The full extent of I.G. Farben's disruption of the war effort during the First World War can be understood by examining the number of patents seized during the war. After U.S. entry into the war, the Alien Property Custodian (APC) was established. The APC seized a total of 12,300 patents 5,000 of which covered chemicals, pharmaceuticals, and munitions.
Without a doubt, the most crucial problem facing the United States during WW1 was the U.S. dependence on Chile for nitrates. Nitrates are essential for manufacturing TNT, picric acid, and other explosives. The dependence on a limited supply of Chilean nitrates was detailed in the 1915 annual report of the Chief of Ordnance. Not only were the shipments vulnerable to German submarine attacks, but many of the Chilean companies were controlled by German interests.
The Germans had eliminated their dependence on Chilean nitrates. With the development of the Haber process, nitrates could be made from atmospheric nitrogen, and by 1913 Germany had a 10,000-ton capacity plant at Oppau. In 1916, Congress appropriated money for the construction of four large synthetic nitrate plants. At the time, there were 250 patents on synthetic nitrogen, all German-owned. These patents became subject to license under wartime legislation. A nitrate plant was constructed at Sheffield, Alabama, costing $13 million dollars. This plant had an annual projected capacity of 9,000 tons of ammonia and 14,000 tons of nitric acid. The plant proved useless because the German patents did not contain the composition and preparation of the catalyst.
The importance of nitrate production during WW1 is comparable to the importance of synthetic rubber production in the Second World War. In both cases, the Germans controlled the process through patents and cartel agreements.
Perhaps one of the more illuminating cases of how I.G. Farben hindered the war effort is the case of Dr. Hugo Schweitzer. Schweitzer was an American citizen and head of the Bayer Company. He also became head of German espionage in America and was known in Berlin as No. 963,192,637. Schweitzer was interned after America's entry into the war but was able to conduct a highly effective industrial espionage campaign before that. The words of his superior, Dr. Albert, sums up Schweitzer's efforts best:
"The breadth of high-mindedness with which you at that time immediately entered into the plan has borne fruit as follows: One and a half million pounds of carbolic acid have been kept from the Allies. Out of this one and a half million pounds of carbolic acid, four and one-half million pounds of picric acid can be produced. This tremendous quantity of explosive stuff has been withheld from the Allies by your contract. In order to give one an idea of this enormous quantity the following figures are of interest:
Four million five hundred thousand pounds equals 2,250 tons of explosives. A railroad freight car is loaded with 20 tons of explosives. The 2,250 tons would, therefore, fill 112 railway cars. A freight train with explosives consists chiefly of 40 freight cars so that 4,500,00 pounds of explosives would fill three railroad trains with 40 cars each.
Of still greater and more beneficial effect is the support which you have afforded to the purchase of bromine. We have a well-founded hope that, with the exclusion of perhaps small quantities, we shall be in a position to buy up the total production of the country. Bromine, together with chloral, is used in making nitric gases, which are of such great importance in trench warfare. Without bromine these nitric gases are of slight effect; in connection with bromine, they are of terrible effect. Bromine is only produced in the United States and Germany. While therefore, the material is on hand in satisfactory quantities for the Germans, the Allies are entirely dependent upon importation from America."
Schweitzer's work not only shows how I.G. Farben was an integral part of the German war machine but also illustrates that German espionage was centered around German immigrants. This doesn't imply that all German immigrants were traitors, as the vast majority were citizens loyal to their adopted country. However, during both wars, German espionage relied heavily on German immigrants. As an example, the German spies apprehended landing on Long Island during WW II had all previously lived in the United States. As the quote above shows, immigrants who chose to remain loyal to their fatherland had a considerable impact hindering the war effort.
Upon Schweitzer's death, government agents searching his apartment found an unpublished article entitled "The Chemist War." In this document, Schweitzer detailed Germany's plan for self-sufficiency and foretells the importance of its scientific advances for the next war. These excerpts from the article show that Schweitzer was fully aware of the importance of Germany's scientific advances to German empire-building.
"Next to steel and iron, aluminum and magnesium play a prominent part as substitutes for copper. It has been found that an aluminum-magnesium alloy possesses a great advantage over the latter as an electrical conductor. Magnesium is said to be useful for many purposes for which aluminum is being employed today. This is a very important discovery because Germany has enormous supplies of magnesium chloride, a by-product of the potash industry, which has been worthless up to now.
That this new scientific achievement will prove of momentous importance appears from the fact that the great chemical works which supply the world with dyestuffs, synthetic remedies, photographic developments, artificial perfume, etc., have entered the field and have become important factors in the artificial fertilizer industry of Germany. The peace negotiations will undoubtedly culminate in the conclusion of commercial treaties between nations.
"What enormous power will be exercised by the nation when possessing such universal fertilizer and practically worldwide monopoly of potash slats will have something to sell that every farmer in the civilized world absolutely requires."
Once again, the close association of I.G. Farben with Germany's war machine is apparent, along with the intention of I.G. Farben officials to use Germany's monopoly of the emerging organic chemistry field for world domination. Shortages during the first war created by various cartel agreements involved other companies besides I.G Farben. Zeiss and its American partner, Bausch, and Lomb, controlled the production of military optics through a cartel agreement. German firms owned by Krupp controlled the production of ordnance in many cases.
Before U.S. entry into the First World War, American aircraft production for the Allies was held up by the practices of Bosch. It was not until the United States entered the war that any action could be taken against Bosch. The same tactics were common before the United States entered WWII.
