Multinational Corporations - World war ii




As one might expect, U.S. entry into World War II in 1941 disrupted the normal channels of American commerce, discouraging or making impossible direct investments overseas. Between 1940 and 1946 such investments grew only marginally, from $7.0 billion in 1940 to $7.2 billion in 1946. In that year they amounted to only 3.4 percent of the GNP, the lowest percentage in the century. What American investments made abroad during the war were largely in the Western Hemisphere. Although investments in Canada and Latin America grew from $4.9 billion in 1940 to $5.6 billion in 1946, investments in Europe declined from $1.4 billion in 1940 to $1 billion in 1946. In Africa and the Middle East they remained steady at about $200 million for each of these years, while in the rest of the world they declined from $500 million in 1940 to $400 million in 1946.

Most of these investments went to further the war effort. No commodity was more important in this regard than oil, on which the entire machinery of war depended. So urgent was the need for oil, in fact, that the War Department invested $134 million in the construction of a refinery and pipeline in Canada as part of a project (the Canol Project) to open a new oil field in the Canadian Northwest Territories. The project had little commercial utility, and after the war it was abandoned when none of the parties to the project showed any interest in continuing it.

In the Middle East, Secretary of the Interior Harold Ickes, who also served as petroleum administrator for the war and generally distrusted the oil industry, even tried to obtain government ownership of American oil concessions in Saudi Arabia and Bahrain. Opposition from oil interests and doubts even within the administration about a government takeover of private enterprise ultimately doomed Ickes's plans. An effort, on the other hand, by several American oil companies to gain an ownership stake in the Anglo-Iranian Oil Company led to strong and ultimately successful opposition by the British, who objected to what they regarded as an attempt by Washington to lock them out of oil development in the Mideast, and by the Iranians, who wanted to delay until after the war any decision on its most vital resource.

During the war a number of major multinational corporations engaged in the production of strategic materials, such as oil and synthetic rubber, were accused in congressional hearings and on the floor of Congress of having conspired with the enemy before the war. In particular, the oil and petrochemical industries were charged with exchanging trade secrets in chemicals with the chemical giant I. G. Farben and other German firms deemed instruments of Nazi policy in return for trade secrets in oil refining. Civil and criminal actions were even brought against a number of these companies, the most notable being against Exxon, which in 1929 had signed an agreement with Farben recognizing its "preferred position" in chemicals in return for Farben's recognition of Exxon's "preferred position" in oil and natural gas. The two giant corporations also pledged close cooperation in their respective enterprises.

In 1942 the Justice Department brought a civil antitrust suit against Exxon, charging it with delaying the development of high-quality synthetic rubber because of its agreement with Farben, which prevented easy access to important data by other U.S. rubber companies. Although Exxon blamed the German government and not Farben for withholding the needed data, it entered a plea of "no contest." As part of its plea bargain it also agreed to release all its rubber patents free during the war, with the royalty on these patents to be determined after the war ended.

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