IG Farben
Most Americans view the Roaring ’20s as a decade of speakeasies, bootleg liquor, flappers and the Charleston. But without a doubt, the 1920s were the most repressive decade of the century, beginning with the Palmer Raids of 1919 and ending with the massacre of the Bonus Marchers in the midst of the Great Depression. As a society, Americans fail to recall the brutal repression unleashed on the labor movement or the many race riots of the decade.
America’s collective “apple pie” view of the 1950s, another decade of repression, is similar, consisting of images of “Leave It to Beaver” and “Ozzie and Harriet.” Few recall the madness of McCarthyism or images of the developing Cold War.
As a society, Americans are led to overlook great threats to our freedoms that took place during repressive times. If the Palmer Raids or McCarthyism had taken place in any country behind the Iron Curtain, Americans would have been quick to condemn the actions as massive purges of dissidents.
The 1920s held a bountiful promise of progress at the end of WWI. The United States could have seized the chance to become a world power and leader. Instead, the nation retreated into itself and rejected President Wilson’s League of Nations in favor of isolationism. New technologies and industries were breaking down doors. Autos were replacing the horse and buggy. Telephones were replacing telegraphs. Electric lights were replacing the kerosene lamp. Air travel became a reality.
It was a decade that did not live up to its promise, that ended in a spectacular failure of laissez-faire economics - the stock market crash of 1929. The resulting Depression was so severe that it left a lasting mark on those who lived through it.
A repressive period has followed every major war this country has fought. The aftermath of the Civil War fits the pattern. McCarthyism followed WWII and coincided with the Korean War. Even with the Vietnam War, repression increased, during the war with the exposure of COINTELPRO and Project Chaos, and afterward in the 1980s, with the Reagan administration.
The infamous Palmer Raids followed on the heels of WWI. The subsequent repression was directed at the perceived threats of the time, the four prime targets of the head of the Army Intelligence Network, Lt. Col. Ralph Van Deman: the International Workers of the World (the IWW union), opponents of the draft, socialists and blacks. These groups were brutally repressed throughout the 1920s. In 1917, even before the war’s end, Van Deman had already opened a file on Martin Luther King Jr.’s maternal grandfather.
Van Deman was an anti-Semite credited with establishing military intelligence as a part of the modern army. Most officers within the Military Intelligence Division (MID) at that time also were virulently Judeophobic . MID officers promoted every anti-Jewish publication, including the Protocols of the Elders of Zion. It was commonly accepted in MID that communists and Jews were one and the same. Military officers were greatly influenced by the teaching of eugenics and Judeophobia at West Point.
The almost universal anti-Semitism and racism of military officers allowed them to overlook the pogroms of the 1920s in Poland and other countries. It lasted until well after WWII, and factored into the failure of the United States to offer sanctuary to Jewish refugees in the late 1930s. It also contributed to the poor treatment of Jewish survivors of Nazi concentration camps. Such beliefs also contributed to the passage of the 1924 bill that restricted immigration of “undesirables.”
During WWI, fearing that Germans would exploit black unrest, Van Deman preoccupied himself with black churches as suspected centers of sedition.
The most sinister aspect of Van Deman’s network was military encroachment into civilian affairs. During the 1920s, federal troops were activated several times to intercede in civilian events. For example, the Seattle mayor used federal troops to break the Seattle strike. As late as 1947, military intelligence was still directed at the same targets listed by Van Deman, as shown by the inclusion of Martin Luther King Jr., in the 111th Military Intelligence Group’s files.
These postwar periods of repression are the times our freedoms are most at risk. As demobilized troops return home, they seek work in an economy that is shifting from war to peace. Unemployment usually rises because many of the former soldiers have little or no peacetime skills. After WWI, inflation ravaged the nation as wartime controls were lifted, adding to the economic woes of returning veterans.
However, the real danger comes from troops formerly engaged in intelligence. These former spies seek to ply their trade in the government or private sector. For instance, following the Civil War, many Union spies went to work for private detective agencies as union busters. After WWI, big business used the newly formed American Legion for union busting and, even more sinister, for destroying political dissent and anyone left of center. The end of WWII ushered in the McCarthy era of wild witch hunts for suspected communists.
After the United States entered the Great War, German agents actively engaged in sabotage in America. The Kingsland fire of Jan. 11, 1917 was traced to a German agent, Fiodore Wozniak, the “Firebug.” In that one act of sabotage, Wozniak destroyed 275,000 artillery shells, huge stores of TNT and other munitions valued at more than $17 million.
Although the sabotage hindered the war effort, these acts paled in comparison to the economic sabotage by the corporate warlords of IG Farben. The cartel agreements between American corporations and IG Farben maintained a stranglehold on munitions production, as well as many consumer items.
Often, rather obscure events control future world peace and war. Discoveries in chemistry labs have played enormous roles leading up to both world wars.
Densely populated with limited arable land and a short growing season, Germany has at times been a net food importer. Although it has ample supplies of coal, it lacks high-grade iron ore and other minerals. These factors played a dominant role in Hitler’s search for “living space” in the East.
Moreover, WWI pointed up Germany’s vulnerability to blockades. Germany’s only access to the world’s oceans is through the North Sea. England, the lord and master of the high seas, could easily blockade this route. Any factor that decreased Germany’s dependence on imports increased its ability to wage war and to challenge England’s dominance over Europe.
Germany’s chemical industry developed in the 19th century. English chemists were the first to discover that pigments could be produced from coal tar. However, they failed to recognize the significance of the discovery. German industry was quick to capitalize on the development and soon dominated the world’s pigment production. The work of German chemists on coal tar launched a new branch of chemistry - organic chemistry. A host of new products came gushing forth: the first sulfa drugs, then plastics and, by the beginning of WWII, synthetic rubber.
One of the developments that had a direct impact on WWI was the Haber process of producing nitrates. Before perfecting this method, Germany was dependent on Chile’s nitrate deposits. With the Haber process, nitrates could be produced from the nitrogen in the atmosphere. Germany’s war machine was no longer dependent on shipments from Chile, which the British Navy could blockade. Also out of the new chemistry came the development of poison gas.
WWI was the first conflict in which technology overpowered the frontline soldier. Chemistry labs played a pivotal role in Germany’s ability to wage war on its neighbors. These labs would play an even larger role in WWII with development of gasoline and synthetic rubber from coal.
At the center of the chemical arms production was IG Farben, Interessen-Gemeinschaft Farbenindustrie AG, or “syndicate of dyestuff corporations.” IG Farben was a product of the cartelization of six dye companies: Badische Anilin & Soda Fabrik (BASF), Farbenfabriken vorm (Bayer), Farbwerke vorm (Hoechst), Aktiengesellschaft fur Anilinfabrikaten, Leopold Cassela, and Kalle & Co. The big six merged into IG Farben in 1916.
Carl Duisberg first proposed merging the big six after returning from a trip to the United States. Duisberg traveled to the U.S. to lay the cornerstone for the Bayer factory in Rensselaer, N.Y. During his trip, he became aware of the trust movement in the United States. The Rockefeller Standard Oil Trust fascinated Duisberg, who used it as a model for merging Germany’s big six chemical companies into IG Farben.
In the decade preceding WWI, IG Farben relentlessly followed a path that strengthened Germany’s capacity to wage war. When WWI broke out, IG Farben controlled the new worldwide chemical industry with cartel agreements and patents. Germany aggressively sought patents in foreign countries, particularly through IG Farben, then refused to grant licenses to corporations in those countries. This shifted all control of the industry to the German homeland.
Because of recent court decisions allowing corporations to patent genes and the resulting genetically engineered food crops, it would be a worthwhile effort to study how Germany used patents to gain worldwide control over the fledgling organic chemical industry.
Joseph Chamberlain summed up England’s loss of the coal tar industry in 1883:
It has been pointed out especially in an interesting memorial presented on behalf of the chemical industry that under the present law it would have been possible, for instance, for the German inventor of the hot blast furnace, if he had chosen to refuse a license in England, to have destroyed almost the whole iron industry of this country and to carry the business bodily over to Germany. Although that did not happen in the case of the hot blast industry, it had actually happened in the manufacture of artificial colors connected with the coal products, and the whole of that had gone to Germany because the patentees would not grant license in this country.
Lloyd George reiterated Chamberlain’s view in 1907:
Big foreign syndicates have one very effective way of destroying British industry. They first of all apply for patents on a very considerable scale. They suggest every possible combination, for instance, in chemicals, which human ingenuity can possibly think of. These combinations the syndicates have not tried themselves. They are not in operation, say, in Germany or elsewhere, but the syndicates put them in their patents in obscure and vague terms so as to cover any possible invention that may be discovered afterward in this country.
These comments leave no doubt about the effect of the cartel agreements and the patents sought by IG Farben on England, and the U.S. During WWI, the U.S. government seized numerous IG Farben front corporations under the 1917 Trading with the Enemy Act. Cartel agreements between American corporations and IG Farben created monopolies and spheres of influence, cutting out any competition. In effect, the cartel agreements were a second wave of robber barons. However, this time the robber barons resided in Germany and structured the agreements to keep control over American corporations, even to the extent of limiting production of war materiel. The cartel agreements overrode the rule of government.
Recent trade agreements such as NAFTA, GATT, the failed MAI, and GATS (proposed under the banner of free trade agreements) have again placed the rights of corporations above and beyond the reach of the government. All these agreements contain clauses that set up tribunals as the final arbitrator in disputes, bypassing the court systems of the signatory countries, allowing corporations to establish law by decree. The inherent danger of allowing corporations to rule will be readily obvious.
Even before the Nazis came to power, cartel agreements formed a vital part of Germany’s plan to wage war and extract revenge for the Treaty of Versailles. The willingness of corporate America’s leaders to reestablish cartel agreements with IG Farben during the 1920s, and their subsequent support for fascist groups in the 1930s, were signs of the strength of indigenous fascism in the United States.
Although there were literally dozens of companies seized during WWI for trading with the enemy, the focus is on the ease and speed with which IG Farben was able to reform its cartels, aided by the laissez-faire economic policies of Harding, Coolidge and Hoover.
During the war, corporations reaped fat profits. In 1919, the Wilson administration lifted wartime controls, freeing businesses to raise their prices. Business leaders at that time craved a chance to get back to normal. Before the war, Teddy Roosevelt had followed a policy of breaking up monopolies; during the war, the government had frozen prices. The only threat to reestablishing their monopolies and dominating the economy came from the new labor movement and communism. In the aftermath of the Red Scare of 1919, the pro-business candidate, Warren Harding, won the presidential election, setting the stage for rebuilding the cartels.
WWI should have taught the Allied nations that Germany used international cartels as its spearhead of aggression. The German military mind had long understood the concept of total war. The father of modern German militarism, Karl von Clausewitz, best summarized the idea:
War is no independent thing, the main lineaments of all strategic plans are of a political nature, the more so the more they include the totality of War and State. Disarm your enemy in peace by diplomacy and trade if you would conquer him more readily on the field of battle.
This philosophy of war and peace became a cornerstone of Germany’s political and economic interactions with other nations. The history of IG Farben in the 20th century is one of support for German military adventurism. It consistently advanced German military plans and subordinated its own financial interests to German nationalistic aims.
With the ink hardly dry on the armistice agreement, the New York Times received a dispatch from its Berlin correspondent on Dec. 1, 1919: “The firms composing the German dye trust have decided to increase their capital to the extent without parallel, I believe, in the history of German industry. The trust which consists of three great and four minor concerns in the industry, valued at, roughly, 15,000,000,000 marks, is extending for two reasons: It is determined to reassert German supremacy in the dye industry; in the second place, there is the question of nitrate, so important for the agricultural life in the country. The trust is aiming at making the fatherland independent of foreign supplies and to increase production so it will be able to export large quantities.”
From 1919 on, IG Farben reestablished dominance using the same methods it had in the first war, as well as newer forms of the cartel. Several IG Farben developments in the interwar period figured prominently in WWII- production of Buna rubber, gasoline from coal, and aluminum and tungsten carbide.
Bayer 205 best illustrates the mind-set of IG Farben, including its use of patents and cartels to establish a German empire. In 1920, IG Farben claimed that Bayer 205, or Germanin, was a cure for sleeping sickness. Through indirect channels, IG Farben made an offer to the British government: the secret of Germanin in exchange for the return of German colonies in Africa lost in WWI. The British government declined the offer. However, a British medical journal in 1922 preserved the resourcefulness of IG Farben:
A curious illustration of German desire, not unnatural in itself, to regain the tropical colonies lost by the folly of the rulers of the German Empire, is afforded by a discussion which took place at a meeting of the German Association of Tropical Medicine at Hamburg. The Times correspondent in Hamburg reports that one of the speakers said that Bayer 205 is the key to tropical Africa, and consequently the key to all the colonies. The German government must, therefore, be required to safeguard this discovery for Germany. Its value is such that any privilege of a share in it granted to other nations must be made conditional upon the restoration to Germany of her colonial empire.
The intent of IG Farben and Germany could hardly be masked by such a report. An even more ominous warning appeared in 1925:
In open violation of the Treaty of Versailles the Germans shipped munitions to the Argentines. Rottweil (IG’s wholly owned subsidiary) still makes and sells excellent military powders, and German factories for munitions have been built or openly offered to build in Spain, Argentina, Mexico, etc.
Article 170 of the treaty specifically forbade German export or import of armaments or munitions. Both the British and American state departments were aware of the violation. British Imperial Chemical Industries avoided lodging any protest because it was locked into a cartel agreement with IG Farben. America, locked in the grip of isolationism, simply ignored the violation.
In 1926, the German army formed the Economic High Command. Robert Strausz-Hupe summed up its express purpose as follows:
Studying the deficiencies of German economy and laying plans for transforming it into Wehrwirtschaft [a military economy]. Rapid conquests alone could provide new resources before Germany’s reserves, accumulated by barter, ruthless rationing, and synthetic chemistry, had been exhausted in the initial war effort.
These new resources could then be poured into the war machine, rolling on to ever larger territorial conquests, and as long as it kept on rolling, the economy of greater space need never fear a crisis.
IG Farben had direct and indirect communication channels with the Economic High Command. IG Farben adjusted its policies to accommodate the High Command’s plans. In 1932, Col. Taylor of du Pont reported:
One of the motives back of the French proposal, that all countries should establish a conscription, is to upset the present German system of handling their Reichswehr. The Reichswehr is limited to 100,000 men of 12 year enlistment, and it would appear reasonable to suppose that there should be at present a number of soldiers around the age of 33 or 34; the fact is that when one meets a soldier of the Reichswehr he is a young man in the early twenties, and it is pretty well accepted that there are several men available under the same name and hence training a much larger number of men than permitted.
During the 1920s, there were more than 100 secret treason trials in Germany of journalists and others who revealed the truth. Quoting Dr. H.C. Englebrecht and F.C. Hanighen:
It would seem then that despite the Versailles treaty that Germany is again a manufacturer and exporter of arms. This interference is confirmed by various incidents from the past ten years. There was the Bullerjahn case of 1925. On December 11, 1925 Walter Bullerjahn was sentenced to 15 years in prison for treason. The trial was held in secret and the public was excluded. Both the crime with which the condemned was charged and the name of the accuser were kept deep and dark secrets. After years of agitation by Dr. Paul Levi and the League for Human Rights, the facts were finally disclosed. The accuser was Paul von Gontard, general director of the Berlin-Karlsruhe Industriewerke, the same man who used the French press in 1907 in order to increase his machine gun business. Gontard had been establishing secret arsenals, contrary to treaty provisions, and the Allies discovered this fact. Gontard disliked Bullerjahn and had serious disagreements with him. In order to get rid of him he charged him with revealing to the Allies the fact that Gontard was secretly arming Germany. This was termed treason by the court and Bullerjahn was condemned, although not a shred of evidence was ever produced to show his connection with the Allies. The exposure of the facts in the case finally brought the release of Bullerjahn.
A little later, Carl von Ossietzky, the courageous editor of the Weltbühne, was convicted of treason by a German court because he had revealed military secrets in his journal. The secrets he had published were closely related to the secret rearming of Germany contrary to treaty provisions.
There is also some evidence that Germany is importing arms and munitions from other countries. In a confidential report of the exports of Skoda for 1930 and 1931, classified by countries, Germany appears as importer of comparatively large amounts of rifles, portable firearms, aero engines, nitrocellulose, dynamite and other explosives.
Time has blurred one simple fact: Hitler had the support of the ruling class as early as 1923. He entered politics on the order of his commanding officer to attend a meeting of what evolved into the Nazi Party.
In the Beer Hall Putsch, Hitler was guilty of a far more serious crime, armed rebellion, but received a much lighter sentence than Bullerjahn. Hitler served less than two years in prison, and his accommodations were more like a hotel with room service.
The Nazis were only a minor party at the time, and the putsch failed because Hitler lacked popular support. There were hundreds of treason trials in which the defendants received harsh sentences. Early releases from prison were possible with the special support of world opinion, but in 1923, few people outside Germany had ever heard of Hitler.
From the files of J. K. Jenny of du Pont’s Foreign Relations Department, a memo dated March 22, 1932 - a full year before Hitler assumed power - reveals that IG and other German industrialists financed Hitler:
It is a matter of common gossip in Germany that IG is financing Hitler. Other German firms who are also supposed to be doing so are Krupp and Thyssen. How much truth there is in the gossip we are unable to state, but there seems to be no doubt whatever that Dr. Schmitz (director-general of IG) is at least a large contributor to the Nazi Party.
The foregoing quotes clearly establish the complacency of the three American administrations of the 1920s toward German violations of the Treaty of Versailles. They detail the ever-increasing role of IG Farben as an agent of the German government, culminating with support of the Nazis, and leave no doubt that the Republican administrations of the 1920s were aware of the violations, as well as of IG Farben’s efforts to reestablish its supremacy.
Isolationist policies of the 1920s Republican administrations were clearly a dismal failure that provided a fertile environment for rebuilding Germany’s war machine. IG Farben had a long history of supporting German nationalism. Perhaps most alarming was IG Farben’s increasing boldness and aggressiveness in violating the treaty. By the mid 1920s, there were clear signs that Germany was preparing for another war.
Even more grievous was the complacency of Republicans to the rebuilding of IG Farben’s domestic cartels. To grasp the full extent of this, a brief look at the economic environment following WWI is needed.
Despite the best efforts of an ailing President Wilson to bring the United States into the League of Nations, the war’s end saw a U.S. pullback into Fortress America and a strict right-wing isolationist policy. The United States had the opportunity to seize a leadership role in the world, but instead retreated.
Compared to the European countries, the war for the United States was short and without the staggering number of casualties, so U.S. isolationism can not be explained solely by war losses. Although it was in accord with the viewpoint of nativist and patriot groups, it had broad appeal beyond these fringes. Perhaps it was a mass revulsion to imperialist adventurism that was fostered by corporate media manipulation.
From 1900 until the end of the war in 1918, big business took several blows. First and foremost during this time was the trust-busting administration of Teddy Roosevelt. Second, price controls passed during the war restricted corporate profits. Senate investigations into war profiteering extended into the 1930s. Finally, big business believed unionism was a threat and portrayed it as either communism or the product of dirty foreigners.
To the business leaders of that time, getting back to normal meant nothing more than returning to the days of robber barons, trusts and cartels free from government intrusion and unionism. Corporate America was gratified by the laissez-faire economics of the three 1920s Republican administrations.
The cartel agreements with IG Farben were anticompetitive and used to set up monopolies. In essence, anticompetitive agreements increased the profits of larger firms at the expense of smaller companies and consumers. Such agreements were the reverse of Roosevelt’s trust-busting days and a free enterprise system.
However, to the business leaders of the 1920s, “competition” was a foul word. Competition, like unionism, had to be avoided. In the view of leading industrialists of that time, competition was destructive. Thus, the empire builders of the 1920s were eager to sign such agreements, and the policies of successive Republican administrations willingly turned a blind eye toward anticompetitive practices.
Economic Warfare and Traitors in High Places
The full extent of IG Farben’s ability to disrupt the U.S. war effort can be seen from the number of patents seized by the U.S. in WWII. After the United States entered WWII, the Roosevelt administration established the Alien Property Custodian (APC) and seized 12,300 patents - 5,000 of which covered chemicals, pharmaceuticals and munitions. This situation was allowed to occur for the second time even though the APC and the Trading With the Enemy Act date from 1917.
The most crucial supply problem facing the United States during WWI was its dependence on Chile for nitrates. Nitrates are essential for manufacturing TNT, picric acid and other explosives. The 1915 annual report of the Chief of Ordnance detailed the dependence on a limited supply of Chilean nitrates. Not only were the shipments vulnerable to German submarine attacks, but German interests controlled many of the Chilean companies.
The Germans eliminated their dependence on Chilean nitrates with the development of the Haber process, which produces nitrates from atmospheric nitrogen. By 1913, Germany had a 10,000-ton capacity plant at Oppau. In 1916, Congress made an appropriation to build four large synthetic nitrate plants. At the time, there were 250 patents on synthetic nitrogen, all German-owned. These patents became subject to license under wartime legislation. A $13 million nitrate plant constructed at Sheffield, Ala., had an annual projected capacity of 9,000 tons of ammonia and 14,000 tons of nitric acid. The plant proved useless because the German patents did not contain the composition and preparation of the catalyst.
