Julius Weltzien and the Interwar Transatlantic Business Dilemma: Nationalism and Internationalism Corrupted
Julius Weltzien spent nearly his entire career with one company, Schering AG, one of Germany’s oldest specialty chemical firms. He built up the international and American business of one of Germany’s leading companies only eventually to be exiled from Germany to the United States, albeit as a potentially dangerous alien to his new hosts.
Foreign business, above all overseas business, was Dr. Weltzien’s specialty. Because of his human and professional qualities, … he was able, both at home and abroad, to develop worthwhile contacts for the firm. Thanks to his efforts, Schering products and the Schering name are known throughout the civilized world.
Note by Dr. Maria Bergmann, January 1974, Employee Relations Department at Schering, who wrote the comment for Schering’s 110th anniversary, SchA.
Julius Weltzien (born August 19, 1889 in Zehlendorf, Germany; died May 26, 1950 in New York City) will not be remembered for an enduring and individual contribution to either general German or American history, but rather as one of a group of interwar businessmen who struggled to salvage some remnants of pre-1914 commercial institutions. Like many other businessmen of his time and ilk, the service was collective and lay in providing a series of band aids to a wounded and more hostile global commercial environment. Born into a world in which simultaneously contributing to the economic interests of either or both of the world’s two largest economies posed no fundamental conflict, like many of his entrepreneurial contemporaries, Weltzien built new, complex structures designed to synthetically achieve an international connectedness that existed circa 1900, a time with few manmade barriers to trade, or frictions, as economists sometimes call them. As E.H. Carr wrote, World War I’s length and intensity shattered the easy compatibility of national aspirations and international co-operation. Although doubts about peaceful competition preceded June 1914, during World War I, mutual distrust replaced faith in the commercial benefits of pursuing national self-interest in the context of international norms of good behavior. For a few years during the 1920s, optimists had some reasons for hope, but for most of the thirty years following August 1914, restoring the old cosmopolitan business community must have seemed like a fool’s errand. At the time of Weltzien’s death in 1950, by many measures his efforts had to be judged a failure. In many respects his personal life paralleled his professional one: passionate, international, but, at the moment of his passing, with little lasting after his death.
Although Julius Weltzien spent nearly his entire career with one company, Schering AG, one of Germany’s oldest specialty chemical firms, he was a quintessential cosmopolitan businessman during a period in which on both sides of the Atlantic the term conjured up anger and antipathy. He spoke near-perfect English and traveled all over the world, enjoying some of the best of bourgeois life while at times flouting its norms. Fine wine, horseback riding and The New York Herald Tribune were regular parts of his day. He built up the international and American business of one of Germany’s leading companies only to eventually be exiled from Germany to the United States, albeit as a potentially dangerous alien to his new hosts.
The Building Blocks of His Character
There was little in his early life that destined Weltzien to become an émigré. Born a few months after Adolf Hitler, on August 19, 1889, Weltzien grew up in Berlin and studied locally as well as in both Freiburg and Munich before getting his doctorate in international law in 1912 at Göttingen, with a dissertation, aptly for his later work, on foreign trade and its various financing instruments, specifically the technical and legal difficulties involved with enforcing the relatively new practice of giving blank acceptance of bills of exchange. Before joining an artillery regiment in World War I where he earned the Iron Cross, both first and second class, he served briefly as an intern for Schering, the chemical company where he later went on to spend most of his working life. His politics tended toward liberal conservatism, but there is no record of how the war affected him personally and whether its violence reinforced his cosmopolitan passions or stimulated a desire to restore Germany’s strong role in a more balanced international order. With his service and assimilation in German society, like many Germans of Jewish descent, Weltzien in all likelihood could not fathom his sudden exclusion from full citizenship years later.
The youngest of three children, Weltzien was the product of a mixed marriage. His Gentile father, Dr. Carl Heinrich Julius Weltzien, was a teacher at a Gymnasium, an elite German high school. He lived until 1928, long enough to witness many of his son’s business successes. The name Weltzien was relatively uncommon in Germany. No kinship has been traced to the aristocratic family of that name which included high members of the military and government, or to Hans Weltzien, a successful Berlin banker who served on the Schering AG’s supervisory board for five years after Julius had left Germany. But the families bearing the name, or slight variations of it, all come from an area approximately ten miles apart near Parchim, south of Rostock in northern Germany.
Weltzien’s mother, born Bella Pauline Schönberg, was Jewish, but probably non-practicing. Although she had less formal education than her husband, she was regarded as cultured and a good conversationalist. Bella died in 1944, ostensibly by her own hand, rather than suffering the indignities and deprivations of deportation. Julius’s older brother August was a successful tax inspector; his older sister Louise, like their father, a Gymnasium teacher. A telling family anecdote probably gives some indication of Julius’ competitive relationship with his older siblings: “Louise knew everything about literature, August knew everything about finances, and Julius knew everything better.” Both siblings survived the war in Berlin, removed from their positions but otherwise unmolested. After the war, August, for example, rejoined the Berlin civil service, rising to the position of Berlin’s finance minister at the time of Julius’s death in the early 1950s.
Shortly after Julius was born, the family moved to Zehlendorf, then a suburb of Berlin. According to family folklore, Julius’s birth actually provoked the move. As a youngster he suffered from some asthma. On a doctor’s recommendation, Carl Weltzien, who had been in Berlin since 1865, moved the family to the “village” for the cleaner air. The house Carl had built served not only as a meeting point for some Berlin illuminati, such as the author Kurt Tucholsky; it also became a refuge for several family members from the early 1930s through the end of World War II.
