The Aniline Dye Situation

The Aniline Color, Dyestuff and Chemical Conditions
from
August 1st, 1914,
to
April 1st, 1917.
A series of Addresses and Articles
Compiled by:
I. F. Stone
1917

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Everybody Knows the Situation.

80% of Colors Come from Europe.

20% of Colors Made in U.S.Address Before the National Exposition of Chemical Industries, New Grand Central Palace, New York, September 22nd, 1915.

I. F. Stone

MR. CHAIRMAN AND GENTLEMEN:

In rising to speak of the aniline dye condition in the United States at this time, it is perhaps needless to repeat what is already known to those who are interested in aniline colors either as merchants or consumers, and, in fact, known to many of the public through the newspapers; that there is a very great shortage in supplies owing to the fact that goods, which formerly came from Europe, upon which we depended largely for our supplies, are by reason of the war no longer sent over; therefore, American consumers are not are not able to get anything like the supply to which they have been accustomed and upon which they depended. Eighty per cent of the colors consumed in the United States were brought over from Europe, principally from Germany, so that upon the stoppage of the imports from Europe, eighty per cent of the supply would naturally disappear. The other twenty per cent had been furnished largely by American manufacturers, but even this twenty per cent of the supply has not been maintained by the American manufacturers because they have been depending upon Europe for a large part of their intermediate or raw products, and when they were no longer able to get these products from Europe, naturally they could only run their factories as long as their stock on hand would enable them to do so. Their only chance then, to continue running their factories, was to make these raw or intermediate products themselves, and while this has been done to some extent, as I will explain later, it has not yet reached a stage where they can get full supplies of every raw material they need to produce the full line of colors which they have been manufacturing. Consequently they are unable to furnish some of the colors which they formerly supplied.

Consumer's Position.

Hosiery and Leather Manufacturers Taken Care Of.

Other Manufacturers Not Able to Secure Colors.This, you will see, leaves the consumer in a very critical osition, as if he wishes to run his factory, he must do so  without his usual colors, meaning that he would have to make a different class of goods as far as colors are concerned, or else only operate part time, or close down altogether for lack of these dyes. Most of the factories have adopted the part time method, in that they are manufacturing such goods as require little or no dyestuff, or else manufacturing such goods for which they can secure colors in America to manufacture. In some lines, for instance the  hosiery and possibly the leather manufacturers, this can be done to quite a large extent, as they use mostly blacks and other dark colors which are manufactured comparatively largely here: that is, for hosiery, direct and sulphur blacks, and for leather, blacks, nigrosines and logwoods; which can be obtained here almost in the necessary quantities. Other lines of manufacture, however, requiring indigo, alizarines other and other fast colors, paint and printing ink manufactures requiring special colors for their lakes to make their paints Secure Colors and printing inks, paper manufactures requiring large quantities of blue to manufacture white paper and fancy shades, and many other industries not mentioned, are unable to obtain anything like their requirements and are accordingly not doing their usual volume of business, and many employees are therefore working only part time at a consequent great loss to themselves, and to their employers.

Reason for the Situation.The reason for this acute situation is manifestly, of course, the present European war, but, as a matter of fact, it could have been avoided largely by what I might call better judgment of two nations, viz., Germany and the United States. In explaining the situation I shall perhaps have to say something which will reflect upon the business methods of one nation the German and the political hods of the other nation the United States. But whatever I do say will be without animosity, and simply a plain statement of facts, and should be taken as such.

Germany Responsible for Present Conditions.

German Reason for Not Shipping.At the beginning of the war, it was of course impossible for the German factories to ship their usual quantities over here because of the fact that the German government had taken charge of all the railroads and other means of transportation for moving their troops and war supplies, and the German factories could not therefore get their colors to seaport for shipment; but after a couple of months this condition changed so that they were able to get their goods to the seaport and did commence to make quite good size shipments to the United States owing to the fact that they were able to do so on neutral or American vessels and there was then no interference with these shipments on the part of England. The first large shipment, for instance, was made on the S. S. "Matanzas," which was chartered by American firms and sent over specially for the bringing over of dyestuffs, and this vessel subsequently made several other trips. After this followed many other chartered vessels and comparatively regular shipments were made until the Spring of this year, when they ceased completely for the reason I believe partly of the action of England in taking measures to prevent such shipments, and partly because the Germans were disinclined to make shipment when they could not get anything in return from this country, cotton and foodstuffs for instance. Had, however, the German firms taken advantage of the time when they could make shipments and had sent to this country a large supply of their products, their agents here could have accumulated large stocks which would have carried them over a long time and so largely prevented the acute shortage of the present time. But for reasons best known to themselves, they decided to ship to this country each month only about sevenGerman ty-five per cent of their regular normal shipments, consquently a shortage of at least twenty-five per cent and perhaps more continued in spite of the German shipments. When I say that the German factories could have made large shipments I say this for the reason that normally only about twenty per cent of their production was shipped to the United States, while the other eighty per cent was used in their own country and shipped to other parts of the world, and as at the time of the war they were barred from shipping to other parts of the world, a large percentage of their eighty per cent was available for shipment to the United States and they could therefore have shipped to us many time the quantity they did ship, and if they had done so their American agents might have acquired a stock which would take care of their customers for perhaps a couple of years or more on some, if not all of the colors. I say, therefore, that the German firms are responsible for the difficulty and the acute position of the American consumers. Their primary reason for this holding back of shipments was probably due to the fact that they did not want American consumers to get an oversupply of colors so that they could make up extra quantities of goods which they might use for export to customers in other countries who had formerly bought the same goods from Germany, but who could no longer obtain them. Therefore, they restricted as far as they could the American supply so that they would only have enough goods to supply what might be called their normal trade and could not increase their production.

