This site is located at 5500 Chemical Road in Baltimore City, on a peninsula between Curtis Creek and Curtis Bay. The site has been involved in the production of agricultural and industrial chemicals since 1910. During WWII, the site was involved in the Manhattan Project.

The W.R. Grace / Grace Davison Chemical Division, Curtis Bay Facility is located on an industrialized peninsula in South Baltimore, and consists of 260 acres owned by W.R. Grace. The property is bordered on the north by Curtis Bay, on the west by Curtis Creek, on the east by the Patapsco River, and on the south by the Baltimore City Municipal Landfill.

Site History

There were both active and inactive waste disposal areas on-site. There is an inactive waste disposal area that was used to dispose of industrial, process and construction waste. There is also an inactive radiation disposal area. This area was used to dispose of waste from a pilot plant process in the 1960s. Currently in use is the wastewater plant sludge cell. Wastewater from the Waste Water Treatment Plant is directed to Herring Pond and the sludge is sent to a wastewater plant sludge cell. There is an NPDES outfall which extends from Herring Pond to Curtis Bay.

At one point, there was approximately 704,000 cubic feet of radioactive waste that had been disposed of in the radioactive waste disposal area. In 1992, an official from MDE's Division of Radiological Health stated the site had been remediated to an acceptable point for any type of use.

Chemical processing has been performed at the Grace site since 1909. In the early 1940’s, Grace produced agricultural fertilizers and industrial chemicals. During World War II, the facility manufactured explosives and participated in Manhattan Engineer District activities. In 1955, Rare Earths, Inc., the predecessor of Grace, entered into a contract with the Atomic Energy Commission to extract radioactive thorium and other rare earth elements from monazite sand that was shipped to the Curtis Bay plant; the thorium processing was terminated at the Grace site in 1956. From 1912 until 1979, all waste material generated at the plant was disposed of in areas to the east of the plant proper.

See [HN002C][ GDrive ]

The choice of building NFS in Erwin was a matter of logic and personal feelings. [T.C. Runion] said the town was close to Oak Ridge and Savannah River, a Department of Energy site close to Aiken, S.C., and a railroad siding could be obtained for the Erwin property. Plus, Erwin was his hometown.

Taylor said the early years consisted of processing highly enriched uranium, low-enriched uranium and thorium metal. During down times, NFS made specialty chemicals. Later, NFS manufactured material for Consolidated Edison's first commercial nuclear reactor.

The company's most well-known role with the military evolved from the Navy's wishes to have a fleet of nuclear powered ships. NFS has been the sole provider of Navy fuel since 1966, and the first batch arrived at an aircraft carrier in 1969.

"We wanted to penetrate the Navy business, so NFS and W.R. Grace went to work on a better type of fuel completely on our own and without government support," Johnson said. "It was a really gutsy thing to do." [...]

He said NFS was one of the first plants to produce uranium oxide as part of the fuel that nuclear power electric generating plants needed. The material used in Erwin was manufactured at a government plant in Oak Ridge, Runion said.

Leadership

On the death of William R. Grace in 1904, he was succeeded by William L. Sauders as company President followed by Joseph Peter Grace, Sr. (1872–1950) who became president in 1907.

In 1974 The Peruvian Government announced that it assumed ownership of the properties of W. R. Grace & Co., Harold Logan, Grace executive vice president, stated the company would join the in governmental level talks over compensation of expropriated American concerns. The loss of Grace's properties in Peru began in 1969, when 25,000 acres of sugarcane plantations were taken over in an agrarian reform. The sugar lands were at Paramonga, 110 miles north of Lima, and at Cartavio, near Trujillo, 200 miles farther up coast. Grace still retained small mining properties producing copper, tin and silver, in southern Peru, about 100 miles north of Juliaca. Jose E. Flores, Head of W. R. Grace S.A. Peru, closed the mining operations for Grace in Latin America when the government of Peru nationalized the remaining interests.

Subsidiaries and products

Subsidiaries and some of their products include:

• Grace Catalysts Technologies

  • industrial catalysts, such as Raney nickel.

• Grace Materials Technologies

  • silica products

• Grace Construction Products

  • concrete admixtures, fibers, and grinding aids

  • concrete pigments

  • air and vapor barriers

  • fireproofing materials

  • bituminous, structural, waterproofing membranes (such as Roofing Underlayments and waterproofing materials)

• Darex

  • coatings, closures and sealants for soft drink cans and canned foods

• Residential Building Materials

  • roofing membranes and flashings for windows, doors, decks and roof detail areas

Contamination incidents

W. R. Grace and Company has been involved in a number of controversial incidents of proven and alleged corporate crimes, including exposing workers and residents of an entire town to asbestos contamination in Libby and Troy, Montana, water contamination in Woburn, Massachusetts, and an Acton, Massachusetts, Superfund site.

Asbestos

While Grace no longer makes asbestos-related products, W. R. Grace and Company has faced more than 270,000 asbestos-related lawsuits, of which 150,000 have been settled or dismissed and 120,000 remain.

On April 2, 2001, Grace and its subsidiaries in United States filed voluntary petitions for Chapter 11 Bankruptcy reorganization in Bankruptcy Court for the District of Delaware. The company was trying to find the resolution through federal court-supervised reorganization in response to the quickly growing number of asbestos-related bodily injury claims.

On September 19, 2008, Grace filed a revised plan of reorganization to the same Court, jointly by the asbestos injury claimants. In January 2011, the Court issued an order in favor of the new plan and in January 2012, the Court denied all appeals and affirmed the plan. After a motion for reconsideration, the plan was reaffirmed on June 11, 2012.

On February 3, 2014, Grace emerged from this asbestos-related Chapter 11 bankruptcy which took more than 12 years. Under the plan of reorganization approved by the Court, all parties filings the asbestos-related claims should direct their inquiry to either an asbestos personal injury trust or a separate asbestos property damage trust.

1961 While industrial interests explore the viability of commercial reprocessing, the state of New York moves to acquire land in the town of Ashford, near West Valley, for an atomic industrial area. The state Office of Atomic Development establishes the Western New York Nuclear Service Center (WNYNSC) on the 3,345 acres of land it has taken title to.

1962 Davison Chemical Company establishes Nuclear Fuels Services, Inc. (NFS) as a reprocessing company. It reaches an agreement with the state to lease the WNYNSC.

1966 Nuclear Fuels Services develops and operates 200 acres of the WNYNSC. It operates the site as a nuclear fuel reprocessing center from 1966 to 1972, and accepts radioactive waste for disposal until 1975. During the operation of the plant, 640 metric tons of spent reactor fuel are processed, resulting in 660,000 gallons of highly radioactive liquid waste. The liquid waste is stored in an underground waste tank. NFS also utilizes a 15-acre area for the disposal of radioactive waste from commercial waste generators, and another seven-acre landfill is used to dispose of radioactive waste generated from reprocessing.

1976 Following four years of pursuing modifications to the plant, NFS decides the costs and regulatory requirements of reprocessing make the venture impractical. The company decides to exercise its right to leave the site after its lease expires on December 31, 1980, transferring ownership and responsibility for the waste and facility to the state of New York. The state initiates talks with the Federal Energy Research and Development Administration to sort out ownership of the waste and environmental remediation responsibility.

1980 Congress passes the West Valley Demonstration Project Act, Public Law 96-368, directing the U.S. Department of Energy (DOE) to take the lead role in solidifying the liquid high-level waste and decontaminating and decommissioning the facilities at West Valley.

In 1959, New York State's interest in attracting atomic development culminated in the formation of the Office of Atomic Development (OAD) as an independent agency responsible for coordination of atomic regulatory and development functions within the State. To encourage nuclear development, the OAD acquired the West Valley site in 1961, which became designated the Western New York Nuclear Service Center (WNYNSC). The purpose of the Center was to store nuclear fuels and radioactive wastes and to be available for related industrial development.

The Davison Chemical Co. was sufficiently encouraged by the developments in the late 1950's to consider the feasibility of constructing a reprocessing facility. In 1961, Davison expressed interest in operating the WNYNSC. January 1962, Davison outlined its plans to the AEC for constructing a In private reprocessing plant. To pursue the reprocessing venture, Davison set up Nuclear Fuel Services, Inc. (NFS), whose stock was owned by the W. R. Grace Co. (78%) and American Machine and Foundry (22%). NFS, in its proposal, indicated its willingness to provide and maintain storage for a limited period of time for the high-level liquid wastes (HLLW) resulting from the reprocessing operations. Subsequently, the wastes would become the responsibility of the AEC. NFS also said it was willing to collect and return to the AEC an amount calculated to provide the estimated full costs for perpetual storage at the point of turnover. NFS was simultaneously negotiating to make New York State responsible for perpetual care of the wastes. The proposed, and eventually approved, method of waste disposition was to store them in liquid form in underground storage tanks, similar to the method being used at AEC production facilities.

