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The War Years:
Part 4: The Nazis Run for Cover

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Perhaps the most influential congressman in aiding the du Pont's free enterprise was Martin Dies. As already covered in the previous chapter Dies set about sabotaging the search for fascists by the House committee and instead started a witch-hunt for reds. Remember that it was a Republican committee from Minnesota led by some of the leading industrialist of that state that asked Dies to investigate the communist influence in the Farmer-Labor Party. Both the FBI and the Dies committee were guilty of pursuing reds over fascists. Both did investigate a few fascists but the emphasis was the investigation of communist.

Ironically, the communists posed a very minor threat compared to the fascists. The results from the 1936 election can readily attest to this fact. In 1936, the pro-fascist candidate, Lemke polled 8882,479 votes--- eleven times the vote total of the communist candidate.83 In fact, the Communist Party vote in 1936 had declined twenty percent from the previous election in 1934. Other polls from the era confirms that the threat was from the right and fascism and not the communism or left. Polls of college professors of the time reveal a deep intolerance by the conservative faculty. One poll revealed that 35 percent of the professors would omit facts from textbooks that might lead to criticism of the social order. Another poll found that 48 percent of the professors favored deportation of aliens who criticized the constitution.84

Hoover was estranged from Dies after Dies leveled charges that the FBI had bungled the en masse arrest of the veterans of the Spanish Civil War and the subsequent dismissal of their indictments. The arrest of these veterans who volunteered to fight fascism while the right wing still was still apologetic to the cause of Hitler stands as an one of the greatest injustices of the 20th Century. Their arrest was based solely on their political views since most members of the Abraham Lincoln Brigade were either socialists or communists. 21 In effect, their only crime was their political views. These veterans of the Abraham Lincoln brigade suffered throughout their lifetime at the hands of Hoover and the FBI. As late as the 1990s the FBI was still keeping them under surveillance. Dies even went so far as to red-bait Attorney General Jackson, citing his support for such groups as the American League for Peace and Democracy and the League of American Writers as communist fronts.

Thus, to further the du Pontsí free enterprise the same whipping boy that was used following WWI to protect the interest of the rich elite was invoked--- the menacing hordes of godless reds. With fascism fanatically opposed to communism, socialism and liberalism, this could only magnify and encourage the fascist groups. One of the first groups charged with being infiltrated with communist were labor unions, just as the case had been after WWI. One of Diesí first and primary targets within the labor movement was Harry Bridges. Bridges was finally deported in 1945 after ten years of harassment by the Dies Committee and the FBI. Dies extended his attack on Bridges to a sweeping attack against the Labor Secretary, Frances Perkins. 22

Dies and his committee also attacked the New Deal extending their attack on communism to include liberal elements. One target within the New Deal was the President's wife, Eleanor. Working covertly the FBI would leak derogatory information about her to right wing publicists.23

Other targets of Dies were California Democratic nominee for governor, Culbert Olson and United States Senator Sheriadan Downey. In this case, Harper Knowles brought the charges before the committee from the private sector. Knowles claimed to be a representative from the Radical Research division of the American Legion; in reality, he represented a fascist connected organization, Associated Farmers Inc. The Radical Research division was created in the 1920s during the Red Scare. The Radical Research division targeted union organizers and any group from the left that was perceived as a threat to business. Most of these radical research groups within the Legion were first formed following WWI and were partially responsible for fanning the flames of the Great Red Scare of 1919.

Downey's Republican opponent in the upcoming election was a millionaire landowner and member of the Associated Farmers. One agenda of the Associated Farmers was to ban John Stienbeck's Grapes of Wrath from the California public libraries. Knowles went on to found the Western Research Foundation, a blacklist operation that figured prominently in the 1970s and 1980s. 24

One final example will establish just how psychopathic Dies was and the extent of his red hysteria. The case centered on J.B. Mathewsís charges of communist influence in the consumer movement. Mathews and Fred Schlink had been consumer advocates until Schlink's employees unionized and formed a rival Consumer Union. Mathews timed his release to coincide with a 1939 Federal Trade Commission (FTC) decision to cite Hearst's Good House Keeping for fraudulent advertising. At least one manufacturer claimed the seal could be obtained simply by placing ads in Good Housekeeping. Other manufactures claimed the seal would be withdrawn if their ads were canceled. The FTC decided to act due to the complaints from retailers and manufacturers. Hearst launched a massive anticommunist advertising blitz and Dies threatened to open an investigation into the consumer groups. 25 Since, these housewives and other manufactures were threatening corporate America they were branded as communist and had to be discredited. It simply never occurred to Dies that these housewives could have legitimate complaints about a product. They had to be godless reds and their movement silenced.