Raw Products.On the intermediate or raw products which they had formerly shipped to American color factories, an embargo was immediately placed by the German government, so that they could no longer be shipped, the embargo being apparently for the reason that many of these materials were for the use of manufacturing explosives which were required by the German government in their war movements, but as a matter of fact, many of them, like aniline oil, beta naphthol, paranitranilin, naphthalin, and such articles, were not so necessary for this purpose, and large quantities of these could easily have been shipped over here and used in the manufacture of colors by American factories, and also in many cases by consumers themselves, as for instance aniline oil for blacks, and paranitranilin and beta naphthol for manufacture of colors by paint ma[n]ufacturers.

German Chemical Committee.

American Consumers Should Now Stick to American Products. The movement of German colors and intermediate products and chemicals was really controlled by a committee called Verein zur Wahrung der Interessen der Deutschen Chemischen Industrie, the chairman of which I understand was a director of one of the large German color factories, and the reason then that larger quantities of various products were not sent when they could have been sent, was evidently due to the judgment of this committee in reducing and finally stopping, because they considered it to the best interests of their manufacture to do so, for reasons already partially explained, and they therefore are really responsible for the present acute condition of the aniline dye supply in this country. Whether or not it was really to their advantage to take this position, it certainly was not to the advantage of American consumers, therefore in the future it seems to me they should bear in mind the position taken by German manufacturers in that the American consumers' position was not considered, and in the future ally themselves as far as they can with American manufacturers who are developing or about to develop the manufacture of aniline dyes in America to as large extent as may be possible, or to a comparatively small extent if the American Government does not come to their support by fixing a new and higher tariff on these goods so that American manufacturers can compete with Europe under normal conditions, but to a large extent if such protection is given.

Tariff Protection Crux of Situation.

New Tariff Proposed by American Chemical Society.

Reflection on American Government.This is really the crux of the whole situation as far as American manufacturers are concerned; viz., whether or not they will be given proper protection, and if so, as I have said, the business will develop to a large extent and in the course of time be practically independent of foreign supplies. I made this same statement in a circular which our company issued on the 1st of September, 1914, just a month after the war started, that is, that the American manufacturers could not make much progress without such protection, which I again repeated in an address before the American Chemical Society of New York on October 9th, 1914. As a result of this address, a committee was appointed by the American Chemical Society to look into the matter, and this committee subsequently reported on November 6th, 1914, that such protection was necessary and advocated that the present duty of 30 per cent ad valorem be continued, with an additional duty of 7½c. per pound specific on finished colors, and an ad valorem duty of 15 per cent and 3%c. per pound specific on the intermediate or what might be called half finished products. This necessity was so apparent that it was even signed by one of the committee, Mr. H. A. Metz, who is the American representative of a large German color factory, whose personal interests naturally lie in the importation of colors, and who would not have signed it had it not been absolutely a necessary action if the development of the color business were to be largely increased in the United States. This resolution, or report, was duly sent to the proper authorities in Washington, and has been on file there since that time. It is a reflection, I think, on the American Government that no action whatever has been taken in this matter, but here comes a question of politics, the present Administration having been elected on the platform advocating reduced tariffs and therefore will not apparently go back on their platform, even under the present unusual and unexpected conditions, even though American consumers are suffering for relief, in that many thousand employees of manufacturers requiring colors, are reduced to only part time and, in fact, some of them laid off entirely by reason of their employers not being able to secure the necessary amount of dyestuffs to continue their regular productions.

Question Not a Political One.

Mistake of Some American Consumers. In other words, the position of American consumers at present is not a political one, but one of cold fact, and should in my opinion have the attention of the Administration irrespective of previous policies. Except that they have had practical example of the workings of a low tariff on aniline colors and coal tar products, and its flat failure as connected with this line of business, the result of which is the present deplorable condition; the present Administration is no different from previous Administrations for the last 25 or 30 years, both Republican and Democratic, none of them having given this necessary protection, and as a result not allowing the business to develop as it would have developed had they done so. It is perhaps some excuse that they did not realize how large a part in the success of the manufactures of textiles, leather, paints, and many other lines, depended on their supply of dyestuffs, in that the business itself was perhaps not large enough to demand their careful attention, and they did not take into consideration the fact that so many other great lines depended on their supply of these goods. This fact was also not realized by many of the American consumers themselves, as is evidenced by the fact that during the many years that the tariff matters were before successive administrations, many American consumers of dyestuffs fought an increase of duty thinking that it might increase their costs and evidently preferring to buy foreign goods at what they considered lower prices than to support the manufacture in America at a possible increase in cost to themselves by reason of a higher protection. The fallacy of this position is now absolutely apparent in that the consumers are now not only not able to get sufficient supplies for their wants, but on what they do get are forced to pay fabulous prices, and certainly the extra cost of their supplies and their losses through failure to run their factories regularly, will far exceed a slight possible advance in the cost of dyestuffs by reason of their being made in America under a protective tariff.

As an instance of prices which they are forced to pay when they do get goods, I might mention a few products:

Sulphur Black, which is used very largely by the hosiery and cotton trades, and which sells normally at about 20c. per lb., has brought as high as $2.75 and even $3.00 per lb.

Fabulous Prices now Paid for Foreign Products.

American Products Not Advanced so Much.Indigo, which sold formerly at about 15c., has been sold as high as $1.00 per lb., even more.

Aniline Oil, the normal price of which is about 10c., as high as $1.75 per lb.

Beta Naphthol, the normal price about 12c., selling as high as $1.50.

