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Commissioner Harry Anslinger seems to have become aware of the new hemp industry at approximately the same time that he focused the Bureau's energies on securing federal legislation against marihuana in 1935. Contrary to the traditional interpretation of history, the Commissioner's decision to lead this final assault against marihuana was directly affected by the development of new commercial enterprises in the hemp industry. From 1935 on, the Bureau actively re-wrote the history of hemp by demonizing marihuana. Ever since this act of deceit, the memory of the new hemp industry in the 1930s has been erased from the public record. In retrospect, the demonization of marihuana was nothing more than a premeditated act of historical sabotage designed specifically to ensure that the truth about hemp's economic potential never reached the investing public. The sudden cascade of insidious propaganda against the use of marihuana acted like a nebulous abstraction hiding the real motives which guided the Bureau. Ultimately, the final assault against marihuana was triggered by the monopolistic greed and economic insecurity of a few financially threatened industries. The reality of this history has been concealed from the public for roughly sixty years.
Early in 1935, the new commercial hemp ventures caught the attention of Helen Moorehead, the Secretary of the League of Nations Opium and Dangerous Drugs Advisory Committee, who had been working on the international front to control the traffic of drugs. Secretary Moorehead contacted the Department of Agriculture for information on the domestic marihuana situation as it might relate to legitimate agricultural and industrial enterprises. In response to her requests, Dr. M. A. McCall, Assistant Chief of the Bureau of Plant Industry, supplied Secretary Moorehead with information pertaining to the commercial hemp industry. According to Dr. McCall, certain promoters had been active during the 1934 and 1935 seasons attempting to develop a hemp fiber industry in certain parts of Minnesota, Iowa, Wisconsin, and Illinois. This promotional activity had caused a tremendous increase in the total acreage of hemp under cultivation during 1934 and 1935. This correspondence was passed on to the Bureau. It provided them with their first report about the new commercial activity in the hemp industry.
Between 1935 and 1937, the Bureau actively gathered information on the new hemp industry, even though it possessed no real authority to do so. During this same period of time, the Bureau became aware that the new ventures in the hemp industry planned on cultivating the plant for its cellulose. This unique chemical compound was one of the most sought after raw materials in the industrial world, as it was and still is the primary ingredient for the production of paper, plastics, synthetic textiles, and building materials. Starting in the mid-1920s and continuing into the 1930s, a body of agricultural literature surfaced which seriously discussed the possibility of producing cellulose from typical farm crops. The possibility was praised as a major breakthrough in the media and it was looked to as a solution for the plight of the farmers, whose profits had steadily deteriorated since the close of the First World War. By 1927, the topic of utilizing farm wastes as an alternative source for the production of cellulose pulp reached the halls of Congress. Several comprehensive bills were debated in successive sessions of Congress. Eventually a compromise was reached in 1930, but nothing was ever done for the farmers. However, in the private sector certain promoters were advocating the cultivation of hemp during 1930. Specifically, they were promoting state of the art machinery for the production of fiber. This machinery was critical to the establishment of the new hemp industry because the waste material, the hurd, which remained after the hemp was processed for its fiber, was ideal for the production of cellulose pulp.
Apparently, without the Bureau's knowledge, the new commercial hemp industry came into existence with the organization of the Northwest Hemp Corporation in 1933. The company's president, Frank Holton, became interested in the prospects of the commercial hemp industry after a meeting with H. W. Bellrose, the president of the World Fibre Corporation. During their meeting they discussed the commercial potential of hemp. Among the possibilities envisioned by Bellrose, one in particular stood out as the greatest advantage; that was the use of hemp for the production of paper. According to Bellrose, the paper industry was perfectly suited for hemp. In addition to paper, Bellrose also referred to the possibility of making plastics from the cellulose and textiles from the fiber. These productive interests were characteristic of the new commercial concerns in the hemp industry.
Starting in 1935, the Federal Bureau of Narcotics requested annual reports from the Bureau of Plant Industry on the hemp industry. These reports briefly informed the Bureau about the new activity. One of the new ventures was Frank Holton's Northwest Hemp Corporation. The Bureau discovered that this company had cultivated 6500 acres in 1934 and an additional 2000 acres in 1935. During 1936, it was reported to the Bureau that the Minnesota concerns did not cultivate any hemp. However, in 1937, the Bureau was notified of three new companies in Minnesota: Chempco, Incorporated, the Central Fibre Corporation, and the Champagne Paper Company. Together, these three ventures had planted 3700 acres of hemp for the specific purpose of utilizing both the fiber and hurds for the manufacture of paper.
Another company active in the promotion of the hemp industry was the Amhempco Corporation of Danville, Illinois. The Bureau learned of this business in 1935, when it was reported to them that the Amhempco Corporation had planted 4200 acres of hemp. At this time, the Bureau also discovered that the Amhempco Corporation planned on using its stock of hemp for the manufacture of textiles and cellulose-based products. In 1936, the Bureau received an update and found that the Amhempco Corporation had planted an additional 1000 acres of hemp. A final report for the year of 1937 showed that the Amhempco Corporation was on record for having planted 7200 acres of hemp. This crop was the largest annual acreage harvested by any single commercial concern during the 1930s. Furthermore, in the Bureau of Plant Industry report, it was stated that the Amhempco Corporation intended to utilize the waste material, the hurd, for the manufacture of paper and plastics.
From 1935 to 1938, the Bureau publicly acknowledged the new hemp ventures in its annual publication, Traffic in Opium and Other Dangerous Drugs. Behind this openness, the Bureau demonstrated a specific concern regarding the possibility of producing paper from hemp. In an undated letter from 1935, the Commissioner requested information from the Bureau of Plant Industry regarding the potential of utilizing hemp to produce paper. A response to this inquiry was not present in the Marihuana Tax Act file, but it is possible that the response was part of the general file from 1936, which happened to be mysteriously missing from the document collection. Whatever the response may have been, the truth of the matter was that hemp was ideally suited to become a major industrial cash crop because of its potential to produce cellulose, and, in particular, paper pulp.
