Destination New Jersey:
Synthetic rubber is a great material, in all of it's many forms. Many of the things we use everyday would not be possible without synthetic rubber. What most people don't know is that most of the technology for making synthetic rubber came out of the labs of German chemists before the second World War. So how did that technology come to the United States? No, it was not industrial espionage, it was through long talks and agreements between a few key people in two big companies, Standard Oil of New Jersey, and I. G. Farben in Germany.
Let's go back to that frustrating time right after World War I. The German chemical company Badische Anilin und Soda Fabrik, more commonly known today as BASF, begins distilling oil from brown coal, or lignite. Germany has no oil, and under the government's Four Year Plan, the chemists are forced to try and come up with a way to make oil and gasoline from the one natural resource they have plenty of, coal. Well, distilling the oil from the coal is not producing enough for the country's needs.
Just before the first World War, Dr. Friedrich Bergius invented a process to convert the brown coal directly into oil, which he humbly named the Bergius Process. It was a great idea, but there were many practical difficulties which made it impossible to operate on an industrial scale.
In the spring of 1925, the directors of BASF come to the United States to tour some industrial plants. One of the stops on the trip is to the New Jersey oil refineries of the Standard Oil company,the largest in the country. The Germans are quite impressed, and in 1926, BASF and Standard join to buy Gasolin A. G., a company in Germany that produces and distributes gasoline. Having an interest in the company, Frank Howard, an executive of the Standard Oil (NJ) Company, visits the BASF facility in Ludwigshafen, Germany.
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This is a great accomplishment. In the past, gasoline was distilled from crude oil, and it took four barrels of crude oil to make one barrel of gasoline. Also, most countries in the world did not have oil and have to buy it from other countries, but most countries have coal. Being impressed by these accomplishments, Standard wants a piece of the action. Since BASF has all this great technology and is not able to make it work on an industrial scale, Standard offers financial help in developing and perfecting the process.
Although they are interested, BASF cannot agree because they, and six other companies, have recently become part of the German industrial conglomerate, I. G. Farben, and the entire group has to decide on any and all such business.
In the summer of 1926, Dr. Carl Bosch, chairman of I. G. Farben, comes to the United States to tour Standard's oil operations. After seeing oil fields and refineries from New York to San Francisco, Dr. Bosch has a good impression of the size of the American oil industry, as well as the vast potential strength of America. He agrees that a partnership between Standard and I. G. Farben would be beneficial to both groups.
In a 1927 agreement, Standard agrees to cooperate technically in the development of the Bergius Process in the United States and to build and operate a plant with the capacity to produce 40,000 tons of hydrogenated oil products per year. I. G. Farben will keep all of the patents and licensing rights, but Standard will receive 50% of the royalties. If Standard makes any new developments, they will keep the patents and licensing and I. G. Farben will receive half of the royalties.
Standard still wants more and "buys" the rights to the Bergius Process for the entire world outside of Germany for the low, low price of 546,011 shares of Standard stock. This amounts to about 2% of Standard's total stock, and about $35,000,000.
In October of 1930, the two companies form the Joint American Study Company, or JASCO, as a forum for getting patents on joint projects. The originator of the new technology will have a 5/8 interest in the new patent, and the other group a 3/8 interest. Through this JASCO arrangement, German Buna rubber technology comes to America. This works well until the start of World War II when both the American and German governments frown on the two companies working together. After all their work, Standard does not want to loose all the time and money they put into getting Buna rubber ready for market, and I. G. Farben does not want to just give it away. So in 1939, the companies write up the Hague Agreement, in which Standard gets the rights to all JASCO processes, including synthetic rubber, in the United States, Great Britain, and France, while I. G. Farben gets the rest of the world. Standard buys back it's stock for a mere $20,000 and calls it even.
So, through a long series of patent trades and friendly agreements, which are greatly simplified here, the rights to German synthetic rubber technology comes to rest in the hands of the Standard Oil (NJ) Company. Not nearly as exciting as industrial espionage, but important to history. Soon, however, the Japanese will invade the Southeast Asian rubber plantations and the American government will say that the technology belonged to the people. So begins the American Synthetic Rubber Research Program.
While Standard was trying to get a hold of Farben's patents in 1925 and 1926, other, more interesting, things were happening:
In 1925, Congress passes the Kelly Air Mail Act, giving private airlines the job of flying the mail. Henry Ford's airline becomes the first to take advantage of this new law in 1926.In 1926, the famous American comedy duo, Laurel and Hardy, makes their first film, Putting Pants on Philip, which is released in 1927.
Also in 1926, Robert H. Goddard and coworkers build and fly the first liquid-propellant rocket.
2. Howard, Frank A. Buna Rubber: The Birth of an Industry, D. van Nostrand Company, Inc., 1947.
3. Purcell, Andrew T. and James V. Fusco. Butyl: The First Fifty Years. Exxon Corporation, 1987.