expect to find concealed ownerships behind the apparent stockholdings and attempts to conceal and cover up by apparent transfers the real interests. In the Bosch Magneto Co., however, the majority of the stock had stood, ever since 1909, in the name of one of the resident officers of the company, who at first insisted that he was the real owner. Robert Bosch, of Stuttgart, Germany, and one Klein also of Germany, although between them they owned all the stock of the company, had only 50 shares standing in their names on the books. These and 45 other shares which stood in the name of Carl Schurz, a New York lawyer, but which were admittedly held for Germans, were all of the shares which on the face of the records appeared to come within the purview of the trading with the enemy act and were all that were reported by the company to the Custodian. A searching investigation, however, brought out a large number of facts which indicated that the record owner of most of the stock was a mere dummy, and eventually in March and April, 1918, confessions were obtained from two of the active officers of the company which demonstrated that all the remaining shares in the company were owned beneficially by Robert Bosch and that 900 shares in the Eisemann and 1,501 shares in the Boonton Rubber Manufacturing Co., were similarly owned. These confessions enable me to take over the stock in question.

In the Eisemann Co., the situation was simpler. Six hundred shares, or 30 per cent of the capital stock, were admittedly German owned and an attempt on the part of Eisemann to transfer his shares-doubtless colorable and pro-forma,-to an American citizen, was prevented by the entrance of the United States into the war. The proposed transferee in this transaction has since been shown to have acted as a cover for other large enemy interests; but as in this case, the transaction came too late, the ownership of the shares remained in such a condition that they had to be reported to the Alien Property Custodian and were accordingly taken over.

The acquisition of the stock in these two companies enabled me to appoint boards of directors and take over the plants of the three corporations concerned about May 1, 1918, since which time, they have been operated under my direction by the boards thus appointed. Thereafter, I placed at the disposal of the Government, for war work, all the factories in question, and to make this offer effective named among the directors of the companies representatives of the War Department. The Government took full advantage of this opportunity and when the armistice was signed, 85 per cent of the Bosch factory and almost an equally large percentage of the capacity of the other plants were engaged in direct or indirect war work at prices which represented a great saving to the United States.

This was in itself a valuable result, but it was the duty of the custodian to go still further. It was incumbent upon him in execution of the spirit as well as of the letter of the trading with the enemy act to "Americanize" the industry. This has been accomplished by means of public sales of every enemy-owned or controlled share in the two magneto concerns, and the work will shortly be completed by the disposal of the shares in the Boonton Rubber Manufacturing Co. The stock of the Bosch Magneto Co. passed into American hands in December, 1918, and the enemy shares in the Eisemann Magneto Co. became American-owned in February, 1919. The total sum realized at these sales was $5,057,500.

In connection with the sale of the enemy stock in these companies, the enemy-owned American patents, important to, and used with the business, were also sold. These patents, of which there was a considerable number, cover every conceivable phase of invention and improvement in the art and embody the ideas of the best and most experienced German engineers in this branch of electrical science. By their seizure and sale in conjunction with the producing units— the factories-the American purchasers and the industry generally are insured against German competition within the field covered by the patents.

As a result of these proceedings, the magneto industry of this country is now wholly in American hands and is unfettered by patents held by or for the benefit of enemies. It seems reasonably safe to predict that the business will remain indefinitely 100 per cent American.

CHAPTER VI.

THE FUR INDUSTRY.

The outbreak of the war found the American fur trade, in so far as dealing was concerned as distinguished from the manufacturing of furs, divided into two classes. One class confined itself almost exclusively to the importation of foreign furs and the other class dealt chiefly in furs caught on the North American Continent. Between these two great classes of dealers, was another class, most of whom did business on a small scale and who dealt in both domestic and foreign furs, getting their supplies at practically all times from the other two classes of dealers.

The great importing houses did business chiefly through Leipzig, Germany, with either branches of Leipzig firms or with American firms who maintained a large branch establishment in Leipzig. These houses dealt in Russian and Siberian furs, a large portion of which were first brought to Leipzig, either for dressing or dyeing purposes. American merchants had to look exclusively to Germany for these foreign furs. In the cases of Leipzig concerns having branches here, the method of business between the branches and the main house was so contrived as to benefit the Leipzig house in all cases. Goods were consigned to the branch houses here with a liberal profit added, which made it just about possible for the American house to make its overhead expenses. This accounts for the fact that, with a few exceptions, none of the branches in any years were conducted on a profitable basis, although the foreign houses made tremendous profits on the merchandise consigned to America to be sold at a fixed price, determined in advance.

