Tower of Basel: The Shadowy History of the Secret Bank That Runs the World (17 page)

McKittrick’s Reichsbank contacts made him an excellent source for news about life inside the Third Reich. Hitler, McKittrick revealed, had become indecisive. “Instead of having a definite plan laid out, and pursuing it relentlessly, he switches from one plan to another,” the OSS document noted.
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There were even rumors that he had started drinking. Despite the soaring casualties on the Eastern Front, and the surrender at Stalingrad, most Germans, McKittrick explained, still believed state propaganda. He related how one friend of his in the Reichsbank said he had to get out of Germany every now and again or he would start to believe the propaganda himself. McKittrick was also in contact with Hjalmar Schacht. The BIS president was not a fan of Schacht’s and regarded him as a “political crook and entirely untrustworthy.” Schacht still saw Hitler every couple of months, and when the Nazi leader asked numerous technical questions Schacht proffered his advice. Sometimes Hitler took it, other times not. As for Basel, McKittrick believed that there were twenty thousand Germans living in the city, who were “well-organized under Nazi leadership.” He did not believe he was under observation by the Gestapo.

Some of most intriguing material the OSS obtained from McKittrick detailed his role as a back-channel between anti-Nazi Germans and the United States. This doubtless explains why the State Department eventually allowed him to return to Basel and the BIS to stay open. McKittrick told the OSS that he received “peace
feelers” from non- or anti-Nazi Germans twice a month. All of them, however, argued that, even if a deal was made, Germany would remain the dominant European power “with a free hand in the east and a large measure of economic control in western Europe.” These envoys included a “Berlin lawyer” and a “retired diplomat” Adam von Trott zu Solz. A former Rhodes Scholar at Oxford University, von Trott was a German nobleman and diplomat. He had lived in the United States and was active in the resistance against Hitler. McKittrick’s personal papers include the record of a meeting with von Trott in June 1941. Von Trott asked McKittrick to arrange for five hundred dollars to be transferred by the Institute of Pacific Relations (a liberal think tank based in New York) to Switzerland, so von Trott could keep in touch with the IPR’s European members. Communications for von Trott should be sent through Werner Karl von Haeften, the German consul in Basel, McKittrick noted.
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Von Trott was a leading figure in the July 1944 plot against Hitler. Had it succeeded, he would have become foreign minister and led negotiations with the Allies. After it failed, von Trott was hanged.

McKittrick, like his colleagues in London and Berlin, strongly emphasized the BIS’s future use in planning the postwar order. “While it does not concern itself with political affairs, it does offer facilities for the discussion of postwar financial and economic questions,” wrote the author of the OSS memo, “and he thinks that a year or two can be saved in getting Europe back to work by informal international conversations under its auspices.”
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McKittrick’s return to New York was the talk of Wall Street. On December 17, 1942, Leon Fraser hosted a dinner for him at the University Club. Thirty-seven of the United States’ most powerful financiers, industrialists, and businessmen gathered in his honor. The Treasury was stonewalling him, his passport was stuck on a bureaucrat’s desk, and the OSS was grilling him, but here at least friends and admirers surrounded him. They included the presidents of the New York Federal Reserve, the National City Bank, the Bankers’ Trust, the New York Life Insurance Company, the New York Clearing House Association, and General Electric, as well as a former undersecretary of the Treasury and a former US ambassador to Germany. Standard Oil, General Motors, J. P. Morgan, Brown Brothers Harriman,
several major insurance companies, and Kuhn Loeb also sent senior executives. It was probably the greatest single gathering of America’s war profiteers.
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Many of these companies and banks had, like McKittrick, made fortunes from their connections with Germany, connections that carried on producing massive profits long after Hitler took power in 1933 and certainly after the outbreak of war in 1939. Some have been accused of continuing links with the Nazis after December 1941, through subsidiaries in Germany—accusations they deny. The three most powerful sectors were oil, cars, and banks.

