BANALITY of EVIL (cont.)
December 07, 1998
“There is a rich, detailed collection of insurance documents at the National Archives relating to World War II, the Holocaust, and postwar Europe as well. … Box 248 of the Deputy Director of the Economics Division of OMGUS contains a very good history of the German insurance industry, including German insurance during the National Socialist regime. This document shows the Nazis partaking of the large capital reserves held by German insurance companies by filling the leading positions in the insurance field with trusted party men. The formation of a Reich monopoly for the privately-owned insurance companies was considered by the Party as a necessary step in a program which envisioned the eventual nationalization of the German insurance business. In addition to attempts to infiltrate into the management of the private insurance companies as a means for controlling the companies, the Nazi party, by decree, exerted pressure on the insurance companies to divert funds from the normal insurance investment channels into Reich securities or loans to industries: initially in such ventures as Autobahn construction, then later, in war industries. The four largest German insurance companies in the U.S. Zone claimed after the war that they were able to resist Nazi pressures to dominate their organizations and that they never contributed more than a minimal amount to the Party’s programs. This, however, was not borne out by the facts of this document.”
SECRET (INSURANCE) AGENT MEN
by Mark Fritz / September 22, 2000
“They knew which factories to burn, which bridges to blow up, which cargo ships could be sunk in good conscience. They had pothole counts for roads used for invasion and head counts for city blocks marked for incineration. They weren’t just secret agents. They were secret insurance agents. These undercover underwriters gave their World War II spymasters access to a global industry that both bankrolled and, ultimately, helped bring down Adolf Hitler’s Third Reich. Newly declassified U.S. intelligence files tell the remarkable story of the ultra-secret Insurance Intelligence Unit, a component of the Office of Strategic Services, a forerunner of the CIA, and its elite counterintelligence branch X-2. Though rarely numbering more than a half dozen agents, the unit gathered intelligence on the enemy’s insurance industry, Nazi insurance titans and suspected collaborators in the insurance business. But, more significantly, the unit mined standard insurance records for blueprints of bomb plants, timetables of tide changes and thousands of other details about targets, from a brewery in Bangkok to a candy company in Bergedorf.
“They used insurance information as a weapon of war,” said Greg Bradsher, a historian and National Archives expert on the declassified records. That insurance information was critical to Allied strategists, who were seeking to cripple the enemy’s industrial base and batter morale by burning cities. “Within a few days, a conference on the burning possibilities of some important cities will be held,” unit chief Robert “Lucky Luke” Rushin wrote a colleague in February 1944, when he was sending data to an Allied bombing-target committee. “I have reproductions of approximately 150 plans covering Jap plants about ready to ride.” The files, at the National Archives office in College Park, are among the latest U.S. intelligence documents ordered declassified by President Clinton last year to speed the identification of Nazi assets. Most of the research attention there has focused on what U.S. intelligence knew about the Holocaust, the whereabouts of Nazi loot, the migration of Nazi war criminals and how much important information never made it to the Oval Office. But the documents suggest that insurance played an important, if less-noticed, role in the war.
The OSS insurance unit was launched in early 1943, long after it had become alarmingly clear that the Nazis were using their insurance industry not only to help finance the war but also to gather strategic data. American insurance companies had been competing furiously for overseas business even after the United States entered the war, and the OSS files suggest that details about U.S. factories and cities were falling into enemy hands because of the interlocking international relationships among insurance companies. Germany had 45% of the worldwide wholesale insurance industry before the war began and managed to actually expand its business as it conquered continental Europe. As wholesalers, or “reinsurers,” these companies covered other insurers against a catastrophic loss that could wipe out a single company. In the process, the wholesaler learned everything about the lives and property they were reinsuring.
Unit’s Efforts Are More Than Altruistic
The motives of the OSS unit’s founders were both pragmatic and patriotic. “This story is incredible because the unit begins as part of the desire of American [insurance] interests to contribute to the war effort and exploit it for future economic gain,” said historian Timothy Naftali, a consultant to the Nazi War Criminals Interagency Working Group that was created by Congress last year. The men behind the insurance unit were OSS head William “Wild Bill” Donovan and California-born insurance magnate Cornelius V. Starr. Starr had started out selling insurance to Chinese in Shanghai in 1919 and, over the next 50 years, would build what is now American International Group, one of the biggest insurance companies in the world. He was forced to move his operation to New York in 1939, when Japan invaded China.
