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Full text of "Cutter Laboratories, 1897-1972 : a dual trust : transcript, 1972-1974"


University of California • Berkeley 



This manuscript is made available for research 
purposes. No part of the manuscript may be quoted 
for publication without the written permission of 
the Director of The Bancroft Library of the Univer 
sity of California at Berkeley. 

Requests for permission to quote for publication 
should be addressed to the Regional Oral History 
Office, 486 Library, and should include identifica 
tion of the specific passages to be quoted, antici 
pated use of the passages , and identification of 
the user. 

Throughout this manuscript an asterisk is used 
to denote registered trademarks of pharmaceutical 
products and equipment made by Cutter Laboratories, 
Incorporated. Researchers are requested to follow 
the same procedure in quoting passages which include 
Cutter trademarks. 



The Bancroft Library University of California/Berkeley 

Regional Oral History Office 



CUTTER LABORATORIES. 1897-1972; A DUAL TRUST 

VOLUME II 
Edward A. Cutter, Jr. Expanding Company Capability 

Howard M. Winegarden Interrelations of Research 

and Production 

Harry Lange Developing Financial 

Resources 

Ernest T. Gregory The Many Facets of Multiple 

Location Operations 

David L. Cutter Some Aspects of Third Generation 

Corporate Leadership 



Interviews Conducted by 
Gabrielle Morris 



Copy No. / 
1975 by The Regents of the University of California 



CUTTER LABORATORIES. 1897-1972; A DUAL TRUST 

Volume I 
ROBERT KENNEDY CUTTER: BUILDING AND GUIDING A FAMILY PHARMACEUTICAL FIRM 

Volume II 
TABLE OF CONTENTS 

EDWARD A. CUTTER, JR. : EXPANDING COMPANY CAPABILITY 1 

Interview History 

1. Youthful Recollections 1 

2. Cutter Salesmen: Recruiting and Training 3 

3. Improvements in Veterinary Products 10 

4. Expansion of Operations During World War II 18 

5. Postwar Research and Development Landmarks 30 

6. Midcentury Growth and Change 47 

7. Concluding Thoughts 62 

HOWARD M. WINEGARDEN: INTERRELATIONS OF RESEARCH AND PRODUCTION 71 

Interview History 

1. Work and Study at California Institute of Technology and 

Cutter Laboratories 71 

2. Research Department Emerges 75 

3. Growth of Cutter Laboratories 83 

4. Major Strides in Research and Production 93 

5. Other Developments 109 

HARRY LANGE: DEVELOPING FINANCIAL RESOURCES 120 

Interview History 

1. Joining Cutter Laboratories 12 ° 

2. Establishing the Controller's Function 124 

3. Organizational Changes 129 



4. Vice-President for Marketing 142 

5. Cutter Family Leadership 148 

6. A Varied Civic Career 151 

ERNEST T. GREGORY: THE MANY FACETS OF MULTIPLE LOCATION OPERATIONS 160 

Interview History 

1. From Procter and Gamble to Cutter Laboratories 160 

2. Organizational and Procedural Changes in the Forties 162 

3. The First Branch Plant: Chattanooga 166 

4. Setting Up Overseas Operation 182 

5. Directing New Plant Operations and Engineering 184 

DAVID L. CUTTER: SOME ASPECTS OF THIRD GENERATION CORPORATE LEADERSHIP 193 

Interview History 

1. Boyhood and Education 193 

2. Joining the Family Firm 203 

3. Moving Into Management 214 

4. Preparation for the Presidency 224 

5. Chief Executive Officer 237 



SELECTED DOCUMENTS FROM THE CUTTER LABORATORIES OLD TIMERS ROOM 256 
INDEX 258 



The Bancroft Library University of California/Berkeley 

Regional Oral History Office 



Edward A. Cutter, Jr. 
EXPANDING COMPANY CAPABILITY 



An Interview Conducted by 
Gabrielle Morris 



1975 by The Regents of the University of California 







Edward A. Cutter, Jr. 



TABLE OF CONTENTS - Edward A. Cutter 



INTERVIEW HISTORY 

1. YOUTHFUL RECOLLECTIONS 1 
At the Laboratories 1 
University of California 3 
Sales Experience in the Chicago Office 4 

2. CUTTER SALESMEN: RECRUITING AND TRAINING 6 

3. IMPROVEMENTS IN VETERINARY PRODUCTS 10 
Joint Effort with Dr. William Boynton on Hog Cholera Vaccine 13 
Anthrax Spore Vaccine 13 
Alhydroxide* Process Developed 15 
U.S. Bureau of Animal Industry 15 
Sales Films 17 

4. EXPANSION OF OPERATIONS DURING WORLD WAR II 18 
Defense Plants for Blood Processing and Penicillin 18 
Blood Supplies 23 
Government Contract Negotiations 25 
Deep Tank Penicillin Production 26 

5. POSTWAR RESEARCH AND DEVELOPMENT LANDMARKS 30 
Conversion of Facilities 30 
Plasma Fractions 31 
Saftiflex* Equipment 34 
Plasma Research in the Sixties 36 
Tissue Culture Progress with Dr. Boynton 38 
Plague Vaccine and Other Projects with Dr. Karl Meyer 41 

6. MIDCENTURY GROWTH AND CHANGE 47 
Branch Plants Established 48 
Labor Relations 50 



National Marketing of Veterinary Products 52 

Licensing and Regulation 53 

1948 Dextrose Recall 55 

1955 Polio Vaccine Recall 57 

7. CONCLUDING THOUGHTS 62 

Cost of Research 62 

Family Attitudes and Responsibilities 63 

Financial Planning 65 

Recent Industry Trends 68 



INTERVIEW HISTORY 



Edward Ahern Cutter, Jr. was interviewed to preserve his recollections 
of the growth of the Berkeley, California, pharmaceutical firm founded by his 
father in 1897, particularly his role as corporate vice-president during the 
remarkable expansion in manufacturing capability during World War II, the re 
sult of military contracts for blood plasma and penicillin. 

Two interviews were held, on January 17 and January 23, 1973, in Mr. 
Cutter's modest, comfortable office at the plant. A bluff, friendly man, he 
seemed to enjoy describing the ingenuity and improvisation that went into 
meeting the wartime challenges and the use of this experience as a base for 
Cutter Laboratories to continue as a national leader in the industry. Tran 
scripts of these interviews were subsequently reviewed and approved by Mr. 
Cutter. 



Gabrielle Morris 
Project Editor 



17 December 1974 

Regional Oral History Office 

486 The Bancroft Library 

University of California at Berkeley 



Date of Interview: 17 January 1973 



1. YOUTHFUL RECOLLECTIONS 



At the Laboratories 



Morris: 



EA Cutter: 



Morris: 



I thought we might begin with a little bit about your youth. 
What do you recall of your boyhood visits here to the 
laboratories? You're the middle Cutter brother? 

I'm the middle one. I'm the second son. I can't recall much 
of any particular boyhood visits, but I did do vacation work 
in high school and college in the shipping room, and then as 
a mechanic's helper to the single and only maintenance man we 
had, and later in production. I can remember very well the 
smelly job I had, which was the production of blackleg aggres- 
sin. They brought a calf down by injecting him with virulent 
blackleg bacillus. Then, after he died, they took the muscle 
tissue and expressed all the juice from the muscle tissue. 
And that was the beginning of producing what they termed black 
leg aggressin. 

I expressed the juice from it and collected it into jars 
and such. And the odor just permeated not only your clothes, 
but your skin and everything. Of course, those were the days 
of riding on streetcars and I could get a seat any time when 
I was going home. [Laughter] I'd just step on and everybody 
would disappear. I could just get a seat and people would be 
standing in the back end. 

Did your father expect each of you boys to get some experience 
at the lab? 



EA Cutter: Well, I'm not sure whether Dad, you might say, expected it, but 
we looked forward to the opportunity of earning some money 
and of having something to do. It was an opportunity. And 
the shipping room was always an opportunity to get acquainted 
with a lot of products. I know that he did like us to work 
there, because you handled all the products and you got to 



EA Cutter: know the names of them and, to a much, much lesser degree, 

what they were intended for and to what type of customers they 
were going. 

Morris: Were you under Mr. Twining 's wing? 

EA Cutter: Well, in the shipping room, I was under Mr. Rahill's. He was 
the, oh, secretary, treasurer— I'm not just sure of what his 
title was, but secretary-treasurer, the administrative end of 
the business. 



Morris: 
EA Cutter: 



Morris: 
EA Cutter: 

Morris: 
EA Cutter: 



Morris: 



EA Cutter: 



Morris: 

EA Cutter: 
Morris: 
EA Cutter: 



Did he have more to do with sales than Mr. Twining did? 

Oh, yes. More with sales and financial matters. Now, when I 
was speaking of my blackleg aggressin days, I was under Mr. 
Twining then. That was in production. And I was under Mr. 
Twining, you might say, when I was the only assistant to the 
only maintenance man that the company had, the one-man mainte 
nance department. 

You said you worked as a mechanic's helper for him. Did this 
mean also putting together some of the production equipment? 



Well, you might say he was a repair man. 
trades — electrical, mechanical thing. 

Do you recall his name? 



He was a jack-of-«ll 



Jack Talbott. He was an Englishman and his helper followed 
very much the English tradition. I'd carry the tools and I'd 
walk about two paces behind him, wherever we went, never up 
with him. [Laughter] 

And did he, then, instruct you in the use of the tools in a 
suitable manner? 

Well, to the extent that if there was anything heavy to do, I 

did it. And I learned a certain amount about tools, but he 

never could teach me much about them, because I just never had 
any aptitude for it. 

But you did pass Mr. Twining 1 s inspection in your work with the 
aggressin? 

Oh, yes. 

That must have been a fairly delicate task. 

No, no. It was one of these hand-operated presses. You'd put 
in these chunks of muscle tissue and just keep pressing it down. 
And it'd come out the holes in the side of the press, more or 



EA Cutter: less like the old wine presses. And then, you'd collect them in 
bottles and, then, other technicians would take the tissue juices 
from there. I had nothing in the technical end of it. 

Morris: Did you do the dissecting out of the muscle tissue? 

EA Cutter: No, no. That was done by a man who was experienced in butcher 
ing. 



University of California 



Morris: In meat cutting, yes. And then, did you go to the University 
of California here in Berkeley? 

EA Cutter: Yes. I was in the class of '25. 

Morris: What were your academic interests when you were in college? 

EA Cutter: Well, I majored in econ, but, very frankly, I just didn't have 
any great aim. I started to take some sciences and very soon 
learned that I was no pre-med student. I was very, very shy in 
my scientific bents. I did have a leaning toward the econ end 
of it, and, like most kids of that age, why, the things that 
came easier is where I went. 

Morris: That seems a sensible approach. Who were the econ professors 
at that point that you recall? 

EA Cutter: Ira B. Cross was one. He's the one that stands out most in my 
mind. 

Morris: He was a distinguished name at Cal for a number of years. 
What was his particular interest? 

EA Cutter: Well, I took two or three courses from him — money and banking. 

Morris: These would have been useful background for you when you came 
into the firm? 

EA Cutter: Well, yes, I'm sure they were. I think it was a broad education. 

Morris: Was your idea during the time you were at Cal, that you would 
join the firm? 

EA Cutter: I think probably so, as I remember. I can't say definitely, 
but it probably was hopefully so. 



Sales Experience in the Chicago Office 



Morris: Did you come right to the laboratories when you graduated? 

EA Cutter: Yes. I was married and was sent back to our Chicago office, 
in sales work. 

Morris: When had the Chicago office been started? 

EA Cutter: Well, it was first started as a sales agency. In other words, 
it was independent of the company, independently owned--the 
company sold to them. But before I went back there, maybe 
five years or more, the company took it over and operated it 
as a branch office. 

I trained under a man who was reaching retirement age 
for a year and then took his job. It was just a one-man 
office and it was largely devoted to veterinary work. 

Was that Illinois agency as far east as the company distributed 
at that point? 

That was our farthest east distributing office. 

And, as head of that office, what territory did you cover? 

The farthest I got was Louisville, Kentucky. That was because 
we had a big account there in the human line. A man down there 
with two prescription pharmacies, through friendship with 
an old salesman of ours from the west, favored us with a great 
deal of businesss in tetanus and diphtheria antitoxin and things 
of that nature. So, about twice a year, I'd go down and call 
on him and visit with him. 

Morris: Who were your major competitors at that point? 

EA Cutter: Well, there was Parke Davis and Mulford, which later became 

Sharp & Dohme. I'm talking about the human line. Lederle was 
coming up. They weren't significant at that time. 

Morris: And they weren't yet part of American Cyanamid? 

EA Cutter: No. I'd say the two I mentioned were the major ones. In the 
veterinary line, back there at least, there was Fort Dodge 
and Corn States and Jen Sal. Jen Sal was a big one. 



Morris: 

EA Cutter: 
Morris: 
EA Cutter: 



Morris: 

EA Cutter: 
Morris: 



Morris: One of the problems that I came across again and again, 
researching the papers in the Old Timers' Room, was this 
business of reaching into the eastern market and becoming 
established. Was this something that you were trying to do 
in the Chicago office? 

EA Cutter: No, no. That came later, with the hospital solutions, I would 
say. I was really predominantly interested in the veterinary 
line. We had a pretty fair reputation and I was just working 
with distributors and calling on veterinarians. 

At that point, about how big a share of the company's total 
business were you doing in that eastern market? 

Oh, I don't think we did ten per cent of it. 

Way back in the beginning, practically as soon as the labora 
tories were here in Berkeley, I find records of sales in New 
Orleans and that part of the world. What had happened to 
sales there by the time you — ? 

EA Cutter: Well, there were sales, yes, down in New Orleans and that 

Louisiana country, which I didn't touch at that time. We had 
sales because of the anthrax. It was a heavily infected anthrax 
area and, of course, in those days, they had the big plantations. 
It was not a cattle country, but a mule and horse country. And 
we were, I think, probably the leading anthrax vaccine-producing 
company. Up in the Chicago area, we had practically no anthrax. 

Morris: What was the need in that Chicago area? 

EA Cutter: Well, there was hog cholera serum and virus and there was black 
leg and, in those days, tuberculin. 

Morris: That's the immunization for the milk cows, is it? 

EA Cutter: Well, testing. It was before the days that they'd practically 
eradicated it. 

Morris: How long did you stay there in Chicago? 

EA Cutter: Two years. And then I came back here to Berkeley. 



2. CUTTER SALESMEN: RECRUITING AND TRAINING 



Morris: Would that be when your father died? 

EA Cutter: No, no. I came back here in '27 and Dad died in '33. I 

came back as more or less an assistant to the sales manager 

and semi-assistant to Mr. Rahill, who was, as I say, secretary- 
treasurer. 

Morris: And who was the sales manager at that point? 

EA Cutter: G. Dwight Wood. 

Morris: When had he come into the firm? 

EA Cutter: Oh, I would guess that Dwight must have come in some time 
between 1915 and 1920. 

Morris: How many salesmen were there all together at that point? 
EA Cutter: At that time, I would guess, not over fifteen. 

Morris: In the Forties, I find a lot of materials about sales training 
and sales classes and things like that. Were these things that 
you and Mr. Wood had — ? 

EA Cutter: We would work together on them. Always, then, we would bring 
the men here. We usually tried to do it once a year. 

Morris: Did selling differ, particularly, in the Twenties from what 
it's become since? 

EA Cutter: Oh, yes. 

Morris: How about telling me what a salesman was like and what his 
duties were? 

EA Cutter: Well, in the Twenties, let's say, your salesman might have 
graduated from any position here in the lab. Many of them 



EA Cutter: were merely high school graduates, who'd come up in the labora 
tory through production, or shipping room, or something else, 
and they seldom were specialists, like pharmacists, or anything 
of that nature. 

Today, you're going after college graduates. You're going 
for chaps who may have been in pre-medicine--you have to have 
specialty men. 

Morris: Are there any particular personality characteristics that you 
look for when you're selecting salesmen? 

EA Cutter: Well, today, we're using quite a bit more of the--what would 
you say? — the psychology testing, the pre- testing. It isn't 
a yes or no thing, but it's a good guide. 

Morris: Do you send the applicants to a testing organization? 

EA Cutter: Yes. 

Morris: Who do you use for that? 

EA Cutter: Kline. 

Morris: Do you think these tests do a better predicting Job than you 
used to? 

EA Cutter: Well, let's say, we don't send every applicant. We only send 
those who appeal. Our hiring of salesmen is done by our 
regional sales managers and we only send those who they look 
upon as possibles. Then, they're sent. We don't go infal 
libly by the Kline thing, unless the Kline thing picks up, 
which they occasionally will, something that just damns them. 
That's what we're after. 

Morris: Something that might really cause a problem for the company? 
EA Cutter: Yes, a future problem. 

Morris: What kind of rules of thumb did you use before you had these 
testing procedures? 

Cutter: Well, as we were upgrading, we used education and personality, 
period. 

Morris: When did you begin the upgrading process? 

EA Cutter: Well, soon after my retirement. 

Morris: I see. You were already aware that you needed — 

Cutter: Yes. We needed upgrading. 



8 



Morris: 
EA Cutter: 



Morris: 



EA Cutter: 



Morris: 
EA Cutter: 
Morris: 

EA Cutter: 
Morris: 

EA Cutter: 
Morris: 

EA Cutter: 



Morris: 



EA Cutter: 



Morris: 



Because of the nature of the new products coming out? 

Well, yes, the nature of the new products and the fact that our 
salesmen, we just felt, couldn't be high school graduates, let 
us say, and go out and deal in technical subjects. They didn't 
have the background for it. 

Would part of it also have been the kind of people you wanted 
to represent Cutter? 

Oh, surely! Our salesmen then were not divided. In other 
words, they called on physicians, on hospitals, on veterinarians, 
on cattlemen. They did the whole gamut. And a salesman who 
would be just perfect for going out to the ranches, you wouldn't 
find perfect for detailing technically to a doctor or a hospital 
administrator. 

At what point did you find that you needed two sets of salesmen? 
Well, that was along, I would say, post-World War II. 

Would that have caused any problems with some of the men who'd 
been on the sales force for ten or fifteen years? 

Well, we didn't do it just over night. But it did--the dividing 
and management of it- -cause problems. 

It would mean that you'd need a director of veterinary sales and 
a director of the human sales? 

That's right. 

So that this was something you worked toward over a period of 
time? 

Well, not too long a period of time. But getting the men 
divided into their territories and what they were going to do 
and who was going to do it--we just didn't say, "On January 
first, this is going to happen." It may have taken six months. 

Going back a bit earlier, I came across references in some of 
the veterinary literature that there was professional consulta 
tion available. Does that mean that the veterinary director 
would go out to the ranches and talk with them? 

Yes, or they could phone. Besides the veterinary medical 
director, we always had one or more veterinarians on our staff. 

Was their function to assist the salesmen, or was it in the 
production end? 



EA Cutter: Well, we'd have, usually, one in production and one out in the 
general field sales work. 

Morris: So that the same man wouldn't be doing both jobs? 

EA Cutter: No, no. And then our veterinary medical director, in his quiet 
way, became a very highly respected man throughout the veter 
inary medical profession and with the big ranchers for his 
opinions in many fields, particularly in anthrax. 

Morris: Was that Fred Wood? 

EA Cutter: That's right, 

Morris: Was he Dwight Wood's brother, by any chance? 

EA Cutter: That's right. 



10 



IMPROVEMENTS IN VETERINARY PRODUCTS 



Joint Effort with Dr. William Boynton on Hog Cholera Vaccine 



Morris: One of my primary observations is how fortunate you've been in 
the people that you've brought in, 

EA Cutter: We have been. Take Fred Wood, for instance--you probably, in 
going through things, saw reference to Dr. Boynton. 

Morris: Yes, I did. I wanted to ask you about him. 

EA Cutter: Dr. Boynton was an old classmate at Cornell of Dr. Wood's and 
they both were together in the Philippines. So, when Dr. 
Boynton was brought to the University of California by the then 
dean of the college of agriculture, E. D. Merrill, along in the 
late Thirties, he and Fred Wood renewed their old acquaintances. 
And there were certain facilities we had for the research work 
that Dr. Boynton was carrying on that he didn't have at the 
university. 

Morris: What would those have been? 

EA Cutter: Well, we had facilities for the handling of numbers of pigs. 

Morris: And the university at Davis wasn't yet set up? 

EA Cutter: He was here. He was not at Davis. He never was connected with 
Davis. He was right here in Berkeley. He was up behind the 
stadium in the labs up there. 

In the Philippines, he developed rinderpest vaccine. And 
so, it was the dean's hope that he could work on hog cholera 
and that's what he worked on. He developed the first killed 
hog cholera vaccine, and he did it in conjunction with us. 

Morris: That was kind of a landmark in tissue work, wasn't it? 



11 



EA Cutter: No. That tissue work came later. This was where you brought 
a hog or a pig down with hog cholera and then took the spleen 
and the lymph glands and treated them with — I know eucalyptol 
was one. I'm not sure just what the other things [were]--and 
killed the virus, but not so much so that it didn't retain its 
antigenic qualities. Up to that time, the only method of immuni 
zation was giving a dose of living virulent virus and counter 
ing it with a dose of anti-hog cholera serum. 

Morris: That must have been potentially much more dangerous. 

EA Cutter: Well, it was. And it kept the virus going all the time, just 
kept spreading it all the time. 

Morris: So, the university was also interested in this hog cholera. 
EA Cutter: Oh, yes! 

Morris: As a pure research matter, or because it related to California 
farming? 

EA Cutter: Well, California agriculture. We were a big hog state at that 
time, from the standpoint, somewhat, of feeding garbage. 

Morris: As waste disposal? 

EA Cutter: Yes. Fontana farms, which fed wet garbage from Los Angeles, 
was the biggest hog farm in the nation, out where the steel 
mills are now. 

Morris: Had people here at Cutter been working on this hog cholera 
problem too? 

EA Cutter: No, no. It was Bill Boynton. We furnished testing facilities. 
We laboratory- tested it on animals here in our quarters, and 
we had to expand our quarters when it progressed further, 
which he couldn't provide at the university. When it got to 
the point of taking it out into the field, why, we located 
the farms to do it and Dr. Wood and Dr. Boynton together did 
the field work on it, until we wanted to take it east, into 
the midwest, and do some testing. And then we supplied veteri 
narians back there. 

Morris: Through contacts through your sales force? 

EA Cutter: Sales force. We took on some new veterinarians. As a matter 

of fact, our present veterinary medical director was brought on 
at that time. 



Morris: 



Was that Dr. Casselberry? 



12 



EA Cutter: That's Dr. Casselberry. 

Morris: Was he from the midwest? 

EA Cutter: Yes. 

Morris: He was part of that hog cholera field testing? 

EA Cutter: Yes. 

Morris: How was it worked out for Cutter to market the vaccine once it 
was perfected? 

EA Cutter: Well, at that time, the university had no patent system or any 
thing else. So, Boynton secured the patent himself, or we 
secured it for him in his name. He licensed us as sole produ 
cers and we produced and distributed it. And it was a pretty 
tough thing to introduce. 

Morris: Why would that be? 

EA Cutter: Well, you take serum and virus. With the serum, you got very 
rapid immunity and with this, you didn't get rapid immunity. 
It took about two weeks to gain an immunity from it. And, 
further, the serum and virus had been used for years and years, 
so, trying to change something like that — but, on the other 
hand, serum and virus did cause trouble and many of your more 
intelligent hog raisers realized it. So, those were the places 
that you got into, the farms where they'd been having trouble. 

And many veterinarians realized it and took it up. So, it 
became quite a big product. 

Morris: So, your people would have tried to keep track of where there 
were outbreaks of hog cholera? 

EA Cutter: Well, they called on veterinarians and told the story and some 
wouldn't listen to you, but some did, and knew where the 
troubled farms were. 

Morris: Then the salesmen would go and say, "I understand you've been 
having trouble. How about trying our product?" 

EA Cutter: No. The veterinarian did that job, the local practicing veteri 
narian. 

Morris: You said that part of the problem was it took two weeks for the 
Boynton vaccine to provide immunity. 

EA Cutter: Yes. And another factor is that it had to be repeated each year, 
whereas the simultaneous, the serum and virus, gave lifetime 
protection. 



13 



Morris: 
EA Cutter: 

Morris: 
Cutter: 



You were still working closely with the veterinary end of 
things at this point? 

Yes. Not as close, because the war came along very shortly 
thereafter. I was working with it when we first started intro 
ducing this. 

The Boynton vaccine wasn't ready until the Forties? 
No. It was ready in the late Thirties. 



Anthrax Spore Vaccines 



Morris: Were there other veterinary products that had as much of an 
impact as this did? 

EA Cutter: Well, yes. You take anthrax. The first anthrax vaccine was the 
Pasteur vaccine in France. And they would take the anthrax 
spore and just heat it. They'd heat one quite a long time and 
the second one not quite so long. And then, they'd give what 
they called Anthrax Spore Number One and Anthrax Spore Number 
Two and they'd give them about ten days to two weeks apart, 
which meant rounding up the cattle twice. And the immunity was 
not too good and it was variable, because of variations in the 
heating, and the whole process wasn't very good. 

Dr. Wood developed a method in which he established the 
Spore Number One, first by cutting it down by heating, and 
then, after testing and finding the strength he wanted, passag 
ing it through guinea pigs at that level and then freezing it, 
and then, doing the same with Number Two. So, there wasn't 
variation from lot to lot or between Number One and Number Two. 
In the old Number One and Number Two days, sometimes you'd have 
a Number One that had nothing in it and a Number Two that was 
very strong. And there were really troubles with it. 

That's when we first went into it, even though the govern 
ment was giving it free. And we had our troubles and the 
government had theirs and Parke Davis had theirs. But that cut 
down on our trouble when Dr. Wood developed that method. And 
then, anti-anthrax serum, which is produced by means of inocu 
lating either horses or bovines with virulent spore, after 
immunizing them highly — they produce a high titer, a high pro 
tective amount of antibodies, in their serum. Dr. Wood developed 
what was called simultaneous vaccination, that is, giving a dose 
of Number Two spore with a 10 cc. dose of serum. 

Well, the rancher, then, could do that with one round-up of 
cattle, which was a great boon to him. It still was only a fair 



14 



EA Cutter: 



Morris: 
EA Cutter: 



Morris: 
EA Cutter: 



Morris: 

EA Cutter: 
Morris: 
EA Cutter: 



immunity. Then, he developed a still stronger spore, which was 
Number Three. And it was only a year or two until we had 
developed a Number Four spore, which was quite potent. With 
Number Four, you had to give 20 cc. of anti-serum. But it pro 
duced a very high degree of immunity and it opened up the viru 
lent; what we call "anthrax badlands," such as Los Banos and the 
Louisiana marshes and all of that. 

So, that was a Cutter first and it really established us. 
Then, somebody — the government, I think it was — developed or 
initiated a method of taking Number Three vaccine and inoculating 
it intradermally, into the skin, under the tail. 

Poor cows .' 

Well, as a matter of fact, it didn't turn out so good for cows. 
It was all right, but handling cows in that manner just wasn 't 
practical. But it was for the horses and mules on the old 
plantations down in the South. And believe me, they were large! 
A plantation with a thousand mules wasn't anything. 

The South was still using mules in large numbers? 

That was in the Twenties, all this development. Then in the 
Thirties, an Italian came up with taking Number Three spore 
and adding saponin to it. After injection, it delayed sporula- 
tion in the animal enough that it could be safely inoculated 
in any manner. And that was patented. 

So, Dr. Winegarden began work with our Number Four and 
found that, by the use of aluminum hydroxide, he could do the 
same with our Number Four spore. 



Ah! Is that the Alhydrox process? 
about that. 



I wanted to ask you 



Yes. Well, that came before that, in blackleg bacterin. 
What was the innovation in the aluminum hydroxide process. 

The first of the blacklegs were the old, as I somewhat described 
to you, the aggressin thing. In the early days, the muscle 
tissue was just dried powder. And then, they impregnated strings 
with this powder and put the string under the hide. And then, 
in the same year — we'd been independently working on it — Parke 
Davis and Cutter introduced it in a rolled up little pill form, 
with a gun to inoculate the pill under the skin. And that 
just revolutionized the thing. 

So, for years, it was the pill. Then they developed the 
blackleg aggressin, which was given and produced a much higher 
immunity. It was the liquid from the tissue of dead calves. 



*Througnout this interview, use of an asterisk denotes a 
registered trademark of a pharmaceutical product or equipment 
manufactured by Cutter Laboratories, Inc. 



15 



EA Cutter: And that took over. But, in the Twenties, the 0. M. Franklin 
Company began the production and distribution of what was 
termed a whole culture bacterin. That is, they just grew the 
blackleg organism and they didn't inject just the organism, but 
they injected the organism and the broth in which it had grown. 
And it was a very good vaccine. They were cutting a wide swath 
in the market and aggressin was going down hill. 

So, Dr. Winegarden began work on a whole culture of our own 
and seeing what we could do to improve the whole culture. And 
at that time, in the human field, they were using what they 
called alum-precipitated diphtheria toxoid. And he worked with 
aluminum hydroxide. Alum precipitate did not do a good job with 
the blackleg whole culture. But, in working, he tried aluminum 
hydroxide, which did a beautiful job. So, we trademarked that 
as Alhydrox,* the aluminum hydroxide, and came out with the first 
precipitated whole culture blackleg. And we got back into the 
market and got back very strong in the blackleg field, particu 
larly in the Far West and Texas, the range country. It got down 
to the point where, really, Franklin and ourselves were just 
dominating the blackleg market. They had a good product and we 
had a good product. And that's when he began to use the Alhydrox* 
for the anthrax and so, the old days of serum and Number Four 
disappeared, because here you had a one-shot and the serum was 
costly. 



U.S. Bureau of Animal Industry 



Morris: Before we get too far past it, I wanted to ask you about a series 
of telegrams that was in the file. This was in the Thirties: 
you and the Bureau of Animal Industry were debating in relation 
to a Lederle vaccine. I wondered if you were the man who dealt 
primarily with the government and the licensing agency? 

EA Cutter: No, I was not. Dr. Wood was, but he wouldn't fight with them 
on it and I did. That was that! 

Morris: I see. Was this kind of challenge fairly frequent in a business 
like yours? 

EA Cutter: Well, they were off base. As a matter of fact, it was with 
reference to the new blackleg, I believe. I can't remember 
definitely. Or maybe it was our entire line of bacterins. 
But everybody else in the industry had to call their bacterin, 
but Lederle called theirs vaccine. And the stockmen always 
referred to them as vaccine. So, my feeling was if they could 
call theirs vaccine, we wanted to call ours vaccine. And they 
pulled an awful boner in there someplace along the line by 



16 



EA Cutter: saying something like it'd have to wait until Lederle's veteri 
nary medical director returned from Europe before they could 
decide the issue, or something like that. 

Morris: The bureau said this? 

EA Cutter: Yes. 

Morris: I see. Did you go directly to Lederle on a case like this? 

EA Cutter: No. This was a pure fight between the bureau and ourselves. 

[John R. ] Holler, I think, was the chief of the bureau at that 
time. In the end, what it amounted to was they forced Lederle 
to give up the name "vaccine." 

Morris: So that everything continued to be called bacterins. And then, 
vaccine was introduced later on? 

EA Cutter: No, no. Vaccine was limited to the use of anything that was not 
totally killed. 



Sales Films 

Morris: On the marketing end of the veterinary products, I came across 
references to films that were made. Was this primarily your 
brother Fred's project? 

EA Cutter: Yes. 

Morris: Were these for educational purposes? 

EA Cutter: Promotional. Educational and promotional purposes. 

Morris: Was this a new idea in marketing at this point? 

EA Cutter: I don't think it had been used to any extent in veterinary 
marketing. 

Morris: What got Fred interested in this? 

EA Cutter: I couldn't say. It was being used in human promotion. 

Morris: Was this part of an over-all plan to improve and expand market 
ing practices? 

EA Cutter: Yes, of veterinary. They were used at, oh, Farm Bureau meetings, 
and things of that nature, and in animal husbandry colleges and 
so forth. 



17 



Morris: Where was Fred in the organization at that point? 
EA Cutter: He was in advertising, largely, at that time. 
Morris: And your title was what? Still in the sales? 

EA Cutter: At that time — let's see, Mr. Rahill had passed on. I think I 
was probably secretary of the company and assistant sales 
manager. 

Morris: So, would that have made you Fred's boss at that point? 

EA Cutter: No. He reported to Dwight Wood. 

Morris: And he was sales manager? 

EA Cutter: Yes. 



18 



EXPANSION OF OPERATIONS DURING WORLD WAR II 



Defense Plants for Blood Processing and Penicillin Production 



Morris: How did you happen to move from the sales end into production? 

EA Cutter: Well, I never was in production per se. I got into, let's say, 
general operations with both feet, and almost entirely out of 
sales, during the war. All of the activities with reference to 
war contracts, with both the army and the navy, and the priori 
ties, the Defense Plant Corporation, the specifications and all 
that--every thing was on the East Coast. And it was more than 
one man could handle. Pres Snow had been trying to handle it, 
but it was more than one man who could handle it. Pres Snow 
was in our Chicago office. 

Morris: Had he replaced you when you came back here? 
EA Cutter: No. There was one man in between. 

Morris: Did you and Pres Snow move into this because sales, in the tra 
ditional sense, pretty much came to a halt during the war? 

EA Cutter: No, no. We had gotten into the intravenous solutions and the 
East was our big market in it. Pres was very heavily engaged 
in that and trying to carry this on at the same time. And it 
was just too much to do. 

So, I got called into it, or forced into it, you might say. 
So, as things progressed, we called Pres out here. And, at that 
time, Dwight's health wasn't good, so we made Pres sales manager. 
And then he and I were a team, working the entire war program. 

Morris: From that one report I read that he wrote on the start-up of 

the blood processing, it sounds like he was right there in the 
plant, getting the machinery there. 



19 



EA Cutter: He did a great deal more here at Berkeley, that's very true. 
I had to spend a lot of time in the East. You see, the first 
was the blood plasma. Our first little token contract was, oh, 
in the fall sometime of '41. We knew nothing about it. 

Morris: You hadn't been working on blood research at all? 

EA Cutter: No. As a matter of fact, we were distributing liquid plasma, 
but we purchased it. So, we'd done nothing on it. 

Morris: Did you know you were going to be asked to do this? 

EA Cutter: We'd heard rumors, but they never contacted us directly* 

Morris: How does this happen? What made them pick Cutter? 

EA Cutter: We were the only ones in the West, the only ones they could 

come to. And they had metropolitan areas out here where they 
were going to have to secure blood. 

Morris: Secure blood from donors? 

. 

EA Cutter: Yes. 

Morris: Why do you suppose the government people didn't consult you in 
their early planning? 

EA Cutter: Well, don't forget that it wasn't a five-hour flight to Washington 
in those days. It was a long train trip of three or more days, 
or, approximately, an eighteen to twenty-four hour DC-3 flight. 
So, Chicago was pretty far west to them. 

Morris: You didn't feel that you had been slighted in any way in not 
being consulted before? 

EA Cutter: Well, later we did, when we found out that everybody else had 
been more or less keyed into it ahead of time. 

Morris: Who got the first word and how? Was it a letter, or a phone call? 

EA Cutter: Visits from Colonel Schoock, 1 think was his name, from the 
medical procurement office. 

Morris: And he said, we want you to make--? 

EA Cutter: Well [he said], this will be coming up. You see, they were doing 
it in England at that time, the dry plasma. 

Morris: But you started first with the liquid plasma? 

EA Cutter: Well, no. We didn't start with it. What do you mean? 



20 



Morris: 
EA Cutter: 
Morris: 

EA Cutter: 



Morris: 



EA Cutter: 



Morris: 



EA Cutter: 



You said you had already been doing some distributing? 
We were selling the product of somebody else. 

And then you started producing dried plasma with a token opera 
tion here? 

The first contract was for twenty-five thousand units. Hell, 
before we even had anything to handle it, Pearl Harbor occurred. 
And before our first delivery, we had contracts for over a hun 
dred and fifty thousand units, with a push, push, push! 



That must have been an incredible expansion of production, 
you ever contemplated anything like that kiid of speed-up? 



Had 



No. And it was a push on our financial ability too. And at 
that time we didn't know anything. There was what was called a 
government Defense Plant Corporation to finance these war expan 
sions, about which we knew nothing at that tome. So, we were 
into the bank pretty darn heavy. 

The first type of equipment we got was very faulty. And 
then Pres located this great, big steam ejector that Hormel had. 
We were able to negotiate. I forget just what type of use they 
were going to put it to, some type of a war dehydration thing. 
But then it never came around, so we negotiated and had it com 
ing. So, that necessitated just a whole revolution down here, 
in the way of excess boilers, excess steam lines, and the whole 
thing. 

As it turned out later, it was very fortuitous, because it 
was a tremendous excess capacity and when we later got into human 
serum albumin, why this excess capacity was of distinct value. 

How did you finally make contact with the Defense Plant Corpora 
tion? 

Well, I would say it was the late summer of '42. We received a 
wire regarding our interest in plasma fractionation for human 
serum albumin and if we had an interest, to send representatives 
to a meeting at Harvard, under the direction of Dr. Edwin Conn, 
who was then professor of biochemistry at Harvard medical school. 

Well, we talked about it and wondered, and our then head of 
biochemistry thought we certainly should do it, at least see what 
it was all about. He knew that Dr. Conn's group had been working 
on the attempted production of a serum albumin from bovine sources 
that would not give reactions in humans and that, finally, they 
had had to give it up, because they couldn't get sufficient puri 
fication to prevent occasional severe reactions, and that they 
had turned to fractionation of human serum. 




tor being bled into Bed Cross-type bleeding bottle. World War II. Photograph by Co»serclal Human Blood dravn by the African Bed Cro«« and lade Into Plasms or Blood Fractions at 
•note Vlev Co., Oakland, California. Cutter Laboratories. Technician, Alice Clayton. 



paratlon (washing, sterilltatlon, assembly, needle sharpening, etc.) of equipment for 
edlag and processing plasma. About 19W. 



Cutter Plasma being used on the beachhead at Ivo Jima. Photograph by Acme levsplctures , 
Inc ., lev York , lev Tork . 



Many itfmt in tit* Cutttr Laboratoriit ' historical collection, likt tllftt photographs of tkf dramatic rslatimthip bttUffn >umm 
and tcohnioal tcnoultdg* of blood processing, bear captions and reminiscences in Dr. Robert Cutter's sprauling, legible script. 



21 



EA Cutter: So he and I went back to this meeting. There were a navy man 
and an army man — officers — whom I'd come to know through their 
connection with the plasma thing. One headed the plasma thing 
for the army and one for the navy and they were at this meeting. 

Morris: Were they from Washington? 

EA Cutter: Yes, from Washington. And, as it turned out, the army, you 

might say, from then on in, handled the plasma program and the 
navy was in charge of the human serum albumin program. But, in 
any event, meeting them there, they said this was going to be a 
big thing. 

And there was also at this meeting a man from the War 
Production Board. They served lunch out at the faculty club, 
or whatever it was, and I was at the table with him. And I 
said, "Well, all this is fine, but 1 don't know how we could 
finance it." 

"Well," he said, "You see me in Washington." Which 1 did, 
and that's how we came in contact with the Defense Plant Corpora 
tion. 



Morris: Did the Defense Plant Corporation actually give you the money, 
or did they guarantee loans from private banks and things? 

EA Cutter: No. They advanced the money. In other words, Dr. Johnson came 
home and worked with our engineers in drawing up specifications 
for the plant we wanted to build and how we were going to do it. 
And then estimates were made on the cost. And then, you went 
to the Defense Plant Corporation with your plans and the esti 
mates. It was the building next to us, which at that time had 
a big crane running up and down the center. 

Morris: This is the rebuilding of the Byron Jackson plant? 

EA Cutter: Yes. It was the beginning of that and remodeling certain of 

the plasma facilities, because, in the early part of the process, 
the two were the same thing, bringing in the blood, centrifuging 
it, and getting off the plasma, and washing the bottles, and all 
that. So, they rebuilt up there, or, really, made just a mezza 
nine of the whole thing. And, then, the refrigeration and all 
the equipment that was necessary, they built that. 

Morris: In other words, the Defense Plant Corporation itself actually 
built that to your specifications? 

EA Cutter: Yes. 

Morris: Dr. Bob had already bought the Byron Jackson plant, hadn't he? 



22 



EA Cutter: Oh, yes. rfe owned the plant. And they weren't too happy about 
doing this inside of our own building, but the blood things were 
a very high priority. We came right after the Manhattan Project. 

Morris: After the emergency was over, how was that ever worked out, if 
Cutter owned the building and the Defense Plant Corporation had 
made all the improvements? 

EA Cutter: Well, they had so much of an investment in it. They did have 
the equipment. That was all tagged and you had "DPC #2 pieces 
of equipment" and all that. And so we just had to bargain as to 
what we'd pay for it. 

Morris: So, in effect, you bought it back from them after the war? 
EA Cutter: That's right. 

Morris: Then, the penicillin plant. That was built entirely, a whole 
new building. 

EA Cutter: A whole new building, on our land. By that time, we knew the 
ropes! 

Morris: In terms of the paper work and the channels to go through? 
EA Cutter: That's right. 

Morris: 1 wondered also if you had learned anything engineering and 
production wise. Were there enough similarities in the 
penicillin production? 

EA Cutter: Well, not similarities between the two processes, but we learned 
enough about maneuvering in the War Production Board and priori 
ties and the Defense Plant Corporation, that it was a great deal 
easier job. 

Morris: This would also be the first plant you built from scratch to 

this volume of production capacity, wouldn't it, the penicillin 
plant? 

EA Cutter: Oh, yes. 

Morris: So that there were things that your engineering — 

EA Cutter: Well, we had done research on this, but we had not done it in 
deep tank. We'd done it only in bottles. 



23 



Blood Supplies 



Morris: Before we get into the penicillin thing, one thing I've wondered 
about is: how did you arrange for the supply of human blood that 
you must have needed for these government contracts? 

EA Cutter: Well, that was Red Cross. They were the sole suppliers of the 
blood and blood plasma to all contractors. And it was a uni 
versal system, regardless of what center was supplying it, and 
the recipient laboratories received the blood in these containers 
and then emptied, washed, and sterilized them and sent them back 
to the centers. 

And you had to keep needling the Red Cross to get sufficient 
supplies to fulfill your contracts. 

Morris: Was there any problem of, I guess, educating the public about 
the need to donate blood? 

EA Cutter: Well, the Red Cross, surely, they had a problem. But, of course, 
it was getting a tremendous amount of publicity. But I remember 
they did a lot of institutional collecting — they would be here 
every six months and we'd give over to them certain quarters and 
time of our employees to donate blood. They had mobile units. 

Morris: At what point did you begin working on some of the appliances? 
In other words, there have been tremendous changes in the col 
lecting equipment and things like that. I wondered if the 
equipment that had been developed for the intravenous solutions 
became an obvious source of ideas? 

EA Cutter: Well, we were in intravenous equipment and blood collection 

equipment. As a matter of fact, we tried quite hard to get the 
Red Cross out here to use our blood collecting equipment, but 
they — and quite correctly--insisted on their own method and 
their own particular type of equipment. 

Morris: They were getting it, in other words, from one of your competitors? 

EA Cutter: No, no. They got bottles from one source and we assembled it 
for them. For instance, we were using vacuum bottles and they 
wanted no part of vacuum. They wanted just gravity bleeding. 

Morris: Then was that a relationship that continued on after the war, 
when you continued to be the major suppliers? 

EA Cutter: No. When we used commercial centers, we used our own vacuum 
bottles. 



Morris: When did the commercial centers open? 

EA Cutter: Well, we opened a commercial center during the middle of the 
war. There was some legal twist. There were the Free French 
in Africa and for some reason none of the donated blood, or 
plasma from it, could be given to them. So, we took a con 
tract to supply plasma from paid donors for the Free French 
and we opened a commercial center in San Francisco at that 
time. 

Morris: Was that a success? 

EA Cutter: Well, we fulfilled the contract. 

Morris: And that would have given you experience for developing your 
own sources of supply? 

EA Cutter: Well, it gave us an experience, yes — not a happy one. I mean, 
you'd deal on Skid Row and all that. When I say not a happy 
one, it's just a general circumstance. 

Morris: When Dr. Winegarden and I were talking about this last week, 
he said when you first went into the blood processing, nobody 
was aware of the hazard of hepatitis. 

EA Cutter: That's right. 

Morris: I wondered when that appeared on the scene to complicate the 
matter? 

EA Cutter: Well, it was pretty darn late in the war. As a matter of 

fact, the first time it became apparent on a wide scale was 
after a yellow fever vaccine, in which they used some raw human 
serum in the process of making it. And they got two or three 
lots with hepatitis-infected serum in it and that, you see, was 
just thousands of doses of infected vaccine. And they had one 
hell of a mess. 

Morris: That wasn't anything that you processed, I hope. 
EA Cutter: No, we weren't in yellow fever vaccine. 

Morris: I see. The human blood was used in producing the yellow fever 
vaccine. 

EA Cutter: Yes. 

Morris: Is hepatitis a problem in the fractionated and dried bloods, 
or is it just a problem when you're taking whole blood and 
directly transfusing it? 



25 



EA Cutter: No. It's a problem in plasma. It is not a problem in the 
albumin, in any product which you can heat to sixty degrees 
Fahrenheit for ten hours, nor is it a problem in gamma globu 
lin, and they're not sure why it isn't. 

Morris: So there are still questions being solved in the blood field? 

EA Cutter: Yes. But we're getting closer. There is a test now that will 
detect about 25 to 50 percent of the infected plasma, not 100 
per cent. 



Government Contract Negot ia t ions 



Morris: 
EA Cutter: 

Morris: 
EA Cutter: 

Morris: 
EA Cutter: 



Morris: 
EA Cutter: 
Morris: 
EA Cutter: 

Morris: 
EA Cutter: 



In that report that Pres Snow wrote in 1943, I got the sense 
that there were some questions from the federal government on 
production costs, and I wondered if this was-- 

Well, they varied between producers. And there was a--I forget, 
a Sanderson, or something like that, went through all the dif 
ferent producers. But nothing ever came of it. 

Well, is it a question of negotiating each contract with the 
government if there are cost questions about it? 

Well, it wasn't a question of negotiating each contract. But 
the big negotiations came at the end of each fiscal year, in 
what was called renegotiation—had you made too much money. 

Yes. I've heard that term and I didn't understand it. 

Well, at the end of every year, you had the renegotiation board, 
or whatever its term was, connected with the purchasing group, 
and you had to supply them with all the profit figures of your 
contracts, as well as your general profits. 

For the company as a whole? 

That's right. And they wanted to keep you in line. 

With other similar—? 

With other manufacturers of plasma and with your general profit 
ability. 

And could you debate a given question? 
Oh, yes. There was give and take in it. 



26 



Morris: Did you feel that they were reasonable fiscal questions that 
were being raised? 

EA Cutter: Yes, yes. We had a smaller certified public accounting firm 
at that time and when it came time for it, Mr. Webster and I 
would go back. It was conducted in New York. We would meet 
with two or three of the army people. 

Morris: This was for your contracts with the army? 

EA Cutter: Yes. 

Morris: What about the navy? Did you have a similar process with them? 

EA Cutter: Well, that covered the navy. Our biggest contracts were with 

the army, and the bigger contract one did it for all the govern 
ment services. 

Morris: That's a sensible arrangement. Did this set the pattern for 
government contracts after the war? 

EA Cutter: Well, yes. There's still renegotiation, if your contracts come 
to so much or so much a percentage. 

Morris: Did the government continue to be a major customer after the 
Second World War? 

EA Cutter: Not so much, no, until Korea, and then, of course, it boomed 
again. 



Deep Tank Penicillin Production 



Morris: Now, you were going to tell me about the start-up of the deep 
tank method of making penicillin. 

EA Cutter: At the time penicillin was gone into, there were certain com 
panies experimenting with producing this by deep tank 
fermentation. Heretofore, it had all been produced in bottles. 
So, the War Production Board insisted that certain continue 
bottles and certain go on with the deep tanks and we were one 
of the bottle producers. 

Morris: Who were the people that you worked with on the War Production 
Board? Did they have a special unit in charge of the medicinal 
supplies? 

EA Cutter: That's right. In charge of, I think they called it, chemical, 
but I'm not just sure. But they very definitely were the 
pharmaceutical group. 



27 



Morris: Were they career military people? 

EA Cutter: They were civilians. The War Production Board was civilian. 
They had a military man attached to them most of the time, 
bt just one in a large bank of civilians. 

Morris: Were they research people? 

EA Cutter: No, business people, mostly. But they would have technicians 
in the group. 

Morris: I'm interested in the fact that it was the War Production 
Board that wanted both processes developed. 

EA Cutter: Well, that's because of the technical people assigned to them. 
Morris: Because they saw different advantages in the different methods? 

EA Cutter: No. They didn't want to gamble. They thought that the deep 
tank would probably come along, but they couldn't be certain 
of it, and they wanted penicillin. 

Morris: They were hedging their bet. 
EA Cutter: Yes. 

Morris: It also sounds as if an aspect of it might have been sci 
entific curiosity. Did they wonder--are there newer, better 
ways of doing things, can we get some work done on that while 
we're getting production for the military? 

EA Cutter: Well, no. It was the fact that they weren't certain of deep 
tanks. They thought it would, but they didn't know at that 
time. Now by the time our plant was completed and we'd just 
started to produce, the deep tank process became a certainty. 
There .as a crying need for penicillin and that's why, because 
of the certainty of the deep tank, we were able to convert, at 
a considerable expense to the Defense Plant Corporation. 

Morris: They'd built the first plant and then they converted it for you? 
EA Cutter: Yes, that's right. 

Morris: Did I read somewhere that you kept the bottle method in produc 
tion, too? 

EA Cutter: It was going during a good portion of the conversion period. 

Morris I thought maybe it produced a slightly different strain that 
somebody wanted for some special purpose. 



28 



EA Cutter: No. Just that it was producing penicillin. 

Morris: So it was the same quality of penicillin throughout? 

EA Cutter: Yes, but very expensive. 

Morris: And was it the deep tank method that brought down the cost so 
remarkably? 

EA Cutter: Oh, yes. 

Morris: A few years after the war the bottom really dropped out of 
the price of it, didn't it? 

EA Cutter: Well, you see, it was late in the war before there was really 
good penicillin production, very late in the war. The price 
was coming down during the later part of the war, and then it 
kept coming down. 

Morris: And then you developed a tablet. 

EA Cutter: Yes, a troche. A throat tablet. It was very successful for 
a couple of years. 

Morris: And also a form for veterinary use? Was that a pill? 

JiA Cutter: No--for injection. Well, we were in the veterinary line and 
it went very well. 

Morris: Did the price drop on the pill form as well as on the other? 

EA Cutter: All forms. 

Morris: Were you a part of the discussion of discontinuing production? 

EA Cutter: You mean of deciding to discontinue? Yes, surely. 

Morris: What were the major points of view here at Cutter? 

EA Cutter: Well, the handwriting was on the wall. We were too small to 
continue in this big-time game. 

Morris: Particularly when the production cost had risen? 

EA Cutter: Yes. In other words, our cost of production couldn't match 
the big producers. 

Morris: Even though you had put in this tremendous -- 
EA Cutter: That's right. But we were small fry in it. 



29 

Morris: Even with the new plant devoted to it? 
EA Cutter: That's right. 

Morris: Was this decision made by what I find in the papers referred 
to as the Kill Committee? 

EA Cutter: Oh, no, no, no. This was a management decision. 
Morris: What was the Kill Committee? 

EA Cutter: Oh, that was more on killing item by item, items that were 

dying in sales or were unprofitable. It wasn't an entire line. 

Morris: It wasn't a policy committee then? 

EA Cutter: No. 

Morris: It was more a sort of housec leaning? 

EA Cutter: That's right. 

Morris: What did you do with the plant and all that stainless steel 
equipment? 

EA Cutter: Well, we were able--and I forget to whom-- to sell the deep 

tanks and a lot of the fermentation and the concentration equip 
ment, some of which, though, we retained. And the refrigera 
tion, we retained. Drying equipment, we retained. And the 
rest of it--hell, we've made fine use of it as biological rooms. 






30 



5. POSTWAR RESEARCH AND DEVELOPMENT LANDMARKS 



Conversion of Facilities 



Morris: What took up the production gap? In other words, between '41 
and '45, you built up this tremendous increase in capacity 
and you must have taken on additional personnel. What did 
the company go into then to fill the gap, to take up the 
production capacity and use all those people? 

EA Cutter: Well, we didn't use all of them. 

Morris: Did you have to lay people off after the war? 

EA Cutter: Oh, yes. Yes, we did. But our penicillin was on the way up, 
so that we could absorb some. And our solutions were going up, 
so that absorbed some. But we couldn't use the entire produc 
tion capacity with the volume that we were doing. 

Morris: You've talked about the management decision to discontinue 

penicillin. Was there a major rethinking about what the labora 
tories are doing and what we'd like them to do at the end of 
the Second World War? 

EA Cutter: Yes. We did quite a bit of thinking on that. We had decided 
that we would stay in blood f ractions--we were the only ones 
that stayed in blood fractions. 

Morris: Did you do any long-range planning? 

EA Cutter: Well, to the extent of — sales planning and beefing up research. 

Morris: Were there new people in top positions at that point? 

EA Cutter: Yes. Right toward the end of the war, we brought in Harry 
Lange and his position was controller. Pres Snow, by then, 
was vice-president for sales and he had some assistance 



31 



EA Cutter: here then, because our sales force had grown. 

Morris: I'm just about at the end of this tape, and this might be a 
good stopping place for today. 

EA Cutter: All right. I think one thing we should touch on is plague 
vaccine. 

Morris: I just recalled that myself. Dr. Bob said to ask you about 
that. I took a minute and went through an interview that 
Dr. Karl Meyer did a number of years ago, in which he talks 
about work he was doing on that at the Hooper Foundation.** 
He's an interesting man. 

EA Cutter: Oh, boy! He sure is! 

Morris: I'd like to hear what you recall of working with him on that. 
Date of Interview: 23 January 1973 
Plasma Fractions 



Morris: I went over the notes that I took on our conversation last 

week and I think we covered a lot of very interesting material 
that added to what I had found in the records. We were talk 
ing about your work with the blood production and we'd covered, 
pretty much, the wartime activities. I wondered if you could 
tell me a little bit about what direction the production of 
the blood products took after World War II? 

EA Cutter: Well, we were the only commercial firm to stay in blood frac 
tions, or plasma fractions, as we later termed them. And we 
continued to be the only producer, I would say, up till about 
1950. Then Sharp and Dohrae came into the picture and then 
Hyland Laboratories, who had been producing plasma, also came 
into the picture. 

Morris: Was that when Pres Snow went down there? 

EA Cutter: Yes. He went down there in, I would say it would be, '51 or 
'52, and shortly thereafter they went into blood fractions 
from just blood plasma. 

Morris: How did he happen to leave Cutter? 

EA Cutter: Well, he got a very fine offer from Dr. Hyland. In other words, 
he got stock and, really, general manager of the company and a 
pretty free hand. So, it was a very good proposition for him. 



** 



Manuscript in process, Regional Oral History Office, 
University of California, Berkeley, 1973. 



32 



Morris: Did it have any effect on the Cutter blood sales and production? 

EA Cutter: No, no. He was not in production here, but we lost a very good 
sales manager, a very dynamic individual. But It had no effect 
on production and we were able to replace in the sales end of 
the game. I wouldn't say as good, but adequately. 

Morris: He seems to have been a remarkably competent person. 
EA Cutter: Very. Very much so. 

Morris: How did the other companies, do you suppose, arrive at the decision 
to get back into blood production? Was it because of the success 
that Cutter had had, do you think? 

EA Cutter: Well, I think that the Korean War had a fair amount to do with 
some of them coming back in, because when it came along, there 
became a very heavy demand by the government for not only 
plasma--( they wanted their old stockpile reprocessed because it 
had gone out of date) --but they wanted some of it put back into 
solution and processed into serum albumin. 

Morris: You can reconstitute stored plasma? 

EA Cutter: Yes. Reconstitute it and process it. There's a loss in the 

amount you will get, as compared to what you will get from fresh 
plasma, because of the age of it and because of other factors, 
such as--in the early days of the war, there were very large 
pools of the plasma, before you bottled it. And that was one of 
the factors, they felt, in the hepatitis problem. Later the 
pools were decreased in size. It was some of the old material 
made from large pools they wanted to get rid of and put into 
the hepatitis-free serum albumin. 

Morris: I see. I have a note that it was in 1953 that plasma as such 
was discontinued by Cutter and that several new products were 
introduced — plasma extender, Dextran , gamma globulin, and 
Parenogen*. 

EA Cutter: Well now, the plasma extender, which they had held very high 
hopes for because it was a completely synthetic product, was 
introduced during the Korean War. 

Morris: On military contracts? You supplied it to the military? 

EA Cutter: On military and then later into the civilian markets. But it 
was found to have certain deficiencies, in that you couldn't 
give more than two or three units to an individual. I forget 
some of the other medical drawbacks to it. It was a good thing 
as far as treatment of shock, but you could only use one or 
two units. It wasn't for extensive use. For that, you could 



33 



EA Cutter: use the natural product, serum albumin. And so, it had a 
big thing at first and then dropped off. 

Morris: And was discontinued? 

EA Cutter: No, no. We still distribute it--Dextran —and it has extended 
use . 

Morris: Would that be an intermediate product between the blood frac 
tions and the intravenous solutions? 

EA Cutter: Well, it's more of an intravenous solution than a blood frac 
tion. It's a protein and in an intravenous solution form. 
It's put into solution and sterilized and so forth and dis 
tributed, just as is an IV solution. 

Morris: That clears up that point. Did the military contracts include 
funds to do the research on the fractions, the gamma globulin, 
and what came--? 

EA Cutter: No. The gamma globulin had come out before that. It was part 
of Conn's work back at Harvard and was a fraction that at first 
was put aside. Then they did more work and that work was then 
turned over to producers and to the world in general. And 
gamma globulin, as you know, just takes the immune substances 
that are in the body and you concentrate them and then trans 
fer them to people that have been exposed to one thing or the 
other. 

Did Dr. Cohn patent these developments and then lease the produc 
tion rights to various companies? 

The patent's granted to Harvard, but they were funded, on a 
large scale, by the government and the patents were royalty-free. 

That's nice! 

Well, on the other hand, there were certain restrictions. You 
had to submit — they were administered by what was called, I 
think, the Protein Foundation, sort of an off-shoot of Harvard, 
rtnd you had to submit each lot to them for testing before 
distribution. 

Morris: That's interesting, since Cutter has always had such a high 
reputation for its testing and its quality levels. 

EA Cutter: Well, this was true of all of the manufacturers. Now,at a later 
time, that was discontinued. I believe it was after the patents 
ran out. But we continued to submit lots to them until they got 



Morris: 
EA Cutter: 

Morris: 
EA Cutter: 



34 



EA Cutter: 

Morris: 
EA Cutter: 

Morris: 
EA Cutter: 
Morris: 
EA Cutter: 
Morris: 

EA Cutter: 

Morris: 
EA Cutter: 
Morris: 
EA Cutter: 



all tangled up in red tape. We then submitted our lots of 
serum albumin to another contracting agency to test each lot 
clinically and we still do. 

This is in addition to your own internal quality-testing pro 
cedures? 

Yes. Sterility testing, pyrogen testing, and all of that. We 
put a human test on it, done by an outside testing group. 

Is this required by federal regulations? 

No. 

Do other pharmaceutical manufacturers do this? 

Not all of them. 

When did this practice come about? Did it start with the 
Protein Foundation? 

It started with the Protein Foundation. And then we were having 
such hold-ups in releases and that, that we made provision to 
have it done at another place. 

Another university facility? 
Yes. It was a university. 
Here in California? 
No, not here. 



Saftiflex Equipment 



Morris: 



EA Cutter: 



Morris: 



It was in 1955 that I find reference to Saftiflex* being intro 
duced. That was a development of the equipment line? 

Yes. That was the dispensing devices for IV solutions and 
albumin. Then that consisted of rubber tubing and glass parts, 
and this was the forerunner of going over to plastic. You had 
a great deal more flexibility and visibility and they were less 
expensive, so that they really became disposable, rather than 
reusable and having to be washed and supposedly sterilized at 
the hospital. 



This also included a plastic blood-collecting container? 
that part of the Saftiflex* line? 



Was 



35 



EA Cutter: No, no. I forget when we did start working with the plastic 
blood-collecting container. 

Morris: I wondered if the same plastic container that was used to 
collect the blood was stored filled and then that same bag 
was used for dispensing the blood if it was a whole blood 
transfusion? 

EA Cutter: Oh, yes. Yes, you collected it in the plastic container. And 
it had the advantage, for some reason — and I'm not enough of a 
chemist to tell you why — that you did not get the homolysis 
that you got in collecting in the glass bottles (in the glass 
bottle, you had a vacuum, you know). So, the blood was drawn 
in faster. With this, it was purely — 

Morris: Was it a vacuum? 

EA Cutter: No, it's not vaccuum. What is the word? Anyway, there wasn't 
any vacuum and the blood came in against the plastic itself 
rather than against glass. It was a better holder and so you 
had a much clearer plasma, with less of the hemolysis coming 
off the red cells, it became straw-colored plasma instead of 
the reddish hue as in bottles. 

