Part IV -The Second World War: American, British and German Business

Compared with World War I, American capitalist prosperity was even more clearly enhanced by World War II, as indicated by graph 2 in Part I (GDP growth¹⁹). And the next graph shows how profits boomed during the period 1939-45, even though America did not enter the War until 1941 (a replay, to some extent of what occurred in WW1).

Graph 5

Source: Based on National Bureau for Economic Research data

I shall give just a few examples here to indicate the way World War II contributed to profit growth in the United States. The background to America’s decision to support Britain was the Great Depression of the 1930s, following the Wall Street Crash in 1929. Despite Roosevelt’s State interventionist policy²⁰ aimed at boosting the US economy during the 1930s, total US profits²¹ in nominal terms between 1937 and 1938 had collapsed by almost 30% and total manufacturing profits were down by nearly 40%, when profits for the U.S. iron and steel (including ordnance) industry collapsed by 95%, and non-electrical machinery profits were down by nearly 53%, autos by 81%, chemicals by nearly 24%, oil and coal products by nearly 63%.

F.D. Roosevelt’s New Deal had pushed up U.S. profits from 1933 to 1937²², the State borrowing money from the banks and injecting it into various economic projects. What had happened in 1937 was that Roosevelt’s Administration believed the economy could now take off on its own, and “pump priming” (bank loans to the government that were expected to stimulate private investment) was officially ended. However, instead of taking off, as Roosevelt’s advisers had expected, the economy, as we have seen, collapsed again, with unemployment rising once more towards 20% of the work force (after having fallen towards 10% during the period from 1933). The New Deal had to be revamped, though this time increased deficit financing (more akin to what the British economist John Maynard Keynes had recommended) was applied, and although profits perked up in 1939²³,unemployment was slow to fall.

However, in 1939, with war breaking out in Europe and American business supporting the British war effort, U.S. iron and steel profits grew by 1,245% in nominal terms and continued to grow until 1943, when they reached a peak, after which they declined before recovering in 1947. US auto profits had also collapsed in 1938 but grew significantly during the first three years of the War. Likewise, chemical profits collapsed in 1938, but grew steadily until 1943. There is an obvious connection between these three industries and war. However, profits for the food industry (for example) also grew during the same period (1939-43) of World War II.

As pointed out in Part II (World War I), profits in both wars were taxed higher than in peacetime to support the war effort. The effect on U.S. profits during the period is shown below:

Graph 6

Clearly, a larger-than-normal part of profits was paid over to the State to pursue the War, but it should be noted that this did not depress real profits below what they had been prior to the War. Capital made its contribution (others gave their lives), but kept a larger reward for its patriotism.

***

“Will the Germans go to war again? I don’t think there is any doubt about it and the curious thing is that I am almost persuaded that some day we shall have to let the Germans arm or we shall have to arm them… One of the greatest menaces to peace in Europe today is the unarmed condition of Germany²⁴.”

The economic scenario for World War II was quite different from that of World War I. For one thing, Germany was a defeated State after World War I. The reparations agreements worked out at Versailles in June 1919, and later adjustments put an enormous strain on it, and Germany had to accept enormous foreign investments, especially from the United States. For another, Britain no longer held the commanding position it held before World War I, and America, now a net creditor, was beginning to consolidate its grip on the world. German rearmament, moreover, was actually promoted by Britain and America during the1930s²⁵, and this was combined with pro-Nazi business organizations in those countries²⁶.

Part V -The Second World War: American, British and German Politics

There appears to be evidence pointing to treachery by leading U.S. business groups during World War II. In particular, friction existed between President Roosevelt and the Rockefeller oil and banking nexus which persisted in supplying the Germans with oil after 1939²⁷. In addition to this, it has been alleged that certain U.S. financiers (the same groups, in fact, that had helped set up and finance the German combines during the 1920s, e.g. the banking firm of Dillon Read²⁸) were able to maintain financial connections with such pro-Nazi capitalists as Thyssen, the steel-maker, via Holland²⁹. It is certainly also the case that, during World War II, bankers representing the Nazis and the Allies met regularly in Switzerland at the Bank for International Settlements³⁰.

