Nazi Germany succeeded in "destroying" confidence in British bank notes across Europe by flooding the continent with forgeries during World War II

 

Nazi Germany succeeded in "destroying" confidence in British bank notes across Europe by flooding the continent with forgeries during World War II, according to secret files made public Friday. By the end of the six-year conflict, the fakes were so rife they were not accepted in mainland Europe, papers released from the National Archives showed. Nazi Germany began forging British notes in 1940 in preparation for the planned invasion of Britain, according to a report drawn up in August 1945 by Sir Edward Reid of MI5, the domestic security and counter-intelligence service. A captured German agent said the plan was to scatter the notes by air over Britain during an invasion "in order to create loss of confidence and general confusion". Although the invasion plan was abandoned after the Battle of Britain, when the Luftwaffe failed to gain aerial supremacy over the Royal Air Force, the Nazi forgers carried on churning out the fake notes. "What they subsequently produced was a type of forgery so skilful that it is impossible for anyone other than a specially trained expert to detect the difference between them and genuine notes," Reid reported. The forgers produced counterfeit sterling with a face value of £134 million -- the equivalent of 10 percent of all sterling in circulation. The fakes were circulated in neutral Spain and Portugal, to raise money while simultaneously damaging confidence in sterling, and also began turning up in Egypt. The practice backfired when it turned out that German agents being sent to Britain had been issued with the fake notes, quickly alerting the authorities to their presence. Reid reported that one department of the German secret service would be selling the forged notes in Lisbon, and another department buying them in the belief that they were genuine. Few of the notes reached Britain before the Allied invasion of France in 1944, when they began turning up in large numbers, mainly due to the activities of Allied troops. "It turned out that what was common was the selling of army stores on the French black market and the using of the francs so received to buy British notes to send or smuggle home," Reid wrote. "A good deal of undesirable activity took place in this way, and although British troops undoubtedly did their share, it appears that American and Polish troops were both more active and more adept in this line." Reid admitted that by the end of the war, the German forgers had achieved their objective. "At present no one will accept a Bank of England note in any neutral country of Europe except at a very large discount," he wrote. He recommended recalling all notes worth £5 and over, which the Bank of England did, issuing fresh notes with a metal strip as an added security feature. The fake notes were made by Jewish inmates at the Sachsenhausen concentration camp, whose experiences were dramatised in the film "The Counterfeiters".