DURING THE
BATTLE FOR THE ARDENNES IN December of 1944, Hitler headquarters on the
Western
Front was hidden underground in. a woods one mile northwest of
Ziegenberg.
It was realized there that the failure of this offensive meant the war
was
ended. AH to follow was charade, merely a resistance that would
continue to
take Allied and German lives until May 1945. At the height of the Battle of the Bulge, champagne was served
in the Western Headquarters bunker on Christmas day, and a euphoric
Hitler
spoke optimistically of 1945.
One man not
at all euphoric was Martin Bormann, deep in his circumspect designs to
enable Germany to emerge from certain military
defeat to commercial victory in. the postwar world. On this Christmas
day, the
Reichsleiter sipped champagne with the others of the headquarters staff
and
agreed, with Hitler that 1945 would be a very interesting year indeed.
He then
stepped back into his office, to the papers spread out on his desk,
some of
which were reports received as to the progress of his flight capita
program,
which had been launched immediately following the meeting of German
industrialists in Strasbourg on August 10.
On one
report he noted that the plan to increase the registration of German
patents in
neutral nations had proceeded satisfactorily. In Sweden, for instance, patent registration
in
131
1938 had
been 1,618, but after the Strasbourg meeting in 1944 the patent
registration had risen to 3,377. The ownership of patents represents a
blockhouse of power in any commercial contest, and the most important
German
industrial corporations were doing their best to maintain their
ownership of
vital processes. The firms represented on the memorandum were I.G.
Farben,
Zeiss-Ikon, Bosch, Daimler-Benz, A.E.G., and Siemens. There was a
similar
increase in patents by these and other German firms in Switzerland and Portugal.
Bormann had
another report, on the continuing creation of assets in the neutral
nations.
German trade with and payments to these were carried on mainly through
clearing
agreements. In Spain, Sweden, and Turkey a two-price system was now being
used for German goods. The lower price was paid through the clearings
(the
total of banking claims presented daily in settlement of accounts at a
clearing
house) while the higher price was retained on the books of the neutral
importer. The difference accumulated was paid to the account of the
German
importer-exporter, becoming flight capital on deposit. To give some
idea of the
size of such deposits: within months of the inauguration of the
two-price
system, Swedish firms owed about $18 million in kroner and Turkish
firms $12 million
in Turkish lira. As goods shipments increased the sums on deposit in
neutral
banks accelerated, then the excess capital was invested in local real
estate
and industry.
Balance
sheets showed Bormann that eleven mines in central Sweden were now owned by German firms and
operated directly or indirectly through Swedish companies by the large
German
steel firms of Roechlingsche Eisen and Stahlwerke G.m.b.H..,
Voeklingen, Saar; Hosche, Dortmund; Friedrich Krupp, Essen; Gutehoffnungshutte, A.G., Oberhausen; and Vereinigte Stahlwerke, Düsseldorf.
The coal now mined was shipped to Germany, with German firms paid in Sweden under the two-price system.
Members of
the German steel cartel (such as Vereinigte Stahlwerke, of which
Hermann
Schmitz was a director, Mannesmann, Krupp, Gutehoffnungshutte, and
Stahlunion)
all owned related enterprises in Sweden, and the importation, handling,
and
transportation of coal and coke became almost a projection of Germany’s
coal
industry. In shipbuilding, the
132
Swedish
companies owned or controlled by German shipping interests accepted
vessels
built by the Swedish firms and kept them in Swedish waters until after
the war.
A further example of masked investment was the money paid into the
Swedish
shipping firm of Rederi A/B Skeppsbron, which received a
German-guaranteed loan
of $3 million made from German supplies of free Swedish kroner in which
the
vessels were mortgaged to the lender. Although the Swedish company
remained officially
the owner of the vessels, the German Hamburg-Amerika line was the real
owner.
Martin
Bormann also knew that the vast funds sent outside the Third Reich
under his
new Nazi state policy were rapidly concealed in safe havens. In Sweden, the technique was to use Swedish
cloaks or German-controlled local nationals to increase the
recapitalization of
Swedish firms. This produced a further stock buy-in by German
interests. A big
penetration was made into commercial and mercantile enterprises, where
nearly
two hundred Swedish firms were now operating on capital wholly or in
part
supplied by Germans or German firms.
In 1944
there was intense pressure on Sweden by American and British government
representatives to halt the export of iron ore, special steels, and
machine
tools to Germany. The A1lies also wanted to deny the
Germans Swedish ball bearings, a prime element in all machinery of war
used by
the Wehrmacht and Luftwaffe. They also wanted German military traffic
through Sweden to Norway stopped. An interesting sidelight
to this struggle between the Allies and Germany for influence on Sweden is the peculiar role played by
Marcus and Jacob Wallenburg, members of Sweden’s most important banking family.
Marcus headed a government commission which negotiated trade and
political
agreements with Britain and the United States throughout the war. At the same
time, his brother Jacob was chief trade and economic negotiator for the
Swedish
government with Nazi Germany. Thus were both sides covered for Swedish
business, including the family’s own very substantial economic
interests. Following
World War II this family empire was to achieve its most spectacular
prosperity,
as German investments under the Martin Bormann program matured in their
Swedish
safe-havens. In this way impressive wealth accrued to the Wallenburgs
as well
as to other Swedish and German
133
investment
groups controlling large holdings in the many Swedish companies under
German
dominance in 1944. For a time, however, in 1944 under the pressure of
threatening to place Sweden on an Allied blacklist, coupled
with promises of compensating Allied orders, Sweden agreed to Allied demands in
December 1944, the very week Martin Bormann was reviewing German
investments in
Sweden. He shrugged at the news clattering aver the
teletype from Berlin. The agreement pleased the Allies but failed
to dent the Bormann-sponsored hidden investment program in Sweden. The war would be over anyway in a
matter of months, and business would pick up again. The binding ties of
marriage, finance, and investment between Sweden and Germany were stronger than ever, and with
peace would come a lessening of Allied probing into German financial
and
business manipulations, particularly when so many Swedes had a personal
stake
in the growth and prosperity of every firm owned or controlled by
German
interests. The Allies were advancing everywhere on the battlefronts and
in
their diplomatic arm-twisting of neutral nations. Yet the outlook of
Reichsleiter Bormann differed little from the pragmatic cynicism of
Hermann Röchling,
the Saar steel magnate, who, when told in December 1944 that the
Saarland would
be overrun in days by American forces, replied almost indifferently:
“We have
lost the Saar once before and won it back. Old as I am, I shall see it
return
to our possession again.” And so it did.
The
movement of German assets into Switzerland had also gone well, Bormann noted
from his reports. Flight capital investments had been accomplished
principally through
the establishment of subsidiaries of powerful German firms. Over half
the total
German capital in Switzerland was used in setting up holding companies
representing I.G. Farben, Merck, Siemens, Osram, Henkel, and others. A
holding
company may not trade in any form. It may only hold stock in other
companies,
but through this device the existing German firms, and the 750 new
corporations
established under the Bormann program, gave themselves absolute control
over a
postwar economic network of viable, prosperous companies that stretched
from
the Ruhr to the “neutrals” of Europe and to the countries of South
America; a
control that continues today and is easily maintained through the
bearer bonds
or shares issued by these corporations to cloak
134
real ownership.
Bearer shares require no registration of identity, for such shares are
exactly
what they mean; the bearer a the majority shares controls the company
without
needing a vestige of proof as to how he acquired them. Thus the Germans
who
participated as a silent force in Bormann’s postwar commercial
campaign—which
is sometimes referred to by aging Nazis as “Operation Eagle’s Flight”
or
“Aktion Adlerflug”—insured their command over the industrial and
financial
institutions that were to move the new Federal Republic of Germany back
into
the forefront of world economic leadership.