Thus, Standard Oil and other U.S. corporations are reported to have operated inside Nazi Germany after World War I began, supplying some of the technical know-how that kept the Third Reich going. Meanwhile, immediately following the War, America successfully moved out large numbers of pro-Nazi scientists and technocrats who were then employed at NASA and elsewhere on classified projects for the U.S. armed forces and for U.S. intelligence, etc³¹.

In July, 1940, the New York Times reported that large amounts of oil were being supplied by the United States to Nazi Germany, at war with Britain³². Less well-known these days is the report that a million barrels of crude oil had been delivered to Germany’s partner, Japan, by the British Anglo-Iranian Oil Co. (predecessor of B.P.) as late as March, 1940, among other similar deals³³.

America would obviously have been well aware of Britain’s continued desire to rule the world, expressed in its own way by the British Round Table organization, but it had cultivated more effective ties within Germany in business, and this could have been pointed at Britain (at the time of World War I, 27% of the US population was of British descent and 25% of German descent³⁴, and several of America’s biggest business families were of German origin -e.g. the Rockefellers, Warburgs, Goldmans, Sachs, Lehmans and Guggenheims, although it should be pointed out that many of these Germans-American, some of whom had supported the Kaiser -e.g. the Warburgs seem to have been particularly close -before and even during World War I were Jews).

World War I had not rid the world of inter-imperialist conflict. Directly following it, not only had Russia taken a Socialist path, but Britain’s differences with the other imperialist powers, including France and the United States had broken out, a reflection of Britain’s weakened state and America’s ambitions.

Indeed, these conflicts were even pursued while the War was actually going on. For example, in the Middle East, Britain, ostensibly at war with Germany, clashed with France -T.E. Lawrence’s (“Lawrence of Arabia”) role in this is evident. Territories in the Arab world were haggled over, and Britain lost against the Wahabis and Abdul Aziz Ibn Saud who had begun to seize power in Saudi Arabia. This became America’s opportunity, cultivated during the 1930s and used to the great benefit of its oil corporations³⁵.

During the 1920s, movements had grown up in Britain in favor of better relations with Germany, sympathizing with it over its treatment in the 1919 Versailles Treaty. Although these movements were associated with the movement against the Soviet Union, and anti-communism in general, they also espoused the continued power of Britain and its Empire.

All those anti-communist, pro-British Empire and pro-Nazi, groups appear to have dissolved upon the outbreak of World War II, and yet it was common knowledge at the time and much commented upon, that those who had been pro-Nazi began turning up at the head of Britain’s military preparations and war effort. For instance, Lord Riverdale (quoted above), said to have been a member of the Anglo-German Fellowship, became associated with the head of Britain’s Aircraft Supply Board, Sir Charles Craven (also Chairman of the largest British armaments company at the time, Vickers Armstrong), Captain Oliver Lyttelton was the British Minister of Production in World War II, even though he was listed in 1940 as a director of the German company Metallgesellschaft AG, Peter Bennett was appointed to a controlling position in World War II Aircraft Supply after having been negotiator of an agreement for joint world trade exploitation with the Nazi Reichsgruppe Industrie as late as March 1939³⁶, while Montagu Norman remained Governor of the Bank of England until 1944, after having been responsible for financing Nazi Germany and sequestering investments made in Britain by German Jews, a matter that has only been “resolved” recently.

At the beginning of 1936, Edward VIII came to the throne. It seems Hitler was informed by the German Embassy in London that the new King believed “an alliance between Germany and Britain [was]... an urgent necessity.” In December, he was forced to abdicate, officially because he had decided to marry a divorcee, Wallis Simpson, and Parliament refused to change the law to make this possible. Britain’s aristocracy, and particularly the monarchy was (and remains) a cousinhood of European families in which the British Royal Family has especially strong relations with the German aristocracy, from whom they originate, in fact³⁷.

