Currency reforms to halt inflation, the free market economy, and the hard work of the populace changed the economic climate of the new Federal Republic; money was worth something again and the supply of needed goods increased. Prices climbed, but they were slowly stabilized by an ever watchful government. By means of tax reductions and special privileges for investors, employers were encouraged to adopt policies of expansion. By mid-1951, 1936 levels of production were reached. West Ger­many was now turning out industrial products that were in great demand everywhere: machine equipment, electrical goods, autos, trucks, chemical products, steel, and electronic units. The indus­trial center of Germany expanded from the Ruhr to complexes in the Rhine/Main area and around the larger cities, like Stuttgart, Munich, Hanover, and Hamburg. A substantial infusion of money into this new Federal Repub­lic economy resulted from the Korean War in 1950. The United States was not geared to supplying all its needs for armies in Korea, so the Pentagon placed huge orders in West Germany and in Japan; from that point on, both nations winged into an era of booming good times.

Daimler-Benz A.G. of Stuttgart expanded its output of autos and trucks, experiencing no difficulty in switching from Wehr­macht staff cars and tanks to Mercedes-Benz cars for the luxury­inclined of the world, and diesel-powered small cars that dominated taxi fleets from Cairo to Cape Town. A newly insti­tuted bus line using Mercedes-Benz vehicles from Lagos to cen­tral Nigeria featured hi-fis and stewardesses bearing food, drink, and pillows; this prompted one delighted Nigerian to remark, "They certainly know how to make a customer feel wanted."

Ferdinand Porsche, who had developed the Tiger tank, which was better than anything the Allies had during most of the war, put Volkswagenwerk back on its feet by redesigning his own Volkswagen as a postwar family car. He later set up his own company as a subsidiary of Volkswagenwerk and began produc­ing the sporty and fast Porsche. Willy Messerschmitt, who had turned out the best fighter plane of the war, became vice chair­man, a director and major shareholder of two peacetime Messer­schmitt aircraft companies in Augsburg and Munich, and twelve subsidiary firms in France, Holland, South America, and the United States. During the 1960s, when the new Luftwaffe was being trained at Luke Air Force Base in Arizona, the historian of this operation, retired U.S. Air Force Colonel Barney Old­field, now of Litton Industries, wrote that West Germany had paid $250 million for the U.S. jet fighters in which they trained, underwriting an annual payroll at Luke of $8 million. Willy Messerschmitt was invited to be guest speaker at one graduation; he flew his own jet to Luke Air Force Base from his own airfield in Augsburg. As he mounted the podium to speak, the 95 musi­cians of a German band struck up "Alte Kameraden" (Old Comrades). He died, esteemed, in Munich in 1978.

As the big industrialists, who had been convicted at Nurem­berg for helping to create the German war machine, began emerging from prison in the 1950s, they too went back to work. Friedrich Flick, a farmer's son who became one of Hitler's biggest industrial supporters and had been a Reichsmark billion­aire during the Third Reich, emerged from prison determined to pull together the shattered pieces of his coal and steel empire. As he left prison, reporters asked him, what he planned to do. "Make steel," was his reply. Oddly, the Allied decartelization policy of separating the giant industries contributed to his re­surgence. He was forced to sell his 60 percent holdings in one of the Ruhr's biggest coal combines. Unable to find a buyer in West Germany, he turned to his French associates of the pre­war and occupation years and sold his stock to the large De­Wendel steel concern in France, which paid him $26 million in cash and $19 million in blocked funds, which could only be reinvested in France or in other areas linked to the French economy. This forced him to invest the French funds outside of Germany, and he started buying industrial bargains abroad, from Belgium to Brazil.

In 1955 Flick became the first German in the postwar period to buy openly into the French steel industry, purchasing a 25 per­cent controlling interest in Chatillon-Neuves-Maisons steelworks, one of France's Big Five steelmakers. The following year he engi­neered a deal that gave him a significant stake in Belgian industry, buying the largest single block of shares of the Hainaut­Sambre steel combine at a cost of $5.5 million. But one of his most important holdings was a 40 percent interest in Daimler­Benz A.G. Through a holding company, he also operated a complex of companies making steel, locomotives and industrial machinery, paper, chemicals, explosives, and synthetic fibers. He died in 1972 at the age of eighty-nine, again a billionaire and again one of the most powerful men in Germany.

But as tycoons retired or died off change came to big industry. The clans like Krupp, Thyssen, and Henschel that had domi­nated West German commerce from their headquarters in Dusseldorf and the nearby Ruhr coal and steel basin, are no longer active business managers. The last Krupp heir, Arndt von Bohlen and Halbach, was dispensed with in 1967 with a $800,­000 pension to enjoy life as an international playboy. Heinrich Thyssen-Bornemisza runs his private Dutch-based investment group from Lugano, Switzerland, and his cousin, Count Fed­erico Zichy-Thyssen, grandson of old Fritz Thyssen, exercises control over Thyssen A.G. from his base in Buenos Aires. Krupp, Thyssen, and similar giant firms are today run by professional managers with boards of directors strong in representation on the major banks. The Krupp Company, formerly Germany's most powerful industrial enterprise, now occupies tenth place on the list of West German corporations, but it is a healthy tenth, having reorganized in the early 1970s, eliminating such unprofitable operations as truck manufacturing, a hotel, and a department store in Essen. It is aggressive in Eastern Europe, Russia, and the Middle East. Krupp and the French concern of Les Forges de Strasbourg, a metal construction group, set up a jointly owned subsidiary to produce and market power dam, bridge, and steel structure equipment in the French-speaking African countries where the French firm has long-standing con­tacts. This merger emphasizes the close ties between the two companies before and during World War II.

