The average crude oil, until the advent of cracking, supplied more gasoline than there was need for. In 1918, in straight-run distillation, 100 gallons of crude oil produced on the average—

Gallons

24

16

45

5

10

At the present time, 100 gallons of crude oil is made into the following amounts of the different products:

In 1900 the United States produced only 5,000,000 barrels of gasoline, and had a market existed there could have been produced by the straight distillation of crude oil without cracking at least 10,000,000 barrels. Gasoline was a byproduct. Its only use was in kitchen stoves for cooking, in store lighting, for enriching illuminating gas such as water gas which was used for city lighting and cooking, for air gas for heating and lighting, and for furnace fuel. From 1900 onward for several years the increase in production of crude oil more than kept pace with lighting through the advent of electricity further damaged the sale of gasoline, the development of automobiles and the passing out of luminous gas flames for except for motor fuels, so that in 1910 the posted price of high grade crude oil was only 35 cents per barrel. It was not until about 1912 that farsighted individuals came to recognize that the rate of increase in the number of automobiles was greater than the rate of increase in the production of crude oil, and that there might be a shortage of gasoline.

The gasoline sold at that time was much lighter than the gasoline now used in motorcars. In 1915 and 1916 there was a marked slowing up in the production of crude oil with the result that demand for gasoline, as shown by the amount produced in the United States, passed the potential supply for straight-run and natural gasoline, and in 1920 the posted price of Mid-Continent crude oil exceeded $3 per barrel.

These statistics go to show that there was little incentive for the production of motor fuel by cracking until some time shortly prior to 1915, although there was much scientific data available relative to cracking. Cracking, prior to this time, was done to some extent for the production of kerosene, but in the main was of merely abstract technical interest, or in anticipation of later needs. The patent art was reasonably complete even in the last century and disclosed how the cracking of crude oil to produce gasoline could be done, but until the advent of the motorcar there was no outlet for gasoline. The change-over of the type of gasoline required in order to suit the earlier type of motor is different from the requirements of the present-day high-compression motor. The fact is that what was a premium gas 20 years ago is today undesirable and the gas that 20 years ago was looked on as undesirable is today a premium fuel. The change of their requirements and the market have much to do with the refining processes; and while these processes could be economically used in the early days only for the making of illuminating oils, of which there was an ample supply without cracking, there was abundant disclosure and plenty of first-class materials available for working at high temperatures and high pressures, had the need for gasoline existed.

The history of petroleum in the United States has been that of monopoly. It has generally been controlled by means of a combination of capital and such practices, starting with the late John D. Rockefeller of Standard Oil, with which most everyone is familiar, as have called for the corrective measures applied by the Federal Government in 1911 to break up the Standard octopus into its many tentacles, so aptly described by Teddy Roosevelt as "malefactors of great wealth." Rule or ruin, now as then, is the watchword.

84949-44-pt. 8-2

In 1912-13 W. M. Burton of Standard Oil of Indiana took out his patent having to do with the cracking of petroleum oil into gasoline and this Standard Oil Co. using the Burton patents was processing 20,000 barrels per day and was the only successful commercial cracking process in the United States and it continued to occupy this highly lucrative position until at least 1920.

Oil refiners throughout the Nation were desirous of participating in this new field and, among these was one Jesse A. Dubbs, who in his oil activities here in California had secured certain patents having to do with the refining of petroleum and which resulting process was being used and developed by the Sunset Oil Refining Co.-a Jesse A. Dubbs and family dominated company-with a plant near Long Beach, Calif. On November 20, 1909, Jesse A. Dubbs filed an application for a patent, which patent for several years rocked along in the Patent Office without coming to issue.

A STOCKYARD BYPRODUCT

During this time there was located at Independence, Kans., a plant of the Standard Asphalt & Rubber Co. (Sarco), which company was a subsidiary of and owned by the J. Ogden Armour interests of Chicago. J. Ogden Armour was the well-known Chicago meat packer. This company was also interested in the refining of petroleum products in similar or like manner to the Sunset Oil Refining Co., of which Jesse A. Dubbs was the president. Then, as now, there was much litigation having to do with the alleged infringement of patents operated by these companies and others.

