I.G. Farben's joint chairman Hermann Schmitz was crucial to the activities of The Fraternity. Born in 1880 in the grim industrial city of Essen, Schmitz was the child of impoverished parents. He was driven from the first by a desire to obtain immense power. He started work at the age of fifteen, slaving as a leather-sleeved clerk at ledgers in a metals corporation. He studied at night school, learning about chemistry, fuels, and gases. Gifted with an extraordinary memory, he obtained a brilliant grasp of many branches of science by age twenty. As with millions of Germans, his nationalism flared during World War I. After service in the army this muscular, broad-shouldered, short-necked young man forced his way to the top of one of Germany's biggest steel corporations at the age of thirty-three. Secretive, difficult, mistrustful yet dynamic he used his government connections to the limit, bludgeoning his way into the Economics Ministry in 1915.
He became a close friend of Hjalmar Horace Greeley Schacht, who introduced him to the idea of a world community of money that would be independent of wars and empires. He became a dominant figure in the chemicals trust that he helped his friend and colleague Carl Krauch forge into I.G. Farben in 1925. Encouraged by Schacht, he developed a series of crucial friendships in England and the United States, always aiming unerringly for the greatest powers. One of his earliest allies was Walter Teagle of Standard Oil, who shared his views on international financial solidarity. Another was Edsel Ford, son of Henry Ford.
In 1929, Schmitz, his nephew, Max Ilgner, Walter Teagle, Edsel Ford, and Charles E. Mitchell of the ever-reliable National City Bank jointly set up the American Farben organization known as American I.G. Chemical Corp. Hermann Schmitz became president, with his brother Dietrich delegated to take over in his absence in Europe. It was an identical arrangement to that made by the von Clemm brothers, giving the family a foothold on both sides of the Atlantic that would survive any possible future war.
In 1931, President Herbert Hoover received Schmitz at the White House. Hoover shared Schmitz's attitude toward Russia: that it must be crushed. Hoover had lost extensive Russian oil holdings during the communist revolution.
So great was the enthusiasm of the German-American population for a recovering Germany that Schmitz's $13 million worth of debentures were sold by the National City Bank in one morning. The wealth and power of German-American I.G. were almost beyond calculation. The international company was the chief economic instrument of the German government. It produced a vast range of chemicals and chemical products, including artificial oil, synthetic rubber, aviation gasoline, plastic, nylon, and numerous poison gases, including the deadly insecticide later used at Farben's combined rubber factory and concentration camp, Auschwitz, where the SS murdered some four million Jews. Schmitz helped to found the Bank for International Settlements and was a member of the board until the end of World War II; he also launched an investment policy whereby American I.G. had, by 1941, $5,042,550 invested in Standard Oil of New Jersey, $838,412 in DuPont/General Motors, and $155,000 in Standard Oil of California.
With Krupp, I.G. Farben was an executor of Goring's Four Year Plan to make Germany militarily self-sufficient by 1940. By 1939, I.G. provided the Nazis with 90 percent of their foreign exchange, 95 percent of their imports, and 85 percent of all the military and commercial goods provided for by the Plan.
In 1932, Schmitz joined forces with Kurt von Schroder, director of the BIS and the enormously wealthy private bank, J.H. Stein, of Cologne, Germany. Schroder was a fanatical Nazi. On the surface he was suave, elegant, impeccably dressed, with a clean-cut face. In private he was a dedicated leader of the Death's Head Brigade. During the war he could be seen driving from his office in his sober pinstripe, changing into a black and silver uniform covered in decorations, and continuing to a meeting by torchlight of his personal storm troopers. It was this SS man who was most closely linked to Winthrop Aldrich of the Chase Bank, Walter Teagle of Standard Oil, Sosthenes Behn of ITT, and the other American members of The Fraternity. In 1933, at his handsome villa in Munich, Schroder arranged the meeting between Hitler and von Papen that helped lead to Hitler's accession to power in the Reichstag.
Also in 1932, Hitler's special economic advisor Wilhelm Keppler joined Schroder in forming a group of high-ranking associates of The Fraternity who could be guaranteed to supply money to the Gestapo. They agreed to contribute an average of one million marks a year to Himmler's personally marked "S" account at the J. H. Stein Bank, transferable to the secret "R" Gestapo account at the Dresdnerbank in Berlin.
This group became known as the Circle of Friends of the Economy. Schmitz was the largest contributor to the Circle, which included representatives of ITT and Standard Oil of New Jersey. Schmitz supplied considerable funds to Himmler separately, partly to secure his properties from seizure by the Gestapo, and to insure contracts for the concentration camps.
In the late 1930s, Schmitz began to conspire with the young and hard-bitten Walter Schellenberg, who was rapidly rising to become head of the SD, the Gestapo's counterintelligence service. Army Intelligence documents declassified in 1981 show that Schellenberg discussed Schmitz as head of a Council of Twelve. The council would place Hitler under the protection and rulership of Himmler while the Fuhrer remained a prisoner of Berchtesgaden. Knowing that Schmitz was dedicated to Himmler and the Gestapo cause, Schellenberg plotted constantly toward this end. However, Himmler vacillated constantly. He could not bring himself to depose the Fuhrer, nor did he expose Schellenberg to the Fuhrer.
The underlying purpose of the Schellenberg plan, revealed in the same recently declassified Army Intelligence report, was clearly to bring about the negotiated peace between Germany and the United States that was the overriding dream of The Fraternity.