In the early years of the war, the German insurance industry expanded its business as it conquered continental Europe. Nazi insurance brokers who traveled with combat troops during invasions also scoured local insurance files for strategic data. German-owned companies were blacklisted by the Allies, but the Insurance Intelligence Unit found that the Nazis did business through countries such as Switzerland and laundered transactions through South American affiliates, particularly in Argentina. “The blacklist is of no good use because the firms not blacklisted are full of Germans,” one of the Insurance Intelligence Unit’s reports complained in 1943. Starr’s people and other insurance executives had intimate knowledge of the people involved in the global insurance business, so they were able to track potential collaborators.
Among those they investigated was Carl Theodore Endemann, a naturalized American from Germany who was assigned by the American Foreign Insurance Assn. to Paris in the 1930s. When war broke out, Endemann sided with the Nazis. When France capitulated, Endemann contacted the Germans and gave them exceptionally detailed blueprints, maps and other information to aid Erwin Rommel’s war in North Africa. The report makes a dry reference to Endemann’s British wife, the mother of their 7-year-old son, as a “staunchly pro-British” woman who, as a result, “was interned from time to time.” The Insurance Intelligence Unit also investigated Americans, which in some cases included an agent’s boss.
One report showed that an Argentine company owned by the American Foreign Insurance Assn. had a known Nazi collaborator on its board and reelected him after it promised it wouldn’t. The documents also said that two New York insurance executives, Cecil Stewart and Stewart Hopps, also came under scrutiny for selling war insurance to strategic U.S. industries and reselling some of the risk to Latin American affiliates linked to Nazi insurers. The men also ran a steamship company that chartered tankers for Royal Dutch Shell, a Nazi collaborator that used Hitler’s slave laborers.
“It’s very possible that details of American insurance properties could reach the enemy via this sequence of reinsurance transactions,” the report said. Stewart and Hopps were not unknown to the unit investigators–they had been part of the original OSS committee convened to design the Insurance Intelligence Unit, Naftali said. Such convoluted business dealings were traced largely through the work of Ernest Stiefel, a member of the intelligence unit who diagrammed the way insurance companies pooled their risks, invested in and insured each other and, as a result, willfully or witlessly shared data about nations at war. “Stiefel mapped the entire system,” said Naftali, a historian at the University of Virginia’s Miller Center of Public Affairs. “Each time I take a piece of your risk, you’ve got to give me information. I am not going to reinsure your company unless you give me all the documents. That’s great intelligence information.”
Naftali came across the first evidence of the unit when the CIA began to release OSS files in the 1980s. He interviewed some members — all now believed dead — for his 1993 doctoral dissertation. Though the earlier files contained references to the insurance unit’s work, the recent release adds details about how sensitive data was gathered and shared and how the unit operated. Though a wiz with records, the unit had problems in the field, where agents operated without the knowledge of local American embassies.
Information arrived months after it was requested, particularly from the Far East and North Africa, and in places such as Singapore and Morocco, where expatriates of all types mingled uneasily while the war’s battles crept closer. “They went into the field and the State Department didn’t know who they were. The military didn’t know who they were. They were largely in neutral zones. These fellows sat in backwaters for months, collecting material and sending it nowhere,” Naftali said. One operative, a Starr insurance man named Bob Smith, traveled throughout China and appeared in several local newspaper accounts as–what else?–a traveling insurance executive named Bob Smith.
Strategic Data Welcomed Back Home
The cables he sent back–still heavily censored by the CIA–showed a man who was under heavy suspicion, often anxious to leave his post and uncertain of how to deliver his information. At one point, posing as an insurance man on a humanitarian visit to a leper colony, he stumbled on Japanese positions in South China. He speculated that he wasn’t shot at because the enemy was too busy laughing at Smith’s pratfall-plagued attempts to flee through the thicket on a bicycle. The strategic information was welcomed back at headquarters. “Our thanks . . . for the gradient profile of the Chinese section of the Canton/Kowloon Railway,” chirped the chatty but highly secret OSS newsletter (“Extra! Extra! It’s twins for Al Booth!”). “Thank you for the Tokyo Water Supply data! We appreciate it very much,” raved yet another edition. Much information came from unit chief Rushin, a Home Insurance Co. executive who rose to U.S. Army major because of his work. Rushin was sent to London in late 1943 after it became clear that OSS and British intelligence had failed to tap London-based insurers for information about the Pacific theater. In fact, Rushin found that a U.S. Embassy official assigned to collect such data had set up shop at Swiss Re, an insurance wholesaler still in business with the Nazis. But, through inexperience or incompetence, the embassy official had learned little of value.
