If appeasement is the explanation for Washington's delayed recognition of the Nazi danger, what are we to make of the extensive American business relations with Germany all during the Third Reich?
Major corporations headquartered in the U.S. found the Nazi agenda
a refreshing change from the sharp class conflict of the Weimar years. As soon
as Hitler took power in January 1933 he set about abolishing unions,
dramatically slashing wages, eliminating worker benefits, ignoring workplace
safety standards, privatizing government enterprise, funneling subsidies to
major corporations, and sharply reducing taxes for the very rich. At the same
time, he pursued an aggressively anti-Communist foreign policy, massively
expanding his military strength as a prelude to annexing Austria and
Czechoslovakia. While these moves were taken in stride in the West, Hitler’s
widely advertised threat to crush the Soviet Union actually found favor among
Western elites, who had long dreamed of doing away with the Bolsheviks.
Investment patterns reveal striking sympathies among U.S. business
leaders. Coinciding with the advent of Nazism, U.S. investment in Germany
soared by nearly 50%, while declining elsewhere on the continent. Unable to
resist the cheap labor, low business taxes, and dazzling profits, Du Pont,
Ford, General Motors, Westinghouse, Goodrich, Standard Oil of New Jersey, J. P.
Morgan, I.B.M., and I.T.T., ignored omnipresent terror and murder in favor of
conducting a booming business with the Reich.
Greatly enhancing the destructive capability of the Nazi military,
American owned factories supplied Germany with tanks, trucks, fighter planes,
bombers, oil imports, synthetic fuels, synthetic rubber, and advanced
communications technology. These materials were used to kill Allied troops,
bomb British cities, and sink Allied ships. Meanwhile, IBM prospered from
providing Germany with the punch cards and machines it needed to target,
enslave, and kill millions of Jews and other victims of Nazi eugenics
throughout Europe.
Some plutocrats did not cease their collaboration even after the
continent was plunged into war, conducting uninterrupted business with
the Nazis and readily making use of slave labor delivered by
German authorities. According to declassified Dutch documents and U.S.
government archives, Prescott Bush, father and grandfather of the later Bush
presidents, realized lavish profits off of Auschwitz slave labor. His Union
Banking Corporation helped Thyssen to make the Nazi steel that killed Allied soldiers
and assisted the financing of Thyssen coal mines that routinely worked Jewish
prisoners to death.
U.S. companies kept control of their German subsidiaries with
minimal interference from Hitler, who was mainly interested in maintaining
production. Reciprocally, Washington did nothing to interfere with U.S.-based
corporations directly servicing the German war machine. In fact, President
Roosevelt actually issued an order not to bomb U.S. corporate property in
Germany or German-occupied Europe. When Cologne was razed by Allied bombers,
its Ford factory—at the time turning out army vehicles used to kill U.S.
troops—was undamaged. German civilians took to using it as a bomb shelter.
After the war, I.T.T. collected $27 million from the U.S. government in compensation
for damages inflicted on its German plants by Allied bombing raids. General
Motors received $33 million and Ford and other companies collected their own
sizable indemnifications.
In addition to investing heavily in Nazi Germany, American firms
bankrolled Italian fascism from the early twenties and continued to ship Mussolini oil even
after he invaded Ethiopia in clouds of mustard gas. Washington, too, evidenced fascist sympathies: it imposed a unilateral
arms embargo on Spain (while Italy and Germany poured in troops and weapons to
Franco), complained of Japan’s closed door rather than its massive atrocities
in China, refused to join the U.S.S.R. in a united front against Nazism until
far too late, failed to prosecute the major firms illegally trading with the
Axis all through the war, installed fascist collaborators in the wake of
successive military victories, and hired Nazis to continue their anti-Communist
bloodletting on the U.S. payroll once the war was declared over. Finally, in a
war effort that many Americans took to be a human rights crusade against Germany’s
vicious treatment of Jews, it led segregated troops into battle, dispatched
120,000 innocent Japanese-Americans to concentration camps, and adopted
wholesale extermination of civilians as a routine tactic of its air war.
Such were the general features of the “good
war.”
"Appeasement” makes little sense as an
explanation for all this. Britain, France, the U.S., and a dozen other Western
nations had not been too war-weary to invade the Soviet Union in 1918 after
four of the most blood-soaked years the world had ever seen. A generation later
they were still ready to fight Communism, but not Fascism, even though the
Soviets had renounced world revolution in 1921 and Hitler spelled out his
expansionist agenda with brutal clarity three years later in Mein Kampf. Furthermore, fear of war’s deadly consequences carries little
explanatory force given that German military capacities remained weak all
through the thirties and were far from overwhelming even when Hitler conquered
France in the spring of 1940.