With the nation involved in a global war with all resources directed to winning it, the efforts expended by the FBI and the Dies Committee chasing communists were squandered. As each focused primarily on communists the fascists were left unmolested for the most part. Only a few minor fascists were ever indicted on sedition and even fewer found guilty. Nor was there any effort to investigate corporations trading with the Nazis after the Truman committee. Resources in short supply and directed at red-baiting could have been better utilized against the source of funding for the fascist groups and the corporations that continued to supply Hitler's war machine.

In 1944, Dies voluntarily chose not to seek reelection. This, however, would not be the end of his radical right-wing activities. During the late 1950s and early 1960s he was one of the contributing editors of American Opinion, the tabloid rag published by the John Birch Society. Another of the contributing editors was Hans Sennholz, a former Luftwaffe pilot who taught economics at Grove City College. This institution was heavily subsidized by J. Howard Pew Sun Oil executive and a huge benefactor of far right groups throughout the 40s and until his death. 36

On convening the new Congress on January 3, 1945 racist Mississippian John Rankin offered an amendment to the rules of the old Congress making the Dies Committee a standing committee and increasing its membership to nine. Thus was born the most notorious congressional committee of all time. The House Committee for Un-American Activities would span another thirty years before finally being dismantled in the mid-1970s following the Watergate and COINTELPRO scandals. Unlike with the Dies Committee Hoover and the FBI would cooperate fully with the new committee, using it to launder illegally obtained information from wiretaps, blackjobs and other dubious and unconstitutional methods. A later chapter will deal with the abuses of the HAUC and McCarthyism. For now it will suffice that HAUC like the Dies Committee was only interested in destroying the left wing; the right-wing extremists and fascists would be protected along with corporate America.

Although du Pont's fascist campaign for free enterprise was an overall success in wrestling control of Congress from the liberals in the 1942 election, the new year brought forth a change in the fortunes of war. Hitler's troops were trapped at Stalingrad. Mongomery's troops had defeated Rommel at El Alamein. In the South Pacific, the U.S. Navy had dealt the Japanese fleet defeats at Midway and in the Coral Sea. Germany and its Axis partners were clearly defeated; it would only be a matter of time before they were forced to surrender to the allies.

With the imminent defeat of Nazi Germany pending in 1943 corporate America had to cover its tracks. The same corporations that were guilty of delaying war production in the sit-down strike and sponsoring pro-fascist groups at home were also guilty of knowingly trading with the Nazis during the war. A massive change in tactics was required to protect themselves from sedition or treason charges following the conclusion of the war. The change in tactics is clearly marked by three notable aspects. First, it marked the beginning of targeting those within the government that were fully opposed to fascism. Many of those within the Roosevelt administration or in the halls of Congress that called for the complete destruction of fascism were discredited, forced to resign or targeted for defeat in elections by corporate America. In the short span of this and the previous chapter several dedicated public servants who fought passionately against fascism were dismissed or otherwise discredited at the hands of the native fascists.

Below is a sampling of these individuals and the date of their dismissal. The list is by no means complete; hundreds of others suffered the same fate.

Individual Year Removed
William Maloney 1942
John Rogge 1946
Summer Wells 1943
Jerry Voorhis 1946
Norman Littell 1944
Harry Dexter White 1948

 

Secondly, it marked a distinct change into an openly and aggressive antagonistic attitude toward our Russian ally by the right-wing within America led by J. Edgar Hoover. Hoover would crisscross the country delivering speeches against the evils of communism. As previously noted, Hoover gave many speeches against communism from 1941 to 1945. Each speech was more inflammatory and the threat more urgent than in his previous speech. The Houseís Un-American Activities Committee would step up its attacks on communists leading to the McCarthy Era. Finally, many of the Nazis recruited by the CIA would intensify the fear.

