To this day, Thomas J. Watson stalks the halls of IBM. For better and worse, the legendary founder of one of the worlds preeminent corporations still casts a formidable shadow across the decades. If the company has a personality, it is Watsons. From his celebrated humanistic treatment of employees to his obsessive salesmanship and his remorseless competitiveness, Watson put his personal stamp on every aspect of his organization.
If you work for IBM, you will be told how Watson created an extended family of employees, fiercely loyal to their leader; how he exhorted his employees to think and compensated them generously when they did. You will be told of many splendid accomplishments. The shameful ones will be omitted.
You will not be told, for example, that prior to founding IBM, Thomas Watson was convicted of criminal conspiracy to restrain trade and construct a monopoly. You will not be told that he built his European operations by catering to the malevolent ambitions of Nazi Germany before and during World War II. Nor will you be told that Hitler himself bestowed a medal on Mr. Watson (reluctantly returned four years later). No. For this information, you will have to suffer the work of Edwin Black.
It wont be easy. Reading IBM and the Holocaust: The Strategic Alliance between Nazi Germany and Americas Most Powerful Corporation (Edwin Black, Crown, 2001) was difficult and highly distressing. I preferred not to believe that, as Black concludes, The dawn of the Information Age began at the sunset of human decency. But there is much to be learned from this sad history, if only so that it may not be repeated.
The question that haunted Black was how did the Nazis always know? How could they identify and locate 6 million people spread across 20 nations? Granted, many Jews escaped; others were betrayed by frightened or vindictive neighbors; still others lived in enclaves, making them easy targets. But millions of Jews had no single identifying feature. Many had seamlessly integrated into the larger society. They lived in impossibly large cities and remote villages, yet the Nazis found them with a staggering degree of accuracy. Sorting the population of Europe to identify Jews, defectives, and undesirablesto catalog their belongings, skills, language, ancestry, and childrenwas a task of monumental complexity. Hitler could not hope to accomplish it manually with any degree of speed or accuracy. It required computers, which did not yet exist. But computing power did.
Herman Holleriths punched card tabulating machines were the computers of their day. Originally designed as a census-gathering apparatus, the Hollerith was IBMs flagship
product, able to revolutionize counting and tracking operations and provide unprecedented sorting, cross-indexing, and tabulation capabilities. The fascists would use the power of this census technology to unearth Jews.
Watson traveled frequently to Germany in the 1930s and could not have failed to map the political landscape. It was no secret; Germany was preparing for war. The Nazis intended to dominate the continent and spoke openly of ridding Europe of its Jewry. Back home in New York, newspaper accounts enumerated a growing litany of injustices and atrocities, and a concerned Jewish community voiced anger and outrage over Nazi policies and practices. But Watson had a twisted admiration for fascism. On his piano rested an autographed picture of Mussolini, and years after Hitler came to power, Watson wrote a letter to the Reich Economics Minister expressing sympathetic understanding to the German people and their aims under the leadership of Adolf Hitler, whom he held in highest esteem.
Besides, IBMs German subsidiary, DEHOMAG, was making money. Germany was IBMs biggest overseas market and its industries were already largely managed using leased equipment from IBM. Hundreds of punched card readers, sorters, tabulators, verifiers, multipliers, and printers underpinned Germanys desire for industrial rearmament. IBM was also the sole-source supplier of punch cards, billions of which were needed to propel economic and military mobilization.
Watson saw growth potential. Just after Hitler came to power in 1933, IBM invested $1 million to expand its German manufacturing facilities. Watson was not disappointed. DEHOMAG finished the year at 237 percent of quota, outpacing all IBM foreign operations combined. In a speech attended by IBM and Nazi representatives, Willy Heidinger, a fervid Nazi who ran IBMs German operations, proclaimed DEHOMAGs enthusiastic support for gathering race statistics so that our nations physician (Hitler) can take corrective procedures.
Dismissing critics, Watson preached world peace through world trade, a mantra frequently repeated today to absolve those trading with repressive and murderous regimes. Unjust criticism of business is a trade barrier, Watson railed. Unjust criticism of government is another trade barrier.
