Enduring Entanglements: The Third Reich’s Insidious Impact on America

Copyright © 2019 by Daniel Patrick Brown

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In Loving Memory

Sarah Katharine

Earl Frederick

Michael A.

Christina Sue

Also by Daniel Patrick Brown

The Beautiful Beast:

The Life & Crimes of SS-Aufseherin Irma Grese

The Camp Women: The Female SS Auxiliaries Who

Served in the Nazi Concentration Camps

The Protectorate and the Northumberland Conspiracy:

Political Intrigue in the Reign of Edward VI

The Tragedy of Libby and Andersonville Prison Camps:

A Study of Mismanagement and Inept Logistical Policies at Two

Southern Prisoner-of-War Camps during the Civil War

Woodrow Wilson and the Treaty of Versailles:

The German Leftist Press’s Response

Abbreviations and Acronyms

AAC: Army Air Corps (forerunner of the U.S. Air Force)

AAMD: Association of American Museum Directors

AAU: American Amateur Athletic Union

ACC: Allied Control Council

AJC: American Jewish Committee

Agfa: Aktien-Gesellschaft für Anilin-Fabrikation (Joint-stock Company for Aniline Production)

AMPAS: Academy of Motion Picture Arts and Sciences

Antifas: ,, Antifaschistische Aktion’’ (postwar German communist group)

APC: Alien Property Custodian

ALR: [European] Art Loss Register

AT&T: American Telephone & Telegraph

AEC: [U.S.] Atomic Energy Commission

BASF: Badische Anilin-und-Soda-Fabrik (Baden Aniline and Soda Factory

BEG: ,,Bundesentschüldigangsgesetz’’ (the Federal Republic of Germany’s Indemnification Law)

BEW: [U.S.] Board of Economic Warfare

BMW: Bayerische Motoren Werke AG (Bavarian Motor Works)

BRD: Bundesrepublik Deutschland (Federal Republic of Germany – West Germany)

CalPERS: California Public Employees Retirement System

CRT: cathode ray tube

CAR: Commission for Art Recovery

CIA: [U.S.] Central Intelligence Agency

CIAA: [U.S.] Coordinator of Inter-American Affairs

CIC: [U.S. Army] Counter Intelligence Corps

CID: [U.S. Army] Criminal Investigation Division

CIOS: [U.S.] Combined Intelligence Objectives Subcommittee

CIPC: [U.S.] Combined Intelligence Priorities Committee

COI : [U.S.] Coordinator of Information

Comintern: Communist International

Committee for Return: Committee for the Return of Confiscated German and Japanese Property

CPUSA: Communist Party of the United States of America

CROWCROSS: Central Register of War Criminals and Security Suspects

DAF: Deutsches Arbeitsfront (German Labor Front)

DDR: Deutsche Demokratische Republik (Democratic Republic of Germany – East Germany)

DINA: "Dirección de Inteligencia Nacional’’ (the National Intelligence Directorate – Chilean intelligence Service)

DMs: Deutsche Marks

DOJ: [U.S.] Department of Justice

DP: Displaced Person

ERR: ,,Einsatzstab Reichsleiters Rosenberg,’’ (National Leader Rosenberg Taskforce)

EAC: European Advisory Commission

ECLA: [European] Commission for Looted Art

EU: European Union

evz: ,,Stiftung Erinnerung, Verantwortung und Zukunft’’ (Remembrance, Responsibility, and Future Foundation)

FAVG: Frankfurter Allgemeine Versicherungs Gesellschaft (Frankfurt General Insurance Group)

FBI: [U.S.] Federal Bureau of Investigation

FCC: Federal Councils of the Churches

FCPA: [U.S.] Foreign Corrupt Practices Act

FEA: [U.S.] Foreign Economic Administration

FFI: Friedrich Flick Industrieverwaltung (Friedrich Flick Industrial Management Group)

FCSC: [U.S.] Foreign Claims Settlement Commission

FFC: [U.S.] Foreign Funds Control

FHO: Fremde Heere Ost (Foreign Armies East)

FIAT: [U.S.] Army Field Intelligence Agency, Technical

FKL: Frauenkonzentrationslager (women’s concentration camp)

FAVG: Frankfurter Allgemeine Versicherungs Gesellschaft (Frankfurt General Insurance Group)

ECLA: [European] Commission for Looted Art

ERR: Einsatzstab Reichsleiters Rosenberg, (the National Leader Rosenberg) – the Nazi organization responsible for confiscating the resources of its victims)

FCPA: [U.S.] Foreign Corrupt Practices Act

GAF: General Aniline and Film

GDV: Gesamtverband der Deutschen Versicherungswirtschaft e.V’’ (German Insurance Association)

GE: General Electric

GM: General Motors

GRU: Glavnoye razvedyvatel’noye upravleniy (Soviet Military Intelligence Service)

HARP: Holocaust Art Restitution Project

HCPO: Holocaust Claims Processing Office

HJ: Hitlerjugend (Hitler Youth)

HUAC: House [Special] Committee Investigating Un-American Activities

HWA: Heereswaffenamt (Army Weapons Office)

