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A book published in 2001, IBM and the Holocaust, as well as a dismissed lawsuit against the company treats the use of Hollerith equipment by the Nazi government and IBM's role. In a "IBM Statement on Nazi-era Book and Lawsuit," IBM responded in February 2001 that
It has been known for decades that the Nazis used Hollerith equipment and that IBM's German subsidiary during the 1930s – Deutsche Hollerith Maschinen GmbH (Dehomag) – supplied Hollerith equipment. As with hundreds of foreign-owned companies that did business in Germany at that time, Dehomag came under the control of Nazi authorities prior to and during World War II. It is also widely known that Thomas J. Watson, Sr., received and subsequently repudiated and returned a medal presented to him by the German government for his role in global economic relations. These well-known facts appear to be the primary underpinning for these recent allegations.[14]
Browning Automatic Rifle
M1 Carbine
Despite Watson's efforts on behalf of world peace, the interests of international commerce failed to prevent the breakout of war. When the Second World War began – well before the United States was formally engaged in the conflict – Watson placed all IBM facilities at the disposal of the U.S. government. IBM's product line shifted from tabulating equipment and time recording devices to Sperry and Norden bombsights, Browning Automatic Rifle and the M1 Carbine, and engine parts — in all, more than three dozen major ordnance items and 70 products overall. Watson set a nominal one percent profit on those products and used the profits to establish a fund for widows and orphans of IBM war casualties.[15]
Allied military forces widely utilized IBM's tabulating equipment for mobile records units, ballistics, accounting and logistics, and other war-related purposes. There was extensive use of IBM punched card machines for calculations made at Los Alamos during the Manhattan Project for developing the first atomic bombs.[16] During the War, IBM also built the Automatic Sequence Controlled Calculator, also known as the Harvard Mark I for the U.S. Navy – the first large-scale electro-mechanical calculator in the U.S..
To meet wartime product demands, IBM greatly expanded its manufacturing capacity. IBM added new buildings at its Endicott, New York plant (1941), and opened new facilities in Poughkeepsie, New York (1941), Washington, D.C. (1942),[17] and San Jose, California (1943).[18] IBM's decision to establish a presence on the West Coast took advantage of the growing base of electronics research and other high technology innovation in the southern part of the San Francisco Bay Area, an area that came to be known many decades later as Silicon Valley.
IBM had expanded so much by the end of the War that the company faced a potentially difficult situation – what would happen if military spending dropped sharply? One way IBM addressed that concern was to accelerate its international growth in the years after the war, cumulating with the formation of the World Trade Corporation in 1949 to manage and grow its foreign operations. Under the leadership of Watson's youngest son, Arthur K. ‘Dick’ Watson, the WTC would eventually produce half of IBM's bottom line by the 1970s.