The Arsenal of Democracy: FDR, Detroit, and an Epic Quest to Arm an America at War

by A. J. Baime

  “Is there going to be war, Mr. Knudsen?”

  “No, ma’am.”

  “But the steward says there is going to be war.”

  “No, there’s not going to be any war at all,” Knudsen said, his Danish accent still noticeable nearly forty years after he had immigrated to the United States. The production man saw things practically. During the Great Depression, Knudsen figured, war was too expensive. “Nobody could afford it.”

  He was headed to Europe to check on GM’s factories, which were in danger given the precarious political situation. GM owned Opel, the largest car brand in Germany. Much to Knudsen’s surprise, given the lingering Depression in the United States, business at Opel was booming as never before. Under Hitler, Germany had by far the strongest economy in Europe, and sales of Opel cars were on the rise. Earlier in the 1930s, long before any threat of war, Opel had agreed to make trucks for the Nazi government, the contracts quite lucrative. By the time of Knudsen’s 1938 journey to Germany, over a quarter of Opel’s “Blitz” trucks were being sold directly to the Nazi army, the Blitz’s biggest customer by far. Recently, however, Hitler’s speeches and his political posturing had grown more ominous, sending shock waves of fear across the continent.

  What did it all mean? Knudsen aimed to find out.

  When the Bremen reached port in Britain, he received a message from US ambassador Joseph Kennedy instructing him to return to the States. Americans were being advised to flee the continent. Knudsen pushed on. In London he found the population “scared stiff.”

  “Airplanes! Airplanes! Airplanes!” Knudsen reported back to the United States. “That is all they think about, and bombs go with them.” Gas masks were being handed out. Children were being evacuated from cities. “It was really bad,” Knudsen later said. “They were just hysterical.”

  In Paris, Knudsen was awoken in the middle of the night by air raid drills. Sirens all over the city howled furiously. Citizens ran for their basements, and all electric switches were flipped off, leaving “the City of Lights” empty in the ink-black night.

  When Knudsen finally reached Berlin, the city didn’t resemble the one he remembered. He could recall arriving here in 1932 to find the streets filled with vagabonds. Six million German men had been out of work. The Depression hit Europe even harder than it did the States. Now the bums were gone. New roads, called autobahns, had been laid; they were wide enough to drive tanks down. All over Berlin, Knudsen saw anti-aircraft guns on the roofs of buildings. Signs on shop and restaurant windows warned Jews to keep out: JUDEN UNERWUENSCHT (JEWS NOT WELCOME). Everywhere Knudsen looked, people offered the Fuehrer’s salute on command, barking “Heil Hitler!” like automatons.

  When Knudsen checked into the Adlon Hotel in the city center, opposite the Brandenburg Gate, a local General Motors man named Winter showed up to meet him. Hermann Goering, Hitler’s second in command, wished to meet with Knudsen the following day, Winter reported.

  “Where is Goering?” Knudsen asked.

  “At Karin Hall, his lodge.”

  Would Winter be coming along?

  “No,” Winter said. “You are to go alone.”

  Goering’s reputation was monstrous. He was a man of insatiable appetites—for power, food, art, jewels. He was a World War I ace pilot who had squandered away years trying to get into the airplane business before riding Hitler’s coattails into the limelight. Goering liked to wrap his nearly three-hundred-pound body in bizarre capes. He rouged his face. He often had conspicuously tiny black dots where the pupils of his eyes were supposed to be—the telltale sign of a morphine addict. Goering was not only the head of the German economy but a military reich marshal, commander in chief of the Luftwaffe (air force), and head of the Gestapo, the secret political police, an organization he had himself founded.

  The following day, at 9:00 AM, a German military car pulled up in front of the Adlon Hotel. Inside was a driver and Ernst Udet, one of Goering’s key Luftwaffe deputies, a pilot who owned the world speed record in an airplane. Knudsen climbed in, wearing a blue suit and derby hat. The car lurched into traffic and headed north to Goering’s lodge.