In connection with this observation, it is interesting to note that between 1935 and 1938 the Paper Trade Journal abstracted a total of eighteen experimental studies and commercial patents regarding the utilization of hemp for the production of paper. Eleven of these abstracts were printed between July and December of 1935. Certainly any response from the Bureau of Plant Industry pertaining to the topic of hemp for paper would not have failed to notice this new surge of commercial interest. Nor would it be difficult to suggest the possibility of awareness among the wood pulp paper industry.
During the final assault, the Federal Bureau of Narcotics was well aware of the hemp industry and its concern about the new law. For instance, late in 1936, the Bureau learned of experimental crops of hemp which were being cultivated under the supervision of the Chicago Tribune. The Bureau happened to discover these experiments because the Chicago Tribune reported on their progress in a section of the paper titled, "Day by Day Story of the Experimental Farms." A letter dated September 28, 1936, from Commissioner Anslinger to the Bureau's District Supervisor in Chicago, Elizabeth Bass, requested information regarding these experiments. Supervisor Bass quickly replied and informed the Commissioner that she had been referred to Frank Ridgway, who was in charge and personally interested in the hemp project. The following week Supervisor Bass visited the experimental farm and discussed its purpose with Ridgway. He informed her that the Tribune's interests were directed "toward the manufacturing uses of the fiber, pith, etc. into commercial products." Ridgway also expressed his lack of knowledge about marihuana and that he did not know that hemp was the same plant.
This information was still too general for Commissioner Anslinger and he requested specifics on the following points: "1) Ascertain the demand for the machine that was used to harvest the MARIHUANA. 2) Find out the places in the United States where there is such a demand. 3) Find just what the hemp is used for in those sections." He also requested that she try to talk to the growers and the manufacturers of the hemp. In her reply, Supervisor Bass stated the following opinion:
"Objections raised by the manufacturing druggists who have slight need of the extracts of the Cannabis in medicinal compounds will be trifling when compared with the country-wide protests that will be raised as with one voice by the experimental stations everywhere developing the use of the fibers of the Cannabis plant stems for every variety of textile."
With regard to the specific information Commissioner Anslinger had requested, Supervisor Bass replied a second time since she was unable to contact Ridgway immediately.
During their second conversation, she discovered who had manufactured the harvesting machine. It had been constructed by the John W. Deere Company of Moline, Illinois. They had modified an ordinary small grain binder, extending its platform further than normal to account for the height of the hemp. The company had manufactured twelve to fourteen of these machines some years ago. One of the machines was in the possession of H. W. Bellrose, the President of the World Fibre Organization, and the several others had been given to the George Ball Glass Can Company of Indiana, the principal financial backers of the Amhempco Corporation. Ridgway also informed Supervisor Bass as to the optimal harvesting time, which was prior to the budding stage, and he also explained that the parts of the plant which were under consideration for commercial use were the fiber, hurds, and seeds.
The following day, Supervisor Bass sent Commissioner Anslinger a clipping from the November 4, 1936 edition of the Chicago Tribune, regarding the paper's experimental farm which had come to her attention too late to include with the previous report. The article addresses the difficulty of harvesting the hemp as well as explains that the fiber was to be developed into cloth, the hurds were to be made into cellulose products, and the seeds were to be pressed for their oil. At this point, the communication between the Bureau and the Chicago Tribune ends without any real closing of the business at hand.
Another example of the new hemp industry's concern becomes apparent on January 18, 1937, when Dr. Brittain B. Robinson of the Bureau of Plant Industry was contacted by the Champagne Paper Corporation. This particular company was considering the use of hemp fiber in the manufacture of cigarette papers and paper for Bibles. The company had become aware that legislation restricting the cultivation of hemp existed in some states. As a result, L. F. Dixon of the Champagne Paper Corporation requested information about the narcotic properties of the hemp. For example, he wanted to know if different botanical varieties of hemp existed and whether or not the type used for the production of fiber possessed the narcotic principle. There was no record of any reply; however, a letter from Commissioner Anslinger to the Department of Agriculture dated February 2, 1937, revealed that the Bureau of Plant Industry had passed the Champagne Paper Corporation's request for information on to the Bureau of Narcotics. In the Commissioner's response, he asked the Bureau of Plant Industry to provide the company with the information it had requested. And, to avoid any further confusion, he suggested that the Department of Agriculture should provide information regarding the analysis and identification of the drug and that only letters requesting information regarding the enforcement of marihuana laws be passed on to the Bureau of Narcotics.
On June 12, 1937, an attorney from Mankato, Minnesota, G. P. Smith, contacted his local Congressman, the Honorable Elmer J. Ryan, regarding the cultivation of hemp. Smith's office was located in the same building which housed the National Citizens Bank in Mankato, Minnesota. This bank was the primary financial backer of the hemp projects in Southern Minnesota. Smith's letter was eventually provided to the Bureau by Congressman Ryan. Beginning the letter, Smith explained that he was interested in developing hemp as a cash crop. He stated that, over the past few years a considerable amount of hemp had been grown for cash in Southern Minnesota. He then proceeded to discuss the activity of the Farm Chemurgic Council and Chemical Foundation, stating that they had made significant progress toward developing the use of hemp for industrial products. He also spoke of "one of the largest paper manufacturers in the country" which planned on using hemp fiber in the production of paper and of another commercial group located in the East, which was interested in using the hurds as a raw material source for plastics. Finally, he emphasized that he had been told by a "leading paper manufacturer" that the growing of hemp in the Middle West was likely to develop into "a more important cash crop than soya beans."
