By Edwin Black
General Motor's German subsidiary, Opel,
remained a loyal corporate citizen of the Nazi regime, prospering as a result.
June 30, 2008
Hitler’s persecution of Jews was building to a frenzy even as fears of a war
escalated. Nevertheless, General Motors’ German automotive subsidiary, Opel,
remained a loyal corporate citizen of the Third Reich — content to obediently do
the Nazi regime’s bidding, and unstintingly supporting Hitler’s program on many
fronts. These included economic and employment recovery, anti-Jewish
persecution, war preparedness and domestic propaganda. In return, Opel
prospered.
Hitler was pleased — very pleased. In 1938, just months after the Nazis’
annexation of Austria, James D. Mooney, head of GM’s overseas operations,
received the German Eagle with Cross, the highest medal Hitler awarded to
foreign commercial collaborators and supporters.
On Nov. 9-10, 1938, shortly after Mooney’s decoration, nationwide pogroms broke
out in Germany against the Jews — Kristallnacht. The American public was finally
shocked onto its heels by the night of officially orchestrated burning, looting
and mob action against Jews. President Roosevelt recalled America’s ambassador,
plunging German-American relations to their lowest point since Hitler assumed
power. All things American came under special scrutiny in Germany.
By now, the truth about GM’s ownership of the Opel car and truck operation was
out in the open among Germans. Reich armament officials increasingly directed
Opel’s output, including mandating that nearly all vehicles be devoted to
military use.
These are among the many findings of a multipart exclusive investigation that
culled and re-examined thousands of pages of Nazi-era and New Deal-era documents
that shed new light on GM’s relationship with the Third Reich.
They reveal that even as GM and its president, Alfred P. Sloan, were helping
mobilize the resurgent German military, they were undermining the New Deal of
Franklin D. Roosevelt and undermining America’s electric mass transit, and in
doing so helped addict the United States to oil.
GM has declined comment for this story. The company has steadfastly denied for
decades that it actively assisted the Nazi war effort or that it simultaneously
subverted mass transit in the United States.
Laissez Faire, Sloan-style
In the months leading up to the feared 1939 invasion of Poland, Sloan, GM’s
president, defended his close collaboration with Hitler. Brushing off attacks
for his partnership with a Nazi regime already notorious for filling
concentration camps, taking over Austria and now threatening to install the
Master Race across Europe, Sloan was stony and proud.
He stated, in a long April 1939 letter to an objecting stockholder, that in the
interests of making a profit, GM shouldn’t risk alienating its German hosts by
intruding in Nazi affairs. “In other words, to put the proposition rather
bluntly,” Sloan said in the letter, “such matters should not be considered the
business of the management of General Motors.”
Indeed, in August of 1939, the world wondered when Hitler might invade Poland.
During those days, Opel, under the direct day-to-day supervision of GM’s senior
executive, Cyrus Osborn, played its role in Germany’s fast-paced military plans.
The company was already manufacturing thousands of Blitz trucks that would
become a mainstay of the Reich’s upcoming Blitzkrieg.
The German military in early August urgently ordered Blitz truck spare parts to
be delivered to Reich bases near the Polish border. Days later in August, nearly
3,000 Opel employees, from factory workers to senior managers, were drafted into
the Wehrmacht.
Moreover, at about that time, GM’s Osborn began evacuating most of the American
employees and their families to the Netherlands. Soon, virtually all Opel
civilian passenger car sales were eliminated in favor of military orders.
At 6 a.m. on Sept. 1, 1939, Germany launched its Blitzkrieg against Poland, with
troops arriving in Blitz trucks manufactured by GM’s Opel. The night before,
Sloan reportedly told stockholders that GM was “too big” to be impeded by “petty
international squabbles,” according to a congressional investigation.
Shortly after war broke out in Europe, however, GM executives in Germany tried
to distance the American company from its involvement in the brutal German war
machine. The Opel board was restructured to ensure that GM executives maintained
a controlling presence on the board of directors but continued invisibility in
daily management. This was accomplished in part by bringing in GM’s reliable
Danish chief, Albin Madsen, and maintaining two Americans on that board.
The company’s 1939 annual report, released in April 1940, stated: “With full
recognition of the responsibility that the manufacturing facilities of Adam Opel
A.G. must now assume under a war regime, the Corporation has withdrawn the
American personnel formerly in executive charge… and has turned the
administrative responsibilities over to German nationals.”
However, GM was still masquerading. By the summer of 1940, a senior GM executive
wrote a more honest assessment for internal circulation only. He explained that
while “the management of Adam Opel A.G. is in the hands of German nationals,” in
point of fact, GM is still “actively represented by two American executives on
the Board of Directors.”
