thomas de baggio - the unholy alliance - links between american big business & nazi germany
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Thomas De Baggio - The Unholy Alliance - Links Between American Big Business & Nazi GermanyTRANSCRIPT
Until 1963, Du Pont, America's leadingchemical maker, dominated General Motors, the world's largest auto manufacturer,through stock ownership and directors,Lammot du Pont, who was both chairmanof GM and president of Du Pont, was probably America's most important industrialist during the two decades between theFirst and Second World Wars. He was inti
mately allied with far-right causes duringthe 1930's, which in some circles gave himthe reputation of a superpatriot. (At the timeof his death in 1952, he still held $28,000in unpaid loans to the American LibertyLeague.)
However, in Germany after World War II,he was thought of by some Nazis as afriend. In a formerly secret intelligence report contained in the files of the militaryoccupation government that is now in theNational Archives, this reputation is spelledout graphically.
The report discloses a conversation thatwas held in a military prison betweenGeorg von Schnitzler, Paul Hoefliger, andGunther Frank-Fahle, who were jailed aswar criminals for the part they played asexecutives of I. G. Farbenindustrie, thegiant German explosives and chemicalcombine which manufactured the poisonfor Hitler's gas chambers. The three werehunting for an escape plan and they hit onLammot du Pont as someone who "could
'be depended upon to intervene in theirbehalf," according to the report.
A member of the du Pont family was anobvious choice for the Farben executives.
The Du Pont Company had an intimate relationship with Farben dating from 1926.As a result of this close association, created through scores of business deals andjoint ventures around the world, these Farben executives knew that Du Pont had:
• Surrendered the fruits of its researchand technical know-how in a handful of
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agreements negotiated on the eve of thewar. These included Freon for refrigeration(from the Du Pont-General Motors jointventure, Kinetic Chemicals), nylon, andsynthetic rubber.
• Helped disguise Farben patents sothat American authorities would think theywere Du Pont patents. This prevented theirseizure as alien property.
• Owned over $2 million worth of sharesof Farben stock. Farben, in turn, owned$838,412.50 in Du Pont stock, accordingto records captured by the U.S. militaryauthorities.
• Helped German munitions makers violate the treaty that ended World War I bykeeping silent about the illegal trade inmunitions conducted by German firms.Du Pont went so far, according to a formerly secret wartime Justice Departmentreport, that it purchased over 11,000shares of stock in two German arms makers to aid the firms in "consolidating theirposition and business in Germany."
• Put secret trade agreements beforenational policy by refusing to sell tetracene-primed ammunition to Great Britain in 1940 at a time when the British were
begging-American aid and PresidentRoosevelt had declared the U.S. to be an"arsenal for democracy."
But I. G. Farben was not the only Germanmunitions maker with which Du Pont haddealings that caused concern amongAmerica's war policy makers. A telegramsent to the State Department on March 21,1942, some three months after the U.S.declared war on Germany, caused secretshock waves. The telegram was from theU.S. legation in Bern, Switzerland (a keyEuropean listening post swarming withmembers of the U.S. intelligence community, including Allen Dulles, who was tobecome head of the CIA). It reads:
"The following just received with spe-
cial request that French sources be not(repeat, not) disclosed.
"Representatives of Du Pont de Nemours recently met with representatives ofHermann Goring Works. Meeting commenced at Montreux but has moved to St.Moritz for greater privacy.
"In reply to informal inquiry by my informant, high Swiss Foreign Office officialreadily confirmed the report adding thatthis was not the first time the parties hadmet; that Vichy was fully informed; and inconclusion reminded my informant thatone of the president's sons had married adu Pont."
A notation in the State Department filesindicates that a paraphrase of the cablewas turned over to the Federal Bureau ofInvestigation "in strict confidence." FBIfiles and documents prepared during thisperiod remain classified.
(The mention of the du Pont-Rooseveltmarriage was a reference to the weddingof Ethel du Pont, daughter of Eugene duPont, Jr., and Frankl in Roosevelt, Jr., thepresident's son. The marriage ended indivorce.)