After Smith had made clear his seriousness and involvement in the emerging hemp industry, he posed a few questions to his Congressman. First, he mentioned that he had heard of a variety of hemp from which a narcotic drug could be produced, but he did not believe that the hemp raised for fiber purposes was the same variety. Second, he noted that he was aware of a bill which was in committee, House File No. 6385, the future Marihuana Tax Act. And, with regard to this pending legislation, Smith and his associates expressed the following concern, "We are unable to understand why such a bill should be proposed because according to our information it could serve no good purpose and would embarrass, if not kill, an important agricultural development." Continuing the same line of thought, he explained that, "No one farmer raises any considerable acreage, the profits are not large and I do not believe any independent Minnesota farmer would care to raise any crop under the license and direction of a Federal Bureau." In conclusion, Smith urged that the bill be killed.
On June 29, 1937, Commissioner Anslinger replied to Congressman Elmer J. Ryan, who had passed the letter on to the Bureau. The Commissioner explained that Smith had been misinformed regarding the narcotic properties of hemp. All varieties contained the narcotic substance. This situation made it necessary for the legislators to include domestic hemp used for commercial purposes within the purview of the law. He continued and explained that measures had been taken to ensure that the legitimate growth of hemp would not be hindered by the legislation. According to the Commissioner, the overriding purpose of the bill was "to bring out into the open all production and sale of the tops, leaves and seeds of the hemp plant which contain the dangerous drug marihuana and to prevent, if possible, the illicit production and sale of these tops, leaves and seeds." Commissioner Anslinger concluded his letter by ensuring the Congressman that the bill would not interfere with legitimate industry. This correspondence ended with the Commissioner's reply.
The surge of commercial interest in utilizing hemp to produce paper, plastics, and textiles crucially affected the Bureau's decision to launch its final assault against marihuana in 1935. Without a doubt, the Bureau was fully aware of the promising economic potential of hemp, and, between 1935 and 1937, this observation was rapidly becoming an economic reality. It certainly seems rather ironic that the marihuana issue spontaneously mushroomed into "the greatest narcotic peril in America" during the same period of time. For instance, in 1938, during a conference held by the New York Herald Tribune, Commissioner Anslinger explained that:
"About 1935, we were stunned with the rapid wildfire spread of this drug; and by the following year it had become such a major menace as to call for the enactment of national control legislation. Nearly every State had suffered from the insidious invasion of this drug. It spread to new circles not previously contaminated by drug addiction; to young impressionable people."
Despite this claim, the Bureau's motives for carrying out the final assault against marihuana have never been satisfactorily established. This convenient state of institutional amnesia has resulted from the fact that the Commissioner and his assistants perjured themselves before both Congress and the public when they actively participated in the demonization of marihuana. Behind the veil of their specious representation there had not been any significant increase in the usage of the drug, nor was the national press reporting about a marihuana problem. The simple truth is, that prior to the Bureau's final assault, the American people were largely unaware of the drug.
Consequently, in the absence of public awareness, the Bureau was able to demonize marihuana. For this task they returned to the erroneous assumptions of state and local authorities who had campaigned against marihuana during the previous twenty-year period. None of the state and local campaigns were based on a true problem with the drug. Instead, a combination of latent xenophobia and Progressive ideas caused the state and local authorities to be blind to reality. This blindness resulted in the proliferation of falsehoods and misrepresentations about marihuana, which suggested that the drug was a dangerous narcotic capable of inducing crime, violence, and insanity. In 1930, the Bureau craftily adopted the mendacity of past anti-marihuana campaigns, doctored it up with new fallacies, and then, used the improved version to demonize marihuana from 1935 on. This process entailed the compilation of an assorted array of propagandistic misinformation, consisting of biased police reports, prejudiced court sentences, and sensationalized media accounts, all of which labeled marihuana not only a dangerous narcotic but also a national menace. Importantly, because of the horrific nature of this material, it is now referred to as a "gore file." Significantly, between 1935 and 1937, material from this gore file was wantonly cited by the Bureau as legal precedent for federal legislation against marihuana.
In order to disseminate this incidinary propaganda among the public, the Bureau enlisted the support of the Women's Christian Temperance Union, the World Narcotic Defense Association, the General Federation of Women's Clubs, the Young Men's Club of America, the National Parent Teacher Association, and the National Councils of Catholic Men and Women. These groups provided the Bureau with the stamp of moral approval and indispensable aid in the overall effort to inform or, correctly, misinform the general public. In addition to employing the former institutions, the Bureau began to advise legislators about the dangers of marihuana. Besides these acts of deception, the Bureau also deliberately suppressed the availability of objective information about marihuana from reaching the public. But, without a doubt, the Bureau's most effective weapon during the final assault was its uncanny ability to plant its anti-marihuana propaganda throughout the presses of the nation. This last tactic of supplying the national media with false information effectively demonized marihuana in the eyes of public.
A survey of the media coverage during the final assault reveals that all of the articles about marihuana are traceable to the Bureau's gore file. None of the Bureau's propaganda represented the truth. Instead, the public was fed a steady diet of prefabricated horror stories about marihuana. For instance, starting in 1935, the Bureau often cited the following prevarication as factual data: "Police officials in cities of those states where it [marihuana] is most widely used estimate that fifty per cent of the violent crimes committed in districts occupied by Mexicans, Spaniards, Latin-Americans, Greeks, or Negroes may be traced to this evil." Similar prevaricaticated data was consistently disseminated to the public despite its overt prejudice and lack of truth. One theme which seemed to be particularly effective for the Bureau involved the strategy of suggesting that marihuana dealers sought out the youth of America, who in their innocence were more susceptible to the drug's addictive powers. In the final assessment, though, none of the Bureau's allegations against marihuana were ever historically or scientifically verified. This absence of truth was characteristic of all the Bureau's inflammatory accounts describing marihuana's evils.
