Wall Street and the Rise of Hitler (9 page)

(Italy), and Japan Electric Bond & Share

Company (Japan).

In brief, we have hard evidence of unquestioned authenticity (see p, 56) to show that German General Electric contributed substantial sums to Hitler's political fund. There were four American directors of A.E.G. (Baldwin, Swope, Minor, and Clark), which was 80

percent owned by International General Electric. Further, I.G.E. and the four American directors were the largest single interest and consequently had the greatest single influence in A.E.G. actions and policies. Even further, almost all other directors of A.E.G. were connected with firms (I. G. Farben, Accumulatoren Fabrik,
etc.)
which contributed directly

— as firms — to Hitler's political fund. However, only the German directors of A.E.G were placed on trial in Nuremburg in 1945.

Technical Cooperation with Krupp

Quite apart from financial assistance to Hitler, General Electric extended its assistance to cartel schemes with other Hitler backers for their mutual benefit and the benefit of the Nazi state. Cemented tungsten carbide is one example of this G.E.-Nazi cooperation. Prior to November 1928, American industries had several sources for both tungsten carbide and tools and dies containing this hard-metal composition. Among these sources were the Krupp Company of Essen, Germany, and two American firms to which Krupp was then shipping http://reformed-theology.org/html/books/wall_street/chapter_03.htm (7 of 13) [8/4/2001 9:44:13 PM]

CHAPTER THREE: General Electric Funds Hitler

and selling, the Union Wire Die Corporation and Thomas Prosser & Son. In 1928 Krupp obligated itself to grant licenses under United States patents which it owned to the Firth-Sterling Steel Company and to the Ludlum Steel Company. Before 1928, this tungsten carbide for use in tools and dies sold in the United states for about $50 a pound.

The United States patents which Krupp claimed to own were assigned from Osram Kommanditgesellschaft, and had been previously assigned by the Osram Company of Germany to General Electric. However, General Electric had also developed its own patents, principally the Hoyt and Gilson patents, covering competing processes for cemented tungsten carbide. General Electric believed that it could utilize these patents independently without infringing on or competing with Krupp patents. But instead of using the G.E.

patents independently in competition with Krupp, or testing out its rights under the patent laws, General Electric worked out a cartel agreement with Krupp to pool the patents of both parties and to give General Electric a monopoly control of tungsten carbide in the United States.

The first step in this cartel arrangement was taken by Carboloy Company, Inc., a General Electric subsidiary, incorporated for the purpose of exploiting tungsten carbide. The 1920s price of around $50 a pound was raised by Carboloy to $458 a pound. Obviously, no firm could sell any great amounts of tungsten carbide in this price range, but the price would maximize profits for G.E. In 1934 General Electric and Carboloy were also able to obtain, by purchase, the license granted by Krupp to the Ludlum Steel Company, thereby eliminating one competitor. In 1936, Krupp was induced to refrain from further imports into the United States. Part of the price paid for the elimination from the American market of tungsten carbide manufactured abroad was a reciprocal undertaking that General Electric and Carboloy would not export from the U.S. Thus these American companies tied their own hands by contract, or permitted Krupp to tie their hands, and denied foreign markets to American industry. Carboloy Company then acquired the business of Thomas Prosser & Son, and in 1937, for nearly $1 million, Carboloy acquired the competing business of the Union Wire Die Corporation. By refusing to sell, Krupp cooperated with General Electric and Carboloy to persuade Union Wire Die Corporation to sell out.

Licenses to manufacture tungsten carbide were then refused. A request for license by the Crucible Steel Company was refused in 1936. A request by the Chrysler Corporation for a license was refused in 1938. A license by the Triplett Electrical Instrument Company was refused on April 25, 1940. A license was also refused to the General Cable Company. The Ford Motor Company for several years expressed strong opposition to the high-price policy followed by the Carboloy Company, and at one point made a request for the right to manufacture for its own use. This was refused. As a result of these tactics, General Electric and its subsidiary Carboloy emerged in 1936 or 1937 with virtually a complete monopoly of tungsten carbide in the United States.

In brief, General Electric — with the cooperation of another Hitler supporter, Krupp —

jointly obtained for G,E. a monopoly in the U.S. for tungsten carbide. So when World War II began, General Electric had a monopoly at an established price of $450 a pound — almost ten times more than the 1928 price — and use in the U.S. had been correspondingly restricted,

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CHAPTER THREE: General Electric Funds Hitler

A.E.G. Avoids the Bombs in World War II

By 1939 the German electrical industry had become closely affiliated with two U.S. firms: International General Electric and International Telephone and Telegraph. The largest firms in German electrical production and their affiliations listed in order of importance were:
Firm and Type

Percent of German

U.S. Affiliated

of Production

1939 production

Firm

Heavy Current

Industry

General Electric

40 percent

International General

(A.E.G. )

Electric

Siemens Schukert

40 percent

None

A.G.

Brown Boveri et Cie

17 percent

None

Telephone and

Telegraph

Siemens und Halske

60 percent

None

Lorenz A.G.

85 percent

I.T.T

Radio

Telefunken (A.E.G.

60 percent

International General

after 1941)

Electric

Lorenz

35 percent

I.T.T.

Wire and Cable

Felton &

20 percent

I.T.T.

Guilleaume A.G.

Siemens

20 percent

None

A.E.G.

20 percent

International General

Electric

In other words, in 1939 the German electrical equipment industry was concentrated into a few major corporations linked in an international cartel and by stock ownership to two

.major U.S. corporations. This industrial complex was never a prime target for bombing in World War II. The A.E.G. and I.T.T. plants were hit only incidentally in area raids and then but rarely. The electrical equipment plants bombed as targets were not those affiliated with U.S. firms. It was Brown Boveri at Mannheim and Siemensstadt in Berlin — which were
not
connected with the U.S. — who were bombed. As a result, German production of electrical war equipment rose steadily throughout World War II, peaking as late as 1944.

