Profits of neutrality

Since the days of ancient Rome, Emperor Vespasian's famous defence of his profits from public toilets - pecunia non olet (money does not stink) - has been oft repeated. In The Art of Cloaking, however, Gerald Aalders and Cees Wiebes examine some very smelly and profitable business. They show how companies in neutral countries supported the German war industry before and during the second world war. Aalders and Wiebes have pieced together the complicated puzzle of how banks and industrial firms in the Netherlands, Switzerland and Sweden kept the Allied authorities in the dark about German industry's far-flung network of foreign subsidiaries.

During the first world war the seizure of enemy property became common. The American Bosch subsidiaries, for example, were vested by the Alien Property Custodian and its patents licensed royalty-free to American firms. Avoiding a repetition of such setbacks became something of an obsession for German companies, according to Aalders and Wiebes. Although the transactions could attain bizarre complexity, the basic principle was simple. Foreign assets would officially be transferred to a firm in a neutral country, with the German company retaining control and ownership in everything but name.

While many firms in neutral countries tried to profit from German cloaking operations, Aalders and Wiebes identify one spider in the cobweb of secret contracts and gentlemen's agreements - Enskilda Bank and the Wallenberg family. To the present day, the Wallenbergs control a large part of Swedish industry and are famous for their wealth and influence. The authors claim many of their riches come from co-operating with Nazi Germany. Not only did they act as cloaks for I. G. Farben and Bosch; firms controlled by them also sold everything from ball-bearings to minesweepers to the Germans while buying looted assets from occupied countries in return.

Wiebes and Aalders deserve praise for the documents they have unearthed, but the book suffers from a lack of focus. We are told that Enskilda and the Wallenberg family were paradigmatic for the dealings of other neutral firms, yet the book itself suggests that the Wallenbergs were in a class of their own. The authors also seem overwhelmed by the secrecy of it all. That neutral firms profited handsomely by acting as cloaks for German companies is alleged repeatedly, but there is no attempt to assess the relative importance of these earnings.

The author's laudable moral impetus also sometimes obstructs their analysis. They waver between implying that the Wallenbergs deliberately supported Germany's bid for hegemony and the allegation that they simply tried to cash in on the war by selling to both sides. Also, no allowance is made for the legitimate desire of private firms to cope with volatile trading conditions in an age of political turmoil.

Many readers will be fascinated by this work's cloak and dagger tales; professional historians will miss a more comprehensive and even-handed assessment of the details Aalders and Wiebes have uncovered.

Hans-Joachim Voth is research associate, Centre for History and Economics, King's College, Cambridge.