The Splendid Blond Beast

by Simpson, Christopher; Miller, Mark Crispin;

  The joint occupation government in Germany temporarily interned about 1.1 million Nazi officials, major businessmen, and former government administrators under various provisions of JCS 1067 and the Potsdam agreements during the summer and fall of 1945, according to U.S. statistics. Some 78 percent of those cases—868, 566 people—had been processed by Allied officials by December 1945. Of those, half had been acquitted, in effect, with findings that they had not substantially participated in Nazi activity. About 20 percent of the accused were found to have been so deeply implicated in Nazi crimes or in the maintenance of Nazi power that they were banned from the postwar German government and from prominent positions in the private sector. The remainder of the accused faced sanctions that varied with the circumstances of the individual’s case.12

  Most of the German civilians still interned during the winter of 1945 were persons against whom reasonable suspicion of serious criminal activity existed. There were 117,512 German internees that December; of these, more than 38,000 had been executive-level Nazi party officials; 9,222 had been members of the Gestapo, SD, or other German police and intelligence organizations; and about 5,000 more had been senior members of various Nazi paramilitary groups.13

  The speed of the “official” denazification thus far had been achieved by identifying categories of suspects—Nazi party officials, government officials above a certain professional grade, Gestapo officers, and so on—whom the Allies regarded as prima facie threats to the occupation government. Contrary to the later myths about denazification, these categories were usually relatively clear and limited to elite sectors of the German population, who were assumed to have had most influence during Hitler’s rule and, hence, the greatest responsibility for Nazi activities.14 The paperwork for persons in each category was then processed through a string of administrative steps that were similar in most respects to the procedures used in almost any government office. The difference, of course, was that this time the bureaucratic product was not distribution of social security benefits or unemployment insurance. It was, instead, the first step in the allocation of legal and political responsibility for mass murder.

  Critics could see that these techniques often captured small-fry while permitting major criminals to escape. Not surprisingly, those who had been most powerful in wartime Germany usually had the most resources to evade the system.

  Business leaders seemed to be particularly immune. “The present procedure fails in practice to reach a substantial number of persons who supported or assisted the Nazis, both in their rise to power and in carrying out their programs,” the confidential study of the Denazification Policy Board reported. “This is probably especially true of business leaders,” who did not necessarily join the party but whose “influence may have been much greater than that of party members.”15 Owners of businesses that played a major role in the regime often escaped responsibility, the board concluded, because regulations in the U.S. zone made it quite complicated to seize a business from its ostensible owner.

  Meanwhile, the U.S. occupation government’s reliance on conventional bureaucratic techniques tended to catch many so-called “little Nazis,” whom the board did not regard as “really active supporters of the Nazi regime.” Such cases would in time be processed and often dismissed, but in the meantime these suspects required endless labor-hours to investigate and administer, and their internment fed German discontent with the occupation government.

  “The net effect of these inadequacies is to bear more heavily on the ‘small Nazi’ and to leave loop-holes for influential supporters. As a result, our actions often seem arbitrary and capricious to the Germans and tend to alienate even those who favor denazification,” the board concluded. “In large measure, these defects arise from our reliance on mandatory categories. Yet, as outsiders to the community, we can not arrive at sound judgments in individual cases, and need some rule of thumb as a substitute.”16

  Similarly, the U.S. occupation government’s effort to block the bank accounts of Nazi-era political and business leaders bogged down by the autumn of 1945. The program was supposed to prevent Nazi officials or profiteers from laundering stolen money or smuggling it out of the country. In reality, however, “there has been a general breakdown in the effectiveness of Law 52 [which blocked the bank accounts] in the entire zone,” the financial branch’s field investigations chief, Louis Madison, reported. “The breakdown is characterized by a failure on the part of the responsible American and German agencies to block the accounts of Nazis, and by violations of the law by German individuals and banks.” Madison’s study reviewed 200 cases chosen at random in the U.S. zone of Germany; of those, only 32 (16 percent) had been handled successfully. Even when an account was blocked as required by law, German banks simply ignored the order. Further, the shortage of U.S. investigations personnel and the labyrinthine bureaucracy that administered the program guaranteed that the little progress could be made without a thorough-going organizational reform.17

  By December 1945, the publicly mandated denazification program sharply collided with the unofficial (but actual) political and economic objectives of the U.S. occupation government. That month, the U.S. Denazification Policy Board confidentially recommended that existing policies and practices be shifted to better fit the “longer term” goals of the occupation. Publicly, the orientation of the denazification program was to remain the same as it had been under JCS 1067. “Every person who exercised leadership and power in support of the Nazi regime should be deprived of influence or power,” the board recommended, “whether or not he was formally affiliated with the Party or any other Nazi organization.” At the same time, however, the board introduced a new consideration that would fundamentally alter the program in the U.S. zone of Germany: “Denazification … should not be carried so far as to prevent the building of a stable democratic society in Germany … we must avoid the creation of a huge mass of outcasts who will provide fertile soil for agitators and a source of social instability.”18

  This turned an important corner. Up to then, the continuation of Nazi influence within German social structures—business, education, the arts, etc.—had been seen as the most dangerous source of potential instability in Germany. But at least as early as December 1945, the opposite formulation came to the fore, even in official documents. Now, it was the denazification effort that was seen as the source of disaffection.