The American fur market was under the domination of Leipzig even in the case of American caught furs. These were sent to Leipzig for dressing and dyeing, then to London, to the sales, then sold back to Leipzig, and finally, with all these costs and charges added, were sold to the American trade plus a profit and the duty.

The first effect of the war was to cut down importation of furs to an almost negligible quantity, as well as the Leipzig market, and to make it practically impossible to ship furs to Leipzig via London, as had formerly been the custom. All the United States fur merchants,

and even the German-owned branch houses, took to dealing in American furs in proportion as importation from European sources ceased. These branch concerns have since all become Americanized and have continued to deal almost exclusively in American furs. On the other hand, the larger American houses, which previously did very little importing business, were remarkably successful in opening up sources of supply in Russia, Siberia, and China, and, at great risks, bringing these foreign goods into a market anxious to consume the same. To be more specific, the leaders in the importation of furs prior to 1914 were such houses as G. Gaudig & Blum, Theodor Thorer, Otto Erler, Fuchs & Co., and M. S. Elias, jr. (Inc.), all of which were German owned, and Joseph Ullmann, an American firm, which also conducted a large business in Leipzig, Germany. With the exception of the two latter firms, these previously German-owned concerns have practically discontinued the importation of furs and the leadership has been taken by such American houses as Albert Hershkovitz & Sons, Max Wulfsohn & Co., G. J. Fuerth & Co., and the EuropeanAmerican Fur Co. (A. Kheel & Son).

The first effect of the war was therefore a revolutionary one which worked to the advantage of America.

With the entrance of America into the great war and the passage of the trading with the enemy act, the first result to be attained was that German capital, invested in the American fur trade, should be quickly drawn out of the business and that traces of German influence should be wiped out. This result was rather easy of attainment, inasmuch as the American branches of German houses were, in practically all cases, under the absolute charge of American citizens who were of considerable assistance in liquidating the German interests in their respective houses. In some cases, the American representatives, early in 1915 and in 1916, had, themselves, arranged to buy out the German interests in the branch businesses and had · at the time executed and delivered proper legal documents affecting such change. In such cases, of which there were two examples, the agreements entered into at such an early date were approved by the Alien Property Custodian and payments due the German interests were thereafter paid to the Alien Property Custodian. In another ase, where a purchase had been made by American interests shortly before the actual entry of the United States into the war, the Alien Property Custodian approved the agreement, subject to a slight increase in the purchase price and the terms of payment. In other cases, it became necessary to liquidate the business; in all such cases the American managers were in a position to greatly assist the Alien Property Custodian by protecting a considerable portion of the assets at public auction sales so as to assure full value being paid into the 107248-S. Doc. 435, 65–3—8

liquidating business for the account of the enemy owned interests. It is most gratifying to be able to report that the results of the liquidations of these interests have been unusually satisfactory, the amounts realized being in practically every instance in excess of book value.

The German interests have been somewhat difficult of discovery in this particular trade, as is shown by the tremendous increase in the number of reports filed after the time fixed by the Government for original filing. But it may be confidently asserted that both German influence and capital have been successfully and completely eliminated from the fur trade. And it is not too much to say that with the enforcement of the terms of the trading-with-the-enemy act this absolute abolition of all enemy-owned interests in present existing American fur houses is for all time, and there is no chance that at any time German capital will reappear to any appreciable amount in the American trade. If the great Leipzig fur houses are, after the signing of peace, in a position to branch out in America, it will have to be through entirely new means and by the investment of new capital in this country, in the face of competition that it will be practically impossible to overcome.

A further result of the war and of the enforcement of the tradingwith-the-enemy act, a result of tremendous importance to the American fur trade, is the establishment of great public auction sales, conducted in the spring, winter, and fall at New York City and at St. Louis. Both cities now vie for the title of "the fur market of the world," a title formerly claimed by and accredited to London and Leipzig. Starting late in 1915, the first St. Louis sale amounted to considerably less than $1,000,000, whereas the January sale was said to have been in excess of $9,000,000. The first New York sale in 1916 disposed of merchandise worth about three-quarters of a million dollars, while the sales there in February, 1919, covered merchandise of the value of almost $6,000,000. But New York, besides holding the auction sales and besides being located in the greatest port of the world, is the center in which 85 per cent of the American furs are manufactured and 95 per cent of the American fur catch. is dressed and dyed.

For almost a century prior to the war, such auction sales had been held in London, England, but owing to the difficulties of transportation growing out of the war, the sales were begun in this country, and it is confidently expected in both American cities, not only that the American trade will hereafter purchase its American furs in America, but that foreign dealers will ship considerable portions of their seasons' collections to the American fur auction sales to be disposed of to American dealers. The curious phenomenon existing before the