Allied Companies: Investments in Axis Countries and the Soviet Union

German motor vehicles
Figure 1.--A major weakness of the German Wehrmacht in preparing for World War II was that it was not fully mechanized. And it did not have an overall industrial capacity or a vehicle production capability comparable to the countries it would have to fight. The American automobile conpanies (especially Ford and GM) played a major role before the War in increasing Germany's vehicle production capacity. Ford would also play an important role in expanding vehicle production of the Soviet Union.

American investments in Europe were relatitively limited before World War I. The War significantly weakened the economy of the belligerant countries. Unlike World War II, Germany or most of Frasnce was not occupied and there were no significant strategic bombing campaign. Even so, the economic damage was significant and this created opportunities for American companies to commit badly needed capital as well as profitably utlize its technology. The Americam investments ptovided a boosdt to the badly weakened European countries. Companies like Ford workded out deals with the Soviet Union (which was at first a NAZI ally). Invesments were also made in Italy. Several American companies were involved in Germany. This activirty began during the Weimar years which mean that the investments were in place when the NAZI seized control. They managed to continue to operate during the NAZI years which eventually caused conflict with the U.S. Government after Hitler launched World War II. American industry of course played a major role in winning World War II. Several of the compasnies involved were at first conflicted, seeking to protect their assetts and operations in Germany and other Axis countries.

Investing Countries

Extensive information is available on American countries investing in Axis countries. Anmerica was not, however, the only country making such investments. As a result of World War I. America was the major country making such investments. The other major countries (Britain, France, and Germany) hadf their finances so damaged by the War that they had to liquidate many overseas investments. There were American companies in Britain at the time. Also were British subsidaries operating in Germany at that time. Germany lost its colonies and many investments in beligerant cuntries, such as Beyer operations in America. It still had some operations in Britain, we think mostly chemical companies.

Chronology

American investments in Europe were relatitively limited before World War I. The War significantly weakened the economy of the belligerant countries. Unlike World War II, Germany or most of Frasnce was not occupied and there were no significant strategic bombing campaign. Even so, the economic damage was significant and this created opportunities for American companies to commit badly needed capital as well as profitably utlize its technology. The Americam investments ptovided a boosdt to the badly weakened European countries. Companieslike Ford workded out deals with the Soviet Union (which was at first a NAZI ally). Invesments were also made in Italy. The major U.S. automobile manufacturers established multinational operations setting up subsudiuaries in the 1920s and 30s. They located plants in Germany, eastern Europe, and Japan. Several American companies were involved in Germany. This activirty began during the Weimar years which mean that the investments were in place when the NAZI seized control. They managed to continue to operate during the NAZI years which eventually caused conflict with the U.S. Government after Hitler launched World War II. American industry of course played a major role in winning World War II. Several of the compasnies involved were at first conflicted, seeking to protect their assetts and operations in Germany and other Axis countries. After the War, Federal procecutors charged the General Electric Company with monopolistic practices. What made this case sensatioinal was that GE was accused of criminal conspiracy with Krupp--the massive German arms firm which had polayed a major role in arming the NAZI military. Some onservers charge, " heir partnership artificially raised the cost of U.S. defense preparations while helping to subsidize Hitler’s rearmament of Germany. The arrangement continued even after Nazi tanks smashed into Poland." [Gilmore]

