Chapter 6: The Telephone Plot
During the early days of 1942, Karl Lindemann, the Rockefeller-Standard Oil representative in Berlin, held a series of urgent meetings with two directors of the American International Telephone and Telegraph Corporation: Walter Schellenberg, head of the Gestapo's counterintelligence service (SD), and Baron Kurt von Schroder of the BIS and the Stein Bank. The result of these meetings was that Gerhardt Westrick, the crippled boss of ITT in Nazi Germany, got aboard an ITT Focke Wulf bomber and flew to Madrid for a meeting in March with Sosthenes Behn, American ITT chief.
In the sumptuous Royal Suite of Madrid's Ritz Hotel, the tall, sharp-faced Behn and the heavily limping Westrick sat down for lunch to discuss how best they could improve ITT's links with the Gestapo, and its improvement of the whole Nazi system of telephones, teleprinters, aircraft intercoms, submarine and ship phones, electric buoys, alarm systems, radio and radar parts, and fuses for artillery shells, as well as the Focke-Wulf bombers that were taking thousands of American lives.
Sosthenes Behn, whose first name was Greek for "life strength," was born in St. Thomas, the Virgin Islands, on January 30, 1882. His father was Danish and his mother French-Italian. He and his brother Hernand, later his partner, were schooled in Corsica and Paris.
In 1906, Behn and his brother took over a sugar business in Puerto Rico and snapped up a small and primitive local telephone company by closing in on a mortgage. Realizing the potential of the newfangled telephone, Behn began to buy up more companies in the Caribbean. He became a U.S. citizen in 1913. In World War I, Behn served in the Signal Corps as chief of staff for General George Russell. He learned a great deal about military communications systems, and his services to France earned him the Legion d 'Ronneur. Back in the United States, Behn became associated with AT&T, of which Winthrop Aldrich was later a director. In 1920, Behn's work in the field of cables enabled him to set up the ITT with $6 million paid in capital. Gradually, he spun out a web of communications that ran worldwide. He soon became the telephone king of the world, making deals with AT&T and J. P. Morgan that resulted in his running the entire telephone system of Spain by 1923. His Spanish chairman was the Duke of Alba, later a major supporter of Franco and Hitler. In 1930 Behn obtained the Rumanian telephone industry, to which he later added the Hungarian, German, and Swedish corporations. By 1931 his empire was worth over $64 million despite the Wall Street crash. He became a director of -- inevitably -- the National City Bank, which financed him along with the Morgans.
Behn was aided by fascist governments, into which he rapidly interlocked his system by assuring politicians promising places on his boards. He ran his empire from 67 Broad Street, New York.
His office was decorated with Louis XIV antiques, rich carpets, and portraits of Pope Pius XI and various heads of fascist states. He traveled frequently to Germany to confer with his Nazi directors, Kurt von Schroder and Gerhardt Westrick. On August 4, 1933, he and his representative in Germany, Henry Mann of the National City Bank, had a meeting with Hitler that established a political relationship with Germany that continued until the end of World War II. The Fuhrer promised aid and protection always.
Through Mann, Behn was closely connected with Wilhelm Keppler, who formed the Circle of Friends of the Gestapo and introduced him to Schroder and Westrick. Not only did Keppler, Schroder, and Himmler see to it that Behn's German funds and industries were untouched by forfeit or seizure, but Schroder arranged for Emil Puhl at the Reichsbank to payoff ITT's bills.
Behn became an important aid to his friend Hermann Goring. In 1938 he and Schroder obtained 28 percent of the Focke-Wulf company; they greatly improved the deadly bomber squadrons that later attacked London and American ships and troops. When Austria fell in 1938, Behn organized his Austrian company under the management of Schroder and Westrick and aided in the expulsion of Jews. Some Nazis tried to take over the Austrian offices, but Behn again visited Hitler at Berchtesgaden and made sure that ITT would be allowed to continue in business.
In Madrid during the Spanish Civil War, Behn supplied telephones to both sides, gradually shifting over his commitments to Franco when it was obvious that Franco was winning. He spent months in the shell-shattered Madrid headquarters known as the Telefonica, playing both ends against the middle and driving, with immunity given by both sides, to and from the Ritz. He gave lavish parties for both the British and American press, while negotiating through the Bank for International Settlements so that Franco could buy up ITT's Loyalist installations.
When Hitler invaded Poland, Behn and Schroder conferred with the German alien property custodian, H-J Caesar. The result was that the ITT Polish companies were protected from seizure for the duration.
Another protector of Behn's in Germany was ITT's colorful corporation chairman, Gerhardt Westrick. Westrick was a skilled company lawyer, the German counterpart and associate of John Foster Dulles. Westrick's partner until 1938, the equally brilliant Dr. Heinrich Albert, was head of Ford in Germany until 1945. Both were crucially important to The Fraternity.
At the beginning of 1940, Behn decided to have Westrick go to the United States to link up the corporate strands that would remain secure throughout World War II. German Foreign Minister von Ribbentrop was equally concerned that Westrick undertake the mission. Westrick represented in Germany not only Ford but General Motors, Standard Oil, the Texas Company, Sterling Products, and the Davis Oil Company.
Since Behn had to be engaged in business in Lisbon, he arranged that Westrick would be hosted by Torkild Rieber in the United States. Behn also called up the Plaza Hotel in New York where he kept a permanent suite, and he had it placed at Westrick's disposal.
