by Adam LeBor
When war broke out in 1939, IG Farben assigned its Buna patents to Standard Oil—to prevent them being seized as enemy property. This was not illegal. But Standard’s obstructive policies over development of the Buna industry were. By the time the United States entered the war in December 1941, the country was facing a desperate shortage of artificial rubber. Standard had deliberately delayed the development of the domestic artificial rubber industry by repeatedly telling other American companies that it would share its expertise, even though it had no intention of doing so, to prevent them developing alternatives, according to the US Department of Justice, which brought a lawsuit against the company.17 In March 1942, six Standard Oil subsidiaries and three company officials were fined five thousand dollars each by a federal judge for violating anti-trust laws. IG Farben was named as a co-conspirator. Thurman Arnold, the assistant attorney general in charge of the Antitrust division, accused Standard of “treason” and entering an “illegal conspiracy” to prevent the development and distribution of artificial rubber. In its defense, Standard claimed that its agreement with IG Farben had resulted in the release of new information about synthetic rubber production, fuel, and explosives.
British Security Coordination, the British intelligence service operating in the United States, was closely monitoring the connections between Standard Oil, GAF and IG Farben, whose CEO, Hermann Schmitz, sat on the board of the BIS. GAF and Chemnyco, another American subsidiary of IG Farben, were the headquarters of Nazi industrial espionage in the United States. British intelligence believed that before the outbreak of war, IG Farben’s spy service, “Buro IG,” had dispatched deep cover agents to settle in the United States, to make business contacts, and to glean American scientific know-how. Some had married American women and become citizens. Chemnyco was also investigated by the US Department of Justice, which reported that it was a spying operation: “The simplicity, efficiency, and totality of German methods of gathering economic intelligence data are exemplified by Chemnyco, Inc., the American economic intelligence arm of IG Farbenindustrie. Chemnyco is an excellent example of the uses to which a country with a war economy may put an ordinary commercial enterprise.”18
Donald MacLaren, a BSC operative based in New York, had been working for months on an operation against GAF. MacLaren’s plan combined dirty tricks with very public exposure of the firm’s links to Nazi Germany. MacLaren, an ebullient Scot and bon viveur, was a forensic accountant by training and an expert in economic warfare. He had untangled the web of connections linking Standard Oil and Sterling Products, an American pharmaceuticals firm, with GAF and IG Farben. GAF, he wrote, was a “supply depot” for the Latin American subsidiaries of IG Farben and sought to “camouflage its German ownership.”19 MacLaren knew that there were two factions in GAF’s board of directors. He infiltrated both groups under a false name and gained their confidence. He then persuaded each of his contacts to reveal their faction’s plan to outmaneuver the other grouping—information that he promptly passed on to the other side, which produced “an outright quarrel between the two.” The result was most satisfactory, he wrote, with “one faction racing the other to Washington to report the wicked activities of their colleagues to the Department of Justice, thereby exposing their German instructions to the United States government.”20
MacLaren and his colleagues in British Security Coordination also set up a company called Booktab. The firm published a seventy-page pamphlet entitled Sequel to the Apocalypse: The Uncensored Story—How Your Dimes and Quarters Pay for Hitler’s War. With a trenchant foreword by Rex Stout, the popular mystery novelist, the pamphlet described, in forensic detail, “the hidden corporate relationships between American organizations and German monopolies.” The pamphlet, published in early 1942, demanded the “the full penalty” for German industrialists and bankers, including Hermann Schmitz and Hjalmar Schacht. Two hundred thousand copies were printed. Despite the best efforts of the companies exposed to sabotage the project by buying up as many copies as possible, tens of thousands were sold. The facts about American business links with the Nazis were now out.
