excerpted from the book
Trading with the Enemy
The Nazi - American Money Plot 1933-1949
by Charles Higham
Delacorte Press, 1983
...a number of financial and industrial figures of World War II
and several members of the government served the cause of money
before the cause of patriotism. While aiding the United States'
war effort, they also aided Nazi Germany's.
It thus came as a severe shock to learn that several of the greatest
American corporate leaders were in league with Nazi corporations
before and after Pearl Harbor, including I.G. Farben, the colossal
Nazi industrial trust that created Auschwitz. Those leaders interlocked
through an association I have dubbed The Fraternity. Each of these
business leaders was entangled with the others through interlocking
directorates or financial sources. All were represented internationally
by the National City Bank or by the Chase National Bank and by
the Nazi attorneys Gerhardt Westrick and Dr. Heinrich Albert.
All had connections to that crucial Nazi economist, Emil Puhl,
of Hitler's Reichsbank and the Bank for International Settlements.
The tycoons were linked by an ideology: the ideology of Business
as Usual. Bound by identical reactionary ideas, the members sought
a common future in fascist domination regardless of which world
leader might further that ambition.
Several members not only sought a continuing alliance of interests
for the duration of World War II but supported the idea of a negotiated
peace with Germany that would bar any reorganization of Europe
along liberal lines. It would leave as its residue a police state
that would place The Fraternity in postwar possession of financial,
industrial, and political autonomy. When it was clear that Germany
was losing the war the businessmen became notably more "loyal.''
Then, when war was over, the survivors pushed into Germany,
protected their assets, restored Nazi friends to high office,
helped provoke the Cold War, and insured the permanent future
of The Fraternity.
To this day the bulk o~ Americans do not suspect The Fraternity.
The government smothered everything, during and even (inexcusably)
after the war. What would have happened if millions of American
and British people, struggling with coupons and lines at the gas
stations, had learned that in 1942 Standard Oil of New Jersey
managers shipped the enemy's fuel through neutral Switzerland
and that the enemy was shipping Allied fuel? Suppose the public
had discovered that the Chase Bank in Nazi-occupied Paris after
Pearl Harbor was doing millions of dollars' worth of business
with the enemy with the full knowledge of the head office in Manhattan?
Or that Ford trucks were being built for the German occupation
troops in France with authorization from Dearborn, Michigan? Or
that Colonel Sosthenes Behn, the head of the international American
telephone conglomerate ITT, flew from New York to Madrid to Berne
during the war to help improve Hitler's communications systems
and improve the robot bombs that devastated London? Or that ITT
built the Focke-Wulfs that dropped bombs on British and American
troops? Or that crucial ball bearings were shipped to Nazi-associated
customers in Latin America with the collusion of the vice-chairman
of the U. S. War Production Board in partnership with Goring's
cousin in Philadelphia when American forces were desperately short
of them? Or that such arrangements were known about in Washington
and either sanctioned or deliberately ignored?
For the government did sanction such dubious transactions-both
before and after Pearl Harbor. A presidential edict, issued six
days after December 7, 1941, actually set up the legislation whereby
licensing arrangements for trading with the enemy could officially
be granted. Often during the years after Pearl Harbor the government
permitted such trading. For example, ITT was allowed to continue
its relations with the Axis and Japan until 1945, even though
that conglomerate was regarded as an official instrument of United
States Intelligence. No attempt was made to prevent Ford from
retaining its interests for the Germans in Occupied France, nor
were the Chase Bank or the Morgan Bank expressly forbidden to
keep open their branches in Occupied Paris. It is indicated that
the Reichsbank and Nazi Ministry of Economics made promises to
certain U.S. corporate leaders that their properties would not
be injured after the Fuhrer was victorious. Thus, the bosses of
the multinationals as we know them today had a six-spot on every
side of the dice cube. Whichever side won the war, the powers
that really ran nations would not be adversely affected.
And it is important to consider the size of American investments
in Nazi Germany at the time of Pearl Harbor. These amounted to
an estimated total of $475 million. Standard Oil of New Jersey
had $120 million invested there; General Motors had $35 million;
111 had $30 million; and Ford had $17.5 million. Though it would
have been more patriotic to have allowed Nazi Germany to confiscate
these companies for the duration-to nationalize them or to absorb
them into Hermann Goring's industrial empire-it was clearly more
practical to insure them protection from seizure by allowing them
to remain in special holding companies, the money accumulating
until war's end. It is interesting that whereas there is no evidence
of any serious attempt by Roosevelt to impeach the guilty in the
United States, there is evidence that Hitler strove to punish
certain German Fraternity associates on the grounds of treason
to the Nazi state. Indeed, in the case of ITT, perhaps the most
flagrant of the corporations in its outright dealings with the
enemy, Hitler and his postmaster general, the venerable Wilhelm
Ohnesorge, strove to impound the German end of the business. But
even they were powerless in such a situation: the Gestapo leader
of counterintelligence, Walter Schellenberg, was a prominent director
and shareholder of ITT by arrangement with New York-and even Hitler
dared not cross the Gestapo.
As for Roosevelt, the Sphinx still keeps his secrets. That
supreme politician held all of the forces of collusion and betrayal
in balance, publicly praising those executives whom he knew to
be questionable. Before Pearl Harbor, he allowed such egregious
executives as James D. Mooney of General Motors and William Rhodes
Davis of the Davis Oil Company to enjoy pleasant tete-a-tetes
with Hitler and Goring, while maintaining a careful record of
what they were doing. During the war, J. Edgar Hoover, Adolf A.
Berle, Henry Morgenthau, and Harold Ickes kept the President fully
advised of all internal and external transgressions. With great
skill, he never let the executives concerned know that he was
on to them. By using the corporate leaders for his own war purposes
as dollar-a-year men, keeping an eye on them and allowing them
to indulge, under license or not, in their international tradings,
he at once made winning the war a certainty and kept the public
from knowing what it should not know.
Why did even the loyal figures of the American government allow
these transactions to continue after Pearl Harbor? A logical deduction
I would be that not to have done so would have involved public
disclosure: the procedure of legally disconnecting these alliances
under the antitrust laws would have resulted in a public scandal
that would have drastically affected public morale, caused widespread
strikes, and perhaps provoked mutinies in the armed services.
Moreover, as some corporate executives were never tired of reminding
the government, their trial and imprisonment would have made it
impossible for the corporate boards to help the American war effort.
