Ford and GM Scrutinized
for Alleged Nazi Collaboration
November 30, 1998; Page A01
Michael Dobbs
Washington Post
Three years after Swiss banks became the target of a worldwide
furor over their business dealings with Nazi Germany, major
American car companies find themselves embroiled in a similar
debate.
Like the Swiss banks, the American car companies have vigorously
denied that they assisted the Nazi war machine or that they
significantly profited from the use of forced labor at their German
subsidiaries during World War II. But historians and lawyers
researching class-action suits on behalf of former prisoners of war
are busy amassing evidence of collaboration by the automakers with
the Nazi regime.
The issues at stake for the American automobile corporations go far
beyond the relatively modest sums involved in settling any lawsuit.
During the war, the car companies established a reputation for
themselves as "the arsenal of democracy" by transforming their
production lines to make airplanes, tanks and trucks for the armies
that defeated Adolf Hitler. They deny that their huge business
interests in Nazi Germany led them, wittingly or unwittingly, to
also become "the arsenal of fascism."
The Ford Motor Co. has mobilized dozens of historians, lawyers and
researchers to fight a civil case brought by lawyers in Washington
and New York who specialize in extracting large cash settlements
from banks and insurance companies accused of defrauding Holocaust
victims. Also, a book scheduled for publication next year will
accuse General Motors Corp. of playing a key role in Hitler's
invasions of Poland and the Soviet Union.
"General Motors was far more important to the Nazi war machine than
Switzerland," said Bradford Snell, who has spent two decades
researching a history of the world's largest automaker.
"Switzerland was just a repository of looted funds. GM was an
integral part of the German war effort. The Nazis could have
invaded Poland and Russia without Switzerland. They could not have
done so without GM."
Both General Motors and Ford insist that they bear little or no
responsibility for the operations of their German subsidiaries,
which controlled 70 percent of the German car market at the
outbreak of war in 1939 and rapidly retooled themselves to become
suppliers of war material to the German army.
But documents discovered in German and American archives show a
much more complicated picture. In certain instances, American
managers of both GM and Ford went along with the conversion of
their German plants to military production at a time when U.S.
government documents show they were still resisting calls by the
Roosevelt administration to step up military production in their
plants at home.
After three years of national soul-searching, Switzerland's largest
banks agreed last August to make a $1.25 billion settlement to
Holocaust survivors, a step they had initially resisted. Far from
dying down, however, the controversy over business dealings with
the Nazis has given new impetus to long-standing investigations
into issues such as looted art, unpaid insurance benefits and the
use of forced labor at German factories.
Although some of the allegations against GM and Ford surfaced
during 1974 congressional hearings into monopolistic practices in
the automobile industry, American corporations have largely
succeeded in playing down their connections to Nazi Germany. As
with Switzerland, however, their very success in projecting a
wholesome, patriotic image of themselves is now being turned
against them by their critics.
"When you think of Ford, you think of baseball and apple pie," said
Miriam Kleinman, a researcher with the Washington law firm of
Cohen, Millstein and Hausfeld, who spent weeks examining records at
the National Archives in an attempt to build a slave labor case
against the Dearborn-based company. "You don't think of Hitler
having a portrait of Henry Ford on his office wall in Munich."
Both Ford and General Motors declined requests for access to their
wartime archives. Ford spokesman John Spellich defended the
company's decision to maintain business ties with Nazi Germany on
the grounds that the U.S. government continued to have diplomatic
relations with Berlin up until the Japanese attack on Pearl Harbor
in December 1941. GM spokesman John F. Mueller said that General
Motors lost day-to-day control over its German plants in September
1939 and "did not assist the Nazis in any way during World War II."
For GIs, an Unpleasant Surprise
When American GIs invaded Europe in June 1944, they did so in
jeeps, trucks and tanks manufactured by the Big Three motor
companies in one of the largest crash militarization programs ever
undertaken. It came as an unpleasant surprise to discover that the
enemy was also driving trucks manufactured by Ford and Opel -- a
100 percent GM-owned subsidiary -- and flying Opel-built warplanes.
(Chrysler's role in the German rearmament effort was much less
significant.)
When the U.S. Army liberated the Ford plants in Cologne and Berlin,
they found destitute foreign workers confined behind barbed wire
and company documents extolling the "genius of the Fuehrer,"
according to reports filed by soldiers at the scene. A U.S. Army
report by investigator Henry Schneider dated Sept. 5, 1945, accused
the German branch of Ford of serving as "an arsenal of Nazism, at
least for military vehicles" with the "consent" of the parent
company in Dearborn.
Ford spokesman Spellich described the Schneider report as "a
mischaracterization" of the activities of the American parent
company and noted that Dearborn managers had frequently been kept
in the dark by their German subordinates over events in Cologne.
