not want to negotiate such sensitive issues with Germany directly. They tried to pressure the occupying powers to deal with them; but the Americans, British and French responded that, while they agreed with such claims, the Jews would have to take the initiative.

“This became an extremely sensitive issue both in Israel and the Diaspora. The initial talks were kept secret. Germany wanted to reach a settlement with the world and, in this context, also the Jews. Germany was not yet a member of the United Nations, while Israel was. Israel and the Jewish organizations embarrassed Germany at every possible opportunity. When Germans spoke at international conferences, the Israeli delegation walked out.

“The Israelis also claimed that the Allies’ conception of a ‘new Germany’ was fictional. They showed that Germany’s current representatives were bank managers, military officials and politicians who had held important positions under the Nazis.” Zweig mentions that, for a short time, there was a higher percentage of Nazi party members in the post-war German civil service than under Hitler.

“When Germany gained independence in 1951, international organizations began winding down their activities, with the intention of handing over the responsibilities for the remaining refugee camps to the Germans. The latter didn’t want the embarrassment of taking care of these people and hoped that the Jewish world would look after them. By 1956 only one camp, with 4,000 people, remained. These were survivors who had gone to Israel and returned, who were too sick to go anywhere else, or who had become accustomed to living off public funds. In short, they were the hard core of the refugee problem.”

Israel’s Involvement

“Meanwhile, the Jewish organizations involved had reached a dead-end by the early 1950s. They found unyielding opponents in the Swiss and Austrians; and they were also unable to achieve anything regarding restitution in Eastern Europe. Widespread destruction during and after the war made the latter task very difficult. Now that a Jewish State had been created with its own government, the Jewish organizations gracefully bowed out and transferred all restitution matters to Israel’s foreign office, in the hope that it would continue the fight. However, Israel had different priorities regarding relations with these countries, and reparation issues were neglected.

“Meanwhile, Germany wanted to be able to say that it had started negotiations with Jewish representatives and had made a reasonable offer. It proposed transferring $100,000,000 of cash – which it barely had – to Israel. Although Israel needed this cash to finance its oil purchases, it rejected the offer in 1952. The Jewish world also imposed one important moral condition for progress: It insisted that modern Germany acknowledge its responsibility for the Holocaust. It could not continue blaming the Nazis. Israel persisted in its position that it could not negotiate forgiveness and that Germany could not ‘buy’ it. At the same time, it made clear that Germany had to pay for the damage inflicted upon the Jews.

“In September 1951, Chancellor Konrad Adenauer made a statement before the Bundestag, the German parliament, in which he talked about the indescribable crimes ‘committed in the name of the German people’ against the Jewish world. This expression, to some extent, adroitly avoided the issue. He did not say ‘we did it,’ yet he came as close as politically possible at that time.”

The Beginning of Negotiations

“Israel thereupon started to negotiate with Germany, in 1952, in the name of the Jewish world, together with a newly established organization, the Conference on Jewish Material Claims Against Germany (Claims Conference). The Germans said this was a first step toward spiritual reconciliation. The Israelis did not disagree, considering that such reconciliation might take many years.

“The legal background for these negotiations was complex. The Jewish state was not a sovereign entity when the crimes were committed. Approximating the size of Jewish material losses was another problem. A rough estimate in 1948 of the material claims of the Jews totaled approximately $8 billion in dollars of that year. These covered the period from the rise of the Nazis until the end of the war. The Jewish organizations involved used relatively primitive tools to estimate this figure, since most of their efforts were directed toward studying the legal side of the issue, rather than its economic aspects. Israel and the Jewish diaspora were not sure how much Germany was willing to offer. The diaspora representatives felt Israel’s claims should take priority, but that their claims must also be addressed. They made an agreement with the Israeli government that, if Germany was not willing to pay their organizations, 15% of what Israel would receive would be given to diaspora Jewry.

“Negotiations began in Wassenaar in The Netherlands. Germany negotiated separately with Israel and the Jewish organizations. Although Israel had not been a sovereign state at the time of the Holocaust, it based its legal claim on the absorption of half a million Nazi victims between 1933 and 1952, at an estimated

$3,000 per capita. Israel thus presented a total claim of $1.5 billion. The Jewish organizations said that the diaspora had absorbed many refugees as well, and claimed $0.5 billion. This should be compared with the original total German offer of $0.1 billion.

