Publisher: Lyle Stuart, 1981

One of the most absorbing operations of the early forties was the clandestine German radio station located in Valparaiso, Chile. This station transmitted to Germany information from Axis agents operating in Chile, Argentina, Peru, Colombia, Ecuador, Guatemala, Mexico, and the United States. The manager of the German firm, Compania Transportes Maritimos, formerly a branch of the Norddeutscher Lloyd shipping concern, operated this illegal and powerful radio transmitter. He was Bruno Dittman, and he had succeeded Friedrich von Schultz Hausmann after he had been transferred to chief of station in Buenos Aires. Both the FBI and the U.S. Office of Strategic Services, under the direction of General William J. Donovan, were concerned about this transmitting facility. The cipher experts of the OSS were able to intercept the messages, but it took time for them to break the code. Meanwhile, a continuous stream of important data from South America and the United States was being sent to Hamburg, and the precise location of the transmitter had yet to be determined. With the permission of the Chilean government, the U.S. Federal Communications Commission sent an electronics expert to Chile to determine the location of this station, which had become known as PYL. The communications expert made several tests and declared the broadcasts were being made from the house of Guillermo Zeller, at Avenida Alemana, 5508, Cerro Alegre, Valparaiso. Zeller, who was the actual transmitter, was an expert radio technician and was using the most modem transmitting set devised, with antennas specially adapted for broadcast to Hamburg. Another PYL went on the air, and the FCC expert determined that it was located at Antofagasta. Then a third went into operation from Buenos Aires with equipment supplied by the Siemens manufacturing organization. This came under the management of Hausmann in the Argentinian capital, Hausmann split his time between his duties at Bromberg y Cia. and the station. Operating such radio facilities and securing agents required a considerable amount of money to make everything mesh. Von Schultz Hausmann, in one message to Germany, instructed them to transmit funds to the account of 0. Osterloh in the German Bank of Buenos Aires. Money was also paid to the Japanese diplomat Tadeo Kudo through this account to accommodate him for the work he was doing for the Germans.

The transmitters located and their messages intercepted, the OSS was a step forward. But not until the code had been broken could a deep look into the Nazi espionage system be taken, serving as a lead to agents in the field. The late Elizabeth Friedman, wife of Colonel William Friedman, the master cryptographer who broke Japan's Purple Code, was a gifted cipher expert. She organized the OSS code and cipher operations for Donovan; to her goes the credit for breaking the German code used between the PYL stations in South America and Germany. Once opened up, the messages were found to be a series of businesslike instructions from a home office to agents. The latter sent their information and requested instructions on handling assorted undercover projects. Hamburg was always concerned that all South American agents could prove legitimate employment as cover for spy activities, which underlined the value of German commercial firms in all Latin American countries. One message follows:

April 17, 1942 Hamburg to Valparaiso IT IS IMPORTANT THAT ESCO, TOM AND FLOR CAN PROVE BUSINESS ANDSOURCE OF INCOME.

After the sudden arrest of most German agents operating in Brazil, the intercepts indicated that Germany was very conscious of the safety of its men, as well as wishing to ensure continuous radio communications with its agents in Chile, the reason it opened up a second PYL, operated by "Pedro" in Antofagasta. This message indicates the concern:

March 26, 1942 Hamburg to Valparaiso BE CAREFUL. ALFREDO ARRESTED. PLEASE ASK BACH WHICH OF YOUR COVER ADDRESSES HE GAVE TO ALFREDO AND WHOM ALFREDO PASSED IT ON TO. IN ANY EVENT, ABANDON YOUR COVER ADDRESS JUAN, AND DON'T PICK UP ANY MORE LETTERS THERE.

The OSS straightaway learned that Bach was the cover name for Ludwig von Bohlen, air attache to the German Embassy in Santiago. Then a new agent, by the name of "Apfel," made his appearance on the intercepts.

May 7,1942 Valparaiso to Hamburg RECEIVED YOURS OF THE FIRST OF MAY. MONEY FOR A START IS AVAILABLE. HOWEVER NOT FOR THE NORTHERN REPUBLICS OF SOUTH AMERICA GUARD TWO APFEL.

This was of significance to the OSS, because Guard Two was the sabotage section of the German High Command, and Apfel was evidently in charge of sabotage along the west coast of South America.