HAF: Humanitarian Aid Fund

IARA: Inter-Allied Reparation Agency

ICBM: intercontinental ballistic missile

ICEP: Independent Committee of Eminent Persons

ICHEIC: International Commission on Holocaust Era Insurance Claims

I.G. Farben: Interessen Gemeinschaft Farbenindustrie, Altiergesellschaft

IMT: International Military Tribunal

Interhandel: Internationale Industrie und Handelsbebeteiligungen, AG

Interpol: International Criminal Police Commission

INS: [U.S.] Immigration and Naturalization Service

IOC: International Olympic Committee

IRO: [British] International Refugee Organisation

ISIS: Islamic State of Iraq and [Greater] Syria

ITT: International Telephone & Telegraph

IWG: Interagency Working Group

IWW: Industrial Workers of the World (also known as Wobblies)

JCS: [U.S.] Joint Chiefs of Staff

JIC: [U.S.] Joint Intelligence Committee

JIOA: [U.S.] Joint Intelligence Objectives Agency

JRSO: Jewish Restitution Successor Organization

KdF: "Kraft durch Freude’’ (Nazi labor campaign slogan: Strength through Joy)

KL: Konzentrationslagern (concentration camp)

KKK: Ku Klux Klan

KPD: Kommunistische Partei Deutschlands (Communist Party of Germany)

KRIPO: Kriminalpolezei (Nazi criminal police)

LAMOTH: Los Angeles Museum of the Holocaust

MVD: [Soviet] Ministry of Interior Affairs (MVD)

MFAA: [joint Anglo-American] Monuments, Fine Arts, and Archives program

MGM: Metro-Goldwyn-Mayer Studios

MI6: [Great Britain] Secret Intelligence Service

MNC: multinational corporation

MOU: Memorandum of Understanding

MNO: multinational corporation

MPPDA: Motion Picture Producers and Distributors Association of America

NACA: [U.S.] National Advisory Committee for Aeronautics

NACP: National Archives at College Park [MD]

NAIC: National Association of Insurance Commissioners

NASA: [U.S.] National Aeronautics and Space Administration

NASM: National Air and Space Museum (Washington, D.C.)

NGO: nongovernmental organization

NKVD (also KGB): Narodnyy Komissariat Vnutrennikh Del’ ([Soviet] People’s Commissariat for Internal Affairs)

NSBO: Nationalsozialistische Betriebszellenorganisation (National Socialist Workers Cell Organization)

NSC: [U.S.] National Security Council

NSDAP: Nationalsozialistische Deutsche Arbeiterpartei (National Socialist German Workers’ Party)

NSU: Neckarsulm Strickmaschinen Union

NSV: Nationalsozialische Volkswohlfahrt (National Socialist People’s Welfare Agency)

OAP: Office of Alien Property

OSI: Office of Special Investigations

ODESSA: ,,Organisation der Ehemaligen SS-Angehörigen’’ (Organization of Former Members of the SS")

OKW: Oberkommando der Wehrmacht (German High Command)

Okrana: Department for Protecting the Public Security and Order (the Russian secret police under the czars)

OMGUS: [U.S.] Office of Military Government for Germany

ONI: [U.S.] Office of Naval Intelligence

OSI: [U.S.] Office of Special Investigations (a unit within the U.S. Department of Justice’s Criminal Division)

OSS: [U.S.] Office of Strategic Services

OUN-B : Organization of Ukrainian Nationalists-B" (OUN-B)

POW: prisoner-of-war

PACHA: Presidential Advisory Commission on Holocaust Assets in the United States

RAF: [British] Royal Air Force

RAS: Riunione Adriatica di Sicurta (Italian insurance company)

RKO: Radio-Keith-Orpheum Studios

RLA: [Nazi] Russian Liberation Army

RLM: Reichsluftfahrtministerium (Reich Air Ministry)

RMs: Reichsmarks

RSHA : Reichssicherheitshauptamt (Reich Security Main Office)

RWM: Rückswanderermark (returning mark)

SA: ,,Sturmabteilung’’ (lit., storm detachment - the early NSDAP paramilitary police force)

SBA: Swiss Bankers Association

SHAEF: [U.S.] Supreme Headquarters, Allied Expeditionary Force

SIS: [U.S.] Special Intelligence Service

SIRTI: Societa Italiana Reti Telefoniche Interurbane (Italian Company of Long Distance Telephone Networks)

SOE: [British] Special Operations Executive

SS: Schutzstafflen (roughly translated as Nazi elite guard)

SBA: Swiss Bank Corporation

SWNCC: [U.S.] State-War-Navy Coordinating Committee

T Force: [U.S.] Task Force units charged with capturing eminent German specialists at the end of World War II

The Org.: Reinhard Gehlen’s Intelligence Organization

TNEC: Temporary National Economic Committee

TWEA: [U.S.] Trading with the Enemy Act

UAW: United Auto Workers Union (UAW)

UBS: Union Bank of Switzerland

UMA: United Mine Workers

UN: United Nations

UNAEC: United Nations Atomic Energy Commission

UAS: unmanned aircraft system (colloquially referred to as a drone)

USPD: Unabhängige Sozialdemokratische Partei Deutschlands (Independent Social Democratic Party of Germany)

USSR: Union of Soviet Socialist Republics

VL: Vernichtungslagern (death camp)

WAAC: [U.S.] Women’s Army Auxiliary Corps

WJC: World Jewish Congress

WJRO: World Jewish Restitution Organization

ZOG: Zionist Occupation Government (the neo-Nazi and white supremacist term used to reference the American government)

Acknowledgments

I have spent most of my retirement years focused on pretty much all things connected to the United States and the Third Reich. This book represents the conversion of all my research into narrative form. Nevertheless, I cannot claim that this effort is singularly mine. I am most grateful to the following individuals and institutions for their assistance in my effort.

