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The Roaring 20s and the Roots of American Fascism
Part 1: I.G. Farben

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Most Americans view the Roaring 1920s as a decade of speakeasies, bootleg liquor, flapper girls, and the Charleston. Without a doubt, the 1920s was the most repressive decade of the 20th Century. It was a decade marked in the beginning by the Palmer Raids of 1919 and at the end with the massacre of the Bonus Marchers in the midst of the Great Depression.

Perhaps the misunderstanding about the 1920s is because the American psyche recalls only the "apple pie" culture of repressive times. As a society, Americans fail to recall the brutal repression unleashed on the labor movement or the many race riots of the decade. America's collective view of the 1950s, another decade of repression, is much the same and consists of images of "Leave It to Beaver" and "Ozzie and Harriet". Few recall the madness of McCarthyism or images of the developing Cold War.

As a society, Americans are led to overlook great threats to our freedoms that took place during repressive times. If the Palmer Raids or McCarthyism had taken place in any country behind the Iron Curtain, Americans would have been quick to condemn the actions as massive purges of dissidents.

The 1920s held a bountiful promise of progress at WW1's end. The United States could have seized the chance to become a world power and leader. Instead, the nation retreated into itself and rejected President Wilson's League of Nations in favor of isolationism.

New technologies and industries were busting down the doors. Autos were replacing the horse-and-buggy. Telephones were replacing Telegraphs. Electric lights were replacing the kerosene lamp. Air travel was now a reality. However, it was a decade that didn't live up to its promise. The decade ended in a spectacular failure of laissez-faire economics, the stock market crash of 1929. The resulting depression was so severe it left an indelible mark on those that lived through it for the rest of their lives.

A period of repression has followed every major war this country has fought. The aftermath of the Civil War fits the pattern. McCarthyism followed WW II and coincided with the Korean War. Even with Vietnam, the phenomenon was observed, although in this case the repression was split. In one part, the repression occurred during the war with the exposure of COINTELPRO, and the other part followed in the 1980s with the coming of the Reagan administration. The infamous Palmer Raids followed the heels of World War I.

The repression that followed was directed at the perceived threats of the time and can best be summarized by the four prime targets of Army Intelligence Network Lt. Col. Ralph Van Deman: the Industrial Workers of the World (the IWW union), opponents of the draft, socialists and blacks. These groups were brutally repressed throughout the 1920s. The decade, in fact, is punctuated with massacres and race riots. In 1917, even before the war's end, Van Deman had already opened a file on Martin Luther King's maternal grandfather.7

Van Deman was an anti-Semite and is credited with establishing military intelligence as part of the modern army. Most officers within the Military Intelligence Division (MID) at the time were also virulently anti-Semitic. MID officers promoted every anti-Jewish publication, including the Protocols of the Elders of Zion, as fact. It was commonly accepted within the MID that communism and Jews were one and the same. The anti-Semitic aspect of military officers extended beyond the MID and was due substantially to West Point's teaching of eugenics and anti-Semitism.

The almost universal anti-Semitism and racism of military officers allowed them to overlook the pogroms of the 1920s in Poland and other countries. Such beliefs were also a contributing cause to the passage of the 1924 bill that restricted immigration of "undesirables." Indeed, the anti-Semitism of military officers would last until well after WWII. It was a deciding reason in the failure of the United States to offer sanctuary to Jewish refugees in the late 1930s. It was also a contributing reason to the poor treatment of Jewish survivors of Nazi concentration camps.

During WWI, fear the Germans would exploit Negro unrest left Van Deman preoccupied with black churches as centers of sedition.

However, the most sinister aspect of Van Deman's network was the encroachment of the military into civilian affairs. During the 1920s federal troops were activated several times to intercede in civilian events; for example, federal troops were used to break a Seattle strike. As late as 1947, military intelligence was still being directed at the same targets listed by Van Deman, evidenced by the inclusion of Martin Luther King, Jr. in the 111th Military Intelligence Group's files.

These postwar periods of repression are the very times our freedoms are most imperiled. Such repressive times are only a natural extension of the war, as deactivated troops return home the former soldiers seek work in an economy that is shifting from war to peace. Unemployment usually rises since, many of the deactivated troops have little or no peacetime skills. Additionally, after WWI, inflation ravaged the nation as wartime controls were lifted, adding to the economic woes of returning veterans.

