-Caveat Lector- <A HREF="http://www.ctrl.org/"> </A> -Cui Bono?- an excerpt from: Treason's Peace Howard Watson Armbruster©1947 A Crossroads Press Book Beechurst Press New York 438 pps. -- First/Only Edition -- Out-of Print --[4]-- C H A P T E R IV New Conquests of America's Industry THE OIL INDUSTRY came next on Farben's agenda. There were several reasons for this, the main one being that Standard Oil Co. of New Jersey, the largest industrial corporation in the world, was reported to be interested in new chemical developments which were related to, or based on, the petroleum and natural-gas industries. The Germans knew that these new chemical products promised to be among the most important munitions of the next war. So Farben, within a few brief years, had induced the leaders of the all-powerful Standard Oil to pay them over $30,000,000 for an oil refining process that turned out to be a commercial fizzle in the United States. They also bamboozled the New Jersey executives into turning over to them technical details of the new chemical processes which Standard Oil's research men might discover; and were given control of the exploitation of such processes as well. Thus the Farben overtures turned into an industrial strip poker game, the results of which would have been highly amusing had not so much of the Standard Oil raiment which passed over to Farben been processes and products vital to our national security. The first understanding between Farben and Standard was in 1925, according to statements made subsequently to stockholders by Walter C. Teagle, then president of Standard. This informal understanding developed into negotiations of a comprehensive character and, in 1926, an agreement was drafted covering exploitation by Standard of Farben's new refining process for the hydrogenation of oil through the use of tremendous pressures. This process was the bait which brought about the strange union between Farben and Standard—a union which ultimately went far afield from petroleum, and led Senator Truman to cry "treason" at a Senate hearing after Germany had declared war upon the United States. In 1927 a formal contract was consummated between Farben and Standard by which Farben agreed to supply the details of its new refining process to Standard, and Standard agreed to erect a commercial plant in the United States to demonstrate the process. Others were to be licensed to use the processes on a royalty basis in which Farben would share. Standard paid Farben with more than a half-million shares of its stock, worth approximately $30,000,000, as consideration for this contract. In addition to the stock transfer, Standard expended a great many more millions erecting hydrogenation plants in the United States and demonstrating that the process did not come up to the rosy expectations of its young technical expert, Robert T. Haslam, who had inspected the Farben plant in Germany, and had recommended the purchase. Apparently Standard missed one point about this new high-pressure cracking method-its cost. Farben used it to produce gasoline from coal. Germany had plenty of coal, and to the Germans, the excessive cost of the gasoline over that produced from oil was not important. They knew that the time was coming when Germany would again begin war and probably be cut off from the most of its crude oil supplies by another British blockade. Dr. Bosch and Hermann Schmitz played the leading parts for Farben in negotiating the 1927 contract; Teagle and Frank A. Howard, who was later made head of Standard Oil Development Company, looked after the interests of Standard and its stockholders. To Farben this tie-up was of vast importance, because it not only established a close working alliance with the world's largest industrial company, but it was also to lead to tie-ups with other American companies on important chemical developments related to the petroleum industry. Some of these new processes have little real relation to oil, but they did very directly relate to Farben's preparation-and our own lack of preparation-for World War II. Other aspects of Standard Oil which made it an ally of great potential value in Farben's eyes included the fact that its distribution system of filling stations reached into the intimate life of so many communities. Unlike Sterling, prior to the latter's expansion, Standard already had a nation-wide army of employees. Also, Standard's organization was world-wide—in South America and the Far East as well as in Europe. This army could feel the pulse, and possibly even change the beat, of countless bloodstreams. Standard's political power and influence with many governments were not the least of its attractions to Farben. That Farben had long contemplated and sought such an arrangement was indicated by a statement made early in 1926 to William Weiss by one of the Farben leaders that they had to be careful in negotiating with Sterling for any products other than pharmaceuticals, because Farben was already negotiating with Standard Oil, and did not want to give Sterling any of the products that should go to the other company. Standard was big game, even for Farben, and had to be stalked with great care. Personal friendships between the negotiators sometimes count much in affairs of this sort, and personal ties were made use of in this instance. Agreements are entered into by corporations acting as legal entities but they are negotiated, wrangled about, drawn up and signed by corporation officials who are real persons, not legal fictions. Mr. Teagle, in a public statement quoted in the New York Times in November 1929, referred to his "close and pleasant personal relationship of some years standing with the leaders of the I. G.," which, said Teagle, was the reason why he had consented to serve as a director of the newly organized American I. G. Chemical Corp., in which he denied Standard had any financial interest. Dr. Bosch of Farben reciprocated these expressions of Teagle's friendship in 1930, after Teagle had interceded between Farben and duPont in a controversy relating to the manufacture of synthetic ammonia. Bosch wrote his friend Teagle to thank