Hell's Cartel

by Diarmuid Jeffreys

  Of course, nobody would have been given too much time to dwell on such things. Sooner or later, a messenger would have been sent out to round up the stragglers, to bring them back to the discussions in the bar or the billiard room, where the conflicting parties had set up camp and were arguing furiously about who had said what to whom and why. This was a council of the gods, after all, and even the most junior deities were expected to play their part.

  The destiny of the mighty German chemical industry was to be decided at these talks. Six years after the calamitous end of World War I—years defined by the Versailles Treaty, political anarchy, hyperinflation, and aggressive international competition—the last tortuous steps toward full union were taken. IG Farben was about to be born.

  * * *

  GERMANY’S DEFEAT HAD been a near disaster for the chemical industry. Its absorption into the wartime economy had made it dangerously dependent on the armed forces for commissions, with a large proportion of its plants given over to the production of munitions and other strategically important materials. In 1917-18, for example, an astonishing 78 percent of BASF’s sales had been to the military alone, and the other firms’ level of exposure was nearly as bad. The armistice on November 11, had obviously brought all this work to a halt, and even though some of the industry’s well-connected executives had been warned the end was coming (on November 4, 1918, BASF’s supervisory board was told that the military was on the verge of total collapse and that Ludwigshafen faced occupation by enemy troops), they had only limited time to prepare for it. A few tons of chemical stocks and finished products that might possibly be confiscated were spirited away deeper into Germany, and hundreds of commercially sensitive plans and technical designs that might fall into enemy hands were destroyed or hidden. But the most important parts of the industry’s infrastructure—its specialized equipment, laboratories, and buildings—were immovable, rooted to the banks of the Rhine and wide open to Allied retribution. A period of great confusion ensued.

  The uncertainty wasn’t helped by the fact that in the days immediately following the cease-fire a rumor went around that some of the industry’s more nervous bosses had decided to make themselves scarce, called on urgent business to their country estates or to relatives farther to the east. One report, in the New York Times, even claimed that Bayer’s Carl Duisberg, “generally looked upon as the connecting link between ‘business’ and General Ludendorff, and … one of the most active of the Pan Germans,” had fled to Switzerland. The great patriot hadn’t, of course. He was still at Leverkusen in early December when a company of New Zealand troops marched in, occupied the factory, and confined him and his family to a suite of rooms in the basement of his house. In truth, most of the industry’s senior managers were equally steadfast. When French soldiers took over Ludwigshafen on December 6, several members of BASF’s board came out to meet them, determined to protect their business from whatever vengeful measures their former enemies had in mind.

  There was little the executives could do. Such stocks of transportable raw materials and finished products as remained were immediately impounded in lieu of future reparations, and hard on the heels of the troops came dozens of French military chemical specialists, charged with unearthing as much technical information as possible about manufacturing processes for explosives, gas weapons, nitrates, and dyestuffs. Other Allied missions followed suit and soon every major chemical plant along the banks of the Rhine was crawling with foreign experts—rifling through filing cabinets, harassing scientists and foremen with questions, and generally making a nuisance of themselves. On the surface, at least, the British and American investigators were more diplomatic than their Gallic counterparts and gave assurances that they were only after technologies with specifically military application, “in order to further disarmament.” The French were less bothered about ruffling German feathers and made no secret of the fact that they were also looking for commercial intelligence that might be useful to their domestic chemical industry.

  One of the things the Allies were naturally keen to understand was exactly how Germany had managed to produce sufficient quantities of nitrates to keep its munitions factories going. Clearly, part of the answer lay within BASF’s Haber-Bosch plant at Oppau on the Rhine, but only the Germans knew how to work it. The French wanted the facility started up so they could see it in operation, but Bosch, who had been appointed to run BASF in early 1918, refused on the grounds that the processes involved were of purely commercial interest and that to reveal them would seriously compromise the company’s viability. The French petitioned the joint Allied peace commission (responsible for overseeing the implementation of the armistice agreement) to order BASF to get Oppau going. To the French government’s fury the commission sided with Bosch: nitrate synthesis might result in the production of materials that could be used for explosives, but the process itself had many other, more peaceful uses and so could justifiably be deemed a commercial secret.

