Hell's Cartel

by Diarmuid Jeffreys

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  THE FULL STORY behind the development of aspirin has been told at great length elsewhere, from its origins in the herbal treatments used by the ancient Egyptians through to the rediscovery of willow bark’s therapeutic potential as a fever reducer in the 1760s. Suffice to say, by the early nineteenth century, when scientists were beginning to tinker with the chemical composition of organic materials, it had become known that the leaves and bark of certain plants and trees, including willow, meadowsweet, and poplar, contain an active ingredient called salicin. The substance has many remarkable properties, one of the most notable of which is its suppressing effect on human temperature, and several chemists understandably became interested in trying to isolate it for use as a remedy. This they managed to do and gradually learned how to refine salicin to a synthetic equivalent, salicylic acid, which, when crystallized, could be more easily dispensed to patients.

  Unfortunately, salicylic acid has a corrosive effect on the lining of the stomach and is exceedingly disagreeable to take (as indeed is salicin). Although by the late nineteenth century its effectiveness as a treatment for rheumatic fever in particular had been proven by physicians, it had never really taken off as a commercial medicine because no one had been able to diminish its causticity. The one chemist who came close, Charles Gerhardt at Strasbourg in 1854, had tried extracting the hydrogen element of salicylic acid (responsible for the irritation to the stomach) and replacing it with a milder acetyl group, but the process was tricky and he managed only to obtain a crude and impure version of the final substance. Nonetheless, Gerhardt was the first person to chemically synthesize a recognizable form of acetylsalicylic acid. When we swallow an aspirin today that’s what we are taking—a compound called acetylsalicylic acid, or ASA. Sadly, Gerhardt found the whole procedure so complicated he decided to shelve it. In the decade or so following, various other chemists had a go at refining his process but with limited success. As a result, the medicine began to languish as just another of the stable of antipyretic substances that hadn’t quite made the grade.

  Interestingly, few of these antecedents featured in Bayer’s official version of how the drug finally came to market. According to a long-promulgated company legend, ASA’s creation was a strictly in-house affair. The father of Felix Hoffmann, one of Bayer’s scientists, suffered badly from rheumatism and had been taking salicylic acid to relieve the pain. As it affected his stomach, he asked his son to find a way to make it easier to take. Young Hoffmann set about his task, trying various formulas, until in a stroke of genius he reportedly came up with the original idea of combining salicylic acid with an acetyl group. The combination proved effective and so aspirin was invented.

  The real story is more complicated. The idea for taking a new look at salicylic acid actually came from Arthur Eichengrün—Hoffmann’s superior in the pharmaceutical department who was setting his team of young researchers a range of targets in accordance with instructions issued by Carl Duisberg to all Bayer scientists on their first day at the company. Their task, Duisberg explained was to

  find new ways of presenting familiar, especially patented pharmaceuticals by making use of the whole range of chemical, pharmaceutical, physiological, and medical literature and also discover new, technically utilizable physiological properties in new or familiar substances, so that the dye works are in a position to include the specialties of competing firms in their manufacture and bring to the market and introduce new pharmaceutical preparations.

  Almost certainly Eichengrün told Hoffmann to go to the library and read up on the medical literature—and there he would have found Charles Gerhardt’s account of his 1854 experiments.*

  Hoffmann got to work and before long—on August 10, 1897, to be exact—he entered the successful formula into his journal, noting that he had found a way of making ASA that neutralized the chemical element of salicylic acid responsible for its stomach-turning acidity. This was essentially what Gerhardt had done forty years earlier but Hoffmann’s procedure was simpler and more effective.

  So far so good, but now the new substance had to be handed over to the company’s pharmacology unit for testing. Arthur Eichengrün was present several weeks later at ASA’s first evaluation and to his delight it performed very effectively. Obviously, Eichengrün felt, it should go on to the next stage, clinical trials. But Heinrich Dreser, the unit’s cautious chief pharmacologist, had other ideas. Salicylic acid enfeebled the heart, he announced (some doctors believed this was so because the high doses given to rheumatic patients sometimes made the heart race), and acetylsalicylic acid would be just the same. He refused to give the drug a seal of approval.

