Trial of the Titans

Looking rumpled in a navy blue suit, Defense Secretary Charles Erwin Wilson took the stand in a Chicago court last week as a witness in the Government's antitrust suit against the Du Fonts, General Motors and U.S. Rubber. The Government, which is trying to 1) force Du Pont to sell its G.M. stock (23%), 2) require members of the Du Pont family to unload their 17% interest in U.S. Rubber, and 3) get G.M. to drop its 50% interest in the Ethyl Corp., wanted to know what G.M.'s former president knew of G.M.-U.S. Rubber dealings.

Was G.M.'s decision to buy half its tires from U.S. Rubber in 1931 influenced by the fact that Du Pont owned such a big bloc of rubber stock? "In no way whatsoever," testified "Engine Charlie." "I never knew how much they owned . . . and no Du Pont ever talked to me about the contract ... I might add that ... I never owned any . . . interest in a supplier when I was the buyer."

G.M. had decided to buy U.S. Rubber tires, Wilson said, only after Goodyear had turned the offer down and Goodrich prices proved too high. Had Wilson ever discussed with G.M. President Alfred Sloan the appointment of Du Pont people to G.M.'s board? Wilson had not, but he had discussed the fact that several board members were also G.M. suppliers, "and I always said that ordinarily that was not a good thing to do ... If you put the president of one of the steel companies on your board, your other good suppliers might worry that he had an inside track ..." But Wilson insisted he had never known of a G.M. supplier who benefited from being a board member.

$1,000,000 into $6,500,000. Just before Wilson testified, the court heard from Du Pont President Crawford Greenewalt, son-in-law of aged Irenee du Pont. He, too, had never heard the Du Fonts mention any Du Pont-G.M.-Rubber agreement, but he did add a footnote on his personal history. In 1926, on his marriage to Irenee's daughter Margaretta, Irenee had presented Greenewalt with 1,000 shares of stock in Christiana Securities Co., the holding company that controls Du Pont. The stock was then worth about $1,000,000 (current value: $6,500,000). But that, said Greenewalt, was a Du Pont gesture "to give an employee incentive, just like any other bonus."

With the appearances of Greenewalt and Wilson, the taking of testimony in the 87-day trial came to an end. Since last November, nearly 2,500,000 words have gone into the record in the courtroom of Judge Walter J. La Buy, who is hearing the case without a jury. Almost a million more have gone into the court's records in the form of letters and documents. On its part, the Government has presented 1,200 documents out of some 100,000 studied. In its defense, the 33 defendants (cut by the Government from 118) produced about 1,000 documents, and the three companies have taken 131 rooms in Chicago's Palmer House for their lawyers, clerks and witnesses.

Twice Told Tale. The U.S. had promised that the case would be a "never-before-revealed biography of the Du Fonts." Actually, as told by Defendants Pierre and Irenee and Du Pont officials, it was pretty much a retelling of familiar history.

The Du Fonts denied the Government's charge that their purchase of $25 million worth of G.M. stock in 1917 was part of a plan to make G.M. a captive closed market for Du Pont products. The purchase was made largely because the late John J. Raskob, the treasurer of Du Pont, had recommended that Du Pont waste no time getting into the young auto business. Raskob's recommendation had also stated: "Our interest in [G.M.] will undoubtedly secure for us the entire Fabrikoid [artificial leather], pyralin [celluloid], paint and varnish business . . ." But Pierre du Pont declared: "There was no discussion whatever [of this]. It was an unimportant statement ..." The only reason, said he, that Du Pont had bought into G.M. was to "get a good investment. . ." It was forced to invest millions more to buy out G.M. Founder William C. Durant, after his enormous losses in the stock market slump of 1920 threatened to ruin him and G.M. Pierre became president of G.M., but only, said he, "until a better-posted man could be found."

Under Pierre and Alfred P. Sloan, Durant's former assistant, G.M. was put back on its feet, its assets boosted from $605 million to $1.8 billion. But Pierre had not been able to get the exclusive use of Du Font's revolutionary new auto paint, Duco, for G.M. Irenee, then president of Du Pont, insisted on selling it to all comers. At no time, then or since, have Du Pont sales to G.M. exceeded 4.1% of its total annual sales.

Lucky Coincidence. Equally sound business reasons, the defense insisted, prompted the Du Pont investment in U.S. Rubber. In 1927, the company was in bad shape (quipped Irenee: "Too many months of accounts receivable"), but Irenee believed that new management could put it in the black. It was a "coincidence," said he, that the syndicate that purchased U.S. Rubber stock in 1927 was made up of members of the Du Pont family. The reason was that Irenee's brother-in-law, W. W. Laird, was the Wilmington broker in the sale, and he had to find participants able to put in $1,200,000. The Du Fonts were the logical men.

As for Du Font's interest in tetraethyl, Alfred Sloan testified that it was G.M.'s Charles F. Kettering who suggested that rather than build a plant for making an antiknock component itself, G.M. should go into business with Du Pont, because "they were the best chemists in the country." From the 43 defense witnesses and two Government witnesses, onetime U.S. Rubber President F. B. Davis and Lawrence Fisher (Fisher Body), the Government was able to draw little evidence that a conspiracy to create or capitalize on "captive markets" had ever existed. At one point, U.S. Rubber President H. E. Humphreys Jr. said that the only instruction he has ever received from the Du Pont brothers has been: "Elmer, you do what you think best for U.S. Rubber." The Government's case also suffered from one other defect: not one company has yet come forward to charge that it has been hurt by what the Government has called "the tremendous industrial trinity of chemicals, motors and rubber."

The Government's nine attorneys (v. 33 for the defense) must now submit a rebuttal in two weeks before both sides retire to prepare their final briefs for submission in October.

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