Above all others, I must thank my mentor, Klaus P. Fischer, Ph.D., for his encouragement and guidance from the inception of my project. Klaus had previously assisted me in preparing a manuscript for submission on the infamous SS concentration camp guard Irma Grese. That work was published and Dr. Fischer provided the Foreword for the biography. His insights about the Third Reich as well as his work on the United States and Adolf Hitler, were critical for my understanding of some of the more oblique and/or obscure areas of U.S.-Nazi interactions. Beyond this, Klaus provided me with constructive criticism to transform my original draft into this finished work and, for that, I am very grateful.

In addition, I also thank my Moorpark College colleague, David Birchman, himself a published author, for his careful review of the book proposal’s initial draft. David gave me invaluable insight, encouragement, and feedback; moreover, his constructive criticism of the proposal’s original organization allowed me to prioritize Nazi innovations and inventions in a much more effective manner. Thanks are also in order to my friend, John K. Roth, Ph.D., for reading my proposal and encouraging me to publish my work.

I also thank Peggy Spellman, the former administrative assistant to the Business and Computer Science Division at Moorpark College, who helped me overcome a few technical hurdles I incurred while preparing my initial manuscript. I am indebted to innumerable research librarians, clerks, and staff at the various Indiana University libraries, particularly at the Herman B. Wells Library and the Michael Maurer Law Library. I thank Assistant Archivist for Reference Carol A. Leandenham for her help in procuring the records at the Hoover Institution. The staff at the National Archives and Research Administration in College Park, MD, were both cordial and helpful. I particularly want to acknowledge Greg Bradsher for his assistance in locating a number of important documents. In addition, I appreciate the excellent research Sim Smiley completed on my behalf at the National Archives and I am grateful to Satu Haase-Webb for helping me to locate the majority of the photographs included in this book.

Enduring Entanglements:

The Third Reich’s Insidious Impact on America

Prologue

What we have learned from history is that we haven’t learned from history.

— Benjamin Disraeli

In 1981, historian Lucy Dawidowicz noted in her analysis of the historiography of the Holocaust that the rise and fall of the German dictatorship [under Adolf Hitler] continue[s] to fascinate us. Shortly thereafter, she pondered why this is still the case? After all, she pointed out, the so-called Thousand Year Third Reich, which existed only for twelve-and-a-half years, left no lasting transformation in society within or outside of Germany. Indeed, the Nazi revolution, unlike most other movements, has given the world nothing in the way of any sort of positive legacy.¹ It has now been thirty-seven years since Dawidowicz made her observation and the interest in the Holocaust has not abated.

The answer suggested by Dawidowicz is both perplexing and intriguing, but it also is one that makes a great deal of sense: Nazism still haunts us because it was a human creation that was so diabolical and opposite to all that is decent and good that it approximates a consummate, all-encompassing evil.² The thought that human beings, particularly those living in the most advanced technological country in the world with a long tradition of artistic and literary achievements, could willfully succumb to an authoritarian government led by a rabble-rousing racist both repels and concurrently engages our senses. The evil of Nazism, personified by its sinister leader, serves as a kind of dark mirror held up to mankind and, as such, represents that ugly side of our nature that we would like to deny, and in perverse sense, our ostensibly unquenchable thirst to learn more about Hitler and his demonic desires demonstrates that . . . evil is more fascinating than virtue.³ As it is stated in Isaiah 59:9, We wait for light, but we behold darkness. In addition, John K. Roth, a recognized authority on the Christian response to the Holocaust, contends that another crucial reason why the Holocaust continues to fascinate and simultaneously haunt us — as it must — is because of the failure of ethics to prevent this tragedy.⁴

The United States was safely cushioned from many of the horrors that the Third Reich inflicted on much of Europe and Eurasia. Despite Vice-President Dan Quayle’s 1988 embarrassing faux pas about the America’s role in the Holocaust (The Holocaust was an obscene period in our nation’s history. I mean in this century’s history. But we all lived in this century. I didn’t live in this century.), the United States was by-and-large safely removed from the terrors that the Nazis inflicted on much of that then-distant part of the world. In fact, at the outset of Nazi Germany’s creation, America maintained full diplomatic relations with Hitler’s government and, as we shall see, American multinational corporations (MNCs) had thriving relationships within the Reich. While German scientists were at the same time inventing extraordinary new devices to improve human life, they were also creating sinister new weapons and malevolent chemical compounds to deploy against the perceived enemies of the Reich.