Countries

American companies had substantial investments in Axis countries. The most important were in Germany which after World War I despeately needed capital and was the infustrial center of Europe. American corporations investing in Germany included: DuPont, Ford, General Electric, General Motors, Internsationsal Busines Machine, Kodak, and Shell Oil. GM (Opel) and Ford controlled 70 percent of the German automotive market when Hitler launched the War (1939). Both companies retooled their plants to produce equipment for the German war effort. As the War was to be a mechanzed struggle, their efforts were of some importance. Luckily for the Allies, the German automotive industry was much smaller than the American industry. Even so, the contribution of American automobile companies to the NAZI war effort was significant. A Congressiional investigation found, "The outbreak of war in September 1939 resulted inevitably in the full conversion by GM and Ford of their Axis plants to the production of military aircraft and trucks. [U.S. Senate Judiciary Committee, 1974] One of the weaknesses of the Wehrmacht was the limited mechanization and inadequate supply capability. The trucks built and track vehicles built at the American subsiduaries played an important role in strenthening the mechanized capability of the Wehrmacht. GM and Ford subsidiaries in the Reich built nearly 90 percent of the armored ‘mule’ 3-ton half-trucks and more than 70 percent of the Reich’s medium and heavy-duty trucks. These vehicles according to American intelligence reports, served as "‘the backbone of the German Army transportation system".

Corporations

Quite a number of important American corporations made investments in Europe after World War I. These companies thus at the time of World war II had investments and subsidiasries in Axis countries and the Soviet Union. The major compaies included Ford, General Electric, General Motors, International Business Machine, and others. The investments of Ford and General Motors were especially important because they significantly expanded Germany's capacity to build motor vehicles.

Ford

Ford was involved in both Germany and the Soviet Union. Ford's German subsiduary Fird-Werke had truck manufactiring plants in Germany. The principal reason for American overseas investments was business and profit. With Henry Ford there seems to have been other motives. Ford while a key figure in the American automobile business, was also a notorious anti-Semite and an ardent isolsationist. He developed at a very early stage, an admiration for Adolf Hitler, even before the NAZI dictator sized power. He was an early financial backer of the NAZIs. [New York Times, December 20, 1922.] Testimony at Hitler's 1924 trial after the Beer Hall Putch revealed, "Herr Hitler openly boasts of Mr. Ford's support and praises Mr. Ford as a great individualist and a great anti-Semite. A photograph of Mr. Ford hangs in Herr Hitler's quarters, which is the center of monarchist movement." [U.S. State Department] Hitler for his part was impressed with the American mass-production techniques pioneered by Ford. He was reprted as saying, "I regard Henry Ford as my inspiration." The NAZIs awarded Ford the Grand Cross of the German Eagle--a NAZI medal given to distinguished foreigners (August 1938). [New York Times, August l, 1938.] He was the first American to receive the honor. The occassion was Ford's 75th birthday. Ford was shaken by the storm of criticism and met with a Detroit Rabbi to say he was sympathetic toward the suffering of German Jew and to deny he suppors the NAZIs. [New York Times, December 1, 1938.] Secretary of Interior Harold Ickes. Ickes criticized both Ford and fellow isolatinist Charles A. Lindbergh for accepting NAZI awards. [New York Times , December 19, 1938.] Congress after World War II investigating charges of American support for the NAZI war effort. They found that the NAZIs obtained coinsiderable U.S. technical and financial assistance. One of the areas of support were provided by Ford-Werke A.G. The company assisted the NAZIs obtain rubber and other critical war materials during 1938 and 1939. [Congressional subcommittee.] Ford was directly involved in the NAZI military build up. The corporatiion financed a truck assembly plant in Berlin (1938). A U.S. Army Intelligence reported that the "real purpose" of as to produce "troop transport-type vehicles for the Wehrmacht". [Gilmore] Ford-Werke when war broke out placed itself at the disposal of the Wehrmacht for arms contracts. One report suggested that Ford officials in Germany quareled over who would control Ford operatins in England after the NAZI invasion. Ford-Werke was the second largest producer of trucks for the Whermact. Ford representative argue that the NAZIs took over their German plants and that they "lost control" of operations. This is not all together clear. Some historians that some of the American managers cooperated with the conversion of those plants to military uses. American GIs reached the Ford plants in Cologne and Berlin. They found foreign workers confined im barbed wire encampments and it terrible conditions. They also found company documents reportedly recognizing the genius of the Führer. [Dobbs] Unlike Hitler, Ford had no admiration for Stalin. He did see, howevr a business opportunity in the Soviet Union. The Ford Motior Company which would become a target of American workers began exploratory visits and negotiations in the Soviet Union (1927). An agreement to produce cars, trucks, and factories was signed (1929). The Soviet Unionhad only 20,000 cars and a single truck factory at the time. The Soviets were eager to expand motor vehiche production, not so much cars, but trucks and tractors were high on heir agenda. Stalin at the time was just bginning his brutal collectivization process and assumed that along with imprived techhnology such as tractors, production from the collectives would substsntilly increase the output of peasant agriculture. In fact Soviet agriculture never recovered. Ford with its engineering and manufacturing capabilities was an obvious choice. Ford would oversee construction of a plant at Nizhni Novgorod, along the Volga River, to manufacture Model A cars. An assembly plant would be opened in Moscow.

