Ford and GM Scrutinized for Alleged Nazi Collaboration German diplomats award Henry Ford, center, with their nation's highest decoration for foreigners, the Grand Cross of the German Eagle, in July 1938. (AP Photo)

By Michael Dobbs

Washington Post Staff Writer

Monday, November 30, 1998; Page A01 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 American 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 busy 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." The Ford Motor Co. 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 Corp. 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 last 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 long-standing investigations into issues such as looted art, unpaid insurance benefits and the use of forced labor at German factories. 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. As with Switzerland, however, their very success in projecting a wholesome, patriotic image of themselves is now being turned against them by their critics. "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, who spent weeks examining records at the National Archives in an attempt to build a slave labor case against the Dearborn-based company. "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 the Japanese attack on Pearl Harbor in December 1941. GM spokesman John F. 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." For GIs, an Unpleasant Surprise 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. It came as an unpleasant surprise to discover that the enemy was also driving trucks manufactured by Ford and Opel -- a 100 percent GM-owned subsidiary -- and flying Opel-built warplanes. (Chrysler's role in the German rearmament effort was much less significant.) 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 and noted that Dearborn managers had frequently been kept in the dark by their German subordinates over events in Cologne. The relationship of Ford and GM to the Nazi regime goes back to the 1920s and 1930s, when the American car companies competed against each other for access to the lucrative German market. Hitler was an admirer of American mass production techniques and an avid reader of the antisemitic tracts penned by Henry Ford. "I regard Henry Ford as my inspiration," Hitler told a Detroit News reporter two years before becoming the German chancellor in 1933, explaining why he kept a life-size portrait of the American automaker next to his desk. Although Ford later renounced his antisemitic writings, he remained an admirer of Nazi Germany and sought to keep America out of the coming war. In July 1938, four months after the German annexation of Austria, he accepted the highest medal that Nazi Germany could bestow on a foreigner, the Grand Cross of the German Eagle. The following month, a senior executive for General Motors, James Mooney, received a similar medal for his "distinguished service to the Reich." The granting of such awards reflected the vital place that the U.S. automakers had in Germany's increasingly militarized economy. In 1935, GM agreed to build a new plant near Berlin to produce the aptly named "Blitz" truck, which would later be used by the German army for its blitzkreig attacks on Poland, France and the Soviet Union. German Ford was the second-largest producer of trucks for the German army after GM/Opel, according to U.S. Army reports. The importance of the American automakers went beyond making trucks for the German army. The Schneider report, now available to researchers at the National Archives, states that American Ford agreed to a complicated barter deal that gave the Reich increased access to large quantities of strategic raw materials, notably rubber. Author Snell says that Nazi armaments chief Albert Speer told him in 1977 that Hitler "would never have considered invading Poland" without synthetic fuel technology provided by General Motors. As war approached, it became increasingly difficult for U.S. corporations like GM and Ford to operate in Germany without cooperating closely with the Nazi rearmament effort. Under intense pressure from Berlin, both companies took pains to make their subsidiaries appear as "German" as possible. In April 1939, for example, German Ford made a personal present to Hitler of 35,000 Reichsmarks in honor of his 50th birthday, according to a captured Nazi document. Documents show that the parent companies followed a conscious strategy of continuing to do business with the Nazi regime, rather than divest themselves of their German assets. Less than three weeks after the Nazi occupation of Czechoslovakia in March 1939, GM Chairman Alfred P. Sloan defended this strategy as sound business practice, given the fact that the company's German operations were "highly profitable." The internal politics of Nazi Germany "should not be considered the business of the management of General Motors," Sloan explained in a letter to a concerned shareholder dated April 6, 1939. "We must conduct ourselves [in Germany] as a German organization. . . . We have no right to shut down the plant." U.S. Firms Became Crucial 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 the German invasion of Poland. 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 and a personal inspection of the Russelsheim plant. 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 "rather than participate in the production of war materials." 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 prominent Berlin lawyer named Heinrich Richter. GM spokesman Mueller declined to answer questions from The Washington Post 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 to 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." 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." In fall 1940, Mooney told the journalist Henry Paynter that he would not return his Nazi medal because such an action might jeopardize GM's $100 million investment in Germany. "Hitler has all the cards," Paynter quoted Mooney as saying. "Mooney probably thought that the war would be over very quickly, so why should we give our wonderful company away," said German researcher Anita Kugler, who used Nazi archives to trace the company's dealings with Nazi Germany. 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. Declaration of War Alters Ties America's declaration of war on Germany in December 1941 made it illegal for U.S. motor companies to have any contact with their subsidiaries on German-controlled territory. At GM and Ford plants in Germany, reliance on forced labor increased. The story of Elsa Iwanowa, who brought a class-action suit against Ford last March, is typical. At the age of 16, she was abducted from her home in the southern Russian city of Rostov by German soldiers in October 1942 with hundreds of other young women to work at the Ford plant at Cologne. "The conditions were terrible. They put us in barracks, on three-tier bunks," she recalled in a telephone interview from Belgium, where she now lives. "It was very cold; they did not pay us at all and scarcely fed us. The only reason that we survived was that we were young and fit." In a court submission, American Ford acknowledges that Iwanowa and others were "forced to endure a sad and terrible experience" at its Cologne plant but maintains that redressing such "tragedies" should be "a government-to-government concern." Spellich, the Ford spokesman, insists the company did not have management control over its German subsidiary during the period in question. Ford has backed away from its initial claim that it did not profit in any way from forced labor at its Cologne plant. Spellich said that company historians are still researching this issue but have found documents showing that, after the war, American Ford received dividends from its German subsidiary worth approximately $60,000 for the years 1940-43. He declined a request to interview the historians, saying they were "too busy." The extent of contacts between American Ford and its German-controlled subsidiary after 1941 is likely to be contested at any trial. 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 some indirect contacts. In June 1943, the Nazi custodian of the Cologne plant, Robert Schmidt, traveled to Portugal for talks with Ford managers there. In addition, the Treasury Department investigated Ford after Pearl Harbor for possible illegal contacts with its subsidiary in occupied France, which produced Germany army trucks. The investigation ended without charges being filed. 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 claiming that 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 Schmidt's name does not show up on Nazi membership lists. Mel Weiss, an American attorney for Iwanowa, argues that American Ford received "indirect" profits from forced labor at its Cologne plant because of the overall increase in the value of German operations during the war. He notes that Ford was eager to demand compensation from the U.S. government after the war for "losses" due to bomb damage to its German plants and therefore should also be responsible for any benefits derived from forced labor. Similar arguments apply to General Motors, which was paid $32 million by the U.S. government for damages sustained to its German plants. Washington attorney Michael Hausfeld, who is involved in the Ford lawsuit, confirms GM also is "on our list" as a possible target. © Copyright 1998 The Washington Post Company Back to the top