This is a story of a peculiar type of cartel. Generally speaking, the cartel arrangements which have been heretofore considered deal with instances wherein the cartel control stems from Germany, or one of the other Axis countries, and into the United States for the purpose of curtailing production of critical materials following a deliberate plan of Nazi economic warfare. Previously a villain like I.G. Farben or Siemens Halske has reached its tentacles into American Industry and curtailed production through patents, licensing agreements, and other types of control. This story deals with an American firm which has deprived not only our own citizens by limiting supply but also the citizenry of the world. Americans and Germans alike have felt the pinching hand of Thomas J. Watson and International Business Machinery manifested through universal limited production and international high prices. In this case, the monopoly control originates in the United States and operates throughout the world. And what Hitler has done to us through his economic warfare, one of our own American corporations has also done. In this “arsenal of democracy,” which supplies materiel for over half the warring world, limited production spells our worst enemy. Hence IBM is in a class with the Nazis.
Further, we have a peculiar clash of interests. This [World War] is a conflict of warlike nationalistic states, each having certain interests. Yet we frequently find these interests clashing diametrically with the opposing interests of international corporate structures, more huge and powerful than nations. These corporate entities are manned not by staffs of citizens of any nation, but by citizens of the world looking solely to the corporate interest and pledging loyalty thereto. We see revealed [in] this clash, this dichotomy of culture between our nation and an international corporation whose interests do not coincide….
Dr. Hollerith was employed by the U.S. Bureau of Census in 1880 where it was necessary for him to spend much time in the routine of addition and subtraction. As a timesaving device, he invented these tabulating machines run by electric current for the use of the Census Bureau. He sold his patents to the predecessor of International Business Machines Company, who set up their legal monopoly based on these patents. The patents have since expired but so many additional patents were taken out by IBM on improvements and refinements of the original Hollerith machines that the field has been entirely weighted down and the legal monopoly extended. The monopoly still exists because of the many patents taken out by IBM on many small technical changes but all based upon the original Hollerith patents. A question might well be raised as to whether the patents belong to Dr. Hollerith or the U.S. Government in the first place…. Since Dr. Hollerith was an employee of a branch of our government and since there was a definite connection between his work of computing and his invention, the question might well be raised as to whether the patents belonged to Dr. Hollerith and were his to sell or to the U.S. Government at the time of their grant….
As to the fact that these monopolies [IBM and the ones IBM imposed on Powers and Remington Rand in the U.S.] existed, there can be little doubt. These companies deliberately conspired to limit production, dictate price and restrain competition as much as possible. This fact has been declared by the United States Supreme Court. We see a monopoly inflicted on the people of the United States. We shall now attempt to show the effect of this monopoly on the outside world, the international cartel arrangement.
This is a story of circumstantial evidence. Practically no documentation or direct evidence can be produced proving the existence of the cartel. Yet one indirect source after the other points to that ultimate conclusion and the indirect evidence is so frequent as to be almost undeniable….
These international corporations have grown so large that very often their interests and the national interests within which they are supposedly contained do not coincide. The personnel of IBM, though nominally citizens of the United States, is actually composed of citizens of the world. Their loyalties to their corporation know no national bounds. Mr. Thomas J. Watson, President of IBM, was one of the leading figures in the international peace movement—not for altruistic motives alone. IBM’s far-flung empire was going much too smoothly to be interrupted by war and Mr. Watson’s goal is profit….
Certainly it can be said that his company is not an American company, but an international company…. The company has not only worked hardship on the people of the U.S. but also people in Germany. When the German section of the world monopoly grew too burdensome on the German people, the Hitler Government apparently sought to interfere…. The entire world citizenry is hampered by an international monster and the indirect evidence herein presented seems to the writer conclusive enough to warrant an extensive search into files of the companies mentioned so that direct evidence may be obtained.5
THROUGHOUT 1942, a number of American companies were grandly exposed for extensive dealings with Nazi Germany. A so-called “Proclaimed List” of blacklisted companies had grown from 1,800 in the summer of 1941 to 5,000 European and Latin American companies by mid-January 1942. These prohibited firms were considered either Nazi-owned or Nazi-connected, whether located in Nazi Europe or in neutral countries such as Portugal, Spain, or Switzerland. Of course, all direct trading with Germany and Italy was prohibited. Some firms were included merely because they were considered Axis sympathizers.6
For example, on January 14, 1942, five controlling senior executives of General Aniline and Film Corporation, America’s third-largest dyestuff manufacturer, were banned from the company by the Treasury Department. All were American citizens, but of German birth, and had for years been suspected of close ties to the German conglomerate I.G. Farbenindustrie. The suspicion was that I.G. Farben either secretly owned Aniline, or could dominate it through the five German-Americans.7
On March 26, 1942, a Congressional Committee castigated Standard Oil of New Jersey for turning over synthetic rubber processes to the German Navy while withholding the same technical information from the United States and British militaries. Investigators cited company correspondence and a secret pre-Pearl Harbor trade arrangement with I.G. Farbenindustrie to permit a “modus vivendi which would operate through the term of the war, whether or not the United States came in.” Senator Harry Truman, who headed up a special defense investigating committee, publicly excoriated Standard Oil’s arrangement as “treason” and “an outrage.” An assistant U.S. attorney general described the pact as a “devise for the continuation of the conspiracy through the war.” In reporting the scandal, the New York Times ran an adjacent article headlined “Standard Oil Men Silent on Charges.”8
Further revelations documented that Standard Oil tried to do business with Nazi firms in Occupied France, including the construction of an aviation fuel refinery. In its allegations against Standard Oil, the Justice Department repeatedly emphasized that scores of American companies had been quietly capitalizing on relationships with Nazi Germany. In fact, said the Justice Department, Farben alone had consummated contracts with more than 100 hundred American firms, and that those efforts had retarded America’s military preparedness by tying up patents and resources.9
Certainly scores of American firms used international connections to trade with the enemy. None of them needed more than their own profit motive to pursue such deals. Many of them were proud members of the International Chamber of Commerce, which, during Watson’s tenure, espoused an official enthusiasm for trade with the Hitler regime.