him for arranging the meeting with Lammot duPont, and concluded his letter with: "I believe that as a result of this intervention, the deadlock in the negotiations between duPont and I. G. has now been overcome, and that thereby our desire will be realized to reach a cooperation with this very energetic and cleverly proceeding firm, which we have endeavored to bring about for years. The reason for the failure of our former negotiations may be the lack of the right personal contact which has now been established, thanks to your personal interest." Farben was the largest corporation in Germany and the greatest chemical cartel in the world; Standard was the largest indus-trial corporation in the world; duPont was not much smaller and, with its multiplicity of products and its stock control of General Motors, U. S. Rubber, Remington Arms and others, it ranked with Farben and Standard in importance. When it came to drawing up written contracts, however, or even arriving at gentlemen's agree-ments, it was the conclusion of Dr. Bosch that the earlier refusal of the huge duPont Corporation to play ball was due mainly to the aloofness of Mr. duPont—an aloofness which Mr. Teagle, as mutual friend, had changed into the right personal contact. On the other hand it is quite possible that recollections of the part played by Bosch and his associates in World War I lingered longer in the memory of Lammot duPont than they did in that of Walter Teagle. After the 1927 contract Farben and the Standard leaders continued their meetings, Farben constantly pressing Standard with the advantages of a more comprehensive tie-up between the two companies. At one of these meetings, early in 1929, Dr. Bosch stated that it appeared certain Standard would be compelled to expand its activities far beyond oil refining, into the chemical field, and naively suggested that as Farben was already supreme in the chemical industry, it should of course have a dominant position in any such arrangement. This sounded plausible, and Teagle signified his willingness to let Standard become the junior partner provided the minority interest was sufficiently large. Mr. Teagle, it would seem, had little confidence in the ability of Standard's research men to forge ahead in those new chemical developments which were already being discussed in the technical journals as certain to arise from the petroleum industry. DuPont and other American corporations had already demonstrated that American chemical research was amply qualified to compete with the Germans. The prewar legend of the supremacy of German chemical brains had been punctured. But the Standard leaders seemed to ignore this fact. Thus, Dr. Bosch cozened his friend Teagle into handing over to Farben what amounted to the direction and control of the chemical-munitions affairs of the largest industrial organization in America. If Mr. Teagle and his colleagues realized what power they were giving away they didn't care. If they did not realize it, then they were among the few in the chemical industry who were not aware of it. The result of these negotiations was four new agreements, entered into in November 1929 between Standard and Farben, which provided for exchange of chemical patents and processes. They also covered the commercial exploitation of new products, payment of royalties, and the division of world markets. The more important of these agreements expressed the intention of the parties to cooperate with each other and avoid overlapping and competition through a recognition by Standard that Farben had a preferred position in chemical products, and a recognition by Farben that Standard had a preferred position in oil and natural gas. The joker in the agreement provided that such new chemical processes contributed by either party, which were not directly related to the refining of oil or natural gas, should be controlled by Farben. Dr. Bosch thus extended the Farben pattern to a dominant position in the group of chemical developments which were on the way, and which he knew would have a vital bearing on the rearming of Germany, and on the national defense of the United States. The relationship established by the 1929 agreements was aptly summarized several years later by Mr. Howard in a letter to one of his colleagues in which he stated: The I. G. may be said to be our general partner in the chemical business as to developments arising during the period beginning in 1929 and expiring in 1947. The desire and intention of both parties is to avoid competing with one another . . . . .The general theory of the agreement is that chemical developments more closely related to the oil busi-ness than to the outside chemical business remain in control of Standard, with I. G. participating whereas develop-ments more nearly akin to the outside chemical industry than to the then existing business of Standard pass to the control of 1. G. with suitable participation by Standard . . . . . One additional fact might be pointed out: for a variety of reasons- it seems quite probable that if we desire to make any addi-tional important affiliations in the oil-chemical field, such affiliations will be with the duPonts, the Shell Company or both. The I. G. relationship is in no respect a handicap but on the contrary, a definite asset to us in considering the possibility of any such affiliations. Standard was courting duPont, as was Farben, but for different reasons. Standard's great power lay mainly in one industry—oil, and the Standard Oil executives were dazzled by the audacity of the duPonts, who were then entering one new field after another with such brilliant success. In 1930 another Standard-Farben agreement was consummated which provided for the organization of a jointly owned development company, later established as Jasco Inc., at Baton Rouge, La. The name Jasco stood for joint American Study Company, but might well have meant Jackass Americans Surrender a Continent. In Jasco, under Standard management, but acting under Farben instructions, a group of technicians were to develop new chemical processes outside of oil and gas refining. Jasco appeared to be an American