Sept. 25


USA:

How Bush's grandfather helped Hitler's rise to power

Rumours of a link between the US first family and the Nazi war machine have
circulated for decades. Now the Guardian can reveal how repercussions of
events that culminated in action under the Trading with the Enemy Act are
still being felt by today's president


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.

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.

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.

In 1941, Thyssen fled Germany after falling out with Hitler but he was
captured in France and detained for the remainder of the war.

There was nothing illegal in doing business with the Thyssens throughout the
1930s and many of America's best-known business names invested heavily in
the German economic recovery. However, everything changed after Germany
invaded Poland in 1939. Even then it could be argued that BBH was within its
rights continuing business relations with the Thyssens until the end of 1941
as the US was still technically neutral until the attack on Pearl Harbor.
The trouble started on July 30 1942 when the New York Herald-Tribune ran an
article entitled "Hitler's Angel Has $3m in US Bank". UBC's huge gold
purchases had raised suspicions that the bank was in fact a "secret nest
egg" hidden in New York for Thyssen and other Nazi bigwigs. The Alien
Property Commission (APC) launched an investigation.

There is no dispute over the fact that the US government seized a string of
assets controlled by BBH - including UBC and SAC - in the autumn of 1942
under the Trading with the Enemy act. What is in dispute is if Harriman,
Walker and Bush did more than own these companies on paper.

Erwin May, a treasury attache and officer for the department of
investigation in the APC, was assigned to look into UBC's business. The
first fact to emerge was that Roland Harriman, Prescott Bush and the other
directors didn't actually own their shares in UBC but merely held them on
behalf of Bank voor Handel. Strangely, no one seemed to know who owned the
Rotterdam-based bank, including UBC's president.

May wrote in his report of August 16 1941: "Union Banking Corporation,
incorporated August 4 1924, is wholly owned by the Bank voor Handel en
Scheepvaart N.V of Rotterdam, the Netherlands. My investigation has produced
no evidence as to the ownership of the Dutch bank. Mr Cornelis [sic]
Lievense, president of UBC, claims no knowledge as to the ownership of the
Bank voor Handel but believes it possible that Baron Heinrich Thyssen,
brother of Fritz Thyssen, may own a substantial interest."

May cleared the bank of holding a golden nest egg for the Nazi leaders but
went on to describe a network of companies spreading out from UBC across
Europe, America and Canada, and how money from voor Handel travelled to
these companies through UBC.

By September May had traced the origins of the non-American board members
and found that Dutchman HJ Kouwenhoven - who met with Harriman in 1924 to
set up UBC - had several other jobs: in addition to being the managing
director of voor Handel he was also the director of the August Thyssen bank
in Berlin and a director of Fritz Thyssen's Union Steel Works, the holding
company that controlled Thyssen's steel and coal mine empire in Germany.

Within a few weeks, Homer Jones, the chief of the APC investigation and
research division sent a memo to the executive committee of APC recommending
the US government vest UBC and its assets. Jones named the directors of the
bank in the memo, including Prescott Bush's name, and wrote: "Said stock is
held by the above named individuals, however, solely as nominees for the
Bank voor Handel, Rotterdam, Holland, which is owned by one or more of the
Thyssen family, nationals of Germany and Hungary. The 4,000 shares
hereinbefore set out are therefore beneficially owned and help for the
interests of enemy nationals, and are vestible by the APC," according to the
memo from the National Archives seen by the Guardian.

Red-handed


Jones recommended that the assets be liquidated for the benefit of the
government, but instead UBC was maintained intact and eventually returned to
the American shareholders after the war. Some claim that Bush sold his share
in UBC after the war for $1.5m - a huge amount of money at the time - but
there is no documentary evidence to support this claim. No further action
was ever taken nor was the investigation continued, despite the fact UBC was
caught red-handed operating a American shell company for the Thyssen family
eight months after America had entered the war and that this was the bank
that had partly financed Hitler's rise to power.

The most tantalising part of the story remains shrouded in mystery: the
connection, if any, between Prescott Bush, Thyssen, Consolidated Silesian
Steel Company (CSSC) and Auschwitz.

Thyssen's partner in United Steel Works, which had coal mines and steel
plants across the region, was Friedrich Flick, another steel magnate who
also owned part of IG Farben, the powerful German chemical company.

Flick's plants in Poland made heavy use of slave labour from the
concentration camps in Poland. According to a New York Times article
published in March 18 1934 Flick owned two-thirds of CSSC while "American
interests" held the rest.

