-Caveat Lector- <A HREF="http://www.ctrl.org/"> </A> -Cui Bono?- an excerpt from: Treason's Peace Howard Watson Armbruster©1947 A Crossroads Press Book Beechurst Press New York 438 pps. -- First/Only Edition -- Out-of Print --[7]-- CHAPTER VII False Fronts Become Bold ON APRIL 20, 1929, Dr. Carl Bosch and a coterie of his Farben associates waved triumphant farewells to the Statue of Liberty and marched into the bar of the Hamburg-American liner New York, to celebrate the success of their mission to America. The Germans were returning to the Fatherland with all that they could have hoped for. Their understandings with our myopic industrialists had been most satisfactory, their arrangements with our avaricious financiers most profitable. And less than a week after their departure the American I.G. Chemical Corp. was launched suddenly and with a great blare of Wall Street publicity. According to reports on the Street that afternoon, its entire issue of $30,000,000 of 5% percent convertible debentures was oversubscribed in an hour. The formation of American I.G. had been a closely guarded secret, but after its announcement on April 26th no attempt was made to conceal Farben's part in the achievement. Both the prospectus and the half-page advertisements announcing the underwriting contained a letter addressed to the National City Bank and signed by Geheimrat Dr. Hermann Schmitz and Dr. Wilfrid Greif, as managing directors of Farben, which recited the huge size of Farben and stated that: As a result of the development of its worldwide activities, I.G. Dyes (Farben) has found it desirable to cause a corporation to be organized in the United States, under the name of American I.G. Chemical Corp. . . . . . with broad corporate powers to foster and finance the development of chemical and allied industries in the United States and elsewhere. The prospectus then went on to state that all of the common stock to be presently outstanding would be issued against cash, or to acquire stocks of Agfa Ansco Corp., and General Aniline ,Works. Both of these companies were known to be controlled by Farben. The prospectus also announced that the principal, interest and premium upon redemption of the 5.5% debentures were unconditionally guaranteed by I.G. Farben and were payable at the National City Bank of New York in gold, with approximately $450,000,000 in Farben assets back of the guarantee. It was thus evident that the American I.G. was to be a Farben holding company for its manufacturing subsidiaries in the United States. The Farben guarantee of the interest on the debentures, plus the big names of the financial houses which underwrote the issue, and the big names of the American industrial and financial leaders on the board of the new company were sufficient incentive to cause unthinking American investors to fall over themselves in the rush to get in on a good thing. It should have been apparent by the most casual reading of the prospectus that control of American I.G. would remain not with the owners of the debentures but with the Farben promoters. Approximately ten percent of the voting stock was all that the. American investors could possibly secure. just before Farben organized this new company and thereby financed its American industrial pincers with thirty million good American dollars on a prospectus signed by its Geheimrat Schmitz, that astute gentleman bad also organized another dummy company in Switzerland with the imposing name of Internationale Gesellschaft Mr Chemische Unternehmungen A. C. of Switzerland. Known as the I.G. Chemie, this Swiss concern was a holding company for Farben's properties in foreign countries, and a part of its stock was offered to Farben's stockholders with Farben's guarantee of payment of dividends. When American I.G. was organized, I.G. Chemie did not appear as the recorded holder of majority control of its voting stock. But by 1940, after the war was started, this "neutral" Swiss concern, with one of its Swiss subsidiaries, held title to over 85 percent of the outstanding shares of General Aniline & Film, successor of American I.G. At one time in the history of these two Farben fronts, the Swiss company was the recorded holder of something over 10 percent of the stock of the American company, while the latter was also the owner of some 9 percent of the outstanding stock of the Swiss company. This exhibition of two Farben snakes swallowing each other by the tail undoubtedly afforded much amusement at the home office. However, back in April 1929, I.G. Chemie was a dark secret. Farben's ballyhoo centered around the names of the American financiers and industrialists who participated in the underwriting of American I.G., and much was made of the fact that the bankmg syndicate that floated the debentures was headed by National City and included such houses as International Manhattan Co., Lee Higginson & Co., Harris Forbes & Co., Brown Bros. & Co., and the Continental Illinois Co. Still greater acclaim was accorded the prominent Americans 'whose names appeared on the board of directors of this new symbol of Germany's friendship for the United States. Listed in the prospectus and in the newspaper advertising were Walter C. Teagle, Charles E. Mitchell, Easel B. Ford, Paul M. Warburg, William E. Weiss, Adolph Kuttroff, and Herman A. Metz. The three other directors were Carl Bosch, fisted under the imposing title of "Professor Doctor," Dr. Hermann Schmitz; and Dr. Wilfrid Greif. Dr. Hermann Schmitz, president of the unheralded I.G. Chemie, was also the first president of the widely publicized American I.G., and soon after its successful financing the campaign to conceal the Ownership of American I.G. began in earnest. In October 1929 (as already related in Chapter II) Herman Metz started the ball rolling by his public statement that although Farben was a stock holder in American I.G., the latter should not be referred to as the American branch of the German I.G., because that was just not so. Some three months later, while testifying before the Senate Lobby Committee, Metz again denied the Farben ownership: The Germans havent got a dollar's worth of stock in the American I.G., of record; nor the Swiss, either. Finally Metz gave the whole thing away when Senator Robinson