Sequel to the Apocalypse caused a nationwide furor. It was certainly a public relations disaster for Standard Oil. The Treasury Department took control of GAF in February 1942 and soon after handed the stock to the newly established Alien Property Custodian. One hundred members of staff known to be sympathetic to the Germans were sacked, from directors to engineers. GAF’s research arm was turned over to war production. By 1944 the Custodian had also seized a total of twenty-five hundred patents from Standard Oil and its affiliates. Standard Oil eventually released all its patents for artificial rubber for free.21
Meanwhile, in Nazi-occupied Poland, the slave laborers at IG Auschwitz were enduring a living hell of backbreaking work, extreme brutality, and starvation rations. Among them was a teenage boy named Rudy Kennedy. Rudy and his family were deported to Auschwitz in 1943 from the ghetto in Breslau, now Wroclaw, in Poland, when he was fourteen. When the train arrived at the selection ramp, Rudy took his father’s advice and lied about his age, claiming to be eighteen:
My father and I went to the right, my sister and my mother to the left. The guards kicked and beat us, and we went into a room with showers and basins at one end. My father was naked with hundreds of older men. Everyone was very agitated. They shaved our hair and told us to go into the shower. I was very disturbed by the shoes. All the shoes were piled up and jumbled together in a big heap. I wondered how they were going to sort them out, if we would ever wear them again. We went into the shower. Water came out. By then my mother and my sister were dead. The temperature was about minus ten and we were chased naked and barefoot down a frozen path to a blockhouse. We were given a red blanket and a piece of bread and salami. In the morning we were given clothes, everything at random, nothing fitted. They called out our names and we had numbers tattooed on our arms. The tattoo needle was very thick, like a knitting needle and the blood of the previous prisoner was still running down it.22
Rudy and his father were sent to the IG Farben factory, where he worked at installing electric motors. The extremely harsh conditions were designed to kill off the laborers in a couple of months. Rudy survived because of his specialist knowledge of electrical systems, which meant he had access to food. He became a kind of mascot. One day a supervisor dropped his sandwich on the floor and told Rudy to pick it up. He would not eat it, he told the starving boy, because it was dirty. But Rudy could have it. This counted as an act of kindness. The IG Farben managers were fully aware of what was happening in their factory, Rudy later recalled. “We saw the civilians from IG Farben all over the place. We worked very near a site where they were building a chemicals factory. We could see people dragging sacks of cement, then they would collapse and die. The IG Farben civilians had to go past that on the way to their canteen. They absolutely knew what was going on. There is no question.”23
When IG Farben’s managers judged their slave laborers to be gebraucht, or used up, they were dispatched to Auschwitz I or II, to be dispatched by Zyklon B. Degesch, the German pest control company, which manufactured the poison gas capsules was a subsidiary of IG Farben. Rudy Kennedy survived. His father, Ewald, endured for about two months before being killed by an injection of prussic acid, which fit with IG Farben’s planners’ calculations about how long a slave laborer could live on his own body fat reserves.24
Walter Teagle resigned from the board of Standard Oil in November 1942. Bruised and disappointed by the pillorying he had received in the media, in 1944 he set up the Teagle Foundation with a mission to “advance the well-being and general good of mankind throughout the world.” The foundation’s reach did not extend to Nazi-occupied Poland but it still exists today.25
Donaldson Brown, Vice Chairman, General Motors
War had brought enormous profits to the American car industry. Opel, General Motors’ German division, produced the “Blitz” truck on which the Wehrmacht invaded Poland. Ford’s German subsi
diary produced almost half of all the two- and three-ton trucks in Nazi Germany. There is a strong argument that without General Motors’ and Ford’s German subsidiaries the Nazis would not have been able to wage war.26 Hitler was certainly an enthusiastic supporter of the American motor industry’s methods of mass production. He even kept a portrait of Henry Ford by his desk.
