In May 1940 a prominent diamond merchant in New York City,
~ Leonard Smit, began smuggling commercial and industrial diamonds
I to Nazi Germany through Panama. Smit's company was theoretically Dutch,
which placed it under the provenance of the Nazis, but
its stock was in fact owned by the International Trading Company,
which was located in Guernsey in the Channel Islands. President
Roosevelt had issued a freezing order precluding the shipment
of monies to Europe, especially if these might seem to be to the
advantage of the Axis. A few days after the Smit account was frozen,
Chase officials unblocked the funds at Smit's request. The funds
flowed out to Panama, allowing diamonds to be sent through the
Canal Zone to Berlin.
On June 17, 1940, when France was collapsing, Morgenthau via Roosevelt
again blocked the French account to prevent money going
to the enemy. Within hours of the blocking, somebody at Chase
authorized the South American branches of the Banque Francaise
et Italienne pour l'Amerique du Sud to transfer more than $1 million
from New York to special accounts in the Argentine and Uruguay.
The Banque was 50 percent owned by the Banque de Paris et des
Pays-Bas (a Chase and Standard affiliate), and 50 percent owned
by the Mussolini-controlled Banca Commerciale Italiana. In South
America, these banks were working partly for the Axis. Larkin
continued to permit free withdrawals from the special accounts
even though he knew perfectly well that such accounts were cloaks
for Banque Francaise et Italienne funds.
On June 23, 1941, J. Edgar Hoover wrote to Morgenthau: "During
the monitoring of foreign funds at the Chase Bank, FBI discovered
various payments to oil companies in the United States. There
are indications that the Standard Oil Company of New Jersey has
been . \ receiving money from German oil sales by order of the
Reichsbank."

p26
The Chase also handled transactions for the Nazi Banco Aleman Transatlantico,
which was, according to a Uruguayan Embassy report dated August 18, 1943,
"No mere financial institution. It
was in actuality treasurer or comptroller of the Nazi Party in
South America. It received local party contributions, supervised
and occasionally directed party expenditures, received party funds
from Germany under various guises and juggled the deposits . .
. all under the guidance of the German Legations." It was
in fact a branch of the Deutsche Uberseeische Bank of Berlin.
Most Nazi businesses in South America handled their affairs
through the Banco Aleman. Thus, the German legations throughout
Latin America possessed channels for distribution and receipt
of Nazi funds. The Paris Chase received large amounts of money
from Nazi sources through the medium of the Bank.
Most important of all, the Chase, with the full knowledge
of Larkin, handled the accounts of Otto Abetz, German ambassador
to Paris, and the embassy itself.
It is interesting to consider what, among other things, Abetz
and the German Embassy dealt with during the war. They poured
millions of francs into various French companies that were collaborating
with the Nazis. On August 13, 1942, 5.5 million francs were passed
through in one day to help finance the military government and
the Gestapo High Command. This money helped to pay for radio propaganda
and a campaign of terror against the French people, including
beatings, torture, and brutal murder. Abetz paid 250,000 francs
a month to fascist editors and publishers in order to run their
vicious anti-Semitic newspapers. He financed the terrorist army
known as the Mouvement Synarchique Revolutionnaire, which flushed
out anti-Nazi cells in Paris and saw to it they were liquidated.
In addition, Abetz used embassy funds to trade in Jewish art treasures,
including tapestries, paintings, and ornaments, for the benefit
of Goring, who wanted to get his hands on every French artifact
possible.
The Chase board in New York could not claim that it was unfamiliar with
these activities on the ground that communication with Occupied France was
impossible. The purpose of retaining diplomatic relations with Vichy was that
the U.S. government could determine what was going on in Occupied France.
A constant flow of letters, telegrams,
and phone calls between Paris and the Vichy branch of Chase in
Chateauneuf-sur-Cher kept Albert Bertrand informed, and in return he kept New
York informed; Washington was advised by Larkin. Despite some criticism by
Nazi comptroller Hans-Joachim Caesar, Vichy had under French law the power
to close the Paris branch at any minute if New York so instructed. No such
instructions were ever received. .
***

