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Sterling Products Inc. (V)

Sterling Products, Inc., Manufacturer

Chapter 5 – Sterling Between the Wars

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QUOTES FROM A 1922 INVESTMENT EVALUATION OF STERLING PRODUCTS

         Two major themes dominate the history of Sterling between World War I and World War II.  The first is its enormous growth resulting from its gathering a wide variety of patent medicines within its ambit, which, toward the end of the decade, brought forth the formation of a very early industrial conglomerate (an aggregation of unrelated businesses).1  The second is its ongoing and intricate course of dealings with the German company, Bayer, which produced not only complicated agreements dividing sales of various medicines, patent and otherwise, all around the world, that led to more charges against, and condemnation of, Sterling as World War II loomed, but also produced an array of significant ethical (prescription only) medicines that permanently changed the practice of medicine by providing doctors with the first substances that genuinely killed disease-causing organisms and saved lives.

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COMPLEMENTARY CONVENTION BOX OF STERLING PRODUCTS 1925c

          With respect to its growth as a company, to complement its acquisition of aspirin, Sterling seems to have embarked on a parallel campaign to acquire as many as it could of the best-selling patent medicines then still on the market.  While the rules that govern sales of such drugs were virtually non-existent in the 1920s, remained hazy for the next forty years, and presently still require sharpening and clarification from time to time, the marketplace itself – with minimal help from the Pure Food & Drug Act and ongoing pressure from the American Medical Association – had begun to sort those products that had some efficacy from those which were completely useless or even dangerous.  This entire category of products was beginning its own slow evolution toward today’s status as “over-the-counter medicines.”

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PARTIAL LIST OF STERLING HOLDINGS AS LISTED IN EXHIBIT FOR CONGRESSIONAL INVESTIGATION OF FEDERAL DRUG ADMINISTRATION CONDUCTED IN 1930

           However, the first major company Sterling scooped up after the end of World War I was Wells, Richardson Co., a New England based drug wholesaler with not only a distinguished company history, but, more importantly, a long course of profitable years and no outstanding debt.  Its assets were yet another golden egg in the basket of Sterling’s balance sheet.  The next noteworthy acquisition was the Charles H. Phillips Chemical Co. which brought Phillips Milk of Magnesia into the Sterling family.  A third company, itself intricately assembled from even smaller companies, was the Centaur Co., which brought Castoria to Sterling.  Other companies added included Scott & Bowne, with its popular Scott’s Emulsion, as well as the Bovinine Co., and the Antidolor Manufacturing Co.  Note that all of the major products Sterling assimilated – Phillips Milk of Magnesia, Castoria and Scott’s Emulsion – were varieties of laxatives.  It is stunning proof of Sterling’s foresight that all of these products remain readily available on the web today, even if they have passed into the portfolios of other pharmaceutical companies since Sterling ceased to exist.  Piling growth upon growth, in 1926, Sterling itself launched its American Home Products division, which began its own rapid acquisition of companies that immediately linked it with the Philadelphia manufacturing chemists, John Wyeth & Brother, as well as W.H. Hill Co., O.W. Jadwin Co., Kolynis Co., Pepsin Syrup Co, St. Jacob’s Oil Co., and Whitehall Pharmacal Co.  The colorful histories of each of these patent medicine companies and their products before their acquisition by Sterling will be explored in subsequent chapters of this article.  Then, as alluded to above and discussed in-depth in subsequent installments, Sterling tried to emulate the patterns of certain industries in other nations by fashioning its own mega-corporation.  The one common thread that tied together the various products ultimately lumped together from several disparate industries is that they all required the support of endless exposure of continuous advertising and prominent shelf display that Sterling was used to arranging.

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1922 POSTCARD VIEW OF GERMAN BAYER HEADQUARTERS AT LEVERKUSEN

          The second major aspect of Sterling’s inter-war history is its continuing relationship with Bayer.  Bayer was a world-wide dominion.  Once World War I ended, it would have liked to reclaim its aspirin properties in the United States, but Sterling, as the legal purchaser from the U.S. Custodian of Enemy Property, blocked that avenue.  Sterling also managed to buy the British Commonwealth rights to Bayer’s trademarks from the British Alien Property Control Board.  The loss of the Bayer trademark in the United States and the British Commonwealth engendered an enormous amount of bitterness within Bayer’s German leadership after World War I because it not only regarded Sterling as a thieving interloper, but also felt that Sterling’s management lacked the proper scientific expertise or business acumen to control aspirin.  It regarded Sterling’s leadership as little better than patent medicine peddlers.  Bayer, as a worldwide manufacturer of ethical drugs, had a complicated leadership hierarchy and a very regulated, scientific process for approving new ethical drugs.  The corporate cultures and aims of the two companies, particularly with respect to the marketing of aspirin, clashed.

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1912 COVER FROM BAYER HUNGARY TO GERMANY

          Once its purchase of Bayer’s assets was complete and Sterling had divested itself of the dyeing business, Sterling placed the manufacture and marketing of Bayer aspirin into a separate American division,² and assigned the other remaining sixty-three ethical drugs it had purchased to its Winthrop Chemical Co. division.  However, at the end of World War I, Sterling and Bayer each faced problems.  Sterling had control of Bayer’s ethical drugs in the United States, but its Winthrop Chemical division lacked Bayer’s expertise to make the Rensselaer plant operate smoothly and efficiently.  On the other hand, if Bayer wanted to sell aspirin again in the United States, it faced the prospect of entering into that marketplace in competition with its own Bayer brand name backed by Sterling’s aggressive and massive advertising tactics.  In addition, Sterling lay closer than Bayer to the burgeoning Latin American market for both aspirin and pharmaceuticals, so if the two competed, Sterling’s lower production and transportation costs would allow it to undersell Bayer’s aspirin and other drugs.  These circumstances created room for both Sterling and Bayer to negotiate.  The talks began promptly, within six months after the U.S. Custodian of Alien Property’s sale in December, 1918 and well before discussions were completed for the Versailles Peace Treaty resolving Germany’s status as an enemy. Business matters were far too important to wait upon such governmental bickering. While these exchanges between Sterling and Bayer were every bit as prolonged and complicated as the meetings among the Allied nations to establish the political treaties (that excluded Germany), unlike the latter political arrangements, they ultimately led to lasting accords.

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1925 WINTHROP CHEMICAL CO. COVER

          By the end of 1920, Sterling and Bayer had reached a compromise about Latin America.  Bayer agreed to license to Sterling its Latin American rights and trademarks for aspirin, which it would continue to manufacture in Germany and supply to Latin America, in return for a 75 percent Bayer – 25 percent Sterling split of these Latin American profits.  In return, Sterling agreed not to sell anything under its licenses other than aspirin and aspirin-related compounds in Latin America, thus allowing Bayer to sell its other ethical goods without worrying about competition from Sterling.  After 1923, the two companies actually serviced their Latin American customers with a single combined sales force administered through a group of Bayer subsidiary companies each containing in its name the words “Quimica Bayer” (Bayer Chemical) and the particular South American nation that it had been organized to service.

SERVING TWO MASTERS:

1934 CHILEAN BAYER BRANCH COVERS TO BAYER GERMANY

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1938 BOLIVIAN BAYER BRANCH COVER TO U.S.

          That taste of cooperation led to further negotiations between the parties.  In 1923, Sterling and Bayer entered into a second more far-reaching group of contracts.  The first contract gave Sterling the right to manufacture, for North America only, certain of Bayer’s German products, largely ethical drugs, through its Winthrop Chemical division in Rensselaer, and pledged Bayer to supply Winthrop with the required scientific expertise, all in return for fifty percent of Winthrop’s profits.  The second contract confirmed Sterling’s right to use Bayer’s name in the former enemy territories of the United States, England, Canada, Australia and South Africa, but restricted Sterling from using the Bayer name on any of its many other products, selling any Bayer products under Sterling’s name, or contesting any of Bayer’s other patents or trademarks elsewhere in the world.  To handle British and Commonwealth sales of the aspirin trademarks it had purchased from the British government, Sterling had already created a British subsidiary, Bayer Products Ltd.  In return for a fifty-fifty split of the profits, the second new contract between Sterling and Bayer also provided that Bayer would manufacture the aspirin for Commonwealth sales, would manage its operations and, as time passed, Sterling would gradually allow Bayer to purchase a fifty percent ownership share.

PORTRAIT AND PHOTO OF CARL DUISBERG AS HEAD OF BAYER GERMANY

          Just as Sterling was growing during the twenties, Bayer had also evolved.  Admiring the efficiency of American trusts, Carl Duisberg and the rest of Bayer’s leadership had always desired to draw the entire German chemical business into a single corporation, but the idea met resistance among the various rival companies.  Under the pressure of war, beginning in 1916, all of the large German chemical companies began participating in a co-operative board for the purpose of consulting to eliminate duplicative efforts while each retaining its own individual corporate autonomy.  The name of this co-operative organization was IG Farben (literally “community of interests of dye making firms”), and Duisberg, as Bayer’s chairman, initially acted as its chairman.  By 1923, scorched by the ruinous inflation brought on by the pressure of reparations, the German chemical companies were forced to re-think their individual strategies.  Suddenly, a single corporation did not appear to be as far-fetched as it once had seemed.  In 1925, the dream became a reality and Bayer became a part of the newly minted successor combine of the largest German chemical companies, IG Farben.  At approximately the same time as Germany’s chemical industry united into a single firm, it should be noted that those industries both in Great Britain and France also consolidated into a single mega-company.  Sterling’s own attempts at creating such an industrial combine will be detailed in later installments of this blog.

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DIAGRAM SHOWING FORMATION OF IG FARBEN³

          Bayer’s metamorphosis into IG Farben proved to be a windfall for Sterling, for, when the parties reviewed Sterling’s contracts with Bayer, Sterling was able to convince Farben that, as Bayer’s successor, it was now obliged to license to Sterling all the same products of every one of its constituent parts as Bayer had.  This contract interpretation opened the door for Sterling to bring to the United States the latest innovations in ethical drugs made by all of Germany’s most technically advanced pharmaceutical labs.  Among the most important of these products that Sterling brought to the American market through its Winthrop Chemical division were: Luminal, the first of the phenobarbital class of barbiturates, originally used to relieve symptoms of anxiety or tension, insomnia and to control certain kinds of seizures and later for detecting blood at crime scenes; Salvarsan and Neo-Salvarsan, the earliest effective treatment for syphilis; Prontosil, the first of the sulfa drugs – the earliest commercial antibiotics; Novocaine, the first local anesthetic as well as its subsequent derivatives, such as lidocaine; and Atabrine, the synthetic quinine for fighting malaria, which became essential to the American war effort against Japan in the Pacific Theater during World War II.  Thus, Americans and the United States benefitted greatly from Sterling’s arrangements with Farben before World War II.

