The British did not want publicity given to their vast counter-spy network, which existed not only to expose traitors, but also to prevent the smuggling of enemy documents and special cargoes. Thus, Hoover, having established Armstrong’s method of conveying sailing schedules through New York by radio and cable to Nazi submarine-information centers in South America and Spain, was flattered by recognition from Scotland Yard.
Others of Armstrong’s persuasion were left to roam free in the United States until they had unwittingly given away their collaborators, whereupon they met with “accidents.” For this, however, the FBI did not get the credit. BSC had its own disposal squads to handle such disagreeable duties. The normal formula was that the victim “has departed for Canada,” a fate more final than it seemed when written on a police blotter.
* Admiral Canaris was known as K within the British Foreign Office. His attempts to change sides once Hitler was doomed were treated with contempt by INTREPID, who remembered that Canaris’s agents had posed as peacemakers or anti-Nazi Germans to disarm influential British and American personalities before the war. K was executed on Hitler’s orders, giving rise to speculation long afterward that he was never fully committed in the secret war against the West. Yet, until the tide turned against Nazi Germany and he fell from Hitler’s favor, K was never regarded as less than a most cunning and formidable foe.
33
In his account of Nazi strategy in the United States, Stephenson prefaced a report to President Roosevelt with the comment: “Never did a man of immense ambition such as Hitler so clearly disclose beforehand the general process and particular methods by which he fulfils his plans for conquest. The Nazi program for the moral disintegration of ideological enemies regards the Americas as the last and largest enemy.”
For many years before the war, German industrial organizations such as I. G. Farben and Schering A. G. had been methodically consolidating their interest in the United States according to a plan for German infiltration in the Americas through U.S. subsidiaries of German-owned companies. The subsidiaries were camouflaged by dummy neutral ownership in Sweden or Switzerland or by secret cartel agreements between them and the German parent companies.
When Germany went to war, this intricate network of companies supported German intelligence and propaganda systems in the Western Hemisphere. “To combat and liquidate this threat is one of BSC’s chief objectives,” Stephenson wrote in 1940. “BSC has to achieve its objective without offending sensitive U.S. public opinion, particularly as represented in Congress. A false step may create revulsion against Britain. . . .”
The plan Stephenson formulated included turning over to the FBI all evidence providing legal grounds for action against German-controlled businesses on technical grounds such as the infraction of antitrust laws. Hoover would be receptive to the plan. Any sign of immorality in Big Business bothered his conscience, which may come as a surprise to those who think of him as so devoutly anti-Communist that he was blind to capitalist sins.
“The Secret Intelligence Division first had to obtain absolute proof of the existence of direct connections between Germany and German firms operating under cover in the United States,” stated the BSC Papers. “The Special Operations Division would then expose these connections by powerful propaganda campaigns to persuade public opinion that American/German firms menaced the security of the United States. This would bring pressure on the U.S. Government and facilitate the President’s own desires. The FBI would provide the Treasury and the Anti-Trust Division of the Department of Justice with grounds for action . . . all these U.S. agencies, though anxious to cooperate, never commanded enough public support to buck Big Business. . . .”
Stephenson went after the offenders with the ferocity of a fox terrier and quickly found himself hanging on to his own landlord, Nelson Rockefeller.
The Standard Oil Company of New Jersey was discovered to be maintaining close relations with Nazi Germany and especially with I. G. Farben, which, apart from its involvement with concentration camps and mass-extermination techniques, had a special intelligence section known as NW7 working hand-in-glove with the economic section of German intelligence. Standard Oil’s relationships went back to 1927, when it began a series of agreements with Farben. The Standard Oil description of the basic agreement was: “The I. G. are going to stay out of the oil business and we are going to stay out of the chemical business.” In 1929, they consummated what each corporation called “a full marriage”: Standard had a free hand in oil anywhere in the world in exchange for giving Farben no global competition in the chemical industry.
