Wall Street and the Rise of Hitler (10 page)

5Mimeographed Translation in Hoover Institution Library, p. 67. Also see Walter Rathenau,
In Days to Come,
(London: Allen & Unwin, n.d.) 6Ibid, p. 249.

7
New York Times,
July 2, 1929.

8Ibid, July 28, 1929.

9Ibid, August 2, 1929 and August 4, 1929.

10Ibid, August 6, 1929.

11Ibid, February 2, 1930.

12Ibid, February 2, 1930.

13Ibid, May 11, 1930. For the prewar machinations of General Electric, Osram, and the Dutch company N.V. Philips Gloeilampenfabrieken of Eindhoven Holland, see Chapter 11,
"Electric
Eels," in James Stewart Martin,
op cit.

Martin was Chief of the Economic Warfare Division of the U.S. Department of Justice and comments that "The A.E.G. of Germany was largely controlled by the American company, General Electric." The assumption by this author is that the G.E. influence was somewhat less than controlling although substantial enough. Because of Martin's official position and access to official documents, not known to the author, his statement that A.E.G. was "largely controlled" by U.S. General Electric cannot be lightly dismissed. However, if we accept that http://reformed-theology.org/html/books/wall_street/chapter_03.htm (12 of 13) [8/4/2001 9:44:13 PM]

CHAPTER THREE: General Electric Funds Hitler

G.E. "largely controlled" A.E.G., then the most serious questions arise which clamor for investigation. A.E.G. was a prime financier of Hitler and "control"

would more deeply implicate the U.S. parent company than is suggested by the evidence presented here.

14Son of Emil Rathenau, founder of A.E.G., born in 1867 and assassinated in 1922.

15The United States Strategic Bombing Survey,
German Electrical Equipment
Industry/Report,
(Equipment Division, January 1947), p. 4.

16U.S. Strategic Bombing Survey,
Plant Report of A.E.G. (Allgemeine
Elektrizitats Gesellschaft),
Nuremburg, Germany: June 1945), p. 6.

17p. 3. Consequently, "production during the war was adequate until November 1944" and "in the opinion of Speer assistants and plant officials the war effort in Germany was never hindered in any important manner by any shortage of electrical equipment." Difficulties arose only at the very end of the war when the whole economy was threatened with collapse. The report concluded, "All important needs for electrical equipment in 1944 may therefore be said to have been met, since plans were always optimistic."

18U.S. Strategic Bombing Survey,
AEG-Ostlandwerke GmbH,
by Whitworth Ferguson, 31 May 1945.

BACK

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CHAPTER FOUR: Standard Oil Fuels World War II

CHAPTER FOUR

Standard Oil Fuels World War II

In two gears Germany will be manufacturing oil and gas enough out of soft
coal for a long war. The Standard Oil of New York is furnishing millions of
dollars to help.
(Report from the Commercial Attaché, U.S. Embassy in Berlin, Germany, January 1933, to State Department in Washington, D.C,) The Standard Oil group of companies, in which the Rockefeller family owned a one-quarter

(and controlling) interest,1
was of critical assistance in helping Nazi Germany prepare for World War II. This assistance in military preparation came about because Germany's relatively insignificant supplies of crude petroleum were quite insufficient for modern mechanized warfare; in 1934 for instance about 85 percent of German finished petroleum products were imported. The solution adopted by Nazi Germany was to manufacture synthetic gasoline from its plentiful domestic coal supplies. It was the hydrogenation process of producing synthetic gasoline and iso-octane properties in gasoline that enabled Germany to go to war in 1940 — and this hydrogenation process was developed and financed by the Standard Oil laboratories in the United States in partnership with I.G.

Farben.

Evidence presented to the Truman, Bone, and Kilgore Committees after World War II confirmed that Standard Oil had at the same time "seriously imperiled the war preparations

of the United States."2
Documentary evidence was presented to all three Congressional committees that before World War II Standard Oil had agreed with I.G. Farben, in the so-called Jasco agreement, that synthetic rubber was within Farben's sphere of influence, while Standard Oil was to have an absolute monopoly in the U.S.
only if and when
Farben allowed development of synthetic rubber to take place in the U.S.:
Accordingly [concluded the Kilgore Committee] Standard fully accomplished
I.G.'s purpose of preventing United States production by dissuading American
rubber companies from undertaking independent research in developing

synthetic rubber processes.
3

Regrettably, the Congressional committees did not explore an even more ominous aspect of this Standard Oil — I.G. Farben collusion: that at this time directors of Standard Oil of New Jersey had not only strategic warfare affiliations to I.G. Farben, but had other links with Hitler's Germany — even to the extent of contributing, through German subsidiary companies, to Heinrich Himmler's personal fund and with membership in Himmler's Circle of Friends as late as 1944.

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CHAPTER FOUR: Standard Oil Fuels World War II

of Friends were unknown. The accusations of treason were vehemently denied by Standard Oil. One of the more prominent of these defenses was published by R.T. Haslam, a director of Standard Oil of New Jersey, in
The Petroleum Times
(December 25, 1943), and entitled

"Secrets Turned into Mighty War Weapons Through I.G. Farben Agreement."4 This was an

attempt to turn the tables and present the pre-war collusion as advantageous to the United States.