Westrick traveled via San Francisco in March 1940, where he handed $5 million of Farben-ITT money on Behn's and Ribbentrop's joint authorization to Nazi Consul General Fritz Wiedemann. The money was to insure the cooperation of small American businessmen with the Third Reich.
Rieber met Westrick at the Plaza on April 10, 1940, and arranged a press conference for him. The reporters were delighted with the German. Burly and bullnecked, with a strong, guttural voice, he had lost his right leg to British shells in World War I. He had an aluminum leg attached to his body by complicated webbing and a silver rod. And he had with him a mysterious and glamorous secretary, the Baroness Ingrid von Wallenheim.
After a series of meetings with the Fraternity leaders, Westrick gave an interview to The New York Times on April 12. He echoed precisely the views of Emil Puhl and Dr. Walther Funk. He said that America must release its vast holdings in gold, amounting to $7,500 million in notes and $18 billion in coinage, to the Nazi government and its conquered territories. Westrick insisted that the loan should be made at a mere one and a half percent interest. He urged that the money be shipped to the Bank for International Settlements for transfer to the Reichsbank. He wanted an end to the economic friction that caused wars and he sought peace forever -- presided over by the Triumvirate of Wall Street, the Reichsbank, and the Bank of Japan, sustained on a river of gold. Indeed, as the Times correspondent pointed out rather sharply, Westrick's views of free trading instead of barter were remarkably similar to those of Secretary of State Cordell Hull.
There was, of course, no mention of such inconvenient subjects as Austria, Czechoslovakia, and Poland in Westrick's visionary pronouncement.
A letter appeared in the Times on April 15, written by Karel Hudek, acting consul general representing the Czechoslovakian republic in exile, saying, inter alia, "I think that all downtrodden nations -- Austria, Czechoslovakia, Poland, Denmark, Norway and some others, who may join us in a short time, will thank Dr. Westrick for his kind endeavors. ... Dr. Westrick is right when he says that wars come from economic causes. I can speak here for my country: they invaded us and promptly took over all industry -- yes, that is economic cause."
On June 26, 1940, his Fraternity associates gave a party for Westrick at the Waldorf-Astoria Hotel to celebrate the Nazi victory in France. This was, of course, only appropriate. Fraternity guests at this scorpions' feast included Dietrich, brother of Hermann Schmitz of General Aniline and Film; James D. Mooney of General Motors; Edsel Ford of the Ford Motor Company; William Weiss of Sterling Products; and Torkild Rieber of the Texas Company. These leaders of The Fraternity agreed to help in the free-trade agreements that would follow a negotiated peace with Germany.
Westrick leased a large house in Scarsdale, New York, from one of Rieber's Texas Company lawyers. He was seen entering and leaving the house in the company of prominent figures of the Nazi government and American industry. The New York Daily News sent reporter George Dickson to investigate the meaning of a big white placard with a large G on it in a window of a front second-floor bedroom. The press generally was suggesting this formed some kind of code for use by Nazi agents. Dickson wrote in his column: "Phantom- like men in white have been responding by day and night to mysterious signaling from a secluded Westchester mansion -- now disclosed as the secret quarters of Dr. Gerhardt A. Westrick -- invariably they carry carefully wrapped packages ... they salute with all the precision of Storm Troopers, deliver the packages, salute again -- and silently depart ... super-sleuthing finally solved the mystery just before last midnight." Then Dickson delivered his death blow to the story: The G sign was an invitation to the Good Humor man to deliver his famous ice cream on a stick!
J. Edgar Hoover of the FBI determined that Westrick had illegally obtained his driver's license by lying that he had no infirmities. The purpose was achieved: Walter Winchell, Drew Pearson, and other patriotic columnists blew up Westrick's Nazi connections out of all proportion, and Westrick was asked by German Charge d'Affaires Hans Thomsen to return to Germany at once.
But before he was ordered home, Westrick had been extremely busy. He had gone to see Edsel and Henry Ford at Dearborn on July 11 at the Fords' urgent invitation, conferring with the Grand Old Man and his son on the matter of restricting shipment of important Rolls-Royce motors to a beleaguered Britain that urgently needed them. He also visited with Will Clayton, Jesse Jones's associate in the Department of Commerce, who went with Westrick to see Cordell Hull to plead for the protection of German-American trade agreements on behalf of his friends in the Texas cotton industry.
Clayton was the chairman of the U.S. Commercial Company, and he helped protect Fraternity interests during World War II. Others of Westrick's circle included, interestingly enough, William Donovan, who became head of the OSS (precursor of the CIA) on its formation in 1942. Westrick also made significant contacts with good and true friends at Eastman Kodak and Underwood before returning home via Japan and Russia.
After Pearl Harbor, at meetings with Kurt von Schroder and Behn in Switzerland, Westrick nervously admitted he had run into a problem. Wilhelm Ohnesorge, the elderly minister in charge of post offices, who was one of the first fifty Nazi party members, was strongly opposed to ITT's German companies continuing to function under New York management in time of war. Behn told Westrick to use Schroder and the protection of the Gestapo against Ohnesorge. In return, Behn guaranteed that ITT would substantially increase its payments to the Gestapo through the Circle of Friends.
A special board of trustees was set up by the German government to cooperate with Behn and his thirty thousand staff in Occupied Europe. Ohnesorge savagely fought these arrangements and tried to obtain the support of Himmler. However, Schroder had Himmler's ear, and so, of course, did his close friend and associate Walter Schellenberg. Ohnesorge appealed directly to Hitler and condemned Westrick as an American sympathizer. However, Hitler realized the importance of ITT to the German economy and proved supportive of Behn.
