U.S. Dealings With Nazi Germany -- Did Ford, GM Boost Nazi War Effort?

LAWYERS RESEARCHING class-action suits on behalf of former prisoners of war are amassing evidence of collaboration by U.S. automakers with the Nazi regime.

Three years after Swiss banks became the target of a worldwide furor over their business dealings with Nazi Germany, major American car companies find themselves embroiled in a similar debate.

Like the Swiss banks, the U.S. car companies have vigorously denied that they assisted the Nazi war machine or that they significantly profited from the use of forced labor at their German subsidiaries during World War II. But historians and lawyers researching class-action suits on behalf of former prisoners of war are amassing evidence of collaboration by the automakers with the Nazi regime.

The issues at stake for the American automobile corporations go far beyond the relatively modest sums involved in settling any lawsuit. During the war, the car companies established a reputation for themselves as "the arsenal of democracy" by transforming their production lines to make airplanes, tanks and trucks for the armies that defeated Adolf Hitler. They deny that their huge business interests in Nazi Germany led them, wittingly or unwittingly, to also become "the arsenal of fascism."

Ford Motor has mobilized dozens of historians, lawyers and researchers to fight a civil case brought by lawyers in Washington and New York who specialize in extracting large cash settlements from banks and insurance companies accused of defrauding Holocaust victims. Also, a book scheduled for publication next year will accuse General Motors of playing a key role in Hitler's invasions of Poland and the Soviet Union.

"General Motors was far more important to the Nazi war machine than Switzerland," said Bradford Snell, who has spent two decades researching a history of the world's largest automaker. "Switzerland was just a repository of looted funds. GM was an integral part of the German war effort. The Nazis could have invaded Poland and Russia without Switzerland. They could not have done so without GM."

Both General Motors and Ford insist that they bear little or no responsibility for the operations of their German subsidiaries, which controlled 70 percent of the German car market at the outbreak of war in 1939 and rapidly retooled themselves to become suppliers of war materiel to the German army.

But documents discovered in German and American archives show a much more complicated picture. In certain instances, American managers of both GM and Ford went along with the conversion of their German plants to military production at a time when U.S. government documents show they were still resisting calls by the Roosevelt administration to step up military production in their plants at home.

After three years of national soul-searching, Switzerland's largest banks agreed in August to make a $1.25 billion settlement to Holocaust survivors, a step they had initially resisted.

Far from dying down, however, the controversy over business dealings with the Nazis has given new impetus to investigations into issues such as unpaid insurance benefits and the use of forced labor at German factories. On Wednesday, representatives of 44 countries are gathering at the State Department to decide what to do about tens of thousands of paintings, sculptures and other works of art confiscated by the Nazis during World War II.

The auto companies

Although some of the allegations against GM and Ford surfaced during 1974 Congressional hearings into monopolistic practices in the automobile industry, American corporations have largely succeeded in playing down their connections to Nazi Germany.

"When you think of Ford, you think of baseball and apple pie," said Miriam Kleinman, a researcher with the Washington law firm of Cohen, Millstein and Hausfeld. "You don't think of Hitler having a portrait of Henry Ford on his office wall in Munich."

Both Ford and General Motors declined requests for access to their wartime archives. Ford spokesman John Spellich defended the company's decision to maintain business ties with Nazi Germany on the grounds that the U.S. government continued to have diplomatic relations with Berlin up until Pearl Harbor in December 1941. GM spokesman John Mueller said that General Motors lost day-to-day control over its German plants in September 1939 and "did not assist the Nazis in any way during World War II."

What GIs found

When American GIs invaded Europe in June 1944, they did so in jeeps, trucks and tanks manufactured by the Big Three motor companies in one of the largest crash militarization programs ever undertaken. The enemy was also driving trucks manufactured by Ford and Opel - a 100 percent GM-owned subsidiary - and flying Opel-built warplanes.

When the U.S. Army liberated the Ford plants in Cologne and Berlin, they found destitute foreign workers confined behind barbed wire and company documents extolling the "genius of the Fuehrer," according to reports filed by soldiers at the scene. A U.S. Army report by investigator Henry Schneider dated Sept. 5, 1945, accused the German branch of Ford of serving as "an arsenal of Nazism, at least for military vehicles" with the "consent" of the parent company in Dearborn.