Whatever may have been Standard Oil's wartime recollections and hasty defense, the 1929

negotiations and contracts between Standard and I.G. Farben were recorded in the contemporary press and describe the agreements between Standard Oil of New Jersey and I.G. Farben and their intent. In April 1929 Walter C. Teagle, president of Standard Oil of New Jersey, became a director of the newly organized American I.G. Farben. Not because Teagle was interested in the chemical industry but because,

It has for some years past enjoyed a very close relationship with certain
branches of the research work of the I.G. Farbenin-dustrie which bear closely
upon the oil industry.
5

It was announced by Teagle that joint research work on production of oil from coal had been carried on for some time and that a research laboratory for this work was to be established
in
the United States
.
6
In November 1929 this jointly owned Standard — Farben research company was established
under the management of the Standard Oil Company of New
Jersey,
and all research and patents relating to production of oil from coal held by both I.G.

and Standard were pooled. Previously, during the period 1926-1929, the two companies had cooperated in development of the hydrogenation process, and experimental plants had been placed in operation in both the U.S. and Germany. It was now proposed to erect new plants in the U.S. at Bayway, New Jersey and Baytown, Texas, in addition to expansion of the earlier experimental plant at Baton Rouge. Standard announced:

... the importance of the new contract as applied to this country lay in the fact
that it made certain that the hydrogenation process would be developed
commercially in this country under the guidance of American oil interests.
7

In December 1929 the new company, Standard I.G. Company, was organized. F.A. Howard was named president, and its German and American directors were announced as follows: E.M. Clark, Walter Duisberg, Peter Hurll, R.A. Reidemann, H.G. Seidel, Otto von Schenck, and Guy Wellman.

The majority of the stock in the research company was owned by Standard Oil. The technical work, the process development work, and the construction of three new oil-from-coal plants in the United States was placed in the hands of the Standard Oil Development Company, the Standard Oil technical subsidiary. It is clear from these contemporary reports that the development work on oil from coal was undertaken by Standard Oil of New Jersey within the United States, in Standard Oil plants and with majority financing and control by Standard. The results of this research were made available to I.G. Farben and became the basis for the development of Hitler's oil from-coal-program which made World War II possible.

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CHAPTER FOUR: Standard Oil Fuels World War II

The Haslam article, written by a former Professor of Chemical Engineering at M.I.T. (then vice president of Standard Oil of New Jersey) argued — contrary to these recorded facts —

that Standard Oil was able, through its Farben agreements, to obtain
German
technology for the United States. Haslam cited the manufacture of toluol and paratone (Op-panol), used to stabilize viscosity of oil, an essential material for desert and Russian winter tank operations, and buna rubber. However, this article, with its erroneous self-serving claims, found its way to wartime Germany and became the subject of a "Secret" I.G. Farben memorandum dated June 6, 1944 from Nuremburg defendent and then-Farben official von Knieriem to fellow Farben management officials. This yon Knieriem "Secret" memo set out those facts Haslam avoided in his
Petroleum Times
article. The memo was in fact a summary of what Standard was unwilling to reveal to the American public — i.e., the major contribution made by Standard Oil of New Jersey to the Nazi war machine. The Farben memorandum states that the Standard Oil agreements were
absolutely essential
for I.G. Farben:
The closing of an agreement with Standard was necessary for technical,
commercial, and financial reasons:technically, because the specialized
experience which was available only in a big oil company was necessary to the
further development of our process,
and no such industry existed in Germany; commercially,
because in the absence of state economic control in Germany at
that time, IG had to avoid a competitive struggle with the great oil powers, who
always sold the best gasoline at the lowest price in contested markets;
financially,
because IG, which had already spent extraordinarily large sums for
the development of the process,
had to seek financial relief in order to be able to

continue development in other new technical fields, such as buna.8

The Farben memorandum then answered the key question: What did I.G. Farben acquire from Standard Oil that was "vital for the conduct of war?" The memo examines those products cited by Haslam — i.e., iso-octane, tuluol, Oppanol-Paratone, and buna — and demonstrates that contrary to Standard Oil's public claim, their technology came to a great extent from the U.S., not from Germany.

On iso-octane the Farben memorandum reads, in part,

By reason of their decades of work on motor fuels, the Americans were ahead
of us in their knowledge of the quality requirements that are called for by the
different uses of motor fuels. In particular they had developed, at great
expense, a large number of methods of testing gasoline for different uses. On
the basis of their experiments they had recognized the good anti, knock quality
of iso-octane long before they had any knowledge of our hydrogenation
process. This is proved by the single fact that in America fuels are graded in
octane numbers, and iso-octane was entered as the best fuel with the number
100. All this knowledge naturally became ours as a result of the agreement,
which saved us much effort and protected us against many errors.

I.G.
Farben adds that Haslam's claim that the production of iso-octane became known in America only through the Farben hydrogenation process was not correct:
Especially in the case of iso-octane, it is shown that we owe much to the
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CHAPTER FOUR: Standard Oil Fuels World War II

Americans because in our own work we could draw widely on American
information on the behavior of fuels in motors. Moreover, we were also kept
currently informed by the Americans on the progress of their production
process and its further development.

Shortly before the war, a new method for the production of iso-octane was
found in America — alkylation with isomerization as a preliminary step. This
process, which Mr. Haslain does not mention at all, originates in fact entirely
with the Americans and has become known to us in detail in its separate stages
through our agreements with them, and is being used very extensively by us.

On toluol, I.G. Farben points to a factual inaccuracy in the Haslam article: toluol was
not
produced by hydrogenation in the U.S. is claimed by Professor Haslam. In the case of Oppanol, the I.G. memo calls Haslam's information "incomplete" and so far as buna rubber is concerned,
"we
never gave technical information to the Americans, nor did technical cooperation in the buna field take place." Most importantly, the Farben memo goes on to describe some products not cited by Haslam in his article:

As a consequence of our contracts with the Americans, we received from them,
above and beyond the agreement, many very valuable contributions for the
synthesis and improvement of motor fuels and lubricating oils, which Just now
during the war are most useful to us; and we also received other advantages
from them. Primarily, the following may be mentioned: