Ben Aris in Berlin and Duncan Campbell in Washington
Saturday 25 September 2004 23.59 BST Last modified on Wednesday 1 October 2014 09.38 BST
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George Bush's grandfather, the late US senator Prescott Bush, was a director and shareholder of companies that profited from their involvement with the financial backers of Nazi Germany.
The Guardian has obtained confirmation from newly discovered files in the US National Archives that a firm of which Prescott Bush was a director was involved with the financial architects of Nazism.
His business dealings, which continued until his company's assets were seized in 1942 under the Trading with the Enemy Act, has led more than 60 years later to a civil action for damages being brought in Germany against the Bush family by two former slave labourers at Auschwitz and to a hum of pre-election controversy.
The evidence has also prompted one former US Nazi war crimes prosecutor to argue that the late senator's action should have been grounds for prosecution for giving aid and comfort to the enemy.
The debate over Prescott Bush's behaviour has been bubbling under the surface for some time. There has been a steady internet chatter about the "Bush/Nazi" connection, much of it inaccurate and unfair. But the new documents, many of which were only declassified last year, show that even after America had entered the war and when there was already significant information about the Nazis' plans and policies, he worked for and profited from companies closely involved with the very German businesses that financed Hitler's rise to power. It has also been suggested that the money he made from these dealings helped to establish the Bush family fortune and set up its political dynasty.
Remarkably, little of Bush's dealings with Germany has received public scrutiny, partly because of the secret status of the documentation involving him. But now the multibillion dollar legal action for damages by two Holocaust survivors against the Bush family, and the imminent publication of three books on the subject are threatening to make Prescott Bush's business history an uncomfortable issue for his grandson, George W, as he seeks re-election.
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While there is no suggestion that Prescott Bush was sympathetic to the Nazi cause, the documents reveal that the firm he worked for, Brown Brothers Harriman (BBH), acted as a US base for the German industrialist, Fritz Thyssen, who helped finance Hitler in the 1930s before falling out with him at the end of the decade. The Guardian has seen evidence that shows Bush was the director of the New York-based Union Banking Corporation (UBC) that represented Thyssen's US interests and he continued to work for the bank after America entered the war.
Tantalising
Bush was also on the board of at least one of the companies that formed part of a multinational network of front companies to allow Thyssen to move assets around the world.
Thyssen owned the largest steel and coal company in Germany and grew rich from Hitler's efforts to re-arm between the two world wars. One of the pillars in Thyssen's international corporate web, UBC, worked exclusively for, and was owned by, a Thyssen-controlled bank in the Netherlands. More tantalising are Bush's links to the Consolidated Silesian Steel Company (CSSC), based in mineral rich Silesia on the German-Polish border. During the war, the company made use of Nazi slave labour from the concentration camps, including Auschwitz. The ownership of CSSC changed hands several times in the 1930s, but documents from the US National Archive declassified last year link Bush to CSSC, although it is not clear if he and UBC were still involved in the company when Thyssen's American assets were seized in 1942.
Three sets of archives spell out Prescott Bush's involvement. All three are readily available, thanks to the efficient US archive system and a helpful and dedicated staff at both the Library of Congress in Washington and the National Archives at the University of Maryland.
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The first set of files, the Harriman papers in the Library of Congress, show that Prescott Bush was a director and shareholder of a number of companies involved with Thyssen.
The second set of papers, which are in the National Archives, are contained in vesting order number 248 which records the seizure of the company assets. What these files show is that on October 20 1942 the alien property custodian seized the assets of the UBC, of which Prescott Bush was a director. Having gone through the books of the bank, further seizures were made against two affiliates, the Holland-American Trading Corporation and the Seamless Steel Equipment Corporation. By November, the Silesian-American Company, another of Prescott Bush's ventures, had also been seized.
The third set of documents, also at the National Archives, are contained in the files on IG Farben, who was prosecuted for war crimes.
A report issued by the Office of Alien Property Custodian in 1942 stated of the companies that "since 1939, these (steel and mining) properties have been in possession of and have been operated by the German government and have undoubtedly been of considerable assistance to that country's war effort".
Prescott Bush, a 6ft 4in charmer with a rich singing voice, was the founder of the Bush political dynasty and was once considered a potential presidential candidate himself. Like his son, George, and grandson, George W, he went to Yale where he was, again like his descendants, a member of the secretive and influential Skull and Bones student society. He was an artillery captain in the first world war and married Dorothy Walker, the daughter of George Herbert Walker, in 1921.
In 1924, his father-in-law, a well-known St Louis investment banker, helped set him up in business in New York with Averill Harriman, the wealthy son of railroad magnate E H Harriman in New York, who had gone into banking.