Rushin was able to gather material that was even in demand by the British. It ranged from Chinese railway inspection reports to photos of the Mitsukoshi department store in downtown Tokyo to blueprints of the chemical company that made the poison gas Hitler used to kill Jews. Rushin’s biggest obstacle appeared to have been the war’s own bureaucracy. “I don’t have but two legs, no one to help and the job of reproducing is terrific,” he complained in a March 1944 memo. “I have material now which has been in the hands of reproduction for six weeks.” Insurance unit spies also came across bits of juicy data that had nothing to do with insurance. They passed along news, for example, that the desperate Nazis had banned the “mourning ribbons” worn by families of the growing numbers of dead. They found a German newspaper obituary of “a collaborator” killed in a “cowardly” attempt by some of Hitler’s men to blow up der Fuehrer. When the tide of the war began to turn and German insurers began losing money, the U.S. insurance agents learned that Nazi insurers were pleading for peace. A source in Stockholm revealed in late 1943 that insurers advised Hitler’s people that “ruin threatens all life and fire insurance companies in Germany.”
As Germany was heavily bombed and casualties mounted, the Nazis prohibited insurance companies from selling new policies–a drastic measure that even prompted complaints in the newspapers. Life insurance and the interest it earned had been viewed as stable investments for Germans who still remembered the hyperinflation that followed World War I. With the Axis defeat imminent, U.S. intelligence officials focused greater attention on ways the Nazis would try to use insurance to hide and launder their assets so they could be used to rebuild the war machine. It’s a task that continues today.
Panel Investigates Life Insurance Claims
A commission headed by former U.S. Secretary of State Lawrence S. Eagleburger is investigating whether five mostly German-owned insurance companies operating today ever paid off all the life insurance policies they sold to Jews, a target market as the Nazis were ascendant. The insurance unit’s reports gave at least one chilling glimpse of how Jewish policies were processed: “You might be interested in the enclosed Dutch Decree of June 11, 1943 ordering the reporting and liquidating of all insurance policies on behalf of the Jews…” The newly released OSS files show just how hard it is to track a paper trail through 50 years of mergers, acquisitions, secret deals and silent partnerships. The files show that American insurance premiums almost certainly wound up in Nazi banks, and German brokers were secretly covering London establishments under attack by the Luftwaffe. “It makes you wonder if a German insurer insuring an American ship went to the German military and said: ‘Don’t bomb this ship!’ ” Bradsher said.
Axis Insurance Firms Resumed After the War
Though the Treasury Department wanted to keep harsh economic restrictions on the defeated Axis powers, the State Department prevailed, and German and Japanese insurance industries resumed operations after the war. Today, for example, Munich Re and Swiss Re are, once again, the two biggest insurance wholesalers in the world. Rushin was promoted to the X-2 branch in Washington after his London mission and then returned to Home Insurance after the war. He retired from the company, which eventually was crushed by asbestos claims from cancer victims in the 1970s. In the end, Home itself didn’t have enough insurance to cover its losses. Starr sent insurance agents into Asia and Europe even before the bombs stopped falling and built what eventually became AIG, which today has its world headquarters in the same downtown New York building where the tiny OSS unit toiled in the deepest secrecy. Starr died in 1968, but his empire endures. AIG is the biggest foreign insurance company in Japan. More than a third of its $40 billion in revenue last year came from the Far East theater that Starr helped carpet bomb and liberate.
Though the OSS files shed light on a little-known operation, there is no good way to fully read the moods and motivations of the people who were part of it. By all accounts, though, Rushin was proud of his spy service. “He was delighted to talk about this,” said Naftali, who talked with Rushin before he died. “He was in his 80s. I was lucky. This latest release [of documents] comes too late. These people are no longer alive.”
Germany Plots with the Kremlin
by T. H. Tetens, 1953, Henry Schuman, 294 pages
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“T.H. Tetens’ Germany Plots with the Kremlin (1953) treats the pivotally important German “Ostpolitik,” which German power structure has traditionally exploited in order expand and develop its influence. The German threat to either remain neutral during the Cold War, or to ally with the USSR, was a significant factor in persuading conservative American power brokers to go along with the reinstatement in Germany of the Nazi elements that prosecuted World War II. Under the circumstances, some of these conservatives felt that permitting Nazi elements to return to power behind a democratic façade was the lesser of two evils, although many would have preferred a more traditionally conservative German political establishment. This German “Ostpolitik,” in turn, is characteristic of the geopolitical foresight and cynicism with which pan-Germanists have successfully pursued their goal of world domination through the centuries.