Therefore, the government was powerless to intervene. After 1945,
the Cold War, which the executives had done so much to provoke,
made it even more necessary that the truth of The Fraternity agreements
should not be revealed.
A Bank for All Reasons
On a bright May morning in 1944, while young Americans were dying
on the Italian beachheads, Thomas Harrington McKittrick, American
president of the Nazi-controlled Bank for International Settlements
in Basle, Switzerland, arrived at his office to preside over a
fourth annual meeting in time of war. This polished American gentleman
sat down with his German, Japanese, Italian, British, and American
executive staff to discuss such important matters as the $378
million in gold that had been sent to the Bank by the Nazi government
after Pearl Harbor for use by its leaders after the war. Gold
that had been looted from the national banks of Austria, Holland,
Belgium, and Czechoslovakia, or melted down from the Reichsbank
holdings of the teeth fillings, spectacle frames, cigarette cases
and lighters, and wedding rings of the murdered Jews.
The Bank for International Settlements was a joint creation
in 1930 of the world's central banks, including the Federal Reserve
Bank of New York. Its existence was inspired by Hjalmar Horace
Greeley Schacht, Nazi Minister of Economics and president of the
Reichsbank, part of whose early upbringing was in Brooklyn, and
who had powerful Wall Street connections. He was seconded by the
all-important banker Emil Puhl, who continued under the regime
of Schacht's successor, Dr. Walther Funk.
Sensing Adolf Hitler's lust for war and conquest, Schacht,
even before Hitler rose to power in the Reichstag, pushed for
an institution that would retain channels of communication and
collusion between the world's financial leaders even in the event
of an international conflict. It was written into the Bank's charter,
concurred in by the respective governments, that the BIS should
be immune from seizure, closure, or censure, whether or not its
owners were at war. These owners included the Morgan-affiliated
First National Bank of New York (among whose directors were Harold
S. Vanderbilt and Wendell Willkie), the Bank of England, the Reichsbank,
the Bank of Italy, the Bank of France, and other central banks.
Established under the Morgan banker Owen D. Young's so-called
Young Plan, the BIS's ostensible purpose was to provide the Allies
with reparations to be paid by Germany for World War I. The Bank
soon turned out to be the instrument of an opposite function.
It was to be a money funnel for American and British funds to
flow into Hitler's coffers and to help Hitler build up his war
By 1939, the BIS had invested millions in Germany while Kurt von
Schroder and Emil Puhl deposited large sums in looted gold in
the Bank. The BIS was an instrument of Hitler, but its continuing
existence was approved by Great Britain even after that country
went to war with Germany ...
The Chase Nazi Account
The Rockefellers' Chase National Bank (later the Chase Manhattan)
was the richest and most powerful financial institution in the
United States at the time of Pearl Harbor. The Rockefellers owned
Standard Oil of New Jersey, the German accounts of which were
siphoned through their own bank, the Chase, as well as through
the independent National City Bank of New York, which also handled
Standard, Sterling Products, General Aniline and Film, SKF, and
ITT, whose chief, Sosthenes Behn, was a director of the N.C.B.
Two executives of Standard Oil's German subsidiary were Karl Lindemann
and Emil Helfferich, prominent figures in Himmler's Circle of
Friends of the Gestapo-its chief financiers-and close friends
and colleagues of the BIS's Baron von Schroder.
the lawyer Creekmore Fath wrote in the introduction to a book
entitled Patents for Hitler by Gunther Reimann
"Since the middle thirties, whenever a German business
group wanted to make an agreement with any business concern beyond
the borders of Germany, it was required first to submit a full
text of the proposed agreement to the Reichsbank. The Reichsbank
rejected or rewrote until \ the agreement met its approval. The
Reichsbank approved no agreement which did not fit into the plans
of the Nazi State and carry that state another step toward its
goal of world domination. In other words, any American firm which
reached an agreement or dealt with a German firm . . . was dealing
... with Hitler himself.
As war approached, the links between the Rockefellers and
the Nazi government became more and more firm. In 1936 the J.
Henry Schroder Bank of New York had entered into a partnership
with the Rockefellers. Schroder, Rockefeller and Company, Investment
Bankers, was formed as part of an overall company that Time magazine
disclosed as being "the economic booster of the Rome-Berlin
Axis. " The partners in Schroder, Rockefeller and Company
included Avery Rockefeller, nephew of John D., Baron Bruno von
Schroder in London, and Kurt von Schroder of the BIS and the Gestapo
in Cologne. Avery Rockefeller owned 42 percent of Schroder, Rockefeller,
and Baron Bruno and his Nazi cousin 47 percent. Their lawyers
were John Foster Dulles and Allen Dulles of Sullivan and Cromwell.
Allen Dulles (later of the Office of Strategic Services) was on
the board of Schroder. Further connections linked the Paris branch
of Chase to Schroder as well as the pro-Nazi Worms Bank and Standard
Oil of New Jersey in France. Standard Oil's Paris representatives
were directors of the Banque de Paris et des Pays-Bas, which had
intricate connections to the Nazis and to Chase.
Six months before the war broke out in Europe, Joseph J. Larkin
brought off his most audacious scheme in the Nazi interest, acting
in collusion with the Schroder Bank. Aldrich and the Schroders
secured no less than $25 million American for the use of Germany's
expanding war economy and accompanied it with a detailed record
(supplied direct to the Chase Bank in Berlin for forwarding to
the Nazi government) of the assets and background of ten thousand
Nazi sympathizers in the United States. The negotiations were
engineered with the help of Dr. Walther Funk and Emil Puhl.
In essence, the Nazi government through the Chase National
Bank offered Nazis in America the opportunity to buy marks with
dollars at a discount. The arrangement was open only to those
who wished to return to Germany and would use the marks in the
interest of the Nazis. Before any transaction could be made, such
persons had to convince the Nazi embassy in Washington that they
were bona fide supporters of German policy. They were told in
pamphlets sent out by the Chase National Bank in Manhattan that
Germany could offer glorious opportunities to them and that marks
would provide a hedge against inflation and would have much increased
value after victory b in the expected war.