Walter Teagle, Crane’s boss, was a founding board member of General Aniline and Film, IG Farben’s American subsidiary. When in 1929 Standard Oil entered into a “division of fields” arrangement with IG Farben—a cartel—IG Farben retained supremacy in the chemicals field, including in the United States, in exchange for giving Standard Oil its oil patents for use anywhere—except Germany, according to a Senate investigative committee.
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Further agreements followed over the next decade to share technical information and patents. In 1938 Standard sent the full specifications of its processes for synthesizing Buna—artificial rubber—to IG Farben. In exchange, the German chemical combine promised its latest research—once it had permission from the government. Not surprisingly, this was not forthcoming. Thus IG Auschwitz, the firm’s massive chemical and Buna factory, run by slave labor and concentration camp inmates, was based partly on American scientific knowledge.

When war broke out in 1939, IG Farben assigned its Buna patents to Standard Oil—to prevent them being seized as enemy property. This was not illegal. But Standard’s obstructive policies over development of the Buna industry were. By the time the United States entered the war in December 1941, the country was facing a desperate shortage of artificial rubber. Standard had deliberately delayed the development of the domestic artificial rubber industry by repeatedly telling other American companies that it would share its expertise, even though it had no intention of doing so, to prevent them developing alternatives, according to
the US Department of Justice, which brought a lawsuit against the company.
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In March 1942, six Standard Oil subsidiaries and three company officials were fined five thousand dollars each by a federal judge for violating anti-trust laws. IG Farben was named as a co-conspirator. Thurman Arnold, the assistant attorney general in charge of the Antitrust division, accused Standard of “treason” and entering an “illegal conspiracy” to prevent the development and distribution of artificial rubber. In its defense, Standard claimed that its agreement with IG Farben had resulted in the release of new information about synthetic rubber production, fuel, and explosives.

British Security Coordination, the British intelligence service operating in the United States, was closely monitoring the connections between Standard Oil, GAF and IG Farben, whose CEO, Hermann Schmitz, sat on the board of the BIS. GAF and Chemnyco, another American subsidiary of IG Farben, were the headquarters of Nazi industrial espionage in the United States. British intelligence believed that before the outbreak of war, IG Farben’s spy service, “Buro IG,” had dispatched deep cover agents to settle in the United States, to make business contacts, and to glean American scientific know-how. Some had married American women and become citizens. Chemnyco was also investigated by the US Department of Justice, which reported that it was a spying operation: “The simplicity, efficiency, and totality of German methods of gathering economic intelligence data are exemplified by Chemnyco, Inc., the American economic intelligence arm of IG Farbenindustrie. Chemnyco is an excellent example of the uses to which a country with a war economy may put an ordinary commercial enterprise.”
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Donald MacLaren, a BSC operative based in New York, had been working for months on an operation against GAF. MacLaren’s plan combined dirty tricks with very public exposure of the firm’s links to Nazi Germany. MacLaren, an ebullient Scot and bon viveur, was a forensic accountant by training and an expert in economic warfare. He had untangled the web of connections linking Standard Oil and Sterling Products, an American pharmaceuticals firm, with GAF and IG Farben. GAF, he wrote, was a “supply depot” for the Latin American subsidiaries of IG Farben and sought to “camouflage its German ownership.”
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MacLaren
knew that there were two factions in GAF’s board of directors. He infiltrated both groups under a false name and gained their confidence. He then persuaded each of his contacts to reveal their faction’s plan to outmaneuver the other grouping—information that he promptly passed on to the other side, which produced “an outright quarrel between the two.” The result was most satisfactory, he wrote, with “one faction racing the other to Washington to report the wicked activities of their colleagues to the Department of Justice, thereby exposing their German instructions to the United States government.”
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MacLaren and his colleagues in British Security Coordination also set up a company called Booktab. The firm published a seventy-page pamphlet entitled
Sequel to the Apocalypse: The Uncensored Story—How Your Dimes and Quarters Pay for Hitler’s War
. With a trenchant foreword by Rex Stout, the popular mystery novelist, the pamphlet described, in forensic detail, “the hidden corporate relationships between American organizations and German monopolies.” The pamphlet, published in early 1942, demanded the “the full penalty” for German industrialists and bankers, including Hermann Schmitz and Hjalmar Schacht. Two hundred thousand copies were printed. Despite the best efforts of the companies exposed to sabotage the project by buying up as many copies as possible, tens of thousands were sold. The facts about American business links with the Nazis were now out.

