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PARAGRAPH 655CAUSTIC POTASH.

PARAGRAPH 654.

Plumbago. PARAGRAPH 655.

Potash, crude, or "black salts”; carbonate of potash, crude or refined; hydrate of, or caustic potash, not including refined in sticks or rolls; nitrate of potash or saltpeter, crude; sulphate of potash, crude or refined, and muri

ate of potash. See also W. H. Bower, p. 5873.

CAUSTIC POTASH.

TESTIMONY OF MR. C. C. SPEIDEN.

The witness was duly sworn by Mr. Harrison.

Mr. SPEIDEN. Mr. Chairman and gentlemen of the committee, you will permit me to say that my first rough statement on this subject was made as the result of a casual conversation. At that time I had no idea or intention of appearing before your committee. Some of the facts stated, however, came to the attention of several consumers of the goods in question, who suggested that I put before you further facts pertaining to the subject.

Mr. HARRISON. Now, Mr. Speiden, before you leave that subject, if you will allow me to interrogate you. You are to testify as to paragraph 655 of the present bill ?

Mr. SPEIDEN. Yes.
Mr. HARRISON. As to the articles, hydrate of potash-
Mr. SPEIDEN. Yes, and carbonate of potash.

Mr. HARRISON. Not including refined, in sticks or rolls. Is that correct?

Mr. SPEIDEN. Yes, sir; that is correct.

Mr. Harrison. Well, now, are you a member of the firm of Innis & Speiden?

Mr. SPEIDEN. Innis, Speiden & Co.; yes, sir.

Mr. HARRISON. And you are the author of a letter to the New York Evening Post concerning the imposition of a duty upon this article, a couple of weeks ago, are you not?

Mr. SPEIDEN. I plead guilty to that; yes, sir.
Mr. HARRISON. I understood that. I wish to elaborate a little on

I that. And in that letter you suggested that for years this article had been on the free list and had remained so until this Congress, yielding to the persuasions of a single American manufacturer of this article, had placed the duty upon it and intended to protect the manufacturer. Is that correct?

Mr. SPEIDEN. That was an inadvertent form of a part of statement.

Mr. HARRISON. Now, I understand you now that you wish to say that you were misinformed, and that you retract that statement ?

Mr. SPEIDEN. I certainly will, so far as it applies in that way.
Mr. HARRISON. Now please proceed.

Mr. SPEIDEN. One of the members of your committee also suggested that you would like to hear further facts concerning the subject.

Just how the real facts of any situation may be obscured by those seeking tariff favors was probably never better illustrated than in the

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PARAGRAPH 655—CAUSTIC POTASH. recent hearing before the Ways and Means Committee when the one and only manufacturer of caustic potash in America sought to have a duty placed upon this article. (All the arguments against a duty on caustic potash apply with equal or greater force to any duty on carbonate of potash, which is also largely used by the woolen, soap, and glass industries; also in some tobacco fertilizers potash is required in the form of carbonate.)

For over 20 years, under all tariffs. Republican and Democratic alike, caustic potash (also carbonate of potash) has been on the free list. It is used extensively in soap and woolen goods making (also in electroplating and fine chemical industries). It is made chiefly by electrolysis of the muriate of potash from the Stassfurt mineral potash deposits in Germany:

A few years ago an enthusiastic inventor, thinking he had discovered a process that would produce caustic potash economically, induced a large chemical firm to allow him to work out his theory in their laboratory, where it was clearly demonstrated that the process was neither practical nor economical, and the experienced chemical firm promptly dropped it. The persuasive inventor, however, had better success with some Wall Street promoters, who were induced to go into it on a manufacturing scale and in due course of time a small factory was installed at Niagara Falls.

This factory demonstrated in a larger and more conclusive way the unprofitableness of the undertaking, but the investment had been made and, as was only natural, the undertaking was kept alive in the hope that something might be done to extricate the unfortunate investors. Something was done, namely, debts were incurred-a very substantial one being that owed to the producer of the muriate of potash in Germany, who, to save himself, took over a controlling interest in the reorganized business, only to find that the advantage of ownership of raw material 4,000 miles away was not sufficient to offset other disadvantages inherent in the project itself.

