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The War Years:
Part 2: Rainbow 5 & The Great Sit Down Strike

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Just as the support for fascism crystallized among the nativist groups during the war years, so did the support for fascism among the isolationist members of Congress. In the previous chapter the removal of Maloney as prosecutor of the seditionist by Wheeler and the pro-fascist Congressmen contributed to the failing of the trials of even the minor fascists. Father Coughlin was not even indicted along with many others. However, it was on the eve of the war with Germany that Wheeler revealed himself as a traitor and a fascist. On December 4, 1941, the pro-fascist Chicago Tribune and its' sister publication the Washington Times Herald printed the plans for the top secret Rainbow 5 Plan.

Rainbow 5 was the battle plan developed by the military in case war broke out. Publishing the plan or leaking information about the plan would be the equivalent of publishing or leaking the battle order of the Pentagon during the Cold War. Unquestionably, leaking such a plan was an act of treason. In Hitler's speech declaring war against the United States on December 11, 1945, the final straw he listed was as follows.

"With no attempt at an official denial there has now been revealed in America, President Roosevelt's plan by which, at the latest in 1943, Germany and Italy are to be attacked in Europe by Military means."43

Amazing as it may seem, no one was charged with treason or sedition, not the Chicago Tribune, not Wheeler and not the army officer that delivered the papers to Wheeler despite an FBI investigation. Remember this was the battle plan in case war broke out. It was top secret and fewer than a dozen copies of the report were ever produced.

The author of the report was Colonel Albert Wedemeyer. Wedemeyer had been educated at the German War College. While in Berlin he rented an apartment with a member of the Nazi Party. Wedemeyer became close friends in Berlin with General Ludwig Beck, chief of the German General Staff. Wedemeyer was friends with Lindbergh and acted as his interpreter while Lindbergh toured Germany. Likewise, Wedemeyer was close friends with General Robert Woods, the president of the American First group.44 Wedemeyer had even attended several meetings of the American First group despite its pro-fascist and anti-war agenda.

Hoover was convinced Wedemeyer leaked the plans to Wheeler. Of special note, Reagan resurrected Wedemeyer's career as a special military adviser in the 1980s. Yet, another of the many seemingly innocence connections between Reagan and the Nazis. Taken singularly one could easily dismiss it as an error in judgement. However, when taken collectively it leaves Reagan as either extremely naïve and dumb or a pro-fascist.45

One clue as to how the files were leaked comes in the book A Man Called Intrepid. In that book, Sir William implies that he was authorized to leak the plan.46 As already mentioned, FDR allowed the British to keep watch of certain characters known to be friendly with the Nazis, particularly those associated with Wall Street. In his plan to trap the fascists, Roosevelt would appoint individuals friendly with the Nazis to positions of power so that they could be monitored. Following the war, Roosevelt planned on leaking the information to the press. With the resulting public outrage over their actions, trials could then be conducted for those guilty of sabotaging the war effort and aiding the Nazis.

Two of the individuals who were appointed so they could be monitored were Allen Dulles and Nelson Rockefeller. FDR's plan was to charge them with treason and sedition following the war. Wheeler may very well have been another of those being watched. With Wheeler's ties to the Rockefellers through Anaconda, a company that delivered substandard copper wire to both our allies and our own military, it seems certain that Roosevelt may have had some big fish to fry if he had lived past the end of the war.

By leaking the files to the Chicago Tribune, Wheeler ensured that they would be published. The Tribune was openly pro-fascist before the bombing of Pearl Harbor and rabidly opposed to Roosevelt. The Chicago Tribune was later charged with treason for publishing the names of the ships involved in the battle of the Coral Sea.

Wedemeyer's career, however, deserves more scrutiny. Wedemeyer was part of a military circle that was extremely anti-Semitic. A few years following the war, Wedemeyer wrote in a letter to his close friend retired colonel Truman Smith that the British, Zionists and Communists made America's entry into the war inevitable. Later, Wedemeyer stated that "most of the people associated with communism in the early days were Jews.

He further claimed that Roosevelt's Jewish advisers did everything possible to spread venom and hatred against the Nazis. He stated that during his attendance of the German War College in 1936 his eyes were opened to the number of Jews in the American government by reading the Die Frankfurter Zietung and Die Berliner. The Nazis controlled both papers.72

In 1937, Wedemeyer tied the shortage of food in Germany to the Jewish question. Using the embassy's attaché stationery, Wedemeyer wrote to friends, dismissing the food shortage as caused by poor weather and crop failures. He claimed that Jews in other countries had bought up the enormous quantities of foodstuffs and had intentionally diverted the shipments from Germany.