Sequel to the Apocalypse
caused a nationwide furor. It was certainly a public relations disaster for Standard Oil. The Treasury Department took control of GAF in February 1942 and soon after handed the stock to the newly established Alien Property Custodian. One hundred members of staff known to be sympathetic to the Germans were sacked, from directors to engineers. GAF’s research arm was turned over to war production. By 1944 the Custodian had also seized a total of twenty-five hundred patents from Standard Oil and its affiliates. Standard Oil eventually released all its patents for artificial rubber for free.
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Meanwhile, in Nazi-occupied Poland, the slave laborers at IG Auschwitz were enduring a living hell of backbreaking work, extreme brutality, and starvation rations. Among them was a teenage boy named Rudy Kennedy.
Rudy and his family were deported to Auschwitz in 1943 from the ghetto in Breslau, now Wroclaw, in Poland, when he was fourteen. When the train arrived at the selection ramp, Rudy took his father’s advice and lied about his age, claiming to be eighteen:

                 
My father and I went to the right, my sister and my mother to the left. The guards kicked and beat us, and we went into a room with showers and basins at one end. My father was naked with hundreds of older men. Everyone was very agitated. They shaved our hair and told us to go into the shower. I was very disturbed by the shoes. All the shoes were piled up and jumbled together in a big heap. I wondered how they were going to sort them out, if we would ever wear them again. We went into the shower. Water came out. By then my mother and my sister were dead. The temperature was about minus ten and we were chased naked and barefoot down a frozen path to a blockhouse. We were given a red blanket and a piece of bread and salami. In the morning we were given clothes, everything at random, nothing fitted. They called out our names and we had numbers tattooed on our arms. The tattoo needle was very thick, like a knitting needle and the blood of the previous prisoner was still running down it.
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Rudy and his father were sent to the IG Farben factory, where he worked at installing electric motors. The extremely harsh conditions were designed to kill off the laborers in a couple of months. Rudy survived because of his specialist knowledge of electrical systems, which meant he had access to food. He became a kind of mascot. One day a supervisor dropped his sandwich on the floor and told Rudy to pick it up. He would not eat it, he told the starving boy, because it was dirty. But Rudy could have it. This counted as an act of kindness. The IG Farben managers were fully aware of what was happening in their factory, Rudy later recalled. “We saw the civilians from IG Farben all over the place. We worked
very near a site where they were building a chemicals factory. We could see people dragging sacks of cement, then they would collapse and die. The IG Farben civilians had to go past that on the way to their canteen. They absolutely knew what was going on. There is no question.”
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When IG Farben’s managers judged their slave laborers to be
gebraucht
, or used up, they were dispatched to Auschwitz I or II, to be dispatched by Zyklon B. Degesch, the German pest control company, which manufactured the poison gas capsules was a subsidiary of IG Farben. Rudy Kennedy survived. His father, Ewald, endured for about two months before being killed by an injection of prussic acid, which fit with IG Farben’s planners’ calculations about how long a slave laborer could live on his own body fat reserves.
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Walter Teagle resigned from the board of Standard Oil in November 1942. Bruised and disappointed by the pillorying he had received in the media, in 1944 he set up the Teagle Foundation with a mission to “advance the well-being and general good of mankind throughout the world.” The foundation’s reach did not extend to Nazi-occupied Poland but it still exists today.
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War had brought enormous profits to the American car industry. Opel, General Motors’ German division, produced the “Blitz” truck on which the Wehrmacht invaded Poland. Ford’s German subsidiary produced almost half of all the two- and three-ton trucks in Nazi Germany. There is a strong argument that without General Motors’ and Ford’s German subsidiaries the Nazis would not have been able to wage war.
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Hitler was certainly an enthusiastic supporter of the American motor industry’s methods of mass production. He even kept a portrait of Henry Ford by his desk.