GERMAN PRODUCTS BROUGHT TO THE AMERICAN MARKET BY STERLING

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GERMAN BAYER & WINTHROP CHEMICAL CO. LUMINAL

GERMAN SALVARSAN AND STERLING SALVARSAN*

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GERMAN BAYER PRONTOSIL

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WINTHROP CHEMICAL CO. NOVOCAINE & TUTOCAIN

            However, there was a darker side, as well, to Sterling’s dealings with IG Farben. In return for Farben’s accepting Sterling’s reading of its contracts, Sterling converted Farben’s interest in Winthrop Chemical from a fifty percent share of the profits to a fifty percent ownership interest, definitely a violation of the spirit of the 1918 sale by the United States government to Sterling at the end of World War I.  Not only was IG Farben successor to the very alien company from which the United States had originally seized the assets, it was also a German company, an as such, had to navigate the chaotic political situation developing within Germany with the rise of the Nazi party.  As the Nazis became more powerful, IG Farben was obliged increasingly to co-operate with the Nazi regime until it became not only an arm of the Nazi state, but, many later critics claim, a willing participant in Nazi atrocities during World War II.  In the thirties, the more the Nazis pressured Farben, the more Sterling was ensnared in, and besmirched by, the ensuing controversies as well.  For example, during the late thirties Farben issued directives to its Latin American subsidiaries to purge themselves of Jews and Jewish advertising because of increasingly hostile German racial policies.  While Sterling internally viewed such policy directives as interfering with its aim of maximizing its profits by leaving certain small portions of the Latin American markets unserved, it did not publicly denounce such directives, and continued to cooperate with the Germans, along with many other large American companies, such as Standard Oil (whose pre-war agreements with Farben were later shown in Congressional hearings to have restricted the development and growth of the synthetic rubber industry in the United States).

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1938 BAYER 5OTH ANNIVERSARY POSTCARD

In the end, however, it was the Latin American dealings between Sterling and Farben that brought United States government scrutiny upon Sterling that changed Sterling’s leadership forever.  Once war began in Europe, not only was Farben’s share of Bayer Products, Ltd. in England immediately seized by the British as alien property, but also the English navy’s blockade of Germany and control of the Atlantic Ocean interdicted trade between Farben and its Latin America subsidiary Quimica companies.  The blockade upset the delicate balancing arrangement – Sterling’s owning the license to Bayer’s name and Farben supplying the aspirin products actually sold – Sterling and Farben had maintained in Latin America for twenty years.  To circumvent it and maintain Latin American sales for both companies, in November, 1939, William Weiss, on Sterling’s behalf, proposed a solution.  He agreed to ship to Latin America aspirin produced at the Sterling’s Rensselaer, N.Y. factory to replace the shipments that Farben could no longer make, an arrangement that Farben unwillingly was forced by circumstances to accept. However, in return and to make the new conditions more palatable to the Germans, Weiss also pledged, without any formal contract between Sterling and Farben, that Sterling would have its Winthrop Chemical division also produce at the Rensselaer plant the ethical drugs for continued sale by Farben in Latin America that Farben had been producing at Leverkusen and selling in Latin America under Bayer’s name.  While the Germans were not thrilled about sharing with Sterling any additional expertise required to produce even more of Farben’s ethical drugs, they also did not want to lose any of their Latin American sales, so they reluctantly embraced this arrangement as well.  Just as Weiss had earlier helped Farben hide its share of Winthrop Chemical’s American sales from the Nazis, he agreed to cooperate with Farben in cloaking records of these sales from the British government by transferring the earnings generated through a farrago of intermediate corporations located in neutral countries.  Neither obfuscation, both done solely for business reasons in the name of maximizing profit, ultimately earned Weiss plaudits from the enemies of the governments from whom the funds were concealed.

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1938 BAYER CHILE COVER TO GERMANY

          As American sentiment soured toward the Nazi government, increasingly, by negotiating arrangement after arrangement with Farben as well as Sterling’s behavior, discussed above, such as tolerating the imposition of Nazi directives throughout its joint Latin American branches with Farben, Sterling rendered itself more and more vulnerable to public criticism.  Moreover, while still remaining neutral itself, the United States government, reacting to shifting social opinion, began to scrutinize American companies with ties to Germany and the Nazi party.  By early 1941, Sterling’s affairs were being examined by the State Department, the Treasury Department, the Justice Department, the Securities and Exchange Commission and, in addition, by Congressional Committees. Congressional hearings about whether German patent holders were unduly influencing the growth of American industry led to price-fixing indictments against Farben, Alcoa and Dow Chemical.  Headlines in newspapers gleaned from documents handled over to governmental investigators claimed (correctly) that Sterling was preserving the Latin American pharmaceutical trade for the Nazis.  Once the Justice Department had copies of the 1920 and 1923 contracts between Sterling and Farben, as Bayer’s successor, it also had concrete evidence of Sterling’s engagement in the anti-competitive division of the pharmaceutical market and price-fixing.  As the price for avoiding indictment, Weiss as well as Albert Diebold – Sterling’s principal founders and most public representatives since its beginning at the turn of the Twentieth Century – were forced to resign from Sterling in August, 1941.  The terms of the Consent Decree between Sterling and the Justice Department barred Weiss and Diebold from Sterling for life and required them to pay fines.  The abrupt end to the era of their control and direction was a complete and utter repudiation of them and Weiss’s policies of cooperating with Farben.  Weiss never really recovered from his removal and was killed in a car accident about a year later.  Diebold lived until 1967, but, among his many lifetime achievements, his official obituary made no mention of his role in founding and creating Sterling.

x———-x

¹  As opposed to the earlier trusts, which had been an integration of linked businesses – either horizontally by controlling all the retail outlets for sale of a product or vertically by controlling the entire process of creating a product – from mining, drilling or growing the raw materials, through transporting, manufacturing and selling the product in retail outlets – to bring an entire industry, like steel, oil, or sugar under a single centralized control

²  also, quite legally, called Bayer Co.

³  ©  Dogan, Musin. Making Innovative Chemical Giants: A Firm-Level Analysis of IG Farben and DuPont.? Columbia University Press, 2017, cup.columbia.edu/book/globalectics/9780231159500.

*   Metz Laboratories was also owned by Sterling Products, Inc.

©  Malcolm A. Goldstein 2018

 

 

 

 

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Sterling Products, Inc. (IV.2): Bayer Medicine Co.

Sterling Products, Inc., Manufacturer

Chapter 4.2 – Bayer Medicine Co.

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1898 BAYER MEDICINE CO. SPANISH CROSS TEA PACKAGE

          Bayer simply means “Bavarian” in German, and is a common German last name. Thus, many of the Germans who emigrated to the United States were named “Bayer.”  Just as many of the products, companies and divisions that Sterling created – such as the Neuralgine and Winthrop Chemical – seemed to exist in some form before Sterling happened to acquire them (whether or not they were previously related to Sterling), so also was there a Bayer Medicine Co. in the United States before Farbenfabriken Bayer of Elberfeld (FFB) began its operations in the United States.  Its business was patent medicines and it was located in Toledo OH.  For years, the two companies seemed to be oblivious to each other’s existence, possibly because Bayer mostly used the Germanized “FFB” version of its name to identify itself at first, and also possibly because Bayer Medicine Co. was a much more localized mid-west company than FFB.

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1898 BAYER MEDICINE CO. POSTCARD

          Bayer Medicine Co. was organized in Toledo in 1873 as a partnership between a Toledo druggist named Adam Burger and a doctor whose last name was Bayer, but whose first name appears to be unremembered by history.  It sold a variety of patent medicines.  At some point Burger and Bayer sold the company name and its proprietary formulae to one William B. Stoll, who, among other pursuits, invested in patent medicine companies.  He, in turn, sold the name and formulae to Van Fleet, Inc. in 1928. According to an Ohio court that later reviewed the company’s history, Van Fleet marketed Bayer Medicine Co.’s patent medicines “in a more or less indifferent way” over the next several years until it virtually ceased operations entirely during the Depression, and its corporate charter was revoked in 1932 for non-payment of state franchise taxes.  As that company petered away, only one Doyt L. Van Fleet, a druggist and president of Van Fleet, attempted to continue to try to sell the Bayer Medicine Co.’s patent medicines. Eventually, even he tired of the enterprise and contracted to sell Bayer’s name and proprietary formulae to one G. F. McIntyre of Maumee, OH for $700. McIntyre chartered a new Bayer Medicine Co. and transferred the name and formulae to that newly incorporated company.

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DR. BAYER’S PENETRATING OIL

          Just at that moment, another stockholder in Van Fleet, Inc. was approached by an attorney named Rasch, from New York City, who claimed that he represented an old friend of one of the original owners, Burger or Bayer.  He wanted to purchase Van Fleet, Inc. to gain control of the old Bayer name and formulae for the friend’s son.  The stockholders consulted one another and then Doyt Van Fleet, who claimed to be willing, personally, to make the deal with Rasch, provided someone could persuade McIntyre to cancel his purchase of the Bayer name and formulae.  When approached, McIntyre, obviously understanding the value of owning a “Bayer” name, declined to cancel his purchase.  Van Fleet’s stockholders then sued the new Bayer Medicine Co. for an injunction to compel it both to cease and desist from using the Bayer name and formulae on its goods, and to return them to Van Fleet, Inc, claiming that Doyt Van Fleet, as President of Van Fleet, Inc., had acted without the consent of Van Fleet Inc.’s board of directors and shareholders when he made the sale of the Bayer name and formulae to McIntyre.

EARLY BAYER MEDICINE CO. ASPIRIN DISPLAY AND TIN

          The Court found entirely unpersuasive Rasch’s tale of acting, essentially, on behalf of a “friend of a friend” of the original owners when he approached Van Fleet Inc.’s shareholders, and deemed that all parties knew that Rasch was acting on behalf of the Bayer Co. of New York City, which “engaged in a kindred but competing business” to that of the Bayer Medicine Co. of Toledo. In fact, the Court went out of its way to chide Rasch stating that his conduct of business in this matter was “not altogether attractive to a court of equity.”  The Court, therefore, ruled that where the shareholders of Van Fleet, Inc. had by their inaction ceded control of the company to its president, they were bound by his actions, and the Court would not use the equity power of injunction to change the sale of the Bayer name and formulae to McIntyre.

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LATER BAYER MEDICINE CO. ASPIRIN TIN

          McIntyre’s Bayer Medicine Co. was still in business in Toledo, OH as late as 1941. Perhaps World War II brought about its end, or, presumably, FFB found another way to fold its name into FFB’s.

©  Malcolm A. Goldstein 2018

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Sterling Products, Inc. (IV.1) – Farbenfabriken Bayer of Elberfeld

Sterling Products, Inc., Manufacturer

Chapter 4.1 – Farbenfabriken Bayer of Elberfeld

TYPES OF BAYER CANCELS

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Line

Box

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           When Sterling Products, Inc. purchased the assets of the American assets of the German company, Farbenfabriken Bayer of Elberfeld, it was the equivalent of a minnow swallowing a whale, for Bayer was already a complex, multi-layered, multi-national chemical and dye business while Sterling Products, Inc. was a brash peddler of nostrums, albeit a rich and resourceful one.

