Machine by machine, office by office, IBM NY began recouping the proceeds of Dehomag’s service to the Third Reich. In doing so, the utmost care was taken to walk the thin green line between conquest and commerce. Chauncey summarized his own conduct in a report to New York. Uppermost in his mind, was the “desire that neither I nor IBM should be in any way criticized.”71
Chauncey was completely successful. Endless additional meetings en sued with the many transient bureaucratic faces of what was known as OMGUS (Office of the Military Governor-U.S.), as well as its counterparts in the Russian occupying administration. IBM was cautious, persistent, and consistently above reproach. This perception was indispensable because with the horror of 6 million murdered Jews, and perhaps an equal number of other Europeans, as well as billions of dollars, francs, and crowns in plunder and devastation, war crime trials were being organized. Reparations from the German commercial sector were being readied. IBM very much wanted to be excluded.
MILITARY LAW NO. 52 was a problem.
Article I stated: “All property in occupied territory is subject to seizure of possession or title of management, supervision or otherwise, which is owned or controlled in any way by: (a) The German Reich or any sub division or agency thereof; (b) any Governments or nationals at war with the United Nations at anytime since September 1, 1939; (c) the outlawed NSDAP… or its agencies; (d) persons held by Military Government under detention.” Dehomag qualified on all accounts. It was controlled by known Nazis, Heidinger and Rottke, who also owned 10 percent of the shares. Rottke and Hummel had been arrested for their Nazi affiliations. The company’s Board of Directors since 1941 was completely Nazified. As part of the war machinery, Dehomag was under the jurisdiction of the Maschinelles Berichtwesen, a wartime agency.72
Chauncey had reviewed a summary of Military Law No. 52 and other Allied decrees as early as May 21, 1945.73 IBM sought to be carved out of the sphere of culpability and absorbed into the apparatus of victory. It wanted restitution for its war-damaged property, not to become a candidate for reparations. IBM did not want to join the roster of all those deemed part of what was termed “Nazi conspiracy and aggression.” Fortunately for IBM, there seemed to be a concerted effort to keep Watson and the company out of the reparations discourse.
On October 16, when Assistant Secretary of State Clayton first wrote to the Pentagon about the troublesome Lieutenant Colonel Flick and Dehomag, the third paragraph originally referred to the issue of potential reparations. “As you know,” Clayton initially asserted, “this Government’s policy towards German reparations, external assets, and combines is not fully implemented and it is my belief that for these and other reasons it is undesirable at this time to foster or support the restoration of private business relationships.” But a State Department policy review of the proposed draft objected to the paragraph. “Attached is a redraft version of the Clayton-Hilldring letter concerning the activities of Lt. Colonel Flick,” wrote Walt Rostow. “As you will note, I have simply removed the offending paragraph.” A large X was drawn across the draft, and a shorter version mailed.74
On Chauncey’s first post-war visit to occupied Stuttgart, in October 1945, Major Teasdale indicated that all the corporate enterprises in the heavily industrial Sindelfingen area were slated to be liquidated for reparations. Chauncey’s report back to New York confirmed, “He [Major Teasdale] stated that all of the property in the American zone belongs to the American government for reparations, and that if and when property owned by an American was turned over to him, it would reduce the reparation claim of the United States and consequently the reparation claim of the American owner.”75
On his second trip, Chauncey arranged for a personal visit to Deputy Military Governor Clay’s office where he was introduced to General Clay’s assistant, Gen. William Draper. Draper, a friend of Watson’s, headed up OMGUS’ Economic Branch. Draper, in turn, introduced Chauncey to Col. John A. Allen, the man in charge of the Restitution Branch. Chauncey argued IBM’s case “that the American viewpoint would be the restoration of American-owned concerns to their owners, and that it would not be… that such companies would be used for general reparations, as has been proposed.” Chauncey was told that no decision had yet been formulated.76
IBM’s view held that even if their machinery and corporate acumen had helped organize and optimize the Third Reich’s aggression, they should be held exempt—ipso facto—by virtue of its American ownership. The company contended that its Nazi payments were protected revenues.
However, the prevailing thought among the Allies and those who demanded justice was that all in government and the private sector who helped Hitler destroy Europe and commit genocide should be held accountable in war crimes. Their war gains and economic wherewithal were not sacrosanct. Rather, they should be sacrificed as reparations to the victims—nations and individuals both. Whether dressed in jackboots and swastikas, or suit and tie, accountability was demanded. Indeed, the world understood that corporate collusion was the keystone to Hitler’s terror. Businessmen who cooperated with Hitler were considered to be war criminals or “accessories to war crimes.”77
OMGUS established a Division of Investigation of Cartels and External Assets to identify those responsible for the financing and corporate support of Nazi Germany. By November 1, 1945, twenty-one major bankers were arrested for their role in helping German rearmament and the plunder of occupied nations. Twenty more bankers were targeted. The financial institutions identified included Germany’s most respected: Deutsche Bank, Dresdner Bank, and Commerzbank.78
German magnates from the steel, finance, automotive, and chemical industries were also arrested and sent to the Nuremberg dock. Names such as Krupp, Thyssen, and Flick became synonymous with corporate war criminality. Even companies with American ownership or affiliation were spotlighted. For example Roehm & Haas of Darmstadt was investigated. The firm, which manufactured Plexiglas bulletproof materials in Germany, was affiliated with its American-owned counterpart in Philadelphia. Each of the corporate twins was half-owned by German and American citizens. The New York Times reported, “Files located in Darmstadt reveal the history of the joint efforts of the German Roehm & Haas and the American Roehm & Haas to nullify the action of the Alien Property Custodian and restore the German interest in the American firm.”79
By January 5, 1946, hundreds of German factories were slated to be sold to Americans to effect reparations. These factories covered a range of industry from entrenched armament firms, such as the Borgward torpedo plant at Bremen, to Norddeutsche Dernierwerke’s factory number 4 at Rothebeck, which manufactured simple household utensils and beds.80 They were sold both because they represented economic assets of the German people to be liquidated in war culpability, and because they were war vendors.
Within another week, OMGUS had destroyed or liquidated half of I.G. Farben’s forty-two German plants. Two dozen of its directors and corporate managers were indicted on five war crimes. One count specified “the planning, preparation, initiation and waging of wars and invasions of other countries.” A second identified “crimes against humanity through participating in the enslavement and deportation for slave labor of civilians.” A third count accused the executives of “participation in a common plan or conspiracy to commit crimes against peace.” Ten of the defendants were acquitted. The remainder were found guilty and sentenced to varying terms in prison.81