Keeping Germany Fat
Gordon A. Craig
The New York Review of Books, September 20, 2001, page 78
a review of
The Deutsche Bank and the Nazi Economic War Against the Jews by Harold
James. Cambridge University Press, 268 pp., $24.95
Doing Business with the Nazis: Britain's Economic and Financial Relations
with Germany, 1931-1939 by Neil Forbes, with a foreword by Richard Overy.
London: Frank Cass, 250 pp., $59.50; $26.50 (paper)
IBM and the Holocaust: The Strategic Alliance Between Nazi Germany and
America's Most Powerful Corporation by Edwin Black. Crown, 519 pp., $27.50
1.
If it can be said that Germany was a world power before it began to act like
one, this was largely because of its banks. In the remarkable extension of
German interests around the globe in the nineteenth century the chief agents
were the great banking institutions, particularly the so-called D-Banks, the
Deutsche Bank, the Dresdner Bank, the Darmstadter-und-Nationalbank
(Danatbank), and the Disconto Gesellschaft. These organizations, which
controlled about 40 percent of Germany's commercial deposits, had been
founded in part to promote industrial growth, but it was their purpose also,
as stated by one of their publications, "to foster commercial relations
between Germany and other countries." They did this by investing in foreign
banks and sharing in their operations or by establishing branches of their
own and using their capital to support commercial operations. Their success
in the 1890s was remarkable, as is illustrated by their creation of the
DeutscheAsiatische Bank in China and subsidiaries of the Dresdner and
Deutsche banks throughout Latin America and by their capital investments and
railway concessions in South Africa and the Ottoman Empire.
The First World War and its aftermath brought changes in the structure and
activities of these organizations. The Deutsche Bank became a truly
multibranch bank with 173 branches throughout Germany by 1926, and in 1929,
in the biggest amalgamation of the period, it merged with the
Disconto-Gesellschaft. Greater changes portended after January 1933, for
Hitler's new ruling party was suspicious of all banks as "plutocratic" and
"Jewish," and soon gave tangible form to its feelings by carrying through a
de facto nationalization of the Dresdner Bank and then forcing it to merge
with the Danatbank. As for the Deutsche Bank, it had long been criticized by
the Nazis for its concentration on large-scale industrial finance and
international trade and its neglect of small business customers, and it was
soon the object of other pressures.
Harold James, one of five historians who were invited by the Deutsche Bank
to examine the bank's behavior during the Nazi era and to write an
unexpurgated account of it, describes where these pressures led. The bank,
he points out, had no desire to become involved in party business:
"The history of Deutsche Bank in the Third Reich is the story of the clash
of two fundamentally contrary strategies of adaptation: on the one hand,
self-defense against the intrusions of party and state; on the other,
accommodation and compromise."
The management of the bank might have tried to retreat into purely economic
activities had it not become clear very quickly that the Nazi Party regarded
all such activities to be political. When Hitler launched his campaign to
purge business of Jewish influence, the bank found itself automatically
involved in individual cases in which it had to choose "Aryans" over Jews--a
process of "Aryanization"--because of its extensive business contacts and
its representation on the supervisory boards of other corporations. It was
easily drawn into the search for new owners or other aspects of the
liquidation of Jewish interest. The most dramatic example of this was the
transfer of the holdings of the prominent publishing house Ullstein, owner
of such journals as the Vossische Zeitung, BZ am Mittag, and the Berliner
Morgenblatt, to the National Socialist Franz Eher Verlag. Josef Goebbels,
who was intent, it was rumored, on "finishing off the Jewish press," wanted
the transfer to be brokered by the Deutsche Bank because this would give an
air of respectability to the deal. The bank's incentive was not so much
financial as the hope that it would, at least for a time, be spared from
attacks by the party press.
James points out that some of the initiatives for Aryanization were taken
for "legitimate and even decent motives," helping the victims to rescue part
of their assets, and he instances the involvement of the Deutsche Bank in
the liquidation of the Bankhaus Mendelssohn and Co. of Berlin, Germany's
largest private bank, which was consummated without the imposition of Nazi
partners or the disappearance of the firm's name. The Jewish owners obtained
considerable settlements. Another example was the transfer of the famous S.
Fischer Verlag to Peter Suhrkamp after skillful diplomacy by Hermann Abs,
the future star of the Deutsche Bank, who defeated party attempts to take
over the press.