The final arrangement was that the Nazi government would not acquire the shares of ITT but would confine itself to the administration of the shares. Westrick would be chairman of the managing directors.
Thus, an American corporation literally entered into partnership with the Nazi government in time of war.
Westrick and Behn appointed Walter Schellenberg as a director with a nominal salary in return for his protection and for his assistance in insuring the company's continuing existence. General Fritz Thiele, second-in-command of the signal corps, was added to the directorial board because army stock orders were crucial in keeping the company afloat. Hitler was gravely suspicious of Thiele for drawing money from an American corporation in time of war and sought to dislodge him, but Himmler stepped in as a protector.
Ohnesorge did not give up. In 1942 he again tried to induce Himmler to sign a warrant of arrest against Westrick for high treason. His idea was to keep Westrick in a concentration camp while he disposed of the shares of ITT. Once again, Schroder stepped in and there was no further trouble.
Not only did Behn own all of the German companies of ITT outright through the war but he also ran ITT factories in the neutral countries of Spain, Portugal, Switzerland, and Sweden, which continued to buy, sell, and manufacture for the Axis. Behn and his directors made repeated and persistent efforts to obtain licenses for dealings with the enemy. When Morgenthau refused the licenses, they proceeded anyway. They also exported materials to their subsidiaries in neutral nations producing for the enemy.
After Pearl Harbor the German army, navy, and air force contracted with ITT for the manufacture of switchboards, telephones, alarm gongs, buoys, air raid warning devices, radar equipment, and thirty thousand fuses per month for artillery shells used to kill British and American troops. This was to increase to fifty thousand per month by 1944. In addition, ITT supplied ingredients for the rocket bombs that fell on London, selenium cells for dry rectifiers, high-frequency radio equipment, and fortification and field communication sets.
Without this supply of crucial materials it would have been impossible for the German air force to kill American and British troops, for the German army to fight the Allies in Africa, Italy, France, and Germany, for England to have been bombed, or for Allied ships to have been attacked at sea. Nor would it have been possible without ITT and its affiliates for the enemy to have kept contact with Latin American countries at a time when Admiral Raeder of the German Navy contemplated an onslaught on countries south of Panama. It is thus somewhat unsettling to note the following memorandum sent by the State Department lawyer R. T. Yingling to Assistant Secretary of State Breckinridge Long on February 26, 1942. It read in part:
It seems that the International Telephone and Telegraph Corporation which has been handling traffic between Latin American countries and Axis-controlled points with the encouragement or concurrence of the Department of State* desires some assurance that it will not be prosecuted for such activities. It has been suggested that the matter be discussed informally with the Attorney General and if he agrees the Corporation can be advised that no prosecution is contemplated ... if the International Telephone and Telegraph Corporation feels that activities of the nature indicated above which it may be carrying on at the present time in Latin America are within the purview of the Trading with the Enemy Act it should apply to the Treasury Department for a license to engage in such activities.
Whether or not the license was issued, the trading was continued with the assurance that neither the State Department nor the Department of Justice would intervene. Armed with this convenient endorsement, Sosthenes Behn was constantly flying in and out of Spain during the war for transactions with the enemy. He owned not only a telephone operating company in Spain, but a major manufacturing company as well: Standard Electrica. In the middle of 1942, after a visit to Madrid, Behn had the audacity to go to the State Department and talk to Dean Acheson's staff to obtain permission for his Spanish subsidiary to purchase materials in Germany for use in Spain. When this was questioned, Behn said that there was a likelihood of the Franco government's taking over the Spanish properties unless they complied. It was a familiar argument, but Behn, who had tried to sell the Spanish company to that same government a year earlier, knew perfectly well that Franco had no intention of running the complex corporation. With a unique gift of understatement, U.S. Ambassador to Spain Carlton J. H. Hayes wrote to the State Department on August 15, 1942, "The Embassy ... feels that the ITT may not have always placed our war efforts above its own interests." The letter was written at a time when ITT was manufacturing military equipment for the German army in Spain.
On September 28, 1942, Ambassador John G. Winant in London telegraphed Washington urgently recommending that the ITT Swiss and Spanish subsidiary, Telephone and Radio, "be issued licenses to trade with Nazi Germany." State Department officials had a meeting with Morgenthau and Harry Dexter White saying that it was essential ITT be allowed to trade with enemy territory. Morgenthau and White flatly refused to countenance any such trading.
In January, February, and March 1943, Behn was back in Barcelona and Madrid for conferences with Colonel Wilhelm Grube of the German army signal corps on the question of forming the German Standard, or European Standard (as it was later known), Corporation amalgamating all ITT companies throughout the whole of Western Europe. Grube carried out Behn's instructions to the letter.
Shortly after Pearl Harbor, Roosevelt had asked Nelson Rockefeller to prepare a study of the communications systems of South America. On May 4, 1942, the President had sent a memorandum to Henry Wallace in his role as chairman of the Board of Economic Warfare, ordering him to insure disconnection of all enemy nationals in the radio, telephone, and telegraph fields. He had urged Wallace to eliminate all Axis control and influence in telecommunications in Latin America, acquire hemisphere interests of all Axis companies, insure loyalty in employees, and disrupt direct lines to the enemy. He had asked for a corporation to be set up to handle the financial aspects of the program with the assistance and advice of an advisory committee.
