International Business and National War Interests

Unilever between Reich and empire, 1939-45

Ben Wubs

• Publisher: Routledge
• Year: 2008
• Print ISBN: 9781138864047
• eBook ISBN: 9781134116515
• Topic: Business
• Subtopic: Business General
• Index: Business

This book deals with the activities of the Anglo-Dutch multinational during the war. Given the various threats faced by Unilever during the Nazi period, Ben Wubs argues that it was not self evident that the company would survive the war. Based on research into company sources which were hitherto unavailable, he shows the effect of the war on Unilev

1 Introduction

Therefore, owning assets that are apt to attract the robber or the tax gatherer and not sharing or even disliking warrior ideology that conflicts with its ‘rational’ utilitarianism, the industrial and commercial bourgeoisie is fundamentally pacifist and inclined to insist on the application of the moral precepts of private life to international relations.¹

Unilever had huge interests on both sides of the Second World War, in particular in the British Empire as well as in the German Reich.² This book deals with the activities of the Anglo-Dutch multinational in that period. Until now the war period is only insufficiently covered in the existing historiography on one of the most important European companies at the time. In the 1930s and 1940s Unilever was the largest company in the world engaged in the processing of non-mineral fats and oils. Its two most important products were margarine and soap. Although it is extremely difficult to compare the capital figures in that period there were only a few companies in Britain and on the European continent that came anywhere near the size of Unilever measured by capital employment. In addition, Unilever was one of the world’s first genuine multinationals with operating companies in more than 40 countries. Its main markets, however, were Britain, Germany and the Netherlands. My study will join a growing body of research on the activities of companies during the war period, which includes German companies, companies from countries under German occupation and subsidiaries of companies from the Allied countries operating in Germany or the occupied areas. The purpose of this introduction is to give an overview of the existing literature and its major debates and findings and to outline the major themes addressed in this particular study.

Unilever was founded by merger in 1930 and has a long tradition of allowing independent scholars to research its history. In 1954, Charles Wilson, a Cambridge University historian, published a pioneering two-volume History of Unilever, based on confidential sources.³ During the Second World War the Board had recognised that ‘an objective history had to be produced, telling the good and the bad’.⁴ Although Wilson’s study offers an immense insight into the evolution of Unilever, the 1939–1945 period was discussed in only eight pages. According to Wilson it ‘was not the place (...) to follow the story of the business in war’.⁵ Possibly the time had not yet been ripe for it. In 1968 Wilson published a third volume of Unilever’s history dealing with the challenges of and response to the post-war industrial revolution in the 1945–1965 period.⁶ Ten years later David Fieldhouse’s study on Unilever’s overseas manufacturing and plantations activities was published.⁷ In 1994 the same author told the story of Unilever’s largest subsidiary and trader, the United Africa Company (UAC), from 1929 to 1987.⁸ Fieldhouse focuses on subsidiaries which operated mainly in the colonial or ex-colonial territories. As a result, he has almost nothing to say about the parent company in its main European markets during the war. In 2005 Jones published volume IV of Unilever’s history, Renewing Unilever: Transformation and Tradition, dealing with the whole Unilever group in the 1960–1990 period.⁹ In effect, the Second World War remained a lacuna in Unilever’s corporate history, despite the fact that this period provides an unusually interesting case of corporate governance issues. My study aims to fill this gap. Although it is not a commissioned corporate history – like the Fieldhouse studies – it is nonetheless based on full and unrestricted access to the company’s records of the 1930s and 1940s.

Since the unification of Germany and the end of the Cold War increasing numbers of companies have allowed and often commissioned academics to study their history in the Third Reich.¹⁰ The end of the Cold War has reduced the fear that the industry’s relationship with the Nazi regime would discredit a company’s name.¹¹ In addition, pressure from international Jewish organisations in particular in the United States has induced several companies to open up their archives. Most of these monographs, however, deal with the behaviour of German companies in the Third Reich and little was written about the international dealings of these companies.¹² Even fewer studies deal with, for example, American, British and Dutch multinationals which had subsidiaries in Nazi Germany. Mira Wilkins’ The Maturing of Multinational Enterprise is an important exception of a general study of American multinationals which also deals with the war period.¹³ A part of her study explores American foreign direct investment (FDI) during the depression and the Second World War.¹⁴ US official FDI data, cited by Wilkins, show for example that US direct investment in manufacturing in Germany rose by almost 50 per cent from 1929 to 1940. In Chapter 3 of this study, I will come back to these figures and compare them with Unilever’s direct investment level in Germany at the time. Another important remark in Wilkins’ study is that multinationals neither calmed nor embittered international relations during the war. ‘[A]fter 1939 – as before 1939 – multinational businesses were buffeted by political conditions beyond their control.’¹⁵ In 1988 Charles Cheape published an intriguing article about the American Norton company in Nazi Germany. He presented a rich and complex pattern of the company’s behaviour at the time: the managers of the bonded abrasives company cooperated with, ignored and violated Nazi policies in the firm’s long-term self-interest.¹⁶ In 1997 Ivo Blanken’s study was published on the Dutch electronics multinational Philips which operated its business in both camps during the war. The book, however, does not explore the German side of the business due to a lack of sources. It mainly deals with Philips’ management in the occupied Netherlands (Eindhoven) and its exile management in New York.¹⁷ At the beginning of the German occupation of the Netherlands Philips was put under two German supervisors (Verwalter). Meanwhile the official domicile of the company had been transferred from The Hague to Willemstad in Curaçao, which hampered the German occupier’s ability to interfere with Philips’ overseas affiliates.

