IBM and the Holocaust (29 page)

American reaction to the riots was almost wholly disregarded by Hitler. After
Kristallnacht,
Jews were forced to vacate their apartments, sometimes on just a few days' notice, as Hitler loyalists queued up to move in. In Munich, all Jewish families were given just forty-eight hours to permanently leave the city. The order was soon rescinded as impossible—although later the demand was re-imposed. Jews were collectively fined 1 billion marks for inciting the
Kristallnacht
riots. And the last phases of confiscation and asset registration were set in motion.
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The German government issued dire warning after dire warning that the situation could worsen. But a
New York Times
feature on November 14, 1938, ominously asked, "Inasmuch as everything has been done to the Jews in Germany that can be done to a people short of physical extermination, there are arising some obvious speculations as to what these continued warnings may imply." The question was answered just days later on November 30, when the newspaper published an article headlined "Jews in Germany Get Extermination Threat," quoting the
Schwarze Korps,
the organ of Hitler's SS, as it advertised the potential for wholesale Jewish murder.
³²

Watson had visited Germany twice in 1938, once in late May, just after the
Anschluss
of Austria, and once in early October, during the tense build-up to
Kristallnacht.
³³

Germany was threatening invasion daily. War preparations were no secret. Reich propagandists spread the word, ensuring headlines and debates. Commanders fortified borders. Mobilization plans were disseminated. Aircraft engineers received special awards for new bomber and fighter designs. Passenger trains were restricted so rail stock could be devoted to troop movements. Housewives were publicly asked to dramatically reduce consumption of fats to save money so the Reich could purchase raw materials urgently needed for its weapons production.
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War was in the air.

Yet, throughout the year, Watson argued passionately for Germany's demands. He barely made an appearance at an international commercial meeting, university commencement ceremony, ribbon-cutting, or press conference without reiterating his well-worn Hitleresque appeal that the world "redistribute its raw materials" and lower so-called "trade barriers" as "the path to peace." This public lobbying was undertaken even as the mass media regularly published articles and broadcast explanations that Germany desperately only needed those raw materials to arm her war machine. Even though Watson's pronouncements sounded to many as mere code for the Nazi agenda, he held fast to his script. More than that, whenever Watson returned from a tour of the Continent, his dockside remarks always spoke glowingly of the optimism throughout Europe and the steadily increased standard of living for all—this at a time when the world was teetering on the brink of total war and witnessing the dispossession of the Jews.
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Prominent writers and personalities would rebut Watson's brand of thinking. One foreign correspondent in the
New York Times
reflected the common view when he wrote, "It must be remembered . . . the series of boycotts due to worldwide resentment against German domestic policies . . . play almost as large a part as do the trade barriers." In May 1938, just after the
Anschluss
and just before sailing to Germany, Watson answered such sentiments. "Unjust criticism of business is a trade barrier," he lectured his fellow industrialists at an ICC gathering, adding, "Unjust criticism of government is another trade barrier."
³⁶

For Watson, whatever Hitler was doing to the Jews and other perceived enemies of the Third Reich was no obstacle to realizing profit on Germany's plans. "You know, you can cooperate with a man without believing in everything he says and does," Watson sermonized to his followers after one trip to Germany, adding, "If you do not agree with everything he does, cooperate with him in the things you do believe in. Others will cooperate with him in the things they believe in." On another occasion, Watson illuminated his steeled indifference this way: "I am an American citizen. But in the IBM I am a world citizen, because we do business in 78 countries and they all look alike to me—every one of them."
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Yet when Watson's ocean liner anchored at New York just days after the November 10
Kristallnacht
outrage, it was all different. IBM's Leader finally realized that American sentiment had become so extremely anti-Nazi, he now needed to distance himself from the very regime he had so publicly saluted.

N
OVEMBER 25, 1938
Dr. Hjalmar Schacht
President
Reichsbank
Berlin, Germany

Dear Dr. Schacht:

I returned from Europe about ten days ago, and I feel I owe it to you and the German people to tell you of the tremendous loss of good will to Germany, which is increasing on account of the latest policies of Germany in regard to dealing with Jewish minorities in your country. I feel that I would be unfair to my long list of Jewish friends if I did not appeal to your Government to give fair consideration to the Jews as human beings, and to their property rights. As you know, for many years, I have put forth my best efforts to improve trade relations between Germany and the United States, and I want you to know that it is my honest judgment that if the Jewish situation today is not improved, it will have a very serious effect on Germany's trade with our country.

Yours very truly
³⁸

Watson reviewed the typed letter from his secretary. A diagonal line was drawn through the entire letter canceling its message and the words "Yours very truly" were vigorously crossed out. The letter would not be sent.
³⁹
Second try, this one directly to Adolf Hitler.

N
OVEMBER 25, 1938

Your Excellency:

In July 1937, as President of the International Chamber of Commerce, I received by your order the Merit Cross of the German Eagle, which was presented to me by Dr. Schacht on behalf of the German Government, in recognition of my efforts for world peace, and better economic relations between Germany and other nations.

In expressing my thanks to you, I stated that I would cooperate with you in the future as I had in the past in connection with these two important issues. This, I am still most anxious to do; but upon my recent return to my country after an absence of several months I find a change in public sentiment and a loss of good will to your country, and unless something can be done to bring about a more friendly understanding on the part of our people, I feel it is going to be difficult to accomplish mutually satisfactory results in connection with our trade relations.

The change in sentiment referred to has been brought about through the decisions of your Government in dealing with minorities, and I respectfully appeal to you to give consideration to applying the Golden Rule in dealing with these minorities.

