More to the point here, however, is the Riga group’s impact on U.S.-German relations, particularly after Hitler came to power. Perhaps the most influential proponent of the Riga Axioms inside the government during the Roosevelt years was FDR’s first ambassador to Moscow, William Bullitt. He had arrived in the USSR full of enthusiasm for normalized U.S.-Soviet relations, but he left soon after, convinced “that only Nazi Germany could stay the advance of Soviet Bolshevism into Europe.”32 As will be seen in a later chapter, many of the career State Department officials who were to specialize in U.S.-German relations, war crimes policy, and so-called Jewish issues such as rescue of refugees during World War II shared Bullitt’s cynical enthusiasm for Hitler’s talents.
Meanwhile there were roughly parallel developments among the German bankers and law firms that specialized in international trade and commerce. For example, at the Berlin law firm of Albert & Westrick, Heinrich Albert was one of the most important German boosters of U.S. loans to Germany during the 1920s. He advanced to director of Ford Motor’s German subsidiary and other U.S. companies in Germany during the Hitler period, and after 1945 he became a custodian of U.S. and British corporate properties in Berlin. Albert had a close relationship with John Foster Dulles, working with him in a variety of projects for at least thirty years. In the immediate postwar period, Albert also played a pivotal role in the establishment of West Germany’s postwar ruling party, the Christian Democratic Union. Albert’s law partner Gerhardt Westrick served as chairman or board member of a half-dozen German subsidiaries of ITT and Kodak, in addition to representing Texaco interests in Central Europe and German industrial companies in the U.S.33 Gerhardt Westrick’s brother Ludger became a prominent banker and a director of several of the most powerful nonferrous metals companies in the world.34
Another example, Karl Lindemann, was director of the Dresdner Bank and the HAPAG shipping combine and simultaneously chairman of HAPAG’s ostensible competitor, the North German Lloyd steamship company (Norddeutscher Lloyd) of Hamburg. Lindemann also directed German-American Petroleum AG, a wholly owned subsidiary of Standard Oil of New Jersey and the principal source of the fuel for Lindemann’s shipping companies. During the 1930s, Lindemann emerged as a leading supporter of the Nazi SS35 in German industrial circles.
The industrial and financial sectors of the German economy during the 1920s and 1930s were tightly interlocked and controlled by a handful of powerful interests. Antimonopoly and antitrust laws such as those used in the United States to encourage competition were unknown. German economic tradition had long encouraged industrial cartels, trusts, and similar organizations designed to dictate prices, exclude competitors from established markets, and coordinate bids for political power.36 This resulted in a closely interwoven network of fewer than 300 men who made up the senior managers and the boards of directors of virtually every large-scale enterprise in the country. Within this group, power was further concentrated in the very largest banks, insurance companies, and manufacturing concerns.37
The general contours of this elite can be illustrated through the interlocking directorships and financial ties among Germany’s two principal banks and their associated industrial concerns, which served as a central meeting ground and policy-coordination point for much of German industry. Deutsche Bank and Dresdner Bank exercised an “influence and control over [German] industry to a degree unparallelled in modern American banking,” as a later U.S. government study put it.38 They exerted power through interlocking directorships, control of voting rights to large blocks of company stock, authority over the financing and credits necessary for day-to-day business, and the banks’ service as a go-between among the German state and private enterprises.
The U.S. government calculated shortly after World War II that the Deutsche Bank’s board of directors and senior management sat on the boards of some 525 other major German companies, and that this pattern had been true since the 1920s.39 Deutsche Bank had no fewer than three joint directors with the Allianz Insurance group (the largest insurance company in the world)40; six joint directors with Daimler Benz; four with Daimler’s ostensible competitor, BMW; five with the Mannesmann steel combine; four with the electrical giant AEG; three with coal and steel specialists Hoesch AG; six with one of Germany’s largest armament manufacturers, DEMAG41; and no fewer than eight with the Siemens group of companies, which has dominated German electrical engineering and communications equipment markets for generations.42 Indeed, Deutsche Bank, Mannesmann, and Siemens can fairly be said to have grown up as a single economic unit.
