and it was all gone. This new resin, which was patented, made varnishes which were unheard of before. Their weathering characteristics were phenomenal. They were unattacked by sulphuric acids, alkalies, heat, alcohol. You could take a table like this, beautifully finished, and pour brandy on it, light the brandy and let it burn off, and the finish wouldn't have been touched. You couldn't have told where it happened.

Well, that is a trick demonstration. It isn't important. The main importance was the great durability, the great life of these finishes, and the high luster and protection that they gave.

The story is an interesting one from a patent point of view. Here was a company, the Bakelite Corporation, which was nationally and internationally known, whose products were accepted whenever they brought them out in the various fields in which they had been serving. If we introduced something in the electrical field or the grinding-wheel trade, they accepted it and put it through a few tests, and they recognized when we came out with something new it was worth looking at and something useful.

But we were not known in the paint and varnish field. In spite of our reputation, our demonstrated ability to introduce new products and new things, here is a new product, very useful in the paint and varnish field, and we couldn't get anywhere with it. Nobody would listen to us; nobody would pay any attention to it: "No; we don't want to be bothered testing that out. We have so many of these things.

We have no desire to go into the paint and varnish business. We can't go into the grinding wheel industry and the radio industry and all these things. We stay out of them. We supply the materials and that is all we do. We don't get into competition with customers or anything of that kind. We certainly didn't want to go into the paint and varnish trade. It meant building up a whole new organization, a new sales force, and we were not going to do it.

We

There were about 1,100 companies in the paint and varnish business and we wanted them as customers and not competitors. would have been the one thousand one hundred and first, and we didn't want to do that. We would rather have 1,100 customers than 1,100 competitors. But because we couldn't go anywhere with it we did go into the varnish business temporarily, solely for this purpose: to take business away from existing varnish companies, and having taken a man's business away from him, he then takes you seriously. So we went at it.

What

We picked the marine field because that was the tough one. would do in the marine field would do anywhere. So when we went out in the marine field and started taking accounts away from the well-known old-line paint and varnish people. As soon as they started to lose accounts they started to take us seriously, and we went to them individually and said, "If you want this account back again, if your customer wants this stuff, not what you used to sell, we will sell you the resins, we will give you the formula, and we will do everything we can to help you."

So we eased out of that and we are the leaders in that field today. We do a big business in it. We have the outstanding materials, materials that are used wherever real quality is wanted.

Mr. PATTERSON. Have you any competition with this?

Mr. BAEKELAND. Oh, plenty.

Mr. PATTERSON. I ask that for the record. What is it, Mr. Baekeland?

Mr. BAEKELAND. Oh, we have a number of competing companies. We are the only company, however, that make all of these. Our competitors all make either one or the other of these that I have pointed out. We are the only ones who make all of them. Representative WILLIAMS. You are the pioneers in that field? Mr. BAEKELAND. Yes, we are.

Representative WILLIAMS. Organized in 1909?
Mr. BAEKELAND. 1910.

Representative WILLIAMS. What capital at that time?

Mr. BAEKELAND. I am not sure, but I believe it was $250,000. Representative WILLIAMS. And what is it now? What has it grown to?

Mr. BAEKELAND. There were common-stock dividends as the business grew. In 1927 there was a 150-percent preferred dividend; 621⁄2 percent preferred stock was issued as a dividend. There have been no increases to capital except through earnings, no new money, no new financing, no borrowing.

Representative WILLIAMS. You have increased it by the issuance of dividends, stock dividends?

Mr. BAEKELAND. Yes, sir. As the business grew a stock dividend was declared. Our capitalization, however, is still low. It is about 81⁄2 million.

Representative WILLIAMS. How many are employed by your company now?

Mr. BAEKELAND. We don't employ a great many people. Our manufacturing processes are such that one man can handle a whole battery of chemical apparatus, and our total pay roll has never exceeded, I think, about 1,300, but it is interesting to note that in 1936 it was double that of 1929.

Representative WILLIAMS. And has it increased since 1936?

Mr. BAEKELAND. Not much. It is less now than it was then, I think.

