result of all this was the accumulation of an immense mass of scientific data which usually afforded a quick and easy solution to each industrial problem as it arose. The importance of this research branch of the industry is hard to overestimate. It kept the German chemical manufacturer in the forefront of progress— always somewhat ahead of his competitors in other countries in the way of new processes and products.

Quantity Production—“ Dumping"

The improvements in processes brought about by all this research laid heavy emphasis on the low cost of quantity production. This, however, carried on by semicompeting houses, led to overproduction. Home prices were kept up by the German tariff and other governmental policies. It was then to the advantage of the manufacturer to produce far more than he could sell in the home market, even though his export trade were carried on at some loss, for by doing so he could use processes so economical and manufacture on such a scale that his profits on home trade were largely increased. Accordingly, German dyestuffs began to appear in every country of the world at prices which domestic manufacturers could not meet. The inevitable result was that in country after country the domestic manufacture was destroyed or stifled in its cradle. As soon as this had been accomplished, it was no longer necessary for the German exporters to sell at or below cost, so prices were immediately raised and handsome profits realized both at home and abroad.

Price Manipulation

For the most part this manipulation of prices occurred in branches of the chemical industry other than the manufacture of dyes, for the simple and sufficient reason that in this country, at least, the dyestuff industry never reached a point where it required much discouragement. When, however, in 1910, the first determined effort was made in this country by the Benzol Pro

ducts Company to establish the manufacture of an important German product-anilin oil-on a large scale, the German hand was immediately shown. The price of German anilin oil then averaged 111⁄2 cents. As soon as its manufacture was fairly under way by the American company, the German importers commenced to cut the price. Apparently no definite figures were made by the Germans, but they adopted the simple policy of offering any customer of the new concern anilin oil at less than the price he was paying. The new company struggled on as best it could, which was not very well. Its operations were conducted without profit. It was, however, supported by a group of men of exceptional insight and determination and it survived until the war eliminated this unfair and destructive competition and enabled it to establish its business on a firm foundation.

Confronted with such conditions there was but little encouragement for any American house to enter the field claimed by the cartel.

Patent Protection for German Products

Another important aid to the success of the German export trade in dyes and pharmaceuticals was the advantage taken of the patent laws of this and other countries. Owing to the immensely greater number of research chemists engaged in this work in Germany than elsewhere, far more patentable inventions in organic chemistry were made by the Germans than by the chemists of any other nation. In the United States they took out patents by the thousands. The Bayer Company alone accumulated approximately 1,200 such patents which were placed in the hands of one of its subsidiary companies. The Badische had about 500 such patents, and each of the other members of the cartel held patents by the score. As there was substantially no effort (with small exceptions) by any of the German concerns to manufacture in the United States, these patents were obviously obtained and held in order to prevent the formation of an American dye indus

try and to make impossible importation from other countries. With the aid of these patents, especially the product patents, the German cartel could and did exclude all importations of competing dyes in the most important classes.

Buying Their Way

But the cartel did not rely entirely on these technically legitimate methods. Secret processes, multitudinous patents, dumping, and destructive price-cutting, were all well enough in their way and would have seemed to be all-sufficient. But the thoroughgoing methods of the cartel did not stop here. Bribery was resorted to without hesitation whenever anything was to be gained thereby. The head dyers of the various mills and other chief customers of the dye manufacturers were subsidized in many ways, direct and indirect. It was easy for the head dyer to manipulate the complicated processes of dyeing in such a way that any particular colors would produce wretched results. It would then be an easy matter for the dyer to get the manager of his mill to try the dyes of another manufacturer, and with the exercise of a little care the new dye would be sure to produce satisfactory results.

Propaganda to Discourage Competition

Besides the obstacles, legitimate and illegitimate, thus placed by the Germans in the way of the establishment of an American industry, there was apparently considerable organized propaganda intended to discourage American attempts. Apparently it was the duty of every good German chemist in the United States to spread the doctrine of the invincibility of the German chemical industry, the almost insuperable difficulty of the processes involved in the manufacture of many important dyes, and the hopelessness of securing the necessary technically trained men and skilled labor outside of Germany. So well was this done, and so real were the obstacles confronting the American chemist

that, prior to the Great War, the German dye-makers encountered but little serious competition in this country.

The End of the German Chemical Monopoly

The net result of all this energy, ability, unfair and dishonest practice, and chicanery, directly aided and abetted by the German government and protected in this country by thousands of product patents, was a complete, unscrupulous, and powerful monopoly. With true German thoroughness it neglected no method or opportunity of establishing and maintaining its ascendency. It controlled almost completely the American dyestuff trade with annual sales of $25,000,000, and controlled absolutely the sale of many pharmaceutical preparations, such as aspirin, salvarsan, and novocaine, of enormous value.

This formidable and sinister monopoly and the power of the cartel in this country was brought to a sudden and disastrous end by the Great War-a war which the cartel itself had been indirectly instrumental in bringing about. It has lost its patents, its prestige, and its power. It is, however, still in existence, and many of the conditions which led to the original establishment of the monopoly still exist. The formation of a powerful American combination in the chemical industry, and particularly in the dyestuff branch of the industry, is therefore timely and significant.

Conditions Permitting Monopolistic Control

Such a monopoly as that established by the Standard Oil Company or the German chemical companies was forced and largely illegitimate in character. Numberless instances of natural and entirely legitimate monopolies are, however, to be found, as where a coal mine is opened in such a location that it can secure better rates to its particular market than can any competing mines; or where a clay bank is discovered from which can be made a brick superior to anything else in the vicinity; or where a

peculiar soil is found that will grow a certain kind of vegetable or fruit in greater perfection than elsewhere.

Other legitimate monopolies of a local character may be artificially created, as where a brickmaker discovers that a few brick plants in his neighborhood occupy all the available clay beds, and by a combination of forces secures a practical monopoly of the brick business in that neighborhood; or where a coal operator, securing the exclusive right in his territory for a new and very economical apparatus for channeling coal, drives his competitors out of business by cheaper production.

Non-Monopolistic Undertakings

In most cases, however, the advantages enjoyed by a particular enterprise are not sufficient to constitute a monopoly, but only sufficient to render the undertaking more profitable to its owners than are other similar but less favored enterprises. For instance, a coal vein may be so favorably located for mining that its cost of production is a few cents less per ton than that of its competitors, giving it a better profit but not sufficient advantage over the other mines in the neighborhood to drive them out of business and create a monopoly. Or a pottery may be so situated as to secure an advantage in freight rates over its rivals, thereby enhancing its profits but not to such an extent as to enable it to crush out others and build up a monopoly for itself.

In conclusion it may be said that in every profitable business, conditions must of necessity exist that give it an equality with or a superiority over its competitors, and that every business success where competition must be met, depends upon and will be accurately measured by the ability with which every possibility of excelling this competition is discovered and developed. Every undertaking cannot have a monopoly as the basis of its operations, but the best business success requires as near an approximation to a monopoly as the conditions will permit.