HUMMEL: They identify Watson and IBM as one person, just like you cannot divide Patterson and the National Cash Register Co.
CHAUNCEY: But Patterson owned the National Cash.
HUMMEL: But the letter was written in [such a] form that it was the instructions from Mr. Watson.
CHAUNCEY: Is there anything I could do to correct that misunderstanding, that it was IBM’s gift and not Mr. Watson’s?
HUMMEL: Don’t try—they will treat you politely and let you go, because they will say or think that you cannot pay for an insult. Here is the letter from [IBM] Geneva, 24 July, saying that Mr. Watson had instructed that the money be given.
CHAUNCEY: Did you present it as a gift from Mr. Watson or as a gift from IBM?
HUMMEL: We had to show the letter. We could not risk saying it was a gift from IBM without having something to show…. It is personal danger to us… if we did not show the letter. If we failed to show the letter we would have been sent to the concentration camp. We had to take all of Mr. Watson’s pictures down because of the visitors or officials who considered that when Mr. Watson insulted Hitler he also insulted them.
CHAUNCEY: Then when did you decide it was necessary to give up the [stockholder] majority—only after the return of the decoration?
HUMMEL: Oh, sure… when the medal was returned it showed that [the]… animosity against us was now proved. Do not worry but when things are settled they have their intentions to reply to Mr. Watson. The Americans refused to give Germany cotton, and Hitler said we will make cotton. Now we have cotton—and rubber and all the other things they wouldn’t let us have without dollars.91
Chauncey turned to the economic outlook. Was Dehomag worth saving? Could it be saved? Hummel equivocated from moment to moment on the prospects. In truth, no one knew in this fluid wartime situation just what Germany’s leaders would decide. Would they choose to angrily excise IBM and proceed with a dubious patchwork of punch card systems that would take months if not years to meet the Reich’s escalating needs, or would some pragmatic modus vivendi be adopted?
CHAUNCEY: Then you are going to lose a lot of business after the war?
HUMMEL: I think… Hitler has so much in mind now, improvements, and you saw in the paper the housing plan! We feel that we will lose that business if German competition comes up. Otherwise not. Very few will discontinue machines after the war—except that they may and probably will change our machines for German machines. I think if we do not get German competition, our business will grow tremendously….
CHAUNCEY: When did you first learn… that a new German company should be formed to compete with Dehomag?
HUMMEL: There are dozens of people who have discussed that and Heidinger believes he knows much more. People say, “We will build a factory—and we will get you.” Take [the] case if Goering [Hitler’s second-in-command] buys Bull patents and gets into the tabulating business. What do you think would happen then?
CHAUNCEY: What information have you obtained as to the purchase of Powers in Germany—I have heard now that it may not be Siemens?
HUMMEL: It may be Goering—whenever the Government feels that the industry should be started, it will put it in Hermann Goering Works. You may be sure that if that happens, Dehomag is no longer in business. Look at what Bull has been doing in France—they claimed that you tried to buy them out but that they would not sell out to Americans. Our security is—Rottke [’s] and mine—is continuing with IBM, because we would have great difficulty with [any new] German partners. We merely think in our hearts that we must show you the danger. If you don’t act on it, all right! We were attacked and attacked, and when Mr. Watson got the decoration it helped us. We have a picture of it—here—and a picture of Mr. Watson and Hitler. It was advertising to us. When we wanted something we could show that and say: “You can’t refuse.” With officials and customers it was a good selling point, and when it was returned it had the opposite effect and worse.92
Chauncey now methodically reviewed for himself exactly what business arrangements Dehomag was engaged in throughout Europe, country by country. At the time, IBM had devised complicated and often circuitous methods of payment that generally but not always followed a 75-25 percent split of revenues between New York and Dehomag. IBM subsidiaries across Europe would generate orders for equipment, parts, and punch cards. Dehomag would supply these, either directly or through the subsidiaries it dominated in Nazi-conquered territory. IBM NY’s 75 percent share of the money would sometimes be sent to Geneva, and sometimes to Berlin. Germany would often—but not always—receive its 25 percent share by crediting what it owed IBM for spare parts, the so-called “goods account.” But all these payment procedures were frequently modified—or even set aside—as conflicting country-by-country wartime regulations emerged.93
IBM received its money either through Geneva, which openly transferred the sums to New York, or through Dehomag, which blocked the revenues until war’s end, although they could be used to grow the subsidiary and purchase real estate.94 Chauncey now wanted to make sure Dehomag was still abiding by the payment procedures as much as possible.
CHAUNCEY: Have you ever had any understanding with IBM in Geneva about the classification of machines for royalties?
HUMMEL: We feel obliged to pay on sorters and tabulators. The Devisenstelle [Foreign Exchange Office] will not permit us to pay royalties on other machines. Patents on the sorters will soon expire, and now there is a serious question whether they will say you can’t pay royalties on expired patents. We have to get all the license statements verified by the Government.
CHAUNCEY: Well, I intend to reserve all our rights…
HUMMEL: Austria. IBM owes Dehomag nineteen thousand dollars. That was five or six years ago…. You agreed… to pay us nineteen thousand in cash. But you never paid it and every time we went to the Finance Department it made a serious problem for us.
CHAUNCEY: Go ahead and try to offset what you say is held in Austria for us against those items. Vienna Company?
HUMMEL: After incorporation of Austria in Germany, the tax people claimed that [with] the existence of that company there, that IBM had business in Germany and thereby [was] subject to the high tax. Every opportunity is taken by the tax authorities to fix liability on IBM for that higher tax. They have always contended that Dehomag is an “organ” of IBM and is subject to the tax….
CHAUNCEY: Countries now incorporated into Germany?
HUMMEL: Austria, Sudetenland, German Poland, Alsace-Lorraine, Silesia.
CHAUNCEY: Bohemia Moravia?
HUMMEL: That is treated as a part of Germany.
CHAUNCEY: Poland?
HUMMEL: Very few customers left, the business is almost destroyed. Besides that they are using all the rentals to pay expenses and the Government will soon close the Company because they will not let it continue to lose money. Dehn [IBM’s Polish subsidiary manager] says he can’t continue to do business—all the industry [is] now in German hands and they won’t do business with a Watson company.
CHAUNCEY: Can Dehne come to Berlin?
HUMMEL: Yes.
CHAUNCEY: Have him come here.
HUMMEL: Bohemia-Moravia—last month [the] frontier [was] given up, and since that time they have to buy machines. Geneva can no longer buy machines from us and they have to pay 100 percent for them. It is more or less included in the German territory. Not included de jure, but de facto.
CHAUNCEY: Are the employees there still the employees of the Prague Company?
HUMMEL: Yes.