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Chapter 4: IG Farbenindustrie AG, Frankfurt and Ludwigshaven

Cartwright had been presented with a summary report and a more detailed thesis on IG Farbenindustrie A.G. late yesterday afternoon. He made a point of not taking paperwork home with him. ‘Read in the office, think at night,’ was his motto.

Early morning London was wet with puddles and the air was damp. Most of the rain clouds had by now moved on. Major Alastair Cartwright paced purposefully over Westminster bridge with his folded umbrella marking time to his limping stride. Big Ben chimed six o’clock. The streets were empty except for a solitary policeman walking his Whitehall beat on Bridge Street, and the occasional AEC Regent red and white bus with half-asleep shift workers silhouetted in the steamed up windows, transported on their way south and north of the river Thames.

The ballroom was empty, eerily quiet. He hung his overcoat carefully behind the greenhouse door, and threw his jacket carelessly onto a visitor’s chair. He turned on the lights, sat down and started reading the report, the IRS/G.2 edition.

IG Farbenindustrie A.G.

Summary

July 28th. 1936

…

(ii) Evidence relating to the origin, growth, and financial and administrative construction of I.G. Farbenindustrie A.G.

The designation IG is used as reference to Interessen-Gemwinschaft Farbenindustrie Aktiengesellschaft which is usually abbreviated to I.G. Farbenindustrie A.G., and which may be freely translated as meaning ‘Community of Interests of the Dyestuff Industries, a Stock Corporation’. The corporation is generally referred to as IG.

IG came into being in 1925, when the firm of Badische Anilin und Soda Fabrik of Ludwigshafen changed its name to the present designation and merged with five other leading German chemical concerns. From 1904 however some of these firms had been working under community interest agreements, and in 1916 they had formed an association council to exercise a measure of joint control over production, marketing and research and for the pooling of profits.

Cartwright scribbled in the margin: community interest? cartel? clarify!

By 1926 the merger had been effected with a capital structure of 1.1 billion Reichsmarks, which exceeded by three times the aggregate capitalisation of all the other chemical concerns of any consequence in Germany. IG had steadily expanded its production and its economic power.

In 1926 the firm had a staff of 93,742 persons and an annual turnover of 1,209 million Reichsmarks. By 1934 the staff had increased to 150,000 (est.) and a turnover exceeding 1,900 million Reichsmarks (ref. historic currency rate. Annex ‘H’).

IG owns or holds participating interest (as far as we can ascertain) in 400 German firms and in about 500 (est.) in other countries. It also controls some 40,000 valuable patent rights. It can be described as a ‘State within a State’.

IG’s achievements are particularly outstanding in chemical research and in the practical utilisation of its discoveries. Among the many pharmaceutical products which IG developed and sponsored may be mentioned: aspirin and salvarsan (treatment of syphilus). Three of its trademarks, the ‘Bayer-Cross’ and Hoechst AG in the pharmaceutical field and ‘Agfa’ in photography, are well known throughout the world. In the industrial sphere IG was a pioneer in the development of intricate processes by virtue of which dyestuffs, methanol, and plastics, artificial fibres and light metals are commercially produced on a large scale (ref. list of manufacturing plants by product. Annex ‘F’).

IG plays an important role in the discovery and development of the process for making nitrogen from air, and gasoline and lubricants from coal. (ref. Summary Imperial Chemical Industries various Agreements. Annex ‘E’)

Cartwright scribbled in the margin: meet ICI Chairman soonest!

An enterprise of the magnitude and diversified interest of IG requires a comprehensive and intricate plan of corporate management. The controlling and managing bodies are:

1 The Stockholders. They number approximately half a million. There is an annual general meeting (AGM) usually attended by …

2 The Aufsichtsrat comprised 55 members at the time the merger was effected (1926), but this number, as far as …

And so it went on

1 Technical Committee (TEA) is composed of the technical members of the Vorsand and the leading scientists and engineers of IG. It deals with questions of research, development of processes, expansion and consolidation of plant facilities, and credit requests for such purposes. Beneath it are 36 sub-committees in chemistry and 5 in engineering (1934). The Technical Committee has a central administrative office in Berlin, called TEA-Buere, and the 5 engineering sub-committees are grouped together as a Technical Commission (TEED).

