The main Nazi objection, however, was made clear: IBM NY, now proven disloyal, would discover the secret planned uses of the Hollerith machines. Chauncey and his fellow Berlin-based attorneys did everything they could to constantly repeat the assurance that they would not ask questions or learn details. He told Heidinger he was willing "to go to any officials to show that IBM had not obtained any information of the confidential matters being done by Dehomag."
87
Again, IBM NY made a fine distinction between what its headquarters in New York would discover and the day-to-day knowledge its managers, engineers, and servicemen on site would be required to know to do their job.
A confusion of unwarranted alarms, false starts, and sudden rumors surrounded Chauncey as he tried, in his proper legalistic way, to make sense of it all. But after a few days of treadmill progress in Munich, Rottke telephoned from Berlin with something that appeared concrete. Rottke, too, was mysterious, but insisted it was imperative that Chauncey come to Berlin at once.
88
When Chauncey arrived in Berlin, the sudden urgency of Rottke's telephone call dissipated as quickly as it appeared. As was so often the case in wartime Berlin, whispers and hazy conjecture ruled the day. Chauncey had hoped for a meeting with an influential Nazi. But as yet, that was not happening. So Chauncey immediately sought out board director Otto Kiep and attorney Albert in Berlin, each of whom offered a different suggestion for IBM's next move. Chauncey penciled voluminous notes and outlined various stratagems assessing the ifs and what-ifs of the predicament.
89
As Chauncey waited to meet with the mysterious Nazi source, he lost no time scheduling a conference with Manager Karl Hummel. Hummel was generally perceived as more helpful in his views toward IBM because of his warm, personal relationship with Watson. This would be Chauncey's opportunity to learn firsthand the structure of Dehomag's business in war-ravaged Europe.
The conversation with Hummel was frank. Acting more like an attorney conducting a deposition, Chauncey first tried in his stiff way to understand the emotional Nazi mindset, why the medal's return was so threatening, and whether Dehomag could weather the rage.
C
HAUNCEY
: When did you first observe difficulties . . . and what form did it take?
H
UMMEL
: Sales resistance—before [the] war—because of [the] American ownership. Prior to that some government departments would not do 244 business with us even if they needed the machines, because they claimed [the] confidential nature of [the] department's activities prevented doing business with . . . [an] American-owned concern. War caused tremendous increase in those departments and they finally decided that they had to have the machines—but treated us very badly because of American ownership. About 35 percent of [our] business . . . is with government departments. [In the future,] even if [a] machine made in Germany is not as good at first as ours, the government will take the German machines and once that is done the private industries will follow. All of those industries are now under the government anyway, and only a suggestion is needed for them to change over.
C
HAUNCEY
: So . . . the form of any animosity was merely growling about having to do business with an . . . American-owned concern? Did any concerns actually refuse to do business with you because of American interest in Dehomag?
H
UMMEL
: There were no German machines. . . . The point . . . [will be] quite different when prospects have a choice between German machines and American machines . . . prospects kept saying that they would prefer to wait for the German machine.
C
HAUNCEY
: After the war commenced, did the difficulties increase?
H
UMMEL
: Sure! . . . [But] in my mind, [a] high percentage of difficulties were taken away because our people kept [the] friendship of the people! [A]number of companies took the machines but did not like it! "We don't want American machines," they said, but [the] Government ordered them.
C
HAUNCEY
: Notwithstanding that the animosity existed against Dehomag?
H
UMMEL
: In view of labor conditions, they could not do otherwise. This is when the Government realized the necessity of relying upon an American concern.
C
HAUNCEY
: What if anything did you report to IBM when this difficulty first arose and increased after the commencement of the war?
H
UMMEL
: When Schotte was here the difficulties had not increased so much and we did not think . . . it was so very much worse than it had always been . . . we always had been accustomed to the sales resistance because we were American owned!
90
Chauncey turned to the issue of Hitler's medal. Hummel tried to be delicate but reflected the ire of many Germans. The photos of Hitler and Watson, and IBM's rejected letter offering a German Red Cross donation, were lying nearby.
C
HAUNCEY
: When did . . . the difficulty reach such a point that you thought . . . something [had] to be done?
H
UMMEL
: When Mr. Watson returned the medal. It came like a bomb. The man from the radio told us before anything [was] seen in the papers.
C
HAUNCEY
: Is it your feeling that this brought the thing to a climax, or was it really the reaction which you experienced with your customers and prospects?
H
UMMEL
: We excuse Mr. Watson because he looked at it from his own viewpoint—but it hurt us. In Italy it was as bad as in Germany . . .
C
HAUNCEY
: But let's have concrete examples. Was it merely talk, or did customers refuse to deal with you?
H
UMMEL
: You must remember that the Nazis, when they feel insulted, will make certain that they will pay back that injury. It shows [how] they feel when they refused the gift [of a Red Cross donation]!
C
HAUNCEY
: So they refer to the return of the decoration when they refused the gift?
H
UMMEL
: They expressed clearly "we do not want anything from that man." They said Watson and IBM's gift could not be accepted.
