by Antony C. Sutton
extracted from "WALL STREET AND THE RISE OF HITLER"
from
Mega.Nu Website
On the eve of World War II the German chemical complex of I.G.
Farben was the largest chemical manufacturing enterprise in the
world, with extraordinary political and economic power and influence
within the Hitlerian Nazi state. I. G. has been aptly described as
"a state within a state."
The Farben cartel dated from 1925, when organizing genius (with Wall Street financial assistance) created the super-giant chemical enterprise out of six already giant German chemical companies - Badische Anilin, Bayer, Agfa, Hoechst, Weiler-ter-Meer, and Griesheim-Elektron.
These companies were merged to become
Internationale Gesellschaft Farbenindustrie A.G. - or I.G.
Farben for short. Twenty years later the same Hermann Schmitz was
put on trial at Nuremburg for war crimes committed by the I. G.
cartel. Other I. G. Farben directors were placed on trial but the
American affiliates of I. G. Farben and the American directors of I.
G. itself were quietly forgotten; the truth was buried in the
archives.
It is these U.S. connections in Wall Street that concern us. Without the capital supplied by Wall Street, there would have been no I. G. Farben in the first place and almost certainly no Adolf Hitler and World War II. German bankers on the Farben Aufsichsrat (the supervisory Board of Directors)1 in the late 1920s included the Hamburg banker Max Warburg, whose brother Paul Warburg was a founder of the Federal Reserve System in the United States. Not coincidentally, Paul Warburg was also on the board of American I. G., Farben's wholly owned U.S. subsidiary.
In addition to Max Warburg and Hermann
Schmitz, the guiding hand in the creation of the Farben empire, the
early Farben Vorstand included Carl Bosch, Fritz ter Meer, Kurt
Oppenheim and George von Schnitzler.2 All except Max Warburg were
charged as "war criminals" after World War II.
In 1928 the American holdings of I. G. Farben (i.e., the Bayer Company, General Aniline Works, Agfa Ansco, and Winthrop Chemical Company) were organized into a Swiss holding company, I.G. Chemic (Internationale Gesellschaft fur Chemisehe Unternehmungen A. G.), controlled by I. G. Farben in Germany. In the following year these American firms merged to become American I. G. Chemical Corporation, later renamed General Aniline & Film.
Hermann Schmitz, the organizer
of I. G. Farben in 1925, became a prominent early Nazi and supporter
of Hitler, as well as chairman of the Swiss I. G. Chemic and
president of American I. G. The Farben complex both in Germany and
the United States then developed into an integral part of the
formation and operation of the Nazi state machine, the Wehrmacht and
the S.S.
I. G. Farben is of peculiar interest in the formation of the Nazi state because Farben directors materially helped.
Hitler and the
Nazis to power in 1933. We have photographic evidence
that I.G. Farben contributed 400,000 RM to Hitler's political "slush
fund." It was this secret fund which financed the Nazi seizure of
control in March 1933. Many years earlier Farben had obtained Wall
Street funds for the 1925 cartelization and expansion in Germany and
$30 million for American I. G. in 1929, and had Wall Street
directors on the Farben board.
It has to be noted that these funds
were raised and directors appointed years before Hitler was promoted
as the German dictator.
The Economic Power of I.G. Farben Qualified observers have argued that Germany could not have gone to war in 1939 without I. G. Farben.
Between 1927 and the beginning of
World War II, I.G. Farben doubled in size, an expansion made
possible in great part by American technical assistance and by
American bond issues, such as the one for $30 million offered by
National City Bank. By 1939 I. G. acquired a participation and
managerial influence in some 380 other German firms and over 500
foreign firms.
The Farben empire owned its own coal mines, its own
electric power plants, iron and steel units, banks, research units,
and numerous commercial enterprises.
There were over 2,000 cartel
agreements between I. G. and foreign firms - including Standard Oil
of New Jersey, DuPont, Alcoa, Dow Chemical, and others in the United
States, The full story of I.G. Farben and its world-wide activities
before World War II can never be known, as key German records were
destroyed in 1945 in anticipation of Allied victory.
However, one
post-war investigation by the U.S, War Department concluded that:
Directors of Farben firms (i.e., the "I. G. Farben officials"
referred to in the investigation) included not only Germans but also
prominent American financiers.
This 1945 U.S. War Department report
concluded that I.G.'s assignment from Hitler in the prewar period
was to make Germany self-sufficient in rubber, gasoline, lubricating
oils, magnesium, fibers, tanning agents, fats, and explosives.
