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Heinrich Albert


Dr. Hugo Schweitzer and the Great Phenol Plot

Dr. Hugo Schweitzer

Dr. Hugo Schweitzer

Dr. Hugo Schweitzer headed the U.S. subsidiary of Bayer Corporation. He had come to the United States in the 1890s as a chemist, climbed the corporate ladder and became one of the top CEOs in the American economy. He also remained on retainer by the German army. Schweitzer was an industrial spy - and a tremendous asset to the German Secret War Council in World War I. Schweitzer had impressed the head of the Secret War Council, Heinrich Albert, through his integrity, absolute loyalty to the German cause and intellectual capability. The German pharmaceutical executive theorized early in the war in an article titled, “Chemists’ War” that the chemical industry was the key to defeating Germany’s enemies. His ideas turned out to have prophetic value, considering the role of chemical and biological weapons used later in the war. After founding the German Publication Society, raising significant contributions from the German- American community, and working with Albert and Dernburg on propaganda projects, Schweitzer wanted to do more. He inundated  Albert’s office with a barrage of suggestions in the spring of 1915, as the German agents in New York embarked on finding strategic raw materials that could disrupt the American production of explosives, arms, and ammunition. The business executive and formidable chemist identified a chemical hardly known for its strategic value: phenol, also known as carbolic acid. This chemical compound, which is derived from crude oil, is used in many industrial products, mainly all kinds of polycarbonates and polymers, as well as detergents, and pharmaceuticals such as Aspirin. However, carbolic acid also was a key ingredient in the production of TNT. The price of carbolic acid increased as the American munitions industry boomed. Shortages of this crucial ingredient in Aspirin haunted Bayer’s Rensselaer, New York factory that produced this wonder drug.

Dr. Schweitzer immediately saw a tremendous opportunity to procure the necessary phenol for the Bayer Chemical Company while, at the same time, removing its availability for the explosives industry. He proposed to Albert and his team in April 1915 to build a factory that processed benzene into phenol and picric acid. This factory would have cost an estimated $100,000, and would have cornered the entire high explosives market. Not ready to invest in a second factory, the idea remained on the back burner while the team explored other options to limit the supply of strategic chemicals. After a barrage of suggestions and market data on the chemical industry, Schweitzer received orders to corner the high
explosives market through purchases of picric acid, a key ingredient of TNT, in June 1915.

Despite serious efforts using Stallforth and various straw men, and despite offering contracts above market price, Schweitzer could not get a contract with the American picric acid manufacturers. While his idea for a German-owned factory wound its way through the Secret War Council’s decision-making process, another formidable American inventor and entrepreneur chomped at the bit. Suffering from shortages of carbolic acid for his own ventures, Thomas Edison decided to build his own phenol refining plant in Silver Lake, New Jersey. Edison had no designs on participating in the booming war industry. Rather, the inventor of the phonograph urgently needed phenol for his booming vinyl record production company. Naturally, Edison’s plans quickly circulated in the chemical industry and reached the ears of Dr. Schweitzer. The Bayer executive immediately entered into  negotiations with Edison to secure excess production for his Aspirin production and prevent phenol from reaching explosives manufacturers. 

Albert agreed to finance the purchase of Edison’s entire annual excess output. Bayer Aspirin, a much-needed product in the domestic U.S. market, became the ideal cover for the project. After the Interior Department gave the green light for the investment, Schweitzer secured 1.2 million pounds of phenol at the end of June, virtually locking down the available U.S. capacities for the entire year. Without phenol, there would be no picric acid. Albert spent $1.3 million ($27.3 million in today’s value) on the contract. Schweitzer and Albert created a web of dummy companies to obscure the underlying mechanics of the operation. Edison’s phenol went to the Chemical Exchange Association, a post office box brokerage firm in New York. The actual deliveries went to the Heyden Chemical Works in Garfield, New Jersey, a subsidiary of the Chemische Fabrik von Heyden in Radebeul, Germany. As was the case with most German industrial producers, the Heyden concern in Germany had been requisitioned for the war and Albert Ballin. Phenol and derivative products went from Garfield directly to Bayer. Dr. Schweitzer sold off what Bayer did not need to other end-uses not considered detrimental to the German war effort. 

The action severely affected the U.S. markets. The price for toluene and picric acid, as well as for all related high explosives, skyrocketed as a result of the German actions. So successful and profitable was the project that Dr. Schweitzer “gave a lavish private dinner at New York’s swanky Hotel Astor in honor of Heinrich Albert. It was a happy evening because behind all the backslapping, champagne and cigars lay the knowledge that Schweitzer had pulled off a remarkable coup… Schweitzer now controlled one of the few available sources of phenol in America and was set to make a fortune.” 

The success of the German team in acting unrecognized behind the scenes of the American munitions industry was not long lived. It was Albert himself who accidentally broke the seal of silence in the end. He had his briefcase snatched on July 24, 1915. The phenol purchases suddenly graced the first pages of American dailies. Albert, teasingly called “minister without portfolio” in the press, offered to resign and return to Germany as a result, but was turned down flatly. Interestingly, nothing about the clandestine projects was illegal, which prompted the publication rather than legal action in the first place. Edison eventually cancelled the deliveries to Heyden and Bayer under pressure. While Albert used his lawyer, Norvin Lindheim, to enforce the signed and legal contracts, the war was rapidly entering a new, more violent stage on the American continent. Despite the setback, the Bridgeport project and the “Great Phenol Plot” remained the most successful German secret missions of the first war year. Heinrich Albert praised Dr. Schweitzer’s success in a letter later in the war:

The breadth of highmindedness [sic] with which you at that time immediately entered into the plan has borne fruit as follows: One and a half million pounds of carbolic acid have been kept from the Allies. Out of this one and a half million pounds of carbolic acid four and one-half [sic] million pounds of picric acid can be produced. This tremendous quantity of explosives stuffs has been withheld from the Allies by your contract. In order to give one an idea of this enormous quantity the following figures are of interest: Four million five hundred thousand pounds equals [sic] 2,250 tons of explosives. A railroad freight car is loaded with 20 tons of explosives. The 2,250 tons would therefore fill 112 railway cars. A freight train with explosives consist [sic] chiefly of 40 freight cars, so that the 4,500,000 pounds of explosives would fill three railroad trains with 40 cars each. Now one should picture to himself what a military coup would be accomplished by an army leader if he should succeed in destroying three railroad trains of 40 cars, containing four and a half
million pounds of explosives.

German Military Attache in the U.S., Franz Von Papen, proudly filed a report on May 18, 1915 to the Imperial War Ministry announcing, 

All reports received here – from the English press as well as from the negotiations of the Allies with munitions-makers [sic] here – show that there is a great shortage of ammunition in
Russia, and that the needs of the English with their apparently enormous expenditure of ammunition during the last weeks, are nowhere near being met.