The construction and German-American balance of the many management entities
created in the facade of control was constantly shifting during the Hitler
years. But regardless of the number of members — German or American — on the
various directing, managing or executive boards and committees, GM in the United
States controlled all voting stock and could veto or permit all operations.
For all intents and purposes, though, once war began, Wehrmacht requirements and
orders determined the specifics of military manufacturing at Opel. Like any
nation at war, including the United States itself, the Reich alone determined
what weapons would be made by its militarized factories. That said, it was GM’s
decision to remain operating in Germany, to continue to subject itself to Reich
military orders, and answer the Reich’s call for ever more lethal weapons.
As anticipated, Opel’s Brandenburg facilities were conscripted and converted to
an airplane-engine plant supplying the Luftwaffe’s JU-88 bombers. Later, Opel’s
plants also built land mines and torpedo detonators. The factories and
infrastructure that GM built during the 1930s were in fact finally used for
their intended purpose — war. Opel-built trucks on the ground, Opel-powered
bombers in the sky and Opel-detonated torpedoes in the seas brought terror to
Europe.
Back in the United States, Sloan tried to obstruct FDR’s war preparedness
planning. The GM chief tried to dissuade GM executives with needed manufacturing
and production experience from helping Washington’s early mobilization plans. In
one typical 1940 case, Sloan asked Danish-born William Knudson, who had ascended
to become president of GM, not to leave the company and help Washington’s war
efforts. Sloan, who had become chairman of the company in 1937, warned his
friend that the Roosevelt administration would make a “monkey out of you.”
Knudson replied, “That isn’t important, Mr. Sloan. I came to this country [from
Denmark] with nothing. It has been good to me. Rightly or wrongly, I feel I must
go.” Sloan retorted, “That’s a quixotic way of looking at it.” By mid-1940, with
or without Sloan’s acquiescence, GM had been drafted by Washington to become a
major war supplier for the Allies. Sloan had no choice but to comply, and GM and
its employees would ultimately make enormously valuable contributions to the
Allied war effort.
In June 1940, Sloan brought Mooney back to America to head up GM’s key
participation in America’s crash program to prepare for war. He was installed as
an assistant to the new GM president to take “full charge of all negotiations
[with Washington] involving defense equipment …”
Mooney’s mere appointment sent shivers through the anti-Nazi boycott and protest
committee, which well remembered his 1938 medal for what the Nazis had termed
“service to the Reich.” The Non-Sectarian Anti-Nazi League railed in a letter to
Roosevelt: “How should we interpret the placing of a Hitler sympathizer and a
Hitler servant (one must render service to the Reich to deserve such a medal) at
the throttle of our defense program? Doesn’t that appear suspiciously similar to
the planting of Nazi sympathizers in key positions…?”
Collusion But No Disloyalty
In June 1940, about the same time Mooney returned to America, Sloan wrote to a
colleague, expressing disdain for FDR’s democracy while grudgingly acknowledging
his admiration for Hitler’s fascist drive, even if that drive had become
criminal.
“It seems clear that the Allies are outclassed on mechanical equipment,” Sloan
wrote, “and it is foolish to talk about modernizing their Armies in times like
these, they ought to have thought of that five years ago. There is no excuse for
them not thinking of that except for the unintelligent, in fact, stupid,
narrow-minded and selfish leadership which the democracies of the world are
cursed with.”
Sloan added a poignant contrast: “… But when some other system develops stronger
leadership, works hard and long, and intelligently and aggressively — which are
good traits — and, superimposed upon that, develops the instinct of a racketeer,
there is nothing for the democracies to do but fold up. And that is about what
it looks as if they are going to do.”
When at the end of 1940 the White House began to insist that GM break off
relations with Latin American car dealers suspected of being pro-Nazi, Sloan
defiantly refused. He lashed out at Washington, accusing it of protecting
Communists at home while focusing on GM dealers in South America. “I have flatly
declined to cancel dealers,” Sloan wrote in April 1941 to Walter Carpenter, a GM
board member and vice president of du Pont.
Days later, on April 18, 1941, Carpenter retorted, “I think that General Motors
has to consider this problem from three standpoints; first, from the commercial,
second, the patriotic and, third, the public relations standpoint….We are
definitely a part of the nation here and our future is very definitely mingled
with the future of this country. The country today seems to be pretty well
committed to a policy opposite to Germany and Italy.”