The Hermann Goring Works controlledhundreds of manufacturing firms throughout Nazi-occupied Europe. It was Europe'sleading coal supplier and the secondlargest steel producer. Its armament division absorbed many of Europe's leadingmunitions makers. The huge conglomerate was designed to aid the Nazis in attaining the goals of Hitler's four-year plan ofincreased production for German rearmament.
It must be stressed that the Du Pont Company had for years maintained such a closerelationship with the U.S. military that industry officials saw the company as "almost a subdivision" of the War Department.As early as 1919, U.S. officials agreed togive Du Pont unique access to secret gov-
WHAT WAS GOOD FOR GENERAL
MOTORS WAS GOOD FOR THE
COUNTRY ... EVEN IF IT MEANT
CONTRIBUTING TO THE NAZI
WAR MACHINE IN EUROPE!
ernment military research.(Germany was not the only enemy coun
try with whom Du Pont had dealings.Another dispatch in State Department filesdetails the 1943 offering for sale in Italy,through agents, of a patent owned by DuPont which covered a process to treatmetal-something that had possible strategic value to the Italians.)
Top State Department officials wereeven more concerned about the activitiesof Du Pont's General Motors, however.Papers in the National Archives disclosethat these government officials suspectedthat key GM executives were pro-Nazi andthat their proclivities were behind the automaker's secret trading with the enemy.
Assistant Secretary of State Adolf A.Berle, Jr., in 1941 expressed his views onGM Vice-President Graeme K. Howard to a
colleague in a short memo. Howard, saidBerle, "was endeavoring to defend theright of General Motors to maintain Axispropagandists as agents in South Americaon the ground that 'General Motors couldnot become concerned in political problems.'" Howard had written a book de
fending Nazi aggression in Europe andargued that the U.S. should acknowledgeNazi hegemony.
A second General Motors vice-president and director, James D. Mooney,came under suspicion somewhat later. Astill-secret communication from the chiefwartime censor in Canada to the U.S. StateDepartment reveals an intercepted letter.This letter, according to a description of itin archive records, led the censor to feelthat "Mr. Mooney of GM is pro-German."Censorship intercepts were sealed underpresidential order and cannot be madepublic.
In a "strictly confidential" note, datedMay 31, 1941, note to FBI Director J. EdgarHoover, Assistant Secretary Berle re-
quested "a most discreet investigation beconducted of Mr. Alfred P.Sloan, Presidentof General Motors Corporation; Mr. Howard, vice-president of that corporation andpresident of General Motors Export Company; and Mr. James D. Mooney, who isconnected with the General Motors organization. "
The trio were all directors of GM andGM's German subsidiary, Adam Opel A.G.Sloan had made known his feelings towardthe Nazis when he reportedly told a groupof stockholders in 1939 that the war inEurope, soon to engulf the world, was a"petty international squabble."
When the U.S. clamped down on American corporate relations by prohibitingtrade with foreign firms owned or managedby Germans or Nazi sympathizers, GMtried to thwart the blockade.
In Bolivia, according to a May 31, 1941,telegram, the U.S. legation had been told"in extreme confidence" that "arrangements are being made between GeneralMotors Export Corporation and Gundlach[C.F. Gundlach, who also represented DuPont interests in Bolivia] pro-totalitarianagent for that company in Bolivia, so thatbusiness may be operated nominallyunder the name of Viuda Velez de Otero."
In Guatemala, the U.S. Naval attachereported in a secret intelligence report ofFebruary 14, 1941, that GM's replacementfor a pro-Nazi firm was a "salesman namedMontano" who was financed by Germanbankers.
A series of similar attempts to violaterestrictions on trading with the enemybrought another State Department call fora "thorough" FBI investigation of Mooneyand General Motors Export Corporation.The June 8, 1942 memo alludes to "previous grave suspicions attaching to thedealings" of the firm.
In June 1943 the previous suspicions
were confirmed. The State Departmentcaught GM trading with the enemy. Theviolation, as spelled out in a series of confidential cables, showed that GeneralMotors' Swiss subsidiary had importedthousands of dollars of material fromenemy territory. Moreover, GM also continued to receive sales figures, transmittedthrough its office in Switzerland, for carsand trucks sold behind enemy lines. TheState Department looked askance at thepractice.
