The author of a controversial book causing a stir in Hollywood for exposing collaboration between the major studios and Nazi Germany in the runup to the second world war has defended his claims to the Observer.

Harvard scholar Ben Urwand, who spent a decade sifting through German and American archives, said: "I want to bring out a hidden episode in Hollywood history and an episode that has not been reported accurately."

Urwand's interpretation of the relationship is disputed by other scholars of the period. He claims that Hollywood studio chiefs, many of them recent eastern European Jewish refugees, enthusiastically worked with Hitler's censors to alter films or even cancel productions entirely in order to protect access to the German film market. "In the 1930s the Hollywood studios not only collaborated by not making films that attacked the Nazis, they also did not defend the Jews or touch on Germany's persecution of the Jews," Urwand said.

The book, The Collaboration: Hollywood's Pact with Hitler, to be published in November, claims the relationship was so enmeshed that MGM, the biggest studio at the time, went so far as to invest in German rearmament to get around currency export restrictions.

Urwand said: "Collaboration: it's not my word or invention. I got it from materials from both sides. It's the word that's regularly used to describe their relationship." He said the German head of MGM spoke to the German press of the "satisfying collaboration on both sides".

"It's collaboration in the sense that Hollywood movie executives and Nazi officials are actually collaborating and the Nazis are having the final say," said Urwand. "They didn't want to lose their business. They didn't want to have to go home and come back under different conditions. They also felt Hitler might win the war and they wanted to work with the Nazis to preserve their business."

About his research, Urwand said: "I wouldn't want what I write to be generalisable about Jews, but specific Jews in the movie business made decisions to work with Nazi leaders." Urwand has uncovered evidence that as late as January 1938 the German office of 20th-Century Fox was requesting Hitler's views about American movies. The letter was signed "Heil Hitler".

Three studios – MGM, Paramount and 20th-Century Fox – did not pull out of Germany until mid-1940. But even after Hollywood started making anti-Nazi films, Urwand says, it continued to erase reference to the Jews because studio chiefs (with the support of Jewish groups) wanted to "avoid special pleading on their behalf".

The author dates Nazi meddling back to the premiere of All Quiet On the Western Front in 1930 when, encouraged by Joseph Goebbels, they set off stink bombs and let white mice loose in the theatre. Carl Laemmle, the Jewish German-American head of Universal, agreed to cuts.

Charlie Chaplin in The Great Dictator. Photograph: Ronald Grant Archive

Hitler favoured films that depicted strong leadership, like Gary Cooper's The Lives of a Bengal Lancer, Mutiny on the Bounty and Greta Garbo's Queen Christina, or films in which democracy was shown as inefficient, like Mr Smith Goes to Washington. He loved Laurel and Hardy, thought Tarzan was silly, and detested Charlie Chaplin and his thinly veiled portrayal in The Great Dictator.

By 1932, Urwand writes, Nazi-inspired regulations allowed for film studios to have their permits revoked if films considered damaging to German prestige were shown not only in Germany but anywhere in the world. Hollywood, he claims, enthusiastically acquiesced to Hitler's demands to shape the content of movies to meet Nazi propaganda goals. "The excuse of ignorance can be ruled out," he writes. "Hollywood executives knew exactly what was going on in Germany, not only because it had been forced to fire its own Jewish salesmen but because the persecution of the Jews was well known at the time."

Hitler's Hollywood consul, Georg Gyssling, made regular studio visits, often requesting edits to scenes that ran counter to Nazi interests, or in the instance of films like The Mad Dog of Europe (1933) asking for them to be abandoned entirely. In 1936, after being tipped off by US censors that It Can't Happen Here, a film showing the advantages of democracy over fascism, would cause problems with "certain foreign governments", MGM head Louis B Mayer called off production.

"Hollywood is collaborating and the Nazis are having the final say on several important movies that would have exposed what was going on in Germany," said Urwand. The historian uncovered documents showing that, in order to get around currency export restrictions, MGM bought German bonds that financed rearmament factories in the Sudetenland. "You can't get more extreme than the biggest movie studio in America funding armaments a month after Kristallnacht," he said.

But other historians present a different explanation. In his research, Tom Doherty, a scholar at Brandeis University who recently published Hollywood and Hitler, 1933-1939, found US commerce department documents advising MGM that one way to get blocked currency out of Germany was to invest in armaments. "Maybe it doesn't look too good, but in 1936 Germany was a friendly nation and America was not a signatory to the treaty of Versailles." He added: "I don't see sinister, greedy monsters. I see people trying to cope with this bizarre anomaly and negotiate in a way that made sense to them. Most people thought that once Hitler achieved power he would moderate this crazy antisemitism and the rational German temperament would return. But of course it never does."

Other historians, including Steven Ross at the University of Southern California, have found evidence of an anti-Nazi spy ring operating in Hollywood – financed by the same studio heads who were complying with Nazi censorship demands.

Ross states: "The moguls who have been castigated for putting business ahead of Jewish identity and loyalty were in fact working behind the scenes to help Jews."