Hell's Cartel

by Diarmuid Jeffreys

  The government’s anti-Semitic program reached a new level of intensity during 1937-38. Until this point, Nazi racial policies aimed at business had been concerned with making life difficult for solely Jewish-owned firms (limiting their access to raw materials, denying them foreign exchange and export licenses, and scaring off their customers with vicious propaganda) in the hope that the proprietors either would be forced to sell their assets at bargain basement prices or would collapse into bankruptcy. In January 1938, however, the regime (through decrees issued by Hermann Göring) began defining “Jewishness”—and Jewish firms—in ever more narrow terms. By July of that year, the presence of even one Jew on a firm’s board or executive committee made it a “Jewish” company.

  As a consequence, all the remaining Jewish executives at the IG were forced to resign. Those at the lower levels had mostly gone by then, and there were none left on the Vorstand, but Bosch’s Aufsichtsrat was still something of a non-Aryan haven. As late as 1935 he had invited his old friend Richard Merton of the Metallgesellschaft onto the supervisory board, and its ranks still included several other men of Jewish origin: Otto von Mendelssohn-Bartholdy, Carl von Weinberg, Arthur von Weinberg, Wilhelm Peltzer, Gustaf Schlieper, Ernst von Simson, and Alfred Merton. Many of them were influential and powerful, with a proud tradition of serving Germany; Carl von Weinberg, for example, was a former owner of Casella, one of IG Farben’s constituent businesses, who had been ennobled by Kaiser Wilhelm II for his contributions to German industry. In 1934, as a loyal son of the fatherland, Carl had even reassured visiting DuPont executives about the Nazi government’s intentions toward the Jews, declaring that he was happy to keep his money invested in Germany. But his patriotism counted for little now and he lost his position, along with the rest.

  On this occasion, at least, there was probably little the IG’s Aryan executives could have done to protect their colleagues and, though they made no official protest, they did, to their credit, try to mitigate the consequences in a number of cases. Neither of the Weinberg brothers, for example, was completely abandoned by the company. With the backing of Schmitz, Krauch, von Schnitzler, and Fritz ter Meer, Carl was eventually helped into exile in Italy, where he was sustained throughout the Nazi years with an annual IG pension of RM 80,000, routed secretly through a subsidiary company’s bank account in Milan. His older brother, Arthur von Weinberg, elected to stay in Germany and wasn’t quite so lucky. Although Hermann Schmitz reportedly gave money to the Weinbergs to bribe a Nazi official so that Arthur wouldn’t have to wear a yellow star, he was nevertheless arrested and incarcerated at Theresienstadt concentration camp. Schmitz and Krauch approached Heinrich Himmler and persuaded him that the eighty-two-year-old could be safely allowed to live out his remaining years in Mecklenburg, with his daughter, the Princess Charlotte Lobkowicz. Unfortunately, the decision was conditional on the approval of the local gauleiter and Arthur von Weinberg died in captivity before it could be obtained.

  In the overall scheme of things, these few small acts of humanity demonstrated none of the courage of someone like the businessman Oscar Schindler, who was prepared (double-edged though his motives may have been) to take enormous risks to save the lives of the Jews who worked for him. While it is commendable that a few IG executives had the conscience and loyalty enough to stand by a former senior colleague or two who had helped create their company, it seems a tepid sort of gallantry when one considers that the concern made little or no effort to mitigate the effects of Aryanization on its prewar blue-collar Jewish employees, who were mostly summarily dismissed without any regard to their future welfare. In any case, even the help the cartel gave senior Jewish staff seems to have been selectively tendered.

  An episode involving Gerhard Ollendorf, head of the IG’s Agfa film factory at Wolfen until his retirement from the Vorstand in 1932, was clear evidence of the IG’s selectivity. In November 1938 Ollendorf approached Fritz Gajewski, the chief of Sparte III, and told him that he was trying to get permission to leave Germany because the situation for Jews was becoming intolerable. The Sparte chief commiserated, wished him well, and said good-bye. Then he wrote a letter to the Gestapo.

  We wish to inform you that according to our interpretation Dr. Ollendorf has knowledge of secret matters and that, therefore, it would serve the general interest of the economy not to permit Dr. O. to go abroad for the time being. Since Dr. Ollendorf may still be in possession of papers, we would consider it advisable to have his home searched as a precautionary measure and any documents sent to us for study and analysis. We request that this matter be treated in complete confidence.

  Of course, Gajewski said nothing of this to Ollendorf, who was subsequently arrested and prevented from emigrating until Gajewski relented and sanctioned his release. Indeed, until 1947, all that Ollendorf knew about the affair was that he had remained in Nazi custody until Gajewski somehow managed to secure his freedom and that his former colleague had then supported his application to leave, permission for which was finally granted in the early summer of 1939. Ollendorf was so impressed by the efforts that Gajewski had apparently made on his behalf that after the war he agreed to repay the favor and wrote an affidavit on the IG man’s behalf for his trial at Nuremberg. Unfortunately for the hapless Gajewski, his 1938 letter to the Gestapo was discovered by the prosecution and read out in court.* But at least Ollendorf had managed to get away. Other Jewish IG officials were not so lucky. The company did nothing for Ernst Baumann, a hydrogenation expert at Leuna who was picked up by the Gestapo in late 1939 and died in Buchenwald in 1940, or for three Jewish middle managers from the IG’s plant at Piesteritz, who suffered the same fate.

