BUSINESS
P H U r F ^ U ËNiiUfITUiEfi 9 fllJTLnOK Defense needs measured by 3 0 % versus 1 0 % at start . . . Washington preaches large expansion in industrial capacity . . . Kaiser w o u l d enlarge steel 3 0 % . ,. Government raises rosin prices . . . Cotton consumption high A CERTAIN measure or our defense ef•**· forts for t h e moment is becoming apparent in several directions. During the early days of the Korean affair spokesmen of some of the key industries, such as steel and aluminum, sounded off in con fident language t o the effect that defense efforts would take only KK'r of our pro duction, with 9 0 r r allowed civilians. Then came reverses to democracy in Indo-China and more recently the in vasion of Tibet b y t b e Chinese Commu nists and the general awakening of the entire country to the great peril in which the country finds itself. Accordingly we have raised our defense sights. Now, in stead of defense in terms of l(Kr, we ob serve a 20 to 309c line of thinking. Thus in copper, zinc, nickel, cadmium, and other metals MC are seeing civilian sup plies cut by those amounts, in fact rang ing up to 100r/c in the case of cobalt. Again w e hear that same percentage range as to the limit of defense orders that any one manufacturer is compelled to ac cept in any one month. It is quite com monly agreed, too, that curbs on civilian efforts will be much more severe in 1951 than at present.
Korea a Laboratory for W e a p o n s To begin with, Korea has been a labo ratory in which the weapons invented in the Pentagon Building w e r e given their tests. Considerable time will elapse while the brass hats study t h e test tubes and re torts of warfare and decide what are the best war-making formulas. But by mid1951 the leaders of the armed forces should know the answers a n d be ready to go full speed ahead. T h e sharp trends toward inflation worry many, including the leaders at Washing ton. Several insist that the best method of coping with inflation is to raise industrial capacity and production. Henry J. Kaiser, who has never lacked in boldness in in dustrial enterprise, advocates raising the nation's steel making capacity by 3 0 r r , or 30 million tons. Interpreting inflation from another angle, the Federal Reserve Bank of New York, in its "Monthly Review" blames "excessive private expenditures" rather than government deficit spending for re cent rises in commodity prices. It says that "Federal Government operations in most of the post-war p c i i o d have been a major anti-inflation force." Since July 1 govern ment receipts have exceeded disburse ments, it claims. Perhaps the most inflationary act of the past week was t h e constant rise in the tin price to all-tirne new highs, reaching $1.44 per pound on Nov. 6. T h e Government 4032
itself, through the Agriculture Department, raised selling prices of gum rosin for sale by $1 per 100 lb., t h e sharpest advance since it started announcing monthly prices on its holdings. Textile fiber consumption will reach a two-year low point in 1951, says Stanley
B. H u n t , president, Textile Economic Bu reau, I n c . This consumption travels in two-year cycles. Besides, high prices of cotton a n d wool t e n d t o lower c o n s u m p tion. U s e of m a n - m a d e fibers h a s grown from 1 0 . 1 % in 1939 to 3 0 % of the total today, h e said. As to the accompanying charts, prices of chemicals a n d allied products seem to have risen more sharply in September t h a n did all wholesale commodities, or as 6 points in the index figure for chemicals compares with 3 points for all commodi ties, t h e index figure basis being 1926 equals 100. T h e revised index figure for August ίο» ·ΐί" --ommodities was 166.4, rising to
C B Û A L PRICES vs. ALL WHOLESALE COMMODITIES BASE YEAR INDEX 1926
=
100
180 160
140 120 CHEMICALS A N D
100
ALLIED PRODUCTS
80
11 1 1 1 11 I 1! 1 1
1 1 1 i 1 1 1 1 1 1 1
1948
1949
1 1 1 1 1 1 1 1 1 11 1950
LEAD PRODUCTION
COTTON CONSUMPTION
REFINED. THOUSANDS O F SHORT TONS
THOUSANDS OF BALES
VEGETABLE OILS
NDUSTRIAL ALCOHOL
FACTORY CONSUMPTION OF CRUDE OILS MIUIQNS OF POUNDS
STOCKS OF ETHYL ALCOHOL AT END OF MONTH. MILLIONS OF PROOF GALLONS
5'
1§
111 1
30 1
! ii 1!
