Business & Finance: Chemical Patriot

“So long as the Germans control great chemical institutions in which the world of tomorrow is being formed, they can sit back and smile at such things as the London Naval Conference, for if Germany has chemical control of the world . . . she need fear no one. . . . It is because of all this . . . that the American people have a right to know of any such operation as that accomplished here in New York in the financing of a subsidiary of the German chemical cartel.”

Last week these words came from one time Alien Property Custodian Francis Patrick Garvan who mortally fears and hates all things Teuton. Accusing the largest U. S. bank of fraud, he was demanding an inquiry into the flotation last April of $30,000,000 of 5½% convertible debentures of the American I. G. Chemical Corp. by National City Co. Its advertisement of the bonds, he said, intended “to deceive the American public into the belief that the proceeds of these bonds were to be used to foster and finance the development of chemical and allied industries in the U. S. . . . whereas the real purpose and intent was to obtain $30,000,000 from American citizens with which to strengthen the I. G. Farben-industrie Aktiengesellschaft in Germany in competition with and in destruction of the American chemical industry.”

Garvan. No holder of American I. G. bonds is Francis Garvan. He first came into prominence when he was made Alien Property Custodian. One of his acts was to confiscate German chemical patents and sell them to the Chemical Foundation (of which he is head) for the fostering of the U. S. chemical industry. In 1919 he was awarded the Priestley medal “for being the greatest lay patron of chemistry.” Later, criminal proceedings were started against him for the sale of the German patents, but he was exonerated.

Another act of Custodian Garvan was to sell the confiscated Bosch Magneto Co. For this he was charged with defrauding the government of $5,500,000 but the case was dismissed last fortnight. From these things he probably conceived his great hate of the Teuton shadow. Last week he accused Senator Moses, former State Attorney General Merton E. Lewis, Banker Otto Hermann Kahn “and his partner Warburg,” Oswald Garrison Villard (editor of The Nation), and others, of German propaganda—all in his lengthy written attack on American I. G. Chemical Corp., which he sent to the office of the State Attorney General.

In addition to his charge that the company is a German menace, Mr. Garvan based his fraud accusations on the following ideas: 1) the debentures are convertible into common stock which the company can redeem, thereby assuring German control; 2) Paul Warburg received an honorary Ph. D. from Heidelberg in 1927, W. E. Weiss a similar degree from Cologne in 1928, were thereby influenced to lend their names to the company, while others received “considerations having nothing to do with the interests of the company.”

Since these facts were not concealed, Assistant Attorney General Washburn replied there was no fraud in selling the bonds. Significant seemed the fact that no holder of the bonds joined in the complaint, for while the redeemable feature may be unusual it still leaves a speculative interest to the issue.

Behind Mr. Garvan’s accusations, therefore, seemed only fear for the future of the U. S. chemical industry. Col. Herman A. Metz, vice president and treasurer of American I. G. and one of the chief objects of the Garvan fury, said, “Frank thinks he is doing a great public service, but doesn’t know the War is over, and is talking through his hat.” He added that 95% of all dyes are now made in the U. S. and that U. S. concerns are selling dyestuffs in Germany in direct competition with I. G. Farbenindustrie.

U. S. Chemistry. Long a great bogy has been the German Dye Trust. But since the War the U. S. chemical industry has flourished. In 1929 exports of chemicals exceeded $200,000,000, up $25,000,000 from 1928. In sales and profits U. S. chemical companies lead the world. More than half the U. S. business is done by its three biggest companies: du Pont, Allied Chemical & Dye, Union Carbide & Carbon. Excluding du Pont’s investment in General Motors, the total assets of these three come to $585,718,000—or nearly twice the size of the Garvan-feared I. G. Farben-industrie.