The relationship of Ford and GM to the Nazi regime goes back to the
1920s and 1930s, when the American car companies competed against
each other for access to the lucrative German market. Hitler was an
admirer of American mass production techniques and an avid reader
of the antisemitic tracts penned by Henry Ford. "I regard Henry
Ford as my inspiration," Hitler told a Detroit News reporter two
years before becoming the German chancellor in 1933, explaining why
he kept a life-size portrait of the American automaker next to his
desk.
Although Ford later renounced his antisemitic writings, he remained
an admirer of Nazi Germany and sought to keep America out of the
coming war. In July 1938, four months after the German annexation
of Austria, he accepted the highest medal that Nazi Germany could
bestow on a foreigner, the Grand Cross of the German Eagle. The
following month, a senior executive for General Motors, James
Mooney, received a similar medal for his "distinguished service to
the Reich."
The granting of such awards reflected the vital place that the U.S.
automakers had in Germany's increasingly militarized economy. In
1935, GM agreed to build a new plant near Berlin to produce the
aptly named "Blitz" truck, which would later be used by the German
army for its blitzkreig attacks on Poland, France and the Soviet
Union. German Ford was the second-largest producer of trucks for
the German army after GM/Opel, according to U.S. Army reports.
The importance of the American automakers went beyond making trucks
for the German army. The Schneider report, now available to
researchers at the National Archives, states that American Ford
agreed to a complicated barter deal that gave the Reich increased
access to large quantities of strategic raw materials, notably
rubber. Author Snell says that Nazi armaments chief Albert Speer
told him in 1977 that Hitler "would never have considered invading
Poland" without synthetic fuel technology provided by General
Motors.
As war approached, it became increasingly difficult for U.S.
corporations like GM and Ford to operate in Germany without
cooperating closely with the Nazi rearmament effort. Under intense
pressure from Berlin, both companies took pains to make their
subsidiaries appear as "German" as possible. In April 1939, for
example, German Ford made a personal present to Hitler of 35,000
Reichsmarks in honor of his 50th birthday, according to a captured
Nazi document.
Documents show that the parent companies followed a conscious
strategy of continuing to do business with the Nazi regime, rather
than divest themselves of their German assets. Less than three
weeks after the Nazi occupation of Czechoslovakia in March 1939, GM
Chairman Alfred P. Sloan defended this strategy as sound business
practice, given the fact that the company's German operations were
"highly profitable."
The internal politics of Nazi Germany "should not be considered the
business of the management of General Motors," Sloan explained in a
letter to a concerned shareholder dated April 6, 1939. "We must
conduct ourselves [in Germany] as a German organization. . . . We
have no right to shut down the plant."
U.S. Firms Became Crucial
After the outbreak of war in September 1939, General Motors and
Ford became crucial to the German military, according to
contemporaneous German documents and postwar investigations by the
U.S. Army. James Mooney, the GM director in charge of overseas
operations, had discussions with Hitler in Berlin two weeks after
the German invasion of Poland.
Typewritten notes by Mooney show that he was involved in the
partial conversion of the principal GM automobile plant at
Russelsheim to production of engines and other parts for the Junker
"Wunderbomber," a key weapon in the German air force, under a
government-brokered contract between Opel and the Junker airplane
company. Mooney's notes show that he returned to Germany the
following February for further discussions with Luftwaffe commander
Hermann Goering and a personal inspection of the Russelsheim plant.
Mooney's involvement in the conversion of the Russelsheim plant
undermines claims by General Motors that the American branch of the
company had nothing to do with the Nazi rearmament effort. In
congressional testimony in 1974, GM maintained that American
personnel resigned from all management positions in Opel following
the outbreak of war in 1939 "rather than participate in the
production of war materials."
However, according to documents of the Reich Commissar for the
Treatment of Enemy Property, the American parent company continued
to have some say in the operations of Opel after September 1939.
The documents show that the company issued a general power of
attorney to an American manager, Pete Hoglund, in March 1940.
Hoglund did not leave Germany until a year later. At that time, the
power of attorney was transferred to a prominent Berlin lawyer
named Heinrich Richter.
GM spokesman Mueller declined to answer questions from The
Washington Post on the power of attorney granted to Hoglund and
Richter or to provide access to the personnel files of Hoglund and
other wartime managers. He also declined to comment on an assertion
by Snell that Opel used French and Belgian prisoners at its
Russelsheim plant in the summer of 1940, at a time when the
American Hoglund was still looking after GM interests in Germany.
