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Fort Knox Scandal - Chapter 20
Topic Started: Aug 30 2009, 08:03 PM (10,082 Views)
Bill Still
Advanced Member
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The Golden Cover-Up Begins

How was the Fort Knox gold drain first discovered? Although the London Gold Pool and gold sales were by no means a secret, the full implication of the gold drain from America was understood by very few people until it hit one of the early tabloids in 1974. What followed was a typical scenario of government stonewalling, half-truths and lies that eventually backed the bureaucrats into a corner, but not without some dedicated work by one determined individual, Ed Durell.

Informant Dies Mysteriously

New York — On July 3, 1974, 59-year-old Louise Auchincloss Boyer died after falling from the window of her 10th-floor apartment at 530 East 86th Street. The event was ruled a probable suicide and duly reported the next day in the New York Times. Note that Mrs. Boyer was the granddaughter of none other than Col. House, the man who guided the Federal Reserve Act through Congress for Morgan, Rockefeller, Warburg and company. Although to date it has not been determined whether there was a relationship, Jackie Kennedy’s father was Hugh Auchincloss. It is known that Jackie’s grandfather helped John D. Rockefeller found Standard Oil.
Mrs. Boyer’s death torched a firestorm of controversy and rocked a previously inviolable element of Americana — the security of the nation’s gold reserves held at Fort Knox. Perhaps not coincidentally, only three days earlier, Mrs. Boyer, had been featured as an unnamed source in a spectacular story in the tabloid, National Tattler. Readers were shocked by the sensational headline:

“International Monetary Expert Sounds Alarm:
Federal Reserve System Charged With Secret Sale of
U.S. Gold Supplies Overseas to Super-Rich David Rockefeller.”
The story charged that the Rockefeller family was manipulating the Federal Reserve to sell off Fort Knox gold at low prices to anonymous European speculators who were really fronting for them. Mrs. Boyer was the executive assistant to former Gov. Nelson Aldrich Rockefeller (remember where that name, Aldrich, came from? Nelson’s grandfather, Senator Aldrich, one of the founders of the Fed), and had served him in one capacity or another since 1944, just as her husband had served Laurence S. Rockefeller for many years before his death two years earlier.

Durell Begins Investigation

The charges contained in the Tattler story seemed unbelievable to most Americans, but, fortunately, 80-year-old Ed Durell, a wealthy Ohio industrialist, took them seriously. Durell contacted the source of the article, Dr. Peter David Beter, a former legal counsel for both the American Gold Association and the U.S. Export-Import Bank and satisfied himself that the charges at least merited a preliminary investigation.

After the death of Mrs. Boyer, on September 1, 1974, author Tom Valentine wrote a follow-up piece that ran in The National Tattler, entitled:

“Mysterious Death Silences Key Informant in Missing Fort Knox Gold Controversy.”
The story quoted Dr. Beter, saying Mrs. Boyer was one of his most important sources of the initial story.

For the next fourteen years, Ed Durell devoted himself to a quest for the truth concerning the Fort Knox gold. He wrote thousands of letters to over 1,000 government and banking officials, trying to find out how much gold was really left and where the rest had gone. He repeatedly called for the Treasury to conduct an annual audit of U.S. gold reserves as required by law.

It was Ed Durell’s personal contact with me in 1980, which started me on the path to investigate the missing gold in particular, and U.S. monetary policy in general. I was working as a newspaper editor in Northern Virginia when Mr. Durell contacted me and said he had a hot story. It sounded kooky, but I told him to send it in. I was not anxious to delve into this subject. Editors are besieged with conspiracy theorists. But Ed was insistent, and he sounded like he knew what he was talking about.

After hundreds of hours of reading and conferring with Ed, I was able to write and publish a 2,000-word story. Although the story got little reaction, I knew it was much too important to leave there. Over the years, I continued to work with the material. Ed helped me whenever I called upon him. This book, in fact, is the direct result of his influence. The United States of America owes a great debt to Ed Durell. The words “He never gave up” should be emblazoned on his tombstone. After his death in 1988, he endowed The Durell Foundation with $11 million to carry on his work. The Foundation has subsequently funded the Durell Institute of Monetary Science at Shenandoah University in Winchester, Virginia.

