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earnings, as well as some borrowed money. I a t first succeeded in producing an article sufficiently pure for use in gas meters (in place of alcohol) to prevent freezing and stoppage of the instrument-it was not however until about the middle of 1860 that I succeeded in ma.king and placing in the market a ‘pure inodorous glycerine;’ even then the amount sold was quite insignificant. Inferior grades made their appearance about the same time in the West. The bland and neutral nature of the article, and the discovery of various uses for it, soon increased the demand t o a marked extent; I was enabled from time to time to increase my works, and in increasing them was making steady inroad into the supply of the crude article. .4t this period, say in 1863, the business of refining glycerine was scarcely known on the continent of Europe, and I exported small quantities to Hamburg paying a profit; Belgium, France, Germany and Austria were immense producers of crude glycerine, but like its sister product here in previous years, it only found its way to the sea. As before stated, the use and sale of the refined continued to improve, the crude growing more scarce each season, until a point has been reached when every available pound is worked into a valuable product. It would not be out of the way to place the total value of all the glycerine sold in the IJnited States a t this time a t $joo,ooo. This sum could never have been reached had it not been for the discovery of a mode for refining, to which, so far as this country i s concerned, 1 lay claim; by a careful management of my business for some years I kept the process a secret; but in time some portions of it came to the knowledge of other persons, who have been enabled to produce very fair articles. There are besides myself, here, two refiners in Cincinnati, one in Chicago, and one in New York.” There were of course other drug and chemical firms who were well and favorably known in the early half as well as the later half of the nineteenth century. We have already mentioned the name of Christopher Llarshall, J r ~ ,who was active in Revolutionary days. Himself the son of a druggist, he was succeeded by his son, Charles Marshall, and his grandson, Charles h.larshal1, Jr.t who in 1814 established himself in the wholesale business a t 3 I O Market Street. With this Charles Marshall, Jr., entered as an apprentice Geo. LT. Carpenter, who later became one of the most prominent as well as successful OF wholesale druggists in Philadelphia. The old store of Carpenter & Henszey a t Eighth and Market Streets I remember quite well as it stood about 40 years ago. A very well-known drug firm of the latter half of the nineteenth century was that of Bullock & Crenshaw. They were the successors to Smith 8r Hodgson who established themselves as druggists a t the corner of 6th and Arch Streets in 1819 where they continued until 1849 when they disposed of their drug business to two of their employees who then formed the firm of Bullock & Crenshaw. This firm carried on not only a wholesale drug business but handled fine chemicals and chemical apparatus, supplying many colleges and schools throughout the country, I n September, 1868, they moved to 528 Arch Street where in larger quarters they carried on a flourishing business until the death of Mr. Chas. Bullock, the surviving partner. The firrn French, Richards & Co. was for many years one of the best known of Philadelphia drug firms a t its centrally located store, Tenth and Market Streets. The founder of this firm was Clayton French who in 1840 entered the drug business as an apprentice with a Dr. Edward S. Wilcox. This firm was disbanded in 1890 on the death of its founder, but in the meantime its extensive cement and plaster department which was started in 1 8 j z a t Callowhill Street and York Ave., had been erected in 1883 into a separate business of Samuel H. French & Co. This has since developed into a. very extensive cement, plaster and dry color firm, now under the leadership of Howard B. French, a son of Samuel H. French of the original French, Richards & Co. firrn. In conclusion I wish to acknowledge my indebtedness to various friends for lurnishing special information and the loan of papers, books and pictures of early chemical establishments. I would specially mention Mr. Wm. H. Bower, Mr. W. C. Carnell, Mr, Thos. S. Harrison, n r . Ewing Jordan, Librarian of the Uni-
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versity Club, and Mr. Spofford, the Assistant Librarian of the Historical Society, Mr. Howard B. French, Prof. Henry ICraemer of the Philadelphia College of Pharmacy, and Mr. Martin I. Wilbert, formerly in this city but now in Washington, D, C. The last named published a valuable paper in the Franklin Institute Journal for &fay, 1904, on “Early Chemical Manufactures,” from which I have quoted in the preparation of this paper. 210 SOUTHI ~ T H STREET, PHILADELPHIA
NECESSITY OF PROPER TARIFF LEGISLATION TO INFLUENCE THE DEVELOPMENT OF THE MANUFACTURE OF MEDICINAL CHEMICALS IN THE UNITED STATES‘ By GASTONDuBors
