The Bank of Canada’s move, and what it means for a fabled underground vault

As the BOC prepares for a massive relocation, rumours of its gold reserves still swirl
The secret treasure
Library and Archives Canada

The Sept. 3, 1964, issue of Town Topics, a weekly newspaper in Princeton, N.J., and still a going concern, contains one of the very few accounts you will ever read of how the managers of a bank plan to relocate operations. Helpfully entitled “How to move a bank,” the story goes into some detail, explaining that, over the coming Labour Day weekend, the Princeton Bank and Trust Company would move from 12 Nassau St. to 76 Nassau St., a distance of some three city blocks. “And moving a bank, as you might well guess, makes the job of moving from one house to another seem as nothing,” the reporter writes. “Particularly since there can’t be any carefree strolling down Nassau Street by bank employees carrying wads of bills and securities.”

In the case of the Princeton Bank and Trust Company, which in 1963 handled average daily deposits of more than $40 million, the task of planning the move fell to Cornelius Arnett, assistant treasurer: “One look at the bulk of his logistics folder is testimony enough of the almost split-second planning he has set up to get the bank, its goods and chattels and its 60-plus employees from here to there, all in the space of a long weekend,” the paper notes. Much of the heavy lifting would come in the form of 1,500 safe-deposit boxes, each fitted with steel doors and bronze hinges, with a collective weight of 40,000 lb.—cargo destined for a new vault manufactured by the Mosler Safe Co., the company responsible for building the vaults at Fort Knox.

Evidently, the move in Princeton went off without a hitch—the next edition of Town Topics ran a picture of Mr. and Mrs. Gregory Guroff, the first couple to open accounts at the new location. But for anyone who stumbles across it, the Town Topics article provides not a few insights into how the Bank of Canada is handling the logistical and security challenges associated with its relocation to temporary lodgings this year.

The move has been in the works for some time. The bank’s current headquarters, updated in the late 1970s when architect Arthur Erickson slipped the original 1938 neo-classical stone structure into a modern building complete with wings of polished glass, has descended into decrepitude and badly needs revamping. “It’s getting long in the tooth in a number of the mechanical and electrical systems that support the facility,” says Dale Fleck, chief architect of the bank’s relocation. Last September, the Bank of Canada signed a lease for almost 350,000 sq. feet of space—equivalent to 4½ standard soccer fields—at Plaza 234, an office tower on Laurier Avenue in downtown Ottawa that’s about a 10-minute walk from what has been the bank’s address since 1938: 234 Wellington St., spitting distance from Parliament Hill and, as it happens, the locus of some pretty thrilling Canadian history.

Unlike the folks in Princeton, the Bank of Canada doesn’t like to discuss the details of its move, which began recently with the removal of such precious Bank of Canada holdings as the massive, three-tonne Yap stone, which has been on display in an atrium inside its building since the 1970s. A peculiarly weighty form of currency from the South Pacific—“it’s not really pocket change—maybe the closest we could come to it is a hundred-dollar bill,” explains Raewyn Passmore, assistant curator of the National Currency Collection, part of the Bank of Canada—the Yap stone had to be hauled away by crane.

Neither was that the most intriguing cargo loaded up for shipment at the bank of late. Indeed, the move of the Bank of Canada, from giant Yap bucks to electronic transfers, captures the whole sweep of money’s changing nature, with much of the story told against the backdrop of shimmering gold.

The bank’s move is a sensitive undertaking involving 1,400 employees, the seamless operation of financial systems crucial to the Canadian economy—and the contents of a fabled vault, located under the Bank of Canada building, where, during the Second World War, vast stores of European gold bullion arrived for safekeeping from the Nazis. As a matter of policy, the Bank of Canada doesn’t talk about the contents of that vault, says chief of communications Jill Vardy, including whether it continues to hold any of that precious war gold.

The renovations, with a price tag of $460 million, and due to be finished by January 2017, will be so extensive as to require the bank to move the entire contents of its Wellington building, including the subterranean vault, which extends from below Wellington and, reportedly, out under the Sparks Street Mall—“built,” in the words of Queen’s University historian Duncan McDowall, “right into the Laurentian Shield.” It was here that, beginning in the years immediately preceding the Second World War, and up until 1945, the central banks of England, Belgium, the Netherlands, France, Norway and Poland stowed a good deal of their gold reserves—in total, some 2,586 tonnes of it, worth about $120 billion in today’s gold prices—spirited across the Atlantic by ship, lest it fall into German hands. In time, this transfer of gold, the largest financial transaction in history, even came to include personal gold accounts for European refugees, a highly unusual accommodation by a central bank.