Rarick Calls for an Investigation

The charges appearing in the first National Tattler article concerning the emptying of Fort Knox sent shock waves through the Treasury, and was even discussed on the floor of the U.S. House of Representatives in the following weeks. On July 18, 1974, Congressman John R. Rarick of Louisiana called for a Congressional investigation. His remarks, recorded in the Congressional Record of that day, are as follows:

“I have no way of knowing whether or not the charges are true. In fact, no Member of Congress can fully know if the allegations are accurate, because the Federal Reserve System operates as a fourth branch of government....

“Since the Federal Reserve is not subject to independent accounting or government audit, there is no way to prove — or disprove — these charges, barring, perhaps, congressional action.
“I believe such action to be imperative. If the charges are true, this country faces an economic crisis more severe than any other in its history.

“And if they are not true, then they must be [dis-]proven before people begin to believe them. Because if that happens, the resultant panic could cause the collapse of our monetary system.”
Rep. Rarick wrote to Federal Reserve Chairman Arthur Burns and asked for a visit to Fort Knox. Dr. Burns sent his request on to the Treasury.

1974 — The Mary Brooks Tour of Ft. Knox

So much pressure was brought to bear on Congress, that only two weeks after the story first appeared, Secretary of the Treasury William Simon ordered Director of the U.S. Mint, Mary Brooks, to take a group of Congressmen and the press on a limited tour of just one of the thirteen smaller vaults in Fort Knox. Unfortunately for Treasury, the peek show raised more questions than it answered.

On September 23, 1974, Mrs. Brooks led six congressmen and one senator on the tour. It was the first time since Roosevelt visited the vault in April 1943 that anyone except Mint and Treasury employees had been allowed inside.

The whole tour lasted less than four hours, and the visitors were plainly shown only what the Treasury officials intended they should see. The entire atmosphere was carnival-like, and only one of the thirteen compartments supposed to contain gold was actually opened to the visitors. In addition, there was no visit to the vast central core vault, nor was there any mention of it.

“It’s all here!” Ft. Knox, KY – Room of Gold – Mrs. Mary Brooks, Director of the Mint, shows reporters one of the small vaults beneath Fort Knox during her September 23, 1974 tour.


Mrs. Brooks delighted in being photographed by both Associated Press and United Press International photographers standing in front of a wall of gold bars. But the visitors noticed that the bars they were allowed to look at were orangish in hue. This coloration was indicative of coin-gold bars, that is, bars that contained at least 10% copper.

Apparently, the group was not shown any .999 fine “good delivery” gold bars, the very thing critics had been concerned about. Ultimately, the peek inside Fort Knox put to rest few doubts, and aroused even more questions.

The Great Weight Controversy

One of the questions raised by the September 1974 Congressional tour of Fort Knox concerned the weight of one of the bars of gold. Associated Press ran a photo of one of the visiting congressmen of that day, Rep. John B. Conlan (R-AZ), weighing a bar of gold on a common postal scale. Unfortunately for Treasury, the U.S. Postal scale in the photo shows a weight of only 22 pounds for the gold bar, significantly less than expected. This touched off another storm of controversy.

During the 1953 physical audit of a portion of the gold in Fort Knox, approximately 9,000 bars of gold weighed in at about 130 tons, according to a Treasury press release. If Treasury was referring to “short tons” of 2,000 pounds — which is most likely — that would mean that the average bar should have weighed 28.9 pounds, or 31% more than the bar Congressman Conlan selected. If metric tons were being used, then the figure anticipated would be 10% higher.

