Art. 2.-GERMAN BUSINESS METHODS IN THE UNITED STATES.

THE methods of German commerce in pre-war days are familiar in their general outline; the concrete details have not often come to the light. This article will endeavour to give the story of how the German Dye Combination operated in the United States. The account will be given as far as possible in the words of witnesses taken under oath. These accounts, commented on only for the sake of clarity, should be allowed to speak for themselves.

During the war, the dye industry in Germany was united into one great chemical Verein, so that the gentle methods hitherto used might become universal and gain completeness of organisation and efficiency after the war, when England and the United States should open again their hospitable doors. Before the war, however, there were six leading German dye houses, divided into two groups of three each. The first group consisted of the Badische Anilin-und-Soda Fabrik (called for short the Badische Company); the Farbenfabriken vormals Friedrick Bayer & Co. (called the Elberfeld or Farbenfabriken Co.); and the Aktiengesellschaft für Anilinfabrikation (known as the Berlin Co.). These three Companies pooled their profits in the respective proportions of 43 per cent., 43 per cent. and 14 per cent. They were controlled by a cartel and met for fixing prices, determining policy, etc. The second group consisted of Farbwerke vormals Meister, Lucius und Brünner (known as the Hoechst Co.); Leopold Cassella & Company; and Kalle & Company. These three concerns were knit together rather more loosely than the first combination; and their unity of action depended mostly on interchange of share capital.

About two years before the war, an internal difference manifested itself, when the accounts for the preceding year were presented to the pool. The Elberfeld Company claimed an allowance of something like $700,000 for ' graft' payments made in the United States. The other partners objected to the amount, not because they were ultra-conscientious, nor because the amount, if really expended, was excessive, but because vouchers were not

presented with ideal German completeness; and the notion seems to have been suggested that foreign agents and managers might have made an error in the calculation, resulting in unintended personal benefit. However this may be, a little private investigation was made by one Company in order to ascertain whether the dyers and ultimate recipients of the 'graft' were really getting what they were entitled to. The investigation, as will happen sometimes with the best regulated enquiries, got a little out of bounds. The result was a series of suits and a general explosion of indignation. From the evidence collected under oath in the enquiry, the following excerpts have been made. It should be noted, in order to reassure the British reader, that the convention called under the cartel entered on its minutes the following resolution: Resolved: that henceforth bribery shall be abolished except in the United States and in Russia.'

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The operations of the Dye Trust in the States can best be examined in the words of the witnesses themselves. In explanation, it may, however, be added that these Companies maintained their American agencies under their own control; that the Elberfeld Company, which had expended the $700,000, was extremely active among the mills in Philadelphia; and that Mr Keppelman was its manager. For convenience, the evidence will be grouped, first, with reference to the book-keeping methods of handling the matter, adopted to secure, so far as possible, proper profits and proper accounting to the principals in Germany; second, the distribution of 'graft'; and thirdly, certain incidental activities, such as chemical means of dealing with rivals, and persuasive invitations on board a yacht.

With respect to book-keeping methods, the problem was a difficult one. It was desirable to secure large prices for the dyestuffs sold, so as to afford a margin for ' graft' and allow of proper accounting in addition. It was obvious that this must be done not only by adulteration, but by misbranding the goods so that comparisons in prices would be rendered impossible and awkward disclosures would be avoided. A system, therefore, based on selling the same thing to 'A' by one name and to 'B,' 'C' and 'D' by different names, on allowances for Vol. 232.- No. 460.

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different degrees of adulteration, and on keeping accurate accounts so that the dyers should receive the correct amounts of graft,' would necessarily be complicated, especially since care had to be taken that each party should see only what it was desirable he should see. The thoroughness of the German mind, and the praiseworthy ingenuity and care with which it triumphed over these difficulties, appear in the following evidence of Clarence C. Du Plaine, book-keeper and order-clerk in the Elberfeld Company.

'My duties as order-clerk, besides the making-out of the orders for goods to be shipped, were to make out the "newthing sheets," post the "new-thing cards," post the salesmen's price-books and price-lists, and also to keep my own set of price-cards from which I ascertained the prices to be charged as well as the character of the goods.

"The price-books would show the limit selling price for the dyes of the Farbenfabriken. The price-cards would show (a set of cards for each customer) the prices which the customer was paying for the colours he bought, the real or trade name of the colour as distinguished from the name under which he may have been buying it, and also the extent to which the colour was reduced or adulterated, if such reduction was being done.