PYL also handled new mail instructions for letters of delivery to Berlin:

July 1, 1941 Hamburg to Valparaiso LETTERS FROM SHANGHAI TO SENORITA, PLEASE PUT INTO NEW ENVELOPE AND SEND BY LATI TO DR. GANZ, BERLIN, CHARLOTTENBURG 4, LIEBENSTRASSE

Identifying an agent in the field from these intercepts was important to the thrust and parry of this underground war. Once identified, a German agent could be neutralized. An intercepted message indicated that the Germans had in their employ an individual by the name of Clarcke, who was to be under the general supervision of Walter Giese, chief of the Nazi espionage service in Ecuador. The message stated: November 6,1941 Rio de Janeiro to Berlin CLARCKE CAN BE UTILIZED BY GIESE IN COLOMBIA AND VENEZUELA. HIS POSSIBLE UTILIZATION IN U.S.A. NOT READY FOR DECISION.

Then, unwittingly, this clandestine station in Brazil sent a message to Valparaiso for transmission to Hamburg:

November 14, 1941 Valparaiso to Hamburg DAUGHTER OF CLARCKE SECRETARY IN U.S.A. EMBASSY QUIT0 SINCE NOVEMBER ONE.

Clarcke was positively identified as Federico Clarcke Car, residing at Huerfanos 2289, Santiago, Chile. Both father and daughter were picked up.

A profound interest in U.S. aircraft production by Germany was understandable, and Germany continued to ask the PYL stations in South America for an updating on production figures. "To what extent has the construction of the assembly plants in Kansas and Tulsa progressed? When can the completion of the first planes by this factory be expected?" That German agents in South America complied faithfully with these orders for information by the German High Command is demonstrated by the typical message quoted here:

January 1, 1942 Valparaiso to Hamburg PRODUCTION OF SO3C BEGUN IN COLUMBUS OHIO FACTORY AT THE BEGINNING OF DECEMBER. EMPLOYEES OF ALL CURTISS AIRCRAFT FACTORIES IN DECEMBER TOTAL 27,000. PROPELLER PRODUCTION NOVEMBER, 1,042.

While the information was pure gold to Germany, the usual fate befell many of these hard-to-get messages. All too often, responsible agencies of the German government ignored their implications. Albert Speer, minister of armaments and war production in the Third Reich, tells of one agonizing scene when he visited the Junkers aircraft plant in Dessau in 1941 to discuss production with General Manager Koppenberg. "After the meeting, Koppenberg led me into a locked room and showed me a graph comparing American bomber production as forecast accurately for the next several years with ours. I asked him what our leaders had to say about these depressing comparative figures. 'That's just it, they won't believe it,' he said."

With the war years far behind him, Martin Bormann goes on and on, quietly making history in worldwide financial circles. He was eighty on June 17,1980, and his chief of security, Heinrich Mueller, was seventy-nine the same year. Bormann today may be likened to the classic chairman of the board of a vast international business complex, of an organization holding greater assets than any private investment house on Wall Street. Bormann, aged though he is, continues to guide the destiny of his financial empire. But he is sufficiently prudent and foresighted to realize that the assets he controls must be placed in younger hands, and today the leadership council of the senior NSDAP group is reflected in a younger generation, comprising professional managers, lawyers, and financiers, who are calling the shots as money and trade are moved among the markets of the Americas and Europe. Their organization holds the bearer bonds that give him a voice in banks and industries of Germany, and likewise they hold blue chip stocks in U.S. heavy industries and chemical companies. They are represented too on the boards of corporations in France, Belgium, Holland, Sweden, Luxembourg, and Switzerland, as well as in a myriad of other countries, including those in their bastion, Latin America. Their management is of the best and the companies they operate return a profit to everyone involved, from the West German government in corporate taxes and increased trade, to the shareholders of all companies that participated so long ago in Reichsleiter Bormann's flight capital program.

Since the founding of Israel, the Federal Republic of Germany had paid out 85.3 billion marks, by the end of 1977, to survivors of the Holocaust. East Germany ignores any such liability. From South America, where payment must be made with subtlety, the Bormann organization has made a substantial contribution. It has drawn many of the brightest Jewish businessmen into a participatory role in the development of many of its corporations, and many of these Jews share their prosperity most generously with Israel. If their proposals are sound, they are even provided with a specially dispensed venture capital fund. I spoke with one Jewish businessmen in Hartford, Connecticut. He had arrived there quite unknown several years before our conversation, but with Bormann money as his leverage. Today he is more than a millionaire, a quiet leader in the community with a certain share of his profits earmarked as always for his venture capital benefactors. This has taken place in many other instances across America and demonstrates how Bormann's people operate in the contemporary commercial world, in contrast to the fanciful nonsense with which Nazis are described in so much "literature." So much emphasis is placed on select Jewish participation in Bormann companies that when Adolf Eichmann was seized and taken to Tel Aviv to stand trial, it produced a shock wave in the Jewish and German communities of Buenos Aires. Jewish leaders informed the Israeli authorities in no uncertain terms that this must never happen again because a repetition would permanently rupture relations with the Germans of Latin America, as well as with the Bormann organization, and cut off the flow of Jewish money to Israel. It never happened again, and the pursuit of Bormann quieted down at the request of these Jewish leaders. He is residing in an Argentinian safe haven, protected by the most efficient German infrastructure in history as well as by all those whose prosperity depends on his well-being. Personal invitation is the only way to reach him.

