From Business History: De-Nazifying the Love Bug: The VW Beetle Story Part II

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You can scroll the headlines all day and still feel empty. I'm Ben Higgins, and If You Can Hear Me is where culture meets the soul. Honest conversations about identity, loss, purpose, peace, faith, and everything in between. Celebrities, thinkers, everyday people, some have answers, most are still figuring it out. And if you've ever felt like there has to be more to the story, this show is for you. Listen to If You Can Hear Me on my iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. Pushkin. Too quick? No, it was perfect. Pushkin. Stop. You got it. How does a country that is completely destroyed end up making the best-selling car of all time, This is business history. Last time on the show, Adolf Hitler had a to-do list. It was a pretty evil to-do list, but way down on the to-do list, he was going to design a car for the German people. For the German Volk, if you will. It was going to be a Volkswagen. An engineer named Ferdinand Porsche signed up to design and build the Volkswagen. His son-in-law, Anton Piech, ran the factory, and he ran it with utter brutality. He forced enslaved workers to build the militarized version of the Volkswagen Beetle. And in the spring of 1945, the two guys running the factory flee. The Allies come in, and the workers are freed. And there is this question, a question for the Volkswagen factory and for all of Germany, which is, what are the Allies going to do with the factories? What's going to happen to the German economy? It is tempting to say that what you should do after two world wars started by Germany, perhaps you should make it so that Germany can never fight again. More than never fight again. Can never produce anything. Can't produce a car, a rifle. You want Germany to basically make pretzels and beer and that's it till the end of time. And this was not just some like populist emotional response, right? The Secretary of the Treasury of the United States of America had exactly this response. His name was Henry Morgenthau, and he put together this plan called, reasonably enough, the Morgenthau Plan. And it said— Oh, yeah, of course. Of course you get to read from it. This is my favorite part. Within a short period, if possible, not longer than six months after the cessation of hostilities, all industrial plants and equipment not destroyed by military action shall either be completely dismantled and removed from the area or completely destroyed. This is saying, like, if there is a machine in it, we will take that machine or smash it to bits. Yeah, this is basically saying, let's make Germany a country of 19th century peasants farming the land forever. We know, of course, the United States decided not to pursue that plan. We know, in fact, that the United States and its allies decided to pursue essentially the opposite plan. Instead of destroying the factories that supplied Germany's war machine, the allies helped the Germans rebuild them better than ever. I'm Jacob Goldstein. I'm Robert Smith. And this is Business History. A show about the history of business. Love explaining that to people. Today on the show, how did we get from a moment of utter destruction to a German economic miracle where it became one of the big manufacturing powers in the entire world? And how did that lead to a little car that looked something like a bug being driven around the streets of California by hippies and surfers? The war is over! The war is over. Good news. Cheers, allies. The Soviets have occupied the eastern part of Germany, and they know what they're going to do with the economy there. They're going to take everything. They're just taking the factories back to the Soviet Union. But the Allies, so the U.S., Britain, and France, they have cut the western part of Germany into three parts, three occupation zones. And the Allies at this point can't really agree on what to do with the German economy. The Americans were super anti-Nazi. Fair enough. The British are obviously also anti-Nazi, but maybe they were like a little bit less anti-Nazi than the Americans. Or like you could at least say the British were more pragmatic about the situation. For one thing, Britain, unlike the United States at this moment, was like flat broke. They had their economy destroyed by the war, essentially. And they had this chunk of Germany that they were responsible for managing. and they couldn't afford to, you know, feed and clothe the Germans forever. They couldn't afford for it to be a ward state. I mean, they're rationing food in London. Yeah, yeah. The British still have a big empire in Africa and in Asia at this time. And so they are used to managing countries that they have subjugated and they tend to do it without having to deploy that many troops. And what they do is they deploy some small number of people And then they get the locals to kind of run the economy on their own. So they think, maybe we can do this in Germany. And there's a little bit of luck that comes in for the Volkswagen factory because it happens to be in the British section of West Germany. And so the British send in an army officer named Ivan Hurst to basically run this factory that the Allies have taken from the Nazis. I picture them in khakis. I just do. You have rolled up sleeves, a hat, a sharp hat. Time to get to work here, boys. And he finds when he gets to the factory that about 70% of it is still in good shape, which end of World War II in Germany is pretty good. This is definitely a glass half full situation. And so while the Allies are sort of thinking their big thoughts about