Wall Street and the Rise of Hitler (4 page)

after World War I.15

The three dominant cartels, the amounts borrowed and the Wall Street floating syndicate were as follows:

Wall
Street

Amount Issued

German Cartel

Syndicate

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CHAPTER ONE: Wall Street Paves the Way for Hitler

Allgemeine

National City

$35,000,000

Elektrizitats-

Co.

Gesellschaft

(A.E.G.)

(German General

Electric)

Vereinigte

Dillon, Read &

$70,225,000

Stahlwerke

Co.

(United Steelworks)

American I.G.

National City

$30,000,000

Chemical (I.G.

Co.

Farben)

Looking at all the loans issued, it appears that only a handful of New York financial houses handled the German reparations financing. Three houses — Dillon, Read Co.; Harris, Forbes & Co.; and National City Company — issued almost three-quarters of the total face amount of the loans and reaped most of the profits:

Participation

in

German

Wall Street

industrial

Profits on

Syndicate

issues in U.S.

German

Percent

Manager

capital market

loans*

of total

Dillon, Read & Co.

$241,325,000 $2.7 million

29.2

Harris, Forbes & Co.

186,500,000

1.4 million

22.6

National City Co.

173,000,000

5.0 million

20.9

Speyer & Co.

59,500,000

0.6 million

7.2

Lee, Higginson &

53,000,000

n.a

6.4

Co.

Guaranty Co. of

41,575,000 0.2 million

5.0

N.Y.

Kuhn, Loeb & Co.

37,500,000

0.2 million

4.5

Equitable Trust Co.

34,000,000

0.3 million

4.1

___________ ___________ _________

TOTAL

$826,400,000 $10.4 million

99.9

Source:
See Appendix A

*Robert R. Kuczynski,
Bankers Profits from German Loans

(Washington, D.C.: Brookings Institution, 1932), p. 127.

After the mid-1920s the two major German combines of I.G. Farben and Vereinigte
Stahlwerke dominated the chemical and steel cartel system created by these loans.

Although these firms. had a voting majority in the cartels for only two or three basic
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CHAPTER ONE: Wall Street Paves the Way for Hitler

products, they were able — through control of these basics — to enforce their will
throughout the cartel. I.G. Farben was the main producer of basic chemicals used by
other combines making chemicals, so its economic power position cannot be measured
only by its capacity to produce a few basic chemicals. Similarly, Vereinigte Stahlwerke,
with a pig-iron capacity greater than that of all other German iron and steel producers
combined, was able to exercise far more influence in the semi-finished iron and steel
products cartel than its capacity for pig-iron production suggests. Even so the
percentage output of these cartels for all products was significant:
Vereinigte Stahlwerke

Percent of German total

products

production in 1938

Pig iron

50.8

Pipes and tubes

45.5

Heavy plate

36.0

Explosives

35.0

Coal tar

33.3

Bar steel

37.1

Percent of German total

I.G. Farben

production in 1937

Synthetic methanol

100.0

Magnesium

100.0

Chemical nitrogen

70.0

Explosives

60.0

Synthetic gasoline

46.0 (1945)

(high octane)

Brown coal

20.0

Among the products that brought I.G. Farben and Vereinigte Stahlwerke into mutual
collaboration were coal tar and chemical nitrogen, both of prime importance for the
manufacture of explosives. I. G. Farben had a cartel position that assured dominance
in the manufacture and sale of chemical nitrogen, but had only about one percent of
the cok-ing capacity of Germany. Hence an agreement was made under which Farben
explosives subsidiaries obtained their benzol, toluol, and other primary coal-tar
products on terms dictated by Vereinigte Stahlwerke, while Vereinigte Stahlwerke's
explosives subsidiary was dependent for its nitrates on terms set by Farben. Under this
system of mutual collaboration and inter-dependence, the two cartels, I.G. Farben and
Vereinigte Stahlwerke, produced 95 percent of German .explosives in 1957-8 on the
eve of World War II.
This production was from capacity built by American loans and to

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CHAPTER ONE: Wall Street Paves the Way for Hitler

some extent by American technology.

The I. G. Farben-Standard Oil cooperation for production of synthetic oil from coal
gave the I. G. Farben cartel a monopoly of German gasoline production during World
War II. Just under one half of German high octane gasoline in 1945 was produced
directly by I. G. Farben and most of the balance by its affiliated companies.

In brief, in synthetic gasoline and explosives (two of the very basic elements of modern
warfare), the control of German World War II output was in the hands of two German
combines created by Wall Street loans under the Dawes Plan.