The Tariff Act of Oct. 3, 1913, can best be defined as a jungle through which no human being could find his way, but which to some extent has been remedied by the Revenue Bill recently enacted into law. We can find in the 1913 Tariff Act such anomalies as benzol, naphthol, resorcin, jammed together in one paragraph a t j per cent ad valorem, followed by chloroform and carbon tetrachloride I c. per lb., and then after the coal-tar intermediates a t I O per cent ad valorem comes cobalt oxide I O c. per lb. Surely Mark Twain himself could not have written a better tariff. We all know and appreciate, however, the enormous amount of work entailed by a tariff revision, and although it is often difficult for our legislators to understand the relation existing between the several products found in any one paragraph of the tariff, we may safely trust them, knowing that every item was thoroughly considered. Even though political opinions may often have thrown the balance to one side or the other, we must admit that every tariff, even though far from perfect, was the result of an honest intention to give the country the best that could be had. A few months ago, when the Revenue bill was being discussed in Washington, the purpose of which was also to encourage the production of dyes in this country, some Congressman suggested a very brilliant division of the Coal-Tar Products, this division to form thc basis of a tariE revision which had become imperative. You are probably familiar with this new revision now in force since Sept. 8, 1916. Group I , Free list, contains products of coal-tar distillation. Group 2 , with a duty of 15 per cent ad valorem, contains all the intermediates, and also some refined products of coal-tar distillation, obtained in whole or in part from products of Group I. Group 3, with a duty of 30 per cent ad valorem, contains all colors, dyes, photographic chemicals, medicinals and flavors, phenolic resin and explosives, obtained in part or in whole from products of Group 2 . Following this division is a paragraph providing for a c. per lb. additional duty upon all articles contained in Group 2 , and a duty of j c. per lb. upon all articles contained in Group 3, excepting, however, alizarin, indigo, medicinals and flavors. Unquestionably, the above division appears perfectly logical to chemists as it has the great advantage of being based on a scientifically logical foundation. One point, however, is most striking, and that is the exemption of medicinals and flavors, made from products contained in Group 2 , from the additional duty of j c. per lb. We are confronted here with a puzzle in an otherwise most harmonious composition. It should be noted that only the medicinal products produced from coal-tar intermediates are exempt of the 5 c. per lb. duty, while other mediciiial products not derived from coal tar are not here considered and retain the duty (provided for in the Tariff Act of 1913) of 15 per cent. 1 Written for the Industrial Conference on Manufacture of Medicinal and Pharmaceutical Products, 53rd Meeting of American Chemical Society, New York, September 25 t o 30, 1916.
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The manufacture of dyestuffs and that of coal-tar medicinals are so closely interwoven that the interests of both are identical and practically inseparable. Both the manufacturers of dyes and those of medicinal products have heretofore imported their raw materials or intermediates from Germany, and to a small extent from England. This, to a certain extent, demonstrates the similarity of the position of the above mentioned manufacturers, for to both industries, conditions in this country previous to the war were not such as to encourage an attempt to manufacture these materials. Another striking illustration of the close relation of the two named industries is the fact that in Germany there is not a single large dye manufacturer, who does not also manufacture medicinals. This is not an accident but the result of a logical development of two industries working hand in hand and depending one upon the other. Speaking to chemists, it is unnecessary to further elaborate, as I am convinced that no well informed chemist would contradict the above statements. Why is it, then, that our legislators apparently fail to fully grasp this situation? And why is it that those interested in a proper rate of duty for dyestuffs omit in all their arguments and all their discussions any reference whatever to medicinals produced from coal tar, and why is it also that even photographic chemicals from coal tar are favored as against medicinals? Why are we confronted by this apparent discrimination in favor of dyes photographic chemicals and explosives and against medicinals and flavors, when all belong to the same class of chemicals? Of the many explanations which might be brought forward to explain this anomaly, let us believe that the desire for cheap medicines for the people brought about the above mentioned discrimination. The question now to determine is whether this particular action on the part of Congress is justifiable or not. Let us answer this question by a second question. Why was the duty on dyes, explosives, and photographic chemicals raised’ It unquestionably was in order to aid in developing those industries in this country. The logical conclusion would be, that in view of the discrimination against medicinals and flavors, it was not the intention of Congress to aid in developing the manufacture of these valuable coal-tar products in this country. Will this situation tend to cheapen these medicinals in this country? The National Association of Manufacturers of Medicinal Products composed, however, mostly of buyers of medicinal products manufactured from the by-products of the coal-tar industry, has asked for a better protection on these manufactured medicinal products; certainly not in order to increase the cost of these medicinals which they must buy, but evidently because they believe that American domestic production of these products, promoted by proper and fair tariff rates, must bring about a reduction in cost to them. The