10

“The Present Ruling Class of Germany”

Henry Morgenthau, Jr., had long led the opposition within the U.S. government to any reconciliation with Nazi Germany. He was secretary of the treasury, a New York Democrat (as were Roosevelt and Pell), and a Jew. Morgenthau’s views concerning Germany enjoyed relatively broad public support in the U.S. and won him some political allies in the Justice Department and the War Department. But the State Department’s specialists viewed him as a dangerous rival for control of U.S. foreign policy.

Much of Morgenthau’s popular appeal stemmed from his arguments against clemency for Nazi war criminals. For much of the U.S. public, German industrialists like Gustav Krupp, steel baron Friedrich Flick, and the IG Farben executives were an integral part of the Nazi power structure and shared direct responsibility for a long list of atrocities. Further, there was widespread suspicion in the U.S. that Germany was in some sense intrinsically evil and would rise from the ashes of World War II to instigate new and still more deadly conflicts unless it was stripped of the economic and military capacity for conducting war. Limiting this German enemy, as Morgenthau’s supporters saw things, required a high degree of postwar cooperation between the U.S. and the USSR.1

Morgenthau’s legal advisors at the Treasury Department favored a tough line on Nazi crimes. It was unthinkable that Germany would be permitted to legalize mass murder and the looting of an entire continent, they argued. If previous international agreements on war crimes had failed to deal with Nazi-style genocide, then justice demanded that new legal precedents be set. Morgenthau’s allies contended that substantially all of the economic, political, and military elite of wartime Germany was implicated in one way or another in the Nazis’ crimes. This was not the same as advocating collective German responsibility for Nazi crimes, though there was at times a tendency in that direction. The Treasury’s legal specialists often acknowledged that there were “good” Germans (including “good” German businessmen) and that ordinary Germans suffering under a dictatorship should not be held personally responsible for the criminal actions of their leaders. Even so, the very fact that the Nazis had so efficiently purged their opposition suggested that the economic and political leaders who had survived those purges and gone on to prosper under Hitler had materially aided the Nazis. There was also direct evidence of culpability of the German economic elite in some crimes, including the use of slave labor and the plunder of Jewish property.

The Treasury group’s strategy for postwar Germany favored what amounted to a massive antitrust action to break up the entrenched monopolies and cartels that were a prominent feature of the German economy. They contended that German corporate leaders should be held personally responsible for the institutional crimes that had been committed by the companies they led.² For Morgenthau, as for Herbert Pell, the systematic removal of the economic and political elite of Germany was necessary to ensure postwar stability in Europe—to “prevent World War III,” as the slogan went. The Germans had been responsible for two world wars within thirty years, they reasoned, and the only way to prevent the outbreak of a third war was once and for all to break apart the power structure of Germany, particularly its heavy industry.

In contrast, the men and women at State who favored the strictly legalist approach to war crimes usually backed a rapid reintegration of Germany into the postwar world. This meant a revitalization of German business and a postwar restoration of German finance and industry to a major place in the overall economy of Europe.

George F. Kennan was among the first State Department officials to grasp the connection between Allied policy on war crimes prosecutions and U.S. political and economic policy toward postwar Germany and the USSR. He began lobbying quite explicitly at least as early as 1943 for the Allies to abandon any efforts to try Nazi criminals after the war. Kennan was a junior diplomat at the time, but he laid claim to comment on such questions because, as second-in-command of the U.S. diplomatic staff in Berlin at the outbreak of war, Kennan had been interned by the Germans (in a luxury hotel) for several months.3 He had also long been a student of German affairs, and had been one of the State Department’s principal back-channel links to the German nobility and business elite.