A stated purpose of the Atomic Energy Act of 1954 was to promote "wide-spread participation in the development and utilization of atomic energy for peaceful purposes." The Atomic Energy Commission (AEC) actively encouraged private industry to enter the field of nuclear power. By the end of 1955, the AEC concluded agreements for the first few demonstration nuclear power reactors.

In 1954, the AEC began a program to encourage private reprocessing of irradiated nuclear fuel as part of its program to commercialize the entire nuclear fuel cycle. By January 1956 this program resulted in an announcement by the AEC that:

• The AEC would make available to industry AEC technology on reprocessing and the description of fuels available for reprocessing

• The AEC invited proposals by industry to design, reprocessing plants construct, and operate

• The AEC would provide assistance in the form of a baseload and allow the use of AEC facilities for development work and training.

During discussions of this program with industry, three predominant issues were raised. The first was the lack of adequate demand to make a commercial reprocessing plant economically viable. The AEC offered to provide a baseload of fuel from its production reactors to support the plant until adequate demand developed.

The second predominant issue was the lack of a basis for establishing reasonable charges for services. In 1957, the AEC announced a policy to assure that reprocessing services would be available for the first commercial irradiated fuel in 1961. Under this policy, the AEC would provide fuel reprocessing services in AEC facilities until services were available commercially at reasonable prices or until June 30, 1976. To establish charges for those services, the AEC designed a hypothetical reprocessing plant. The reasonableness of commercial charges was to be based on comparison with these hypothetical plant charges.

The third predominant issue was responsibility for the high-level radioactive wastes resulting from commercial reprocessing. The AEC policy was to encourage the maximum participation of industry in the management of these wastes. It was recognized that industrial longevity was insufficient to assume ultimate responsibility for these wastes. For West Valley, this factor was overcome by having ownership of the land reside with the State.

Perceiving an opportunity to promote industrial development within the State, New York, in 1956, had created a State Council on the Development of Atomic Energy, followed by the formation of the Office of Atomic Development (OAD) in 1959. In 1961, OAD acquired a 1350-hectare (ha) (3345-acre) site near the hamlet of West Valley in the Town of Ashford, Cattaraugus County, about 48 km (30 miles) south of Buffalo. The site was judged to be favorable for a nuclear fuel reprocessing plant and attendant waste facilities. It was favorably located with respect to projected nuclear reactor development in the north eastern and mid-Atlantic United States. In addition, the silty till in the West Valley area was relatively impermeable to water and would, therefore, provide protection against migration of waterborne radioactivity through the ground. Further advantages of the site were a low population density in the area and meteorological conditions favorable for atmospheric dilution of any radioactivity released. The site was named the Western New York Nuclear Service Center (WNYNSC); it is also referred to as West Valley or the Center.

The developments of the late 1950s were sufficiently encouraging for utility and industrial concerns to form the Industrial Reprocessing Group (IRG). The IRG, composed of Davison Chemical, Consolidated Edison, Commonwealth Electric, and Northern States Power, in 1ate 1959 initiated a technical and economic feasibility study of reprocessing. As a result of IRG's interest, the AEC delayed indefinitely the modification of facilities planned for processing commercial fuel, but would continue to receive fuels for which reprocessing capability did not exist or charges were not reasonable.

In 1961, the Davison Chemical Company expressed interest in the West Valley site. In January 1962, Davison outlined its plans to the AEC for constructing a private reprocessing plant. To pursue the reprocessing venture, Davison (which was acquired by W. R. Grace and Company) set up Nuclear Fuel Services, Inc. (NFS). W. R. Grace owned 78% of the NFS stock and American Machine and Foundry owned the rest.

NFS indicated its willingness to provide and maintain storage for a limited period of time for the high-level liquid wastes resulting from the reprocessing operations. Subsequently, the wastes would become the responsibility of the AEC. NFS also said it was willing to collect and return to the AEC an amount of money calculated to provide the estimated full costs for perpetual storage at the point of turnover. NFS was simultaneously negotiating to make New York State responsible for perpetual care of the wastes. The proposed, and eventu ally approved, method of waste disposition was to store the wastes in liquid form in underground storage tanks, similar to the method being used at AEC production facilities

W. R. Grace and Co. - Hiring of Otto Ambros

More important to the Operation Paperclip legacy is that when Rögner filed his civil suit, he named another name: Dr. Otto Ambros. Ambros was listed as a criminal in Rögner’s complaint because he had been general manager of IG Farben’s Buna factory at Auschwitz. German prosecutors looked into the Ambros case and saw that Ambros had already been tried and convicted of war crimes at Nuremberg and that he had served two years and five and a half months in Landsberg Prison. They decided not to press charges against him a second time. In December 1963, however, Ambros was called to testify at the trial, which was held in the Römer, Frankfurt’s town hall. This brought Ambros into the limelight once again.

By 1964, Ambros had been a free man for thirteen years. He was an extremely wealthy, successful businessman. He socialized in Berlin among captains of industry and the professional elite. When the Frankfurt Auschwitz trial started, he was a board member of numerous major corporations in Germany, including AEG (Allgemeine Elekrizitats Gesellschaft), Germany’s General Electric; Hibernia Mining Company; and SKW (Süddeutsche Kalkstickstoff-Werke AG), a chemical company. On the witness stand at the Frankfurt Auschwitz trial, Ambros gave testimony that contradicted statements he had made during his own trial at Nuremberg in 1947. He also said that the conditions at the Auschwitz Buna factory had been “cozy,” and that the workers had enjoyed “good hospitality,” which many Auschwitz survivors found appalling in its offensiveness. While contradictory statements might have gone unnoticed by Frankfurt’s judges and jurors, there were a number of high-profile Israeli journalists in the courtroom who had become experts on the subject and caught Ambros’s lies. These journalists began at once to investigate Otto Ambros’s post-Nuremberg life. Here was a man who had been convicted of slavery and mass murder and had served very little time, considering the crimes. The Farben slaves at Auschwitz numbered sixty thousand, approximately thirty thousand of whom had been worked to death.

The journalists covering the trial were outraged by what they discovered. Otto Ambros now sat on the board of directors of numerous private corporations, but he was also on the board of directors of five companies that were owned by the Federal Republic of Germany. The exorbitant fees Ambros commanded in these positions were being paid by the German taxpayer. An Israeli female journalist, identified in Bundesarchiv documents only as “Frau Deutschkren,” became so incensed by the arrogance and hubris she saw in Otto Ambros’s postwar life that she wrote a letter to the state minister of finance, Ludger Westrick. That the Federal Republic of Germany was paying a “consulting fee” of 12,000 deutschmarks—about $120,000 in today’s dollars—to a convicted war criminal was shameful, Frau Deutschkren said. She demanded that Finance Minister Ludger Westrick meet with her. He agreed.

Frau Deutschkren could not have known that Otto Ambros and Finance Minister Ludger Westrick were business colleagues and apparently on very friendly terms, as state archive correspondence reveals. After the meeting, Westrick promised to look into the matter. Instead, he told Ambros what was going on. In an effort to hold on to his lucrative and prestigious positions on company boards, Ambros produced a summary of the allegations against himself and his Nuremberg codefendants, written by his attorney, a Mr. Duvall. Ambros asked Finance Minister Westrick to circulate this apologia around the various boards on his behalf. “As a short summary of our case [shows] you will clearly find out we are innocent,” Ambros explained, referring to charges of slavery and genocide that he and his Farben colleagues were convicted of at Nuremberg. “I and my colleagues are the victims of the Third Reich,” Ambros insisted. “The former government utilized the success of synthetic rubber which they used to make a profit. If there had been anything against me, then I would have never been released by the American military.” U.S. High Commissioner John J. McCloy had granted Ambros clemency under intense political pressure, a fact now being used by Ambros to suggest that he had been wrongly convicted at Nuremberg.

In a letter dated April 25, 1964, Ambros reminded Finance Minister Westrick that after he had been released from Landsberg Prison in 1951, “You helped me get back on the boards.” For this, Ambros said he was grateful. “I see it as an honor and a duty to [remain] there. I do this for pure altruistic reasons. I appreciate anything you can do.” In turn, Finance Minister Westrick wrote letters to the various boards on Ambros’s behalf. “Ambros was chosen for the board because of exceptional talent,” Westrick said. “In his field he is as wanted as Wernher von Braun. Everyone wants him. He can get a job anywhere he wants, anywhere in the world.”