Mr. DIENNER. How many men do you have in your laboratory? Mr. BAEKELAND. We have a research laboratory; we have 250 men there. Sixty-five percent of the cost of our research is pay roll; the other 35 is taxes, depreciation, and insurance and such things as that. Our budget for 1938 was $682,000 for research. It has been over or around half a million dollars a year for quite a number of years. And on our research we depend for our safety and future existence. Without it I don't think we could maintain our organization. I know we couldn't in this field where it is very competitive and where there are a great many developments going on all the time, and an increasing amount of research work.

The CHAIRMAN. What contributions have been made to improvements of these various devices and methods from outside of your organization or your laboratory?

Mr. BAEKELAND. There have been some of them from outside.

The CHAIRMAN. What proportion of them would come from outside? Mr. BAEKELAND. At the present time of our sales I should say 95 percent are our own.

The CHAIRMAN. In other words, the bulk of the extension of this art is a result of your own laboratory, your own work?

Mr. BAEKELAND. Yes, sir.

The CHAIRMAN. How many persons are employed in that sort of work?

Mr. BAEKELAND. In research work, 250. That also includes some janitors and a few maintenance men around the laboratory.

NECESSITY FOR PATENTS IN PROTECTING RESEARCH WORK

The CHAIRMAN. Yes.

Are all your research workers under obligation to give to the company the patents which they may devise and the discoveries which they make?

Mr. BAEKELAND. Oh, yes; we supply them with the equipment, we pay them to do the work, we direct what work they are to do. We can't permit our research men to work on their own. They might go into very interesting fields which would be of no use to us, not commercial. We do not run an academic laboratory. We are in business, and although we do some molecule chasing and let a few men have their heads in work along lines in which they might feel inclined to do something, a greater part of our research work is directly applied to the needs of the business, and much of the research work is dictated by our customers or by prospective customers.

Someone will come to us with a problem. Well, the man with the new sandpaper disk, for example. He wanted something that would replace glue because he was having trouble with glue and knew its limitations. I give this only as one of a great many examples. He came to us to try to develop something to replace glue and give a better sandpaper, a sandpaper that would be waterproof and have longer life. We went to work on the problem, gave it to the research laboratory, and they developed resins which had the characteristics necessary to do that particular job, and much of our research work is dictated to us from the outside.

The CHAIRMAN. But it is all planned by a general staff.

Mr. BAEKELAND. All planned directly by the management and not only by the research management; it is also directed by the executive management-sales and executives also have their say in what we are going to do or what we are going to quit working on in research.

The CHAIRMAN. In other words, each person in the research laboratory is told just what his task may be with the exception of a few who are engaged in what you call molecule chasing?

Mr. BAEKELAND. Yes.

The CHAIRMAN. In other words, the phrase that I think Dr. Jewett used here the other day is applicable here. It is cooperative effort under control.

Mr. BAEKELAND. That's it, and the men themselves help each other. They cooperate. Each has something to contribute and those men have meetings together in which they exchange problems. That is the way it works out.

The CHAIRMAN. Of course, since you have been associated with this company and with this industry you have had occasion to observe the work of other laboratories?

Mr. BAEKELAND. Yes.

The CHAIRMAN. And the development of patents generally, have you not?

Mr. BAEKELAND. Yes, sir.

The CHAIRMAN. What could you tell the committee with respect to the position that the research laboratory occupies in the modern field of invention and patents? Have you reached any conclusions about that?

Mr. BAEKELAND. Yes, I have. I was just trying to say it as succinctly as possible, because it is a large subject. The great technical advances that we have witnessed have been the result of research work, either by individuals or by organized research in laboratories of large companies. The advances, the improvements, have been largely, I am convinced, owing to research. New products, new useful things, new ways of doing things, can only come from carefully applied work done in scientific laboratories-improvements in our paints, in our fabrics, in the materials we use such as these.

The CHAIRMAN. In other words, we couldn't make the advances which are being made without the extensive and expensive equipment which is supplied in these large laboratories?

Mr. BAEKELAND. That is true. They are making the advances. No one else is doing it. Without those laboratories, naturally these advances wouldn't be there.