Today most Americans have no idea of just how many of their own corporate and governmental agencies, products, and inventions, in one manner or another, are directly linked to the Third Reich. Moreover, there are dangerous products that were conjured by Nazi-era scientists that are commonly found throughout the world and which are still ongoing threats to humanity. It is truly amazing how many different connections twenty-first century Americans contend with that are directly linked to the repugnant aberration known as the Third Reich.

The genesis of this book occurred as a result of my increasing awareness of the many legacies that Nazi Germany had bequeathed to the United States. I was intrigued by Robert N. Proctor’s compilation of remarkable Nazi-era technological and medical breakthroughs highlighted in his fascinating examination of the Nazi War on Cancer.⁵ As I began to pick up other tidbits about inventiveness during the Third Reich, I started to toy with the idea of perhaps creating some sort of taxonomy or updated compilation of these additional Nazi discoveries I had found. It was about this time that I ran across Fabienne Hurst’s online Der Spiegel article on the seventy-fifth anniversary of the Nazi development of Methamphetamine, which appears at the beginning of Chapter 4. I had had no idea that this dreadful drug, known to many addicts as Devil Dust, Devil’s Dandruff, and/or Devil’s Drug (all so designated because of the seemingly demonic hold it has on them), had originated in the Third Reich. It now almost seems sadly appropriate that the Nazis would develop and use it to motivate their own troops, but, then, in fairness, even those who developed it had no idea of just how addictive or destructive it actually would become and, in turn, just how many lives would be destroyed by those who had succumbed to it. Also, it was just a month or two after this that I watched a four-hour documentary produced by Spiegel Television that included a segment on the development of television, which had been created just in time for the 1936 Olympic games in Berlin.⁶ The most astonishing and enduring link between Nazi Germany, American business, and toxic substances is the Chlorpyrifos connection. New York Times journalist and a two-time winner of the Pulitzer Prize, Nicholas Kristof, reported on October 28, 2017, that one of the nerve gases developed in the Third Reich is now being used in the United States as a pesticide. A 2013 study revealed that the Nerve Gas Pesticide Chlorpyrifos was found . . . in the umbilical cord blood of 87 percent of newborn babies tested and other studies have shown that it has been linked to lung cancer and Parkinson’s Disease. Moreover, both human and animal studies demonstrate that Chlorpyrifos damages the brain and reduces I.Q.s while causing tremors in children.⁷ Why hasn’t the Environmental Protection Agency (EPA) banned this toxic remnant of Nazism? It banned it seventeen years ago for indoor residential use and in 2017 intended to prohibit its use for agricultural and outdoors usage; however, after Dow Chemical Corporation, its U.S. manufacturer, made a one-million dollar contribution to the Trump inauguration committee, the EPA withdrew its proposed ban and, as a result, Chlorpyrifos continues to contaminate the fruits, vegetables, and water that Americans consume.

As I started to find more and more examples of Nazi inventions and innovations, I also began to see more and more evidence of many American industries and businesses that had actively worked with Nazi Germany and, as noted above, Dow’s Chloroyrite sales perpetuate that legacy. I had previously read various snippets about American business collusion with Hitler’s rearmament, but I had only a peripheral understanding of just how extensive this complicity with the Third Reich had been. What was really startling to me were the revelations about many well-known, well-respected American business and industries had camouflaged their connections with Nazi Germany, even after December 11, 1941 — the day that Adolf Hitler declared war against the United States of America!

Consequently, my interest was piqued all the more and for the past five years I have been on the quest to find all these American links to the Third Reich. When I retired from a long career in teaching (and a short stint in administration) at a California community college, I resettled back in my native Indiana, specifically choosing Bloomington as the community I wanted to live in for a number of reasons. One of the most important of which was the fact that Bloomington is the home of Indiana University and the Herman B. Wells Library, the thirteenth largest university library in the United States, is close to my home. This amazing repository has provided me with so many excellent reference resources that I can truly assert that this book would not have been possible without my close proximity to it. In addition, there are many support libraries within the Indiana University system and I have at one time or another been able to avail myself to all of them. I have also spent innumerable hours perusing legal materials found in the Jerome Hall Law Library, which is the resource support center within I.U.’s Maurer School of Law.

Although I have integrated some of the previously untapped primary documentation into my examination of the advanced scientific breakthroughs and connection, much of what I have assembled can be found in other secondary sources. What is different about my study is that I have attempted to include as many of the legitimate connections between the United States and the Third Reich as I could. Nevertheless, there will no doubt be critics who feel some inventions have been omitted. For example, the advanced P-Series land cruisers — such as Krupp Armaments’ prototype P-1500 Monster" that was canceled by Armaments Minister Albert Speer in in early 1943 is not included in this study. Neither will one find an examination of the Kriegsmarine’s (the Third Reich’s navy) new generations of U-boats, such as the electro-boat Type XXIA, which would have traveled faster submerged than when it was moving on the ocean’s service).⁸ These weapons that would have added greatly to the Nazi arsenal were developed too late in the war to be operational. Moreover, I will not delve into some of the more questionable areas of Nazi scientific endeavor, such as research into anti-gravitational flying saucers or work on the so-called death ray device.