Wallace approached Secretary of Commerce Jesse H. Jones to make the necessary arrangements. Jones set up the U.S. Commercial Company to take charge of the matter. It was a characteristic choice. The company's second-in-command was none other than Robert A. Gantt, vice-president of ITT itself. Gantt continued to receive salary from ITT while holding his position with the U.S. Commercial Company. The rest of the board was largely composed of directors of ITT or RCA (also a wartime partner in Nazi-American communications companies).
The Hemisphere Communications Committee sat with a mixed Treasury, State, Army, Navy, and U.S. Commercial Company board throughout World War II, doing little more than discussing possible actions against Axis-connected companies.
A pressing issue from Pearl Harbor was the matter of ITT amalgamating the telephone companies of Mexico. One of these, Mexican Telephone and Telegraph, was owned by Behn outright. The other was owned by the Ericsson Company, of which Behn had a 35 percent share in Sweden. The Ericsson Company was partly owned by Nazi collaborator Axel Wenner-Gren and by Jacob Wallenberg, Swedish millionaire head of the ball bearings firm, which played both sides of the war. Behn was in and out of Europe in the early 1940s discussing a merger of the two Mexican companies under his guidance.
He made the reason for the take-over the need to remove Axis influence in Mexico -- though he failed to explain how ITT could in any way reduce such influence. Indeed, it would almost certainly have enhanced it. C.J. Durr, acting chairman of the Federal communications Commission, was drastically opposed to any such takeover. Durr was correctly worried that some $15 million of money that would be advanced to Behn by the Export-Import Bank would make its way directly into German hands.
Durr was also concerned over the fact that ITT retained a contract with the Nippon Electric Company in Japan that provided that Behn could place Japanese employees in Mexico in time of war.
On October 29, 1942, the Export-Import Bank agreed to pay $36 million for the merger. When Durr asked point-blank why this was the case, Hugh Knowlton said, "The ITT will supply a listening post. " Durr replied, "Isn't that a two-way affair?" Commander Willimbucher of the U.S. Navy said, "The question of which side gets most value from the listening post depends on the relative shrewdness of the particular people in the company." "Who gets the information?" Laurence Smith of the Department of Justice asked. "The company," Francis DeWolf of the State Department said. "The Government gets what the company wants it to.* The company has to be careful lest competitive information gets into the hands of the Government and then reaches its competitors."
Statements of this kind infuriated Durr. He was aggravated also by the fact that all the circuits to the Axis remained open throughout the war. The real truth of the matter emerged at a meeting on January 6, 1943. There was an argument between Durr and Hugh Knowlton of the board. Knowlton said that "The army has investigated ITT thoroughly and ... ITT is presently engaged in confidential manufacturing work for the army so I assume they're all right. " Durr stated he wasn't so much worried about their operations in the United States "as they could be watched, but rather their operations outside this country and particularly their Axis connection." Knowlton kept up his defense. So did DeWolf, who said, "It might be well to put a finger on just what the Committee is afraid of. ITT has factories in Germany, it has a company in Spain, it is in correspondence with Belgium, in fact, it is in correspondence with the enemy. What this Committee is afraid of is public opinion. ... That the corporation might not play our game. "*
Knowlton said he had never heard anyone express any doubt as to Colonel Behn's patriotism. ("Col. Behn certainly knows his way around but he is a loyal American citizen.") Laurence Smith (of Justice) said he had not yet had from the U.S. Commercial Company "an adequate appraisal of possible dangers." He mentioned Westrick and Nazi cooperation in South America and DeWolf answered, "ITT is a loyal American corporation." Smith disagreed. Lawrence Knapp of Justice asked if the Tokyo circuit was still operating. Knowlton said, "Not if the U.S. Government asked them not to." DeWolf said, correctly, "If they are doing it, it is with the license of the State Department!"
While these meetings were going on, CIDRA, ITT's Argentine subsidiary, handled a constant flow of phonecalls to Buenos Aires, Germany, Hungary, and Rumania. Another ITT subsidiary, the United River Plate Telephone Company, handled 622 telephone calls between the Argentine and Berlin in the first seven months of 1942 alone.
There was constant dealing with Proclaimed List firms. Licenses were issued by authorization of the local embassies. At Behn's instructions Brazil and Peru were supervised from Argentina since Argentina had not declared war on the Axis.
In Brazil the ITT obtained a license from the embassy to buy equipment from a leading German-owned Proclaimed List electrical company, Industria Electre-Ace Plangt, which supplied tungsten and cobalt to ITT. The mailing lists of ITT were filled with enemy names. In Venezuela, in June 1942, ITT bought many consignments of radio tubes from the firm Armanda Capriles and Co., which was contributing heavily to the Nazi Winter Help Fund, designed to pay for Germany's troops in Russia and Poland. In Uruguay, Behn's manager was himself on the Proclaimed List.
By the second half of 1942, ITT sent telephone apparatus to its offices in South America without licenses. Discounts were permitted and the Export-Import Bank loan continued. In July 1942 the ITT All-America Cables Office in Buenos Aires obtained secret information on tungsten ore through handling cables and passed this on to the enemy-controlled Havero Trading Company of Buenos Aires.
On December 4, 1943, P. E. Erickson of the ITT subsidiary in Sweden wrote to H.M. Pease of the head office in New York consulting with him on a 400 million kroner plan to automatize the telephone system in Nazi-occupied Denmark. The Danish ITT subsidiary employed two hundred people in its Copenhagen factory. It was of vital importance to the Germans in its North European network of communications.
