Even before Germany surrendered officially, General Eisenhower ordered an investigation of I.G.’s place in Germany’s war effort. After a detailed analysis of every facet of I.G.’s operations, from the creation and production of synthetic oil and rubber to its international cartel agreements, the investigating team concluded that I.G. was indispensable for the German war effort. Without it Hitler could never have embarked on the war or come so close to victory. 1
The report made a deep impression on Eisenhower. He decided that I.G.’s strategic position in the German economy must be broken as “one means of assuring world peace.” 2 Eisenhower’s specific recommendations would have warmed the heart of Marshal Foch, his predecessor as commander in chief of the Allied forces in World War I:
The same day Eisenhower’s recommendations were released to the papers, the United States Army announced plans to dynamite three I.G. plants in the American zone devoted to the manufacture of smokeless powder and nitrocellulose. These factories would be “the first of many hundreds of plants . . . designated for actual destruction.” 4
By November 1945, the Allied Control Council enacted a law “to ensure that Germany will never again threaten her neighbors or the peace of the world . . . taking into consideration that I.G. Farbenindustrie knowingly and prominently engaged in building up and maintaining the German war potential.” 5
All plants and other assets of I.G. in Germany were to be seized and legal title vested in the Control Council. Control officers were to be appointed for each zone of occupation to administer the seized plants and implement Control Council policies. The objectives set forth were exactly those recommended by Eisenhower, including destruction of I.G. plants used for war purposes and dispersion of the remaining plants.
Despite the strong words of the Control Council German speculators did not seem to take the new law or the Allied plan seriously. In the three months between October 20, when Eisenhower’s recommendations about I.G. were made public, and January 20, the price of I.G. shares doubled on the Munich stock exchange. General William H. Draper, director of the economics division of the office of military government, was asked at a press conference about the skyrocketing price of the stock. He smiled wryly and remarked that the speculators must be “buying a piece of the Control Council” 6 since the council now held legal title to all I.G. assets.
The “Prohibition of Excessive Concentration of German Economic Power” 8 was a sweeping antitrust law designed to prevent monopoly practices. It provided for the investigation of all German firms employing more than 10,000 persons; if any of these firms were found to represent an “excessive concentration of economic power, they were to be reorganized and broken up into a number of economic units.” 9
The first target of this law—and, as it turned out, the only one—was I.G. Farben. On June 17, U.S. Military Government decartelization chief Phiilip S. Hawkins announced that the I.G. facilities in the American zone had been broken up and established as forty-seven independent units to be run by German trustees until the final disposition of the plants. 10 By any standard, the breakup of I.G. into forty-seven parts was quite a dissolution.
It was not long before all this fine sermonizing turned out to be too good to be true. By the middle of 1947, American foreign policy was taking a direction that was drastically to affect the decartelization program in Germany. The new point of view was expressed in a report by fourteen top American businessmen appointed by the War Department to review the U.S. Military Government’s industrial policies in Germany.
The committee of businessmen specifically attacked the decartelization law, charging that it embodied a series of controls and regulations, many of which represent economic principles quite new to the German mind and to the past industrial development of the country. Since we are now confronted with the urgent necessity of bringing about as rapidly as possible recovery of the economic life of a starving people—it is our belief that too strict adherence to the law in its administration will seriously retard this primary objective. 12 In keeping with the new attitude of the cold war, the breakup of I.G. was suspended. Nothing further happened for the duration of the Allied Control Council’s existence.
The stockholders committee further demanded that all the stock of the old I.G. Farbenindustrie be converted pro rata into the stock of the proposed three successor companies. The large stockholders of each company would be the same. To the skeptical this appeared to be an ingenious scheme for maintaining common control of each of the three companies 13 by the erstwhile major stockholders of I.G. Farben.
