Hell's Cartel

by Diarmuid Jeffreys

  These tactics had the desired effect. Soon, French dyestuffs plants were closing down, unable to function without essential supplies. Realizing that the factories could not get back on line without IG Farben’s support, one of Kuhlmann’s senior executives, Joseph Frossard, tried to open negotiations with the cartel. Back in 1919 he had been Carl Bosch’s principal contact in the French administration and had helped facilitate the last-minute deal in Paris whereby France agreed to let Germany’s chemical plants stay open and intact in exchange for secret synthetic nitrate technology. Frossard evidently hoped that this history would stand him in good stead with the IG, but of course Bosch was now dead and no one else at the concern was prepared to pay him much attention. Acting on government advice, the cartel stalled, referring Frossard and his colleagues to a decision by Ambassador Hans Hemmen, chief of the German economic delegation to the Armistice Commission at Wiesbaden, to defer all discussions on industrial matters until after agreements had been reached about the borders between occupied and unoccupied France. “We do not think that the time has come to initiate these negotiations,” an IG official said loftily. In reality, as von Schnitzler admitted later, the intention was to let the French “simmer in their own juice.”

  Von Schnitzler knew, however, that talks could not be postponed indefinitely. Eventually the Wehrmacht would insist that the French plants be reopened to help meet its insatiable need for chemical products. The moment that happened, the IG would lose its leverage over any negotiations. Therefore, in the last week of October, around the time that Adolf Hitler and Marshal Pétain were arriving at Montoire to settle the details of French collaboration, he asked Ambassador Hemmen to set up a meeting.

  The talks began on November 21, 1940, at Wiesbaden. The German location was chosen in accordance with Hemmen’s advice that it would give the IG a tactical advantage, but if the French were cowed by their surroundings, they didn’t show it. Led by Kuhlmann’s René Duchemin (Frossard wasn’t present), the delegation responded to Hemmen’s invitation to open discussions by suggesting that the best way forward would be to revive the 1927 Gallus Vertrag agreement. Although the war had interrupted the arrangement, their experts had assured them it was still legally valid and could easily be picked up again. Their proposal was made, they added blithely, in the spirit of the deal recently agreed between Hitler and Pétain as allies and partners.

  The Germans, including von Schnitzler and Fritz ter Meer, listened in frosty silence until Ambassador Hemmen, who was there in his capacity as an adviser, suddenly “lost his temper.” The French proposal left him “speechless,” he shouted. The 1927 agreement was a product of the shameful Versailles Treaty. To suggest that it was still valid after Germany’s recent historic victory was an insult. He would not allow it to be discussed. The French had two choices. Either they accepted that they had lost the war and submitted themselves to the dictates of the IG in the chemical field or the Reich would step in to decide their fate.

  While the dismayed French struggled to absorb this unexpectedly hostile riposte, von Schnitzler began reading from a prepared statement. The IG’s right to lead the European chemical industry had been well established before 1913, he said, but from the end of the last conflict the French had been abusing their relationship with their German counterparts. Now they had to face facts. France had declared war on Germany and this time had lost. Europe would need a strong and united chemical industry in the years to come and the French had to accept that only the IG was in a position to lead it. What would that mean in practice? All competition between the IG and the French companies would end immediately: French dye sales would be restricted to existing domestic and colonial markets; in every other respect, from production to exports, the IG would have unchallenged control over the French industry’s affairs. At this point Hemmen adjourned the meeting until the following day.

  The next morning von Schnitzler went into more detail, explaining the IG’s plan to create a single Franco-German dye company in which the German cartel would hold the controlling stake; the IG would also control all export activity, with the possible exception of a few small existing contracts with Belgium. The French were appalled. Unnerved by Hemmen’s threat of the previous day—to hand the entire matter over to the German authorities for resolution if they continued to protest—they pleaded for time to consult their government in Vichy. Once away from the high-pressure atmosphere of Wiesbaden, they rediscovered something of their courage, with Duchemin declaring he would rather cut off his hand than sign a deal that made his industry subservient to the IG.