Morris: In Pres Snow's report on the start-up of the blood production, 
one of the recommendations that he made — or I guess he had 
already started this—was to subcontract out the assembly. 
And I wondered if this subcontracting led you into deciding to 
develop your own line of plastic products? 

EA Cutter: Well, after the big surge of the war and the labor situation, 
after that crisis ended, why, there was no reason not to do 
it yourself. That's when we came back to doing it ourselves. 

Morris: I see. Well then, this is getting on a little later. After 
the war, Cutter went out and acquired a couple of plastics 
manufacturing companies. 

EA Cutter: That's right. 

Morris: I wondered if this was an outgrowth of, first, subcontracting 
and then — 

EA Cutter: No, not subcontracting. They happened to be plastic manu 
facturers from whom we were making substantial purchases of 
parts for our line of recipient sets and donor sets and so 
forth, tubing and drip meters and that type of thing. 

Morris: So it was a financial advantage to actually acquire the company? 
EA Cutter: Yes. And we felt they had growth possibilities. 



Morris: 



36 



Growth possibilities in products not necessarily used by your 
Pharmaceuticals? 



EA Cutter: Very much so, yes. 



Plasma Research in the Sixties 



Morris: Now the other blood fraction that's particularly interesting, 
1 think, is the products used to treat hemophilia. Now at 
what point did that come into production? 

EA Cutter: Well, I think, before that one, you should speak of what is 
called plasma protein fraction or, our trade name, 
Plasraanate . And that was purely a development within our 
own research laboratories, I would say about 1960, probably, 
some time along in there, in our group here in the biomedical 
research division. And what it did was develop a method of 
utilizing not only the serum albumin, but also two fractions, 
alpha and beta globulin, which had heretofore been discarded, 
but were perfectly good proteins. They came up with a 
product that had just as good properties as pure serum albumin, 
but could be heat treated for that vital ten hours at sixty 
degrees centigrade. And the net result was that out of the 
same liter of plasma, you obtained 20 to 25 per cent more of 
the end product, the shock treatment product. 

So, that development came along and was a Cutter first 
and was an only for a long period of time. 

Morris: Did this replace the earlier albumin? 

EA Cutter: No. It has not to this day. We make both of these products. 
We sell considerably more of the Plasmanate* than we do of 
albumin. 

Morris: And the Parenogen* had come in earlier? 

EA Cutter: That had come in earlier. That was part ours and part Protein 
Foundation. But we were the first to introduce it commercially. 
And that's made from the fraction one, the fibrinogen. Its 
big use was in — what is it with the early abortion of women — 
placenta abrupta and the terrific hemorrhaging there. And 
other types of hemorrhaging. But the trouble is it can't be 
heated and it's a carrier of hepatitis, if hepatitis was in 
the original pool. 

Morris: How had the researchers gotten from wartime wound treatment 
over to problems of childbirth, to the problems of placenta 
abrupta? 






37 



EA Cutter; 

Morris: 
EA Cutter: 

Morris: 
EA Cutter: 



Morris: 
EA Cutter: 



Morris: 



EA Cutter: 



Morris: 

EA Cutter: 
Morris: 

EA Cutter: 
Morris: 



Well, it was attempting to utilize the different fractions 
that had just been going down the sink. 

And also because it controlled a bleeding condition. 

That's right. The fibrinogen, they knew, was part of the 
coagulation factors of the blood. 

Is that what led on, then, into the research that produced 
products for hemophilia? 

Well, which came a lot later. Our fraction nine is not 
entirely from fraction one. The hemophilia that they call 
hemophilia-B, which is about 20 per cent of the hemo 
philiacs, is a factor nine. And we were working on that a 
long, long time, trying to get a product that would control 
hemophilia -B, but didn't have side effects. For instance, 
some of our early products--hell, we could control hemo 
philia-B, but it'd just drop the blood pressure way down. 
It contained what they call cat-depressor substance. 

So that the side effects were to be worried about. 

Yes. That made it unusable. But work continued on it. So 
then, Hyland Laboratories continued their work on hemophilia- 
A and they were able to concentrate it down and get a fairly 
stable product. And these are all coagulation factors that 
are in the plasma. 

With Pres Snow at Hyland as a chief executive, was there 

a pretty good working relationship between the research groups 

here and there? 

Oh, fair. We didn't exchange any secret stuff, but problems 
we discussed very thoroughly. Very good friendly relations 
between us. But he only lasted down there until 1956. They 
were bought out by Baxter Laboratories. 

The Baxter people turn up again and again in the Cutter 
Laboratory story. 

Yes. 

1 was wondering if all of the research records on this very 
complicated and detailed research on blood products have been 
kept in the archives? 

I'm sure they have, some place. I doubt if they're in the 
archives. 

They'd be kept within the laboratories? 



38 



EA Cutter: Within the research organization some place. 

Morris: As you get into finer fractions of blood, does the cost per 
unit go up? I found references in the Microscope to concern 
about the high cost of Parenogen* 

EA Cutter: Well, the high cost there is really due to the fact that 

it's a very delicate process and you lose so many lots, so that 
your man-hours going into it just go down the wash. 

Morris: I see. But this isn't necessarily true of some of the other 
very complex fractions? 

EA Cutter: Well, it's true of factor nine. And your yield from it, of 
what you start with and what you get out, is very low. 

Morris: Is this an area where possible future production improvements 
and techniques will bring the cost down? 

EA Cutter: Oh, in time, yes. In other words, let's say you know that 
there's x number of units when you start with the amount of 
fraction nine and you end up with y number, which is perhaps 
only 20 per cent of what you started with. Well, you keep 
working in process research to bring that up to 30 and 40 per 
cent. So, with the same amount of labor and all that, you 
come out and double your production. 



Tissue Culture Progress with Dr. Boynton 



EA Cutter: I think there's one thing we have skipped and that's Dr. 
Boynton. We talked about his killed vaccine. 

After that had really proven itself, he then went on. 
Tissue culture had been progress ing-- the growth of viruses 
on tissue culture—and he established a line of tissue culture 
of swine origin and then he began passing a starting culture 
of hog cholera virus from one growth of tissue to another and 
then recycling and recycling. 

And I forget how many passages, but it was well up in 
the seventieth or eightieth passage. And every so often, he 
would bring down a passage and we would test it here for 
virulence. And it was obvious that this virus was being 
modified. It was getting weaker. And at some passage — and 
at what passage it was, I don't know, but it was up in the 
eighties or nineties, something like that— he had a virus 
that had been so modified that it would not produce hog 
cholera. But, on the other hand, it produced a significant 
immunity in the non-immune swine. And so we started work 






39 



EA Cutter: with that, then, producing small amounts and doing it on 

lab animals and then going out into small field trials with 
it and then into larger field trials. I think we had about 
eight thousand pigs immunized and observed when we went for 
a license from the Bureau of Animal Industry and obtained it. 
And that actually was the first tissue culture vaccine, human 
or veterinary, ever produced. That was a development of Dr. 
Boynton and we were the first ones to market it. 

Now, when it got into actual wide-scale field use, it 
proved a little too virulent. In other words, a little too 
strong, still. It gave trouble in certain areas. So, he 
kept working with it and attempting to weaken it. And so, 
the first vaccine, which was called Viracine*, in about two 
years between us--this was a joint operation between Dr. 
Boynton and Dr. Casselberry and our virus research group-- 
we had so weakened it that we produced a vaccine that did 
not give field problems and, yet, gave a very high degree 
of immunity. It was called Allocine . And we became a very 
important factor in the hog cholera vaccine market. 

Morris: Throughout the country? 

EA Cutter: Yes. 

Morris: Did it go back overseas at all? 

EA Cutter: Oh, to some extent, but not — you see, you take Canada and 
Great Britain, as a couple of examples I can think of off 
hand. Even these modified vaccines--they wouldn't permit 
the use of them. They'd treat it just as we treat foot-and- 
mouth disease: at the first sign of an outbreak, slaughter. 

Morris: Slaughter the whole herd? 

EA Cutter: Yes. 

Morris: Is this still true in Canada and Great Britain? 

EA Cutter: Yes. That's what we're attempting to do now [1973] in this 
country. All vaccination in this country has been stopped 
and we're going on what they term an eradication program. 
That's been going on for two years. 

Morris: In other words, hogs are no longer immunized against cholera? 
EA Cutter: That's right. 

Morris: They're trying to remove the possibility of it occurring in 
this country. 

EA Cutter: That's right. 



40 



Morris: That's going to mean that there's going to be no market for 
your product. 

EA Cutter: Well, we aren't making it any more. No one is. We're not 
allowed to. 

Morris: That's interesting. Is it felt that it can be wiped from 
the face of the earth, the cholera virus? 

EA Cutter: Well, we're still having some pretty bad outbreaks in places, 
worse this year than last. 

Morris: What's the thinking behind trying to kill any possibly con 
taminated animal, as opposed to building up an immunization? 

EA Cutter: Well, there's the feeling that even with these vaccines that 
are modified, that there's a possibility that passage from 
one pig to another will step up their virulency and continue 
the contamination of the fields. 

Morris: It goes back into the earth? 

EA Cutter: Yes, into virulent form. 

Morris: With the possibility of eventually attacking humans? 

EA Cutter: No, not a normal case of hog cholera. 

Morris: Do you have a rough guess of when Allocine* was introduced? 

EA Cutter: I would guess that Allocine was about 1954 or so. 

Morris: So that you were actively working on live virus when the 
polio vaccines came along? 

EA Cutter: Oh, yes. We had introduced these vaccines before polio. 

Morris: Were there any people here in your research groups who were 
working on a polio — ? 

EA Cutter: No, not until the National Foundation started this Salk 
thing. And we went into that. [Rueful chuckle] Almost 
too much in that! 



41 



Plague Vaccine and Other Projects with Dr. Karl Meyer 

Morris: Let's go back and talk about the plague vaccine project and 
then come up into the postwar troubles. How did Cutter 
establish contact with Dr. Meyer? Or was it the other way 
around on the plague vaccine? 

EA Cutter: Well, we'd had contact off and on over all the years with 

Dr. Meyer. California was the first state to be recognized 
as having bubonic plague-infested areas and that was up in 
Modoc and Lassen counties, where it was discovered in the 
ground squirrels. And they had two or three cases develop 
up there intermittently. And Dr. Meyer became a very 
recognized expert in that field. 

Morris: This was back in the Thirties, wasn't it? 

EA Cutter: Oh, yes! I would guess in the Thirties. It could have been 
in the Twenties. 



Morris: 
EA Cutter: 



Morris: 



EA Cutter: 



Morris: 



EA Cutter: 



He says he was already interested in the Thirties. 

In the Thirties, yes. But it was isolated. It was here in 
California and, so far, no place else in the United States. 
And as far as the humans were concerned, it was not the 
ground squirrel, but the fleas that were on the ground 
squirrel that were the infective agent. 

Was this known, or was this something that Karl Meyer dis 
covered? 

I couldn't say that for certain, but it was certainly estab 
lished in the Thirties. No, I'm sure it was known. Yes, it 
was. And so, he began working at the George William Hooper 
Foundation—part of the UC medical group — on the development 
of a vaccine. And he also got funds from the army, from the 
Walter Reed group, working on that project. And included in 
the funds was the building of what's called a flea-proof 
animal quarters. 



[Laughter J 
got a dog! 



That would be a marvelous boon to anybody who's 



Morris: 



[Laughter] They didn't care what happened to the hamsters, 
but they didn't want any fleas off the guinea pigs or mice to 
get out of it. And he also had been testing this vaccine on 
volunteers. 

Human volunteers? 



42 






EA Cutter: Human volunteers. 

Morris: That must have been a very touchy matter. Where did he get 
his volunteers? 

EA Cutter: Well, of course, the test did not mean testing against viru 
lent plague. It was inoculating and then bleeding and test 
ing with regular, allowed methods of testing. It's whether 
they build up antibodies. 

Morris: Were these volunteers members of his staff? 

EA Cutter: No. They were institutionalized people. 

Morris: When you say institutionalized, do you mean people in prisons? 

EA Cutter: Prisons. And they did quite a bit of work at Sonoma State 
Home . 

Morris: There's been public objection to this kind of testing 
recently. Was there any factor of that at that time? 

EA Cutter: Very little, at that time. Very little. 

And he had developed a vaccine that, no question about 
it, did produce pretty good immunity. It also produced some 
damn good reactions. So, when we went into war, why, here we 
were down in Southeast Asia, where, at that time, there was 
a lot of plague. There isn't too much of it today. As a 
matter of fact, Vietnam is about the worst there is. 



Morris: 



EA Cutter: 



Morris: 
EA Cutter: 



What happened to the plague in Southeast Asia? 
work done to eliminate it? 



Was there 



Oh, yes. As the sanitation gets better, it cleans things 
up a whale of a lot. So, the army wanted quite a lot of 
plague vaccine, but the National Institutes of Health--the 
licensing body for biological manufacturers — would not permit 
it to be handled any place but in California and, preferably, 
next door to Karl Meyer. So, that's how we came into the 
picture. 

There you were, right on the doorstep. 

Yes. We were right on the doorstep. So, a set-up was 
made, whereby — at that time, Hooper Foundation was a larger 
part of the University of California Medical Center than 
it is today. It had more space and was more important. That 
was before the days that they were building the marble palaces 
that they are now at the University. 



Morris: 



There would be smaller state support, right? 



43 



EA Cutter: 

Morris: 
EA Cutter: 






Morris: 
EA Cutter: 



Morris: 
EA Cutter: 
Morris: 

EA Cutter: 
Morris: 
EA Cutter: 



Morris: 



Yes. So, we built, inside the Hooper Foundation, production 
facilities and we furnished workers. 

You actually built it on the site over there? 

Inside the building, because we had that know-how for mass 
production. And he had the know-how for production of the 
vaccine. And we had workers experienced in producing a bac 
terial vaccine, which this was. 

Were they quarantined inside the facility? 

No, but they were all vaccinated with routine vaccinations 
and a booster shot every six months and all that stuff. So, 
they grew the virulent plague organism over there and then 
they killed it by heat. Then they put it in a concentrated 
form, in solution. They harvested it off. They grew it on 
solid culture media and then, with very little solution, 
washed it off and killed it. And then they sent that con 
centration over here. 

You mean across the bay, to Berkeley? 
They brought it over here to Berkeley. 

And the growing and the washing off was done at the production 
facility inside the Hooper Foundation? 

That's right. 

Was it brought over in sealed containers? 

No. It had been killed by that time. Then we standardized 
it. That is, we diluted it sown. They wanted about two 
billion organisms per cubic centimeter. And, with the best 
techniques known at that time, we standardized it. Hell, 
with the equipment we have today, we know that our standardiza 
tion was all over the map. By that I mean as low as two 
billion, but as high as eight billion per cc. And we packaged 
it. Then, we sent samples of each lot back to Hooper, where 
they tested it in their flea-proof animal quarters, where they 
had to use the virulent plague to challenge. In other words, 
they would vaccinate the guinea pigs or mice and, after a 
period of time, they would challenge them and unvaccinated 
controls with virulent plague. And, if it passed the test, 
then it was released from here and we would ship to designated 
spots, designated by the army. 

When you say challenge the immunized animals, does that mean 
that after they'd had the immunizing vaccine--? 



44 



EA Cutter: Yes. After they'd been immunized, in the period of time, 
they were challenged, as were some unimmunized controls. 

Morris: That means they were then injected with the live, virulent 
virus? 

EA Cutter: That's right. 

Morris: I see. And the killed vaccine stood up under this test? 

EA Cutter: Yes, that's right. 

Morris: That's a remarkable adventure story! Did you and your 

brothers have some concerns about going into this highly 
virulent project? 

EA Cutter: We didn't! 

Morris: Well, for your employees. 

EA Cutter: Oh, no. No, because Dr. Meyer and his people had been work 
ing with it for quite some time and there 'd been no acci 
dents. We had selected individuals. They got premium pay. 

Morris: That helps, yes. In Dr. Meyer's reminiscences on this 

plague research, he said that later they went into various 
kinds of chemotherapy for plague treatment and did a lot 
of work with sulfanilamides. 

EA Cutter: Well, that I'm not familiar with. I know, in the treatment 
of it, they-- 

Morris: This is for treatment for people who did have the misfortune 
to come down with the plague? 

EA Cutter: Yes. 

Morris: I see. Having worked so closely with Meyer on the vac 
cine, did you continue working with him as he went into the 
sulfanilamides? 

EA Cutter: No, not at all. 

Morris: It was just a contract arrangement on this one--? 

EA Cutter: Yes. And we continued working with him in attempts to improve 
the vaccine, to improve the potency and to make it less re 
active. And orders for it died off pretty much. We had some 
large supplies of bulk. By that, I mean in large bottles, but 
it hadn't been packaged yet. It was the property of the 



45 



EA Cutter: government that we held here in cold storage. And then, 
when the Korean War came along, there was a great hue and 
cry to retest this and make more. And we did that, again 
with Meyer, went into another phase of it. 

Morris: What other projects do you recall that were fruitful in work 
ing with Dr. Meyer? 

EA Cutter: Oh, I know we worked on an abortion vaccine. That's a 
veterinary one. 

Morris: He's one of the landmark figures, I gather, in research in 
public health. 

EA Cutter: Oh, very much so. He's a patriarch. 

Morris: An interesting person to work with? 

EA Cutter: Very. An extremely interesting personality. 

Morris: I'm interested that there was this sulfanilamide research 
going on over at Hooper, because sulfas were-- 

EA Cutter: Well, now when you say that, I think the research was purely 
clinical. There was no manufacturing over there. 

Morris: The sulfas were one of the big things to come out of the 

Second World War and I wondered if Cutter had any interest 
in them? 

EA Cutter: No. We never were into them. 
Morris: Any special reason why not? 

EA Cutter: Well, it was somewhat out of our line. And they were out 
before World War II. 

Morris: Well, again, they became well-used in the civilian popula 
tion after the war. 

EA Cutter: Yes. 

Morris: I came across a mention of a plague vaccine put out by 

Cutter in 1967. Was this a descendent of the vaccine that 
you worked on with Dr. Meyer? 

EA Cutter: Well, by the time Vietnam came along, the Hooper Foundation 
had been squeezed in over there and they could no longer 
produce. They did still have their flea-proof animal quarters. 
And yet there was this crying need for plague vaccine. So, we 
built a building out here that was flea-proof. Or, I don't 



46 



EA Cutter: know whether it was flea-proof, but anyhow, all the air out 
lets and everything were filtered and it was specially 
designed so that we could handle virulent plague organisms. 

Morris: Did you need to get special permission for this from the 
National Institutes of Health? 

EA Cutter: No. They had to approve our plans and everything for it, 
our specifications and all that. We had an agreement with 
the army that we could write the cost of this building off 
in two contracts, because it wouldn't be a hell of a lot of 
use afterwards. 

Morris: Is the building still used for work on virulent materials? 

EA Cutter: Well, the army is still keeping us going on a very limited 
scale, because they don't want an outbreak of plague among 
our military overseas. 



MIDCENTURY GROWTH AND CHANGE 



Morris: It's interesting to me, going back through the years, how 
closely Cutter Laboratories' fortunes have been tied to 
national events. For instance, in the Second World War, 
so many things that were desperately needed by the army 
were right in your line of work. 

The other thing that's interesting is looking at the 
sales curves. After the war, the sales curves and there 
fore, presumably, production, goes shooting up at an ever- 
increasing rate, even though the military contracts, presum 
ably, dropped off. I wondered what you felt you learned in 
the way of production and operations that made this kind of 
growth after World War II possible? 

EA Cutter: I wouldn't say it was so much production. I think that there 
was a pent-up demand and that we developed a sales group. 
That was largely Pres Snow, right after the war. And then 
we had such things as our early penicillin products, like 
the troches. We were the only one in blood fractions. And 
these doctors that returned from the war had learned the use 
of the blood fractions. 

Morris: So that they had experience with Cutter products and con 
tinued to use them after the war? 

EA Cutter: That's right. 

Morris: I hadn't thought of that aspect of it before. Was there long- 
range planning? 

EA Cutter: Well, toward the end of the war, we had meetings. For 

instance, our decision to stay in blood fractions was made 
before the end of the war and, I would say, our decision 
that we would stay in penicillin for a period, but with the 
realization that we couldn't stay in it when the price com 
petition really got tough, because we just weren't in the 
league with the big boys in it, was made then. 



48 



Morris: Was this kind of long-range planning primarily done by you 
and your two brothers? 

EA Cutter: No. I would say we got all of our top and middle management, 
as much as possible, those that we felt had good judgment, 



Mo r r ) S . : 

EA Cutter: 
Morris: 



EA Cutter: 
Morris: 



EA Cutter: 
Morris: 



EA Cutter: 



in it. 

There was one report on planning that Pres Snow wrote that 
has survived. He must have been a great report writer! 

[Chuckle] 



He didn't mind writing! 



Yes. He seems to have 
forcefully and clearly 
years later, you get a 
important to the firm, 
interested in in this 
was going to be a need 
to employ more people 
if you recall that and 



had a talent for expressing himself 
In reading the things twenty-five 
very clear picture of what he saw as 

But one of the points that I was 
postwar thinking of his was that there 

for companies like Cutter to find ways 
than they had previously. I wondered 
if this was generally--? 



Frankly, I don't recall it. 

His thinking was that traditionally one had as small a staff 
as needed to get the job done. And I wondered if this re 
flected the thought that there might be economic troubles in 
California and the United States after World War II? 

I don't recall any discussions along that line. 

Government contracts had enabled you to greatly expand produc 
tion facilities during the war. Did you, as one of the 
executives in operations, have any concerns about using all 
of this production capacity? 

No. I felt we'd grow into it. I didn't think we would be 
using it all right after the war, but I felt that we would 
grow into it. 



Branch Plants Established 



Morris: At what point did the decision to go into branch plants 
and acquisitions begin to develop? 

EA Cutter: Well, the branch plant was just an economic, you might say, 
necessity, because it costs like the devil to ship water and 
our biggest markets for IV solutions were in the Middle West 



49 



EA Cutter: and East. And, basically, that's what you're doing is 
shipping water. 

Morris: [Laughter] That's true. So the need for water would also 
determine where you located. 

EA Cutter: That was part of the decision, yes, and transportation. 

Morris: Did you call in outside consultants? 

EA Cutter: In plant selection? Yes. 

Morris: Who were the outside consultants? 

EA Cutter: Oh, in plant selection — Frank Chilson was the fellow we used. 
And as management consultants, the firm we used most often 
was Booz, Allen and Hamilton. 

Morris: I've come across their name. I wondered if they were often 
called in. 

EA Cutter: Well, on quite a few occasions, yes. 

Morris: What kinds of questions would you go to them for? 

EA Cutter: Well, we would go to them for recommendations in sales 

problems, recommendations in inventory control, recommenda 
tions in the finance and accounting. 

Morris: Was this because you wanted a second opinion, or did you 

feel that there were gaps in particular technical areas in 
your own staff? 

EA Cutter: Because we wanted an outside opinion, yes. 

Morris: Did this stimulate thinking within your organization? 

EA Cutter: There was a lot of stimulation because a good one, they 
ask a lot of questions before they give recommendations. 

Morris: And this is in addition to the routine, outside, technical 
people you had around? I keep meeting the Price Waterhouse 
people in the Old Timers' Room. They're a regular part of 
the whole operation? 

EA Cutter: Oh, they're not consultants. They're just your auditors. 



50 



Labor Relations 



Morris: One other aspect of the postwar scene is the whole area of 
personnel. You said you didn't really feel there was any 
economic likelihood of depression, but 1 gather that there 
was a considerable increase in salaries during the war. Did 
this increase in salaries continue on? 

EA Cutter: Oh, yes. Sure. You mean wages and salary? 

Morris: Wages and salary, yes. The hourly employees — the production 
and secretarial and clerical people. 

With Cutter's early benefits in the way of a pension 
plan and health insurance, 1 was surprised to find that there 
was a fairly sizable strike in 1947. Since wages had gone 
up and Cutter already had had early benefit programs, why 
did the strike descend on you? 

EA Cutter: Well, it was Harry Bridges' union and 1 think they were 

asking for the moon and we weren't ready to give the moon. 
And I don't think either side foresaw just how long it would 
last and what it would cost each side. 

Morris: What did it cost, other than the — I assume you ended up grant 
ing a general increase--? 

EA Cutter: Oh, yes. We gave in on certain things and they did. 
Morris: But you say it cost both sides. 

EA Cutter: Well, their wages were lost and it cost us an inability to 

do our day-to-day jobs and an inability to fill certain custo 
mer demands . 

Morris: Was there a particular grievance that started it? 
EA Cutter: No. I think it was a contract up for renewal. 

Morris: Were there many other labor strikes at that time against 
other companies? Do you recall? 

EA Cutter: Well, the ILWU had a series of them. The big thing they 
were trying to do with us was bring us up to what the 



** The Old Timers' Room contains a binder and a folder of 
press clippings, company memos, and union handbills which 
give quite a complete picture of day-to-day events and 

issues. 



51 



EA Cutter: warehousemen were getting and we were resisting that because 
we didn't think we were in the same classification. 

Morris: Yes. How did laboratory workers become involved with the 

warehousemen? 1 would not think they were the same kind of 
work particularly. 

EA Cutter: Well, it's just your ordinary laborer. In other words, they 
did a better job than some other union. 

Morris: At some point sometime after that, there was an election, in 

which some of the employees voted out of that union and into — 

EA Cutter: Our technical people. 

Morris: Was the 1947 strike the first one that Cutter had ever had? 

EA Cutter: Yes. 

Morris: That must have been kind of a shock. 

EA Cutter: No, it wasn't. 

Morris: Were you aware that this was building up and likely to--? 

EA Cutter: Well, we knew it was a possibility. 

Morris: So was that the first union that you'd had? 

AE Cutter: I think ILWU was the first, yes. 

Morris: And then you went on and the technical workers voted out 
and started another group? 

EA Cutter: No, no. They just remained out. 

Morris: That's sort of unusual in today's labor relations for anybody 
to-- 

EA Cutter: I don't think it was then. 

Morris: Do you now have a single union for the whole plant? 

EA Cutter: Well, a single union, but the technical workers no longer 
belong. 



52 



National Marketing of Veterinary Produc ts 



Morris: In general, what happened to veterinary products after the 
war? 

EA Cutter: I believe it was '54 that we bought the Ashe Lockhart 

biological company and the Haver-Glover veterinary pharma 
ceutical company. And so, Cutter labels stayed pretty much 
in the ranching area, eleven western states, Texas, and 
Western Canada, you might say. The acquisitions, newly 
named Haver-Lockhart, who sold only to veterinarians, sold 
nationally. 

But with the advent of the hog cholera virus vaccines, 
Cutter did go nationwide and set up a separate sales force. 
That was, 1 would guess, around '56, '57. 

Morris: Separate sales force from the human products? 

EA Cutter: Yes. They were veterinary only, called on just stockmen 
and feedlots and drug stores and veterinarians and that 
type of customer. And the veterinary distribution picture 
had changed a great deal by then. Where at one time it was 
dominated by the drug store and, to an extent, the veter 
inarian, by 1960, what we called stockmen's supply houses 
had become a very dominant factor. They carried a wide line 
and they traveled salesmen. 

Morris: Of their own? 

EA Cutter: Of their own. And they were obtaining wholesale prices. 
And the drug store was disappearing as a real big factor 
in the veterinary line. 

Morris: Would this correspond to the increase in larger and larger 
ranches? 

EA Cutter: Larger ranches and the increase in the number and sizes of 
feedlots. They sold direct to the feedlots, which was 
becoming a bigger and bigger factor in the veterinary line. 

Morris: The feedlot is primarily cattle, isn't it? 
EA Cutter: Yes, that's cattle. 

Morris: So that a salesman had to be able to deal in larger kinds 
of merchandising? 

EA Cutter: Well, yes, and with bigger customers. 



53 



Morris: That would have a positive effect wouldn't it, on the 
profit margin? If you sell things in larger quantities, 
doesn't that — ? 

• 

EA Cutter: Yes, but your price was lesser because it was always wholesale. 

Morris: Yes. So every good thing brings a drawback. You said that 
your acquisitions continued to market in the east, but I 
notice that there's a Haver-Lockhart Laboratory out here now, 
down in San Leandro. 

EA Cutter: Well, that's a distribution point for them. 
Morris: So that Haver-Lockhart — 

EA Cutter: Totally independent of--Now, it's Cutter-Haver-Lockhart, and 
bit by bit, we're transferring all veterinary production to 
Kansas City. They will produce both the Cutter label and the 
Haver-Lockhart label and our Cutter veterinary group is head 
quartered now in Kansas City. 

Morris: The research group? 

EA Cutter: No. The research we will maintain centralized here. They 
have some research back there. 

Morris: But all production will be there? 

EA Cutter: Will go there. There's quite a bit here, but, bit by bit, 
it's being transferred there. 



Licensing and Regulation 



Morris: Another area I'd like to talk about is the government 

agencies. Does the State Department of Public Health also 
license you and inspect you and things like that? 

EA Cutter: Well, for a number of years--there was some inspection by 
the State Department of Agriculture, the Virus Serum Act. 
In any event- 
Morris: How about licensing of the laboratories? 

EA Cutter: Yes. And for years, that was under the NIH, the National 
Institutes ot Health, and it was the Division of Biologic 
Standards. 

Morris: In other words, the State Department of Public Health — 



EA Cutter: Not state department. We were licensed by the national 
government. And we very carefully, as far as the state 
went, in all bills dealing with licensing and that, got an 
exemption for institutes or laboratories licensed by the 
federal government, so that we didn't have any of the dual 
licensing situations. 

Morris: I've done some interviews with Malcolm Merrill, who was head 
of the Department of Public Health for a number of years. 
Before that, he himself was involved in veterinary research 
in encephalitis and things like that. I wondered if there 
were areas where Cutter Laboratories' researchers-- 

EA Cutter: By the way, that's one place we were with Karl Meyer. It 

was encephalomyelitis and we were the first ones to make an 
encephalomyelitis vaccine, which was a natural product. 
You brought a horse down with it and then you took his brain 
and spinal tissue and made a vaccine out of it. It was an 
expensive thing. And then other horses, you immunized them 
and kept hyper- immunizing them and produced an anti-serum. 
And that was the first effective protection against encephalo 
myelitis. But Karl Meyer developed a method of growing 
encephalomyelitis on a chick embryo and from that, then, you 
could take the chick embryo and kill it. You'd infect the 
egg, the yolk, and then kill it with formalin. It made a 
very effective vaccine. And that was along about '36, '37, 
and we made a killing there a couple of years, because there 
was an outbreak in Canada. 

Morris: The Department of Public Health also keeps track of the epi- 
demiologtcal records. Would they notify you, for instance, 
when they had reason to believe that an epidemic or something 
was going to happen? 

EA Cutter: No, no. Just their publications. 

Morris: So they were just there; they didn't really make much impres 
sion one way or the other on the laboratory. So, it was the 
federal licensing and regulatory agencies that really have 
had an impact? 

EA Cutter: That's right. Now I believe it was just in 1972, it became 
a division of the Food and Drug Administration, because it 
had not been really doing its job properly, ever since polio. 

Morris: Licensing? 

EA Cutter: Yes. And regulatory agency. 

Morris: Was transferred from the Public Health Service? 



55 



EA Cutter: From National Institutes of Health to the federal Food and 
Drug Administration. This is just human biologicals— not 
veterinary. 

Morris: Why would that be? 

EA Cutter: Well, for one thing, the head of it was a guy who could 

never make up his mind and he didn't have too good men under 
him. 

Morris: And this had gone on for fifteen years? 

EA Cutter: Well, since polio. 

Morris: And the same man stayed in charge of NIH? 

EA Cutter: All that time. The Division of Biologicals of the NIH. 

Morris: That's interesting, because I gathered that part of the 

problem with polio was, again, this business of standardiza 
tion and that the testing was not all that it might have 
been. 

EA Cutter: That's right. 

1948 Dextrose Recall 

Morris: 1948, on this regulatory business, was the dextrose solutions 
crisis. And your name is on a file of telegrams going back 
and forth to Washington to Art Beckley. Were you boss of the 
production operations during that year? 

EA Cutter: Oh, no. Art was back there dealing directly with the Food 
and Drug Administration and other people back there at that 
time. I was merely keeping him informed in many phases and 
I was a contact with our distribution group. 

Morris: Did you have information from your distribution people that 
something was wrong with some of these solutions before the 
FDA alarm went up? 

EA Cutter: I believe we first picked it up in Florida. 

Morris: So you were prepared when the federal government expressed 
alarm about this? 

EA Cutter: I think we were recalling before they stepped in. 

Morris: The telegrams are very interesting. I was impressed with 
the speed with which everybody acted. Did you have a 



56 



Morris: procedure already worked out for what you would put into 
operation if a problem like this arose? 

EA Cutter: Yes. 

Morris: Was this the first time there was anything of that magnitude? 

EA Cutter: Oh, yes! 

Morris: Was Mr. Beckley in Washington routinely? 

EA Cutter: No. 

Morris: You sent him back to keep tabs on this? 

EA Cutter: He had certain connections back there that we thought might 
be helpful. 

Morris: Was this before he was on the city council here in Berkeley? 
EA Cutter: I believe it was. I'm not certain, but I believe it was. 

Morris: So that you sent him back with instructions and he knew what 
the plan — ? 

EA Cutter: Well, he had to play it by ear back there, with the head of 
Food and Drug and also with congressmen. 

Morris: How does Congress get involved in something like this? 
EA Cutter: Well, with congressmen and senators, certain of them. 

Morris: I'm interested that congressmen and senators would be involved 
when-- 

EA Cutter: Well, they wouldn't be involved. You'd try to get them 
involved if you were being trod on too hard, that's all. 

Morris: In other words, a couple of batches of solutions turned out 
to be-- 

EA Cutter: Contaminated. And we never knew why. We called in Karl 

Meyer and we had the Canners Association people here. They 
were very fine. They'd had this trouble themselves with 
sterilization. 

Morris: At Hooper? 

EA Cutter: No. He had worked with them and was a consultant to them 

and he got them to work with us. And none of us could ever 
figure what happened, whether it was sabotage, or what. 



Morris: 
EA Cutter: 
Morris: 



EA Cutter: 

Morris: 

EA Cutter: 
Morris: 



57 



Were there any cases of people becoming ill? 
Yes. There were reactions, definitely. 

But as soon as you found out about this, you started recall 
ing all of the lots and you got them all back. I'm inter 
ested that there would still be hearings on this with the 
Food and Drug people. 

Hell, yes. It finally came that there was oh, some kind of 
a court thing here in San Francisco, and the judge gave us 
a big pat on the back and fined us a hundred dollars. 

Oh! Well, that's quite a vote of confidence. [Laughter] 
But there were no actions for damages or anything like that? 

No. 

Did Karl Meyer and the Canners Association and other people 
rallying around lead to any changes in procedures here at 
the laboratory? 



EA Cutter: Not procedures, I don't think. One step we took was better 
isolation, going into the sterilizer, and then stuff at one 
end was isolated from stuff that had come out, by screening 
off, and off-tests from on-tests. I think that was about it. 
But we didn't change our cycle, as I remember it. 

Morris: Had this kind of mishap befallen any other pharmaceutical 
companies that you were aware of? 

AE Cutter: Oh, it had in a product or two and I can't recall just what 
they were. Yes, the thing that brought on the 1938 Food and 
Drug Act was some mishap with Massengill on some sulfa. 

Morris: It seems that it's sort of a hazard of a business operation. 
EA Cutter: Yes. It's a particular hazard of this industry. 



1955 Polio Vaccine Recall 

Morris: Yes, I would think so. Did this experience with the solu 
tions crisis provide you with any experience or prove helpful 
at all in handling the much larger troubles when the polio 
vaccine went bad? 

EA Cutter: Oh, I'm sure that it did. I can't tell you specifically how 
it might have, but I'm sure the general experience did. 

Morris: Were you as much involved with the polio crisis? 



58 



EA Cutter: No. I was in ill health with my eyes at that time. 

Morris: Then you could sort of observe it from the outside, as it 
were? 

EA Cutter: Yes. Well, 1 wouldn't say from the outside, but I-- 
Morris: You weren't right on the firing line? 
EA Cutter: No. 

Morris: Dr. Bob says he would like to include some thoughts on it in 
his comments, but, obviously, it distresses him very much 
still to talk about it. 

EA Cutter: I'm sure it does, yes. He took the brunt of it, very much. 

Morris: I gather from reading the press articles on it that other 
laboratories in the program had similar difficulties. How 
come it was Cutter that really took the brunt of the trouble? 

EA Cutter: Because ours was the first. 
Morris: You mean the first on the market? 

EA Cutter: No. It was one of the first on the market, one of the first 
releases, and it was widespread. And we did have it in more 
lots than anybody else, that they could prove. 

Morris: Was this because you made smaller batches? 

EA Cutter: No. It was because--we all had been making it with merthio- 
late as a preservative. In other words, in case of a little 
contamination, merthiolate would hold it down or kill it off. 
Then it was determined that merthiolate was killing the 
potency of the vaccine. So, you had to discontinue use of 
it. So, there was a very, very rushed thing for a substitute 
for merthiolate. And before we could come up with one, we had 
determined to put out some early lots without any preservative, 
be ultra-careful in the filling of the vaccine, and test 
severely for sterility. And we did. 

And in those lots-- there were about seven of them--the 
• live virus, if it was there, there was no test at that time 
sufficiently good to pick up any presence of virus. It all 
appeared dead. But you could pick up, with the tests known, 
any bacterial contamination. Now those lots, later on, with 
things they had since developed by injecting cortisone into 
monkeys and then injecting the vaccine that had some very 
minute amounts of live virus, that monkey would develop the 
polio. And that's how ours would be found. Now if that 
vaccine had had a thing like merthiolate, or something of that 



59 



EA Cutter: nature, or what we later used, parabenz, that minute amount 
of virus would have been killed off, or it wouldn't have 
shown up. And so that's why other's lots were very diffi 
cult that contained it. And nobody else made that foolish 
choice that we did to put some lots out without a 
preservative. 

Morris: Which meant that some other manufacturer's product probably 
would have had less potency or less immunizing capacity? 

EA Cutter: I wouldn't say probably, but there were other lots found, 
with more sensitive methods, of other manufacturers, that 
did have virus in them, later, with methods that weren't 
known in the beginning. 

Morris: The polio vaccine, again, was something that was started up 
in a fairly short time, with quite a lot of pressure. 

EA Cutter: Very much pressure from the Polio Foundation. O'Connor was 
just really a pressure guy. 

Morris: Why did it suddenly have so much urgency at that point? 
EA Cutter: Well, you'd have to ask Basil O'Connor. 

Morris: And in that instance, not only the government agencies 
stepped in, but the President issued proclamations and 
there were extensive court actions on this. Did you feel 
that government was your adversary on this? 

EA Cutter: They started out to be, but they could never find anything. 
And later on, they had to admit that they themselves weren't 
able to — they had to later on reverse themselves and recall 
all vaccines from the market and put out an entirely new 
testing procedure. 

Morris: When you say they later recalled all vaccine-- 

EA Cutter: From all manufacturers. 

Morris: Was that within a period of weeks or months? 

EA Cutter: I would say in a period of weeks. 

Morris: Were there ways in which the government agencies and policies 
have been helpful to the development of the laboratories? 

EA Cutter: Well, 1 think that, certainly, it's kept fly-by-night start 
ups out. 



60 



Morris: In the last ten years or so, there's been a great deal of 

publicity given to increases in licensing and standards and 
various other kinds of regulations for the pharmaceutical 
industry, as well as other things used by human beings. I 
wonder why these regulations should increase so? 

EA Cutter: Well, for one thing, there's consumerism, on their back and 
looking over their shoulders. You have that. Then, for 
another thing, you are having these new techniques, right up 
and down the line, things that you are able to do today, 
let's say, in the way of testing that were impossible as 
short as two years ago. And, as they develop, the insistence 
on the use of them is all to the good. There's no question 
about it. 

Morris: So that you feel that there is an improvement in the quality 
of the pharmaceutical products? 

EA Cutter: Surely, surely. We can do things today we couldn't do five 
years ago. Just take blood fractions alone, the higher 
quality of the stuff. 

Morris That kind of reflects the technical advances made by your 

research and production people and those of other laboratories, 

EA Cutter: Research, production, and testing. 

Morris: But it's your people who develop the tests, isn't it? 

EA Cutter: Well, yes, some. And some that the government or somebody 
else develops. 

Morris: The other big area of publicity has been on the cost of pharma 
ceutical products. Did Cutter get involved at all in the 
Kefauver hearings back in the middle '60s? 

EA Cutter: No. 

Morris: Did you follow those hearings with interest? 

EA Cutter: Oh, sure! Sure, we followed them! 

Morris: Was there fire behind the smoke, would you say? 

EA Cutter: Well, it was a very one-sided thing, using the case of a loaf 
of bread, as they did, for instance, adding up the loaf of 
bread's cost and not taking anything else into account. I 
think a very good example is when the president of Baxter 
Laboratories pointed out to them that one of their items was 
a bottle of vacuum, a bottle of nothing, and they sold it 
for x amount. And he said, "Here are our costs on it. Now 



61 



Cutter: you break that down. How would you sell a bottle of nothing?" 
And it kind of stumped their group. 

Well, I'm sure there's no question that a patented com 
modity is going to command a higher premium. There's just no 
question. My God, you've got to get your research back 
somehow! 



62 



CONCLUDING THOUGHTS 



Cost of Research 



Morris: In reading the last couple of years' annual reports for the 
laboratories, I gather there's been some decision to cut 
back on the amount of research. 

EA Cutter: Well, on the amount and the path we were following. We went 
in rather heavy into research aimed at producing new chemical 
entities that would be productive. But just about the time 
we went into it, the new Pood and Drug law, in which you had 
to go to such ends of clinical researching and development 
of not only effectiveness, but safety and all that — the cost 
just rose and rose and rose! 

Morris: So that it's not economically valid to continue in this area? 
EA Cutter: No, no. 

Morris: One other thing I'd like to ask you — you'd said that you were 
into operations with both feet from the war time on. I 
wondered if you were involved at all in the establishing of 
the product and machine development group? 

EA Cutter: No. 

Morris: Was this when you began to be less active in the work? 

EA Cutter: Well, for one thing, that's about as far away from anything 
I'm capable of as I know! If I lift up the hood of an auto 
mobile and the wires are connected and there's gas in the 
tank, I don't understand why it doesn't run. Machinery is 
beyond me and the interest in it is lacking. 



63 



Morris: The notes that I read were that this was hoped to have a 
positive effect on profits and-- 

EA Cutter: Well, yes! To that extent, I could appreciate what they 

were trying to do. But to have any hand in who and why and 
what, or what they were going after, I just would be the last 
one to take any pride in it! I could take pride in what they 
were trying to do. 

Morris: What were your later responsibilities for the laboratory? 

EA Cutter: Well, largely, general administration and finance and a 
watchful eye on sales. 

Morris: That's a pretty broad territory. What do you feel have been 
the developments in the laboratory that have given you the 
greatest satisfaction? 

EA Cutter: Well, I feel that the blood and plasma group and the veterinary 
end have given me--l've been the most interested in. Shall we 
put it that way? And the general growth. 



Family Attitudes and Responsibilities 



Morris: Over the years, how did you and your brothers sort out the 
tasks that each of you would concentrate on? 

EA Cutter: Well, I think they rather took care of themselves. There's 

no question that Bob was the head, the best long-time thinker. 
He was a human--he was the doctor, a doctor of medicine, and 
the best brains along that line. And we were perfectly 
willing to go along with him. 

He had the foresight and the ideas. I, on the other 
hand, had the follow- through and the ramrod. In other words, 
I could take something and ramrod it and keep it going and I 
was blessed always with a very good memory. But I wasn't very 
good at conceiving anything. I could take a germ of an idea 
and then work hard on it, but I wasn't very good in germinating 
the idea. 

My brother Fred could germinate more ideas than a cat on 
a tin roof, but he wasn't any good at all at following through 
on them. 

Morris: He particularly enjoyed, several people told me, the mechanical 
devices. 



64 



EA Cutter: Gadgeteering. He was quite a gadgeteer. 

Morris: What happened when you disagreed? Did you, as brothers, as 
well as--? 

EA Cutter: Well, to some extent. Fred and I were more apt to disagree 
than Bob and I. Bob and I seldom had disagreements. Fred 
and I often did. 

Morris: Do you feel that the fact that you are brothers was a help 
or a hindrance in working together? 

EA Cutter: I think it was a help. 

Morris: One of the things that comes through in reading the records 

is the almost family feeling that a number of employees seemed 
to have about the organization. 

EA Cutter: Well, don't forget that each one of us began working here-- 
off and on, odd jobs — when we were in high school. And we 
had quite a history of longevity of employees. So, a lot 
of these employees, you might say, knew us back when we were 
punk kids in high school. And I'm thankful to say that not 
one of us ever had a swelled head 'I'm the boss* son* attitude. 
And I think it carried on through in our relationship with all 
the people. 

Morris: Is this because your father raised you this way? 

EA Cutter: Perhaps. I'm sure it's part of the family upbringing. 

Morris: And the first name tradition, I think. You're all still 

referred to by your first names around the plant, aren't you? 

EA Cutter: That's right. Bob's the only one that gets the "Dr." treatment. 
He's "Dr. Bob," you know. 

Morris: Yes. From your point of view, have these kinds of attitudes 
continued in the generation of Cutters that's now with the 
company? 

EA Cutter: Very much so. My son, for instance. I don't think it started 
until he was in Stanford, but he spent three summers here 
cleaning out the guinea pig cages. In other words, during the 
vacation period, they'd be animal attendants. 

Morris: And he is now the secretary of the firm, is he not? 
EA Cutter: Secretary and corporate counsel. 

Morris: So, he's got the legal training. Is he the first one of the 
family to have legal training to bring to the firm? 



65 



EA Cutter: Yes. 

Morris: But you were also secretary for a while? 

EA Cutter: Yes, but not counsel. 

Morris: No, but it's kind of nice for the position of secretary to 
pass from father to son. Was that coincidence? 

EA Cutter: There was at least one, if not two, secretaries between me 
and him. 

Morris: When did you cease keeping an eye directly on the operations? 

EA Cutter: Well, I had quite a period of illness in my vision between, I 
would say, '48 and '52 or '53. 

Morris: That's a long spell to be out of condition. 

EA Cutter: Yes. I went totally blind and then 1 had a period of opera 
tions and corneal grafts. 

Morris: What a disaster! 

EA Cutter: Yes, it was. All that brought me back was the cortisone. 
The eye inflamation went into the corneas. And cortisone, 
which is an ant i-inf lama tory, just brought it out. I had 
the first dose of cortisone over at UC Hospital and it just 
brought these down so fast and drastically that, hell, I had 
a parade of doctors going through my room. [Laughter] 

Morris: You were a medical first yourself. 

EA Cutter: 1 was. I was there five months. 

Morris: So that kind of short-circuited your own career. 

EA Cutter: Well, it certainly took me out of very active involvement. I 
was consulted on certain things, particularly with relation 
to blood and plague, but I wasn't actively involved. 



Financial Planning 



Morris: Yes. You said that you also kept an eye on financial matters. 
Could you continue consulting on that during this period? 

Cutter: Not as active, no. 



66 



Morris: So, did you come back full-time into company things? 

EA Cutter: Well, I started slowly and then it became full time, yes. 

Morris: Would your thinking, then, have gone into the financial plan 
ning that must have gone into the acquisitions and then, 
later, into putting the company stock on the market? 

EA Cutter: Well, stock on the market, yes. Bob was primarily in the 
acquisitions. He was a better trader. 

Morris: Yes, I imagine he's a very good trader. Was this a major 
decision, to go public? 

EA Cutter: We'd been planning that for quite some time. 
Morris: What was the thinking on that? 

EA Cutter: Well, a new means of securing additional capital and a market 

for Cutter family stock, without losing control of the company. 

Morris: Was this something that you could work out with your people 
on the staff, or did you need consultants for this? 

EA Cutter: Well, yes. We had, definitely — Harry Lange, our then vice- 
president for finance and so forth, was extremely active in 
it and Bill Thomas, our controller. 

Morris: I'm going to be talking with Mr. Lange, I hope, if he can 

find some time, with running the BART system. Are there any 
particular aspects of this that I should ask him about? 

EA Cutter: Well, he, for one, was vice-president for sales when they 
split off the veterinary sales group. And before that, 
the Salk vaccine, Basil O'Connor's outfit, the National 
Foundation, had come up with a contract to purchase every 
drop of gamma globulin that every producer could produce. 
So, Harry went out and he beat the bushes--he* 11 go more into 
what he did in the procurement of blood to greatly enhance 
our gamma globulin production. And it was sold too, because 
we had an assured market for it and a profitable price. 

Morris: I should think so. On the finance end, the papers in the 

Old Timers' Room indicate that you must have had a very good 
working relationship with the local American Trust Company 
and, then, Wells Fargo. 

EA Cutter: Yes. 

Morris: The American Trust did become Wells Fargo? 



67 



EA Cutter: It did. In our early days, when we weren't borrowing so 
much of the time, we did it right in Berkeley. Then it 
moved to San Francisco. That's when we first came in contact 
with Ransom Cook. 

Morris: Had he come from the Berkeley office to San Francisco? 

EA Cutter: No, no. But he was on their lending board, or whatever it is. 

Morris: The American Trust Company in Berkeley — was this the branch 
on this side of town on San Pablo Avenue? 

EA Cutter: No. It's the branch up on Center and Shattuck. 

Morris: That relationship goes back to your father's day, doesn't it? 

EA Cutter: Oh, yes, when it was The First National Bank of Berkeley, 
then the Mercantile Trust, and then American Trust. 

Morris: And through thick and thin, good times and bad, for the company 
and the economy, they were always willing to extend the loans? 

EA Cutter: They've been very, very good to us. 

Morris: Was it customary, in the early days, for a bank to have this 
kind of line of credit for a company? 

EA Cutter: I don't know, in the early days. But certainly, by the time 
I was in it, we had a line of credit. 

Morris: I think there probably have been developments in financing and 
financial institutions as great as the technical developments 
in production. 

EA Cutter: That's true. That's right. 

Morris: Ransom Cook was the first outside person to be elected to the 
board of directors. Was this because of his close working--? 

EA Cutter: Well, we got to know him and got to have a great respect for 
his fund of knowledge. 

Morris: On banking, or also broader economic and financial — ? 

EA Cutter: Financial, economic matters. Business, general business. 

Morris: Has it been important, in your experience, to keep tabs on 

what else is going on in the California economy and nationally? 



68 



EA Cutter: Oh, yes. Bob was president, at one time, of the California 
Manufacturers Association. 

Morris: That also seems to be part of the Cutter tradition. Many of 
the staff have been active in some other professional or 
civic organization. 

EA Cutter: Yes. 

Morris: Did you participate in this part of things? 

EA Cutter: No, 1 didn't. That wasn't my forte. 

Morris: It's not everybody's dish of tea. Is it a company policy that 
it's a good thing for a company to be part of the community? 

EA Cutter: Yes. That's right. Chamber of Commerce and Rotary Club and 
so forth. 

Morris: Is this, again, a matter of public relations, or is it a sense--? 
EA Cutter: Community relations, I would say. 

Morris: It has a different quality, does it, if it's done spontaneously 
than if it's--? 

EA Cutter: We don't force anybody, if that's what you mean, no. But we 

stand all expenses in that sort of — Junior Chamber of Commerce, 
Chamber of Commerce, and so forth. 



Recent Industry Trends 



Morris: And on through to the Manufacturers Association. As late as 
1945, I gather that Cutter was one of the few pharmaceutical 
houses here on the west coast. And in the last ten or 
fifteen years, a number of new firms have appeared out here. 
Do you think that's a healthy development for the firm? 

EA Cutter: Yes, very much so. 

Morris: Did they compete particularly with you? 

EA Cutter: No, no. Hyland is about the only one. The Hyland Laboratory 
division of Baxter was about the only one in direct competi 
tion with us. Don Baxter Laboratories, now McGaw Labora 
tories, are very distinctly competitors, but they were before 
the war. 



Morris: 



Yes. They go back kind of parallel with Cutter. 



69 



EA Cutter: Well, as a matter of fact, they were the first ones to 

develop the large, mass intravenous- 
Morris: Production? 
EA Cutter: Yes. 

Morris: One other thing — the development of prosthetics. That's the 
heart valve and other mechanical devices? 

EA Cutter: That landed in our lap from a doctor up in Sacramento, Smeloff, 
who came to us with it and it looked very intriguing. 

Morris: I should say so. How did he happen to pick you? 

EA Cutter: Well, because he was familiar with us and we were close at 
hand and nobody else was. And he didn't want to go to any 
body that was already producing valves. 

Morris: He didn't? Is his that much of a departure from other valves? 

EA Cutter: Well, it was very close to one that was being produced by the 
leading producer, so he didn't want to go to them and he 
didn't want to go to anybody geographically distant and all 
the others were. 

Morris: Did you see this as a logical development of your work with 
hospital supplies? 

EA Cutter: No, no. No, it was an interesting field. It was quite 

apparent that you would have to call on a totally different 
class of men and that we weren't sure until we got into it 
whether it would go direct to the hospital, or just what it 
would-- 

Morris: Or to the surgeon? 

EA Cutter: To the surgeon himself is how it was marketed. 

Morris: Did that lead to other prosthetic devices? 

EA Cutter: Well, other heart valves and then, later on, to Joint 
prosthetic devices. 

Morris: Opening up a whole new market. 

EA Cutter: Yes. We're getting out now of the joint thing. We don't 
think it's a field we want to stay in. 

Morris: They're actually manufactured by Cutter? 



70 



EA Cutter: Yes. 

Morris: That must have meant a whole new bunch of skills in production 
and machinery? 

EA Cutter: Yes, it did. 

Morris: Is the prosthetic line a matter of prestige, or is there 
enough volume of sales to make it profitable? 

EA Cutter: Well, very much prestige. There is a very good volume and 
it's a new field that is opening up. 

Morris: And with good prospects? 
EA Cutter: Potentially good prospects. 

Morris: For rebuilding whole human beings. Is that where we're 
headed? 

EA Cutter: Well, rebuilding whole cardiac systems. 

Morris: Yes. Lyndon Johnson might have stayed with us longer if 

somebody had done something on his heart system. His death 
was really a surprise yesterday. 

I think that covers all of the questions I have. Is 
there something that I've missed that you'd like to put in 
the company history? 

EA Cutter: I don't think so. I think you've done a very thorough job. 

Morris: Well, I enjoy this. Cutter Laboratores is a fascinating 
prize example of American business growth. 

EA Cutter: Well, thank you. It's been interesting on this side. 



END OF INTERVIEW 



Berkeley Gazette 
Berkeley, California 
Wednesday, August 13, 1975 




is mourned 
of age of 72 

Edward A. "Ted" Cutter Jr., re 
tired chairm an of the board of Cutter 
Laboratories of Berkeley, died yes 
terday in an Oakland hospital follow 
ing a longlllness. He was 72. "c v • 

Mr. Cutter, a long-time officer of 
the company founded by his father in 
FYesno in 1897, was a member of the 
board and honorary chairman at the t 
i time of his death. 

He became in charge of marketing 
. and finance in the 1930s when, after « 
^his father's death, he and two 
. brothers assumed control of the then 
family business. ' 

Mr. gutter subsequently became 
vice president of the company, then . 

(Cont. on Page 5, Col. 5) ' 
' 



^W^'^^^^V^^M^^M ^^r^BM&i*V »f^^H^»Wi^^n » ^J 

1 ^^^Br ilJ 

CUTTER 

(Continued from page 1) 

executive vice president, and finally 

chairman of the board in 1973. 
.Cutteri.Laboratories became a^ 
' publicly held corporation^] 1955, and 

ui 1974. it' was acquired by Beyer A. 

G. of West Germany. 
Through Mr. Cutter's leadership, 

Cutter. Laboratories became a 
' leader in blood plasma f ractiona- 

tion, a process in which blood plasma 

is broken down into its different 
' components for specialized use. The 

laboratory is still considered aj 

leader in that field. ; ' 
Mr. Cutter, who was called "Ted" 

by his associates and friends, was a 

former resident 'of Berkeley before 

moving to Oakland many years ago. 
,' He was a native of Santa Cruz.' 
Private graveside services w 

held today at Sunset View Cemetei y . 

- He is survived by his widow. 

Roddy C. Cutter; a daughter, Carol 

Cutter of Oakland; a son, Edward ' 
£ Cutter III of Oakland; and fi 
j grandchildren. 
i. • • . • • 

/ iJMBHBH 



San Francisco Chronicle 
San Francisco, California 
Wednesday, August 13, 1975 



C * L 

Services for 

Edward A. 

. 

Cutter Jr. 

Private family services' will 
be held today (Wednesday) for \ 
Edward A. Cutter Jr., retired \ 
chairman of the board of Cutter - 
Laboratories in Berkeley. 

Mrv Cutter died yesterday at 
Merritt Hospital in Oakland. He 
was 72. 

A graduate of the University 
of California at Berkeley, Mr. . 
Cutter made his home in Berkeley 
and Oakland for most of his life. 

He joined the family firm 
after graduation and became ex- ' 
ecuttye vice president in the mid- 
19508L In 1973, he served as chair 
man . of the board for" several 
months before his retirement 

.He is survived by his wife, - 
Roddy, Of the family home at 161 
Alpine terrace in Oakland; a 
daughter, Carol, and a son, Ed 
ward, both of Oakland; and five 
grandchildren. 

The family prefers contribu 
tions to a San Francisco founda 
tion that researches causes 
blindness— That Man May See 
Kirkharn street. 



ada- 

of ; 

.95 



The Bancroft Library University of California/Berkeley 

Regional Oral History Office 



Howard M. Winegarden 
INTERRELATIONS OF RESEARCH AND PRODUCTION 



An Interview Conducted by 
Gabrielle Morris 



© 1975 by The Regents of the University of California 




Howard M. Winegarden 
ca. 1945 



TABLE OF CONTENTS - Howard M. Winegarden 



INTERVIEW HISTORY 

1. WORK AND STUDY AT CALIFORNIA INSTITUTE OF TECHNOLOGY AND 

CUTTER LABORATORIES 71 

2. RESEARCH DEPARTMENT EMERGES 75 
First Assistants 75 
Improved Veterinary Vaccines 76 
Human Biologicals 78 
The Cutter Brothers 81 

3. GROWTH OF CUTTER LABORATORIES 83 
Dr. Bob Becomes General Manager 83 
Building a Good Research Staff 84 
Organizational Changes: 1945 87 
Cordial Relations with the Competition 89 
Long Range Visions 91 

4. MAJOR STRIDES IN RESEARCH AND PRODUCTION 93 
Work with UC Scientists Meyer and Boynton 93 
Alhydroxide* Process 95 
Blood Fractions 95 
Penicillin 98 
Production Capacity Mushrooms 101 
Intravenous Solutions and Administration Sets 103 
Quality Control Concerns 106 

5. OTHER DEVELOPMENTS 109 
Choices: Antibiotics, Blood Fractions 109 
Pure and Applied Research 

Poison Oak Extract HI 

Patents 113 

Polio Vaccines 115 

Early Retirement 117 



INTERVIEW HISTORY 



Howard M. Winegarden was interviewed as the biochemist who came to 
Cutter Laboratories as a graduate student and stayed to organize and develop 
its research capability into a department recognized throughout the industry 
for its competence in the increasingly complex process of developing scienti 
fic discoveries into usable remedies for men and animals. 

A single interview was held on January 11, 1973, at Dr. Winegarden *s 
pleasant contemporary home on a hillside in Moraga, a suburban community 
twenty miles from the laboratory he headed. Succinctly he recounts not only 
the growth of the company's research ability but also his satisfactions in 
seeking and selecting talented additions to his staff. 

The transcript was reviewed by Dr. Winegarden and approved with minor 
revisions and additions. 



Gabrielle Morris 
Project Editor 



17 December 1974 

Regional Oral History Office 

486 The Bancroft Library 

University of California at Berkeley 



Date of Interview: 11 January 1973 



71 



1. WORK AND STUDY AT CALIFORNIA INSTITUTE OF TECHNOLOGY 
AND CUTTER LABORATORIES 






Winegarden: I'll give you my background and work right up to the time that 
I came to the Cutter Laboratories. My undergraduate work was 
taken at the California Institute of Technology and I majored 
in chemical engineering. In my senior year, a group of people 
came down from the north to see if we would be interested in 
making insulin, which was then not on the market, half of it 
to be used in clinical trials and half of it spent in trying 
to find the structure of insulin and synthesize it. Dr. Noyes, 
in charge of the division, asked me if I'd like to work on 
research on insulin and get a little pay for it and then com 
plete my education a little later in the summer. So, I got 
into insulin research. 

Morris: Who were the people who came down from the north? 

Winegarden: Oh boy! [Pauses to think] There was an automobile distributor 



from Seattle whose wife was very sick with diabetes, 
remember his name. 



I can't 



Morris: 



Winegarden: 



So this was a group of citizens who were concerned with the 
problem of diabetes? 

With the problem of diabetes, that's correct. It [insulin] 
wasn't on the market. It had been discovered at the University 
of Toronto. So, I said, "Sure." I liked the research and that 
is the reason that I shifted from chemical engineering into the 
field of medical research. It was a long-time picture. 