In Switzerland the most substantial investments
were in chemicals and drugs, and in electric power and equipment.
German
investments totaled $300 million, of which bank deposits (cash and
securities) amounted
to about $250 million, with direct investments about $50 million. In
the
German—Swiss clearings, Germany’s debt, as the new year of 1945
began, was 1,000 million Swiss francs ($232.1 million). Swiss
investments in Germany and prewar loans to Germany were $445 million.
Six Swiss
private banks were now used by German firms in the flight capital
program: H.
Sturzenegger & Cie., Röchling & Co., Johann Wehrli and
Company, Bank
Wadenswil, Basler Handelsbank, and Kreditanstalt. However, all major
Swiss
banks were serving the Germans in the massive movement of funds. The
big German
banks, Deutsche, Dresdner, and Commerz bank, all had their regular
Swiss
affiliations through which they worked. Deutsche had as its principal
connection
Credit Suisse, and also did business with the Swiss Bank Corporation
and the
Banque Fédérale. Funds transferred from Berlin for a
client list approved by
Bormann went into numbered accounts, and were either held there for
local
investment or soon shifted to neutral nations elsewhere in Europe or
overseas,
to be credited to the accounts of appropriate German corporate
subsidiaries, or
else to entirely new corporations awaiting these start-up monies that
would
enable them to go into business using German patents.
As these
new corporations prospered, they generated more money and profits,
becoming
important elements in the Bormann global economic scheme.
Seven
hundred and fifty new corporations were established in the last months
of the
war under the direction of Reichsleiter Bormann, using the technique
perfected
by Hermann Schmitz.
135
A national
of each country was the nominal head of each corporate structure and
the board
was a mix of German administrators and bank officials, while the
staffing at
senior and middle management levels was comprised of German scientists
and
technicians. In the background were the shadowy owners of the
corporation,
those Germans who possessed the bearer bonds as proof of stock
ownership. The
establishment of such companies, usually launched in industries
requiring high
technical skills, was welcomed in Spain and Argentina, to give two examples, because
those governments appreciated that German companies would generate jobs
and implement
a more favourable balance of trade. Country by country, a breakdown by
U.S.
Treasury investigators of these new 750 German firms was as follows:
Gold always
held a great attraction for Martin Bormann, as it did for all German
bankers
and economic leaders of the Third Reich. In fiscal conferences during
the
occupation years, in Brussels, Paris, and Amsterdam, the German economic specialists
would always advocate more printing of local currencies by the state
treasury.
But when it came to safeguarding their own means, it was gold, always.
Perhaps
it was a subconscious holdover from the early 1920s, when the currency
of the WeimarRepublic had become virtually worthless. In
1943, when Bormann was sitting tail in the saddle as Hitler’s right
hand and as
leader of the Nazi Party throughout the world, as well as chairman of
his own
banking committee, which oversaw the banking practices of every bank in
Germany
and the greater Third Reich, the Reichsleiter made sure that gold
bullion was
drawn into the vaults of the Reichsbank and of the three big commercial
banks
in Berlin. The gold, whatever its origin, would be stamped with Third
Reich
seals and periodically sold to leading Swiss banks, as well as to the
Swiss
National Bank. These banks purchased several hundred million dollars of
such
gold, paying in Swiss francs, which the Germans preferred at this
point. The.
money was then left on deposit in various numbered accounts to be
invested in Switzerland and in other neutral countries, and
ultimately to maintain the Bormann party apparatus abroad.
These
banking channels aside, Martin Bormann had other ways to disperse
German assets
outside of the Third Reich. The
136
diplomatic
pouches of Joachim von Ribbentrop’s Foreign Ministry were used to
transport
gold, Amsterdam diamonds, bearer bonds, and U.S. stocks purchased over the years in
large American corporations. A Foreign Ministry special courier went
twice
monthly to Stockholm, where the gold and diamonds he carried were
sold for kroner currency and then invested in Swedish firms. A similar
pattern
was developed for South
America, where deposits
were made in the Buenos Aires branch of Deutsche Bank. Many individual
Nazis, with Bormann’s permission, transferred their own assets, Von
Ribbentrop
in one shipment banked $1 million, allegedly using an Argentinian
intermediary
named Pedro Rodrigues Panchino as his five percenter, according to the
French
newspaper, France-Soir, in its
edition of February 10, 1945. The hangman claimed von Ribbentrop at Nuremberg. So the throwaway question is
whether the Argentinian kept the money in his own name or it was turned
over to
Bormann’s account. I would think the latter, for one doesn’t fool with
SS men
charged with guarding such sums on behalf of the NSDAP in exile. Others
wanting
large deposits in Portugal or Spain would first ship gold to
Switzerland, order
it sold, then have a check or bank draft sent to Madrid or Lisbon in
care of
their money agent, where it would be deposited and then claimed at the
end of
the war.
Turkey, too, did a brisk business in gold
and other assets. The week when three German armies were attacking in
the Ardennes, German assets in Turkey on the record totaled $30 million,
and the Turkish—German clearing account was $15.7 million in favor of
the
German government. Neither figure tells the whole story of Nazi
resources in Turkey. Two branches of German banks, the
Deutsche Istanbul and the Deutsche Orient (a branch of the Dresdner
Bank), were
depositories for a steady flow of bonds, cash, gold, bank deposits, and
foreign
exchange belonging to German firms and individuals. In Turkey, as in other neutrals, the Germans
had also been able to achieve a safe haven for their money, by
preventing the
normal repatriation of foreign earnings. For example, both major German
banks
had a policy approved by Bormann of accumulating in Turkey all annual profits of the war years,
rather than returning the money to Berlin. It just piled up as a bookkeeping
item ready for transfer to South America
or investment in Turkish business and
137
commerce.
Six big German insurance companies with branches in Turkey followed the same policy. Further,
they followed a policy of linking Turkish insurance companies to their
own
operations by granting readily available German capital in return for
stock
considerations. Thus, these insurance firms generated large fluid
assets that
they invested in real estate and other properties. More than sixty
German-controlled
firms were the linchpin of the Turkish economy, and ran the gamut from
construction to chemicals. In 1944 gold trading grew very active, with
Deutsche
Bank selling $5.5 million in gold coins for clients.
When in
1944 Turkey severed diplomatic relations with the Third
Reich, joining the Allies in 1945, just four months before German
surrender,
there was no blocking of German assets. Thus, the two German banks in Turkey were enabled to transfer millions
to their branches in Spain and Argentina. The German firms that had taken on
a Turkish coloration of ownership were to be reclaimed by their German
owners
after the war.
Throughout
this period of asset transfer, Reichsleiter Bormann’s goal was to have
as much
foreign exchange as possible in position in all neutral nations in both
hemispheres. Aside from the Swiss banks, which made all currencies
readily
available in exchange for goods, trade, or gold bullion sales, the
export of
German products to neutral nations added to the general foreign
exchange funds.
Upon receipt of German goods, an agency in Spain—for example, the Spanish Foreign
Exchange Institute—would credit pesetas to a German-controlled
import-export
company. With such funds accumulating rapid in Spain, Portugal, Sweden,
Switzerland, and Argentina, Bormann and his group, who were handling
the fortunes
of 750 new corporations, would use these corporations in neutral
countries as
cloaks for investing in American companies. Bormann always had a high
regard
for U.S. blue chip stocks as a stable investment, consistently
purchasing a
vast number of shares from the European offices of such New York stock
brokerage houses as Merril, Lynch on behalf of the Reich chancellery
and
Hitler, until war became official between the United States and Germany
and the
buying stopped, for a time.
In 1941,
investments in U.S. corporations by German companies
and assorted German individuals held voting ownership in 170; minority
ownership was held in another 108 American companies. These businesses
covered
the following fields: manufacturing (foodstuffs, chemicals, electrical
and
automobile equipment, machinery and machine equipment, other metal
products);
petroleum production, refining and distribution; finance; trade; and
miscellaneous.
