chemical industry is the great training ground for chemists and other scientific workers and also that this industry undoubtedly employs a greater proportion of technically trained men than any other manufacturing industry in the United States. While no definite comparative figures are available on expenditures for research by various industries, we can give you the information as to what is spent by the synthetic organic chemical industry who spent in 1927 for research an amount of money equal to over 4 per cent of its total sales volume. These large expenditures for research are an absolute essential if the industry is to go forward. Our European competitors have now the accumulated effect of many years of this sort of intensive research and for the American industry to diminish its efforts in this phase of its activities would be absolute suicide. It is common knowledge that chemical developments from day to day are often revolutionary and, therefore, to fail to go forward is to go backwards. Research is the key to the future. It must not be forgotten either that this research in the synthetic organic chemical industry leads among other results to the discovery of a constantly increasing number of medicinals the importance of which can not be overstated. The creation of this industry in the United States has also created careers both present and prospective for scientifically trained men. Our colleges and universities are full of men and women in training to take their places in the synthetic organic chemical industry. Any impairment of the industry in the United States destroys in advance their future and destroys at the same time the incentive for others to similarly educate themselves. This has a direct bearing on our national security for as all nations now realize their security as well as state of preparedness depend very greatly upon the synthetic organic chemical industry. One of the outstanding developments in synthetic organic chemistry during the past several years has been the intensive research and commercial develop ment in the United States on the aliphatic or open-chain group of compounds. This group is differentiated from the aromatic series of benzene ring type of compound by different atomic structure which groups the atoms in an open-chain formation instead of the benzene ring. As a Prior to the American chemist undertaking an intensive research and technical investigation of this group with corresponding commercial development, practically all of the resulting commercial products were mere laboratory curiosities and little was known about their interest or potential use in industry. result of our American scientists taking the initiative in this investigation, the United States has taken the lead in the development of the open-chain compounds in the same manner as Germany assumed the lead in the development of the aromatic series. This development is of unusual importance to the country as a whole because it has not only provided American industry with new products suitable for use as raw materials and intermediates, but it is also of interest to the Nation as a whole from a conservation of resources and national defense point of view. The aliphatic or open-chain compounds are readily available in natural gas, by-product gas and other gases of low or semiwaste value. The development of a chemical industry utilizing these products is of primary importance in the conservation and economic utilization of our natural resources, many of which are peculiar to the United States. As a result of the favorable tariff legislation on the more basic synthetic chemicals obtainable from the open-chain group which is provided for in the present tariff, commercial expansion involving the expenditure of many millions of dollars and fixed capital investment has been made. It is of extreme interest to note that as a result of industry enjoying the protec tive influence of the present tariff on these products, American industry has benefited by having available constantly increasing quantities of individual products which have become essential to their industrial processes. For example, in 1921 ethylene glycol was only produced in laboratories and had no commercial use. year since 1921, there has been an increased consumption of this material and it is now commercially used in quantities of many millions of pounds However, each per annum. This activity in America has attracted international attention as practically nothing had been done toward the production of ethylene glycol or associated produets in any country prior to the development in the United States. However, owing to its relation to national defense, practically every large country is strenuously engaged in developing its domestic production of ethylene glycol even though the domestic consumption is so small as to require governmental assistance in the form of a subsidy to make the project feasible and give a continuity of peace-time production. The chemical industry is appreciative of the favorable protection very wisely provided for under the existing tariff for this new group of chemical products which has permitted commercial expansion as outlined above. It also considers that continued and enlarged protection for the aliphatic compounds is of prime importance and it is urgently recommended that suitable modifications be made in the existing tariff to provide for the new products of this group which are and will be available. Future of industry.