By Elizabeth Manus

January 17, 1999 | 7:00 p.m

On Dec. 14, Peter Olson, Random House Inc.'s mild-mannered chairman

and chief executive, issued a memo addressed to "everyone" at the company, having to do with Random House's corporate parent, German media giant Bertelsmann A.G. "Over the weekend," Mr. Olson began, "published reports raised questions about Bertelsmann's publishing program in the 30's and 40's and the alleged affiliation of one of its former senior executives with German political organizations during the Nazi era." He was referring to information contained in two articles, one that appeared in October in the Swiss weekly magazine Die Weltwoche and one that ran in December in The Nation . The accusations had been tough: Contrary to Bertelsmann's assertions on its Web site that during the 1930's and 1940's the company had been "a constant embarrassment to the ruling NSDAP" (Nazi Party) because it had refused "to toe the party line," Düsseldorf-based journalist Hersch Fischler, author of the piece in Die Weltwoche and co-author of article in The Nation , wrote that Bertelsmann had published "a wide range of Hitlerian propaganda," including titles such as People Without Space , which whipped up enthusiasm for Hitler's attacks on Germany's neighbors, and Between the Vistula and the Volga , which claimed Jewish people had murdered scores of Ukrainian women and children. After Mr. Fischler published his findings, a follow-up report on European TV station 3sat included the news that Bertelsmann, which had begun in 1835 as a publisher of prayer books and hymnals, had published a book called Sterilization and Euthanasia: A Contribution to Applied Christian Ethics in 1933. Mr. Olson was clearly concerned that Random House employees might be a bit queasy about the unsavory facts about their new owners. (Bertelsmann bought Random House last March for an estimated $1.4 billion.) So after quoting a statement from Bertelsmann's 45-year-old chairman and chief executive Thomas Middelhoff, in which Mr. Middelhoff promised "an independent critical review" and conceded, "During the Nazi era there were clearly some titles published by Bertelsmann which were not consistent with our values," Mr. Olson listed his office phone number and invited any Random House employee to call him personally and he would "address any concerns" and "answer any of your questions." But since then, no one has called. Random House spokesman Stuart Applebaum told The Observer , "Neither he nor I got a single call from authors, agents, special-interest groups–not an e-mail, not a letter to this day." What was Mr. Olson's reaction? "He said he didn't know what to make of it," said Mr. Applebaum. There was also not a peep from any of the Authors Guild's more than 7,500 members. Guild president Letty Cottin Pogrebin said she is keeping her eye on the situation. "From what we gather, it's absolutely appalling that they'd choose to cover up their Nazi history, but it isn't so surprising given what we know about corporate interests and the Nazi regime," she said. "We don't want to trust secondhand reports–we're waiting to see original documentation.… Authorsdoing deals with Bertelsmann are going to have to make their own decisions. This is 50-year-old history, but some writers have 50-year-old memories." In Germany, Bertelsmann's home turf, the reaction has also been muted. "It was very strange to have so reputable a newspaper publish it, and then not have it show up in our own newspapers," said Stephan Russ-Mohl, a professor of journalism and media management at Freie Universität Berlin. "It's funny how it worked so slowly, compared to how it usually works. That wouldn't have happened if it were Daimler-Benz." Asked why he thought the story took so long to catch on in the German press, Mr. Russ-Mohl said there were a few reasons, but he thought that "the most important is that Bertelsmann is the most powerful media company in Germany, and the most attractive media company, where most journalists would like to work." He was speaking of the fact that Bertelsmann owns six of Germany's newspapers, as well as one of its most popular newsmagazines, Stern . "You think twice about saying something critical about your potential future employer," said Mr. Russ-Mohl. Bertelsmann has long proclaimed itself in the pink of moral health. Its company history, penned for its 150th anniversary in 1985, says that Bertelsmann was forced to close in 1944 and that some senior employees were jailed. Mr. Fischler countered that the company continued to publish, and the arrested employees, who had been accused of black-market paper trading, were freed after Joseph Goebbels intervened. And while the corporate history mentions entertaining pocket editions for the armed forces such as Memoirs of a Good-for-Nothing and The Foolhardy Mouse , Mr. Fischler reported that among these rousing war tales were some with less folksy titles ( With Bombs and Machine Guns Over Poland ; German Tanks Enter Hell ) and that Bertelsmann was the largest supplier of books to the German army, and also supplied the SS. And where Mr. Fischler reports that Bertelsmann founding family member Heinrich Mohn was a "passive" member of the SS and a supporter of Hitler Youth, the company history asserts that Mr. Mohn "concentrated mainly on the Christian education of the young, not publishing any proponents of 'German' Christianity while Adolf Hitler was in power." His son Reinhard Mohn, a Luftwaffe soldier who was an American P.O.W. from 1943 to 1946, retains control of the company at age 77. While Mr. Middelhoff's statement quoted in Mr. Olson's memo did promise accountability, he reasserted the company line that "Bertelsmann was not in any way an active supporter of the Nazi regime and, in fact, for a time during World War II, the Nazi party closed down the Bertelsmann publishing operations and jailed three of its senior executives." In any case, the independent commission promised by Mr. Middelhoff is under way. Prominent Israeli historian Saul Friedländer, author of 1997's Nazi Germany and the Jews: The Years of Persecution, 1933-1939 (Volume 1) , told The Observer he has chosen his team: Norbert