The Israeli journalists refused to let up on Otto Ambros. They continued to write news stories about him, making it increasingly difficult for both the Federal Republic of Germany and the publicly traded companies on whose boards Ambros sat to maintain business associations with him. “Former War Criminal Found Refuge in Switzerland,” read a headline on June 6, 1964. The story detailed time that Ambros spent in the Swiss village of Pura. Ambros, furious, submitted a “statement of facts” to Labor Ministry state secretary, Ludwig Kattenstroth, in response. “I did not hide myself in Pura,” Ambros wrote. “It is my holiday home. And I have to say that when I bought the parcel there [in 1956] I informed the Swiss government by handing over the judgment at Nuremberg. I am only there for holidays… my children go there, and my friends. After consulting with my lawyer, I will never go back.” Then came the blaming. “The whole affair,” wrote Ambros, “has to be seen in the shadow of the Frankfurt trial. A certain faction of the press is trying to blame me.” The subtext was that “the Jews” were trying to blame him.

In late summer of 1964, AEG’s board members met and decided that they could no longer retain convicted war criminal Otto Ambros. Ambros then also quietly left at least two of the five taxpayerfunded consulting positions he held on Federal Republic of Germany boards.

In separate letters to Finance Minister Ludger Westrick and Deputy Finance Minister Dr. Dollinger, a new secret was revealed, though Ambros promised not to make public a piece of the information they shared. “Concerning the firms abroad where I am a permanent co-worker advisor,” Ambros wrote, “I won’t name them [publicly] because I don’t want to tip off any journalists who might cause trouble with my friends. You know about W. R. Grace in New York… and I hope I can stay with Hibernia Company. Concerning the firms in Israel,” Ambros wrote, “stating their names publicly would be very embarrassing because they are [run by] very public, well-respected persons in public positions that have actually been at my home and are aware of my position, how I behaved during the Reich, and they accept this.”

The “well-respected” public figures in Israel to whom Ambros referred have never been revealed. That Ambros also had worked for the American company W. R. Grace would take decades to come to light. When it did, in the early 1980s, the public would also learn that Otto Ambros worked as a consultant for the U.S. Department of Energy, formerly the Atomic Energy Commission, “to develop and operate a plant for the hydrogenation of coal in a scale of 4 million tons/year at the former IG Farben industrie.” That a convicted war criminal had been hired by the Department of Energy sparked indignation, and congressmen and journalists sought further details about Ambros’s U.S. government contract. In a statement to the press, the Department of Energy insisted that the paperwork had been lost.

The scandal was brought to the attention of President Ronald Reagan. Letters on White House stationery reveal that Deputy National Security Adviser James W. Nance briefed Reagan about how it was that the U.S. government could have hired Otto Ambros. Nance’s argument to the president was that many others hired him. “Dr. Ambros had contacts with numerous officials from Allied countries,” wrote Nance. “Dr. Ambros was a consultant to companies such as Distillers Limited of England; Pechiney, the French chemical giant; and Dow Europe of Switzerland. He was also the chairman of Knoll, a pharmaceutical subsidiary of the well known chemical corporation BASF.” President Reagan requested further information from the Department of Energy on its Ambros contract. Nance told the president, “The DOE and/or ERDA [The Energy Research and Development Administration] do not have records that would answer the questions you asked in the detail you requested. However, with Dr. Ambros’ involvement in the company shown and his special knowledge in hydrogenation of coal, we know there were productive contacts between Dr. Ambros and U.S. energy officials.” Even the president of the United States could not get complete information about an Operation Paperclip legacy.

In the midst of the scandal, a reporter for the San Francisco Chronicle telephoned Ambros at his home in Mannheim, Germany, and asked Ambros about his 1948 conviction at Nuremberg for mass murder and slavery.

“This happened a very long time ago,” Ambros told the reporter. “It involved Jews. We do not think about it anymore.

[....]

Prologue

[... ]On 19 May 1945, eleven days after the surrender of Nazi Germany to Allied forces in Europe, a German U-boat was escorted into Portsmouth Naval Yard, New Hampshire. Underseacraft U-234 (as the Germans designated their submarines) was not the first U‐boat to surrender at Portsmouth Naval Yard,2 but it was by far the most enigmatic.

The massive size of the U-boat alone ‐ the submarine was three times larger than the standard German submersible ‐ was quite enough to draw attention to the vessel. But there were other hints that spoke of the craft’s singular status: News reporters covering the surrender of U-234 had been ordered, contrary to all U-boat surrender procedures before and after its capture, to keep their distance from crew members or passengers of U234 on threat of being shot by the attending Marine guards.3 Strict orders had been given that the press and all other observers must stay at least eight feet away from the disembarking POWs, and ropes were used to cordon off a corridor so the prisoners coming off the boat could march unhindered through the crowd.

The first group of sequestered POWs that marched down the gangway revealed another clue to the mysterious vessel’s mission. At the lead was Luftwaffe Lieutenant General Ulrich Kessler, former commander-inchief of the German Air Force in Norway and the North Atlantic and newly-assigned air attaché to Japan. The stem and monocled Prussian general was followed by an entourage; including Dr. Heinz Schlicke, a high-frequency electronics expert; seven other military officers, all scientists, engineers or military staff members; and two mysterious civilians. Neither the reporters nor indeed any members of the United States armed services at Portsmouth would ever see or know about the passenger who it now appears had been on board but who was not among the prisoners taken off the boat. Nor would the reporters soon find out about the cargo still deep inside U-234’s hull.

Reports did circulate of two Japanese officers on board who took their own lives in hara kari rather than submit to capture and the failure of their top-secret mission, which was to guarantee the safe arrival of cargo and passengers to Japan. According to rumors later proved to be true, they were buried at sea. But it seems another, more foreboding guest also had been on board. He probably now was somewhere in Spain.

As the most important prisoners were whisked away by airplane to Washington D.C., and the reporters were complaining among themselves of their lack of opportunity to interview the cabalistic captives, the ultimate secret of U-234 still lay quietly in its sleeping hull. For jam-packed throughout the monstrous boat was the elite of Nazi Germany’s newest weapons development; including a completely disassembled Messerschmidt 262 jet fighter8 ‐ the first jet aircraft to be used in combat ‐‐ and the plans and material to build Germany’s ultrasecret V-4 rocket, the long-distance version of the feared V-2; as well as a mysterious “stratosphere plane,” apparently an aircraft that could reach and cruise in the rarefied atmosphere of near space- But most important, buried in the nose of the mammoth boat, sealed in cylinders “lined with gold,” was 560 kilograms, 1,120 pounds, of uranium oxide labeled “U235” ‐ the fissile material from which atom bombs are made.

Despite the cutting-edge technology, all of the other goods were dwarfed in significance by the uranium portion of U-234’s cargo. The United States, dangerously short of its nuclear objectives, would spirit away the uranium, and other captured materials, for use in its own atomic bombs. Orders from the Commander Naval Operations in Washington DC. to the Naval Yard at Portsmouth commanded:

• Desire following accomplished cargo U-234.... All material after rendering safe by mine disposal personnel placed safe stowage and inventory list sent CNO who will give shipping instructions and will control access to and disposition of all cargo due to vital importance to Pacific War.

History seems to suggest U-234’s killer cargo would soon be dropped on the U-boat’s original destination ‐ Japan.

How the uranium came to be in the U-boat, and the impact it would have on the outcome of the war against Japan and the future of the world, is a story of international intrigue to rival the most thrilling of espionage accounts. It is a story of unequaled scientific endeavor that toyed with the elementary building blocks of nature and of the universe and the staggering power with which it is held together; all being performed by the most brilliant minds of the age, under super-secret conditions, their projects swallowing staggering sums of money. It is the story of the struggle to control that power. It is a story of subterranean machinations unequaled in man’s history, driven by selfish and evil men who were opposed by both honorable and suspect adversaries. And this chess-like struggle is counterpointed by raw power grabbing, achieved through such voluminous death and destruction as had never before been seen. To this day, it is the culminating story of power politics on earth.

The traditional history of the race for the atomic bomb ‐ written by the victorious Allies ‐ has taught us to believe the United States‘ atomic bomb program, the Manhattan Project, with help from Britain and mistakenly believing that Germany’s nuclear program was striving to attain a bomb, had forged ahead and beaten the Germans to the development of a nuclear weapon. The authors of that history would have us believe that only later was it discovered the Germans never were successful in progressing beyond a very elementary level of the bomb’s development.

Nothing could be further from the truth.

