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products of the electric furnace. The textiles must have dyes. We must have chemicals for the refining of sugar and petroleum, for the manufacture of glass, pottery, paper, paints, and varnishes, rubber, and cement. The tanning industry leans heavily on the chemical industries. Agriculture gets from these industries its fertilizers. Medicinal and pharmaceutical products, toilet preparations, photographic materials, motion picture films, cleaning compounds, baking powder-to mention these among the many which suggest themselves reveals how close chemistry comes t o our daily life. I n the problem of national defense it is a controlling factor. The factories that produce nitrogenous fertilizer in time of peace will yield us nitric acid in time of war; those producing intermediates and dyes can turn their machinery and workers to making explosives. Hard steels for shells and armor-plate are achievements of the electrochemists. I might go on enumerating cases illustrating the close relationship which exists between our chemical industries and our national interests. I have said enough, however, to indicate m y feeling. The healthy development of our chemical industries i s a matter of national concern. I t i s the duty of the Govbrnment to study its needs sympathetically. In turn, it i s not only your duty but your privilege to be business statesmen in solving your problems of production and distribulion-to plan not merely for profits but also for a national industrial system serviceable to the capdelist who invests, the worker who toils and the public that consumes. WAR AND THE FUTURE O F INDUSTRY
f have spoken of some things this evening which, at Jfrrst glance, seem to have no bearing on the tariff problem. B u t our tariff problems, in so far as they touch production, are also industrial problems. They must be considered as a part of the more comprehensive task of the progressive development of our national life. The War in which we are now engaged will inevitably affect radically American industry. More than ever before conditions demand a constructive program, not merely for war but for peace. Modern war is in methods an economic as well as a military struggle. It is teaching us the value of cooperation. Society is learning its obligations t o industry; industry is learning its obligations to society. We are relearning the old lesson that we can not under modern social conditions live to ourselves. Things which once were private matters are now admitted by all to be matters of public concern. It is not strange that many men are now wondering whether or not social cooperation, if it is good for national defense, is not equally good for the progressive development of our economic life after the War. Let us face these new problems with an open mind. Let us look forward not backward. Let US cooperate together in bringing from the fire of sacrifice, through which the world is passing to-day, more efficient methods of production, juster means of distribution, and a nation rededicated to righteousness and international fair,dealing. THE TABIFF COMMISSION AND ITS OPEBATION WITH REFERENCE TO THE CHEMICAL SCHEDULE B y GRINNELL JONES Technical Expert, U. S. Tariff Commission
The structure of the Tariff Act as we have it to-day goes back to the Act of 1883, when the dutiable articles were for the first time divided into Schedules. Schedule A was assigned to Chemical Products, Schedule B to earthenware and glassware, _Schedule C to metals; while wood, sugar, tobacco, foods, liquors, cotton, flax, hemp, and jute, wool, silk, paper and books, and sundries were classified under Schedules D to N. This same order is found in all the later Tariff Acts. The Schedules of dutiable articles are followed by the Free List, in which the articles admitted free of duty are arranged alphabetically with entire disregard of the classification by Schedules. I n the Act of 1890 we find for the first time the Schedule subdivided into numbered paragraphs, which proved such a great
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convenience that it has persisted to the present time. There have been, however, frequent changes in the paragraph number assigned to any given article. I n subsequent Acts there have been considerable additions t o the number of substances mentioned by name, but these additional substances have not always been added to the Schedule and paragraphs to which they would seem properly to belong. For example, articles made of carbon have been added to the Glassware Schedule; thorium nitrate has been added t o the Metal Schedule; and saccharin has been classified with sugar rather than with coal-tar products; and we now find dried egg albumen in Schedule A, and liquid egg albumen in Schedule G. Schedule A, in 1883, was made to include not only chemicals proper but oils, drugs, pigments, dyes and extracts for tanning and dyeing, explosives and alcoholic preparations. This same grouping and a great deal of the phraseology has persisted to the present time in spite of the numerous revisions, and many of the things which seem strange in the present Act can be traced back to the Act of 1883. For example, we find sponges included in Schedule A in the present Act instead of among the sundries in Schedule N. This classification appeared in the Act of 1883 and has been copied in all later Acts. The arrangement by paragraphs also leaves much to be desired, since the same paragraph includes such dissimilar articles as amber, dutiable a t $1.00 per lb., and dextrine, dutiable a t 3/4c per lb. On the other hand different barium compounds are dutiable under five separate paragraphs. Asafetida quite properly gets a paragraph by itself, but “gunpowder and all explosive substances” are compressed into one paragraph, although further search discloses