THE GENERAL CHEMICAL COMPANY
AFTER TWENTY YEARS
1899-1919 MARCH-IS
GIFT OF
THE
GENERAL CHEMICAL COMPANY
AFER WENTY YEARS
1899-1919
MARCH-IS
To
DR. WILLIAM H. NICHOLS,
Chairman of the Board of Directors of the General Chemical Company, who conceived the idea of the Company, who, as its first President, guided its early footsteps, and who has ever been its chief adviser and a source of inspiration to all; this record of the Company's accomplish- ment is dedicated by the Directors as a slight expression of their great admiration and affection
Neu; York, March i, 1919
415460
INDEX
INTRODUCTORY II
I. ORIGIN AND FORMATION 13
II. THE CHEMICAL FIELD 19
III. STAFF ORGANIZATION AND DEVELOPMENT 23
IV. FACTORIES; THEIR EQUIPMENT AND THEIR PRODUCTS 29
V. RESEARCH WORK AND THE RESEARCH DEPARTMENT 39
VI. THE REVOLUTION IN SULPHURIC ACID: CATALYSIS 43
VII. THE CREATION OF A GREAT COAL TAR PRODUCTS INDUSTRY IN
AMERICA 49
VIII. RYZON AND ITS RELATION TO OTHER LEAVENING AGENTS 53
IX. MANUFACTURING NITROGEN PRODUCTS FROM THE AIR 57
X. MINES AND MINING 63
XI. RELATIONS WITH WORKMEN: THE SERVICE DEPARTMENT 67
XII. THE HOUSING PROBLEM: OVERLOOK COLONY 75
XIII. SALES, CUSTOMERS AND TRADE RELATIONS 79
XIV. FINANCIAL 83
XV. MOBILIZATION FOR WAR AND DEMOBILIZATION 91
APPENDIX A — BALANCE SHEET, MARCH I, 1899 95
B — DISTRIBUTION OF EARNINGS 96, 97
C — GROWTH OF INVESTED CAPITAL 98, 99
D — CONSOLIDATED GENERAL BALANCE SHEET, DECEMBER
31, 1918 100
E — PLANTS, MINES AND STATIONS IOI
F — OFFICERS AND DIRECTORS, 1919 IO3
G — NECROLOGY IO5
CHARACTERISTIC PHOTOGRAPHIC VIEWS
INTRODUCTORY
iHIS first extended report of the General Chemical Company is intended as an account of its origin, organization, facilities, field of activity and accomplish- ment since it started in business on March i, 1899. It has been compiled for those who compose the company — the stock- holders, the staff and interested workmen.
The period of twenty years covered by this report is the period of greatest industrial achievement that this country or the world has ever known. This has been made possible by the corporate form of enterprise; and corporations have grown and developed and improved methods and created new national wealth in ways and degrees never before dreamed of. Consequently, much of the progress here recorded for the General Chemical Company is a product of the times — not to have accomplished which would have been to record failure. But there is much in this record that is peculiar to the General Chemical Company and for which those who have guided it and those who have so ably worked out its problems under guidance, may fairly claim the credit.
This is not the time nor is this simple report the place to apportion praise or run the risk of distinctions that might be invid- ious; but rather is this the occasion to emphasize the unselfish self-effacing team-work and loyalty of all concerned that have been such potent factors in our measure of success.
The financial results achieved may seem modest when measured by the standards of larger corporations in vaster fields. But the chemical business, important, indispensable and basic as it is to modern industry, is not one of the largest branches of industrial activity. It may indeed be said, subject to exception, that its products whilst entering industry everywhere do not enter it largely anywhere. And our company occupies but a portion of the field.
I
ORIGIN AND FORMATION
I HE General Chemical Company commenced business twenty years ago — on March i, 1899. It was formed by the consolidation or taking over of the chemical business of several distinct concerns. No promoter or banking concern had any part in it and no commissions were paid to anybody.
In 1899 the air was filled with mergers and promotions and the formations of new corporations of all kinds, sizes and shapes. A strong impression prevailed that small industries lacked efficiency and that great economies could be effected and greater and more advantageous results generally be achieved by grouping small and disparate concerns into larger aggregations. Subsequent events have proven this impression to have been substantially correct. Unfortunately, there went with it in the minds of too many the further notion of carrying combination to the point of eliminating competition by acquiring an undue preponderance of the concerns in any given industry and thus monopolizing or at least dominating the entire field. For such persons the Sherman anti-trust law had no terrors, because they believed or affected to believe, that court decisions had rendered that law inapplicable to industrial corporate mergers, no matter what their scale. Others there were at that time — and they were not few, whether in Congress or out of it — who believed that the law applied to every fairly important merger or combination whatsoever involving inter-state commerce, no matter how reasonable or innocent or how far removed from domi- nating power.
The view entertained by those who guided the counsels of this company was that probably neither of these extreme opinions was correct, and that whatever else the anti-trust laws meant they certainly did not mean to restrain trade or to restrict that liberty
13
14 THE GENERAL CHEMICAL COMPANY
of contract which has always underlain Anglo-Saxon notions of commerce and industry. It seemed clear to these men that a combination in corporate form of a dozen small concerns in the chemical field, scattered over the country from Bridgeport to Chicago and St. Louis and from Philadelphia to and into Canada, comprising altogether but a small percentage of the total capital invested in the chemical industry of the country — a combination which acquired, and could acquire, no dominance in the industry, which would greatly promote efficiency and leave competition as keen as before — that such a combination would be not only within the law, but would be encouraged by it. The long list of judicial decisions handed down since that time, elucidating and expounding the law, has confirmed this view.
Twelve concerns came together in the General Chemical Company on March i, 1899. All of these had been more or less successful, some highly so, but they were small as judged by modern business standards, the largest of them bekig much smaller than several of their outside competitors, and they were limited to localities and limited in their products, and, thus limited, were exposed to the risks of these limitations — much as a fire insurance business upon only a few risks is hazardous in the extreme, while such insurance distributed over large numbers of risks and a large territory is relatively safe. These concerns lacked the income for efficient research work on a large scale, so indispensable in the chemical field; they lacked the resources for rapid growth, and they absolutely lacked the size necessary for^ efficient organization.
Many of the concerns were so small that the death of an im- portant member would have meant the extinction of the business. It has been the misfortune of the General Chemical Company to lose by death several of its important and valued members, whose death prior to 1899 would have caused the liquidation, or at least the serious embarrassment, of the concerns to which they then belonged; but this company's business has been untouched thereby, or nearly so: Bradstreet's and Dun's have had no failure or liquidation to record on that account, and the chemical invest- ments of these men which might previously have been rendered worthless by their death passed on to their heirs unimpaired in value.
THE GENERAL CHEMICAL COMPANY 15
It is a point never yet sufficiently emphasized to what extent the combination of small and weak though worthy concerns into fewer but larger aggregations tends to diminish business mortality, loss to individual investors and to the country, as well as unem- ployment— in other words, tends to effect a stabilizing of industry.
It has been the mistake of many to suppose that the advan- tages of size cannot be secured unless that size be colossal, such as to include practically all of a given trade or industry. It was believed by those engaged in forming the General Chemical Company that this was not so, and that it would be feasible to secure the important and legitimate advantages of size, such as capital, organization, brains and efficiency, without attempting to merge so large a number of concerns as to risk a violation of the law.
The twelve concerns in question were found after careful appraisement to have an aggregate capital of $14,008,955 and it was believed, and as events have shown, correctly believed, that this aggregation would be large enough to realize most of those advantages, notwithstanding that the total capital of the country invested in chemicals was at that time about $238,000,000, and in heavy chemicals alone about $89,000,000.
It may be interesting to dwell a moment on the details of the formation. On March I, 1899, the various constituent concerns, after frequent conference and frank discussion, had settled upon a form of agreement providing for the transfer of all the properties to the newly formed corporation, full consideration to be paid to the sellers only after the values had been ascertained by careful appraisal. The basis of price was preferred stock to be issued for the tangible property and common stock for good-will and intan- gibles, although in some special cases common stock was issued for tangible property also. The common stock for good-will was to be issued on the basis of ten years purchase — that is a sum equal to ten times the average annual earnings, as shown during the previous five and a half years. And this period included the panics of '93 and '96, so that those earnings were presumably fairly low. These earnings had to be ascertained and reported by chartered accountants, when the computation of the amount to
l6 THE GENERAL CHEMICAL COMPANY
be paid in common stock followed by simple arithmetic. It is not too much to say that the most valuable asset turned over to the new company was this item of good-will thus conservatively appraised. The ascertainment of the tangible values was left to an appraisal committee of skilled chemical men, and so careful was their task that their appraisal was only finally finished after nine months more or less of continuous work. This committee in turn delegated the land values, exclusive of improvements, to one of the leading real estate men in New York, who took charge for the entire field, and himself engaged local experts as required. So conservative were these land appraisals that in most cases subsequently where the company has had occasion to part with any of the land acquired, it has obtained higher prices than the appraisals.
When the company was formed it took over from the con- stituents the manufacture of only fifteen different chemical prod- ucts, but hardly any concern was making more than half a dozen, and some not so many. This company is now making nearly one hundred distinct commercial products besides many hundreds of fine and chemically pure products and the list is increasing, and with each increase the risks of the business are diminishing.
The company has fully justified the middle conservative course which has been steered for it from the beginning. Its prices have been materially reduced — or at least had been up to the outbreak of the Great War, which has so disturbed values. Its organization has been greatly perfected and its efficiency vastly increased. It has carefully studied innumerable difficult chemical problems and solved many. It has found methods for treating and making valu- able refractory ores, previously valueless. It has discovered and developed properties previously unknown. It has devised and adopted methods for the manufacture of some products that would have been deemed revolutionary and impossible a few years ago, resulting in greatly reduced costs and improved quality. Its constant aim is to discover new methods to reduce cost; and while this is done largely out of self-interest, industrial economies always end in the public getting the full advantage of them.
