Relation of Chemical Industry to the State 1%.L. DERBY American Cyanamid & Chemical Corporation, New York, N. Y.
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BAT does the chemical industry contribute to the state, to its progress, its security, and the well-being of its people? What does the state do for the chcmical industry7 I assume that by the “stat.”’ is meant an organized group of individuals which, through the clectiori or appointment from its membership of its own represcntatives, forms a political community. These representatives of the people become the government, recognized by the people as supreme in executing the regulations and laws of the statc for the good of society as a whole. I n discussing the contributions of the chemical industry to the state, it is fitting to separate the social phaseof thestate from the governmental. A static society is a retrograding society. Man’s constant aim is to enlarge and improve himself, his comforts, and recreation. Over and above the bare necessities of life, his wants are unlimited. The desire to progress is instinctive, biological, in him. This instinct is the mainspring in the dcvelopment of our civilization. That this development goes forward in surges and relapses is merely evidence of man’s overeagerness at times to reach his goal. Fortunately, man does not lose his desire for hetterment in the relapses or had times, but. IT. I,. once he gets his bearings, pushes on, mtrely, though sometimes slowly, toiviard the at.tajnment of his aims. If it were not so, society would stagnate. Its character would shrivel, and decline would set in (some of the far eastern countries illustrate this); but, because progress is instinctive and biological in man, society progresses. ~ O I I T R I U U T I O N S OF CHEMICAL INDUSTRY TO SOCIXTY
The chemical inditstrv has contributed to the develow . ment of the social and economic phases of society. I n a sense, there have been three successive phases in the development of our civilization which have had marked effects on our
social and cconomic life. In the beginning, our methods of obtaining material necessities and possession? were confined entirely to manual and animal labor. The use of manual and animal labor, however, has a definite limit after a certain point, and therefore the capacity for making and doing things was definitely limited. The pressure of increasing population and the desire to obtain and do things with greater comfort and ease gradually forceda realization of these limitations, and we come to the second phase of our development-the creation of mechanical devices. Mechanical devices, though crude, are known to have existed many ccnturies before the Christian era. The real beginning of the mechanical age occurred when Wilkinson discovered a cylinder tliat made Watts’ new steam engine redly run. Water power and windmills were replaced by steam. Mechanical devices were nsed to produce other mechanical apparatus-apparatus which could be depended upon to replace hand or animal labor. Electricity a little la,ter vastly accelerated our mechanical progress. The ever-present desire for betterment in health, quality, and variety of goods and other contemponERBI rary desires for social advancement, after many centuries of slow progress, bronght about our third phase-~thcheginning of the science of chemistry. The application of chemistry to industrial progress began about a century ago and today is only a t the threshold of its development; therefore, tho contributions of chemistry to the progress of society and the state is less a matter of ancient history than B promise for the future. Despite its youth, chemical industry ha8 undergone a remarkable advancement during the past and i t is significant of tho importance of this _ generation, . phase of our social and economic life that this phenomenal growth has coincided with one of the most rapid developments of society that has ever taken place.
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Up to the later years of the past century, the mining of our gold supply had progressed from the manual through the mechanical stage. Production was dwindling alarmingly, and by 1895-6 fear was freely expressed that the sources of gold were practically exhausted and that a dual metallic base of gold and silver was a necessity for future support of our currency. As a matter of fact, it was not the exhaustion of the gold supply, but the exhaustion of means of extracting it which was causing the apparent scarcity. Then came the discovery in South Africa of a new source of gold, much of which was not economically recoverable by means hitherto in use. The chemical industry was prepared for this situation, and its cyanidation process was employed for the first time on a commercial scale. There were no further fears of gold shortage until thirty-five years later. In the meantime, chemistry had evolved the chemical flotation method of concentrating base metals. Again gold production was declining and again alarm began to be felt for the gold supply. This time there was no well-advertised gold discovery, although production in 1932, both in the United States and the rest of the world, reached a new all-time record. The reason is that chemistry added the advantages of flotation principles to those of cyanidation, and today gold is being profitably extracted even from residues of former operations. Prior to the World War our own country depended largely upon other nations for its chemical products. There was a lack of realization of the importance of the industry to the nation’s welfare and progress. We failed to understand that chemical products enter into the manufacture of nearly everything produced by industry; that, unless essential raw materials were produced a t home, a wasteful expense of long-distance transportation would be placed upon the dependent industry; and that, if we had to continue to rely upon foreign producers, we were placing ourselves entirely a t their mercy. Germany was the principal world producer of chemicals, and through research and patient, long continued effort, her developments had surged far ahead of those of any other country of the world. With the outbreak of the war our people became alive to the necessity for a complete chemical industry. Had i t been necessary for America to engage in hostilities in 1913, we would have found ourselves woefully lacking the vital essentials of modern warfare. The progress made by the American chemical industry beginning with 1913 startled even those actively engaged in its affairs. When the first mustard gas was sent over the lines against the Allies, they were unprepared for the attack and