Domestically, cartel agreements created acute shortages in the medical field. Prior to the war, more than eighty percent of surgical instruments were imported from Germany. Additionally, many medicines were under complete German control, particularly salvarsan, luminal, and Novocain. Salvarsan was used at the time to treat syphilis, and luminal was used to prevent epileptic seizures. There were no replacements for these drugs and patients went untreated. The shortage of Novocain forced American surgeons to revert to operating without anesthesia.
No better summation of the dangers cartel agreements posed to the United States exists than the State of the Union address by President Wilson on May 20, 1919:
"Nevertheless, there are parts of our tariff system which need prompt attention. The experiences of the war have made it plain in some cases that too great a reliance on foreign supply is dangerous, and that in determining certain parts of our tariff policy domestic considerations must be borne in mind which are political as well as economic.
Among the industries to which special consideration should be given is that of the manufacture of dyestuffs and related chemicals. Our complete dependence upon German supplies before the war made the interruption of trade a cause of the exceptional economic disturbance. The close relation between the manufacture of dyestuff on the one hand and of explosives and poisonous gases on the other, moreover, has given the industry an exceptional significance and value.
Although the United States will gladly and unhesitatingly join in a program of international disarmament, it will nevertheless, be a policy of obvious prudence to make certain of the successful maintenance of many strong and well-equipped chemical plants. German chemical industry, with which we will be brought into competition, was and may well be again a thoroughly knit monopoly, capable of exercising a competition of a peculiarly insidious and dangerous kind."
It is obvious from this quote that the danger posed by cartels and their monopoly agreements was well-known at the highest levels of government. The most stunning aspect of the aftermath of WWI was the speed at which I.G. Farben reestablished its cartel agreements. This re-establishment could only have occurred with the full cooperation of Republican administrations and the leaders of corporate America.
Even during the peace conference, there were those in this country whose actions were fraudulent, if not treasonous. Throughout the war, lawyer John Foster Dulles sought to protect the assets of the Kaiser from seizure by the Alien Property Custodian Act. Dulles sought to derail the peace conference by looking for bribes and misdirecting clients. As a member of the post-war U.S. War Trade Board, Dulles had good information for sale. He was well aware that German bribes went all the way to the Harding administration's crooked Attorney General, Harry Daugherty. In a later corruption trial, Daugherty's defense counsel pointed out there was a bigger crook behind the bribery scandal, John Foster Dulles:
"[Dulles] who strutted about the Peace Conference promoting himself as (Secretary of State) Lansing's nephew while carrying a bag3/4 looking for a bribe3/4 misdirecting his clients and comporting himself as a man who should be disbarred."
The importance of the quote cannot be underestimated. It clearly establishes a right-wing element at the peace conference who was willing to sabotage the interest of the American people for personal, private gain. Dulles continued to work his mischief in the corrupt Harding administration and had access to its highest levels of power. Later, as WWII approached, he and his brother Allen helped conceal Nazi ownership of, and involvement in, American corporations from the U.S. government.
Daugherty was not the only Harding administration member seeking to form alliances and cartel agreements with I.G. Farben. Prior to becoming Secretary of the Treasury, Andrew Mellon controlled interests such as Alcoa and formed several cartel agreements with I.G. Farben. Mellon's support of fascism went further than just cartel agreements with German firms. Mellon was a supporter of several pro-fascist groups in the 1930s, and part of the fascist plot against FDR in 1934.
One must keep in mind the links between top Republican administration officials of the 1920s if one is to understand the roots of American fascism. Mellon and Daugherty were not the only officials sympathetic toward I.G. Farben and Germany. There were many more, some of whom became Nazi supporters in the 1930s.
In addition to supporters within the government, I.G. Farben found a multitude of support on Wall Street. Many from Wall Street would later rise to high positions within the government, particularly in the OSS during the war, and as economic advisors during the post-war denazification period.
By the end of the first war, it was quite obvious as to all how dangerous cartel agreements with I.G. Farben were and how such agreements had hindered the U.S. war effort. These agreements were anti-competitive and a violation of trust and monopoly laws. They also violated numerous sections of the Alien Property Custodian Act. However, during the Harding administration, individuals openly sympathetic to I.G. Farben and German interests headed the two cabinet positions charged with enforcing these laws, the Departments of Justice and the Treasury. Mellon was Secretary of the Treasury throughout the Harding and Coolidge administrations, and most of the Hoover administration.
Holding his position throughout the 1920s, Mellon was able to quash almost all investigations into reforming cartels. Thus, by the end of the 1920s, I.G. Farben had regained control over all its assets seized by the Alien Property Custodian Act. In fact, the Mellon-owned Alcoa Corporation signed a cartel agreement with I.G. Farben while Mellon was still in the government.
The full ramifications of actions by top 1920s Republican administration officials, and the resulting hindrance of WWII, are immeasurable. Because of cartel agreements signed in the 1920s, the supply of many vital materials was hindered, causing shortages and production delays of munitions during WWII. Particularly damaging was a shortage of aluminum due to the cartel agreement entered into by Alcoa. Only recently has information became available that sheds light on how damaging agreements signed in the 1920s were to the war effort in the 1940s as the quote from a recent article on Newsweek.com shows below.