An authority on pan-Germanism employed by the U.S. government during World War II, Tetens analyzes German Ostpolitik in the aftermath of the war in the context of centuries of German policy toward Russia and the former Soviet Union. Tracing the roots of Ostpolitik, Tetens begins with Frederick the Great’s secret pact of 1762 with Czar Peter III, which disrupted the European coalition that almost crushed Prussia in the Seven Years War. This pact saved Prussia from total defeat and led to the first partition of Poland. In 1867, German chancellor Otto von Bismarck made a secret pact (called a “re-insurance treaty”) with Russia, which secured Germany’s Eastern frontier, helping to make Germany the strongest military power on the continent. Following in the footsteps of their predecessors, General Hans von Seeckt (head of the German general staff) created a new army after the German defeat in World War I. That army trained and armed in Soviet Russia after the Rapallo Treaty between Germany and the USSR in 1922. While German Chancellor Gustav Stresemann feigned neutrality, von Seeckt contemplated “war against the West in alliance with the East.” Perhaps the best-known example of Ostpolitik was the Hitler Stalin pact of 1939, which secured Germany’s Eastern border on the eve of World War II.
After World War II, the German geopoliticians (acting at the direction of the leaders of the Underground Reich under Martin Bormann) pursued a similar tack. Threatening neutrality, or even an alliance with the Soviets, the Germans were able to manipulate the U.S. into wooing Germany as an ally– –granting it renewed economic and military power and re-installing Nazis in positions of great influence. Kevin Coogan’s remarkable text Dreamer of the Day: Francis Parker and the Postwar Fascist International contains an excellent contemporary account of this phenomenon. Listeners are emphatically encouraged to read the Coogan text as a supplement to the Tetens book (which was published in 1953.)
In 1950, the Madrid Geo-political Center (a Nazi think tank operating in exile under the friendly auspices of fascist dictator Franco) discussed the successful realization of the Reich’s plan to go underground. (These plans were described by Curt Reiss in The Nazis Go Underground. The Nazi grooming and installation of Franco, whose country was an important base for the postwar Reich activities, is discussed in Falange by Alan Chase.) The following passage appears on page 73 of the Tetens text: “According to the Madrid Circular Letter, referred to above, the German planners have never ceased their political warfare against the Allies.
They admit that they had ‘blueprinted the bold plan and created a flexible and smoothly working organization,’ in order to safeguard Germany from defeat and to bring Allied post-war planning to nought. They boast that they were able to create total confusion in Washington, and that they saved German heavy industry from destruction: ‘By no means did the political and military leadership of the Third Reich skid into the catastrophe in an irrational manner as so many blockheads and ignoramuses often tell us. The various phases and consequences of the so-called ‘collapse’ . . . were thoroughly studied and planned by the most capable experts . . . Nothing occurred by chance; everything was carefully planned. The result of this planning was that, already a few months after Potsdam, the coalition of the victors went on the rocks….”
The Madrid Circular Letter goes on to set forth the course to be pursued by Germany, more startlingly relevant from the vantage point of early 2006 than in it was in 1950. The following is from page 52 of Tetens’ book: “ ‘In view of the present political situation . . . the policy of orientation towards the West has lost all meaning or sense. . . . We must not forget that Germany has always considered orientation towards the West as a policy of expedience, or one to be pursued only under pressure of circumstances. Such was the case in Napoleon’s time, after 1918, and also after 1945. All of our great national leaders have constantly counseled the long-range policy of close cooperation with the East . . . .’” Fear of this dynamic drove the U.S. to accede to all of Germany’s demands for renewed power. “Anti-Communism Uber Alles!”
A stunning measure of the success of the Underground Reich and German Ostpolitik can be obtained by reading Dorothy Thompson’s analysis of Germany’s plans for world dominance by a centralized European economic union. (In this, we can see the plans of pan-German theoretician Friedrich List, as realized by the European Monetary Union.) Ms. Thompson was writing in The New York Herald Tribune on May 31, 1940! Her comments are reproduced by Tetens on page 92.