Germany’s second largest bank, the Dresdner Bank, was also allied with key businesses during the 1920s and 1930s, including the Krupp empire and steel magnate Friedrich Flick’s. In later years, Dresdner bankrolled the SS concentration camp system and the government-sponsored Hermann Goring Werke, which served as a vast holding company for dozens of mining, steel, and armaments companies seized by the Nazis. The Krupps had used the Dresdner as a virtual in-house bank since the end of the nineteenth century, in much the same manner that the Siemens interests had dominated Deutsche Bank.43
These two major German financial institutions had long competed for business and political influence. At the same time, they often cooperated in dealing with business trusts that were simply too big to fit under any one bank’s umbrella, such as the chemical combine IG Farben and Vereinigte Stahlwerke, or United Steelworks.44
Obviously, there were other prominent German and American financial leaders in addition to those mentioned here, but this brief list is characteristic. They were, first of all, a relatively small group, even within the closed world of U.S. and German law and banking. They specialized in foreign affairs and have had a substantial influence on U.S.-German relations and on both countries’ conduct of foreign affairs, emerging at the core of a foreign policy establishment active in groups such as the Council on Foreign Relations. They built strong relationships over a period of ten, twenty and even thirty years. They often shared similar convictions on issues such as class, business, and the importance of U.S.-German economic ties. In many cases, they shared business partnerships and investments as well.
This does not mean that they had a single point of view concerning Hitler, either before or after the Nazis’ climb to power in 1930–33. Contrary to the popular myths concerning the Dulles brothers, for example, Allen Dulles was a relatively early advocate of U.S. backing for the British in their showdown with Germany, while John Foster Dulles remained considerably more tolerant of Nazism. Others were prominent Jews who were destined to be dispossessed by the Nazis. Banker Eric Warburg was forced to sell off most of his German properties in the early 1930s, but he returned for the reconstruction after 1945.45 Some members of the elite did become creatures of Hitler, however, such as Dresdner Bank’s Karl Lindemann, who was characterized as a “rabid Nazi” by one of the bank’s senior executives, Hans Schippel.46
The cement that bound these groups together was trade, not politics—or at least not politics in the narrow sense of the term. U.S. business magazines became regular critics of Hitler’s politics during the 1930s, for example. But a review of the internal records of U.S. companies made public during wartime “trading with the enemy” scandals shows that, despite pious comments to the press, a dozen major corporations proved to be enthusiastic partners in trade and technology cartels exploited by the Nazis.47
Even Allen Dulles, who was among the more vocal on Wall Street in warning that German military adventures would come to no good, found himself caught up in this contradiction. Captured German records show that the United Fruit Company, where Dulles maintained a long and active directorship, became an international pacesetter in devising ways to expand trade with Germany despite obstacles from the U.S. and U.K. governments.48 Similarly, while publicly advocating U.S. economic backing for the British on the eve of the war, Dulles was privately representing German corporate clients in their efforts to buy out the American Potash and Chemical Corporation, an i
mportant potential source of strategic chemicals and foreign currency.*49
Despite their differences, these U.S.-German “reference groups” or “linkage groups,” as they became known to sociologists,50 shared common convictions that were to them far more fundamental: the central importance of maintaining the viability of capitalism as a national and world economic system, and the key role of U.S. and German productive capacity and markets within that effort. Measured against these more basic values, the Nazis and their whole brutal apparatus were seen by much of the elite as transitory, at least during the 1920s and 1930s. From the standpoint of corporate ideology, this elite saw itself as a new generation of the so-called managerial revolution; they considered themselves to be “forward thinking” and unencumbered by the stuffy formalism of earlier times.
