by Edwin Black
WHEN WORLD WAR II ENDED IN EUROPE, THE CONTINENT was shattered and in disarray. Millions of all faiths and nationalities were dead. For millions more—displaced persons, tattered victims, and fatigued combatants—it would be years before they could recover.
Yet, Dehomag emerged from the Hitler years with relatively little damage and virtually ready to resume business as usual. Its machines had been salvaged, its profits preserved, and its corporate value protected. Hence, when the war ended, IBM NY was able to recapture its problematic but valuable German subsidiary, recover its machines, and assimilate all the profits.
As early as December 1943, the United States government concluded that Hitler’s Holleriths were strategic machines to save, not destroy. Dehomag’s equipment held the keys to a smooth military occupation of Germany and the other Axis territories. By June 1944, Carter’s investigative reports on IBM and Dehomag had been adapted into a confidential War Department Pamphlet, 31-123, entitled Civil Affairs Guide: Preservation and Use of Key Records in Germany. Over several dozen pages, key government and Party offices were listed by street address with a description of their punch card machines and data. On page 18, the Ministry of Labor entry declared, “Their records are of the utmost importance as they are the means by which the Germans controlled and shifted manpower, and should therefore be a valuable source of information for the occupying authorities. On pages 19-20, the Ministry of Transportation entry explained, “The up-to-date reports disclose the location and number of trains available in each territory, traffic density, tonnage over a particular line, type of cars used, type of materials shipped…. As the smooth running of the railroad system is of primary importance… in administering the occupied territory, all records should be placed under military custody.”1
The War Department’s Civil Affairs Guide citation on page 21 for Police Records specified, “records on aliens and Jews are kept by a special department of the police, the Fremdenpolizei (alien police)…. By an elaborate technique, that is kept rigorously up to date, the police are enabled to trace the movements of practically everyone in the country.” On page 58, in the “Gestapo Card Index,” section subsection B was entitled “Register of Inmates of Concentration Camps.” It confirmed: “The Gestapo Directorates and Offices keep the register of inmates of concentration camps in the areas under their jurisdiction. Copies are to be found in the concentration camps themselves.”2
Appendix B of the Civil Affairs Guide identified the Dehomag factories and summarized the operational basics of Hollerith tabulators, sorters, verifiers, and multipliers.3
British intelligence was also keen to maintain German Holleriths intact to facilitate the occupation. A British paper reviewing the Reich Statistical Office asserted, “If the German statistical staffs at the Ministry of Economics and at subordinate levels continue to function, it will not require a great number of people to take charge. If, however, the German system… has been disrupted and the records sabotaged, it would be a long and arduous, though necessary, task to reconstitute it.”4
German forces were just as eager to safeguard their IBM equipment, albeit for their own reasons. As the Allies liberated territories from the east and west, precious machines were moved behind defensible lines for the Reich’s continued use. As late as 1945, der Fuhrer himself had issued a decree placing a new emphasis on punch card technology for registering and tracking all Germans needed for the defense of the Reich. He appointed Karl-Hermann Frank, former military governor of occupied Czechoslovakia as a new plenipotentiary for punch card registration. Frank would be able to supercede the authority of the Maschinelles Berichtwesen (MB), the Zentral Institut, and all other party and state offices. “In this capacity, he has to answer to me personally,” declared Hitler. Der Fuhrer added that the committee advising Frank would be chaired by Rudolf Schmeer, the official who spoke for the Party at the original 1934 opening of Dehomag’s Lichterfelde factory. Schmeer still enjoyed a commanding role at the MB.5
More than just the strategic need to evacuate the equipment to safer ground, Hitler’s Holleriths constituted damning evidence. Hence, when concentration camps were abandoned, the machines were moved and files destroyed to obliterate the record of war crimes. In many cases, Hollerith devices from various Reich sites were not redeployed, but simply hidden to keep them from Allied confiscation. However, as the Allies closed in on Berlin, military intelligence tracked many of the machines.6
A major MB punching operation of almost 100 Hollerith machines at its Wendisch-Reitz office was shifted in part to Otto’s Hotel, while its tabulators were installed at a nearby castle, and the remaining devices were shipped by rail to Neudientendorf for reassembly in the basement of the Riesbeck brewery. Allied forces arrived at the brewery before the machines could be activated. Machines from Krakow and Posen were also moved to sites in Neudietendorf. Tabulators and sorters in Koenigsberg were thought to have been loaded onto a boat that escaped before Allied armies arrived. Holleriths at Hannover were moved to Elze. Nuremberg machines were relocated to Brauhaus Street in Ansbach. Tabulator experts at Kassel shipped their gear to Oberaula, but first removed several small components, rendering them inoperative if Allied forces discovered the systems.7
With both sides trying to protect the Holleriths, the evidence on exactly where and how thousands of machines were used was all but obscured. This was particularly the case in concentration camps where the Hollerith Departments were generally dismantled before liberators arrived, even if some of the cards, decoding keys, and telltale Hollerith transfer paper were left behind.8
Thus, almost as soon as Germany capitulated, IBM could begin the proc ess of recovering its valuable equipment from frequently innocuous sites.
