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Construction did not progress beyond some blastings; and, second, that all the men slated to command the troops in the Alps had expressed their willingness to co-operate with the Allies in frustrating Hitler's last grand design. My report to Dulles brought forth genuine sighs of relief. Mr. Dulles stated quite frankly that my report to him, and the assurances I was authorized to sup- ply, removed the last road bloc :.om the victorious path of the Allies. When Germany's defeated leaders set their signatures under the instruments of total capitulation. my work as Hitler's master spy came to all end. I thought that the past would recede from me rapidly and that I could return to "nor- mal life," to begin my studies where I interrupted them 10 years before. A few months ago, however, this weird past returned to me abruptly for a fleet- ing moment. It came in the form of a strange and embarrassing discovery, re- minding me of the manner in which Hey- drich used to do business. The most secret of his operations. about which we used to speak only in hushed tones, was suddenly exposed by the chance dis- covery of a couple of Austrian fishermen. The secrets o our "Operation Bern- hard" were ou:. The last mysterious plot of World War II tad lost its mystery. Two fishermen on the Austrian lake called Traunsee came upon big green and red patches on the surface of the lake that at first seemed to them a strange variety of water lilies. On closer examination they found that in reality they were pieces of paper, floating by the thousands on the surface of the lake. They picked up an armful of them and returned to their village with their find, You may imagine the surprise of the quiet village folk when the pieces of paper turned out to he-English pound notes.) I am able to clear up the mystery of their discovery and explain the sudden appearance of millions of English Approved For Release 2008/04/09: CIA-RDP7000058R000100080035-4 Approved For Release 2008/04/09: CIA-RDP7000058R000100080035-4

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Approved For Release 2008/04/09: CIA-RDP70-00058R000100080035-4 potato: in till )avian Ur. It _was mon- ey p7lnte .. 1;lun.Sncret Service on ley driclx a -tit dt ra -dumped into the sea when this; cud of the war found us with caches ,of it still on our hands. Early in our game, and contrary to widespread belief, the Lerman secret service was woefully short of ready rash. What we needed tverc dollars and pounds, the international currency of the espionage business. But neither the Ministry of Finance nor the Rcichsbank had adequate supplies to pay for our quaint operations. Already, in 1939. in the wake of his discovery of the counterfeit rubles. Hey- drich hit upon the idea of printing the money we so urgently needed. At first. the technical difficulties proved almost insurmountable. No matter how hard they tried, they couldn't duplicate the intricate paper design the British usted in printing their five-pound notes. Never- theless. the technical branch of the se- cret service finally succeeded in produc- ing counterfeit pounds which were so good that most of Ilie banks of the world accepted them. But it was not until 1913 that the se- cret service could begin the dissemina- tion of these counterfeit pounds in great- er quantities. We had to devise fantastic methods to hiring this money into circu- lation. A special branch was set tip with- in the secret service which was devoted exclusively to the distribution of the counterfeit notes. A network of special agents was estab- lished in Italy. They sold the pound notes to Italians for genuine lire and then used the lire- to boy genuine pounds on Switzerland's black market. The loss- es we suffered in these transactions were enormous. But what did it matter as long as we were printing 'our own pounds? Soon another method was found to get rid of the millions of pounds on hand. It became known that the Partisans of Yugoslavia were only too glad to sell some of the supplies they received from the Allies-provided they were paid in pounds or dollars. This led to the de- velopment of the most fantastic business in the history of iiartm-e. The l:erm.nl secret service appeared on the scent' as the buyer of automatic weapons which Tito received front the Allies. Soon the business was flourishing to the point where whole trainloads of Allied sup- plies came into our hands. They were paid for with forged English pound notes. Our buyers Iraveled freely in the regions controlled by the Partisans even while our troops Itad it hard time fight- in, against tlicnt. The counterfeiting of dollar notes suc- ceeded only inward the end of the war. but cycn then the notes proved to be so primitive that our agents refused to ped- dle them. Only shortly before the sur- render did the Cct-man Secret Service succeed in iniproe ing the quality of these forgeries, but there was no tints left to bring then' into circulation. The British understandably took a very serious view of this operation. 'I'hev discovered the existence of these counter- feit notes when an airman of the lloval Air force was t'ailght at all airport in the act of smuggling French currency into Britain. He had all kinds of money on kiwi. including British pound notes. And on closer scrutiny. more than 10 per cent of them proved counterfeit. The airtuan confessed that Its received them as part of his winnings in it Ilc1- gian gambling casino. This discovery alerted the Bank of England and Scot- land Yard. More and more forged pound notes were discovered and. in the words of one of Britain's outstanding spy ex- perts. "the notes were such perfect forgeries that any British bank would have accepted theta as geniiitie without the sliglitest hesitation." A special forgery squad was formed by Scotland Yard under the famous In- spector Jack Smith. nne of Britain's legendary spy catchers. Squads of Scot- land