The Mortal Wounds

Part I: The 80-Year Betrayal

Chapter 1: The Mortal Wounds (1942-1945)

During World War II, the US government enacted genuinely aggressive capital controls and taxation — among the most aggressive in American history:

The teeth were real:

• Top marginal income tax rate hit 94% on income over $200,000 (~$3.4M in 2026 dollars)
• FDR proposed 100% tax on income over $25,000 — Congress killed it
• Excess Profits Tax on corporations reached 95% — collected $34.5 billion
• $11 billion reclaimed through retroactive contract renegotiation (Renegotiation Act of 1942)
• Executive Order 8785 froze all continental European assets in the US (~$7 billion)
• Treasury's Foreign Funds Control (FFC) required licenses for virtually all foreign transactions
• Payroll withholding invented in 1943 — before this, people paid taxes annually and evasion was rampant. Withholding at source made wage/salary evasion nearly impossible. Tax filers went from 7M to 42M.
• Truman Committee functioned as standing whistleblower magnet — thousands of complaints, saved estimated $15 billion

Key legislation: Trading with the Enemy Act (revived), Revenue Act of 1942, Current Tax Payment Act of 1943, Excess Profits Tax Acts of 1940-42, Renegotiation Act of 1942.

Key figures: Henry Morgenthau Jr. (Treasury Secretary, genuinely aggressive), John W. Pehle (Foreign Funds Control), Senator Harry Truman (anti-profiteering watchdog).

But the Connected Got Passes

These are not historical footnotes. They are mortal wounds to the soul of the American project that festered into the cancer we see today. The unprosecuted became the establishment. Their fortunes compounded for 80 years. The cancer metastasized across generations.

• ITT Corporation — Sosthenes Behn maintained business with Nazi Germany throughout the war. ITT subsidiaries built components for Focke-Wulf bombers used against Allied forces. Investigated, never prosecuted. Political connections to the military establishment shielded him.
• Ford Motor Company — Ford-Werke used forced labor, produced Wehrmacht military vehicles. Henry Ford received Hitler's Grand Cross of the German Eagle in 1938. No sanctions whatsoever. The Ford family fortune compounded for 80+ years.
• GM/du Pont — GM's Opel subsidiary produced trucks for the Wehrmacht. After the war, GM successfully claimed tax deductions for Allied bombing damage to their German factories. The du Pont family controlled GM. The audacity of claiming tax relief for damage to factories that built vehicles for the enemy — and getting it — tells you everything about selective enforcement.
• Chase National Bank — Paris branch maintained accounts for German officials during the occupation. Treasury's John Pehle pushed for action, but the bank's political connections limited consequences. Chase eventually became JPMorgan Chase — the largest bank in America.
• Prescott Bush / Union Banking Corporation — Seized under Trading with the Enemy Act (Vesting Order No. 248, October 1942) as a clearing house for Fritz Thyssen, German industrialist. Zero criminal prosecutions. Bush faced minimal personal consequences and went on to become a US Senator. His son became CIA Director then President. His grandson became President. The unprosecuted Nazi collaborator's lineage occupied the White House for 12 years.
• Standard Oil of New Jersey (Exxon) — Cartel agreements with I.G. Farben. Shared synthetic rubber patents with German chemical giant, restricted American access to the technology. Exposed by Truman Committee. Company paid fines. No criminal prosecution. Became ExxonMobil — one of the most valuable companies on Earth.

The pattern: Enforcement was harshest against the politically powerless — Japanese Americans had assets frozen alongside internment, small German nationals were prosecuted vigorously — and weakest against large American corporations with Axis ties. Not a formal exemption, but enforcement discretion in practice.

The Swiss problem was never solved: Switzerland resisted behind banking secrecy laws. The Washington Accord of 1946 was a weak compromise — Switzerland largely didn't comply. This festered for fifty years until the 1990s Holocaust restitution cases.

The consequence: The permission structure was set. You can collaborate with the enemy, profit from it, and keep your fortune and your freedom. Thirty years of compounding later, those same fortunes and institutions were powerful enough to restructure the monetary system of the entire world to benefit themselves.