There are no easy places in the chemical business. The field
THE GENERAL CHEMICAL COMPANY IJ
is a highly competitive one. There is none other that is so com- plicated. It calls for a combination of hard work, technical knowledge, scientific training, capital, and general ability. But it is a fascinating field and one that bids fair to expand in the future and to reward in a fair measure those who may make their mark in it. It is the policy of the General Chemical Company that those who help it to succeed shall share in that success — whether they be workmen or staff, officers or stockholders.
II
THE CHEMICAL FIELD
IHERE is or has been in the public mind so little compre- hension of the chemical industry, that when mention is made of a chemical company people are apt to think of a fertilizer concern.
Now it is not to be denied that fertilizers bulk large in the chemical field and are destined to bulk still larger as our farmers come more to appreciate their value — but fertilizers form but one department out of many in that field — and both in volume, money values, numbers of products, complication of industry, they are far surpassed by other branches.
The public has heard something lately of munitions and explo- sives— something less of coal tar dyes — something still less of pharmaceutical coal tar preparations. It has always known of oil refining — but it may not know it to be a chemical process. It is familiar with so-called drug and chemical companies innumer- able— some large, some very small — some manufacturing the standard orthodox remedies for human ailments and some the more profitable patent medicines so dear to the average American who wants to avoid a doctor's fee. It is not generally known or fully realized how fundamental and all-pervading the chemical business really is — how basic to all modern industry.
Chemical products enter into almost all lines of manufacture; but to so small an extent in volume and value that they are scarcely noticed. Yet suppress them wholly and modern industry would cease to exist.
The chemical industry is a modern creation and is still in its infancy. But it has assumed such a position, that in referring to it a distinguished scientist once said that the degree of civiliza- tion attained by any community could be measured by the extent
19
2O THE GENERAL CHEMICAL COMPANY
to which it used sulphuric acid. And sulphuric acid is at the base of almost all that constitutes this basic business. Sulphuric acid is one of, and the most important one of, that group known as "heavy chemicals" — among the others being nitric acid, muriatic acid, salt cake, mixed acid, the alkalis, etc. — all products bulking large and selling at prices relatively low per ton or per cwt. These chemicals are not fertilizers, are not munitions, but the makers of fertilizers or of munitions must have them or some of them.
It was these so-called "heavy chemicals" or certain of them that constituted the business of the General Chemical Company in 1899 and that still constitute the major part of its business, notwith- standing the development of the Company both up and down and the enormous increase in the number of its products.
Right here it is well to distinguish the scientific basis of our industry from all others. We are dealing more particularly and directly with chemical reactions — with chemical combinations and chemical decompositions — and not primarily with those of elec- tricity or heat or the other forces of physics — although we do constantly employ these forces as aids in every step of our work. A chemical combination is distinguished from a mechanical combination or mixture by the fact that there are fixed laws governing the combination requiring so and so much of each ele- ment, neither more nor less, and by the further important fact that the chemical combination forms a new compound which differs in its very properties from either or any of its constituent elements.
This second point of distinction is what has enabled technical chemistry to give to the world such a wealth of new products, each and all having new properties peculiarly their own. It is this which makes of technical chemistry the field of infinite pos- sibility. With upwards of eighty elements in nature (and thousands of products of their combination) the theoretical and mathematical possibility of new products by the union of any two or more of these is nothing less than infinite for all practical purposes. But the mathematical possibilities do not stop here. For in many cases the same elements by combining in different, though in each case fixed, proportions may produce compounds that differ
THE GENERAL CHEMICAL COMPANY 21
radically in their qualities. Thus sulphurous acid gas (SO2) and sulphuric anhydride (SO3) composed of the same elements though in different proportions are totally distinct substances. And this is not all. Because there is ever present the possibility of learning how to do some old thing in a new way or of producing some old product by a new and cheaper method. This is to say that we may discover a new process or invent a new apparatus. And all this opens the field for an infinity of research and experiment rewarded here and there by the discovery of a new product having properties that are both new and useful.
Thus chemistry is still like alchemy in being a sort of search for the philosopher's stone in each new case. But unlike alchemy it is helped by past experience and reason — helped but not deter- mined by these, because no amount of past experience or reasoning can lead to valuable results without a vast amount of experimenting and infinite patience. Reason and experience may guide some- what and may be suggestive always, but they are not infallible guides in new fields.
Ill
STAFF ORGANIZATION AND DEVELOPMENT
|HE first organization in 1899 was simple as befitted a comparatively small concern moving along well known lines. It was tentative having regard to the uncer- tainties of future development.
The operations were divided into those few main departments that would naturally suggest themselves — Purchasing, Sales, Manufacturing, Finance — each with a head. There was an Executive Committee of the Board of Directors, and on this com- mittee each department head had a seat. And this committee met daily. It will be seen that it took itself very seriously and under- took not only to lay out the main policies of the company but to control and direct operations in some detail.
This form of organization was tried out and, as it was found wanting, modified. It would be tiresome to trace all the changes of twenty years — but it may well be of interest to describe the organization as it exists today after twenty years of experimenting and experience.
The Board of Directors is the governing body as in every corporation. There is still an Executive Committee. But this committee meets only once or twice a week or as often as occasion demands. It may be called at any time. Four members make a quorum. It is composed of an Executive Chairman, of four mem- bers chosen from the Board, of the Chairman of the Board, the President, the Vice-Presidents, the Treasurer and the Secretary.
This committee now confines its attention to questions of general policy, the consideration of matters to be laid before the full board, the approval of acts or recommendations of officers or other committees, and especially those of the Operating Com- mittee.
23
24 THE GENERAL CHEMICAL COMPANY
The greatest change from twenty years ago is in the creation of the Operating Committee. This is nothing less than a Junior Executive Committee charged with the details of management and looking to the executive committee for its authority and support.
The company is still divided into departments, but there are more of them and they are at once more efficiently run and more intimately coordinated. These are the Manufacturing, Purchasing, Sales, Engineering (including Construction), Trans- portation, Mining, Research and Service Departments.
Finance is not represented here but comes under the direct control of the Executive Committee, aided by a special Finance Committee composed largely of bankers.
The chairmen of these various departments and sometimes one other member from each department make up the Operating Committee. At first this committee met as often as three times a week. But this was found burdensome and unprofitable. And now the operating committee, barring special emergencies, meets but once in two weeks. In place of frequent meetings of its own a system of frequent meetings has been established of sub-committees of the operating committee corresponding to the main departments of the business. On each one of these sub- committees there is besides its chairman, who is a specialist, two other members of the main body and a group of younger men taken principally from the department concerned and thoroughly familiar with its affairs. Minutes are kept of all these sub- meetings and each member of the main operating committee receives copies of these. Besides which he is at liberty to attend sub-committee meetings if he desires.
By this method, whilst each department has the benefit of trained experts and specialists, it is not dependent on them alone. A number of minds trained in over-lapping fields are thinking along the problems of all, as occasion demands. And the risk is lessened of a decision that might conceivably help one phase of the business at the expense of another or of the whole.
All this work is thus correlated and there is a central secretary charged with the distribution of the sub-committees' minutes among the main committee's members and whose duty also it
THE GENERAL CHEMICAL COMPANY 2$
is on the eve of each meeting of the main committee to prepare a list of the items of business transacted by the various sub- committees since its last main meeting. On the reading of this list before the operating committee, if no member desires to dis- cuss it, it is approved and thus in a matter of a few minutes the previous two weeks' transactions may be disposed of with full knowledge thereof by all the members of the operating committee, and this committee is thereupon ready to take up new business or matters of policy to be recommended to the executive committee. This method has the further advantage of educating the younger men, bringing to the front their otherwise latent abilities, and of training up understudies for the future.
This form of organization calls for a much larger number and wider range of experts and specialists than was dreamed of a few years ago or than would have been financially possible for any chemical concern of the size then existing. Chemists there then were in each plant continually making tests of the product. Research work was done to a small extent — but with no well defined organization.
But besides chemists so obviously needed, the chemical engineer has become an indispensable factor in a business whose entire plants have been rebuilt within twenty years on entirely new systems and whose chemists are constantly creating new problems for the engineer to solve for them. For physics and chemistry are becoming more and more interconnected in the industrial world as they are in the world of science; so that today a scientist or a technician may not be able to say where chemistry ends and physics begins, and vice versa. The chemical engineer must be in touch both with the Research and the Manufacturing Depart- ments.
And a business which seeks some control of its own raw material from Mother Earth needs its mining engineers. The Mining Department, like the Research Department, is a new creation of a few years ago and the creation of both has been justified by their success.
Another new creation is the Service Department, having to do with the company's relations to its workmen, their employ-
26 THE GENERAL CHEMICAL COMPANY
ment, their efficiency, compensations for accidents, their health, hospitals for their care, workmen's housing and the like.
Of the vice-presidents — one is the manager at Chicago of the Western business — one is manager at San Francisco of the Pacific Coast business — one is general head of the sales of the company.
The Eastern works are all managed from the New York Office.
The Canadian business is operated by a separate company — The Nichols Chemical Company, Ltd.
The system of committee meetings has been carried down into the works themselves. Each works how holds its Weekly Superintendents' Meeting, attended by the division superintendent, the assistant superintendents, the chief chemist and the chief clerk. The general superintendent acts as chairman. At this meeting subjects of general plant interest, such as labor, wages, handling materials, construction and condition of plant, are taken up, and those questions that are of only local interest calling for deci- sion on the spot are so decided. Those having a more general interest, or involving the question of company policy, are reported to the head office.
