Abstract
In 1926, eight years after the armistice that ended World War I, members of Congress debated once again what should be done with the German property the United States government seized during the war. The animosity toward Germany had lessened among most members of Congress, making possible sincere efforts to demonstrate Americans’ respect for private property rights, even the property rights of former enemies. The majority in the Congress backed the comments of members such as Representative J.W. Collier of Mississippi, whose speech was reminiscent of President Woodrow Wilson’s idealism about settling the peace. The United States, Collier said, was in no way obligated to return any property to Germany because of the peace treaty provisions, but Congress aspired to create a precedent, perhaps “to be used as guides in the future.” He took care not to imply criticism of European allies who confiscated German property and would never return it, but he argued that the United States needed to be guided “by the American standard of justice and equity.”1
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References
Congressional record, 69th Cong., 2nd sess. (1926–1927), 68:1 (16 Dec 1926), 597.
Mira Wilkins, The history of foreign investment in the United States to 1914 (Cambridge, MA, 1989), 389–400;
Elisabeth Glaser-Schmidt, “Foreign trade strategies of I.G. Farben after World War I,” Business and economic history, 23 (Fall 1994), 201–211;
Verena Schröter, “Participation in market control through foreign investment: I.G. Farbenindustrie AG in the United States, 1920–1938,” Alice Teichova, Maurice Lévy-Leboyer, and Helga Nussbaum, eds., Multinational enterprise in historical perspective (Cambridge, 1986), 171–184.
Louis Galambos and Jeffrey L. Sturchio, “Transnational investment: The Merck experience, 1891–1925,” in Hans Pohl, ed., Transnational investment from the nineteenth century to the present (Stuttgart, 1994), 227–243;
3b and Kathryn Steen, “Confiscated commerce: American importers of German synthetic organic chemicals, 1914–1929,” History and technology, 12 (1995), 261–285.
Alfred Chandler, Scale and scope (Cambridge, MA, 1990).
John Beer, The emergence of the German dye industry (Urbana, IL, 1959);
L.F. Haber, The chemical industry during the nineteenth century: A study of the economic aspect of applied chemistry in Europe and North America (Oxford, 1958; reprinted, 1969);
Haber, The chemical industry, 1900–1930: International growth and technological change (Oxford, 1971);
Harm Schröter, “Cartels as a form of concentration in industry: The example of the international dyestuffs cartel from 1927 to 1939,” Hans Pohl and Bernd Rudolph, eds., German yearbook on business history 1988 (Berlin, 1990), 113–144;
Georg Meyer-Thurow, “The industrialization of invention: A case study from the German chemical industry,” Isis, 73 (Sep 1982), 363–381;
Ernst Homberg, “The emergence of research laboratories in the dyestuffs industry, 1870–1900,” British journal for the history of science, 25 (1992), 91–111;
Anthony S. Travis, The rainbow makers: The origins of the synthetic dyestuffs industry in western Europe (Bethlehem, PA, 1993).
Galambos and Sturchio, “Transnational investment” (ref. 3), 229; Thomas H. Norton, Artificial dyestuffs used in the United States, Department of Commerce, Bureau of Foreign and Domestic Commerce, Special Agents Series No. 121 (Washington, D.C., 1916), 7–33;
Herman A. Metz testimony in Senate Committee on the Judiciary, Subcommittee on the Judiciary, Hearings, alleged dye monopoly, 67th Cong., 2nd sess., 1922, Senate Res. 77, 741–904.
Williams Haynes, American chemical industry, 3 (New York, 1945), 225–239;
David A. Hounshell and John K. Smith, Jr., Science and corporate strategy: Du Pont R&D, 1902–1980 (New York, 1988), 76–97;
Peter J.T. Morris and Anthony S. Travis, “A history of the international dyestuff industry,” American dyestuff reporter, 81 (Nov 1992), 59–100, 192–195. I discuss the significance of the importers to the American industry more fully in Steen (ref. 3).
Kathryn Steen, “Wartime catalyst and postwar reaction: The making of the U.S. synthetic organic chemicals industry, 1910–1930,” (Ph.D. Dissertation., University of Delaware, 1995).