The US National Archive documents show that BBH's involvement with CSSC was
more than simply holding the shares in the mid-1930s. Bush's friend and
fellow "bonesman" Knight Woolley, another partner at BBH, wrote to Averill
Harriman in January 1933 warning of problems with CSSC after the Poles
started their drive to nationalise the plant. "The Consolidated Silesian
Steel Company situation has become increasingly complicated, and I have
accordingly brought in Sullivan and Cromwell, in order to be sure that our
interests are protected," wrote Knight. "After studying the situation Foster
Dulles is insisting that their man in Berlin get into the picture and obtain
the information which the directors here should have. You will recall that
Foster is a director and he is particularly anxious to be certain that there
is no liability attaching to the American directors."

But the ownership of the CSSC between 1939 when the Germans invaded Poland
and 1942 when the US government vested UBC and SAC is not clear.

"SAC held coal mines and definitely owned CSSC between 1934 and 1935, but
when SAC was vested there was no trace of CSSC. All concrete evidence of its
ownership disappears after 1935 and there are only a few traces in 1938 and
1939," says Eva Schweitzer, the journalist and author whose book, America
and the Holocaust, is published next month.

Silesia was quickly made part of the German Reich after the invasion, but
while Polish factories were seized by the Nazis, those belonging to the
still neutral Americans (and some other nationals) were treated more
carefully as Hitler was still hoping to persuade the US to at least sit out
the war as a neutral country. Schweitzer says American interests were dealt
with on a case-by-case basis. The Nazis bought some out, but not others.

The two Holocaust survivors suing the US government and the Bush family for
a total of $40bn in compensation claim both materially benefited from
Auschwitz slave labour during the second world war.

Kurt Julius Goldstein, 87, and Peter Gingold, 85, began a class action in
America in 2001, but the case was thrown out by Judge Rosemary Collier on
the grounds that the government cannot be held liable under the principle of
"state sovereignty".

Jan Lissmann, one of the lawyers for the survivors, said: "President Bush
withdrew President Bill Clinton's signature from the treaty [that founded
the court] not only to protect Americans, but also to protect himself and
his family."

Lissmann argues that genocide-related cases are covered by international
law, which does hold governments accountable for their actions. He claims
the ruling was invalid as no hearing took place.

In their claims, Mr Goldstein and Mr Gingold, honorary chairman of the
League of Anti-fascists, suggest the Americans were aware of what was
happening at Auschwitz and should have bombed the camp.

The lawyers also filed a motion in The Hague asking for an opinion on
whether state sovereignty is a valid reason for refusing to hear their case.
A ruling is expected within a month.

The petition to The Hague states: "From April 1944 on, the American Air
Force could have destroyed the camp with air raids, as well as the railway
bridges and railway lines from Hungary to Auschwitz. The murder of about
400,000 Hungarian Holocaust victims could have been prevented."

The case is built around a January 22 1944 executive order signed by
President Franklin Roosevelt calling on the government to take all measures
to rescue the European Jews. The lawyers claim the order was ignored because
of pressure brought by a group of big American companies, including BBH,
where Prescott Bush was a director.

Lissmann said: "If we have a positive ruling from the court it will cause
[president] Bush huge problems and make him personally liable to pay
compensation."

The US government and the Bush family deny all the claims against them.

In addition to Eva Schweitzer's book, two other books are about to be
published that raise the subject of Prescott Bush's business history. The
author of the second book, to be published next year, John Loftus, is a
former US attorney who prosecuted Nazi war criminals in the 70s. Now living
in St Petersburg, Florida and earning his living as a security commentator
for Fox News and ABC radio, Loftus is working on a novel which uses some of
the material he has uncovered on Bush. Loftus stressed that what Prescott
Bush was involved in was just what many other American and British
businessmen were doing at the time.

"You can't blame Bush for what his grandfather did any more than you can
blame Jack Kennedy for what his father did - bought Nazi stocks - but what
is important is the cover-up, how it could have gone on so successfully for
half a century, and does that have implications for us today?" he said.

"This was the mechanism by which Hitler was funded to come to power, this
was the mechanism by which the Third Reich's defence industry was re-armed,
this was the mechanism by which Nazi profits were repatriated back to the
American owners, this was the mechanism by which investigations into the
financial laundering of the Third Reich were blunted," said Loftus, who is
vice-chairman of the Holocaust Museum in St Petersburg.

"The Union Banking Corporation was a holding company for the Nazis, for
Fritz Thyssen," said Loftus. "At various times, the Bush family has tried to
spin it, saying they were owned by a Dutch bank and it wasn't until the
Nazis took over Holland that they realised that now the Nazis controlled the
apparent company and that is why the Bush supporters claim when the war was
over they got their money back. Both the American treasury investigations
and the intelligence investigations in Europe completely bely that, it's
absolute horseshit. They always knew who the ultimate beneficiaries were."

