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Series Part Two: Counted for Persecution; IBM's Role in the Holocaust
by Merry Madway Eisenstadt
Washington Jewish Week
September 17, 1998
Hollerith punch-card tabulation machine (circa 1890)
Hollerith punch-card tabulation machine (circa 1890)
What is IBM subsidiary DEHOMAG's responsibility for the uses of its equipment leased to the German government for the German censuses? What type of technical help did DEHOMAG provide when Hollerith technology was used in the concentration camp system?

Holocaust scholars and other historians believe further study is warranted about these and other questions. It's a topic where there's a great deal of interest, observed Holocaust museum curator Luckert. What did they [DEHOMAG directors] know? What was their position on it?

And what was the nature of the contractual relationship between the IBM parent and its subsidiary, and what control could the U.S. firm have exerted during Nazi rule?

IBM Corp. has never answered those questions: A senior corporate IBM archivist in Somers, N.Y., Robert Godfrey, said that "IBM's archives are open to anybody who wants to come," but that "I don't have any documents here that relate to the Holocaust." He said IBM has not issued a position paper or any statement on DEHOMAG, or any response to the Holocaust museum's exhibit.

"The Germans did use the DEHOMAG Hollerith. That's about all I know," he said. Only a brief, puzzling explanation is offered in IBM's internal publication The Story of Computing in Europe by John Connolly. Listed in a chronology of events is this description for 1939, "Due to war, connections between DEHOMAG and IBM Corp. (especially for technical information) ceased."

Milton says, "The few contacts we tried to have [with IBM] were very unsuccessful. What we tried to do was to find out if they had punch cards, old punch cards that might show us the way this works. They had nothing; they had long since been shredded. No one saves punch cards, and no one has such a collection."

IBM was displeased that its logo was shown on the DEHOMAG Hollerith displayed at the museum: "We learned that IBM considered the logo inappropriate on principles of fairness and artifacts' integrity, because the logo had been added to the equipment by IBM after the war when DEHOMAG was renamed IBM Germany. However, IBM still owned the company that made it, whether it was called DEHOMAG or Hollerith," Milton said.

By mentioning IBM in its Hollerith display, the exhibit raises questions, whether intentionally or not, about IBM Corp. and DEHOMAG's responsibility for how its leased machines were utilized.

Observes former museum historian Luebke, now at the University of Oregon, "The point of that exhibit has been predictably misunderstood as an accusation thrown at IBM, as if to say, 'Bad, bad IBM, you were complicit in the Holocaust.' But what the exhibit is about is the degree to which the Nazi state availed itself of up-to-date technology to classify its citizenry according to the racial categories of the state.

"Were they complicit? Sure," Luebke says. "What does it mean? That is harder to say." Noting that at least a half- dozen other American multinational companies maintained operations in enemy countries, although profits remained blocked during the war, he says, "It is harder to point the finger at IBM as compared to companies producing armaments for warfare and profiting from slave labor."

As for the exuberant statement from DEHOMAG director Heidinger praising the Nazi regime and census program, Luebke says, "That doesn't make him an Eichmann, either. There's a big gap there between someone who sees a business opportunity and someone who participates in a process of genocide."

Says Milton, "We were never out to harass any corporation. The aim here was to tell a story of how people, companies and even foreign companies are made complicit for multiple reasons in a process that would have taken place, perhaps, more slowly, but certainly would have happened in Nazi Germany. Certainly, you would have needed more manpower to manipulate cards by hand. What this machine does is it makes it faster. It mechanizes it. And it's part of the industrialization of mass murder."

If Hollerith leases machines to the German statistical office, is Hollerith responsible for what the German statistical office does with that information? poses Holocaust museum curator Luckert."The German Hollerith company may have produced the cards, but they wouldn't have been involved in [selecting ] the groups for identification."

Luckert also said, "It's very difficult to show a link between knowledge within the corporation of the actual killing process. Information goes to agencies involved in the killing process. But that doesn't mean the information gatherers are part of that killing process. They supply the information." Luckert distinguishes between American companies that had wholly owned subsidiaries in Germany, such as IBM, Frigidaire and General Motors' Opel, and companies like I.G. Farben, which actually utilized prisoner slave labor in the manufacture of its products.

Clearly, IBM Corp. had a keen interest in its German subsidiary's growing business before World War II, when Jews and other groups were already being disenfranchised from German economic life and persecuted. Military intelligence and Justice Department Warfare Section documents maintained at the National Archives II in College Park, Md., show that IBM Corp. was actively involved in the decision-making as DEHOMAG rapidly expanded facilities and capabilities to meet the push for the 1939 census. Correspondence between the two entities mainly focuses on the need for increased factory space and equipment, and not on the applications of its machines.