T. Pardee to Herbert Dow, 22 Mar 1917; Dow to Pardee, 24 Mar 1917, folder 170003, Herbert H. Dow Papers, Post Street Archives, Midland, Michigan; Charles H. Herty, “The chemists’ club,” Journal of industrial and engineering chemistry, 10 (May 1918), 338;
Haynes (réf. 7), 220; District Court of the United States for the District of Delaware, USA v. The Chemical Foundation, Inc., record of final hearing, No. 502 in Equity (1923), 3,1390; Trading with the enemy act approved October 6, 1917 (New York, 1917), Record Group 131, Records of the Office of Alien Property, entry 15, box 1, National Archives and Records Administration, College Park, Maryland.
Stanley Coben, A. Mitchell Palmer: Politician (New York, 1963), 8–15, 127–154.
“Francis P. Garvan,” Chemical industries, 41 (Dec 1937), 561; A. Mitchell Palmer and Francis P. Garvan, Aims and purposes of the Chemical Foundation, Inc. (New York, 1919), 20.
Palmer testimony in “USA v. The Chemical” (ref. 9), 4, 2525–2527, 2536–2537.
Will T. Gordon testimony in USA v. The Chemicar (ref. 9), 2, 1050–1070; Palmer and Garvan (ref. 11), 47.
David J. Rhees, “The chemists’ crusade: The rise of an industrial science in modern America, 1907–1922” (Ph.D. dissertation, University of Pennsylvania, 1987), 286–306; Palmer and Garvan (ref. 11), 61–62.
The Treaty of Versailles and after: Annotations of the text of the treaty (Washington, D.C., 1947; reprinted, Grosse Pointe, MI, 1969), 380, 460, 516–518.
Bruce Kent, The spoils of war: The politics, economics, and diplomacy of reparations, 1918–1932 (Oxford, 1989), 1–13.
Ref. 15, 380, 460, 516–518.
Craig D. Patton, “The German chemical industry and reparations in kind (1919–1924),” draft of paper presented at the annual meeting of the American Historical Association, 30 Dec 1992, Washington, D.C.
Yerkes to Du Pont, 4 Apr 1919 and 8 Apr 1919, box 5, Francis P. Garvan Papers, American Heritage Center, University of Wyoming, Laramie, WY; Wigglesworth to Redfield (2 Jul 1919), RG 151 (Bureau of Foreign and Domestic Commerce), 232 Dyes (Germany), box 1036, National Archives and Records Administration, Washington, D.C.
Rhees (ref. 14), 64–112; Germaine Reed, Crusading for chemistry: The professional career of Charles Holmes Herty (Athens, GA, 1995), 119–155; see also Herty’s editorials during the war in the Journal of industrial and engineering chemistry, a publication of the American Chemical Society.
To some degree, this was returning a favor to the ACS and chemical manufacturers, who supported the CWS’s fight for bureaucratic existence after the war when the army wanted to dismantle it and merge its functions into older army divisions. William L. Sibert and Amos A. Fries’ testimony in House Committee on Ways and Means, Hearings, dyestuffs, 66th Cong., 1st sess., 1919, H.R. 2706 and H.R. 649, 32–41; and in Senate Committee on Finance, Hearings, dyestuffs, 66th Cong., 2nd sess., 1920, H.R. 8078, 9–10, 25–30.
Andrew Imbrie, U.S. Finishing Company, to Charles H. Herty (20 June 1919); Cluett, Peabody & Company and four other shirt manufacturers to Clarence M. Woolley, War Trade Board (WTB) (28 June 1919); C.S. Hawes, WTB, to Herty (8 Jul 1919), box 85, Charles Holmes Herty Papers, Special Collections, Robert Woodruff Library, Emory University, Atlanta.
“Report of Edward S. Chapin, Paris representative of the Textile Alliance” (22 Sep 1921 and 29 Sep 1920), Herty papers, box 87; Joseph H. Choate, Jr., to American Dyes Institute, 9 Nov 1920, 15 Nov 1920, 19 Nov 1920, 26 Nov 1920, and 6 Dec 1920, reprinted in Senate Committee on the Judiciary, “Hearings” (ref. 6), 530–537.
The War Trade Board was a wartime agency established to supervise international trade during the war. In the summer of 1919, it was merged into the Department of State, and it was the War Trade Board section that continued to supervise the chemical reparations.
War Trade Board to Herty, 29 Sep 1919, Garvan papers, box 5.
Herty testimony in Senate Committee on the Judiciary, “Hearings” (ref. 6), pp. 561–564.
