Tuesday, October 16, 2007

Corporate America - Trading With the Enemy for Sixty Years

Today, with corporate power magnified by the global economy and its international trade agreements, it is worthwhile to reflect on the behavior of "American" corporations at a time when fascism threatened to plunge the world into an anti-human abyss. The experiences of 60 years ago are a potent reminder of corporate power and greed that transcends national borders or patriotic allegiances.
Writing about the Big Three automakers’ dealings with Nazi Germany, Bradford Snell observed: "these firms retained the economic and political power to affect the shape of governmental relations both within and between these nations in a manner which maximized corporate global profits. In short, there were private governments unaccountable to the citizens of any country yet possessing tremendous influence over the course of war and peace in the world."
Bringing corporate power to account remains the task of the world’s citizens today.

Nineteen Forty-Six: Not for the first time and not for the last, the giant General Electric Co. found itself in federal court on charges of violating anti-trust law. The U.S. government charged GE and a corporate ally with conspiracy to monopolize a market, raise prices and drive out competitors.
But this was no ordinary anti-trust case. The year following the end of World War II, GE stood accused of criminal conspiracy with Krupp, a major German munitions firm. Their partnership artificially raised the cost of U.S. defense preparations while helping to subsidize Hitler’s rearmament of Germany. The arrangement continued even after Nazi tanks smashed into Poland.
GE was not alone among U.S. big business in having cordial, profitable arrangements with the corporations of Germany. Kodak, DuPont and Shell Oil are also known to have had business dealing with Germany. Due to a recent reparations case, the activities of General Motors and Ford are the most well known. And the cases are instructive:

"It came as an unpleasant surprise to discover that the enemy was also driving trucks manufactured by Ford and Opel — a 100 percent GM-owned subsidiary ..."

GM and Ford, through their subsidiaries, controlled 70 percent of the German automobile market when war broke out in 1939. Those companies "rapidly retooled themselves to become suppliers of war materiel to the Germany army," writes Michael Dobbs in the Washington Post.
"When American GIs invaded Europe in June 1944, they did so in jeeps, trucks and tanks manufactured by the Big Three motor companies in one of the largest crash militarization programs ever undertaken," observes Dobbs. "It came as an unpleasant surprise to discover that the enemy was also driving trucks manufactured by Ford and Opel — a 100 percent GM-owned subsidiary — and flying Opel-built warplanes."
The major U.S. automakers (including Chrysler) established multinational operations as early as the 1920s and 1930s, locating plants in Germany, eastern Europe and Japan.


It wasn’t all strictly business. Henry Ford, a notorious anti-Semite, formed a kind of mutual admiration society with Adolf Hitler. The German dictator enthusiastically applauded American mass-production techniques. "I regard Henry Ford as my inspiration," declared Hitler, who kept a life-size portrait of the American industrialist next to his desk. In 1938, Ford accepted the highest medal that Nazi Germany could award a foreigner, the Grand Cross of the German Eagle.
had a role in Nazi Germany’s prewar military buildup. U.S. Army Intelligence reported that the "real purpose" of the truck assembly plant opened in Berlin in 1938 was to produce "troop transport-type vehicles for the Wehrmacht (German military).
A senior executive of General Motors also received a medal from Hitler, apparently for services rendered, and services to come. GM’s involvement in Germany began in 1935 with the opening of a truck factory near Berlin. Within a few years trucks produced by that factory would be part of German Army convoys rumbling through Poland, France and the Soviet Union.

A senior executive of General Motors also received a medal from Hitler, apparently for services rendered, and services to come.
After the German occupation of Czechoslovakia in 1939, GM Chairman Alfred P. Sloan commented that the Nazis’ behavior "should not be considered the business of the management of General Motors." The GM plant in Germany was highly profitable. "We have no right to shut down that plant," Sloan declared.

GM and Ford were vital components of the Nazi war effort. German Ford was the second largest producer of trucks for the Nazi military. GM’s plants built thousands of bomber and jet fighter propulsion systems for the Luftwaffe — while at the same time profiting from production of aircraft engines for the U.S. Army Air Corps.
"The outbreak of war in September 1939 resulted inevitably in the full conversion by GM and Ford of their Axis plants to the production of military aircraft and trucks," according to a 1974 report printed by the U.S. Senate Judiciary Committee. "On the ground, GM and Ford subsidiaries built nearly 90 percent of the armored ‘mule’ 3-ton half-trucks and more than 70 percent of the Reich’s medium and heavy-duty trucks. These vehicles, according to American intelligence reports, served as ‘the backbone of the German Army transportation system.’"
"General Motors was far more important to the Nazi war machine than Switzerland," says researcher Bradford Snell. "Switzerland was just a repository of looted funds, while GM was an integral part of the German war effort. The Nazis could have invaded Poland and Russia without Switzerland. They could not have done so without GM."


'The Nazis could not have invaded Poland and Russia without GM'

Company officials have maintained that the Hitler government took over their German plants and that they "lost control" of the situation. But documents discovered in German and American archives show that in some cases, American managers of both Ford and GM seem to have gone along with the conversion of those plants to military production.
"When American GIs liberated the Ford plants in Cologne and Berlin, they found destitute foreign workers confined behind barbed wire and company documents extolling the ‘genius of the Fuhrer,’" writes Michael Dobbs.
Shamelessly, after the war both GM and Ford demanded reparations from the U.S. government for damage to their German plants caused by Allied bombing. In 1967, GM was compensated with $33 million from the U.S. government for the American bombing of its Russelsheim plant.


Compared to Ford and General Motors, GE’s involvement appears less overt and extensive than that of the automakers. But it is nonetheless instructive, showing GE’s more complex relationship to the Third Reich.
As early as 1904, GE began joining forces with major foreign "competitors" to carve up world markets for crucial goods and technologies. In that year GE reached agreement with AEG (Allgemeine Elektricitäts Gesellschaft). The following year GE established a relationship with Tokyo Electric. GE’s early alliance with German firms was only temporarily disrupted by World War I. GE acquired 16 percent of AEG stock and placed four of its officials on the AEG board. It also obtained a stake in Siemens, Germany’s other big electrical manufacturing company.
GE’s patent agreements and minority stock ownership with German and Japanese corporations protected the domestic market while gaining access to foreign markets.
It was GE’s conspiracy with the German steel company Krupp that affected the U.S. war effort and dragged the company into a New York courtroom.
Both GE and Krupp had patents for tungsten carbide, a hard metal composition valued for its use in cutting dies and machining metal. Neither company’s patents were good enough to set up a monopoly. But jointly they could influence the world market.
Discussions between GE and Krupp began in April 1928. A GE representative asserted that his company’s willingness to enter new lines of business was dependent upon "the extent to which they can discourage competition." Eight months later they had an agreement which allowed GE the right to fix prices. GE set up a separate subsidiary, Carboloy, to handle the business.
Immediately, the price of tungsten carbide went from $48 to $453 a pound.

A GE representative asserted that his company’s willingness to enter new lines of business was dependent upon "the extent to which they can discourage competition."
GE used the agreement to cripple — or buy out — domestic competitors. When the head of American Cutting Alloys appealed to GE to be permitted to remain in business, he was told by a GE official: "It seems rather obvious to me that five suppliers in the American market all supplying carbides is a better situation than six suppliers."

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