UC Santa Barbara > History Department > Prof. Marcuse > Courses > Hist 133D Homepage > 133D Book Essays Index page > Student essay
American Big Business and Nazi Germany and the Holocaust
by Nikita Schottman
for Prof. Marcuse's lecture course
About Nikita Schottman
I am a junior history and business economics major. I am specifically interested in 20th Century United States and European History. I was born in the Soviet Union, and traveled extensively throughout Europe, including Germany, Austria and other countries controlled by the Third Reich. I chose to write a paper about American business and the holocaust because I am interested in business and American history. Also, I had heard about Ford being friendly to the Nazis and wanted to research this and other businesses in more detail.
Abstract (back to top)
Essay (back to top)
American big business helped the United States and the Allies win the Second World War and defeat Adolf Hitler and Nazi Germany. However, some of the biggest businesses in the United States, such as International Business Machine (IBM), General Motors (GM) and Ford Motors contributed to the Third Reich. These companies were lead by powerful and driven businessmen who took advantage of the German market. Although, they had difficulty maintaining control over their German subsidiaries, IBM, GM and Ford all tried to remain in the German market for as long as possible. These major American businesses viewed the Third Reich as a customer and primarily looked to profit from their German subsidiaries and did not intentionally support Nazi ideology and the Holocaust. Ultimately the subsidiaries of IBM, GM and Ford all fell under Nazi control, especially after Germany declared war on the United States on December 11, 1941. Important contributions to the Third Reich from these major companies came without the consent or knowledge of the American leadership.
International Business Machine entered the German business scene with its Hollerith machines. IBM distributed these machines through its German subsidiary, Dehomag, which it acquired in 1923. Hollerith machines were used for data collection and sorting. According to Edwin Black, author of IBM and the Holocaust, The Nazi regime used these machines in conducting censuses. In the1939 census Dehomag used collected data to find “racial Jews” within the Reich, which included Austria and the Sudetenland (Black 172). The Hollerith machines could sort data so that people could be labeled Jewish based on their grandparents, thereby making being Jewish racial rather than religious. Black tries to tie Hollerith machines to Holocaust escalation and the inception of the Final Solution, stating that the machines “had enabled the Nazi Reich to make an unprecedented leap from individual destruction to something on a much larger scale” (Black 365). He fails to provide evidence to show the impact of the machines in decision-making or their use in the Final Solution. However, in reviewing this book Henry Turner suggests that IBM machines were not used in the 1939 census, since the data was only ready by 1942, apparently “more time-consuming methods than machine-automated processing” were used (Turner 639). Even if Turner is wrong, and Hollerith machines were used, the delay in calculating the data shows that they were not as important as Black claims in locating Jews and other minorities. Even though he argues that these machines were useful to the Nazis, Black writes “a determined Reich” would have deported Jews “with or without punch cards, efficiently or inefficiently” (Black 387). The Nazi regime would have conducted their anti-Jewish policies with or without IBM, and it seems unlikely that these machines significantly impacted the Reich’s Jewish policy.
Black attributes the distribution of Hollerith machines to Thomas Watson, IBM’s CEO. He erroneously portrays Watson as always in control of IBM and its European subsidiaries, and actively involved in doing business with Adolf Hitler and the Nazi party. Tom Watson took over Dehomag in 1923 but did not actively run it. Willy Heidinger already ran the company and did not want to relinquish control. German law greatly benefited German owned businesses; therefore it was beneficial for IBM and other businesses to remain as German as possible. Watson had limited control of Dehomag before World War II. However, when the war started, and especially when the United States entered, Watson not only lost decision-making control in Germany but also had difficulty retrieving profits. According to Black, IBM New York used their Switzarland branch to interact with Dehomag even after the war (Black 247). Black cites Harold Carter, who studied IBM’s relationships with its subsidiaries. Carter did not find any evidence that IBM controlled its European subsidiaries and thus concluded, “that either the important files are in the offices of the European headquarters in Geneva, Switzerland or IBM has not made full disclosure.” (Black 342) Black argues that this lack of evidence shows that IBM is trying to keep such relationships secret. To the contrary, there is no smoking gun evidence against IBM, so it seems more likely that IBM had little or no control over Dehomag and other subsidiaries in Nazi controlled Europe.
Watson did not agree with Hitler’s policies or political ideology. In fact, according to Black’s evidence, Watson clearly denounced Hitler and his policies. In a letter to Hitler, Watson denounced the anti-Jew actions during Kristallnacht in November 1938. However, the letter did not reach Hitler because it was addressed incorrectly (Black 147), but it still shows Watson’s opposition to Hitler’s anti-Jewish policy. Watson also returned the Merit Cross of the German Eagle with Star that Hitler awarded him. Watson’s gesture was not public enough for Black, but it nevertheless angered and insulted Hitler and made it very difficult for IBM to control Dehomag (Black 217). By returning the medal, denouncing Hitler and giving up control of Dehomag and other foreign companies as the US entered the war; Watson effectivly distanced himself from the Third Reich. There is not enough evidence to prove that any sort of philosophical alliance between Watson and Nazi leadership existed, and actually more effectively shows the absence of such a relationship.
