Tricky trading with the enemy

IBM and the Holocaust
July 13, 2001

Michael André Bernstein, an acute critic of Holocaust historiography and literature, coined "backshadowing" as a term to describe one of its worst characteristics. "Backshadowing is a kind of retroactive foreshadowing in which the shared knowledge of the outcome of a series of events by narrator and listener is used to judge the participants in those events as though they too should have known what was to come." Edwin Black's account of IBM's corporate relations with Nazi Germany is a sorry example of backshadowing.

IBM was founded by Herman Hollerith, an American of German parentage who invented a machine for processing statistical data. In 1910 he licensed Dehomag in Germany to build, lease and operate Hollerith machines. After the first world war, IBM, now led by Thomas J. Watson, exploited German hyperinflation to obtain control of Dehomag. Watson "was a pure capitalist" who did business with anyone. When Hitler achieved power, Watson saw opportunities for IBM in the Nazis' predilection for statistical analysis. It did not matter if race was one of the chief organising categories for data research.

The Nazis used IBM machines for population surveys in 1933 and 1938 that helped to classify and enumerate German Jews. Racial violence and discrimination did not deter Watson from regularly visiting Germany. His machines, meanwhile, helped to sort Germans lined up for sterilisation. As head of the International Chamber of Commerce, Watson arranged for the ICC's annual meeting to be held in Berlin in 1937, where he was given a medal by Hitler. To prepare for war, the Wehrmacht used IBM apparatus extensively and IBM's business in Germany boomed. Watson was momentarily disturbed by Kristallnacht and sent Hitler a mild reproof, although it was mailed to the "wrong address". In public, he campaigned for good relations with the Third Reich. However, when IBM came under increasing tax pressure in Germany, he devised ways to camouflage its profits.

Black does a terrific job piecing together the scam and showing how it backfired once Watson's German partner became frustrated by having to take "losses" every year. Resentment exploded in June 1940 when Watson returned his medal to Hitler in deference to public outrage against Germany's attack on Western Europe. Yet, instead of letting Dehomag go, Watson fought to retain it and its profits. Ironically, war saved IBM because the German subsidiary fell under control of the Custodian of Enemy Property, who protected IBM's interests. Black provides shocking evidence that IBM in America continued to supply vital punch cards and other services to its lessees in Nazi Europe, despite the use of IBM technology for repression and in defiance of Allied regulations against trading with the enemy. By another irony, it was this very business that saved IBM from prosecution and retribution, since it could provide intelligence for the Allied forces and once Germany was vanquished, became crucial for reconstruction work.

This story would have made a stunning enough book, but Black massages the facts to blacken IBM still further. He asserts that: "When Hitler came to power he made an open promise to create a Master Race, dominate Europe, and decimate European Jewry." Black, then, knows better than the legions of scholars who have debated Hitler's outlook and objectives in 1933. And if Black knows, then Watson ought to have known. When IBM dealt with the Nazis in 1934, it should have been aware of their "methodical program to destroy the Jews" and conquer Europe. During a visit that year, Watson should have noted that "everywhere Jewish misery was evident". Strange, then, that in 1935 Britain concluded a naval agreement with Hitler and 10,000 Jewish refugees decided to go back to Germany. Black asserts quite fantastically that 60,000 Jews were imprisoned in April 1933 and consistently exaggerates Nazi repression of the Jews. He also overstates how much world opinion knew or cared about it so as to make Watson appear more nefarious. Black claims that in 1933 the "world reacted with a boycott", which was so powerful that by 1938 it "virtually crippled" the German economy. This is nonsense. The controversial boycott was staged by some sections of the Jewish population in various countries with limited general support. Historians agree that it was largely ineffective: the Germany economy hit trouble because of rearmament. And Watson's Berlin adventure in 1937 was hardly contentious, coming a year after Germany staged the Olympic Games there. Black treats his anti-war sentiment as singularly obnoxious whereas an extensive isolationist movement existed in America.

The fruits of Black's own investigation disprove a genuine "strategic alliance" between IBM and the Nazis. The corporation and the party may have shared a penchant for dictatorial leaders, uniformed employees and rousing songs, but Watson systematically deceived the Nazi authorities. IBM avoided paying corporate tax in Germany from 1934 to 1938. Watson fought to prevent the Nazis from taking a controlling interest in Dehomag or promoting alternatives. During the war, IBM serviced Axis requirements, but it obliged the Allies equally. As a wartime investigator observed: "The personnel of IBM, though nominally citizens of the USA, is actually composed of citizens of the world. Their loyalties to their corporation know no national bounds." What Black proves with devastating clarity is that capitalism is amoral.

Black makes his gravest charge against IBM in its alleged complicity in the "final solution", yet here his evidence is weakest. Undoubtedly, Hollerith machines were used to count Jews, run concentration camps and facilitate railroad operations. But machines did not identify Jews: they only processed faster the existing data that humans collected. To illustrate his thesis, Black argues that a higher proportion of Jews in Holland than in France were sent to the camps because the Nazis in Holland used IBM technology whereas in France they could not. His reductive explanation ignores the very different character of the two occupations, the terrain and the timing of the deportations. The case against IBM is damning enough without needing to exaggerate it or apply hindsight.

David Cesarani is professor of modern Jewish history, Southampton University.

IBM and the Holocaust: The Strategic Alliance between Nazi Germany and America's most Powerful Corporation

Author - Edwin Black
ISBN - 0 316 85769 6
Publisher - Little, Brown
Price - £20.00
Pages - 520

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