A revealing insight into this international financial and industrial network was given me by a member of the Bormann organization residing in West Germany. Meyer Lansky, he said, the financial advisor to the Las Vegas-Miami underworld, sent a message to Bormann through my West German SS contact. Lansky promised that if he received a piece of Bormann's action he would keep the Israeli agents off Bormann's back. "I have a very good relation with the Israeli secret police” was his claim, although he was to be kicked out of Israel later when his presence became too noted--and also at the urging of Bormann's security chief in South America. At the time, Lansky was in the penthouse suite of Jerusalem's King David Hotel, in which he owned stock. He had fled to Israel to evade a U.S. federal warrant for his arrest. He sent his message to Bormann through his bag man in Switzerland, John Pullman, also wanted in the United States on a federal warrant. Lansky told Pullman to make this offer "which he can't refuse." The offer was forwarded to Buenos Aires, where it was greeted with laugher. When the laughter died down, it was replaced with action. Meyer Lansky was evicted from Israel, and was told by Swiss authorities to stay out of their country, so he flew to South America. There he offered any president who would give him asylum a cool $1 million in cash. He was turned down everywhere and had to continue his flight to Miami, where U.S. marshals, alerted, were waiting to take him into custody.

The Bormann organization has the ultimate in clout and substance, and no one can tamper with it. I have been told: 'You cannot push these people; if you do it can be extremely risky." Knowing their heritage, I take this statement at face value.

Russell A. Nixon, former acting director of the Division of Investigation of Cartels and External Assets in the U.S. military government in West Germany, spoke of the difficulties in those days investigating and doing something about the industrial and financial leaders of the conquered Third Reich. The denazification process was cumbersome and elusive, and captains of the economy below the level of those who had undergone the 13 Nuremberg war crimes trials were difficult to pinpoint as to extent of guilt and involvement, Nixon remarked, "because they, by chance, held certain high Nazi positions or because they were in one way or another in a mandatory-arrest category. It was on a purely hit-or-miss basis; there was no policy with regard to industrial and financial leaders. When we finished interrogating a man, we were faced with the problem: What authority do we have to hold him? By what test do we decide whether he is in or out? We began to face some criticism because we were holding Germans in prison without 'specific charges.'" So, one after another, these men were released despite U.S. Joint Chiefs of Staff directive 1067, issued on May 10, 1945, which stated that Nazis and Nazi sympathizers holding important positions in industry, commerce, finance, and agriculture should be arrested and held for trial.

The situation was the same when military government investigators probed into the personnel of major banks. Bankers had arranged the financing of the war, and through their financial webs had established and maintained control over the economies of occupied Europe for the Third Reich. The officers and board members of the Big Six banks were picked up, but efforts of the military administration to follow through were resisted by other Allied departments of the occupation. Russell Nixon recalled that when he moved to arrest the bankers he was unable to get the U.S. Counterintelligence Corps to assign him men to do it. "So we had to deputize our own staff people to go out and pick them up.'' But the departmental infighting didn't stop there. Nixon had trouble getting jail space, and so "the bankers merely remained under house arrest, in their own homes." On the part of some of the American generals, "This was some sort of screwball idea, anyway, another of Colonel Bernstein's schemes to tear up Germany." Finally, the key bankers did go to prison for a time, but only to be interrogated about their financial activities in the war, including: 'What happened to the money and other liquid assets you sent out of Germany after August 10, 1944, when Martin Bormann inaugurated his flight capital program?"