Julius Weltzien’s personal demeanor and professional vision reflected a liberal and intellectually rich upbringing. Julius Albert Theodor Otto Weltzien—Ully to his friends and family—was, by all accounts, witty, clever, urbane and conservative in his politics. A chain smoker, Weltzien enjoyed many aristocratic pleasures. At home with the business elites of many countries, Weltzien devised and implemented the strategy of creating many foreign subsidiaries in order to give the chemical company more international flexibility and diversity. Beginning in 1921, he seems to have been responsible for all of Schering’s international marketing, financing and extensive legal issues. While other executives traveled abroad, Weltzien was considered a skilled negotiator and did most of the foreign travel where his legal and language skills were in great demand and he regularly spent months at a time away from Berlin. Although we do not know how Weltzien acquired his language skills, for example, like many of his class, he probably threw himself into all things international from an early age, which clearly entailed language courses and perhaps even early foreign travel. He brought this spirit to his business activities. Indeed, there is evidence that Weltzien wanted to shift Schering’s center of gravity away from Germany or, as one colleague put it, “wanted to separate Schering Corporation’s (Schering’s main subsidiary in the United States) fate from that of Germany and thereby by the parent company.”
Having served in the German army during World War I, Weltzien rejoined one of Germany’s oldest pharmaceutical companies, Chemische Fabrik auf Actien (vorm. E. Schering), a firm that changed its name and ownership structure many times before and during the interwar period. By the young age of thirty-three, in 1922 he became part of its management board. The firm traced its heritage back to 1851, when Ernst Schering opened his Grüne Apotheke (Green Pharmacy) in Wedding, then a suburb of Berlin. During the second half of the 19th century, many entrepreneurial pharmacists used the liberalization of production laws to shift pharmaceutical supplying away from local pharmacies to larger companies. Ernst Schering set out to create a firm with a reputation for the purity of its specialized chemicals, many of which were medical, but also got the company involved in photographic supplies and early forms of plastics well before World War I. Although not yet a joint-stock company, by the late 1860s Schering had enlarged his operation and was trading both internationally and throughout the as yet not unified German Reich. Schering had won many awards at international commercial fairs including those in Paris and London.
After the Franco-Prussian War and German unification, like many German companies riding the wave of optimism and enthusiasm for equity investing, in 1871, Schering converted his enterprise into a publicly traded company, selling off much of his own interest and listing on the Berlin exchange. He promoted some of the managers he had earlier brought into the company and brought some friends onto the supervisory board, a strategy that helped the company weather the 1873 crash and subsequent economic downturn that lasted approximately a decade. By 1914, Schering had invented several patented drugs, such as Urotropin, a disinfectant, and Piperazin, an anti-gout medication, had leading positions in some fine chemical markets like iodine and synthetic camphor, production facilities in Russia and Great Britain, and had sales agents in over twenty countries, including a firm called Schering & Glatz in New York which had Ernst Schering’s nephew, Hugo, as a partner.
Like most international German companies, Schering lost virtually all its foreign advantages due to World War I. Even before the United States entered the war in 1917, the British blockade made sales from Germany to the United States extremely difficult, but not impossible. Not only were its patents and factories in the United Kingdom and Russia seized, Schering was cut off from many foreign business contacts, which had helped the company do overseas business. In the world’s largest market, the U.S. government deprived Schering of the use of many valuable patents and trademarks. Although Schering got back some of their financial value, directly or indirectly, by the end of the 1920s in U.S. alien claim settlements, some foreign companies tried to ignore their prewar agreements; some competitors got use of Schering’s assets throughout most of the assets’ useful lives of patented products like Atrophan, a drug against rheumatism and Medinal, a sleep medication. American restoration of German property in 1929 covered only a portion of the economic value of assets expropriated by the Alien Property Custodian when the United States entered World War I. Moreover, tariffs and other trade barriers increased and in general, the relatively serene macroeconomic environment of the pre-World War I period gave way to prolonged foreign exchange and inflation disorder.
Faced with these problems and shortages of vital inputs like foreign exchange, capital and coal, Schering’s owners and bankers turned to a coal and coking company as an antidote to the chemical company’s predicament. In summer 1922, shortly after Weltzien had returned to the company and near the climax of Germany’s disastrous postwar inflation, Schering was acquired by a larger well-financed company outside of its own core business.
Founded in 1890 by a flamboyant entrepreneur and funded by large banks, Oberschlesische Kokswerke & Chemische Fabriken Aktiengesellschaft (Kokswerke) set out to become a wholesaler for coal and coke sales, a sector troubled by gyrations of capacity and pricing. The Kokswerke’s business model entailed simultaneously tying up the suppliers of coal for coking and the purchasers of coke and its many byproducts, including even-burning briquettes and chemical derivatives of coal and the coking process. Controlling both supply and demand ostensibly allowed the company to reduce the risk of investing in the capacity to transform the coal into coke. The plan required more money and acquisitions than originally envisioned. In spite of the apparently viable business plan, within twenty years of its creation, the firm had overextended itself and fell deeper into the hands of its bankers, who not only provided additional financing but also insisted in introducing less visionary and more thorough management. Even with large borrowings acquired just before the war and despite its postwar financing needs, bankers appeared eager to fund Kokswerke’s expansion into the chemical sector. Moreover, Kokswerke’s vertical linking of coal and chemicals was a strategy already successfully employed by many German companies. Although no existing planning memo outlines Kokswerke’s intentions, beyond merely looking to invest cash in real assets to avoid inflationary effects, its managers looked for a vehicle with which to design and market final products that utilized its raw materials. In short, in Germany, high inflation and the breakdown of international capital flows shifted economic power to those who controlled vital real assets and who could access hard currency.
