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

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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:

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.

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.

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?

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?

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.

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

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.

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

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.

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.

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.

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?

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.

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?

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.

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?

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:

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.

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.

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.

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.

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.

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

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.

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

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:

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

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:

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?

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?

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

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.

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!

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?

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?

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--?

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

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

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.

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:

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

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.

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.

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.

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.

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?

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

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:

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?

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

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.

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

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!

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.

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.

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?

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.

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?

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?

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.

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?

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

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

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.

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

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?

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.

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.

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:

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.

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.

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.

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]

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

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.

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.

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.

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?

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.

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.

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:

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

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.

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

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.

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.

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.

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

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.

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?

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

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

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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:

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

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:

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:

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

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:

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

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.

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

•>

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• f\^-Jr -s

• *" 'i •• < : ^*^** . y ' .*

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s> -^ '-v'X:- ->^? *'*£*

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.- ••',• 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