As late as 1958, Wedemeyer was still voicing pro-Nazi opinions. He completely ignored the Nazi's racial ideology. He described lebenstraum as merely a national movement to win living space. In his arguments, Wedemeyer used the same historical analogies that the Nazi propagandists used. He compared the German invasions and expansions eastward with the American expansion westward.

The two people with the largest influence of Wedemeyer's career were Truman Smith and Wedemyer's father-in-law, Deputy Chief of Staff Stanley Embrick. Embrick was the most outspoken isolationist general in 1939.

A brief look at Wedemeyer's circle of friends within the military provides a worthwhile examination of the opinions of many of the top military officers before the war. Many of those officers harbored pro-fascist leanings and an extreme hatred of Jews. Such views had been engrained into the officers since the 1920s and would affect how the war was conducted, as well as the post-war period.

In 1939, Smith was the attaché in Berlin and warned against allowing the Jewish question to interfere with German-American relations. After returning to Washington in 1939, Smith became General George C. Marsahll's German specialist. Smith conferred extensively with Lindbergh, as did Colonel Hamilton the head of G2's German section. Lindbergh's isolationist views were well known at the time and Lindbergh continued his isolationist radio broadcasts. Two weeks after the German invasion of Poland, Smith delivered a confidential message from Roosevelt offering Lindbergh a cabinet position in aviation if he would cease his radio broadcasts. Both Smith and Lindbergh scoffed at Roosevelt's offer.

In November of 1939, Smith's assistant attaché in Berlin, Major Percy Black returned to Washington. Black had accompanied the German army into Poland. Black, like Smith, talked glowingly of the prospect for a negotiated settlement. Even more disturbing was Black's discounting of Nazi brutality. In May 1940, the Nazi invasion of France proved Black wrong.

Wedemeyer opposed the creation of the State of Israel, as did Black and other members of his circle of friends. After retiring, Wedemeyer became a writer for the John Birch Society and a member of the American Security Council, a group formed in the 1950s from the remnants of three pro-fascist groups of the 1930s.

The most astonishing aspect of the publication of the Rainbow Plans was that charges of treason were never brought to bear, even after the end of the war. Most Americans are unaware of the plans ever having been leaked, and is yet another example of how high-level fascists within the United States were immune from prosecution. This brief look at Wedemeyer and his circle of friends reveals that even within the Army there was a group of officers sympathetic to the fascist cause.

However, the majority of support for fascism and opposition to the war came from the leaders of corporate America. It was the leaders of corporate America who were behind the plot to seize the White House and install a fascist government. It was the leaders of corporate America who were building the Third Reich's war machine as the statement from the US Ambassador to Germany, William Dodd, noted. And it would be the leaders of corporate America who went on a sit down strike to prevent the production of war munitions first for the Lend Lease program and then for our own troops once war was declared.

Between 1940 and 1945 there was a dramatic evolution in the tactics employed by the native fascists within America. The first phase of this evolution was marked by the sit-down strike during the summer of 1940. Prior to this time and throughout the remainder of 1940, corporate America opposed the entry of the United States into the European war. Considerable opposition was raised against Roosevelt's Lend Lease program and several contracts to supply Britain with war munitions were rejected outright by corporate America. One such example being the rejection of a contract to build Rolls Royce engines for the RAF by Ford Motor Company. Other corporations hid behind the terms of the cartel agreements with I.G. Farben and other German corporations. Such was the case of du Pont furnishing the British with inferior cartridges lacking tetrazine. However, by far the most damaging aspect of this phase was the sit-down strike of 1940, which reveals the complacency of corporate America toward Nazi Germany.

The need for aircraft was one of the most pressing needs as the ominous clouds of war gathered on the horizon. Aircraft production required massive amounts of aluminum. However, aluminum production in the United States was controlled by a virtual monopoly held by the American Aluminum Company of America (Alcoa). Alcoa had signed a cartel agreement through a slight of hand with German interests in the late 1920s. Alcoa was controlled and owned by Andrew Mellon, one of the participants in the plot against FDR and steadfastly delayed increasing production. George Seldes recorded the following quotes about Alcoa:

"If America loses the war it can thank the Aluminum Corporation of America" Secretary of Interior Harold Ickles, June 26,1941.

By its cartel agreement with I.G. Farben controlled by Hitler, Alcoa sabotaged the aluminum program of the US air force. The Truman Committee heard testimony that Alcoa's representative, A.H. Bunker a dollar a year head of the aluminum section of the OPM prevented work on our $600,000,000 aluminum expansion program.