The importance of nitrate production during WWI is comparable to synthetic rubber production during WWII. In both cases, the Germans controlled the patents and cartel agreements. Perhaps one of the clearest examples of how IG Farben hindered the WWI effort is the case of Dr. Hugo Schweitzer. An American citizen and head of Bayer Co., he conducted an effective industrial espionage campaign. Known in Berlin as No. 963,192,637, he led German espionage in America. The words of his superior, Dr. Albert, sum up Schweitzer’s efforts:
The breadth of high-mindedness with which you at that time immediately entered into the plan has borne fruit as follows: One and a half million pounds of carbolic acid have been kept from the Allies. Out of this one and a half million pounds of carbolic acid, four and one-half million pounds of picric acid can be produced. This tremendous quantity of explosive stuffs has been withheld from the Allies by your contract. In order to give one an idea of this enormous quantity the following figures are of interest:
Four million five hundred thousand pounds equals 2,250 tons of explosives. A railroad freight car is loaded with 20 tons of explosives. The 2,250 tons would, therefore, fill 112 railway cars. A freight train with explosives consists chiefly of 40 freight cars, so that 4,500,000 pounds of explosives would fill three railroad trains with 40 cars each.
Of still greater and more beneficial effect is the support which you have afforded to the purchase of bromine. We have a well-founded hope that, with the exclusion of perhaps small quantities, we shall be in a position to buy up the total production of the country. Bromine, together with chloral, is used in making nitric gases, which are of such great importance in trench warfare. Without bromine these nitric gases are of slight effect; in connection with bromine, they are of terrible effect. Bromine is only produced in the United States and Germany. While therefore, the material is on hand in satisfactory quantities for the Germans, the Allies are entirely dependent upon importation from America.
Schweitzer’s work not only shows how IG Farben was an integral part of the German war machine, but also illustrates the role of German immigrants. While the vast majority were citizens loyal to their adopted country, during both wars, German espionage relied heavily on German-Americans. The German spies apprehended landing on Long Island during WWII had all previously lived in the United States. Immigrants like Schweitzer who chose to remain loyal to their fatherland had a considerable impact hindering the war effort.
On Schweitzer’s death, government agents searching his apartment found an unpublished document, The Chemists’ War. It detailed Germany’s plan for self-sufficiency and foretold of the strategic value of its scientific advances for the next war. Excerpts from the article show that Schweitzer was fully aware of the importance of Germany’s scientific advances to its empire building.
Next to steel and iron, aluminum and magnesium play a prominent part as substitutes for copper. It has been found that an aluminum-magnesium alloy possesses great advantage over the latter as an electrical conductor. Magnesium is said to be useful for many purposes for which aluminum is being employed today. This is a very important discovery, because Germany has enormous supplies of magnesium chloride, a by-product of the potash industry, which has been worthless up to now.
That this new scientific achievement will prove of momentous importance appears from the fact that the great chemical works which supply the world with dyestuffs, synthetic remedies, photographic developments, artificial perfume, etc., have entered the field and have become important factors in the artificial fertilizer industry of Germany. The peace negotiations will undoubtedly culminate in the conclusion of commercial treaties between nations.
What enormous power will be exercised by that nation, when possessing such a universal fertilizer and practically world-wide monopoly of potash salts, it will have something to sell that every farmer in the civilized world absolutely requires.
The close association of IG Farben with Germany’s war machine is clear, as is the intention of IG Farben to use Germany’s monopoly of the emerging organic chemistry field for world domination. Shortages during the first war created by various cartel agreements involved other companies too. Zeiss and its American partner, Bausch and Lomb, controlled production of military optics through a cartel agreement. German firms owned by Krupp often controlled the production of ordnance.
Before U.S. entry into WWI, Bosch practices delayed American aircraft production for the Allies. It was not until the United States entered the war that any action could be taken against Bosch. The same tactics were common before the United States entered WWII.
Domestically, cartel agreements created acute shortages in the medical field. Before WWI, more than 80 percent of surgical instruments were imported from Germany. Germany held patents on medicines like salvarsan, luminal and Novocain. Salvarsan was used at that time to treat syphilis; luminal was used to prevent epileptic seizures. Without substitutes for these drugs, patients went untreated. The shortage of Novocain forced American surgeons to revert to operating without anesthesia.
No better summation of the dangers cartel agreements posed to the United States exists than in the State of the Union address by President Wilson on May 20, 1919:
Nevertheless, there are parts of our tariff system which need prompt attention. The experiences of the war have made it plain in some cases that too great a reliance on foreign supply is dangerous, and that in determining certain parts of our tariff policy domestic considerations must be borne in mind which are political as well as economic.
Among the industries to which special consideration should be given is that of the manufacture of dyestuffs and related chemicals. Our complete dependence upon German supplies before the war made the interruption of trade a cause of exceptional economic disturbance. The close relation between the manufacture of dyestuff on the one hand and of explosives and poisonous gases on the other, moreover, has given the industry an exceptional significance and value.
Although the United States will gladly and unhesitatingly join in a program of international disarmament, it will nevertheless be a policy of obvious prudence to make certain of the successful maintenance of many strong and well-equipped chemical plants. German chemical industry, with which we will be brought into competition, was and may well be again a thoroughly knit monopoly, capable of exercising a competition of a peculiarly insidious and dangerous kind.
It’s obvious from this quote that the danger posed by cartels and their monopoly agreements were well known at the highest levels of government. Yet the most stunning aspect of the aftermath of WWI was the speed at which IG Farben reestablished its cartel agreements. This could only have occurred with the full cooperation of Republican administrations and the leaders of corporate America.
Even during the peace conference, there were those in this country who acted fraudulently, if not treasonously. Throughout the war, lawyer John Foster Dulles sought to protect the Kaiser’s assets from seizure by the Alien Property Custodian, the APC. Dulles sought to subvert the peace conference by smoothing the way for cartels. As a member of the postwar U.S. War Trade Board, Dulles had good information for sale. He was well aware that German bribes went all the way to the Harding administration’s crooked Attorney General, Harry Daugherty. In a later corruption trial, Daugherty’s defense counsel pointed out a bigger crook behind the bribery scandal - John Foster Dulles, “who strutted about the Peace Conference promoting himself as [Secretary of State] Lansing’s nephew while carrying a ‘bag looking for a bribe,’ misdirecting his clients and comporting himself as a man who should be disbarred.”
In other words, a right-wing element at the peace conference was willing to sabotage the interests of world peace for personal and private gains. Dulles continued to work his mischief in the corrupt Harding administration, where he had access to its highest levels of power. Later, as WWII approached, he and his brother, Allen, helped hide Nazi ownership of, and involvement in, American corporations from the U.S. government.
Daugherty was not the only Harding administration member seeking to form alliances and cartel agreements with IG Farben. Before becoming Secretary of Treasury, Andrew Mellon controlled interests such as Alcoa, and formed several cartel agreements with IG Farben. Mellon also supported several pro-fascist groups in the 1930s, and was part of the fascist plot against FDR in 1934.
Mellon and Daugherty were not the only officials sympathetic toward IG Farben and Germany. There were many more, some of whom became Nazi supporters in the 1930s. Besides supporters in the government, IG Farben found a multitude of support on Wall Street. Many from Wall Street later rose to high government positions, particularly in the OSS during the war, and as economic advisers during the postwar denazification period.
The first war made it obvious how dangerous the IG Farben cartel was, and the agreements were anticompetitive, a violation of trust and monopoly laws, and of the APC. However, during the Harding administration, officials openly sympathetic to IG Farben and German interests headed the two departments charged with enforcing these laws - Daugherty at the Justice Department and Mellon at the Treasury.
Mellon was Secretary of Treasury throughout the Harding and Coolidge administrations, and most of the Hoover administration. Holding his portfolio throughout the 1920s, Mellon was able to quash almost all investigations into reforming cartels. Thus, by the end of the decade, IG Farben had regained control of all its assets seized by the APC. In fact, the Mellon-owned Alcoa Corp. signed a cartel agreement with IG Farben while Mellon was still heading the Treasury.
These actions by 1920s Republican administrations had an enormous effect on the US war effort in the 1940s. Cartel agreements signed in the 1920s caused supply shortages of many vital materials and production delays of munitions during WWII. Particularly damaging was a shortage of aluminum, the result of the cartel of IG Farben and Alcoa. Only recently has information surfaced on this damage to the second war effort, as evident from a recent Newsweek.com article:
The fresh look at wartime culpability may extend to other American icons. In 1940 one of the nation’s most prestigious law firms, Sullivan & Cromwell, joined together with the Wallenberg family of Sweden - famed for producing Raoul, a Holocaust martyr who saved Jews in Budapest - to represent Nazi German interests, says Abe Weissbrodt, a former Treasury Department lawyer who prosecuted the case in 1946. The scam? Sullivan & Cromwell drafted a voting trust agreement making the Wallenbergs’ Enskilda Bank a dummy owner of the U.S. subsidiary of Bosch, a German engine-parts maker, so the Nazis could retain control. The papers were drawn up by John Foster Dulles, a Germanophile who later became Secretary of State and whose name today graces Washington’s international airport. (The scheme worked during the war, but in 1948 Bosch was finally auctioned to a U.S. buyer.) “The record is compelling in terms of warranting questions about Dulles’ motives and his own allegiances,” says historian Masurovsky. “One might say about him what Treasury said about Chase and J.P. Morgan, that they had allegiance to their own corporate interests and not to their country.”
Sullivan & Cromwell was established by Algernon Sullivan in New York following the economic panic of 1857 which had bankrupted his practice in Indiana. The young Sullivan had just married a George Washington descendent from Virginia. Before the Civil War broke out, Sullivan built his firm based on his wife’s southern contacts. In the last two decades of the 20th century, these southern connections also played an important role in moving industry from the Rust Belt to the South. Moreover, they were key to the financial shenanigans of the Bush family.
With the advent of the Civil War, Sullivan once again saw his practice almost destroyed. In June 1861, the Confederate warship, Savannah, was disguised as a northern vessel to attempt to capture the USS Perry. However, the Perry captured the Savannah and delivered the crew to New York. Because the United States did not recognize the Confederacy as a nation, the prisoners were considered pirates who, if convicted, would have been hanged. Sullivan defended the captives, arguing that they were prisoners of war. Against all odds, Sullivan won the case.
In 1870, Sullivan went back to private practice in the firm of Sullivan Kobbe and Fowler. Here, Sullivan met Cromwell, who was employed as a bookkeeper. Recognizing Cromwell’s talents, Sullivan sent him to Columbia’s Law School. Cromwell joined Sullivan after Kobbe and Flower left, and the firm soon flourished. When Sullivan died, Cromwell hired William Curtis as a partner and began focusing the firm on business law.
The year after Sullivan’s death, Cromwell had Curtis, a New Jersey resident, work behind the scenes to change that state’s laws of incorporation. Cromwell’s package of changes gave much more to the corporations than to the state, and lowered incorporation fees and taxes. It further prevented shareholders from inspecting a corporation’s books and interfering in corporate management. But most important, it allowed corporations to hold shares of other corporations, thus sidestepping the Sherman Antitrust Act of 1890. In essence, Cromwell had designed a wholesale assault on the laws that held corporations in check. Only Santa Clara County v. Southern Pacific Railroad Company, the disastrous 1886 Supreme Court ruling giving corporations Fourteenth Amendment rights, was more important in creating the corporate state.
The first two companies to take advantage of the changes in New Jersey corporate law were Sullivan & Cromwell clients, the Southern Cotton Oil Co., and the North America Co. The way a firm manipulates and follows the law says a lot about its honesty and integrity. The way Sullivan & Cromwell handled the 1889 Louisiana Supreme Court decision outlawing the American Cotton Trust exposes how the firm viewed the law as a tool to be manipulated for the benefit of the wealthy. The Louisiana Court had ruled the American Cotton Trust to be an illegal association, guilty of usurping, intruding into, and unlawfully holding and exercising the franchise and privilege of a corporation without being duly incorporated.
Cromwell went to Louisiana and hired the best local lawyers to argue the appeal. Then he toured the state urging members of the trusts to sell their shares to the Rhode Island Co. The Rhode Island Co., was exactly like the American Cotton Trust, but incorporated in Rhode Island, which tolerated trusts. The day the appeal was to be heard, Cromwell walked into court and announced that the company had been dissolved. Cromwell’s action outraged local officials, who threatened to jail him. Cromwell wisely left town that afternoon. Cromwell then had Curtis do the same in a Texas court for the local cotton oil trust.
In 1901, J.P. Morgan used Sullivan & Cromwell to organize U.S. Steel, the first American corporation with more than $1 billion capital. Previously, Sullivan & Cromwell had organized National Tube Co. for Morgan. In 1906, Harriman sought help from Sullivan & Cromwell in gaining control over the Illinois Central Railroad. The president of Illinois Central realized the value of the north-south route of his railroad in adding to Harriman’s holdings of major east-west routes. He appointed the governor of Illinois to the board and organized small shareholders against a Harriman takeover. In the mounting proxy fight, Cromwell forged alliances with two board members, coming within one vote of a majority. He then offered another board member the position of president if he would help oust the current president.
In the vote of proxies, Cromwell shouted from the floor and demanded the current president cast his votes in favor of the Harriman takeover. As reported on the front page of The New York Times, Cromwell made a spectacle of the meeting after being attacked by the small shareholders against the takeover. Afterward, Cromwell announced there would be a board meeting in November to elect officers of the railroad. Cromwell and Harriman nursed their wounds for three weeks. The board meeting was set in New York on election day to deliberately deter the governor of Illinois from attending. The governor reluctantly attended the meeting, but to no avail; Cromwell and Harriman controlled the board. Sullivan & Cromwell worked against most of the small holders, manipulating the system to the benefit of one of the most notorious robber barons.
Sullivan & Cromwell helped manipulate utility owners by placing rising profits in holding companies that, by the 1920s, had given the control of three-fourths of the nation’s electric business to just 10 companies. For the firm’s client, Union Electric, Sullivan & Cromwell created more than 1,000 subsidiaries. In turn, one or two individuals controlled the subsidiaries. Instead of issuing common stock, the subsidiaries issued only bonds and preferred stock that did not carry any voting rights.
Sullivan & Cromwell applied the tricks developed for the utilities to the National Dairy Products Co. National Dairy had acquired a string of regional dairies across the country, and, in 1930, bought Kraft-Phoenix Cheese Co. The manipulative efforts of Sullivan & Cromwell transformed a localized industry into a multinational conglomerate known as Kraft.
By 1900, Sullivan & Cromwell emerged as the law firm of the robber barons. Cromwell was willing to use unethical means to achieve victory for any client who could afford his fees, while he worked behind the scenes to weaken corporate laws. It was at this time that Cromwell developed an interest in the Panama Canal. In 1911, Dulles’ grandfather, John Watson Foster, a former Secretary of State, urged Cromwell to hire his grandson. The elder Foster had known both founding partners and had clerked for Sullivan when he was in Ohio. Cromwell complied with the request and hired John Foster Dulles.
By writing a pamphlet urging that American ships passing through the canal should have free passage, the young Dulles made a favorable impression in the firm. Sullivan & Cromwell was Panama’s fiscal agent at that time.
WWI broke out during John Foster Dulles’ third year at Sullivan & Cromwell. To take advantage of the war, Dulles volunteered to travel to Europe to sell risk insurance for American Cotton Oil’s European shipments.
In 1915, President Wilson appointed Dulles’ uncle, Robert Lansing, as Secretary of State. Lansing recruited his nephew to go to Nicaragua, Costa Rica and Panama on the pretext of company business, but in reality to sound out the Latin Americans on aiding the U.S. war effort. Federico Tinoco, a vicious dictator, led Costa Rica. Dulles advised Washington to support the dictator because he was anti-German. Dulles also encouraged Nicaraguan dictator Emianiano Camorro to issue a proclamation suspending diplomatic relations with Germany. In Panama, Dulles offered to waive the tax on Panama’s annual canal fee as long as the country would declare war on Germany.
With his success in Central America, Dulles was commissioned as a captain for a position in military intelligence working for the war trade board. While on the board, Dulles recommended installing a new leader in Cuba and voiding the recent election. Dulles’ concern was not for the welfare of the citizens of Cuba, but for the 13 Sullivan & Cromwell clients who held huge sugar interests there. President Wilson refused to unseat the Cuban government, but did send 1,600 marines to protect American sugar interests.
During WWI, Cromwell lived in Paris. John Foster Dulles’ dealings during the peace negotiations on behalf of Germany caused him to rise in stature in Cromwell’s eyes. While in Europe after the war, Dulles met with the Merton brothers in Frankfurt. The Mertons needed copper for their Metallgesellschaft business, so Dulles arranged a large loan through Goldman Sachs to allow the brothers to import American copper. It was this deal that led to charges against Attorney General Harry Daugherty. Dulles was forced to testify at the trial. He could plead innocent because Goldman Sachs backed out of the deal.
However, the real story of treason by Sullivan & Cromwell and the Dulles brothers, John Foster and Allen, begins with the end of WWI. Cromwell stayed in Paris and John Foster Dulles, while not formally in charge of the New York office, was the leading expert there. In 1926, Allen Dulles resigned from the State Department and went into private practice with his brother at Sullivan & Cromwell. In the 1920s-1930s, several Wall Street firms figured prominently in guiding investments into Germany, but almost every deal involved the services of Sullivan & Cromwell.
Coinciding with the Dawes Plan, John Foster Dulles arranged a large loan for Krupp. To obtain it, Dulles called Leland Harrison, Assistant Secretary of State, to soft-pedal the item in the news. Harrison was infuriated because the department had issued a circular asking to see foreign loans before American funds were exported. However, Dulles knew that Harrison had no authority to stop the loan. Wanting to avoid the State Department’s scrutiny of German factories producing military hardware, he chose a Saturday to call Harrison. At Dulles’ bidding, Sullivan & Cromwell blandly accepted Krupp’s assurances that all military hardware had been destroyed.
The Krupp loan opened a new era at Sullivan & Cromwell. It was the start of a massive investment in Germany by U.S. banks, who competed with each other for the services of Sullivan & Cromwell in arranging German loans. Within a year, America had loaned Germany $150 million. Such massive lending worried both the German and U.S. governments. The State Department privately warned bankers and lawyers of the growing indebtedness of Germany. Dulles actively promoted the loans, and Sullivan & Cromwell supervised an endless stream of German bonds. Many of the prospectuses contained errors and were never proofread in the frantic pace; others were deliberately deceptive. A Bavarian bond prospectus said the country “has an excellent credit history” when, in reality, Bavaria had defaulted on its debt the year before. Almost 70 percent of the money flowing into Germany during the 1930s came from U.S. investors.
Dulles gained much of his and his clients’ profits from investments in Nazi Germany. In the 1930s, he created an incredible interlocking financial network between Nazi corporations, American Oil and Saudi Arabia. Here, Allen had help from his brother, Foster. Perhaps the best-known deal arranged by Dulles was between IG Farben and Standard Oil of New Jersey. What is generally not known is that IG Farben was the second largest shareholder in Standard Oil of New Jersey, second to only John D. Rockefeller. Another Rockefeller-controlled corporation that Dulles worked to protect was United Fruit. Both United Fruit and Standard Oil of New Jersey continued to trade with the Nazis after the outbreak of war.
In the 1930s, Dulles arranged for the wealthy Czech family, the Petscheks, to sell their interest in Silesian Coal to George Murnane. Murnane was used merely to hide the Petscheks’ interest. Dulles then sold the shares to his friend, Schacht, the Nazi economic minister. After the sale, Dulles became director of Consolidated Silesian Steel Co. Its sole asset was a one-third interest in Upper Silesian Coal and Steel Co. Friedrich Flick controlled the balance of the shares. This was one of the companies seized from Prescott Bush for trading with the enemy.
Allen Dulles’ role at Sullivan & Cromwell soon developed into that of a fixer. The Mellons hired him to convince the Colombian government not to confiscate their investments in the country’s rich oil and mineral fields. He did so by rigging the 1932 Colombian presidential election.
By 1934, John Foster Dulles was publicly supporting Nazi philosophy. In 1935, he wrote a long article for the Atlantic Monthly, “The Road to Peace.” He excused Germany’s secret rearmament as an action to take back its freedom. Knowing what he did about Inco and Germany’s munitions industry, Dulles misled his readers in asserting the wishes of Germany, Italy and Japan for peace. Later in the 1930s, Dulles helped organize the America First group, to which he gave $500 a month before Pearl Harbor. Later, he would claim no association with the organization. Dulles continued his support for the Nazi line right up to the time Germany invaded Poland. Dulles’ excuse for the invasion of Poland was much like blaming the victim for the crime.
After the Japanese bombed Pearl Harbor, John Foster Dulles wrote the company policy for Sullivan & Cromwell on the rehiring of those who had joined the army to fight. This policy refused to guarantee that employees could return to their former positions. Nonetheless, more than half of the firm enlisted, including four partners and 35 associates. The OSS assigned many of the enlistees to top-level positions. In an act of poetic justice, Dulles’ policy to refuse to guarantee the enlistees’ jobs on their return from service came back to haunt him in his 1950 race for the Senate, and figured prominently in his defeat.
With the outbreak of WWII, John Foster Dulles’ praise of Nazi Germany severely tarnished his image. Throughout the war, he stayed home and used sanctimonious pronouncements to rebuild his image, but he did not give up his secret Nazi ties.