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1902 BAYER U.S. COVER

          As set out in the discussion of the VapoCresoline Co., the modern petrochemical industry grew out of the commercialization of coal as fuel.  Controlled burning of coal produced coal gas, which became the earliest commercial gas supplied for street and house illumination, but also produced a residue of coal-tar, at first considered dirty, useless glop.  When chemists all around the world began to analyze coal tar, it was found to be composed of hundreds of different substances some of which could be utilized by other industries.  In particular, the substance aniline, first isolated from coal tar in 1826 by Otto Unverdorben in Germany, could be turned into synthetic fabric dyes.  This discovery was significant news for the dyeing industry, which has existed from the beginning of recorded history, but had changed remarkably little over thousands of years because dye sources were extremely limited by known natural substances and sources.  For example, Tyrian purple, the lushest purple dye reserved for the garments of Roman emperors and senators, could be produced only by crushing huge amounts of the shells of certain sea-snail species found mainly near the Eastern Coast of the Mediterranean Sea, and so remained extremely costly through the ages.

FREIDRICH BAYER & J. F. WESTCOTT

          In 1863, Friedrich Bayer and Johann Friedrich Westcott organized Frederich Bayer & Co to exploit the possibilities of these new artificial, aniline dyes. They were in a good position to enter this burgeoning field because Bayer was a dealer in natural dyes who had a network of sales agents and Westcott operated a factory for the extraction of natural dyes.  They located their plant in their hometown, Barmen, a small village approximately twenty miles east of Düsseldorf in the northwest corner of Germany. Bayer soon brought Carl Rumpff into the business as his agent in New York City.  Rumpff had emigrated from Germany to the United States and worked there in the coal-tar business before accepting employment as Bayer’s U.S. agent.  Rumpff soon became Bayer’s most trusted assistant.  In 1876, he moved back to Germany and married Bayer’s eldest daughter, Clara.  Westcott died in 1876, and Rumpff took over the entire business when Bayer died in 1880.  By then, because of problems associated with disposal of toxic waste generated from the dyeing business, the company had moved a short distance to the town of Elberfeld.  The next year, Rumpff took the company public under the name Farbenfabriken vormals Frederich Bayer & Co, which means the Dye Factory formerly known as Friedrich Bayer & Company (“Bayer”).

PORTRAITS OF BAYER & CARL RUMPFF

          By this time, however, Bayer was struggling because it was too dependent on the sales of a single dye, alizarin, an orange-red dye. In the process of searching for new dyes to boost Bayer’s faltering product line, Rumpff hired a young graduate student in chemistry named Carl Duisberg.  Under German patent law, it was then permissible to market a patented product that someone else was manufacturing, provided the second production method was completely independent of the first and, therefore, did not infringe the underlying patent.1   Joining the firm in 1884, Duisberg quickly struck gold by finding an alternate method for Bayer to produce a competitor’s dye known as Congo Red.  Duisberg’s discovery put Bayer’s finances on a firm footing.  He subsequently perfected two other dyes, and Rumpff installed him as the head of Bayer’s research and patent department.

PORTRAIT OF RUMPFF & PHOTO OF CARL DUISBERG AS A YOUNG MAN

          As well as working with dyes, Duisberg was sensitive to the growing possibilities for other kinds of chemicals derived from coal-tar.  In the field of medicine, he observed Cahn and Hepp’s discovery of acetanilid in 1886 and watched them propel it into a market success by allowing it to be prescribed by doctors and sold only under the specific brand name “Antifebrin” rather than permitting it to be identified simply by its generic chemical name, acetanilid.  He also realized that acetanilid was chemically similar to para-nitrophenol, a waste product of Bayer’s dye manufacturing process stored in a vast quantity of barrels piled all around the company’s factory yard. Recognizing that he might be able to create from the para-nitrophenol a compound to compete with Antifebrin, he put his research department to work.  His chemists found a compound called acetophenetidin, which Duisberg then had Bayer market under the brand name Phenacetin.  It was first sold in 1888. Although it cost more than Antifebrin, and still had the same potential lethal side effects of acetanilid, doctors quickly judged it to be the safer of the two drugs.  An influenza epidemic that struck the Northern hemisphere in 1889 popularized the Phenacetin outside of Germany and spectacularly boosted Bayer’s sales.

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1891 PHENACETIN TRADE AD BY BAYER U.S. DISTRIBUTOR

          By 1890, when Rumpff died and Duisberg became the head of Bayer, Duisberg had married Rumpff’s niece and merged his administrative prestige with family ownership. The next year, Bayer, having outgrown its plant at Elberfeld, moved its main headquarters about fifteen miles to the southeast to a campus in a town called Leverkusen, just north of Cologne on the east bank of the Rhine river.  That plant is still there and operating today.  Duisberg had the old plant at Elberfeld reconditioned purely as the company’s research facility for new drugs.  It was split into two departments: the first to develop new products and the second to test their efficacy prior to bringing them to market.  One of the first projects Duisberg assigned to his new laboratory was to find an even better and safer pain relief compound, since Phenacetin still carried the potential for lethal harm if misused.

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BAYER FAMILY VAULT INCLUDING RUMPFF

         Before Cahn and Hepp derived acetanilid, there were only two natural compounds that acted as analgesics, that is, they successfully relieved pain.  Each had its drawbacks. The first was salicylic acid derived from the bark of the white willow tree.  Its basic chemical, a bitter-tasting substance called salicin, had been isolated as the bark’s active ingredient in 1828, and first synthesized as an acid in 1838.  Its side effects were nausea and ringing in the ears.  The second was quinine, which was compounded made from the bark of the Peruvian cinchona tree.  It too caused unpleasant side effects, and, moreover, was extremely difficult to obtain in quantities sufficient to use for experiments, since scientists could not yet synthesize the active compound and the tree resisted all cultivation attempts outside of Peru.

COMPETITOR KNORR’S ANTIPYRINE

           One synthetic pain-killer existed already. In 1883, a German chemist named Ludwig Knorr had created a compound which was marketed under the name Antipyrine.  He patented it and assigned its manufacture to another chemical company, now known as Hoechst (which will also be profiled in this column bye and bye). However, Antipyrine suffered under some drawbacks as well.  First as a patented medicine, its manufacture and sale was limited solely to the patent holder, Hoechst, which exercised its legal monopoly to make it expensive.  Second, as a medicine whose chemical formula was protected by a legal patent – and therefore not truly a “patent medicine” at all – it was advertised and marketed – as all such “ethical” drugs were – only to doctors, not directly to the public.  The doctors created a demand for an “ethical” drug by prescribing it to their patients, who then purchased it from them or from pharmacies. In the case of Antipyrine, its name, however – which doctors took to mean limited its use to fever reduction – did not really describe its chemical formula sufficiently enough for doctors to be entirely comfortable prescribing it, and, moreover, doctors considered pain merely a symptom of the underlying disease that warranted treatment, rather than a condition in itself to be alleviated.  While the public might have disagreed with that professional assessment – and Antipyrine was quite popular briefly where it became available in certain countries without a prescription – because doctors did not adopt it broadly, its appeal was soon eclipsed by subsequent events.  Even with its possibly lethal consequences, acetanilid – never protected by a patent because it had been synthesized before its medicinal properties were recognized – was always cheaper than Antipyrine. Phenacetin, as expensive as Antipyrine, but judged safer than acetanilid, soon cut into its sales. Meanwhile, Duisberg was already working on a better product.

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FELIX HOFFMAN

          Duisberg’s new laboratory at Elberfeld responded to his challenge to develop an analgesic without potential fatal side effects by producing Aspirin.  The legend that surrounds its discovery begins with a young chemist named Felix Hoffman, who had drawn the assignment to develop Bayer’s next pain reliever.  From among the choices of existing analgesics, Hoffman chose to work with salicylic acid.  The reason Hoffman chose that compound was that his father was crippled by chronic rheumatism, and took sodium salicylate, the available form of salicylic acid, to relieve the pain.  Because that treatment caused him severe stomach pains, he begged his son to find him a more effective treatment.  On October 10, 1897, Hoffman noted in his laboratory workbook a method for converting salicylic acid into acetylsalicylic acid.   He reportedly gave his father the resulting compound and discovered that his father experienced a complete remission.  The new compound was immediately denominated Aspirin, and the rest is history.

ARTHUR EICHENGRÜN & HEINRICH DRESER

          In actuality, Hoffman was not the first to produce acetylsalicylic acid, but did find a better method for synthesizing it.  However, when the compound was sent to Duisberg’s other laboratory department for testing, it was summarily rejected because, in the doses originally utilized it caused heart palpitations.  In addition, the testing laboratory was busy trumpeting another new discovery, a cough medicine called Heroin, which was much more effective than codeine and promised to be completely non-addictive. Acetylsalicylic acid remained neglected for approximately a year until Hoffman’s boss in the drug developing department, Arthur Eichengrün, circumvented the testing department by placing samples with some of his practicing colleagues.  Their favorable reports prompted the testing laboratory to conduct its own tests which were glowing. The head of the testing laboratory, Heinrich Dreser, then published the first paper on Aspirin, omitting to mention either Hoffman or Eichengrün.  Once placed on the market, Aspirin’s success was immediate.  Ironically, because of his contract with Bayer as head of the testing laboratory, Dreser received royalties on the sales of Aspirin that were so immense that he was able to retire early from Bayer.  Hoffman and Eichengrün received no special compensation for their contribution to the development of Aspirin and only belated credit for its development.

1898 TRADE ANNOUNCEMENT CHANGING DISTRIBUTORS TOGETHER WITH 1898 SCHIEFFELIN AD  AND 1899 BAYER U.S. AD FEATURING HEROIN

          The largest potential market for Aspirin was the United States.  Bayer already had a sales history in the United States.  As noted above, Frederich Bayer had immediately set up a sales agency in the United States and Carl Rumpff had initially been employed in New York City before moving back to Germany.  By the late 1890s, the United States had already emerged as the biggest market for Bayer’s dyes, accounting for greater sales even than Germany.  Bayer had employed Schieffelin & Co. (previously mentioned in the article on John D. Park & Sons) as its distributor in the United States, but Rumpff’s successor in Bayer’s New York office never felt that it featured Bayer’s products, such as Phenacetin, prominently enough, so in 1898 Duisberg discharged Schieffelin & Co. and made Bayer U.S. its own sales and distribution center.  Dr. Hugo Schweitzer, a chemist who had emigrated to America in 1889 and become an American citizen was a consultant to Bayer U.S. and was both a prominent spokesman on behalf of the company and a primary channel of communication between Bayer U.S. and the head office in Leverkusen, Germany.  Meanwhile,  Duisberg who had protected Bayer by patenting Phenacetin in the United States, immediately patented Aspirin in the United States as well.  However, because Hoffman had actually not been the first to produce acetylsalicylic acid, Bayer was only able to win patents for Aspirin in the United States and in England.

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1903 LETTER FROM SCHWEITZER AT BAYER U.S. OFFICE TO DUISBERG IN GERMANY

             Still, even with patent protection for the formula for Aspirin and, initially, trademark protection for its name, Bayer felt it was at a marketing disadvantage in the United States.  High U.S. tariffs, as well as the certain prospect of the patent’s eventual expiration, persuaded Duisberg that he ought to have a production plant in the United States to maximize Aspirin’s sales prospects. Bayer finally determined that its best course of action would be to expand its presence in the United States. In 1881, Bayer had purchased a one-quarter interest in the Hudson River Aniline & Color Works located in Rensselaer, N.Y. across the Hudson River from Albany. Duisberg visited this property in 1903 and decided to create a plant on the Hudson along the same design parameters as he had developed on the Rhine at Leverkusen. He had the machinery from another dye plant transferred to this location and erected new buildings to accommodate the production of Aspirin, which included two large crucibles made of pure silver needed to hold the acetic acid required to acetylate salicylic acid.

