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Aviation History
1918
1918 - 0867.PDF
AUGUST I, 1918. (replaced in the firm's letter of March 24th by an equal amount of methylacetate), and half a ton each of triacetine, triphenyl phosphate and aspirin. On he 24th March the firm informed the War Office that they were proceeding withthe ordering of the necessary plant, and in subsequent correspondence reference is made to expenditure actually inccurred. A building licence was appliedfor in August, 1916, and was granted, the expenditure involved being stated at about £4.0,000. In the previous months, however, namely July, 1916, Dr.Dreyfus had written to the Contracts Branch of the War Office saying that he ' hoped to begin the manufacture of cellulose acetate at the end of the next month.During practically the whole period of these negotiations offers to manu- facture were made- by other companies. The Admiralty wereanxious to widen-... the sources of supply, partly in order to secure competition in manufacture and partly owing to dissatisfaction with the cellulose acetate which was being importedfrom the parent firm at Basle. Two English companies, the Cellon Company, who had already approached the War Office, and the United Alkali Company,got into touch with the Usines du Rhone and offered to manufacture in England. The Cellon Company approached the -War Office direct in May, 1916, on the, advice of the Admiralty. They were told that if they liked to put up a plant at their own expense they could tender for the next requirements of the WarOffice for cellulose acetate. The United Alkali proposal was put formally before the War Office by the Admiralty inJJuly. In reply the Admiralty were informedthat the British Cellulose Company would commence output about the end of August. Their expenditure, with special concessions from the Treasury, wasbased on an anticipated output equal to three times the total estimated require- ments of the War Office and the Admiralty together. Consequently, if an orderwere given to another firm sufficiently large to recoup them for their capital expenditure, the discontinuance of the order to the-British Cellulose Companywould probably be involved, which would be contrary to the understanding on which they had undertaken the erection of their factory. The United AlkaliCompany were, therefore, put off by the Admiralty according to the firm's state- ment on the grounds that the British Cellulose Company would be producingthe required cellulose acetate within two months, which would, of course, effect- ually prevent them from competing, their offer being to erect their plant in fromsix to nine months. The hopes held out by Dr. Dreyfus that the cellulose acetate would be producedat the new works by the end of August proved little better founded than his statement in November, 1915, that supplies would be forthcoming within amonth. Although, according to the contemporary Admiralty records, the accuracy of which, however, is questioned by the firm, Colonel Grant Morden- informed the Secretary on the 8th November, 1916, that the Company were in a position to begin manufacture of cellulose acetate at a week's notice, and onthe r5th February, 1917, Sir Trevor Dawson described the Company to the Fifth Sea Lord and the Civil Lord as the only one in England producing cellulose acetatein any quantity it was not until April, 1917, that any supplies were manufactured, and not until July, 1917, that the material was forthcoming in quantity. On the29th September, 1916, a month after the date when supplies were expected, the Admiralty again wrote to the War Office suggesting that another source of supplyfor cellulose acetate should be found. To this the War Office replied on the 9th October that they would have no objection if the Admiralty, notwithstanding thedifficulties mentioned in their former letter^arranged their own source of supply. They added that if the contract entered into with any new firm were similar tothat made with Dr. Dreyfus, namely, for the supply of a definite quantity, not exceeding 100 tons, arrangement could no doubt be made for a portion of thatquantity to be taken over by the War Office. It is difficult to reconcile this with the programme which the British Cellulose Company had put forward, but inany case the Admiralty contented themselves by relying entirely upon the French product, until later they agreed to obtain all supplies from the Depart-ment of Aeronautical Supplies. ' Ministry of Munitions.—New Contracts."At toe end of February, 1017, Aeronautical Supplies were taken over by the Ministry of Munitions. Cellulose acetate was still being obtained partly fromBasle and partly from the Usines du Rhone, that from Basle continuing to give trouble in spite of an alteration in the specification. The original contract for100 tons, 50 to be supplied from Switzerland, had been superseded, after some 75 tons had been imported from Switzerland, by a new contract for 40 tons onthe new specification to be manufactured in England. The principal dope manu- facturers, the British Emaillite Company and Cellon, were using as much as pos-sible the du Rhone product, and the former, together with the United Alkali Company, were endeavouring to introduce the du Rhone manufacture intoEngland. No supplies were forthcoming from the new work€, where expenditure, entirely unchecked, had been continuing far beyond the original capital. In therr formal application of 24th March, 1916, for special terms, the BritishCellulose Company offered to the War Office an output of some five tons a day of methyl acetate, which was then being spoken of as a possible solvent for use indope. An unfavourable decision having been obtained upon it, reference to its use was struck out of the first letter of the War Office to the Treasury, but asearly as 2nd October, 1916, Dr. Dreyfus informed the