Chapter Fifteen
WAR GAMES

Germany's industrial preparations for World War II; the continued support by American industrialists given to Farben and to the Nazi regime during this period; and the profitable role played by Ford and ITT in war production for both Nazi Germany and the United States.

By 1932 it was obvious to many observers that Nazi Germany was preparing for war. It was equally obvious that I.G. Farben was both the instigator and the benefactor of these preparations. It was during these years that German industry experienced its greatest growth and its highest profits.

In the United States, however, things were not going as smoothly for the cartel subsidiaries and partners. As the war drew nearer, the American companies continued to share their patents and technical information on their newest processes. But Farben was returning the favor less and less- - especially if the information had any potential value in war production, which much of it did.

When the American companies complained, Farben replied that it was forbidden by the Nazi government to give out this information and, that if they did so, they would be in serious trouble with the authorities!

Meanwhile, the American companies continued to honor their end of the contracts, mostly because they were afraid not to. In almost every case Farben controlled one or more patents that were vital to their operations, and any overt confrontation could easily result in a loss of these valuable processes which would mean business disaster. This was particularly true in the field of rubber.

Rubber is basic to modern transportation. It is a companion product to gasoline inasmuch as it supplies the wheels which are driven by the gasoline engines. Without rubber, normal economic life would be most difficult. Warfare would be impossible.

I.G. had perfected the process for making buna rubber but did not share the technology with its American partners. Standard Oil, on the other hand, had been working on another process for butyl rubber and passed on all of its knowledge and techniques.

Sasuly summarizes the situation that resulted:

True to their obligations to the Nazis, Standard sent the butyl information. But they did not feel any obligation to the U.S. Navy. In 1939, after the outbreak of war, a representative of the Navy's Bureau of Construction and Repair visited Standard's laboratories and was steered away from anything which might give clues as to the manufacture of butyl.

Standard did not have the full buna rubber information. But what information it did have, it only gave to the U.S. rubber makers after much pressure by the government when war was already underway. As for butyl rubber, Standard did not give full rights to manufacture under its patents until March, 1942...

Because of a cartel of the natural rubber producers, the United States found itself facing an all-out war without an adequate rubber stock-pile. And because of the operation of the I.G.-Standard Oil cartel, no effective program for making synthetic rubber was underway.(1)

1. Sasuly, I.G. Farben, op. cit., pp. 151,155.

Aluminum is another material that is essential for modern warfare. But here, too, cartel influence stood in the way of American development.

Even though the United States was the greatest user of aluminum in the world, and in spite of the fact that its industrial capacity was greater than any other nation, in 1942 it was Germany that was the world's greatest producer of this war-essential metal.

Alcoa (the Aluminum Company of America) had a major subsidiary in Canada known as Alted, which was an integral part of the world aluminum cartel. It was the policy of this group to restrict the production of aluminum in all nations except Germany - probably in return for valuable patent rights and promises of non-competition in other fields.

Even though Alcoa never admitted to becoming a direct participant in these agreements, nevertheless, the record speaks for itself. It did limit its production during those years far below the potential market demand. Consequently, here was another serious industrial handicap confronting the United States as it was drawn into war.

The production of the drug atabrine - effective in the treatment of malaria - also was hindered by the cartel. Quinine was the preferred prescription, but it was entirely controlled by a Dutch monopoly which possessed its only source in Java. The Dutch company apparently chose not to join the international cartel, however, because Farben entered into competition by marketing its own drug, atabrine, a synthetic substitute.

When the Japanese captured Java, the United States was totally dependent on Nazi Germany as a source. Needless to say, the cartel did not share the manufacturing technology of atabrine with the United States, and it took many months after Pearl Harbor before American drug firms could produce an effective material.

Meanwhile, the first GIs who fought in the Pacific Islands suffered immensely from malaria with no drugs to treat it - thanks again to the cartel.

The American development of optical instruments was yet another victim of this era. The firm of Bausch and Lomb was the largest producer of American high-quality lenses of all kinds. Most of these lenses were manufactured by the German firm of Zeiss. As was the pattern, American technology was deliberately retarded by cartel agreement.

These were the products that were in short supply or lacking altogether when the United States entered the war: rubber, aluminum, atabrine, and military lenses such as periscopes, rangefinders, binoculars, and bombsights. These were handicaps that, in a less productive and resourceful nation, could easily have made the difference between victory and defeat.

Meanwhile, the Nazis continued to enjoy the solicitous cooperation of their American cartel partners. And they benefited immensely by American technology. A document found in the captured files of I.G. at the end of the war reveals how lop-sided was the exchange.

In this report to the Gestapo, Farben was justifying its "marriage" with Standard Oil, and concluded:

It need not be pointed out that, without lead tetraethyl, modern warfare could not be conceived... In this matter we did not need to perform the difficult work of development because we could start production right away on the basis of all the experience that the Americans had had for years.(1)

1. New York Times, Oct. 19,1945, p. 9.

American ties to German industry began almost immediately after the guns were silenced in World War I.

