CHEMICAL INDUSTRY DEVELOPS *
’IN -THE+ *A M
sr
AY“
lr
* A
MERICA’S basic philosophy of life and government which has come to be called the “American Way” has lately been attacked from many directions. Zealots of the different ideologies now loose in the world have developed offensives. Some of the most subtle of these have been by those who have profited under the American system and reside within our borders. World economic conditions have favored the attackers; and although the defense of the American institutions until lately has been complacency and inertia, the weak armor which a contented people sets against change, the defenders have become sufficiently nettled to launch a campaign of education to remind our people of much they seem to have forgotten. Several of the articles to follow (pages 501-595) are designed to contribute to that purpose as it relates in part at least t o a single industry-that of chemical processes and production. Here it is our purpose to show how the American Way has promoted growth in industry, how that growth has taken a variety of forms, and how the manner of growth has been primarily influenced by freedom of operation of the law of supply and demand. The American Way has developed through the pioneering of courageous and resourceful individuals on a continent singularly blessed with raw materials. Individual initiative, under a system of free competition, has given a growing population a high standard of living. The tools employed have been research and invention, elaborated by engineering skill, supported by courageous capital, and protected by tariffs and a helpful patent system. In terms of benefits for the man in the street, the American Way represents a philosophy of life and a method of government that deser ires preservation-in short, something for which we should be willing to fight. Obviously industry, as well as individuals, is interested in every phase of the freedom ensured to America by those fundamental charters, the Declaration of Independence, the Constitution, and the Bill of Rights. The freedoms of special importance to industry are, first, the choice of materials or objects which it may produce and secondly, the choice of persons to spend the recompense for their labors in a way to satisfy their desires. Under our system those who manufacture or otherwise produce articles of commerce are guaranteed MAY, 1939-Page
499
*
+
freedom to make what people desire; on the other hand, those who purchase are guaranteed freedom to spend what they earn as may please them, purchasing what they desire and investing as they see fit. These basic American philosophies have shown themselves as guiding motifs in the growth of industry. If these two aspects of freedom vital to industry are followed through their various implications, the basic reasons for a great many peculiarities in industry’s growth in the United States become apparent. The diversification of industry as a result of specialization and the division of labor, the growth of companies by meeting specific phases of demand and by fully utilizing their own resources, mergers of groups in related lines to effect economy of labor both in production and distribution, some peculiar advantage of location or a unique skill in a particular type of activity-all of these result directly from the freedom of indiciduals to spend their labors as they choose and to convert their recompense therefrom into a form satisfying to themselves. One significant aspect of these two freedoms is the multiplicity of products resulting from their exercise. Each attains variety through the freedom of individuals to engage in any productive enterprise that appeals. Thus, monopoly in production may be prevented by the attraction which high profits offer possible competitors. Generally this is effective in the chemical industry in curbing monopolistic tendencies and in bringing about a downward trend of prices for the output. This freedom of competition among producers is a vital spur to research in the chemical industry and its allied lines. Research has become as vital in a corporation’s assets as business acumen, good will, and plant equipment. Upon research depends the survival of whole industries, as well as of the corporate units which constitute them. Freedom to pursue research extends equally to the primary question of whether to invest in this asset or not, and to the direction which research will take. The challenging systems all have dictation and planned economy in common, and the more prominent among them seek to abolish the profit motive. We hear much, even in this country, about the T H E AMERICAN WAY
base profit motive, and yet there is much to show that from five to seven years of persistent and expensive work generally elapse between an idea and its profitable exploitation. Such work can be sustained only out of profits-ultimately some individual’s profits. A distinctive feature of the American Way is the frequency with which brilliant investigators are supported by grants or bequests from private individuals, as well as from industry, all such sums being fruits of the profit motive. The rejoinder is that research and development should be carried out by the state. Yet it is obvious that this activity is much too complex for effective accomplishment under governmental auspices. Only general policies can be laid down by such governments, and under the challenging systems a brilliant young man who might have definite ideas about a pressing problem might be too little known and certainly could not have reached a state of authority to be useful; he might even have been regimented to some other task. A Carothers, a Nieuwland, or a Steenbock would never have a chance, before the event. Even under our own system there is too much regimentation in some places, but fortunately a man with a dynamic personality or with ideas and some voltage behind him can always discover a more progressive employer. Our university men are absolutely free to develop their own ideas. It remains to be seen what the ultimate effect will be of present attempts by totalitarian states to bring university research men directly into