Finally, the change in tactics signaled a frantic effort for a negotiated peace. While there were previous efforts for a negotiated peace in the past, most notably the effort by Texas oilman William Rhodes Davis in 1940, the new efforts clearly marked the beginning of the cover-up of corporate Americaís treasonous behavior. The most significant peace plan during this time was initiated between Allen Dulles and Prince Hohenlohe. The role of Dulles and his association with Nazis is exposed in more detail in the following chapters but for now to convey the treachery of Dulles the following will suffice. In 1943, Dulles began meeting with the Nazi, Prince Hohenlohe. Dulles falsely claimed to speak for Roosevelt and agreed with Hohenlohe that post war Germany should be the leader of industrial production to maintain a bulkhead against Russia. Dulles was lying because Roosevelt was leaning towards the Morgethau Plan calling for the complete dismantling of German industry.

Dulles agreed with the Prince that it would be unbearable for any European to think that Jews might return and that there must be no toleration of a return of Jews to positions of power. Dulles also made the statement that Americans were only continuing the war to get rid of the Jews and that there were people in America who were intent on sending the Jews to Africa.


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In the course of his talks with Hohenlohe, Dulles gave away the entire battle plan for Europe. He informed the Nazi Prince that the allies would not land in Spain, but instead, after conquering Tunisia, would advanced towards the Ploesti oil fields to cut off the German supply of oil. The information that no invasion of Spain was planned was particularly useful to the Nazis. It meant the Naziís vital supply of tungsten from the Iberian Peninsula was safe. He informed Hohenlohe that the Allies would invade Sicily to cut Rommel off.47

In other meetings, Dulles spoke of Papal action in the area of negotiations. Later chapters will detail the Vaticanís role in the surrender of Wolff and in helping Nazi war criminals escape from Europe and justice. In the reconstruction of Germany Dulles spoke of giving preference to Bavaria and described a speech by Goebbels as a work of genius.

Noting that he was speaking for himself and other right-wing elements in America, Dulles spoke disparagingly about Churchill and the British in their talks with the Russians over the Balkans. On concluding the talks, Dulles requested that the American Embassy in Madrid to be of assistance to Hohenlohe at any time.

Dulles spent more time giving away the Alliesís battle plan than in discussing the proposed German peace treaty. In effect, Dulles may have been stalling for time hoping to delay the end of the war. He was well aware of the many American corporations that were currently doing business with the Nazis and may have been buying time--- hoping for a negotiated peace or at least enough time to ferry the Nazi's ill-gotten assets out of Germany.

Dulles had several Americans in Switzerland who were willing collaborators with the Nazis. Alexander Kreuter was the American Nazi collaborator who Aryanized the French Worms bank when the Nazis marched into Paris. Kreuter was likewise connected to Dillon Reed, the Wall Street firm that helped finance Hitler until 1934.

Another Dulles accomplice was Gerhardt Westrick, a partner in the German law firm associated with both Dulles brothers. Westrick secured the assets of many American corporations throughout the war from nationalization. His partner was Heinrich Albert, the head of the Ford operation in Germany. Albert received orders directly from Edsel Ford in Dearborn, Michigan after the bombing of Pearl Harbor to build trucks for the German Army.47 Also included in the list of Dulles collaborators was the American minister in Berne, Leland Harrison, who authorized shipments of enemy oil through Switzerland as well as American oil to fuel the German army.

While the talks between Dulles and the Nazi Prince were initiated by the Germans as they saw the Third Reich collapsing into ashes around them, the talks were remarkably similar to the earlier peace plan of Davis in1940. The only major difference was that Himmler instead of Goring would replace Hitler. In both cases the Nazis would remain in power and receive United States aid to maintain a bulkhead against Russia. It is not clear whether Dulles ever presented his peace plan to the White House, but such plans received a cold shoulder from the White House because Roosevelt was adamant in removing the Nazis from any position of power within Germany.

This wasnít the only peace effort advanced in 1943 by those claiming to represent Roosevelt. The head of the OSS, Bill Donovan, advanced another effort called the M Project. In July, Donovan ordered Theodore Morde, a former journalist for Reader's Digest to meet the local OSS chief in Cairo. From there, Morde traveled to Turkey to meet with another OSS agent and to make contact with von Papen through the von Papen's agent, Posth. The meeting with von Papen was arranged. The only condition for peace in Morde's plan was the arrest of Hitler. The plan was the same as the plan that Dulles had advanced earlier. It would terminate all lend lease aid to the Soviet Union and set Germany up as the dominating force militarily and industrially.