The War Trade Board appointed an advisory committee on dyes composed of representatives from the American dyes industry and the American textile industry. The committee recommended prohibiting the old importing agencies from shipping reparations chemicals. “Minutes of the advisory committee on dyes, July 24, 1919,” excerpted on p. 40 in an untitled collection of evidence for USA v. The Chemical Foundation, Inc., RG 60 (Department of Justice), Classified Subject File, entry 114 (Correspondence), Case 9–17-10–12, box 750, National Archives and Records Administration, Washington, D.C.
“Proceedings of a hearing accorded by the War Trade Board Section of the Department of State to the firm of Kuttroff, Pickhardt & Co., Inc.” (Jan-Feb 1920), Garvan Papers, box 144; Metz testimony (ref. 6), 886–887.
Albert M. Patterson testimony in “USA v. The Chemical” (ref. 9), 2, 950, 998; Haynes (ref. 7), 3,264. During the war, the Textile Alliance supervised the importation of wool and other products from British territories. The British desired assurances that the products would not be resold and end up benefiting Germany. The Textile Alliance, as an organization of textile manufacturing associations, provided the assurance. Patterson testimony in “Hearings” (ref. 6), 307.
Patterson testimony in “USA v. The Chemical” (ref. 9), 2,964,978–979; Patterson testimony in “Hearings” (ref. 6), 329.
William Phillips, Department of State, to American Mission, 8 Sep 1919; Phillips to American Mission, 27 Sep 1919, Garvan papers, box 5.
Herty to Garvan, 6 Oct 1919, Garvan papers, box 5.
Phillips to American Mission, 8 Sep 1919; Department of State to American Mission, 8 Oct 1919, Garvan papers, box 5.
St. John Perret to Van S. Merle-Smith, 5 Jan 1920, copied in “The files of the State Department and the War Trade Board,” RG 60 (Department of Justice), Classified Subject File, entry 114 (Correspondence), box 749; Textile Alliance Board of Directors, Excerpt of Minutes, 8 Dec 1921; Herty to Chapin, 17 Dec 1921, Herty papers, box 87.
Kent (ref. 16), 373; E. A. Macon to Herty, 6 Apr 1922; Macon to Herty, 7 June 1922, Herty papers, box 87.
A.C. Imbrie to Textile Alliance, 28 Jan 1922; E. A. Macon to Herty, 7 Apr 1922; Macon to Herty, 7 June 1922; Minutes of the Textile Alliance dyes committee, 13 Dec 1922, Herty papers, box 87.
Ref. 15, 518.
The most important of the Congressional hearings to discuss the activities of the Alien Property Custodian was (ref. 6). Hearings, alleged dye monopoly, 67th Cong., 2nd sess., 1922, Senate Res. 77, otherwise known as the Shortridge hearings.
Haynes (ref. 7), 3, 220, 258; Metz testimony (ref. 9), 3, 1997–1998.
Section 9 of the act, however, permitted non-enemies to file suit to reclaim property. For example, American citizens who owned stock in a company seized because of majority German ownership could sue in federal district court for compensation. “Trading” (ref. 9).
Herman J. Galloway, Special Assistant to the Attorney General, to Attorney General Daugherty, 11 Jul 1922; Galloway to United States Attorney, Pittsburgh, 31 Aug 1922; Galloway to Col. Henry W. Anderson, Special Assistant to the Attorney General, 2 Sep 1922; Galloway to Almuth C. Vandiver, lawyer for Herman A. Metz (9 Jan 1923; RG 60, Central Files, entry 114 Correspondence, Case 9–17-10–12, box 748.
The White House felt the pressure to investigate. The new Attorney General and Alien Property Custodian under President Warren Harding noted in memos to the president the “considerable unrest” and “much criticism” in Congress over the Chemical Foundation. Thomas Miller to Warren G. Harding, 21 Apr 1922, 30 June 1922, Daugherty to Harding, 25 Apr 1922, Records of the Department of Justice, Record Group 60, Central Files, entry 114 Correspondence, Case 9–17-10–12, box 748, National Archives, Washington, D.C.
Harding to Daugherty, 22 Apr 1922; Daugherty to Harding, 25 Apr 1922 (ref. 42).