So, I was the chore boy. There were two graduate students 
and I who were in the group and I was the chore boy who made 
all of the insulin. Half of it was used for people. I partic 
ularly remember little Jimmy, who was seven years old, who'd 
never have made it in those days . When he survived through 
insulin treatment, that gripped me as the field I wanted to work 
in. 



72 



Morris: It really must have been very inspiring for a student. 

Winegarden: It was. I had had a sister who worked years before at Cutter 
Laboratories and knew about the firm. I decided I would come 
up and see the Cutter people. A friend of mine wanted to join 
me in making insulin and selling it through Cutter and so I 
came up to see them. 

I came on September 20, 1923, and it was the day of the 
big fire. I thought they sure had big brush fires here, but I 
found out it was something else. Anyhow, I talked with Mr. 
Twining and he talked with the ones who were in charge of the 
company then. I believe it was Mr. Cutter and Mr. Rahill, 
Mr. Twining and Mrs. Sattin — four of them. Their reaction was 
they were not set up to market insulin, but how would I like to 
work for them in research? They had never had a full-time 
research man. 



Morris: 



Winegarden: 



Morris : 
Winegarden: 



Morris: 



Winegarden: 



This is something that Dr. Bob said his father had been looking 
for for a long time. He wanted a well-trained person to do 
research. 

Well, they took a chance on me, because I was only college- 
trained and in another field. [Laughter] They had had two 
men with doctorate training working in the production depart 
ments who did some research. 

Who were they? 

They were important men. One of them was Selman Waksman, who 
later on developed streptomycin and, I think, was a Nobel Prize 
winner. I'm not sure of the other man's name, but it was pos 
sibly Dr. Wright. Neither of the men were directing their 
efforts primarily toward getting out products and so that's why 
they chose a fellow with less training. 

Can you tell me a little bit about your chemical engineering 
training? I would think that would have some application to 
production. 

It was fine in the chemical end of my research later on, but I 
knew no bacteriology. I knew all about chemical purity, but I 
knew nothing about bacteriology. So, I got a hold of Park and 
Williams' Pathogenic Microorganisms and, with the guidance of 
Dr. Harry Poster, medical director of the laboratories, I learned 
my bacteriology as I went along. With the help of Dr. F. W. 
Wood, veterinary medicine enough to work on veterinary products. 



Morris: 



That's kind of interesting, 
tradition. 



Learning on the job is an old 



73 



Winegarden: That's what it was. 

Morris: I'd like to go back and pick up a little bit about how you got 
to Cal Tech. You are a Californian, born and raised? 

Winegarden: That's right. I was born in California, twenty miles east of 

Sacramento and moved south, as a little boy, in 1906, after the 
earthquake. Then in 1907 we moved to Pasadena. How did I get 
to Cal Tech? That's easy to answer. The war was on and I was 
an eager beaver and wanted to enlist. My mother said, "You 
shouldn't do it yet. Wait a while." So 1 did wait and worked 
to get money to go to college. 

Then Cal Tech became the Student Army Training Corps in 
1918 and I did enlist in the army then, but the war was over in 
a matter of months. So, I'm a veteran of World War I. [Laughter] 
All my shooting was done in a rifle range near Cal Tech. That's 
how I got to Cal Tech. I had originally planned to go to Davis. 
I wanted to work in agriculture. I wanted to be a scientific 
farmer, so I chose civil engineering as the closest thing to it 
and my first year in Cal Tech was civil engineering. Then I 
liked chemistry so well that I shifted to chemical engineering 
and was heading for, probably, working in the oil industry when 
this insulin research came up and that shifted me again. 

I came up to Cutter and worked about two years. I was 
always on their payroll after this, but only part-time for a 
while. I was broadly in charge of what research went on. I 
went back to Cal Tech and got a master's degree in organic 
chemistry. Then I came up to Cutter and worked three years 
more and went back and got a doctorate in biochemistry from 
Cal Tech. So, I had two rounds of graduate work and still 
worked for Cutter part-time. 

Morris: and you were the head of the research department while you com 
pleted your studies? 

Winegarden: I was always the head of the research department, because I was 
the only one at the start. [Laughterj 

Morris: Wasn't it unusual at the time for a company to give an employee 
full time off to continue his education? 

Winegarden: It sure was. They not only gave me time off. They gave me a 

stipend too. Well, I did some work consulting-wise. I thought 
they treated me royally! 

Morris: I can imagine. Was this Mr. Twining 's doing, or was it EA Cutter? 



74 



Wtnegarden: I think EA Cutter. I think probably because I was fortunate in 
some of my research on some of the difficult problems that they 
had. I'm thinking of diphtheria antitoxin/ tetanus antitoxin 
production and the toxoids and things like that. There was a 
lot of literature available and I had a lot of coaching from 
the men around me, but we were able to make some real advances 
with antitoxins, cost-wise and quality-wise, and with the 
preparation of toxoids and the diphtheria, tetanus, and pertussis 
combinations. 1 pioneered the toxoid work at Cutter. 

Morris: Was that your work, the putting the three together? 






The opening of the San Francisco-Bay Bridge 
in 1938 was celebrated at Cutter Laboratories 
with a costume party, as recorded in these 
photographs preserved and annotated by Dr. 
Vinegar den. 

"I dressed as a wild Mexican cowboy [top right] . . . 
I obtained a horse from our serum barn [lower right 
photo, to the left of Dr. Bob and his bulldog] and 
rode in to the party using a very limited Spanish 
vocabulary." 

Top left: Ida Goodwin in sombrero, Josephine Cutter 
in scarf, Alberta Hawkes holding parasol. 
Lower left: Harold Umphrey with six-shooter and Ed 
Armstrong, Sr. 




75 






2. RESEARCH DEPARTMENT EMERGES 



First Assistants 



Winegarden: Yes. I pioneered the work. Then, right along with this, so 
you have the background, they saw we were getting on well and 
wanted me to get a helper. I said, "All right." Of course, 
in those days, you didn't go out from a small firm — I think there 
were fifty people in it when I joined--and hire a highly 
trained bacteriologist. They were actually afraids of Ph.Ds 
because they had been so theoretical. I almost had to hide 
my degree! [Laughter] They hardly wanted a college man at 
the start for the work that they wanted done, some of them. 

Morris: Because they felt that a Ph.D. was so theoretical that he 
couldn't translate it into terms of production? 

Winegarden: They felt Ph.Ds were so theoretical they couldn't translate into 
practice and they wanted something now and they needed something 
now. So, my work was development. I wouldn't really call it 
research. It was development in those early days. 

The first assistant I had was Frances Westfall. Now, 
Frances Westfall was just a girl working in the finishing room. 
When I was thinking about getting some help, they told me about 
her and said, "Maybe you'd like to talk with her because she's a 
graduate of the University of California in physics." Well, 
that's quite a different field, but she had a good record and I 
talked with her and decided she could do the job and she did do 
the job. So, she was my first assistant. 

Morris: If she was a graduate in physics, what was she doing in the 
finishing room? 

Winegarden: She just wanted a job. She used to come to the lab in a Packard 
and they said, "Well, she doesn't have to work. What's she doing 
here?" [Laughter] I guess her dad took care of her. She took 
her first two years at Radcliffe and her last two years at Cal. 



76 



Winegarden: 



Morris: 



In those days, they couldn't figure why a girl like that would 
want to come, but she did. She was bright and did good work. 
She stayed with us until early retirement. 



Was she a Berkeley family? 
tfestfall. 



There's still a physician named 



Improved Veterinary Vaccines 



Winegarden: 



Morris: 
Winegarden: 

Morris: 
Winegarden: 



Her folks were from the east. Her father was with one of the 
railroad companies. Where was it? Minneapolis, I think. She 
was out here alone and her mother came out later. 

The second assistant was Roland C. Hawes. Since one Cal 
Tech engineer had gotten along all right, I thought another 
one might, so I got Roily Hawes. He and Frances and I, the 
three of us, worked on the combination of toxoids together. 
We were the crew for that and also for two veterinary products- 
one in particular--Blacklegol*. First they immunized animals 
with aggressin, which was prepared from the tissue juices of 
animals that had died of blackleg. Then the bacterial vaccine 
came out and we worked on improvement of the bacterial vaccine, 
both from the standpoint of improving the liquid part of the 
vaccine--it had immunizing potency--and the bacteria. Then we 
added an adsorbent agent to it, which made our Blacklegol*. We 
had a superb product with that combination, giving excellent 
results. 

Now, you might be interested in this. People don't realize 
how much trouble it is to develop such products. In three years' 
time, in developing our Blacklegol , the three of us used ten 
thousand guinea pigs! 

What an incredible quantity! 

Fortunately, they cost fifty cents apiece in those early days 
and not five dollars! 

You didn't raise them yourselves? 

Oh, no. We got them from several producers. Now, the reason 
that we had to use so many pigs was you couldn't learn anything 
without putting ten animals — because of individual, biological 
variation — on every dilution of every product. Suppose we had 
three dilutions and we had four things we wanted to test. That 
would be twelve preparations, and would require a hundred and 
twenty animals in that one test, plus ten controls, of course, 



•Throughout this interview, use of an asterisk denotes a 
registered trademark of a pharmaceutical product or equipment 
manufactured by Cutter Laboratories, Inc. 



77 



Winegarden: that wouldn't be protected, and would mostly die. It wasn't a 
real sharp, clean-cut test like those given by the toxins and 
toxoids. 

Morris: What do you test the toxins on? 

Winegarden: Guinea pigs. That was the standard test of the United States 
Public Health Service. The weights were specified for both 
diphtheria and tetanus. 

Going on with our veterinary products, since we were pri 
marily on them at that time, we worked on hemorrhagic septi- 
cemia in more of a minor way as another bacterin vaccine, mak 
ing improvements using many of the techniques employed with 
Blacklegol*. Later on, I worked on anthrax vaccine, starting 
with the product Dr. Fred Wood had developed, and improving it 
by adding aluminum hydroxide suspension, making Qiarbonol*. 
But that I did alone. 

Morris: The anthrax? 

Winegarden: Yes. Anthrax. I was in the lab alone. Now that's, you know, 
a kind of dynamite, dangerous for humans. I think the most 
dramatic experience I had with Charbonol* was this. First, 
we had to test it on sheep, and we got two dozen sheep. Sheep 
have to know you. You can understand what it says in the Bible 
about sheep, because, for a while, 1 couldn't get normal tempera 
tures at all. They were wild. But when they got to know me and 
to know my voice, they settled down and I could get normal 
temperatures and proceed with tests. 

The key experiment was this. After we had done our pre 
liminaries on smaller animals, we took two sheep as controls, 
receiving no vaccine, and gave five sheep Charbonol*. We got 
a suspension of virulent anthrax spores— and were they hot!-- 
and diluted it ten million fold— 10 7 --and gave two cubic centi 
meters to the controls and they were dead in forty-eight hours. 

Morris: You really had a very powerful strain. 

Winegarden: The vaccinated sheep lived, all five of them. So, the two con 
trols just went boom and the others all lived. Then I wondered 
whether 1 had any scratches on my hands where I'd been working 
with the stuff. [Laughter] Then, of course, we field-tested 
it. Dr. Wood went out with me and we field-tested it and it 
looked good in the field too. 

Morris: So you would be working on things that Dr. Wood and Dr. Foster 
were concerned with? 

Winegarden: Oh, very much. 



78 



Morris: 



Winegarden: 



Morris: 



I'm unclear as to what the relationship was at that point, 
research a separate department? 



Was 



It was a separate department completely. I would have reported 
to EA Cutter if I'd reported to anybody, but he wasn't around 
too much. He wasn't very well a lot of the time. I really 
worked with these three men: Mr. Twining, who was vice-president, 
Dr. Foster, and Dr. Wood. I just went back and forth with them. 
They told me the field they wanted me to work in, but they didn't 
tell me what to do particularly. I mean, I had a very free hand. 

They were responding to the requests they were getting from 
customers or salesmen? 



Human Biologicals 



Winegarden: Yes, that's right. That would be it — you'd go back to the sales 
department, for their reactions--! *ve kept you on veterinary 
products. Do you want me to swing into human biologicals? It's 
close here. Maybe I'd better. 

The first major products that I worked on were diphtheria 
and tetanus antitoxins. Diphtheria antitoxin for therapeutic 
use, for treatment, was the biggest single product when I came 
to the laboratory, volume-wise. It was a very important 
product. 

Our goal was twofold: first to get the horses to a higher 
level, immunizing them so their blood plasma had more potency, 
more units per cc, and, secondly, to purify it further so that 
there would be a minimum of reaction from the nonspecific pro- 
tine associated with horse antitoxin. Those were the goals. 
And, of course, there was a third goal as we purified antitoxin 
further—it made a beautiful product. 

Morris: More reliable? 

Winegarden: Beautiful as to physical appearance and smaller volume. We 
got that fine product and I thought we'd immediately go east 
as a little, western firm and get the market, but they just 
dropped the price on their most highly purified antitoxins. 
[Laughter] 

Morris: The competing price? 

Winegarden: Yes. The big competing firms like Parke Davis and Mulford and 
others, so we heard, said, "Well, now, we've gotten our anti 
toxin as good as Cutter Laboratories'." So, we led the way to 
the best quality of antitoxin at that time. 



79 



Winegarden: In starting work on the antitoxins, I, of course, began looking 
for what we could find in the literature. There was some good 
work on the potency of the serum of the blood of immunized 
horses, and I found the best published literature in England, 
was the work of A. I. Glenny and his associates at Wellcomb 
Laboratories. And perhaps the best of all was the work that 
came out of the Pasteur Institute in Paris. 

And now, an aside. Years before, on tetanus antitoxin, 
Cutter Laboratories had a horse that was 1,500 units and no 
one in the East would believe it because the unitage in those 
days was 300 or 400. 

Morris: You mean you got 1,500 units from one horse? 

Winegarden: Fifteen hundred units per cubic centimeter of serum in a horse, 
it went that high. I may be too technical for you here. 

Morris: I follow you. But my reading is that you were drawing the serum 
from the horses. 

Winegarden: Let me give you the background. We immunized the horses with 
small amounts of toxin, but would eventually get up to big 
doses. We'd make 300 cc, 400 cc, and 500 cc injections of 
that and then draw nine liters of blood at one bleeding and 
separate half of that out as plasma, if you had citrate there. 
We used that usually. In the absence of citrate, the blood clots 
and the serum is separated out after standing. The serum did 
have 1,500 units per cc from this prize horse and no one would 
believe it. 

So, when I was in the tetanus immunizing end, I set about 
to see if I could do it again and find out why. Then I ran into 
French literature which showed that if they injected their horses 
with tetanus toxoid and then let them rest a whole year, there 
was something changed in the basic immunity response of the ani 
mals and their serum potency went way up following toxin injec 
tions. This was all published in French. It came out of the 
Pasteur Institute. 

Morris: Did you have French, or did the journals come to this country 
already translated? 

Winegarden: Oh, no. I used French. This is an aside, too. My speaking 
French was a joke when we went traveling to Europe in '58. 
I'd gotten good enough with a scientific vocabulary to read 
French articles and dictate to my secretary in English with 
a little help from a dictionary. Maybe it wasn't a perfect 
translation, but it was the technical information that gave us 
fine results in horse immunization. When I went to France, I 
couldn't talk to a kid in the street. [Laughter] 



80 



Morris: When you were in training, a doctoral degree required foreign 
languages, didn't it? 

Winegarden: I was doing this before I had my doctorate. At Cal Tech, I had 
had a little French and a little German, scientific French and 
German. We got it in the undergraduate courses then, but it 
was a smattering, elementary. 

Morris: But you could work on that and you built it up in using the 
journals? 

Winegarden: That's right. 

The immunization results were fine. Diphtheria horses 
never went as high as the tetanus, but they did very well, and 
the tetanus horses were excellent. In fact, we got up to 2,000 
units per cc of plasma finally, with a lot of horses. So, maybe 
that's why they were so generous to me when I went back to 
school. [Laughter] I don't know. 

Morris: They encourage talent. This is one of the ideas that keeps 
coming up in the history of the laboratories. 

Winegarden: That might be it. I don't know how much they want published of 
this, but they helped me with my tuition expenses and things 
like that, both times, although I did some work for them. But 
it was still a handsome pay for the amount of time I spent for 
the laboratories. 

Morris: Was your graduate work directly applicable to the problems you 
were working on for the laboratories? 

Winegarden: No, I can't say that, because it was biochemistry. Well, wait 
a minute. It wasn't directly applicable to immunology, but all 
that work became applicable later on in the things we went into, 
which included, besides microbiology, fractionation of human 
blood products and preparation of intravenous solutions. You 
see, that gets right into chemistry. 

Morris: Was the fractionating of human blood a theoretical problem under 
discussion in the graduate school? 

Winegarden: No. That's an entirely different story. That comes later. That 
starts in 1941. 

Morris: Let's cover a couple of other things in between first. Tell me 
a little bit more about Mr. Twining. He seems to have been a 
very key person in those early years. 

Winegarden: He was the key person. Mr. Cutter was not well and I only saw 

him intermittently. Mr. Twining was always there. He just plain 



81 



Winegarden: ran the plant and put out the wash, as we say. He was it! 



The Cutter Brothers 



Morris: When you were first there in the Twenties, where were the Cutter 
brothers themselves? 

Winegarden: In '23, let's see. Bob worked, of course, as a boy before he 
was on the staff at the lab, but he went back east for his 
doctorate, I think, at Yale. 

Morris: That's right. He went to Yale for medical training. 

Winegarden: He was interested in allergy and he developed the allergy products, 
along with his other work, ,/hen I was working on poison oak, he 
developed the allergy products. He also developed the snake-bite 
kit. 

Morris: That early? 

# 

Winegarden: Well, not quite that early, but he had these two projects, along 
with regular administrative duties. The snake-bite kit was just 
a hobby at the start but became a serious project. Of course, 
the allergy products were in his field — wasn't he practicing 
half time for a short time? 

Morris: For about two years, just before his father died. 

Winegarden: Practicing allergy. So, he knew allergy. He was a specialist 
in allergy. 

Morris: His mother had allergies. 

Winegarden: Oh, I see. I didn't know about that. Then he had a personal 
interest in the allergy field. 

Morris: And Fred and Ted were younger? 

Winegarden: They were younger. Oh, yes. Fred was six years younger and 
Ted three, I think. 

Both Ted and Fred Cutter went into sales when they started 
work at Cutter Laboratories, and I do not recall the dates when 
they began. I was away from the Laboratories for about a year 
(1925-1926) completing work on a master's degree, and a year and 
a half (December 1929-June 1931) working on the doctorate. 



82 



Winegarden: My doctorate studies were under Dr. Henry Borsook. I didn't 
want to go back to Cal Tech until they set up a biology divi 
sion and that was organized by Dr. Thomas Hunt Morgan, a Nobel 
Prize man. He was a geneticist, but it also included bio 
chemistry. Dr. Henry Borsook was my professor; He's retired 
now. He wasn't much older than I wa s then — a couple of 
years — and he was a Ph.D., M.D., from the University of Toronto, 
a very fine, highly trained man. It was under his tutelage that 
I did my doctorate work. 

Now, you were asking me, "Did it have application to Cut 
ter?" I studied under him courses in vitamins and nutrition. 
But my own thesis didn't seem very close to Cutter, really. 
I was the junior author of four papers with Dr. Borsook. One 
was on a spectrophotometric study of blood, where you look for 
variations in hemoglobin—from various sources. It's close to 
the blood picture. Another paper was on kidney function and 
the specific dynamic action of protein. 

It was just good, basic training, I would say, broadening 
a person's knowledge. It wasn't directly related to the Cutter 
research. 



83 



GROWTH OF CUTTER LABORATORIES 



Dr. Bob Becomes General Manager 



Morris: So that when you came back from finishing your doctorate, Dr. 
Bob had taken over as general manager of the firm. 

Winegarden: In '31. I'm quite sure he had. Mrs. Cutter was president. He 
was general manager for a while. Then he was president and she 
was chairman of the board. 

Morris: Did you notice any particular difference in the way the company 
was run or in the territory they were interested in when Dr. Bob 
took over? 

Winegarden: Well, I think he was very sound in his handling of it. He saw 
that they balanced the budgets and that's something more than 
we do today in the national government! [Laughter] I think 
he did a fine job of taking this small, struggling company and 
keeping it on the beam while we developed. 

Morris: Did Cutter go into insulin? 

Winegarden: They did not. They turned it down because of not having the 
marketing potentiality. 

Morris: I see. But then they did go into hospital solutions early in 
the Thirties? 

Winegarden: Oh, yes. Now, that's a story also. 
Morris: Would that be you and Dr. Bob? 

Winegarden: That would be Dr. Bob. He called the shots of what we wanted 
and I developed it. Yes, I was involved in developing the 
products. Now, here's where chemical engineering came in handy, 
you see. My training was ideal, because it required special 
equipment and I worked on, oh, everything. I discussed our 



Winegarden: 



Morris: 






problems with Rice and Adams in Buffalo, New York, and ordered 
the first bottle washer in 1941. 

One of the things that I've discovered in reading the records, 
is that the laboratories have also developed a lot of the 
equipment. 



Finding Good Research Men 



Winegarden: That's right. Let me give you the research organization, so 
you'll fit it in here. In about 1938, I think, I talked to 
the Cutters and said, "If we're going into viruses—" and 
viruses were coming up, equine encephalomyelitis and some other 
important virus products--"We don't have properly trained 
research men for this and I can't make a go of this unless I 
can get a good man. " They gave me an open hand to look and 
this I appreciated very much. In fact, if you want to know 
it, this was a very important part of my work at Cutter. 
Fred Cutter told me the most important single contribution 
I've made to the company, as the years rolled by, was getting 
good men. So, I did a lot of scouting. 

It was a problem to locate these Western universities 
that had good graduate schools covering our special fields 
of interest. I found that the University of Washington in 
Seattle, was strong both in virology and pharmaceutical chem 
istry. I located Dr. K. S. Pilcher, a fine virologist, through 
the University of Washington. He joined our research depart 
ment in 1939. In 1941, Dr. Frederick F. Johnson joined our 
research group. He was doctorate trained in pharmaceutical 
chemistry at the University of Washington and had also carried 
on post-doctorate research at the Mellon Institute. So, these 
were the first two key men that I secured for research. 

Morris: Let me ask you this. You mentioned the virus s tudies coming 
up. Did you have any contact with the State Department of 
Public Health on that? Some of their people were doing research 
on encephalomyelitis. 

Winegarden: We knew Karl Meyer very well, but our work with him involved 
plague vaccine, sterilization to kill anaerobes, etc. 

Morris: Malcolm Merrill is one that I've talked with who did some work 
on the encephalomyelitis. 

Winegarden: Well, some of our people probably did. I didn't personally. 
When I got Dr. Pilcher, he took care of our virus research. 



85 



Winegarden: Dr. Johnson's addition in 1941 filled a key spot in our rapidly 
expanding research program. I had to get behind a desk full- 
time about '41. Before that, I'd stayed in the lab all I 
could. I'm a lab man at heart. Of course, I wasn't in all 
the time, but I did a lot of laboratory work up to 1941. 

I'm not quite sure of the timing of this, but I suppose I 
was director of research when I had a couple of assistants. 



Morris: 



In 1924, it's in the records. 



Winegarden: Well, that's when I had my first assistants. But when these 
men came, then we had big enough groups, in different fields, 
to have department heads. So, Dr. Pilcher was made director 
of biological research and Dr. Johnson was made director of 
chemical research in '41. 

Dr. Herman Beniams came later. Now, Dr. Beniams is a 
brilliant independent research man. He hasn't had a group 
under him. When I got Dr. Beniams, I went to the University 
of Colorado in search of a biophysicist— an uncommon field at 
that time. I told you I did a lot of scouting for people. I 
went to the University of Colorado to talk with his prof, from 
whom he had just gotten his Ph.D. in biochemistry. Earlier he 
had obtained a master's degree in physics from a university in 
Utah. His prof told me that when he came up for his doctorate 
exam, he knew more about math than the man who was asking the 
questions. [Laughter] In other words, he's a genius. His 
wife used to .have to look out for him so he didn't get lost in 
his work. He'd forget almost to go home. He's just a plain 
genius. 

So, we got Herman Beniams for biophysics and then we got 
into electron microscope studies. That's virus work and we also 
used him for electrophoresis. In all of these projects involv 
ing biophysics, he was our key man. He reported to me also, at 
that time. 



Morris: 



1_11U U V *,IIISi • 

When you went on these scouting expeditions, did you have a 
regular, annual pattern of traveling to talk to the various 
university staffs? 



— v 9 

university staffs? 



Winegarden: I found the universities that I thought had men trained in the 
fields we wanted. Those were the days when you could do it 
easily. You couldn't doit that way any more. They're too big. 
But I'd get acquainted with the man who I thought was the best 
prof to talk within that department of the university related 
to our work. 

Morris: And then ask him who his key students were? 



86 



Winegarden: Who his key students were and told him what we were and who I 
was. I had to sell the company, of course, to them. It was 
a little company. Growing, true, but was small. Up in the 
University of Washington, Fred Johnson's father, Dr. Charles W. 
Johnson, was in charge of the college of pharmacy then and I 
talked with him. He suggested different people and then he 
mentioned his son Fred Johnson, who was at the Mellon Institute 
then. We got him from there. 

Morris: When you found somebody who was really promising, would you 
make a place for them at Cutter? Did you have enough funds 
to do this if you found a really hot young man? 

Winegarden: In the field we worked, that's right. We'd make a place for 
them if they were real good. We could only take on a few 
within our relatively limited budget. But the budget was 
generous. I don't know exactly what it was. It might have 
been 5 per cent of sales for a long time. It was a lot of 
money for the size of the company. It was generous. 

Dr. Pilcher—let's see. I talked with several people up 
there. Dr. Henry was, I think, the head of the department of 
microbiology, but Dr. Rachel Hofstadt was the chief virologist 
there. Anyway, Steve Pilcher was recommended highly to me and 
it was no mistake. He's a grand fella, just a grand fella. 
He's at Oregon State University now. He decided later on to 
go back to university work. I was sorry to lose him, 
naturally. 

The other man, who was a key man, came later—William H. 
Corcoran. Now, let's see if I can give you the timing. We 
got Bill, I think, in 1941. He had been turned down by the 
navy because he couldn't pass the eye test and he didn't know 
what to do. Then he thought that our work was related to the 
war, and it was, so he worked for us for several years. Then 
he went back and got his doctorate. After the war, he came 
with us for a while and the men under him worked on the 
development of the appliances and some of the equipment. 

Bill was an outstanding fella. When Steve Pilcher left, 
I'm sure they were grooming him for my job, my successor, for 
he was about twenty years younger than I. But he went back 
to Cal Tech later on. He's got a fine job there and he likes 
the educational field best. But anyhow, while he was here, he 
was director of development — this is when I was vice-president-- 
and Steve Pilcher was director of research. These two men were 
my key men then, you see. You see how the structure's sort of 
changed a little. 



87 



Organizational Changes : 1945 



Morris: This structure changed as the personnel increased? 
Winegarden: Increased, that's what it was. Yes, you're right. 

Morris: As you went into these different areas of research, you needed 
a specialist in charge of each. 

Winegarden: Yes. Now, I don't know if you want to get into this facet, but 
since you're following my personal activities, I should throw 
it in. In 1945—1 think in October — I became vice-president 
for production and research. 

Morris: That is an interesting title. 

Winegarden: The company, at that time, had— let's see— four departments 

for plant operations. The quality control departments reported 
clear up at the top, because it's so important. So, we had a 
medical director, a veterinary medical director, the person in 
charge of production, and the person in charge of research. 
Four things— medical control, veterinary medical control, pro 
duction, and research. The heads of these four departments, 
then reported to me. In fact, I had about half the company, 
if you like, because I didn't have sales, advertising, or 
finance, or personnel. So, I had just about half. 

Now, I'm not quite sure why, but maybe one reason was 
Ted Cutter, who was executive vice-president, I think, then, 
was having an awful time with his eyes. He's had a struggle 
with eye trouble for years. 

Morris: I understand that. I haven't talked with him yet, so I don't 
know the history of it. 

Winegarden: Yes. You should get more on this from Or. Bob, because he'd 
know why also. But I had that job for about five years. 

Morris: And Ted Cutter was, what, your opposite number? 

Winegarden: He was my boss. No, I reported to him. As a matter of fact, 
there was a time, it seems to me, when I reported to both Fred 
and Ted. It was a curious set-up. Later on I reported to 
Fred rather completely. 

Morris: They kind of changed functions, it seemed to me. 



88 



Winegarden: 



They did. But I no longer reported to Dr. Bob. 
of his brothers. 



It was one 



I was talking earlier about seeking key employees. Here's, 
then, where I said again, "Can't do it without a good produc 
tion man," and they gave me the rein to go look. I got Ted 
Nitche, a fine, experienced production man, and he got some 
very good men, one of whom was Bob Sandberg. When Ted Nitche 
left and went east, Bob took over production and eventually 
became vice-president for manufacturing. Bob Sandberg is also 
a Cal Tech man. We didn't get him for that reason. We got 
him because we were working then with Booz Allen and Hamilton, 
a consulting firm, and they gave us no end of help, including 
the selection of key personnel. 

Morris: They helped on selecting? 

Winegarden: They gave us prospects from which to select. 



Morris: 
Winegarden: 



Morris: 
Winegarden: 



Morris: 

Winegarden: 

Morris: 

Winegarden: 



In other words, you were looking for-- 

We were looking for some key men, but that isn't their major 
business. Their major business was to tell us how to run our 
company. It was broad. Dr. Bob worked right with them. Mr. 
Booz came out once, but they sent several men out. 

Yes, management studies. 

Management studies, correct! And they gave us prospects. In 
fact, I approved of Ted Nitche' s hiring Bob Sandberg for an 
important place in production. You see, I had my hand in that. 
And there were other men. 

Now, I didn't hire Norrie Casselberry. You might think 
I hired men for all key spots. Somebody else got him. Dr. Wood, 
maybe, found him, or one of the Cutters. But I did have a hand 
in selecting Harry Lange, with Dr. Bob. He was my recommended 
choice. Of course, I didn't hire him, naturally. 

That's interesting, because his work has been primarily in 
finance and administration rather than in research and produc 
tion. 

Finance, that's right. 

Was he a result of the Booz Allen and Hamilton selecting? 

Yes, I think he was. I think we looked at three men. Harry 
was thirty-nine at the time, I believe, and he was in a war 
business that didn't look too promising. While Harry didn't 



89 



Winegarden: have all the formal education in finance, he had a lot of get-up- 
and-go. He surely did! And he had developed a very strong 
financial division of the company too. He's one of the board 
of directors at Cutter now. 

Of course, I selected Dr. Foster's successor. He was 
nearing retirement when I became vice-president for production 
and research. 

Dr. Walter Ward had ideal training for the duties of 
medical director. He had a doctcrate in microbiology as well 
as his M.D. He served under me as medical director for several 
years. Then, later on, I became vice-president and scientific 
director and I only had the scientific end of production and 
control and I had the research division. That was a shift, 
you see, away from the broad field. I didn't have to get out 
the wash any more. [Laughter] It was a lot of fun, though, 
to handle production in a small company. I loved it. This 
period of my work again illustrates how the Cutters gave me a 
free hand--and perhaps that's what I've enjoyed, among other 
things, the most. 



Cordial Relations with the Competition 



Morris: 



Winegarden: 



Morris: 



You were saying that you appreciated the laboratory giving 
you a free hand when you were in the administrative end, 
and as vice-president. 

This is going back in history, but I think I should tell it 
to you so you have it as background. The laboratory gave me 
a very free hand also in letting me visit other plants in the 
east and this goes beyond just looking for personnel. Through 
the contacts made, I guess, by our medical director, Dr. Harry 
Foster, I was able to visit several of the major pharmaceutical 
firms in the east and talk with their key men and they showed 
me as much as they wanted to. I visited Abbott, Parke Davis, 
Lilly, and Squibb, and then the New York State Department of 
Health and, I think, the New York City Department of Health. 
Dr. Foster had had contacts with them and we'd swap knowledge 
back and forth in the vaccine and antitoxin fields, as much 
as they wanted to tell me. They were very nice to me. 

That's interesting, because, from the outside world, the view 
is that the pharmaceutical industry is secretive, you might 
say, that they guard their own ideas very carefully. 



90 



Winegarden: 






Morris: 



Winegarden: 



Morris: 



Winegarden: 



Well, they have to guard their ideas for this reason. It costs 
a huge amount of money to get an idea developed into an effec 
tive product that is safe to use and that's why some firms will 
spend up to as much as 10 per cent of their sales budget— a 
fantastic amount--in the development of products. Not only do 
you have to get a product that you're sure is right, you've 
got to prove it's right to the controlling agencies of the 
government and then get something to tell the doctors so 
they'll want to use it. So, that makes it important to get 
patent protection or maintain a measure of secrecy. 

Well, on these trips, referring back now--there were two 
of them, one in 1934 and one in 1939. I spent a total of ten 
weeks on the first trip and six weeks on the second trip. They 
paid all my personal expenses, but I wanted Ruth, my wife, along 
with me just for company and also, she could help me. So, she 
went along and I used to dictate to her what I had learned at a 
plant as we'd go between places. I was driving the car and she, 
with a typewriter, would type it down as I'd dictate as we went. 
That's the way we handled it and then I wrote a letter to Dr. 
Bob every so often, as we visited these various plants. 

The last two weeks of each of these trips, as we stopped 
at points of interest on the way home were considered vacation. 
I also attended, on these trips, scientific meetings of real 
value. An International Microbiological Society meeting was 
held at the Waldorf Astoria Hotel in New York in 1931. In 
1939 an international veterinary congress was held in New York 
also. I also attended the national meetings of the American 
Chemical Society during each of these trips, and in 1939 I 
spent a day with the Biological Control Division of the National 
Institute of Health in Washington, D.C. (Our biological products 
were licensed for sale under them.) In other words, I would 
take in what meetings there were in the east that were pertinent 
to what I was trying to do at Cutter Labs and also visit some 
competitive plants; they were very nice to me. 

So that you've got a combination? Each company keeps its 
ideas to itself, plus there are other areas in which they're 
eager to exchange ideas? 

They would swap ideas because they knew who we were--we never 
tried to spy anything. They knew just what to tell us and 
what not to tell us. 

What kinds of things would you share ideas on? 

Oh, we'd look at their quarters, say, for producing antitoxins 
and toxins and maybe later on their packaging operations. We 
discussed equipment sterilization and a wide variety of 



91 



Winegarden: procedures. But I was careful not to ask them questions that 
would be embarrassing--! didn't pump them and make a nuisance 
of myself. 

Morris: It must be a nice diplomatic distinction. 

Winegarden: Well, I wanted them to know that I was playing the game fairly 
and there wasn't anything done that wasn't fair. I enjoyed 
it and I enjoyed their company. Later on, I went to the 
yearly drug manufacturers' meetings where you'd meet the 
research men in these various companies in greater numbers. 
There was a free discussion of research methods and problems 
common to the drug industry. I attended several of those 
meetings and they were a very friendly group. 

Since I was looking for very capable men, when I went to 
these large pharmaceutical companies, I'd always study their 
personnel. They were good firms and they did well. I'd ask 
myself, "Now, what do these people have in men? How competent 
are these men? What do they have that we don't have that 
they're so large, except experience and time — started earlier?" 
Maybe I was a little over-confident, but I came back telling 
myself and probably Dr. Bob, "They have no supermen. If we'd 
look far enough, we can get as good men as they have and do 
just as good a job." And that was my attitude all the time I 
was at the lab. 



Long-range Visions 



Morris: So you and Dr. Bob were thinking as early as the Thirties 
that Cutter could maybe become one of the leaders in the 
industry. In size, become one of them? 

Winegarden: Well, not the biggest one, but do a real job and get the market 
in the west. Then we went, of course, national when we got 
into the solutions business. But get a good chunk of the market 
in the west--that was my major approach. 

Here's another thing I did. Even back in the Twenties, 
in '29, I began to study on the side, when I was doing other 
work, population curves, the number of babies born in dif 
ferent states and that sort of thing to see what the market 
might be, not that I'm a salesman. I'm not. 

Morris: That takes planning, too. 



92 



Winegarden: Yes. It was the planning end of it. So, I did that. Then, 
later on--this would probably be starting in the Forties 
I began to study the financial performance and all I could get 
from Moody 's reports on the best companies. Oh, I had Abbott, 
Parke Davis, Squibb, and others. This is when we were having 
coordinating committee meetings and I was getting more into 
policy decision discussions of the company's future. So, I did 
an awful lot of work on that. They were again very generous 
to me and gave me a free hand and I used my secretary a great 
deal for compiling reports and statistical summaries of the 
business of these companies. It was very fascinating. 



93 



4. MAJOR STRIDES IN RESEARCH AND PRODUCTION 



Work with UC Scientists Meyer and Boynton 



Morris: Could we go back a little bit, then, and talk about some of 
the research areas? You mentioned that plague research was 
the area in which you worked very closely with Karl Meyer at 
the Hooper Foundation. 

Winegarden: Our people just simply made it. He did the dangerous work and 
we did the vaccine-making work. I personally did very little 
on that. It would be just a case of them telling us what to 
do and our doing it, virtually. 

Morris: Why were we doing plague research? 

Winegarden: That's a good question. I think it was for the military. 
It wasn't for an outbreak here, and I think it was for 
military needs. 

Morris: Were there any other contacts with Dr. Meyer? He's one of the 
great names in medical research in the twentieth century. 

Winegarden: We must have contacted him on numerous projects, I would think, 
as well as plague. He was an expert in fields involving several 
of our products. I didn't personally contact him very much. I 
did occasionally. 

Morris: And he was around? 

Winegarden: Oh, he was around and the Cutters knew him real well, of course. 

Morris Were there other people at the university who used Cutter's 
facilities, or did Cutter ever go to the university and say, 
"Have you got some people who could do some work on this?" 



Winegarden: Not very much. I think there was a cooperative effort with 
Dr. Smith at one time, but not a great deal.** Actually, I 
didn't have much of that contact. You'd have to get that 
from Dr. Bob. I think he'd know more than I would about that. 

Morris: In other words, in your judgment, Cal didn't have the quality 
of training that some of these other universities had? 

Winegarden: Oh, it did later on. Oh, yes! But when I first started out, 
it didn't have men trained specifically in the fields that I 
thought were best for the products that we wanted to develop, 
that's all. Oh, yes, they had fine men, but they didn't go 
into the projects we were most interested in. Now, of course, 
in the veterinary field, we worked a lot with them. Dr. Boyn- 
ton and the tissue vaccine—do you have all of that? 

Morris: I have quite a lot about Dr. Boynton. I'm unclear about 
the financial arrangements. lie was on the staff of the 
University of California, but Cutter would periodically make 
grants to the university for work on veterinary projects? 

Winegarden: He had had a lot of experience, first, with rinderpest vaccine 
in the Orient and that was applied to tissue vaccine for hog 
cholera. It seems to me there was a patent gotten out on that 
too. Anyhow, my knowledge of hog cholera was simply running 
the experiments with the hogs, using some of the things we'd 
learned in other viruses. But the application of Dr. Boynton' s 
findings was basically our program. I didn't do a lot of 
original research. Now, we did get some highly trained men 
for hog cholera vaccine research later. Dr. Winston Malmquist 
did some good research work on the tissue culture itself, but 
I must confess I don't remember the details of that. 



A Ihvdroxide Process 



[Dr. Winegarden wrote the following section 
in response to the editor's written request 
that he explain the process.] 

Aluminum hydroxide was first used at Cutter 
Laboratories to increase the immunity response from 
injections of diphtheria and sterile aluminum hydroxide 



** 



Dr. Charles E. Smith, director of the UC School of 
Public Health. 



95 



suspensions was developed after a study of the 
available related literature. The immunity response 
from injections of diphtheria or tetanus toxoid, 
could be determined with reasonable accuracy by using 
large groups of guinea pigs. With the aid of these 
tests we determined the optimum conditions for increas 
ing the immunizing power of our toxoids by the addition 
of aluminum hydroxide. 

The knowledge gained from this work was then applied 
to vaccines for immunization of calves against blackleg 
infection. Sterile aluminum hydroxide suspensions were 
added to potent blackleg (B. Chauvei) cultures, previously 
sterilized by the addition or formalin. Significant im 
munity response from both the bacterial bodies and the 
liquid part of the killed blackleg cultures were demon 
strated in guinea pigs. The addition of aluminum hydrox 
ide was also applied to another veterinary product, hemor- 
rhagic septicemia vaccine. 

Sometimes later sterile aluminum hydroxide suspension 
was added to anthrax vaccine to obtain a potent product 
(Charbonol*) safer for field use. Our #4 live spore vac 
cine had given excellent immunity, but it was dangerous 
to use on some animals. The addition of aluminum hydrox 
ide suspension to #4 spore vaccine gave a potent but safer 
product, probably due to a slowing down of the release of 
live anthrax spores in the animal. 



Blood Fractions 



Morris: Cutter's work on blood is another fascinating and long-term 
story. You said that that begins in 1941? 

Winegarden: Yes. I can give you the story on the blood work pretty well, 
I think. We had the background of making dried human plasma 
before we started into fractional: ion. That's one of the reasons 
we got into it. We were experimenting with the preparation of 
dried plasma for civilian use before the war broke out. It seems 
to me we had started the dried plasma program two or three years 
earlier and had considerable knowledge. 

As far as the blood fractions go, Harvard Medical School, 
under Dr. Edwin Cohn, had developed a method for fractionating 
human blood so they could get out human albumin and put it out 
in a much smaller package than the dried plasma. It was for 
people in the navy and maybe the air corps and it would serve 



96 



Winegarden: for the treatment of shock due to loss of blood. It wouldn't, 
of course, supply the red blood cells or the plasma anti 
body, but it would do what plasma would do in many cases and 
it was comparatively small in volume and easy to administer. 

Morris: All improvements over the whole blood? 

Winegarden: Yes. That's the start of it. Then, in order to learn that 
process, I went back in May, I think it was, of 1941, taking 
Fred Johnson with me. It seems to me I went with him. 
Possibly, he went before me. Anyway, we were both there and 
we learned the process of blood fractional: ion in the experi 
mental laboratory of the Harvard Medical School. This project 
was under Dr. Cohn's direction. Several other firms were there 
too from the east. We were all learning it together. 

Morris: Had Cutter already gotten military contracts for this, or was 
it on your own interest? 

Winegarden: I'm sure they anticipated contracts. I don't know whether 

they actually had them or not. But the first thing to do was 
learn the process and then say, "Yes, we can make it" and go 
ahead. So, that's what happened. We were there for weeks. 
It was interesting work. 

The fractionation was done at -5° centigrade equivalent 
to 23° Fahrenheit, a little below freezing, you see. You'd 
wear a heavy parka and go in there and work in the cold. 

Morris: In other words, the procedure was sufficiently new that you 
did it and the whole room was cold? 

Winegarden: Oh, the whole room was cold, yes. We just worked in that. 
Well, the net result was you got a beautiful appetite! 
[Laughter] Fred Johnson used to want about four meals a day. 
It was very stimulating. Anyway, we learned the method and 
no one knew much about any problems connected with it, includ 
ing hepatitis. That was hardly recognized in those early days. 
So, we just plunged in and made it, learned the method, came 
back and produced it. 

Then, of course, other products developed. There were 
the antibodies that were fractionated out to obtain immune 
serum globulin. They used it prophylactically against, I guess, 
measles and polio. Following albumin and the globulin frac 
tions, a whole family of human blood products have been 
developed. You'll have to get that from somebody else, because 
it's way beyond me now, but there are a bunch of them. 

Morris: Well, it's the origins of them we're interested in and at what 
point you realized what the potential was. 



97 



Winegarden: Well, it just grew on us as we kept at it, but I can only 
give you that background. From this work grew all these 
products. It's unfortunate Fred Johnson's passed away. You 
could get the whole story perfectly from him, but I think 
you can pick it up from some of the other people pretty well. 

Human blood fractionation yielded, at first, very valuable 
products for the military. Later researches developed a whole 
family of products that have been of real value for us as a 
company and for the needs of people. 

There is a human blood product that maybe I should men 
tion here that we now put out. I talked to you about horse 
immunization--well now, some twenty-five years ago, I guess, 
after the toxoids had been purified, we began to think, "Wouldn't 
it be nice if we could get a human tetanus antitoxin!" The old 
statistics that you would see in the textbook for reactions 
following large injections of horse antiserum for the treatment 
of tetanus were: one person in 10,000 develops alarming symp 
toms, a naphy lactic symptoms, and one person in 50,000 dies. 
That's the picture that you face, realistically. 

Morris: From the treatment? 

Winegarden: Yes. It's a big dose. On the other hand, I guess the mortal 
ity rate for tetanus, if you didn't give them anything, might 
be 60 or 70 per cent. So, you see why you do it. But, if you 
could get away from that danger, why not? 

In attempting to produce human tetanus antitoxin, I was 
the first human "guinea pig" and I started in with the ordinary 
human dose of tetanus toxoid. Then I concentrated the stuff 
down so I could get the volume small and I finally got up to 
the equivalent of twenty doses. I took eight shots, working 
up to the twenty-dose level. That stung when it went in. It 
was concentrated. [Laughter] 

But anyhow, it didn't hurt me and my blood serum titer 
increased to thirteen units per cubic centimeter. Well now, 
you need about forty or fifty units to be a good donor. So, 
my blood was never used for that, but I was the start, right 
there, of the development of human tetanus antitoxin. I'm 
glad I was, because it's turned into a wonderful product. You 
see, being homologous, the same species as man, the dosage has 
been cut for the prevention of tetanus from 1,500 units down 
to, I think, a sixth of that or 250 units, making it practical 
to use refined human blood serum. 

Morris: In other words, the tetanus shots that are routinely given to 
all children, I think, nowadays comes from human blood? 



98 



Winegarden: No, this is toxoid. They use the human antitoxin, if a person 
gets a bad wound. If you had had toxoid immunization, you 
probably can forget it. But sometimes, if it's real bad, they 
say, "Well, we'd better give also the protective treatment of 
tetanus antiserum immediately, before the booster toxoid injec 
tion builds up the patient's immunity." Formerly you could use 
the horse antitoxin but there was that hazard of a serious 
reaction. But now you can use this human product and I don't 
think it ever caused antiphy lactic shock and it works very well. 
So, that's an addition to the prevention of tetanus. It has 
been used in the treatment of tetanus, too, with pretty good 
results, but that's a last resort. 

Morris: Is the preventive dosage that's given routinely a human blood 
product, or is that a synthetic? 

Winegarden: It is not a synthetic. Tetanus toxoid is routinely given to 

children, followed by booster injections. If the immunization 
record is sure, another injection of toxoid may be given after 
an injury. Otherwise both toxoid and human tetanus may be given. 

Morris: Has there been a problem ever of developing supplies of human 
bloods for all of these fractions and blood products as they 
came long? 

Winegarden: It has been difficult to get enough sources, but when you get 
into that phase you ought to talk with Dr. Bob because he 
knows much more than I do about that. 



Penicillin 



Morris: The other big product, in terms of production, was penicillin, 
during the war. This was something you must have had a hand 
in, too. 

Winegarden: Oh, yes. This again is where Dr. Pilcher was the key man. 
Well, I had a hand in it, of course. In fact, I went to 
Washington when they were having a penicillin meeting in the 
early days with about twenty firms. Blood fractions had maybe 
eight or nine, but for penicillin there were twenty firms 
interested. 

Morris I was startled at how many there were. 

Winegarden: Let me tell you why this was done. It doesn't hurt to have 
this background, I'm sure, tfhat had been found was 
that Arthur Fleming's laboratory curiosity, penicillin, had 
a marvelous effect in the treatment of certain kinds of 



99 



Winegarden: infection, many found in the battlefield. Well, this was 
great. The only trouble was it took a liter of material 
to have enough potency to do what you wanted and, of course, 
you couldn't give a liter or you'd kill the person anyway. 
In other words, you had a marvelous product, but it had to be 
refined. 

So, you had to develop quickly some way of making penicil 
lin in great quantity and less expensively and sufficiently 
purified to use. That was the problem. Okay. 1 would Judge 
that there were perhaps five hundred people in the world 
working on the structure of penicillin with the idea of synthe 
sizing it. It was a worldwide project. I think there would be 
that many, with all the countries of the world involved. 

The other approach was to make it in quantity and refine 
it and the latter was the one we went into, of course. So, 
to get started on the project, I was back in Washington when 
they had a key meeting. Now, this meeting was necessary to 
get the equipment needed for penicillin. It required some 
critical stainless steel equipment and things of that type. 
Ted Cutter was there quite a bit too, handling the business 
end of it. When we got back to Washington, we heard there, 
also in regard to blood fractions, "We'll have to talk about 
this and see if we can spare this stainless steel for you, 
because it's being needed so much for the Manhattan Project." 
No one knew what the Manhattan Project was. It was the A-bomb. 
But there was this mysterious Manhattan Project. Anyhow, 
they did give us leeway, so we got the critical pieces of 
equipment--centrifuges, etc. --to make penicillin by the best 
known methods at that time. 

It was complicated. I remember one day I was in Washing 
ton and I had a hook-up after one of the meetings with Steve 
Pilcher here in Berkeley and we talked a solid hour, trying to 
work out the problems just to get started on penicillin. Well, 
we carried forward with penicillin production, first with 
bottles. We had a small plant. Pfizer was the biggest. We 
might have harvested 10,000 bottles a day. 

The initial process was developed with everybody sort of 
working together until it got close to the point where there 
was going to be commercial competition. Then were was secrecy, 
plenty of it, between the firms, naturally. [Laughter] Lots 
of it! You can believe that! Later the tank method was 
developed. 

Morris: Was that developed at Cutter? 

Winegarden: No, no. Everybody worked on it. The liquid product that 

was used, corn steep liquor, was the basis of tank production. 



100 



Winegarden: It's kind of a molasses from corn. The sterilized media, con 
taining corn steep liquor gave very good growth of penicillium. 
You had to have aeration--it's a complicated process, but we 
worked out the details gradually. 

The Northern Regional Research Laboratories at Peoria had 
a very important hand in the development of this nutrient for 
tank production. 

Morris: Now, is this a federal—? 

Winegarden: Government, federal. That's right. So, a lot of this informa 
tion, of course, was available to anyone. Well, the progress 
was tremendous. You may be interested in these figures that I 
heard. January 1, 1942, before we made it, the first company 
that had it — it was either Merck or Pfizer — turned out a 20,000 
unit package, one day's treatment, for which they received 
twenty dollars and which cost them thirty dollars, they said. 
[Laughter] 

Then followed the most dramatic increase in yield and im 
provement in a product in all medical history, to my knowledge. 
Some ten years later, the 20,000 unit package cost about twenty 
cents, and this was mostly container expense. The bulk penicil 
lin cost two cents. In other words, the penicillin itself 
dropped almost a thousand-fold, in price. 

Morris: There are incredible economic implications in that. 

Winegarden: Well, penicillin has always been cheap since then. In fact, a 
lot of firms went out of business. There was overproduction. 
We did it finally, too. It wasn't worth keeping on. 

Morris: Some companies went broke, didn't they? 

Winegarden: I guess some of them did that were just making that. Now, here's 
a case where competition was too keen, really, for the good of 
the business. But anyhow, we had this brown powder that 
originally cost over twenty dollars being purified to a white 
crystalline product that cost about two cents to make. [Laughter] 
That's some change! Well, big tanks, massive production and 
improved methods of refinement brought it about. But all this 
took some doing and this is where Dr. Pilcher came in. He was 
a key man in the research and development end of that and there 
were several capable men under him. I did some scouting also 
for men for this project, speaking of scouting for men. They 
were a little hard to find in those days. The war had nailed 
down so many. Oh, they were tied up in various things. Of 
course, they were deferred from active military duty, practi 
cally all of them. 



101 



Morris: But did you succeed in locating new people to bring to the 
company? 

Winegarden: Yes, I did. We got several new ones and they filled in there. 
We just got what we could get, actually, but they were capable 
people. Of our permanent research group that stayed on--I 
guess there were two or three more added. Steve Pilcher was 
in charge of that whole project. 

Morris: Did you also bring in new men for the blood research? 
Winegarden: Oh, yes. We had to get a lot of them. 

Morris: It must have been a remarkable situation to have two such brand 
new areas of research going at the same time. 

Winegarden: It was. And we had two top men at it, too. We had Steve 
Pilcher and Fred Johnson, you see. 

Morris: They didn't get in each other's hair or anything like that? 

Winegarden: Oh, no. The fields were different and they were both very 
fine cooperative research men. 

Morris: How about the problems again of translating these fast-moving 

research developments into production, which was also expanding? 



Production Capacity Mushrooms 

Winegarden: Production, in this type of manufacturing, turned out to be 

largely a case of research working with lab equipment briefly, 
then with pilot plant equipment, then with larger plant 
equipment and training production to carry on, and then pulling 
out of it. So we trained the men technically to run the 
processes. 

Morris: That must have been kind of an exciting situation. 

Winegarden: It was great! 

Morris: Right on the frontier, as it were, of medical knowledge. 

Winegarden: That's right. It was tremendously challenging. Yes, that's one 
of the satisfactions of life, to realize that while the war was 
going on with all of its horrible effects, together. 

Morris: What did you do for space? You said several times that Cutter 
was a small firm. 



, 



102 



Winegarden: 



Morris: 
Winegarden: 
Morris: 
Winegarden: 

Morris: 
Winegarden: 

Morris: 



In 1941, they acquired the Byron Jackson Pump Company's property 
next to us. Dr. Bob can give you all the details of this, if you 
need them. We expanded over into the warehouse areas and put 
up extensive laboratory quarters wherever we could. Then we 
built a new penicillin building later on. The Austin Company 
built that. I think there was some help, possibly, from the 
government on the cost of that building. I'm not sure of 
that. But a regular building was made for penicillin. The 
blood fractions went into one of the large buildings of the 
Byron Jackson Pump Company we had purchased. The solutions 
department was in there, of course, and it grew in that area, 
too, until we built the new plant at Chattanooga, Tennessee. 

The control department was upstairs. Byron Emery's been 
in charge of that for a long time now. He's one of the men I 
also hired years ago. 

I've wondered about converting an old pump plant into produc 
ing sterile medical products. 

Now you're getting into the intravenous solutions end of it. 
Do you want some data on that? 

Yes. I wondered also about the blood. You said the blood 
production was in the old pump plant. 

Yes. Those were special quarters within this big plant— nice, 
white, made up for special laboratory work with everything 
just right inside. 

So you could rehabilitate the building? 

Yes. You'd take a section of it, and just build the labora 
tories in it the way you want, pretty much. 

You mean new ceilings and walls and all? 



Winegarden: Oh, everything new. 

Morris: I see. Why didn't they just tear down the plant then? 

Winegarden: It cost less to do it this way and, with the war on, materials 
were hard to get and it was faster to do this. 



Intravenous Solutions and Administration Sets 



103 



Morris: Do you want to tell me some more about the intravenous solu 
tions? 

Winegarden: I certainly do want to tell you about them because the intra 
venous solutions' line impressed me as a fine addition. I 
went back to Chicago and met Pres Snow, who was a key sales 
man in those products. He was doing so well with intravenous 
solutions and he was a splendid salesman; he sold me. He sold 
me so much that Mr. Twining wondered what had happened to me 
when I came back that I was so strong for going into solu 
tions. [Laughter] 

But anyhow, I thought it was a real field for us and we 
plunged right into it about 1941, I believe. I think we 
moved into the Byron Jackson plant area in '41, but we did make 
a few solutions in the old laboratory building some time before 
that. In intravenous solutions, the first thing, of course, 
was to get proper equipment. Well, there are several factors, 
aren't there? You must have a safe product-- that's first- 
pleasant in appearance, and convenient to use. And that's 
when the curious bottle that Dr. Bob developed with the square 
corners first came out. Maybe you know about that? 

Morris: The Saftiflask*. 

Winegarden: The Saftiflask* was first developed then. I was working 
on distilled water production for solutions then. 

Morris: That was 1943. That was still right in the middle of the war 
time. 

Winegarden: Oh, yes. This was all going on in the wartime. [Laughter] 
Morris: It just exhausts me to think about it. 

Winegarden: Everything at once! [Laughter] It was very interesting and 
challenging. There was a problem that came out in connection 
with safety of solutions. You knew they were sterile. You 
tested them. We were sure they were sterile. But later on, 
you found some of them gave thermal reactions in people and 
this was found to be due to pyrogens, which are formed by a 
certain group of organisms--! think it's pseudomonas--and 
the stuff is so stable that ordinary sterilization doesn't 
destroy it. So, you had to learn how to keep pyrogens out 
of all your products and this was a key problem for a time. 



104 



Winegarden: We learned as we went along. We had to get freshly distilled 
water and we had to check the raw materials we got and have 
good bottle washing and rinsing too--all sorts of things. We 
used distilled water rinse, I think, for a while—maybe we 
still do. It was very tricky work and rabbits were found to 
be a pretty good guide to whether you had pyrogens or not, so 
we made thousands of tests with rabbits to work out in detail 
the process and be sure we were on the beam in process control. 

Well, I was real active in solutions and here's where my 
original chemical engineering work at Cal Tech came in handy. 
I was very active in getting equipment—kettles, bottle washers, 
filters, filling machines, and so on. I worked rather inten 
sively on that, with other people, of course. By Emery--! 
mentioned him in control— did some work on solutions, quite a 
bit on some facets of getting the bottles to pass through the 
process with their square cornered bases. They were sort of a 
headache . 

And then the question of closure— it seems to me Dr. Bob 
had a lot to do with the original closure of that. 

Morris: He did. He seems to have enjoyed this kind of thing. He still 
has several corks of various kinds that he whittled by hand 
with various in and out tubes. 

Winegarden: Yes. You're right. So, he had a lot to do with that. Of 

course, this business was heavily military at the start, but 
there was good civilian business, too. It was needed. Along 
with that, not too many years later, came the administration 
sets, plastic sets for intravenous administration. 

Morris: Did your research staff work those out? 

Winegarden: Yes. They were under Bill Corcoran. Some of the work was also 
done later on by technical men in production under Bob Sandberg. 
It involved both departments and production did a lot of it 
later on, most of it, I think. 

Morris: You must have had some very skilled mechanics in the shop. 

Winegarden: And ingenious men. Sometimes the men with not too much formal 
training but a lot of ingenuity were excellent at it. Bill 
Butler did some wonderful developing of all sorts of gadgets 
and things. So, that went on. 

Well, when these first came out they looked a little bit 
like toys to me. 

Morris: The Saf tif lasks*? 



105 



Winegarden: Not the flasks, but the administration sets. But not so, 
because the administration set, sterile as it was and con 
venient as it was, was found to be a cost-saver for the 
hospitals in what they had to do. They took glass and rubber 
tubing sets and cleaned and sterilized them for use again. 
There's a lot of labor involved there. So, the sterile admin 
istration sets became a very substantial business, along with 
the solutions. 

Morris: Did Cutter pioneer in these sets, or were other manufacturers 
also discovering the possibility of making them? 

Winegarden: I think they worked simultaneously. Now, the pioneers in the 
solutions business were Baxter of Morton Grove and Don Baxter 
of Glendale, California. They were in before we were. 

Morris: Their names were both Baxter, but they weren't related? 
Winegarden: I don't know if they were related. Dr. Bob would know. 

Well, that business, as I say, has grown. Let's take 
some of the other problems we had to solve. I've mentioned 
pyrogens. Their elimination is very important. Then the 
problem you face is to produce a sterile solution without 
color. The solutions are readily sterilized by heating, but 
if they contain sugar, you're going to have a yellowish color 
develop. Now, we know that that yellow color is completely 
harmless, but it doesn't look good in a hospital to give a 
yellowish-cast solution if you can give a water white one. 
So, you've got to find ways to sterilize that solution and be 
sure it's sterile and still not create color. That's tricky. 

Another problem was the elimination of traces of lint and 
specks in the solution. These particles can be caused by vari 
ous things. Although these particles are harmless, they are 
still a hindrance to sales. So, we spent hundreds of thousands 
of dollars to get rid of this participate matter. It took a 
long time to solve this problem. 

I can't remember all the details, really, of what was done, 
but we just kept at it, improved the air, improved the filter, 
improved the inspection. 

Morris: Improved the air? 

Winegarden: The air in the production room--precipitin air filters, I 

think, in the air lines. Improved bottle washing and better 
solution filtration were important. You can get a particle- 
free solution that isn't yellowish cast and that's free from 
pyrogens and is sterile. That's it. 



106 



Quality Control Concerns 



Morris: This must have required great improvements in quality control 
and production conditions over the years. 

Winegarden: Tremendously so. I think the man who has done the most in 

our intravenous solution department without any question, is 
T. R. Sandberg. He was a magnificent production man from every 
standpoint, getting the original line rolling in Berkeley. The 
design and operation of the Chattanooga plant and the Ogden 
plant were wholly under his direction. Bob Sandberg reported 
to me for several years and then he was on his own as a vice- 
president of the company. Magnificent Job! 

All right. Do you want to hear about the problems we had 
in 1948 with the intravenous solutions? 

Morris: Yes. You said that from the beginning you had had problems 
that were not a safety hazard that you met with. 

Winegarden: That's right. 

Morris: By 1948, you must have thought you had most of those solved. 

Winegarden: Oh, yes. 

Morris: And then what happened? 