The fresh look at wartime culpability may extend to other American icons. In 1940 one of the nation's most prestigious law firms, Sullivan & Cromwell, joined together with the Wallenberg family of Sweden--famed for producing Raoul, a Holocaust martyr who saved Jews in Budapest--to represent Nazi German interests, says Abe Weissbrodt, a former Treasury Department lawyer who prosecuted the case in 1946. The scam? Sullivan & Cromwell drafted a voting trust agreement making the Wallenbergs' Enskilda Bank a dummy owner of the U.S. subsidiary of Bosch, a German engine-parts maker, so the Nazis could retain control. The papers were drawn up by John Foster Dulles, a Germanophile who later became secretary of State and whose name today graces Washington's international airport. (The scheme worked during the war, but in 1948 Bosch was finally auctioned to a U.S. buyer.) The record is compelling in terms of warranting questions about Dulles's motives and his own allegiances," says historian Masurovsky. "One might say about him what Treasury said about Chase and J.P. Morgan, that they had allegiance to their own corporate interests and not to their country."112
Due to the prominence of Sullivan & Cromwell in aiding the Nazis, a brief look at the background of the firm and the role the Dulles brothers played in it is needed. The firm was initially established by Algernon Sullivan in New York following the economic panic of 1857. The economic panic had bankrupted his practice in Indiana. The young Sullivan had just married a descendent of George Washington from Virginia. Before the outbreak of the Civil War, Sullivan relied on and built his firm on his wife's southern contacts. These southern connections of Sullivan and Cromwell also play an important role in the last two decades of the 20th Century in moving industry from the Rust Belt to the South. Moreover, they play a particularly important role in the financial shenanigans of the Bush family.
With the advent of the Civil War, Sullivan once again saw his practice virtually destroyed. In June 1861, the Confederate warship, Savannah disguised itself as a northern vessel in an effort to capture the USS Perry. However, Perry captured the Savannah and delivered the crew to New York. Because the United States did not recognize the Confederacy as a nation, the prisoners were treated like pirates who if convicted of piracy, would have been hanged. Sullivan took it upon himself to defend the prisoners, arguing that they were prisoners of war. Against all odds, Sullivan won the case.
In 1870, Sullivan went back to private practice in the firm of Sullivan, Kobbe, and Fowler. Here Sullivan met Cromwell, who was employed as a bookkeeper. Recognizing Cromwell's talents Sullivan offered to send Cromwell to Columbia's Law School. Cromwell accepted the offer and after Kobbe and Flower left, Sullivan formed Sullivan and Cromwell. The firm soon flourished. After the death of Sullivan, Cromwell hired William Curtis as a partner and began focusing the firm on business law.
The year after Sullivan's death, Cromwell had Curtis, a New Jersey resident, work behind the scenes to change New Jersey's laws of incorporation. Cromwell's package of changes in the incorporation gave much more to the corporations than to the state and lowered incorporation fees and taxes. Additionally, it prevented shareholders from inspecting a corporation's books and interfering in corporate management. Most importantly though, Cromwell's package allowed corporations to hold shares of other corporations. It was a package designed to sidestep the Sherman Antitrust Act of 1890.78 In essence, Cromwell's package was a wholesale assault on the laws that held corporations in check. Only the disastrous Supreme Court ruling giving corporations the rights of a person was more important in the creation of the corporate state.
The first two companies to take advantage of the changes in New Jersey corporate law were Sullivan & Cromwell clients, the Southern Cotton Oil Company, and the North America Company. The way a firm manipulates and follows the law says a lot about the firm's honesty and integrity. The way Sullivan and Cromwell handled the 1889 Louisiana Supreme Court decision outlawing the American Cotton Trust exposes how Sullivan & Cromwell viewed the law 3/4 as just a tool to be manipulated for the benefit of the wealthy. The Louisiana Court had ruled the American Cotton Trust to be an illegal association, guilty of usurping, intruding into, and unlawfully holding and exercising the franchise and privilege of a corporation without being duly incorporated.
Cromwell went to Louisiana and hired the best local lawyers to argue the appeal, who assured him they could win. Cromwell then toured the state urging members of the trusts to sell their shares to the Rhode Island Company. The Rhode Island Company was exactly like the American Cotton Trust but incorporated in Rhode Island--which tolerated trusts. The day the appeal was to be heard, Cromwell walked into court and informed the court that the company had been dissolved. Local officials were outraged at Cromwell's action and threatened to jail him. Cromwell wisely left town that afternoon. Cromwell then had Curtis do the same thing in Texas for the local cotton oil trust.
In 1901, J. P. Morgan used Sullivan & Cromwell to organize U.S. Steel, the first American corporation with more than one billion dollars capitalized. Previously, Sullivan & Cromwell had organized the National Tube Company for Morgan. In 1906, Harriman sought help from Sullivan & Cromwell in gaining control over the Illinois Central Railroad. The president of Illinois Central realized the value of the north-south route of his railroad in adding to Harriman's holdings of major east-west routes and had given the governor of Illinois a seat on the board and organized small shareholders against a Harriman takeover. In the mounting proxy fight, Cromwell forged alliances with two board members, leaving Cromwell short one vote short for a board majority. He then offered another board member the job of president of the company--if he would help oust the current president. In the vote of proxies, Cromwell shouted from the floor and demanded that the current president cast his votes in favor of the Harriman takeover. In news that made the front page of The New York Times, Cromwell made a spectacle of the meeting after being attacked by the small shareholders against the takeover. After the meeting, Cromwell announced that there would be a board meeting in November to elect officers of the railroad and that anyone could draw his own conclusions. Cromwell and Harriman nursed their wounds for three weeks. The board meeting was set in New York on election day to deliberately deter the governor of Illinois from attending. The governor reluctantly attended the meeting to no avail; Cromwell and Harriman controlled the board. Sullivan and Cromwell worked against the majority of smallholders manipulating the system to the benefit of one of the most notorious robber barons.