General Electric

General Electric (GE) began working in Europe before most American industrial corporations. GE was a world leader in electrial and other technologies. Many of those technolgies involved goods and commodities, including metals that had previouly been of only limited use. The compsany began approaching European competitors to control the supply or price of some of these importasnt goods and commodities. GE negotiated an agreement with the German company Allgemeine Elektricitäts Gesellschaft--AEG) (1904). Another agreement was signed with Tokyo Electric (1905). GE cooperation with German companies was temporarily interupted by World War I. After the War, GE expanded its operations in Germany. GE acquired an interest in AEG (16 percent). Four GE executives sat on the AEG board. GE also obtained an important interest in Siemens, another major Germany electrical manufacturing company. GE had a variety of reasons for these investments in the major ndustrial powers in both Europe and Asia. It facilitated joint actions to control supplies and prices of critical materials. They also served to protect patents while helpinggain access to important foreign markets. One of the most important commodities was tungsten carbide made from wolfram. This was critical for the production of high grade steel needed for military purposes (artillery and armour). Tungsten is an exceedingly hard metal which is especially useful in cutting dies and machining metal. Both GE and the Krupp industrial complex had patents for tungsten carbide. The patents could establish a momopoly in their respective countries. Cooperating with each other, the two companies could dominate the world market. GE and Krupp began to discuss possible cooperation (April 1928). A GE representative indicated that the company’s willingness to launch new business oiperations, but this was affected by the "the extent to which they can discourage competition." After 8 months of negotisation, GE and Krupp had an agreement (December 1928). GE now had the capbility to set tungsten carbide prices and a subsidiary was establish to handle the tungsten business--Carboloy. The price of tungsten carbide immeditely increased astonishingly, from $48 to $453 a pound.

General Motors

General Motors (GM) had truck manufactiring plants in Germany. Opel was an entirely GM-owned subsiduary. Opel not only built trucks, but aircraft as well. A GM executive received a medal from Hitler for unspecfied services. GM’s involvement in Germany began with the consdtruction of an Opel truck factory near Berlin (1935). This would become a major source of Wehrmact trucks during the War. GM Chairman Alfred P. Sloan commented in repose to press reports following the German invasion of Cezecoslovakia (March 1939) that Nazi actions "should not be considered the business of the management of General Motors." The GM plant in Germany was reportedly highly profitable. "We have no right to shut down that plant." GM did not just build trucks for the Wehrmacht. GM was deeply involved in the German jet program. GMplants built thousands of jet fighter engines for the Luftwaffe. One resesarcher writes, "General Motors was far more important to the Nazi war machine than Switzerland," says researcher "Switzerland was just a repository of looted funds, while GM was an integral part of the German war effort. The Nazis could have invaded Poland and Russia without Switzerland. They could not have done so without GM." [Snell] After the war both GM and Ford filed claims for compensation. Their plants were heavily damageed in the Allied strategic bombing campsaign. GM received $33 million in compensation from the U.S. Government for the Army Air Corps bombing of its Russelsheim plant (1967). The final chapter in the GM story came after GM declared bankruptsy (2009). As part of its effort to recover GM sold its Adam Opel GmbH unit. GM sold a controlling stake in Opel to Austrian-Canadian car parts maker Magna International Inc. (MGA). Magna teamed up with Russian savings bank OAO Sberbank (SBER.RS) and automaker OAZ Gaz (GAZA.RS) Chancellor Angela Merkel confirmed that the sale had the support of the German Government.