20 10 0 1 !
1 ! 1 1 f 1 I
j l M A M J J
1949
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I I I O H O
1950
CHEMICAL AND ENGINEERING NEWS
CHEMICAL
AND
ENGINEERING
NEWS
169.5 in September; in the case of chemi cals, the revised August figure was 122.5, stepped up to 128.5 in September. How ever over t h e past t w e l v e months all com modities advanced 16 points against a rise of only 10.9 points for chemicals. It would b e indicated t h a t prices of chemicals and allied products are still cheap and reasonable since t h e index figure still lags 41 points b e h i n d wholesale com modities generally. Comparing chemicals, index 122.3, with really high-priced com modities, lumber w a s 356.6 in August; building materials generally were 213.5; meats, poultry, and fish stood at 240.2; hides and skins were 237.7, and cotton goods stood at 206.8. Among the cheap items are fertilizer materials at 112.0; petroleum and products at 116.8; rayon and nylon, at 41.3, and silk at 65.6. Production of refined lead in September was highest in several months, though lower than in early 1949. S e p t e m b e r out p u t was 50,137 tons, with 47,242 tons in August and 41,520 tons in July. Produc tion in September 1949 had been 34,928 tons. The rise in production, hence theo retically more a m p l e supplies, failed to halt a rise in price on Oct. 3 1 to 17 cents per pound, New York, as against the 1950 low point of 12 cents. T h e Government has not stockpiled lead since J u n e and it is freer in supply than in case of copper and zinc, the other "trinity" metals. Consumption of Cotton Spurts Cotton consumption is groping for the roof of our chart, September figures having been 968,484 bales, a s against 807,840 for August a n d 610,555 bales for July, truly a sharp gain over three months. I-se of cotton in S e p t e m b e r 1949 had been 709,958 bales. I t is q u i t e possible of course that some increase in cotton consumption may be d u e to the shortage of wool and accompanying high prices. Coming to crude vegetable oils, factory consumption in August was 456 million pounds, against 330 million in July, 375 million in June, and 380 million in August 1949. Production of crude oils in August was much u n d e r consumption, or 3 8 0 mil lion pounds, leaving stocks at the end of the month of 735 million, which w a s the lowest since August a year ago, a t 718 million. In the "picket f e n c e " graph on stocks of ethyl alcohol the "pickets" have been at a rather low point in recent months, re flecting the big drain on this important organic. T h u s at t h e e n d of August, stocks were 24.6 million proof gallons, compared with 56.6 million a year before. Stocks for other recent m o n t h s have b e e n 21.6 million for July and 23.2 million in June. August stocks were m a d e up of 23,886,000 gal. in industrial alcohol bonded ware houses and 694,000 gal. in denaturing plants. Production in August h a d been 3 3 million gallons.
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LJnder c u r r e n t conditions, construction know-how is needed more than ever to speed your building program. Before you build — w h e t h e r it is a new plant, addition, o r the installation of process equipment — it will pay you to know the latest construction techniques of which you can take advantage. Right here is w h e r e w e can help y o u . . . by focusing o u r b r o a d chemical and process in dustry construction experience on your particular prob lem, A s illustrated by the brochure offered below, you will find that no problem is "out of our line."
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CHART CREDITS: Chemical and Commoditif Prices—Department of Labor; Vegetable Oils—Bureau of the Census; In dustrial Alcohol—Alcohol Tax Unit; Cotton —Department of Commerce; Lead—Ameri can Bureau of M e t a l Statistics. V O L U M E
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