METAL SITUATION.

THE DISPOSITION.

As to Beer, Sondheimer & Co.-The business of Beer, Sondheimer & Co. is in process of liquidation. This includes not only the corporation Beer, Sondheimer & Co. (Inc.), but also its subsidiaries, the National Zinc Co., the Norfolk Smelting Co., and the Cuba Copper Leasing Co.

When the Custodian took over the business of Beer, Sondheimer & Co. he placed it in control of a board of directors designated by him. Elkan and Frohnknecht maintaining that they owned all the stock of the corporation, filed a claim therefor, and thereafter brought suits to recover the same. These suits, however, have been withdrawn, and the Custodian through said board of directors is proceeding to liquidate the company, and as soon as the business has been liquidated the corporation itself will be dissolved, and Beer, Sondheimer & Co. will entirely have disappeared as a factor in the zinc and copper situation both in the purchase and sale of ores and in the control of mines and smelters. As pointed out above, the Frankfort firm of Beer Sondheimer & Co. was a stockholder in the Minerais Separation Companies. In 1913 the Frankfort firm transferred to its American branch its interest in this stock, and when the American Minerals Separation was formed in 1916 under the name of Minerals Separation North American Corporation the stockholders of the predecessor, British Minerals Separation Co., became entitled to exchange their shares for the stock of the new company upon the basis of one share of the old stock for two of the new. Thus Beer, Sondheimer & Co. became entitled to receive 65,230 shares of the stock of Minerals Separation North American Corporation. In addition to this amount of stock, Beer, Sondheimer & Co. had received from Minerals Separation North American Corporation 35,000 shares of stock as a consideration for the cancellation of the exclusive agency of Beer, Sondheimer & Co. theretofore granted by the British Minerals Separation Co., thus giving to Beer, Sondheimer & Co. a total of over 100,000 shares of the stock of Minerals Separation North American Corporation out of a total issue of 500,000 shares. The Custodian took over all of said 100,000 shares (in form of voting trust certificates) as property of Beer, Sondheimer & Co., of Frankfort. This stock will likewise be disposed of by the Custodian and will go into American hands. Beer, Sondheimer & Co.'s control over the important flotation process has been destroyed.

As to Vogelstein & Co.-As in the case of Beer, Sondheimer & Co., when the Custodian took over the business of L. Vogelstein & Co. (Inc.), he placed in control thereof a board of directors designated by him. Susbsequent investigation by the Custodian disclosed that Vogelstein, who was a naturalized American citizen, had a pre

ponderating interest in the assets of the corporation, and inasmuch as it has as yet been impossible to obtain from Aron Hirsch & Sohn an accounting so as to determine that concern's exact interest in the assets of L. Vogelstein & Co. (Inc.), an arrangement has been perfected between the Custodian and Vogelstein whereby all of the stock of the corporation has been put into a voting trust for a period of five years, the Custodian naming two of the three voting trustees. Thus the control of the corporation for the next five years will be in the hands of trustees appointed by the Alien Property Custodian. Vogelstein has agreed not to resume his relations with the Germans during this period of five years and to conduct the business of the corporation as a purely American concern. The voting trust certificates have been made assignable only to Americans. Vogelstein has agreed to pay to the Custodian $1,668,671.49, being the amount of the apparent indebtedness from him to the Hirsches as of April 30th, 1916, and has agreed to pay to the Custodian all additional moneys that may be found to be due to the Hirsches upon a final accounting which is to be had within six months after the declaration of peace. Thus circumscribed and guarded, the control of the business has been turned back to Vogelstein, the Custodian retaining two out of the five places on the board of directors as long as the Custodian may have any interest in the business.

As to American Metal Co.-Soon after the trading-with-the-enemy act became a law, the Americans in control of the American Metal Co., not only promptly filed the report required by the act and disclosed therein the German ownership of about 49 per cent of the stock of the company, but offered to cooperate with the Custodian in any direction looking to the elimination of the German interests. An investigation of the affairs of the company was courted and at the instance of the War Trade Board, such an investigation was made and subsequently the Alien Property Custodian likewise made an investigation of his own. The officers of the company heartily cooperated with the Alien Property Custodian, which resulted in the first instance in the transfer to the Custodian of the stock belonging to the Germans. The Custodian was satisfied with the good faith of the management of the corporation and, therefore, designated but five out of the 15 directors of the company.

By agreement between the Alien Property Custodian and the American stockholders, together controlling 53,264 shares (out of 70,000 shares outstanding) all of said stock has been placed in a voting trust for a period of five years. The Alien Property Custodian is entitled to receive voting trust certificates representing the 34,644 shares of stock formerly held by enemy aliens. It is his purpose to offer these certificates for sale to the American public at public auction.

The voting trust agreement provides that the Alien Property Custodian shall appoint all five of the voting trustees. He has already appointed three trustees who are now in actual control of the management and policy of the company. The trustees are Joseph F. Guffey, Henry Morgenthau, and Berthold Hochschild. Mr. Hochschild is one of the founders of the company and has been chairman of the board of directors for several years. The Alien Property Custodian will appoint the other two trustees after he shall have sold the voting trust certificates held by him.

