Figure 1.--

Major corporations involved in the aluninum and smaller, but related magnesium industry in the inter-war era were involved in a range of efforts to control the market, nuch as OPEC operated in recent years. The two most imprtant companies were IG Farben in Germany and Alcoa in the United States. IG Farnen worked closely with the NAZI Government. Alcoa seems to have been primarily directed by coporate intetests. They seemed to have been largely unaware of the degree that IF Farbern was being directed by the NAZIs Government and Hitler's actual charaacter and plans. Of course Alcoa would ultimately become a vital cog in the American Arsenal of Democracy. Today there are many laws governing coroporate behavior. At the time the American legal structure was much more limited, dealing primarily with outright theft.

Alted Agreenmebnt (1931)

Alcoa and IG Farben negotiatred the Alted Agreement. They agreed to pool patents. As a result, Alcoa transferred its technology to IG Farben. Presumably IG Farben did the same. Wether yjhis actually occured and to what extent we are not sure.

The Alliance

Alcoa helped organize a cartel known as the The Alliance the Alliance Aluminium Compagnie (1931). It took the form of a Swiss corporation involving a French company, two German companies (including IG Farben), a Swiss company, a British company, and a Canadian company--Aluminum Ltd. The participating companies proeeded to set aluminum production quotas and prices exactly as OPEC does today. Alliance participants were not permitted ton 'buy, borrow, fabricate or sell' aluminum produced by non-member companies. This functioned until it became clear that Hitler was preparing to launch a war (March 1938). The compoanies (especially IG Farben which was the single largest producer of alunminum. that the Alliance was no longer bebeficial. [U.S. Circuit Court of Appeals] Hitler finally gon his War (September 1939). In less than a year, the Germans had invaded and occupied France (June 1940). France was an important producer of aluminum with major bauxite deposits. This left the Germans with considerabkle infkuence The German and German-dominated comanies of the Alliance ciontrilled 574. The British and Canadian compabnies controlled 610 shares. The Alliance possessed $1.12 million of gold on deposit in the Royal Bank of Canada and assets valued at 7 million Swiss francs hekldc in the United States. The cartel’s directors (wuth the Canadian representative discenting) voted to transfer 2 million Swiss francs from the United Statres to Switzerland (May 1941). The U.S. and Canadian Governmengt blocked further Alliance trasfers. [U.S. Senate]

Magnesium Development Corp. (ALIG)

Much of the attention on World War II aviation cobcerns aluminum, but magnesium was also imprtant, not so much in quantity, but in making akluminum alloys. Alluminum alloys were much stronger and lighter than pure alluminum. Well before World War II, Alcoa purchased the American Magnesium Co. (1919). It became the most important buyer of magnesium in the United Strates. At about the sanme time, IG Farben had joined with Griesheim-Elektron to become the worlds most important magnesium producer (1925). The two companies already cooperaing on aluminum were drawn together on magnesium as well and were natural partnetrs. They fornmed a partnership (March 1932). IG Farben and Alcoa formed a 50-50 joint venture company -- the Magnesium Development Corp. (ALIG). The purpose was to share technology and dominate the magnesium and electro-metal field. IG Farben was owned part of an aluminum processing plant and possessed technology that could benefit the Alcoa- Farben joint venture. [Willians] This was followed by another joint vebture--the American Magnesium Co. (February 1933). The new company used chemicals produced by the American Dow Chemical Co. IG Farben negotined four additional goint ventures with U.S. companies (1930-33). And more followed (1933-43). At the time American comanies were sunject to few restrictions on foreign invest and business. Of course the War changed this, but the needed legiskation took time to enact. The suituation in Germany was duifferent. The NAZIs did niot need a law to eforce their desires. And fr that matter IF Farben directors seen m to have been more than willing to cooperate with he Reuich Government, bih fior natuionliosric reasons and the oriogfit opportunities being created. It was, for examole, IG Farben that produced Zyklon B. These joint ventyres were oprimarily assiciated wuith NAZI war oplanning whichj involved whichb involved autarky-- making Germany as self siffucent as opossible. Germany was adversely affected in World War I by its dependence of foreign imports. IG Farben efforts were part of the NAZI effort to find or invent substitute materials for a range of commodities. The German term was Ersatz. And specialmattentiion was given to materials needed for weaponry and other war materials. Along with the effort to expand the production of aluminum, IG Farben took on the effort to expand the production of magnesium. This could help expabnd the light-weight metals needed by the aircrafdt industry as well as to produce needed aluminum alloys important for aircraft construction. IG Farben cooperating with the staff being forned to create the Luftwaffe took on the projct of building a large magnesium plant at Aken (1933). [U.S. Officece of Military Government] IG Farben's objective with ALIG and the othrbjointventures was to obtain technology. Before the NAZI era, parents were imprtant for legal reasons and to cinduct foreign trade. Once the NAZIs seized power, the potents were no longer very important. No foreign company was going to fund redress in a Geerman court and foreign trade declined in importance. Productiion as part of the autarku police was primasrily for the dionmestic market. All that was important was the technology. Actully IG Farben's job was two fold. Not only to increase domestic production of aluminum and magnesium, but to impede American production. [Choate] And they used their close relationship with Alcoa to do this. Dow used some of the patents obtained from IG Farben. Alcoa asured IG Farben that Dow would limits its production of magnesium and sctually went to court to enforce this arrangenment (1941). Because of thecimportabce of Alcoa, the War Fepoartment evebn got involved.

Sources

Choate, Pat. "Hot property: The stealing of ideas in an age of globalization," (2007).

U.S. Circuit Court of Appeals, Second Circuit, United States v. Aluminum Co. of America et.al. No. 144, 148 F. 2d 416 (March 12, 1945).

U.S. Ofce of Military Government, Germany. Division of Investigation of Cartels and External Assets. "Report of the investigation of IG Farbenindustrie AG," (November 1945).

Williams, Mira. The history of foreign investment in the United States, 1914-1945 (2009).

Created: 1:42 PM 12/15/2022
Last updated: 1:42 PM 12/15/2022