Although it is certainly not the case that Edward was alone in the British Royal Family in his admiration of Nazi Germany, he may have represented a specific route with respect to it that was not supported by the majority of them³⁸. That will probably remain a mystery for many years to come. Whatever light it may cast on things, this is not the main issue at stake, and his role has been turned into a myth to cover up more serious matters.

Upon Edward’s abdication, his brother George VI came to the throne in January ,1937, and in May the Government of Neville Chamberlain came into office and followed a policy of Appeasement with respect to Germany, which merely encouraged the militarist and expansionist government of Hitler. However, in doing this, Britain was not merely trailing behind Hitler, but following its own imperialist reasoning.

Edward (by then Duke of Windsor) visited Hitler until October, 1937, when Appeasement was in full swing -in November, 1937, Britain’s Prime Minister Neville Chamberlain sent Lord Halifax to meet Adolf Hitler, Joseph Goebbels and Hermann Goering in Germany, where Lord Halifax recalled saying that:

“Although there was much in the Nazi system that profoundly offended British opinion, I was not blind to what he (Hitler) had done for Germany, and to the achievement from his point of view of keeping Communism out of his country³⁹.”

Hitler had banned the German Communist Party and put its leaders into concentration camps.

Britain, however, appears to have been preparing for War as early as April 1938, following the Nazi occupation of Austria in March. For example, a British purchasing mission arrived in California in search of aircraft, and two months later they purchased 250 from Lockheed and named them Hudsons⁴⁰. However, Neville Chamberlain’s Appeasement policy did not come to an end until March, 1939, when Hitler seized the rest of Czechoslovakia, thus breaking with the Munich Agreement signed in September, 1938.

But it was not until June, 1939, when King George VI visited President Roosevelt in the United States (after having been invited by FDR in a letter dated September 17, 1938, to which the King replied on October 8th that year), on an unprecedented State visit to America, the first official State visit by a ruling monarch since America had split from the Britain in the 18th century. They discussed the ways America could help Britain and laid the basis for the destroyers for bases deal, which was authorized on September 2nd, 1940.

On the surface, the situation appears similar to what happened in World War I -Britain (France, Russia) versus the Alliance Powers led by Germany. But the power situation between Britain and America was reversed -instead of Britain being the most powerful State in the world, setting up a blockade across the North Sea and patrolling the Atlantic, now America was telling Britain how it could help her out of the mess. The Americans would take over various British bases in exchange for destroyers and Canada need not waste money building “a Canadian fleet as he [Roosevelt] had already laid his plans for the defense of the Pacific Coast of Canada, especially Vancouver Island⁴¹.” Britain declared war on Germany on September 3rd, 1939.

A curious piece of evidence for a shift by British imperialism against Germany is the book “Tory MP” by one Simon Haxey⁴², published in 1939, which exposes the fascist-Nazi connections of the British Conservative Party until then, while singling out a few Conservative dissidents, such as Winston Churchill and Anthony Eden, who it argued would lead the British Empire in the correct direction. This book, issued by the Left Book Club, gives every impression of standing on the left and exposing the fascist network, but adopts an openly pro-imperialist stance, e.g.:

“Every British Government also has responsibility towards the Empire, whose people have a right to depend on British statesmen to save them from the clutches of Hitler and Mussolini. Our Conservatives have made it increasingly difficult for any British Government to fulfil these, its greatest responsibilities⁴³.”

It is also worth noting that by 1930 the United States was outpacing Britain as an exporter, though not in all parts of the world. America’s biggest export coup was Canada (a Dominion of Britain), where US exports totaled £ 131.819 million compared with £ 29.138 million for British exports. However, Britain was still the dominant exporter to India (with £ 52.944 million, while US exports were only 17% of this amount), Ireland (US exports were only 8% of Britain’s), and South Africa (US exports were 29% of Britain’s). Meanwhile, US exports to Germany were more than double Britain’s and in Australia US exports were gradually catching up with Britain’s (at 48% of the latter’s). From 1913 to 1929, British exports to its Empire fell from 44% to 34%, while British imports from its Empire fell from 42% to 34%. Meanwhile, the United States share in these had grown⁴⁴.