Air Board, that his Company was installing a large plant for the purposesjol manufacturing this material, andwished to know whether its use as a solvent was permitted. On the 16th April, 1917, he informed the Ministry of Munitions that his firm would, within a veryshort time, be in a position to manufacture several tons a day of methyl acetate, as they had at the present moment supplies of all raw material with the exceptionof methylic alcohol, which they had reason to believe they could obtain without difficulty. Consequently he asked for orders. This was followed at an intervalof two days by a letter containing an apparently separate proposal for the installation of a plant and the manufacture of carbide of lime, synthetic aceticacid, pure acetone and ethylic alcohol (being both solvents and constituents 01 the cellulose acetate), which could be carried out within three months time,provided that the necessary priorities were received and orders were given suffi- cient to justify the expenditure. The twojproposals were considered together,and in June, 1917, an order was placed for 2,500 tons of methyl acetate or acetone (involving about>£450,000), delivery of the former to be at the rate of three tonsper week to begin in four weeks, reaching 24 tons in 18 weeks, delivery of the latter to be at the rate of 20 tons per week to begin in 20 weeks. Until May, 1918, no methyl acetate was delivered to the Ministry from thisfactory, although the firm stated that they were manufacturing it from acetic acid in a letter written on September 27th, 1917, to the Department of theMinistry which had just announced its control of the latter material. The delay of over nine months in the production of methyl acetate from materials manu-factured elsewhere was explained to the Sub-Committee as due to the fact that it Is made on the acetic anhydride plant. Acetic anhydride is an essentialingredient in cellulose acetate ; methyl acetate could, therefore, only have been made at the expense of cellulose acetate. The demand for acetone has beenwithdrawn and since no carbide of lime or acetic acid has yet been produced the. m^*?y! acetate is being made entirely from materials supplied by the Ministry. When tbe prices under this contract were under consideration a questionwas raised within the Ministry concerning the inclusion of the capital expenditure involved within the terms of the concession made as to freedom from ExcessProfits taxation, and it was held by the officials concerned that the terms of the concession would not cover these new proposals, but the point was not raisedby the firm and no decision to that effect was communicated to them. It i« noticeable, in view of the original intention (see above), that the concessionis now spoken of as being one of exemption and not of refund. At about the same time, namely, on the 4th May, 1917, Dr. Dreyfus wrote that the works were now almost completed for cellulose acetate, and asked 865 for a larger order than that for 40 tons mentioned in above. A newcontract was placed on the 5th June for 25 tons a month, with three months notice, the price showing a slight reduction over that previously arranged Thisorder, though in excess of the output of the works during any month in 1017 was well within their capacity as estimated by the Supply Branch, and was nottherefore regarded as in itself involving new extensions. Doubling of Cellulose Acetate, &c. Plant. < Tu^i I?17' Partlv as a result of stoppage of imports from France, statedto the Sub-Committee to have been due to a temporary shortage of coal, the supply of dope in this country became precarious. The output of the new workswas far below the promises. The works were accordingly visited by Supply Officers of the Ministry, one of whom reported on August 16th that the delaywas entirely due to failure by the Ministry to recognise the merits of Dr. Dreyfus and the difficulties of his work. If properly assisted by the Ministry they wouldcomplete their programme. The Reports ends:—" With proper assistance, i.e., provision of plant items ordered by them, but hopelessly slow in deliveryhitherto—loan of charge hands from our chemical plant, assistance of our ex- perienced chemists at the right time—and advice from certain selected engineersin the employment of the Ministry of Munitions, they can deliver two tons daily in one month to six weeks from now and four tons in two to three incnths "In examination by the Sub-Committee the Supply Officers reaffirm this statement that the delay in production was due entirely to the low priority whichthe firm received for their orders. The Officer in'charge of the Priorities Branch entirely combats this assertion. In his evidence he said that, in view of thestatement of the Supply Branch, he had caused a special enquiry to be made into this case, and after following up the orders for plant and material, not onlyto contractors but also to their sub-contractors, he was able to show them that the delay was not due to the low priority but to lack of organisation and absenceof interest on the part of manufacturers in the orders of a company concerning which they knew nothing. At a special conference on 8th September, 1917, thisconclusion was generally accepted by the Supply Branch, and the demand for a floating Priority I was withdrawn. Such a priority would have given them ageneral precedence over practically all other war work. From this date, however, every possible assistance, including the advice of the chemical experts of theMinistry an3 the presence of a Ministry's representative on the Works, was given to the firm. Indeed, the Officer in charge of Supply states that he has been quitesatisfied with the progress made. Yet, how little this progress complies with the forecasts made by the Branch themselves is shown by the fact that, insteadof producing two tons a day at the end of September, they