The Kokswerke takeover of Schering was one of many acquisitions following the Great War. With little productive capacity destroyed by the war and countries investing in domestic industrial autonomy, one of the great challenges of the interwar period was overcapacity in many sectors. Moreover, Schering’s acquisition by a domestic company was politically more palatable than being acquired by a foreign firm. Although there is no evidence that Schering in particular was a target, many Germans were outraged by the number of acquisitions of pieces of the patrie by aggressive American firms, eager to take advantage of Germany’s many weaknesses, not the least of which was its rapidly depreciating currency. For many Germans, domestic white knights were perceived as a welcome antidote to the wave of foreign money buying up German assets cheapened by the effects of the war and currency collapse. Indeed, Kokswerke’s acquisition of Schering was one of many acquisitions it made in the chemical and photographic sectors, which may have made tempting targets for American shoppers looking for bargains.
Thus, by the summer of 1922, shortly after Weltzien had returned to the company, Schering became part of and was controlled by a larger, well-financed, company outside of its own core business, a step that would shape his career for two decades. By the time Weltzien left Germany in 1938, the chemical segment that he led had become larger and vastly more profitable and vibrant than its former parent. The acquisitions plunged Weltzien into a sea of managerial issues vital to creating (or, really, salvaging) economic value from assets whose only immediate value seemed to be largely financial or political. The most immediate challenge was to make a truly integrated entity out of the portfolio of chemical and photo companies. Within two years of the purchase, Weltzien and a colleague more experienced in production, Walter Zeiss, were effectively co-chairmen of the chemical and photographic activities of Kokswerke. Despite it being a post traditionally held by chemists or pharmacists, Weltzien’s appointment to co-managing director reflected the greater importance of law and finance to Schering. Weltzien’s and Zeiss’ chief challenge was to coordinate the production and sales endeavors of a dozen or more companies that were still legally separate, each with management viewing itself as independent Kokswerke assets. Some, especially those not fully owned, required their own supervisory boards on which both Weltzien and Zeiss served. Weltzien took the lead in many committees designed to coordinate production, sales and research, before Kokswerke, under economic and political pressure, restructured its holdings into a more efficient entity.
Despite higher costs and thereby lower profits and greater risk associated with increasing foreign debt, in the late 1920s Kokswerke, with all its subsidiaries including Schering, was Germany’s 13th-largest company as measured by assets. Kokswerke’s leaders continued to pour vast amounts of money into coal and coke, for which there was excess supply in Germany even during Weimar’s better days. They waited until 1927 to merge Schering with Kahlbaum, its other large chemical company, forming Schering-Kahlbaum, while leaving most of its other chemical and photographic companies in a separate confederation managed by Weltzien and Zeiss through complicated interlocking management committees.
Increased U.S. lending to Germany after 1924 and an economic upturn after the severe recession following Germany’s currency stabilization bought the consolidated company some time, but at a price. Like many other German companies, Kokswerke used the opportunity to expand into areas in which it had little experience and was left with large levels of debt, most of which were denominated in foreign currencies and in addition were issued for shorter terms than the projects they financed, a particularly dangerous mismatch during volatile periods. Part of Weltzien’s responsibility was negotiating the terms of some of the American debt, about which he evidenced little concern.
Rebuilding the International Business
In the 1920s, international business took on a new meaning and importance for German companies. In addition to providing the hope of offsetting weak German demand, only by exporting could many German companies hope to respond to demands for more and better employment and to earn the foreign currency in which their debt was denominated. Some lucky ones, like Schering, had some assets held by foreign governments and individuals that might be used to pay obligations or guarantee new ones. Weltzien’s principal goals during the 1920s were to re-establish Schering’s foreign sales and to reclaim its foreign property.
The task was daunting. Although one Schering executive got a visa to visit the United States in 1920, until the United States signed a peace treaty with Germany and Schering’s finances improved in 1922, little could be done. Specific restrictions on German trade and travel, as well as anti-German feelings just after the war, limited Schering’s foreign dealings to small amounts of exports at depressed prices. Europe alone had added numerous new countries, each of which now could create entry barriers. Generally high tariffs and fear of German encroachment continued through the interwar period.
Weltzien took over responsibility for Schering’s international business in 1921. In many countries, Schering had to disguise its ownership interest, a topic that will be dealt with in more depth below. Before 1914, Schering owned just three foreign subsidiaries, with limited manufacturing, selling its goods internationally for the most part through independent agents. By 1931, due largely to Weltzien’s efforts, Schering had twenty-one foreign subsidiaries, employing nearly five hundred people, ten percent of whom were German nationals. These included substantial staffing levels and activities in continental Europe in non-German speaking areas, the United Kingdom, South America, Asia and the United States, but many activities were coordinated from Berlin. Despite international pressure against them, Schering participated in many international cartels that required central coordination. Running subsidiaries was expensive, and managing them from Berlin was complicated. Weltzien handled many important decisions personally, including personnel matters.
Understandably, Weltzien focused much of his attention on the United States as the largest chemical and photographic market in the world, home to Schering’s major competitors and customers such as Kodak, DuPont, and Eli Lilly. His visits included meetings with bankers about financing, American chemical companies about sales and potential joint ventures, former partners about managing Schering production in the United States and, perhaps most importantly, with lawyers recuperating Schering’s U.S. property. Although no record survives of Schering’s sales to the United States before World War I, the size of the American chemical market, the seeming importance of its U.S. agent and number of patents and trademarks Schering registered there, and the sales of similar German companies, suggest Schering probably had substantial revenues from North America. As early as 1927, total sales (pharma, camphor, and other chemicals) to the United States reached RM 5.6 million (reichsmarks), roughly 15% of Schering’s total revenues. In the late 1920s, American pharmaceutical consumption alone accounted for nearly half the world’s market. Despite substantial trade and other barriers, by 1938, Schering’s pharmaceutical sales in the United States alone reached RM 4.0 million, nearly 14% of its total pharmaceutical revenues, including those in Germany. Thus, from a low base those RM 4.0 million in sales represented an annual growth of 60% since 1928. Both Schering and its parent company received substantial loans from American banks, some of which were eager to increase their exposure to German companies with dollar collateral even into the 1930s.