Any influence Britain (through its aristocratic connections) and America (through business connections) may have had in Germany, however, was surely eclipsed by its own power-groups’ desire (again) to extend their control over the rest of Europe. Germany was being treated as a second-rate power because it had been crushed by the combined weight of the other powerful States,. This was unacceptable to its ruling classes, the industrial and financial capitalists and the great landowners, the Junker class. It united them, but plenty more divided them⁴⁵, and it took Hitler and the Nazi Party to bring them together -under Hitler Germany began arming in earnest.

World War II and the period leading up to it were clearly characterized by the clash of imperial designs on the world. Within this conflict, it was the largest, most economically powerful that won, a fact that was announced in 1930 by Ludwell Denny⁴⁶:

“The ‘feeling’ of victory is on America’s side. It is America’s ‘day.’ The devastating ‘will to win’ so characteristic of youth and the energy and daring which flow from it, drive America forward… The ‘Americanization’ of Europe and the far places of the Earth advances… We were Britain’s colony once. She will be our colony before she is done, not in name but in fact. Machines gave Britain power over the world. Now better machines are giving America power over the world… What chance has Britain against America? Or what chance has the world?”

N.B. This is a continuing project. We welcome comments, corrections, suggestions, criticisms from readers.

NOTES

¹⁹ Eric Hobsbawm, in “The Age of Extremes” (1994), emphasizes the real material losses -the destruction of economic assets in each World War, but notes that “wars were clearly good for the U.S. economy” whose “growth in both world wars was quite extraordinary, especially in the Second World War.” (page 48)

²⁰ Known as the “New Deal”.

²¹ BEA figures, all in nominal terms.

²² In inflation-adjusted terms, total US profits (according to BEA and U.S. Department of Labor data) had grown from losses in 1933 to US$ 18 million in 1934, and by more than 56% in 1935, by over 52% in 1936 and by over 10% in 1937.

²³ Inflation-adjusted profits went up by more than 33%.

²⁴ Lord Riverdale (owner of a large steel and son of former Conservative Prime Minister of Britain, Arthur Balfour), Sheffield Telegraph, October 24th, 1933; taken from the book, “The Traitor Class” by Ivor Montagu, Lawrence and Wishart, 1940, page 38.

²⁵ In the 1930s, Standard Oil transferred hydrogenation patents and technology to Germany via IG Farben, thus massively increasing German synthetic (oil from coal) production. Braunkohle-Benzin A. G. (an IG Farben subsidiary), which controlled this synthetic oil, was created in 1926 with heavy Wall Street financing. Loans made by Americans were utilized in the mid-1920s to create and consolidate the gigantic chemical and steel combinations of I. G. Farben (with which America’s chemical corporation du Pont, among others, also had a cartel arrangement) and Vereinigte Stahlwerke, respectively. The German cartels not only helped Hitler to power in 1933, they also produced the bulk of key German war materials used in World War II (See: Anthony Sutton, “Wall Street and the Rise of Hitler”). Montagu Norman, Governor of the Bank of England (1920-1944) had meetings with Ribbentrop and under him the Bank helped finance Germany after 1933. “General Motors is an international organization. It operates in practically every country in the world…many years ago, General Motors – before the present regime in Germany -invested a large amount of money in Adam Opel A.G. It has been a very profitable investment, and I think outside of the political phase, its future potentiality from the standpoint of development and profit, is equal to, if not greater than many of the other investments which the Corporation has made. It enjoys about 50% of the business in Germany -a little less than that to be exact. It employs German workers and consumes German materials… The operations of the great auto manufacturing firm of Adam Opel A.G. were no less valuable to the German Government than they were to General Motors Company. Opel was producing the major portion of the mobile equipment for the Nazi Wehrmacht.” (From Albert E. Kahn: “High Treason, The Plot Against the People”, 1950)