According to the U.S. Strategic Bombing Survey reports, "In the opinion of Speers'

assistants and plant officials, the war effort in Germany was never hindered in any important manner by any shortage of electrical equipment."
15

One example of the non-bombing policy for German General Electric was the A. E.G. plant http://reformed-theology.org/html/books/wall_street/chapter_03.htm (9 of 13) [8/4/2001 9:44:13 PM]

CHAPTER THREE: General Electric Funds Hitler

at 185 Muggenhofer Strasse, Nuremburg. Study of this plant's output in World War II is of interest because it illustrates the extent to which purely peacetime production was converted to war work. The pre-war plant manufactured household equipment, such as hot plates, electric ranges, electric irons, toasters, industrial baking ovens, radiators, water heaters, kitchen ovens, and industrial heaters. In 1939, 1940 and 1941, most of the Nuremburg plant's production facilities were used for the manufacture of peacetime products. In 1942

the plant's production was shifted to manufacture of war equipment. Metal parts for communications equipment and munitions such as bombs and mines were made. Other war production consisted of parts for searchlights and amplifiers. The following tabulation very strikingly shows the conversion to war work:

Percent

Total sales

Percent

ordinary

Year

in 1000 RM

for war

production

1939

12,469

5

95

1940

11,754

15

85

1941

21,194

40

60

1942

20,689

61

39

1948

31,455

67

33

1944

31,205

69

31

The actual physical damage by bombing to this plant was insignificant. No serious damage occurred until the raids of February 20 and 21, 1945, near the end of the war, and then protection had been fairly well developed. Raids during which bombs struck in the plant area and the trifling damage done are listed as follows:

Bombs striking

Date of raid

Damage done

plant

March 8, 1943

30 stick type I.B.

Trifling, but 3

storehouses outside the

main plant destroyed.

Sept. 9, 1944

None (blast damage) Trifling, glass and

blackout curtain damage.

Nov. 26, 1944

14000 lb. HE in

Wood shop destroyed,

open space in plant

water main broken.

grounds

Feb. 20, 1945

2 HE

3 buildings damaged.

Feb. 21, 1945

5 HE, many I.B.'s

Administration bldg.

destroyed & enameling

works damaged by HE.

Another example of a German General Electric plant not bombed is the A.E.G. plant at Koppelsdorf producing radar sets and bomber antennae. Other A.E.G. plants which were not bombed and their war equipment production were:

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CHAPTER THREE: General Electric Funds Hitler

LIST OF A.E.G. FACTORIES NOT BOMBED IN WORLD

WAR II

Name of Branch

Location

Product

1. Werk

Kries Saalfeld

Measuring

Reiehmannsdoff

Instruments

mit

Unterabteilungen in

Wallendorf und

Unterweissbach

2. Werk

Bayreuth

Starters

Marktschorgast

3. Werk F18ha

Sachsen

Short Wave Sending

Sets

4. Werk Reichenbach Vogtland

Dry Cell Batteries

5. Werk Burglengefeld Sachsen/S.E.

Heavy Starters

Chemnitz

6. Werk Nuremburg

Belringersdorf/

Small Components

Nuremburg

7. Werk Zirndorf

Nuremburg

Heavy Starters

8. Werk Mattinghofen Oberdonau

1 KW Senders 250

Meters & long wave

for torpedo boats &

U-boats

9. Unterwerk Neustadt Coburg

Radar Equipment

That the A.E.G. plants in Germany were not bombed in World War II was confirmed by the United States Strategic Bombing Survey, officered by such academics as John K. Galbraith and such Wall Streeters as George W. Ball and Paul H. Nitze. Their "German Electrical Equipment Industry Report" dated January 1947 concludes:
The industry has never been attacked as a basic target system, but a few plants,
i.e.
Brown Boveri at Mannheim, Bosch at Stuutgart and Siemenstadt in Berlin,
have been subjected to precision raids; many others were hit in area raids.
17

At the end of World War II an Allied investigation team known as FIAT was sent to examine bomb damage to German electrical industry plants. The team for the electrical industry consisted of Alexander G.P.E. Sanders of International Telephone and Telegraph of New York, Whit-worth Ferguson of Ferguson Electric Company, New York, and Erich J.

Borgman of Westinghouse Electric. Although the stated objective of these teams was to examine the effects on Allied bombing of German targets, the objective of this particular team was to get the German electrical equipment industry back into production as soon as possible. Whirworth Ferguson wrote a report dated March 31, 1945 on the A.E.G.

Ostland-werke and concluded, "this plant is immediately available for production of fine metal parts and assemblies.
18

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CHAPTER THREE: General Electric Funds Hitler

To conclude, we find that both Rathenau of A.E.G. and Swope of General Electric in the U.S. had similar ideas of putting the State to work for their own corporate ends. General Electric was prominent in financing Hitler, it profited handsomely from war production —

and yet it managed to evade bombing in World War II. Obviously the story briefly surveyed here deserves a much more thorough — and official — investigation.

Footnotes:

1For the technical details see the three-volume study, Antony C. Sutton,
Western Technology and Soviet Economic Development,
(Stanford, California: Hoover Institution Press, 1968, 1971), 1973), hereafter cited as
Western
Technology Series.

2(New York: Arlington House Publishers, 1975)

3
New York Times,
October 6, 1936. See also Antony C. Sutton,
Wall Street and
FDR, op. cit.

4Of course, socialist pleading by businessmen is still with us. Witness the injured cries when President Ford proposed deregulation of airlines and trucking. See for example
Wall Street Journal,
November 25, 1975.