But as time passed, such cases became rarer. In April 1933, Georg Solmssen,
spokesman for the bank's managing board, had written in a letter to a
colleague,
"I fear we are only at the beginning of a development that is deliberately
aimed...at the economic and moral extermination of all members of the Jewish
race living in Germany--quite indiscriminately. The total passivity of those
classes not belonging to the National Socialist Party, the manifest lack of
any feeling of solidarity on the part of everyone who...formerly worked side
by side with Jewish colleagues, the ever-clearer readiness to take personal
advantage of the fact that jobs are now falling vacant, and the dead silence
that greets the ignominy and shame irremediably inflicted on those who,
albeit innocent, find the foundations of their honor and livelihood
undermined from one day to the next--all this points to a situation so
hopeless that it would be wrong not to look matters in the face without
applying any makeup, as it were."
This was prophetic. Even in the first years after 1933, when the party's
attacks upon Jewish firms were still relatively restrained, banks like the
Deutsche Bank were under pressure from their junior employees or from Nazi
work councils to institute Aryanization processes of their own in their
branches and associated firms. After Germany had occupied Austria and
Czechoslovakia in 1938 and 1939 it was often the junior staff and managers
who instituted radical measures against Jews in the occupied countries.
By 1938, moreover, the big banks had abandoned their early attempts to
defend themselves against party and state intrusion and, when the German
push into Eastern Europe began in earnest, they became agents of the state
in a real sense. The government wanted the Deutsche and Dresdner banks to
involve themselves in the takeover of the Czech banks because the German
banks' foreign contacts were essential to financing the transactions and
because they could handle the extensive Aryanizations involved in such a
way, James writes, "as to win the confidence and cooperation of greedy and
hungry German and Czech industrialists, who might in this way be firmly
bound into the military economy of the 'Protectorate of Bohemia-Moravia.' "
The banks had no reservations. A Deutsche Bank official went to Prague to
negotiate about the future of Czech banking in March 1939, just two days
before the German invasion, and began to carry out the Aryanization process
immediately thereafter.
Spokesmen for the bank have sometimes said that, while it made some profits
on the transactions involved, these were not excessive, and that the
operation as a whole was simply business as usual. Given the fact, however,
that the expropriation of Jewish property took place in the setting of a
radical mobilization of anti-Semitic resentment, and then of a racial war,
this is not a very persuasive excuse.
2.
In the frequent postwar debates over the question of ultimate responsibility
for bringing the sins of Nazism down upon the world, the note of
self-reproach ran strongest perhaps in Great Britain. It was impossible to
deny that Britain's role in the Great Depression had been selfish and
destructive. Sir Frederick Phillips, undersecretary of the Treasury, was
making an unanswerable point when he wrote in 1934:
"No country ever administered a more severe shock to international trade
than we did when we both (1) depreciated the [British pound] (2) almost
simultaneously turned from free trade to protection. Overwhelming reasons
can be given why we were compelled to do these things but the point is we
ought not to be too touchy at developments abroad which interfere with us."
The shock of these British actions was reflected in the economic convulsions
of the Weimar Republic in its last phase. On January 30, 1933, it collapsed,
and Adolf Hitler became chancellor of Germany.
What that signified was the subject of the wildest speculation in the West.
For a time it was fashionable to believe that Hitler might be a stabilizing
influence, since it was realized that if he were allowed to fall, the
country might succumb to deeper economic depression and worse. But these
ideas were soon discovered to be based on nothing but underestimation of the
new chancellor's political skills and of the seductive force of the Nazi
ideology. Similarly, Britain's confident belief that resumption of trade
between the two countries would pose no serious problems became questionable
when it was discovered that the Fiihrer valued economic activity only for
what it could contribute to his expansionist political goals. With the
disclosure of his intention to push for all-out rearmament, the trade
question became as much a moral as an economic question.
Neil Forbes's new book is concerned with how British financial and economic
policy toward Germany was made, how it was executed, and what it achieved.
More particularly it deals, the author writes, "with the wider question of
how well British institutions responded to the challenge posed by the Third
Reich and whether the use of the term 'economic appeasement' aids or hinders
historical understanding."