All Watson was saying was give trade a chance, so in 1937, as president of the International Chamber of Commerce, he chose Berlin as the host site for the organizations annual meeting. There, during Nazi-sponsored festivities, Hitler awarded Watson the highest medal conferred on a non-German, the Merit Cross of the German Eagle with Stars. It was, Black asserts, created specifically for Watson, to honor foreign nationals who made themselves deserving of the German Reich.
What made Watson particularly deserving was not only his support of German industry, but also his role in enabling authorities to conduct the massive census efforts that would ultimately seal the fate of millions of people. The personal history of a continent was being recorded on punch cards. Card readers and sorting machines were used to identify and separate Jews from Aryans. The sick and frail were coded as defective and subjected to forced sterilization. The physically able were organized to perform slave labor based on work and language skills. The punch card, says Black, became a 19th century bar code for human beings.
Once the Jews were identified, they were systematically stripped of their professional standing and their assets, rounded up, and forced to live in ghettos. Eventually, they were deported and either worked to death or sent to concentration camps for immediate extermination.
The deadly irony, a contradiction so visible it could only be obscured by profit blindness, was that while Watson publicly preached peace through trade, he was helping the Nazis organize war and systematic annihilation. Still, Watson was reluctant to take a public stand against Hitler. His hand was finally forced after the infamous Kristallnacht, when Jewish homes, businesses, and synagogues were premeditatedly looted, smashed, and torched, and Jews were savagely beaten, jailed, or dispatched to concentration camps.
But all he could muster in response was a letter to Hitler urging him to use The Golden Rule with minorities. The letter, Black documents, was misaddressed.
Only after Hitler had invaded half a dozen nations, and the FBI was actively investigating Nazi sympathizers at IBM, did Watson finally return Hitlers medal with great public fanfare. But business with the Reich continued unabated; Watson simply adopted a dont-ask-dont-tell policy toward his European subsidiaries. In response to a Roosevelt Administration decree that financial transactions with the Reich could not occur without concurrence from the U.S. Treasury Department, Watson informed his European affiliates that, In view of world conditions, we cannot participate in the affairs of our companies in various countries as we did in normal times. Therefore you are advised that you will have to make your own decisions and not call on us for any advice or assistance until further notice. Nothing changed, however. European operations were henceforth managed through IBMs Geneva offices.
IBM, Black documents, paced Hitlers advance, placing Hollerith machines in Germany, Poland, Czechoslovakia, France, Belgium, Norway, Holland, Italy, and Yugoslavia. There was, Black asserts, nowhere IBM would not trade and no nation from which it did not collect funds. Every machine was leased and therefore regularly maintained by IBM. European salesmen, engineers, and managers came to New York for training. As Black notes, IBM prided itself on knowing its customers, anticipating their needs, and providing appropriate solutions. Each Hollerith system was custom-designed; IBM engineers fully understood what every column on every punch card represented, even if they did not know how the cards would ultimately be used .
Among other things, punch cards were used to schedule trains that carried millions to their death with Swiss precision. Cards processed military orders and tracked troop movement, materials, and even the number and location of horses and cattle. But the cards most devastating use was tracking people through many stages of cruelty to their final destination, which was also coded. Concentration camps, too, used Holleriths. Auschwitz was coded 001; Buchenwald was designated 002; Dachau was 003. One punch card per person, one small hole to decide your fate.
Certainly IBM did not consciously send Jews to concentration camps, but it enabled the Nazis to locate and transport them more efficiently. IBM didnt cause the Holocaust, but its technology helped the Nazis manage it. Nothing personal, just business.
It was left to Edwin Black to shine a light on the dark side of providing enabling technology with no accountability for its use. For its part, IBM expressed concern, if not remorse. History is written by the victors, and IBM appears content to have become the object of its own mythology.
The degree of denial and rationalization that the company exhibited during the war years can only be explained by a depth of avarice and self-absorption so profound that it justified holding corporate interests above national and even human interests. IBM, says Black, was self-gripped by a special amoral corporate mantra: if it can be done it should be done.
The question, as relevant today as it was 60 years ago, is this: Who wont corporations sell to? Drug cartels, arms dealers, sociopathic regimes? Do corporations set boundaries, or only quotas? Historys answer is that the market cannot be trusted to be the final arbiter of human conduct: It has no conscience.