Wall St. and the Rise of Hitler by
Antony C. Sutton from reformation.org
CHAPTER FOUR
Standard Oil Fuels World War II
In two gears Germany will be manufacturing oil and gas enough out of soft coal for a long war. The Standard Oil of New York is furnishing millions of dollars to help. (Report from the Commercial Attaché, U.S. Embassy in Berlin, Germany, January 1933, to State Department in
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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