fulminates in a separate paragraph. Paragraph 5 reads, “Alkalies, alkaloids and all chemical and medicinal compounds, preparations, mixtures and salts, and combinations thereof, not specially provided for in this section, 1.5 per centum ad valorem.” However, this close juxtaposition of alkalies and plkaloids is not quite so bad as it sounds because nearly all of the alkalies are elsewhere provided for by name and therefore not included here. Paragraph 5 is the basket clause which levies a duty on any chemical which may have been overlooked in drawing the Act or on any newly discovered substance which is not covered by any of the general desxiptive or class names in other paragraphs. The rates in the Act of 1883were high, but the general tendency in the revision since has been downward. Chloroform was dutiable a t goc per lb. i n 1883 and has been gradually reduced t o 2c per lb. Refined glycerine which was dutiable a t 5c per Ib. in 1883 is now zc per lb. Castor oil has come down from 80c t o 12c per gal. and linseed oil from 25c to IOC per gal. Bicarbonate of soda has been reduced in the same time from 1l/2c to ‘/PC per to nothing. Perhaps the most extreme lb. and soda ash from case is the alkaloid strychnine which has come down from goc per oz. to nothing. On the other hand cases where articles on the Free List in 1883 have been removed from it are rare, the most conspicuous examples being alizarine, indigo, the essential oils and balsams. There has been a marked tendency to alternate from ad valorem to specific duties and back again, especially in the earlier tariffs under consideration. The continual increase in the number of items mentioned by name has resulted in a corresponding increase in the detail of the import statistics published by the Government. If a substance is specified by name in the Tariff Act, all shipments of the article which came into the United States must necessarily be so described and invoiced and can, therefore, be entered in the published import statistics. In many cases, however, a substance not mentioned by name in the Act will be dutiable under some general class name and in such cases it is usually entered on the customs house records under that general class name, thus
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making the ascertainment of more detailed statistics impractito any possible rival commodities which might be used as subcable. For instance, the tariff act names six barium compounds stitutes. The statistics of production in the United States and and as a result these are all brought out individually in the im- in the principal foreign countries will be included, together with port statistics published by the Bureau of Foreign and Domestic the statistics on exports from and imports into the United States Commerce. All other barium compounds are dutiable under and the amount of revenue collected on each article. The Paragraph j , which reads, “Alkalies, alkaloids and all chemical geographical distribution of the industry within the United and medicinal compounds, preparations, mixtures and salts and States will be noted. A statement of the treatment under combinations thereof, not specially provided for in this section, previous tariff acts and any decisions of the Treasury and of I j per cent ad valorem,” and the imports of all other barium the Courts affecting it will be compiled. I n many cases a comcompounds except those mentioned by name are buried in the pilation of market prices over a series of years will be made. import statistics under this general grouping. Whenever reliable data in regard to the cost of production are I n a few cases the attempt is made t o bring out in detail in the available, they will be included and in many cases a special import statistics substances not mentioned by name in the act. effort will be made to secure such data, although it is recognized For example, we have import statistics on stearic acid, which is that a t the present time costs are so abnormal as to have little not mentioned by name in the act. It is possible, however, that value as a basis for determining future policy. this is a case of incomplete record, since shipments of stearic It is intended that this Tariff Information Catalogue shall be a acid may be entered on the customs records as an “acid not living, growing thing, kept continually up to date by additions specially provided for, 15 per cent ad valorem” and so recorded and corrections. The information thus collected is to be available in the import statistics. for the use of Congress and its Committees or Members, on Recently there has been a movement within the American request, a t short notice, and will also be used as a basis of reports Chemical Society to secure more detail in the statistics on the by the Commission to Congress. Imports of Chemicals. It is evident that the best way to do this Such portions of this work as are of general interest will be is to enlarge tlfe list of substances mentioned by name in the published. For example, a classified synopsis and index to all tariff act. About a year ago, Congress passed a special Tariff the Court and Treasury Decisions affecting the tariff on chemicals Act on the Coal-Tar Products, in which the number of inter- is now being compiled by a lawyer experienced in tariff practice mediates mentioned by name was greatly increased. As a result in cooperation with the chemical expert of the Commission and we now have detailed import statistics on each of these inter- it is expected that this compilation will be published. mediates. Nevertheless, during the first three months of 1 9 1 7 , Care will be taken to keep separate and distinct from this over IOO,OOO lbs. of material were imported which are described Catalog all confidential information, especially in regard to the in the import statistics as, “All similar