Watson would be satisfied with not knowing the specifics held by his European subsidiaries and managers—so long as those subsidiaries tenaciously pressed the Nazi regimes for proper rent payments on each and every machine, on every last one of billions of punch cards, on every spare cog and plate, and on all maintenance calls, all according to carefully worded contracts. Those demands for payment would start with the machines just removed from Paris by Reich officers in August 1940.60
Watson’s micro-management of the most infinitesimal details would now end. That power would be delegated to trusted senior managers, managers who would be rewarded for their most loyal and most difficult service with generous salaries, and then anointed with great promotions in the powerful foreign divisions of the global IBM that they themselves built. Corporate security for these men would be seemingly endless. Even their children would find lucrative association with International Business Machines. In the company’s literature, they would be remembered as “heroes.”61
The corporate haze would last for decades. With all the European intermediaries, ownership nominees, corporate intrigues, belligerent German managers, and Nazi custodians, it would be impossible to reliably point a finger at the New York office. Hollerith machines could be placed in museums in exhibits tying their use to the most heinous aspects of the Third Reich, but the deniability would be unshakable. For, in truth, from 1933 until the summer of 1940, Watson personally micro-managed virtually every Dehomag decision. From August 1940, IBM NY made sure it did not know most of the gruesome details of Hollerith use. It was better not to know.
The company that lionized the word THINK now thought better of its guiding mandate. Incriminating dealings with Nazis did surface from time to time as frustrated war-besieged subsidiary managers would invariably become too specific in the cables to New York. These communications were discarded, however, and if necessary disowned by IBM NY.62 By placing itself in the dark, IBM could forever truthfully declare it made millions during the war without knowing the specifics.
An emboldened Watson now decided more than ever to fight back. Immediately after Taylor’s September 30 telephone call warning of German receivership, Watson elected to confront Heidinger head on. To do so, he would need the strongest ally. He knew who to call.
Watson contacted the U.S. State Department.
IBM HAD BEEN cultivating contacts at the State Department for years, starting at the top with Secretary of State Cordell Hull, and, of course, President Franklin D. Roosevelt. But entrenched influence was sought at all levels down to the lowliest clerks and bureaucrats in the Department’s technical offices and overseas installations. Indeed, it was these people who rendered the most service.63
Commercial attaches and officers in the Foreign Service were supposed to assist U.S. business abroad. That has always been their charge. But with Watson’s widely published letters of greetings, endorsements, and congratulations from Hull, the rank and file of the Foreign Service soon learned that Thomas J. Watson was more than just another citizen, and International Business Machines more than just another American company. Increasingly, diplomats and Foreign Service staffers became only too eager to please the firm and its stellar leader. Eventually, Watson assumed the status of unofficial ambassador-at-large, or perhaps something even larger. What was good for IBM became good for the United States. The protection and success of IBM was elevated to a defined “national interest.” As such, IBM subsidiaries around the world learned to use American embassies and consulates as strategic partners in their routine business activities.64
The special relationship started in earnest in late 1936. Just after Watson was elected president of the International Chamber of Commerce, he managed to gain unprecedented levels of official recognition for the body and his assumption of its helm. Ambassadors, consuls general, and attaches were invited to attend, and IBM made special arrangements for their passage and hotels. Diplomats and other State Department bureaucrats were always welcome at the company’s door or its lavish events. Watson traded on the perception throughout the Department that he was a personal and influential friend of Hull, and a major donor to Roosevelt. Designating who would represent the Department at a Watson event was frequently a process handled with great deliberation. A dozen or so memos might circulate back and forth to numerous offices and bureaus as the collective decision was carefully rendered.65
At first, rank and file State Department officers offered simple cooperation. For example, in fall 1936, the third secretary of the U.S. Embassy in Moscow conferred regularly with IBM’s office there about Soviet government attempts to break IBM’s monopoly. Cooperation was a two-way street. Watson would continuously check his busy travel and social schedule with State officials. In spring 1937, various letters were exchanged between the White House, the State Department, and Watson over whether he should extend official felicitations to the French government at a commemoration event.66
After Watson had received the medal from Hitler at the 1937 ICC Berlin Congress, junior officials at the State Department had begun advocating for IBM’s unique business advantage. In particular, helping IBM avoid or reduce foreign taxes and tariffs was a continuing effort. For example, in August 1937, the U.S. Embassy in Paris helped IBM’s French subsidiary gain a better tariff rate. Just days after the Paris Embassy helped with French customs, IBM sought similar assistance in Czechoslovakia. Tax authorities in Prague were raising IBM’s tariffs. IBM’s Foreign Division wrote to the Trade Agreement division in Washington, D.C., asking for help “to induce the [Czech] government to revert to the former classification.”67
In some cases, the lower echelons of America’s Foreign Service were eager to curry favor when they succeeded for IBM. In Bucharest, on September 28, 1938, Legation Secretary Frederick Hibbard sent report 543 entitled “Assistance Given International Business Machines Corporation,” bragging, “Mr. Schotte of the Geneva office thanked a member of my staff for assistance given the company about a year ago. He stated that following the advice of the Legation, he [Schotte] had been able to prevent a tax suit against the Romanian subsidiary calling for the payment of 60 million lei in back taxes and fines…. This item should be added to the list of accomplishments of the Legation.”68
Lavish letters of praise for individual ambassadors or their attaches were often sent by senior IBM executives to Hull to show gratitude and reward their effort.69
Watson’s almost regal movements in Europe were regularly followed and reported with the utmost detail by American diplomats who were always on hand. Watson’s visit to Oslo was typical. The U.S. Embassy there quickly reported “in quintuplicate” that “his train was met by a delegation representing the local membership of the International Chamber and by the Secretary of the Legation. Shortly after reaching the Legation, Mr. Watson received the press, responding to questions in a manner which evoked considerable favorable publicity in the newspapers.”70
There seemed to be no limit to the service lower-echelon State Department staffers were willing to extend. Indeed, while World War II was raging, one Department administrator found time to write a letter to Frances Munos, an IBM employee in New York, passing along a message from a family member in Santiago, Chile, “stating that she desires to have you purchase shoes for her use.”71
With as much service as State Department lower-echelon officers were enthusiastically providing, it is no wonder that Watson turned to America’s commercial attache in Berlin, Sam Woods, to use the weight of the United States government to help IBM confront Heidinger. Woods was enamored with Watson and only too glad to act as IBM’s post-man, openly passing messages across the Atlantic through diplomatic pouch and coded cable, and providing clerical facilities within the embassy. More than that, Woods openly draped IBM’s negotiation in the mantle of American officialdom that Watson hoped would make the difference.