corporation operated by Americans, and was not identified in the public mind with Farben. Actually it became the medium through which Farben secured the results of chemical research done by Standard. Farben in return, furnished Standard with a bare minimum of its own research. When pressed for more data by Standard, Farben at first procrastinated with the excuse that its research was incomplete, then bluntly stated that the Hitler government would not permit the information to leave Germany. In one instance it was revealed later than Standard had even supplied data relating to the production of high-test aviation gasoline which Standard research had not developed, but which had been secured through an association with other large oil-refining concerns, including the Anglo-Iranian Oil Company, which is controlled by the British Government. Standard was accused of continuing to send these developments on aviation gasoline to Farben until November 1939, two months after the war between Germany and England had started. Synthetic rubber was one of the new products which should have been turned over by Farben to Jasco. This development was, in fact, the choicest bit of the limburger with which Farben had baited its trap. Back in 1927 Standard learned that Farben had developed commercial production of synthetic rubber. Standard also knew that duPont was working on synthetic rubber and, in April 1930, before the Jasco agreement was signed, a Standard vice-president, E. M. Clark, wrote Farben warning them to review their patent situation on artificial rubber so that duPont could not get ahead of them. Farben, in Germany, developed a type of synthetic rubber called Buna. Standard, later at Jasco, developed one called Butyl. Buna was considered better than Butyl for some purposes, especially for tires. Butyl was cheaper to produce and better for other purposes, particularly inner tubes. What happened in the jug-handled oneway pot called Jasco? Standard, as rapidly as it made progress in its Butyl research, supplied all pertinent data to Farben, whereas Farben not only delayed supplying the data on Buna but, for a period, actually attempted to discourage Standard about its new synthetic. "It's not so hot," indicated Farben. "Why bother with it? Let's wait until we develop something really worth while." At this time, duPont was making rapid strides in the commercial production of its own synthetic rubber, Neoprene, which had excellent qualities but under normal conditions was too expensive to compete with natural rubber for making tires. Farben had already succeeded in making a number of agreements with duPont on exchange of other patents, but duPont was still gun shy; and Farben wanted Neoprene very badly indeed. So, in 1935 Farben notified Standard that they had a proposal from duPont for a tie-up on the latter's synthetic rubber. Accordingly, suggested Farben, it might be well if a new development company should be organized to take care of synthetic rubber research and exploitation for all three. One third of the proposed new company was to go to Standard, duPont and Farben respectively, and each was to put all of its synthetic rubber patents and processes into this new pot. Thus Farben tried to play Standard against duPont, and duPont against Standard. By suggesting a minority part for itself and leaving a two-third interest to the Americans, Farben was sugar-coating the syphon through which it hoped to extract the desired technical information on this vital synthetic. This proposal did not go through, possibly because the Messrs. Irenee, Lammot and Pierre duPont had a more acute sense of smell than had their friends, Messrs. Teagle, Howard and Haslam. Farben, however, does not become discouraged easily, and some three years later succeeded in getting duPont to grant it certain patent licenses to make a Neoprene type of rubber in Germany. Meanwhile Farben was building synthetic rubber plants for the Hitler Government large enough to supply Germany's requirements and supplement the reserve stock pile of natural rubber which was being imported in anticipation of the blockade which would again cut off her outside supply. Reports of the success of Germanys synthetic rubber production were discounted by many when Austria was invaded in 1938, and stories strangely leaked out of Germany that its motorized' troops were delayed in getting to Vienna because the new ersatz tires blew out. Eventually, a few individuals in our government became mildly alarmed at the possibility of losing our natural rubber supply, and Standard, responding to pressure, renewed its efforts to induce Farben to put the Buna developments into Jasco where, under the 1930 agreement, they belonged. In 1938 Howard reported to his Executive Committee that Farben continued to decline to supply its data on Buna rubber, since, because of military expediency, the German Government refused to allow the information to leave Germany. Thus the Farben-Hitler military machine clearly showed its teeth. As late as October 19, 1939, after the war had started, Howard again reported sorrowfully to his Standard colleagues that Buna rubber had never been made at Jasco because Farben had not supplied the necessary information. A week later Howard explained in writing: We haven't complete technical information on Buna, and cannot get any more information from Germany. The only thing we can do is to continue to press for authority to act, but in the meantime loyally preserve the restrictions they have put on us. So, until December 1940, after our Lend-Lease program was under way, and Hitler's intentions were clearly defined for the whole world to see, Standard loyally continued to preserve the restrictions of the Germans and to transmit to Farben its latest research data on this strategic material of national defense. Synthetic rubber was by no means the only new research development which came within the provisions of the lopsided mesalliance between Farben and Standard. Farben had discovered a process for making acetic acid from natural or cracked gas by means of an electric arc. This process tied into synthetic rubber