what should we do with the German economy, Ivan Hearst thinks, let's see if we can just start making some cars at this car factory. He is an engineer. What do engineers do? They see a factory and they're like, let's make some cars. We can drive them around. He does have the good sense to change the name of the town where the factory is. It's a town that the Nazis had built. The Germans, as you remember from last time, had built the town alongside the factory and they called it, I don't speak German, Stadt des KDF Wagens, which basically means strength through joy cars town. Extremely Nazi name. Yes. And so Ivan and the British sort of look around town and they see that there's this castle in town or near town and it's called Wolfsburg, perhaps Wolfsburg. And so that's what they call the town. And that is still the name of the town where Volkswagen is headquartered. Slightly less Nazi. It's not super warm and fuzzy, right? Wolf town. Wolf town. So, OK, so they've denazified the name. He's getting the factory going and now he needs some demand. If they're going to make these cars, somebody's going to have to buy them. The Germans don't have any money. And so Hearst convinces the British to order Beetles to be used for the occupation forces, which, again, very pragmatic. It costs money to make cars in England, to ship them to Germany. If you even can do that. If you even can do that. So the British order 20,000 Beetles, Volkswagens, to be delivered in a year, which is way more cars than the factory has ever built in a year. They're just putting the factory back together. And crucially, it is not clear at this point who is actually going to work in the factory and build these cars. To recap from last time, they had had Aryan youth building the cars. They were drafted off to the war. Then they were using enslaved prisoners, and they've obviously been freed and escaped. And so when you look around, there's also the people who enslaved those prisoners. Right, the people running the factory. Who worked for the Nazis or who were Nazis. You didn't want them in charge. How Nazi is too Nazi? It is a question that is central to the rebuilding effort across the western part of Germany. Who can we hire and feel like at least okay about hiring? And who is absolutely too Nazi, can never allow them back? There was the incident we talked about last time in the show, which was the nursery where babies born to the enslaved workers were brought. They were promised they would take care of the children, but they allowed the children to die. Those people clearly are two Nazi, right? Ten members of the staff were tried for murder. Two were sentenced to death. And then you get to the factory itself, where there were some people clearly who were knowingly sending those babies off to die. And Hearst and his colleagues go through the records of the people who ran the factory. And they wind up firing 228 people, including the technical director and the head of operations at the factory. Two Nazi. So it kind of leaves you really with soldiers returning from the war. Yeah. And there are lots of soldiers who have been demobilized, who are, you know, looking for work. But they are very difficult people to manage, right? Now you have this factory with people who are just off fighting the Soviets on the Eastern Front. Imagine being the manager and being like, hey, can you pick up the pace? Like, see what's going to happen if you tell a Nazi soldier to do that. And here they are in a destroyed factory. There's no real housing in the town. So they're being housed in the cabins, I suppose, for the former enslaved workers. They're essentially working and living in a concentration camp. Yes. And, you know, food is hard to come by. I mean, Germany is destroyed, right? So you have workers just wandering off to try and find something to eat. People are living on like a thousand calories a day. And on top of all that, the winter of 1946 is particularly cold. and the ports freeze over and the rail lines freeze over. And so you can't get food to the factory. You can't get supplies to the factory. Essentially, the factory, the assembly line closes down for months. So the British engineer, Ivan Hurst, promised 20,000 vehicles. Not looking good for him. He does deliver 10,000. Kind of a miracle. Kind of a miracle, but they were 10,000 extremely bad cars. They were built partly with like sort of quasi salvaged parts that had been left over at the factory. And like something like half of them immediately after driving out the factory gates had to come back for repairs. It's like that moment in the comedy where the car rolls off the production line. Everyone cheers and the wheels fall off and the windshield caves in. Everyone's like, oh, it was that truly like doors wouldn't close. Headlights wouldn't work. But in an interesting quirk of history, this proved to be kind of a lucky break for Volkswagen itself, Volkswagen as an entity, because British engineers were going around Germany looking at factories thinking like, are there any really nice ones we want to take back to England piece by piece as reparations for the war, right? This is still the spirit of the time to some extent. You could have a British people's wagon, you know, built in Manchester. And so these engineers come to the Volkswagen factory and they see these garbage cars coming off the line and they like this is a terrible vehicle People around the world are never going to want to drive these so Volkswagens We pass Thanks I hearing the Benny Hill theme It like driving a tiny little car and the doors are falling off And so this Volkswagen factory is removed from the reparations