The most significant action Dulles took during the war severely crippled America’s war effort. The military depended on diesel motors for trucks, tanks, submarines, ships and aircraft. There was no substitute for the direct fuel injection in diesel engines. While the United States plotted to bomb Nazi diesel plants in Germany, the legal maneuvers of John Foster prevented America from manufacturing more efficient diesel engines at home.
In 1934, Dulles handled the legal end and George Murnane handled the operational end. Together they made a deal in which Bosch sold its international interests to Mendelssohn & Co., of Amsterdam, with a right to repurchase them later. In 1935, Murnane joined the board of directors of the American Bosch Co. Fritz Mannheimer, the head of Mendelssohn, was a German agent. In 1937, Murnane became chairman of the board at American Bosch.
Throughout this period, American Bosch Co. tried to get the German company to reduce the 5 percent royalty it had to pay. In exchange, American Bosch volunteered information about costs, prices and other competitive data. The deal delighted the Nazi government, because it provided an outline of American war production before the U.S. entered the war.
As the war approached, the Nazis sought to further camouflage the true owner of American Bosch, and Dulles and Murnane arranged another sale. This time, the Wallenbergs of Sweden appeared to have bought American Bosch. Besides the critical fuel injectors, Bosch also produced walkie-talkies for the Third Reich. To further cloak German ownership, Dulles fabricated a maze of corporations that seemed American, without transferring control outside Germany. He had the Wallenbergs put their shares in Providentia, a Delaware corporation. Dulles was the sole voting trustee of the corporation and had full authority to dispose of the shares.
In July 1941, the Navy Department approached American Bosch on behalf of Caterpillar with the intention of manufacturing diesel equipment. American Bosch responded that it was willing to change its exclusive rights; however, the corporation’s rights were indivisible and thus the company was unable to grant the request.
In May 1942, authorities confiscated American Bosch under APC. A secret government document dated Oct. 11, 1944 concluded that Dulles must have known that American Bosch was German owned. Nevertheless, Dulles was successful in delaying the widespread manufacturing of diesel engines for five years during the critical period when America sought to rebuild its military might.
The Justice Department’s antitrust lawyers found that other Sullivan & Cromwell clients were prominent causes of bottlenecks in war production. However, prosecution was delayed until the end of the war; otherwise, war production would have suffered adversely. In 1946, the chemical companies signed a consent decree paying a minimal fine of $5,000. A list of those who faced or signed consent decrees reads like a list of Fortune 500 corporations, including Allied Chemical, American Agricultural Chemical and Merck.
The real extent of the damage caused by John Foster Dulles, acting as an intermediary in setting up deals between the rich and the Nazis, is unknown. However, according to documents assembled from the State Department by Ronald Pruessen, Dulles acted as a fixer or intermediary in deals worth more than $1 billion. Note that the total is only for deals that Pruessen uncovered, thereby establishing a floor value. The total is most likely greater; it is unlikely the State Department would have been aware of all of Dulles’ deals.
To put the value of a billion dollars in 1930s context, the table below lists the gross domestic product and the gross domestic private investments throughout that decade.
GDP= Gross Domestic Product, GPDI= Gross Private Domestic Investment
Numbers given in billions
In the 1930s, $1 billion ranged from 1 percent to a high of 2 percent of the GDP. Moreover, it ranges from 10 percent to 100 percent of annual domestic investments in the United States by the private sector. The money Dulles siphoned from the American economy to invest in Nazi Germany undoubtedly prolonged and deepened the Depression. To put it in another perspective, in 1940, the Nazi war machine’s budget was about 5 billion marks. In effect, what Dulles alone invested was enough for almost an entire year for the Nazi war machine. (This is one way to get an airport named for you in the capital of the U.S. - as if the airport of Paris were named Adolf Hitler International instead of Charles de Gaulle.)
Likewise, Commerce Department records show that investments in Germany increased 48.5 percent from 1929-40. Many U.S. companies bought direct interests in German firms, plowing profits back into the Aryanization (seizing of Jewish firms) or Nazi arms production. Among those firms: International Harvester, Ford, GM, Standard Oil of New Jersey and du Pont.
In the 1944 election, Dulles advised Dewey to reject the issue of deploying U.S. troops under the command of the United Nations (note this does not refer to the present UN, but to the nations united in the war), causing a break in Allied relations. Dulles also was responsible for the extremist remark in Dewey’s campaign that FDR had weakened the Democratic Party so badly that it was readily subject to capture by communist forces. Dulles also wanted to charge FDR with unpreparedness related to the Pearl Harbor bombing. However, cooler heads prevailed; George Marshall advised Dewey not to reveal the secret of the Magic Code.
Besides his close ties with Dewey, John Foster Dulles wormed his way into Republican politics by befriending Arthur Vandenberg, a staunch isolationist from Michigan. Vandenberg collaborated with Dulles on the foreign policy planks of the Republican platform in 1944. At Vandenberg’s insistence, Dulles accompanied him to the San Francisco organizing meeting for the United Nations. Dulles quickly leaked information to the press on the bipartisan agreement, poisoning negotiations.
In the 1950s, John Foster Dulles testified at the first Alger Hiss trial that he had asked Hiss to accept the presidency of the Carnegie Endowment for Peace. However, in the second Hiss trial, Dulles denied his previous testimony. Instead of the court charging Dulles with perjury, the inconsistency was blamed on Hiss.
At the urging of Gen. Clay, Dulles also was instrumental in getting Eisenhower to run for president on the Republican ticket. Dulles lost his earlier chance to become Secretary of State under Dewey and was eager for a second chance. Before leaving for Europe to meet with Eisenhower, Dulles studied Ike’s background carefully. He learned that Eisenhower was popular with the public, but was viewed as weak on foreign policy. Dulles played on Eisenhower’s aversion to American casualties during the Paris meeting by claiming that the modern strategy of preserving peace was through massive retaliation with nuclear warheads, to frighten enemies from attacking and keeping American boys from dying. Eisenhower was impressed with Dulles’ views and foreign policy was never discussed. The meeting cinched Dulles appointment as Secretary of State in the Eisenhower administration.
The man who arranged more deals with the Nazis than any other hand-picked the next American president and appointed himself as secretary of state.
In 1951, the Federal Trade Commission produced a 400-page secret report detailing the history of collusion in the oil market and exposing its cartel agreements around the globe. However, it wasn’t until 1952 that an internal Justice Department memo noted the existence of cartel agreements that violated the U.S. antitrust laws among the seven largest oil companies. The delay was beneficial to the oil companies, since the incoming Eisenhower administration was friendlier to business than the Truman administration.
On Jan. 11, 1953, the Justice Department offered to drop criminal charges and bring a civil suit only if the oil companies would produce the documents requested for the criminal case. Arthur Dean, the attorney for the oil companies, refused the offer. Dean was another Sullivan & Cromwell lawyer. It was imperative for the oil companies to avoid court hearings, where the Nazi dealings of Standard Oil of New Jersey and others during the war would be exposed. Later in the Eisenhower administration, Dean was chosen to negotiate the return of POWs in Korea.
Both Dulles brothers played a role in obstructing the Standard case before the courts. John Foster Dulles used the National Security Council to screen evidence and isolate from public disclosure evidence with “national security” implications.
The Eisenhower administration was packed with Sullivan & Cromwell employees. Another Sullivan & Cromwell lawyer, Norris Darrell, wrote the Internal Revenue Code of 1954.
As Secretary of State, Dulles used Sullivan & Cromwell to help carry on his support for former Nazi businessmen. He supported Republican Sen. Everett Dirksen’s bill to return all property held by APC to its previous owners. The value of the property confiscated was worth up to $200 million. The proposal horrified former Allies. Releasing the property would have returned the property to the Nazis and their collaborators.
John Foster Dulles became a director of IG Farben, while his brother served on the board of a leading German bank that became closely associated with the Nazis. Both were masters at drawing up arrangements hiding American corporations’ Nazi involvement. Following WWII, as head of the CIA, Allen Dulles was in an ideal position to continue the cover-up of American corporate involvement with the Nazis, as well as helping scores of war criminals escape justice.
Following the first war, many large American investment firms and corporations invested heavily in Germany. In return for their dollars, they received bonds backed by shares in a Swiss holding company that owned shares in German banks. The banks, in turn, held shares in major German corporations that owned some of the world’s most valuable patents. In effect, the German banks held a worldwide monopoly on the high technology of the time, particularly in chemicals. There was even talk of setting up a worldwide patent cartel in Germany so American investors could escape U.S. antitrust laws.
The Dulles brothers also were the masterminds behind the Dawes Plan, which had the support and backing of J.P. Morgan. Under the Dawes Plan, the United States loaned money to Germany so it could pay international reparations to England and France. In turn, England and France repaid the United States. For a while, this financial merry-go-round was successful and the Dulles brothers’ clients reaped a financial windfall. From 1924-31, Germany paid the Allies about 36 billion marks in reparations, but received about 33 billion marks borrowed under the Dawes and Young Plans. This resulted in shifting the burden of German reparations to the buyers of German bonds sold by Wall Street firms at hefty commissions.
General Electric Corp. also played a tremendous role in the Dawes and the Young Plans. Owen Young was a member of GE’s board and part of the brain trust behind the Dawes Plan. General Electric had large investments in Germany and benefited immensely from the Young Plan.
To fully understand its involvement in both ill-conceived German bailout plans, look at GE’s management. Gerard Swope, president of General Electric, and Walter Rathenau, managing director of GE’s German subsidiary, opposed free enterprise. Rathenau’s views of the interwar period’s new political economy are summed up in this quote:
The new economy will, as we have seen, be no state or governmental economy but a private economy committed to a civic power of resolution which certainly will require state cooperation for organic consolidation to overcome inner friction and increase production and endurance.
It is obvious that Rathenau believed corporations should hold the ultimate power and that the government’s only role was to pave the way for corporate rule.
Swope held similar beliefs. He called for an antitrust law exemption for the electrical manufacturing industry. In 1931, Swope proposed forming cartel-like trade associations governed by a central quasi-governmental agency. Such laws would only serve to limit competition, as did the cartels and trade associations of Nazi Germany.
Between the cartel agreements of IG Farben and the monopolistic behavior of American robber barons, the Dulles brothers had no shortage of investors for Germany. In 1940, Professor Gaetano Salvemini of Harvard was quoted as saying that 100 percent of American big business was sympathetic to fascism. Corporate America’s support for fascism was so great that U.S. Ambassador to Germany William Dodd proclaimed:
A clique of U.S. industrialists is hell-bent to bring a fascist state to supplant our democratic government and is working closely with the fascist regime in Germany and Italy. I have had plenty of opportunity in my post in Berlin to witness how close some of our American ruling families are to the Nazi regime...
Certain American industrialists had a great deal to do with bringing fascist regimes into being in both Germany and Italy. They extended aid to help Fascism occupy the seat of power, and they are helping to keep it there.
Propagandists for the fascist groups try to dismiss the fascist scare. We should be aware of the symptoms. When industrialists ignore laws designed for social and economic progress they will seek recourse to a fascist state when the institutions of our government compel them to comply with the provisions.
Americans have never been told the truth about the extent of corporate America’s involvement with the Nazis. The media has spoon-fed Americans into believing that only a handful of companies were involved. In reality, more than 300 American corporations were illegally arming Nazi Germany during the war.
Many of these corporations took extraordinary steps to preserve communication with their German offices and to hide their Nazi involvement from the U.S. government. They could have severed all links with Nazi Germany, but instead chose to continue to support a regime at war with their own country. In doing so, these corporations became willing accomplices to the Holocaust, traitors to their country and guilty of war crimes. The traitors responsible for such actions and crimes should have received justice at the end of a hangman’s noose. Sadly, not one American corporation was charged for aiding the Nazis.
The bluest of the “blue chips,” IBM, actively sought business with the Nazis during the war. Dehomag, IBM’s German subsidiary, supplied the Hollerith machines that played a prominent role in the Holocaust. Without Hollerith, the efficiency with which the Holocaust was carried out would have been impossible. The roundup of the Jews would have been slowed to a snail’s pace by forcing the Nazis to divert more manpower to the task of locating their Jewish victims. Every concentration camp had Hollerith machines serviced by Dehomag representatives, with full approval of the New York office.
Edwin Black’s IBM and the Holocaust details the ruthlessness of corporate America in its pursuit of profits. When the Nazis came to power, IBM was under the direction of Thomas Watson, who actively sought out a contract to provide the equipment for the Nazi census.
Up until then, Watson’s career had been less than ethically stellar. Watson learned his business skills from John Patterson, the ruthless founder of National Cash Register (NCR). Watson rose quickly in the ranks of NCR, learning to use trivial lawsuits against competitors. NCR placed Watson in charge of driving out of business those competitors selling used equipment. He quickly adopted the tactics of the robber barons to set up a monopoly by using predatory pricing, threats of lawsuits, bribes and even smashed storefronts. On Feb. 22, 1912, Watson was indicted for criminal conspiracy to restrain trade and found guilty.
When the Nazis seized power, Watson saw an opportunity to expand in Germany for IBM. In the depths of the Depression, Watson increased IBM’s investment in Germany by nearly $1 million. Even more gratifying was the secret pact Watson concluded in October 1933 that gave Dehomag commercial powers beyond the German borders. Previously, IBM confined all subsidiaries to a single country. With Dehomag now established as the de facto “IBM Europe,” the Nazis were able to conduct statistical services throughout Europe. In effect, Watson had set up an IG Farben-like cartel.
In an attempt to justify the dealings with the Nazis, many suggest that Watson was not a fascist, but simply a ruthless businessman. However, evidence suggests that Watson was at least a great admirer of fascism. At a 1937 sales convention, Watson said:
I want to pay tribute (to the) great leader, Benito Mussolini. I have followed the details of his work very carefully since he assumed leadership. Evidence of his leadership can be seen on all sides. Mussolini is a pioneer... Italy is going to benefit greatly.
For years, Watson had an autographed portrait of Mussolini hanging in his living room. He was quoted as saying: “We should pay tribute to Mussolini for establishing this spirit of loyal support.”
In a private letter to Reich Economic Minister Hjalmar Schacht, Watson wrote of “the necessity of extending a sympathetic understanding to the German people and their aims under the leadership of Adolf Hitler.”
Watson, who wrote the letter years after Hitler seized power, described Nazi aggression against neighboring countries as a dynamic policy. The letter ended with “an expression of my highest esteem for himself (Hitler), his country and his people.”
Before the ink was dry on the Treaty of Versailles, American corporations were rushing to invest and support Germany. The first to support what became the Nazi line was Henry Ford. Ford began publishing an anti-Jewish newspaper in the early 1920s. He was an early financial supporter of Hitler when the Nazis were still virtually unknown.
Other early backers of Hitler and the Nazis were the du Ponts. The power behind the du Pont throne in the 1920s was Irénée du Pont who, like Ford, was a supporter of Hitler before he was known outside Munich. Irénée du Pont avidly followed Hitler’s career beginning in the early 1920s. Du Pont representatives traveled to Germany almost immediately after the armistice to renew their alliance with IG Farben.
In November 1919, merely months after the armistice was signed, representatives of du Pont and the Badische Co., the principal corporate identity of IG Farben in Switzerland, worked out a tentative agreement for the organization of a global corporation to exploit the Haber process for ammonia and nitrate production. Du Pont also sought technical help in the dyestuffs industry. Although the parties never reached a complete agreement on a grand alliance, the relationship between du Pont, Vereinigte Köln-Rottweiler Pulverfabriken (VKR) and Dynamit Aktiengesellschaft (DAG) became closer. At one point, du Pont had roughly $3 million invested directly in IG Farben.
The most notable aspect of the November 1919 meeting and tentative agreement was the lightning speed with which the German cartels reestablished control over the all-important Haber process for ammonia and nitrate production. All parties had a stake in completing the agreement in secret, since the very nature of the agreement was in violation of the armistice. For Germany, it meant control over explosives and fertilizer production, freeing the country from dependence on Chilean nitrates. For du Pont, it was a matter of profits. Before WWII, one of the most profitable periods for du Pont was WWI. During that war, du Pont’s profits rose to $230 billion. The du Ponts used the war profits to buy a controlling share of General Motors.
On Jan. 1, 1926, an agreement between du Pont, VCR and DAG was consummated, similar to the agreement of the same date between du Pont and Imperial Chemical Industries of Britain. This agreement, debated at length in the 1934 Nye Committee hearings (see Appendix 7 for excerpts from the Nye Report), was found unsigned in du Pont files. It was a gentlemen’s agreement detailing exchanges of patents and technical information that could be denied if discovered. In defiance of the Treaty of Versailles banning German companies from selling military explosives, the agreement allowed du Pont to sell German-produced explosives. The Nye Report provides the best summary of the agreement: “In other words, though German munitions companies cannot sell abroad, American companies can sell for them, and to our own government at that.”
In effect, the agreement between du Pont, DAG and VCR reestablished the prewar explosives cartel between du Pont, Köln-Rottweiler Pulverfabriken and the British Nobel Dynamite Trust. Under the prewar agreement, du Pont agreed not to erect any explosive powder works in Europe, and the other signers agreed not to in the United States. Technical information was exchanged among the signatories, and du Pont agreed to inform the others of the quantity, quality and requirements of all gunpowder sales to the U.S. government. In 1910, the Justice Department found the agreement to be a violation of antitrust laws, resulting in the breakup of the du Pont explosives works and the formation of Atlas Powder and Hercules Powder. Within a few years of the 1910 ruling, du Pont reorganized in Delaware, taking advantage of the state’s lax regulations of corporations.
An agreement between du Pont and Dynamit in 1929 controlled the production of tetrazine, a substance that greatly improved ammunition primers. When WWII began in 1939, Remington (controlled by du Pont) received huge British ammunition orders. Because of a clause in the agreement with IG Farben, the British received an inferior cartridge lacking tetrazine.
The Great Paper Shuffle & the Cartels
The Germans reestablished control over dyestuffs and pharmaceuticals with almost the same lightning speed with which they regained control over the Haber process. Under APC, Sterling Products bought Bayer’s factories and patents. Sterling later sold the dyestuff business to Grasselli Chemical Co. This might have been a move in the right direction if not for one disturbing fact: Grasselli employed many former Bayer personnel who supported Germany during the war. Rudolph Hutz, the former manager of Bayer, became general manager at Grasselli. Hutz had been interned during the war.
In 1920, Bayer signed an agreement with Sterling covering patents and trademarks. Then, in 1923, Bayer entered an agreement to control Grasselli, even though Grasselli still held 51 percent of the stock. On March 23, 1925, Grasselli and Bayer entered an agreement with Hoechst Co., which reduced Grasselli’s ownership to 35 percent. On Oct. 20, 1928, Grasselli sold its dyestuff business to IG Farben. Three days later, du Pont bought out Grasselli Chemical.
The Grasselli case illustrates some of the tactics employed. IG Farben often produced an endless paper shuffle, resulting in a transfer of ownership in name only while employing the same personnel. This was common to many post-WWI deals, where the American firm would retain 51 percent ownership in order to appear that it was in control, while in reality, IG Farben held overall control of pricing, plant expansion and export policies.
In 1929, IG Farben merged most of its interests in the United States into an umbrella company, American IG. It combined Grasselli Dyestuffs, General Aniline, Agfa-Ansco, Winthrop Chemical, Magnesium Development and others. In April 1929, Wall Street offered $30 million of American IG debentures to investors; within an hour of their release, the offering was oversubscribed. The agreement between Magnesium Development and IG Farben would figure prominently at the onset of WWII in delaying aircraft production.
Sterling Drug was part of the maze of front companies that IG Farben and Bayer used to regain control over assets seized during the war. In 1918, the APC sold Bayer at a public auction. Sterling was the winning bidder at $5.31 million. Earl McClintock, an APC staff attorney, arranged the details of the sale. One of Sterling’s first acts was to hire McClintock at more than triple his government salary.
Under laws governing APC sales, a buyer faced a $10,000 fine, 10 years imprisonment, or both, for acting for an undisclosed principal or reselling to or for the benefit of a noncitizen. The buyer also forfeited the property to the U.S. government. The sale of Bayer to Sterling clearly fell within the scope of the law.
The original connection between Sterling and Bayer remains secret. However, it is well established that months after the purchase, Sterling president William Weiss met with Bayer executives in Baden Baden. An informal agreement of cooperation was reached and, shortly after, Sterling formed Winthrop Chemical. In 1923, Winthrop entered a cartel agreement, and was assigned all of Bayer’s patents. Once again, the familiar 50-50 split was part of the agreement.
In 1925, IG Farben and Sterling-Winthrop brought Metz into the Sterling orbit. The result of all the stock transfers and paper shuffling was that IG Farben regained control of the U.S. pharmaceutical business for a mere $2 million.
APC also seized the Hoechst-Metz Co. Metz claimed that he had bought back the assets of the company, but it was commonly believed to have been a dubious stock transaction. In 1921, a court ruled in favor of Metz. In his bizarre rambling ruling, Judge Julius M. Mayer said:
As seizure by the Alien Property Custodian is likely to carry the suggestion to those not informed in respect of the controversy, that the demandee (Metz) in some manner may have been improperly associated with the enemy, it is desirable at the outset to state that no such situation exists here. The Transactions here took place long before our entry into the war and indeed before the European war started and had no relations to either. That Metz should deliberately by his testimony falsify the true transaction is not to be thought of. Stock ownership would not affect the apportionment of profits. This testimony of Hauser can only be rejected upon the theory that both Hauser and Metz have willfully deceived the court by false testimony.