Sullivan & Cromwell was instrumental in helping to manipulate utility owners by placing rising profits in holding companies that, by the 1920s, had given the control of three-fourths of the nation's electric business to just ten companies. For the firm's client, Union Electric, Sullivan, and Cromwell created more than 1000 subsidiaries. The subsidiaries were in turn controlled by one or two individuals. Instead of issuing common stock, the subsidiaries issued only bonds and preferred stock that didn't carry any voting rights.81
Using the tricks developed for the utilities, Sullivan & Cromwell applied them to the National Dairy Products Company. National Dairy had acquired a string of regional diaries across the country, and in 1930 acquired Kraft-Phoenix Cheese Company. Through the manipulative efforts of Sullivan and Cromwell, a localized industry was transformed into the multi-national conglomerate known as Kraft.
By 1900, Sullivan & Cromwell had emerged as the law firm of the robber barons. In the examples already given, it is clear Cromwell was willing to use unethical means to achieve victory for any client that could afford his fees. Additionally, Cromwell worked behind the scenes to weaken corporate laws. It was at this time, Cromwell developed an interest in the Panama Canal. It was also around this time, in 1911 that Dulles' grandfather, John Watson Foster, a former Secretary of State, urged Cromwell to hire his grandson. The elder Foster had known both founding partners and had clerked for Sullivan when he was in Ohio. Cromwell complied with Foster's request and hired John Foster Dulles.
By writing a pamphlet urging that American ships passing through the canal should have free passage, the young Dulles attracted the attention of Cromwell. The firm was impressed with his contacts. Sullivan and Cromwell was Panama's fiscal agent at the time.
WWI broke out during John Foster Dulles' third year at Sullivan & Cromwell. To take advantage of the war, Dulles volunteered to travel to Europe to sell risk insurance for American Cotton Oil Company's European shipments.
In 1915, Dulles' uncle, Robert Lansing, was appointed Secretary of State. Lansing recruited his nephew to go to Nicaragua, Costa Rica, and Panama on the pretext of company business, but in reality to sound out the Latin Americans on aiding the U.S. war effort. Costa Rica was led by the vicious dictator Federico Tinoco. Dulles advised Washington to support the dictator because he was anti-German. Dulles also encouraged the Nicaraguan dictator Emianiano Chamorro to issue a proclamation suspending diplomatic relations with Germany. In Panama, Dulles offered to waive the tax on Panama's annual canal fee as long as the country would declare war on Germany.
With his success in Central America, Dulles was commissioned as a captain for a position in military intelligence working for the war trade board. While on the trade board, Dulles recommended installing a new leader in Cuba and voiding the recent election. Dulles' concern was not for the welfare of the citizens of Cuba, but for the thirteen Sullivan & Cromwell clients that held huge sugar interest there. President Wilson refused to unseat the current government of Cuba but did send 1,600 marines to protect American sugar interests.
During the war, Cromwell had lived in Paris. John Foster Dulles' dealings during the peace negotiations cause him to rise in stature in the eyes of Cromwell. Cromwell was impressed with Dulles' work on the behalf of Germany. While in Europe after the war, Dulles met with the Merton brothers in Frankfurt. The Mertons need copper for their Metallgesellschaft business. Dulles arranged a large loan through Goldman Sachs for the Mertons to import American copper. It was this deal that lead to charges against Attorney General Harry Daugherty. Dulles was forced to testify at the trial. He could plead innocent because Goldman Sachs backed out of the deal.
However, the real story of treason by the Dulles brothers (John Foster and Allen) and Sullivan and Cromwell begins with the ending of the First World War. Cromwell would remain in Paris and John Foster Dulles, while not formally in charge of the New York office, would be the force to be reckoned with in New York. In 1926, Allen Dulles resigned his position with the State Department and went into private practice at Sullivan & Cromwell law firm where his brother John Foster also worked. Several Wall Street firms figured prominently in guiding investments into Germany, in the 1920s as well as in the 1930s. However, almost all deals would involve the services of Sullivan and Cromwell.
Coinciding with the Dawes Plan, John Foster Dulles arranged a large loan for Krupp. To obtain the loan Dulles had called Leland Harrison, Assistant Secretary of State to soft-pedal the item in the news. Harrison was infuriated because the department had issued a circular asking to see foreign loans before American funds were exported. Dulles knew, however, that Harrison had no authority to stop the loan. Dulles wanted to avoid the State Department's scrutiny as to whether German factories were producing military hardware. To avoid any scrutiny, Dulles chose a Saturday to call Harrison. Sullivan and Cromwell, at Dulles behest, accepted the assurances of Krupp that all military hardware had been destroyed.
[EDITOR: Notice that Allen Dulles was "away" from his office during the weekend the Bay of Pigs invasion was launched in 1961]
The Krupp loan opened a new era at Sullivan & Cromwell. It was the start of a massive investment in Germany by U.S. banks. Banks competed with each other for the services of the firm in arranging German loans. Within a year America had lent Germany $150 million dollars. Such massive lending worried both German and United States governments. The State Department privately warned bankers and lawyers of the growing indebtedness of Germany. Dulles actively promoted the loans, and Sullivan & Cromwell supervised an endless stream of German bonds. Many of the prospectuses contained errors and had never been proofread due to the frantic pace; others were deliberately deceptive. A Bavarian bond prospectus began "Bavaria has an excellent credit history"; however, Bavaria had defaulted on its debt the year before.82 Almost 70% of the money flowing into Germany during the 1930s came from U.S. investors.