The "new-thing sheets" were kept for the purpose of keeping track of all new colours that were bought by the various customers, also any change in the price of the goods they had been buying. These sheets were, I should say, as near as I can remember their size, about eight inches square and ruled with columns, first for the fictitious name, then the real name, of the colour, then a small column for the price charged and a wider column at the extreme right-hand side. The name of the customer was not written on these sheets, but a small slip of paper with such customer's name on it was pinned to the sheet.

'Miss Gaul would do all the figuring-out of the graft to be paid to the dyers, in Mr Keppelman's office, her desk being in the corner of said office towards Market Street. . . . After these "new-thing sheets" were taken to Miss Gaul I never saw them again; so presumably they were destroyed after they had served their purpose of determining the amount of graft to be paid the dyer. The "new-thing" cards were a permanent record of any change in the name of a colour, a fictitious name substituted for the real or trade

name of the colour, or any reduction in strength. No price appeared on the "new-thing" cards. A regular code form. was used to designate the amount the colour was reduced, so that to the ordinary observer the card would not convey the actual strength of the colour sold.

"The method I pursued in making out the order was as follows. Upon the receipt of the order, either through the medium of the mails, or the telephone, or brought in by the different salesmen, I would consult my price-cards, which were kept in four or five drawers, a set for each customer. In many cases these orders would be for dyestuffs known to the customer under a fictitious name, that is, names not generally known to the trade. The price-cards would show the fictitious name, the real or trade name of the colour, and the price to be charged.

A long blank or form was used on which to transcribe the orders so given, with columns for the fictitious name, the correct name, the price to be charged, the gross, tare and net weights of the goods and the means of shipment to the customer. After filling-in on the order-blank, in the proper places, the fictitious name, the real name and the price to be charged for the goods ordered, I would give the order to the shipping department. The shipping clerk at that time was ..., assistant . . . Schneider. They would know just what colour to send the customer from the second column on the order blank, for that contained the real name of the colour ordered by the customer.

'The shipper would erase from the package (in cases where a keg or barrel had been ordered) by means of red paint, painting over the whole head of the keg or barrel, as the case may be, thus erasing the correct name of the colour (for all such packages had the trade name of the colour painted on the head of the package in black stencilling ink), and substitute in its place the fictitious name of the colour by which it was known to the customer. After weighing the packages to learn the gross, tare and net weight, these would be inserted by the shipper or his assistant in the proper spaces on the order, and the means of shipment.

'After this the order was sent to the bill-clerk, whose duty it was to bill and charge the goods sent to the various customers. . . . The method of billing and charging was as follows. Quadruplicate copies of all charges to customers were made, the original being the invoice to be sent to the customer, the other three being sales sheets, one of which was retained in the Philadelphia office for the matter of book-keeping and record, and the other two sent to the New

York office, who in turn, sent one of these copies to the home office at Elberfeld, Germany.

'In cases where fictitious names had been given to the dyestuffs that were to be billed, when it came to the billing, the fictitious name was written by means of a typewriter of the billing variety on the invoice and the impression conveyed of such writing to the underlying three sales sheets by means of carbon sheets. Then a piece of paper would be laid over the invoice, the typewriter spaced on space and the real or trade name of the colour written. No impression of this latter writing would be made on the invoice, as the paper intervened between the type and the invoice, but this writing of the real or trade name of the colour would be conveyed, by means of the carbon sheets, to the three underlying sales sheets. In this manner, no inkling of the true name and character of the dyestuff bought was given to the customer, but a record was made on the sales sheets of the true as well as the fictitious name of the goods. After this, the piece of paper would be removed from the typewriter and destroyed. Then after spacing the typewriter properly, the gross, tare and net weights of the dyestuff were inserted on the invoice, together with the price to be charged for the goods and the final extension. By way of illustration, note the following:

1 keg of Fast Yellow S. C.

is Chinoline Yellow.

115-15-100 lbs. a 1.10 $110.00.

'All of the above specimen charge, except "is Chinoline Yellow," would be written in the body of the invoice, for the paper inserted over the invoice, as stated before, would take the impression of "is Chinoline Yellow,' which impression or writing could and would be destroyed after removal of the paper from the typewriter. This notation, however, would be conveyed to the three underlying sales sheets by means of the intervening carbon paper and kept as a matter of book-keeping and record in the various offices of the Farbenfabriken Company, viz.: the Philadelphia office, the New York office and the home office at Elberfeld, Germany.

'The ledger-cards were about ten to twelve inches and were arranged as an ordinary ledger, a column for debits and one for credits. To them was clipped, by means of an ordinary paper-clip, a separate card that was known as the "Is-card." These latter were about four inches wide and as long as the ledger-cards, and they were fastened to the ledgercards by no more permanent fastening than the paper-clips.