The arrival in the United States of U-234 and its stockpile of nuclear materials saved the United States’ atomic bomb program. Because of shortages of time and materials within the American bomb project, unreported until now, the United States needed the German goods and technology not only to gain victory over Japan, the only surviving member of the German-ltalian-Japanese triumvirate, and win the war, but to establish its objective, as well, of making its place once and for all among the top world powers.

Prior to World War Two, America, while considered an ambitious contender for a place in the upper echelon of Earth’s geopolitical elite, was still relegated to the status of “also ran” among the countries of the world. The British Empire, though slowly being dismantled, could still brag the sun never set upon its holdings and still acted as the reigning world power. Germany, in the few short years before and during the early part of the war, was making an aggressive effort to unseat Britain’s shaky imperialism. Japan hoped to do the same in the East. The Soviet Union, like the United States, saw the war asan opportunity to make up distance in the international arena and fought for its place on the geopolitical globe. The potential introduction of an atomic weapon added a singular and determining dynamic to the equation. The bomb was the international equivalent of a sandlot free-for-all where one of the youngsters shows up with a machine gun: whoever had the weapon had control of the playground ‐ if he could prove it was real and that he would use it.

Up to the time of the U-boat’s surrender, America still had not been successful producing the weapon. True, the arrival of U-234’s uranium on America’s shore did not exactly replace the United States’ atomic bomb program. To be sure, the Manhattan Project was enjoying levels of success on all fronts of the newly developing technology. Bomb-grade uranium was being enriched in Oak Ridge, Tennessee. Plutonium for nuclear weapons was being bred in huge reactors in central Washington State. Advances in the understanding of nuclear technology and how to utilize it were being achieved at the national laboratory in Los Alamos, New Mexico and elsewhere. The major problem was that the desired result ‐ a usable bomb ‐ was not going to be completed in time. While development of the bomb components were moving forward, a date had been set after which use of the bomb would be difficult to impossible; and even if it was used after that date, significant political potential would be lost.

To optimize atomic bomb technology politically required it be used to foreshorten the war in the Pacific by the time Russia declared war on Japan, which the Soviets planned to do in mid-August 1945. Any action significantly later would result in the parceling out of the Asia/Pacific region in the same way Europe was to bepartitioned, leaving Russia with more than its fair share of the globe. Worse, once the Soviet Union was in the war in the Pacific, in order for the United States to use the bomb details of its existence and development would have to be shared with the Soviet Bear ‐ an intimidating proposition indeed, giving nuclear war capabilities to Joseph Stalin. Russia’s helping to foreshorten the fall of Japan through conventional warfare before the bomb could be used would also eliminate America’s powerful (and arguably justifiable) rationalizations for use of the bomb against the Island Nation. The United States would not only lose the opportunity to save countless Allied and Japanese lives, but it would also lose powerful political advantage it hoped to gain psychologically and in real terms if it could demonstrate it had an atomic weapon and the resolve to use it.

Lacking enough enriched uranium to produce a uranium bomb (the type dropped on Hiroshima) at the time U-234 landed, and unable to complete the development of a reliable triggering device for a plutonium bomb (the type dropped on Nagasaki), the Manhattan Project greedily gobbled up the enriched uranium and detonation components available from the surrendered submarine. Three months later, the bomb materials finally reached Japan.

Why did Hitler fail to use the atomic bomb components before they fell into American hands? And how did Germany come to have the makings of an atomic bomb in the first place?

Substantial evidence exists that Germany led the race for an atomic bomb throughout the war. The Germans were unable, however, to use the weapon against their enemies in Europe because the weapon components were not completed until after the Luftwaffe (the German Air Force) had lost air supremacy in Europe. Germany then had no means to deliver the weapon on an enemy target. Following D-day, in June 1944, the Allies’ close proximity to German troops on the European continent and in the Fatherland itself eliminated any potential attempt to use the weapon by Germany because of the improbability of successfully surreptitiously spiriting a nuclear weapon weighing several tons many miles behind enemy lines for detonation. There was no guarantee the weapon might not be captured and turned against them in one treacherous moment. As a result, arrangements were made at the highest level to export the technology and bomb components to Germany’s ally, Japan. Germany presumably hoped a Japanese victory in the Pacific would mean a victory for the Triumvirate, which would still ultimately result in Aryan domination of Europe.

The masterminds behind development of the German nuclear weapon were not those men so often cited as the reigning scientific minds of the Third Reich ‐ Heisenberg, Hahn, Weizsacker, Bothe and others. Heisenberg and his cronies are correctly characterized in the traditional history as having been so full of petty professional jealousies and pompous pride they could not productively work together to reach a common goal. The true masterminds of the German atomic bomb did not struggle under these conditions and the paltry budgets the traditional history suggests were provided the German scientists. The real masterminds of the German atomic bomb were not restricted by a lack of highly technical production capacity either, as the traditional history suggests was the German program. Nor was that production program under constant scrutiny by Allied nuclear reconnaissance efforts, as the traditional history asserts would have been the case had the Germans actually been more successful with their bomb project.

The true masterminds of the German atomic bomb program were experimental physicist Baron Manfred von Ardenne, his theoretical/experimental physicist colleague Fritz Houtermans, and an army of scientists and technicians. This intellectual armada was provided, as was the extravagant funding for the program, by one of the Third Reich’s richest and most successful sources of research and development sustenance ‐ the German postal service. As bizarre as this may seem, it is a documented fact the postal ministry supported with hundreds of millions of reichsmarks, possibly billions, an excellent technical branch that, among other remarkable achievements, successfully tapped and decrypted the complex technology of a dedicated transatlantic hot‐line established early in the war between Franklin Roosevelt and Winston Churchill. All students of the race for the atomic bomb know Adolf Hitler himself once joked (as they, probably wrongly, characterized the comment) following a report by his Minister of Posts on the progress of the ministry’s nuclear research and development program, that it would be his postal service, not his military, that would win the war for him with the secret weapon it was developing.

Significant and substantial documentation exists that proves Ardenne and Houtennans worked on far-reaching nuclear weapons programs well advanced over Heisenberg’s work, and funded and supported by the Ministry of Posts; and that Hitler on multiple occasions personally visited Ardenne’s laboratories in Berlin Lichterfelde. No record could be found by this author of Hitler ever having shown such support for Heisenberg’s supposed atomic technology-leading nuclear reactor site, or that of any other nuclear scientist. Hitler insisted, nonetheless, that Germany would win the worldwide struggle using a secret weapon with destructive powers far superior to any previously known instrument of war.

Once Ardenne and Houtennans developed the technology, the massive and sophisticated mechanisms required for producing the fissile material had to be built and operated in a safe location, free from Allied detection and bombing. With United States aircraft screening German skies daily for emissions laced in xenon-13315 and monitoring the Fatherland’s electrical power usage for indications of inordinately high consumption of electricity and other characteristics that would signify existence of uranium enriching facilities, the Germans needed to find a location that would allow the work to go forward undisturbed. And big business needed to be brought in and tasked with building the secret, gargantuan industrial complex to enrich uranium. This business would be the German counterpart to DuPont, General Electric, Westinghouse, and Tennessee Eastman working on the Manhattan Project in the United States.

The safe location required for building this complex and the company retained to do the work were both found in I.G. Farben. During the war, this German conglomerate constituted the largest single chemical concern in the world, outsizing the top four United States chemical companies combined (all of which were working on the Manhattan Project). Farben had pioneered and owned the worldwide rights to the development and production of synthetic gasolines and rubbers including those in the United States- Synthetic product technology required high-pressure, very demanding capabilities that were a good jumping-off point for the science needed to n n or build and operate a nuclear plutonium-breeding reactor.

In the early 1940s, the company had in fact started constructing a buna plant, a synthetic rubber product, at a location outside of Germany ‐ perfect for the requirements of freedom from scrutiny by Allied reconnaissance. The buna plant construction would allegedly last twice as long as planned, eventually cost LG. Farben 900 million reichsmarksl 6 (approximately $2 billion), utilize over 25,000 laborers,l 7 and devour more electricity than the entire city of Berlin, but it would never produce a pound of buna. All of these characteristics run counter to those one would expect to observe from an actual buna manufacturing plant. But they would have been perfectly expected of an electromagnetic isotope separation facility ‐ the technology Ardenne and Houtermans had successfully pioneered ‐ required to enrich uranium for nuclear bombs.

---> The location was picked by Otto Ambros. Otto Ambros was the factory manager. This location is the Mn

(see https://en.wikipedia.org/wiki/Monowitz_concentration_camp )

Saileaie. Ambros was IG Farben's expert on buna AND on poison gas.

By 1942 he conceived the technology used by modern magnetic tapes.

Are he chose - 3 rivers (vital source of water) and a coal plant.