stated: Now, it is pretty clear that the American I.G. was organized by the German I.G., and that they both are officered by the same people, and therefore are practically the same concern. Mr. Metz replied: Well, that can be so construed, but the reason for it was to take over what the Germans had or were trying to do in this country, and get the industry established, which I always preached to them, to come over here and manufacture over here. The Geheimrat Dr. Hermann Schmitz, along with Prof. Dr. Carl Bosch and the other Farben executives, did everything in his power to hide Farben's control of the new holding company in the United States. The Geheimrat even tried to pull the wool over the eyes of the two duPont representatives who visited him in Berlin in July, 1933, to discuss the possibility of exchanging some duPont investments in Farben for shares in either I.G. Chemie or in the American I.G. The growth of nationalism, the Wilmington executives naively explained, made it advisable for their company to get rid of its interests in Farben. Dr. Schmitz opined that such a horse trade was impossible and solemnly stated that I.G. Chemie was strictly a Swiss company, and that Farben owned not a single share. The duPont officials were not impressed with. the truthfulness of Dr. Schmitz' s statements and reported to the home office that they presumed Farben had a dummy Swiss director in I.G. Chemie. They also reported that in London an official of Imperial Chemical Industries told them definitely that the Geheimrat had lied to them. In 1934, Mr. Teagle decided that he had better resign 'as director of American I.G. Chemical Corp., but, instead of exercising his own discretion and resigning, be cabled his subordinate, Frank Howard, who was in Paris, to find out whether he should take up the matter with Dr. Bosch, or whether Howard would ask Mr. Schmitz about. it. Howard cabled back on November 29th, that Teagle take a firm stand with Dr. Bosch, and stated that the resignation was . . . . . certainly wise under present conditions since it will tend minimize chauvinistic comments in both countries should there be any public interest aroused in the relations of the two companies. However, Mr. Teagle did not resign as director of American I. G. Both Bosch and Schmitz refused their permission, despite a rather pathetic letter dated June 6, 1935, in which Mr. Teagle begged Dr. Schmitz "to permit Mr. Clark (a Standard vice-president) to replace me on the board." The Hitler regime in Germany had aroused some official interest at Washington in American companies with German ties, and, in 1938, the Securities and Exchange Commission decided to go through the motions of investigating the ownership of American I.G. In its preliminary exploration of the records, the S.E.C. discovered that although Farben was never to be a record shareholder, a resolution was adopted at the first board meeting of this "American" company, before the public had bought its stock, by which the officers were authorized to loan any part of its funds to either Farben or to I.G. Chemie. At that same meeting, the sum of $10,000,000—ostensibly transferred to the United States by Edward Greutert & Cie., Farben's Swiss bankers, for the purchase of voting shares in the new company, was adroitly switched back to Farben as a loan from the new American I.G. That ten-million-dollar silver spoon from Grandpa Farben never entered the new infant's mouth-it got only a book entry on its birth certificate. This ingenious method of tapping Wall Street was worked overtime and, within a few weeks after the public had planked down its cash, nearly $20,000,000 of American I.G.'s capital funds had been transferred, by vote of its directors, to Switzerland or Germany as loans to Farben. The S.E.C. accountants also uncovered data which established nominal stock control of American I.G. by Swiss I.G. Chemie from the date of organization. This condition had never changed and, at the time of the investigation, I.G. Chemie held nominal control of- more than 85 percent of the shares of American I.G. With these facts established, Mr. Teagle was called to the witness stand and sworn to tell the truth, the. whole truth and nothing but the truth. Unhappily, however, he did not know who owned control of American I.G.—the company of which he was a director. More, he bad never known, from the day the company was organized. He did not know who owned the little block of 500,000 shares of the company stock that had been issued in his name-stock worth at least half a million dollars. He did not know how many shares I.G. Chemie owned, or who owned I.G. Chemie. It was just too bad, but Mr. Teagle really could not tell to the S.E.C. things about the company which no one had ever told him. Mr. David Schenker, chief attorney for the S.E.C., was exquisitely polite in his questioning. After some discussion of the snake-swallowing act by which American I.G. and Swiss I.G. Chemie purchased each other's shares, the question was asked: SCHENKER: So that you have a situation where the American I.G. Corporation, the control of which is unknown to us, is buying over a period of one year approximately $21,000,000 of the stock of this I.G. Chemie Corp., the control of which is unknown to us and to you; is that not so? TEAGLE: That is correct. SCHENKER: So far as you know, you do not know the exact extent of the control of the I.G. Chemie in American I.G. Corporation; is that true? TEAGLE: That is correct. SCHENKER: And you do not know at the present time who controls that corporation? TEAGLE: That is correct; yes. The examiner's queries continued to be approved by Mr. Teagle. SCHENKER: Throughout your entire tenure of directorship you say you did not know who the controlling owners of American I.G. Chemical Corp. were? TEAGLE: That is correct. On the little matter of 500,000 shares. SCHENKER: Now, the record discloses that 500,000 common shares were issued to you. Were you the beneficial owner of those shares'? TEAGLE: I was not. SCHENKER: Do you know how it was that those shares got into your name? TEAGLE: No, I do not. When asked whether be thought that his colleague on the board, Mr. Edsel Ford, might be better posted than he was, Mr. Teagle expressed the opinion that Mr. Ford did