  In the meantime, the IG’s official response to the enforced resignation of its Jewish Aufsichtsrat directors was to apply immediately for a certificate declaring the company to be a “German firm” in accordance with the Reich’s race laws. Without such a document, the IG could not have carried on its work for the government, and by the increasingly distorted standards of the wider German business community the cartel’s request for clearance was not exceptional. Nevertheless, it was a sad footnote to the truncated careers of the concern’s senior Jewish personnel.* But the IG was becoming quite hard-nosed about such matters; any reservations its executives might have felt about the regime’s anti-Semitism were not strong enough to stop the opportunistic purchase of a number of formerly Jewish-owned businesses. In 1936 the combine took over the firm of Weinessigfabrik L. Hirsch, and in 1938 it snapped up IFC Mertens and the Halle-based company Braunkohlenwerke Bruckdorf AG, establishing a pattern of questionable acquisitions that would later be repeated in occupied Europe.

  Even for those Jewish staff the company had managed to spirit abroad (in the early and mid-1930s Carl Bosch had been successful at placing some people in overseas subsidiaries), life was now more complicated. By 1937 the Nazi Party’s Foreign Organization (Auslan-dorganisation, or AO) had become particularly troublesome. The AO’s leader, Ernst Bohle, a fanatical anti-Semite and a close associate of Rudolf Hess’s, was determined to increase the NSDAP’s influence overseas and rid all foreign branches of German businesses of any Jewish connections. The size of the IG’s overseas operations was always going to make it a target, but Bohle, who had grown up in South America, where the concern was strongly represented, seemed to take a particular dislike to the cartel. For the first few years after the Nazis’ seizure of power, the IG had sometimes been able to contest the AO’s insistence that it dismiss its foreign Jewish employees and cease doing business with Jewish communities and businesses abroad. But in early 1937, when the AO became an adjunct of the German Foreign Office, Bohle gained official backing to enforce his views. By September 1937, Georg von Schnitzler’s Commercial Committee had ordered the preparation of “lists of the non-Aryan employees working abroad, together with a proposal for a gradual reduction of their numbers.” Five months later, in the aftermath of Hermann Göring’s decrees defining “Jewishness,” the concern’s memoranda became i
nfused with more than a whiff of panic: “The few remaining foreign Jews have to be systematically eliminated from our agencies,” urged one, adding that department heads were responsible for the speedy execution of the order. As a result, seventy Jewish foreign employees lost their jobs between February and November 1938 and the remaining thirty-seven were dismissed or forced into retirement by the end of the following year.

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  IF IG FARBEN’S executives believed that sacking Jewish overseas staff would be enough to satisfy the AO’s insistence that the cartel conform to Nazi ideals, they were clearly mistaken. The AO wasn’t finished with the IG yet. Next, it required the company to change its overseas advertising policy, asserting that commercial logic was of less importance than the need to avoid giving German money to newspapers that published “insulting and abusive” articles about the fatherland. In January 1938, Max Wojahn, the head of the Bayer sales operation in South America, was exasperated to be told that he had to pull the IG’s aspirin advertisements from La Critica—a mass circulation Argentinean tabloid that was also notably anti-Nazi—and place them instead in the pro-German La Razon, which had a readership of only a few thousand. Wojahn cabled his bosses at Leverkusen, pointing out that he was in the middle of a campaign to sell one of the company’s most profitable export items (known in South America as Cafiaspirina) and that by refusing to advertise in papers that ran anti-Nazi articles the IG would inevitably sacrifice ground to the competition. He was told to obey orders.

  But Bohle also wanted the IG to act as a propagandist for the Nazi cause and again his attention was drawn to the concern’s extensive marketing operation in South America, where the AO had long had ambitions of establishing a German sphere of interest. There was no reason, he insisted, why the company should not send copies of Hitler’s speeches to those on its commercial mailing lists or why its local managers and those posted to the region from Germany could not be used as agents of influence on the party’s behalf. With no apparent reluctance, the Commercial Committee hastened to agree.

  Gentlemen who are sent abroad should be made to realize that it is their special duty to represent National Socialist Germany. They are particularly recommended as soon as they arrive to contact the local or regional [Nazi Party] group and are expected to attend its meetings regularly as well as those of the Labor Front. The sales combines are to see that their agents are adequately supplied with National Socialist literature. Collaboration with the AO must become more organized.

  It is perhaps no wonder, then, that the IG’s traveling road shows in Argentina and Brazil (mobile cinema units that set up screens in remote towns and villages to show advertisements for Bayer drugs in between cartoons and popular movies) were soon playing Nazi propaganda films or that the promotional flyers its salesmen handed out during the intermissions were richly decorated with swastikas.