I have read with the greatest interest the statement that your Government is prepared to make arrangements with a committee of leading Quakers to assist German Jews in the spirit of charity and the Golden Rule, I venture, therefore, to accept this act as a symbol of willingness on your part to grant more generous treatment to minorities.

If your Excellency would follow up this act of kindliness with policies inspired by its humanitarian effort, it would, in my opinion, be the one way by which those interested in the exchange of goods and services and high ideals might find the opportunity to help Germany regain the valuable trade and good-will which she has lost.

Very respectfully yours,
Thomas Watson
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Watson would be able to show his direct and unequivocal protest letter to anyone as evidence of vociferous objection to Hitler's anti-Semitism. Presumably the letter could be exhibited with the same flourish Watson employed in displaying other letters to and from world leaders, some of which he routinely carried in his inside suit pocket. Surely, the November 25, 1938, letter would put Watson on record as unalterably opposed to Hitler's campaign. But somehow, Watson's explicit letter to Hitler was . . . misaddressed. Watson could always say it had been mailed. But in truth the Post Office returned it—unopened. Watson's secretary tried again four months later.
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People of conscience throughout the world were outraged at the Hitler regime. Yet Germany was on the verge of expanding its use of Hollerith systems to an unprecedented level. Watson needed to cover himself in the Reich and at home. He would now pursue a strange public posture, essentially speaking from both sides of the punch card. Deftly, he would mix his messages of subtle advocacy for Reich territorial and economic hegemony with patriotic assertions supporting American defense measures, and almost pollyannaish aphorisms offered to Germany about its brutal anti-Semitism. Watson would always be able to point to out-of-context portions of his remarks to satisfy any audience—be it those listening in the Nazi Reich or the United States. At the same time, all mention of Germany as the linchpin of IBM's overseas operation was conspicuously dropped from IBM press statements.

For example, just after
Kristallnacht,
when Watson returned from Europe, his usual dockside remarks to the media listed the many countries he had visited, including Greece, Italy, Romania, Portugal, Turkey, and France. But Germany was not mentioned—the first time since the rise of Hitler that Watson had omitted the country name from his proudly detailed itineraries. A newspaper article about IBM's foreign employees studying at the company sales school in Endicott spoke of students from twenty-four countries. Yet Germany's name was the only one not listed—again, the first time the Reich's place in IBM's international commerce was omitted, even though, as usual, representatives from Germany were there.
⁴²

Platitudes were dispensed in abundance. "World Peace through World Trade" became Watson's official jingo to explain away IBM trading with Nazi Germany. Beckoning Hitler to please "observe the Golden Rule" paled as a schoolboy-like admonishment in the face of the ruthless torture and dispossession gripping German Jewry. But Watson was an expert at calculated public pronouncements on troublesome topics. When he first assumed the helm of the IBM organization—back in the CTR days—he scheduled a company assembly to demonstratively and publicly lecture his sales force, "You must not do anything that's in restraint of trade . . . or that could be construed by anybody as unfair competition." Ironically, these stern moralistic directives were conspicuously broadcast just at the height of the Justice Department's decision-making process on re-prosecuting Watson for his role in one of America's most aggravated cases of anti-competitive tactics.
⁴³

So, at the same time the IBM Leader was advocating "the Golden Rule," he wrote a letter to the world's governments urging them to "collaborate regardless of divergent ideals and opinions" to avoid war. In international economic forums, he asserted "the divine right of every people to choose its own government" and demanded "adjustments that would give all countries an opportunity to share in the resources of the world."
⁴⁴
Watson's choice of words bore the unmistakable ring of Germany's party line, which likewise demanded that it be allowed to share in all of Europe's natural resources for the greater glory of the Reich.

None of Watson's public posturing stopped him from accelerating Dehomag's ability to do Hitler's bidding throughout Europe—so long as IBM could keep its distance and Watson could remain removed from the process. In late May 1938, shortly after Germany annexed Austria, Watson visited Berlin on Dehomag business. Watson requested Dehomag's management to prepare to extend its operations into Austria, thus replacing the existing subsidiary controlled by IBM NY. Dehomag was going to develop some unique tabulating equipment, based on its powerful new D-11, engineered for special applications that could generate significant revenues. However, these new efforts would have an impact on complicated issues of profit sharing, tax, bonus, and general compensation—all of which Watson wanted carefully negotiated.
⁴⁵

More and more, Watson tried to work through intermediaries. The negotiation itself was delayed until shortly after Watson left Germany. Then, on the morning of June 24, 1938, Dehomag convened a shareholder meeting attended by two Geneva-based IBM executives representing the New York office. Although Watson was not there, he controlled the decisions from afar through his 85 percent vote, cast through his European General Manager John E. Holt who held a power-of-attorney. Point six of the minutes called for negotiations "as soon as possible."
⁴⁶

It was left to a member of the IBM NY's board of directors, Oscar L. Gubelman, to work out the details of Dehomag's expansion into Austria, along with certain loan provisions and stock options as inducements for Dehomag Directors Rottke and Hummel. Gubelman agreed that the directors' loan provisions and stock options could be incorporated into a formal supplemental employment contract, but the Austrian expansion itself was to be kept as an oral arrangement recorded only by memo. On July 6, 1938, Rottke and Hummel jointly confirmed the oral arrangement in a letter to Gubelman, who was staying at Berlin's Hotel Adlon. Their letter listed three main points: "a) New Products, b) New Territories, c) reduction of [stock] repurchase price in case of premature leaving the Dehomag due to notice of resignation."
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