Winegarden: The crisis really consisted of finding bottles from two lots 
of intravenous solutions that were cloudy and obviously con 
taminated. Careful checking, over months of time, led to 
the conclusion that the sterilizing runs were satisfactory, 
the cycle was all right, the closures were all right, and since 
only two cages appeared to have cloudy bottles from these two 
lots, one in each lot, it seems almost certain that these two 
cages, for some reason which we do not know, failed to go 
through the sterilizing cycle. That's the conclusion of that 
problem, as far as I can boil it down. 

Morris: The file on the recall of those solutions indicated that the 
Food and Drug Administration worked very closely with you on 
this. Did they come in and inspect the plant? 

Winegarden: They didn't do much in the way of inspecting the plant. The 
report of the National Canners Association research men that 
Dr. Karl Meyer sent to test our sterilization, of course, was 
given to them. I don't recall George Larrick, who was in charge 
of Food and Drug control at that time, coming out here, but we 
went back to Washington. As a matter of fact, I went back first 



107 



Winegarden: and talked with technical representatives of three other intra 
venous solution firms and Mr. Beckley, of course, was heavily 
involved in this. We talked with them first to see what we 
could learn about solution sterilization and then we went to 
Washington and it was further discussed there with the Food 
and Drug Administration people. Those firms were the two 
Baxters and Abbott, with Cutter making the fourth. 

So, the thing was gone into very carefully by industry be 
cause industry was terribly interested in it, obviously— all 
the producers. 

Morris: I should think so. Were there general problems in the solu 
tions business that Dr. Meyer was commenting on? 

Winegarden: No. He had to do with checking the sterilizer. 

Morris: There survives a file of telegrams between Ted Cutter in 

Berkeley and Art Beckley in Washington about the day-to-day 
events in that. Were there hearings in Washington? Was there 
legal action of any kind taken? 

Winegarden: I don't recall any legal action. There were a lot of hearings 
between Food and Drug men and Art Beckley, and I entered the 
picture. Maybe Dr. Bob was there— I'm not sure— once. Anyway, 
Art Beckley was the key man. As vice-president for personnel— 
wasn't he?— he was the key man talking with them about it and 
then I was the technical man to enter into the picture and 
give what I knew about it. 

Morris: Was Mr. Beckley generally the representative to governmental 
agencies, federal and state? 

Winegarden: He was frequently involved. He was heavily involved with the 
Food and Drug Administration. With the National Institutes of 
Health, it was different. They sent out inspectors. He would 
be involved there, too, if there were complaints. But the 
National Institutes of Health would send out inspectors every 
year for serum and vaccine production. That's a definite 
routine thing. They'd come and they'd go through your records 
carefully. Dr. Milton Veldee was, I think, the last inspector 
I knew, but they had inspections when I first worked at Cutter 
Labs. Dr. Wayson was the inspector then. 



Our medical directors — Dr. Foster, in the early days, 
then Dr. Ward — would be the contact men with the National 
Institutes of Health inspectors. 

Morris: That's the technical and professional side. 



and 



108 



Morris: Then, your feeling is that when it was a matter of policy 

discussion at the federal or state level, Mr. Beckley and the 
Cutters themselves would have handled it? 

Winegarden: Yes, they would have. That's right. 



109 



5. OTHER DEVELOPMENTS 



Choices: Antibiotics. Blood Fractions 



Morris: 



I have one question going back to medical developments in 
World War II. The laboratories went out of production of 
penicillin because the cost dropped. Did they go on at all 
with the other wonder drugs, the sulfa drugs? Did Cutter 
handle them? 



Winegarden: No. We have never worked with the sulfa drugs. We might 
have marketed some, bought the stuff and marketed it, but 
we never worked with those. We did work on looking for new 
antibiotics. I haven't mentioned that, but we did that in 
research for a period of years. We found some promising leads, 
but nothing with enough promise to be worth the expense of 
completely developing and marketing it. Then, of course, the 
competition in that field was very extensive from big firms 
in the east. They really went after it. 

Morris: Why do you suppose there was this tremendous competition on 
the new antibiotics, but nobody, apparently, except Cutter, 
had any interest in keeping on with the blood products? 

Winegarden: Well, my guess would be that Cutter kept on with the blood 

products for several reasons. First, we knew the field very 
well. We had been working with plasma, so we knew a lot 
about human blood and something about human blood collection 
for products of this type . Secondly, we had a key man there 
in Dr. Fred Johnson, who probably knew as much about the 
process and the new products that could be developed as anyone 
in the industry in our country, an excellent man. That would 
have a lot to do with it. 

And there was another thing. When the human blood products, 
after the war, were being used commercially, the market volume 
was not large enough to attract several of the large pharmaceu 
tical companies into the field, so they didn't get into it. 



110 



Morris: The market for the antibiotics was more obvious? 

Winegarden: Oh, it was much larger, much larger. The broad spectrum 

antibiotics, together with penicillin — have probably increased 
in sales volume up to the hundreds of millions of dollars 
annually. It's tremendous. You see, these broad spectrum 
antibiotics work in so many directions. For example, strepto 
mycin was found to be good for tuberculosis. It's one of the 
four, shall I call them miracle drugs for tuberculosis. That'* 
just one example of the broad usage of antibiotics. I don't 
know what the annual death rate for TB is today. It used to 
be, when I was a boy, 220 per 100,000. It's way down. You 
hardly hear about it any more. So, one antibiotic worked 
there and then there are many other antibiotics for a variety 
of diseases. 

Here'* another thing. Penicillin, which seemed to be a 
harmless drug at the start, produced sensitization in some 
people that was even dangerous and they had to look for some 
thing else to take its place. It produced allergies which were 
very discomforting, to say the least, if not dangerous. Then 
some strains of bacteria became resistant to penicillin, so 
here was a great field for further development of antibiotics 
and a huge market. 

Morris: What is the dollar sales relationship to the blood market? 

Again, I'm looking at it from a layman's point of view. Many 
of the blood fractions are now used as immunizing agents as 
well as for treatment of illness. I wondered if it has grown 
into the same size of business as the antibiotics. 

Winegarden: No, it has not. It's very specialized and it always has to 
be somewhat limited, because there isn't enough human blood, 
even if there were a demand for enormous amounts. It has its 
limitations. But what you want to do is get out of human blood 
everything you can, out of the blood you collect. That's, of 
course, the thing you work on. There is a field that I believe 
we've not worked on yet at all, but they even have found ways 
of holding blood for an extended period before use. Special 
blood preparations are frozen quickly and stored at very low 
temperature and the cells are preserved for many months. 

Morris: That seems to be a frontier of medical research at this point. 
Winegarden: That's a frontier, yes. That's right. 



Ill 



Pure and Applied Research 



Morris: This brings us to a philosophical question that the people 
at the university are interested in. What's the dividing 
line, if there is one, between pure research and applied? 

Winegarden: Well, that's a vague line, really. Pure research, I believe, 
would be research directed toward increasing our general 
knowledge, with the assurance that someday some of it will be 
useful for practical application. In applied research, you 
want some clue that says, "There's a practical chance here. 
Let's give it a real whirl and try to get something out that's 
useful and valuable." Practical research has to take into 
account not only cost, but the market. 

Going back in ancient history now, I worked once, just 
a little bit, under Dr. Cutter's direction, on immunizing a 
horse against rattlesnake venom. The antivenom that you get 
many have some value, but the injection of venom was dynamite 
on the horse. I mean, it would soon just kill the horse off-- 
too toxic. Also there wouldn't be enough demand for it to 
warrant the difficult horse immunization. So, he developed 
the snake bite kit, which is a real valuable effective 
product. 

Morris: Can you use that on a horse? 

Winegarden: No, no. People carry them on trips in high country, you see. 
In other words, that's a practical approach. You remove the 
venom with a suction cup before it spreads through the body. 



Poison Oak Extract 



Morris: The rattlesnake reminded me of one thing we didn't pick up 
on — the poison oak work you did. Now, was that because you 
were subject to poison oak? 

Winegarden: Not at all. It's my first product. If you want the history, 
I could summarize it. When I came to Berkeley, I believe it 
was Mr. Twining who suggested that I look into poison oak 
extract. There was a product that wasn't very pure put out 
by Broemmel's Pharmacy in San Francisco. This was in 1923. 
In fact, it had been out for a little while and he wanted me 
to look into the possibility of our making such an extract 
for treatment or prevention of poison oak. So, I went into 
the literature and studied it rather -carefully— first, the 
medical literature— and there were some articles that looked 
promising on the injection of a very dilute purified extract 
of the toxin. 



112 



Winegarden: Another approach was to take it by mouth, in a very tiny dosage. 
Well, to get quickly to the heart of the matter, subsequent 
researches showed that this toxin didn't produce an antibody 
in the blood at all. It was a desensitization phenomenon. 
So, I set about to see how we could purify poison oak toxin 
so it would be acceptable for preparations for the prevention 
or treatment of oak poisoning. 

There was no animal on which to test it. Animals are not 
satisfactory. There's a skin test that you can apply on 
people to see whether you've got proper strength or not and 
that is what I used when it was necessary to test anything. 
I think later they have found some way of checking sensitiza- 
tion a little bit on some animals, but at that time, nothing 
was available. 

In looking through the chemical literature, I found that 
the Japanese had been working with the toxin of the Japanese 
lac, obtained from plants similar to poison oak, poison ivy, 
and poison sumac. One of their men had reported in Chem 
Abstracts, perhaps back as far as 1918--on a method of purify 
ing the toxin and determining the essential parts of its 
structure, not a complete thing. With this as a guide and 
with chemical knowledge in general, I set about to make a 
practical purification of our product, which I wanted to have 
distinctly purer than those extracts which were on the market. 
This we did. 

We ended up with a material that was, perhaps, half pure. 
Actually, as a concentrate, it was a dark green solution, but 
diluted the way you'd use it, there wouldn't be much color 
in it. We put out two products. One for oral use was put out 
in sugar solution and it was called Poison Oak Protective 
Treatment. And the other— let's see. We called the prepara 
tion for injection, Toxok*. Later an analogous product called 
Toxivi was prepared from poison ivy plants. 

There are some interesting experiences with poison oak, if 
you want me to reminisce. I told you about the big Berkeley 
fire before I came to work here. When we wanted to find poison 
oak material to start working with, there weren't any bushes 
around Berkeley. They'd all been burned off. So, we had to go 
out to Contra Costa County to get the poison oak. Ed Armstrong, 
Sr. said, "I know where there's a lot of poison oak," and he 
took me out and we collected plenty. Fortunately, I'm not very 
susceptible to poison oak, so I didn't hesitate to work on it. 

However, in the early days, I was filtering my extract, 
a dark breen solution, through a white porcelain Buchner filter, 
and the Buchner broke and spread poison oak toxin all over my 
white laboratory table. Well, with complete abandon— I had on 



Winegarden: 



Morris: 



113 



canvas gloves, which were worthless--! grabbed a rag and 
mopped it up. After that massive exposure, I did get 
some oak poisoning myself, so I took some shots of a competi 
tor's product. The poisoning didn't last very long and I was 
soon all right. 

Then, later on, I began to have more respect for the 
product because of the results I had in testing twenty people 
at the laboratories--volunteers— with a patch test. While I 
could take a drop of a 5 per cent solution of this purified 
poison and just get a red spot, I found on one of our men- 
Pop Joyal — that one little drop of a 1 to 100,000 dilution 
gave him a big blister like a dollar on his arm. So, he was 
very sensitive. And there was the case of a woman working 
upstairs far from my laboratory. They said, "Watch out for 
her." I never had the blame pointed at me, but she got severe 
oak poisoning while I was working on the toxin. So her 
sensitivity was enormous if my toxin work caused the poisoning. 

Anyhow, to make the story shorter, the product which was 
developed had some merit, I think, in the prevention of poison 
oak. It apparently, in about 80 per cent of the people, seemed 
to help a great deal in reducing sensitivity, if they took it 
before the spring season. I think that's its value today. 
I know Mr. Twining himself took it and I gave it to one of my 
boys who had poison oak problems and its preventive value, if 
taken right, seemed to be genuine. I think it's still on the 
market today, even though it was first made forty-nine years 
ago. 



It still is. 
California. 



Well, poison oak is still a hazard of living in 



Winegarden: [Laughter] Yes, that's right. 



Patents 



Morris: One question on the development of the research department 

that we haven't gotten to is: At what point did the company 
become interested in patenting its products and the equipment 
that they developed? I see that in 1948, I think it is, there's 
a patent coordinator as a separate individual on your research 
staff. 

Winegarden: We first started working, as I recall it, with Leroy Hanscom, 
who was a patent attorney. I've forgotten the exact items we 
took up with him. I went and took a course in patents myself, 



114 



Winegarden: 






but we later on decided that there was enough coming up that 
should be patented, either to protect us, or to gain something 
from it, to get a man full-time. He carried it pretty much 
after that. I assigned our patent work to Don Wonder. He 
carried that for years and then they have had other people 
since. 



Morris: Now, is he an attorney? 

Winegarden: No. We first used technical men who knew our field and who 

learned the patent possibilities of it. I don't know who they 
have with the lab now. It might be a patent attorney even. 
I'm sure they have somebody who does the job. 

Morris: But I wondered who makes the decision that they'll patent 

things. Is that a research decision, or is that a management 
decision? 

Winegarden: Very largely management, following suggestions made by research. 
Reminiscing and looking back, I think the man who was most 
interested in it was Fred Cutter. Fred Cutter was very much 
interested in patents. He was also very much interested in 
trademarks. It was he who proposed most of these names, I 
think-- Blacklegol , Charbonal*, that sort of thing. So, I 
think Fred Cutter had the major responsibility or took the 
major responsibility for that. 

Morris: I wondered if patents ever have an economic value that is, 

if there were products that you'd developed that Cutter 
didn't want to market particularly, or if they would patent 
them and then market the rights to produce more; if this, over 
the years, became something that was a valuable procedure? 

Winegarden: I see your point. During the time I was there, active at 

Cutter, I believe it was more a question of getting patents to 
be sure that we could make what we wanted to make , that sort 
of a thing — more a protective type of thing, rather than some 
thing from which we collected royalties. Now, I believe some 
patents have been involved in royalties, but you'd better check 
with Dr. Bob on that. 

Morris: Was there ever any instances where another company had patented 
something similar and there was an argument as to whose product 
was—? 

Winegarden: I don't recall any strong issues that I was involved in at all. 
Maybe there was something on antitoxin purification. That was 
more a case, though, of the English having published their work 
which we followed, to avoid a patent on some kind of purifica 
tion of diphtheria and tetanus antitoxins. I was working on 
similar methods at that time. 



115 



Polio Vaccines 



Morris: Were you still active at the laboratories when the polio 
work was being done, or had you retired by then? 

Winegarden: Oh, I was active then, buc Dr. Walter Ward was in charge of 

it. Dr. Walter Ward, who originally reported to me as medical 
director, was the man who really handled our whole polio 
project, because there was so much government control and 
clinical involvement. It's a mighty good thing he was, because 
of the problems that developed. I don't know what you've had 
on the polio picture, but I can give you the statistics that 
he told me about and I think I'm correct in this. 

I'll first give you the general information that we fol 
lowed to the letter, the requirements for making the vaccine. 
This was before we had any problems. And we tested it for 
safety on monkeys. Our vaccine had good potency, made the 
tests nicely, and passed all safety tests that were available 
at that time. It was only later that they found out that you 
had to give massive doses of cortisone to monkeys to catch 
traces of virus that had not been killed. They improved the 
test and made a much weaker vaccine. That's what happened. 
It wasn't nearly as potent a vaccine. 

Now, these are the figures that I shall not forget that 
Dr. Ward told me about. From one of the lots of vaccine that 
later on gave us plenty of trouble in Idaho, 10,000 doses were 
used in New Mexico or Arizona and they had no problems. The 
answer probably was that those people had had polio epidemics 
off and on for years. 

Morris: And had built up natural immunities. 

Winegarden: There was a higher level of natural immunity than you had in 
Idaho, for example. That seems to be the answer right there. 
So, you see, we had no way of knowing we were doing anything 
wrong. We thought we were doing a fine job. Of course, the 
other companies all had trouble. We got most of the publicity, 
but they had trouble too. 

Morris: That's an interesting point. I wanted to ask about that, because 
the newspaper accounts say so many people in this state and so 
many people in that state and I wondered if people had become 
ill from vaccine made by other companies. 

Winegarden: Dr. Cutter can tell you better than I what happened there in 
its entirety. But as I recall it, there were a total of five 
companies. They all stopped making vaccine for months until 
this thing was straightened out. 



116 



Winegarden: Now, I'll give you my opinion on it. My opinion is that today 
the Salk vaccine, as it's tested, is safe and is a weak vac 
cine against polio. On the other hand, the Sabin vaccine, which 
is a modified, live, oral vaccine, is a very good vaccine and I 
think it's about as safe as it's practical to make a vaccine and 
still have it really immunize. It's a fine vaccine, so I'm all 
for it. The Salk vaccine has merit, but if you get it perfectly 
safe, made from that virulent Mahoney strain adequately treated 
with formaldehyde, it's getting so modified that it's a weak 
immunizing agent. 

Morris: And it was the Salk vaccine that you had the trouble with? 
Winegarden: That's what caused the trouble. That's right. 

Morris: You said something about the company's having $3,000,000 worth 
of insurance coverage? 

Winegarden: I think they had $2,000,000 and paid $1,000,000 more than 

$2,000,000 in damages, but get that from Dr. Bob. I'm not 
sure of that. 

Morris: Again, looking at the sales figures, I find it remarkable that 
whenever there's been trouble of some kind and sales have 
dropped off for a year, within two years there's indication 
of sales having taken a jump ahead of where they were before 
the trouble and of a whole new batch of products coming on 
the market. 

Winegarden: [Laughter] Well, we have had our hands in so many different 

things. Of course, you know there have been quite a few small 
company acquisitions that have entered the picture of Cutter. 
You know about that. You undoubtedly got that from Dr. Cutter 
in more detail. 

Yes, in connection with all the troubles we have had— I 
say "all the troubles." The solutions problem and the polio 
problem, really, are the only ones of any significance in 
product complaints of a serious nature. Cutter Laboratories, 
to the best of my knowledge, has had the support and the con 
fidence of 95 percent of all the doctors all along, in both 
instances. I think that is correct. When all the facts 
were known, I don't think we lost hardly any physicians as 
customers because of product troubles. I attribute that to 
the splendid work of the Cutters. Dr. Bob, particularly, was 
very fair about everything and they knew that his word was 
reliable. 



117 



Early Retirement 



Morris: 

Winegarden: 



Morris: 
Winegarden: 



Morris: 



Winegarden: 



Morris: 

Winegarden: 

pro 



Morris: 



When did you leave the company and start your world travels? 

My connection with the company was as follows toward the end. 
I had told the Cutters for years that when I was sixty, I 
wanted to retire because I wanted to do some other things in 
life. In 1955, I was fifty-seven plus, and they asked me 
how I would like to be a consultant for them and carry on 
until I was sixty-five. It was a different set-up than I'd 
envisioned. 

Phased out the way you phased in. 

Phased out, and it was great! I was glad for the opportunity 
and that's what I did. Well, they didn't tell me how much 
time to spend, but I probably spent the equivalent of, say, 
working full-time two days a week. With that program and 
with the fact that it was research and I wasn't in production, 
getting out the wash [Laughter] I was flexible. So, we took 
our first large trip in 1958. 

We went to Europe. It was a three-month trip. I cele 
brated my sixtieth birthday on a boat on the Rhine on that 
tour. Afterwards, we took several tours abroad. You don't 
want the details of all my trips! 

I wanted to know about your consulting though. You said as a 
consultant, you were back in the research end of things. 

A scientific consultant, a general consultant, in anything 
scientific. It wouldn't be Just research—anything they wanted 
me to do. But I spent a lot of my time searching the literature 
on some of the problems we had and on some of the products we 
were looking forward to making. That's what I did. 

What were some of those? That sounds like a fascinating job. 

Well, I worked on one of my old friends for a while, diphtheria 
toxoid. I wanted to see if we could make a pure crystalline 
product, avoiding all reactions on injection. Anything that the 
man who succeeded me came up with, I'd work on that quite a 
while. There were a variety of things. I can't remember them 
all, actually, but there were several projects related to the 
research program. I wasn't directing anybody, you understand. 

Yes. Somebody was asking you for help. 



118 



Winegarden: 

Morris: 

Winegarden: 

Morris: 

Winegarden: 



Morris: 



Winegarden: 



Morris: 



Winegarden: 



Asking me questions. And I did a lot of literature search and 
report-writing and some discussion, whenever they wanted me. 
That was it. 

That sounds like a lovely, stimulating kind of thing to do. 
It was great! 

This was in refining and additional variations on lines that 
Cutter had been in for some years. What new--? 

Quite generally old line products, not being a pharmaceutical 
chemist. I did dabble a little in new Pharmaceuticals, but 
my work was pretty much in the fields that I had followed during 
the years I was directing research at Cutter. 

And the company, as a whole, has shifted over into more pharma 
ceutics Is now than they used to have? 

Well, intravenous solutions, I believe, and the appliances that 
go with them are the heart of the business. The blood fractions 
are large, but I think they have gradually gotten away from the 
biologies. Not only is the demand less for certain products, 
but a great many of them are distributed by public health 
departments and a few firms can easily make them for the whole 
nation. I think the business didn't look attractive enough to 
carry on. We have maintained, of course, products in the 
veterinary field because of those companies around Kansas City 
that we acquired. But the kind of research that I was doing 
would be very minimal now. 

This is my last question and it's sort of of general interest. 
The area of medical research that seems to be getting the most 
interest nowadays in the general reader's literature is cancer. 
I wondered if any of the things that Cutter has worked on over 
the years might lead into this? 

Not yet, I would say. There was one project that was brought 
to us that held some promise in cancer research, but this was 
in the early days and you didn't talk much about it. You know, 
we've come a long way in cancer research reports. There was a 
time when you didn't dare publish anything on cancer, or you 
were told you were a quack. It was Just like that. You didn't 
dare publish any material hardly. You probably don't remember 
back quite that far, but that's the way it was. Then, gradually, 
the curtain was lifted and the facts came out and people began 
to realize that cancer was not a disease, but many diseases. 
Then people got the courage to publish good papers and show 
the limitations and the things you can do for cancer. 



Winegarden: 



Morris: 



119 



But we have not been, so far as I know, unless there's some 
thing new going on there I'm not aware of, really involved in 
cancer. The only way we would get, perhaps, heavily into 
that might be if they find some way to use the knowledge that 
some viruses are associated with cancer. You see, the argument 
of its being caused by a virus has not been proven, nor does it 
seem to ever be the only cause of cancer. But there is, 
apparently, a relationship between viruses and cancer in many 
cases. It's at that stage in research. 

Yes. I was aware of the project years ago, which was why I 
asked the question, because it's still one of the big unanswered 
questions. This has been absolutely fascinating! 



Winegarden: I'm glad you enjoyed it. 



END OF INTERVIEW 



The Bancroft Library University of California/Berkeley 

Regional Oral History Office 



Harry Lange 
DEVELOPING FINANCIAL RESOURCES 



An Interview Conducted by 
Gabrielle Morris 



1975 by The Regents of the University of California 



TABLE OF CONTENTS - Harry Lange 



INTERVIEW HISTORY 

1. JOINING CUTTER LABORATORIES 120 
Prior Experience in the East 120 
Postwar Growth Potential 121 

2. ESTABLISHING THE CONTROLLER'S FUNCTION 124 
Expanded Financing and Marketing 124 
Foreign Trade 127 

3. ORGANIZATIONAL CHANGES 129 
Management Reviews 129 
Pharmaceutical Controllers' Survey 131 
Moving Production to the Market 132 
Issuing Capital Stock 135 
Cutter Directors and Banking Relationships 137 
Fiscal Results of the 1955 Polio Vaccine Crisis 139 

4. VICE-PRESIDENT FOR MARKETING 142 
Evaluating Management Potential 142 
Selecting and Training Salesmen 144 
Sales Growth 146 

5. CUTTER FAMILY LEADERSHIP 148 

6. A VARIED CIVIC CAREER 151 
Oakland City Councilman 151 
Golden Gate University Trustee 155 
Bay Area Rapid Transit District Director 157 




Harry Lange 

Photograph by Barry Evans 



INTERVIEW HISTORY 



Harry Lange was interviewed in order to document his contributions in 
the areas of marketing and finance to the growth and development of Cutter 
Laboratories. 

As the firm's first controller in 1947, and later corporate vice- 
president, he was instrumental in the issuance of the first public stock and 
negotiated agreements with national financial institutions for capital for the 
expanding firm. 

Hearty and outgoing in retirement, Mr. Lange was interviewed on March 
16, 1973, in the small office of his home in the Oakland hills, filled with 
his collection of stringed instruments and musical tapes, as well as business 
records . 

The interview was interrupted by several telephone calls about details 
of the reelection campaign he was managing for Mayor John Reading, but Mr. 
Lange picked up the thread of each question without hesitation. He reviewed 
the transcript of the interview, correcting and adding a few details. 



Gabrielle Morris 
Project Editor 



20 December 1974 

Regional Oral History Office 

486 The Bancroft Library 

University of California at Berkeley 



120 



Date of Interview: 16 March 1973 



1. JOINING CUTTER LABORATORIES 



Prior Experience in the East 



Morris: 



Lange : 



Morris; 
Lange: 



We like to start with a bit of your personal background, 
were you born? 



Where 



Well, I'm a native of South Bend, Indiana. Just having turned 
sixty-five, I was born there in 1908. I had my first real job 
with the Studebaker Corporation there and it turned out I was with 
Studebaker and Fierce-Arrow, a company that Studebaker had 
acquired, for a period of seven years, including a portion of 
that time in Chicago. 

Then the Fierce-Arrow Company decided to fold up. They went 
bankrupt. This was, if you'll keep in mind, in 1935 after three 
or four years of the Depression. They were certainly one of 
those companies that didn't fare well in the Depression and they, 
I guess, made a basic management mistake that some of the other 
companies didn't, of feeling that they could still sell their 
very expensive cars. But, at that time, it just wasn't possible 
for a lot of people to buy those cars and a lot of people, even 
where they could, didn't feel that they should because of the 
nature of the times. So, Fierce-Arrow went bankrupt. 

When that happened, I moved into a company by the name of 
Wilson Sporting Goods Company. 

That's the tennis racquet company. 

Yes, it's a sporting goods company. They make all kinds of 
sports equipment — golf, tennis, baseball, football, the whole 
bit. I went with them as an auditor. By the way, with Stude 
baker, I was in their accounting department. I was in charge of 
their Chicago office for Fierce-Arrow as treasurer and then I 



121 



Lange: went with Wilson Sporting Goods Company as an auditor and was 
with them for several years, leaving them as general auditor. 

I left them in 1942 because of the war that was going on at 
that time and took a position as controller of a company known as 
the Ordnance Steel Foundry Company. It was a subsidiary company 
organized for ordnance by the Campbell, Wyant, and Cannon 
Foundry Company. We made steel castings for tanks and we occupied 
a facility that was shared by the International Harvester Company. 
We made the steel castings and they made the tanks. We had the 
one distinction of making the largest steel casting that was ever 
made, weighing some forty-five tons, which no one had ever been 
able to do before. 

Morris: That wasn't for one tank, was it? 

Lange: Yes. Well, anyway, I was with them until 1945 and then, of 

course, as you know, the war was beginning to taper off* So, 
the war was obviously coming to an end. Campbell, Wyant, and 
Cannon, whose headquarters were in Muskegon, Michigan, wanted me 
to come up there. But, having known enough about that part of 
the world, 1 wasn't too anxious to go there to live. I knew some 
people in Booz, Allen and Hamilton and, at that time, Cutter was 
having a management review made by the Booz, Allen and Hamilton 
people and they put the two of us together, that is, the Cutter 
group and me. 

I interviewed Dr. Cutter in Chicago and then they invited 
Mrs. Lange and me out to California. We were out here for about 
a week as their guests while we were both looking each other over. 
They finally, then, offered me a job and 1 took it, being very 
happy to move to California rather than Michigan. 

So, 1 went with them in 1945 as their controller. 



Postwar Growth Potential 



Morris: Did the fact that it was California make it — ? 

Lange: It was more interesting. Of course, 1 was interested in getting 
with a company about like Cutter was at that time. They were a 
relatively small company, some five to six million dollars a year, 
and most of that was war business. They were obviously growing 
and 1 liked the people. We seemed to be compatible and the com 
bination of that with California was what caused us to choose 
them. I had a couple of other job offers at the same time, but 
they were in the Middle West. One was with about the same sized 
company and one was with a much larger company, but I decided on 



122 



Lange: Cutter because it seemed to be the kind of thing that I wanted. 
I was interested in this particular business, although I had 
no previous experience in it. But it was the kind of a business 
that attracted me. 

Morris: Pharmaceuticals? 
Lange: Yes. 

Morris: Was there any particular reason why you thought that was a good 
business to get into? 

Lange: Well, I felt that it was a relatively high class business. Hav 
ing been in the automobile business and in the steel business, both of 
which are kind of rough businesses — the sporting goods business 
was a little more like Cutter than the other two — I just felt 
that it was a better business to become identified with. I think 
that most of the fine drug companies are really fine companies to 
be associated with and Cutter, of course, is outstanding in that 
respect. 

Morris: Did you have a sense, from your general knowledge of business and 
the financial aspects of corporations, that Pharmaceuticals were 
going to expand and/or that California would be a place of economic 
growth? 

Lange: No. But 1 did feel, after meeting the people and learning about 
what they were doing--at that time, they were very heavily in 
penicillin, which was an intricate thing at the time, and their 
other research — and generally, the people that were identified with 

it the firm just seemed to me to carry with it the kind of 

promise that the firm has manifested over the years. I really, 
as I say, knew nothing about the business, other than that it 
seemed to be the kind of a business that one could be happy in, 
which I was. I think California was simply the frosting on the 
cake. 

Morris: That was a pretty interesting time in California as the war was 
coming to an end, wasn't it? 

Lange: 1 came to work for Cutter Laboratories on August 1, 1945. I still 
remember Ted Cutter saying to me as I began my first day there 
that he wanted me to take about sixty days to become acquainted 
with the business and didn't want me to become too involved in 
things. He thought 1 should just become acquainted with their 
problems and all the rest. 

Well, 1 think it was on either August 2 or August 3 that we 
had V-J Day. That carried with it an immediate cancellation of 
all of our government contracts, as you perhaps know, and, if you 



123 



Lange: keep in mind that most of our business was with the government, 
it meant that we were essentially out of business in terms of 
what we'd been doing for two or three years. We had this job 
of terminating the government contracts, which, of course, was 
a very time-consuming and technical problem. So, about the 
second or third of August, I was headlong into that problem and 
never did get the sixty days to become oriented, as such. But 
it certainly did give me an opportunity, at the same time, to 
become pretty familiar with the problems of the business. 

Morris: And you'd become acquainted with people on a crash basis. 
Lange: I sure did! 

Morris: Who were the people with whom you were primarily working in that 
period? 

Lange: Well, of course, the three Cutters. Fred was there at the time. 
Then, Howard Winegarden was our vice-president for research and 
a chap by the name of Nitchie, at that time, was vice-president 
for production. Then, Arthur Beckley was our personnel man and 
our lobbyist in Sacramento and a number of other things. I'd 
say those were the primary people, but then, of course, there 
were all of the people in my own group. I came in heading up the 
financial end of the business, so, I had a staff that I worked 
with very closely right from the very beginning. 



124 



2. ESTABLISHING THE CONTROLLER'S FUNCTION 



Expanded Financing and Marketing 



Morris: Had there been a position of controller before you joined the 
company? 

Lange: No. They had a man in there who was supposed to do something 
along those lines. I don't think they'd ever given him that 
title of controller. I could be wrong on that, but the position 
as it was assigned to me had never been in existence with its 
full responsibility for all of the financial aspects of the 
business. Ted Cutter had largely handled that. He had assumed 
the secretarial functions of the company and the treasurer func 
tions and that had been pretty much his bailiwick. When I came 
in, I reported directly to Ted, but was given that entire 
responsibility and the authority that the job required and he 
stepped back out of it. 

Morris: Were there additional functions that you performed that hadn't 
been done before? 



Lange: No. Well, of course, when someone comes into a picture as I did 
there, one brings a whole new viewpoint of the things that need 
to be done, many of which hadn't been done before. A good 
example was the use of our tabulating equipment, which, at that 
time, had largely been confined to the preparation of sales 
statistics. One of the first things I did was to put our accounts 
receivable on the tabulating equipment so that we were able to get 
better figures quicker. 

Then, of course, we had, in addition to the actual termina 
tion of all of our government business and the bank loans that 
went with it, the need for getting financing to be in a position 
to go out and get civilian business. Of course, one ot tne first 
things that we did was to sell an issue of preferred stock to the 
Northwestern Life Insurance Company, which gave us our first 



125 



Lange: outside money. There were things of this kind that received-- 
what should I say?--attention that was more of an expertise 
nature than my own experience had prepared me for that they had 
not gotten into. 

But I'd say that I was also brought into most of the manage 
ment decisions of import. They put me on the board in V)fS , which 
was some seven years after I came there, and I remained there. 
So, I was always made to feel a significant part of the management 
of the business and almost like one of the family members. I had 
the privilege of carrying that feeling with me until I left the 
business in 1968. 

Morris: This would be quite important to the firm, 1 think, to have access 
to your kind of financial background. 

Lange: Well, they needed it because they didn't have anyone there. They 
had a chap by the name of Steve Fiskrwho has been retired quite a 
while now, who was very capable up to a point. But he, of course, 
was the first one to realize that there was a need for someone like 
myself to come into the picture. 

Morris: If all of the government contracts terminated overnight, as it were, 
was there a great gap then in your market. What did you do about 
finding a market for the production capacity that had increased 
considerably during the war? 

Lange: Well, we just converted that capacity to start making products 

for commercial use. Penicillin, of course, at that time, had been 
largely prepared for use by the government forces, so this now 
became a product which could be used civilianwise. The same thing 
is true of our work with products made from blood. Everything we 
were doing at that time was largely for the armed forces. 

We really didn't have as much of a problem as one would think, 
because there was this great pent-up demand for all of these things 
that had been largely government exclusives which now became avail 
able to the civilian population. So, our job was simply to let it 
be known that these products were available and our selling wasn't 
too difficult at that moment and for a considerable time thereafter. 



Morris: You said that you got the additional financing to go after this 
civilian business. Where did the money go? In other words, did 
it go into an expanded sales force, or where? 

Lange: Partly. The money was put into the general operating funds of the 
business. It enabled us to expand our selling activities and to 
start spending money for advertising and the other things at a 
level that we hadn't done before. You see, prior to the beginning 



126 



Lange: of the war, I think our sales level was something in the neigh 
borhood of $1,000,000 a year, or in that general area. So, here 
we had a lot of people that were being supported by a much higher 
level of sales and, so, we had to do all of the things that are 
involved in sustaining that level of activity. 

In addition, of course, we realized the significance of 
building up our research activities and preparing ourselves to 
be moving ahead with new medical advances, as our competition 
would be doing. So, all of this took money. There was an important 
need for this preferred stock issue that was sold in 1947. 

Morris: Was there anything that could be considered long-range planning 
at that point? 

Lange: Cutter was never much for long-range planning. I tried to intro 
duce the concept on many occasions into the company. But I would 
say that the Cutter management was head and shoulder ahead of 
most managements when it came to, shall I say, short-term looking 
ahead, budgeting for the next year, and this kind of thing. In 
fact, 1 was pleasantly surprised when I came to Cutter to find 
that they had a long history of having budgeted their activities. 
But they always had difficulty looking beyond a year or so and 
they always had trouble in accepting concepts or plans that looked 
three, four, or five years ahead. 

I think that, maybe, under Dave, we're getting more of that 
than we ever had when I was with the company. I made many attempts 
to bring this about, but I was never really successful with the 
rest of the management organization. 

Morris: That's interesting, because in the Old Timers' Room, there are several 
reports that Pres Snow wrote about 194A, talking about general 
economic post-war planning. I found them very interesting and 
forward- looking . 

Lange: But I don't think that to a large extent they were ever extensively 
utilized. Now, they did have the good business sense to bring in 
Booz, Allen and Hamilton, who did quite a bit of this. In fact, 
it was their suggestion that they get a guy like me into the picture 
and they suggested other similar things. They went along with this. 

My point is that they started to have trouble when one was 
talking two, three, four years ahead. They just couldn't ever 
bring themselves around to take meaningful steps to bring some 
thing about that isn't going to happen for five years. So, we 
always had to sort of accommodate that reaction by doing the best 
we could in our planning. 

In fact, I used to have my own plans that I would develop to 
guide me in shaping my own activities, without making much to-do 



127 



Lange: about it, because I just couldn't develop support from the rest 
of the organization about them. So, I would say that, in many 
ways, our long-range planning, during the years I was with Cutter, 
was deficient. Short-range, fine. The next year's budget, great. 
Staying with the budget, raising hell when we weren't making it, 
great. But, beyond that, there was a blank spot. 



Foreign Trade 



Morris: That's interesting, because, within a couple of years of your 

arrival — 1947 is the date I find — Cutter International was formed. 

Lange: Well, that was an expedient in many ways. At that time the govern 
ment created so-called Western Hemisphere Trading Corporations. 
It was a new action on the part of the Congress that was designed 
to encourage foreign trade. By setting up a so-called Western 
Hemisphere Trading Corporation that met the qualifications that 
the government set forth, you were able to pay less taxes on the 
income you made. Of course, we took advantage of that develop 
ment as we have done in many similar situations since. 

There's very recently been a similar thing done by the 
government in what is known as DISC corporations.** What it 
amounts to is that it encourages and enables you to sell your 
products as a manufacturing entity to this corporation which, in 
turn, produces the sales in foreign countries. There are tax 
benefits to the extent that you don't have to pay taxes on certain 
portions of your income. Again, that was done to encourage foreign 
trade. 

So, this International Trading Corporation that we set up in 
1947 was really nothing too great. It was an attempt and a proper 
attempt to enable us to operate with the greatest financial bene 
fits under the tax laws that existed at that time. In fact, I 
think the company is still in existence as an international 
corporation. It may not be. I'm not sure. 

Morris: There's now an international division that does a fairly healthy 
chunk of business. 

Lange: There sure is and it's one of the things that I strived for over 
the years and, until very late in my employment with the company, 
I didn't accomplish much about. Most of the drug companies have 
traditionally had a much greater proportion of their business and 



** 



"Domestic International Sales Corporation. 



128 



Lange: their profits coming from international activities than Cutter. 
For many years, we were unable, for various reasons, to get more 
than eight or ten per cent of our business out of foreign fields. 

But I think that one thing that a man can bring to a company 
over the years, as I think I did, was the employment of people 
that have abilities to do their own jobs effectively. I'm very 
proud of the fact that I did bring in Jan Hjorth, who heads up 
our international activities. I should say, however, that before 
finding him, 1 had selected two other people who fell on their 
faces. I got to a point where I was wondering if I had lost my 
ability to pick people. But when I was able to get Hjorth, I 
found that my confidence in myself had been restored in that 
respect. He has really been doing a great job for the company and 
has made a very meaningful contribution to our activities. 

Morris: What 1 sense is that it was originally set up on your suggestion 
as a part of the financial needs of Cutter. 

Lange: Yes. But I really can't say anything about that if part of what 

you're saying implies that I really did a great thing, because all 
1 was doing was doing my job. Here, some legislation came along 
and, as I was supposed to do, I became aware of it and we imple 
mented it and it was nothing more than my job to do this. 

Morris: Did you have a sense or a hope that what started out as taking 
advantage of a new piece of legislation could or should develop 
into a meaningful part of the company's sales and production? 

Lange: Oh, yes. I don't think there was a time after 1 became acquainted 
with this particular industry that 1 didn't strive in one way or 
another to try to improve the amount of business we were doing in 
international fields. I was always concerned that we were behind 
the parade and all of our industry in this area. So, I would say 
it was one of the uppermost concerns in my mind during my entire 
period with the company. It was, unfortunately, only toward the 
latter part that we began to see this thing really bloom like it 
is now. 



129 



ORGANIZATIONAL CHANGES 



Management Reviews 



Morris: In those first four or five years that you were with the company — 

(you've mentioned that Booz, Allen and Hamilton suggested that 

somebody like yourself be brought in — was this a part of a gen 
eral reorganization? 

Lange: Yes. They made a complete management study. They also brought 
in Mr. Nitchie, who was the production head. Prior to that time, 
Art Beckley had production as a part of his various responsibili 
ties. They made other suggestions. I don't recall all of them, 
although I've seen their report. They did make a very compre 
hensive report. They went into such things as establishing better 
cost accounting procedures, better personnel procedures and better 
research procedures. 

They really went through the company. I think it was a 
very enlightened thing that the management did at that time in 
engaging them, because Cutter had grown from a $1,000,000 to a 
$6,000,000 business, most being government business that every 
one knew was going to end and something needed to be done to put 
the company on the right road to do what they did do. I'm sure 
that the management study that Booz, Allen and Hamilton made was 
productive in that respect. There's no question that the company 
did the right thing and that Booz, Allen and Hamilton were 
effective in this regard. 

Morris: Going through the company records, I get the sense that about 
every ten or fifteen years, there has been a fairly major 
reorganization. I wondered if, from your observation, this is a 
continually recurring process in management? 

Lange: Well, you're speaking of management in business in general? 
Morris: Yes. 



130 



Lange: I think, to some degree, yes. Perhaps there may be some companies 
that don't find it necessary, but, you know, as a business goes 
along, particularly if things are going well it may be due to the 
people. People do get a bit too complacent in their work at times 
and 1 think a stirring up or a relooking at what is going on is 
healthy* 

We have a situation like that at BART right now,** where 
we've been growing like Topsy for the last ten years, and we are 
just about to bring in some management people to take an objective 
look at the whole thing, because we're spending a lot more money 
for people and we're not doing all the things that we ought to be 
able to do. 

So, I would say that a periodic review, which could very 
likely and often does result in a change of personnel, is a healthy 
thing. If you don't do it, you can become too inbred and you may 
compound the problems that you create as times go on. 

Morris: Are there any signs that it's time for such a review? 
Lange: At Cutter? 
Morris: Yes, for example. 

Lange: Well, I think they've had one here in the last, let's say, five 
years. 1 left there in 1968. Then, of course, prior to that, 
David had come in and then he put Dick Hawley, whom you know, 
into his job. That job's been blossoming into the presidency of 
the medical products division, which it is now. The man that I 
had hoped would follow me successfully, Ralph Richardson, as vice- 
president for marketing wasn't found to be acceptable to the present 
management. So, he is no longer there. They changed their vice- 
president for manufacturing from Bob Sandberg to the fellow that's 
there now, Dick Shock. 

They've done a great many things in terms of turning the 
organization around and doing things differently than they were 
done before. I think that all of this is good. I think it has 
to be expected because, irrespective of how good some of the other 
people who ultimately leave think that things are, when a new person 
comes in, he sees things with new eyes and with a new perspective. 
If he's any good, he's got his own ideas as to how things should 
be done. Part of his responsibilities, I think, if he's the right 
guy and has been given the responsibility, is to make the changes 
that he thinks are going to produce better results. 



** 



Bay Area Rapid Transit District, just beginning operation at the 
time of the interview, of which Lange was then a director. 



131 



Lange: So, I think that we've been having a reorganization for the last 
four or five years. I don't think they're finished with it yet. 
So, I think 1 have to say that it isn't needed because it's 
already going on. [Laughter] 



Pharmaceutical Controllers' Survey 



Morris: If it's happening, that's one clue that it was time. Going back 
to when you were trying your ideas out in working them out with 
the company, how did you come to do this lengthy questionnaire 
that you did in 1950? 

Lange: You'll recall that this is stated here. [Refers to copy of 

questionnaire. ] It's prepared for members of the drug, soap, 
and cosmetic industry in connection with the organization then 
known as the Controllers Institute of America. The Controllers 
Institute, now known as the Financial Executives Institute, was 
and is a very prestigious association of financial men. They 
have a number of committees that do various things incidental to 
the interests of its members. One of them is the group that was 
then known as the Drug, Soap and Cosmetic Committee and I was the 
chairman at the time. 

One of our problems was that we had dif f iculty--(we being the 
various members of this committee, all representing pharmaceutical 
groups of one kind or another) knowing what norms were and what 
other companies were doing about various things. This was due to 
the fact that there was considerable reticence on the part of 
people in this industry to exchange this kind of information, 
believing that this was a kind of privileged information that 
shouldn't be given out because you'd be giving away the "family 
jewels." 

So, we decided--! think it was partly due to my many com 
ments along these lines, because I wanted some of the information 
too — to make this independent and confidential survey, which was 
done. I haven't reviewed it lately, but I seem to recall that we 
had the data summarized independently, so that we weren't able to 
say who said what. Thus, the participants knew that they weren't 
going to have their own information pinpointed as being their 
company. At the same time it gave all of us an opportunity to 
compare our own activities with what appeared to be some kind of 
an indication of what was going on in the industry. For example, 
one of the questions is: [Reads from questionnaire] -What does 



Deposited in the Old Timers' Room, Cutter Laboratories. 



132 



Lange: a salesman's salary become after he has completed his training 

period?" This question produced replies that indicated what the 
norm was and this gave me an opportunity to say, "Well, this is 



what we're doing. This is what the rest are doing, 
good or it isn't good." 



So, it's 



All of us had this kind of a need for this study. As I 
recall, it was considered very, very useful. But, like anything 
else of this kind, it is only good for a short period of time 
unless it's updated. Now, I notice on another sheet here that 
we're talking about maintenance costs. I see a note by Dr. Bob. 
He doesn't say it's Bob, but I recognize his handwriting. He had 
looked it over and, I'm sure, made some use of it. 

So, 1 believe that this was considered very, very useful and, 
I think, for the first time, it brought out information from the 
rest of the industry that individual members of the industry did 
not have. But, so far as I know, it was never repeated, so the 
extent of its use was limited. 

Morris: It gave you a baseline, but then nothing developed from the 
baseline. 

Lange: Right. 1 was the chairman at that time and, then, as happens with 
most of these things, I was the chairman for a year and then some 
one else becomes chairman and then someone else. You know, unless 
someone exerts a certain amount of leadership along this line, this 
kind of a project may or may not be continued and it wasn't in this 
case. But it certainly was useful to us at the time. 

Morris: Useful to you and to Cutter? 

Lange: Oh, yes. To me and to Cutter as a whole, because it went into 

all kinds of things, as you no doubt have realized in going over 
it. We were able to make a great many comparisons with our own 
activities and the rest of the industry. 



Moving Production to the Market 



Morris: 1950 was when the branch plant was established at Chattanooga and I'm 
told that you also had a major role in the decision to have a branch 
plant. 

Lange: This is a good illustration, as an answer to one of your earlier 
questions, of what kind of things did I get into. There was a 



133 



Lange: great initial acceptance of my abilities when I came into the 

company. Not that they necessarily lessened, but there was such 
an absence of whatever abilities I may have had up to the time, 
that there was, I think, a feeling on the part of the Cutter 
family that 1 was bringing some expertise and some abilities that 
they needed and hadn't been able to use before, because they didn't 
feel that others had it. 

So, one of the things that we came to an agreement on and I 
think that 1 may have had something to do with it, was the fact 
that we needed to start producing our solutions in the east 
because freight costs were killing us. You perhaps know that our 
IV solutions are mostly water and thus costly to ship. 

Morris: Ted Cutter pointed that out to me and, once said, it's 
obvious. [Laughter] 

Lange: Yes. As I remember it now, a case of six bottles of IV solutions 
weighs twenty-seven pounds in glass and sold, at that time, for 
something like eighteen dollars. When we put together the costs 
of shipping this stuff to all parts of the country, we were just 
being killed by the freight costs and this was a business that 
was growing fast. 

So, it was very easy to see that if we could establish a 
plant elsewhere in the United States, closer to our markets, at 
least for a part of our products, that such a plant would easily 
and soon pay for itself. So, we decided to look into the matter 
of establishing such a plant elsewhere. We first went to the 
Fantus Company. Fantus is still a company that is in existence. 
They specialize in plant locations and relocations. However, we 
didn't get too far with them. 

So, after several months of studying the problem, Mrs. Lange 
and I got on a train --at that time we weren't riding planes—and 
went to several different places in Kentucky and Tennessee and 
finally came to this place in Chattanooga where we saw this par 
ticular piece of property. I got Bob on the phone and he came 
down and we proceeded to buy it. But that, of course, was pre 
ceded by studies that showed that that general area of the country 
was within the center of our distribution--of the business that we 
had in the eastern part of the United States. 

As I remember it, we saw ourselves saving something in the 
neighborhood of $300,000 or $400,000 a year in freight. If I 
remember correctly, we spent something like $1,000,000 for this 
new plant at that time. So, it wasn't hard to see that, in addi 
tion to giving better service, we were going to be paying for a 
new plant very easily. 



134 



Lange: This move was a step in the right direction for the company. 

It was, of course, the first of many such things that have happened 
since then. The particular piece of ground that we bought was 
thirty-five acres and it was in a good labor market. We had the 
kind of cooperation from the city of Chattanooga that we wanted. 
Once we saw this particular place, it was like — Eureka! We're 
home! 

Morris: Had the city authorities lobbied you at all, or the authorities in 
Tennessee? 

Lange: Not till we got there, because, I guess, as far as I know, we 

found this place by ourselves. That is, we went into Chattanooga 
and made a contact with one of the main banks there. I've for 
gotten which one it was. It was one of the correspondents of 
our bank here that we'd been in touch with. They had selected 
a couple of sites and showed them to us. Those of us mostly 
concerned with the project recognized that it was the answer we'd 
been seeking. After that, the city was very cooperative. They 
gave us some tax breaks during the first four or five years and 
they have been generally fine to work with. 

I don't know how it's been in recent years, because it's an 
old story now. The plant's been there since 1951, so it's getting 
to be an old plant, as plants go, you know- -twenty- two years old. 
But it certainly was a major step for our company and one that 
made a great deal of difference in our growth in many ways. 

Morris: How had that southeastern part of the country come to be such a 
good market for Cutter products? 

Lange: I don't think I know the answer to that. I started with the fact 
that it was the area of our principal business. I suppose it's a 
combination of things. Cutter has always had a predominance of 
small hospitals as their customers, all over the country. You 
must keep in mind that when we talk about the intravenous feeding 
field, we've been more or less number three in the field, with 
Baxter and Abbott almost always overshadowing us. They are bigger 
companies and they have been more aggressive and have been more 
successful in getting the bigger hospitals. Cutter, I guess, has 
been more successful in getting the smaller hospitals and, maybe, 
there are or were more smaller hospitals in that area. 

So, beyond that assumption, I don't really think I can tell 
you more. It's just that that's the way our business grew. Now, 
at the same time, I suppose that a great deal of this situation 
had to do with the people that were in these areas. Some people 
are more successful in developing an area than others and we've 
always had good people in the Southeast. Whether we've just been 



135 



Laoge: received there better or whether we've worked harder and had 
better results, I don't know. 

I started with the fact that the Southeast was where a large 
part of our business was. Also 1 believe this area still produces 
a significant part of our business. 

Morris: That's interesting when you consider the size of Cutter and that 
Abbott's headquarters are in the East, aren't they? 

Lange: They're in Chicago. If we did establish ourselves in the South 
east and were accepted there, it's only natural that our business 
would grow there and that it would stay. So, we've always had a 
real good foothold in the Southeast, probably due to a combination 
of work that was done by our own people and, perhaps, less com 
petition. 

Morris: The other question on that first branch plant was how did you 

finance that? That must have been a pretty major piece of money. 

Lange: You know, 1 remembered that and I'm going to specifically ask you-- 
have you seen Hugh Eyerly, or do you plan to? 

Morris: I have not seen him. 



Issuing Capital Stock 



Lange: I'm going to ask you to have him show you the prospectus for the 
first stock issue that we sold in 1951. Incidentally, one of 
your questions here refers to why we postponed "public issue." 
You refer to 1960 and I guess you qualified it by stating that 
it was only the listing on the American Exchange which you were 
questioning. 

Well, we had sold our first issue of common stock in 1951. 
As I remember it, the proceeds were something in the neighbor 
hood of $750,000. That new money, together with our own funds, 
was largely used to finance this operation. If you will see Hugh 
Eyerly and ask him to let you see that portion of the 1951 prospec 
tus, it would make specific reference to that earlier issue. 

It is correct that as early as '47, probably even earlier 
than that, we knew we'd have to do public financing, but then 
we did go into the preferred stock sale in 1947, which, of course 
relieved us of a considerable amount of financial concern for a 
period of time. But, at the same time, we also knew that sooner 
or later we would have to go to the public for some additional 



136 



Lange: money. This new plant, of course, accelerated our going ahead 
with a common stock issue. 

Morris: Then it was 1960 when it was listed on the American Stock Exchange. 

Lange: On the American Stock Exchange, yes. You see, first it was avail 
able on what is known as the "over-the-counter market," with which 
I'm sure you're familiar. The over-the-counter market was pre 
ferred by Blythe and Company and, probably rightly so, as an 
initial way to provide a market for our stock. 

Blythe and Company, at that time, made large markets in over- 
the-counter securities. They did not belong to the New York Stock 
Exchange and, in fact, I think, only recently have become members, 
due to their merger with Eastman Dillon and Company. The securi 
ties companies that trade stock on the over-the-counter market 
are generally unlike those that trade on the exchanges, the dif 
ference being that such a company makes its own market on stocks, 
both buying and selling, and thus establishes its own prices based 
upon whatever the circumstances are that cause them to establish 
one price or the other. 

In fact, when we finally went on the American Stock Exchange, 
it was over the violent objections of Blythe and Company, who 
knew they'd be losing out on the trading of our stock as a result 
thereof. But I'm sure it was the right thing to do and it took a 
lot of thinking on the part of the Cutter family to finally 
reach the decision that they should do that, particularly in the 
light of the Blythe concerns. But they finally came to that con 
clusion, I think, due to persuasions of myself and others. I 
believe they have subsequently felt this was the right step to 
take. 

The listing of a stock on a stock exchange, whether American 
or New York or others, is certainly preferable for stockholders. 
This is due to the ready market price availability which is often 
not the same in the OTC market. 

Morris: The question that occurs to me in this business of working with 
a brokerage firm and selling a preferred stock issue—and I also 
found a reference to MONY [Mutual of New York] as providing some 
large chunk of capital — is: does this kind of outside money, as 
it were, have an effect on company policy? Is there any wish to 
say, "Cutter should do thus and so?" 

Lange: No. I suppose there is some of that in other situations, but 

I'll have to say we've been very free of it. Now, when we first 
got in bed with Blythe and Company, one of their officers made 
quite a pitch to become a member of our board of directors. They 
like to do this. A company that underwrites a stock issue would 



137 



Lange: like to be in the inner circle in this way. However, the Cutter 
family never accepted that concept and, I think, properly so. I 
think they've been glad they didn't. 

If they had gone along with the idea, we would have had more 
of the kind of thing to which you refer. But from the standpoint 
of the insurance companies and the underwriting companies and the 
banks, 1 think we've been very, very free of this kind of thing. 

Of course, any lender does have the opportunity to make 
requirements. They start out by requiring that you sign an 
agreement that has many provisions in it which, by their very 
nature, restrict a great many things that you can do, such as 
what kind of dividends can you pay and what kind of working 
capital levels you must maintain and what kind of approvals you're 
required to get from them if you do this or that or something 
else. 

So, once they establish a working understanding incidental 
to making a loan or providing an underwriting or something of 
this kind, they're pretty well protected unless the company 
violates its obligations, which, of course, Cutter never did. 
So, I would say that we were really free of this and happily so. 
I don't know that that's true in all instances, but it certainly 
was true of Cutter. 



Cutter Directors and Banking Relationships 



Morris: In 1951, the first non-Cutter, ^either family member /jor executive, 
was appointed to the board and he was a banker, Ransom Cook. 

Lange: Yes. In other words, you mean outside of the employees of the 
company. I don't recall that it was as early as '51. It might 
have been. No, I'm sure it was not, because he was not on the 
board when I was appointed, which was in 19-^. So, it was some 
time later. Of course, Ransom Cook was appointed largely, and I 
think solely, because he was so well-respected by the Cutter 
family and by any of us that had anything to do with him. We 
felt he would make an excellent board member, which he did, and 
continues to be. 

Morris: His primary career was with Wells Fargo. 

Lange: Right. And he wound up being their top man, their top top man 
as chairman and chief executive officer. He's now retired from 
Wells Fargo, but he's still on their board. But he, at no time-- 
and I will emphasize this — even when he was with the bank and in a 



138 



Lange: managing capacity, did he commingle what he did as a director with 
what he did as a management representative of Wells Fargo. 

Morris: 1 didn't mean to suggest that. What I'm interested in is, what 

were Mr. Cook's gifts as a person, or what is there special about 
Wells Fargo Bank, because the Wells Fargo Bank connection and 
business relationship with Cutter goes back to the very first days 
when Wells Fargo was American Trust Company and even before it was 
the American Trust Company. 

Lange: You're really asking two questions. Taking the bank thing, you've 
analyzed it. Bob's father and his associates started to do busi 
ness with the then-company that is now Wells Fargo and we've Just 
always been with them. We've had many overtures by all of the 
banks — Bank of America, Crocker, and so forth—to tie in with them 
and we have always said no, because we have always gotten every 
thing we wanted from Wells Fargo. They have pretty well said, 
"Well, what do you need?" and then have, in one way or another, 
provided it. So I think that the reason we have always been with 
Wells Fargo is just because they have always been everything we've 
wanted and we haven't had a need for anything else. 

Now, the fact that Ransom Cook came into the picture is 
totally unrelated to that point. He came into the picture because 
we all knew him. When I first came with the company, he was the 
man, as a loan officer, with whom I talked about making loans and 
this sort of thing. He was down the line. He was an officer, but 
he was not the top man. But I and the others had known him for 
many years and had watched his progress and had learned to admire 
him and to respect his decisions. 

I have often said and still feel that when we have a board 
meeting, 1 almost always learn something from him. He is a very 
capable man. He has good judgment when it comes to basic financial 
problems and analyzing balance sheets and things of this sort. 
He's a very capable man and we're very, very fortunate to have him 
on our board. 

In fact, I often wondered why he was on our board, because he 
was on many boards when he was with Wells Fargo. But, at the same 
time, I think he also sort of felt an affinity to us, because of 
our long association and, now that he's retired, he's continued to 
be on our board. When he's not out of town, he's at our meetings 
and he can be very effective. He says things that may be hard for 
the management to accept. He can be critical, but this is his job. 
So he is an outstanding man on our board. I'm very pleased that 
he continues to be a board member. 

Morris: Would somebody like Mr. Cook at Wells Fargo offer advice and counsel 
in the early days on things like acquisitions? 



139 



Lange: Only when it was asked for. But if it wasn't asked for, no. In 
other words, they never would step in and say, "Hey, we've seen 
you're doing this or that. Why don't you do it this way or that 
way." On the other hand, they have also provided every help when 
we come to them and ask for it. Our relationship with that bank 
has been magnificent. 

Morris: 1 had the feeling that this was so, because, looking at the early 
ledgers, it's very clear what a very supportive relationship it 
was. 

Lange: We've really never gone to them for anything to which they've 

said no. And, you know, this is quite remarkable. But, at the 
same time, I'll have to say that we've earned it. When we've said 
we were going to do something and we went into an agreement, we 
followed it. They haven't had trouble with us either. There have 
been times when, I'm sure, they wondered if they were going to get 
their money out, but, if so, they never said anything to us about 
it, you see. So, it's just been a delightful arrangement. 



Fiscal Results of the Polio Vaccine Crisis 



Morris: The wondering if they were going to get their money back leads to 
my next question. In 1955, I find the first drop in the sales 
curve from $14,000,000 in '53 down to $10,800,000 in January of 
'55, which was before the polio recall disaster. Do you recall 
what brought this on? 

Lange: Yes. We deliberately decided to de-emphasize some of the parts 
of our business, having to do largely with our blood products in 
the interests of promoting sales of polio vaccine. We saw this 
polio vaccine as a great opportunity for us to increase our sales 
and our earnings. Of course, we did not anticipate that anything 
such as did happen would happen, so we had deliberately planned to 
lessen our other activities in favor of polio. 

Then the polio recall came along and the result was an 
$11,000,000 year in 1955--a very poor year. But it was only a 
temporary situation. 

Morris: That's really remarkable. Aside from the financial disaster that 
year, were there any changes in company direction or organization 
as a result of that? 

Lange: Oh, yes. I would say that that really started us on the acquisi 
tion program that we carried out. We put our heads together in 
order to decide what the different things were that we were going 



140 



Lange: to do to meet this situation, for it became clear that we had a 
major problem on our hands in every respect. 

One of the things that came out of our deliberation was that 
we should really get with it on the business of seeing what we 
could do acquisitionwise. This was followed by the acquisition of 
a company in Kansas City known as Ashe Lockhart Laboratories and, 
subsequently, another company known as Haver-Glover Laboratories, 
which has since become the Haver -Lockhart part of Cutter Labora 
tories. Acquisition of other companies followed. 

I suppose we would have done this anyway, but we really had 
a major reason for getting on with it in the light of the polio 
problem. I don't think there's any question that this acquisition 
program had a great deal to do with the results of the company as 
a whole. In fact, I haven't looked at the percentages recently, 
but I believe we've been running in the neighborhood of forty per 
cent of our business being from the companies we've acquired. So, 
it really has been an important thing to us. 