However, the real danger comes from troops formerly engaged in intelligence. These former spies seek to ply their trade in the government or private sector. For instance, following the Civil War, many Union spies went to work in the private sector as union busters. After WWI, the newly formed American Legion was deployed in union busting, but even more sinister, went much further seeking to destroy political dissent and anyone left of center. The end of WWII ushered in the McCarthy era of wild witch-hunts for suspected communists.

There is little doubt that, after the Untied States entered the Great War, German agents were actively engaged in sabotage in the United States. The Kingsland fire of Jan 11, 1917 was traced to a German agent, Fiodore Wozniak, the "Firebug." In that one act of sabotage, 275,000 artillery shells and huge stores of TNT and other munitions valued at more than $17 million dollars were destroyed.1

Although destruction of war plants and munitions hindered the war effort, these acts paled in comparison to the economic sabotage by the corporate warlords of I.G. Farben. The cartel agreements that American corporations had with I.G. Farben preserved a stranglehold on munitions production, as well as many consumer items.

Before looking at the cartel agreements and how they hindered both wars, some brief history is required. Often, rather obscure events determine future world peace and war. Discoveries in chemistry labs have played enormous roles leading up to both world wars.

First, Germany has always been a country short of natural resources. Although it has ample supplies of coal, Germany lacks high-grade iron ore and other minerals. The soil is not particularly fertile, and Germany has traditionally been unable to feed its people without importing food. This reason alone played a dominant role in Hitler's quest for living space to the east.

The second factor that comes into play is Germany's geographical location. Its only access to the world's oceans is through the North Sea. The lord and master of the high seas, England, could easily blockade this route. Therefore, any factor that decreased Germany's dependence on imports increased its ability to wage war and to challenge England's dominance over all of Europe.

Germany's chemical industry developed in the 19th Century. English chemists were the first to discover that pigments could be produced from coal tar, but they failed to recognize the significance of the discovery. German industry was quick to capitalize on the development and soon dominated the world's pigment production. The work of German chemists on coal tar launched a new branch of chemistry, organic chemistry. Along with pigments, a host of new products came gushing forth: the first sulfa drugs, plastics and, by the advent of the Second World War, even rubber.

Along with the many useful and beneficial products that could be developed from this new branch of chemistry, a sinister side arose as well. One of the developments that had a direct impact on WWI was the Haber process of producing nitrates. Prior to Germany perfecting this process, Germany was dependent on Chile's nitrate deposits. With the Haber process, nitrates could be produced from nitrogen in the air. Germany's war machine was no longer dependent on shipments from Chile that could be blockaded by the British Navy. As war approached, an even more sinister side of the new chemistry was developed poison gas.

WWI was the first war in which technology overpowered the frontline soldier. The chemistry labs of Germany played a pivotal role in its ability to wage war on its neighbors. These labs would play an even larger role in WWII with the development of producing both gasoline and synthetic rubber from coal.

At the center of the chemical arms production was I.G. Farben. I.G. Farben was a product of cartelization formed from six dye companies: Badische Anilin & Soda Fabrik (BASF), Farbenfabriken vorm (Bayer), Farbwerke vorm (Hoechst), Aktiengesellschaft fur Anilinfabrikaten, Leopold Cassela, and Kalle & Co. The big six were completely merged into I.G. Farben in 1916.2 In the ten years preceding WWI, I.G Farben relentlessly followed a path that enhanced Germany's ability to wage war.

When WWI broke out, I.G. Farben controlled the new worldwide chemical industry with cartel agreements and patents. Germany, particularly through I.G. Farben, aggressively sought patents in foreign countries, then refused to grant licenses to corporations in those countries. This shifted all aspects of the industry to the German homeland.

In light of recent court decisions allowing corporations to patent genes and the resulting genetically engineered food crops, it would be a worthwhile effort to study how Germany used patents to gain worldwide control over the fledgling organic chemical industry.