IBM’s money was protected with equal fervor. During the war, the Reich needed IBM subsidiaries in Nazi Europe to continue operating in a reliable, profitable mode. At first, the Reich appointed a temporary enemy property custodian, Dr. Kottgen. He simply re-appointed IBM’s most trusted managers in virtually all the territories.9
By 1943, however, the Reich Economics Ministry had designated Hermann B. Fellinger as custodian over Dehomag. Fellinger was one of Germany’s most reliable and commercially adept Kommissars. In WWI, he had served as the chief Kommissar overseeing all other custodians of enemy property. In France, where Westerholt officiated as preliminary custodian at CEC, Fellinger was empowered to supersede and ultimately replace him. Ultimately, Fellinger’s authority extended not only to Dehomag, but also to IBM companies in Norway, Yugoslavia, Czechoslovakia, Poland, and France. Fellinger also coordinated closely with a second custodian, H. Garbrecht, who oversaw the IBM operating units in Belgium and Holland, and with Rome’s appointed official at Watson Italiana. Real estate attorney Oskar Mohring was named custodian for IBM’s property and other commercial interests in Nazi Europe.10
On assuming his position, Fellinger immediately re-designated IBM’s best managers to keep the subsidiaries productive and profitable. He only excised one IBM personality: Dehomag Chairman Willy Heidinger. A four-man Advisory Committee, including Veesenmayer, quickly replaced Dehomag’s Board of Directors. That outraged the combative Heidinger who saw his power suddenly neutralized. On June 18, 1943, Heidinger wrote a long, bitter defense of his involvement with the company, going back to its inception in 1910. His diatribe railed that Watson’s interference had been the cause of all problems. Dehomag was German not American, he argued, and should not be administered for IBM’s benefit, but instead completely Aryanized.11
“Contrary to what has on occasion been alleged,” protested Heidinger, “it was, therefore, not a case of us Germans participating in an American enterprise, but rather of Americans participating in a German enterprise that I created… I have been blamed for many other things, in an unfounded and partly contradictory manner. Among other things, I was told I was merely a figurehead for the Americans; on the other hand, it was not very nice of me to act so aggressively towards the Americans now that I had waxed rich because
of them. The opposite is true: It is not a case of my having become wealthy because of the Americans, but rather of the Americans having become wealthy because of me.”12
Further undercutting him, Fellinger ruled that the company was no longer obligated to re-purchase Heidinger’s stock. Heidinger would have undoubtedly pressed claims against Fellinger and done his utmost to regain control of Dehomag. But Heidinger’s battle came to an end several months after his angry apologia to Fellinger. Deteriorating health eventually won out over the indomitable Dehomag founder. In 1944, Heidinger died of natural causes.13
With Heidinger out of the way, Fellinger was free to operate Dehomag and its sphere of influence as he saw fit. In that vein, he was far more than just an inert oversight officer. Fellinger functioned with as much commercial zeal and dedication to the IBM enterprise as any senior executive Watson could have personally selected. It was exactly as Watson had envisioned. Germany’s custodian, Fellinger, was the perfect solution to the Dehomag revolt and the predicament of a business alliance with the Third Reich while America was fighting a war with Germany.
