by Oliver Stone
During the final sessions, representatives of the House of Morgan did their best to fend off charges that their loans to the Allies had influenced U.S. participation in the war. The New York Times headlined its February 5 article “Morgan Leaves Happy, ‘Cleared’ by Friend Nye.” The Times breathed a sigh of relief. It titled its February 9 editorial “An Inquiry Ends Well.” The committee’s efforts to show that Morgan had made “enormous profits out of the sale of munitions” and had “used its powerful influence” to secure American entry were completely discredited, the Times noted, and “the inquiry ended on a sort of jovial note of congratulation between MR. MORGAN and his ‘friend NYE.’ ” The editorial concluded, “Such an outcome is of great public benefit. . . . It is easy to imagine the disturbing effect if a contrary result had been reached. People would despairingly have concluded that there was something rotten in the whole banking business.”106
Nye immediately took issue with the Times’ portrayal. “There is not a single member of the Senate committee of inquiry that believes that the inquiry has afforded a clean bill of health for the banking house of Morgan.” Although Morgan couldn’t be blamed for inducing U.S. entry into the war to protect its investments, Nye noted that it was “altogether fair to say that these bankers were in the heart and center of a system that made our going to war inevitable.” Once Wilson allowed Morgan to become banker to the Allies, Nye added, “the road to war was paved and greased for us.”107
Dramatic evidence that the committee hearings were having the desired impact appeared in a Gallup Poll released on March 7. When asked, “Should the manufacture and sale of war munitions for private profit be prohibited?” 82 percent of Americans responded yes and only 18 percent no. The strongest support came from Nevada, where 99 percent favored abolishing profits. The weakest came from Delaware, the home of Du Pont, where only 63 percent answered affirmatively. George Gallup reported that since the company had begun polling the previous October, only old-age pensions had received more support in any of its surveys. Gallup quoted a grocer in western Pennsylvania who said, “The profit system in munitions has been leading us to war for generations.”108 Even Nye had considered such ideas farfetched when he began his hearings seventeen months earlier. “I thought,” he admitted, “that nationalization of munitions manufacturers was about the wildest idea we had under consideration.”109 The Washington Post, among others, congratulated Nye and his committee for educating the public on “the abuses which have developed in the munitions trade and . . . the relation between war and the accessibility of arms.”110 The next day, Eleanor Roosevelt, speaking in Grand Rapids, Michigan, called for taking all profits out of the munitions industry. The New York Times, which had so recently come to the defense of Morgan and the munitions manufacturers, did not even report that the Gallup Poll had been released.
In April, the Nye Committee issued its long-awaited third report. It concluded, “While the evidence before this committee does not show that wars have been started solely because of the activities of munitions makers and their agents, it is also true that wars rarely have one single cause, and the committee finds it to be against the peace of the world for selfishly interested organizations to be left free to goad and frighten nations into military activity.”111 Four of the seven members of the committee—Nye, Clark, Pope, and Bone—called for outright government ownership of the munitions industry. The minority—George, Barbour, and Vandenberg—called for “rigid and conclusive munitions control.”112 But the bill to remove the profits from war had been assigned to a subcommittee chaired by Connally, one of Nye’s biggest critics. There it languished, and when it was finally introduced in watered-down form, it failed to get the requisite votes. Similar bills introduced by Nye and others over the next five years also failed to gain traction.