State Department officials kept on top ofGM affairs through secret telegrams sentto them from allover the world. But particular attention was drawn to the activities ofGM's Opel subsidiary in Germany. Opelbegan aiding Hitler's bloody drive forworld domination as early as 1935, sixyears before Germany declared war on theUnited States.
In 1935 GM built a large modern plant inBrandenburg, about 200 miles from themain Opel plant at Russelsheim. "TheBrandenburg works was built ... at the instigation of the [German] government withthe object of building military cars andtrucks and heavy commercial vehicles,"states a formerly secret British wartime report on Opel. The vehicles produced atBrandenburg became, in the words of anAmerican intelligence report, "the backbone of the German Army transportationsystem."
By the late 1930's the modern conveyorbelts at Brandenburg and at the recentlyenlarged Russelsheim factories werewhirring smoothly-but not with the precision and speed desired by the Nazis. InNovember 1938 the German auto industry,including Ford and Opel, was called to aspecial meeting with Field Marshal Hermann Goring. A memo on the meeting iscontai ned in a confidential report prepared by the wartime U.S. Justice Depart-
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ment. The memo, written by Dr. H. F.Albert,chairman of Ford Motor Company's German operations, reveals Nazi unhappiness that "the German automotive indus
tries had not met the expectations placedin them." According to the mef!lo, Goringdressed down the automakers for producing "too expensive cars, much too heavyunits" which "were not fit, in their presentcomposition, to carry through the increasein production which, for military reasonsappears necessary." Automakers' profitsof from 40 to 50 percent were also criticized by Goring.
Goring also went on to tell the automakers, according to the memo, that "the fortification of the western frontiers could nothave been carried through if Americanunits had not been reverted to. These Ameriican cars had met all the expectations placedin them." Ford and GM produced the bulkof the trucks for the Nazi military.
GM's Russelsheim plant was convertedinto a large-scale aircraft-parts factory in1939, and a year later it was the leadingproducer of components for the GU-88, theLuftwaffe's most important bomber. Half ofthe propellant systems for this aircraftwere assembled during the war at Russelsheim. The facility also assembled jetengines for the world's first jet fighter, theME-262.
General Motors retained control of itsGerman factories unti I the spring of 1941when Cyrus Osborn, chairman of Opel'sboard of managers and the firm's chiefoperating executive, returned to America.Carl Luer, a former member of the GMselected board of directors, was named astrustee a year later.
Before the outbreak of hostilities, Chairman Alfred P. Sloan, a Du Pont Companydirector, was an Opel director, along withGraeme K. Howard, James D. Mooney,and David F.Ladin, all GM officials. Opel'sfounder, Wilhelm von Opel, continued aschairman of the Opel board. His son Fritz,jailed in the U.S. during the war as anenemy alien, had been a GM director inDetroit unti I 1938.
Although its German factories were obviously important to the Nazi war effort,General Motors had already made an evenmore basic contribution to the conflagration that engulfed Europe. In 1935 it wentinto business with I. G. Farben makingtetraethyl lead, the chief ingredient inhigh-octane gasoline. This was the firsttime the antiknock compound had beenproduced outside the United States sinceit was discovered in 1921 by GM's CharlesKettering.
The venture-joined by Exxon, thenknown as Standard Oil of New Jerseywas essential if petrOleum-short Germanywas to mount a war. "Without lead-tetraethyl," a captured I. G. Farben wartimedocument explained, "the present methodof warfare would be unthinkable."
When part of the story of GM's aid to theNazis was made public in 1974, testimonybefore the U.S. Senate by Bradford C.
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Snell, a Senate.antitrust subcommitteecounsel, General Motors reacted angrily."Following the German declaration of waron the United States on December 11,1941," GM said in a prepared statement,"the relationship with Opel was entirelysevered. No Americans sat on the board of
directors, even nominally, after that time."However, documents in the National Ar
chives disclose that General Motors wasable to retain some measure of control
over Opel-even during the war. This wasdone through Albin D. Madsen, a wartimedirector of Opel, who represented GeneralMotors, according to a 1948 report by theU.S. military's decartelization branch.
Madsen was managing director of GM'ssubsidiary in Denmark, General Motors International, according'to a company history prepared by the American legation inStockholm, Sweden, in March of 1944.