  Opposition within the U.S. to denazification and decartelization in Germany was led almost exclusively by the corporate and foreign policy elite that had been most active in U.S.-German financial relations during the 1920s and 1930s. The disproportionate political leverage of this group, its ability to shape media coverage of foreign policy issues, to influence government policy, and eventually to shift public opinion was dramatically manifested in the realignment of U.S. policy concerning denazification and decartelization in the brief period between 1945 and 1947.

  One of this group’s most effective lobbying tactics was sponsorship of junkets to Europe by American politicians and businessmen, financed by U.S. multinationals, to “study the problem of German recovery.” Draper paid close attention to these visits, staging elaborate briefings intended to shape public opinion at home concerning the professed realities of business in Europe. These events were almost ceremonial: The attendees and the briefers had selected one another largely through their existing social networks based in powerful U.S. companies with investments in Europe. The men on both sides of Draper’s briefing table were receptive to his message and usually knew pretty well what it would be.

  A stream of U.S. experts visited the headquarters of the Economics Division during the first two years after the war, and Draper provided them with privileged access to the inside thinking on U.S. policy concerning German business. “The reports of these visitors echoed the conclusion that German recovery demanded greatly increased emphasis on heavy industries,” decartelization chief James S. Martin (a Draper rival) remembered later. “In their reports the
visitors frequently referred to the ‘proven impossibility’ of something that no one had yet tried to do [i.e., actually break up German banking and industrial oligopolies]. With equal frequency they reported the ‘mounting chaos’ that was supposed to have resulted from the ruthless ‘Morgenthau Plan of deindustrialization.’” Similar problems were alleged to have been caused by drastic reforms that had not actually been carried out. “It became customary to refer to the urgent necessity for ‘reversing the former policy of destroying German industries,’” Martin wrote, and of reversing a decartelization policy that in fact had not yet been implemented.19

  A popular example of Martin’s point can be found in Lewis H. Brown’s A Report on Germany, a 1947 bestseller that had substantial influence in Washington at the time and remains quoted to this day.20 Brown was chairman of the Johns-Manville Corporation, a major military contractor and international mining company that held a near-monopoly on the U.S. market for asbestos. The company has frequently been accused in U.S. courts of corporate crimes, including antitrust violations.21

  Brown toured Germany during 1946 and 1947 and returned to the U.S. with detailed arguments against economic reform in Germany that had been prepared mainly by Draper’s staff. Brown’s preconceptions clearly shaped the conclusions he drew from the visits. He wrote quite frankly that he approached Germany “from the standpoint of an industrialist’s attempt to analyze the problem of a bankrupt company [seeking] to determine the simple common-sense fundamentals necessary to get the wheels of production turning.”22

  His acknowledgments of the experts he consulted concerning Germany read like the guest list of a dinner sponsored by the Council on Foreign Relations: AT&T’s Frederick Devereux, Sullivan & Cromwell’s John Foster Dulles, former president Herbert Hoover (who had been enlisted by Truman to cement Republican party support for his administration’s emerging policy on Germany), General Lucius Clay, William Draper, Sears, Roebuck president A. S. Barrows (who was then serving as U.S. Comptroller in Germany), British and Swiss banking and industry officials, and twenty-five unnamed German industrialists. In more than five pages of Brown’s detailed acknowledgments of those he interviewed, there appears no speaker for German labor, no small businessman of any nationality, no female, none of the then-well-known public advocates of denazification and decartelization of German industry (including those still in government posts inside Germany), no Social Democrats, and no known veterans of European Resistance movements of any political persuasion.23

  Brown’s argument was simple and in some ways convincing. He said that the Morgenthau Plan had shaped JCS 1067—as was true enough—and that JCS 1067 was a disaster. The economic and denazification commitments that the U.S. made at Potsdam should be unilaterally disavowed as quickly as possible, Brown contended. The U.S. should block further German reparations to the USSR, because German uncertainty over which equipment might be shipped to the Soviets had “helped destroy the incentive to put plants in Germany back into operation.” The postwar punishment of Nazis by France and the USSR had been indiscriminate and brutal, Brown said. The U.S. and British system of trying accused criminals before courts and administrative commissions was better, he argued, but “many of the industrial and technical leaders of the economic life of Germany, who had climbed on the Nazi bandwagon much as people climb on any new and apparently successful bandwagon, were permitted to do only common labor pending the years required to go through the denazification courts.” The Potsdam agreements had “deprived the economic machine of Germany of the very leadership necessary for its revival … [and was now] fatally slowing down the rehabilitation and reconstruction of the industrial machine of Germany and Western Europe.”24