not know any more about it than he did. Teagle also stated that he did not know who was voting for him at the stockholders' meetings. When asked to express an opinion as to whether all this was a healthy condition, Mr. Teagle begged to be excused from answering. One thing Mr. Teagle could explain. He recalled distinctly that he went on the Board at the request of his friend Dr. Bosch: My connection with the American I.G. came about through an explanation made to me by Dr. Bosch of the German I.G. of his plans, and my interest was prompted by the fact that I hoped to secure for the Standard Oil Co. of New Jersey a supply of the raw product for the fertilizer plant. Just how his American I.G. directorship was to help supply Standard Oil's proposed fertilizer plant with raw products, while he was voting for loans to Farben, Teagle did not explain, neither did he mention the efforts he had made to resign from the board. Another matter which Mr. Teagle neglected to mention was a letter which he had received back in 1932 from Dr. Wilfrid Greif, the managing director of Farben. Written on the letterhead of the American I.G. Chemical Corp., 521 Fifth Avenue, New York City, and dated May 6, 1932, the letter read, in part: I.G. Chemie is, as you know, a subsidiary of I.G. Farben, organized in 1928 . . . . . As officially stated in the annual report of the I.G. Farben for 1931, the net income of I.G. Chemie for 1931 is sufficient to pay on its stock the same dividend which will be paid by I.G. Farben. Another item of possible pertinency to the S.E.C. inquiry which was not brought out in the Teagle examination, was the fact that Standard Oil had decided not to be identified publicly as a stockholder in American I.G. This had been the subject of a cable sent to Teagle by Mr. Howard on May 27, 1930, when the former was in London: In view of fact that we have repeatedly denied any financial interest in American I.G. it seems to me to be unwise for us to now permit them to include us as stockholders in their original listing which is object of present transaction. It would serve their purpose to issue this stock to you personally . . . . . Will this be agreeable to you as a temporary measure? Mr. Teagle, or the S. E. C. investigators, might also have dug up correspondence which passed between Teagle and Mitchell back in 1932, when those two American I. G. directors for a time opposed the action of the board in swapping Farben securities for those of the I.G. Chemie. One of these letters, dated May 27, revealed the existence of a contract, or option through which Farben might completely absorb I.G. Chemie by exchanging its own shares for those of the Swiss company. Mr. Mitchell's letter to his fr iend Teagle went on to say that: Professor Bosch and Dr. Schmitz should thoroughly understand how anxious we are to be of assistance to them in bringing about a development of the chemical industry along most approved lines in the United States, but they should realize just as fully the fact that you and I are in a very embarrassing situation whenever transactions are proposed as between the German I.G. and the American I.G. Finally, there was the letter which Mr. Teagle wrote to Mr. Mitchell on May 26, 1932, enclosing a memorandum which he stated had been prepared at his direction to be used in discussions with Dr. Bosch about the exchange by American I.G. Farben securities for those of I.G. Chemie. It might appear from two statements of fact in the memorandum that Mr. Teagle had already reached a very definite conclusion regarding the ownership of both American I. G. and I. G. Chemie. The statements were: The transaction between American I.G. and the I.G. parent company involving the exchange of I.G. bonds against the I.G. Chemie shares ..... Transaction between parent and subsidiary company like that of the exchange of I.G. bonds against the I.G. Chemie shares ..... It may be assumed that if Mr. Teagle's testimony before the S. E. C. bad been more informative, Mr. Schenker might not have felt it necessary to also summon Messrs. W. H. Duisberg and D. A. Schmitz. Mr. Duisberg qualified as director,. first vice-president and treasurer of American I.G. and stated solemnly that he didn't know who owned it. He then produced correspondence which he had conducted with Farben and with Edward Greutert & Cie., bankers of I.G. Chemie, at the request of S.E.C., requesting them for information about who was which and which controlled whom? Farben's reply dated August 13, 1937, was brief and to the point: We have no direct or indirect participation either in the American I.G. Chemical Corp., nor in the other corporations mentioned in your letter (I.G. Chemie and other stockholders of record). This letter added that it was not Farben's custom to give such information, so no precedent was to be established in making the exception; also that the letter was to be treated as confidential. Greutert's response was a rebuke for making so unethical a request of a banker about its clients. On August 18, 1937, Greutert wrote: We regret not to be in a position for reasons of principle, to give you the requested information. Such a disclosure by us would be entirely irreconcilable with the bank secret, particularly strictly observed in our country by the banking community, and with the duties and practices resulting therefrom. (It is of interest here that the so ethical Greutert & Co., and Edward W. Greutert, head of this Swiss banking firm, were among those named as co-conspirators, along with various officers, subsidiaries and affiliates of Farben, in the indictment of September 1, 1939, for conspiracy with Farben's international nitrogen cartel which restricted production of nitrogen and ammonia. This distinction did not cause either co-conspirator Greutert or any of those indicted any real trouble because this multiple indictment was one of those nolle prossed by a complacent Department of Justice.) Also called to testify by the S.E.C. was D. A. Schmitz, brother of Dr. Hermann (the Geheimrat) Schmitz, who added his bit to this fantastic, corporate merry-go-round. After qualifying as a director of American I.G. since 1933, and its president since 1936, he was asked by Mr. Schenker: Do you know who was the beneficial stockholders . . . . . of the class A and class B stock of American I. G.