research, and also produced an acetic acid of superior purity and at what promised to be lower cost than resulted from the methods then in use. Acetic acid, widely used in the industries of peace, is invaluable in the manufacture of various chemical munitions in war. (In World War I its price advanced in this country from a few cents to more than a dollar a pound.) This acid was being made by various American companies, but the market was expanding, and Standard had ample supplies of both natural and cracked gas. So the new Farben method fitted splendidly into the Jasco program of joint research and exploitation. A pilot plant was erected at Baton Rouge, and the excellence of the process demonstrated. The plant produced acid beyond the normal requirements of Standard, and it was proposed to sell the surplus to various large consumers. Farben, however, was very definitely opposed to the commercial production of acetic acid, or of any other acetylene products from the electric arc process. Some strange reasons were given: Farben had other commitments in America which might be interfered with; a disagreeable price war might result in Europe; the acetic acid market offered no incentive to take up the manufacture of this product, etc, etc. When Standard persisted in its desire to enter the acetic-acid field, Farben came up with the suggestion that the acid sales be handled, not by Jasco or Standard, but through Advance Solvents & Chemical Corp., with which Farben had other ties. This plan fell through, however, as did a later effort to interest the Shell Oil Co., the American subsidiary of the Dutch Shell interests. Farben then informed Standard that it was developing improvements in the original acetylene process but that the German Government would have to approve any contracts relating to it. Finally, Farben threw all pretense aside and requested that the Jasco acetic acid plant be abandoned. This was done. Standard dismantled the plant. In 1940 the patents covering the acetic acid process were transferred by Farben to its own subsidiary General Aniline & Film Corp., which at the -time was engaged in a furious campaign to convince the American public and the U. S. Government that it was not controlled by Farben. Another product which was turned in to Jasco for development was a laboratory curiosity called Oppanol. Oppanol had not been considered previously as a basis for compounding lubricants, but through Jasco research it was found to have great value in the production of a superior lubricating oil for planes, tanks and naval vessels. These developments, invaluable in war, and wholly the result of research by Standard technicians, were promptly handed over to Farben and thus became available for the German war machine. Other processes and products which were worked on by Jasco, became the mediums through which numerous American companies were brought within the Farben orbit. Through the kindly offices of Standard Oil, the intelligence department of Farben was thus enabled to peek into technical minds, and enter doorways that would not otherwise have been open to it. When the present war started, Standard and Farben entered into a new series of agreements, some of which, by their wording, were undoubtedly intended for carry-over understandings, effective for the duration and until such time as the old agreements could be reinstated and "business as usual" resumed. While Hitler's army was on its way to Warsaw, Standard's Mr. Howard was on his way to Europe to meet a Farben representative. This meeting resulted in what came to be known as the Hague Agreementa most interesting document which was signed by Mr. Howard for Standard, and by Dr. Fritz Ringer for Farben, on Sept. 25, 1939, two days after the German Army announced its victorious destruction of Poland's resistance. Messrs Howard and Ringer, however, dated the document back a few weeks to September first, feeling .perhaps, that it would read a bit better as a peacetime understanding. By the Hague Agreement Farben purported to transfer to Standard all of its rights in Jasco in consideration of a small cash payment which was to be paid -to a Farben designee. A division of market rights on the products was also included. Standard to have the United States, the British and French Empires and Iraq, Farben to retain the rest of the world. Then came carry-over provisions which obligated Standard and Farben to report to each other on all future business in their respective territories, with the understanding that if there should be inequities in the monetary returns, adjustments would be made on the basis of the original agreements of 1930. War or no war, the Standard-Farben alliance was to go on. Mr. Howard reported to his colleagues that this agreement was a modus vivendi which would operate for the duration—"whether or not the U.S. came in." The report continued with: It is hoped that enough has been done to permit closing the most important uncompleted points by cable. It is difficult to visualize as yet just how successful we shall be in maintaining our relations through this period without personal contacts. In making this report, Mr. Howard may have had in mind the fact that the Trading with the Enemy Act, passed during the first World War, had never been repealed. Despite Mr, Howard's anticipated suspension of communications, in June 1940, Standard asked Chemnyco, Inc., Farben's New York headquarters, for a license and transfer of title on a patent on an asphalt process, with a provision for retransfer of title under suitable conditions. And, six months later, Farben suggested an understanding through which it would sell on a royalty basis certain products for Standard in countries the latter could not reach. Meanwhile on Sept. 4, 1940, Standard's executive committee ratified a brand-new arrangement, covering payment of royalties on hydrogenation patents with Farben, which was dated back to January 1, and in which some provision of the original 1929 agreements were either reaffirmed or modified. After the fall of France, Farben kept in touch with Standard by meeting the latter's representative in Paris. And, in