The Nazis’ advent to power presented both opportunities and risks for this informal network. Hitler delivered on his promises of large-scale government backing for rearmament, roadbuilding, and industrial-development projects like IG Farben’s massive synthetic gasoline refineries. Hitler also guaranteed “stability” of sorts for business in the face of the gathering resistance of German Communists and labor unions. On the other hand, the big banks and cartels (including IG Farben) had been the target of Nazi propaganda and agitation, as Hitler advocated a major role for the National Socialist state in coordinating the German economy. Much of the industrial and financial elite supported Hitler’s economic strategy—but only up to a point. They welcomed public-works projects, particularly during the lean years of the Great Depression, but they saw Hitler’s more utopian vision of a German “socialism” under Nazi leadership as a challenge to their own interests.
The role of the German business community during the rise of Hitler has been argued at length elsewhere and need not be detailed here.51 More important to this discussion are the activities of the U.S. and German business elites during the Hitler years and particularly during the Holocaust.
As will be seen, the Nazis often persecuted Jews during the 1930s through economic measures. They relied heavily on German banks and businesses for the success of anti-Semitic, anti-Communist, and antiunion programs crucial to the stabilization of the Hitler state. For the most part, the Nazis were not disappointed. Gestapo terror was always a key aspect of Nazi activities, of course, and police measures took on a terrible importance as the extermination phase of the Holocaust grew near, but the Gestapo could not be everywhere. Particularly during the early years of Hitler’s rule, Germany’s private sector served as the main instrument of persecution through economic boycotts, dismissal of Jews from the professions, Aryanization of Jewish property, and discrimination against Jews in wages, prices, and access to goods. Later, German industry often led the way in exploitation of concentration camp labor and systematic rape of occupied countries. By the end of the war, virtually all of America’s most important German trading partners from the 1920s and 1930s were to have blood under their fingernails.
* U.S. corporate investment in Germany during the 1920s and 1930s was concentrated in the hands of fewer than two dozen major companies, reports economic historian Mira Wilkins. According to her data, U.S. industrial leaders in Germany included oil and chemical companies such as du Pont, Standard Oil of New Jersey, and Texaco; food and consumer products companies such as Corn Products Refining Co. (today CPC International) and United Fruit; and mining companies such as American Metal (today AMAX), Anaconda, International Nickel (based in Canada, but American owned) and the large Guggenheim mining interests. The most active category of U.S. industrial investors appears to have been automotive and light industrial manufacturing companies, including Ford, GE, GM, Goodrich, IBM, International Harvester, ITT, National Cash Register (joint venture with Krupp), Singer, and several smaller companies.
* Sullivan & Cromwell maintained strong ties to German corporate interests at the outbreak of World War II, notwithstanding Allen Dulles’s public comments. As far back as the 1920s, John Foster Dulles and Sullivan & Cromwell had represented Metallgesellschaft AG of Frankfurt, the largest nonferrous metals company in the world. Dulles’s task at that time was to reestablish the Frankfurt company’s control of the American Metal Company, a U.S. subsidiary of Metallgesellschaft that had been seized as enemy property during the war. He succeeded.
Almost two decades later, in 1938, IG Farben director Hermann Schmitz, who had played a major role in the Metallgesellschaft affair, hired Sullivan & Cromwell to deal with the World War II version of U.S. Alien property regulations. According to U.S. Justice Department and Securities and Exchange Commission (SEC) investigators, IG Farben’s photographic film subsidiary GAF was at that time engaged in complex financial maneuvers designed to conceal its relationship to the IG. GAF wished to avoid the Treasury Department’s strict regulations on control of foreign funds, and to head off the possibility that it, too, might be seized as enemy property if war broke out.
