IBM and the Holocaust

by Edwin Black

  Anti-Semitic violence and general repression in Germany was an undeniable fact for all in America, but especially for anyone who could read the front page or the first few pages of the New York Times, listen to a radio broadcast, or watch a newsreel. In the formative months of February, March, and April 1933, Watson and his colleagues at IBM were exposed to not just several articles in the New York Times, but scores of them each week detailing ghastly anti-Semitic brutality. On many days, the New York papers were filled with literally dozens of repression and atrocity reports.

  March 18, New York Times: In an article detailing Nazi plans to destroy Jewish professional life, the paper reported that a quarter of all Jewish attorneys would be forced to retire each year until they were all gone. It wasn’t just the legal profession. Within weeks all German Jews expected to be ousted from their professional positions and occupations, the paper wrote.46

  March 20, New York Times: The page one center headline decried, “German Fugitives Tell of Atrocities at Hands of Nazis.” Making clear that “iron-clad censorship” in Germany was preventing most of the truth from emerging, the paper nonetheless enumerated a series of heinous acts. For example, at Alexanderplatz in Berlin, just down the street from the Prussian Statistical Office complex, Brown Shirts invaded a restaurant popular with Jewish businessmen. Waving a list of names of the restaurant’s Jewish customers, the Brown Shirts “formed a double line to the restaurant door.” They called each Jew out by name and made him run a gauntlet. As a Jew passed, each Storm Trooper “smashed him in the face and kicked him with heavy boots, until finally the last in the line, knocked him into the street.” The last Jew to run the gauntlet was beaten so severely, “his face resembled a beefsteak,” the newspaper reported.47

  March 21, New York Times: Under a page one banner headline declaring, “Reichstag Meeting Today is Prepared to Give Hitler Full Control As Dictator,” was a special two-column dispatch from Munich. “Chief of Police Himmler of Munich today informed newspaper men here that the first of several concentration camps will be established near this city.”48

  By April 20, about the time Watson decided IBM should solicit the census project, New York Times headlines reported more than 10,000 refugees had fled Germany in the face of daily home invasions, tortures, and kidnappings; 30,000 more were already imprisoned in camps or prisons; and another 100,000 were facing economic ruination and even starvation. On May 10, about the time IBM was at the height of its negotiations for the census, the world was further shocked when Nazis staged their first and most publicized mass book burning. By the end of May, when Dehomag’s contract with the Reich was finalized, the New York Times and the rest of America’s media had continuously published detailed accounts of Jews being brutally ousted from one profession after another: judges ceremoniously marched out of their courtrooms, lawyers pushed from their offices, doctors expelled from their clinics, professors drummed out of their classrooms, retailers evicted from their own stores, and scientists barred from their own labs.49

  On June 11, the day before the door-to-door census taking began, the New York Times reported that the government was searching through the backgrounds of more than 350,000 government workers to identify which among them might be of “Jewish extraction who are liable to dismissal.” In that same edition, the New York Times rendered a page-specific summary of Adolf Hitler’s book, Mein Kampf, explaining how completely public his program of Jewish annihilation was. Hitler declared on page 344, reported the New York Times, “If at the beginning of the [Great] War, 12,000 or 15,000 of these corrupters of the people [Jews] had been held under poison gas… then the sacrifice of millions at the front would not have been in vain… 12,000 scoundrels removed at the right time might perhaps have saved the lives of one million proper Germans.”50

  By the time Watson was organizing his plans to set sail on the Bremen, on August 29, 1933, the New York Times, in a page one article, reported the existence of sixty-five brutal concentration camps holding some 45,000 Jewish and non-Jewish inmates; an equal number were incarcerated at a variety of other locations, creating a total of some 90,000 held.51

  Banner headlines, riveting radio broadcasts, and graphic newsreels depicting the systematic destruction of Jewry’s place in Germany must have seemed endless. Blaring media reports made it impossible for anyone at IBM to deny knowledge of the situation in the Third Reich. But what made a technologic alliance with the Reich even more difficult—moment-to-moment—was an America that everywhere was loudly protesting the Hitler campaign of Jewish destruction. To ally with Germany at that time meant going against the will of an enraged nation—indeed an enflamed world.