Rep. Conlan wrote specifically about this discrepancy to the Treasury. Secretary of the Treasury William E. Simon responded on May 4, 1976. His response is typical of an unending government smoke screen that was to frustrate Ed Durell for the rest of his life. Simon excused the discrepancy in this way:

“The 22-pound bar of gold ... was a coin gold bar weighed on a household scale during the Congressional inspection of the Fort Knox depository on September 23, 1974. Coin gold bars are lighter in weight than the standard fine gold bar because of their copper content. They are also subject to a 10% variation in weight as are all gold bars, due to the casting process. These factors can bring the weight of the coin gold bars to near the 22-pound level. Also, the only accurate way to weigh gold is on a balance beam scale, rather than the spring type household scale.”

Even if you grant that during the 1953 audit, Treasury weighed only the .999 fine gold bars to get their 130-ton figure, which divided out, equals 28.9 pounds per bar, then the minimum weight of a coin-gold bar containing 10% copper would be 27.4 pounds, nearly 25% more than the bar Congressman Conlan selected.

What bad luck for the Treasury that Mr. Conlan just happened to pick a bar that weighed nearly 25% less than the minimum weight Sec. Simon describes above.

Even if the supposed 10% weight variation for gold bars is fact — which is doubtful — that would yield a minimum weight for a bar of coin gold of 24.66 pounds.


Ft. Knox, KY. – WEIGHING THE GOLD – Rep. Gene Snyder (R-KY), left, holds the scale as Rep. John B. Conlan (R-AZ), places a gold bar on U.S. Postal scales during the September 23, 1974 tour.


Secretary Simon then blames the only possible culprit left, the scale. The scale used is, as seen in the photo, apparently a standard, government-issue U.S. postal scale, not a “household scale.” In other words, that would mean that the government’s own postal scale mis-weighed a 22-pound bar of gold by 2.66 pounds.

An 1100% enlargement of the U.S. Post Office scale shown in the previous picture taken just seconds later showing that the gold bar weighs in at 22-1/4 pounds.

The point here, is not to quibble over the arcane intricacies of gold smelting or assay, but to show that there do seem to be significant variations in the quantity and fineness of the gold left in Fort Knox. Possibly, there is a reasonable explanation for these discrepancies, but why then doesn’t the Treasury openly pursue the questions and put them to rest? The government could have easily quelled the worst fears of the skeptics at any time with a simple, conventional audit, where all bars are counted, and weighed, and a large, random sample in which they are assayed by the standard drilling method as mentioned in Treasury’s explanation of their 1953 audit.

Faced instead with the government’s devious actions over the last twenty years, a reasonable judgment has to be that the Treasury has something to hide.

The 10-year Inventory Begins

The day of the Mary Brooks tour of Fort Knox, September 23, 1974, the Treasury announced that for the first time in twenty-one years, they would agree to an audit of the U.S. gold reserve. The audit announced, however, would include just 20% of the gold. The audit was to take place over a 30-day period to begin the next day, September 24.

After howls of criticism from skeptics, however, Treasury announced that all the remaining stock would be audited. Again, officials chose to proceed in a way that could not eliminate reasonable doubt. They decided to audit only 10% of the remaining gold every year for ten years until all was audited, even though, by their own estimates, 10% could be audited in only thirty days.

The California Gold Scheme

Treasury’s announced audit methodology still left skeptics unsatisfied. Experts in gold assay knew a ten-year audit raised the specter of the California Gold Scheme of the late 1800s. In the late 19th century, crooked bankers in California, upon being notified that the gold bullion in their vaults would be audited one-branch-at-a-time, were able to stretch out the travel time of the auditors between branches so that, by means of a faster horse, gold previously counted could be sent ahead to the next bank with the auditors unaware they had seen the same gold before.
Surely, the doubters reasoned, Treasury’s drawn-out audit would leave ample time for chicanery, a notion not unjustified in light of later revelations concerning shoddy bookkeeping at the U.S. Assay Office in New York, where 90% of Fort Knox’s store of .999 gold was shipped between 1961 and 1974.