Dulles derived much of his profits and his clients' profits from investments in Nazi Germany. In the 1930s Dulles set about creating an incredible interlocking financial network between Nazi corporations, American Oil and Saudi Arabia. Here Allen had help from his brother Foster. Perhaps the best-known deal arranged by Dulles was between I.G. Farben and Standard Oil of New Jersey. What is generally not known Farben was the second-largest shareholder in Standard Oil of New Jersey, second to only John D. Rockefeller himself.113 Another Rockefeller-controlled corporation that Dulles worked to protect was the Rockefeller corporation United Fruit, both United Fruit and Standard Oil of New Jersey continued to trade with the Nazis after the outbreak of war.
In the 1930s, Dulles arranged for the wealthy Czech family, the Petscheks, to sell their interest in Silesian Coal to George Murnane. Murnane was used merely to hide the Petscheks' interest. Dulles then sold the shares to his friend Schacht, the Nazi economic minister. After the sale, Dulles became director of Consolidated Silesian Steel Company. Its sole asset was a one-third interest in Upper Silesian Coal and Steel Company. The remainder of the shares were controlled by Fredrich Flick.83 This was one of the companies seized from Prescott Bush for trading with the enemy.
Allen Dulles' role at Sullivan & Cromwell soon developed into that of a fixer. The Mellons hired him to convince the Colombian government not to confiscate its investments in Colombian's rich oil and mineral fields. He did so by rigging the 1932 Colombian presidential election.
By 1934, John Foster Dulles was publicly supporting Nazi philosophy. In 1935, he wrote a long article for the Atlantic Monthly entitled "The Road to Peace." He excused Germany's secret rearmament as an action to take back their freedom. Knowing what he did about Inco and Germany's munitions industry, Dulles mislead the readers in asserting Germany's, Italy's, and Japan's desires for peace. Later in the 1930s, Dulles helped organize the American First group. A month before Pearl Harbor, he donated $500 to the group. Later, he would claim no association with the group.84 Dulles continued his support of the Nazi line right up to the time Germany invaded Poland. Dulles' excuse for the Poland invasion was much like blaming the victim for the crime.
After the bombing of Pearl Harbor, John Foster Dulles wrote the company policy for Sullivan & Cromwell on the rehiring of those who had to join the army to fight. This policy refused to guarantee that employees could return to their former positions. Nonetheless, more than half of the firm enlisted including four partners and thirty-five associates. Many of the enlistees were assigned top-level positions in the OSS. In an act of poetic justice, Dulles' policy to refuse to guarantee the enlistees' jobs upon their return from service came back to haunt him in his 1950 race for the Senate and figured prominently in his defeat.
With the outbreak of WWII, John Foster Dulles' image was severely tarnished by his praise of Nazi Germany. Throughout the war, he stayed home and used sanctimonious pronouncements to rebuild his image. However, he did not give up his secret Nazi ties.
The most significant action Dulles took during the war crippled America's war effort severely. The military depended upon diesel motors for trucks, tanks, submarines, ships, and aircraft. There was no substitute for the direct fuel injection in diesel engines. While the United States plotted to bomb Nazi diesel plants in Germany, the legal maneuvers of John Foster prevented America from manufacturing more efficient diesel engines at home.
In 1934, Dulles handled the legal end and George Murnane handled the operational end. Together they fabricated a deal in which Bosch sold its international interests to the Mendelssohn company of Amsterdam with a right to repurchase them at a later date. In 1935, Murnane joined the board of directors of the American Bosch Company. Fritz Mannheimer, the head of Mendelssohn, was a German agent. In 1937, Murnane became chairman of the board at American Bosch. Through this period, the American Bosch Company tried to get the German company to reduce the five-percent royalty is paid. To induce the German company to agree, American Bosch volunteered information about costs, selling prices, and other competitive data. The Nazi government was delighted in the exchange of data because it provided them with a blueprint of American war production prior to the United States' entry into the war. As war approached, the Nazis sought to further camouflage the true owner of American Bosch, and another sale was arranged by Dulles and Murnane to the Wallenbergs of Sweden. Besides the critical fuel injectors, Bosch also produced walkie-talkies for the Third Reich.
To further conceal German ownership, Dulles fabricated a maze of corporations that seemed American without transferring power outside of Germany. He had the Wallenbergs put their shares in Providentia, a Delaware corporation. Dulles was the sole voting trustee of the corporation and had full authority to dispose of the shares.
In July 1941, the Navy Department approached American Bosch on behalf of Caterpillar with the intention of manufacturing diesel equipment. American Bosch responded that it was willing to modify its exclusive rights; however, the corporation's rights were indivisible and thus the company was unable to grant the request.
In May 1942, American Bosch was confiscated under the Alien Property Custodian Act. A secret government document dated October 11, 1944, concluded that Dulles must have certainly known that American Bosch was German own.86 Nevertheless, Dulles was successful in delaying the widespread manufacturing of diesel engines for five years during the critical period when America sought to rebuild its military might.
The Justice Department's antitrust lawyers found that other Sullivan & Cromwell clients were prominent causes of bottlenecks in war production. The prosecution, however, had to be delayed until the end of the war; otherwise, war production would have suffered adversely. In 1946, the chemical companies signed a consent decree paying a minimal fine of five thousand dollars. A list of those who faced or signed consent decrees reads like a list of Fortune 500 corporations, including Allied Chemical, American Agricultural Chemical, and Merck.
