Dinner-Table Treason

Seldom has a U.S. business firm taken such a smearing as Standard Oil Co. of New Jersey got last week. Assistant Attorney General Thurman Arnold swung the rubber hose while the Truman Committee held the victim. Before the company could even yell, it found itself blamed for the U.S. rubber shortage, slugged for playing along with the Axis. Senator Harry S. Truman had even shouted "Treason!"

For two days Thurman Arnold monopolized the nation's front pages; Standard was damned from hell to breakfast. But this week, when the company finally got a chance to reply, its "treason" turned out to be strictly of the dinner-table variety.

Man of Promise. For months Trust-Buster Arnold has tried to break up a patents cartel formed in 1929 by Jersey Standard and Germany's Hydra-headed I. G. Farbenindustrie. Last week Standard signed a consent decree, released 2,000 patents royalty-free, took a $50,000 fine. In return, Thurman Arnold agreed to withdraw the most sinister conclusion in his complaint: that Standard had held up the U.S. synthetic rubber program.

Arnold was faithful, in his fashion; that statement was kept out of court. But next day he appeared before the Truman Committee and the whole story came out. The committee had heard him before on the same subject, in a kind of rehearsal behind closed doors. Now, for the public, his horrific charges were aired again:

Under the cartel, Germany got the benefit of U.S. technical developments; the U.S. did not get Germany's.

Standard's ruddy-faced, Texas-drawling President William S. Farish replied for the company: the cartel began when Standard paid I. G. Farben $30,000,000 for patents on a German-invested hydrogenation process. The process, used in Germany to make synthetic oil from coal, was used in the U.S., by Standard and its licensees, to create the world's greatest supply of 100-octane aviation gas. A variation of the same process is now used by Humble Oil in a new plant which makes 30,000,000 gallons of synthetic toluol a year for TNT. The cartel also gave the U.S. its buna knowledge, except the process for making rubber from coal, a Nazi Government-sponsored program.

Standard "delayed the use of buna rubber in this country because the Hitler Government did not wish to have this rubber exploited here for military reasons."

The reply: nobody--from Standard Oil to Jesse Jones--wanted to exploit synthetic rubber at 20-c- to 40-c- a lb. (except for minor specialty products), as long as natural rubber was available at about 15-c- a lb. A plant to make synthetic rubber costs $1,000 per ton of annual capacity; no private company could risk that kind of money while natural rubber was plentiful. Beginning in 1939, Standard Oil tried to get the Government to finance plants; it went to the Army and Navy Munitions Board, National Defense Advisory Committee, the Senate Military Affairs Committee and Banker Jesse Jones; the Government's answer was no.

When Standard Oil developed a new synthetic rubber called butyl, it turned the process over to I. G. Farben, refused to give it to the U.S. Navy.

The reply: butyl was no good to Germany because it is made of oil, and oil is Hitler's great lack. In 1939 the company gave samples to the Munitions Board, which turned them over to tire companies for experimentation; though it is cheaper than buna, they decided that butyl was not as good.

As late as February 1941, Standard supplied gasoline to the Italian-owned Brazilian airline Lati.

Correct, said Farish--but with the consent of the U.S. State Department, which wanted the gas supplied during negotiations with Brazil for ousting Lati. In Standard's files was a thank-you letter from the State Department. It was also with State Department approval that Standard continued to deal with Japan.

Even after Pearl Harbor, when the Government wanted synthetic rubber developed in a hurry, Standard was reluctant to release its patents to U.S. companies.

Reply: In early 1940 Standard licensed two U.S. rubber companies to produce buna, was ready to license others. On Dec. 19--twelve days after Pearl Harbor--it pooled its buna patents, with royalties set at 1%. It kept its butyl patents--promising that the company itself could make all the Government wanted.

What is Treason? Standard had a good thing in the patents it held with I. G. Farben; it also dominated vast areas of chemical technology. When World War II began (but before the U.S. entered), it tried to keep its profitable arrangements with I. G. Farben on a business-as-usual basis that looks extremely bad now, when the U.S. and Germany are at war.

Standard alone could not justly be blamed for the rubber shortage. Even Germany did not have any synthetic rubber to speak of, until Hitler began subsidizing plants in 1935. Hitler knew when war was coming and how. The U.S. did not know when or how until Pearl Harbor.

And, as Thurman Arnold pointed out--sotto voce between blasts--Standard was in the same boat with many other U.S. firms which had made peacetime agreements with I. G. Farben, the world's great fountainhead of chemical ingenuity. Well might the company contend that "treason" was a queer name for a deal that gave the U.S. buna, aviation gas, toluol. Moreover, Arnold was at his most cogent when he suggested that the real way to avoid the "viciousness" of world cartel agreements is to modify U.S. patent laws, encourage (with Government funds) more research at home.

Yet up spoke Harry Truman of Missouri (before he had heard the Farish rebuttal): "Even after we were in the war, Standard Oil of New Jersey was putting forth every effort . . . to protect the control of the German Government over a vital war material. As Patrick Henry said, if that is treason--and it certainly is treason--then make the most of it. Yes, it is treason . . . They are going to have hard sledding if they try to squirm out of it."

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