list. They leave it alone. So around this time, we're getting to the later part of the 1940s. There is this big important shift happening in Germany and Europe. And that is that the Allies have decided that, in general, they want Germany to actually thrive and succeed. Yeah. And it's interesting to think about why this is happening, right? There are a few reasons. One is, within Germany, there is a threat from the right, essentially, from the former fascists. People are painting swastikas on the walls of the Volkswagen factory. People, you know, they were Nazis three years before this, right? And that spirit is still there. And so the West is concerned about that. There is also a threat from the left, right? The Soviets are right there, right across the line in Germany. And furthermore, communism is popular in Western Europe, right? Ciao, Italia. And so there is this idea, which is we can fight the threat both from the right and the left by helping the ordinary people of Germany and Western Europe get richer. They should rename the town Strength Through Capitalism. Yes, Wagonstown. And, you know, the Marshall Plan from the U.S. is probably the most famous part of this. But especially in Germany, the Marshall Plan was not that big in terms of dollars. I think more important was this vibe shift away from let's make Germany poor and isolate it so they can't hurt us and toward let's make Germany rich and trade with them so they don't want to hurt us. And I know it's a different show that we'll do one day, but the same thing was happening in Japan, too. Yes. Yes. And I love this shift. Like, it really makes me happy to think about, I guess partly because I believe in it, right? For me, the central big idea of economics, of markets, is the world is not zero-sum. The pie can get bigger. Everybody can be better off. Trade can bring nations together in a web of prosperity. And I know this sounds like naive or unfashionable, but I think it's true. And this was the dream at the time, that if you pulled this off in Europe and in Germany, there could be economic growth, shared prosperity, liberal democracy, a chicken in every pot, a Volkswagen in every driveway. After the break, we know it's going to happen. But it's really interesting how it happens, how Hitler's car wins over America's hippies. That's what we're going to talk about later in the show. In 2023, a story gripped the UK, evoking horror and disbelief. The nurse who should have been in charge of caring for tiny babies is now the most prolific child killer in modern British history. Everyone thought they knew how it ended. A verdict, a villain, a nurse named Lucy Letby. Lucy Letby has been found guilty. But what if we didn't get the whole story? The moment you look at the whole picture, the case collapses. I'm Amanda Knox, and in the new podcast, Doubt, the case of Lucy Letby, we follow the evidence and hear from the people that lived it to ask what really happened when the world decided who Lucy Letby was. No voicing of any skepticism or doubt. It'll cause so much harm at every single level of the British establishment of this is wrong. Listen to Doubt, the case of Lucy Letby on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. Run a business and not thinking about podcasting? Think again. More Americans listen to podcasts than ad-supported streaming music from Spotify and Pandora. And as the number one podcaster, iHeart's twice as large as the next two combined. So whatever your customers listen to, they'll hear your message. Plus, only iHeart can extend your message to audiences across broadcast radio. Think podcasting can help your business? Think iHeart. Streaming, radio, and podcasting. Let us show you at iHeartAdvertising.com. That's iHeartAdvertising.com. What if mind control is real? If you could control the behavior of anybody around you, what kind of life would you have? Can you hypnotically persuade someone to buy a car? When you look at your car, you're going to become overwhelmed with such good feelings. Can you hypnotize someone into sleeping with you? I gave her some suggestions to be sexually aroused. Can you get someone to join your cult? NLP was used on me to access my subconscious. NLP, aka Neuro Linguistic Programming, is a blend of hypnosis, linguistics, and psychology. Fans say it's like finally getting a user manual for your brain. It's about engineering consciousness. Mind Games is the story of NLP, its crazy cast of disciples, and the fake doctor who invented it at a New Age commune and sold it to guys in suits. He stood trial for murder and got acquitted. The biggest mind game of all? NLP might actually work. This is wild. Listen to Mind Games on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. Okay, that's the end of the ads. Let's get back to what Ivan Hurst is doing at the Volkswagen factory. So after a few years, Ivan Hurst in his khaki suit and jaunty hat, he started to turn things around at Volkswagen. He's created a network of dealerships, which is what you have to have, right? Trained mechanics. He's developed a nicer version of the Beetle for export. And orders are coming in, at least nearby in Europe, Netherlands and Switzerland. And it's time, he feels, to hand Volkswagen back to the Germans. And so you got to figure out then who's going to run it. And we get back to our central question, how Nazi is too Nazi? There were the guys who ran the factory before. They're problematic. They're pretty Nazi, right. Ferdinand Porsche, who developed the Beetle, and his son-in-law Anton Piesch, who actually ran the factory, wound up joining the SS. At the end of the war, they fled to their estate in the Austrian