GM, Ford, the Bailout, and Nazi Germany

I spent more time than I should have watching the CEOs of the automakers ask the government for bailout money yesterday. That's what happens when you are on a research trip and you have nothing to do after the library closes. You sit around, read, and watch too much television.

I was against the bank bailout. If they felt that banks needed to get more money into the market, they should have given the money to the banks that actually have shown they are responsible with their money rather than send it to the banks that have shown irresponsibility and a lack of foresight.

Now comes the automakers. If we give them a bailout, why should we just stop there. What industry would come next? Although I might be for universal health care, I am not for the nationalization of private industry. GM, Ford, and Chrysler have been slow to respond to the changing marketplace. They were focused on making gas guzzling trucks in a world that has become environmentally-sensitive. Not that there isn't room for gas guzzling trucks, it just should not have been their focus.

I actually feel sorry for International Harvester. They developed the coolest gas guzzler at the wrong time. In September, they quietly killed commercial manufacturing of the Navistar CXT. I saw one in real life and it was massive, cool, and a definite gas guzzler. It resembled a semi-truck without a trailer. They are still selling them to the military. The military likes them because they serve as a generator along with being an SUV.

Speaking of the military and car manufacturers. Due to a conversation earlier this week, I have been trying to find information regarding American companies in Nazi Germany. It is a forgotten theme in history that American companies profited off of all the sides during WWII. (Kind of like Stark Enterprises in the Iron Man movie - just playing around with yesterday's comments theme.)

The evidence seems to be that the many American companies, specifically IBM, General Motors, and Ford, split into German entities at the onset of war. These German subsidiaries were still in communication with, taking orders from, and sending profits to their real owners in the United States.

Here is a link from the Washington Post.

There is nothing unusual in believing that most companies would make a profit from both sides during a time of war if they were given the opportunity. What blew up in their faces was the fact that the Nazis lost and were then rightfully villainized for their horrible treatment of the Jews. This made the companies playing for both sides look bad because of their use of Jewish slave labor, and they immediately tried to cover their tracks. How would things have turned out if Britain had never started bombing Germany and Germany had defeated the Soviets? I would bet that is what the companies were hedging their bets on, although I have read that we also made a lot of the military goods for the Soviets. Business is good for war manufacturing if you are outside of the battle lines.

The photo is of Henry Ford receiving the Grand Cross of the German Eagle in July, 1938. The head of IBM also had received a Grand Cross, but he returned his at the onset of the war.

What I found interesting from the Washington Post article is that American automakers were 70% of the auto industry in Germany prior to the war. Obviously, these Ford and GM factories were then transformed into military producing machines. The serious questions are whether they were fine with that and what did they use the profits for.

Back to the bailout. If we give the automakers a bailout, I would like to see them limit executive salaries, force the automakers to make the cars in America that they sell here, and introduce into the US market some of the better gas mileage vehicles that they sell abroad; however, I really do not think the government should be managing auto companies. Combine that with the belief that I do not think they should give money without stipulations, I am left to conclude that the government should not give any money to the auto industry.

These auto manufacturers are not really American companies any more. The only thing that makes them America is that they are traded on the NYSE. They are multinational, and they have shown in the past that they have no loyalty to America, only to the bottom line. The government needs to ask why should they bail out multinational companies who are taking jobs overseas?