Carpenter continued with a blunt warning. “If we don’t listen to the urgings of
the State Department in this connection,” he said, “it seems to me just a
question of time… The effect of this will be to associate the General Motors
with Nazi or Fascist propaganda against the interests of the United States…The
effect on the General Motors Corporation might be a very serious matter and the
feeling might last for years.”
A few weeks later, in May 1941, a year-and-a-half after World War II broke out,
with newspapers and newsreels constantly transmitting the grim news that
millions had been displaced, murdered, or enslaved by Nazi aggression and that
London was decimated by the Blitz bombing campaign, Sloan, then in his mid-60s,
told his closest executives during a Detroit briefing: “I am sure we all realize
that this struggle that is going on though the World is really nothing more or
less than a conflict between two opposing technocracies manifesting itself to
the capitalization of economic resources and products and all that sort of
thing.”
He then continued in a rambling, incoherent fashion, trying to further justify
the company’s Nazi business dealings.
By now, Assistant Secretary of State Adolf Berle, whose portfolio included the
investigation of Nazi fronts and sympathizers in Latin America, had had enough
of Sloan and GM executives. Berle circulated a memo asserting “that certain
officials of General Motors were sympathetic to or aligned with some pro-Axis
groups….That this is [a] ‘real Fifth Column’ and is much more sinister than many
other things which are going on at the present time.” Berle called for an FBI
investigation.
The FBI’s probe of GM senior executives with links to Hitler found collusion
with Germany by Mooney, but no evidence of any disloyalty to America. The Aug.
2, 1941, summary of the investigation clearly listed Sloan in the title of the
report, but Mooney’s was the only name mentioned in the investigative results.
However, in a separate report to FBI director J. Edgar Hoover, the agent stated,
“No derogatory information of any kind was developed with respect to Alfred
Pritchard Sloan Jr.”
Opel’s Friendly Nazi Custodian
On Dec. 7, 1941, Pearl Harbor was bombed. The United States declared war on
Japan. On Dec. 11, German diplomats in Washington called at the State Department
to deliver Germany’s declaration of war against America. All direct
communications between GM and its Opel subsidiary in Germany were necessarily
severed, although historians have always wondered about indirect links through
Denmark where GM operated a longtime subsidiary. Ranking GM men from Denmark
were also in ranking positions both in Opel in Germany and GM in America.
After Germany declared war on America, all American corporate interests in
Germany or under German control were systematically placed under the
jurisdiction of a Reich-appointed “custodian” for enemy-owned property. In
practice, the “custodian” was akin to a court-appointed receiver. Generally, the
Reich custodian’s duty was not to dismember the firm or Aryanize it, but to
continue to run the enterprise as efficiently and profitably as possible,
holding all assets and profits in escrow until matters would be resolved after
the war. This generally meant re-appointing members of the pre-existing
management team, although these managers no longer reported directly to their
American masters in the United States.
In the case of Opel, Carl Luer, the longtime member of the Opel Supervisory
Board, company president and Nazi Party stalwart, was appointed by the Reich to
run Opel as custodian, but only some 11 months after America entered the war. In
anticipation of the outbreak of hostilities, GM had appointed Luer to be
president of Opel in late 1941, just before war broke out.
In other words, the existing GM-approved president of Opel continued to run Opel
during America’s war years. The company continued as a major German war
profiteer, and GM knew its subsidiary was at the forefront of the Nazi war
machine. An Aug. 27, 1944, New York Times article detailed that Opel was the
principal target of a 1,400-plane RAF bombing mission because its 35,000-worker
plant was turning out crucial military transport and was known to be developing
rocket technology.
In the wartime months and years that ensued, 1941-1945, GM built and operated
some $900 million worth (about $120 billion in today’s dollars) of defense
manufacturing facilities for the Allies. Almost all of the company’s
undertakings were propped up by federal programs that guaranteed profit and
“cost-plus” contracts, various subsidies, tax benefits and other incentives then
available to defense contractors to produce goods for the war effort.
Secretary of War Henry Stimson later explained that when a capitalist country
wages war, “you have got to let business make money out of the process, or
business won’t work.” Gen. Lucius Clay, who oversaw war materiel contracts,
confessed, “I had to put into production schedule the largest procurement
program the world had ever seen. Where would I find somebody to do that? I went
to General Motors.”
GM also reaped the financial benefits of its relationship with the Third Reich.
During the pre-war Hitler years, GM entered its Opel proceeds under “reserves”
instead of listing the profits as ordinary income.
