IG Farben

Interessengemeinschaft Farbenindustrie AG (), commonly known as IG Farben (German for 'IG Dyestuffs'), was a German chemical and pharmaceutical conglomerate. Formed in 1925 from a merger of six chemical companies— BASF, Bayer, Hoechst, Agfa, Chemische Fabrik Griesheim-Elektron, and Chemische Fabrik vorm. Weiler Ter Meer—it was seized by the Allies after World War II and divided back into its constituent companies.

IG Farben was once the largest company in Europe and the largest chemical and pharmaceutical company in the world. IG Farben scientists made fundamental contributions to all areas of chemistry and the pharmaceutical industry. Otto Bayer discovered the polyaddition for the synthesis of polyurethane in 1937, and three company scientists became Nobel laureates: Carl Bosch and Friedrich Bergius in 1931 "for their contributions to the invention and development of chemical high pressure methods", and Gerhard Domagk in 1939 "for the discovery of the antibacterial effects of prontosil".

The company had ties in the 1920s to the liberal German People's Party and was accused by the Nazis of being an "international capitalist Jewish company". A decade later, it was a Nazi Party donor and, after the Nazi takeover of Germany in 1933, a major government contractor, providing significant material for the German war effort. Throughout that decade it purged itself of its Jewish employees; the remainder left in 1938. Described as "the most notorious German industrial concern during the Third Reich" in the 1940s the company relied on slave labour from concentration camps, including 30,000 from Auschwitz, and was involved in medical experiments on inmates at both Auschwitz and the Mauthausen concentration camp. One of its subsidiaries supplied the poison gas, Zyklon B, that killed over one million people in gas chambers during the Holocaust.

The Allies seized the company at the end of the war in 1945 and the US authorities put its directors on trial. Held from 1947 to 1948 as one of the subsequent Nuremberg trials, the IG Farben trial saw 23 IG Farben directors tried for war crimes and 13 convicted. By 1951, however, all of them were released from prison early after the U.S. military instituted good time credits in its war crime program. What remained of IG Farben in the West was split in 1951 into its six constituent companies, then again into three: BASF, Bayer and Hoechst. These companies continued to operate as an informal cartel and played a major role in the West German ''Wirtschaftswunder''. Following several later mergers the main successor companies are Agfa, BASF, Bayer and Sanofi. In 2004 the University of Frankfurt, housed in the former IG Farben head office, set up a permanent exhibition on campus, the Norbert Wollheim memorial, for the slave labourers and those killed by Zyklon B.

Early history

Background

At the beginning of the 20th century, the German chemical industry dominated the world market for synthetic dyes. Three major firms BASF, Bayer and Hoechst, produced several hundred different dyes. Five smaller firms, Agfa, Cassella, Chemische Fabrik Kalle, Chemische Fabrik Griesheim-Elektron and Chemische Fabrik vorm. Weiler-ter Meer, concentrated on high-quality specialty dyes. In 1913 these eight firms produced almost 90 percent of the world supply of dyestuffs and sold about 80 percent of their production abroad. The three major firms had also integrated upstream into the production of essential raw materials, and they began to expand into other areas of chemistry such as pharmaceuticals, photographic film, agricultural chemicals and electrochemicals. Contrary to other industries, the founders and their families had little influence on the top-level decision-making of the leading German chemical firms, which was in the hands of professional salaried managers. Because of this unique situation, the economic historian Alfred Chandler called the German dye companies "the world's first truly managerial industrial enterprises".

With the world market for synthetic dyes and other chemical products dominated by the German industry, German firms competed vigorously for market shares. Although cartels were attempted, they lasted at most for a few years. Others argued for the formation of a profit pool or ''Interessen-Gemeinschaft'' (abbr. IG, lit. "community of interest"). In contrast, the chairman of Bayer, Carl Duisberg, argued for a merger. During a trip to the United States in the spring of 1903, he had visited several of the large American trusts such as Standard Oil, U.S. Steel, International Paper and Alcoa. In 1904, after returning to Germany, he proposed a nationwide merger of the producers of dye and pharmaceuticals in a memorandum to Gustav von Brüning, the senior manager at Hoechst.

