IBM and the Holocaust Read online

  More than ever, Watson fused himself into every facet of IBM’s operations, injecting his style into every decision, and mesmerizing the psyche of every employee. “IBM Spirit”—this was the term Watson ascribed to the all-encompassing, almost tribal devotion to company that he demanded. “We always refer to our people as the IBM Family,” Watson emphasized to his employees, “and we mean the wives and children as well as the men.” He continually spoke in terms of “oneness” with IBM.75

  Employees were well treated, generously compensated, entitled to excellent working conditions with the most liberal benefits and vacation times, enrolled in the IBM Country Club at Endicott, New York, and invited to endless picnics, rallies, and dances. Plus they were inducted into the IBM Club. “The company just won’t let you get lonesome,” assured one Club member. Children began their indoctrination early, becoming eligible at age three for the kiddy rolls of the IBM Club, graduating to junior ranks at age eight.76

  “Look upon me as the head of the family,” Watson would preach. “I want you to come to me as often as you feel that I can do anything for you. Feel free to come and open your hearts and make your requests, just the same as one would in going to the head of a family.” So penetrating was the Watson father image that employees routinely did ask his permission for ordinary personal decisions. John G. Phillips, for example, a man so powerful within the IBM organization that he ultimately became its vice-chairman, did not own an automobile until 1926; in that year, he finally approached the Leader. “Mr. Watson,” declared Phillips, “I have enough money to buy a car, but I would like your permission to do it.”77

  Watson’s own son, Tom, who inherited his father’s throne at IBM, admitted, “The more I worked at IBM, the more I resented Dad for the cult-like atmosphere that surrounded him.”78

  Large pictures of Watson in the weekly company publication, Business Machines, regularly sported headlines proclaiming even his ordinary accomplishments, such as “Thomas J. Watson Opens New Orleans Office.” The ever-present equating of his name with the word THINK was more than an Orwellian exercise, it was a true-life indoctrination. The Watson mystique was never confined to the four walls of IBM. His aura was only magnified by his autocratic style, barking out orders, demanding everywhere the pinnacle of service and action at a moment’s notice, employing a secretary to ostentatiously follow him around scribbling notes and instructions on a steno pad.79

  Newspapers constantly reported his movements and exploits. It was written during this era that, “probably no businessman in the country gets his name and picture in the newspapers more often than he does. Watson makes hundreds of public appearances every year at banquets, university commencements, the opening of art exhibits and similar occasions.” Fortune referred to Watson as “the Leader,” with a capital “L.” So completely conscious was Watson of his mythic quality that he eyed even the porters on trains and waiters in restaurants as potential legend busters. He tossed them big tips, often as much as $10, which was largesse for the day. As he once explained, “there is a whole class of people in the world who are in a position to poor-mouth you unless you are sensitive to them. They are headwaiters, Pullman car conductors, porters and chauffeurs. They see you in an intimate fashion and can really knock off your reputation.”80

  By giving liberally to charities and universities, by towering as a patron of the arts, by arranging scores of organizational memberships, honorary degrees and awards, he further cultivated the man-myth for himself and IBM.81

  Slogans were endlessly drilled into the extended IBM Family. We Forgive Thoughtful Mistakes. There Is No Such Thing As Standing Still. Pack Up Your Troubles, Mr. Watson Is Here. 82

  And the songs. They began the very first day a man entered the IBM culture. They never ended during one’s entire tenure. More than 100 songs were sung at various company functions. There were several for Watson, including the “IBM Anthem”:

  There’s a thrill in store for all,

  For we’re about to toast

  The corporation that we represent.

  We’re here to cheer each pioneer

  And also proudly boast

  Of that “man of men,” our sterling president.