- Chemical Corp.? SCHMITZ: No, no more than the records we have here. SCHENKER: So the only thing you know is who the record holders are and whether they are the beneficial owners or not you do not know? SCHMITZ: No. Perhaps the crowning gem of the hearing was the tribute paid to the witnesses at its close. Said Mr. Schenker: I would like the record to indicate we are appreciative of the full cooperation that was given to us in connection with our study of the American I.G. Chemical Corp. and that they have made available to us all of the information we asked. Some mention having been made in the press of the acarpous nature of the public hearing, I wrote to the S.E.C., offered my services, and enclosed various papers, one of which was a copy of the diagrammatic chart I had prepared in 1931 for Congress. This chart, or flow sheet, set forth in detail what Farben was doing and proposed to do in this country through its control of American I.G. Chemical Corp., and other United States companies. My letter to the S.E.C., dated Feb. 5, 1938, and addressed to the Chairman, Hon. William 0. Douglas (made Supreme Court justice in 1939), stated in part: Having noted in the press that you are having difficulty in uncovering the identity of those interests which control the American I. G. Chemical Corp., due to the unfortunate lapse of memory indicated by some of your witnesses, I am enclosing herewith copies of some papers and documents which may assist your investigators my own diagrammatic chart or flow sheet was worked out in 1931 with the- hope that Congressional investigation might be induced into one of the most sinister groups which has ever been assembled in indus-try, finance, and politics in this country. Considerable water has gone over the dam since I put this chart together, but in its essential aspects of objective, the ramifications and offshoots of this grouping of interests still persist. It would be a very valuable public service if your investigators should uncover some of its present connections and agencies-but I suggest you will have to arm them with brass knuckles and a sublime indifference to their own future welfare if they really dig into it. If you feel that I can be of assistance let me know. I doubt whether the S.E.C. Chairman ever saw this letter. It was acknowledged, however, by Mr. David Schenker, S.E.C. counsel, who expressed appreciation for my cooperation, but did not indicate a desire for any more of it. As an immediate aftermath of the S.E.C. public hearing Mr. Teagle's earlier desire to resign as an American I.G. 'director was seconded vigorously by his colleagues, and considerable indignation was expressed at the embarrassment to which both Mr. Teagle and Standard Oil of New Jersey had been subjected. Standard Oil was not amused! And a memorandum by one of the Standard Oil staff, uncovered later in Mr. Teagle's files, contained these statements: The commission wants to know the true foreign ownership since American I.G. is a chemical company. In case of any war anywhere this ownership would be wanted by the United States Government. Mr. Wellman (Standard Oil attorney) explained to Mr. Schenker that any conclusion by the Commission that American I.G. is, or is possibly, owned by I.G. Farben or allied interests may well result in an ownership by the German Government with all the attendant risks to the American owners of the twenty-five million of American I.G. debentures. It is a real possibility that if, in another war, Germany and U. S. A. should again be enemies the non-German financial interest in American I.G. shares would have to be shown to the satisfaction of the U. S. Government to escape seizure as German-owned property. Mr. Teagle as a director was placed in a most embarrassing position at the hearing and also in press releases because he did not know the beneficial ownership of any of the large blocks of American I.G. shares. To the public, at any rate, it seems impossible that a man in his position would not know, something as to who owns the company. "For Duisberg and Schmitz to say in effect that they knew nothing about the holdings of this company, and that they had made the investment entirely on the recommendation of Dr. Schmitz, is just a plain dereliction of their duty as directors. It seems to us also that the best thing Mr. Teagle can do is to resign from the American I.G., for, while the present inquiry, I believe, is closed, we have certainly not heard the last of it. It may be contended that the S.E.C. is poking into things that are none of its business, but after all, they take the attitude that the company raised $30,000,000 from the American public and they have a right to know what has been done with this money. The pithy comment on various aspects of the S.E.C. hearings was unsigned, but some of the writer's forebodings about war and the seizure of American I.G. as German owned were to come true. He was correct also in his forecasts that the S.E.C. inquiry was closed, but that Standard had not heard the last of it. Mr. Howard wrote Standard's European representative on Feb. 19, 1938, that "a very unfavorable impression" had been created by newspaper reports of Mr. Teagle's apparent lack of any real knowledge of the ownership or business of the company of which be was a director, and in which the records indicated he had 500,000 shares. "I am afraid the letter continued, "that one of us or both of us will have to have some pretty straight talk with Geheimrat Schmitz about this American I.G. Chemical business." Apparently, however, it was the Geheimrat who did the straight talking, when-Howard rushed to Berlin to see him. For, in a letter dated March 11, 1938, Mr. Howard reported to Teagle that he was doubtful that Dr. Schmitz would consent to the resignation, and went on to say that Dr. Schmitz appeared to see no advantage in further talk about the matter. Wrote Howard: He knows what happened in Washington, and despite everything he still believes that his course has been the best course that could be taken and he wishes to continue it. He has pointed out to me, however, reasons why he believes there will be no recurrence of any of the past troubles in connection with the