-A while ago I made the statement that in the field of fast dyes and high quality products generally lies the future of this industry. (Shown It is recognized as a fact to-day by the whole of the textile and allied industries and no more striking demonstration need be shown than the fact that almost 50 per cent of the total poundage of dye imports are in the vat color class. on p. 88, 1927 Dye Census.) This is the direction in which the American industry must continue rapidly the development already begun. Unfortunately the varieties to be produced are many and the amounts of each comparatively small. This means proportionately higher investments for plant, much greater expenditures for research and in the case of actual manufacture the complicated processes mean pyramided labor costs. Important considerations as to the future of our industry here were long ago realized by our principal competitors in Germany as is clearly shown by the following paragraphs taken from a report by a well-known German expert, Dr. Hugo Schweitzer, as quoted in the hearings before the Ways and Means Committee on H. R. 2706 and H. R. 6495 (pp. 137, 138, 139). "The manufacture of the derivatives offers much greater difficulties for an industry still in the process of development for the reason that such an incredibly large variety of products is necessary. In a well-developed industry like that of the German a technical use is found in the end for all these products. In a less well-developed industry and in an industry which is only in the process of development, great hindrances stand in the way of the utilization of these derivatives. Many can not be used at all and thus become troublesome waste products. The price of those derivatives which can be utilized is thereby increased to an incredible degree. * * * In a well-developed industry all these products are manufactured and ultimately find utilization. * * * "The manufacture of derivatives stands in Germany on such an incredibly high plane that the prices for the manufactured articles are very low. It would take American industry many many years before the same, even if it will ever be possible at all, could produce these derivatives as cheaply as German industry does. * * * "The wonderfully developed technique of derivatives will, therefore, for many years to come give German industry a preponderance over all other lands in which the derivative industry has first to be built up. * * * "Vat dyes are a comparatively modern achievement of the German dye technique and are in general regarded as the most genuine dyes. "The preeminent coloring qualities of these products have already brought it about and will do it even more so in the future that the older anthracite coaltar dyes, which in many respects are inferior to these vat dyes, will be driven from the market. The manufacture of these vat dyes is very complicated and can be undertaken only in a very highly developed industry. Here * the very greatest exertions will not make it possible to cope with the competition of Germany. In our considerations it is of still further importance that these vat dyes are much dearer than the ordinary anthracite coal-tar dyestuffs, which is readily explicable in view of the difficulties of manufacture. But in spite of this higher price the vat dyestuffs, on account of their superior tinctorial qualities, are finding a more and more widely extended sphere of application in all fields of the textile, leather, paper, etc., industry. "The history of American tariff legislation has shown that, in general, a protective tariff of 30 per cent ad valorem does not afford sufficient protection to create an American industry. If this was the case with the old anthracite coaltar dyestuffs, of which only a few staple kinds were ever manufactured here, and these for the most part from derivatives which were imported from Germany, a protective tariff of 30 per cent is, of course, absolutely insufficient for the complicated vat dyestuffs. * "Here is where the German industry must apply the lever. It must, in any case, of these vat dyes which must be regarded as the 'highest quality' goods of the industry. "1. The vat duestuffs have in the past and will even more so in the future supplant the old anthracite coal-tar dyestuffs. 2. The money value of the vat dyestuffs is uncommonly higher than the money value of the old anthracite coal-tar dyestuffs. "From these arguments it is clear that the salvation of the German dyestuff industry is to be sought in the development of vat-dyestuff chemistry." When we make the statement that we now produce 90 per cent of the poundage of dyes used in the United States we are perhaps a bit misleading, for while this statement is true as regards pounds, it is equally true that when we consider dollar value, we only produce about 80 per cent in value of the dyes consumed here. Of most significance, however, is the fact that we only produce about 25 per cent of all of the different varieties of dyestuffs now used in the United States. In this larger percentage of the varieties that we do not now produce, is included a great many of the newer, faster, high-quality products which we must also produce in our further progress. Costs and wages.