2 Commercial Committee (KA) which concerns itself primarily with financial, accounting, sales, purchasing and economic political problems. The full committee consists of about 20 members, including, in addition to Vorsand members, the heads of Sales Combines and other administrative agencies.

3 Mixed Committees coordination between the Technical and Commercial Committees was achieved through special groups that drew their personnel from both fields. The more important of these were the Chemical Committee, the Dyestuff Committee, and the Pharmaceutical Main Conference Committee.

The numerous IG plants are operated on the so-called leadership principle. A major unit is usually under the supervision of an individual Vorsand member, though in some instances one member is responsible for more than one unit, while in others a diversion of responsibility prevailed within the plant, according to production.

Unity in policies of management is achieved by grouping the plants geographically and also in accordance with the character of production in the following way:

1 The Works Combine constitutes the basis for geographical coordination of IG plants. The four original combines are the Upper Rhine, the Main Valley, the Lower Rhine and Central Germany. In 1929 a fifth, called Works Combine Berlin, was added. The Works Combine coordinates such matters as overall administration, transportation, storage, etc., in their respective areas.

2 The Sparton constitutes a means of coordinating IG production facilities on the basis of related products. Thus Sparte I includes nitrogen, synthetic fuels, lubricants and coal. Sparte II embraced dyestuffs and their intermediates, light metals, chemicals and pharmaceuticals. Sparte III includes synthetic fibres, cellulose and cellophane, and photographic materials.

3 Sales Combines were established to handle the marketing of the four principal categories of IG products. Each combine is headed by a Vorsand member, with deputies. There are Sales Combine Dyestuff, Sales Combine Chemicals, Sales Combine Pharmaceuticals and Sales Combine Agfa (photographic materials, artificial fibres, etc.)

4 The Central Finance Administration (ZEFI) was established in 1927 in connection with its location on Unter Den Linden, Berlin NW7. It is known internally as ‘NW7’, its postal district code. In 1933 was added the Economic Research Department (WIPO), and a central office for armed forces liaison called Vermittlungsstelle W, – ‘Wehrmacht Switchboard’ We have little information on the full function of NW7.

He stopped reading.

Cartwright, with his hands on its armrests, pushed himself up slowly from the captain’s chair and stood over the open report. He looked out of his glass-paned office; the day had moved on without him. The ballroom was full, his beavering DCs at work.

He ran the fingers on his right hand through his hair. ‘God, this company is a government in action, it’s better organised than the British Army!’ he exclaimed out loud. Cartwright sighed, locked his hands behind his back and paced back and forth, a frustrated beast trapped in a greenhouse cage. He now realised this truly massive industrial combine was now under the control of Hitler, and a serious threat to national security.

He reluctantly returned to his chair, and continued reading; he had to read it all. Cartwright then flicked through the financials: capital and reserves to include; called up share capital, share premium account, profit and loss, shareholders funds, then finance charges to include foreign exchange gains/losses, amortisation of development costs and something called Impairment of intangible fixed assets … but thin, he thought, and virtually all with the asterisk pointing to a common footnote: estimated/best guess … he was not a finance man, but it was obvious that they did not know too much about the flow of money through the body corporate of I.G. Farbenindustrie A.G.

Later, he organised an early evening meeting with Sir Harry McGowan, the Chairman of Imperial Chemical Industries. Meanwhile at four o’clock he met with the IRS financial section external authors of the IG report. A three man team, one from the Bank of England, one from HM Treasury, and a Christopher Matthews of Lloyds Bank International.