Morris: I'm interested in how you managed, again, to raise the capital to 
acquire the companies when you were also saddled with sizable 
judgments in the cases that resulted from the polio crisis. 

Lange: Well, you've raised a point at the end of your questions which I 
think I'll answer now, because it really is something that I have 
always been proud of. Prior to the time that this polio thing 
happened, we had planned to go to the public with another issue of 
common stock. In fact, were in registration with the SEC for a 
new issue when the polio matter occurred. 

Of course, the minute this thing broke, we realized that we had 
to withdraw that registration and that we could not go ahead with it 
because, obviously, that wasn't the time to sell new common stock. 
But we still needed the money. So, I was given the job of going 
East at that time, and finding the $3,000,000 that we had expected 
to raise from this common stock issue. 

So, again, I took my wife Esther with me and we first went to 
Boston. At that time, we had a loan with the John Hancock people. 
I went to them first for they were obviously the ones that one 
would think about first when planning to try to borrow more money. 

Morris: Since they already had an investment in the company? 

Lange: Yes. You know, I've never seen a big company more excited and con 
cerned about a problem than they were, or more anxious to get out 
of their arrangement with us. Not only were they uninterested in 
doing anything more with us under those circumstances, but they 
were very interested in knowing how they could get out. So they 
gave up a number of their prerogatives under our agreement in the 
event that I was able to work something out with someone else and 
pay them off. 



141 



Lange: So I went to New York. I think the whole trip was about six 

weeks but I came back with the $3,000,000 from MONY, Mutual of 
New York. This was one of the most difficult things that I think 
I've ever had to do, because, you know, there was absolutely no 
climate for any new company making a loan to us. However, I stayed 
with it and met with their various committees and with their offi 
cers and answered their questions and all the rest. 

We finally worked a very satisfactory agreement. It was one 
of those things that looked like an impossibility. However, we did 
work out an agreement and then did make the loan. 

Morris: How did you get in contact with MONY? 

Lange: Through Blythe. Blythe vere our investment bankers. One of the 

advantages of being tied up with a firm like that is that they always 
know which lending institutions are looking for what kind of busi 
ness. All lending institutions try for a number of things. They 
want diversification of industries. They want diversification of 
locations. They want diversification of amounts lent, whether it's 
$100,000,000 or $1,000,000. They want all kinds of diversification— 
and here is a good illustration of where Blythe was very useful to 
us and received a finder's fee because of their work. They knew 
that at that time MONY was interested in getting in the pharmaceutical 
ousiness on the West Coast, because they didn't have any investments 
in that field and location* It was as a result of their introduc 
tion, after some research on their part, and our subsequent discus 
sions that we finally were able to get together. But Blythe was the 
key. 

Morris: Because there was the polio crisis in the company's recent history, 
did they exact any unusual or additional regulations in the agree 
ment? 

Lange: No. I'll always take my hat off to them for that because they 

really didn't. They were gentlemen from the beginning to the end. 
They were tough as the dickens in the questions that they asked; 
they probed and they were penetrating in every respect. But, in the 
final analysis, we got an agreement that we had no problem living 
with and everybody wound up happy. 



142 



VICE-PRESIDENT FOR MARKETING 



Evaluating Management Potential 



Morris: 



Lange: 



Morris: 
Lange: 
Morris: 
Lange: 



Morris: 
Lange: 

Morris: 
Lange: 



Were you already vice-president for marketing when you arranged 
this agreement? 

Yes, I was. This was 1955. I became vice-president for marketing, 
but also retained the vice-presidency for finance, in 1954. So, in 
1955, I had both jobs and it wasn't until 1956 that I relinquished 
the finance job to Mr. Thomas, who succeeded me in that area, and 
confined myself to marketing. So, the answer to your question is 
yes. 

You were both? 

Yes, I was both, for a period of two years. 

And Mr. Thomas had worked under you as controller? 

Yes. He was the first man I employed when I came with the company 
and I employed him with the objective of his being my successor. 
He was ten years younger than I and I viewed him as being just what 
he turned out to be. 

That's a great tribute to him and also to your intestinal fortitude 
to hire somebody who could replace you. [ Laughter j 

There's no question that this was a good man and that we made a 
good selection. He worked out well until he left us. 

Why did you move over then to marketing? 

Well, I'm a very critical person and I was very critical of the 
absence of a great many things in our marketing and I made my 
views known. So, finally, the management said, "All right. Why 
don't you take that job on?" They weren't happy either. 



143 



Lange: 



Morris: 



I guess it was a case of, "If you know so much about it, you do a 
better job." [Laughter] It was an unusual thing, because here's 
a financial man — sure, I did a little selling when I was at school, 
but what I didn't know about selling would fill a great many vol 
umes. Yet, I knew what made sense and I think I knew how to sur 
round myself with the kind of people who could supply the experi 
ence I didn't have. 

I think that the years that I was marketing vice-president 
were productive and I question whether the rest of the organization 
felt, for any length of time, that it was a mistake. But, of course, 
I'll have to leave it to them to say whether it was or not. 



What were the things that particularly bothered you? 
were absences in marketing. 



You said there 



Lange: Well, I think I began with the fact that I didn't feel that we were 
making the right kind of sales progress. I thought we had wrong 
men in key spots, with nothing being done about it. I felt that we 
weren't getting enough government business. I felt we weren't ex 
panding our activities in the field in the ways that I thought we 
should. I was unhappy with the advertising that we were doing. 
I was just plain unhappy with the whole thing. 

I just didn't feel that we were going to be getting any place 
under the existing leadership. Since I had a big stake in the 
future of the company, I made my thoughts known. 

Morris: I have a question that may not come here in time, but, if you know 
about it, I'd like to know the origin of the "Little Willy Book." 
That's the one with little kids' drawings in red on a rough brown 
background, and a very heart-wrenching little piece about why 
parents should get their children immunized. It's got a story 
about little Willy's mother, who took him down to be exposed to 
chicken pox. 

Lange: I don't think that I can tell much about that. This was something 
that was done in our advertising department and with our advertis 
ing agency. I really don't know that I can answer what its origin 
was. It was purported to be a piece that would develop business 
for us and it did, but how it got started, I don't know. 

Morris: It's a very appealing little booklet and there isn't anything on 
it, except that there it is. The copy in the Old Timers' Room 
says that a million of these have been distributed, which makes 
it seem like a pretty useful sales piece. 

Lange: Yes. I believe it was partly in connection with our attempt to 
revitalize our pediatric business, but what the origin of it was, 
I don* t know. 



144 



Morris: So, how did you go about remedying what you saw as the lacks in 
marketing? 

Lange: Well, I made some changes. I put one of our men into a job in 
the East handling our government business. He had been in the 
Berkeley office and had not been doing very well. He's been doing 
a beautiful job in the East and he's still there, still on it. I 
made some changes in the field. I instituted a number of things 
like market planning. 1 made some organizational changes. 

At that time, we had distribution, which is shipping and that 
sort of thing, under the heads of our branch managers and we took 
that away from them and gave it to another end of our business, so 
that our managers could be devoting more time to sales. I insti 
tuted sales meetings that had not been held and on a different 
basis. I think I just went through that thing from top to bottom 
and made a number of changes, all of which I'm sure I don't 
remember, but which seemed to be pertinent at the time. 

Morris: It looks as if you did quite a lot in the sales training field. 
There are quantities of photographs. 

Lange: Oh, yes, a great deal in training. In fact, that has been con 
tinued. At least it was, up until the time that Mr. Uls,',, a 
name that you may have heard, left. He retired here a few months 
ago, but he became our principal trainer and did some very fine 
work in that regard. Also, I brought this chap Richardson into 
the picture and he too brought a lot of that kind of change into 
our activities. 

It was largely a selection of different people and putting 
different people in different places, so as to get better results. 



Selecting and Training Salesmen 



Morris: Did you come up with any ideas as to what makes a good Cutter 

salesman and what kinds of things you have to train salesmen for? 

Lange: We made an analysis at one time by contacting a number of our 

hospital customers, since most of our salesmen were and still are 
in the hospital field. The question was: Why do you buy Cutter 
solutions instead of Abbott or Baxter or somebody else's? It 
wasn't that brash, but that was the essence of what we were ask 
ing. Well, the essence of the answers was that they liked the 
Cutter salesmen. it wasn't that the Cutter product was better 
or anything else. It was just that they liked the Cutter salesmen. 



145 



Lange: So, yes, I think that I had to conclude that, first of all, a man 
needs to be trained, and we can go back of that. We adopted a 
rule that we wouldn't hire anybody just out of school, that we 
wanted somebody that had not only had the proper education, but 
that had had some kind of sales experience, even if it was only 
for a year, but actually out in the field. In addition to that, 
we instituted a very careful screening program of our salesmen. 
We changed our previous procedure. 

Then, of course, we felt that every salesman had to be 
trained. After he had come with us and had had his initial 
experience in the field, we brought him back into the home office 
for his training. We exposed him to a lot of things, like a lot 
of opportunity to do a lot of drinking and things of this sort, 
to see if he knew how to handle himself properly and all the rest. 

I think we were primarily interested in making sure that he 
knew what he was doing, that he could handle himself well. We 
instituted such things as play-acting--you be the customer and I'm 
the salesman. We had some experienced salesman act as the customer, 
to make sure that the guy knew how to answer for himself, that he'd 
be the kind of a guy that is likable and has the right kind of a 
personality. We were always interested in his family and if he could 
handle himself and be depended on to handle himself properly when 
he's out in Podunk some place for a couple of weeks and that he'd 
turn out to be a good salesman. 

Morris: All the salesmen rotated out through the home office at some point? 

Lange: Oh, yes. They all came into the home office for training. That is, 
they did. 1 guess they still do the same thing. Then, of course, 
there's constant training in the field. In other words, that's one 
of the regional manager's responsibilities to go out and work with 
salesmen and keep them updated and, of course, to frequently hold 
in-the-field meetings with all of his men. Training is a never-ending 
function, particularly when you're dealing with changes in products 
and the addition of new products and all of that. 

Morris: Is this more of a factor for a good salesman in something like 

Pharmaceuticals, where there are so many new products coming out? 

Lange: I think so. And particularly where there are so many technicalities 
involved. The guy is talking with a registered nurse. He's talking 
to an anesthesiologist. He's talking to a doctor. He has to pretty 
well know what he's talking about, unlike somebody that's out selling 
a pipe wrench, or an automobile, or some other thing of that sort. 
So, yes, 1 think that probably, in this field, it's one of the really 
important points to be well-trained, much more so than elsewhere. 



From Cutter Laboratories 1972 Annual Report 








$90,000,000 



80,000,000 



70,000,000 



60,000,000 



50,000,000 



40,000,000 



30,000,000 



20,000,000 



10,000,000 



Wages 32.0* 



Common Stock Dividends 1.3* 
Employee Benefits 4.5** 



Materials and Supplies 36.5* 



Taxes 2.0* 



1942 1947 1952 1957 1962 1967 1972 



Other Costs 22.6* 



Reinvested Earnings from 
Current Operations 1.1* 



•Retirement Plan, Group Life and Health 

Insurance, State Unemployment 

Insurance, Social Security 



••Interest, Insurance, Depreciation, 
Legal Fees, Utilities, Advertising, 
Traveling Expenses, Freight, etc. 



146 



Sales Growth 



Morris: Your formula of shake-up and move around and bring in new people 
paid off. In an eight-year period, the company sales tripled. 

Lange: Yes. From the polio year, which was $11,000,000, more or less, to 
last year, which was $89,000,000. If you want to go to '68, which 
was my last year, it was $51,000,000. So, I think that there isn't 
any question that we made a major turnaround in sales and that that 
turnaround has continued. So, I think that the proof of the pudding 
is in the eating, in this instance at least. 

Morris: What struck me was that the sales curve had showed a steady growth 
up until that point and then you've got this astronomical jump. 
That's really unbelievable. 

Lange: That's the sales growth. Well, yes, to go from, let us say, '47, 
which is like $8,000,000, to $90,000,000 in '72—1 don't know that 
that's too good, because—what is that? --twenty-five years should 
be a lot better than that. Baxter's was. But it's not a bad pic 
ture. I'm not happy with it. I wouldn't say I'm ashamed of it, 
but it should be a lot better. Of course, I'm never satisfied. 
I always start with that point, you see. But, anyway, it's not 
bad. 



Morris: How much of a factor were the improvements in production and 

machine development and market research? In other words, how did 
the company manage to keep the production up to what you had your 
marketing force able to sell? 

Lange: Well, it never really did. I still get kidded, but the expression 
that was used so often, that is, "you can't sell anything from an 
empty wagon"--! feel that we've always had a lag between production 
capacity and sales capacity. This was due to a lot of things, but 
it's still a problem that is bugging us. We still could sell twice 
as much of our blood products as we have, which is one reason why 
we're building a new plant in North Carolina right now. I would 
say that on an overall basis, and this is not true of all of our 
product lines, but, as a whole, production ability and capacity 
have never kept up with sales capacity and haven't as of today. 

Now, market research was one of the things that I instituted 
that we hadn't had before and which has been a boon. I don't know 
how people can live without this sort of thing, but it was one of 
those things that we hadn't had before. We still have it. It's a 
growing part of our activities and has been beefed up from what it 
was when 1 was there, which is the way it should be. It has helped 
me to comprehend our sales capacity levels better. 



147 



Lange: In many ways, I hope that we never reach the time when we have an 
over amount of production capacity, but I would like to see us be 
a little closer, productionwise, to what we could do, because we 
could make some of those sales figures look sick if the products 
were available. 

Morris: So, in other words, it's a matter of the sales force and the sales 
projections pushing on the production end of things? 

Lange: Right. I think that's been perennially true. Sure, there have 

been situations where we've had to gear production to sales capa 
city, because there are a few products where we could probably 
produce more than we could sell and it is unrealistic to expect 
that we'd sell more. But this is not true of the bulk of our 
business. 

Morris: How much of a factor has inflation been in costs and profits in this 
last twenty years or so? 

Lange: It's not anything I've ever been too concerned about. We sell 

largely to wholesalers, as you know, as opposed to selling to the 
consumer and our selling prices follow our costs. Most of our 
products are not sold over the counter to a customer. As to the 
products we sell, the consumer doesn't really have a choice as to 
whether he's going to take it or not. The doctor says he needs it 
and he gets it. So, I've just not even thought too much about that 
factor as it applies to our business. 

Morris: How about the IBM computer? Was that primarily a matter of 
sales and budget requirements? 

Lange: No. I think this new equipment was primarily acquired to give us 
better control over our inventories and the ability to utilize 
inventories that were here and sales that were there sort of 
thing. Now, of course, it's gone much beyond that. It's producing 
a great many statistics and facts that are helpful all the way 
through and, in addition to that, I think we're in a computer age 
where, you know, everybody's got to have a computer or they're not 
quite with it. 

But, to a large extent, it was a production control device. 
It was an inventory control device and it was a product movement 
device — that sort of thing. 



148 



CUTTER FAMILY LEADERSHIP 



Morris: Do you know what led Dr. Cutter to decide to step down as president 
in 1962? 

Lange: Well, let's see. I think he was sixty-five at that time. While 
he has never really stepped out of the company and probably never 
will, I think he's always been realistic enough to know that people 
should step down and let others step in. 

Fred, of course, always wanted to be the president of the 
company. He was the logical one, since Ted's health didn't ever 
really permit him to take on that sort of a responsibility. Then, 
of course, Fred's untimely death led to the need to make a further 
decision as to where the company was going to go, as a result of 
which Dave was selected as the head man. 



Morris: That must have been kind of a tough situation to have Fred die 
unexpectedly, when he'd only been-- 

Lange: Three weeks, you know. All of a sudden, he had a stroke and in 

three weeks he was gone. He was a very vital guy in our business. 
It was a great disappointment to me, personally, when he died, 
because he always had a flair for marketing that I think went beyond 
what either Bob or Ted had. I think he had a realization of needs 
that went beyond what they had. He was a delightful guy to work 
with and I think the company would have prospered— I can't say even 
more than they have or anything else like that, because I wouldn't 
presume to say that, but he would have made, as he did make during 
the years that he was president, a very fine president over the 
years. It was a great loss to the company, no question about it. 

Morris: Did you have any thought that you might like to be president when 
it came up unexpectedly? 

Lange: Oh, yes. In fact, that's one of the principal reasons I retired at 

age sixty, because it became clear that I wasn't going to be selected. 



149 



Lange: This is understandable. 1 have often wondered what 1 would do if 
I were Bob and I had sons and 1 was in the control of the business 
and 1 wanted to step down and here was a young man that was unques 
tionably capable, a CPA with a good head on him. Would I give 
somebody else the preference over my son? And I really can't say I 
would. 

Morris: That's why I say it must have been a very tough situation for all 
involved. 

Lange: Yes. And it's one of the hazards that I understood when I went 

with the company. I knew it was a family company. I knew that it 
was likely to remain a family company, because Bob has never made 
any secret of his belief that the company should remain in the 
Cutter hands. 1 think that as long as he's got anything to say 
about the company, it will. What will happen when Bob is gone, I 
don't know, but, as long as Bob's here, the last thing that will 
ever happen is that the control of the company will get out of the 
hands of the Cutters. But I knew this. I had to hope, as I'm sure 
others did, that they would find me so acceptable that they couldn't 
make any other choice. But, in the final analysis they chose a 
member of their family and their action was understandable and no 
surprise. 

Morris: 1 wanted to ask you a bit about your other career in civic matters 
that you managed to keep going while you were improving Cutter's 
financial position. Do you think that there are company attitudes 
that encourage civic participation? There have been many people, I 
have noticed, in the company who have been active. 

Lange: It has always been the policy of the company to not discourage out 
side activities. I don't know that I can say they've encouraged it 
as such. In other words, they haven't said, "Look, out of this 
department, we want three people that will be spending at least some 
of their time on this project, that project, or some other." At 
the same time, they have always taken the attitude, "Look, if this 
is what you want to do and you feel you can do it and still handle 
your job, go ahead." 

So, there has been an encouragement to do this by not discourag 
ing it, if you know what I'm trying to say. A good example of the 
kind of thing I mean is, let us say, in United Crusade. They've 
always been supportive of United Crusade, and, yet, they've always 
been reluctant to say, "Look, we want people that are earning $10,000 
a year or more to give one per cent of their pay." They have never 
said that. They have said, "This is what United Crusade recommends 
and we hope you'll look at it, but what you do is up to you yourself." 
This has been their policy right along. They have never objected 



150 



Lange: to it, unless there was a situation where it was really reflecting 
on one's ability or doing one's job. In certain cases, Fred, par 
ticularly, was perhaps more inclined than either Bob or Ted to get 
involved in outside activities himself. He often recommended that 
I be approached for something that he felt 1 could do when he was 
asked for some help. 

The company's attitude has been very progressive in this 
respect. They've recognized that there's a responsibility there. 
They've also recognized that it's a man's own decision and they've 
never let it interfere with a man's career in any way. 



151 



6. A VARIED CIVIC CAREER 



Oakland City Councilman 



Morris: How did you happen to get involved in local politics? 

Lange: Well, I guess it was preceded by several things. I guess my first 
civic activity was with the Oakland Chamber of Commerce and I 
believe that I was introduced into that organization because of 
Fred. That led to a number of things. I had several activities 
with the Chamber. I was on their board and was an officer of the 
Chamber and then with the Taxpayers Association, which was still 
another. 



Then I became involved with the Oakland Symphony because it 
was a needful activity. So, to a degree, I guess I became known 
in the community. 

Morris: That's a pretty good base, those three organizations. 

Lange: Yes. John Houlihan, a name that you may recall, who was mayor of 
the City of Oakland for many years, knew me. I guess he knew me 
largely because of my symphony activity. He approached me one 
day to take a spot on the Oakland city council. A man that had 
been on the council for many years died suddenly, an older man, 
and they had a vacancy. As is the practice, the mayor then appoints 
a replacement with the approval of the rest of the council. So, he 
wanted to submit my name and, after thinking about it, I said yes. 

So, that was my entree into politics. I was on the city 
council for two and a half years. After being appointed, I had to 
run for the office in the following election, which I did, and won. 
Before my term was over, however, I decided that it was not the 
kind of thing I liked, so I resigned. In a way, I have been on the 
fringes of politics ever since. I don't really consider my BART 



152 



Lange: activities political, although it is to a degree. It's political 
to the extent that you're in the public eye all the time. It's 
political to the extent that you're appointed and that you repre 
sent people. But I almost envision that as being something where 
my business experience is being utilized, I hope effectively, in 
connection with our various activities. 

But then I've also been involved politically in other ways. 
I've been in many campaigns to help others become elected to 
office. I'm currently the finance chairman for Mayor Reading's 
campaign for re-election in Oakland.** But I have absolutely no 
desire and haven't had, after my city council experience, to become 
involved in another political job. I've had two or three opportuni 
ties to become mayor ot the City of Oakland, but it's never been 
anything I've wanted to do. My two and a half years on the council 
was enough. I really disliked it. 

Morris: In what ways did you dislike it? 

Lange: Well, because, I guess, of the pettiness. That's really the differ 
ence between the council and BART. In many ways, there are similari 
ties between the two. But, you know, you'd sit in a city council 
meeting and you'd have to cope with a bunch of all of the kooks who 
really don't have any good common sense. They aren't responsible 
people, but they are taking potshots at you that are really unmerited. 
My wife used to get a lot of these freak phone calls and this was a 
bother. 

Also, politics carries with it the responsibility to be out at 
evening affairs with people that I don't particularly like. 

On BART, for example, I almost never have an evening activity. 
It's all during the day and there is really a great difference between 
the two. So, I'm in politics, but I'm not. I'm sort of on the 
fringes of politics. 

Morris: But you are very much involved in public affairs. 
Lange: That's right. 

Morris: What about the process of campaigning in the election that you did 
stand for? 

Lange: It didn't bother me particularly, except I had a very rough opponent 
at the time. But that didn't bother me either. Once I'd made up my 
mind I was going to run, I just dedicated myself to doing it. But it 
was beyond that. It's the whole concept of trying to please everybody 



** 



Which was successful. — Ed. 



153 



Lange: and no matter what you do, you can't, and wondering just what you're 
accomplishing as a result of it. At least at BART, I feel that I'm 
doing something. I can point to things that are a direct result of 
what I have been able to bring to it. 

Morris: That's an interesting contrast. 

Lange: This was very rarely true of the council. 

Morris: What about Mr. Beckley? Did he give you any advice and counsel from 
his service on the Berkeley City Council? 

Lange: Yes. I would often confer with him, because he had a good head. 

He was a good politician. He was the kind of a guy that loved being 
a politician. 1 mean if he'd have to be out every night of the week, 
it wouldn't bother him. He loved this kind of thing. Art and I were 
good friends and he helped me in many, many ways. I always respected 
the guy. He was a great guy. He was unfortunately one, however, that 
let his outside activities interfere with his job more so than he 
should have. But still the company didn't really object to it. They 
let him do it. 

Morris: 1 wondered if some of them overlapped, because he lobbied some for 

the City of Berkeley, too. In other words, he was very effective in 
Sacramento and Washington, both for the company and for the community. 

Lange: Oh, very much so, right. 

Morris: So, in a sense, one trip could accomplish a number of things. 

Lange: Oh, yes. No, he was a good man. I was very fond of Art Beckley. 
I always was. 

Morris: There's something that I'd like to put in the record, because it 
pleased me to find it. When you retired from the Oakland City 
Council, the council passed a resolution commending Cutter Labora 
tories for your services and they said, "Were all American corpora 
tions to practice citizenship in this manner, we would not be so 
concerned today about creeping socialism or the welfare state." 
I thought it was interesting that they passed the resolution for 
Cutter instead of passing the resolution in your honor. 

Lange: Oh, I got one, too. No, I think this is right. It was well merited 
and I think the company earned this sort of commentary. I don't 
know that there was anything special about it, except that there was 
a general feeling— well, I think I was well-accepted as a councilman 
by my fellow councilmen and by the employees of the City of Oakland. 
In fact, some of my very best friends are still employed there. 



154 



Lange: Mayor Reading and I are close friends. So, I think there was a 
general feeling on the part of the council that there was a real 
interest on the part of Cutter Laboratories in doing this, because 
many companies don't take this attitude. 

Morris: My impression is that many companies never even think about it one 
way or the other. It never occurs to them to participate in this 
sphere of community activity, 

Lange: Yes, that's right. 

Morris: Am 1 correct that Mayor Reading was formerly the city manager? 

Lange: No. He was appointed a city councilman about a year before I was. 
Then, when Houlihan got in trouble, he was appointed mayor and then 
he ran for mayor and has been elected three times. Now he's going 
after his fourth term. 



Morris: I see. I had the impression that there was some sort of change in 
the structure of Oakland 1 s-- 

Lange: Prior to the time that Reading got on. Prior to that time — it was 
sometime in the fifties--it was the practice of the city council to 
appoint their own mayor. In other words, everybody was elected as 
a councilman and then the council selected one of their number to 
be mayor for a year or two years or something of that sort. 

Then, subsequently, the charter was changed and the mayor 
became subject to specific election. But that was before either 
Reading or I got on the council. 

Morris: I ask because there seems to be some discussion going on about 
whether the council-manager form of government should be changed. 
I wondered if that had been an issue at all while you were on the 
council. 

* 

Lange: No. It still is not an issue in the City of Oakland, although there 
are some people who favor this. It's a very vital issue in Berkeley, 
as you may know. There's a feeling that the city manager should not 
be a part of the government, that there ought to be the strong mayor 
form of government and that ought to be it. I don't particularly 
believe in that philosophy myself, but there is considerable merit 
in some of the views that they have. It's not one that I have, but 
I can at least understand their view. 

Morris: I gather that in some professional circles, public administration 

people feel that it may be time to take a look at the structure and 
see if maybe city functions could be accomplished more smoothly 
with some other structure. 



155 



Lange: Like everything else, you know, it doesn't hurt to take a look 
occasionally and see if what you're doing has really proven 
itself. 



Golden Gate University Trustee 



Morris: Somewhere in here, you also served on the Golden Gate College board 
of directors. 

Lange: Yes. I still do. It's now known as Golden Gate University. I'm 
still on the board of trustees and I guess I've been on that 
board for over fifteen years. I served three years as the chairman 
of the board of trustees. I know you asked how that came about. 

That was due to a chap by the name of Ed Kelly, who's dead now, 
who used to be a member of the Controllers' Institute, which I refer 
red to earlier in the subject of a study. I was very active in the 
Controllers' Institute. I was president of the local chapter here 
and chairman of some of the national committees. Ed used to think 
that I was a pretty good guy and he was one of the deans at the 
school. He recognized that the school needed some bolstering in 
terms of their board of trustees, so he asked me one day if I'd 
be interested. I said I'd be glad to look at it, so they invited 
me to a luncheon and asked me to serve and I've been on it ever 
since. 

It's a very interesting university. Do you know anything about 
it at all? 

Morris: Only that it's there. I'm always amazed at how many schools there 
are in San Francisco. 



Lange: I guess when I went on the board of trustees, they had something 

like 500 students. It was a branch of the YMCA at the time. There, 
I think, I've had quite a lot to do with two or three aspects of it. 
First of all, I felt that if the school was ever going to amount to 
anything, it needed to be on its own. The YMCA really wasn't geared 
to handle a thing of this kind. Their objectives are in other fields. 

So, after some maneuvering, we were able to separate ourselves 
from the YMCA and are now, of course, completely independent. One of 
the other things I felt was very important was that we get our own 
building. We'd been occupying some of the space that was available 
at the YMCA headquarters in San Francisco on Golden Gate Avenue 
which were very unsuitable. 

Morris: That's not the nicest neighborhood in town. 



156 



Lange: 



Morris: 

Lange: 

Morris: 

Lange: 



Morris: 



Lange: 



No. And it wasn't even then. So, at one of our trustees' meetings, 
I made the statement that I thought we needed to have our own build 
ing. But we didn't have any money and 1 went on to say that I 
thought if we found the building, we'd find the money. 

Well, we started to look and did find a building that was up 
for sale. It was a building in probate. We were the successful 
bidders for it and, between the Bank of America and the government, 
we were able to make a loan, which we paid off, to have it. We have 
about 4,700 students at the present time. 

And you're a completely independent educational enterprise? 



Completely private. 

And how much does it cost students to attend? 
college, isn't it? 



It's a commuter 



Well, it depends. It's largely a graduate school now and it depends 
on the courses that one takes. It caters primarily to the person 
who wants to add to or, perhaps, change his education. Most of our 
people are people who are working. We go in quite a lot for helping 
people to find part-time jobs so that they can have part-time educa 
tions. It has a fully accredited law school, a very fine law school. 
Last year we had something like 3,200 applications and, I think, 112 
or something like that vacancies. So, you can see from that what 
it is. 

I would say that our fees are just under anybody else's and, 
of course, considerably under Stanford or any of the larger schools. 

When you say just under anybody else's, I think of Hayward and 
Berkeley. 

And San Francisco State and City College. Golden Gate has been a 
very, very interesting experience. It's been wonderful to see the 
thing blossom the way it has and to see it become meaningful. I 
think we're really only getting started in terms of the things we're 
going to do. 

One of the interesting things about the school is that it 
always tries to do something that somebody else isn't doing. 
For example, we have something like forty-five students that are 
getting their MA degree by television. They attend classes at 
their companies and we have closed circuit television where they're 
able to ask questions and receive lectures and all the rest of it. 

We've established, both in the Bechtel organization and the 
Kaiser organization and a couple of other companies, master's degree 



157 



Lange: 

Morris: 
Lange: 



Morris: 

Lange: 

Morris: 

Lange: 



classes for students that they want to bring along. We have a law 
and order course where we cater to law officers who want to add to 
their education. 

How about fire protection? 

No, we haven't gotten into that, but we recently added a course in 
administration of the arts, for managers of symphony orchestras- 
managers of museums, that sort of thing. We have a number of off- 
campus projects which may or may not be continuing to the same 
extent now that Vietnam is over. But in a number of air force 
fields, we bring our own faculty there and give both undergraduate 
and graduate degree courses. 

For military personnel? 

Yes, for those who want to further their education. 

Yes, 1 remember those during the Second World War. Those all used 
to operate out of the University of Maryland, for some reason I 
couldn't understand, all over the world. 



Probably because they did it and no one else did it. 
even doing it in North Carolina and one in Vermont. 



Now we're 



Bay Area Rapid Transit District Director 



Morris: Really off -campus! And this does not interfere with your respon 
sibilities to BART? 

Lange: Well, you see, being retired, I can parcel my time the way I want. 

So, I try to do it in a way that I can attend to my symphony respon 
sibilities, my BART responsibilities, my Golden Gate responsibilities, 
and then my personal responsibilities. 1 have a little investment 
program of my own that's designed to supplement my income, so that 
it takes a little time. 

Morris: You should be well equipped to take care of your own investment 
program. [Laughter] 

Lange: Yes, 1 feel that I am. 

Morris: Is it too early to assess BART's impact on the Bay Area? 

Lange: No, other than to say, "How high is up?" Its impact so far has just 
been fantastic and far beyond anybody's dreams, in terms of property 



158 



Lange: values and what it means in terms of moving people and all the rest. 
But we're not really going to see the full impact until we start 
into San Francisco, which is anticipated to begin in 1973. We'll 
be adding to this thing by going to Concord in May. All I can say 
is that it's one of the greatest things that will happen to the 
Bay Area, in terms of lessening the traffic problem and making 
the movement of people easier. There's just no end to its potential 
and to its future needs. 

Morris: Yes. I was thinking also of payroll. I remember when it was first 
being proposed that there was a sense that it would add appreciably 
to the payroll. 

Lange: Well, I'm sure that it has in many ways. Of course, you see, we 
have around 1,000 people there now, so that in itself is not par 
ticularly important. But the important thing is the way in which 
businesses will be adding to their own employment or business being 
added to the community because of the accessibility that BART will 
bring to it. 

Morris: In terms of some companies locating out at the ends of the BART line? 

Lange: Right. And, in fact, just a little minor thing, but the Oakland 
Symphony recently bought the old Paramount Theatre and one of the 
major considerations was that it's a half a block from a BART station. 
That theatre is going to become a very major new facility for the 
City of Oakland, bringing all kinds of performances to Oakland that 
it hasn't had — ballet, traveling road shows, everything. 

Morris: Working under or brought in by the Oakland Symphony Association? 
You're also on their board, I believe? 

Lange: Yes. 

Morris: A very fine idea. One final question on BART--1 do hope that some 
body there is keeping the files with the thought that ten years from 
now somebody should do an historical study of this first- 
La nge: Yes. They're even taking periodic movies and slides. They have a 
tremendous library of slides and films, with this very thought in 
mind. 

Morris: Does somebody up at the University know about this, I hope? 

Lange: I don't know, but we do it ourselves. That's part of our general 
activities because we realize the importance of it. 

Morris: Good, because it's going to be something for the future. 



159 



Lange: Oh, golly! It sure is. 

Morris: Well, I think we've covered all of my questions. Thank you. 

Lange: I think we have, and thank you. 

END OF INTERVIEW 



The Bancroft Library University of California/Berkeley 

Regional Oral History Office 



Ernest T. Gregory 
THE MANY FACETS OF MULTIPLE LOCATION OPERATIONS 



An Interview Conducted by 
Gabrielle Morris 



© 1975 by The Regents of the University of California 




Ernest T. Gregory 



TABLE OF CONTENTS - Ernest T. Gregory 

INTERVIEW HISTORY 

1. FROM PROCTER AND GAMBLE TO CUTTER LABORATORIES 160 

2. ORGANIZATIONAL AND PROCEDURAL CHANGES IN THE FORTIES 162 

3. THE FIRST BRANCH PLANT: CHATTANOOGA 166 
Growth of Hospital Solutions Production 166 
Construction and Equipment 167 
Community Relations in Tennessee 169 
Employment Practices 171 
Communication with the Home Office 174 
Production and Sales 174 
Automation and Mechanization 176 
Employee Activities, Unions 177 
Companywide Developments 180 

4. SETTING UP OVERSEAS OPERATIONS 182 

5. DIRECTING NEW PLANT OPERATIONS AND ENGINEERING 184 
Kansas, Utah, and North Carolina 184 
Capital Planning 186 
Market Research 187 
Regional Variations in Work Force 189 
Federal Legislation 190 
Limits to Growth 191 



INTERVIEW HISTORY 



Ernest T. Gregory was interviewed to record his observations on the 
process by which Cutter Laboratories, Incorporated, began expansion of its 
national marketing with the establishment of its first branch plant in 
Chattanooga, Tennessee. He describes not only the completion of construc 
tion but also the intricacies of getting into production in a new community. 
As vice-president for new plant operations and engineering at the time of 
the interview, Mr. Gregory also commented with wit and clarity on some 
regional and corporate variations in hiring and personnel administration. 

The single interview was conducted February 21, 1973, in Mr. Gregory's 
office in one of the modular buildings scattered around the home plant in 
Berkeley. On the wall were engineering drawings for several plants under 
construction or recently completed. 

He reviewed and approved the edited transcript of the interview and 
sent it on to David Cutter for return to The Bancroft Library. 



Gabrielle Morris 
Project Editor 



17 December 1974 

Regional Oral History Office 

486 The Bancroft Library 

University of California at Berkeley 



160 



FROM PROCTER AND GAMBLE TO CUTTER LABORATORIES 



Morris: Can we start with a little bit about your own personal back 
ground? Are you a Tennesseean? 

Gregory: No m'am! I'm a damn Yankee. My home originally was in Massa 
chusetts, around the Boston area. Actually, I haven't lived in 
Boston since I got out of college in 1940, but I still consider 
myself a New Eng lander. 

Morris: It dies hard! You went to college in the Boston area, then? 

Gregory: Yes. I went to MIT. When I got out of college, I went to work 
for Procter and Gamble. I worked for about a year in Cincinnati 
and then went to their factory in Quincy, Massachusetts. Then, 
during World War II, they took over the management of ammunition 
loading plants, two of them, one in Tennessee and one in Mississippi. 
I was at the ore in west Tennessee, in the little town of Milan. 
It was a pretty big operation. The plant employed, oh, approxi 
mately 12,000 people. 

Morris: When you say loading, is that putting explosives into the shell 
casings? 

Gregory: That's right. It was very, very interesting work, because we had 
to take people who had never had any industrial experience before 
and put them to work loading ammunition. 

Morris: That would be quite a hazardous operation, wouldn't it? 

Gregory: It's potentially, of course, extremely hazardous. But actually, 
because of all the safeguards that have been applied to it, the 
safety record in the ammunition business is probably better than 
in most industries. 

Morris: Had your training at MIT been engineering? 



161 



Gregory: 



Morris: 
Gregory: 

Morris: 
Gregory: 
Morris: 
Gregory: 



Morris: 
Gregory: 



Right. Mechanical engineering. So, the war years I spent in west 
Tennessee. Then, at the end of the war, 1 went back to Cincinnati 
with Procter and Gamble and 1 worked in the central engineering 
department there. But I became dissatisfied with what I thought 
was [going to happen]. I thought that I was going to be called 
upon to play an increasingly specialized role and my interests were 
in a broader area than that. It was rather amusing. One of the 
reasons why I decided to leave Procter and Gamble was the lack of 
geographical stability. They moved people around the country at 
the drop of a hat. 

When I decided to leave, I thought I'd try and find a firm with 
a single manufacturing location in a part of the country in which 
I would care to live. So, I decided to go with Cutter Laboratories. 
They had only a single plant in Berkeley. 

I see. So you came to the home office. 

Right. But then, five years after I came to Berkeley, they said, 
"We're building a plant in Chattanooga and we want you to go." 
[Laughter] 

[Laughter j You were caught in the wave of history! 

Right. 

How did you, in Cincinnati, make contact with Cutter in Berkeley? 

Well, a good friend of mine at Procter and Gamble was Bob Sandberg. 
He was, of course, a Californian and, actually, his wife was from 
Berkeley. At the end of the war, he went with Cutter. Now, 
actually, how that contact was established, I don't really know. 
He was interested, though, in coming back to California and, 
specifically, Berkeley. So, he went with Cutter and he just told 
me that Cutter was looking for people. That was how I made the 
contact. Of course, then he was my boss, you see, until 1969, I 
guess. 



Am 1 correct that he was an officer? 

He was vice-president for manufacturing, yes. 
retirement in 1969, I believe it was. 



He took early 



162 



2. ORGANIZATIONAL AND PROCEDURAL CHANGES IN THE FORTIES 



Morris: So, you joined the company on the engineering staff? 

Gregory: That is correct. In Berkeley, actually, I was originally hired as 
an industrial engineer. Gee, I did a little bit of everything in 
the five years that 1 was in Berkeley. That was from 1946 to 1951. 
I was an industrial engineer. Then I headed up the first depart 
ment they had for generating standard manufacturing procedures and 
then I had, oh, a job which required tying together a number of 
the staff f unctions--industrial engineering, planning, standard 
procedures, and stores and scheduling. Then, after that, I moved 
into a direct line of production responsibility and had charge of 
the solutions operations we had here in Berkeley at that time and 
a disposable equipment operation, the finishing room, and the 
plasma canning operation. These were essentially all of the manu 
facturing operations that employed a relatively large number of 
people, as opposed to the biological operations and penicillin. 

Morris: I'm interested in the tying together of the staff functions and the 
standardizing of manufacturing procedures. Was this an idea of 
Mr. Sandberg's, or was this part of some long-range company plan? 

Gregory: Actually, this was basically Bob Sandberg. Of course, we both were 
drawing on our experience with Procter and Gamble, which is a very 
highly organized and well-managed company. Cutter, in 1946, was 
still a bit informal, you know. 

Morris: That's when I date the great leap forward, I think. 

Gregory: Well, this is true. You see, Cutter, of course, got a tremendous 
shot in the arm during World War II. They built the penicillin 
plant and they played a very important role in the plasma program. 
Let's see . . . the company's first million dollar year, I believe, 
was 1939. They came out of the war about eight million. 

Morris: That's just about right, as I recall. 



163 

Gregory: When they came out of Che war, one of Che things that Chey did was 
employ Booz, alien, and HamilCon Co come in and advise them on 
organization and so forCh. Booz, nllen, and HamilCon recommended 
an organizacional sCrucCure and idenCified a number of key posi 
tions which Chey should recruiC and hire for. Bob Sandberg was one 
of Chose and I Chink I was also one down in a lesser role. Harry 
Lange--well, Chere was a fellow named Ted NiCchie, who, incidentally, 
was also a ProcCer and Gamble man, who had Che CiCle of works man 
ager, I believe, righC after Che war. 

Morris: That's a nice old word. 

Gregory: Now, if you look at one of Che programs for Che Oldtimers" Lunch 
eons, you'd find ouC that Che class of 1946 was one of Che biggesC 
classes at CuCCer. 

Morris: Yes, I was aware of Che Booz, Allen, and HmilCon sCudy and I haven 1 C 
been able Co fill in jusC whaC it did. So, ic really did bring in 
a new organizacional sCrucCure and define some funcCions that hadn't 
been yeC filled? 

Gregory: That's right. Now, Che general manager, all during Che war, was a 
fellow named Arc Beckley. I'm sure that you've run inCo his name. 

Morris: I remember him on Che Berkeley CiCy Council. 

Gregory: Yes. You're going Co geC me walking on awfully dangerous ground 

now, buC I believe that, in Beckley 1 s organization, he had sevenCeen 
or eighCeen differenC people reporting Co him. 

Morris: That's possible, because things sorC of flowed inCo each other at 
that point. 

Gregory: Yes. This is one of Che reasons why they needed Booz, Allen, and 
HamilCon, I Chink. 

Morris: Oo you feel that ic's Che kind of a job that only an outside firm 
can do, to come in and be able to see where things are overlapping? 

Gregory: Probably, yes. 

Morris: So, wich Chis class of 19A6 coming inCo CuCCer, that gave additional 
personnel and skills Co Che company? 

Gregory: Hopefully! [LaughCerj 

Morris: Yes. Which came first? Were Che long-range ideas of expansion and 
conCinued growCh of Che firm already working, or did Chey need to 
wait on a new generation of people? 

Gregory: Oh, I think that the thinking was there and the family was deter 
mined that the business was going to grow. It originated, obviously, 
directly with the Cutter family. The only thing that the class of 
1946 and the later ones contributed was the how. 



164 



Morris: When you joined the firm, did you have a sense that this was a 
family firm and that the family was--? 

Gregory: Oh, very definitely. Very definitely. 
Morris: Was it similar to Procter and Gamble? 
Gregory: About as divergent as you can get. 

Morris: I see. 1 have a recollection that Procter and Gamble also has 
very strong employee benefit programs. Is that correct? 

Gregory: Oh, yes. But Procter and Gamble's a pretty impersonal, cold 
blooded business, as opposed to Cutter. No, I think that one 
of the dominant things about Cutter Laboratories is the fact that 
it is a family business. In fact, I always make this very clear 
to new people that I'm interviewing. It has the advantages and it 
has the disadvantages. 

Morris: Would you care to expand a little bit on the advantages and the 
disadvantages? 

Gregory: Well, I think the big advantage is, obviously, you have a com 
pletely cohesive management, which can move and move quickly. 
There's no doubt about it: the family runs the business and this 
means, I think, that they can move quickly. I think that they have 
a genuine interest in all their employees, all of their people, and 
they've always put a lot of emphasis on trying to make Cutter Labora 
tories a nice place to work and they've done this very effectively. 

I suppose the disadvantages are just the other side of the 
coin, in that if you move into an area where there may be some- 
how am I going to put this? Well, in any situation where you have 
a small group that controls it, you have the advantage of the fact 
that that small group can move and move quickly. The disadvantage 
is, of course, you're subject to the whims of the small group, you 
see? 



Morris: Yes. Even with broad responsibility being distributed to additional 
executives? 

Gregory: Right. Obviously, I can't be too highly critical of the place. 
I've stayed with it for twenty-seven years. [Laughter] 

Morris: You're saying then that for some people it works and works well. 
I imagine there are also some people to whom this is a restrictive 
kind of a thing. That probably has to do with individual differences, 

Gregory: That's correct. 



165 



Morris: So, your original training was in mechanical engineering and then 
you went into production supervision. That's a little different 
from plant development and construction. 

Gregory: Yes. You see, the bulk of my experience has been, really, in what 
1 call line production management. I did a little bit of engineer 
ing with Procter and Gamble and I did a little bit of industrial 
engineering in my early years at Cutter, but I went into a line 
situation — oh, that must have been around 1948, after I'd been 
here two years. Then, my entire period of time in Chattanooga, 
which was almost seventeen years, was direct line production manage 
ment, with no engineering at all, other than what you use as a 
background. So, then, when 1 left Chattanooga in 1967, I took 
over the position of chief engineer and that was really the first 
time I've been directly or intentionally associated with engineer 
ing. 

Morris: Engineering in the sense of the nuts and bolts of putting something 
together? 

Gregory: That's correct. 



166 



THE FIRST BRANCH PLANT: CHATTANOOGA 



Growth of Hospital Solutions Production 



Morris: 

Gregory: 

Morris: 

Gregory: 

Morris: 
Gregory: 



Morris: 



So, am I right that you were chosen to head the Chattanooga opera 
tion because that was solutions and you were in charge of solu 
tions production here? 

This is basically right, yes. 

Were you part of the decision to go to a branch plant operation? 

No. I think, probably, the prime mover in the decision to build 
Chattanooga was Harry Lange. Bob Sandberg was also an important 
factor. 

Do you recall what their thinking was? 

Yes. Basically, the intravenous solutions end of the business 
was obviously growing and we were selling on a national scale. 
It doesn't make an awful lot of sense to pay freight on a lot of 
water all the way across the country. So, we needed additional 
capacity and, obviously, it made sense to put our capacity in an 
area where it could serve the markets. 

When we started to sell solutions on a nationwide basis-- 
we sell through distributors--we made some very good distributor 
relationships in the southeast. For that reason, at the time that 
Chattanooga was built, the Cutter solutions market, I believe, was 
strongest in the southeastern part of the country. That, then, was 
one of the things that dictated going to Chattanooga. 



That's interesting, 
southeast? 



What, particularly, was there about the 



Gregory: As I said, we happened to pick out good distributors. 



167 



Morris: 

Gregory: 
Morris: 

Gregory: 
Morris: 

Gregory: 



Morris: 
Gregory: 
Morris: 
Gregory: 



They were already on the scene and the Cutter sales force made 
contact with them to take on the Cutter line? 

That's correct. 

Those were the years when the technology of solutions production 
was being developed, weren't they? 

The whole technology, right. 

So, let me backtrack a minute, nfhile you were in charge of the 
production here, how had the production increased? Had that been 
the largest part of the business? 

Oh, yes. It would be hard for me to qualify it, but when I first 
came on board, I believe we were only running a part of a single 
shift in our solutions operation. By the time Chattanooga was 
built, we were running two full shifts. We were running every 
bottle of solutions we could possibly squeeze out of the place 
here. 

You were at the limit of the production capacity here? 

Yes. 

Before the plant was built in Chattanooga? 

Well, I would say pretty much so, yes. 



Construction and Equipment 



Morris: At what point did you become involved in the actual operation 
there? While the plant was being built? 

Gregory: Well, actually, my first involvement was when I was told to go 
back and start it up. That was in August of 1951. I'll never 
forget it. Bob Sandberg told me, "All you have to do is go back 
there and push the button." I went back there and the place was 
only about eighty per cent finished. It was wild. [Laughter] 

Morris: So, you were on the spot in the final- 
Gregory: During the wind-up of construction and the installation of all 
the equipment and, of course, all the hiring of the people and 
everything else that went along with it. There were actually 
three of us who started that plant — myself, Bill Powell, who's 
here in Berkeley now, and a fellow named John Hughes, who's no 



168 



Gregory: 



Morris: 



Gregory: 



Morris: 



Gregory: 



Morris: 



Gregory: 



longer with Cutter. But we were the only Cutter people at the 
plant. Everybody else was hired there. 

Did you and these other two men have any input into the planning 
of what would go into Chattanooga? 

Not too much. Most of that planning was done by Dan Washburn, 
who was chief engineer at the time, and a fellow named Bill White, 
who was the project manager. Neither one of the two of them are 
still with us. 

When you say "chief engineer," does that mean that the drawings 
and the design were actually done in the Cutter plant? 

No. Actually, that plant was engineered by the Austin Compaay. 
This is pretty much the way we still operate. Of course, we're 
currently engineering this new plant we're building in Clayton. 
But I have a staff of engineers here who concentrate primarily on 
what you call preliminary engineering. We come up with basic lay 
outs, work out the material flow, select equipment, size the vari 
ous buildings, and this kind of thing. But then, when you get down 
to actually generating construction blueprints, we have this done 
by outside firms. We couldn't afford to maintain all the disciplines. 

So, would you describe to me what it was like there in Chattanooga? 
You said the plant was only eighty per cent done. Was that more 
than you had bargained for, or did that make it more interesting? 

Oh, it was interesting! Let's see. The shell of the building was 
complete. The offices had hardly been started. Actually, our 
first office was in an area that now is the plant cafeteria, which 
we shared with the contractor's personnel. This was late in August. 
In the month of September, the construction was wound up and we 
installed all the equipment, hired the initial crew. Actually, our 
first output was in the first week in October. [Shows photo] That 
was taken when I left Chattanooga and those are people who worked 
with me for fifteen years or more. 



Morris: 



That's a pretty good longevity record! 
first people you hired. 



So they'd be some of the 



Gregory: Some of those were hired on the first day, yes, 



169 



Community Relations in Tennessee 



Morris: What were your relations like with the local community? 

Gregory: The community was very, very helpful to us in getting going. I 
think they really leaned over backwards to try and help. 

Morris: Was Chattanooga a depressed area at that point? 

Gregory: Yes. Chattanooga's a funny town. There's a relatively small 
element in Chattanooga that has all kinds of money and they 
really — at least, particularly, when we went there in 1950--dominated 
that town. Then you would drop from that group all the way down to 
the working group. There was essentially no middle class in 
Chattanooga. 

Morris: Was it still primarily a rural, agricultural area? 

Gregory: No. Manufacturing. Chattanooga's always been a manufacturing 
center. But the dominant element wanted to keep it that way. 
In fact, they weren't really too interested in seeing Chattanooga 
grow. 

Morris: They'd be old families? 

Gregory: Yes. They wanted to keep it down. 

Morris: Had they objected at all to Cutter coming in? 

Gregory: I'm sure that there was some objection, but I never heard about 
it. Dupont went in there about the same time that we did and 
there was a lot of resentment of Dupont. 

Morris: That's interesting. Why? 

Gregory: It upset their wage structure. 

Morris: Dupont was paying better wages? 

Gregory: Much better. 

Morris: But I thought one reason why the eastern companies went south was 
to find cheap labor and not have to pay as much as they were pay 
ing in the east. 

Gregory: Yes, this is true. But Dupont' s policy is to pay significantly 
more than the community average because they feel that it gives 
them a better selection of people, and it probably does. It also 
means that they can hold on to them. 



170 



Morris: So, had they broken the ice, in a sense, before you went in? 

Gregory: Yes. But I know there's a lot of resentment to Dupont in Chat 
tanooga. But I never felt any resentment toward Cutter. Of course, 
we were so small, compared to Dupont. I mean, Dupont employed 
twenty-five hundred people. When we started out, we employed forty- 
five. Of course, now Cutter has built up. I believe that the pay 
roll at Cutter in Chattanooga is getting awfully close to a thousand. 
That would be in 1972. 

Morris: Do the Dupont products take more people, or was it just that they 
put in a larger volume? 

Gregory: It was a huge plant. A huge plant! No, actually, they only make 
a single product in that plant and that's nylon monof i lament. You 
can put the entire day's output of that Dupont factory in this 
office. 

Morris: These four walls in this room? 

Gregory: Yes. Of course, you can get many miles of nylon monof i lament on a 
bobbin* too. [Laughter] 

Morris: Did you meet the Dupont wage scale? 

Gregory: No. We never did. 

Morris: Were your people doing less skilled jobs? 

Gregory: Yes, I would say they were doing less skilled work. We moved in 
at about the median of the industrial wage scale. 

Morris: Had all that been researched by Cutter people before you went in? 
Gregory: Somewhat informally. 

Morris: In other words, when you got there, did you spend some time being 
taken around to get acquainted with the local people? 

Gregory: Yes. A fellow named John Wanger, who was our personnel manager at 
the time, went back and interviewed a representative sample of 
industry in order to determine what our wage pattern should be. 

Morris: He talked with management, other personnel people? 

Gregory: Yes. I, when I had the time, visited and got to know a lot of the 
people in manufacturing there. One company that was particularly 
helpful to us because they were in an allied industry was the 
Chattanooga Medicine Company. 



171 



Morris: What kind of medicines were they in? 

Gregory: Well, they originally were a patent medicine house. They made 
Cardui, which is the Lydia Pinkham of the south, and a laxative 
called Black Draught. [Laughter] Those were their two big 
products. Since that time, they have gotten more into the ethical 
drugs, with less and less emphasis on the proprietary. A very 
successful little company and very helpful people. 

One of the important influences in Chattanooga was a con 
sultant named Frank Chilson. You may have bumped into his name, 
I don't know. But he's always had quite a close personal rela 
tionship with Dr. Cutter and we used him as a consultant in 
selecting Chattanooga as a location and also as a consultant in 
the design and layout of the plant. He also had consulted for the 
Chattanooga Medicine Company. 

Morris: Was he from Tennessee? 

Gregory: No. He operates out of New York, actually. 

Morris: I'm always interested in how these contacts come about. Was he 
generally working for the pharmaceutical industry? 

Gregory: Yes. He's widely known in the drug and pharmaceutical industry. 
In fact, for many years, he had a column in one of the trade 
journals or periodicals. He specializes in the pharmaceutical 
industry. 

Morris: So, Dr. Cutter could have first made contact with him at a con 
ference or a professional gathering? 

Gregory: Right. Oh, he'd be a mine of information if you could ever get 
him to leave New York. 

Morris: [Laughter] But, as a consultant, doesn't he have to leave town 
quite a lot? 

Gregory: I imagine he's retired by now. 



Employment Practices 



Morris: So, did you have any difficulty hiring? 

Gregory: No, no. 

Morris: Were there more people than there were jobs? 



172 



Gregory: 
Morris: 

Gregory: 
Morris: 

Gregory: 



We were able to be really very selective, I'd say. 
went through four or five for every one we hired. 



We probably 



Morris: 



Gregory: 



How did it line up when you had those forty-five people? Were 
there many women? 

Mostly women. 

In the south, would you have had a large number of black applicants 
for jobs? 

Now you're going to have to start editing again. [Laughter] 
Actually, when we went to Chattanooga, the prevailing community 
practice was that the only blacks were in strictly menial jobs — 
janitorial, material handlers in the warehouse. That was it. And 
no black women. 

That's interesting, particularly from your point of view, when you 
hired many women. I notice a couple of black faces in that photo. 

Some of those walked in the first day. Now, at Chattanooga, I 
would say that the makeup of the plant is probably forty per cent 
black, of both sexes. 

When we started out, we had two wage scales; now this is 
hard to believe. 



Morris: One for blacks and one for whites? One for women and one for men? 

Gregory: Well, I was thinking of the blacks and the whites, doing the same 
work. 1 stopped that within a week after we opened the plant. I 
just said, "This is ridiculous." We also, of course, had the double 

rest rooms, you know. 

Morris: Yes, well, you were in the South and it was before all the major 
legislative changes. 

Gregory: That's right. 

Morris: Did you have any feelings about this, that you might be stepping on 
local toes and not aware of what the local practices were? 

Gregory: Oh, I tried to be as sensitive as I could and I also tried to keep 
Cutter up in the front of the progressive industries down there. 
Now, I was also careful not to get so darn far out in front that we'd 
be a target, you know. But we always kept the thing moving. All the 
time I was there, we never really had any racial difficulty in that 
plant. 

Morris: Did you come to have blacks and whites working side-by-side in the 
production lines? 



173 



Gregory: Oh, yes. Eventually, yes. It was a rather slow and torturous 
road to get there, but we never had any trouble. Oh, I had a 
fellow who walked into the front door and wanted to- -we had a lot 
of vacant property. We'd bought thirty-five acres and the building 
only sat on about two acres of it. He came in and he wanted to 
rent the property for the weekend for a Ku Klux Klan rally. 

Morris: And how did you handle that? 

Gregory: 1 told him we weren't about to rent any land! [Laughter] Go 
somewhere else! 

Morris: Oh, my! Well, these would have been the years when the civil 
rights movement was itself getting started, wasn't it? 

Gregory: Sure. What was the date of the Supreme Court decision on the 
schools? 

Morris: That was '54. 

Gregory: Okay. That was three years after I started. And then, of course, 
the first time they ever called out the National Guard was in the 
town of Clinton, Tennessee, up near Oak Ridge, and we were pretty 
close to that. 

Morris: Oak Ridge was a federal installation, so was Tennessee already being 
exposed to people and ideas from outside? 

Gregory: Well, now, Tennessee is a very interesting state, you know. There 
are three very distinct geographical divisions in Tennessee. You 
have west Tennessee, which is primarily — it's over toward the 
Mississippi River, it's deep south--cotton, sharecropping, and the 
whole bit. Middle Tennessee is really a very pleasant, rolling, 
rural community around Nashville--you know, bluegrass and horses 
and so forth. Then, east Tennessee is more mountainous and forested. 
So, it's separate geographically and, also, it's separate politically. 
The west Tennessee is Deep South and it was part of the so-called 
Solid South, you know. There are counties in east Tennessee that 
have always been Republican. 

Morris: Straight on through from the Civil War? 
Gregory: Right. 



174 



Communication with the Home Office 



Morris: How did you maintain lines of communication and whatnot with the 
home office? 

Gregory: Well, by the normal means, of course, the telephone and the mail 
and so forth. Then, we were visited periodically. My boss, Bob 
Sandberg, used to get down there, I'd say, about four or five 
times a year. Usually, we could expect one of the Cutters 
once a year. Dr. Bob usually made an annual trip. Ted was only 
there, oh, I think, two or three times the entire time I was there. 
Ted just didn't like to travel much. 

Morris: That's interesting, because he does seem to enjoy the production 
end of things . 

Gregory: Yes. And Fred was there fairly often. Dr. Bob was there the most 

often though. And I, then, occasionally would come back to Berkeley. 
Looking back on it, 1 think I probably should have come back more 
often than I did. But we're doing things differently now, as far as 
the branch plants are concerned. The branch plant managers usually 
come in here at least twice a year. I went for one stretch of 
eight years without ever setting foot in Berkeley. 

Morris: Was this just coincidence? 
Gregory: Yes. It was coincidence. 

Morris: That means that you must have had quite a lot of autonomy yourself 
to handle things as they came up. 

Gregory: I did. A tremendous amount, really. 



Production and Sales 



Morris: Did you have contact, through the sales and distributing end, 
with the sales force from the Berkeley office? 

Gregory: Not too much. We had a regional sales office in Atlanta and whoever 
managed that used to come up, I'd say, four or five times a year. 
Then some of the home office sales personnel would stop by if they 
had other reasons to be in the southeast. Of course, in the early 
years, everybody in the company generated some excuse to go to 
Chattanooga, you know. It was a new toy. [Laughter] But the 
novelty wore off. Also, you could expect them in April, May, or 
October. This is when the weather was nice in Chattanooga. Very 
few visitors in mid-summer. 



175 



Morris: [Laughter] Yes. That would be when people from Chattanooga would 
want to come out here. What I'm interested in is that you were 
producing as much solutions as you could, striving ever onward for 
higher production records, and how this relates to sales. In other 
words, how do you relate production to sales. 

Gregory: Well, of course, the sales come first, really. Essentially, you 
monitor or keep track of your sales and then you produce. We 
produced to inventory. In other words, to oversimplify, say, we 
will determine that we should have 100,000 cases of solutions in 
inventory. >11 right. That means if sales pull out 20,000, we have 
to produce 20,000. If sales pull out 50,000, we have to produce 
50,000. So, essentially, you monitor your inventory and this is 
the way you establish your production schedules. 

Morris: And is there any point at which the sales people and the production 
people get together and either the production people say, "Our 
capacity is going to increase here because we've made this change 
in the process. Can you people sell it, or do you have some new 
kind of need in the market?" 

Gregory: That's right. I mean, this has to be a joint decision, obviously. 

There's no point in the world in adding capacity or increasing 

capacity if you're not going to be able to get it out at the end of 
the pipe. 

Morris: What I'm interested in is what the process was when you were in 
Chattanooga by which you got this information back and forth to 
each other. 

Gregory: The direct contact between manufacturing and sales was primarily 
at the vice-presidential level in Berkeley. Then the flow of 
information went from the vice-president for manufacturing to an 
individual or group of individuals who scheduled a system here in 
Berkeley. Then that information would go to Chattanooga and they 
would tell me how much to make. But it was coordinated here in 
Berkeley and it still is. 

Morris: Did you feel, at any point, that you were sort of in a vacuum and 
didn't know all the things you might have needed to know? 

Gregory: No, m'am! I make it my business not to be in a vacuum! [Laughter] 

Morris: Were there any particular advances in production made under your 
direction? 