products, obtained, derived, operations of individual manufacturers-such information to be or manufactured in whole or in part from the products provided available only to the Commissioners and its confidential staff, for in Group I.” Group I includes the coal-tar crudes and this For this work a staff of special experts and clerks has been description, therefore, is equivalent to “Other intermediates not organized under the direction of Llr. William M. Steuart, formerly mentioned by name.” Chief Statistician of the Manufactures Division of the Census, It is evident from this brief survey of the tariff history that and the work is now actively in progress. Congress acted wisely in creating a permanent non-partisan Since the primary object of Congress in creating the Tariff commission to gather, in a systematic and comprehensive way, Commission was to have on hand exact and reliable information the information needed by Congress in revising the tariff in to be used in framing future tariff acts, the Commission earnestly the future. desires the full cooperation of American business men in its The United States Tariff Commission was created by an Act task. It is hoped that they will volunteer information in regard of Congress signed by the President on September 8, 1 9 1 6 . The to any notable changes which are occurring in American industries Commission was organized on April I , 1917, and immediately or in the conditions of international competition, and that all made comprehensive plans to carry out the varied and important requests from the Commission or members of its staff for informaduties assigned to it by the law and appointed a staff of Special tion and advice will be given careful attention and frank and Experts to assist in the work. The duties of the Commission will full answers. They are invited to submit to the Commission any be primarily the collection and editing of the facts necessary to suggestions which seem to them desirable in regard to administraapply, intelligently and consistently, to the end1ess detail of tive features, the classification or nomenclature of articles or the the tariff act itself, the general tariff policy, adopted by the rates of duty to be imposed. Such suggestions, to be of value, people and Congress. should be as detailed and specific as possible and accompanied THE TARIFF IXFORMATION CATALOGUE by the reasons for the changes proposed. They will be filed and The part of the work of the Commission which will be of most indexed in such a way as to be readily available. It is especially important that information should be sent to the Commission interest to this audience is the preparation of a Tariff Information in regard to articles formerly imported exclusively but now made Catalogue. The purpose of this Catalogue is to have on file ready for immediate use pertinent information in regard to each com- in the United States. The full cooperation of the American manufacturers and modity now mentioned in the Act, whether dutiable or on the free list, as well as all other commodities not specially mentioned importers is specially important in the work of the chemical but included in the comprehensive general or basket clauses. schedule, because of its great complexity and highly technical The Catalogue will contain a definition or description of each com- character and because of the revolutionary changes that have modity, including an explanation of the recognized commercial occurred in many branches of the chemical industries since the grades or varieties. All synonyms will be noted and cross- outbreak of the European War. indexed. This will be followed by a brief description of the proAmerican chemists have met the industrial emergency cess of manufacture with special emphasis on the raw materials created by war by expanding existing plants, creating new needed and on any general economic characteristics of the in- industries and by discoveries and inventions which have addustry, such as a need for abundant and cheap power or special- vanced the chemical industries a t a rate never before approached,’ ized and highly skilled labor, etc. The varied uses of the com- Broad general statements of this kind, however, are very easy modity will be ascertained in order to learn the industries likely to make and of little value. A much more difficult and important to be adversely affected by the imposition of any tax which task is to make exact and detailed statements of the pertinent would result in a rise in price. Consideration will also be given facts in regard to each specific industry or commodity, t o
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ascertain what have been the consequences of existing legislation and to forecast those of proposed legislation. The units of the Tariff Information Catalogue on sulfur, barium compounds, and abrasives have already been prepared and the work on potash compounds and dyes and other coal-tar products is well advanced. Much of the statistical information on many other classes has already been assembled. I have been seeking what may be the limits, of the territory that I have to explore, but with little success. I have found, however, that it includes Abrasives and Lubricants; Bleaching Powder and Dyes; Explosives and Fertilizers; Olive Oil and Cyanides; the Salts of Potash and Radium, Bromine and Balm of Gilead; Aconite and Zaffer. It is evident that the Commission directly or through its staff must appeal to specialists in many lines for information and advice, and that only through this cooperation can a true statement of the recent achievements and present position of the American chemical industries be prepared in proper form for the consideration of the Commission and of Congress. Your aid is earnestly desired in this undertaking. THE DEVELCPMENT O F OUR EXPORT TRADE EXTRACTS FROM ADDRESSB Y
w. s.