  The name of T.J. Watson means a courage none can stem:

  And we feel honored to be here to toast the IBM.83

  Revival-style meetings enthralled the men of IBM. Swaying as they chanted harmonies of adulation for the Leader, their palms brought together in fervent applause in hero worship, fully accepting that their families and destinies were intertwined with the family and destiny of the corporation, legions of company men incessantly re-dedicated themselves to the “Ever Onward” glory of IBM. All of it swirled around the irresistible magnetism, the intoxicating command, the charismatic cultic control of one man, Thomas J. Watson, the Leader. 84

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  WATSON’S CONNECTIONS to Germany set the stage for a technologic and economic alliance with the Third Reich. It began soon after America’s entry into the Great War, when CTR’s pre-Dehomag property in Germany, albeit marginal, was seized by the German government for being owned by an enemy national. As it happened, Watson was delighted with how CTR’s assets were protected during receivership. His feelings were best expressed in a 1937 recollection he penned to Nazi Economics Minister Hjalmar Schacht.85

  “From the day I returned to Germany after the [Great] War,” Watson wrote Schacht, “to find my Company’s affairs in the best safekeeping by your Alien Property Custodian, well-administered and conscientiously managed, from the highly satisfactory experience gained in my association with German industry after the War while building up my Company in Germany, all through the time of Germany’s post-War suffering, recovery and setbacks, I have felt a deep personal concern over Germany’s fate and a growing attachment to the many Germans with whom I gained contact at home and abroad. This attitude has caused me to give public utterance to my impressions and convictions in favor of Germany at a time when public opinion in my country and elsewhere was predominantly unfavorable.”86

  He added, the world must extend “a sympathetic understanding to the German people and their aims under the leadership of Adolf Hitler.”87

  More than fundamental sympathy, Watson in 1933 possessed an extraordinary investment in Germany. It began in the early twenties during the height of Germany’s tornadic post-War inflation. It was a time when valueless German currency was transported from place to place in wheelbarrows and worth more as kindling than as legal tender. In 1922, Willy Heidinger’s Dehomag was a mere licensee of Hollerith equipment. But the monetary crisis in Germany made it impossible for Dehomag to pay royalties and other monies it owed to Watson’s CTR, which now controlled all of Hollerith’s patents. Dehomag’s debt was $104,000, or the astronomical sum of 450 billion marks. There was no way Dehomag could pay it.88

  Watson traveled to Germany and ruthlessly offered Heidinger two options: bankruptcy, or handing substantial ownership of Dehomag over to Watson. It began by Watson asking for only 51 percent of the stock. But as Dehomag’s financial position weakened, Watson abruptly upped his demand to 90 percent. Heidinger felt “cornered” with no choice: he ceded the German company to Watson, and Dehomag became a CTR subsidiary. When CTR was renamed IBM in 1924, Dehomag of course continued as an IBM subsidiary. Heidinger was allowed to retain approximately 10 percent of the stock. Dehomag could then still claim some token German ownership for appearance’s sake.89

  Ironically, Heidinger’s shares were a virtual ruse because he could only own them as long as he worked for Dehomag. Even then, he could not control the stock. Once Heidinger left the company, he would have to sell the shares back to IBM and only IBM. Moreover, Heidinger’s shares were used as collateral against large deferred company loans and a bonus system. For all intents and purposes, IBM now controlled the German company.90

  For a decade after IBM acquired Dehomag, Watson tightly managed the German subsidiary’s operation, setting its sales quotas, and at the same ti
me benefiting from technical improvements to Hollerith systems devised by German engineers. Eventually, IBM began extending its influence overseas, creating subsidiaries or agencies in dozens of countries, each with its own name. With Watson’s persona bigger than IBM’s name, several of the companies were namesakes. Watson Belge was the Belgian subsidiary. Watson Italiana was the Italian subsidiary. In Sweden, it was Svenska Watson. In many places, the business names Watson and IBM were synonymous and inseparable.91

  But the German subsidiary’s revenues outshone them all. Many European countries were slow to adopt Hollerith technology. Germany, however, was more willing to accept the punch card systems. Indeed, of some seventy subsidiaries and foreign branches worldwide, more than half of IBM’s overseas income came from Dehomag alone. By 1933, Dehomag had turned in a spectacular financial performance, 237 percent of its quota, and Willy Heidinger was due to be one of the stars at the forthcoming Hundred Percent Club convention in New York.92