The name of Krupp has become synonymous with German arms and munitions. Yet, the Krupp enterprises literally were salvaged out of the scrap heap in December of 1924 by a loan of ten million dollars from Hallgarten and Company and Goldman, Sachs and Company, both in New York.

Vereinigte Stahlwerk, the giant Farben-controlled steel works, likewise, received over one hundred million dollars in favorable long-term loans from financial circles in America.

The 1945 report of the United States Foreign Economic Administration concluded:

It is doubtful that the [Farben] trust could have carried out its program of expansion and modernization without the support of the American investor.(1)

1. Ibid., p. 82.

But far more than money went into Nazi Germany. Along with the loans to German enterprises, there also went American technology, American engineers, and whole American companies as well. Ford is an excellent example.

As pointed out previously, the Ford Motor Company of Germany was eagerly embraced by the cartel. Ford put forty percent of the new stock on the market, and almost all of that was purchased by I.G. Both Bosch and Krauch joined the board of directors soon afterward in recognition of their organization's substantial ownership interest. But well over half of the company was still owned by the Ford family.

War preparations inside Germany included the confiscation or "nationalization" of almost all foreign-owned industry. As a result, the Ford Company was a prime target. It never happened, however, primarily due to the intercession of Karl Krauch, I.G.'s chairman of the board.

During questioning at the Nuremberg trials, Krauch explained:

I myself knew Henry Ford and admired him. I went to see Goering personally about that. I told Goering that I myself knew his son Edsel, too; and I told Goering that if we took the Ford independence away from them in Germany, it would aggrieve friendly relations with American industry in the future. I counted on a lot of success for the adaptation of American methods in German industries, but that could be done only in friendly cooperation.

Goering listened to me and then he said: "I agree. I shall see to it that the Deutsche Fordwerke will not be incorporated in the Hermann Goering Werke."

So I participated regularly in the supervisory-board meetings to inform myself about the business processes of Henry Ford and, if possible, to take a stand for the Henry Ford works after the war had begun. Thus, we succeeded in keeping the Fordwerke working and operating independently.(1)

The fact that the Nazi war machine had received tremendous help from its cartel partners in the United States is one of the most uncomfortable facts that surfaced during the investigation at the end of the war.

And this was not just as the result of negotiations and deals made before the war had started. It constituted direct collaboration and cooperation during those same years that Nazi troops were killing American soldiers on the field of battle.

The Ford Company, for example, not only operated "independently," supplying military hardware in Germany all through the war, but in Nazi-occupied France as well. Maurice Dollfus, chairman of the board of Ford's French subsidiary, made routine reports to Edsel Ford throughout most of the war detailing the number of trucks being made each week for the German army, what profits were being earned, and how bright were the prospects for the future. In one letter, Dollfus added:

The attitude you have taken, together with your father, of strict neutrality, has been an invaluable asset for the production of your companies in Europe.(2)

It was clear that war between the United States and Germany made little difference. Two months after Pearl Harbor, Dollfus reported net profits to Ford for 1941 of fifty-eight million francs.

And then he said:

Since the state of war between the U.S.A. and Germany, I am not able to correspond with you very easily. I have asked Lesto to go to Vichy and mail this... We are continuing our production as before... The financial results for the year are very satisfactory...We have formed our African company...(3)

1. DuBois, The Devil's Chemists, op. cit., pp. 247, 248.
2. Ibid., p. 248.
3. Ibid., p. 251.

There are no records of Edsel Ford's return communications with Dollfus after Pearl Harbor, if indeed there were any. It is likely that there were, however, in view of the continuing letters that were sent by Dollfus.

It is also impossible to prove that Ford approved of his factories being used to supply the same army that was fighting against the United States. But there is no doubt about the fact that both Dollfus and the German High Command considered those factories as belonging to Ford all through the war. And that is a circumstance that could not have continued for long without some kind of friendly assurances "of strict neutrality."

At any rate, it was one of the curious quirks of war that, because of cartel interlock, the Ford Motor Company was producing trucks for Nazis in both Germany and France, producing trucks for the Allies in the United States, and profiting handsomely from both sides of the war. And if the Axis powers had won the war, the top men of Ford (as well as of other cartel industries) undoubtedly would have been absorbed into the ruling class elite of the new Nazi order. With close friends like Bosch and Krauch they could not lose.