Likewise, some might suggest that certain American business leaders and their companies were left out of my examination. For example, Jane Mayer’s recent study of the growth of the modern conservative movement in the United States recounts the fact that Fred Koch, the father of ultraconservative billionaires David H. and Charles G. Koch, obtained a lucrative contract to build a major oil refinery in the Third Reich prior to the outbreak of World War II and that Hitler personally approved the venture.⁹ This is true, but Fred Koch’s involvement in Nazi Germany never rose to the level of many American industries. Prior to the war, there was no prohibition against such German-American business connections. Also, Fred Koch worked with Joseph Stalin to build a number of oil refineries in the Soviet Union between 1929-1932. When Nazi Germany declared war on the United States, Fred Koch, despite being over the age of forty, attempted to enlist in the U.S. military; consequently, one can hardly question where his true loyalties were.

There may be other Nazi inventions and German-American business arrangements that could be included in my work, but I want to assure the reader that I have considered many potential entries and I have elected to leave them out for failing to meet my criteria for justifiable inclusion.

I have decided to provide the actual German governmental or business entity’s designation or the actual German word for a process or mechanism before the approximate English translation of the German term. I believe it is important to provide the reader with the exact German verbiage, as sometimes it is difficult to capture the true meaning or usage in translation. A good example of this is ,,Gleichschaltung,’’ which is generally translated as coordination, synchronization, or bringing in line and applies to the manner in which the Nazis transformed German institutions from the Wilhelmine era or the Weimar Republic constructs to serving only the New Order’s purposes. In reality, Gleichschaltung is a compound word, which joins gleich (the same or equal) with schaltung (switching), but, naturally, the fusion of the English words makes for an awkward and incomprehensible rendering (equal switching). Hopefully this will not prove to be a distraction for the English reader.

I asked a former colleague of mine to peruse my initial manuscript to let me know what she thought. Approximately two weeks later she called me and asked if I would not be concerned that readers might think I was somehow anti-American for pursuing this topic? I understand her sentiment, but, as I assured her, my intent has never been to somehow drag down the United States. First, I feel very fortunate to have been born and raised in America. One of our country’s great virtues is its usual receptiveness to constructive criticism. Beyond this, I believe some of the material found in my treatise will be a revelation to many and this alone warrants its exposure.

This book’s structure combines both a series compilation of inventions and innovations as well as individual corporations with business ties to the Third Reich and an historical narrative examining the interplay between these elements that link the United States to Nazi Germany. It is my hope that this format will not distract the reader’s attention.

There have been times when I have found it necessary to rehash some of the Nazi links to the United States, which might lead some to question why such repetition is necessary. In a couple cases, I have been somewhat repetitive in order to insure that there is no confusion or misunderstanding with regard to the particular issue being examined and/or its importance to the subject at hand.

Finally, I bear all responsibility for any errors, omissions, or faulty communications found in this effort. I invite all to notify me if-and-when such oversights and/or discrepancies are detected.

D.P.B.

Bloomington, Indiana

February 2018

Part I

American Connections with the Third Reich

Chapter 1

The Conducive Milieu

In [Nazi] Germany there is no uncertainty, no political caprice and no nonsense.

— George M. Moffett, president of the

Corn Product Refining Company

How did these legacies of Hitler’s short-lived reign occur? As virtually everything that happens in history, it was a gradual, ever-evolving process that spawned them. Indeed, to come to grips with just how these anomalies happened, one must understand just how dire things were when Germany lost the First World War. Consequently, an encapsulated examination of the period immediately following the Great War debacle is provided below.

During the interwar era in Germany, the period of the Weimar Republic, the nation was, by-and-large, racked by social, political, and economic crises. Field Marshal Erich Luddendorf, who had become the de facto wartime manager of Germany at the start of 1917, would have to inform Kaiser Wilhelm II that all was lost in September 1918. This prompted the Kaiser to abdicate and slip over the border to Holland. On November 9, 1918, a republic was proclaimed and Friedrich Ebert, the leader of the ,,Sozialdemokratische Partei Deutschlands’’ (SPD), the moderate Social Democratic Party of Germany, was appointed chancellor. Ebert was then permitted to form a new government. In short order, Ebert set up a provisional government composed of three members of his party and three members of the more radical ,,Unabhängige Sozialdemokratische Partei Deutschlands’’ (USPD, the Independent Social Democratic Party of Germany). For the first time in German history, the nation was governed by a truly representative form of government. However, even before the Germans signed the Versailles Treaty, rioting erupted across the country and, seizing the opportunity, Communists staged a Putsch in Bavaria and set up a ,,Räterepublik’’ ([Workers’] Council Republic). The fear and hatred for all things Bolshevik was exceedingly pronounced for the majority of Germans and, of course, even more so among those on the Right.¹ The Ebert administration in Berlin quickly had to deal with two untenable realities: 1.) the radical Soldiers and Workers’ Council had to be suppressed if the national government could continue to function and 2.) Ebert’s government would also have to bear the ignominy of signing the armistice and, later, a forced peace agreement.