The Secrets of Standard Oil
p32
In 1941, Standard Oil of New Jersey was the largest petroleum corporation in
the world. Its bank was Chase, its owners the Rockefellers.
Its chairman, Walter C. Teagle, and its president, William S.
Farish, matched Joseph J. Larkin's extensive connections with
the Nazi government.

p33
From the 1920s on Teagle showed a marked admiration for Germany's enterprise in
overcoming the destructive terms of the Versailles
Treaty. His lumbering stride, booming tones, and clouds of cigar
smoke became widely and affectionately known in the circle that
helped support the rising Nazi party. He early established a friendship
with the dour and stubby Hermann Schmitz of I.G. Farben, entertaining
him frequently for lunch at the Cloud Room in the Chrysler Building,
Teagle's favorite Manhattan haunt of the late 1920s and the 1930s.
Teagle also was friendly with the pro-Nazi Sir Henri Deterding
of Royal Dutch-Shell, who agreed with his views about capitalist
domination of Europe and the ultimate need to destroy Russia.

p33
Because of his commercial and personal association with Herman Schmitz, and
his awareness that he must protect Standard's interest
in Nazi Germany, Teagle made many visits to Berlin and the Standard tanks and
tank cars in Germany throughout the 1930s. He became director of American I.G.
Chemical Corp., the giant chemicals
firm that was a subsidiary of I.G. Farben. He invested heavily
in American I.G. and American I.G. invested heavily in Standard.
He sat on the I.G. board with Fraternity brothers Edsel Ford and
William E. Weiss, chairman of Sterling Products.
Following the rise of Hitler to power, Teagle and Hermann
Schmitz jointly gave a special assignment to Ivy Lee, the notorious
New York publicity man, who had for some years worked for the
Rockefellers. They engaged Lee for the specific purpose of economic
espionage. He was to supply I.G. Farben, and through it the Nazi
government, with intelligence on the American reaction to such
matters as the German armament program, Germany's treatment of
the Church, and the organization of the Gestapo. He was also to
keep the American public bamboozled by papering over the more
evil aspects of Hitler's regime. For this, Lee was paid first
$3,000 then $4,000 annually, the money paid to him through the
Bank for International Settlements in the name of I.G. Chemie.
The contract was for obvious reasons kept oral and the money was
transferred in cash. No entries were made in the books of the employing
companies or in those of Ivy Lee himself. After a short
period Lee's salary was increased to $25,000 per year and he began
distributing inflammatory Nazi propaganda in the United States
on behalf of I.G. Farben, including virulent attacks on the Jews
and the Versailles Treaty.
In February 1938 the Securities and Exchange Commission held
a meeting to investigate Nazi ownership of American I.G. through
a Swiss subsidiary. The commissioners grilled Teagle on the ownership
of the Swiss company. He pretended that he did not know the owners
were I.G. Farben and the Nazi government. The commissioners tried
to make him admit that at least American I.G. was "controlled
by 'European' interests." Teagle replied dodgily, "Well,
I think that would be a safe assumption." Asked who voted
for him as a proxy at Swiss meetings, again he asserted that he
didn't know. He also neglected to mention that Schmitz and the
Nazi government owned thousands of shares in American I.G.
Teagle was sufficiently embarrassed by the hearing to resign
from the American I.G. board, but he retained his connections
with the company. He remained in partnership with Farben in the
matter of tetraethyl lead, an additive used in aviation gasoline.
Goring's air force couldn't fly without it. Only Standard, Du
Pont, and General Motors had the rights to it. Teagle helped to
organize a sale of the precious substance to Schmitz, who in 1938
traveled to London and "borrowed" 500 tons from Ethyl,
the British Standard subsidiary. Next year, Schmitz and his partners
returned to London and obtained $15 million worth. The result was that
Hitler's air force was rendered capable of bombing London,
the city that had provided the supplies. Also, by supplying Japan
with tetraethyl, Teagle helped make it possible for the Japanese
to wage World War II.

p62
On September 22,1947, Judge Charles Clark delivered the final
word on the subject. He said, ''Standard Oil can be considered
an enemy national in view of its relationships with I.G. Farben-after
the United States and Germany had become active enemies."
The appeal was denied.
***

