Nobelpreis für Physik 1921 - What happened to the prize money?:
Nobelpreis würde Dir - im Falle der Scheidung und für den Fall,
Nobel Prize - in the event of the divorce and in the event
Albert Einstein to his first wife Mileva, 31. January 1918
The Nobel Prize in Physics 1921 - What happened to the prize money?
One of the many “ingeniously devised tales” adorning Albert Einstein's life focuses on the prize money that accompanied the Nobel Prize for Physics in 1922. The actual story deserves a long and detailed account. This paper presents just a brief summary.
It begins in 1918, a long time before the Royal Swedish Academy of Sciences conferred upon him the award. In that year, Albert Einstein signed over the award money to his first wife, Mileva: “[I]n the case of a voluntary divorce… the Nobel Prize… would be ceded to you in full a priori.”
Has this apparently generous gesture to be considered a belated acknowledgement of an ousted co-author – Mileva – of certain scientific papers published between 1901 and 1913 under Albert Einstein’s name alone? There is no document to justify this frequent claim. In fact, correspondence preserved in the archives tells a different story. In 1918, the prize money was still far away, yet confidently expected. It represented the security that Mileva demanded in the event of divorce.
The draft of the divorce agreement stated: “Disposal of the interest would be left entirely to your discretion. The capital would be deposited in Switzerland and placed in safe-keeping for the children.”
As reworded by Mileva’s lawyer, in the divorce decree the phrase “placed in safe-keeping for the children” became “In the case of the remarriage or death of Mrs. Einstein [the capital] shall go to the children.” Even if the practical consequences hardly changed – due to the fact that Mileva “shall have no authority over the capital without the consent of Prof. Einstein” - Albert’s clear statement of intent regarding the children’s heritage was swept under the rug. Yet happy to escape prolonged negotiations, in order to end an unfortunate marriage, Albert may not even have realized the difference.
Almost four years after the divorce, in the fall of 1922, it happened. “[N]ow … you really will be getting the Nobel Prize”, Albert announced to his children in a letter from Japan, once he received notice of the award. Soon Mileva’s plan could materialize: “Look into the matter about the house. The rest will be deposited somewhere in your names. Then, you'll be so rich that, God knows, someday I may have to squeeze money out of you ...“
In 1922, the Nobel Prize in Physics was endowed with 121,572:54 Swedish kronor, a relatively small sum compared with other years, yet the equivalent of more than twelve years' income for Albert Einstein.
The divorce agreement of February 1919 stipulated that the capital was to be deposited in a Swiss bank account. But by 1923, even Switzerland's economy was destabilized by political uncertainty. Would not Albert’s jocular forecast be jeopardized if the prize money remained in Europe?
Back from his trip to the Far East in the spring of 1923, Albert transferred 45,000 Swiss francs to Zurich, the amount Mileva planned to invest in real estate. Of the remaining 91,000 Swedish kronor Albert could have retained the equivalent of 40,000 German marks, deposited, in securities, in Zurich in 1918, as an advance payment towards the divorce. But by 1923, galloping inflation in Germany had reduced the original value to a tiny fraction. Following the advice of a financial expert, Albert decided to place the remaining prize money with an American bank “because I regard this as more advantageous and safer in your and the children’s interest“. In Mileva's name, this capital was invested in a number of different dollar bonds.
By May 1924, Mileva had found the property she wished to own: a five-storey apartment building at the edge of Zurich's prosperous district of Fluntern. Upon payment of 45,000 Swiss francs she became the owner of Huttenstrasse 62, valued at 195,000 SFr. In late summer, Mileva and her two sons moved into the six-room apartment on the third floor. Albert, visiting in September, expressed his satisfaction at the “visible result of my musings”.
When in the following year the roof required repair work, Albert offered Mileva an interest-free loan to avoid sale of bonds in the United States. That same year, 1925, while revising his last will, Albert noticed that the wording in the divorce decree only partially reflected his original intentions. Concerned, he asked Mileva for a written note stating that the Nobel Prize money will be considered an advance payment of their sons’ inheritance, and that Mileva would not appeal against Albert’s last will. Mileva, fearing that her sons be bamboozled, stubbornly ignored this demand. What she did not know is that in this last will Albert assigned to their sons not merely his violins, books and papers, but explicitly the scientific manuscripts which by now had become an asset of ever-increasing value.
