Hell's Cartel

by Diarmuid Jeffreys

  Dr. Ungewitter told me in the summer of 1939 that war with Poland would not begin until harvest time, September 1939. I was a very worried man. Even if we hadn’t been told directly that the government intended to wage war, it was impossible for officials of IG to believe that the enormous productions of armaments and preparation for war, starting with Hitler’s coming to power, accelerating in 1936, and reaching unbelievable proportions in 1938, could have any other meaning but that Hitler and the Nazi government intended to wage war come what might. We of the IG were well aware of this fact.… In June or July 1939, the IG and all heavy industries were completely mobilized for the invasion of Poland.

  Von Schnitzler wasn’t the only one to get the message. At around the same time Ungewitter had an almost identical conversation with Carl Wurster, director of the IG’s Ludwigshafen and Oppau plants, telling him that the war would start “at harvest time.” Wurster later said that he had immediately relayed these remarks to his superiors, Otto Ambros and Fritz ter Meer, and told them that the Nazi official had suggested they shift manufacture of vital commodities away from Ludwigshafen (presumably because its location on Germany’s western border and renown as a production center for synthetics made it vulnerable to air attack). Ernst Struss, Fritz ter Meer’s assistant and office manager, later recalled a further meeting with Ungewitter, this one actually attended by Ambros and ter Meer, at which the Nazi commissioner, clearly doing his official best to make his point understood, had once more repeated his warning.

  The IG got the message and readied itself to play its part in the war effort. A couple of weeks after these meetings the company agreed to set up an Association for Sales Promotion, which the Abwehr intended to use as a cover for its agents abroad. Meanwhile, Max Ilgner handed over to the government the IG’s extensive collection of maps, photographs, and documents that detailed the whereabouts and productive capacity of chemical and explosives factories across Europe and the United States. There were also discussions in the Vorstand about the vulnerability of the IG’s huge Frankfurt headquarters and the Rhine plants to air attack and what could be done to protect them. By mid-August senior managers had begun implementing their mobilization plans and were discreetly letting staff on foreign business trips know that they should be making their way home.

  The Poles, needless to say, were not so well prepared and quickly succumbed to the juggernaut that swept over the border. Within days of the invasion, Poland’s major cities had been devastated by bombs, its air force destroyed, its soldiers overwhelmed by the crushing power of the German army. Kraków fell on September 6; Warsaw was surrounded a few days later. As the shattered nation staggered under these repeated blows, its misery was compounded by the arrival of Soviet forces from the East, occupying half the country up to a line secretly agreed on by Stalin and Hitler a few weeks earlier. By the third week of September Poland had been effectively dismembered.

  * * *

  WITH ALMOST WOLVERINE speed, the IG moved in. A small team led by Georg von Schnitzler followed hard on the heels of the Wehrmacht, armed with a comprehensive survey of the enemy’s chemical industry that Max Ilgner had compiled two years earlier and a determination to pick the juiciest plums before anyone else could get to them. The document, entitled “The Most Important Chemical Plants in Poland,” had been updated in recent months with information from the IG’s network of traveling sales agents (probably with this very eventuality in mind) and listed dozens of potential targets. But three in particular stood out: Boruta, the country’s largest dye maker and intermediate producer; Wola, which was owned by three Jewish families; and Winnica, with which the IG already had a connection through its Swiss holding company, the IG Chemie. Of course, these firms were mere minnows compared with the German giant: the Polish dye and intermediates market was worth only around RM 20 million in total and even before the war the IG had controlled almost a quarter of it. But von Schnitzler and his colleagues were concerned lest the Wehrmacht take possession of any stockpiles of completed product before the IG had a chance to stake a claim to them, because if those goods were impounded and then dumped onto the market all at once prices across the industry could be seriously depressed. Furthermore, as in Austria and Czechoslovakia, the IG did not want any possible competitor acquiring the companies as a way to muscle into its domestic market.

