The Heirs of I. G. Farben

L. G. Farben was the largest corporation in Germany and the largest chemical corporation in the world. This organization planned and schemed as a tool of the Nazi regime. The Allied Control Council has agreed that the economic power of cartels, syndicates, trusts and combines will be eliminated. We are committed and determined to seek out and destroy the sources of Germany's once powerful aggressive industrial might.

Thus in 1945 did a Senate Military Affairs subcommittee hear Major General John H. Hilldring, the War Department's chief of U.S. military government and decartelization in Germany, pledge to break up the $2.8 billion Farben chemical trust. Farben had held an interest--often a controlling interest--in 379 German companies and 400 others. The Allies enthusiastically enforced this policy of dismemberment. They imprisoned 13 of Farben's top 23 executives as war criminals, stripped Farben of $1 billion worth of its assets and of its 30,000 patents. The Russians and Poles swallowed the three-fifths of Farben that lay in eastern Germany, including its biggest single chemical works and its largest synthetic-rubber plant. Farben plants in the Western occupation zones were divided into 44 separate companies.

That was the end of Farben as such. But it was the beginning of an amazing recovery by the free-enterprising successors to the cartel, which has resulted in bigger sales than their prewar parent ever had. In the postwar German boom, Farben's vigorous successor companies have won back far more of their immense prewar business and prestige than the most optimistic German had hoped for. Sales of the three biggest companies last year topped $1.09 billion, just over Farben's prewar total; and they are rising at the rate of 12% a year (but are still well behind Du Font's $1.89 billion). Even so, the German chemical industry has grown so fast that the trio accounts for but one-third of all West German chemical sales. Yet it holds 7% of the capital invested in West German companies, employs 2% of the country's industrial work force.

From Ashes to Atoms. Fastest growing of the top three Farben heirs is Farbwerke Hoechst near Frankfurt, whose moving force is energetic Board Chairman Karl Winnacker, 53, a wartime Farben plant manager. Hoechst's sales--antibiotics, synthetic fibers, cellophane and oxygen--rocketed 17% last year to $355 million. Now the company is taking German industry's first steps toward harnessing the atom. It operates a nuclear research laboratory outside Frankfurt and is building a heavy-water plant (annual capacity: six tons) that will be among Europe's biggest when completed this year. Last week, with Atomic Energy Commission approval. North American Aviation Inc. sent to Hoechst the final parts of a 50-kw. U.S. nuclear research reactor that uses heavy water. Hoechst will donate the reactor to Frankfurt University, which will conduct nuclear experiments for Hoechst and other German companies.

A month ago the biggest of Farben's successors, Farbenfabriken Bayer of Le-verkusen. announced one of its most am bitious projects. With Anglo-Iranian Oil Co.'s German subsidiary, Bayer will build a $60 million plant near Cologne to crack 2,100,000 bbl. of oil a year into basic chemicals for plastics and synthetic fabrics. This will vastly expand Bayer's production of 13,000 different chemicals, dyes, drugs, resins and photographic products (Agfa), which last year rang up $380 million in sales.

Into the World Market. Bossed by Dr. Ulrich Haberland, 56, who ran two Bayer plants during the war and was picked by the British at war's end to direct the combine of Farben plants that now make up Bayer, the company is rapidly moving into foreign markets. Burgeoning Bayer has recently opened plants in Argentina, Brazil and Chile; it is building another in Mexico and, together with Farbwerke Hoechst, will add still another in Pakistan. In the U.S. it owns a 50-50 interest, with Monsanto Chemical Co., in West Virginia's Mobay Chemical Co. (polyurethane plastics), and a 50% interest with Pittsburgh Coke & Chemical Co. in Manhattan's Chemagro Corp. (insecticides).

Close behind Bayer among the Farben heirs is Badische Anilin-und Soda-Fabrik (B.A.S.F.) of Ludwigshafen, with sales of $357 million from chemicals, plastics, dyes, fertilizers, insecticides. Worst damaged of the big three, B.A.S.F. saw its Rhineside plant at Ludwigshafen 45% bombed out, started up again in 1945 with only 800 workers. Today the smoky, sprawling plant is Western Europe's biggest chemical unit with 36,600 workers. B.A.S.F. also employs 11,000 at its Auguste-Victoria coal mine in the Ruhr. Masterminding B.A.S.F.'s comeback is its wartime head, Chairman Carl Wurster, 56, who was acquitted at Nurnberg on charges of plundering occupied countries and employing slave labor.

Pressure v. Pressure. How did the Farben successors soar so high so fast? Answered a West German industrialist: "In physics we have the law that pressure brings forth counterpressure. The Allies exerted great pressure on Germany. In return, we exerted great counterpressure. And to get our minds off the dark future, we also worked like hell."

The splinter companies of the war-racked Farben trust started working from the moment the shooting stopped. Bayer got the first postwar production permit in the British occupation zone, and the other Farben companies rushed to follow. The market was enormous, since Germany had no money to import such vitally needed products as drugs, fertilizers and dyes. To replace the plants and patents lost to the Allies, the companies plowed back 20% of their sales into buildings and research. B.A.S.F., for example, has applied for 3,900 new chemical patents since the war, now bases only 200 of its thousands of chemical products on pre-1945 patents.

While the Farben heirs built up, the Allies broke down in bickering over how to take Farben apart. U.S. decartelizers demanded a complete breakup into many splinter companies; the British wanted sizable firms. So did the French, who also desired to absorb some rich Farben plants located near France. German negotiators, holding fast to their plan for big successor companies, utilized the dispute among the victors to drag out the talks and wait for the political climate to change. By 1950 the Western Allies had decided that the U.S.S.R. was really the enemy, and that it would be good economics and good politics to encourage a strong West German chemical industry. They accepted the German plan almost intact, agreed to split Farben into only three big companies and nine lesser ones. But by 1954 the three giants had absorbed most of the nine smaller units, leaving only the big three and two lesser companies.

New Problems. Despite their quick comeback, the companies are still licking some battle wounds. As the world leader in chemical sales, Germany in 1938 held 24% of the world chemical trade v. 15% for the U.S.; today West Germany has 14%, the U.S. 23%. Among the reasons: Farben successors are cut off from many of their eastern sources of supply, thus must pay up to three times as much as U.S. competitors for some raw materials. And their productivity is below the U.S. level because old, war-weary equipment is still being replaced.

The fact that the companies neatly complement each other has stirred up some fears in the West that they might recombine. From time to time in the past, the managers of the companies have heartily condemned the deconcentration of Farben as being uneconomical and inefficient. But now they declare that there is no intent to re-form the competition-stifling Farben trust. A legal reason is that such a movement would crash head-on with West Germany's new anticartel law (TIME, July 15). It would also downgrade the men who have built up rank in the separate companies. Even more important, Farben's prosperous heirs are doing so well that the three fast-moving, flexible companies can compete far better in world markets than one unwieldy colossus.

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