He added that previous plans for a vast liquidation program for I.G. would have to be scrapped; the program to sell individual plants was “dead as a doornail.” The spokesman did not need to point out that the emphasis was on the cold war and the industrial recovery of Germany and not on the deconcentration of excessive economic power and demilitarization.
The number of companies was not specified. An I.G. Farben liquidation committee of German nationals was to be appointed by the Allied High Commission to put the new law into effect. Any convicted war criminal was to be barred from participating either directly or indirectly in the management of any of the proposed new companies; this edict barred such prominent I.G. figures as Krauch, Schmitz, Schnitzler, Ter Meer, Jaehne, Ambros, and Buetefisch. The provisions of the new law definitely gave the impression that the old order of I.G. control had been effectively terminated.
Some Allied officials who had been involved in the decartelization program began to say openly that control seemed to be slipping from the Allies and returning to former I.G. men. They speculated that the Big Three might return to their old ways once the Allies left Germany. They also found another matter disquieting. The stock in the newly formed Big Three companies would be available to former I.G. stockholders on a priority basis. This raised the possibility that the Big Three would be owned by the same stockholders. 15 Nevertheless, no one was much inclined to prevent this situation.
Still, the Allies refused to capitulate on one point, the German demand to register the stock in the new companies only to “bearer.” They insisted that every share be registered in the name of the actual owner in order to insure against secret control. The Germans responded that registering all shares was too difficult and too expensive. But on this issue, the Allied High Commission refused to compromise. Bearer shares were prohibited.
A year and a half later, in October 1954, treaties were signed in Paris terminating the occupation regime in West Germany. With the ratification by the signatory nations, the Federal Republic of Germany would soon become a sovereign and equal member of the Western Alliance. 18
Chancellor Konrad Adenauer wrote the U.S. high commissioner, James B. Conant, affirming the determination of the Federal Republic of Germany to follow the antitrust policy that had been pursued by the Allied occupation regime. 19
But not all of the occupation officials were sanguine about the effectiveness of this transfer of authority. According to a New York Times dispatch:
On May 5, 1955, the Federal Republic of Germany became a sovereign government, and the Allied occupation forces left. Three weeks later, 450 stockholders of the old I.G. Farben met, for the first time since the defeat of Germany, to receive a report on the past decade. They were informed by the I.G. liquidators that the formal dissolution of I.G. would not take place “for many years to come.” 21
Numerous claims on I.G.’s assets had been filed, including demands for compensation from slave laborers who had worked in the I.G. plants during the war. Moreover, the disposition of I.G.’s assets in the Soviet zone, including the huge Leuna works, had to await the reunification of East and West Germany, an uncertain and distant possibility.
This action was soon repeated by the other companies. Moreover, the successor companies did not intend to be bound by the Allied High Commission law barring convicted war criminals from executive posts. Friedrich Jaehne, a war criminal who had been sentenced at Nuremberg to a year and a half in prison, became a member of the supervisory board of Hoechst in June 1955. In September he was elected chairman. 23 In 1956 Fritz ter Meer, the only war criminal who had been convicted of both plunder and slavery, was elected chairman of the supervisory board of Bayer. 24
Prosperity was returning to the Big Three. Their profits already outstripped those of their monolithic I.G. predecessor. All three raised their annual stock dividends from nine to ten percent in 1956. The combined value of BASF, Bayer, and Hoechst stock represented over fifteen percent of the value of all stock listed on the West German stock exchange.25 At the beginning of 1956 Bayer more than tripled its capitalization.26
Three months later it acquired twenty-eight percent of Huels. According to the New York Times, one of the Farben successor companies has now become part owner of another part of the old German chemical empire. . . .
Soon the last piece, Cassella, was absorbed by Bayer. The Big Three once again merited the name. In 1977, Hoechst, BASF, and Bayer were among the thirty largest industrial companies in the world. Hoechst is the largest company in Germany. Hoechst and BASF are each larger than Du Pont; Bayer is only slightly smaller. 28
Each one is bigger than I.G. at its zenith.