Summary of report on Krupp Nirosta - page 1

SUMMARY OF REPORT ON KRUPP NIROSTA Following ie a resume of the information contained in the Report on the Krupp Niros ta Company by the Department of Justice, Economic Warfare Section, 19Ui, which the undersigned studied in compliance with Mr. Gantt's request. Copies of the report will be forwarded as soon as available. 1. Organisation. The Krupp Niros ta Company was organised as a patent holding company under the laws of Delaware in 1928 in order to enable Krupp to re-enter the American stainless stall field from which it was ousted in World War I. Through this company Krupp was able to effeot agreements with leading American steel producers for price-fixing and eliminating competition. Although the patents assigned to the company by Krupp were of minor importance, American companies were eager for such an arrangement. At the time of the foundation of Krupp Niros ta, the American Krupp firm and the American Ludlum Steel Company were the holders of almost all shares. Subsequently, Crucible Steel, Republic Steel, Drive i^-Harrie Company, and Pelree Aubert, a French industrialist, became stockholders of a small amount of Niros ta shares by invitation of Nirosta. 2. Restriction of Stainless Steel Production. After having obtained control о/ the patents of Ludlum and drucible, Wires ta was able to restrict production by licensing important companies and by strictly limiting the granting of licenses to additional companies. As a result of this policy, in the Hi years of its existence (1928-19U2), Nirosta issued only 62 licenses, 10 of which were important. Ъу means of these patents, Nirosta was able to dictate prices since each license for a patented alloy had a price schedule attached. This was a very attractive inducement to the important companies who were otherwise only getting patents of little value. There is no indica¬ tion that аду of the important companies apposed this price fixing policy. Nirosta kept its American stainless steel licenses out of the export field. Thus the market for the American companies was territorial- restricted to U.S. and Canada, whereas all export was reserved to Krupp. 3. Economic Intelligence. Nirosta licensees were required to furbish the company with production reports which were subsequently forwarded to Krupp in Essen. Numerous visits of Krupp representatives to American steel plants were arranged by Nirosta , and their officials travelled frequently to Germany. Niroeta k*p+ Ki-upp informed of the latest American development# in steel, while Krupp withheld pertinent technical information. The motive, however, seems to have been only of a mercenary nature. For money, Krupp would furnish the information. U. Camouflage of German Control. In May 1937 Krupp transferred its shares to do Sary and Company, a Dutch banking fim, but actually retained control. With the war approaching Krupp further concealed its control of Niroeta, by transferring the shares hitherto held by de Вагу to Wolfraaem, a Swiss company.