Aggravating these citizens’ fears was the fact that the government announced that they themselves would carry out the audit. Ed Durell and others who were following the sequence of events were, by now, furious at this prospect. It is common practice for shareholders of a corporation under audit to demand that the audit be done by an independent company. They wondered why the government would not erase all suspicions once and for all by having the audit performed by one of the Big-Eight accounting firms?

Once the audit was underway, it became shamefully clear that an actual physical inventory of the number and quality of each gold bar was not being done. Treasury admitted that many vault compartments in which gold was kept were not even opened as long as the “wax seals and ribbons” on the doors appeared to be undisturbed. Only “a few” of the compartments were actually opened, and of those, only spot counts of gold bars were made. Of those few bars counted, even fewer bars were actually weighed. Of these few weighed, fewer still were “assayed.” Of the very few bars “assayed,” the traditional core boring method was not employed. Unlike the method used in 1953, this time, Treasury — despite the intense scrutiny — only took small chips from the surface of the bars, leading watchdogs to scream foul.
This unusual method of “assay” left some skeptics free to develop wild theories. Some thought the remaining gold bars in Fort Knox were only gold-plated lead. Again, all this was totally avoidable since experts claim a full, unequivocal, conventional audit of total U.S. gold stocks can be done in a few months, not years.

Edith Kermit Roosevelt

The Treasury’s failure to conduct a conventional audit that could have eliminated any doubt concerning the integrity of the U.S. gold reserve was raising eyebrows across the nation. Edith Kermit Roosevelt, the granddaughter of President Theodore Roosevelt, eloquently railed against the Treasury’s foot dragging in the March 9, 1975 edition of The New Hampshire Sunday News, saying:

“Allegations of missing gold from our Fort Knox vaults are being widely discussed in European financial circles. But what is puzzling is that the Administration is not hastening to demonstrate conclusively that there is no cause for concern over our gold treasure — if indeed it is in a position to do so.”

The Financial Times Bombshell

But then, a major journalistic bomb blast rocked American financial circles. The authoritative Financial Times of London of Feb. 11, 1975 ran a story on the situation under the headline: “Fort Knox Gold — the Plot Thickens.” The story, written by Gordon Tether, reads:
“Close observers of the Fort Knox mystery assured me that this — so far unexplained official procrastination by the U.S. Treasury — read in conjunction with other circumstantial evidence strongly suggest that it is no longer a question of whether there is a discrepancy between the figures and the physical reality but what the size of the gap is.”

Congressman Frank Chelf

Evidence of a government scandal and cover-up continued to pile up. On April 7, 1975, Frank Chelf, for twenty-two years the Congressman from the Fourth Congressional District in Kentucky, in which Fort Knox is located, swore out an affidavit charging that for years, the government had tried to hide secretive gold shipments from the public, and even from him.

“In August 1963 I charged that the United States government was moving gold ‘quietly as a church mouse out of Ft. Knox,’ and that the gold was ‘constantly and surreptitiously on the move....’ In response to my previous requests for gold removal information, Treasury officials had been courteous and most friendly but always noncommittal or evasive.... They were telling me in the Treasury that they were not taking the gold out but I had friends who told me the hour and the minute when they’ll come up for another load. Oh yes, they’ve taken a lot of gold out of there, but they won’t admit it. It’s terrible.”

Treasury Admits Gold Gone

After the initial results of the first year’s audit were issued in February 1975, Ed Durell wrote to his Congressman, J. Kenneth Robinson of Virginia, saying that he wasn’t pleased by the nature of the government’s 30-day audit of just 10% of the nations gold reserves. The pressure on the government was now such that they apparently felt they could no longer simply stonewall the critics. The General Accounting Office first sent two men to Congressman Robinson’s office to discuss the situation, then four men to Durell’s Virginia farm in attempts to defend their accounting practices and try to convince him that nothing was amiss. In charge of the government’s persuasion team was Hyman Krieger, the Washington regional manager for the General Accounting Office (GAO).