Gregory: Obviously, a tremendous amount of change took place over a period 
of over sixteen years. We started out with 45,000 square feet of 
plant and forty-five people and, when I left Chattanooga, we had 
about 150,000 square feet of plant and, I guess, close to eight 



176 



Gregory: hundred people. 1 guess the biggest single thing that was done was 

that we added a completely new department, a department in which 

we made disposable equipment or IV sets, which, actually, uses the 

largest numbers of people. 

Morris: It does piece work. 

Gregory: Manual assembly work. But the plant was constantly being upgraded. 
We started out running solutions at production rates of sixty 
bottles a minute. When I left in 1967, we were running approxi 
mately a hundred bottles a minute. Through progressive refinement, 
we made a number of process changes, which resulted in higher quality 
and greater yields. We made some very, very significant labor-saving 
changes in the set area. But I'll be quick to add that most of the 
original work for that was done here in Berkeley. 



Automation and Mechanization 



Gregory: We have a section which is part of engineering where we design 
and build our own automatic assembly equipment. 

Morris: That's a fascinating sideline of the Cutter story, I think. 

Gregory: And we have a very fine capability in this area. We had an oppor 
tunity to check it, because, you know, when we entered into this 
agreement with Abbott Laboratories, some of us got into some of 
their plants and, as big as they are and, really, as successful 
as they are, Cutter is miles ahead of them in the area of automa 
tion and mechanization. 

Morris: Again, is this because of the skills of the people that are here? 
Gregory: Pretty much so, yes. 

Morris: And would it also be the fact that this is a tradition of the 
firm, back to Dr. Bob's early days as president? 

Gregory: Yes. He's always had an interest in this, a personal interest. 

Morris: Yes, I know. We have a few bottle stoppers and things like that 
that Dr. Cutter whittled out by hand. 

Gregory: Yes. And, of course, Fred was very ingenious too. Fred was more 
the inventor type, really, than Dr. Bob. But both of them were. 
So, obviously, some of this thrust toward mechanization originated 
with the Cutter family. A large part of the drive came from Bob 



177 



Gregory: Sandberg, who picked this up as a kind of a personal campaign on 
his part, building this capability and getting this equipment and 
these machines. 

Morris: Finally, here in the home office, it became a special separate 
department, didn't it? 

Gregory: It was part of product development. Actually, it was part of 

product development until 1 came back as chief engineer in 1967. 
At that point, I picked up the machine development function as 
part of engineering. 

Morris: Now, are these machine developments patented so that they then 
become available to the industry? 

Gregory: Some are patented, but ours is such a specialized industry that 
you can't go out and find a machine to put an IV set together. 
If you're going to get one, you're going to have to design it 
and build it yourself. So, a number of these machines are patented; 
however, we patent them only for our own protection. We have not 
sold any. 

Morris: Do other pharmaceutical houses come to Cutter and say, "Can we lease 
your patent?" 

Gregory: There hasn't been much of this. 

Morris: That's interesting, because the pharmaceutical business, as an 
industry, has grown tremendously. 

Gregory: Yes, but it's a very secretive industry. It really is, particularly 
in solutions and sets. Boy! Baxter and Abbott and McGaw-nobody 
knows what they're doing. They don't want you to know what they're 
doing and, I suppose, the same is true of Cutter. 

Morris: But the finished product is on the market and any intelligent sales 
man or production person should be able to take a look at it and 
think, "Well, they must have done thus and so." 



Employee Activities. Unions 



Morris: One other question on the Chattanooga operation: Did you do any 
thing particular to encourage at Chattanooga the same kind of 
family feeling in the employees that you mentioned earlier was a 
characteristic here? 



178 



Gregory: 



Morris: 



Gregory: 



Morris: 
Gregory: 

Morris: 

Gregory: 

Morris: 

Gregory: 

Morris: 

Gregory: 



I think so. Oh, very definitely. And that still exists, more so 
I think, in Chattanooga than in any other place outside of 
Berkeley, partly because the South is the South. 

We had a young industrial engineer here in 1967 who was an 
Australian and, when I came back here, he was sent back to Chat 
tanooga for in assignment that was going to take about six weeks. 
He approached me with a certain amount of reservation. He was 
concerned about how he was going to spend his time, you know, in 
this strange land. And I told him to be at ease. I said, "You 
don't have to be worried about those people in Chattanooga. They'll 
look out for you." He was there for six weeks and 1 don't think 
he ate more than three meals by himself. 



That's lovely! 
Australia? 



Did he stay in this country, or did he go back to 



Morris: 



No. He's back in Australia now, but he really 'had a ball. But 
this has been a tradition in Chattanooga. When you have visitors, 
they really look after them. We had a whole lot of plant functions, 
far more plant functions than they do in Berkeley. We had picnics 
and outings and you name it--hay rides and square dances. 

Were these of your organizing? 

Oh, I encouraged it, but, no, most of them developed down below, 
which is the way they should, really. It's much better than 
superimposing them from the top. 

Did you have or set up an employee association ? 

No, we did not. Of course, we became organized fairly early on. 

You mean the unions? 

Yes. We were organized in 1953. 

Was this the same union that had—? 

United Mine Workers, would you believe? District 50. Well, 
District 50 of the United Mine Workers is what you'd call a 
catch-all union. They will organize anything that's lying 
around loose. [Laughter] So, we were organized in 1953 and we've 
been organized ever since. Now, since I've left, the Teamsters 
took over. 

When you say that District 50 was a catch-all union, did fiat mean 
that they could include any of your personnel categories? 



179 



Gregory: Yes, and any industry too. You see, certain unions are craft- 
oriented and other unions — well, the classic example is the 
Automobile Workers — are industry-oriented. But John L. Lewis 
originally conceived of District 50 to organize the agricultural 
workers in the South. He had this structure set up to do this, 
but he found out that the southern agricultural worker didn't 
organize worth a hoot. But since he already had the structure 
set up, then, essentially, they said, "Just organize anything you 
can." 

Morris: Was this a troubled time, this process of being organized? 

Gregory: Not too much, no. Oh, there was a certain amount of unrest. When 
an organizational effort is going on, factions develop within the 
plant and then they squabble. So, there was a reasonable amount 
of unrest, but nothing actually very serious. 

Morris: I was thinking of 1947, when there was a fairly stiff strike here 
in the Berkeley plant. 

Gregory: Right. I was here then. A bunch of us moved in. 
Morris: To keep the production line going? 

Gregory: Yes. 

• 
Morris: Could you ship the product out? 

Gregory: No. Of course, it didn't go on that long. The strike here only 
lasted a week. I think, if we had it to do over again, I don't 
think we'd— 

Morris: Cross the picket line? 

Gregory: Well, the drama of moving everybody inside! 

Morris: So, on the Chattanooga District 50 local, are you saying that it's 
the union, by and large, that keeps the social activities going? 

Gregory: Oh, no. That was in response to your question of whether or not 
we set up the employees' committee. Oh, we had a recreation com 
mittee and an activities committee. That's one of those things 
that goes in fits and starts. Most of the employee activities in 
Chattanooga have been very highly informal. They've not been 
structured. 

Morris: On the spur of the moment? 

Gregory: Yes, which is the best kind, I think. 



180 



Morris: To try and organize a spur of the moment something for a thousand 
employees must be quite an undertaking! 

Gregory: [Laughter j Yes. 

Morris: While you were there in Chattanooga, as you got things under your 
belt and the production increased and whatnot, did you have any 
role in the overall company decision to continue to diversify and 
go into other branch plants? 

Gregory: Not too much. No. I just kept grinding out the stuff out of 
Chattanooga, which was a full-time job! 



Companywide Developments 



Morris: I can believe it. You said that you made a conscious effort not 
to be left in the dark. Did this include keeping up with the 
company's acquisitions of other companies? 

Gregory: Yes, I was aware of them. Now, you can keep yourself pretty well 
informed--you know, just the visitors from Berkeley. Lots of 
times, because of my position in Chattanooga, I knew, I think, 
perhaps more on a broad base what was going on in the company than 
a lot of people working in manufacturing here in Berkeley. 

Morris: 1 can see that. The visitors would bring you the best news that 
they had from whatever they were doing? 

Gregory: Yes. I was aware of the acquisition program. Of course, the 
acquisition program was mostly post-polio. 

Morris: Was it in any sense because of the polio thing? 

Gregory: Oh, I think so, yes. I think that, after polio, there was a delib 
erate conscious effort on the part of the management to broaden the 
base of the business, not to get too many eggs in one basket. I 
think the acquisition program was an outgrowth of that. 

Morris: Did you have any fall-out in Chattanooga of that polio crisis? 

Gregory: Oh, a little bit. Not too much. Some community reaction. We got 
a wretched press. 

Morris: That was unanimous across the nation. 

Gregory: But you knew who your friends were. You found out. 



181 



Morris: Did it have any effect on production or sales? 

Gregory: Not out of Chattanooga. I'll always have a lot of respect for 
Dr. Cutter. I don't know if he even knows this, but he was in 
Chattanooga the day before the polio situation broke and he never 
said a word to me about it. You wouldn't have known that he had 
a thing on his mind and yet he knew about it. 

Morris: That's interesting. David says the same thing. After the fact, 
he thought that his father was a little abstracted that morning 
and then he realized later what had really been on his mind. 

Gregory: But he was in Chattanooga. I remember it distinctly. Then he 

left. He must have left, I think, about two or three o'clock in 

the afternoon and I believe the situation hit in Chattanooga that 
night. He knew! 

Morris: In other words, he was aware that something was wrong? The 

federal government had notified him before they broke the story? 

Gregory: Yes. 



182 



4. SETTING UP OVERSEAS OPERATIONS 



Morris: That's fairly sporting. And the post-polio period was also when 
the overseas operations really began to go too. 

Gregory: That's right. Originally, our international or export business 
was kind of a lesser sideline and an area that we weren't very 
aggressive in. Now, of course, it's a very important element of 
our business, both from the marketing standpoint and, to a cer 
tain extent, from our manufacturing standpoint. As you know, we've 
got an operation in Kobe, Japan. We have a small operation in 
Mexico City — veterinary. Then we have a solutions licensee opera 
tion in Honduras and another one in Lima, Peru. I was just work 
ing this morning with a fellow—we're going to be building a 
little solutions plant in Lebanon. 

Morris: And each country would have its own local conditions? 

Gregory: Right, yes. I was directly involved in the Lima one. That de 
veloped after I cameback from Chattanooga. I went down to Lima, 
actually, and visited two small companies who were in the solu 
tions business and we licensed one of them to produce our product 
and then changed over some of their equipment and advised them on 
quality control and manufacturing procedures. I went down on an 
exploratory trip, actually. The agreement was reached after I 
came back and then, subsequently, we sent a fellow from Chattanooga 
down there when they actually were ready to go into production. 
He stayed down there for about a month and got them going. 

In the Honduras operation, we trained one of the managers from 
Honduras in Chattanooga. He worked the better part of a summer out 
there. Then, when they started up, we sent one man down there from 
Chattanooga and one man from Berkeley in getting that plant going. 

In addition, overseas, we have an affiliate in Sydney, Australia. 
Morris: This is the operation for which you had the Australian engineer here? 



183 



Gregory: No. That was just coincidental. The fellow who manages the 

Sydney operation was in last week. They're building a plant in 
Scotland. 

Morris: Is this in any sense an intentional plan to export American tech 
nical knowledge to other nations? 

Gregory: Yes, I think so, to a degree. Certainly, this would be the case 
in Honduras and Lima and Mexico. I was going to say it would be 
true, to a degree, in Japan, but I'm not sure but what we don't 
stand to learn about as much from the Japanese as they do from us. 

[Laughter] 

Morris: I was wondering if other countries are eager and supportive of the 
idea of Cutter consulting to their firms and setting up plants? 

Gregory: Yes, very definitely. Mexico in particular. 

Morris: The Mexican government? 

Gregory: They encourage this. Very much so, yes. 

Morris: Are there any special factors to be considered, such as personnel- 
finding and training employees on the production line — or financing 
and things of that sort? 

Gregory: Well, yes. I don't get too much into the financing area. But, as 
far as staffing the plant is concerned, I think we definitely 
make an effort to staff the plant with as many nationals as we 
possibly can. In fact, I don't believe that we have a resident 
American at any of our foreign operations at this time. We had one 
for a while in Mexico. He left. He was replaced by an Englishman 
whom we had originally hired for an operation we had in Buenos 
Aires. The Englishman has gone back to England in semi-retirement 
and the manager down there is now a Mexican. We did have a Nisei 
that we sent over to our Japanese operation, but he's no longer with 
us. It's now managed by a Japanese. He had a worse problem being 
accepted in Japan than he did in this country. 

Morris: Really! Did he go over shortly after the Second World War? 
Gregory: Yes. 



From Cutter Laboratories 1966 
Annual Report 



18 3a 




ABOVE: To improve customer service and facilitate communications with its branches, 
district sales offices, and affiliates, Cutter has completed a new data processing 
center specifically designed to house the new IBM 360 computer. 



LOW; The new intravenous solutions plant and western 
itribution center in Ogden, Utah. Construction on a 
Jacre site of the 70,000 square foot plant is making 
stress with an early 1968 completion objective. 




ABOVE: A new blood and plasma processing plant also in Berkeley will be ready 
about mid-year 1967. When in full operation, it is anticipated that the output of blood 
fraction products will be greatly increased. 




JUS 






183b 






Copyright • 1972 by CUTTER fnUnafaat me . Berkeley. Calif. 94710. USA 



April 1972 



Company Future Looks Good 



We are now organized and staffed better 
lan at any time in our history," Dave 
utter. President and Chief Executive 
'fficer. told the audience gathered in 
erkelev for the annual shareholders 
letting 

Dave, who took over as president in 
967, traced the corporation's growth 
vcr the past five years noting that, in 
971, we had sales of 86.5 million with 
rofits of 4.3 million compared to sales 
f 44.5 and profits of 2.8 in 1966. 

Calling attention to the newly formed 
tedical Products Division which accounts 
)r over 60% of the corporation's present 
ties volume, Dave turned the meeting 
ver to Dick Hawley, President of the 
Division. 

Dick first explained the Medical Prod- 
;ts Division included all of the human 
ledical products manufactured and sold 
v Cutter, except for the allergy products 
lanufactured by our affiliate, Hollister- 
lier. 

These products can be divided into two 




Wans Sluis, Plasma Processing, looks 
over the products his department 
manufactures at the shareholders 
meeting 

major groups: intravenous solutions and 
administration equipment, human plasma 
fractions, disposable hospital products. 



>H-L Expansion Program 




'Hlfr-Haver-I ockhart is currently un- 
1 'going a building expansion program 
« will almost double the size of their 
: '»**n«e, Kansas headquarters. 
By the time the new addition is com- 
<tfd in the Fall of 1973. the veterinary 
filial* will have approximately 4.63 
res under one roof. 

The design and construction of the ad- 
lion will be similar to the existing plant. 
it n«w area will include facilities for 
materials, finished pharmaceuticals. 



' 



LOCKHART 



biological cold room, animal quarters, 
bacterin production and an employee 
cafeteria. 

A mezzanine above the biological re 
search section is also planned to house 
all environmental control and support 
equipment permitting maintenance work 
to be done without disturbing the sterility 
of the lab rooms. All access to the bio 
logical research and anthrax production 
areas will be from outdoors in order to 
prevent interior access from other areas. 



blood collection and administration equip 
ment and prosthetics devices. The second, 
group, referred to as "Consumer Prod 
ucts" (which the user can buy directly), 

(CONTINUED ON PAQE 5) 



RIGHT ON DEADLINE 

As we went to press, the Board of 
Directors of Hollister-Stier Labora 
tories in Spokane, Washington elect 
ed Ace Gtboney as President and 
Chief Operating Officer. 

He succeeds Len Maxey, Presi 
dent since 1961, who was elected 
Chairman of the Beard and Chief 
Executive Officer at the annual 
meeting. 

Ace, formerly Executive Vice 
President, joined H-S in 1968. He 
joined Cutter in 1943 and was later 
President of Corn King Company, 
a former affiliate. 



Promotion For 
Ernie Gregory 

Ernie Gregory has been promoted to the 
newly, created position of Director of 
New Plant Operations and Engineering. 

In making the announcement Vice 
President for Manufacturing Dr. Dick 




Schock said, "With the accelerated de 
mands for new facilities, it is necessary 
that we recognize and formalize a total 
Manufacturing Planning function and pro- 

(CONTINUEO ON PAQE 2) 



183c 



Chattanooga Celebrates 20 th Yea 



>>eptember 10, 1971, some 75 new Cut- 
•ttss met at the Southern Plant for orien- 
•9>n and luncheon. 

'hat was Cutter s first manufacturing 

,eore outside of Berkeley is now known 

$ he Chattanooga plant and has over 

•5 employees producing solutions and 

usable equipment. 

hen ground was broken in January of 

•>• year the project was known as "Op- 

'ion Sunrise" and those in Berkeley, 

./fre all solutions manufacturing was 

•0! at the time, received monthly reports 

me building progress. 

II Powell, now back in Berkeley as 
'(eager of Inventory and Production Plan- 
IT. was the first to be permanently as- 
g;d to Chattanooga and served as Office 
\coger. Ernie Gregory, now also in Berke- 
iyas Chief Engineer, followed shortly 
ft word as Plant Manager. 

e group pictured on Page One will 
jl irate their 20th year with Cutter dur- 
g!971. Standing are Ralph Moser, DE ; 
•old Hundley, Maintenance, Bob Peal, 
Isir, Ed Gibbs, Maintenance; Lester Pier- 
. K Distribution, Ed Prince, DE; and Al- 
:eiLittle, janitorial Service. 

'e ladies include Ruby Rich, Solutions; 
itric* Bollew Quality Assurance; Kath- 
fiVrnold, Receptionist; Helen Dalton and 
•ilia Story, Solutions; Eloise Whittenbarg- 
!', lant Secretary; and Janice Williams, 
'.v ity Assurance. 

f Prince and Bob lead the Chattanooga 
' sf if Old Timers. Both were hired the 
ioh before the plant opened. 

Mhryn, Helen, Ruby, Hilma, Ed Gibbs, 
Mh't, Ralph and Janice came on board in 
ijp-mber as did Pete Greene, Receiving 
ncStores; Alexander Henry, Distribution,- 
JxArfhur Perkins, Maintenance. 

Mvin Baine, Maintenance, and Eloise 
ptheir first Cutter paychecks in Novem- 
• Mieatrice and Harold joined The Lab in 
N»mb«r and Lester in December. 

l;y will all be honored at the tradi- 
'»rl Chattanooga Old Timer's Luncheon 
' tcember 




Solutions Inspection Line then 




From way back when; First row: Kathryn 
Arnold and Helen Dalton: Second row: 
Hilma Story at left, Ruby Rich in the middle, 
Ernie Gregory and Ed Prince. Standing from 
left: Harold Hundley, third; Ralph Moser, 
seventh, followed in order by Ed Gibbs, 
Arthur Perkins, Pete Green and Albert Uttle 




and today 







The original structure built in 1951 




When the plant expanded in 1959 extensions were added 
on both sides of the original entry area 




as Chattanooga Otfice Manager 



The current office building was added in 1969 and is directly In front of the previous 
entrance area. You can see a portion of the older structure at the right 



THE MICROSCOPE 



184 



5. DIRECTING NEW PLANT OPERATIONS AND ENGINEERING 



Kansas, Utah, and North Carolina 



Morris: There were big plants built in Kansas City and in Ogden. Did 
you have any involvement in that? 

Gregory: Well, the Ogden plant was under construction when I came back in 
1967, so I was essentially responsible for completing it in its 
initial form and we've had three major expansions since then, 
which have been my direct responsibility. 

Morris: Three expansions in five years? That's incredible. 

Gregory: The Ogden plant is now bigger in area than the Chattanooga plant, 
not in terms of numbers of people, but in terms of floor space. 

Morris: You don't think of Utah as being a center of population. 

Gregory: [Laughter] No, you don't! But the Ogden operation's been very 
successful. We have a very fine working force up there and, of 
course, it is our most modern plant, which is to its advantage. 
The Chattanooga plant is getting kind of tired. It is. It's 
twenty-two years old. 

Morris: Well, then you have the home plant. 

Gregory: Well, the home plant is getting a little bit tired too! [Laughter] 
Then, Shawnee — the first part of that plant was built in the early 
sixties, wasn't it? 

Morris: Yes. I can't find the exact date, but, in terms of when the 

veterinary companies were acquired, it would be in the early sixties. 

Gregory: We're currently doubling the size of that plant. Now, this has 

been my responsibility. That job will be winding up here in another 



185 



Gregory: 



Morris: 



Gregory: 



Morris: 



Gregory: 



Morris: 
Gregory: 

Morris: 
Gregory: 
Morris: 
Gregory: 



two or three months. It's a big job. That means we're going to 
consolidate our entire veterinary operation there. We're going 
to phase it all out in Berkeley. 

When you came back here to Berkeley, did you come into a new 
position? 

Yes. They recreated the position of chief engineer. I mentioned 
that it was in existence at the time Chattanooga was built and not 
too long after that, the job was discontinued. We had a small 
chemical engineering group who reported to Rudy Sehring, whose title 
is director of manufacturing staff, and then we had this machine 
development capability that was part of product development. So, 
when I came back in 1967 in the position of chief engineer, I picked 
up the chemical engineering group and I picked up the machine 
development group and consolidated them. 



And then how did that get broadened out? 
plant operations and engineering. 



Your title now is new 



Now, you see, the chief engineer works for me. It's my responsibil 
ity to staff and manage new plants until they—and this is a fascin 
ating term — get up to standard production. Now, you tell me when 
that is! [Laughter] 

So, right now, my major preoccupation is getting Clayton 
built. That's the new plant that we're building in North 
Carolina. But I'm starting to move over into getting Clayton 
staffed and getting the plant into operation. Of course, that will 
be my job after it does get built. Right now, we're waiting for 
the rains to stop. 

There's trouble there with the weather? 

Yes. We got about a third of the way through our rough grading and 
the bottom fell out of the sky and it's been raining ever since, I 
think. 

Just like Berkeley. North Carolina's noted for red dirt and very 
sticky mud, I understand. 

[Shows diagram.] That's what the plant will look like. It will be 
plasma fractions and sets and, possibly, solutions in the future. 

It looks like, again, you've got more land than you need to begin 
with. 

Right. This is pretty much Dr. Cutter. It's one of his personal 
beliefs and I think he's completely right. 



186 



Morris: To buy all che land that's available on the spot? 

Gregory: Well, buy considerably more land than you ever think that you'll 
need, because, historically, we've always ended up needing it. 
[ Laughter j And it's hard to get! We have eighty acres there. 



Capital Planning 



Morris: So, you're very much a part of the corporation's five-year plans 
on capital development, inevitably. 

Gregory: Yes, 1 think so. Well, my specific responsibility is, actually, 
to administer the capital money for the manufacturing division, 
which is the largest consumer of capital money by far in the 
corporation. 

Morris: Yes. So, this is the actual production, the machinery and equip 
ment? 

Gregory: The machinery and the buildings. That's right. And so forth. 
That's where all the capital goes, the bulk of it, so that I do 
work very closely with management on capital decisions and so 
forth. 

Morris: How well does a five-year plan work? I'm referring back to some 
of the manuals I've read in which this is beautifully laid out. 

Gregory: Not too well. [Laughter] This is a very changeable business, 
really. 

Morris: So this means that you have to be able to shift your — ? 

Gregory: You have to react. 

Morris: Yes, in fast order, in terms of spending major sums of money. 

Gregory: Right. On the Clayton plant, the original thought was that we 

would put a solutions plant in Clayton. Then that changed and we 
decided to put a set plant into Clayton. Then the decision was 
made that we would put a plasma fractions plant along with the 
set plant in Clayton. And, as of today, it looks as if the first 
unit that we're going to build will be the plasma fractions plant 
and that the set plant will be built at some later time. So, how's 
that for a few changes? Just in connection with one plant, we went 
from solutions, to sets, to sets and plasma, to plasma. 



187 



Morris: Are there developments in the twenty years that you've been doing 
this kind of thing that make it easier to design a plant which you 
can convert from one to another? 

Gregory: No. I would say, if anything, that it's more difficult, because 

as your technology becomes more complicated, your facilities become 
more specialized and, therefore, more difficult to convert. 

Morris: Even on things like sets? 

Gregory: Well, now, going from solutions to sets would be a major change, 
and plasma fractions is a world all of its own. There you have 
to have these huge refrigerated areas and so forth that you don't 
have in a normal plant. But, hopefully, we will build both the 
set plant and the plasma fractions plant in Clayton. 

Morris: And then you may find that you have to add on a solutions installa 
tion? 

Gregory: We're going to have to do something about solutions. That's right. 

Morris: In other words, the market has increased so that you're still 
at the limit of your capacity? 

Gregory: Well, you can see the day coming, let's put it that way. We're 

trying to move before we actually get there. You can see the day 
coming when we're going to need more solutions capacity. 



Market Research 



Morris: It was about when you came back here that a market research person 
was also added to the staff as a separate function. Am I right? 

Gregory: This is correct. Now, we've had the market research analyst for 
ten years at least, but he played kind of a subordinate role in 
the marketing organization. I think that the function very 
definitely has increased in importance. The one person who was 
doing it has been supplemented. I believe there are now three or 
four who are working in this area. 

Morris: And this is specifically to develop as solid data as possible 
as a basis for the decision that you make? 

Gregory: That's correct. Now, I think the Chattanooga location was — again, 
you're going to have to edit this, perhaps. But that decision was 
almost made by throwing darts at a map. We knew in general that 
we wanted to be in the southeast. 



188 



Gregory: A fantastic amount of research went into the selection of Clayton 
as a plant site. These four books — [Takes books down from shelf. J 
— are a single study on solutions. 

Morris: On the process? 

Gregory: No. On where to locate a solutions plant. It was all written for 
me. I have an operations research analyst who worked for me. He's 
not in this department any longer, but this is primarily his work. 

Morris: And this is from the operational point of view, separate from the 
marketing point of view? 

Gregory: No. He takes marketing inputs as well. 
Morris: Yes. But he's not part of market research? 

Gregory: No, but he gets inputs from them. Now, here. [Points to a section 
of one volume] That's our solutions market today. Actually, the 
plant was located primarily by use of a computer, on the transporta 
tion portions of it. 

Morris: Do you rent space on a computer, or do you have one? 
Gregory: We used our own. We have an IBM 360. 

Morris: There are enough operations here that are that refined that you use 
the computer full-time? 

Gregory: Oh, yes. You can't get on it! 

Morris: This is something else that is a company tradition. There seems to 
have been, all the way back through the years, remarkably fast 
acceptance of technological improvements — the first typewriter and 
one of the first tabulating machines. 

Gregory: Right. This goes back with the family. I think that Fred, in 
particular, was intrigued with computers. 

Morris: So that he was receptive when they were first available? 
Gregory: Yes. 



189 



Gregory: 

Morris: 

Gregory: 



Regional Variations in Work Force 

Morris: You mentioned a few minutes ago that the Ogden plant had a par 
ticularly successful, very fine work force. I wondered if there 
were any complications in hiring or personnel administration 
there, it being a Mormon state. 

Most of our people are Mormons. 

Again, was there any resistance to an outside firm coming in? 

No, no. Very much to the contrary, really. Ogden was depressed. 
We're the largest employer in Ogden now. You see, Ogden was pri 
marily a railroad town and that was about all that was there — 
very little industry. 

Morris: Is there anything in particular that contributes to their being a 
specially good work force? 

Gregory: Well, I think, the Mormon ethic. They still believe in hard work! 
[Laughter j Self-sufficiency and a lot of pride. They're good 
people to work with. I expect we're going to have a good work 
force in Clayton also. Those are mostly agricultural people. That 
is an area of small, single-family farms, so, you know, the day of 
the single-family farm is drawing to a close and those people 
would rather stay there. They don't want to move off to find 
employment. 

Morris: Do you train the employees? 

Gregory: Right from scratch, yes. 

Morris: So, you can take people with high school or less education? 

Gregory: Right. 

Morris: Do you use any kind of screening devices? 

Gregory: Yes. We have a battery of tests that we use for screening. They're 
dexterity tests, mental aptitude tests, and so forth. 

Morris: In a semi-rural area such as Clayton and maybe even Chattanooga 
and Ogden, or if they are depressed areas, do you ever go to the 
schools and talk to them about what kinds of things they offer to 
students which might make them good potential employees? 

Gregory: We did some of this in Chattanooga and there's been more of this 
since I left, because the state has gone into Chattanooga with 



190 



Gregory: what they call the Technical Institute. It's somewhat akin, I 
think, to the junior colleges in California. But they're set up 
specifically to develop technicians for industry and I know that 
we have worked very closely with the Technical Institute in Chat 
tanooga on the type of courses that would adapt an individual to 
employment at Cutter. There's a lot of this in North Carolina. 

Morris: They're also available to offer help? 
Gregory: Yes. 



Federal Legislation 



Morris: 



Gregory: 



Morris: 



Gregory: 



Morris: 



Gregory: 



Morris: 



On this new plant and the expansion that you see at the other 
ones, is this new federal legislation on occupational safety and 
health a major factor to be considered? 

Yes, m'am! It's a nightmare! It's a nightmare because the thing 
is still being created and built and on a lot of the regulations, 
you can get as many interpretations as you ask questions. It's a 
nightmare! 

Were you aware of the legislation being developed? Is it the kind 
of thing that a company like Cutter can react to and discuss with 
the legislature, with Congress in this case? 

Yes, I think there was some of it. I'm not sure that we were as 
totally aware as perhaps we could have been. But, basically, you 
can't argue with the principle at all and I think that most of the 
things that OSHA [Occupational Safety and Health Act] requires you 
to do are things that just make good sense to do. Some of them, 
though, are kind of somewhat ridiculous, I think. 

Yes, I have gathered this in some of the discussions I've heard 
about it. I've also heard the comment that one reason for it was 
that some of the southern states, particularly, didn't have any 
state employees safety legislation. 

Yes, I'm certain this is true. In Tennessee — they did have. It 
wasn't too strongly administered, but it was there. We were 
inspected by the state department of labor for safety, I would say, 
about once a year, or something like that. 

Is this new legislation going to have any noticeable effect on the 
cost of construction? 



191 



Gregory: 

Morris: 
Gregory: 

Morris: 
Gregory: 



Morris: 
Gregory: 



Oh, definitely! It will increase the cost of construction some. 
I don't know exactly how much. I couldn't name a figure. 



And operations? 

Oh, maybe a little on operations, but not too much, 
your initial cost is obviously going to be higher. 



But I think 



Are there other state and federal laws that have come along? 

Oh, yes. Well, there's been a tremendous change in the federal 
Food and Drug Administration, which, of course, is the agency that 
we're primarily responsible to. Those laws are getting tougher 
all the time. Oh, I think we can thank Senator Kefauver of 
Tennessee for kicking this off originally. But there has been a 
complete change in the philosophy of the law. 

It used to be that you had to do something wrong to be in 
violation of the law. Now, essentially, the basic change in the 
law is that you are in violation of the law if the possibility 
exists in your operation of something going wrong. 

That's rather like being judged guilty before proven. 

Exactly. Precisely. But here's a simple case in point and not a 
very attractive one. If you have a warehouse infested with rats, 
it used to be that they had to find some rat hair or something in 
your product before they'd move in on you. Now they can move in on 
you just because you have rats in your warehouse and the possi 
bility exists that your product might have become contaminated. 



Limits to Growth 



Morris: We have just about time for a wind-up thought. I asked you before 
we started if you thought that there were limits to growth, with 
the kinds of changing economic conditions that are occurring. 

Gregory: Of course, you know that the company doubled in size the last five 
years, didn't it? I believe it did. Well, ending in '71. '66 to 
'71, I believe it doubled in size. I think we would certainly like 
to see it double in size again in the next five years. I think 
the limiting factor could well be the availability of capital money. 

Morris: That's interesting, because that has grown geometrically in this 
last fifteen years. And you think that may have come to an end? 



Gregory: Yes. 



192 



[Although this was a topic worth further discussion the 
tape ended and Mr. Gregory was needed for conference about 
a current crisis at the Chattanooga plant. J 



END OF INTERVIEW 



The Bancroft Library University of California/Berkeley 

Regional Oral History Office 



David L. Cutter 
SOME ASPECTS OF THIRD GENERATION CORPORATE LEADERSHIP 



An Interview Conducted by 
Gabrielle Morris 



© 1975 by The Regents of the University of California 




David L. Cutter 
1973 



TABLE OF CONTENTS - David L. Cutter 



INTERVIEW HISTORY 

1. BOYHOOD AND EDUCATION 193 
Childhood Recollections 193 
Economics Major at Stanford 197 
Graduate School and Business Experience 201 

2. JOINING THE FAMILY FIRM 203 
Policy on Employing Relatives 203 
Sales Experience 204 
Observations on Polio Vaccine Recall 206 
Cutbacks Affect Career Plan 211 

3. MOVING INTO MANAGEMENT 214 
General Accounting: Product Profitability 214 
Junior Board Boat-rocking 217 
Improving Personnel Relations 220 

4. PREPARATION FOR THE PRESIDENCY 224 
Corporate Planning and Politics 224 
Flyer in Pharmaceutical Specialities 227 
Production Experience: Resiflex* Laboratory 231 
Improving Communication: New Product Planning 233 

5. CHIEF EXECUTIVE OFFICER 237 
David Cutter Appointed President 237 
Executive Shifts: Manageable Span of Control 239 
Profit Centers: Responsibility and Accountability 243 
Personnel Attitudes 245 
Considering Profits and Human Needs 248 
Energetic Civic Participation 249 
Looking Ahead 254 



INTERVIEW HISTORY 



David L. Cutter was interviewed to complete the narrative history of 
Cutter Laboratories, as the third- gene rat ion chief executive officer of the 
pharmaceutical firm established by his grandfather. The interview was con 
ducted on January 24 and January 26, 1973, in his comfortable, uncluttered 
office at company headquarters. 

In the first session he describes his education and the beginning of 
his career with the laboratories. By conscious design or not, this sound 
experience in sales, finance, and production operations could be considered 
a classic of on- the- job training for the presidency, which he assumed while 
still in his 30s as had his father and grandfather before him. The second 
session is a candid and entertaining discussion of some of the organizational 
changes Mr. Cutter undertook in the process of becoming president and estab 
lishing his own leadership, again, a valuable insight into American corporate 
life. 

The death of his father, Dr. Robert Cutter, in August, 1973, led to a 
hiatus in the completion of this project, during which time the decision was 
made for Cutter Laboratories to become a division of Rhimechem (see appendix) . 
Asked for a further interview on the implications of this move, David Cutter 
commented that it was too soon. 

s 

He approved the interview transcripts with minor revisions and also 
read the interviews of his father, his uncle, and his vice-president for 
new plant operations and engineering. 



Gabrielle Morris 
Project Editor 



20 December 1974 

Regional Oral History Office 

486 The Bancroft Library 

University of California at Berkeley 



DAVID L. CUTTER 
Bioaranhical 



PERSONAL 

3orn 
Married 
Chi Idren 
Res i dences 



January 3. 1929, Oakland 
September |1», 1950 to Nancy 
Five sons, born 1952, 1953, 
1929-^7 Berkeley 
19^7-52 Stanford 

1952-5'* Berkeley 

195^-56 Redding 

1956-66 Berkeley 

1966- Lafayette 



Baugh 
1955, 



1957, 1963 



EDUCATION 

Grade Schools - Berkeley 

University of California - 

Stanford University - 19^7-50, A.B., Economics 

Graduate School of Business, Stanford University 1950-52, M.B.A. 



EWLOYMENT 

Webb 6 
Cutter 
Cutter 



Webb, CPA's, 
Laboratories 
Laboratories 



San Francisco, 1952-5^ - Staff Accountant 
, Redding, Calif., 195^-56 - Traveling Salesman 



Berkeley, Calif 



1956-59 • Vnrious Accounting Positions 

1959-62 - Chief Accountant 

1963 - Assistant Controller 

196*1 • Director of Corporate Plannino 

1965 - Director of Mew Product Planning 

1966 - Vice President and Assistant to 

the Executive Vice President 

1966 - Director 

1967 • President 



OTHER BUSINESS CONNECTIONS 

Bill's Stores, Inc., Lafayette - Director 
Cutter Lumber Products, Oakland - Director 



PROFESSIONAL 

Licensed by California as Certified Public Accountant • since 

Member. American Institute of CPA's •• since 19?** 

Member, California Society of CPA's • since 19f>7 

Director, East Bay Chapter of California Society of CPA's • 1962-61* 



-2- 

OTHER ASSOCIATIONS AND ACT I_VJJMES. 

Delta Upsilon Fraternity 

Stanford Alumni Association 

Junior Achievement, Advisor - 1956-57 

United Crusade Campaign - 1959 

The Stanford Fund - 1959-6** 

Berkeley Junior Chamber of Commerce, Director - 1958-59 

President - 1959-60 
California State Junior Chamber of Commerce, Vice President - 1960-61 

Treasurer - 1961-62 

Berkeley Chamber of Commerce, Director - 1959-60 
Voters Organized in Community Education, Trust - 1960-66 
Citizens Committee to Study Discrimination in Housing, Member - 1961-62 
Park Hills Homes Association, Director - 1961-63 

Committee to Study DeFacto Segregation in Berkeley Schools, Member - 1963 
Boy Scout Troop 5, Berkeley, Commi tteeman - since 196** 
Herrick Hospital Clinic Board, Member - 1965-68 

Vice Chairman - 1966-68 

Herrick Hospital Advisory Board - since 1968 
Citizen's Advisory Committee to the Economic Opportunity Organization 

Berkeley Area - 1965 
Rotary Club of Berkeley - since 1965 

Advisory Council to School of Business, San Francisco State College - 1966-70 
Alameda County Taxpayers Association, Director - 19&7-69 
San Francisco Bay Area Council, Board of Trustees •• since 1968 
Young Presidents' Organization, Member - since 1968 
Medical-Surgical Manufacturers Association, Director - since 1971 
Pharmaceutical Manufacturers Association, Director - 1972 



Date of Interview: 24 January 1973 



193 



1. BOYHOOD AND EDUCATION 



Childhood Recollections 



Morris: We'd like to start with your earliest recollections of the 
family enterprise. Were there any stories about your 
grandfather that your father or your uncles told you as a boy 
that have stuck in your memory? 

DL Cutter: Golly, not really. He died — when was it? — in 1933 or there 
abouts and I was four years old, so that's pretty far back 
in the memory tank. I guess I can only remember one 
recollection of him and that was when he was, I guess, in 
his final illness, visiting him at the home where he was 
propped up in bed. And that's that. [Laughter.] 

Morris: As a boy, was business part of the family dinner table 
conversation? 

DL Cutter: No, I don't recollect that it was particularly, that is as 
a p re-teenager , let's say. I started to work there when I 
was sixteen, when the child labor laws would allow, and it 
was during World War II, so that they, in essence, were 
hiring high school kids too. 

Morris: Part-time, after school, and that sort of thing? 
DL Cutter: Yes. And then, during the summers, full time. 
Morris: In the production departments? 

DL Cutter: Well, then it was called the "bull gang," which was the 

catch-all — labor loan, janitorial. If somebody didn't show 
up today, can you go do that? And so forth. 

Morris: At one point a picture of you as a very small boy was used 
on the company literature. How did that come about? How 



194 



Morris : did they happen to pick you for the picture? 

DL Cutter: Well, I guess I was cherublike, or something like that, and 
the price was probably pretty good. I don't remember that 
I received any residuals, or anything! [Laughter.] And 
the other gentleman looked like a doctor, so the two of us 
melded together, I guess, and they took the picture. 

Morris : Whose idea was it? 

DL Cutter: I don't know. I guess Fred Cutter was, of the three brothers, 
the one that was thought the advertising man type and perhaps 
he did it. Of course, my dad was reasonably good with lay 
outs and things of this nature. Maybe it was a combination. 
I don't know, but perhaps it didn't start out with the 
objective of making a logo, but the picture turned out better 
than they expected and so they decided to use it. 

Morris: It's a departure from the earlier letterheads, all of which 
had a company plant photograph on them. 

DL Cutter: Yes. 

Morris Did you go to Berkeley High? 

DL Cutter: Yes. 

Morris: Your father told me that his early experience in business 

goes back to his Berkeley High days when he was advertising 
manager for the newspaper. Did you get involved in any of 
that kind of activity? 

DL Cutter: No. Oh, I was on the swimming team, so I guess that was my 
athletic career. And rally committee, at one point. I was 
always in the band or orchestra or both. 

Morris: That didn't leave you much time for business type activities! 

DL Cutter: No. [Laughter.] And I started to work at the lab when I was 
in the eleventh grade, so working every Friday after school 
and all day Saturday took up a little time. 

Morris: Did you and your brothers come down here to visit or to be 
taken on tours of the plants as younger boys? 

DL Cutter: Not in any formal way. I can remember one instance in, it 

must have been, the late Thirties — again, before child labor 
laws might have prevented this. I guess I must have been 
nine or ten years old. Somehow I remember a job that I did 



195 



DL Cutter: for perhaps one day, sorting smallpox needles. The smallpox 
needles came in a little capillary tube, sealed at one end 
and then sterilized, or maybe they'd process-sterilize them. 
The machine didn't always work, so you'd end up having this 
tray of both sealed and unsealed capillary tubes. And so, 
my job was to take a magnet and pull the ones out with the 
needles. Somehow I just had a recollection of doing that 
and I guess that's my earliest recollection of being in the 
plant itself. 

Morris: You've got two brothers and you're — 

DL Cutter: I'm the youngest. 

Morris: Had they preceded you in part-time summer jobs? 

DL Cutter: Yes. But they were both in the military by the time I came 
here. We're two and a half years apart. 

Morris: What were your impressions of what the lab was like during 
World War II? You would have been observing the set-up of 
the blood processing line and then, later, the penicillin. 
Did any particular things impress you about how this was 
done? 

DL Cutter: No, not really. I don't have any particular vivid recollection 
of anything that made a big impact on me. One thing I do 
remember — again, maybe as an eleven or twelve-year-old, or 
earlier, I guess. We had bought this property from Byron 
Jackson Pump and after they had moved out , but before the 
Laboratories had moved in to any degree, why, these big, 
vacant buildings — what's now the chemical building and so 
forth — were here. And I suppose just to either get us out of 
the house or for some reason that's immaterial, Dad had to 
come down to work and he brought me and maybe a couple of 
brothers, or maybe a friend, and there used to be these little 
four-wheel dollies and tracks. You can still see the remnants 
of the tracks in a couple of those buildings. And we had a 
lot of fun playing around in the soot and pushing these little 
dollies all over with tracks and switches. It was like a 
glorified push train, you know, only the real thing! 
[Laughter. ] 

Morris: Who particularly on the staff here made an impression on you 
in your early years? 

DL Cutter: You mean when I came to work here? 
Morris: Yes. 



196 



DL Cutter: Oh, I remember Pres Snow and Dwight Wood, who were in the 
sales end of things, and Dr. Winegarden. Probably, I 
remember those names even before I came to work. And Bob 
Ulsh. 

Morris: Would they have been people who visited at the house? 
DL Cutter: Yes. 

Morris: Was there ever an opportunity for them to tell you about what 
was going on or for you to ask questions about what they 
did that you might recall? 

DL Cutter: No, not that I remember. 

Morris: Was it because of their personalities that you recall them 
rather than their work? 

DL Cutter: Maybe so. I guess another one that I definitely should 

mention is Art Beckley and, perhaps Art even more than the 
others, because he, I guess, made an impact shortly after he 
first came out here with his interest in horses and cattle 
and things of this nature. And the fact that we had this 
property over in Briones Valley and one of my brothers had a 
horse. 

We kind of looked up to Art Beckley as a kind of a "he 
knows it all" in that area and he was very, very good. And 
so, I think, in a family sense, even though the Beckleys 
didn't have any children themselves, they were close to my 
family and the whole Cutter family, really, in some of those 
outdoor activities, including hunting and then the idea of 
horses. Long before my two brothers and I ever knew what 
we were doing (we had a little money which, I guess, our 
grandmother had given us for Christmas or we'd accumulated) 
we got into the cattle business. We were kind of just silent 
investors while Art did all the work. 

But our greatest claim to fame was throwing an annual 
branding party, at which all these kids would be penned up 
in a corral with maybe half a dozen small calves and we'd 
see if we could rope them down and brand them and let them 
up. Then everyone would have a barbecue. This would usually 
take place at the ranch out in El Sobrante and would involve 
the Santos family, who were the employees of the lab and 
lived on the ranch and ran that end of the operation. 

Well, of course, the three Santos boys living out there 
knew all about it. They'd wait until we Cutter kids had 



197 



DL Cutter: shown how completely inept we were at roping. And then 
they would come in and the little six or seven-year-old 
would really lasso it and get him down and so it was very 
embarrassing in one sense. [Laughter.] 

Morris: El Sobrante was where the stock was kept for laboratory 
experiments? 

DL Cutter: Some, yes. A lot of it was still kept on the premises up 
here on Seventh Street. 

Morris: That late? 

DL Cutter: Oh yes. A lot of that was still there. Well, we still have 
stock up there now on the Seventh Street-Eighth Street ware 
house. There's an animal barn up there now. There 're 
horses and cattle up there, is what I'm saying! [Laughter.] 

Morris: I didn't realize that you could still keep big livestock 
within the city. 

DL Cutter: No, no. Within the barns, if you will, really enclosed barns 
and stalls. 

Morris: Just for short periods of time? 
DL Cutter: Not necessarily. 

Morris: Not necessarily? Don't they need exercise and things like 
that? 

DL Cutter: No. They're in large enough pens that they get exercise, 

really. I mean, they're not in just stalls. They're in pens. 



Economics Major at Stanford 



Morris: Now, you went to Stanford. How did you happen to pick 
Stanford rather than the University of California? 

DL Cutter: Well, my dad, with all of his sons, I guess — forced is maybe 
too strong a word, but let's use it anyway — forced us to go 
for the B average college recommendations to get into Cal 
Berkeley, figuring also that with a B average, we could get 
into most any university at that time. The requirements 



198 



DL Cutter: 



Morris : 
DL Cutter; 



Morris : 



DL Cutter: 



Morris : 



DL Cutter: 



Morris : 



weren't quite as restrictive as they appear to be now. And 
I would suppose up until through the eleventh grade, it 
never occurred to me that I might even go anywhere other 
than Berkeley, because we really hadn't discussed it and I 
wasn't at the age yet where it was necessary to discuss it. 
And I suppose it wasn't really till the twelfth grade when 
my dad suggested I might even have a choice and might I like 
to consider Stanford? 

Sure! You know, really, at that point in time, maybe 
the idea of not living at home and getting away appealed to 
me. And certainly Stanford and Cal were both equally 
prestigious. So, I ended up eventually going to Stanford, 
although, being a midyear graduate from Berkeley High School, 
I did go one semester to Cal and then entered as a freshman 
at Stanford with advanced units that I had gotten during the 
one semester at Cal. 

That would be a comfortable position to be in! 

Well, the way it turned out, it was just enough of a carrot 
to say, "Well, why don't I take more units and get out of 
Stanford in three years, plus what I had at Cal, rather than 
delaying and dilly-dallying around?" So, that's what I 
eventually did. 

Was this a matter of personal ambition, or was it seeing the 
servicemen coming back who were all trying to get through 
in a hurry? 

I really never analyzed it before. What might have something 
to do with it was my eventual wife and I were going together 
at the time and I gave her a fraternity pin in my "sophomore 
year" and then I went to summer school and figured I could, 



in essence, graduate a year early, 
about there, we were engaged. 



And so, somewhere along 



It made more sense to get married than to fiddle around in 
college. 

Yes. And so, the plot was to — well, I had intentions of 
going on to business school and the idea was if I graduated 
this early, we could get married while I was in business 
school, which is what happened. 

Did World War II make any particular impression on you, 
living here on the West Coast? 



199 



DL Cutter: Oh, let's say superficially more than anything else. The 

dimouts, the bond drives, the tin can drives, I can remember. 
Garfield Junior High School's play yard was loaded with 
scrap metal and things of this nature. 

Morris: That's what it looks like now. [Laughter.] 

DL Cutter: Yes. And, of course, with my two brothers in the service, 
it began to hit a little closer to home. It wasn't really 
until the latter stages of the Pacific war that the oldest 
brother, Rob, actually got into the combat area. He was a 
Marine pilot and had been training for what must have been 
two or three years. That's a long training session. Dick 
was in the Navy and he was in Hawaii, but he was never in 
actual combat. But the fact that they were in the service 
made it closer to home, although at that time, because of my 
age, none of my peers really ever died in the war, none of 
my friends, because the war ended in '45 and I was sixteen. 

Morris: When you got to Stanford, what did you major in as an under 
graduate? 

DL Cutter: Well, I started out in pre-med and almost flunked out. 

Morris: Oh dear! Did you take pre-med because of a wish to follow 
in your father's footsteps? 

DL Cutter: Yes. I think all of my generation, the eight grandchildren, 
kind of thought, "Well, somebody's expecting it of us." 
My grandfather, perhaps. No pressure that I can recollect 
was ever put on any of us, but it was considering the long 
line of physicians or pharmacists, as the case may be, and 
wondering: is this where it's going to end? And maybe 
subconsciously we thought, well, we at least ought to take 
a crack at it. 

Morris: Did any of the eight of you end up as physicians? 
DL Cutter: None. 

Morris: That's interesting. Maybe it's going to skip a generation. 
[Laughter.] I have the feeling you might have majored in 
economics eventually. 

DL Cutter: I did. 

Morris: Who were the particular great thinkers in economics that made 
an impact? 



200 



DL Cutter: Well, of course, they were teaching the Keyneslan theory at 
that time and I guess, to a degree, still are. And I guess 
Keynes was pretty well dominating economic thinking at that 
time. I'm not sure that there were many, if any, dissenters. 

Now, before you jump to the conclusion that I'm a grand, 
theoretical economist, I hasten to add that all of the 
undergraduate accounting courses and many of the statistical 
courses were given in the department of economics and these 
things started to interest me, particularly accounting. So, 
I took as little theory as I could to still retain a major 
and all of the accounting courses they had to offer and a 
number of the statistics courses and had ample units to get 
an economics degree. 

Morris : What was it particularly about the accounting end of economics 
that appealed to you? 

DL Cutter: I don't know. At the end of my freshman year, wherein I was 
in scholastic difficulty and had better get some As and Bs 
to remain in school that first quarter — I've forgotten what 
I took, but they were what the fraternity brothers thought 
would be easy courses. You know, there 're all these courses 
that have that reputation. I don't think that accounting 
was necessarily thought of as an easy course, but, you know, 
one has to take some solid subjects. [Laughter.] And I 
guess that first accounting course I did well in, I enjoyed, 
it was interesting, and then I thought, "Well, let's try the 
next one," and pretty soon I got hooked. If you ask me how 
come I took that first accounting course, I really can't say. 
There were some other fellows in the fraternity that had had 
accounting and they'd enjoyed it and they just — 

Morris: Could lend a hand on it? 
DL Cutter: Yes. 

Morris: Going back to Keynes for a minute, do you recall having either 
any sympathy for his ideas or objections to them, as a 
student? 

DL Cutter: No. As a student, I accepted it, obviously, as the gospel. 
It must be if some fancy professor is teaching that that's 
the theory and Keynes' word is law! [Laughter.] 

Morris: I see. Your questioning mind did not develop until later on? 
DL Cutter : Perhaps not , yes . 



201 



Graduate School and Work Experience 



Morris: You said that before you got your BA, you'd already begun 
to think of graduate work. 

DL Cutter: Yes. 

Morris: Was there any particular reason for that? 

DL Cutter: Oh, probably because the accounting and the economics courses 
led me to an interest in, shall I say, the management aspects 
of business. And certainly Stanford's school had a good 
reputation and I just thought that if I could get in, why, it 
would be a useful education. 

Morris: In the eastern business schools, they were using the case 

study approach at that time. Was that Stanford's approach? 

DL Cutter: No, only to a limited cegree. Stanford's approach then, 

under J. Hugh Jackson, who was dean at the time, was pretty 
well the traditional lecture method. We had problems and 
we had some case studies. We had field trips we had to write 
up and things of this nature, but it was pretty well the 
lecture and examination type of a program — some independent 
study in the second year. 

Morris: What did you do your independent study in? 
DL Cutter: Taxation. 

Morris : Did you find that you had many things you wanted to talk with 
your father and uncles about, applying what you were studying 
in graduate school to the lab here? 

DL Cutter: Oh, yes and no. I'm sure they remember and I remember, too, 
the instance at the annual shareholders meeting where I 
demonstrated that a little smart goes too far. I guess it 
was in 1951 when we had our initial stock issue and at the 
shareholders meeting, which I guess I came up to attend, why, 
the attorneys were explaining that we were having this stock 
issue and going on and on about the legalities. At question 
time, I raised my hand and asked, "Does the stock have any 
preemptive rights?" I guess my dad was acting as chairman and 
he didn't know what preemptive rights were, so he made some 
smart remark about his son. [Laughter.] It was a rather 
close-knit stockholder group. 



202 



Morris: 



DL Cutter: 



Morris: 



DL Cutter: 



Morris : 



DL Cutter: 



Morris : 
DL Cutter: 
Morris : 

DL Cutter: 



It was still primarily employees and officers of the company, 
that first issue? 

Yes. Well, no, not the issue. But, I mean, the existing 
shareholders before the issue, it certainly was. 

This was the initial issue of stock that was primarily sold 
to doctors and others? 

1951, yes. But, you know, they'll still comment on that — this 
smart aleck kid who's had all this book learnin* and is trying 
to demonstrate how smart he is by asking all these questions. 

[Laughter.] Then when you had your MBA, you didn't come 
right into the company. What was your thinking on that? 

Well, I couldn't, for one thing, by policy. The board of 
directors set up a policy that relatives of executives — 
family — could not come to work in permanent employment until 
two years after they got their degree or equivalent. So, all 
of us who have eventually ended up in the company have worked 
elsewhere. Brother Dick, of course, the middle brother, 
started out with Owens Illinois and is still with them. 

Because of my interest in accounting and what have you, 
I had obtained a part-time job in the latter part of 1951 
with Webb and Webb , who had an office in Palo Alto at that 
time. I think I'd gotten this job through one of my accounting 
professors when I was in graduate school. I worked in public 
accounting then and I got my degree in April. I had gone to 
summer school in '51. They had a San Francisco office, so I 
just moved on up and started to work full-time with them after 
I got out of graduate school. 

Was this a satisfactory experience? 
Very much so. Very much so, yes. 

Did you work just here in San Francisco, or did they send 
you out to see — ? 

They had a number of clients up the north coast and, during 
the time I was there, also opened an office in Ukiah to handle 
these clients, primarily in the lumber and the logging industry, 
plus the local merchants up there. It was a small firm and, 
as a result, the clientele were primarily small businesses of 
one type or another. The largest business at that time might 
have had a volume of one and a half, two million dollars, so 
it wasn't a "Ma and Pa" operation, but, on the other hand, it 
wasn't a Price Waterhouse either. [Laughter.] 



203 



2. JOINING THE FAMILY FIRM 



Policy on Employing Relatives 



Morris: What made you then decide to join the family firm? Had you 
had this in mind? 

DL Cutter: Yes. Yes, I had. Again, maybe it was more instinctive than 
objective and I debated long and hard. As a matter of fact, 
I came and asked a number of the executives here, including 
Dad and his two brothers and Harry Lange. I've forgotten 
who all I talked with, but, you know, "Should I come, or 
should I not?" My dad stayed out of it. [Laughter.] You 
know, my own opinion. I think, predominantly, others urged 
me to do it. Ted raised questions as to whether it made 
sense. Inasmuch as I did have a profession, it would be 
putting all of my eggs in one basket and, you know, I could 
continue on with a good profession. It's interesting too 
[in terms of] subsequent events relative to his own son, who 
had a profession and was practicing law and, I guess, had the 
same instinct I did to come here, ten years later. 

Morris: Of the eight of you in this generation — 
DL Cutter: Three are with the company. 

Morris: Were there ever discussions between the brothers and the 

cousins as to what it was like to be part of the family firm? 

DL Cutter: No, I can't remember any. 

Morris: There was quite a discussion amongst the board of directors 
about establishing this policy in relation to the next 
generation. Were you aware that that was going on? This 
must have been while you were at Stanford, or — 

DL Cutter: It was probably — let's see. Rob was the oldest, although the 



204 



DL Cutter: service fouled up the timing of when they were all getting 
out of college. But it must have been, probably, in the 
late Forties that this was all debated, as they looked and 
saw, by golly, the kids are going to be available.' I was, 
of course, too young at that point in time to even be 
concerned or consulted. 

Morris: Do you remember Mr. Booz? His consulting firm, I think, 
made a recommendation on this. 

DL Cutter: No. I remember hearing talk about him, but I never met him. 

Morris: So, when did you actually reach the decision that you would 
join the family firm? Did you go officially and apply for a 
job through Personnel? 

DL Cutter: Well, yes and no. I also was debating in my own mind, "Well, 
all right. If I come to Cutter, what should be my entry 
level job, assuming I can, in essence, make a choice, or, at 
least, propose a choice?" 1 had made up my mind probably, 
let's say, in December of 1953 — bear in mind that my two 
years, if you will, out of school was up in April of '54. 
So, I had given it considerable thought and finally made the 
decision that I would explore it and would come to work with 
the lab . As I had analyzed it , 1 had all the financial 
background and the accounting background and I was a CPA. 
It would be logic that I would go to the company in that 
fashion. But I felt that sales experience would be extremely 
valuable downstream and there was no other point, as I saw 
it, in my career that I could ever get first line, direct 
sales experience except right then and there, with an entering 
job with the company. So, I elected to opt for that choice. 
There were some territories open and so I went into a sales 
territory, living in Redding. 



Morris: 



DL Cutter: 



Sales Experience 



Who was the sales manager at that point? 
your boss? 



In other words , 



Well, the vice-president at that point was Donn Court, at the 
time I was deliberating. But Donn left, I think, before I 
came aboard and Harry Lange had assumed the vice-presidency 
and a dual role in both finance and marketing at that point. 
The sales manager might have been Bill Flint, as I recollect 



205 



DL Cutter: it. And I also remember Mel Wilcox, who subsequently went 
with a customer of ours. 

Morris: Did Mr. Lange share your opinion that it would be good to 
have sales experience? 

DL Cutter: I can't remember who advised on which side on that. If I 
had to guess, I'm sure that Ted would have recommended it. 
I would think that both my dad and Fred and Ted would recommend 
that. How the others talked, I can't remember. 

Morris : Did you go through the regular sales training procedure? 
DL Cutter: Yes. 

Morris : And how did that strike you? Would you have had any contact 
with it before or have known what it involved? 

DL Cutter: No, no. 

Morris: Going through the manuals, it seems as if it, even at that 
point, was remarkably thorough and continuous. There were 
regular and frequent sales meetings. 

DL Cutter: Well, chronologically, I came to work in June of 1954. For 
a month or so, I traveled with experienced salesmen in other 
territories, just traveling with them, watching, observing. 

Morris: On the job? 

DL Cutter: Yes. This was the way it was done then. And then I was 
assigned the Redding- Southern Oregon-Northern California 
territory. I almost got sent to Rapid City! [Laughter.] 
At the time my deliberations were going on, that was the 
territory that was open. 

Morris: That's the bottom of anybody's list! [Laughter.] 

DL Cutter: Well, I didn't know any better. [Laughter.] But, in the 
course of time, why, a fellow that they had recently hired 
to fill that territory up in Redding had found out he liked 
another occupation better and he quit. So that one opened 
again, too. I commuted for a number of weeks, and then — I 
guess in September or October — we rented a house and moved up 
there. And it was next April that the polio situation happened. 

Now, in October, I went through a formal sales training 
class for three weeks here in Berkeley. And I guess we 



206 



DL Cutter: probably had one regional sales meeting, just of the eight, 
nine, or ten of us in the region, in December or January, 
whenever it was. 



Observations on Polio Vaccine Recall 



Morris: So, you were a salesman in your own territory when the polio 
crisis hit? 

DL Cutter: Yes. 

• 

Morris: What did it look like from up there in Redding? 

DL Cutter: Well, it was interesting. My wife and I happened to be down 
in this area the day that it was announced. In fact, we were 
down the previous week to pick up a new company car and the 
outlet was down in this area. My dad was perhaps east at a 
meeting. He might have been there with my mother. For some 
reason which escapes me at the moment, he was returning and 
no one was at the family home. We were staying at my wife's 
folks, who also lived in Berkeley, and so they invited him 
up to breakfast that morning. 

He came up and he was his usual jolly self, but I could 
sense there was something there and I had no idea what it was. 
But there seemed to be something different and he apologized 
profusely when he excused himself very shortly after break 
fast, claiming some sort of pressing business down at the 
plant here and not disclosing anything. 

Then my wife and I went out to pick up this car, wherever 
the dealership was. Remember, in those days, you didn't go 
over thirty-five miles an hour breaking your new car in. So, 
we drove the two hundred miles to Redding without a radio. 
We didn't have company cars with radios. (I had one, but I 
hadn't transferred it to the new car.) We took our time and 
we had had our neighbors collecting our mail for us; we must 
have been gone a week for some reason. So, in the evening 
I said, "Well, I'll go over to Charlotte's and pick up our 
mail." 

So, I went over and rang the doorbell. The door opened 
and she said, "Oh Dave, I'm so sorry!" And I said, "Sorry 
about what?" [She said,] "You mean you don't know?" And I 
said, "What are you talking about?" And so she told me. 