‘So, let me recap,’ and he looked down at his scribbled notes. ‘I’ve got IG is Germany’s greatest source of foreign exchange through the export of chemical products and revenues from royalty payments and patent sales. Revenue, you said estimated,’ he emphasised the ‘estimated,’ and looked accusingly at the trio, ‘is half a billion Reichsmarks,’ and after a moment, ‘give or take another possible half a billion,’ Cartwright added in his best sarcastic voice.

‘Major Cartwright, we have very little information over the flow of funds between subsidiaries. There is no real group consolidation as we know it,’ replied the indignant Bank of England economist, raising his voice in ending the reply, in his and his department’s defence.

‘Well, there is one, obviously, it’s just we have no access to it,’ said the HM Treasury man, in a quiet, reasoned voice.

‘Right. So we are clear that IG is a very profitable business.’ The three economists nodded their heads in unison. ‘What I am trying to get clear in my head is the ability, the flexibility, to use surplus funds for nefarious activities.’

‘What does that actually mean, Major Cartwright?’ Inquired Matthews. This was the first time Christopher Matthews, the junior of the three, had spoken.

Cartwright looked at Matthews and said slowly, with an exaggerated patient voice: ‘Is IG Farben splashing money about internationally to ensure the supply and import for internal storage of essential raw materials for build-up to war? That’s number one, and two, if there is indeed a policy of internal storage, how much annual import surplus is deemed required and which particular materials are deemed strategically necessary? That’s what I mean and that’s what I am interested in!’

The three economists looked at each other in astonishment. Matthews was the first to speak. ‘Major Cartwright, we do not have access to sensitive if not secret inter- and intra- commercial trade agreements between Group companies and third parties, internally in Germany or internationally, let alone access to the German Ministry of Economics,’ and then added, after a pause, ‘sorry.’

Christopher Matthews thought that Cartwright was about to blow a fuse. But Cartwright held himself in check, he responded in a voice reminiscent of a school teacher patiently explaining the obvious solution: ‘First you identify where IG Farben funds are going around the world. From that you move to identify foreign companies supplying IG Farben and therefore Germany. It then follows that the raw product can be identified. We can then check foreign company export ship manifests and thus enlighten ourselves regards volumes.’ He held up both arms, ‘Easy.’

The three economists were silent, they had nothing to say, each surprised at Cartwright’s naivety. Was it naivety or Cartwright’s determination to push the investigative envelope wider? Pull out all the stops! Make ‘em work for their money!

Matthews broke the impasse.

‘We did look at foreign company shareholding in IG. I refer you to the International Shareholder Section in Annex ‘J’.’ Matthews began to flick through pages in his ring-folder.

‘Yes, alright, I haven’t read that, yet,’ interrupted an irritated Cartwright, knowing that would be in the full report, the IRS/G.3, which came in a cardboard box now lying on the floor in the greenhouse, under the teleprinter table.

‘This then implies cooperation, commercially, and possibly of ongoing technical research sharing.’ Matthews continued, ‘About 6% of IG stock is owned by four international business-related companies.’ He found the section. ‘We have Francolor of France, with 51% of its stock owned by IG by the way; Solvay et Cie of Belgium; DuPont de Nemours of Delaware; and Imperial Chemicals Industries of this country.’ Matthews looked up at Cartwright. ‘And of course each of these combines have various trade, sales and patent licensing agreements with IG. It is therefore in their shareholders interest to cooperate with IG. It’s actually a gordian knot of international commercial self-interest.’

‘Right, moving on.’ Cartwright was glad of his opportune meeting with Sir Harry McGowan later. ‘What do we know about IG in the Americas?’ was the next question. Implication was again geared towards access to raw materials.

‘Major, we simply do not have the resources to do this sort of investigation justice. We are also up against what we call ‘camouflage companies.’ For example, under Spanish law, designed to protect home industry, heavy taxes are imposed on Spanish companies of which more than 25% of the capital is owned by a single foreign company. This would have meant that IG would have to pay out large sums of money as a result of its 50% participation in Fabricacion Nacional de Colorantes Y Explosivos S.A. Consequently just over half of its holding was transferred to Unicolor S.A. of Switzerland, a company controlled by IG. Corporation tax obligation erased by signatures on a Spanish tax return. That, Major, is not illegal. International companies will always seek to minimise tax obligations.’ The man from the Treasury looked at the other two, seeking support.