American I.G. Company. Unfortunately, these are matters which I can only talk about when I see you-this at Dr. Schmitzs specific request. The occult powers which Dr. Schmitz indicated relating to the non-recurrence at Washington of the troubles of American I.G. were never revealed publicly by Mr. Howard, and it is worthy of note here that subsequent to the inclusion of this particular letter in the record of the hearings of the United States Senate Committee investigating the National Defense Program (Truman Committee) in 1942, Mr. Howard, who had appeared as a witness before the committee, was not asked to disclose those statements of Geheimrat Schmitz which he had not dared to put in his confidential report to Mr. Teagle. Mr. Howard also appeared later as a witness before the Senate Committee on Patents (Bone Committee) but again failed to relate just what the Geheimrat had said that he could "only talk about" when he saw Teagle. Mr. Teagle was not called as a witness before either of those Senate hearings. He did, however. finally succeed in his long cherished desire to resign from the board of the Farben subsidiary, about which, as a witness, he knew so little. On April 4, 1939, seven long years after he had first requested permission to resign and just a few months before the start of the war, D. A. Schmitz wrote Mr. Teagle that his resignation as director had been accepted "with regret." Brother Hermann the Geheimrat, and Carl Bosch the Professor Doctor apparently had instructed D. A. Schmitz to be nice about it, and that they could now spare from the board of Farben's American I.G. the august name of the chairman of the board of Standard Oil of New Jersey. That name had served its purpose in the Farben pattern for ten vital pre-war years. Apropos of the non-recurrence of troubles for American I.G., as foreseen by Dr. Schmitz. the S.E.C. held no more public hearings on the subject, and issued no public statement about it until June 9, 1941. This was a few days after the discerning Lowell L. Leake in newspaper PM had published the first informative article which ever appeared in the press about my earlier protests at Farben's activities in the chemical industries of this country. The S.E.C. statement took the form of a report to Congress. In this report of its four years of lethargic efforts to uncover the ownership of American I.G., the S.E.C. included the following: All attempts to ascertain the beneficial ownership of the controlling shares have been unsuccessful . . . . . . As a conse-quence the American investors, mainly bondholders, are in the peculiar position of being creditors of a corporation under an unknown control. A few days later I prepared an analysis of that report for the Non-Sectarian Anti-Nazi League which in part was as follows: The monkey in the box and circus merry-go-round of concealed stock ownership fools only those individuals who want to be fooled, or who are willing for some reason to play a part in the attempted deception. Unhappily an agency of the United States Government has now issued an official report or presentation, which, when we finally get to the point of seizing enemy property, as we must, will provide a document to be utilized as a pretext to permit the German I.G. Farben to continue its operations in this country, under the present management, and in the interest of the German Reich. A year later I made one more attempt to induce the S.E.C. to reopen its inquiry into other ramifications of the activities of I.G. Farben and its agents and affiliates in the United States. In a communication dated August 8, 1942, 1 called attention to the fact that during the earlier period of its American I.G. investigation it had been rumored that Earle I. McClintock, high official of Sterling Products, was being considered to succeed- Messrs. Joseph P. Kennedy and William 0. Douglas as chairman of S.E.C. when those two gentlemen resigned that office in 1937 and 1938 respectively. I pointed out that regardless of the fact that Mr. McClintock was not made chairman, any attempt to secure his appointment became a matter which the S.E.C. might properly inquire into-in view of the Sterling and Farben secret agreements. Again the S.E.C. declined to follow my suggestion. The S.E.C. report on the lily-white purity of American I.G., as submitted to Congress, was prepared under the supervision of Commissioner Robert E. Healy, assisted by the gentle Mr. Schenker, as counsel. In the past I had made other appeals to agencies advised by these two distinguished public servants. In 1929, when Mr. Healy was chief counsel for the Federal Trade Commission, I requested an investigation of the German affiliations of American I.G., Drug, Inc., and the American Medical Association. And two years later, I again asked that agency to dig into the McKesson & Robbins mess. Mr. Schenker's first-job in Washington was assistant to Ferdinand Pecora, counsel for the Senate Committee on Banking and Currency, which drafted the S.E.C. legislation. And it was this committee that ignored my appeals to explain the New York Stock Exchange listing of the fraudulent McKesson & Robbins securities, and also to investigate what I described as "a reign of terrorism . . . . . utilized by our so-called financial leaders to cow into sub-mission any one who protested against the prostitution of our governmental machinery at Washington." Messrs. Pecora and Healy became members of the S.E.C. when it was organized in 1934, and Mr. Schenker became its counsel. On June 11, 1941, just two days after the S.E.C. report on Farben's American front was filed with the Congress, Mr. Schenker retired as its counsel and returned to the private practice of law in New York City. When the war started in Europe, Farben decided that it might be wise to do a little face lifting on its American offspring. So, on October 30, 1939, the directors of the American I.G. Chemical Corp. announced that there was no longer an American I.G. because one of its subsidiaries, General Aniline Works, had first absorbed it and then had changed its own name to General Aniline & Film Corporation. just like that. How could it be related to German I.G. when the I.G. had vanished from its name. There would be no change, it was announced, in the