Wikipedia:Articles for deletion/Pentagon Centre

Northern façade of the building of the Bank of Spain in Madrid. The gold reserves guarded inside until 1936 were sent to the Soviet Union during the Spanish Civil War.

The term Moscow gold (Spanish: Oro de Moscú), or Gold of the Republic (Spanish: Oro de la República), refers to the operation by which two-thirds of the gold reserves of the Bank of Spain (510 tonnes) was transferred from its original location in Madrid to the Soviet Union a few months after the outbreak of the Spanish Civil War, as well as to the subsequent issues relating with its sale to the U.S.S.R. and the usage of the funds obtained. The term also refers to the sending of other similar goods seized during the Civil War to Moscow, by order of the government of the Second Spanish Republic, presided by Francisco Largo Caballero, through the initiative of his Minister of Finance, Juan Negrín. The remaining third of the gold reserves (193 tonnes), the so-called Paris Gold, was transported to the French capital and exchanged into French currency.

The term Moscow Gold had already been used in the 1930s by the international press, popularized during the Civil War and the first years of the Francoist régime. During the Cold War, it was also used at an international level by anti-soviet propaganda, contrary to western communist trade unions and political parties, to refer to the supposed source of financing of such groups, considering that such funds were granted in their most part directly by the USSR, coining the derogatory term on Moscow's paycheck.

This episode in Spanish history has been the topic of numerous works of literature and essays based on official documents and records of the time. It has also been the source of strong controversy and historical debate, specially in Spain. Disagreements are centred on the political interpretation of its motivations, its supposed usage and its effects on the development of the conflict, and on its subsequent influence on the exiled Government of the Republic and on the diplomatic relations between the Francoist government and the Soviet Union.

The global communist revolution and the Moscow Gold

Before 1935, as the government of Joseph Stalin focused part of its foreign policy towards the promotion of the so-called global communist revolution of the proletariat, English language media, such as Time magazine, used the term Moscow Gold to refer to the Soviet plans to intensify the activities of the international communist movement, which at the time was manifesting itself timidly in the United States and the United Kingdom. Time considered that the evolution of Soviet policies, which in 1935 supported communist participation in the formation of various popular fronts in a number of countries worldwide, was due in part to Stalin's necessity to counteract Trotskyist criticism.

The Spanish Episode

Context: the initial months of the Civil War

Léon Blum, President of the French Republic.

From 19 July, 1936 onwards, days after the military revolt that lead to the outbreak of the Spanish Civil War, both the government of the Spanish Republic as well as Nationalist General Francisco Franco, at the time commander of the Army in Spanish Morocco, established similar negotiations with France, on the Republican side, and with Italy and Germany through emissaries in Rome and Berlin, on the Nationalist side, in order to seek material support. These initiatives led to the progressive internationalization of the conflict, as the lack of military equipment on both sides necessary to continue the war effort became apparent.

At the start of the Spanish Civil War, the political climate in France was uncertain, with a government dominated by a Popular Front which included in its majority the centrist Radical Party. Despite Léon Blum's support for military intervention in favour of the Republic, combined with the support of the French Communist Party, the Radical Party were opposed and threatened to remove their support for Blum's government. The United Kingdom equally subscribed to such view, warning of the risk of obstructing the policy of appeasement of the Conservative politician Stanley Baldwin. Thus, the French government approved on July 25, 1936, a measure prohibiting the sending of any supplies from France to either of the belligerent sides. On the same day in which the policy of non-intervention of the Western democracies was confirmed, Hitler gave his consent for the sending of a first shipment of airplanes, crew and technical personnel to the Nationalist side in Morocco. Shortly after, Mussolini approved the shipment of a load of cargo airplanes and other supplies that would be later used to transport the Nationalist troops stationed in Africa to the Nationalist-controlled city of Seville on July 29.

On August 1, 1936 the French government forwarded a proposal to the international community for the adoption of a Non-Intervention Agreement in Spain, supported also by the British government on August 7. The Soviet Union, Portugal, Italy and the Third Reich also initially subscribed to the agreement, participating in the Non-Intervention Committee, established September 9. However, the latter three nations maintained their material and logistic support to the Nationalist side, while the Republican government was able to acquire supplies from Mexico and the black market.

Republican (red) and Nationalist (blue) controlled areas, September 1936. Green areas represent the Nationalist territorial gains since the beginning of the war.

During the months of August and September of 1936 Nationalist forces gained important military victories, consolidating the Portuguese border after the Battle of Badajoz on August 14 and closing the Basque-French border after taking control of Irun on September 14. These advances coincided with the progressive shift in Soviet policy towards active intervention. The Soviet Union moved to establish diplomatic relations with the Spanish Republic, and appointed its first ambassador to Spain, Marcel Rosenberg (former Soviet representative to the League of Nations), on August 21.