Among the issues raised by the hearings that continue to rankle investigators is U.S. businessmen’s contribution to Germany’s economic and military revitalization long after they had become aware of the repugnant nature of Hitler’s regime. Since 1933, Hitler had been imprisoning and murdering Communists, Social Democrats, and labor leaders. His vicious anti-Semitism was apparent, although the campaign to exterminate the Jews was still several years away. Close ties between U.S. businessmen and bankers and their German counterparts had been forged in the years prior to Hitler’s rise to power. U.S. loans, largely organized by the Morgan and Chase banking interests, propped up the faltering German economy of the 1920s. IBM, headed by Thomas Watson, purchased a controlling interest in the German firm Dehomag. Sloan’s General Motors purchased German car manufacturer Adam Opel between 1929 and 1931. Ford increased investment in its German subsidiary, Ford Motor Company Aktiengesellschaft, declaring that this move would build a bridge between countries.113 Watson shared that vision. “World Peace through World Trade!” he was fond of proclaiming.114
World peace, however noble, was no more the capitalists’ primary concern than was achieving wealth and power through a competitive marketplace. Through a dizzying array of formal and informal business agreements, a network of multinational corporations based in the United States, England, and Germany colluded to capture markets and control prices. A trade agreement reached in Düsseldorf between the Federation of British Industries and Reichsgruppe Industrie was announced in March 1939, proclaiming, “It is agreed that it is essential to replace destructive competition, wherever it may be found, by constructive cooperation designed to foster world trade to the mutual benefit of Great Britain, Germany, and all other countries.”115 It was only after the war that most observers became aware how extensive such arrangements had been. As Theodore Kreps of Stanford University observed in May 1945, “The word ‘cartel’ has recently been catapulted from the obscure technical jargon of economic treatises to the front pages of daily newspapers.”116 Typical of these arrangements, Edsel Ford sat on the board of the German chemical firm IG Farben’s U.S. subsidiary, General Aniline and Film, while Farben General Manager Carl Bosch sat on the board of Ford’s European subsidiary. Similar arrangements tied together Farben, Du Pont, GM, Standard Oil, and Chase Bank.
After meeting Hitler in 1937, Watson dutifully and credulously relayed the führer’s message to a gathering of the International Chamber of Commerce in Berlin: “There will be no war. No country wants war, no country can afford it.”117 A few days later, on his seventy-fifth birthday, he accepted the Grand Cross of the German Eagle, which Hitler bestowed on him for the welcome assistance that Dehomag’s punch-card machines were providing the German government in tabulating its 1930 census and, as a result, identifying Jews. Dehomag’s counting machines represented an unprecedented breakthrough in the organization of data that later, when the company was under Nazi control, helped make the trains to Auschwitz run on time.
Henry Ford also attested to Hitler’s pacific intentions. On August 28, 1939, just four days prior to the invasion of Poland, Ford assured the Boston Globe that Hitler was just bluffing. The Germans “don’t dare have a war and they know it,” he said. A week later, after the German invasion had begun, he had the temerity to remark to a friend, “There hasn’t been a shot fired. The whole thing has just been made up by Jew bankers.”118
Ford and Watson should both have known better. In 1937, Ford’s German subsidiary was manufacturing heavy trucks and troop carriers for the German Wehrmacht. In July 1939, the subsidiary changed its name to Ford-Werke. Farben, which was later convicted of crimes against humanity for operating the Buna rubber plant at Auschwitz and supplying the notorious Zyklon-B tablets used to exterminate Jews, owned 15 percent of the company. When the war started in 1939, Ford and GM still controlled their German subsidiaries, which dominated the German auto industry. Despite their subsequent disclaimers, they refused to divest themselves of their German holdings and even complied with German government orders to retool for war production, while resisting similar demands from the U.S. government to retool their factories at home. Sloan justified such behavior in March 1939, following t