Henry W. Anderson, in the governments opening statement, “USA v. The Chemical” (ref. 9), 2, 1082–1087; 3, 1380–1385, 1715–1737; 5, 2403. The Hagley Museum and Library in Wilmington, Delaware, possesses the full record of the court case. The verdict of the district court judge is in the manuscript section (see ref. 50 below), but everything else is in the library.
Anderson statements, “USA v. The Chemical” (ref. 9), 2, 1082–1087; 3, 1380–1385, 1715–1737; 5, 2403.
Ibid., 1, 599–627; 2, 1005–1008, 1534–1547.
Isidor J. Kresel, lead defense lawyer, statement, “USA v. The Chemical” (ref. 9), 2, 689–695; 3, 1792–1807.
Kresel statement, “USA v. The Chemical” (ref. 9), 1, 699–702; Frank L. Polk, Under Secretary of State under President Wilson, statements, “USA v. The Chemical” (ref. 9), 2, 1181–1182, 1187–1200.
Most of the testimony in volume six of “USA v. The Chemical” (ref. 9), addresses this issue (e.g., 3820–3822).
Opinion of the Court, “USA v. The Chemical” (ref. 9), U.S. District Court, District of Delaware, Equity Case, no. 502 (Jan 1924), Records of E.I. Du Pont de Nemours and Co., Administrative Papers, Accession 1662, Box 17, Hagley Museum and Library, Wilmington, DE.
Opinion of the Court, “USA v. The Chemical Foundation, Inc.,” U.S. Circuit Court of Appeals for the Third Circuit, no. 3160, Oct 1924; Opinion of the Court, USA v. The Chemical Foundation, Inc. (ibid.), Supreme Court of the United States, no. 127, Oct 1926.
Glenn McHugh, “Settlement of War Claims Act of 1928,” American Bar Association journal, 14 (1928), 193–195, on 195.
“The trading with the enemy act,” Yale law journal, 35 (1925–26), 345–357, on 352.
Ref. 1,598.
The total amount of cash assets seized by the Alien Property Custodian, a figure excluding ships, patents, and a radio station, reached $545,000,000. Through the Winslow Act and other means, about half of the property had been returned by 1928. McHugh (ref. 52), 195; Joseph Conrad Fehr, “American and German war claims settled,” American Bar Association journal, 18 (Jan 1932), 896–899, on 898.
Rep. W.R. Green mentions earlier legislative attempts in (ref. 1), 594; Joseph Conrad Fehr, “Paying our claims against Germany,” American Bar Association journal, 12 (1926), 408–412, on 408.
Ref. 1, 611.
Under the newly negotiated Dawes Plan, Germany had been given more than sixty years to pay off the debts owed to the United States. Therefore, Congress decided to pay private American citizens the amounts they were due from Germany and then let the U.S. Treasury collect the German payments over the next several decades. Ref. 1, 594–596; McHugh (ref. 52), 193.
Fehr (ref. 55), 896–897.
Alexander Holtzoff, “Enemy patents in the United States,” American journal of international law, 26 (Apr 1932), 272–279, on 273–275;
Edwin B. Parker, “War Claims Arbiter, administrative decision no. 1,” American journal of international law, 23 (1929), 193–233, on 196; “Minutes of the war claims arbiter,” 7 Jun 1928, Record Group (RG) 60, General Records of the Department of Justice, Records of the Claims Division, entry 209, box 1. Parker died in the fall of 1929 after having established most of the procedures by which claims were settled under the act. He was replaced by James W. Remick, who had been a judge on New Hampshire’s supreme court. Holtzhoff, “Enemy patents” (this note), on 277; “Memorandum for counsel and the press” (13 Jan 1930), RG 60, entry 209, box 1.
For a discussion of the formation of I.G. Farben, see, among others, Peter Hayes, Industry and ideology: I.G. Farben in the Nazi era (New York, 1987), 7–31.
“Minutes of the War Claims Arbiter,” 10–11 Sep 1928, RG 60, entry 209, box 1; “Hearing before the arbiter under the settlement of War Claims Act of 1928,” 10–11 Sep 1928, RG 60, entry 228, box 6.
“Hearing before the arbiter” (ref. 62), 43ff.
Ibid., 13ff and 180ff.
Parker (ref. 60), 213–214.
Ibid., 209–213, 221–225.
Ibid., 211–214. Although the original TWEA would have permitted patent royalty claims throughout the entire war, the War Claims Act amended that provision to exclude the period when the United States actively participated in the war. “Memorandum for the War Claims Arbiter” (5 Oct 1928), RG 60, entry 228, box 3.