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1900c BAYER U.S. TRADE AD

           Aspirin’s success in the United States, combined with its relatively high price guaranteed by its patent-protected monopoly, immediately led competitors to emulate it. One Edward Kuehmsted, a somewhat shady drug dealer in Chicago, some of whose exploits are recounted in a book entitled Twenty Years in the Wickedest City in the World by Detective Clifford Rodman Woolridge, began to import large quantities of acetylsalicylic acid from Canada, where Bayer did not hold a patent.  Bayer responded in 1905 with a patent infringement suit.  No sooner had it filed its suit, than a similar suit in England that Bayer had filed against a German competitor was decided against Bayer invalidating its English patent, precisely because Hoffman had not been the first to create acetylsalicylic acid, and the English court – drawing the opposite conclusion from German law – could not grasp the fine distinctions Bayer tried to articulate between Hoffman’s process, which it claimed yielded a purer form of acetylsalicylic acid, and the earlier process utilized by that other German company.  Bayer’s American attorney then delayed the proceeding for roughly the next four years. When the American court rendered its opinion, much to everyone’s surprise, it ignored the English precedent and upheld the legitimacy of Bayer’s patent, finding sufficient novelty in Hoffman’s process to warrant a separate patent.  When the plaintiff Kuehmsted complained that Bayer was unable to patent Hoffman’s process anywhere else in the world, the judge merely remarked that the United States was different from any other country.  In 1910, an appellate decision confirming the lower court’s reasoning sealed Bayer’s patent victory.

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1912 BAYER U.S. TRADE AD

          World War I began in Europe in 1914.  At first the United States attempted to remain neutral and avoid favoring either England, the principal power among the Allies or Germany, the principal anchor of the Central Powers.  However, as a German company operating in the United States, Bayer found itself in a number of harrowing scrapes before the United States entered World War I on the side of the Allies and seized its American assets.

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AUGUST 15, 1915 NEW YORK WORLD FRONT PAGE

          One of the stories is now told as the Great Phenol Plot of 1915.  An essential ingredient for the manufacture of Aspirin was a substance called phenol, another organic chemical originally derived from coal-tar.  Phenol, however, was also a building block for many, many other substances, including a potent explosive trinitrophenol. Before the war, England provided most of the phenol Bayer needed, although not to Bayer directly, but rather to its suppliers.  They, in turn, used the phenol to produce salicylic acid, which Bayer then purchased and turned into Aspirin.

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DR. HUGO SCHWEITZER & HEINRICH ALBERT

         As soon as the war began, England stopped all foreign export of phenol.  Bayer’s suppliers were starved and Bayer also faced closure because it could not obtain salicylic acid to convert into Aspirin in its pure silver cauldrons.  Many other companies in the United States were also facing a shortage of phenol, and one man who immediately took action was Thomas Edison, who required phenol to produce his best quality phonograph records.  He set up two new plants to synthesize phenol.  No sooner were the plants in operation than Edison was approached by none other than Hugo Schweitzer, still operating as a consulting chemist for Bayer, to purchase all of Edison’s excess production of phenol for use by Schweitzer’s company, the Chemical Exchange Association.  Unbeknownst to Edison, Schweitzer had been employed by the German Embassy to act as an agent on behalf of the German government and it supplied the money Schweitzer used to pay Edison.  As well as trying to tip public opinion toward Germany, the German Embassy in the United States was charged with preventing – in any way possible, as best it could – the United States from exporting chemicals to the Allies which they could use to harm Germany.  Schweitzer took the phenol he had purchased from Edison and entered into a contract to have it turned into salicylic acid by the American branch of Chemische Fabrick von Heyden (the very same German firm whom Bayer had sued in England that had led to the invalidation of its Aspirin patent in England).  Heyden’s American branch had been supplying Bayer’s American plant with salicylic acid under a contract between the two companies made before the war and it was natural for it to resume its contract with Bayer when it again had salicylic acid to sell. Schweitzer exported the balance of the salicylic acid himself. As well as turning a profit on all of the phases of the transaction, Schweitzer managed to divert all of Edison’s excess production of phenol from being turned into the explosive trinitrophenol by the Allies. Estimates were that four and a half million pounds of explosives could have been produced from the phenol that Schweitzer managed to divert.

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BAYER PRODUCTS 1915c

          The scheme did not last too long.  Schweitzer’s paymaster, a German Embassy official, Heinrich Albert, fell asleep on the Sixth Avenue elevated railway in New York City.  Awaking suddenly to find he was missing his stop, he jumped up and departed so hurriedly that he left his briefcase in the subway car.  It was immediately seized by a sharp-eyed Secret Service agent who had been assigned to watch his movements.  While the briefcase did not contain enough material for the United States to indict any specific German Embassy official for acts of sabotage, when its contents became public after a highly placed member of the U.S. government leaked the papers to an anti-German newspaper, there was an enormous public hue and cry and the entire press charged the Germans with theft of American chemicals.  However, in 1915 the United States was not prepared to end its neutrality, although the subsequent public outrage was strong enough to persuade the Germans to cease funding Schweitzer’s contract with Edison. Schweitzer simply then made other arrangements and continued to purchase Edison’s excess phenol for another several months until growing sentiment in favor of the Allies finally pressured Edison to start selling his excess phenol to the United States government.  By that time there was enough of a supply of phenol to assure that Bayer would stay in operation, but its reputation as an honorable chemical company was severely impaired by its involvement in the Great Phenol Plot.

BAYER U.S. MEDICINE BOTTLE 1915c

          As the prospect of America’s entry into World War I on the side of the Allies loomed larger and larger, Bayer engaged in one more complex intrigue to protect itself.  The German owners and managers of Bayer’s American operations realized that seizure of enemy property would follow a declaration of war by the United States.  At the beginning of the war, the European combatants mutually had seized enemy property for their own use for the duration of the war intending to return such property in tact following hostilities.  As the intensity of the war increased, that prospect became unlikely. While Bayer’s management could not avoid seizure of the physical assets, it realized it was were even more vulnerable because in 1913 Bayer’s German headquarters had also transferred to a newly formed American subsidiary ownership of the intangible assets, not only of the expiring patents, but, most importantly, the American trademark rights. These managers, therefore, schemed to cushion themselves against the possible impact of seizure by channeling Bayer’s profits to their own benefit as well as setting up a genuine American corporation which they would control to act as its dummy to bid for these assets in the unfortunate event of a sale.

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1918 BAYER U.S. TRADE AD

          Cynically recognizing that the American army would need uniforms if it went to war, Bayer purchased another dyeing company in Providence, RI, Williams & Crowell (“W & C RI”), to provide dye for such uniforms.  However, instead of Bayer’s appearing as owner of W & C RI, an American attorney advised Bayer’s officials to set up another American company, Williams & Crowell Color Co. of New York (“W & C New York”), to actually take title.  Management and ownership of W & C New York was nominally placed in the names of Americans (such as the advising attorney), but the real owners were Bayer’s owners and managers.  They, in turn, provided the money from Bayer’s profits for W & C New York to purchase W & C RI.  Moreover, since, in their capacity as Bayer’s managers, they bought all of W & C RI’s output at inflated prices for resale to the American army, they re-cycled the money to themselves, and had those inflated profits stored and available in an American company for any other eventuality which might arise.  Bayer’s management also ensured that a friendly American, properly bribed, was installed as manager of Bayer the U.S. Alien Property Custodian actually seized control of its operation in January, 1918.  Through friendly administration of Bayer’s assets while under American control and storage of Bayer’s profits in a certified American corporation, Bayer’s management felt it could navigate through any eventuality that arose, even the ultimate unfortunate event of a sale by the Custodian.

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A. MITCHELL PALMER

          Eventualities, however, did not evolve in the manner Bayer’s management anticipated. An anonymous crackpot letter, claiming that W & C RI was poisoning the military uniform fabric it was dyeing, led A. Mitchell Palmer, the U.S. Attorney-General, acting in his capacity as the Alien Property Custodian, to examine its operations. When the Custodian investigated, he quickly discovered the shell nature of its ownership. The American attorney to whom Bayer’s management had entrusted leadership of W & C RI quickly bailed on Bayer, and announced he would instead purchase the company himself from the Custodian when it was put up for sale.  When the Custodian revealed all of the plotting by Bayer’s managers, their machinations led to further public condemnation and ultimately to their arrest on charges of trading with the enemy.  By the time the Custodian was ready to auction Bayer’s assets, its prior management had effectively disappeared.  The way was clear for Sterling Products, Inc. to make its audacious bid to buy Bayer’s remarkably valuable assets for its own future development.

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¹     A similar ruling emerged in the United States in the 2009 Abbott v. Sandoz case discussed in the column concerning Abbott Alkaloidal Co.

©   Malcolm A. Goldstein 2018

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Sterling Remedy Co. (IV); Sterling Products, Inc.

Sterling Remedy Co.

Chapter 4 – Sterling(Of West Virginia)’s First Decade

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1910c CASCARETS PACKAGE BEARING CANADIAN MEDICINE REVENUE TAX STAMP

          Virtually from its inception until the entry of the United States into World War II forty years later, Sterling’s principals were William Weiss, who served as General Manager, Albert H. Diebold, who was its Secretary-Treasurer, and H. F. Behrens Jr., who was its first President.  As noted earlier, William Weiss trained as a pharmacist, and practiced that trade in the now obscure town of Sistersville, WV during the 1890s. At that time, however, Sistersville was an oil and gas boom town whose population briefly mushroomed to over 10,000 people.  Weiss apparently invested wisely in these West Virginia oil field and was able to amass the capital he invested in Sterling’s predecessor. He managed the various plants it accumulated in its 1909 amalgamation which were located in Wheeling, WV, Cincinnati, OH and Walkerville, Canada (now a historic district of Windsor, Ontario, across the Detroit River from Detroit, MI, originally founded as a company town by Hiram Walker, the distiller of Canadian Club).  Diebold, Weiss’s childhood friend and scion of the wealthy Diebold safe and lock family, traveled around the United States establishing Sterling’s business connections and even arranged its sales agency in London, England.  Behrens, born in Wheeling, WV in 1870, and thus slightly older than Diebold and Weiss, began his career as a grocer in Wheeling with his father, but had branched into other industries and had become a prominent merchant as well as a director of two banks in Wheeling.  At the beginning, he provided the company its credentials in banking and economics.  These men served on Sterling’s Board of Directors together with several other prominent business leaders of Wheeling, and one other veteran of the pharmacy business, Stanley P. Jadwin.  Jadwin, was a member of the New York City wholesale drug firm, O. H. Jadwin & Sons (which itself cancelled battleship revenue stamps), founded by his father. Sterling’s connection with Jadwin gave it its initial major distribution network, particularly in the more thickly populated Eastern half of the country.