“The negotiations with Israel broke down and the delegations returned home. Thereafter, the Germans accepted one billion dollars of  Israel’s  claim,  but stated that West Germany represented only 72% of the former German Reich; Israel would have to claim the remaining 28% from East Germany  (which refused to pay anything). Germany offered the diaspora organizations 450 million German marks, spread over 12 years, less than a quarter of their formal claim.

“The Claims Conference was to deal with the money the diaspora received. Ultimately, about 50% of these funds were used for Jews living behind the Iron Curtain. That had to be done secretly, because communist governments did not want to admit that there were needy people in their countries.”

The Jewish Decision Makers

“The Claims Conference’s decisions were, in practice, made by three Jewish leaders: Nahum Goldmann, Chairman of the Jewish Agency and President of the World Jewish Congress, Jacob Blaustein, President of the American Jewish Committee, and Moses Leavitt, Executive Secretary of the AJDC. Goldmann had a diplomatic background, a genuinely cosmopolitan outlook and deep roots in European Jewish culture. He was much better prepared to handle negotiations with the Germans than the Americans. Blaustein controlled major oil interests and was one of the wealthiest men on earth. He was also influential because of his good connections with the White House.”

Despite his many business interests, Blaustein involved himself greatly in the Claims Conference. Zweig relates an anecdote: “Each year the Claims Conference prepared a summary of all applications for funding for the coming year. These were compiled into thick folders called ‘Black Books.’ Blaustein heavily annotated his copy. Goldmann was only interested in the political aspects of the allocations and never opened his. Blaustein reproached him: ‘You do not even look at these books before you vote!’ Goldmann calmly replied, ‘You deal in retail, I am in wholesale.’

“All in all, German restitution after the war to Israel and the Jews amounted, in today’s terms, to about $70 billion. This was far more than the Germans had originally intended to pay; but more and more categories of victims were added as beneficiaries over the years.”


“Austria remained a separate problem, because it claimed to be a victim of the Nazis rather than its partner in the perpetration of war crimes. Wartime damage caused a post-war shortage of 65,000 Austrian housing units, so the Austrians staunchly opposed returning Jewish property. At a famous meeting between Na­ hum Goldmann and the Austrian Chancellor, Julius Raab, the latter asked Gold­ mann what was on the agenda. Goldmann cynically replied that he had come to discuss how much the Jewish world owed Austria. The Chancellor understood the absurdity of the situation. From then on negotiations started with – as elsewhere – Goldmann as the key negotiator. The first stage of restitution began only in the mid-1950s, and it was always niggardly. Not until the early 1990s did Austria finally face its true war history.”

“It was also difficult to negotiate with Austria because a 1943 Allied agreement in Moscow stipulated that Austria should be considered the first country occupied by the Nazis, rather than the first country to collaborate with them. Further, there has never been significant support in the Austrian parliament for restitution. Later international attacks on President Kurt Waldheim, who had concealed his wartime past, first seriously dented the Austrian position. Public pressure began to have a modest success; and the Austrians began making some restitution payments, initially only to those victims still living in Austria, but later also to those outside the country.”

The Reemergence of the Restitution Issue

Zweig concludes that while restitution matters were neglected by Israel for decades they were not entirely forgotten. They remained one of the many war issues unclosed. Finally, in the mid 1990s, restitution became an item of considerable worldwide interest. New negotiations started with several countries and these received much publicity.

Zweig warns against the creation of a new myth that the main restitution negotiations were those of recent years. He points out that the total monies received in these highly publicized renewed negotiations still total no more than about 5% of what had been obtained in the first  post-war  round  described above.

Ronald W Zweig is a Professor of Modern Jewish History at Tel Aviv Univer­ sity. He  was educated at the  University of Sydney  ( Australia )  and  Cambridge University( UK ). He is the author of three books, including ‘German Reparations and the Jewish World: A History of the Claims Conference’ ( London: Frank Cass and Co., 2001), 2nd edition. His most recent work is The Gold Train ( New York: William Morrow, 2002 ). It is a study of the looting of Hungarian Jewry and the fate of their assets.

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