Nelson Rockefeller worked in the Standard Oil offices at 26 Broadway as a young man, before he turned his full attention to leasing offices in the family complex at Rockefeller Center. Though he wrote off BSC’s rentals as a nonrepayable loan to Britain, his good will was more than financial. He lacked the power to pick apart Standard Oil’s international knitting, but he could make the details of its more questionable activities available. A vice-president of the corporation, for instance, negotiated, after the war in Europe broke out, a method of operation that would, as he wrote in a memo, “allow us to continue in partnership with the Germans whether or not the United States comes into the war. I. G. assigned to me some 2,000 foreign patents, and in three days of negotiations in Holland we worked out a modus vivendi.”
Rockefeller agreed with Stephenson that the best possible weapon against this “business-as-usual” mentality would be publicity. He goaded and persuaded other oil executives to recognize their social and political responsibilities and worked with BSC in pinning down precisely how involved Standard Oil and other U.S. corporations were with Axis commerce. After Roosevelt made him Co-ordinator of Inter-American Affairs in 1940, he began countering the Nazis with BSC’s methods: controlling U.S. newsprint exports to South America, for instance, thus influencing an estimated 1,200 newspapers in the republics.
The joke was that Standard Oil executives offered a considerable fortune in hard cash, no questions asked, to anyone who would identify the source of a book called Sequel to the Apocalypse: How Your Dimes Pay for Hitler’s War. Nobody ever claimed the reward. The book, detailing I. G. Farben–Standard Oil collaboration, was printed on Camp X presses and smuggled from Canada into the United States by BSC. It exposed “the tangled nature of the corporate structure” and charted the links from Germany to dozens of dummy companies in the Americas and with big U.S. corporations, including Ford. What it did not mention was that I. G. Farben had a significant interest in German atomic-bomb research and was the principal shareholder in a Norwegian plant producing ingredients for German atomic projects.
Rockefeller had the book distributed by U.S. embassies in South America even as executives of his family’s company muttered about lawsuits. The Stephenson view of corporation ethics was colored by the June 1940 German-sponsored victory celebration in the Waldorf Astoria, when American tycoons were told not to waste time on Britain, whose armies had just been chased out of France.
A typical INTREPID signal on the problem was this one of April 14, 1941:
THE STANDARD OIL COMPANY IS PLAYING THIS WAR AT BOTH ENDS AND IN THE MIDDLE. THEIR TANKERS OPERATING UNDER THE PANAMANIAN FLAG PLY BETWEEN GULF OF MEXICO PORTS AND TENERIFE OSTENSIBLY TO SUPPLY THE SPANISH REFINERY BUT IN FACT TO SUPPLY ENEMY VESSELS.
This ran parallel to Stephenson’s charges against the International Telephone and Telegraph Corporation—that it was associated with Hitler’s SS and war industries like Focke-Wulff, which built bombers. He was trying, too, to put an end to a situation in which ITT carried messages from the United States to the enemy by way of its own cables and those of its subsidiaries in South America: Chile, Cuba, Colombia, and Ecuador. The piquancy of the situation was that ITT also owned a British company, Standard Telephones and Cables. When the supreme boss, the notorious Sosthenes Behn, visited his English workers after the fall of France, none knew about his German activities across the Channel. Yet it was this
very situation that had allowed ITT engineers to draw Stephenson’s attention to the Enigma coding machine, whose solution was vital to ULTRA.
Chart included in Sequel to the Apocalypse: How Your Dimes Pay for Hitler’s War.
“If the Nazis won, some of these business realists would have been impeccably Nazi,” Stephenson said of them. “If the Nazis lost, the same businessmen were impeccably American.”
