The Present and Future of the Dyestuff Situation in the United States

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
1917Being an Article Written for "Cotton," Appearing in Issue of September, 1916

I. F. Stone

I. F. Stone, president of the National Aniline & Chemical Company, of New York, in speaking of the present situation of dyestuffs in this country, said: "It will, perhaps, be interesting to start by comparing this situation with the situation one year ago.

"At this time last year, 1915, practically no shipments had been received from Germany or other European countries since early in the spring, and American agents for these factories were practically sold out of their stocks. No American factory had had time to increase its production by the erection of new buildings, etc., therefore the situation became very strenuous, and it was practically impossible to secure a sufficient supply of any color. Prices naturally advanced to almost prohibitive figures, that is, the consumers or dealers who had a stock of colors would only sell them because of the extremely high price they might get; one color, for instance (sulphur black), being sold in considerable quantities at as high as $3 per pound as compared with a normal price of about 20 cents per pound."

In discussing the beginning of the clearing up of the situation, as far as supplies are concerned, I am compelled to speak particularly, and without prejudice to other fac-" tories, of our works, the Schoellkopf Aniline & Chemical Works, Inc., for whom the National Aniline & Chemical Company are selling agents, as they were the first to begin to relieve the situation. This factory was established in 1879 by two brothers, J. F. Schoellkopf and C. P. Hugo Schoellkopf, and has been run continuously since that time by these gentlemen. They, therefore, have the benefit of some thirty-six years of continued experience in the manufacture of aniline products, and as a consequence our factory is the oldest and largest of the American factories.

"Our factory was making, in addition to those colors which were made by other American factories, a good line of direct cotton colors, which were very much in demand. On direct black, for instance, we had a possible production of about one-quarter of the estimated annual consumption; the other three-quarters being furnished by German and other European factories. Our production was immediately available for consumption, and did a great deal to relieve the situation as far as direct black was concerned. This was also true of other colors, although the quantities were not so large. It was our opinion that the war would extend over a considerable period of time, and we therefore made arrangements to increase production largely, as soon as possible. By the end of the year we had new factories in operation, which gave us a large increase over our ordinary production, and for this increased production we made contracts over this year, 1916, and consumers who made such contracts have been taken care of practically to the full extent of their contracts. Our increase for one color alone, for instance, the direct black already spoken of, was about four times the original production for this year and other colors in proportion. In addition to being a direct dyeing color for cotton, and mixed goods, it was found that by treating it with formaldehyde solution, it made a nice fast black on hosiery, and therefore replaced very satisfactorily the developed and other aniline blacks formerly used for this purpose.

"Fortunately it happened that our Dr. J. F. Schoellkopf, Jr., who had finished his education in German universities, and given particular attention to the chemical industry, had been working on sulphur blacks and has been so successful that about November 1st, 1915, we were producing and delivering to consumers considerable quantities of this color. Thus we were the first, and are now the largest producers of this color in America

"This sulphur black together with the direct black already mentioned, were of particular benefit to cotton and hosiery mills, where they were largely used, and those who had contracts with us have been able to run full this year on material on which they used these colors.

"Being an American industry, it was our policy to place contracts for raw and intermediate materials, as far as we could, with other American factories, even though we paid a higher price than we could have secured from Europe. The fortunate result of this policy was that after the war commenced and the importation of aniline oil and other intermediate products stopped, we continued to have our regular supply and were consequently able to produce our regular quantities of the colors which we made from these American intermediate products, and being, I think, the only factory who had placed its contracts with American factories, were the only ones who were able to run regularly through the strenuous year of 1915. We could not, of course, increase our production until we had new buildings, new installations and increased quantities of raw materials, the factories making these materials having also arranged to increase their facilities in the meantime.

"We did, however, make one mistake in making our prices for 1916 contracts and that was we did not look forward to the enormous increase in the cost of raw material such as benzole and like products, which resulted to us in a far higher cost on our additional quantity of raw material than we had figured upon, consequently it increased our cost of production of colors much more than we expected. We have, however, filled all of our contracts at contract prices, without making any attempt to advance, but for 1917, in order to cover ourselves on this increased cost of raw material, new buildings, installations, etc., we were compelled to advance prices over the 1916 prices, so that by the end of the year we would have profit enough to cover the cost of the increase in raw materials, buildings, etc.

"The extent of the increase in production will be at once understood when I say that we will have spent in the near future several millions of dollars for this purpose, which in addition to the capital or money employed in our old factories, gives us a large investment and makes us compare favorably with some of the European factories in size and production.

"In addition to our own factory before the war, there were four other factories who made a limited line of aniline colors and these factories also largely extended their production and increased their facilities in much the same way as we have, although not, I think, on anything like so large a scale. Two of these factories, however, are controlled by German factories, one of them being owned outright by a large German factory and the other, since the war, having sold its control to the representative of another large German factory, so that the increase in production of these two factories is more or less restricted to such colors as will not compete with their German principals. Therefore the bulk of the trade is really in the hands of the three other factories who are entirely independent of foreign concerns, and are financed entirely by American capital and American facilities. These three factories, particularly, are doing the most to relieve and clear up the situation, and in 1917 will be able to produce enough staple colors to take care of the demand, if the consumers are careful enough to make contracts for their supplies at this time, so that these factories can be prepared with the necessary installations and raw materials to make the colors for which they accept contracts. Speaking for our own factory, we are willing to increase our facilities to practically any extent as long as consumers will support us by making contracts.

