IBM and the Holocaust (66 page)
THROUGHOUT 1942,
a number of American companies were grandly exposed for extensive dealings with Nazi Germany. A so-called "Proclaimed List" of blacklisted companies had grown from 1,800 in the summer of 1941 to 5,000 European and Latin American companies by mid-January 1942. These prohibited firms were considered either Nazi-owned or Nazi-connected, whether located in Nazi Europe or in neutral countries such as Portugal, Spain, or Switzerland. Of course, all direct trading with Germany and Italy was prohibited. Some firms were included merely because they were considered Axis sympathizers.
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For example, on January 14, 1942, five controlling senior executives of General Aniline and Film Corporation, America's third-largest dyestuff manufacturer, were banned from the company by the Treasury Department. All were American citizens, but of German birth, and had for years been suspected of close ties to the German conglomerate I.G. Farbenindustrie. The suspicion was that I.G. Farben either secretly owned Aniline, or could dominate it through the five German-Americans.
7
On March 26, 1942, a Congressional Committee castigated Standard Oil of New Jersey for turning over synthetic rubber processes to the German Navy while withholding the same technical information from the United States and British militaries. Investigators cited company correspondence and a secret pre-Pearl Harbor trade arrangement with I.G. Farbenindustrie to permit a "modus vivendi which would operate through the term of the war, whether or not the United States came in." Senator Harry Truman, who headed up a special defense investigating committee, publicly excoriated Standard Oil's arrangement as "treason" and "an outrage." An assistant U.S. attorney general described the pact as a "devise for the continuation of the conspiracy through the war." In reporting the scandal, the
New York Times
ran an adjacent article headlined "Standard Oil Men Silent on Charges."
8
Further revelations documented that Standard Oil tried to do business with Nazi firms in Occupied France, including the construction of an aviation fuel refinery. In its allegations against Standard Oil, the Justice Department repeatedly emphasized that scores of American companies had been quietly capitalizing on relationships with Nazi Germany. In fact, said the Justice Department, Farben alone had consummated contracts with more than 100 hundred American firms, and that those efforts had retarded America's military preparedness by tying up patents and resources.
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Certainly scores of American firms used international connections to trade with the enemy. None of them needed more than their own profit motive to pursue such deals. Many of them were proud members of the International Chamber of Commerce, which, during Watson's tenure, espoused an official enthusiasm for trade with the Hitler regime.
Ironically, none of IBM's subsidiaries were on the Proclaimed List because they fell into a double-edged corporate identity as "American-owned property." The same applied to all American-owned subsidiaries in Axis-controlled lands. So even though corporate parents, such as IBM, were not permitted to communicate with their own subsidiaries because they were in Axis territory, these companies were deemed American property to be protected. In fact, since IBM only leased the machines, every Dehomag machine, whether deployed at the
Waffen
-SS office in Dachau or an insurance office in Rome, was considered American property to be protected.
10
Hence, Dehomag could simultaneously exist as a U.S. interest and a tool of the Nazis doing business with the same Farben and Siemens entities that brought other American companies utter denunciation and often prosecution.
The confusion and inconsistency inherent in the classification of IBM subsidiaries as "friend or foe" was evident virtually every time the matter was raised. For example, on June 16, 1942, the American Consul in Bern asked that IBM's Swiss subsidiary, Watson A.G., not be blacklisted. "This is an American firm," wrote the Consul, "and American interests would probably suffer should it be listed. Axis firms would profit by the listing because it is believed that they have in stock a substantial number of office machines manufactured in Germany and exported to countries later occupied by Germany and Italy. . . . Such machines have already reached the Swiss markets carrying instructions for assembly, use, etc. in the Spanish, Yugoslav, Rumanian, etc., languages. . . . This Consulate General concurs . . . that Watson A.G. should not be listed."
11
No wonder the British Foreign Office was increasingly disturbed at America's blacklisting inconsistencies. One confidential memo from the British Embassy regarding the blacklist evoked a handwritten marginal note: "It is only too clear that where U.S. trade interests are involved, these are being allowed to take precedence over 'hemispheric defense,' and . . . over cooperation with us."
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Because the legalities were so gray, and IBM so stellar an American concern, Carter was not permitted to work with much speed. Alleging treacherous business when the firm was as prominent as IBM, and its leader as well connected to the White House as Watson, was not to be undertaken lightly by any branch of the U.S. government.
So Carter was unable to obtain a subpoena. But he was allowed to visit IBM headquarters and conduct interviews in mid-July 1943. To prepare for his visit, Carter typed an outline with nine topics. His emphasis was how IBM could not just lease products but actually control its customers. Topic 1 on Carter's typed outline: "Importance of the [Dehomag] plant for the efficient management of the German war machine." Topic 2: "Cards imported from the United States per year." Topic 3, with a checkmark: "The source of raw materials with particular emphasis on the possible bottleneck in supplying paper pulp for the manufacture of cards." Topic 7: "Control exercised by IBM over their customers through the policy of renting equipment and the sale of cards."
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A second list of ten typed questions focused strictly on Dehomag factories in Sindelfingen and Lichterfelde. Carter wanted to know about "alphabetical printers . . . why the sudden interest now." He also wanted the "name of railroads" Dehomag worked with, and the volume of cards it produced and had imported from IBM NY over the years.
