Operation Bernhard: Nazi Germany’s Plot to Counterfeit British and American Currency — What Every Currency Collector Should Know

In the early 1940s, deep inside the Sachsenhausen concentration camp north of Berlin, Jewish prisoners with backgrounds in engraving, printing, and banking were forced to execute one of the most audacious financial warfare schemes in history. Operation Bernhard, named after SS Major Bernhard Kruger who oversaw its later phase, set out to destabilize the Allied economies by flooding them with counterfeit currency. The operation ultimately produced over 130 million British pounds in forged notes and came disturbingly close to turning its sights on the United States dollar. For currency collectors, the story is not merely historical drama: it is a masterclass in paper money authentication, a cautionary tale about what motivated modern security printing, and the source of some genuinely collectable wartime artifacts that still surface in the numismatic marketplace today.

Origins: Andreas Naujocks and the First Phase

The concept of large-scale currency counterfeiting as a weapon of war did not originate with Kruger. It was SS Sturmbannfuhrer Alfred Naujocks who proposed and launched the initial effort, Operation Andreas, in 1939. Naujocks, already notorious for staging the false-flag Gleiwitz incident that triggered the German invasion of Poland, believed that flooding Britain with fake pounds would trigger hyperinflation and erode public confidence in the Bank of England. The early effort struggled badly. German printers could not replicate the distinctive texture of the Bank of England’s hand-laid paper, and initial specimens were rejected by experts almost immediately.

The Bank of England had, since 1853, used a paper manufactured almost exclusively from new cotton and linen rags with a specific laid pattern and distinctive watermark featuring Britannia. Replicating this paper proved to be the single greatest technical obstacle the forgers faced, and it remained so for years. Operation Andreas produced notes that were visually convincing but physically betrayed themselves to any cashier who had handled genuine British currency daily. The operation was effectively shelved by 1941 with little to show for its efforts.

Kruger Takes Over: Sachsenhausen Block 19

SS Major Bernhard Kruger restructured the operation in 1942, relocating it to Block 19 and later Block 18 of Sachsenhausen concentration camp. His key insight was that the technical expertise to defeat the Bank of England’s printing methods existed among the Jewish prisoners within the Nazi camp system. Kruger recruited approximately 140 prisoners across the operation’s lifetime, selecting engravers, lithographers, currency experts, and even a former Bank of England employee. Working under threat of death while also receiving marginally better food and conditions than the general camp population, these men performed the impossible.

By late 1942, the Sachsenhausen team had cracked the paper problem. A German paper mill, believed to be Hahnenmuehle in the Harz Mountains, was compelled to produce a rag stock that closely mimicked the Bank of England’s specific fiber composition and felt finish. The watermark, depicting Britannia seated within an oval border, was reproduced by hand-crafting a custom dandy roll. Spectroscopic analysis conducted after the war confirmed the watermark quality was extraordinarily close to genuine.

The Denominations Targeted and Why

The forgers concentrated on four denominations of Bank of England currency: five pounds, ten pounds, twenty pounds, and fifty pounds. The five-pound note, universally known as the White Fiver due to its large uncolored format, was the most commonly forged because it was the workhorse of British commercial transactions and the easiest for a German agent to pass in neutral countries such as Sweden, Switzerland, Spain, Portugal, and Turkey without arousing suspicion. The notes measured approximately 211 by 133 millimeters, printed in black ink on the distinctive white paper with intricate copperplate engraving on the obverse only.

The ten-pound and twenty-pound notes were produced in smaller quantities and used primarily to fund actual Nazi intelligence operations. Agents in neutral countries used these notes to pay informants, bribe officials, and purchase strategic materials. The fifty-pound notes were produced in the smallest quantities and served as the primary vehicle for larger financial transactions and agent funding. Historians estimate the breakdown of production roughly as follows: 80 to 90 million five-pound notes, 25 to 30 million ten-pound notes, 10 to 15 million twenty-pound notes, and a smaller quantity of fifties, perhaps 5 million or fewer.

How Close Were They, Really?

This is the question that haunts currency historians. The honest answer is: extraordinarily close. After the war, the Bank of England commissioned a classified study of recovered Bernhard notes. The report, portions of which were declassified decades later, concluded that the forgeries were of a quality that would deceive trained bank tellers under normal transaction conditions. The engraving quality of the Britannia vignette, the serial number typography, and the overall print registration were all rated as near-identical to genuine examples.

The primary detection weaknesses identified were subtle. First, the forged notes showed minor inconsistencies in the spacing of the chief cashier’s signature, particularly in specimens signed by Kenneth Peppiatt (chief cashier from 1934 to 1949). Second, the ultraviolet fluorescence of the forged paper differed from genuine Bank of England stock, though ultraviolet examination was not standard banking procedure during the war. Third, some later-production forged notes showed slight tonal variations in the engraved shading of the architectural elements on the reverse side of higher denomination notes.

The American Dollar: The Target That Got Away

Here is where the story becomes most directly relevant to collectors of US currency. By 1943, emboldened by the success of the pound forgeries, Operation Bernhard expanded its ambitions to include the United States dollar. The primary target was the Series 1934 Federal Reserve Note in the $100 denomination, specifically the notes bearing the signatures of Secretary of the Treasury Henry Morgenthau Jr. and Treasurer of the United States W.A. Julian.

