Watson, on the other hand, was a steel-nerved businessman. He saw the Dehomag takeover of 1922 as just another opportunity to swoop up a lucrative business for virtually nothing. What could be more natural? Hating a business contact was of no use to a man like Watson. Heidinger merely represented a factor to control in the pursuit of profits.
But Heidinger was woven from too much feisty fabric. His austere face pulled tight over high cheekbones beneath a worried brow framed the very picture of contentiousness. “I would be the last to submit to domination,” Heidinger wrote to IBM’s Nazi oversight panel in recalling his dislike for Watson. “I do not, as a matter of principle, let anyone tell me to do anything.”3
Warlike in his business demeanor, Heidinger enjoyed corporate combat and tenacious lawsuits. He could litigate a narrow commercial issue for years and obstruct a crucial company program at the eleventh hour unless he received his due. Like Hollerith himself, Heidinger was willing to battle colleagues as well as adversaries. An IBM assessment of Heidinger termed him a “hardened survivor” whose “life… was not a serene one.” The description added, “He throve on fights.”4
More than just volatile and unpredictable, no one at IBM trusted Heidinger. Company executives constantly suspected him of chiseling IBM for small and large sums, and thwarting their routine audits to identify the amounts. “Mr. Heidinger is a very selfish man,” wrote one IBM auditor who in spring 1934 tried to verify Dehomag’s tax information. At about that time, another IBM auditor in Paris reported back to the New York office, “Just in order to avoid any misunderstanding, we wish to advise that we are not aware of what is taking place… insofar as the recording of the inventories and the closing of the books is concerned.” The company’s staid blue-suited accountants learned to be reluctant in approaching Heidinger less they incur his volcanic temper. In that vein, another auditor, also writing in spring 1934, complained, “it is practically impossible to do anything by correspondence, due to the fear of unduly exciting our German friends.”5
Even before Hitler seized power, IBM had profited enormously from Dehomag. By 1927, profits had returned more than 400 percent of IBM’s purchase price.6 Now, as part of the Third Reich’s industrial team, Dehomag’s future was catapulting. Nazi demands for a universe of punch card applications promised horizonless profits. Merged IBM entities, a Europe-wide territory, and a new factory presaged a magnificent new Dehomag whose fortune would rise along with the fortune of the Third Reich. Yet who would prosper? Would it be the German people? the Aryan race? Heidinger personally? No. It would be Watson and IBM. Heidinger roiled at the prospect.
Normally, Watson would not tolerate even a spark of rebellious management, let alone continuous insolent defiance. It was indeed a measure of Dehomag’s indispensable importance to IBM’s long-range global goals that the micro-managing, egocentric Watson would endure clash after clash with his own executives in Germany. Likewise, Heidinger was resourceful and energetic enough to walk away from any distasteful foreign enterprise and pursue his own commercial dominion. In truth, the two men desperately needed each other.
Watson needed Heidinger’s connections to the NSDAP to turn Nazi plans into IBM profits. And he needed Heidinger’s cooperation if those profits were to discreetly detour around the Reich payment moratorium. One method was requiring its own German subsidiary to pay IBM “royalties.” Revenues could then be deemed a “necessary expense” to Dehomag rather than a profit to the parent company. Dehomag monies could occasionally be transmitted to IBM in this form. As IBM’s European manager reassured New York executives in a 1934 letter, Dehomag Manager Herman Rottke promised to “pull every wire and use every effort to continue [royalty] payments.”7
For Heidinger’s part, he needed Watson to arm the statistical soldiers of the Third Reich for the coming war against European Jewry and territorial conquest. For now, the machines would still be imported from the United States. But even after the new factory was rushed into operation, allowing Hollerith machines to be manufactured in Berlin, the precious punch cards themselves, painstakingly produced to an exacting specification, could still be ordered from only one source: IBM in the United States.
Both men would vault their tempers and stratagems across the Atlantic as Heidinger labored to expand Dehomag’s commercial cooperation with the Third Reich, and Watson struggled to retain all the profits, often cutting Heidinger out.
To achieve his goals, each man had to cooperate in an international campaign of corporate schizophrenia designed to achieve maximum deniability for both Dehomag and IBM. The storyline depended upon the circumstance and the listener. Dehomag could be portrayed as the American-controlled, almost wholly-owned subsidiary of IBM with token German shareholders and on-site German managers. Or Dehomag could be a loyal German, staunchly Aryan company baptized in the blood of Nazi ideology wielding the power of its American investment for the greater glory of Hitler’s Reich. Indeed, Heidinger and Watson both were willing to wave either banner as needed. Both stories were true. Watson had seen to that.
Dehomag’s Aryan facade was carefully constructed. In newly Nazified Germany, many good and decent businessmen looked the other way, dread-ing the day stern-faced men sporting swastika armbands knocked on the door demanding anti-Semitic loyalty oaths, subscriptions of financial support, and ultimately invasive Party control via kommissars. At the same time, some could not wait to join the movement. Dehomag was among those who could not wait. IBM was among those who did not mind.
Early on, Heidinger sought out the sponsorship of the Nazi Party hierarchy. He wanted Dehomag draped in the authority not only of the government but the Nazi Party itself. However, before the NSDAP would ally with Dehomag, the powerful Political and Economics Division demanded, in December 1933, that the company answer some pointed questions. The Party’s probe was designed to detect just who controlled the corporation, whether the firm was German enough, Nazi enough, and strategic enough to receive the Party’s seal of approval.8
Heidinger proffered incisive, if dubious, written replies. “My company is an entirely independent organization which has acquired patent rights from their American owners,” he insisted, and is merely bound to pay “royalties.” But, argued Heidinger, “any worries as to whether or not excessive amounts of German funds are being exported are thoroughly unjustified,” especially since most of the royalties remained in blocked German bank accounts until released by the government.9
One Party question inquired why Dehomag could not sell any wholly German-built office equipment instead of American products. Heidinger explained that the Reich could not achieve its goals without Hollerith tabulators. “[A]side from ours, no other punched card machinery is manufactured in Germany,” asserted Heidinger, adding, “Our machines cannot possibly displace other machines, because the work they are called upon to perform cannot be accomplished by the other machines.”10
Heidinger concluded his written comments by reminding the Party examiners that Dehomag had been “entrusted… with the compilation of statistics for the Prussian census.” He added knowingly, with that air of ominous lack of specificity so common in those days, “Moreover, negotiations are now pending in Berlin, their object being an agreement between my company and the SA [Storm Troopers] high command in that city for the compilation of certain necessary statistics.”11 Nothing more need be said. Dehomag was approved.