In July 1938, Henry Ford was awarded the Grand Cross of the German Eagle, the highest honor Nazi Germany could bestow on a foreigner. The following month James Mooney, who ran General Motors’ overseas operations, was also awarded a high Nazi honor. Mooney was a regular visitor to Berlin, where he met numerous Nazi officials, including Hjalmar Schacht, to negotiate deals to produce vehicles for the military. In 1939 Mooney even held talks with Hermann Goering on converting the General Motors plant at Russelheim to production of the Junker Wunderbomber.27
George Messersmith, the U.S. Consul-General in Berlin, who later served as ambassador to Austria, was watching Mooney’s enthusiasm for the Nazis with alarm. Messersmith, despite his German origins, was an ardent anti-Fascist. His reports through the decade detail Mooney’s unwavering determination to build up General Motors’ links with the Nazis. Mooney, like Sosthenes Behn (the president of ITT whose German partner was the BIS director Kurt von Schröder) believed that the Nazi regime was here to stay in Germany and was “well established,” wrote Messersmith in November 1934.28 Thanks to Schacht’s policies and the armaments drive, the German economy was booming. “It is curious that he and Colonel Behn and some other factories in Germany give this opinion. The factories owned by the ITT in Germany are running full time and in double shifts and increasing their capacity for the simple reason that they are working almost entirely on government orders and for military equipment.”29
Numerous American business leaders traveled to Berlin to ingratiate themselves with the Nazis. Thomas Watson, the president of IBM, arrived in 1937, to be decorated with the Merit Cross of the German Eagle. That was one grade down from Henry Ford’s honor. But Watson could comfort himself with the fact that Schacht himself had hosted the ceremony and given a speech in Watson’s honor.30 The following year, after the Nazi annexation of Austria, the SS used one of IBM’s prototype computers, known as a Hollerith machine, to keep a record of Jewish properties and their subsequent Aryanization. The Vienna Nazi party newspaper boasted that thanks to the Hollerith machine, “within six weeks we shall have laid hands on all Jewish fortunes over 5,000 marks; within three years every single Jewish concern will have been Aryanized.”31 The historian Edwin Black argues that IBM’s technology, used for cataloging and identifying the Jews of Europe, was crucial for the organization of the Holocaust.32
Mooney’s medal was certainly a good investment by Hitler. In late 1938, Mooney was still pressing for a trade agreement with Nazi Germany, noted Messersmith, claiming that it would “help the conservative elements in Germany and therefore improve the prospects for a more reasonable regime in Germany,” as though a wealthier Third Reich would somehow become more benign. Messersmith dismissed Mooney’s claim. His real aim was to “in some way or other help along the important General Motors interests in Germany.”33
Even in April 1941 Mooney refused to get rid of Axis supporters in the company’s overseas subsidiaries, Messersmith wrote to Breckinridge Long at the State Department. “There are some cases like the General Motors, which are not giving us any cooperation in our program to get rid of anti-American agents of American firms abroad. This is due to the fact that there are certain people in the General Motors, such as Jim Mooney, and some of the men whom he brought into the organization over the years, who are really betting on a German victory and who hope to be the big boys in our country if there is a Nazi victory.”34
Siegfried Stern, Vice President, Chase National Bank
Chase National Bank was the world’s largest private bank in terms of assets and deposits. Its New York headquarters was a key hub in the Nazi’s global financial network and held accounts for the Reichsbank and Germany’s Gold Discount Bank. Chase was so close to the Reichsbank that after the war, Thomas Dodd, a prosecutor at Nuremberg, claimed the bank had once offered Emil Puhl, the vice president of the Reichsbank and BIS board member, a job in New York.35 The Treasury closely monitored Chase’s transactions for its Nazi clients. On October 3, 1940, Merle Cochran sent a note to Henry Morgenthau detailing transfers from Chase’s German accounts. In the previous two days alone, $850,000 had been debited from the Reichsbank account, of which $250,000 was sent to the Wallenbergs’ Enskilda Bank in Stockholm. A further $1.13 million was transferred from the account of the Gold Discount Bank to Topken and Farley, a firm of lawyers at 17 Battery Place, New York.36
Chase National was of special interest to the Nazis because of its overseas branches in London, Paris, Mexico City, and Shanghai. A wartime investigation of the bank’s Nazi links, by Paul Gewirtz, a US Treasury official noted, “The Chase Bank, like the other American banks in France, operated on a relatively small scale. The attitudes of the Germans, however, when they came into France, indicates that they looked beyond the activities in France and were more interested in the international character of an organization like Chase with its established branches through the world and its history in international banking which including a friendly intercourse with the Germans.”37 In other words, Nazi Germany valued Chase National, like the BIS, for its transnational reach.
After the German invasion of France in May 1940 the Paris headquarters of Chase National had enthusiastically collaborated with the country’s new overlords—with the knowledge of the bank’s headquarters in New York, reported Gewirtz.