Paranitranilin, normally about I5c., selling as high as $1.75, and I might continue this list indefinitely showing where all products for which consumers depended on European supply, that is, which were not manufactured here, are now selling at anywhere from five to twenty times their normal value. I might call attention in this connection to the fact that these enormous advances do not apply on colors and products which were made regularly in America; for instance, such products as direct black, Bismarck Brown, Chrysoidine, Nigrosine, and any number of other colors, have not been advanced by American manufacturers more than two to three times their normal selling price, and this advance was only caused by reason of the fact that their raw materials are also used in the manufacture of ammunition and explosives, and are now in large demand for this purpose, so large a demand, in fact, that American manufacturers of colors have been unable to get adequate supplies, and for what they do get pay abnormal prices; benzole, for instance, having advanced from a normal price of about 20c. to as high as $1.25 for immediate shipment, and on contract to about 65c. at the present time; while toluole, with a normal price of about 25c., has been sold as high as $6.00 for immediate supply, and on contract at this time about $4.25. Had these advances not taken place by reason of their demand for other purposes, the manufacture of American colors could have been continued on almost normal lines, so they are not to blame for the necessity for advancing prices to the extent they have, which, however, is no comparison to the advance in the prices of European colors which have not been made here. I might say that the one American manufacturer of aniline oil before the war, even in the face of these enormous advances, continued to fill contracts at the old contract prices, and when they arranged to increase their production to a large extent, only advanced their price in proportion to the advance in raw materials, and had they only been able to manufacture enough aniline oil to supply the country, which they were not at the time, the price on this article would not have soared to $1.75 as it has, but would have been held to some reasonable figures. This shows the policy of real American manufacturers, which is to protect their customers as far as possible under unusual conditions, and has also been the policy of color manufacturers.

Tariff Literarute.The matter of tariff being so important a factor in the development of the color business in the United States, I might call your attention to an article recently written by Dr. B. C. Hesse, a well-known aniline expert, and published in pamphlet form, headed, "Who Killed Cock Robin?" and which gives the United States tariff history for the past thirty years. He calls attention to the fact that there was from 1880 to 1883 a duty of 35 per cent ad valorem and 50c. per lb. specific on aniline colors, which gave ample protection to the industry, and as a consequence there were then nine or ten factories in the United States, and the prospect of becoming independent of other nations for our supply of these aniline products was bright indeed, but the passage of the Tariff Act of July 1st, 1883, which abolished the specific duty of 50c. per Ib, leaving only the ad valorem duty of 35 per cent and fixing a 20 per cent duty on the intermediate products, which left only a net protection of 15 per cent, immediately checked the industry here. No new factories were started, and within one year after the new tariff took effect, five of those already established were forced to succumb and go out of business, leaving only four to continue the work, who have since stayed in business, but have not been able to develop to any extent. I might say that a specific duty of 50c. at that time was not exorbitant, as the prices of aniline colors then manufactured were very much more than they are to-day, colors for instance selling at $4.00 to $5.00 per lb. now sell at only 50/60c. per lb., so that the 7½C. specific duty now recommended by the American Chemical Society would not be very far out of proportion to the 50c. per lb. at that time.

Golden Days.

Patent Laws.Had a proper duty been kept on these aniline products, say from 1883 to about 1900, during what might be called the golden progress of the industry, when so many new colors and products were brought out, the business might be here to-day in the same prosperous condition as it has been in Germany, whereas, as everybody knows, enormous factories have been erected and the business of the world practically controlled by them. It is, of course, due to the Germans to say that many of their new products were patented colors produced through the careful research work of their chemists, but no one can say that American chemists would not have been equally diligent in research work had they had the same opportunities, and not only that, had the United States at that time had a proper patent law which would compel the manufacture in this country of all goods patented by foreign residents, it would have protected the industry and insured its great success. Our legislature, however, did not appreciate the importance of the business, and so failed to give us the proper protection and proper patent laws, and therefore the business has drifted away from the United States, and resulted to the great credit and prosperity of the German manufacturers. However, these Patent Laws patents have now practically expired, and the American manufacturers are free to manufacture practically everything that is needed, so I must emphasize again that it is now only an insufficient tariff which prevents the development of the American industry in the future. This pamphlet of Dr. Hesse's also shows that in the various tariff administrations, fights against an increased tariff were made not only by foreign manufacturers and their representatives, but were actually supported by American manufacturers and consumers whose names are given, and who are now I think very sorry that they took this position, and did not rather favor a protection and development of the American industry.

Manufacturers Dependent on Colors.To show you the lines of manufactures which are dependent on their supply of dyestuffs, to continue their regular production, I would say the most important, perhaps, are the textile manufacturers, comprising cotton, wool, carpets, knit goods, silk, cordage, shoddy dyeing and finishing. The following figures are taken from the census of 1909:
--- | Establishments | Employees | Capital |  Salaries and Wages  | Value of Product
Dyeing and Finishing  | 426 |  47,303  | 114,092,654  | 26,261,634  | 83,556,432
Wool  | 985  | 175,176  | 430,578,574  | 82,523,776  | 435,978,558
Carpets  | 139  | 34,706  | 75,627,010  | 17,745,092  | 71,188,152
Knit Goods  | 1,374 |  136,130 |  163,641,171 |  52,431,680  | 200,143,527
Silk  | 852 |  105,238 |  152,158,002 |  46,097,364  | 196,911,667
Cordage |  164  | 27,214  | 76,020,366 |  10,995,545 |  61,019,986
Shoddy  | 88  | 2,320 |  6,886,825  | 1,196,376 |  7,446,364
Cotton  | 1,324  | 387,771  | $822,237,529 |  $147,470,903  | $628,391,813
--- | 5,352  | 915,858  | $1,841,242,131  | $384,522,370 |  $1,684,636,499

You will see that there are over five thousand of these establishments with over nine hundred thousand employees, with a capital invested of $1,841,242,151, who are paying in wages annually $384,522,370, and the value of whose product is $1,684,636,499.

