Mr. MARTIN (reading);

Methods that might be pursued to further educate the Rueckwanderer were likewise discussed. Rueckwanderer business must naturally be conducted through the employment of numerous agents and subagents who operate throughout the country. These agents and subagents, in cooperation with their respective principals (the five Golddiskontbank correspondents) have gone a long way toward educating Rueckwanderers through extensive newspaper advertising campaigns, radio broadcasts, as well as through literature, etc., all of which at a very great expense.

The CHAIRMAN. Is it correct that the funds available for these people returning to Germany were in part taken by the German Government from German refugees whose property they had confiscated?

Mr. MARTIN. That was part of the plan. There was a fund of marks in Germany largely made up from the source you mention.

The great majority of the purchasers of the "preferential blocked marks" were small shopkeepers, factory workers, housemaids, and others of small means. Special attention, however, was directed to the recruitment of skilled workers for German factories. An agent of the Nazi Government worked in conjunction with one of the five licensed firms in securing the remigration of such persons.

A substantial commission (7 percent) out of all proportion to the commission or profit from an ordinary foreign exchange transaction (a fraction of 1 percent) and deductible from the dollars paid by the applicant, was awarded to the chosen American firms and their subagents.

The five firms which operated under the direct control of the German Ministry of Economics in the United States agreed among themselves to keep the details of the Rueckwanderer program secret and made a particular effort to prevent these facts from coming to the attention of the Department of State. The reasons for this secrecy were expressed in the minutes of the agents' meeting held at the Chase Bank on February 15, 1939.

The ensuing publicity and the agitation that has been furthered in certain quarters of this country might possibly compel our Department of State to enforce a clearing system between Germany and America, under which moneys due to American citizens such as inheritances, etc., would have to be cleared. The results are too obvious: firstly, no benefits are likely to accrue to Germany; secondly, the final outcome might prove disadvantageous from Germany's standpoint

The CHAIRMAN. The banks were afraid that if our State Department discovered the real facts our Government would take countermeasures that would be detrimental to the German Government, to German business, but to the German Government?

not

Mr. MARTIN. That seems to be correct. In other words, this was all being worked out with the representatives of the German Government. Although the Rueckwanderer business was carefully concealed from United States Government agencies, the representatives of the five agents of the German Government were fully agreed at a meeting held in February 1939 to keep the German consulate and Embassy fully informed of all details of the business.

German economic warfare methods in the fields of finance, trade, and commerce are indicated by these activities of Transmares and the Rueckwanderer agencies. The practices depicted were for the most part carried out in accordance with the strategic plans of Dr. Hjalmar

Schacht, director of German economy in the pre-war years, and author of the German 4-year plan for rearmament and militarization. Companies like Transmares reflect the stepping up of German economic penetration abroad after the Nazis came to power in 1933.

The CHAIRMAN. It was in 1939 that these American banks were acting as agents-and that was after Munich?

Mr. MARTIN. That's right, Senator.

The CHAIRMAN. And after the policies of Hitler had been fully disclosed?

Mr. MARTIN. That is correct.

The CHAIRMAN. And at a time when we were trying to rearm this country against a possible invasion?

Mr. MARTIN. This continued up through the early part of 1941.

The CHAIRMAN. As a matter of fact, the German-American Board of Trade still operated their offices in New York after Pearl Harbor? Mr. MARTIN. Yes. Before the coming of the Nazis, however, Germany had already directed its attention toward the United States. Almost as soon as World War I had terminated German industry was busy regaining its pre-war strength and influence. Typical of this quick recuperation is the I. G. Farbenindustrie, which by the midtwenties already owned Germany's principal chemical and dye firms. By 1928 I. G. Farbenindustrie was sufficiently consolidated at home to direct its attention to the United States.

In 1928 I. G. Farben established in the United States what was first conceived of as a "committee on political economics," but very soon became a large-scale incorporated business enterprise whose function it was to furnish information regarding "financial and industrial conditions in the United States of America, with special reference to the chemical and allied industries."

The description of the function is included as an exhibit.

(The document was marked "Exhibit No. 578" and appears on p. 2332.)

The CHAIRMAN. Chemnyco was to assist Germany as an on-the-spot observer in the United States?

Mr. MARTIN. That is correct. This organization, which became Chemnyco, Inc., in 1931, was set up by Max Ilgner, soon to become I. G. Farben's official link with and paymaster to the Nazi hierarchy. The CHAIRMAN. Where is Max Ilgner now?