made frantic appeals to America to supply the chemicals to counteract these deadly fumes. For nearly two years prior to America’s entry into the conflict, a defense mixture was furnished for the Allies’ gas masks, and, when America finally did enter, her soldiers were completely protected. There is no recorded fatality resulting from poison gas because of the inefficiency of any American gas mask. The chief characteristic of man is his instinct of selfpreservation. He accordingly provides in the state numerous agencies for protection against enemy aggression and for the maintenance of domestic peace and safety. Chemistry did not win the World War, but its contributions, not only to defensive and offensive operations, but to the care of the sick and wounded in and behind the lines, were great and became increasingly important as the war continued. Chemical science saved many lives and serious complications in the solving of secret messages, Salvarsan and numerous other vitally needed medicines were produced by American chemists for the first time during the war and are today articles of domestic commerce. Realizing the dangers of an interrupted supply of nitrogen in time of war, our chemical industry has built a capacity ample for war needs and, with other domestic supplies, a surplus for agriculture. Chemistry has also provided milch
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for peace-time protection and safety, such as tear gas for police, safety explosives for underground mining, and chemicals to aid in man’s constant fight against insects and soil and plant diseases. I n the field of human ailments, chemistry’s achievements in the last generation have been no less than phenomenal, not only in discovering controls and cures, but in making available, a t moderate prices, chemicals for medical use that had formerly not been known or were mere laboratory curiosities. A striking example of chemistry’s contribution to society is the development of synthetic nitrogen. I n his presidential address to the British Association for the Advancement of Science in 1898, Sir William Crookes startled his audience, and indeed the world, by his warning of an approaching world wheat shortage. Population was increasing rapidly and new available wheat lands were apparently becoming exhausted. He came to the conclusion that wheat production per acre had to be increased by making available the great store of nitrogen in the air. Within ten years synthetic nitrogen plants had been constructed in several countries. That chemical industry has done its job of supplying air nitrogen too well, both from the standpoint of supply and utilization in agriculture, does not alter the fact that there was real concern a t the time and that chemical industry met the need. Most of the post-war period prior to the present depression was characterized by the prosperity which typically follows the abstinences and deficits of a widespread conflict. Purchasing power of our people was high, and credit was abundant. Under these conditions it was inevitable that the standard of living should rise, that demand for comforts and recreations, even luxuries, far beyond the bare necessities of life should be a matter of common expectancy, a t least as long as such prosperity lasted. It is natural that the chemical industry should have received tremendous stimulation and, great as had been the accomplishments during the war, the most rapid advances in chemical utilization have occurred since. A number of factors combined to produce this result. The consumer demanded more goods, and the increased volume required greater quantities of chemicals, but he also demanded a greater variety of goods better in appearance and desirability. The chemist r e sponded with faster dyes, with better paints and lacquers, with tougher, harder, and lighter alloyed metals, with rayon and other commodities. Producers attempted greater output per unit of energy and competed to give better value than ever before. The chemical industry contributed larger quantities of better balanced fertilizer, quick-drying lacquers, and chemical methods for speeding the production of leather and for hastening the processing of and prolonging the wear of rubber. One of the notable incidents of the present depression is the demand for low-priced merchandise, quality being one of the lesser considerations (the reverse of the prosperity type of demand). I n past generations, the distinctions between good and cheap merchandise were readily discernible by the most inexperienced observer. However, modern chemistry has largely eliminated the superficial differences by neatly and attractively covering up the inferior quality. I believe it is no exaggeration to state that our industry is only on the threshold, and that its contribution to society has barely begun. What direction future developments will take is, in a sense, fairly certain. Already the chemical industry is a basic one in our economic life, as there is scarcely a product where the chemist and his chemicals do not play a part at some point along the line, As necessity has been the mother of invention, it will be the mother of chemical application. Even today the separation of nonferrous metalsfrom their ores is chiefly a chemical process. High-grade iron ore
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INDUSTRIAL AND ENGINEERING CHEMISTRY
in the lake districts is becoming scarce and, in some operations, a crude sort of concentration process is already employed, the concentrate being mixed with high-grade ore to maintain the average iron content. Chemical separation and concentration of many other minerals, such as coal, phosphate, earths, etc., is past the experimental stage. Synthetic molding compounds, developed and produced entirely by the chemical industry, are just a few years old. Their possibilities for future utilitarian use are almost illfinite. I t seems certain that the chemist is destined to bear a heavier burden in the future advancement of housing, even beyond his present contributions of selection, standardization, and ornamentation. The use of alloys of common and rare metals is in its infancy, and future demand for speed, lightness, and durability will expand their use. The chemist, in collaboration with his fellow scientist, the metallurgist, will be obliged not only to perfect the structure and application of alloys, but also to find a way of making available in commercial quantities what are now the rare alloy materials. These are merely a few examples of future prospects, but where the field for future expansion is nearly unlimited, it would be a hopeless task to attempt to circumscribe