The technical challenges were considerably greater than those posed by the Bank of England notes. American currency in the 1930s and 1940s incorporated several printing and paper innovations that the British pound lacked. The Bureau of Engraving and Printing used a specific blend of cotton and linen fiber paper manufactured exclusively by Crane and Company of Dalton, Massachusetts, embedded with red and blue security fibers randomly distributed throughout the sheet. The distinctive green Treasury seal and serial numbers were printed in a separate operation using a proprietary ink formula. The fine-line geometric lathe work surrounding the portrait of Benjamin Franklin on the $100 note was executed to tolerances that pushed the limits of 1940s engraving technology even for the BEP itself.

The Sachsenhausen team, working under Kruger’s direction, made measurable progress. Former prisoners later testified that the engraving of the Franklin portrait was essentially completed and judged to be of acceptable quality by 1944. The red and blue security fiber problem was partially solved by manually embedding colored threads into the forged paper stock. However, the team never successfully replicated the specific feel and composition of Crane paper, and the proprietary green ink used for the Treasury seal resisted chemical analysis sufficiently to prevent accurate reproduction.

In early 1945, as Allied forces advanced into Germany, the entire Operation Bernhard apparatus was relocated from Sachsenhausen to Mauthausen and its subcamps in Austria. The dollar counterfeiting project was abandoned before producing any notes suitable for distribution. The printing plates, equipment, and the prisoners themselves were moved by train in February 1945, a journey conducted under SS guard with the explicit understanding that the prisoners might be executed to prevent any disclosure of the operation. They were not: the approaching Allied armies made mass murder increasingly impractical for the SS command, and the prisoners survived to liberation.

Lake Toplitz and the Recovery of Evidence

In the final days of the war, SS officers loaded crates of forged British pound notes, along with printing equipment and documents, onto trucks and disposed of them in Lake Toplitz in the Austrian Alps. The lake, remote and extremely deep in sections, was chosen precisely because recovery would be difficult. They were right, but only partially. Austrian police and later professional salvage teams conducted recoveries in 1959, 1963, and most comprehensively in 2000 under a joint Austrian government and National Geographic Society operation.

The 2000 expedition recovered wooden crates containing an estimated 70 to 100 million pounds worth of forged Bank of England notes, along with documents related to the operation. The recovered notes were in various states of preservation, having spent 55 years submerged in cold, low-oxygen water. Some were essentially pulped; others, sealed in wax-lined inner packaging, were surprisingly legible. The Austrian government and the Bank of England agreed that the recovered notes would not be released into commerce and would be preserved for historical and research purposes.

Smaller quantities of Bernhard notes had already entered the collector market through various channels in the postwar decades. Some were retained as souvenirs by Allied soldiers who encountered them. Others surfaced through neutral-country banking channels in the late 1940s. A small number were authenticated and sold through specialized currency auctions in Europe beginning in the 1970s.

Impact on American Currency Security

Even though the dollar counterfeiting effort failed, Operation Bernhard had a profound indirect impact on United States currency design and production philosophy. The wartime intelligence reports detailing the German progress on dollar forgeries reached the Bureau of Engraving and Printing and the Treasury Department’s Secret Service division. These reports accelerated discussions about long-term security improvements that would eventually bear fruit decades later.

The postwar era saw the BEP intensify its use of microprinting concepts, refine its ink formulations in collaboration with chemists at the Treasury, and conduct ongoing research into paper security. The security fiber program in Crane paper was refined and standardized. While the dramatic security overhaul of US currency (polyester security strips, color-shifting ink, and modern microprinting) did not arrive until the Series 1990 $100 notes and the comprehensive redesign beginning with Series 1996, the philosophical framework for those improvements was shaped in part by the wartime counterfeiting threat that Operation Bernhard represented.

The Series 1934 $100 Federal Reserve Note that Operation Bernhard targeted remained in production through the Series 1950 issues, but the Treasury maintained heightened awareness of its vulnerabilities throughout this period. Collectors of these notes should understand that the Morgenthau-Julian signature combination on Series 1934 and 1934-A notes represents not just a historical signature variety but a specific piece of currency that Nazi Germany spent years attempting to replicate.

The Prisoners Who Made It Possible

No account of Operation Bernhard is complete without acknowledging the human dimension. Adolf Burger, a Slovak Jewish printer who was one of the Sachsenhausen forgers, survived the war and published his memoir, which formed the basis of the 2007 Austrian film “The Counterfeiters” (Die Falscher), which won the Academy Award for Best Foreign Language Film. Burger actively resisted the operation by deliberately introducing subtle defects into some of his work, a form of resistance that carried mortal risk.

The prisoners operated in a moral crucible: cooperation extended their lives but potentially aided the Nazi war economy, while sabotage risked immediate execution but served the Allied cause. The nuances of their choices, documented in postwar testimonies and Burger’s own writings, remain among the most ethically complex stories in the history of currency and printing.

Conclusion: What Operation Bernhard Teaches Collectors

Operation Bernhard occupies a unique place in the history of paper money because it forces every collector to confront a fundamental truth: a banknote’s value as an object of study lies not only in its official origin but in everything that has happened to it and because of it. The forged British pounds produced at Sachsenhausen are simultaneously criminal artifacts, historical documents, and technically remarkable objects. Certified examples deserve a place in serious collections of wartime currency not in spite of their fraudulent nature but because of what their existence reveals about the technology of currency, the politics of financial warfare, and the extraordinary human story embedded in every sheet of paper.

For American collectors specifically, the operation serves as a reminder that the Series 1934 Federal Reserve Note, often overlooked in favor of rarer large-size type notes or exotic error currency, carries a weight of wartime history that few other 20th-century US issues can match. It was the note that Nazi Germany’s finest counterfeiters could not crack. That is not a bad credential for a note that can still be acquired in circulated grades for well under a hundred dollars.