Towards the end of September of 1936, communist parties of different countries received instructions from the Comintern and from Moscow for the recruitment and organization of the International Brigades, which would enter active combat during the month of November. Meanwhile, the successful conclusion of the Siege of the Alcázar on September 27 in favour of the Nationalist side allowed the forces of General José Enrique Varela to concentrate their efforts on the Siege of Madrid.

Throughout the month of October of 1936, the USSR shipped material aid to the new Popular Front government led by Francisco Largo Caballero, which included two communist ministers. These actions were then defended by the Soviet ambassador to the United Kingdom, Iván Maiskiel, before the Non-Intervention Committee on October 23, by denouncing the aid previously sent by Italy and Germany to Nationalist forces, thereby also being in violation of the Non-Intervention Agreement, and called for the reinstitution of the right of the Republic to arm itself. Five days later, on October 28, 1936, four Soviet cargo-boats set sail from Cartagena carrying the gold evacuated on September 14 from the Bank of Spain.

Status of the gold reserves and state of the Bank of Spain

A few months after the start of the Civil War, the Spanish gold reserves had been registered in international statistics on May 1936 as being the forth largest in the world. They were accumulated primarily during the World War I, in which Spain remained neutral. It is known, thanks tothe records and historical documentation of the Bank of Spain, that the reserves in question were located mainly in the central headquarters of the Bank of Spain in Madrid, although also distributed in various provincial delegations of the Bank of Spain and other minor deposits in Paris, since 1931. The reserves were constituted in their majority by Spanish and foreign coins; the fraction of antique gold was less than 0.01% of the total reserves, a largely insignificant amount of gold, as there were only 64 ingots.

The value of the reserves was known at the time by various official publications. The New York Times reported on August 7, 1936, that the Spanish gold reserves in Madrid were worth 718 million U.S. dollars of the time,. According to historian Ángel Viñas, such figures corresponded to 635 or 639 tonnes of fine gold, or 20.42 or 20.54 millions of troy ounces. According to the statistics of the Bank of Spain published in the official Spanish government newspaper on July 1, the existent gold reserves on June 30, 1936, three weeks before the start of the conflict, reached a value of 5,240 million Spanish pesetas. Viñas calculated that the 718 million U.S. dollars of 1936 were equivalent, adjusted for inflation indexes, to 9,725 million U.S. dollars in 2005. In comparison, the Spanish gold reserves available in September of the same year were 7,509 million U.S. dollars.

File:Cambo2.jpg

Photograph of Francesc Cambó at age 20. As Minister of Finance, he was responsible for the legislation that regulated the conditions for the use of Spain's gold reserves by the Bank of Spain.

In 1936, the Bank of Spain was constituted as a joint stock company (as its French and English counterparts) with a capital of 177 million Spanish pesetas, which was distributed among 354,000 nominative shares of 500 pesetas each. Despite not being a state-owned bank, the institution was subject to the control of both the government, which had the power to appoint the Bank's governor, and the Ministry of Finance, which appointed various members of the Bank's General Council.

The Law of Banking Ordination (Spanish: Ley de Ordenación Bancaria) of December 29 of 1921, alternatively called Cambó Law (Spanish: Ley Cambó) attempted for the first time to organize the relations within the Bank of Spain as a central bank and as a private bank. The law also regulated the conditions under which the gold reserves could be mobilized by the Bank, which required the preceptive approval of the Council of Ministers. The Cambó Law stipulated that the Government had the power to approach the entity and solicit the selling of the Bank's gold reserves exclusively to influence the exchange rate of the Spanish peseta and to "exercise an interventionist action in the international exchange and in the regularity of the monetary market," in which case the Bank of Spain would participate in such action with a quantity of gold equal to that dictated by the Public Treasury.

While authors such as Pío Moa considered that the transfer of gold from the Bank of Spain clearly violated the Law, in the view of Ángel Viñas the implementation of the Cambó Law was strictly followed, based on the testimonies of the last pre-1931 Minister of Finance, Juan Ventosa y Calvell, who, before the outbreak of the Civil War, judged its application to be too orthodox, limiting, in his view, the possibilities of economic growth of the country. According to Viñas, the exceptional situation created by the Civil War caused the change in attitude by the Government with respects to the Cambó Law, which moved on to exercise the necessary measures to carry out a partial undercover nationalization of the Bank of Spain. Other historians, such as Sardá, Miralles, or Moradiellos, have concurred with this interpretation.

The actions of the Republican Government upon the Bank of Spain to place in its management individuals loyal to the Republic was solidified through the Decree of August 4 of 1936, which removed Pedro Pan Gómez from the office of First Sub-Governor in favour of Julio Carabias, a move which 10 days later was followed by the removal from office of various council members and high executives. After the transfer of gold to the Soviet Union on November 21, the modification of the General Council was decreed. The Council underwent new modifications until December 24 of 1937, when nine council members were substituted directly by institutional representatives.