Soon after the ruling, the Harding administration appointed Judge Mayer to the Federal Circuit Court. What Mayer lacked in legal shrewdness was offset by his political correctness. Mayer ordered the deportation of Emma Goldman, ruling that aliens had no rights under the Constitution. In another ruling, a pamphlet about the relationship between big business and war was written by an author named Scott Nearing and published by the American Socialist Party. Mayer found Nearing innocent and the publisher guilty of obstructing the war. This was a sleight of hand; if he had found the author guilty, it would have constituted a violation of his free speech rights, but as an organization, the American Socialist Party lacked this protection. Other victims of the good judge were IWW members, who could expect to receive the harshest sentences possible in his courtroom.
Judge Mayer’s rulings were a reflection of the prevailing attitudes and beliefs of contemporary business leaders. His rulings were extremely pro-business and anti-union. He showed no tolerance for those who held different political beliefs.
George Sylvester Viereck and his Burgerbund campaigned extensively for Harding during the 1920 presidential election. After the election, Viereck demanded a political payoff, but Harding was noncommittal. Viereck became the man behind the notorious Nazi publisher Flanders Hall, and was later indicted for sedition.
By 1925, IG Farben had made powerful allies inside the Republican administration. Then Secretary of Commerce Herbert Hoover appointed a nine-member Chemical Advisory Committee, including Walter Teagle of Standard Oil of New Jersey; Lammot du Pont; Frank Blair, president of Sterling Drug; and Henry Howard, vice president of Grasselli. Despite the extensive ties these four had with IG Farben, they sat on a board meant to help America’s chemical industry fight off the IG Farben cartel.
In 1928, Sterling’s Weiss brought the entire drug industry together in one giant cartel. With Louis Liggett, he put together Drug Inc., a holding company for Sterling-Winthrop. Drug’s properties included United Drug, Liggett, Bristol Myers, Vick Chemical and Life Savers. The Richardson family, which owned the Vick Chemical Co., is one of the many hard-right foundations that promoted impeaching President Clinton and is closely associated with the Bush family.
Liggett was the Republican National Committee member from Massachusetts who made the false claim that, under President Coolidge, the Department of Justice had approved the creation of Drug Inc. It was not until 1933, after the defeat of Hoover in the 1932 election, that Drug Inc., was dissolved.
Also tied to the illegal cartel of Drug Inc. was the notorious Dr. Edward Rumely. Rumely was imprisoned for pro-German activities during the first war. When President Coolidge released him, he went on to become director of Vehex Inc., another corporation formed by Weiss.
Throughout the maze of paper shuffling and stock transfers, the accounting firm of Price Waterhouse collected fat fees for auditing the books of two of IG Farben’s American affiliates, Sterling and Standard Oil of New Jersey. Audits from Price Waterhouse helped sanitize the records of Drug Inc. and other IG Farben front companies.
From 1929 until Drug Inc. was dismantled, Ted Clark, President Coolidge’s private secretary, was its vice president for government relations. While on Drug Inc.’s payroll, Clark also served a short time as Hoover’s secretary. In 1942, Clark’s files were suddenly withdrawn from auction and donated as a sealed gift to the Library of Congress. Those who had seen the files noted correspondence with Coolidge’s Assistant Attorney General Col. William Donovan, and with Charles Hilles, former Chairman of the Republican National Committee and a close associate of the Morgans.
The timing of the file withdrawal is highly suspicious. Donovan was closely involved with both Drug Inc. and IG Farben. He became director of the OSS in June 1942, about the time the files were sealed. Donovan spoke patronizingly about IG Farben at Hoover’s second conference on the chemical industry: “So far as it presently appears, the so-called chemical entente and Franco-German dyestuff agreement appear to involve no attempt to exploit this market. In fact, we have authentic assurances that these arrangements are not directed against the market.”
IG Farben had learned its lessons well during the first war. Its American interests were vulnerable to seizure in wartime. In a move that should have set off an alarm about Germany’s designs on war, IG Farben made an effort to further cloak its ownership of American IG. Even with Walter Teagle, president of Standard Oil of New Jersey, and Edsel Ford on its board of directors, American IG was vulnerable to seizure if war broke out. By a conjuring trick, American IG assets were transferred to a German-controlled corporation based in Switzerland, Internationale Gesellschaft für Chemische Unternehmungen (IG Chemie). From then on, American IG loudly proclaimed it was Swiss-owned and controlled, and free from German interests, even though, until 1940, the president of IG Farben, Hermann Schmitz, also was the president of IG Chemie.
The ruse of masking German control through various Swiss concerns soon became a favorite tactic of IG Farben. With the storm clouds of war on the horizon by the late 1930s, it also became a favorite tactic of the Dulles brothers in helping American investors hide their dealings with the Nazis.
Another German firm seized during WWI was Rohm & Haas, which was sold to Tanner’s Products. The tanning industry at that time played an important role in support of war-related chemical facilities. In 1924, the original German owners regained control. Technically, Rohm & Haas of Philadelphia was independent of Rohm & Haas of Germany; the same stockholders merely owned both. In 1927, the two firms signed an agreement about the division of territories. The agreement was typical of German cartel arrangements in that it restricted American companies from South America and Europe, granting those areas to the German corporation.
During the 1920s and 1930s, Rohm & Haas’ primary business involved the production of general chemicals, particularly methyl methacrylate or Plexiglas. By 1934, Plexiglas reached commercial practicability and a new agreement was reached between IG Farben, Rohm & Haas of Philadelphia, and Rohm & Haas of Germany. The new agreement further restricted Rohm & Haas of Philadelphia’s territory and banned the firm from entering six business areas: photography, dyestuffs, synthetic rubber, pharmaceuticals, abrasives and celluloid masses.
In 1939, Rohm & Haas cross-licensed to du Pont its process for making cast sheets of methyl methacrylate. However, the terms of the license limited du Pont’s production to half of Rohm & Haas’ production. By 1940, the market for methyl methacrylate had exploded with wartime applications. Du Pont was receiving enormous orders for Lucite and Plexiglas that far outstripped the restricted production agreement. On Aug. 10, 1942, a grand jury indicted both Rohm & Haas and du Pont for restricting war munitions production.
Besides producing methyl methacrylate for airplane canopies, Rohm & Haas also produced Tego glue film, used to produce the plywood needed for aircrafts and marine vessels, such as PT boats. Once again, Rohm & Haas had a production agreement with a German firm covering Tego.
There are literally thousands of examples of IG Farben and other German firms regaining control over vital industrial processes in the 1920s. Among the most startling were two areas in which American industry dominated: aluminum and magnesium.
In 1907, the Pittsburgh Reduction Co. reorganized as Alcoa, the Aluminum Company of America. The Mellon, Davis and Hunt families owned Alcoa through closely held shares. Alcoa held two patents for making aluminum: the Hall and Bradley patents, which expired in 1906 and 1909, respectively. Theoretically, the expiration of the patents would have allowed others to enter the aluminum business. To keep its monopoly, Alcoa took steps to ensure control of the aluminum market by buying up the raw bauxite supply. Until 1915, Alcoa was a member of every world aluminum cartel.
By 1928, Alcoa owned 32 subsidiaries, including railroads, bauxite mines, fabricators and power companies in and out of the United States, such as Duke Power of Canada. Alcoa also controlled more than 20 other companies.
Also that year, Alcoa created the Aluminum Co. Ltd. of Canada (Alted), selling its subsidiaries all of its foreign properties, except for its Dutch Guiana bauxite mines. The controlling interest of Alted remained the same, with E.K. Davis as president. Alted’s creation was a ruse used by Alcoa to keep its monopoly. It also freed Alcoa to enter additional European cartel agreements through its Alted subsidiary. When the war clouds appeared and the United States began a defense build-up, the result of Alted’s creation became clear. The United States was no longer the world’s largest aluminum producer; Germany was now No. 1.
Intertwined with German control over the aluminum industry was its control over magnesium, another industry in which America was either dominant or competitive with Germany by the end of WWI. Magnesium is used in tracer bullets, flares and incendiary bombs, and magnesium alloys are indispensable in aircraft production.
During WWI, eight American companies produced magnesium. With the end of the war and the decrease in magnesium demand, only two companies stayed in the business: Dow Chemical and American Magnesium Co. (AMC). AMC was a wholly owned subsidiary of Alcoa. In 1931, Alcoa and IG Farben penned the Alig Agreement, which became the charter of the magnesium industry. Once again, the agreement formed a joint company in which each firm held a 50 percent share. IG Farben shareholders had the right to limit the production capacity of any company in the United States, and to restrict total U.S. production to 4,000 tons a year.
In 1933, after continuous pressure, Dow affirmed AMC as its preferred customer. In 1934, IG Farben entered an agreement with Dow to buy 600 tons of magnesium the next year, with options for the same amount in 1936 and 1937. The agreement restricted Dow from selling in Europe, except for sales to IG Farben and British Maxium. Under this arrangement, Dow sold magnesium to IG Farben at 20 cents a pound - 30 percent less than it charged American companies.
The above cartel agreements are only a few examples. A complete account of all cartel agreements and how they hindered the war effort would fill volumes. More than 100 American corporations had cartel agreements with IG Farben. None of the agreements were legal under U.S. trust laws, as all monopolized or restricted trade. Many were also illegal under Alien Property Custodian laws, since they transferred control to IG Farben and other German corporations seized during WWI.
Once war broke out in Europe, cartel agreements had an enormous impact on global geopolitics. Almost all cartel agreements banned American corporations from South America. Germany did not need to fight for South American markets; American businesses willingly handed them over to IG Farben when they signed the cartel agreements. It was only after war broke out that the cartel agreements allowed American corporations to expand their markets into South America, and then often only to German firms already there.
It was through these South American outlets that American corporations continued to supply Nazi Germany during the war. They served as the method of choice to evade the British blockade. By using a South American firm, either under the control of IG Farben or one of its American cartel partners, shipments to Germany were first exported to a so-called neutral country, such as Spain or Switzerland, and then to Germany. It was through a South American subsidiary that Standard Oil of New Jersey continued to supply Nazi Germany with oil and munitions. The company also distributed pro-Nazi propaganda throughout South America during the war.
Corporate apologists try to dismiss these cartel agreements simply as good business practices. However, legal documents from IG Farben suggest they were an integral part of Germany’s war plan. The following excerpts from its legal department leave no doubt about IG Farben’s plans:
… After the first war, we came more and more to the decision to tarn (German for camouflage) our foreign companies in such a way that participation of IG in these firms was not shown. In the course of time the system became more and more perfect.
… If the shares or similar interests are actually held by a neutral who resides in a neutral country, enemy economic warfare measures are ineffectual; even an option in favor of IG will remain unaffected.
… Protective measures to be taken by IG for the eventuality of war should not substantially interfere with the conduct of business in normal times. For a variety of reasons it is of the utmost importance that the officials heading the agent firms, which are particularly well qualified to serve as cloaks, should be citizens of the countries where they reside.
… In practice, a foreign patent holding company could conduct its business only by maintaining the closest possible relations with IG, with regard to applications, processing and exploitation of patents it is sufficient to refer to experience.
Adopting these measures offered protection against seizure in the event of war.
… In the case of winning this war, the mightful situation of the Reich will make it necessary to re-examine the system of Tarnung. Politically seen, it will often be wished that the German character of our foreign companies is openly shown.
After the outbreak of war, IG’s legal department continued discussing Tarnung.
… Only about 1937 when a new conflict became apparent did we take pains to improve our camouflage in endangered countries in a way that they should, even under wartime difficulties, at least prevent immediate seizure.
… Camouflage measures taken by us have stood us in good stead, and in numerous cases have even exceeded our expectations.
A Treasury report on espionage and saboteurs made in 1941-42 is equally vivid:
In the twenty year period between 1919-1939, German interests succeeded in organizing within the United States another industrial and commercial network centered in the chemical industry. It is unnecessary to point out that these business enterprises constituted a base of operations to carry out the Axis plans to control production, to hold markets in this Hemisphere, to support fifth column movements, and to mold our postwar economy according to Axis plans. This problem with which we are now faced is more difficult than, although somewhat similar to, the problem faced by us in 1917. The background is vastly different from that which existed in 1917.
Certain individuals who occupied a dominant place in business enterprises owed all of their success to their business contacts in the past with IG Farben.
The Treasury report went on to discuss IG Farben’s practice of sending spies and agents into the United States to become citizens. The report also discusses the need of dismissing 100 American citizens from General Aniline, including five key executives, as Nazi spies or agents.
IG Farben’s employment of spies and its relationship to the Gestapo were made vividly clear to Congress months before the attack on Pearl Harbor. Richard Krebs, a former Gestapo agent, testified before the Dies Committee on Un-American Activities. Later chapters will discuss how the Dies Committee subverted the investigation of Nazis.
From his personal knowledge of German cartels, Krebs testified at length about the organization of Nazi propaganda, espionage and sabotage in the Western Hemisphere. In his testimony, Krebs stated that Hamburg-Amerika Lines and Zapp Transocean News Services were nothing more than appendages of the Gestapo. Hamburg-Amerika was one of the firms seized from Prescott Bush for trading with the enemy. Krebs detailed how businesses in the United States employed Gestapo agents who were placed in other firms that were not a part of pro-Nazi cartels.
Krebs’ testimony revealed that the Gestapo’s Industrial Reports Department had special schools to train Germans and Americans of German descent to work in the U.S. as mechanics, engineers, drafters, newsmen and even teachers. Krebs specifically stated that the relationship of IG Farben with the Gestapo was “to obtain information about our security program and to produce choke points, or to sabotage our war efforts. In 1934, IG Farbenundustrie was completely in the hands of the Gestapo. It went so far as to have its own Gestapo prison on the factory grounds of the large works at Leuna and, particularly after Hitler’s ascent to power, began to branch out in the foreign field through subsidiary factories. It is the greatest poison gas industry in the world, concentrated under the title of IG Farbenindustrie.”
While there was less sabotage during WWII than in WWI, the new tactics were just as useful in delaying the production of war equipment and munitions. For example, Standard Oil of New Jersey managed to delay any increase in toluol production until 1941 out of obedience to IG Farben. Toluol is the vital starting material for producing both TNT and butadiene, the feedstock for synthetic rubber.
There is at least one report that Standard Oil of New Jersey intended to resume its cartel link with IG Farben following WWII. In May 1942, Walter Winchell stated that CBS effectively silenced a news reporter covering both the Truman and Boone Committees. This reporter had included in his script reports that Standard Oil of New Jersey intended to resume ties with IG Farben when the war ended. A CBS censor who killed the item reportedly told the reporter to “go easy on Standard, you know we carry plenty of their business.”
By the time Pearl Harbor was bombed, support for fascism was widespread, especially within large corporations. Some of the support was the direct result of IBM President Tom Watson’s tenure as president of the International Chamber of Commerce (ICC), which enthusiastically promoted trade with Nazi Germany. In 1937, the International Chamber of Commerce held its world congress in Berlin, during which Schacht presented Watson with Hitler’s medal. Watson later returned the medal, but only after it was clear that war was imminent.
Throughout the 1930s, several large newspaper chains were openly pro-Nazi, as were many members of Congress. By the end of 1942, the proclaimed list of blacklisted companies (Nazi front corporations in Europe and South America) grew to more than 5,000. In the process, many American corporations were shown to be still trading with the Nazis. None of these companies would ever face charges, because by 1942, support for fascism and the corporate state was thoroughly entrenched in American corporate culture.
Support for fascism within the corporate community can be traced back to the period immediately following WWI into the 1920s. None of the cartel agreements would have been possible without the voluntary cooperation of America’s corporate leaders. Many, such as du Pont, actively sought out cartel agreements following WWI. Others, such as Standard Oil Of New Jersey, were willing to reach new cartel agreements with IG Farben and Germany after WWII ended. The widespread enthusiasm to enter such agreements can only be understood by exploring the attitudes of America’s corporate leaders following WWI.
The Red Scare of 1919
WWI had been good for American corporations’ bottom lines; many reaped fat profits. In fact, leaders of corporate America were spoiling for a fight. Prices were frozen during the war and the government seized many corporations for trading with the enemy because of their illegal, trade-restricting cartel agreements with IG Farben. Moreover, before the war, corporations had suffered under the great trustbuster Teddy Roosevelt. Businesses were eager to raise prices once the government lifted the wartime controls. The leaders of corporate America saw themselves as victims of the political atmosphere of the previous 20 years.
The muckrakers largely fueled the liberal and progressive movements that ushered in the new century. The press had exposed the robber barons and their practices for all to see. The attack on organized capital and the rich elite (such as Rockefeller, Morgan and Mellon) was fully justified. Their policies were universally detested by the public.
Naturally, corporate America resented the attacks and sought to resume its old methods. Business as usual meant recreating the huge trusts and reestablishing their monopolies. Inking new cartel agreements with IG Farben was merely reinstituting their imagined right to rule the world. The likeness of the cartel agreements to the behavior of the robber barons cannot be underestimated.
At the end of WWI, the leaders of corporate America saw two threats to their dreams of grandeur looming on the horizon: organized labor and the Bolshevik Revolution. Out of these threats, the Right Wing launched one of the most shameful periods of political repression, the infamous Red Scare of 1919. Having experienced firsthand the power of the press, corporate America employed the media in a full-scale assault to regain its stature. It used the three most successful propaganda methods ever devised: patriotism, religion and anti-communism.
To fan the Red Scare flames, every possible asset was employed to destroy the threats of unionism, communism and socialism. J.P. Morgan laid the groundwork for this assault before war’s end by buying editorial control of the media. According to Rep. Oscar Callaway in the Congressional Record:
In March, 1915, the J.P. Morgan interests, the steel, shipbuilding, and powder interests, and their subsidiary organizations, got together 12 men high up in the newspaper world, and employed them to select the most influential newspapers in the United States, and the sufficient number of them to control generally the policy of the daily press of the United States. These 12 men worked the problem out by selecting 179 newspapers, and then began, by an elimination process, to retain only those necessary for the purpose of controlling the general policy of the daily press throughout the country. They found it was only necessary to purchase the control of 25 of the greatest papers. The 25 papers were agreed upon; emissaries were sent to purchase the policy, national and international, of these papers; an agreement was reached; the policy of the papers was bought, to be paid for by the month; an editor was furnished for each paper to properly supervise and edit information regarding the questions of preparedness, militarism, financial policies, and other things of national and international nature considered vital to the interests of the purchasers... This policy also included the suppression of everything in opposition to the wishes of the interests served.
In 1919, the Morgan family and its allies also bankrolled the creation of the American Legion and crafted it into a union-busting organization of thugs. The first acting officers of the legion were bankers, stockbrokers and the like.
The Legion took on a fascist character almost from its inception and, in the 1930s, played a prominent role in the fascist plot against Roosevelt. In 1923, the Legion’s Commander, Alvin Owsley, openly embraced Mussolini and approved fascism as a policy for the United States. In the Journal of the National Education Association, Owsley equated the Legion in America with the Fascisti in Italy.
... the American Legion stands ready to protect our country’s institutions and ideals as the Fascisti dealt with the destructionists who menaced Italy... The American Legion is fighting every element that threatens our democratic government - soviets, anarchists, I.W.W., revolutionary socialists and every other Red... Do not forget that the Fascisti are to Italy what the American Legion is to the United States.
The Legion took on a racist character through the 1920s and 1930s, and served as a recruiting base for the rebirth of the Ku Klux Klan. In the South, many Legion posts were also local Klan cells.
This should not be taken as a besmirching of those who have honorably served their country. In fact, disgruntled veterans who resented the wealthy elite for using them as cannon fodder went on to create the Veterans of Foreign Wars (VFW). It was the VFW that led the fight for early payment of veterans’ bonuses after the 1929 stock market crash. The American Legion stood idly by, supporting the failed policies of Wall Street and the Hoover administration.
The importance of the Legion’s anti-union activity is obvious in the events leading up to the 1919 Red Scare. By the end of 1919, the buying power of the 1913 dollar had shrunk to 45 cents. Food costs had increased by 84 percent; clothing, 114.5 percent; and furniture, 125 percent. By the end of 1919, the cost of living had risen 99 percent in the preceding five years. Wages during this time rose, at most, 5 percent-10 percent for salaried employees. In fact, workers such as salaried clerks, police and others in similar positions were worse off than any time since the Civil War.
Organized labor had made large gains during the earlier, more liberal times with such bills as the Clayton Act, the Seamen’s Law and the Adamson Act. Membership in the American Federation of Labor increased from about 500,000 in 1900 to more than 4 million by 1919. Unions kept an effective truce with management, but with the war’s end, they went on the offense. Many employers were willing to grant moderate wage increases, but refused to negotiate or even recognize the workers’ rights to join unions.
President Wilson had foreseen the upcoming struggle of unions, as shown in his remark to Secretary of the Navy Josephus Daniels in 1917, just before the United States intervention in the war in Europe: “Every reform we have won will be lost if we go into this war. We have been making a fight on special privilege. War means autocracy. The people we have unhorsed will inevitably come into control of the country for we shall be dependent upon steel, ore and financial magnates. They will ruin the nation.”