American
industry, of course, had a financial stake in German industry. In the
same year,
1941, 171 U.S. corporations had major investments
in German firms amounting to $420 million. A listing of these
corporations is
identical to the general categories under German ownership in the United States.
When
Bormann gave the order for his representatives to resume purchases of
American
corporate stocks, it was usually done through the neutral countries of Switzerland and Argentina. From foreign exchange funds on
deposit in Swiss banks and in Deutsche Sudamerikanische Bank, the
Buenos Aires
branch of Deutsche Bank, large demand deposits were placed in the
principal
money-center banks of New York City: National City (now Citibank),
Chase (now
Chase Manhattan N.A.), Manufacturers and Hanover (now Manufacturers
Hanover
Trust), Morgan Guaranty, and Irving Trust. Such deposits are interest
free and
the banks can invest this money as they wish, thus turning tidy profits
for themselves.
In return, they provide reasonable services such as the purchase of
stocks and
transfer or payment of money on demand by customers of Deutsche Bank,
such as
representatives of the Bormann business organizations and Martin
Bormann
himself, who has demand accounts in three New York City banks. They continue to do so. The
German investment in American corporations from these sources exceeded
$5
billion and made the Bormann economic structure a web of power and
influence.
The two German-owned banks of Spain, Banco Aleman Transatlantico (now
named
Banco Comercial Transatlantico), and Banco Germanico de la America del
Sur,
SA., a subsidiary of Deutsche Bank, served to channel German money from
Spain
to South America, where further investments were made.
Argentina was the mecca for such money in the
Western Hemisphere,
and when Bormann gave the go-ahead in his over all flight capita
program after
the decisions at Strasbourg, over $6 billion of this money flowed into Buenos Aires for investment there and elsewhere
in Latin America.
The investments
139
covered factories,
hotels, resorts, cattle, banks, land, sugar and coffee plantations,
metallurgy,
insurance, electrical products, construction, and communications. It
was much
the same investment spectrum as established in Spain. West German investments today
account for nearly 45 percent of all foreign investments in Spain.
Before
D-Day four Paris banks, Worms et Cie., Banque de Paris et des Pays-Bas,
Banque
de l’Indochine (now with “et de Suez” added to its name), and Banque
National
pour le Commerce et l’Industrie (now Banque Nationale de Paris), were
used by
Bormann to siphon NSDAP and other German money in France to their bank
branches
in the colonies, where it was safeguarded and invested for its German
ownership.
In addition
to overseeing his 750 new corporations, Martin Bormann was also kept
apprised
of I.G. Farben’s activities in neutral countries, as well as the
intensified
activities of other major firms that were utilizing the new Bormann
policy of
transferring Third Reich money to subsidiaries. Farben had eight
subsidiaries
in Argentina, three in Portugal, four in Sweden, six in Switzerland, and fourteen in Spain. A.E.G., the giant electrical
equipment manufacturer, had six subsidiaries in Argentina, three affiliates in Spain, and four in Sweden. In brief, every major German corporation
with an international operation strengthened its branches,
subsidiaries, and affiliates
with an influx of new money and talent that included scientists and
technicians
arriving weekly ready to perform laboratory research in Spain and Buenos Aires.
Early in
January 1945 Adolf Hitler and Martin Bormann, in company with the rest
of their
headquarters staff, left the Ardennes
sector and traveled back to Berlin. On January 12 Stalin launched his
Soviet winter offensive. The Fuehrer was in his main office in the
chancellery,
Bormann just adjacent. A briefing on the battle in the East given by
General
Heinz Guderian had been concluded. It had been a stormy session, in
which
Guderian was pessimistic about holding, and strongly urged that German
forces
fall back. Hitler resisted this suggestion with anger. Afterward,
Reichsleiter
Bormann was visited in his own office by Heinrich Mueller, SS chief
group
leader and senior general of the Waffen SS. As Bormann was skillful in
administration and world fiscal affairs, Mueller was equally tops
140
in his own
area of competence, secret state police affairs. He told Bormann that
Ernst
Kaltenbrunner, chief of the Gestapo and an SS general, had gathered a
small
personal treasure and was sending it by armed SS convoy to a hideaway.
Mueller
handed to Bormann the listing, which read as follows: 50 kilograms of
gold
bars., 50 cases of gold coins and gold watches, 2 million American
dollars, 2
million Swiss francs, five cases filled with diamonds and other
precious
stones, one stamp collection worth 5 million gold marks.
“Well”
Bormann commented, “Ernst is still looking out for Ernst. It doesn’t
mean much
to the big picture. But find out where he has it taken. When it’s
buried, and
it will probably be in an Austrian lake close to his home, we might want
one of
our party gauleiters to watch over it. Kaltenbrunner may never last the
war
out, and it would be useful to the party later.”
Mueller
stood at attention, nodded, and left the office.
Kaltenbrunner
finished the war out but never made it to his treasure. He did receive
a report
from his aide that it was secure, sunk deep in waterproof containers in
AuseeLake, but he was one of the ten
convicted and executed in the prison gymnasium at Nuremberg.
Field
Marshal Kesselring, during his retreat in Italy, before surrendering his 1-million-man
force to the Allies, ordered $4.8 million in assorted valuables sunk in
the
waters around Verona. He wanted it safely out of the grasp of
Italian communist partisans.
Corsica was held by German and Italian
troops in the summer of 1943. The coastal areas, that is, and the
principal
cities—the capital of the island, Ajaccio, with its 25,000 people
living around
the bay, Bastia and its bay likewise ringed with people, and the
coastal
regions. But despite the armed might of the Axis troops, the Corsicans
controlled the inland mountainous region, where hardly a road existed.
The rugged
dwellers had footpaths and trails throughout the wild interior, and
they had
the patience and wily wisdom of their forebears. They knew that in time
the
Germans and Italians would depart, as had the Romans and the Vandals,
the
Visigoths, the Saracens, the Genoese, and the French. Through the
centuries,
Corsicans had engaged in trade with their invaders. They did so now
with the
141
Germans and
Italians, and would soon be doing likewise with the Americans and
British and
Free French who were to come.
The Germans
and Italians were making preparations to leave, and were watched, as
always, by
members of the Unione Corse, the ancient secret organization whose
tentacles
spread to Marseilles and through the underworld of Europe. They watched at the Bay of Bastia during the month of September as
German E-boats and frogmen searched the bottom of the bay for a
treasure they
were unable to locate.
The Germans
were searching for a shipment of gold bullion, diamonds, jewelry, and
currencies, which had been sealed in six lead containers and placed
aboard an
E-boat at Tripoli earlier in 1943. It was loot of North Africa, valued at an estimated $150
million, and had been collected by a special unit sent from Berlin by Reichsleiter Martin Bormann, to
add to the Reich chancellery fund of the NSDAP. As the Afrika Korps
retreated
under the ferocious onslaught of the British Eighth Army, the treasure
had been
packed up and shipped out of Tripoli. This port in Libya was especially striking because of
the waterfront facade built by Italian stonemasons. The E-boat, under
command
of officer Hauptmann Dahl, moved out of Tripoli harbor at high speed, then was lost
from view in the Mediterranean’s dark blue. On the water to Italy, Hauptmann Dahl was ordered from Rome to head for Corsica with the sealed treasure; he was to
join a German naval convoy off Bastia, which would then steam north to
German naval headquarters at La Spezia, in northern Italy. There they were to unload the
consignment and take it by truck to Milano, where it would go by train
over the
Alps to Germany and on to Berlin. Dahl had made it to the coast of Corsica but before he could join the convoy
an Allied air attack dispersed the German and Italian ships, sinking
several.
