In a radio broadcast to the nation on 15 June 1942 Dr. António Oliveira Salazar stated that the price of neutrality in WW2 had not come cheaply but he was determined to preserve the integrity and welfare of the Portuguese people in turbulent times. Steps taken by his government fulfilled this promise by keeping the belligerent Axis and Allied entities at arm´s length until mid-1945 by which date the negative balances of payment of 1939 had been converted to positive with £97million (£5.5billion in 2023 value) being owed by Britain and gold reserves held by the Bank of Portugal increasing from 63 to 356 metric tons . This economic turnaround enabled the post war expansion of Portugal´s merchant shipping fleet by fifty vessels and the construction of electricity grids, dams, roads and bridges.
Much of this financial gain could be attributed to the war-time trading in wolfram ore; an essential source of tungsten which was used for the manufacture of weaponry, machine tools and reinforced steel. Until 1939 the mining of wolfram was almost exclusively undertaken by British and German companies or their Portuguese subsidiaries with minimal governmental supervision other than the collection of taxes resulting from export licenses. In 1940 the blockade of the north-west Atlantic by U-boats forced cessation of shipments to the Allies whereas Germany was able to continue imports via road and rail through Spain and Vichy France. All of this changed in June 1941 when the invasion by Germany of the USSR closed access to Far Eastern metal markets and thus brought the north-west region of Portugal into the limelight as being Europe´s principal supplier of wolfram. A frenzy of productivity ensued with the registered mines doubling their employment and an immense movement of agricultural labour to freelance prospecting using the “fossicking” process and a consequent black market at highly inflated prices.
Alarmed at these dire social and economic ills, Salazar created at the end of 1941 the “Comissão Reguladora do Comfraio de Metais” which enforced limited price controls (with a tax of 45% payable to the state) and new rules for export and mining safety. This was followed in January 1942 by a Luso-German accord whereby Portugal pledged for one year a minimum availability of 2,800 tons plus one half of the “free” pool of the prospectors. In turn, the Germans undertook to continue selling to Portugal weapons, trucks, oil and steel – all advantageously at 1939 prices. Naturally, the Allies protested but their objections were overshadowed by (1) the perfunctory invasion by Australian and Dutch troops of East Timor and (2) the uncovering through surveillance by the PVDE of a resistance organization for sabotage which was financed by the secretive British Special Operations Executive (SOE) and resulted in heavy jail sentences for its Portuguese members and the deportation of many Britons. However, by August 1942, pressure by the USA resulted in an Accord being signed with the Allies whereby the allocation to Germany was fixed at a maximum of 2,800 tons and excluded production from the largest mines of Panasqueira and Borralha. Thereafter, until the allied invasions of June 1944 brought to an end the rail route for shipments. the allied policy in Portugal continued to be one of containment and hampering in every way the export of wolfram and other metals. The sabotage of German owned mines and even the introduction of typhoid and other pestilences was ventured (but never used) by the US secret services while German spies were sought and expelled from the positions which they had secured in Government ministries, the maritime police and alfandaga.
After VE day in May 1945, the investigation of Nazi war crimes inevitably led to questions being asked about the huge increase (293 tons) in gold reserves and how much of this could be related to the bullion which had been looted from the central banks of the European countries which were occupied in 1940. The Bank of Portugal responded that all of its holdings had been acquired legally through the Swiss National Bank (SNB) acting in consortium with the Bank for International Settlements (BIS) which had been founded in 1930 by thirty central Banks as a clearance mechanism but now included in its shareholders some private bankers sympathetic to the Third Reich. Initially, the BofP transferred escudos to commercial banks in Basel and Bern which then received and stored gold ingots on its behalf but from October 1941 the BIS and SNB began organizing direct shipments to Lisbon in payment for wolfram imported by Germany. All records were kept secret and it was not until after the London Conference on Nazi Gold held in December 1997 that a figure of 124 tons was assessed as having been received directly or indirectly from the Reichsbank´s looted hoard.
The question remains as to the origin of the additional 169 tons possessed by BofP in 1945. Did this represent an additional payment made for wolfram? Declassification of the archives of the Novo Estado (including those of the PYDE) has not provided any positive information and the Bank of Portugal, apart from alluding to the existence in its vaults of “several” ingots stamped with a swastika emblem, will add nothing to its previous assertions of non-complicity. A possible explanation is that some of this gold may be attributed to the actions of the U.S. secret service OSS (Office of Strategic Services) which spent a rumoured USD100million in 1942/44 in pre-emptive buying of wolfram on the Lisbon Metal Market to prevent its export to Germany. This resulted in a stockpile the whereabouts of which has never been determined and represents another uncertain chapter in the murky history of Black Gold.