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  WHEN HITLER came to power, in January 1933, he made an open promise to create a Master Race, dominate Europe, and decimate European Jewry. Num-berless racial laws—local and national—appeared throughout the country. Jews could no longer advertise in the phone book or rent stalls in the markets. Thousands were terminated en masse from their employment. Even Jewish-owned companies were forced to fire their Jewish employees.93

  Hitler’s paper pogrom was the dull edge of the knife. The sharp edge was violence. Unrestrained acts of depraved Nazi brutality against Jews and other undesirables began at once, often in full view of newspapermen and photographers. Windows were broken. Jews dragged from their homes and shops were paraded through the streets with humiliating signs hung around their necks. Some were forced to wash the streets with toothbrushes. Not a few were kidnapped and tortured by Nazi gangs. Police looked the other way. On March 20, 1933, a concentration camp for political enemies was established at the pastoral town of Dachau, ten kilometers north of Munich. Many others soon followed. Scores of Jewish merchants in Essen and Muen-ster were delivered wholesale to the infamous camps. In Frankfurt, thousands of frenzied Storm Troopers paraded through the streets chanting, “Kill the Jews.” A London newspaper actually published a Berlin street map locating a dozen Nazi torture houses.94

  By April, some 60,000 Jews had been imprisoned and 10,000 more had fled the country, appearing as refugees throughout Europe and America. Professional associations were expelling their Jewish members. Signs were hoisted in front of hotels, restaurants, beaches, and sometimes even at the edge of town: “Jews Not Wanted Here.” Jews were being swiftly driven into economic and social exclusion as a first step.95

  Newspapers and radio broadcasts throughout the western countries declared Hitler a menace to world peace and indeed world civilization. The world reacted with boycott and protest movements springing up everywhere. Led by the Jews of New York and London, but supported by men and women of conscience from all faiths and all nations, boycotters and protesters noisily made sure that no one was unaware of the atrocities in Germany.96

  On March 27, some 20,000 protesters gathered at a monster Madison Square Garden demonstration in New York that was broadcast around the world. Within days, similar rallies and sympathetic movements appeared in Paris, Istanbul, Toronto, Bombay, Warsaw, and London. In Salonika, 70,000 Greek Jews assembled to launch their anti-Hitler movement.97

  Whether in Bucharest, Antwerp, Chicago, or Belgrade, a growing world movement would not stand by passively as Jews were being targeted. Anti-German boycott and protest actions erupted across the globe. The anti-Nazi boycott systematically identified merchants who imported German goods and forced them to stop by public pressure tactics. Whether it was small shops selling German china and camera film, or tourists sailing across the Atlantic on German vessels, outraged boycotters demanded they switch—or face a retaliatory boycott.98

  Nor was energetic support for the whole idea of anti-German boycott the province of mere agitators. A Depression-wracked world was eager to replace the Third Reich’s economic niche. Commercial interests and labor unions everywhere saw the anti-Nazi movement as one they could eagerly join for both moral and business reasons.99

  On May 10, 1933, more than 100,000 marchers, businessmen and unionists alike, Jews and Christians, jammed midtown Manhattan. Newsreel cameras mounted on platforms filmed evocative scenes of anti-German placards in the air amid a backdrop of furling American flags and crowds loudly demanded that “in the name of humanity” all businesses stop doing business with Adolf Hitler.100

  The question confronting all businessmen in 1933 was whether trading with Germany was worth either the economic risk or moral descent. This question faced Watson at IBM as well. But IBM was in a unique commercial position. While Watson and IBM were famous on the American business scene, the company’s overseas operations were fundamentally below the public radar screen. IBM did not import German merchandise, it merely exported American technology. The IBM name did not even appear on any of thousands of index cards in the address files of leading New York boycott organizations. Moreover, the power of punch cards as an automation tool had not yet been commonly identified. So the risk that highly visible trading might provoke economic retaliation seemed low, especially since Dehomag did not even possess a name suggestive of IBM or Watson.101