  So even before the country was completely subdued, von Schnitzler was finding his way through burning rubble and along the refugee-clogged roads. Presenting himself and his associates at the gates of each factory, he curtly informed owners and managers that, as part of “the former Polish state,” their enterprises were now subject to his inspection. Then he cabled Berlin, suggesting that an immediate meeting be arranged with the Ministry of Economics. “We consider it of primary importance that the above-mentioned stocks be used by experts in the interests of the German national economy,” he wrote. “Only the IG is in a position to make experts available.… We intend to present ourselves in the middle of next week to the competent authorities in Berlin for further deliberation.”

  But when von Schnitzler called at the ministry on his return he found that officials were unwilling to be pushed into hasty decisions. Although they agreed that the IG could manage the plants on a temporary basis and that two of its employees, Hermann Schwab and Bernhard Schoener, could be appointed as trustees for the three companies, there was outright hostility to the concern’s brash assumption that it could take over the businesses in their entirety. The ministry’s General von Hanneken wrote to the IG on September 21 to emphasize that “there will be no changes in the conditions of ownership of the plants concerned” and that this interim appointment should not be seen as “preparation for a change in the ownership conditions.”

  Von Schnitzler was not easily put off, however, and he soon made a direct appeal to Hermann Göring, whose Four-Year Plan Office had set up an organization, the Main Trusteeship Office East, to confiscate, and dispose of, Polish property. As his petition was being considered, other IG executives made sure that the important “assets” of the three target companies were “secured” and began surveying Poland’s smaller chemical factories. Carl Wurster set off in a vast Mercedes, with a chauffeur, an interpreter, and a representative from the Reich Office of Economic Expansion, to determine which of these lesser plants could be dismantled and shipped back to Germany.

  In the meanwhile, Maurcy Szpilfogel, one of the Jewish partners at the target firm of Wola, who owned two country estates as well as a large property in the Polish capital, was finding out exactly what the IG meant by “securing assets.”

  When the Germans crossed the border, I fled first to my brother’s house at Orwick and later to my own house at Warsaw, where I had stored part of the dyestuffs manufactured in Wola. In September 1939, [the IG’s] Schwab and Schoener visited me in this house. After introducing themselves as IG commissioners, they stated that all my dyestuffs were confiscated, along with all my houses. They prohibited my use of any article in any of these houses. They confiscated my cars. The dyestuffs were then put under seal. In accordance with the German “laws” then in existence, the “trustees” were permitted to allot 500 zloty per month, per family, to the Jews who had been robbed of their property. But Schwab allotted only 500 zloty for all three families; that is, for myself, my wife, and her aged mother, who was living with us; for my married daughter and her husband; and for my sick son, who was in a sanatorium. Then I had to pay 150 zloty to the IG for so-called rent. At that time, one family, even living at the most modest level, could not survive on 350 Zloty a month.

  If Szpilfogel, an honors graduate of the famous Karlsruhe Polytechnic in Germany, found this treatment hard to swallow, it was nothing to what was coming. Within a few months the pitiful allowance was stopped altogether and he and his family were thrown out of their homes and told to find shelter elsewhere. By 1940 they had been moved to the newly established Warsaw ghetto. From there, in desperation, Szpilfogel wrote to Georg von Schnitzler, whom he
had known before the war, pleading for permission to go back and work at the Wola factory he had once owned and managed. Von Schnitzler didn’t reply, and as Szpilfogel later recalled, what happened next marked the beginning of the tragedy that was about to befall Poland’s Jews.

  The ghetto was ostensibly administered by its inmates; the purpose of this was to force the Jews themselves to introduce the measures that were intended to lead to their extermination. When the liquidation of the ghetto began, it was the task of the president of the Jewish Council, among other things, to segregate, by order of the SS, a certain number of ghetto Jews—5,000, to begin with—and have them taken to a collection point.… The inhabitants were given to believe that they were being assigned to work on a farm.

  Another time, the Germans rounded up Jews intended for extermination by having single houses, blocks of houses, or whole rows emptied, ordering everyone to gather on the street, which was surrounded by soldiers. Anyone who went back into the house was immediately shot. Those who had been assembled in the street were taken to the collection point, loaded onto trucks, and sent to meet their fate. My wife and children went onto the street one day and never came back.