As a result, there was a rush on marks. On February 15, 1939,
there was a summit meeting at the Chase in New York of representatives
of both Chase and Schroder banks on what was known as the Ruckwanderer
(Reimmigrant) scheme. Alfred W. Barth was the personal representative
of Winthrop Aldrich and Joseph J. Larkin, while E. H. Meili of
J. Henry Schroder represented that side of the association. At
the meeting the members discussed a proposal that the Reichsbank
should send a special representative to the Nazi consulate in
New York, which served as the headquarters of the Gestapo and
had its accounts at the Chase. The American group decided that
they should not take such a risk because their importing such
a person ` might reveal to the American public that they were
supporting Nazis. The minutes show that it was decided to "let
well enough alone and to conduct future business on behalf of
"the employment of numerous agents and sub-agents who
operate through the country. These agents and sub-agents in cooperation
with their respective principals, ourselves, can go a long way
towards educating Germans in exile and those sympathetic to the
Nazi cause through extensive newspaper advertising campaigns,
radio broadcasts, as well as through literature, etc. .
It is unanimously felt that it would be to the greatest advantage
of everyone concerned if . . . Berlin would instruct the various
consulates in the United States that all inquiries about . . .
transactions should be referred to ourselves, whose name should
be supplied not only to the various consular offices in the U.S.
but also to those who inquire at the consulates in respect to
The bankers agreed that special attention should be focused
;~ shopkeepers, factory workers, and others with little money
but great potential for Germany. They should be able-bodied young
men and women of pure Aryan stock. Above all, the present meeting
must never come to the attention of the American government. The
minutes of the meeting state:
"The ensuing publicity and the agitation that has been
furthered in certain quarters of this country [against similar
schemes] might possibly compel our Department of State to enforce
a clearing system between Germany and America, under which monies
due to American citizens such as inheritances, etc., would have
to be cleared. The results are too obvious: firstly, no benefits
are likely to accrue to Germany; secondly, the final outcome might
prove disadvantageous from Germany's standpoint."
Thus, the Chase directors and the barons von Schroder were
afraid that if Morgenthau discovered the true facts, the U.S.
government might take measures detrimental to the German government.
It was an act of total collaboration with the Nazis.
In May 1940 a prominent diamond merchant in New York City,
~ Leonard Smit, began smuggling commercial and industrial diamonds
I to Nazi Germany through Panama. Smit's company was theoretically
Dutch, which placed it under the provenance of the Nazis, but
its stock was in fact owned by the International Trading Company,
which was located in Guernsey in the Channel Islands. President
Roosevelt had issued a freezing order precluding the shipment
of monies to Europe, especially if these might seem to be to the
advantage of the Axis. A few days after the Smit account was frozen,
Chase officials unblocked the funds at Smit's request. The funds
flowed out to Panama, allowing diamonds to be sent through the
Canal Zone to Berlin.
On June 17, 1940, when France was collapsing, Morgenthau via
Roosevelt again blocked the French account to prevent money going
to the enemy. Within hours of the blocking, somebody at Chase
authorized the South American branches of the Banque Francaise
et Italienne pour l'Amerique du Sud to transfer more than $1 million
from New York to special accounts in the Argentine and Uruguay.
The Banque was 50 percent owned by the Banque de Paris et des
Pays-Bas (a Chase and Standard affiliate), and 50 percent owned
by the Mussolini-controlled Banca Commerciale Italiana. In South
America, these banks were working partly for the Axis. Larkin
continued to permit free withdrawals from the special accounts
even though he knew perfectly well that such accounts were cloaks
for Banque Francaise et Italienne funds.
On June 23, 1941, J. Edgar Hoover wrote to Morgenthau: "During
the monitoring of foreign funds at the Chase Bank, FBI discovered
various payments to oil companies in the United States. There
are indications that the Standard Oil Company of New Jersey has
been . \ receiving money from German oil sales by order of the
The Chase also handled transactions for the Nazi Banco Aleman
Transatlantico, which was, according to a Uruguayan Embassy report
dated August 18, 1943, "No mere financial institution. It
was in actuality treasurer or comptroller of the Nazi Party in
South America. It received local party contributions, supervised
and occasionally directed party expenditures, received party funds
from Germany under various guises and juggled the deposits . .
. all under the guidance of the German Legations." It was
in fact a branch of the Deutsche Uberseeische Bank of Berlin.
Most Nazi businesses in South America handled their affairs
through the Banco Aleman. Thus, the German legations throughout
Latin America possessed channels for distribution and receipt
of Nazi funds. The Paris Chase received large amounts of money
from Nazi sources through the medium of the Bank.
Most important of all, the Chase, with the full knowledge
of Larkin, handled the accounts of Otto Abetz, German ambassador
to Paris, and the embassy itself.
It is interesting to consider what, among other things, Abetz
and the German Embassy dealt with during the war. They poured
millions of francs into various French companies that were collaborating
with the Nazis. On August 13, 1942, 5.5 million francs were passed
through in one day to help finance the military government and
the Gestapo High Command. This money helped to pay for radio propaganda
and a campaign of terror against the French people, including
beatings, torture, and brutal murder. Abetz paid 250,000 francs
a month to fascist editors and publishers in order to run their
vicious anti-Semitic newspapers. He financed the terrorist army
known as the Mouvement Synarchique Revolutionnaire, which flushed
out anti-Nazi cells in Paris and saw to it they were liquidated.
In addition, Abetz used embassy funds to trade in Jewish art treasures,
including tapestries, paintings, and ornaments, for the benefit
of Goring, who wanted to get his hands on every French artifact
The Chase board in New York could not claim that it was unfamiliar
with these activities on the ground that communication with Occupied
France was impossible. The purpose of retaining diplomatic relations
with Vichy was that the U.S. government could determine what was
going on in Occupied France. A constant flow of letters, telegrams,
and phone calls between Paris and the Vichy branch of Chase in
Chateauneuf-sur-Cher kept Albert Bertrand informed, and in return
he kept New York informed; Washington was advised by Larkin. Despite
some criticism by Nazi comptroller Hans-Joachim Caesar, Vichy
had under French law the power to close the Paris branch at any
minute if New York so instructed. No such instructions were ever
The Secrets of Standard Oil
In 1941, Standard Oil of New Jersey was the largest petroleum
corporation in the world. Its bank was Chase, its owners the Rockefellers.
Its chairman, Walter C. Teagle, and its president, William S.
Farish, matched Joseph J. Larkin's extensive connections with
the Nazi government.
