Tower of Basel: The Shadowy History of the Secret Bank That Runs the World (18 page)

In July 1938, Henry Ford was awarded the Grand Cross of the German Eagle, the highest honor Nazi Germany could bestow on a foreigner. The following month James Mooney, who ran General Motors’ overseas operations, was also awarded a high Nazi honor. Mooney was a regular visitor to Berlin, where he met numerous Nazi officials, including Hjalmar Schacht, to negotiate
deals to produce vehicles for the military. In 1939 Mooney even held talks with Hermann Goering on converting the General Motors plant at Russelheim to production of the Junker Wunderbomber.
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George Messersmith, the U.S. Consul-General in Berlin, who later served as ambassador to Austria, was watching Mooney’s enthusiasm for the Nazis with alarm. Messersmith, despite his German origins, was an ardent anti-Fascist. His reports through the decade detail Mooney’s unwavering determination to build up General Motors’ links with the Nazis. Mooney, like Sosthenes Behn (the president of ITT whose German partner was the BIS director Kurt von Schröder) believed that the Nazi regime was here to stay in Germany and was “well established,” wrote Messersmith in November 1934.
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Thanks to Schacht’s policies and the armaments drive, the German economy was booming. “It is curious that he and Colonel Behn and some other factories in Germany give this opinion. The factories owned by the ITT in Germany are running full time and in double shifts and increasing their capacity for the simple reason that they are working almost entirely on government orders and for military equipment.”
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Numerous American business leaders traveled to Berlin to ingratiate themselves with the Nazis. Thomas Watson, the president of IBM, arrived in 1937, to be decorated with the Merit Cross of the German Eagle. That was one grade down from Henry Ford’s honor. But Watson could comfort himself with the fact that Schacht himself had hosted the ceremony and given a speech in Watson’s honor.
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The following year, after the Nazi annexation of Austria, the SS used one of IBM’s prototype computers, known as a Hollerith machine, to keep a record of Jewish properties and their subsequent Aryanization. The Vienna Nazi party newspaper boasted that thanks to the Hollerith machine, “within six weeks we shall have laid hands on all Jewish fortunes over 5,000 marks; within three years every single Jewish concern will have been Aryanized.”
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The historian Edwin Black argues that IBM’s technology, used for cataloging and identifying the Jews of Europe, was crucial for the organization of the Holocaust.
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Mooney’s medal was certainly a good investment by Hitler. In late 1938, Mooney was still pressing for a trade agreement with Nazi Germany, noted Messersmith, claiming that it would “help the conservative elements in Germany and therefore improve the prospects for a more reasonable regime in Germany,” as though a wealthier Third Reich would somehow become more benign. Messersmith dismissed Mooney’s claim. His real aim was to “in some way or other help along the important General Motors interests in Germany.”
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Even in April 1941 Mooney refused to get rid of Axis supporters in the company’s overseas subsidiaries, Messersmith wrote to Breckinridge Long at the State Department. “There are some cases like the General Motors, which are not giving us any cooperation in our program to get rid of anti-American agents of American firms abroad. This is due to the fact that there are certain people in the General Motors, such as Jim Mooney, and some of the men whom he brought into the organization over the years, who are really betting on a German victory and who hope to be the big boys in our country if there is a Nazi victory.”
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Chase National Bank was the world’s largest private bank in terms of assets and deposits. Its New York headquarters was a key hub in the Nazi’s global financial network and held accounts for the Reichsbank and Germany’s Gold Discount Bank. Chase was so close to the Reichsbank that after the war, Thomas Dodd, a prosecutor at Nuremberg, claimed the bank had once offered Emil Puhl, the vice president of the Reichsbank and BIS board member, a job in New York.
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The Treasury closely monitored Chase’s transactions for its Nazi clients. On October 3, 1940, Merle Cochran sent a note to Henry Morgenthau detailing transfers from Chase’s German accounts. In the previous two days alone, $850,000 had been debited from the Reichsbank account, of which $250,000 was sent to the Wallenbergs’ Enskilda Bank in Stockholm. A further $1.13 million was transferred from the account of the Gold Discount Bank to Topken and Farley, a firm of lawyers at 17 Battery Place, New York.
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Chase National was of special interest to the Nazis because of its overseas branches in London, Paris, Mexico City, and Shanghai. A wartime investigation of the bank’s Nazi links, by Paul Gewirtz, a US Treasury official noted, “The Chase Bank, like the other American banks in France, operated on a relatively small scale. The attitudes of the Germans, however, when they came into France, indicates that they looked beyond the activities in France and were more interested in the international character of an organization like Chase with its established branches through the world and its history in international banking which including a friendly intercourse with the Germans.”
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In other words, Nazi Germany valued Chase National, like the BIS, for its transnational reach.