However, the industrialists and leaders of corporate America wanted a return to “normalcy,” meaning freedom from government regulation, unions and public responsibility. Thus, the stage was set for a full-scale assault against organized labor, which, in 1919, had more than 4 million workers involved in 3,600 strikes. The strikes were only occasionally successful, with most winning no concessions.
Secondary to the plight of organized labor, but central to the 1919 Red Scare, were various espionage laws passed during the war aimed at German agents and cartels. After the war, politicians and law enforcement officials used these laws against leftists and the leaders of the labor movement.
During the war, hysteria was fanned by independent agencies, such as the National Security League, the American Defense Society and the government-sponsored American Protective League. These organizations converted otherwise sane Americans into raging superpatriots. More often than not, these superpatriots and their organizations were blights on freedom, and used by the Right Wing to gain and preserve power.
These superpatriot groups garnered strength from the Right Wing, not the public; their financial support came directly from corporations and the rich elite. The National Civic Federation received most of its support from V. Everit Macy, August Belmont and Elbert Gary. The National Protective League was supported by T. Coleman du Pont, Henry Frick, J.P. Morgan and John D. Rockefeller. While union leader Matthew Woll was acting president of the National Civic Federation, the group collaborated closely with Nazi agents in this country. Another group from the 1920s that underwent the transformation from nativism to fascism was Harry Jung’s American Vigilant Intelligence Federation.
In effect, these superpatriot groups and the American Legion were bridging the chasm between the rich elite and the general population. They appealed to a large part of the population by invoking a false sense of patriotism, while the directors and managing officers remained fully under the control of the elite. They also fostered a conservative economic agenda. Except for the National Civic Federation, they were all virulently anti-union. As an umbrella group of business and union leaders with a few trade unionists on its board of directors, the NCF acted much like a company union, vigorously pursuing an aggressive, open-shop policy.
In the postwar period, the membership of these patriot groups was relatively small. However, they exerted an influence that far outstripped their numbers. Their propaganda efforts were well funded and organized. The National Security League sent pamphlets to schoolteachers, clergy, business leaders and government workers. In every major city, they formed a flying squadron of speakers to whip up public sentiment against radicalism, which included unionism.
Central to the hysteria were three federal acts. The first was the 1917 Espionage Act. This act made it illegal to convey false reports with the intent to interfere with the operation or success of U.S. military forces, to promote the success of its enemies or to attempt to cause insubordination, disloyalty and mutiny. The second was the Sedition Act of 1918, which made it illegal to utter, print, write or publish any disloyal, profane or abusive language about the U.S. government, the Constitution or the military. The third act, passed in October 1918, excluded from admission into the United States all aliens who were anarchists or who advocated assassinating public officials.
While only a handful of pro-Nazis ever faced charges under these laws during WWII, thousands of individuals were rounded up because of them in 1919. These laws, and the plight of labor, would now play a central role in the events leading up to the mass hysteria of the Red Scare of 1919, launched by the Palmer Raids.
One of the first victims of the espionage laws was Victor Berger, a founder of the Socialist Party. The socialists opposed the war, as did Berger. In 1918, officials arrested Berger under the Espionage Act for his statements, such as: “Personally, I was against the war before war was declared. But now since we are in the war, I want to win this war for democracy. Let us hope we will win the war quickly. The war of the United States against Germany cannot be justified. The blood of American boys is being coined into swollen profits for American plutocrats.
Berger was arrested for his criticism of war profiteering, which threatened the leaders of corporate America. While awaiting trial, Berger ran for his old seat in the House of Representatives, winning it back on a peace platform. In January 1919, the court found Berger guilty of conspiracy to violate the Espionage Act and sentenced him to 20 years at Leavenworth. His conviction was only the beginning of the destruction of the Socialist Party. Party Secretary Charles Schenck, who had ordered leaflets that discouraged enlistment, was convicted shortly after Berger.
Many other prominent members of the Socialist Party were arrested for violations of the Espionage Act. In June 1918, Eugene Debs delivered a scathing speech denouncing the arrests of such prominent Socialists as Charles Ruthenberg, Alfred Wagenknecht, Kate Richards O’Hare and Rose Pastor Stokes. Soon after, officials arrested Debs.
The arrests of prominent Socialists were systematic, and before the hysteria of the 1919 Red Scare was over, the party was destroyed. Sincere Socialists were punished for patriotism, while cunning capitalists reaped the rewards of trading with the enemy, of prolonging the war, of the victory, and of postwar chaos.
Closely associated with the Socialist Party in the minds of the public were members of the International Workers of the World, nicknamed the Wobblies. Founded in 1905 in protest over the conservative American Federation of Labor, the Wobblies were aggressive in both demands and actions. Like the Socialists, they were singled out during the Red Scare for annihilation.
Before the war’s end, corporate America enlisted the press in its defense, using perhaps the most effective propaganda tool available - the bogey of communism. The press attacked the Bolsheviks for the Brest-Litovsk Treaty, as well as their views on capitalism. Using the wild claims of the superpatriot groups, church magazines, business and financial journals, and the general press struck out against Bolshevism. The term “Bolsheviks” soon became interchangeable with criminals, German agents, anarchists, Wobblies, Socialists and economic imbeciles. In the eyes of the press, there was no difference between a Wobbly and a Bolshevik. Both were tantamount to treason.
Claims made in the press about the Bolsheviks were ludicrous. One particular horror story made the staggering claim that in Petrograd, the Bolsheviks had an electric guillotine that could behead 500 people an hour. The press portrayed Bolsheviks as wild, bloodthirsty murderers.
Perhaps the most astounding success of the propaganda about Bolshevik bloodletting was in mustering support for a U.S. intervention in Russia. Many of the same right-wing forces in the U.S. that opposed entry into a war with Germany now supported intervention in Russia. The overwhelming majority of Americans were isolationists, yet right-wing pressure was strong enough that President Wilson sent a small contingent of forces into Russia, with the curious stipulation that they could not intervene in domestic affairs. Tagging along as a missionary was William Dudley Pelly, who later founded the Silver Shirts, a pro-Nazi group.
The combination of media propaganda with the real plight of labor was a recipe for trouble. Three events - the Seattle general strike, the bombings and the Boston police strike - triggered the epidemic hysteria in late 1919.
During the war, inflation hit Pacific Northwest workers hard. Seattle had been a hub of wartime shipbuilding, which caused a dislocation of peacetime industries, housing shortages and extreme inflation. As a result, the Pacific Northwest became a hotbed of activity for the IWW. Even before shipyard workers walked off the job, area newspapers were busy asking whether strikes were for wages or Bolshevism. On Jan. 21, 1919, 35,000 shipyard workers went on strike in violation of their contract, which had two months to run. The director of the Emergency Fleet Corp., Gen. Charles Piez, refused to discuss any conditions of employment.
On Feb. 3, the Seattle Central Labor Council announced that a general strike in support of the shipyard workers was to begin in three days. Consequently, mass hysteria gripped the city. The public, fearing shortages from the strike, went on a buying frenzy. Drug, department and grocery stores were swamped with customers stockpiling goods. Hardware stores had more orders for guns than they could fill. The Labor Council quickly ran an editorial to calm the hysteria, stating the Strike Committee would run all industry necessary to the public health and welfare, and that law and order would be preserved.
Scores of articles in the local media compared the pending strike to Bolshevism, further inflaming the public. On the morning of Feb. 6, 60,000 workers went out on strike. The unions granted exemptions to garbage, milk and even laundry trucks. At no time during the strike was Seattle without food, coal, water, heat or light. Even more remarkable, no violence marred the strike.
Among the alarmists was Seattle Mayor Ole Hanson, who had run unsuccessfully for the Senate the year before. Originally a Republican, Hanson switched to the Progressive Party in 1916 and supported Wilson. He harbored an intense hatred for the IWW, believing it was at the root of all labor unrest. His fear reached a fever pitch when the general strike was called. He had no doubt that it signaled the beginning of a revolution “to take possession of our American government and try to duplicate the anarchy of Russia.” Hanson also had no doubt that the man who ended this anarchy would have a promising political career.
At Hanson’s request, federal troops from Fort Lewis were dispatched to Seattle on Feb. 6. Ever the ambitious politician, Hanson personally led the troops into the city with a huge American flag draped over his car. The following day, Hanson declared that unless the strike ended, he would use the troops to crush it and to run all the essential enterprises. Hanson’s words framed the hysteria to come later in the year: “The time has come for the people in Seattle to show their Americanism. The anarchists in this community shall not rule its affairs.”
Seattle newspapers continued a barrage of condemnation against the strikers, calling for “no compromise now or ever.” In the face of criticism fueled by the fear of revolution, the strike ended on Feb. 11 with Hanson proclaiming: “The rebellion is quelled, the test came and was met by Seattle unflinchingly.”
Banner headlines and editorials across the nation labeled the strikers as Reds. The Chicago Tribune warned its readers, “it’s only a middling step from Petrograd to Seattle.”
Hanson was not the only politician who saw a bright future in denouncing unionism and strikes as Bolshevism. Minnesota Sen. Knute Nelson declared that the Seattle strike posed a greater danger than strikes during the war. Utah Sen. William King said strike instigators were Bolsheviks. Washington Rep. William King said: “From Russia they came, and to Russia they should be made to go.”
Within a few months of the strike, Hanson resigned as mayor of Seattle and toured the country lecturing on the danger of domestic Bolshevism. The lecture circuit proved financially rewarding; in seven months, Hanson netted $38,000, more than five times his annual mayoral salary.
The Seattle general strike was a fundamental cause of Red Scare hysteria because it focused America’s attention solely on what became known as radicalism. Any strike after Seattle was framed the same, each with ever- increasing hysteria. The most successful propaganda ploy of the right wing in America had been successfully launched.
Both foreign and domestic events kept the fear of Bolshevism alive. On Feb. 20, the press reported a Bolshevik agent wounded French Premier Clemenceau. Four days later, Secret Service agents arrested four Wobblies in New York City. The press immediately seized on the arrests, alleging they were part of a worldwide plot to kill American and Allied officials.
In March, the Chicago Tribune reported uncovering a plan for planting bombs in Chicago. On April 1st, the New York Times reported a Department of Justice agent had infiltrated a conspiracy by anarchists in Pittsburgh to seize the arsenal and use the explosives to lay the city in ruins. It wasn’t until April 28 that any bomb physically emerged. On that day, Hanson’s office in Seattle received a package. Hanson was in Colorado on a Victory Loan tour, and aides left the package containing a homemade bomb unopened on a table. The wrapping was torn in transit and acid leaked, damaging the table.
The following day, a maid lost both hands when she opened a similar package that exploded. She worked for a former senator from Georgia, Thomas Hardwick. An alert postal clerk who read of the bombings supposedly remembered setting aside 16 similar packages for insufficient postage just days earlier. He located the packages and told authorities. Postal officials later found 18 additional bombs in transit. The packages were addressed to, among others, Attorney General Palmer, the Secretary of Labor, Chief Justice Holmes, John D. Rockefeller, J. P. Morgan, and several senators and immigration officials.
Russian and Italian anarchists were blamed, yet none of the bomb plots were ever solved. There are many resemblances here to the 1970’s “strategy of tension” in Italy. Bombings were arranged by police agents working for fascist elements within the upper echelons of government. The terrorist acts were then used to suppress unions and keep the Italian Communist Party out of the government.
The nation was now timed and primed for May Day violence. In Boston, police arrested 116 socialists when violence erupted during a May Day parade. The police arrested only socialists. In New York, riot soldiers raided the Russian People’s House and the offices of The Call, a liberal magazine. Other cities saw similar events. Cleveland erupted in an orgy of violence, with more than 40 socialists injured and another 106 arrested.
Yet another month later came the trigger for mass hysteria, the June 2 bombing of Attorney General Palmer’s home. A copy of Plain Words, an anarchist pamphlet, was placed near the doorstep. Palmer was an ambitious politician with an eye on the 1920 presidential nomination. While President Wilson remained healthy, Palmer was held in check, but as Wilson’s health declined, Palmer began to assert more power. It was not until the President was bedridden that Palmer was able to unleash his assault on unions and socialists. Meanwhile, the press sensationalized fears of a Red Scare with each strike.
The Winnipeg general strike in June further heightened tensions. It was given the same Bolshevik label as the Seattle strike. Newspapers ran scare headlines to shock the public and harden opinion against unions. Further inflaming the public was labor’s insistence on the Plumb Plan for government ownership of the railroads.
By late summer, the public was nearly hysterical with fear of Bolsheviks and unions. Each event led to greater anxiety and fear, and ratcheted up the hysteria. Then the Boston Police went on strike. Police in other cities had already unionized, but police commissioner and former mayor Edwin Curtis was virulently anti-union. He stated that a police officer could not simultaneously belong to a union and perform his sworn duties. Massachusetts Gov. Calvin Coolidge backed Curtis and took a hard line toward the striking police officers. Soldiers and volunteers took to the streets to police Boston, and the city announced that none of the strikers would be rehired. Coolidge’s harsh approach to unions immediately placed him in the national spotlight.
In September, coal miners went on strike. With President Wilson’s health failing at an alarming rate, Attorney General Palmer argued for invoking an injunction under the Lever Act. Organized labor had supported the Lever Act and its use of injunctions to stop strikes in the event of war. Wilson had given labor the express promise the government would never use the act in times of peace. The betrayal outraged labor leaders and workers. Without the approval of the entire cabinet, Palmer invoked the act and issued an injunction on Oct. 30, signed by federal Judge Albert Anderson.
Against this backdrop, the Massachusetts governor’s race took on national significance. Coolidge’s harsh stance in the Boston police strike was fresh in everyone’s mind, and he became the unanimous choice of the Republican Party for reelection. The Boston police strike became the focal point of the race, with the press loudly framing the election as a battle between Bolshevism and law and order. Coolidge handily won reelection with his anti-union message; the following year, he was selected as the vice presidential candidate.
Anti-unionism reached hysterical levels in fall 1919. Newspapers proclaimed that anything other than the open shop was un-American. The anti-union campaign of big business was bearing fruit. Clergymen such as David Burrell of Marble Collegiate Church in New York City claimed the Bible not only proved the closed shop was unpatriotic, but also unchristian.
Clergy and churches that supported the rights of labor soon fell victim to attacks by the superpatriot groups. The superpatriots singled out for unusually harsh treatment the National Welfare Council, the Federation for Social Service of the Methodist Church and the Commission on Church and Social Services. Many clergymen sympathetic to labor were labeled “parlor pinks.” This was the beginning of the radicalization of religion to the hard right’s viewpoint. Liberal and moderate church leaders were purged.
By the end of 1919, the Red Scare was reaching critical mass. Palmer, ever more confident of his future political achievements, believed the best solution was to deport radicals. Colluding with certain Labor Department and immigration officials, Palmer assured himself of greater success.
Palmer issued orders on Dec. 27 for the FBI to arrange meetings on Jan. 2, 1920 of the groups it had infiltrated. During the raids, field agents were to obtain all necessary documentation, such as charters, meeting minutes, membership lists and books. No person arrested was allowed to communicate with anyone unless Palmer, William Flynn or J. Edgar Hoover granted permission. Palmer had appointed Flynn as chief of the Bureau of Investigations, the forerunner of the FBI.
The results were spectacular. The Bureau of Investigations, with help from local police, arrested more than 4,000 suspected radicals in 33 U.S. cities. Arrests were often made without warrants. The bureau turned the arrested Americans over to state authorities for prosecution under syndicalism laws. Prisoners were denied legal counsel and held under inhuman conditions. Brutality by arresting officers and jailers was widespread.
The mass hysteria even reached into the halls of Congress where, at the urging of Palmer, 70 sedition bills were introduced. Eventually, cooler heads prevailed and none of the peacetime sedition bills passed. Nevertheless, many states passed sedition laws that made it easier to prosecute the IWW. In New York State, five Socialist Party members of the legislature were disbarred.
The full extent of the hysteria and brutality is best be illustrated by the Centralia Massacre that followed the steel and coal strikes. In 1919, there were only two IWW halls open in the state of Washington; the others had been suppressed or closed by the police or local mobs. The Centralia IWW hall had just reopened after a local mob raided it during a Red Cross parade the year before.
On Oct. 20, 1919, a group of local business leaders formed the Centralia Protective Association to safeguard the small town against undesirables. Rumors inside the IWW hall were rampant that it would be raided. On Armistice Day, the parade route led directly past the hall. The Wobblies, seeking to protect themselves from mob violence, stationed armed members inside the hall, across the street and on a hilltop overlooking the street. Parade marchers included the local post of the American Legion led by Warren Grimm of the Centralia Protective Association. At first, it appeared that violence would be averted, but some legion members moved toward the IWW hall. In self-defense, the Wobblies opened fire and wounded several legionnaires, including Grimm. Another legionnaire was shot in the head as he burst through the door.
The Wobblies responsible for the shootings were quickly rounded up and jailed, except for Wesley Everest, who escaped toward the Skookumchuck River. A posse chased Everest and overtook him as he tried to ford the river. Everest refused to surrender and soon emptied his revolver, killing another legion member. Before taking him to jail, the posse beat Everest and knocked out his teeth with a rifle butt.
That night, the lights went out in Centralia. Under the cover of darkness, a mob broke into the jail, seized Everest and took him to the Chehalis River. On the way, one of his captors castrated him. At the river, he was dragged from the car pleading for the mob to shoot him. He was hung from the bridge, but the first rope was too short. Somehow, Everest remained alive through two attempted hangings. On the third try, the mob stomping on his fingers as he desperately clung to the bridge, Everest finally succumbed.
After making sure their work was done, the mob turned their headlights on the dangling body and riddled the corpse with bullets. After several days, Everest was cut down and displayed in the jail as an example to other Wobblies. Since none of the town’s undertakers would care for the body, four of Everest’s fellow IWW members were forced to dig his grave in a potter’s field. No inquest was ever held; the corner ruled the death a suicide. In the end, eight Wobblies were found guilty of murder and imprisoned.
The Centralia Massacre followed a long string of attacks on strikers and unions dating back to at least the post-Civil War era. By 1914, the attacks had become commonplace. On April 20, 1914, in an effort to break a strike against the Rockefeller-owned Colorado Fuel and Iron Co., more than 40 striking miners and their families were murdered in Ludlow, Colo., by the Colorado National Guard and Rockefeller-hired thugs from the Baldwin-Felts detective agency. Another massacre of Wobblies occurred in Everett, Wash., on Nov. 5, 1916.
Superpatriot groups sprang up like mushrooms after a rain, and would continue distributing literature throughout the 1920s. No group with liberal tendencies remained untouched. The Lusk Committee branded The Survey, a national liberal magazine, as approved by revolutionary groups. Other liberal magazines such as The Nation, New Republic, Dial and Public were the subjects of similar attacks. The ACLU was condemned as a Bolshevik front. Even the National League of Women Voters became labeled as a tool of radicals.
The infamous Lusk Committee followed on the heels of a report from the U.S. Senate Overman Committee. The Overman Committee began hearings on Feb. 11, the day the Seattle general strike ended. The 1,200-page report showed little evidence of communist propaganda in the United States, and even less of an influence on American labor.
The Lusk Committee sprang from a report leaked to the public by prominent New York lawyer Archibald Stevenson. Stevenson was serving in the Military Intelligence Division, and supplied a list of 62 individuals to the Overman Committee whom he had branded traitors. Stevenson’s report on radicalism in New York City determined that Bolshevism was rampant among New York workers.
On March 26, the New York legislature appropriated $30,000 for the Lusk Committee and appointed Stevenson as assistant counsel. On June 12, the Justice Department raided the Russian Soviet Bureau and hauled off 2 tons of propaganda material for the Lusk Committee for review. Following the raid, New York Sen. Lusk declared there were at least 50 radical publications in the city. At the same time, New York State Attorney General Charles Newton claimed the Soviet Bureau was the clearinghouse for all radical activity in the United States.
On June 21, the Lusk Committee struck again, this time raiding the Rand School of Social Science and the local IWW office. The committee claimed that documents from the Rand School showed that radicals were in control of at least 100 trade unions. Stevenson even claimed the documents showed that the Rand School was propagandizing for blacks.
With no supporting evidence, Lusk charged the Rand School was the headquarters for Bolshevik radicals and quickly took steps to close it. The renewal of the school charter was delayed until July 30, when the Supreme Court Justice of New York threw out the case for lack of evidence.
Preachers & Klansmen
In 1924, the Hearst papers, the American Legion and the Ku Klux Klan led the charge for the “Americanization” of schoolbooks, loyalty oaths for teachers and harsher immigration legislation. The three organizations became deeply tied to fascism in the following decade. Several members of the American Legion were involved in the fascist plot of 1934 against FDR. The Hearst papers became an open propaganda outlet for the Nazis and fascism. The Klan went on to form an alliance with the American Bund.
W. J. Simmons, a former Methodist circuit rider from Atlanta, established the second Klan in 1915. The original Klan had died out and disbanded. (The second Klan would be disbanded later, only to be reborn once again.) In the first four years of rebirth, the Klan was relatively small. Not until 1920 did it grow mammoth.