From the 1920s on Teagle showed a marked admiration for Germany's
enterprise in overcoming the destructive terms of the Versailles
Treaty. His lumbering stride, booming tones, and clouds of cigar
smoke became widely and affectionately known in the circle that
helped support the rising Nazi party. He early established a friendship
with the dour and stubby Hermann Schmitz of I.G. Farben, entertaining
him frequently for lunch at the Cloud Room in the Chrysler Building,
Teagle's favorite Manhattan haunt of the late 1920s and the 1930s.
Teagle also was friendly with the pro-Nazi Sir Henri Deterding
of Royal Dutch-Shell, who agreed with his views about capitalist
domination of Europe and the ultimate need to destroy Russia.
Because of his commercial and personal association with Herman
Schmitz, and his awareness that he must protect Standard's interest
in Nazi Germany, Teagle made many visits to Berlin and the Standard
tanks and tank cars in Germany throughout the 1930s. He became
director of American I.G. Chemical Corp., the giant chemicals
firm that was a subsidiary of I.G. Farben. He invested heavily
in American I.G. and American I.G. invested heavily in Standard.
He sat on the I.G. board with Fraternity brothers Edsel Ford and
William E. Weiss, chairman of Sterling Products.
Following the rise of Hitler to power, Teagle and Hermann
Schmitz jointly gave a special assignment to Ivy Lee, the notorious
New York publicity man, who had for some years worked for the
Rockefellers. They engaged Lee for the specific purpose of economic
espionage. He was to supply I.G. Farben, and through it the Nazi
government, with intelligence on the American reaction to such
matters as the German armament program, Germany's treatment of
the Church, and the organization of the Gestapo. He was also to
keep the American public bamboozled by papering over the more
evil aspects of Hitler's regime. For this, Lee was paid first
$3,000 then $4,000 annually, the money paid to him through the
Bank for International Settlements in the name of I.G. Chemie.
The contract was for obvious reasons kept oral and the money was
transferred in cash. No entries were made in the books of the
employing companies or in those of Ivy Lee himself. After a short
period Lee's salary was increased to $25,000 per year and he began
distributing inflammatory Nazi propaganda in the United States
on behalf of I.G. Farben, including virulent attacks on the Jews
and the Versailles Treaty.
In February 1938 the Securities and Exchange Commission held
a meeting to investigate Nazi ownership of American I.G. through
a Swiss subsidiary. The commissioners grilled Teagle on the ownership
of the Swiss company. He pretended that he did not know the owners
were I.G. Farben and the Nazi government. The commissioners tried
to make him admit that at least American I.G. was "controlled
by 'European' interests." Teagle replied dodgily, "Well,
I think that would be a safe assumption." Asked who voted
for him as a proxy at Swiss meetings, again he asserted that he
didn't know. He also neglected to mention that Schmitz and the
Nazi government owned thousands of shares in American I.G.
Teagle was sufficiently embarrassed by the hearing to resign
from the American I.G. board, but he retained his connections
with the company. He remained in partnership with Farben in the
matter of tetraethyl lead, an additive used in aviation gasoline.
Goring's air force couldn't fly without it. Only Standard, Du
Pont, and General Motors had the rights to it. Teagle helped to
organize a sale of the precious substance to Schmitz, who in 1938
traveled to London and "borrowed" 500 tons from Ethyl,
the British Standard subsidiary. Next year, Schmitz and his partners
returned to London and obtained $15 million worth. The result
was that Hitler's air force was rendered capable of bombing London,
the city that had provided the supplies. Also, by supplying Japan
with tetraethyl, Teagle helped make it possible for the Japanese
to wage World War II.
On September 22,1947, Judge Charles Clark delivered the final
word on the subject. He said, ''Standard Oil can be considered
an enemy national in view of its relationships with I.G. Farben-after
the United States and Germany had become active enemies."
The appeal was denied.
The Mexican Connection
Even the supposed enemies of The Fraternity were connected to
it by almost invisible threads. One of Jersey Standard's most
powerful rivals in the field of petroleum supplies to Germany,
William Rhodes Davis's Davis Oil Company, was connected to Goring
and Himmler. Davis was linked to Hermann Schmitz and I.G. Farben
through the Americans Werner and Karl von Clemm, New York diamond
merchants (who were first cousins to Nazi Foreign Minister Joachim
von Ribbentrop by marriage), and through the National City Bank.
The von Clemms were fanatical devotees of Germany, even though
both had become American residents in 1932. They used a device
typical in Nazi circles: a device copied, ironically, from the
Rothschilds. One brother stayed in Berlin, the other remained
in New York. They were connected to the Schroder banks through
interlocking directorships, and on the board of a company that
helped finance General Motors in Germany along with I.G. Farben.
In 1931 they financed the Gestapo with funds supplementing
those supplied by Schroder's Stein Bank. Yet another Fraternity
link was their involvement with the First National Bank of Boston,
an associate of the Bank for International Settlements. They conceived
the idea of unblocking First National's blocked German marks to
build a vast oil refinery for Goring's air force and for Farben
and Eurotank near Hamburg, with Karl von Clemm in charge. This
oil refinery would bypass the terms of the Versailles Convention
and supply Goring's so-called Black Luftwaffe, which was secretly
being prepared for world conquest.
In order to secure the oil for the refinery, the von Clemm
brothers had to find an American who would aid and abet them.
The choice was easy. From 1926 to 1932, Werner von Clemm had financially
sustained a largely unsuccessful oil prospector and confidence
trickster named William Rhodes Davis.
Davis was on the face of it unprepossessing. He was short,
not much over five feet, with a solid-gold left front molar and
a badly bowed left leg that contained a silver plate put there
after he was injured in a train wreck in 1918. His head was too
large for his body, and his face sported a broken nose. Yet despite
his lack of good looks he had the one indispensable quality needed
for success. He had the gift of gab. He was capable of talking
anyone into the ground. He spoke in superlatives. He never took
no for an answer, and he would shaft anyone when the chips were
Davis was born in Montgomery, Alabama, in 1889. Poorly educated,
he left school at sixteen and jumped a freight car. A kindly porter
gave him a job as candy butcher, selling chocolate and ice cream
from a tray. Railroad crazy, he graduated to brakeman, fireman,
and engineer in the Southwestern states until the collision put
him out of commission. Emerging from the hospital with a gimpy
leg, he used his plight to his own advantage by working as a comedian
on the Keith vaudeville circuit, making audiences laugh as he
wiggled his distorted member in a dance. When his popularity ran
out, he shipped off on tramp steamers as stoker, fireman, and
Back in the United States, he dabbled in the oil business
but consistently went broke. He was under frequent investigation
for a variety of swindles. People were fascinated, even hypnotized,
by him; but disillusionment would always set in, followed by the
inevitable lawsuit. He sold dry wells, manipulated stocks, and
set up and collapsed small companies, carrying the shareholders
In 1926 he was penniless. The von Clemm twins stepped into
the picture in 1933. Their support of him saved him from ruin
and imprisonment. As a result of this he became deeply committed
to Nazism. He was fascinated by the opulence of a Germany heavily
financed by American bank loans, the handsome, healthy men in
black uniforms, the pretty blond women. It all seemed a far cry
from the bread lines and pinched faces of America in the Depression.