  As a result of this intransigence, negotiations dragged on until the following spring, with the French allowed only the barest minimum supplies of coal and electricity necessary to stop their plants from falling into total disrepair. The IG softened its approach to some marginal issues, conceding, for example, that the chief executive of the new company should be a Frenchman and suggesting that it might give Kuhlmann a technical helping hand in its non-dye-making activities. But the concern stuck rigidly to its main demand for a single national dye business in which the IG had a controlling stake, at one point threatening that if the French refused to comply, the IG would arrange for the seizure of the whole Kuhlmann operation on the grounds that its prewar vice president, Raymond Berr, was a Jew. On March 10, 1941, at talks in Paris, the French finally gave in. In reality, they never had much choice. Lack of orders and raw materials had forced many of their plants to shut down and the Vichy government had come under intense pressure from the German authorities to ensure their cooperation. Two days later the French representatives sat in glum silence at a press conference as von Schnitzler announced the formation of a new firm. The Compagnie des Matières Colorantes et Produits Chimiques—or Fran-color as it would be known more colloquially—would have a French president (Joseph Frossard was later appointed to the role), but IG Farben would own 51 percent of Francolor’s stock and would appoint its own men to four of the eight top management positions: Otto Ambros, Fritz ter Meer, Hermann Waibel, and von Schnitzler himself. In return for a controlling stake in the business (later estimated to have been worth around 800 million francs at prewar prices), the IG compensated the French with a meager 1 percent of its own equity—as valued in the rapidly depreciating French currency.

  Although there were still details to be worked out (including the precise wording of the written introduction to the formal agreement), the IG men could barely contain their glee. On July 23, 1940, ter Meer, Ambros, and others celebrated by drinking the night away in the garden of a Paris café. When the other customers had left, the Germans broke out into song, continuing even as they wound their way back to their hotel. The next morning, during one of his last conferences with the “French gentlemen,” ter Meer remembered the words of one popular refrain and jotted them down among the doodles on a file folder: “For in the woods there are robbers” (Denn im Wald da sind die Rauber).* On November 18, 1941, Francolor came formally into being and all the property and assets of the major French dyestuffs manufacturers passed into German control.

  But the IG hadn’t quite finished with the French chemical industry. Wilhelm Mann, the head of the IG’s Bayer pharmaceutical division, had ambitions to do to Rhône-Poulenc, France’s biggest drug manufacturer, what his colleagues had done to Kuhlmann. Mann considered Rhône-Poulenc responsible for much of the aggravating prewar damage to the IG’s medicines trade in France. At first he wanted the IG to take a controlling stake in the business but he ran into problems when it became clear that many of the French company’s assets were in unoccupied Vichy territory and therefore invulnerable to threats of seizure. So, instead, Mann invited Rhône-Poulenc to form a joint sales company with the IG, backing up his “offer” with hints that if the French firm refused it would soon find itself on the receiving end of a price war—which the IG would surely win—and claims for compensation for abuse of IG Bayer’s trademark and patent rights. When the French refused to consider the proposal, Mann became nastie
r, threatening to refer the matter to the German government—clearly now the standard approach with intractable foreign businesses. The threat worked as expected. Rhône-Poulenc’s opposition evaporated and the joint sales venture, known as Theraplix, was quickly formed. Thereafter Bayer established a lucrative market for its medicines in France, eventually clocking up sales worth around twenty million francs a year.

  The IG also tightened its grip on the rest of the French chemical industry. Between 1942 and 1943, occupation and Vichy authorities closed around thirteen hundred small family dye companies and pharmaceutical producers in the name of increased efficiency and rationalization, though the IG’s already swollen market share was the real beneficiary. Along the way, the cartel also acquired two alloy mines, a 25 percent share of Kodak’s French photographic business, an interest in a newly established synthetic fibers combine, and, most significant of all, an end to French competition for its products in neutral countries. All in all, not a bad haul for the robbers in the woods.