The report discloses that after Denmarkwas overrun by the Nazis in April, 1940,GM's plant was not seized as the propertyof enemy al,iens and run by a German-appointed trustee as the Opel plants were inGermany. On the contrary, GM continuedto run the factory without German intervention unti I early 1943, according to the report. The GM management in Denmarktried to put off Nazi overtures with arguments that "consideration should be givento the fact of the American ownersh ip of thecompany," the report explains.
State Department officials, relying oncompany managers for much of their information, tell of a set of complex negotiations which led to GM's relinquishing itsnew factory in Copenhagen to the Germans. The terms made it appear that theNazis had used force; but in fact the GMfactory was in effect rented to the Germansthrough the Danish government. The Germans used it as an aircraft engine repairfacility. GM retained complete control overall its remaining manufacturing facilities inDenmark, according to the report.
In order to protect its wartime profits, thereport notes, GM "purchased a ... realestate company which owned a largeblock of modern flats in Copenhagen" inm id-1943. Th is was just one stratagemused by the GM-Du Pont complex to squirrel away Nazi war profits.
GM officials claimed in 1944 that theyhad resisted German entreaties as long aspossible, but, the report acknowledges, "aconsiderable section of the Danish population views the company as undesirableby reason of the fact that many peoplebelieve it cooperated with the Germans inmaki ng avai lable its plant."
Protecting Nazi war profits was difficultfor America's premier corporations duringWorld War II. GM's scheme of keeping themoney under its control in the foreigncountry unti I after the end of hosti lities wasonly one method.
After the war ended both Du Pont andGM made attempts to reap the rewards oftheir corporations' silent dealings with theNazis. General Motors, for instance, was
successful in obtaining more than $16 million in direct awards and another $16.8million in tax savings as a result of bombing damage to its German war plants.
DuPont, without damaged plants to collect on, went to the Foreign Claims Settlement Commission in an attempt to get itsshare of profits on war goods sold to the Nazis by firms it partially owned in Germany.
The largest single pile of German warprofits that Du Pont tried to tap was held bythe German Foreign Debt Conversion Office. The money, $121.407.39, accordingto Du Pont, consisted of dividends from amajority interest in Duco, AG, of Berlin, ajoint venture Du Pont owned with Schering,AG, Germany's second largest chemicaland pharmaceutical firm. Although Schering had control of 51 percent of the votingshares of the company, Du Pont ownedadditional nonvoting stock which gave it amajority of the profits.
The profits Du Pont attempted to collectthrough the commission represented returns for the years 1940 through 1943. Butin 1967 the claims commission rejectedDu Pont's bid for the money becauseawards could be granted for damagedproperty but not for debts.
Du Pont also tried to collect $15.494.50in royalty payments for the use of its synthetic rubber patents in Czechoslovakia.Under the licensing arrangement, BataCorporation was to pay Du Pont $35 a ton.The corporation produced 442 tons for theNazis, but the commission again thwartedDu Pont's lust to collect enemy war profits.
Du Pont also attempted to collect royalties through the State Department for payments on war material produced by I. G.Farben. The German firm was taken overby Allied military authorities after the warand Du Pont could only be compensatedby appealing to the U.S government. DuPont expected thousands of dollars in profits as a result of patent arrangements withI. G. Farben. Available records do not indicate whether the company was paid.
Du Pont had agreements with othercompanies producing war goods for theNazis. Nylon patent rights had been soldon the eve of World War II by Du Pont inGermany, Italy, and F!ance. How muchwas collected in wartime profits from theseconcerns is unknown since it was not nec
essary for Du Pont to take formal actionwith the U.S. government to collect themoney. Presumably, the firms paid whatDu Pont demanded as its share figuredunder contracts negotiated before the war.
Du Pont also owned shares in a numberof important Axis firms. Aside from stock inI. G. Farben, Du Pont held about 4 percentof the stock of Deutsche Gold and SilberScheideanstalt. Nicknamed DEGUSSA,the firm was second only to I. G. "in therange, variety, and importance of its manufacture of chemical products," accordingto an assessment made by military author i
.ties after the war. Du Pont valued its DE-GUSSA shares at $430,066.18 in 1930.
A list of foreign investments datedCONTINUED ON PAGE 91
"I think we could safely rule out suicide, Watson,"
.'