Congressman Pierce of Oregon said in May 1941: "To date 137 days or 371/2% of a year's production has been wasted in the effort to protect Alcoa's monopolistic position. This delay translated into planes means 10,000 fighters or 1,665 bombers."

This of course is the answer to the boys on Guadalcanal and in Tunisia and not absenteeism, the 48 hour week or wage increases to meet the cost of living."99

Not only did Alcoa own almost all of the plants that produced aluminum, but it also controlled most of the high-grade bauxite ore. Aluminum production requires massive amounts of electric power and Alcoa controlled much of the hydropower. In a radio broadcast on March 22, 1941 the Assistant Secretary of State, Adolf Berle declared:

"The Lord Almighty so built the continent of North America that most of the water in the northeast quarter of the continent forms streams and rivers which flow into that huge collection of reservoirs we call the Great Lakes. This is an enormous amount of water. All of it funnels out to the sea through a single great millrace, which is the St. Lawrence River. If that water is ever harnessed, it will make the largest and cheapest supply of electricity available anywhere in the world."74

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However, the St. Lawrence was unharnessed and would remain so. Andrew Mellon owned all of the land on the American side and much of the land on the Canadian side of the International Rapids stretch. Along this course of 49 miles, the river fell 92 feet and could be used to generate electricity at a cost of one tenth of a cent per kilowatt-hour. Only last-minute fights by New York governors, Charles Hughes in 1907 and Alfred Smith in 1926 prevented Alcoa from exercising absolute control over it. By 1940, Roosevelt had still failed to gain passage in Congress of a treaty negotiated by Herbert Hoover for the joint development of the St Lawrence. The Alcoa lobby was too strong to break. Both Ontario and New York drew electrical power from Niagara. The Canadian power was generated by a public owned system and charged $0.85 a kilowatt-hour. On the New York side the power was produced by the private Niagara Hudson combine and the cost was $1.59 for a kilowatt-hour.75

This example of the conglomerate gouging New Yorkers at almost twice the rate of cost of the Canadian public utility should serve to remind us that some services and materials are far too valuable to ever be entrusted to private hands and should remain in the hands of local public utilities. Especially in light of the contrived energy shortage in California during the winter months of 2001, this price gouging was miniscule compared to the profits that Alcoa would generate during the war. In a long antitrust suit in 1940, a government brief stated that Alcoa's highest profits came from the production of sheets of 24S and XA 24S alloys, both of which were used extensively in aircraft. According to the Justice Department, as the sole supplier of these alloys Alcoa was realizing a profit of 181% over costs.76 Alcoa's cartel agreement with a German corporation in the 1920s allowed Germany to produce 165,600 tons of aluminum in 1938, while the total United States production was only 103,129 tons. Additionally, Alcoa had invested heavily in plants in Norway, Hungary, Italy and Spain---two of which were outright fascist countries and two of which had fallen under the boot of the Third Reich. No investigation of Alcoa's dealings with the Nazis was ever made.

Mellon not only controlled the production of aluminum through Alcoa, but he also sought to prevent all others from entering production through his cronies in the Office of Production and Management (OPM). E. R. Stettinius, chairman of the board of U.S. Steel, headed the OPM and was in charge of the Industrial Materials Section. Stettinius issued glowing reports assuring that an adequate supply of raw materials was available. Many of the materials such as antimony, manganese, mercury, tungsten, nickel, chromium and tin came from South Pacific Islands and Malaya and would be vulnerable to a supply cutoff. Nor were the stocks on hand adequate for a two-year supply, as purchasing of the materials didn't begin until 1940.

In May of 1941, the truth of the shortages was brought to light in a report from the Metals Reserve Corporation. The report detailed the amount purchased, the amount in transit and the amount delivered. In the case of mica, the report showed a purchase of 500 tons from India, but as of the date of the report none had been shipped. In the case of zinc, a vital material in producing the brass cartridges, the report was dismal. The only amount ordered was from Newfoundland for 50,000 tons (less than a month's supply). Zinc was being consumed at 70,000 tons per month (7,000 tons more than domestic production). One thousand rounds of 30-caliber shells would consume 16 pounds of zinc, for 75-mm shells one thousand rounds would consume 3800 pounds of zinc. During the war production of small arms, ammunition reached four billion rounds per month.77

Perhaps the best example of how the dollar-a-year men like Stettinius hindered the war effort is that of aluminum. At the onset of the war, there was only one aluminum refiner, Alcoa. In 1941, Alcoa could produce a maximum of 642 million pounds of aluminum in one year. With Roosevelt's plan to produce bombers, the nation required 1.6 billion pound a year.