Tom Watson was very interested in maintaining ties with Dehomag, as “Nazi Germany was IBM’s second most important customer after the US market.” (Black 111) However, Watson was more interested in collecting profits than managing the subsidiary, therefore it would seem that IBM’s ties to Nazi Germany were purely economic. Watson willingly made deals, giving up control, first to Heidinger, then to Nazi officials, in order to maintain access to profits. Whenever Dehomag or another company tried to break away, Watson intervened only enough to protect his profits. Even early disputes with Hedinger, like in June 1934, proved that Watson wanted to control Dehomag “not to reign in its technological alliance with the Third Reich, but rather to ensure that the profits continued and remained unshared.” (Black 101) Black acknowledges that Watson primarily cared about profits, and therefore, as long as Dehomag remained profitable, he had no reason to micromanage it, especially when that became illegal under US law.
Black suggests IBM knew about the Holocaust through their business dealings in Germany. Robert Urekew stated, “the IBM corporation knew the whereabouts of each of its European-leased machines… [and] each machine was insured and serviced monthly on site.” (Urekew 85) However, neither Black nor Urekew provide sufficient evidence to prove that IBM kept close track of their machines, especially those controlled by subsidiaries. Although Urekew claims that these machines were regularly services he does not provide any records of this occurring. IBM faced many difficulties even in trying collect profits from its European subsidiaries, clearly indicating the impossibility of micromanaging them and their Hollerith machines. Black views the lack of evidence and IBM’s struggle to collect profits as an elaborate plot to conceal the true relationship between IBM New York and its European subsidiaries. However, there is no evidence to support this thesis, and although it is possible, Black does not prove it.
IBM survived several investigations, including one by the FBI (Allen 1), and two lawsuits. In February 2001, five holocaust survivors filed a suit alleging that IBM "implemented, aided, assisted or consciously participated in the commission of crimes against humanity and violations of human rights." (Sebok) This suit was dropped in April 2001. In February 2002, the Gypsy International Recognition and Compensation Action association (GIRCA) filed suit against IBM in Geneva, Switzerland. The Swiss Supreme Court eventually affirmed that too much time had passed and ruled against GIRCA. These failures to prosecute IBM for their apparent wrongdoing prove that there is insufficient evidence to tie IBM to the Nazi leadership the Holocaust.
General Motors faced criticism for working with the Third Reich through its German subsidiary, Adam Opel AG. Like IBM, Alfred Sloan (GM President) and GM looked to profit from Germany during the interwar years by purchasing a struggling German company. Sloan purchased 80 percent of Opel stock in 1929 and secured the remaining 20 percent two years later, spending $33.3 million, a third of GM’s after-tax profits in 1931 (Turner 3). With GM technology Opel became the largest car manufactures in Europe by 1937. In fact, “Ford Werke and GM's Adam Opel AG unit controlled about 70 percent of the German car market when war broke out in 1939.” (CNN) Sloan and GM had trouble collecting profits because after 1931 Germany implemented strict currency exchange and dividend control. Although Opel became an important investment for GM, it was becoming increasingly difficult to control and profit form the subsidiary for GM as the Nazis took power.
GM struggled to retain control of Opel until completely losing control in 1942 and declaring the subsidiary a “total war loss.” (Turner 141) The Third Reich gradually gained control of Opel in the years between 1933, when Adolf Hitler became Chancellor and the Nazis took power in Germany, and 1942 when GM completely gave up control. Despite loosing influence over Opel, GM retained ownership and kept the subsidiary on its books. Pressured by the Reich, GM appointed more and more German and Nazi managers and gave up control to stay viable in the German market. Government contracts were extremely important in Nazi Germany, and therefore GM allowed Opel to adapt certain pro-Nazi elements to compete for contracts, like the lucrative Volkswagen proposal. As GM made these concessions, its decision making power diminished. “Faced with the issue of whether to allow Opel to embark upon production of a clearly military nature for the government of the Third Reich, GM’s top leaders ruled out the possibility.” (Turner 87) But, Opel produced airplane gears for Hermann Goring and the Air Ministry regardless. Such incidents showed that it was impossible for GM’s American leadership to go against the Nazi government and Sloan had to comply in order to avoid a complete takeover by the Reich. According to Hans Mommsen, who reviewed Turner’s General Motors and the Nazis, Turner’s findings “show that GM management did not have any realistic alternative to the strategy of adapting to the pressures of the regime.” (Mommsen 580) Therefore it is apparent that GM did not have enough control to prevent Nazi officials from using their subsidiary for military production, and opposition would only completely sever ties between Opel and GM.
