Business: Nitrates

Before the War, Germany imported each year from Chile about $41,000,000 worth of nitrate of soda, valuable in times of peace as plant food, invaluable in time of war as the base of all explosives. When the War began, and the allied blockade raised a wall between the Chilean nitrate fields and the German munitions plants, the stocks on hand in Germany were worth $30,000,000. Without this, the War would have ended within a few months. With it, the greatest care had to be used lest the supply give out too soon. Savior of the situation at this critical time was the great scientist Fritz Haber, who made practical the extraction, on a large scale, of nitrogen from the air. Thus began the commercial production of synthetic nitrogen. After the War, another German scientist, Carl Bosch, adapted the process to peacetime uses, and became chief of Europe’s largest corporation, the I. G. Farbenindustrie. Now Germany im ports no nitrate from Chile, but exports each year about $50,000,000 worth of synthetic nitrogen. This was a notable triumph for science; it provided a valuable stimulus to the German post-War recovery; but for Chile it was disastrous. Backbone of the Chilean budget is the export tax on nitrates. Frantically, the producers association played with price-fixing, abandoned it, watched the synthetic competition mount, in Germany, in the U. S., until in 1929 Chile provided only 25% of the world production of all forms of nitrates. A new threat loomed at Hopewell, Va., where Allied Chemical & Dye Corp. has built a vast nitrogen fixation plant which might in time outstrip even the I. G. Farben. The industry was overproduced. A long monopoly had been broken; the effects were manifest throughout the entire structure of Chilean economics. Last week, in Paris, form was given to the most recent, most ambitious, of all efforts to remedy this desperate situation. There was projected a $375,000,000 holding company to be controlled by the Chilean Government and the Chilean producers. The export tax will be abolished, the Government will be recompensed by the new company. New fields will be opened; the price will be sharply dropped, perhaps by as much as $10 off the current price of $42 a ton. Conceivably, a price agreement will be reached with I. G. Farben. Guggenheims. While one great U. S. nitrogen power—Allied Chemical & Dye Corp.—will not take part in this effort at world rationalization, another U. S. group is vitally concerned. A huge investment in Chilean nitrates, amounting to perhaps 35% of the industry, is credited to the Brothers Guggenheim. Of their two companies, the Anglo-Chilean Consolidated is the larger, its Maria Elena works alone having a 600,000-ton capacity. In the new holding company, some persons now see the Guggenheim interest dominant. Thus from the offices of Guggenheim Bros., at No. 120 Broadway, may come direction of the last battle to save Chile’s nitrate industry. No one Guggenheim brother is likely to be sole field general in the battle. Seven sons had old Meyer Guggenheim, the founder of the house, and four still share one common office, sometimes called the world’s copper capital. Here is the venerable Simon, now president of American Smelting & Refining Co.; Daniel, the philanthropist; Murry, the shrewdest financial mind of the four and an expert on copper prices; Solomon, sportsman, cosmopolite, a specialist in metallurgical processes. Together, they direct their vast copper properties which include Kennecott, Utah, Nevada. Consolidated and many another. Once a week the four brothers gather and discuss the business in hand; no major step can be taken unless all four agree.