The first of that European gold, in the form of 3,550 bars culled from Bank of England reserves, arrived in May 1939, in a convoy travelling alongside the Empress of Australia ocean liner, which happened to be carrying King George VI and Queen Elizabeth (later better known as the Queen Mum) for the couple’s famous pre-war royal visit to Canada. The rest of the British gold arrived under circumstances decidedly less posh: as cargo labelled “fish” in a military operation called, appropriately enough, Operation Fish.

Within a couple of years, that influx of European gold, most frequently delivered by warship to Halifax, then by train to Ottawa, had bank officials scrambling for space. In a 1997 report it commissioned, aimed at determining whether the bank ever unwittingly handled tainted Nazi gold (it very likely didn’t, that report concluded), McDowall, a Carleton University historian at the time, describes a scene from out of Raiders of the Lost Ark: “Plans were drawn up for special shelving to be added to the new vault. When one young bank employee first glimpsed the bank’s new vault in 1938, he had thought it was ‘as cavernous as Fort Knox.’ By mid-1939, he remembered that gold was, by necessity, being stacked on the floor to save space. Crawl spaces were left between the stacks to enable the bank’s auditors to verify that the stacks were all gold.”

The security measures taken during transport of this precious cargo may, some 70 years later, suggest how the Bank of Canada’s more recent relocation planning must have come together. The British gold, in particular, as Bank of England governor Montagu Norman warned Ottawa in one dispatch, reached the Canadian vault “by devious and unexpected ways.” Beginning in England, the gold-laden trucks left London for the docks at Portsmouth with little security, as officials believed that low-key secrecy would provide the best protection. One young Bank of Canada staffer, who told his story to the Ottawa Citizen decades later, described his bosses putting him on a stately private train bound for a secret destination—it turned out to be Quebec City—where he received sealed instructions. “Specially chartered trains brought the gold to Ottawa and the bank hired some Mounties to oversee its unloading,” McDowall writes of one shipment. After spotting this scene at the Ottawa train station, then located not far from Parliament Hill, reporters began asking questions, and went on to write, in McDowall’s word, “garbled” news dispatches.

Whether any of that Operation Fish gold remains in the vault is an open question. According to a spokesman, the bank continues to manage $68 billion in foreign reserves. “It’s possible that some of it still is washing around in there,” says McDowall, who received a guided tour of the subterranean facility after completing his report in 1997. “I’m no expert on vaults, but it seemed like a pretty secure place,” he says. “It’s like a library. Aesthetically, it’s quite striking because there’s row after row of gold bars. You could see that gold has a different lustre from the different nations of production. You could look down these rows and they would say, ‘Here’s the Polish gold,’ and most of it was of one colour. The South African gold, I think, was very lustrous, whereas the Russian gold was quite dull.”

Circumstances in the vault have changed since the mid-1990s. Canada spent the early part of the last decade aggressively divesting itself of its gold reserves, selling at the bottom of the market. Today its holdings amount to $141 million, according to the Bank of Canada, ranking us 85th on the World Gold Council’s list of countries by gold holdings, sandwiched between Mozambique and Slovenia.

But rude, corporeal stuff like gold isn’t what central banks are made of anymore. The most delicate aspect of the Bank of Canada’s upcoming move, says Michael King, a former analyst with the Bank of Canada who is now with the Richard Ivey School of Business, at the University of Western Ontario, will involve its role in the Large Value Transfer System, an electronic scheme that permits financial institutions and their customers to shuttle large payments among themselves, securely and in real time. “That is a vital system for the functioning of Canada’s financial system,” says King, a claim borne out by the numbers: In 2011, according to the Bank of Canada, the system processed some 26,000 payments a day, worth an average total of $157.5 billion.

To ensure the seamless functioning of this and other of its operations, the bank does extensive business-continuity planning, and in the event of a crisis—large-scale power outages, terrorist attacks, massive G20-style demonstrations—it is always in a position to operate out of several constantly maintained off-sites. “One of the priorities for the bank over the past few years is ensuring that we’ve got business-continuity plans in place and all of the arrangements to ensure that we can seamlessly deliver these critical systems and services,” says Vardy. “We’re sort of the federal government’s banker, as it were. All of the federal government’s debt transactions happen through here.” Moving into its new digs will largely be an extension of the bank’s already long-standing practices.

Yet the move has no doubt also involved the transport of less newfangled stuff. Former front-line employees interviewed by Maclean’s, whose work until recently took them beneath the Bank of Canada building, describe vaults that, although depleted, continue to be home to a not insignificant horde of foreign reserves—gold in the form of bullion and coins kept for other central banks. Whatever those holdings entail, all of it is already gone, relocated in advance of the move. That gold is a mere glimmer of the old days, when the earth under 234 Wellington St. was a nest of European bullion kept safe from the Nazis.