In addition to these there are very brief department meetings held at each of the works daily, attended by the various process foremen of the divisions, the division superintendent or assistant superintendent acting as chairman. Brief reports are submitted upon progress in general departmental activities and conditions. Attention is confined to matters involving mutuality of interest between the various sub-divisions within the department con- cerned.
The organization as a whole thus follows the principle of local self-government as illustrated on the larger scale by the form of Government in these United States.
The aid afforded by Committees of Workmen which act as a medium through which to develop and determine policy and disseminate information promptly will be mentioned later. These last are not executive.
An important committee, not directly connected with operations and therefore independent of the Operating Committee, is the
THE GENERAL CHEMICAL COMPANY 2J
Insurance Committee, composed of four members and reporting to the Treasurer.
The latest creation in the way of a committee is the Chemist and Laboratory Committee, and its province is to coordi- nate the work of the laboratories with that of the Research and Manufacturing Departments.
If this description of a multiplicity of committees sounds cumbersome and suggestive of the town meeting method of conducting business, it would produce a false impression.
The system in its operation is very expeditious; the meetings are brief and they can be made brief because they are among persons thoroughly familiar with the questions coming up, or that are familiar with questions that overlap the questions that come up. And the decisions adopted are those of experts or quasi experts whose recommendations go higher up to be passed on by those who, whilst not so steeped in the particular facts, are still more expert, or supposed to be, on the general subjects.
IV
FACTORIES: THEIR EQUIPMENT AND THEIR PRODUCTS
1899 the plants in most of the Company's factories, but particularly the sulphuric acid plants, were of the K^ highest type of their kind then known. Today and for some years past these have been superseded by new plants operating on new and more effective systems. In other words, the Company's plants have been almost entirely rebuilt and this statement would have been true to the letter but for the fact that the exigencies of war caught an archaic plant here and there of the 1899 type, that had been marked for dismantlement and forced it back into use for a brief period, notwithstanding its relatively high cost of production.
In some cases, as years went on, whole works were abandoned as having been found to be unfavorably situated. In other cases, old works were greatly extended. In others, completely new sites were selected and new works erected where none had existed before.
NEW PLANTS AND OLD
In 1909, the Company commenced the erection of a plant near San Francisco, California; up to that time having had no works west of St. Louis. The California plant was erected to supply the demand for chemicals on the Pacific Coast and its growth has kept up with the requirements of our customers.
At Marcus Hook on the Delaware River below Philadelphia, a large piece of land was bought in 1910 between deep water and two lines of railways, and the erection of a new plant was there begun. This plant has become one of the most important of all the Company's works.
29
3O THE GENERAL CHEMICAL COMPANY
As the Marcus Hook works were designed to supplant the old Philadelphia plants with a newer and larger factory — so, near Pittsburgh, a new plant was erected at Newell on the Monongahela River, to supplant the old Pittsburgh plant since dismantled.
A large works has been constructed since 1903 at Pulaski, Va., but this enterprise has features that deserve separate mention.
Our Canadian branch, The Nichols Chemical Co., Ltd., of Canada, when taken over had one small works at Capelton, Quebec. It has since built a small works at Sulphide, Ontario, where a pyrites mine had been acquired and another works at Vancouver in British Columbia.
The plants originally acquired at Lodi, N. J., at Troy and Syracuse, N. Y., at Bridgeport, Conn., in Chicago City and at St. Louis, though profitably operated for a time, were finally dismantled as obsolete in the face of the newer types and systems.
The old Philadelphia works are still running, and will continue to be, as they now are, our local distributing warehouse.
Of the original works, the plant at Long Island City has been largely dismantled and changed over into a distributing warehouse and research and experiment station; the works at Edgewater, N. J., Buffalo, N. Y., Cleveland, Ohio, Calumet near Chicago, Illinois, have been considerably enlarged. A new works on a new site has recently been built at East St. Louis, Illinois.
Since 1899 some new acquisitions of going concerns have been made of which the most important was Baker & Adamson of Easton, Penn. That Easton plant specializes in fine chemicals and chemic- ally pure acids, and has become this Company's department for those and similar products — and it was at this plant that much of the work in coal tar derivatives and intermediates, especially in the war time, was done.
Another acquisition was the Thomsen Chemical Company, of Baltimore, Md., which has developed a very considerable business in insecticides.
Besides its manufacturing plants, the Company has distributing stations at various points — so that its business covers a large part of the continent.
THE GENERAL CHEMICAL COMPANY 3!
PRODUCTS
Mention has already been made of the range of the Company's products.
Among the more important commercial products it has added Oleum or Fuming Sulphuric Acid, an article unknown to the trade here until a few years ago, Acetic Anhydride, Ryzon, a very remarkable baking powder, various Insecticides, and has developed so important an interest in Coal Tar Intermediates as to give it an interest in the newest and largest producer of colors in this country, the National Aniline & Chemical Company, Inc. — which jointly with other large chemical interests it now controls.
The heavy chemicals now manufactured by the General Chem- ical Company may be divided into two classes: —
ACIDS AND SALTS
Among the acids made by us and their uses, the principal ones are as follows :
SULPHURIC ACID is used directly in the production of the so-called volatile acids, such as nitric, hydrochloric and hydro- fluoric acids; also acetic acid. It is directly used in refining petro- leum; in storage batteries; in fertilizers, alum products, explosives and the refining of copper. The great iron industry, whose prod- ucts in most cases undergo what is known as "pickling," largely depends upon it; for pickling is done with sulphuric acid. This acid is used either directly or indirectly in almost all articles of chemical manufacture. It is the true hand-maiden of the chemical industry.
NITRIC ACID is employed in making explosives and coal tar dyes, and in cleaning metals and alloys.
HYDROCHLORIC or MURIATIC ACID is used in dyeing, scouring wool, tanning leather, galvanizing, electrotyping, pickling of steel, manufacture of liquid carbon dioxide, etc.
MIXED ACID is a mixture of strong sulphuric and nitric acids and is used in immense quantities in the production of explosives and in dye intermediates.
PHOSPHORIC ACID is used in clarifying sugar and in the manu- facture of fertilizers and in the production of alkaline phosphates.
32 THE GENERAL CHEMICAL COMPANY
HYDROFLUORIC ACID is largely employed in the cut glass trade for etching and polishing purposes.
ACETIC ACID is used in making white lead, inks and vinegar and in the dyeing trades.
Among the salts made by us and their uses, the principal ones are as follows:
GLAUBER'S SALT AND SALT CAKE are extensively used in the glass industry, in making paper pulp and in the textile trade.
SULPHATE OF ALUMINA AND ALUM are used in the sizing of paper, in purifying water, in photography, in making artificial statuary, etc.
EPSOM SALT is of great importance in leather tanning, in making of dyed cotton goods, and in the drug trade.
SILICATE OF SODA finds a variety of uses in special cements and adhesives, soaps, fireproofing materials and in treating silk.
SODIUM SULPHIDE is used in making sulphur dyes, and in the leather trade in removing hair from hides.
SODIUM SULPHITE AND SODIUM HYPOSULPHITE are used in large quantities in photography, and in the dyeing and textile printing industries as well as in tanning.
SODIUM BISULPHITE is used extensively in the textile and bleaching industries, and in the leather trade.
Of the three sodium phosphates TRISODIUM PHOSPHATE is largely used in the softening of water, for boiler purposes, and in the textile industry, and in cleansers.
DISODIUM PHOSPHATE is employed in the drug trade, in the treating of silk and in dyeing.
MONOSODIUM PHOSPHATE is the acid ingredient of our Ryzon baking powder.
ZINC CHLORIDE is an important wood preservative.
A group of other salts, including:
ARSENATE OF LEAD BORDEAUX MIXTURE ARSENITE OF ZINC are among the important insecticides and fungicides.
To make more clear what we do in heavy chemicals we will at the risk of some repetition say what we do not do. The General
THE GENERAL CHEMICAL COMPANY 33
Chemical Company does not yet manufacture ammonia or ammonium salts, nor does it make the alkalis like soda ash or bicarbonate of soda, nor fertilizers, nor explosives, nor the crude products of the distillation of coal tar, nor has it embarked in the promising field of electro-chemistry with its caustic soda, liquid chlorine and bleaching powder; although these fields are entirely open to the use of our many products and are constantly pressing their claims upon us.
TRANSPORTATION
A large chemical company must have its transportation service. The movement of sulphuric acid, and mixed, muriatic and acetic acids in bulk requires tank cars, boats and trucks.
This Company at present operates more than one thousand railway tank cars of from 30 to 80 tons capacity each. These cars are operated in the United States under the name of Crescent Tank Line, and in Canada under the name of Sherbrooke Tank Line. Cars have to be built and maintained in repair, and this is done largely in the repair shops belonging to the Company. Present-day requirements demand that Cars be operated intensively. A force of men is maintained throughout the country to act as tracers and to report upon and hasten the movement of cars.
The work of the Transportation Department involves such business as routing of freight, entering and collecting claims for incorrect freight charges, loss of, and damage to, freight in transit, and following up the multitudinous changes in methods of railroad transportation — such as classification of freight, changes in rates, regulations by State and Federal authorities — all of which requires the obtaining and indexing of large numbers of freight tariffs.
The Transportation Department collects every year from the transportation lines thousands of dollars for incorrect charges and for material lost and damaged. It handles the export business of the Company from the transportation point of view, and also the tens of thousands of tons of ore brought down from the Canadian mines.
For use in New York Harbor and nearby territory the Company operates, under the name of General Lighterage Company, a fleet of vessels, of which one is an ocean-going tank barge; two are
34 THE GENERAL CHEMICAL COMPANY
combination deck lighters and tank barges; one is a steam lighter; one a derrick lighter and one a harbor box. These boats have been specially designed and built as experience taught the needs for special types.
The Company formerly owned two lake steamers for the trans- portation of its Canadian ore, but one of these was shipwrecked and the other taken over by the U. S. Government.
