Book Review: IBM and the Holocaust

Review by Dr. Robert Urekew

A review of:
Edwin Black. IBM and the Holocaust: The Strategic Alliance between Nazi Germany and America’s Most Powerful Corporation (New York: Crown Publishers, 2001) 520 p.


This book began with a tour of the United States Holocaust Memorial Museum in 1993. The first exhibit was a Hollerith punch-card sorting machine with an IBM identification plate. The author, Edwin Black, leading his Holocaust survivor parents on a tour of the Museum, resolved to find out why that machine was there. How, he asks, did the Nazi identify his parents? After an exhaustive study, he concludes that IBM made the process of identifying Jews easier and more efficient by means of the technology it provided for the Nazi regime.

This is a shocking book. It goes against the grain of all that is dear to naive images of corporate America. Did IBM really know what it was doing? Is this book objective? Is its research accurate? The book was obviously not welcome at IBM. The author testifies that the corporation placed obstacles to his research. Why?

It is common knowledge that the inmates of the concentration camps at Auschwitz were tattooed with an identification number on their forearm. What is not so widely known is that these numbers corresponded to an IBM punch-card system. The machines used in the camps to identify and track prisoners and forced laborers were designed by IBM staffers specifically for that purpose.

Black gives an unflattering history of Thomas J. Watson and IBM, and clearly traces the corporation’s takeover of the German competitor Dehomag, an acronym for Deutsche Hollerith Maschinen GmbH (Gesellschaft mit beschr?nkter Haftung, or Firm with limited liability). Nazi Germany would become second only to the United States as IBM’s best customer.

One of the first challenges of the new Nazi government was the rapid and accurate identification of the Jews. IBM, “the solutions people”, stepped forward to provide the means. Black shows how Watson closely supervised this operation, not wanting any mistakes in this prosperous relationship, even though he could not have been unaware of the New York Times’ continual reporting of Hitler’s intentions regarding the Jews. Watson was a friend of Nazi Germany, and traveled there frequently in the 30’s.

IBM Germany helped make the German war machine most efficient. The armed forces, the railroads and war production departments were automated by the IBM punch-cards and sorting machines. IBM New York owned 90 % of the stock of Dehomag, and thus clearly controlled the operations in Germany.

IBM flourished because of Watson’s insistence on the maxim: “Know your customers, anticipate their needs.” Watson applied this guideline to his relations with Nazi Germany. He went to Germany in 1935 to celebrate the 25th anniversary of Dehomag. In recognition of Watson’s value to the Third Reich, Adolf Hitler created a special medal, the Merit Cross of the German Eagle with Star, and bestowed it on Thomas Watson. It was the highest honor that could be given to a non-German. Watson was the president of the International Chamber of Commerce. He chose Berlin as the site for the 1937 meeting of the ICC. It was given by Hitler to Watson, partly in gratitude for his selection of Germany, which had become more and more isolated because of its racial and militaristic policies, as the venue for this prestigious world trade conference. He was clearly a friend of Nazi Germany.

In a telegram to Hitler, Watson thanked him for the medal, and promised to do everything in his power to further the best of relationships between America and Germany. It was, after all, in both of their best interests.

With the advent of war, Watson directed Dehomag though agents in Switzerland. The technology of IBM was exported to all the countries invaded by Germany. The Jews everywhere in Europe were poised to be identified, counted, and eliminated, thanks to the technology of IBM.

Black displays and documents the contradictions between what Watson said and what he actually did. Outwardly, he was a proponent of peace, and constantly repeated his mantra: “World peace through world trade.” At the same time, he was revolutionizing warfare for the Third Reich, deploying his cards and machine to promote efficiency in all aspects of the military, from troop dispositions to armaments production. IBM, insists Black, brought modern warfare into the information age.

With Black’s documentation, it appears to be an undeniable fact that IBM, after the outbreak of hostilities, knew where each of its machines were operating in Germany and the conquered countries, and what kind of revenues it could expect from each machine. War was just another financial opportunity for Watson and IBM. Watson did not publicly condemn Hitler or Germany for its aggression. There were so many connections between Germany and IBM that Edgar G. Hoover of the Federal Bureau of Investigation felt compelled to investigate these ties. When faced with this kind of pressure, in 1940 Watson reluctantly returned his medal to Hitler. This was perceived as an insult, and, in Black’s words, “all hell broke loose” in Dehomag. The German managers of IBM wished to sever ties with IBM-New York. Watson fought vigorously to maintain control, using German corporate law to his advantage. The fight was bitter, precisely because IBM’s technology was the centerpiece of the automation of the German war effort and the operations of the Nazi party. Germany had become dependent upon IBM New York’s vast knowledge, technology and financial support. It would have taken years for Germany to wean itself away from IBM’s systems, and Watson knew this very well.