Beginning in 1922, Weltzien visited the United States annually and saw Schering’s main customers and suppliers, including General Motors and DuPont, as well as many bankers and lawyers. Weltzien helped initiate and implement agreements about potential joint ventures with Parke-Davis, Eli Lilly and DuPont dealing with shared production and distribution of pharmaceuticals and other products in the United States and Europe, such as camphor and lacquers. Weltzien’s affinity for international business and regular trips led Kokswerke’s management to rely on his talent for cross-border projects even when they had little or no connection to Schering-Kahlbaum’s core business. But furthering the sale of Schering-Kahlbaum products and recuperating its property in the United States remained Weltzien’s main preoccupations during the 1920s. Against some opposition within Schering, he particularly pushed the pharma portion of Schering’s business in the United States, which required much upfront investment with little immediate return.
High tariffs and the loss of patents prevented the simple export of Schering products to the United States well into the 1920s. Just after the war, Schering had surreptitiously set up a small manufacturing company in Bloomfield, New Jersey with its former agent, Schering & Glatz (S&G). The joint venture’s sales and profits were small, but denominated in dollars. Not only was the company a repository for cash balances denominated in dollars, it served Schering well in its legal battles with the U.S. government. Schering maintained that its seized patents were the effective property of S&G, an American company and, therefore, not subject to the Enemy Property Law. The defense worked in the sense that S&G (and thereby Schering) were able to profit from the patents through much of their useful life and until the U.S. government was ready to settle the German property disputes. But by the mid-1920s, conflicts of interest with S&G and the limited scope of the joint-venture convinced Weltzien that Schering’s ability to exploit the largest chemical market in the world required investing in its own independent subsidiary. With several new product lines (synthetic hormones and diagnostic imaging, i.e. chemicals to improve X-ray quality) in the pipeline, S&G’s lackluster sales track record did not inspire confidence. In December 1928, Schering founded its own wholly-owned subsidiary in the United States, the Schering Corporation.
From the beginning, Schering felt obliged to camouflage its ownership of the subsidiary even though it bore its name. Sales progressed, but from a very low base, and required heavy initial investment; despite high U.S. prices, profits were weak or non-existent. Schering’s vaunted new products found no immediate success. For unexplained reasons, the sale of Schering’s other products, such as photography chemicals and camphor, required separate legal entities in the United States. Moreover, legal disputes with S&G about trademarks and other matters dragged on. Nevertheless, this joint-venture was not closed until 1930, when its production was transferred to Schering Corporation. While Weltzien maintained his optimism despite the Great Depression, others in Berlin questioned his plans and focus on pharmaceuticals to the neglect of some of the company’s other products such as camphor. For Weltzien, the fast sales growth of patented pharmaceuticals in the United States provided a reason to believe that they would overtake the contribution of photography and camphor to Schering’s sales and profits in the United States, especially as they were less sensitive to economic downturns.
The loss of property after World War I hurt Schering economically and involved complicated issues requiring a lawyer’s skills. In 1921, Schering believed that it had lost thirty-seven patents for production processes, most of which had been recently issued and therefore had many years of useful life remaining. Not only did the loss of property bring Schering into ongoing legal battles with the U.S. federal government, it also led by a decade-long suit with Eastman Kodak, in which the U.S. government was ironically Schering’s ally. The dispute arose out of a 1903 agreement between Kodak and a consortium of German companies in Germany, which included Schering. Most of the other companies were controlled by Schering by the end of the 1920s. The 1903 agreement entailed a division of the photographic market, allowing each company to concentrate on geographic and business segments in which they excelled, and the exchange of shares, a violation of U.S. anti-trust law. The German companies got a sizeable block of Kodak shares in exchange for their agreement not to enter North America. Even after America’s entry into World War I, Kodak acknowledged its obligations under the agreement, but when the U.S. government began seizing German property, Kodak seems to have perceived an opportunity. In 1922, Kodak refused to hand over new shares and dividends to either the companies in Germany or to the Alien Property Custodian, the U.S. agency charged with handling enemy property. While the agreement was effectively terminated by the war, Schering and even the U.S. government agreed that Kodak still owned the shares under the terms of the initial agreement.
As the largest and most international of the consortium companies, Schering led the charge to get back the shares and dividends. Weltzien worked closely with the Alien Property Custodian’s office while Kodak, defying the government, pressed its case until 1929 and did not turn over the funds until 1931. Most of the $4 million ($57.3 million in 2010 dollars) the consortium received was kept in the United States, where the funds contributed to Schering’s ability to get financing through the difficult 1930s. This sum was equivalent to almost half of what Schering’s total Goldmark assets had been in 1924 and was crucial for Schering's financing in the cash-strapped 1930s when German firms in particular found accessing foreign exchange funds difficult. The long legal battles caused some division in Schering’s management, but when the final settlement was made many Schering leaders got bonuses. The consortium companies’ boards praised Weltzien’s international and legal skills in particular when the awards were made.
