Hitler and IBM

Did International Business Machines, a giant of information technology long before there were computers, have a “conscious involvement —directly and through its subsidiaries—in the Holocaust, as well as... in the Nazi war machine that murdered millions of others throughout Europe"? That’s the message of the bestselling book IBM and the Holocaust , by a journalist and son of Holocaust survivors named Edwin Black. The volume’s subtitle, The Strategic Alliance Between Nazi Germany and America’s Most Powerful Corporation , signals both the enormity of the crime the author alleges (that’s a strategic alliance with Nazis) and, unfortunately, the hyperbolic overreaching with which he sometimes prosecutes his case (“America’s most powerful corporation”? Its sales in 1940 were roughly 1/150 of General Motors’).

The book was published in February —within days, as it happened, of the launching of a Holocaust survivors’ lawsuit against IBM that has since been dropped—and ignited instant controversy. In the book, Black takes on not just IBM itself but also its legendary founder and longtime chairman, Thomas J. Watson, Sr., who Black says “admired the whole concept of Fascism” and engaged in “micromanagement from afar” as “IBM placed its technology at the disposal of Hitler’s program of Jewish destruction and territorial domination.” How true is this? Despite the book’s 520 pages and eight years in the making, the evidence never quite adds up.

Black tells the story beginning with Herman Hollerith’s invention of a punchcard tabulating machine for use in the 1890 census; Hollerith’s technology would later found the business that under Watson would grow into IBM. Hollerith was born in Buffalo, New York, but Black sets an insinuating tone early by writing, “IBM was born German.” The evidence: Hollerith was “the son of intellectual German parents"; he borrowed money from a German friend; he showed his tabulator to “European governments, including Germany and Italy”; he “was said to cherish three things: his German heritage, his privacy, and his cat Bismarck”; and he “went out of his way to sail... on German vessels.”

Watson comes into the story in 1914, as “one of America’s up-and-coming business scoundrels” whose technique was to “vanquish all in his way, and then demand the spoils.” In Black’s telling, Watson built an IBM whose corporate culture “swirled around the irresistible magnetism, the intoxicating command, the charismatic cultic control of one man, Thomas J. Watson, the Leader .”

In 1910, Hollerith licensed his patents in Germany to an adding-machine salesman named Willy Heidinger, who founded Deutsche Hollerith Maschinen Gesellschaft, or Dehomag for short, to use those patents. After World War I, Dehomag was going bankrupt, so Watson, now in charge of what was becoming IBM, bought it out, leaving Heidinger with just 10 percent ownership. Heidinger deeply resented this outcome, and his relations with Watson were stormy from then on. Dehomag, like IBM, owned and leased all its machines, customizing them for specific tasks, so its employees always knew what they were being used for. In Germany as elsewhere that mainly meant business tabulations for companies and censuses for the government.

Not long after Hitler came to power, Dehomag provided technology for the 1933 census. Black makes much of the fact that the census identified citizens as Protestant, Catholic, or Jewish—while acknowledging that censuses in Germany had long asked questions of religious affiliation. Of course, no one could know then the horrific use to which Hitler would ultimately put his knowledge of who was a Jew, but the Nazis’ persecutions and the evidence of worse to come grew steadily more plain.

So, did IBM’s difficulties with its subsidiary. Heidinger battled New York constantly, and as Nazi control and restriction of businesses grew, he insisted that his company was pure German and free from foreign influence. By 1935, it was virtually impossible to remove profits from Germany, and by 1936, Dehomag was wholly German-owned—on paper. Black spends many pages showing the contortions IBM went through to hold onto its subsidiary, mainly by working out royalty and loan arrangements to substitute for straightforward ownership and by maintaining financial ties through its Geneva office. And the parent firm certainly did nothing to circumscribe Dehomag’s operations. In fact, Watson held far too long to a belief that a prosperous Germany would avoid war, and that thus trade should be kept flowing openly. In 1937 he said, “As soon as we can have the proper flow of trade both ways across the border, there will not be any need for soldiers crossing those boundaries.”

Later that year, he actually accepted a medal from Hitler—the highest decoration given to a non-German, the Merit Cross of the German Eagle With Star. Black portrays the award as bestowed for, among other things, Watson’s “Promethean gift of punch-card technology that enabled the Reich to achieve undreamed-of efficiencies both in its rearmament program and its war against the Jews.” But by then, Watson’s open involvement in Dehomag had been cut off by the Nazis, who were increasingly suspicious of any American presence in the firm, and he was visiting Berlin solely as the head of an International Chamber of Commerce convention.