The Armour interests of Standard Asphalt & Rubber Co. was looked after by one E. G. Leszynsky, president, and Frank L. Belknap, the latter being a wellknown corporation and patent lawyer well versed in the knowledge of what was happening in oil circles. The said Leszynsky and Belknap made a trip to California, accompanied by C. P. Dubbs, the son of Jesse A. Dubbs, and although C. P. Dubbs was the general manager and treasurer of the Sunset Oil Refining Co., he was also in the employ of Sarco. Leszynsky, Belknap, and C. P. Dubbs approached the Sunset Co. in the fall of 1913 for the purpose of purchasing the patent application of Jesse A. Dubbs-the reason for this purchase being that the Armour group, and particularly Leszynsky and Belknap, who were active in the management of the oil department of Armour, were familiar with the Burton patent which had just been issued, and well understood the commerciability of the Burton process and the fact that it was an enormous money maker for the Standard of Indiana. Belknap had ascertained that Jesse A. Dubbs had this patent application of November 20, 1909, lying in the Patent Office and conceived the idea that, if he could secure it, he could by amendments and adding claims have it antedate the Burton patent and when this was done, compel the payment to themselves by the Standard of Indiana of vast sums of money.

DUBBS SELLS OUT HIS COMPANY

Despite the fact that Jesse A. Dubbs had long since (May 5, 1900) granted exclusive rights for all of his patents and inventions, then developed or issued or to be developed and issued in the future, to the Sunset Oil Refining Co., and which condition was well known to Leszynsky, Belknap, C. P. Dubbs, and Jesse A. Dubbs, this fact did not for a moment deter them, and an agreement was entered into on November 15, 1913, for an option to Leszynsky from Jesse A. Dubbs to purchase the Jesse A. Dubbs patents, which were, in fact, the property of the Sunset Oil Refining Co., and which agreement was completed on May 14, 1914. The Sunset Oil Refining Co. and its shareholders and creditors never were advised by these conspirators of this option or agreement, and in fact, they were deliberately misled and immediately after the option date Mr. Belknap became active at the Patent Office with this application in order to bring about the desired results as here indicated, and as a result of his efforts there was issued on January 5, 1915, patent No. 1,123,502 which has been known to the oil world ever since as the cracking patent, which during its lifetime and since, was exploited for great gains by the Universal Oil Products Co., and has ever been claimed by this company to be basic and controlling in its patent structure.

Leszynsky, who was an agent or instrumentality for the Armour group, caused to be formed immediately after he completed his purchase of May 14, 1914, with J. A. Dubbs, the National Hydro-Carbon Co., a South Dakota corporation, and on or about November 2, 1915, the name of this company was changed to that of Universal Oil Products Co. It will not be disputed by even the Universal and its

officers that Leszynsky and the National Hydro-Carbon Co. and the Universal Oil Products Co. were the one entity in this matter.

1

The history of J. Ogden Armour and the Armour business does not show them as being possessed of the highest ethics or reputation in their undertakings. This is the same J. Ogden Armour who, having been bequeathed one of the largest American fortunes had his Armour Grain Co. thrown off the Board of Trade in Chicago for shady practices when he was at the height of his financial power. The history of his companies and practices have been well advertised and written up, and more than lightly touched upon in The Jungle by Upton Sinclair, having to do with the unsavory packing-house conditions at Chicago.

The Standard Oil of Indiana was then, as now, enormously wealthy and had set a value of $150,000,000 on their Burton process. It was for no other purpose than the sandbagging of this enormously rich company that the Universal Oil Products Co. was formed, as herein outlined. Immediately upon obtaining control of this important Dubbs cracking application the Armour interests went into action and by means of building up a situation and suppressing evidence of prior art and by enlarging on the practice and process having to do with this J. A. Dubbs patent No. 1,123,502 and by tying up the Sunset Oil Refining Co. employees and others throughout the Nation who had knowledge, and thereby render them unavailable as witnesses, or to give only such testimony as Universal wished them to give, this company in the course of a couple of years put themselves in shape to bring an action against the Standard of Indiana.

COURT ACTIONS

On August 7, 1916, the Universal Oil Products Co. brought an action in the United States district court at Kansas City, Mo., against the Standard Ol Co. of Indiana, alleging solely as a cause of action the infringement of the J. A. Dubbs patent No. 1,123,502 and asking for an accounting. On both sides were arrayed an important retinue of high-powered attorneys and cracking experts. The following set-up is significant:

An obscure lawyer by the name of Holmes Hall, of Sedalia, Mo., a classmate and roommate of Frank L. Belknap, and who admittedly never had earned as much as $5,000 a year in his practice, was found to be acceptable to the Universal Co. as special master.

It also appears that Mr. Hall was related to Mr. Wiles, the leading counsel for the Standard of Indiana, and Mr. Hall's compensation was fixed at $100 per day and expenses. This case rocked along for 15 years with an abundance of testimony being taken-something over 20,000 pages of testimony and a great truckload of innumerable exhibits.