Returning to Washington, Morde wrangled a meeting with Roosevelt's speechwriter by claiming that he had been authorized by General Hurley to advance the proposed peace plan. The good general immediately denounced Morde's claims. The general went on to state that Morde's actions were merely a thinly disguised attempt to promote the Reader's Digest. In a memo dated October 29, 1943, Donovan urged FDR to give Morde's plan serious consideration. Roosevelt promptly canceled the plan.48

George Earle in Spain advanced a similar plan during the summer. Earle was a wealthy anticommunist. After the Morde plan, collapsed Baron Kurt von Lersner proposed a new plan to Earle. In this new plan, Lersner claimed to have the backing and approval of a group of German officers. This group of officers with the backing of the officer in charge of Hitler's cavalry division in East Prussia would kidnap Hitler and make a peace proposal with only one condition--- that the Soviet Union be precluded from entering Germany. Roosevelt again turned down the proposal.

Other peace plans were advanced in 1943 through New York attorney Abram Stevens Hewitt. Like Morde and Earle Hewitt falsely claimed to be a Roosevelt representative. The plan was once again similar to the plans advanced by Dulles and Morde. Early in 1944, another plan was attempted through Gabrielle Chanel, the perfume magnate. Chanel was denounced as a German agent by her friend Lombardi. Chanel had attempted to use Lombardi's connections to the British royal family to advance her peace plan.

These secret and unauthorized negotiations reveal the length that Dulles and others would go in sabotaging the war effort. One thing was common to all of these negotiations; the Nazis would remain in power in Germany. By 1943, Nazi Germany was clearly defeated on the battlefield. The battles for Stalingrad and El Alamein were the turning points for the war. Allen Dulles and the others revealed their desperate plight in trying to cover up for corporate Americaís and the rich industrialistsí collaboration with Nazi Germany. No other reason can explain their willingness to risk charges of treason or sedition, as none of these talks called for free elections in Germany. In effect, the plans centered on finding a more palatable replacement for Hitler and ensured a government that would be friendly to the corporate America collaborators.

Even more odious, these talks mark the beginning of the Cold War. Not only were the Nazis to be left in power but they were also to be rearmed to provide a bulkhead against Russian. Corporate America and the rich industrialists had to be protected at all costs against their enemies, real and imagined. The war had been very profitable for corporate America and a new war against the Soviets would likewise be very profitable. The benefits and profits of trade with Russia would be small in comparison. In effect, corporate America was willing to risk another major war that the neither the American or the Russian people wanted even if it meant pushing the world to the brink of a nuclear holocaust to inflate the bottom line.

Both Donovan and Dulles came from Wall Street. Donovan was a prominent Wall Street lawyer and was involved with the Drug Inc cartel. Dullesís role in the cartels was more extensive and is detailed in the following chapter. Both Donovan and Dulles had knowledge of the extensive involvement of U.S. corporations with the Nazis and both were in ideal positions to cover up the crimes of corporate America.

During 1943, war production peaked and thereafter declined until the end of the war. The critical phase in war production had been met and passed. However, with the decline in military orders a new problem emerged, reconversion to a consumer economy. Orders to small firms were being canceled. Once their military contracts had been canceled, the small firms wanted to revert back to producing goods for the consumer. This set off a firestorm of protest among the "dollar a year men" with the War Production Board (WPG). They argued that allowing the small firms to reenter into the consumer market immediately was unfair and would take business away from the larger firms while they fulfilled their military contracts. In effect, big business demanded that if they had a twenty- percent share of the market before the war they should have a twenty- percent share during reconversion. The same firms that had engaged in the sit-down strike were now demanding that no reconversion take place until after the war was over.

Donald Nelson was the chairman of the WPG. In early 1943, the War Department attempted to have Nelson fired. Secretaries of War and Navy, Stimson and Knox respectively, along with their undersecretaries Patterson and Forrestal had scheduled a meeting with Roosevelt to demand Nelsonís dismissal and to replace him with Bernard Baruch. Baruch was the choice of big business. His wartime plan rested on the assumption that industry itself should have the right to determine what controls were needed and to administer them as they saw fit. The ultimate end of such folly was that big business would end up with full control of the economy. The Baruch plan included special legislation to prevent the use of antitrust laws to penalize an overly-enthusiastic exercise of that power. In effect, it would grant big businesses powers over the economy that exceeded the governmentís power to regulate commerce.54 By publicly firing Eberstadt, the War Departmentís proposed aide by to Baruch, Nelson avoided being dismissed. He later brought in Charles Wilson the president of GE, as co-chairman of the WPG.