To solve the first problem, the new government agreed to deploy ,,Freikorps’’ (Free Corps) volunteer paramilitary units to violently crush the neo-Bolshevik Council. The Freikorps units, whose members included many veterans of the western front as well as a number of young men simply looking to spill Communist blood, mercilessly put an end to the experiments in Bolshevik rule. The Social Democrats’ willingness to turn these violent paramilitary bands on the Communists would discredit its claim to rule in a new, more enlightened manner. As for the second reality, the Ebert coalition had no choice but to sign the despised "Diktat’’ (dictated) — the Treaty of Versailles. The government’s foreign minister, Walther Rathenau, was a Jew, and many Germans came to believe that it was this Jew who actually created the almost-untenable provisions of the Versailles Treaty. The truth was that Rathenau had to accept the terms of the treaty and any German representative would have had to do exactly the same. Nevertheless, rightwing, antidemocratic opponents immediately and continually claimed that the Jewish foreign minister was the architect of this treasonous act. They would remind Germans that these November criminals had agreed to shackle Germany with a draconian debt, loss of all their colonies, a huge reduction of the landmass of Germany itself, and a feeble military (something that was particularly painful to a proud, militaristic people). In truth, any governmental entity would have had to go along with these harsh terms, as the victorious Allied nations would have invaded and occupied the country if the German delegates did not sign the treaty. One other factor is important to note: Germany had not been invaded at the end of the war. This afforded critics to create the ,,Dolchstoßlegende’’ (the stab-in-the-back myth), which claimed that the German nation had never actually lost the war; rather, traitors at home (Social Democrats, Communists, and Jews) had sought surrender while brave German soldiers were fighting and dying in France. This myth would undermine the government’s legitimacy and insured its weakened position. Until the Machtergreifung (the Nazi seizure of power), the Weimar Republic would appear to be a failed experiment in democracy and radicals on the Right and radicals on the Left would exploit this in their attempts to take power.

The political malaise exacerbated the economic situation. The punitive reparation debt would keep the Weimar Republic impoverished and the once-proud Germans now found themselves spiritually and emotionally drained. Since the nation had been deficit-spending for years, the government defaulted on its reparation payments.² In retaliation, a Belgium-French force invaded Germany’s industrial sector, the Ruhr, on January 11, 1923 and, in turn, the German economy collapsed. The French mistreated those living in the Ruhr and took control of all the factories, mines, and government offices. The Germans responded by employing passive resistance tactics. The crisis continued throughout the year until the late summer when government resorted to unleashing the printing presses to artificially generate currency and thereby entice striking workers back to their work stations. The money kept being printed and the eventual result was hyperinflation of which the modern world had never experienced. Those dependent on fixed incomes and those with savings accounts were thrust into abject poverty. This economic calamity destroyed any hope that the SPD-led government might be able to right itself.

On August 12, 1923, Friedrich Ebert asked the leader of the ,,Deutsche Volkspartei’’ (the liberal German People’s Party or DVP), Gustav Stresemann, to serve as chancellor. Stresemann would only serve as chancellor for one hundred days, but he would then take on the important position of foreign minister until his death on October 3, 1929. Stresemann was a shrewd politician and an equally astute statesman. He adroitly assessed Germany’s plight³ and went to work to alleviate the nightmarish predicament it found itself in. He was able to calm passions a bit by moving away from the failed passive resistance efforts in the Ruhr. Stresemann also reassured the Allies that Germany would find a way to resume repaying their reparation obligation. With Germany’s reparations debt now significantly reduced, Stresemann could devote his attention to the issue of hyperinflation. He replaced the currency with the Rentenmark on November 16, 1923. This new form of exchange was not, in truth, legal tender (it could not be exchanged for gold); rather, it was declared to be a legal means of payment. Nevertheless, prices stabilized and, for the time being, the Rentenmark was accepted as a legitimate alternative to the all-but-worthless Reichsmark.⁴ For Stresemann’s extraordinary accomplishments, he was named a corecipient of the Nobel Peace Prize in 1926. After this good faith gesture, the United States organized a Reparations Conference in Paris in 1924 to work out a more realistic payment plan. The American delegation was headed by the American Bureau of Budget Director, Charles G. Dawes, but, the director of the Radio Corporation of America, Owen D. Young, actually worked out the details of the more lenient payment schedule for Germany.⁵ This alleviated the crisis and, as stipulated by the Dawes Plan, the Belgium-French troops withdrew from the Ruhr District. To further solidify the deal, J. P. Morgan eagerly enlisted support from his Wall Street brethren to support German investment.⁶ What ultimately occurred once the Dawes Plan was in place was a sort of international Ponzi scheme. Germany was once again able to borrow money from U.S. investors and then turn around and pay the British and French reparations with their borrowed funds. The British and French, in turn, reimbursed the United States for their World War I assistance with those payments. At the same time, individual American investors began to receive huge dividends from this new arrangement.⁷ On the surface, at least, it appeared that the economic problem had been solved.

