To what extent did the US 'fund' Nazi rearmament?

[Christopher Marcus]

Just had a rather heated argument, to put it mildly, with a friend about US involvement in funding the Nazi rearmament program. Not that I doubt there were some connections, imports, loans, etc., but my friend connected this to various IMO very ill-founded conspiracy theories about US support for the Nazis against England. That's the gist of it and the reason we got into hot water, but what I want to ask about and keep the discussion limited to here is to what extent the US contributed to Nazi-Germany before the war broke out.

I know next to nothing about this subject, but knowing this excellent forum I know that will not be the case for long, if people care to share their knowledge on this. If anybody has some good book recommendations, I'd also be grateful. Thanks in advance!

 

[marathag]

You mean like pointing out that Henry Ford did business in Germany before and after 1933, he also did even more business with Uncle Joe Stalin?

Only difference is that in the USSR, they were called GAZ, not Ford

Nothing at all like a Ford AA truck.

Really.

 

[Deleted member 1487]

The US government did not, in fact they were pretty anti-Germany due to their clearing agreement efforts internationally and defaulting on US loans in 1934. Certain US businesses and interests got in on the Nazi rearmament bonanza, like Standard Oil.
https://newrepublic.com/article/104346/standard-oil-axis-ally

IBM profited off of the Holocaust in fact:
https://en.wikipedia.org/wiki/IBM_and_the_Holocaust

 

[GeographyDude]

http://www.washingtonpost.com/wp-srv/national/daily/nov98/nazicars30.htm

' . . . James Mooney, the GM [emphasis added] director in charge of overseas operations, had discussions with Hitler in Berlin two weeks after the German invasion of Poland [which began on Sept. 1, 1939].

'Typewritten notes by Mooney show that he was involved in the partial conversion of the principal GM automobile plant at Russelsheim to production of engines and other parts for the Junker "Wunderbomber," a key weapon in the German air force, under a government-brokered contract between Opel and the Junker airplane company. Mooney's notes show that he returned to Germany the following February [1940] for further discussions with Luftwaffe commander Hermann Goering and a personal inspection of the Russelsheim plant. . . '

Yes, it certainly seems like GM General Motors tried to help their damn client.

 

[Christopher Marcus]

The US government did not, in fact they were pretty anti-Germany due to their clearing agreement efforts internationally and defaulting on US loans in 1934. Certain US businesses and interests got in on the Nazi rearmament bonanza, like Standard Oil.

So there were absolutely no US gov loans to Nazi Germany after 34?

 

[Carl Schwamberger]

So there were absolutely no US gov loans to Nazi Germany after 34?

The US government was not in the business of loaning money. Under the 1920s Dawes Plan, and later Young Plan the US and British governments facilitated the reorganization of the German government finances and repayment schedule of the reparation payments of Germany to the Entente nations. This included the US governments underwriting or insuring some specific loans. The loans were from US banks. Most of the loans were ordinary operating loans to bridge gaps between receipts and expenditures of the German industry and government. Some were higher risk and required the government act as a underwriter. The point to the Dawes and Young Plans were to stabilize the payment of reparations. The chaos of German finances 1919-1924 threatened sectors of the global banking system. That had led to the Franco Belgian occupation of the Ruhr in 1923 to enforce payments and a bad scare that Germany would collapse into civil war, or revive a war with France.

In simplistic terms the Dawes and Young Plans created a circular flow of money, where US banks loaned money to Germany, to enable its economy to service debt to the former Entente nations, so those nations could service their debt to the US banks, which reloaned the money to Germany. On a more practical level the plan helped keep western Europes economy a bit more stable for four or five years. The Depression unraveled this system & Roosevelts administration ceased encouraging the loans. Since the global economy had more or less collapsed any way since the late 1920s neither the Dawes or Young Plans were workable, and neither was the Versailles Treaty as written. The official nazi governments abrogation of the reparations payments in 1934 brought to a end any efforts to keep up the payment of reparations. The former Entente nations continued to keep up their repayment of war debt to the US banks, tho the Depression necessitated adjustments there.

 

[Christopher Marcus]

The US government was not in the business of loaning money. Under the 1920s Dawes Plan, and later Young Plan the US and British governments facilitated the reorganization of the German government finances and repayment schedule of the reparation payments of Germany to the Entente nations. This included the US governments underwriting or insuring some specific loans. The loans were from US banks. Most of the loans were ordinary operating loans to bridge gaps between receipts and expenditures of the German industry and government. Some were higher risk and required the government act as a underwriter. The point to the Dawes and Young Plans were to stabilize the payment of reparations. The chaos of German finances 1919-1924 threatened sectors of the global banking system. That had led to the Franco Belgian occupation of the Ruhr in 1923 to enforce payments and a bad scare that Germany would collapse into civil war, or revive a war with France.

