In two other great branches of chemical industry, however, the Germans had attained not only the first place, but to all intents and purposes a world monopoly-that is to say, in the practical application of organic chemistry to the manufacture of dyestuffs and medicinals. Although the first coal-tar dye was made in England by an English chemist and the next important step in the development of the industry-the production of Fuchsine, or Magenta-was the work of a Frenchman, the Germans almost immediately advanced beyond the rest of the world in the development of this infinitely complex industry.

This complexity of the manufacture of dyestuffs as a business proposition is almost beyond belief. Tens of thousands of distinct dyes were produced in the German factories, and over 900 of these were actually sold in appreciable quantities, in the American market alone, before the war. Each of these nine hundred and odd products required a separate and distinct process of manufacture, one differing from the next, in many cases, as widely as if the products had been those of unrelated industries. While all these dyestuffs and a host of pharmaceuticals have a common source, in that they are derived originally from coal tar, they descend from this common ancestor by an enormous number of separate family lines. From the hundreds of distinct subtances found in coal tar 10 so-called crudes form the starting points of substantially all the processes which result in dyes. From these more than 300 so-called intermediates are produced by a variety of more or less complex chemical reactions. Most of these reactions require the use of large quantities of acids and other chemicals not produced from coal tar. From the intermediates thus obtained an infinite number of possible dyestuffs can be produced. Many thousand such dyestuffs have been actually produced and marketed.

In carrying out the processes which result in the extraction of the crudes from coal tar, the conversion of crudes into intermediates, and of intermediates into dyes, the quantities of each substance produced depend not upon the will of the manufacturer, but upon the inexorable laws of chemistry. The proportion of the various substances obtained can be varied slightly by skillful manipulation, but only to a small extent. The manufacturer can not avoid producing large quantities of certain materials in order to secure perhaps smaller quantities of others. Again, at the very starting point of the industry, in extracting the crudes from the original coal tar, an analogous situation arises. The tar's content of anthracene, from which the most valuable of all modern dyes are derived, are relatively small; that of naphthalene, for instance, is immensely larger. The tar distiller can not obtain anthracene without producing or wasting much greater quantities of naphthalene, benzol, and other crudes.

The same truth holds good in every subsequent step of the immensely complex processes of dye manufacture. At each step by-products are produced in addition to the products sought. The obvious result is that, unless the final product can be sold at a colossal price, uses or markets must be found for most of these innumerable byproducts. Many of them, fortunately, are useful in the manufacture of intermediates and dyes. Many have been found to have important medicinal effects and have taken permanent rank as pharmaceuticals. For others no use has been found, and the unavoidable production of these represents pure waste.

The most important feature, however, of this production of byproducts is the relation which it bears to the explosive industry. All the most important explosives of the present day are either coal-tar products or the result of chemical processes requiring the use of coaltar products. In a large dyestuff factory there is an unavoidable production of considerable quantities of substances which are directly available for conversion into explosives. A still more striking example is that of paramononitrotoluol. This in an intermediate necessarily made in quantities often beyond the needs of the dye makers. To the end of the last century many thousand tons of this substance had accumulated in the German dye works, which were making frantic efforts to find uses for it in dye making. About 1904 these efforts suddenly ceased. Trinitrotoluol (T. N. T.) had been adopted as a military explosive, and every pound of the accumulation was directly available for easy conversion into this most formidable of high explosives. Moreover, in addition to these by-products which can be used for manufacture of explosives, many of the materials which are not by-products but are directly useful for the production of dyes, can also, by slight alterations in the processes employed, be converted into explosives. For example, in the production of sulphur black, one of the most important black dyes, a slight variation in the final step of the long and complicated process of manufacture will transform the ultimate product into picric acid. More important still, the technical skill required for the manufacture of explosives is precisely that possessed by the chemical staff of a successful dye works and is to be found nowhere else.

Three things are apparent in regard to a business conducted under such conditions. One is that, unless limited to the manufacture of a very few carefully selected products, it must be carried out on a large scale with the aid of immense resources in the way of capital and technique. Another is that, if carried out on a large scale, one of its most important features will inevitably be the maintenance of large research laboratories to work out the infinite problems raised by the necessity of disposing of by-products. A third is that the connection with the explosive industry is so close that no Govern

ment which gave any serious consideration to the possibilities of war could fail to see the necessity of aiding and controlling the industry. The truth of each of these propositions was at once demonstrated in the history of the German dyestuff industry. From an early period, the manufacture became concentrated in a few important companies. These companies, ultimately six in number, developed into enormous establishments producing practically complete lines of dyes and manufacturing most of their own crudes and intermediates, as well as many of their acids and heavy chemicals. Several of these establishments also became large producers of pharmaceuticals in order to procure an outlet for their by-products. Outside of these very large houses, the industry was confined for the most part to small establishments producing only a limited number of carefully selected dyes, so chosen as to minimize the by-product difficulty, and so organized as to enable the owners to save most of the overhead expense by themselves furnishing the required technical skill and superintendence. These, indeed, were mostly little more than assembling plants. In the great establishments, the research laboratories became large and highly efficient institutions. In these laboratories hundreds of chemists were constantly employed. Their facilities were placed at the disposal of research chemists from universitiesoften men who had no connection with the dye industry whatever. Many of the manufacturers' own chemists were allowed and encouraged to proceed with researches which had no probable immediate commercial utility, but which tended to increase the existing supply of knowledge in those general regions of the world of organic chemistry in which the dyestuff concerns were operating. The result of all this inevitably was the accumulation of an immense mass of scientific data which usually afforded a quick and easy solution to each industrial problem as it arose. The results were sometimes startling. The most striking instance, perhaps, is the case of the Pfleger patent. The invention covered by this patent solved, by the use of sodium amide, of which an overproduction was available, the problem of producing indigo direct from aniline, and thus afforded a process far simpler than and at least as cheap as any theretofore known. As an instance of how closely such matters are followed by the German public, it may be noted that the announcement of the purchase of this patent by the great Hoechst works, one of the largest German dye manufacturers, advanced the company's stock 150 points on the stock exchange in a single day. The importance of this research branch of the industry is thus hard to overestimate. Finally, the connection with the explosives industry resulted, as is well known in constant governmental assistance to and control of the dye industry. Much was done by the German Government to insure the prosperity of the dye industry and its immediate convertibility to the production of munitions.