  At this remove it is hard to gauge the sincerity with which these activities were carried out.* It is unlikely that the IG was fully behind the propagandizing, not least because in many parts of the world the company was better served commercially (in terms of tariff duties and local taxes) by concealing the true ownership of local subsidiaries rather than flaunting their German origins. Waving the swastika attracted attention and won the combine some relief from the pressure of Nazi officials but it also drove revenues down and that was never popular with managers. In truth, the IG was happier acting on the German government’s behalf in more discreet ways, such as gathering intelligence.

  Max Ilgner’s Vowi operation (Volkswirtschaftliche Abteilung, or Department of Economic Research) at Berlin NW7, which had been established in 1929 to produce reports on foreign developments that might affect the concern’s commercial interests, became especially useful in this regard. Ilgner’s personal trips abroad throughout the mid-1930s had often provided him with titbits to pass on to the Nazi authorities, and his account of a visit to China and Japan—“an extensive study of the economic development of the Asiatic countries”—had reportedly been read “with pleasure” by Adolf Hitler himself. But in 1937–38 Ilgner began to use the concern’s economic intelligence apparatus to greater effect, turning many of the IG’s overseas executives into quasi-agents (Ilgner called them his Verbindungsmänner, or liaison men) and asking them to pass back any information on Germany’s foreign rivals that might be of value to the regime and—though this was never explicitly expressed—might boost his own and the IG’s standing. Inevitably, much of this material was the kind of low-grade business intelligence that German embassy staff could have easily gleaned from cocktail party gossip and a careful perusal of trade journals and the local media. But occasionally it strayed into more strategic areas. For example, one report from a Verbindungsmann in Central America offered a tour d’horizon of the region’s political and military pressure points, with speculation about the Uruguayan government’s ability to act independently of the United States and England, the disposition of its air and naval bases in relation to those of neighboring states, and the willingness of the Argentinean armed forces to defend themselves “against a coup de main of the United States of America at the La Plata estuary or against any possible cession of the Malvinas by England to the U.S.” While this information was of little importance to the IG’s pharmaceutical sales operation in the region, the Nazi government’s military analysts lapped it up and pressed for more.

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  IN THIS CLIMATE the various foreign partnerships the IG had entered into during the 1920s and early 1930s were bound to come under special scrutiny. Many of these ventures—such as a 1930 deal with Switzerland’s Ciba and France’s Kuhlmann over dyestuffs or a later agreement with Britain’s ICI over nitrogen—were relatively straightforward cartel arrangements, aimed at minimizing competition. Although there had sometimes been a trade-off whereby IG know-how had been exchanged for investment capital and market access, there was usually a clear and demonstrable commercial logic behind them. But there were other, more secret deals where the logic was not so apparent, in which it appeared as though the IG had passed technology and patents to foreign rivals for no apparent gain. To the cartel’s disquiet, the Nazis now began to probe into these transactions.

  In late 1937, for example, the German government learned of the contracts Bayer had made with William E. Weiss and Sterling Products in 1920 and 1923. In return for the U.S. rights to Leverkusen’s drugs, Sterling had agreed to hand back 50 percent of the sales revenue the medicines generated and (later) to give the IG a minority share in the company. It had been in both parties’ interests to keep these matters secret at the time because of the soured relations between Germany and the United States, and so the money had been funneled through the IG’s U.S. subsidiary to accounts in Switzerland—making considerable tax savings for the IG in the process. To the Nazis, however, it looked as though German patents and trademarks had been handed over to the Americans for nothing—and they wanted to know why. In March 1938 the IG tried to come up with a solution that would satisfy the regime without jeopardizing the company’s earnings. It so happened that Earl McClintock, one of William Weiss’s deputies, was due to visit Leverkusen on a routine business trip. Much to his surprise, on his arrival in Cologne McClintock was immediately taken to Basel, Switzerland, instead. There he was astonished to find Hermann Schmitz, the IG’s chief executive, waiting in his hotel room.

  After apologizing for the cloak-and-dagger nature of their meeting, Schmitz came to the point. The Nazis were asking awkward questions about the arrangement between their two companies, and the Americans would have to help out by paying the IG for its products and technology. McClintock protested that Sterling had already paid with its stock and a percentage of its U.S. sales revenue and that there was no question of giving the IG any more: a deal was a deal and if the Nazis didn’t like it, that wasn’t Sterling’s concern. Well then, Schmitz suggested hopefully, perhaps the Americans might pretend to pay, sending Leverkusen an annual check for $100,000, which the IG would later fi
nd a way to return to them secretly. McClintock agreed to discuss the matter with his colleagues back in New York, although he knew what their response would be—the proposal was almost certainly illegal and might be construed as an attempt to defraud the company’s stockholders. Under pressure from the government, the IG refused to let the issue drop, however, and was still trying to persuade Sterling to go along with the plan nine months later. In January 1939 Wilhelm Mann, head of the IG’s pharmaceutical sales combine, wrote to William Weiss and told him that the concern was in desperate need of a $100,000 check, threatening that the “acute state that the matter had reached … might possibly not leave our original agreements unaffected.”