November 30, 2006
Hitler’s carmaker: How General Motors helped jump-start the Third Reich’s military machine
(Page 3 - Previous Page)Opel's Friendly Nazi Custodian
On Dec. 7, 1941, Pearl Harbor was bombed. The United States declared war on Japan. On Dec. 11, German diplomats in Washington called at the State Department to deliver Germany's declaration of war against America. All direct communications between GM and its Opel subsidiary in Germany were necessarily severed, although historians have always wondered about indirect links through Denmark where GM operated a longtime subsidiary. Ranking GM men from Denmark were also in ranking positions both in Opel in Germany and GM in America.
After Germany declared war on America, all American corporate interests in Germany or under German control were systematically placed under the jurisdiction of a Reich-appointed "custodian" for enemy-owned property. In practice, the "custodian" was akin to a court-appointed receiver. Generally, the Reich custodian's duty was not to dismember the firm or Aryanize it, but to continue to run the enterprise as efficiently and profitably as possible, holding all assets and profits in escrow until matters would be resolved after the war. This generally meant re-appointing members of the pre-existing management team, although these managers no longer reported directly to their American masters in the United States.
In the case of Opel, Carl Luer, the longtime member of the Opel Supervisory Board, company president and Nazi Party stalwart, was appointed by the Reich to run Opel as custodian, but only some 11 months after America entered the war. In anticipation of the outbreak of hostilities, GM had appointed Luer to be president of Opel in late 1941, just before war broke out.
In other words, the existing GM-approved president of Opel continued to run Opel during America's war years. The company continued as a major German war profiteer, and GM knew its subsidiary was at the forefront of the Nazi war machine. An Aug. 27, 1944, New York Times article detailed that Opel was the principal target of a 1,400-plane RAF bombing mission because its 35,000-worker plant was turning out crucial military transport and was known to be developing rocket technology.
In the wartime months and years that ensued, 1941-1945, GM built and operated some $900 million worth (about $120 billion in today's dollars) of defense manufacturing facilities for the Allies. Almost all of the company's undertakings were propped up by federal programs that guaranteed profit and "cost-plus" contracts, various subsidies, tax benefits and other incentives then available to defense contractors to produce goods for the war effort. Secretary of War Henry Stimson later explained that when a capitalist country wages war, "you have got to let business make money out of the process, or business won't work."
Gen. Lucius Clay, who oversaw war materiel contracts, confessed, "I had to put into production schedule the largest procurement program the world had ever seen. Where would I find somebody to do that? I went to General Motors."
GM also reaped the financial benefits of its relationship with the Third Reich. During the pre-war Hitler years, GM entered its Opel proceeds under "reserves" instead of listing the profits as ordinary income. Then during America's war years GM declared it had abandoned its Nazi subsidiary, and took a complete tax write-off under special legislation signed by Roosevelt in October 1942. The write-off of nearly $35 million created a tax reduction of "approximately $22.7 million" or about $285 billion in 21st-century money, according to an internal Opel document.
But Opel's friendly Nazi custodian, Luer, kept on making profits for the company during those war years. Opel produced trucks, bomber engines, land mines, torpedo detonators and other war materiel, a significant amount of it by the sweat of thousands of prisoner laborers or other coerced workers; some of those workers were tortured if they did not meet expectations. Those profits and GM's 100 percent stock ownership were preserved by the Reich custodian, even though GM and Opel ostensibly severed ties with each other after America entered the war.
During the Hitler years, many of those excess profits were used to acquire other companies and properties, only increasing Opel's assets in Germany. After the war, starting in 1948, GM began regaining control over Opel operations and eventually its monumental assets as well as blocked dividends. GM also collected some $33 million in "war reparations" because the Allies had bombed its German facilities.
After the defeat of Berlin, GM and its executives, including those who joined the government in Washington, then steered America toward its gargantuan postwar boom. That boom was in large measure powered by the constellation of direct and indirect economic benefits delivered by the U.S. automobile industry.
The Transit Scam
Ironically, while GM was mobilizing the Third Reich, the company was also leading a criminal conspiracy to monopolistically undermine mass transit in dozens of American cities that would help addict the United States to oil. The war in Europe had only been over for 16 months when on Oct. 2, 1946, a memo from the Department of Justice landed on the desk of J. Edgar Hoover, outlining the elements of the GM conspiracy.
At the center of the conspiracy was National City Lines (NCL), an Enronesque company that suddenly arose in 1937, ostensibly run by five barely educated Minnesota bus drivers, the Fitzgerald brothers. Yet the Fitzgeralds miraculously marshaled millions of dollars to buy up one failing trolley system after another. Soon, through a patchwork of subsidiaries, the brothers owned or controlled transit systems in more than 40 cities. Generally, when NCL acquired the system, the tracks were pulled from the street, the beloved electric trolleys were trashed or burned, and the whole system was replaced with more expensive, unpopular and environmentally hazardous motor buses that helped addict America to oil.
The Justice Department discovered that NCL was just a front company for General Motors, in league with Mack Truck, Phillips Petroleum, Standard Oil of California and Firestone Tires -- all petroleum interests. The companies became the major preferred stockholders of National City Lines, but operated behind the scenes.