Cover photo: The Resolutions of the Bank of Spain regarding Gold Reserves in the 1930s.

Text by Periklis Dervisis.

It was October 22, 1936, when Major Orlov ¹, in collaboration with Juan Negrin, the then Minister of Finance of Republican Spain, began loading the country’s gold onto the ships Kine, Neva, Kursk, and Volgoles in the port of Cartagena, destined for Odessa.² With Franco’s Army of Africa just 115 kilometers from Madrid in the summer of 1936, the Republican leadership decided to hide the country’s gold reserves, the fourth largest in the world at that time, by initially transferring them to the fortified coastal town of Cartagena, away from the Nationalists.

However, at the suggestion of Stashevsky, the Soviet trade attaché in Madrid, Negrin had already decided to send the gold and precious stones of the country out of Spain, without informing the cabinet of the destination. For the loading of the gold, Orlov had received from Colonel Krovozein, commander of an armored “brigade” that had disembarked in Cartagena just two weeks earlier, 20 trucks and personnel. Locals were not used because the Republican leadership believed that if it became apparent to the Spaniards that Russians were taking the country’s gold, it would lead to a civil war within the civil war. All transactions, counting, and clandestine movement of gold were, of course, done with the full cooperation of the well-known communist, Dolores Ibaruri.

The loading of the spanish gold (Oro de Moscú) took three nights, and on October 25, the four ships set sail for Odessa, always under the fear of German air strikes. By November 2, the Kine, Neva, and Volgoles had reached the USSR, with the Kursk following two days later. The operation was accompanied by four Spanish officials sent by the Republicans. As the gold arrived in Moscow one day before the anniversary of the October Revolution (according to the old calendar), the reception was made by Stalin himself with a banquet and generous amounts of alcohol, as befitting the occasion.

On February 5, 1937, the Spanish ambassador and Soviet representatives Grinko, Commissioner of Finance, and Krestinsky, Commissioner of Foreign Affairs, signed the final acceptance act for the deposit of Spanish gold. Paragraph 2, section 4 of the document stated that the Spanish government retained the right to re-export or use the gold, and the last clause of the document stated that the Soviet Union would not be held responsible for the use of the gold by the Spanish authorities. This clause specified that “if the government of the Republic ordered the export of the gold deposited by the USSR or used the said gold in any other way, the responsibility assumed by the People’s Committee of Economics (Ministry of Finance of the USSR) would automatically be reduced in whole, or in part, in proportion to the actions taken by the government of the Spanish Republic.”

It was clear that the gold deposits in Moscow could be freely used by the Republican authorities, exporting or cashing them, and the Soviet authorities would not assume any responsibility. It is worth noting that the USSR transferred ownership of the gold to the Republican government, not to the Bank of Spain, the legal owner. However, as usual in such cases, complaints soon reached Stalin and Molotov about the embezzlement of Spanish gold by members of the Spanish Communist Party. Beria was immediately ordered to investigate the matter, and he, in turn, sent Sudoplatov, then a special assistant to the Director of the Foreign Department and later the orchestrator of Trotsky’s assassination, to check the transaction records at Gohran, the Precious Stones Service of the Ministry of Finance of the Soviet Union.

His investigation concluded that no embezzlement had occurred, and the value of 518 billion dollars in gold and jewelry (1938 values) had all ended up in the Moscow treasury. This value did not include the face value of the coins, which was greater than the quantity of gold contained in the coin itself. Those involved in the events were, of course, removed very quickly. Stashevsky and the Soviet ambassador to Spain, Rosenberg, were executed in 1937 and 1938, respectively.

Orlov, fearing for his life, escaped to the United States in 1938. Grinko, Krestinsky, Margoulis, director of the Precious Stones Service of the Ministry of Finance, and Kagan, director of the Foreign Exchange Service, were executed or disappeared in various ways, accused of “actions detrimental to the USSR.” The four Spanish officials sent to oversee the operation were detained by Stalin until October 1938, when they were allowed to leave the Soviet Union for Stockholm, Buenos Aires, Washington, and Mexico City, respectively. The Spanish ambassador Marcelino Pascua was transferred to Paris.

The lack of gold as collateral for banknotes caused a 1,500% inflation in areas controlled by the Republicans (in nationalist-controlled areas, inflation was 40%). After the war, the Spanish government attempted to repatriate the gold from the USSR, only to receive the reply that it had all been used to pay for the military aid received during the civil war, as well as the cost of its transportation to Moscow. In addition, Spain seemed to owe 50 million dollars, with all the above having Juan Negrin’s signature.

«The Spaniards will never see their gold again, just like they don’t see their ears», Joseph Stalin.

Bibliography

P. and A. Sudoplatov, J. and L. Schecter, “Special Tasks”, publ. Back Bay Books, 1995.

D. Kowalsky, “Soviet Diplomacy and the Spanish Civil War”, publ. Gutenberg, 2004.

Footnotes

1. Major is the equivalent of Colonel in Western ranks. ↩︎
2. The ship Vogloles achieved fame 26 years later, carrying missiles during the Cuban Missile Crisis. ↩︎