Two factors with roots in the late 1800s set the stage for the rebirth of the Klan. The first was massive immigration from Europe. The American Protective Association, formed in 1887, was virulently anti-alien. The group was particularly strong in the Midwest, where the Klan gained strength in the 1920s. The other reason was the populist movement of the 1890s, which sought to unite blacks and poor whites against mill owners and the conservative elite of the South.
It was not until Simmons met publicists Edward Young Clarke and Elizabeth Tyler in 1920 that membership increased, peaking around 4.5 million. Simmons had a contract with the two, giving them 80 percent of all membership dues. Clarke and Tyler promoted the Klan as rabidly pro-America, antiblack, anti-Jewish, anti-union and, most importantly, anti-Catholic.
The huge increase in Klan membership was largely a product of the Red Scare. Another factor were the race riots in the summer of 1919, in Chicago; Washington, D.C.; Elaine, Ark.; Charleston; Knoxville and Nashville Tenn; Longview, Texas; and Omaha.
Through the first half of the decade, the Klan would be a serious force in both the North and South. The message from the new Klan was that it meant business. Besides blacks, Jews and immigrants, the Klan attacked bootleggers, dope dealers, nightclubs and roadhouses, violations of the Sabbath, sex and so-called scandalous behavior.
The early 1920s saw a rash of lynchings, shootings and whippings; the victims were most often black, Jewish, Catholic or immigrant. “Women of scandalous behavior,” as determined by the Klan, were subject to abuse. In Alabama, a divorcee was flogged for remarrying. In Georgia, the Klan, led by a minister, administered 60 lashes to a woman for the vague charge of immorality and failure to go to church. In Oklahoma, Klansmen whipped girls found riding in automobiles with young men. In the San Joaquin Valley of California, the Klan flogged and tortured women for morality charges. In Chicago, Mildred Erick was beaten nearly unconscious and had crosses carved on her arms, legs and back by Klansmen. The attack was provoked by her conversion to Catholicism.
In November 1921, a case in Asheville, N.C. became the focus of the national media. Rev. Abernathy of the First Christian Church sent a letter to city officials calling for a purity campaign and the arrest of two women, Etyln Maurice and Helen Garlington, and two black men, Louis Sisney and Maurice Garlington. The women were charged with prostitution, fornication and adultery. Both women received a sentence of one year in the county jail. The campaign was similar to an earlier one in Athens, Ga., launched by the Rev. M.B. Miller of the First Christian Church. Miller headed the Klan in Athens.
Scores of women received much harsher treatment. Asheville got national attention because it was the home of William Dudley Pelly and the Silver Shirts. Many regions where the Klan was strong in the 1920s later became centers of pro-fascist groups in the 1930s. Pelly moved his Silver Shirt organization to Indiana, an area that had a strong Klan in the 1920s.
With its antiblack, anti-union, anti-communist, anti-socialist, anti-Jew and extreme nationalist agenda, the Klan’s platform was remarkably similar to that of the Nazis. By the 1930s, the Klan served as a bridge between nativist groups and fascists. On Aug. 18, 1940, the Klan formalized an alliance with the American Bund at the Nazi encampment of Nordland in Andover, N. J. Before this, a Nazi agent offered former Grand Wizard Hiram Evans $75,000 to control the Klan’s voice. When James Colescott succeeded Evans, the Klan began its collaboration with the American Bund.
After forming the alliance, the Klan embarked on a plan to infiltrate unions in an effort to Americanize them. After Pearl Harbor, the Klan intensified these efforts, particularly in the Detroit area. Once inside the unions, Klansmen spread pro-fascist literature and succeeded in provoking wildcat strikes to hinder the war effort. Their efforts went so far as organizing opposition to buying war bonds.
Probably the Klan’s most successful effort to disrupt the war effort was the Detroit riot, an attempt to prevent blacks from occupying their new homes in the Sojourner Truth Settlement housing project. The riot left several dead, interrupted war production and was propaganda for America’s enemies. Germany and Japan seized on the riot, airing lurid broadcasts of it to demoralize American troops.
Today, one cannot understand the Detroit area without looking at the influence of fascism there. The Klan provoked the riot and was closely associated with the Bund at that time. However, many other fascist organizations were active in Detroit, including the Black Legion, the Wolverine Republican League, and Father Coughlin and several other fundamentalist ministers of hate. Michigan was one of the hot spots for fascism, electing several of the strongest supporters of fascism in the halls of Congress.
Detroit was not the only riot inspired by the Klan that was designed to stop war production. Another race riot occurred on June 15, 1943 in Beaumont, Texas. A mob of more than 4,000 attacked the black section of the city, looting stores and burning buildings. The riot killed 21 people and war production in the area was slowed for months.
Today’s modern Klan formed an alliance with neo-Nazis domestically and in England, Sweden, Canada and Australia. An American sergeant stationed in Bitburg served as the Klan’s recruiting officer in Germany. Currently, much of the hate and pro-Nazi literature in Germany (where it is illegal) comes from the United States.
In the 1920s, Klan-inspired lynchings and riots were common. More than 450 people were lynched; almost all were black. Lynchings became so frequent that Rep. L.C. Dyer of Missouri introduced a bill in 1921 to make them a federal crime. The bill passed the House, but was killed in the Senate by a southern filibuster. On Dec. 9, 1922, a mob in Perry, Fla. burned a black man at the stake after accusing him of murder.
The most noted act of Klan-inspired violence was in Rosewood, Fla., which was chronicled in a recent movie. In January 1923, the tiny town of Rosewood came under attack by a mob incited by a report of a black man assaulting a white woman in the nearby town of Summer. The riot resulted in several murders of Rosewood residents; the black portion of town was burned to the ground. Fearing for their lives, black residents fled into the nearby swamps. No charges were ever filed against the mob, which was reported to have included several Klansmen from outside the area.
Although Rosewood is the most widely known race riot of the 1920s, it was not the bloodiest. The Tulsa, Okla. riot of 1920 was far more horrific. A mob of more than 10,000, some wielding machine guns, attacked the black section of the city, destroying 35 square blocks and leaving more than 300 dead. The mob used at least eight airplanes to spy on the blacks and possibly to bomb some areas.
Listing all the race riots and lynchings of the 1920s would fill several volumes. Many, such as Rosewood, were reported nationally. The Nation reported “the state of Florida was unconcerned about the fate of Negroes.” A few northern newspapers condemned the massacre, but most adopted a more apologetic view of the Klan and its violence. The Tampa Times justified it by proclaiming that blacks “are anything but a Christian and civilized people.” The Gainesville Sun went even further, stating that lynchings would prevail as long as criminal assaults on innocent women continued, and equating the massacre with the death of a dog.
Today, most peoples’ image of the Klan is one of a violent gang of racists dressed in bed sheets, a pariah of some sort. Even with the rise in membership since 1980, the Klan is still a shadow of its former self. However, its real legacy is not the symbols of hooded nightriders or cross burnings, but in developing what is now the Religious Right.
It was commonplace in the 1920s for ministers to lead the local Kaverns. The same holds true today. One such example is the Rev. J.M. Drummond, who was the keynote speaker at a Klan rally near Estill Springs, Tenn., on July 7, 1979. Drummond is an Identity minister, as is Pete Peters, another minister closely associated with the Klan.
The Identity religion teaches that Aryans are the true Jews of the Bible, and that Jews, blacks and other minorities are children of Satan. Two of the more influential developers of the Identity religion began their ministries in the 1920s.
The Red Scare of 1919 resulted in purging anyone holding even the mildest of liberal views, clergy included. With few liberal clerics remaining, the result was a chasm into which the Klan and the radical right moved, shifting the spectrum to the far right. The result is visible today in the link between racism and religion.
The evolution of the present Religious Right from the 1920s Klan can best be shown by the careers of Gerald Winrod and Gerald Smith. Winrod established the Defenders of the Christian Faith in Salina, Kan. in Nov. 1925, an extremely conservative sect. In April 1926, he began publishing a monthly magazine, The Defender. Winrod supported prohibition and rabidly opposed the theory of evolution.
The Scopes “monkey trial” would become a watershed event in shaping later movements. The issue of teaching evolution defined the evolution of the Religious Right itself. Although there were fundamentalists before the 1920s, the Scopes trial revitalized and redefined the fundamentalist religious movement. In fact, the term “fundamentalist” was coined in the 1920s. Many early fundamentalists, such as John Franklyn Norris, were openly sympathetic to the Klan. Norris was a Baptist preacher from Texas with a parish in Detroit. He also ran a seminary with a notable graduate, John Birch. Birch’s death at the hands of Chinese communist forces in the late 1940s spawned the formation of the John Birch Society in the 1950s.
In 1926, Winrod led a campaign to ban teaching evolution locally, as well as in California and Minnesota. He appointed a committee to examine textbooks, and in Minnesota, he helped William Bell Riley draft the bill introduced in the Minnesota legislature. Riley was a force in the conservative wing of the Baptist Church during the 1920s.
Like Winrod, Riley rabidly opposed teaching evolution, and was also extremely anti-Semitic. In 1934, he published the Protocols of the Elders of Zion, and an article on communism, attempting to show they were part of a conspiracy at work in Roosevelt’s New Deal. Riley preached: “Today in our land many of the biggest trusts, banks and manufacturing interests are controlled by Jews. Most of our department stores they own. The motion pictures, the most vicious of all immoral, educational and communistic influences, are their creation.”
This quote from one of Riley’s sermons is indistinguishable from Hitler’s propaganda. It is a clue that if Riley was not outright pro-Nazi, he certainly harbored sympathy for fascism.
Riley was not the first cleric to tout the Protocols. On Feb. 12, 1919, the Rev. George Simons testified in front of the Senate’s Overman Committee, shocking listeners with the tale of a secret, worldwide Jewish conspiracy. Simons cited the Protocols as evidence. It is generally assumed that Simons got his copy of the Protocols from Dr. Harris Houghton of military intelligence. Houghton got his copy from the Czarist immigrant Boris Brasol.
With his congregation of 3,500, Riley exerted tremendous influence in the upper Midwest. Jewish leaders regarded his church as the center of anti-Semitism in the area, but Riley’s influence extended far beyond. In 1902, Riley founded Northwestern Bible Training School, which in 1935 became the Northwestern Theological Seminary. He also assisted in preparing The Fundamentals, a statement of fundamentalist belief. Just before his death, Riley placed the leadership of Northwestern under Billy Graham’s direction.
On March 2, 2002, the ghost came home to roost on the head of Riley’s chosen successor. On that day, an additional 500 hours of Nixon tapes were released. In a 1972 conversation between Nixon and Graham, the preacher expressed his contempt for, as he saw it, Jewish domination of the media. Graham is heard on tape referring to a Jewish newspaper owner: “His stranglehold has got to be broken or this country is going down the drain.”
Later in the conversation, Graham says of Jews: “They swarm around me and are friendly to me. Because they know I am friendly to Israel and so forth. But they don’t know how I really feel about what they are doing to this country, and I have no power and no way to control them.”
In response to the new revelations, Graham apologized profusely, claiming no memory of the incident. Yet this example of Billy Graham’s anti-Semitism should come as no surprise to those who have followed his career.
Graham had earlier been embroiled in a similar scandal. His portrait graced the cover of the January 1957 issue of The American Mercury. The magazine was owned by his friend Russell Maguire, who had acquired a huge fortune from oil and munitions. The owner of the Thompson submachine gun company bought the Mercury in 1952.
In 1951, Maguire gave $75,000 to Billy Graham to produce a film praising the virtues of free enterprise development of God-given natural resources: Oiltown, USA. Graham continued his friendship with Maguire after producing Oiltown and wrote several articles for the American Mercury. By the time Graham’s portrait appeared on the cover, the magazine had earned a reputation as overtly anti-Semitic and hard right. Maguire and the Mercury were ardently anti-communist, calling for abolishing the income tax, the UN, NATO, the ACLU and Zionism. Throughout the 1950s, the Mercury under Maguire’s guidance supported Sen. Joseph McCarthy.
Other writers for the Mercury included J. Edgar Hoover, Ralph de Toledano and George Lincoln Rockwell, founder of the American Nazi Party. De Toledano resigned from the OSS after refusing to work with liberals. Maguire was an open backer of fascism and fascist organizations, and an early supporter of Rockwell. Rockwell often complained about Maguire’s miserly donations.
By January 1957, the Mercury was at loggerheads with the Anti-Defamation League over charges of anti-SemitismDespite their public apologies, the Religious Right and Billy Graham cannot rid themselves of their past support of fascism and anti-Semitism any more than a leopard can change its spots.
Conservative theological circles today still regard William Bell Riley highly, carefully sweeping under the rug his collaboration with the Jayhawk Nazi Winrod. Anti-Semitism is still present in the Baptist Church, but like many right-wing groups, today the Baptist Church cloaks it behind a thin veil. It comes bubbling to the surface in the position the church has adopted in recent years of reaching out to Jews so they may be converted to Christianity. Jewish leaders describe this program as condescending. It is also manifested in their strong support for Israel, which is based on the misguided beliefs of many fundamentalists. The reconstructionists are a sub-branch of the Religious Right who believe the end of the millennium marks the end of time and the approaching battle of Armageddon, with the conversion of Jews to Christianity.
Winrod’s lingering influence and Judeophobia also were readily apparent in the 1980s in Kansas. At that time, Kansas became a hotbed of support for the Posse Comitatus, a far right-wing, extremely anti-Semitic group. A former Silver Shirt leader founded the Posse Comitatus, which subscribes to the Identity faith.
This was not the end of Winrod’s influence. In the 1960s, his son, Gordon, began buying land in Ozark County, Mo., and eventually opened a church he called Our Savior, in which he preached his hate for the Jews. Winrod’s congregation consisted mostly of his adult children and a few followers. Two or three times a year, despite many complaints, he would mail every resident of the county his Winrod Letter. During his trial, he repeatedly referred to the proceeding as a “Jewdiciary.”
The Posse’s rise to popularity in the Midwest and in Kansas, in particular, provides another example of how old prejudices, hate and fascist leanings linger for generations. Indeed, racism in Kansas can be traced back before the Civil War. Winrod’s lingering influence is seen in the 1999 attempt by the Kansas Board of Education to ban the teaching of evolution.
Although Winrod claimed he was not a member of the Klan, he did nothing to oppose the group. During the 1920s, an estimated 100,000 Kansans were Klansmen. In the 1924 race for governor, both Democratic and Republican candidates sought the Klan’s support. There was a solid base of support in Kansas at that time for candidates who attacked Catholics and Jews. Winrod would depend on that base in his later run for the Senate.
It was not until the 1930s that Winrod adopted full-blown fascism. After 1934, Winrod accepted the Nazis’ justification for their anti-Semitic policies. His view was the Nazis were only acting to save Germany from Jewish radicalism, economic exploitation and racial lust. In 1935, he called Hitler a devout Catholic. Eventually, in the 1940s, Winrod was indicted for sedition.
An even more direct link between the 1920s and today’s far right groups can be established by tracing the origin of the Identity religion. It is based on racial hatred, and has been adopted by many current far right groups, including the Aryan Nations, the Posse Comitatus, various Klan klaverns and militias.
Reuben Sawyer, pastor of East Side Christian Church in Portland, Ore., was the first to combine the Klan with Identity religion. He was instrumental in the British Israel Federation, and during the 1920s, was a popular speaker in the Pacific Northwest. It was out of the British Israel Federation that the Identity religion emerged. Sawyer was a leader of the Klan in Oregon and the founder of its women’s auxiliary. He also was the first to combine Judeophobia with anti-communism, as in the following quote:
Jews are either Bolshevists, undermining our government, or are shylocks in finance or commerce who gain control and command of Christians as borrowers or employers. It is repugnant to a true American to be bossed by a sheenie. And in some parts of America the Kikes are so thick that a white man can hardly find room to walk on the sidewalk. And where they are so thick, it is Bolshevism they are talking. Bolshevism, and revolution.
From such views the Identity religion developed. Among those credited with its founding was a young minister, Gerald Smith. Smith began his ministries in Soldier’s Grove, Wis., by revitalizing a Disciples of Christ congregation. In 1923, He accepted a pulpit at a church in Indianapolis, and soon built the congregation to more than 1,000. At that time, the Christian Evangelist noted that Smith was a prominent figure among the Hoosier Disciples. Throughout the 1920s, he moved to other pulpits in the Indianapolis area and, in 1929, left Indiana for the Kings Road Christian Church in Shreveport, La.
While at the Kings Road church, he worked with the Klan, not against it. Smith’s self-promotion and social activism soon alienated many of his wealthy backers. It wasn’t long before Smith aligned himself with one of the populist Huey Long. In 1934, he resigned his pulpit at Kings Road to work with Long’s Share the Wealth organization. In 1936, Smith endorsed for reelection Eugene Talmadge, the racist governor of Georgia, and aligned himself with another well-known fascist, Francis Townsend.
In 1939, Smith met Merwin Hart, head of Utica Mutual Life, and soon received support from the New York Economic Council. No doubt, Smith’s campaign against the CIO union figured prominently in the decision to support him. Living in Michigan at that time, Smith began broadcasting on WJR, a station owned by a Roosevelt enemy. There he received further support from leading industrialists, such as the Dodge and Olds brothers. In 1938, he supported the campaign of Arthur Vandenberg, a senator with fascist leanings. Smith also cultivated a friendship with Henry Ford.
In 1942, the FBI received a tip that Winrod helped Smith start The Cross and Flag, a notorious fascist publication that continued well into the 1960s. Following WWII, Smith moved to California and founded what has become the Identity religion. In the 1960s, he moved to Arkansas, and started several grandiose projects, one of which, the Christ of the Ozarks, was completed in 1966. It was soon followed by a Bible museum. His legacy is the Identity religion, which has become almost universal among far right groups today. It acts as the glue holding various factions of the far right together and justifying their hate.
American Eugenics
A more sinister aspect rose alongside racism in the early part of the 20th century - eugenics. Eugenics as applied in the 1920s can be defined as the creation of the prefect Aryan race and the elimination of all inferior individuals and races. It is so intertwined with racism in America that it is impossible to separate them. IQ tests were developed as an offshoot of the eugenics movement, as was Planned Parenthood. Moreover, eugenic laws passed in the United States served as the model for the Nazi Nuremberg Laws.
Most Americans have little understanding of the eugenics movement. Surviving groups have sought to outwardly distance themselves from a movement associated with the Nazis. It is commonly assumed the movement died beside the Third Reich, but this is not only wrong, it also is dangerous, because the eugenics movement is still alive and well today.
Author Edwin Black has traced the origins of eugenics back to biblical times and the Judeo-Christian concept of charity. After the Roman Empire adopted Christianity, the Canones Arabicia Nicaeni mandated the expansion of hospitals and other institutions for the needy in 325 A.D. Such institutions were also needed in England, and the church supplied them. Starting in the early 1500s, English agriculture underwent a change from small to large estate farming, idling thousands of farmers and contributing their numbers to the masses of needy. In 1530, King Henry VIII seized church property because the church refused to allow his marriage to Catherine of Aragon. Charity had now become a state responsibility. Although tending to the needs of the poor was expensive, the alternative of riots and revolutions was less appealing to the nobility.
By the end of the century, a distinct pauper class had emerged in England. Compulsory poor law taxes were assessed to each community to pay for housing the poor. The pauper class was viewed largely as arrogant and ripe for riots or revolution. The advancing Industrial Revolution only compounded the problems, as the poor were concentrated in urban slums, where sweatshops sprang up to exploit cheap labor. For 300 years after Henry VIII, many reforms were made in the poor laws, and the ruling class became ever more resentful of the poor tax. By the 1800s, they looked down on the poor as subhuman.
In 1798, English economist Thomas Malthus published a watershed theory on the nature of poverty and the social economic system. Malthus believed the population was growing at a geometric rate, while the food supply was only increasing linearly. The solution he called for was population control. He also maintained that charity promoted generation-to-generation poverty. Many of his supporters ignored his criticisms of an unjust social and economic system, and instead merely rejected the value of helping the poor.
Since the 1980s, the same attitude has been a mainstay of the Republican Party. Yet even in the Great Depression of the 1930s, there was no shortage of food, coal or any of the needs for a normal living standard for every American. There wasn’t even a money shortage. The Depression was the result of an inequitable distribution of wealth, with no means of delivering food to the hungry other than through private charity soup kitchens.
In 1851, Herbert Spencer, an editor on the free-trade journal The Economist, published his Social Statics. Spencer argued that man and society followed the laws of science, not of a caring God. He popularized the familiar term: “survival of the fittest.” He argued that the fittest would continue to prosper while the poor would become more impoverished until they died out naturally. Spencer denounced charity and aid to the poor. In 1859, Charles Darwin published his famous theory of evolution in Origin of Species. Spencer then published Principles of Biology in 1863, arguing that heredity is under the control of physiological units. In 1886, the Moravian monk Gregor Mendel published his classic experiments with peas from which he modeled a predictable heredity system.
Heredity provided a false basis for eugenics. In 1869, Francis Galton, the father of eugenics, published Hereditary Genius. Galton had never finished his medical studies at London’s King College, but instead had studied mathematics at Cambridge, where he became a devotee of the emerging field of statistics. Galton distinguished himself by recognizing patterns. In his book, Galton studied the genealogies of eminent scholars, artists and military men. He found that many of them were descendents of the same family and decided the frequency was too impressive to ignore. Galton then assumed that not only physical characteristics, but also mental, emotional and creative qualities were hereditary. Further, Galton reasoned that talent and quality could be sharpened by judicious marriages in a few generations into a race of highly gifted individuals. Galton suggested that by selective breeding of the very best, the human race could evolve into a prime species. Galton hoped to develop a regulated marriage process in which members of the finest families only married carefully chosen spouses.
