The Moscow Gold (), or alternatively Gold of the Republic (), was of gold, corresponding to 72.6% of the total gold reserves of the Bank of Spain, that were transferred from their original location in Madrid to the Soviet Union a few months after the outbreak of the Spanish Civil War. This transfer was made by order of the government of the Second Spanish Republic, presided over by Francisco Largo Caballero, through the initiative of his Minister of Finance, Juan Negrín. The term also encompasses the subsequent issues relating with the gold's sale to the USSR and the use of the funds obtained. The remaining quarter of the Bank's gold reserves, , was transported and exchanged into currency in France, an operation which is also known by analogy as the "Paris Gold".
Since the world now was aware of the existence of a large mass of gold in Moscow, the term "Moscow Gold" would eventually be popularized for any Russian funding worldwide.
Since the 1970s the specific episode in Spanish history has been the focus of many essays and works of literature, many relying on information from official documents and records of the time. It has also been the source of strong controversy and historical debate, especially in Spain. Disagreements are centred on the political interpretation of its motivations, on its supposed usage, its effects on the development of the conflict, its subsequent influence on the exiled Government of the Republic and on the diplomatic relations between the Francoist government and the Soviet Union.
Background
Historical context
The Spanish Civil War began on July 19, 1936, after a half-failed coup d'état against the government of the Second Spanish Republic by certain factions of the Spanish Army left approximately a third of the country under the control of the rebel forces. The rebels (also known as the Nationalists) under the leadership of a junta (Generals Emilio Mola, José Sanjurjo and Francisco Franco) established negotiations with Italy and Germany in order to seek material support for the war effort. The Republic also established similar negotiations for the same purpose with France. 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.Moradiellos 1999Howson 2000
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 French Prime Minister Léon Blum's support for military intervention in favour of the Republic, combined with the support of the French Communist Party, the Radical Party was opposed and threatened to remove their support for Blum's government. The United Kingdom equally subscribed to such a 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, Adolf Hitler gave his consent for the sending of a first shipment of aeroplanes, crew and technical personnel to the Nationalist side in Morocco. Shortly after, Benito Mussolini approved the shipment of a load of cargo aeroplanes 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.Moradiellos 1999, quotes 14 & 15
On August 1, 1936 the French government forwarded a proposal to the international community for the adoption of a "Non-Intervention Agreement in Spain". The British government stated its support for the proposal on August 7."Note de la Sous-Direction d'Europe", 8th of August 1936. DDF, vol. III, nº 108. Moradiellos 1999. The Soviet Union, Portugal, Italy, and Germany also initially subscribed to the agreement, participating in the Non-Intervention Committee, established on September 9. However, the latter three nations maintained their material and logistical support to the Nationalist side. The Republican government also managed to acquire supplies from Mexico and the black market.Moradiellos 1999, quotes 22, 23, 24 & 25
During the months of August and September 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 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 1936, the Soviet Union shipped material aid to the new Popular Front Republican government led by Prime Minister Francisco Largo Caballero, which included two communist ministers. These actions were then defended by the Soviet ambassador to the United Kingdom, Ivan Maisky, before the Non-Intervention Committee on October 23, by denouncing the aid previously sent by Italy and Germany to Nationalist forces, which also constituted a violation of the Non-Intervention Agreement.Moradiellos 1999, quote 27
Status of the gold reserves and the Bank In May 1936, shortly before the start of the Civil War, the Spanish gold reserves had been recorded as being the fourth largest in the world.Statistics of the Bank of International Payments of Basel, May 11, 193611/5/1936. Viñas 2006, p. 112 They had been accumulated primarily during World War I, in which Spain had remained neutral. It is known, thanks to the records and historical documentation of the Bank of Spain, that the reserves in question were, since 1931, located mainly in the central headquarters of the Bank of Spain in Madrid, though some parts were located in various provincial delegations of the Bank of Spain and other minor deposits in Paris.Viñas 2006, p. 111 The reserves consisted mostly of Spanish and foreign coins; the fraction of antique gold was less than 0.01% of the total reserves. The amount of gold bullion was insignificant, as the reserves included 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 (equivalent to $ billion in ). Such figures corresponded to of fine gold,Pons 2006, p. 14Viñas 1976, p. 29 or 20.42 million troy ounces. According to the statistics of the Bank of Spain as 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 US$718 million of 1936 were equivalent, adjusted for inflation indexes, to US$9,725 million in 2005. In comparison, the Spanish gold reserves available in September of the same year were worth US$7,509 million.Viñas 2006, p. 112
In 1782, the Bank of Spain was established 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 Bank of Spain would not become state property until the passage of Law-Decree 18/1962 of July 7 of 1962, on Nationalization and Reorganization of the Bank of Spain (). 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 () of December 29, 1921,Modified on January 24 of 1927 and amended by Law on November 26 of 1931. alternatively called Cambó Law (, named after Minister of Finance Francesc 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 Treasury.
Historians have questioned the legality of the gold's movement. While authors such as Pío MoaMoa 2001Moa 2003 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,Between February 18, 1931 and the following April 15. , who before the outbreak of the Civil War judged the application of the current law to be too orthodox,Viñas 2006, p. 113; the author quotes the articles of Juan Ventosa in España Económica y Financiera (May 23, 1936) and ABC (May 29, 1936) and viewed it as limiting 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 respect to the Cambó Law, which moved on to exercise the necessary measures to carry out a "partial undercover nationalization" of the Bank of Spain.According to Viñas, the process was guided by the maxim "salus patriae, suprema lex". Viñas 2006, p. 114
The intentions of the Republican Government to place in the Bank's management individuals loyal to the Republic were solidified through the Decree of August 4, 1936, which removed Pedro Pan Gómez from the office of First Deputy Governor in favour of Julio Carabias,Pan Gómez fled to the Nationalist-controlled area, in order to organize a new Bank of Spain in Burgos. 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, 1937, when nine council members were substituted for institutional representatives.Sánchez Asiaín 1999, p. 281
Paris gold