The question of how extensive the work of John Foster Dulles acting, as a middleman in setting up deals between the rich and the Nazis cannot be answered with any great certainty. However, Ronald Preussen assembled documents from the State Department, in which Dulles acted as a fixer or middle man that indicates the total was more than one billion dollars. It is important to note that the total is only for deals, which Prussen uncovered, and that it is a floor value. The total is most likely greater as it is unlikely that the State Department would have been aware of all of Dulles's deals.
While today a single B-2 bomber costs more than one billion dollars, it is important to put the value of a billion dollars in the 1930s into context. The table below lists the gross domestic product and the gross domestic private investments throughout the 1930s.
GDP= Gross Domestic Product, GPDI= Gross Private Domestic Investment
Numbers are given in Billions
One billion dollars during the 1930s ranged from ten percent to a high of two percent. Moreover, it ranges from ten percent to one hundred percent of the money domestically invested in the United States by the private sector. The money Dulles siphoned from the American economy to invest in Nazi Germany undoubtedly prolonged and deepened the depression. To put it onto another perspective, in 1940 the Nazi war machine's budget was about five billion marks, in effect the amount of money Dulles had invested would have been enough for almost an entire year for the Nazi war machine.
Likewise, Commerce Department records show that investments in Germany increased 48.5% from 1929 to 1940.17 Additionally many U.S. firms bought a direct interest in German firms and in turn plowed the profits back into the Aryanization (seizing of Jewish firms) or arms production. Among those firms are International Harvester, Ford, GM, Standard Oil of New Jersey, and du Pont.
In the 1944 election campaign, Dulles advised Dewey to reject the issue of deploying U.S. troops under the command of the United Nations (note this does not refer to the present UN but refers to the nations united in the war) causing a break in allied relations. Dulles was also responsible for the extremist remark in Dewey's campaign that FDR had weakened the Democratic Party so badly that it was readily subject to capture by communist forces. Dulles also wanted to charge FDR with un-preparedness in the bombing of Pearl Harbor. However, cooler heads prevailed with George Marshall contacting Dewey and advising him on not revealing the secret of Magic.
Besides his close ties with Dewey, John Foster Dulles wormed his way into Republican politics by befriending Arthur Vandenberg, a staunch isolationist from Michigan. Vandenberg collaborated with Dulles on the foreign policy portion of the Republican platform in 1944. It was at Vandenberg's insistence that Dulles accompanied him to the San Francisco organizing meeting for the United Nations. Dulles promptly leaked information to the press on the bipartisan agreement poisoning the agreement and negotiations.
In the 1950s, John Foster Dulles testified at the first Hiss trial that he had asked Hiss to accept the position of president of the Carnegie Endowment for Peace. However, in the second Hiss trial, Dulles denied his previous testimony. Instead of Dulles being charged with perjury for the inconsistency of his testimony in the two trials, the inconsistency was blamed on Hiss.
Dulles was also instrumental in getting Eisenhower to run on the Republican ticket for president at the urging of General Clay. Dulles had lost his earlier chance to become secretary of state in Dewey's loss and was eager for a second chance. Before leaving for Europe to meet with Eisenhower, Dulles studied Eisenhower's background carefully. He learned that Ike was extremely popular with the public and was well known for his aversion to American casualties but was viewed as weak on foreign policy. Dulles flew to Europe to meet with Eisenhower. Dulles played on Eisenhower's aversion to American casualties during the Paris meeting by claiming that the modern strategy of maintaining peace was through massive retaliation with nuclear warheads to frighten enemies from attacking and keeping American boys from dying. Eisenhower was impressed with Dulles views and foreign policy was never discussed.88 The meeting cinched Dulles appointment as secretary of state in the Eisenhower administration.
In essence, the person who arranged more deals with the Nazis than any other person had hand-selected the next American President and appointed himself as secretary of state.
In 1951, the Federal Trade Commission produced a 400-page secret report which detailed the history of collusion in the oil market and exposed its cartel agreements around the globe. However, it wasn't until 1952 that an internal Justice Department memo noted the existence of cartel agreements that violated U.S. anti-trust laws among the seven largest oil companies. The delay was beneficial to the oil companies since the incoming Eisenhower administration was friendlier to business than the Truman administration.
On January 11, 1953, the Justice Department offered to drop criminal charges and only press a civil suit if the oil companies would produce the documents requested for the criminal case. Arthur Dean, the attorney for the oil companies refused the offer. Dean was another Sullivan and Cromwell lawyer.89 It was imperative that the oil companies avoided the court. Once in court, the Nazi dealings of Standard Oil of New Jersey and other oil companies during the war would have been exposed. Later in the Eisenhower administration, Dean was chosen to negotiate the return of POWs in Korea.
Both Dulles brothers played a role in obstructing the Standard case before the courts. Using the National Security Council, John Foster Dulles used the agency to screen evidence and segregate it from public disclosure evidence that he viewed as having national security implications.
The Eisenhower administration was packed with Sullivan & Cromwell employees. Another Sullivan & Cromwell lawyer, Norris Darrell wrote the Internal Revenue Code of 1954.
As Secretary of State, Dulles used Sullivan & Cromwell to help carry on his support for former Nazi businessmen. He supported, the Republican Senate leader Everett Dirksen's bill to return all property held by the Alien Property Custodian to its previous owners. The value of the property confiscated was worth up to $200 million dollars. The former allies were horrified by the proposal. Releasing the property would have returned the property to the Nazis and their collaborators. Holland held $100 million dollars confiscated from the Nazis, a small fraction of the damage they had done.
