IBM has had business internationally since before the company had a name. Early leaders of the companies that would eventually become IBM (Mr Hollerith, Mr Flint, and Mr Watson) all were involved in doing international business.Edwin Black, IBM and the Holocaust: The Strategic Alliance between Nazi Germany and America's Most Powerful Corporation. New York: Crown/Random House, 2001. Please see chapter 2, passim.
In those early days, IBM had 70 foreign branches and subsidiaries worldwide.Black, IBM and the Holocaust, pg. 44. Competitors in the pre-World War II era included Remington Rand, Powers, Bull, NCR, Burroughs, and others.Before the computer by James W. Cortada, Princeton University Press, 2000.
European HQ The European headquarters for IBM was originally in Paris. In 1935, Watson moved it to Geneva. The managers included Schotte,Black, IBM and the Holocaust, pg. 203. and later the controversial Werner Lier (see #Switzerland).Black, IBM and the Holocaust, see index.
Austria IBM was represented in Austria by Furth & Company until 1933, when a direct subsidiary was created. IBM did the 1934 Austrian census. A card-printing plant was built later. Germany annexed Austria in 1938. In late May, Thomas J Watson went to Berlin and got IBM's German subsidiary, Dehomag, to replace IBM's Austrian subsidiary. Dehomag would go on to perform the May 1939 Reich Census, which included Austria and other areas Germany had invaded at the time.Black, IBM and the Holocaust, pp. 141, 142, 149, 169.
Belgium IBM's subsidiary in Belgium was named Watson Belge. The director was Emile Genon, formerly of Groupe Bull, a competing punch-card firm. When the US entered the World War II in 1941, the company ownership was taken by the Nazi government and given to a custodian, H. Gabrecht, who also custodied the Netherlands subsidiary. He allowed Bosman and Galland to keep running the company, and he coordinated with Hermann Fellinger, custodian of Dehomag.Black, IBM and the Holocaust, pp. 44, 300, 376, 401.
During the war the Nazi Maschinelles Berichtswesen (Mechanical Reporting) department took machines from Belgium to use in other parts of the Reich. Custodian Gabrecht worked on the contracts for these takings, so that the owner, IBM NY, would eventually be properly paid for the machine's use.Black, IBM and the Holocaust, pg. 404. See also pg. 234 regarding alien property in Germany.
Bulgaria IBM's Bulgarian subsidiary was called Watson Business Machines Corporation, Ltd. It started in Sofia in March 1938. During the war, Germany invaded Bulgaria, thus it became illegal for IBM NY and IBM Geneva to transact with the subsidiary in 'enemy territory' (per General Ruling 11). In 1942, the Bulgarian government blocked payment from its railroads to the subsidiary, and bankruptcy threatened. Lier of IBM Geneva asked the State Department for help to get money to the subsidiary; State refused. By unknown means the subsidiary survived and continued to provide punch card based scheduling to the railroads. After the war, in 1945, the subsidiary was again allowed to transact with IBM, which filed a war compensation claim and requested access to its Sofia bank accounts.Black, IBM and the Holocaust, pp. 385–388.
Please also see: Holocaust in Bulgaria
Canada
Information Systems Management Corporation (ISM Canada) was formed through the merger of Westbridge Computer Corp and STM Systems Corp. The official opening of the new head office at 1 Research Drive, Regina. IBM assumed a controlling financial interest in ISM Canada. IBM outsourced its internal computer operations (host and client-server systems) to ISM. ISM ranked as one of the top 500 Canadian companies, moving up almost 300 places in the survey by Commerce magazine.
In 1995, ISM Canada became 100% owned by IBM.
China IBM had an office in Shanghai. When Japan invaded during World War II, they took an IBM machine back to Kobe.American Multinationals.., p. 123.
Czechoslovakia IBM opened an office in Prague circa 1933, a sales school in 1935, and a card printing plant soon after. A big customer was the Czechoslovak State Railways. Schneider joined in 1937, moved to Berlin, and back to Prague in 1939. In the war, custodian Hermann Fellinger let E. Kuczek continue to run the company. The Czech subsidiary supplied cards to IBM's German subsidiary, Dehomag, while Dehomag supplied it equipment. The Nazis took some machines from Czechoslovakia to railways in the East, and Kuczek put the rental money in Prague Kreditbank.Black, IBM and the Holocaust, pp. 159–160, 401, 403.
France In 1919, CTR (which became IBM later) opened a sales office in Paris. In 1925, IBM France opened a factory and a branch. By 1932 it had 65 customers, including the Ministry of War. IBM France did not grow as fast as the other European subsidiaries. There were two competitors in those days, Powers and Bull. Watson moved on Bull by purchasing its Swiss rights and hiring away a Bull manager. Bull sued for unfair competition.Black pp. 295, 296.
In 1936, Compagnie Electro-Comptabe de France (CEC) was created. Its customers were mostly banks, railroad and the military. CEC grew and built many factories in France.Black ppð. 296, 300. citing
CEC Quartlery Report, Fourth Quarter, 1942, p. 11, DOJ, Dept of War, Economic Warfare Section, National Archives RG60
and Connally, pp. E12, E13
and CEC IBM Subsidiary in France: Confidential Report 332, p2,12, Harold J Carter, 1944-04-10, DOJ War Division, Economic Warfare Section, Nat. Archives RG60
and Note, Fellinger, circa 1944, T-73 Reel 11 RmfRuK/297 Frame 1057532.