And access to SLAVE LABORE (not abailable at other sites. )

See - https://en.wikipedia.org/wiki/Monowitz_concentration_camp

"The creation of the camp was a result of an initiative by the German chemical company IG Farben to build the third largest plant to produce synthetic rubber and liquid fuels. The camp was supposed to be located in Silesia, out of range of Allied bombers. Among the sites proposed between December 1940 and January 1942 the chosen location was the flat land between the eastern part of Oświęcim and the villages of Dwory and Monowice, justified by good geological conditions, access to transport routes, water supply, and the availability of raw materials such as: coal from mines in Libiąż, Jawiszowice, and Jaworzno, limestone from Krzeszowice, and salt from Wieliczka. However, the primary reason for building the industrial complex in that location was the immediate access to the slave work-force from the nearby Auschwitz camps. "

While the deadly purpose of the work done at the alleged buna facility has been virtually unknown to the world until now, the name of the place it was located carries an aura of condemnation nonetheless, earned for its other malignant purpose. The place is Auschwitz.

Located on the banks of the Vistula River in Poland, the concentration camp was the perfect site for Farben’s facility. Vast coal reserves to provide the fuel necessary for allegedly heating buna and for use as buna feed stocks, but, in fact, for generating electricity, were mined nearby. The river provided additional energy and cooling for the plant’s high-temperature processes. The major railroad spur located there provided easy transportation of equipment to, and product from, the plant. The vast pool of cheap labor available from the camp, which Farben infamously exploited throughout the war and for which the company paid the price dearly afterward when the Nuremberg Trials found it guilty of crimes against humanity and other human rights violations and ordered the dismantling of the conglomerate, were all components in selecting the location. But the best reason of all for selecting the site was the fact the proposed buna plant would provide the needed technological base and an excellent cover for what would actually be produced ‐ enriched uranium.

Synthetic rubber technology was still so new few people would know what to look for in a buna plant ‐ or a uranium enrichment plant. And even better, much of the high-end technologies, materials, skills and services required to deal with the high pressures, high temperatures and demanding performance of reactor vessels in a buna plant were also needed to construct and operate an electromagnetic separation facility.

Qualified Farben personnel performed the demanding aspects of construction, while almost all of the non-technical facilities at the “buna” plant at Auschwitz, requiring a veritable army to erect and maintain the buildings and simple structures that supported the sophisticated technology, were built and manned largely by the ill-fated inmates. The last of their physical energy ‐ their very beings ‐ was drained from them by the work and they were driven to the gas chambers while enriched uranium was being collected and stockpiled for its future, sinister purpose.

Standing silently at the center of this immense German atomic bomb program was one man. He had deep and powerful personal connections to each key player in the project. One of these relationships was old and sealed with blood ‐ that he had with Rudolf Hoess, the Commandant of Auschwitz, with whom he helped murder a man, an enemy to the cause, when they were both young and unknown.

Another of these relationships was bound together by tremendous wealth. Billions, probably tens of billions of reichsmarks, were amassed when he colluded with Hermann Schmitz, the chairman of 1.0. Farben. He and Schmitz camouflaged a huge fortune in securities and other portable properties and, with the war winding to a close, they removed the funds from Nazi Germany and carefully disseminated them into the markets of the free-world economy for their later use.

Still another of these relationships was bound together by power derived from the position he held as the most highly regarded lieutenant of arguably the most powerful man on Earth. His advocacy with the Fuehrer on behalf of Minister of Posts Wilhelm Ohnesorge fed the enormous research and development program Ohnesorge ‐ formerly a mathematician and physicist ‐ operated within the postal ministry.

The final, fateful, least secure but most important relationship was forged in the final days of his, and - Germany’s, power ‐ with Grand Admiral Karl Doenitz. Doenitz was commander of the German U-boat navy, and was the man with whom he would trade the supreme leadership of all Gennany for a place on one of the Adm iral’s fleeing Uboats, apparently having previously secretly agreed to pay to the United States the price of his own ransom ‐ in the currency of atomic weaponry.

This man was Martin Bormann.

In the dismal days at war’s end, buried in the bunker in Berlin that constituted the final seat of Hitler’s government; with the world crashing in around them; with Hitler high on drugs and low on mental and emotional reserves; with the - leadership panicked and breaking for cover; the mysterious Martin Bormann, true to his Machiavellian nature, weaved one of his most deadly, intricate and yet enduring webs. These machinations succeeded in deft strokes to dismember from the Party leadership both Hermann Goering, political heir apparent to Hitler’s throne, and Heinrich Himmler, purportedly next in line of ascension. In their stead a seeming anomaly, and long misunderstood historical event, occurred, in which Admiral Doenitz, with no apparent political leanings and no political following, mysteriously took over the reins of German government from Adolf Hitler. Bormann had shrewdly negotiated with Doenitz the now hollow leadership of all Germany in exchange for a place on the U-boat he knew was leaving for Japan with its belly full of the power of the future, which to a large extent Bormann had made possible. From the bunker Bormann made his final arrangements to reach Doenitz at his U‐boat headquarters. The web was being woven.

The fortune from LG. Farben and additional funds that Bormann had camouflaged through a variety of financial instruments and then had surreptitiously exported into banks and businesses around the world silently awaited him once he was free of Germany. Agreement by the United States to allow his escape and to protect him from the justice sure to be demanded by - victims following the war appears to have already been achieved. The arrangement would ensure his life-long freedom in the post-war world, paid for with the atomic bomb.

7500 Grace Drive , Columbia, Maryland 21044 U.S.A.

Company Perspectives:

Grace is a leader in catalysts and silica products, construction products and container products. Our products enhance the performance of your petroleum products, ensure the integrity of some of the world's major buildings and bridges, increase the quality of images on ink jet paper, improve the appearance of your fine wood furniture and preserve the safety of your foods.

History of W.R. Grace & Company

W.R. Grace & Compamy is one of the oldest and most adaptable U.S. corporations. Over the course of its 150-year existence, it has been involved in areas of business ranging from fertilizer to shipping to consumer goods to specialty chemicals. At one time or another, the company, in addition to its current role as one of the most comprehensive, specialty chemical and packing companies in the world, has been the world's largest distributor of spaghetti, a cowboy apparel retailer, and owner of an airline. Despite a tumultuous history--most recently involving extensive asbestos litigation and a resulting Chapter 11 filing--W.R. Grace has survived, with an adaptability and flexibility unusual in large companies. It may be hard to believe that W.R. Grace & Company started out shipping guano, or bird droppings, from South America.

In the Beginning

In 1854, William Russell Grace and his father, James Grace, traveled to Callao, Peru. James, a prosperous Irish landowner, wanted to establish an Irish agricultural community. He hoped to rebuild the family fortune which had been depleted during the Irish famine of 1847-48 when he provided employment to a large number of people from the countryside around his estate. Not finding the prospects he had hoped for in Peru, James soon returned to Ireland.

William, however, remained in Peru and became a clerk in the trading firm of Bryce & Company. His value to the company was recognized after a few years when he was made a partner in the firm, which was then renamed Bryce, Grace & Company. Under William's direction, the commercial house soon became the largest in the country.

Poor health forced William to retire from the Peruvian business in 1865. He returned to New York City where he had spent a year during his youth. His brother, Michael P. Grace, who had joined him earlier in South America, remained behind to manage the growing family business in Peru which was soon named Grace Brothers & Company.

With his health fully recovered, William established W.R. Grace & Company in New York. William had long been a confidant of the Peruvian president, and through this connection the company became the Peruvian government's agent for the sale of nitrate of soda.

The Chile-Peruvian war of 1887-81 severely weakened Peru's economy, and the government had difficulty repaying its foreign debt. In 1887, a group of foreign bondholders in the Peruvian government, mostly British, called on Grace Brothers & Co. to attempt a settlement of the debt. Michael accepted the offer and in the settlement he negotiated, known as the Grace-Donoughmore Contract, two Peruvian bond issues amounting to $250 million were cancelled in exchange for equally valuable concessions to the bondholders. Bondholders received shares in a newly-established company, The Peruvian Corporation, which received the rights to two state-owned railroads for 66 years, all Peruvian guano output up to 3 million tons (except for that on Chincha Island), a government promise to pay shareholders 80,000 pounds sterling annually for 30 years, and ownership of the lucrative Cerro de Pasco silver mines. In return, the shareholders agreed to finish uncompleted railroads and repair existing ones within certain time limits. (Most of the contracts for supplying the railroad building program went to the Grace company.)

At the time of the company's incorporation in Connecticut in 1899, Grace listed capital of $6 million. The amount, however, undervalued the company's worth. since it did not include Grace Brothers & Co. Limited in London and its branches in San Francisco, Lima, and Callo, Peru as well as Valparaiso, Santiago, and Concepcion Chile.