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1910c STERLING NO-TO-BAC PACKAGE

          With the purchase of the California Fig Syrup Co., Sterling became the largest patent medicine company in the United States.  Almost immediately after it closed that deal, the company instituted a pattern of organizing itself into various separate semi-autonomous divisions to perform different functions.  To illustrate an example of how the functions of these divisions were kept separate but coordinated, in 1909, together with Pape, Thompson & Pape Co., Sterling had also purchased Pape’s Cincinnati advertising agency called Thompson-Koch.  No sooner had it purchased the California Fig Syrup Co. in 1912 than it had Thompson-Koch launch a million dollar sales campaign to expand its sales.  The ad took the form of a letter from Thompson-Koch to the California Fig Syrup Co.  There was no hint that both companies were owned and controlled by the same people.  For the rest of Sterling’s existence, while the Sterling name would appear on most of the company’s products, it almost always appeared in the form of “____ division of Sterling” (never Sterling’s name alone) and with the subsidiary company’s name or division more prominently displayed or printed in larger letters.

1912 TWO PAGE THOMPSON-KOCH AD ANNOUNCING MILLION DOLLAR CALIF. FIG SYR. CAMPAIGN

          Along with handling the company’s advertising, the Thompson-Koch Agency was also utilized to fight the rear-guard action against increasing governmental scrutiny and regulation of the patent medicine industry.  A 1917 article entitled “Killing Public Health Legislation” published in the Journal of the American Medical Association, a strong advocate for such regulation, reprinted a circular issued by Thompson-Koch and sent to every retail druggist in Michigan urging them to lobby their state representatives to oppose legislation then pending in the state legislature which it claimed would compel “withdrawal of all advertising and sale of all package, household medicines, cosmetics and hair tonics in your state” because it required complete disclosure of ingredients in patent medicines.  To balance that screed, which JAMA characterized as a “highly colored piece of fiction,” JAMA also published the rejoinder by the Michigan State Dairy and Food Department that stated the bill merely instituted a system of registration and inspection of patent medicines that the patent medicine companies could either finance by paying the modest registration fee and submitting a sample of each product for “inspection and analysis” or avoid entirely by making voluntary disclosure of the ingredients in the products, thus saving the state the cost of examining them.  Its conclusion about this section of the bill was that “no manufacturer of a meritorious proprietary remedy can reasonably object.”  The only real limitation contained in the bill was a prohibition of advertising “claiming to cure consumption, cancer and other admitted non-curable diseases,” about which JAMA noted “all reputable newspapers already refuse.”  JAMA further reported that Thompson-Koch had sent a similar circular to every newspaper publisher in North Dakota – most of whom derived substantial income from their patent medicine advertising – urging rejection of a similar bill then pending in the North Dakota legislature.

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  1920 CASCARETS TRADE AD

           By 1917, Neuralgine was no longer a major seller, so the Neuralgyline Co. decided to drop entirely its original name, which was both hard to remember and to pronounce, and adopt a variation of the Sterling Remedy Co. name it had acquired together with H. L. Kramer’s company in 1909 – and continued to use as its manufacturing name for Cascarets and No-To-bac – as the public name of the overall shell company which would encompass all of the other companies it was busy absorbing . It chose to be known henceforth as Sterling Products, Inc.  Among the other separate divisions that Sterling had created prior to World War I were those which held intangible assets and real property separately from the company’s purchasing and trading activities, and another that dealt with the difficulties it was beginning to encounter with overseas trading as the prospects of the United States’s involvement in the European war became more and more tangible. It also created another division called Winthrop Chemical Co.1 specifically to manufacture chemicals that it had imported from Germany prior to the entry of the United States into World War I.

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1920c CASCARETS PACKAGE BEARING U.S. PROPRIETARY STAMP

          However, it was Sterling’s next acquisition that ultimately catapulted it on to a completely different plane from the run-of-the-mill nostrum peddlers, even the extremely rich ones.  After the United States entered World War I in 1917, it seized the assets of all companies owned by citizens of enemy nations.  One of the largest German companies operating in the United States was Farbenfabriken Bayer (“Bayer”).  Although it had begun principally as a dyeing business, Bayer had refined the research conducted on acetanilid by Cahn and Hepp, discussed in the article on the Nervease Co., and had discovered acetylsalicylic acid, a chemical cousin of acetanilid that was not potentially lethal.  It began marketing its headache curing product under the name Aspirin in Germany in 1899 and promptly patented Aspirin in the United States.  However, to fully exploit the enormous American market for the drug, Bayer had to invest in an American manufacturing plant in order to avoid paying American import tariffs on Aspirin manufactured in Germany.  By buying some American chemical companies involved in the dyeing business, which Bayer also conducted in Germany, it managed to create not only a dyeing but also a pharmaceutical manufacturing center in Rensselaer, N.Y, across the Hudson River from Albany.  Both Bayer’s physical assets and its patents were seized by the U. S. Government, acting through its office of the Custodian of Alien Property, on January 10, 1918 and auctioned to American bidders at Bayer’s Rensselaer plant on December 12, 1918.  On Sterling’s behalf, Weiss successfully bid for all of Bayer’s assets, paying $5.3 million.  Immediately, Sterling spun Bayer’s dyeing business off to another chemical company for $1.5 million, freeing Sterling to concentrate all its energy on the pharmaceutical market.

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1921 STERLING TRADE AD

          With its purchase of Bayer, Sterling had pulled off a major coup in the pharmaceutical world and changed the nature of its business forever.  Sterling and Bayer arose at the two opposite poles of the pharmaceutical industry.  Up until its acquisition of aspirin, Sterling had dealt only in patent medicines.  As often discussed in this column, these products, usually trumpeted to cure virtually any discomfort or illness, were prepared from non-disclosed, privately held formulae and advertised directly to the public as a replacement for medical care, which was, at best, limited and, before the advent of antibiotics, precarious.  Patent medicines had been completely unregulated until the passage of the 1906 Pure Food And Drug Act, but, even in 1918, only out-right lying about either a patent medicine’s ingredients or its curative powers actually ran afoul of the law.  Patent medicines relied upon relentless advertising and lots of public display without major concern as to whether their contents had any genuine medical efficacy.

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1921 STERLING TRADE AD

          Bayer’s approach to marketing Aspirin had been completely different from Sterling’s.  Because it held a patent on acetylsalicylic acid, and because the drug actually worked, Bayer had marketed its Aspirin as an “ethical” drug, that is, it openly disclosed its ingredients and advertised and sold it only to physicians and pharmacies, relying, in turn, on physicians to prescribe it to their patients based solely upon its merits, literally by writing a medical prescription.  Patients would then have the prescriptions filled at pharmacies.  Ethical drugs counted upon their actual ability to bring about abatement of the malady for which they were prescribed to recommend them.  Pharmacies had to stock them because physicians kept prescribing them and patients kept asking for them. A solid reputation for delivering relief – not hype – was Bayer’s claim to its preeminence as a drug maker.

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1921 CASCARETS TRADE AD

            Sterling immediately determined that it would market aspirin as a patent medicine, the same way it had marketed all its other products.  It was easy for Sterling to move in this direction for Bayer’s patent on Aspirin’s chemical formula for acetylsalicylic acid had expired in February, 1917, and after that date anyone could freely manufacture the chemical itself.  The trickier question was whether competitors could denominate their acetylsalicylic acid “aspirin,” or whether only Bayer held the trademark rights to call its acetylsalicylic acid “Aspirin.”

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1923 CONSOLIDATION OF STERLING AND BAYER WEST COAST SALES OFFICES

            Two American companies, Lehn & Fink, a drug manufacturer and wholesaler, and United Drug Co., a drug manufacturing and retailing combine, had vigorously opposed Bayer’s efforts to hold on to the name “Aspirin” as its exclusive trademark. In February 1917, Lehn & Fink published a bulletin to the trade stating that, having consulted its attorneys, it would accept orders for Lehn & Fink aspirin the next day after Bayer’s patent expired.  The following month, the Druggists Circular, a trade publication reported that the National Drug Trade Council had consulted its attorneys who rendered an opinion that aspirin was simply a generic term (that is a non-exclusive, non-trademarkable name for a chemical, exactly like acetanilid, no more nor less) rather than the exclusive brand of Bayer.  Of course, together with that report, the magazine even-handedly published a letter from Bayer’s attorneys stating that Aspirin was Bayer’s exclusive trademark.  The industry was left to draw its own conclusions, but Lehn & Fink persisted in advertising its own brand of aspirin.  United Drug Co. went further.  It also began to manufacture and market its own aspirin, and supported this effort by bringing an interference action before the U.S. Examiner of Patents challenging Bayer’s trademark on “Aspirin.”  It also endured Bayer’s suit against it in federal court to enjoin it from selling its own aspirin.  Between America’s entry into World War I, which disrupted Bayer’s business plans, and the efforts of these two American companies, Americans soon came to regard any headache remedy generically as aspirin.  Although Sterling continued Bayer’s defense of Bayer’s trademark hold on Aspirin, both Bayer and Sterling finally were forced to concede defeat after losing the administrative trademark decision in 1920, which was re-enforced by court decisions rendered in 1921.  The final defeat was after the fact for Bayer, which had already lost the American market by virtue of Sterling’s purchase, and probably of relatively little concern to Sterling which had already determined to follow its patent medicine strategy for marketing aspirin. Curiously, both Lehn & Fink and United Drug Co. later became directly involved with Sterling. Those tales will be woven into Sterling’s history at the appropriate time.

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¹   As with almost every other company Sterling absorbed or spawned, there was another Winthrop Chemical Co. prior to Sterling’s.  This particular company was incorporated in Kittery, ME in 1903 by one Horace Mitchell, among others.  Mitchell himself, who lived from 1857 to 1922, engaged in various careers from teacher and hotel keeper to postmaster, local official and state legislator.  He was apparently also such a versatile businessman that he was involved in incorporating over 500 companies in every field from soap to securities, electrical engineering to railroads. These companies were on paper worth in total over $1 billion dollars (at a time, the same source notes, that John D. Rockefeller was involved in companies worth only half that amount). While it would have been well in keeping with Sterling’s pattern to have simply absorbed and re- purposed the existing Winthrop Chemical Co., it is unclear whether this company had any actual relationship with Sterling’s.

©  Malcolm A. Goldstein 2018

 

 

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Sterling Remedy Co. (III.3) – California Fig Syrup Co.

Sterling Remedy Co., Manufacturer

Chapter 3.3 – California Fig Syrup Co., Manufacturer

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BATTLESHIP PROPRIETARY ISSUE

As with the origin of Sterling’s original product Neuralgine, there are at least two different accounts concerning the origins of the patent medicine laxative “Syrup of Figs” initially manufactured by the California Fig Syrup Co. The first origin story was recounted as testimony taken in a lawsuit begun in 1897 which contested the company’s right to the exclusive use of the name “Syrup of Figs.”

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CalifFigSyrCo-5-4a     CalifFigSyrCo-5-4b

   TRADE CARDS EXAMPLES

One Richard E. Queen, who claimed to be the inventor of the product, testified that in 1878, having observed that people did not like taking laxatives in the form of pills or oils, he determined to create an effective liquid laxative. He spent a year experimenting with various combinations of ingredients and found that the most effective laxative was produced from the pods or leaves of the plant senna alexandrina, a member of the senna genus of herbs, plants and trees that contains some 250 to 350, mostly tropical, species. As that name implies, senna alexandrina’s laxative properties had been known even to the ancient Egyptians. Queen believed that the senna products then on the market were either too weak or produced results by such a violent, painful, diarrhetic action that they were all useless.