The Mexican Connection
p63
Even the supposed enemies of The Fraternity were connected to
it by almost invisible threads. One of Jersey Standard's most
powerful rivals in the field of petroleum supplies to Germany,
William Rhodes Davis's Davis Oil Company, was connected to Goring
and Himmler. Davis was linked to Hermann Schmitz and I.G. Farben
through the Americans Werner and Karl von Clemm, New York diamond
merchants (who were first cousins to Nazi Foreign Minister Joachim
von Ribbentrop by marriage), and through the National City Bank.
The von Clemms were fanatical devotees of Germany, even though
both had become American residents in 1932. They used a device
typical in Nazi circles: a device copied, ironically, from the
Rothschilds. One brother stayed in Berlin, the other remained
in New York. They were connected to the Schroder banks through
interlocking directorships, and on the board of a company that
helped finance General Motors in Germany along with I.G. Farben.
In 1931 they financed the Gestapo with funds supplementing
those supplied by Schroder's Stein Bank. Yet another Fraternity
link was their involvement with the First National Bank of Boston,
an associate of the Bank for International Settlements. They conceived
the idea of unblocking First National's blocked German marks to
build a vast oil refinery for Goring's air force and for Farben
and Eurotank near Hamburg, with Karl von Clemm in charge. This
oil refinery would bypass the terms of the Versailles Convention
and supply Goring's so-called Black Luftwaffe, which was secretly
being prepared for world conquest.
In order to secure the oil for the refinery, the von Clemm
brothers had to find an American who would aid and abet them.
The choice was easy. From 1926 to 1932, Werner von Clemm had financially
sustained a largely unsuccessful oil prospector and confidence
trickster named William Rhodes Davis.
Davis was on the face of it unprepossessing. He was short,
not much over five feet, with a solid-gold left front molar and
a badly bowed left leg that contained a silver plate put there
after he was injured in a train wreck in 1918. His head was too
large for his body, and his face sported a broken nose. Yet despite
his lack of good looks he had the one indispensable quality needed
for success. He had the gift of gab. He was capable of talking
anyone into the ground. He spoke in superlatives. He never took
no for an answer, and he would shaft anyone when the chips were
down.
Davis was born in Montgomery, Alabama, in 1889. Poorly educated,
he left school at sixteen and jumped a freight car. A kindly porter
gave him a job as candy butcher, selling chocolate and ice cream
from a tray. Railroad crazy, he graduated to brakeman, fireman,
and engineer in the Southwestern states until the collision put
him out of commission. Emerging from the hospital with a gimpy
leg, he used his plight to his own advantage by working as a comedian
on the Keith vaudeville circuit, making audiences laugh as he
wiggled his distorted member in a dance. When his popularity ran
out, he shipped off on tramp steamers as stoker, fireman, and
engineer.
Back in the United States, he dabbled in the oil business
but consistently went broke. He was under frequent investigation
for a variety of swindles. People were fascinated, even hypnotized,
by him; but disillusionment would always set in, followed by the
inevitable lawsuit. He sold dry wells, manipulated stocks, and
set up and collapsed small companies, carrying the shareholders
with him.
In 1926 he was penniless. The von Clemm twins stepped into
the picture in 1933. Their support of him saved him from ruin
and imprisonment. As a result of this he became deeply committed
to Nazism. He was fascinated by the opulence of a Germany heavily
financed by American bank loans, the handsome, healthy men in
black uniforms, the pretty blond women. It all seemed a far cry
from the bread lines and pinched faces of America in the Depression.
After the deal with the German government over Eurotank, Davis
saw the way to make his fortune at last. He owned a few wells
through the von Clemms' good graces. With German money he could
certainly start pumping.
He traveled to Berlin in 1933. He had to have the personal
approval of Hitler before he could go ahead. He arrived at the
Adlon Hotel, where Karl von Clemm arranged a reception for him
to meet Hermann Schmitz of Farben, Kurt von Schroder, and other
German members of The Fraternity. He was welcome at once when
he gave the group the Nazi salute as he entered the room.