  Eichengrün was furious but Dreser was immovable and, in any case, all his attention was taken up with another Hoffmann “discovery,” made at almost the same time. This was a substance called diacetylmorphine (an opium derivative), and Dreser believed it had stronger commercial potential, both as a remedy for coughing fits and as a drinkable health tonic.† Indeed, the volunteers in the Bayer factory who tried it loved the substance so much that Dreser gave it a name to reflect the heroic way it made them feel. Thus heroin was created and Bayer and Hoffmann earned the curious distinction of “discovering” in the same fortnight one of the most useful substances known to medicine and one of the most deadly. Unfortunately, getting heroin ready for manufacture was a lengthy process that left no one much energy for Hoffmann’s other formulation. So Eichengrün was forced to act on his own initiative.

  He secretly arranged for some doctors in Berlin to conduct trials and within weeks they were returning glowing assessments. Not only was ASA free of the unpleasant side effects associated with salicylic acid, it also appeared to have another remarkable property—it was a general-purpose analgesic. Eichengrün immediately circulated these reports among the laboratory staff. Hopeful, Carl Duisberg ordered another full set of trials. Yet again the responses were enthusiastic and this time Dreser had to concede. In accordance with standard company practice, ASA was baptized with a typically memorable brand name and then it went into production.

  Aspirin was launched quietly with only a few hundred samples sent out to doctors across Germany in 1899. But it quickly took off. Patients declared there had never been anything like it for relieving their aches and pains. Word spread and soon Bayer had an extraordinary best seller on its hands.

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  BY THE DAWN of the new century, innovative developments such as these had given the leading German dyestuff producers an unshakable grip on the global chemical industry’s key technologies and largest markets, an ascendancy they would strain every sinew to maintain until their power reached its zenith in the IG Farben era. For now, of course, competition between them continued as fiercely as ever, and there was little diminution in their appetite for encroaching on one another’s specialist fields whenever they could. Hoechst, for example, mirrored Bayer’s growing success with pharmaceuticals when it invented Novocain, the local anesthetic, in 1900, and both companies continued to challenge BASF’s lead in synthetic dyes. Other German dye firms—Agfa, Kalle, Cassella, and Weiler-ter-Meer, to name but a few—also remained strong contenders and in some novel areas of business were forging far ahead: in 1898, for example, Agfa began manufacturing photographic X-ray plates for use in the new medical science of radiology. But, collectively, these firms’ dominance over their international rivals—even the biggest of them—was very clear. The French and British chemical industries, having started so boldly in the middle years of the nineteenth century, were in a woeful condition fifty years later. Uncompetitive, inefficient, bereft of initiative, and badly managed, they had all but given up the ghost.

  Belatedly, there was some recognition that this sorry state of affairs had gone on long enough. In 1906, in an article to mark the jubilee of William Perkin’s discovery of mauve, the Daily Telegraph noted caustically, “We have forfeited our heritage, and upon the foundation of an Englishman’s work the superstructure of the commanding scientific
industry in the Fatherland has been erected.” And at long last in the political sphere moves were afoot to amend British patent laws, which had hitherto failed to ensure that foreign companies worked their protected processes on British soil.* It would still be some years, however, before anyone would truly comprehend the strategic consequences of Germany’s triumph.