But Schering’s foreign assets and diversified pharmaceutical business were not enough to protect the consolidated company from many of the most important economic and political effects of the Great Depression. Laden with debt and overcapacity, Kokswerke’s coal and coke businesses increasingly relied on its more profitable chemical division to stave off financial collapse. Unlike the chemical division, nearly all Kokswerke’s assets, supplies, and sales were in Germany, whose fragile democracy did not withstand the economic juggernaut. The consolidated company was held hostage to a regime hostile to the free international commercial, financial and intellectual flows that had been fundamental factors in Schering’s success and keystones of Weltzien’s worldview, but were vehemently opposed by National Socialist zealots.
Adapting to the New Regime
In January 1933, when Adolf Hitler assumed power, there was nothing about Schering or its parent company, Kokswerke, that indicated it would become an obedient servant of a totalitarian, racist government. Its policies and leaders showed little sympathy for the new regime and none of its senior managers belonged to the Nazi Party, although several touted their party connections. Indeed, many were Jews. Although its managers hardly ever evinced unabashed enthusiasm for the Party’s program, by 1938, Schering conformed to most of the government’s new employment and other rules in order to insure its status as an Aryan firm in good standing. All the Jews in senior management had left their posts, and the chairman of the consolidated company had joined the party. As the Nazi government stepped up its war preparations in 1937, pressure grew to remove Jews from all commercial activity. Companies like Schering with powerful Jewish (or half-Jewish) managers ran the risk of losing contracts or worse still becoming non-Aryan companies, which could lead to expropriation.
Schering’s and its parent’s physical closeness to the corridors of political power was both a blessing and a burden for the company. Berlin firms could hardly escape the gaze of either skeptical foreign journalists and other visitors to the new Reich or government bureaucrats who controlled both the “sticks and carrots” essential to carrying out their businesses. Even during the early days of spontaneous violence, the party held Berlin enthusiasts under more control in the capital than those ruffians in the provinces, further away from critical commentators, especially foreign correspondents. Apart from brute force, the Nazis inherited many levers of power, such as foreign exchange controls, from their Weimar predecessors. The economic crisis prompted governments all over the world to become more intrusive in financing and other business issues. Particularly hard hit by the Depression, by the end of 1932, German government had taken control of much of the banking sector and played an active role in renegotiating Germany’s foreign private debt. Access to foreign capital became much more complicated with exchange controls and the Depression. Although Schering’s chemical business maintained much of its sales and profitability, Kokswerke’s core business was nearly bankrupt, threatening the whole consolidated enterprise.
Even before the Depression, Kokswerke’s coal and coke divisions had shown little economic vitality and the 1929 downturn was devastating. In spite of the more vibrant chemical business, the coal and coke businesses became more dependent on government largesse and banks, which themselves fell into government control after the 1931 banking crisis hit. With strict new foreign exchange laws during the last years of Weimar, even the international chemical business needed good relations with bureaucrats to buy and sell currency at normal or preferential rates. The Nazis were not averse to using complicated foreign exchange procedures and increasingly harsh penalties to exact co-operation from companies, the “stick.” For companies like Schering that regularly needed to buy and sell currency and which kept some funds abroad, the procedures increased the complexity of doing international business but also created opportunities. Blocked funds of foreign companies in Germany could be used by German entities with foreign funds to repatriate foreign currency into Germany at very favorable Reichsmark rates, a practice that Schering utilized extensively.
Weltzien could do little to avoid being central to Schering’s role in this transformation. Although Weltzien had little sympathy for most of the aims of the party, like most patriotic Germans, he yearned for some solution to the country’s long-standing economic and political problems, and had insufficient foresight about where the Nazis’ methods and aims were leading the country. Despite his half-Jewish heritage, Weltzien’s position was not overtly threatened during the early days of the regime, but understandably Weltzien may have felt more vulnerable than his fully Aryan co-workers. No existing document indicates his concerns or reaction to the Nuremberg Laws directly. During the first few years after the Nazi Machtergreifung (seizure of power), some of Weltzien’s trusted colleagues left Germany and went abroad, some to Schering foreign subsidiaries. Some were apparently uncomfortable with the new political climate, while others, particularly Jewish managers, probably left because some stakeholders declared that they were no longer appropriate representatives of the company. Supporting Nazi-inspired charities and demonstrations of national loyalty became regular parts of the Schering workday. Many announcements about Nazi human resource and worker directives came out under Weltzien’s signature. There is no record of his lodging any personal protest, even as long-standing colleagues were forced out, or expressing support when his superiors at Kokswerke protested Nazi hooliganism, such as disruptive behavior in board meetings to force the promotion of party members. Indeed, Weltzien seemed proud to announce the addition in June 1933 of the former number two National Socialist leader, Gregor Strasser, to Schering’s management committee, a decision that brought the company little relief and may have ultimately threatened both its domestic and foreign reputation.
Strasser’s addition to Schering’s management board in a public relations and human resource role appeared to have much to recommend it. However, Hitler and Strasser, his long-time number two in the party, had their falling out in December 1932 when rumors circulated that Strasser disobeyed the Führer’s instruction not to discuss with conservatives a coalition government without Hitler as Chancellor. Strasser’s inability to convince Hitler of his loyalty resulted in Strasser’s expulsion from the party. Despite his good relations with the more left-leaning faction of the party, business leaders had considered Strasser as one of the more responsible leaders among the Nazis. Moreover, he was a pharmacist with some business experience. Some conservatives still hoped, with reason, that Hitler might be replaced by a more docile Nazi who could quell worker anger and stand up to foreign pressure. Strasser might have become that man, but within a year, his name rekindled in the foreign press Schering’s association with poison gas, an allegation that actually referred to Kahlbaum’s bottling of gases long before its merger with Schering. Worse still, his former party colleagues murdered Strasser during the Night of Long Knives in June 1934, when Hitler settled old scores, brought some of the more radical elements of the party under firmer control, and favorably impressed some conservative leaders with his Will to Power.
