Railroad baron E.H. Harriman's son Averell wanted nothing to do with railroads, so his father gave him an investment firm, W.A. Harriman & Company in New York City. E.H. hired the most qualified person in the country to run the operation, George Herbert Walker. Averell hired his little brother Edward Roland "Bunny" Harriman as a vice president.
By 1920, George Herbert Walker had already built a fortune in Missouri. Walker, a charismatic former heavyweight boxing champion, was a human pit bull. He lived life to the fullest, owning mansions around the east coast and one of the most extravagant apartments in Manhattan. His hobbies were golf, hunting, drinking scotch and beating his sons to a pulp. Elsie Walker, one of Walker's grandchildren described Walker as a "tough old bastard" whose children had no love "for their father." He was also a religious bigot who hated Catholics, although his parents raised him to be one. According to other sources, he also did not like Jews.
In 1922, Averell Harriman traveled to Germany to set up a W.A. Harriman & Co. branch in Berlin. The Berlin branch was also run by Walker. While in Germany, he met with the Thyssen family for the first time. Harriman agreed to help the Thyssens with their plan for an American bank.
The following year, a wounded Germany was growing sicker. The government had no solution and froze while Germany rotted from within. With widespread strikes and production at a near standstill, Fritz Thyssen later recalled, "We were at the worst time of the inflation. In Berlin the government was in distress. It was ruined financially. Authority was crumbling. In Saxony a communist government had been formed and the Red terror, organized by Max Hoelz, reigned through the countryside. The German Reich ... was now about to crumble."
In October, 1923, an emotionally desperate Fritz Thyssen went to visit one of his and Germany's great military heroes, General Erich Ludendorff. During the 1918 socialist rule in Berlin, Ludendorff organized a military resistance against the socialists and the industrialists were in great debt to him. When Thyssen met with Ludendorff, they discussed Germany's economic collapse. Thyssen was apocalyptic, fearing the worst was yet to come. Ludendorff disagreed. "There is but one hope," Ludendorff said, "Adolph Hitler and the National Socialist party." Ludendorff respected Hitler immensely. "He is the only man who has any political sense." Ludendorff encouraged Thyssen to join the Nazi movement. "Go listen to him one day" he said to Thyssen.
Thyssen followed General Ludendorff's advice and went to a number of meetings to hear Hitler speak. He became mesmerized by Hitler. "I realized his orator gifts and his ability to lead the masses. What impressed me most however was the order that reigned over his meetings, the almost military discipline of his followers."
Thyssen arranged to meet privately with Hitler and Ludendorff in Munich. Hitler told Thyssen the Nazi movement was in financial trouble, it was not growing fast enough and was nationally irrelevant. Hitler needed as much money as possible to fight off the Communists/Jewish conspiracy against Europe. Hitler envisioned a fascist German monarchy with a nonunion, antilock national work force.
Thyssen was overjoyed with the Nazi platform. He gave Hitler and Ludendorff 100,000 gold marks ($25,000) for the infant Nazi party. Others in the steel and coal industries soon followed Thyssen's lead, although none came close to matching him. Many business leaders in Germany supported Hitler's secret union-hating agenda. However, some donated because they feared they would be left out in the cold if he actually ever seized power.
Most industry leaders gave up on Hitler after his failed coup in 1923. While Hitler spent a brief time in jail, the Thyssens, through the Bank voor Handel en Scheepvaart, opened the Union Banking Corporation in 1924.
Union Banking Corporation
Early in 1924, Hendrick J. Kouwenhoven, the managing director of Bank voor Handel en Scheepvaart, traveled to New York to meet with Walker and the Harriman brothers. Together, they established The Union Banking Corporation. The UBC's headquarters was located at the same 39 Broadway address as Harriman & Co.
As the German economy recovered through the mid to late ‘20s, Walker and Harriman's firm sold over $50,000,000 worth of German bonds to American investors, who profited enormously from the economic boom in Germany. In 1926, August Thyssen died at the age of 84. Fritz was now in control of one of the largest industrial families in Europe. He quickly created the United Steel Works (USW), the biggest industrial conglomerate in German history. Thyssen hired Albert Volger, one of the Ruhr's most influential industrial directors, as director General of USW.
Thyssen also brought Fredich Flick, another German family juggernaut, on board. Flick owned coal and steel industries throughout Germany and Poland and desperately wanted to invest into the Thyssen empire. One of the primary motivations for the Thyssen/Flick massive steel and coal merger was suppressing the new labor and socialist movements.
That year in New York, George Walker decided to give his new son in law, Prescott Bush, a big break. Walker made Bush a vice president of Harriman & Co. Prescott's new office employed many of his classmates from his Yale class of 1917, including Roland Harriman and Knight Woolley. The three had been close friends at Yale and were all members of Skull and Bones, the mysterious on-campus secret society. Despite the upbeat fraternity atmosphere at Harriman & Co., it was also a place of hard work, and no one worked harder than Prescott Bush.
In fact, Walker hired Bush to help him supervise the new Thyssen/Flick United Steel Works. One section of the USW empire was the Consolidated Silesian Steel Corporation and the Upper Silesian Coal and Steel Company located in the Silesian section of Poland. Thyssen and Flick paid Bush and Walker generously, but it was worth every dime. Their new business arrangement pleased them all financially, and the collective talents of all four men and their rapid success astonished the business world.
