Optical Restraint of Trade?

The modern business of optical instruments is heavily indebted to the work of a painstaking German scientist, Carl Zeiss, who nearly a century ago in the little town of Jena tried to make good microscopes. Largely because of that fact a Federal grand jury in Manhattan last week handed down a stiff anti-trust indictment.

There are only four makers of military optical instruments in the U. S. One is Kollmorgen (of Brooklyn), which concentrates on periscopes. Another is Keuffel & Esser (of Hoboken, N. J.), which makes range finders, trench periscopes. A third is Spencer-Lens Co., scientific instrument subsidiary of American Optical Co. The fourth is Bausch & Lomb (of Rochester, N. Y.), which makes binoculars, range finders, periscopes, about 50% of all the military optical goods sold in the U. S.

John J. Bausch, a German immigrant who originally peddled spectacles in Rochester, and his partner Henry Lomb, who during the Civil War served as a captain in the Army under Grant, got the right to use Zeiss patents nearly 50 years ago. They not only licensed Zeiss patents but made an arrangement for exchanging skilled men, techniques and manufacturing secrets. Their military products, only about 10% of their output, have become so vital to national defense that since 1912 the U. S. Navy has kept experts stationed continuously in the B. & L. plant as observers.

Last week the Federal grand jury accused B. & L. and Carl Zeiss of Germany of having entered into a secret agreement in violation of the anti-trust laws. Under this agreement, the Government charged, the American company is powerless to sell range finders, gun sights and other fire-control instruments to any foreign nation without consent of the German firm. Although the indictment did not say so, it was plain any foreign nation meant France and Great Britain.

The indictment also charged that:

> Under the 20-year agreement, entered into in 1921, the U. S. had found it necessary to pay "unreasonable" prices for instruments of which the two companies sold "the greater part."

> The two companies had divided up the world between themselves in violation of the anti-trust laws.

> B. & L. and Zeiss refused to allow use of any of their methods or devices (thus hindering the establishment in the U. S. of other companies which might wish to make military and naval optical instruments).

President of Bausch & Lomb, and named in the indictment, is Martin Herbert Eisenhart, mild-mannered former chemist whose hobby is Boy Scouting. Jumping to the defense of his company, Mr. Eisenhart pointed with pride to the Navy Department's satisfaction with B. & L., declared that the Department of Justice and the Navy Department were obviously working at cross purposes. Said he: "I can see no constructive motive which could prompt our Government in bringing this kind of action against the company."

Under the 1921 Zeiss-B. & L. contract (revised in 1926 to avoid any violation of the anti-trust laws) Zeiss makes all its patents exclusively available to B. & L. for U. S. use; Zeiss also provides technical knowledge in return for a royalty on all B. & L. military goods.

After Hitler clamped down on German industry. President Eisenhart explained, B. & L. no longer received value for money paid to Zeiss. So acute did this situation become that in the summer of 1938, he told Zeiss his company wanted to break the contract (which is scheduled to run out in 1941). Later B. & L. stopped payments to Zeiss on unpatented products, although the German concern never accepted abrogation of any part of the contract.

Navy men kept a discreet silence on the indictments but an anonymous Navy spokesman said cryptically: ''It is public knowledge that Bausch & Lomb are valuable to national defense. We'd hate to see the plant blown up."

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