There is no explicit evidence documenting Weltzien’s and other managers’ reaction to Strasser’s murder. By some accounts, he was arrested at Schering, which, if true, probably compounded the shock. Nevertheless, for the next four years, Weltzien and Schering had even more reason for compliance. Without removing threats completely, the government lessened its more obvious forms of violence and embarked on a series of measures, such as the foreign exchange transactions mentioned above, that rewarded companies for unquestioned obedience, the “carrot.” While Schering managers had seen at first hand the brutality the regime was capable of, they also began to profit from renewed prosperity, subsidies, and other opportunities for expansion. Although the chemical company had little or no direct business with the military, by 1936, its return on equity had nearly doubled from that of 1932. Schering cannot be considered a company that took immense advantage of the National Socialist campaign to remove Jewish companies from the German economy (so-called Aryanization), but while Weltzien was still in Germany, it did purchase two small Jewish companies. In both cases, it had worked with the companies for a long time, paid the highest amount the law allowed, and in one case provided employment to the owner outside of Germany, which was forbidden under German law of the period. In taking this chance, Schering, under Weltzien’s guidance, was using a complex, international holding structure that attempted to camouflage its activities from both its home and host countries.
Creating a New International Holding Company
In the political and economic environment that followed World War I, building and camouflaging foreign operations had become a strategic necessity which Weltzien orchestrated for Schering and which found new meaning as Hitler prepared Germany for war. The peace treaty that ended World War I created many new countries but did little to end the national animosity that made old and new countries less receptive to accepting investment from other countries, especially those with which they had recently been at war, as could be seen with Schering’s involvement in the United States. In the 1920s and early 1930s with increased government debt and current expenditure, taxes became an increasingly important consideration in how foreign investment was structured.
Yet by 1937 the Nazi government made this organizational strategy one of the most important ways to enhance the survival of Schering—and more dangerous. The last vestiges of government restraint, including toward Jews, had been removed. Hitler plunged the German economy into full scale preparation for war, which for him meant even more conformity with Nazi ideology. For Weltzien and for Schering, this had two immediate ramifications. The remaining Jews, or half-Jews, would have to leave the company and the company would have to be restructured if it were to have any hope of weathering the coming storm.
All of these considerations led to major reorganizations of Schering’s business, in which Weltzien played a key role and one that would determine how he spent the rest of his career. In the summer of 1937, Schering announced the merging of its main subsidiaries, mining and chemicals, which had operated under many names and as separate German companies, into a new entity, Schering AG. With the merger, the consolidated company finally adopted a divisional structure along functional and product lines. The consolidated supervisory board kept its Jewish members but added the half-brother of Hermann Göring. Weltzien became the chairman of the new management board, a position that he only held for less than a year. Although the merger helped Schering adapt to new Nazi corporate governance rules by making the company’s structure more transparent to the authorities, it failed to quell calls for the removal of its remaining Jewish leaders. The new rules removed many of the excuses management had used for non-compliance. They reduced the powers of supervisory boards and even shareholders, while giving new powers to managing directors, who also became directly accountable for the company’s adherence to state policy. By early 1938, Nazi officials defined a Jewish firm as one that contained anyone of Jewish or mixed ancestry in senior positions.
Six months after the merger and restructuring of the domestic companies, Weltzien set up a complex holding-company structure based in Switzerland for most of Schering’s foreign subsidiaries. There were many reasons for this strategy, including avoidance of U.S. taxes and fears of reprisals by Germany’s potential enemies. But aided by Germany’s accounting system, which did not require full consolidation, the new structure also kept some of Schering’s activities away from the prying eyes of Germany and also of the other nations where its operations were based. The Basel-based company held the shares of Schering’s foreign subsidiaries, with friendly Swiss bankers acting as trustees. Although the specifics changed with the political environment, basically flows of information and funds passed through Switzerland instead of going back and forth through Germany. Transferring ownership of German assets required the approval of German bureaucrats, who were lukewarm to the idea and had to be wooed with extensive arguments about its benefits to the Reich. Although the Swiss company technically owned nearly all foreign subsidiaries including those in the United Kingdom and France, the United States’ presumed neutrality in any future conflict was key to the functioning of the structure.
In many respects, the United States became the centerpiece of Schering’s international business. The specific holding structure evolved as Schering’s domestic and international political environment changed, but some common threads remained. The original structure set up a separate Swiss company for the supply of many foreign companies. That Swiss company was owned by Schering Corporation, Schering’s main U.S. subsidiary, effectively adding a double layer of camouflage. Ostensibly, the control and supply of much of Schering’s extensive foreign holdings would run through the United States. In 1938, this tactic had plenty of merit. Keeping large amounts of foreign inventory and moving a lot of production outside of Germany, along with concealing ownership, allowed many foreign entities to operate virtually unimpeded well into 1941. Although anti-German feelings were mounting in the United States, it was still a large foreign market with strong neutralist sentiments. Keeping the complex structure functioning from Germany and adapting it to the changing reporting requirements of the authorities fell to Hans Hartenstein, arguably Germany’s most skilled foreign exchange expert, whom Schering hired away from the Ministry of Economics in 1937. In early 1938, in keeping with the importance of law, foreign exchange regulations, and anti-Semitic laws, Hartenstein took over Weltzien’s position.