In South America, Sosthenes Behn was in partnership (as well as rivalry) with an even more powerful organism: the giant Radio Corporation of America, which owned the NBC radio network. RCA was in partnership before and after Pearl Harbor with British Cable and Wireless; with Telefunken, the Nazi company; with ltalcable, wholly owned by the Mussolini government; and with Vichy's Compagnie Generale, in an organization known as the Transradio Consortium, with General Robert C. Davis, head of the New York Chapter of the American Red Cross, as its chairman. In turn, RCA, British Cable and Wireless, and the German and Italian companies had a share with ITT in TTP (Telegraifica y Telefonica del Plata), an Axis-controlled company providing telegraph and telephone service between Buenos Aires and Montevideo. Nazis in Montevideo could telephone Buenos Aires through TTP without coming under the control of either the state-owned system in Uruguay or the ITT system in Argentina.
Messages, often dangerous to American security, were transmitted directly to Berlin and Rome by Transradio. Another shareholder was ITT's German "rival," Siemens, which linked cables and networks with Behn south of Panama.
The head of RCA during World War II was Colonel David Sarnoff, a stocky, square-set, determined man with a slow, subdued voice, who came from Russia as an immigrant at the turn of the century and began as a newspaper seller, messenger boy, and Marconi Wireless operator. He became world famous in 1912, at the age of twenty-one, as the young telegraph operator who first picked up word of the sinking of the Titanic: for seventy-two hours he conducted ships to the stricken vessel. He rose rapidly in the Marconi company, from inspector to commercial manager in 1917. He became general manager of RCA in 1922 at the age of thirty-one and president just before he was 40. Under his inspired organization NBC inaugurated network broadcasting and RCA and NBC became one of the most colossal of the American multinational corporations, pioneers in television and telecommunications.
After Pearl Harbor, Sarnoff cabled Roosevelt, "All of our facilities and personnel are ready and at your instant service. We await your command." Sarnoff played a crucial role, as crucial as Behn's, in the U.S. war effort, and, like Behn, he was given a colonelcy in the U.S. Signal Corps. He solved complex problems, dealt with a maze of difficult requirements by the twelve million members of the U.S. armed forces, and coordinated details related to the Normandy landings. He prepared the whole printed and electronic press-coverage of V-J day; in London in 1944, with headquarters at Claridge's Hotel, he was Eisenhower's inspired consultant and earned the Medal of Merit for his help in the occupation of Europe.
Opening in 1943 with a chorus of praise from various generals, the new RCA laboratories had proved to be indispensable in time of war.
But the public, which thought of Sarnoff as a pillar of patriotism, would have been astonished to learn of his partnership with the enemy through Transradio and TTP. The British public, beleaguered and bombed, would have been equally shocked to learn that British Cable and Wireless, 10 percent owned by the British government, and under virtual government control in wartime, was in fact also in partnership with the Germans and Italians through the same companies and proxies.
Immediately after Pearl Harbor, Hans Blume, manager of Transradio in Chile, set up an arrangement in connection with his related clandestine station, PYL, to transmit Nazi propaganda, coordinate espionage routes, give ship arrivals and departures, supply information on U.S. military aid, U.S. exports, the Latin American defense measures, and set up communications with German embassies throughout South America. Transradio was equally active in Rio and Buenos Aires.
In Brazil, Transradio was known as Radiobras, its mixed American, British, Nazi, and Italian shares permanently deposited in -- of course -- the National City Bank of New York in Rio. Its directors were American, Italian, German, and French. Transradio's London bank transferred as much as a quarter of a million shares of Transradio stock from Nazi-controlled banks to the National City Bank branch in 1942.
In Argentina the board was again a mixture of Nazi, Italian, and Allied members. Like the members of the Bank for International Settlements, though with even less excuse, the directors sat around a table discussing the future of Fascist alliances. So extreme was the situation that many messages could not be sent to Allied capitals by U.S. embassies or consulates without going through Axis hands first.
On March 15, 1942, Transradio in London instructed its Buenos Aires branch to open a radio-photograph circuit to Tokyo. Since British post office authorities were in charge of British Cable and Wireless's wartime operations, the British government was presumed to have authorized this act. On March 16 the U.S. Embassy in Buenos Aires reported to the State Department in Washington that the opening of the radio-photograph circuit "would appear to offer the Japanese opportunity of transmitting news photos unfavorable to the united nations to Buenos Aires for distribution here and in other countries."
On March 16, Thomas Burke of the State Department sent a note to State's Breckinridge Long saying, over three months after Pearl Harbor, "Now that we are at war and parties to Resolution XL of the Rio Conference, it seems proper to require our companies to desist from carrying any Axis traffic in the other American republics. It is our understanding in this connection that the Treasury Department in the future will require licenses of American communications companies desiring to carry traffic of this nature. ... As far as the past is concerned, it is believed that we can give oral assurances to the companies that they will not be prosecuted against." It is of interest to note that those assurances extended into the future and that indeed the companies were not prosecuted against at any time.
At the same time, London allegedly authorized Transradio to transmit messages from South American capitals direct to Rome. The British authorities had cut off ltalcable's line to Rome at Gibraltar in 1939, but Transradio now took over its Italian partner's transmissions at a 50 percent discount.
Simultaneously, the Transradio stations, according to State Department reports with the full knowledge of David Sarnoff, kept up a direct line to Berlin. The amount of intelligence passed along the lines can scarcely be calculated. The London office was in constant touch with New York throughout the war, sifting through reports from Argentina, Brazil, and Chile and sending company reports to the Italian and German interests.