After the deal with the German government over Eurotank, Davis
saw the way to make his fortune at last. He owned a few wells
through the von Clemms' good graces. With German money he could
certainly start pumping.
He traveled to Berlin in 1933. He had to have the personal
approval of Hitler before he could go ahead. He arrived at the
Adlon Hotel, where Karl von Clemm arranged a reception for him
to meet Hermann Schmitz of Farben, Kurt von Schroder, and other
German members of The Fraternity. He was welcome at once when
he gave the group the Nazi salute as he entered the room.
Next morning, two Gestapo officers delegated by Himmler arrived
at the door of his suite. They carried with them a letter from
the Fuhrer. The former brakeman and candy butcher was overwhelmed.
He could not believe he had received so signal an honor. The letter
asked him to meet with Finance Minister Hjalmar Schacht at the
Reichsbank. When he arrived, Schacht seemed cold and uninterested
and brushed the whole matter aside. Schacht already had deals
going with Walter Teagle and Sir Henri Deterding of Shell. What
did he want with this small fry?
Furious, Davis returned to the Adlon empty-handed. He wrote
to Hitler, insisting upon better treatment. Hitler replied immediately
in person, asking him to return to the Reichsbank the following
morning for another meeting.
Davis arrived in the boardroom at 11 A.M. As FBI records show,
Schacht smiled faintly in a corner, obviously in no mood to talk.
But a door flew open and thirty directors of the bank appeared,
to greet Davis with warm handshakes. Hitler strode in. Everyone
jumped to attention and gave the Nazi salute. Hitler said, "Gentlemen,
I have reviewed Mr. Davis's proposition and it sounds feasible.
I want the bank to finance it." Then he walked out.
It was clear to Davis that the directors of I.G. Farben, along
with Kurt von Schroder, had exercised influence over the Fuhrer.
Davis traveled to England, where he resumed an earlier business
relationship with Lord Inverforth's oil company. He obtained major
concessions in Ireland and Mexico. He traded Mexican oil for German
machinery when it proved impossible to export marks. Eurotank
was built. By 1935, Davis was shipping thousands of barrels of
oil a week from his wells in Texas and eastern Mexico.
Davis knew Senator Joseph F. Guffey of Pennsylvania, whose
friend Pittsburgh oilman Walter A. Jones had major contacts in
Washington. Through Guffey and Jones, Davis met with John L. Lewis,
the labor leader of the CIO. Davis worked hard on Lewis, convincing
him that national socialism was preferable to democracy and that
the German worker far exceeded in health, good humor and muscular
prowess the American equivalent. In 1936, Davis tried to influence
Roosevelt by pouring money into the election campaign. From then
on he was always able to telephone the Oval Office.
In 1937 he saw a major opportunity in Mexico. He was convinced
President Lazaro Cardenas would nationalize the oil fields. He
foresaw a way to corner all the oil in Mexico. In February 1938
he started bribing high-ranking officials in the Mexican government.
He made a close friend of Nazi Vice-Consul Gerard Meier in Cuernavaca,
who was allegedly encouraging Cardenas to invade and repossess
California, Texas, Arizona, and New Mexico.
Davis obtained the Mexican government's cooperation. He was
promised all the oil in Mexico when Cardenas expropriated it on
March 18, 1938. Cardenas kept his promise. On April 18, John L.
Lewis telephoned Cardenas's right-hand man Alejandro Carrillo.
Lewis told Carrillo that Davis would be making a deal with Germany
and Italy immediately and that these two countries were the only
two with which it would be safe for Mexico to deal.
Why did America's most famous labor leader support the arming
of the Nazi war machine? Because Lewis had major territorial ambitions
himself. He dreamed of a Pan-American federation of labor of which
he would be the unchallenged leader. Through Davis, and through
Cardenas, he would be able to consolidate the unions north and
south of the border. In this he had the total collusion of Vincente
Lombardo Toledano, head of the Mexican labor force.
By June 1938, Davis's first tanker was steaming to Germany
with thousands of tons of Mexican oil. But by 1939 he was already
running into trouble. On May 31 his chief geologist, Nazi Otto
Probst, was found murdered in his hotel room in Mexico City. Probst
had been strangled by a clothesline that was tied to the head
of his bed.
The German Embassy intervened and prevented an autopsy. FBI
investigators determined Probst had been poisoned. It turned out
he had bribed government officials and stimulated action against
communists. It was almost certainly a communist killing.
Communist cells infiltrated Davis's growing oil empire. He
used strikebreakers to vanquish the opposition and shipped millions
of barrels of oil until after World War II broke out in Europe.
Meanwhile, the von Clemm brothers profited enormously from
his success. Goring gave them the German franchise in hops, putting
them in virtual control of the beer business.
Along with Davis, they became multimillionaires.
The Telephone Plot
During the early days of 1942, Karl Lindemann, the Rockefeller-Standard
Oil representative in Berlin, held a series of urgent meetings
with two directors of the American International Telephone and
Telegraph Corporation: Walter Schellenberg, head of the Gestapo's
counterintelligence service (SD), and Baron Kurt von Schroder
of the BIS and the Stein Bank. The result of these meetings was
that Gerhardt Westrick, the crippled boss of ITT in Nazi Germany,
got aboard an ITT Focke-Wulf bomber and flew to Madrid for a meeting
in March with Sosthenes Behn, American ITT chief.
In the sumptuous Royal Suite of Madrid's Ritz Hotel, the tall,
sharp-faced Behn and the heavily limping Westrick sat down for
lunch to discuss how best they could improve ITT's links with
the Gestapo, and its improvement of the whole Nazi system of telephones,
teleprinters, aircraft intercoms, submarine and ship phones, electric
buoys, alarm systems, radio and radar parts, and fuses for artillery
shells, as well as the Focke-Wulf bombers that were taking thousands
of American lives.