By December 1937, Weltzien’s situation in Germany had become untenable. He announced his resignation as president of the German company in order to take up the same responsibility for Schering’s North and South American operations. He sailed for the United States in April 1938. He was not alone in recognizing that the writing was on the wall, as the Nazi government tightened its restrictions on Jews as it prepared for war, even before Kristallnacht in November 1938. By the end of 1938, all of Schering’s Jewish board members, both management and supervisory, had resigned under pressure. In the face of “pragmatic” pressure from his own managing board to cut all business ties with Jewish stakeholders in Schering, the chairman of Schering’s supervisory board, Hans Berckemeyer, fought against this exertion of power, despite threats that his company might not receive an “Aryan Certificate,” a failure that could result in nationalization. Most of those Jewish stakeholders, like Otto Jeidels, the cosmopolitan banker from the Berlin-Handels Gesellschaft, left the country before the end of the year. A rare few, including Weltzien, were able to take sizeable amounts of money with them, helped by the company or by friendly government officials. From 1933 onward Schering had been placing its Jewish managers in good jobs abroad, mostly in the United States (seven in total), which still seemed like a safe haven for them and for Schering’s business, an act of humanity that brought forth attacks from Nazi faithful. Though by no means the only example, an unsigned letter directed to the Ministry of Economics in January 1939 accused Schering’s foreign holding company of being a ruse designed merely to keep foreign earnings abroad and Jews in leading positions in the subsidiaries.
Though certainly less threatening than Germany, the United States presented Weltzien with a host of uncomfortable challenges. Eighteen months after his arrival much of Europe was at war again. British agents did all they could to prevent German companies doing both domestic and international business in the United States. The FBI began building files on German businessmen in the United States, including Jewish refugees. Even those of Jewish extraction were pressured to show their allegiance to their adopted country by divulging information about the companies for which they worked. Weltzien was interrogated on several occasions and may have been a secret FBI source on details about Schering’s international holding company. Even before the United States entered World War II, the FBI accused Schering of several crimes, including antitrust violations in the marketing of pharmaceutical products, which led to both the American Schering Corporation and Weltzien personally paying fines in 1939. Weltzien paid $3000 ($47,100 in 2010 dollars), about a quarter of the amount he received with the Kodak settlement; there is no record of whether he was reimbursed by the company. Some reports gathered by the FBI accused Weltzien of aiding the German war effort and of being pro-Nazi. Schering managers received threatening letters from unknown authors. Ironically, too, some of the one hundred and fifty Bloomfield, N.J. Schering employees complained of the company being too Jewish. Years later, others reminisced that the German managers just did not understand America and American marketing, perhaps an indication that the transition to their new home was not completely smooth. Just after Pearl Harbor but before Germany declared war against the United States, Weltzien looked for some way to sell the subsidiary to a friendly buyer.
But in less than two months, he lost control of the company. Agents of the federal government entered the company in mid-January 1942. Weltzien’s resignation was dated March 1, but effective February 1, 1942. The last record of his doing Schering business dates from mid-January. Little is known about how Weltzien spent the war years. He did some consulting, and moved from Short Hills, New Jersey into Manhattan, but seems never to have held an executive position again. Likewise, only one of the six Jewish employees Schering sent to the United States for their safety was kept by the firm after the American government took over. Ostensibly the loyalty of the managers, including Weltzien, to the United States was called into question as they were allegedly more loyal to Schering and thereby Germany. But U.S. agents quickly determined that some of Schering’s products, such as insulin, would be useful for the war effort and several buyers were interested in purchasing the company that Weltzien had largely built. From 1943 on, Schering Germany no longer had any active business outside of Europe. By the early 1950s, the Schering U.S. was sold to the Plough family and re-christened Schering-Plough.
In many respects, Weltzien’s personal life paralleled Schering’s history. Both thrived with globalization and suffered with its breakdown. Weltzien spent much of his life trying to repair his company’s American business relationships. Despite his best efforts, when Weltzien died, both Schering’s and his transatlantic relationships had to a very large extent been severed.
Weltzien’s life reflected many of the contradictions of the European bourgeois world that had faded or been bombed away. When he was born, in Europe and the United States at least, children of even high-school administrators lived with relative security, luxury, and in a cultural environment full of the classics of Western civilization, as Stefan Zweig eloquently described in The World of Yesterday. Even ensconced in suburban New Jersey, Weltzien kept many of his old-world charms. One Bloomfield worker remembers him tipping his homburg hat as he left the office every evening.
His business life at Schering was much of his personal world. Weltzien never married nor had his own children. While on one of his first American trips during the early 1920s, Weltzien fell in love with the wife of Schering’s New York lawyer, a woman much older than he was and with a young daughter. When her husband died in 1931, she moved to Berlin and later went with him to the United States. Yet they never married and barely lived together. Nevertheless, her daughter remembered Weltzien as a wonderful “stepfather.” Children in his own family were utterly charmed by him. But Weltzien died alone in May 1950, sunning himself on a Manhattan rooftop, just hours before a planned dinner with one of Schering’s board members who was visiting New York.
Largely unknown outside of the business world, like scores of anonymous international businessmen, Weltzien’s life revolved around transatlantic connections that were an integral part of the first modern era of globalization. In the heyday of political and economic liberalism, businesses and businessmen could reasonably count on low and steady long-term interest rates, currency stability and conversion, little political risk, easy cross-border movement of inputs, growth in trade and GDP, and low taxes. But much of this economic environment depended upon governments’ insulation from the political demands of large portions of their populations and power brokers recognizing their responsibilities and the fragility of the consensus on which these conditions were built. Despite the insecurities and deprivations for much of society as well as numerous, serious financial crises, the pre-World War I world seemed to many observers as a “quiet stream,” even more idyllic in light of “the white water” that followed it.