The policy of the Alien Property Custodian to sell only to Americans will be strictly adhered to in this instance and none of the voting trust certificates will be permitted to go into any but American ownership. The immediate result is that 76 per cent of the stock of the company will be owned by American citizens. The Alien Property Custodian is in correspondence with the British authorities with a view to the deposit under the voting-trust agreement of the 16,736 shares held by Henry R. Merton & Co. and its allied interests. It is hoped that such action will be taken in the near future. When this has been done, the Alien Property Custodian believes that all German ownership and influence will be effectually eliminated from the company.

To summarize the result of the activities of the Alien Property Custodian in so far as they affect German interests and German influences in the American metal market, it may be said that finding those interests and influences centered in three well-defined corporations, American in name but all controlled by the German metal triumvirate, the activities of which three corporations were not confined solely to the United States but penetrated into Mexico and South America, owning mines, smelters, refineries, oil concessions, railways, dealing in every known metal, doing a business which annually ran into hundreds of millions of dollars, he has succeeded in thoroughly Americanizing two of these concerns and liquidating the third, thereby entirely eliminating German influences in our metal markets and our metal industry.

The German metal octopus had spread his tentacles across the ocean and over the United States into Mexico and South America, but for the present surely, and for all time it is hoped, he has been driven back and a wall of Americanism erected which, it is hoped, he will never be able again to scale. The Alien Property Custodian thanks Isidore H. Kresel for his efficient assistance in the investigation of the metal industry.

CHAPTER IV.

WIRELESS.

The development of the German marine coincident with German commercial penetration into foreign countries required that the best system of direct communication, especially between ship and shore, should be found and adopted. In the decade prior to the general war, inventors and scientists all over the world were seeking to develop wireless communication and so German science undertook to experiment with the art. The underlying ideas in wireless communication were the fruit of other than German minds, but, as in many other fields, the Germans experimented with and patiently developed these ideas.

The inherent difficulties in the art, the widely varying systems on which experiments were proceeding, the immense costs attending experimental work and the lack of certainty in the results achieved, had delayed the commercial use of wireless, and it was not until a few years before the European war that German enterprise undertook the construction of a trans-Atlantic station. About this time. the English Marconi Co. undertook the ambitious scheme of linking up the British dominions throughout the world by wireless stations, including a trans-Atlantic station.

In the prewar period it must have been at once apparent to the Junkers that all communication with America would be cut upon England's entry into the war, unless some means independent of cable or ship was established. The danger of a severance of communication was obvious. In America was a great Nation whose reservoir of men, money, and munitions would decide the war against Germany if thrown into the scale against her. In America was the only great neutral to whose opinions the world would give heed. In America was a great body of German-born citizens upon whose attachment to their native country great dependence was placed for aid both in moulding American opinion and in giving to Germany the financial and material aid which she needed if the war lasted beyond a few months. In America Germany knew the allies would find a source of supply of goods, machinery, and munitions which would help them in ever increasing measure to overcome the handicap of

unpreparedness under which they labored. From America, also, must proceed communication to all other neutrals in the Western Hemisphere.

The war plotters found in a trans-Atlantic wireless station the sole means of overcoming the British control of the seas and of maintaining their touch with America, and from 1910 to 1914, there were begun and completed two high-powered wireless plants, one at Sayville, Long Island, and the other at Tuckerton, N. J.

The Tuckerton station was built by Hochfrequenz Maschinen Aktiengesellschaft fur Drahttose Telegraphie (commonly called Homag), a company organized in Berlin and managed by a retired admiral of the German navy, and by Rudolph Goldschmidt, who claimed to be the inventor of the transmitting system (Goldschmidt high-frequency generator) used in the plant. This plant was designed to connect with Eilvese on the German side.

The Sayville station was built by the Atlantic Communication Co., a New York corporation, and there was no ostensible connection with Germany. The system used in this station was the so-called "Telefunken "system, and the plant was designed to connect with the highpowered Telefunken plant at Nauen, near Berlin. Both Nauen and Eilvese were controlled and operated by the German post office.

Thus, practically side by side, there were being erected by German funds two stations intended to communicate with Germany and using different systems, thus insuring contact if either system was effective. It is a curious incident in the wireless situation that the Goldschmidt or Homag Co. entered into a contract to sell the Tuckerton plant to a French company known as Companie Universelle de Telegraphie et de Telephonie sans Fil (abbreviated to C. U. T. T.). After vast sums had been paid by the French company, the war broke and "Homag" on one pretext or another, withheld delivery of the plant and used it to communicate with Germany and this in spite of the fact that it was beneficially owned by the French. The litigation arising respecting this use of the plant and the complaints made by the French of this misuse of their property resulted in the United States, through the Navy Department, taking control of the plant in September, 1914. Our Government could not (in observance of neutrality) prevent the use of the plant to communicate with Germany, but it could and did prevent it being exclusively so used and secured to the French some rights in the property pending the termination of the litigation.

There is available information that the great electrical companies of Germany had a working understanding with the Homag Co. and did not resent the apparently serious competition of the Tuckerton plant with the Sayville plant, which they built. Their complacency can be explained if one accepts the thought that both plants were