he Nazi occupation of Czechoslovakia, based on the fact that the German operations were “highly profitable.” Germany’s internal politics, he insisted, “should not be considered the business of the management of General Motors.” Opel converted the 432-acre complex in Russelsheim to production of Luftwaffe warplanes, providing fully 50 percent of the propulsion systems for Germany’s JU-88 medium-range bombers while also helping to develop the world’s first jet fighter, the ME-262, which was capable of speeds a hundred miles per hour faster than the United States’ P-510 Mustangs. In appreciation of their efforts, the Nazi government decorated Henry Ford with the Grand Cross of the German Eagle in 1938, four months after Germany had annexed Austria, and similarly honored James D. Mooney, GM’s chief overseas executive, one month later. Ford’s parent company lost effective control of the company during the war years, when Ford-Werke supplied the regime with arms, employing prisoners from nearby Buchenwald concentration camp as slave labor. When a former prisoner Elsa Iwanowa brought suit against the company in 1998, the Ford Motor Company hired a small army of researchers and lawyers to whitewash its unscrupulous behavior and promote its preferred image as part of the “arsenal of democracy.” Just after the war, however, a report by U.S. Army investigator Henry Schneider called Ford-Werke an “arsenal of Nazism.”119 And, as Bradford Snell discovered during his congressional investigation into the monopolistic practices of the auto industry, through “their multinational dominance of motor vehicle production, GM and Ford became principal suppliers for the forces of fascism as well as for the forces of democracy.”120
Henry Ford did more than supply trucks for the German military; he also helped the Nazis hone their hateful ideology. In 1921, he published a collection of anti-Semitic articles titled The International Jew, which was widely read by future Nazi leaders. He also sponsored the printing of a half-million copies of the Protocols of the Elders of Zion. The fact that the Protocols had been widely exposed as a forgery didn’t deter Ford. Baldur von Schirach, former head of the Hitler Youth organization and wartime governor of Nazi-occupied Vienna, testified at Nuremberg:
The decisive anti-Semitic book which I read at that time was Henry Ford’s book, The International Jew. I read it and became anti-Semitic. This book made . . . a great impression on my friends and myself, because we saw in Henry Ford the representative of success, also the representative of a progressive social policy. In the poverty-stricken and wretched Germany of the time, youth looked toward America, and . . . it was Henry Ford who, to us, represented America. . . . If he said Jews were to blame, naturally we believed him.121
Hitler hung a portrait of Ford in his Munich office and confided to a Chicago Tribune reporter in 1923, “I wish I could send some of my shock troops to Chicago and other big American cities to help in the elections. We look on Heinrich Ford as the leader of the growing Fascist Party in America.” In 1931, he told readers of the Detroit News, “I regard Henry Ford as my inspiration.”122
The Germans also drew inspiration from the ill-fated U.S. flirtation with eugenics and “racial hygiene” in the 1920s and 1930s. California paved the way in forced sterilizations, with more than a third of the sixty thousand performed, but other states were not far behind.123 Rockefeller and Carnegie money helped fund the research that gave these efforts a patina of respectability. These developments did not go unnoticed in Germany. In Mein Kampf, Hitler lauded American leadership in the field of eugenics. He later informed his Nazi colleagues, “I have studied with great interest the laws of several American states concerning prevention of reproduction by people whose progeny would, in all probability, be of no value or be injurious to the racial stock.”124
Among those states was Virginia, whose decision to sterilize a “feebleminded” young woman prompted the famous 1927 Supreme Court ruling in the case of Buck v. Bell. In writing the majority opinion, eighty-six-year-old Justice Oliver Wendell Holmes, a Civil War veteran, argued that Buck’s sacrifice of procreative freedom was comparable to soldiers sacrificing their lives in wartime: “We have seen more than once that the public welfare may call upon the best citizens for their lives. It would be strange if it could not call upon those who already sap the strength of the State for these lesser sacrifices . . . in order to prevent our being swamped with incompetence.” Holmes concluded, “It is better for the entire world, if instead of waiting to execute degenerate offspring for crime, or to let them starve for their imbecility, society can prevent those who are manifestly unfit from continuing their kind. . . . Three generations of imbeciles are enough.”125 Although Virginia was second only to California in forced sterilizations, some felt it was not aggressive enough. In pushing the state legislature to broaden its sterilization law, Dr. Joseph DeJarnette complained in 1934, “The Germans are beating us at our own game.”126
A German edition of Henry Ford’s The International Jew, a collection of anti-Semitic articles that was widely read by future Nazi leaders.
Although most U.S. companies doing business in Hitler’s Germany removed American officials in 1939 or 1940, control often remained in the hands of the same German businessmen who had run the companies as subsidiaries of U.S. firms. Profits, meanwhile, piled up in blocked bank accounts.
Prominent among the American capitalists with ties to Nazi counterparts was Prescott Bush, the father of one president and grandfather of another. Researchers have been trying for years to determine the precise nature of Bush’s ties to Fritz Thyssen, the wealthy German industrialist who played a crucial role in bankrolling Hitler, as revealed in his 1941 memoirs I Paid Hitler. Thyssen ultimately repudiated the Nazi dictator and was himself imprisoned.