Krupp also has plans for expansion in the U.S. market, through its U.S. subsidiary, Krupp International, Inc., of Harrison, New York, a manufacturer of industrial equipment and systems. German-born Helmut L. Schwarz, who became a naturalized U.S. citizen in 1970, states: "We feel that this country will adopt an energy policy which will make more use of domestic resources-and we see a significant market in that area in which we have a lot to contribute."

Inga Quandt, who as a widow is the surviving beneficiary and the inheritor of an industrial fortune but has little interest in or inclination toward business management, sold a 14 percent share in Daimler-Benz to the government of Kuwait for $400 million.

However, the Friedrich Flick Group of Dusseldorf does not represent absentee management. It is very much part of the global multinational scene; before he died Friedrich Flick, still referred to in Diisseldorf as "der alte Herr" (the old gentleman) took steps to insure continued active and family ownership after his death. He and his wife Marie, who died in 1963, had three sons: Otto-Ernst, born in 1916; Rudolf, born in 1919; and Friedrich Karl, born in 1927. The middle son was killed in action on the Russian front in World War II. The other two entered business: Otto-Ernst in 1953, Friedrich Karl in 1957. Around 1960 there was a sharp break between father and eldest son, which became permanent when Otto-Ernst took his father to court to gain control of his inheritance. After several years of litigation, Otto-Ernst took a large cash settlement and severed all connections with the company, living quietly in Diisseldorf until his death in 1974.

Despite this family altercation, Friedrich Flick wanted to assure a role in the company for Otto-Ernst's three children, and especially for his two grandsons, Gert-Rudolf and Friedrich Christian. He arranged his bequests so that the two and their sister became owners of some 30 percent of the shares. He also specified that the two grandsons could become full partners upon reaching the age of twenty-eight.

From the time of the contretemps with Otto-Ernst, it was apparent that Friedrich Karl Flick was heir apparent. He become a full partner in 1961, the third member of a business triumvi­rate that included his father and IKonrad Kaletsch, his father's cousin. Flick, Senior, preparing for the succession, enlarged the number of partners to six in 1965, bringing in two men of Kaletsch's generation, plus his son's friends, Eberhard von Brauchitsch, Gunter Max Paefgen, and Harms Arnt Vogels. Von Brauchitsch is a Prussian aristocrat, nephew of the famous field marshal of World War II; Paefgen is a convivial, extroverted Rhinelander; Vogels, a sharp-minded and sharp-tongued Ber­liner. Remarking on the family ownership of the Friedrich Flick Industrial Holding Company, Friedrich Karl commented in Dusseldorf: "My shares will pass to my children, so the family character of the company will be preserved. As most of the shares are already held by family foundations, arrangements exist to assure continuity of management if anything should happen to me. But I intend to go on working as long as I can. When I am no longer able, then we will see what is to be done." There are no plans for any public sale of shares. "Un­doubtedly the general climate is becoming less favorable to family companies, but there is no reason for us to change things yet. We don't need the money."

The Friedrich Flick Group enjoys about $3.2 billion in annual sales, largely realized from chemical, machinery, and paper ac­tivities. In 1978 it made a concerted drive to expand its invest­ments in various United States corporations. It was able to do this by selling 29 percent of the 40 percent ownership in Daimler-Benz to Deutsche Bank for $888 million, which the bank then floated off to preferred investors in West Germany and South America. With this, added to another 200 million D­marks realized from the sale of some smaller properties, it bought for $400 million a 29.6 percent interest in W.R. Grace & Co., a chemical giant and diversified multinational that earned $222.6 million on sales of $5.27 billion in 1979. W.R. Grace & Co. is described as having "recession-restraint" characteristics, which appeals to the Germans. Flick, with its capital gains from these sales of properties in West Germany, was able to take advantage of the West German government's proffered capital gains bonanza that offered up to $500 million in tax benefits to industrial corporations that would invest up to $1 billion in the United States by December 30, 1978, in projects deemed strengthening to the German economy or capable of fostering international trade.

Flick likewise paid $100 million for a 34.5 percent interest in U.S. Filter Corporation, a high-technology company specializing in chemicals, pollution control equipment, and engineering ser­vices. The buy-in to U.S. Filter was suggested to Flick by a New York investment bank, Arnhold & S. Bleichroeder. An interest­ing footnote is that the S. Bleichroeder segment of the firm was founded in Germany in 1803, and later served as Bismarck's banker. By the 1930s there were no Bleichroeders remaining in the firm. Driven out of Germany by Hitler, it got together with another old German-Jewish bank, Gebriider Arnhold, founded in 1864, and set up offices in London and New York.

But while Friedrich Karl Flick is today definitely the man topping the Flick pyramid in Dusseldorf, which city he insists will continue to be "my home and that of my company," the strength behind him and his administration of assets, assembled by his father the patriarch, is a strong professional management team that works in the background. Flick, Senior, had the same approach to family strength as did the elder Fritz Thyssen in the last years of his life, when he established a structure of immense managerial power that would aid his grandsons in Buenos Aires in producing perpetual profits for family members in Buenos Aires and Europe. In the shadows, of course, are the bearer-bond holders of both holding companies representing the Bormann organization, who are business realists and techni­cians of the first order. Before the restructuring of Friedrich Flick Industrial Holding Company of Dusseldorf and its subse­quent investments in W.R. Grace & Co., and in U.S. Filter Corporation, it was felt by South American bearer-bond share­holders and Deutsche Bank that promising opportunities were being missed and that growth had flattened out. But today it's a resurgence for the Flick Group, and Friedrich Flick again presides over a balance sheet that is generally rock solid.