Kennan’s wartime writings show that he was unable, or unwilling, to separate even the activities at Sobibor and Auschwitz from the carnage created by a more or less conventional war. “The day we accepted the Russians as our allies in the struggle against Germany,” he wrote in a 1944 memo, “we tacitly accepted as facts … the customs of warfare which have prevailed generally in Eastern Europe and Asia for centuries.”⁴ Kennan’s moral and intellectual failure cannot be attributed to a lack of information about the Holocaust, for the main picture of what was taking place in the death camps and slave labor centers throughout Europe was already widely known in 1944. Indeed, he wrote the memo precisely because of the Allied discussions concerning what was to be done about such atrocities. Kennan continues in his memoirs (where he quotes the 1944 memo) that even after the war, when the record of Nazi atrocities was laid out in all its grotesque detail, the Allies’ “punishment for war crimes” remained “a particular reason for the unhappiness I felt” over the postwar treatment of Germany.⁵

In a second wartime memo, Kennan explained his objections to purging Nazis from the German state and economic structure. First, the elimination of Nazi influence in Germany “is impracticable,” he said. The Allies could never cooperate well enough to carry out the task, and it would require a massive investigation that would undoubtedly be unpopular with the Germans.

Second, and most pertinent here, Kennan argued that even if a purge of Nazis could theoretically be successful, “we would not find any other class of people competent to assume the burdens [of leading Germany]. Whether we like it or not, nine-tenths of what is strong, able and respected in Germany has been poured into those very categories which we have in mind” for removal from power, namely those persons who had been “more than nominal members of the Nazi party.” Rather than remove the “present ruling class of Germany,” as he put it, it would be better to “hold it [that class] strictly to its task and teach it the lessons we wish it to learn.”6

The same faction at State that was most committed to a revival of the German economy was also highly influential in the execution of wartime U.S. policy concerning Jewish refugees. Both issues were seen as foreign affairs questions involving Germany, so both ended up on the desks of a handful of mid-level State Department officials. The results were tragic. Men like Elbridge Durbrow, R. Borden Reams, and John Hickerson prided themselves on their professed realism toward Germany in the midst of what they saw as a wartime hysteria that had produced exaggerated reports that Jews were being systematically murdered by the millions. Their most potent argument at the time was that the only effective way to end suffering in Europe was to defeat Hitler as quickly as possible. Policies that they opposed were said to divert resources from the war effort, hence were counterproductive in the long run.⁷ Meanwhile, the State Department’s key legal and political specialists, Green Hackworth and James Clement Dunn, operated on the assumption that the Nazi persecution of German Jews and of non-Jewish Germans was an internal German matter and thus outside the reach of international law.⁸

This was not a “conspiracy,” in the banal sense of that word, but these men did share common convictions concerning strategies for dealing with Germany and the USSR. As Kennan’s comments suggest, they reasoned that if the U.S. wished to avoid a post-Hitler social revolution in Germany, it would be necessary to have some “non-Nazi” Germans with whom to negotiate, and that such people had to already have a substantial measure of power within that country.⁹

They favored, in brief, that the U.S. make a sharp distinction between the ostensibly non-Nazi German economic and military elite, on the one hand, and Hitler’s inner circle, on the other. They saw the former group as essential to postwar reconstruction. Hitler’s inner circle, on the other hand, could be made publicly responsible for the war itself and for all Nazi atrocities, then disposed of as quickly as possible—except for Hitler himself, who as head of state involved certain legal difficulties. In this context, the wartime rescue of European Jews raised several problems: it would likely mean increased Jewish immigration to the U.S., for example, which many at State opposed for political and anti-Semitic reasons; it would heighten U.S. conflicts with Britain over Palestine; and it would tend to criminalize the German economic and military elite in the eyes of the U.S. public, thus undermining longer-term efforts to focus public hostility on the USSR rather than on Germany once the fighting was over.

This faction was not sympathetic to Nazism as such. Rather, it viewed Hitler, as Kennan put it, as “stamping out the last vestiges of particularism [sic] and class differences … [by] reducing everything to the lowest and most common denominator.”10 Many were strongly sympathetic to the German business and cultural elite, however, and charitable to the point of blindness to the compromises this stratum had made with Hitler.¹¹

Interestingly, both poles of the debate over Germany within the U.S. government tacitly acknowledged that Germany’s economic elite had been deeply implicated in the work of the Nazis, though the two sides drew nearly opposite conclusions from it. At the State Department, the complicity of much of the German elite was seen as one reason that war crimes trials should be restricted as much as possible, in order to ensure continuity of the core of German society after Hitler was gone. For Morgenthau at Treasury and for Pell at the UNWCC, the same complicity was seen as proof that German society should be fundamentally reorganized and that the political and economic elite of the Hitler period had to be completely removed from power.