"There is no one left alive who could be prosecuted but they did get away
with it," said Loftus. "As a former federal prosecutor, I would make a case
for Prescott Bush, his father-in-law (George Walker) and Averill Harriman
[to be prosecuted] for giving aid and comfort to the enemy. They remained on
the boards of these companies knowing that they were of financial benefit to
the nation of Germany."

Loftus said Prescott Bush must have been aware of what was happening in
Germany at the time. "My take on him was that he was a not terribly
successful in-law who did what Herbert Walker told him to. Walker and
Harriman were the two evil geniuses, they didn't care about the Nazis any
more than they cared about their investments with the Bolsheviks."

What is also at issue is how much money Bush made from his involvement. His
supporters suggest that he had one token share. Loftus disputes this, citing
sources in "the banking and intelligence communities" and suggesting that
the Bush family, through George Herbert Walker and Prescott, got $1.5m out
of the involvement. There is, however, no paper trail to this sum.

The third person going into print on the subject is John Buchanan, 54, a
Miami-based magazine journalist who started examining the files while
working on a screenplay. Last year, Buchanan published his findings in the
venerable but small-circulation New Hampshire Gazette under the headline
"Documents in National Archives Prove George Bush's Grandfather Traded With
the Nazis - Even After Pearl Harbor". He expands on this in his book to be
published next month - Fixing America: Breaking the Stranglehold of
Corporate Rule, Big Media and the Religious Right.

In the article, Buchanan, who has worked mainly in the trade and music press
with a spell as a muckraking reporter in Miami, claimed that "the essential
facts have appeared on the internet and in relatively obscure books but were
dismissed by the media and Bush family as undocumented diatribes".

Buchanan suffers from hypermania, a form of manic depression, and when he
found himself rebuffed in his initial efforts to interest the media, he
responded with a series of threats against the journalists and media outlets
that had spurned him. The threats, contained in e-mails, suggested that he
would expose the journalists as "traitors to the truth".

Unsurprisingly, he soon had difficulty getting his calls returned. Most
seriously, he faced aggravated stalking charges in Miami, in connection with
a man with whom he had fallen out over the best way to publicise his
findings. The charges were dropped last month.

Biography


Buchanan said he regretted his behaviour had damaged his credibility but his
main aim was to secure publicity for the story. Both Loftus and Schweitzer
say Buchanan has come up with previously undisclosed documentation.

The Bush family have largely responded with no comment to any reference to
Prescott Bush. Brown Brothers Harriman also declined to comment.

The Bush family recently approved a flattering biography of Prescott Bush
entitled Duty, Honour, Country by Mickey Herskowitz. The publishers,
Rutledge Hill Press, promised the book would "deal honestly with Prescott
Bush's alleged business relationships with Nazi industrialists and other
accusations".

In fact, the allegations are dealt with in less than two pages. The book
refers to the Herald-Tribune story by saying that "a person of less
established ethics would have panicked ... Bush and his partners at Brown
Brothers Harriman informed the government regulators that the account,
opened in the late 1930s, was 'an unpaid courtesy for a client' ... Prescott
Bush acted quickly and openly on behalf of the firm, served well by a
reputation that had never been compromised. He made available all records
and all documents. Viewed six decades later in the era of serial corporate
scandals and shattered careers, he received what can be viewed as the
ultimate clean bill."

The Prescott Bush story has been condemned by both conservatives and some
liberals as having nothing to do with the current president. It has also
been suggested that Prescott Bush had little to do with Averill Harriman and
that the two men opposed each other politically.

However, documents from the Harriman papers include a flattering wartime
profile of Harriman in the New York Journal American and next to it in the
files is a letter to the financial editor of that paper from Prescott Bush
congratulating the paper for running the profile. He added that Harriman's
"performance and his whole attitude has been a source of inspiration and
pride to his partners and his friends".

The Anti-Defamation League in the US is supportive of Prescott Bush and the
Bush family. In a statement last year they said that "rumours about the
alleged Nazi 'ties' of the late Prescott Bush ... have circulated widely
through the internet in recent years. These charges are untenable and
politically motivated ... Prescott Bush was neither a Nazi nor a Nazi
sympathiser."

However, one of the country's oldest Jewish publications, the Jewish
Advocate, has aired the controversy in detail.

More than 60 years after Prescott Bush came briefly under scrutiny at the
time of a faraway war, his grandson is facing a different kind of scrutiny
but one underpinned by the same perception that, for some people, war can be
a profitable business.

(source: The Guardian)