As the Nazis wrested Dehomag from IBM’s control, it became more and more a pawn of the Reich. It played a central role in a 1939 national census that identified “racial Jews” and gathered information on the bloodlines of everyone living within the expanded Reich. Black states that by 1940 “deniability was constructed with enough care to last for decades.” It indeed appears that no one at IBM in the United States really knew what was going on at Dehomag, and there is no smoking gun anywhere for Watson’s or any American’s witting involvement in Nazi crimes.

After Kristallnacht, in November 1938, when Hitler’s shock troops incited riots against Jews and the destruction of synagogues all across Germany, Watson sent a letter of protest to Hitler that can only be considered pathetic in its attempt to be diplomatic: “I find a change in public sentiment and a loss of good will to your country, and unless something can be done to bring about a more friendly understanding on the part of our people, I feel it is going to be difficult to accomplish mutually satisfactory results iti connection with our trade relations. ... I respectfully appeal to you to give consideration to applying the Golden Rule in dealing with these minorities.” The letter was misaddressed and never reached the Führer. It was returned unopened by the post office.

Finally, in June 1940, after Germany seized the Netherlands and began its invasion of France, Watson sent back his medal, with a letter stating that “the present policies of your government are contrary to the causes for which I have been working and for which I received the decoration.” This so enraged the officials at Dehomag that the general manager, writing to inform Heidinger of “this stupid step,” explained Watson’s “personal hatefulness and stupidity” by conjecturing that he had been “surrounding himself with a group of Jews who fled from Europe.... The influence of these Jews, in addition to the anti-German Jewish and other lies in newspapers, are beginning to affect his mind....” Dehomag’s founders, as well as the Nazis, now tried to remove all vestige of IBM control, exposing the financial tangles that had made German ownership of the company something of a front. And in August, a putsch put Nazis, including a staff adviser to Rudolf Hess, in charge of Dehomag.

Germany had not actually seized the business, and neither did Watson renounce it. He would not yield ownership, far though the company now was from his grip, and he refused to allow it to be bought out, nor did IBM officials stop reviewing Dehomag financial reports that passed through the Geneva office. But IBM’s assets in Germany were already blocked until the war’s end. And then when Pearl Harbor put the United States and Germany at war with each other, Dehomag, like all American businesses in Germany, was seized to be run by Reich trustees, under long-standing German alien-custody laws that protected enemy property during wartime.

Black details the murderous use to which Dehomag’s punch-card machines were put during the war. They were em- ployed in many of the concentration camps, and they helped automate the mass production of death (though they were in such short supply that the Race and Settlement Office of the SS didn’t have one until 1943). He also describes IBM’s and Watson’s own extensive and energetic service to the Allied cause, which included sharing every bit of information they had about Germany’s use of punch cards; building a factory within 60 days of Pearl Harbor to turn out cannon, automatic rifles, gas masks, bombsights, and more; turning the company’s main training facility into a military academy for the use of punch-card machines; and supplying the machinery that, in England, broke the Axis’s Enigma code.

After the war, IBM got Dehomag back and renamed it IBM Deutschland, but the parent company does not seem to have gotten much in the way of war profits with it. As early as May 1941, Dehomag was cutting prices to support the German war effort and, in the ruins of the Reich in the summer of 1945, the firm was reduced to making toys from scrap metal so back salaries could be paid. That summer, the company’s machines were used to carry out the United States Strategic Bombing Survey, the government’s full evaluation of the air campaigns that had done so much to bring the war to an end.

Watson and IBM certainly did not behave in exemplary fashion in the years leading to war, but the evidence suggests that they did no worse than countless other multinational corporations. And once America was in the war, they gave enormously to the Allied cause. What was the role, ultimately, of IBM’s punchcard technology itself? It served both sides, of course, and served them powerfully—which illustrates a truth about technology that was eloquently summed up by the historian Melvin Kranzberg: “Technology is neither good nor bad; nor is it neutral.” The fruits of human inventiveness—whether punch-card machines, miracle drugs, atom bombs, or plowshares—contain no morality whatever in themselves, but how they are used is absolutely always a moral matter. It is a tragedy that Watson didn’t find a way to prevent the immoral use of his company’s machines, even if he was far from the active collaborator Black tries to suggest he was.