The Ford Company was not the exception, it was the rule. As Stocking and Watkins explained:

When World War II broke out, I.G. and Mitsui on the one hand, and DuPont, ICI, and Standard Oil on the other, did not completely sever "diplomatic relations." Although direct communication was disrupted by the war, the companies merely "suspended" their collaboration. The general understanding was that they would take up again at the close of the war where they had left off, in an atmosphere of mutual concord and cooperation.(1)

The authors are much too cautious in their appraisal. The record is clear that the heads of those financial interests did not suspend their collaboration. They merely made them secret and reduced them to the bare minimum. In October of 1939, Frank Howard of Standard Oil was in Europe for the specific purpose of finding ways to keep the Standard - I.G. cartel functioning in spite of the war. Howard himself described his mission:

We did our best to work out complete plans for a modus vivendi which would operate through the term of the war, whether or not the United States came in. [Emphasis added.](2)

1. Stocking and Watkins, Cartels in Action, op. cit., p. 423.
2. Sasuly, I. G. Farben, op. cit., pp. 149,150.

On June 26, 1940, the day after France capitulated to the Nazis, a meeting was held at the Waldorf-Astoria which brought together some of the key American business tycoons who were interested in protecting their German-based operations during the war.

The meeting was called by Torkild Rieber, chairman of the board of Texaco. Among others present were James Mooney, chief of General Motors' overseas operations; Edsel Ford; executives from Eastman Kodak; and Col. Behn, head of ITT.(1)

1. Ladislas Farago, The Game of the Foxes, (New York: D. McKay Co., 1972), pp. 463-479.

The case of ITT is most instructive. ITT began to invest in the Nazi pre-war economy in 1930. It formed a holding company called Standard Elektrizitats and then bought another company, Lorenz, from Philips. Seeing that war was rapidly approaching, ITT did everything possible to make its new holdings look like German companies.

Then in 1938, just as the Nazi troops were preparing to march into Poland, ITT, through its subsidiary Lorenz, purchased twenty-eight percent ownership of the Focke-Wulf Company which, even then, was building bombers and fighter planes. ITT could not claim either ignorance or innocence. They simply were investing in war.

During the course of that war, ITT's plants in Germany became important producers of all kinds of military communications equipment. They also installed and serviced most of the key telephone lines used by the Nazi government.

In the United States, ITT was regarded as highly patriotic. It developed the high-frequency direction finder, nicknamed Huff-Duff, which was used to detect German submarines in the Atlantic. Colonel Behn, the head of ITT at the time, was awarded the Medal of Merit, the highest civilian honor, for providing the Army with land-line facilities.

Anthony Sampson, in The Sovereign State of ITT, summarizes:

Thus, while ITT Focke-Wulf planes were bombing Allied ships, and ITT lines were passing information to German submarines, ITT direction finders were saving other ships from torpedoes... In 1967, nearly thirty years after the events, ITT actually managed to obtain twenty-seven million dollars in compensation from the American government for war damage to its factories in Germany, including five-million dollars for damage to Focke-Wulf plants - on the basis that they were American property bombed by Allied bombers.

 

It was a notable reward for a company that had so deliberately invested in the German war effort, and so carefully arranged to become German. If the Nazis had won, ITT in Germany would have appeared impeccably Nazi; as they lost, it re-emerged as impeccably American.(1)

It is not within the scope of this study to analyze all of the possible motives of those who led us into the two global wars of the twentieth century.

Standard text books give such explanations as ancient rivalries, competition for natural resources, militarism, offended national or racial pride, and so forth. Certainly, these factors did play a part, but a relatively minor one compared to the financial and political goals of the men who, from behind the scenes, set the forces of war into motion.

War has been profitable to these men in more ways than one. True, fantastic profits can be made on war production through government-backed monopolies. But those who were the most responsible also looked upon war as a means of bringing about rapid and sweeping political changes.

The men behind a Hitler, a Mussolini, a Stalin, and, yes, even an FDR recognized that, in wartime, people would be far more willing to accept hardship, the expansion of government, and the concentration of power into the hands of political leaders than they ever would have dreamed of doing in times of peace. The concept of big government - and certainly the appeal of world government - could not have taken root in America except as the outgrowth of national and international crisis.

Economic depressions were helpful, but not enough. Sporadic riots and threats of internal revolution were helpful, but also not enough. War was, by far, the most effective approach. This was doubly so in Europe and Asia, as can be confirmed merely by comparing maps and ruling regimes before 1939 and after 1945. As Lenin had predicted, the best way to build a "new order" is not by gradual change, but by first destroying the old order and then building upon the rubble.(2)

1. Sampson, The Sovereign State of ITT, (New York: Stein & Day 1973), pp. 40, 47.
2. It is important to know that Lenin accepted but did not favor outright war as a means of destroying the old order. He claimed that Communists should work at destruction from within, not by external conquest.

The desire for rapid political and social change, therefore, can be a powerful motivation for war on the part of the finpols who would be the benefactors of those changes - especially if they were playing their chips on both sides of the field.

Yes, war can be extremely rewarding for those who know how to play the game.
 

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