A Corporate Tale

Submitted by: Mike Spindell, guest blogger

This week Huffpost ran an article titled:“IBM’s Role in the Holocaust — What the New Documents Reveal”, written by Edwin Black. The article was a followup to Mr. Black’s book “IBM and the Holocaust” published in 2001. As Mr. Black puts it justifying this particular article:

“Newly-released documents expose more explicitly the details of IBM‘s pivotal role in the Holocaust — all six phases: identification, expulsion from society, confiscation, ghettoization, deportation, and even extermination. Moreover, the documents portray with crystal clarity the personal involvement and micro-management of IBM president Thomas J. Watson in the company’s co-planning and co-organizing of Hitler’s campaign to destroy the Jews.” http://www.huffingtonpost.com/edwin-black/ibm-holocaust_b_1301691.html?ncid=edlinkusaolp00000009

These are of course pretty serious charges being made about one of the world’s most famous companies and about its founder. While I will present the nature of these charges and the specificity of the author’s alleged proof in the piece, it really is not my focus to condemn IBM one way or another, or even to vouch for the truth of the article. I will provide a link that offers a different perspective on these charges and will leave it to you the reader to decide what you think of them. My real purpose here is to discuss the necessary amorality of Corporations and what effect that amorality has upon nations and people.The newly released documents Mr. Black speaks of:

“are secret 1941 correspondence setting up the Dutch subsidiary of IBM to work in tandem with the Nazis, company President Thomas Watson’s personal approval for the 1939 release of special IBM alphabetizing machines to help organize the rape of Poland and the deportation of Polish Jews, as well as the IBM Concentration Camp Codes including IBM‘s code for death by Gas Chamber. Among the newly published photos of the punch cards is the one developed for the statistician who reported directly to Himmler and Eichmann.”

 The other evidence Mr. Black offers is:

 “From the first moments of the Hitler regime in 1933, IBM used its exclusive punch card technology and its global monopoly on information technology to organize, systematize, and accelerate Hitler’s anti-Jewish program, step by step facilitating the tightening noose. The punch cards, machinery, training, servicing, and special project work, such as population census and identification, was managed directly by IBM headquarters in New York, and later through its subsidiaries in Germany, known as Deutsche Hollerith-Maschinen Gesellschaft (DEHOMAG), Poland, Holland, France, Switzerland, and other European countries.”

In 1937 Adolph Hitler bestowed upon Thomas J. Watson a special award to honor the IBM Chairman for extraordinary service by a foreigner to the Third Reich. The medal was resplendent with swastikas and was to be worn above the heart. After the bombing of Paris and the beginnings of WW II in June 1940, Mr. Watson returned the medal, since the publicity was hurting IBM’s reputation. It also must be mentioned that Mr. Watson was a very prominent Democrat, closely tied to FDR. However:

“….a newly released copy of a subsequent letter dated June 10, 1941, drafted by IBM‘s New York office, confirms that IBM headquarters personally directed the activities of its Dutch subsidiary set up in 1940 to identify and liquidate the Jews of Holland. Hence, while IBM engaged in the public relations maneuver of returning the medal, the company was actually quietly expanding its role in Hitler’s Holocaust. Similar subsidiaries, sometimes named as a variant of “Watson Business Machines,” were set up in Poland, Vichy France, and elsewhere on the Continent in cadence with the Nazi takeover of Europe.”

The article goes on to explain that the operations of controlling and keeping track of the prisoners of the various concentration camps was done via IBM punch card machines and we all have heard of the ruthless efficiency and meticulous record keeping of the Holocaust. Indeed, it always struck me that the business like way the NAZI’s kept track of their murders, in some ways added to the horrors committed.

“Particularly powerful are the newly-released copies of the IBM concentration camp codes. IBM maintained a customer site, known as the Hollerith Department, in virtually every concentration camp to sort or process punch cards and track prisoners. The codes show IBM‘s numerical designation for various camps. Auschwitz was 001, Buchenwald was 002; Dachau was 003, and so on. Various prisoner types were reduced to IBM numbers, with 3 signifying homosexual, 9 for anti-social, and 12 for Gypsy. The IBM number 8 designated a Jew. Inmate death was also reduced to an IBM digit: 3 represented death by natural causes, 4 by execution, 5 by suicide, and code 6 designated “special treatment” in gas chambers. IBM engineers had to create Hollerith codes to differentiate between a Jew who had been worked to death and one who had been gassed, then print the cards, configure the machines, train the staff, and continuously maintain the fragile systems every two weeks on site in the concentration camps.”

Finally, Mr. Black completes his discussion of the newly released data by referring specifically to two now released government memos that as he terms it are ironic in light of subsequent history.