Despite the seeming importance of this particular patent suit-and that Universal has widely advertised (probably for the intimidation of refiners) that its cost to them alone was in excess of $1,800,000-the utmost good will prevailed between counsel, experts, and special master. It had the appearance of club life rather than a serious lawsuit, despite the chicanery and untoward practices which every once in awhile cropped up. In 1924 the special master either conceived or had suggested to him the idea that it would be well worth his while to put out some feelers for a settlement. The idea being that by his giving out the information to Standard that he was about to rule in favor of Universal he could force the Standard into a settlement. Mr. Hall had the idea that he would from this receive a very large amount of money, and to this end he enlisted the offices of a newspaper reporter on the Kansas City Star, one Cale Jones, and he suggested sharing with Mr. Jones his contemplated fee. (For particulars, see 76 Fed. (2d) 258.) Such untoward practice being a little more than the Standard Oil could swallow or even had looked for, caused Mr. Hall to be shorn of his duties as special master insofar as making rulings or recommendations were concerned, and so from that time on he merely took testimony. It is significant that Universal rushed to his rescue when he was under attack, but when confronted with Mr. Hall's written admission of guilt the Universal attorneys were full of uctuous words and appeared to greatly deplore the unseemly situation the master found himself in.

ARMOUR AND STANDARD WALTZ

There was no effort made by either side to bring this case before the courts for adjudication or to have either the Dubbs patent or the Burton patent declared valid, as will be touched on later. The J. A. Dubbs patent issued on January 5, 1915. The Burton patent issued on January 7, 1913. This case Universal v.

Standard-continued until after January 6, 1931, which time is 1 year after the Burton patent had expired and 1 year before the Dubbs patent was due to expire the meaning of this will also be revealed later on.

During this time, the chief oil expert in the employ of or retained by the Universal was Dr. Walter M. Cross, of Kansas City, Mo., generally reputed to be a leading petroleum engineer of the Nation. Dr. Cross had acted as the expert for Sarco in its litigation and early in 1913 was prevailed upon by Mr. Belknap to give every attention to the development of a process for cracking gasoline. Dr. Cross continued to act as consultant and advisor to Universal until about the year 1922. Dr. Cross and his brother, Dr. Roy Cross, and Mr. Lyons, owned the Kansas City Testing Laboratories at this time. The Cross brothers took out several patents which became the basis of the business of Gasoline Products Co., formed about 1915, and afterward taken over by the Texas Co. Belknap had a substantial interest in this Cross process and patents, and it is also believed that C. P. Dubbs likewise had an interest. Belknap and Dubbs were certainly doing all they possibly could from 1914 on for several years to interest refiners in the Cross process and describing it in detail-this at a time when obviously, despite its later claims, the Universal had no plant or process. Dubbs and Belknap were in close communication with and had the run of the Cross laboratories for a period of many years and undoubtedly much of what they learned regarding oil cracking and what the Universal's research and development department acquired was gleaned from this source. The Universal, during the years 1916, 1917, 1918, and 1919 endeavored to build at Independence, Kans., a replica of the original Sunset Oil Refining Co.'s plant and to work out some sort of a process for the commercial cracking of oil.

One remarkable feature is that, although the Universal had control of this Jesse A. Dubbs No. 1,123,502 patent and invention at all times after November 15, 1913, it did not develop any operable process or any process that could be termed commercial until late in 1922 and for that year its entire royalty fees amounted to less than $6,000, and this 9-year period was at a time when other companies cracking gasoline had developed very successful cracking processes with a moiety of the money expended by the Universal and which speaks volumes for the attainments of Universal and its claim of being early in the cracking field and contributing to such development.

THE ERSATZ PATENT

In 1912 one Otto Behimer, a book agent selling encyclopedias, appeared at the Kansas City Testing Laboratories. The book business was tough and Dr. Cross, to help him out bought a set. This was the only set that Mr. Behimer had any luck with and so he solicited a job at the laboratory, which was given him and he remained until about 1917. His duties were those that could have been discharged by any semiskilled laborer and consisted chiefly of such chores as wrapping parcels and collecting samples of water out of the river at Kansas City for purity determination by Dr. Walter Cross, who was this city's chemist. The wages for Mr. Behimer during his term at the laboratory approximated $40 per month, and he developed to the point where he was permitted to be a wrenchman at the Cross plants; and it was while performing such semiskilled duties that Mr. Behimer met Messrs. Manley and Holmes of the Texas Co. when a demonstration was being given to them by Dr. Cross at the Rosedale refinery, in which refinery and process Belknap had an interest. Behimer solicited through these Texas representatives a job with their company and Cross, caring little or nothing about the matter, did nothing to stop him. The Texas officers apparently believed that Behimer would know something of value in regard to what Cross was doing. His salary with Texas was $10.000 per year. Quite a field of speculation opens in regard to the hiring of this semiskilled laborer at such money by this enormous corporation, and the conclusion is easy to arrive at that they figured Behimer-and he probably so assured themknew something of benefit to Texas that was going on in the Cross laboratories. C. P. Dubbs, as has been pointed out, had the run of the Cross laboratories, also and Dr. Cross, in supervising the experimental plants of Universal at Independence and trying to make such into an operable process, learned or determined the feature of returning the reflux or condensate to the inlet side of the heating coil for re-treatment. This is the basic feature of what is termed "Clean circulation." It was old and had been commercially practiced at the plant of the Sunset Oil Refining Co. as early as 1909 and 1910, and had been practiced elsewhere. Had Cross known of or thought there was any invention to this idea,

