The New York herald., 1922-07-17

branches Of the Government and in the
full light of publicity. The idea Of its
formation was the result OF the intimate
knowledge of the past use OF these
patents in manner hostile TO the
United States interests. and I'm full con-
sultation with all OF the executives OF
the Government, the experts OF our
army and navy. and leaders OF our
chemical business organizations and the
heads Of all our scientific and research
organizations. l do not ask you TO
accept my present statement of the mat
ter, but insert here an extract from the
report OF A. Mitchell Palmer. filed with
the President February %. 1919. and
by him forwarded to the Congress. and
by that Congress made a public docu-
ment and most widely commented on by
the press OF the country"
PaImer's Version of 1t.
Mr.. Palmer stated in the course of
the report referred to by Mr.. Garvan
These patents, as had already been In
dicated, formed a colossal obstacle to
the development of the American dye,
stuff industry. Evidently they had not
been taken out with any intention OF
in this country or from
any fear of American manufacture
upon consideration 1t seemed
that these patents offered a possible
for the problem, hitherto un-
of protecting the new Amer
lean dye industry against German COM
petition after the war The idea
was accordingly conceived that IL the
German chemical patents could be
placed in the hands Of any American
institution strong enough to protect
them, real obstacle might be opposed
to German importation after the war
and at the same time the American in
dustry might be freed from the prohi-
bition enforced by the patents against
the manufacture of the most valuable
dyestuffs. Accordingly these considera-
tions were laid before various associa-
tions of chemical manufacturers, not
ably the Dye Institute and the Amer
lean Manufacturing Chemists Associa-
ton. The suggestion was met with an
and enthusiastic approval.
and as a result a corporation has been
organized to be known as the Chemical
Foundation Gnc.), in which practically
every important manufacturer Will pc
a stockholder, the purpose OF which IS
to acquire by purchase these German
patents and to hold them as trustee
for American industry. The first
president of the Chemical Foundation
will be Francis p. Garvan Of the New
York bar, to whose clear vision and In
industry ! am chiefly In
debted for the working out OF this plan.
BY executive order, have sold to this
for the sum of $250,000, ap-
$500 patents. The remain
ing S250,000 has been provided for
working capital. The price thus
paid was necessarily determined some
what arbitrarily. The great majority OF
the patents were presumably valueless.
The value of the remainder was entirely
and impossible to esti-
mate. Substantially the entire industry
having combined for this purpose, 1t
would have been impossible on public
sale TO find as a bidder any legitimate
No other bidder could.
therefore, have been found on public
sale except some speculative individual
who might have bought them for pur-
poses amounting to commercial black
mail. The combination was not ob1ec-
ton able to public policy. since 1t was so
organized that any genuine American,
whether a stockholder Of the company
or not. could secure the benefits OF the
patents on fair and ecu:! terms"
A Quasi-Public idea.
NJ. Garven goes on to state that at that
time he was dollar year man. with
no expectation v hatever OF becoming
Alien Property Custodian: that it was
only when Attorney General Gregory
resigned and Palmer was appointed
General that Palmer asked
him to take the custodian's place. Three
months later, he writes, he testified be-
fore the Ways and Means Committee Of
the House, The foundation Of the
Chemical Foundation was an effort to
form an organization to represent as
nearly as possible at that time the pub
lie interests. Judge Ingraham Of New
York and Judge Gray of Delaware had
Charge OF drawing our charter and our
trust agreement and our certificate OF
We have endeavored
to make II as nearly a public insti-
tuition as our laws allow, and at
the same time to have it an official
We wanted to sell these
patents to the Government, and IL there
had been any method by which we could
make them working force, and still
have them owned and controlled by the
it would have relieved us
OF a great deal Of responsibility, and
IL there Is at this time any suggestion
for modification or amendment OF our
plan which will insure In the minds OF
the committee more deIinlte and
certain fulfillment Of the intention and
purposes of our organization am
certain that the Chemical Foundation
and all its stockholders and all who are
in il would be glad to con-
form to the wishes OF the committee. be-
cause. In so far as we have public
recognition and public support and
Government recognition and Govern
ment support. we become more efficient
and become more able TO carry out the
Intentions which are III our hearts and
minds"
Mr.. Garvan states that the total or
gross income Of the Foundation has
averaged $143,216.65 per year. The
running expenses, bare overhead. have
averaged S121,971.35, a net excess OF
s21,245.30 or .049 per cent. on the $42S.-
500 invested, allowing nothing for de-
probation. The average life of the
patents is eight years. so that twelve
and q half per cent. OF the $271,S50
cash paid for the patents. or S33,9S1 per
year, should be subtracted from the ap-
parent net receipts per year. which