207 



DL Cutter: That was that April day that all the stuff broke loose in the 
news and the radio. 

Morris : The announcement was made in Washington? 

DL Cutter: Well, on the recall. Of course, the products had been on the 
market for maybe three or four weeks prior to that. 

Morris: But who made the first announcement that there was trouble? 
Did that come from your father here at the lab, or did that 
come from Washington? 

DL Cutter: That came from the Division of Biological Sciences in Washington. 
Yes. Maybe it was joint. But anyhow, I had missed it all, so 
the thing that sticks in my mind was my first hearing of it. 

Morris : Your father trying to keep it all to himself? 

DL Cutter: Yes. And at that time, he was acting so unusual that I sensed 
something was wrong. I suppose maybe it was more from hind 
sight that I could say, "Well, that's why he did this," or 
"That's why he said that or reacted in this way." 

Morris: Did you come back to Berkeley, or did you stick it out up 
there? 

DL Cutter: No, no. I had no reason to come back to Berkeley. 1 was 

just a lowly territory salesman and I was expected to go out 
and call on the customers. 

Morris: And what kind of a reaction did you get from the customers? 

DL Cutter: Mostly good. Not good, but mostly sympathetic. Let's put it 
that way. I would suspect, if I can put a number on it, only 
one or two per cent of the people that I called on thought 
that this was a bad deal and that the company was negligent 
and that I was a bum and that everyone connected with it were 
bums. 

Morris: The whole story went on for a number of years. 
DL Cutter: Yes. 

Morris: By the time it came to court action, you would have been 
back here in Berkeley. 

DL Cutter: Oh yes. 



208 



Morris: 

DL Cutter: 
Morris: 
DL Cutter: 
Morris: 

DL Cutter: 
Morris: 



DL Cutter: 



Morris : 
DL Cutter: 



Morris: 



Did you have a part in that, either preparing for the court 
action or — ? 

No, not in any way in the defense of our suits. 

You were then in the accounting end? 

Yes. 

Would you, in that position, have had a share in deciding 
how to cope with the judgments? 

No. Let's put it this way. I was in the bookkeeping end, 
not in the financing department. 

Watching this, then, did you feel that there were guidelines 
in the way your father and the other executives — I guess 
Mr. Beckley would have been close to this — handled this that 
would be useful if anything of this kind came along again? 

Yes, I think so. I think his major theme was: if we don't 
know nothin' , don't say nothin' , or at least say we don't 
know and don't try and make any inferences. Don't, first 
of all, assume that everything is good and don't assume 
everything is bad. Wait till you get the facts. 

And certainly, as long as you can do this in good faith 
and with a clear conscience and no one has overtly, that 
you're aware of, done anything, why, I think that's probably 
the best policy to have. But there was an awful lot of cause 
and reason for him to react, in terms of the press and every 
thing that was being said about the company and him personally 
and the family in general and so forth. 

By whom? 

Oh, there was the Drew Pearson stuff. Confidential magazine 
had an expose on the fact that someone had pulled the plug 
on the refrigerator, or whatever that idiotic thing was. 
[Laughter.] My cousin, Ted's daughter Carol, who was a school 
teacher in Reno at the time, got a few threatening phone calls 
— anonymous phone calls. I remember her relating one. There 
was a voice at the other end: How does it feel to be a killer 
of children? Click. 

Oh dear! How do you account for that kind of very negative 
reaction when the people that knew you best — your customers 
and, I gather, other pharmaceutical companies — were very 
supportive? 



209 



DL Cutter: Ignorance. Cutter was not a well-known name because our 

products were, in essence, virtually all professional, except 
in the veterinary area. 

I had what we called then a general line territory. It 
covered all the product lines of the company at that time 
and I would say half the volume of my territory was in animal 
products. So, you can imagine the emphasis. [Laughter.] And 
the people that I called on — the cattlemen, cattle owners, and 
such — were sympathetic. I include them among the ninety-eight 
per cent who understood the problem, and, certainly, having 
dealt with Cutter Laboratories over the many years, our repu 
tation prevented them from believing that we would consciously 
do anything or be negligent or what have you. 

Morris: There was a tremendous amount of publicity. Do you think this 
affected public reactions, or the amounts of the sizable judg 
ments in the cases that went to court? 

DL Cutter: No, I don't think so. Forgetting the judgments for a moment, 
I think for the press it was good news. They had somebody to 
pick on and it was emotional. You get involved with little 
children and you can do a lot with that. They had to find 
some scapegoat, if there was to be one, and 1 guess it was 
easier to pick on a company that you'd never heard of, that 
therefore must be a fly-by-night outfit, than it was to pick 
on the federal government or the biological science people or 
what have you, because Cutter was virtually an unknown in lay 
or consumer circles. 

Morris: There's an old adage in publicity that — 
DL Cutter: You spell your name right! [Laughter.] 

Morris: Yes! And I have wondered if, possibly, the overall, long 

range effect was positive, because it certainly did establish 
the Cutter name. 

DL Cutter: Oh, it's hard to tell. For ten years, or even more while it 
was going on, but over the last ten years, for example, you'd 
come up against people: "Oh yes. Nice to meet you. Say, let's 
see. Your company was the one that was involved in that polio 
thing, wasn't it?" And you say, "Yes." Most people are sur 
prised, too, when you tell them it was seventeen years ago, 
almost eighteen years ago. 



210 



DL Cutter: 



Morris: 



DL Cutter: 



Morris: 



DL Cutter: 



Morris: 
DL Cutter: 

Morris: 



What you were asking about, whether it had a long run 
positive effect — in the commercial sense, no. In other words, 
the people that then had never heard of Cutter — maybe they'd 
heard of us, but they're no decision makers, in the sense of 
how it might effect us commercially. And with the exception 
of the snake bite kit, insect repellent line of products, we 
don't have that many lay products. And I think the people now 
that are buying those products either were too young or have 
long forgotten polio, to have any negative reaction in terms of 
what other products they might be buying. 

Do you feel that it had an effect on the company internally, 
to spur the organization on to greater accomplishment? 

Well, yes. It certainly, obviously, had an effect on the 
company. They had to tighten their belts at the end of 1955, 
when all this came to roost, if you will, and it was a very 
severe cutback. It was a severe cutback for the next five 
years, because the specter of the lawsuits hung over for that 
long and the amounts prayed for exceeded the liability coverage 
significantly, so you never knew when the other shoe would drop 
and how hard it would drop. So, they played an interesting 
strategy at that time. 



They knew that we had to diversify, if you will. We 
to not be just in the lines we were in. So, they did embark 
on an acquisition program. 

Yes. There did seem to be a connection in the timing. If 
there were these judgments that were above the liability 
insurance, how was it possible to finance acquisitions at 
the same time? 

Well, there was preferred stock, or common stock, as the case 
may be. We had an excellent relationship with the Wells Fargo 
Bank. They loaned us money that we needed for working capital. 
As I recollect., one of the veterinary acquisitions was for cash. 
I can't remember, but I think it was Ashe-Lockhart . 

So that gave you some liquid assets? 

A broader base. Well, no. We had to spend cash to buy 
Ashe-Lockhart. I'm curious. You don't mind my just refreshing 
my memory, do you? [Looks through papers.] 

Please do. 



211 



DL Cutter: I think also the first one they acquired was Plastron 

Specialities, the plastics company that was selling us most 
of our solutions tubing. Yes, [refers to paper] Ashe-Lockhart 
was all cash and Haver-Glover was some cash and mostly preferred 
stock. 

Morris: If you acquired Ashe-Lockhart for cash, that meant, then, that 

your investment in that plant was an asset against which you 
could raise further money if need be? 

DL Cutter: Oh yes, but you bought that company more for its potential and 
how it would strengthen you in the future rather than providing 
anything else, because you made yourself illiquid by paying out 
the cash and less liquid by acquiring bricks and mortar. [Laughter.] 

Morris: That's true, but it seems to me that in those same years, there 

were all sorts of developments in financing techniques that were 
going on and, as a lay person, I'm fascinated by the amount you 
owe on various properties increasing your ability to borrow, 
because the total worth of all those things that you — 

DL Cutter: If you want to build a house of cards, yes. [Laughter.] 
Morris: You don't think that's a sound financial practice. 

DL Cutter: No, not in terms of pyramiding things just for the sake of 
expanding empires. 



Cutbacks Affect Career Plan 



Morris: Let's see. You were, by then, about to leave the sales end 

and go into — 

DL Cutter: But I got fired. 

Morris: You got fired? Now, that's a remarkable experience. How did 

you get fired? 

DL Cutter: You mean nobody's told you that yet? [Laughter.] 
Morris: No, no. 

DL Cutter: The cutbacks at the end of 1955 were across the board. I 

wasn't involved in the determination of what they should be, 
but it might appear to me by hindsight that everyone cut ten 



212 



DL Cutter: per cent or what have you. So, my sales region district was 
faced with cutting one salesman as their contribution. And 
the district manager at that time didn't have any — you know, 
he didn't think, Oh boy! What an opportunity to get rid of 
this guy! He was well aware of my background, of course, and 
my plans to reenter — I had basically set out a two-year 
program for myself in marketing and sales and then wanted 
to return to the financial end of the business. So, I'd been 
in sales a year and a half. And he gave me the option. 
Particularly, it was January, it was tax season. I mean, a 
CPA — 

Morris: You could go out and freelance. 

DL Cutter: Yes. Or it would be easy for me to get a job, was the plot. 
And he asked if I would make the sacrifice, so that, when 
things got better, his corps of what he felt were good sales 
men would still be there in their territories. I thought 
since I was only going to be there for a year or less anyway, 
I might as well. I had some stipulations, you know, that I 
didn't lose the seniority and I still was on the retirement 
plan and these various things . So it was more a leave of 
absence than anything else. 

But I felt, for the good of the company, why foul up 
a territory with a guy that — you know, a salesman in a 
territory becomes more valuable the longer he's in it, assuming 
that he's any good in the first place. So, as long as I was 
planning to leave the territory, I thought, Why don't I leave 
it now? , even though there was not a spot waiting for me in 
Berkeley in the finance end of things. So, we have, among 
our friends, always talked about the time I was fired. 

Morris: That really is a brave man, in spite of all these rational 
discussions, to be the man who fired a Cutter! [Laughter.] 
Is he still with the firm? 

DL Cutter: No. And the interesting, almost hilarious, thing is neither 
are any of the salesmen that were with me in that region at 
the same time! [Laughter.] 

Just as a kind of vignette, when I came to work for 
Cutter from the public accounting firm, I took a cut in pay, 
as I had gotten my CPA and was going back as a lowly sales 
man. I think that I was getting three hundred dollars a 
month. So then, I think I was up to four hundred dollars 
a month when I got "fired" and then I started looking for a 
job. 



213 



DL Cutter: I naturally gravitated back to the placement office at 

Stanford, the business school, and also talked with the dean, 
whom I had known down there, and also Professor Neilsen — 
Ozzie — who was the accounting prof that I'd done my indepen 
dent work under and who was, in the accounting area, my 
mentor. So, I was talking with Bud Peterson about all this, 
who was the associate dean. After we'd talked, he said, 
"Well, how would you like to come to work for the business 
school and write cases?" 

Morris: By then, they had shifted over into case study? 

DL Cutter: They began to shift. I think that Dean Jackson hadn't 

retired just yet, but he was about to. Subsequently, Arbuckle 
came in as dean. They were doing some good things in the 
school, even though (I don't know whether I would eventually 
leave this on the tape [Laughter], but anyway,) J. Hugh 
Jackson had the reputation among the students and faculty 
that his greatest objective as dean was to see how much money 
he could return to the school coffers at the end of the fiscal 
year, the academic year. If he could turn a good amount back, 
why, he'd done a good job in managing the organization. 

Well then, when Arbuckle got there, why, that school just 
went straight up because his greatest objective was to see 
how much more money he could get his sticky paws on. So, he 
was going out contacting business and always over at the 
president's office and what have you. 

Morris: A good grant-getter. 

DL Cutter: Yes. It was kind of the difference between night and day. They 
say that's kind of irrelevant, but I was in there just at the 
time that all the scuttlebutt was going on about who was going 
to be Dean Jackson's succsssor. 

Morris: So, did you go down and work for them for a while? 

DL Cutter: Yes, because here it was the end of January and all indications 
were there wouldn't be an opening here in Berkeley at least 
for six months and probably about nine months, maybe a year. 
The year was the outside. In other words, I'd made this 
sacrifice for no longer than a year. So, you know, as it 
turns out, no one is indispensable and people change and, sure 
enough, two and a half months later, why, here was the opening 
back in Berkeley. [Laughter.] 

Morris: In the accounting department? 
DL Cutter: In the accounting area, yes. 



214 



3. MOVING INTO MANAGEMENT 



General Accounting: Product Profitability 



Morris: Was this your specification, that when you came back in 
you wanted to come into accounting? 

DL Cutter: Yes. I guess now I can come back to the vignette that I 

started. I'd been making four hundred dollars as a salesman 
on the territory and when I took the job down at Stanford 
writing cases, I made four hundred and fifty dollars. 
[Laughter.] And when I came back to Cutter, I took another 
cut in salary back to four hundred! [Laughter.] 

Morris: Does that say that the salary scale at the Laboratories was 
then lower than surrounding industries in general? 

DL Cutter: I don't know. I couldn't tell you one way or the other. 
The job to which I came back, which was, in essence, an 
entering level job, for the sake of illustration, had a 
salary range of three hundred to four hundred. I remember 
the top, because I made sure that I came in at the top of 
that salary range at four hundred. And I was here about two 
months when they did another survey and adjusted the ranges. 
I remember, for my job, the top went from four hundred to 
four hundred and fifteen dollars, I think. Maybe it was 
thirty. So, I immediately went to my boss and asked for a 
raise. I'd only been on the job for two months, which kind 
of nonplussed him. I'm not sure he was involved in the 
original salary discussions, but I did kind of feel that with 
the two years experience and being a certified public 
accountant and a few other things, I really wasn't an entering 
level accountant per se, although I did want to get the 
experience of these various jobs within cost accounting. So, 
anyhow, I guess I made my case and immediately went up to — 
I've forgotten — four fifteen or four thirty, or something. 
[Laughter. ] 



215 



Morris: It made a bigger difference then than it does now. 

DL Cutter: Yes. Now again, I'm curious. I'm not sure if my record 
goes back that far. [Refers to papers] May 1, 1956 — 
forty-eight hundred. Yes. that's the four hundred dollars 
a month; that's when I returned from Stanford. Now, October 
1, 1956, I went to fifty-one sixty. [Stops to compute] It 
was four hundred and thirty dollars a month. 

Morris: That's almost a ten per cent raise. That wouldn't meet the 

President's current inflation control guidelines. [Laughter.] 

DL Cutter: Yes! [Laughter.] 

Morris: And then, within a year or so, you were supervisor of the 
general accounting department. Had somebody left again? 

DL Cutter: They had a rotation program up there and they had several 
departments that they rotated supervisors and/or managers 
around in, in lateral moves rather than promotions. 

Morris: That's an interesting concept. How did that work? 

DL Cutter: It worked pretty well. Each of these units were quite small, 
so you were a working supervisor. You were really a worker 
bee, but had a couple of people reporting to you. Say, in 
general accounting, I think there were only two or three 
people. Cost accounting, maybe five, and budgets and reports, 
four and — I've halfway forgotten some of the other depart 
ments up there. 

Morris : When you were in the accounting department , did you have some 
ideas that you wanted to try? How long before things began 
to occur to you as you became familiar with the — ? 

DL Cutter: Oh, I like to immodestly think that I was contributing all 
the time. At the time that I came in, my first job was as 
cost accountant. We were, during that period of time, 
preparing to change our basis for accounting for inventories 
from what we called a full absorption cost system to what was 
called a modified direct cost system. It involved a lot of 
changes in allocation methods, how we thought about profit 
ability of various products, how the bookkeepers could get 
across to marketing people particularly, as well as general 
management people, that by the mere flick of a pen, we 
haven't automatically increased the profitability of product 
A. 



216 



DL Cutter: The numbers may show something different, but that doesn't 
mean it's any more or less profitable than it was before. We 
just think of profitability in different terms. In other words, 
in the generally accepted terminology, gross profit versus 
direct margin, direct margin is the difference between variable 
costs and revenues and gross profit is the difference between 
variable and indirect manufacturing costs [and revenues], on 
some kind of allocated basis. So if you have more costs in one, 
which you subtract from revenue, the resulting number is smaller 
than if you would have only the direct, variable costs subtracted 
from the revenue, where you get a larger number. And that's 
what we were going to end up with and that's where we coined — and 
I think, probably, Hugh Eyerly can claim the authorship — a term 
which I've never heard before, since, or in any other company. 
We still use it. It's called balance for expenses and profit 
— BEP. 

Morris: Back when your grandfather was setting up the first fairly 

complete accounting system, he was apparently quite concerned 
with the difficulties in this kind of an industry of finding 
out what kind of a profit you actually were making, because of 
the numbers of sizes of containers and the various different 
strains of a related product. Is this still a particular dif 
ficulty in accounting for this type of firm? 

DL Cutter: Yes, it is. As a matter of fact, it was either during this 
period or later that one of the chores I had was to convert 
our human biological production departments to a standard cost 
system. The difference between us and, say, a bicycle manu 
facturer or something like that is that in a more straightforward 
type of manufacturing operation, sure, you have to make estimates 
of scraps and yields and things of this nature, but you're usually 
able to get a five per cent scrap allowance, or something like 
this. And, through experience, you can develop historical infor 
mation which verifies or confirms the validity of your figures. 

In biologies, you grow the bugs and they will yield a 
different toxin or immunizing ability, depending on a number of 
variables. You can do the same thing and have a very reproducible 
process day after day or batch after batch, but you're still, due 
to the vagaries of biological science, going to get different 
end-product yields. Even if you always put a constant quantity 
of dollars, materials and labor into each batch, that doesn't 
mean you are going to get the same output. 

Morris: Even with the increases in standardization and accuracy in 
scientific technique? 



217 



DL Cutter: Yes, because the bugs may grow differently. There may be some 
minute variable. 

Morris: From the same strain, on the same kind of culture media? 

DL Cutter: Yes. 

Morris: That does complicate things. 

DL Cutter: It makes it difficult to develop a standard process, too. 

Morris: Yes. In this period when you were in the accounting department, 
there was a — I don't know whether you'd call it a project, or 
a department, or just a system — called product and machine 
development. There's some interesting material in the Microscope 
on this. The aim was to increase the standardization of the 
machinery so that you could automate the lines further. Was 
this something that related to accounting, your thinking from 
a cost point of view? 

DL Cutter: No. Well, of course, from the engineers' point of view, one 
of their objectives is to reduce costs and they would do it 
through their designs or through their set-ups of the manu 
facturing process. And I think that was more the goal than 
some accounting method or degree of manipulating costs, if 
you will. 



Junior Board Boat-rocking 



Morris: Then, in 1960, you were elected the chairman of the Junior 

Board. I'm interested in the Junior Board's function and, if 
this is a unique thing. 

DL Cutter: No, it's not unique. As a matter of fact, my dad had set that 
up a number of years earlier. He could probably tell you when. 
And I think he got the idea from Schilling, the spice people. 
And since then, although its not a widespread thing, there have 
been other companies which have adopted it. It's basically a 
technique or a device to allow middle-management personnel to 
participate in top management type of deliberations and dis 
cussions and to provide a two-way communication vehicle, too. 

It tends to broaden one's perspective and, at that level, 
virtually all of the people are in one functional area. In 
other words, it's not intended to have any general management 



218 



DL Cutter: people on it. So, It tends to — hopefully, at least — let some 
of these middle-management people figure out that some of the 
other functional areas are useful to the company, too. It 
minimizes tunnel vision as they find out the contributions of 
the other functions, as well as providing the social and inter 
personal relationships with the people in the other functions. 

Morris: Is this a one-year term? 

DL Cutter: Eighteen months, rotating every six months. 

Morris: So that you're always getting new people on it? 

DL Cutter: Three new members every six months on a nine-man board. 

Morris: And is the appointment to membership on the board by virtue 
of your job: everybody at a certain level on the personnel 
organization chart? 

DL Cutter: It has to be above a certain level. I have forgotten exactly 
how it was defined previously, but it's intended to be open to 
supervisory, middle managerial, and professional personnel. We 
just recently restated it in line with some revisions in our 
payroll and job classifications and right now it's anyone, I 
think, at job-level seven and above who is eligible. And this 
would include professional and managerial and would exclude 
clerical, by and large. 

Morris: Are the members elected, then? 
DL Cutter: It's a self-perpetuating society. 

Morris: In other words, the existing members choose the next contingent 
and then the group elects their own president? 

DL Cutter: That's right. Now, there is a tacit, yet unused, veto power 

that the president has; I have. In other words, traditionally, 
they hold their elections and send me a list of names and if 
I have no objections, why, they're going to notify the people 
as to their election. Just within the last couple of months — 
that is, just prior to their last election — I took the oppor 
tunity to spend an hour before the board to cover a variety of 
subjects, which I like to do periodically, one of which was to 
try and give them my thoughts, which I hadn't done in quite a 
while, on the qualities and qualifications of membership and 
how I saw the Junior Board, how it should function, and what 
it should provide for the membership. 



219 



DL Cutter: 



Morris : 
DL Cutter: 

Morris : 

DL Cutter: 
Morris : 

DL Cutter: 

Morris : 
DL Cutter: 



In other words, it's an excellent vehicle and I urged 
the members , as they evaluated potentially new members : 
"Certainly, we want to get broad representation from various 
functional divisions of the company, but that should not be 
the prime criteria. In other words, don't sacrifice quality 
just because, oh golly, we need someone from research or 
someone from manufacturing to balance the board. I think 
what you're looking for is a person in the company who has 
potential, because this is going to be the greatest value, 
to broaden his horizons. You people know your peers probably 
better than I do and, therefore, look among your peers — who do 
you think is a guy that is a comer and that is really going to 
make something of himself in this company and whose experience 
on the board would be valuable?" 

And I got a very positive feedback later on that, both 
in terms of some of the members saying, "Well, we never really 
thought about it in that light before," and — frankly, in their 
recent election, I was very pleased with my evaluation of the 
three members that they elected. I think they have a great 
deal of potential. 

Should we stop about now and give you time to get to your 
luncheon meeting? 

No, no. I'm going to pick someone up at quarter after, just 
down the street, so I've allocated already the transportation, 
including that time. 

Excellent management! [Laughter.] I have two more questions 
on this Junior Board. In the time that you served on it, do 
you recall any particularly interesting ideas? 

I was a rabble-rouser! [Laughter.] 



That was my second question, 
lenge the senior board? 



Did the Junior Board ever chal- 



Yes. Well, it's basically a relationship with the president 
rather than the board as a whole. The Junior Board has no 
relationship with the board of directors of the company. 

Okay. What rabble did you rouse? 

Oh, periodically the thrust of the board's activities sways, 
you know, from emphasis in one area or de-emphasis in another 
area. I guess up till that time, in the Fifties, before I 
was on the board, they'd gone through a period of — whether it 



220 



DL Cutter: was because they felt they were getting this direction from 
above or not, I don't know. They'd gone through a period of 
pretty petty projects. How to control crumbs, I think, is 
the one that everyone usually gets a kick out of — not in the 
cafeteria, but crumb control around the plant, because "we 
don't want mice here in our production areas. You eat your 
darn lunch or your cookies here and the crumbs fall and the 
mice come" — a real sterling, top management type project. 1 
[Laughter. ] 

So, I wasn't any crusader but, 1 guess, the board, as it 
was composed at the time I joined it — 1 had been on it six 
months by the time I became chairman. I was elected vice- 
chairman for the second six months and then would succeed in 
the last trimester. But the guy who was elected chairman left, 
so I got booted immediately into the chairmanship, after only 
a couple of weeks of being vice-chairman. So, I still had 
even six months to go after my chairmanship, which doesn't 
happen very often. I think that's more when I was a rabble- 
rouser, after my chairmanship! [Laughter.] 

Morris: Yes! As emeritus, you can say things you don't when you're 
carrying the responsibilities of being chairman. 



Improving Personnel Relations 



DL Cutter: Yes, right. But anyhow, our board felt that we ought to be 
looking into a little bit larger type of projects, like the 
organization structure of the company and kind of sensitive 
things like this. [Laughter.] So, we started. One of the 
projects that I can remember is a survey we ran on attitudes 
among the employees and it was a pretty worthwhile survey. 

Morris: There's a copy of that in the Old Timers Room. It's very 
interesting. Speaking of crumb control, one of the things 
that struck me in that report is the number of people who 
were concerned that the plant didn't look very pretty, nor 
did it look very modern. 

DL Cutter: Right. 

Morris: I was startled. Is this something that really affects morale 
and things like that? 



221 



DL Cutter: Oh, I think it probably has to, to a degree. I think we all 
like to have pride in where we work, what we're doing, and in 
everything we're associated with and, let's face it, some of 
our buildings are pretty old and crummy. 

Morris: But they go along with the length of the accomplishment of the 
company. 

DL Cutter: Yes. But I think it's just a question of voicing an expression 
that, "Gee, we'd sure like something to be done," without being 
able to evaluate the other half of the equation: how do we 
pay for all this? [Laughter.] So, if the thing still has 
utility and is usable, then it's been our philosophy to use it. 

Morris: Were there other, more meaningful findings that you recall from 
that survey? 

DL Cutter: Gee, I really can't remember the survey results per se. I 

think most everyone that was surveyed and returned it took the 
thing seriously and it led us into some different project areas. 

Morris : In terms of personnel? 

DL Cutter: Yes. I can't really remember at this stage of the game specific 
projects, except one relative to organization, that we got into. 
But I'm just remembering that the thrust of the Junior Board 
changed from the crumb control type of projects into projects 
that should concern upper levels of management. 

Morris: Did you periodically meet with the president and say, "This is 
what we think?" 



DL Cutter: We had a big mass meeting then that was a result of some of our 
rabble-rousing relative to organization. And, as I say, I look 
back on it now with some humor. [Laughter.] I honestly can't 
remember the details of all of this! I would if I had the 
annals of the Junior Board and the minutes and could look back 
there. 

Morris : Are they on file? 

DL Cutter: I don't know to what extent the current Junior Board chairman 
keeps these things. Carolyn Devinney's the present Junior 
Board chairman, incidentally. You know her, I'm sure. 

Morris: I know her fine work on the Microscope, but our paths have 
not crossed. How would you feel, on the other end of the 
stick now, if you had a Junior Board that was as rambunctious 
as the group was when you were working on it? 



222 



DL Cutter: [Hesitation.] The reason I'm hesitating is that I'm trying to 
equate the rambunctiousness , because the board currently still, 
I think, is involved in projects which are of some significance. 
They did quite an extensive project on the four-day week, for 
example, and recommended we try it out and I turned them down, 
I hope with well-reasoned refusal. They have talked about plant 
security and have made a number of recommendations, some of 
which we have implemented. Again, a lot of them have cost 
implications which we're not prepared to cope with. We can get 
back to this when we go on, because I do have a file on the 
most recent recommendations and I think it would be interesting 
just to kind of review their content. This board is illustrative 
of the types of problems we ran into. 

Morris: I think so. That would be very valuable. Do you or your senior 
board of directors ever have topics that you think might better 
be gone into by the Junior Board than by a department or top 
management? 

DL Cutter: I've never approached the problem from that point of view. I 

have, in the course of sometimes meeting with the Junior Board, 
had suggestions for them. They're always scratching for what 
can they get involved in, what can they really sink their teeth 
in? I may come up with some thoughts : "You might want to con 
sider doing this or that." But as far as the thought that it 
could better be done by the Junior Board than some other group 
or person or function, I don't think I've ever been involved in 
that kind of deliberation. 

Morris: Is this done on company time, in addition tocthei?— ? 

DL Cutter: Yes, mostly company time. The format is, in essence, they 

meet weekly from eleven to one. Oh, they do sacrifice their 
lunch hour. They bring a bag lunch or buy a sandwich up at 
the cafeteria. 

Morris: That can be a very useful lunch hour. 

DL Cutter: Yes. And once a month, they have a — let's call it purely social 
evening and it varies between the group going to a restaurant 
or going to one of the member's homes. The company picks up 
the tab for this. 

Morris: So that the structure also includes recognition of the 
importance of the interpersonal relationships? 



223 



DL Cutter: Oh yes. In fact, that's one of the major features of the 

Junior Board: that the chemist gets to know the bookkeeper, 
who gets to know the first line supervisor, who gets to 
know the control guy, and so forth, even the sales manager. 

Morris: There's a different quality to knowing somebody when you 
have dinner with them occasionally than if you're just in 
their office with a piece of paper in your hand. 

DL Cutter: Right. You suddenly find these other guys are human after 
all and in the day to-day operation of your job, maybe you 
now feel a little bit freer, following them up and saying, 
"Hey, you know what's going on?" or "Maybe I can help you 
in something that just came across my desk." 

Morris: Yes. Very useful. That's a good stopping place. 



Date of Interview: 26 January 1973 



224 



4. PREPARATION FOR THE PRESIDENCY 



Corporate Planning and Politics 



Morris: The other day, we wound up with some of your thoughts on the 
Junior Board and I wondered if you wanted to put anything 
more on that into the record? 

DL Cutter: No, not that I can think of that I don't recollect we already 
discussed. 

Morris: The next major step along the line was in 1964 when you 

became director of corporate planning. How did this come 
about? 

DL Cutter: Well, Fred Cutter was president by then. He had become 

president in 1962. I guess, in the course of his reading 
and maybe attending some seminars — of course, formalized 
corporate planning was, I guess, just coming into vogue and 
it was receiving more attention. 

Morris: The state of the art? 

DL Cutter: The state of the art, yes. So, he had in mind, I guess, 

broadening my background, presumably for bigger and better 
things. So, he, in essence, yanked me out of the finance 
area and I reported directly to him as the director of 
corporate planning. 

Morris: In other words, this was a new job and a new function? 
DL Cutter: Brand new, yes. 

Morris: Was it seen as formalizing the long-range post-war planning? 
You were pretty well into branch operations by then, and had 
acquired a number of plants. 



225 



DL Cutter: It's difficult, looking back on it, to figure out exactly 

why the job was set up. Well, no, that's a wrong statement — 
not why the job was set up, I think maybe he wanted to get 
me more exposed to general management type of problems, 
rather than himself thinking that we would end up with a big 
formalized corporate plan, because I got into a lot of 
analysis . 

Of course, from my familiarity with the financial 
aspects of the company and having been a salesman, why, I 
was able to know where the bodies were buried, so to speak. 
I came up with a lot of projections, but I guess the flaw in 
the thing was that I never really got Fred enthused about 
being the planner himself. You read in the literature and 
I learned by experience, both sitting in that chair long ago 
and sitting in this chair, that the president is the one who 
is the corporate planner. Without his thinking and without 
his direction, the staff men are kind of going up blind 
alleys , perhaps . 

Morris: You had a pretty diversified and talented committee — Dr. Van 
Campen, Harry Lange, Bill Thomas and R. T. Sandberg. 

DL Cutter: What committee are you referring to? 

Morris: This was a note in the Microscope that said that as director 
of corporate planning, you would be involved in intermediate 
and long-range needs, which would be determined by — in 
consultation with, I presume — a committee composed of Dr. 
Van Campen, Harry Lange, Mr. Sandberg and Bill Thomas. Do 
you remember sitting with them on this? 

DL Cutter: No. [Laughter.] Yes, we might have on one or two occasions, 
but that was basically your vice-president for research, 
your vice-president for manufacturing, your vice-president 
for marketing and your vice-president for finance. In essence, 
the four functional areas of the current company operations 
were there and I think that was more of an ad hoc committee 
than anything formalized — in practice, that is. 

Morris: Yes. You would meet with them sort of constantly anyhow 
in various activities. 



DL Cutter: Yes. 

Morris: Do you remember what any of them particularly felt about 
either intermediate or long-range planning? 



226 



DL Cutter: It's like motherhood and sin, you know — we ought to do some 
of it and we had to get with it, but how do you accomplish 
it, if you will? There were a lot of political problems 
among those individuals — jockeying for position, in one sense. 

Morris: I see. Over their own areas of responsibility, or in other 
directions? 

DL Cutter: Oh, jockeying for position, I guess, in looking to the 

future, as to who might succeed Fred as president, or whose 
sphere of influence do we have here. In addition, the vice- 
president for marketing and the vice-president for finance 
were also on the corporate board of directors. 

Each of them had, in the past, brought several acquisi 
tions to the attention of the board and each had had some of 
these acquisitions made by the company. They were then the 
liaison from the parent company to that particular acquired 
company. So, I think that there was some — I won't call it 
empire building, even though maybe that's what it was — but 
there was some: These are my companies and those are you, 
companies and I want to go out and get more companies than 
you do. [Laughter.] 

Morris: That must have been an interesting position for you to be 

in. At that point, you were yourself beginning to think in 
terms of eventually becoming president of the firm, weren't 
you? 

DL Cutter: Well, yes, possibly. Certainly in an upper management position, 
just from the signal that I received when Fred put me in the 
position of director of corporate planning, obviously. 

Morris: So, in a sense, the five of you would have been in competition 
as well as working out ideas together. 

DL Cutter: Yes. 

Morris : What were the positive aspects of your relationship in terms 
of corporate planning? You've got the tensions, but quite 
often, this kind of a situation also produces good and useful 
ideas which eventually might become a part of corporate 
planning. 

DL Cutter: Well, I can't think of any! [Laughter.] 



227 



Flyer in Pharmaceutical Specialties 



Morris: Dr. Van Campen was the one who was particularly interested 
in pharmaceutical specialties. 

DL Cutter: Oh, yes. 

Morris: This might be the place to talk about those, because, I 
gather, the end of the story is just unfolding now. 

DL Cutter: Well, it done unfolded a year or so ago! [Laughter.] 

Morris: What is a pharmaceutical specialty and how did it differ from 
the kinds of lines you were already in? 

DL Cutter: We were primarily in biological products, which are inject- 
ables and which are usually of biological origin. That's 
obvious. We were in the intravenous solutions and the 
disposable equipment and the things which I'm sure you're 
already familiar with. 

In the heyday of the Fifties, the companies that were 
getting rich were those companies that had an organic chemical 
synthesis program. In other words, they had a bunch of 
organic chemists and in the laboratory they would synthesize 
brand new patentable compounds. Then they had a biological- 
pharmacological screening program where the pharmacologist 
would screen these various new compounds against animals to 
see what kind of reactions, physiological or otherwise, would 
happen in the animal. Then they'd proceed further if they 
got something that looked like it might have some medical 
utility and they'd eventually wind up with an active drug, 
with patents which protected them and gave them exclusive 
possession for seventeen years. So, this is the pharmaceutical 
specialty, really, in the traditional sense. Usually it ends 
up in the form of a capsule or tablet — oral disage forms — or 
some injectable dosage forms. 

In 1956, I think it was, the company made a decision 
when they hired Dr. Van Campen to basically get us into 
this type of research. So, we built the building over there, 
a research building with chemistry and pharmacology labs in 
'56, '57, '58, or thereabouts. Dr. Van Campen hired the 
staff because, based on our previous product line, we had 
very few organic chemists or pharmacologists. He built up 
two well-staffed, albeit small, but adequate departments in 
that area. 



228 



DL Cutter: We did discover some drugs which seemed active. We got 
into an arrangement with the Upjohn Company, because we began 
to see that it was so expensive to clinically test these drugs 
that we would do better to go into partnership with the Upjohn 
Company. That is, we would synthesize something and we'd do 
the preliminary animal screening. If there was something that 
looked like it might have promise, if we chose we would offer 
it to the Upjohn and they would complete the work and pay us 
a royalty if the product ever came to fruition and we would 
also have joint rights to market it with them. 

This was going along just fine until 1962, when Senator 
Kefauver and others were trying to get amendments passed to the 
food and drug law and were having little success until the 
thalidomide incident happened — and bang! Probably there was a 
rebound effect and the amendments were tougher than anyone ever 
imagined, as far as the new requirements were concerned and their 
subsequent cost implications of getting a drug on the market. 

The major change was that prior to the Kefauver amendments, 
you had to demonstrate that a drug was safe, that it was not 
harmful in the dosage intended. The Kefauver amendments, in 
essence, said, "You must now also prove that a drug is efficacious, 
that it is effective." So, in addition to having to do tests 
as to the safety of a drug, you now had to prove what it was good 
for. And you had to do this with very well-controlled scientific 
tests. A lot of technical people and scientists say that a com 
pany would never get aspirin approved under today's climate and 
regulations. 

Morris : That was also about the beginning of the hearings on the prices 
of drugs, the cost to the consumer. 

DL Cutter: Yes. I don't remember those particularly. Of course, in the 
last five or six years, Senator Nelson has been having these 
things . 

Morris: There were earlier hearings where much of the publicity centered 
around the psychoactive drugs with some implications on drugs 
and Pharmaceuticals in general. But that didn't really have any 
effect on Cutter? 

DL Cutter: No effect on us, no. 

Morris: Did your research continue after the Kefauver hearings? 

DL Cutter: Yes, it did continue. We had some compounds which, pre-1962, 

might have taken three or four years to get to market, presuming 
that they had commercially-satisfactory potential. After 1962, 



229 



DL Cutter: why, those same products might take six or seven years to get 

to market, with the usual cost implications of all the additional 
work that you had to do. So, we stuck it out until a couple of 
years ago and decided that our effort was just too small and we 
didn't have the resources to adequately support such programs. 
And we had lots of other places to spend that money. 

Morris: That were already reasonably productive? 

DL Cutter: Yes. The solutions, the plasma fractions, equipment — things of 
this area. 

Morris: Did Dr. Van Campen stay with the firm? 

DL Cutter: Oh, yes. He stayed until 1966. He had had some health problems. 
He'd had a heart attack and some other maladies, so he decided 
that he wanted to see whether he wanted to take early retirement. 
He took a leave of absence for three months , for the first 
quarter of 1966. He decided that he liked that, so he retired. 
But we retained him as a consultant for a few years, just to 
provide a little continuity for the new man, Dr. Hamlin, when 
he came on the scene. 

Morris: During this period, Savage Laboratories were acquired for their 
marketing competence in pharmaceutical specialties? 

DL Cutter: Right. They were an existing, ongoing company and were making 
their own profits. We acquired them a very short time before 
the Kefauver amendments. [Laughter.] 

Morris: It's interesting how often extraneous events really have an 
effect on what happened in a given business. Did they have a 
sales operation? 

DL Cutter: Yes. They weren't nationwide. They were regional, primarily 
in the South, the Midwest. They had come a little ways over. 
I think they had several salesmen here in California, but they 
were not heavy at all on the East Coast. In fact, I don't think 
they had anything at that time on the East Coast. 

Morris: Why was it a good idea to acquire a company for its marketing 
ability rather than developing your own, if and when the 
pharmaceutical specialties worked out? 

DL Cutter: Well, we, in our existing product line, were primarily oriented 
to the hospitals, rather than having a detailing force, which 
goes out and calls on physicians and sells the merchandise to 






230 



DL Cutter: the local drugstores. We didn't have much of those products. 
We used to when we were really heavy In human biologicals 
earlier. But we had swung away from that. 

Now, we did — I guess it was in the early Sixties — bring 
in a man. We were going to set up our own pharmaceutical sales 
force within Cutter and we started out with the very few products 
we still had that went into the drugstore. I don't think we 
ever had much more than ten or fifteen men in that sales force. 

Morris: Is this the poison oak and the snake bit type of product? 

DL Cutter: No, no. This was the gamma globulin. We still had DPT, tetanus 
toxoid , immunizing agents , but that business went to pieces be 
cause more and more of that was being done by the health services, 
the county health departments and clinics and things of this 
nature. Less and less of it was being done by the private 
physician. 

Morris: So, it becomes uneconomic for a company the size of Cutter to 
continue to produce it? 

DL Cutter: Yes. We got out of that business — the DPT and the tetanus 
toxoids. The prices went to pieces. 

Morris: Who does manufacture those things? 

DL Cutter: Oh, you've got several houses left, big houses that have strong 

detailing forces. You've got Eli Lilly, you've got Wyatt, you've 
got Lederle, Parke-Davis — I'm probably missing some, but those 
are the ones that come to mind. 

Morris: What other factors influenced your thinking about the corporation's 
future? 

DL Cutter: [Pause.] I can't really think specifically in terms of sitting 
down and talking about: This is the direction we ought to go 
in. I think the projections I was making at that time were 
taking our existing businesses and trying to project out for 
five and ten years. If we continued in the same way, what might 
we reasonably expect to look like in terms of volume by product 
line and profitability? But I guess the frustrating thing for me 
was that I got very little direction, if you will, from Fred. 
I'd present a lot of this stuff to Fred and he would react 
favorably — "Gee, that looks great" and what have you — but then, 
"Well, what do you do with it?" [Laughter.] 



231 



Production Experience; Resiflex Laboratory 



Morris : 



How did you get out of that box? 



DL Cutter: Well, we acquired Resiflex Laboratory in October of 1964. 

Let's see. I guess I'd become director of corporate planning 
in May or June of 1964. So, I was going through all my exer 
cises then through the summer months and through September. 
Then we acquired Resiflex Laboratory. 

• 

Resiflex Laboratory had primarily a manufacturing and 
product development facility and, in essence, one customer, 
the C.R. Bard Company. C.R. Bard Company — although the 
products they bought from Reisflex weren't their total line, 
it nevertheless was a significant share of the products they 
sold — had announced they were going to go into their own manu 
facturing operation for this type of products, these catheters 
and tubes. So, Resiflex had three options available to it. 
It could sell out to another company, or merge with a company 
that might have its own marketing. It could build up its own 
sales force and market its own products, or it could find another 
customer like the C.R. Bard Company had been before. They even 
tually decided: Well, why don't we merge with a company that 
already has an existing marketing force. 

The agreement between C.R. Bard and Resiflex, for most 
products, expired on December 31. That is, Resiflex was 
obligated to sell and C.R. Bard was obligated to buy through 
December 31 and after that point, Bard was not obligated to 
buy and vice versa. So, we acquired Resiflex in October. 
Our chore was to convert all of that production from C.R. Bard 
material to Cutter material while, at the same time, having 
Resiflex fulfill its obligations to Bard and continuing to sell 
to them up until January 1, and yet, be ready with inventory of 
Cutter merchandise so Cutter could introduce the product on 
January 1. 

Morris : This meant you had to wind up your contracts with other 
suppliers? 

DL Cutter: We weren't even in this product line. This was a new product 
line for us. 

Morris: It seems related to some of the other equipment you were 
producing . 

DL Cutter: It's related technically to it, technologically, in that it's 
basically working with plastics, sometimes sterile. You need 



232 



DL Cutter: a clean environment where you make the stuff. But the 

intravenous administration equipment involves sterile fluid 
paths because you're dealing with stuff going into the vein. 
The Resiflex line dealt with products that went into existing 
body orifices. It wasn't intravenous. So, they had rectal 
tubes, urinary catheters, feeding tubes, nasal oxygen tubes, 
and things of this nature. 

Morris: I see. So you had a real production planning job to do. 

DL Cutter: Yes. The day we acquired them, I went full-time, in terms of 
being the coordinator, if you will, of getting these products 
on stream in the Cutter line and having them ready to go on 
January 1. So, that's when, in essence, I got into critical 
path analysis and things of this nature to make sure that that 
program moved on schedule. As I say, I was working full-time 
on that and overall corporate planning was forgotten. [Laughter.] 

Morris: Your brother Rob was involved in that, too? 

DL Cutter: Right. He became the Resiflex product manager in the marketing 
area and he and I worked very closely then, obviously, with 
this. In other words, he was more the marketing input or 
liaison with the existing management at Resiflex to what pro 
ducts we wanted, the design, the labeling, and things of this 
nature. I was more the "Who's doing what to who?", coordinating, 
setting deadlines, and monitoring the progress — more the admin 
istrative end, I guess you'd call it. 

Morris: Did this make any major changes in the sales structure? Did 
you use the existing Cutter salesmen? 

DL Cutter: Yes, we did. We used the existing Cutter sales force. I 

can't remember the timing. I think it was some years later 
when we set up a Resiflex specialist in each sales region. 

Morris: How did you go about developing this new sales and marketing 

force for the Resiflex line? Were they detail men or hospital 
men? 

DL Cutter: No, this was a hospital line of products. The same men could 
do it. They had to be broader in their product knowledge than 
if they were just selling the previous line. But Resiflex, at 
that time, had hired a fellow from C.R. Bard, in fact, one of 
their marketing men. 



233 



DL Cutter: In December of 1964, Rob and I and this other fellow made 
a trip around the country. We had four meetings and all of 
the sales force people were brought in to these four locations. 
We gave a two-day seminar on just what this product line was 
all about, samples, and how to sell it and things of this 
nature. So, that's how we started training. I talked about 
the price structure and how we were going to account for things. 

Morris: Did you have to set that up from scratch, or could you use the 
experience of the Bard Company? 

DL Cutter: Well, obviously, the fellow we hired from Bard gave most of 

the input on how to sell the product, how to use it, and what 
the products were all about. Rob and I talked about a wide 
variety [of things.] Rob handled some of the marketing aspects 
of it too. 

Morris: The actual changeover period must have been kind of hectic. 
How did that go in the production end? 

DL Cutter: I think it went quite well. We did introduce the line on 

January 1. We obviously didn't have full inventories of all 
products. We didn't expect to. I think we missed introduction 
dates in just two or three of the products. I can't remember 
exactly, but when all was said and done, we looked back on it 
and we patted ourselves on the back and said we did a good job 
in doing what we wanted to accomplish then. 

Morris : And that has worked out well for the laboratory? 

DL Cutter: Yes. Incidentally, the management of Resiflex also came with 
Cutter when we bought the company — the management, who were 
also the founders and the major shareholders. We thought we 
would retain their expertise in that particular area and they 
remained as chairman and president of Resiflex Laboratory, 
respectively. As a separate corporate entity, we were in a 
situation as before of Resiflex, in essence, being a manufac 
turing company selling to one customer. Now, the one customer 
was Cutter Laboratories, even though they had much more influ 
ence now in the marketing strategy, because they were presumably 
the knowledgeable people. 



Improving Communication: New Product Planning 



Morris: The other thing that is interesting in here is that it was 

'65 when you got into prosthetics, the first heart valve that 



234 



Morris: you produced. That again sounds like a favorable accident, 

you might say. The record says that Dr. Smeloff came to you. 
Had you had any contact with him before or with the Sacramento 
medical scene? 

DL Cutter: That I don't know. That thing pretty well did initiate in 

research and it could very well be that Smeloff had contacted 
some of our bio-engineers. This wort of grew like Topsy. 

Morris: Is this something that you'd anticipated in your corporate 
planning? 

DL Cutter: No. 

Morris: Has it turned into a sizeable piece of the production? 

DL Cutter: Yes, it's good business. It isn't what we at the moment would 
call a major product line, but it's good business. 

Morris : Are there any other things that particularly pleased you or that 
seemed to be areas needing further attention while you were in 
this corporate planning and Resiflex-establishing stage? 

DL Cutter: Well, yes. It's what probably led to my next job, which was 
director of new product planning. That probably happened 
around January of 1965, if my recollection is correct. We 
felt that we had accomplished something in terms of our 
ability to get this Resiflex line off the ground and all the 
things that had to be done to get new products going. As we 
looked at our own new product activities, Ted Cutter, I guess, 
in particular felt something was lacking, in that we weren't 
getting the coordination of all of the elements that it takes 
to get a new product on the market. It's fine for research to 
invent something and bring it to a particular point, but then 
manufacturing has to say, "Well, we'll make it," and the quality 
control has to set the parameters for the release of the product 
and the testing, and the marketing says, "I guess we'll sell it." 
[Laughter. ] 

Morris: Yes. It's a whole new set of activity that needs to be 
established. 

DL Cutter: Yes. Maybe it stemmed back to some of the political problems 
which I mentioned previously. We weren't having very good 
communication among all of these people, so maybe research 
would come up with something, but it wasn't necessarily in 
response to marketing's saying, "We've got a need. Help us 



235 



DL Cutter: fill it." So, my new assignment was basically one of coordin 
ation, to get all of these elements working together, but 
focusing now on new products, rather than overall corporate 
planning. 

Morris: Was your thinking that it would be easier to establish new 
ways of departments and management dealing with each other 
for new products than for some of the older line? 

DL Cutter: New ways of communicating, yes. I think that kind of a 

problem is twofold and, in one sense, soluble. One, there 
definitely needs to be some catalyst for communication or a 
method of communication. Two, there has to be some element 
of control and feedback to make sure that people are doing 
what they said they were going to do. In essence, getting 
a critical path and seeing who the players are along the path 
and then making sure that they do what they're supposed to do 
to maintain the progress. So, as a result, I got quite a bit 
involved in research, just because I had to! [Laughter.] 

Morris: That's where the new product evolves, yes. In what ways did 
you get involved in research? You didn't put your eye to a 
microscope, or did you? 

DL Cutter: No, no. But I was almost spending more time educating myself 
and going to research meetings, which were both a process of 
education and part of a job, really, to find out what's going 
on and what to do about it. So, I had to do a lot of reading 
and began to at least pick up, as a laymen still, some of the 
jargon and what it meant. So, I think we did accomplish some 
thing. I think we improved our ability to get products out 
fast, faster. 

Morris: Did it result in any great change in the kinds of products 
you were producing? 

DL Cutter: No, no. That wasn't necessarily the purpose of my job. But 
I think it established better communication between marketing 
and research, so that they were working toward a common com 
munication between marketing and research, so that they were 
working toward a common commercial objective. There's the old 
saying, "Technical triumph, financial flop," you know. 
[Laughter.] And that's what you have to watch out for with 
technical people, that they aren't doing things for the sake 
of technical triumph — when you're in a commercial organization. 
[Laughter. ] 



236 



Morris: This close relationship between research and marketing seems 
to have existed earlier on, maybe in the Thirties, before the 
great wartime push. 

DL Cutter: Probably, yes. I can't comment on it. 

Morris: Then, in '66, you became a vice-president and went on the board 
of directors. Was this because somebody had left, or just be 
cause your work was — ? 

DL Cutter: No, no. I think — again, from the pinnacle of hindsight — they 
were grooming me as a potential candidate to succeed Fred when 
his normal retirement date would have arrived. I think Fred 
would have been sixty-five in 1969, plus or minus a year. So, 
I guess they wanted to give me the position and the stature, 
work me up to bigger and better things if I made it. That was 
also the exact same time that Dr. Van Campen was considering his 
retirement. So, I was in this new product planning job, and 
they also sent me to an executive development course at MIT for 
nine weeks in the fall of 1966. 

Morris: Did that shed any light? 

DL Cutter: Well, it was a good experience, yes. I read a lot anyway! 
[Laughter. ] 

Morris: Sometimes it's useful to have your working conclusions confirmed 
by something like that. 

DL Cutter: Yes. I think its main purpose, as in most of these types of 
programs, was to broaden the outlook and scope of functional 
executives. The participants usually are still in a functional 
area rather than in general management areas. So, you get a 
smattering of marketing, finance, human relations, and all sorts 
of things. 



237 



5. CHIEF EXECUTIVE OFFICER 



David Cutter Appointed President 



Morris: So that, in a sense, you were prepared for Fred's eventual 
retirement and the likelihood that you might take over, but 
not for him dying in office. 

DL Cutter: Yes, I suppose so. No one's ever prepared for this job! 
[Chuckle. ] 

Morris : What was going on when your uncle did pass away? Were you 
here? 

DL Cutter: Again, as another broadening experience, I was back in 

Chattanooga at the time he had his stroke. We were going 
through labor negotiations and I was sitting in on the nego 
tiations, which eventually ended up in a strike. 

Morris: Was that your first experience with being directly involved 
in negotiations? 

DL Cutter: To any great extent, yes. I had sat in once or twice on 
meetings here in Berkeley, but I had never been involved 
from the beginning to the end of negotiations. I think Fred 
had his first stroke the latter part of January and the strike 
was fairly soon afterwards. The contract ended February 1 and 
we didn't reach an agreement, so they walked out and I returned 
to Berkeley. Fred passed away, I think, the twenty-second or 
so of February, 1967. 

Morris: So that there was a strike still to be settled? 
DL Cutter: Yes. 

Morris: Were you the logical choice, or did the directors have other 
candidates? 



238 



DL Cutter: Well, of course, Mr. Thomas and Mr. Lange were still here. 

I think that Mr. Lange had — I won't say long since—given up 
aspirations to the presidency. He was a very good adminis 
trator and a man who had everything in order, just a very 
meticulous man in terms of his ordered life. As it subse 
quently turned out, he decided that he was going to take early 
retirement. 

He'd planned his financial affairs so that he could do 
this and he announced to me, about a year in advance, what 
his goal was and what he was planning to do — to take early 
retirement. He then sort of worked his way down and trans 
ferred off all his responsibilities, so that the day he walked 
out the door, why, there was hardly a ripple! [Laughter.] He 
did it beautifully.' Maybe you've heard of Harry Lange. 

Morris: Yes, I have. Since I've known that I was going to be inter 
viewing him, too, his name keeps popping up in the daily papers. 

DL Cutter: Oh, yes. He's a heck of a nice guy. He's chairman of the 
administrative committee on the board of BART. 

- 
Morris: He certainly hasn't lessened his responsibilities or challenges! 

DL Cutter: No, he went from the frying pan into the fire. We kid him a 

lot because he's still on our board and comes back. I occasionally 
have lunch with him and chat about things. 

Morris: So, if Mr. Lange was already thinking in other directions, you 
and Mr. Thomas would have been the top contenders. 

DL Cutter: Yes. I guess the board — and in that case it would have to 
be primarily Ted and my dad, because the outside members of 
the board would obviously look to their recommendations for 
succession. 

Morris: At that point, had Ted's eyes improved to the point where he 
might have considered taking it on for a year or two? 

DL Cutter: As I have heard the story, I think he pretty well disqualified 
himself from the beginning, at Fred's death. I think he felt 
that his health would not allow it, but that's hearsay. 

Morris: He seems to have had a fairly strong influence on you and to 
have offered quite a lot of support and advice. 

DL Cutter: Oh yes. He's a man of great judgement. His business judgement 
is superb and we still lean heavily on it. If we've got knotty 
problems, we'll discuss it with Ted. 



239 



Executive Shifts: Manageable Span of Control 



Morris: What did the company look like to you when you went from this 
side of the desk to the seat of the presidency? 

DL Cutter: Well, I found I had seventeen people reporting to me! 
[Laughter. ] 

Morris: Oh boy! That's a little broader than the ideal span of control. 

DL Cutter: Yes. I had the presidents of all the subsidiary companies, 
with some exceptions in the international area. We had two 
men who headed up the international division. It was split 
geographically, for reasons which were more political, I guess, 
than other. [Laughter.] Then I had all the functional vice- 
presidents reporting to me for the current company operations — 
manufacturing, marketing, finance, and so forth. 

Morris: Did the responsibilities of the functional vice presidents 
extend to the same functions in the branch plants, like 
Chattanooga? 

DL Cutter: Chattanooga, yes. But the branch plants only had manufacturing, 
basically. At that time, we had just the two plants, with one 
coming on stream in Ogden. That was started while Fred was 
still alive. So, three plants, in essence, reported to the 
vice-president for manufacturing. 

Morris: What about the acquisitions, Haver-Lockhart and Hollister-Stier? 

DL Cutter: The plant reported to me. The presidents reported to me. And 
then, in addition, we had a Cutter veterinary operation; Dr. 
Casselberry reported to me. It was either then or shortly 
thereafter that Dr. Railsback, who is now the vice-president 
for marketing at Cutter-Haver-Lockhart , became the sales manager 
for the Cutter veterinary line — we had two different lines and 
still do. 

Morris: And what did you do about all these people reporting directly 
to you? 

DL Cutter: Well, let's see. How long did it take me to make the first 
move? The first move was to try and unite our international 
operations. 



240 



DL Cutter: 



Morris : 
DL Cutter: 
Morris : 

DL Cutter: 
Morris : 
DL Cutter: 



Morris : 
DL Cutter: 



One of the men, Dr. Ward, was a physician, a microbiologist, 
who had formerly been our director of control. He had gotten 
started in Japan when we were importing blood plasma from Japan. 
He started our little operation over there. He had also been 
instrumental in the acquisition of Tuta Laboratories in Australia. 
So, he had been given responsibility for that area of the world, 
the Far East, geographically. 

And then Jan Hjorth had the responsibility for the rest of 
the world outside of the Far East. My first effort was to try 
to reorganize the international operation on a functional basis, 
instead of splitting the world up geographically. Because of 
Dr. Ward's great expertise and brilliance in the technical area 
and Mr. Hjorth 's forte in marketing and administration, I asked 
them to divide it up that way, so that the technical aspects 
and manufacturing and research and science would be under Dr. 
Ward and the administrative and marketing aspects would be under 
Mr. Hjorth. 

This didn't work too well and Dr. Ward subsequently left. 
After that, Mr. Hjorth then took that whole operation under him. 

That must be a very complicated job. 
Yes. 

In the overseas operation I find references to scattered small 
laboratories producing things which are marketed under the 
Cutter label. How does that work? 

Licensees, you mean? 

Yes, rather than producing here and shipping overseas. 

Because, in recent years, many, many countries have lowered 
the curtain, if you will, to raise the wall, in terms of 
tariff barriers or just downright prohibition of imports of 
certain types of products, particularly if there is local 
production, so that they will protect, if you will, local 
producers and prohibit imports. So instead of being able to 
sell, you find that you must license local producers. 

And this is a valuable enough market that it's worth doing this? 

Yes. We are, in some countries, still permitted to import from 
here bulk plasma fractions, for example, which our licensee 
than further processes and sells in the finished package. 



Morris : 



241 



Had the foreign operation begun during the Second World War? 



DL Cutter: We had export operations for many years before the war, I'm 
sure. I can remember when I was working here in 1945, we 
were shipping primarily veterinary biologies to Cuba and other 
Latin American countries and Mexico. Max Ritter, in Switzer 
land, comes to my mind. They're still a distributor of ours 
for human products. So, we did have export operations. 

I may be off on my chronology here, but the first plant 
that I think we had was in Argentina, where we built a plant 
before we had a market and lost our shirts and finally shut 
it down after a number of years. 



Morris : 



This was before your time? 



DL Cutter: Oh yes. This must have been in the early fifties. 

Morris: When you consolidated the international operation, how many 
people did that bring in under one head? 

DL Cutter: From two, it went to one reporting to me, in essence. I can't 
remember exactly, but it was along about that same time that 
I purposefully picked up another man to add to my list of those 
reporting to me. That was Dick Hawley, who had been with us 
since 1950. He was in finance. I had been impressed with Dick 
as a manager, because he had been treasurer of the company and — 
don't ask me how this happens — the distribution function was 
reporting to him. That's a line function and I'd been impressed 
with the way he had handled that particular responsibility, as 
well as the other responsibility of the treasurer's job. 

So, I brought him down* and made him a vice-president, kind 
of without portfolio, and assigned him a bunch of miscellaneous 
chores. He'll look back at it and laugh, I'm sure. He was 
having a hard time really keeping busy and wondering what the 
h — he was almost going out of his mind! Dick's an aggressive 
kind of high-strung type of guy and this was really frustrating 
to him. I hadn't been very specific when I talked to him and 
told him that I was going to make him a vice-president because 
I felt I needed some help. I've forgotten everything that I 
was giving him, but it was a bunch of miscellaneous chores and 



*Executive offices are on the first floor of the main office 
building, with various middle management departments on the 
second floor, in 1973. Ed. 






242 



DL Cutter: 



Morris : 



DL Cutter: 



Morris: 

DL Cutter: 
Morris : 
DL Cutter: 



Morris: 
DL Cutter: 
Morris : 

DL Cutter: 



it really probably wasn't very challenging. But it needed to 
be done and it needed to be done by a person at a relatively 
high level. 

And it gave him access to further information about areas of 
the business new to him? 

Yes. At the same time, it took him out from the strictly 
financial area and got him exposed to a wide variety of things. 
He only was in that job for a matter of months before I named 
him executive vice-president. Let's see if I can figure it 
out exactly. [Checks records in desk.] He was secretary and 
treasurer at the end of '67 and at the end of '68 he was execu 
tive vice-president. [Laughter.] So, he was a vice-president 
for a matter of months and then became executive vice-president. 

It sounds like the experience you went through when you were 
director of corporate planning. 

Yes. I had a model to follow. 
Did you have that in mind? 

Yes. [Laughter.] But I didn't feel that I could do it all at 
once. I didn't feel that I could take the secretary-treasurer, 
who reported to the vice-president for finance, and immediately 
name him executive vice-president and have the vice-president 
for marketing, the vice-president for manufacturing, the vice- 
president for control report to him. I subsequently did this, 
late in 1968 when he became executive vice-president — I've 
forgotten exactly just how it was organized at that time, but 
it eliminated at least three or four guys that reported directly 
to me. 

It took all of these out of your direct responsibility. 



That's right. 

Were there other changes that you made in people? 
other people into management positions? 



