IBM and the Holocaust (33 page)

Clearly, money was a pressure tactic IBM could use. Heidinger was receiving a monthly allowance of RM 7,000 for all of 1938. Milner had some weeks earlier reminded IBM attorneys in New York, "the last payment on this account will fall due in December. It will then be necessary for a decision to be made regarding the year 1939."
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Heidinger was being squeezed. Not only was he liable for a RM 90,000 tax, but because of the protracted reporting delay, German tax authorities had added a mandatory loan to the government, made retroactive for the three years 1934-1937, and that loan totaled RM 151,000. He could never afford that without help from the company. Watson understood that, and cut off Heidinger's RM 7,000 monthly advance.
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In a March 13 letter, Rottke implored Milner to advance Heidinger the money needed for the mandatory loan.
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Heidinger was clearly desperate. Tax monies would be due within a matter of weeks. He had accommodated Watson all these years. Now he needed help.

Watson was unmoved. On March 15, the day the Nazis smashed into the remainder of Czechoslovakia, Milner calmly answered Rottke, expressing regret for a "very awkward condition." But in fact, insisted Milner, it was Heidinger who had insisted that dividends be paid. If now the taxing authority had imposed mandatory loans, that was Heidinger's problem. Indeed, IBM attorneys in Berlin had carefully studied current regulations and determined that IBM had actually advanced monies above the legal limit. "Therefore," asserted Milner, "it is Mr. Heidinger who has received too much money, and it is he who should make arrangements to invest the surplus with the Loan Stock Bank."
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In describing the mess to the IBM NY officers, Milner caustically noted, "We cannot be blamed if Mr. Heidinger's own government will not let him draw adequate cash dividends. On the other hand, this increases the hazard of his offering to sell us some of his stock."
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In the meantime, IBM was negotiating with the subsidiary's two other managers, Hummel and Rottke, over the profit sharing plan for Dehomag's activities outside of Germany. On March 21, six days after Czechoslovakia had been seized, even as Poland, Lithuania, and other countries were being actively threatened with German invasion, IBM European troubleshooter Harrison Chauncey dashed a short note off to Phillips about the bonus terms for "new territories" to be handed to Dehomag. "I wonder," Chauncey asked, "if the further changes in the German political situation require any consideration of this subject at this time?" Phillips in New York scrawled a note back, "Considering present changes in the map of Europe don't you consider it best to wait?"
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It was no longer just Austria and Czechoslovakia. Clearly, other nations would soon come under Dehomag's sphere of influence. IBM was trying to plan ahead.

BRINKSMANSHIP WAS
Watson's specialty. First he instructed Holt not to go to Berlin to participate in a scheduled shareholders meeting. Hence, no decision could be voted on Heidinger's request. As each day passed, Heidinger's financial situation worsened.
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Then, on March 31, 1939, Watson cabled Holt: "Loan Heidinger 150,000 marks to pay Loan Stock Account and also authorize you to vote for payment of 8% dividend, you to invest our dividend money in real estate."

Under German law, 8 percent was the legal limit IBM could pay without incurring additional taxation. The 8 percent dividend was to be paid monthly just as the advance was. But 8 percent would total RM 3,500, just half of what Heidinger needed to pay his bills and half the 16 percent return identified by Price Waterhouse.
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Heidinger needed RM 7,000 per month. He was fed up with IBM and Watson.

A
PRIL 26, 1939
Thomas J. Watson
President of the IBM
New York

Dear Mr. Watson!

As you know, up to the end of last year, I received a monthly payment of RM 7000—as an advance on account of dividends. . . . these payments have been stopped since Jan. 39 . . . since that date, no shareholders meeting took place and therefore a corresponding resolution could not be formed.

A meeting has been called for April 11 . . . Mr. Holt replied . . . "it is not convenient for him to come Berlin" and that he acts solely in the capacity of the chief stockholder, the IBM. . . .

April 14, Mr. Rottke wrote to Mr. Milner . . . saying among other words: "I seriously fear that Mr. Heidinger gets in economic difficulties . . . therefore I beg you kindly to discuss this item with Mr. Watson in Paris . . . Today, Mr. Rottke informed me that he received a letter of Mr. Milner . . . "to advance to Mr. Heidinger on account of dividends for 1939, a sum equal to eight percent of his capital share in Dehomag. (That means RM 3,500). This may be advanced monthly . . . and can be ratified at an eventual meeting of the partners." . . . That means that the IBM either does not like my partnership or at least that it does not attach great value to maintain my partnership in the Dehomag.

Unnecessary to say how sorry and how deeply depressed I feel about such an attitude, which in all probability ends my partnership . . . I herewith offer my shares . . . in the Dehomag to the IBM . . . negotiate with me about the purchase price . . . accept the transfer of the shares to IBM.