Peter W. Grace, heir to the company he assumed control of in 1945 at age thirty-two when his father had a stroke, was de­lighted with the fiscal strengthening of the company that his grandfather founded. He has observed that he knew the late Friedrich Flick, who was sentenced to a term of seven years in prison, having been convicted of exploitation of slave labor during World War II. A spokesman for Grace said in Decem­ber 1978: "Peter Grace knew the late Flick well.... They were friendly, and he respected him very much."

In these times it is of advantage to the Flick Group to buy extensively into W.R. Grace & Co. Not only is Grace America's fifty-first largest corporation, with annual sales of over $5 billion, but its corporate structure and output along the west coast of South America are strong. The founder, William R. Grace, was an extraordinary immigrant boy from Ireland who worked him­self into becoming a prosperous guano merchant, married the daughter of a United States ship captain, and thereby became an American citizen. By 1935 his company had extended over western South America, and was in control of 43 different com­panies, including sugar mills and five-eighths of the total cotton output of Peru. Old William R. capped his amazing career by twice being elected mayor of New York City, in the last cen­tury. Grandson Peter W., reared as he was in both Peru and New York, has always had an affinity for the family Flick as well as for the German community of Peru, small in number but dominant in the industrial and financial structures of this nation. Peru has long been a province of foreign capital, repre­sented chiefly by the International Petroleum Company, Cerro, Grace (of course), and various Swiss electrical interests. Al­though the army runs the country, it is a small pool of the edu­cated and advantaged class, criss crossed by family relationships, that dominates the economy. So it was altogether natural that Peter Grace and Friedrich Karl Flick should arrive at a business understanding in the domain of interlocking multinationals, and that they should decide it was to their mutual interest to join forces.

Thyssen A.G., West Germany's most important steel corpora­tion, employs 142,506 people, turns out 11.7 million tons of steel each year, and boasts annual sales amounting to 21 billion deutschmarks. Were Fritz Thyssen alive today, he would take pride in the fact that his shrewd maneuvers during and after World War II, to retrieve his steel and coal properties in Ger­many, as well as his out-of-the-country assets, had been a stun­ning success. In Buenos Aires on January 5, 1950, while visiting his daugh­ter Countess Zichy, he stated to the Associated Press that he had paid "a stiff price for his earlier friendship with the Nazis, for he had lost all his property and had been interned for four years in a concentration camp." He said that he intended to settle in Belgium, where he hoped to live out his days as a "stateless person."

Residence in Belgium was never to be, for he died in Buenos Aires on February 8, 1951. Nazi authorities had seized his Vereinigte Stahlwerke A.G., now Thyssen A.G., Germany's largest steel and coal combine at that time, stripping him of his German nationality, subsequent to his flight to Switzerland on September 2, 1939, with his wife, daughter, son-in-law, and grandson. In a signed deposition in the Office of the Director of Intelligence, U.S. Group Control Council, on September 4, 1945, he stated that he had been forced to leave Germany be­cause he had opposed the war and objected to the treatment of Catholics and Jews and to such Nazis as Goebbels, Himmler, Rosenberg, and Ley. He also felt that Goering had coveted his successful steel combine.

Yet in a document from the U.S. Financial Intelligence Group, dated 30 April 1948, Berlin, it was concluded that among the German industrialists Fritz Thyssen was a main promoter of the National Socialist doctrine, both before and after Hitler's seizure of power. As chairman of Vereinigte Stahlwerke, he played a decisive role in the Fuehrer's rise through his generous contributions to the party, and by pressuring fellow industrialists to support Adolf Hitler. Fritz Thyssen started to be conspicu­ous in German public life when he led the Ruhr coal and iron producers in their refusal to operate the mines during the French occupation of that area following World War I. Like Hitler and so many others, he despised the Treaty of Versailles as a "pact of shame," to be thrown aside if Germany were again to have pride.

Thyssen's 'support of Hitler commenced just after the period of the Ruhr occupation. In 1923 he had contributed RM 200,000 to the fledgling Nazi Party, through General Luden­dorff. Several years later Thyssen again came into contact with Hitler via their common opposition to the Young Plan of rep­arations. According to statements made by Thyssen to Allied investigators in 1945: "I do not know anyone among the indus­trialists who was supporting the party financially in 1928; I was then its principal supporter."

In 1930 or 1931 he had arranged for a credit from the Dutch Bank voor Handel en Scheepvaart, Amsterdam, to accrue to the Nazis, amounting to RM 250,000 to 300,000 of which he repaid RM 200,000 to 280,000 out of his own pocket. In arranging this loan Thyssen dealt directly with Rudolf Hess. The money was spent for the so-called Brown House in Munich, which later became headquarters of the National Socialist Party.

"The next sum I paid in favor of the Nazi Party," Thyssen continued, "was 150,000 marks, which I paid personally to Hermann Goering in 1932." After Hitler's rise to power, his steel combine contributed to the party a fixed sum for each ton of steel produced. In addition, Thyssen made substantial per­sonal contributions to the Nazis at regular intervals.

After the financial crash of 1931, Thyssen openly embraced National Socialism. He joined the party in 1933; his member­ship number was 2917299. During the following two years he dedicated his resources and influence to aiding Hitler, organiz­ing meetings and raising funds from his industrialist friends. As a reward, he was showered with political and economic favors. He was one of five state counselors with a seat on the Economic Council whom Hitler appointed to that esteemed position for life. He was a National Socialist member of the Reichstag from 1932 until the outbreak of the war, and a member of the Insti­tute for Social Order. He was also appointed by the Reich min­ister of economics "Leader of the War Economy" in the iron­producing industry. As for his personal opinion of Adolf Hitler, on July 13, 1945, he stated: "After all, I don't think he did so many bad things. I don't think that in the beginning he only told lies; but the influence of the Party and his surroundings was very bad."

