Detroit’s Fifth Column

Smedley Butler had been an outstanding Marine Corps Major General, during his time the highest rank possible for that branch of the service. He is also one of few who were awarded the Medal of Honor twice; he participated in many overseas operations, beginning by lying about his age so he could fight in the Spanish American War in 1898. But at the end of his long career, Butler took to making speeches about our conflicts with other countries. In 1935 he wrote War is a Racket, a short book summed up by this passage:

“I spent 33 years and four months in active military service and during that period I spent most of my time as a high-class muscle man for Big Business, for Wall Street and the bankers. In short, I was a racketeer, a gangster for capitalism. I helped make Mexico and especially Tampico safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped purify Nicaragua for the International Banking House of Brown Brothers in 1902 – 1912. I brought light to the Dominican Republic for the American sugar interests in 1916. I helped make Honduras right for the American fruit companies in 1903. In China in 1927 I helped see to it that Standard Oil went on its way unmolested. Looking back on it, I might have given Al Capone a few hints.”

Some might think that Butler had become a cynic in his old age. Maybe, but he would also die young, just 58, as the Second World War was cranking up.

And even as Butler’s book was being published, General Motors was building a new factory near Berlin that the German government would task with building the Opel Blitz truck, which the army would use during Germany’s campaigns against Poland, France, and Russia. Today we think of Daimler, BMW, and Volkswagen as the German automotive heavyweights. But prior to the Second World War, GMs’ Opel was the largest automobile manufacturer in Europe. Opel’s engineers were so highly regarded that they would design and engineer a 3-short-ton heavy duty truck that Mercedes would build under license for the German military.

For the record, Ford was the second largest builder of trucks for the Third Reich’s use during the Second World War. Today these memories have been wiped from our national consciousness as Detroit’s automakers have denied certain aspects of their trading with the enemy during that war. Hollywood helped, wiping clean their slate by always showing German soldiers in Mercedes trucks in their movies.

When in Rome?

This brings up an important question: To what nation do corporations and their executives owe loyalty during an international conflict?

For years Hitler kept Ford’s photo on his desk, then in July of 1938 awarded him the Grand Cross of the German Eagle, the highest honor Germany could bestow on a foreigner.

The next month the GM executive in charge of Opel was given a similar award. There were many reasons why. German bombers during the war would never have gotten off the ground without the use of tetra-ethyl lead, and that patent was controlled solely by Standard Oil and General Motors. It was also reported by author Bradford Snell that in 1977 Nazi armaments chief Albert Speer told him that “Hitler would never have considered invading Poland without synthetic fuel technology provided by General Motors.”

Now, in the late Thirties there had been a huge national movement here to stay out of any conflict that might arise overseas. Even so, GM Chairman Alfred Sloan felt he had to make a statement about the company’s holdings in Germany shortly after the Nazis occupied Czechoslovakia. So in March of 1939 he said that GM’s Opel division was a smart strategy for the company, because its German operations were highly profitable. In April of 1940, Sloan wrote to a shareholder who questioned the loyalty of GM’s doing business in Germany, “The internal politics of Nazi Germany should not be considered the business of the management of General Motors …. we must conduct ourselves [in Germany] as a German organization. We have no right to shut down the plant.”

As the Washington Post also pointed out in 1998, GM and other corporations testified in Congress in 1974 that all GM’s American personnel had resigned from Opel the moment the war broke out in late 1939. But documents were found showing that GM’s James Mooney had actually been involved in converting part of Opel’s Russelheim factory to produce engines and other parts of the Junker Wunderbomber, going so far as having meetings with Hermann Goering and giving him a tour of that plant. And Pete Hogland, an American manager for GM in Germany, was given a power of attorney for that factory that stayed in effect until he left in mid-1941.

As for Detroit automakers’ claiming they had given up control of their German operations as a result of the conflict, again, the Washington Post reported that Nazi officials decided against nationalizing Ford of Germany at first because not only was “its organization exceptional,” but it would make it more difficult to bring Ford companies across Europe under German control, assuming they won the war. Meanwhile, an FBI report from July of 1941 quoted GM’s Mooney as saying he would refuse to take any action that might make Hitler mad. Doesn’t look like GM had given up control of Opel at that point.

Years later Alfred Sloan would write in his memoir that Opel had in fact been seized by the Nazis at the outbreak of war. Then in 1942 the Treasury Department allowed GM to write off its German investment, but “that did not end the company’s interest or responsibility for its German properties; GM was still considered owner of the stock in Adam Opel AG.”

Fifth Columnists

Ironically, as Ford was moving into heavy truck production for the Nazis, here in America Henry Ford was refusing to build Rolls Royce Liberty engines for British fighters under Lend Lease. President Roosevelt was so infuriated with Ford’s hardline position that he discussed nationalizing Ford to help with the war effort. In the end, Washington took Henry Ford II out of the navy and returned him to his family business to make sure the company survived his grandfather.

With the attack on Pearl Harbor and our official entry into the Second World War, it technically became illegal for any American corporation to do business with an Axis Power. So it was inconvenient when it was discovered that Ford, in spite of protesting that the company in no way financially benefited from its German operations during the conflict, was found to have received $60,000 in dividends for the years 1940 – 1943. Additionally, it has been reported that meetings did take place during the conflict between German managers of American corporations and their U.S. counterparts in neutral Portugal.

GM, Ford, Chrysler, and other American automobile manufacturers jumped into the U. S. war effort building tanks, planes and all sorts of war materiel; in fact, Detroit became known as the Arsenal of Democracy during the conflict. American patriotism kept the darker side of their story, that of helping the Nazis, quiet during the war, and purged that involvement from history afterward.

Purely Mercenary

Once WWII was over both GM and Ford demanded reparations from our government for damages done to their factories in Germany. At least, damages caused by Allied bombers, which had never targeted those American-owned factories until late in the conflict. In 1964 those cases were finally settled, although there are two different versions of what GM and Ford were given. In one version, GM received $34 million, while reports at the time stated they were given large tax credits for their troubles.

Over the decades both Mercedes and Volkswagen had their corporate historians go through their archives and come clean on their wartime activities — even going so far as to have the final reports published for the public. In historical terms they were breathtakingly, brutally honest accounts of life as a German corporation using slave labor in war. But Detroit has held their cards much closer to their vests. Typically, they’ve refused to answer hard questions about that period in their history.

In 1983 Charles Higham published his book, Trading with the Enemy, about U.S. corporations that did business with the Nazis right up until and after the war started. I read that book almost 40 years ago and its stories are still shocking today. But its underlying message is that wars come and go, as do politicians and madmen, but corporations are supposed to be forever — and they have few loyalties outside of their own financial survival.

Which takes us back to Marine Major General Smedley Butler in 1935, telling all who would listen that war is in fact just a racket.