In a remarkable example of the pot calling the kettle black, Nando Behn, the nephew of Sosthenes Behn, cabled his uncle from Buenos Aires to New York on June 29, 1942: "It is about time something is done down here to cut out the sole communication center in the Americas with Berlin. Our competitors, Transradio, have a direct radio circuit with Berlin and you can be pretty sure that every sailing from Buenos Aires is in Berlin before the ship is out of sight."
General Robert C. Davis never seemed to question the fact that his Swedish fellow board members were proxies of an enemy government. Nor that secret documents, charts, and patents were being transferred with speed, accuracy, and secrecy, with the authorization of the Japanese Minister of communications, to South America direct.
On July 10, 1942, adhering to terms of the Rio Conference at which Sumner Welles had succeeded in obtaining agreements for discontinuing communications with the Axis, the Argentine Minister of the Interior addressed an official letter to the Director General of Posts and Telegraphs, seeking to suspend such connections for the duration. Despite that fact, Transradio and RCA, like their counterparts in ITT, pretended they feared that if they did not discontinue the circuits, the Argentine government would retaliate by nationalizing them.
By blaming the Argentine, Chilean, and Brazilian cabinets, Sarnoff and his own board proved conclusively that they were interested in business as usual in wartime.
On July 12, two days after Argentina's intention to disconnect the circuits was made clear, an urgent meeting was held in the office of Breckinridge Long, Assistant Secretary of State in charge of communications and visas, and a former ambassador to Italy, admirer of Mussolini, and notorious block to Jewish refugee immigration. Among those present were Sarnoff, Sir Campbell Stuart, New York representative of British Cable and Wireless, RCA vice-president W.A. Winterbottom, and General Davis. It was graciously decided that Davis should go to Argentina and Chile and "have a look see." The ostensible purpose of Davis's mission was to do everything in his power to close down the circuits. He would travel with an engineer, Phillip Siling, of the FCC (and ITT) and Commander George Schecklin of the Office of War Information (and RCA).
At a further meeting on July 20, setting out details of the mission, Breckinridge Long calmly referred to the importance of the question, pointing out without anger the unfortunate fact that "a stream of information is being sent out by the consortium stations with resulting losses in our shipping." Sir Campbell Stuart of British Cable and Wireless coolly promised to keep his government "advised of the decision of this meeting." It was agreed that the State Department would take care of all costs of Davis's mission and arrange the necessary priorities in terms of passports and visas.
Davis traveled to the South American cities and began interviewing the local directors and chiefs of staff. He either was completely blind to the facts, or lied to cover his associates. Despite the fact that every branch of Transradio was bristling with Nazis, he dislodged only two: Henri Pincernin, the Vichy manager in Buenos Aires, and Hans Blume in Valparaiso. Ernesto Aguirre, president of the board of directors of Transradio in Buenos Aires, was kept on despite the fact that he was also on the board of the Nazi branch of General Electric as well as of Italian, Japanese, and German companies.
In Buenos Aires, Rio, and other cities, Davis retained important Nazis. One of these, Jorge Richter, an official of Siemens who moved from branch to branch, was reported by the FBI to be an espionage agent of the Nazi High Command.
On August 18, 1942, Davis cabled Long from Santiago, Chile, stating that he could give Transradio there "a clean bill of health," and that the company was "entirely under Allied control." Yet in January 1943 the FBI was to supply its own report based on an independent investigation saying that Transradio there still had four receivers tuned in to Tokyo, Berlin, London, and New York and that Hans Blume's brother, Kurt, was now in charge. Similar reports reached Washington on Buenos Aires and Rio.
On August 25, 1942, Davis, Sarnoff, Winterbottom, and Breckinridge Long met in Long's office to hear General Davis give RCA a complete whitewash in South America. He said, "There is a satisfactory condition now existing. ... The communication facilities of Transradio ... are in friendly hands." Friendly to whom? one might ask; but Long conveyed to Cordell Hull his own satisfaction with the situation, even confirming such an outrageous statement as, "Dr. Aguirre is entirely pro-Ally and cooperative."
On August 31, Davis presented his report to an understandably delighted RCA shareholders' meeting. He read messages that the State Department had conveyed to the Italian and German proxies in the middle of the war. The French and Germans urged Davis via the board not to make any further changes in South America. None was made except that an American, George W. Hayes, took over in Buenos Aires. He found himself as managing director of a mixed Axis and Allied board. He also allegedly did not enforce the suggestion that Aguirre resign from his Nazi companies -- until October 6, 1943.
Despite pretensions to the contrary, and promises to close down the circuits, they continued. Breckinridge Long proved incapable of vigorously enforcing the disconnections or unwilling to do so. The British government seemed to be prepared to let the matter drift on indefinitely. Whenever it was suggested by Long that the British should disconnect, Sir Campbell Stuart indicated he was waiting for the Americans to act. Sarnoff waited for Stuart and Sosthenes Behn for Sarnoff. The buck was passed to South American governments, from London to New York and back again, while the profits and the espionage continued.
The U.S. Commercial Company sat on the matter on September 25, 1942, as part of the FCC special board in charge of hemispheric communications. Hugh Knowlton reported that RCA had instructed Transradio in Argentina and Chile to close the circuits of the Axis "when the British did so." The British ambassador in Washington had advised FCC Acting Chairman C.J. Durr "that the British government expects daily to be able to report that the British representatives in these two companies have been so instructed." ITT "would also close their circuits when the British did."