Galton developed a protoscience in search of justifying data. His ideas of marriage became known as positive eugenics. However, with the 20th century arrived, a new form of eugenics developed: negative eugenics, calling for sterilization of the unfit. The spotlight of eugenics soon shifted from England to the United States, where it immediately took on a racist characteristic.
Breeding humans had been part of America from pre-colonial slave trade days. Only the strongest could survive the journey from Africa. On their arrival, the slaves were paraded about on the auction block for examination. Following the Civil War, America was primed for eugenics. In 1865 in upstate New York, the utopian Oneida Community declared in a headline that human breeding should be the foremost question of the age. As news of Galton’s work reached American shores a few years later, the Oneida community began its first human breeding experiment with 53 female and 38 male volunteers.
As the new century approached and the number of emigrants from eastern and southern Europe increased, eugenics became more popular as a means to purify American society. However, one would be amiss to blame the rise of eugenics in America solely on the massive immigration during the last half of the 19th century. Contributing to its rise was a good deal of racism and group hatred. American Indians were isolated on reservations. The isolation of groups judged as unfit became a cornerstone of negative eugenics. In the Southwest, much of the race hatred stemmed from the Mexican-American War, and absorbing thousands of Mexicans in the territory taken by the United States. On the West Coast, the race hatred took the form of the Chinese Exclusion Act barring immigration from China and blocking naturalization of those already here. In the South, race hatred reached a feverish peak, and a network of Jim Crow laws were passed to keep society pure.
In 1891, Victoria Woodhull, a leading feminist of the day, published a pamphlet with the unapologetic title The Rapid Multiplication of the Unfit. It called for both positive and negative eugenics. In 1896, former census director Francis Walker published “Restriction of Immigration” in Atlantic Monthly, evoking the specter of racial suicide beneath a rising tide of non-Anglo-Saxon immigration. Roughly 18 million immigrants arrived between 1890-1920.
By the turn of the 20th century, women were still barred from voting, and racial hatred was the norm. Reservations isolated Native Americans. White society considered blacks and Asians as second-class citizens and undesirables. Vigilantes often dispensed what passed for justice at the end of a hangman’s rope: from 1889-1918, mobs lynched 3,224 people. More often than not, the victims were black; 702 were white. Moreover, trivial reasons such as staring at a white woman, offensive language or other such minor infractions often sufficed as provocation for hanging a nonwhite person.
Eugenics was touted as a cure-all for society’s problems. Criminal analysis would move racial hatred and criminal behavior into the realm of heredity and eugenic cleansing. Eugenics considered disease and physical afflictions, such as tuberculosis and epilepsy, as hereditary disorders.
One of the first benefactors of eugenics in the United States was the Carnegie Institute. Following an infusion of bonds and other assets totaling $14 million from the founder in 1901, a special act of Congress in 1904 rechartered the institute. The new charter established the institute as one of the premier scientific organizations of the world. Twenty-four eminent individuals from science, government and finance were selected as trustees, including Elihu Root, Cleveland Dodge and John Billings. John Merriam was appointed president. The Carnegie Institute soon added a new science to its principal areas of investigations - negative eugenics.
Charles Davenport emerged as the driving force behind the American eugenics movement. Davenport, a sad character with a Harvard degree in zoology, came from a long line of Congregational ministers. His father was a real estate man who had founded two churches. He raised his family harshly, forcing members into long hours of Bible study.
Davenport approached the Carnegie Institute in 1902 to fund a study of evolution at the biological experiment station at Cold Spring Harbor where he worked. In 1903, the American Breeders Association (ABA), a group created by the Association of Agricultural Colleges and Experimental Stations, elected Davenport to its five-person permanent oversight committee. Davenport also was successful in pushing the ABA to adopt the views of negative eugenics. In 1904, the Carnegie Institute formally inaugurated the evolution center at Cold Spring Harbor, with Davenport as director.
Davenport’s work impressed the wealthy elite of New England and attracted more funding from the Carnegie Institute and Mary Harriman, the widowed heir to the railroad fortune of E.H. Harriman. Others who jumped aboard the movement were Henry Ford, John Kellogg, Clarence Gamble, J.P. Morgan and E.B. Scripps.
Davenport soon enlisted the help of Harry Laughlin, a Missouri schoolteacher and minister’s son. Davenport structured the Eugenics Records Office to further Laughlin’s career. At Cold Spring Harbor, Laughlin set out to identify the most defective and undesirable Americans, which he estimated at about 10 percent of the population. He toured Sing Sing and got the records of the inmates to prove for all time that criminal behavior was hereditary. He also toured New York’s State Asylum and the Connecticut school for the feebleminded. He then started training field workers to produce more eugenics records. Laughlin also targeted epileptics.
In early May 1911, the ABA created a special committee to study the best practical means of cutting off the defective germ-plasma of the American population. The stage was now set for removing undesirables. The ABA appointed Laughlin secretary of the committee. The advisory panel included Dr. Alexis Carrel of the Rockefeller Institute for Medical Research, Chief of the Bureau of Statistics O. P. Austin, and immigration expert Robert DeCouncy Ward, among other prominent advisers.
In mid-July 1911, the special committee met in Manhattan and systematically plotted a campaign to purge the blood of American people of the declining influence of these undesirable antisocial classes. The committee identified 10 classes of the socially unfit: feebleminded; pauper; alcoholics; criminals, including petty criminals; epileptics; the insane; the constitutionally weak; those predisposed to certain diseases; the deformed; and the blind and deaf. Not only did the ABA target the individuals afflicted, but also their extended families. The group agreed that sterilization of the extended families was desirable.
The eugenic committee supported an ambitious plan with priority on sterilizing those receiving custodial care, including those in poorhouses, insane asylums, prisons and other state agencies. This group comprised roughly 1 million people. The plan called further for sterilization of borderline cases of 7 million people judged by the ABA to be unfit to become useful parents or citizens. The estimated 11 million people targeted for the first wave was over 10 percent of the population. After completing the first wave, the plan called for sterilizing the extended families of those judged unfit.
The committee sought to bypass the courts in ordering the sterilization. It tried to define sterilization as a police function. In its view, once a eugenic board ordered sterilization of an individual, police would simply enforce the decision. Laughlin and his committee also suggested polygamy and systematic mating to increase the bloodline of the desirables, and harsh laws to prevent births to any judged unfit. They called for restrictive marriage laws, forced segregation of undesirables and compulsory birth control in a global movement.
It was only a short step from theory to carrying out the plan. The first sterilizations occurred outside the law in parallel with the development of eugenics. In Kansas in the 1890’s, F. Hoyt Pitcher surgically asexualized 58 children confined in the Kansas Home for the Feebleminded. The citizenry denounced the doctor, and the board of trustees, which staunchly defended Pitcher and his work, reluctantly removed him. The doctor did not face charges.
About the same time, Dr. Harry Clay Sharp was castrating inmates at the Indiana Reformatory to cure convicts of masturbation. Again, the procedure was conducted outside the law. In 1899, Sharp read an article in the Journal of the American Medical Association (JAMA) written by Dr. Albert Ochsner, who recommended vasectomies for all convicts. After reading the article, Sharp performed the procedure on scores of inmates without anesthetics.
By 1906, Sharp claimed to have performed 206 vasectomies, even though the procedure was not legal. While Sharp was influential in the passage of Indiana’s sterilization law, he was by no means alone.
Rev. Oscar McCulloch of the Plymouth Congregational Church in Indianapolis was a leading reformer and promoter of public charity, while harboring a deep hate for the poor. Indiana law specified compulsory servitude for its paupers. They could be farmed out to the highest bidder.
McCulloch performed his own genealogical survey of Indiana’s wandering paupers called the Tribe of Ishmael, which quickly became a centerpiece of eugenics studies. McCulloch preached to his congregation that paupers were parasites, preordained to be nothing more.
While there were many evangelical ministers who served as officers in the eugenics movement and more were members, the connection to religion seems informal, depending solely on the individual minister involved. Yet few ministers spoke out against eugenics, and those who did so waited until the 1930s, after it was discredited and associated with the Nazis. The connection between eugenics, the Klan and religion is an area open to further research.
David Jordan, president of the University of Indiana, also lectured his students that paupers were parasites. In 1902 in his book Blood of a Nation, he first proposed the concept of blood as the immutable basis for race. Jordan left Indiana to accept a position as the first president of Stanford University.
Besides Jordan and McCulloch, Dr. J. N. Hurty, a staunch believer in eugenics, headed the Indiana State Board of Health. Hurty would later rise to become head of the American Public Health Association. In 1907, at the repeated urging of Sharp and Hurty, Indiana became the first state to pass eugenic laws calling for sterilizing undesirables. In 1905, legislators in Michigan first proposed sterilization laws; the next year in Pennsylvania a similar bill was introduced. Both measures failed, but the Pennsylvania bill was used as a model in Indiana. It passed with little debate in the Indiana House, 59-22 votes; in the Senate, 28-16.
In 1909, Oregon Gov. George Chamberlain vetoed a sterilization bill, noting that it did not require enough safeguards. That year, eugenic sterilization laws failed in several other states, including another attempt in Michigan and a first try in Wisconsin. But that year, sterilization laws did pass in three more states.
Washington State mandated sterilization of habitual criminals and rapists. Connecticut passed a law allowing medical staff to examine patients of two asylums for the feebleminded and their family trees to decide whether to sterilize. California passed a bill to allow castration or sterilization of convicts and residents of the state home for the feebleminded.
In the next two years, more states passed eugenic sterilization laws, including Nevada, New Jersey and New York. Iowa passed perhaps the most inclusive regulations, allowing the sterilization of criminals, idiots, feebleminded, imbeciles, drunkards, drug fiends, epileptics, and moral or sexual perverts.
Nonetheless, the American Breeders Association and the Eugenic Record Office remained frustrated with the progress of removing undesirables from the gene pool. Although several states had laws allowing forced sterilization, they were scarcely applied. Only in California, where more than 200 were sterilized, had the law been applied to more than a couple individuals. Moreover, public support for sterilization laws was lacking across the nation.
Following the death of Galton in 1911, the First Eugenic Conference was organized in London. Winston Churchill was scheduled to introduce the king at the conference and reportedly was concerned about the rising number of people judged to be mental defects. The organizers wanted Secretary of State P. C. Knox to send an official delegation. The State Department could not comply because the conference was a nongovernmental meeting, but Knox sent invitations to prominent American leaders on official letterhead. Knox, a former lawyer for Carnegie Steel, effectively used the State Department as the eugenics post office. American race theories dominated the conference held at the University of London.
The next big stride forward for the American eugenics movement came with the U.S. entry into WWI. Officials struggled with the task of classifying the 3 million draftees. Robert Yerkes, president of the American Psychological Association, and other eugenic activists pleaded for intelligence testing of the new draftees. They developed two tests for the army - the beta test for those who could read and write English, and a pictorial alpha test for those who could not read. The questions centered largely on popular culture.
Urbanites could pass the exam easily, while draftees from rural, isolated areas failed miserably. Even the questions in the pictorial tests were drawn from the latest pop culture. In the pictorial test, the subject was to draw in what was missing. Predictably, the results were dismal: 47 percent of all whites 89 percent of all blacks failed. Nonetheless, Yerkes claimed that feeblemindedness was the lowest in the following Anglo groups: 0.1 percent in the Dutch, 0.2 percent in Germans and less than 0.05 percent in Swedes.
During the war, eugenic groups multiplied in America. In 1914 the Race Betterment Foundation was founded by Dr. John Kellogg, a member of the corn flakes family and the Michigan state board of health. The group attracted some of the most radical elements in the eugenics movement.
The next big advance for eugenics came on May 2, 1927, in a Supreme Court ruling of Buck vs. Bell. The case revolved around Carrie Buck and the sterilization law of Virginia.
Shortly after WWI, Virginia confined Carrie’s mother, Emma, to a home for the feeble-minded. Virginia had a well-established program of sweeping social outcasts into such homes. Carrie’s mother was a destitute widow convicted of prostitution, making her an ideal candidate for the home for the feebleminded, where she remained for the rest of her life.
Carrie, an only child, was placed with the Dobbs family. Although she was a good student, she was taken out of school when she reached sixth grade. In 1923, Carrie became pregnant after she was raped - by a relative of the foster parents. The Dobbses filed commitment papers, declaring Carrie feebleminded and promiscuous.
In 1924, Virginia passed a sterilization law for the feebleminded. The case attracted the attention of Laughlin and other prominent individuals from the eugenics movement. To further their efforts and strengthen their court case, they had Carrie’s daughter declared feebleminded at age 3 - although she did well in school. Eventually, the case reached the Supreme Court. Chief Justice was William Howard Taft. Only Justice Pierce Butler ruled against sterilizing Carrie. The opinion written by Justice Oliver Wendell Holmes Jr. closed with words that still echo throughout time: “Three generations of imbeciles are enough.” Yet in 2000, the Court elected George W. Bush, a fifth-generation racketeer, to be president.
Until the Buck ruling, many states with sterilization laws avoided using them. Of the 23 states with such laws, Maine, Minnesota, Nevada, New Jersey, South Dakota and Utah recorded no sterilizations. Idaho and Washington State recorded one each; Delaware recorded five cases. Kansas had recorded 335; Nebraska, 262; Oregon, 313; and Wisconsin 144. California recorded 4,636 cases.
From 1927-40, the totals increased at a horrific rate. North Carolina recorded 1,017 cases of forced sterilization; Michigan, 2,145; Virginia, 3,924; and California, 14,568. In total, no less than 35,878 people were sterilized. Following Laughlin, the Nazis adopted a law in 1933 that opened the way to sterilizing more than 350,000 people. “Laughlin proudly published a translation of the German Law for the Prevention of Defective Progeny in The Eugenical News. In 1936, Laughlin was awarded an honorary degree from the University of Heidelberg as a tribute for his work in ‘the science of racial cleansing.’”
Throughout the 1920s, the eugenics movement attracted people from diverse causes. The leading proponent of birth control, Margaret Sanger, was committed to Social Darwinism and eugenics. Through her radical oratory and her publication, Birth Control Review, she helped to legitimize the appeal of eugenics.
The eugenics movement attracted another leading figure of the time, Lucien Howe, a pioneering ophthalmologist. As a leading expert, Howe was well aware that hereditary blindness is rare. Yet Howe supported sterilizing the blind, banning marriage of anyone blind, and even led the charge to extend sterilizations to relatives of the blind.
With the gathering strength of the eugenics movement, Harry Laughlin sought to integrate the movement inside various government agencies. One long-standing target for Laughlin was the Census Bureau. The bureau ignored Laughlin’s suggestion that each person be classified by race, such as German Jew or Dutch Jew. It did allow Laughlin to conduct a survey of those in state custodial and charitable facilities, as well as jails.
Unable to gain further inroads into the Census Bureau, Laughlin turned to other government agencies. He found ready acceptance in Virginia, largely due to Walter Plecker, the registrar of vital statistics. Plecker, an extreme racist, soon used his hatred of race mixing, or “mongrelization of the white race by lesser races,” to shape one of the nation’s most restrictive marriage laws. With the help of Anglo-Saxon clubs, the 1924 Virginia legislator passed the Racial Integrity Act, labeling anyone with more than one-sixteenth nonwhite blood as a nonwhite. Originally, the act called for one sixty-fourth, but the legislature amended it because too many of the leading families of Virginia boasted of their Indian ancestry. The penalty for falsely registering one’s race was a year in jail.
The dilution of the bill incensed Plecker. His fury was further inflamed when Congress granted citizenship to all Indians not already naturalized, less than two weeks after the passage of Virginia’s Racial Integrity Act. Plecker’s problem was with Indians mixing with both whites and blacks, so under the act, they could claim exemption from being classed as non-white. Most of Virginia’s Indian population were poor and lived in rural areas, making them an easy target for reclassification as Negroid, despite vigorous protest. In one case, Plecker ruled that if a comb could pass through the hair of an individual, he or she would be classified as Indian; if not, as Negroid. The comb test was perhaps as good as any other method Plecker used in reclassifying Virginia’s Native Americans. He used his racist tactics to expunge the Indian as a racial classification in Virginia.
The eugenics movement was largely unable to penetrate the federal government and affect policy decision, with one notable exception, the immigration law. After 1890, the American eugenicists considered the immigrants arriving from Europe to be genetically inferior. The massive number of people fleeing Europe heightened their fears. More than 8 million immigrants arrived between 1900-09. The newly arrived came mostly from southern and eastern Europe. Many of them were Catholic or Jewish. The influx of immigrants contributed to the urbanizing of the country. The 1920 census revealed for the first time that more people lived in urban rather than rural areas. The resulting reapportionment was hard-fought. The House increased the number of representatives to 415 to preserve as much as possible the old districts and power structure. The Red Scare and the rise of the Klan added further fuel to the fury.
A key figure in the success of eugenicists on immigration policy was Albert Johnson, a fanatic racist and eugenicist. He was raised at the edge of the Mason-Dixon Line in Illinois during the turbulent post-Civil War reconstruction period. He later became a big city newspaperman before moving to the small town of Hoquiam, Wash. In 1912, Johnson ran for Congress and won a seat in the House. In 1919, he began a 12-year tenure as chairperson of the Immigration and Naturalization Subcommittee in the House.
While there had been immigration restrictions before Johnson’s chairmanship, these were reactionary in nature and not eugenically motivated. Johnson took a dim view of all immigration, and tried to restrict it on eugenics grounds. One of his first actions was to appoint Laughlin as his eugenics expert. Laughlin and other eugenicists had long urged the classification of immigrants along strict biological and racial lines, with intelligence testing before they left Europe. The goal was to restrict immigration using quotas before the mass arrivals started in 1890.
Laughlin’s inflammatory rhetoric, supported by funding from the Carnegie Institute, began producing results in Congress. Due to the political explosiveness of the issue, Congress wavered. In 1923, Labor Secretary James Davis signaled a willingness to cooperate in setting up an overseas eugenics network. Laughlin then toured Europe as a special immigration agent.
In 1924, President Calvin Coolidge signed an immigration act that called for vast changes. For instance, the Italian quota was cut from 42,000 a year to just 4,000. The act limited immigration to just 2 percent of the reported national origin of the 1890s census. However, the act produced a firestorm in Congress, with many arguing the validity of the data used to set the quotas.
The act required the Census Bureau report its methods in fixing base figures to a quota board, made up of Secretary of Commerce Herbert Hoover, Secretary of State Frank Kellogg and Secretary of Labor James Davis. In 1927, the quota board sent a letter to Coolidge, cautioning that the figures were not satisfactory.
Laughlin was only partially successful in setting up his European testing centers. The system was installed in Belgium, England, Ireland, Holland, Poland, Italy, Czechoslovakia, Denmark, Germany and Sweden. On average, roughly 80 percent of would-be immigrants from those countries were eugenically inspected; about 88 applicants out of every 1,000 were rejected as mentally or physically defective. However, Laughlin’s inspections were short lived due to a shortage of funding and government objections from Europe.
Nevertheless, Laughlin’s major achievement in establishing eugenics as part of immigration was the passage of the 1924 Immigration Act and the setting of quotas. Both stood as national policy until 1952.
The American Breeders and the Eugenic Society were not content with sterilization and segregation methods as a gradual means to eliminate the defective. By 1910, they also were proposing euthanasia using a lethal chamber. The forerunner of the modern gas chamber was thought to be humane. Euthanasia was listed as the eighth of nine methods of eliminating defectives from society. Many prominent professional people in both medicine and psychology came to support euthanasia, including Margaret Sanger and others within her birth control movement.
On Nov. 12, 1915, euthanasia and eugenics became front-page news across the country. One Dr. Harry Haiselden refused to provide treatment for a newborn suffering from extreme intestinal and rectal abnormalities. There was a question if the baby could be saved; yet the doctor withheld treatment. Emboldened by some favorable press coverage, the doctor admitted to euthanizing others. Haiselden later brought to light the case of the Illinois Institution for the Feebleminded in Lincoln. The institute fed patients with milk from its cows, knowing the herd was infected with tuberculosis. Eugenicists believed death from tuberculosis was the result of defective genes.
However, the real story behind the gates of this home for the feebleminded was euthanasia by neglect. Between 1904-09, 12 percent of Lincoln residents died. As many as 30 percent of the epileptic children died within 18 months of admission, and many residents died before age 10. In 1930, the life expectancy of those judged feebleminded was just 18.5 years; today, the rate for those classed as mentally retarded is 66.2 years.
Euthanasia through neglect was all too common in America in the 1920s and 1930s. In fact, it is still commonplace in America today where adequate health care has now become a luxury only affordable by the wealthy. An excellent example is the case of Legionnaires disease. The discovery of the disease occurred in 1976, with an outbreak among attendees of an American Legion celebration of the bicentennial. It took researchers more than six months to discover the bacteria responsible for the outbreak that caused numerous deaths and a near panic. Yet further investigation of blood samples from other deaths showed that a previous outbreak of the disease had occurred in 1965 at St Elizabeth’s Psychiatric Hospital in Washington, when 14 patients died.