countryside. And they actually, there's this interesting story about them that's worth telling for a minute. So the Allied soldiers caught up with them and arrested them and questioned them. But what the Allies were really interested in— Not what they did, but what they built. Yeah, and what they knew, right? They had worked—I think Porsche in particular had worked on weapons systems. And as we know, the Allies after the war were obsessed with what German engineers and scientists knew about building weapons. So they talked to Porsche, and then they release him. And then the French car company Renault comes to Porsche and Pierre and asks them if they want to come help Renault build a little people's car. What's a people's car in French? Voiture des gens. I don't know. I just made that up. I haven't looked it up. It'll be wrong. And they say yes, because I think, you know, Porsche really does love designing cars and building these cars. So Porsche and Pierre and actually Porsche's son, Ferry Porsche, they go to the French-controlled part of Germany to have talks with Renault. But the guys at Peugeot, the other big French car company, they hear about this and they're like, no, no, no way. They point out that during the war, when the Nazis had invaded France, Porsche had been given control of Peugeot factories and had, you know, sent some of the executives to concentration camps where some of them died. And so the Peugeot guys are like, there is no way we can work with this guy to build a car. He is too Nazi. And so they get arrested again, this time by the French. But eventually, the French let him go, and they go home, and they start a little sports car company called Porsche. Porsche. Not too Nazi for the world. Not too Nazi for the world, but too Nazi to run the Volkswagen factory. So they are not going to work. So, you know, Ivanhurst crosses them off the list of potential people who run the factory. So he's going through the names, and he comes up with one, Heinrich Nordhoff. Nordhof. And he had helped run Opel, which I guess is a car and truck firm in Germany. Yeah, GM. It was connected to GM. I think it was GM's German operations. Okay. But more importantly, he had been one of those German car makers who had fought this idea of a Volkswagen, right? He had said, it's not possible. It can't be done. And it sort of resisted Hitler's push for that. Now, eventually, he would cooperate with Hitler, as many people did. He actually got an award from Hitler for meritorious service in factory, whatever, whatever, whatever. The Werwirtschaft Führer Award. I think it means war economy leader. But all I hear is Führer. It's like a mini Führer. And for the Americans, that's too Nazi. It's pretty Nazi. If Hitler gives you an award, it's not a great book. For the British, they're like, he gave out a lot of awards. We've got to hire someone. So they hired Nordhoff. And say what you will about the Führer's Award. Nordhoff was great at running a car company. Yeah, so he comes in and, you know, looks at the Volkswagen and says, let's, you know, let's polish this thing up a little. Which is amazing. Remember, they're emerging from the war. They can barely build these cars, but he's smart enough to know people like a little luxury. They like a little shine on there. They got to have better hubcaps, you know, shiny, right? You got to have different colors. He has like a Bordeaux red, pastel green colors. And like any factory boss, he wants to get productivity up. He specifically says he wants every worker to increase their productivity by 30 percent, which is a tough ask. But here, Nordhoff and really the entire German economy gets a big boost from monetary policy. Great moments in monetary policy right here. Germany, 1948. So at the time, Germany is running on Reichsmarks, the currency. It was created in the 1920s, and it had been through a lot. There was a ton of inflation. They weren't worth very much. It was still the sort of German money from the war, right? And so because it was sort of worthless and there was shortages, the country of Germany at this point post-war is running on, you know, bartering and ration slips and all of this sort of stuff. And occupation currency introduced by the various allies. And so if you're running a factory and paying your workers in Reichsmarks. Worthless pieces of paper. You're kind of out of luck. You can be like, work harder or else I won't keep giving you these worthless pieces of paper. And so the big break for Nordhoff and Volkswagen and really all of what's about to become West Germany comes in June of 1948 when the Germans got rid of the Reichsmark and introduced a new currency called the Deutschmark. It's going to become the most important currency in Europe. And you could trade in 10 Reichsmarks for one Deutschmark, which is the numerical part of it. But it was also functionally a devaluation of the currency. So anyone who had their savings could transfer their savings over to Deutschmark, but it was worth almost nothing. It took away people's savings. So not lucky for those people, but it allowed Germany to remove the price controls and sort of start their economy from scratch. You see this with a lot of economies in trouble. They devalue the currency and kind of start over. And so now to the extent people had savings those savings are gone But the money you get paid if you say work at a factory can buy stuff Is worth more yeah Is worth something is functional right Yeah. So now they're back in the familiar world of you get a job, they give you money, and you can use that money to buy stuff. And so Nordhoff gets his productivity gain now. People are showing up to