Did you bring 



Yes. I hired Dr. Hamlin even before I was president. In other 
words, when Dr. Van Campen made his decision to retire, I got 
the assignment to get his replacement, because I had been working 
in research and was director of new product planning and then 
vice-president. So, Dr. Van Campen and I, basically — he knows 
a lot of people in the industry and we hired a head hunter, a 
professional executive search firm. They came up with all sorts 



243 



DL Cutter: of names and Dr. Van Campen would say, "Yes. He's a good can 
didate," or, "Oh! That guy's a jerk," because he knew all of 
these people. It was great to have him around, really. 
lLaughter.J When Dr. Hamlin's name was suggested, he said, 
"My golly.' Is he available? He'd be great!" So, eventually, 
Dr. Hamlin came with us as vice-president for research, in 
October of 1966. Fred had given me this assignment to go out 
and look for him rather than him doing it himself. So, it 
worked out fine. 

Morris: What was the general reaction of the other executives and board 
members to some of your changes? 



Profit Centers; Responsibility and Accountability 



DL Cutter: Except for the ones who were adversely affected, I think it was 
all positive. Obviously, I couldn't survive with seventeen 
people reporting to me. 

I had to not only get the organization down to manageable 
proportions, but I was also working in the direction of creating 
independent profit centers for proper accountability and respon 
sibility for the people involved because, with the functional 
vice-presidents reporting to me, as well as all the subsidiary 
presidents, the buck stopped here as far as the operations of 
the parent company. In other words, in addition to having 
profit centers like the subsidiaries reporting to me, I was 
also the chief operating executive for the whole parent com 
pany operations — Chattanooga, Ogden and what have you — marketing 
and so forth. Because, again, there was only one place certain 
decisions could be made and that was the person who was the head 
of that particular operation. 

I was getting involved in things, first of all, that I 
didn't have time to get involved in and, secondly, that really 
should have been decided at a lower level. The main thing was 
the time. We needed a man to head this operation up who could 
devote full time to just the parent company operations, because 
it was the largest segment of our business. I couldn't devote 
the necessary time to that and, at the same time, still be 
responsible for all the other activities that we had. So, that 
was the move in bringing Dick Hawley in as executive vice- 
president. Then, we were talking about Resiflex earlier and 
it was somewhere in there also that I had the president of Resi 
flex report to Hawley. So that was another reporting relation- 



244 



DL Cutter: ship that I got rid of, if you will. 

Morris: Just last year [1972] you shifted Resiflex organizationally from a 
subsidiary affiliate to a corporate part of Cutter Labs. What 
was the thinking on that? 

• 

DL Cutter: For some time, it had been increasingly apparent that, because 
of production scheduling and market planning and what have you, 
there was just going to have to be more close communication 
between the Covina Resiflex operations and the marketing force 
here. So, we began to have more frequent meetings, all aiding 
them to establish this communication. Resiflex Laboratory 
reported to me, in other words, as all the affiliates did. It 
just became apparent to me that this wasn't working out organi 
zationally. So — I've forgotten when it was, three or four years 
ago — I said, "Well, this doesn't make sense. Let's have Resi 
flex report to Dick Hawley." He was, at that time, de facto 
president of the medical products division, even though we 
didn't have a medical products division.' [Laughter.] But he, 
in essence, did have the responsibility for the parent company 
operations. He had the vice-presidents for manufacturing and 
sales and what have you reporting to him at that point. 

So, Resiflex then, in essence, went in under the medical 
products division rather than reporting to the corporate presi 
dent. Things just got more closely entwined and, finally, it 
just made a lot of sense to say, "Well, who are we kidding with 
this separate corporation type of thing? We'd really be better 
off merging it in and having the plant manager there reporting 
to the vice-president for manufacturing and having the quality 
control person reporting to the corporate quality control and 
distribution and what have you." 

Morris: This is what you meant when you said shorten the lines of com 
munication? In other words, they don't come around through you; 
they work in a much closer lateral arrangement? 

DL Cutter: That's right. And, of course, Hawley has the profit-center 
responsibility for the Resiflex line and, so, it should have 
been under him. 

Morris: It more closely relates the authority with the responsibility? 

DL Cutter: Oh, yes. Sure. 

Morris : Is this a complicated legal procedure? 

DL Cutter: No. You just liquidate the corporation into the parent. There 



245 



DL Cutter: are a variety of ways you can handle it. 

Morris: But that's a fairly routine procedure once you realize that 
this is the effective way to continue operation? 

DL Cutter: Yes. 



Personnel Attitudes 



Morris: How about the general reaction, as you could read it, of the 

men in the production line, in the laboratories, and the cleri 
cal help to you as president? 

DL Cutter: Well, you know, usually I'm the last to learn! [Laughter.] 

Morris: What kind of a reading is it possible to get on this? Do you 
ever get a chance to get out still, as president, and go 
through the plant? 

DL Cutter: Oh yes. I think it's hard, of course, to separate their per 
sonal reaction from their evaluation reaction. From a personal 
point of view, I have excellent relationships. One reason, per 
haps, particularly in this plant, because I worked with a lot 
of the people. Not a lot any more, but some of the old timers 
are still around and, why, I was working side by side with them 
in the shipping room or wherever it might have been. In most 
cases, it's a mutual first name relationship. As far as whether 
they think I'm doing a good job or a bad job, I don't know. I 
suppose, if you look at the results for this year, I'm not very 
proud of them, but they're two different types of relationships. 
[Laughter. ] 

Morris: What I was thinking about is that Cutter has a tradition of 

people working here for a long time and this usually indicates 
that they're happy in their work and like the company. I won 
dered if this were still true at this plant as the company has 
grown? 

DL Cutter: I think so, yes. I think I have made more changes in the recent 
past, before I became president. Maybe that's just because 
we're a larger company and there's just bound to be more people 
involved. 

Morris: The changes in personnel that you'd be specifically responsible 
for would be management and executive. I was thinking, again, 
of the men in the shipping room and the women, the people actually 



246 



Morris: 



DL Cutter: 
Morris : 

DL Cutter: 
Morris: 

DL Cutter: 



Morris : 



DL Cutter: 



Morris: 



DL Cutter; 



Morris: 



DL Cutter: 



out there in the plant, producing the solutions and making up 
the orders. What is the turnover in overall personnel? Do 
you still have your general employees here for ten, fifteen, or 
twenty years? 

Yes. 

How does your turnover rate compare with other people in the 
industry? 

I don't know, specifically. I think it's favorable. 

Knowing that this long, friendly employment was traditional 
here, I wondered if this was also true at the branch plants? 

Yes. As a matter of fact, just a year ago, we had our twentieth 
anniversary luncheon, the old-timers' luncheon, in Chattanooga. 
I think the initial complement in the plant when it was built in 
1951 was about fifty or sixty people. Seventeen of them are 
still on the payroll. 

That's great! Is this by good fortune, or do your personnel 
management people really work at this? 

It's hard to tell. Of course, a good number of these people 
are still in the bargaining unit back there. We haven't had an 
overly good relationship in terms of management /union relation 
ships. That isn't to say that there aren't a lot of the people 
who are not militant and loyal and all that stuff. But it's 
interesting. What motivated them to stay, I think, is reason 
ably good working conditions. The pay is not out of line at 
all. I don't think we're the highest, nor are we the lowest. 
We have comparable benefit plans to the area. 

Are you still in the forefront of benefits? Your father's very 
proud, I think, and rightly so, of the fact that he put in a 
pension program before practically anybody but the United States 
government had one for its employees. 



Some areas, yes. 
benefits. 



Some areas, we're behind, in terms of the 



Is this the result of the fact that you now have unions to cope 
with? 

Partially, maybe. You sometimes get into the attitude of, "Well, 
don't give it to them. Wait and let's bargain for it at the 
bargaining table." There are some types of benefits that you do 



247 



DL Cutter: 



Morris: 



DL Cutter: 



Morris : 



DL Cutter: 



Morris: 
DL Cutter: 



Morris: 



DL Cutter: 



that — other types of benefits we do unilaterally make and I 
think this has primarily been in the pension area. But it's 
probable — at least, I get inputs now from some of our people — 
that maybe our benefits, which haven't been changed in several 
years, are falling behind what the current practices are. 



How about women in the company? 
number, haven't you? 



You've always hired quite a 



Yes. A lot of the production activities are what, tradition 
ally, women have been involved in, the more repetitive tasks. 
Where , I guess , men would have more a tendency to go up the 
wall, women can sit there and routinely do things. At least 
this has been, I think, the experience in industry in general. 

The pharmaceutical industry, I think, employs many women. I 
wondered if Cutter felt prepared to deal with women agitating 
for higher level jobs? 



No, I never thought of it that way. So, off the top of my 
head 'no', I guess, came naturally. I would say, maybe even 
more so, because of the type of business we are in, you find, 
quite often, women getting technical or scientific educations. 

In lab sciences? 

Yes. You don't find too many women engineers and things, so 
you wouldn't expect to find a woman as the production manager 
in an automobile plant. On the other hand, many women, I think, 
get scientific careers. We've always had women, then, in profes 
sional capacities, so we're used to dealing with women other 
than as operatives, if you will, and I think that makes it 
easier for us to more objectively evaluate a woman in terms 
of potential. 

You said earlier that nobody's ever ready to be president. I 
wondered if you could recall any specific worries you had, 
either about things that needed doing or areas where you felt 
you had less preparation? 

Well, I don't think I've ever felt ill-prepared to cope — ill- 
prepared, that is, from an educational point of view, from 
having had experience, albeit limited, in a wide variety of 
areas. As you may remember, my formal education and initial 
activity was financial and accounting. I spent two years in 
selling. I was in research, in essence, that area which also, 
from a technical point of view, got me more involved to at 
least understand production problems. I had been very active 



248 



DL Cutter: in civic affairs locally, so I was, I think, tuned in to some 
of the outside environment, some of the social issues, that a 
company must operate within. As a former tax return preparer, 
a CPA, why, I understood taxation and things of this nature. 
So, I can't look back and say, "Gee, I wish I'd taken a course 
in this or a course in that to better prepare myself to become 
president," or, "I wish that I had done something different," 
recognizing that you can't do everything in a lifetime. 

Perhaps the major concern I had was that I was thirty- 
eight years old and virtually all of the vice-presidents and 
virtually all of the seventeen people that I now found report 
ing to me were much senior to me in terms of age, experience, 
and, in some cases, stature and visibility. So, I felt that 
I had to be very careful in the moves that I made and how I 
made them and when I made them, so that it wouldn't be taken 
as the young bull rattling around in the china shop and break 
ing all the cups and saucers. 

Morris : Your father was about the same age when he took over the presi 
dency. 

DL Cutter: A little younger. 

Morris: Yes. Did you and he ever talk about this? 

DL Cutter: No. 



Considering Profits and Human Needs 



Morris: Any other concerns? 

DL Cutter: Well, of course, there's always the concern of making a buck. 
[Laughter.] That's the primary concern! Of course, that in 
volves an awful lot of issues. Making a buck doesn't mean that 
the only consideration is what's on the bottom line, because, 
for your long-term health, making that buck means happy employ 
ees and running a place where people like to work, because 
that's where you're going to get the best work out of them, 
and all those considerations and being able to afford to do 
all those things. 

Morris: In the Old Timers' Room, there's a piece about the dual trust 
of Cutter Laboratories; I don't know who wrote it and it 
doesn't say that this is Dave's comment or that this is Dr. 



249 



Morris: Bob's comment, which they often do. The dual trust idea is 
that not only is there responsibility to make a buck for the 
stockholders, but also the greater trust of producing products 
which alleviate human suffering. It's quite an impressive 
statement. I wondered how much this is consciously a part of 
what you do in making decisions? 

DL Cutter: I don't think that I consciously think about that aspect of 
it as I'm making day-to-day or even strategic decisions on 
products. We're already in that business, so I don't have to 
make the initial decision, shall we say. I guess it's more 
a question of, "Is this product fit?" or "Can we sell it?" 
Obviously, it has to fulfill some need out there or it isn't 
salable. It wouldn't be commercially successful. But as far 
as saying, "Here's a product that is going to save lives" — 
if I didn't feel it would also be a commercially attractive 
venture, then I would have to say Cutter Laboratories, as a 
company, could not afford to go into that because we're already 
borrowed up to the hilt and we've got probems with our alloca 
tion of resources. 

Morris: Does the research facility have the time and the financial bud 
geting to pursue abstract ideas which do not yet have any com 
mercial application? 

DL Cutter: No. 

Morris: You spin those off to somebody else, or those people leave and 
go somewhere else? 

DL Cutter: Yes, if that's the case. 

Morris: It's usually in the mind of the researcher that these things 
develop? 

DL Cutter: We're pretty well product development oriented. 



Energetic Civic Participation 



Morris: The other thing I wanted to ask you about was your civic acti 
vities. They've really been extensive. How do you find the 
time? 

DL Cutter: Well, I don't do as much as I used to. I think I really got 
active in the late fifties. It must have been when I was out 



250 



DL Cutter: with the United Crusade. I got involved as a captain or some 
thing like that and so I was calling a friend of mine to see 
if he'd act as a worker under me. He said, 'Veil, I'll act 
as a worker if you'll join the Jaycees , because we're having 
a membership drive." I was as desperate as he was, so I said, 
"Yes." I got involved in the Berkeley Jaycees and very short 
ly got so enthused that I ran for president and got elected 
and got involved in the state activities; you do as a local 
member, if you're active. I went on and then was state vice- 
president. I was responsible for all the Alameda County Jay 
cees at the state level. Then, I was treasurer, which is a 
statewide election that's a lot of fun. The next place was 
president of the state Jaycees, which I will immodestly say I 
made a good go for. Incidentally, if you're not familiar with 
the Jaycees, it's the darndest political — 

Morris: I'm aware! 

DL Cutter: [Laughter.] Okay! You really have to campaign. There's no 
railroading or nominating committee slate. But that job is 
probably almost a half-time, quarter-time job. 

Morris: You have to travel a lot, too. 

DL Cutter: Yes. I just couldn't do it, so I bowed out of that, but then 
I began to get involved in other things to kind of take up the 
slack. You know, once you get used to this kind of thing, why, 
you're in. 

Art Beckley, who used to be a vice-president here, was 
on the Berkeley City Council for many years. In the early six 
ties, the city council had been getting a lot of flack from 
minority groups about discrimination in housing in Berkeley 
and there was an impetus for a housing ordinance of some kind. 
So, I went to Art and said, "I'd like to serve on that commit 
tee that the council's going to appoint, the citizens committee 
to study discrimination in housing." I felt ignorant and I 
thought I'd like to become involved in that. 

I didn't want the committee to be completely loaded with 
a bunch of do-gooders who — let's put it this way — did really 
not represent all parts of the spectrum in the city. As it 
turned out, it was a good experience. I got a lot of education 
and I think it tempered my attitudes, just serving on that 
committee. I always thought of myself as objective and impar 
tial. Nevertheless, my upbringing and orientation is more con 
servative than liberal. But I guess I was one of the mavericks 
on that committee. Tom McLaren was on that committee too, by 



251 



DL Cutter: the way, and Tom and I were the ones who were leaning most to 
the right.* Really, we didn't think ourselves very far to the 
right! lLaughter.J We know an awful lot of people that were — 

Morris: That's, I think, something practically anybody can say. 

DL Cutter: Yes. But anyhow, the housing committee was a lot of fun, because 
then an ordinance did get proposed and I had a lot of fun debating 
people. I was always picked as the other side. Remember Cap 
Weinberger's Profile; Bay Area? I remember one time Bill Sweeney 
and somebody else was on their side and then a realtor and I on 
our side debated that issue with Cap Weinberger on television 
for an hour. That was a lot of fun. [Laughter.] That's how 
I got to know Bill Sweeney pretty well. He and I consider our 
selves — we like each other, let's put it that way. 

Morris: That was before he himself had run for the city council? 

DL Cutter: No. He was on the council then. I'd really gotten to know the 
council when I was in the Jaycees, because 1 had to go ask them 
for money and also we were always trying to get the city offi 
cials to come to our dinners, big awards banquets, or what have 
you. So, we got to know them pretty well. 

Morris: Then you went on and served on what was called the Hadsell 
Committee on school integration? 

DL Cutter: Yes. And once again, I found myself in the minority. 
Morris: In what way? 

DL Cutter: I've forgotten the exact thrusts. I think there were thirty- 
four recommendations that the report made and I think I con 
curred in all but about four, five, or six of them, in most of 
them. I'd say eighty percent of the committee were right down 
the line, though there were just some in there, frankly, that 
I've long since forgotten, that I conceptually and rationally 
didn't believe in. 

That's how I got to know Mary Jane Johnson, too. Mary 
Jane and I were the only two who served on both those committees. 
I have a great deal of respect for her too, in light of what I've 



*Mr. McLaren later served on the Berkeley City Council, 
1969-73. 




David L. Cutter and family at Budd Lake, Yosemite 
Labor Day, 1964 



252 



DL Cutter: been exposed to of what she's been doing recently as a member 
of the school board. 

Morris: After all of this involvement in the city's discussion of 

racial issues in the community, what led you to decide to move 
from Berkeley? 

DL Cutter: Oh, several factors. One, I began to see the handwriting on 

the wall in terms of my progress here at the company. I'd been 
made the vice-president and we'd moved into our house when we 
had four kids. By that time, we had five. So, we needed more 
space from a living point of view and I could anticipate more 
space from the social and entertaining point of view as things 
came along. So that was saying, "We're going to move," whether 
it be within Berkeley or not. And then, secondly, I just got 
to looking at this school situation. I had two kids going to 
Garfield Junior High by that time and a couple more in the gram 
mar schools. They were small for their age, as was I, and 
they were just getting beat up and stuff stolen and what have 
you. I just didn't like what I saw. 

And I guess there was a thing that broke the camel's back. 
I was invited, because I had served on that citizens committee, 
to attend something at Garfield. It was still Garfield then.* 
It was some retreat where they had educators in from all the 
state or area. I remember Ad Fording and I were sitting there; 
he was the police chief at the time and one of the people who 
was invited. And I just couldn't understand what was going on. 
We all gathered in the auditorium after a morning of sitting 
around small tables talking about Job Corps and minorities and 
so forth. 

The black fellow that plays one of the characters in "Hogan's 
Heroes" — if you've ever watched that program, you know who I'm 
talking about — was one of the guests at this thing. We got in 
a celebrity to attract the crowds, I guess. So, he got up there 
and there was a largely liberal audience with quite a black 
element there too. So, there's his audience. He starts going 
and everyone's yelling, "Right on!" and he started just talking 
pretty doggone foul-mouthed in front of this group of about a 
thousand people. Everyone was cheering, "Right on!" and I 
thought, "Good God! Is this what's happened to the Berkeley 
school system?" 



*In the summer of 1968, the name was changed to Martin Luther 
King, Jr. Junior High School at the request of students. 



253 



DL Cutter: It's really funny. I can remember that as an incident because 
I was born and raised in Berkeley and here I'd lived there for 
eight years and been so active in Jaycees and these committees. 
We were going to move and I was debating, "Should I move out 
of Berkeley, or should we still live in Berkeley?" While I 
was debating this I went to that thing and that was the clincher 
that made my decision. 

Morris: Quite often there is one incident that crystalizes a decision. 
The United Crusade aspect of your civic activities has con 
tinued out here at the plant; the lab has been a very big boos 
ter. 



DL Cutter: Well, yes. Our company has traditionally done that. Fred 

Cutter was probably the guiding light in that and probably, I 
think, one of the founding members. Maybe it's older than he 
was, but he was very active initially and always has been in 
the United Fund. He was a great believer in, "If you only have 
to give once, you can get all these other bodies off your back." 
[Laughter. ] 

Morris: That hasn't necessarily turned out to be true. [Laughter.] 

DL Cutter: Oh yes! If you follow them scrupulously — I'm thinking primarily 
from the personal, the individual's [point of view.] Just give 
once — I find it very easy to say no. Here comes the mothers' 
march around and I say, "I'm sorry, I gave to the United Crusade." 
And you can always say, "if you don't like it, join them." 
[Laughter. ] 

Morris: The company here always seems to put on a great party of some 
kind. I wondered if this has meant that, over the years, the 
company employees have continued to be interested and supportive? 

DL Cutter: Oh yes. I think it's just basically a sales pitch, an enthu 
siasm-generating thing with prizes and all that stuff. 

Morris: And this is worked out by the personnel department, or by your 
employees association? 

DL Cutter: No. Somebody is elected chairman or selected chairman. He has 
to agree to do it and be enthused. Basically, he develops his 
own committee and, following the guidelines of the preceeding 
years, does what he wants to do, within budget limitations and 
so forth. I'm involved to the extent that they bring all of 
their programs to me for approval. 



254 



Looking Ahead 



Morris: I'd like to ask one wind-up question. In the 1970 annual 

report, you wrote that "recently, the company had been solving 
the problems of the past and we're now aimed at solving the 
problems of the future." I wondered what you see as the prob 
lems of the future for your company? 

DL Cutter: Well, of course, that report was written before the Abbott 

recall happened to us in 1971 and we went from feast to famine. 
The Abbott thing created great stresses and strains on us, but 
it also provided us with a good income year. Then, the sub 
sequent reentry of Abbott has seriously eroded the pricing 
structure. 

Morris: You didn't say specifically Abbott, but you mentioned there 
had been sharp price competition. 

DL Cutter: Well, everyone has been involved, but it steins from Abbott 
Laboratories, which was then trying to get from ground zero 
back up to some portion of its previous share of the market. 
The companies that had gotten some of that business want to 
hang onto it and Abbott wants to get it back, so you get into 
a big dogfight. 

I think the whole industry needs to see the price levels 
get back up, because I doubt if anyone's making much money at 
the current price levels. Each one is trying to buy its own 
share of market. And the Abbott situation has resulted in 
the regulatory authorities getting more involved and more 
interested in parenteral IV solutions. As a result, I think 
we'll see more concern and more interest of not only the 
regulatory groups, but academia in this area and we'll see 
advances in delivery systems. So, this is what concerns us, 
as it does our industry, in trying to keep ahead and up with 
that racket and that game. 

Morris: What about the general, overall concern in several different 
connections that we may be reaching the limits of growth as 
a nation and internationally? Is this line of thought going 
to go further and what do you think it might lead us into? 



255 



DL Cutter: That's rather a big question. I think that population will 
be controlled by all available means, but probably not in my 
lifetime. Technology will not be limited, certainly. Hope 
fully, it will develop to a point where men won't have to 
spend all their time working to keep a roof over their heads 
and we will have time for leisure and maybe time to do some 
thing for the good of the community. 



END OF INTERVIEW 



Transcriber: Marilyn White 

Final Typist: Beverly Heinrichs 
Elizabeth Dubravac 
Wendy Won 



255a 




Vol. 39, No. 1 



CUTTER Laboratories Inc., Berkeley, Calif. 



March 1! 



'ayer 




omes to Berkeley 









V 







•> 



i 

' I , 



" V V * f ^ S 

• f\^-Jr -s 

• *" 'i •• < : ^*^** . y ' .* 

\1 ."''•'. *§§ 

,'«, i^S '- :£l 

^CS? ^S>i i . : J 



s> -^ '-v'X:- ->^? *'*£* 

fc'^ : -- ^ ^S ^. ^ ^ -NV^ 

'.-;.. v \ ^ :-\'---?:?. V?:- -; • :<^ 

.- ••',• k - .: ' •';^ i - ; >,/-- 

Seated: Franz Geks. Ted Cutter, Walter Salzer, Edward Pflueger, Dave Cutter; 
Standing: Dick Schock, Dick Hawley, Jan Hjorth, Theodor Heinrichs, Ernst 
Schrautstatter, Ken Hamlin. 



Following the acquisition of Cutter Lab- 
or.ttorics in January, several key Bayer 
cxci.utiNi.-s paid a two week visit to Berke 
ley in order to become belter acquainted 
and to familiari/c themselves with our 
operations. 

Dave Cutter introduced the group to 
Beikclcy employees at meetings held in 
the cafeteria on January 22: 

Dr. Waller Sal/tr, member of the 
Biiurd of M:.n.igeinent, I.c\erkti<cn. 

Ntr. F.Jnard Pfliu-scr, President and 
ClKiirnian of (lie Board of Baychom, 
R:ncr's New Vork-b-T-ed cnmpnuy. 

Dr. Fr.ni/ Ccks, Director of the 
riiariii:ucii(ical D:\ision, I.ocrku- 
son. 



Dr. Ernst Schraufstatter, 



Director of the Pharmaceutical Di 
vision, Leverkuscn. 

Mr. Theodor Fleinriehs, Manager of 
Animal Health Actiuties, Cologne. 

Dr. Geks welcomed Cutter into the 
Bayer organization, stating they were 
looking forward to cooperating with Cut 
ter and "are convinced that Bayer can 
help make Cutter a profitable and fast- 
growing company." 

In line with this intention, Bayer ex 
tended an invitation to Dick Hawley, Jan 
Hjorth, Ken Hamlin and Dick Schock to 
go to Germany to explore the new re 
sources available to Cutter. Leaving at 
dillYrcnt time intervals (in pairs) during 
mid-February, 'he group has already un 
dertaken this venture and are presently 
back in Berkeley. 

Dr. Geks also indicated the feasibility 



of further expanding Cutter Internatio 
sales with the help of Bayer's world-w 
sales and distribution organization, 
those countries where it makes sense 
do so. 

The Bayer group presented a film g 
ing a more descriptive account of Bay< 
products and how some of them are u: 
in the plastic, automobile, textile, teat! 
and other industries throughout the woi 
This film will be shown at all Cutter pla 
over the next few months. 

More About Baye 

HISTORY 

Bayer AG has been in existence for 1 
years. It began its operations in Wupp 
tal-Barmen, Germany with the prodi 
tion of aniline dyestuffs. The compa 
has expanded over the years to enco 
pass five continents selling its appro 
mate 6,000 products in almost ev< 
country in the world. The company 
headquartered at Leverkusen, Germs 
located on the banks of the Rhine, 
incorporates nine divisions: Inorga 
Chemicals; Organic Chemicals; Rubb 
Plastics and Surface Coating Matcri; 
Polyurethanes; Dyestuffs; Fibres; Ph 
maceuticals; and Agricultural Chemici 
Bayer's sales approximate 5 billion d 
lars per year, and, to date, the comps 
employs a staff of over 100.000. 

U.S. OPERATIONS 

Current U.S. operations consist of f 
divisions within the Baychem Corpo 
tion of New York: Chemagro Divisii 
Kansas City, Missouri — Producer of 
ricultural chemicals and animal hea 
products: Mobay Division. Pitlsbur 
Pennsylvania - - Producer of polyu 
thanes, thermoplastics and other indusli 
chemicals; Verona Division, Union. N 
Jersey -Producer of dyestuffs and aux 
aries -principally for the textile, pa] 
.md leather industries; f BA Phairnac 
ticals Division. New York. New Y«-rV 
Imporler of fine chemicals; Bajlex D 
sion. New York, New York Impoi 

of synthetic fibers. 

(CONTINUED ON PAGt 



Who Owns Slayer? 



Swluor- r.'tii.or- 

rpQ I »id Fr.inee land* UK. U S A. Belgium Ausltla Oilier* 



nee land* UK. U S A. Begum Ausltla Oilier* 

ilr JOMULM -.-3i J 



f Hv 

77V. 11, SV. 3.2V. 3.0V. 0,9V. 0,7V. 0.7V. 0.7V. 2,3 •/• 



\ i 






Slock capital 1,91 thousand million DM 

nil i n? 

1 ; 



13V. 19V. 28V. 17V. 




Pensioners, SeH- Wage ..nd Invest- House- Olh«r Industry 
etc. employed salary men! wive* person* and 

earner* fund* commerce 

and other 
, Institutions 

Bayer AG is owned by about 460,000 shareholders in all parts of the world — 
22000 ol whom are employed by Bayer. The chart illustrates the percentage 
breakdown. (DM stands for Deutsche Mark. 2,40 DM is comparable to $1.00.) 

A Slayer Product 






. , 



,.. 



v> / J 

• ' > /„< ; •- >'' . • '" :> - ! - ' ? -'1 

t ;C V j' V 'v /• • 

* ....> :S --• • : ' * 

- '-" ' > . i ' 

J . A .j 



Phslic igloos, made from polyutcthane 
raw in.ttcrial components have been used 
lo shelter earthquake victims in Turkey, 
Peru ;ind. rnoM recently, in a large-scale 
relief opi -ration in Nicar.'tgua (shown 
ah..ve). 

Bj\cr pioMilcd M;m;ii;ua with 205 
tons of polyiirethane material, technical 
:issisl;mce and manufacturing units, so 
that production could be undertaken on 
the spot. 



/ . -. 

•' " • 

• . "; - 
• ' * 



The igloos were produced at the rate 
of 300 per month by a relatively simple 
process. A foaming machine mixes the 
liquid polyurcthanc raw material cornpo- 
pents and sprays them on to a rotating, 
inflatable balloon mold. 'Pic spiayrd on 
mixluic foams continually dining the m- 
tary movement, and the weather-resistant 
ijjKx), slabili/ed by concrete fltH<ring, is 
ready in about an hour's time. 



255b 

More About Bayet 

(CONTINUED FROM PAGE 1) 

MANAGEMENT STRUCTURE 
The management structure, operating ou 
of l.everkuscn, is made up of a Stipci 
vi.sory Board and a Board of Manage 
ment. The Supervisory Board comprise 
directors drawn from the public, cm 
ployccs, business and the scientific com 
mtinity. Though this Board does hav 
decision-making responsibilities, it usual 
ly acts upon recommendations from th 
Board of Management. The Board c 
Management is composed entirely of ex 
ccutivcs of Bayer AG. The members c 
this Board compare, by U.S. structure, t 
group vice presidents, each having com 
plctc responsibility for a particular are 
of activity. 

Dr. Walter Salzer, member of the Boar 
of Management, is responsible for all c 
Bayer's pharmaceutical, veterinary an 
agricultural chemical activities through 
out the world. 

Among those reporting to Dr. S.ilzt 
are three Directors responsible for Baj 
cr's Pharmaceutical Division: Dr. Fran 
Gcks, Professor Dr. Ernst Schraufstatte 
and Professor Dr. Rudolf Kopf. 

Mr. Thcodor Hcinrichs, currently r« 
sponsible for Bayer's world-wide animi 
health activities, will be joining Cuttt 
and moving to Berkeley in the near futun 

Regional Distribution 
Of Sales by 
Percentage in 
1972 



Common M.irk.t 
without Federal 
Republic of 
Gsrmany 
3.16 = 2»'/« 




The chart above illustrates the regio* 
al distribution of Bayer world sales 
1972. The Federal Republic of Ge 
tnnny, the Common Market (witho 
niG) and other rtiropoan countrii 
account for the largest portion of fl.i 
er's business — 71%. North and Lut 
America — ?0%; Asia and other cou 
tries combined — 9%. 



255c 



Gan Francisco Chronicle, November 30, 1973 



Bayer Firm 
Merger Bid 
To Cutter 

Cutter Laboratories Inc., 
Berkeley, said that Rhine- 
chem Corp., a subsidiary of 
the German Chemical Co. 
Bayer A. G., has indicated it 
intends to make a cash ten 
der offer for all shares of 
Class A and B common 
stock of Cutter Laboratories 
at $18.50 a share net. Certain 
members «f the Cutter fami 
ly, including chairmaB Ed 
ward A. Cutter and presi 
dent David Cutter, have in 
dicated that when the tender 
offer is made they wiM ten 
der an the shares owned by 
them. 

The tender is expected to 
be made in a few days, and 
it is expected mat Rhine- 
chem will-not be obligated to 
purchase any shares unless 
shares constituting 90 per 
cent of each class of stock 
are tendered. 



256 
SELECTED DOCUMENTS AMONG CUTTER LABORATORIES ' OLD TIMERS ROOM MATERIALS 



1. Cutter family history in Canada. 

2. Edward A. Cutter, Sr. : 

t -copybooks for 1892-94, 1894-97, including orders and payments for goods, 

comments on state of his business (Fresno). 

-pocket notebooks with reminders of things to attend to (Berkeley), 
-miscellaneous notes, 1908-21, ideas on developing business systems, 
-ledger setting up cost analysis system, 1921. 

3. Anthrax vaccine test records, 1904-07. 

4. Cash book, 1908-09, including reconstruction of accounts lost in the 
San Francisco Fire. 

5. Ledger, 1911-20, including accounts by states, record of war bond purchases 
by employees, French Fatherless Babies Fund. 

6. Pay books, 1916-17, 1917-19, 1917-21 (sic). 

7. Accounts payable ledger, 1917-50. 

8. Personnel sheets, including memos on hiring, classification, 1919-44, 
1945-46, 1947-48, 1949-50. 

9. Accounting correspondence and forms, 1919-21. 

10. Inventory and balance sheets, 6-month intervals, 1921-23. 

11. Uniform Cost Accounting Manual, American Drug Manufacturers Association, 1927. 

12. Product information materials: 

-ledger- shaped scrapbook - pamphlets, price sheets, 1910-29. 

-Blacklegol* direct mail pieces, 1923-42. 

-folders (5) - labels of various products, 1929-39. 

-folder, Cutter Lab Products - sales and professional leaflets on 

intravenous solutions and their application, 1935-39. 
-Intravenous Dextrose Therapy, pamphlet by Dr. Robert Cutter, 1938. 
-promotional aids and press clippings concerning "Health on the Range" 

veterinary products film, 1943-46. 
-various other materials on human and veterinary products. 

13. Correspondence with Kasauli, India, Pasteur Institute, details of rabies 
vaccine preparation, 1921. 

14. Sales graphs, by product, kept by Dr. Cutter, 2 volumes, 1924-58, 1945-64. 
-historical summary of sales and net profit, 1946-65. 

15. Telegram file, debate with U.S. Bureau of Animal Industry re labeling, 1930. 

16. Monthly Meeting minutes, management group during Dr. Cutter's presidency. 

17. Cost accounting study and procedures prepared by George S. May Co., 2 
volumes, 1938. 

18. Blood plasma program, 22 page narrative by Pres Snow of start-up of 
blood processing, 1943. Also various press clippings, photographs, articles 
in industry publications. 

19. Correspondence - annual random survey of company letter-writing, by Dr. 
Cutter, 1943-50; "Cutter Style" manual, 1954. 

20. Job Evaluation Plan prepared by Booz Allen & Hamilton, 1944. 
-Dr. Cutter's comments on these recommendations, 1945. 

-relatives in the company, folder of correspondence from other family 
pharmaceutical firms re consultant's recommendations, 1945. 



257 

21. Industrial relations, binder: handling of 1948 strike; chronology and 
press clippings on 1941 strike. 

22. Cutter Laboratories by-laws, 1946. 

23. Junior Board employee communications survey, 1961; "Oh, What You Said," survey, 19 

24. New products, scrapbooks, 1947. 

25. Intravenous solutions, 1948 recall: 2 volumes press clippings, file of 
telegrams between Washington representative and Berkeley plant, memos 
and correspondence re handling of situation, quality control. 

26. Drug, Soap, & Cosmetic Industry questionnaire results, prepared by 
Harry Lange for Controllers Institute of America, 1950. 

27. Cutter Laboratories Budget Manual, July 1, 1955. 

28. Polio vaccine recall, 1955: envelope of press clippings, summaries of 
correspondence, press and magazine articles on outcome, notes on court 
proceedings, summary of actions, 1958-64. 

29. The Microscope, monthly company newspaper, bound volumes: 1939-47, 1948-54, 
1955-66, plus later issues unbound. 

30. Cutter patents, collected in 1973, 3 volumes: September 7, 1937-October 22, 
1957; March 11, 1958-August 15, 1967; December 27, 1965-September 12, 1972. 



Many items have notes written by Dr. Cutter at various times, beginning 
in the mid-40s. Others have been annotated by the employees who added the 
item(s) to the collection. There are also photographs of many employees and 
production processes and artifacts from early days. A selection of these 
became a permanent display in the Oakland Museum history collection in October, 
1974. 

Shelves along one wall of the Old Timers Room contain an assortment of 
business reference works and what may well be rare editions of medical and 
pharmacology texts dating back to the mid-1800s. In a separate location, the 
company archives contain the detailed records of product and process develop 
ment which are confidential. These were not reviewed for this study, which 
focussed on the business aspects of the firm. 

This is a very live archive, since additional items keep finding their 
way to Edward A. Cutter, Sr. 's rolltop desk in the Old Timers Room. -Ed. 



258 



INDEX - Cutter Laboratories, Volume II 



Abbott Laboratories, 89, 107, 134-135, 144, 176-177, 254 

abortion vaccine (veterinary), 45 

accounting, 200, 213 

accounts receivable, 124 

acquisitions, 35, 48, 52-53, 66, 116, 118, 138-140, 180, 184, 210, 224, 

226, 231, 240 

administration sets, 104-105, 118 
advertising, 17, 125, 193 
affiliates, 182 

agriculture, California, 11, 14, 53 
albumin, 20-21, 25, 32-36 
allergy products, 81, 111-113 
Alhydroxide* process, 14-15, 94-95 
Allocine*, 39-40 
aluminum hydroxide, 77 
American Chemical Society, 90 
American Cyanamid , 4 
American Trust Company, 66-67, 138 
annual meeting, 201 
"anthrax badlands", 14 
anthrax vaccine, 5, 9, 13-15, 77, 95 
antibiotics, 109-110. See also penicillin, 
antitoxins, 74, 78-79, 89-90, 97-98, 114 
Arbuckle, 213 
Armstrong, Ed., Sr. , 112 
Ashe Lockhart Company, 52, 140, 210 
Atlanta, Georgia (regional sales office), 174 
Austin Company, 102, 168 
automation, 176-177, 217 
Automobile Workers, 179 



bacterins, 77 

balance for expenses and profit, 216 

banking, 137-139 

investment, 141 
Bard, C.R. Company, 231 

Baxter Laboratories, 37, 60, 105, 107, 134-135, 144, 146, 177 
Baxter (Don) Laboratories, 68, 105, 107 
Bay Area Rapid Transit District, 11, 152-153, 157, 238 
Beckley, Arthur, 55-56, 107-108, 123, 129, 153, 163, 196, 250 
benefits, 246 



259 



Beniams, Herman, 85 
Berkeley City Council, 153, 250 
Berkeley High School, 194 
Berkeley schools, 251 
bio-engineers, 234 
biologies, 216, 227, 230 
blackleg, 76, 95 

agressin, 1-3, 14 

bacterin, 14-16 
Blacklegol*. 76-77, 114 
blood collecting, 23-24, 66 

equipment, 35 

blood products. See plasma fractions; see also albumin. 
Blythe and Company, 136-137, 141 

board of directors, 67, 125, 136-138, 203, 219, 226, 236, 238 
Booz, Allen and Hamilton, 49, 88, 121, 126, 129, 163, 204 
Borsook, Henry, 82 
Boynton, William, 10-12, 38-39, 94 
branch plants, 48-49, 53, 103, 106, 132-134, 136, 224, 237, 239, 246 

Chattanooga, Tennessee, 166-181, 184, 189-190 

Clayton, North Carolina, 185-190 

design, 168 

Kansas City, Kansas, 184 

Ogden, Utah, 184, 189 

overseas division, 182-183 
Bridges, Harry, 50 
Broemmel's Pharmacy, 111 
budgets, 126-127 ' 

Bureau of Animal Industry, U.S., 15-16, 39 
Butler, William, 104 
Byron Jackson [Pump] Company, 21, 102-103, 195 



California Institute of Technology, 71, 73, 76, 82, 86, 88, 104 
California Manufacturers Association, 68 
California State: 

Department of Agriculture, 53 

Department of Public Health, 53-54, 84 
cancer, 118-119 
Canners Association, 56-57 

capital expansion, 163, 186, 191, 210-211, 231 
capital stock, 66, 124, 126, 135-137, 140 
Casselberry, Norrie, 11, 39, 88, 239 
cattle ranchers (stockmen), 15, 52 
Chamber of Commerce, 68 
Charbonol*, 77, 95, 114 
Chattanooga Medicine Company, 170-171 



260 



Chattanooga plant, 102, 106, 132-134, 166-181, 184, 189-190, 237, 246 

Chem Abstracts, 112 

chemotherapy, 44 

child labor laws, 193 

Chilson, Frank, 49, 171 

civic affairs, 248-249 

Clayton plant, 185-190 

Cohn, Edwin J., 20, 33, 95-96 

colleges, veterinary, 10, 16 

common stock, 201, 210 

communication, internal, 172, 174-175, 218, 222, 226, 234-235, 239, 244-245 

community relations, 68, 169, 172-173, 189 

competition, 15, 31-32, 47, 59, 68-69, 78, 89, 99-100, 109, 112, 126, 134-135, 254 

computers, 147, 188 

Confidential magazine, 208 

Congress, 56 

consultants, 49, 56, 88, 117, 121, 126, 129-130, 133, 163, 171, 183, 204 

consumer protection, 228 

contamination, 106 

controller, 124, 126, 131 

Controllers' Institute of America, 131, 155 

Cook, Ransom, 67, 137-138 

cooperation, 36-37, 39, 69, 99, 107 

Corcoran, William H. , 86, 104 

Corn States (Company), 4 

Cornell University, 10 

corporate planning, 224, 230 

costs, 38, 60, 62-63, 74, 100, 105, 109, 133, 140, 216, 221 

construction, 190-191 
Court, Donn, 204 
''crumb control", 220 

customers, 4, 8-9, 11-13, 18-21, 24, 26, 32, 42, 46-47, 52, 69, 207-208, 229, 232 
Cutter, David L., 126, 130, 148, 181; interview with, 193-254 
Cutter, E.A. , Sr., 1, 6, 64, 72, 74, 78, 80-81, 193, 216 
Cutter, E.A., Jr. (Ted), interview with, 1-70; 81, 87, 99, 107, 122-124, 

133, 148, 174, 203, 234, 238 
Cutter, E.A., III, 64-65, 203 

Cutter family, 194-208, passim. See also individual listings. 
Cutter, Fred, 16-17, 63-64, 81, 84, 87, 114, 123, 148, 150, 174, 176, 188, 

194, 224 

Cutter-Haver-Lockhart, 53, 239 
Cutter International, 127 
Cutter Laboratories: 

board of directors , 89 

executives, 241 

family feeling, 125, 133, 137, 149, 164, 177 



261 



Cutter Laboratories (cont'd): 

first public stock issue, 201 

"firsts", 14, 36, 39, 74-75 

international division, 127 

officers, 241 

organization, 78, 83-84, 86-88, 106, 129-130, 139-140, 162-163, 165, 175, 
210, 220, 224-225, 233, 240, 242-243 

policies, 114, 149-150, 153, 180, 202, 208, 217-221 
Cutter, Margaret K. (Mrs. E.A. Cutter, Sr.)» 81, 83 
Cutter, Rob (D.L. Cutter's brother), 199, 232-233 
Cutter, Robert K. , 21, 31, 58, 63-64, 66, 68, 81, 83-84, 87-88, 91, 98, 

103-104, 107-108, 111, 114, 116, 121, 123, 138, 148-149, 174, 176, 181, 

185, 194-195, 199, 205, 217, 238 

Defense Plant Corporation, U.S., 18, 20-22, 27 

Devinney, Carolyn, 221 

Dextran*, 32-33 

diptheria toxoid, 15, 74, 77-78, 94-95, 117 

disposable equipment, 185, 227, 231 

diversification, 34-36, 103-104, 116, 180, 210 

Division of Biological Sciences, 207 

Division of Biologic Standards, U.S., 53, 55 

DPT vaccine, 230 

Dupont Corporation, 169-170 

Eastman Dillon and Company, 136 

economics, 199-200 

Eli Lilly and Company, 89, 230 

Emery, Byron, 102, 104 

employees, 248. See also personnel. 

activities, 177-180 

association, 253 

attitudes, 220 

minority, 172 

recruitment, 189-190 

employment policies and practices, 48, 172. See also personnel, 
encephalomyelitis, 54, 84 
engineering, 185, 217 
equipment 

administration, 103-104 

production, 83-84, 101, 104, 176-177 
Eyerly, Hugh, 135, 216 



262 



Fantus Company , 133 

federal government, 173, 181, 209, 228 

contracts, 18-22, 25-26, 32-33, 42, 45-48, 93, 95-96, 98-99, 102, 104, 
121-124 

immunization procedures, 13-14, 41, 44 

medical procurement officers, 19, 26-27 

regulation, 15-16, 34, 54-57, 59-61, 90, 106-107, 115, 140, 190-191, 228. 
See also licensing. 

research, 100 

tax incentives, 127 
fibrinogen, 36-37 
finance, 66-67, 123-125, 127-128, 135, 137-141, 204, 210-211, 225, 249 

acquisitions, 35 

capital expansion, 20-22, 27, 46 

company stock, 66 

controller, 30, 66 

marketing costs, 133 

profitability, 25, 28-29, 53-54, 63, 65-66, 70 

See also costs. 

Financial Executives Institute, 131-132 
finishing room. See packaging. 
Fisk, Steve, 125 
Fleming, Arthur, 98 
Flint, Bill, 204 
Food and Drug Acts, 57, 62 

1962 amendments, 228 

Food and Drug Administration, U.S., 54, 56-57, 106-107, 191 
foreign trade, 127-128, 182-183, 239-240 
Fort Dodge (Company) , 4 
Foster, Harry, 72, 77-78, 89, 107 
four-day week, 222 
Franklin, O.M. Company, 15 



Glenny, A.T., 76 
globulin, 96 

alpha and beta, 36 

gamma, 25, 32-33, 66, 230 
Golden Gate University, 155-157 
Gregory, E.T., interview with, 160-192 



Hamlin, Dr., 229, 242 

Hanscom, Leroy, 113 

Harvard Medical School, 20, 33, 95-96 

Haver-Glover Company, 52, 140, 211 

Haver-Lockhart, 52-53, 140, 239 



263 



Hawes, Roland C. , 76 

Hawley, Richard, 130, 241 

hazards, 96-97, 103, 105, 110, 115-116. See also problems. 

health care delivery, 254 

hemophilia, 36-37 

hemorrhagic septicemia, 77, 95 

hepatitis, 24, 32, 37, 96 

hiring policies, 48, 145, 172. See also personnel. 

Hjorth, Jan, 128, 240 

Hofstadt, Rachel, 86 

hog cholera, 94 

marketing, 52 

serum, 5, 11 

vaccine, 10-13 

virus tissue culture, 38-40 
Hollister-Stier Company, 239 
Hooper Foundation, 31, 41-43, 45, 93 
hospitals, as customers, 134 
Hughes, John, 167 
human products, 15, 24, 76, 78-80, 95-96, 98, 125, 133, 138, 216, 227, 230 

medical equipment, 23, 34-35, 69-70 

penicillin, 22, 26-30 

plasma fractions, 19-25, 30-31, 33, 36-38, 60, 66 

polio vaccine, 58, 139, 180-181 

sales, 47, 52, 58 

See also; intravenous solutions; medical products division; plasma fractions; 

and under type of product. 
Hyland Laboratories, 31, 37, 68 

IBM computer, 147, 188 

ILWU , 50-51 

immunization, 13-14, 41, 44, 230 

immunology, 11-15, 33, 38-39, 42-44, 54, 74, 76-77, 79-80, 94-95, 115-116 

inflation, 147 

insulin, 71-72, 83 

insurance, 210 

international division, 127-128, 182-183, 239-241 

international relations, 183 

International Microbiological Society, 90 

interpersonal relations, 172, 174-175, 218, 222, 226, 234-235, 239, 244-245 

inventory, 175, 215, 233 

intravenous solutions, 80, 83, 91, 103-107, 116, 118, 133, 162, 166-167, 175-176, 

182, 187-188, 211, 227, 254 

administration, 33-34 

contamination, 55-57 

equipment. See medical equipment. 

markets, 5, 18, 30, 48-49 

production, 69 



264 



Jackson, J. Hugh, 201, 213 

Jaycees, 250 

Jen Sal (Company) , 4 

John Hancock Mutual Life Insurance Company, 140 

Johnson, Charles W. , 86 

Johnson, Frederick F., 21, 84-86, 96, 101, 109 

Joyal, Pop, 113 

Junior Board (of directors)', 217-219 



Kansas City plant, 184 

Kefauver Committee, 60 

Kefauver, Estes, 191, 228 

Kelly, Ed, 155 

Keynesian economics, 200 

Kill Committee, 29 

Kobe, Japan (manufacturing in), 182-183 

Korean War, impact of, 26, 32, 45 

Ku Klux Klan, 173 



labor relations, 50-51, 237, 246 

Lange, Harry, 30, 66, 88-89; interview with , 120-159; 166, 225, 238 

Lange, Mrs. Harry, 121, 133, 140 

Larrick, George, 106 

Lederle Laboratories, 4, 15-16, 230 

legislation, 53-54, 58, 190-191 

letterheads, 194 

Lewis, John L. , 176 

licensees, 240 

licensing, production under, 12, 39, 42, 53-55 

limits to growth, 191 

litigation, 107, 116, 140, 207 

"Little Willy Book", 143 

loans, 136, 140-141 



machine development, 217 

maintenance, 1-2, 220 

Malmquist, Winston, 94 

management decisions, 125-126, 130, 133-136, 139-140, 185 

manufacturing processes, 13-14, 72, 76, 94-96, 99-100, 162, 175, 182, 216, 

225, 240 

blood fractions, 20-22, 24-25, 32, 36-38, 60 

encephalomyelitis vaccine, 54 

hospital solutions, 57 

penicillin, 22, 26-27 

plague vaccine, 43-44 

polio, 58-59 



265 



manufacturing processes (cont'd) 

prosthetics, 70 

veterinary products, 1-3 
marketing, 12, 16, 28, 39, 52-53, 58, 66, 69-70, 72, 83, 91, 109-112, 114, 

125, 133-135, 142-144, 182, 204, 215, 255, 228-229, 231, 235, 240-241, 244 
market research, 146, 187-188 
markets 

eastern, 4-5, 18 

government, 18, 21, 26, 43-44 

human products, 5, 18 

midwest, 48 

overseas, 182-183 

southeast, 166 

veterinary, 4-5, 15 
Massengill (Company) , 57 
McGaw Laboratories, 68, 177 
McLaren, Tom, 250 
measles vaccine, 96 
mechanization, 176-177 
medical director, 72, 77-78, 89, 115 
medical equipment, 23, 34-35, 69-70 
medical products division, 130, 244 
Meller, John R. , 16 
Mellon Institute, 84, 86 
Merck, 100 
Merrill, E.D., 10 
Merrill, Malcolm, 54, 84 

Meyer, Karl F. , 31, 41-42, 44-45, 54, 56-57, 84, 93, 106-107 
microbiology, 80 
Microscope, 38, 217, 221 
middle management, 217 
minority employees, 172-173 
Morgan, Thomas Hunt, 82 
Mulford (Company), 4, 78 
Mutual of New York, 136, 141 



National Canners Association, 106 

National Foundation, 40, 66 

National Institutes of Health, 42, 46, 53, 55, 90, 107 

Neilsen, 0. , 213 

Nelson, Gay lord, 228 

newspapers, 180, 208 

New York State Department of Health, 89 

Nitchie, Ted, 88, 123, 129, 163 

Northern Regional Research Laboratories, Illinois, 100 

Northwestern Life Insurance Company, 124 

Noyes , Dr. , 71 



266 



Oakland, City of, 151-158 

Occupational Safety and Health Act, 190 

O'Connor, Basil, 59, 66 

Ogden plant, 106, 184, 189, 239 

Oregon State University, 86 

organization, 78, 83-84, 86-88, 106, 129-130, 139-140, 162-163, 165, 175, 

210, 220, 224-225, 233, 240, 242-243 
Owens Illinois Company, 202 

packaging, 75, 90, 100 

Parenogen*, 32, 36 

Parke Davis and Company, 4, 13-14, 78, 89, 230 

Pasteur 

anthrax vaccine, 13 

Institute, 79 

patents, 12, 14, 33, 90, 113-114, 177, 227 
Pathogenic Microorganisms . 72 
Pearson, Drew, 208 

penicillin, 22, 26-28, 30, 47, 98-102, 110 
pensions, 246 
personnel, 75, 164, 189, 202, 213, 218, 245. See also employees. 

benefits and wages, 44, 212 

employment policies, 48 

executive, 30, 32, 63-64, 66, 72, 87, 89, 103, 107, 117, 122-123, 130, 
138, 224-225, 233, 238, 241-242 

health care, 43 

hiring, 167, 171, 189 

labor relations, 50-51, 237, 246 

minorities, 172-173 

production, 104 

recruiting, 84-86, 88, 91, 128, 242 

research, 84-86, 100-101, 107 

sales, 134-135, 174 

training, 73, 101 

women, 172 
pertussis vaccine, 74 
Peterson, Bud, 213 
Pfizer and Son, 99-100 
pharmaceutical industry, 78-79, 89-92, 96, 98-100, 107, 109, 112, 115, 118, 122, 

126-127, 131-132, 134-135, 141, 145, 170, 177, 208, 216, 227, 230, 246, 254 
pharmaceutical manufactures, 4, 15, 33-34, 42, 47-48, 57, 59-60. See also 

by company name. 

pharmaceutical specialties, 227 
pharmacies, sales to, 4 
Pilcher, K.S., 84, 86, 98-101 
plague vaccine, 31, 41-46, 84, 93 



267 



planning, 30, 47-48, 91-92, 126-127, 133, 186, 188 

plant expansion, 21-22, 27, 43, 46, 48, 53, 66, 101-103, 106, 116, 175-176, 

184-185, 195 
plasma fractions, 19-25, 30-31, 33, 36-37, 47, 63, 66, 78-80, 95-96, 98, 

102, 109-110, 139, 185-187, 229, 240 
Plasmanate*, 36 

plastic administration sets, 104-105 
Plastron Specialties, 211 
poison oak preventive, 81, 111-113 
polio vaccine, 40, 54-55, 96 

recall, 57-61, 115-116, 139, 180-181, 206-208 
politics 

company, 226, 234 

Tennessee, 173 
Powell, Bill, 167 
preferred stock, 210 
Price Waterhouse, 49 
pricing, 254 
Polio Foundation, 59 
problems, 13, 20, 24, 32, 34, 54-62, 179, 205-206, 216 

polio vaccine recall, 57-61, 115-116, 139-141, 180-181, 206-208 
Procter and Gamble, 160-162, 164 
product development, 62-63, 75-78, 81, 83-84, 86, 90, 94, 96, 100, 109, 111, 

185, 217, 227, 231, 233, 249. See also research, 
product planning, 234 

production, 88-90, 93, 99, 101, 104-107, 146-147, 175-177, 182, 185 
production capacity, 167 
production equipment, 62-63, 70, 147 
profitability, 215 
profit centers , 243 
profits, 216, 248-249 
prosthetics, 69-70, 86, 233 
Protein Foundation, 33-34, 36 
public health, 42, 45, 53-54, 230 
Public Health Service, U.S., 25, 54, 77 
public opinion, 208 
pyrogens, 34, 103-105 

quality control, 25, 33-34, 44, 55-58, 60, 74, 78, 84, 87, 90, 95, 102-106, 
195, 240 

racial issues, 172-173, 250 
Rahill, J.J., 2, 6, 17, 72 
Railsback, Dr., 239 
ranch animals, 9, 11, 14 



268 



Reading, John H. , 152, 154 

recalls, 106, 115-116, 139-141, 205-206 

Red Cross, 23 

regulation, federal, 15-16, 34, 54-57, 59-61, 90, 106-107, 115, 140, 190-191, 228 

regulatory groups, 254 

research, 19-20, 22, 30, 33, 36-37, 39, 53-54, 91, 111, 122, 126, 197, 225, 

227, 234-235, 240, 242, 249 

clinical, 45, 54 

human products, 40-42, 62, 71, 74, 79, 81, 95, 97, 104, 109, 111, 115, 
117-119 

organization, 72-73, 75-76, 78, 84-86, 113-114 

process research, 38, 94-96, 99-101, 104-105, 110, 114 

veterinary products, 10-11, 13-15, 72, 94 

virus, 84 

Res if lex Laboratory, 231 
Rice and Adams (Company) , 84 
Richardson, Ralph, 130, 144 
rinderpest vaccine, 10, 94 
royalties, 114, 228 

Sabin vaccine, 116 

safety, 190-191 

Saftiflask*, 103-104 

Saftiflex*, 34 

salaries, 214 

sales, 78, 81, 103-105, 116, 121, 125-126, 129, 133-134, 139-140, 145, 

146-147, 166, 174-175, 204, 209, 229 

Chicago office, 4 

films, 16-17 

foreign, 127-128 

human products, 8, 30, 44 

organization, 8-9, 17-18, 31, 47, 52, 63 

training, 6-8, 144-145 

veterinary, 4-5, 8, 66 

See also marketing. 
Salk vaccine, 40, 66, 116 

Sandberg, T.. Robert, 88, 104, 106, 130, 161-163, 166-167, 174, 177, 225 
Sanderson Report, 25 
Santos family, 196 
Sattin, Nora (Cutter), 72 
Savage Laboratories, 229 
Schilling, 217 
Schook, Colonel, 19 

Securities and Exchange Commission, 140 
security, 222 



269 



Sehring, Rudy, 185 

Sharpe and Dohme, 4, 31 

Shawnee, 184-185 

Shock, Richard, 130 

site selection, 166, 171, 187 

Smeloff, Dr., 69, 234 

snakebite kit, 81, 111 

Snow, Preston, 18, 20-21, 25, 30-31, 35, 37, 47-48, 103, 126, 196 

social issues, 248-249, 254 

Sonoma State Home (for the retarded), 42 

Squibb and Company , 89 

staffing, 183 

standardization, 16, 20, 43, 55, 216-217. See also quality control. 

Stanford University, 197, 201, 213 

streptomycin, 72 

strike, 179 

Student Army Training Corps (1918), 73 

subcontracts, 35 

subsidiary companies , 239 

sulfanilamides , 44-45 

Sydney, Australia (affiliate), 182-183 

synthetic chemicals, 227 

systems analysis, 235 



Talbot, Jack, 2 

tariffs, 240 

tax incentives, 127 

Teamsters Union, 178 

technology, 167, 187-188 

testing, 11-12, 38-39, 41-43, 60, 71, 76-77, 95, 104, 112-113, 115-116, 

227, 240. See also quality control, 
tetanus vaccine, 74, 77-79, 95, 97-98, 230 
thalidomide, 228 

Thomas, William, 66, 142, 225, 238 
tissue culture, 38-39 
toxins, 77, 79, 111-113 
Toxivi*, 112 

toxoids, 74, 76-77, 79, 95, 97-98, 117 
Toxok*, 112 
trademarks, 15, 114 

training, 182, 189-190, 205, 217, 223, 233, 236 
transportation, costs of, 133 
tuberculin, 5 
Tuta Laboratories, 240 
Twining, C.M., 2, 72, 78, 80, 103, 111, 113 



270 



Ulsh, Bob, 144, 196 

unions, 178-179, 246 

United Mine Workers, 178 

University of California, 3, 12, 75, 93-94, 197 

Medical Center, 41-43, 65 

research at, 10-12 
University of Colorado, 85 
University of Toronto, 71 
University of Washington, 84, 86 
Upjohn Company, 228 



vaccines, 13-14, 16, 24, 31, 38-45, 58-59, 76-77, 84, 89, 94-95, 115-116 

Van Campen, Dr., 225, 229 

Veldee, Milton, 107 

veterinary medical director, 9, 11 

veterinary products, 76-77, 94-95, 118, 182, 184-185, 197, 209, 239 

marketing, 12 
production, 53 

plants, 140 

research, 10-11, 13-14, 38-39, 45, 54 

sales, 4-5, 52, 63, 66 
Vietnam conflict, impact of, 42, 45 
Viracine*, 39 

virology, 38-44, 84-86, 94, 119 
Virus Serum Act, 53 



wage structures, 169-170, 172, 246 

Waksman, Selman, 72 

Walter Reed Hosptical, 41 

Wanger, John, 170 

Ward, Walter, 89, 107, 115, 240 

War Production Board, 21-22, 26-27 

Washburn, Dan, 168 

waste disposal, Los Angeles, 11 

Wayson, 107 

Webb and Webb, 202 

Wellcomb Laboratories, 79 

Wells Fargo Bank, 66-67, 137-139, 210 

Westfall, Francis, 75-76 

White, Bill, 168 

Wilcox, Mel, 205 

Winegarden family, 72, 113 

Winegarden, Howard M. , 14-15, 24; interview with, 71-119 

Winegarden, Ruth, 90 



271 



women employees, 75, 172, 247 

Wonder, Don, 114 

Wood, Fred W. , 9-13, 15, 72, 77-78, 88 

Wood, G. Dwight, 6, 9, 17-18, 196 

World War I, 73 

World War II, impact of, 18-24, 45, 47-48, 93, 95-99, 102, 109, 121, 162, 

183, 193 
Wyatt, 230 



Yale Medical School, 81 
yellow fever vaccine, 24 






Gabrielle Morris 

B.A. in economics, Connecticut College, New 
London; independent study in Journalism, 
creative writing. 

Historian, U.S. Air Force in England, covering 
Berlin Air Lift , military agreements , personnel 
studies, 1951-52. 

Chief of radio, TV, public relations, major 
New England department store; copy chief, net 
work radio and TV station in Hartford, Connec 
ticut ; freelance theatrical publicity and 
historical articles, 1953-55. 

Research, interviewing, editing, community 
planning in child guidance , mental health , 
school planning, civic unrest, for University 
of California, Berkeley Unified School District, 
Bay Area Social Planning Council, League of 
Women Voters, 1956-70. 

Research, interviewing, editing on state 
administration, civic affairs, and industry, 
Regional Oral History Office, The Bancroft 
Library, University of California at Berkeley, 
1970-present . 






12 614