One of the first jobs Walker gave Bush was to manage UBC. Bush was a founding member of the bank and the incorporation documents, which list him as one of seven directors, show he owned one share in UBC worth $125.
The bank was set up by Harriman and Bush's father-in-law to provide a US bank for the Thyssens, Germany's most powerful industrial family.
August Thyssen, the founder of the dynasty had been a major contributor to Germany's first world war effort and in the 1920s, he and his sons Fritz and Heinrich established a network of overseas banks and companies so their assets and money could be whisked offshore if threatened again.
By the time Fritz Thyssen inherited the business empire in 1926, Germany's economic recovery was faltering. After hearing Adolf Hitler speak, Thyssen became mesmerised by the young firebrand. He joined the Nazi party in December 1931 and admits backing Hitler in his autobiography, I Paid Hitler, when the National Socialists were still a radical fringe party. He stepped in several times to bail out the struggling party: in 1928 Thyssen had bought the Barlow Palace on Briennerstrasse, in Munich, which Hitler converted into the Brown House, the headquarters of the Nazi party. The money came from another Thyssen overseas institution, the Bank voor Handel en Scheepvarrt in Rotterdam.
By the late 1930s, Brown Brothers Harriman, which claimed to be the world's largest private investment bank, and UBC had bought and shipped millions of dollars of gold, fuel, steel, coal and US treasury bonds to Germany, both feeding and financing Hitler's build-up to war.
Between 1931 and 1933 UBC bought more than $8m worth of gold, of which $3m was shipped abroad. According to documents seen by the Guardian, after UBC was set up it transferred $2m to BBH accounts and between 1924 and 1940 the assets of UBC hovered around $3m, dropping to $1m only on a few occasions.
Read more > http://www.theguardian.com/world/2004/sep/25/usa.secondworldwar
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One more time.
By Gregory D L Morris
Although it may seem shocking to watch the 112th Congress, there was a time when national leaders were swift and decisive in getting things done. In November 1910, in the space of less than two weeks, a group of government and business leaders fashioned a powerful new financial system that has survived a century, two world wars, a Great Depression and many recessions.
Of course, the Jekyll Island conference, which met that month, was dodgy even by the standards of the Gilded Age: a self-selected handful of plutocrats secretly meeting at a private resort island to draw up a new framework for the nation’s banking system. Add in the gnarly live oaks and dripping Spanish moss of coastal Georgia, and the baronial becomes baroque.
The group's original plan wasn't ratified by Congress, but one very much like it was adopted and became the basis of the Federal Reserve system that remains in place today.
At the time, the Panic of 1907 was still fresh in everyone’s mind. J.P. Morgan had resolved that panic by locking the heads of major banks in his library overnight, and strong-arming them into a deal to provide sufficient liquidity to end the runs on banks and brokerages.
No one was happy with that expediency, and in 1908 Congress passed the Aldrich-Vreeland Act, which formed the National Monetary Commission. Senator Nelson Aldrich, a Rhode Island Republican and sponsor of the act, embarked on a fact-finding mission to Europe, where he met with government ministers and bankers.
The panic had shown that the existing financial system, founded on government bonds, was brittle and ponderous. But, although voters were eager for a more robust and responsive system, there was no support at the time for a central bank either from the public or from industrialists. Both were suspicious of such government interference.
The Jekyll Island collaborators knew that public reports of their meeting would scupper their plans. The idea of senior officials from the Treasury, Congress, major banks and brokerages (along with one foreign national) slipping off to design a new world order has struck generations of Americans as distasteful at best and undemocratic at worst -- and would have been similarly received at the time. So the meeting of the minds was planned under the ruse of a gentlemen’s duck-hunting expedition.
Aldrich, an archetype of his age, was a personal friend of Morgan, and Aldrich's daughter was married to John D. Rockefeller Jr. He found in the European central banks a useful model. Although the financial system in the U.S. was functional enough to stoke the engines of a growing industrial economy, it was a classic example of the persistence of interim solutions. The models Aldrich found in Europe were more efficient and effective.
What he lacked was a way to graft those characteristics onto the American economy without retarding it. Hence the duck hunt.
Aldrich invited men he knew and trusted, or at least men of influence who he felt could work together. They included Abram Piatt Andrew, assistant secretary of the Treasury; Henry P. Davison, a business partner of Morgan's; Charles D. Norton, president of the First National Bank of New York; Benjamin Strong, another Morgan friend and the head of Bankers Trust; Frank A. Vanderlip, president of the National City Bank; and Paul M. Warburg, a partner in Kuhn, Loeb & Co. and a German citizen.
The men made their way to the island by private railway car and ferry.