I would be very happy and highly appreciative if the personal relations which have been created during the past 29 years between me and the different gentlemen of the IBM . . . and between you and me will not be changed . . . Again expressing my deepest regret, I beg to accept my personal regards and remain

very sincerely yours,
Willy Heidinger
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Rottke openly conceded the contract between IBM and Heidinger had "been made under an unlucky star, [and] appears to be the source of all evil." But he nonetheless warned Watson again that if Heidinger's shares were transferred to a foreign source Dehomag would probably not be permitted "the use of the word
Deutsche
(German) as an enterprise recognized in Germany as German."
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That disaster had to be avoided at all costs. To IBM's doctrinaire German managers, including Heidinger, Dehomag represented far more than just a profit-making enterprise. To them, Dehomag had the technologic ability to keep Germany's war machine automated, facilitate her highly efficient seizure of neighboring countries, and achieve the Reich's swiftly moving racial agenda. If IBM's subsidiary were deemed non-Aryan, the company would be barred from all the sensitive projects awaiting it. Hitler's Germany—in spite of itself—would be deprived of the Holleriths it so desperately required.

From Watson's point of view, Germany was on the brink of unleashing its total conquest of Europe. IBM subsidiaries could be coordinated by Dehomag into one efficient continental enterprise, moving parts, cards, and machines as the Reich needed them. The new order that Hitler promised was made to order for IBM.

In July 1939, Watson arrived in Berlin to personally mediate with Heidinger. A compromise would be necessary. The stakes were too high for the Nazis. The stakes were too high for capitalism. But it was the Germans who gave in, deferring on Heidinger's demands for a few months under terms Watson dictated. Watson now controlled something the Third Reich needed to launch the next decisive step in the solution of the Jewish question, not just in Germany—but all of Europe. Until now, the fastest punchers, tabulators, and sorters could organize only by numbers. The results could then be sorted by sequentially numbered profession, geographic locale, or population category. But now Watson had something new and powerful.
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He had the alphabetizers.

VII DEADLY COUNT

ON MAY 17, 1939, GERMANY WAS SWEPT BY 750,000 CENSUS
takers, mainly volunteers. They missed virtually no one in the Greater Reich's 22 million households, 3.5 million farmhouses, 5.5 million shops and factories. Teams of five to eight census takers fanned out through the big cities such as Berlin, Frankfurt, Hamburg, and Vienna. Towns and villages were divided into districts of thirty homes with one census taker assigned to each. Some 80 million citizens in the Greater Reich, including Germany, Austria, the Sudetenland, and the Saar, would be classed according to their ancestry.
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There was little question to the world that the May 1939 national census was racial in nature.
New York Times
coverage of the mammoth project made clear that this census would "provide detailed information on the ancestry, religious faith and material possessions of all residents. Special blanks will be provided on which each person must state whether he is of pure 'Aryan' blood. The status of each of his grandparents must be given and substantiated by evidence in case of inquiry."
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Certainly, by May 1939, virtually every "practicing Jew" had been registered, surveyed, numbered, and sorted numerous times in a series of overlapping, often disjointed, campaigns. The purpose of the 1939 census was to identify the so-called "racial Jews" in Germany proper, add Jews of any definition in the new territories of the expanded Reich, and locate each individual before being ghettoized or subjected to other action. Indeed the ghettoization decrees had begun that very month. In addition, Germany was preparing for all-out war and without the census, it could not identify exactly where all its draftable men were, and which women would step into their economic shoes once mobilized.
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As such, the census was vital to Hitler's two-front war—one against the Jews, and one against all of Europe.

Understandably, Dehomag's 1939 undertaking dwarfed anything it had attempted before, including the 1933 Prussian census. Months of intensive training, conducted in thousands of sessions, prepared legions of volunteers for the critical mission. Police and their auxiliaries were mandated to support the count "with all their powers" and "to function as census-takers in difficult and confusing residential areas," according to official regulations.
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The additional Hollerith machinery assembled was massive: 400 electrical key punches, 10 gang punches, 20 summary punches, 300 key punch verifiers, 70 sorters, 50 tabulators, 25 duplicators, and 50 D-11 VZ tabulators. The Reich had imposed seemingly impossible target delivery dates for November 1939. So to increase speed, Dehomag's engineers converted their versatile D-11 calculating tabulator into a pure counting machine dubbed the D-11 VZ. The improvised device could process 12,000 60-column punched cards per hour in sixteen counters and then precision-punch its own summaries onto 80-column cards. Eighty million cards were actually used.
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A special envelope containing a so-called Supplemental Card was created. This all-important card recorded the individual's bloodline data and functioned as the racial linchpin of the operation. Each head of household was to fill out his name and address and then document his family's ancestral lines. Jews understandably feared the newest identification. Census takers were cautioned to overcome any distrust by assuring families that the information would not be released to the financial authorities.
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But it was not German taxing agencies that were the most eager for the new data. It was the Nazi Party structure and Reich security forces seeking to locate additional Jews and other undesirables. Indeed, the final data was intended to help comprise a single national register for the entire Greater Reich. Each card carried a single column coded for descent, designed into the card prototype long before the census was launched. A letter from the Order Police to the Ministry of the Interior at the end of 1938 explained: "This column on the registration card is included to be filled out at the right time. That time should come in May of next year during the population, occupation, and company census. The regular questionnaire will be supplemented by an additional card. This card will include the question of whether the person had any fully Jewish grandparent. Survey results will then be evaluated using this registration card."
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The 25 million Supplemental Cards—one for each household—represented a virtual doubling of census files. To cope with the volume and still meet deadlines, the census tabulation was divided into two operations. First, each special envelope containing a Supplemental Card was labeled to correspond to the household's general questionnaire, along with the district and municipality of origin. Then local officials, generally the police, affixed the letter "J" to both the questionnaires and cards of all Jewish families.
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