The Paris Gold

Royal Customs House (Spanish: Real Casa de la Aduana), Madrid, central headquarters of the Ministry of Finance.

With the beginning of the Civil War, the Nationalists began to organize their own government machinery, considering those institutions that remained under the control of the Republican government in Madrid as illegitimate and illegal. As such, a parallel central bank, head-quartered in Burgos, was formed. Both Republican and Nationalist banks affirmed to be the legitimate Bank of Spain, both domestically and internationally. The central headquarters of the Bank of Spain in Madrid, and thus its gold reserves, as well as its most important provincial delegations, were kept under the control of the Republican government, while the Nationalists gained control of the provincial delegations within their territory, including Burgos.

On July 26, the newly-formed Government of Prime Minister José Giral announced the sending of part of the gold reserves to France. Nationalist authorities, informed by their contacts in France and in the Republican territory of the Republican government's intentions, affirmed that such usage of the gold was in violation of the aforementioned Cambó Law, and therefore considered such actions illegal. Nationalist authorities emitted a decree on August 25 declaring the credit operations of the Republican government null and void.

Vicent Auriol, Minister of Finance, and Émile Labeyrie, Governor of the Bank of France, agreed to allow these operations to continue, both because of their antifascist convictions and to strengthen their own reserves and the stability of the French franc. The creation of the Committee of Non-Intervention did not obstruct the sending of gold to France, and the government of Prime Minister Largo Caballero, form in September of the same year, continued such policy. London and Paris ignored the complaints of Nationalist authorities about the allegedly unlawful use of the gold.

By March of 1937, 174 tonnes of fine gold had been sent to the Bank of France, equivalent to 27'4% of the total Spanish reserves, in order to purchase military matériel and provisions. These transactions were justified by the Republican government on August 30, in view of the gravity of the situation following the military insurrection, in order to "be able to respond in the extent and intensity necessary to crush the despicable rebellion".

During the last year of the Civil War, 40'2 tonnes of gold deposited in Mont de Marsan were judicially retained, and finally handed over to the Francoist government at the conclusion of the war. This became the only successful claim on the Bank of Spain's gold reserves.

The transfer order and its motivations

On September 13, the reserved decree from the Ministry of Finance which authorized the transportation of the gold reserves of the Bank of Spain was signed, on the initiative of Minister of Finance of the time, Juan Negrín. The decree also called for the Government to eventually answer for their actions to the Cortes Generales, a clause that was never fulfilled:

Minister of Finance

By His Excellence the President of the Republic, on the 13th of this present month, the following confidential decree has been signed: The abnormal situation created within the country by the military insurrection compels the government to adopt those precautionary measures considered necessary to safeguard the metallic reserves of the Bank of Spain, basis of the public credit. The nature of the measure itself and the reasons behind its adoption demand that this agreement be kept confidential. Based on the aforementioned considerations, in agreement with the Council of Ministers, and on the proposal of the Ministry of Finance, I hereby ordain, in confidentiality, the following:

• Article I: The Ministry of Finance is hereby authorized to mandate, when considered necessary, the transportation, with the highest guarantees, and to the location esteemed to be the safest, of the gold, silver, and bills present at the time at the central headquarters of the Bank of Spain.
• Article II: The Government will, when appropriate, answer to the Cortes Generales for the present decree.

Madrid, 13th of September, 1936.

— 

The decree was also signed by the President of the Republic of the time, Manuel Azaña, who would later affirm that the final destination of the reserves was unknown to him. According to Largo Caballero, Añaza was informed about this later on due to his emotional state and his reserved character towards the operation.

Many authors, such as Viñas, have pointed out that the decision to transfer the gold reserves outside of Madrid were motivated by the rapid advance of the Army of Africa, which, since its landing on the Spanish mainland, had incessantly marched forward towards the capital. At the time when the decision was taken, the Army of Africa was stationed at only 116 kilometres from Madrid, and the efforts made up to that point to halt its advance had not been even partially successful. However, Nationalist forces would not arrive at Madrid until two months later, not because of the Republican resistance, but because of Nationalist General Francisco Franco, who decided to deviate his course to aid Nationalist sympathizers in the Siege of Toledo, a highly prestigious operation that consolidated Franco's political position and allowed him to be named Head of State by the Nationalist side on September 29 of 1936. Madrid would withstand the Nationalist offensive until the end of the war, and the Republican government did not relocate to Valencia until November 6.

One of the main protagonists in these events, Largo Caballero, argued that the transfer of the gold reserves were necessary because of the Non-Intervention Pact and the defection of democratic states towards the Republic, which left Madrid under threat from the Nationalist forces. However, Luis Araquistáin, member of the same political party as Largo Caballero, attributed the events to Soviet constraint.