-We do not know the costs of our foreign competitors. We do know that differences in cost fall in two main categories: a. Differences in yield due to "know how" which is a temporary difference. b. Differences in labor cost which for us is a permanent one. As to a the only way in which American manufacturers can become just as expert in the "know how" is to continue to operate and continue to grow. As to b this obviously is the real difference and the one that requires tariff to protect. Comparable labor here and in Germany and Switzerland where our principal foreign competitors are located shows a considerable difference. The same class of labor to whom we pay 60 cents to 90 cents an hour receives 20 cents in Switzerland and less in Germany. Efficiency as far as we can learn is about the same. Purchasing power, however, is greater proportionately in Europe so that the difference is greater than the actual comparison of money wages indicate. Synthetic organic chemical processes are much more complex than is commonly realized. Complexity means more operations and more operations obviously mean pyramided labor costs. There is another important item of cost which is more or less closely related to "know how." This is the question of the uses for the incredibly large number of intermediates and the by-products obtained in the course of their manufacture. Our American industry has progressed a long way since 1922 in this direction and is making rapid strides to-day. Completeness as far as the line of products is concerned is in many cases synonymous with cheapness-for the more complete the uses for all by-products, the less waste and consequently the lower net cost of each item. Differences in cost here and abroad are accounted for in large measure by the difference between the foreign cartel system and our individualistic system in the United States. Under the cartel system manufacturing operations are concentrated at strategic plants, overlapping and duplication is eliminated and all of the obvious attendant advantages are realized. In the field of research this concentrated effort and elimination of duplication s tremendously valuable. The benefits of this system extend still further and into a part of the business which is always proportionately very costly. This is in the marketing of the products as well as in executive personnel. Just one instance will suffice. The German I. G. represents such a coordinated and concentrated industry. In the marketing of its products one sales organization is necessary whereas here in the United States each of our separate companies must maintain its own organization, all of which becomes a part of cost. The scientific and industrial developments of recent years have established a very close relationship between agriculture and industry which is growing in portance very rapidly. This relationship has become of special significance in the chemical industry. Chemical manufacturers depend upon agriculture for Any raw materials. We recognize that the producers of these agricultural products should receive adequate tariff protection and wish to go on record to this effect. Manifestly, any protection which is placed upon agricultural prodlets and imported products, which compete with agricultural products produced in this country, becomes ineffective unless the manufactured products receive Corresponding protection, and adequate duties placed upon manufactured chemical products which directly or indirectly compete. Specific instances of this principle will be developed in the respective briefs presented by various branches of the chemical industry. It is our purpose here to establish as a fundamental principle of protection that in protecting products of agriculture, manufactured products derived therefrom must be protected in proportionate measure in order to make the system effective. More and more the chemist is of assistance in solving some of the problems of agriculture. It may easily be that agriculture plus the help of our chemists may be the bulwark of our future national prosperity and welfare. In closing we want to say that a great deal of the accurate information herein contained is only made possible through the excellent data collected and published by the United States Tariff Commission and its chemical expert, Mr. Warren N. Watson, all of which you gentlemen have, of course, at your disposal. Paragraph 61.-We request in this paragraph that the words "ambergris, castoreum, civet, and musk, grained or in pods, 20 per cent ad valorem" be omitted, that the specific duty remain unchanged, and that the ad valorem duty be raised to 60 per cent both for single products and mixtures. In asking to place ambergris, castoreum, civet, and musk on the free list, we point out that these are natural products not produced in the United States, and for that reason we concur with the premises of the brief being presented by the American Manufacturers of Toilet Articles. We are asking for the increased duty in order to establish this industry on a firmer footing, and are submitting a brief in support. We suggest that paragraph 61 be worded as follows: Paragraph 61.