The Penn's Grove record., 1919-09-05
How Germany Killed American Dye
Industry
Continued from page l

and a majority OF us sIoCh o"hSu ~
the parent house. In that year the
German company took over all but ~
shares of the minority stock which had
previously stood in the name OF Mr..
Metz, leaving him the record owner
of these 10, the only shares not held
by them. At the same time the name
OF the New York Corporation was
changed to Farbwerke-Hoechst, so
that the value of the good will might
be firmly fixed in the German name
At about this time the antitrust pro-
ceedings above referred to were COM
menced against these three companies
Mr.. Metz settled for $4,000 the suit
commenced against his company, ano
proceeded to make strong representa-
tions to the German house to the
effect that the stock ought to be owned
by him so that it could be asserted
that the German house was no longer
doing business in America. A pro-
longed negotiation ensued, the Ger
mans being very reluctant to make
any change. At last, in the summel
of 1918. it was arranged that the 1,99C
shares held by the German concern
should be transferred on the books to
Mr.. Metz; that in return he should e.
ecute a demand promissory note with
out interest for the sum of $597,0OO;
that the note should be delivered to
the German company and the stock.
together with a suitable transfer exc
cuted. should be deposited to the sole
order of the German concern in a Mon
treal bank, as security for the note.
At this time and for many years
previous the American company had
been operating under a contract by
which the German house appointed 1t
its sole American sales agent aad
agreed to furnish it with goods, in
return for which the profits were to
be divided according to an arbitrary
scale, irrespective of stock ownership.
Under this arrangement the Germans
were to have one-half the profits OF
the color business and rs per cent of
the profits of the pharmaceutical bus
mess, which, owing to the develop
ment of salvarsan and novocaine, had
become of great Importance. In re-
turn, and as a check on possible over
charges by the German house, Mr..
Metz was to receive a percentage OF
their profits on the sales of the Amer
lean company. An ~irrevocable power
of attorney was given to Mr.. Metz to
vote the stock owned by the German
company in the New York house and
an option was reserved to the German
company to purchase the stock in the
event of MI. Metz's death or retire
ment.
This contract was continued unalter-
ed after the stock transaction of 1913,
and under it the profits were divided
as long as it was possible to remit
moneys to Germany. There was also
an oral understanding between the
parties that the note should not be
PAYABLE except out of the stocks or it's
proceeds, and that it could not be de-
manded as long as Mr.. Metz should
remain president of the company. 1t
will thus be seen that the whole stock
dealing produced no change whatever
in the rights of the parties. After it,
as before, the share in the profits of
each party remained the same; the
power to secure and pass title to the
certificates remained as before in the
hands of the German company alone;
the voting power remained as before
in MI. Metz's hands; in fact none of
the incidents of ownership was in any
way affected by the transaction.
At the outset Mr.. Metz filed reports
stating the existence of the note and
the fact that certain stock was de-
deposited as security for the same, but
it was not until the ascertainment of
the entire history of the transaction
that the proof could be obtained that
the. transfer was not and was not in
tended to be of any effect. At last,
however, the investigation thoroughly
demonstrated this, and the stock has
accordingly been taken yer by me.
During the course of the year 1916,
Mr.. Metz, finding that he could no
longer secure from German supplies
of pharmaceuticals, especially salvar-
san and n~ovocaine, which formed the
most profitable part of his business,
determined to enter upon their manu-
facture in this country. Correspon-
dence with the German house proving
unsatisfactory, he sent his brother, DR..
G. P. Metz, to Germany to cur the
necessary permission. This permits
sion was refused, but the latter came
home with a sufficient knowledge to
permit the commencement of the
work. A new company was organized
under the name of H. A. Metz Labo-
ratories (Inc.), a New York corpora
ton, and this company commenced
the manufacture of these invaluable
medicinals, which has been continued
since our entrance into the war under
license from the Federal Trade Com
mission.
The agency of the largest of all the
German houses, the great Badische Co.
Of Ludwigshaven, presents perhaps
the most striking example of the Ger
man methods of ~camouflage as ap-
piled to stock ownership. For many
years this company has been repre-
sented in this country by Mr.. Adolf
Kuttroff, who was born in Germany,
but came to this country at a very
early age, and was naturalizd in 1867.
In a succession of partnerships and
interpretations with various members
of the Pickhardt family this gentle
mar has always conducted the business
of the Badische in the United States.
In 1906, shortly after the formation