it. It is natural that, as the science of chemistry has contributed in such marked degree to the welfare and security of society, there should be corresponding benefits accruing to the state through the resultant growth of the industry. Up to the beginning of the World War the domestic industry was small, more or less in a crude state of development, and, with a few notable exceptions, not particularly well organized. Our foreign trade in chemicals was heavily against us, especially in many lines vital to our needs. The stimulation given to the industry by war and post-war demand quickly changed this. From a heavy importer of chemicals, we have so increased our production and variety that we can now, except for a few minor exceptions, supply our entire requirements for chemicals, and provide large quantities for export. As a result, we now have an export balance in this line. It is estimated that in 1931 we imported less than sixteen million dollars worth of chemicals that cannot be produced in sufficient quantities in the United States, and this figure included a total of twelve million for potash salts, which America itself can soon completely supply. I n 1914 the chemical industries employed 249,000 persons. By 1929, these industries had provided employment for 465,200, despite the fact that many improvements in production methods had occurred and accordingly reduced labor. During the same period many other industries, particularly the older ones, were doing little more than maintain employment. The increase in employment in the chemical industry was a t a rate of approximately twice the rate of growth of our population. Moreover, in 1929 these industries contributed nearly $700,000,000 to society’s income in wages and salaries. Employment and pay rolls have declined much less since 1929 than in most other industries, with the result that purchasing power among those directly dependent on the chemical industries is relatively higher. It is estimated that before the war the total capital employed in our chemical industries, including petroleum refining, was less than two billion dollars. This had increased to over ten billion in 1930, providing a large and safe field for the investment of society’s savings. That our tremendous growth was financed conservatively is evidenced by the fact that in 1930 the bonded indebtedness of the chemical industries bore a lower ratio to total assets, to plant investment, and to gross income than other leading manufacturing industriee. One of the points that deserves considerable notice, not only by the chemical industry, but by society as well, is our Gnancial stake in government. It may not be generally realized that the chemical industries, in the five years ending
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1930, contributed a total of over one billion dollars in taxes to federal, state, and local governments. This sum is equal to 25 per cent of the total taxes paid during the same period by all other manufacturing industries combined, and the proportion rose to 30 per cent in 1930. During that five-year period our industry distributed, in state and local taxes alone, $659,000,000; this was 29 per cent of the amount contributed by all other manufacturers combined. In 1930, this percentage had increased to 33 per cent. This does not necessarily mean that the chemical industries have consciously been singled out for discriminatory taxation, yet the effect is somewhat the same. It does mean that, because the chemical industries have obtained a better demand for their products than other manufacturers in recent years, and because their earnings have accordingly been better sustained, they are bearing an increasing burden of taxation. Corporations that do not have net incomes are paying no federal taxes, but taxes on those that have earnings, such as the chemical companies, have been increased, with the result that we are paying a disproportionate share of the taxes. This being so, it is becoming increasingly important for chemical industries to take a leading position in the demand for reduced governmental expenditures.
THE STATEAND CHEMICALINDUSTRY What then should the state do for the chemical industry? Reduction of expenditures and a real balancing of budgets is one of the most important steps toward reaching a sound basis. Temporary unemployment relief, expenditures for self-liquidating construction (if we could cut red tape and local politics, there would undoubtedly be many such projects available), maintenance of our defensive forces, are all essential if kept within reason; but we all know that hundreds of millions of dollars could be eliminated from federal and local expenditures without vitally affecting the functions of government or the welfare of the people. It is hardly a mere coincidence that we had a weak, disorganized, and comparatively inefficient chemical industry in the early years of the present century, a t the same time that the tariff protection accorded it was among the lowest in the tariff schedules. It is likewise no mere coincidence that the greatest stimulation and development in the industry took place after the war when the chemical tariff rates were rising. In recent years we have had tariffs that protected the American chemical industry for the American people, and the nation is far richer than the mere capital invested, by the assurance of adequate chemical supplies in case of war and for the benefits to health and comforts not hitherto enjoyed, which chemical science has given. The state should maintain that protection which has favored the nation so much. Recently, however, chemical industry has again been faced with the threat of foreign competition through the instrument of depreciated currency. This view is opposed by the argument that there is no evidence of our markets being flooded with commodities from depreciated currency countries, and, therefore, the threat is purely imaginative. Is it necessary that our markets be flooded to receive serious harm, and is it necessary that this occur before we can take notice of its effects? The British did not long debate that point when they passed their depreciated currency bill in 1921. One of the primary remedies generally considered necessary a t this stage of the depression is to stop the demoralizing effect of prices below cost of production and to procure a t least stabilization, if not a higher price level. Prices of most commodities are very sensitive to outside competition, particularly a t this time, and it may require only small quantities brought in a t lower prices to affect the prices of fifty to one hundred times the quantities of home-produced commodities.