“The Germans have a clear plan of what they intend to do in case of victory. I believe that I know the essential details of that plan. I have heard it from a sufficient number of important Germans to credit its authenticity . . . Germany’s plan is to make a customs union of Europe, with complete financial and economic control centered in Berlin. This will create at once the largest free trade area and the largest planned economy in the world. In Western Europe alone . . . there will be an economic unity of 400 million persons . . . To these will be added the resources of the British, French, Dutch and Belgian empires. These will be pooled in the name of Europa Germanica . . . The Germans count upon political power following economic power, and not vice versa. Territorial changes do not concern them, because there will be no ‘France’ or ‘England,’ except as language groups. Little immediate concern is felt regarding political organizations . . . . No nation will have the control of its own financial or economic system or of its customs. The Nazification of all countries will be accomplished by economic pressure. In all countries, contacts have been established long ago with sympathetic businessmen and industrialists . . . . As far as the United States is concerned, the planners of the World Germanica laugh off the idea of any armed invasion. They say that it will be completely unnecessary to take military action against the United States to force it to play ball with this system. . . . Here, as in every other country, they have established relations with numerous industries and commercial organizations, to whom they will offer advantages in co-operation with Germany. . . .”
Again, check the current European Monetary Union and the “borderless” EU against the background of what Ms. Thompson forecast in 1940 and Mr. Tetens reproduced in 1953.”
by Mark Fritz / Boston Globe / November 19, 2001
“A half century of chronicling the history of World War II has largely overlooked a carefully cloaked world of dubious deals between American entrepreneurs and the Third Reich’s financiers. Newly declassified United States intelligence records reveal in unprecedented detail how US and Allied firms systematically used backwater countries to conduct backroom business with Axis enterprises. The files peel away a whole new layer of collaboration, describing scores of so-called ”shadow agreements” in which corporations disguised their ties with the enemy through the cover of other companies in neutral countries, from Spain to Sweden to much of Latin America. They show bank drafts and communiques moving among scores of shippers, banks, insurance companies, and exporters from nations at war. Global commerce was still conducted amidst global combat, and business blurred the boundaries between fascism and the free world. This cloudy category of complicity is emerging only now, largely because of a somewhat chaotic dash to declassify ultra-sensitive espionage records in the United States, Western Europe, and the former Soviet bloc. The Nazi War Crimes Disclosure Act that Congress passed in 1998 has triggered the release of some 3 million pages of intelligence files, thereby helping to lift the last veil of secrecy on the US role in World War II.
Last year, the CIA released records of the virtually unknown Insurance Intelligence Unit, a component of the agency’s wartime predecessor, the Office of Strategic Services. Besides supplying Allied battle planners with important target data, it also outlined the way insurance companies — along with banking and shipping interests and governments of neutral countries — conducted clandestine commerce that ignored lines drawn in blood on the battlefield. The Insurance Intelligence Unit was formed by OSS General William Donovan from a gaggle of rival insurance executives motivated by patriotism and personal gain. It is difficult, if not impossible, to determine which companies operating in this gray zone profited from Axis war crimes. But the records show with stunning frequency just how determined businessmen were to continue commerce even if the sharing of risk also meant the sharing of critical intelligence information. Some examples from the newly declassified files:
- In 1941, a year in which US trade embargoes of, and military tensions with, Japan culminated in the attack on Pearl Harbor, the San Francisco office of a British insurer resold coverage of the Panama Canal — the US Navy’s key link between the Pacific and Atlantic theaters — to two Japanese firms. ”In connection with this insurance, there was forwarded to Tokyo a detailed description of the locks, all machinery in connection therewith, exact location, etc.,” a 1942 OSS report said.
- In 1938, with Germany and Japan looming as potential conquerors of their respective hemispheres, the Axis-linked Swiss Re insurance group asked for, and received, detailed reports on the flammability of major American cities from the National Board of Fire Underwriters.
- With war underway in 1942, Fireman’s Fund Insurance Co. sold risk coverage of a key US defense contractor, the Sperry Gyroscopic Compass plant, to Axis-dominated Switzerland General Insurance Co. As part of such transactions, Fireman’s shipped the complete plans of the Compass plant to Zurich, though they were intercepted by US censors.
- When a fire of suspicious origin wiped out an enormous Firestone tire plant in New Jersey in 1939, it turned out that Fireman’s of Newark had sold the risk to a group of Axis-connected European insurers. In exchange for covering the loss, Fireman’s of Newark and the Marine Office of America had to provide the US supply and production capacity of an essential wartime material: rubber.