Sosthenes Behn, whose first name was Greek for "life
strength," was born in St. Thomas, the Virgin Islands, on
January 30, 1882. His father was Danish and his mother French-Italian.
He and his brother Hernand, later his partner, were schooled in
Corsica and Paris.
In 1906, Behn and his brother took over a sugar business in
Puerto Rico and snapped up a small and primitive local telephone
company by closing in on a mortgage. Realizing the potential of
the newfangled telephone, Behn began to buy up more companies
in the Caribbean. He became a U.S. citizen in 1913. In World War
I, Behn served in the Signal Corps as chief of staff for General
George Russell. He learned a great deal about military communications
systems, and his services to France earned him the Legion d'Honneur.
Back in the United States, Behn became associated with AT&T,
of which Winthrop Aldrich was later a director. In 1920, Behn's
work in the field of cables enabled him to set up the ITT with
$6 million paid in capital. Gradually, he spun out a web of communications
that ran worldwide. He soon became the telephone king of the world,
making deals with AT&T and J. P. Morgan that resulted in his
running the entire telephone system of Spain by 1923. His Spanish
chairman was the Duke of Alba, later a major supporter of Franco
and Hitler. In 1930 Behn obtained the Rumanian telephone industry,
to which he later added the Hungarian, German, and Swedish corporations.
By 1931 his empire was worth over $64 million despite the Wall
Street crash. He became a director of-inevitably-the National
City Bank, which financed him along with the Morgans.
Behn was aided by fascist governments, into which he rapidly
interlocked his system by assuring politicians promising places
on his boards. He ran his empire from 67 Broad Street, New York.
When Hitler invaded Poland, Behn and Schroder conferred with t:
German alien property custodian, H-J Caesar. The result was that
the ITT Polish companies were protected from seizure for the duration.
Another protector of Behn's in Germany was ITT's colorful
corporation chairman, Gerhardt Westrick. Westrick was a skilled
company lawyer, the German counterpart and associate of John Foster
Dulles. Westrick's partner until 1938, the equally brilliant Dr.
Heinrich Albert, was head of Ford in Germany until 1945. Both
were crucially important to The Fraternity.
At the beginning of 1940, Behn decided to have Westrick go
to the United States to link up the corporate strands that would
remain secure throughout World War II. German Foreign Minister
von Ribbentrop was equally concerned that Westrick undertake the
mission. Westrick represented in Germany not only Ford but General
Motors, Standard Oil, the Texas Company, Sterling Products, and
the Davis | Oil Company.
On June 26, 1940, his Fraternity associates gave a party for Westrick
at the Waldorf-Astoria Hotel to celebrate the Nazi victory in
France. This was, of course, only appropriate. Fraternity guests
at this scorpions' feast included Dietrich, brother of Hermann
Schmitz of General Aniline and Film; James D. Mooney of General
Motors; Edsel Ford of the Ford Motor Company; William Weiss of
Sterling Products; and Torkild Rieber of the Texas Company. These
leaders of The Fraternity agreed to help in the free-trade agreements
that would follow a negotiated peace with Germany.
Westrick leased a large house in Scarsdale, New York, from
one of Rieber's Texas Company lawyers. He was seen entering and
leaving the house in the company of prominent figures of the Nazi
government and American industry. The New York Daily News sent
reporter George Dickson to investigate the meaning of a big white
placard with a large G on it in a window of a front second-floor
bedroom. The press generally was suggesting this formed some kind
of code for use by Nazi agents. Dickson wrote in his column: ''Phantom-like
men in white have been responding by day and night to mysterious
signaling from a secluded Westchester mansion-now disclosed as
the secret quarters of Dr. Gerhardt A. Westrick-invariably they
carry carefully wrapped packages . . . they salute with all the
precision of Storm Troopers, deliver the packages, salute again-
and silently depart . . . super-sleuthing finally solved the mystery
just before last midnight.'' Then Dickson delivered his death
blow to the story: The G sign was an invitation to the Good Humor
man to deliver his famous ice cream on a stick!
J. Edgar Hoover of the FBI determined that Westrick had illegally
obtained his driver's license by lying that he had no infirmities.
The purpose was achieved: Walter Winchell, Drew Pearson, and other
patriotic columnists blew up Westrick's Nazi connections out of
all proportion, and Westrick was asked by German Charge d'Affaires
Hans Thomsen to return to Germany at once.
But before he was ordered home, Westrick had been extremely
busy. He had gone to see Edsel and Henry Ford at Dearborn on July
11 at the Fords' urgent invitation, conferring with the Grand
Old Man and his son on the matter of restricting shipment of important
Rolls-Royce motors to a beleaguered Britain that urgently needed
them. He also visited with Will Clayton, Jesse Jones's associate
in the Department of Commerce, who went with Westrick to see Cordell
Hull to plead for the protection of German-American trade agreements
on behalf of his friends in the Texas cotton industry.
Clayton was the chairman of the U.S. Commercial Company, and
he helped protect Fraternity interests during World War II. Others
of Westrick's circle included, interestingly enough, William Donovan,
who became head of the OSS (precursor of the CIA) on its formation
in 1942. Westrick also made significant contacts with good and
true friends at Eastman Kodak and Underwood before returning home
via Japan and Russia.
After Pearl Harbor, at meetings with Kurt von Schroder and
Behn in Switzerland, Westrick nervously admitted he had run into
a problem. Wilhelm Ohnesorge, the elderly minister in charge of
post offices, who was one of the first fifty Nazi party members,
was strongly opposed to ITT's German companies continuing to function
under New York management in time of war. Behn told Westrick to
use Schroder and the protection of the Gestapo against Ohnesorge.
In return, Behn guaranteed that ITT would substantially increase
its payments to the Gestapo through the Circle of Friends.
A special board of trustees was set up by the German government
to cooperate with Behn and his thirty thousand staff in Occupied
Europe. Ohnesorge savagely fought these arrangements and tried
to obtain the support of Himmler. However, Schroder had Himmler's
ear, and so, of course, did his close friend and associate Walter
Schellenberg. Ohnesorge appealed directly to Hitler and condemned
Westrick as an American sympathizer. However, Hitler realized
the importance of ITT to the German economy and proved supportive
The final arrangement was that the Nazi government would not
acquire the shares of ITT but would confine itself to the administration
of the shares. Westrick would be chairman of the managing directors.
