IBM and the Holocaust

by Edwin Black

  Watson, in fact, was ready to continue fighting to keep Bull out of the Nazi market. IBM had already preemptively acquired Swiss Bull’s patent rights in Switzerland and was preparing to litigate to block the French sister corporation from functioning. IBM had concluded Bull infringed several IBM-owned patents, now that IBM NY had acquired Swiss Bull, which legally controlled French Bull’s patents. Moreover, IBM believed that French Bull’s use of an 80-column punch card violated IBM patents and could be swiftly enjoined by court action. So Chauncey added his prediction that even if French Bull did attempt to cooperate with the Nazis, there would be a great “length of time and difficulties for actual competition” to appear.104

  It seemed that in spite of its autarkic impulses and collective rage against Watson, the cold fact remained: Nazi Germany needed punch cards. It needed them not next month or even next week. It needed them every hour of every day in every place. Only IBM could provide them.

  “My inclination is to fight,” Chauncey declared straight out. But the battle would be difficult. He knew that IBM was fighting a two-front psycho-economic war: Heidinger’s demand to cash in his stock, and Nazi Party demands to take over the subsidiary. Clearly, the two were organically linked, but Chauncey could not be sure how.105

  As they bickered, war and invasion proved it was still good business. By now, Dehomag’s profits had mushroomed even more rapidly than expected, especially as a result of the Nazi takeovers of Belgium, Poland, and France. As the Reich expanded its voracious need for Holleriths in occupied lands, Dehomag’s value was catapulting daily. The latest valuation of Heidinger’s 10 percent stock, Chauncey advised, was now as much as RM 23 million—IBM accountants in Germany had already confirmed it. The new figure was as much as ten times higher than calculated just a few months earlier. It would be an enormous amount of money if payable in dollars—perhaps $5 or $6 million. Chauncey expected Heidinger to prevail in any court, should the Germans press his claim for repurchase. IBM’s multimillion-mark blocked accounts in Berlin would be seized by the court to purchase those high-priced dollars, Chauncey warned. For this reason, Chauncey was continuously trying to finesse a settlement. “I am after him every day,” he wrote.106

  As for IBM’s fight with the Nazi Party, Chauncey reiterated his willingness to “make any representations to the authorities that our managers need not reveal any information of the activities of Dehomag’s customers…. but I cannot get the actual persons out in the open.”107 That chance would now come. After weeks of remaining in the background, Dr. Edmund Veesenmayer would finally come forward.

  * * *

  EVEN THOUGH Edmund Veesenmayer lived at August Strasse 12 in Lichterfelde, just around the corner from Dehomag’s Berlin headquarters, he had declined to make his presence known to Chauncey until the first days of December 1940. Veesenmayer was one of Berlin’s quiet but powerful Nazis, often feared, who helped to directly implement the most dramatic phases of Hitler’s plans for Europe and the Jews. He was just a step or two removed from der Fuhrer , and was from time to time summoned for consultations by Hitler personally—a claim few would dare make, but a claim that was nonetheless quite correct. Although Veesenmayer proudly wore the full uniform and regalia of his SS rank, he avoided noisy street riots and ghetto roundups in favor of boardrooms and embassies. Always lurking in the shadows as Eastern Europe’s most heinous actions erupted, Veesenmayer was Hitler’s most trenchant facilitator.108

  Born Catholic in 1904 in the town of Bad Kissingen, amid the pastoral rolling hills and lush forests of Bavaria, Veesenmayer quickly took to political economics. He became a professor of economics and business administration at the Technical College in Munich. Veesenmayer joined the NSDAP early, in 1932, when he was only twenty-eight years old. When National Socialism came to power in 1933, he became the personal secretary and economic advisor to Wilhelm Keppler, Hitler’s personal economic advisor. As such, Keppler functioned as Veesenmayer’s direct connection to the Fuhrer and the most powerful officials in Germany.109