CalifFigSyrCo-5-3a     CalifFigSyrCo-5-3b     CalifFigSyrCo-6-3

EXAMPLES OF TRADE CARD & BOOK MARK

Queen wanted to differentiate his brand of senna from all the others. When he added other medicines to boost the effectiveness of the senna, he had to contend with the bad taste these substances produced. To offset their bitterness and to give the liquid some body, he decided to add syrup of figs for its sugar and viscosity, but it did not blend well into his concoction. As his experiments progressed, he found that neither the bad tasting medical boosters nor the fig syrup was absolutely essential to the stable liquid senna compound he was creating. While his final recipe did require some sweetening agent, for the tiny bit he needed, he found he could just as easily have used honey. Yet, when he selected a name for his new elixir, remembering the sweet taste of the fig syrup, he christened it “Syrup of Figs.” He soon sold his formula to his own California Fig Syrup Co. which thereafter assumed its production.

CalifFigSyrCo-21-4a

CalifFigSyrCo-21-4b

CalifFigSyrCo-21-4c

BOOKLET FOR EXHIBIT AT CHICAGO WORLD’S FAIR IN 1893

The second origin story appeared as a column in a pharmaceutical trade publication at the end of 1899.  One Richard E. Queen, known locally as “Dick Queen,” a native of Bardstown, KY, born on December 21, 1853, was working as a clerk in George Newman’s drug store in Louisville, KY in 1885.  He decided to “go west” to make his fortune, took his savings of roughly $2000, moved to Reno, NV and opened a drug store himself.  To boost sales, he began hawking a preparation ginned up by a local resident, one Dr. Baldwin, which Queen advertised as “Syrup of Figs.”  Queen promptly ran out of money and bounced back to Louisville. After a year’s persuasion, his former employer, Newman, let Queen mix a batch of the Syrup in his store’s basement and lent him $5000 on the promise of repayment of the loan together with a royalty of 20 cents per dozen bottles sold. Queen spent the money buying $1200 worth of advertisements in the St. Louis trolleys and the rest on newspaper advertising. When Queen sought a further loan, Newman refused, and Queen waited.

CalifFigSyrCo-21-3a

CalifFigSyrCo-21-3c     CalifFigSyrCo-21-3d

CalifFigSyrCo-21-3b

SAMPLE CHILDREN’S BOOKLET PAGES

Within a few months, lo and behold, the orders began to gush in. Once orders materialized, Newman re-opened the financial spigot and by the end of the year, Newman had invested $52,000 in the Syrup venture. Newman and Queen then organized the California Fig Syrup Co. Queen moved to San Francisco and handled advertising while Newman acted as the Eastern region sales agent. In 1893, Queen spent $429,000 on advertising which produced sales of $1,500,000, or 6,000,000 bottles. Newman received his 20 cent royalty on each of 50,000 dozen bottles sold, plus his share of the business profits. Queen earned $117,000 that year. By 1899, the stock of the company had advanced from 10 cents a share to $3.50 a share. Queen owned 600,000 of the million shares issued with Newman owning another 200,000. Newman easily earned a half million dollars, and his former clerk, Queen, had become a millionaire in ten years time. Because Queen was doing so much advertising, he finally organized his own advertising agency, the Golden Gate Advertising Bureau which added advertising commissions to his sources of wealth.  The company also quickly opened offices overseas in London, England.

CalifFigSyrCo-3-1903-1(Eng) 1903 COVER FROM ENGLISH OFFICE

x—–x

CalifFigSyrCo-1-EngMedStamp-M123

CalifFigSyrCo-1-EngMedStampM135-1R

CalifFigSyrCo-1-EngMedStampM136-3R2

ENGLISH PROPRIETARY MEDICINE TAX STAMPS – 1ST HALF 20th CENTURY

Usually, the origin story of a company given in court testimony would be taken as the truest and most accurate account because it is a sworn statement given under penalty of perjury. In this instance, the popular re-telling of the origins of the company, with its emphasis on the vast sums of money earned, rings a great deal truer as to the actual circumstances giving rise to the company. However, Queen’s court testimony – palpably designed to offer a rational explanation for Queen’s choice of the name “Syrup of Figs” for his laxative – was ultimately accepted as true by the Supreme Court of the United States, but applied in a manner most inimical to Queen’s interest. The question ultimately presented to the Supreme Court that led to it to review Queen’s testimony was whether Queen could affirmatively use the power of the federal courts to enjoin another patent medicine company, Clinton E. Worden & Co. (yet another user of proprietary battleship revenues), from advertising its product as “Syrup of Figs” or “Fig Syrup,” on the grounds that California Fig Syrup Co. had established its exclusive commercial rights to those names. Having heard all of the testimony, including Queen’s, the trial court had ruled that Worden was deliberately attempting to deceive the public by copying Queen’s packaging and marketing so closely as to cause confusion between the products, and granted Queen an injunction against Worden. The appellate court affirmed, and Worden appealed to the Supreme Court.

CalifFigSyrCo-3-1908-1

1908 COMPANY COVER

In 1903, the Supreme Court heard a different voice in Queen’s testimony. To the extent that Queen asserted that “Syrup of Figs” was a trademark, the Court said that the name was merely descriptive and, therefore, insufficient to serve as a trademark. Morever, pointing to the fact that Queen had deemed the actual inclusion of syrup of figs only incidental to the final formulation of the “Syrup of Figs” he marketed to the public, the Supreme Court ruled that Queen could claim no monopoly on the name because the name he chose was itself misleading right from the beginning. Even though, the California Fig Syrup Co. had later advertised that senna, rather than figs, were the principal laxative agent in its “Syrup of Figs,” the Court found that the name so misleading to the public in general as to be deceptive. Falling back on an old “equitable” principle, the Court ruled that where the plaintiff had himself acted in a deceptive way – came into court with “unclean hands” – it could not seek the Court’s help to block deception. Since Queen had misled the public by calling his medicine “Syrup of Figs” when it included only the minutest amounts of fig syrup and depended on another ingredient, senna, to make the product effective, the court would not stop another patent medicine company from also advertising its laxative as “Syrup of Figs.” The loss in the Supreme Court was the last and final one in a string of similar cases that Queen lost attempting to isolate “Syrup of Figs” as his exclusive brand.

CalifFigSyrCo-6a-1890-1b(MeyerBrosCat)

AD FROM 1890 MEYER BROS. CATALOGUE

CalifFigSyrCo-6a-1895c-2     CalifFigSyrCo-6a-1899-1a

CalifFigSyrCo-6a-1899-3     CalifFigSyrCo-6a-1891-1

CalifFigSyrCo-6a-1895c-1

1890s ADS

Note that this ruling, rendered three years before the Pure Food And Drug Act, did not turn on whether any of the ingredients had any actual medicinal value, but only on the question of whether the product truthfully contained syrup of figs. The ruling raised a question of “equity” law – whether the Supreme Court should refrain from using its injunctive power to protect what it considered to be a dishonest claim – rather than any standard of medical purity or efficacy. The Supreme Court answered the question that it would not extend any commercial advantage to a liar by using its enormous injunctive power to block his competition.

CalifFigSyrCo-10-8a

CalifFigSyrCo-10-8c

1905c ORIGINAL COMPANY’S BOTTLE

Despite Queen’s doleful litigation record, just like Knowlton Danderine, Syrup of Figs attracted the attention of Weiss and Diebold because of its rapid growth and burst of sales success. Whether or not Queen exclusively controlled its name, Syrup of Figs generated enormous revenue. In 1912, Queen sold the California Fig Syrup Co. to the Sterling Remedy Co for a sum reported at the time to be “in excess of $2,000,000.” The same article indicated that California Fig Syrup Co. had spent more than $6,000,000 on advertising and had netted over $40,000,000 worth of sales across its then twenty-six year existence.

CalifFigSyrCo-6a-1919-2

1919 AD AFTER STERLING TAKEOVER

Queen remained a “man about town” in San Francisco. In 1895, he had built a Classic Revival mansion which he occupied with his wife, mother and sister. He never had children and died at age 76 while touring in Egypt in 1924. Because it is the only remaining residence in San Francisco designed by architect A. Page Brown, the Richard E. Queen House is now listed on that city’s register of historic landmarks.

CalifFigSyrCo-10a-3b     CalifFigSyrCo-10a-3h

CalifFigSyrCo-10a-2a(SterlingDrug)

CalifFigSyrCo-10a-3g

BOX(TOP) & BOTTLE FROM 1920S AFTER STERLING TAKEOVER

California Fig Syrup Co. remained a separate entity within one of the divisions of Sterling Products Co. until approximately 1943 when it was absorbed into the larger company. Generic fig syrup is now readily available for use in recipes as a sweetener and is sometimes even recommended as containing either an enzyme or just plain fiber that acts as a “digestive aid.” Old myths die hard and sometimes echo through time.

CalifFigSyrCo-10b-4d

BOX & BOTTLE FROM 1935C AFTER FURTHER STERLING REORGANIZATION

©  Malcolm A. Goldstein 2018

Standard
K, S

Sterling Remedy Co. (III.2) – Knowlton Danderine Co.

Sterling Remedy Co., Manufacturer

Chapter 3.2 – Knowlton Danderine Co., Manufacturer

     KnowltonDanderineCo-2-RB21(ChicagoIL)     KnowltonDanderineCo-2-RB23-1R(ChicagoIL)

KnowltonDanderineCo-2-RB25(ChicagoIL)

POSSIBLE SPANISH-AMERICAN WAR ISSUE CANCELS

knowltondanderineco-2-rb48-2chicagoil.jpg     knowltondanderineco-2-rb48-1chicagoil.jpg

knowltondanderineco-2-rb50.jpg     knowltondanderineco-2-rb54.jpg

1914 PROPRIETARY ISSUE CANCELS

KnowltonDanderineCo-2-RB65

POSSIBLE 1919 PROPRIETARY ISSUE CANCEL

According to a full-page report in a 1906 issue of New England Magazine, Dr. Elias W. Knowlton invented his miracle hair grower and restorer, Danderine, in Guthrie, Oklahoma in 1901. Danderine sold so well so quickly that Dr. Knowlton was compelled to move his company to Chicago almost immediately to centralize its manufacture and distribution. The article further states his company quickly became the “largest patent medicine institution in America.” A Boston wholesaler placed a single order for $55,000 worth of goods, and a special train had to be dispatched to carry another $30,000 order to the New York City drug wholesaler McKesson & Robbins. A charming engraving of Dr. Knowlton’s daughter, Frances Marie, accompanies the article.