The legionnaires were upright citizens and voters, while the residents of St Elizabeth’s were weak and expendable. No uproar ensued on their deaths, which were checked off as routine.
Neglect of the poor and weak characterizes the right wing in America. It serves the same purpose as eugenic euthanasia of bygone days. Further, it provides society with a guiltless solution and the excuse of being unaware, like the good German citizens living next to a concentration camp.
As mentioned earlier, the American eugenics movement began to attract global attention at the First Eugenic Conference in London, where American views dominated. Plans for further conferences were made. The second was held in Paris, but World War I forced postponement of the next one.
Following the war, Germany would not cooperate with the International Federation of Eugenic Organizations because of bitter animosity remaining between Germany and England, France and Belgium. However, German eugenicists’ bonds with Davenport remained firm, due largely to generous funding of German eugenic research by the Rockefeller Foundation and the Carnegie Institute. American laws soon became an inspiration for the German racists, including Adolf Hitler. While in prison for the Beer Hall Putsch, Hitler studied textbooks that quoted Davenport and other American eugenicists. The president of the American Eugenic Society received a letter from Hitler praising The Passing of the Great Race by Madison Grant, which Hitler described as his bible. It called for eliminating the unfit.
It would be unwise to attribute Hitler’s extreme racist views to the American eugenics movement. Nonetheless, by cloaking his racism in science, Hitler was able to attract additional followers who would have otherwise remained neutral. The intellectual view of eugenics that Hitler adopted was strictly from the American eugenics movement. One of the books that Hitler studied was Foundation of Human Heredity and Race Hygiene, written by three American eugenicists. In Germany, Julius Lehmann published the book. Lehmann was at Hitler’s side during the Beer Hall Putsch. It also was Lehmann’s villa where Bavarian officials were held hostage in the immediate aftermath of the failed coup.
The influence of the American eugenics movement on Hitler can be seen in several quotes from Mein Kampf.
The demand that defective people be prevented from propagating equally defective offspring is a demand of the clearest reason and if systematically executed, represents the most humane act of mankind.
It must see to it that only the healthy beget children ….
The prevention of procreative faculty in sufferers from syphilis, tuberculosis, hereditary diseases, cripples, and cretins is no crime... A prevention of the faculty and opportunity to procreate on the part of the physically degenerate and mentally sick, over a period of only six hundred years, would not only free humanity from an immeasurable misfortune, but would lead to a recovery which today seems scarcely conceivable ….
… The result will be a race which at least will have eliminated the germs of our present physical and hence spiritual decay.
Speaking English, wearing good clothes and going to school and to church do not transform a Negro into a white man. Nor was a Syrian or Egyptian freedman transformed into a Roman by wearing a toga and applauding his favorite gladiator in the amphitheater.
… since it restores that free play of forces which must lead to a continuous mutual higher breeding until at last the best of humanity, having achieved possession of this earth, will have a free path for activity in domains which lie partly above it and partly outside of it.
… that the state represents no end, but a means. It is, to be sure, the premise for the formation of a higher human culture, but not its cause, which lies exclusively in the existence of a race capable of culture.
Every racial crossing leads inevitably sooner or later to the decline of the hybrid product as long as the higher element of this crossing is still existent in any kind of racial unity.
The first quote from Mein Kampf above is an eerie echo of the Justice Holmes majority opinion in the Buck case:
It is better for all the world if instead of waiting to execute degenerate offspring for crime, or to let them starve for their imbecility, society can prevent those who are manifestly unfit from continuing their kind. The principle that sustains compulsory vaccination is broad enough to cover cutting Fallopian tubes. Three generations of imbeciles are enough.
Hitler was acutely aware of the progress of eugenics in the United States, as evident in Mein Kampf in which he notes the passage of quotas for immigration. Hitler attributed the superior culture of the United States compared to South America to a large Germanic population that did not interbreed with the lesser, native population like the Spanish. Throughout the pages of Mein Kampf, one can note the similarity of Hitler’s rantings to the policies of the American eugenicists. Perhaps the best summarization of Hitler’s views comes from Mein Kampf: “The Germanic inhabitant of the American continent, who has remained racially pure and unmixed, rose to be master of the continent; he will remain the master as long as he does not fall victim to defilement of the blood.”
During the first two decades of the 20th century, American eugenicists led the way. With the rise of Hitler in Europe, Germans became copartners in eugenic research, but it was American money that kept German eugenic research and science alive during the hyperinflation of the early 1920s. One noted beneficiary of Rockefeller Foundation money was the Kaiser Wilhelm Institute for eugenic research, with its own institutes for psychiatry, anthropology and brain research.
Throughout the 1920s, German eugenicists continued to gain stature in the global movement. On Jan. 30, 1933, Germany assumed the leading role in the eugenics movement with Hitler’s rise to power. It did not take Hitler long to impose his eugenic views. On July 14, 1933, Hitler issued the Reich Statute Part 1 No. 86, the Law for the Prevention of Defective Progeny, calling for compulsory sterilization of defectives. The nine categories listed were feebleminded, schizophrenia, manic-depressive, Huntington’s cholera, epilepsy, hereditary body deformities, deafness and hereditary blindness. Alcoholism, the last category on the list, was optional to avoid confusion with ordinary drunkenness.
The Nazis announced that 400,000 Germans would be subjected to the law immediately. The program began on Jan. 1, 1934. The Nazis created a massive sterilization infrastructure with more than 205 local eugenic courts and 26 special eugenic appellate courts. The law required doctors to report suspected patients and to provide their confidential records.
The law was essentially the same one that Davenport and Laughlin proposed for the United States and passed in a majority of states. While most of the world reacted in shock and horror to the inhumane regime of the Nazis, American eugenicists covered developments in Germany with fascination and joy. The Journal of the American Medical Association reported on the Nazi law as if it were a routine health measure, like vaccines. The Rockefeller Foundation continued to fund additional Nazi eugenics studies until the outbreak of war in Europe.
In 1933, after an aggressive campaign to secure a contract with Germany, IBM designed the first Nazi census. It was IBM technology that aided the Nazis in carrying out the Holocaust. It would have taken an army of workers years to manually sort through all the records, but with the IBM’s Hollerith machines, the same task could be completed in hours.
It was not until 1936 that the eugenics movement experienced a decline due to the Nazi threat in Europe. By then, Germany was considered a threat to the peace in Europe, and refugees were flooding the world.
Central to eugenics studies was research on twins. Several small studies on twins were conducted in England and the United States. However, with the rise of Nazism, the lead in twin research would pass to Germany, now in the forefront of eugenics research. Still, the seed money came from the Rockefeller Foundation, as the following telegram of May 13, 1932, from the foundation’s headquarters to its Paris office reveals:
JUNE MEETING EXECUTIVE COMMITTEE. NINE THOUSAND DOLLARS OVER THREE YEAR PERIOD TO KWG INSTITUTE ANTHROPOLOGY FOR RESEARCH ON TWINS AND EFFECTS ON LATER GENERATIONS OF SUBSTANCES TOXIC FOR GERM PLASMA. NATURE OF STUDIES REQUIRES ASSURANCE OF AT [Rockefeller’s director of science in Europe - Augustus Trowbridge]
The chief beneficiary of the Rockefeller seed money was Dr. Otmar Freiherr (Baron) von Verschuer. Von Verschuer was a violent anti-Semitic and German nationalist who had taken part in the Kapp Putsch in 1920. In 1922, he outlined his nationalistic eugenic position in a student article, “Genetics and Race Science as the Basis for National (Völkische) Politics.” By the time of the Beer Hall Putsch, von Verschuer was lecturing that fighting the Jews was integral to Germany’s eugenics battle. In 1935, he left the Institute of Anthropology to establish Frankfurt University’s new Institute for Hereditary Biology and Racial Hygiene. By 1937, von Verschuer gained the trust of the Nazis and, within two years, was describing his role as pivotal to Nazi supremacy.
After the Nazis seized power, the American eugenicists and medical media still praised von Verschuer’s work. Such prestigious American medical journals as the Journal of the American Medical Association cited his research. Rockefeller money continued to flow to him. It was not until 1936, after Raymond Fosdick became president of the Rockefeller Foundation, that funding for German eugenics research slowed. However, funds were readily available if the research omitted the word eugenics and was repackaged as research in genetics, the brain, serology, etc.
In June 1939, the Rockefeller Foundation tried to deny that it was funding Nazi science. This was a lie, because the Rockefeller trust was sending money through the Emergency Fund for German Science. The sleight of hand provided the foundation with a window of deniability. Funds to von Verschuer continued through the war years, supporting several concentration camp experiments. In 1943, he received funding from the German Research Society for experiments packaged under the label of serology. The experiments required large volumes of blood from twins at Auschwitz.
Most readers have probably never heard of von Verschuer, yet everyone is aware of the horrendous and hideous experiments carried out on Auschwitz prisoners at his beckoning by a former Ph.D. candidate of his, who remained his collaborator throughout the war. This former student who provided the blood samples for the study was Dr. Joseph Mengele, the notorious “Angel of Death.” Hence the trail of Rockefeller money leads directly to the gates of Auschwitz and some of the most gruesome experiments ever carried out on humans.
While Mengele escaped to South America to avoid war crimes charges and a sure date with the hangman, the Allies never charged von Verschuer with war crimes or crimes against humanity. In 1946, the Die Neue Zeitung, an organ of the U.S. occupying power, published an article listing all the doctors who fled Germany. On May 3, it followed with accusations against von Verschuer by Robert Havemann, a communist and chemist who had resisted the Nazis. He openly accused von Verschuer of using Mengele to get eyeballs and blood from those murdered at Auschwitz. Von Verschuer dictated a sworn statement to the occupation-appointed administrator of the Kaiser Wilhelm Institute that he had always opposed racial ideas. He further swore that Mengele himself was transferred to Auschwitz against his will. In fact Mengele could not wait to get involved in the war, and enlisted.
Havemann organized a committee of scientists at Kaiser Wilhelm Institute to examine the evidence against von Verschuer. The committee concluded that he had engaged in despicable acts in concert with Mengele. The report was sealed for the next 15 years. Then a second board found von Verschuer innocent of committing any crimes or transgressions against inmates of Auschwitz. Von Verschuer’s record was expunged of any transgressions, and he soon became a respectable scientist in Germany and the United States.
In 1949, Verschuer became a member of the American Society of Human Genetics, newly created by eugenicists. The first president of the society was Hermann Muller of Texas, a former Rockefeller fellow who had worked at the Kaiser Wilhelm Institute in 1932. In 1960, under international pressure to continue the hunt for Nazis, an investigation opened to examine the connection between von Verschuer and Mengele. It concluded there was none. Von Verschuer’s record, like those of so many other Nazis, had been completely whitewashed. In 1969, he was killed in a car accident; he never faced justice for his crimes.
It was not until 1940 that the Carnegie Institute stopped funding Laughlin and the Cold Spring Harbor Center. In 1947, a Carnegie administrator overseeing the dismantling of Cold Spring contacted the Dight Institute, an independent eugenics research organization at the University of Minnesota. In 1948, the Dight Institute agreed to take the records about individual traits and family documents if Carnegie defrayed the shipping cost. Six months later, the Minnesota Historical Society agreed to take a half-ton of books and family genealogical books. The New York Public Library took an additional 1,000 volumes of family genealogical books.
In December 1946, the United Nations passed Resolution 96 (I), which embedded genocide into international law. It reads as follows:
“Genocide is a denial of the right of existence of entire human groups, as homicide is the denial of the right to live of individual human beings; such denial of the right of existence shocks the conscience of mankind, results in great losses to humanity in the form of cultural and other contributions represented by these human groups and is contrary to moral law and the spirit and aims of the United Nations.”
Shortly after the passage of Resolution 96, the UN ratified the Treaty Against Genocide. The treaty listed five categories of genocide:
Killing members of the group.
Causing serious bodily harm or mental harm to members of the group.
Deliberately inflicting on the group conditions of life calculated to bring about its physical destruction in whole or in part.
Imposing measures intended to prevent births within the group.
Forcibly transferring children of the group to another group.
Under the categories listed above, aspects of past and present policies of the United States and Canada, including ghetto-like reservations, are considered genocidal under the international treaty. Also, the policies of many international companies, especially those engaged in oil exploration and mining, are equally guilty of genocide in the remote areas of South America, Asia and Africa. However, the UN has failed to pursue a single case of genocide against any corporation.
Eugenics, like fascism, did not die with the end of WWII. Rather, during the war, it began to morph into more socially acceptable forms. In fact, one of the largest sterilization campaigns in the United States took place in 1946-47, in the North Carolina’s Winston-Salem school district.
In 1941, the American Eugenic Society helped set up a Department of Medical Genetics at Wake Forest Medical School with money from the Carnegie Institute. Eugenics Research Association Vice President William Allan chaired the new department. Following Allan’s death in 1943, Dr. C. Nash Herndon took over. Herndon was an advocate of forced sterilization. By 1943, he claimed to have sterilized about 30 individuals, mostly blacks.
In 1946, the Bowman Gray (Memorial) Medical School in Winston-Salem was founded by Gordon Gray, a close friend and frequent golfing partner of Prescott Bush. The school kept extensive eugenic records of children with diseases believed to be inherited, which included low IQ children.
Herndon and Gray, with the help of Dr. Clarence Gamble, heir to the Procter and Gamble soap fortune, began a program to administer an IQ test to all Winston-Salem schoolchildren. Below some arbitrary cut-off point in the test scores, children were selected for sterilization. The program extended to nearby Orange County with money from James Gordon Hanes, a trustee of Bowman Gray Medical School and underwear mogul. Hundreds of children in North Carolina were sterilized in the program. Wake Forest is still uncovering its past association with the eugenics movement.
The Bush Family & Eugenics
In 1950-1951, John Foster Dulles, chairman of the Rockefeller Foundation, led John D. Rockefeller III on a world tour, focusing on the need to stop the expansion of the nonwhite populations. In the fall of 1952, Rockefeller and Dulles established the Population Council with money from the Rockefeller fortune. The American Eugenics Society soon moved its Yale University headquarters into the offices of the Population Council, and the two groups merged. In 1953, Dr. Herndon became president of the American Eugenic Society, and its work continued to expand with money from the Rockefellers.
In the early 1950s, Gordon Gray was appointed as the first director of the Psychological Strategy Board under Truman. Later in 1958, Gray became National Security Adviser to Eisenhower. Gray’s son, C. Bowden, served as legal counsel to George H. W. Bush (Prescott’s son) throughout the evolving Iran-Contra scandal.
In 1958, Prescott Bush and Gordon Gray, who were President Eisenhower’s frequent golfing partners, helped secure an appointment for William Draper to chair a committee advising Eisenhower on the use of military aid to other countries. He was a relative of Wickliffe Draper. Dillon and Read employed him the 1930s. He helped Prescott Bush float the largest bond issue for Nazi Germany, and later served in postwar Germany as head of the economic unit in charge of dismantling the cartel system.
Draper was a racist and major funding source for the eugenics movement. He used his position as committee head to direct its focus away from military aid to the danger of overpopulation in third world countries. The Eisenhower administration dismissed his racist views. Draper went on to fund the Population Crisis Committee with money from the Rockefellers and du Ponts. In the 1960s, he served as an adviser to LBJ. He was instrumental in getting the Johnson administration to use the overseas aid program to fund birth control in nonwhite countries.
The Bush-Rockefeller connection goes back before WWI to Samuel Bush, president of Buckeye Casting. Samuel Bush also was director of several Ohio and Pennsylvania railroads that worked closely with the Ohio-bred Standard Oil. Standard held a minority interest in Buckeye Castings, and Rockefeller required railroads transporting Rockefeller oil to buy all their couplings and related railroad equipment from Buckeye.
George H. W. Bush, Prescott’s son, was a vocal supporter of Draper’s policies. In 1964, he campaigned in Texas against the Civil Rights Act. In 1969, as a member of Congress, Bush arranged hearings on the dangers posed by the birth of too many black babies.
In 1972, as ambassador to the United Nations, George H. W. Bush arranged the first official contract between the American government and the Sterilization League of America. By then, the league had changed its name, yet again, to the Association for Voluntary Surgical Contraception. This contract burdens the United States taxpayer with the cost of sterilization programs in the nonwhite third world. Dr. Clarence Gamble later set up the Pathfinder Fund, whose primary objective is to break down the resistance to sterilization in third world countries.
In the 1980s, as vice president, George H. W. Bush urged Reagan to appoint William Draper’s son Bill as administrator of the United Nations Development Program, an organization connected with the World Bank and charged with supervising population control. Bush also was in on the appointment of Bill Draper to the Export-Import Bank. During the 1980s, the Export-Import Bank, at the urging of the Reagan administration, served as a funnel to provide Saddam Hussein with funds and credits during the Iran-Iraq war.
The Bush and Draper families shared close friendships going back to the 1920s. Bill Draper was co-chairman for finance and head of fund raising for the 1980 George H. W. Bush for President campaign. The Pioneer Fund was established by Wickliffe Draper. Charles Murray, the Pioneer Fund’s best-known expert, has served as adviser to many of George W’s top consultants, and is often quoted by them. He directly influenced the repressive welfare programs of Tommy Thompson and NYC Mayor Giuliani, and was a consultant to Thompson on changes in the Wisconsin welfare system. Murray’s books, The Bell Curve and Losing Ground, both about the inferiority of blacks, serve as bibles for the school privatization and anti-welfare movements in the United States. Thus the racist policies of the Bush family extend into George W. Bush’s administration.
It will be noted from the foregoing what a tight, small group the postwar eugenics movement is. American fascism is not broadly based; it is concentrated in a few key wealthy families, with links by marriage to a larger circle. Many of these people also had key posts in the Eisenhower administration. Ike was certainly no supporter of fascism; he expressed hatred for the Nazis, and Germans in general, countless times in letters to his wife. Yet his administration was littered with Nazi supporters. In essence, he was duped. However, the old general was not a complete fool. In his farewell address, he forewarned about the military-industrial complex, a polite description for postwar fascism.
It is undeniable that the tentacles of eugenics extend into such causes as birth control, population control and Planned Parenthood. When such organizations and policies are under democratic control, they can do much to alleviate poverty, human misery and famine.
However, the Cold Spring Harbor Laboratory is still operating. Currently, it is a leader in the human genome project. While the genome project will undoubtedly provide many future medical benefits, it could equally provide weapons of mass destruction, such as bioweapons or even more evil genome-specific bioweapons. The Project for the New American Century (PNAC) describes genome-specific weapons as politically useful tools. PNAC serves as the blueprint for the George W. Bush administration, with many members closely associated with PNAC.
With the Bush administration’s disregard for human rights and the ban on nuclear testing, it is cause for alarm to find Cold Spring Harbor firmly controlled by the same families involved in the American eugenics movement. Current directors William Gerry and Allen Dulles Jebsen are the grandsons of Averell Harriman and Allen Dulles, respectively. When such policies and organizations slip under the control of families like the Bushes and Rockefellers they can be used as modern-day weapons of genocide.
The legacy of the 1920s is not one of flappers and speakeasies. Its true legacy is one of brutal repression. The leaders of corporate America were successful in purging socialists and union organizers through a network of hard-right “patriotic” groups. The seeds of fascism were successfully sown in the 1920s, and grew into full-blown fascist groups during the economic turmoil of the 1930s.
In 1929, the economy sank into a deep depression, a fitting tribute to the failed laissez-faire economic policies of the decade’s three Republican administrations. In May 1932, WWI veterans came to Washington D.C., demanding payment of their deferred bonuses to help them survive the Depression. On May 24, Gen. Alfred Smith, Chief of G2 (Army intelligence), and Gen. Douglas MacArthur met to consider carrying out Emergency Plan White, designed to suppress domestic unrest. Charged with preparation was Gen. George Van Horn Moseley, who held extreme views on eugenics and immigration; following his retirement, he became a pro-Nazi figure. He and MacArthur were convinced the Bonus Marchers had fallen under communist control. Moseley was insistent on removing the marchers by force.
In one of the most hateful acts of all time, President Hoover ordered the army to expel the Bonus Marchers from Washington, D.C. Late in July, the army attacked the marchers using tear gas, cavalry, sabers and bayonets. Two officers involved in the attacks were George Patton and Dwight Eisenhower.
Summing up, the Nazis’ plan for world domination involved several facets, like a many-headed hydra. The cartel agreements went far beyond establishing monopolies and, in fact, were a major part of the Nazi war plan readily entered into by the leaders of corporate America. With fascism’s support for big business came extreme anti-unionism.
Cartel agreements had two effects on WWII. First, they hindered production of munitions. Second, they shifted the geopolitical balance in South America to the Nazis. Most of the cartel agreements excluded American companies from expanding into South America, while German firms were free to do so. Once the war started, these German firms in South America were used to evade the British blockade, prolonging the war.
Nazi influence in South America continued after the war. Once safely in South America, Nazi war criminals became military advisers and trained their host country’s security forces. The result has been a series of coups overthrowing reformist governments, followed by brutal dictatorships with their accompanying death squads. The Nazi influence in Argentina was apparent as recently as the Falkland Islands War, in which the Argentine air force achieved some success. The Argentine aircraft industry is the direct product of ex-Nazi engineers.
(Click here for Chapter 3 Bibliographical notes)