As that war approached, Schmitz's brother Dietrich, acting on instructions from Berlin, moved from there to Manhattan and went into action to undermine any prospective American war effort. Despite the fact that he was an American citizen, enjoying all of the privileges of a glamorous social life in New York, he had involved himself in espionage with Farben's N.W.7. intelligence network. American I.G. owned the General Aniline and Film works and the huge film corporation Agfa and Ansco. It also owned Ozalid, the multimillion-dollar blueprint corporation. The General Aniline works supplied khaki or blue dyes for army, air force, or naval uniforms, which gave Schmitz's army of salesmen spies access to every military, naval, and air force base before and after Pearl Harbor. These "salesmen" talked the forces into using Agfa/Ansco for their private instruction films and having their photographs of secret installations developed in American I.G.'s laboratories. They also arranged to have every Ozalid print of secret military and naval plans copied and filed at their headquarters in Berlin.
The person responsible for this remarkable espionage stunt was Hermann and Dietrich Schmitz's nephew, plump, jolly Max Ilgner. Ilgner's motivation was to infiltrate at the top of Farben and prove himself indispensable to the company. He allied N.W.7. with the A.O., the Organization of Germans Abroad, an intelligence network which came directly under Walter Schellenberg. He set up an army of five thousand secret agents headed by Nazi Consul Fritz Wiedemann, operating through American I.G., which penetrated North and South America, weaving through military, naval, and air force bases as staff to supplement the information supplied by the I.G. salesmen. Between the two sets of spies Germany had a very clear picture of American armaments before Pearl Harbor.
Like Hermann Schmitz, Max Ilgner sent his brother to carry out his purposes in the United States. Rudolf Ilgner, an equally pushy, greedy, grasping opportunist, became a leading executive under Dietrich Schmitz in New York. He set up Chemical Co. a "Statistical Branch" of I.G. dedicated to espionage. He made contact with a famous priest, Father Bernard R. Hubbard, known as the Glacier Priest because of his work as missionary and explorer in the frozen wastes of Alaska. The friendship had a purpose. In 1939, just weeks after war broke out in Europe, U.S. Secretary of War Henry Stimson asked Hubbard as a special favor to undertake a tour of strategic U.S. Army bases in Alaska. On the pretext of giving a lecture tour, he was to make a complete movie and still photographic survey of the bases for use at military headquarters at the War Department in Washington.
Innocently if recklessly, Father Hubbard told Rudolf Ilgner of his assignment. Ilgner told him that in the goodness of its spirit, American I.G. (now known as General Aniline and Film) would present him with free cameras and film from its finest Agfa color wholesale supplies. Naturally, Ilgner pointed out, Hubbard would want to process the film in General Aniline and Film's laboratories. Hubbard agreed. Apparently no one in military intelligence bothered to consult FBI or State Department files that showed the GAF-Nazi connection. Hubbard undertook his long and difficult expedition, through blizzards and rainstorms, returning with a priceless record of the whole United States northwestern defense system. This, Rudolf Ilgner naturally forwarded to his brother at N.W.7. in Berlin.
Simultaneously, the Army began to photograph the Panama Canal for defense purposes. Rudolf Ilgner offered the Army Agfa film at a very low price. The films were processed and shipped to Berlin. Ilgner had a sense of humor. He gave the American government copies of the movies and still photographs and kept the originals, which were shipped via the Hamburg-America steamship line in 1941. The president of this company was Julius P. Meyer, head of the Board of Trade for German-American Commerce, whose chairman was Rudolf Ilgner.
In September 1939 the Schmitz brothers and the Ilgners realized that with the outbreak of war in Europe, the name I.G. -- as in Farben -- might put off some of the scores of thousands of American smaller shareholders who were unwittingly helping to finance Hitler.
Rudolf Ilgner burned all of his incriminating records. The directors instructed their publicity team to layoff any further plugging of Nazi super-efficiency as a selling point. It was thus that the company had become General Aniline and Film. The I.G. Farben subsidiary I.G. Chemie in Switzerland, run by the Schmitzes' brother-in- law, owned 91.5 percent of the stock through -- need one add? -- the National City Bank of New York and the Chase National Bank. The board still included William E. Weiss of Sterling Products and Edsel Ford; Teagle had resigned in 1938 following much unwelcome publicity. In his place James V. Forrestal was appointed to the board. Forrestal was a partner in the part-Jewish banking company of Dillon, Read, which had helped to finance Hitler in the earlier days. He was soon to become Under Secretary, and later Secretary, of the Navy. Another on the board was former Attorney General Homer S. Cummings. Cummings, who had done much to protect American I.G. when he was in his official post, now became the leading defense lawyer for the corporation. Just how qualified he was for the job may be judged by the fact that he slipped secret intelligence to Hans Thomsen, Nazi charge d'affaires in Washington. In a telegram marked Top Secret sent to Germany on June 11, 1940, Thomsen revealed that Cummings had supplied him with details of a private conversation with Roosevelt. Cummings told Thomsen's special contact that the President would make use of every legal trick in order to circumvent neutrality and help Britain in the Atlantic; that should the war last long enough for American armaments to be built up, he would give them to England, and that should the war end with Hitler defeating England and France, America would be "sweet and polite and gracious" toward Germany for two years, during which she would build up her armed forces regardless of cost. Roosevelt said Germany would be crushed if she tried to attack Canada or the Caribbean. Thus, a former attorney general in the pay of a known Nazi corporation supplied Hitler with secret intelligence on the private thoughts of the President.
General Aniline and Film could not have functioned as a branch office of N.W.7., the German Secret Service and The Fraternity without help in the Senate and in the House. Hans Thomsen's private memoranda allege that GAF, in addition to financing N.W.7. agents and the A.O. in America, supplied funds to significant figures of the House to secure propaganda arrangements. A telegram from Thomsen to Joachim von Ribbentrop, the Foreign Minister in Berlin, dated June 12, 1940, read:
A well known Republican Congressman who works in close collaboration with the special official of Press Affairs will invite some 50 isolationist Republican Congressmen on a 3-day visit to the Party Convention, so that they may work on the delegates of the Republican Party in favor of an isolationist foreign policy. $3,000 are required.