Not in question was such treasure as was discovered by the U.S. Third Army in a salt mine near Merkers in April 1945. A preliminary inventory of gold bullion, currency, and miscellaneous property placed the value of the find at $515,825,802, and as Lieutenant General Walter Bedell Smith, chief of staff of the U.S. Army at SHAEF, stated: "The total figure arrived at was made only from information on the Reichsbank tags attached to the sealed bags, boxes and parcels." In his letter dated 20 April 1945, to the Combined Chiefs of Staff Committee, General Smith asked the Treasury Department to send expert weighers of gold bars with their equipment. The final inventory was carried out in the vaults of the Reichsbank at Frankfurt, where the treasure had been moved. General Smith also said it obviously had belonged to the SS or the Gestapo. "Evidence indicates that part of the treasure represents loot taken from individuals who have been murdered, as it includes thousands of gold and silver dental crowns, bridges and plates and some personal articles. It may, therefore, constitute items of evidence, and should be considered in that light. It is believed that agencies engaged in the determination of evidence for the prosecution of war criminals should be informed, and at the proper time should be permitted to inspect and investigate this part of the property." American and British treasury agents went to Frankfurt, performed their assessments, and the decision was ultimately made to put all the gold into an Allied "gold pot" for sharing as reparations, while the currencies (French francs, Belgian francs, Norwegian kroner, Czech kroner, Croatian kuna, Italian lira, Hungarian pengoes) were returned to the central banks of these countries. Parcels containing the sad reminders of concentration camp victims were held for agencies concerned with war crimes.

But scant useful information was obtained from the leading bankers and industrialists held for interrogation. To be sure, all had approved and complied with Bormann's program of flight capital to neutral safe havens in 1944; they had faith that the Fatherland, or at least those zones supervised by Britain, France, and the United States, would rise from the ashes of defeat. They knew too that the money, patents, and new manufacturing processes, along with scientists and administrators sequestered beyond reach of the Allies, would also be a necessary component in the resurgence of Germany. But they sidestepped acknowledging that billions had been sent from their country in the final nine months of the war, and that corporations outside the boundaries of Germany would be generating further money in world markets during the years to come. Treasury officials in Washington, as in London, knew what was transpiring; the teams they sent into the field uncovered enough evidence to prove a definite pattern. As for the news media, it did not seem important, although long-term it was really the biggest of the postwar stories. Yet so quietly was it handled by the Germans and so &&dent was the reaction by the Allies, that few ripples rose to the surface, and investigators of the U.S. Treasury Department were taken off the case.

Allied correspondents were then more interested in the progress of the denazification program being carried out in the U.S. and British zones of occupation. The Allied administrators had removed 25,000 Nazis from banking and finance in the U.S. zone, but later found to their dismay that the individuals they were denazifying out of finance were going into related fields, a holding operation of sorts, until such time as they could move back into their old slots of influence and power-an identical process to that taking place in Japan. American and British newspapers played up the fact that 200,000 Nazis in the American zone had been removed from industry and government by 1946, which impressed readers in the United States and the United Kingdom, until later it came out that this had barely made a dent in the 2% million Nazi Party members of the U.S. zone. Then, when Britain and America found themselves involved in a hapless cold war with former ally Russia, West German support was courted and welcomed, and the majority of those formerly declared Nazis quietly folded themselves back into industry, banking, and government. Forgotten was General George Marshall's clarion declaration of March 1945, when he listed 1,800 industrialists and bankers as "leaders who have thrived under National Socialism, welcomed it in the beginning, aided the Nazis to obtain power, supported them in office, shared in the spoils of expropriation and conquest, or otherwise benefited in their careers or fortunes under the Nazis."

Realism superseded idealism when it was officially acknowledged by top occupation officers that permanent removal of such leadership from the West German scene would deal a devastating blow to German rehabilitation. Historically, men of talent and drive have a way of rising again to the surface following reverses, and this was the case in West Germany. Under the Marshal1 Plan, the money that was pumped into the economy arrived at the right time, enabling plant management to rebuild the factories that would provide jobs and employment. None of it went for luxury items, as in Britain, to compensate a people who had been deprived of many items in five years of war. The people labored mightily and practiced thrift. Private investment money began to flow back from the banks of Switzerland, as bankers there recommended such investments to their customers, as well as to their own bank investment committees. Later, other money, which had found its way to the "neutrals" under the Bormann program, began to flow slowly from these safe havens to Germany, although the reverse flow didn't accelerate until the occupation ended and the destiny of the new Federal Republic of Germany was in German hands. Until that time the West German economy moved forward under the policy pronounced by Federal Chancellor Adenauer, the policy of a free economy: the greatest possible liberalization of the market. It had led to impressive increases in production and under Adenauer's successor, Ludwig Erhard, the free market economy was christened the "economic miracle." It was also made possible by a new labor supply, the influx of millions of refugees driven out of Eastern European countries by Soviet rule. There were 8 million expellees and 2 million refugees who arrived in industrialized West Germany between 1945 and 1961. They were integrated rapidly, making a real contribution to the growth of the Federal Republic by their desire to work hard and build a new life for themselves.

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 luxury inclined 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 shamed pieces of his cod 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 De- Wendel 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 Hainaut- Sambre steel combine at a cost of $5.5 million. But one of his most important holdings was a 40 percent interest in Daimler- Benz 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 Diisseldorf 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 Dusseldorf as