"The German factories in years gone by have made large amounts of money on their products, and as a consequence their factories have been charged off from these profits so that their capital stock as a rule does not represent more than one-quarter of the amount of capital employed in their operations, and this is one reason why they are able to pay the large dividends which they have been paying, viz., 20 to 30 per cent annually, even though in America particularly they cut the prices to almost no profit in order to prevent the increase in American production. This is now what the American factories are trying to do, viz., using all their profits for the erection of their new factories and if possible have them paid for by the end of the war and so be on the same basis as the German factories, and overcome this heretofore insurmountable advantage. Some of the German factories also have the advantage of a large profit on the manufacture of pharmaceutical products, which line has so far not been taken up by American factories, although it may be later on, and this is another reason why the Germans were able to make such low prices on colors; in other words, they made up in profits on pharmaceutical products what they did not make on colors.

"In saying as I have that the American factories will be able to take care of the whole demand of American consumers, I do not mean to say that they will make every color which has hitherto been furnished by European factories, but that they will make a staple line of colors which will enable any consumer to produce a line of shades to answer all reasonable requirements. For the colors which are not made in this country, what I might call the luxury colors, that is, colors not actually necessary but very useful, it is possible that the new submarine service which the Germans are trying to establish with submarine boats like the 'Deutschland' will be able to furnish this country with enough of such colors to provide the special shades and requirements which may not be furnished by American factories, but this is not so necessary as it is desirable, that is, it is not actually needed but would be very welcome in addition to those colors which are made here.

"I have spoken so far only of five factories which were actually in operation before the war, and which went through all of the intense competition with the European factories prior to that time, because I believe that these factories are entitled to the first support of American consumers, rather than the newer factories which have been started since the war. When the war is over, some of these newer factories will not be able to stand the competition which will naturally ensue.

"Aside from the manufacture of aniline and sulphur colors, there have been quite a number of new factories established for the manufacture of what we call intermediate products, such as aniline oil, beta naphthol, paranitranilin, etc., some of these manufacturers being very responsible and whose business will be continued in spite of European competition after the war is over, if conditions are favorable, that is if they have proper tariff protection and other Government support. This is particularly true of aniline oil, which is now manufactured largely here, and it is doubtful if it will ever again be imported in any important quantity.

"In my opinion, if the Senate will increase the protection on aniline products in the new tariff bill (H. R. 16763) recently passed by the House of Representatives, giving them in addition to the present 30 per cent ad valorem on aniline colors, 5 cents per pound specific duty, and in addition to the ad valorem duty of 15 per cent on intermediate and raw products, 2^ cents per pound specific duty to 7^2 cents per pound specific duty on aniline colors and 3J4 cents per pound on intermediate products, in addition to the present ad valorem duty, these being the duties suggested by the committee appointed by the American Chemical Society, New York Section, in their report of November 6, 1914 (of which committee I was a member), after a most careful investigation of the situation, together with the anti-dumping clause which will prevent European manufacturers from selling their products here in this country at lower prices than they do at home in order to prevent the American production and also the increase in their production owing to the present war conditions the American factories will, in the future, be in a position to compete with the European factories on more or less of an even basis, and the German monopoly of this business, so long enjoyed by them, will be restricted to special colors on which they have patents or some particular advantage in the manufacture which cannot be had here. The American manufacturers will be able therefore to hold the bulk of the trade on staple colors and products which they are now manufacturing.

"The result to American consumers will be very advantageous as they will then be able to buy their colors at a staple and more average uniform price than heretofore, as it has been the custom of the German factories to get high prices on such colors as could not be produced here, while on the colors which were produced here, or could be produced here, they made prices which were out of all reason in proportion to what they sold them for in other countries; in other words, they sold at much less in this country than they should have in order to prevent American competition. Their average price, however, figuring the special and staple colors together as a whole, will be in my opinion higher than the average price of American colors, so the manufacture in America will be a great advantage to the public in general.

"With regard to the present high prices for American products, I would say this is due entirely to the high cost of raw materials, starting with benzole and its derivatives and continuing through acids and other various chemicals used for the manufacture of colors and other finished products, the high cost being caused by their demand for explosives and other war purposes. As soon as the war demand is over, the large production, which has been continuously increased to answer this demand, will be available for commercial purposes, and conditions will then become more normal, and the prices will be reduced, and consequently the prices for colors and other aniline products made from them will be correspondingly reduced.

"The definite answer to your question, therefore, is that the present condition of dyestuffs supplies is very satisfactory, and the future outlook still more satisfactory in that everything indicates that a large business will be in the hands of American manufacturers instead of in the hands of European manufacturers as has been the case prior to the present war."