At the center of the controversy were Donald Nelson and Charles Wilson, co-chairmen of the WPG. In the fall of 1943, Wilson made a speech warning against fascist thinking among the higher ranks of big business.53 The War Department backed the ranks of the big businessmen. On July 7, Nelson received a letter from Admiral William Leahy as follows:

"We are disturbed over the existing lag in war production which, if it continues, may necessitate revision in strategic plans which could prolong the war.

In view of the major offensive operations under way on every front, it is essential at this time that there be no relaxation in war production and that deficits in deliveries be made up at the earliest possible date.

The issuance of orders at this time which will affect our ability to produce war materials is not consistent with the all out prosecution of the war."87

In an unusual move, the letter was published on July 9. Of course, the letter was an appeal to the public and not to Nelson, as contracts were already being canceled by the War Department and others were not being renewed. Leahy was hoping to panic the public into opposition of the WPG's policies on reconversion.

By 1944, those that supported the fascist line of corporate rule had clearly gained the upper hand. In January 1944, Charles Wilson proposed the wedding of the military to corporate America. Wilson suggested that every large corporation appoint a liaison man with the armed forces with a commission of a colonel or above in the Reserve. The liaison man would coordinate industrial production to meet the militaryís need. Experts from his proposed wedding follows below.

"First of all such a [preparedness] program must be the responsibility of the federal government. It must be initiated and administrated by the executive branch--by the President as Commander in Chief and by the War and Navy Departments. Of equal importance is the fact that this must be, once and for all, a continuing program and not the creature of an emergency. In fact one of its objects will be to eliminate emergencies so far as possible. The role of Congress is limited to voting the needed funds...

Industry's role in this program is to respond and cooperate.... in the execution of the part allotted to it; industry must not be hampered by political witch-hunts, or thrown to the fanatical isolationist fringe tagged with a merchants of death label."88

Note how Wilson denigrates the role of Congress to merely providing the needed funds. Under such a system no congressional investigations would be possible. It would completely remove the checks and balances provided in the constitution. Fraud would become widespread under such a system since there would be no congressional investigations into $800 toilet seats or any other items.

The war had been good for the largest corporations as previously shown by the increase in the large corporationsí employment figures. Profits for these same corporations had skyrocketed to dizzy heights and the largest firms were of the mind to ensure that they continued to do so.

However, even more ominous is the fact that before Eisenhower's troops stormed the beaches of Omaha and Normandy, the war against fascism was lost on the home front. As Wilson's words embraced the very heart of fascism and the power that ruled Germany, the military-industrial alliance of Nazi Germany. In effect, Wilson's proposal was the same as Germany's Economic High Command that allowed Germany to wage total war.

Wilson's proposal formed the very basis of what so alarmed Eisenhower a decade later, the military-industrial complex. It would become the nerve center from which the Cold War could be waged. Wilson's proposal wanted to remove all oversight of corporations from Congress. Congress would be removed from approving new weapon systems, investigating the misappropriation of funds, and investigating profit mongering. Such words render the elegant debates of Hamilton, Madison, Jefferson and other founding fathers granting Congress the sole ability to wage war and appropriate funding mute.

There was also another crisis facing large corporations. As 1944 continued to pass it became clearer and clearer that the Axis powers were defeated and it would only be a matter of time before they surrendered. Orders for war munitions continued to decrease. Once the war was over there would be an enormous supply of government-built factories and manufacturing facilities up for grab. The same large corporations that had engaged in the sit-down strike and had frozen out smaller firms from engaging in defense production wanted to retain the ownership of these facilities. However, these facilities had been built solely with government funds because the large corporations had refused to invest in expanding their facilities for the war effort. The value of the war surplus that would be up for grabs was immense, 60 billion dollars. In fact, the federal government at the end of the war owned ten percent of the industrial capacity.

The agenda of the large corporations was then to force the government to give up control of these plants or otherwise face a formidable competitor. Likewise, the corporations did not want these plants to fall into the hands of smaller firms. It would be a fire sale for large corporations, who had successfully rigged the bidding process to exclude the smaller firms. Competitive bids from firms other than those that had run the plants during the war were only rarely allowed. With competing firms successfully eliminated from the bidding process, the low-ball bids of the large corporations were accepted. The government received pennies on the dollar. In the case of government-built integrated steel plants, one company U.S. Steel got 71%. Only four corporations received the synthetic rubber and polymer plants. Eventually, two-thirds all government-built plants went to just 87 large corporations.28