Dr. Veesenmayer had asked that Dr. Albert and Mr. Heidinger agree on a plan to effect the reorganization and that I should agree in writing to such a plan subject to the approval of the Board of Directors of the IBM. Dr. Albert attempted to get me to agree, which I refused on the ground that any such tentative agreement would lead to the belief officially that it would be carried out. . . . If the IBM did not desire to approve it . . . [then] IBM's position would [only] be more difficult with the officials. I told Dr. Albert that all I would authorize him to say to Dr. Veesenmayer was that there had been several plans submitted to me and these I would in turn submit to the IBM.
Dr. Albert told me that Dr. Veesenmayer had [then] expressed a desire to see me but not in his office, as he would like the conversation to be unofficial. Tentative arrangements were made for me to meet him at lunch. However, Dr. Albert called me one day and informed me that he was going to see Dr. Veesenmayer on the next day. . . . Dr. Albert called me later and said that I should go with him to Dr. Veesenmayer's office.
Dr. Veesenmayer stated [to me] that there were advantages to be gained by friendly agreements between industries in America and Germany and that it was not unusual to find a desire to have industries owned by the nationals of a country. I told him that I appreciated the advantages of a nationally-owned company whether in Germany or elsewhere. I pointed out to him that competition could be used [just as easily] against Dehomag [if it were] partly-owned by the IBM as it could be used when IBM practically owned the entire company . . . I asked him what guarantees IBM could have for the protection of its minority, assuming that it gave up its majority. He [Veesenmayer] suggested that no guarantees could be made in writing but that if the Government approved of the act of increasing the capital and the disposition of it to Germans, that should be all the security we need ask for. Dr. Veesenmayer did not speak English very well but I understood him to say that he had been instrumental in assisting in the re-organization of the International Telephone Company in Spain. Subsequently I attempted, through Dr. Albert, to have Dr. Veesenmayer give me the names of American companies which he had also assisted in re-organizing. The reply was that he could not give me the names but that he could tell me that he had just about closed the arrangements with two other American companies. In this connection I saw for a moment the names of three German companies which have been reorganized. I did not have the opportunity to get down these names, which were in German, nor could I identify them with any American company. . . .
Dr. Kiep seemed to be of the opinion that Dr. Keppler's introduction into the matter was occasioned by Mr. Heidinger. This may be so but I do not believe that Mr. Heidinger himself got in touch with Dr. Keppler or Dr.
Veesenmayer because he appeared to be as much concerned about the call to Dr. Keppler's office as was Dr. Albert. It is possible, however, that through his other friends he [Heidinger] may have brought Dr. Keppler into the subject.
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Soon after Chauncey met with Veesenmayer, Albert delivered to Chauncey a short unsigned, unaddressed note, typed on plain paper. Chauncey forwarded that to New York as well through diplomatic pouch.
The party with whom you have discussed the matter of IBM is Mr. Veesenmayer. He is the right hand of Dr. Keppler, Secretary of State in the Ministry of Foreign Affairs, but at the same time being entrusted, as an important member of the party with certain special duties and responsibilities, F.I. [for instance] concerning questions of political economic organizations. Mr. Veesenmayer confirmed the official attitude that no pressure should be brought on IBM to transfer its majority into German hands, but that he thought it advisable to do so. His recommendation to you was to lose no time in reporting to IBM and then to return as soon as possible to Berlin in order to carry the plan through.
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Things began happening rapid-fire. On December 5, Heidinger suddenly agreed to accept a vastly lower purchase price for his shares, just RM 3.9 million. What's more, he would accept payment in IBM's blocked marks and no longer insist upon dollars. A contract with IBM was quickly drawn up and signed on December 13, 1940.
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IBM felt Heidinger's war was on hold, at least for the moment. But the continuing pressure for IBM to relinquish its majority remained intense. Equally manifest was the air of tight-lipped mystery surrounding what the Nazis had in mind for the machines. Chauncey studiously avoided ever asking what additional tasks the machines were intended for. He nonetheless pressed ahead, demonstrating IBM NY's intention to remain a reliable vendor to the Reich. He began organizing new support for Germany's needs in occupied France, and declared his readiness to integrate IBM's Polish subsidiary into Dehomag proper. He even offered to extend Dehomag's territory into Russia, which many believed Germany was preparing to invade.
120
Even still, a new plan was emerging. The Third Reich was now hoping to expand Dehomag and all its dominated European IBM subsidiaries into a huge all-inclusive Nazi cartel governed by the
Maschinelles Berichtwesen,
the Reich's agency for punch card technology. This cartel would be strengthened by the inclusion of the marginal European branches of Powers, as well as all local companies in invaded lands, such as Bull in France and Kamatec in Holland. Machines would be transported from country to country, like so many mortars, across war-ravaged Europe to the precise locales needed. Once their mission was accomplished, the devices would be shifted to the next hot spot. The pillars of the cartel would be the well-developed IBM subsidiaries in Italy, France, and Holland. In fact, a special Dehomag employee named Heinz Westerholt, the Nazi Party's direct agent within the subsidiary, had already traveled to France to initiate the arrangements in both Vichy and occupied territory. The Germans working through French authorities had already demanded a test integration of Bull systems with Hollerith tabulators and sorters.
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The planned punch card cartel would then be able to accomplish all the Reich's most important objectives without channeling requests through the IBM corporate bureaucracy or submitting to Watson micro-management. Germany's IBM-based cartel could function as a binary with Watson's non-European operation.
Ultimately, the attempted cartel would be bitterly fought by Watson, deploying every technologic, legal, financial, and political argument at IBM's disposal. Eventually, by mid-1941, the Nazis concluded that connecting Holleriths to other systems was mechanically impossible, and operationally naive. Unlikable as it was, Germany needed an agreement with Watson in which he agreed to supply all the Reich's needs, receive proper payment, but remain detached from the local details his managers and engineers would necessarily possess. Ironically, such a modus vivendi appealed greatly to Watson.