Ford spokesman Spellich described the Schneider report as "a mischaracterization" of the activities of the American parent company.

After the outbreak of war in September 1939, General Motors and Ford became crucial to the German military, according to contemporaneous German documents and postwar investigations by the U.S. Army. James Mooney, the GM director in charge of overseas operations, had discussions with Hitler in Berlin two weeks after Germany invaded Poland.

Trip to Germany

Typewritten notes by Mooney show that he was involved in the partial conversion of the principal GM automobile plant at Russelsheim to production of engines and other parts for the Junker "Wunderbomber," a key weapon in the German air force, under a government-brokered contract between Opel and the Junker airplane company. Mooney's notes show that he returned to Germany the following February for further discussions with Luftwaffe commander Hermann Goering.

Mooney's involvement in the conversion of the Russelsheim plant undermines claims by General Motors that the American branch of the company had nothing to do with the Nazi rearmament effort. In congressional testimony in 1974, GM maintained that American personnel resigned from all management positions in Opel following the outbreak of war in 1939.

However, according to documents of the Reich Commissar for the Treatment of Enemy Property, the American parent company continued to have some say in the operations of Opel after September 1939. The documents show that the company issued a general power of attorney to an American manager, Pete Hoglund, in March 1940. Hoglund did not leave Germany until a year later. At that time, the power of attorney was transferred to a Berlin lawyer named Heinrich Richter.

GM spokesman Mueller declined to answer questions on the power of attorney granted to Hoglund and Richter or to provide access to the personnel files of Hoglund and other wartime managers. He also declined comment on an assertion by Snell that Opel used French and Belgian prisoners at its Russelsheim plant in the summer of 1940, at a time when the American Hoglund was still looking after GM interests in Germany.

The Nazis had a clear interest in keeping Opel and German Ford under American ownership, despite growing hostility between Washington and Berlin. By the time of Pearl Harbor in December 1941, the American stake in German Ford had declined to 52 percent, but Nazi officials argued against a complete takeover. A memorandum to plant managers dated November 25, 1941, acknowledged that such a step would deprive German Ford of "the excellent sales organization" of the parent company and make it more difficult to bring "the remaining European Ford companies under German influence."

Protecting investments

Documents suggest that the principal motivation of both companies during this period was to protect their investments. An FBI report dated July 23, 1941, quoted Mooney as saying that he would refuse to take any action that might "make Hitler mad."

Even though GM officials were aware of the conversion of its Russelsheim plant to aircraft engine production, they resisted such conversion efforts in the United States, telling shareholders that their automobile assembly lines in Detroit were "not adaptable to the manufacture of other products" such as planes, according to a company document discovered by Snell. In June 1940, after the fall of France, Henry Ford personally vetoed a U.S. government-approved plan to produce under license Rolls-Royce engines for British fighter planes, according to published accounts by his associates.

America's declaration of war on Germany in December 1941 made it illegal for U.S. motor companies to have any contact at all with their subsidiaries on German-controlled territory. Simon Reich, an economic historian at the University of Pittsburgh and an expert on the German car industry, says he has yet to see convincing evidence that American Ford had any control over its Cologne plant after December 1941. He adds, however, that both "Opel and Ford did absolutely everything they could to ingratiate themselves to the Nazi state."

While there was no direct contact between American Ford and its German subsidiary after December 1941, there appear to have been indirect contact. In June 1943, the Nazi custodian of the Cologne plant, Robert Schmidt, traveled to Portugal for talks with Ford managers. In addition, the Treasury Department investigated Ford after Pearl Harbor for possible illegal contacts with its subsidiary in occupied France, which produced trucks for the German army. The investigation ended without charges being filed.

Managers kept jobs

Even though American Ford now condemns what happened at its Cologne plant during the war, it continued to employ the managers in charge at the time. After the war, Schmidt was briefly arrested by allied military authorities and barred from working for Ford. But he was reinstated as the company's technical director in 1950 after he wrote to Henry Ford II saying he had always "detested" the Nazis and had never been a member of the party.

A letter signed by a leading Cologne Nazi in February 1942 describes Schmidt as a trusted party member. Ford maintains that his name does not show up on Nazi membership lists.