This upset the Ministry of Economic Warfare, worried about offending U.S. financiers, for British international commerce did not always bear close inspection either. To INTREPID’s Standard Oil messages of April 1941, one reply from London read:
MEW SUSPECT ATTEMPT CREATE BAD BLOOD BETWEEN YOUR INFORMANTS AND STANDARD. REGARDING ALLEGED SUPPLY TO ENEMY SHIPS OF STANDARD OIL THIS REPORT WITHOUT FOUNDATION. . . .
INTREPID’s answer was a mass of details. He kept up similar barrages until finally a senatorial investigating committee headed by Harry Truman reviewed the evidence. Standard Oil’s record was then set forth, from its continuing sale of fuel to Axis airlines, despite State Department protests, to its providing German companies with strategic materials. In Venezuela, where Rockefeller checked out his family oil holdings, it was established that Standard Oil gave Germans preference in supervising the development of oil fields. The BSC Papers declared: “Standard Oil could be scarcely regarded as an American business machine. It was a hostile and dangerous agency of the enemy.”
Early in 1941, after Roosevelt’s re-election but before his inauguration, Stephenson turned over to Hoover and the FBI a 400-page report, one of many produced by the men who were forming the nucleus of the new Political-Warfare Division within British Security Coordination. For Hoover, it came as a shock. Among disclosures about the links between Nazi coporations and American businessmen were the names of British collaborators. The report recounted the experience of “The Worried German” awaiting American naturalization who had gone to a State Department official to offer information on Nazi activities. The official was not much interested. Eventually a confidential report was written by Assistant Secretary of State Adolf Berle, beginning: “From a source—the reliability of which is not confirmed—I have learned the following . . .” In effect, as Stephenson pointed out, the State Department was saying it could not care less. Berle was a loyal American, but his approach to foreign affairs was “schoolmasterish and rigidly opposed to British manipulations and secret British police and espionage agencies in Washington.” He clashed later with Stephenson over BSC’s activities, until eventually he had to accept the President’s ruling that “for the sake of our own national survival, you must cooperate.”
The report opened the door to further action against Nazi organizations working under commercial cover. It analyzed the fifteen big German trusts that provided the social base for Hitler. The most interesting was I. G. Farben, whose directors endorsed the Nazi party because it opposed free enterprise, and who encouraged the building of slave-labor camps in order to make production more “efficient.” Few in the West wanted to believe reports of Nazi mass-murder programs. Stephenson had blueprints of the mobile gas chambers and a Farben report on experiments with the prussic-acid derivative later known as Zyklon-B, which would exterminate “sub-humans” on an assembly-line basis with speed, dispatch, and little fuss in the chambers that became notorious in their guise as communal showers.
INTREPID’s report went on to describe what happened when “The Worried German” was turned away by Berle, who saw him on behalf of the State Department. The man was an executive of Schering A. G., a chemical firm in Bloomfield, New Jersey. Its Swiss “ownership” was camouflage for a subsidiary of Schering/Berlin, which had built up a network of neutral holding companies and dummies from Scandinavia to South America. Known in BSC records as The Bloomfield Man, the disenchanted German executive made contact with Stephenson’s organization. It was still unregistered with the United States government and the informant was in a precarious position. Despite his honorable motives, he could be deported to Germany for working on behalf of a foreign secret agency. If he kept quiet, his application to become an American citizen could be rejected if the United States came into the war and he was seen as part of a Nazi conspiracy. For this reason he was never identified by name in official papers.
The Bloomfield Man collaborated with British agents for several months. Material was removed from the corporation’s files and photographed in a suite at the St. Regis Hotel, in mid-Manhattan, then owned by a friend of Stephenson working for BSC. Schering worked for Berlin, and was a source of hard currency and cargoes regarded by the British as contraband.
A section of the State Department was angered by a public statement from London that certain American companies were “trading with the enemy.” The Ministry of Economic Warfare, responding to the 400-page report, tried to pressure Washington, to “freeze enemy assets, cooperate in black-listing enemy commercial firms and deny fuel to vessels serving enemy interests.” The Secretary of State, Cordell Hull, expressed outrage at British accusations.