  Although anti-German protest marches, picket lines, boycotts, and noisy demands to stop the atrocities were in full swing on every continent of the world, nowhere would protest have appeared more omnipresent than to a businessman in New York City. In New York, the air burned with anti-Nazi agitation. All sectors of society—from labor unions to business leaders, from Catholic bishops to Protestant deacons to defiant rabbis—rallied behind the battle cry that humanity must starve Depression-battered Germany into abandoning her anti-Semitic course. “Germany Will Crack This Winter,” read the placards and the leaflets.52

  Typical of the vehemence was the giant demonstration at Madison Square Garden on March 27, 1933. Culminating days of loud marches through out the New York-New Jersey area and highly publicized denunciations, the Madison Square Garden event was calculated to shut down New York—and it did.

  At noon on March 27, business stopped. Stores and schools closed across Greater New York as employees were released for the day. The rally didn’t start until after 8:00 p.m., but by that afternoon, large crowds were already lined up outside the Garden. Once the doors were unlocked, the flow of protesters began. It continued for hours. Traffic snarled as thousands jammed the streets trying to wedge closer. Demonstrators heading for the rally were backed all the way down the subway stairs. Six hundred policemen formed a bluecoat chain along the crosswalks just to allow pedestrians to pass.53

  When the doors shut, only 20,000 boycotters made it inside. So public loudspeakers were hastily erected for an estimated 35,000 keyed-up citizens crammed around the streets of the Garden. Police and protest marshals diverted several thousand to a second ad hoc rally at nearby Columbus Circle. It wasn’t enough. More overflow rallies were frantically set up along the nearby intersections.54

  Synchronized programs were at that moment waiting in Chicago, Washington, Houston, and about seventy other American cities. At each supportive gathering, thousands huddled around loudspeakers waiting for the Garden event to commence. That day, at least one million Jews participated nationwide. Perhaps another million Americans of non-Jewish heritage stood with them shoulder-to-shoulder. Hundreds of thousands more in Europe were preparing sympathetic demonstrations, fasts, and boycotts.55

  New York and Thomas Watson had never seen anything like it. From the windows of IBM at 270 Broadway, the massive demonstration was an unmistakable message: Don’t do business with Hitler. Moreover, boycott leaders promised vigilant retaliation for any American firm that did.56

  Protests, larger and smaller than the one on March 27, were repeated throughout the year and indeed throughout the life of the Third Reich.

  The stakes must have been high for Watson to disregard the gargantuan protest of a nation, and the world’s battle cry to isolate Germany commercially. But IBM maintained its steadfast commitment to an alliance with Nazi Germany. It was just days later that Watson launched the effort to garner the Prussian census contract.

  Germans understood Watson to be a friend of the Reich. Just after the Madison Square Garden event, senior management at Dehomag sent their company Leader a jointly signed appeal on firm letterhead. German managers implored Watson to help suppress the “cruelty stories depicting pretended abominable crimes against German jews… [which] are untrue.” The word “Jews” was not capitalized. Heidinger could not bring himself to capitalize the l
etter “J” when typing the word “German” next to the word Jew. “We are applying to our esteemed foreign personal and business friends,” Dehomag wrote, “with the most urgent request, not only to reciprocate our cooperation but—as champions of truth—not only not to believe similar unfounded rumors, but to set yourselves against them.”57

  Watson did not disappoint his colleagues in Berlin. Just after the worldwide rallies in late March, Dehomag board meetings in Berlin confirmed, “President Watson and vice president Braitmayer were fully agreed that we should manufacture all suitable items in Germany according to our best lights and by our own decision.” Hence, plans to establish a factory were to proceed, even though certain highly technical parts would still be imported from the United States. Watson’s office routinely received translated copies of the meeting minutes a few days later.58

  Watson’s commitment to growing German operations seemed indefatigable. He ignored the tide of America’s anti-Nazi movement and the risk of being discovered as a commercial associate of the Third Reich. But doing so meant ignoring the inescapable financial risk any businessman could see in Nazi Germany. Simply put, doing business in Germany was dangerous.