It now became the turn of the new German owner to devise some method of extrication, and obviously that offered by a protective tariff appealed most strongly to him, since with sufficient protection he could make a profit on both his muriate of potash refined from the crude potash salts in Germany, and the caustic potash converted from this muriate here. Accordingly, at the recent hearing before the Ways and Means Committee specious arguments were advanced by the representatives of this foreign owner as to why a duty of $20 per ton should be imposed on this article, which is essentially raw material in the soap making and woolen manufacturers' industries. Many irrelevant and misleading statements were made, to which, according to the record, no refuting testimony was offered, and on its face it would seem that the committee were allowed to remain in ignorance as to the real facts. It would appear that the German's representatives bald assertion that the price need not be raised more than 25 per cent to afford him his desired protection was somewhat at variance with the policy of a downward revision of the tariff, or free raw materials.

We believe it will only be necessary to have the pertinent facts fully understood by your committee to have them realize the injustice

PARAGRAPH 655–CAUSTIC POTASH,

of changing a policy that has obtained for nearly a generation in respect to these articles, to have them retained upon the free list, and that the danger will be averted of having a duty put on them for the benefit of an investor whose residence is foreign, and whose main interests are also foreign, at the expense of several of our most important industries.

It is a fair conclusion that the manufacture of caustic potash is not a "legitimate" American industry, in the technical sense of the word, and the manufacture of carbonate of potash is not an American industry at all.

The agents of the Niagara Falls potash factory have made a long statement referring to what they term the “evasion” of duty on caustic potash by bringing in the 90 per cent goods, and refer to the paragraph in the tariff which provides for caustic potash, refined, in sticks or rolls, as dutiable at i cent per pound. This is a palpable attempt to befog the issue, as the use of this so-called stick or roll form of caustic potash is infinitesimal as compared with the regular mass form of the article. The figures will show, probably, that less than 1 per cent of the importations of caustic potash are in the stick or roll form, which is usually peddled in 1, 2, or 5 pound lots for the smallest kind of industries, so that the argument based upon this clause is a palpable quibble.

The showing of selling prices of caustic potash from 1907 to date is grossly incorrect. They show a range of prices from 7.52 cents to 4.15 cents. As a matter of fact, the prices of standard quality electrolytic caustic potash from 1906 to 1913 range from 5 cents to 41 cents, with one period during 1908-9 when the price was 5.6,0, the highest price for usual contract quantities that has obtained during the past eight years. The prices for the eight years in question have been as follows:

Cents. 1906..

to 51 1907.

5

to 57 1908.

5. 60 to 5. 85 1909.

51 to 57 1910.

58 to 5 1911.

55 to 51 1912.

41 to 43 1913..

41 to 41 They make a statement, by implication, that the imported caustic potash is sold with a guarantee that the importers shall pay any duty that may be assessed. This is absolutely untrue so far as our firm is concerned, and we believe this applies to all other importers as well. It is also contradicted by their own advertisements.

They make a point of other potash salts than caustic carrying a duty, and enumerate several of them. The conditions pertaining to the manufacture of these other materials are essentially different, and the sources of a considerable part of their raw materials are largely domestic.

An important point to bear in mind is that the conversion of the refined muriate into the potassium hydrate (caustic potash), which is all that is attempted by the factory in question, is a very small part of the manufacturing processes necessary to make the pure caustic potash from the natural German potash salts as mined. The crude

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PARAGRAPH 655—CAUSTIC POTASH. salts are obtained largely in a low degree of purity, 20 per cent or so of actual potash, which is found mixed with other potash and magnesium salts. This crude material has to be put through several processes to separate the various ingredients of the native salt as mined, in order to produce the refined muriate, which is the Niagara factory's starting point. This is a very much more elaborate and extensive process that what might be termed, in comparison, the simple finishing or conversion process from the refined muriate into the caustic, which is all that is attempted in this country. There are several hundred thousand tons of muriate of potash in various degrees of purity imported, and if the small amount of revenue involved be the object and necessity of this tax, a duty of 1 or 2 per cent on this muriate would yield considerably more revenue than the suggested tax on the converted caustic potash which is asked by this foreign owner of the plant in question.

I am reliably informed that this plant is equipped for making either caustic soda or potash at their option. Caustic soda is protected by a duty equal to about 50 per cent ad valorem, and the raw material for it is domestic common salt.

I may say that I have been fairly well in touch with the producers and consumers of these two articles, caustic and carbonate of potash, for the past 25 years, and will be glad to answer any questions and to give any information in my power that any of the gentlemen of the committee may desire.

I have said that for over 20 years, under all tarifl's, Republican and Democratic alike, caustic potash (also carbonate of potash) has been on the free list. I will say that that applies to over 99 per cent of the caustic potash. The refined potash, in sticks and in rolls, is a very negligible quantity.

