CHAPTER
FOUR
Standard
Oil Fuels World War II
In two years 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.
During World War II Standard Oil of New Jersey was
accused of treason for this pre-war alliance with Farben, even while its
continuing wartime activities within Himmler's Circle 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
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.
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 Nuremberg defendant and then-Farben official
von Knieriem to fellow Farben management officials. This von 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 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:
(1) Above all, improvement of fuels through the
addition of tetraethyl-lead and the
manufacture of this product. It need not be especially mentioned that without
tetraethl-lead the present methods of warfare would be impossible. The fact
that since the beginning of the war we could produce tetraethyl-lead is
entirely due to the circumstances that, shortly before, the Americans had
presented us with the production plans, complete with their know-how. It was,
moreover, the first time that the Americans decided to give a license on this
process in a foreign country (besides communication of unprotected secrets) and
this only on our urgent requests to Standard Oil to fulfill our wish. Contractually
we could not demand it, and we found out later that the War Department in
Washington gave its permission only after long deliberation.
(2) Conversion of low-molecular unsaturates into
usable gasoline (polymerization). Much work in this field has been done here as
well as in America. But the Americans were the first to carry the process
through on a large scale, which suggested to us also to develop the process on
a large technical scale. But above and beyond that, plants built according to
American processes are functioning in Germany.
(3) In the field of lubricating oils as well, Germany
through the contract with America, learned of experience which is
extraordinarily important for present day warfare.
In this connection, we obtained not only the
experience of Standard, but, through Standard, the experiences of General
Motors and other large American motor companies as well.
(4) As a further remarkable example of advantageous
effect for us of the contract between IG and Standard Oil, the following should
be mentioned: in the years 1934 / 1935 our government had the greatest interest
in gathering from abroad a stock of especially valuable mineral oil products
(in particular, aviation gasoline and aviation lubricating oil), and holding it
in reserve to an amount approximately equal to 20 million dollars at market
value. The German Government asked IG if it were not possible, on the basis o
fits friendly relations with Standard Oil, to buy this amount in Farben's name;
actually, however, as trustee of the German Government. The fact that we
actually succeeded by means of the most difficult negotiations in buying the
quantity desired by our government from the American Standard Oil Company and
the Dutch — English Royal — Dutch — Shell group and in transporting it to
Germany, was made possible only through the aid of the Standard Oil Co.
Another prominent example of Standard Oil assistance
to Nazi Germany — in cooperation with General Motors — was in supplying ethyl
lead. Ethyl fluid is an anti-knock compound used in both aviation and
automobile fuels to eliminate knocking, and so improve engine efficiency;
without such anti-knocking compounds modern mobile warfare would be
impractical.
In 1924 the Ethyl Gasoline Corporation was formed in New
York City, jointly owned by the Standard Oil Company of New Jersey and General
Motors Corporation, to control and utilize U.S. patents for the manufacture and
distribution of tetraethyl lead and ethyl fluid in the U.S. and abroad. Up to
1935 manufacture of these products was undertaken only in the United States. In 1935 Ethyl Gasoline Corporation
transferred its know-how to Germany for use in the Nazi rearmament program.
This transfer was undertaken over the protests of the U.S. Government.
Ethyl's intention to transfer its anti-knock
technology to Nazi Germany came to the attention of the Army Air Corps in
Washington, D.C. On December 15, 1934 E. W. Webb, president of Ethyl Gasoline,
was advised that Washington had learned of the intention of "forming a
German company with the I.G. to manufacture ethyl lead in that country."
The War Department indicated that there was considerable criticism of this
technological transfer, which might "have the gravest repercussions"
for the U.S.; that the commercial demand for ethyl lead in Germany was too
small to be of interest; and,
... it has been claimed that Germany is secretly
arming [and] ethyl lead would doubtless be a valuable aid to military
aeroplanes.10
The Ethyl Company was then advised by the Army Air
Corps that "under no conditions should you or the Board of Directors of
the Ethyl Gasoline Corporation disclose any secrets or 'know-how' in connection
with the manufacture of tetraethyl lead to Germany.11
On January 12, 1935 Webb mailed to the Chief of the
Army Air Corps a "Statement of Facts," which was in effect a denial
that any such technical knowledge would be transmitted; he offered to insert
such a clause in the contract to guard against any such transfer. However,
contrary to its pledge to the Army Air Corps, Ethyl subsequently signed a joint
production agreement with I.G. Farben in Germany to form Ethyl G.m.b.H. and with
Montecatini in fascist Italy for the same purpose.
It is worth noting the directors of Ethyl Gasoline
Corporation at the time of this transfer:12 E.W. Webb,
president and director; C.F. Kettering; R.P. Russell; W.C. Teagle, Standard Oil
of New Jersey and trustee of FDR's Georgia Warm Springs Foundation; F. A.
Howard; E. M. Clark, Standard Oil of New Jersey; A. P. Sloan, Jr.; D. Brown; J.
T. Smith; and W.S. Parish of Standard Oil of New Jersey.
The I.G. Farben files captured at the end of the war
confirm the importance of this particular technical transfer for the German
Wehrmacht:
Since the beginning of the war we have been in a
position. to produce lead tetraethyl solely because, a short time before the
outbreak of the war, the Americans had established plants for us ready for
production and supplied us with all available experience. In this manner we did
not need to perform the difficult work of development because we could start
production right away on the basis of all the experience that the Americans had
had for years.13
In 1938, just before the outbreak of war in Europe,
the German Luftwaffe had an urgent requirement for 500 tons of tetraethyl lead.
