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"Based on the currently known circumstances, the Prussian Cultural Heritage Foundation does not believe that the conditions for restitution of the Guelph Treasure to the heirs of the art dealers who sold it to the Dresdner Bank in 1935 for transfer to the Prussian State Museums in Berlin are met."

Hermann Parzinger, President of the Prussian Cultural Heritage Foundation, says: "The Foundation has come to this conclusion after a very thorough examination of the restitution request and the acquisition history of the Guelph Treasure. Should documents be identified in the future that make a new examination of the case appear necessary, we will examine them just as carefully."

The Guelph Treasure

The collection of the "Guelph Treasure" preserved in the Berlin Museum of Decorative Arts comprises 44 works of treasury art from the 11th to 15th centuries, mainly reliquaries and altarpieces. Among them are numerous objects of the highest art-historical rank. No other German church treasure reflects the development of goldsmithing in the Middle Ages in such a comprehensive way. The "Guelph Treasure" had its origins in the former reliquary of the collegiate church of St Blasius in Brunswick. However, as it was augmented over centuries in the Middle Ages by numerous donations from the Guelph sovereigns and church patrons and was also in the direct possession of the Guelph dynasty for almost 260 years from the 17th century onwards, it now bears the name "Guelph Treasure".

In the early 1920s, the ducal house tried unsuccessfully to sell the treasure to raise money. After these initial sales plans failed, the 82 objects in the Guelph Treasure were purchased by a consortium of Frankfurt art dealers in October 1929. Soon afterwards, "sales exhibitions" of the treasure were organised in Frankfurt am Main, Berlin and several cities in the USA and 40 pieces were sold to various museums and private collectors. In mid-1935, Dresdner Bank, acting as trustee for the Prussian state, purchased the remaining holdings of the Guelph Treasure for the Museum of Decorative Arts, which was located in the Berlin Palace at the time (and therefore called the "Palace Museum"). Two further pieces were acquired later.

The statement of the Prussian Cultural Heritage Foundation

In today's letter to the applicants' lawyer, the Prussian Cultural Heritage Foundation has presented and evaluated the facts and circumstances researched to date, taking into account the principles of the Washington Principles of 1998 and the "Declaration of the Federal Government, the Länder and the municipal umbrella organisations on the tracing and restitution of cultural property seized as a result of Nazi persecution, in particular from Jewish property" of December 1999. The result is summarised as follows:

• There can be no doubt that all consorts were racially persecuted and therefore also suffered considerable losses of property. With regard to the Guelph Treasure transaction, however, a different assessment must be made against the background of the circumstances established.
• After analysing the documents, the decisive factor for the sale of the Guelph Treasure to Dresdner Bank at the known time and on the known terms was the fact that the syndicates had made an enormous investment with the purchase in 1929, which then did not lead to the hoped-for resales due to the weak market. Both the purchase of the treasure and its commercialisation required extraordinary financial efforts. Before 1933, less than half of the objects were sold and only part of the purchase price was recovered. As a result, the Consortia were already under severe financial pressure before 1933.
• According to the files, the Prussian state was the only interested party in 1935. No undue pressure was exerted in the contract negotiations to force a favourable outcome for Prussia. At the time of the treaty negotiations, the Guelph Treasure was located outside of Germany and was not subject to access by German authorities.
• The purchase price of 4.25 million Reichsmark agreed in the contract of 14 June 1935 was not disproportionate to the proceeds that the consortium had achieved with the sales of parts of the Guelph Treasure prior to 1933, but was at a corresponding level.
• There is no evidence that the purchase contract was not fulfilled in all respects as agreed, but there are clear indications that Prussia acted in accordance with the contract.
  Prussia paid the agreed purchase price of RM 4.25 million to Dresdner Bank as agreed, as confirmed in writing by Dresdner Bank on 17 July 1935.
  It was agreed that the consortium member Saemy Rosenberg could acquire and export works of art in Germany for part of this sum (RM 778,125). This was necessary in order to be able to pay off the consortium's liabilities abroad despite the existing foreign exchange regulations. Evidence shows that Rosenberg acquired and exported works from the collections of the state museums for RM 678,125. These were high-quality pieces whose resale value significantly exceeded RM 678,125.
  The company Z. M. Hackenbroch was to issue payment instructions to Dresdner Bank for the remaining amount of over RM 3.3 million and Mr S. Rosenberg for a further amount of RM 100,000. These amounts were available to the consortium members after Prussia's payment to Dresdner Bank. Whether and how they drew down the amounts is not documented. However, there are indications from Hackenbroch's compensation proceedings that in 1935 and 1936, his company recorded income from the sale of the Guelph Treasure.
  In the compensation proceedings of the Consortium members in the 1950s, it was neither argued nor asserted that the Guelph Treasure contract had come about as a result of persecution or had not been fulfilled as agreed. At the time of these proceedings, the Guelph Treasure was already on permanent display in public museums - initially from 1953 in Lower Saxony and from 1963 in Berlin.