Economic comeback fueled by ‘reinsurance’
Germany had pulled itself out of the rubble of World War I and global depression by specializing in ”reinsurance,” the selling of insurance to insurance companies. Just before the start of World War II, the global leader in reinsurance was Switzerland’s Swiss Re, followed by Germany’s Munich Re. Intelligence records show that as the Reich conquered Europe in the first half of the war, its insurance revenue actually grew. Not only were Axis insurance companies in effect operating in the United States by sharing risks, they were using the business as a source of foreign exchange. Germany and Italy, in particular, camouflaged their stake in the industry by forming reinsurance pools in Brazil, Chile, Argentina, and other South American countries. So essential was the insurance industry that the Reich enlisted a Hamburg brokerage house to dispatch insurance ”penetration agents” to travel with German troops into France, the Balkans, and Soviet Union.
The Insurance Intelligence Unit’s predictions of the Nazis’ moves were eerily accurate. It forecast and then followed the way German and Italian insurance strategists sought to circumvent Allied blacklists of their global business through the shadow agreements in neutral countries, starting with Spain and then spreading to Latin America. The files include detailed charts that show how Allied and Axis businesses intermingled, often with a German on every board. Three executives of companies controlled by Munich Re, for example, were on the boards of 12 other Argentine companies, and those companies, in turn, were linked to management of dozens of other firms. ‘As we’re seeing with the insurance [disputes] of the World Trade Center, the reinsurance business was a very international business and most people don’t realize how involved these companies are with each other,” said Gerald D. Feldman, a historian at the University of California at Berkeley.
“There is so much common business that they can’t imagine living without each other,” said Feldman, author of “Allianz and the German Insurance Business,” a new book that examines links between German insurance giant Allianz and Swiss companies. Consider American Cornelius Tucker, who the declassified files show served as the Argentina representative for the American Foreign Insurance Association, a brokerage firm that represented such wartime US insurance giants as Home Insurance Co., the Hartford, and the Phoenix of Hartford. The AFIA, based in New York, was a rich source of information for the OSS unit and Tucker cooperated fully with the US Embassy in Buenos Aires on insurance intelligence matters, one OSS report said. Yet Tucker also was director of an AFIA-owned Argentine insurance company, Sud Atlantica, that was placed on the ”yellow list” of companies doing indirect business with the enemy.
Yellowlisted firms were forbidden from doing business with Allied companies and given the opportunity to break off Axis ties or face war-crime sanctions. The OSS said Sud Atlantica was writing insurance policies for such important Axis defense industries as Siemens-Schuket, a subsidiary of the big German electronics firm. And the actual managers of Sud Atlantica were Heine and Co., which also was the broker for two German insurance syndicates: Bremen Marine Insurance Association and the Hamburg Association of Insurance Firms. The upshot of such business-as-usual arrangements meant that there was a clear channel for cash and strategic data to reach from the United States to the Axis nations trying to crush it.
The same fears were expressed in reports on two New York insurance executives, Cecil Stewart and Stewart Hopps, who were affiliated with the Atlantic Brokerage Co., the Rhode Island Insurance Co., and the William Penn Insurance Co. A 1943 OSS report said they were purportedly selling war insurance to strategic US defense industries and reselling some of the risk to Latin American affiliates linked to Nazi insurers. The report said the two men also ran a steamship company that chartered tankers for Royal Dutch Shell, a Nazi collaborator that used Hitler’s slave laborers. “It’s very possible that details of American insurance properties could reach the enemy via this sequence of reinsurance transactions,” the OSS report said. Stewart and Hopps were not unknown to the unit investigators; they had been part of the original OSS committee convened to design the Insurance Intelligence Unit, according to the minutes of meetings that included OSS officials and prominent international insurance executives.
Profit appears to have been the prime motivation for the dubious dealings that blurred enemy lines. US intelligence officials were clearly concerned that commerce was giving the Axis easy access to vital defense information. Such dealings were a part of routine global commerce during peacetime, and they continue today. Swiss Re, for example, insured 22 percent of damage done to the World Trade Center, and the insurer and the towers’ owners have tussled over the amount of the proper payout. Just as numerous businesses have capitalized on the fear and anxiety that have gripped the United States since the Sept. 11 terror attacks, the declassified World War II documents help demystify one of the most overromanticized of eras. The records illustrate the range of greed that was pervasive during the war. ”The Greatest Generation,” for all its exploits, was also peppered with crooks, con artists, and cold-hearted profiteers.