In the 2000s some fine studies have been published that deal with multinationals based in allied countries as well. In 2004 Christopher Kobrak and Per Hansen edited European Business, Dictatorship and Political Risk, 1920–1945, which aims to explore how various multinational companies in the inter-war period dealt with political risks posed by home or host country regimes at the time.¹⁸ In an introductory essay on multinationals and dictatorship Wilkins raises the question whether some legitimate generalisations can be made about the strategies and structures of multinationals in that period.¹⁹ Her article, however, mainly deals with the problems of foreign multinationals in Nazi Germany in the pre-war period. It focuses on two major issues: foreign exchange restrictions and their consequences and technology transfer. Although my study also treats Unilever in Nazi Germany during the 1930s it focuses on the wartime period and consequently deals with other issues. Yet it hopes to add up some evidence for a few generalisations about the strategies and structures of multinationals during the war.

Several other chapters in the book address the challenges multinationals faced that were based in Allied countries but had subsidiaries in Nazi Germany and in various countries of occupied Europe. Lars Heide’s chapter, for example, on IBM during the Second World War disagrees with Edwin Black’s account of America’s largest computer firm. In his rather biased work Black stated that IBM’s CEO Thomas J. Watson was a Nazi collaborator and that the company as a whole was to be held responsible for the Holocaust, because it delivered hollerith machines which were also used in the Nazi extermination camps.²⁰ Heide, however, clearly shows that IBM’s control of Dehomag, its German subsidiary, had diminished since the early 1930s. After the German declaration of war on the United States it became completely autonomous from the American parent company and under control of the German government.²¹

Another interesting chapter – based to a large extent on the author’s previous work – is Neil Forbes’ account on how British business managed political risk in Nazi Germany during the 1930s.²² Although Forbes’ essay only deals with the pre-war period it is relevant for my study because it analyses the role British industrial firms and banks played in the economic appeasement of Nazi Germany. At the time, British multinational firms had invested heavily in Germany and British financial institutions had made long-term loans to German states and municipalities.²³ As a result, Forbes concludes that British business directly or indirectly played a role in facilitating Hitler’s rearmaments plans. However, as my study of the Unilever case will show, the reality of the 1930s was too complicated to make an easy assessment of political risk. A peace settlement with Nazi Germany – independent of the business elite’s political inclinations – was thought to be in the interest of British multinational business and banks during that period. Moreover, Germany’s currency restrictions made a divestment strategy impossible – capital transfers to abroad were simply forbidden. British companies, including Unilever, made separate deals with the regime to reduce financial damage as much as possible.

In 2007 Forbes published an article which focuses on Unilever in Germany in the 1930s.²⁴ Here Forbes states that Unilever’s executives did not understand that all commercial decisions in Nazi Germany had political consequences at the time, and therefore he reproaches them for naivety and myopia. The last qualifications, however, were not particularly apt for Unilever’s top management at the time. As this study will show, the company was constantly making assessments of the political situation in Germany based on information coming mostly from high-ranking German officials.

Another collection of papers Business and Industry in Nazi Germany, edited by Francis R. Nicosia and Jonathan Huener and published in 2004 as well, contains the essays by some of the best historians in the area of business history and Nazi Germany, such as Gerald D. Feldman, Harold James and Peter Hayes. The majority of these essays are critical of the over-emphasis of the alignments between the Nazis and big business in Germany. One essay written by Simon Reich considers the relation between the Nazi regime and foreign-owned companies, in particular the American Ford Motor Company which had set up a subsidiary in Germany in 1925 which opened a plant in Cologne 1931.²⁵ Reich contextualises the Ford case into the larger debate of corporate social responsibility and accusations of complicity levelled in the 1990s against American foreign direct investors in Nazi Germany. Reich argues that Ford had only a relatively small investment in Germany and it was accordingly only a small player in the German car industry. Ford experienced systematic discrimination by the Nazi authorities both because it was marginal to Germany’s military plans and because of its American ownership. Once the US entered the war the German subsidiary was run by its German executives in the interests of the German wars effort. Ford in Detroit had lost its control and could therefore not be held responsible for the practices of its subsidiary, including the use of forced labour.

Henry Turner’s book General Motors and the Nazis published in 2005 brings up similar arguments, though it was impossible for him to argue that Opel, GM’s subsidiary in Germany, was only a marginal car producer at the time.²⁶ The main topic of his study is, according to its subtitle, the struggle for control of Opel, Europe’s biggest carmaker. In the book Turner concludes that during the war the company had more or less continued its operations in Germany but without direct management control from the parent company. Before Hitler had declared war on the United States all direct contact with Opel’s headquarters in Germany had been lost. During the rest of the war the German subsidiary was managed by Germans previously appointed by General Motors. Nevertheless, after Opel’s sequestration bureaucrats of the Nazi regime decided what and how to produce in the interest of the German war effort.²⁷

The Royal Dutch/Shell group faced c...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• List of figures
• List of tables
• Acknowledgements
• List of abbreviations
• 1 Introduction
• 3 Unilever and Nazi Germany
• 4 War preparations
• 5 Business as unusual, 1939-1941
• 6 A Reichs Commissioner for the Unilever Group, 1941-1945
• 7 London’s calling, 1941-1945
• 8 The aftermath, 1945-1950
• 9 Conclusions
• Appendix
• Notes
• Primary sources
• Bibliography
• Index