‘But we do have proof of IG attempts to dodge the United States Anti-Dumping Act of 1921 through the creation of camouflaged subsidiaries in Canada and Australia,’ chipped in Matthews. He felt that Cartwright needed something on the dastardly IG Farben. ‘We have included a section on American IG Farben. This company is controlled from Switzerland, but we have no information on its directors.’ Cartwright’s frustration came out as a long audible sigh.

‘But we do believe, nay suspect a strong link, possibly illegal, between American IG and IG Chemie registered in Switzerland and IG Farben of Ludwigshafen,’ continued the man from the Bank of England.

‘What does that actually mean?’ asked a now exasperated Cartwright.

‘Tax avoidance, for starters,’ said Matthews.

Mr John Haslett, a senior Bank of England official, who had decided early on in the meeting that it was his good fortune not to work directly for Major Cartwright, summed up. ‘To come back to your question Major, the foreign currency earned by international subsidiaries, camouflaged or not, and kept overseas, is, to us, a blank page. Funds from American subsidiaries are sent, we believe, to Switzerland. Quantity and transfer dates unknown. We do have a much better handle on legitimate, so to speak, earnings from export of various IG products from Germany. It all adds up, in our considered opinion, to a healthy pool of foreign currency to pay for raw materials.’

Matthews added, ‘We strongly believe that a substantial portion of international revenues is kept abroad, away from the German tax authorities – and, I have to say, with the probable knowledge of the current government, or perhaps we should say, certain members of government.’

‘The end justifies the means,’ concluded Cartwright wistfully, ‘and the objective of Hitler is to ensure national self-sufficiency, by whatever means.’

The meeting soon ended. Cartwright had not got to where he wanted to be. It threw up more questions than answers, and reinforced his deep foreboding, his fear of IG Farbenindustrie A.G. On a positive note, Cartwright had met young Christopher Matthews. When he found out that he was an auxiliary list Royal Air Force officer, then Matthews was most definitely to be snared, brought into the world of IRS.

***

The meeting with Sir Harry McGowan, chairman of Imperial Chemical Industries, was held on the first floor gentlemen’s smoking room of the Great Northern Hotel, Kings Cross. Sir Harry was to catch the 10.35 night train to Inverness for a long weekend at the estate of Lord Balvaird. The décor of the smoking room was that of a Pall Mall club; feel at home, a rest stop ready for that train journey to the long weekend shoot north of the border.

Cartwright thanked the busy chairman for meeting him at such short notice, and hoped the weekend would be a success. Yes, he did indeed know Lord Balvaird, a relative of his wife’s. Second cousin or perhaps third. ‘Please pass on Edwina and my best regards to Freddie and Clara.’

They sat in leather chesterfield armchairs opposite each other, separated by a small coffee table holding two glasses of whisky and a small jug of water.

Sir Harry was a clean-shaven, close-cropped-haired businessman of average height and weight. His piercing brown eyes ‘looked into your soul,’ Cartwright was to relate afterwards. He was dressed in a three piece country tweed and highly polished brown brogue shoes, ready for the trip up north. His Glaswegian accent had mellowed over the years, but was still there, and became more pronounced when strong sentiments were expressed. Here was a man who started work at the age of fifteen, and worked his way up from the shop-floor to becoming Managing Director of Nobel Industries Ltd, the company founded by Alfred Nobel, the philanthropist, explosives king, and chemicals magnate.

‘So, Major Cartwright of the Foreign Office, what is this subject of national importance that you need my thoughts and advice on?’

‘IG Farben.’ Was the abrupt reply, as Cartwright brought his glass of neat whisky to his lips.