only reached that output seven months later, in April, 1918, and have still much ground to coverbefore they reach the output promised for the end of 1917. On the strength of these promises, the Supply Department state that theywere satisfied that, notwithstanding all the advantages of securing an alternative source of supply, the quickest and indeed the only way of securing the requiredquantities of cellulose acetate was through the British Cellulose Company. Accordingly in August, 1917, the firm were instructed to double their plantfor cellulose acetate, and a further contract was given to them for a total quantity of 700 tons. All other proposals to manufacture were refused or ignored.How far the financial consideration that the cost of these extensions might be charged to the State was kept in view, in considering alternative suggestionsof manufacture, the Sub-Committee find it aifficult to determine. The Direc- tor of Contracts in the Department of Aeronautical Supplies was the sameofficer who had conducted all the negotiations with regard to these commodities at the War Office, and though he shortly afterwards gave up this work he waspresent throughout all the preliminary negotiations. The officers in charge of Supply were, until July, also the same as those who had dealt with the matterat the War Office. Their successor informed the Sub-Committee that, although aware unofficially of the agreement regarding the refund of capital expenditure,he bad not seen its actual terms until a few days before he met tbe Sub-Com- mittee. His subordinate officer, who was more directly concerned with thisparticular manufacture, and made the report referred to above, showed himself, as late as tbe 19th March.'io.iS, totally misinformed of the position in theminute which he put forward to the Director of Supplies combatting the argu- ments of the Technical Department in favour of widening the sources of supply.The same official, in a minute on the same subject of December, bases himself very largely on financial reasons for the rejections of the officers of other firms.With both these minutes the Director of Supplies stated his agreement without any correction on the financial point ; and, so far as the Sub-Committee candiscover, the offers for alternative manufacture were never put before the Con- tracts or the Finance Branches. On the other hand, the question whether the concession granted to this Com-pany secured any special supervision of their capital expenditure in the interest of the State, admits of a more complete answer. Not only was there no specialsupervision, but there has been even less than in the case of an ordinary controlled firm. No supervision whatever was exercised by the War Office over the erectionof the buildings and plant necessary for the execution of the original contract for cellulose acetate. When the contract for solvents was placed inJune, 1917, no estimate of the probable capital expenditure for the manufacture of acetic acid, &c, was asked for or given. On August 13th, 1917, the firm wroteto the Ministry regarding the extensions necessary, both for this contract and for doubling their cellulose acetate plant in accordance with the instructions of theSupply Department, and applied for a loan of £200,000 towards the erection of a power plant. Incidentally they stated that hitherto they had asked for nofinancial assistance. The letter was passed by the Contracts Branch to the Muni- tions Works Board, who were, as was stated in the First Report of the currentsession, the body specially charged with the investigation of all proposals for constructional work to be done by or for the Ministry (specifically includingwork to be paid for in whole or in part out of mone ys advanced by or on behalf of the Ministry), and for supervising erection after sanction. Although theControlled Establishment Division of the Ministry were in negotiation with the firm from February to December, 1917, for their control—one of the causes ofdelay being the Company's objection that control might prejudice their special agreement regarding the refund of capital expended—the Munitions Works Boardheld that, as the firm was not controlled and no financial assistance appeared to be asked for, it lay outside their jurisdiction. If financial assistance wererequested, the Board would need more details. The papers were never returned to them. The loan was granted to the firm in the same month by the FinanceDepartment who explained to the Sub-Committee that in not referring to the Munitions Works Board they relied upon the necessity for obtaining a buildinglicense and priority to bring the proposals for expenditure before that bcdy in due course. Priority was obtained by the Supply Department direct. Certainapplications for building licenses involving, with plant, an expenditure of some £750,000 were made in the following months, and ultimately referred to theMunitions Works Board in January, 1918, and by them to the Works Construction Sub-Committee of the War Cabinet. When these applications had been passedby both bodies the Munitions Works Board learnt from the Supply Branch that the extensions were the same as those referred to above which, they said, hadbeen "sanctioned" in August, 1917, and further buildings being mentioned, which involved a very large quantity of steel, details of these were asked for bythe Munitions Works Board in February before communicating any approval to the firm. Apart from the power plant which was separately dealt with, thesedetails were only received by the Supply Branch at the end of May, six weeks after their evidence was taken by the Sub-Committee, and they are stated to benow receiving the attention of the Munitons Works Board. Consequently no financial sanction whatever has been issued for these extensions which have been
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