Thus, an American corporation literally entered into partnership
with the Nazi government in time of war.
Shortly after Pearl Harbor, Roosevelt had asked Nelson Rockefeller
to prepare a study of the communications systems of South America.
On May 4, 1942, the President had sent a memorandum to Henry Wallace
in his role as chairman of the Board of Economic Warfare, ordering
him to insure disconnection of all enemy nationals in the radio,
telephone, and telegraph fields. He had urged Wallace to eliminate
all Axis control and influence in telecommunications in Latin
America, acquire hemisphere interests of all Axis companies, insure
loyalty in employees, and disrupt direct lines to the enemy. He
had asked for a corporation to be set up to handle the financial
aspects of the program with the assistance and advice of an advisory
Wallace approached Secretary of Commerce Jesse H. Jones to
make the necessary arrangements. Jones set up the U.S. Commercial
Company to take charge of the matter. It was a characteristic
choice. The company's second-in-command was none other than Robert
A. Gantt, vice-president of ITT itself. Gantt continued to receive
salary from ITT while holding his position with the U.S. Commercial
Company. The rest of the board was largely composed of directors
of ITT or RCA (also a wartime partner in Nazi-American communications
The Hemisphere Communications Committee sat with a mixed Treasury,
State, Army, Navy, and U.S. Commercial Company board throughout
World War II, doing little more than discussing possible actions
against Axis-connected companies.
A pressing issue from Pearl Harbor on was the matter of ITT
amalgamating the telephone companies of Mexico. One of these,
Mexican Telephone and Telegraph, was owned by Behn outright. The
other was owned by the Ericsson Company, of which Behn had a 35
percent share in Sweden. The Ericsson Company was partly owned
by Nazi collaborator Axel Wenner-Gren and by Jacob Wallenberg,
Swedish millionaire head of the ball bearings firm, which played
both sides of the war.
In South America, Sosthenes Behn was in partnership (as well as
rivalry) with an even more powerful organism: the giant Radio
Corporation of America, which owned the NBC radio network. RCA
was in partnership before and after Pearl Harbor with British
Cable and Wireless; with Telefunken, the Nazi company; with Italcable,
wholly owned by the Mussolini government; and with Vichy's Compagnie
Generale, in an organization known as the Transradio Consortium,
with General Robert C. Davis, head of the New York Chapter of
the American Red Cross, as its chairman. In turn, RCA, British
Cable and Wireless, and the German and Italian companies had a
share with ITT in TTP (Telegrafica y Telefonica del Plata), an
Axis-controlled company providing telegraph and telephone service
between Buenos Aires and Montevideo. Nazis in Montevideo could
telephone Buenos Aires through TTP without coming under the control
of either the state-owned system in Uruguay or the ITT system
Messages, often dangerous to American security, were transmitted
directly to Berlin and Rome by Transradio. Another shareholder
was ITT's German "rival," Siemens, which linked cables
and networks with Behn south of Panama.
The head of RCA during World War II was Colonel David Sarnoff,
a stocky, square-set, determined man with a slow, subdued voice,
who came from Russia as an immigrant at the turn of the century
and began as a newspaper seller, messenger boy, and Marconi Wireless
operator. He became world famous in 1912, at the age of twenty-one,
as the young telegraph operator who first picked up word of the
sinking of the Titanic: for seventy-two hours he conducted ships
to the stricken vessel. He rose rapidly in the Marconi company,
from inspector to commercial manager in 1917. He became general
manager of RCA in 1922 at the age of thirty-one and president
just before he was 40. Under his inspired organization NBC inaugurated
network broadcasting and RCA and NBC became one of the most colossal
of the American multinational corporations, pioneers in television
After Pearl Harbor, Sarnoff cabled Roosevelt, "All of
our facilities and personnel are ready and at your instant service.
We await your command." Sarnoff played a crucial role, as
crucial as Behn's, in the U.S. war effort, and, like Behn, he
was given a colonelcy in the U.S. Signal Corps. He solved complex
problems, dealt with a maze of difficult requirements by the twelve
million members of the U.S. armed forces, and coordinated details
related to the Normandy landings. He prepared the whole printed
and electronic press-coverage of V-J day; in London in 1944, with
headquarters at Claridge's Hotel, he was Eisenhower's inspired
consultant and earned the Medal of Merit for his help in the occupation
Opening in 1943 with a chorus of praise from various generals,
the new RCA laboratories had proved to be indispensable in time
But the public, which thought of Sarnoff as a pillar of patriotism,
would have been astonished to learn of his partnership with the
enemy through Transradio and TTP. The British public, beleaguered
and bombed, would have been equally shocked to learn that British
Cable and Wireless, 10 percent owned by the British government,
and under virtual government control in wartime, was in fact also
in partnership with the Germans and Italians through the same
companies and proxies.
Simultaneously, the Transradio stations, according to State Department
reports with the full knowledge of David Sarnoff, kept up a direct
line to Berlin. The amount of intelligence passed along the lines
can scarcely be calculated. The London office was in constant
touch with New York throughout the war, sifting through reports
from Argentina, Brazil, and Chile and sending company reports
to the Italian and German interests.
In a remarkable example of the pot calling the kettle black,
Nando Behn, the nephew of Sosthenes Behn, cabled his uncle from
Buenos Aires to New York on June 29, 1942: "It is about time
something is done down here to cut out the sole communication
center in the Americas with Berlin. Our competitors, Transradio,
have a direct radio circuit with Berlin and you can be pretty
sure that every sailing from Buenos Aires is in Berlin before
the ship is out of sight."
General Robert C. Davis never seemed to question the fact
that his Swedish fellow board members were proxies of an enemy
government. Nor that secret documents, charts, and patents were
being transferred with speed, accuracy, and secrecy, with the
authorization of the Japanese Minister of Communications, to South
On the day Paris was liberated, August 25, 1944, Behn drove in
a jeep down the Champs-Elysees in a new role: He was "special
communications expert for the Army of Occupation." His right-hand
man, Kenneth Stockton, who had remained joint chairman with Westrick
of the Nazi company throughout the war, was with him in the uniform
of a three-star brigadier general. Behn made sure in Paris that
his collaborating staff were not punished by Charles de Gaulle
and the Free French. He was helped at high army levels to protect
When Germany fell, Stockton, with Behn, commandeered urgently
needed trucks to travel into the Russian zone, remove machinery
from ITT-owned works and aircraft plants-and move them into the
In 1945 a special Senate committee was set up on the subject
of international communications. Completely unnoticed in the press,
Burton K. Wheeler, "reformed" now that Germany had lost
the war, became chairman. An immense dossier showing the extraordinary
co-ownership with German and Japanese companies of RCA and ITT
was actually published as an appendix to the hearings, but almost
nobody took note of this formidable and fascinating half-million-word
transcript. Least of all were its contents noted by the committee
itself, which wasted the public's money by simply discussing for
days (with Fraternity figures like James V. Forrestal) the possibility,
quickly ruled out, of centralizing American communications systems.