work, they're motivated to make cars better, and the factory starts working better. And there is another quirk of macroeconomics, which is if you've devalued your currency, it also makes the objects you make much cheaper to the world. It helps exports. Yes. And so not long after this, in 1949, the British turned Volkswagen over to the newly formed West German government. Going to the new decade, the new currency is propelling Germany forward. Exports are starting to grow. And it happens. The Wirtschaftswunder, the German economic miracle. Wirtschaftswunder. You know, the decade of the 50s was incredible for Germany. Foreign investment is coming in. The government is focused on economic growth. And Germany is catching up to its richer neighbors. In that one decade, living standards for Germans doubled. It was this incredible economic era. And the Beetle was really at the center of it. I mean, you know, sales were growing, but also as a symbol. Volkswagen was like, you know, the national carmaker. and the beetle was like the chrome ornament on the hood of the Wirtschaftwunder. And by 1955, Volkswagen had produced one million beetles. So Nordhoff is still running the company and he wants to, you know, keep this going. He wants to keep growing. And so he comes up with a plan, a plan that specifically has three, let's call them prongs. Did he call them prongs? I have no idea. But let me do the prongs. I'm a good pronger. Okay. Okay. Prong number one. Prong number one, domestic sales. So in Germany, remember, this was not a big driving culture before the war. So Nordhoff really has to change the idea of what it means to own a car. This is not a luxury thing. This is something that everyone needs and has to have. It's like a TV or refrigerator. If you live in the modern world, you have to have a car, which of course was Hitler's original dream. We should know here he never made very many of those cars under Hitler, right? So the way to do that is to essentially make the car cheaper. In the 1950s, the Beetle cost what a typical worker would make in 13 months. So that's the equivalent of like a $65,000 car now. So that's pretty expensive. That's not cheap. At the end of the decade, he had gotten down the cost of the car to about eight months salary for a typical worker. So that's progress, right? And on top of that, something we're going to see a lot in business history, Volkswagen creates a financing arm that essentially can lend people the money to buy the car so they can get into the car for relatively cheap and pay it off over time. And there was also this plan where several people could buy a car and share it, which I love. It feels very West European to me in a nice way. Why don't we do that again? I would do that. I would do that. So all these things are happening. Beetles are like, I don't know, a third or so, 30 percent, 40 percent of the cars on the road in Germany at this point. That is prong one, as you said. Sort of the core of Germany's economic miracle is not building stuff for Germans, but it's building stuff that people in the rest of the world are going to buy. And that is where prongs two and three come in. Prong two. Pitch the Beetle as a rugged car for the developing world. Very, very smart. Yeah. And I mean, it was built as a rugged car. It was, you know, used by the military. It was, in fact, a rugged car. It was a car that was easy to work on. There were big parts of the developing world, of course, at this point in the 1950s, where the roads were bad, where there weren't very many mechanics. And so Volkswagen actually builds a factory in Brazil that winds up cranking out cars for Latin America. And, you know, the Beetle is fuel efficient. It is rugged. It is easy to work on. It becomes a very popular car in the developing world. Yeah, you could open the trunk and the engine is right there. You don't have to lean over it or get under the car. You can fix everything right away, which comes in useful if you're on the Pan-American highway. Prong three? Prong three. Prong three was, and this is the hard one, sell the Beetle to rich countries. And one rich country in particular. The one that kicked your ass in World War II. And is the biggest car country in the world. We're referring, of course, to the United States of America. And this is tough, right? Because America had invented mass bargaining of cars. They have, I don't know at this point, but probably at least the three big car manufacturers in Detroit churning out cars. They do not need another car in America. Yeah, there was a German executive around this time who said selling Volkswagens to America would be like trying to sell American beer in Bavaria. Like, they don't want what you're selling. They don't need what you're selling. They got it already. Yeah, and especially if your car is associated with Adolf Hitler. It seems like it's not going to work. But of course it did in a very delightful way. We'll talk about that after the ads. In 2023, a story gripped the UK, evoking horror and disbelief. A nurse who should have been in charge of caring for tiny babies is now the most prolific child killer in modern British history. Everyone thought they knew how it ended. A verdict, a villain, a nurse named Lucy Letby. Lucy Letby has been found guilty. But what if we didn't get the whole story? The moment you look at the whole picture, the case collapses. I'm Amanda Knox, and in the new podcast, Doubt, the case of Lucy Letby, we follow the evidence and hear from the people that lived it to ask what really happened when the world decided who Lucy Letby was. No voicing of any skepticism or doubt. It'll cause so much harm at every single