“Two telling U.S. government memos, now published, are remarkable for their telling irony. The first is a State Department memo, dated December 3, 1941, just four days before the attack on Pearl Harbor and as the Nazis were being openly accused of genocide in Europe. On that day in 1941, IBM‘s top attorney, Harrison Chauncey, visited the State Department to express qualms about the company’s extensive involvement with Hitler. The State Department memo recorded that Chauncey feared “that his company may some day be blamed for cooperating with the Germans.”

The second is a Justice Department memo generated during a federal investigation of IBM for trading with the enemy. Economic Warfare Section chief investigator Howard J. Carter prepared the memo for his supervisors describing the company’s collusion with the Hitler regime. Carter wrote: “What Hitler has done to us through his economic warfare, one of our own American corporations has also done … Hence IBM is in a class with the Nazis.” He ended his memo: “The entire world citizenry is hampered by an international monster.””

Given all of the above it is hard not to feel that IBM played some role in assisting Hitler’s deeds. You can decide for yourself where the evidence leads you. In an alternative view:

“During the 1930s, IBM‘s German subsidiary was its most profitable foreign operation, and a 2001 book, IBM and the Holocaust by Edwin Black, argues that Watson’s pursuit of profit led him to personally approve and spearhead IBM’s strategic technological relationship with the Third Reich. In particular, critics point to the coveted Eagle with Star medal that Watson received at the Berlin ICC meeting in 1937, as evidence that he was being honored for the help that IBM’s German subsidiary Dehomag (Deutsche Hollerith-Maschinen Gesellschaft mbH) and its punch card machines provided the Nazi regime, particularly in the tabulation of census data. The most recent study of the matter, however, argues that Watson believed, perhaps naively, that the medal was in recognition of his years of labor on behalf of global commerce and international peace. Watson soon began second-guessing himself for accepting the medal, and eventually returned the medal to the German government in June 1940. German Chancellor Adolf Hitler was furious at the slight, and he declared that Watson would never step on German-controlled soil again.” http://en.wikipedia.org/wiki/Thomas_J._Watson

This whole story though led me away from the Shoah and in an entirely different direction that is current today. The Supreme court is now debating a case brought to them about whether corporations can be sued for human rights violations, which they have some complicity in perpetrating in the pursuit of profit. http://www.nytimes.com/2012/02/29/us/supreme-court-debates-human-rights-case-against-companies.html   In hearing the arguments being made Justice Kennedy stated:

“For me, the case turns in large part on this,” Justice Anthony M. Kennedy said and then quoted a sentence from a brief filed by the Royal Dutch Petroleum Company, which is accused of complicity in human rights violations in Nigeria: “International law does not recognize corporate responsibility for the alleged offenses here.” Justice Kennedy went on to quote from a brief supporting the companies filed by the Chevron Corporation: “No other nation in the world permits its court to exercise universal civil jurisdiction over alleged extraterritorial human rights abuses to which the nation has no connection.” 

It seems to me that this current case turns on an issue that might have arisen in the past with IBM as detailed in Mr.Black’s article. The question is should corporations be held liable for immoral activity, such as human rights violations, when they are carrying out what is their prime function, which is turning a profit?

The definition of a corporation from InvestorWords.com, self labelled as “The biggest investing glossary on the web” is as follows:


Definition:The most common form of business organization, and one which is chartered by a state and given many legal rights as an entity separate from its owners. This form of business is characterized by the limited liability of its owners, the issuance of shares of easily transferable stock, and existence as a going concern. The process of becoming a corporation, called incorporation, gives the company separate legal standing from its owners and protects those owners from being personally liable in the event that the company is sued (a condition known as limited liability). Incorporation also provides companies with a more flexible way to manage their ownership structure. In addition, there are different tax implications for corporations, although these can be both advantageous and disadvantageous.”  http://www.investorwords.com/1140/corporation.html#ixzz1ntMStnxA

I believe that by their nature for profit corporations must be considered to be “amoral” entities, since their sole rationale for existence is turning a profit for their investors. By “amoral” I mean morally neutral and I am not dealing with morality from a religious view. Looked at from this perspective we cannot assume, nor would it be fair to assume, that a corporate entity should concern itself with acting morally. We know from the stock market that CEO’s and indeed corporate value rises and fall with a firms earnings. Investors for the most part judge companies merely on the bottom line. That is why in recent years some corporations have fired workers merely to increase their quarterly profits, without any thought given to any long term consequences to the entities viability.Then too today, many top corporate officers are remunerated with stock options, whose value increases with the share value of the stock. Give that these are the current, accepted rules of the game, why should we then be surprised, or even outraged when corporate entities behave badly regarding human rights?