On the basis of extensive documentation, the SPK assessed the facts and contexts on the basis of the "Handreichung". It was checked whether the former owners were persecuted and whether they suffered a loss of assets after 1933. In this case, it is generally assumed that the loss was due to persecution. This presumption can be rebutted by showing that the claimants received a fair price and were able to dispose of it freely.

Persecution of the persons and companies involved

"This is beyond doubt here, all the consortium members were Jewish and subjected to the known reprisals."

The seller in the purchase contract of June 1935 was a so-called "consortium" of art dealers, which included

• the company Z.M. Hackenbroch, Frankfurt a.M.,
• Messrs I. Rosenbaum and S. Rosenberg, Amsterdam, as former owners of the company I. Rosenbaum o.H.G., Frankfurt,
• the company I. and S. Goldschmidt, Frankfurt am Main.

At the time of the purchase of the Guelph Treasure, the Hackenbroch company was managed by Zacharias Max Hackenbroch and his nephew Herbert Bier as authorised signatories. Bier was banned from his profession in August 1935. Hackenbroch was also banned from working, but initially managed to avert this. In April 1937, around two years after the contract was signed, Z.M. Hackenbroch was banned from practising his profession and died in Frankfurt in August of the same year. The company was cancelled in February 1938. Bier left Germany in 1936, and Hackenbroch's widow and daughters travelled to London around 1938.

The company Jakob Rosenbaum oHG was a Frankfurt family business. The managing directors at the time of the purchase of the Guelph Treasure in 1929 were Isaak Rosenbaum and Saemy Rosenberg. The compensation files show that the Rosenbaum company was already in financial difficulties at the beginning of the 1930s. At the end of 1934, Saemy Rosenberg and Isaak Rosenbaum emigrated from Germany to the Netherlands, where they founded Rosenbaum N.V. and continued to be active in the art trade. The business of Jakob Rosenbaum oHG, which was liquidated in 1934, was continued in Germany from 1934 by J. Rosenbaum GmbH, which, however, was not involved in the Welfenschatz business. Rosenberg in particular conducted the contract negotiations for the Welfenschatz himself, in part representing the entire consortium, and also travelled to Germany from Amsterdam for this purpose.

Little is known about the history and legal relationships of the I. and S. Goldschmidt company. The claimants' lawyer has stated that Julius Falk Goldschmidt, who died in London on 18 November 1964, was the sole owner of the company until his death. The company is said to have been included only pro forma in the purchase agreement for the Guelph Treasure and to have already been paid out by the other syndicates at that time. Julius Falk Goldschmidt ran an art dealership in New York under the company name "The Goldschmidt Galleries, Inc.", through which the majority of the American sales were made.

The companies and their owners were subject to reprisals even after the settlement of the Guelph Treasure Treaty, although the SPK does not believe that these were connected to this treaty.

Loss of assets

"Of the possible loss scenarios, only a forced sale comes into question here. However, unlike other sales, the fact of the sale in itself cannot be an indication of an involuntary loss. Unlike collectors who acquired art in order to keep it permanently, the consorts were art dealers who bought the objects precisely in order to resell them."

It was examined whether the state persecution was at least a decisive reason why the legal transaction with the state as the buyer of the Guelph Treasure came about. It was also investigated whether the consorts were restricted in their decision to sell due to their persecution.

It can be seen from the available documents that at the time of the sale in 1935, and probably since mid-1931, there was no other serious prospective buyer than the German or Prussian state. Even before 1933, the Consorts had great difficulty finding buyers for the treasure. Shortly after the purchase, they initially offered it to the Reich in 1930. As the state rejected the purchase despite considerable lobbying from museum and church circles, exhibitions were organised in Frankfurt and Berlin, but these only led to one serious offer - from the director of the Cleveland Museum of Art. In particular, the major museums worldwide showed no interest whatsoever. In 1930/31, the treasure was shown by the consortium in several exhibition centres in America. The museum in Cleveland finally bought important pieces, the top piece being the Getrude Altarpiece; less important objects were purchased by a museum in Chicago. None of the other American museums showed any interest, probably due to the poor economic situation. During the same period, the Consorts also managed to sell other, less important objects to individual collectors from Europe and America. According to the literature, the sales price achieved totalled around RM 2.5 million. 42 pieces could not be sold, including important objects, in particular the dome reliquary, the main work of the treasure. The unsold objects were returned to Europe. Nothing is known about further concrete sales efforts by the consortium until autumn 1933.