level if the British establishment of this is wrong. Listen to Doubt, The Case of Lucy Letby on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. Run a business and not thinking about podcasting? Think again. More Americans listen to podcasts than ad-supported streaming music from Spotify and Pandora. And as the number one podcaster, iHeart's twice as large as the next two combined. So whatever your customers listen to, they'll hear your message. Plus, only iHeart can extend your message to audiences across broadcast radio. Think podcasting can help your business? Think iHeart. Streaming, radio, and podcasting. Call 844-844-iHeart to get started. That's 844-844-IHEART. What if mind control is real? If you could control the behavior of anybody around you, what kind of life would you have? Can you hypnotically persuade someone to buy a car? When you look at your car, you're going to become overwhelmed with such good feelings. Can you hypnotize someone into sleeping with you? I gave her some suggestions to be sexually aroused. Can you get someone to join your cult? NLP was used on me to access my subconscious. NLP, a.k.a. Neuro Linguistic Programming, is a blend of hypnosis, linguistics, and psychology. Fans say it's like finally getting a user manual for your brain. It's about engineering consciousness. Mind Games is the story of NLP. It's crazy cast of disciples and the fake doctor who invented it at a new age commune and sold it to guys in suits. He stood trial for murder and got acquitted. The biggest mind game of all? NLP might actually work. This is wild. Listen to Mind Games on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. And we are back from the ads. So let's talk about the cars Americans are buying in the late 1950s. If you were shopping for a car, you wanted a car that was big, a big slab of car, boat of car, a big, heavy rectangle to impress your neighbors. Maybe it had a lot of chrome. It probably had tail fins. Oh, absolutely. Big hood ornament, shiny hubcaps. And almost certainly that car was made in America. So in every way, we're talking about the opposite of the Volkswagen Beetle, which is small, round, and made in Germany. When you put it that way, it's just funny, right? You could picture it as a quaint thing you see in the Netherlands. Yeah, like on some little stone street or whatever. But in Dallas, Texas? On Dallas, Texas, it's going to get run over by a Chevrolet like a little bug. And at the time, Americans were really, the way they were shopping between cars was by looking at their amenities and their upgrades, right? Oh, does it have the new air conditioning? Does it have electric reclining seats? I mean, this is the height of luxury. And Jacob, you've put a picture in here of the dashboard of a Volkswagen from around this time. What I love about it is the upgrade it has is... The Blumenwassen. It is a ceramic vase. It looks to be bolted right next to the radio on the dashboard. And in this picture, there's three lovely, I don't know, Edelweiss or something in there. Fresh flowers. There are fresh cut flowers in this German porcelain vase that is an optional extra, right? And it's perfect, right? put this little car with this little vase with the little flowers next to the giant Ford or Chevy with its electric seats and air conditioning. And it just looks like a joke. And this is how American auto executives saw this car as a joke that they didn't care about because it's ridiculous. And this again, as with the poorly functioning factory in the mid 40s, this again is a weird kind of a lucky break for Volkswagen because since the executives don't take the car seriously, they're not worried about it as a threat. They're not demanding tariff protection against it. They're like, sure, you want to sell your cute little car to 12 people in America, go ahead. And that is, in fact, what happens. But initially, it is a truly tiny percentage, as in less than 1%. percent. But that tiny number of people, I guess as with, you know, sort of classic early adopter, maybe they love their Volkswagens, right? They feel like they have discovered this special, different car. And this came at a very particular moment in American history, which is lucky for Volkswagen, right? Americans are getting rich. It's the 1950s, right? They won the war, things are going very well in America. So they have extra disposable income. Plus, women are starting to go in the workforce. So they are looking at having more than one car. And if you have your big boat of car parked outside of your suburban home, why not get a little tiny car to go with it? It makes total sense. Yes. Yes. Volkswagen was the second car and it was particularly popular among women. there's this one woman in Ohio who's quoted in that excellent Bernard Rieger book, The People's Car. She said her Volkswagen lets me be the boss when I'm behind the wheel. It might have stayed a novelty car in America until something happened in 1959. It was a big, big deal in a small, small place. It was a magazine ad. How amazing. Can we just pause for a moment and say there was an era where a magazine ad ad meant anything where anything in a magazine was important. I'll take it. Have you seen page 49? So this ad was made by an ad agency called Doyle Dane Bernbach. Bernbach was like, I think he gets shouted out in Mad Men. He was this guy central to this creative revolution in advertising going on around the time where ads are getting more interesting and more creative And this particular ad is one of the most famous ads of all time And in part it famous because it was so different So car ads in the 1950s, if you've ever seen them, it's often