February 1941, a message from the French capital informed Mr. Howard that his friend Dr. Ringer wished to reply to a question raised by a cable with the advice that: Jasco cable will be difficult but one underlying point is that Jasco contract has not been wiped out as agreed whatever done the final financial outcome original intention of old Jasco agreement should govern. The exchange of information continued until a few weeks before Germany declared war upon the United States. On Oct. 22, 1941 a cable went to Farben advising that Jasco bad filed suit against the B. F. Goodrich Rubber Co. for alleged infringements of patents covering Buna. The cable also asked Farben to send copies of the German patent applications which should be duly certified by a United States Consul. Again, war or no war-business as usual. In addition to Messrs. Teagle, Howard, Haslam and Clark, among those most actively concerned in the later negotiations with Farben was the late W. S. Farish, who came into the Standard organization in 1919 when that company purchased control of the Humble Oil Co., of Houston, Texas. Farish had organized the Humble Co. a few years previously with several men who were high in Texas political affairs. In 1933 Farish became chairman of Standard, and in 1937 he succeeded Teagle as president. Another Standard stalwart was Dr. Per K. Frolich, director of their chemical laboratories. Dr. Frolich, in 1942, was elected president of the American Chemical Society. Mention has already been made of the kindly intercession of Mr. Teagle in bringing about a friendly conference between Dr. Bosch and Lammot duPont. Previous meetings had not run too smoothly, as indicated by the 1929 conference at which Lammot duPont challenged Dr. Bosch about the report that Farben and Standard Oil planned a joint synthetic nitrogen plant in Louisiana. Dr. Bosch replied that the report was true and that a company bad already been formed in which Farben held fifty-one percent of the stock. This, of course, was entirely untrue. The 1929 agreements between Farben and Standard had not been signed at that time, and the stock interest of which Bosch bragged was not in those agreements. Apparently Farben was bluffing and had no intention of building a synthetic plant here in its own name or at its own financial risk. Why invest in a horse and buggy if someone else could be induced to furnish a free ride? What Farben was after was to hold the reins, no matter who owned the steed. Synthetic nitrogen was the personal baby of Dr. Bosch, and Farben's annual production of 600,000 tons was one-third of the world's consumption. So the good doctor was fully aware how great had been the loss to Farben when, in 1918, the Haber-Bosch patents for the production of the synthetic nitrogen were seized by the Alien Property Custodian. Prior to the war, an unsuccessful attempt had been made in the United States to produce nitrogen commercially by atmospheric fixation, and while the war was in progress a huge nitrogen plant was started with government aid at Muscle Shoals, Alabama-too late for the war effort. However in the postwar decade atmospheric fixation had begun in the United States and with this background and the prospect of a large American production of synthetic nitrogen and ammonia, Farben did not relish the thought of new American plants which might serve as munition factories in the next war. As always, Farben was looking to the future, and the importance with which its leaders regarded a participation in the production of these synthetics in the United States has been amply justified by the tremendously increased use of high explosives in the present war. Their use has dwarfed all earlier needs for nitrates and ammonia; an example were the huge two and four-ton "Block Busters" charged with amatol, a new high explosive which is made by compounding TNT with ammonium nitrate. Yes, Farben knew what was coming. Eight years after the friendly conference arranged by Mr. Teagle, Farben caused the formation of the International Nitrogen Association, a world cartel, which brought into unity of action the producers of both natural and synthetic nitrogen and ammonia. Ostensibly this cartel was to rule the markets for fertilizer materials. Actually, the far more important objective was to limit the capacity of synthetic nitrogen plants outside of Germany. Farben went far around Robin Hood's barn to secure some sort of nitrogen and ammonia tie-ups in this country, and to bring duPont within its sphere of influence on these important synthetic war munitions. DuPont's main interest in synthetic nitrogen and ammonia in the decade after World War I was for the explosives department of its business. Fundamentally duPont has been a producer of gun-cotton rather than fertilizer. In January 1926 duPont entered into a rather illusive agreement on explosive patents and processes with Dynamit A.G., which later became a Farben subsidiary in that field. The agreement that was drawn up was not signed, but was held as a gentlemen's understanding. It covered ammunition of various sorts, industrial explosives, and the countries in which licenses under the patents should be granted. It did not however, mention military explosives as such. Dynamit A.G. was also a manufacturer of celluloid, which is made from nitro-cellulose, and another informal agreement was reached by which duPont and D.A.G. would exchange information and give each other the first option on rights to patents and processes. These two casual understandings are significant because, apparently, they were the first through which duPont became allied with Farben. A later tie-up which was to have wartime repercussions was made in 1929 between Dynamit A.G. and the duPont-owned Remington Arms Co., by which information was exchanged and royalties paid by Remington on a patented chemical product of German invention known as Tetrazine, a substance of great value as a priming charge for ammunition. This agreement stipulated that Remington could not sell military ammunition containing Tetrazine in any of the countries comprising the British Empire. When war began in 1939, Remington