UNHOLYALLIANCECONTINUED FROM PAGE 76
January 24, 1944, supplied to the StateDepartment by Du Pont, showed holdingsin French and Italian chemical industries.In France, German-occupied during thewar, Du Pont owned 17.5 percent of the
" stock in Societe FranQais Duco, an outfitmanufacturing Du Pont paint productssimilar to the German Duco firm.
Du Pont also maintained an interest in
the Italian chemical giant, Montecantini, a'firm which historians say had a large rolein bringing about the fascist dictatorshipof Benito Mussolini. Du Pont also held 16percent of the stock in Societa ItalianaDelle Celluloide, a holding company inwhich the firm had maintained a controlling interest prior to the war,
In addition to making money, these foreign investments had an indirect benefitfor Du Pont. They helped the company divide the world into exclusive markets inwhich there would be no competition,
These formerly secret government doc-- uments help cast light on the hidden re
cesses of American corporate activity intimes of international tensions, They showthe actions behind the business axiomformulated by Pierre du Pont, the patriarchof the modern American corporation. "Wecannot assent to allow our own patriotismto interfere with our duties" to achieve"reasonable profits for our stockholders,"he said in testimony before the SenateCommittee to Investigate the Munitions Industry in the 1930's,
"It may, of course, be argued that participating in both sides of an internationalconflict, like the common corporate practice of investing in both political partiesbefore an election, is an appropriate corporate activity," says Senate Aide Snell ina study done for the Senate antitrust andmonopoly subcommittee, "Had the Naziswon, General Motors, .. would have appeared impeccably Nazi; as Hitler lost,these companies were able to reemergeimpeccably American, In either case, theviability of these corporations and the interests of their respective stockholderswould have been preserved,"
Snell, however, sees the inevitability ofthe conflicting loyalties created by this
, credo as having a "potential for abuse"
r' ,which would suggest "that in the case ofpowerful concentrated industries engaged in war-convertible production mul-tinational expansion may adversely affect
j' America's legitimate interest in national, security,"
A special report by the Foreign Economic Administration prepared in 1945 cameto similar conclusions about the activitiesof multinational corporations. It based its
\ conclusions on World War II experiences,"International cartel agreements were
one of the effective means employed by
the Nazis in preparing for World War II," theclassified report said. "Such agreementswere used not only to develop the Nazimilitary potential and to weaken the preparedness position of Germany's potentialenemies, but also to provide a screen forespionage activities."
These cartel agreements were enteredinto by various corporations in order toprotect profits by dividing up sales territories among them and to swap patentedinformation. "Loyalty to such agreementsis usually supranational and, consequently, exceedingly dangerous to national security," the report noted.
These business agreements amongcorporations "perform the functions of aninternational government," the report said."International security demands the adoption of an international cartel conventiondesigned to eliminate all restrictive measures imposed by international cartels andthe creation of such international agenciesas may be essential to the implementationof the convention."
No meaningful controls were everplaced on multinational corporations. Today, among the few congressional aideswho have interested themselves in theseproblems there are two schools of thought.There are those whose idealism has beenshocked by what they view as the inevitable threat to America by international corporations. They talk in hushed tones of legislation which would force these giant
firms to sell their foreign holdings. Whilethey talk about such a proposal, however,they are not optimistic about its success inCongress because they feel the case forsuch drastic economic action has notbeen made with sufficient force and dramato sway public opinion and votes,
Other congressional opinion favors lesssevere restrictions. Some type of monitoring system which would require disclosure of now-secret holdings and deals is afirst step favored by some on the SenateMultinational Subcommittee. The proponents of this and other proposals to restrictand regulate American multinationals seeAmerican corporate power with some ambivalence. In their view there are good andbad corporations, The good corporationscan immeasurably aid foreign nations in avariety of ways. Under their suggestedscheme the bad would be weeded out.The catch is how to set up criteria to determine "good" and "bad" corporations.
Implicit in all the arguments is the ideathat America's corporations form an unacknowledged world empire. Even a few firststeps at regulating the nation's multinational giants would have to set some international standards of behavior for American companies.
That it has taken this long to even begintentative discussions about the problem isa measure of corporate power as much asit is an indication of the complexity of theissue. O+--m
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