Next morning, two Gestapo officers delegated by Himmler arrived
at the door of his suite. They carried with them a letter from
the Fuhrer. The former brakeman and candy butcher was overwhelmed.
He could not believe he had received so signal an honor. The letter
asked him to meet with Finance Minister Hjalmar Schacht at the
Reichsbank. When he arrived, Schacht seemed cold and uninterested
and brushed the whole matter aside. Schacht already had deals
going with Walter Teagle and Sir Henri Deterding of Shell. What
did he want with this small fry?
Furious, Davis returned to the Adlon empty-handed. He wrote
to Hitler, insisting upon better treatment. Hitler replied immediately
in person, asking him to return to the Reichsbank the following
morning for another meeting.
Davis arrived in the boardroom at 11 A.M. As FBI records show, Schacht
smiled faintly in a corner, obviously in no mood to talk.
But a door flew open and thirty directors of the bank appeared,
to greet Davis with warm handshakes. Hitler strode in. Everyone
jumped to attention and gave the Nazi salute. Hitler said, "Gentlemen,
I have reviewed Mr. Davis's proposition and it sounds feasible.
I want the bank to finance it." Then he walked out.
It was clear to Davis that the directors of I.G. Farben, along
with Kurt von Schroder, had exercised influence over the Fuhrer.
Davis traveled to England, where he resumed an earlier business relationship
with Lord Inverforth's oil company. He obtained major concessions in Ireland
and Mexico. He traded Mexican oil for German machinery when it proved
impossible to export marks. Eurotank
was built. By 1935, Davis was shipping thousands of barrels of
oil a week from his wells in Texas and eastern Mexico.
Davis knew Senator Joseph F. Guffey of Pennsylvania, whose
friend Pittsburgh oilman Walter A. Jones had major contacts in
Washington. Through Guffey and Jones, Davis met with John L. Lewis,
the labor leader of the CIO. Davis worked hard on Lewis, convincing
him that national socialism was preferable to democracy and that
the German worker far exceeded in health, good humor and muscular
prowess the American equivalent. In 1936, Davis tried to influence
Roosevelt by pouring money into the election campaign. From then
on he was always able to telephone the Oval Office.
In 1937 he saw a major opportunity in Mexico. He was convinced President
Lazaro Cardenas would nationalize the oil fields. He
foresaw a way to corner all the oil in Mexico. In February 1938
he started bribing high-ranking officials in the Mexican government.
He made a close friend of Nazi Vice-Consul Gerard Meier in Cuernavaca,
who was allegedly encouraging Cardenas to invade and repossess
California, Texas, Arizona, and New Mexico.
Davis obtained the Mexican government's cooperation. He was promised
all the oil in Mexico when Cardenas expropriated it on
March 18, 1938. Cardenas kept his promise. On April 18, John L.
Lewis telephoned Cardenas's right-hand man Alejandro Carrillo.
Lewis told Carrillo that Davis would be making a deal with Germany
and Italy immediately and that these two countries were the only
two with which it would be safe for Mexico to deal.
Why did America's most famous labor leader support the arming
of the Nazi war machine? Because Lewis had major territorial ambitions
himself. He dreamed of a Pan-American federation of labor of which
he would be the unchallenged leader. Through Davis, and through Cardenas,
he would be able to consolidate the unions north and
south of the border. In this he had the total collusion of Vincente
Lombardo Toledano, head of the Mexican labor force.
By June 1938, Davis's first tanker was steaming to Germany
with thousands of tons of Mexican oil. But by 1939 he was already
running into trouble. On May 31 his chief geologist, Nazi Otto
Probst, was found murdered in his hotel room in Mexico City. Probst
had been strangled by a clothesline that was tied to the head
of his bed.
The German Embassy intervened and prevented an autopsy. FBI
investigators determined Probst had been poisoned. It turned out
he had bribed government officials and stimulated action against
communists. It was almost certainly a communist killing.
Communist cells infiltrated Davis's growing oil empire. He
used strikebreakers to vanquish the opposition and shipped millions
of barrels of oil until after World War II broke out in Europe.
Meanwhile, the von Clemm brothers profited enormously from
his success. Goring gave them the German franchise in hops, putting
them in virtual control of the beer business.
Along with Davis, they became multimillionaires.

part 3