  Brown said he expected no support for his proposals from “the enemies of the American Way of Life.” But “from our friends who abhor all forms of totalitarianism … I hope for tolerance and ultimate understanding of the imperative need for getting together on a plan of action under which we may minimize the [Soviet] threat to Western civilization …”25

  Brown’s lobbying trips to Germany were underwritten mainly by General Electric’s chairman Philip D. Reed, who was one of the single most influential U.S. corporate leaders on postwar U.S.-German issues. In addition to his role in Brown’s project, Reed and the business organizations he led organized a series of similar conferences in 1946 and 1947. Typical U.S. delegations included the chairman of the executive committee of the National Association of Manufacturers, the chairman of the (U.S.) National Foreign Trade Council, and senior executives of the National City Bank of New York and the Chase Bank, among others. On some occasions, Reed traveled as a representative of General Electric; on others, he came as head of the U.S. delegation to the International Chamber of Commerce; or as the personal envoy of Secretary of Commerce Averell Harriman.26

  Like Brown’s book, Reed’s report to Harriman lambasted the denazification and decartelization policy the U.S. had approved at Potsdam as the work of FDR-era “extremists” (Reed’s term) at the Department of Justice. The U.S. policy was harmful and unnecessary, he said, and was interfering with Germany’s economic recovery.27

  Reed’s company was not an entirely disinterested party. General Electric was among the most important U.S. investors in Germany, owning about 25 percent of its German counterpart, the electrical giant AEG, plus factories and dozens of smaller interests.28 At the time Reed was lobbying the U.S. government against antitrust policy in Germany, GE was facing no fewer than thirteen criminal antitrust prosecutions in U.S. courts for price fixing, gouging consumers and the U.S. government through its monopoly on electrical equipment manufacturing, conspiracy, Sherman Act violations, and similar corporate crimes. (GE settled most of these cases out of court in 1949, then went on to a series of remarkably similar abuses that in time led to still another round of criminal convictions for senior General Electric executives about a decade later.)29

  As Morgenthau, Pell, James S. Martin, and other reformers saw things, the arguments of General Electric and Johns-Manville had become the dominant point of view in Western policy circles and in the media. They had become “standard fare” in U.S. newspapers within a year after the occupation began, Martin commented,30 even though in reality only two steps had been undertaken to implement U.S. antitrust efforts in Germany by the time Brown’s denunciation of the program appeared: the seizure of plants and assets of IG Farben; and the appointment of a trustee to administer coal wholesaling firms in the U.S. zone.

  The Allies and the Germans both knew that German manufacturing, including war production, had survived the war surprisingly intact, despite the massive Allied bombing campaign. Senator Kilgore publicized a congressional study based mainly on U.S. Strategic Bombing Survey data that concluded that Germany’s production of armored cars, fighter bombers, and several categories of strategic supplies had actually increased under U.S. and British bombing, in some cases expanding eightfold over 1942 production figures. True, the air attacks had crippled the German transportation network and oil production during the final months of the war—a telling blow. But that damage was repaired relatively easily once the fighting stopped. From the point of view of production, at least, Germany was already “better prepared for war than it was at the end of World War I,” Kilgore contended.31

  Kilgore stressed that a distinct drift toward postwar accommodation with German business had already set in. “There is a natural inclination on the part of many of our [U.S.] administrators to take over in order to get things running again, and there is a natural inclination on the part of many Germans to lie back and let them do it.… [In] the desire for efficiency our military administrators may keep in positions of power the Nazi plant managers,” Kilgore said. “In Italy, I heard certain American Army officers deplore the fact that Italian partisans had killed many of the Fascist plant managers, which made more difficult the reorganization of Italian productive capacity. In Germany there has been no such [partisan] revolt. The Nazi industrial hierarchy remains i
ntact.”32

  The reports of Brown and Reed were in reality briefs for the European Recovery Program—the Marshall Plan. They illustrate the extent to which that enormously popular and respected program became entangled with the revival of German businessmen who had participated in Nazi crimes. Particularly important in this effort was the “Committee for the Marshall Plan,” founded in September 1947. It labeled itself a citizens’ organization but was in reality funded and administered by the same economic and foreign policy elite that has been discussed thus far. Its initial sponsors included Averell Harriman and Robert Lovett (who will be remembered from the Brown Brothers, Harriman bank). Allen Dulles, Dean Acheson, Winthrop Aldrich (chairman of the Chase Bank), Philip Reed (of GE), and others of similar stature, most of whom had been active in U.S.-German finance since the 1920s. Labor was represented by hard-line anti-Communists active in the CIA-sponsored penetration of European trade unions, such as James Carey and David Dubinsky.33

  This Marshall Plan lobby operated as a “distinguished propaganda committee,” as AT&T executive Arthur Page described it.34 Its goal was never described as the revitalization of the German business elite but, rather, as “saving Europe” and “providing American jobs” through implementation of the Marshall Plan. But whatever one may think of the plan, the restoration of much of the prewar German corporate elite was an integral part of the package.