Another consequence of the implementation of the Dawes Plan was the creation of the Bank of International Settlements (BIS). Headquartered in Basel, Switzerland, the BIS in short order became the world’s most important financial institution and predated both the World Bank and the International Monetary Fund (IMF).⁸ From its inception, the BIS served as the means for the world’s central banks to openly maneuver across banking borders. This bank for central banks controlled and invested 10-15% of the world’s currencies at the turn of the twenty-first century. However, today few of those involved in the banking industry are even remotely aware of the existence of the BIS, much less just how much wealth it oversees.⁹ What is most important for this study is the fact that once the Second World War broke out, the Bank of International Settlements served, in effect, as the servant of the Reichsbank and, as will be shown later, became involved in the transfer of looted Nazi gold and various international financial exchanges on behalf of the Third Reich.¹⁰ The bank’s director for almost the entirety of World War II was an American — Thomas H. McKittrick, who resigned his position in 1946.¹¹ Despite the Dawes Plan’s more realistic reparations arrangement by February 1929 — even prior to the Great Depression’s onset — it became clear to the U.S. and Great Britain that Germany could not meet its annual payments over an indefinite period of time. Consequently, another Reparations Conference was convened in Paris. The representatives to this convention further reduced German reparations by about twenty percent and no longer required the reparations be made in the form of goods, but rather in monetary payments. While this would appear to a blessing to Germany, Reichsbank president Hjalmar Horace Greeley Schacht and industrialist Fritz Thyssen would later argue that the Young Plan was instrumental in bringing Adolf Hitler to power, as foreign firms, particularly American, would be able to buy out German businesses (which only inflamed nativist sentiments).¹²

Amid the turmoil generated by the reparations revisions, the sharp downturn in the American stock market in October 1929 exacerbated the domestic crisis in Weimar Germany. The panic by shareholders on Wall Street had an immediate impact on the German economy, as American lenders were now desperately seeking to repatriate their loans. The economic distress, in turn, heightened extremism on both sides of the German political spectrum. The Kommunistische Partei Deutschlands (KPD – the Communist Party of Germany) took to the streets of the major German cities declaring that capitalism had had its last gasp while Hitler’s paramilitary men in brown uniforms, the ,,Sturmabteilung’’ (SA men, or Storm Troopers), engaged in open combat against these Red revolutionaries. As unemployment skyrocketed and political brawling continued, the electorate increasingly looked to the radicals to solve the crisis. On March 27, 1930, the coalition government composed of five German parties resigned and a new government was formed by Heinrich Brüning. In the September 14, 1930, national elections, the Social Democrats retained one hundred and forty-three seats (despite losing ten), the ,,Nationalsozialische Deutsche Arbeiter Partei’’ (NSDAP – the National Socialists German Workers’ Party — shortened to the Nazi Party) became the second largest contingent with one hundred and ten seats, and the Communists managed to move into third place with seventy-seven deputies elected to the Reichstag; consequently, of the 570 deputies seated in the German national assembly, the German electorate chose almost one-third of their legislators from the radical Right and radical Left.¹³

Not only was the economy in dire straits at this time, but the agricultural sector was also depressed. Life for the agricultural workers, particularly the peasants, was harsh and their work was frequently dangerous as well. While the Communists promised collectivization as a means of providing peasants with their fair share of the harvest, the Nazis assured those who worked with soil that they would be granted more land to cultivate in the East after those rightfully German lands were returned to the Reich. This concept of ,,Lebensraum’’ (living space) was only part of the Nazi pledge. In addition, the noble workers of the soil would form the foundation of a new aristocratic elite.¹⁴ Once the Eastern lands were secured, then the impoverished agricultural workers would become prosperous and powerful, while the displaced, inferior Slavs would be cast down to serve their new masters.

On May 29, 1932, with the economy in a downward spiral and public perception of the current government as inept, the 83-year-old President and venerated field marshal, Paul von Hindenburg, summoned Chancellor Brüning to inform him that he was dismissed. The leader of the Deutsche Zentrumspartei (DZ), the conservative Roman Catholic Center Party, Franz von Papen, was selected by von Hindenburg to form a new government. During the next eight months, more street violence and economic upheaval left Germany seemingly on the cusp of paralysis. To make matters even worse, there were real concerns by the high command of the Reichswehr that if a full-fledged civil war broke out between the Nazis and Communists, the armed forces would not be able to effectively control the nation and at the same time assure that the borders would be secure.¹⁵ Given this situation, von Hindenburg felt he had no other alternative than to appoint the Austrian upstart, Adolf Hitler, as chancellor. Unfortunately, like the military, the church, and the conservative elite, there were some German businessmen who mistakenly believed that they could somehow tame Hitler via governmental restraints that were built into the rightist coalition, but these same provisions also made it possible for Hitler to become chancellor.¹⁶

It did not take Hitler and his cohorts long to strip the German constitution of its democratic and electoral processes. Following the arson of the Reichstag, the Nazis exerted pressure on the Roman Catholic Center Party to vote with their delegates to pass the Decree of the Reich President for the Protection of the People and State (commonly referred to as the Enabling Act) on March 23, 1933. Armed with this decree, law enforcement and the courts served Hitler alone and the last vestiges of constitutionality in the Third Reich were stamped out.