In 1936 disagreements began to appear between him and Hitler over certain Nazi policies and practices. Thyssen did not resign any of his public offices, however, until 1939, when he departed Germany for Switzerland. From there he moved with his family to France in 1940, collaborating on a book titled I Paid Hitler, which was to be published in New York City in 1941. Later he denied having anything to do with the book, but his handwritten corrections on the manuscript, written and approved on the letterhead of the Hotel de Paris in Monte Carlo, addressed to Emery Reves, on April 27, 1940, justify the affidavit made in 1945 by Reves that publication was with Thyssen's knowledge and blessing. Most significant in Thyssen's deposition of 1945 was the following: "Before I left Germany, I kept my bank accounts with the Deutsche Bank in Dusseldorf and the same bank in Berlin, but the accounts were not large, for I had no confidence in German money. So much money was constantly being spent without being covered that I feared another inflation."

Anticipating a weakening currency and inflation, Fritz Thys­sen had for years been inconspicuously shifting funds and other assets to other countries, and placing them in corporations and banks he controlled. He swore to Allied financial investigators: "I have no bank accounts in other countries, and no safe de­posits."

In 1934 he had traveled to Argentina, and upon his return to the Third Reich reported to Hitler that the president of Argentina had proposed that Germany would get extra orders for its industry if Argentina could sell a considerable quantity of meat to Germany. Hitler was favorably inclined but the German farmers objected, fearing that this would lower the price of good German beef, so the overture was dropped. However, the central reason for this trip was Thyssen's acquiring of South American properties and investments.

Investigation by the American Embassy in Buenos Aires pro­duced the following report, of April 30, 1948:

The holdings of Fritz Thyssen in Argentina may be of interest. The local firm, Thyssen-Lametal Compania Industrial y Mercentil Thys­sen Limitada, formerly importer and manufacturer of rolling mill equipment, rails and structural steel, has a paid-in capital of 5,000,000 pesos, and along with its subsidiaries, namely, "Tungar" S.A., Crefin S.A., Creditos y Financiasciones, T.A.E.M., Speratti Romanelli and Carbonera Buenos Aires S.A., is considered to have assets of approximately 20,000,000 pesos. This firm is controlled by Stahlunion of Dusseldorf, through the Dutch holding company Cehandro of Rotterdam. Information indicates that Cehandro is capitalized at 1,000,000 Reichsmarks, of which Thyssen is alleged to hold the controlling interest.

Files of the local company seized by the junta (alien property custodian) at the time of intervention indicated that the actual shares were held in the name of Theo Urlich, a German of Rotter­dam. The only other property in Argentina in which Fritz Thyssen may be interested are two estancias (ranches), Don Roberto and Don Federico, the values of which are not known and which are alleged to belong to Calamine S.A., a Thyssen holding company.

So we see that Fritz Thyssen had become a one-man, pioneer, flight capital entrepreneur before Martin Bormann instituted his massive thrust to move German assets beyond seizure of the Allied nations in 1944-45. And because he was the first to under­take such a movement without benefit of official certification from the Reichmank and from the economic policy of leader­ship of the Third Reich, he was labeled a traitor for contraven­ing the currency policies of the Nazi state, which were voided by Reichsleiter Bormann in the national interest on the fateful date of August 10, 1944.

An OSS confidential report distributed in London and Wash­ington disclosed not only that Thyssen had established a secret account in a Liechtenstein bank, but that he owned the bank itself. Thyssen controlled the family Pelzer Endowment Fund in Switzerland, originally established with substantial funds by his mother under her maiden name, Pelzer. The fund also had assets in Holland and Belgium. The business generated by this fund and by other Thyssen holding companies was important financially to Bank voor Handel and Rotterdamsche Trustees' Kantoor, due to the great amounts of money that Thyssen was siphoning from companies on two continents into safe havens. In 1937 he moved 1 million Swiss francs to his daughter's ac­count in his Uebersee (overseas) Trust in Liechtenstein. He shifted 300 kilos of gold from the Pelzer fund to his safe deposit vault in a private bank in London, with the knowledge and approval of the Bank of England. He purchased stocks in the following Spanish, Dutch, and American corporations, accord­ing to an Allied investigative report of 1949 in Stuttgart and transmitted to headquarters of the investigative branch at Diissel­dorf.

15,000 shares series

E Compania Hispano-Americana de Electridad­Chade

83,000 shares

Kon. Nederl. Petroleum Maatschappij

17,000

4% Atchison Topeka 1995

10,000

4% Central Pacific 1949

7,000

3% Kansas City Southern 1950

7,000

4% Norfolk & Western 1996

50,000

4% Southern Pacific 1955

To understand the personal financial activities of Fritz Thys­sen, one must know the genesis of his fortune and the ramifica­tions of his family. The founder of the fortune was old August Thyssen, Senior, who died in 1926. He had been divorced in the 1880s, his wife agreeing to accept an annual income. Her share of the family fortune was then transferred to the four children, August, Junior, Heinrich, Fritz, and Hedwig.

August, Jr., died in the 1930s, with no interest in either the German or the foreign holdings of the family, other than his inherited income. Hedwig married a Baron Berg and took her inheritance in cash, likewise disdaining family business affairs. Fritz and brother Heinrich, who became Baron Heinrich Thyssen-Bornemisza, inherited the foreign and German partici­pations held by August, Senior. Hans and Julius Thyssen were nephews of the old man, minor figures in the Thyssen opera­tions. Neither was actively engaged in the business; Fritz ad­ministered their participations.