following is Congressman Hill’s opinion expressed several months ago: “The practical famine of dyestuffs which exists in the United States and in the whole world, is proof of the supreme folly which is now shown in allowing one nation in the world to control all others in any industry. “When it comes to the point that American manufacturers are compelled to scour China for the leavings of German dyes in order to continue their manufacturing operations in America, it would seem as though it was high time to put this nation on a self-reliant and independent basis, and the report of the chemical society is the clearest and most intelligent presentation of the situation which has yet been made of this whole subject by men who are thoroughly familiar with the industry and know whereof they are speaking.” Why is it that this otherwise so valuable document reported by the committee, makes no reference whatever to medicinals and flavors? We should be interested in the development and perpetuation
IIji
of an independent domestic production of these essential products, the coal-tar medicinals,’ so that there may be domestic competition with foreign producers after the war. It is to the interest of the dye industry to encourage the development of the manufacture of medicinals and synthetic flavors produced from intermediates, as it assures a ready market for some by-products obtained in the manufacture of dyes. Let us now see what other nations are doing to protect their chemical industries. We have heard of recent agreements among German dyestuff manufacturers who, as already stated, are also the greatest manufacturers of medicinal and fine chemicals. The German dyestuff manufacturers have taken steps that are likely to be of far-reaching industrial importance. According to a report of the U. s. Consul a t Frankfort on the Main, the two important groups among the large important dyestuff and chemical industries of Germany have combined in a defensive alliance. Arrangement is being made for a mutual exchange of information as t o factory methods and other matters tending to reduce the cost of manufacture and otherwise strengthen the industry as a whole. The total profits are to be divided a t the end of the year, according to an agreed scale. The concerns named as included in the new arrangement are the following:
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Badische Anilin- und Sodafabrik. , , , , , . , , . . , , , . , , . . , , Farbwerke von Master, Luaus & Bruning. . . . , , , , , , . , , ...... . . . . . , , . Leopold Cassella & Co,. Farbenfahriken Friedr Aktjengesellschaft fur Chemische Fabriken v . ., . . . , .. . , , , , , , , , , , Kalle & Co.. . . . . . . .
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.
...
.. . .
Capital Stock in Marks 54,000,000 54,000,000 30,000.000
54,000,000 19,800,000
8,000,000 6,000,000
These firms combined represent a capital of 2 2 j,800,00o marks, or about $ jj,ooo,ooo. England is also preparing an alliance, Brunner Mond Co. with Castner-Rellner Alkali Co. A strong association of the manufacturing interests is in process of formation; the object will be to foster the trade of the empire under the new conditions which will arise after the war. The membership already represents capital to the amount of over 80,000,ooo pounds sterling, or roughly about $400,000,000. Prospects point to the possibility that a severe international contest will be witnessed after the war. Japan, in her quiet manner, with the full cooperation and support of the government, is pushing ahead in the production of chemicals. According to articles which recently appeared in the Japanese press, the following products are now being produced in Japan: acetanilide, antipyrine, aspirin, carbolic acid, phenacetin, salicylic acid, salol, sodium salicylates, caffein, bismuth subnitrate, bromine, bromides, ether, formalin, glycerine, iodoform, lactic acid, menthol, morphine, naphthalene, benzol, etc., tannic acid, picric acid, magnesium salts, etc., and many others. We find all nations actively engaged in building up industrial combinations, and it is important that we look ahead in view of the great industrial strife which will follow the war. The organic branch of the chemical industry in the United States is still in its infancy. The whole country, however, realizes to-day more than ever, the importance of the chemical industry, and while heretofore many of our legislators were satisfied that dyes, medicinals, etc., such as we require, should bemanufactured for us in Germany, to-day there is a growing belief that we should develop independent domestic production. The firm with which I am connected has, since the war started, undertaken the manufacture of several intermediates and other finished products. \Tie are manufacturing phthalic anhydride, paraphenetidin, phenol, aniline, acetanilide, coumarin, products enabling us to a certain extent to continue the production of pharmaceutical products which we were manufacturing before the war. To continue the manufacture of chemicals in the face of the impending trade war, will require the united efforts of all, legis-
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lative bodies, manufacturers, those indirectly interested in the growth of American chemical manufacture, and last, but not least, we require the aggressive support of the Chemical Society individually and collectively to act as a connecting link between the various chemical manufacturing branches. The most productive field, it would appear, in which t o direct the united efforts of all is to assist in providing for fair and proper tariff legislation.