The Next Generation

When William Grace died in 1904, control of the company passed to his brother Michael, who became chairman. In 1907, he negotiated a new agreement with the Peruvian government annulling the terms of the previous agreements and extending the Peruvian corporation's lease for 17 years. The government agreed to continue paying £80,000 annually to shareholders for 30 years, but made claims to one half of the company's net proceeds.

William's son, Joseph, who started working for the company's corporate offices in New York in 1894 when he graduated from Columbia University, became President in 1909. The company underwent a period of rapid growth during Joseph's presidency, and, in the process, greatly expanded South American production and trade.

In 1929, the year Joseph became chairman of the board, W.R. Grace and 🌐Pan American-Grace Airways [HK000C] together established the first international air service down the west coast of South America, Pan American Grace Airways otherwise known as Panagra.

After suffering from a stroke in 1946, Joseph retired. A feud subsequently broke out among family members over who should run the company. Eventually, Joseph prevailed, and his son, J. Peter, after some misgivings of his own, became president.

Expansion and Diversification

At the age of 32, Peter inherited a company with $93 million in assets and whose primary interests were in Grace Steamship Lines, Grace National Bank, Panagra, sugar plantations and cotton mills in Peru and Chile. The company also produced paper and biscuits, mined tin, and grew coffee.

From the very beginning, Peter was concerned about the political and economic instability of South American nations that he believed threatened Grace's operations. In particular, many companies had shown resistance to U.S. domination of their economies. With what proved to be remarkable foresight, Peter embarked on a plan of diversifying into U.S. and European investments, seeking to reduce South American investments from 100 percent to 5 percent. To raise the capital necessary for his expansion the company went public in 1953. The board of directors resisted his plan of broadening investment and, though the Grace family owned more than one-half of the company's stock, he nearly lost his position as chief executive officer.

Attracted by profits achieved by Dupont, Peter began searching for investments in the chemical industry. He purchased two major chemical companies which made Grace the nation's fifth largest chemical producer. In 1954 Grace completed a merger with Davison Chemical Corporation, a manufacturer of agricultural and industrial chemicals. Later that year, Grace purchased Dewey & Almy Chemical Company, an investment one industry analyst later called "among the greatest acquisitions of all time." A producer of sealing compounds and batteries, Dewey and Almy grew rapidly and earnings quickly surpassed the $35 million purchase price. This became the foundation for one of the world's largest specialty chemical operations. Over the next 11 years, Grace acquired 23 more chemical companies for four million shares of stock.

Seeking to enter markets that could compensate for the cyclic nature of the fertilizer industry, Grace set out to build the "General Foods of Europe." Over the decade, Peter Grace purchased a chocolate producer in the Netherlands, a Danish ice cream maker, and an Italian pasta company. Critics charge that he was searching for companies he could shape and manage himself, attempting to prove he was his ancestors' equal as an entrepreneur.

Peter continued selling the company's old businesses and using the money to acquire new ones. In August 1965, he sold Grace National Bank to what is now Marine Midland Bank. The next year, he acquired a 53 percent interest in Miller Brewing Company. And in 1967 Peter sold the company's 50 percent interest in Pan American Grace Airways to Braniff Airways for $15 million.

The late 1960s proved a difficult time for Grace. The fertilizer market became severely depressed, where it had once been a source of substantial profit. Facing falling profits, Grace attempted to boost efficiency by closing marginal plants, but in the process the company incurred huge losses.

In the meantime, relations between Grace and Miller Brewery's minority stockholder, an heir to the company's founder, had turned for the worse. Peter realized he would never be able to buy the rest of the company. Thus, in 1969, Grace sold its holdings in Miller for $130 million, resulting in a net profit of $53.9 million.

In the early 1960s, the company management had reversed its previous policy in regard to South American investment and began pouring funds into paper, food and chemical companies. Later that year, however, Grace's fears about these investments came true when the Peruvian government seized the company's sugar mills and a 25,000 acre sugar plantation. Earnings on South American operations tumbled from $12 million the previous year to zero on sales of $256 million. Peter, not discounting the possibility of pulling completely out of the region, said that company investments in future would be made on the attitude of each individual country.

In the early 1970s, W.R. Grace made a move into consumer goods. In 1970, the company purchased Baker & Taylor, a supplier of books to libraries, as well as FAO Schwarz, the New York toy store. Hoping to cash in on the U.S.'s love affair with leisure-time activities, the company acquired Herman's World of Sporting, a landmark in New York's financial district.

Grace saw a chance for substantial returns in the sporting goods business. Involvement in the market was especially attractive since there were no national sporting goods chain stores. Department stores, preferring the profits and turnover of apparel and other "soft" product lines, had shunned sporting goods. The company sought to expand Herman's from three stores with $10 million in sales into the first national chain. As part of the plan, Grace bought Mooney's of Boston, Atlas of Washington, and Klein's of Chicago and converted them to Herman's sporting goods stores.

In 1971, the year that Peter became chairman, the company's profit was at its lowest point in years, after hitting a high of $82 million in 1966, and its return on equity was well below that of other conglomerates. Extraordinary (or, one time only) write-offs, became such a regular part of the company's financial statements (just that year the company wrote off $7.8 million from closing fertilizer plants) that some security analysts had come to consider them a regular part of Grace's operations. Consequently it was not surprising that in 1972, company executives produced a 700-page memo, establishing 20 criteria for acquiring a new business. Most importantly, these executives decided that in order to be purchased a company must have $20 million in sales and $1 million in profits.

In 1974, Peter began to reduce the company's holdings by selling a grocery products venture, and began to concentrate company investments in three areas: consumer goods, chemicals, and natural resources. Fertilizer profits had rebounded because of low supply and high worldwide demand, but the consumer groups showed lackluster profits even with large sales in sporting goods. In addition, Grace's final investment in Peru was severed later in the year. The Peruvian government nationalized its paper and chemical operations, leading to a loss of $11.5 million for the company, despite $23.6 million in compensation from the government.

By 1976, the company was ready to continue its move into consumer goods and services. Later in the year, when the company was about to make a public stock offering to raise capital for further expansion, it received an offer from Peter's old friend Friedrich Karl Flick, who during the 1950's had worked for Grace National Bank for three years. Flick, head of Friedrich Flick Industrial Corporation, Germany's largest family-owned company, was looking for somewhere to invest the $900 million it had recently made from the sale of its 29 percent interest in Daimler-Benz to Deutsche Bank. Wanting to take advantage of German laws that granted tax free capital gains and dividends earned on investments of more than 25 percent ownership in foreign companies, Flick eventually bought a 30 percent stake in Grace.

Although Grace family interest in the company had dwindled to 3 percent, Peter made it clear that Flick would not run the company. Receiving seats for only three of the company's 35 directors, Flick nonetheless obliged, since he was concerned with his own business ventures in Europe.

The consumer divisions' growth accompanied increasing internal strife at the company. In 1979, after years of watching the company's stock trading at low earnings multiples, management proposed splitting up the company into seven or eight separate companies which would command higher stock prices. Worried about the company's increasing reliance on consumer products, they also suggested selling the energy division whose market value could have been as much as $1 billion over book value. Peter, unwilling to give up his control of the company which might also have resulted from these proposals, rejected both ideas.

1980s: The Beginning of Specialization

At the beginning of the 1980s, Grace's move into natural resources appeared as if it was going to be as profitable as its venture into chemicals. The company's energy reserves had grown to 73 million barrels of oil, 300 billion cubic feet of natural gas, and 239 million tons of coal. Specialty chemicals sales and earnings, meanwhile, rose an average of 15 percent annually over the last decade. The company had 85 product lines, ranging from plastic packaging materials to petroleum cracking catalysts, many of which were market leaders.

However, the company suffered with falling energy prices in 1981. Moreover, in 1982, the combination of a poor natural resources profit and a further decline in the fertilizer business led to a 50 percent decrease in the company's profitability. As a result, Grace petroleum was put up for sale in 1984. The retail and consumer goods divisions, which were returning just 14 percent of profits on 36 percent of sales, looked like they might be next.

At the same time, however, Grace began to pursue business interests that would eventually become the main focus of the company: specialty chemicals and materials. Particularly significant was the 1985 acquisition of Chomerics, Inc., a packaging and coating manufacturer. The company, which had been losing money, was acquired through a $99 million stock swap.

The company's problems were compounded in 1984, when Flick became the target of a government bribery scandal and was forced to confront a $260 million dollar tax bill. Rumors abounded in West Germany that Flick was looking for someone to buy the family business, putting Grace at risk of a hostile takeover.