received huge orders for ammunition from the British Government, but because of the clause in the contract with the Farben subsidiary, it had to supply the British with cartridges containing an inferior priming agent. This restriction continued in 1941. Later it was rescinded. Only a tiny speck of the primer is required in each cartridge, but the efficacy of that small particle might well mean the life or death of a soldier. Returning for a moment to the period immediately following the Armistice, we find that the great chemical plants that had mushroomed up in the United States during the war presented a big reconstruction problem. Clearly, it was up to the industry to evolve new peace-time products, and in this effort the duPont chemists outstripped all other American research workers. The war plants which gave the impetus to this research were largely in the organic chemical field-based upon the conversion of coal tar or other once-living organisms as distinguished from inorganic materials such as sulphur, sodium and other metallic elements. Among the most important developments of this post-war research were various types of synthetic resins or plastics made by what is known as polymerization. This may be described briefly as a method of changing liquids into solids through application of heat, light or the use of catalysts. Chemically, polymerization is the combination of a number of molecules to form a single new and larger molecule. The number of new materials in which these rearranged molecules may be formed is endless. It might almost be said that the chemist, having unscrambled matter down to what seemed to be its smallest particles, the physicist then stepped in to rebuild it into heretofore unsuspected forms. Thus such elements as oxygen, hydrogen, nitrogen, carbon and chlorine, all obtained from inexpensive raw materials, are formed into solids of surpassing beauty that for many constructive uses are unequalled in nature. Unhappily, however, these new substances supply some of the most important implements of war. Among these postwar products in which duPont research kept so far ahead of its competitors in the United States and at least abreast of Farben's technicians were Neoprene, Nylon and the glass-like product called Lucite. This last was an evolution of the laminated safety glass, designed primarily for automobile windshields. Lucite proved to be a most superior product. It was far stronger than glass, was practically shatterproof, and provided equally good visibility. DuPont's commercial production of Lucite began in 1935. It had been preceded by the production of a somewhat similar plastic known as Plexiglass produced in Germany by the firm of Rohm & Haas A. G., Darmstadt; and in the United States by a company of a very similar name, Rohm & Haas Co., Inc., of Philadelphia. Years before, when the firm was founded, Dr. Rohm was the German and Mr. Haas the American partner. During World War I the American Rohm & Haas had been seized by the Alien Property Custodian because of an alleged sixty per cent enemy interest. The enemy interest was sold by the Custodian to a Chicago concern which promptly sold it back to the American Rohm & Haas company. A forty per cent interest in the American company was then trusteed so that the dividends would go to Dr. Rohm and his family in Germany. Thus the partners lost no time in circumventing the seizure by the United States Government. In 1927 there began a series of agreements between the American and the German Rohm & Haas companies between the latter and I. G. Farben. These agreements related to new developments in sheet plastics. In this same period duPont and the English Imperial Chemicals Industries were cooperating in similar plastic developments. Conflict over patents arose between these two groups. Finally, in March 1936, after protracted negotiations, duPont and the American Rohm & Haas agreed on an exchange of patents and processes, which arrangement tied in with Imperial Chemicals and the German Rohm & Haas, and thus with Farben. Three years later, just a few months before World War II started, the two American makers of plastic glass entered into several more understandings which provided for control of prices, market sharing and restriction of production. Also, restrictions on the sale of the plastics abroad were entered into by the American Rohm & Haas with its German namesake and with Farben. By this time the use of plastics for airplane enclosures and gunners' screens had become of vital importance. And a result of the limitation of production was said to be a shortage of these sheets of plastic for the construction of military airplanes and other military equipment scheduled for the Lend-Lease program, and the Iong-delayed United States national defense program. Farben strategy, again by the indirect approach, had succeeded. The relationship between the American Rohm & Haas and Farben is illustrated by correspondence between them after the war had started. Farben, in December 1939, wrote to the Philadelphia company releasing it from restrictions on the exportation of certain of its products, and requesting it to take care of Farben's customers in Latin America-orders from whom would be referred to Rohm & Haas through another of Farben's allies in the United States, Advance Solvents & Chemical Co. Mr. Haas replied on January 22, 1940, that his firm would of course comply with Farben's request, also that: No matter who is doing the shipping we shall revert to the, status quo antem a s soon as normal conditions have been restored. The thought uppermost in my mind is to serve you in the most faithful and most efficient way possible in this emergency. Otto Haas, an American citizen for many years, was not only faithful to Farben in the emergency of war, but appeared confident that when the war should end he and his supposedly American firm would be permitted to resume their relations with Farben-and that Farben would again rule the roost as before. In October, 1935, two of Farben's leading officials, Georg von Schnitzler and Dr. Fritz ter Meer, came to Wilmington and attended a meeting at