In Norway, Fellinger received regular progress reports from Watson Norsk’s longtime manager, Jens Tellefson. Fellinger limited his involvement to “smoothing his [Tellefson’s] path with [various Reich] departments, and especially the German occupation authorities.” When machines and parts could no longer be imported directly from New York, Fellinger arranged for imports from Watson Italiana and Dehomag. Tellefson purchased the Italian and German machines not in the Norwegian subsidiary’s name, but in the name of IBM NY to preserve the American parent company’s claim to the property being used in occupied Norway. When the Norwegian company ran low on card stock, Fellinger also arranged for supplies through Dehomag’s paper vendors.14
At one point, Norwegian saboteurs used explosives to destroy Watson Norsk’s offices. They hoped to disrupt the company’s in-house servicing of the Nazi labor office, which coordinated both conscripted and slave workers. Anticipating such an attack, Tellefson had arranged for Nazi records to be moved off-site daily. Nonetheless, most of the IBM machines serving the labor office were crippled in the bomb attack. So Fellinger approved relocating the IBM office to a more secure neighborhood with replacement machinery. This allowed IBM’s lucrative service to continue. In Norway, annual revenues doubled from 161,000 crowns in 1940 to 334,000 crowns in 1943, and declined only slightly in 1944, just months before Norway was liberated in 1945. Fellinger attributed Watson Norsk’s excellent performance to “wartime conditions.”15
In dismantled Czechoslovakia, Fellinger allowed Watson’s handpicked director, Emil Kuczek, to remain in command. Fellinger was pleased that “Kuczek has conducted the business with great care and expert knowledge… acting conscientiously in the interest of that company.” He remembered that Kuczek “always acted in complete harmony with myself.” The Czech subsidiary’s card printing capacity was doubled thanks to a transfer of printing presses and paper cutters from Dehomag. In turn, the Czech subsidiary filled Dehomag’s punch card orders. A number of Czech machines were assigned to “German railways in the East.” Kuczek accepted all machine rental payments, but did not provide any receipts. He deposited the money in IBM’s account at Prague Kreditbank. IBM Geneva in turn notified Kreditbank that Kuczek was permitted to freely spend up to 20 percent of the deposits to pay for ordinary subsidiary operations, such as salaries and rent.16 In this way, Czech operations were routinely funded without any written instructions from IBM NY, and service rendered with a minimal paper trail.
Fellinger worked hard to keep the Czech division’s profits high. He insisted on eliminating discounts, limiting expenses, and even added a bonus to Kuczek’s contract based on net profits. From 1941 to 1944, Czech punch card revenue alone doubled from 2.6 million crowns to nearly 5.3 million.17
Fellinger showed equal diligence in his administration of the other IBM subsidiaries under his control, such as Poland and Yugoslavia. The devoted receiver never failed to demand the best terms and formulate the most conservative business decisions to protect the companies he administered.18
Fellinger even put IBM’s interest before that of the Third Reich, constantly badgering Berlin to pay more rent, and clear up its delinquencies. He even demanded that the Wehrmacht pay for CEC machines the German military seized from occupied France. It took months of burdensome legal wrangling, but Fellinger successfully argued that the German military had no right to remove CEC’s machines without properly compensating IBM. His argument hammered away at the theme that because the plundered machines were leased items, they never belonged to the French government, but to IBM. As such, the transferred devices were not subject to traditional rules of “war booty.” Only after reams of Fellinger’s dense briefs, supported by attestations by CEC Managing Director Roger Virgile, did the MB finally consent to nearly a million Reichsmarks in back rent for machines transported out of France.19
Even when 308 leasing contracts—one for each requisitioned machine—were printed and submitted to CEC, at the last minute Fellinger asked Virgile to withhold signature. Fellinger learned that the MB had negotiated slightly better maintenance discounts with the custodian for IBM units in Belgium and Holland. Only after an adjustment guaranteeing parity did Fellinger finally agree. To replace the 308 now obsolete leasing contracts, Fellinger proposed reducing the entire agreement to a punch card but wondered about the validity of a “punch card signature.” Ultimately, the parties relied on traditional written contracts.20
