Hell's Cartel

by Diarmuid Jeffreys

  As a former corporal, Hitler shared some of Röhm’s proletarian distrust of the military establishment and sympathized with his political radicalism. But he needed the army’s support and was alert to whispers from Göring and Himmler about the SA leader’s loyalty and ambitions. Moreover, it was becoming obvious that Hindenburg was ill and wouldn’t last long. When he died there would be a vacancy for the Reich presidency and there were still worryingly unresolved questions about how his successor would be chosen or who it would be. Hitler was determined to take the role for himself, though he doubted he could succeed without the Reichswehr’s backing. But what if some other rival emerged to try to gain the army’s allegiance in the meantime? With Hitler prey to suspicion, the atmosphere in Berlin became more poisonous by the day. To the outside world the new Nazi regime appeared strong and unified. Behind the scenes it was a maelstrom of jealous hatreds and distrust. Something or somebody would have to give way.

  In the early hours of June 30, 1934, the tension boiled over into violence as Hitler cynically took the one step that was almost guaranteed to win the Reichswehr’s approval. At the head of a group of Himmler’s SS men, he descended on Röhm’s temporary headquarters at the Hanselbauer Hotel in Wiessee, near Munich. Having surprised the SA boss and his associates in their sleep (and, infamously, a couple of men together in bed), Hitler ordered the execution of his once most devoted follower and several of Röhm’s lieutenants.* At the same time in Berlin, Göring and Himmler were coordinating the arrest and murder of his other subordinates. That night SS and Gestapo firing squads brought 150 SA leaders to the Lichterfelde cadet school and shot them. The pretext—almost certainly invented—was that a plot had been uncovered, a mutiny that would have involved Röhm and other SA leaders launching surprise attacks on government buildings and even assassinating Hitler himself. But it quickly became an excuse for settling old scores as the SS hunted down other supposed enemies of the regime. Kurt von Schleicher was shot with his wife as they opened the front door of their Berlin villa to a plainclothes SS detachment. Also murdered were two of Franz von Papen’s closest confidants, his secretary, Herbert von Bose, and an adviser, Edgar Jung; both men had been urging the former chancellor to speak out against Nazi terror.† Estimates vary on how many others were killed in the course of the next few hours, but it was probably around five hundred in total. Hundreds more were arrested, beaten up, and taken off to Gestapo headquarters in Prinz Albrecht Strasse for questioning.§

  For Heinrich Gattineau, the IG Farben press chief who had once spent an exhilarating few hours discussing synthetic fuel and German self-sufficiency with Adolf Hitler, the Night of the Long Knives was a stark lesson in the wisdom of choosing one’s friends carefully. Having joined the SA while waiting for his full Nazi Party card, he had gained the rank of Standartenführer, or colonel, and quickly become one of Röhm’s key economic advisers. Now, bewildered and terrified, he was dragged out of his bed by the secret police and taken into custody to answer charges that he had financed Röhm’s supposed plot with IG Farben money.

  The allegations were untrue, of course. There had been no conspiracy to finance, and even if there had been, it is highly improbable that Gattineau would ever have been able to use IG funds for such a purpose; although he was authorized to dispense small political donations, he rarely did so without seeking his superiors’ permission. But at the best of times the Gestapo was not particularly disposed to worry about such trifles as proof. At this moment of crisis, it was enough that someone somewhere had made the allegation. Several of the SA commanders with whom Gattineau had most closely associated were executed that night or over the following days and in each case the evidence was equally fanciful. As he sat before his interrogators, desperately pleading his innocence, the IG man must have been certain he was next on the list.