  When Knudsen arrived at Karin Hall, a gate opened onto a property of 105,000 acres. The driveway wove past stately columns of oaks and a fountain with a statue of a horse and a nude rider. Outside the mansion’s front door, storm troopers in black uniforms clicked their heels as Knudsen walked by, lifting his derby hat uncomfortably.

  Inside sculptures, paintings, and a collection of assorted weaponry crowded the walls. “It would be difficult to find an uglier building or [one] more intrinsically vulgar in its ostentatious display,” as the American statesman Sumner Welles once described this property. Following a short wait, the famed reich marshal appeared, Nazi Germany’s second-most-powerful figure, wearing a hunting coat with a dagger strapped around his thigh. A three-hour conference followed, with Goering’s deputy Udet doing the translating. Goering began by asking if the political situation was causing General Motors problems in Germany.

  “Not that I know of,” Knudsen said.

  “Well, you will not be permitted to take any money out of Germany.”

  Knudsen squirmed. GM had invested over $40 million in Opel operations. At any moment, Hitler could seize it all—and with what recourse?

  After a long silence, Goering got to the point. General Motors was building an aircraft engine called Allison out of its factory in Indianapolis. What did Knudsen know about it?

  Knudsen tried to hide his surprise. The engine was being developed for the US Army Air Corps—and it was top-secret. Twelve cylinders, liquid-cooled—the US government had high expectations for the Allison engine.

  “I don’t know much about it,” Knudsen lied.

  Goering smiled. “I do.” His deputy Udet rolled out blueprints of an aircraft engine that bore a stunning resemblance to the Allison. Goering asked Knudsen if GM’s Opel was capable of building such an engine in Germany.

  Knudsen studied the blueprints. “Yes,” he responded, “that can be made.”

  “We will get 1,250 horsepower out of it,” said Udet.

  Goering’s smile widened. “We will build the plant,” he said. “We will furnish all the money you need, in American dollars, to buy the machines and tools to make it. We will pay you a fee, besides.”

  Knudsen said, “That is a matter I would have to take up with the Board of Directors of General Motors.”

  Goering proceeded to brag about his Luftwaffe, displaying his renowned hubris. These great fleets of mechanical birds were the most powerful weapon in the history of the world, Goering said. Soon the German airplane factories would produce 35,000 planes per year. Germany, Goering said, was better equipped for war than any other nation. Ever.

  The conference ended with a tour of Karin Hall. How, Knudsen wondered, with a published government salary of $12,000 a year, was Goering able to afford such luxury? And what of this air force? Was it all true?

  Knudsen spent the rest of his time in Germany in distress. Before he left, Hitler and the leaders of Britain, France, and Italy signed the historic Munich Pact, allowing the Nazis to essentially take over a critical chunk of Czechoslovakia without a shot fired—anything to avoid war. It was a brilliant political victory for Hitler, and proof that amazing things could be accomplished through schoolyard bullying.

  That Goering knows airplanes, Knudsen said to himself upon his departure from Nazi Germany. So does Udet. I wonder how they got copies of the Allison engine. Goering knows something about machinery, too. . .knows more about people—the German people, anyway, the way he has those storm troopers clicking their heels. No, he doesn’t want war—what the Hell! Ten years ago, he was nothing but a fellow trying to sell airplanes in Denmark.

  In the fall of 1937, the head of Ford Motor Company’s German division, Dr. Heinrich Albert, arrived for a meeting in Dearborn on a politically dangerous mission. Dr. Albert had traveled a long way to convince Edsel Ford to agree to build trucks for the N
azi government in Germany. Charlie Sorensen welcomed the executive into the Administration Building.

  Dr. Albert was a sixty-four-year-old German auto man with an acne-scarred face and a strange history. He had served as a German spy in the United States during World War I and had gotten himself tangled in a scandal when he accidentally left a briefcase full of top-secret German documents on a train in New York City. He later admitted that the loss of those documents was “as big a loss as the loss of the battle of the Marne.” A domineering man of quick intelligence, he had moved on to a position of power in Germany, serving as minister of the national economy and then chairman of Ford-Werke AG in Cologne, where for many years he worked to protect the interests of the Ford family in Europe. The Cologne plant was the second-largest Ford manufacturing site outside of the United States, behind Dagenham in England. Along with Dr. Albert that day in Dearborn came an engineer named V. Y. Tallberg, the only American working at Ford’s German factory.

