in similar proceedings in respect to another company. This stock and other rights of the German house in the American company have been sold at public auction to the Monsanto Chemical Works for $605,000 plus taxes and profits of 1917 and 1918, but the sale has not yet been confirmed by the sales committee.

An almost exactly similar situation was disclosed by the investigation of Bauer Chemical Co., a much smaller concern manufacturing pharmaceuticals, especially the widely advertised "Sanatogen" and "Formamint." In this company also the stock, which was really the property of the Berlin house of Bauer & Co., appeared by a fictitious transaction to have passed into the hands of Mr. Hodgskin. The fictitious character of the transaction in this company also has been admitted, and the stock has been taken over.

Another method of concealment was disclosed in the investigation of American Pyrophor Co. (Inc.). This company was organized in December, 1917, by Charles Ganz, former agent of the Treibacher Chemische Werke, of Treibacher, Austria, and to it Ganz transferred, without authority, the entire business of the Treibacher company in this country, a business consisting of the manufacture of pyrophor, an alloy of iron and cerium, which, when struck or scratched, produces fire and is used for cigar lighters, etc. Here, after investiga tion, the unauthorized character of the transfer was so clearly shown that it was admitted, and upon demand the stock of the company was turned over. In this, as in many other like cases, it was impossible to determine whether the ostensible new owner of the business meant to keep it for the alien enemies or to steal it for himself.

In pharmaceuticals, the most important concern in the world was that of E. Merck, of Darmstadt. This was represented in this country by Merck & Co., a New York corporation which had an enormous and very profitable business in all kinds of medicinal preparations. The stock of this company appeared on the books to be owned exclusively by George Merck, a member of the family which owns the house of E. Merck, of Darmstadt. Investigation, however, showed that the profits of this company had always been remitted to the German house in a manner utterly inconsistent with the apparent stock ownership, and it now stands admitted that the stock was paid for with money of the German house and belongs to the latter. Mr. George Merck insists that he is the real owner of one-fifth of this stock by virtue of the fact that he owns 20 per cent interest in E. Merck, of Darmstadt. I am of the opinion, however, that indirect ownership of this kind can not be recognized under the trading with the enemy act, and I have therefore determined that the whole of this stock is enemy owned and it has accordingly been taken over.

In addition to the above, I have taken over all or part of the stock of the following less important companies engaged in various lines

of chemical activity: Charles Helmuth & Co. (Inc.); International Ultramarine Works; G. Siegele & Co.; Williamsburgh Chemical Co.; New Brunswick Chemical Co.; Fahlberg Saccharine Co.; Philipp Bauer & Co. (Inc.); Amid-Duron Co.; Haarmann-de Laire-Schaefer Co.; Jarecki Chemical Works; Riedel & Co. (Inc.); Rohm & Haas; Somerset Chemical Co.; Tropon Works; Gerstendorfer Bros.; German Kali Works; F. Ad Richter Co. The liquidation of the German interests in these companies is proceeding in due course.

The amendment of November 4 to the trading with the enemy act presented for the first time an opportunity for what appears to me to be the most important piece of constructive work which has been possible in my department. Until the enactment of this amendment it had not been possible to take over German patents. These patents, as had been already indicated, formed a colossal obstacle to the development of the American dyestuff industry. Evidently they had not been taken out with any intention of manufacturing in this country or from any fear of American manufacture, which the Germans apparently thought could not be successfully carried on under conditions prevailing in this country in regard to costs and to the supply of technicians and skilled labor. Upon consideration, however, it seemed that these patents offered a possible solution for the problem, hitherto unsolvable, of protecting the new American dye industry against German competition after the war. If they were not taken out in order to prevent American competition they must have been obtained as a weapon against competing imports. If they were sufficient to stop importation of competing Swiss, French, and English dyes, they would presumably serve, in American hands, to stop the importation of German dyes. This was particularly probable in the case of the product patents, since most of the coal-tar dyestuffs are definite chemical combinations to which a product patent is entirely applicable.

The idea was accordingly conceived that if the German chemical patents could be placed in the hands of any American institution strong enough to protect them, a real obstacle might be opposed to German importation after the war, and at the same time the American industry might be freed from the prohibition enforced by the patents against the manufacture of the most valuable dyestuffs. Accordingly, these considerations were laid before various associations of chemical manufacturers, notably the Dye Institute and the American Manufacturing Chemists Association. The suggestion was met with an instantaneous and enthusiastic approval, and as a result a corporation has been organized to be known as the Chemical Foundation (Inc.). in which practically every important American manufacturer will be a stockholder, the purpose of which is to acquire by purchase these German patents and to hold them as a trustee for American