At the time, Reynolds Aluminum was a small upstart company compared to Alcoa. Reynolds was merely a fabricator of aluminum products and had never produced a single ingot of virgin aluminum. Foreseeing the shortage in aluminum and unable to obtain a full supply of aluminum from Alcoa, Reynolds agreed to mortgage all of his property to start refining in his own plants if the government would lend him the money. The Reconstruction Finance Corporation (RFC) approved his loan within 30 days for $15 million dollars and later increased it to $20 million dollars.78

Reynolds soon had a plant at Lister, Alabama, that produced forty million pounds and another plant in Longview, Washington, of sixty million pounds, but considerable pressure was brought against Reynold's loan application. W. Averill Harriman and a delegation of war department officials pressured Secretary Ickles to deny Reynolds an allocation of electrical power from Bonneville. Stettinius and his consultant, Grenville Holden, opposed Reynold's entry into the refining of aluminum vigorously behind the scenes.79

Although Reynolds persevered despite the objections and backroom dealings of Stettinius and Holden with the help of Ickes, others failed. To protect Alcoa, Stettinius and Holden blocked others from producing aluminum and from using new methods. In March 1941, the Bohn Aluminum Company sought a loan to produce aluminum and was denied by Holden. Although OPM had been ladling out millions of dollars to help businesses expand for the war effort, Holden replied to Bohn: "The Army is not disposed to finance expansion of industrial capacity with government funds as long as any company is prepared to expand with private funds." However, Holden was likewise uninterested in expanding aluminum production even when a private company from Switzerland sought to enter the market.80 Holden also opposed the use of low-grade ore in an effort to protect Alcoa. Alcoa controlled all of the high-grade ore. However, with the increased demand for aluminum production for bombers, the only North American high-grade ore would be exhausted in two years.

From May to October 1940, corporate America was engaged in a sit-down strike. Led by the aviation industry, defense contracts were left unsigned until the corporations were granted special tax privileges. Unlike labor strikes, the sit-down strikes of corporate America had the support of the news media of the War and Navy Departments and the new Defense Commission. Strikes by labor were immediately greeted with charges of treason. No strikes, however, were launched against any aviation corporation yet hardly any planes were produced.

A look at the figures of ships in service on January 31, 1941, only confirms the serious lack of Navy war ships. In three of the five categories listed the total tonnage falls woefully short of the tonnage Congress authorized in 1934.


Authorized 1934 In Service81
Battleships 525,000 tons 464,300
Aircraft Carriers 135,000 tons 134,800
Cruisers 343,770 tons 328,973
Destroyers 190,000 tons 217,390
Submarines 68,298 tons 107,960

 

Even more revealing as to the inadequacy of the navy's procurement of warships is a direct comparison of our fleet with the fleets of the Axis powers.82

 

January 1, 1941

January1, 1943

 

U.S.

Axis

U.S.

Axis

Battleships

15

20

18

28

Aircraft Carriers

6

8

7

8

Cruisers

37

75

45

101

Destroyers

159

271

219

325

Submarines

105

284

133

500

 

With the exception of destroyers in the two year-period of 1941 to 1943, the United States shipbuilding industry had barely outpaced the losses sustained in the first year of the war. Fortunately, England's Royal Navy was up to the task of ruling the seas.

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In May 1940, the financial editor of the New York Sun was astonished by the British 100-percent excess-profits tax. Corporate America, which built Hitler's war machine in violation of the Treaty of Versailles, was in no hurry to arm the United States or its allies. The July 29, 1940, issue of Barron's Financial Weekly reported: "The attitude of some defense industries that they must be assured of a profit is souring many Washington dispositions, even in the pro-business War and Navy Departments." Unlike the GIs who were drafted and compelled to serve and defend their country for the paltry sum of $21 a month the aviation industry would reap millions.

In June 1940, Congress revised the Vinson-Trammell Act of 1934 to limit profits on competitively bid contracts to eight percent and to seven percent on other contracts. Roosevelt signed the bill on June 28, 1940, but by July 10, he had to surrender to corporate America and its sit-down strike.

In addition to dropping the limits on profits, corporate America demanded and received legislation that would enable companies building new plants or equipment to amortize the purchases in five years. Assistant Secretary of War, Louis Johnson sent out a letter to all plane manufactures asking for work to begin immediately even though it would take sixty days for the new bill to pass through congress. The plane manufactures waited.