management but the offices were to move from Fifth Ave. to Park Ave. Careful in small details, Farben was moving its renamed child from the too close environment of other Farben subsidiaries, which still occupied offices at the old Fifth Ave, address. Despite the unhappy experiences of Mr. Teagle as an American I.G. director, Standard continued its intimate relations with Farben and permitted its vice-president, E. M. Clark to remain as a director of American I.G., or General Aniline & Film, until 1940. Standard also took part in several sizeable financial negotiations with Farben, one of which, in 1940, involved a Standard proposal that Farben exchange its interest in General Aniline & Film for Standard's oil-refining properties in Germany. In reply General Aniline's New York management solemnly informed Standard that Farben had no interest in it or in any other American properties; and then, by way of proof, arranged a conference in Switzerland at which representatives of the three companies met. The real purpose of this conference came out when Farben and its American front both suggested that Standard purchase control of General Aniline & Film from its Swiss "owners." This would make everybody happy and prevent any possibility of General Aniline & Film getting into a jam with the United States Government. Standard, for some reason, did not bite on that one. Some months later Mr. Hugh S. Williamson (prominent member of the New York law firm of Breed, Abbott and Morgan, also vice-president and treasurer of General Aniline & Film), was in Europe discussing' matters with the home office. Possibly Mr. Williamson feared that the S.E.C. whitewash might not stand exposure to the stormy weather in prospect, and that the Farben name might show through on the General Aniline signboard. In any event, late in October, 1940, Mr. Williamson put in a New York call from Switzerland for his friend Mr. Orville Harden then vice-president of Standard and, as a representative of Farben, asked whether Standard would not like to sell Farben its very valuable Hungarian oil properties. Standard by then was more than willing to get some of its assets out of Europe and suggested a price of $30,000,000 as about right. Farben declined with thanks and, after protracted negotiations. came back with a counter offer of $24,000,000, mostly in cash but including a note for $5,000,000, which was to be secured by collateral in the form of a lien on Farben's American properties (which it had just denied owning) and was to be payable "three months after the end of the war." Standard's directors bit at this last offer; took it to Washington and secured the approval of the State Department (so they said) but the chief counsel for the Treasury, and Vice President Henry A. Wallace, as chairman of the Board of Economic Warfare, refused official permission. This was in August, 1941; by this time Farben's tie-ups with American war industries were beginning to receive some rather critical public attention, and the atmosphere in official circles was a bit thick when anything relating to Farben came up. While the S.E.C. staff was still fabricating its conclusion that American I.G. was nullius filius, several other branches of the Government refused to accept the theory of illegitimate Swiss parentage, and concluded that American I.G. actually meant German I.G. Among those who discredited the woods-colt story were members of the Antitrust staff of Assistant Attorney General Thurman Arnold, who had uncovered evidence of the Farben pattern in investigations of some of its tie-ups in the synthetic nitrogen-ammonia field, and in the magnesium industry and had instituted actions accordingly. And, on April 10, 1941, the Antitrust Division issued subpoenas calling for, the complete records of General Aniline, Winthrop Chemical, and Sterling Products. Then began the sort of dragnet investigation into the ramifications of Farben's affiliates and personal agents in this country that I had first asked the Department of justice to make thirteen years previously, in 1928. There was consternation in the ranks of Farben's New York and Berlin offices when word of those subpoenas reached them. The management of General Aniline at first declined to comment publicly; later a press statement was issued which read: The officers of General Aniline & Film Corporation stated that the report it was among the companies whose books and records had been subpoenaed in connection with the Government's investigation of the drug and pharmaceutical trade was an error. It was an error all right, a very bad error on the part of Dr. Schmitz who had assured Standard Oil's Frank Howard that there would be no recurrence at Washington of the past troubles of American I.G. Three weeks later came another blow for Farben's "American" citizens. On May 1, 1941, the British Minister of Economic Warfare, Dr. Hugh Dalton, threw some very pointed comments about conditions in the Western hemisphere into an informal statement which he made to American correspondents in London. The gist of these remarks was cabled to the United States and received considerable publicity in the press. They reflected a very natural feeling of irritation in the British Cabinet at the fact that Farben's affiliates in the United States were helping effectively to nullify the British Navy's blockade of Germany's export trade by shipping American-made dyes, drugs, and chemicals to Farben's agents in Latin America, and thus helping Farben to hold its trade and to finance German propaganda and espionage in those countries. Dr. Dalton suggested that the United States, for its own protection and security, might well follow Britain's example by freezing the assets of Axis countries and by blacklisting all concerns whose profits were being utilized to finance Nazi activities in the Western Hemisphere. The Minister named some of the German-controlled companies in the United States that had been carefully organized before the war to supply the requirements of German agencies in South America–when Britain- should shut off their supply of products from Germany. Among the most important of these companies was General Aniline & Film, which was supplying Farben's Latin American agents with dyes, photographic materials and other products, shipping them through General Dyestuff or other companies acting for it. Sterling Products was also branded and Messrs. Weiss and McClintock were named in person by Mr. Dalton for similar offenses. There were immediate repercussions of this blast at Farben's American front. The American patriots who sat in the New York office of General Aniline promptly issued another chapter of the bedtime story of their firm's parentage. They denied emphatically the allegation of the British Ministry that it was owned or controlled by I.G. Farben, which has "no interest, direct or indirect. in or control over the affairs of General Aniline & Film Corporation." 