Mr. MARTIN. He is a leading light of I. G. Farbenindustrie in Germany. His brother Rudolf is in the United States on a farm in Connecticut.

The CHAIRMAN. He also took up farming.

Mr. MARTIN. The files of Chemnyco, Inc., have been examined by the Economic Warfare Section of the Department of Justice in the preparation of the next following part of this statement. These files are now in the possession of the Alien Property Custodian at 27 Cliff Street, New York.

The CHAIRMAN. Isn't it a fact that because companies like Chemnyco were American corporations, and their officials and stockholders were Americans, the Alien Property Custodian, regardless of their enemy activities, could not take them over as he could take over AGFÅ Aniline and others who were predominantly German-owned? Mr. MARTIN. I believe that is correct.

The CHAIRMAN. That was a sufficient cloak to protect them and their officers against any activity by this Government under the Alien Property Act?

Mr. MARTIN. I believe that if a German interest, that is, if a legal interest in the company could be shown, as was shown to the sattisfaction of the Custodian in the case of Chemnyco, they could be taken care of, but if it was purely an American-owned company, whose only evident connection with Germany was parallel action, they couldn't. It is possible that if you could prove agency in the legal sense it could be seized, but a merely parallel action that turned out to the benefit of Germany is too remote, as I understand it. I am not, of course, expressing an official opinion of the Custodian or of the Department of Justice in saying this.

Transmares is in operation in New York at the present time. Mr. von Rumohr is no longer with them. Mr. Von Rumohr was the vice president. He had been in a purely domestic concern known as Eastern Potteries, but more recently has gone back into the export trade as the head of Morland Trading Co., 82 Beaver Street, New York.

Max Ilgner came to the United States for the purpose of setting up an economic intelligence agency and, upon his return to Germany, left his brother Rudolf as his deputy in the United States. Chemnyco operated until the United States entered the war against Germany. It was supplied by its parent with highly skilled personnel having rich technical backgrounds. Ownership of Chemnyco, though never in the name of I. G. Farben, was always tightly controlled by selected representatives of that company.

The Committee on Political Economics at that time was essentially a separate organization given a job to do, which in some respects was beyond the normal activity of ordinary business institutions. It was therefore compelled to work behind a facade of other companies controlled by I. G. Farben. On October 23, 1930, the committee's position was regularized through the incorporation of the United States & Transatlantic Service Corporation and the transference to that corporation of the committee's duties. The name of this corporation, nominally controlled by Wilfred Greif through majority stock ownership, was changed in 1931 to Chemnyco, Inc.

In November of 1930, I. G. Farben entered into a contract with the new company subscribing to the latter's services in return for a payment of $84,000 per annum plus charges for all special services. This agreement remained in effect until the date the United States entered the war against Germany. There were changes only in the amount of the retainer, which increased from $84,000 per year in 1930 to $240,000 in 1938. The agreement between I. G. Farben and the new company provided that the service company would act as United States representative of I. G. Farben in all business, commercial, patent and tax matters and that it would investigate and report in detail on existing and prospective American industries in which I. G. Farben was interested. In addition to the retainer, the new company was to be reimbursed for its outlay for traveling, entertaining and employment of additional technical and professional experts and advisers. Chemnyco agreed to—

84949 44pt. 16— 9

receive officers, employees, or special representatives of the foreign concern obtain hotel and traveling accommodations for such visitors

and facilitate their introduction to American financiers, industrialists, merchants, and others, and aid and assist such visitors in the accomplishment of the purposes of their visits.

That is all referred to in exhibit No. 579 on page 2335.

Family relationship among the chief personalities in Chemnyco and those in I. G. Farben was extensive. Rudolf Ilgner, in addition to being the brother of Max Ilgner was a nephew of Hermann Schmitz, chairman of I. G. Farben's executive committee. Dietrich A. Schmitz, the nominal owner of a majority of the stock of Chemnyco from 1935 to 1939, was the brother of Hermann Schmitz, uncle of both Max and Rudolf Ilgner, and brother-in-law of Albert Gadow, I. G. Farben's representative in Switzerland and chief figure in I. G. Chemie. Walther Duisberg, a director and officer of Chemnyco and said to have been its guiding personality after Wilfred Greif stepped down in 1934, was the son of Karl Duisberg, the organizer and first chairman of the board of directors of I. G. Farben. Wilhelm von Rath, a part-time owner of Chemnyco stock and a powerful figure in many of I. G. Farben's American enterprises, was the son of Walther von Rath, vice chairman of I. G. Farben's board of directors from 1925 until his death in 1940.

