Nazis, BlackRock, And The Hunt For Profit

A little more than a year ago, the investment management company BlackRock sparked outcry with the announcement that it would launch  a major investment initiative in China.  Even George Soros, hardly a figure of the right, criticized BlackRock chairman Larry Fink’s turn towards Chinese investment in a scathing op-ed for The Wall Street Journal.

But BlackRock’s foray into China is by no means the first time an American company has sought to strengthen commercial ties with a country that posed a threat to both basic human rights and to American foreign policy interests. 

Perhaps the most striking example of this is IBM’s relationship with Nazi Germany, as detailed in Edwin Black’s IBM and the Holocaust: The Strategic Alliance between Nazi Germany and America’s Most Powerful Corporation. Though most people today probably associate IBM with its computer software, the company’s original flagship product was an electromechanical tabulating machine. Invented at the end of the 19th century by Herman Hollerith, the machine worked by “reading” punch cards to collect data.  The United States and almost every single country compiling a census report at this time recognized the machine’s utility and leased the technology. In 1933, Germany, which was then under the chancellorship of Adolf Hitler, likewise became an IBM customer. 

At that time, IBM’s CEO was Thomas Watson, whom The New York Times has dubbed “The World’s Greatest Salesman.” Watson was behind the massive growth of IBM, which had developed a near global monopoly over tabulating machines. Nevertheless, Watson was determined to grow operations in Germany and win a Prussian census project, despite the fact that anti-Hitler sentiment was intense throughout the United States and the media was openly discussing fears that the Third Reich was angling for another war.

For their part, the Nazis, who prized order and efficiency, quickly realized that the tabulating machine was a game-changer in bureaucracy. In Germany, the most common use of IBM’s tabulating machine would be to record the names of the Jewish population in Germany and, later, conquered territories. And the Nazis did not hide their goals: Watson and IBM were very much aware how the Third Reich was using their technology. As Black explained:

“When Germany wanted to identify the Jews by name, IBM showed them how. When Germany wanted to use that information to launch programs of social expulsion and expropriation, IBM provided the technologic wherewithal. When the trains needed to run on time, from city to city or between concentration camps, IBM offered that solution as well.”

As the relationship between IBM and Nazi Germany grew, the lines blurred between business and diplomacy. Though Black claims that Watson was not a fascist so much as a “pure capitalist,” the pursuit of profit appeared to have influenced Watson to defend the increasingly autocratic moves of the German government throughout the 1930s.

"Different countries require different forms of government and we should be careful not to let people in other countries feel that we are trying to standardize principles of government throughout the world,” Watson declared. On other occasions, he openly praised both Hitler and Mussolini for what Watson perceived as their strong “leadership” qualities.

Watson wasn’t just a businessman. He was the chairman of the Carnegie Endowment for Peace, a trustee of Columbia, and chairman of the American section of the International Chamber of Commerce before becoming president of the entire organization in 1937. He was also a major player in Democratic politics and a close friend to (and unofficial representative of) President Franklin Delano Roosevelt. "I handle 'em in Washington and Tom handles 'em in New York," FDR reportedly quipped in reference to IBM’s CEO.

Watson flexed his soft diplomacy on behalf of German interests throughout the 1930s as Germany quickly grew to be IBM’s second largest market, after the United States. For example, Watson gave Nazi leadership an air of respectability throughout the decade by inviting the German consul in New York to be a houseguest at his home, and socializing with German diplomats.

But that wasn’t all. As president of the ICC, Watson asked his colleagues to put pressure on their government contacts to get "some sound understanding in regard to limitation of armaments” and convinced the body to publish a bizarre resolution that encouraged Allied countries to adhere to "a fair distribution of raw materials, food stuffs and other products . . . [to] render unnecessary the movements of armies across frontiers." It was a Nazi talking point that Germany was unfairly deprived of raw materials, and Watson and the ICC were now repeating them.

By the time the United States entered World War II, Watson began to embark on a patriotic crusade (though he still maintained control and made a profit from IBM’s German subsidiary, Dehomag). But while Watson should be recognized for his patriotic assistance, he should also be held accountable for providing the technology that assisted the Nazi systemic displacement and extermination of millions of European Jews. 

Though comparisons to Nazism are often trite in today’s media landscape, it is hard for those following the BlackRock saga not to see the similarities. 

For starters, BlackRock has chosen to ignore ethical concerns and instead chase profit in a country criticized for its autocratic regime, its abuse of ethnic minorities, and its likelihood of armed conflict with the United States or its allies in the future. As Watson did with European fascists in the 1930s, BlackRock has defended  the CCP’s dictatorial practices.  For example, The Wall Street Journal has paraphrased Larry Fink as stating in a 2019 meeting in Beijing that “BlackRock should be a Chinese company in China,” an eerie echo of Watson’s “different countries require different forms of government” line.

Moreover, like Watson, Fink and BlackRock have incredible political influence. This past June, BlackRock Investment Institute chairman Tom Donilon was selected by Secretary of State Anthony Blinken to co-chair the Foreign Affairs Policy Board during the State Department’s pivot to China. The Foreign Affairs Policy Board exists to provide "advice, feedback, and perspectives" to senior State Department officials, creating a blatant conflict of interest.

Just as Watson sought to ease anti-German tensions with public relations maneuvers, BlackRock appears to have begun a campaign to refer to China’s possible invasion of Taiwan as “reunification,” a major CCP talking point, both on social media and even in investor literature of linked companies, as seen here and here. Just as Watson made numerous efforts to support the German economy, BlackRock executives lobbied against a series of 2019 tariffs that had a negative impact on the Middle Kingdom. 

However, what is perhaps the most shocking similarity in the two cases is their disregard of human rights abuses. Reuters reported as early as 2019 that at least one company in BlackRock’s portfolio, Hikvision, enabled “the crackdown that has led to mass arbitrary detentions in the Xinjiang region.” This information was later repeated in a speech by no less than then-Secretary of State Mike Pompeo. Since then, The American Prospect confirmed BlackRock’s investment in a second company, iFlytek, that similarly creates technology used to track the Uyghur population. At present, both companies are blacklisted by the United States government on their so-called entity list.

There is one major difference between BlackRock and IBM. Though IBM’s technology helped the Nazis create a more organized government and streamlining their assault on the Jewish people, it did not materially help the Axis on the battlefield against Allied forces. In contrast, the technology that BlackRock has invested in gives the Chinese military an extreme advantage, which would almost certainly lead to increased American casualties – or even American defeat – should the two countries embark on war.

Though BlackRock has previously held the course with its policies re China despite much criticism, perhaps the similarities between their actions and those of IBM and the holocaust will encourage Larry Fink and other leadership figures to reevaluate their priorities, their morals, and their legacies.