Hoechst and several pharmaceutical firms refused to join. Instead, Hoechst and Cassella made an alliance based on mutual equity stakes in 1904. This prompted Duisberg and Heinrich von Brunck, chairman of BASF, to accelerate their negotiations. In October 1904 an ''Interessen-Gemeinschaft'' between Bayer, BASF and Agfa was formed, also known as the ''Dreibund'' or little IG. Profits of the three firms were pooled, with BASF and Bayer getting 43 percent each and Agfa 14 percent of all profits. The two alliances were loosely connected with each other through an agreement between BASF and Hoechst to jointly exploit the patent on the Heumann-Pfleger indigo synthesis.

Within the ''Dreibund'', Bayer and BASF concentrated on dye, while Agfa increasingly concentrated on photographic film. Although there was some cooperation between the technical staff in production and accounting, there was little cooperation between the firms in other areas. Neither were production or distribution facilities consolidated nor did the commercial staff cooperate. In 1908 Hoechst and Cassella acquired 88 percent of the shares of Chemische Fabrik Kalle. As Hoechst, Cassella and Kalle were connected by mutual equity shares and were located close to each other in the Frankfurt area, this allowed them to cooperate more successfully than the ''Dreibund'', although they also did not rationalize or consolidate their production facilities.

Foundation

IG Farben was founded in December 1925 as a merger of six companies: BASF (27.4 percent of equity capital); Bayer (27.4 percent); Hoechst, including Cassella and Chemische Fabrik Kalle (27.4 percent); Agfa (9 percent); Chemische Fabrik Griesheim-Elektron (6.9 percent); and Chemische Fabrik vorm. Weiler Ter Meer (1.9 percent). The supervisory board members became widely known as, and were said to call themselves jokingly, the "Council of Gods" (''Rat der Götter''). The designation was used as the title of an East German film, '' The Council of the Gods'' (1950).

In 1926 IG Farben had a market capitalization of (equivalent to billion euros) and a workforce of 100,000, of which 2.6 percent were university educated, 18.2 percent were salaried professionals and 79.2 percent were workers. BASF was the nominal survivor; all shares were exchanged for BASF shares. Similar mergers took place in other countries. In the United Kingdom Brunner Mond, Nobel Industries, United Alkali Company and British Dyestuffs merged to form Imperial Chemical Industries in September 1926. In France Établissements Poulenc Frères and Société Chimique des Usines du Rhône merged to form Rhône-Poulenc in 1928. The IG Farben Building, headquarters for the conglomerate in Frankfurt am Main, Germany, was completed in 1931. In 1938 the company had 218,090 employees.

IG Farben was controversial on both the far left and far right, partly for the same reasons, related to the size and international nature of the conglomerate and the Jewish background of several of its key leaders and major shareholders. Far-right newspapers of the 1920s and early 1930s accused it of being an "international capitalist Jewish company". The liberal and business-friendly German People's Party was its most pronounced supporter. Not a single member of the management of IG Farben before 1933 supported the Nazi Party; four members, or a third, of the IG Farben supervisory board were themselves Jewish. The company ended up being the "largest single contribution" to the successful Nazi election campaign of 1933; there is also evidence of "secret contributions" to the party in 1931 and 1932.

Throughout the 1930s the company underwent a process of Aryanization, and by 1938 Jewish employees had been dismissed and the Jews on the board had resigned. The remaining few left in 1938 after Hermann Göring issued a decree, as part of the Nazis' Four Year Plan (announced in 1936), that the German government would make foreign exchange available to German firms to fund construction or purchases overseas only if certain conditions were met, which included making sure the company employed no Jews.

Products

IG Farben's products included synthetic dyes, nitrile rubber, polyurethane, prontosil, and chloroquine. The nerve agent Sarin

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