In spite of the relative ease with which it might have been
accomplished, the West made no timely effort to stop Hitler; not in 1934, when
Nazi thugs assassinated the Austrian Prime Minister; not in 1936, when Germany
reoccupied the Rhineland in violation of the Versailles Treaty; not in 1938,
when Hitler annexed Austria and dismembered Czechoslovakia. In those years the
U.S. perceived the Nazi dictator as an ideological “moderate” who had restored German
economic strength and kept the Bolshevik hordes at bay. Ambassador William E.
Dodd’s regular warnings that soaring U.S. trade with the Reich was directly
aiding Hitler’s massive re-armament campaign fell on deaf ears in Washington,
which replaced him with a diplomat friendlier to the Nazis.
Clement Leibovitz and Alvin Finkel, co-authors of a study critical
of the appeasement hypothesis, dismiss altogether the idea that placating the
Nazis accounts for the policies that consistently aided them:
... the argument here is that “appeasement”—the notion that a
war-weary Britain humored Hitler’s wish to gobble up small countries, in order
to avoid another European-wide slaughter—is a myth. Chamberlain and his
followers made clear that they did not wish to fight fascism as such—indeed,
that they admired many
aspects of fascism. They were not trying to avoid a war; their whole intention
was to turn Nazi militarism loose in a bloody confrontation with the Soviet
Union to end Bolshevism in its heartland. Hitler was to be given a free hand in
Eastern Europe so that this common end could be achieved. ‘Appeasement’ was no
more than a public front constructed to appease public disgust with the Nazis
and the Nazis’ treatment of minorities such as the Jews and small nations such
as Czechoslovakia and Austria.
The outbreak of World War II marked not the failure of
“appeasement” but the collapse of the tacit pact between British and German
leaders.1
Furthermore, the West proved overtly hostile to genuinely
anti-fascist movements, which developed in Spain, where the U.S. imposed a
unilateral arms embargo on the anti-Franco forces, and among the peasant and
worker-based resistance that fought German occupation throughout Europe, where
Washington disarmed, dispersed, and destroyed popular forces. These policies
existed in sharp contrast to those awarding a free hand to Mussolini in
Abyssinia, Franco in Spain, and Hitler in Central Europe—and this at a time when
fascism could have been stopped at relatively low cost.
What historian Gabriel Kolko calls the “problem
of the left”
made it impossible for the Roosevelt administration to embrace a genuinely
anti-fascist ethic. The problem of the left was that European resistance
movements were led by socialists, social democrats, and Communists, whose
convictions clashed with Anglo-American hegemonic designs. As British historian
Basil Davidson explains, the wartime collapse of traditional ruling groups and
fascist collaborators yielded a situation where “large
and serious resistance came and could only come under left-wing leadership and
inspiration ... the self-sacrifice and
vision required to begin an effective resistance, and then rally others to the
same cause, were found only among radicals and revolutionaries.” These, in turn, were mostly
men and women who “followed the hope and
vision of a radical democracy.” As South African Prime Minister Jan Christiaan Smuts warned
Winston Churchill after the fall of Mussolini, “with
politics let loose among those peoples, we may have a wave of disorder and
wholesale Communism set going all over those parts of Europe.” Communism meant not
domination from Moscow but the ascendancy of popular movements dedicated to
collective social designs placing fundamental human needs ahead of private
gain. That was heresy.
Washington’s strategy had been not to risk
everything on behalf of democracy, as the architects of the "good war" claimed, but rather, to let others fight fascism. As
FDR once confided to his son, the U.S. tried to function as “reserves” while the Soviets
exhausted themselves holding off the Nazi onslaught, after which Washington
would deliver the coup
de grace, which is very much how things turned out. According to
Roosevelt scholar Warren Kimball, “aid
to the Soviet Union became a presidential priority” only
on the assumption that Red Army victories would obviate the need for U.S.
troops to fight a ground war in Europe. Senator Harry Truman went even further,
stating after the German invasion of Russia in June 1941 that the U.S. should
strive to bring about the two countries’ mutual annihilation: “If we see that Germany is winning we ought
to help Russia and if Russia is winning we ought to help Germany and that way
let them kill as many as possible.”
With the collapse of the Axis powers the U.S. took over the world,
an outcome wartime planners had anticipated from the beginning. A week after
the U.S. entered the war Isaiah Bowman, Director of the Council on Foreign
Relations, wrote Hamilton Fish Armstrong that the U.S. government had to “accept world responsibility ... The measure of our victory will
be the measure of our domination after victory.” In the spirit of selfless
imperialism so popular down through the ages, “responsibility”
meant
unilateral authority, which Washington gladly seized while talking of its “obligation” to rule the world for the benefit of all.2
Fascism: A Threat To Private Enterprise
As war in Europe threatened to engulf the U.S., American business
leaders and government officials discussed the threat that the Nazis posed to
the free enterprise system. Convinced liberal capitalism could not exist in one
state, the Roosevelt administration ultimately chose to fight to keep foreign
markets open, cloaking its effort to preserve freedom of private investment in
the lofty rhetoric of the Atlantic Charter and the Four Freedoms.