In addition, the Republican in question is prepared to form a small ad hoc Republican committee, which, as a counterblast to the full-page advertisement by the [William Allen] White committee, "Stop Hitler Now," would, during the Party Convention, publish in all of the leading American newspapers a full-page advertisement with the impressive appeal "Keep America Out of War." The cost of this would be about $60,000 to $80,000, of which half will, in all probability, be borne by his Republican friends. In view of the unique opportunity I have accepted the proposal. I request telegraphic instructions as to whether [the project] is of interest and if it is, that the funds referred to be transferred.
Ribbentrop's office cabled back on June 16: "The Foreign Minister agrees to the adoption of the countermeasures against pro-Ally propaganda activities in the U.S.A." The money was released and paid to the congressman.
Who was he? Representative Stephen A. Day, a pro-Nazi from Illinois, in partnership with a group of ardent admirers of Hitler including Senator Rush D. Holt of West Virginia and Senator Ernest Lundeen of Minnesota.
On July 19, 1940, Thomsen reported the success of the mission. He telegraphed Berlin: "As I have reported, isolationist Republican Congressmen at the Republican Convention succeeded in affixing firmly to the Party platform the language of an isolationist foreign policy that will not let itself become entangled in a European war. Nothing has leaked out about the assistance we rendered in this. ... For travel assistance and costs of the advertisements, $4,350 have been disbursed, which please refund to the Embassy."
As the international situation drew America to the brink of war, Max Ilgner and his Uncle Hermann became increasingly nervous about the future of their New York operation. They summoned two crucial directors of GAF to a meeting in Milan, on May 2, 1941, to discuss how best they could function if Hitler and Roosevelt clashed in war. These men were Alfredo E. Moll and Ernest K. Halbach -- both of whom were Americans. Moll and Halbach agreed that they would slip drugs and patents to South America through an American export firm called Fezandie and Sperrle, which had an impeccable background and would not be seized in time of war. Hugh Williamson, a director of General Aniline, allegedly handled materials and agents. Meanwhile, Halbach arranged to have his own subsidiary, General Dyestuffs, reconstructed as an American company that also would not be subject to seizure. In New York, Dietrich Schmitz bundled all the incriminating Chemnyco documents into a furnace and watched them burn.
On May 9, 1941, Attorney General Robert H. Jackson yielded to pressure from Roosevelt. He seized American I.G.'s deposits at the National City Bank of New York. But it turned out that only $250,000 of the half-billion-dollar corporation account was in the bank vault. Evidently, Ilgner had good contacts, because only six weeks later all except $25,000 of the money was unfrozen. It looked as though I.G. had gotten away with everything, but Morgenthau and Roosevelt froze all Swiss holdings in the United States and with them, American I.G. Its Swiss cloak had proved its undoing for the time being.
Sosthenes Behn of ITT proved to be a useful Fraternity member when he stepped in on Goring's suggestion to try to buy General Aniline and Film, thus Americanizing it, and removing the Swiss freeze order, and preventing it from seizure in time of war. He would make a neat exchange of ITT's German properties so that these, too, would escape seizure. The inescapable National City Bank naturally encouraged the transaction, but Hermann Schmitz was convinced that Behn was trying to outfox him and instead he decided to sell the company to one of its own subsidiaries. Schmitz outsmarted himself. The deal nearly went through but it was too much for Morgenthau, who stopped it. Schmitz tried again. Part of the American I.G. shares were owned by a Dutch subsidiary. He tried to have that subsidiary buy out GAF, but Morgenthau stopped that arrangement, too.
With the advent of Pearl Harbor, Morgenthau set his sights on an outright seizure of GAF for the duration. He had already closed down or nationalized fifty related firms of which he was suspicious. Shortly after Pearl Harbor, Morgenthau begged Roosevelt to let Treasury run GAF instead of the Department of Justice or the Office of the Alien Property Custodian, which was then in the process of being formed. He was strongly opposed to Roosevelt's suggestion that the tycoon Leo T. Crowley, a bete noire of his, should take over General Aniline and Film as Alien Property Custodian. He didn't trust Crowley, an appointee of the weak and vacillating Attorney General Francis Biddle. He knew that Crowley, a big, bragging, loudmouthed man, was a close friend of the corporations: a protector of big money in the Jesse H. Jones mold. Crowley had begun as a Wisconsin delivery boy, had fought his way up through the electrical business. A prominent Roman Catholic, Knight of Columbus, and recipient of the Order of St. Gregory, the Great Order of Knights, from Pope Pius XI, he was a pillar of the business establishment and, Morgenthau felt, the last person on earth to take over General Aniline and Film.
While the Crowley matter remained undecided, Morgenthau, on January 13, 1942, invaded General Aniline and Film and began sacking some obviously pro-Nazi personnel. Roosevelt was 100 percent behind him and told him that "in case anybody asks you, you can say that the President [says] 'Kill the son-of-a-bitch.'"
However, Roosevelt almost simultaneously undermined Morgenthau's power over the company by putting in temporary charge of it a servant of big business, the wealthy lawyer John E. Mack. Mack brought in the ever-scheming William Bullitt as chairman of the board. Mack opposed the removal of Nazi officers and flatly refused Morgenthau's demand that he stop using them in a consulting capacity. Morgenthau was disgusted by the huge salaries Mack and Bullitt were drawing for simply covering for Nazis. Mack even tried to set up a so-called "plant management committee," staffed in its entirety by hardcore former I.G. Farben executives.