After the German invasion of France in May 1940 the Paris headquarters of Chase National had enthusiastically collaborated with the country’s new overlords—with the knowledge of the bank’s headquarters in New York, reported Gewirtz.

                 
Investigations conducted at the Paris Branch and at the Home Office in New York of Chase Bank disclosed that the bank operated in Paris throughout German occupation and engaged in sundry activities indicate an over-riding desire to continue operating even though this required a close collaboration with the German authorities. There is evidence that the Home Office in New York was fully informed of these activities, at least until late in 1942, but took no steps to discourage them, at the same time withholding pertinent information from United States Governmental authorities.
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Carlos Niedermann, the manager of Chase’s Paris office, was an ardent Nazi sympathizer. He closed Jewish-owned accounts and transferred the assets to Nazi-owned ones. In May 1942, Hans Caesar, a director of the Reichsbank, was put in charge of American banks in France. Niedermann
met with Caesar. Caesar held the bank in “very special esteem” because of its New York headquarters. Niedermann recorded, “It is a fact that the Chase Bank enjoys special prestige in the banking circles in question owing to the international activities of our head office.”
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Thomas Lamont was a senior partner at J. P. Morgan, one of the BIS’s founding banks, a veteran of the reparations negotiations and, naturally, a friend of John Foster Dulles. Lamont had represented the US Treasury at the Paris Peace Conference in 1919 and later sat on the Young Plan committee. Like Chase National, J. P. Morgan encouraged its French subsidiary, known as Morgan & Cie, to continue trading with the Nazis, according to declassified US intelligence reports. As the Germans advanced on Paris, the French authorities ordered Morgan & Cie to liquidate their accounts and destroy their stocks of banknotes. Morgan & Cie ignored the order. Instead, like Chase National, the bank opened a new office in Vichy, France, at Châtel-Guyon to service its Nazi clients.

A Treasury investigation reported that “the primary loyalty of the Morgan partners was not to the US or France, but to the firm. Regardless of national considerations, they invariably acted in what they deemed to be the best interests of Morgan et Cie.”
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Morgan & Cie even gained permission to handle payments from German accounts to the European subsidiaries of American firms that were building military equipment for the Third Reich—such as General Motors. This ran so smoothly that Morgan & Cie’s American lawyers cabled the firm’s French managers to thank them: “The office at Châtel-Guyon has proved to be of great practical utility; without it we could not have carried on any business with the outside world.”
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SWEDEN, ONE OF
the Nazis’ most important trading partners, was also represented at McKittrick’s dinner, by Lars Rooth, the son of Ivar Rooth, the director of the Rijksbank. Ivar Rooth was one of the world’s longest-serving central bankers and a founding member of the new transnational financial elite. He was important enough to be elected unanimously to the BIS board in 1931, even
though Sweden was only a shareholder and not a founding member of the BIS. Rooth stayed until 1933 and returned in 1937, praised in the BIS annual report for that year as a banker well known for his “constructive work of collaboration.” Working with the Wallenberg brothers at Enskilda Bank, Rooth helped steer Sweden through a neutrality whose profitability was rivaled only by Switzerland’s. Swedish firms supplied the Nazis with millions of tons of iron ore to be turned into tanks, guns, and ammunition, with vital ball bearings, foodstuffs, and timber. Rooth, it seemed, was indeed a highly skilled collaborator, although not only in the meaning referred to in the BIS report.