GM reluctantly allowed Opel to conform to Nazi policies until its eventually lost control of the company. However, GM’s American leadership was not antisemitic and opposed measures that discriminated against the Jews. Opel tried to counter Nazi antisemitism and tried maintain Jewish clients and workers. Opel leadership refused to comply with Nazi policies like; refusing vehicle service to Jews and tried to conceal Jewish members of the company rather then firing them (Turner 20-21). In a November 30, 1998 Washington Post article Michael Dobbs alleged that Opel used forced labor in Russelsheim (Dobbs). An Opel report issued to Berlin on September 10, 1942, was the first and only know forced labor data, and it stated that Opel employed 502 male and 146 female Soviet Russian civilians, 1539 French prisoners of war and 262 other foreign workers (Billstein 56). Although these facts are troubling, “General Motors can not… be held responsible for the fate of those victims at this time.” (Turner 158) In December 1941 it became illegal for US companies to conduct business with enemy subsidiaries, and by April 1942, the Reich has declared the American stake in Opel as enemy property. According to this time line the first indication of forced labor appears after GM lost power to the Nazi regime. It seems that GM had no knowledge of the use of forced labor, and certainly did not have enough control to stop it.
GM avoided responsibility for Opel’s contributions to the Third Reich because the parent company did not know and did not have enough control over the subsidiary to prevent such collaboration. Nevertheless, GM maintained ownership of Opel, despite its activities and collected profits and re-gained control (1948) after the war. GM recovered dividend frozen before the war and those accumulated during wartime, but after currency conversion it amounted to $261,061 (Turner 149). The decision was probably not made top GM executives as this money seems insignificant because it “amounted to only a twentieth of one percent of GM’s net income for that year.” (Turner 158) GM can be blamed for seeking profits after the war, but even this does not imply that they condoned or knew what the Nazi regime was doing.
Ford Motors had some notable differences with IBM and GM with regard to its business with the Nazis. Ford established its presence in Germany in 1925 on its own, without purchasing a German company and making it a subsidiary. Ford built a factory in Cologne in 1931, acting as an American company. Also, unlike Sloan and Watson, Henry Ford was antisemitic. He published antisemitic material and made antisemitic comments (Baldwin 132-133). Ford famously published an anti-Jewish pamphlet; The International Jew: The World's Foremost Problem (Silverstein). For this publication and his general anti-Jewish sentiment Hitler awarded Henry Ford the “highest medal that Nazi Germany could bestow on a foreigner, the Grand Cross of the German Eagle.” (Dobbs) Ford later apologized for this publication and his antisemitism. Furthermore, in 1936, “the first time that a Jewish manager was fired, Ford himself was successfully able to reverse the decision.” (Reich) Conducting business was difficult for foreign owned companies in Nazi Germany. Despite Henry Ford’s antisemitism, according to Simon Reich, “Ford's foreign ownership meant that it lacked the ‘authenticity’ and ‘credibility’ of other businesses.” (Reich) Nevertheless Ford managed to establish itself in Germany and do business with Nazi Germany through its subsidiary Ford-Werke.
Ford had more difficulty selling to the Third Reich than IBM or GM. The Hollerith machine was unique to IBM, so there was no competition for Dehomag in Germany. Ford had to compete against other carmakers, and its American ownership put it at a disadvantage. In the interwar years Ford’s German branch had trouble competing with Opel. According to Simon Reich, “Ford lacked the size and, thus, the strategic importance of Opel, General Motors' German subsidiary.” (Reich) Furthermore, its American ownership made Ford “the producer of last resort” (Reich) for the Third Reich. These disadvantages made Ford compete harder for Nazi support and made American executive more willing to give in to Nazi influence to obtain business. In order to make the company appear more German, Ford appointed “a majority-German board of directors for the Cologne plant, upon which it bestowed the politically correct Aryan name of Ford Werke.” (Silverstein) As Ford-Werke became more German, the American parent company lost influence and control. Although there are rumors that Ford controlled its subsidiary after 1941, despite sanctions, Simon Reich says; “he has yet to see convincing evidence that American Ford had any control over its Cologne plant after December 1941.” (Reich)
Ford lost complete control of Ford-Werke in May 1942, when the Superior Court of Cologne declared the subsidiary a trusteeship (Silverstein). However, long before this decision, Ford’s American leadership gradually lost influence over Ford-Werke as it slipped into Nazi control. Reich claims that control shifted to Cologne by 1940 and Ford-Werke was under direct Nazi control by 1941 (Reich). Robert Schmidt, who controlled Ford-Werke while it was under Nazi control told the Army “whenever there was the slightest indication of anti-Nazi feeling, be it amongst foreigners or Germans, the Gestapo tramped down as hard as possible." (Silversten) Ford adamantly denied doing business with the Third Reich during the war. "We did not do business in Germany during the war," (Silversten) says Lydia Cisaruk, a Ford spokeswoman. "The Nazis confiscated the plant there and we lost all contact," she added (Silverstein). According to this analysis, Henry Ford and the American Ford leadership cannot be blamed for Ford-Werke’s action after 1941 because they did not have sufficient control or influence at that time.