In simplistic terms the Dawes and Young Plans created a circular flow of money, where US banks loaned money to Germany, to enable its economy to service debt to the former Entente nations, so those nations could service their debt to the US banks, which reloaned the money to Germany. On a more practical level the plan helped keep western Europes economy a bit more stable for four or five years. The Depression unraveled this system & Roosevelts administration ceased encouraging the loans. Since the global economy had more or less collapsed any way since the late 1920s neither the Dawes or Young Plans were workable, and neither was the Versailles Treaty as written. The official nazi governments abrogation of the reparations payments in 1934 brought to a end any efforts to keep up the payment of reparations. The former Entente nations continued to keep up their repayment of war debt to the US banks, tho the Depression necessitated adjustments there.

That's a wonderfully understandable explanation for an economy neophyte like myself. Thank you!

It spurred another question, though, which I hope you don't mind giving your input on: Could one in any reasonable way argue that the 1920s-loans to Germany helped German rearmament in the 1930s? I mean, the fact that Germany did not collapse in the 1920's could, I suppose, be seen as a support to Germany's ability to rearm later on, but that is surely too superficial an 'argument'? And as I have read it, once the financial crisis was winding down and Hitler had become to power, the Nazis began financing their rearmament economy through deficit spending, which was then to be covered ASAP through annexations and conquests.

 

[Carl Schwamberger]

http://www.washingtonpost.com/wp-srv/national/daily/nov98/nazicars30.htm

' . . . James Mooney, the GM [emphasis added] director in charge of overseas operations, had discussions with Hitler in Berlin two weeks after the German invasion of Poland [which began on Sept. 1, 1939].

'Typewritten notes by Mooney show that he was involved in the partial conversion of the principal GM automobile plant at Russelsheim to production of engines and other parts for the Junker "Wunderbomber," a key weapon in the German air force, under a government-brokered contract between Opel and the Junker airplane company. Mooney's notes show that he returned to Germany the following February [1940] for further discussions with Luftwaffe commander Hermann Goering and a personal inspection of the Russelsheim plant. . . '
Yes, it cer

Yes, it certainly seems like GM General Motors tried to help their damn client.

After France collapsed in June 1940 the panic in the US & subsequent mobilization acts allowed the US government to arm twist the pro nazi faction in US industry. They had to close out contracts in Germany in exchange for new contracts with the US Navy and War Departments. Internally there was a opposition to this from the War Department. The 'Army' had a group of preferred vendors & was loathe to drop them just because they were selling equipment to the potential enemy. The mess was not entirely cleaned up until legislation accompanying the US DoW in December 1941 broke the hold certain Congressmen and their committees had on Navy and Army procurement. War legislation also made sanction of businesses trading with the enemy clear and easy. In 1942 a few residual US based businessmen were subject to legal actions over continued trade with Germany. One individual Charles Davis died in prison in 1943 awaiting adjucation of charges. His company, Davis Oil, was accused of selling US oil to Germany or Italy via neutrals. Since Davis Oil owned few assets, it was a trading company or brokerage, the shipments would have had to be in someone else's tanker ships. Some folks (British intelligence agents) suggested Standard Oil owned tankers that were flagged in Panama.

Post war some US business owners were still working to recover payments for production of war equipment in their nazi or Axis controlled factories in Europe.

 

[Carl Schwamberger]

...
It spurred another question, though, which I hope you don't mind giving your input on: Could one in any reasonable way argue that the 1920s-loans to Germany helped German rearmament in the 1930s? I mean, the fact that Germany did not collapse in the 1920's could, I suppose, be seen as a support to Germany's ability to rearm later on, but that is surely too superficial an 'argument'? And as I have read it, once the financial crisis was winding down and Hitler had become to power, the Nazis began financing their rearmament economy through deficit spending, which was then to be covered ASAP through annexations and conquests.

Yep, that argument is very superficial. In its logic any economic well being enables nazi armament plans.

 

[Christopher Marcus]

Yep, that argument is very superficial. In its logic any economic well being enables nazi armament plans.

Well, I suppose I am not saying too much when I hint that that particular 'argument' made by my friend was one of the reasons things got heated (cf. the OP). Thanks again, Carl!

 

[Christopher Marcus]

After France collapsed in June 1940 the panic in the US & subsequent mobilization acts allowed the US government to arm twist the pro nazi faction in US industry. They had to close out contracts in Germany in exchange for new contracts with the US Navy and War Departments. Internally there was a opposition to this from the War Department. The 'Army' had a group of preferred vendors & was loathe to drop them just because they were selling equipment to the potential enemy. The mess was not entirely cleaned up until legislation accompanying the US DoW in December 1941 broke the hold certain Congressmen and their committees had on Navy and Army procurement. War legislation also made sanction of businesses trading with the enemy clear and easy. In 1942 a few residual US based businessmen were subject to legal actions over continued trade with Germany. One individual Charles Davis died in prison in 1943 awaiting adjucation of charges. His company, Davis Oil, was accused of selling US oil to Germany or Italy via neutrals. Since Davis Oil owned few assets, it was a trading company or brokerage, the shipments would have had to be in someone else's tanker ships. Some folks (British intelligence agents) suggested Standard Oil owned tankers that were flagged in Panama.