Steering a course along the shoreline was all that be could do; Dahl
didn’t
dare to venture ashore because on this night he could see a firefight
in
progress between German troops and guerillas. He had headed for the
estuary of
Golo and there, about four kilometers off the port of Bastia, unloaded the six lead containers,
as a safekeeping measure. He ordered his officers and crewmen to drop
the cargo
overboard, which they did—in about 20 fathoms of water. Marking the
spot in
triangular fashion with two land bearings he headed north to Italy. He
142
had reached
La Spezia and reported his action to the German naval
command. Rather than being
commended for his fore sight, he, along with three officers, was held
for court-martial
in the barracks of Massa,
below La Spezia. The officers were shot and the
seamen, judged as only carrying out orders, were sent off to the
Russian front.
For the
next month, on instructions from La Spezia, the German naval command on Corsica searched for the heavy containers
in the waters and soft sand off BastiaBay. But on October 4, under Allied
pressure, the Germans withdrew from the island, after blowing up the
ancient,
narrow stone bridges on the eastern end. Within two days the streets of
Ajaccio, with its statue of Napoleon, were filled
with men wearing the uniforms of the United States, Britain, and the Free French. The bays of Ajaccio and Bastia filled with freighters, supply
ships, tenders, gray destroyers, and troop transports. Inland, glades,
meadows,
rocks, and trees were bulldozed away to create an airfield, from which
flew
American and British fighter planes and DC-3 transports.
The Unione
Corse waited through this desecration with the traditional patience of
a
patriarchal crime family. When the hubbub was over, and all was serene
again,
the waters would be theirs and theirs alone to explore. Peace, of
course, did
come to Corsica, and divers of the Unione Corse tried
and tried but failed to locate the looted treasure of North Africa. Occasionally, venturesome
strangers would arrive to explore, having heard rumors of Nazi booty.
In one
way or another, all were discouraged. Four disappeared one night. An
Andre Mattei
was found dead, riddled with bullets, after he had had too much to say
about
the location of the six containers. Then appeared Peter Fleig, one of
the
German sailors of the original E-boat, who had helped shove the
containers into
the water that night back in September 1943. He had survived the war in
Russia, spent a year or so in a military hospital
recovering from wounds, and then made it to Corsica. The vision that had sustained him through Russia and convalescence was that of
finding again this wealth. While diving for it he was warned off by the
Unione
Corse, a warning he paid no attention to. He vanished.
This legend
of World War II continues to attract the adventurous. Even Edwin Link,
American
businessman and inventor
143
of the Link
Trainer of World War II who later pioneered underwater vehicles for
oceanographic exploration, mounted an expedition in the spring of 1963
to
search for the treasure that had been intended for Martin Bormann. Like
the
others, Link, too, failed.
In the
final days of any war, grabbing and looting are commonplace. Martin
Bormann,
however, was wrapped up in the dispersal of several billion dollars in
assets
around the globe. He dwelled on control of the 750 corporations; he had
utilized
every known legal device to disguise their ownership and their patterns
of
operation: use of nominees, option agreements, pool agreements,
endorsements in
blank, escrow deposits, pledges, collateral loans, rights of first
refusal,
management contracts, service contracts, patent agreements, cartels,
and
withholding procedures. Detailed documents and other papers on each
company and
on all money transferred from the Third Reich to outside subsidiaries
of the
German corporations participating in the flight capital program, had
been
maintained. As goals were achieved, the papers were deposited in Swiss
banks. A
copy of everything, including field reports, went to Bormann as part of
the
historic file that would be crated and trucked out of Berlin to Munich,
flown
to Spain, and then trans-shipped to the Bormann archives in South
America.
Hermann Goering,
like Ernst Kaltenbrunner, got caught up in the looting frenzy of the
waning days
of the war. Art treasures were Goering’s passion, and he had filled his
mansion, Karinhall, with priceless specimens taken from national
collections in
almost every city of the occupied world. As the Allied forces closed in
on the
Nazis, he had most of these stored in cool salt mines to protect them
from
bombs and the weather. He was shrewd enough to realize that such
masters could
be readily identified and returned to their rightful owners. He
possessed
several of the better paintings from the Rothschild collection in France. Almost certainly they would find
their way back to Baron Rothschild. Still, he realized that certain art
treasures not so easily identifiable have great economic value; if sold
in a
neutral country, they could provide a handsome source of foreign
exchange,
providing one was able to collect it after the war.
Goering
instructed a friend in Holland, Alois Miedel, a German
144
art dealer
who had become owner of the Goudstikker Galleries in Amsterdam after the occupation in 1940, to
begin collecting works of art that could be readily turned into cash in
Spain. Miedel began with excellent Dutch
paintings, by early as well as by later great masters. Usual he paid
for them
in German marks that had been pumped into the Dutch, Belgian, and
French currency
systems—but on occasion with Dutch “occupation” guilders. He seized
outright
art belonging to Jewish owners. He took his first big shipment in a
Luftwaffe plane
to Bilbao, a free port in Spain. Among the valuable paintings he
offered for sale were works by Rembrandt, Van Dyck, Rubens, Jan Steen,
and
Cranach. The Prado in Madrid offered 2 million pesetas for one
of these. They purchased others more cheap at prices ranging frorn
100,000 to
500,000 pesetas. British and American diplomats in Madrid, who were likewise amateur
collectors, identified ten in the Prado looted from Holland as belonging to the Gondstikker collection,
one to the Van Oalst collection, and one to the Valkenburg collection.
Eventually,
some were returned to their owners. The money paid to Alois Miedel was
banked
in an account jointly controlled by himself and Goering.
Miedel was
a very busy man during the last stage of the war, and for a time was
the most
important art dealer in Europe. He brought a shipment of art treasures from France, with Goering’s assistance, and for
their sale in Spain published a catalogue of 200
pictures. Art stolen from Italy was appearing in Stockholm and in the galleries of Geneva, Basel,
and Zurich. The value of paintings and objects
of art looted from Holland, Belgium, and France totaled over $1.5 billion. Holland alone accounted for 200 million
guilders or $136 million. Aside from Hermann Goering, Joseph Goebbels
and
Joachim von Ribbentrop were recipients of stolen art. While Alois
Miedel was
Goering’s personal art hunter, Dr, Hans Wendland in France and Andreas
Hofer, a
Berlin art dealer, were also extremely
active in the business.
In December
1944 the Spanish government issued an order for the arrest of Alois
Miedel, but
he had already been seized by the Maquis on the French side of the
border.
Miedel escaped, made his way back to Spain, then with German assistance disappeared.
He showed up later in Buenos Aires, whence his funds
145
had been
transferred, and to demonstrate that all art lovers were not in Spain,
Sweden,
or Switzerland, the paintings he had with foresight shipped to Buenos
Aires
were soon gracing many fine homes there.
In London and Washington there was grave concern about the
German flight capital. Officials of both Allied governments knew in a
general
way what was going on, but not until they had laboriously compiled a
card index
of 500,000 names of businessmen in both hemispheres, northern and
southern, who
were working for the Germans, did they realize the magnitude of the
task ahead.
This list showed only the tip of the iceberg; many, many people were
willing to
be profitably employed by the Germans. It was early 1945, and Bormann
was
moving forward full speed. The various departments of the two Allied
governments—U.S. Department of State and Treasury Department, British
Ministry
of Economic Warfare, together with General Donovan’s OSS and General
Menzies’
MI—6---realized only too well that they would have to come up with a
substantial
counteroffensive to checkmate Martin Bormann’s economic blitzkrieg.
Bormann’s
group was lean and mean, a prototype of what Admiral Turner in 1977 was
to hope
aloud that his CIA might one day become.
Orvis A.