KIES
Vice-president of the National City Bank of New York and American International Corporation September 26, 1917
The chemical industry of the United States has shown greater efficiency and greater powers of quick response to business demands than almost any other of the great industries of the country, as illustrated by the fact that exports of chemicals ‘in 1917 ($185,ooo,ooo) were practically seven times as great in value as in 1914 ($27,000,000), while exports of all industries, as a whole, were only three times as great. But this does not tell the full story because the list of exports does not include the great group called “explosives,” which is so closely allied to the chemical industry as to be in fact a part of it. I n explosives the value of our exports grew from $6,000,000 in 1914 to $8~o,ooo,oooin 1917. Under this class were listed cartridges, dynamite and gunpowder. Under the heading “other explosives,” the value of our exports grew from $I,OOO,OOO in 1914 to $420,000,000 in 1917, showing that in the industries closely allied with chemicals the growth has been quite as striking as in chemicals proper. In the articles which may be considered as strictly chemicals, we exported, for example, in 1914 acids valued at $5oo,ooo; in 1916, $24,00o,mo; and in 1917 approximately $55,000,000. Our dyestuffs exports have grown from one-third of a million dollars in value in 1914 to $12,000,000 in 1917, and these latter figures do not include any foreign dyes reexported. A few other illustrations may be of interest. Our exports of soda salts and preparations grew from practically nothing in 1914 to $18,000,000 in 1917. In the tabulations issued by the Government, under the heading “other chemicals,” the exports grew from $9,000,000 in 1914 to $75,ooo,ooo in 1917. The importance of the chemical industry is evidenced by comparison of the amount of capital and value of products turned out with that of other leading industries. According to the census of 1915, the value of capital of the group known as “chemicals and allied industries” was $723,ooo,ooo in 1914. I n the great woolen, worsted and felt goods manufacturing industry, the total capital in the same year was but $~I~,OOO,OOO, and in the silk goods industry $2 IO,OOO,OOO. The capital of the automobile industry in 1914was $408,000,000, and the capita1 of the flouring mill industry was $380,000,000. The amount of capital invested in the group distinctly classed as “chemicals” was, in 1914, $224,000,000, which represents an increase of nearly eight times since 1880. A study of the statistics of your industry reveals a further interesting fact, that the industry as a whole shows a decreasing
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value of-product per dollar of capital invested-in other words, that yours is an industry where the cost of experimentation and the development of new processes make constantly increasing demands upon capital. In 1880 there was invested in the general chemical industry in this country $29,000,000. The value of products was $38,000,000 annually, or $1.33 per dollar of capital. In 191j the capital invested strictly in the chemical industry was $224,000,000, the value of products $ I ~ ~ , O O O , O O O , or $0.70 per dollar of capital invested. The capital, from 1880 to 1915, increased about eight times. The number of employees in the industry during that period increased but a trifle over three times, and the wages and salaries paid increased about five times, from $6,000,000 to $31,000,000. This indicates that as an industry you are more dependent upon capital and brains than upon labor; that the success of the industry depends upon the development of improved and cheaper processes and the intensive use of the capital Zmployed. During the last three years, the chemical industry has received a great impetus. Large amounts of money have been spent in its development. When the war demand for your product shall have ceased, your great problem will be to find markets that will absorb your production. In many lines, before the war, Germany was supreme and competition with her was impossible. She held, to a very large extent, the South American markets. I n 1914 we sent to all of South America only $3,000,000 worth of chemicals. In 1917 the value of our exports to South America will amount to nearly $15,000,000. But even this latter figure does not indicate an export trade of very substantial proportions. Germany, prior to the war, as we all know, had a grip upon the chemical markets of the world, and in South America it was perhaps stronger than in other parts of the world. In considering the subject of the development of trade in South America, or in any other foreign country, the basic problems are the same, These are: ( I ) the cost a t which the article can be produced and sold in a foreign market; ( 2 ) distribution, which includes salesmanship, advertising and transportation; (3) financing, which comprehends the always difficult problem of credits. Fundamentally the South American market is not much different than any other. It must be studied to be understood. Consumers in South America will purchase goods on the same principles that consumers elsewhere do-on the basis of price, adaptability and quality. Where the price is out of line with that of a foreign competitor, quality may sell the article as a result of genius in salesmanship. Where the quality of two articles is practically the same, the cheaper will be moved. We come right back home, therefore, to the most important problem -the cost of production. Shall we be able t o produce in this country after the war on a basis which will enable us to compete with the products of other countries of the world? All industry is intensely interested in the answer to this question. So far as German figures are available, the production in the chemical industries, per dollar of capital invested, is much greater than in this country. The reason probably lies in the more intensive application of science and the use of men of science in the industry. In fact, a German author, writing on the industries in 1897, said, “It is generally recognized that the German chemical industry owes it preponderating position solely to the highly scientific preparation of its collaborators.” With the cost of production a t or near the costs of our leading competitors, the development of any given foreign market is an assured possibility if enough thought and attention be given to the task. The outbreak of the war in 1914 had a paralyzing effect, during the first few months, upon American industry. As a matter of fact, in the months immediately prior to the war, business had been declining. It was a t this period of contraction of our domestic market that American manufacturers turned