Hollywood

No industry appeased the NAZIs more widely or more slavishly than Hollywood. This is not so well known because Hillywood made so many anti-NAZI films like the aclaimed Humprey Bogart classic, 'Casablanca' (1942) that is on virtually everyone's all time best film list. But these anti-NAZI films only began after Hitler launched World War II. All the major studios, except Warner Briothers, were involved in apeasing Hitler. It was a box office matter. Once the NAZIs seized power, the German film indutry was under the control of Propaganda Minister Josef Goebbels. To be shown in Germany, American studios needed Government approval, meaning Goebbels approval. Germany was the largest market for American films in Europe and American studios wanted a piece of that lucrative market. And it wasn't a matter of just not depicting the NAZIs in a negative way. Films could be rejected if there were Jewish actors or directors or even music scores by Jews. The studios hired NAZI Party members to manage their German operations. [Urwand]

International Business Machine (IBM)


International Telephone and Telegraph (ITT)


Standard Oil


Universal Oil Products Corporation

Various American companies were actuve in the Soviet Union before World War II. Oil was one area of involvement. The Universal Oil Products Corporation (UOP) no longer exists as a separate entity (it is now part of Honeywell), but after World War I it became the target of major legal action among American oil giants as it developed important refinery products and technologies that proved of immense importance during World War II. One of these was solid phosphoric acid as a catalyst to stimulate even higher yields of gasoline from crude oil. This was followed by work in hydrofluoric alkylation, polymerization and isomerization. These developments led to the development of high-octane fuels that could be produced on a large scale, as well as for the production of synthetic rubber.

Left-Wing Assessments

One of the fascinating benefits of the internet is the ability to exchange ideas and information with people all over the world. This has resulted in adung importabt information and insights for our web pages. It alo has served to reveal attitudes and mis conceptions. And in this regard we have noted a string propensity among Russind and left-wing voices in the est to diminih the role of the Western Allies in defeating the Axis. Now we do not man to disniss in any was the enormity of the Soviet contrinution to smashing the Whermacht ad NAZI regime. What we note, however, is a tendncy to not only to dismiss the Allied role, but to actually claim that the Western Allies wre in keague with the NAZIs. This was a part of Soviet propaganda during the Cold War, but we note it continues in modern Russia and among left-wing commentators in the West. One blogger, for example tells us, "Have you made some research into Western financing of Nazis? Switzerland wasn't occupied primarily because it was source of laundering such money from Western financiers. Do some research into that." [Pazzo] Actually we have looked into both issues, pre-War activities of American companies in Germany (mostly investments made before the NAZIs seuzed power) as well Swiss money laundering. The Swiss were certainly involved, but we have found no evidence of a wuder conspiracy among Western financeers. While individuls like Pazzo are quick to raise charges about America and Britain, they do not want to talk about the Soviet alliance with NAZI-Germany and the enormous Soviet support for the NAZI war effort.

Sources

Dobbs, Michael.

Gilmore, Prter. "Nasty Nazi Business: Corporate deals with Nazi Germany," UE News (December 2000). UE NEWS Managing Editor Peter Gilmore, with research and consultation by UE Research Dir. Lisa Frank and UE Archivist David Rosenberg. Much of the article, however, is based on the reportage of retired UE NEWS Managing Editor James Lerner, who covered the GE-Krupp conspiracy trial.

Snell, Bradford.

Urwand, Ben. The Collaboration: Hollywood's Pact with Hitler.

New York Times various issues.

U.S. Senate Judiciary Committee. (1974).








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Created: 3:07 AM 9/7/2009
Last updated: 2:34 PM 7/29/2018