Synopsis Operation Safehaven

Gerard Aalders

During the spring of 1944, the US intelligence service Office of Strategic Services (OSS) received a continuously swelling stream of information indicating that the political and economic leaders of Nazi Germany were making preparations to flee abroad as defeat loomed. The Americans were convinced that a new war was being prepared, even as the current one was still being fought. More than half a century later, we in the new millennium may see such fears as absurd, but the Americans of that day were guided by their thorough studies of the history of German militarism in the aftermath of World War I. Investigations by Senate committees had revealed that Germany had begun to build a new army immediately after the end of the World War in 1918, and that at the same time, a well-planned rearmament program had been launched. All that had been top secret. The Treaty of Versailles of 1919 had only permitted Germany a small professional army of 100,000 men (the Reichswehr ), and had banned the arms industry altogether. But the Germans had circumvented “Versailles” in a multitude of ingenious ways, and had made a sport of leading allied control commissions on wild- goose chases.

Operation Safehaven, launched in 1944, was to prevent any similar rearmament program from being repeated after the Second World War. Nonetheless, nothing of significance has ever been published about this intriguing operation, which has left its traces in all corners of the globe, and has been recorded in millions of documents.

The history of Operation Safehaven – a misleading name, since it merely implies that its purpose was to prevent the Nazis from finding a “safe haven” – cannot be understood without background knowledge of the secret rebuilding of the German military potential after the First World War. Therefore, the scope of this study will include the largely unknown, yet fascinating, history of secret rearmament and preparation for war.

The Period from 1919 to 1933

The Treaty of Versailles was a dictated peace, imposed by the victors, and very – arguably unjustifiably – unfavorable for the vanquished. Versailles required that Germany disarm. The Reichswehr , reduced to a small professional army, was deeply humiliated by its mandated miniscule size, while German industry was naturally enraged at the ban on producing goods of a military or 2

even semi-military nature. The Reichswehr commander, Major General Hans von Seeckt, took the initiative in “neutralizing” the “poison of Versailles,” as he called it – with considerable success. Germany concluded military cooperation agreements with the Soviet Union, Europe’s other pariah. The USSR, technologically underdeveloped as it was, wished to profit from advanced German technology, and in return made production facilities available. The German armaments industry during this period was not so much interested in profits as in the maintenance and advancement of its technological knowledge. The treaties between Moscow and Berlin provided for the establishment of training centers for pilots and tank crews on Soviet territory; later, Moscow was to make development and testing facilities for poison gas, explosives, tanks, aircraft and artillery available. Motivated by a desire not to lose technological knowledge and know-how, the German armaments industry seized the opportunity to perfect old technologies and develop new ones in Lenin’s Soviet Union.

The financing of these projects was provided by both the German and the Soviet governments. Companies which plunged with greater or lesser success into the Soviet adventure included JUNKERS (aircraft), KRUPP and RHEINMETALL (ammunitions and armaments), IG FARBEN (chemicals, ammunitions and poison gas) ZEISS (military optical devices), the coal and steel producers STINNES and GUTEHOFFNUNGSHÜTTE , BLOHM & VOSS (ships) and the aircraft manufacturer ALBATROSWERKE . The production of poison gas was placed in the hands of a Soviet-German joint venture, BERSOL AG .

German companies also developed major activities elsewhere in Europe, where they produced goods they were unable to manufacture in Germany. In the Netherlands, where KRUPP had purchased shares in an engineering firm, the company developed submarines which were built at the FEIJENOORD shipyards in Rotterdam, as well as in Spain and Finland. German navy crews were also trained in the latter two countries, and in Turkey. Krupp forged a close relationship with the Swedish armaments manufacturer Bofors, and successfully produced new types of artillery and ammunition in Sweden. The aircraft manufacturer Junkers established itself in that country as well as in the USSR, and developed the K-47, the antecedent to the feared JU-87 dive-bomber, or Stuka , while fellow aircraft manufacturer Dornier produced just across the Swiss border from the German city of Constance. Switzerland, like the Netherlands, was a favorite site for German armaments plants.

