November 30, 2006
Hitler’s carmaker: How General Motors helped jump-start the Third Reich’s military machine
Dwarfing the Competition
Within a few years of partnering with the Hitler regime, Opel began to dwarf all competition. By 1937, GM's subsidiary had grown to triple the size of Daimler-Benz and quadruple that of Ford's fledgling German operation, known as Ford-Werke. By the end of the 1930s, Opel was valued at $86.7 million, which in 21st-century dollars translates into roughly $1.1 billion.
In the meantime, GM was responsible for stunning growth in Germany's economy. As most economists of the day knew, and as Sloan himself bragged, automobile manufacturing created thousands of factory jobs, hundreds of suppliers, numerous dealerships, widespread motorization and an attached oil industry.
Moreover, the growth of the highway network, from local roads to the Autobahn, spurred a construction boom that spawned thousands of additional jobs and necessitated hundreds of additional suppliers. Even GM's own sponsored expert historian, who decades later examined Hitler-era documentation, concluded: "The auto industry spearheaded the remarkable recovery of the German economy that boosted the popularity of the Nazi regime by virtually eliminating within a few years the mass unemployment that had idled a quarter of the workforce and contributed so importantly to Hitler's rise."
But Reich currency restrictions obstructed the outflow of cash for profits or even the purchase of raw materials to build trucks. GM in America circumvented those regulations through the overseas sales of German pencils, sewing machines, Christmas tree ornaments and virtually any other exports that would earn foreign currency internationally. Those sales proceeds were then exchanged for profits or raw materials through complicated bank transfers.
On The Home Front
Ironically, while GM's Opel was a deferential corporate citizen in Nazi Germany, going the extra mile to comply with Reich requirements and making no waves, Sloan helped foment unrest at home, as part of the company's efforts to undermine the Roosevelt administration.
For example, the GM president was one of the central behind-the-scenes founders of the American Liberty League, a racist, anti-Semitic, pro-big business group bent on rallying Southern votes against Roosevelt to defeat him in the 1936 election. The American Liberty League arose out of a series of private gatherings organized in July 1934 by Sloan, Irenee Du Pont and other businessmen. Some of those meetings were even held at GM's office in New York.
The businessmen sought to create a well-financed, seemingly grass-roots coalition that Du Pont declared should "include all property owners, the American Legion and even the Ku Klux Klan." Sloan served on the American Liberty League's national advisory board, and was one of a number of wealthy businessmen who each quietly donated $10,000 to its activities. The American Liberty League, which raised more money in 1935 than the National Democratic Party, in turn, funded an array of even more fanatical, racist and anti-Jewish groups.
One such group funded by the American Liberty League was the Southern Committee to Uphold the Constitution. With help from the Du Pont family fortune, the Southern Committee circulated what it called "nigger pictures" of Eleanor Roosevelt with African Americans. Sloan sent a $1,000 check directly to the Southern Committee after those pictures were distributed, according to congressional testimony.
Racist diatribes found in Southern Committee literature included an anti-union screed that complained: "White women and white men will be forced into organizations with black African apes whom they will have to call 'brother' or lose their jobs." The Southern Committee also jointly organized protest marches with the American Nazi Silver Shirts.
The American Liberty League also financed the Sentinels of the Republic. The Sentinels of the Republic, in turn, orchestrated incendiary, anti-Semitic letter-writing campaigns, and otherwise provoked a backlash against Roosevelt and what was sometimes derisively labeled his "Jew Deal."
True, the Sentinels of the Republic bore all the earmarks of a rabble-rousing extremist group. But behind it were some of the nation's most affluent and well-heeled, supplying the operating cash and direction. Among them: Sun Oil President Howard Pew, investment banker Alexander Lincoln who served as the group's president and the president of Pittsburgh Plate Glass, John Pitcairn. Sloan himself wrote a $1,000 check directly to the Sentinels of the Republic.
Only after an April 1936 congressional investigation was Sloan's financial involvement in the Sentinels outed. Just days after the disclosure, Sloan issued a statement to an inquiring Jewish newspaper in Louisville, Ky., promising, "Under no circumstances will I further knowingly support the Sentinels of the Republic." He added, ambiguously: "I have no desire to enter into any questions involving religious or political questions."
Although Sloan backed away from further financing of the Sentinels, the GM chief continued to fund and fundraise for another anti-Roosevelt-agitation group, the National Association of Manufacturers. Founded in 1895 as a pro-business organization and still prominent more than 100 years later, NAM sowed anti-union and anti-New Deal discord among Americans in the 1930s through clandestinely owned and operated opinion-molding arms.
Roosevelt openly acknowledged that Sloan, GM, the Du Ponts and other corporate giants hated him for his reforms and his efforts to relieve Depression-era inequities. In his final 1936 campaign speech, the president threw down the gauntlet, shouting to an overflow Madison Square Garden crowd, "They are unanimous in their hate for me -- and I welcome their hatred."
Roosevelt added that he wanted his first four years to be remembered as an administration where "the forces of selfishness and of lust for power met their match."
Fearing Roosevelt's possible re-election, several of Sloan's top executives at GM actually considered deliberately extending the financial woes of the Depression, presumably in retaliation against the entire nation. In the final days of the 1936 election campaign, several GM officials met with W.H. Swartz, a Lehman Brothers investment banker, according to a historian who studied the incident.
The GM officials apparently planned to stop investing in and expanding their company in the event of Roosevelt's expected victory. Swartz's Nov. 4, 1936, confidential memo about the GM meeting asserted, "Certain General Motors people also felt further capital expenditures could not be expected now, in view of Roosevelt's possible re-election." Based on their plans, Swartz predicted "a break in general business next year ... mid-summer is the logical time to expect it," adding, "I would suggest that the rather intense political emotions of certain of these men may have colored their thinking more than they themselves may have realized."
Despite the lush opposition funding by Sloan and other affluent anti-New Deal nemeses, Roosevelt was re-elected by a landslide.
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