  On the other hand, the anticipated reward in Germany was great. Watson had learned early on that a government in reorganization, and indeed a government tightly monitoring its society, was good news for IBM. During the Depression years, when the Franklin D. Roosevelt Administration created a massive bureaucracy to assist the public and control business, IBM doubled its size. The National Recovery Act of 1933, for example, meant “businesses all of a sudden had to supply the federal government with information in huge and unprecedented amounts,” recalled an IBM official. Extra forms, export reports, more registrations, more statistics—IBM thrived on red tape.102

  Nazi Germany offered Watson the opportunity to cater to government control, supervision, surveillance, and regimentation on a plane never before known in human history. The fact that Hitler planned to extend his Reich to other nations only magnified the prospective profits. In business terms, that was account growth. The technology was almost exclusively IBM’s to purvey because the firm controlled about 90 percent of the world market in punch cards and sorters.103

  As for the moral dilemma, it simply did not exist for IBM. Supplying the Nazis with the technology they needed was not even debated. The company whose first overseas census was undertaken for Czar Nicholas II, the company Hollerith invented in his German image, the company war-profiteering Flint took global, the company built on Thomas J. Watson’s cor-rugated scruples, this company saw Adolf Hitler as a valuable trading ally.

  Indeed, the Third Reich would open startling statistical venues for Hollerith machines never before instituted—perhaps never before even imagined. In Hitler’s Germany, the statistical and census community, overrun with doctrinaire Nazis, publicly boasted about the new demographic break-throughs their equipment would achieve. Everything about the statistical tasks IBM would be undertaking for Germany was bound up in racial politics, Aryan domination, and Jewish identification and persecution.

  * * *

  WHEN HITLER rose to power, German intellect descended into madness. The Nazi movement was not merely a throng of hooligans pelting windows and screaming slogans. Guiding the Brown Shirts and exhorting the masses was an elite coterie of pseudo-scientists, corrupted professionals, and profit-blinded industrialists. Nazi jurists, medical doctors, and a clique of scientists—each with their prestigious academic credentials—found ways to pervert their science and higher calling to advance the cause of Aryan domination and racial persecution.

  At the vanguard of Hitler’s intellectual shock troops were the statisticians. Naturally, statistical offices and census departments were Dehomag’s number one clients. In their journals, Nazi statistical experts boasted of what they expec
ted their evolving science to deliver. All of their high expectations depended on the continuing innovation of IBM punch cards and tabulator technology. Only Dehomag could design and execute systems to identify, sort, and quantify the population to separate Jews from Aryans.

  Friedrich Zahn, president of the Bavarian Statistical Office, phrased it best in recalling the role of Nazi statisticians. “The government of our Fuhrer and Reichschancellor Adolf Hitler is statistics-friendly,” wrote Zahn in Allgemeines Statistisches Archiv (ASA), the official journal of the German Statistical Society. Zahn emphasized that Hitler’s “government not only demands physical fitness and people strong in character and discipline, but useful knowledge as well. It demands not only political and economic soldiers, but also scientific soldiers.”104

  Zahn was a giant of statistics. Chairman of the German Statistical Society and president from 1931 to 1936 of the International Statistical Institute, Zahn was by virtue of his prestigious international standing also an honorary member of the American Statistical Association. He was also a contributing member to the SS since the first days of the Hitler regime. Zahn was among those chiefly responsible for the immediate ouster of Jews from the German Statistical Society.105

  The ASA, and technical journals like it, were closely followed at Dehomag since the publication was a virtual roadmap to the desires of Nazi statistical hierarchy. Anyone active in the statistics world read it. No IBM office, even in the United States, could afford to overlook a subscription. Within the pages of the ASA and similar statistical technical journals, Dehomag management and engineers could review proven statistical method-ology that sought to step-by-step identify the Jews as undesirables. In many cases, ASA articles were written in conjunction with Dehomag experts, describing the tedious technical workings of specific IBM equipment, but more importantly how they were applied or could be applied to Reich policy and programs.106