a guy smoking a cigarette with a fedora on, right? And maybe he's wearing a tuxedo and there's a beautiful woman in an evening gown. It is the height of luxury. It is saying you are going to live large in this automobile. Yeah, there's a great big shiny full color car, you know, sparkling. Let's look at this Beetle ad and just talk about it, right? You look at the ad and the first thing you see is nothing. Like it is mostly empty space. And then in the top left corner of the page, really small, kind of like off in the back. You could cover it with your thumb. There is a little black and white picture of a Volkswagen Beetle. A little photo of a little car. And then most of the way down the page is the headline, Think Small. Which is hilarious at the time. It is hilarious. It's all the advertising you've ever seen in your life is saying, think big. And at this moment, someone's saying, think small. And you smile and you read. There's a whole bunch of text talking about how great this car is. But it's also tiny. Think about the time that this ad is hitting, right? 1959. What do we think of when we think of the 50s? We think of, like, consumerism. We think of conformity. Man in the gray flannel suit. And so the calculation was that there was some number of Americans who, you know, who were ready for something different, who were ready for something that was counter to the culture, if you will. Perfect timing. In this new decade of the 1960s. Perfect timing. Teenagers adore this thing. They start to put pictures of it, not, you know, racing cars on their walls, right? They actually tear the ad out of whatever Life magazine and pin it on their wall. The agency has another ad that says, if it runs out of gas, it's easy to push. That one is really good, right? Like, it is making fun of itself. There's another one that is sort of more sly. It's a big picture of a Beetle. And then the headline below it says, Lemon. Yeah, it says Lemon. And the car sort of looks like a half lemon, so that's funny. But Lemon is also a slang term for a terrible car. As in, that guy sold me a lemon, the wheels fell off. Yes, so you think that's what they're saying, but then you read the copy below the headline, and it says, you know, the problem with the car isn't a bad engine or unreliable brakes, it's a blemish on the chrome trim of the glove compartment spotted by Inspector Kurt Kroner at the Wolfsburg factory. Very, very interesting, right? It comes off as self-deprecating, but when you read it, it's actually the opposite. It goes through point by point how precise and exacting the engineers at Volkswagen are. It ends like this. This preoccupation with detail means that the VW lasts longer and requires less maintenance by and large than other cars. It also means a used VW depreciates less than other cars. Right. So here they're not like, oh, you can push it or whatever. They're not pitching it as a smaller car or a cheaper car. they're pitching a better car, a more reliable car, a car that holds its value. And I think this is, you know, foreshadowing a couple things we're going to see more broadly in global business in the years to come after this. One is the rise of foreign carmakers in the U.S. who are going to obviously build reputations for reliable cars. And two, even bigger, is this global brand that is developing for German manufacturing in general, right? Germany as this world leader at building precise, efficient, reliable stuff, which does drive their economy through the 20th century and into the 21st century. And it's essentially saying that American cars, and it turns out all of American industry, have not really had competition. And so they've been on top for so long that maybe they're a little bit lazy, dare we say. They're cutting corners. And certainly, you know, the German economy is going to run on making fancy, complicated machines, cars, but also like big machinery that builds other machines and selling it to the rest of the world. Like they are, in fact, great at that. You know, I was talking to a professor who, a historian who studies the car industry, and I was talking about the amazement that the Germans and the Japanese in this era, the people whose countries were destroyed, the losers of the war, end up having this huge dominance in imported vehicles over the 60s and 70s. And he said one of the reasons is that the American factories at this point were 30, 40 years old. And even though they had to rebuild them from scratch, the Japanese and German factories could put more modern techniques, modern machines. You know, it's a brand new factory. And so could actually put out a product that was better than the old Detroit plants. I buy it. It's interesting. and for purposes of our story, it means that the Beatle, with the push of this ad campaign, takes off in the U.S. Sales go from $100,000 a year to $150,000 to $200,000. Surfers are driving them, teachers, moms, hippies, of course. People start having Beatle races. And this is how we get to that moment we talked about at the beginning of the last episode, that moment in the late 1960s when Disney is testing cars for a racing movie. And remember, they park all these different cars outside the commissary on the lot and have the people who work at the studio walk around and just, like, try out the cars, open the doors, sit behind the wheel. And what they notice is that when people see the Volkswagen Beetle, they do something unusual. They pet the car, a little petting of the car, like it's a cute puppy or an animal. They were going to call the movie Car Boy Girl, but people loved the Volkswagen so much that they wound up calling the movie The Love