While incarcerated, Thyssen’s vast wealth was protected overseas, much of it by the investment firm of Brown Brothers Harriman, through the holding company Union Banking Corporation. The account was managed by senior partner Prescott Bush. In 1942, the U.S. government seized Union Banking Corporation under the Trading with the Enemy Act for its association with the Thyssen-owned Bank voor Handel en Scheepvaart NV of Rotterdam. The government also seized four other Thyssen-linked companies whose accounts Bush handled: the Holland-American Trading Company, the Seamless Steel Equipment Corporation, the Silesian-American Corporation, and the Hamburg-Amerika Line shipping company.127
Following the war, most of this Nazi-tainted money was released. Union Banking Corporation shares were returned to Bush; Dehomag’s frozen profits were taken by IBM; and Ford and GM both reabsorbed their German subsidiaries—even receiving reparations for the European factories that had been destroyed by Allied bombing, up to $33 million in the case of GM.128
These businessmen were not alone. Many American companies continued doing business with Nazi Germany right up to the Japanese attack on Pearl Harbor. As Ford Motor Company was happy to point out in its 2001 investigation into the activities of Ford-Werke, at the start of the war, 250 American firms owned more than $450 million worth of German assets, with 58.5 percent being owned by the top ten. Among the companies were familiar names like Standard Oil, Woolworth, IT&T, Singer, International Harvester, Eastman Kodak, Gillette, Coca-Cola, Kraft, Westinghouse, and United Fruit. Ford ranked sixteenth, holding only 1.9 percent of the total U.S. investment. Standard Oil and GM topped the list, holding 14 and 12 percent, respectively.129
Many of these companies were represented by the corporate powerhouse law firm Sullivan and Cromwell, headed by future Secretary of State John Foster Dulles. His brother Allen Dulles, future head of the CIA, was a partner. Among their clients was the Bank for International Settlements (BIS), which had been set up in Switzerland in 1930 to channel war reparations between the United States and Germany.
After war was declared, the bank continued to offer financial services to the Third Reich. The majority of gold looted during the Nazi conquests of Europe ended up in BIS vaults, and the transfer of capital allowed the Nazis access to money that would have been normally trapped in blocked accounts under the Trading with the Enemy Act. Several Nazis and suppor
ters were involved at high levels, including Hjalmar Schacht and Walther Funk, who both ended up in the dock at the Nuremberg trials, though Schacht was acquitted. American lawyer and chairman of the bank, Thomas McKittrick, facilitated the process, claiming “neutrality” but effectively aiding the Nazis. The BIS’s operations were so vile that Secretary of the Treasury Henry Morgenthau charged that twelve of the bank’s fourteen directors were “Nazi or Nazi-controlled.”130
Chase, Morgan, Union Bank, and the Bank for International Settlements all managed to obfuscate their collaboration with the Nazis. Chase continued to work with Vichy France, a client state and intermediary of the Third Reich. Its deposits doubled during the war years. In 1998, Holocaust survivors sued the bank, claiming it held blocked accounts from that era.
While American capitalists piled up the earnings from their overseas investments and did everything possible to ingratiate themselves to the German government,131 Gerald Nye and his crack team of investigators succeeded brilliantly in revealing sordid truths about the influence and machinations of arms manufacturers and moneylenders, exposing the ugly reality hidden beneath the lofty refrains to which the GIs had marched off to war. But the hearings had two other effects that, with the wisdom of hindsight, we can justly regret. First, they tended to oversimplify the causes of the war. And, second, they reinforced the country’s isolationist tendencies at precisely the worst time imaginable—when U.S. influence might have helped avert disaster. The hearings justified the widespread belief that the United States should steer clear of entangling alliances and involvement in world affairs. For perhaps the only time in U.S. history, powerful antiwar sentiment was actually misplaced in light of the true threat to humanity posed by fascistic and other dangerous forces. Cordell Hull later wrote that the Nye Committee hearings had had the “disastrous effects” of catalyzing “an isolationist sentiment that was to tie the hands of the Administration just at the time when our hands should have been free to place the weight of our influence in the scales where it would count.”132 In January 1935, Christian Century observed, “Ninety-nine Americans out of a hundred would today regard as an imbecile anyone who might suggest that, in the event of another European war, the United States should again participate in it.”133