  Keppler was not only Hitler’s personal economic advisor, he was also Germany’s main nexus to American business. Dubbed “a Kodak Man” by U.S. military intelligence reports for his links to the Eastman Kodak film company, Keppler owed much to the Kodak Company. Before the rise of Hitler, Keppler enjoyed managerial positions with several firms that produced photographic gelatins, including one that exported heavily to Eastman Kodak in America and Kodak Limited in England. Kodak financed 50 percent of Keppler’s Odin Company, which specialized in photo gels. Once Hitler came to power, Keppler advised a number of American companies on terminating their Jewish employees. He maintained good relations with executives connected to such companies as International Telephone and Telegraph and National Cash Register, and was Hitler’s intermediary to such commercial giants as General Motors.110

  Largely through his Keppler connections, Veesenmayer eventually joined the board of directors of the German subsidiaries of International Telephone and Telegraph and Standard Oil.111 Veesenmayer traveled in executive circles and spoke the language of big business.

  But Veesenmayer was more than just a corporate liaison. He was arguably considered Reich Foreign Minister von Ribbentrop’s most important personal troubleshooter and advance man. A technical expert on the eradication of Jewish communities, Veesenmayer was invaluable as a behind-the-scenes organizer in Hitler’s war against the Jews. As such, he had a keen appreciation for statistics and Hollerith capabilities. U.S. military intelligence described his meteoric ascent within the Reich’s anti-Jewish destruction machine as “an amazing career which took him on missions to Southeastern Europe always, it would seem, at a moment of trouble.”112

  In the months leading up to the March 1938 Anschluss with Austria, Veesenmayer functioned as the Foreign Office’s principal economic expert in Vienna. The day before Austria was taken over, March 12, Veesenmayer shuttled Himmler from a Vienna airfield to the German Embassy to help form a new Austrian Nazi regime. The next day, however, before the puppet Austrian government could be installed, Hitler annexed the country altogether.113

  A year later, in early March 1939, Veesenmayer traveled to Bratislava to help engineer the destruction of Czechoslovakia and the declaration of a puppet state in Slovakia. On about March 11, he drove two handpicked Slovak leaders to Vienna where they met Keppler and then flew on to Berlin for a meeting with Hitler. On that same day, Veesenmayer wired the Foreign Office, “alle Juden in der Hand,” that is, “all Jews in hand.” He remained in Bratislava on March 15 while Czechoslovakia was dismantled. Jews were quickly identified in the days to come.114

  Veesenmayer was a frequent liaison to foreign militant movements. In early 1940, he was assigned to coordinate with two members of the Irish Republican Army visiting Berlin. Later, in Rome, he met with the virulent anti-Semites Amin Husseini, the Grand Mufti of Jerusalem, and Rashid Ali Gailani, former Iraqi premier. He escorted both men to Berlin for meetings with Hitler.115

  It was Veesenmayer, who, in April 1941, brokered a written political agreement between Yugoslavian Fascists and a murderous Croatian militia known as the Ustashi, helping the Croats remain in power as Nazi surrogates with the support of the German Foreign Office. Indeed, the same day he brokered the Ustashi pact, Germany invaded Zagreb. Ustashi militias were allowed free rein under Veesenmayer’s eye. It was Veesenmayer’s job to liaison with Ustashi leader, Ante Pavelich. In the annals of wartime savagery against the Jews, there was no group as sadistic as the Croatian Ustashi. Using chainsaws, axes, knives, and rocks, frenzied Swastika-bedecked Ustashi brutally murdered thousands of Jews at a time. Ustashi leaders openly paraded about Zagreb with necklaces comprised of Jewish tongues and eyeballs cut and gouged from women and children, many of them raped and then dismembered or decapitated. Pavelich himself was fond of offering wicker baskets of Jewish eyeballs as gifts to his diplomatic visitors.116

  In the first days of December 1940, just after completing his assignment with the Irish Republican Ar
my and four months before leaving for his behind-the-scenes work with the Ustashi, Veesenmayer telephoned Heidinger and Albert to make the Reich’s views on Dehomag known. Then he met with Chauncey.

  MEMORANDUM OF CONVERSATION WITH DR. VEESENMAYER

  Chauncey in Berlin to IBM New York

  Dr. Veesenmayer is the right hand man of Dr. Keppler. Dr. Keppler, I am informed, is and has been Hitler’s personal economic advisor. The organization of which Dr. Keppler is the head is a Nazi Party organization called… The Department for Policies and Economics. It’s not formally a part of the government but has, of course, immense power… because it instructs… the government on what the Nazi party decides shall be economic policy.