Then there are the leather manufacturers and tanners, of which there are over nine hundred establishments, with a capital of $322,726,952, employing over 62,000 people, and the value of whose production is $327,874,187.

Then again there are the paper manufacturers, numbering over seven hundred and fifty, with over 81,000 employees, with capital invested of over four hundred million dollars, and the value of whose product is over two hundred and sixty million dollars.

Then there are the paint and color manufacturers, about nine hundred in number, with a combined capital of about two hundred and fifty million dollars, and employing thirty thousand men.

2,000,000 People Dependent on Color Supply For Employment.As I said at first, these figures are taken from the census of 1909, and those who are interested in these particular lines tell me that there has been an increase in practically every industry averaging about twenty-five per cent., so that the figures should be something like twenty per cent, more than those given. Add to these lines of business, others which are not separated in the census, such as printing, and writing ink manufactures, shoe dressing manufactures, and a hundred and one other lines which consume dyestuffs, and I think I could safely say there are upwards of two million people employed in industries which require the use of dyestuffs, and who are now affected by the present shortage. Others affected, of course, not so directly, are the public generally, who will soon find that they cannot get what they want, and will have to take what they can get, and if some changes do not take place very shortly, a totally new scheme in colors will have to be presented to the American public.

We have now come to a point where we are under unusual conditions, and the American industry again has a chance to develop, and it would seem a pity if the present Administration would not take the opportunity to help manufacturers to do so.

Attitude of Prominent NewspapersThe New York Sun, in its edition of September 3rd, had a good article on the subject, and an editorial calling the attention of the President to the fact that while he might be engrossed in very serious affairs such as the Mexican situation and the foreign wars, at the same time the new conditions and new complications arising from the present conditions, should warrant his attention, to see what prompt action and judicious protective legislation in the matter of the dyestuff industry, might do for the country, saying further that the dyestuff industry is a single illustration only of the great trade advantages which the situation promises. This article and editorial were repeated and supported by many other American newspapers, and certainly is a step towards accomplishing a revision of the tariff on aniline products, to take advantage of present conditions.

Mistake to Believe Higher Tariff Increase Prices. I might at this time call attention to a popular belief, Mistake to which I consider a mistake, that an advance in the tariff on H?ghJ r e Tariff aniline products would necessarily result in advance of prices, but this is open to question, as while it is true that many of the cheaper colors might be advanced to some extent, on the other hand the higher-priced colors, which have not been made in America and which are controlled by European conventions, would probably be actually reduced in price so that the general average price on everything would not be possibly much different from what it is to-day, under normal conditions. Then again, there is the question of the so-called "Anti-dumping Clause," referring to the fact that it has been the habit of European manufacturers to sell in this country colors which were made here, at lower prices than they sold them in other countries, so as to prevent their development here, while at the same time they held prices at good figures on colors which are not made here, and so averaged up their profits. I am glad to say that some legislation against these proceedings is favorably considered by the present Administration, and no doubt some law will be passed which will prohibit this so-called dumping in the future.

In view of the emphasis I have placed on the necessity of tariff legislation, it may interest you to know what I have discovered in my interviews with various administration officials, to get their ideas on the subject.

The Government's Attitude.

Mr. Redfield's Interest.Some months ago, Secretary Lane of the Interior Department, called a meeting of the various chemical manufacturers, to get their ideas as to the situation, and what was to be done about it, and at that meeting what little I said was to the same effect as what I am now saying, viz., the necessity of tariff action. Mr. Lane made the observation that if this were done it would create in this country a great monopoly or trust and he did not think it would be advisable, but as a matter of fact the lack of this legislation has simply resulted in a great trust or monopoly in Germany, so I could not see where there could be any reason in this point. Such legislation would not necessarily create a monopoly here, as any one would be open to go into the business; the only point being that it would put us on equal terms with foreign competition, and this is the only result desired not monopoly. Mr. Lane further said, however, that the matter would probably be put in the hands of the Department of Commerce, which eventually it was. Some time afterwards I called on Secretary Redfield of the Department of Commerce, and found that he was very sanguine of the ability of American manufacturers through their ingenuity and ability to create this business without help of a tariff, and instanced a number of new concerns who had started in the business since the war commenced, but as I knew most of these parties through previous inquiry, I told him they were not being established for the manufacture of colors, but simply for such intermediate products as aniline oil, carbolic acid, beta naphthol, and paranitranilin, which are more easily manufactured, and while they might be profitable under war conditions, could not possibly exist under normal conditions, which I believe is true. Mr. Redfield was very much interested in the matter, and said that his Department was doing everything possible to foster the development of the business in the United States, but could not say that he was in favor of higher tariff, as it was against his policy and against the policy of the present Administration, but that he was in favor of some antidumping legislation, which would prevent the selling in this country of European colors at lower prices than to other countries, and he thought something would be done in this line to prevent it in the future.

Dr. Norton Admits Some Colors Need Protection.Notwithstanding the fact, however, that the Administration, as represented by Secretaries Lane and Redfield, are apparently opposed to higher tariff, is the fact that in the meantime, in fact only a day or two ago, Dr. Thomas H. Norton, special representative of the Department of Commerce, gave his views on dyestuff tariff in the New York Sun and in the New York Herald of September 15th, admitting that in spite of the fact that he does not think the general line of colors need any more protection he does feel that some of them, like indigo, alizarine, and others which are on the free list, should have some protection to be successfully made here, and if he were to go a little more carefully into the matter would find that while thirty per cent duty on the ordinary aniline colors might be sufficient, if it were a clear protection, as a matter of fact the intermediate and raw products which are used in this manufacture, carry a duty of 10/15 per cent, so that the real protection on aniline colors is not half what it apparently is in the Bill. If it were possible to buy these raw materials made in the United States at approximately the same prices at which they can be bought in Germany, then the 30 per cent tariff would be more or less effective, but for reasons just mentioned, i. e., the duty on the intermediate products, it is not, and to show that this is a positive fact, without any theories, I would again call attention to the fact that since 1885 there have been practically no new color factories started in the United States, and the great business developed since that time all over the world, has been practically controlled by Germany. If these colors had been properly protected, as I have already said, then a large part at least of this great business would have stayed in the United States, and now that we have again a chance to get to a quick development through the present abnormal conditions, certainly we should not throw away another chance to become a great factor in the industry, and no longer dependent upon foreign countries for our supplies.