²⁶ It is commonly believed that this rearmament collaboration was aimed at crushing the Bolsheviks, but it also reflected a continuation of the inter-imperialist rivalry between the Great Powers, and particularly between Britain and America, notwithstanding attempts to unify them -actually reading what the Round Tables Organization had to say, for instance, tells us that people like Lionel Curtis wanted a British Commonwealth with the United States included (see his works, “The Commonwealth of Nations”, 1916 and “Civitas Dei”, 1938), i.e. a world dominated, as before, by Britain, but with a new title: the British Commonwealth.

²⁷ For FDR’s opposition to the Rockefellers -see: Charles Higham: “Trading with The Enemy; the Nazi American Money Plot, 1933-1949”.

²⁸ The German Steel Trust, Stahlvereign consolidated in 1926 about half of Germany’s steel capacity and a fifth of its coal. It was underwritten by Dillon Read and J. Henry Schroder & Company in New York. See: Robert Franklin Maddox: “The War Within World War II: The United States and International Cartels”, 2001, page 71.

²⁹ See: John Loftus, “Heir to the Holocaust”, 2003

³⁰ Baron Kurt von Schroder, who held a very high position in the Nazi Party, as well as helping to finance it -and was also the head of a worldwide banking group, with offices in London and New York, as well as a business connection with America’s ITT (See: Anthony Sampson, “The Sovereign State of I.T.T.”, 1973) -became Germany’s representative on the Bank for International Settlements, sitting alongside representatives from the Bank of England and the US Federal Reserve, in Switzerland during the course of the War. (see: Anthony Sutton: “Wall Street and the Rise of Hitler”, Chapter 5)

³¹ Top Nazi V-2 rocket scientist Wernher Von Braun, for example, was smuggled out along with many others in Operation Paperclip, to become the founder of NASA’s George C. Marshall Space Flight Center.

³² Ivor Montagu: “The Traitor Class”, 1940, page 59.

³³ Ibid, page 57

³⁴ See: Don Von Heinrich Tolzmann: “The German-American Experience”, page 268.

³⁵ This is evident from Richard Aldington’s “Lawrence of Arabia, a Biographical Enquiry” (1955), with respect to certain territories in the Middle East, later followed through at the Versailles negotiations.

³⁶ See Ivor Montagu: “The Traitor Class”, 1939.

³⁷ The British Royal Family is descended from the German aristocratic Saxe-Coburg dynasty and connected through marriage to both the British and German aristocracy. Prince Philip, the Duke of Edinburgh’s full name is Philip von Schleswig-Holstein-Sonderburg-Glücksburg. His education began in Germany, and his sisters married several German Dukes and one German Prince, all of whom stood or fought on the German side during World War II.

³⁸ His brother, the Duke of Kent and his wife, for instance, were intrigued by Hitler’s “sociological experiment”. In November 1939, Queen Elizabeth, George VI’s wife, sent Lord Halifax a copy of Hitler’s “Mein Kamph”. In her accompanying letter, the Queen Mother made reference to Hitler’s “obvious sincerity” (from the biography of Lord Halifax by Andrew Roberts: “The Holy Fox”)

³⁹ See Spartacus pages, “Appeasement”.

⁴⁰ See: Anthony Sampson; “The Arms Bazaar”, 1977, page 94.

⁴¹ Transcript of King George VI’s “Handwritten Notes for a Memorandum on His Conversations with President Roosevelt on June10 and 11, 1939”.

⁴² Richard Griffiths (“Fellow Travellers of the Right”, 1983, page 382) states that “Simon Haxey” is a pseudonym.

⁴³ Haxey, page 226

⁴⁴ Ranji Palme Dutte: “World Politics, 1918-1936”, 1936, page 197, 237.

⁴⁵ Industrialization, for instance, against which the Junkers put up some opposition.

⁴⁶ “America Conquers Britain”, 1930, pages 404-7.