  While Maurcy Szpilfogel was struggling to stay alive, the IG was working hard to impound his factory. The concern’s appeal to Göring about the Polish plants had failed because responsibility for confiscated enemy property was shifted to Heinrich Himmler’s SS before the matter was settled. Von Schnitzler therefore set about cultivating the friendship of Himmler’s deputy in Poland, SS Brigadeführer Ulrich Greifelt (later shown to be responsible, among many other things, for the mass murder of Polish hostages).* Eventually they struck a deal: the IG succeeded in obtaining full ownership of the Boruta plants in return for a promise to Himmler to invest five million marks in the newly defined Nazi-Polish province of Warthegau. The cartel also bought the technical equipment of Winnica and Maurcy Szpilfogel’s Wola from the government for a further seventy-two thousand marks, before shutting down both premises. The concern went on to acquire three further confiscated Polish properties: a French-owned coal mine in Silesia and two small oxygen plants, all at similarly knocked-down prices. Although these were minor gains in comparison with the IG’s earlier acquisitions, they, too, were made with the assistance of the SS and cemented a working relationship that was already proving highly productive.

  Not everyone at the IG could stomach the concern’s strengthening links to the Nazi hierarchy. Back in Germany Carl Bosch had had enough. For many months he had been sunk in the depths of depression and alcoholism, unable to shake off the feeling that he was, in some way, personally responsible for his country’s aggression. His sense of guilt had been growing since 1933, when he sanctioned the IG’s first massive donation to the party. The prize then had seemed to be a return to political and economic stability and, more important, a chance to get the new regime’s financial support for his cherished high-pressure programs. But stability had long since given way to a repressive dictatorship, and the technology, though it had made huge profits for the IG, had also provided Hitler with the tools to wage war. When the burden of dealing with the Nazis had finally become too difficult to bear Bosch had relinquished day-to-day control of the IG and assumed the chairmanship of its supervisory board instead. From that lofty but increasingly ineffectual position he had watched his Jewish colleagues be stripped of their jobs and his business become one of the world’s greatest producers of military matériel. In May 1939 he had made a speech at the Deutsches Museum in Munich in which he had openly questioned the Führer’s decisions and poured scorn on his economic policies. In the past, the opprobrium of Carl Bosch would have made politicians tremble; now the Nazis merely booted him off the museum’s board and banned him from making public statements. Prevented from sniping at his enemies, even from the margins, Bosch took refuge in his house at Heidelberg, locked the door, and started drinking. By February 1940 his physical and mental state had deteriorated to such an extent that his friends and family insisted he take himself to Sicily for a rest. In early April he returned to Germany to live out his last weeks. His final words to his doctor were to predict that Hitler’s insanity would lead to the destruction of Germany and the downfall of IG Farben. On April 26, aged sixty-five, he died.

  Though many at the IG mourned Carl Bosch, the concern moved rapidly to find his successor. The Aufsichtsrat wasn’t the force it had once been, but it still played a role in influencing policy and it was vital to have one of the IG “family” in the high-profile chairman’s seat. The most obvious candidate was quickly selected: Carl Krauch, Hermann Göring’s plenipotentiary general for special questions of chemical production. With this new addition to his workload, Krauch finally had to give up his place on the Vorstand, but he was generously compensated for his trouble. Apart from his normal director’s fees, he received a onetime special payment of RM 400,000 and was allocated a further monthly allowance of RM 5,000. For its part, the IG considered the money well spent. The new role made Krauch an even more significant figure in Germany than he had been before and it maintained the company’s connections at the highest level.

  Those connections were to prove vitally important in the months ahead. In early April 1940 the Germans overwhelmed Denmark and Norway. On May 10 the Nazi war machine began tearing through the Low Countries, while launching a simultaneous and massive attack on France through the Ardennes. By June 22 the campaign in the West was all but over; the bulk of the defeated British Expeditionary Force had been evacuated from Dunkirk, and the Netherlands, Belgium, and France had capitulated. With all of continental Europe under his control—or in the hands of cowed neutrals and compliant allies—Hitler had won an extraordinary victory.

