Evening star., 1942-04-23
Arnold Claims
Patents Created
Metal Monopoly
Charges Companies
Held Absolute Control
Of Magnesium
b. ,ht Associated Press.

b. thF Associated Press.
Thurman Arnold, director Of
antitrust prosecution for the
Justice Department, testified to-
day that patents were used to
create in the United States an
absolute monopoly on produc-
tion of magnesium, a light
metal with many war uses"
The Assistant Attorney General
made this charge before the Senate
Patents Committee as he referred TO
the recent consent decree obtained
by antitrust prosecutions involving
Alcoa aluminium Co of America),
the Dow Chemical Co, and =. G.
Farbenindustrie, A. G., of Germany.
This (magneisum) monopoly con-
troll began in 1927 and complete con-
troll was exercised by patents until
l941," Mr. Arnold said He explained
that patents of the American and
German industries were fitted to-
gether to obtain control.
Arnold Much Amused"
AS the hearing opened Chairman
Bone called attention to number
of full-page advertisements in met
ropolitan dailies by Carboloy, Inc,
and General Electric Co, dealing
with issues raised at the Senate in
quiry.
Senator Bone said he wondered
how much of this dough" was
charged to national defense or the
public The Western Senator said
it had been his experience that so
called institutional advertising in
newspapers by utilities" actually
were paid for by the consuming
public.
Mr.. Arnold said he was very much
amused, and the newspapers owe to
this committee the money they got"
Senator Lucas, Democrat. of Illi-
nois said he would like to know
how much General Electric and its
subsidiary, Carboloy, spent on these
advertisements.
Expects Flood of Letters"
"We1l probably get a flood of let
ters now Mr.. Arnold said for the
Antitrust Division "The public
always writes us They must be
guilty or they would not be adver-
tising'"
Mr. Arnold said he was convinced
that cartels and patent monopolies
were not the way for nation to
encourage development of skills and
inventions nor to increase foreign
trade.
"A much better and simpler
method would be direct use of Gov
ernment subsidies" he said
The Assistant Attorney General
said that a 1926 Supreme Court
decision had been utilized by the
General Electric Co. to operate a
Nation wide licensing cartel which
is purely fiction" Under this, he
said, the company licensed $4,000
retail stores by calling them agents"
and referring to royalties and fees
collected as commissions"
Abuse of Privileges"
Returning to the consent decree
covering magnesium" Mr.. Arnold
said it was not perfect but did
much to remove restrictions"
He recalled that the American
companies and their principal OFF,
GERS paid fines of s135,000 and added
that by terms of the decree not only
is the conspiracy terminated for all
time, and the restrictions removed,
but a positive influence is directed
toward the expansion of the mag
neSium industry. since under the
terms Of the decree rights under the
pooled patents are available to all
who make application therefor
Il DO not think it is an extreme
statement TO assert that most of our
present shortage of basic materials
for the war has been the result of
the abuse of patent privilege" he
said at one point
Mr. Arnold told the committee
that officials of Alcoa, Dow and
other companies attempted to give
the public the impression that they
have engaged in some immaterial
and technical violations of law on
account of which they felt no per-
sonal guilt whatever" after they
plead guilty and paid fines under
the consent decree.
Il am willing to leave it to the
common sense of the public that de-
fendanS do not pay fines, both
corporate and individual, without
| knowing that they have been fined
for an actual violation of law of
which they were conscious" he
added.