By October 1942 the matter was still dragging on. At a meeting at the State Department on October 7, Sarnoff took the view that he would "generously waive consideration" of the commercial interests at stake. Such "generosity" was surely mandatory in wartime. Ignoring the fact that the British directors had said that it was up to him to discontinue the South American circuits if he wanted to, and that much of South America had turned against the Axis, he repeated that the British directors had still to concur in the action, and he questioned whether the order to close would be obeyed by the local managements in each case -- ignoring the fact that he had the power through Davis to fire anybody who disobeyed such orders.
By February 1943, Transradio was still in business. On February 10, RCA's W.A. Winterbottom cabled Martin Hallauer of British Cable and Wireless in London that he was making sure that RCA received all dividends and interests of Transradio, supervised all accounts, and helped maintain its offices in London. Even as the war deepened, RCA and British Cable and Wireless continued to own a substantial proportion of Transradio's stocks. In Brazil in March 1943, seven months after Brazil was at war with Germany, RCA's Radiobras held 70,659 German shares: part of the 240,000 voting shares held by the National City Bank of New York in Rio. On March 22 a British Cable and Wireless executive wrote from London to State that the Swedes, who represented the Nazi interests, had received the minutes of the latest board meeting and had sent them to Berlin and Paris.
On May 24, 1943, Long called Sarnoff with a mild complaint "that we have reason to believe that more messages than the agreed 700 code groups a week are being sent from Buenos Aires by the Axis powers for their Governments." Long added, "There may be sound reasons why your man George W. Hayes refuses to disclose the exact number of messages sent in code groups by each of the Axis representatives to their Governments. But I don't see any reason why Hayes shouldn't ask for a report on all code groups being sent day by day and to include a report on all belligerents. If you would obtain the information we would be appreciative. Don't do it by telegraph or telephone. We'll make our diplomatic pouch available to you." Sarnoff replied, "I'll talk to Winterbottom. I don't see why we shouldn't do it." The documents do not show that he did.
As it turned out, the final disconnection of the circuits only took place because the South American governments willed it. There is no evidence that ultimate action was taken by the State Department, RCA, or British Cable and Wireless.
Sosthenes Behn, like Sarnoff, paradoxically showed great dedication to the American war effort. On May 15, 1942, Behn announced to The New York Times that the United States government could have free use of all ITT patents and those of its subsidiaries, both in the United States and abroad, for the duration of the war and six months thereafter. He would not charge manufacturers engaged in the production of war equipment.
With a touch of black humor he told the Times that "We have 9,200 patents, and more than 450 trademarks in 61 countries, and about 5,100 patents and 40 trademark applications pending in 38 countries. These figures do not include patents to German subsidiaries of the corporation since information about them is not available." This barefaced lie was published without demur in the Times.
Behn coolly announced that profits and losses of his international corporations "and the accounts of German subsidiaries, Spanish subsidiaries, the Shanghai telephone company ... and Mexican subsidiaries" had not been included in the annual financial statements for the same reason of "lack of information" -- information that was, in fact, reaching him daily.
Amazingly, on April 21, 1943, Behn let the cat at least peep out of the bag. He said, at an ITT shareholders' meeting in New York, "More than 61 percent of ITT's operations are in the Western hemisphere, almost 24 percent in the British Empire and neutral nations in Europe and less than 13 percent in Axis or Axis-controlled countries. Most of the cash available to the corporation originated with 'subsidiaries in the Western hemisphere.'"
The announcement to the shareholders that 13 percent of ITT was held in enemy territory caused not a ripple of surprise.
Despite the fact that all branches of American Intelligence were monitoring Colonel Behn at every turn, intercepting his messages, supplying unflattering memoranda marked "Confidential," and in general knowing exactly what he was up to, nothing whatsoever was done to stop him. As the war neared its end, whatever mild internal criticisms were voiced within the American government were quickly silenced by the prospects of peace with Germany and future plans to confront Russia. The FBI released through its internal organization a number of detailed reports on Behn forwarded to Navy, Army, and Air Force Intelligence. J. Edgar Hoover linked Behn to Nazi sources, including agents in Cuba and other parts of the Caribbean. Yet, despite the overwhelming evidence of Behn's collusion in his files, Hoover was pleased to receive from Behn the book Beyond Our Shores the World Shall Know Us, written with Behn's cooperation in 1944 and dealing with the problem of providing adequate American international broadcasting facilities. On June 17 of that year Hoover wrote to Behn: "Your letter of June 10 ... has been received and the book entitled Beyond Our Shores the World Shall Know Us has arrived. I do want to express to you my heartfelt appreciation for your thoughtfulness in making this splendid volume available."
Ironically, Behn's wartime headaches came not from Roosevelt but from Hitler. During that last period of the war Behn's work on behalf of the German army had deeply intensified. His communications systems for the OKW, the High Command of the Nazi armed forces, had become more and more sophisticated. The systems enabled the Nazis under Schellenberg's special decoding branch to break the American diplomatic code. They also allowed the building of intercept posts and platoons in the defensive campaign against the British and American invasion of France. At the same time, Behn was indispensable in making that invasion possible.
