Authors Borkin and Welsh analyze how the Nazis took advantage of the budding globalized economy to restrict both their enemies’ strategic production and their access to critical raw materials. The same cartel agreements gave the German war economy access to technological know-how and raw materials vital to the successful prosecution of modern industrial warfare. Learning the lessons of defeat from World War I, the German military-industrial complex also sought to use technological innovation to make up for key areas of shortfall. Utilizing leading-edge technology to great advantage, companies such as I.G. Farben developed processes to synthesize oil, rubber, narcotics to treat casualties and other innovations that greatly aided the German wartime economy.
Key to the German industrial offensive was the doctrine of the famous Prussian military philosopher Karl von Clausewitz—the first strategic thinker to formalize the concept of “Total War.” On pages 16 and 17, Borkin and Welsh discuss von Clausewitz’s analysis of the relationship between war and peace, essential to understanding the concept of Total War.
“Germany has long understood this strategy of total war. Karl von Clausewitz, the father of modern German militarism, set out its major premise when he said, ‘War is no independent thing; the main lineaments of all great strategic plans are of a political nature, the more so the more they include the totality of War and the State.’ To von Clausewitz, peace was a continuation of war by other means. In effect, he said to Germany, ‘Disarm your enemy in peace by diplomacy and trade if you would conquer him more readily on the field of battle.’ This philosophy of war-in-peace became the keynote of Germany’s political and economic intercourse with other nations. These tenets explain why, twice within a generation, we have entered war not only facing the might of German armies, but shackled by economic bondage to German industry. German-controlled cartels were at all times the servants of German interest. That their loyalty to Germany was undivided explains the uniformity of the agreements which they made. Germany’s industrial attack had as its cardinal purpose the reversal of blockade. Patents and secret ‘know-how’ were used to bar our access to our own technology.”
By contrast, the German firms’ foreign cartel partners looked on these relationships as mere vehicles to maximize profits by eliminating competition and limiting production. On page 17, the authors develop this theme:
“ . . . To businessmen in the United States, England, and France, international cartels were an efficient means of guaranteeing monopoly. Industrialists outside of Germany thought in terms of low output, high prices, and maximum profits. They regarded divisions of both territory and fields of production as comfortable and easily policed methods by which they could free themselves from competition and create spheres of monopoly.”
As a result of this sharp disparity in the viewpoints of the German and Allied industrialists, the armies facing the Third Reich’s soldiers on the field of battle were placed at a fundamental disadvantage. On pages 13 and 14, Borkin and Welsh highlight the military results of the cartel agreements:
“ . . . Wherever there was a cartel before, in 1942, there was a military shortage. The Army and Navy petitioned civilians to turn in binoculars and lenses. The Baruch Committee reported that if we do not solve the synthetic rubber problem, we face a ‘civilian and military collapse.’ The gallant stand of MacArthur’s men on Bataan became more desperate because they found themselves without quinine. The growing priority lists of chemicals and plastics were an inventory of cartels. When we tried to tool up our new factories, with every second of passing time working against us, the lack of tungsten carbide blunted the edge of our effort. This roster of scarce materials and the absence of substitutes have a common cause.”
“These shortages speak volumes for the brilliant planning of the German offensive. The first ‘Report to the Nation,’ issued January 14, 1942, by the Office of Facts and Figures, says: ‘[The enemy] has worked for many years to weaken our military potential. Through patent controls and cartel agreements he succeeded in limiting American production and export of many vital materials. He kept the prices of these materials up and the output down. He was waging war, and he did his work well, decoying important American companies into agreements, the purpose of which they did not sense. . . . The list of materials affected is long—beryllium, optical instruments, magnesium, tungsten carbide, pharmaceuticals, hormones, dyes, and many more. When you match each product with its military use, the significance of the attack becomes clear. Beryllium is a vital element for alloys that make shell springs; magnesium makes airplanes and incendiary bombs; tungsten carbide is essential for precision machine tools. Concealed behind dummy corporations, the enemy went unchecked for years, using our own legal machinery to hamstring us. [Italics added.]’ During the past twenty years, this cartel device has been the first line of German assault. . . .”
Actualizing the von Clausewitz doctrine that “war is a continuation of policy by other means,” the Third Reich and its Axis allies used their military onslaught to drastically exacerbate the imbalance in strategic industrial production. On pages 15 and 16, the authors write: “The effect of Axis victories, in Europe and in the Pacific, give them an advantage which we will spend many thousands of lives to overcome. The reversal of position is starkly evident in the following figures on some of the major resources:
PERCENTAGE OF AXIS CONTROL OF WORLD PRODUCTION
The Martin , Ambruster  and DuBois  texts also cover the effects of the German cartels, as well as the postwar defeat of attempts to bring responsible parties to justice and to dismantle the cartel system. It is more than a little interesting to contemplate the sad state of American industry in the early part of the 21st century in light of the perpetuation of the relationship between major U.S. and German corporations. Have the German firms played a role in deliberately undermining the American commercial manufacturing economy analogous to the one they undertook in the run-up to World War II? In that context, it is important to bear in mind that corporate Germany is the tool of the Bormann capital network described by Paul Manning in Martin Bormann: Nazi in Exile .
The Bormann network incorporated plans to have German industry finance the Nazi party in an underground fashion after the war, those plans having been initiated at the Strasbourg (Alsace-Lorraine) meeting in 1944.
An important supplement to weigh in connection with this analysis concerns the plans of the Nazi government in exile in Madrid, discussed in T.H. Tetens’ The New Germany and the Old Nazis . The Underground Reich set forth part of the SS and Nazi agenda: ” . . . . Other fields of activities for the group were political propaganda in foreign countries, carried out in close contact with the Nazi headquarters in Madrid, and the initiation of conspiracies in foreign countries on behalf of German industrial cartels. . . .”
Remember: with the advent of nuclear weapons, frontal warfare between great nations of the type that had dominated international relations for many years became obsolete. Corporate power is now the decisive determining factor in international political relationships. The Germans learned the lesson of the primacy of corporate policy as a result of defeat in two world wars. Are we now paying the price for overlooking that same lesson? Are the conspiracies hatched “in foreign countries on behalf of German cartels” now making their presence felt?