Thanks to rental income, supplemented by the interest flowing in from her American account, and a few smaller loans, in the second half of the 1920s Mileva and Eduard enjoyed a relatively comfortable existence.
In the early summer of 1930, bonds in Mileva's American account reached their maturity date; a capital of 5,000 US$ needed to be reinvested. With the stock market crash of October 1929 fresh in mind, Albert, circumspectly, suggested that she place this money in real estate rather than in new bonds. After hesitating for a moment, Mileva became enamoured with the idea of owning a second property. The following month such a property was found. Trusting in Mileva's judgment “because you already once made a good buy” Albert signed the necessary forms. By August 1930, the purchase was finalized.
How could it be, that hardly one month later, Mileva decided to purchase a third house?
In order to make this acquisition, in September 1930 – with Albert's approval – she sold bonds worth a total of 5,400 US$. The face value of the bonds now left in her account in New York could hardly have been more than 10,000 US$; accordingly, the income from interest "formidably shrunk".
Albert's Nobel Prize money reposed now in three apartment buildings situated in Zurich's rather expensive residential area, on the Zürichberg. Here, only high-earners could afford the rent. This turned out to be a disaster once the economic crisis reached Switzerland. Some tenants delayed the rent payments or paid only a part of it, others moved out; each empty apartment left a bigger dent in Mileva's budget.
To assist her in escaping from this precarious situation, in the summer of 1932 Albert engaged a lawyer to sort out Mileva’s financial affairs, and to find a way out of the impasse. However, Mileva did not appreciate the expert’s suggestion: to sell property as fast as possible, even at an unfavorable price.
In the same politically explosive summer of 1932, Albert revived the plan to amend his testament and, as he fruitlessly did in 1925, again asked Mileva and the sons to commit to "unconditionally respect" his last will. In return, he offered the sons the interest from a sum of ca. 25,000 Marks he had saved up for them.
“Back then,” he wrote, referring to the year 1918, “I ceded to you the Nobel Prize with the intention to secure your and the children's future. It ought to be made clear … that this sum, the only assets I had at all by then, was to be credited to the children's inheritance in the event of my death.”
In this summary I will not expand on the controversy that Albert's request brought about, and how it affected the younger son, Eduard. One fact, however, needs to be stated: neither Mileva nor Hans Albert were ready to sign a paper which might, as they surmised, discriminate against them, vis-à-vis Albert’s new family. Mistrust prevailed on both sides.
Soon other concerns made obsolete the smoldering conflict: By January 1933, Eduard was diagnosed with schizophrenia; it seemed unlikely that he would become (financially) independent in the near future; in May, Albert lost his possessions in Germany, including the savings retained for the sons, all seized by the Nazis. Thanks to some foreign income prudently kept outside Germany, and his appointment at the Institute for Advanced Study in Princeton, he was not left destitute and was still able to aid Mileva.
However, despite the large and small sums Albert sent occasionally in answer to Mileva’s anxious appeals, or at the request of her professional supporters, and despite the monthly allowance – a sum equivalent to a qualified handyman's salary - for the son who remained with his mother at home, between 1933 and 1938, Mileva's debts slowly grew to alarming heights.
In 1936, she sold the last American stocks to finance renovations of the house at Huttenstrasse 62, in the hope of yielding higher rental income.
That year, the income from the two apartment houses purchased in 1930 did not even cover the running expenses, let alone the mortgages. It was impossible to sell them; foreclosure approached. Just before the house at Huttenstrasse 62 was about to be seized too, in 1938, Mileva implored Albert to take it over – a formality made legally possible by the 1935 conversion of Mileva’s old debts to Albert into an additional mortgage in his favor.