On February 16, 1942, Morgenthau won a round against Mack by seizing 97 percent of the shares of GAF. Bullitt resigned at once. Mack stayed on, furiously arguing with Morgenthau and his policy. Meanwhile, Roosevelt kept mentioning that Crowley was waiting in the wings. Frustrated, angry with the President, Morgenthau wrote to Harry Hopkins on February 26, "Roosevelt wants to be in the position that if I go ahead and clean all of this up, he doesn't know anything about it, and he can say he doesn't know anything about it."*
Hopkins conveyed his fury to the President, who on March 5 at last told Morgenthau to "proceed at once with Aniline. " However, scarcely a week later, Roosevelt suddenly appointed Crowley the head of General Aniline and Film! It was typical of Roosevelt's equivocation that he would do this. Within twenty-four hours of taking office, Crowley put Ernest K. Halbach, perhaps the most committed pro-Farben executive in the whole organization, in as chairman. He declined to fire him even when Halbach was indicted three times for dealing with Farben after Pearl Harbor. To Morgenthau's intense disgust he hiked his salary from $36,000 to $82,000 a year and with shocking boldness reappointed Alfredo E. Moll, Halbach's collaborator, as GAF head of sales in South America. Both men were given back shares that Morgenthau had seized, and their bank accounts at the National City Bank were unfrozen on Crowley's specific instruction. Nor was Crowley content with this. His partner in the multi-million-dollar firm Standard Gas and Electric was the immensely wealthy Victor Emanuel, who had obtained control of SGE with the aid of the Schroder banks. Crowley continued to receive a salary from SGE and from the J. Henry Schroder Bank of New York while remaining Alien Property Custodian! John Foster Dulles, a close friend of Crowley's and Halbach's, became special legal counsel for Crowley. He was also Halbach's attorney, suing the government for the recovery of funds.
By 1944, after Crowley had been in charge of GAF for two years, he and Francis Biddle had still failed to try three antitrust indictments returned against General Aniline and Film on December 19, 1941, accusing the corporation of being part of the world trade conspiracy for Hitler. They had failed to enforce its acceptance of consent decrees that would bar it permanently from resuming its ties with I.G. Farben. They had failed to merge it with General Dyestuffs, which still got 10 percent of all GAF sales. They had not released GAF's patents, nor had they prepared a report showing which of those patents had been given it by the Nazi government for protection from seizure during the war.
I. F. Stone led a storm of criticism against Crowley in PM and The Nation. Crowley "resigned" -- only to find himself in the even more important position of Foreign Economic Administrator. In an editorial in PM, on February 10, 1944, Stone wrote: "Crowley's resignation is not enough. ... We hope that, in picking a new Alien Property Custodian, the President will pick a man who, unlike Crowley, is not dependent on private salaries for the bulk of his income. ... [We suggest the government] remove from the board of General Aniline and Film any men associated with Victor Emanuel, the Schroder banking interests, Standard Oil or any company linked by business ties with I.G. Farben before the war." The article continued, "Throw open to American business all the dyestuffs, chemical, pharmaceutical and other patents owned by General Aniline directly or through its subsidiary, Winthrop Chemical ... break up General Aniline into smaller companies under permanent American ownership, each handling a different one of General Aniline's business interests, so that we may be rid of the monopolistic power this German-controlled firm exercised in so many products."
It goes without saying that none of these ideas were followed by the President.
It was three months after Crowley left his post in March 1944, that further details of his iniquities came to light. William La Varre of the Department of Commerce charged before a Senate Postal Committee meeting on June 1, 1944, that censored information was being distributed by Crowley through the U.S. government against the nation's best interests. He said that two men representing themselves as salesmen for General Aniline and Film sought from him data from a censored message about Eastman Kodak for use in a film sales campaign in Latin America. He refused to give the information. La Varre told the committee that instead of freezing General Aniline, Crowley was running it in competition with Kodak. The GAF reps had returned to Crowley and then gone back to La Varre with letters saying they were working for the Alien Property Custodian and they must have the secret data. In view of the fact the instruction came from the government, La Varre had felt obliged to hand it over. General Aniline had beaten Kodak hollow below Panama.
Worse, La Varre found out that when the Mexican government made a deal with American Cyanamid for the operation of seized Nazi chemical companies, two of Crowley's officials flew to Mexico City in 1944 and bribed everyone in sight to break the arrangement in favor of General Aniline.
Crowley was not punished. Meanwhile, John Foster Dulles represented Mrs. Ernest Halbach in suing the Alien Property Custodian's office for the return of her husband's remaining Nazi shares. Crowley had been replaced by his assistant, James E. Markham, as Custodian. Markham was also a director of Standard Gas and Electric! It is scarcely surprising that Dulles had no problems with Markham in winning the case. Halbach received a total of $696,554,000 for properties that the government had seized -- plus the compound interest paid by the U.S. Treasury.
***
One of the multitudinous branches of I.G. Farben before and during World War II was the General Aniline and Film associate Sterling Products, Inc., the colossal drug empire partly financed by the National City Bank, that manufactured in connection with its subsidiaries, the Winthrop Chemical Company and the Bayer Company. Sterling, Winthrop, and Bayer distributed the famous pharmaceutical products known as aspirin and Phillips Milk of Magnesia. Millions of Americans would have been shocked to learn that by their use of these familiar nostrums they were helping to finance an army of secret agents north and south of Panama who supplemented the Max Ilgner N.W.7. spy network in supplying information on every aspect of American military possibilities.
A close friend of Hermann Schmitz's, a director of American I.G. and General Aniline and Film, William E. Weiss was chairman of Sterling. He was a tough, stocky, aggressive German-American from Wheeling, West Virginia. Episcopalian, pillar of the community, expert chemist, he built his flourishing business from the base of a small drugstore. He early formed an intimate friendship not only with Schmitz but with Wilhelm Mann, director of Farben's pharmaceutical division.