Thus, the two principal figures of the Thyssen fortune throughout the years preceding and during the Third Reich were Fritz and Heinrich. Neither liked the other, so they agreed to divide their inheritance into two separate spheres of interest, cooperating only when it was necessary. Fritz's circle of interest became the German holdings, Thyssen Gewerkschaft A.G., Thyssen Co. A.G., Pelzer Stiftung (the endowment fund), and Faminta A.G. Heinrich devoted himself largely to holdings outside of Germany, Bank voor Handel en Scheepvaart, Rotter­damsche Trustees' Kantoor, N.V. Handels-en-Transport Maat­schappij "Vulcan," Rotterdam, Press and Walzwerk A.G., August Thyssen Bank.

Heinrich Thyssen became Baron Heinrich Thyssen-Borne­misza when he married into Hungarian nobility. In this way he had acquired Hungarian nationality, which gave him dual na­tionality. He also changed his residence to Switzerland when German pressures became too alarming, and in time acquired Swiss nationality.

Despite the separation of interests and affection, Fritz always retained stock interests in Heinrich's banks and assorted com­panies.

With such an international background in trade and finance, it was natural for Fritz Thyssen to view the tax and other re­strictions of the Third Reich as burdensome, to be circum­vented. According to an investigative study of his fiscal activities of the thirties by British financial experts, signed by H.R. Priestly in Diisseldorf on September 3, 1949, Thyssen's first step in a long dance of tax and currency frauds began when he disposed of his shares in the Dutch Hollandische-Ameri­kanische Investment Corporation. On his instructions Dutch accountants valued the sale at RM 1,250,492.12, and this was transferred to Germany. But the true value amounted to 21 million Dutch guilders, and most of this remained in Holland to be credited to the family Pelzer Endowment Fund by the Bank voor Handel en Scheepvaart, N.V., Rotterdam, the bank founded in 1916 by August, Senior.

It came later to the attention of a pair of German tax officials named Brill and Jansen that Fritz Thyssen and the two Thyssen nephews, Hans and Julius, owed RM 40 million to the German government in back taxes. Payment of these delinquent taxes was not pursued because by this time "the entire assets in Ger­many of Fritz Thyssen had been declared confiscated by the Reich."

The relinquished property consisted of relatively small bank accounts in Deutsche Bank, an estate in Bavaria near Straubing, an estate in Mechlenberg, the house in which he lived near Muelheim, and the crowning jewel of his assets, the steel com­bine. As Thyssen stated in 1945:

"My chief property was my participation in the Thyssen com­pany in Muelheim. Formerly this company owned the works in Muelheim, but these went over to the Vereinigte Stahlwerke, and my company became merely a holding company, without works. Of this company I held 60 percent; the other forty per­cent belonged to my cousins Hans and Julius."

Thyssen added: "My 60 percent was confiscated on behalf of the Prussian government. Under the law originally proclaimed after the burning of the Reichstag, and directed then against communists, my nationality was taken away by the German government and my property confiscated. Under the law, it should have gone to the German state, but Goering, as Prime Minister of Prussia, was eager for it-not only for the property, but for my little art collection, and I believe this was the reason it was confiscated by the Prussian state."

Goering did not keep the securities; he had the art collection. Thyssen's securities were distributed to various individuals, but the majority shares were held by the Prussian state. However, the Thyssen holding company and the mills of Vereinigte Stahlwerke were blended into a vast combine, and the produc­tion of steel continued to roll under private management, al­though the government laid down the directives.

The knowledge that government administrators now pos­sessed of Fritz Thyssen's foreign properties and his activities in camouflaging these assets came to the attention of Bormann, who had succeeded Rudolf Hess. It was October 1941, and Bormann had approved the policy of providing assistance to a few large industrial firms so that they might divert discovery of their overseas assets. The decision was a prelude to the all­encompassing Bormann program of 1944 to establish 750 new firms as safe havens for fleeing German capital. An example of how this camouflage action was initially planned and carried

out is revealed by documents found in the files of the Foreign Exchange Department at Disseldorf by the Joint Special Finan­cial Detachment, U.S. Group Control Council, Control Com­mission for Germany (British Element), Dusseldorf, August 31, 1945.

In 1941, political developments in South America prompted the Vereinigte Stahlwerke to camouflage its Brazilian subsidiary com­pany, Stahlunion Rio. A deal was worked out between the Vereinigte Stahlwerke, the Reich Ministry of Domestic Economy, the Foreign Exchange Department of Dusseldorf, and the German Embassy in Rio, in order to protect the capital, a large accumulation of profits and reserves, and merchandise of the Stahlunion Rio amounting to more than 20 million Milreis. On 23.10.41 the Reich Ministry of Domestic Economy and on 25.10.41 the Foreign Exchange De­partment Dusseldorf approved and authorized the planned trans­actions. Stahlunion Rio was immediately instructed to carry out independently all camouflage transactions. Mail or cable could no longer be considered safe communication.

The basic instructions to Stahlunion were as follows:

1. 1.Cash on hand was to be used for the purchase of securities of German companies and other European companies in countries under German influence. These securities were to be deposited in bank-safes in the name of reliable foreigners or burnt by the German embassy in Rio. In the latter case a list was to be kept and properly safeguarded. This would later permit a reissue of securities.
   

2. 2.All merchandise on hand was to be mortgaged and the proceeds were to be camouflaged as outlined in paragraph 1. Merchandise was also to be disposed of by sale at very low prices to reliable customers and agents who were to sell them for current prices and keep the profits in trust for Stahlunion Ltda.
   

3. 3.Part of the funds was to be used for investments in Brazilian firms or purchase of factories in order to retain and employ the workers and the sales staff.
   

Sufficient quantities of the desired securities were not available on the Brazilian Stock Exchange. This fact caused a change in plans as follows:

1. 1.Brazilian securities, which were prevalent, were to be purchased and deposited in bank-safes. Stahlunion Rio was to keep the keys.
   