It was only after the National Socialists seized power that the purchase negotiations began to move forward again. The change to a National Socialist-dominated policy made it seem possible to persuade the state to provide the not inconsiderable financial resources for a purchase. The first contacts between Zacharias Hackenbroch and Adolf Feulner, the director of the Frankfurt Museum of Decorative Arts, were established in autumn 1933 at the latest. The course of the negotiations, also with regard to the people directly involved, is only incompletely documented in surviving documents. The Prussian Minister of Science, Art and National Education evidently succeeded in gaining the support of the Prussian Prime Minister, Hermann Göring, for this goal, and finally also convinced the Prussian Minister of Finance, Johannes Popitz, to support it.

There is no indication that the Consorts were forced to sell the treasure to Prussia in 1935 by coercive state measures, as is known from other cases. The unsold parts of the treasure were in Amsterdam in 1935. Individual members of the consortium had business operations outside Germany, from 1934 also in Amsterdam, from where they could have prepared and realised a sale with any interested party.

"The initiatives to explore the possibilities of a sale to the German or Prussian state, which, according to the documents, began in autumn 1933 at the latest with the active involvement of Zacharias Hackenbroch and had the Prussian ministries considering a purchase of the Guelph Treasure by spring 1934 at the latest, did not originate from these ministries. Nevertheless, the only rudimentarily preserved files prove that considerable persuasion was required in these ministries to consider the purchase feasible."

According to the files, however, the consortia were partly under economic pressure. This would be of significance for the assessment of the request for restitution insofar as it arose as a result of persecution measures and prior to the conclusion of the purchase agreement on 14 June 1935 and would have been decisive for the conclusion.

The company I. Rosenbaum und S. Rosenberg oHG was liquidated in 1934 and reorganised or re-established as Jakob Rosenbaum GmbH. There is no evidence - not even in the compensation files of the J. Rosenbaum company - that the economic situation leading to the liquidation of the company only arose after 30 January 1933. Poor economic results for this company are already documented for the years before 1933; in particular, the compensation file contains the note "the company was ready for bankruptcy". Zacharias Hackenbroch's company was also in financial difficulties even before 1933. The business books of all the consortium companies have not been preserved, as was stated in the compensation proceedings. In one of these proceedings, however, Herbert Bier, Hackenbroch's authorised signatory, described how in 1932 he was unable to receive the annual interest income of just over RM 1,000 to which he was entitled from his capital investment in the company because the company was not solvent.

A not insignificant cause of the economic difficulties of all the companies involved in the Welfenschatz consortium was probably the purchase of the Welfenschatz itself. This purchase clearly proved to be a commercial miscalculation at the latest after the results of the 1930/31 sales exhibitions in the USA. The remaining 42 objects of the Guelph Treasure, for which no buyer could be found, also became an economic burden for the Consortia because their safekeeping alone required permanent expenditure (accommodation, servicing of loans).

The fact that even the total proceeds of RM 2.5 million from the sales in 1931 did not alleviate the pressure was certainly also due to the internal relationship between the syndicates, which could not be clarified by any known documents. Apparently, the other partners had already redeemed Julius Falk Goldschmidt's shareholding before 1935. This redemption probably increased the economic pressure on them considerably. Presumably, the syndicates also had not inconsiderable liabilities to other domestic and foreign parties, which are expressly mentioned in the purchase agreement of 14 June 1935. Adolf Feulner also reported that the syndicates had informed him that the Guelph Treasure had been "purchased abroad, by foreign capital with the participation of the German art trade". Nothing further is known about the identity of the investors. It is also not known what contractual arrangements the syndicates had made with each other in connection with the purchase from the Guelph House in 1929 or in connection with the sale to Dresdner Bank.

Fair price

The market value of the Guelph Treasure is difficult to determine, as it was only of interest to a very limited circle of people. This makes it all the more important to assess the fairness of the sale price to establish how the price expectations of the buyer and seller related to each other and what means were used to reach an amicable agreement. No documents from the dealers themselves are known that reveal their ideas about the purchase price. Little else is known about the details of the contract negotiations, which probably began after mid-1934.