  Something stayed his accusers’ hands that night. It may have been that IG Farben called in a few favors on Gattineau’s behalf; many years later Max Ilgner would claim that he had come to the hapless executive’s aid. Or it might simply have been that with so many other “conspirators” to dispatch, the SS and Gestapo put off dealing with the small fry until later and focused elsewhere as the wave of violence spent itself. Whichever it was, after a few days Gattineau emerged shakily into the sunlight as a free man. He immediately resigned from the SA and other prominent public posts he held and vowed to be more careful in the future, but that didn’t save him from a furious reception back at NW7. His immediate superior, Erwin Selck, who had his own connections to the SA to worry about, tried to get Gattineau dismissed or at least banished from the Unter den Linden offices on the grounds that he was now a dangerous liability who could only draw unwelcome attention to the IG. Carl Bosch intervened and restored calm, but even he had to agree that the executive should keep a low profile for a while. Gattineau’s position as head of the Wipo research office was made subordinate to Max Ilgner, and a short time later he surrendered all his press duties to him, too. Remarkably, he achieved some degree of rehabilitation a year later when he finally won admission to the Nazi Party (if he bore any grudges, he kept them to himself) and gradually worked his way back into its good graces, but his career never fully recovered.

  Though the immediate consequences were slight, the incident was confirmation to anyone in the IG who needed it that the Nazis had to be taken seriously. Indeed, although it can only be speculation, a reminder to that effect may even have been the authorities’ real purpose in arresting Gattineau. Despite the number of senior IG executives who had joined the NSDAP, there were still many in the party who viewed the giant cartel as a bastion of pro-Semitism, run by arrogant and unpatriotic nonbelievers. The temptation to rattle their composure may have been too strong to ignore.

  But if this was their intention it had little apparent effect on Carl Bosch. Having momentarily swallowed his antipathy to the Nazis in order to secure a deal for Leuna, he soon returned to his usual stance. Not long after the Gattineau affair he was arranging Fritz Haber’s controversial memorial service and making disparaging remarks about the party at the concern’s board meetings. To those who knew him well, the IG boss’s mood was darkening. He had always been subject to periodic bouts of depression and now they were becoming longer and more frequent. There was still plenty of fight in him and his judgment was still sharp but his consumption of alcohol and painkillers was increasing. The stresses and strains of trying to run a massive business in Hitler’s Germany were taking their toll.

  The death of his sparring partner and colleague Carl Duisberg (at the age of seventy-four) on March 19, 1935, did little to improve his mental state. For all their many differences, Bosch had deeply respected the elder man, not just as a visionary whose determination to end the German chemical industry’s self-destructive internal competition had done so much to bring IG Farben into being but as a committed scientist whose love for the laboratory and what it could produce had brought so many wonderful discoveries to light. To be sure, the two had had fierce arguments over the direction the IG was going and Bosch, a humble man in many ways, had often shaken his head over Duisberg’s vanity and ostentation. Nevertheless, he knew there had been no sharper business brain in Europe when it came to cutting a deal or finding a way out of an impasse. It was a great blow to be deprived of his advice at so difficult a time.

  Duisberg’s passing was mourned throughout the whole of Germany but at Leverkusen, the scene of his greatest achievements, it had a special significance. The huge Rhine-side factory that had dazzled his rivals was closed for the day and thousands came from the company town and from nearby Cologne to pay homage. His monumental house, where the excruciating negotiations to create the IG had taken place, was shuttered and silent and the flag that had once proudly proclaimed the master’s presence was hauled down for the last time. It was a fitting way to say good-bye to someone who had always enjoyed ceremony and pomp. That night, however, the giant aspirin logo over the Bayer factory was turned on as usual, its thousands of el
ectric lights a brilliant reminder of Duisberg’s most remarkable legacy. An assessment of his wider historical significance came a few weeks later—fittingly enough in a foreign newspaper: “Germany is deprived of one of the greatest and most valuable citizens she has ever had,” wrote the London Times. “In the legend of the future, he may well come to be considered the most efficient and effective industrialist the world has yet known.”* But given what was to happen to his company and his country over the years that followed, it was probably just as well that Duisberg died when he did. Though his patriotic heart might have rejoiced at the restoration of German power, the grand old man would have been devastated by the IG’s growing entanglement with the criminal new regime.