Dulles tried to get the attorney general to postpone the sale of the Hugo Stinnes Corporation, which held assets of the coal king of the Rhur. Since anyone legally could bid on the property, Dulles the bidding in such a way only Germans could bid arranged through Arthur Dean. There was only one bidder, the Deutsche Bank of Frankfurt. The role that Dean and Dulles performed in the sale still remains classified.
The Dulles brothers used their positions at Sullivan & Cromwell to rise not only to prominent positions inside the United States but also to key positions that aided their financing of Hitler's war machine. John Foster Dulles became a director of I.G., while his brother Allen was on the board of a leading German bank that became closely associated with the Nazis. Both were masters at drawing up arrangements to conceal the involvement of American corporations with the Nazis. Following WWII, as head of the CIA, Allen Dulles was in an ideal position to continue the cover-up of American corporate involvement with the Nazis, as well as helping scores of Nazi war criminals escape justice.
Following the first war, many large American investment firms and corporations invested heavily in Germany. In return for their dollars, they received bonds backed by shares in a Swiss holding company that owned shares in German banks. The banks in turn held shares in major German corporations that owned some of the world's most valuable patents. The German banks in effect held a worldwide monopoly on high technology. (Note high-technology is used in the context of the time and refers to the chemical industry.) There was even talk of setting up a worldwide patent cartel in Germany so American investors could escape U.S. anti-trust laws.
The Dulles brothers were also the masterminds behind the Dawes Plan, which had the support and backing of J. P. Morgan. Under the Dawes Plan, the United States lent Germany money to pay its international reparations to England and France. In turn, England and France repaid the United States. For a while this financial merry-go-round was successful and the Dulles brothers' clients reaped a financial windfall. From 1924 to 1931, Germany paid the Allies about 36 billion marks in reparations but received about 33 billion marks borrowed under the Dawes and Young Plans. This resulted in the burden of German reparations being shifted to the buyers of German bonds sold by Wall Street firms at hefty commissions.
Besides the significant involvement of the Dulles brothers and J.P. Morgan, the General Electric corporation played a tremendous role in the Dawes Plan and the Young Plan. Owen Young, the author of the Young Plan, was a member of GE's board and part of the brain trust behind the Dawes Plan. General Electric had considerable investments in Germany and benefited immensely from the Young Plan.
To fully understand its involvement in both ill-conceived German bailout plans, one must look at GE's management. Gerard Swope, president of General Electric, and Walter Rathenau, a managing director of GE's German subsidiary, opposed free enterprise. Rathenau's view of the inter-war period's new political economy is summed up in this quote:
"The new economy will, as we have seen, be no state or governmental economy but a private economy committed to a civic power of resolution which certainly will require state cooperation for organic consolidation to overcome inner friction and increase production and endurance."
It is obvious from the quote that Rathenau believed that the ultimate power should be held by corporations and that the government's only function was to pave the way for corporate rule.
Swope's held similar beliefs. He called for an anti-trust law exemption for the electrical manufacturing industry. In 1931, Swope proposed the formation of trade associations resembling cartels governed by a central quasi-governmental agency. Such laws would only serve to limit competition, as did the cartels and trade associations of Nazi Germany.
Between the cartel agreements of I.G. and the monopolistic behavior of our own robber barons, the Dulles brothers had no shortage of investors willing to invest in Germany. In 1940, Professor Gaetano Salvemini of Harvard was quoted as saying that 100 percent of American big business was sympathetic towards fascism. Corporate America's support for fascism was so great that U.S. Ambassador to Germany William Dodd proclaimed:
"A clique of U.S. industrialists is hell-bent to bring a fascist state to supplant our democratic government and is working closely with the fascist regime in Germany and Italy."
Americans have never been told the truth about the extent of corporate America's involvement with the Nazis. The media has spoon-fed Americans into believing that only a handful of companies traded with the Nazis. Nothing could be further from the truth. In reality, well over 300 American corporations were arming Nazi Germany during the war in violation of the law.
Many of these corporations took extraordinary steps to maintain communication with their German offices and to conceal their Nazi involvement from the U.S. government. They could have severed all links with Nazi Germany, but instead chose to continue to support a regime at war with their own country. In doing so, these corporations became willing accomplices to the Holocaust, traitors to their country, and guilty of war crimes. Those responsible for such actions and crimes should have received justice at the end of a hangman's noose. Sadly, none were even charged.
Even the bluest of the "blue chips," IBM, actively sought business with the Nazis during the war. Dehomag, IBM's German subsidiary, supplied the Hollerith machines that played a prominent role in the Holocaust. Without Hollerith machines, the efficiency with which the Holocaust was carried out would have been impossible. The roundup of the Jews would have been slowed to a snail's pace by forcing the Nazis to divert additional manpower to the task of locating their Jewish victims. Hollerith machines were located in every concentration camp and were serviced by Dehomag representatives under the full appraisal of the New York office.
The inclusion of IBM provides a look at the mindset of corporate America. Edwin Black's IBM and the Holocaust details the ruthlessness of corporate America in its pursuit of profits. 22 When the Nazis came to power, IBM was under the direction of Thomas Watson, who actively sought out a contract to provide the equipment for the Nazi census.
Up until then, Watson's career had been less than ethically stellar. Watson learned his business skills from John Patterson, the ruthless founder of the National Cash Register (NCR). Watson rose quickly in the ranks of NCR, learning to use frivolous lawsuits against competitors, as well as the threat of lawsuits against competitors' customers. At NCR, Watson was placed in charge of driving out competitors selling used equipment. He quickly adopted the tactics of the robber barons to establish a monopoly by using predatory pricing, threats of lawsuits, bribes, and even smashed storefronts. On February 22, 1912, Watson was indicted for criminal conspiracy to restrain trade and found guilty.