Adolf Feulner, the director of the Frankfurt Museum of Decorative Arts, wrote on 3 February 1934: "Nothing is known about the amount of today's demand. The Frankfurt gentlemen have occasionally told me verbally that they would be happy to disclose the purchase price of each individual piece and - in the event that a purchase was seriously considered - they would also go below the purchase price." Indirect information can also be found in letters from the Prussian Ministry of Science, Art and National Education. The letter of 14 July 1934 to the Prussian State Ministry states: "I would like to take this opportunity to point out that the sum of RM 7 million that you mentioned as the current demand of the dealer consortium. - as far as I am informed - no longer corresponds to the actual circumstances. The negotiations conducted to date by various parties have shown that the owners of the Guelph Treasure would be prepared to sell it for a much lower sum, i.e. for around RM 4 to 5 million." On 31 October 1934, the letter to the Prussian Ministry of Finance, which still had to be convinced of the purchase, stated: "The commercial value of this collection is subject to the fluctuations of the art market as well as general economic life. At 6 to 7 million Reichsmarks, it is not currently estimated to be too high. However, as the sales prospects for the closed collection are now unfavourable and a company belonging to the dealer consortium is experiencing payment difficulties, the time would be extremely favourable for the state to purchase the entire collection at a significantly lower price." The outcome of the negotiations on 14 June 1935 finally corresponded to the negotiating line agreed between the Minister of Finance and Dresdner Bank, with an upward adjustment of RM 150,000.

At this point, the SPK drew a comparison with the sum that the dealers themselves had paid for the treasure. There are various statements regarding the purchase price. The most reliable figure appears to be RM 8 million, which is mentioned in the text "Der Reliquienschatz des Hauses Braunschweig-Lüneburg (Welfenschatz) vom 17. bis 20. Jahrhundert" by Klaus Jaitner in the Jahrbuch Preußischer Kulturbesitz 1986. No reliable figures are currently available, as confidentiality was agreed.

The sales from the Guelph Treasure prior to 1933 and the sale in 1935 resulted in total proceeds of RM 6.75 million for the consortium. This sum corresponds to around 85 per cent of the price paid by the consortium to Guelph in 1929, assuming RM 8 million.

It is also significant that there was significant deflation in the period from 1929 to 1935, so that the general price level in 1935 was around 80 per cent of the prices in 1929. If this is taken into account, the total proceeds are not significantly lower than the purchase price.

The purchase price of RM 4.25 million agreed in 1935 was also not disproportionately low compared to the total proceeds of RM 2.5 million realised in earlier sales. Persecution was by no means a factor in the earlier sales. The main work of the Guelph Treasure, clearly more valuable than any other object, is the cupola reliquary, which was bought by Prussia. It had already been offered to the German Empire by the Consorts for RM 2.4 million in 1930. Otherwise, the collections of both sales consisted of roughly equal numbers of outstanding and less important pieces. This makes it clear that the price paid in Germany in 1935 was in the same order of magnitude as the proceeds realised in 1930/31.

"To the extent that the price turned out to be low compared to the initial expectations of the consortia, this was probably due to the fact that the Prussian state was the only interested buyer, as described in detail above. Negotiating a "good" price in this situation is common practice in the art trade and is not fundamentally reprehensible. In this market situation, the consortium could certainly not hope to realise a profit."

The way the contract was drafted also speaks against the fact that the consortium's plight was exploited in a reprehensible manner during the contract negotiations and that a contract was dictated. The contract contains detailed provisions and security mechanisms for the underwriters, which indicate that serious negotiations took place. One example of this is the payment of the part of the purchase price intended for Saemy Rosenberg (778,125 RM) in works of art, which made it possible to compensate foreign participants in the consortium, which would otherwise have been problematic due to foreign exchange regulations. The consortium was granted the right to withdraw from the entire contract in the event that no agreement was reached on these pieces. Rosenberg expressly waived this right of cancellation "on condition that the export of the objects acquired from the state museums takes place in the intended manner", so that he must have been in agreement with the agreed selection of artworks.

Free disposal of the purchase price

According to the guidelines, prima facie evidence is sufficient to answer the question of whether the consortium members received the agreed purchase price and were able to dispose of it. This means that if, according to life experience or historical findings, a fact points to a certain typical course of events or a typical result, only this fact needs to be proven. The result is then also regarded as proven.

Dresdner Bank acted as trustee for the Prussian government. It is not yet clear why this structure was chosen. It could be related to the fact that other art-related transactions were conducted between Dresdner Bank and the Prussian government. The transfer is documented by the instruction from the Minister of Finance to the State Bank to pay the sum to Dresdner Bank, as well as by a letter from Dresdner Bank dated 17 July 1935 confirming receipt. The file on the processing of the contract can no longer be found at Dresdner Bank.