American Bayer, the developer of the aspirin, had been seized by the World War I Alien Property Custodian in 1918 and closed down. In buying the company in 1919, Weiss had to sign a pledge that he would never let anyone obtain control of it who was not "one hundred percent loyal to the United States."
Within six months of signing the agreement, Weiss got in touch with Hermann Schmitz of Farben to find methods of entering into collusion with America's former enemy and circumventing the Versailles Treaty, which did not permit Germany to build up its drug industry. His first move was characteristic. Another Pennsylvanian -- the brisk, no-nonsense Pittsburgh Scots-Irish attorney Earl McClintock -- had been second-in-command to the Alien Property Custodian in charge of the German properties. Weiss hired this bright, smooth, fast-talking young man away from the Custodian office at $13,000 a year, $10,000 more than he had been getting, and made him a junior partner. In 1920, McClintock traveled to Baden-Baden in Germany. In meetings with Carl Bosch and Hermann Schmitz, he reestablished the very links with German Bayer that he himself had legally broken off on behalf of the U.S. government a mere nine months before.
He helped to set up a clandestine network of agents in South America, threading through cities and small towns in order to form one of the most powerful drug cartels in the world. In the 1920s, Sterling wholly owned Bayer in the United States. The two companies operated in separate offices and factories, but were bound together as closely as twin threads.
In 1926, Herbert Hoover as Secretary of Commerce set up a Chemical Advisory Committee with Frank A. Blair of Sterling, Walter C. Teagle of Standard Oil, and Lammot du Pont, brother of Irenee, on the board. Two years later Sterling Dyestuffs was sold by Weiss to the old and well-established American firm of Grasselli, which merged with Du Pont and finally became part of General Aniline and Film. Thus, The Fraternity strands were knitted together almost from the beginning.
During the 1920s, Weiss and I.G. had signed a fifty-year agreement in which they literally carved up the world into market areas, with each assuming control of specific regions as far as New Zealand and South Africa. They jointly set up Alba Pharmaceutical Co. I.G. controlled 50 percent of Alba. And Winthrop, Alba, Sterling, and I.G. interchanged board members in a thirty-year game of economic musical chairs.
In 1928 a Nazi agent joined the company. This man was Edward A. Rumely, an independent financial consultant to Henry and Edsel Ford -- those founder members of The Fraternity.
In World War I, Rumely had been a leading German propagandist, working with Westrick's partner, Fraternity lawyer Dr. Heinrich Albert, later head of German Ford. Rumely had spent $200,000 on an advertising campaign urging the readers of 619 newspapers to protest sending war supplies to the Allies. He had bought the New York Evening Mail as a German front. In 1918 he was arrested on charges of trading with the enemy but, although convicted, he only served one month in jail. Henry Ford had used influence with President Calvin Coolidge. The day Rumely left prison, Ford, with a touch of black humor, handed him a parcel of Liberty Bonds as a stake. Rumely remained a fanatical German nationalist and an early Nazi party member. He proved to be Sterling's chief advisor, working closely with Weiss to set up nascent Nazi organizations below Panama. He was greatly aided by Alfredo E. Moll, who continued to function in World War II under the malign aegis of Leo T. Crowley. To make the picture complete, Weiss used the Dulles brothers as one set of lawyers and, as another, Edward S. Rogers and partners, connected to the Rogers Standard Oil family and formerly legal advisor to the Alien Property Custodian.
Yet another valuable connection came in 1929, when Weiss gave the vice-presidency of Sterling to Edward Terry Clark, secretary to President Coolidge and later to President Hoover.
Clark headed a Washington lobby in I.G.'s favor that continued to function in various forms until after World War II. Ten years later, after Clark's death, his papers were sold by his wife to an obscure hobby shop on Seventeenth Street in Washington, just around the corner from the White House. The owner, Charles Kohn, specialized in rare documents, stamps, coins, and autographs. A tiny item announced in the press that the Clark letters, which contained details of the I.G. Farben connections, were in the shop. Within two hours of reading the announcement, a representative of the German government pretending to be a document collector turned up with $100,000 in crisp new banknotes. Kohn refused to part with the letters at any price: a Jewish veteran of World War I, he had a nose for German spies. Next day a beautiful young woman appeared, offering money and physical inducements. Again, Kohn refused. However, when he handed the letters over to the Library of Congress, the incriminating documents had disappeared. They have never been traced.
Throughout the 1930s, Weiss used every avenue for political propaganda, collection of strategical information, and efforts to suppress equivalent drug production by loyal American companies. On March 29, 1933, Farben's Max Ilgner -- by now a Nazi officer in Gestapo uniform -- sent a message to Max Wojahn, Sterling export manager for South America, which read, in part: "You are asked to refrain from objecting to 'indecencies' committed by our [Nazi] government. ... Immediately upon receipt of this letter, you are to contribute to the spread of information best adapted to the conditions of your country and to the editors of influential papers, or by circulars to physicians and customers; and particularly to that part of our letter which states that in all the lying tales of horror [about Germany] there is not one word of truth. "
It was agreed that no anti-Nazi newspaper would receive advertisements from Sterling. Indeed, an advertising contract would be canceled if the paper changed to an anti-Nazi attitude.