Generally, this was a smooth relationship, although the lawyers in the War Claims Arbiter’s office expressed frustration that the War Department could not produce their reports on patent use more quickly. Alexander Holtzhoff, “Memorandum for Assistant Attorney General [Herman] Galloway” (16 Apr 1929), RG 60, entry 228, box 2.
The archival records for the War Claims Arbiter (RG 60, entries 209–228) do not reveal which patents belonged to the secret Group B, but my best guess is that they were the Haber-Bosch patents related to the fixation of nitrogen.
Lt. Col. Joseph I. McMullen to James Remick, War Claims Arbiter (19 May 1930), RG 60, entry 228, box 2.
Alexander Holtzhoff, “Memorandum for Assistant Attorney General [Herman] Galloway” (2 May 1929), RG 60, entry 228, box 3.
“Stenographic notes taken at hearing held in arbiter’s office (26 Nov 1930), in dockets 1 and 2,” RG 60, entry 228, box 2.
Almuth C. Vandiver, lawyer for I.G. Farben, “Before the War Claims Arbiter: Claim of I.G. Farbenindustrie, A.G. (Docket No. 1)” (8 Jan 1931), RG 60, entry 228, box 2.
“Motion, I.G. Farbenindustrie, A.G., v. the United States, before the War Claims Arbiter” (9 Dec 1931); undated memoranda and working notes, RG 60, entry 228, box 4, folder on Group A patents.
“Awards entered 23 Jan 1931,” RG 60, entry 228, box 3. The $739,175.89 was the final, base award due as of 31 Dec 1928, and whatever portion of the sum retained in the U.S. Treasury would continue to collect five percent interest. Ogden L. Mills, Undersecretary of the U.S. Treasury, to I.G. Farbenindustrie A.G., 26 May 1931, Amerika Freigabe Bill (4 Oct 1928–6 Apr 1936), 9/A.1.1, Bayer-Archiv, Leverkusen, Germany. In Jun 1931, President Herbert Hoover implemented a moratorium on reparations payments, which was not supposed to apply to Germany’s payments toward the private claims arranged under the Mixed Claims Commission. However, Germany did not have the wherewithal to pay even these claims, which, under the War Claims Act, would be used to pay the remainder due I.G. Farben and the other private German claims. The records suggest that when the German payments to the United States ceased, the American payment of German private claims ceased. “Confidential memorandum” (5 Feb 1932), and “Observation on the question why the German government should be prepared to continue payments under the debt settlement between the United States and Germany,” n.d., Amerika Freigabe Bill (4 Oct 1928–6 Apr 1936), 9/A.1.1, Bayer-Archiv.
The Chemical Foundation, however, chose not to collect any royalties prior to 10 Apr 1919, when it purchased most of its patents from the Alien Property Custodian. Consequently, by law, the royalties would return to the American companies which had licensed the patents and paid the royalties and which were, not coinci-dentally, stockholders in the Chemical Foundation. Thomas E. Rhodes, Special Assistant to the Attorney General, “Memorandum for Assistant Attorney General Farnum” (28 Feb 1929), RG 60, Central Files, entry 114 Correspondence, Case 9–17-10–12, box 750.
Rhodes (ref. 76); “Rules on alien patents,” New York Times (20 Nov 1928), 16; several Section 10 (f) cases reached the Supreme Court together, including case no. 179, Farbwerke vormals Meister Lucius und Bruning, Deutsche Gold und Silber Scheide Anstalt vorm. Roessler, and Badische-Anilin und Soda-Fabrik v. The Chemical Foundation, Inc., E.L du Pont de Nemours and Company, and Walter O. Woods, as Treasurer of the United States, and also cases 180, 181, 182, 271–174, in the Supreme Court of the United States, 1931. Unlike the German firms, some of the American importers for German chemical companies were able to collect seized assets under Section 10 (f). “Receipt and release of the H.A. Metz Laboratories, Inc.,” 16 Jun 1931, RG 60, entry 114, box 750, case 9–17-10–12.
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Steen, K. (2000). German chemicals and American politics, 1919–1922. In: Lesch, J.E. (eds) The German Chemical Industry in the Twentieth Century. Chemists and Chemistry, vol 18. Springer, Dordrecht. https://doi.org/10.1007/978-94-015-9377-9_11
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