  But if IG Farben gorged itself on French chemicals, its appetites were comparatively restrained in Western Europe’s other occupied nations—Belgium, Holland, Luxembourg, Denmark, and Norway. In part this reserve was a response to an edict from Gustav Schlotterer at the Economics Ministry in Berlin. Alarmed at reports of acquisitive Ruhr coal and steel producers descending in a greedy and undisciplined horde on the Low Countries in the aftermath of the invasions, Schlotterer insisted on more self-control from other German industries. The odd advantageous purchase here or there could be countenanced and certainly there would be no objection to the confiscation of Jewish property, but any further takeovers would have to be officially sanctioned, in the proper fashion and at the proper time, to ensure that key factories of potential use to the German war effort were not rendered useless. As this bureaucratic process was obviously going to take a while, the IG, with its eyes fixed firmly on the far greater prizes in France and Poland, felt no immediate need to rush in.

  The cartel’s restraint was also due to the fact that these countries posed little competitive threat. Holland and Belgium, for example, specialized mostly in the production of heavy chemicals, which were of no great interest to the concern, and the IG’s lead in its core production area of high-pressure chemistry was already so great that it could afford to be generous. In Belgium, the IG restricted itself to forcing the closure of a building project for an organic dyes factory at Terte and to cementing its existing relationships with Solvay et Cie, a reasonably sized manufacturer in Brussels, whereas in Holland it was content merely to drive the country’s two leading dye firms out of business. Norway presented even less of a challenge. The only large Norwegian chemicals manufacturer, Norsk Hydro, was the IG’s partner in a number of fields and the concern already held 25 percent of its stock (later increased to 31 percent) and a seat on its board, occupied by Hermann Schmitz. Otherwise the IG’s only really significant wartime exploitation of Norwegian assets came through its attempt to provide the Hamburg nuclear physicist Paul Harteck with consignments of heavy water from the Vemork hydroelectric plant.

  Had Germany gone on to invade Great Britain, of course, things would have been very different, because then the mighty Imperial Chemical Industries would have become a target. Although ICI’s bosses and the British government later shied away from admitting the connection, ICI and the IG had actually cooperated very closely on occasions during the 1920s and 1930s.* In 1929, for example, ICI had joined up with Norsk Hydro in the IG-dominated Nitrogen Syndicate, and in 1930 it signed an IG/Standard Oil/Royal Dutch Shell agreement designed to contain the spread of synthetic oil technology. In 1935, well after the concern had struck its contract with the Nazis, the IG provided ICI with technical assistance and advice on the construction of a large hydrogenation plant at Billingham, in the northeast of England. Yet, at the same time, the two companies were fierce rivals, forever encroaching on each other’s markets in search of strategic advantage. In Czechoslovakia, for example, ICI had helped the Aussiger Verein keep the IG at bay for years, while the IG had used its connections in Japan to undermine ICI’s Asian interests. Indeed, with the possible exception of the United States’s DuPont Corporation, ICI was IG Farben’s biggest international competitor. It stood to reason, therefore, that Max Ilgner’s Vowi office had gathered extensive information on ICI’s assets and products and in the event of a successful Nazi occupation these plans would have formed the basis of an acquisition spree that dwarfed anything in Poland or France. As it was, the IG merely contented itself with handing over its intelligence to the Luftwaffe for use in its blitz on Britain’s cities and industrial installations.

  * * *

  BOMBING CAMPAIGNS COULD go in two directions, of course. While some of the IG’s senior executives were swaggering along in the wake of the Wehrmacht, their colleagues back home were nervously watching the skies for the Royal Air Force. Well before the start of the war, the Reich authorities had concluded that Leverkusen, Oppau, and Ludwigshafen, so close to Germany’s western border, were vulnerable to enemy air attack. Each factory was therefore ordered to carry out regular air raid drills and to stockpile raw materials for production and repairs in case of disruption. These precautions had been relaxed when it seemed that Hitler’s armies were on course for an easy victory, but by the middle of 1940 Allied bombing was gathering pace and IG officials were compelled to take the threat more seriously.