BSC decided to “find” evidence that would reach the FBI and eventually the State Department. Suspicious material netted in the Bermuda censorship station from outgoing mails was normally shared with the FBI. Letters on Schering / USA stationery that compromised the company were faked and sent back from Bermuda. One FBI man who was not surprised by the letters was J. Edgar Hoover. He had agreed this was the way to jolt the Justice Department into action. Investigators who reported their discovery of the Schering conspiracy were perfectly spontaneous in their reaction. They were surprised, and angry.
The Bloomfield Man had also written an extensive account of the Schering corporation’s activities. Some of this material was leaked to the Washington bureau of International News Service, including photostats of forged Schering letters “proving” the firm was breaking the Sherman Anti-Trust Act. Joseph Borkin, of the Department of Justice, was approached by INS, which undertook to sit on the story provided the Anti-Trust Division began legal proceedings and gave the news agency the first break when action was taken.
This strengthened Borkin’s hand. He was one of many middle-level officials who had trouble getting action against German and other foreign cartels, although he was convinced this was morally the proper course of action. Opposition to these troubled souls, and to the FBI, seemed to come from the State Department and its friends in higher business levels.
“President Roosevelt himself proposed in his Fireside Chat after reelection in 1941 to say that American citizens in high places were aiding and abetting the work of Nazi agents,” the BSC Papers noted. “The President sent a draft of the speech to the State Department. It was returned with the words ‘in high places’ ringed in red. When Roosevelt asked who was responsible, he was told ‘State—they think the words dangerous.’ The President said sharply, then let’s change the sentence to read—‘There are also American citizens, many of them in high places, especially in the State Department. . . .’
“This gives a taste of circumstances even this late in time,” the BSC Papers continued. “Borkin was one of many frustrated men who ran into mysterious resistance at higher levels. The Schering/USA reports on subversion could not be totally ignored. But the State Department was conducting its own feud with Hoover and the FBI, and accused them and the Justice Department of intruding into State’s preserves. It was recognized by BSC that the threatened press campaign, proceeding through INS and other media, would have to go ahead.”
During preparations for this, Stephenson applied another form of polite pressure on a Swiss bank, which professed to control Schering/USA. The managing director later recalled being reached by “Mr. Samuel of General Trust of London.” He thought he would hear some proposition for laundering currency through the Swiss bank. Instead, over massive Martinis, he heard that Schering/USA was about to have its properties seized by the U.S. government. The gossip was mentioned in passing. The managing director hastily drew Mr. Samuel back to this
topic. Why, yes, said Mr. Samuel, surprised. Surely the Swiss banker did not think U.S. authorities were as innocent as they appeared? Come to think of it—suppose Schering/USA were expropriated? Where would this leave the Swiss bank? The conversation passed on to the subject of Mr. Samuel’s interest in meeting Swiss businessmen in Geneva. . . .
A few days later the banker called Samuel, who seemed to be Canadian. Did Mr. Samuel know much about business in Canada? Indeed Samuel did. The two met again. Mr. Samuel suggested a way out of the banker’s difficulties—form a Canadian holding company to take over the Schering/USA share certificates. There would be no loss of profit, the U.S. authorities would be satisfied that the Canadian government exercised proper supervision, and the Swiss banker would be relieved to know he was on the right side of the fence.
This game distracted the banker while German ownership through his bank was documented. “On April 10, 1941 a superbly orchestrated press campaign was launched, exposing the scandal of the New Jersey firm under disguised Nazi control,” Cuneo said years later. “A series of carefully timed leaks to friendly newsmen and broadcasters ensured that the media pursued these news stories.”
Schering’s operations came to a standstill. The U.S. Treasury took over. The Swiss bank was ordered to divest itself of all stock held in the chemical company. The managing director never discovered that helpful cozy Mr. Samuel was chief of British intelligence.
A Man Called Intrepid Page 35