There is clear evidence that the artworks selected for RM 678,125 from the state museums reached Saemy Rosenberg. Most of the works are now in foreign museums, which purchased them from Rosenberg. Two works can be cited as examples: The painting "St Magdalene" by Crivelli, about which Hackenbroch wrote that it was expected to be sold to either Thyssen or Mannheimer for around "300" (thousand) RM. In fact, the Amsterdam banker Mannheimer bought the painting, which is now in the Rijksmuseum Amsterdam. In 1937, the Metropolitan Museum acquired the French Stone Madonna, which had been given to Rosenberg, through an intermediary for 75,000 dollars (about 300,000 RM). It was agreed that Rosenberg could acquire and export works of art in Germany on the free art market and from the holdings of the state museums for RM 778,125. There is no information about the remaining 100,000 RM. However, it is documented that Prussia paid the full amount of RM 778,125 into the blocked mark account at the Dresdner Bank and only received back the RM 678,125 offset against the artworks in the State Museums.

The largest part of the price, RM 3.3 million, was to be paid to the company Z.M. Hackenbroch. There is no clear evidence of a transfer or payment to Hackenbroch from the files received. However, a file note dated 9 July 1935 (signed by Dresdner Bank and Saemy Rosenberg for the consortium) states that the Hackenbroch company "will issue payment instructions to Dresdner Bank for the sum due to it according to a separate letter". Legally, therefore, the Hackenbroch company was already authorised to dispose of the money. The Clementine Cahn/Hackenbroch compensation file contains a note stating that Hackenbroch's turnover in 1935 and 1936 was "still relatively substantial" only because the stake in the Guelph Treasure had been sold. The stated business turnover is significantly higher than in previous years. Although these are not receipts of RM 3.3 million, it can be assumed that Hackenbroch received the sum for the entire consortium and that it was not intended for his company as a whole. It can be assumed that the foreign investors for the 1929 purchase were also paid from this sum. The compensation files also state that the business documents were "bombed"; they are not available to the Prussian Cultural Heritage Foundation.

A further RM 100,000 was to be paid as "commission" to a "foreign currency resident" not named in the contract. The memo dated 9 July 1935 states that Saemy Rosenberg was to give the Dresdner Bank a payment order. It is not known whether this was issued.

In none of the documents available to date from the directly involved parties, of whom Goldschmidt died in 1964 and Saemy Rosenberg only in 1970, was there even a hint that the contract, including the payments, was not executed as agreed. There is also no indication in the compensation files of Mrs Hackenbroch, S. Rosenberg and the company I. Rosenbaum that the purchase price was not paid.

"With regard to the part of the purchase price to be paid in works of art, it is therefore clearly proven that the contract was duly executed, insofar as pieces were purchased from the museums. There is clear evidence in favour of the payment to Hackenbroch. On the other hand, there are no indications that the contract was not properly executed in part, although such irregularities could have been expected. There is therefore a proven fact here from which it typically follows that the payment was made. This prima facie evidence would have to be shaken by the applicants by demonstrating tangible evidence that the payment was not made or not made in full."

There are therefore clear indications from the available documents that the consortium members received the remuneration and were able to dispose of it freely. Insofar as the purchase price was paid in works of art, these were demonstrably exported and the consortium members were undoubtedly able to dispose of them freely. For Hackenbroch, there is no indication in the compensation files that the company was subject to a special levy or similar with regard to the income from the Guelph Treasure. There is therefore every indication that Hackenbroch was able to freely dispose of the amount he could claim for his company in the course of business. In this respect, too, the presumption of persecution-related loss can be rebutted.

There is therefore a proven factual situation from which it typically follows that the payment was made and that the consortium members were also able to freely dispose of it. This prima facie evidence would have to be rebutted by the claimants by demonstrating tangible evidence that the payment was not made or not made in full.

Restitution at the Prussian Cultural Heritage Foundation

The Prussian Cultural Heritage Foundation is committed to the Washington Principles (Principles of the Washington Conference With Respect to Nazi-Confiscated Art) adopted in 1998. In accordance with a resolution passed by the Board of Trustees in 1999, the President of the Foundation is authorised to negotiate amicable solutions directly with the legal successors of Jewish owners. Since then, the Foundation has decided on 29 restitution requests. 22 of these restitution requests have been granted and further cases are currently being processed. In addition, the Foundation's collection holdings are being systematically and scientifically researched further with regard to their provenance and the results of this research are being made public.