  According to a source that came forward later, the room at the hotel where Dr. Albert stayed when he arrived in the States was “rigged with microphones” by the FBI, and “Dr. Albert was shadowed from the moment he stepped on American soil to the moment he left” by J. Edgar Hoover’s Washington-based Federal Bureau of Investigation.

  In Sorensen’s office (either Edsel was out of town or he thought it politically astute not to attend this meeting), Dr. Albert stated his case. He had already detailed his plan through correspondence, so the agenda moved quickly. The German government had designed a truck and had asked Ford-Werke AG to build a factory in the middle of the country, far from any foreign borders, to mass-produce it. Dr. Albert was adamant: the company had to sign this contract with Hitler’s government.

  “According to the official conception of the duties and obligations of the private industry,” Dr. Albert said, “all German manufacturers are bound to execute such orders.”

  Sorensen turned to the American, Tallberg, who was chief engineer of the Ford plant in Cologne. “How do you feel about that?” he asked.

  “Mr. Sorensen, I think that this thing is entirely out of our class,” said Tallberg. “As far as the engine is concerned, we can’t machine it. We haven’t got the machinery for it. It would mean millions of dollars of investment to get the necessary machinery before doing this job.”

  Sorensen turned to Dr. Albert. “See what he said? He ought to know what he’s talking about. You don’t know what you’re talking about.”

  Dr. Albert reiterated his case: The Ford family had invested heavily in their works in Germany—far and away the most thriving economy in Europe. And if Hitler wanted Ford to build trucks, Ford would build trucks—or else. The government would pay for the new machinery necessary to do the job. The contract would result in a great increase in profits. The consequences of angering the Nazi high command would be severe. As Tallberg later remembered: “[Dr. Albert] said that if we wanted to stay in business in Germany, we must do that for the German government.”

  “There’s going to be a war over there,” Tallberg said.

  “You don’t know what you’re talking about,” Sorensen retorted.

  “Mr. Sorensen, you’re misinformed. They’ve been stockpiling for years.”

  Dr. Albert left Dearborn without a commitment, but he continued to pressure Edsel and Sorensen. He assured them that the trucks would not be used for military purposes. “Government orders do not concern war material,” he cabled from Germany a month later. “They will not be used for military purposes more than any other private car or truck requisitioned by the government in case of war. . . . Refusal would greatly antagonize.”

  Could Dr. Albert be trusted? Edsel viewed him as a longtime confidant, a man who had worked doggedly in his family’s interest for years. Dr. Albert had always served as the one man above all others in Germany who could be relied upon to give advice when the stakes were high. But now? The rules had changed, though how was not yet apparent. Edsel did not have the benefit of retrospection, of understanding what such a deal could mean. If the trucks would not be used for war purposes, then what would be the downside? Hitler was clearly a dangerous man. But who knew, in 1938, that he would prove to be the most demonic figure of the twentieth century? No one at the time.

  Dr. Albert was not in fact a member of the Nazi Party, but he and his Cologne cronies were desperate to please Hitler—just like everyone else in Germany. Dr. Albert’s letters and cables poured into Dearborn throughout 1938, each more urgent than the last.

  Edsel and Sorensen had a decision to make in which there was no right choice. They could either agree to a deal with Hitler’s regime or risk losing their entire investment in Nazi Germany—in the middle of the Great Depression, when every penny and reichsmark counted.

  Up to that point in 1938, Hitler had been good to the Fords. When he took power during the Depression, he chose Henry Ford as his inspiration.

  “I am a great admirer of his,” Hitler said of Ford. “I shall do my best to put his theories into practice in Germany.”

  In 1933, the year Hitler took power, he launched Volksmotorisierung—his rough translation of “Fordism,” and a centerpiece of his economic policy. What Fordism had done for America in the earlier part of the century, it could do for Germany in 1933.