  Duisberg was not the only significant German to die that year: on August 2, Field Marshal Paul von Hindenburg, the eighty-seven-year-old guardian of the Hohenzollern legacy, passed into history. He had been debilitated for some months, retiring to his sickbed at his ancestral estate in Neudeck, from where he dispatched a last telegram to Hitler to thank him for having recently “nipped treason in the bud.” He probably knew a little of the true events of the Röhm purge and the fate of his once favored adviser Kurt Schleicher, but he kept the knowledge to himself. His political testament endorsed Hitler as his successor, for the Führer had “led the German nation above all professional and class distinctions to internal unity.”

  With all possible opponents out of the way and the army’s unease erased by his suppression of the SA, Hitler was able to grasp the opportunity on offer. The presidency and Reich chancellorship were immediately consolidated by emergency decree into one office held by the Nazi leader.* A few weeks after Hindenburg’s death Hitler was in a position to demand that the armed forces swear allegiance to his person rather than to the state. On August 20 all officers and men paraded and took a pledge that was used to justify many terrible acts in the years to come: “I swear by God this sacred oath, that I will render unconditional obedience to Adolf Hitler, the Führer of the German Reich and people, supreme commander of the armed forces, and will be ready as a brave soldier to risk my life at any time for this oath.” The last remaining barrier to the Nazi revolution had been removed. Hitler was the unchallenged master of Germany. Now, buoyed by the public’s adulation and with the help of the IG’s synthetic wizardry, he could prepare to take on the world.

  * * *

  VITAL THOUGH OIL undoubtedly was to the Führer’s ambitions for military self-sufficiency, it was only part of the equation. As the IG plowed ahead with its expansion of the Leuna synthetic fuel program, it also began to develop plans for another crucial material. Synthetic rubber, or buna, had first become a target of Bayer and BASF during World War I, when the British naval blockade hindered imports of the natural product from the Far East.* Since then the project had followed an uncertain course, being variously taken up and abandoned as world rubber prices rose and fell and the investment required to take buna beyond the experimental stage seemed either more or less likely to deliver a decent return. In 1933, however, the combination of a Nazi government keen on achieving autarky and the rapidly improving economy had suddenly made the synthetic rubber program more attractive—an impression that was reinforced in August of that year when Fritz ter Meer, the head of Sparte II, managed to persuade military procurement officials in Berlin to buy a thousand buna tires for testing on the Reichswehr’s vehicles.

  The IG proceeded cautiously. Having come so close to catastrophe with its investments in synthetic oil, the cartel was nervous about making a big financial commitment to yet another experimental product until there was proven demand—or enough of a safety net in the form of subsidies. As ter Meer and his colleagues made clear in a memo to the authorities, “Before we resume our efforts on a large scale, it is necessary that the government decide whether it is sufficiently interested in the manufacture of synthetic rubber in Germany to be prepared to support the project.”

  Unfortunately, the Reich’s economics experts, led by Hjalmar Schacht, were far from convinced. They pointed out that a natural rubber tire cost around eighteen marks to produce, while its buna equivalent cost over ninety. To overcome such a massive price differential and qualify for subventions, the synthetic product would have to be of markedly better quality than the natural one—something that the army’s tests quickly found not to be the case. With no apparent depletion of natural rubber supplies on the horizon, there didn’t seem much point in discussing subsidies any further.

  It took a direct intervention from the Führer to get things moving again. In this instance, Hitler had little interest in economic niceties. Always aware of the lessons of the Great War, he was determined to make Germany self-sufficient in strategic resources: the fatherland must never again be put in jeopardy because of its dependence on foreigners for raw materials. Rubber was especially vital to Hitler’s plans for rearmament and a secure nationally controlled supply was essential; if that meant paying a higher premium, then so be it. Informed that the IG’s program had stalled, he appointed his personal economic adviser, the Ruhr industrialist Wilhelm Keppler, as a plenipotentiary for raw materials and synthetics and told him to sort the problem out. The Führer assumed the production of synthetic rubber was now taken care of and announced to a Nazi rally at Nuremberg on September 11, 1935, that “the erection of the first factory in Germany for this purpose will be started at once.”