-Perfume materials: Anethol, citral, geraniol, ionone, rhodinol, safrol, terpineol, and all natural or synthetic odoriferous or aromatic chemicals, all the foregoing not mixed and not compounded, and not specially provided for, 60 per cent ad valorem; all mixtures or combinations containing essential or distilled oils, or natural or synthetic odoriferous or aromatic substances not otherwise provided for, 40 cents per pound and 60 per cent ad valorem: Provided, That only materials not marketable as perfumery, cosmetics, or toilet preparations, and not containing more than 10 per cent of alcohol, shall be classified for duty under this paragraph: Provided further, That all of the foregoing materials containing more than 10 per cent of alcohol shall be classified for duty under paragraph 62 as toilet preparations. LIST OF OFFICERS AND BOARD OF GOVERNORS OF THE SYNTHETIC ORGANIC CHEMICAL MANUFACTURERS ASSOCIATION OF THE UNITED STATES President.-Mr. August Merz. Secretary. Mr. C. A. Mace. Dyes section. Mr. E. H. Kilheffer, vice president; Mr. E. A. Barnett, Mr. R. W. Cornelison, Mr. A. J. Farmer, and Mr. August Merz. Crudes and intermediates section. Mr. W. F. Harrington, vice president; Mr. E. H. Klipstein, Col. W. S. Weeks, and Mr. S. W. Wilder. Fine organic and medicinal chemicals section. Mr. R. E. Dorland, vice president; Mr. John W. Boyer, and Dr. A. S. Burdick. Special chemicals section. Mr. A. Cressy Morrison, vice president; Mr. Glenn Haskell, and Dr. F. G. Zinsser. LIST OF MEMBERS OF THE SYNTHETIC ORGANIC CHEMICAL MANUFACTURERS ASSOCIATION OF THE UNITED STATES Abbott Laboratories, North Chicago, Ill., medicinals. Bakelite Corporation, New York, N. Y., synthetic resins. Bayer Co. (Inc.), New York, N. Y., medicinals. Beaver Chemical Corporation, Damascus, Va., dyestuffs. Burton T. Bush (Inc.), New York, N. Y., synthetic aromatic chemicals, perfume, and flavoring materials. Calco Chemical Co., Bound Brook, N. J., dyestuffs, intermediates, and pharma ceuticals. John Campbell & Co., New York, N. Y., dyestuffs. Carbide & Carbon Chemicals Corporation, New York, N. Y., solvents and aliphatic chemicals. Carus Chemical Co., La Salle, Ill., benzoic acid. Colgate & Co., Jersey City, N. J., soaps, perfumes, etc. Dow Chemical Co., Midland, Mich., coal-tar chemicals, dyes, pharmaceuticals. E. I. duPont de Nemours & Co., Wilmington, Del., dyestuffs, intermediates. Dve Products & Chemical Co., New York, N. Y., dyestuffs. Eastman Kodak Co., Rochester, N. Y., fine organic chemicals, photographic chemicals. Elko Chemical Co., Nitro, W. Va., coal-tar chemical products. Franco-American Chemical Works, Carlstadt, N. J., essences and pharmaceutical chemicals, solvents. Gaskill Chemical Co., Newark, N. J., fur dyes. Gilbert Laboratories, Morristown, N. J., pharmaceuticals. Heller & Merz Co., Newark, N. J., dyestuffs. Hooker Electrochemical Co., Niagara Falls, N. Y., organic chemicals, benzoic acids, etc. Industrial Dyestuff Co., Providence, R. I., dyestuffs. Charles Eneu Johnson & Co., Philadelphia, Pa., dyes and lakes. Kessler Chemical Co., Orange, N. J., solvents. E. C. Klipstein & Sons Co., Newark, N. J., dyestuffs, intermediates. Mathieson Alkali Works, New York, N. Y., synthetic organic chemicals, favoring materials. May Chemical Co. (Inc.), Newark, N. J., color lakes and bases. Merck & Co., New York, N. Y., pharmaceuticals. Merrimac Chemical Co., Boston, Mass., solvents, intermediates. Crown Chemical Co., New York, N. Y., intermediates. Monsanto Chemical Works, St. Louis, Mo., medicinals, synthetic flavors, fine chemicals. Newport Chemical Works, Passaic, N. J., dyestuffs, solvents, intermediates. Noil Chemical & Color Works, New York, N. Y., dyestuffs. Passaic Color Corporation, Passaic, N. J., dyestuffs. Peerless Color Co., Plainfield, N. J., dyestuffs. Pennsylvania Coal Products Co., Petrolia, Pa., coal-tar chemicals, inter mediates. Pharma-Chemical Corporation, New York, N. Y., dyestuffs. Rhodia Chemical Co., New York, N. Y., photographic chemicals, perfume and flavoring materials, pharmaceuticals, fine chemicals. Roessler & Hasslacher Chemical Co., New York, N. Y., fine organic chemicals. Harold L. Simons (Inc.), Long Island City, N. Y., medicinals and perfume materials. Selden Co., Pittsburgh, Pa., intermediates. Standard Ultramarine Co., Huntington, W. Va., dyestuffs. U.S. Industrial Chemical Co., New York, N. Y., solvents. A. L. Van Ameringen, New York, N. Y., synthetic aromatic chemicals and perfume materials. Van Schaack Bros. Chemical Co., Chicago, Ill., solvents. Victor Chemical Works, Chicago, Ill., oxalic acid, formic acids. Zinsser & Co. (Inc.), Hastings-on-Hudson, N. Y., photographic chemicals, dyestuffs, color lakes BRIEF OF KUTTROFF, PICKHARDT & CO. (INC.), NEW YORK CITY [Paragraphs 3, 4, 11, 27, 28, 38, 80, 83, and 1501] The Hon. W. C. HAWLEY, Chairman, Committee on Ways and Means, House of Representatives, Washington, D. C. DEAR SIR: In accordance with the permission given us by your committee, we offer this brief concerning various products covered by Schedule 1 of the present tariff. Our principal business is the importation of chemicals from Germany, Norway, Holland, principally the former, and we manufacture certain products in this country. This committee has given much time to the gathering of information on this schedule, and we are assuming that it is not the intention to place general embargo on these products. A careful examination of requests pre |