Only one concrete piece of information came out of this meeting. Krieger admitted, for the first time, that Fort Knox — and indeed the entire U.S. Treasury — had been practically drained of pure gold. He confirmed this startling statement in a letter to Durell dated April 11, 1975, saying that only 24.4 million ounces of the gold reserves of the United States remained.
“We analyzed, as agreed, the gold bar schedules for Fort Knox and found that fine gold in good delivery form (.999 or better) at Fort Knox totaled 24,411,140 ounces....”

In other words, less than 10% of the 264 million ounces of so-called “gold” remaining could be considered “good delivery gold” — the only form acceptable in international trade. But the Treasury had 701,800,000 ounces of gold in its possession less than 20 years earlier. Since, according to the government, we now have about 220,000,000 ounces of less-than-pure gold remaining. That means that 480,000,000 ounces of pure gold has disappeared — 95% of our original stock — between 1957 and 1972.

It is important to remember, however, that the government has steadfastly and inexplicably refused to allow a standard audit of what gold reserves it still claims to have.

Durell felt somewhat vindicated that the government had finally admitted that the vast majority of its pure gold stocks were gone. A large supply of coin gold probably remained, but, according to Durell, coin gold could not be counted as official U.S. gold reserves because the confiscation of privately owned gold in 1933 has never been upheld by the Supreme Court, and many experts in constitutional law believe it was clearly illegal. This means that the coin gold belongs to the American people, as private citizens, not to the government, or to the Federal Reserve.
But despite the government’s best efforts to win Durell over, they failed to do so. He chastised Mint Director Mary Brooks concerning the progress of the ten-year audit, as well as the procedures being employed. For example, in a letter dated April 21, 1975 he pointed out that the ongoing audit was hardly worthy of the name since only two of the thirteen members of the audit panel were G.A.O. employees, and only G.A.O. employees could possibly maintain any semblance of independence. In addition, using Treasury’s own figures, Durell calculated that the audited gold had a fineness of not the previously stated 90% purity, but only 84.9% purity. No one knows what really is in Fort Knox today. Both the quantity of gold and its quality lies under a dark cloud of doubt because the government refuses to provide honest answers.

The Missing Gold Shipment

In the same document, Durell referred to a list of gold shipments from Fort Knox he had received from the G.A.O.’s Hyman Krieger ten days earlier. Durell challenged Mint Director, Mary Brooks as to whether or not these newly provided records of gold shipments were accurate.
Durell knew that someone had either made a huge mistake, or was lying. By searching the files of the Louisville, Kentucky newspapers, he found at least one shipment consisting of four tractor trailer loads which had left Fort Knox on January 20, 1965 which was not included in the April 11, 1975 tally. According to a letter written to Sen. William Proxmire several years later, Durell stated:

“This shipment consisted of 1,762,381 ounces, which at today’s market of $650/ounce would be worth $1.145 billion.”

Two months later, Mint Director Brooks, in a letter dated June 19, 1975, grudgingly acknowledged to Durell’s Virginia Congressman, J. Kenneth Robinson, the omission of one shipment of gold from Fort Knox. As Durell noted later, Mrs. Brooks “gave no reason why it was omitted from the Treasury’s tally.” Durell suggested a Congressional investigation. Nothing was done.

How many more unlisted shipments were there? Over sixteen years later, no one knows. Incredibly, there has been no investigation. At best, this shows a shocking degree of carelessness. Reasonable observers would have to conclude that an unaccounted shipment of 1.7 million ounces of gold from Fort Knox is at least a major error, if not a criminal act, and, considering the amount of money involved, and the fact that it put the entire security of the U.S. gold reserve in doubt, it is certainly deserving of congressional scrutiny.