Ethyl was advised by an official of DuPont that such quantities of ethyl would
be used by Germany for military purposes.14 This 500
tons was loaned by the Ethyl Export Corporation of New York to Ethyl G.m.b.H.
of Germany, in a transaction arranged by the Reich Air Ministry with I.G.
Farben director Mueller-Cunradi. The collateral security was arranged in a
letter dated September 21, 193815 through
Brown Brothers, Harriman & Co. of New York.
The transfer of ethyl technology for the Nazi war
machine was repeated in the case of synthetic rubber. There is no question that
the ability of the German Wehrmacht to fight World War II depended on synthetic
rubber — as well as on synthetic petroleum — because Germany has no natural
rubber, and war would have been impossible without Farben's synthetic rubber
production. Farben had a virtual monopoly of this field and the program to
produce the large quantities necessary was financed by the Reich:
The volume of planned production in this field was
far beyond the needs of peacetime economy. The huge costs involved were
consistent only with military considerations in which the need for
self-sufficiency without regard to cost was decisive.16
As in the ethyl technology transfers, Standard Oil of
New Jersey was intimately associated with I.G. Farben's synthetic rubber. A
series of joint cartel agreements were made in the late 1920s aimed at a joint
world monopoly of synthetic rubber. Hitler's Four Year Plan went into effect in
1937 and in 1938 Standard provided I.G. Farben with its new butyl rubber
process. On the other hand Standard kept the German buna process secret within
the United States and it was not until June 1940 that Firestone and U.S. Rubber
were allowed to participate in testing butyl and granted the buna manufacturing
licenses. Even then Standard tried to get the U.S. Government to finance a
large-scale buna program — reserving its own funds for the more promising
butyl process.17
Consequently, Standard assistance in Nazi Germany was
not limited to oil from coal, although this was the most important transfer.
Not only was the process for tetraethyl transferred to I.G. Farben and a plant
built in Germany owned jointly by I.G., General Motors, and Standard
subsidiaries; but as late as 1939 Standard's German subsidiary designed a
German plant for aviation gas. Tetraethyl was shipped on an emergency basis for
the Wehrmacht and major assistance was given in production of butyl rubber,
while holding secret in the U.S. the Farben process for buna. In other words,
Standard Oil of New Jersey (first under president W.C. Teagle and then under
W..S. Farish) consistently aided the Nazi war machine while refusing to aid the
United States.
This sequence of events was not an accident.
President W.S. Farish argued that not to have granted such technical assistance
to the Wehrmacht "... would have
been unwarranted."18 The
assistance was knowledgeable, ranged over more than a decade, and was so
substantive that without it the Wehrmacht could not have gone to war in 1939.
The Standard Oil subsidiary in Germany, Deutsche-Amerikanische
Petroleum A.G. (DAPAG), was 94-percent owned by Standard Oil of New Jersey.
DAPAG had branches throughout Germany, a refinery at Bremen, and a head office
in Hamburg. Through DAPAG, Standard Oil of New Jersey was represented in the
inner circles of Nazism — the Keppler Circle and Himmler's Circle of Friends. A
director of DAPAG was Karl Lindemann, also chairman of the International
Chamber of Commerce in Germany, as well as director of several banks, including
the Dresdner Bank, the Deutsche Reichsbank, and the private Nazi-oriented bank
of C. Melchior & Company, and numerous corporations including the HAPAG
(Hamburg-Amerika Line). Lindemann was a member of Keppler's Circle of Friends
as late as 1944 and so gave Standard Oil of New Jersey a representative at the
very core of Nazism. Another member of the board of DAPAG was Emil Helfrich,
who was an original member of the Keppler Circle.
In sum, Standard Oil of New Jersey had two members of
the Keppler Circle as directors of its German wholly owned subsidiary. Payments
to the Circle from the Standard Oil subsidiary company, and from Lindemann and
Helffrich as individual directors, continued until 1944, the year before the
end of World War II.19
Footnotes:
1In 1935, John D. Rockefeller, Jr. owned stock valued
at $245 million in Standard Oil of New Jersey, Standard Oil of California, and
Socony-Vacuun Company, New York Times, January
10, 1935.
3Ibid.
6Ibid.
7Ibid, November 24, 1929.
9See letter from U.S. War Department reproduced as
Appendix D.
10United States Congress. Senate. Hearings before a
subcommittee of the Committee on Military Affairs. Scientific and Technical Mobilization, (78th Congress, 1st session,
S. 702), Part 16, (Washington: Government Printing Office, 1944), p. 939.
Hereafter cited as Scientific and Technical Mobilization.
11Ibid.
14George W. Stocking & Myron W. Watkins, Cartels in Action, (New York: The
Twentieth Century Fund, 1946), p. 9.
15For original documents see NMT, I.G. Farben case, Volume VIII, pp. 1189-94.
18Robert Engler, The
Politics of Oil, (New York: The MacMillan Company, 1961), p. 102.
19See Chapter Nine for details.
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