  In truth, Keppler had a much harder time than he expected. Although Hitler had given the go-ahead, no formal commitment to subsidies had been made. Schacht, by now economics minister, was thus able to continue dragging his heels, protesting that uncompetitively priced buna tires would generate none of the foreign exchange revenue the country so desperately needed—a reasonable concern given the investment the state was being asked to make. The army also remained resistant because its tests showed that buna tires fell apart under rigorous military conditions. Indeed, even the IG still had cold feet. The concern was willing in principle to invest money and energy in buna, Fritz ter Meer told Keppler, but without the assurance of public funds, the project was not financially viable. Commercial manufacturers were reluctant to make tires with buna because it was so expensive. To bring them on board, production costs would have to drop significantly—something that could not be achieved without state subsidies. It was only when Keppler went back to Hitler and obtained his explicit and unqualified backing for an agreement on government support that Carl Bosch and his colleagues were persuaded to move forward. In late 1935, under the direction of a promising young chemist called Otto Ambros, the IG began building another new plant, this time at Schkopau, a few miles from Leuna. The company announced that once production tests were out of the way the works would expand its capacity to a thousand tons a month.

  The decision to proceed with buna was one of Bosch’s last acts as chairman of the Vorstand. The death of Duisberg had left the chair of the Aufsichtsrat vacant and now, at the age of sixty, the IG’s boss decided to fill it. He was exhausted and depressed by the day-to-day pressures of the business, and though he had every intention of playing an important role in IG Farben for years to come, he was glad to let someone else take responsibility for dealing head-on with the government. Having won the Nobel Prize and secured his beloved fuel hydrogenation project at Leuna, he had a great many extraordinary achievements to his credit, but he was also made uneasy by the IG’s now irrevocable association with the Nazis. The recent deals he had sanctioned were commercially right for the concern but they were good for Hitler, too, and that must have been increasingly troubling. It was time to move off center stage.

  To those in the IG who were accustomed to Bosch’s dominant presence at the top of the firm, the announcement of his successor came as a shock. Fifty-six-year-old Hermann Schmitz sprang from an entirely different mold. Reticent, cautious, and almost obsessively secretive, he had been headhunted by Bosch for BASF after the war because of his expert knowledge of banking and accounting procedures. During the period foll
owing the IG’s creation, these skills had proved to be a great asset: Schmitz had quickly mastered the company’s complicated financial affairs and gone on to become one of Bosch’s most useful lieutenants. But as a leader of men Schmitz was to prove woefully inadequate. He had none of his predecessor’s charisma, let alone any scientific training or experience of running a big plant, and though his stolidity and circumspection gave the impression of calm competence—qualities sufficient to recommend him to the IG’s board members and major shareholders—they would turn out to be far less significant than his flawed political and moral judgment. He had already shown he was susceptible to Nazi blandishments by becoming a party-sponsored delegate to the Reichstag during the rigged November 1933 election. In the years following his appointment as Vorstand chairman, Schmitz’s misguided opportunism, idiosyncratic decision making, and weak management would contribute in a major way to the cartel’s downfall.

  Crucially, his promotion came as the IG—reassured by the return of civic stability, the improvement in its financial performance, and, most significantly, the benefits already accruing from the Benzinvertrag with Göring’s Air Ministry—showed signs of a shift in its position, moving away from tactical and semipassive support of government policies to an active role in shaping and implementing Nazi programs for self-sufficiency. Hitler’s stated aim was the restoration of German power: it was no secret to his coterie that his plans included—indeed, would inevitably lead to—armed conflict at some point in the future. But such a step could be taken only after meticulous preparation and rearmament and the mobilization of significant parts of German industry. The covert Luftwaffe program was an early phase of this rearmament; now the effort would be expanded across all the armed services. Key businesses were expected to become full partners in the enterprise, sharing its aims and the Nazis’ sense of urgency. With the Nazi-sympathizing Schmitz in the driver’s seat, the cartel would become fully engaged in this process, creating an infrastructure that would allow it to respond directly to the government’s demands for strategic autarky—in effect, taking a lead role in getting Germany ready for war.