KnowltonDanderineCo-6a-1906-2R(NewEnglandMag(1906-v34)

1906 NEW ENGLAND MAGAZINE ARTICLE/AD

Whether a genuine news story or, more probably, merely an ad masquerading as a news article (as many ads did at that time), the article recounts the kind of meteoric rise in sales that would have quickly attracted the attention of William Weiss and Albert Diebold, who were then looking to expand the product line of the Sterling Remedy Co. The facts appear to have been similar but slightly different. Knowlton was in Oklahoma in the mid-1890s, but a Cook County, IL record attests that he fathered his daughter Frances Marie in Chicago in 1899. He had been born in 1864 in rural Nodaway County, Missouri (a county located in the northwest corner of that state, north of St Joseph, MO and southeast of Omaha, NE, seemingly so remote that I-29 the present highway connecting these two cities appears to deliberately bend west to avoid it perhaps because its own Wikipedia article dwells at length on the lurid murders that have occurred within its borders), and his wife, the former Laura Bell Williams, who had been born somewhere in Iowa in 1871.

KnowltonDanderineCo-6a-1898-1

1898 AD IN MEYER BROS. CATALOGUE

The Smithsonian Institution’s National Museum of American History more accurately places the earliest sale of Danderine in 1895 rather than 1901, but states the trademark (possibly the image of Frances Marie) was not registered until 1908 after Sterling Remedy had purchased the company. However, a drug trade magazine’s monthly column listing new trademark registrations from 1896 shows that Knowlton, then in Guthrie OK, himself registered some kind of Danderine trademark much earlier. Knowlton and his winsome daughter promptly disappear from Danderine’s history after its sale to Sterling, but she remained the principal poster girl for the product and her image remained on the box, although the company thereafter also recruited celebrities such as opera singers and members of the House of Representatives to endorse the product.

KnowltonDanderineCo-6a-1906-1(SantaRosaCARepublican)

1906 AD

In the 1940s, the company tried to reinvigorate the brand by advertising Double Danderine on radio. The Smithsonian claims Double Danderine was marketed until 1963. The trademark was last owned by Medtech Laboratories of Cody, WY, but has expired as of November 8, 2008.

SterlingRemedyCo-6a-1950c-1R(KnowltonDanderine)

1950c AD – DOUBLE DANDERINE

Knowlton Danderine Co. figured prominently in an extremely early Federal Trade Commission case which demonstrated the weakness of the original Pure Food And Drug Act of 1906. In 1909, the company had a contract with Parke, Davis & Co. for Parke, Davis to prepare Knowlton’s hair tonic mixture according to Knowlton’s own proprietary formula.

KnowltonDanderineCo-6a-1902-2

1902 AD

Parke, Davis, a Detroit MI company – itself a user of the battleship revenue stamps – was even then one of the pharmaceutical industry’s most respected manufacturing chemists, which means that as well as selling its own products, it prepared products for other companies to sell. Its name is familiar to most people because it continued to exist independently and advertise on its own for approximately three-fourths of the Twentieth Century. Its story is yet another future tale to unfold in this column.

KnowltonDanderineCo-6a-1902-1

1902 AD

After Parke, Davis prepared the hair tonic mixture to Knowlton’s specifications, it shipped it by boat to Sandusky, OH and then by train to Knowlton’s plant, which had been moved by Weiss and Diebold from Chicago to Wheeling, WV. The hair tonic traveled in 50 gallon wooden casks owned by Parke, Davis and stamped with its initials. When the mixture reached the West Virginia plant, Knowlton decanted the casks and placed it in individual Knowlton’s bottles for distribution as Knowlton’s hair tonic. Knowlton then returned the empty casks to Parke, Davis. One day, after 59 casks of a 65-cask shipment had been unloaded in West Virginia, the Federal Trade Commission swooped down on Knowlton’s plant and seized the balance of the shipment under a civil procedure called a “libel in rem” – a legal proceedings against the goods themselves – alleging the hair tonic was mis-branded because the Pure Food And Drug Act required that drugs shipped in interstate commerce for sale list their ingredients as well as state the amount of alcohol they contained.

KnowltonDanderineCo-4-1905c-1

1904 COMPANY POSTCARD

Knowlton appeared in the seizure proceeding to defend its hair tonic claiming that the mixture in the casks could not be considered a drug traveling in interstate commerce subject to the provisions of the Pure Food And Drug Act. The case was tried in the federal district court of West Virginia by a judge sitting without a jury and making his decision based upon facts which the government and Knowlton had jointly negotiated and agreed upon. Among these jointly submitted facts were stipulations: 1) that Knowlton’s hair tonic mixture did contain about ten percent alcohol; and 2) that Knowlton’s own bottles were labeled “Danderine Scalp Tonic. Alcohol 10 percent.”

EARLY BOX & BOTTLE OF KNOWLTON DANDERINE

Knowlton raised five separate lines of defense, and the court responded to each of them in turn. First, Knowlton argued that since a statute may not create a criminal violation merely by implication and the specific language of Pure Food And Drug Act only required that labeled drugs specify the amount of alcohol they contained, it followed that since the casks containing the mixture bore no labels, they fell outside the coverage of the Act. Second, Knowlton stated the Commission had not given Knowlton proper notice that it was going to examine the goods or opportunity to heard in advance of the seizure. Third, Knowlton contended that because the “package” the drug came in was the freight car delivered to the Wheeling plant and fifty-nine of the sixty-five casks had been opened and emptied, the drug had left interstate commerce and had passed outside the coverage of the Act. Fourth, Knowlton argued that the Commission’s seizing only the remaining six un-emptied casks constituted improper execution of the federal warrant drawn for sixty-five casks. Finally, Knowlton argued that the transmission of the mixture in interstate commerce between Detroit and Wheeling – albeit made by Parke, Davis in Detroit for Knowlton and sent to Knowlton in Wheeling – was not for the purpose of sale, and that since the mixture was only offered for “sale” after it was properly bottled and labeled in the Wheeling plant, the drug complied fully with the terms of the Act.

KnowltonDanderineCo-10-3

LATER BOX FOR KNOWLTON DANDERINE

The Court spurned Knowlton’s first argument as too simplistic, finding that a statute preventing the carriage in interstate commerce for sale of a mis-branded or adulterated drug could not be avoided by a bald claim that the drug was unlabeled. The Court found that the intent of the statute was to prevent manufacture or carriage for sale of any drug that was misbranded or adulterated in any particular and that Knowlton’s insistence that the drug had to bear an actual paper label before a violation could be found was an overly “technical” and narrow interpretation of the statute.

FOLDER ACCOMPANYING LATER BOX & BOTTLE

Next, the Court speedily demolished Knowlton’s second, third and fourth arguments. The Court held that by lawfully proceeding civilly “in rem” against the drug itself, the government had correctly freed itself of the notice and hearing provisions which would have been required if the action had been commenced against Knowlton personally as a criminal matter. It also set aside Knowlton’s argument that the rail car itself was the mixture’s “package” since it was not a tank car and the facts stipulated that the mixture was actually transported in 50 gallon casks. The Court then reasoned that its ruling on this third issue precluded consideration of the fourth argument. If the cask was the drug’s package, seizure of one, part or all of the casks was sufficient to effect the seizure under the warrant.

KnowltonDanderineCo-10-1b

LATER BOTTLE OF KNOWLTON DANDERINE

The Court was then left with the fifth argument. While the government contended that the goods moving from Detroit to Wheeling constituted a “sale” by the manufacturer of the hair tonic mixture, Parke, Davis, to the bottler of the mixture, Knowlton, sufficient to make its carriage in interstate commerce a transportation of a mis-branded or adulterated drug because the casks used for shipment lacked the proper indication of the amount of alcohol it contained, the Court looked at other stipulated facts as being more important. First it noted that Knowlton owned the formula for the hair tonic mixture. Second, it found that Parke, Davis was merely acting as Knowlton’s agent when it prepared the hair tonic mixture in accordance with Knowlton’s specifications. From these findings, it further determined that Parke, Davis’s transmission of the mixture from Detroit to Wheeling – although a transfer of goods between two separate, distinct and unrelated commercial entities – was simply the act of an agent transacting business with its principal for the purpose of “finishing” the goods before sale. Since Knowlton re-bottled the mixture into bottles that contained a label declaring the mixture ten percent alcohol before they were sold to the public, the transfer of the mixture from Parke, Davis’s plant in Detroit to Knowlton’s plant in Wheeling was not a “sale” within the meaning of the Pure Food And Drug Act. It further concluded that since Knowlton’s own bottles were properly labeled when presented to the public, Knowlton had complied fully with the provisions of the Act. The Court upheld Knowlton’s fifth argument, voided the seizure of the casks and ordered the mixture returned to Knowlton. The government appealed the dismissal of the seizure to the federal Fourth Circuit Court of Appeals.

DETAILS OF LATER BOTTLE LABELS

The Court of Appeals swiftly affirmed the District Court’s decision in a two paragraph opinion, accepting all of the lower court’s findings, both those against Knowlton on the other defenses, but, most particularly, that the transfer from Parke, Davis in Detroit to Knowlton in Wheeling, WV, although made by means of interstate commerce, was merely for the purpose of “finishing” the goods and not a “sale” within the meaning of the Act. Reformers felt that an enormous hole had been blown in the protection the Pure Food And Drug Act afforded consumers. Rather than treating Parke, Davis and Knowlton as separate and distinct commercial entities, and thus the transfer of goods between them as an arm’s-length sale between separate and distinct parties, the Court categorized the transfer as one made between agent and principal, thus subordinating the broader social intent of the Act to keep bad medicine away from the public to a much narrower commercial doctrine of agent and principal. While the Act was amended as early as 1912 to try to close some of the gaps created by various courts in its protections, it wasn’t until 1938 that it was re-written to fully withstand such technical body blows.

Cosmetic; hair tonic.  1979.0798.235.

EVEN LATER BOX AND BOTTLE OF KNOWLTON DANDERINE

©  Malcolm A. Goldstein 2018

Standard
D, J, N, P, S

Sterling Remedy Co. (III.1) – Neuralgyline Co.; J. W. James Co.; J. G. Dodson Medicine Co.; Drake Co.; Pape, Thompson & Pape Co.

Sterling Remedy Co., Manufacturer

 Chapter 3.1 – Purchase By Neuralgyline Co.
(William E. Weiss and Albert H. Diebold)

1932c PORTRAITS OF WILLIAM E. WEISS and ALBERT H. DIEBOLD

In 1909, H. L. Kramer sold his Sterling Remedy Co. to the Neuralgyline Co. of Wheeling, WV. The principals of the new owner were William E. Weiss and Albert H. Diebold.  Because of the dizzying course of corporate growth and acquisition that they pursued, many serious students of the late Twentieth Century giant Sterling Drug, Inc. actually date its inception to the founding of the Neuralgyline Co. rather than Kramer’s Sterling Remedy Co.