  “The Government of the Reich will give all support to the development of the motor car industry,” Hitler declared at the 1933 Berlin Auto Show. He promised a public works program that would build an “enormous network of automobile roads” and announced Germany’s answer to the Model T: the Volkswagen (“people’s car”). “If we can only succeed in winning the masses to adopt this means of transportation, the economic as well as the social profit will be undeniable.”

  German auto production sextupled in the first four years under Hitler (though he himself never learned to drive) and did in fact succeed in lifting the German economy out of the Depression. Massive unemployment gave way to a labor shortage. At Ford’s fifty-two-acre factory on the Henry Fordstrasse in Cologne, the stacks spewed smoke over the Rhine River, to Dr. Albert’s great pleasure. Since Ford’s German company was founded in 1925 (the Cologne plant was completed in 1931), never had it seen such success. Sales of cars, trucks, and buses shot up 600 percent between 1932 and 1938. Since Hitler forbade any profits from leaving the country, all of those reichsmarks were reinvested in the factory. Ford’s Cologne plant became one of the most technologically advanced in all of Europe—an industrial jewel, right under Hitler’s nose.

  That was when the Gestapo swarmed in. That was when the Nazi government began to bend Ford’s German division to its will.

  A number of American companies had large investments in Nazi Germany at the time, most notably General Motors with its Opel division, Standard Oil, F. W. Woolworth, and International Telephone & Telegraph (ITT). The Nazis took particular interest in the car factories, however, as they were making products that could be used for military purposes. At the time, Ford was the third-largest car company operating in Germany, behind Opel and Daimler-Benz. Ford’s investment in Germany neared $9 million in Depression-era dollars (the equivalent of over $147 million today), in a time when the company’s global operations were losing money.

  In the months after Dr. Albert visited the United States, he began complaining to Edsel about political problems. Ford had not signed the contract to build trucks for the Nazi government, and the company had failed to meet other mandates in Germany. The consequences were immediately apparent. “No one who is in the public service or on the staff of a Party Department or any semi-official department” would be seen in a Ford, Dr. Albert wrote Dearborn. “No officer in the Army, Navy, or Air Force, no member of any undertaking financed by the Government or any of the industries with which Government orders are placed would dare to buy a Ford car.”

  To gain favor with the Nazi regime, Dr. Albert made it his mission to turn Ford of Germany into a truly German company. He had the name changed from Ford AG to Ford-Werke AG,
to make it sound more Teutonic. He negotiated to increase the amount of stock held inside Germany, decreasing the American company’s ownership to 55.75 percent. The remaining Americans and Britons, including Edsel Ford, were removed from Ford-Werke’s board of directors.

  Then Dr. Albert negotiated a complex bartering deal for the Nazi government, which eventually caught the eye of US Treasury Department investigators. He used the American Ford company in Dearborn to import critical raw materials, such as rubber and pig iron, in exchange for exporting cars and parts. According to declassified Treasury Department documents, “the Reich was able to extort” for its own use some 30 percent of the rubber and 20 percent of the pig iron from Ford-Werke. The Nazi government could then use that material as it wished during the key years of Hitler’s “Four Year Plan”—an economic campaign that, in retrospect, was a thinly veiled and highly coordinated plan to prepare for war.

  Nazi officials began paying regular visits to Ford’s Cologne plant. “We had not only one visit,” said the American chief engineer, Tallberg. “But there was constantly Government personnel that more or less watched over us.” Nazi salutes and swastika signage became de rigueur at the factory. Ford-Werke gave Hitler a gift of 35,000 reichsmarks on his fiftieth birthday. At the same time, Dr. Albert grew secretive about the operations in Germany.

  After an extended visit home to the United States, Tallberg returned to Cologne to find that a new building had appeared beside the Ford factory. As an American, he was not allowed inside.

  “What kind of building is that over there that’s been put up since I left here?” Tallberg asked his German assistant.

  “I’m sorry,” came the answer, “I can’t tell you that.”

  “My God,” Tallberg said, “I’ve been in this organization for twelve years and now that building is going up and you can’t tell me what it is. Is it a new factory?”