The sun., 1918-07-23
GERMANS CONTROL )
OF METALS ENDED
Palmer Seizes Enemy Interest
in Four Big Companies
Here.
ASSETS OVER S15,OO0,OOO
Two Firms Believed to Have
Supplied TeutOns With Much
War Material.
ASSETS OVER S15,OOO,OOO

] control or the metal markets OF the
United States and of the world by Ger
man interests was broken yesterday
| when A. Mitchell Palmer, Alien Property
| Custodian. announced that he had taken
over the business OF L. vogelstein & Co.
Inc. OF AZ Broadway and of Beer. Sond-
| heimer & Co.. Inc, Of 81 Broadway.
The assets of Vogelste'r 9 Co. are placed
at upward of $4,000, 900 and Of Beer.
Sondheimer & Co. at more than $4,000
| 600
The enemy interest in Stallforth & Co.
| OF New York. dealers in silver bullion,
also was assumed by the Alien Property
! Custodian. The latter company Is capt.
TALKED at 81. 100000. The enemy interest
in the American Metals Company was
| seized too.
The businesses OF L. vogelsten & Co.
Inc. and OF Beer. Sondheimer & Co.,
Inc, were conf1scated as the result of
Investigations conducted by Francis p.
Garvah. director Of the bureau OF in
| vestigation Of the Allen Property Gus
| todian's Office. Mr.. Caravan is continuing
his investigation into the metal situa-
| ton.
Sold Metals Cheaper in Germany.
These two companies were AFFILIATED
| with the German Metal Gessellschaft.
The domination OF this German company
| over the worlds metal market was such
In the United States that the company
was able to sell copper. aluminium zinc
and other metals in Germany at prices
| much lower than those paid by the
American consumer
Ownership OF the two companies was
camoufiaged and appeared to be held by
| Americans, but Mr.. Garvan pierced the
thin veil that covered the fictitious trans
fer Of the properties which are believed
to have supplied Germany with vast
quantities of copper. zinc and other nee
essary war materials after the war be-
gan. This activity did not cease until
after the United States entered the war.
The business OF Beer. Sondheimer &
Co. was founded in 1904 in New York
| as n branch Of Beer. Sondheimer 4 Co.
OF Frankfort am Main, German dealers
in metals. specializing In copper. The
New York branch. managed by Benno
Elkan and Otto Frohnknecht, con-
trolled the German FIRMS business In
United States Canada, Mexico. South
America and Central America.
In 1912 Elkan and Frohnknecht
| made an agreement with the home Of
fee in Germany whereby each would
receive a salary OF 5000 per month
and. in addition. 12H per cent. OF the
ret profits OF the American branch.
the German Arm guaranteeing to each
that the salary and participation in
profits should equal not less than $751;
700 per year. The German ONCE also
provided all the capital required by the
branch's business
Elkan and Frohnknecht were German
c!tizens when these agreements were
made, although they had been In the
United States q number Of years. They
did not take out citizenship papers
until early IN 1917.
Shares Worth $500 Each.
1t was not until after the start OF the
European war when communication with
the German partnership became increas-
ingly difficult and finally impossible
that the New York corporation Of Beer.
Sondheimer & Co.. Inc. was organised
with capitalization OF Sl.o00.000 under
the direction OF Sullivan & Cromwell as
counsel. The corporation was formed
upon the advice OF the German COM
pany and all the stock was issued to
the German copartners hp.
The company was organized with
this small capitalization. notwithstand-
ing that the books OF the company as
have exceeded the liabilities by $4,000
600, thus making the book value OF each
share slightly in excess OF 5000. Five
shares Of the 10000 shares were issued
In the names Of directors and the re-
naming 1905 shares were put into n
voting trust. the trustees OF which were
Elkan & Frohnknecht, one Falck. book
keeper of the company. and a lawyer
named Nelson. Elkan was made presi
When war clouds began to threaten
the United States In the spring Of 1916
F. o. jacobson was sent to Europe on
the pretence Of purchasing 5000 shares
of stock owned by the German partner
ship in the American corporation. 1t Is |
claimed that jacobson paid $50 a share
for the stock. or a total OF S240. 900. OF
which $15l. 900 was said to have been In
cash.
In addition a deposit of the American
corporation with the German partnership
OF $4,000 and $40. 900 on deposit on
subscription to the German war loan
also were transferred to the German
company Jacobson Is said to be dead.
and the only receipt submitted by Elkan
and Frohnkneckt is for $4,000.
Price Is stated VariousIy.
jacobson while abroad is also under |
stood to have obtained from the German
Arm a power OF attorney and to have !
transferred the remaining $685. shares |
of the American corporation to the latter. |
Contradictory statements were made |
as to the price at which this sale was |
made. In report to the Alien Property |
Custodian made by Elkan and Frohn- |
knecht 1t is stated that the American |
corporation in January. 1917, purcha seJ |
this stock out OF its accumulated SIR.
plus, paying therefor 100000 in cash. |
1t is also stated in the report that IN |
addition this sum. approximately S2,410,-
900. was paid by the American corpora
ton to the German firm as "a balance |
Of the original investment" the claim |
being that the German firm was willing |
to sell out its interest here for the |
amount OF the original investment.
Later Elkan and Frohnknecht claimed ]
that the 100000 was not the amount |
of the purchase price. but hat the price |
was 100000 plus the balance of the |
original investment so paid back.
Mr.. Garvan. however. discovered that |
Elkan and F'rohnknecht each drew $751;
500 from the American corporation, thus |
making up $751; 900, which. added to the |
$4,000 deposited In Germany. enabled |
them to pay $4,000 as the alleged pur-
chase price for the 5000 shares OF stock. |
Mr.. Garvan believes that all the money |
for the purchase OF the American cor
Toraton's stock came from the latter's !
knecht purchased the company for s240,-
600 at time when 1t was earning a |
profit Of 100000 for the year.
From Mr.. Caravans investigation IL
would seem that the American corpora
ton in 1916 had net assets In excees Of |