This Department likewise controls the motor vehicles of the Company used for road purposes and the industrial trucks and tractors at the various works.
In order to facilitate the use of these within the works, good road surfaces are necessary and there have been laid recently many thousand square yards of new walks and roadways.
Within recent years, numerous installations have been made of labor-saving machinery to help the Transportation Department in loading and handling the increased and increasing tonnage — such as car loaders, bag-pilers, belt-conveyors, gravity-carriers and barrel-pilers.
The distributing stations at Newark, Bridgeport, Laurel Hill, Providence and Camden are placed under the jurisdiction of the Transportation Department.
APPARATUS PLANTS
Chemical plants require large amounts of earthenware vessels and steel castings. In order to secure an improvement in such apparatus, the Company has found it advisable to install a pottery plant at the Camden works in New Jersey, and a foundry plant at the Pulaski works, in Virginia, and to manufacture most of its own apparatus of these kinds.
CAMDEN POTTERY PLANT
The Research Department of the Company carefully determined the earthenware most suitable for the various uses throughout the different processes, and all ware is now made subject to careful analysis in a properly equipped plant of our own.
In addition to earthenware, the plant produces some other special products for our own use. The careful inspection and
THE GENERAL CHEMICAL COMPANY 35
the analysis control of the eight or ten ingredients which compose the ware, give a much more satisfactory product than we can obtain from outside sources.
THE PULASKI FOUNDRY
This foundry covers about one and a half acres and comprises modern machine, blacksmith and pattern shops.
These pottery and foundry plants wholly controlled by us have produced improvements both in quality and promptness of delivery and in economy also.
We can best complete an understanding of what a chemical works is or should be like by a brief description of our most modern and complete example of a plant.
A MODEL MODERN PLANT: THE DELAWARE WORKS
We have given the name of Delaware Works to the Company's plant at Marcus Hook. It is situated on the Delaware River between Chester and Wilmington and comprises some eighty odd acres of land with a river frontage of approximately 1600 feet, and dock facilities to berth ocean liners drawing 24 feet. The P. B. & W. R. R. branch of the Pennsylvania system connects with the four miles of standard gauge track of the Plant. The switching service is amplified by the use of our own locomotives, which move and make up train loads of finished product leaving the plant daily.
It was in the Spring of 1912 that ground was first broken for the erection of the first sulphuric acid contact units, and these began producing acid in February of the following year. Since then the acid plant has grown to several times its initial capacity. Coincidently the plant has been extended along other lines of chemical manufacture, and the following is a list of the products made on a relatively large scale:
Anhydrous Bisulphite Sulphate of Alumina
Liquid Bisulphite Di- and Trisodium Phosphate
Hyposulphite of Soda Phosphoric Acid
Glauber Salts Sulphide of Soda
Muriatic Acid Salt Cake
Nitric Acid Nitre Cake
36 THE GENERAL CHEMICAL COMPANY
The Delaware works now handles so large a tonnage daily of raw material and finished product, that in order to handle it expeditiously and economically, elaborate and efficient mechanical devices have been installed. Besides the elevators, conveyors, locomotive cranes and other loading devices employed generally, we have constructed 5^ miles of elevated track, on which electric- ally driven tram car trains take the product and raw materials to and from every section of the works.
To give a little picture of these works in operation, we will take for illustration the manufacture of sulphuric acid. The pyrite shipped from Spain comes directly by vessel to the dock which extends out into the Delaware River. Here a large vessel is unloaded in 24 hours by electrical cranes into the tram trains which take the ore, as may be desired, either directly to the burners or to covered storage buildings of thousands of tons capacity. If the ore goes directly to the burners, which are of our own Herreshoff type, the SO2 gas is developed almost immedi- ately, and in a few hours it passes through the entire system and is converted into strong sulphuric acid or oleum, which goes immediately to some one of the many steel storage tanks of 1000 to 2000 tons capacity, and is ready to be shipped by water or by rail, or to be transferred through several miles of pipe lines to the various other departments to be used in the manufacture of the many other chemicals to which sulphuric acid is an essential.
Judging from the speed with which sulphur ore in a boat at a pier may be converted into sulphuric acid, in tank cars ready for delivery to customers, it might be inferred that the capital turn- over in the heavy chemical business is proportionally rapid and that it is a business of small quick profits made large by frequent turnovers — but the reverse is true. In no other business is the turnover so slow. And this is due to the fact that we are dealing here with a product of great bulk and of very low value and price per ton, whilst the plants required to produce it are of great com- plexity and extremely high cost and the operations are costly in repairs and renewals. It is estimated that in a heavy chemical concern the turnover of its capital instead of being an affair of a few hours or days or weeks is accomplished in nothing less than a matter of from eighteen months to two years.
THE GENERAL CHEMICAL COMPANY 37
The operations of this great plant especially in the manufacture of sulphuric acid are made as far automatic as possible, and the control of the strengths of the gases passing or travelling through the various parts of the apparatus and of the resultant liquid products is effected by electrical devices at a central station near the office of the plant whereby delicate and accurate tests of our own devising can be constantly and promptly made for any part of the chain of operations.
All the power used in this plant is generated in a centrally located power house, furnished with the most modern equipment.
This plant is, of course, equipped with extensive shops to handle current repairs, and to take care of the many tank cars that enter and leave the plant each year.
The buildings are all of brick and steel construction, or equally fire resisting material. Concrete roadways extend throughout the plant, making it possible to operate economically many industrial trucks, tractors and trailers between departments, and to make delivery by auto truck into Philadelphia territory.
Of late there have been constructed large and attractive buildings for the service of the employees, equipped with the best of plumbing fixtures, steel lockers, etc., and in addition to this a large dining hall with modern cuisine has recently been completed and is operating successfully.
The plant, although already very large, has considerable room for expansion, both toward the Delaware River on its southern extremity and toward the Post Road which forms its northern boundary.
Summing up what has been just stated and also what is to follow, we may say that a well-equipped, well-integrated chemical enterprise of our day finds itself obliged to enter upon many other fields besides that of pure chemistry. It should enter the mining business to obtain its raw materials. It should know how so to treat crude ores as to adapt them for further uses. It should go into the transportation business in so far at least as to maintain tank cars and tank boats and motor trucks. It may need to establish potteries and foundries to secure advantageously the apparatus best adapted to chemical processes. It must be superior
38 THE GENERAL CHEMICAL COMPANY
in engineering in order to construct the chemical plants required by modern conditions. It may need to enter the real estate field and to build and to rent houses; even to become a great caterer and furnish food for thousands. It will need to maintain hospitals and to learn how to care for the sick and injured; it must be something of a sociologist and study the conditions best adapted for labor efficiency: and in order to practise successfully all these technical arts that have come to be conditions of success in the chemical industry, it must provide itself with a general staff of veritable experts in all these fields.
RESEARCH WORK AND THE RESEARCH DEPARTMENT
N the Research Department there is a general com- mittee with the research director or chairman at its '*g head and the department is divided into such sub- departments as the work may from time to time require. One of the permanent and important divisions is that on
PATENTS
This division has for its head a man thoroughly trained both in chemistry and patent law, who is assisted by a small staff.
This division is responsible for the intimate relationship which should be maintained with the various patent law counsel of the Company, so that the department may be guided in a manner to avoid undertakings that are already in the control of others and so as to protect the valuable inventions of our own Company by patents as well as to avoid infringement of the rights and inventions of others.
It is the policy in some Companies to apply for patents on every minor improvement, however slight and however intrinsically devoid of real invention; the idea seeming to be to strew the paths of competitors with difficulties to be overcome. This policy seems to the General Chemical Company a perversion of the patent law, and our policy has been to confine our patent applications to those improvements and ideas which we sincerely believe to be substantial and inventive.
It is the policy of the Company that all inventions of its employ- ees shall belong to the Company, but the successful work of any inventor on the Company's staff is always substantially recognized.
There are 206 outstanding patents now belonging to the
59
4-O THE GENERAL CHEMICAL COMPANY
Company besides 57 that have expired. They cover such fields as the contact process for sulphuric acid, the Herreshoff roasting furnace, nitrogen products from the air, the making of muriatic acid and various phosphates of soda, etc., etc.
We are indebted to the Research Department for the work of bringing to perfection the Ryzon baking powder mentioned later on, as well as for the work in developing processes for sulphide of soda, hyposulphite of soda, sulphite of soda, bisulphite of soda, monosodium, disodium and trisodium phosphates and many other products.
It will be possible to signalize but a few of the results obtained by the unremitting activity of the Research Department. The larger results will be described under separate headings.
£
CHEMICALLY PURE PRODUCTS
The manufacture of chemically pure acids and fine chemicals requires the most careful work of the chemist. While the volume of this business is small compared with the rest, it is a highly important branch of our business. The use made of these products by scientists, by laboratories and by druggists in medicinal prepara- tions, their influence in perfecting our processes and in insuring the accuracy of our analyses are important factors of success. The plant acquired by this Company for the manufacture of these fine chemicals was the first of its kind in the United States. Until it was built and operating it had been supposed that products of such fineness could be made only abroad.
IMPROVED ACCURACY OF TESTS AND IMPROVED QUALITY
One example of this accuracy, more fully treated later on, is the perfection of our system of purifying gases from arsenic- bearing ores in the sulphuric department, where an absolutely arsenic free product is required and obtained on a great commercial scale. Another example is to be found in the case of sulphate of alumina, where the Federal Pure Food Department established a standard of but two parts of arsenic in a million. This article as manufactured by this Company on a large tonnage scale was thereupon so made as to contain but one part of arsenic in a million,
THE GENERAL CHEMICAL COMPANY 4!
and this is a smaller content of arsenic than would be found in many of the most healthful food products. The methods that we have developed for the detection of arsenic are a very great improve- ment on the past. Twenty years ago the presence of arsenic in sulphur ores to the amount of half of i% was doubted by the chemist. It is now easily identified to the sixth decimal place, that is one part in a million. We have succeeded in determining the presence of copper, lead, zinc, antimony and fluorine, even in routine work, to the fourth decimal place, that is one part in ten thousand.