The CHAIRMAN. That is exactly what I am trying to develop. In other words, the collective work of a group of individuals is becoming gradually more important than the individual work of an individual inventor.

Mr. BAEKELAND. That is true.

The CHAIRMAN. And as the frontiers of science are pushed further and further back, it is the collective and cooperative enterprise rather than the enterprise of the individual which is bringing the greatest returns to civilization.

Mr. BAEKELAND. Very likely.

Senator KING. However, the field for the inventive genius of the individual is not narrowed, even by the collective activities to which the chairman has referred.

Mr. BAEKELAND. No, sir. I think that it is increased, because each new development opens new vistas and new avenues that suggest themselves, avenues of approach to the solving of another problem. Our increased knowledge, our increased information as a result of this is giving us more and more hints and suggestions to follow, and the thing I think is cumulative in a geometrical progression rather than an arithmetical progression.

Senator KING. Isn't it true that frequently a basic patent which may have been obtained by this collective energy and collective effort becomes the basis of a large number of improvements which are developed by the inventor in a small way, and as a result of his interpretation of the defects, as there are defects even in basic patents, and he addresses himself to improving the basic patent, and as a result of that many of the patents which are obtained merely cluster around the basic patent.

Mr. BAEKELAND. That is very true. That is particularly apt in this case. That is precisely what happened. My father came out in 1909 with a few patents. Following that he continued his research work, brought about improvements and modifications of those first materials as well as bringing out additional new materials.

Senator KING. Did you give a definition which would be comprehensive as well as detailed of what plastics are, how broad a field they cover?

Mr. BAEKELAND. Well, that is a large order. You see-well, I can read you a list here of some of the industries.

Senator KING. Generally, when you speak of plastics what does the ordinary ignorant man such as myself and others comprehend it to be?

Mr. BAEKELAND. Of course, some of these people call paint and varnish resins plastics. I don't think they are palstics. I think anything that can be shaped by applying pressure to something, squeezing it into shape, is a plastic. A piece of marble, like this marble, is shaped by machinery. That is not a plastic operation. If, on the other hand, these columns had been formed out of a loose unconsolidated material, and under pressure had been formed into that shape there, they would then have had to be a plastic material.

Senator KING. Almost any element, then, that might be congealed, if I may use that expression, might be the basis of plastics. The principal elements, though, are carbon, are they not, and oxygen and nitrogen?

Mr. BAEKELAND. All of these plastics are organic materials and all organic materials contain carbon, and these here, for example.

Here is a urea material. This thing is made out of a base for fertilizer.

Senator KING. I beg your pardon?

Mr. BAEKELAND. This is a urea material made out of the base of a fertilizer. That is an organic material, carbon, nitrogen. Urea is largely used for fertilizer. It is very cheap. It is made from the air and the supply is unlimited.

The CHAIRMAN. The word "plastic" no longer actually covers the field of the articles that you produce. Take that wheel, that gear, for example, that is cut rather than pressed.

Mr. BAEKELAND. Yes, but you see that gear is moulded.

The CHAIRMAN. That is what I was getting at. I understood you to tell me it was cut.

Mr. BAEKELAND. Afterward. When that gear just as you see it except no teeth were cut into it. The CHAIRMAN. I see.

was made it was

Mr. BAEKELAND. And the metal hub was pressed in or moulded in in the original operation, moulded in as a matter of fact. That is a plastic; that was moulded in that shape. So was that box in your hand.

The CHAIRMAN. That is what I conceive to be plastic, anything that is molded.

Mr. BAEKELAND. These are truly plastics. These are cloth coverings made of some of our materials; they are alcohol and oil and water, weather resistant. They have their uses for gas masks and upholstery and raincoats and things of that sort.

The CHAIRMAN. Tell me, is this a substitute for wool?

Mr. BAEKELAND. Oh, no. No; that is not a substitute for wool. We would like to find one, as a matter of fact. I don't think we ever shall.

The CHAIRMAN. Well, you know I have been hearing some rumors of such a substitute. You haven't heard of it?