  While such isolated triumphs were undoubtedly good for morale, in the grand scheme of things they didn’t do much to help the wider German chemical industry get back on its feet. The British blockade was still in effect to keep pressure on Germany in the forthcoming peace treaty negotiations, and shortages of food, coal, and important raw materials were making it impossible for factories to return to full capacity. With orders canceled, workers laid off, and many plants barely ticking over, it must have seemed that the situation couldn’t get any worse.

  Then it did. Germany, like almost everywhere else that winter, succumbed to disease. The great influenza pandemic of 1918-19 was one of the twentieth century’s great tragedies—a plague of almost biblical proportions that swept across the world in just a few months and killed at least five times as many people (around fifty million) as had died during the preceding four years of armed slaughter. The death toll was astounding, especially among populations suffering from the other privations associated with wartime, and the pandemic made the postwar recovery of those societies that much harder. Germany was particularly badly hit, with over 400,000 recorded deaths and over a million sufferers forced to take to their beds. With so many workers and managers laid low by the Blitzkatarrh, it soon became impossible for industrialists to keep their businesses functioning.

  Ironically, one of the few beneficiaries was Bayer’s pharmaceutical division. There was no cure for the flu (scientists at the time didn’t know that it was caused by a virus and had no hope of developing an effective vaccine), and so people turned to whatever palliative treatments they could find to mitigate its symptoms. Aspirin, Bayer’s most successful invention, was barely two decades old but its ability to ease aches and pains and reduce fever was already widely known. With few effective alternatives it quickly became the medicine of choice for millions around the world. Although it was now available from other suppliers, there was such great demand for the drug over the winter of 1918-19 that Bayer’s Leverkusen plant actually managed to double its production. And of course, the more that people used it and found it helpful the more customers Bayer lined up for the future. For a time, the rush on aspirin was a lonely shining beacon in an otherwise bleak landscape.

  There were no such bright spots in the political situation. During the relatively bloodless prodemocracy coup of November 9-11, 1918, the majority Social Democrats in the German parliament successfully pressed for an armistice, forced the kaiser to abdicate, and declared their intention of forming a republic. The new chancellor, Friedrich Ebert, had won the reluctant support of the military hierarchy (on condition that he uphold the authority of the traditional officer corps and oppose the spread of Bolshevism) and managed to push through Germany’s surrender. But then things became more difficult. That winter the country degenerated into sectarian class conflict and violence as political extremists took their ideological hostility to one another—and to the new government—into the streets. A Spartacist revolt in Berlin was suppressed only with the help of the Freikorps (a hastily assembled posse of
demobilized servicemen, nihilistic counterrevolutionaries, and university students), while elsewhere soldier soviets and anarcho-syndicalists created havoc and threatened rebellion. Ebert’s hold on power was tenuous at best and though his interim government of Social Democrats was made up of pragmatic men who wanted to get on with the business of demobilization, restoring the economy and reaching a peace settlement with the Allies, there were plenty of others, on the left and the right, who persisted in the belief that more fundamental political change was necessary.

  It was remarkable in this climate that anything could be achieved at all, but once the immediate threat of revolution had receded with the defeat of the Spartacists, the authorities found a brief opportunity to hold elections to the new National Assembly and then gather its delegates together in the Thuringian town of Weimar to draw up a republican constitution. On February 11, 1919, Ebert was elected president (with the power to dissolve parliament and issue emergency decrees) and a shaky center-left coalition of Social Democrats, the Catholic Center Party, and the liberal German Democratic Party quietly took up the reins of government. If, as some contemporary critics complained, this national regenesis lacked crowd-pleasing luster and ceremony, at least it seemed to offer some measure of stability in which the nation could begin preparing for the forthcoming peace negotiations. These were still febrile times, however, colored at one extreme by nationalism, anti-Bolshevism, and the rage of the disenfranchised elite of the old regime and at the other by support for Communism and fury that the revolution had failed to turn the country into a dictatorship of the proletariat. Thus, the new republic had to find its feet amid antiparliamentary subversion from the left and the right and a recurring stream of attempted paramilitary putsches. It was not the best atmosphere in which to build a democratic consensus or indeed to run a business—as the chemical industry soon found.