INSECTICIDES
The subject of arsenic suggests the manufacture of Insecticides and Fungicides, in which this poison plays a considerable role. The insecticide and fungicide business has been greatly developed by the Company in the last few years, not only in the East but also and very largely in the San Francisco plant.
This development is carried on in close touch with the Federal and State Agricultural Departments in their efforts to educate farmers. Twenty or thirty years ago farm practices in raising fruit were most casual. Fruit developed either sound or unsound, according to the decrees of Providence. The bulk of the apple crop (being deformed) was consigned to the cider mill.
About twenty years ago a pest known as the San Jose scale made its appearance, brought from China, by way of Japan, and fruit growers, alarmed by their dying trees, appealed to the authorities and to agricultural colleges. The success in developing sprays to combat this pest led to the appreciation of other forms of insecticides to meet other conditions, and now the value of insecti- cides and fungicides is recognized by the farmer and by the fruit grower who has become usually a specialist in one or two fruits best adapted to his particular region.
The distinctive products of this Company that emerged from its researches were Atomic Sulphur, B. T. S. — that is, Barium Tetrasulphide — Arsenite of Zinc, besides comparatively large tonnages in Lime-Sulphur and Arsenate of Lead. The distribu- tion of these goods has led to the creation of trade-marks of great value to the Company.
42 THE GENERAL CHEMICAL COMPANY
The Company also publishes and distributes literature describ- ing the troubles to be treated and the proper use of the products to cure them, and it acts generally as an Intelligence Department and Bureau of Education.
COAL TAR PRODUCTS
The research staff had already before the war developed processes for a number of coal tar products including Hydro- quinone and certain other products used as photographic develop- ers; and shortly after the beginning of hostilities it was able to place on a manufacturing scale the manufacture of Diphenylamine which is used as a stabilizer in smokeless powder and for the pro- duction of certain dyes; Dimethylaniline for the manufacture of tetryl which is used as a detonator and as a very strong explosive and in other ways; Diethylaniline for the pharmaceuticals and colors; Benzidine, Toluidine and H-Acid for aniline dyes; and more lately, a number of chemicals entering into poison and tear gases.
If any one imagines that the coal tar branch of the chemical industry is a simple one and easy to pursue, let him before he goes too far devote himself to learning the names of some of the products. Two of the new products which we developed under the exigencies of war bore names such as these: — One is called Monomethyl-Paramidophenol Sulphate and the other is known as /: 2: 4 Diamido Phenolhydrochloride .
This coal tar branch of the business was subsequently turned over to the National Aniline and Chemical Company, as described later on.
We may now consider in more detail those results of the research work that developed very especial importance. In doing so we must bear in mind not only the splendid services of the Research Department and its staff of special investigators — but also the cooperating aid of the entire organization — and the direction at the top which pointed out fields for investigation and often the methods of investigation to be pursued.
VI
THE REVOLUTION IN SULPHURIC ACID: CATALYSIS
Kdf^KW^^ had been for some time known that a process in some
y- vupJ Vjl/'i. • . .
&"" "JQ form for making sulphuric acid by what is now known |$ as the catalytic or contact method was being worked ^ on a commercial scale in Germany. In about the year 1900 investigations were begun by us, and by 1906 a completed and successful plant was in operation. Although our system had been originated independently and differed from any other, it came into collision in the Patent Office with the so-called Badische system, the invention of Dr. Knietsch. Investigation convinced us that although our system did not utilize any of the apparatus or details of that system and although we wanted none of them, nevertheless that we probably did infringe on the basic inventions of that system, which appeared to be fundamental for all. This led to our purchase outright of all these Badische patents for the United States. In the intervening years much has been done to perfect the contact system; but to this day we have failed to use any of the apparatus or details of the patents so purchased.
The change is so revolutionary and the product is so important, that a little descriptive explanation may be interesting to those not familiar with it; and this will be made clearer by contrasting the newer contact system with the older chamber method of making acid.
In the CHAMBER SYSTEM, which had been brought to a high degree of development, the sulphur fumes from burn- ing brimstone or the burning of sulphur ore like pyrite were led into a large chamber filled with steam. Minute amounts of nitric acid were introduced and the sulphur gas in the fumes,
43
44 THE GENERAL CHEMICAL COMPANY
known as SO2, would here take up another atom of oxygen from the air, making SO3, a gas called sulphuric anhydride, which, com- bined with water from the steam, would fall in the form of a weak sulphuric acid liquid to the bottom of the chamber. From this it would be drawn off as weak acid. This was known as chamber acid; it was not pure sulphuric acid — that is, of perfect standard strength (100% H2SO4) — but only about 65%. To bring this acid up to 100% strength was exceedingly costly, but it was possible to bring it up to the strength of oil of vitriol, which is 93%, and even up to 97 or 98% by distillation in platinum at a con- siderable expense. This chamber acid when made in the most economical way, that is, from pyrites or similar cheap ores, would take up the impurities, arsenic and other, contained in the ore. And these could only be removed at considerable additional expense.
The CONTACT SYSTEM proceeds exactly the other way about, and produces as its first product an acid that is both strong and pure; if weak acid is wanted the product is merely diluted with water and without expense. In this Contact or Catalytic System the sulphur fumes must be freed from all dust and impurities, since the oxidation is effected by contact with an agent known as a catalyst or catalyzer — in this case platinum — and this catalyst is extremely sensitive to gas impurities. If the fumes come from ore like Pyrites, containing arsenic, lead, zinc and other impurities, a most elaborate purification is effected by passing the gases through various treatments and various apparatus costly to erect and more or less difficult to control, but which iff fact, with the modern chemist in charge, do work with marvelous precision and economy. These purified gases pass into an apparatus known as a converter, where the catalyst is found. Usually these gases contain but 6 to 8% sulphur fumes, that is SO2, the rest being air — the oxygen of the air being necessary to effect the oxidation.
These gases are heated to about 750 deg. Fahr. and at this temperature this thing known as the catalyzer (the platinum) is endowed with the power of causing the sulphur gas (SO2) to unite with a certain amount of oxygen from the accompanying air to make SO3 — that is that same sulphuric anhydride already mentioned. It requires the combination of a heat regulated to
THE GENERAL CHEMICAL COMPANY 45
about 750 deg. and this catalyzer to accomplish this result. And right here was one of the great difficulties to be overcome. The chemical union of SO2 and oxygen produces a great heat of reac- tion. This heat tends to raise the gases to so high a temperature as to dissolve the elements of union back into disunion — into SO2 and O again — to undo the work already done.
But means have been devised not only to carry away this surplus heat so as to keep the temperature in the converter nearly constant — but what is more this heat of reaction is most ingen- iously utilized to heat the incoming gases up to the 750 deg. required — and thus a great saving in coal is effected. The dry gas is then passed on and absorbed by strong acid so regulated that the resultant acid is maintained constantly at about 99% H2SO4. Oleum or fuming acid is made by the absorption in the strong sulphuric acid of more of this dry sulphuric gas (SO3) to such a degree as may be desired, making the resultant product an acid of 120 or 130 or 140%. Fuming acid is really standard acid 100% strong with a certain amount of sulphuric anhydride gas dissolved or held in it mechanically.
The part played by the catalyzer in causing chemical reaction has been, and despite numerous hypotheses still remains, a mystery. Nothing else in chemistry so much resembles the magi- cian's wand. Its presence and its contact cause a union of atoms to take place without which the union would not take place, or so feebly as to be of no value; and yet this catalyzer is itself entirely unaffected, provided all impurities be previously excluded, and it can continue to go on performing this mysterious work year after year totally unchanged. But so delicate is the catalyzer that if the minutest amount of harmful impurities be left in the gas, such as arsenic, it soon becomes poisoned and its catalytic action grows gradually less and less. For this reason the purification of the gases must be perfect. Such perfection has been attained in our system that the acid now made from the most arsenious ores is more free from traces of arsenic than acid made from arsenic-free brimstone brought from Sicily or Louisiana, and some of our converters have operated continuously and efficiently for ten years. Fuming acid cannot be made by the old chamber process alone,
46 THE GENERAL CHEMICAL COMPANY
and as a matter of fact it was not industrially known in this country until a few years ago. It has now become a commodity of very extensive use.
The working of the contact or catalytic process although more economical for the higher strengths of acid than the old chamber process, is much more complicated and requires a very much higher order of chemical and manufacturing ability. And its operation has brought about standards of analytical work, the refinements of which were never dreamed by any chemist previous to 1899, and these refinements have made possible the development of such other matters to be spoken of later as synthetic ammonia, and synthetic nitric acid from the atmosphere, whilst the present- day coal tar dye industry is bottomed on strong and pure acid.
This change has likewise brought about the application of machinery to a chemical plant — mechanical devices of every sort that prior to 1900 would have been regarded as fundamentally unsuited to the chemical industry. Nowadays a chemical process plant looks much like a vast machine shop. The number of cen- trifugal pumps, automatic valves, pyrometers, etc., in use would astound any superintendent of ten or twelve years ago. A great enlargement of units has ensued arid liquid and solid chemicals are now moved and controlled by machinery and tested by auto- matic devices.
CATALYSIS
Catalysis is not confined to the manufacture of sulphuric acid. It has become an important feature of chemical reactions in the forming of many other combinations, and notably so in the fixation of atmospheric nitrogen. Catalysis is in effect causing a revolution in many branches of technical chemistry.