Thus, the question of what to do with Germany after the war became tied up in complex questions of international economics, U.S.-Soviet relations, and war crimes enforcement. Political developments in one issue had immediate and often substantial implications for each of the other concerns. This was the context in which the controversies over the Morgenthau plan for postwar Germany and the establishment of the International Military Tribunal at Nuremberg were to be hammered out.

By 1943, important changes were also under way among the German economic elite, and these had an indirect but nonetheless important effect on political debate in the U.S. Up until the German defeat at Stalingrad in late 1942, Adolf Hitler remained the best thing that had ever happened to the German financial elite from a strictly business point of view—notwithstanding the Nazi party’s occasional flourishes of anticapitalist rhetoric. The sophisticated conservatives that dominated German business made the most of National Socialism. Virtually all major German enterprises adopted elements of Nazi ideology in their day-to-day operations, including the purging of Jews, decimation of labor unions, and exploitation of forced labor. Along the way, they invented a variety of triumph-of-the-will rationalizations for corporate brutality and theft.

But in early 1943, the German financial and industrial elite began to split on the future of Hitler. Increasingly, the very forces that they had helped set in motion were now dragging the whole of Germany toward catastrophe. Hitler had irrevocably blundered and, it was rumored, might even be mentally unbalanced. The banker Hjalmar Schacht—long the quintessential German establishment banker who had backed the Nazis since before Hitler came to power—left Hitler’s government. Even Oscar Henschel, whose weapons companies made extensive use of forced labor, claimed to have concluded as early as December 1942 that the military situation was hopeless.12

The economic elite turned their attention to self-preservation. But such planning, regarded by Hitler’s government as defeatist or even treasonous, could be carried out only under a thick veil of secrecy. Intriguingly, the existing social networks used by the economic elite to coordinate their actions and to secure influence within Hitler’s government provided some of the most effective “covers” for German corporate efforts to prepare for the postwar world.

The notorious Himmlerkreis, the Circle of Friends of Reichsführer SS Heinrich Himmler, is a good example of the dynamics of Germany’s high-level business networks during the decline of the Third Reich. The Nazis and leading German businessmen had jointly created the Himmlerkreis in the early 1930s as an informal communication link between the financial and industrial elite and the SS. Himmler sought the political and economic support of the business elite, and the elite in turn sought influence outside of official channels with the increasingly powerful police leader. Senior business leaders active in the Himmlerkreis included Siemens’ general director Rudolf Bingel, Unilever and Kontinentale Öl director Karl Blessing, steel industrialist Friedrich Flick, Dresdner Bank’s Karl Rache and Emil Meyer, shipping and oil executive Karl Lindemann, and board members or senior managers from the Deutsche Bank, RKG, IG Farben, Krupp, and a dozen other companies central to the German economy.13 As the SS grew as an economic power, the SS members of the Himmlerkreis often migrated to new positions on corporate boards, where they could secure government contracts and embody corporate loyalty to the regime. SS men and Nazi party activists who made this transition included Wilhelm Keppler (of the BRABAG brown coal combine and SS enterprises), Fritz Kranefuss (BRABAG, Dresdner Bank), and Ritter von Halt, who joined the Deutsche Bank board.¹⁴

Officially, the Himmlerkreis meetings were not for conducting business, because that would have suggested corruption in National Socialist circles. As a practical matter, however, the encounters served as an informal coordinating point for German industry’s negotiations with the SS on policy matters. IG Farben appears to have used Himmlerkreis meetings to seek support for the company’s vast forced-labor complex at Auschwitz, for example. The companies represented in Himmler’s circle became pacesetters in Aryanization, exploitation of concentration camp labor, seizure of foreign companies in the occupied territories, and similar business ventures that depended on SS cooperation.¹⁵