The Central Core Controversy

About a year after the Mary Brooks “peek” inside Fort Knox, the former commanding general of the facility came forward and asked why the media hadn’t been shown the main storage room for the gold, something he called the “central core vault.” From 1956 to 1959, the Commanding General of Fort Knox was Lt. General John L. Ryan, Jr. In addition, Gen. Ryan had been stationed at the bullion depository twice earlier, initially, just shortly after its completion in 1937. On November 16, 1975, he wrote a letter confirming the existence of the central core vault, as he had earlier testified before the congressional committee of Representative Otis Pike.
The second page of General Ryan’s letter continued as follows:

“On the vault door were two combination locks, two key-operated locks, and a timing mechanism that prevented opening the door except at preset days and hours. The Agent-in-Charge knew one combination and had one key; his Deputy knew the other combination and held the other key. I was told that the key to the timing mechanism was kept in Washington....
“I departed Fort Knox in July 1942, and returned in January 1952 for duty as Chief of Staff. In the spring of 1953 I believe but it could have been later, Mr. Van Horn received secret instructions to conduct a 100% inventory of the bullion. Specialists to check serial numbers, take ‘plug’ samples for assay, weigh the bricks etcetera, would be sent in but hiring men to move the gold bricks from the vault up to the receiving room, then back into the vault was up to the Agent-in-Charge.

“Upon approval of the Commanding General, a number of selected non-commissioned officers were put on furlough status to become temporary Treasury Department employees to perform the labor involved in moving the gold bricks. I was in the Depository several times during this inventory and know that the bullion was stored in the vault.

“Mr. Van Horn told me that during WWII many irreplaceable documents such as the Declaration of Independence, the Constitution and amendments had been secured in the cell-like compartments surrounding the vault. At the moment, our war reserve of rare drugs were stored there in the compartments.

“I departed Fort Knox in November 1954 and returned in May 1956 as Commanding General. Mr. Van Horn had retired or died, I cannot recall which; his Deputy, Mr. Al Evans, was Agent-in-Charge. Although I was in the depository on a few occasions, I was not in the Depository when the vault was open. I departed Fort Knox in May 1959. It is my firm belief that until that time, May 1959, the bullion was stored in the vault.” Signed, John L. Ryan, Jr.
General Ryan then drew a rough map of the layout of the depository with its huge subterranean central core vault clearly indicated as “Gold Vault.” As shown, the central core that takes up about 75% of the floor space of the basement level is surrounded by a passageway, and the thirteen smaller vaults.

Coming a full year after the 1974 tour of the depository, and subsequent Treasury denials of the existence of a central core vault, General Ryan’s map constituted damning evidence which the government has failed to adequately address to this day. If such a central core vault existed, why wasn’t it shown to congressmen and reporters, and why has Treasury subsequently denied its existence so steadfastly? Wild speculations abound, but the truth probably is that the government didn’t know how they would explain why the huge central core vault, measuring about 65-by-80 feet, was completely empty.

Before Ed Durell’s death, he was attempting to get verification from a retired officer named Major Stanley Tatom who claimed to have designed and overseen construction of the central core vault at Fort Knox. It is hoped that by the publication of General Ryan’s hand drawn map of the ground floor of the Fort Knox Gold Repository, with the basement features, including the central core vault – which he called the “Gold Vault" -- in this book, Major Tatom’s relatives will come forward with this documentation.

The Treasury Department responded very slowly to written inquiries concerning the central core vault matter, even when those inquiries were made on this author’s behalf by his congressional representatives. A letter from the Assistant Secretary of the Treasury, Gene E. Godley, to Congressman Joe Fisher, dated December 21, 1979 stated that questions concerning the illegal removal of gold from Fort Knox had:

“been thoroughly and repeatedly investigated and are false and irresponsible."

Mr. Godley was no doubt telling the truth. After many years of investigation, it now appears that the gold was shipped out of Fort Knox legally, as part of something called the “London Gold Pool.” But it was certainly done without the full knowledge of, or understanding by the general public, and the result — though technically legal — was no less a crime against the people of the United States.

Mr. Godley went on to say:

“Allegations relating to a so-called central core vault at Fort Knox are grossly inaccurate. In fact we do not — and find no record that we ever did — refer to any part of the depository by that name.... You may be assured, and assure your constituent, that all the United States gold stock, which currently totals 263.1 million ounces, is intact and reflected in our official records.
“I hope this information will be helpful to Mr. Still.”