The rumors about Flick proved true, when Deutsche Bank acquired the company and put its holdings in Grace on the market. The company immediately seized the attention of takeover specialists, since Grace's assets could be sold at a profit of $20 to $25 more than the market price. GAF Corporation Chairman J. Heyman approached Grace about a friendly takeover, causing Grace's stock to rise 30 percent.

Although already strapped for cash, Peter, fearing a takeover, was forced to buy Flick's holdings for $598 million. The acquisition put Grace's debt at $2.6 billion and caused a downgrade of Grace's credit rating.

Critics, both inside and outside the company, regarded this as an unthinking decision. Complaints about Peter's domination of the company and an incoherent business strategy put mounting pressure on him to sell the consumer division. Since Grace was desperate for cash, this forced Peter to comply. Energy and fertilizer investments were reduced. Herman's was sold to Dee Corporation for $227 million, realizing a profit of $144 million. The remaining consumer goods businesses were sold for $500 million, but because of high expansion costs at the 317-store home center operations, Grace barely broke even on the sale. In addition, in 1986, Peter agreed to selling 51 percent of the restaurant division to its management in a leveraged buyout, although Grace did not bail out of the newly created Restaurant Enterprises Group until 1993. In 1986, William Baldwin wrote in Forbes that a $1 investment in W.R. Grace in 1945 would be worth $23 23 years later; but, the same investment in the S&P 500 would be worth a corresponding $77. Some speculated that Peter wished to live up to his grandfather's entrepreneurial spirit by remaking the company his own way, and Peter himself said that "My grandfather didn't found any of the things we have now. He didn't found this company. I did." While Peter Grace was definitely onto something, Forbes' Thomas Jaffe considered the company severely undervalued in 1989. Speculation arose that Peter might resign.

The 1990s: A Leaner, Meaner Company

In January 1993, J. Peter Grace did stepped down as CEO, ending the longest term of any CEO in history. His successor, J.P. Balduc, had been groomed for the position since joining Grace in 1983, eventually becoming COO and president in 1990. In contrast to Peter Grace, of whom Smith Barney analyst James Wilbur said, "You never knew what business he'd be in next," Balduc took the reins of an ambitious restructuring plan, stating, "There is no backing up. The days of Grace buying companies that are not strategic are gone." First announced in 1991, this plan was to cut back Grace's operations to two lines of business, specialty chemicals and health care, and called for a divestment of 25 percent of the company's assets. Although Peter Grace retained his position as chairman, it was clear that Balduc was in charge as the company began to lose all resemblance to a family-run operation, becoming more like a standard corporation.

This transformation, it seemed, was long overdue. Although Grace topped $6 billion a year in sales in 1993, its profit on those sales was only $26 million, and the sprawling company was so heavily diversified that it owned over 100 subsidiaries. When Balduc trimmed it to six core businesses, the sold-off assets, which included divisions ranging from organic chemicals to restaurants to book distribution, were worth nearly $1.5 billion. Some argued, reflecting the emphasis on specialization in business that had become a 1990s trend, that even six was too much, particularly when the six ranged from specialty chemicals to health care to food packaging. Under Balduc's leadership, health care emerged as the most prominent part of Grace's business, in the form of the National Medical Care division, and the company's goal of $10 billion by 2000 seemed possible.

However, Balduc's term had barely begun when the company--and, Balduc himself--was once again embroiled in controversy. On March 2, 1995, Balduc abruptly resigned from Grace, citing philosophical differences with the board of directors. Inevitably, further--and, less abstract--details surfaced, among them allegations that Balduc had threatened to disclose details of previously unreported financial compensations to J. Peter Grace and to his son, J. Peter Grace III. Additional allegations of sexual harassment on Balduc's part toward five female Grace employees surfaced as well, although the harassment allegations came not via Grace's official procedure on sexual harassment, but via the company's board of directors, with no formal complaint being filed. This gave rise to suspicions that the company wished to avoid placing Balduc in the chairman's seat. The chairman's seat had recently been vacated by Peter Grace due to pressure from major shareholders, who also influenced the company's decision to reduce its board of directors from 22 members to 12. Whatever the truth may have been, both Balduc and Peter Grace departed; the latter, already ill from lung cancer, died a few weeks later, and Albert J. Costello was named CEO.

If anything, Costello was more aggressive about streamlining the company than his predecessor. This included spinning off Grace's medical care division, National Medical Care, in a sale to German-based medical company Fresenius AG, despite a federal investigation into the division's handling of Medicare charges and an FDA citation regarding importation of dialysis equipment from its Dublin plant. In addition, Grace sold its Dearborn water treatment business--then the third largest in the United States--to Betz Laboratories; its transgenic plant business to Monsanto; its TEC systems division to Sequa Corporation; its specialty polymers business to National Starch and Chemical Co.; its cocoa business to Archer Daniels Midland; and more. Other actions included a buyback of 10 million shares of common stock, amounting to approximately 10 percent of the total, as well as a new two-year corporate reorganization, inaugurated late in 1995. This move, designed to cut costs by $100 million, reduced the company's staff by 800. Over 50 percent of the cost reduction was due to decreased staff as Grace sought to reduce its number of core businesses from six to three. Those businesses were streamlined also; for instance, in June 1997, Grace set out to restructure its packaging business on a global basis, saving an estimated $25 million a year.

Costello was not only focused on selling, however. At the annual shareholders' meeting in 1996, he said, "We are a much more focused and financially disciplined company, targeting performance levels that will put us in the top quartile of our peer companies." While Grace's divestments had increased its value and decreased its liability, its CEO sought acquisitions and joint ventures in keeping with the company's newer, narrower focus. In April 1998, Grace's remaining divisions essentially split: the specialty chemicals divisions, consisting of Grace Davison, Grace Construction Products, and Darex Container Products, kept the W.R. Grace name, while the Cryovac packaging business merged with Sealed Air Corporation. Now in essence a chemicals company, W.R. Grace & Co. bore no remaining resemblance to its namesake's initial venture.

On November 2, 1998, the top chair at the new Grace changed hands again. This time the new name was former Allied-Signal executive Paul Norris, who was named president and CEO, and was slated to take the chairman position as well. Norris immediately announced a plan of divestiture, streamlining, and job cutting, and was quoted in trade publication Chemical Week that "We can't just offer products to our customers anymore. We have to control our costs as well as help control our customers' costs by providing services to them." The following year, Grace moved its corporate headquarters from Boca Raton, Florida, where it had been quartered since 1991, to Columbia, Maryland, the location of its specialty chemicals division. The move cut costs both by reducing staff and by moving the headquarters closer to its business divisions. Also in 1999, Grace cut 370 jobs, or approximately 8 percent of its workforce, as part of a restructuring designed to streamline the company still further. Grace was not alone; in 1999, the trade publication Chemical Week noted an industry-wide trend toward reducing spending, as a slowing economy cut into profits. Chemical Week noted that Grace's capital spending in 1998 was $95 million, as opposed to $137 million in 1997, a 30 percent reduction. In addition, Chemical Week reported that in 1999, of the 40 top publicly traded chemical companies, 11 had new CEOs.

By 2000, it appeared that Norris had succeeded in his aim. W.R. Grace had slimmed down from a $5.7 billion conglomerate to a $1.5 billion company specializing in chemicals. Instead of 30 business divisions, it had only two: Grace Davison, and its performance chemicals division. In 1999, the company had $1.47 billion in sales, with a goal of 15 percent earnings growth for 2000. By 2001, Norris intended to reach the $2 billion sales mark, partly through acquisitions, partly through the introduction of new products, and to boost the company's sagging stock price. This reflected the two-fold strategy he described to Chemical Specialties in July 2000: "We have a number of initiatives. The majority involve bringing new products to existing markets. But in some cases we want to enter new markets with new applications for existing products." He added that "Growth is the most difficult of all strategic agenda items, but I think it's the most important." Although Grace continued to acquire new companies, the deals involved were relatively small, and in keeping with the company's new goals: purchases of coating and sealant manufacturer Bayem SA in 1996, food packaging manufacturer Schurpack in 1997, the construction chemicals division of Sociedad Petreos in 2000 (incidentally, returning Grace to its original region of business in South America), Crosfield Group's hydroprocessing catalyst business in 2000, International Protective Coatings Corporation in 2000, and similar acquisitions were examples of the company's more focused acquisitions approach. Acquisitions continued into 2001, even as Grace faced redoubled legal problems.

With the new millennium, Grace faced a new obstacle: asbestos litigation. And, while Norris claimed that publicity from the asbestos suits against the company--numbering in the hundreds of thousands by 2001--had little to do with the stock price, it is a fair bet that Grace's bankruptcy filing did.

