10 - The Extreme Liquidity Creation during the Occupation Years, 1940–1945

Summary

The German Occupation and the Gold Stock

In the early hours of 9 April 1940 German military forces occupied four of the largest cities in southern Norway and Narvik in the north. King Haakon VII, the government and members of the Storting managed to flee from Oslo the same morning, heading north with German troops on their heels and German bombers over their heads. By early June, when the skirmishes between Norwegian and German forces ended, they had all made their way to Britain, where the Norwegian government in exile was established.

The German invasion had taken the political as well the military community by surprise. In some respects Norges Bank was better prepared. Plans for moving the gold stock and other valuables to a location outside the main office in Oslo had been laid in advance. Part of the gold stock had always been kept in a safe depository abroad, but there was a formal requirement that the part of the metal stock that was needed to back the note issue must be held in Norges Bank's vault. Towards the end of 1939 Norges Bank began to take steps to permit the whole gold stock to be located abroad, but the necessary law changes had not been formally sanctioned by the government when the war broke out. But already in 1938 the gold had been made ready for shipment, which came in very handy when it had to be moved quickly to avoid falling into the hands of the Germans.

In the early morning hours of 9 April, fifty tons of gold, transported by twenty-six lorries, left for Norges Bank's branch office in Lillehammer, a town about 185 kilometers north of Oslo, just as German troops marched into the streets of Oslo. The Germans were never close to catching the gold stock once it had left Oslo on 9 April. The next day German soldiers encircled the main office of Norges Bank in Oslo while German officials made inquiries about the gold stock. The deputy governor then declared that the gold stock would not be used ‘in conflict with Norwegian and German interests’, which temporarily appeased the German representatives. On 15 April the Germans returned to the bank, explicitly demanding to know where the gold stock was stored.