  During one such attempted coup, the right-wing Kapp putsch of March 1920, the government was obliged to decamp to Dresden. Thousands of workers from chemical factories across Germany took part in the national strike that followed, forcing the putschists to back down but seriously disrupting production in the process. The episode put Carl Duisberg in an awkward position. His old friend General Ludendorff was one of the leaders of the revolt, and Duisberg, whose political sympathies were generally in tune with the coup’s aims of restoring the monarchy and the old order, might have been expected to express his support, especially as he also distrusted organized labor and was usually forthright in condemning strikes, whenever they occurred. On this occasion, however, he kept his criticism of the unions to a minimum and directed his public statements of disapproval at the putschists. The plotters’ impetuosity had unnerved him because it seemed destined to end in violence and chaos, whereas the strikers, for once, had acted in support of the status quo. Like most industrialists, Duisberg hated anarchy more than anything; social instability was bad for business and, when it loomed, even old friendships and personal political preferences had to take second place. Of course, Duisberg and his peers in the industry had no such qualms about condemning left-wing actions that were aimed at overturning the status quo. In March 1921 an attempted workers’ uprising was staged by the VKPD (an alliance of Communists and the Independent Socialists), and BASF’s Leuna works erupted into violence. During ten days of bloody clashes, two thousand workers armed with machine guns occupied and barricaded the factory until it was stormed by police with artillery support. Thirty workers and one policeman were killed and hundreds more were carted off to prison. Afterward, BASF’s board ordered the dismissal of the whole factory workforce until they could be rehired with all the radical elements weeded out.

  Against such a politically volatile background, it was never going to be easy for the Weimar government to negotiate a peace treaty with the Allies that was acceptable to everyone in Germany. In the event, the process proved to be exceptionally intractable, so difficult and controversial that it widened the country’s political divisions still further. The unrealistically optimistic expectations shared by many Germans in the immediate aftermath of the armistice were undoubtedly a factor. Even quite level-headed people believed that achieving a fair settlement would be merely a matter of turning up at the peace talks. In their view, Germany had lost the war, but not by much. As evidence, they pointed out that, prior to November 11, 1918, not a single Allied soldier had crossed the country’s borders and its territorial integrity was as intact as it had been in August 1914. Furthermore, in relative terms, Britain and France had suffered equally grievous human losses and the latter had sustained great structural damage as well, and to the east, Russia was arguably even worse off, its devastation magnified by violent revolution and civil war. Had it not been for the intervention of the United States on the Allies’ side, the final chapter of the war’s story might have been very different. As it was, with things so finely balanced between winners and losers, it didn’t make sense to distinguish between them or to ask that Germany pay an unduly harsh price for its surrender. The kaiser was gone, his aristocratic clique of generals was consigned to history, and surely things should just be allowed to return to normal. After all, had not America’s President Wilson made it plain that he was in favor of a fair peace for everyone?

  This was wishful thinking to a remarkable degree. The idea that Britain, Belgium, and France—especially France, which had lost so much—were going to allow Germany to emerge from the war relatively unpunished was nonsensical. From the victors’ perspective, Germany had been solely responsible for the conflict, its militarism, nationalism, and greed the cause of millions of deaths. Germany had invaded the sovereign territories of its peace-loving neighbors and, with the help of perfidious allies in Austria-Hungary, had sought to redraw the map of Europe to its advantage. Now the Germans were beaten and down and the only way to make sure they stayed that way was to keep kicking them until they stopped twitching. Germany had been a menace before the war; it was still a menace now. Before the nation could be trusted, it had to acknowledge its guilt and pay for its sins—and redemption was not going to be cheap.