In the 1930s, the British Foreign Office lost the dominant position it had
once held in determining foreign policy, and economic advisers began to
receive a more attentive hearing than professional diplomats like Sir Horace
Rumbold in Berlin, whose predictions about Hitler's future policy were among
the most prescient, and the most unheeded, of the period. The Treasury, the
Board of Trade, and the Bank of England became increasingly vocal in policy
matters, and the pressure of employers' organizations and trade unions was
also felt on many issues. This made for a divided and sometimes contentious
policy-making process. When Neville Chamberlain was chancellor of the
exchequer and felt compelled, in a dispute with Germany, to answer the
German finance minister's bullying with a retort in kind, his action, he
wrote to his sister,
"put the City in a blue funk, and the Chairmen of 5 banks with other
magnates proposed to come and tell me of the awful disasters that might
follow. But before they could come we had a brilliant triumph. The Germans
surrendered on both points."
During another dispute, Sir Orme Sargent, assistant undersecretary of the
Foreign Office, complained that
"In spite of all our efforts Mr. Montagu Norman [the governor of the Bank of
England] continues to carry on his own foreign policy, certainly without
consulting the Foreign Office and without, I suspect, taking even the
Treasury very much into consideration. The present dispute with the German
Government affords indeed a glaring instance of this independent action by
the Bank of England, for the settlement...was almost wrecked not so very
long ago by the sudden intervention of Mr. Norman."
The Foreign Office supposed that Montagu Norman was under the influence of
Hjalmar Schacht, the president of the German Reichsbank, who was said to
have persuaded him that the Foreign Office was anti-German and that
opposition to Hitler on important issues ran the risk of bringing communism
down upon the country.
To Sir Robert Vansittart, the permanent undersecretary in the foreign
office, Norman was "a pleasant but misguided person" who persistently
refused to recognize the important political issues that were involved in
financial relations with Germany. Vansittart argued that it was vital that
this "short view" be abandoned and that Britain begin to talk the only
language the Germans would understand, and in economic negotiations to be
canny and ungenerous and, as far as possible, to "keep Germany lean." But
Vansittart was never able to win his foreign secretary, Sir John Simon, a
persistent follower of the line of least resistance, over to his harder
position, and he was opposed in his own department by economic appeasers
like Frank Ashton Gwatkin and Gladwyn Jebb, who argued that Germany had to
be provided with opportunities to expand its trade and secure new markets
lest it go bankrupt and start a European war.
Elsewhere in the government, and particularly in business and banking
circles, it was argued cheerfully that keeping Germany fat rather than lean
was in everyone's interest and would increase the ability of German
moderates to oppose Hitler's dangerous policies, although all evidence from
Germany indicated that the Rihrer was going from strength to strength and
that moderates were in increasingly short supply.
In this atmosphere of doubt and division, credit arrangements were
negotiated between the two countries, with increasing difficulties on the
British side, as Mr. Forbes shows, and trade also continued. In the short
run, both countries benefited from this, for, if the German military
continued to import vital war materials from British sources, Britain
imported machinery for manufacturing shells and bombs from Germany. But even
so, Vansittart, whose constant nagging about the peril of overlooking the
political cost of small economic surrenders had finally resulted in his
being kicked upstairs as a nuisance, had been right all along. Forbes
concludes his excellent analysis by writing:
"In the face of economic nationalism at home leading figures in British
commercial and political life struggled to prevent a complete breakdown in
economic relations with Germany--by far the most important trading partner
in Europe....Ultimately, in trying to confront the growing menace of the
Third Reich, Britain failed to devise a mechanism which could reconcile a
panoply of political, financial, economic and strategic considerations."
Tragically, it was to take the all-out effort of a world war to teach the
British establishment to overcome its divisions of policy and purpose.
3.
Dealing as it does to a considerable extent with commercial and financial
negotiations like those that led to the Anglo-German Transfer Agreement of
July 1934 and the Payments Agreement of that November, Forbes's book does
not make for easy reading, but his sober and precise style suits the
material and is likely to inspire the reader's confidence. The same cannot
always be said of Edwin Black, who is given to overstatement and an almost
reckless rhetoric. When at a loss for the mot juste, he invariably chooses
the one that gives the reader the impression that a lot is going on, or is
about to. Religious undercurrents "ripple" and occasionally "explode." IBM
makes its first appearance in his book as "solipsistic and dazzled by its
own swirling universe of technical possibility" and "self-gripped by a
special amoral corporate mantra." Later we are told ominously:
"IBM did not invent Germany's anti-Semitism, but when it volunteered
solutions, the company virtually braided with Nazism. Like any technologic
evolution, each new solution powered a new level of sinister expectation and
cruel capability."