In 1934 more than 80% of U.S. foreign trade was with countries
that the U.S. enjoyed a trade surplus with. The following year General Motors
president Alfred P. Sloan exclaimed that a loss of foreign markets would
require “adjustments to our national economy
appalling to contemplate.” By 1936 Assistant Secretary of State Francis Sayre was warning
that “if we are to choose the pathway of
economic self-sufficiency, we must frankly accept a system of government
control over private business enterprise.” After the 1938 Munich agreement, J. Pierrepont
Moffat, chief of the State Department’s European Division, explained that
American commercial interests would suffer because German domination of Central
and Eastern Europe meant “a still further
extension of the area under a closed economy.”
In January 1940, the president of the Iron and Steel Institute
warned that “in the event of war
we can expect a degree of regimentation and control by Government that is now
unthinkable.”
The same month the Fortune group predicted: “There
is a real danger ... that as a result of a long war all the belligerent powers
will permanently accept some form of state-directed economic system.” Meanwhile, Business Week worried that, “We may have to
sacrifice some of the notions we have held about the rights of private property
owners to dispense of their property as they see fit.”
In short, U.S. business leaders and government officials feared
German economic nationalism would destroy private investment. A victorious
Germany that conscripted labor and converted Europe to an industrial workshop
under Berlin’s sole control would deprive U.S. business leaders of the
opportunity to export their surplus, which would force them into reliance on
the federal government to strictly regulate the domestic economy in order to
establish an internal balance between supply and demand. This concern, not
beguiling rhetoric about universal human rights, formed the operative value
behind U.S. foreign policy, which explains why Washington opposed the triumph of
European anti-fascist resistance movements at the end of the war as much as it
did Hitler during the war: both placed collectivist designs ahead of private
profit and the demands of the market.
Financer Bernard Baruch explained the Nazi economic threat five
days before Hitler invaded France in 1940: “Germany
does not have to conquer us in a military sense. By enslaving her own labor and
that of the conquered countries, she can place in the markets of the world
products at a price with which we could not compete.” The next day investment
banker W. Averell Harriman also stressed the economic danger of a regimented
Nazified Europe: “The idea that
American free enterprise can compete in the foreign markets against such
competition is ludicrous.”
Three days after the Nazis occupied Paris, the American charge
d’affairs in Berlin, Alexander Kirk, predicted that Hitler “will confront the United States within a brief measure of time
with the impossible task of adjusting its system to an economy in which it will
be excluded from access to all foreign markets.”
Days later Business Week warned that if the Nazis won
the war they would set wage scales and price levels with the sole aim of
capturing foreign markets for goods manufactured under their control. “The United States,” the article concluded, “would tend to become
a lone [free
enterprise] island in a world
dominated by a philosophy of industrial coordination. We may be forced to adopt
some of the totalitarian ways of doing things,” the editors observed. “We may have to sacrifice some of the notions we have held about
the rights of private property owners to dispense of their property as they see
fit.”
Ten days later Will Clayton, a leading cotton exporter, announced
that a German victory would lead to a government controlled export economy. “If the rest of the world adopts totalitarian methods of trade,” he reasoned, “we will be compelled to conform if we wish to sell our
surpluses.”
On August 15, 1940, Joel C. Hudson wrote from his consular post in
Berlin that if German export plans went into effect, the position of the U.S.
would be much like that of “an old-fashioned
general store in a region of hard-boiled chain stores.”
By January, 1941 U.S. business journals were all worried about the
potential doom of the American free enterprise system. “The great danger facing the Western Hemisphere in the event of a
totalitarian victory,” Barron’s declared, “is not the immediate
threat of armed invasion, but rather the threat of trade aggression.”
Two months later W. H. Schubart of the Bank of Manhattan expressed
his displeasure at the prospects of a Nazi-American trade war. “If Germany wins, she will most certainly extend her clearing
system,” he
said. “In such a barter economy we shall not
fit and much of the world trade will be denied us.”
In June, 1941 Barron’s warned: “The inevitable consequence of federal control of the export
portion of the business would be that government agencies would eventually find
it necessary to extend their authority to the company’s whole operations,
domestic and foreign.” Meanwhile, Fortune opined: “Industry and trade, labor and agriculture would become part of a
state system, which in its own self-defense, would have to take on the
character of Hitler’s system. Freedom cannot be national. It must be
international.”
Two months before Pearl Harbor Winthrop W. Aldrich of Chase National Bank warned the attendees of the National Foreign Trade Convention in New York that, “The tremendous power of the Nazi-dominated and regimented economy in the field of foreign trade would make it necessary for our own government to regiment our own foreign commerce.” The Business Advisory Council added its warning that, “A greater dependency on self-containment [would lead to] a degree of regulatory control destructive of free enterprise.” Finally, W. Randolph Burgess of the National City Bank noted that the U.S. had joined Great Britain in the battle against Hitler so that “his conception of foreign trade does not become dominant on this planet.”9
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