There was not a mention from beginning to end of the discussions
of the questionable activities of RCA and ITT chiefs. Yet, in
a curious series of exchanges between Wheeler and Rear Admiral
Joseph R. Redman, who had been in charge of Naval Communications
during the early part of the war, the cat leaped out of the bag
in no uncertain manner. Apparently under the impression that the
hearings would never be published, Wheeler seriously sat and talked
of some of the reasons that such events had taken place. He asked
Redman the question, already knowing the answer, "To what
extent has American ownership of communications manufacturing
companies in foreign countries, such as Germany, Sweden, and Spain,
been of advantage, if any, to this country?" Redman replied,
"Of course, from an economic point of view, I am not qualified
to say, but I would say this from possibly a technical or research
point of view, you get a cross-exchange of information in the
This amazing revelation by a high personage won the response
from Wheeler, "And what about the disadvantages to us?''
Redman replied blandly, "While you are working on things
here that are developed for military reasons, there may be a certain
amount of leakage back to foreign fields."
Wheeler asked, "How could you keep a manufacturing plant
in Germany or in Spain or in Sweden, even though controlled by
Western Electric from exchanging information as to what they were
Redman replied, "Well, we have had to rely a great deal
upon the integrity of our commercial activities. Of course, if
a man is a crook, he is going to be a crook regardless of whether
you set up restrictions or not.''
Wheeler said, "Let us suppose that you have a manufacturing
company in Germany and also one here, and they are owned by the
same company, aren't they exchanging information with reference
to patents and everything else? . . . Admiral Redman, you are
not naive enough to believe, if a company has an establishment
in Germany and another in America, they are not both working to
improve their patents, are they?''
Redman admitted, ''No, sir."
Warming to his theme, Wheeler said, "Consequently, if
there are private companies that have factories over there and
also here, they're bound to exchange information. It seems to
me this has been going on in all kinds of industry. And that would
be true of the electronics industry, or any other manufacturing
industry, and whether they have a medium for such exchange in
the nature of cartels or something else, they exchange information.
What check has the Navy made to find out whether or not information
is exchanged in that manner?"
Redman said, ''We get a certain amount of information from
captured equipment, captured documents, and things like that,
and can find out if there is a leakage.... Of course we have depended
somewhat on our foreign attaches to get us some information on
these things.... I do not like here to get into a discussion of
intelligence because I fear we might get ourselves into trouble."
Wheeler said, "You might, but some of us don't feel that
way about it."
"Perhaps not," Redman replied.
Wheeler continued, "We might get into trouble in the
Senate, but they cannot do anything about it. They cannot chop
our heads off at the moment."
Senator Homer Capehart added, "For at least six years."
On February 16, 1946, Major General Harry C. Ingles, Chief
Signal Officer of the U.S. Army, acting on behalf of President
Truman, presented the Medal of Merit, the nation's highest award
to a civilian, to Behn at 67 Broad Street, New York. As he pinned
the medal on Colonel Behn, Ingles said, "You are honored
for exceptionally meritorious conduct in the performance of outstanding
service to the United States.'' A few years later Behn received
millions of dollars in compensation for war damage to his German
plants in 1944. Westrick had obtained an equivalent amount from
the Nazi government.
The Car Connection (on a separate page)
The Fraternity Runs for Cover
The Nuremberg Trials successfully buried the truth of The Fraternity
connections. Schacht, who was more privy to the financial connections
than most German leaders, gave an extraordinary performance, mocking,
hectoring, and pouring contempt upon his chief prosecutor-Biddle's
predecessor, Robert H. Jackson. Charged with engineering the war
when he had only wanted to serve the neutralist policies of Fraternity
associates, he was understandably acquitted. Had he chosen to
do so, he could have stripped bare the details of the conspiracy,
but only once in his entire cross-examination, when he admitted
to complicity in the shipment to Berlin of the Austrian gold did
he indicate any knowledge of such matters. Never in those days
on the witness stand was he asked about the Bank for International
Settlements or Thomas H. McKittrick. Not even in his memoirs was
there an inkling of what he knew.
Conveniently for The Fraternity, Goring and Himmler committed
suicide, carrying with them the secrets that Charles Bedaux, William
Rhodes Davis, William Weiss of Sterling, and William S. Farish
had carried to their graves. James V. Forrestal also ended his
life by suicide. In 1949 he hanged himself from the window of
the Bethesda Naval Hospital in Washington, D.C., where he was
suffering from advanced paranoid schizophrenia. Newspapers reported
him screaming that the Jews and the communists were crawling on
the floor of his room seeking to destroy him.
The rest of the conspirators lived out full life-spans.
Those who had opposed The Fraternity were not so fortunate. In
| 1948 the House Un-American Activities Committee, in one of its
l unbridled smear campaigns, named Morgenthau's trusted associates
Harry Dexter White and Lauchlin Currie as communist agents. Based
on the uncorroborated testimony of one Elizabeth Bentley, a self-confessed
Soviet spy who was turning state's evidence, the Morgenthau Treasury
administration was smeared in the eyes of the public. White and
Currie, those deeply loyal enemies of fascism, those investigators
of the Bank for International Settlements, of Standard, the Chase,
the National City Bank, the Morgans, William Rhodes Davis, the
Texas Company, ITT, RCA, SKF, GAF, Ford, and General Motors, were
effectively destroyed by the hearings. Currie disappeared into
Colombia, his U.S. citizenship canceled in 1956, and White died
of a heart attack on August 16, 1948, aged fifty-six, after returning
home from an investigative session. While the surviving Fraternity
figures flourished again, helping to form the texture of postwar
technology, those who had dared to expose them were finished.
The Fraternity leaders who had died could sleep comfortably in
their graves-their dark purpose accomplished.
with the Enemy