In the IBM situation Thomas J. Watson was a man who by all accounts believed his job was to grow the wealth and market share of his company. I would imagine that Germany was a rich and fertile market. IBM, because of its unique capabilities at the time, would naturally want to have a large market share and they did. From one perspective Watson was being true to his stockholders and to the nature of the corporate need to grow. There seems little evidence, at least that I’ve seen, that would indicate Watson hated Jews. He was merely doing what he deemed best for the interests of IBM. In the Royal Dutch Petroleum case their assertion boils down to we were pursuing normal business interests and feel no corporate responsibility for the human rights abuses, as defined by International Law. I have no expertise to define this case from a legal standpoint, but on the surface, as the law now stands and as corporate entities have been treated, Royal Dutch has a fair point.

Herein lies the problem we face with the notion of “corporate person-hood” which began as follows:

The Supreme Court of the United States (Dartmouth College v. Woodward, 1819), recognized corporations as having the same rights as natural persons to contract and to enforce contracts. In Santa Clara County v. Southern Pacific Railroad, 118 U.S. 394 (1886), the Supreme Court recognized corporations as persons for the purposes of the Fourteenth Amendment. In a headnote—not part of the opinion—the reporter noted that the Chief Justice began oral argument by stating, “The court does not wish to hear argument on the question whether the provision in the Fourteenth Amendment to the Constitution, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws, applies to these corporations. We are all of the opinion that it does.” http://en.wikipedia.org/wiki/Corporate_personhood

By allowing, what to me is, the mistaken notion that entities chartered by the State should have the same rights as citizens, is patently absurd and conclusively dangerous to the interests of people and their government. We’ve had may discussion on this site regarding “Citizen’s United” and I’ve written a blog on it:  http://jonathanturley.org/2012/01/07/americas-transcendent-issue/  As shown in the definition of corporations above, all corporations are chartered by the State. They are then naturally artificial constructs of the State and to consider them with having the same rights as an ordinary person is either close to insanity, or more likely the successful attempt to ensure that our Nation is run by a moneyed elite.

I’ve illustrated my belief that corporations are of necessity amoral operations. Their interest is the rather narrow one of ensuring growing profits, indeed any CEO worth their salt would see that as the first imperative of their job. Yet, this blog, current events and investigative reporting have shown that the effects of corporate entities allowed to run rampant are ultimately destructive to the citizens, the state and to civilization as a whole. Since the State has allowed these entities to exist, it is the responsibility of the State to ensure that these entities in their pursuit of gain, do not because of that pursuit, harm the fiber of our nation and our society.

This is not an anti-capitalist rant, since corporations and capitalism are not indivisible, this is a call to ensure that the threat of corporate excess be reined in and prevented from doing innocents harm. We must reverse, through law, the definition of corporate person-hood, which then in tandem would derail Citizen United. Given how intertwined our political system has become with corporate money, this is a daunting task. There is no alternative though, because the failure to do so will eventually reduce the 99% of us to a feudalistic serfdom and lead us to a skeletal nation, where our legislature will be made up of representatives from various corporate entities.

Submitted by: Mike Spindell, guest blogger

61 thoughts on “A Corporate Tale”

  1. “We as consumers ought to start looking into the moral character of the companies we do business with. If they support individual rights and are good actors then we should give them our support, if they provide aid to tyrants we should punish them at the cash register.” Bron
    I agree with this statement but the ineffectuality of it is immense. These entities have become so big that they can easily weather a consumer backlash…just look at BP. There is NO EXISTING power that could serve as a detriment to any misdeed that they commit, and so why should they bother to live with even 1 foot on the ground of morality or law? One need look no further than the SuperPACs to see how these entities play BOTH sides of an equation in order to safeguard themselves from just such scrutiny and possible liability. And we can thank our justices for creating this monster….. In fact, one may be able to argue that the creation of superPAC’s is intentional fo just this purpose….

  2. Large corporations are the banal,soulless, masking vehicles small groups of already wealthy individuals use for making more money. They are in service to their financial masters AND to any authority that facilitates their prime directive of making money. They are no more human than a pick-axe but like that tool, they are deadly in the wrong hands. IBM’s culpability belongs to its puppet-masters behind the scenes who plucked the strings to the tune of the Great Dictator. An axiom of law is that a corporation acts only through its agents. I say is it truly acts only through its masters. Great work, Mike S.

  3. Gene,
    Allowing corporations to be sued for their acts, without damage caps would help. I’m sure you agree that is why they’ve been fighting to cap liability for years. As for other ways of dealing with it I think Congress has the power to overturn the concept of corporate personhood by legislation. It would be an impossible stretch by SCOTIS to claim that an artificial entity, created by statute, can’t be redefined by its creators. How likely is it that can happen? Not very, unfortunately.

  4. Bill McW,
    I understood you correctly and I don’t doubt that no one would be prosecuted. However, my point was exactly that under the legal concept of corporate-personhood, with a concomittant money-fueled reluctance to demand corporate accountability, corporations run roughshod over Nations and people.