What it has done in the sulphuric acid field may be seen when it is considered that the purest and the strongest acids may now be made from the most impure and otherwise waste gases, and that these strong acids have rendered possible the great aniline and coal tar industries. The greatest authority on sulphuric acid, Dr. G. Lunge, pronounced the basic inventions acquired by us in this field as constituting the greatest revolution that has taken place
THE GENERAL CHEMICAL COMPANY 47
since that acid became a commercial product. Other eminent authorities have paid equal tribute to their importance.
But advantageous and indispensable as the contact system has become it cannot be denied that it requires a far more costly plant than the old chamber system per unit of product and a higher order of control, and it is not likely that it will ever super- sede the older system for those who require only the lower grades of acid.
ff
VII
THE CREATION OF A GREAT COAL TAR PRODUCTS INDUSTRY IN AMERICA
HEN the War broke out and the scarcity of colors and other coal tar products threatened disaster, the American chemical industry was severely blamed for its lack of < progressiveness, and its alleged inferiority to the German. No one thought of blaming the Government for not having pro- tected by a tariff the coal tar color industry as it had protected other essential industries almost without exception. Protection had been the rule for half a century and the industries protected were thriving like the green bay tree. Free trade was the excep- tion but unfortunately it was an exception which applied to the coal tar industry; and the coal tar industry in the face of Germany's overwhelming advantages simply could not exist — so that when the War broke out this country was able to manufacture few colors and these only partially; and few coal tar explosives — and our chemical industry was confronted with the need of doing forthwith what it had taken Germany fifty years to accomplish.
And the impossible has been realized.
Chemists and chemical concerns rose to the occasion all over the country. The coal tar products needed for explosives were soon manufactured on a large scale. The textile interests and other users of colors were soon furnished with a few, and, an ever increasing number of colors, at first of doubtful quality, but gradu- ally of an improved and improving quality — until now the most important colors are made here and the quality of those of the best makers equals that of the best of their kind anywhere.
This could never have been done had not some small founda- tions of a coal tar industry already been laid in spite of all dis- couragements. To speak only of those which concern ourselves:
+9
5O THE GENERAL CHEMICAL COMPANY
Schoellkopf of Buffalo had made a few colors for years — but he was dependent on German coal tar intermediates and his business was really a mere assembling of ingredients. He, however, learned the business and stuck to it against all discouragements and lack of profits.
Wm. Beckers began in the same way in 1913 but on a smaller scale.
A most important factor in the subsequent success was the Benzol Products Company formed in 1910, by the joint efforts of the General Chemical Company, the Semet-Solvay Company and the Barrett Manufacturing Company. The transformation of the coking industry of the United States from the beehive coke ovens to the by-products coke ovens resulted for the first time in the saving of the by-products from the distillation of coal tar, benzol and toluol, which the American Chemical Society has lately elected to call benzene and toluene, respectively. These are the raw materials to the making of colors and of many explosives. The two latter companies (Solvay and Barrett) controlled large amounts of these by-products. The General Chemical Company produced fuming acid and other chemicals required in the business. The first ambition of the new Benzol Company was to make aniline oil and salts — intermediates so-called — that were essential in color making but not themselves colors. Much experiment was needed but by 1913 the Benzol Company had so far perfected its processes that it would have been able to earn a satisfactory profit at the prices then made in this country by the German trust or kartel which was supplying the market. Then occurred one of those examples of German business methods that had done so much to create their coal tar monopoly and to enable them to laugh at a country where anti-trust laws suppressed the kartel at home without protecting its industries from the kartels abroad. The German kartel lowered the price of these anilines below the German cost of production. And the little Benzol Company lost money month after month and was still losing when the War broke out. Then came its opportunity.
So-called color makers sprang up all over the country. Their demand for aniline oil and salt was enormous. The Benzol
THE GENERAL CHEMICAL COMPANY 51
Company made money and put it into the erection of a large up- to-date plant at Marcus Hook adjoining this Company's chemical plant at that place. And soon the Benzol Company was able to supply the country's entire needs in aniline oil and salt. Color makers improved and completed their processes. Schoellkopf and Beckers especially made great progress and greatly enlarged their works and the War gave the color business the first adequate protection it had ever had — and its first prosperity.
But it seemed doubtful whether this business could be main- tained after the return of peace and German competition. The industry was too dispersed. It was in order to integrate the industry and to form a company that should be able to make coal tar colors and intermediates in all their phases from start to finish that the idea was conceived of uniting in the National Aniline & Chemical Company, the color business of Schoellkopf and of Beckers with the Benzol Products Company and enlisting the help and capital of the General Chemical Company, the Semet-Solvay Company and the Barrett Manufacturing Company, together with the accomplishment of these three last named companies- in the development of coal tar intermediates.
The National Aniline & Chemical Company now supplies, if we may believe the estimates of Government officials, some 55 to 60% of the color business of this country. Its exports of dyes are greater in value than were all this country's German imports of dyes before the war. And it has the backing of the three strong companies named.
So serious was the situation as to colors and explosives and so imperative seemed the need of this industry that in 1916 this Democratic Administration, though committed to a Tariff for Revenue only, embodied in their Revenue Bill of that year a small measure of protection for certain colors and intermediates. But since that time wages and other costs in this country have increased enormously.
The National Company is now a strong and well integrated concern. But if besides having to fight the long experience and unscrupulous methods of the German kartel it should be compelled to pay a far higher scale of wages, it could scarcely
52 THE GENERAL CHEMICAL COMPANY
be expected to succeed without some form of protection for at least several years to come.
The success of the National Company will benefit the country at large not merely by making the textile and other users of colors independent of foreign kartels, but also by establishing a per- manent coal tar industry which could be quickly turned to munitions should this country ever again unhappily become embroiled in war.
The injury that was done to industry in this country at the beginning of the war through lack of colors and through lack of facilities for making munitions and its narrow escape from disaster is an object lesson in the vital importance of encouraging and maintaining a large, prosperous, complete, thoroughly integrated coal tar industry. We submit that in forming one company that fulfills these conditions, we have done our part.
The rest is in the lap of the gods — at Washington.
VIII
RYZON AND ITS RELATION TO OTHER LEAVENING AGENTS
N modern conditions, baking powders are essential for certain forms of baking. The leavening force in tnem as m Yeast is carbonic acid gas (carbon dioxide), S; which, in baking powders, is generated from the alkali, bicarbonate of soda, by means of an acid. RYZON uses as its acid content acid phosphate of soda or monosodium phosphate. The value and healthfulness of this acid reagent had long been known, but it had not been known until we found the way and patented it, how to stabilize the mixture and keep it from spoiling prematurely.
The object of leavening in baking is to aerate the dough so that the bread or cake when baked will be light and porous, and when eaten will present as much surface as possible to the digestive juices. In other words, leavening renders the food palatable and digestible.
Carbon dioxide gas is the aerating agent in practically all leavening methods.
The oldest leavening material of which we know is yeast, which is older than recorded history. The active leavening sub- stance in yeast is carbon dioxide. Yeast is a plant form of low order which changes saccharine matter into carbon dioxide and other incidental substances, but the carbon dioxide is the sub- stance which does the work.
The oldest baking powder, broadly speaking, may be con- sidered to be sour milk and baking soda (sodium bicarbonate).
But the success of this leavening agent is too dependent on luck and the skill of the particular cook.
Calcium acid phosphate was proposed and patented by Prof. Horsford in 1856. Cream of tartar baking powder appeared in
S3
54 THE GENERAL CHEMICAL COMPANY
1866, and alum powder about 1876. The General Chemical Com- pany has been interested in the baking powder problem for a long time. It appreciated the importance and necessity of it in domestic economy, as well as the defects of the powders offered to the consumer. The question was — whether there was any substance available which would properly function in the form of baking powder with sodium bicarbonate, and at the same time belong to a class of substances commonly existing in foods — substances necessary to health and life and which could be produced in pure form from domestic raw materials.
Lactic acid (the active ingredient of sour milk) does not fulfill the requirements. Neither does acid potassium tartrate (cream of tartar), because it is made from an imported raw material and also because it leaves a residue in the baked product of Rochelle salt (sodium-potassium tartrate), which cannot be classed as a common or necessary food substance.
Neither is alum (sodic aluminic sulphate) the solution. Alum baking powders leave a residue of aluminum hydrate and sodium sulphate and neither of these substances is a common constituent of food, nor is either necessary to health and life.
After a number of years of research work the General Chemical Company found the answer to its question in mono- sodium phosphate.
One of the elements required in food is phosphorus. This is a common and necessary constituent of, and is present to some extent in, all animal and vegetable foods. Animals, including man, would die in a short time from phosphorus starvation were this element absent from their diet. It is stated on good authority that many typical American diets contain so little phosphorus that those using them are not properly nourished.
Monosodium phosphate crystallizes from solution like sugar. Any traces of impurities remain behind in the mother liquor which can be reworked. Crystallization is nature's method of purifica- tion.
Calcium acid phosphate does not crystallize in this way. This is got into a dry form by evaporation and any impurities in the solution, not removable by chemical means, get into the product.
THE GENERAL CHEMICAL COMPANY 55
The merits of Ryzon, compared to acid tartrate (that is cream of tartar) powders, are that it excels in healthfulness; compared to alum powders, that it excels in purity and healthfulness; and compared to calcium phosphate powders, that it excels in purity and strength. In baking results and efficiency it is believed to excel them all.
A not unimportant feature of Ryzon is that it is entirely inde- pendent of foreign markets for its raw materials.
Ryzon and the methods for making it are protected by six patents in this country and also by patents in Canada. The stabilization of the monosodium phosphate is effected by means of starch which adheres as a fine film or coating to the minute particles of the phosphate and prevents premature reaction.