Even with the special tax breaks, corporate America chose to invest little of its own money in new plants and equipment, choosing instead to let the government directly finance the expansion. By April 13, 1941, the total amount of private funds invested in the expansion of various defense industries was miniscule, as shown in the table below.

Tank and Vehicles 24%
Aircraft 16%
Guns and Parts 12%
Ammunition 6%
Ship Construction 3%

Of the $2.8 billion dollars in planned expansion of defense facilities, private capital only accounted for $773,000,000. The average government expenditure for plant expansion was six million dollars while the average expenditure of private capital under the five-year amortization was $60,000. In short, corporate America was holding the free world hostage. The figures in the table above are enough of a testament to bury the myth that private enterprise built America and created a "Fortress of Democracy." The fact remains it was all done with the taxpayer's money under the guidance of the Roosevelt administration.

In industry after industry, the story was much the same as it was for aluminum. In the critical machine tool industry, corporate America continued to drag its feet and delayed war production. About 15 million man-hours of machine tooling could have been made available by General Motors if it had foregone a model change. If the entire auto industry had foregone model changes in 1942, over 30 million man-hours of machine tooling could have been freed up for the war effort. General Motors promised to give up a model change and then promptly went ahead with a model change anyway.

Against Roosevelt's call for full production, survey after survey found machine tools sitting idle. According to the March issue of Monthly Labor Review, a publication of the Department of Labor, weekend shutdowns were commonplace. A survey of 45 machine tool plants found only 14 running three shifts and another 19 running two shifts. However, the number of employees working on the second shift was less than 20 percent of the workers on the normal day shift. In plants with three shifts operating, only 25 percent of the workers were employed on the second and third shift. Officials of the AFL Machinist's Union attributed the major obstacle to the strong anti-unionism of the Metal Trade Association and its fear of hiring new, pro-union workers. In May 1941, a Bureau of Labor Statistics study revealed a high ratio of workers had quit the machine tool industry because of the repressive working conditions. In eleven categories of skilled machinists, there were only prospective shortages of labor in four. Further complicating the shortage in machine tools was the reluctance of the industry to subcontract work to small shops.

Indeed, the reluctance of corporate America to subcontract work out to small shops was widespread and protected by the dollar-a-year men. No better example exists of the Defense Commission ignoring small businesses than the case of Beaver County, Pennsylvania. Community and labor leaders in Beaver County concerned with the war effort prepared a sixty page booklet detailing the production facilities available along with the available labor supply. The booklet was delivered to Sidney Hillman's division of the Defense Commission in charge of labor, the only division actively interested in farming out defense contracts to small firms.

The Beaver County booklet was ignored. The facilities of Beaver County's small businesses went unused. The idle facilities in Beaver County were not insubstantial in any sense of the word. There were five modern machine shops that combined could handle large contracts and seven additional plants with partially available production for alloy iron, steel, brass and aluminum castings. Also available: were seven pipe and tube mills; two plants that could produce machine tools parts; two plants that could handle metal stampings; four plants that could handle light steel fabrication; two additional plants that could produce rivets, bolts and nuts; five plants that could handle all kinds of wood packaging crates. It was not until May 1941 that Beaver County received its first subcontract, and even then the contract was for a mere $1,500 for nuts and bolts, despite pleas from Roosevelt to use all available production facilities.

The dollar-a-year-men staffing the Defense Commission and the OPM were not interested in farming out work to small firms. Instead, they sought to protect their former firms, many of which held cartel agreements with I.G. Farben. With a stranglehold on wartime production, the nation was held hostage. By the end of the war, only 150 large corporations had operated 80 percent of the government-built war plants. Only 31 corporations operated Fifty percent of the government-built plants. The 100 largest had operated 75 percent of those plants.28.

Labor statistics confirm how the largest corporations used the war to the disadvantage of smaller firms. In 1939, firms with fewer than 500 employees employed 52 percent of all manufacturing workers. Five years later, these firms employed only 38 percent. Corporations employing more than 10,000 employees accounted for less than 13 percent of all workers in 1939, but by 1944 they accounted for 31 percent of the workforce.

Only in the case of aluminum did the RFC finance a competitor to break a production monopoly and then only at the beginning of the transformation toward a war economy. By 1940, with war raging in Europe the large corporations were in the "catbird seat." Roosevelt was powerless to assert control over war production as the repeal of the revised Vinson-Trammell Act testifies to. Men could be drafted to serve their country; capital was exempt from the draft. Any attempt to draft capital would have been met with immediate claims of communism from the right-wing and pro-Nazi groups. In effect, the nation's security was held hostage by the same corporations that built Hitler's war machine and whose senior management and owners supported many of the pro-fascists groups.