Investigations conducted at the Paris Branch and at the Home Office in New York of Chase Bank disclosed that the bank operated in Paris throughout German occupation and engaged in sundry activities indicate an over-riding desire to continue operating even though this required a close collaboration with the German authorities. There is evidence that the Home Office in New York was fully informed of these activities, at least until late in 1942, but took no steps to discourage them, at the same time withholding pertinent information from United States Governmental authorities.38
Carlos Niedermann, the manager of Chase’s Paris office, was an ardent Nazi sympathizer. He closed Jewish-owned accounts and transferred the assets to Nazi-owned ones. In May 1942, Hans Caesar, a director of the Reichsbank, was put in charge of American banks in France. Niedermann met with Caesar. Caesar held the bank in “very special esteem” because of its New York headquarters. Niedermann recorded, “It is a fact that the Chase Bank enjoys special prestige in the banking circles in question owing to the international activities of our head office.”39
Thomas Lamont, J. P. Morgan
Thomas Lamont was a senior partner at J. P. Morgan, one of the BIS’s founding banks, a veteran of the reparations negotiations and, naturally, a friend of John Foster Dulles. Lamont had represented the US Treasury at the Paris Peace Conference in 1919 and later sat on the Young Plan committee. Like Chase National, J. P. Morgan encouraged its French subsidiary, known as Morgan & Cie, to continue trading with the Nazis, according to declassified US intelligence reports. As the Germans advanced on Paris, the French authorities ordered Morgan & Cie to liquidate their accounts and destroy their stocks of banknotes. Morgan & Cie ignored the order. Instead, like Chase National, the bank opened a new office in Vichy, France, at Châtel-Guyon to service its Nazi clients.
A Treasury investigation reported that “the primary loyalty of the Morgan partners was not to the US or France, but to the firm. Regardless of national considerations, they invariably acted in what they deemed to be the best interests of Morgan et Cie.”40 Morgan & Cie even gained permission to handle payments from German accounts to the European subsidiaries of American firms that were building military equipment for the Third Reich—such as General Motors. This ran so smoothly that Morgan & Cie’s American lawyers cabled the firm’s French managers to thank them: “The office at Châtel
-Guyon has proved to be of great practical utility; without it we could not have carried on any business with the outside world.”41
SWEDEN, ONE OF the Nazis’ most important trading partners, was also represented at McKittrick’s dinner, by Lars Rooth, the son of Ivar Rooth, the director of the Rijksbank. Ivar Rooth was one of the world’s longest-serving central bankers and a founding member of the new transnational financial elite. He was important enough to be elected unanimously to the BIS board in 1931, even though Sweden was only a shareholder and not a founding member of the BIS. Rooth stayed until 1933 and returned in 1937, praised in the BIS annual report for that year as a banker well known for his “constructive work of collaboration.” Working with the Wallenberg brothers at Enskilda Bank, Rooth helped steer Sweden through a neutrality whose profitability was rivaled only by Switzerland’s. Swedish firms supplied the Nazis with millions of tons of iron ore to be turned into tanks, guns, and ammunition, with vital ball bearings, foodstuffs, and timber. Rooth, it seemed, was indeed a highly skilled collaborator, although not only in the meaning referred to in the BIS report.
Thomas McKittrick was the third American president of the BIS, after Gates McGarrah and Leon Fraser. The American connection had shaped the BIS since its foundation in 1930. The bank had been ostensibly set up to administer the Young Plan for German reparations, named for the American diplomat who had brokered the deal. The BIS was the trustee for the loans Germany took out from Wall Street to meet those obligations. The bank’s American presidents stood at the center of the network of connections between Wall Street and American industry and Nazi Germany. Standard Oil had formed a cartel with IG Farben, whose CEO, Hermann Schmitz, sat on the board of the BIS. The French subsidiary of J. P. Morgan, a founding member of the BIS, traded profitably with the Nazis after the invasion of France. ITT had gone into partnership with Kurt von Schröder, the powerful Nazi banker who was a director of the BIS. For the new class of transnational financiers, war was merely an interruption in commerce, albeit a highly profitable one. Both McKittrick and his guests were already planning how to maximize their profits in the postwar era. Meanwhile, the money channels had to be kept open, and they ran through Basel. McKittrick embodied the American-Nazi financial network, which is why dozens of the United States’ richest and most powerful businessmen and industrialists gathered in New York that freezing December evening to honor Hitler’s American banker.