Before losing control of its subsidiary, Ford contributed to the Nazi war effort. By employing its innovative assembly line production and bringing scarce natural resources into Germany, Ford helped the Third Reich wage war. When Germany limited the natural resources allowed to the American owned Ford subsidiary, “Ford headquarters in Dearborn responded--just as the Nazis hoped it would--by shipping rubber and other materials to Cologne in exchange for German-made parts.” (Silverstein) However, by importing natural resources Ford was inadvertently helping the Third Reich, because “the Nazi government took a 25 percent cut out of the imported raw materials and gave them to other manufacturers.” (Silverstein) Germany heavily taxes these resources and thereby obtained crucial materials for the war. Ford also sold trucks to Germany and assisted in military production. In fact, “by 1941 Ford of Germany had stopped manufacturing passenger vehicles and was devoting its entire production capacity to military trucks.” (Silverstein) It seems that by this point the American parent company had little control over Ford-Werke, and there is no evidence to indicate that Henry Ford, who actively opposed war, supported this shift to military production.
If Ford profited from Ford-Werke during the war, it is undocumented or very small. Reich claims that he “found little evidence that Fordwerke made money during the war.” (Reich) Furthermore, the Foreign Claims Settlement Commission of the US Congress awarded Ford “almost $1.1 million” (Reich) for damages during the war. These damages indicate that Ford did not make money in Germany during the war. Many financial statement are not available and therefore it is unknown how much Ford actually profited, but based on the evidence available, it was likely minimal.
Ford, like IBM, faced accusations about their involvement with Nazi Germany in court. A federal class action suit was filed against Ford on March 4, 1998, by Elsa Iwanowa vs FORD MOTOR COMPANY, and FORD WERKE A.G., seeking payment for forced labor by Ford’s German subsidiary during World War II (Hobbs). In response to these allegations Ford issued a lengthy report outlining Ford Werke’s activities during the war. Along with the report Ford donated “$4 million toward human rights studies, primarily focusing on the issue of slave and forced labor.” (Jewish Virtual Library) The report, released in December 2001, outlined the use of forced labor but concluded that “it had no control over what happened at the subsidiary, Ford-Werke, and that it did not profit from wartime operations at the German plant.” (Jewish Virtual Library) Historians who oversaw the production of the report, like Simon Reich, attest to its credibility. Judge Greeneway dismissed the case because, he said, that international treaties stated that such claims should be taken up through governments (Bazyler 76). Despite not admitting guilt, “Ford contributed $13 million to a $5 billion fund created by the German government and industry for slave and forced laborers.” (Jewish Virtual Library) Also, “the company also is establishing a new $2 million center to be affiliated with a university, and it plans to give $2 million to a humanitarian fund at the U.S. Chamber of Commerce that helps Holocaust survivors.” (Jewish Virtual Library) As the failed case indicated Ford was not legally liable. Fords donations and lack of knowledge, as shown by the report, exonerate them morally.
IBM, GM and Ford all contributed to the Nazi regime, but after the United States and Germany went to war, these companies were vital in helping the Allie’s war effort and defeating the Third Reich. Technical expertise made IBM useful to the allies; “IBM and its technology were in fact involved in the Allies’ most top-secret operations” (Black 344). Ford and GM were indispensible in producing military machinery and were a vital part of the “Arsenal of Democracy.” Despite their contributions to the Third Reich, these companies also helped the United States win the Second World War. Meanwhile their German subsidiaries remained a “hostage of the Third Reich” (Turner 151) through the war. Even though IBM, GM and Ford all benefited from their German subsidiary, sufficient evidence that the companies intentionally collaborated with the Nazi regime does not exist. It is evident that by 1942 these companies lost control of their subsidiaries and could not do anything to prevent the Third Reich from using their companies to conduct Nazi policy during the war.
Annotated Bibliography and Links (back to top)(links last checked 3/22/10)
Books and Articles
Any student tempted to use this paper for an assignment in another course or school should be aware of the serious consequences for plagiarism. Here is what I write in my syllabi: