Hell's Cartel

by Diarmuid Jeffreys

  *Some measure of the scale of Germany’s educational advantage may be grasped from the fact that in 1876, twenty years after Perkin’s discovery, the United States had only eleven graduate students in organic chemistry.

  *In May 1882 Duisberg had written to Rumpff, “Unfortunately, it is extremely difficult to be hired for a position as a works chemist if one does not already have some professional experience. Since it is my greatest desire to work in a chemical company, and more specifically in the dye industry, I would like to take the liberty of asking you for your kind support in achieving this goal.” In truth, Duisberg would have been happy to get work in any chemical business.

  *After it had been in use for a few years doctors began to notice that acetanilide (Antifebrine,), when taken in large or continuous doses, produced almost as many gastric side effects as its predecessor, antipyrine, and even turned some patients’ skin an alarming blue. As it turned out, Bayer’s acetophenetidine (Phenacetin) had some of the same problems, but they were much less marked. This modest advantage allowed the company to claim that the product was safer than any of its rivals.

  *There is some evidence to suggest that Arthur Eichengrün’s role in the development of aspirin was written out of Bayer’s corporate history in the mid-1930s because he was Jewish. The company has always denied this claim but Eichengrün, who was incarcerated in the Theresienstadt concentration camp by the Nazis in 1943, was convinced it was true.

  †Like ASA, diacetylmorphine had been found before. In 1874, an English chemist, C. R. Alder Wright, formulated the substance while conducting experiments with opium derivatives at St. Mary’s Hospital, London. Presumably Hoffmann found an account of Wright’s work during a trawl through old medical literature.

  *As a consequence, German chemical firms regularly obtained British patents for their inventions but then only manufactured the goods at plants in Germany, for export to the United Kingdom. This way, they managed to prevent knowledge about innovative production methods from slipping into the hands of potential British competitors.

  *Bayer’s other top brands—Phenacetin, Sulfonal, Trional, and heroin—were also proving popular with consumers.

  *For the duration of a patent license in the United States and Britain, usually between fifteen and twenty years, the holder had a legal monopoly on the product.

  *The subsequent construction work took some years to complete, but the finished factory ranked as one of the most modern and technically impressive in the United States. Though smaller than Leverkusen, Bayer’s extraordinary new plant near Cologne, which was also then nearing completion, Bayer Rensselaer was built to many of the same exacting standards and high technological specifications and, inevitably, attracted covetous eyes from within the nascent American chemical industry.

  *Henceforth the firms would cooperate in various ways, such as consulting one another on big investment decisions, abandoning some product lines in favor of the most efficient manufacturer in the group, and establishing joint sales operations in selected foreign markets. The companies still had their differences. For example, both Bayer and Agfa objected to BASF’s attitude on bribery, or the giving of “discretionary payments” to potential customers, which was commonplace in the industry. BASF wanted the practice scrapped, especially in the United States, where it was rife, but the other firms resisted, insisting that an immediate ban on such kickbacks would damage sales and endanger the interests of their stockholders.

  *UK pharmaceutical companies did not have the expertise necessary to begin manufacturing acetylsalicylic acid straightaway, but by 1908 British brands such as Xara and Helicon began to appear on the market. However, these products could not yet be called aspirin because the name remained a Bayer trademark in the UK until 1914. As it happened, the quality of the drugs was poor and most consumers stuck with the Bayer product for some years to come.

  *The British weren’t alone in being influenced by the fanciful imaginings of popular novelists; Germany had its best-selling doommongers, too, for example, Karl Eisenhart’s novel The Reckoning with England (1900).

  *Lieutenant General Ludwig Sieger, the head of the imperial army’s Field Munitions Service, also warned his superiors at the very beginning of the war that ammunition would have to be used sparingly but he was icily informed that “the campaign would not last so long” and the precaution was unnecessary.

  *From then on, raids increased in frequency and intensity throughout the war, and though the installation of air defenses managed to prevent too much destruction, the frequent shutdowns caused by alarms inflicted much wear and tear on equipment and civilian morale. As a result, BASF began looking around for an additional site for its all-important nitric acid production. In 1916, with the help of government subsidies, it began to construct a new factory at Leuna, near Merseburg, on the Saale River—out of range of the Allied bombers. The man in charge of construction was a young chemist called Carl Krauch, a protégé of Carl Bosch’s. Many years later he would head the list of defendants at Nuremberg.

  *His wife may have felt differently. Once a promising scientist in her own right, she is believed to have objected vehemently when Haber began his experiments in the first few months of the war and to have tried desperately to persuade him to drop the project. A few days after his return from the Western Front and just before he was due to leave for the East to initiate a similar attack against the Russians, she shot herself.

  *In both Britain and France dye plants and patents confiscated from the Germans were used to launch big new chemical combines. In France these would lower the nation’s dependence on imported dyestuffs from 80 percent of the market in 1913 to around 30 percent by 1919.