Sir Harry McGowan’s private office had enquired after this Major Cartwright as soon as he had telephoned that morning, but had been given the go-around through numerous telephone pass-overs within the Foreign Office. A pass-the-parcel game where the music, in this case, didn’t stop. The intangible man. A Major Alastair Cartwright MC was indeed on the current Foreign Office civil servant list, and this fact was indeed acknowledged at a very senior level, but the problem was ascertaining his actual role in Whitehall. The Chairman’s office in ICI’s headquarters at Millbank prided itself in locating anyone anywhere. Even his formidable personal secretary, Miss Evershed, who had been with him since Nobel Industry days, was frustratingly stumped. This told the Chairman all he needed to know, for he was a man who could pick up the telephone and speak directly with the Prime Minister. The meeting was confirmed by a return phone call to the greenhouse.

‘What exactly do you want to know Major?’

‘Two questions. Briefly your commercial relationship with IG Farben, and secondly this coal-to-petrol method, or if you prefer, gasoline and ICI’s involvement in it. That’s it, Chairman.’

Sir Harry nodded his head, and was silent for a whole quarter of a minute. He took a sip of his whisky and water, and then another one. He was formulating a way to encapsulate the ICI coal-to-gasoline story into a short but succinct narrative.

‘May I answer the second question first?’ he asked politely. Cartwright smiled and nodded.

Sir Harry spoke quickly. ‘Like the Germans, we also had an explosives shortage during the last war, they, of course, more than us. The German Haber-Bosch process was well known, the difficulty was the commercial production of nitrogen and ammonia, and thence explosives. The trick was, if I may use the term, the combination of high temperature and very high pressure conditions in the presence of a particular catalytic mixture. We hadn’t mastered the trick, the physio-chemical balance required for such a particular reaction, and of course the mechanical and chemical engineering skills required for a high temperature, high pressure continuous commercial production plant. The Germans had nailed it. In 1917 our Government decided it should be in on the act as well and built a process plant at Billingham, Stockton on Tees, for the production of explosives.’ Sir Harry smiled and waved at someone behind Cartwright, and continued. ‘Germany kept details of the process secret; it was only after the war, with trade delegation visits and IG patent sharing, we learnt how to do it safely.’

‘So you bought the patent?’

‘No, we purchased the British licence to use the technology,’ he replied sharply, embarrassed to acknowledge paying for the privilege. ‘In 1920 we bought the Billingham site from the government, or actually Brunner Mond did. Money was invested, serious money was spent, Major Cartwright, then after the Mond merger, we, I mean ICI, decided on further capital expenditure, tripling the fertilizer production capacity of the Billingham plant. This was 1927, and just in time for the economic crisis of 1929 which led to the dramatic fall in demand for nitrogen fertilizer products.’ Sir Harry raised his hands from the arms of his chair, as if to say ‘win some, lose some.’

Sir Harry read Cartwright’s impatience on his face and in his light finger-tapping on the arms of the chesterfield armchair. ‘This is background to our coal-to-gasoline project, bear with me,’ he said soothingly.

‘By 1929, 1930, there was over fifty per cent fertilizer overcapacity at Billingham, the plant was running at a loss and the return on capital employed had dropped below our target of five per cent. ICI was left with expensive, under-utilised equipment. The Board was under pressure from shareholders to identify new markets for this stranded asset.’ The Chairman rolled his hand in a circular manner, indicating he was moving on to a new chapter in the life of Billingham. He continued, ‘Our existing knowledge base in coal hydrogenation, that simply means the use of hydrogen in a chemical reaction, yes, let’s leave it like that, was based on Mond’s earlier involvement.’ Sir Harry finished his whisky, and a waiter appeared immediately at his side. Yes indeed, a refill was a good idea. ‘Thank you.’ ‘So, we thought that a new product market could be developed for the high capital equipment now lying virtually idle. I slightly exaggerate, but you take my point. Coal-to-motor car gasoline was the logical product. The Bergius process of coal hydrogenation also required high pressure and high temperature and associated equipment. We lobbied for state support. Fuel security, domestic fuel production and all that.’

‘Your lobby for state aid was successful, was it not?’ interrupted Cartwright gently.