'They were not acting for Farben or in its interest in exporting merchandise," etc., etc. One of its officers was interviewed by The New York Times at his home in Englewood, N. J. This was Dr. Rudolph Hutz, General Aniline's vice-president who, in World War I, was an official of the Bayer Company and had been arrested and interned in 1918. When asked about this incident by the Times he treated it lightly and described the arrest as "a so-called Presidential warrant—a purely formal charge of the Alien Property Custodian." Dr. Hutz also stated that he knew nothing about any relations between General Aniline and Farben. However, that gentleman's peculiar lack of knowledge about such things did not save him, seven months later, from being named as a co-conspirator in an indictment against General Aniline, Farben, and his earlier employer, Bayer. The United States Government was prompt to take the hint from the British Minister's blunt remarks, and things started to happen. On May 9, 1941, Attorney General Robert H. Jackson attached about $250,000, which was on deposit in the account of I.G. Farben in the National City Bank of New York. An order was secured from Federal Judge John C. Knox directing the bank to hold all funds or credits owing to Farben pending disposition of antitrust suits in which Farben, as a defendant, had refused to put in an appearance. Two weeks later the justice Department tied up some additional funds which were about to be paid to Farben's account by General Dyestuff and, following the usual Farben procedure, were informed by that company's president, E. K. Halbach, that General Dyestuff was completely independent, as it was owned 100 percent by American citizens. On June 14, another real blow was dealt Farben when President Roosevelt issued an order freezing all funds belonging to Axis nationals. Mr. Henry Morgenthau, Jr., Secretary of the Treasury, to whom enforcement of the freezing was delegated, had long been urging that step but, according to press dispatches from Washington, bad been blocked by the unwillingness of Secretary of State Cordell Hull to -give the Axis a pretext for reprisals. Our distinguished Secretary of State apparently did not appreciate the important part which Farben played in any decision as to reprisals. Secretary Morgenthau, however, was better advised and had already expressed the opinion that the delayed freezing action would be a matter of locking the stable after the horse was gone; but the White House statement indicated that it was also intended to curb subversive activities in this country. The Treasury regulations included one clause calculated to give Farben's American agents a headache; it read that on or before July 14 a report should be filed setting forth all information relative to property in the United States in which any foreign country or, national had any interest, direct or indirect. This meant Farben patents as well as other Farben property. It also meant that it mattered not a bit whether I.G. Chemie was Farben owned or not; Switzerland was a foreign country and the General Aniline shares were, therefore, to be frozen by the Treasury. Mr. Dalton's brutal frankness had turned the tide. The foundations of Farben's framework in the United States were beginning to crumble. On July 17, the President issued another proclamation that hit Farben in another highly vulnerable spot. This time the Secretary of State was instructed to publish a blacklist of companies in Latin America and elsewhere which were affiliated with Axis powers. This fist included the names of every known agent, affiliate or branch house of I.G. Farben in all of the Latin American countries. While these storm clouds were gathering about Farben's American fronts, there came to the rescue one Dr. Werner Karl Gabler, who had moved to Washington some years previously as an advocate of the social and economic policies of the New Deal. Dr. Gabler now appeared as an accredited representative of the Swiss I.G. Chemie, and approached various government officials with impressive looking documents to support his arguments that I.G. Chemie was a wholly independent Swiss company. According to Time, Dr. Gabler had become well known in Washington as an "economist lobbyist" for the American Retail Federation and bad also done work for the late Edward A. Filene, Boston capitalist and department store operator. Be that as it may, Dr. Gabler certainly blossomed out in his new role at Washington. He had secured his assignment through the Swiss Minister at Washington, the Hon. Charles Bruggmann. And the fact that the Swiss Minister's wife, the former Mary 0. Wallace, was a sister of Henry A. Wallace, then Vice President, did not detract from the prestige and dignity with which Dr. Gabler conducted his efforts to checkmate those who were saying, "Why argue any more, seize General Aniline and get it over with." Needless to say neither the Vice President nor his sister was involved in aiding the Gabler efforts. In its article about Dr. Gabler, Time included this comment: Some of Dr. Gabler's fellow New Dealers though no more anti-Nazi than he, believe he was hired because he had an in with the New Deal. If that was a Nazi plan, it could be an example of the super-ingenuity of Nazi infiltration tactics. Economist-negotiator Gabler, to give him a more polite title than 'lobbyist," went about his task with great circumspection, he always notified the authorities before be put in telephone calls for Switzerland (undoubtedly they were all listened in on anyhow) and a stage battle of noisy name calling went on between him