  To their relief, the situation turned out to be not quite as dangerous as they had anticipated. The first Allied raids on the area, in June and December 1940, were aimed principally at targets in the center of Cologne, Ludwigshafen, and Mannheim and thus did little damage to the nearby Rhine plants—although the destruction of transportation links moderately disrupted the traffic of raw materials to and from the Ruhr. Further raids in May, August, and October 1941 were more substantial but by then IG managers were practiced at dispersing their resources and effecting quick repairs. The huge size of the plants (larger targets were obviously easier to hit) was offset by their proximity to abundant water supplies, which meant that fires could be doused with comparative ease. Until the Allies amassed sufficient numbers of aircraft to overcome the Luftwaffe’s strong ground and air defenses and then adopted the saturation bombing techniques that would prove so devastatingly effective later in the war, their efforts were more a nuisance than a true threat.

  Aside from the air raids, the IG’s biggest domestic headache was what to do about its rapidly diminishing labor supply. Well before the outbreak of war, thousands of IG workers had disappeared into the armed forces or munitions production, either voluntarily or as a consequence of the military draft. At first their departure had been offset by the arrival of some four thousand German labor conscripts—men deemed ineligible for military service because of age, political “unreliability,” or infirmity. But with the demands of the procurement economy increasing all the time, the IG’s managers had felt compelled to take more radical steps, like the recruiting of female workers. Unlike Britain and later the United States, the Nazi regime frowned upon the use of women in industrial jobs and throughout the war its attitude would cause the IG (and other large manufacturing concerns) great difficulty. Nevertheless the regime agreed to partially relax the restrictions when it took part in a scheme to automate some of its factories to make the work less strenuous. Between 1939 and early 1941, thirty thousand more women began working in heavy industry, of whom around three thousand were eventually assigned to the concern.

  But this was a drop in the ocean compared with the numbers of skilled male Germans leaving through the other door. Inevitably, therefore, the IG turned once again to the controversial practice followed by Carl Duisberg and others during the Great War: enlisting neutral foreign labor and conscripting workers from occupied territories. On June 21, 1940, the first deployment of five hundred Belgian POWs arrived at Ludwigshafen. Within six weeks they had been joined by a contingent of around a thousand Italian and Slovak volunteers (some of wh
om had been lured to the Reich by promises of higher wages than they could get back home). Later in the year thousands of others were drafted more reluctantly from France and the Netherlands.

  Although glad to have the extra men, IG managers were initially concerned that the newcomers might cause problems among the company’s recently hired German women, and they warned female staff against fraternizing with foreigners or POWs. “Contact with the prisoners is permitted only in the framework of the employment relationship. Anything else will be punished severely.… Remember, our fathers, brothers, sons, and workmates are involved in heavy fighting at the front.” But the caution was unnecessary; there was little chance that even the most ardent of the foreign workers would want to enjoy off-hour contact with their German “colleagues”: away from the factory floor they were incarcerated in specially built barracks and POW camps where the food was too poor and the living conditions too cold, cramped, and depressing to leave much energy for anything beyond just getting through the days.*

  Nevertheless, their presence seemed to relieve some of the pressure in the factories. The concern’s output rose quickly and managers were free to concentrate on adapting what remained of their civilian productive capacity to meet the now incessant stream of military orders. At Leuna, the manufacture of synthetic automobile fuel for the civilian market was all but abandoned in favor of the high-octane diesel required by the army and air force, and it was much the same story at Leverkusen, Wuppertal, Landsberg, Wolfen, Oppau, Frankfurt, and Munich, where purely “peaceful” production was pushed firmly to the margins.