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Joseph Chamberlain summed up England's loss of the coal tar industry in 1883:  

"It has been pointed out especially in an interesting memorial presented on behalf of the chemical industry that under the present law it would have been possible, for instance, for the German inventor of the hot blast furnace, if he had chosen to refuse a license in England, to have destroyed almost the whole iron industry of this country and to carry the business bodily over to Germany. Although that did not happen in the case of the hot blast industry, it had actually happened in the manufacture of artificial colors connected with the coal products, and the whole of that had gone to Germany because the patentees would not grant license in this country."3

Lloyd George reiterated Chamberlain's view in 1907:

"Big foreign syndicates have one very effective way of destroying British industry. They first of all apply for patents on a very considerable scale. They suggest every possible combination, for instance, in chemicals, which human ingenuity can possibly think of. These combinations the syndicates have not tried themselves. They are not in operation, say, in Germany or elsewhere, but the syndicates put them in their patents in obscure and vague terms so as to cover any possible invention that may be discovered afterward in this country."4

These quotes leave no doubt about the destructive nature of the cartel agreements and the patents sought by I.G. Farben in England. Nor is there any doubt over how such cartel agreements hindered U.S. war efforts during WWI. During the war, numerous I.G. Farben front corporations were seized under the Trading with the Enemy Act. Cartel agreements between American corporations and I.G. Farben created monopolies and spheres of influence, eliminating any competition. In effect, the cartel agreements were a second wave of robber barons. This time, however, the robber barons resided in Germany and structured the agreements to keep control over American corporations, even to the extent of limiting production of war material. In effect, the cartel agreements were nothing short of an attempt to put corporate rule ahead of government.

 

Recent trade agreements such as NAFTA, GATT, the failed MAI and GATS (all are proposed under the banner of free trade agreements) have placed the rights of corporations above and beyond the reach of the government. The inherent danger of allowing corporations to rule will be readily apparent in such a study. Furthermore, all these agreements contain clauses that set up tribunals as the final arbitrator in disputes, bypassing the court systems of the signatory countries which in effect allows the corporations setting on the tribunals to establish law by decree.

Even before the Nazis came to power, the cartel agreements formed a vital part of Germany's plan to wage war and extract revenge for the Treaty of Versailles. The willingness of corporate America's leaders to reestablish cartel agreements with I.G. Farben during the 1920s, and their subsequent support for fascist groups in the 1930s, forms the base of fascism in the United States.

Although, there were literally dozens of companies seized during WWI for trading with the enemy, the focus is not on those seized. Rather, the focus is on the ease and speed with which I.G Farben was able to reform its cartels, aided by the laissez faire economic policies of Harding, Coolidge and Hoover.

During the war, corporations reaped fat profits. With the lifting of wartime controls in 1919, business leaders craved a chance to get back to normal. Prices had been frozen during the war and before the war, Teddy Roosevelt had followed a policy of breaking up monopolies. The only threat to reestablishing their monopolies and domination of the economy came from the new labor movement and communism. In the aftermath of the Red Scare of 1919, the pro-business candidate, Warren Harding, was elected president, setting the stage for the rebuilding of the cartels.

WW I should have taught the Allied nations that Germany used international cartels as its spearhead of aggression. The German military mind had long understood the concept of total war. The father of modern German militarism, Karl von Clausewitz, best summarized the concept:

"War is no independent thing, the main lineaments of all strategic plans are of a political nature, the more so the more they include the totality of War and State. Disarm your enemy in peace by diplomacy and trade if you would conquer him more readily on the field of battle."5

This philosophy of war and peace became a cornerstone of Germany's political and economic interactions with other nations. The history of I.G. Farben in the twentieth century is one of support for German military adventurism. It consistently advanced German military plans and subordinated its own financial interests to German nationalistic aims.

With the ink hardly dry on the armistice agreement, the New York Times received a dispatch from its Berlin correspondent on December 1, 1919:

"The firms composing the German dye trust have decided to increase their capital to the extent without parallel, I believe, in the history of German industry. The trust which consists of three great and four minor concerns in the industry, valued at, roughly, 15,000,000,000 marks, is extending for two reasons: It is determined to reassert German supremacy in the dye industry; in the second place, there is the question of nitrate, so important for the agricultural life in the country.

The trust is aiming at making the fatherland independent of foreign supplies and to increase production so it will be able to export large quantities."6

The first World War pointed out deficiencies in Germany's armor. I.G. Farben's activities in the inter-war period must be understood to understand how U.S. corporations willingly hampered the war effort in the 1940s. From 1919 onward, I.G. Farben pursued a path of reestablishing its dominance. I.G. Farben continued to use the same methods it had used successfully in the first war as well as newer forms of the cartel. Several I.G. Farben developments in the inter-war period¾ such as Buna rubber, the production of gasoline from coal, as well as aluminum and tungsten carbide production¾ would figure prominently in WWII.