Butchers in Brooklyn rioted over federal meat rationing; coal miners defied a law against strikes in essential industries; hoarders emptied stores to create food shortages. The United Auto Workers fought hard to keep women — epitomized by the propaganda posters of ”Rosie the Riveter” — off the assembly lines. Race riots broke out nationwide when labor shortages allowed blacks and Hispanics into jobs that previously were unattainable for minorities. OSS operatives in occupied France continually complained that members of the fabled ”La Resistance” were often merely bandits who stole their equipment and held their agents for ransom. “Regardless of the country or the era, you don’t change human beings very much, or their instincts,” said Edwin J. Putzel Jr., former executive officer to the OSS’s General Donovan. ”Their basic drives, good and bad, are always there.”
Unit hoped to exploit insurance information
The idea for the Insurance Intelligence Unit was hatched by Ernest Cuneo, a New York lawyer and OSS operative close to President Franklin D. Roosevelt, spy novelist Ian Fleming, gossip columnist Walter Winchell, and muckraking newsman Drew Pearson. Cuneo later ran a newspaper syndicate that had ties to US intelligence agencies. According to the OSS files, Cuneo and Hopps approached Allen Dulles, a Wall Street lawyer running the OSS in New York, about forming a group that not only could exploit the detailed intelligence contained in fire, casualty, aviation, and marine insurance, but also expand the US share of the global insurance market. Hopps, an adviser and director of the Rhode Island Insurance Co., which owned a controlling interest in the William Penn Insurance Co., was quickly bounced from the unit when other top executives were recruited. According to minutes of the meetings held to create the unit, Hopps was considered untrustworthy. He responded by tipping the FBI that the OSS was going to conduct counter-intelligence in Latin America, which was then under FBI jurisdiction. FBI director J. Edgar Hoover demanded that the fledgling spy unit stay out of the area.
But it was clear to members of the Insurance Intelligence Unit that Latin America had become an important part of the Axis war machine. Beginning in 1942, the unit diagrammed labyrinthine connections between insurance companies around the world, a network that included not just every other form of financial institution, but virtually every type of business. Most insurers pooled their risks to protect themselves from a catastrophic payout. The unit made clear how entwined the lucrative risk business really was, from Hartford to Hamburg to Hong Kong. US citizens were paying premiums that German companies theoretically were using to cover losses to London businesses battered by Luftwaffe bombs. By sharing risk, they also shared details of the things they insured — from Naval shipyards in Baltimore to chemical companies in Bremen, to bridges built on the River Kwai. The United States blacklisted enemy companies. But a 1943 OSS analysis of Nazi infiltration dismissed the list as useless because: ”a) The firms not blacklisted are full of Germans. b) The blacklisted firms can’t be prevented from reinsuring in Swiss or Swedish pools, both of which are Axis.”
The OSS unit tracked how Nazi Germany took over France’s insurance industry as it invaded the country. The files are filled not only with the names, backgrounds, and personal peccadilloes of French insurance executives who collaborated with the enemy, but the names and details of Allied branch executives who turned traitor. One, Carl Endemann, an American of German descent who represented AFIA but sided with the invading Nazis, provided strategic data about installations in North Africa just prior to the Allied invasion there, according to an OSS report. His English wife, stoutly pro-British, went to jail. For Germany, the capture of France opened up a financial link to neutral Spain, allowing the Reich to penetrate the insurance market in the Americas. Fenix-Espanol, a joint venture of French and Spanish companies, was an important conduit. ”Due to this international versatility and its dual offices, Fenix has become a dangerous center for the accumulation of vital data and funds for use by Fascist interests,” a 1943 OSS report said.
The OSS found that the Axis used different tactics in countries in which the government controlled the insurance industry. Acting through an intermediary, Munich Re in 1942 offered a deal to government reinsurance banks in Uruguay and Brazil. Munich Re would share their risk, and the Latin American banks, in turn, would get a cut of the European insurance market. It is unclear if the offer was accepted. The records also describe how the Axis was using its precious foreign currency to finance Nazi spies in the United States itself. The US dollars it obtained — often through American banks — were ”used for subversive activities” in this country, the OSS records said: ”The Insurance [Axis] people are the Axis payoff men in the US and Latin America.” Not only do the OSS records show a paper trail of money that linked Munich Re and Italy’s Generali Group to Swiss Re and their sundry adventures in neutral Spain, Portugal, Sweden, and South America, they provide evidence that Americans themselves were paying premiums on policies that indirectly funneled cash and intelligence to Germany.