Post war some US business owners were still working to recover payments for production of war equipment in their nazi or Axis controlled factories in Europe.

Very interesting. It appears a case can be made that some businesses the US weren't particularly anti-Nazi for profit-reasons (surprise-surprise). But there is hardly an organized conspiracy at play here, I would say (which was one of the topics of the discussion mentioned in the OP).

 

[Ian_W]

In simplistic terms the Dawes and Young Plans created a circular flow of money, where US banks loaned money to Germany, to enable its economy to service debt to the former Entente nations, so those nations could service their debt to the US banks, which reloaned the money to Germany. On a more practical level the plan helped keep western Europes economy a bit more stable for four or five years. .

I'm going to TLDR this.

The failure of this system led to the failure of Germany, which led to Nazis and rearmament.

 

[Crowbar Six]

Interesting fact. In 1943 ITT an American company arranged a secret conference in Portugal for it's European subsidiaries to discuss how the war was affecting profits and looking at post war business opportunities. Some of those companies included electronics, chemical and industrial concerns, they went to great lengths to hide this conference from the FBI and German Abwehr, SD and Gestapo. A number of US executives who attended represented companies working on the Manhattan Project. ITT were also at one point the biggest shareholder in Focke Wulf and picked up $27 million as compensation for Allied bomb damage to its German aircraft plants.

The main funders of the NAZI party particularly before 1933, were German business concerns worried about the rise of the Communists.

 

[Deleted member 94680]

I don’t believe you can make a reasoned argument for US government support for German rearmament, but there maybe is an argument for American business... “indifference” to German rearmament and a degree of support of that.

• IBM providing the computers used to run the holocaust
• GM doing extensive business with the Nazis (as mentioned above)

and of course:

• Coca-Cola continuing operation in Nazi Europe and even inventing Fanta to overcome shortages of coca (fun fact kids, that’s where Fanta comes from, hence why an older guy I work with referring to it as ‘Nazi coke’)

 

[Deleted member 1487]

That's a wonderfully understandable explanation for an economy neophyte like myself. Thank you!

It spurred another question, though, which I hope you don't mind giving your input on: Could one in any reasonable way argue that the 1920s-loans to Germany helped German rearmament in the 1930s? I mean, the fact that Germany did not collapse in the 1920's could, I suppose, be seen as a support to Germany's ability to rearm later on, but that is surely too superficial an 'argument'? And as I have read it, once the financial crisis was winding down and Hitler had become to power, the Nazis began financing their rearmament economy through deficit spending, which was then to be covered ASAP through annexations and conquests.

Not sure how that could possibly be true given that the money flowed out to pay for reparations. Besides all US loans stopped during the Great Depression, which was a major part of the reason for the instability in the German financial situation from 1929-32 that lead to the rise of the Nazis; the money was long gone by the time the Nazis showed up and in fact Brünnig's efforts to cut government spending to service foreign debts and reparations used up whatever money was left and created the social conditions for the rise of extremism. Later Schacht did enough of tricks to get money, like the issuance of MEFO bills, which raise private money.

If you would like a source, I'd suggest checking out 'Wages of Destruction' by Adam Tooze, who gets into the pre-war financing of German rearmament in a lot of detail, too much perhaps for a non-economist.

If you really want to get into detail if you can find the Nuremburg trial transcripts IIRC they went into the pre-war 'planning for aggressive war' and how it was financed.

 

[RightHoJeeves]

Coca-Cola continuing operation in Nazi Europe and even inventing Fanta to overcome shortages of coca (fun fact kids, that’s where Fanta comes from, hence why an older guy I work with referring to it as ‘Nazi coke’)

It was the German-run subsidiary of Coca-Cola that, cut off from its American parent after 1941, continued to operate basically independently and devised Fanta, which was made from apple cider byproduct and whey. It wasn't like Coke headquarters in Atlanta told them to do it. After the war they liked the recipe enough to keep making it.

 

[Deleted member 94680]

It was the German-run subsidiary of Coca-Cola that, cut off from its American parent after 1941, continued to operate basically independently and devised Fanta, which was made from apple cider byproduct and whey. It wasn't like Coke headquarters in Atlanta told them to do it. After the war they liked the recipe enough to keep making it.

Splitting hairs. They carried on operating in Nazi Europe when they could (should?) have ceased operating.

 

[wcv215]

Splitting hairs. They carried on operating in Nazi Europe when they could (should?) have ceased operating.

How exactly would you suggest the American based Coca-Cola company shut down operations of its German subsidary in WWII?

 

[Catsmate]

Blame "Dad" Joiner.

 

[Deleted member 94680]

How exactly would you suggest the American based Coca-Cola company shut down operations of its German subsidary in WWII?

There was plenty of time pre-WWII to shut down and remove operations before the situation became overly complicated. Much like IBM, they turned a blind eye when it was blatantly apparent what kind of country Nazi Germany was.