In 1933, after the accession of Hitler, Weiss in his correspondence with Farben's Rudolf Mann, indicated that he was "worried about the condition of Germany." However, Mann, who had embraced the Nazi doctrine with alacrity from the start, reassured Weiss that in Germany things would be very much better under the Nazi party. Weiss stated that he was not inclined to believe the ugly rumors of things that were happening in Germany but he wanted a more substantial report. Mann replied, completely endorsing the National Socialist government. Noting that there had been "a few unfortunate cases" he quoted as an excuse the German proverb "Wo Gehobelt Wird, Da fallen Spane" ("Where one shaves, the shavings fall"), which had become popular in Germany a few days before when Goring used it in the course of a speech. There was further correspondence of the same type between Weiss and Mann.
In the fall of 1933, Weiss made a trip to Germany. His thirty-second wedding anniversary was celebrated with great pomp among Gestapo leaders in Munich. After his return, in a letter of November 17, 1933, Weiss assured Rudolf Mann that his "American friends were naturally very much interested in our trip and we made many inquiries as to existing conditions in Europe. I have informed them of the remarkable strides made in Germany and you may rest assured that I will help to give an enthusiastic report of the conditions as I viewed them in Germany and the splendid progress that the country has made under Herr Hitler."
A young and feisty former employee of I.G., Howard Ambruster, constantly hammered away at Sterling's pro-Nazi activities. Football coach at Rutgers, engineer, liberal journalist, chemist, editor, builder, and contractor, he was a robust, muscular jack-of-all-trades who spent a lifetime trying to strip bare Sterling's influences in Washington. But he had little chance of success. His numerous memoranda to congressmen and senators were ignored. Every effort was made to silence him.
Ignoring such small fry, Weiss and Earl McClintock maneuvered through the Depression years to insure Sterling's rise to the most important pharmaceutical corporation in the United States. In 1936, McClintock almost pulled off a major coup. Irritated by the Securities and Exchange Commission's investigations into Sterling's activities, he pulled several strings to take over as SEC chairman. Fortunately for American security, he did not achieve his purpose. As Europe moved toward war, he found other protections. He and Weiss poured a large sum of money into the Democratic National Committee -- and the Republican National Committee as well -- to make sure that whoever won the presidency would prove supportive. In May 1938, McClintock traveled to Basle to confer with Hermann Schmitz and Kurt von Schroder during meetings of the Bank for International Settlements. The subject of the discussion was the best way of handling Sterling if Roosevelt brought the United States into the war. The conference members agreed that the vast funds earned by Sterling from distributing Bayer products in Latin America would be held in the J. Henry Schroder Bank of New York until the end of the war. In return for this arrangement, Sterling Products in Germany and in the countries Germany would occupy would be held in the Stein Bank of Cologne for the duration. As for the all-important Bayer patents, which could easily be seized by the U.S. government if they were German-controlled, they would be sanitized by transferal to Sterling as American patents for the duration.
I.G. was to continue its Latin American operation under the Sterling cloak. Goods would be stockpiled for the duration or relabeled in order to disguise their origin to avoid the freezing of their distribution as enemy products. A further meeting took place in Florence, Italy, in February 1940, with Europe at war. Schmitz and Schroder again met with McClintock and reconfirmed the arrangements. In an addendum to the original agreement, funds earned in South America would be held in local banks for use by Nazis in exile.
It would have been impossible to achieve these arrangements without powerful contacts in Washington. Thomas Corcoran, the famous "Tommy the Cork," became first the unofficial, then the official lawyer for Sterling. Eventually, he became a director of the corporation.
In 1934, Corcoran introduced his brother David to Weiss. David wanted a job. He was an automobile salesman with no other experience to speak of, but Weiss hired him on the spot to take over Sterling's South American operation.
That operation became a fabulous resource for Nazi Germany. In his 15,000-word report to the Truman defense committee in 1942, the young and keen-witted Assistant Attorney General Norman Littell stated: "When the Nazi government pressed I.G. Farben for money in 1938, it drew on Sterling Products Inc. or its subsidiaries." The shipments to South America continued from Germany until the outbreak of war in September 1939. The British blockade created the same problems that it had for Davis and for Standard. Therefore, Hermann Schmitz was compelled to hand over his South American distribution to Sterling. The drug supply continued uninterrupted, emanating more and more from New York.
On September 11, 1939, ten days after war broke out in Europe, Weiss took over the operation of the Latin American businesses in order to avoid seizure if the United States should enter the war. In addition he made arrangements to stockpile products for the German agencies to last for at least five years. With $2 million in stock and $30 million in investments in actual medication in South America, Weiss and Earl McClintock fought desperately to save their Nazi association. In February 1940, McClintock flew to Rome to confer with I.G. 's Rudolf Mann to tell him once again that the alliances would continue whether or not the United States came into the war. Mann refused initially on the ground he might be executed for trading with Germany's potential enemy. He was evidently more afraid of Hitler than McClintock was of Roosevelt.
Mann said that providing Sterling took care of the German businesses south of Panama, it would be possible to continue the association without actual contact visible to the Nazi government. The National City Bank characteristically agreed to protect the arrangement indefinitely and not show on any statements that any of the dealings took place. The reason for this was a fear not of the U.S. government finding out but of the information slipping into the hands of German agents.
Max Wojahn of Sterling dealt with the National City Bank loan that would help finance dealings with the enemy: "To avoid the appearance of this loan on the balance sheet at the end of each year, we would cancel it late in December and renew it early in January."
On May 31, 1941, I.G. began to make the transfers. It handed over 75 percent of its Argentine operation to Sterling in return for money advanced in helping I.G. to finance an Argentine laboratory helping the Nazis in Buenos Aires. This reached the attention of the U.S. Department of Justice, which ordered the money transferred to "miscellaneous income of the Bayer Company" on the ground that transactions with I.G. were illegal and that the matter might reach the attention of the public.