Very shortly after this, American business leaders were provided a number of reasons to invest more heavily in Nazi Germany. On May 1, 1933, Hitler and his Propaganda Minister, Dr. Paul Joseph Goebbels, orchestrated a May Day event that celebrated the German worker. Trade unions quickly felt the real effect of this new public holiday. The day after, SA men ransacked trade union offices and shut them down. In short order, all the resources and accounts of the unions were seized and Robert Ley established himself as the director of the newly created Deutsche Arbeitsfront. (DAF, the German Labor Front). These actions had a far-reaching impact for the German worker. Henceforth they were denied any right to organize and were also no longer allowed to leave their work without approval by the state. Employers could now keep wages artificially low and demand whatever work hours they deemed appropriate. The stridently anti-trade unionists, the Nationalsozialische Betriebszellenorganiation (NSBO), the Nazi Workers Cell Organization, insured that the workers were attuned to the fact that now there were serious consequences for bucking the system in any manner.¹⁷ Since most of the major American MNOs were already invested in the German economy, they too were able to reap economic benefit from this repressed work environment.¹⁸

The second reason American businesses began to invest more in the Third Reich occurred on July 5, 1935 when President Roosevelt signed the Wagner Act into law. This fundamentally changed American labor relations and, concurrently, moved America in the completely opposite direction from what had occurred in Nazi Germany two years before. The Wagner Act represented a fundamental shift, because for the first time, American workers had the right to unionize and to strike. Workers’ unions could now form collective bargaining units to negotiate with management to seek redress of grievances and to protect their membership from arbitrary job termination. American business and financial leaders were naturally outraged by this and, with the exception of W. Averell Harriman and Allen Dulles, reviled Roosevelt (mockingly referring to him as Rosenfeld) and the New Deal (calling it The Jew Deal) for what they perceived to be moving the America toward a Jewish-led socialist economy (at best) or state-run Bolshevik economy (at worst).¹⁹ Furthermore, Roosevelt’s economic planners were viewed as dangerous urban intellectuals driven by their economic agenda. American historian Richard Hofstadter would later observe that this anti-intellectualism has long been the anti-Semitism of the businessman.²⁰

If the Great Depression accelerated the opportunity for Hitler to obtain power, it should also be noted that concurrently the socio-political disintegration of Weimar Germany drew business leaders closer to accepting the Nazi cause, rough edges and all. Indeed, German banks and insurance companies operated for many years in a milieu that had been void of serious adherence to democratic ideas and practices. Furthermore, the largely unsuccessful experiment in representative government and free market economy only lasted from 1918 to 1933 and, all that time, it had been lambasted and ridiculed. On the other hand, this does not mean that German business leaders always had a harmonious working relationship with the Nazi leadership once Hitler became absolute master of Germany in August 1934.

Hitler’s ascension to power encouraged many U.S.-based, multinational companies to seek business deals with the new regime. On September 1, 1933, two American bankers, Winthrop W. Aldrich of Chase Bank and Henry Mann of National City Bank, met with Hitler and both men reported to the U.S. Ambassador to the Third Reich, William E. Dodd, that they were confident that they could do business with the Nazi government.²¹ John Foster Dulles, the senior partner of the law firm Sullivan & Cromwell, had represented his firm’s American clients in Germany during the Weimar era and now was eager to advance business opportunities with the Third Reich. To that end, Dulles and American bankers had secured the blessing of the U.S. State Department to work with Hitler’s government to hammer out the reparations debt settlement issues. Early in 1934, Dulles sent an optimistic analysis of the Nazi’s willingness to resolve the debt problem to his bondholders. Ambassador Dodd was dumbfounded by the cheery appraisal John Foster Dulles had delivered. In short order, Dodd’s assessment proved to be the correct one: even before the end of 1934, the German government established such restrictions on payments from the Reichsbank that all cash payments on all dollar loans, including the formerly privileged Dawes and Young Loans, were terminated.²² These events would not be widely known to the American public until long after World War II had ended. It was only after litigation was initiated by various parties in the United States against European companies for exploiting and profiting from Nazi slave labor that the United States was forced to come to terms with the fact that many of its own private corporations had been eager to profit from the economic malaise that existed within the early era of the Third Reich.²³

There is another important factor that encouraged American MNCs to set up shop in the Third Reich. Under the auspices of one of the main tenets of Nazi rule, the so-called ,,Führerprinzip’’ (leadership principle), all power in the Third Reich emanated from Adolf Hitler and filtered down and, as a consequence, everyone in the Third Reich marched in lockstep with the will of the Führer.²⁴ There was an expected salutation and farewell saying during Hitler’s twelve-year rule — ,,Führer befiehl, wir folgen!’’ (leader commands, we follow!) — and this outward demonstration of submission to Hitler’s desires had to be complied with by everyone! While this sounds oppressive and constricting, it provided some sense of stability to business. The Third Reich’s predecessor, the now-excoriated Weimar Republic, seemed to have been constantly on the verge of paralysis, but now, with the resolute leadership of the Nazi leader, American MNCs sensed that they could operate in a more stable commercial environment. As we shall now see, this sentiment proved to be illusion, but, at the time, it appeared to