Mr. Schoellkopf's Comparison of German and American Color Manufacture. In the tariff pamphlet by Dr. Hesse already mentioned, there is a copy of a brief filed with the Congressional Committee, who were working on a new tariff in 1908. This brief is dated November 9th, 1908, and is a complete statement of the cost and operation of an aniline color plant designated to manufacture three million pounds annually. It was written and filed by Mr. J. F. Schoellkopf of the Schoellkopf, Hartford & Hanna Company, now called Schoellkopf Aniline & Chemical Works, and is confirmed and also signed by the Heller & Merz Company, one of the largest and oldest color manufacturers in the United States.

In Table A of this brief it is shown in detail that the cost of such a plant would be $104,000 in the United States and $70,000 in Germany, a difference of $34,000 in favor of Germany.

In Table B the number of employees needed to operate such a plant is given in detail, and shows that their wages would amount to $116,236 in the United States against $61,493 in Germany, again a difference in favor of Germany of $55,000.

In Table C, a list of the cost of the material required for running this factory to a three million pounds capacity is given, showing that the cost in the United States for these materials, which are given in detail, would be $443,000, while in Germany the same materials would cost only $317,000, a difference of $126,000 in favor of Germany.

In Table D is given the cost of producing the colors as a whole, adding together materials, fuel, labor, interest on investment, depreciation of plant, etc., the table amounting to $693,000 in the United States, where it would only cost in Germany $480,000, a difference of $212,000 in favor of Germany.

German Cost 44% Less than American.The net result as shown by these figures is that it actually costs 44 per cent less in Germany to make colors than it does in the United States, and while of course these figures are now somewhat old, I think this same difference would still be true at the present time.

Views of New Manufacturers.Take, however, the possibility that the present manufacturers are not correct in their statements as to this increase of duty being necessary, let us take the opinion of two possible new manufacturers; for instance, Mr. Thomas A. Edison, who when the war started found that he could no longer get the large amount of carbolic acid which he consumed, and which was formerly furnished from Europe, and he promptly started to manufacture it himself, first making an arrangement with a large steel works for the benzole to make it from. In making the carbolic acid he also decided to produce aniline oil, and has been a producer of these products for some time. It was rumored at that time that he also intended to take up the manufacture of aniline colors, and this same rumor has been repeated in the public press in the last few days. Now, in an interview with him, published in a recent edition of the Journal of Commerce, he is quoted as saying that we can only become independent of Germany in the dyestuff industry if Congress will allow a moderate tariff, confirming the opinion of older manufacturers, and showing that after looking into the matter he was convinced that colors or coal tar products could not be manufactured successfully here in competition with Europe unless they had the proper protection.

Then the Pearsite Company of Cannel, Kentucky, who have lately been extolled as having a marvelous new process for manufacturing aniline colors by which they could manufacture them cheaper than the Germans, and would soon control the entire consumption of the United States, gave an interview in the New York Times of September 9th, by Colonel H. P. Bope, who is their President and also VicePresident of the Carnegie Steel Company. Mr. Bope states in answer to a question as to whether their company could continue to compete with Europeans under normal conditions, that he believed that the men in charge of affairs at Washington would readily see the necessity for, and would give them the protection in tariffs that comes to all American industries, so you will see that Colonel Bope's mind was also running on the line of protection in spite of the fact that the supposed new method of manufacture would entirely alter the whole situation.

What the Department of Commerce is Doung.Now, to come back to what the Government, through the Department of Commerce, are trying to do to help the production of dyestuffs in the United States, aside from any question of tariff, and we find that while they are working  diligently to do what they can, they are starting from an entirely wrong point of view in that instead of trying to help the present manufacturers in the way for instance of securing them very much needed raw material, and other helps to their production, they seem to be paying more attention to possible new productions, and to the claims of people who think they have wonderful new methods for producing dyestuffs, which will render us independent of Europe for all time.

The first reports sent out by the Department were to the effect that many new concerns were entering the field, which I have already mentioned in the account of my interview with Mr. Redfield, but it turned out that these concerns were not intending to make aniline colors, but only intermediate products.

Then the next reports of any interest were to the effect that they were working on agreement with the Swiss manufacturers whereby we were to send over to that country raw materials, and the Swiss manufacturers were to make them up into colors and return them to us. That this arrangement has failed of any result is very natural, because the United States did not have the raw material to send, in fact, its own manufacturers could not get enough for their own wants, and if there had been any raw materials available, it would have been much better for us to have given them to American factories instead of sending them to Switzerland. My own firm has recently had correspondence with Swiss manufacturers relative to furnishing them such articles as benzole, aniline oil, acetate of lime, and oleum (which is sulphuric acid), stating they were unable to obtain supplies abroad, and we were obliged to write them that we could not get supplies ourselves, therefore could not send them anything from here. Aniline oil and oleum are out of the question owing to the immense demand for them from American consumers, and benzole is practically barred because of its extreme high price, and the enormous transportation charges for carrying it to Switzerland, which brought the total up to more than they are willing to pay.