During 1935, two new bills against marihuana were presented in Congress by Congressman John J. Dempsey and Senator Carl A. Hatch from New Mexico. Locally-inspired prejudice against the Mexican use of the drug seems to have prompted the introduction of this legislation. Within the Bureau, objection was raised to both bills by Acting Commissioner Will Wood and Chief Legal Advisor Alfred J. Tennyson, who felt that the proposed legislation might endanger the Harrison Act. This objection was overruled by their superiors in the Treasury Department, Assistant Secretary Stephen Gibbons and General Counsel Herman Oliphant, who approved the legislation. Apparently, though, the public outcry against marihuana was not strong enough or Congress knew the reality of the situation, because both pieces of legislation died before they reached the floor.
In the meantime, General Counsel Oliphant continued to search for a suitable means of establishing federal control over marihuana. Eventually, he decided that the government's ability to tax would provide the Bureau with the means they sought. Without notifying the public or Congress, the Bureau's legal team proceeded to draft a bill authorizing a prohibitive tax on transactions dealing with marihuana. As a model the drafters turned to the 1934 National Firearms Act, which prohibitively taxed the unlicensed transfer of machine guns. Their plan became a reality after the constitutionality of the National Firearms Act was upheld by the Supreme Court on March 29, 1937. Shortly following this decision, the Bureau unveiled the Marihuana Tax Act, on April 15, 1937.
Prior to the introduction of the Tax Act, the Bureau flooded its channels of propaganda with a foreign study on the Moslem custom of using cannabis drugs in the North African province of Tunisia. The study was conducted by a French hospital pharmacist, Dr. Jules Bouquet, upon the request of the Sub-Committee on Cannabis of the League of Nations Advisory Committee on Traffic in Opium and Other Dangerous Drugs. When the Bureau reproduced and disseminated this report through its propaganda channels, Dr. Bouquet was introduced as the world's foremost expert on cannabis drugs. But, his conclusions bore the same traces of latent xenophobia and Progressive morality which had influenced the evolution of the marihuana issue in America. For instance, Dr. Bouquet offered the following explanation for the local Moslem custom of smoking and ingesting cannabis drugs:
"The basis of the Moslem character is indolence; these people love idleness and day-dreaming, and to the majority of them work is the most unpleasant of all necessities. Inordinately vain-glorious, thirsting for every pleasure, they are manifestly unable to realize more than a small fraction of their desires: their unrestrained imagination supplies the rest. Hemp, which enhances the imagination, is the narcotic best adapted to their mentality. The hashish addict can dream of the life he longs for: under the influence of the drug he becomes wealthy, the owner of a well-filled harem, of delightful cool gardens, of a board richly supplied with exquisite and copious viands; his every longing is satisfied, happiness is his. When the period of intoxication is over and he is again faced with the drab realities of his normal shabby life, his one desire is to find a corner where he may sleep until a new orgy of hemp brings him back to the realm of illusions."
In addition to racist bigotry, Dr. Bouquet associated the use of cannabis drugs with the "poorer classes in the urban communities: artisans, small traders, workmen, etc." Continuing, Dr. Bouquet also claimed that the petty criminal classes were "ardent devotees of hashish." On the basis of his biased observations of a socio-economic section of the Moslem culture in Tunisia, Dr. Bouquet stated that the use of cannabis drugs led to abandonment of work, propensity to theft, and the disappearance of reproductive powers. In the final assessment, Dr. Bouquet failed to produce any credible evidence to support his findings. Yet, despite this discrepancy, the Bureau still presented Dr. Bouquet's erroneous findings before Congress as scientific verification of the dangers posed by marihuana.
Back in 1931, the Bureau had done the same thing with the Preliminary Report on Indian Hemp and Peyote, when it briefly campaigned for the Uniform Narcotic Drug Act. Six years later the Bureau continued to rely on the same strategy, employing prejudicially falsified information to ensure the passage of the Tax Act. All of the evidence presented against the drug by the Bureau during the Congressional Hearings, except for Dr. Bouquet's report, were drawn from its gore file, the same body of misinformation which the Bureau had been diligently collecting and embellishing since 1930. During the hearings, Commissioner Anslinger drilled the legislators with shocking stories about the evils of marihuana. For instance, before the Senate Committee on Finance, Commissioner Anslinger cited a brutal murder and several other violent crime cases in which marihuana was blamed for the defendant's actions. None of the cases were scientifically credible. In fact, none of the material the Bureau offered during either of the hearings was credible. To pass the Marihuana Tax Act of 1937, the Bureau committed perjury before the highest legislative body in the United States by lying about the history and effects of marihuana.
To the Bureau's dismay, dissent was voiced during the Congressional Hearings on several occasions. In particular, the legislative counsel of the American Medical Association, Dr. William Woodward, vehemently opposed the new Tax Act. During the House Hearings, Dr. Woodward categorically denied each of the Bureau's arguments against marihuana. Employing the Socratic Method, he questioned the Bureau's reliance on sensationalized media stories instead of scientific evidence. In answer to his query, Dr. Woodward proceeded to demonstrate that the perceived problem was a farce of the imagination:
"We are told that the use of marihuana causes crime. But yet no one has been produced from the Bureau of Prisons to show the number of persons addicted to marihuana. An informal inquiry shows that the Bureau of Prisons has no information to this point. You have been told that school children are great users of marihuana cigarettes. No one has been summoned from the Children's Bureau to show the nature and extent of the habit among children. Inquiry into the office of Education, and they certainly should know something of the prevalence of the habit among school children of this country, if there is a prevalent habit, indicates that they have had no occasion to investigate it and know nothing of it."