The CHAIRMAN. Did Wilhelm von Rath become an American citizen?

Mr. MARTIN. Yes.

The CHAIRMAN. Was Schmitz naturalized?

Mr. MARTIN. The chief personnel of Chemnyco, without exception, applied for naturalization as United States citizens. All acquired American citizenship, except two, in whose cases the proceedings were interrupted by the outbreak of the war. The names escape me for the moment as to which were the two whose applications had not been completed.

Not only did I. G. Farben contrive to avoid the appearance of ownership or control of Chemnyco by a German company, but every effort was made to Americanize the individuals to whom the control and operation of Chemnyco had been entrusted.

In

Chemnyco was an excellent example of the uses to which a country with a war economy may put an ordinary commercial enterprise. planning for total war, Germany needed more information than could be obtained through the conventional invisible-ink methods of espionage. It required knowledge of economic facts and figures the sum total of which make up the economic life of America. Such information was readily obtainable at little cost and with no risk through the exploitation of well-organized industrial and commercial contacts.

Through friends made in the ordinary course of business and utilizing its commercially revered position.as the arm of one of the world's greatest aggregations of industrial capital, Chemnyco was able, in the course of its short life, to transmit to Germany tons of material ranging from samples of newly discovered chemicals to photographs, blueprints, and detailed descriptions of whole industrial developments. Rather than "the plans" of conventional espionage, Chemnyco transmitted to Germany our economic and industrial vital statistics whose German counterpart our military and administrative authorities would give much to possess.

The CHAIRMAN. I have been informed-I don't know whether this is true or not-by a reputable patent lawyer that Chemnyco bought a sample of practically everything that was produced that would be of interest to Germany and transmitted that to Germany; and that a German company which frequently dealt with Westinghouse and General Electric bought a sample of everything either of those companies produced, although neither Westinghouse nor General Electric took the opportunity to buy samples of what the German company produced.

Mr. MARTIN. I know the purchasing was extensive.

The CHAIRMAN. And the samples were broken down for experimental purposes.

Mr. MARTIN. Yes. We introduce here as exhibits letters from the Chemnyco files showing the type of information and material secured by Germany.

The CHAIRMAN. Do you know whether they checked the Patent Office?

Mr. MARTIN. Yes, sir; they did.

The CHAIRMAN. I know that I. G. Farben had the finest patent library in the world, and every patent filed here was transmitted to them within 24 hours after it was granted. It was frequently repatented abroad by foreign companies to beat our companies to the patenting process abroad.

Mr. MARTIN. As the issues sharpened and our Government sought, by blocking and registration acts, to protect itself, Chemnyco adopted a less careful regard for our statutes. For example, it developed in the course of an antitrust investigation, that Rudolf Ilgner, the company's vice president, had ordered the destruction of a considerable part of the files, as a result of which action he was indicted for obstruction of justice, pleaded guilty and paid a $1,000 fine. There is no indication of the type of evidence Chemnyco was seeking to withhold when it destroyed its papers. Chemnyco's activities depended upon the existence of German-American business relations. They could not have been carried on in wartime. Hence, on December 11, 1941, the day Germany declared war on the United States, the Treasury Department closed Chemnyco and its stock was subsequently vested by the Alien Property Custodian.

The armament firm of Friedrich Krupp was another German industrial organization which commenced its rehabilitation as soon as the guns of World War I ceased firing. Using a $10,000,000 loan from the United States as a basis for reorganization, the company immediately set about reacquiring its lost position, which prior to World War I, as a member of the armor-plate cartel, was sufficiently powerful to cause the United States Navy to pay approximately three times as much for armor plate as was paid by the navies of European countries. With the advent of World War II, the rebuilt Krupp organization, through its New York affiliate, Krupp-Nirosta, had already played its part in curtailing United States stainless steel production through patent controls and licensing, and was assisting the Nazi economic war machine through industrial espionage. Recognizing its role as a dangerous one, Krupp-Nirosta unsuccessfully sought to conceal its true ownership from United States authorities. While Friedrich Krupp was required to destroy machinery and implements of war after Germany's defeat in 1918, its patents, licenses,