New Method of Manufacture Announced.The next what we might call important or interesting news given out by the Department of Commerce was an announcement in the New York Times of September 4th, in which it was stated in an interview with Dr. Norton, special agent for the Department in New York, that an American had solved our dye problem, in that he had invented a new process for manufacturing colors which was much cheaper than the old process, and which would allow his factory to revolutionize the business in the way of costs and production, and that production might begin within two weeks, with a possible production of five tons per day, or 35,000,000 pounds per year the total consumption of the United States, by the way, being about thirty million. The name of the concern who were to make these new colors was not given, but the next day in the Times edition of September 5th, it was stated that the firm who would manufacture colors by the new process was the Pearsite Company, who had erected large works at Cannel, Kentucky, and again repeated, with Dr. Norton's approval, that it would be ready to produce dyes in a few weeks, again mentioning five tons daily as its probable production, and further interviews with Dr. Norton on the subject were continued for several days, all to the effect that these new colors would be in the market in a few weeks in the quantities mentioned and would revolutionize th dyestuff conditions of the United States, and relieve consumers from the present shortage. I immediately received letters from all parts of the United States, asking if we knew anything about the process and if it were true that colors could be had from this new company in so short a time, to which I replied that I did not know anything about it, except the newspaper reports, but that I doubted if it were possible for such a marvelous change to take place so quickly. Later, however," I have been in communication with parties who have actually had dyed samples and tried out the new colors, but instead of having an unlimited line of complicated colors such as are required by the United States consumers, some nine hundred in all, and which would be needed, a good many of them, to relieve the present shortage, the new company really only had five colors to begin with, this being also confirmed by an article in the New York Times of September 15th, stating that this would be the number of colors to be produced and giving the names of the new selling agents for these colors. The point to this matter is simply that instead of a marvelous new discovery which would alter the present conditions and relieve the present shortage of colors, as announced by the Department of Commerce through Dr. Norton, we simply have an experimental proposition which will not relieve the situation to any particular extent. I do not question but that this Pearsite Company may have some method of making colors which will produce colors, but I do say that it is impossible for them to have a method which would enable them to make all of the complicated colors consumed in this country and which are made not only from their base benzole but many other raw materials which are combined with coal tar products, but which are not related to them at all, and which they could not possibly manufacture from a coal tar process alone. Department of Commerce Should Not Send Out Misleading Reports.I do not believe that the Department of Commerce should allow such exaggerated statements to appear in the public press through their intervention, as it simply results in great disappointment to American consumers, who were hopeful that something had been found at last to supply their wants.

Mr. Redfield now says in an article in the New York Sun of September 16th that "home dyes will be plenty soon," which if one did not know the conditions would again build up the hopes of consumers, while unfortunately there is no immediate relief in sight, and it must be months before a full quantity of dyestuffs can be obtained, even after the war is over. American consumers must understand this and take it into their calculations in figuring on their future production, and such statements should not be sent out by the Department of Commerce.

What Has Actually Been Accomplished By American Manufacturers.Up to the present time I have mentioned the cause of the present shortage, the reason for and hope for a development in the manufacture of colors in America through tariff corrections on the part of the Government, and the attempt on the part of the Department of Commerce to create a new supply through other than ordinary methods, which, however, up to date has failed to produce anything of importance, so now I will tell you what actually has been accomplished by American manufacturers to increase the production of American products in the United States, and those who have aided in this development are firms who will continue in business after the war is over no matter what the conditions may be, even though they may have to do so at little or no profit unless they have some help from the Government. I am glad to say, however, that the development of the coal tar product business in this country will continue to a large extent, irrespective of what the tariff decision may be, but the development will not be anything like as large if the tariff is not corrected as it would be if it were.

ANILINE COLORS: There were five factories actually engaged in the manufacture of these products before the war, the names and locations being as follows:

Schoellkopf Aniline & Chemical Works, Inc., Buffalo (National Aniline & Chemical Co. selling agents)
The Hudson River Aniline Color Works, Albany (Bayer Co. selling agents).
Heller & Merz Co., Newark, N. J.
Central Dyestuff & Chemical Co., Newark, N. J.
W. Beckers Aniline & Chemical Works, Brooklyn.

When the war started, and the shortage of foreign goods became apparent, these firms were overwhelmed with orders from American consumers for supplies. For reasons which I have already mentioned, viz., their inability to get raw material from Europe, they were not able in the beginning to increase their production, and were compelled to use only the raw material which they had on hand, and when this was exhausted had to give up some colors entirely. In the meantime, however, some of them have commenced to manufacture these intermediate products, and the rest will undoubtedly do so as quickly as possible. Although I cannot speak specifically for any other factory, I can say that our own factory, Schoellkopf Aniline & Chemical Works of Buffalo, by the 1st of January will be making largely its own raw material, and this, together with what raw material we can get from other manufacturers, has enabled us to insure ourselves of a supply of raw material, so that we have increased our regular aniline products to the extent that by the 1st of January we will be producing something like 800,000 to a million pounds monthly, or say ten million pounds annually, which is about four times our former production. While, as I have just said, I cannot speak specifically for other factories, I have no doubt they are making equal improvements, and will show equal increase in production in the course of time.

It is my opinion that an immediate development in the aniline color business in this country will depend entirely on these five original makers, as they are all equipped with capable and experienced men who are able to direct much larger production than they are now getting, and to manufacture successfully, which is a great advantage they have over new factories which may enter the field, who have not the experienced and necessary scientific help to develop the business quickly, and these factories, while having no connection one with another and no conventions nor understandings of any kind, are a unit in declaring that they must have additional protection in order to develop their business to an extent which would take care of the consumption of the United States.