To
fulfill this critical assignment, vast sums were spent by I.G. on
processes to extract these war materials from indigenous German raw
materials - in particular the plentiful German coal resources. Where
these processes could not be developed in Germany ,they were
acquired from abroad under cartel arrangements.
For example, the
process for iso-octane, essential for aviation fuels, was obtained
from the United States,
The process for manufacturing 'tetra-ethyl lead' essential for
aviation gasoline, was obtained by I. G. Farben from the United
States, and in 1939 I.G. was sold $20 million of high-grade aviation
gasoline by Standard Oil of New Jersey.
Even before Germany
manufactured tetra-ethyl lead by the American process it was able to
"borrow" 500 tons from the Ethyl Corporation. This loan of vital
tetra-ethyl lead was not repaid and I.G. forfeited the $1 million
security.
Further, I.G. purchased large stocks of magnesium from Dow
Chemical for incendiary bombs and stockpiled explosives,
stabilizers, phosphorus, and cyanides from the outside world.
In 1939, out of 43 major products manufactured by I.G., 28 were of "primary concern" to the German armed forces.
Farben's ultimate
control of the German war economy, acquired during the 1920s and
1930s with Wall Street assistance, can best be assessed by examining
the percentage of German war material output produced by Farben
plants in 1945.
Farben at that time produced,
(See Chart 2-1 and Table 2-1.)
Dr. von Schnitzler, of the I.G. Farben Aufsichsrat, made the
following pertinent statement in 1943:
Unfortunately, when we probe the technical origins of the more
important of these military materials - quite apart from financial
support for Hitler - we find links to American industry and to
American businessmen.
There were numerous Farben arrangements with
American firms, including cartel marketing arrangements, patent
agreements, and technical exchanges as exemplified in the Standard
Oil-Ethyl technology transfers mentioned above. These arrangements
were used by I.G. to advance Nazi policy abroad, to collect
strategic information, and to consolidate a world-wide chemical
cartel.
One of the more horrifying aspects of I.G. Farben's cartel was the invention, production, and distribution of the Zyklon B gas, used in Nazi concentration camps.
Zyklon B was pure Prussic acid, a lethal
poison produced by I.G. Farben Leverkusen and sold from the Bayer
sales office through Degesch, an independent license holder. Sales
of Zyklon B amounted to almost three-quarters of Degesch business;
enough gas to kill 200 million humans was produced and sold by I.G.
Farben.
The Kilgore Committee report of 1942 makes it clear that the
I.G. Farben directors had precise knowledge of the Nazi
concentration camps and the use of I.G. chemicals. This prior
knowledge becomes significant when we later consider the role of the
American directors in I.G.'s American subsidiary.
The 1945
interrogation of I.G. Farben director von Schnitzler reads:
There was no attempt by I.G. Farben to halt production of the gases
- a rather ineffective way for von Schnitzler to express any concern
for human life, "because it was too terrible."
The Berlin N.W. 7 office of I.G. Farben was the key Nazi overseas espionage center.
The unit operated under Farben director Max Ilgner,
nephew of I.G. Farben president Hermann Schmitz. Max Ilgner and
Hermann Schmitz were on the board of American I.G., with fellow
directors Henry Ford of Ford Motor Company, Paul Warburg of Bank of
Manhattan, and Charles E. Mitchell of the Federal Reserve Bank of
New York.
Berlin N.W. 7 office of I.G. Farben
At the outbreak of war in 1939 VOWI employees were ordered into the
Wehrmacht but in fact continued to perform the same work as when
nominally under I.G. Farben.
One of the more prominent of these Farben intelligence workers in N.W. 7 was
Prince Bernhard of the
Netherlands, who joined Farben in the early 1930s after
completion of an 18-month period of service in the black-uniformed
S.S.8
The U.S. arm of the VOWI intelligence network was Chemnyco, Inc. According to the War Department,
Chemnyco's vice president in New York was Rudolph Ilgner, an
American citizen and brother of American I, G. Farben director Max
Ilgner.
In brief, Farben operated VOWI, the Nazi foreign
intelligence operation, before World War II and the VOWI operation
was associated with prominent members of the Wall Street
Establishment through American I.G. and Chemnyco.
The U.S. War Department also accused I.G. Farben and its American associates of spearheading Nazi psychological and economic warfare programs through dissemination of propaganda via Farben agents abroad, and of providing foreign exchange for this Nazi propaganda.