SterlingRemedyCo-Neuralgine-4-1910c-1

1910c STERLING NEURALGINE AD

World-girdling institutions, such as Sterling Drug, Inc., like great nations and empires, engender founding myths.  Rome had Romulus and Remus.  Sterling Drug, Inc.’s Romulus and Remus were Weiss and Diebold. Instead of being suckled by a wolf, Weiss and Diebold grew up in Canton, OH ostensibly as childhood friends and classmates. After they graduated high school together, Weiss had matriculated at the Philadelphia College of Pharmacy, and, following his graduation in 1896, had gone to work in a drugstore in Sistersville, WV, a small town lying approximately 50 miles southwest of Wheeling on the Ohio River.  Diebold meanwhile joined his father’s safe and lock business. One of them happened upon an effective pain relieving medicine called Neuralgine and in 1901, they decided to form the Neuralgyline Co. to market Neuralgine in the more metropolitan Wheeling, WV.  Their oft-repeated tales continues that in two cramped and dark rooms on the second floor of a ramshackle building in Wheeling, which then constituted the offices of their fledgling company, they labored three days a week compounding their analgesic, Neuralgine, while spending another three days bouncing over rutted roads in rented buckboards hawking it to neighboring druggists. They even had to call special board meetings to authorize the expense of hiring of a stenographer, or installing a safe or telephone.  From such long days of hard work and humble beginnings did Sterling Drug ultimately soar forth.

RW-NeuralgylineCo-3a(Ad-NARDJourn(1910-v10)

1910c STERLING NEURALGINE TRADE AD

The truth is difficult to tease out from the myth, and true stories are often embellished to make them more thrilling.  Weiss and Diebold were indeed genuine businessmen with a particular genius for purchasing and exploiting popular patent medicines.  Both were born in Canton, OH: Weiss in 1879 and Diebold in 1873. Weiss did train as a pharmacist, but different sources attribute the original ownership of Neuralgine differently, and all sources agree that there is no record presently extant that attests to Neuralgine’s original composition.  One source says that Weiss first compounded  and marketed it in the Hill drugstore where he was employed in tiny Sistersville.  Others suggest that Diebold brought the product to the partnership.  While Weiss appears to have been a truly self-made man, Diebold may have had the funding and the connections necessary to create a new business. His family was already wealthy and well-known in Canton in the safe and lock business, and today, Diebold Nixdorf Corporation, originally founded by Albert Diebold’s grandfather, Carl Diebold and still headquartered in North Canton, OH, remains prominent not only in its original areas of expertise in bank vaults and fiscal security, but also in the related fields of equipment and software for all manner of self-service sales transactions and related financial services.

1886c NEURALGINE MFG. CO. ADS

What slightly muddies the tale of Weiss and Diebold toiling long hours in dark offices are ads for a patent medicine called Neuralgine dating from around 1886, some fourteen years before Weiss and Diebold appeared on the scene.  These ads were placed by a New York City based company, the Neuralgine Manufacturing Co. They followed the great patent medicine tradition of attributing the miraculous discovery of the remedy to a folk figure, such as an Indian medicine man or a wise and savvy Westerner taught firsthand by such a medicine man, who was both cognizant of the secrets of nature yet far away removed in a romanticized locale, such as the Old West, for they stated that the formula had been discovered a mere six months prior by the “celebrated physician Dr. Walter Hendricks of Montana.” Diligent Google searches reveal no such “celebrated physician” in the Old West.

 SterlingRemedyCo-Neuralgine-6-ReproAd-1

1886c NEURALGINE MFG. CO. AD (REPRODUCTION)

However, patient searches of the Neuralgine Mfg. Co. show that in Trow’s New York City Directory for 1904, its address was 24 Vandewater Street in Manhattan and its registered owner was one Henrietta Munro.  Its 1880s ads ran in the back pages of novels printed by a Norman L. Munro, whose address happened to be 24 and 26 Vandewater Street.  Norman Munro had been a publisher who became rich enough printing dime novels to afford a custom-built 48 foot luxury steam yacht (called the Henrietta) in 1886, and to replace it subsequently with an 84 foot steam yacht in 1887 and a 132 steam foot yacht in 1888. He had died at age 51 in 1894 after an emergency appendectomy undertaken within the same week after his eleven year old son had successfully survived the same operation performed by the same physician.  Henrietta Munro had continued Norman’s businesses, one of which apparently was a side line in patent medicine.

RW-NeuralgylineCo-6(1887Ad-HolyRose[The])

1887 COVER OF A NORMAN L. MUNRO BOOK CONTAINING NEURALGINE AD

One significant distinction between Munro’s Neuralgine and Weiss and Diebold’s Neuralgine must be flagged.  The former was an external remedy, perhaps a liniment, while the Neuralgine marketed by Weiss and Diebold was a pill for internal ingestion. Also, oddly, the Neuralgine Mfg. Co. of New York City was still advertising in 1905 to the trade, four years after the Neuralgyline Co. of Wheeling, WV was founded.SterlingRemedyCo-Neuralgine-10-1

STERLING REMEDY CO.’S NEURALGINE

The reconciling conclusion that emerges from these somewhat puzzling contradictory facts seems to be that Weiss’s and Diebold’s Neuralgine was a new formulation applied to a remedy acquired by, rather than invented by, Weiss and Diebold.  Two small clues in the remaining readily available extant records seem to support such a conclusion.  First, when Neuralgine was trademarked in 1907 as an internal remedy by the Neuralgyline Co. of Wheeling WV, the date of 1879 was listed as the date of its first use in trade. Had either Weiss or Diebold actually invented Neuralgine the date of first use would have been much closer to 1901.  Second, in 1902 there appeared in the columns of the drug trade publications a provocative teaser news item/ad heralding a change about to take place in Neuralgine.  The statement affirmed that despite not being advertised for several years Neuralgine was a trusted “oldtime” remedy that had maintained a steady demand because of continual medical recommendations, but alerted retailers that they must now stock up their supplies because the Company was ready to “boom” it that Fall with a new and well-funded advertising campaign.  This “item” suggests that by 1902 the widow Munro was ready to jettison some of her late husband’s minor interests and the real “manufacturers” were now Weiss and Diebold.

1902 NEURALGINE AD

RW-NeuralgylineCo-1a(Ad-20Yrs-PharmEra(1902)

 Whatever the truth of the origins of Neuralgine – whether they sweated in a dark room to formulate Neuralgine completely from scratch, or whether they applied their new formulation to a previously known patent medicine which they acquired -Weiss and Diebold quickly came to appreciate the value of unrelenting advertising, and scrupulously plowed their profits back into further advertising.  However, they soon realized that a wider line of products would produce even greater profits.

1910 STERLING REMEDY NEURALGINE TRADE ADS

Certainly the modified origin story of Neuralgine proffered in this column neatly corresponds to Weiss’s and Diebold’s later pattern of building their business. To expand their product line, Weiss and Diebold early came to the conclusion that it would be easier to purchase established products rather than try to develop their own. Their first acquisition took place in 1906 when they purchased the Knowlton Danderine Co. of Chicago, a hair tonic manufacturer.  As outlined in the prior column, Sterling Remedy Co. was acquired in 1909 principally for two of its patent medicines, a laxative, Cascarets, and its product advertised to break smoking addiction, No-To-bac. To give their company additional heft, Weiss and Diebold also bought three smaller local West Virginia patent medicine companies, the J. W. James Co. which produced an entire line of patent medicines, the J. G. Dodson Medicine Co. which marketed a product called Liver Tone, and the Drake Co., which manufactured Drake’s Palmetto Compound, and at the same time, absorbed a Cincinnati-based company called Pape, Thompson & Pape Co. whose featured commodity was Diapepsin, a remedy allegedly to treat kidneys and urinary problems.   In 1912, Weiss and Diebold purchased the California Fig Syrup Co. which brought in another laxative, Syrup of Figs, to provide additional relief for the constipation that No-To-bac seemingly produced.

SterlingRemedyCo-4-1910c-1a

SterlingRemedyCo-4-1910c-1b

1910c STERLING REMEDY CO. POSTCARD RE AD SIGNAGE

Relentless advertising kept all of these products before the public and producing profits.  By 1912, the company was worth $4 million. Fearing that the Neuralgyline name was too difficult for people to grasp, Weiss and Diebold decided to simplify it by adopting the Sterling name they had acquired from Kramer, and re-dubbed their company Sterling Products, Inc.  Eventually, the transactions that Weiss and Diebold masterminded catapulted them on the world stage and carried consequences with national implications, which is why they are generally regarded as the true founders of Sterling Drug, Inc.

The Four Smaller Companies Acquired By Weiss & Diebold In 1909

1) J. W. James Co. Cancels

1898 Revenue Stamps

JamesJWCo-2-RB21-1-1898-2R(SterlingProductsIncSucessor)     JamesJWCo-2-RB21-1-1899-1R(SterlingProductsIncSucessor)

JamesJWCo-2-RB21-1-1900-2R(SterlingProductsIncSucessor)

JamesJWCo-2-RB23-1-1900-1R(SterlingProductsIncSucessor)     JamesJWCo-2-RB23-1-1901-1R(SterlingProductsIncSucessor)

TYPE 1 CANCELS

JamesJWCo-2-RB21-2-1899-12-31-2R     JamesJWCo-2-RB23-2-1899-04-14-1R(SterlingProductsIncSucessor)

TYPE 2 CANCEL

1898 Cover and Trade Advertising Material

JamesJWCo-3-1898-1a

JamesJWCo-3-1898-1b

JamesJWCo-3-1898-1c

1904 Invoice

JamesJWCo-6-1904-1

Products

JamesJWCo-10-0a(HairTonic)

HAIR TONIC

JamesJWCo-10-2(SterlingProductsIncSucessor)

“MINATURE’ HEADACHE POWDERS

JamesJWCo-10-5(SterlingProductsIncSucessor)

LATER PACKAGING

—–

2) J. G. Dodson Medicine Co.

1915c Cover

DodsonJGMedCo-3-1915c-1(laterSterlingProductsInc)

1920 Ad

SterlingRemedyCo-DodsonJGMedCo-6a-1920-1(HoustonInformer)

Product

SterlingRemedyCo-DodsonJGMedCo-10-1

SterlingRemedyCo-DodsonJGMedCo-10-3

SterlingRemedyCo-DodsonJGMedCo-10-2

1914 Doctor’ Complaint Re Druggist’s Sale Of Dodson’s Liver To Retail Customers

SterlingRemedyCo-DodsonJGMedCo-6a-1914-1a(ComplaintReDodLtr-NARDJourn-v17)

SterlingRemedyCo-DodsonJGMedCo-6a-1914-2a(ComplaintReDodLtr-NARDJourn-v17)

—–

3) Drake Co.

1910 Ad

SterlingRemedyCo-DrakesPalmetto-6a-1910-1(BiloxiHerald)

Product

DrakeCo-10-1

—–

4) Pape, Thompson & Pape Co.

1910 Trade Ad/News Story Promising Ad Blitz (just like 1902 Neuralgine Ad)

SterlingRemedyCo-PTPCo-6a-1910-3a(ArtReDiapepsinTradeAd1-PharmEra-v43)

1910 Additional Trade Ads

SterlingRemedyCo-PTPCo-6a-1910-1a(DiapepsinTradeAd-PharmEra-v43)

—–

SterlingRemedyCo-PTPCo-6a-1910-2a(DiapepsinTradeAd-PharmEra(v43No2)

Product

Knowlton Danderine Co. and the California Fig Syrup Co. each possess histories prior to their acquisition by Weiss and Diebold that echo this story of the Neuralgyline Co. Perhaps that is why Weiss and Diebold were attracted to them.  They will subsequently each receive their own separate treatment in this column.

©  Malcolm A. Goldstein 2018

 

 

 

 

 

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