Dr. Woodward also found that the Bureau of Mental Health and the Public Health Service were ignorant of a marihuana problem. The testimony presented by Dr. Woodward effectively explained why the Bureau had no credible evidence to present during the hearings. According to Michael Schaller, a historian observing this debate thirty-four years later, "There simply was no evidence of a marihuana problem, except in the eyes of the Bureau of Narcotics."
Further dissent was registered by several representatives from the new hemp industry during the Congressional Hearings. These representatives lobbied for the exemption from the Tax Act of hemp cultivated for legitimate commercial operations. During the ensuing debate, Commissioner Anslinger argued that the plant, hemp, produced the drug, marihuana, and therefore the two were inseparable. In other words, any legislation dealing with marihuana also covered hemp. Eventually, a compromise was reached between the Bureau and these representatives. This compromise consisted of an agreement on the part of the Bureau to exclude the mature stalks of the plant from the stipulations of the tax, as long as the stalks were free of all foliage before they were transferred from the farmer to the processor. In return, the industry representatives agreed to comply with regulatory licensing and supervision. Both parties appeared to be satisfied with this decision and the hearings concluded.
Despite the gross misrepresentations, the Bureau easily convinced Congress to pass the Marihuana Tax Act. This feat was certainly aided by the crafty maneuvering of General Counsel Herman Oliphant. When he introduced the bill, he presented it to the House Committee on Ways and Means. According to Congressional procedure, a bill could be sent directly to the Senate via this powerful House committee. Interestingly, the Committee on Ways and Means was chaired by Representative Robert L. Doughton, a staunch ally of Du Pont. The rationale for this legislative sleight of hand was quite simple. If the bill had been debated in the House, representatives from the districts where hemp was to be grown would have offered opposition and possibly killed the legislation, while bringing national attention to the economic potential of hemp. However, this scenario was not allowed to occur. Instead, the bill's supporters astutely circumvented debate in the House and ensured the passage of bill.
On August 2, 1937, the Marihuana Tax Act was signed into law. In section 14 of the Tax Act the Bureau was given full jurisdiction over the issue of marihuana. This new responsibility was formalized through Regulations No. 1, which was a comprehensive code of licensing and taxing procedure. In particular, Regulations No. 1 featured a transfer tax to control the distribution and traffic of marihuana. Hemp cultivated for legitimate industrial purposes was exempt from the transfer tax as long as the foliage was removed from the mature stalks of the harvested plants. But, if violated, Regulations No. 1 stipulated that the Bureau possessed the legal right to confiscate, withhold, or destroy the hemp in question.
During the same amount of time that it took the Bureau to demonize marihuana and pass the Tax Act, the new hemp industry nearly revolutionized agriculture by developing the cultivation of hemp as a cash crop for industrial purposes. There would seem to be an obvious correlation between the final assault against marihuana and the dawn of the new hemp industry. Historically, the acts of deception carried out by the Federal Bureau of Narcotics during its final assault against marihuana were indicative of the protective strategies exercised by the wood pulp industry whenever its investments or profits were threatened by economic changes. At the close of the 1920s, the wood pulp industry was clearly dominated by the International Paper Company (between 1927 and 1935 the International Paper and Power Company). As a leading manufacturer of wood pulp, International dictated prices in the lucrative newsprint market and controlled a large stake in the production of Southern kraft pulp. Furthermore, it was capable of exercising a considerable amount of influence over the major presses of America through the American Newspaper Publishers Association. During the late 1920s, International's behavior directly affected the development of farm wastes as an alternative source for the production of paper; a movement, which, in turn, was inseparable from the natural progression of history leading up to the genesis of the new hemp industry. The following scenario of economic sabotage occurred for the simple reason that the wood pulp industry stood to lose a considerable amount of investment and profit if farm wastes were developed as an alternative source for the manufacture of cellulose products such as paper and plastics.
In 1929, the International Paper and Power Company was involved in a plot to close the newsprint market to paper made from the cellulose of farm wastes. At this time the company already dominated the newsprint market and it was beginning to infiltrate the media by offering 15-year contracts to newspaper publishers in return for stock in their newspapers. Furthermore, it was alleged that these 15-year contracts were designed to close the newsprint market to paper made from the cellulose pulp of farm wastes. In order to set the standard with the 15-year contracts, International conducted negotiations with the largest consumer of newsprint, the Hearst media syndicate. Before anything was formalized, though, Senator Thomas Schall of Minnesota called for the Federal Trade Commission to investigate International. As a result of these investigations International promptly restructured its contracts and liquidated its interest in newspapers to avoid any further attention.
This act of retreat was not made in defeat. Instead, another solution had offered itself to the Hearst media syndicate and newspaper publishers in general. During 1930, Hearst purchased an interest in the production of newsprint. This development marked the beginning of a trend as more newspapers followed suit. The trend increased after the passage of the Holding Company Act of 1935. This piece of legislation forced holding companies with subsidiary interests outside of their primary realm of business to liquidate their assets in the subsidiary interests. Evidently, the production of newsprint had become a subsidiary business concern of public utility holding companies. This was the case with the International Paper and Power Company, which was primarily a public utility and secondarily a paper manufacturer. As a consequence of the new law, many changes occurred in the financial structure of the newsprint industry between 1936 and 1937. These transformations were embodied in a process of decentralization during which the nation's larger newspaper publishers purchased an interest in the production of newsprint. In the process, the newspaper publishers assumed the financial burden of manufacturing, since the production of newsprint carried one of the highest ratios between plant investment and unit sales. This financial burden undoubtedly influenced the intensity of the demonization of marihuana. In particular, Hearst was one of the first and most active participants in the final assault. Certainly his new control of the production of wood pulp paper influenced his decision to attack marihuana; otherwise he could have lost a significant sum of money if hemp had emerged as a raw material source for the manufacture of newsprint as the plant's promoters suggested. This scenario of interlocking financial interests also applied to the investment bankers who provided the capital for the newspaper publishers, such as Hearst, to acquire an interest in the production of newsprint. In connection with these observations, it is interesting to note that, prior to the 1930s, Hearst had used his papers to attack the bastions of banking. However, by the time of the final assault against marihuana, Hearst had developed a new allegiance with this powerful business community.