According to Chester T. Lane, the general counsel of the SEC in the 1930s, “The German government, acting through its representatives here, its financial counselors and attorneys, who, as I remember, were Sullivan & Cromwell, filed a registration statement with us looking towards refunding of many of its securities held in the United States,” Lane recalled. “It was obviously designed as a public relations gesture.” Lane and the SEC responded with a demand that the Nazi state “give us a complete blueprint of [its] economy, including all its indirect assessments through party dues, its indirect taxes, and its whole financial structure.” Frustrated, the Germans eventually abandoned the effort.
5
The Profits of Persecution
Hitler became German chancellor on January 30, 1933, and in less than three months his government promulgated decrees restricting Jews from work as doctors, dentists, lawyers, teachers, and civil servants. In October a decree barred non-Aryans (or persons married to non-Aryans) from work as editors. Nazi officials denounced “Jewish culture” in literature and the cinema; storm troopers burned books.1
The Nazi party and the SS, not the industrial and financial elite, initiated the Holocaust. But they succeeded in their program of genocide only by enlisting a broad collection of collaborators. They gave financial incentives to the German business community to participate in, first, persecution and dispossession of Jews, later in outright murder. The business community’s enthusiastic response to these initiatives at times actually outstripped the Nazi state’s own anti-Semitic persecution, particularly during the first half of Hitler’s rule.
The Nazis’ genocide of Jews was not driven solely by economic factors. Noted Holocaust historian Raul Hilberg and others have presented convincing evidence that the Nazi party and the SS pursued the destruction of Jewry in the final stages of the Holocaust even in circumstances when it was economically or militarily disadvantageous to the Germans to do so.2 But Hitler’s government did make it possible for businesses to reap rewards from persecution of Jews as well as from exploitation of POWs and forced laborers from the East. German finance and industry made the most of the opportunity.
Private enterprise first fed on the German government’s program to “Aryanize” Jewish property—that is, to force the sale of Jewish-owned property at a fraction of its value to ethnic German entrepreneurs. The first phase was the so-called “voluntary” Aryanizations, when Jews hoping to flee Germany sold off property at the best price they could find. These transfers took place mainly between 1933 and 1938 in Germany, and they continued as late as 1941 in some of the Nazi-occupied territories.3
Later came the compulsory Aryanizations, which began in November 1938.4 The government seized Jewish property without compensation and sold the plunder to German companies or individuals. The Nazis also consolidated some formerly Jewish- or Polish-owned companies useful in war production into large manufacturing conglomerates run by the German state or the SS.
The forced sales of the 1930s usually maintained the trappings of ordinary commerce, complete with negotiations,
attorneys, and formal bills of sale. German businesses were thus able to maintain a facade of legitimacy in the eyes of foreign affiliates and trade partners, so that international markets remained open and foreign exchange continued to flow. For some Jews there was still some room to play German off against German in an effort to reduce the damage inherent in any forced sale.5
The “voluntary” Aryanizations provided strong incentives for tens of thousands of Germans to profit from this supposedly minor form of persecution. Aryanization thus built support for Nazi rule, particularly among German merchants and the business elite, who relied on continued Nazi rule to ensure the legitimacy of their new acquisitions. Most of these expropriations continue to be recognized by German courts to this day.6
The earliest Aryanizations can be traced to the national boycott of Jewish businesses initiated by the Nazi party shortly after Hitler came to power. “For local Nazi leaders persecution of Jews [during the boycott] meant a show of power,” historian Anne Bloch has written. “For Aryan businessmen, the boycott was a convenient means of ridding themselves of Jewish competitors, and of acquiring new enterprises cheaply.… It also served to fulfill the material promises made to prominent Party members.”7
Large-scale theft through Aryanization soon became a fact of German business life. Early in Hitler’s rule for example, Dr. Ignatz Nacher, a prosperous Berlin Jew, decided to sell Germany’s second largest brewery, the Engelhardt Brauerei A.G., following repeated harassment and a Nazi-organized boycott of his brands. This was well before Hitler had consolidated his power, and Nacher hoped to flee the country with his fortune intact. The sale was to be finalized in May 1934.
The Splendid Blond Beast Page 7