A number of German banks opened branches in the Netherlands in order to be able to finance all these foreign activities. After Versailles, these banks, usually closely tied to major industrial groups, could no longer operate freely in London, then the center of the world’s financial markets. In addition to Krupp, such companies as ZEISS , SIEMENS (military electronics and fire-control systems), LEICA (military optics) and DORNIER established themselves in the Netherlands. Usually, German influence could not be discerned from the company name. Siemens, for example, made an agreement with the HAZEMIJER Company of Hengelo, the Netherlands, which thereupon changed its name from HAZEMIJER -APPARATEN [“Devices”] to HAZEMIJER -SIGNAAL .

As far as Europe is concerned, let these examples suffice for now, and let us take a look at the United States. There, such German companies as BOSCH (electronics), SCHERING (pharmaceutics), KRUPP , RÖHM & HAAS (plastics) and of course IG F ARBEN had penetrated deep into the American economy. All the companies named still exist today, albeit in the case of IG F ARBEN in the form of the successor companies into which it was split up after World War II, of which BASF, HOECHST and BAYER are the best-known. 3

In virtually all cases, front men were used to conceal the identity of the actual German owners. During World War I, many German subsidiaries in the US had been confiscated and sold as enemy property. After a certain period, the parent companies perceived the situation as favorable to repurchase their subsidiaries via intermediaries. In doing so, intricate techniques were used to ensure that the identity of the owner would always remain secret. In the present book, this phenomenon, known as “cloaking,” or, in German, Tarnung , is to be examined in detail. Cloaking was of great importance for the penetration of foreign economies by German corporations. Initially, during the twenties, commercial, financial and monetary considerations were the main motivating factor behind the camouflage of German corporations abroad. War was not a major factor during this period. This, however, changed as 1939, and the rapidly growing possibility of war, approached.

The means for camouflaging companies and other property, such as share-holdings, patents, trade marks, etc., in such a manner that they will no longer be recognizable as – in this case – German property, are legion. Often, this involved making use of “ Vertrauensmänner ” (liaisons or trustees), who might be citizens of the host country with which agreements were to be made, naturalized Germans with the citizenship of such a country, or citizens of neutral countries, to ensure that the property not be confiscated in wartime.

The Period between 1933 and 1940

When Hitler came to power in 1933, Germany possessed technology and know-how that it would not have had, had its industrial establishment abided by the stipulations of Versailles. This explains why Germany could, in a relatively short time, build up an impressive armaments industry, army, air force and navy. During the period 1933 – 1940, production methods which had been developed during the foregoing period and which, thanks to such German trusts as IG F ARBEN and KRUPP , had been able to assume powerful positions in foreign economies, were elaborated upon. This study will primarily address the situation in the United States. In no other country did German trusts penetrate as deeply as in America. One result was that at the outbreak of the war, America was faced with a major shortfall of strategic goods which was so disconcerting that the Senate in 1941 established a special investigative committee to investigate the consequences. It was chaired by Sen. Harry S. Truman, who would succeed Roosevelt as president in 1945.

The German heavy and chemicals industries were among the most advanced of that day. At the beginning of the twentieth century, a technological revolution had begun which had brought forth a whole range of new products and production technologies. The fact that at that time, unlike in the past, products and inventions could be protected by patent rights was of great significance. Especially the companies which were to merge to form the IG-FARBEN TRUST – although certainly not these exclusively – acquired a large number of patents. In order to get an edge on competitors, patent rights and the patent scopes were formulated so broadly that competitors saw little sense in undertaking research of their own. After all, the chance that, after a major investment in research which had enabled it, some invention might not be patentable due to its having violated this or that IG-FARBEN patent was so great that a company would prefer to reach an agreement with IG-FARBEN , combined with a right to manufacture products under license. The aggressive patent policy of this German monopolist became almost proverbial. 4

Three major areas of research constituted the pillars upon which IG-FARBEN ’S dominant position in the chemical industry was based. One was the technology upon which the production of coloring dies is based, which is the same as that used for a number of other products; including medicines, ammunition, explosives, plastics and synthetic rubber. The second invention was the method for using atmospheric nitrogen as the basic ingredient for such products as artificial fertilizer and a number of powerful explosives. A third IG-FARBEN invention, hydrogenation technology, made it possible to manufacture gasoline from coal, and was to make German militarism largely independent of foreign oil.