Under pressure from Henry Morgenthau, on August 15, 1941, Weiss signed a consent decree in return for minimal fines in which Sterling and Bayer would cease their association for the duration. By now most of the Bayer operation was tucked under the Sterling cloak. Weiss promised he would not sell Bayer products in South America under German names. He broke the promise within twenty-five days of signing the agreement. On September 10 SFI, a Sterling subsidiary in Rio, advised New York that it was handling its aspirin product under the old German name. Instead of instructing his agent to discontinue the distribution, Wojahn told him to proceed as usual.
Again under pressure from Morgenthau, who ceaselessly hammered away at the board, Weiss left the company on December 3, 1941, and returned to his home in Wheeling, West Virginia. However, he continued to exercise an influence behind the scenes. He made two trips to Albany to attend board meetings at which he sought to state his case for being reinstated, but this was out of the question: the company's image was tarnished enough already. Back in Wheeling, he refused to remove his effects from his office. During the Christmas vacation he wrote asking for information on products from the Sterling secret laboratory. Even as late as February 1942 he still had done nothing to clean out his office. He suggested to his successor, James Hill, that he should have a separate entrance built and his office could be kept in the building. Hill explained that this would not be acceptable to Treasury. Hill warned Weiss that Morgenthau might treat him as harshly as he was treating some of the board of General Aniline and Film. On February 23, Hill returned again and Weiss was still installed. Hill screamed at Weiss that for the company's own good he must leave at once. On March 10, Hill made a fourth trip to Wheeling and nothing had been done. Weiss had taken off to Arizona on a vacation, leaving his office intact. Hill shouted at Weiss's secretary, who refused to move her boss's belongings. Hill thereupon ordered the plant superintendent to remove the secretary and the remainder of Weis 's effects from the premises in twenty-four hours. His instructions were carried out.
When Weiss returned, he was devastated to see what had happened. Completely blackballed, he became a kind of ghost, walking or driving meaninglessly around Wheeling for eighteen months. In March 1943 he drove his car head on into another and was killed instantly.
The new management of Sterling was almost as unsatisfactory, except for James Hill. Earl McClintock, who had so coolly fed his own colleague to the wolves, stayed on. Meanwhile, some three weeks after Weiss's resignation, on December 31, U.S. Military Intelligence had intercepted a cable from the Sterling headquarters to Mexico City and Venezuela stating under the heading Top Secret, "In order that shipments ... be afforded greater security, it is requested that you designate different consignees which are perfectly neutral, and to whom we will ship the goods in lots of 40 or 50 cases after repacking in neutral packing cases following a period of storage in a warehouse. It is possible for us to obtain consignments in the Western coast ports to avoid having U.S. espionage be able to ask in pursuing the matter the transportation route of the consignment."
The cable was examined in Washington, but the consignments were not discontinued. On February 4, 1942, J. Edgar Hoover sent a private memorandum to Under Secretary of State Adolf Berle with a report on the Sterling operation in Chile. He revealed that Werner Siering of the local operation was head of the espionage service in that country. Hoover wrote, "Not only does this group keep careful files on the principal opponents of Nazism, but checks on each German citizen to test his loyalty to Hitler. This organization has agents in all American-controlled copper mines, the American and British-controlled night raid works, as well as in large chemical and financial houses. Through these agents they keep check on all important economic developments." The report continues at great length to disclose that Siering and his corporation had aided German crewmen of the scuttled German battleship Admiral Graf Spee to escape from prison and go by Japanese ship to Japan.
Siering also worked with local Nazi officials to collect information on the political and economic situation, the activities of Chile's leaders, the production of minerals in Chile and Bolivia, general conditions in industry and commerce, maritime and military movement.
In April 1942, Morgenthau's staff investigated Sterling's headquarters in Manhattan. The investigative team found that a man who for sixteen years had worked for I.G. Farben was still employed as an executive. The team found that an attorney who had been executive vice-president of General Aniline and Film had continued to represent Sterling on its legal staff until February.
On May 28, 1942, the Lima, Peru, manager of Sterling wrote to his Buenos Aires office stating that the Peruvian government was suspicious of Sterling's operations and wanted to control its business dealings. The letter stated that no such control would be permitted. No interference with Sterling's dealings with Proclaimed List nationals would be tolerated.
On August 27, 1942 Phillip W. Thayer, senior economic assistant of the American Embassy at Santiago, Chile, wrote to Mario Justiniano, manager of the Sterling laboratories in that city, urging Sterling to collect "the sum of 500,827 pesos, the equivalent of $14,861.81 which is owed you by Quimica Bayer, of Santiago, a branch of I.G. Farben." Thus, an official of the U.S. government authorized a branch of a New York company to collect money from a Nazi corporation in time of war. The note continues with the words: "It would also be very much appreciated if you will inform us as to the steps which are now being taken by your firm in the United States to obtain the necessary commission and the license to effect this cooperation."
On August 30, 1942, Justiniano wrote to the Securities and Exchange Control Commission in Washington to seek the license. He informed the SECC that there would be a problem in getting the money. He would have to obtain it through the German-owned Banco Aleman Transatlantico in Buenos Aires. He wanted to avoid this transference because of the unfavorable attention that a disclosure of it might cause. He advised SECC that his lawyer had approached Bayer to obtain payment in Chilean pesos and cash. The money came from the Banco Aleman Transatlantico and was transferred to a Chilean bank.
Justiniano sent McClintock a copy of the letter to the SECC. McClintock immediately cabled him that the arrangement was unacceptable and that Sterling must approach the Banco Aleman direct. Thus, McClintock personally authorized an arrangement with the enemy.