the service of the state. Success would seem to involve a greater wisdom as to the ultimate outcome of a quest in pure science than anyone has so far possessed. Necessarily the development of the results of research requires engineering skill and knowledge, executive ability, and patient money. All of these have been developed in the American Way to an extent equal to the need for them. Above all, cooperation among all the groups contributing to industrial success has been traditional, and scientist, engineer, workman, and capital have learned how to cooperate for the common good. The primary motives involved in industrial development are the creation of profitable employment for capital and for labor, and the meeting of a demand, latent or active, for products which capital and labor can by their combined efforts create. To these primary motives and their direct accomplishment must be added innumerable secondary purposes which are served simultaneously. The variety of demand is equally a question of the freedom of purchasers to spend their earnings as they please. Upon producers rests the necessity to please purchasers with the output of their factories. Improvements in all types of manufactured products necessarily follow the free selection by consumers from among competitive wares. The consumer looks for products to satisfy his vital needs. The producer, having provided them, seeks to stimulate desires which create new demands to be met by his goods. This concept of industry is essentially different from that of dictator-governed countries and of traditional monarchies. These survive through control of wealth, army, industry, and labor. The earnings of the people must be controlled by the state for its own purposes. Only such parts of the common capital and income as may be decided by the ruler go into industry. Industry is thus controlled by the state to ensure the strength of the army and with little regard to other considerations. Labor, too, must contribute to the army, whose prime object is to maintain the status quo in the state. Indeed, the more intimately totalitarian states and autocracies are examined, the more obvious it becomes that defense of the autocrat or dictator, maintenance of the state against internal and external change, and control of a capable 500
standing army are the state’s first considerations. Manifestly, a people whose strength, productivity, and wealth are being utilized primarily by a ruler has negligible opportunity for influencing the state, for developing ingenuity, and for working out its own salvation. The democracies are essentially different. Primarily such states emphasize the welfare of the people, for they have no dominant individual whose status quo must be maintained. Armed forces achieve only secondary importance in democracies, and the collective good of all their people becomes their foremost care. I n these broad, basic considerations, democracy differs from autocracy. The purest examples of democracy are to be found in the governments of the United States, of Great Britain, and of France. I n its geographical isolation from the chicanery and intrigue of Europe’s politics, the United States has developed an independence impossible elsewhere. Its government and its philosophy of life have undergone characteristic development. They are intimately and inseparably interwoven. Together they constitute the American Way. By proper selection of one’s examples, many of the advantages accruing to all the people through industrial developments can be illustrated. The efficacy of certain important government measures, undertaken as encouragement rather than as fiat, in the development process is vital to the whole. These measures are typified by the protection of our patent system and of our selective tariff. Neither is in itself a mandate to industry to develop in this direction or that. Rather they are permissive in protecting industry in its development in directions desired by the people. The result is salutary and even more effective in getting things done than the ukases and fiats of dictators and autocrats. One finds numerous lines of endeavor nurtured and fostered by this protection. The automotive industry is encouraged to cooperate with petroleum refiners in measures to conserve liquid fuel reserves through the simultaneous development of better fuel and more efficient engines to utilize it, developments which greatly prolong the benefits of automotive transportation to the people. Similarly, one finds petroleum refineries diligently converting their wastes through chemical synthesis into new and valuable products, and building thereby an entire new industry to employ labor and to produce values. The development on the one hand of industries of a strictly consumer aspect, like that of pharmaceutical manufacture, is fostered along with such strictly producers’ programs as the industrial utilization of farm crops. None of these vital developments has needed from government more than permissive support and protection. Each has grown lusty without dictatorial intervention and for that very reason possesses innate vitality, which can exist only through the will of the people who have created it from their labor, capital, and desire for its products. In almost endless ways companies have grown through their abilities to serve the people well. The merging of related company units to secure greater efficiency in marketing of ultimate products, the complete elaboration of specialized techniques to raise efficiency in manufacture, and the utilization of a unique raw material in as many ways and for as many purposes as possible-each of these has characterized certain companies in their particular fields of chemical industry and has provided their reasons for existence and growth. Finally, too, industry has faced the problems of developing integrated supplies of a vast number of raw materials and of creating tools and equipment in which to process them. These have been solved with remarkable success by Americans working in and under the American system without the need of dictatorial compulsion.
INDUSTRIAL AND ENGINEERING CHEMISTRY
VOL. 31, NO. 5