Ryzon has been received with great favor by the consuming public and its larger exploitation has only been delayed by the difficulty in this time of storm and stress of getting the necessary amounts of raw material and by the prohibitory cost of enlarging factories. As an example of its success, it already counts among its customers — the U. S. Military Academy at West Point, the U. S. Naval Academy at Annapolis, nearly all the leading hotels, restau- rants and clubs of New York City, the Massachusetts General Hospital of Boston, many domestic science schools, the Bellevue- Stratford Hotel of Philadelphia, the Copley-Plaza Hotel of Boston, the Statler System of Hotels, the Harvey Restaurant System of the Santa Fe and the leading hotels of many of the other cities.
Capacity of production is being greatly enlarged and a much increased output will be placed on the market the current year.
IX
MANUFACTURING NITROGEN PRODUCTS FROM THE AIR
f^ITROGEN is four times as abundant as oxygen in the atmosphere about us and is essential to both plant and $ animal life. Yet, whilst oxygen readily gives itself up to help us whether to aerate our blood in breathing or to burn the fires that warm us, or as we have seen, to oxidize our SO2 into SO3, so that industrial chemistry may live — it is only by ways that are devious, that the nitrogen of the air can be brought to cooperate with us — whether to enter the plants we may be growing or the foods on which we depend for nourishment, the clothing that we wear or the numerous other substances that our complicated wants insist upon.
If a layman were to judge atmospheric nitrogen by its behavior, he would be inclined to think that it must be held in the air in a chemical union of great strength. But this is not true. Unlike water, the air is not a chemical compound, but a mere mechanical mixture of nitrogen and oxygen in a usually pretty definite ratio of about four to one yet capable of slight variation. Water on the other hand is a chemical union of two atoms of hydrogen to one of oxygen — never varying.
Chemists cannot explain, they only state a fact, when they say that oxygen is an active element having a great affinity for an immense number of other substances, whilst nitrogen is an inert element having little affinity for anything.
Certain it is that atmospheric nitrogen at the ordinary tempera- tures of air and under ordinary conditions, inexhaustible as it is, is utterly unavailable, whether for physiological or manufacturing purposes. It will not combine. And nitrogen uncombined and uncombinable is of no use whatsoever.
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Only in its compounds can we humans utilize it.
Perhaps we can best realize this inertness and aloofness of nitrogen by bearing in mind the fact that whilst it comprises by weight or volume about 80% of the atmosphere it forms but two hundredths of one per cent of the entire earth's crust including as crust both air and water and land so that the amount actually contained in the land itself is relatively trivial — and this after ages and eons of the interplay between earth and air.
Our problem is to coax more of this recalcitrant element from air to earth so as to combine it in useful forms.
Until lately, the problem seemed impossible of solution.
Nature herself with Infinite Time at her disposal had in the course of ages withdrawn a little nitrogen from the air into forms that were useful to man. She had stored some nitrogen (less than one half of one per cent) in her beds of coal; — quite large per- centages (15^2%) in the deposits of Nitrate of Soda limited how- ever to the rainless zone of Chile. She set life a-going with a certain amount of nitrogen in its bodily structures. How she did this may not be perfectly clear — but Nature has controlled temperatures and pressures and forces, organic and inorganic, which we are but trying crudely to imitate.
Animal and vegetable waste matters have always yielded to the farmers available nitrogen to fertilize the soil — but an amount quite insufficient for modern systems of intensive cultivation. And this source is merely the same old nitrogen used over and over again — coming from one form of life to nourish another — no fixing of new nitrogen from the air whatever.
At one time scientists built great hopes on their discovery that certain leguminous plants, such as common peas and beans and clover, possess the faculty of drawing nitrogen from the air. They do this indirectly by means of nitrifying bacteria which take the nitrogen from the air and give it to the plant; and so it was seriously thought feasible to raise these particular plants on a large scale and plow them into the soil as fertilizer. But the theoretical proved not to be the practical.
Science was more successful when it turned to the ammonia gas liquors from the coking of coal. Ammonia is made up of one
THE GENERAL CHEMICAL COMPANY 59
atom of nitrogen and three atoms of hydrogen, and the nitrogen in this form can be made useful, but this source of supply is limited to the demand for the coke from which it is a waste product.
And thus it has been that something like a half of the supply of nitrogen for manufacturing purposes has been and still is the nitrate of soda that comes from Chile — the other half being furnished by the ammonia which comes from coal.
A few years ago the alarm was authoritatively sounded that Chilean nitrates — the world's sole supply of nitrates — could not last much above 100 years. This gruesome warning led the chemists to turn once more to that inexhaustible but refractory source of supply, the circumambient atmosphere. And once more, the philosopher's stone has been found, or rather perhaps three philosophers' stones, for there are now three methods for the fixation of atmospheric nitrogen that dispute the field.
Happily nitrogen is not always and everywhere and under all circumstances inert. Under intense heat it may change its char- acter entirely — for it may then not only combine in useful ways that are harmless — but in others also that furnish man's most powerful engines of destruction^-the high powered explosives.
Another curious fact about nitrogen is that right in the air which it serves to make up lie all the elements for a useful product. If only, instead of lying there inert, two atoms of nitrogen could be made to unite chemically with five atoms of oxygen lying alongside together with a little of the water vapor in the air, nitric acid would result which is another useful compound of nitrogen. And scientists had actually observed that this thing is occasionally accomplished in nature. They have been able to detect minute particles of nitric acid formed as the result of lightning.
ELECTRIC ARC PROCESS
The first method seriously attempted for fixing the nitrogen of the air is the electric arc method. The success of this method depends upon developing intense heat by electricity and this presupposes a cheap water power not to be had readily outside of Norway.
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The principle here is believed to be that when air is intensely heated electrically, the nitrogen ignites and combines with the oxygen to form oxide of nitrogen which can be converted into nitric and nitrous acids by means of steam and air.
But nitric acid is a dangerous product to transport and so the Norwegians converted their product into lime nitrate and sodium nitrite for export. It is, however, doubtful whether these products can compete in most parts of the world with the products of Chilean nitrate.
So scientists could report progress but not a final solution — Chilean nitrate was still the cheapest source of supply for the world generally.
Two other processes have been tried — one known as the cyanamide process, the other as the ammonia process — both of which dispense with the need of enormous power.
THE CYANAMIDE PROCESS
Calcium carbide (from lime and coal), long used as a source of acetylene for illuminating purposes, when subjected at a high heat to the action of pure or nearly pure nitrogen yields a new product called cyanamide which itself has found extensive use as a fertilizer. This cyanamide when treated with steam produces ammonia in gas-form which, like the ammonia contained in crude illuminating gas, can be converted into the aqua ammonia of commerce, liquefied ammonia for refrigeration, and ammonia salts to be used for fertilizer purposes or for ultimate conversion into nitric acid and its salts. The nitrogen in this process is usually obtained by liquefying air at low temperatures and separating the nitrogen gas from it at its boiling point which is different from the boiling point of oxygen. For this purpose large and expensive fur- naces are required to handle enormous amounts of raw materials, since the process converts into useful form but a small part of the great bulk of material handled. And this material is handled largely in the form of solids much more expensive to move than are liquids or gases. As the plant costs are high and repairs heavy, this process seems to be quite an expensive one.
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THE AMMONIA PROCESS
This process is thus called because the first product in the fixation of the nitrogen is ammonia composed of one atom of nitro- gen to three atoms of hydrogen, expressed as NH3. From that form, it may be converted into compounds of nitrogen by methods — some known and others to be yet found or improved upon.
The reaction has been known scientifically for a long time. The first commercial success or near-success is believed to have been made by Le Rossignol (an Englishman) and Haber (a German) operating in Germany. The earliest disclosures in this field were given to the world. Subsequently the Badische Company of Germany patented certain features of their own.
Of all these methods of nitrogen fixation, it seemed to the research department that the ammonia method promised the best results both in economy and yield.
This method consisted in bringing nitrogen and hydrogen to- gether in an apparatus under enormous pressure and at high temperatures in the presence of some one of those substances that had been discovered to act as a catalyzer — where the united effect of pressure, heat and catalysis was to cause three parts of hydrogen to unite with one part of nitrogen and to form ammonia.
So that we are here in the presence of catalytic action once more.
The previous work done along this line had left a very large field open to further investigation and exploitation and an enormous opportunity for improvement.
Investigation was begun by the research department and after five years of work these efforts in 1916 resulted in an ammonia process of our own essentially differing from anything known up to that time; and achieving success in a field where previous inves- tigation had not only failed but had led to the prediction that commercial success would be impossible.
The nitrogen for our purposes is obtained by heating the air in the presence of compounds of carbon, so that the carbon will unite with the oxygen, leaving the nitrogen behind; the necessary hydrogen is obtained by superheating steam with the result that the oxygen combines with some other substance and the hydrogen is set free; and then the pure nitrogen and hydrogen gases thus
62 THE GENERAL CHEMICAL COMPANY
developed are brought together in the proper proportions — one volume nitrogen to three volumes hydrogen — in the presence of those catalyzers, of which we have made discovery as being best adapted to our process.
In 1917 this Company had arranged to build a plant on a com- mercial scale for this process, when the United States Government, about to embark in war, and eager to increase its nitric supply and to be independent of foreign countries for its raw materials, investi- gated and approved of our process. We thereupon offered it to the Government to be used by it for munition purposes, free of all charges for the period of the war. This offer was gratefully accepted by the War Department, and in September last a large plant for its manufacture had been in part completed by the Government, at Sheffield, Alabama.
Yet it must not be concluded from this that all work is over and financial success assured.
As in all such new inventions much work remains to be done to perfect methods and apparatus; and this work of improvement may well go on for years, as was the case with our sulphuric acid processes, before methods and apparatus can be finally standardized.
We are, however, quite justified in saying that this plant has more than fulfilled our first expectations and has greatly strength- ened our former confidence in this process.