  * * *

  NATURALLY, THE WEHRMACHT’S successes were wildly celebrated in Germany, but the conquest of France was especially savored at the IG’s Frankfurt headquarters. Several of its executives had fought in the previous war and retained painful memories of their treatment by the French in its aftermath. The humiliation of Versailles, the harsh reparations demands that followed, the occupation of the Interessen Gemeinschaft’s Rhineland factories, the attempts by the French military authorities to criminalize and jail Carl Bosch, Hermann Schmitz, and August von Knieriem—all these insults were fresh in their minds and there was deep satisfaction in seeing the tables turned on their old adversary. More significantly still, now that most of France lay helplessly at Germany’s feet, the large French chemical industry was ripe for exploitation. In 1926 the newly formed IG had tried to restore its prewar dominance in France by buying the country’s leading chemical company, Etablissements Kuhlmann, but the takeover had been frustrated by hastily enacted French legislation forbidding German citizens from holding voting stock in French companies. The concern had to settle for an unsatisfactory cartel arrangement, the Gallus Vertrag, in which the companies agreed in 1927 to stay out of one another’s existing dyestuffs markets and to set prices jointly in fields where they both had a presence. As a result, many in the IG felt that the French chemical industry had grown fat at their expense, exploiting German science, technology, and products that had been sequestered after the war and enjoying a privileged position that it had not earned. Unlike in Austria, Czechoslovakia, and Poland, where the concern’s actions had been largely defensive, aimed at preventing possible competitive threats to its domestic business, France offered another level of opportunity entirely: a golden chance, informed by long-suppressed bitterness and a desire for revenge, to put an upstart rival in its place and help reestablish the concern’s supremacy over all the chemical businesses of Europe.

  The IG quickly realized that it wasn’t feasible to swallow the French industry wholesale. It was too big, for one thing, and the concern’s already overstrained bureaucracy would have a difficult time coping with the added responsibilities. But such drastic action also wouldn’t be necessary. All that was required was for the French to acknowledge their subordinate status as junior partners in the
IG’s larger enterprise, lift the punitive restrictions on German imports, and abandon the infuriating practice (adopted by pharmaceutical companies in particular) of copying the IG’s products without heeding to its patents. During the interwar years the IG’s share of the French dye market had shrunk from a pre-1914 peak of 90 percent to around 10 percent. That could now be reversed. The ten-to-one sales advantage French drug manufacturers had enjoyed over the IG in France would also now come to an end, as would the French habit of undercutting the IG’s prices across Europe and in exports overseas. France would take its place in the IG’s “new order,” a far-reaching plan for the whole of the European chemical industry that the concern had prepared for Hermann Göring in August 1940 and made subject to strict regulation “for all time to come.”

  The company presented its proposals to Gustav Schlotterer, number two at the Economics Ministry’s foreign trade division. Noting that this time (unlike earlier, when the cartel had presented obviously self-interested proposals for the acquisition of Polish businesses), IG Farben had carefully framed its plans to take account of Germany’s military and strategic requirements, Schlotterer agreed that reestablishing the IG’s dominance in Europe was in Germany’s best interests. He advised the IG’s bosses, however, to use patience rather than belligerence in dealing with their French counterparts. The Reich’s economic supremacy and France’s growing shortage of raw materials would bring the French to the table soon enough, he said, but it would be better that they came cap in hand, humbled and desperately seeking the means to keep their factories going, instead of being dragged kicking and protesting to negotiations in which they would then try to gain parity with the IG. Time was on the combine’s side. All it had to do was wait.

  The Vorstand agreed and used the hiatus to gather necessary intelligence on its rivals. Inevitably, its focus fell on the French national dyes cartel, a group of companies led by the IG’s old adversary Etab-lissements Kuhlmann. The Vorstand’s aim was for all the Kuhlmann cartel’s firms to be folded into a single enterprise in which the IG would then take a controlling stake, thereby gaining the means to extend its influence over the entire French dyestuffs industry. Meanwhile, the German occupation authorities increased the pressure, confiscating one of Kuhlmann’s smaller factories and blocking the supplies of coal and electricity that the French industry desperately needed to keep operating.