The 1990s also saw the long-overdue publication of William Russell Grace's biography, Merchant Adventurer, by the Pulitzer Prize-winning author Marquis James. The book, commissioned by William Grace's son Joseph, and originally scheduled for publication by Viking Press in 1948, was suppressed by the Grace company, for reasons that remain unclear. Discovered in a disused storage room in 1978 by historian Lawrence Clayton, himself the author of Grace: W.R. Grace & Co., the Formative Years, 1850-1930, the book was finally published by Scholastic Resources in 1993.

2001: The Final Chapter?

Legal action, of course, is a way of corporate life, and a company the size and breadth of W.R. Grace was certainly no exception. A high-profile pollution case in 1986 pitted Grace against eight families in Woburn, Massachusetts over the question of drinking-water contamination; Grace settled for a reported $8 million, and the case was a subject of the book and film "A Civil Action." In 1995, Grace's patent on the extraction of the natural pesticide, azadirachtin, from Indian neem trees was challenged, as the substance had been used for that purpose in India for hundreds of years. In 1998, the company agreed in a settlement to pay $32 million for remediation of a radioactive waste site, and the SEC sued Grace that same year over reserves pertaining to former subsidiary National Medical Care (the suit was settled out of court). 1999 brought an emergency order from the Environmental Protection Agency to clean up ammonia near Lansing, Michigan, which threatened the local water supply. The ammonia was a byproduct of Grace fertilizer production from the 1960s. In 2000, Grace agreed to pay the major portion of a $15.5 million settlement against book distributor and former subsidiary Baker & Taylor.

The asbestos suits, however, were a different kind of legal action. For one thing, there were more of them; for another, they dealt not only with damage done, but with potential injury as well. The trouble had been brewing for a while. As far back as 1985, Matthew Schifrin reported in Forbes that gypsum suppliers, including W.R. Grace as well juggernaut USG, could expect a flood of litigation in the wake of a high-profile personal injury suit related to asbestos, and in fact the first asbestos-related suit had been filed against Grace in 1982. In 1994, Grace settled charges of violating asbestos standards at its Libby, Montana tremolite mine, for over half a million dollars; in 2000, the EPA ordered Grace to spend an additional $5 million to clean up the site. Then, in 1999, Grace was party to a $200 million settlement to residents of Cook County, Illinois, who were exposed to asbestos in the 1960s and 1970s.

On October 5, 2000, Owens Corning, the United States' largest building materials manufacturer, filed for bankruptcy. While this did not affect Grace's fortunes directly, it did cause a general fall in stock prices among companies with asbestos liability--including Grace. More serious, however, was how removal of players from the field affected those remaining; as Merrill Lynch analyst Karen Gilsenan put it in Chemical Market Reporter, "Grace and the other remaining players could face increased liability ... co-defendants in many of these cases could end up shouldering a larger part of the financial burden." As of June 30 that year, Grace was named in over 53,000 asbestos lawsuits and had paid out a total of $1.15 billion in judgments and settlements. By April of the following year, that amount had risen to $1.9 billion, and the number of personal injury claims against the company topped 325,000.

By early 2001, Grace's stock price had fallen to under $2 a share, and President and CEO Norris admitted in the company's fourth-quarter conference call that Grace was reviewing the choice of actions available, and that "these include ... resolving our asbestos liability through a reorganization under Chapter 11." The decision was not long in coming; Grace filed for Chapter 11 on April 2, 2001. The filing included 61 of Graces 70 domestic subsidiaries, but none of its foreign subsidiaries.

Grace's troubles did not end there. An investigation related to the filing looked into whether Grace's massive divestitures in the 1990s, particularly National Medical Care and Cryovac, were meant to shield the assets tied up in these companies from asbestos liabilities. Atlanta attorney Sally Weaver noted in an affidavit related to the Libby case, "the asbestos liability faced by W.R. Grace & Co. was sufficiently large to constitute a strong inducement to insulate the company's assets."

Grace acted immediately to keep the company afloat, acquiring $250 million in financing to maintain day-to-day operations. The company also created the position of chief restructuring officer, naming Senior Vice-President and General Counsel David Siegel to the post. In fact, the outlook for Grace was generally considered good; Norris was quoted in Chemical Week as saying that "We are confident that once we can finally resolve this difficult issue, the company can emerge from reorganization as a strong, financially sound enterprise." And analyst Fred Siemer told Adhesives Age that "Grace is a really strong company ... the lawsuits simply got out of hand. The courts will set up a payment schedule, and Grace will meet it." Some saw the situation as illustrative of a fundamental imbalance between business and law; consultant Stephen Einhorn told the same publication that "W.R. Grace is another example of how the legal profession is in a battle with the business world for survival." Lehman Brothers analyst Timothy Gerdeman agreed, saying that "Grace is an excellent company, possessing an attractive portfolio, solid management, and solid cash flow, but it is a victim of the U.S. legal system." There seemed little doubt, despite the overwhelming volume of lawsuits and the bankruptcy filing, that the company that had persisted for 150 years would continue, and perhaps even thrive.

Principal Subsidiaries:Grace Performance Chemicals; Grace Davison Chemicals; Gloucester New Communities; Grace Logistics Services.

Principal Competitors:BASF AG; DuPont; Engelhard; Cytec Industries; GenTek Incorporated; Great Lakes Chemical Corporation.

Chronology

Key Dates:

• 1854: William Russell Grace becomes a partner in Bryce, Grace & Co., in Peru.

• 1865: The company, now called W.R. Grace & Co., moves to New York.

• 1899: W.R. Grace & Co. incorporates.

• 1904: Death of William Grace. His brother, Michael, succeeds as chairman.

• 1914: Grace National Bank established. Grace sends first commercial ship through Panama Canal.

• 1945: J. Peter Grace, grandson of William, becomes president of W.R. Grace & Co.

• 1953: W.R. Grace & Co. lists on New York Stock Exchange.

• 1954: Grace acquires Davison Chemical Company and Dewey & Almy Chemical Company. Cryovac spins off from Dewey & Almy as a separate subsidiary.

• 1958: Grace constructs Washington Research Center, a chemicals research facility in Maryland.

• 1960: Grace introduces Cryovac Type L shrinkwrap for meat and poultry.

• 1963: Grace introduces pellet silica gel for use as a packaging desicant.

• 1964: Grace Davison introduces XZ-15, a catalyst that increases gasoline efficiency.

• 1965: Grace introduces Bituthene waterproofing membrane, replacing paint-on waterproofing.

• 1968: Grace introduces Cryovac Market-Ready packaging for beef and Monokote spray-on fireproofing.

• 1972: Grace Davison introduces CO Combustion Promoter Additive.

• 1978: Grace introduces Ice & Water Shield for roofing.

• 1979: Grace introduces Darex Corrosion Inhibitor for concrete.

• 1984: Grace introduces Cryovac cook-in bags for institutional cooking.

• 1985: Grace acquires Chomerics, Inc., a packaging and coating manufacturer.

• 1986: Grace settles with eight Woburn, Massachusetts families in a water pollution case.

• 1987: Grace becomes first wholly foreign-owned company to do business in the People's Republic of China.

• 1991: Grace announces major restructuring plan, to culminate in a company with two lines of business, instead of dozens.

• 1992: First asbestos-related lawsuit is filed against W.R. Grace.

• 1993: J. Peter Grace retires as CEO of W.R. Grace & Co. and is succeeded by J.P. Bolduc. Grace introduces beer bottle seals that help retain freshness without preservatives.

• 1994: Grace settles out of court regarding the violation of Clean Air Act asbestos standards near Libby, Montana.

• 1995: J. Peter Grace dies at age 82; Balduc resigns. Albert J. Costello is named president, chairman, and CEO. Grace is challenged on its patent of its extraction of natural pesticide from Indian neem trees.

• 1996: Grace divests extensively, streamlining the company to six core businesses. Merchant Adventurer, a long-suppressed biography of William Grace, is published by S.R.

• 1998: Cryovac merges with Sealed Air Corporation. Grace streamlines further, to two essential businesses: specialty chemicals and container products.

• 1999: Paul Norris becomes chairman. Grace relocates headquarters from Boca Raton, Florida, to Columbia, Maryland.

• 2000: Grace makes acquisitions in keeping with its new focus, including Crosfield Groups, International Protective Coatings, Hampshire Polymers, and more.

• 2001: Grace files for Chapter 11 on April 2. The company acquires $250 million in financing to continue day-to0day operations, and names senior executive David Siegel to the newly-created position of chief restructuring officer.

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