2. 2.If seizure or blocking of the safes appeared imminent, securities in the safes were to be removed and substituted by worthless objects.
   

3. 3.Before communications were broken off, the loan of limited amounts to confidential persons was suggested as an additional camouflage measure. Siemens Electro Company Rio was mentioned in this connection.
   

4. 4.A certain Mr. H and his relatives were to be used as trustees for many camouflage transactions. His full name is never mentioned in the records.
   [However, it was later stated that "Mr. H. was Dr. Heida of Rotterdam, a Fritz Thyssen proxy and collaborator who played an important role in Thyssen's foreign transactions," accord­ing to a statement on September 3, 1949, by H.R. Priestly, a .financial investigator in the Control Commission for German-British Element at Dusseldorf.]
   

Supporting documents for this report are in possession of the Devisenstelle Team, Dusseldorf. H.B. Resnik

Although the above report refers to Brazil it is to be expected that similar instructions were given for the Argentine.

Following these camouflage directives, Vereinigte Stahlwerke A.G. established these subsidiaries:

1. 1.Cia. de Mineracao de Ferro e Carvao, Rio
   

2. 2.Cia. Siderurgica Brasileira S.A., Rio
   

3. 3.Syndicate Mineire e Metallurgiee de Brasil, Ltda., Rio
   

4. 4.Soc. de Mineracao Catharinense, Blumenau
   

Stahlunion Export A.G., Dusseldorf, the export arm of Ver­einigte Stahlwerke, A.G., paid Kurt von Dellinghausen, a Ger­man mining engineer employed by Vereinigte Stahlwerke to represent their interests in Brazil, and Dr. Salvatore Pinto, Junior; they had a hand in every subsidiary in Brazil.

Pinto's chief interest, however, was the Companhia de Mineracao de Ferro e Carvao S.A., of which he was co-manager with Dellinghausen and nominally majority shareholder. Both served as proxies for Fritz Thyssen and were the conduits for vast sums of money to the Thyssen interests in Buenos Aires.

Stahlunion Ltda., Vereinigte Stahlwerke A.G.'s chief subsidi­ary in Brazil, was vested by Brazilian authorities in 1942 before the Germans could transfer all shares to nominal Brazilian ownership.

These lessons were observed by Reichsleiter Martin Bormann when he received confidential reports on the Brazilian camou­lage operations from the German Ministry of Economics in Berlin. He determined that when he set up his safe haven flight capital program, he would not duplicate the mistakes of 1941 made by the Ministry of Economics.

In Lugano, Switzerland, meanwhile, Fritz Thyssen was ex­amining his options. There was no future for him in Germany while the war continued, although he had his clandestine ar­rangements. The German underground leaders had talked to him about participation, but although he sympathized he knew their cause would fail. The Nazis had the country by the throat, and would relinquish power only by defeat on the battlefield; such reverses would be a long time coming. In Lugano he had talked on several occasions with Hans Bernd Gisevius, who worked for Hjalmar Schacht, head of the Reichsbank. Gisevius was shortly to leave Schacht and become number one man to Admiral Canaris, head of the Abwehr and a silent force in the Schwarze Kapelle, the underground movement that aspired to capture Hitler or to assassinate him, and then to substitute a government that would sue for peace. Failing to enlist Thyssen, Gisevius became Allen Dulles's pipeline to Admiral Canaris, who had arrived in Berne in 1942 as chief of station for the OSS and President Roosevelt's personal representative for clan­destine operations in Switzerland and on the European conti­nent. Gisevius had a good run as a Dulles agent until uncovered by the Gestapo and obliged to flee to Berne in 1943. After six weeks in hiding, he crossed the Swiss border with false Gestapo credentials.

Thyssen thought about England. His prewar connections gave him entry into the highest circles. This included Winston Chur­chill himself. All of them knew they wouldn't last a week were Germany to overrun the tight little island, whether by war or by treaty, which is why Churchill underplayed the arrival of Rudolf Hess in 1941 as an emissary of peace. Thyssen had handsome bank deposits in London, including the 300 kilos of gold be­longing to the family Pelzer Endowment Fund. There was also his steel subsidiary in Wales, under the direction of Sir William First. Although his British funds were blocked, the knowledge that they were there was comforting. In his deposition of 1945 to Allied investigators, Thyssen told of the visit paid to him in Lugano in March 1940 by Sir William First, who said the Bank of England and the British government wanted him to sur­render the gold in exchange for an equivalent amount in pounds sterling credit. Thyssen agreed to the exchange, after obtaining permission from his eighty-five-year-old mother in Brussels, who had founded the endowment.

Thyssen had good relations with top American government and industrial leaders too; in 1940, when he went to Paris, American Ambassador Drexel Biddle provided the Thyssens with U.S. passports for a proposed journey to Argentina via Spain. In Paris Mrs. Thyssen became ill and could not travel for a time. The Thyssens soon proceeded to Cannes. By May 1940, the Germans had overrun France and they were turned over to the Gestapo. Goering explained to Thyssen later, "The French did not want to have you in France and gave you over to the Gestapo."

In the light of this event, Fritz Thyssen was fortunate to have had a long-time relationship with Martin Bormann, beginning in 1923.

French troops had moved into the Ruhr in that year to grab steel mills and coal mines as reparations, and to destroy the industrial capabilities of Germany. The move was contrary to the wishes of the United States and Britain, which did little more than wring their hands and file diplomatic objections. Fritz Thyssen had organized the Ruhr industrialists into a re­sistance force, which refused to make steel or dig coal for the French.