Bug. The beetle in the movie had a name. It was Herbie. Watched it when I was a kid. And kind of amazingly, when Disney goes to Volkswagen and is like, great news, we're going to make your car the star of a movie. the executives are like, well, this car in the movie, it's going to be sentient and have a mind of its own and drive around San Francisco. Will that make people think Beatles are unreliable? We're not so sure about this. Or aggressive. Or aggressive. And actually, if you watch the movie, of course, it is a Beatle, but nowhere in the film is it referred to as a Volkswagen. And yet it is a big, long commercial. That's what the New York Times pointed out in their review of the film. Yes, and it was a hit. There were sequels and reboots. Shout out Herbie Goes Bananas. And in 1968, the year that The Love Bug premiered, 399,674 Beetles were sold in the U.S. And this was it. This was actually peak Beetle. Not necessarily because of any problem with the Beetle, but there were other foreign cars now who are following Volkswagen's lead, specifically Toyotas and Hondas, were coming in by the boatload at this point. They had entire ships that could carry 4,000 or 5,000 cars, unloading them in California and just rolling them off, right? And the Beetle did still have life left in it. In 1972, the 15,000,000th, 7,000th, and 34th Beetle rolled off the production line, beating the record set by the Model T Ford for the best-selling car of all time. And I will note, sometimes people say the Toyota Corolla is the best-selling car of all time, but the trick is it's not the same car. Toyota has been making a car called the Corolla for decades. But if you look at a Corolla today and look at a Corolla 25 years ago, they look nothing the same. The amazing thing about the Beetle is if you look at the Beetle that Ferdinand Porsche designed in the 1930s and the one that came off the line in 1972, they look basically the same. The last final Beetle rolled off the production line in Mexico in July of 2003, 70 years after Hitler started to rant about a people's car. 70 years. Yeah, they made more than 21 million Beetles over the course of that time. And by the way, Do you know who was the chairman of Volkswagen in 2003 when that last Beetle came off the line? I know, but I can't pronounce his name. Ferdinand Pierre. I can't either. Who was the son of Anton Pierre and the grandson of Ferdinand Porsche. So that's the end of the Beetle story, right? Best-selling car of all time, dreamed up by Hitler, beloved of hippies and people around the world. We've talked about it for two episodes. And like, I'm curious, Robert, like when you step back, where does it sort of land for you? Like, what are you left with? So two things come to mind. The first one is about the design of the Beetle. When we looked at that first picture of Adolf Hitler looking at the very first model of the car before they built a single one, it looked almost identical to the car we see today. There was something about it, a beauty about it, that survived for 70 years and made the car successful. Okay, so that's one. What's the other one? And the other one is about resiliency. Think about Germany after the war. There's probably rarely been a country that is as devastated as Germany was after World War II. and then this German economic miracle is happening within 20 years. And so in some ways, I'm like, there is an amazement that when a country has nothing, using some wise decisions, good economics, world trade that we talk grows the pie, you can actually make a country rapidly improve. I mean, it is an inspiring story for any country that's facing any sort of difficulty. Like if Germany can do it, other countries can do it too. I love it. It's a story that starts with Hitler and has a happy ending. I'll take it. Our producer is Gabriel Hunter Chang. Our engineer is Sarah Brugger. And our showrunner is Ryan Dilley. I'm Jacob Goldstein. And I'm Robert Smith. We'll be back next week with another episode of Business History. A show about the history. Wait for it. Of business. What if mind control is real? If you could control the behavior of anybody around you, what kind of life would you have? Can you hypnotically persuade someone to buy a car? When you look at your car, you're going to become overwhelmed with such good feelings. Can you hypnotize someone into sleeping with you? I gave her some suggestions to be sexually aroused. Can you get someone to join your cult? NLP was used on me to access my subconscious. Mind Games, a new podcast exploring NLP, a.k.a. neurolinguistic programming. Is it a self-help miracle, a shady hypnosis scam, or both? Listen to Mind Games on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. You can scroll the headlines all day and still feel empty. I'm Ben Higgins, and If You Can Hear Me is where culture meets the soul. Honest conversations about identity, loss, purpose, peace, faith, and everything in between. Celebrities, thinkers, everyday people, some have answers, most are still figuring it out. And if you've ever felt like there has to be more to the story, this show is for you. Listen to If You Can Hear Me on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. 1969, Malcolm and Martin are gone. America is in crisis. And at Morehouse College, the students make their move. These students, including a young Samuel L. Jackson, locked up the members of the Board of Trustees, including Martin Luther King Sr. It's the true story of protest and rebellion in Black American history that you'll never forget. I'm Hans Charles. I'm Menelik Lumumba. Listen to The A-Building on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.