Note that Mr. Godley didn’t deny the existence of the central core vault — he denies referring to any part of the depository by that name. I pointed this out to Congressman Fisher and enclosed General Ryan’s letter and drawing. On March 21, 1980, Mr. Godley responded again:
“There have been a number of unsubstantiated allegations that there is a central core vault at Fort Knox which was constructed to house the gold supply and is now empty. In fact, there is no ‘central core vault’....

It is interesting that Mr. Godley kept repeating that there was no vault called exactly the “central core vault.” General Ryan didn’t call it that, either, in his drawing. He called it simply the ‘gold vault.’ Perhaps Mr. Godley was merely playing with words, and promoting half-truths. I never could get the Treasury Department to address the existence of a basement-level vault as per General Ryan’s drawing. Furthermore, if these allegations of a central core were so “grossly inaccurate,” as Mr. Godley put it, why didn’t he attack General Ryan’s credibility? One must assume that he couldn’t. Ryan was a real person. He was who he said he was, and his testimony stands inviolable.

1977: Another Peek Into Fort Knox

With the inauguration of President Jimmy Carter, in 1977, Durell and other skeptics hoped the question of why there had been no credible independent audit of gold at Fort Knox would finally be addressed. But his hopes were dashed when, on March 8, 1977, Jerry H. Nisenson, Deputy Director for Gold Market Activities at the Treasury’s Office of Foreign Exchange Operations wrote a letter justifying the ongoing ten-year audit:

“A continuing audit of all United States-owned gold is currently in progress. These audits are being conducted on a cyclical basis because of the enormous quantity of gold to be physically handled and the related costs. The Government personnel conducting these audits are highly qualified and experienced in the various phases of handling bullion. To date, the audits have accounted for over 20 percent of the total U.S. gold stock. Representatives of the General Accounting Office, an organ of the Congress and completely independent of the executive branch, observed several of the audits and expressed no objection to the procedures followed. Thus, there is simply no justifiable reason to secure the services of a private accounting firm.”
Pressure on the government from Durell and others forced yet another, even briefer, peek into the Depository. On July 28, 1977, Treasury Secretary Blumenthal spent less than two hours there. He was shown only two vaults and obviously had no intention of being objective.
After his inspection, he drove directly to Louisville to deliver a speech about tax reform to the city’s Chamber of Commerce. He duly reported that all was well at the nation’s gold depository with the opening of his speech.

“If I appear a bit dazzled, I hope you’ll forgive me. I’ve just been down the road to inspect the nation’s gold stock at Fort Knox. First, I can report it’s still there.”

Interestingly, his remarks were written in Washington, and even distributed to the press at least one day before the trip.

1978-79: The NY Assay Office Scandal

The New York Assay Office scandal broke on December 21, 1978 when several newspapers published reports that more than 433 pounds of gold were missing from the assay office, and that employees had been implicated in the theft.

The New York Assay Office was an important transit point for America’s gold stock. Of the 480,000,000 ounces of pure gold which was lost between 1957 and 1972, the government acknowledged that 233,723,565 ounces of it was shipped from Fort Knox to New York — 90% to the U.S. Assay Office, and the rest to the Federal Reserve Bank of New York. 491 Just where the other 246,276,435 ounces of pure gold went remain unexplained.

Two days before the story broke, Deputy Treasury Secretary Robert Carswell wrote to Senate Banking Committee Chairman William Proxmire, referring to his initial investigation of the assay office irregularities and stating:

“The full truth may never be known because of the inadequate records kept over the years.”
Carswell further commented that much of the gold “could have been lost in the normal refining process.” However, an employee quoted in the January 3, 1979 Staten Island Advance states contemptuously, “Considering how bad security was at the office, that’s ridiculous.” Other employees quoted charged that supervisory personnel were guilty of “flagrant abuses in bookkeeping.”

When the Treasury closed its investigation on August 7, 1979, the Wall Street Journal commented: “The great U.S. Treasury missing gold case is closed — but it isn’t solved.”
Keep in mind, this was the office through which the largest treasure in gold in the history of the world had just passed. Apparently it did so with the world’s sloppiest bookkeeping procedures, although Treasury tried to brush that fact aside by labeling it “inadequate” record keeping.