  5. Mike,

    Excellent job about a subject foundational to my hatred of corporatism and fascism: the amoral nature of corporations and the pursuit of profit before other considerations. That Watson did the right thing in returning his Eagle with Star after the fact, it does not change that in pursuit of an amoral target of profits he led his company to materially aid war criminals. In fact, his returning it shows to me that he should have and likely did know what the equipment was being used for when he received it. The project managers would have had a grasp on the data collection requirements the Hollerith cards were being programmed for and upper management would have been kept informed of the scope of the project in conjunction with the progress of the project. Knowing the data collection parameters of a project is very informative about the nature of the whole project. That IBM was in the cat seat for viewing their data collection needs and providing processes to handle them is even further damning.

    Is there a lot that can be done to prevent these kind of thing happening through regulation? Other than prohibit business with known human and civil rights abusing regimes, not really, and we already have provisions blocking trade with those sort of governments. In lieu of that, allowing corporations to be sued for their role in rights abuses is the next best solution for discouraging knowingly aiding abusive regimes for profit. It provides incentive to shut down the project or otherwise breach contract once such abuses are known (or should be known) to upper management. The key here is also not to limit those damages either. Damage caps are an anathema to justice as a known cost can be factored in to the cost of doing business and posses no threat to those would willingly violate others rights for profit.

  6. M.S.

    “The post wasn’t about prosecuting anyone for NAZI war crimes. Perhaps a second reading by you might glean the message of it, or maybe not.”

    I didn’t say it was. Perhaps you’ve mistaken what I said for what some oher
    people here said. Perhaps a second reading of my comment might help you understand my comment, or maybe not.

  7. Mike,

    As you know this particular part of history is near and dear to me….. I am at this time at a loss for the appropriate words to properly express my disgust…..

  8. Lawsuit accuses Cisco of aiding Chinese repression

    The lawsuit, which seeks class-action status, alleges that Golden Shield–described in Cisco marketing materials as Policenet–resulted in the arrest of as many as 5,000 Falun Gong members. Cisco “competed aggressively” for the contracts to design the Golden Shield system “with full knowledge that it was to be used for the suppression of the Falun Gong religion,” according to the lawsuit.

  9. In authoritarian countries throughout the Middle East and North Africa, Western surveillance tools have empowered repression, allowing leaders to intercept e-mails and text messages, and monitor the whereabouts of citizens through their cell phones. Armed with this information, police in many of these countries now routinely confront dissidents with records of their messages and movements during arrest and torture, according to a 10-month investigation by Bloomberg News.

    The Surveillance Market and Its Victims

  10. IBM is alive and well.
    The question becomes whether there is a statute of limitations for war crimes committed by them against individuals. If I had a tatoo which correleated with a IBM punch card then I would sue IBM for complicity in my arrest, detention and torture by the Nazi regime, Nazi stooges and stooge corporations.
    A good venue for this trial would be Nuremberg.
    Which brings us to the next question: Did the Nuremberg War Trials Tribunal consider IBM as a target suspect corporation? We know that they prosecuted defendants of German corporations. I recall that Krupp was one such entity.

    I will examine my book Tyranny On Trial by the American Army prosecutor Whitney Harris. Whitney lived to be 97 years old. He died a few years ago in Saint Louis, Missouri.

  11. “Applying the same logic used in this post, the Bush family, Ford Motor company, and no doubt many, many other U.S. companies could potentiallyy face a world of hurt. So could many descendants of past politicians,PR firms and many other companies.”

    Bill McW,

    The post wasn’t about prosecuting anyone for NAZI war crimes. Perhaps a second reading by you might glean the message of it, or maybe not.

  12. dredd and the boys,
    Oddly the number of missiles are going down, but the nuke power is increasing more rapidly. Feel safer?

    Got a good link about a semiautistic nuke boy who worked in Alamagordo labs. Fascinating tale. He visited (high level permission) several nuke test sites (under mountains, proved things were impossible to calm high level people, and constantly tried to work out the energy problem of space travel).
    Can’t find it

  13. Dredd,
    See the continuation of the history in previous post, but never mind……

    Your point is more important. Yes, and the British thanked the Germans for the London burning with Dresden (old well used tactics from colonial wars), and we killed far more in the firebombings of Japanese towns prior to H/N bombs. Good old McNamara was the later SAC chief’s head optimizer of the fire bombing raids using operations research methods.

    Who will be next. Israel, Pakistan, India—-do I hear any other bids.

  14. idealist707 1, March 3, 2012 at 3:59 pm

    … She met her nephew, told him how near the Germans were to understanding what she had realized was nuclear fission.
    The nephew warned the Dane, who warned Einstein, who wrote a letter to Roosevelt. Thus came the Manhattan Project. When my old brain activates I’ll give you the names—-or you’ll give me them instead.
    Then we became the only nation in history, so far, to nuke and burn alive hundreds of thousands of innocents.

    We still are those same people who did that.

Comments are closed.