Other large corporations like the E. I. du Pont de Nemours Powder Company, the General Chemical Company, and Thomas A. Edison, have been recently mentioned as about to enter the manufacture of aniline colors, but I question if they have any intention of doing so in the immediate future, as their present business is so large and the demands upon them so severe, that they will hardly 140

be able to entertain taking up new lines in the near future, another difficulty being the inability of any of us or them to secure at present enough raw materials to manufacture even the amount of colors we could manufacture if raw materials were plentiful. For instance, one article, oleum, which is a concentrated sulphuric acid, and which enters largely into the manufacture of colors, is almost unobtainable owing to the enormous increase in its demand, due to -present war conditions, which require large quantities of it for explosive purposes, and unless sufficient quantities of it could be secured the deevlopment of the manufacture of colors could not be carried on by anybody. Of course the present aniline works have arranged for their supply of this product now, in advance, so have enough in sight to enlarge their production to the extent which I have mentioned, but for a new concern to start in at this time, I think it would be impossible for them to get this, as well as other raw material, which is absolutely necessary, and for this reason, as I said before, I think it rests with the original five color makers to develop the business for the relief of consumers, and while other concerns like those mentioned may enter the field later, it certainly will not be in time to improve matters much for a year at least. Two other concerns have been mentioned prominently in the papers of late in connection with the actual manufacture of aniline colors, as distinct from those mentioned as manufacturers of intermediates, both concerns claiming to have new methods which are different from the methods used by the older manufacturers in their production. One of them is the Pearsite Company, mentioned before, and the other is the American Co-operative Dye & Chemical Co., Bangor, Pa., who claim to have a new method for making a hosiery black, and some other colors of similar nature, and which is now in the course of formation. These two companies, however, are not known to the trade as manufacturers of colors, and the success of their new methods is therefore more or less problematical, and the future only will show whether or not they will be successful in their lines.

ANILINE OIL -  Until about three years before the war, this very important product for the manufacture of aniline colors, and for producing blacks directly through oxidation in dye houses, was not made in the United States, and was furnished almost exclusively by Germany and England, being in the hands of a convention which controlled the price and conditions. About four years ago the manufacture of this product was commenced on a fairly large scale by the Benzole Products Company, now at Marcus Hook, Pa., whose sales agents are the General Chemical Company, who began with a production of about 1,000 tons, the whole annual consumption of the country at that time, by the way, being about 4,000 tons. This Benzole Products Company did not make much progress financially, owing to the fact that even when a tariff of 10 per cent was placed on this product, the foreign convention immediately reduced their price accordingly, that is, assumed this duty and still sold to their consumers here at the regular prices, and such prices did not leave the Benzole Company any profit, for they could not manufacture as cheaply as the Europeans were willing to sell for. At the beginning of the war, however, the imports from Europe stopped suddenly, and the demand for aniline oil became very acute. The Benzole Company immediately took the situation in hand and arranged to increase their production as quickly as possible, and have recently completed their new factory, so that they have increased their production very materially, and eventually will reach about 5,000 tons, which will be more than the entire consumption of the country under normal conditions, although the consumption will be increased very largely by the probable development in the manufacture of aniline colors, which is the largest use.

This is the concern I have mentioned as having been so fair in making contracts with their customers, that those who have bought from them have not had to pay the exorbitant prices asked by outsiders, and it is to their great credit therefore, for working directly for the benefit of American consumers, without the possible abnormal profit which they might have secured had they wished to take a different position.

In addition to the Benzole Products Company, there have a number of firms started up since the war to manufacture aniline oil, and some of these new factories have already started to deliver, but even at that the total production is not yet large enough to supply the demand. But the point is that in the end enough aniline oil will be manufactured in America to supply the demands of all consumers, so that if properly protected by tariff it will make this country independent of Europe for its supply of this product.

BENZOLE - This is the basis product for the manufacture of aniline colors and products, being used, however, largely for other purposes as well as for explosives. Before the present war, the normal production in the United States was about three million gallons. Since the war, owing to its suddenly increased demand, many steel companies and other similar industries who could recover benzole from their other operations, immediately began to do so, so that now it is estimated that the production of benzole for 1916 will be upwards of fifteen million gallons, or about five times the original production. Owing to the enormous demand for it from explosive manufacturers, and for export to other countries, the supply in this country, in spite of the increase, remains insufficient, and very high prices are asked. But the important point is that this large production is now assured, and whenever the foreign demand ceases and the demand for explosives ceases, the United States will have ample production of benzole from which to build up her other industries which depend upon it; for instance the manufacture of aniline colors and other similar products, and inevitably in view of the large supply the prices should not be any higher than those paid by foreign manufacturers for the same product.

CARBOLIC ACID - This is an article which has a large consumption in the United States, some eight to ten million pounds per annum, but which before the war was not manufactured here to any extent because American manufacturers could not compete with the German and English. Since the war, however, many plants have been put in and practically all that is consumed here at present is manufactured in this country, Thomas A. Edison alone, who was an enormous buyer before the war, now manufacturing 12,000 pounds daily according to his interview given in the Journal of Commerce of July 30th, most of which, however, he requires in his own works, and does not have much for resale. Other manufacturers are making it mostly for the making of picric acid for export, but after this demand for picric is over, then the manufacturers of carbolic acid will continue here in large quantities for domestic consumption, and the country should then be independent of Europe for its supply. This is another article which is also used in the manufacture of aniline colors, and will help their development.

INDIGO - There is now being built in Charleston, W. Va., a factory for the ostensible purpose of manufacturing caustic soda and chlorine products. It is, however, being built and controlled by a firm who are agents for one of the largest indigo manufacturers in Europe, and who, I am informed, have all arrangements made to make indigo if it can be done success fuly here, which it can in every way, except possibly not as cheaply as in Europe. With a proper protective tariff, however, this plant could be fully completed for the manufacture of indigo, and surely it would be a great relief to American consumers who use about one million and a quarter dollars' worth annually, to have a plant in this country from which they could draw their supplies, and be assured of them in the future.