Schmidt, director of Foreign Funds Control of the U.S. Treasury
Department,
shook his head when he described the German flight capital operation in
1945:
“The
network of trade, industrial, and cartel organizations has been
streamlined and
intermeshed, not only organizationally but also by what has been
officially described
as ‘personnel union.’ Legal authority to operate this organizational
machinery
has been vested in the concerns that have majority capacity in the key
industries, such as those producing iron and steel, coal, and basic
chemicals,
These concerns have been deliberately welded together by exchanges of
stock to
the point where a handful of men can make policy and other decisions
that
affect us all.”
This highly
developed control that blanketed Germany from top to bottom also functioned
outside of the Third Reich and was a vital key to the success of the
Bormann
program. The great civil service bureaucracy within Germany never for a moment doubted that
there would be a German revival, and they
146
had been
trained like those in industry to follow a pattern that would advance
the
interests of their country. In the first week of occupation by the
Allies after
the surrender, when Allied military government representatives went to
the Ruhr factories, they were always met by
handpicked Germans, frequently engineers, speaking English and prepared
with credentials
to prove their acquaintance with reputable citizens and corporations in
the United
States. They had already begun to
rehabilitate the bombed factories. The destruction of I.G. Farben
plants was relatively
light. As German I.G. technicians streamed from the battlefronts back
to their
hometowns arid went to work, it was estimated that production could
reach 90
percent of capacity in three months, given adequate supplies of labor,
fuel,
power, and raw materials. War damage to the other industrial firms had
also
been greatly exaggerated by Allied wartime air intelligence. The amount
of
capacity knocked out by bombing and shelling was less than that which
the
Germans had built during the war, so that Germany found herself somewhat ahead of her
prewar capacity. For a time the Allies threatened to dismantle heavy
factories
and ship them to neighboring countries. But they would have been
useless
additions, and this factor, together with a growing distrust of Russia by the American and British
governments, produced a change in outlook. Germany, with $1.5 billion from the Marshall
Plan, would soon find herself with the same well-rounded industrial
structure
as before the war.
But what
real hexed officials in London and Washington, whose job it was to stop the flow
of liquid assets out of Ger many, was their inability to get a handle
on the problem.
Everything was moving too fast. At all key points this economic empire
was
staffed by reliable party men, who were also expert businessmen. They
in turn
guided and worked with the nationals of each neutral country, who could
be
counted on to follow the same pattern of contributing to the best
interests of Germany and German business corporations.
In the formerly occupied countries, when ownership of a corporation was
turned
over to an appointee it was a legal fact, but there was simultaneously
the
handshake and the oral understanding that within five years ownership
would
revert to the German. Bormann believed that five years was a sensible
time limit.
He knew from his own
147
intelligence
sources that Russia would take over eleven nations
along the eastern frontier, including the eastern part of Germany, and that this would disenchant the
British and the Americans. This, and the truth that man’s memory is
short
lived, guaranteed an altered Allied attitude.
But all
this speculation was for the near future; Bormann dealt with the
present from
his offices in Hitler’s headquarters. When he gave directions they were
followed in Latin America.
At the time Orvis A. Schmidt of the U.S. Treasury Department declared:
“The great
German combines were the spearheads of economic penetration in the
other
American republics. In the field of drugs and pharmaceuticals the
Bayer, Merck,
and Schering companies enjoyed a virtual monopoly. I.G. Farben
subsidiaries had
a firm hold on the dye and chemical market. German enterprises such as
Tubos
Mannesmann, Ferrostaal, A.E.G., and Siemens-Schuckert played a dominant
role in
the construction, electrical, and engineering fields. Shipping
companies and,
in some areas, German airlines, were well entrenched. In addition,
other and
newer pro-German firms were engaged in miscellaneous types of business,
some of
which were partly or wholly owned by Germans and some of which were
wholly
owned by persons of German origin, who, without changing their inborn
allegiance, had acquired citizenship in one of the American republics.”
The U.S.
Treasury Department thought it might be possible to supersede these
German
firms with a replacement program of its own, in which local industry
would be
fostered, with U.S. corporations encouraged to expand
into these markets. But the obstacles were too great. In some Latin
American
countries German capital represented a large segment of the total
business
investment, and in some important industries there was nothing to
replace such
German corporations, which had been profit-making concerns for some
years; the
I.G. Farbens and Siemens. Part of the new corporate move to Latin America was represented by Fritz Mandl, the
armament manufacturer of the Ruhr, who
invested heavily in an Argentine
government program to expand its armaments industry. The two largest
German
firms, Thyssen
Lametal, S.A., Industrial y Mercantil, and La Sociedad Tubos
Mannesmann, received German financing under
148
the capital
made available for export by Martin Bormann. They were also able to
employ
large numbers of German scientists and technicians who had been moved
out of Germany in 1944. There was also the
important German insurance firm of El Fenix Sudamericano Cia. de Reaseguros, S.A., an affiliate of the Munich
Reinsurance Company. All South American big business came to depend on
El Fenix
as the principal reinsurers of commerce and industry in Latin America.
Not so
important but curiously interesting was the establishment of the small
textile
firm of Denubio, with a capitalization of 2 million pesos in Argentina. In 1944, while serving as German
army chief of staff in Berlin, General Heinz Guderian received
permission from Reichsleiter Bormann to establish this firm in
association with
a partner, Count Galeazzo Ciano, Mussolini’s son-in-law and Italian
foreign
minister to the Third Reich. The granting of such permission also
entitled the
famed Panzer general to the use and transfer of Nazi state funds to Argentina for this corporate purpose. When
Orvis A. Schmidt suggested that some Latin American business
enterprises alter their
management to exclude all Germans, the chief executive officer of such
a
company would frequently claim non-German ownership, which made it
necessary
for a U.S. Treasury team to trace laboriously the ownership through a
maze of
dummies and holding companies. There was also the feeling of the U.S. administration that to proceed fully
with such an elimination program in Latin America was to open up the serious question
of whether the United States had the constitutional authority to
take such action.
Recently in
Washington, D.C., I spoke with two lawyers, both of
whom had worked with Orvis A. Schmidt, now deceased. As the director of
Foreign
Funds Control of the U.S. Treasury Department during the latter part of
the
war, Schmidt was the U.S. official directly responsible for stopping
the German
flow of assets to safe havens; he had been in a position to destroy the
Bormann
intention of establishing economic strong-points from which German
businessmen
could launch their postwar commercial campaigns after the war.
One of
these lawyers was Elting Arnold. He told me that Foreign Funds Control
had been
the think tank for Henry Morgenthau, secretary of the treasury, and
that it was
composed
149
of
brilliant young men dedicated to high principles and the freezing of
enemy
assets in wartime. Arnold described Schmidt as a “tenacious,
observant man, a man of sincerity and great character. . . . He was
large and
barrel-chested, quiet-spoken but possessed of a sense of mission.”
Following
World War II, Orvis Schmidt went to the International Bank for
Reconstruction,
serving there until the time of his death.
From the
second attorney, John Pehle, I learned why Schmidt and Foreign Funds
Control
had been unable to stop the German program of flight capital to neutral
nations. John Pehle, an urbane and distinguished looking man who is
today
counsel to the law firm of Morgan, Lewis, and Bockies, had been the
original
director of Foreign Funds Control in the US. Treasury Department, with Orvis
Schmidt serving as his deputy director.
Pehle said,
“The main mission of Foreign Funds Control, which began on April 8, 1940, after
Norway and Denmark were invaded, was to freeze the
assets of these countries in the United States so they could not be used by the
Third Reich. As other countries were occupied, our activities expanded
until we
had all assets of Germany, Japan, and all occupied countries frozen,
which amounted to many billions of dollars. We also attempted to reach
outside
the United
States to control the assets and trade of Germany and Japan by establishing, with Britain, a blacklist of firms and businessmen
doing business with Germany. There were no computers in those
days and we kept some 500,000 names on Rolodex files. It was cumbersome
and
slow.”