the home of Lammot duPont. At this meeting Farben's representatives pointed out how friendly Farben's attitude bad been in cooperating with duPont on the amicable settlement of patent disputes and foreign market problems and that Farben had invited duPont participation in the synthetic rubber developments. Yet duPont, according to the Farben report of this meeting, remained apprehensive that Standard Oil, by reason of its Farben tie-ups, might break into duPont's field in the chemical industry. DuPont's ideas on the subject of its relations with Farben are recorded in a memorandum dated March 18, 1936, in which was stated: "The duPont-I. G. relationships have notably improved, due partly to the personalities of individuals entrusted with negotiations, and partly to an officially more friendly attitude from higher up in the I. G. organization." This memorandum also indicated that patent disputes were being settled very satisfactorily, especially those handled by Dr. George Lutz, an expert employed by duPont, who formerly had been associated with 1. G. Dyes. The memorandum further suggested that the relations with Farben which did not seem to stand so well were on artificial silk and cellophane. However, on May 23rd, 1939, Farben finally induced duPont to sign an agreement which covered Nylon. Artificial silk has had its place in the list of chemical-munition products since the first World War, when its value was demonstrated for powder bags, electric insulation, and other military requirements. More recently the use of different types of rayon as a substitute for cotton in heavy-duty airplane and auto tires, and to replace silk for parachutes, had placed these synthetic textile fibers definitely among the more important chemical munitions. These qualities, plus the adaptability of some of the chemical processes involved in rayon production to other war materials and the rapid advance of technical developments, made it important to the Farben strategy to add this industry to the list of those in the United States to be penetrated, and handicapped for war. Farben first reached into the United States photographic field in 1926, shortly after it succeeded I. G. Dyes. At that time William E. Weiss of Sterling Products wanted Farben to turn over to him the American development of the photographic interests of Kalle, which owned the German Agfa, and was already in a strong position in Germany. Farben refused Weiss's request, and proceeded to purchase complete control of the Ansco Photo Products, Inc., of Binghamton, N. Y., the oldest maker of photo supplies in America. Farben also organized Agfa Raw Film Corp., and Agfa Photo Products, of New York City. Then, in 1928, it combined all these interests in the Agfa Ansco Corp. Ten years later Agfa Ansco had become the second largest concern of its kind in the United States. Its importance as a supplier of materials for war requirements, especially for aerial photographic maps and for blueprinting war plants and equipment, made this Farben-owned company a potential menace to the national defense of this country. We now come to a phase of Farben's strategy which reached out into metallurgy rather than chemistry, although its inception came from the chemical process by which metallic magnesium is recovered from solutions of brine. Farben's early development of largescale magnesium production and the light metal alloys into which this metal is combined, constituted a most important contribution to the German war machine-incendiary bombs and airplane metals. As already mentioned (in Chapter II), Dr. Schweitzer, World War spy and head of the American Bayer Company, had boasted of the day when his colleagues' development of magnesium alloys would be of great value to the Fatherland. It was. Germany made great strides in the first postwar decade in producing the metal and its alloys, and in making castings of the latter. In this same period the Dow Chemical Co., and the American Magnesium Co., began to produce metallic magnesium in the United States. The Aluminum Co. of America (Alcoa) then took over the American Magnesium Corp., and shut off its production of the metal, leaving Dow the sole American producer. In 1927 Alcoa made a cross-licensing arrangement on alloys owned respectively by Dow and American Magnesium, and also secured licenses to United States patents on magnesium owned by British Aluminium Co. Farben had been biding its time. It bad taken out various United States patents which were of no great value on the production of the metal, but which did have some advantages in its fabrication. Then, in 1929 Farben made advances to both Dow and Alcoa for partnership arrangements covering the entire magnesium field-production, alloys and fabrication. Dow repulsed these advances and refused even to discuss any partnership with the Germans. Possibly they recalled an experience twenty-five years earlier, when a visitor from Germany came to Midland, Michigan, and warned the senior Dow that if his firm did not discontinue exporting bromine, the Germans would retaliate by dumping two pounds of bromine in the United States for every one that Dow exported. Dow had defied those early threats, and the Germans dumped their bromine in this country at less than the cost of transportation and duty. This vicious commercial blackjacking continued to handicap Dow's business until war broke out in 1914, but Dow bad not yielded to the Germans then, and did not intend to do so on magnesium. However, Dow failed to reckon with the power of the new Farben strategy which tied up Alcoa as its partner in 1931, and a year later organized the Magnesium Development Co. Under joint ownership, but with Farben's Dr. Walter H. Duisberg as president, the new company pooled all the magnesium patents and developments of Farben and Alcoa, and notice was served on Dow to play ball-or else. Dow held what appeared to be trump cards in development of processes, valuable patents and contracts with Ford and other automobile companies. But the heat was on, and threats of patent litigation were made. One suit was actually started. A gentler approach was through a series