Additional evidence was offered in 1929, which linked the wood pulp industry to the Department of Agriculture in the plot, described previously, to sabotage the development of farm wastes as an alternative source. The focus was not on hemp at this time, but what occurred was reflective of what happened to hemp during the 1930s. This plot emerged in 1927, when an appropriation of $50,000 to conduct research into the utilization of farm wastes was secured for the Bureau of Standards. This appropriation was opposed by the Department of Agriculture on the grounds that the Bureau of Forestry and Forest Products already conducted the research. In reality, though, this government agency only searched for different types of wood to use for the production of paper. The simple truth of the matter was that the Bureau of Forestry and Forest Products was merely a government operated research center for the wood pulp industry. On an annual basis the Bureau of Forestry and Forest Products received approximately a million dollars for its specific research, yet during its twenty-year history very little progress had been made. Meanwhile, by 1929, the United States imported eighty percent of its wood pulp paper. This import market was worth $275,000,000. In light of this potentially lucrative market for the American farmer, it seems rather puzzling that the Department of Agriculture would not endorse $50,000 to conduct research for the development of farm waste for the production of paper.
A similar conflict of interest becomes apparent again in 1929, when Blair Coan, a Washington newspaper correspondent, revealed that the Department of Agriculture had suppressed information for twenty years, which suggested that white paper could be made cheaper and better from the cellulose of farm crops than from wood. With regard to the previous allegation, it is particularly relevant to recall the Yearbook of the United States Department of Agriculture from 1910, in which the following statement was made:
"In addition to the waste materials that are available, evidence has been gathered that certain crops can probably be grown at a profit to both the grower and manufacturer, solely for paper-making purposes. One of the most promising of these is hemp."
This Yearbook article seems to have been the most extensive treatise written about the subject of alternate sources dating from the period of time twenty years prior to 1929. Based on this coincidence, there seems to be ample evidence to suggest that hemp was "one of the most promising" crop plants about which the Department of Agriculture was attempting to suppress the availability of agricultural and economic information from the public. Further inspection reveals that the Department was presented with similar data regarding the economic potential of hemp on several occasions during this twenty year period, and, in each instance the Department declined to act.
During the same period of time, the national press coverage of alternative sources for the production of paper also displayed opposition to the use of farm wastes for such an endeavor. Hemp was not openly referred to in the media coverage of alternative sources, but any individual interested in the production of paper from farm wastes would have known about hemp's unique properties. Instead, the main topic was cornstalks, since there was an abundance of this type of farm waste. On March 2, 1929, the New York Times featured a prominent article on alternative sources in its March 10, 1929, Sunday edition. The headline read, "CORNSTALK PAPER NOT SATISFACTORY." This article was released only eight days after Senator Thomas Schall had delivered his final speech on alternative sources before the Senate, which described the previously discussed conspiracy to stop government aid for the establishment of a farm waste industry for the agricultural community.
According to the New York Times article, newspaper publishers had found cornstalk paper to be a poor substitute for wood pulp newsprint. In addition to being a poor substitute, it was stated that the cost of production for cornstalk newsprint was much greater. These negative aspects led the article's author to conclude that farmers could expect little direct benefit from the development of farm waste industries. Instead, the author suggested that:
"Publishers of Cornbelt newspapers have been giving cornstalk newsprint a 'ride' and incidentally whooping it up for the utilization cornstalk waste as a means of industrializing farm communities and fattening the income of the farmer."
Clearly, the author was attempting to dissuade potential investors by claiming that the entire operation was promotional. At first glance this appears to be a noble gesture, but a closer inspection of the article reveals a technical slip. While discussing the prices the farmer could expect for his farm waste the author stated that:
"Estimates of the recoverable value to the farmer of his waste stalks run all the way from $5 to $12 an acre, the figure most frequently being suggested being $10. It is difficult to see where he can ever hope to realize anywhere near that figure."
However, the correct figure was not $5 to $12 per acre, but rather $5 to $12 per ton. How did such an error find its way into publication? The price by tonnage significantly increased the earning potential because for every acre of cultivation two to six tons of waste existed. Considering the context of the article and this specific error, it seems that there was a deliberate attempt to downplay the significance of developing farm waste industries.
A few weeks later another negative statement was printed in the New York Times. It was presented by the head of the Newsprint Institute, R. S. Kellogg, who noted that, "Cornstalk paper publicity goes merrily on." In this release, Kellogg cited an official statement made by the Bureau of Standards regarding a promotional book on farm products in the industry. This particular book was heralded as the first to be printed on paper made from cornstalks. The official statement from the Bureau of Standards read as follows:
"A sample from the book, "Farm Products in Industry," by G. M. Rommel, consisted of 25 per cent cornstalk fiber, 55 per cent sulphite fiber, and 20 per cent flax fiber." - The question arises, therefore, why this paper should not be heralded as sulphite paper or flax paper with as much accuracy as it has been widely advertised as cornstalk paper."
Obviously the wood pulp industry was concerned about the potential development of markets for alternative sources, otherwise why would the head of the Newsprint Institute have felt compelled to release such a derogatory statement to the editor of the New York Times?
