The following article is based on a speech given by Dr Heraeus at the Heraeus lunch during Platinum Week in London on 16 May. This year marks, the 150th anniversary of the company's founding.

Heraeus was founded by my great-grandfather, Wilhelm Carl, who succeeded in melting platinum in his pharmacy, a real breakthrough at that time. Up until then, platinum had had to be forged, a process that was only carried out in London and Paris.

Wilhelm Carl came from an old family of pharmacists in which the trade had been passed on from father to son for generations. The family tree can be traced back to The 16th century. The Huguenots, who founded the city of Hanau in Germany during the 17th century, introduced the art of gold smithy and thus platinum to Hanau.

In 1888 domestic platinum sales amounted to 400 kg, while platinum exports were 600 kg. The metal was exclusively extracted from Russian minerals. The price then was 800 marks per kg, which nowadays would be $11 per ounce. Unfortunately, there is no stock worth mentioning left from that time, and the price of the metal in our books is now somewhat higher.

However, the problems in the platinum business have not changed. Old Heinrich Heraeus, my grandfather, remembers a dispute regarding the platinum content of sponge that had been sent in by customers. His father (that is my great-grandfather) had entered it content in the books as 100 per cent platinum, but the analysis showed a content of only 97 per cent. This topic of discussion between father and son 130 years ago is still the daily bread of a platinum refiner doing business today.

Platinum was used in jewellery production as early as the late 18th century, and its popularity increased during the 19th century. And due to its chemical and physical characteristics, new industrial applications were constantly being found. With the construction of apparatuses for the concentration of" sulphuric acid and an increase in the production of the electric light bulb, the demand for platinum rose enormously. Russian material had always been available in sufficient amounts, but in 1885, the Russians suddenly withheld their material and spread the rumour that platinum was in short supply.

The Heraeus company chronicle states that all companies on the world market needing platinum doubled and tripled their orders seeking to increase stocks at any price. The price tripled within a few weeks but fell back to its old level of $11 per ounce a few months later.

As usual, everyone wanted a scapegoat. It was said that Johnson Matthey spread the wrong information and that Heraeus as the biggest consumer was responsible for causing a platinum boom and simultaneously making high profits. I assure you that I am telling this story for the first time today and that I only recently discovered it in our old chronicles. You may, therefore, assume that Heracus has not been responsible for the rise in platinum group metal prices over the last two years. You may further assume that we did not give the Russians the idea of withholding platinum in order to provoke a shortage in supply.

Wilhelm Carl Heraeus sent his brother-in-law, Charles Engelhard, to the US in order to deal with the American market on behalf of Heraeus. As everybody knows, he was very successful. At that time, he was the only representative for a European company who was actually in the US and, therefore, Heraeus, was able to win market shares easily. The chronicle states that: "Soon the competitors lost most of their ales". As always in these cases, a mutual undercutting in prices ensued with no real profit for any company.

The question was raised whether it would not be advisable to come to a common understanding that would result in a sales agreement for the American market. Therefore, the European competitors met in France in 1894 in order to draw up a contract which excluded mutual undercutting and which included a fair split of the profits. Again, I am quoting history and am not making suggestions! Those gentlemen did not have any anti-trust problems with their agreement.

The agreement went down in the annals of history as the "platinum convention" and it is nice to read that these negotiations always took place in Paris as Messrs. Desmoudes would not be persuaded to take the dangerous voyage across the Channel. In return, my grandfather writes, the French always paid generously for breakfast expenses.

Charles Engelhard was 24 years old when he emigrated to The United States. He began his training by trading diamonds and pearls, which was his father's business. My grandfather gave Charles Engelhard 2,000 marks, the funds needed for his trip and his first weeks in the US. It then remained to be seen if, in addition to his personal activities in diamond trading, he could also prove useful to Heraeus.

As already mentioned, platinum sales rose very quickly and customers who had been buying in London or Paris now bought from Heraeus. Firstly, Mr Engelhard acquired the Gross & Meier Company, which was not very important in the platinum industry, but the company's founder and owner came from Hanau and had been living for over decades in the US. This company was merged with the Baker Company whose owners, the brother's Baker, kept some shares in the merged company, which was then called American Platinum Works.

Baker held 3/7 of the capital and Mr Engelhard and the three European companies of the convention each held 1/7. Mr Engelhard was named general manager of the company with a salary of $1,200 a year and a commission of 5 per cent for the next 1,000 kg platinum, 10 per cent for the next 1,000 kg and 15 per cent for the following 500 kg sold by the three companies to the US.

In this way, Mr Engelhard quickly became wealthy. In 1903, the Baker brothers sold their remaining shares to Mr Engelhard and the European consortium. It is interesting to read that they agreed on a detailed due diligence, as they were really surprised at the amount of profit announced.

After the First World War, Heraeus lost the shares, and Mr Engelhard later took over all the shares in the Engelhard company. During the bad economic conditions that followed the war, Charles Engelhard supported the Heraeus company with a loan, which was later changed into a 15 per cent share of the company. The Engelhard family held these shares until Charlie Engelhard died in the early 1970s. After his death, I was able to buy them back from Jane Engelhard, his wife. Looking back, the price of 20 million marks For 15 per cent of the Heraeus shares seems to have been extremely good.

Also at the turn of' the century, the Siebert company was founded in Hanau as well as Rossler, as a mint in Frankfurt. Both companies later joined to form the Degussa company, which traded under the name of' the former Rossler company for a long time. Today they are winning new markets with a new ownership under the modern name of dmc2 .

I do not want to go into too many details regarding the development of Heraeus. During the Second World War the company was completely destroyed by two big attacks in December 1944 and March 1945. In 1945 we had a staff of 125 employees. By 1951, the year of our 100th anniversary, our staff had increased to 1,100. Not a single employee was working abroad at that time. In 1972 fewer than 200 employees worked abroad. Today more than 5,000 employees are working abroad, with more or less the same number working in Germany.

Today the precious metal business belongs to Iv. C. Heraeus and Heraeus Metallhandclsgesellschaft. It is by far the business with the biggest sales and has been our most important profit centre in recent years. We chose "Innovation - a Precious Tradition" as the motto for our anniversary year. We believe in the innovation and the success of the platinum group metals business For the next 50 years and we intend to be one of the big players in this market.

We have also held a leading global position in our other business areas, especially quartz glass but also the dental and sensor business. The company's capital is still owned by the family and a few foundations close to the family. At the end of last year, we did not have any bank liabilities, so we are well prepared for the years ahead.

The community of platinum metal producers, users and - in the end - consumers is small and tightly knit. London Platinum Week, rich in tradition, is significant for this. Those who handle platinum - who buy, sell and use it ­must be respectable and reliable. There must be confidence between all members of the community - customers, suppliers and those doing the analyses. The customer who has his material recycled must feel confident that it will be returned after an appropriate time.

I would like to thank all those present with whom we have many different kinds of business connections For their trust in Heraeus over the past decades. I hope these excellent relationships will last for many decades to come.