Bormann, then the youthful district leader of the Mecklen­berg Freikorps Rossbach, a paramilitary organization established to disrupt French military movement in the Ruhr, had carried out a series of daring sabotage exercises by night, while working as an estate manager by day. Hardly more than a boy, he came to the attention of Fritz Thyssen. The two-tiered resistance­Freikorps and corporate-was financed by the industrialists. At a time of raging inflation throughout Germany, the Reichsmark had little value. But Thyssen and his peers in the Ruhr had printed scrip to finance the resistance through workers' wages. The relationship between Thyssen and Bormann was limi led, but when Bormann was released from Leipzig prison after serv­ing a one-year sentence for political assassination of a traitor friendly to France, both became imbued with the doctrines of Adolf Hitler. The Freikorps Rossbach, unlike Thyssen, believed in direct action in the field, not social ostracization. Hitler and the new National Socialist German Workers Party drove at combating communism and bringing financial stability to Ger­many. Martin Bormann joined the NSDAP at this juncture, but not until January 5, 1933, did Thyssen officially join the Nazi Party. The German resistance in the Ruhr succeeded.

As Thyssen and Bormann made their ways into positions of power within the National Socialist Party, Allen W. Dulles observed from the wings. During World War I he had been an espionage agent serving the United States in Switzerland against the German and Austro-Hungarian empires. Between the wars, in the twenties and thirties, he socialized with the elite of Ger­man industry and banking, traveling on international corporate law business for the New York firm of Sullivan and Cromwell, which served German-American business accounts. He grew friendly with Fritz Thyssen, but knew Bormann only casually. The ruler-to-be of Germany's economy was climbing quietly, managing the finances of Adolf Hitler and the Nazi Party. Yet Dulles caught on that, as Hitler was voted into office, Bormann was the one to watch. It is axiomatic that you keep an eye on the number two man-the man who does the work. At a Berlin reception attended by Hitler, Thyssen, and Bormann, Dulles left Thyssen's side to seek out the diligent and inconspicuous Bormann, chatting with him about the future of Germany and Anglo-German-American rapprochement. Bormann ventured, according to a conversation I had with Dulles in 1969, "There is room for the three nations in the world today without war, but the Third Reich must not be checked in its drive for eco­nomic and diplomatic parity. I favor alliance with England and Poland and a particularly close relationship with America, as does the Fuehrer." Dulles remarked that Bormann was not the grubby, uncivilized man he had been led to expect. "He was soft-spoken and direct, but while he talked to you his eyes con­tinued to keep watch on Hitler and those surrounding him. I felt he was a man of strength who might one day best his more colorful rivals in the Nazi hierarchy."

The Thyssens were transferred to Germany on December 2, 1940, and passed two and a half years in a lunatic asylum near Berlin, on the assumption that Thyssen was mad because he had voted against the war. Treatment in the asylum was good, with distinguished prisoners such as the Archduke of Austria paying for their maintenance. Hermann Goering arrived one day to interrogate Thyssen, probing about his assets and testing to see if the industrialist had changed his mind about the war. Goering learned nothing about Thyssen's foreign assets, and was told that he and Hitler were on the wrong course. Goering remarked that they would be invading Russia the following year.

Gestapo examinations were intense and lasted for many weeks, always breaking off at the end of a regular work day. Thyssen said, "My life was never threatened by the Gestapo. I was not submitted to physical torture. One of my interrogators . . . offered his hand, but I refused it. He was quite angry, but did not hit me.

"Another gentleman who questioned me, Abendroth, was very polite, probably because he thought I had helped another gentleman of the same name in Switzerland. The latter's wife was of Jewish origin."

Fritz Thyssen's episodes with the Gestapo never took a nasty turn because Bormann had instructed SS General Mueller to handle Thyssen with care. Bormann was Thyssen's protector for old times' sake, and he admired the man who had given so much aid to the party when it sorely needed it. Also, Bormann felt Thyssen was his ace in the hole if he ever needed a personal pipeline to Allen W. Dulles. Dachau and Buchenwald both received Thyssen, but in both instances Bormann had the Thys­sens quartered in a house outside the main concentration camp areas. Then, when the Third Reich was reeling from the on­slaught of Allied forces, he had them moved south to the Tirol, where they would be set free by advancing American troops. It was the best Bormann could do; he could not free Thyssen, for he was outranked by Goering and Himmler, and Hitler would have been affronted at the release of the man who had disdained him in the late thirties. "Not only did he write insulting letters to me questioning my decisions but he openly consorted with Jews in Dusseldorf," Hitler had complained to Bormann. In 1936, 1937, and 1938 Thyssen had the leading Jewish bankers of Diisseldorf join him each week for luncheon. It rankled the Fuehrer that the meetings were held in the same club where he had been Thyssen's guest speaker in 1932, the occasion that had brought him the support of the Ruhr industrialists. As Thyssen told it:

It is a very funny thing about Hitler's influence at such meetings. I don't actually remember but it is possible that at the close of the speech I cried out "Heil Hitler!" as I have been reported in the New York Times to have done; I think the "Heil Hitler!" salute was used at that time. It was a very successful speech; he persuaded them that he had a lot to offer Germany, that he had a good program for Germany.

He declared that he favored:

1. 1.Restoration of the Hohenzollern in the form of a moderate king­dom like England;
   

2. 2.Alliance with England;
   

3. 3.Alliance with Poland.
   

All this was very reasonable and I believed him. My faith in his words was strengthened by his promise to establish a social order according to the plan of Dr. Klein (of I.G. Farben) and myself, a plan which should realize the ideas of Pope Leo XIII as expressed in the famous encyclical "Rerum novarum." When Hitler had formed his new government everything seemed to be all right. He made an alliance with Poland, he concluded the fleet arrangement with England, he arranged the Concordat with the Pope, he made nonaggression pacts with different countries, and he declared that in the future he would live in peace with France.