These conditions soon produced in the dye industry certain results similar to those which occurred in all the other important German industries during the great period of expansion at the end of the nineteenth century. The improvements in processes brought about by research laid heavy emphasis on the value of quantity production. Quantity production, carried on by competing houses, led to overproduction. Overproduction led to a determined effort to establish and maintain a large export trade. The natural advantages of the German industry, as compared to the industry in other countries, prevented serious competition in Germany itself. The Government's tariff and other policies enabled home prices to be kept up. It was then evidently to the advantage of any manufacturer to produce far more than he could sell in the home market, even if his export trade had to be carried on at a loss, when by doing so he could use a process so economical that his profits on home trade would be largely increased. Accordingly, German dyestuffs began to appear in every country at prices which domestic manufacturers could not meet. The inevitable result was that in country after country the domestic manufacture was destroyed or stifled in its cradle. As soon as this had been accomplished, it was no longer necessary for the German exporters to sell at or below cost. Prices were immediately raised and handsome profits realized. The tendency to this result was recognized by the German Government from the first, and every facility was afforded to the growing export trade. It was fully realized by both the civil and military authorities that if a world monopoly in the dyestuff industry could be built up the military strength of Germany would be colossally enhanced, since it alone of all the great powers would then be in a position to secure immediate supplies of the vast quantities of munitions likely to be needed in a modern war.

The methods under which this dumping policy was conducted, and its extent, may be illustrated by a few specific instances. Most of these occurred in branches of the chemical industry other than the manufacture of dyes, for the simple and sufficient reason that in this country, at least, the dyestuff industry never reached a point where it required much discouragement. When, however, in 1910 the first determined effort was made in this country to establish the manufacture of an important intermediate, when, that is to say, the Benzol Products Co. was organized by a group of men interested in the heavy chemical industry, to manufacture aniline oil on a large scale, the German hand was immediately shown. The price of aniline oil at the time of the establishment of this company averaged 114 cents. As soon as its manufacture was fairly underway, the German exporters commenced to cut the price. Apparently, no definite prices were made by the Germans, but they adopted the

simple policy of offering any customer of the new concern supplies at less than the price he was paying. For example, one of their most important customers refused an advantageous contract at 84 cents, stating that he had assurance from the Germans that whatever price the Benzol Products Co. made would be met and bettered by them. Accordingly, the new company struggled on, conducting its operations without profit, and only because it was supported by a group of men of exceptional determination and insight was it able to survive until the war gave it an apportunity to establish its business on a firm foundation. Among other examples are the following: In 1903, there were in the United States five manufacturers of salicylic acid. By 1913, three of these had failed. Of the two survivors, one was the Heyden Chemical Co., a mere branch of a German house, which, as such, I have since taken over. During the latter part of the decade referred to, salicylic acid was selling in Germany at from 261 to 30 cents. During the same period, the German houses were selling it in this country after paying a duty of 5 cents, at 25 cents, or from 6 to 10 cents below what they were getting at home.

A similar situation developed in the manufacture of oxalic acid. In 1901, when there was no American manufacture, it was sold by the Germans at 6 cents. In 1903, when the works of the American Acid & Alkaii Co. were started, the price was immediately dropped to 4.7 cents, at about which figure it remained until 1907 when the American factory was shutdown for a number of months. During this shutdown period the price was instantly raised to 9 cents. When the factory reopened the price was again dropped until in 1908, when the company failed. It was then reorganized and in 1909 secured the imposition of a 2 cent duty on the acid, from which time up to the beginning of the war the price ran at about 7 cents a pound. The same process was carried on in regard to bicarbonate of potash. In 1900 there was no American manufacture and imports ran about 160,000 pounds. In 1901 American manufacture began. This succeeded so well that in 1906 imports had dropped to 45,000 pounds. At this time the American manufacturer's price was 6 cents, while the import value was given at 4.9 cents. In the following year the Germans made a determined and successful onslaught. Their import value was lowered to 2.2 cents with a result that, instead of 45,000 pounds, 310,000 pounds were imported. Accordingly, in 1908, the American manufacturer failed. The price was immediately raised to 7 cents and remained thereabouts thereafter until the war. Many similar instances might be cited, but these sufficiently indicate the method and its results.

This determined onslaught upon the competing industries of other countries, this definite attempt to secure world monopoly naturally