Mr. Pehle
believes his department of several hundred did a fine job of
controlling foreign
assets in the United States. Of course, “there was always
political pressure to free some company or other from our strictures.
The
infamous IT&T deal in which they sold their telephone company in Romania to the Romanian government and were
paid the $7 million in the U.S. which represented Romanian frozen
currency, is a testimony to backstairs influence. However, I am glad to
say it
didn’t happen again.”
Pehle
described the U.S. Treasury Department as an interesting place to be.
“We had
bright men. Lend-Lease was conceived in the Treasury.”
150
But perhaps
Pehle put his finger on the reason why U.S. Foreign Funds Control was
unable to
interdict the German drive to move assets to neutral nations.
“In 1944
emphasis in Washington shifted from overseas fiscal controls to
assistance to Jewish war refugees. On presidential order I was made
executive
director of the War Refugee Board in January 1944. Orvis Schmidt became
director
of Foreign Funds Control. Some of the manpower he had was transferred,
and
while the Germans evidently were doing their best to avoid Allied
seizure of
assets, we were doing our best to extricate as many Jews as possible
from Europe.”
One project
of Mr. Pehle’s War Refugee Board was an order to rescue as many Jews as
possible
from Budapest. The U.S. board could not intervene directly
and so it asked the Swedish government if it would send a Swedish
representative to Hungary, where 900,000 Jews, the last large
remaining Jewish population, awaited either extinction or rescue. Sweden agreed and dispatched Raoul
Wallenberg, who traveled to Budapest with huge sums of U.S. Treasury
money and Swedish diplomatic papers, which were to provide freedom of
travel to
Sweden for a subsequent stream of 90,000 Jewish
refugees. But when Budapest fell to Soviet troops, Wallenberg
became a prisoner of the Russians and was shipped to Moscow.
Many
believe that Wallenberg has spent the last thirty years in Soviet
prisons. Russia has denied the capture and imprisonment
of Wallenberg. But the case remains open. In May of 1980 the “Free
Raoul Wallenberg
Committee,” largely composed of influential Swedish and American Jews,
held an
international hearing in Stockholm to focus new attention on this
case. They wanted to induce the Soviet Union
to produce this man, whom Einstein
recommended for the Nobel Peace Prize in 1949 for efforts in Budapest on behalf of Balkan Jews and the American
War Refugee Board operating under the direction of John Pehle.
The two
objectives were diametrically opposed. Certainly in his power position
Reichsleiter Martin Bormann from 1944 to the end of the war was moving
with all
possible speed to shift all moveable assets out of the greater Third
Reich. He
was untroubled by the humanitarian considerations holding Washington
151
in their
sway. For him it was a go-for-broke operation all the way. Even today,
however,
there are U.S. Treasury old-timers of World War II still not aware of
the
magnitude of the Bormann operation and of its success. Those who know,
in Washington, in South America,
and in the capitals of Europe, are locked together in a
conspiracy of silence that has endured for thirty-seven years until the
publication of this book.
In this silent
contest during the winddown years of World War II, Orvis A. Schmidt was
not to
emerge victor over Martin Bormann, although he tried. Tirelessly, he
told
assorted Senate committees what was happening, spoke of the extent of
the
German plan, and urged a new dedication to stopping the flight capital
blitzkrieg, with the prescient warning, “It is these new concentrations
of economic
power which will enable Germany to rise again.”
Orvis A.
Schmidt felt that he was a man crying in the wilderness as he gave
testimony
before Senate committees. The mood of the country and the marketplace
was
similar: get our boys home and get on with the business of making money
and
building new homes and stabilizing the economy for the bumper crop of
babies
which was sure to come. When Orvis Schmidt told the Senators the extent
of
German economic infiltration into the foreign countries even before
VE-day and
that the Germans intended to preserve this vast hidden economic
structure in order
to rise again, he knew instinctively that he had failed to catch the
interest
of the American lawmakers. Schmidt testified:
The danger
does not lie so much in the fact that the German industrial giants have
honeycombed
the neutrals, Turkey and Argentina, with branches and affiliates which
know how
to subvert their commercial interests to the espionage and sabotage
demands of
their government. It is important and dangerous, however, that many of
these
branches, subsidiaries, and affiliates in the neutrals and much of the
cash,
securities, patents, contracts and so forth, are ostensibly owned
through the
medium of secret numbered accounts or rubric accounts, trusts, loans,
holding companies,
bearer shares, and the like by dummy persons and cornpones claiming
neutral
nationality and all of the alleged protection and privileges arising
from such
identities. The real problem is to break the veil of secrecy and
152
reach and
eliminate the German ability to finance another world war. We must
render useless
the devices and cloaks which have been employed to hide German assets.
Schmidt
noted the facts that A.E.G. had six subsidiaries in Argentina, one in
Portugal,
two in Spain, three in Sweden; Siemen-Schuckert-Werke A.G. with seven
subsidiaries in Argentina, two each in. Portugal and Sweden, four in Spain, and five in Switzerland, and that Vereinigte Stahlwerke had
seven subsidiaries in Argentina, three affiliates in Spain, and four in Sweden—and so on almost ad infinitum. He
was to save perhaps his best shot for I.G. Farben when he testified
before a
U.S. Senate committee:
“We have
found an I.G. Farben list of its own companies abroad and at home—a
secret list
hitherto unknown—which names over 700 companies in which I.G. Farben
has an
interest,” and this did not include their regular corporate structure
in 93 countries
or the 750 companies established under the Martin Bormann program.
He also
recited the discovery of his former chief, John Pehle, now directing
the War
Refugee Board at the request of President Roosevelt. I.G. Farben, at
the
insistence of Himmler and for related political reasons, had built a
vast
industrial establishment at Auschwitz to
manufacture synthetic oil and rubber. Himmler
promised Farben officials an unending supply of Jews in the 300,000
population
concentration camp to work I.G. Farben Auschwitz. But even Friedrich
Flick and
other Ruhr industrialists who were themselves utilizing supplies of
slave labor
in their factories to the west knew production could only be maintained
with well-fed
workers, not emaciated, walking skeletons as at Auschwitz. It was I.G.
Farben’s
greatest failure. Despite a plant which used more electricity than the
city of
Berlin, an investment of 900 million Reichsmarks, and 25,000 inmates
who were
worked until they dropped dead, not a single pound of Buna rubber was
ever
produced, It was the last time that political considerations would
influence
business judgment in the establishment of a factory, decreed the I.G.
Farben
board of directors.
153
Orvis
Schmidt also testified that when they questioned the top Farben people
about
their wartime activities,
…They were
inclined to be very indignant. Their general attitude and expectations
was that
the war was over and we ought now to be assisting them in helping to
get I.G.
Farben and German industry back on its feet. Some of them have
outwardly said
that this questioning and investigation was, in their estimation, only
a
phenomenon of short duration, because as soon as things got a little
settled
they would expect their friends in the United States and England to be coming over. Their friends,
so they said, would put a stop to activities such as these
investigations and
would see that they got the treatment which they regarded as proper and
that
assistance would be given to them to help reestablish their industry.
As the war
came to a close, all major American industries felt that they would
like to see
the German money machine working again. Every U.S. company of consequence had its
representative in uniform, as technical advisor or officer, as did the
British.
As Allied armies moved through France, Belgium, and the Lowlands,
corporate executives took lime out
to check the status of their branch firms. The changing tone seemed
auspicious
to Martin Bormann.
In all
lands liberated by American and British armies, there was a reluctance
to disturb
the machinery of money and industry that had been shaped by German
economic
experts into cartels and interlocking business arrangements with German
firms.