  Foreign business was fundamentally considered an enemy of the German State. Incomes earned by foreign corporations could not be transferred overseas. They were sequestered in blocked German bank accounts. The money was usable, but only in Germany. Hence, a dollar of profit made by Dehomag could only be spent in Germany, binding any foreign enterprise to continued economic development within Germany. Companies were frequently required to invest their profits in Reich bonds. Many considered this monetary move little more than Hitler’s effort to take American business hostage. Others understood that as corporations fled Germany, the Reich was forced to decree that their money would have to remain behind.

  IBM’s Paris office began regularly receiving statements from the Deutsche Bank und Disconto-Gesellschaft, listing Dehomag’s distributions as blocked funds in the name of International Business Machines Corporation. For example, one account balance of RM 188,896 was suddenly boosted by RM 90,000—almost none of which could be sent back to America.59

  Rapid-fire regulations designed to subdue the independence of foreign business were being promulgated almost daily. Often regional rules were simply decreed by a local party potentate. Companies were obligated to fire Jews, hire from the ranks of the NSDAP—the Nazi Party—pay special contributions, and sometimes even defer plans for mechanization on the theory that certain types of machinery displaced jobs. Conflicting rules from conflicting authorities were commonplace.

  Most of all, Germany loudly warned all foreign business that they were subject to a concept known as Gleichschaltung, loosely translated as “total coordination” with the State. Within days of Hitler’s rise to power, the process of Gleichschaltung began as every political, organizational, and social structure within German society was integrated into the Nazi movement and therefore made subordinate to NSDAP goals and instructions. Gleichschaltung applied to business as well. Foreign business quickly realized it. And they were reminded often.60

  April 7, 1933, New York Times : A page one article bannered “Nazis Seize Power to Rule Business; Our Firms Alarmed,” led with the assertion, “Adolf Hitler, having made himself political dictator of Germany, today became dictator of German big business as well.” The New York Times explained that, “every phase of German business had already been thoroughly organized. By taking control of the business organizations, the Nazis have obtained control of the interests they represent.”61

  April 28, 1933, New York Times: In an article headlined “Germany Cautions Foreign Business,” the newspaper prominently reported a promulgation by Reich Economics Undersecretary Paul Bang, “The German government… must demand that foreign business establishments unreservedly participate in the realization of Germany’s economic program.”62

  To complete the circle of apprehension, everywhere the talk was of renewed war. Any economic transfusion to the Hitler regime was seen by many as a mere prelude to another horrific military conflict. Officials in Washington, diplomats in London and Paris, and business leaders throughout the world feared that the advent of Hitler would throw humanity back into a global war. Signs of German rearmament were reported continuously. Open declarations by Germany that it would reoccupy tracts of land seized by the victorious Allies were blared throughout the media. A key source of alarm was Hitler’s so-called employment program.

  Germany was disarmed as part of the Versailles Treaty. Now labor forces were becoming facades for military recruitment. Organized “labor units” were subject to conscription, wore uniforms, and underwent paramilitary training. Typical was a New York Times report on May 21 headlined “Reich Issues Orders for New Labor Units.” The subhead read, “Military Tone Is Evident in the Conscription Regulations—Storm Troops Favored.”63

  Why would one of America’s leading businessmen and his premier corporation risk all by participating in a Nazi economy sworn to destroy Jewry, subjugate Europe, and dominate all enterprises within its midst? For one, IBM’s economic entanglements with Nazi Germany remained beneath public perception. Few understood the far-reaching ramifications of punch card technology and even fewer had a foreground understanding that the company Dehomag was in fact essentially a wholly-owned subsidiary of International Business Machines.