We will use this last example, of which there are many others, to demonstrate how German trusts proceeded. The news that coal could be turned into gasoline caused no joy at STANDARD OIL (now Exxon), for world coal reserves are many times more plentiful than oil reserves. STANDARD OIL thus made an agreement with IG-FARBEN under which the latter would limit its production of synthetic gasoline to Germany, and leave the rest of the world to the oil operations of STANDARD OIL . In return, STANDARD OIL was to limit its activities in the chemical industry to those areas directly related to oil. The stipulations and arrangements were established in agreements. Under one arrangement, the patents and know-how of IG-FARBEN and STANDARD OIL were brought together in a pool.

This arrangement meant among other things that STANDARD terminated its own promising research into synthetic rubber, an indispensable product in wartime, since natural sources are insufficient, leaving to IG a free hand world-wide. American rubber producers such as GOODYEAR could not circumvent the arrangements between the two giants without violating existing patents. The result was that at the outbreak of the war, America suffered from a severe deficiency of rubber, as well as – thanks to other patent arrangements with various implications – of technological equipment and such light metals as aluminum and magnesium, used for the manufacture of ships and aircraft.

During the period of the Hitler regime, the German military was directly involved in patent agreements of military importance. The close ties between American and German corporations in addition provided a wealth of information on products, of which the German military intelligence services availed themselves most particularly. Based on the royalties paid for patent rights, it was always possible to calculate approximately how much light metal chemicals, equipment, electronics, aircraft and ships the US was producing.

Nonetheless, this in no way implies collusion with the Nazis – at least not initially. Both the American and German partners were exclusively pursuing their own material interests. The fact that the growing entwinement of German industry with the Hitler regime meant that this benefited the German military was never a goal in and of itself, but after a certain time, it was an effect that resulted. The American defense structure was to pay the price for this effect in the form of significant wartime shortages.

The Second World War

During the Second World War, the consequences of cloaking and the patent policies of the major German corporations/ trusts – which had in effect been used as weapons of economic warfare – became painfully apparent. The installation of “neutral” front-men – often Swiss or Swedish 5

companies, citizens, banks or holdings – resulted in the fact that German subsidiaries could not be confiscated. When, on the basis of a special Executive Order, this became possible after all, sale remained virtually impossible in practice, since the ostensible owners often sued against the confiscation of “their” property. In almost all cases, that led to long drawn-out court battles, some of which lasted longer than twenty-five years.

During the war, much German property was seized – the Americans, too, had learned their lesson in World War I – but how many German interests were able, thanks to clever stratagems, to escape the dragnet is still an open question. The question can also be raised in reference to South American countries, which were known as breeding-grounds for cloaking.

Operation Safehaven

Thus, Safehaven flowed from the experience of World War I, the interwar years and World War II. The large-scale avoidance of the Versailles stipulations was known and acted upon. The signals received in 1944 to the effect that German companies and Nazi leaders were forging new plans to conceal their corporate holdings and technologies in neutral foreign companies, as they had done between the wars, demanded countermeasures. The possibility of a Third World War was seen as a serious possibility in 1944, and, from the perspective of the day, it doubtless was. The mistrust of Germany and its weapons of economic warfare – as German trusts were viewed – was enormous, as was the fascination they engendered. As President Roosevelt said:

The history of the use of the IG F ARBEN trust by the Nazis reads like a detective story. Defeat of the Nazi armies will have to be followed by eradication of these weapons of economic warfare.

Another goal of Operation Safehaven was to track down assets – works of art, gems, gold, negotiable securities, etc. – plundered by Germany and to return them to their countries of origin. The goal at that time was to urge such countries as Sweden and Switzerland to confiscate German subsidiaries on their territory and to make the proceeds available for the reconstruction of Europe. The aspect of plundered goods will not be addressed in the present book. I have already written three books and some thirty-five articles on that subject, and believe that I can do justice to it by referring to these publications.

The End of Safehaven

Like the Americans, who initiated Safehaven, the Soviets, too, were convinced that German economic power was a source of militarism. Both great powers were convinced that the elimination of that power was an absolute precondition to prevent future German aggression. During most of World War II, there was hardly any difference of opinion regarding that elimination as a precondition for a safe Europe. But after – and even before – the end of the war, this unity of opinion was a thing of the past. Especially major American corporations proved to be staunch opponents of Safehaven. For not only STANDARD OIL (E XXON ), but also such other giants as ALCOA , DOW , DUPONT , REMINGTON ARMS , GENERAL MOTORS , GOODYEAR , PROCTER & GAMBLE and UNION CARBIDE had concluded agreements with German trusts such as KRUPP , MANNESMANN , IG FARBEN , SIEMENS and SCHERING . These agreements 6

had been suspended for the duration of the war, but almost in all cases with the proviso that business was to be resumed once peace had been restored – “business as usual.” After the war, they of course preferred not to be reminded of – let alone implicated by – such agreements, especially in public. IG FARBEN and KRUPP were found guilty at the Nuremberg Trials of using forced labor, plundering the occupied territories and aiding and abetting the Nazi regime in the preparation of World War II.