With the Huttenstrasse Realty Corporation, a body founded by Albert Einstein for the one and only purpose of preventing loss of the property, by April 1939, “the house seem[ed] bailed out for the time being, though with substantial sacrifices”.
At this point, it is pertinent to ask how much of the 121,572:54 Swedish kronor, almost 180,000 Swiss francs, or around 31,000 US$, was still at Mileva's disposal.
Her American account was empty. The two apartment houses acquired in 1930, including all money she invested there later, were lost. If any, the house Huttenstrasse 62, valued at around 200,000 SFr, might have represented the final few Swedish kronor; but this property was now owned by the Corporation. The Corporation held a mortgage of 15,000 SFr; mortgages totaling 135,000 SFr were held by the State Treasury, and two additional mortgages together amounting to 44,000 SFr belonged to Albert. A part of the latter figure, though, was still Nobel Prize money, signed over to Albert in 1935, to prevent intervention by creditors.
Who was to blame for the considerable losses? Did Albert cause them, as some claim, due to his gambling on the stock exchange, and by leaving Mileva, contrary to all promises, in the lurch with the high hospital fees for their sick son? None of these allegations is supported by evidence, even though Mileva's desperate calls for help seem to suggest it, and her Zurich friends and supporters, compassionately, sided with her. The fact is that Mileva financially overstretched herself by acquiring expensive properties yielding only meager returns and, in a period of economic instability, even no return at all.
When, in 1939, the Corporation had become the property's official owner, Mileva's budget problems seemed solved for the time being. An official agreement between the Corporation and Mileva was established. As in previous years, she would collect the rents and from this income pay the mortgage interests and taxes, as well as all necessary expenses. Her official salary amounted to 600 SFr p.a.; the surplus was to go to the Corporation together with regular accounts for income and expenses. Such an agreement met the tax office's provisions. In practice, things were supposed to continue as was the case prior to the change of hands. The “surplus” including the mortgage interest owed to Albert and the Corporation would flow into Mileva's household budget. And, of course, she and Eduard could stay in their comfortable home, free of charge. Yet, for a limited transition period, the lawyer who supervised the takeover by the Corporation, had to remain the house's official manager; unfortunately, he knew too well how to skim off a considerable part of the surplus.
By the end of 1941 the house had become more or less unprofitable. Relenting to Mileva's begging, Albert promised not to sell it unless the situation should become financially unbearable.
With the entry of the United States into the war, the correspondence between Mileva and Albert was interrupted. While Albert succeeded in ensuring the transfer of his monthly payments for Eduard, for a few years Mileva did not meet her obligation to regularly submit financial statements to the Corporation.
The statements arrived eventually in 1946. They made obvious that the house accumulated even more debts during the war years. Only a considerable investment could have brought about a long-term change, money that Albert would rather invest directly in a pension scheme for Eduard than in this house. The sale had become inevitable.
In 1947, the Corporation entrusted Mileva with the sales negotiations. Since her greatest concern was Eduard's financial protection, Albert committed himself to sign over the 40,000 SFr mortgage – the only sum which still contained a small part of the Nobel Prize money - to Eduard's name as soon as a legal guardian had been appointed for him. The 4,000 SFr mortgage would be paid to Mileva after the sale. The sale proceeds, less the profit tax charged in the United States, and less some debts Albert had made to cover the costs of the takeover, were supposed to be placed in a bank account in the Corporation's name --- yet at Mileva's disposal, thus replacing the revenue Mileva previously obtained from the rents.
Assisted by the House Owners' Association, in September 1947 Mileva sold the house on behalf of the Huttenstrasse Realty Corporation at a price of 235,000 SFr. The buyer took over mortgages of altogether 192,000 SFr and handed out the difference. As suggested by the Corporation, the contract granted Mileva the right to stay in her apartment.
Once the contract was signed, she remained silent about the deal. Despite a number of reminders, by the end of April 1948, the Corporation had not yet received the sales documents and nothing precise was known about how much money Mileva obtained. Instead, she was writing desperate, reproachful letters to Albert and denigrating him with third persons in a quite perfidious way. She was distressed and confused, and no more able to comply with her obligations.