  I was present when Mr. Heidinger received a request or summons to visit Dr. Keppler and the morning afterwards when I saw Dr. Albert, he told me he had not slept all night…. Until this time, Dr. Albert had been ardently fighting Mr. Heidinger with respect to any reorganization of Dehomag…. The only question of competition was whether or not the managers were strong enough to fight, and whether our machines and prices could meet the competition.

  Dr. Albert did not tell me what the conversation was between Mr. Heidinger, Dr. Keppler and himself, but did tell me of the conversation with Dr. Veesenmayer which conversation was after the talk with Dr. Keppler. Dr. Albert informed me that Dr. Veesenmayer had said that under no circumstances would any coercion be used to force the IBM to give up the majority but that it appeared advisable that the IBM should do so.

  Dr. Veesenmayer had asked that Dr. Albert and Mr. Heidinger agree on a plan to effect the reorganization and that I should agree in writing to such a plan subject to the approval of the Board of Directors of the IBM. Dr. Albert attempted to get me to agree, which I refused on the ground that any such tentative agreement would lead to the belief officially that it would be carried out…. If the IBM did not desire to approve it… [then] IBM’s position would [only] be more difficult with the officials. I told Dr. Albert that all I would authorize him to say to Dr. Veesenmayer was that there had been several plans submitted to me and these I would in turn submit to the IBM.

  Dr. Albert told me that Dr. Veesenmayer had [then] expressed a desire to see me but not in his office, as he would like the conversation to be unofficial. Tentative arrangements were made for me to meet him at lunch. However, Dr. Albert called me one day and informed me that he was going to see Dr. Veesenmayer on the next day…. Dr. Albert called me later and said that I should go with him to Dr. Veesenmayer’s office.

  Dr. Veesenmayer stated [to me] that there were advantages to be gained by friendly agreements between industries in America and Germany and that it was not unusual to find a desire to have industries owned by the nationals of a country. I told him that I appreciated the advantages of a nationally-owned company whether in Germany or elsewhere. I pointed out to him that competition could be used [just as easily] against Dehomag [if it were] partly-owned by the IBM as it could be used when IBM practically owned the entire company… I asked him what guarantees IBM could have for the protection of its minority, assuming that it gave up its majority. He [Veesenmayer] suggested that no guarantees could be made in writing but that if the Government approved of the act of increasing the capital and the disposition of it to Germans, that should be all the security we need ask for. Dr. Veesenmayer did not speak English very well but I understood him to say that he had been instrumental in assisting in the re-organization of the International Telephone Company in Spain. Subsequently I attempted, through Dr. Albert, to have Dr. Veesenmayer give me the names of American companies which he had also assisted in re-organizing. The reply was that he could not give me the names but that he could tell me that he had just about closed the arrangements with two other American companies. In this connection I saw for a moment the names of three German companies which have been reorganized. I did not have the opportunity to get down these names, which were in German, nor could I identify them with any American company….

  Dr. Kiep seemed to be of the opinion that Dr. Keppler’s introduction into the matter was occasioned by Mr. Heidinger. This may be so but I do not believe that Mr. Heidinger himself got in touch with Dr. Keppler or Dr.Veesenmayer because he appeared to be as much concerned about the call to Dr. Keppler’s office as was Dr. Albert. It is possible, however, that through his other friends he [Heidinger] may have brought Dr. Keppler into the subject.117

  Soon after Chauncey met with Veesenmayer, Albert delivered to Chauncey a short unsigned, unaddressed note, typed on plain paper. Chauncey forwarded that to New York as well through diplomatic pouch.