But as the war turned against the Third Reich, a number of business leaders in the Himmlerkreis began to cooperate in clandestine and semiclandestine contingency planning for the postwar period. Two of the best known of these groups, the Arbeitskreis für aussenwirtschaftliche Fragen (Working Group for Foreign Economic Questions) and the Kleine Arbeitskreis (Small Working Group), were nominally sponsored by the Reichsgruppe Industrie association of major industrial and financial companies. They brought together Blessing, Rasche, Kurt von Schroeder, Lindemann, and others from the Himmlerkreis with other business people such as Hermann Abs (Deutsche Bank), Ludwig Erhard (then an economist with the Reichsgruppe Industrie and later Konrad Adenauer’s most important economic advisor), Ludger Westrick (RKG, aluminum industry, nonferrous metals), and Philipp Reemtsma (tobacco, shipping, banking), and with Nazi business specialists such as Otto Ohlendorf (the former commander of the Einsatzgruppe D murder troops) and Hans Kehrl (SS business specialist).16 A half-dozen similar business forums emerged during the last years of the Third Reich. Most of these overlapped in membership, and all of them favored some variation of the “corporatist” strategy for empire articulated by Hjalmar Schacht, Abs, and others during the showdown over Aryanization in Vienna discussed earlier.¹⁷

A number of top German corporate officials initiated attempts to reach Allied governments with offers to serve as intermediaries in negotiations of a separate peace between Germany and the Western Allies. Men such as Hermann Schmitz and Georg von Schnitzler of IG Farben, the international lawyer Gerhardt Westrick (of the Albert & Westrick law firm, and brother of Ludger Westrick), and others were prominent in these efforts, precisely because it was they who had the international ties to powerful U.S. and British circles.¹⁸ OSS man Allen Dulles became the focal point of many of their efforts, as noted earlier.¹⁹ They extended somewhat similar peace offers from time to time to the USSR as well.²⁰

The German industrialists’ roles in these efforts have frequently been raised in their defense since the end of the war. Such activities are sometimes described as a form of resistance to the Nazi state, and there is some merit to that argument. But these industrialists wanted the Allies to permit Germany to keep most of what it had looted from Germany’s Jews and from Eastern Europe. They also usually insisted that there should be no punishment for Nazi atrocities, and in several variations of the separate-peace proposals, the SS would remain in power, but without Hitler. Finally, they usually insisted that the Western allies tacitly support Germany’s ongoing war against the USSR.²¹ These were not “peace” proposals in a fundamental sense, but rather efforts to rationalize the management of the war and to gain time to digest the billions of marks worth of personal and industrial property that had fallen into German hands.

Some U.S. factions clearly supported the general concept of a separate peace with Germany, though very few other than Allen Dulles knew the precise terms that German emissaries had offered. John Foster Dulles advocated consideration of this strategy in early 1943, for example.22 There was also an undercurrent of support for a separate peace among some of the more conservative Democrats who, like Harry Truman, had an open mind about the advantages of encouraging an ongoing German-Soviet slaughter by withdrawing U.S. troops from the conflict.²³ Nevertheless, President Roosevelt forcefully ruled out any possibility of a separate peace—in part to help stabilize U.S. relations with the USSR.²⁴ As the likelihood of total victory over Germany became increasingly clear, the murmurings for a separate peace died away.

German industry’s efforts reveal the moral bankruptcy of this group during the later Hitler years. They proved to be willing to engage in risky conspiracies to protect their company positions and corporate assets, but not to save the lives of the concentration camp inmates who worked for them. According to their own accounts, they knew that Hitler’s strategy had collapsed and that the war would be lost. Many knew of Hitler’s extermination programs, and some of them—members of the IG Farben and Siemens boards, for example—had personally procured slave labor from concentration camps or directly participated in other atrocities.²⁵ Yet in most cases they failed to remove themselves from positions of authority, or to ameliorate conditions for forced laborers working for their companies, or to resist the Holocaust in any way. As the war lurched into its final months, conditions in the corporate concentration camps deteriorated dramatically. Food ran out, and new epidemics ripped through the camps. The pace of exterminations actually accelerated during 1944, despite the Red Army’s encroachments on the death camps in eastern Poland. Tens of thousands of the Jews who were gassed that year were veterans of the corporate camps in the East, and their murders often required active or tacit cooperation from company leaders.²⁶

Jewish blood became the currency, in effect, with which German companies bought legitimacy in the eyes of the Nazis during Hitler’s last years. Legally speaking, of course, corporate leaders must be judged on their individual acts, not as members of a group. But from a sociologist’s point of view, from the perspective of how groups of people behaved, it is evident that most members of Germany’s corporate elite were willing to sacrifice the lives of innocent people in their determined pursuit of institutional survival.