Evening star., 1926-10-11
Supreme Tribunal Decides
Against Government in
Chemical Foundation Suit.
WRITES FINAL CHAPTER
TO SPECTACULAR CASE
Action Started by Harding After
Disposition Was Ordered Under
Wilson Regime.


The Government lost in the Su-
preme Court today in the Chemical
Foundation case.
The court sustained the sale OF
seized German chemical and dye pat
ents, trade marks and copyrights to
the Chemical Foundation by the alien
property custodian.
The decision wrote the final chap
ter to one Of the largest and most
spectacular Of the governments post
war recovery suits. The highest
court upheld the adverse decision
rendered after trial in the District
Court at Wilmington, Del.
Sale of the patents was ordered
under the administration of Presi-
dent Wilson. while A. Mitchell
Palmer was alien property custo-
dian.
President Harding directed that
suit be filed for cancellation Of the
transaction, on the ground that the
price obtained was inadequate. that
the sale was made without authority
and for other reasons.
Adverse Decisions Given.
The fight of the Federal admins
tration to cancel the sale of Ger
man chemical and dye patents. trade
marks and copyrights to the Chem
ical Foundation. Incorporated, was
iol %,, ho offor
the court in Delaware and the Court
Of Appeals for that circuit had given
adverse decisions.
Pointing out that President Hard
ing had directed the suit to recover
possession and that his position had
been supported by three Attorneys
General, the Department of Justice
sought to have the sale set aside
on the grounds, among others, that
the price obtained was wholly made
quate, that the alien property Gus
todian had no authority to make 1t,
that the transaction was an unlaw-
full conspiracy and that 1t had re-
suited in a restraint of interstate and
foreign commerce in violation of the
Sherman antitrust laws.
Counsel for the corporation contend
ed that Frank l.. Polk had been fully
empowered by President Wilson, be-
fore the latter went to Paris, to au
thorize A. Mitchell Palmer, alien prop
erty custodian to make the sale pri-
vately without competitive bidding to
a corporation representing the chemi
cal and dye industry Of the country.
according to a plan worked out by Mr..
Palmer after Congress had provided
for the confiscation of the properties,
the plan having been approved by
President Wilson to Americanize the
chemical and dye industry. Many OF
the patents, trade marks and copy
rights were valueless, they asserted.
and the others required large eXpendi-
lures of money to develop. owing to
the practice Of the Germans not to dis
close in their patents sufficient infor-
nation to make them workable, thus
expensive experimentation.
Actual Value Questioned.
For these reasons it was impossible.
it was asserted, to determine the
actual market value of the patents or
to find purchasers in a competitive
bidding. 1t had, therefore, been deter.
mined, with the approval of the Pres1-
dent, to turn the properties over to
corporation which would be required
to grant the Federal Government the
free use Of the patents, and would
guarantee that all American interests
which desired to use them should be
granted licenses under like terms.
The corporation was not a money
making affair, it was asserted. but
was controlled by committee which
had no financial interest in 1t, It's
officers serving without salary. merely
to permit the corporation to function.
The Government insisted that the
same results, SO far as the chemical
and dye industries were concerned.
could have been obtained had the
Government retained title to the prop
critics instead of turning them over to
a private corporation. and particu-
1arly challenged the sales which
Francis P. Garvan, as alien property
custodian, had made to himself as
head Of the corporation after Mr..
Palmer had become Attorney General.
1t insisted that Congress had intended
that the properties should be held by
the alien property custodian until 1t
made provision for their disposition.