Black is always alert to the dramatic possibilities of his story and tries
to make the most of them. Typical is his account of the meeting of the
International Chamber of Commerce in Berlin in June 1937, when IBM's chief,
Thomas J. Watson, who was the chamber's president, had a meeting with Hitler
and was presented with the Merit Cross of the German Eagle by Hjalmar
Schacht. To Black this was the "crowning moment" of the international
meeting, and he writes:
"The magic and fantasy of Berlin 1937 swept Watson and IBM into an ever more
entangled alliance--now not only in Germany, but in every country in
Europe....
"Through it all the songs never stopped. Swaying with exuberance, all
dressed in one color, lyrics shouted in almost hypnotic fervor, the songs
never stopped. Endicott reverberated with the prospects as followers sang
out.
"That's the spirit that has brought us fame!
"We're big, but bigger we will be.
We can't fail for all can see.
We fought our way through--and new
Fields we're sure to conquer too.
For the ever upward IBM."
This clumsy lyric is an excerpt from the "IBM Anthem," often sung by
uniformly blue-suited employees at rallies in Endicott, New York, the seat
of the IBM Country Club. Black suggests it is connected to the "Horst Wessel
Lied," the song of the uniformed SA, and that this was clearly meant as an
intimation of the spiritual bond between IBM and the Nazi Party. Black does
not show that the employees who sang the song were aware of the Horst Wessel
song. But he implies that there is a hidden connection between the two songs
in order to strengthen the charge, made in the subtitle of the book and in
an early chapter called "The IBM Intersection," that Hitler and Thomas
Watson, "one an extreme capitalist, the other an extreme fascist," formed a
"technologic and commercial alliance that would ultimately facilitate the
murder of six million Jews and an equal number of other Europeans."
This is a charge that Black repeats several times, writing for example that
IBM "designed, executed and supplied the indispensable technologic
assistance Hitler's Third Reich needed to accomplish what had never been
done before--the automation of human destruction." Yet one searches his
pages in vain to discover any evidence that the company and its leader ever
acknowledged that the destruction of the Jews was an objective for which
they were striving. And without that, what becomes of all the talk about
alliances and joint strategy? Black himself seems shocked by the thought
that he might attract readers who could think that there would have been no
Holocaust without IBM. If you believe that, he writes,
"you are more than wrong. The Holocaust would have proceeded--and often did
proceed--with simple bullets, death marches, and massacres based on pen and
paper persecution."
The true reason for IBM's involvement in German affairs is quite simple, and
Black acknowledges it in the end, although it weakens his principal
argument. He writes:
"IBM's business was never about Nazism. It was never about anti-Semitism. It
was always about the money. Before even one Jew was encased in a
hard-coded...identity, it was only the money that mattered. And the money
did accrue."
In an age before the computer, IBM possessed a machine, the Hollerith, named
for its German inventor, that was capable of sorting and tabulating data on
punch cards specially designed for the task at hand and doing so faster and
more efficiently than was possible by human hand. When it was used by the
Nazis for the Prussian census of 1933 it enabled the regime to obtain
up-to-date information identifying Jews. The Hollerith machine was in hot
demand for this and other uses, and for that reason IBM elected to lease
rather than sell it and to supply the punch cards, the special paper needed
for their replication, and spare parts when they were needed. From the
beginning, it was a profitable business, particularly in Germany, where
Hollerith machines found many uses, apart from the censuses, whether in rail
transport or the process of rearmament.
Trading with Germany became a delicate business as the years passed, and
after Germany went to war IBM was subject to complicated political and moral
pressures from the US government. Indeed, Black's book is most interesting
when he is dealing with Watson's stubborn, and successful, determination to
continue in control of IBM's German operation without appearing to be doing
so. He was able to cut off direct relations between IBM in the US and the
Germans while continuing to deal with them indirectly. He was a master of
subterfuge and made a fine art of being in a position to deny collaboration
with the Nazis while operating through subsidiaries who were responsive to
his every wish. Black writes that Watson never asked those subsidiaries to
stop trading with the Hitler regime, the war machine, or any German
occupying authority, and he never forbade them to supply the IBM machines
that were used in sending people to camps, which they did. "Watson," Black
writes, "only asked his companies to stop informing the New York office
about their activities."