The American State Department, with its close contacts with major American corporations, proved to be an early and ever more enthusiastic opponent of the Safehaven policy, which it had been assigned to help implement. Moreover, this was a constant stumbling block in relations with Switzerland, Sweden, Spain, and Portugal, and in the numerous South American countries where German Nazis and companies had found a hospitable haven. After a while, the Soviets were the only ones who supported an effective elimination of German economic might to prevent future war. In the West, fear of communism had led to a shift in opinion and gave rise to the view that Germany was an indispensable ally in the battle against the “Red Menace.” The country had changed from an enemy to a friend; the opposite was the case of the Soviet Union. From an initially well-oiled operation, Safehaven degenerated into a powerless structure pursuing a goal that had been made both untenable and obsolete by the changed political circumstances. There seems to be a direct relationship between the decline of Safehaven and the emergence of the Cold War. That raises the question as to whether the Cold War accelerated the withering away of Safehaven, or whether, conversely, the evident failure of Safehaven in eliminating German economic sources for aggression was one of the reasons for the emergence of the Cold War. 7

Dr. Gerard Aalders is a researcher at the Netherlands Institute for War Documentation (NIOD) in Amsterdam. He studied history and Scandinavian languages and literature, and wrote his doctoral dissertation in 1989 on Swedish Neutrality and the Cold War, 1945-1949. Aalders is co-author of The Art of Cloaking Ownership (1996), a study of the secret collaboration of neutral countries with the German war industry, which has been published in six languages; the first version, in Swedish, appeared in 1989. He is also the co-author, with Dr. C. Hilbrink, of De affaire Sanders (1996), a book on the first post-war Dutch intelligence service, and author of a biography of the German-Dutch spy Leonie (2003 ).

Aalders is also the author of approximately thirty-five articles on plundering and restitution, about which he has published a trilogy consisting of the books Roof: De ontvreemding van joods bezit tijdens de Tweede Wereldoorlog , The Hague, 1999; Berooid: De beroofde joden en het Nederlandse restitutiebeleid sinds 1945 , Amsterdam, 2001; and Eksters: De nazi-roof van 146 duizend kilo goud bij De Nederlandsche Bank , Amsterdam, 2002. Roof was published in English as Nazi Looting. The Plunder of Dutch Jewry during the Second World War , Oxford – New York, 2004; and in German as Geraubt! Die Enteignung jüdischen Besitzes im Zweiten Weltkrieg , Cologne, 2000. (The titles of the other two works: “Penniless: The Plundered Jews and Dutch Restitution Policy since 1945,” and “Magpies: The Nazi Plundering of 146 Tons of Gold at the Bank of the Netherlands.”)

The German translation of Leonie will appear at the end of 2004 .

Sources

Operation Safehaven will be approximately 90 percent based on archival research, conducted at the following institutions, among others:

Bundesarchiv, Berlin

Department of Justice, Washington, DC

Stiftung für Sozialgeschichte des 20. Jahrhunderts, Hamburg

Hoover Institution on War, Peace and Revolution, Stanford University, Palo Alto, CA

Library of Congress, Washington, DC

Nationaal Archief, The Hague

National Archives, Washington, DC

National Archives, London

Netherlands Institute for War Documentation, Amsterdam

Riksarkivet, Stockholm

Schweizerisches Bundesarchiv, Bern

Truman Presidential Museum and Library, Independence, MO

Publication 8

Operation Safehaven is part of the NIOD Research Program. In accordance with NIOD regulations, the manuscript (an estimated 200,000 words) is to be evaluated prior to publication by an independent commission of economic, legal and historical experts. The sources are to be referenced in end-notes. The Dutch edition is scheduled to be published in 2006 by BOOM of Amsterdam.