and some of General Aniline's German-born directors. Finally, after it appeared fruitless for even a Doctor Gabler to gabble any more about I.G. Chemie's being a safe and neutral guardian of the General Aniline shares, this New Deal economist proposed a new deal for General Aniline-an American voting trust was to be set up to control the I.G. Chemie shares on which a United States Government official and an I.G. Chemie nominee should have equal voice. This was rather far fetched as the Government already had frozen the stock and was about to take over the property. About this time one Ernest W. Flender, German born shareholder in General Aniline, and a member of the private-banking house, C. B. Richard & Co., dealt himself into the situation by starting a mysterious equity suit in a Delaware Court to secure an order compelling a stockholder's meeting. However, the U. S. Treasury intervened and the suit was dismissed after Mrs. Dorothy Pickhardt-Kahle, another stockholder, had been substituted for Mr.' Flender as the complainant The General Aniline directors made many moves on the Washington chessboard to strengthen their position. One of these was to retain the services (at an annual retainer reported to be $100,000) of former Attorney General Homer S. Cummings, who had opened an office for the practice of law in the nation's capital a few months before the outbreak of the war. More will appear about this later. As the date of the declaration of war between Germany and the United States drew near, the board of General Aniline was in a state of wild confusion. A number of the old German-born directors resigned and were replaced by several well known Americans who had no prior connection with the company. Finally, D. A. Schmitz was asked to resign as president and, when he refused, the board voted to remove him. For several weeks the company had no president. Then, on October 30, 1941, the directors elected as president former Judge John E. Mack, of Poughkeepsie. The name of judge Mack, known to be an intimate friend and neighbor of President Roosevelt, was calculated to lend such an aura of American respectability to General Aniline that this, in itself, might prevent actual seizure of the company as enemy owned. judge Mack had had no previous experience as head of an $86,000,000 corporation with 6,000 employees. Nevertheless, his salary was reported to be fixed at $90,000 a year. Not long afterward, on December 5, 1941, another, even bigger, name was added to the General Aniline board, through the election of William C. Bullitt. Mr. Bullitt, however, never actually served, as he left that same day for Africa and the Far East, on a personal mission for the President. This frantic Americanization of Farben's offspring might at least have stalled off the seizure had not the Japanese time-table decreed otherwise. With the attack on Pearl Harbor the energetic and able Assistant Counsel of the Treasury Department, J. J. O'Connell, Jr., (later to become its chief counsel) moved in on General Aniline with a commando squad of seventeen supervisors and took over in earnest. Evidently he was not content with previous housecleaning which had consisted in taking a few offensive I.G. pictures off the wall and hiding some of the hired help in the cellar. Within a week a New York Grand jury had returned the three indictments already mentioned charging conspiracy by General Aniline, Farben, General Dyestuff and several of its officers and directors with numerous acts of conspiracy in restricting production of dyes, photographic materials and chemicals, along with other violations of the criminal statutes of the United States. Two months passed during which Mr. O'Connell and his supervisors did some checking up, and then ousted five of the principal operating executives of General Aniline, all naturalized Americans who were accused of obvious Farben affiliations. Meanwhile, Mr. Leo T. Crowley, head of the government-owned Federal Deposit Insurance Corporation, and also high-salaried president of a public utility company, was offered by the President the additional position of Alien Property Custodian. However, Mr. Crowley appeared none too anxious to accept this responsibility unless complete freedom of action was assured him. So Treasury, for a time, remained supreme in General Aniline affairs. On February 16, 1942, Secretary Morgenthau addressed an official notice to General Aniline that he had vested in his own name, title to all of the shares of the company listed in the names of Geheimrat Professor Dr. Carl Bosch of Ludwigshafen, Geheimrat Dr. Hermann Schmitz of Berlin, and of the Swiss I.G. Chemie or its nominees in Switzerland and the Netherlands. Prior to this final seizure of the controlling shares of General Aniline, that company, as one of Farben's American dummy fronts had controlled not only its own immense war material manufacturing plants, but bad also owned huge blocks of stock worth some $11,500,000 in the following American Corporations: Standard Oil Co., of New Jersey; Standard Oil Co., of California; Standard Oil Co. of Indiana; E. I. duPont de Nemours & Co., Sterling Products'. Inc., Plaskon Co., American Magnesium Corp., Alba Pharmaceutical Co., and Winthrop Chemical Co. What came after February 16, will appear in a later chapter, but it was this date which marked the end of the long fabric of lies and subterfuge behind which Farben had almost succeeded in veiling its identity. Perhaps, more important, it exposed officially the use which these Teutonic builders of a secret world empire had made of some of our esteemed citizens and, to quote from a later U. S. Treasury Department report, how Farben had: . . . . . been plotting the downfall of the free peoples who gave them an opportunity to prosper and grow rich by honest trade . . . . . by control of corporations, by accumulating stocks of raw materials, by carefully directed but unlimited bribery, by the use of force and threats of force, and by any other methods which came to hand. Which is a pretty good description of the Farben pattern. pps. 107-131 --[cont]-- Aloha, He'Ping, Om, Shalom, Salaam. Em Hotep, Peace Be, All My Relations. Omnia Bona Bonis, Adieu, Adios, Aloha. Amen. 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