International investment and Nazi politics: The cloaking of German assets abroad, 1936-1945

This article deals with the relationship between business and government during the Third Reich in making policy toward attempts by German companies to protect their foreign assets. In contrast to the widely held view of many professional historians and journalists, we argue that business engaged in these efforts largely without governmental assistance, indeed often in the face of resistance from the regime, since for the most part companies set up structures that were contrary to the wishes of the National Socialist political bureaucracy. Although some of the evidence we present here is known to historians, much of our interpretation of the data has not penetrated professional accounts of the period. The cloaking story, moreover, has implications for contemporary multinational business. As the Second World War approached, fear of expropriation became a more important motivation for cloaking, but even in the late 1930s German managers created these structures for a variety of commercial reasons. Firms are still confronted by a myriad of pressures and political risks, not the least of which are those posed by their own home countries' actions that affect the value of their foreign assets. We argue here that one of the commercial objectives of German businesses' cloaking efforts was to reduce the political risk of the actions of the country in which they were incorporated.