In the meantime Hitler and the Nazi party were broke. Since the German economic recovery, members and donations had dried up, leaving the Nazi movement withering on the vine. In 1927, Hitler was desperate for cash; his party was slipping into debt. Hitler told his private secretary Rudolf Hess to shake down wealthy coal tycoon and Nazi sympathizer Emil Kirdorf. Kirdorf paid off Hitler's debt that year but the following year, he too had no money left to contribute.
In 1928, Hitler had his eyes on the enormous Barlow Palace located in Briennerstrasse, the most aristocratic section of Munich. Hitler wanted to convert the palace into the Nazi national headquarters and change its name to the Brown House but it was out of his price range. Hitler told Hess to contact Thyssen. After hearing the Hess appeal, Thyssen felt it was time to give Hitler a second chance. Through the Bank voor Handel en Scheepvaart, Thyssen said he "placed Hess in possession of the required funds" to purchase and redesign the Palace. Thyssen later said the amount was about 250,000 marks but leading Nazis later claimed that just the re-molding cost over 800,000 marks (equivalent to $2 million today).
Regardless of the cost, Hitler and Thyssen became close friends after the purchase of the Brown House. At the time, neither knew how influential that house was to become the following year when, in 1929, the great depression spread around the world. With the German economic recovery up in flames, Hitler knew there was going to be a line out the door of industrialists waiting to give him cash.
1930s: Hitler Rises – Thyssen/Bush Cash In
Thyssen would later try to claim that his weekends with Hitler and Hess at his Rhineland castles were not personal but strictly business and that he did not approve of most of Hitler's ideas, but the well-known journalist R.G Waldeck, who spent time with Thyssen at a spa in the Black Forest, remembered quite differently. Waldeck said when he and Thyssen would walk through the cool Black Forest in 1929-30, Thyssen would tell Waldeck that he believed in Hitler. He spoke of Hitler "with warmth" and said the Nazis were "new men" that would make Germany strong again. With the depression bleeding Europe, Thyssen's financial support made Hitler's rise to power almost inevitable.
The great depression also rocked Harriman & Co. The following year, Harriman & Co. merged with the London firm Brown/Shipley. Brown/Shipley kept its name, but Harriman & Co. changed its name to Brown Brothers, Harriman. The new firm moved to 59 Wall St. while UBC stayed at 39 Broadway. Averell Harriman and Prescott Bush reestablished a holding company called The Harriman 15 Corporation. One of the companies Harriman had held stock in was the Consolidated Silesian Steel Company. Two thirds of the company was owned by Friedrich Flick. The rest was owned by Harriman.
In December 1931, Fritz Thyssen officially joined the Nazi party. When Thyssen joined the movement, the Nazi party was gaining critical mass around Germany. The charismatic speeches and persona of Hitler, the depression and the Thyssen's Bank voor Handel en Scheepvaart all contributed to Hitler's sudden rise in popularity with the German people.
In September 1932, Thyssen invited a group of elite German industrial tycoons to his castle to meet with Hitler. They spent hours questioning Hitler, who answered all their questions with the'"utmost satisfaction," Thyssen remembered. The money poured in from the industrial circles mostly due to Hitler's "monarchistic attitude" towards labor and issues of class.
But by November, German voters grew weary of Hitler's antidemocratic tendencies and turned to the Communist party, which gained the most seats in the fall election. The Nazis lost a sweeping 35 seats in the Reichstag, but since the Nazis were already secretly negotiating a power sharing alliance with Hindenberg that would ultimately lead to Hitler declaring himself dictator, the outcry of German voters was politically insignificant.
By 1934, Hindenberg was dead and Hitler completely controlled Germany. In March, Hitler announced his plans for a vast new highway system. He wanted to connect the entire Reich with an unprecedented wide road design, especially around major ports. Hitler wanted to bring down unemployment but, more importantly, needed the new roads for speedy military maneuvers.
Hitler also wanted to seriously upgrade Germany's military machine. Hitler ordered a'"rebirth of the German army" and contracted Thyssen and United Steel Works for the overhaul. Thyssen's steel empire was the cold steel heart of the new Nazi war machine that led the way to World War II, killing millions across Europe.
Thyssen's and Flick's profits soared into the hundreds of millions in 1934 and the Bank voor Handel en Scheepvaart and UBC in New York were overflowing with money. Prescott Bush became managing director of UBC and handled the day-to-day operations of the new German economic plan. Bush's shares in UBC peaked with Hitler's new German order. But while production rose, cronyism did as well.
On March 19, 1934, Prescott Bush handed Averell Harriman a copy of that day's New York Times. The Polish government was applying to take over Consolidated Silesian Steel Corporation and Upper Silesian Coal and Steel Company from'"German and American interests" because of rampant "mismanagement, excessive borrowing, fictitious bookkeeping and gambling in securities." The Polish government required the owners of the company, which accounted for over 45% of Poland's steel production, to pay at least its full share of back taxes. Bush and Harriman would eventually hire attorney John Foster Dulles to help cover up any improprieties that might arise under investigative scrutiny.
Hitler's invasion of Poland in 1939 ended the debate about Consolidated
Silesian Steel Corporation and Upper Silesian Coal and Steel Company. The
Nazis knocked the Polish Government off Thyssen, Flick and Harriman's
steel company and were planning to replace the paid workers. Originally
Hitler promised Stalin they would share Poland and use Soviet prisoners as
slaves in Polish factories. Hitler's promise never actually materialized
and he eventually invaded Russia.