In the end, the efforts of the wood pulp industry in conjunction with the Department of Agriculture successfully quelled the brief surge of Congressional interest in developing farm waste industries for the farmer. Instead, legislators and the wood pulp industry decided to develop the Southern Pine as an alternate source for the production of paper. Coincidentally, the Southern Pine became a serious topic about the same time that cornstalks were ruled out as a possibility. In connection with this development, it is very interesting to note the positive reception given to the proposal to utilize the Southern Pine, as opposed to the negative reception encountered by farm waste legislation.
Starting in 1932, the Department of Agriculture released an influential report which supported the development of the Southern Pine as a source of wood pulp. This report also stated that hemp was unsuitable for the production of paper. Indications of the policy-to-be continued in 1934, when President Roosevelt gave his approval of the plans to develop the Southern Pine for the production of newsprint. The following year the Reconstruction Finance Corporation raised to the possibility of governmental aid for the development of industries to utilize the Southern Pine. Also during 1935, Roosevelt put the Civilian Conserveration Corp to work reforesting the South, as well as sanctioning the federal purchase of forest holdings to be leased to private timber concerns. By 1937, the American Newspaper Publishers Association was urging publishers to invest in the building of production facilities. The talk became reality in 1938, when a group of publishers in Texas were given a loan from the RFC and started the construction of a plant near Lufkin, Texas. This facility opened in 1940, and marked the shift of the forest products industry from the North to the South. To stress the significance of this economic shift, wood pulp grew to become the largest industry in five Southern states.
Meanwhile, following the demise of farm waste legislation in 1930, promoters began to stimulate interest in the cultivation of hemp. In 1931, the Bureau of Plant Industry countered this activity by warning farmers to be wary of the hemp promoters, insinuating that they were scam artists. Two years later, in 1933, the Bureau of Plant Industry canceled Lyster Dewey's hemp breeding project. Another suspicious event occurred in 1935, when a government cellulose expert visited the National Cellulose Corporation of Minnesota and condemned the operation. Based on the Bureau of Plant Industry's specialization, it seems likely that the expert was sent by the agency. Regardless, this official's action seems to have disillusioned investors and caused the company to fail. Most importantly, though, the Bureau of Plant Industry never backed the new hemp industry during the 1930s. Instead, the Bureau of Plant Industry consistently maintained that the new hemp ventures were merely promotional operations. In retrospect, it seems clear that the Bureau of Plant Industry's guiding purpose was to stop the new hemp industry from reaching its full potential. Each instance of sabotage was a continuation of the previously cited cases of opposition to developing farm waste as an alternative source for the production of paper.
When the new hemp ventures began to emerge as a real threat to the wood pulp paper industry in 1935, the Federal Bureau of Narcotics launched its final assault against marihuana. The sudden move on the part of the Bureau to demonize marihuana was indicative of the pattern of behavior which had been set before 1935, with regard to the development of farm wastes as an alternative source for the production of paper. In the fight against alternative sources, the International Paper and Power Company was a leader. Interestingly, this company was financially linked to J. P. Morgan & Company. It is important to note, that Du Pont was also financially linked to this powerful bank. Du Pont was a participant in the wood pulp industry as the primary supplier of the chemicals necessary for pulping. In addition to this interest, Du Pont had also cornered the market on the synthetic fibers and plastics made from cellulose derived from wood pulp. Furthermore, Du Pont was interested in the development of the Southern Pine as raw material source for its cellulose industries. Likewise, the International Paper Company, which had been reformed as a result of the Public Utilities Holding Company Act of 1935, also expanded its operations into the Southern region, especially from 1935 on, in anticipation of utilizing the Southern Pine.
Du Pont and International were not alone in the migration as other large corporations entered the emerging Southern forest products industry. For instance, the St. Regis Paper Company another Morgan interest, as well as the Great Northern Paper Company and the Champion Paper Company, which were within Chase Manhattan's sphere of influence, also migrated southward. By 1935, the success of the Southern Pine as a new source of wood pulp was quickly becoming the responsibility of the federal government and the financial institutions which supported the movement, and eventually provided the capital to develop the industry. To give an idea of this new responsibility, one estimate predicted an investment of $500,000,000 would be necessary for the development of the Southern wood pulp industry. A simple cursory glance at the history of the government and these financial institutions prior to 1935, reveals that both had consistently adopted conciliatory strategies to protect and further their interests. Incidentally, the Southern forest products industry faced a serious economic challenge from the nascent movement to utilize hemp as alternative source for the production of raw cellulose. The previous observation raises speculation about collusion between the Federal Bureau of Narcotics and concerned industrial leaders. Commissioner Anslinger had been appointed to his post by his future uncle-in-law Andrew Mellon, who at the time had been the Secretary of the Treasury. In addition to serving as the Secretary of the Treasury, Andrew Mellon along with his brother controlled the Mellon Bank which was financially linked with J. P. Morgan & Company. On a more personal level both Mellon brothers were a privileged members of J. P. Morgan & Company's "preferred list." This list was composed of corporate directors, government officials, and the heads of the nations largest banks. As a group, these preferred clients were kept informed on all aspects of the economy from which they shamelessly profited.
Among this privileged financial caste were individuals directly associated with International Paper, Du Pont, and other corporations financially interested in the development of the wood pulp industry and its expansion in the South. Hemp was undoubtedly unwelcome competition. Was it mere coincidence that the Bureau's position toward marihuana abruptly changed in 1935, when Commissioner Anslinger became aware of the surge of activity to develop hemp for the production of cellulose pulp? Or was the final assault against marihuana precluded by hidden motives stemming from the industrial and governmental endorsement of plans to develop the Southern Pine as a new source of cellulose pulp?