C
HAUNCEY
: Why was it presented as a gift of
Mr. Watson
and not of IBM [corporately]?
H
UMMEL
: They identify Watson and IBM as one person, just like you cannot divide Patterson and the National Cash Register Co.
C
HAUNCEY
: But Patterson owned the National Cash.
H
UMMEL
: But the letter was written in [such a] form that it was the instructions from Mr. Watson.
C
HAUNCEY
: Is there anything I could do to correct that misunderstanding, that it was IBM's gift and not Mr. Watson's?
H
UMMEL
: Don't try—they will treat you politely and let you go, because they will say or think that you cannot pay for an insult. Here is the letter from [IBM] Geneva, 24 July, saying that Mr. Watson had instructed that the money be given.
C
HAUNCEY
: Did you present it as a gift from Mr. Watson or as a gift from IBM?
H
UMMEL
: We had to show the letter. We could not risk saying it was a gift from IBM without having something to show. . . . It is personal danger to us . . . if we did not show the letter. If we failed to show the letter we would have been sent to the concentration camp. We had to take all of Mr. Watson's pictures down because of the visitors or officials who considered that when Mr. Watson insulted Hitler he also insulted them.
C
HAUNCEY
: Then when did you decide it was necessary to give up the [stockholder] majority—only after the return of the decoration?
H
UMMEL
: Oh, sure . . . when the medal was returned it showed that [the] . . . animosity against us was now proved. Do not worry but when things are settled they have their intentions to reply to Mr. Watson. The Americans refused to give Germany cotton, and Hitler said we will make cotton. Now we have cotton—and rubber and all the other things they wouldn't let us have without dollars.
91
Chauncey turned to the economic outlook. Was Dehomag worth saving? Could it be saved? Hummel equivocated from moment to moment on the prospects. In truth, no one knew in this fluid wartime situation just what Germany's leaders would decide. Would they choose to angrily excise IBM and proceed with a dubious patchwork of punch card systems that would take months if not years to meet the Reich's escalating needs, or would some pragmatic modus vivendi be adopted?
C
HAUNCEY
: Then you are going to lose a lot of business after the war?
H
UMMEL
: I think . . . Hitler has so much in mind now, improvements, and you saw in the paper the housing plan! We feel that we will lose that business if German competition comes up. Otherwise not. Very few will discontinue machines after the war—except that they may and probably will change our machines for German machines. I think if we do not get German competition, our business will grow tremendously. . . .
C
HAUNCEY
: When did you first learn . . . that a new German company should be formed to compete with Dehomag?
H
UMMEL
: There are dozens of people who have discussed that and Heidinger believes he knows much more. People say, "We will build a factory—and we will get you." Take [the] case if Goering [Hitler's second-in-command] buys Bull patents and gets into the tabulating business. What do you think would happen then?
C
HAUNCEY
: What information have you obtained as to the purchase of Powers in Germany—I have heard now that it may not be Siemens?
H
UMMEL
: It may be Goering—whenever the Government feels that the industry should be started, it will put it in Hermann Goering Works. You may be sure that if that happens, Dehomag is no longer in business. Look at what Bull has been doing in France—they claimed that you tried to buy them out but that they would not sell out to Americans. Our security is—Rottke ['s] and mine—is continuing with IBM, because we would have great difficulty with [any new] German partners. We merely think in our hearts that we must show you the danger. If you don't act on it, all right! We were attacked and attacked, and when Mr. Watson got the decoration it helped us. We have a picture of it—here—and a picture of Mr. Watson and Hitler. It was advertising to us. When we wanted something we could show that and say: "You can't refuse." With officials and customers it was a good selling point, and when it was returned it had the opposite effect and worse.
92
Chauncey now methodically reviewed for himself exactly what business arrangements Dehomag was engaged in throughout Europe, country by country. At the time, IBM had devised complicated and often circuitous methods of payment that generally but not always followed a 75-25 percent split of revenues between New York and Dehomag. IBM subsidiaries across Europe would generate orders for equipment, parts, and punch cards. Dehomag would supply these, either directly or through the subsidiaries it dominated in Nazi-conquered territory. IBM NY's 75 percent share of the money would sometimes be sent to Geneva, and sometimes to Berlin. Germany would often—but not always—receive its 25 percent share by crediting what it owed IBM for spare parts, the so-called "goods account." But all these payment procedures were frequently modified—or even set aside—as conflicting country-by-country wartime regulations emerged.
93
IBM received its money either through Geneva, which openly transferred the sums to New York, or through Dehomag, which blocked the revenues until war's end, although they could be used to grow the subsidiary and purchase real estate.
94
Chauncey now wanted to make sure Dehomag was still abiding by the payment procedures as much as possible.
C
HAUNCEY
: Have you ever had any understanding with IBM in Geneva about the classification of machines for royalties?
H
UMMEL
: We feel obliged to pay on sorters and tabulators. The Devisenstelle [Foreign Exchange Office] will not permit us to pay royalties on other machines. Patents on the sorters will soon expire, and now there is a serious question whether they will say you can't pay royalties on expired patents. We have to get all the license statements verified by the Government.