The criminal behavior and lack of ethics illustrated by Watson's early career were pervasive between the wars. When the Nazis seized power, Watson saw an opportunity to expand in Germany. In the depths of the Great Depression, Watson increased IBM's investment in Germany by nearly a million dollars. Even more gratifying was the secret pact Watson concluded in October 1933 which gave Dehomag commercial powers beyond the German borders. Previously, all IBM subsidiaries had been confined to a single country. With Dehomag now established as the defacto "IBM Europe," the Nazis were able to conduct statistical services throughout Europe. In effect, Watson had established a cartel much like I.G. Farben's.
In an attempt to justify Watson's, and IBM's dealings with the Nazis, many suggest that Watson was not a fascist, but simply a ruthless businessman. Evidence, however, suggests that if Watson was not a fascist, he was at the very least a great admirer of fascism. At a 1937 sales convention Watson said:
"I want to pay tribute(to the) great leader, Benito Mussolini. I have followed the details of his work very carefully since he assumed leadership. Evidence of his leadership can be seen on all sides. Mussolini is a pioneer... Italy is going to benefit greatly."
This is not the only evidence of Watson's support and admiration for fascism. He also had an autographed picture of Mussolini hanging in his living room for years. Watson was quoted saying:
"We should pay tribute to Mussolini for establishing this spirit of loyal support."
In a private letter to Reich Economic Minister, Hjalmar Schacht, Watson wrote:
"the necessity of extending a sympathetic understanding to the German people and their aims under the leadership of Adolf Hitler.
Watson wrote the letter years after Hitler seized power, and described Nazi aggression toward neighboring countries as a dynamic policy. The letter ended with:
"an expression of my highest esteem for himself (Hitler), his country, and his people."
While Watson's praise for Hitler and Mussolini does not supply definitive proof that Watson was a fascist, it certainly confirms the conclusion of Harvard professor, Gaetano Salvemini, that corporate America was in sympathy with fascism.
Before the ink was dry on the Treaty of Versailles, American corporations were rushing to invest and support Germany. The first to support what became the Nazi line was Henry Ford. In the early 1920s, Ford began publishing an anti-Semitic newspaper. Ford was also an early financial supporter of Hitler at a time when the Nazis were virtually unknown.
Another early backer of Hitler and the Nazis was the du Ponts. The power behind the du Pont throne in the 1920s was Irenee du Pont who, like Ford, was a supporter of Hitler before he was known outside Munich. Irenee du Pont followed Hitler's career avidly from the early 1920s on. Du Pont's representatives traveled to Germany almost immediately after the armistice to renew their alliance with I.G.
In November 1919, mere months after the armistice was signed, representatives of du Pont and the Badische Company, the principal corporate identity of I.G. Farben in Switzerland, worked out a tentative agreement for the organization of a global corporation to exploit the Haber process for ammonia and nitrate production. Du Pont also sought technical help in the dyestuffs industry. Although a complete agreement was never reached on a grand alliance, the relationship between du Pont, Verinigte Koln-Rottweiler Pulverfabriken (VKR) and Dynamit Aktiengesellschaft (DAG) became closer. At one point, du Pont had roughly three million dollars invested directly in I.G. Farben 24
The most notable aspect of the November 1919 meeting and a tentative agreement was the lightning speed with which the German cartels reestablished control over the all-important Haber process for ammonia and nitrate production. All parties had a stake in completing the agreement behind closed doors since the very nature of the agreement was in violation of the armistice. For Germany, it meant control over explosives and fertilizer production, freeing the country from dependence on Chilean nitrates. For du Pont, it was a matter of profits. Before WW II, one of the most profitable periods for du Pont was WW I. During that war, du Pont's profits rose to $230,000,000. The profits from the war were used to buy a controlling share of General Motors.
On January 1, 1926, an agreement between du Pont, VCR, and DAG was consummated and was similar to the agreement of the same date between du Pont and Imperial Chemical Industries of Britain. This agreement, debated at length in the 1934 Nye Committee hearings, was found unsigned in du Pont files. It was a gentlemen's agreement detailing exchanges of patents and technical information that could be denied if discovered. In defiance of the Treaty of Versailles banning German companies from selling military explosives, the agreement provided a means by which du Pont could sell German-produced explosives. The Nye report provides the best summary of the agreement:
"In other words, though German munitions companies cannot sell abroad, American companies can sell for them, and to our own government at that."
In effect, the agreement between du Pont, DAG, and VCR reestablished the pre-war cartel between du Pont, Koln-Rottweiler Pulverfabriken, and the British Nobel Dynamite Trust. Under the pre-war agreement, du Pont agreed not to erect any powder works in Europe, and the other signers agreed not to erect powder works in the United States. Technical information was exchanged among the signatories, and du Pont agreed to inform the others of the quantity, quality, and requirements of all powder sales to the United States government. In 1910, the Justice Department found the agreement to be a violation of anti-trust laws, resulting in the breakup of du Pont powder works and the formation of Atlas Powder and Hercules Powder. Within a few years of the 1910 ruling, du Pont reorganized in Delaware because of the state's lax regulations of corporations.
An agreement between du Pont and Dynamit in 1929 controlled the production of tetrazine, a substance for greatly improved ammunition primers. When WWII began in 1939, Remington (controlled by du Pont) received huge British ammunition orders. Because of a clause in the agreement with I.G. Farben the British received an inferior cartridge lacking tetrazine.