By the time Weltzien died, in Europe and even in the United States, the families of most professionals had witnessed thirty years of economic havoc, war, lost savings, if not their homes, and worse. The world in which Weltzien had traveled so freely was divided into the so-called “free” and “Communist” spheres of the Cold War, a conflict that was fought not only with expensive weapons, but also with new social programs, which raised government expenditures and the taxes of western companies and individuals to levels unimaginable in 1914.
There is virtually no record of Weltzien’s personal and business experiences in the United States during the late 1940s. After the war, Weltzien did venture back for a short visit to Berlin once, a city whose division and destruction served for many years as a metaphor for the state of the whole world. He corresponded with his former colleagues about getting back the property Schering had lost in the war and about disputes with the owners of Jewish companies Schering had taken over. The correspondence never mentioned the possibility of returning to Schering in Berlin or his taking on any post with his old company elsewhere. Some letters were in English. They give no indication of Weltzien’s reaction to the devastation he found in Berlin. There are also no references to the many other Schering employees who spent the war years in the United States. While there were no signs of wanting financial support at the end of his days, Weltzien could be said to have died, at the age of sixty-four, with neither country nor company, a businessman torn from his roots with no new seedbed. We will probably never know Weltzien’s state of mind in the spring of 1950. But in the wake of destruction of fascism, advent of communism, and a new major war, imagining the rebirth of European and American ties – which businessmen of his ilk had tried in vain to restore – as well as the political stability and economic growth of the 1950s and 1960s probably still seemed like a fantastic dream, to say the least.
 Edward Hallett Carr, Nationalism and After (London: Macmillan, 1968).
 Die Einreden des Blankoakzeptanten gegenüber der Wechselklage, SchA-B1-524.
Julius Weltzien files, Schering Archives, Bayer AG, Berlin, Germany, hereafter SchA, SchA-B1-524 and SchA-B5-790. E-mail from Thore Grimm (Bayer Business Services, Schering Archives) to Christopher Kobrak, April 12, 2012. There is no information about where and for exactly what Weltzien earned the citations. One indicates “Tapfer vor dem Feinde” (“Courage in the face of the enemy”), a very standard phrase. They may have been awarded to his whole unit. E-mail from Thore Grimm to Christopher Kobrak, September 25, 2012.
 E-mail from Tobias Weltzien to Christopher Kobrak, July 5, 2012. Tobias Weltzien is the son and nephew of two distant cousins of Julius Weltzien, Wolf-Deneke and Erika Weltzien, who spent a lot of time with Julius’s immediate family before, during and after World War II. Both Julius Weltzien of this chapter and Tobias Weltzien’s grandfather, Julius Weltzien, a first cousin of Carl Heinrich Weltzien, were named after Tobias’s great-grandfather.
 Julius Weltzien files, SchA, SchA-B1-524 and SchA-B5-790.
 E-mail from Tobias Weltzien to Christopher Kobrak, July 5, 2012. This experience was not uncommon for families like the Weltziens with mixed Christian-Jewish ancestry, defined as “Mischlinge” by the Nazi regime. E-mail from Peter Hayes to Chris Kobrak, August 21, 2012.
 E-mail from Tobias Weltzien to Christopher Kobrak, July 26, 2012. The house still exists at Prinz-Handjery-Str. 2-3, in Zehlendorf.
 Christopher Kobrak, National Cultures and International Competition: The Experience of Schering AG, 1851–1950 (Cambridge, Eng.: Cambridge University Press, 2002), 149–150.
 Transcript of Wilhelm Borner’s statement to the OMGUS (Office of Military Government, United States), translated from the German, April 10, 1946, SchA, Jakli collection, 16.
 For the early history of Schering see Kobrak, National Cultures and International Competition, 13–50.
 Gerald D. Feldman, “Foreign Penetration of German Enterprises after World War I: The Problem of Ueberfremdung,” in Historical Studies in International Corporate Business, ed. Alice Teichova et al. (Cambridge, Eng.: Cambridge University Press, 2002), 87–110.
 William McNeil, American Money and the Weimar Republic (New York: Columbia University Press, 1986) and Harold James, The German Slump (Oxford, Eng.: Clarendon Press, 1986).
 Kobrak, National Cultures and International Competition, 153.
 Kobrak, National Cultures and International Competition, 362–372, esp. Table 17, p. 371, and Table 14, p. 370.
 Kobrak, National Cultures and International Competition, 160–167. The amounts and terms varied greatly and were booked on unconsolidated subsidiaries, but even during the best years of Weimar when Kokswerke’s share price was relatively high, total foreign loans amounted to roughly 50% of the parent’s capital and carried high-interest rates and conversion features. Ibid., 190–193.
 Ibid., 160–167.
 Ibid., 163–166.
 Ibid., 171–176.
 Ibid., 217–244.
 Peter Hayes, Industry and Ideology (Cambridge, Eng.: Cambridge University Press, 1987), 169.
 Kobrak, National Cultures and International Competition, 217–244.
 Ibid., 245–295.
 Translation by Liaison & Protocol Section, OMGUS, January 18, 1939, SchA, B2/1.
 Kobrak,National Cultures and International Competition, 296–341.
 Stefan Zweig, The World of Yesterday (New York: Random House, 1943).
 For the stream metaphor, see David Landes, Unbound Prometheus (Cambridge, Eng.: Cambridge University Press, 1993), 359. For an excellent discussion on the fragility of the political and economic pre-conditions of the Gold Standard era, see John Maynard Keynes, The Economic Consequences of the Peace (1920; New York: Penguin Books, 1971).