  In the meanwhile, the Rhineland chemical chiefs enjoyed their preeminence, mischievously rubbing salt into their foreign rivals’ wounds (particularly those of the British) whenever the opportunity occurred. In 1900, for example, Heinrich Brunck, the boss of BASF, outraged public opinion in London by suggesting that all Indian indigo producers should switch to growing food instead. And Carl Duisberg, never shy about being forthright, noted that Britain could hardly complain about German success in one industry when it had for so long enjoyed a lead in many others. After all, it wasn’t Germany’s fault that the British had failed to display the right degrees of Teutonic forbearance and hard work necessary to allow its chemical industry to thrive. “It requires,” he said, “a singular ability to wait and abide things coming, combined with endless patience and trouble.… We Germans possess in a special degree this quality of working and waiting at the same time and of taking pleasure in scientific results without technical success.”

  The fruits of this patience were beginning to flood the world’s markets. Over the next few years a cornucopia of remarkable new products would follow dyes and pharmaceuticals out of Germany’s chemical factories: soaps, detergents, photographic materials, printing inks, fertilizers, paints, glazes, explosives, chemical processes for iron and steel production (which were also beginning to outstrip those of Britain and were already well beyond France), and much, much more. To the consternation of its competitors, Germany was becoming an economic and industrial powerhouse. When allied to the growing political and military ambitions of its young imperial dynasty and the Junker class that supported it, this was cause for deep concern.

  2

  THE GOLDEN YEARS

  In 1947, when the IG Farben defendants at Nuremberg were mulling over the long sequence of events that had brought them to the Palace of Justice, the first decade of the twentieth century would have stood out as a golden age for their industry, a period of comparative calm when everything still seemed gloriously possible. It is true that the international atmosphere was turning sour and that bellicose voices were echoing across Europe. But Germany’s industrial chemists had good reasons for optimism. Business was buoyant and an expanding array of innovative products had propelled their firms to a dominant position. Until foreign competitors were able to mount an effective challenge, BASF, Bayer, Hoechst, and the rest had the field to themselves.

  They used the time to develop more extraordinary new technologies, including one discovery that would have a significant effect on the lives of millions. Innovation in those years was not restricted, however, to new science or new products. The industry’s rapid international expansion, its relentless domestic competitiveness, and the sheer novelty of many of its manufacturing processes had often thrown up complex problems. But these very crises also sometimes opened up unexpected avenues to further growth and consolidation. By learning how to identify and take advantage of such opportunities, those running Germany’s chemical businesses had become strategically sophisticated in their thinking and better able to measure risk against likely reward. Their more mature outlook allowed them, for the first time, to recognize fully the merits of working in concert rather than in isolation.

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  AS THE NEW CENTURY broke, no company was more golden than Bayer. Most of its medicines were selling well and aspirin, one of its most recent inventions, was a worldwide success.* Although the product’s launch had been a modest affair, soon thousands of physicians were clamoring to try it. A rash of confirming scientific articles appeared—an astounding 160 of them were published in its first three years—and with each fervent endorsement aspirin’s reputation grew. Its advocates realized it was much more than just a simple, if effective, antifever treatment. It was a powerful remedy for a range of other conditions, too—headache, toothache, neuralgia, migraine, the common cold, influenza, “alcoholic indisposition,” tonsillitis, and arthritis, to name just a few. Prescription sales began to soar.

  But protecting and exploiting this success wasn’t as straightforward as it might have seemed. One of the company’s first acts had been to apply for worldwide patents on the discovery, yet to Carl Duisberg’s great consternation the claim was rejected in Germany and across much of Europe, the authorities judging that Charles Gerhardt and other scientists from the 1850s onward had devised the medicine’s chemical formula before Bayer’s Felix Hoffmann. In the world’s two largest potential markets, Britain and the United States, patent officials adopted a less stringent attitude and gave Bayer lucrative exclusive rights over the drug’s production and sale—albeit only until 1916 and 1917, respectively.* Elsewhere it could only rely on its trademark of the aspirin brand name. Of course, Duisberg knew that, properly exploited, a brand name could be an even greater asset than a patent; as he had learned from the company’s earlier success with Phenacetin, if a manufacturer could fix the name of a product in the mind of consumers, they would return to it again and again, no matter how effective or inexpensive a rival’s identical but differently branded offering might be. But it would be harder to pull off the same trick with aspirin because the international medical community, increasingly concerned about the indiscriminate sale of harmful quack remedies, had begun to frown on any attempt to advertise prescription medicines.