he undoubtedly would have taken out a patent for himself and his company. Whether C. P. Dubbs knew of this feature having been employed at the old Sunset Co., one cannot say, for Dubbs was merely the salesman for the products of the Sunset Co. and located at Pittsburgh, Pa. He had-and we have made a very careful investigation of him and his attainments-no chemical or engineering knowledge and was utterly lacking in mechanical ability. Had he been possessed of such, we are of the opinion that Universal would have been willing to have him complete his deposition in the suit brought against Hancock Oil Co., rather than dismiss their bill of complaint on May 4, 1942, and beat a hasty retreat. At all events C. P. Dubbs made an application for a patent covering this clean-circulation feature on March 19, 1919, and this resulted in Patent No. 1,392,629 on October 4, 1921. The two features of this patent are the continuous withdrawal and removal of the residuum from the process and the return of the reflux or condensate to the inlet side of the heating coil for re-treatment.

THE TWIN PATENTS

Behimer made an application on March 21, 1918, for a patent covering these same features of this Dubbs patent, and this resulted in the issuing to Behimer of patent No. 1,883,850 on October 18, 1932, just 14 years after his application was filed.

UNCLEAN HANDS

In 1923 an interference was declared between Dubbs and Behimer by the Patent Office, and Dubbs being adjudged junior to Behimer, the burden of proof was on Dubbs. This interference case likewise rocked along without either patent being declared valid or invalid or any serious attempt made to determine the issues, and eventually a get-together was arranged after the Texas Co. and Universal made peace with each other, whereby Behimer disclaimed in favor of Dubbs, after the ransacking of the Texas files by agents of Universal, under direction of Dubbs, to secure evidence of Behimer's work when with Texas, and the hiring of Behimer by Universal in 1927 for the sum of $225,000 and rendering him unavailable to testify for anyone except his employer, Universal. After Behimer entered Universal's employ he filed nullifying affidavits and generally professed to treat his patent and work as abandoned experiments. The upshot of this matter was that by the connivance of these two royalty companies, Universal and Texas, the Dubbs patent enjoyed a lifetime of 17 years from 1921 until 1938, and the Behimer patent came into being in 1932 and may continue until 1949. It is understood that this particular patent matter is cited by attorneys of the patent group in Washington as the leading example of the abuse of the patent system that is known to them. This Dubbs patent is and has been claimed by Universal as the basic and important patent in their so-called clean-circulation process, generally known as the Dubbs process.

After the expiration in 1932 of the J. A. Dubbs patent No. 1,123,502, then this C. P. Dubbs patent No. 1,392,629 is claimed by the Universal to be its chief patent, and great stress is laid on the Dubbs process as being a clean-circulation process. As to whether or not the Behimer patent and the Dubbs patent cover these same clean-circulation features is best shown by the fact that on December 1, 1937, immediately prior to the expiration of the C. P. Dubbs patent, the Universal Oil Products Co., in order to perpetuate the Dubbs process embodying clean circulation and not disturb the basis of its patent structure, entered into contractual relations with the Gasoline Products Co. and the Texas Co. whereby, through the payment of a large amount of money, said to be $3,600,000, they secured the licensing rights to the Behimer patent and replaced the Dubbs patent on its expiration, with the Behimer patent in its patent structure.

UNIVERSAL A PARASITE

The Universal has never been an oil company or in the oil industry. It is a parasite. It merely licenses its patents and by intimidation, threats, and law suits, forces independent refiners to take out a license from them. The Universal was the first group to make a consistent effort to patent every conceivable sort of combination or apparatus or process having to do with the oil-refining industry. This procedure was in the hands of its president, Mr. Hiram J. Halle, and Mr. Belknap, the patent attorney who well knew the limitations of the United States Patent Office. It is reliably reported that Mr. Belknap received a fee of $1,500 from Universal for each and every