IBM sent over U.S.-based personnel to help with the surge in German business, according to IBM's published history: "By 1936, a program to supply Germany with engineers with punched card machine experience starts with the transfer of Walter Schaar from U.S.A. to Germany. Otto Hang followed in 1937 and Erich Perschke and Oskar Hoerrmann in 1939."

And before the war, in 1937, when Jews and dissidents were already being oppressed (concentration camps existed as early as 1933), IBM Corp. President Thomas J. Watson Sr., then president of the International Chamber of Commerce, accepted the Merit-Cross With Star from Chancellor Adolf Hitler, "honoring foreign nationals who have made themselves deserving of the German Reich." To protect overseas investments, Watson had been actively campaigning for World Peace Through World Trade.

While in Berlin for the occasion, Watson met with Hitler and reported to the press afterward that Hitler personally assured him that "there will be no war. No country wants war; no country can afford it. Certainly that is true of Germany." Watson also said he was "impressed with the simplicity and sincerity of [Hitler's] expression."

"It indicates a sentiment that was noncritical of what was going on in Nazi Germany," Milton says of Watson's award from Hitler. "It indicates a willingness to overlook certain problems. Your willingness to accept this [award] already tells you something very compromising about the thought process in corporate ideology."

Watson's son and eventual successor at IBM, Thomas J. Watson Jr., writes in Father, Son & Co.: My Life at IBM and Beyond, "Dad's optimism blinded him to what was going on in Germany.... Dad believed his German businessmen friends, who assured him they had Hitler in check. A lot of people made the same mistake."

Watson's son also describes meeting up with his parents in Berlin during this time; clearly his parents knew of the oppression directed at Jews: "Mother told us that her friends the Wertheims, who owned one of the biggest department stores in Berlin, were leaving the country. In the summer of 1935 theirs had been one of the businesses hit when Nazi gangs ran wild in Berlin's streets, smashing the windows of Jewish-owned stores. The Germans we knew pooh- poohed the incident at the time saying, 'Oh, it's too bad, but you know how young people are,' but Mother had been shocked."

Watson Jr. also writes, "I also visited the Japanese embassy. It was a beautiful house, and we stood in the garden sipping tea while a German diplomat told us proudly that the place had belonged to a rich Jew who had fled the country. Nobody took exception, but I wondered how the Jewish man felt about having his house taken over. The callousness of the Germans made me very uneasy."

Watson Sr. did not return the Merit Cross of the German Eagle to Hitler until June 6, 1940, following the invasion of France, but well after the beginning of World War II with the invasion of Poland on Sept. 1, 1939.

IBM's publication describes a power struggle before the war between DEHOMAG's director Heidinger and the parent company. IBM's president Thomas J. Watson Sr. sent a representative in 1940 to negotiate with Heidinger, who wanted more control over DEHOMAG and believed that as Germany expanded, so would his company. This representative/attorney is praised by Watson as the bravest man in IBM for saving DEHOMAG from Heidinger control and takeover by the Nazis during the war.

A U.S. military intelligence interview with a captured DEHOMAG branch manager (1944) indicates that the German subsidiary employed about 2,300 people in 1944. The company ran training schools before and throughout the war for customers intending to operate the machines themselves.

In addition to leasing equipment and labor, knowledge of IBM business practices would indicate that subsidiary employees would have provided technical support through its active service bureaus even without knowing the details of the data being gathered. IBM promotional materials from this period highlight its service bureau: "Branches of the Bureau are located in principal cities and are equipped with electric punched card accounting machines. They [bureaus] may be employed to handle all or part of your accounting work as desired." A brochure also notes, "Naturally, strict confidence is an underlying principle in the handling of all data."

"IBM didn't merely drop off a few card punches, sorters and printers to a customer and let him figure out how to use them effectively," maintains IBM critic Richard Thomas DeLamarter, describing general IBM corporate practices throughout its history in his book, Big Blue: IBM's Abuse of Power. "Rather, it became intimately involved in the customer's business a virtual partner in that business."

DEHOMAG personnel were concerned with business first, a U.S. military document concludes: "The Hollerith departments are nothing but collecting agencies which deliver various compilations of figures to the plant management without knowing at all what these figures stand for," reads the Intelligence Bulletin dated Jan. 15, 1945. The document also notes that the DEHOMAG "branch manager does not know of any special measures of the Hollerith Company to conceal its connection with IBM or to sever this connection. On the contrary, PW claims that this close relation with an American firm made the leading personalities of [DEHOMAG] internationally inclined and friendly to the U.S.A."

What is the responsibility of multinational firms to know and monitor how their products are used, even during wartime? "To ask this question backwards, which firms refused, even to their financial disadvantage, to have absolutely anything to do with Nazi Germany?" said Milton. "I think even today we're not yet, unfortunately, at a phase where we talk about the ethics of multinational corporate investment except for the boycott of South Africa," she added.

