The Wilmington morning star., 1941-02-09
Bruce Cations
In Washington'
NEA Service Staff Correspondent

OF the department OF
Justices antitrust law indictment of leading
corporations and individuals in the magnesium
industry is an amazing story of how one gov
eminent agency got worried about national
defense bottlenecks long before the current
defense program even got started - and set
out to do something about them.
In 1888 one of the antitrust divisions keen
young attorneys went to Thurman Arnold, head
of the division, with this assertion:
Europe is getting ready for a war, and
when the war comes this country will spend
a lot Of money on defenses. I think Germany
is in shape to delay or cripple any such effort
that we may make because of the network OF
patent controls and trade agreements that
exist between German and American corpora
tons. Shouldn't the antitrust division begin
looking into these things?"
Arnold agreed, and a long, quiet preliminary
investigation was made. AS a result, Arnold
wrote a letter to Harry Woodring, then secre-
tary of war, on Jan. 25, 1910, citing seven vital
fields in which German interests had gained
a measure of control over production in the
U. S. of strategic defense materials.
AND SO-ARNOLD
WENT TO WORK
The War Department did nothing about it,
although Arnold's letter warned that lit is
not too much: to say that the situation is dan
gerous." Arnold hereupon went to work-de-
spite an inadequate budget and staff-to bring
some anti-trust prosecutions.
First he exposed the situation in the manu-
facture of optical instruments, in which the
German firm of Zeiss had a water-tight agree
ment with the American firm of BauSch &
Lomb by which the latter firm paid royalties
to Zeiss on its sales of instruments manufac-
tured for the U. S. Army and Navy and gave
the Germans access to full information about
the manufacture and sale of those instru-
ments. $500 .-.....
Next came an indictment accusing the Gen
eral Electric Co. and the German firm of
Krupp of maintaining a patent and trade agre
ment governing the sale TO hard metal COM
positions for machine tool and dies. The eff
feet, the antitrust division charged, was to
discourage and cut down the use of tungsten
carbide in the U. S. machine tool industry.
According to antitrust division experts, tung-
stem carbide was sold in Germany at a price
slightly more than o%ne-tenth the price in the
U. S., it was used 20 times more widely in
consequence, and it's wide use was of enor-
nous advantage to Hitler when German in
dustry was re-tooled for war production.
SAME PATTERN
IN ALL CASES
Most recent action was the indictment
against the makers of magnesium. Here,
again, there are allegations of German-Ameri
can agreements which held down u. S.. pro-
duction of a material-magnesium alloys-of
great usefulness for defense production, while
Germany expanded her own production, find
ing magnesium alloys essential in the manu-
facture OF airplaneS.
In all of these cases, Arnold's men see the
same pattern a German monopoly tunder
full government control, like all German bust
ness) getting itself into a position to have a
say on prices and production of materials
which the United States would need urgently
if it ever set out to make large-scale prep
a~rations for possible war. This SAY usu-
ally resulted in higher prices and limited pro-
duction. And all Of the agreements were en-
tered into long before business men in this
country had any notion that Germany was 60
ing to emerge as a potential enemy.
So far, Arnold has had to fight his fight
alone. He is still. at it, however, and there
will be more chapters in the story before the
year ends.