CAPITALIZATION OF TRAINING AS A BASIS FOR COMPENSATION By E. 0. HWNRICH Received October 28, 1916
During the several years that I have been engaged in independent practice I have received numerous applications for work from chemists in various stages of professional development. In nearly every case the applicant had no definite ideas regarding the value of his services either t o himself or t o me and stated his case with considerable detriment t o himself. Even among the mature chemical workers of my acquaintance the fundamental propositions of business do not seem t o be included in all instances in their valuation of services rendered or sought. On the contrary the view seems to prevail that the cost of living is synonymous with the cost of production of service and if this is covered, all is well. What I have t o suggest herc is neither nem- nor novel. M y whole purpose is to make a comparison which may be of service in affording a. slightly different angle of view on the question of pay; to suggest a test for comparing service with compensation; and to intimate that the cost of living is not completely synonymous with the cost of service production. KOmatter what may be the stage of his career, the chemist’s essential capital consists of 1400 g. of gray matter, supposedly keen, His progress in a large measure depends on how he values and markets what he can extract from it and convert into service. Under our competitive conditions he must regard himself as a salesman and sell his services under the same principles which govern the sale of commodities. These principles may he stated thus: ( I ) Service rendered must produce a profit t o the recipient, thereby fixing its maximum value. ( 2 ) Service rendered must yield a profit to the producer, thereby fixing its minimum value. All too often is the chemist inclined t o overlook that jobs and lines of business follow these common rules. He sees only the leaves and thinks not of the root. The acorn of business is capital, by which is meant accumulations of productive wealth. Like a living thing the growth of business requires constant intensive cultivation, with constant comparative reference to the original acorn and the tap root which sprang from it. I n a like manner the job, by which is meant that which produces income through service, has somewhere in i t a tangible acorn from which it sprang and a tap root to keep it steady. This acorn is nothing else than the cost of preparation, computed as fairly as possible, with suitable credits and debits from time t o time for appreciation and depreciation with changing environment. From this point of view it becomes apparent that the charge for rendering service legitimately includes other things besides mere cost of living. As a matter of fact a certain investment has been made in training and equipment in order t o produce a minimum earning capacity and the cost of living merely enters as the acid test t o determine the sufficiency of the investment. The real factors t o be taken into consideration are ( I ) equipment and overhead charges; ( 2 ) capacity for work, or, the time element. These are all elements which can be determined with a fair approximation t o accuracy for each individual case. Moreover, the increment t o the principal can also be worked out
1’01. 8, NO.1 2
since it is true that intensive cultivation ol a job is largely a matter of ability and effort t o convert daily experiences into working knowledge, for reserve equipment in the handling oE new problems. The growing, rising chemist should always want to know. He will progress measurably as he reaches out for information in varying directions and organizes it for his practical use, When he sells his service this constructive reorganization of previous experiences is the big value that the chemist has t o cultivate and offer. Few can rise without it; and if one has it, or will adopt it deliberately, his name will not be a frequent visitor on the waiting job list of his Alma Mater.. I t will take him from the minor to the major stages of responsibility for it comes pretty near being the whole thing in personal values. Granted then that every chemist is willing continually t o study and reorganize his accumulating experiences, all that remains is t o see that the initial pay is as fair as possible. To what he may be entitled by way of compensation can be most easily determined by comparison with distinctly different types of investment. To illustrate let us compute an average investment for a man at the end of a normal college course and establish his initial salary. Under normal conditions the student pays during his college career not only the cost of living and attendance, but surrenders his earning capacity during that time. An 18-year-old high school graduate can readily earn $600.00 per year; a t 20, $720.00 per year; and a t 21, $780.00 per year. By surrendering these earnings he invests in this way during the 4 years $2700.00. He also invests 4 years’ sustenance a t $600.00 per year, or % ~ O O . O O , In addition, the State has invested in him as a high school graduate 8 grades a t b4o.oo per year and 4 grades a t 31oo.00 per year, amounting t o J720.00. The total investment nom amounts t o Sj820.00. Deducting the usual 15 per cent knocked off of first cost for the first year in nearly all lines of business, leaves $4940.00, and most graduates have enough books and chemical apparatus by way of equipment legitimately to make the round sum lor the first year out of college, $5000. Here then comes the issue. Is the man with SjO00 invested in training entitled t o the same return as the man with Sjooa invested in a personally conducted business? I think hc is. The only obscure point arising is what the other fellow realizes from his investment in the average case. bIy own observations lead me to believe that the average merchant turns his stock twice a year with a +o per cent gross margin, or 80 per cent increment for the year. Out of this come his operating costs, except salary, averaging jj per cent of the gross earnings. The employee has no operating cost. Eliminating it we arrive a t the proper point for comparison-the net return as salary on equivalent capital. Extracting the operating charge leaves z j per cent of 8 0 per cent as the net return or 20 per cent on the original investment, equal to $1000 per year as the amount which his investment should bring. Cultivated with constructive curiosity the principal should the compound interest law, increase according to P = where “be” equals Po, the principal a t the time “ t equals zero,” or graduation from college, and “7” is legitimately chosen from a consideration of new experiences. I n this way income can be tested from time to time. In doing this many contingencies may arise in each individual case. Yet with a base established along the foregoing lines a legitimate conclusion can be reached with fair-minded treatment of the factors arising, and a more equitable relation established between buyer and seller of services. The investment in training when capitalized must be sufficient t o provide the cost, of living, with a surplus for contingencies, for depreciation and wear, and for individual growth.