Swiss Re had branches throughout Britain and Axis-occupied Europe, and founded the North American Fire & Marine Reinsurance Corporation in 1940, with headquarters on New York’s Park Avenue. By 1944, the OSS said it was the biggest fire reinsurer in the United States. American Rodney Davis was both president of North American and of the US branch of Swiss Re, and the board of directors of the former was the same as the board of managers of the latter. Two directors of the American branch of Swiss Re, Paul Alther and Erwin Hurlimann, were ”chiefs” of what the OSS called the ”mother enterprise” in Zurich.
Whether they were collaborators or just businessmen endeavoring to conduct commerce under precarious conditions is one of the ambiguities of the war. ”Many Germans and Swiss, friendly to the Axis, are employed in the various Swiss insurance companies and have ready access to their records,” one 1943 OSS report said. ”Therefore, it would be impossible for any Swiss company to prevent information received through international insurance business from falling into the hands of the Axis. …” Switzerland, because of its neutrality, avoided the heavy reparations paid by former Axis nations until the mid-1990s, when a class-action lawsuit successfully proved that Swiss banks pocketed the accounts of Holocaust victims.
The United States, Germany, and Israel — along with businesses ranging from Daimler Chrysler to Deutsche Bank — tentatively agreed in 1999 to establish a German foundation that would distribute $5 billion to an estimated 1 million people for unpaid insurance policies, lost pensions, or wages they could have earned performing slave labor. This is in addition to the roughly $100 million that Germany has paid, and continues to pay out, in postwar reparations since 1947. Roughly 61 international US firms, including Coca-Cola and Ford, also have contributed to the foundation. Contributing is supposed to be a shield from reparations lawsuits, but the suits continue unabated as lawyers race to the docket before their clients reach the grave.
One suit accuses IBM of allowing its computer technology to make the genocide of Jews more efficient, but US-based companies have largely disavowed any actions of their overseas subsidiaries, which were more or less seized by the Axis. An international commission led by former US Secretary of State Lawrence Eagleburger has reached a tentative agreement with major Swiss, German, Austrian, and Italian insurers to pay off old policies, but squabbling over who would pay for the program has left the agreement in limbo. Hearings were held on Capitol Hill earlier this month on the topic. ”The work of international insurance, like that of banking, is so intertwined and multinational — even in the 1940s — that I suspect it was decided to let beneficiaries of fascist finance off the hook,” said historian Timothy Naftali, a consultant for the commission overseeing the declassification of US intelligence files from the World War II era.
Still, historians-for-hire and lawyers for purported victims and complicit companies have built a cottage industry in combing through declassified records — part of a reparations fever that resulted in the Nazi War Crimes Disclosure Act to begin with. Yet the indirect relationships American firms had with Axis companies remain below the radar screen. The Eagleburger commission has focused largely on exacting compensation from big European companies that kept the premiums of Holocaust victims. But Neal Sher, the commission’s chief of staff, expressed surprise when asked about the declassified documents that linked Allied and Axis insurance concerns. ”If there is any evidence that there were American companies writing policies on people who were victims of the Holocaust, we’re interested,” Sher said.
A private insurance investigation law firm that specializes in treating old insurance records as archeological digs also was unaware of the unit’s information. ”That certainly raises my curiosity. The thing I am most interested in right now is the liability of US corporations,” said Terrell Hunt, president of Risk International Services, Inc., a Houston-based insurance investigation firm voluntarily assisting state insurance commissioners in reparations cases. ”It would take a fair amount of research, but I can’t believe there isn’t something wrong about [Axis and Allied executives] sharing board seats.” back in 1944, OSS agents described the daunting postwar task of untangling what one termed the Third Reich’s vital ”invisible export.”
Not only did the Axis develop a sophisticated ”set of economic tools” to move money around the world more easily, they covered their tracks enough to make ”the unscrambling of liberated areas more complicated.” Moreover, insurance and banking are far more complex than other businesses to trace because of the intricate way that money traveled a circuitous global route. Exactly where the boundaries of blame should be drawn has led to endless debates about how far to extend responsibility for the one war that truly engulfed the globe. “Whole conferences are held on these sorts of questions,” said Ron Zweig, a Tel Aviv University Holocaust expert and a member of a historians panel helping oversee the US records declassification. “These are difficult and complex issues.”
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