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The mind-set of I.G. Farben, and its use of patents and cartels to establish a German empire, is best illustrated with the example of Bayer 205. Bayer 205, or Germanin, was announced in 1920 as a cure for sleeping sickness. Through indirect channels, I.G. Farben made an offer to the British government: to exchange the secret of Germanin for the return of German colonies in Africa lost in WWI. The British government refused the exchange. However, a British medical journal in 1922 preserved the resourcefulness of I.G. Farben as follows:
 

"A curious illustration of German desire, not unnatural in itself, to regain the tropical colonies lost by the folly of the rulers of the German Empire, is afforded by a discussion which took place at a meeting of the German Association of Tropical Medicine at Hamburg. The Times correspondent in Hamburg reports that one of the speakers said that Bayer 205 is the key to tropical Africa, and consequently the key to all the colonies. The German government must, therefore, be required to safeguard this discovery for Germany. Its value is such that any privilege of a share in it granted to other nations must be made conditional upon the restoration to Germany of her colonial empire."7

The intent of I.G. Farben and Germany could hardly be masked by such a report. An even more ominous warning appeared in 1925:

"In open violation of the Treaty of Versailles the Germans shipped munitions to the Argentines. Rottweil (I.G’s wholly owned subsidiary) still makes and sells excellent military powders, and German factories for munitions have been built or openly offered to build in Spain, Argentina, Mexico, etc."8


Article 170 of the treaty specifically forbade German export or import of armaments or munitions. Both the British and American state departments were aware of the violation. British Imperial Chemical Industries refrained from lodging any protest because it was locked into a cartel agreement with I.G. Farben. America, locked-in the grip of isolationism, simply ignored the violation.

In 1926, the German army formed the Economic High Command. Robert Strausz-Hupe summed up its express purpose as follows:

"Studying the deficiencies of German economy and laying plans for transforming it into Wehrwirt-schaft. Rapid conquests alone could provide new resources before Germany's reserves, accumulated by barter, ruthless rationing, and synthetic chemistry, had been exhausted in the initial war effort.

These new resources could then be poured into the war machine, rolling on to ever larger territorial conquests, and as long as it kept on rolling, the economy of greater space need never fear a crisis."9

I.G. Farben had direct and indirect communication channels with the Economic High Command. I.G. Farben policies were adjusted to accommodate the High Command's plans. In 1932, Colonel Taylor of du Pont reported:

"One of the motives back of the French proposal, that all countries should establish a conscription, is to upset the present German system of handling their Reichswehr. The Reichswehr is limited to 100,000 men of 12 year enlistment, and it would appear reasonable to suppose that there should be at present a number of soldiers around the age of 33 or 34; the fact is that when one meets a soldier of the Reichswehr he is a young man in the early twenties, and it is pretty well accepted that there are several men available under the same name and hence training much larger number of men than permitted."10

During the 1920's there were more than a hundred secret treason trials in Germany of journalists and others who revealed the truth. Quoting Dr. H.C. Englebrecht and F.C. Hanighen:

"It would seem then that despite the Versailles treaty that Germany is again a manufacturer and exporter of arms. This interference is confirmed by various incidents from the past ten years. There was the Bullerjahn case of 1925. On December 11, 1925 Walter Bullerjahn was sentenced to 15 years in prison for treason. The trial was held in secret and the public was excluded. Both the crime with which the condemned was charged and the name of the accuser were kept deep and dark secrets. After years of agitation by Dr. Paul Levi and the League for Human Rights, the facts were finally disclosed. The accuser was Paul von Gontard, general director of the Berlin-Karlsruhe Industriewerke, the same man who used the French press in 1907 in order to increase his machine gun business. Gontard had been establishing secret arsenals, contrary to treaty provisions, and this fact was discovered by the Allies. Gontard disliked Bullerjahn and had serious disagreements with him. In order to get rid of him he charged him with revealing to the Allies the fact that Gontard was secretly arming Germany. This was termed treason by the court and Bullerjahn was condemned, although not a shred of evidence was ever produced to show his connection with the Allies. The exposure of the facts in the case finally brought the release of Bullerjahn."

A little later Carl von Ossietzky, the courageous editor of the Weltbuehme, was convicted by a German court of treason because he had revealed military secrets in his journal. The secrets he had published were closely related to the secret rearming of Germany contrary to treaty provisions.

There is also some evidence that Germany is importing arms and munitions from other countries. In a confidential report of the exports of Skoda for 1930 and 1931, classified by countries, Germany appears as importer of comparatively large amounts of rifles, portable firearms, aero engines, nitrocellulose, dynamite and other explosives."11

The previous quotes focused on one simple fact that has been blurred by time: Hitler had the support of the ruling class as early as 1923. Hitler's entry into politics was the result of his commanding officer's order to attend a meeting of what evolved into the Nazi party.