The obvious inequities and seizures were adjusted. The paintings taken
from the
Rothschilds were returned, as was the family bank. Firms and newspapers
that
had been too blatantly Nazi changed hands or were closed down. The
German
presence was reduced, but not eliminated; the device of cloaked
ownership
insured a continuation of proprietory rights. It all added up to a new
chapter
in the adventures of the U.S. Army investigative teams. Grim idealists
when
they entered the liberated countries, they soon learned that, once
free, each
government haughtily insisted on making its own decisions without
advice from
the Americans.
Even Grand
Duchess Charlotte of Luxembourg had her own ideas, and they didn’t
jibe with those of the U.S. investigative team dispatched to
her tiny country to set things right. Upon
154
her return
from exile in London and Montreal, she promptly dismissed the U.S. investigative mission, which had
been attempting to uncover secrets of the German—Luxembourg steel cartel. Elbert D. Thomas of
Utah, when he was chairman of the U.S. Senate subcommittee on military
affairs,
commented in Washington on June 26, 1945:
We had a
mission in Luxembourg which was obtaining quite a bit of information
on the steel cartel until the Grand Duchess returned. Information was
then blocked
off from us and the mission had to retire with what information they
had
already collected. There was much to learn about the way in which small
states
like Luxembourg had been used by the cartels. The episode
suggests
that some rulers, whom we have befriended, may be expected to assist
the
cartelists in their postwar efforts to regain dominance.
What the
grand duchess learned from her finance minister on her return to Luxembourg was simple: “Don’t tamper with the
money machine. We made record profits during the German era, and there
is every
indication we will be going into an even greater period of prosperity,
once Germany recovers. They will then continue
to be our biggest customer. All that is required now is a readjustment
in stock
ownership to please Belgian, French, British, and American
shareholders, which
will be done.” Open German stock ownership was reduced to its former
position
of about 20 percent in Luxembourg industry and the German trustee was
eliminated. But at board meetings, Belgian and French banks voted as
blocs on
behalf of stockholders in Germany. The German voice in the wings was still
there, and as time went on in Luxembourg, increasingly the voice could be
heard loud and clear—the customer speaking to the seller, the equalizer
of the
marketplace. Grand Duchess Charlotte, who was to retire during the
sixties to
be succeeded by her son, Grand Duke Jean, always believed that the new
prosperity of Luxembourg after the war was testimony to her decision in
1945
not to permit interference with the German financial and industrial
apparatus.
The German banks, Deutsche and Dresdner, remained in position and the Luxembourg financial community continued to
look to Frankfurt rather than to Zurich, London, and New York for financial guidance. ARBED (its
sales organization in New York City is Amerlux Products) continues as a
powerful
155
and
prosperous steel cartel closely tied to its German mentors. By 1980 Luxembourg was to become a new center for gold
buying in Europe, with West German banks selling the
equivalent of $1.4 billion in gold to holders in Luxembourg. The chief attraction was the lack
of a value-added tax, a form of sales tax. The tiny principality also
became
the European finance center for the KGB and its espionage operations on
the continent.
But on February
25, 1946,
Russell A. Nixon, when acting director, Division of Investigation of
Cartels
and External Assets in the U.S. military government in Germany, was to sum up the entire problem
facing those investigative teams in their efforts to check and change
the
economic web woven to confuse the Allies. He was to tell a Senate
subcommittee
in Washington:
We have not
yet, nine months after the war has ended, developed an effective drive
for
these assets. If you will go through the neutral countries, country by
country,
you will find that they have not accepted the sovereignty of the four
powers in
getting the assets. They are not turning the assets over. Such progress
as we
have made has been very partial and generally ineffective. Generally
speaking,
in spite of the efforts that have been made, at the present time there
is a
continuation of the dissipation and further concealment of these assets
throughout all the neutral countries.
Powerful
friends of the Bormann organization in all Western countries, including
those
sprinkled in control points throughout the administration in Washington and in the financial and brokerage
businesses of Wall Street, the City of London, and the Paris establishment, did not wish a coordinated
drive to get at these external German assets. They had understandable
reasons,
if you overlook morality: the financial benefits for cooperation
(collaboration
had become an old-hat term with the war winding down) were very
enticing,
depending on one’s importance and ability to be of service to the
organization
and the 750 corporations they were secretly manipulating, to say
nothing of the
known multinationals such as I.G. Farben, Thyssen A.G., and Siemens;
and, as a
second reason, the philosophy of free enterprise and preservation of
private
property.
This latter
reason was expressed best at an appeals board hearing in the American
Zone of Germany. The board was to
156
vote
four-to-one in late 1945 to release from prison Richard Freudenberg,
the largest
leather and shoe manufacturer in Germany. In 1944 his personal income for
the year was one million marks. Freudenberg was also a war economy
leader and a
regional economic advisor to Reichsleiter Bormann. He had been jailed
as an
active Nazi under the mandatory arrest category regulation, and the
vote to
release him also permitted him to return to management of his company.
The
argument for freedom, which was to become a landmark for occupation
authorities,
was expressed by Mr. Reinhard, representing Ambassador Robert Murphy:
“What we
are doing here through denazification is nothing less than a social
revolution.
If the Russians want to Bolshevize their side of the Elbe that is their business, but it is
not in conformity with American standards to cut away the basis of
private
property. This man is an extremely capable industrialist, a kind of
Henry
Ford.”
It was
fated that Hermann Schmitz and Martin Bormann should meet again and
discuss the
progress of the flight capital program. It took place at the
chancellery in Berlin in March 1945. The Wehrmacht was
fighting inside Germany, hard pressed by General Patton’s US. Third Army. In the east, German
defenses still held in Upper Silesia, Czechoslovakia, and Danzig. But
Russian pressure was increasing.
In the chancellery it was quiet, with only the noise of typewriters and
teletype
machines in outer offices as Schmitz and Bormann talked.
In
testimony later given to Nuremberg investigators, Schmitz praised
Bormann for the way he had directed the distribution of German assets
around
the world. His own Farben organization had, of course, contributed to
the
success of the operation. Every regional representative working for
Hermann Schmitz
was an exceptional businessman or he would not have been with I.G. All
had contributed
sound advice in their areas of competence, the regions of the world
where they
represented Farben while keeping an eye on the subsidiaries of the
parent
concern and the 700 hidden corporations they controlled. They had
provided
assistance and continuing guidance in establishing the 750 new
companies
created on order of Bormann, who wanted more than hidden assets;
Bormann wanted
the money and patents and technicians put to work to create even
greater assets
157
that would
bolster Germany in the postwar years. In their meeting
in the chancellery, both men checked over the figures of sums
disbursed, and
they were accurate to the pfennig. The Reichsleiter asked Schmitz his
views of
the future. Schmitz replied, “The occupation armies will be
understanding in
the West, but certainly not in the East. I have instructed all Farben
administrators and technicians to come to the West, where they can be
of use in
resuming our operations once the disturbances of 1945 come to a halt.”
Schmitz
added that, while general bomb damage to the I.G. plants was about 25
percent
of capacity, some were untouched. He mentioned speaking with Field
Marshal
Model, who was commanding the defenses of the Ruhr. “Model had planned to turn our
Bayer-Leberkusen pharmaceutical factory into an artillery base but he
agreed to
make it an open, undefended factory. Hopefully, we will get it back
untouched.”
“What about
your board of directors and the essential executives? If they are held
by the
occupation authorities can I.G. continue?” Bormann asked.
“We can
continue. We have an operational plan for such a contingency, which
everyone understands.
1 I don’t believe our board members will be detained too long. Nor will
I. But
we must go through a procedure ef investigation before release, so I
have been
told by our N.W.7 people who have excellent contacts in Washington.”