INTERMEDIATE PRODUCTS - These products were practically all imported from Europe prior to the war, but since the war factories have been started for their manufacture, so are now produced in this country such articles as beta naphthol, paranitranilin, diphenylamin, dimethyl-anilin, H.-acid, benzidin, chlor-benzole, and some others, with more to come, all of which being used particularly by the aniline color manufacturers, although incidentally in some other lines. So again, if these new factories are protected by sufficient tariff, the manufacture will go on successfully, and we will again be independent of Europe for our supplies.

NAPHTHALINE - This is another coal tar product which has increased very largely by reason of the present conditions. Before the war the production in this country was about two and a half million pounds, while now it has increased to something like seven million, perhaps more; the normal consumption being about nine million pounds, and the difference between what was produced in America and the total was obtained from England and Germany, which hereafter they should be practically unable to ship over here by reason of the new large production here, and which should be sold in normal times at as low prices as could be sold by Germany and England. This is also a very important intermediate product for the manufacture of aniline colors, and again a help in this production.

SULPHUR BLACK - This is a color used largely for hosiery and cotton purposes, and which never before was manufactured successfuly in this country, or rather could not be manufactured cheaply enough to compete with European products. The probable consumption of it is four or five million pounds annually. Since the war our own concern have taken up the manufacture of this color successfully, and are now furnishing the goods to consumers, and are rapidly increasing our production so that we will probably produce two million pounds over 1916, all of which is practically sold on contract. Two other manufacturers have also taken up its manufacture, and are making contracts over the same period, so that it is probable that in 1916 the total amount of sulphur black manufactured in the United States will equal the former import from Europe, and with a proper protection in the tariff this large volume of business could be retained in the United States against all foreign competition.

You will see from the above that there is something actually being done in the United States in the development of coal tar and allied products, and no matter what happens in the future a large increase in this production will be assured, but I must repeat once more that if it is to be developed to the extent of supplying the whole amount of dyestuffs needed in the country which have heretofore been imported, it must have help from the Government in the way of an increased tariff, and the help of every consumer should therefore be given to bring about this very desirable result.

I wish to impress upon you in connection with the above list of what has been done, that on many of the products we are already producing in this country the normal consumption of the country, and this production will be kept up if properly protected. A notable exception to this statement, however, is aniline colors, which are so badly needed, but which owing to their variety and the complicated formulae and range of raw material necessary to make them, as well as the large amount of capital necessary to manufacture them in a large way, have not been developed to the full quantity needed, but even with these disadvantages, my remarks show that all of the five factories mentioned are making every preparation for development to the best of their ability, and I believe in spite of the difficulties against them, that by January 1st, 1916, when they will all commence to get the benefit of their new installation and increase, they will be producing anywhere from three to four times their former production, which is a very important increase in itself. What American Manufacturers Can Do.I make bold to say further that if these factories were assured of protection, they would increase their productions still further and to such an extent that within a year they could furnish the entire amount of color required by American consumers, and so relieve them once and for all of their dependence upon European manufacturers. When I make this statement, I do not mean that they can make every color which has been imported in so short a time, as there are a number of specialties which have some particular advantages in application, fastness, or something of that sort, and require a special raw material, which they would not be able to take up so quickly, and again there are a few colors which are still patented. But what I do mean to say is that they could make the colors necessary to furnish consumers every quantity and every shade which might be required, that is, give them something which they could use in place of the specialties already mentioned, the latter being what we might call luxuries and dispensable until such time as they could again be resurrected, or again imported from Europe, as there can be no question but that some colors would probably always be imported no matter what the American manufacturers are able to do.

Such an assurance of protection would also probably mean the establishment of branch factories in this country of the European factories, as they would not want to lose their business over here, but the establishment over here of such factories would be welcomed by American factories, because they would then have to work under the same conditions that we do, and would not have any advantage in the cost of manufacture. Again, this assurance of protection would probably stimulate the starting of new American companies who would then be willing to advance the capital necessary, and take a chance of being successful. So that even if the five original factories mentioned could not live up to the statements I have made as to their ability, they would undoubtedly have lots of new help, and the result would be ultimately the same, viz., the manufacturing in this country of all colors which are needed for its consumption.

A New Suggestion for the Government to Consider.In closing, I might say, however, that there is one thing A New which might be done in lieu of an increased tariff protection and which has been suggested before in different forms,  but which is so reasonable and simple that I do not suppose it will be considered by our political leaders and parties, and that is, the establishment by the United States of a factory or factories for the manufacture of the intermediate coal tar products needed by the color manufacturers, and an arrangement to sell same to them at the same prices which are paid by the German manufacturers even though there might be no profit or even a possible loss to the Government in doing so. In addition to this great relief to American color makers, the Government, however, would have the greater purpose in mind of having plants already established capable of manufacturing ammunition in case of war; the point being that the raw materials used by color makers are very much the same as those used in the manufacture of various kinds of ammunition and explosives, and certainly such a factory or series of factories would be a very valuable asset for the Government. I believe it is true that other governments take an interest in and control to some extent their natural resources, for instance Germany is interested in her potash and coal fields, Japan in her production of camphor and menthol, and other governments in other products, therefore it is not out of reason that the United States Government should take a parental interest in its great benzole production, and the use of same for such purposes as the manufacture of aniline dyes for its American consumers, and the manufacture of explosives for its own protection should it become necessary. Certainly such a matter is well worth considering by our Administration, if it is impossible to secure added tariff protection on the lines mentioned so many times in this address.

I thank you for your attention.