industry, "for the Americanization of such institutions as may be affected thereby, for the exclusion or elimination of alien interests hostile or detrimental to the said industries and for the advancement of chemical and allied science and industry in the United States." The voting stock is to be placed in a voting trust of which the trustees are to be the five gentlemen who for months have been acting as the sales committee which passes upon sales made by my department, that is to say, George L. Ingraham (former presiding justice of the appellate division, first department, New York Supreme Court); Otto T. Bannard (president, New York Trust Co.); Cleveland H. Dodge; Benjamin H. Griswold (senior partner of Brown Bros', bankers, Philadelphia); Ralph Stone (president, Detroit Trust Co.), and the charter is so framed that under the patents nonexclusive licenses only can be granted on equal terms to all proper applicants, and must be granted to the United States free of cost. The company is capitalized at $500,000, of which $400,000 is to be 6 per cent cumulative preferred stock and $100,000 common stock also limited to 6 per cent dividends. The first president of the Chemical · Foundation (Inc.), will be Francis P. Garvan, of the New York bar, to whose clear vision and indefatigable industry I am chiefly indebted in the working out of this plan. By Executive order obtained. under the provisions of the act, I have sold to this company for the sum of $250,000 approximately 4,500 patents, the remaining $250,000 has been provided for working capital so that the company may be able to commence immediately and prosecute with the utmost vigor infringement proceedings whenever the first German attempt shall hereafter be made to import into this country. The charter of the corporation provides that surplus income is to be used for the retirement of the preferred stock and thereafter for the advancement of chemical and allied science and industry. The price thus paid was necessarily determined somewhat arbitrarily; the great majority of the patents were presumably valueless. The value of the remainder was entirely problematical and impossible to estimate. Substantially the entire industry having combined for the purpose of this purchase, it would have been impossible on public sale to find as a bidder any legitimate manufacturer. No other bidder could, therefore, have been found on public sale except some speculative individual who might have bought them for purposes practically amounting to commercial blackmail. The combination was not objectionable to public policy since it was so organized that any genuine American, whether a stockholder of the company or not, could secure the benefits of the patents on fair and equal terms. It is submitted that the organization of this institution constitutes the most important step that has been taken for the protection of the new industry. Tariff protection has proved utterly unavailing in the

past. The German industry as hitherto organized, and still more as now organized, has had so much to gain by extending its foreign trade and by destroying the industry in other countries that it would undoubtedly give away its goods in this country for nothing in order to recover the American market. The Chemical Foundation, however, should prove a power sufficient to discourage in a most effective manner any German attempts in this direction. If, as their newspapers boast, the Germans have during the war worked out entirely new dyes superior to their past productions, the protection afforded by it will be invaluable. It has been the uniform experience of the industry that the introduction of new classes of dyestuffs follows only several years after the patenting of the original inventions on which their manufacture depends. Accordingly, the later dyes of to-day depend largely upon the patents of three or four years ago. The patents transferred to the Chemical Foundation include many German patents of 1917 and even of 1918, and also many applications still pending. These patents undoubtedly include the results of the research upon which must be based the manufacture of any new dyes which the Germans are now able to produce and market. Accordingly, at the very least, the institution will be able to protect the American industry for a considerable period, and this should be all it needs. It appears to be the universal view of the more competent manufacturers in this country that given five years of freedom from German competition, the American industry can hold its own. Probably only a measure such as the embargo which appears to have been imposed by the British and French against all foreign dye importations can furnish this protection to the degree necessary to insure the safety of the American industry; but short of such an embargo, the Chemical Foundation would seem to furnish all the aid that possibly can be given.

At the same time the new institution promises an incalculable benefit not only to the dye and chemical industries but to the whole American manufacturing world. The opportunities which it can offer and the rewards which it can hold out to competent research scientists should far exceed those of any institution unconnected with industry, and it may well, therefore, form the nucleus of the greatest research organization in the country.

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CHAPTER III.

THE METAL SITUATION.

To appreciate what has been accomplished in ridding the metal industry of the United States of the influences of the so-called “German metal octopus," it is necessary to briefly sketch the growth of the German metal concerns on their native soil, and then to point out how these gradually invaded foreign markets and to what extent the American metal markets came under their domination. At the outset, however, it must be pointed out that however much justification there is for the assertion that the German metal combine controlled the metal markets of Europe and Australia-especially in zine and lead-it is not the fact that they controlled the metal market of the United States. Their influence here was potent, no doubt, and it was growing, but it was far from sufficient to control either the production or the price of metals in the United States. The octopus was spreading his tentacles across the Atlantic, but he had not yet assumed the "octopian" proportions.

The Alien Property Custodian has taken over the German-owned metal concerns in the United States, and, by disbanding some and Americanizing others, it is believed that the German influences in our metal market have been completely eliminated.

GROWTH OF THE GERMAN METAL TRADE.

Germany has never been a great producer of metals. Her production of copper is but 3 per cent1 of the world's output, against about 60 per cent produced by the United States. Her production of refined zine is about 28 per cent of the world's output, and of lead she produces 16 per cent of the world's total production. Yet unquestionably Germany has for years controlled the zine and lead metal markets of Europe and of the rest of the world except the United States. What is the secret of her power? It is not alone that she is a large consumer of metal. For though she consumes annually about 500,000,000 pounds of copper more than she produces, she consumes only 23 per cent of the world's zinc against her own production of 28 per cent of the world's output; and of lead she consumes only 20 per cent of the world's output against her own production of about 16 per cent.

1 All figures herein regarding Germany are for 1913.

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