IBM has not offered a clear accounting of earnings from its German subsidiary as the Nazi state geared up for its 1933 and 1939 census or from deferred revenues from IBM subsidiaries operating in enemy countries during World War II. The foreign subsidiaries' revenues and profits are not broken out by individual subsidiaries, but are, instead, combined in IBM's long listings of annual earnings filed with the U.S. Securities and Exchange Commission from 1935 (when filings were first required) and throughout the war and beyond. This makes it impossible to separate out the profits earned by IBM during the massive gearing up for the German censuses and any blocked profits received from Germany after the war.

The annual forms include this explanation for 1939, "The registrant also has 32 subsidiary and related companies operating in 26 foreign countries. The registrant's investment in such companies is protected through ownership of stock or through agreements with the stockholders of such companies. The disclosure of the names of foreign subsidiaries and related companies will be detrimental to the interest of security holders of the registrant."

According to a January 1940 article in Fortune magazine, At the time the war broke out, "IBM's foreign investment, including stock, advances, and surplus was about $12 million, mostly from plowed-back foreign profits. Foreign gross in 1938 was about $10 million (22 percent of total revenues) and earned $1.5 million. The profit, however, was only slightly greater than in 1934, when investment was around $7 million, owing to the rapid expansion. The size and revenues and profits of the German investment are nearly equal to all the others combined. So, although IBM earned $1.5 million abroad in 1938, blocking of foreign profits (from Italy and Spain, as well as Germany) brought the figure down to $739,000. The blocked money in Germany has been invested in real estate."

DEHOMAG's contract, signed in 1937 for the 1939 German census, required 70 sorters, 50 tabulators and 90 million cards, according to IBM's publication. To calculate this data, DEHOMAG leased the labor of 1,200 keypunch operators, notes Milton.

IBM's information for some of the war years shows stock dividends received from foreign subsidiaries in enemy- controlled countries-net consolidated. Accounting also is given for net foreign assets, and securities of and advances to foreign subsidiaries and branches in enemy- controlled countries, as well as in countries where the exchange is blocked. Undistributed surplus amounts also are shown.

If no correspondence exists between the parent and its subsidiaries in enemy-controlled countries, what is the basis for these accounting figures?

Percentage of profits from abroad falls during the war. A report in the May 1, 1946, New York Times states that reports from IBM branches in nine liberated European countries revealed that they were able to retain about $2 million in cash, in addition to other assets and were using the funds to rehabilitate the company's foreign business.

During the war, IBM president Watson voluntarily decreased his compensation and vowed to forego any war profits earned from the manufacture of munitions.

Another puzzle involves a microfilm copy of a contract for a sorting machine, dated Aug. 7, 1942, well after America entered the war, between the Reich Ministry for Armament and Munitions, Berlin, together with the firm, IBM, New York, represented through its German administrator in Amsterdam. The contract, included in the seminal book in German on census work during the Holocaust by Goetz Aly and Karl Heinz Roth, is cut off at the bottom and does not show the signatures or reference completely the original source for the material.

"You have a highly official German agency dealing with IBM in New York after the war had started," Milton said.

Internal IBM publications applaud anecdotal instances of heroic rescue of threatened employees and resistance to a Nazi takeover of operations in some European countries, including France and Norway. These episodes appear to be a byproduct of righteous actions by individuals, rather than corporate policy.

Viewed in the context of the horrific suffering of the Holocaust, it might seem that statistics and tabulation technology are mere footnotes in the anguished saga. But the story of tabulation technology's uses in the Holocaust, and its suspected use in the rounding up and detention of Japanese-Americans during World War II, is important, argues Milton.

"Unless we begin to understand how technology influences society, we're going to be in a lot of trouble in the future," she says, noting the potential for misuse of personal data on health history, genetically determined health risks, and other confidential information.

"You can have a census, but you have to guarantee the sanctity and secrecy of the material, that the data cannot be used irresponsibly or for commercial profit or for the invasion of personal privacy," she said. Her views are echoed by Fordham University's Seltzer, whose research shows an increased risk of genocide in countries with advanced population registration systems.

"Do we, as statisticians and demographers, have a special responsibility to encourage the development of technological, as well as legal, safeguards against abuse?" he writes. "I would answer this question in the affirmative."

"But we must first overcome the half century of near silence on the role played by population statistics, statistical and related data systems, and statisticians and demographers during the Holocaust. Current protective policies and official statistics have both been ill-served by this silence, whatever its source or motivation."

Washington Jewish Week © 1999   Used with permission.

Return to Part One of this series

Related links:
The Avalon Project : Nuremberg Trial Proceedings Vol. 6
The Avalon Project at Yale Law School
FORTY-FOURTH DAY Monday, 28 January 1946
Re: Hollerith (IBM)
NARA | Holocaust-Era Assets | Trade With the Third Reich Bibliography
U.S. National Archives & Records Administration

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