  Even as the company’s marketing specialists were working out how to get around this problem, Carl Duisberg was wrestling with another. Bayer’s American business was conducted through a subsidiary, the Farbenfabriken of Elberfeld Company, which had been established in New York to handle sales of its dyestuffs and other chemicals. Historically these sales had made a healthy contribution to Bayer profits, but the recent move into pharmaceuticals had been more difficult. Although Bayer had won a U.S. patent on Phenacetin, high import tariffs had made the product an attractive target for smugglers who bought it cheaply in Europe and dumped it on the American black market. Bayer had fought back through the courts with injunctions and infringement claims but the loss of revenue had still been considerable. The situation was only likely to worsen in 1906 when the Phenacetin patent expired and legitimate American competitors would be able to sell the drug cheaply as well.

  Determined to prevent the same fate for aspirin and other products, Duisberg set sail for America in 1903 to explore a possible solution. If Bayer drugs could be manufactured in the United States rather than Germany they would be tariff-free, bringing down the price to consumers and depriving bootleggers and mainstream rivals of their competitive advantage. Duisberg didn’t much like the loss of control this would entail—as an arch centralist he found the idea of a semiautonomous U.S. operation alarming, and he was worried that it would cause him “a lot of anger and tedious work”—but he couldn’t see that he had much choice.

  He found the answer at Rensselaer in upstate New York, where Bayer owned a stake in a small manufacturing firm, the Hudson River Aniline and Color Works. It was an untidy little dyestuffs business but the site had great potential. The area had good communications links and—a useful bonus—a large pool of immigrant German labor in nearby Albany. If Bayer acquired the rest of the company and then invested heavily in a new plant and facilities for pharmaceutical production (he estimated the total cost at around $200,000), it would have an American home for its drug production and a base for any further expansion. Swallowing his misgivings, Duisberg concluded the deal.*

  Before returning to Germany, Bayer’s boss embarked on a grand fact-finding tour of American industry. For the most part he wasn’t impressed. The plants and factories were old-fashioned and ill-equipped, their managers uncouth, badly educated, and lacking in ambition. More troubling, for someone who had rigid ideas abo
ut the correct relationship with labor, was that the workers appeared to be obsessed with gaining union rights. On May 13, 1903, a few days after he returned to New York to prepare for his journey home, he was invited to share his wisdom at a lecture to the city’s Chemical Society. The organizers presumably expected a few platitudinous remarks about the importance of science; what they got instead was a tirade. In his usual forthright manner, Duisberg told the audience that labor was strangling the nation’s economic growth and that, as a result, Americans were “not able to perform the exact and exhausting work necessary to make the principles of chemical science fruitful for industry.” To anyone who knew Duisberg well such views were consistent with his long-held belief that Teutonic patience was indispensable to chemical innovation; indeed, he was to make much the same complaint about the British a few years later. But his New York listeners were outraged. He was heckled from the floor and booed off the stage at the end of his speech. When he finally caught the boat home the following week, the city’s newspapers announced that they were glad to see the back of him.

  On the whole, though, Duisberg counted the visit a great success. He had secured his company’s immediate future in America and laid the groundwork for further expansion. He had also—despite his outburst in New York—been deeply impressed by at least one aspect of American business: the power of the big American industrial trusts, notably John D. Rockefeller’s Standard Oil. The very scale of these cartels, the way they managed to mitigate damaging competition by coordinating their efforts on pricing and supply (despite the 1890 Sherman Antitrust Act, which was supposed to outlaw such things), was an inspiration to a man whose career had been forged in the crucible of German industrial rivalry. He spent the voyage home deep in thought.