Mr. HARRISON. Mr. Speiden, we do not want to get back into exactly the same position in which we have been on the subject. When you refer to the testimony given by the representative of this Niagara Alkali Co., do you refer to his statement before the Ways and Means Committee about 10 days ago, or to his statement-

Mr. SPEIDEN (interposing). A month ago; the 6th of January. Mr. HARRISON (continuing). Or to his statement before the Senate Finance Committee last spring?

Mr. SPEIDEN. The recent testimony.
Mr. HARRISON. The recent testimony !
Mr. SPEIDEN. That is what I refer to.

Mr. HARRISON. Of course, in making this statement you realize that the two statements made by this representative of this company as to claims upon a protective duty were made after the bill had passed the House of Representatives?

Mr. SPEIDEN. Yes.

Mr. HARRISON. And that no suggestions were ever made by him or by anybody else to place a protective duty upon this article, and this article was placed there simply for revenue purposes ?

Mr. SPEIDEN. Yes; so far as you are concerned.

Mr. HARRISON. The statements were made by him after we placed a revenue duty upon carbonate of potash; then he rushed into the field to make an argument why a duty should be placed upon it.

PARAGRAPH 655–CAUSTIC POTASH.

Mr. SPEIDEN. I will say, Mr. Harrison, that two or three years ago, or at the time when these negotiations for the transfer of the plant to its present owner were going on, and before the claim was made more or less openly that there should be a duty placed upon the article. I know that for a fact.

Mr. HARRISON. However you may have had it, you know that it was not made openly to the ears of Congress?

Mr. SPEIDEN. I quite fully realize that, Mr. Harrison, and the statements that were made were no doubt intended as a confirmation of the action of the committee, to give an additional reason for the step the committee had taken prior to those statements.

The CHAIRMAN. Any questions, gentlemen ?

Mr. Hill. I want to congratulate you on having exploded one unfair public criticism of the action of this committee in doing what they thought to be for the public interest, and I simply say that it is a fair illustration of a very large number of similar criticisms which have been made upon previous occasions, in the same way.

Mr. SPEIDEN. Yes. Mr. Hill. I am glad that this one has been exploded. Mr. SPEIDEN. I am very glad to have the opportunity to do so, Mr. Hill, and to say that there was no personal reflection upon anybody. It was something which the man in question asked me to write down without the slightest intention of pursuing it further, but it came to the attention of several men who were interested and they pressed it further. It would be a very happy thing for the country if all previous criticisms were likewise exploded.

The CHAIRMAN. Thank you.

BRIEFS SUBMITTED BY INNIS, SPEIDEN & Co., New York City.

INNIS, SPEIDEN & Co.,

New York, January 22, 1913. Hon. Oscar W. UNDERWOOD,

Chairman Ways and Means Committee, Washington, D. C. Dear Sir: A recent incident in the tariff hearings merits more than passing attention in order to prevent a rank injustice being done to an important class of consumers.

For 30 years, under all tariff bills, Republican and Democratic alike, caustic potash has been on the free list. It is used in the woolen, soap, electroplating, and fine chemical industries in America. It is made chiefly by electrolysis of the muriate of potash from the Stassfurt mineral potash deposits in Germany.

A few years ago an enthusiastic inventor, with a great deal of the magnetic, persuasive quality, thought he had invented an electrolytic cell that would produce chlorates, and incidentally caustic potash, economically from this German muriate, but after exhaustive experiments in the laboratory of a large New York chemical house it was demonstrated to these chemical merchants that the inventor's theories could not be worked out profitably. His persuasive powers, however, had better success with some Wall Street promoters, who were induced to invest in a small factory at Niagara Falls to enable him to make the wonderful profits that his process, as elaborated by him on paper, promised.

The money was spent. The small plant was put up; but, as in the case of the experienced chemical merchants, it was again demonstrated, much more expensively, to the Wall Street promoter and his friends that the scheme would not work out profitably. It would be almost as reasonable to attempt to raise oranges under glass in Central Park as to try to electrolize a solution of muriate of potash which had to be brought to seaboard from the interior of Germany, then across the ocean, and then up to Niagara Falls in competition with the people who could make these goods on the spot where the cruder goods, viz, muriate of potash, were produced at the pit's mouth in Germany. The oranges could be raised in Central Park with sufficient protection if the cost were

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