Moreover, American assistance to Nazi war efforts extended into other areas.
17
The
two largest tank producers in Hitler's Germany were Opel, a wholly owned subsidiary
of General Motors (controlled by the J.P. Morgan firm), and the Ford A. G. subsidiary
of the Ford Motor Company of Detroit. The Nazis granted tax-exempt status to Opel in
1936, to enable General Motors to expand its production facilities. General Motors
obligingly reinvested the resulting profits into German industry. Henry Ford was
decorated by the Nazis for
his
services to Naziism. (See p. 93.) Alcoa and Dow
Chemical worked closely with Nazi industry with numerous transfers of their domestic
U.S. technology. Bendix Aviation, in which the J.P. Morgan-controlled General Motors
firm had a major stock interest, supplied Siemens & Halske A. G. in Germany with
data on automatic pilots and aircraft instruments. As late as 1940, in the "unofficial
war," Bendix Aviation supplied complete technical data to Robert Bosch for aircraft
and diesel engine starters and received royalty payments in return.

In brief, American companies associated with the Morgan-Rockefeller international
investment bankers — not, it should be noted, the vast bulk of independent American
industrialists — were intimately related to the growth of Nazi industry. It is important
to note as we develop our story that General Motors, Ford, General Electric, DuPont
and the handful of U.S. companies intimately involved with the development of Nazi
Germany were — except for the Ford Motor Company — controlled by the Wall
Street elite — the J.P. Morgan firm, the Rockefeller Chase Bank and to a lesser extent
the Warburg Manhattan bank.
18 This book is not an indictment of
all
American
industry and finance. It is an indictment of the "apex" — those firms controlled
through the handful of financial houses, the Federal Reserve Bank system, the Bank
for International Settlements, and their continuing international cooperative
arrangements and cartels which attempt to control the course of world politics and
economics.

Footnotes:

1United States Congress. Senate. Hearings before a Subcommittee of the
Committee on Military Affairs.
Elimination of German Resources for War.

Report pursuant to S. Res. 107 and 146, July 2, 1945, Part 7, (78th
Congress and 79th Congress), (Washington: Government Printing Office,
1945), hereafter cited as
Elimination of German Resources.

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CHAPTER ONE: Wall Street Paves the Way for Hitler

2

Elimination of German Resources,
p. 174.

3Gabriel Kolko, "American Business and Germany, 1930-1941,"
The

Western Political Quarterly,
Volume XV, 1962.

4Ibid, p. 715.

5Carroll Quigley,
op. cit.

6Ibid, p. 308.

7Carroll Quigley,
op.
cit., p. 309.

8Fritz Thyssen,
I Paid Hitler,
(New York: Farrar & Rinehart, Inc., n.d.), p.

88.

9U.S. Group Control Council (Germany), Office of the Director of
Intelligence, Intelligence Report No. EF/ME/1, 4 September 1945. Also see
Hjalmar Schacht,
Confessions of "the old Wizard",
(Boston: Houghton
Mifflin, 1956)

10Hjalmar Schacht,
op
cit., p. 18. Fritz Thyssen adds, "Even at the time
Mr, Dillon, a New York Banker of Jewish origin whom I much admire told
me 'In your place I would not sign the plan.'"

11Ibid, p. 282.

12Carroll Quigley,
op. cit.,
p. 324.

13Henry H. Schloss,
The Bank for International Settlements
(Amsterdam,:
North Holland Publishing Company, 1958)

14John Hargrave,
Montagu Norman,
(New York: The Greystone Press,
n.d.). p. 108.

15James Stewart Martin,
op.
cit., p. 70.

16See Chapter Seven for more details of Wall Street loans to German
industry.

17See Gabriel Kolko,
op. cit.,
for numerous examples.

18In 1956 the Chase and Manhattan banks merged to become Chase
Manhattan.

BACK

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CHAPTER TWO: The Empire of I.G. Farben

CHAPTER TWO

The Empire of I.G. Farben

Farben was Hitler and Hitler was Farben.
(Senator Homer T. Bone to Senate Committee on Military Affairs, June 4, 1943.)

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 Hermann Schmitz (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 Inter-nationale 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 War-burg, 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 (Inter-nationale 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 http://reformed-theology.org/html/books/wall_street/chapter_02.htm (1 of 15) [8/4/2001 9:44:10 PM]

CHAPTER TWO: The Empire of I.G. Farben

then developed into an integral part of the formation and operation of the Nazi state machine, the Wehrmacht and the S.S.