The problem was that the forces of anti-Behn were moving in under Postminister Wilhelm Ohnesorge. Behn's associate, General Erich Fellgiebel of the OKW, was prodded by the determination to bring about a negotiated peace, and Schellenberg's efforts undoubtedly abetted him. With Behn moving behind the scenes, and the assistance of John Foster Dulles's brother, Allen Dulles, of the Schroder Bank and the OSS, the famous generals' plot of July 1944 was hatched to assassinate Hitler. When Fellgiebel hesitated in cutting off communications to Hitler's headquarters after the bomb went off that almost killed the Fuhrer, conversations were overheard by Hitler's spies that revealed the plot's purpose. Ohnesorge's hour had arrived. In a desperate effort to save himself from ruin or worse, Schellenberg turned against his fellow conspirators and Himmler -- who had all along tacitly half-encouraged Behn and the plotters -- was compelled to feed Fellgiebel to the wolves. Fellgiebel and his associate in ITT, General Thiele were executed, and Karl Lindemann of Standard Oil went to prison, narrowly escaping the gallows. Only ITT's Gerhardt Westrick's hold over his fellow ITT board member Schellenberg and close contacts with I.G. Farben saved Westrick from a similar fate. Again, Behn's German empire very nearly was confiscated by Postminister Wilhelm Ohnesorge, but Schellenberg took a great risk and protected it once more.
On the day Paris was liberated, August 25, 1944, Behn drove in a jeep down the Champs-Elysees in a new role: He was "special communications expert for the Army of Occupation." His right-hand man, Kenneth Stockton, who had remained joint chairman with Westrick of the Nazi company throughout the war, was with him in the uniform of a three-star brigadier general. Behn made sure in Paris that his collaborating staff were not punished by Charles de Gaulle and the Free French. He was helped at high army levels to protect his friends.
When Germany fell, Stockton, with Behn, commandeered urgently needed trucks to travel into the Russian zone, remove machinery from ITT-owned works and aircraft plants, and move them into the American zone.
In 1945 a special Senate committee was set up on the subject of international communications. Completely unnoticed in the press, Burton K. Wheeler, "reformed" now that Germany had lost the war, became chairman. An immense dossier showing the extraordinary co-ownership with German and Japanese companies of RCA and ITT was actually published as an appendix to the hearings, but almost nobody took note of this formidable and fascinating half-million-word transcript. Least of all were its contents noted by the committee itself, which wasted the public's money by simply discussing for days (with Fraternity figures like James V. Forrestal) the possibility, quickly ruled out, of centralizing American communications systems. There was not a mention from beginning to end of the discussions of the questionable activities of RCA and ITT chiefs. Yet, in a curious series of exchanges between Wheeler and Rear Admiral Joseph R. Redman, who had been in charge of Naval Communications during the early part of the war, the cat leaped out of the bag in no uncertain manner. Apparently under the impression that the hearings would never be published, Wheeler seriously sat and talked of some of the reasons that such events had taken place. He asked Redman the question, already knowing the answer, "To what extent has American ownership of communications manufacturing companies in foreign countries, such as Germany, Sweden, and Spain, been of advantage, if any, to this country?" Redman replied, "Of course, from an economic point of view, I am not qualified to say, but I would say this from possibly a technical or research point of view, you get a cross-exchange of information in the research laboratories."
This amazing revelation by a high personage won the response from Wheeler, "And what about the disadvantages to us?" Redman replied blandly, "While you are working on things here that are developed for military reasons, there may be a certain amount of leakage back to foreign fields."
Wheeler asked, "How could you keep a manufacturing plant in Germany or in Spain or in Sweden, even though controlled by Western Electric from exchanging information as to what they were doing?"
Redman replied, "Well, we have had to rely a great deal upon the integrity of our commercial activities. Of course, if a man is a crook, he is going to be a crook regardless of whether you set up restrictions or not."
Wheeler said, "Let us suppose that you have a manufacturing company in Germany and also one here, and they are owned by the same company, aren't they exchanging information with reference to patents and everything else? ... Admiral Redman, you are not naive enough to believe, if a company has an establishment in Germany and another in America, they are not both working to improve their patents, are they?"
Redman admitted, "No, sir."
Warming to his theme, Wheeler said, "Consequently, if there are private companies that have factories over there and also here, they're bound to exchange information. It seems to me this has been going on in all kinds of industry. And that would be true of the electronics industry, or any other manufacturing industry, and whether they have a medium for such exchange in the nature of cartels or something else, they exchange information. What check has the Navy made to find out whether or not information is exchanged in that manner?"
Redman said, "We get a certain amount of information from captured equipment, captured documents, and things like that, and can find out if there is a leakage. ... Of course we have depended somewhat on our foreign attaches to get us some information on these things. ... I do not like here to get into a discussion of intelligence because I fear we might get ourselves into trouble."
Wheeler said, "You might, but some of us don't feel that way about it."
"Perhaps not," Redman replied.
Wheeler continued, "We might get into trouble in the Senate, but they cannot do anything about it. They cannot chop our heads off at the moment."
Senator Homer Capehart added, "For at least six years."
On February 16, 1946, Major General Harry C. Ingles, Chief Signal Officer of the U.S. Army, acting on behalf of President Truman, presented the Medal of Merit, the nation's highest award to a civilian, to Behn at 67 Broad Street, New York. As he pinned the medal on Colonel Behn, Ingles said, "You are honored for exceptionally meritorious conduct in the performance of outstanding service to the United States." A few years later Behn received millions of dollars in compensation for war damage to his German plants in 1944. Westrick had obtained an equivalent amount from the Nazi government.
* Author's italics.