‘Oh yes, the Oil Fuel Board of the Committee of Imperial Defence was very supportive. We threw at them the idea of submarines sinking our oil tankers. What they all saw were German U-Boats! Remember, the Great War was only eleven years behind us, and they all had served in one capacity or another. Oh, yes, we most certainly got the Committee’s backing.

‘We got after it, as they say, Major. The aim was to establish whether production of gasoline from coal could be carried out economically. Plan was, as soon as we had completed its commercial development, we hoped to sell the technology to the major oil companies. Ironic, don’t you think,’ he said with a smile.

‘So we built a small pilot plant at our Billingham site. It worked and we were treating ten tons of coal a day. At first we were optimistic that large-scale production could produce gasoline that would be price competitive with imported fuel, even though the profitability of the operation would be small.’

Sir Harry shifted in his armchair and tilted his head upwards to look at the ceiling, remembering those days.

‘It was a commercial battle to compete with imported fuel, that was the crux of it. We fought with the Board of Trade: proposal versus counter-proposal, counter-counter-proposal against counter-proposal. We argued that development of a large-scale commercial plant would increase national fuel security. Once the technology had been developed, the plant could be expanded rapidly during an emergency. We also argued that the increase in demand for coal would create employment within the struggling coal industry, particularly in the North East, an area with one of the highest unemployment rates in the country.’ He moved his hand like a bat, ‘This went on and on, back and forth, this table tennis game.

‘To put it simply, picture in your mind’s eye an equation: the cost of coal plus plant operating costs plus fuel distribution costs against cost of imported fuel at a garage outlet. if the resultant is negative then it’s uneconomic. Each parameter can change and change dramatically in today’s interconnected world. We can make it complicated but real by introducing various taxes and tax bands embedded in this seemingly simple equation. To make the equation work, and make a profit, we needed a catalyst, not chemical but financial. Government support, a subsidy mechanism.’

He paused, and half rose from his armchair to shake someone’s hand who was leaving the waiting room.

‘Oil price volatility meant the project was too risky for us to pursue alone. In 1933, we approached the Board of Trade with a proposal that requested a guarantee that our domestic production of hydrocarbon oils would receive tariff protection equal to the current import duty of same. The Board of Trade agreed to the tariff protection, but stipulated a cap on profits from the enterprise of five per cent to quell any allegations of preference to ICI. We immediately began the re-configuration of the Billingham plant at Stockton. So to answer your question, yes we have the technology, and yes we can have a working commercial coal-to-gasoline at Billingham, but only if we can benefit from government subsidy. Some influential politicians are baulking at the subsidy. So we are in the hands of the Pantheon, the Houses of Parliament.’

As if on cue, at the end of Part One, the waiter appeared with refills.

Sir Harry waited for the waiter to take his leave. ‘Now to address your first question, and our relationship with IG Farben.

‘Running a chemical company is an expensive business. Think of the army of research scientists and engineers working on projects that lead nowhere; we abandon pilot plants, and start on something else; think of pilot and commercial plant building costs; then sales and competition fighting costs, national as well as international. The Great War produced big changes in the international chemical industry, Major Cartwright. Here in Britain and Germany, government dictated product and volume requirements. In both countries government-led coordination made the larger chemical firms get better acquainted with each other, and led to the formation of new associations and alliances. We here in Britain founded the Association of Chemical Manufacturers and in Germany, and it started with the dye people, they formed an association called the ‘Community of Interests’, which is the IG Farben of today. This interaction changed the post war chemical industry in Europe.’

Sir Harry bent over and added a dash of water to his whisky.