  *At the last minute, Richard Merton, who as well as being an aide to Groener was also the head of the Metallgesellschaft concern (a leading player in the German metals industry), was able to pull his own strings. He got himself appointed to a commission investigating industrial bribery in the occupied areas instead. Groener wasn’t so lucky.

  *Of course, German sympathizers in the United States lost no time in pointing the finger at who they thought was to blame for the shortages—the perfidious British and their infuriating embargo on German-American trade. Curiously, they were equally quick to claim that the enemy wasn’t infallible and that the blockade could be broken any time. For example, when a U-boat, the Deutschland, dramatically surfaced in Baltimore harbor in July 1916, with a cargo of three hundred tons of concentrated dyestuffs and pharmaceuticals, the event was excitedly seized on by pro-German newspaper columnists (most notably those working for the Hearst empire), who celebrated it as a triumph of Teutonic ingenuity and daring and an example of what could be done if everyone put their minds to it. But although such ventures undoubtedly had their propaganda value (the same submarine returned with a second cargo four months later), they were too infrequent and came too late to prevent America’s chemicals shortage at the start of the war.

  *Schweitzer was known in German intelligence circles as Agent 963192637. His principal role in the early years of the war was as an intermediary between the German embassy and Walter Scheele, an expatriate scientist with a U.S. chemical firm, the New Jersey Chemical Company, and one of Germany’s most important moles in the American industry. Scheele provided secret information on British armaments orders to Schweitzer, worked with him on devising a method of disguising American oil so that it could be smuggled past the blockade, and even prepared incendiary devices that Schweitzer arranged to have planted on British merchant ships anchored in New York Harbor.

  *One typical effort involved the discreet acquisition, through third-party nominees, of a small American dye company called Williams and Crowell. In a complex deal, Bayer’s U.S. executives secretly assigned this business some patents, copyrights, and product lines on the understanding that these licenses would be returned to Bayer after the war. Another operation, the Synthetic Patents Company, was set up to operate in a similar way. Both were unmasked by the American authori
ties.

  *France tried to get these valued at 269 billion gold marks but, under pressure from the Americans and British, eventually agreed to 132 billion—about $30 billion.

  *Although it seemed draconian at the time, this particular provision was something of a double-edged sword in that it kept the IG companies’ products in exactly those markets from which their foreign competitors were trying to exclude them. Furthermore, the sudden availability of large quantities of cheap German chemicals depressed global prices and undermined profitability. In 1921, realizing that their own industrial growth was being retarded, the Allies were forced to modify their terms. The Germans were told to supply products to order instead. This brought some stability back into the market but, as some chemical manufacturers in Britain and France pointed out, it helped the IG companies recover, too.

  †How Bosch arranged this meeting isn’t known but he must surely have done it with the connivance of the French authorities. Nevertheless, it caught his guards by surprise. The next morning the head of the German delegation received a note from the commander of the French army security detail at Versailles: “Last night in violation of law Professor Bosch left the German quarters surrounded by barbed wire and scaled the wall of the Versailles Park. After two hours and five minutes he returned the same way.” But it wasn’t much of a rebuke and no further action was taken.

  *After Bayer’s exclusive trade name rights were revoked in Britain in February 1915, any UK manufacturer could call its acetylsalicylic acid aspirin and Bayer’s USP (unique selling proposition) was gone. Consumers became less discerning and more open to advertising from competitors.

  *Sterling also acquired Bayer’s U.S. dyestuffs business but Weiss had no interest in it and quickly sold it.

  *The great man even arranged for a Bayer flag to be raised outside the building when he was in residence.

  *The courts had declared that in legal terms “a mark was a mark.” If you had debts to pay this was terrific news, but anyone relying on a fixed income or a pension or savings was plunged into poverty. Suicide became increasingly common among the middle classes.

  *The title “March on Berlin” was inspired by Benito Mussolini’s “March on Rome” in October 1922, which had led to the Fascist leader’s appointment as prime minister of Italy.

  *In a narrow technical sense, BASF took over the other companies, but this was just legal mechanics, the most efficient way under German law of bringing the firms together.

  *There were exceptions. The Central Germany group, for example, included the factories of the Berlin-based business of Agfa but not the former BASF works at Leuna, which were still directed from Ludwigshafen and were therefore included in the Upper Rhine work group. Eventually, to complicate matters still further, Berlin became a work group in its own right.

  *Many of the more senior executives also sat on the boards of other companies—either IG Farben subsidiaries or businesses with which the combine had close commercial relations.

  *Bosch and Richard Merton (William’s son and successor as head of the Metallgesellschaft) also took up seats on each other’s boards. Interestingly, this was the same Richard Merton who had so infuriated Carl Duisberg during the war by recommending that industrialists bear the burden of any price increases in procurement materials. On that occasion Merton’s reward had been ejection from the War Ministry and a dangerous posting to the Western Front, rescinded only at the last minute. But that wouldn’t be the last time he tangled with the establishment. With four Jewish grandparents, Merton’s connections with IG Farben were destined to end in grim circumstances.