Certainly, there is reason to continue the inquiry. During the final assault, the Bureau redoubled its efforts to demonize marihuana. Its task was greatly facilitated by the fact that the media, and various morality groups, as well as bureaucrats and legislators were easily influenced by the financial institutions which controlled all facets of the wood pulp industry. This situation is best reflected in the phenomenal cooperative effort exhibited by the government and private concerns to the develop the Southern Pine industry. The campaign against marihuana was an extra protective measure to ensure the success of the project. Initially, the Bureau's intense demonization of marihuana had the effect of seriously diminishing investment capital flowing into the development of the hemp industry. The following example serves to demonstrate the ramifications of this dilemma.
In Minnesota, after the National Cellulose Corporation failed, Joseph H. Gunderson assumed control of matters during 1936. Gunderson had invested heavily in the hemp venture from the beginning and throughout the past few years of failure he had maintained a vision of a grand industry. To keep this vision alive, he enlisted the financial aid of his associates and traveled to Delaware, where he organized a new company Chempco, Incorporated. The new company was listed under the liberal laws of Delaware, "to process, buy, sell, deal in and use fibre plants, etc., etc." In addition to Gunderson, Dr. J. M. Johnson, of Hartington, Nebraska, who had organized the Nebraska Fibre Corporation during 1935 and had contracted to grow 3676 acres of hemp, also invested in the company, along with his son.
Once Gunderson returned to Minnesota, he proceeded with negotiations to purchase hemp and he began organizing for the production of fiber at the old Union Fibre Corporation plant at Winona, Minnesota. For the purchase of hemp, Gunderson contacted Dr. Johnson and easily purchased the Nebraska crop. He then offered to buy any of the 1934 and 1935 crops from Minnesota that the farmers wanted to sell. Chempco, Inc. concentrated its efforts on producing fiber from the Nebraska crops during 1936. The fiber which they obtained was transferred for marketing to the Harry H. Strauss organization, which later developed the Central Fibre Corporation and the Champagne Paper Company.
On February 24, 1937, the Central Fibre Corporation was organized by Harry H. Strauss and Lawrence F. Dixon. The purpose of the company was "to grow, cultivate and produce, sell and generally deal in flax, hemp, and other agricultural crops and products." It was located in Blue Earth, Minnesota. That spring they contracted with local farmers and purchased 428,583 pounds of the 1934 and 1935 crops. Over the course of the summer and fall, they produced a total of 148,090 pounds of fiber which was classified as a mixture of hurd and short length fiber "tow." Strauss's other commercial enterprise was the Champagne Paper Company. Apparently, the fiber left at the Central Fibre Corporation mill in Winona, Minnesota was going to be shipped to a paper mill in Brevard, North Carolina, where Strauss planned to locate the Champagne Paper Company. The transfer was to occur once the plant was completed. Nothing else is stated about the Champagne Paper Company. However, in an article written by Strauss, "Paper from Flax and Hemp," which appeared in the September, 1937, issue of the Farm Chemurgic Journal, he discussed the company's intentions of producing Bible, cigarette, carbon, condenser tissues, and similar grades of paper from hemp.
During the Congressional Hearings for the Marihuana Tax Act a representative for Chempco, Incorporated was present. The use of term marihuana was a specific concern of this representative. Because of the demonization of marihuana, hemp now possessed a very deleterious stigma. Explaining his position during the Senate Hearings, he stated: "I do not think the use of the word 'marihuana' belongs in this measure, because that is the word that came up from Mexico and attached to these cigarettes. I see no use in it. This is hemp being grown, not marihuana." According to the representative, there was a definite necessity to differentiate between hemp cultivated for legitimate industrial purposes and the drug marihuana. If this was not done, he feared that "...we might lose an industry purely by the phraseology of the measure."
Meanwhile, in the spring of 1937, Chempco, Inc. had contracted with farmers to grow a new crop of hemp. About the same time, the Central Fibre Organization had been formed and the two companies entered into an agreement whereby the Central Fibre Corporation would buy and process all the hemp produced by Chempco, Inc. The other part of the agreement stipulated that the Central Fibre Corporation would market the fiber. This business transaction never occurred because Chempco, Inc. experienced a $25,000 loss in 1937, which forced the company to cease operations. Before this loss occurred the company had purchased 2,611,259 pounds of the 1934 and 1935 hemp crops which were left in the field. In the end, Gunderson was forced to resign on account of defalcations.
Nothing was ever said about the circumstances of the $25,000 loss suffered by Chempco, Inc. in the records of the Bureau. Considering the absence of an explanation, there is reason to believe that investors withdrew because of the public hysteria which had resulted from demonization of marihuana and the inevitable threat of government regulations. In retrospect, the emergence of these three commercial concerns was the apex of the new hemp industry in Minnesota. After this episode the activity in Minnesota never really recovered. Gunderson, Strauss, and Dixon were truly on the verge of establishing the cultivation of hemp as a cash crop for the production of paper, plastics, and textiles, when the Bureau destroyed their plans by frightening away their financial backers and their farmers, both of whom did not want to be associated with the supposedly insidious demon drugmarihuana.
In conclusion, marihuana offered the Federal Bureau of Narcotics a convenient means of protecting the special interests of the wood pulp industry. The demonization of marihuana which occurred during the final assault forever marred the public's perception of the hemp plant. It also allowed the Bureau to gain jurisdiction over the commercial hemp ventures. Potential investors did not want to risk their capital on a government controlled industry. Furthermore, farmers were especially wary of cultivating hemp because of the stigma of marihuana. Because of this impasse, the hemp ventures began to default after the passage of the Tax Act in 1937. To ensure that this process was finalized, the Bureau sabotaged the remaining concerns by using the stipulations of the transfer tax as a medium to stop business transactions. This underhanded tactic quickly drained the waning energy of the original promoters and forced them to abandon their dreams of developing hemp as a cash crop for the economically depressed agricultural community and as a raw material for the manufacture of cellulose products.
The Immediate Repercussions of the
Marihuana Tax Act of 1937
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