  * * *

  THUS THE STAGE was prepared for the circus of Versailles. On the one side there were the victors, hoping to ensure fair play (the United States) or determined with varying degrees of vengefulness to extract as much penance from their former enemy as possible (Britain, France, and Belgium). On the other side were the principal losers, the Germans, singled out from their unhappy camp followers in the Austro-Hungarian and Ottoman Turk axis who had negotiated separate peace terms. (Bulgaria had surrendered on September 29, 1918, the Ottoman Turks on October 31, Austria on November 4.) The German delegation traveled west in uncertain spirits, the more optimistic among them believing that the Allies might help their nation through the civil chaos that was unfolding at home, the others speculating gloomily on the unpalatable demands they would be asked to swallow—but none of them were prepared for the exercise in humiliation that followed. For several days after the delegates’ arrival at Versailles on April 29, 1919, they were simply ignored, separated from the main proceedings by wooden fences and barbed wire, officially to protect them from being attacked by irate French citizens but in reality to rub their noses in their lowly status. And there they waited, anxious, perturbed, and increasingly frustrated, for the Allies to deign to inform them of Germany’s fate.

  Carl Bosch was among them. The new German government had put together a peace delegation composed of politicians, lawyers, bureaucrats, and business leaders. It had first asked Duisberg to represent the critically important chemical industry, but he had declined, perhaps recognizing that the appearance of one of the old regime’s most publicly stalwart supporters would be inflammatory. Bosch, reluctantly, stepped into the breach and joined the others on the train to Paris, hoping that he might be able to help secure the return of patents, trademarks, and factories impounded by the Allies over the last four years. This was no insignificant matter. The companies in the chemical industry’
s expedient wartime coalition—the Interessen Gemeinschaft—had all lost assets in these confiscations and desperately wanted them back. Bayer, for instance, had seen its American assets—offices, cash, production and distribution facilities, rights to dyestuffs, chemical and pharmaceutical goods, stockpiles of manufactured product, and trademarks and patents—all seized by A. Mitchell Palmer’s Office of the Alien Property Custodian. This indignity had been compounded in December 1918 when the whole lot, including Bayer’s state-of-the-art factory at Rensselaer, was auctioned off for $3.5 million to a firm of quack-remedy manufacturers. BASF, by comparison, hadn’t done quite so badly in the United States—its prewar American importers, Kutroff and Pickhardt, had survived the conflict intact—but it had lost many important dye patents and assets in France. The other members of the IG—Weiler-ter-Meer, Kalle, Griesheim Elektron, Hoechst, and Agfa (especially the last two, which had to hand over significant assets in dyes, medicines, and photographic technology)—had all been hit as well. One of the reasons they had been persuaded to work together in 1916 was because they had seen that one day there might be strength in numbers. Now they looked to Bosch to exercise that strength—and recover their property.

  He did his best to prepare for the task, marshaling his thoughts in a paper he circulated to his fellow delegates entitled “The German Chemical Industry and Its Desires during the Peace Negotiations.” In it he mounted a persuasive argument, based on morality and international legal precedent, for the return of the confiscated property. If patents had been suspended, he said, they should now be reestablished and extended to make up for lost time.

  Bosch and his colleagues back home would be bitterly disappointed. From the beginning of the delegation’s second week at Versailles, when its members were presented with an agenda for the negotiations (an agenda they had had no part in drawing up), it was clear that German sensitivities were the last thing on Allied minds. There was no provision for any meetings between the parties, negotiations were to take place through an exchange of notes, and, in an ominous portent of what was to come, the Germans were given an eighty-thousand-word draft of the treaty document that demanded their country acknowledge its guilt, sacrifice territory and the larger part of its armed forces, and pay massive reparations. Not only was nothing said about returning seized assets, the Allies (driven by the French) also insisted that they wanted to see the closure and demolition of all establishments responsible “for the manufacture, preparation, storage or design of arms, munitions or any other war materials.” This, they made plain, included all the German chemical plants that had produced nitrates or poison gases. As most of the factories of the Interessen Gemeinschaft had been involved in such work, the demand threatened the very foundations of their industry.