There was some delay in getting a response from Washington. The detailed interoffice memoranda between Treasury and State make interesting reading. Justiniano was complaining that he was having difficulties getting letters through to New York so that the long delay could be checked on by head office. He seemed to think that some foreign intelligence service must have intercepted the mail. Treasury checked into the matter and found that in fact letters were coming through safely but perhaps Justiniano was afraid of their being seen. State wavered, then finally agreed to the transaction.
On November 4, 1943, Dudley G. Dwyre, legal counsel of the U.S. Embassy in Montevideo, Uruguay, reported to State that Sterling in that country was utterly failing to meet its agreements with the U.S. government to desist from trading with the enemy. Sterling's local branch was still using Nazi trademarks and retaining Nazi employees, every one of whom had worked for Bayer, in defiance of the Consent Decree. Indeed, a local Sterling executive had been hired from Bayer, which he also had run. The Sterling laboratories were still part-owned by Proclaimed List firms. A local lawyer for Sterling's subsidiary was a known Nazi.
Various dispatches from embassies throughout 1943 assert that McClintock actually bribed Chilean government officials to enable him to continue business connections with the Nazis. That same year a Treasury team arrived in South America to investigate Sterling from Panama to Cape Horn. In many areas Sterling had done much to clean house, transferring patents and products to American ownership from Bayer management. But the pockets of collusion and collaboration -- chiefly in Uruguay and Chile -- survived.
Norman Littell, antitrust lawyer in the Attorney General's Department, spent most of the war years fighting Sterling and its protections within the U.S. government. He was appalled by the infringements of the Consent Decree and he was upset by the fact that the famous Tommy Corcoran was handling Sterling. He felt that Corcoran exercised too great an influence on Attorney General Francis Biddle. He was aggravated by a statement Biddle made to The New York Times on September 6, 1941, a statement that Littell felt showed Biddle's weakness and vacillations and lies to protect the corporation: "Sterling Products has always been a wholly American company, and none of the profits of the sale of Bayer Aspirin has been shared among foreign investors. Similarly, none of the domestic American products or achievement of the Bayer Company was involved in relations with I.G. Farben nor is there any foreign interest in the numerous other subsidiaries of Sterling Products engaged in the proprietary medicine field."
Another bugbear of Littell's was Alien Property Custodian Leo T. Crowley, who, as part of the "house cleaning" of Sterling, took over the Bayer patents for Atabrine. This substitute for quinine was indispensable during quinine shortages caused by the Japanese seizure of Malaya and the Dutch East Indies. Without quinine, or Atabrine, thousands of young Americans died of malaria on the tropical warfronts.
Through 1942, Littell tried desperately with the help of the former American I.G. employee Howard Ambruster to persuade Crowley to release Atabrine for use by American soldiers. Crowley refused. Meanwhile, as hitherto classified documents show, the Atabrine was freely distributed from heavy stockpiles or even from new supplies through Proclaimed List customers in South America.
The Atabrine story leaked to I. F. Stone and others of the press, who backed Littell and Ambruster in an all-out assault on Crowley. Owing to their pressure Senator Homer T. Bone, chairman of the Senate Patents committee, announced that there would be a full-scale hearing on Atabrine. But the hearing was postponed again and again. Despite the fact that Biddle had thousands of documents proving the suppression of Atabrine, he refused to move on the evidence. The matter dragged on until August, when at last a hearing began; but it was quickly suspended when five members of the patents committee refused to discuss the matter.
In August 1942, Thurman Arnold of the Department of Justice Antitrust Division wrote in The Atlantic Monthly: "The spectacle of the production of this essential drug, left so long to the secret manipulation of a German-American combination during a period when Germany was preparing for war against us, is too shocking to need elaboration."
In March 1943, Ambruster went to see Earl G. Harrison, new head of the Immigration and Naturalization Service. He brought with him a list of every American simultaneously connected to Sterling Products and Proclaimed List companies. He demanded to know why none of these people had been interned, denaturalized, or deported. Harrison told him that Immigration was forbidden to discuss the subject. Ambruster asked for a regulation upon which that refusal might be based. He was told that no such regulation would be supplied.
Ambruster now wrote to Assistant Attorney General Wendell Berge. Berge was in charge of the Criminal Division of the Department of Justice. He asked the same questions. There was no reply. Berge said later on the telephone, "I am not permitted to reply to your inquiries."
Assistant Attorney General Littell became so persistent a gadfly that on November 18, 1944, Roosevelt, under pressure from Littell's enemies, called for the young man's resignation. Instead of tendering it, Littell wrote a 15,000-word blast, exposing the intricate connections between Sterling, Tommy Corcoran, and the enemy. Biddle insisted Roosevelt fire Littell. Roosevelt hesitated. He dreaded personal confrontations of any kind. But Biddle finally won. Roosevelt dismissed Littell for insubordination, saying, "When statements made by Norman Littell [criticizing the government] first appeared in the papers I put it to him ... that I hoped for his future career he would resign. ... Under the circumstances my only alternative is to remove him from office which I have done today. "
In 1945, Littell at last found support in Congress. Representatives Al Smith of Wisconsin, and Jerry Voorhis of California entered Littell's charges against Sterling in the Congressional Record on January 22 of that year, demanding a full-scale investigation. The investigation never took place. Within a few days of the resolution being entered, it was removed from the agenda, and Biddle quietly resigned, ironically taking up the post of prosecutor at the Nuremberg Trials immediately afterward.
Just before Roosevelt died, the ailing President asked to see Littell, who recalls that in a charged meeting in the Oval Office he told the young man he would like to have seen Biddle impeached for treason but the difficulties were too great in his grievous physical condition. Littell asked Roosevelt why Biddle, of all people, was a judge at Nuremberg. Roosevelt did not reply.
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Notes:
* Blum, John Morton From the Morgenthau Diaries: Years of War. 1941-1945: Boston: Houghton Mifflin.