Germany invaded France in 1940. The Nazis (especially their Maschinelles Berichtswesen department) took hundreds of CEC's machines for use elsewhere in the Reich. Many of CEC's operations were moved, as was the paper CEC needed for punchcards. CEC almost became part of a planned Nazi competitor to IBM, but the plan fell through. CEC's Nazi Kommissar was an SS man named Westerholt.Black, IBM and the Holocaust, pg. 300. Black cites Westerholt Biography, 1933 5 1, National Archives, RG242 A3340-MFOK-Y078, Frame 1532 and Nat. Archives RG242 A3343-RS-G 5166, Westerholt, Heinz 25 July 1907 Rase- und Siedlungshauptamt, Frame 370.Black, IBM and the Holocaust, pg. 302. Black cites
Letter, W.C. Lier to F.W. Nichol, 1941-10-21, IBM Files
and
Radiogram, C. Delcour to IBM NY, 1941-11-17, IBM Files
and
H.B. Fellinger, Enclosure 5, 1945-07-30, p. 6, IBM Files.
At this time CEC had offices in French colonies such as Algeria, Casablanca, and Indochina.Black, IBM and the Holocaust, pg. 300, citing CEC Quartlery Report, Fourth Quarter, 1942, pg. 11, DOJ, Dept of War, Economic Warfare Section, National Archives RG60 CEC also worked with Vichy France's Demographic Department to perform a census. However the department was run by René Carmille, a secret agent of the French underground, who failed to punch the 'Jewish' hole on the census cards, and instead used his operation to mobilize French resistance troops in Algeria.Black, IBM and the Holocaust, pp. 328–329; Black cites
and Bull Computers Chronological history, perso.club-internet.fr/febm/english/chronoa3.htm p. 3
and CEC Quartlery Report, Fourth Quarter, 1942, p. 25, DOJ, Dept of War, Economic Warfare Section, National Archives RG60
and History of Computing in Europe, Connolly, James, IBM World Trade Corporation, circa 1967, p. E-14
and Robert Carmille, Des Appearances A La Réalité: Mise Au Point, Le "Fichier Juif": Rapport de la Commission présidée par René Rémond au Premier Ministre, 1996. pp. 8, 10, 13, 15, 22, 33.
and Le "Fichier Juif:" Rapport de la Commission présidée par René Rémond au Premier Ministre, France, Plon, 1996, p. 145.
and "Vichy Maps Plan of Identity Cards", New York Times, 22 October 1941.
Germany
Before World War I, when IBM was called CTR, it had a business in Germany. During that war, the German government seized the company as 'enemy property'. However, Germany's alien custody laws protected enemy assets via an Alien Property Custodian. Thus CTRs assets were returned to it in good condition after the war.Black, IBM and the Holocaust, pp. 43 and 234. Black cites "Letter P Taylor to FW Nichol, 12 September 1940 pp. 1–2 IBM Files, Memorandum H. Albert to IBM NY, circa Fall 1940, IBM Files."
In 1922, there was a rival company named Dehomag, run by Willy Heidinger, who had brought Holleriths to Germany back in 1910. Dehomag licensed machines from CTR (later IBM). When Germany's currency suddenly lost almost all of its value due to the German hyperinflation of the 1920s, Dehomag suddenly found itself owing enormous sums of money to CTR. Watson bought 90% of the shares of Dehomag. The remaining 10% of shares were 'specialized' with various rules to make it hard for them to be sold, and Heidinger was given these. Dehomag became a subsidiary of CTR (later IBM). It performed much better than IBM's other subsidiaries.Black, IBM and the Holocaust, pp. 43–44.
There were also IBM subsidiaries called Degemag, Optima, and Holgemag. They were merged into Dehomag in the early 1930s.Black, IBM and the Holocaust, pp. 60–62.
Dehomag got a contract to do the 1933 Prussian census via their lawyer Karl Koch.Black, IBM and the Holocaust, pg. 55. Watson visited in 1933, and made a deal with Heidinger that allowed Dehomag to do business in territories that were already covered by other IBM subsidiaries.Black, IBM and the Holocaust, pg. 61.
The Nazi Party came to power in 1933. It banned foreign corporations from transmitting income back to their home countries. Dehomag's profits would sit in blocked bank accounts in, for example, Deutsche Bank und Disconto-Gesellschaft.Black, IBM and the Holocaust, pg. 67. However money did flow from Dehomag to IBM NY, in the form of 'royalty' payments (classified as a 'necessary expense').Black, IBM and the Holocaust, pg. 77.
In 1933, Heidinger claimed that Dehomag was working with the Sturmabteilung for the compilation of 'certain necessary statistics'<pg 78>
A new Dehomag factory was started up in 1934 at Lichterfelde. Attendants at opening included Watson's representative Walter Jones, Heidinger of Dehomag, Rudolf Schmeer, Deputy Leader of the German Labor Front, Artur Görlitzer, Deputy Gauleiter of Berlin, directors of financial institutions, like the Reichsbank, the Police, Post Office, Ministry of Defense, Reich Statistical Office, and Reichsbahn.Black, IBM and the Holocaust, pp. 81–84.
Applications included payroll, inventory, personnel, finance, scheduling, manufacturing supervision, and many others. Customers came from all over government and industry, including IG Farben, Zeiss Ikon, Siemens, Daimler-Benz, Junkers, Krupp, Deutsche Bank, public works departments, statistical offices, the Reichsbahn railroad, and many others.Black, IBM and the Holocaust, pg. 87.
Watson authorized a lawsuit by Heidinger against competitor punch-card company Powers, on the basis that Powers was not 'German' enough, something that was problematic in the days of the Nazis. In 1934, Powers lost the case.Black, IBM and the Holocaust, pg. 102.
Heidinger was enthusiastic about Adolf Hitler's plans. At the opening of a new IBM facility, he spoke of Hitler as a physician who would 'correct' the 'sick circumstances' of the 'German cultural body', by using Dehomag's statistical surveys of the population. Watson congratulated him on his speech.Black, IBM and the Holocaust, pp. 50–51.