by Joseph Borkin and Charles A. Welsh
1944, Duell, Sloan & Pierce, 339 pages.
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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?