14
Carter began June 14, 1943, by interviewing Jurriaan W. Schotte, IBM's New York-based General Manager for Europe, in the company's headquarters. Although Schotte, a Dutch national, was the firm's European General Manager, he was permanently stationed in New York. From his office at IBM NY headquarters, Schotte continued to regularly maintain communication with IBM subsidiaries in Nazi territory, such as his native Holland and Belgium.
15
Carter found Schotte a font of information. The interview lasted three days. During that time, Carter scribbled copious notes about IBM customers, uses for Hollerith machines, paper suppliers, biographies of leading IBM and Dehomag personalities, and terms of use. Since Carter represented the Justice Department, his request to examine hundreds of pages of material was complied with.
16
Carter perused collections of documents, allowing him to piece together an extraordinary global enterprise, one that in Europe centered on Nazi Germany. It was all micro-managed from IBM's world headquarters. He saw correspondence, typed and sometimes handwritten, detailing sales, installations, Dehomag's revolt, and IBM's struggle to retain its position in the Axis. Machine tool orders were itemized by factory, order date, and anticipated delivery date. Quarterly financial reports and monthly narratives from subsidiaries in enemy territory, received even after Pearl Harbor, relayed the latest business developments and the vicissitudes of competitor information. Up-to-date customer account information enumerated long lists of machines and rental prices, as well as specific war applications. Card consumption figures summarized the volume both by country of manufacture and country of import, all organized by year. Most of all, anyone could discern the ease and frequency of contact IBM maintained with foreign branches.
17
Clearly, IBM NY possessed a wealth of detailed information about its overseas operations, from CEC to Dehomag to the units peppered throughout the Balkans. Carter was able to type twenty-five pages of notes based just on his three days of interviews with Schotte. A significant portion of those notes centered on two aspects: IBM's ability to manage all aspects of the railroads of Europe, from identification of freight to scheduling, and IBM's incontrovertible control of punch cards.
In the case of the railroads, Carter learned that the Nazis could not schedule cargo or locate a boxcar or locomotive without Hollerith cards. "The German government," Carter wrote, "is at present partly subsidizing freight shipments . . . dependent upon IBM machines in such a way that if the card system were not permitted to function, the railroads would be unable to ascertain that portion of the expense which the government had contracted to bear. . . . Statistics as to the expense to the railroad of freight running between certain points depends upon the card system. In allocating freight charges between railroad systems in different countries, the cards are invaluable."
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Carter continued, "the location of the number of trains available in a particular territory can be ascertained, which record would only be about two days late. The only other method would be a spot check which would be two weeks late and, of course, in any system such as a railroad with the tremendous flux of traffic, a two-week gap would be worthless."
19
Regarding punch cards, Carter noted, "In the manufacture of cards, special machinery is needed. No one but an IBM affiliate can make IBM cards because in Germany the contracts contain a clause that the German customer cannot use cards except those of IBM manufacture. . . . At present, with paper shortages, stockpiles are probably not permitted for more than one month. The replacement requirements of cards are tremendous."
20
Carter was even able to comprehend IBM's controversial "royalty" agreement. "A peculiar situation arises with regard to the Dehomag company," recorded Carter, "in that here is an almost completely owned subsidiary which, in addition to paying the usual stock dividend, is also required to pay royalties to the American company. . . . However, probably, the true explanation is that the legal limits of stock dividends prevented IBM from getting the return it wanted from the German company, and hence this is a method devised for additional returns."
21
Clearly, if he could reconstruct as much as he did with a simple request, a full search was called for. Carter returned, this time for a systematic "file search." But he was still hobbled by the lack of a subpoena; his superiors would still not approve one. As such, he was dependent upon the voluntary cooperation of the very people he was investigating.
22
In IBM's warehouse, at 75 Murray Street in Manhattan, Carter found ten file drawers. Files were arranged alphabetically by country covering the years 1934 to 1940. They contained correspondence relating to punch card production, machine and parts inventories, tariff files, repair records, customer complaints, lists of international fairs and visitors entertained.
23
But where were the key European files listing "the customer, location, type of business, ownership . . . card consumption and name of salesman" for each machine? Most importantly, where were the "application studies," that is, the specific analysis of each machine's purpose, how well it performed its task, and how it could improve? Schotte's answer: all those records were located in the offices of IBM Geneva.
24
Where were the records for 1933? Schotte's answer: destroyed.
25
At IBM World Headquarters, 590 Madison Avenue, Carter first asked for Schotte's files. But now, cooperation had substantially narrowed. Carter was not permitted to examine the actual file drawers. Instead, Schotte brought the folders into his office for Carter's review. Again, all the files were arranged alphabetically by country. The covered years spanned 1940 to IBM's most recent correspondence, containing monthly narrative reports by subsidiary, the details of the IBM machine installations, and "in many instances, applications of the machines." But no "application studies" were found for Germany, France, or Japan.
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Where were the copies of Schotte's personal correspondence with the subsidiaries? Schotte's answer: none were in America—they were all kept in the files of the various subsidiaries.
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