  Boycott and protest movements were ardently trying to crush Hitlerism by stopping Germany’s exports. Although a network of Jewish and non-sectarian anti-Nazi leagues and bodies struggled to organize comprehensive lists of companies doing business with Germany, from importers of German toys and shoes to sellers of German porcelain and pharmaceuticals, yet IBM and Watson were not identified. Neither the company nor its president even appeared in any of thousands of hectic phone book entries or hand written index card files of the leading national and regional boycott bodies. Anti-Nazi agitators just didn’t understand the dynamics of corporate multinationalism.64

  Moreover, IBM was not importing German merchandise, it was exporting machinery. In fact, even exports dwindled as soon as the new plant in Berlin was erected, leaving less of a paper trail. So a measure of invisibility was assured in 1933.

  But to a certain extent all the worries about granting Hitler the technologic tools he needed were all subordinated to one irrepressible, ideological imperative. Hitler’s plans for a new Fascist order with a “Greater Germany” dominating all Europe were not unacceptable to Watson. In fact, Watson admired the whole concept of Fascism. He hoped he could participate as the American capitalistic counterpart of the great Fascist wave sweeping the Continent. Most of all, Fascism was good for business.

  * * *

  THOMAS WATSON thomas watson and IBM had separately and jointly spent decades making money any way they could. Rules were broken. Conspiracies were hatched. Bloody wars became mere market opportunities. To a supranational, making money is equal parts commercial Darwinism, corporate ecclesiastics, dynastic chauvinism, and solipsistic greed.

  Watson was no Fascist. He was a pure capitalist. But the horseshoe of political economics finds little distance between extremities. Accretion of wealth by and for the state under a strong autocratic leader fortified by jingoism and hero worship was appealing to Watson. After all, his followers wore uniforms, sang songs, and were expected to display unquestioned loyalty to the company he led.

  Fascism, the dictatorial state-controlled political system, was invented by Italian Dictator Benito Mussolini. The term symbolically derived from the Roman fasces, that is, the bundle of rods surrounding a ceremonial axe used during Roman times. Indeed, Nazi symbols and ritual were in large part adopted from Mussolini, including the palm-lifting Roman salute. Ironically, Italian Fascism was non-racial and not anti-Semitic. National Socialism added those defining elements.

  Mussolini fascinated Watson. Once, at a 1937 sales convention, Watson spoke out in Il Duce’s defense. “I want to pay tribute… [to the] great leader, Benito
Mussolini,” declared Watson. “I have followed the details of his work very carefully since he assumed leadership [in 1922]. Evidence of his leadership can be seen on all sides…. Mussolini is a pioneer… Italy is going to benefit greatly.”65

  Watson explained his personal attraction to the dictator’s style and even observed similarities with his own corporate, capitalistic model. “One thing which has greatly impressed me in connection with his leadership,” conceded Watson, “is the loyalty displayed by the people. To have the loyalty and cooperation of everyone means progress—and ultimate success for a nation or an individual business… we should pay tribute to Mussolini for establishing this spirit of loyal support and cooperation.”66

  For years, an autographed picture of Mussolini graced the grand piano in Watson’s living room.67

  In defense of Fascism, Watson made clear, “Different countries require different forms of government and we should be careful not to let people in other countries feel that we are trying to standardize principles of government throughout the world.”68

  Years after der Fuhrer seized power, Watson drafted a private letter to Reich Economics Minister Hjalmar Schacht, in which he argued “the necessity of extending a sympathetic understanding to the German people and their aims under the leadership of Adolf Hitler.” Watson described Hitler’s threatening posture toward other nations as a “dynamic policy.” In referring to the “heroic sacrifices of the German people and the greatest achievements of their present leadership,” Watson declared, “It is the sincere and earnest desire entertained by me and countless other friends of Germany… that these sacrifices and achievements should be successful and that the New Germany should reap the fruits of its present great effort to the fullest extent.” Watson concluded the draft with “an expression of my highest esteem for himself [Hitler], his country and his people.”69