of luncheons at which one Edward L. Cheyney, suave Alcoa sales executive, entertained an aged director of the Dow company at the gloomy Union Club in Cleveland and, between courses, pictured the doleful things that could happen to a company that persisted in bucking the Farben-Alcoa combine. No threats were made but the deep regret of Alcoa was expressed at the unfortunate obstinacy of the Dow management. The luncheons were held on direct instructions from Farben, but Mr. Cheyney soft-pedaled the Germans' place in the setup, and emphasized the probity of Alcoa. Dow finally decided that further resistance was useless, gave up the unequal contest and, in 1933, signed up with the Farben-Alcoa magnesium team. During this triumph of the Farben strategy in breaking into another American industry on the traditional German shoestring, its emissaries were negotiating with the Ford Motor Company on the fabrication of magnesium alloys for piston beads and other automotive parts where light weight was an advantage. Quite possibly these negotiations traced back to the Ford Motor Company's plant in Germany, and may also have had bearing on the willingness of Mr. Edsel Ford to act as one of the directors of the American I. G. Chemical Corp. to which Farben's fifty per cent interest in the Magnesium Development Corp. was assigned. However, once Dow was securely tied into the Farben-Alcoa combine, Farben's next step was to make sure that the production of magnesium metal in the United States be restricted, and its fabrication in alloys be developed as slowly as possible. This was important, because magnesium, in its natural form, is one of the most plentiful of the elements, and so many new methods of extracting it had been experimented with, and so many new uses were in sight that there were good prospects of lower costs for the metal and the consequent rapid expansion of its production. In its first 1931 agreement with Farben, Alcoa had accepted a restriction on initial production of the metal should a new United States plant be built by the partners. When Dow signed up, the plans for a new plant were at once abandoned, and competition in the domestic magnesium industry was at an end. Farben meanwhile bad greatly expanded its own production of magnesium and magnesium alloys in Germany. With one hand Farben prepared Germany for war by creating a sufficient supply of light metal for its huge fleet of warplanes; with the other it throttled the growth of the industry in America, and saw to it that a good part of the limited United States production was shipped out of the country. Thus Farben inoculated our magnesium producers with industrial sleeping-sickness, which the larger of its partners, interested mainly in aluminum, did not resent, and which the other partner, shanghaied into a shotgun Farben marriage, was unable to prevent. When the United States started its schedule of expanded airplane production, one of the greatest, and seemingly insurmountable barriers which confronted the Army and Navy was the acute shortage of magnesium alloys. Other metals of vital importance to national defense which are found in restrictive agreements involving American producers with Farben, directly or indirectly, included aluminum, nickel and molybdenum. Contrary to opinion so frequently expressed elsewhere, it was merely incidental to the Farben strategy (as illustrated in this chapter and that preceding it) that the cartel mechanism lent itself to Farben's purpose in tying into some of the great industrial corporations of this country. The almost complete abandonment of anti-trust law enforcement had made many of these American combinations inevitable and likewise made Farben's technic possible. This technic would have been ineffective and Farben's task much more difficult if the anti-trust laws had been enforced. Farben's part in procuring two decades of lax enforcement of federal statutes may best be understood after reading other chapters of this story. When the war started in 1939 Farben's tie-ups in the United States were by no means confined to the particular products and companies which have been mentioned thus far. The thousands of United States patents taken out during the preceding seventeen years by Farben and its affiliates in Germany had been utilized to effect an almost countless number of agreements with corporations and individuals in the United States. These agreements ranged from royalty payments on products of relative unimportance to complete control of militarily-strategic industries. The greatest number of these patents related to coal-tar dyes and pharmaceuticals; others involved a wide range of chemical and metallurgical products. It is proper to state that the mere fact that each of those many companies had relations of some sort with Farben or its affiliates, does not necessarily imply any degree of illegality on the part of each such American company. Farben's broad purpose was to accomplish so complete a saturation of our industrial structure, by fair means or foul, that our progress at all times would be under observation, and, when advisable, might be restricted. As we have seen, some of its contracts were viciously illegal. Other arrangements however were not tainted with illegality. An indication of the extent and diversification of this penetration is a partial list, in the appendix, of some of the better-known American corporations, including those already mentioned, which are officially reported to have made agreements with Farben or to have been involved in some of Farben's direct tie-ups with other companies. This list reads like a directory of American industry. Because of the character of these agreements and relationships, at least some degree of Farben's influence or espionage may have resulted in each instance. pps. 47-68 --[cont]-- Aloha, He'Ping, Om, Shalom, Salaam. Em Hotep, Peace Be, All My Relations. Omnia Bona Bonis, Adieu, Adios, Aloha. Amen. Roads End <A HREF="http://www.ctrl.org/">www.ctrl.org</A> DECLARATION & DISCLAIMER ========== CTRL is a discussion & informational exchange list. 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