IBM as a company would know the innermost details of Hitler's Hollerith operations, designing the programs, printing the cards, and servicing the machines. But Watson and his New York directors could erect a wall of credible deniability at the doors of the executive suite. In theory, only those down the hall in the New York headquarters who communicated directly with IBM Geneva, such as IBM European General Manager Schotte, could provide a link to the reality in Europe. But in fact, any such wall contained so many cracks, gaps, and hatches as to render it imaginary. The free flow of information, instructions, requests, and approvals by Watson remained detailed and continuous for years to come—until well into 1944.
Subsidiary managers were authorized by New York to negotiate special equipment rental and service agreements from the
Maschinelles Berichtwesen
and other Reich officials. Projects in Europe were approved and customers prioritized with New York's permission. Machines were moved from place to place to meet the demand. IBM Europe's managers received special permission from the Nazi authorities to travel back and forth between neutral nations, Nazi-held territory, and Germany itself. They regularly sent IBM NY letters and reports. Some were simply handwritten notes. Others were dense sales and machine status reports, or meticulous monthly summaries, all sent from Axis-controlled subsidiaries to New York through neutral cities.
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When Geneva executives were pressed for time, they telephoned New York. Using codes and oblique references, they nonetheless all spoke the same language, even when the language was vague. As one previous European General Manager, John Holt, urged an IBM NY colleague early in the war: "wire Schotte for the information which you need, care being taken that your request is so worded that it can pass the censor. It goes without saying that any information covering military activity is apt to get the recipient, as well as the sender, into considerable 'hot water.' "
123
Together the continuous reports, summaries, cables, and telephone calls offered minute-to-minute operational details of IBM's activities in France, Italy, and Sweden; the serial number and location of equipment; and precisely which machines were destined to be shipped to Dehomag or the German army. Devices and spare parts going into the Reich or elsewhere in Nazi-conquered Europe were tracked by New York—from the most complex collator to the simplest sorting brush. Despite the turmoil of Dehomag's revolt, throughout 1940 and 1941 the fluid decision to build new factories to supply Nazi Germany, the stocking of those factories, and the year-to-year ordering of expensive machine tools, these decisions were made by IBM NY based on the most current market information. Paper factory output and anticipated shortages throughout Europe were monitored to anticipate problems before they occurred.
124
Millions of punch cards were routinely shipped from IBM in America directly to Nazi-controlled sources in Poland, France, Bulgaria, and Belgium, or routed circuitously through Sweden or colonies in Africa. When IBM's American presses did not fill orders, subsidiaries themselves would ship cards across frontiers from one IBM location to another.
125
All money was accounted for and audited down to the franc and lira. All expenses were deferentially proposed to New York and carefully approved or rejected. Watson was even told that the French subsidiary had charged an extra 1.5 francs for wine with lunch in the company canteen.
126
But in December 1940, things were different. The plan for an
MB
cartel was still very much alive in the Nazi game plan. Moreover, the constantly evolving special plans for Hitler's Holleriths were beginning to take shape. Periodically, when Chauncey inadvertently raised an issue that came close to the cartel question, the managers at Dehomag would mysteriously comment, "there were concentration camps," and then become completely silent. On December 13, 1940, Chauncey wrote to Watson, "I mentioned to Hummel that now might be a good opportunity to acquire our rights from Bull, he vaguely hinted that perhaps the Bull Company in France has already been acquired by others. When I pressed him for an explanation, he would say nothing more. When I reach a point with these fellows, they begin to talk of concentration camps, etc."
127
A few days later, on December 17, Chauncey was discussing the issue of Heidinger defecting to a competitive company and destroying the subsidiary. Hummel first swore Chauncey to secrecy and then revealed, "Heidinger would never fight Dehomag." Chauncey then reported to IBM NY that he "went along with him [Hummel] in the hopes that he would not retire within a shell, or completely shut up with the explanation that 'there were concentration camps'!"
128
About that time, Otto Kiep surprised Chauncey by mysteriously stating it was better for directors to decline any stock in Dehomag—even token stock. On December 13, Chauncey wrote to Watson without elaborating, "it is Mr. Kiep's opinion that no shares should be issued to the directors, because of something he has learned." Like the other messages, Chauncey channeled the message through the Embassy.
129
Chauncey made clear to Watson in his various writings that Germany's use of machines throughout conquered Europe would be profoundly lucrative, and IBM could not give up the profits. Albert described an enticing Axis-wide punch card monopoly that would rule in "Germany's possible future economic space comprising not only the increased [Reich] territory [itself], but the sphere of . . . Central Europe to the Balkans, the African possessions, and the Near East."
130
But to remain a viable member of the Nazi juggernaut, Albert explained, Watson would have to adopt a decision not to just do business with and extract profit from Nazi Germany, but to ensure that Dehomag become an organic facet of the Third Reich itself. In a twenty-one-page recommendation to Watson, Albert circumlocutiously described the cooperation Veesenmayer expected. "The structure of the German economic system," Albert wrote, "requires that every German undertaking is completely, loyally and without any reservation a member of that system, as formed by National Socialist leadership. What matters is . . . the spirit of German economic leadership—and not who is the owner of the shares. . . . the business policy of the German company . . . [must be] in complete harmony with the German national interests, and it is the business of the men at the head of the German undertaking to see to that. Of course, if the company's interests are not so defended, either because the parties concerned grow weary under the weight of those difficulties, . . . [or] perhaps because at heart they themselves share the adversarial point of view . . . the company will suffer."
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