He continued: ‘During the war, we were producing at full capacity, medical drugs, dyes, fertilisers and explosives. Then comes the end of the war. A very sharp decrease in demand, we have over-capacity, and we have to scale back. Lower demand equals unemployment in the industry. This now becomes political. Both governments, here and in Germany, responded by introducing tariffs to solve the political and industrial problems. We had import restrictions and tariff walls and limited international trade. In Britain we had the Dyestuff Regulation Act of 1921 which prohibited the export of dyestuff for years, and the Import Duties Act of 1932 imposed tariff on imported goods. For countries like Germany, which was and indeed is, very export orientated, protectionism was a serious problem. In general, firms in both countries had over-capacity and this led to a radical restructuring of the industry via mergers and the formation of business understandings.

‘Most firms used the merger and acquisition route to restructure or rationalize in the wake of the economic depression which followed the war. IG Farben in Germany in 1925, and ICI, here at home, in 1926, were the result of this merger and amalgamation process.

‘In an effort to, how can I say, to relax competition further, to protect ourselves, our respective companies formed alliances with other international companies. For example, by the late 20s we had established a wee bit less than a thousand agreements covering all aspects of chemical production, and in 1927 we signed a ‘Patents and Process Agreement’ with American DuPont in order to reduce the technology gap between ICI and DuPont and IG. We believe IG Farben has probably double, close to two thousand international agreements with other firms. These multifarious contracts, I have to say, brought stability to our industry.’

‘When you mention agreements and business understandings, do you mean cartels?’ asked Cartwright.

Sir Harry’s head shrank back in his armchair, and hepursed his lips if he had heard something unpleasant, distasteful even. He replied: ‘The usual definition of a cartel is an association of companies with the sole purpose of maintaining high prices, restricting competition and making obscene profits. That is what most people think. Right?’

Cartwright did not respond.

‘I prefer to view a cartel arrangement as a business instrument to keep a company profitable.’ Sir Harry McGowan moved forward in his seat and stared at Cartwright, ready to defend his statement. ‘The word ‘cartel’ has bad press, Cartwright. In today’s business environment, so called international trade, global trade, globalization some call it, we have to adapt to survive.’ Sir Harry sat back in his armchair and crossed his legs. Defence rests its case.

He decided to continue, hammer the point home. The Glaswegian accent became more pronounced.

‘In our business we can talk about two important business understandings; dyes and fertilizer. In other sectors you have understandings, or cartels if you prefer, Cartwright. In the minerals and oil sectors, cartels are necessary international business tools. It offers us stability. We are in one with IG Farben, well actually more than one, dyes and fertilizer, where we can reduce over-production without the consequence of catastrophic price reduction leading to insolvency.

‘And to be more specific, we pay IG Farben various royalties for using their patents and they pay us for using ours. We also use IG Farben subsidiaries for our sales outlets in South America and parts of the Far East, and we in turn help IG’s products in countries where we are strong; Bayer drugs and Agfa photographic products in Africa and India, for example. In other words, Cartwright, the link is strong. Mutual aid through business understandings is the name of the game today – if one wants to stay in the game.’

He concluded, ‘I have a company to run and to build, shareholder value to protect, shareholder expectations to satisfy, and cash dividends to distribute each year like Father Christmas. A product price war is destructive and not very profitable. There you have it.’ Sir Harry raised his left hand, palm towards Cartwright, and raised his glass to finished off the whisky with his right. He clapped both hands down on the arms of his leather chesterfield. Here endeth the lesson on business reality.

Cartwright looked up at the octagonal wall clock to his left. Sir Harry had spoken for less than fifteen minutes, and he had learnt all he wanted to know.

Cartwright caught a taxi home. As the cab wove its way down Gower Street on its way south, he thought of the next move. He had decided to focus on key import products: fuel and iron ore for steel making. For now. The rise of the new German airforce seriously worried him, so priority was to learn more of the military aviation fuel business, and Matthews to be snared for real-time economic analysis.

He was both apprehensive and excited at the same time. He was apprehensive of the scale of the challenge and excited that he was going to do something. Lefoy, his country manager in Berlin, had lined up some interesting characters to fill in the gaps. This was the raison d’etre of his Industrial Resource Section.

By the time the taxi cab had reached Piccadilly Circus, he had decided a nightcap at his club would not be a bad idea. New instructions were passed to the driver.