But after the burning of the Reichstag Hitler showed more and more of his real face. He began to act against the constitution by dissolving all parties with the exception of his own, he allowed Rosenberg's propaganda against the Catholic Church, he broke the Concordat, and the persecution of the Jews got more and more intense.

In 1936 Thyssen concluded that his influence with Hitler had come to an end. He began to utilize his foreign subsidiaries as collection points for money that never even entered Germany, and within the Third Reich he stonewalled the tax collectors by keeping two sets of books. When the German army took over Holland, suspicious German tax officials searched for records of the Pelzer Endowment Fund in Rotterdam, but the records and files had been destroyed. Under examination by the Gestapo in 1940, Thyssen was vague in his recollections of for­eign assets. The Gestapo held Thyssen for four and a half years. Following his release by American troops in the Tirol, he was equally vague when it came to pinpointing the locations and extent of his funds. Allied examinations stretched from 1945 to 1949, a period when Thyssen was fighting for return of his German holdings, as well as those in Holland and Bel­gium. As late as September 3, 1949, a British government financial investigator complained: Thyssen continuously evades . . . or else gives contradictory re­plies. . . . he seemed to be perfectly in the picture on matters relating to the foundation of the Overseas Trust Company, and the transfer of assets from the Pelzer endowment into that company, being well aware of the fact that assets belonging to his daughter were in question. . . . He refused to give any further information under the flimsy pretext that these were matters which concerned his daughter.

Fritz Thyssen knew by 1949 that he was just about home free. Being stripped of his German nationality by the Third Reich was a plus in the postwar years, when Allied occupation forces were trying to determine the true ownership of securities and other assets that had been seized by the Nazis. He put in claims for all he had owned in Germany, Holland, England, Belgium, Argentina, and the United States, using the fact of being a "stateless person" as sufficient reason for return of the confiscated property. In time, it all flowed back to him.

With everything again in his hands, Fritz Thyssen departed Europe in January 1950. First, he paid a visit to Thyssen A.G., which had undergone a rebirth since the bombings of World War II, when it was 90 percent demolished. But under the management of Dr. Hans-Gunther Sohl, today chairman of the Advisory Board and chief executive of Thyssen A.G., the mills were again producing at capacity. En route to South America, Thyssen stopped off in London to check his British holdings and bank statements. He then proceeded to Buenos Aires.

During the final year of his life, in Argentina, dividing his time between the villa in Buenos Aires and the ranches, one in Argentina, the other in Paraguay, Fritz Thyssen completed establishing the control that would assure everlasting family

prosperity through Thyssen A.G. Elder grandson Count Federico Zichy-Thyssen of Buenos Aires was placed on the board of this German steel trust. When the count votes at board meetings in Diisseldorf three or four times a year, he votes for the entire Thyssen family of South America and Europe.

Count Federico Zichy-Thyssen, who has a younger brother Count Claudio Zichy-Thyssen, represents the largest single shareholding group, with 25 percent of the stock of Thyssen A.G. The remainder of the stock is diffused into Deutsche Bank in Frankfurt and Buenos Aires, which holds shares for many indi­viduals on both continents, including those representing the Bormann group.

Countess Zichy resides permanently in West Germany. Her Hungarian husband had supervised the turning of thousands of ranchland acres into productive farm and cattle land, following their flight from Europe in 1940. These ranches in Argentina and Paraguay and the villa in Buenos Aires are occupied by her two sons and their families, who, it is said, "represent the old wealth of Buenos Aires."

Fritz would have liked that.

But if the heirs of the old German elite are moving away from industry, the opposite is the case with the hard-driving professionals who manage the destinies of the giant firms that continue to bring prestige and profit to the Federal Republic, who are the engineers of the German economic leadership.

I.G. Farben, the Third Reich's most substantial foreign in­come producer, was back in business 60 days after the war in Europe ended. But in 1947 the U.S. Military Government an­nounced that I.G. would be dissolved into 47 smaller corpora­tions. Then American and British foreign policy took a different turn: the cold war was on and both Washington and London wanted to halt any Farben breakup. By 1950 emphasis was on a strong West Germany and industrial recovery, and it was finally decided that the I.G. plants should be reorganized into three companies: BASF (Badische Anilin and Soda-Fabrik), Bayer (Farbenfabriken vorm. Friedrich Bayer & Co.), and Hoechst (Farbwerke vorm. Meister Lucius and Bruening). Four smaller concerns under the Farben mantle-Agfa, Cassella, Kalle, and Huels-were also in contention. Under pressure from Washington and London, and from the shareholders of the old Farben stockholders protective committee, who lobbied for their interests in Bonn, the Allied High Commission agreed to a plan of 159 I.G. plants' being formed into the Big Three (BASF, Bayer, and Hoechst). Agfa also went into the Bayer structure and Cassella and Huels went their way as independents. In October 1954, treaties were signed in Paris ending the occupa­tion of West Germany. In 1955, when the Federal Republic of Germany became a sovereign government, the shareholders of the new companies held their first annual meeting. Most were former I.G. stockholders, and one of the first motions passed was to change the Allied bylaws, mandating changing from open stock ownership back to the secrecy of bearer shares. There was relief in Switzerland and in South America, where financial secrecy is a way of life; it is quite necessary to the continuation of the Bormann organization.

The Big Three are today the largest chemical companies in the world. Each is now larger than I.G. itself in its heyday, and the growth potential seems unlimited. The chairman of Bayer A.G. has set a goal of $1 billion in the U.S. market for Bayer A.G.'s subsidiary in America, Mobay Chemical Company. The Allied Liquidation Commission had separated the big banks from their branches. But when occupation ended the banks coalesced again and Deutsche Bank, Commerzbank, and Dresdner Bank continue their leadership.