This was
not quite an accurate assessment of the immediate future that faced
Schmitz and
J.G. Farben in Germany. Twelve officers of I.G. were to be
tried at Nuremberg, and on July 30, 1948, they were sentenced to various
prison terms for plunder of occupied territories and use of slave labor
in
their factories. Schmitz was to receive a four-year prison term, but
many of
the lesser officials would be released by the Allied military
government, which
simply didn’t know what to do with them. Of those at the second level
of
management, there was Paul Denker, director of Farben’s accounting
divisions
and important in the various Farben subsidiaries; Carl von Heider,
general
director of sakes of dyestuffs, who also handled the Czechoslovakia
operation;
Helmuth Borgwardt, general director of sales of organic chemicals;
Guenther
Frank-Fahle, chief of the central finance office and director of Max
Ilgner’s
espionage group; N.W.7’s
158
Kurt
Kruger, another Ilgner lieutenant; Herbert Stein, chief legal advisor
of the chemical
and dyestuffs department and corporate camouflage expert second only to
Schmitz
himself. All were returned to their corporate offices.
Schmitz
also told Bormann of his visit to Switzerland earlier in the month. “Germany will have a poor image problem this
time. Much worse than after the First World
War. It can all be placed on the
doorsteps of Goering, Himmler, and Heydrich. Goering and Himmler
thought up the
Final Solution for the Jews, and Heydrich made it a fact.”
Bormann
agreed, asking, “How does that affect I.G.?”
“We
produced the poison gas on Himmler’s orders,” Schmitz explained, “so
I’ve been
making some corporate name changes in Basel, which may help our overseas
situation.”
Hermann
Schmitz then went on to explain that he had changed I.G. Chemie to
Société
Internationale pour Participations Industrielles et Commerciales SA. In
German-speaking Basel, the name became International Industrie und
Handelsbeteiligungen A.G.,
or Interhandel. Schmitz said he had stipulated that only Swiss were to
be on
the board of directors of the new holding corporation, which could then
declare
itself a fully Swiss corporation. The brightest jewel in the
Interhandel string
of companies was General Aniline and Film Corporation, a holding
company in the
United
States for various American I.G. Farben companies. It
had been organized in 1929. There were ten members of the beard:
Schmitz,
Bosch, and Greif, all Farben men; Metz, Weiss, and Kitroff, of U.S. companies that sold Farben manufactured
products; and four prominent American industrialists and
bankers—Mitchell,
Ford, Warburg, and Teagle of Standard Oil. In one instance Farben
gained a
large bloc of Standard Oil stock by selling certain patents to the
Standard Oil
Corporation. Some American directors of General Aniline had large blocs
of GAF stocks
registered in their name. The New York bank of record was National City
Bank,
the largest in New
York, which
is now known as Citibank. In 1929 the
board voted Hermann Schmitz president, a position in which he served
from 1929
to 1936, while simultaneously serving as head of I.G. Farben. In March
1945,
Hermann Schmitz was telling Martin Bormann that he hoped this shuffling
of name
and board membership would prove helpful after the war
159
when steps
would be taken to return General Aniline and Film Corporation to his
ownership
in Switzerland. The valuable holding company had been seized
in 1942 by U.S. authorities as suspected enemy
assets.
In 1948 a
suit was to be filed by certain minority stockholders of Interhandel
against
the attorney general of the United States, as successor to the wartime Alien
Property Custodian, and the U.S. Treasury, for the return of 89 percent
of GAF,
of a value of $100 million plus $1.8 million seized in cash in 1942.
Interhandel,
through its American attorneys, first filed an administrative claim,
which was
denied. The snit then went to the District Court for the District of Columbia, then to the Supreme Court, and
back to District Court. The Swiss claim was based on the argument that
Interhandel
was a Swiss corporation, that it was not nor had it ever been an enemy
of the United States, and that it owned the shares in
question. The American government rebuttal was that Interhandel was the
result
of a conspiracy between the private bank of H. Sturzenegger, formerly
E.
Greutert & Cie., and I.G. Farbenindustrie of Germany and others “to conceal, camouflage,
and cloak the ownership, control, and combination by I.G. Farben of
properties
and interests in many countries of the world, including the U.S.”
As the case
dragged through the U.S. courts, Schmitz would have Interhandel
cosmeticized even more. Charles de Loes, past president of the Swiss
Bankers
Association, would be elected chairman, and the general manager of each
of the
Big Three banks would be appointed to the board. They would agree to
this
because the honor of Swiss banking and its principle of banking secrecy
would
be at stake. In addition, 25 percent of Interhandel stock would be
registered
in the name of Union Bank, whose manager, Dr. Alfred Schaefer, was of
known integrity.
The Swiss believed the association of such a man of high banking repute
at
Interhandel would impress American government authorities. But the
German
connection would still be there. Not only Hermann Schmitz, but also the
banking
connection of Union Bank of Switzerland, Dr. Schaefer’s bank, and
Deutsche
Bank, which acted in concert on so many deals involving not only I.G.
Farben
but also big Ruhr industrialists such as Thyssen A.G., the largest
steelmaker
in Germany. In January 1978 these two lead banks, acting through the
UBS-DB
160
Corporation,
an American firm of the Union Bank of Switzerland and the Deutsche Bank of Germany, would be the financial advisors
for Thyssen A.G. in its $275 million cash takeover of the Budd Company
of Troy, Michigan, a leading U.S. manufacturer of auto components,
truck trailers, and rail cars. UBS-DB Corporation would also say that
the West
German companies it represented were showing a “very substantial
interest in
all sorts of American ventures, including mergers and acquisitions.”
Bayer A.G.,
another of Schmitz’s divisions in I.G. Farben, would continue to grow,
in 1977
buying Miles Laboratories, a U.S. corporation, maker of Alka Seltzer,
for $261
million; Daimler-Benz acquired Euclid, Inc., and Siemens bought 50
percent of
Allis-Chalmers electrical equipment operations.
The General
Aniline and Film suit would finally be settled by Attorney General
Robert
Kennedy in 1965. The company had been under government ownership and
American
management for twenty-three years and had always turned a handsome
profit.
Under private ownership it could do better, and although an entire
generation
of lawyers, bankers, and politicians who had profited from GAF would
cease
making big money from their involvement, the attorney general felt it
was best
for the government to divest itself. The war was long over, and few
people cared
about its Nazi connections.
As a result
of this decision, General Aniline and Film would be sold at public
auction. It
was to be the biggest competitive auction in Wall Street history, and
an
underwriting syndicate headed by First Boston Corporation and Blyth
&
Company would win out over Lehmann Brothers. The total sales price,
$329,141,926.49. The U.S. War Claims Fund would receive $189.2 million,
plus
$17.5 million in back taxes. Through its Swiss bank connections, $120.9
million
would be distributed to Interhandel stockholders.
For the
aging Hermann Schmitz it had been a good run. A gigantic settlement for
General
Aniline and his coshareholders would have capped his remarkable career;
however,
before the General Aniline suit was settled by Attorney General
Kennedy, Schmitz
died.
Back in
March 1945 when he was confiding in Martin Bormann, who was also doing
some
heavy planning, there was
161
always the
unknown—What now? Schmitz foresaw himself testifying before victorious
American
occupation authorities perhaps, ruefully, spending some time in prison,
and
then back to I.G. Farben, to resume his plans to make this vast
industrial
apparatus more prosperous than ever.
For Martin
Bormann time was of the essence, and he had planned his escape with
great care.
He would, loyally, remain with Adolf Hitler till the end of the war,
then he
and the Fuehrer would make their way to South America. But on April 27 Hitler’s choice
was to expire in the Fuehrerbunker with his devoted Eva. Bormann
finalized his
own plans for an escape design, one worthy of the man who had directed
the
greatest financial disappearing act in history. From that time on the
world has
speculated, What really became of Martin
Bormann?