1973-74: The Firestone Gold Scandal

The original Tattler charge that Americans were buying gold in Europe, possibly from Fort Knox, was at least partially substantiated. At the very time the Tattler article was hitting the streets, at least one major American corporation was illegally buying massive quantities of gold in Europe, knowing the price was about to skyrocket.

According to a government suit filed in federal court in 1979 in Akron, Ohio, that corporation was financially troubled Firestone Tire & Rubber Company. In a story broken in The New York Times on March 16, 1979, the Internal Revenue Service charged that Firestone was buying gold bullion and gold coins in Europe for investment purposes in violation of U.S. law.

In the suit, the government charged that the company had set up a suspicious banking operation, known as Bank Firestone Ltd. of Zurich in 1972 that they later folded in 1976. The gold was actually purchased by a dummy Panamanian corporation known as Alps Investment, all shares of which were owned by another corporation known as Morbira Anstalt, a Swiss corporation owned by Dr. Hans Hussy of Zurich. According to the suit:

“Dr. Hussy was a member of the board of directors of Bank Firestone and a legal counsel to Firestone.”

The suit charged that in 1973 and 1974, Alps Investment bought gold valued at $31,066,079.62 in violation of Roosevelt’s Gold Reserve Act of 1934. During this period, incidentally, gold shot from $50 to $170 per ounce. The government suit demanded that Firestone pay twice the value of the gold purchased without a license, as stipulated by the Gold Reserve Act.

The bullion and coins were, according to the government, purchased for investment purposes and were:

“fraudulently concealed by the officers and agents of Bank Firestone and Firestone Tire and Rubber Co. through the use of secret arrangements, sham transactions, and alteration or amendment of written documents.”

Among Firestone officers accused were Kishore Premchand, chairman of Bank Firestone, Robert Beasley, former chief financial officer for Firestone, and even Firestone Board Chairman Richard A. Riley.

How did the government find out this was going on? The information apparently came out during another investigation in which Beasley became a government witness to save his own neck. According to the New York Times:

“Robert Beasley, former chief financial officer for Firestone who is now serving a prison term for misuse of Government funds, first charged the company with tax avoidance and illegal gold transactions during a lawsuit brought by the company to force him to account for $625,394 in missing company money. The money was allegedly part of a political slush fund managed by Mr. Beasley.”

In other words, Beasley turned and squealed on Firestone’s misdeeds to help extricate him from a pending legal problem.

The Durell Foundation

What had Ed Durell accomplished for all his efforts? Before his death in 1988, Durell had finally obtained from the U.S. Treasury a list of gold shipments out of Fort Knox. Working from this list, he had uncovered at least one missing shipment. In addition, he managed to get the General Accounting Office to admit that less than 5% of the nation’s .999 fine gold stock remained.
Durell never accomplished his primary goal, however — a conventional audit of America’s gold reserves so we could know for sure how much gold remains. Therefore, in 1984, he set up a foundation and funded it with stock worth $10 million to insure this work would be carried on after his death.

On December 9, 1991, the Durell Foundation announced a $3.5 million gift to Shenandoah University in Winchester, Virginia, near Durell’s Virginia home, for the establishment of the Durell Institute for Monetary Science.

So Much Gold, So Little Accounting

It is incredible that the world’s greatest treasure has had little accounting or auditing. This gold belongs to the American people, not the Federal Reserve and their foreign friends and owners. Unfortunately, if one accepts the worst-case scenario that centralization of world gold reserves in Fort Knox was merely a ploy to eventually transfer this gold into private hands in Europe, then shoddy accounting practices and government cover-ups would be a necessity.

One thing is certain; the government could blow all this speculation away in a matter of days with a well-publicized audit under the searing lights of media cameras. It has chosen not to do so. One must conclude that it is afraid of the truth such an audit would reveal.

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