and trust companies which report enemy property are designated, whenever possible, depositaries for such property. Responsible banks or trust companies are designated depositaries for properties reported by others in those places, if practicable, where such properties are situated, preference being given to those banks or trust companies which are members of the Federal Reserve System. In unusual trusts an individual is designated codepositary with a bank or trust company, where his familiarity with the property makes such a course advisable. There are no local custodians and no exclusive depositaries. There may be, and frequently are, many depositaries in those places where large numbers of enemy properties (in several trusts) are located.

After the trading with the enemy act was amended on March 28, 1918, and the Custodian was thereby given the power to sell enemy property, as though he were the owner thereof, the Bureau of Sales was created to sell those businesses and interests therein which the Custodian determined should be sold.

There are five ways in which property is received by the Custodian:

1. In response to a formal demand.

2. By order or decree of a court.

3. In pursuance of a petition by the holder of such property, to be permitted to turn it over.

4. In pursuance of a license by the War Trade Board in connection with liquidation.

5. In pursuance of a license of the Treasury Department in connection with the supervision and liquidation of enemy insurance companies.

When a report, petition, copy of a decree or license is received in the office, it is given a report number by the Division of Mails and Files in the Bureau of Administration, and entered upon the Report Register.

It is then routed to the Bureau of Investigation, where it is examined for sufficiency of form and substance, and if there is doubt about the latter, advice is received from the Bureau of Law. If the enemy status is established, and the property should be demanded, the report is routed to the Bureau of Trusts, where it is given a trust number and assigned to the appropriate division.

Thereafter the Bureau of Trusts has complete jurisdiction over the property, calling upon the Bureau of Investigation for any further information which is necessary, and upon the Bureau of Law for legal advice. If a sale is authorized, the Bureau of Sales is charged with the duty of conducting such sale, and accounts to the Bureau of Trusts for the net proceeds realized. Litigation affecting

such property or the interests of an enemy therein, and claims under section 9 of the act, for all or any part thereof, are referred to the Bureau of Law, and distribution is made by the Bureau of Trusts upon the advice of the Bureau of Law.

An analysis of the books in the Division of Accounts and the demands on file not yet complied with as of February 15, 1919, reveals the following facts regarding the nationality of the former owners of the property seized:

CHAPTER II.

THE CHEMICAL INDUSTRY.

The great field of chemical industry presented, at the outset, perhaps the most difficult of the many problems which the Alien Property Custodian was expected to solve. It was, or had been until importations cased, saturated through and through with German influence. In regard to no branch of human endeavor was the myth of German invincibility more firmly fixed in the public mind. The country was flooded with German chemists; and those who were not German by origin, were mostly German, directly or indirectly, by training. A vast proportion of the persons engaged in the business bore German names. Connections more or less close between American and German houses were frequent and obvious. There was unquestionably a considerable German interest in such manufacturing as was being carried on. In view of the well-known and uniform policy of the great German government-aided combinations to embark in foreign manufacture only when export from Germany was not feasible, this interest seemed unlikely to be large; but, unless it could be discovered and rooted out, no substantial Americanization of the industry was possible. The German chemical industry, which had so thoroughly penetrated and permeated our own, was gigantic, perhaps the strongest, and certainly the most remunerative of all Teutonic industries. The task of identifying and taking over its property in the United States was thus a direct attack upon a most formidable opponent; while the information on which the work had to be based, had to be derived, to an exceptional extent, from men hostile by birth or tradition.

In order to give a fair understanding of the situation, it is necessary to sketch briefly the history of the German chemical industry. From about the middle of the nineteenth century, the practical application of chemical science began to occupy the attention of a constantly increasing number of the best scientific and industrial minds of Germany. A combination of natural advantages and national characteristics led to rapid advance. The industrial districts in which the necessary materials and other facilities were found or developed was exceptionally compact. Distances were

short and transportation easy. Labor was cheap, docile, and stable. On the other hand, the national habit of mind was peculiarly fitted for chemical research work, and particularly for the interminable tasks presented by such research, in the way of exhausting the immensely numerous possible combinations available within a particular field. From the first, scientific attainment, and particularly accomplishment in the field of research, appealed strongly to the public mind. Men of science, and particularly research workers, were more highly regarded than in other countries. This tendency was strongly fostered by the Government, which, by conferring honors and titles, did everything possible to exalt the position of the successful scientist.

As a consequence of these conditions, the universities were at an early date provided with the most elaborate and advanced equipment for research work, and attracted to themselves an extraordinary proportion of the ablest young men of the nation. They accordingly proceeded to turn out a constantly increasing number of highly trained technical men, whose services were available to the rising chemical industry. The number of these men was such that the inevitable competition between them for places made the average salaries exceedingly small. Highly skilled service was, therefore, available to the German chemical manufacturer at an extraordinarily low cost. In this respect he had a marked advantage over the manufacturers of any and every other country in the world.

These advantages were made use of to an extent nowhere else approached, because from a comparatively early date the importance of research work to practical industry was firmly grasped by both the industrial and governmental ruling classes. The alliance of the manufacturer and the university professor became constantly closer and more complete. To meet the needs pointed out by the industrial leaders, armies of plodding, but nevertheless skillful, chemists completed hundreds of thousands of separate researches. The results of these kept the German chemical manufacturers constantly in the van-always somewhat ahead of their competitors in other countries in the way of new processes and products.

While all that has been said above applies in a measure to every form of chemical activity, the German advantages were naturally less in the manufacture of the heavy chemicals than in the more difficult and complicated processes involved in other forms of the industry. Chemicals which are consumed in great quantities, like sulphuric acid or soda ash, are produced at prices so low that costs of transportation are often a controlling factor. Accordingly, in this branch of the trade the Germans never attained supremacy. The natural tendency was for each country to supply itself with these essential materials and this natural tendency had not, at least so far as the United States was concerned, been overcome.

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