Then during America’s war years GM declared it had abandoned its Nazi
subsidiary, and took a complete tax write-off under special legislation signed
by Roosevelt in October 1942. The write-off of nearly $35 million created a tax
reduction of “approximately $22.7 million” or about $285 billion in 21st-century
money, according to an internal Opel document.
But Opel’s friendly Nazi custodian, Luer, kept on making profits for the company
during those war years. Opel produced trucks, bomber engines, land mines,
torpedo detonators and other war materiel, a significant amount of it by the
sweat of thousands of prisoner laborers or other coerced workers; some of those
workers were tortured if they did not meet expectations.
Those profits and GM’s 100 percent stock ownership were preserved by the Reich
custodian, even though GM and Opel ostensibly severed ties with each other after
America entered the war.
During the Hitler years, many of those excess profits were used to acquire other
companies and properties, only increasing Opel’s assets in Germany. After the
war, starting in 1948, GM began regaining control over Opel operations and
eventually its monumental assets as well as blocked dividends. GM also collected
some $33 million in “war reparations” because the Allies had bombed its German
facilities.
After the defeat of Berlin, GM and its executives, including those who joined
the government in Washington, then steered America toward its gargantuan postwar
boom. That boom was in large measure powered by the constellation of direct and
indirect economic benefits delivered by the U.S. automobile industry.
The Transit Scam
Ironically, while GM was mobilizing the Third Reich, the company was also
leading a criminal conspiracy to monopolistically undermine mass transit in
dozens of American cities that would help addict the United States to oil.
The war in Europe had only been over for 16 months when on Oct. 2, 1946, a memo
from the Department of Justice landed on the desk of J. Edgar Hoover, outlining
the elements of the GM conspiracy.
At the center of the conspiracy was National City Lines, an Enronesque company
that suddenly arose in 1937, ostensibly run by five barely educated Minnesota
bus drivers, the Fitzgerald brothers. Yet the Fitzgeralds miraculously marshaled
millions of dollars to buy up one failing trolley system after another. Soon,
through a patchwork of subsidiaries, the brothers owned or controlled transit
systems in more than 40 cities.
Generally, when National City Lines acquired the system, the tracks were pulled
from the street, the beloved electric trolleys were trashed or burned, and the
whole system was replaced with more expensive, unpopular and environmentally
hazardous motor buses that helped addict America to oil.
The Justice Department discovered that National City Lines was just a front
company for General Motors, in league with Mack Truck, Phillips Petroleum,
Standard Oil of California and Firestone Tires — all petroleum interests. The
companies became the major preferred stockholders of National City Lines, but
operated behind the scenes.
The scheme worked this way: The manufacturers purchased NCL preferred stock to
acquire transit lines on condition that when the systems were acquired, the
trolleys would be dismantled and replaced with motor buses. That is exactly what
happened.
All the conspirators gained immensely when non-polluting electric systems were
replaced by oil-burners. Phillips and Standard sold oil products. Firestone sold
the tires. GM and Mack divvied up the bus manufacturing and sales market
according to an agreed-upon formula.
Transit systems in 16 states were converted, adversely affecting millions of
Americans, who had to pay higher fares for lesser, more unpopular service.
Dozens more cities were targeted in the $9.5 million scheme.
In April 1947, indictments alleging two counts of criminal conspiracy were
handed down against General Motors, Mack Truck, Phillips Petroleum, Standard Oil
of California and Firestone Tires, as well as against numerous key executives of
the companies.
The defendants were found guilty on one of the two counts: conspiring to
monopolize the bus business by creating a network of petroleum-based transit
companies that were forbidden to use transportation or technology products other
than those supplied by the defendants themselves. The jury found the defendants
not guilty on the count alleging a conspiracy to actually control those transit
systems.
On April 1, 1949, the judge handed down his sentence: a $5,000 fine to each
corporate defendant except Standard, which was fined $1,000. As for National
City Lines, president E. Roy Fitzgerald and his co-conspirators at GM and the
other companies, they too were fined. Each was ordered to “forfeit and pay to
the United States of America a fine in the amount of one dollar.”
The cases were appealed — even the one-dollar penalties — all the way to the
United States Supreme Court, which allowed the convictions to stand. The
government filed a civil action against the same circle of companies trying to
stop their continued conduct. But the government was unsuccessful. Undaunted,
National City Lines and its many subsidiaries continued into the 1950s to
acquire, convert and operate urban transit systems using evolved methods.
Edwin Black is a bestselling author of several books, including the upcoming
book, Nazi Nexus (Nov 2008 Dialog
Press). This article is adapted from his book
Internal Combustion (St. Martin's Press). He is also the editor of
The Cutting Edge News.
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