Thomas McKittrick was the third American president of the BIS, after Gates McGarrah and Leon Fraser. The American connection had shaped the BIS since its foundation in 1930. The bank had been ostensibly set up to administer the Young Plan for German reparations, named for the American diplomat who had brokered the deal. The BIS was the trustee for the loans Germany took out from Wall Street to meet those obligations. The bank’s American presidents stood at the center of the network of connections between Wall Street and American industry and Nazi Germany. Standard Oil had formed a cartel with IG Farben, whose CEO, Hermann Schmitz, sat on the board of the BIS. The French subsidiary of J. P. Morgan, a founding member of the BIS, traded profitably with the Nazis after the invasion of France. ITT had gone into partnership with Kurt von Schröder, the powerful Nazi banker who was a director of the BIS. For the new class of transnational financiers, war was merely an interruption in commerce, albeit a highly profitable one. Both McKittrick and his guests were already planning how to maximize their profits in the postwar era. Meanwhile, the money channels had to be kept open, and they ran through Basel. McKittrick embodied the American-Nazi financial network, which is why dozens of the United States’ richest and most powerful businessmen and industrialists gathered in New York that freezing December evening to honor Hitler’s American banker.

MCKITTRICK REMAINED MAROONED
in New York, unable to return to Basel, until Montagu Norman came to the rescue. Meanwhile the BIS
president was still a man in demand. Thomas Watson, the president of IBM who had been honored by Hitler, could not attend McKittrick’s dinner at the University Club. Instead, Watson, who was also the president of the International Chamber of Commerce, arranged a luncheon in McKittrick’s honor. Aware that not all of the American public shared the financiers’ enthusiasm for the BIS, McKittrick limited himself to three private formal engagements while in New York. On January 12, 1943, he wrote to Ernst Weber, the president of the Swiss National Bank and chairman of the BIS board, that “it seemed to me best, however, for the BIS not to take part in public or semi-public gatherings.”
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One day, McKittrick paid a call on a diplomat at the British embassy in Washington, DC. He had reassuring news for the BIS president. The Bank of England and the Treasury were “very interested in the BIS,” the British diplomat said. “I’ve got to take this up with London. I’ll be surprised if I can’t get you back.”
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Calls were made, cables were sent, and the wheels of transitional finance started turning. Rafaelle Pilotti, the BIS’s Italian secretary general, told McKittrick to travel to Lisbon and report to the Italian Legation, which would help him get to Rome, and from there he could travel on to Basel. McKittrick eventually received permission to leave the United States and arrived safely in Lisbon. After a stop in Madrid, he flew to Rome.

The United States was at war with Italy, and McKittrick was a citizen of an enemy nation, but none of that mattered. The BIS president still received a regal reception, he recalled. “I was met at the airport as if I was the king of something. Nobody looked at my passport; they just waved their hands at it.” McKittrick was then taken to a comfortable hotel where Pilotti met him. Understandably, the Italian authorities did not want an American banker wandering freely around Rome. Pilotti arrived, to act as McKittrick’s minder. The two men sent out for a sumptuous dinner. “That was the best meal that I ever had in the war, and Italy was really short of food, but good gracious they gave me a wonderful meal,” recalled McKittrick. Soon after, at 11 p.m., McKittrick was put on a train to Switzerland.
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McKittrick finally arrived back in Basel in April 1943. His trip to the United States had produced mixed results. Despite his lobbying and John Foster Dulles’s legal advice, the BIS’s request for exemption was denied. The bank’s funds in the United States remained frozen. But if that battle was lost, a far larger one loomed: for the bank’s very survival. This time Henry Morgenthau, rather than McKittrick, would find himself outgunned.

          
“The bearer of this letter, Mr. Thomas McKittrick, President of the Bank of International Settlements, is a close friend of a prominent member of the State Department stationed in Switzerland, Mr. Allen Dulles.”