  The party with whom you have discussed the matter of IBM is Mr. Veesenmayer. He is the right hand of Dr. Keppler, Secretary of State in the Ministry of Foreign Affairs, but at the same time being entrusted, as an important member of the party with certain special duties and responsibilities, F.I. [for instance] concerning questions of political economic organizations. Mr. Veesenmayer confirmed the official attitude that no pressure should be brought on IBM to transfer its majority into German hands, but that he thought it advisable to do so. His recommendation to you was to lose no time in reporting to IBM and then to return as soon as possible to Berlin in order to carry the plan through.118

  Things began happening rapid-fire. On December 5, Heidinger suddenly agreed to accept a vastly lower purchase price for his shares, just RM 3.9 million. What’s more, he would accept payment in IBM’s blocked marks and no longer insist upon dollars. A contract with IBM was quickly drawn up and signed on December 13, 1940.119

  IBM felt Heidinger’s war was on hold, at least for the moment. But the continuing pressure for IBM to relinquish its majority remained intense. Equally manifest was the air of tight-lipped mystery surrounding what the Nazis had in mind for the machines. Chauncey studiously avoided ever asking what additional tasks the machines were intended for. He nonetheless pressed ahead, demonstrating IBM NY’s intention to remain a reliable vendor to the Reich. He began organizing new support for Germany’s needs in occupied France, and declared his readiness to integrate IBM’s Polish subsidiary into Dehomag proper. He even offered to extend Dehomag’s territory into Russia, which many believed Germany was preparing to invade.120

  Even still, a new plan was emerging. The Third Reich was now hoping to expand Dehomag and all its dominated European IBM subsidiaries into a huge all-inclusive Nazi cartel governed by the Maschinelles Berichtwesen, the Reich’s agency for punch card technology. This cartel would be strengthened by the inclusion of the marginal European branches of Powers, as well as all local companies in invaded lands, such as Bull in France and Kamatec in Holland. Machines would be transported from country to country, like so many mortars, across war-ravaged Europe to the precise locales needed. Once their mission was accomplished, the devices would be shifted to the next hot spot. The pillars of the cartel would be the well-developed IBM subsidiaries in Italy, France, and Holland. In fact, a special Dehomag employee named Heinz Westerholt, the Nazi Party’s direct agent within the subsidiary, had already traveled to France to initiate the arrangements in both Vichy and occupied territory. The Germans working through French authorities had already demanded a test integration of Bull systems with Hollerith tabulators and sorters.121

  The planned punch card cartel would then be able to accomplish all the Reich’s most important objectives without channeling requests through the IBM corporate bureaucracy or submitting to Watson micro-management. Germany’s IBM-based cartel could function as a binary with Watson’s non-European operation.

  Ultimately, the attempted cartel would be bitterly fought by Watson, deploying every technologic, legal, financial, and political argument at IBM’s disposal. Eventually, by mid-1941, the Nazis concluded that connecting Holleriths to other systems was mechanically impossible, and operationally naive. Unlikable as it was, Germany needed an agreement with Watson in which he agreed to supply all the Reich’s needs, receive proper payment, but remain detached from the local details his m
anagers and engineers would necessarily possess. Ironically, such a modus vivendi appealed greatly to Watson.

  IBM as a company would know the innermost details of Hitler’s Hollerith operations, designing the programs, printing the cards, and servicing the machines. But Watson and his New York directors could erect a wall of credible deniability at the doors of the executive suite. In theory, only those down the hall in the New York headquarters who communicated directly with IBM Geneva, such as IBM European General Manager Schotte, could provide a link to the reality in Europe. But in fact, any such wall contained so many cracks, gaps, and hatches as to render it imaginary. The free flow of information, instructions, requests, and approvals by Watson remained detailed and continuous for years to come—until well into 1944.

  Subsidiary managers were authorized by New York to negotiate special equipment rental and service agreements from the Maschinelles Berichtwesen and other Reich officials. Projects in Europe were approved and customers prioritized with New York’s permission. Machines were moved from place to place to meet the demand. IBM Europe’s managers received special permission from the Nazi authorities to travel back and forth between neutral nations, Nazi-held territory, and Germany itself. They regularly sent IBM NY letters and reports. Some were simply handwritten notes. Others were dense sales and machine status reports, or meticulous monthly summaries, all sent from Axis-controlled subsidiaries to New York through neutral cities.122

  When Geneva executives were pressed for time, they telephoned New York. Using codes and oblique references, they nonetheless all spoke the same language, even when the language was vague. As one previous European General Manager, John Holt, urged an IBM NY colleague early in the war: “wire Schotte for the information which you need, care being taken that your request is so worded that it can pass the censor. It goes without saying that any information covering military activity is apt to get the recipient, as well as the sender, into considerable ‘hot water.’”123