Farben's cartel arrangements promoted Nazi economic warfare
- the
outstanding example being the voluntary Standard Oil of New Jersey
restriction on development of synthetic rubber in the United States
at the behest of I. G. Farben.
As the War Department report puts it:
In 1945 Dr. Oskar Loehr, deputy head of the I.G. "Tea Buro,"
confirmed that I. G. Farben and Standard Oil of New Jersey operated
a "preconceived plan" to suppress development of the synthetic
rubber industry in the United States, to the advantage of the German
Wehrmacht and to the disadvantage of the United States in World War
II.
Dr. Loehr's testimony reads (in part) as follows:
I.G. Farben was pre-war Germany's largest earner of foreign
exchange, and this foreign exchange enabled Germany to purchase
strategic raw materials, military equipment, and technical
processes, and to finance its overseas programs of espionage,
propaganda, and varied military and political activities preceding
World War II.
Acting on behalf of the Nazi state, Farben broadened
its own horizon to a world scale which maintained close relations
with the Nazi regime and the Wehrmaeht. A liaison office, the
Vermittlungsstelle W, was established to maintain communications
between I.G. Farben and the German Ministry of War:
The aim of this work is the building up to a tight organization for armament in the I.G. which could be inserted without difficulty in the existing organization of the I.G. and the individual plants.
In the case of war, I.G. will be treated by the authorities
concerned with armament questions as one big plant which, in its
task for the armament, as far as it is possible to do so from the
technical point of view, will regulate itself without any
organizational influence from outside (the work in this direction
was in principle agreed upon with the Ministry of War
Wehrwirtschaftsant) and from this office with the Ministry of
Economy.
To the field of the work of the Vermittlungsstelle
W belongs, besides the organizational set-up and long-range
planning, the continuous collaboration with regard to the armament
and technical questions with the authorities of the Reich and with
the plants of the I.G.12
Unfortunately the files of the Vermittlungsstelle offices were destroyed prior to the end of the war, although it is known from other sources that from 1934 onwards a complex network of transactions evolved between I.G. and the Wehrmacht.
In 1934 I. G. Farben began to mobilize for war, and each I.G. plant prepared its
war production plans and submitted the plans to the Ministries of
War and Economics. By 1935-6 war games were being held at I.G.
Farben plants and wartime technical procedures rehearsed.13
These
war games were described by Dr. Struss, head of the Secretariat of
I.G.'s Technical Committee:
Consequently, throughout the 1930s I. G. Farben did more than just
comply with orders from the Nazi regime.
Farben was an initiator and
operator for the Nazi plans for world conquest. Farben acted as a
research and intelligence organization for the German Army and
voluntarily initiated Wehrmacht projects. In fact the Army only
rarely had to approach Farben; it is estimated that about 40 to 50
percent of Farben projects for the Army were initiated by Farben
itself.
In brief, in the words of Dr. von Schnitzler:
Polishing I. G. Farben's Public Image
This miserable picture of pre-war military preparation was known abroad and had to be sold - or disguised - to the American public in order to facilitate Wall Street fund-raising and technical assistance on behalf of I. G. Farben in the United States.
A
prominent New York public relations firm was chosen for the job of
selling the I.G. Farben combine to America. The most notable public
relations firm in the late 1920s and 1930s was Ivy Lee & T.J. Ross
of New York.
Ivy Lee had previously undertaken a public relations
campaign for
the Rockefellers, to spruce up the Rockefeller name
among the American public. The firm had also produced a syncophantic
book entitled USSR, undertaking the same clean-up task for the
Soviet Union - even while Soviet labor camps were in full blast in
the late 20s and early 30s.
From 1929 onwards Ivy Lee became public relations counsel for I. G. Farben in the United States. In 1934 Ivy Lee presented testimony to the House Un-American Activities Committee on this work for Farben.15
Lee testified that I.G. Farben was affiliated with the
American Farben firm and,
Lee explained that he was paid
$25,000 per year under a contract made with Max Ilgner of I.G.
Farben. His job was to counter criticism levelled at I.G. Farben
within the United States.
The advice given by Ivy Lee to Farben on
this problem was acceptable enough:
The initial payment of $4,500 to Ivy Lee under this contract was
made by Hermann Schmitz, chairman of I.G. Farben in Germany.
It was
deposited in the New York Trust Company under the name of I. G.
Chemic (or the "Swiss I.G.," as Ivy Lee termed it). However, the
second and major payment of $14,450 was made by William von Rath of
the American I.G. and also deposited by Ivy Lee in New York Trust
Company, for the credit of his personal account. (The firm account
was at the Chase Bank.)