The Nazis had a clear interest in keeping Opel and German Ford
under American ownership, despite growing hostility between
Washington and Berlin. By the time of Pearl Harbor in December
1941, the American stake in German Ford had declined to 52 percent,
but Nazi officials argued against a complete takeover. A memorandum
to plant managers dated November 25, 1941, acknowledged that such a
step would deprive German Ford of "the excellent sales
organization" of the parent company and make it more difficult to
bring "the remaining European Ford companies under German
influence."
Documents suggest that the principal motivation of both companies
during this period was to protect their investments. An FBI report
dated July 23, 1941 quoted Mooney as saying that he would refuse to
take any action that might "make Hitler mad." In fall 1940, Mooney
told the journalist Henry Paynter that he would not return his Nazi
medal because such an action might jeopardize GM's $100 million
investment in Germany. "Hitler has all the cards," Paynter quoted
Mooney as saying.
"Mooney probably thought that the war would be over very quickly,
so why should we give our wonderful company away," said German
researcher Anita Kugler, who used Nazi archives to trace the
company's dealings with Nazi Germany.
Even though GM officials were aware of the conversion of its
Russelsheim plant to aircraft engine production, they resisted such
conversion efforts in the United States, telling shareholders that
their automobile assembly lines in Detroit were "not adaptable to
the manufacture of other products" such as planes, according to a
company document discovered by Snell.
In June 1940, after the fall of France, Henry Ford personally
vetoed a U.S. government-approved plan to produce under license
Rolls-Royce engines for British fighter planes, according to
published accounts by his associates.
Declaration of War Alters Ties
America's declaration of war on Germany in December 1941 made it
illegal for U.S. motor companies to have any contact with their
subsidiaries on German-controlled territory.
At GM and Ford plants in Germany, reliance on forced labor
increased. The story of Elsa Iwanowa, who brought a class-action
suit against Ford last March, is typical. At the age of 16, she was
abducted from her home in the southern Russian city of Rostov by
German soldiers in October 1942 with hundreds of other young women
to work at the Ford plant at Cologne.
"The conditions were terrible. They put us in barracks, on
three-tier bunks," she recalled in a telephone interview from
Belgium, where she now lives. "It was very cold; they did not pay
us at all and scarcely fed us. The only reason that we survived was
that we were young and fit."
In a court submission, American Ford acknowledges that Iwanowa and
others were "forced to endure a sad and terrible experience" at its
Cologne plant but maintains that redressing such "tragedies" should
be "a government-to-government concern." Spellich, the Ford
spokesman, insists the company did not have management control over
its German subsidiary during the period in question.
Ford has backed away from its initial claim that it did not profit
in any way from forced labor at its Cologne plant. Spellich said
that company historians are still researching this issue but have
found documents showing that, after the war, American Ford received
dividends from its German subsidiary worth approximately $60,000
for the years 1940-43. He declined a request to interview the
historians, saying they were "too busy."
The extent of contacts between American Ford and its
German-controlled subsidiary after 1941 is likely to be contested
at any trial. Simon Reich, an economic historian at the University
of Pittsburgh and an expert on the German car industry, says he has
yet to see convincing evidence that American Ford had any control
over its Cologne plant after December 1941. He adds, however, that
both "Opel and Ford did absolutely everything they could to
ingratiate themselves to the Nazi state."
While there was no direct contact between American Ford and its
German subsidiary after December 1941, there appear to have been
some indirect contacts. In June 1943, the Nazi custodian of the
Cologne plant, Robert Schmidt, traveled to Portugal for talks with
Ford managers there. In addition, the Treasury Department
investigated Ford after Pearl Harbor for possible illegal contacts
with its subsidiary in occupied France, which produced Germany army
trucks. The investigation ended without charges being filed.
Even though American Ford now condemns what happened at its Cologne
plant during the war, it continued to employ the managers in charge
at the time. After the war, Schmidt was briefly arrested by Allied
military authorities and barred from working for Ford. But he was
reinstated as the company's technical director in 1950 after he
wrote to Henry Ford II claiming that he had always "detested" the
Nazis and had never been a member of the party. A letter signed by
a leading Cologne Nazi in February 1942 describes Schmidt as a
trusted party member.Ford maintains that Schmidt's name does not
show up on Nazi membership lists.
Mel Weiss, an American attorney for Iwanowa, argues that American
Ford received "indirect" profits from forced labor at its Cologne
plant because of the overall increase in the value of German
operations during the war. He notes that Ford was eager to demand
compensation from the U.S. government after the war for "losses"
due to bomb damage to its German plants and therefore should also
be responsible for any benefits derived from forced labor.
Similar arguments apply to General Motors, which was paid $32
million by the U.S. government for damages sustained to its German
plants. Washington attorney Michael Hausfeld, who is involved in
the Ford lawsuit, confirms GM also is "on our list" as a possible
target.
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