Dehomag engineer Oskar Hoermann, who doubled as CEC’s deputy custodian, transmitted the basic format for the 308 leases to Paris. During the war years, Hoermann stayed in contact with IBM NY by various means, including posting ordinary letters—casual and formal—from Vichy France. For example, in April 1942, while transiting from Berlin through Vichy, Hoermann mailed a handwritten “Dear Jimmy” letter to manufacturing executives at Endicott, New York, routinely reporting factory developments at Dehomag and CEC. From Vichy, Hoermann also was free to communicate with Lier in Geneva. The protracted negotiations with the MB specified the number of hours IBM machines could be used each month, thus limiting wear and tear, as well as monthly rental fees. CEC managers in combination with Fellinger stubbornly held out for the best terms, yielding the most money for IBM. Un til the agreement was finalized, CEC was willing to just wait for its back rent.21
On June 16, 1944, an MB official finally noted for his file, “Fellinger has received the basic agreement signed by us and will give it today to his CEC representative, Mr. Hoermann, who is currently in Berlin. Mr. Hoermann will take it with him to Paris, where General Director Virgile will sign it…. The essential factor, however, is that after four years [of negotiation dating back to the invasion of France], a basic agreement is being signed.”22
Fellinger’s counterpart in Amsterdam, H. Garbrecht, who administered IBM companies in Holland and Belgium, exhibited similar assiduity in securing payment for machines removed from subsidiaries under his control. Working with IBM managers in Brussels and Amsterdam, Garbrecht finalized contracts that were typeset into a formal lease contract. Each contract declared at the top that the agreement was between the Maschinelles Bericht - wesen in Berlin and “International Business Machines Corporation-New York” through the German administrator in Amsterdam or alternatively in Brussels. Details about the specific machine, its serial number, monthly rent, permissible hours of usage each month, and service terms were typed into the provided spaces. Although the numerous contracts were all executed on September 15, 1943, rental terms and fees were made retroactive to the summer of 1942, depending upon when the specific machines were transferred to Reich offices.23
For example, contract series #091/1/0094/43 for a model 034 duplicating alphabetizing puncher, serial number 10167, specified rent at RM 127.47 per month, retroactive to August 13, 1942; the device was deployed at the MB field office in Munich. A model 405 alphabetizing tabulator with an automatic cart, serial number 13430, c
ost RM 945.76 monthly, retroactive to August 26, 1942. Monthly billing tallies were generated until war’s end, specifying combined rental fees at such departments as the Foreign Ministry, German Navy, Luftwaffe, or Inspectorate Seven. None of the contracts executed through custodian Garbrecht exploited IBM. In fact, German officials complained the hard bargain they agreed to was fundamentally unfair because the Reich was liable to pay for any damage caused by war action.24
With all the fervor of a Watson devotee, Fellinger also blocked any potential rivals. For example, in early August 1944, when the potential competition posed by the Wanderer-Werke alliance appeared, Fellinger challenged its patent rights in Germany. To avoid litigation, Wanderer-Werke was forced to accept Fellinger’s stringent, almost dictatorial licensing agreement. Dehomag would receive a 4 percent royalty on every Bull machine imported into Germany. The 4 percent level was expressed as a temporary wartime royalty, to be increased after the conflict stopped. Fellinger’s agreement demanded, “You will inform us about the type, the number, the date of import and the final purpose of every Bull machine imported.” To further hush Wanderer-Werke’s presence in the market, the license agreement stipulated, “You will not use these machines for advertising purposes.” In the end, Fellinger’s many procedural delays in Germany and the liberation of France in August 1944 combined to effectively stymie the delivery of any Bull machines into the Reich.25 Thus, Dehomag’s virtual monopoly was preserved.
Through the devoted administration of Fellinger and other Axis custodians, Dehomag and the other IBM subsidiaries in Europe thrived. Their custodial authority stopped when Germany surrendered. It would be a long bureaucratic and uncharted process for IBM to reclaim its property. Fortunately, Watson could rely upon another column of support: the IBM Soldiers.
* * *
AMERICAN SOLDIERS in Europe fought valiantly to defeat the Nazi nemesis. Part of their mission was to take control of German facilities and seize evidence of Nazi war crimes and collaboration. Whether the target was an industrial site, a bank, a military base, or a concentration camp, it was all enemy property to be referred to commanders, and possibly war crime prosecutors.