In May 1948, Mileva suffered a stroke. While picking her up from bed, at home, the paramedics discovered cash amounting to more than 87,000 SFr.
Is it reasonable to assume that these 87,000 SFr or a part of this sum was the rest of the Nobel Prize money?
The legal guardian recently appointed for Eduard now was also taking care of Mileva; he deposited the sum with the guardianship authorities. Although unaware of its actual amount, Mileva claimed that the entire sum belonged to her, being the leftover of the Nobel Prize money.
She died in August 1948.
If the full 87,000 SFr did belong to her, then this heritage would be split between her two sons, Hans Albert and Eduard, a position immediately endorsed by Hans Albert.
Soon, however, the guardian realized that the case was more complicated. The Corporation made it perfectly clear that any amount handed over to Mileva when she was selling the house legally belonged to the Corporation in the first place. As for the mortgages in Albert's favor, at a total value of 55,000 SFr, Albert confirmed his commitment to eventually make them available, preferably for Eduard's care. The whereabouts of the promissory notes, though, still remained in the dark.
So far, the calculation was:
Out of the 87,000 SFr, payments had to be made to Mileva’s doctor and the tax office as well as for her funeral and the liquidation of her household. 43,000 SFr would then go to the Corporation. The remaining sum was to be shared among the sons.
The situation changed drastically when it came to light that Mileva, unauthorized, had sold Albert's mortgages and the proceeds were contained in the 87,000 SFr.
To make matters worse, the owner of an old bearer mortgage note of 37.000 SFr registered his claim, which had not yet expired.
Hence the calculations looked quite different:
The 87,000 SFr plus a small sum resulting from the sale of Mileva's household stood counter to the following claims:
43,000 SFr by the Huttenstrasse Realty Corporation
It is pointless to go into details about the dispute which erupted between Hans Albert and his father when Albert showed his inclination to rescue whatever sum he could for the benefit of the younger son. It is, however, worth mentioning that eventually Albert's perseverance and his insistence on the Corporation’s and his personal entitlements brought the case to a successful conclusion. Confronted with the estate's impending bankruptcy and the danger of losing the full sum, the owner of the 37,000 SFr mortgage agreed to a settlement payment of 15,000 SFr. Albert then withdrew his own claim and thus allowed Eduard's legal guardian to accept the succession.
Once all bills and taxes were paid, 70,000 SFr were left.
It is true that this sum could no longer be considered the remains of Albert's Nobel Prize money; too much additional money had been invested in what for 24 years represented the “visible result of my musings”, as Albert put it in 1924.
But at least these 70,000 SFr eventually ended up in the hands of his sons, as foreseen in 1918: “The capital would be … placed in safe-keeping for the children.”
There is a very last chapter to this story:
In 1950, Hans Albert grudgingly agreed upon an "unjust" sharing of what may be called Mileva’s estate – 30,000 SFr for him, and 40,000 SFr for his far needier brother.
Until the end of his life, another six years, Albert continued to pay a monthly allowance to Eduard. By the time of Albert's death, in 1955, out of the 40,000 SFr, more than 39,000 SFr were still in Eduard's account.
Eduard's share of Albert's inheritance amounted to 64,256:25 SFr, and by 1956 Eduard owned a little over 100,000 SFr.
For another ten years, Eduard lived off this sum supplemented by occasional small gifts.
At the time of his death, in fall of 1965, 67,000 SFr were still lying in his account.
Eduard's only heir was his brother Hans Albert.
Taxes and Hans Albert’s contribution to the placement of a headstone for Eduard lowered his inheritance. How much money may eventually have fallen into his hands? 40,000 SFr? 30,000 SFr? In any case, even given some inflation, this amount is more than what he lost when, in 1950, he generously renounced the "fair" or "just" distribution of the money that Mileva had left.
So in the end, the Nobel Prize money, through all the ups and downs and losses and gains, and the political catastrophes and personal tragedies, had served, besides Mileva, one way or another, the two sons, just as it was Albert's intention.
Author: Barbara Wolff, Jerusalem, March 2016