This point about the origin of the funds
is
'important when we consider the identity of directors of American
I.G., because payment by American I.G. meant that the bulk of the
Nazi propaganda funds were not of German origin. They were American
funds earned in the U.S. and under control of American directors,
although used for Nazi propaganda in the United States.
In other words, most of the Nazi propaganda funds handled by Ivy Lee were not imported from Germany. The use to which these American funds were put was brought out under questioning by the House Un-American Activities Committee:
Finally, Ivy Lee employed Burnham Carter to study American new paper
reports on Germany and prepare suitable pro-Nazi replies.
It should
be noted that this German literature was not Farben literature, it
was official Hitler literature:
The American I.G. Farben
Who were the prominent Wall Street establishment financiers who directed the activities of American I.G., the I.G. Farben affiliate in the United States promoting Nazi propaganda? American I.G. Farben directors included some of the more prominent members of Wall Street. German interests re-entered the United States after World War I, and successfully overcame barriers designed to keep I.G. out of the American market. Neither seizure of German patents, establishment of the Chemical Foundation, nor high tariff walls were a major problem. By 1925, General Dyestuff Corporation was established as the exclusive selling agent for products manufactured by Gasselli Dyestuff (renamed General Aniline Works, Inc., in 1929) and imported from Germany. The stock of General Aniline Works was transferred in 1929 to American I.G. Chemical Corporation and later in 1939 to General Aniline & Film Corporation, into which American I.G. and General Aniline Works were merged.
American I.G. and its successor,
General Aniline & Film, is the unit through which control of I.G.'s
enterprises in the U.S. was maintained. The stock authorization of
American I.G. was 3,000,000 common A
shares and 3,000,000 common B shares. In return for stock interests
in General Aniline Works and Agfa-Ansco Corporation, I.G. Farben in
Germany received all the B shares and 400,000 A shares.
Thirty
million dollars of convertible bonds were sold to the American
public and guaranteed as to principal and interest by the German I.G.
Farben, which received an option to purchase an additional 1,000,000
A shares.
The management of American I.G. (later
General Aniline) was
dominated by I.G. or former I.G. officials. (See Table 9..9..)
Hermann Schmitz served as president from 1929 to 1936 and was then
succeeded by his brother, Dietrich A. Schmitz, a naturalized
American citizen, until 1941. Hermann Schmitz, who was also a
director of the bank for International Settlements, the "apex" of
the international financial control system. He remained as chairman
of the board of directors from 1936 to 1939.
The original board of directors included nine members who were, or had been, members of the board of I.G. Farben in Germany (Hermann Schmitz, carl Bosch, Max Ilgner, Fritz ter Meer, and Wilfred Grief), or had been previously employed by I.G. Farben in Germany (Walter Duisberg, Adolph Kuttroff, W.H. yon Rath, Herman A. Metz).
Herman A.
Metz was an American citizen, a staunch Democrat in politics and a
former comptroller of the City of New York. A tenth, W.E. Weiss, had
been under contract to I.G.
Directors of American I.G. were not only prominent in Wall Street and American industry but more significantly were drawn from a few highly influential institutions: 
The remaining four members of the American I.G. board were prominent
American citizens and members of the Wall Street financial elite:
Directors of American I.G. were not only prominent in Wall Street
and American industry but more significantly were drawn from a few
highly influential institutions. (See chart above.)
Between 1929 and 1939 there were changes in the make-up of the board of American I.G. The number of directors varied from time to time, although a majority always had I.G. backgrounds or connections, and the board never had less than four American directors.
In 1939 - presumably looking ahead to World War II
- an effort was made to
give the board a more American complexion, but despite the
resignation of Hermann Schmitz, Carl Bosch, and Walter Duisberg, and
the appointment of seven new directors, seven members still belonged
to the I.G. group. This I.G. predominance increased during 1940 and
1941 as American directors, including Edsel Ford, realized the
political unhealthiness of I.G. and resigned.
Several basic observations can be made from this evidence.
If the directors of a
corporation are collectively responsible for the activities of the
corporation, then the American directors should also have been
placed on trial at Nuremburg, along with the German directors - that
is, if the purpose of the trials was to determine war guilt.
Of
course, if the purpose of the trials had been to divert attention
away from the U.S. involvement in Hitler's rise to power, they
succeeded very well in such an objective.
Footnotes
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