Chemical Change

FOREIGN TRADE Chemical Change

In cartel-minded Britain, stolid, well-nosed Lord McGowan, 75-year-old chairman of the billion-dollar, globe-girdling Imperial Chemicals Industries, Ltd., has long been the staunchest champion of gentlemanly agreements which divide the world's markets. But this week. Lord McGowan reversed his field. Imperial Chemicals announced that it would invade the U.S. markets of its great & good friends, Wilmington's E. I. du Pont de Nemours & Co.

One thing that may have caused Lord McGowan to change his mind was the U.S. Department of Justice's suit which is coming up for trial next month. The suit charged that I.C.I, and Du Pont were operating a world chemical cartel (TIME, Jan. 17, 1944). Lord McGowan had denounced the "iniquitous charges," but quietly terminated I.C.I.'s 24-year-old agreements to share "patents and processes" with Du Pont.*

To enter the U.S. market, I.C.I, bought 70% of the outstanding stock of Arnold, Hoffman & Co., Inc. of Providence, R.I., one of the oldest (135 years) though least-known U.S. chemical companies. The price was high: I.C.I, had to pay $55 a share, twice what the stock had recently been selling for. To finance the $3,500,000 deal, shrewd Scotsman McGowan did not spend any of Britain's scarce dollars. He merely arranged to borrow the money from Manhattan's Guaranty Trust Co., will repay it from Arnold, Hoffman's U.S. earnings.

Its new company would barely permit I.C.I, to get a toe in the U.S. door: Arnold, Hoffman 1948 sales, biggest ever, totaled only $7,187,000, and sales for 1949 were down to $5,850,000. But Lord McGowan planned to expand his U.S. marketing facilities to handle some of the 12,000 products, ranging from dynamite to penicillin, made in I.C.I.'s 100-odd British plants. In Wilmington, Du Pont took the news calmly. Said a spokesman: "Du Pont has been competing vigorously with I.C.L in the British Empire, and it is logical to expect that in the British quest for dollar exchange they would try every means to better their competitive position in the U.S." In Washington, the Department of Justice said it would go right ahead with its trial to break up the alleged cartel.

*Under the agreements, the U.S. charged, I.C.I. left the U.S. and Central American markets exclusively to Du Pont, which in turn left the Empire market, except Canada and Newfoundland, exclusively to I.C.I.

This file is automatically generated by a robot program, so reader's discretion is required.