Frei, a historian at Ruhr University in Bochum, a historian specializing in the Nazi period; Reinhard Wittmann, a professor at the University of Munich whose expertise is in German literature and the history of publishing; and Trutz Rendtorff, a professor of theology at the University of Munich. Mr. Friedländer said that Bertelsmann has promised him full access to the company archives and complete control over the final product and how it is publicized and published. "We are not submitting it for their O.K.," he said, adding, "Mr. Middelhoff has been extraordinarily supportive." Farrar, Straus & Giroux is another publisher whose parent company, the Stuttgart-based von Holtzbrinck Group, has a Nazi past. According a June 1998 Vanity Fair article by David Margolick, company founder Georg von Holtzbrinck was a member of the Nazi Party who published Nazi-sanctioned magazines and produced books for German soldiers. However, the von Holtzbrinck heirs have not tried to do damage control. Farrar publisher Roger Straus said the issue of publishers with Nazi pasts was not a simple one. "When you're manufacturing propaganda, you could do considerable harm. When you're manufacturing airplane engines, you do a different kind of harm," said Mr. Straus. "There seems to be some conversation about who lied when and about what. In all fairness, the [Bertelsmann] managers are very concerned. At least they're making the right noises. The interesting thing to find out is, Is there any publisher in Germany that went through the Hitler period and survived and came out clean?" New Press director André Schiffrin asked the same question. "Company histories are company histories," he said. "What's needed is an objective look at German publishing, like they have in France." (France has a comprehensive overview titled French Publishing During the Occupation .) Andrea Heyde, project director at the German Book Office on Fifth Avenue, whose mission is to get more German authors read stateside, said, "German publishers should face their past, and not just when they're forced to. If it's a factory, it's one thing. But these are people who work with the written word." The U.S. publishing community's reaction to the Bertelsmann findings may simply be a case of sanguine acceptance that corporations are hardly receptacles of virtue. "If you and I had a nickel for every company that's spun the truth, we'd have a home in every fashionable resort town in the universe and a Gulfstream V to get us from one to the other," said a von Holtzbrinck Group employee. "How could this possibly come as a surprise? Any company that came through the war would have to have had some dealing with the Nazis. Georg von Holtzbrinck was a really smart businessman who knew he had to get in bed with the Nazis to stay in business. He practiced Realpolitik ." Since World War II, Bertelsmann has been an assiduous supporter of humanitarian organizations and causes. The company recently received the International Humanitarian Award from the World Union for Progressive Judaism for promoting understanding between Jews and non-Jews. Several weeks ago, Bertelsmann announced a major donation–500,000 Deutsche marks–to help Steven Spielberg's Survivors of the Shoah Visual History Foundation establish a presence in Berlin. As for the people who ostensibly matter most in publishing–authors–there has been no outcry as yet. Farrar author Grace Paley said, "I feel very far from Holtzbrinck, I have no feelings about my relation to them at all. It was what was happening in Germany, and everyone with money thought they could get away with it." Ms. Paley was speaking from her home in Thetford, Vt. "Everything I see in this house is made by an innocent person that's owned by some bad person, or by some greedy corporation or some corporation that tries to sell us the idea that it's innocent." Gore Vidal, a Random House and Modern Library author, hadn't heard anything about the dust-up at his home in Ravello, Italy. "The only thing that disturbs me is that they were publishing Christian hymnals," he quipped. "I'm anti-Christian." The silence comes with its own irony. "I'm kind of surprised there hasn't been a reaction," said one New York-based scout. "What's funny about it is that books on the Holocaust continue to do so well." She mentioned three books that sold in December alone: A Life in Pieces , by Blake Eskin, sold to W.W. Norton; The Borders of Time , by Leslie Maitland, which sold to Houghton Mifflin; and Witness: Voices From the Holocaust , edited by Joshua Greene and Shiva Kumar, sold to the Free Press. And last spring, William Morrow's Rob Weisbach Books paid about $500,000 for The Nazi Officer's Wife , by Edith Hahn. Mr. Schiffrin thought that when it comes to Bertelsmann, it's a size thing. "Does a 1,000-pound gorilla have more trouble sitting down because it was a Nazi?" he said. "They're very big. They're very powerful. People are careful about criticizing what is by now the biggest firm in American publishing." "What's most dismaying is that [Bertelsmann] now owns so much of American publishing. I think it's bad for American publishers to be in the hands of foreign conglomerates in any case, but in this case it's particularly lamentable," said Jonathan Brent, editorial director of Yale University Press. He mentioned Random House Inc. imprint Schocken Books, founded in Berlin in 1933 and shut down in November 1938 in the wake of Kristallnacht. "Schocken is a publisher that truly was persecuted by the Nazis, and now to be owned by a publishing company that collaborated with the Nazis is rather a horrible thing to contemplate." Schocken publisher Arthur Samuelson said of the independent commission, "I think Bertelsmann is going about this the right way." Mr. Brent remained skeptical. "I would hate to know what would happen if one of these conglomerates became part of a tyrannical foreign power," he said. "What if 40 percent of the American publishing had been owned by German firms in 1932? Things like this happen and happen and happen and happen. We can't somehow be free of the past. We think it's over and then it's not over." You can reach the Publishing column at emanus@observer.com.