  *The original Aufsichtsrat contained members of the Bayer, Meister, Bruning, Kalle, vom Rath, and von Weinberg families, who had all been owners or principal shareholders in the IG’s constituent businesses.

  *IG Farben had tried to get these firms to agree to export quotas in an attempt to limit their access to the market, but the move failed when ICI and DuPont concluded a bilateral patent-and market-sharing agreement.

  *The deal was finessed by Hermann Schmitz, Bosch’s chief financial officer, and completed just prior to the IG’s formation.

  †The scale of the investment was staggering. Between 1925 and 1929 more than RM 250 million were poured into Leuna, mostly into the synthetic fuel program. To put this figure into perspective, it was three times as much as was given to Ludwigshafen during the same period and around four times more than was put into the Bayer plant at Leverkusen and the Hoechst plant in Frankfurt.

  *In June 1928 Farben had begun reviewing its American holdings, which encompassed all the agreements between its constituent businesses and American partners—such as that between Bayer and Sterling—and had placed them into a Swiss holding company, IG Chemie, in Basel. The following April it set up the American IG Chemical Company, which then exchanged its shares against the Swiss IG’s shares of the old American subsidiaries. These maneuvers were complicated but they had three big advantages: they helped insulate IG Farben against possible countermeasures and confiscation of its assets if Germany again defaulted on its reparations; they helped disguise the American IG’s German parentage at a time when anti-German feeling was still strong in the United States; and they thus made it easier to raise money in the U.S. capital markets. In the years to come, American IG would raise around $30 million through bond issues, making Wall Street one of IG Farben’s biggest lenders.

  *Most notably a grant in 1929 of RM 20,000 to a dissident faction of the Nationalists, who split away from Alfred Hugenberg’s DVNP to form the Conservative People’s Party in 1930.

  *The Frankfurt building, designed by the architect Hans Poelzig, was the largest company headquarters in the world on its completion in 1930.

  *Fritz Haber had been awarded the Nobel Prize in 1918 for discovering a method to synthesize ammonia. The 1931 prize acknowledged Bosch and Bergius’s success in building on Haber’s work to create new applications for high-pressure chemistry.

  *The IG’s enthusiasm for Brüning increased after this decision, and in October 1931 it lobbied for the inclusion of IG representatives in his cabinet. One, Hermann Warmbold, a member of the Vorstand, was actually appointed as economics minister and served ineffectually during the government’s last six months in office, having resigned from the IG to take the position.

  *Haushofer had supervised Gattineau’s doctoral thesis, “The Significance of the Urbanization of Australia in the Future of the White Race,” and was known to be close to Rudolf Hess, Hitler’s factotum.

  *Hitler was fond of expatiating grandly on scientific matters but as Albert Speer, his architect, was to say many years later, he “depended on unreliable, incompetent informants to give him a Sunday-supplement account.” He added bitingly that Hitler lacked “any real understanding” of fundamental scientific research.

  *Göring also held the honorary position of president of the Reichstag, as representative of the largest party.

  *Wels carried a cyanide tablet in his pocket against the eventuality that he would be arrested that day and tortured by the Nazis.

  *Some businesses, including several Jewish organizations, were undoubtedly pressured by the authorities into writing in encouraging terms to contacts abroad, but there is no evidence that IG Farben was put under such pressure.

  *Haber found it difficult to settle in England because of the hostile reception he got from some in the British scientific community who never forgave him for his work on poison gases during the war. As a result, he decided to accept an offer from the Hebrew University in Palestine. According to one account, he was also considering trying to return to Germany but was dissuaded from doing so by IG Farben’s Hermann Schmitz, who warned him that the Nazi terror was continuing unabated.

  *The term Geheimrat is an honorific, meaning privy councillor or “great man.”

  *Standard Oil’s chairman, Walter Teagle, had introduced Ilgner to Lee a few years earlier when IG Farben was looking for ways to combat negative publicity generated by
its formation of the American IG Chemical Company.

  †Ivy Lee’s work on behalf of IG Farben in particular and Nazi Germany in general didn’t go unnoticed back home in the United States. In the summer of 1934 Lee was interrogated by the House Special Committee on Un-American Activities, during which he freely admitted that the material he had disseminated on behalf of the IG was authorized by the official German propaganda apparatus. He was pressed particularly on why he had advised the IG to respond to foreign media concerns about the dangers of Germany’s 2.5 million Nazi paramilitaries with the claim that they were unarmed and organized only in case of Communist peril. Wasn’t it strange that a chemical company should be interested in such things? After vacillating for a while Lee was forced to admit that IG Farben was effectively acting as an advocate for the German government. The inquiries didn’t lead anywhere, however, because a few months later Lee fell ill and died.

  *Göring combined the aviation minister’s role with various other official duties. He was still president of the Reichstag, head of the Gestapo, and minister-president (prime minister) of Prussia.