Hitler, in fact, was found guilty of a far more serious crime, armed rebellion, but received a much lighter sentence than Bullerjahn. Hitler served less than two years in prison. Nor was Hitler's imprisonment particularly harsh. A more fitting description of his prison accommodations would be that of a hotel with room service. No amount of propaganda can cover up the difference in fate of Hitler and Bullerjahn. Without the support of the elite in Germany, Hitler would have suffered the same fate as Bullerjahn.

At the time of the Beer Hall Putsch, the Nazis were only a minor party. In fact, the reason the putsch failed was because Hitler lacked the popular support he had counted on. There were hundreds of trials for treason in which the defendants received harsh sentences. None were released from prison early without the special assistance of outside world opinion. Few people outside Germany had ever heard of Hitler in 1923.

In a memo dated March 22, 1932 a full year before Hitler assumed power the files of J.K. Jenny, of du Pont's Foreign Relations Department, reveals that I.G. and other German industrialists financed Hitler:

"It is a matter of common gossip in Germany that I.G. is financing Hitler. Other German firms who are also supposed to be doing so are Krupp and Thiessen. How much truth there is in the gossip we are unable to state, but there seems to be no doubt whatever that Dr. Schmitz (director-general of I.G.) is at least a large contributor to the Nazi Party."12


The previous series of quotes clearly establishes the complacency of the three American administrations of the 1920s towards German violations of the Treaty of Versailles.

The quotes also establish the ever-increasing role of I.G. as an agent of the German government, culminating with I.G. Farben's support of the Nazis. Further, the quotes leave no doubt that the Republican administrations of the 1920s were aware of the violations, as well as the intent of I.G. Farben to reestablish its supremacy.

Isolationist policies of the 1920s Republican administrations were clearly a dismal failure that provided a fertile environment for rebuilding Germany's war machine. I.G. Farben was a supporter of the Nazis at least a full year before Hitler seized power. One can only speculate of when I.G. Farben began to support Hitler. Moreover, I.G. Farben had a long history of supporting German nationalism. Perhaps the most alarming feature of the quotes is I.G. Farben's increasing boldness and aggressiveness in violating the treaty. By the mid-1920s there were clear signs that Germany was preparing for another war.

Even more grievously than the complacency towards the violations of the Treaty of Versailles was the complacency of Republicans to the rebuilding of I.G. Farben's domestic cartels. To grasp the full extent of this, a brief look at the economic environment following WWI is needed.

The war's end saw a U.S. pullback into Fortress America, and the imposition of a strict right-wing isolationist policy, despite the best efforts of an ailing President Wilson to bring the United States into the League of Nations. The United States had the opportunity to seize a leadership role in the world, but instead retreated.

Compared to the European countries, the war for the United States was short, and as a result the United States didn't suffer the staggering number of causalities that the European countries did. The resulting isolationism was far too widespread to have been caused solely by war losses. Although, it went hand in hand with the policies of the extreme nativist groups, the resulting isolationism went far beyond fringe groups. It would be more fitting to describe it as mass psychosis. This was as much a product of nativism as it was a product of media manipulation by corporate America.

From 1900 until the end of the war in 1918, big business took several blows. First and foremost during this time was the trust-busting administration of Teddy Roosevelt. Second, price controls passed during the war restricted corporate profits. Senate investigations into war profiteering would extend into the 1930s. Finally, unionism was perceived as a threat by big business, and largely portrayed as either communism or the product of dirty foreigners.

To the business leaders of the time, getting back to normal meant nothing more than getting back to the days of robber barons, trusts, and cartels free from government intrusion and unionism. Corporate America was seeking the laissez faire economics of the three 1920s Republican administrations.

The cartel agreements with I.G. Farben were anticompetitive, and used to establish monopolies. In essence, anticompetitive agreements were used to increase profits of larger firms at the expense of smaller firms and consumers. Such agreements were the antithesis of Teddy Roosevelt's trust-busting days and a free enterprise system.

However, to the business leaders of the 1920s, "competition" was a foul word. Competition had to be avoided as much as unionism. In the view of leading industrialists of the time, competition was destructive. Thus the empire builders of the 1920s were eager to sign such agreements, and the policies of successive Republican administrations willingly turned a blind eye towards anticompetitive practices.