This is a critical chapter in the book. Most readers will probably approach this book with the assumption that IBM’s operations in Germany at the outbreak of the War were nationalized by the totalitarian Nazi government. Watson was not about to let this happen. He struggled to maintain control using every means available to him, including his powerful political connections. Watson was acutely aware of the economic value of his investment in the Third Reich. Even if America entered the war against Germany, which he fully expected, Watson so arranged the power structures of the corporation so that IBM New York would remain in control of its German “enterprise.”

Although readers will struggle with Black’s panoply of documentation, it becomes clear that IBM was so deeply entrenched in Germany that its biggest fear was not being dislodged from the Axis powers, but rather that its profits might be diminished.

Eventually, American law would prohibit any financial transaction with Nazi Germany, without special permission of the Treasury Department. Watson and IBM-New York were faced with a challenge. It was not patriotism or loyalty or concerns about genocide. The challenge was how to get around this restriction on income derived from commerce with the Third Reich. Here Black documents with great detail the intrigues Watson employed to evade these restrictions. More and more, it becomes evident that the main watchword of the IBM was “Profit at any Price.” Milton Friedman is famous for his standard dictum that the only social responsibility of a corporation is to maximize profits. Friedman however, adds the proviso that this must be accomplished without fraud or deception. IBM apparently did not recognize that restriction.

In spite of Watson’s enormous popularity in the United States, the IBM corporation came under the scrutiny of the “Economic Warfare Sector” of the Department of Justice. This organization investigated and exposed American firms which did business with Nazi Germany during the War. By means of Watson’s political connections and outright deceptions, Black shows how IBM evaded any of the sanctions that were applied to other American corporations accused of profiting from and abetting the German war effort.

It was common knowledge throughout the world that the Nazi regime was bent on genocide. The Allies declared at the end of 1942 that there would be “war crimes” trials for those who had cooperated with the Nazis and their goals of domination and extermination. IBM ignored this warning. Its activities were never concerned with patriotism or antisemitism. “It was always about the money,” insists Black.

As soon as WWII ended in Europe, IBM rushed in to recover its leased machines and its bank accounts. These machines and accounts were scattered everywhere, from Belgium to Bulgaria. During the war, Black shows that Watson’s prime directive to his IBM subsidiaries in Europe was, in effect, “Don’t ask; don’t tell.” He did not wish to be officially informed about the uses of his machines, nor did he wish to be approached for approval of any use. In this way, he insulated himself and IBM-New York from the grim applications of his data processing technology. In spite of this directive, and perhaps because of it, it was business as usual for IBM in Europe during the war.

The occupying forces realized that IBM technology was essential to the Third Reich. They acknowledged that the punch-card machines and their data “are of utmost importance as they are the means by which the Germans controlled and shifted manpower.” The Allies would use these machines and data in order to make their occupation more efficient. Because they were so useful, these IBM machines were not seen by the occupying powers as evidence of crimes against humanity, but rather as essential components of an effective occupation and the implementation of the Marshall Plan. In this way, any accusation of complicity in war crimes against the IBM corporation was quietly deflected. IBM evaded any hint of responsibility for wartime reparations.

The evidence for all this is, of course, circumstantial. There is no smoking gun. Nevertheless, Edwin Black has amassed a formidable mountain of coherent evidence that argues convincingly for IBM’s complicity in the Holocaust. This book will be a case study in corporate ethics for years to come.

Over 16 million people have visited the Holocaust Museum and seen the IBM machine there. Surely some have raised the question: How could this prestigious corporation possibly be linked to such a heinous stain on human history? With empirical evidence, Edwin Black has supplied the answer. IBM and the Holocaust makes an empirical statement. Like all empirical statements, it has the qualities of verifiability and falsifiability. Edwin Black has made his case. It would seem that the burden of proof, in the form of any attempt at deniability, now lies with IBM.

Dr. Robert Urekew is a lecturer of business ethics at the University of Louisville.