X MINES AND MINING
HE "Heavy Chemicals" of our industry, complicated as they are to make, are regarded by other industries as mere raw materials. And the U. S. Tariff so regards them — for "heavy chemicals" are nearly all placed on the free list as a still further and indirect help to the industries that are directly protected. We do not complain. We feel on the contrary rather proud of the fact that the Chemical Industry is so far advanced in scientific and business efficiency as to be able to dispense with the props of Protection to so great an extent.
The chemical industry seeks most of its raw materials at the ultimate source of things — the earth itself and the mines. The chief sources of sulphur are brimstone as mined in Sicily and in Louisiana, which is sold as nearly pure sulphur, and metalliferous ores containing sulphur such as iron and copper pyrites and zinc blende. It is highly desirable for a large chemical company to control a considerable part of its supply of sulphur.
This the General Chemical Company now does. For some years it has included mining engineers on its staff and has conducted a considerable amount of prospecting in this country and adjoining countries.
Its first marked mining success was due to long and careful work by the research department. A mineralized zone several miles long, by a quarter to half a mile wide in Carroll County near Pulaski, Virginia, had long been known as "The Great Gossan Lead." The ore lay in pockets. In the upper portions the ore had been oxidized by the weather and the sulphur eliminated. This top ore known as gossan was rich in iron but this had been mostly stripped off and sent to the blast furnaces. Below
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the water line the ore still rich in iron contained about 30% of sulphur, which made the ore refractory; and the owners had been wholly unable to utilize it profitably. The content of sulphur was too low and the location too distant for the sole use of making sulphuric acid — and the then known methods of roasting the ore so as to drive off the sulphur were so imperfect as to leave in the ore a residue of sulphur that rendered the resultant cinder unfit for the blast furnace. In this situation the owners brought their problem to the General Chemical Company for solution. When after years of work the problem had been solved, a company was formed by both interests to own the mine and build an acid plant at Pulaski. And as the acid and the iron cinder are now by-products of one another, — and both are of high grade, — the operation of the mine, before impossible, became possible because of the two products that resulted.
The new company was finally absorbed by the General Chemical Company, the former owners becoming stockholders with us, and the Pulaski factory has been much enlarged and has been drawing its sulphur material from this formerly refractory body of ore. The iron cinder after roasting and nodulizing in rotary kilns is sold to an iron furnace near by and forms a part of the highest grade ore that this furnace uses.
The efforts of the mining department have been rewarded in other directions, more especially in Canada.
The Canadian business and the Canadian mines are held by the Nichols Chemical Company, Limited, as a subsidiary.
At NORTHPINES, ONTARIO, about ij^ miles from the Grand Trunk Pacific Railway, and 200 miles northwest of Fort William on Lake Superior, we have a valuable mine containing an iron pyrites ore carrying 40% sulphur as shipped.
The ore is mined, hand picked and crushed, then transferred to railroad cars by means of an overhead wire cableway ij^ miles in length which during the shipping season (May to November, inclusive) discharges directly into cars. During the winter season when the lake shipping ceases, the ore is stockpiled at the railroad spur.
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After being transferred to Fort William, the ore is unloaded and stockpiled on the dock, from which it is loaded into lake steamers for transport to Buffalo, Cleveland and Chicago. This ore is burned at our works at these points, and also at our Pittsburgh plant at Newell; material to the latter point going first to Cleveland, thence by rail.
The mining operations are entirely underground. A consider- able unmined supply is still in sight.
Located at GOUDREAU, ONTARIO, on the Algoma Central and Hudson Bay Railroad, 17 miles south of Franz, the junction point on the Canadian Pacific Railway, is our Goudreau Mine. All mining operations here have so far been open cut. At this place there is a large mineralized area and there are many ore bodies varying in size from those too small to mine economically to some containing fairly large tonnages. Practically all of the ore is a low grade pyrite. Steam shovels and narrow gauge locomotives are used. The sulphur content varies from 25% to 35% and the ores are blended so as to secure about 30% sulphur in the material shipped. We have built a small modern town at this point. A large boarding house accommodates the single men; the others are housed in well built family houses. A crushing plant having a capacity of 100 tons per hour, with the necessary power house, crushes the ore to 2j^" size for shipment in railroad cars to Michipicoten, distant about 50 miles south on Lake Superior. Here the ore is transferred from the ore dock to lake boats and carried to lower lake ports.
From 1915 to date we have shipped nearly 300,000 tons. As at the Northern mine, the shipping season lasts from May to Novem- ber.
At SULPHIDE, ONTARIO, on the Canadian Pacific Railway, Montreal-Toronto line, 200 miles from Montreal, we have a mine and small acid works together. The mine has been operated for about fifteen years, the ore having been shipped to the Buffalo works prior to the completion of the plant at Sulphide, since which time all the ore produced at the mine has been utilized at Sulphide. Underground mining has been followed from the beginning, and at the present time the workings are some six hundred feet deep.
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The ore is rather low grade, 30% to 36% Sulphur, but is 'very free burning so that the Sulphur recovery is high.
Located 30 miles northwest of FORT WILLIAM, ONTARIO, on the Canadian Northern Railway is a rather promising prospect acquired by lease during 1917 and called Mokomon Prospect.
We have also conducted some other mining operations, though somewhat indirectly and in other fields.
XI
RELATIONS WITH WORKMEN: THE SERVICE DEPARTMENT
N general this company's relations with its workmen have been particularly satisfactory. Long before Work- men's Compensation Acts became embodied in our laws this company adopted the policy of extending aid to workmen or their families in cases of injury or death — irrespective of any legal liability involved. We welcomed the Compensation Acts as a means of making the cost of accidents a part of the cost of general production, imposed upon all employers alike instead of being left to be assumed by the few. But our attitude on this whole subject of labor has gone far beyond those initial stages. Like many other similarly disposed corporations we realize that we are here in the presence of problems of the highest importance, not only to the men themselves, but to productive industry as a whole — and not only to productive industry but to society at large. As our industrial system may change for better or for worse, our very political structure may change for better or for worse.
Labor must be contented in order to be efficient. It must be efficient in order to be contented. This is no vicious circle; for only by contentment and efficiency can labor produce in compara- tive abundance those innumerable products that labor itself is coming to require in ever increasing quantities.
Probably the greatest impediment to full labor efficiency in the present-day industrial system is the workman's lack of interest in his work. Each man is too much part of a vast labor machine, too much like a single cog on a giant wheel to be able to see the results of his own efforts — whether he put in a little more or a little less zeal; and the work too often palls. It seldom calls forth
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the best that is in the man — seldom evokes the interest that would make work easy that is often fatiguing.
The man who can invent a method, or system, for making workmen feel the same interest in their work that they felt in the times long past when workmen were working with and under the master himself, will have come near solving the problem of the efficiency of labor and its contentment, and will have delivered a body blow to Socialism and all the other "isms." But the coming of this Messiah is doubtful, and until he comes we must do all that we can to improve a situation that we may not be able to perfect.
We have no doctrinaire notions on this great subject. We are merely feeling our way with open minds — sympathetic alike to the claims of labor and to the indispensable best interests of the com- munity at large. And from the beginning we have sought to establish justice in the relations of the company with its men. More and more we have felt the need of insuring their safety and their health by every possible means. We have endeavored to interest them — if not in their specific work, at least in their jobs, and we have encouraged them in their amusements. Latterly we have encouraged the formation of company associations side by side with those of the trade unions — and we have found committees of workmen at certain of our works a valuable aid to the conduct of the works and to the promotion of discipline and just dealing.
We call all these problems Service Problems.
Without tracing the steps that led up to it, we now have a Service Department, whose head is a member of the general Operat- ing Committee.
Like other departments, the Service Department holds weekly committee meetings attended by its more important members and by representatives from the Mining, Metallurgical, Engineering, Insurance and Manufacturing Departments. The personnel of the Service Department includes a medical director, a sanitary engineer and an architect. Records are kept of personnel, com- pensation, labor turn-over, accidents, and vital statistics pertaining to employees.
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(
SAFETY
The provisions for safety include protection against fire and occupational hazard. The fire risk is practically negligible, as our rebuilt, modern works are to all intents and purposes fireproof. The machinery risks are guarded against by pro- tective devices as complete as skill and foresight can devise. The risks from carelessness of fellow-workmen are minimized through the careful physical examinations of men when they are engaged. All risks are further guarded against by the selection of experienced men and their fullest possible instruction.
As experience shows that more than sixty per cent, and perhaps ninety per cent, of all accidents can be prevented by perfect care and watchfulness on the part of the men, failing in which accidents will occur in spite of all other precautions, the importance of securing the men's cooperation is obvious. Thus a factor of much importance in the improved immunity from accidents has been the help afforded by safety committees of employees in which membership is rotated so that in the course of time a large number of individuals shall have become particularly experienced in these problems. These safety committees make it their business to conduct peri- odical inspections of the premises, the apparatus and the methods of the plants, and to render written reports containing their sug- gestions and recommendations for improvement. They also review all accidents of importance which occur with a view to mak- ing deductions that shall tend to prevent recurrences.
And interest has been awakened among the employees by accident competitions — that is, by competitions between the various departments of each plant and also between the several plants in their entirety as to which department or which plant, as the case may be, shall attain the best record as to accidents. Rewards are distributed annually to the winners.
MEDICAL CARE AND HOSPITALS
When, as will occur despite all these precautions and efforts, accidents do happen, the compensation laws afford relief in most cases; and where these do not exist, the company makes voluntary contributions toward the losses entailed. And while the company
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complies strictly with the compensation laws of each state, it by no means limits its contributions to the strict, legal right of the injured employee, but in nearly all cases furnishes medical attention far in excess of its legal obligations — in fact until all need of it shall have ceased.
But further than that, we have from small beginnings finally established an effective medical service in all the plants. First- aid rooms for the injured have been provided in all, and in the place of, or in addition to, the chemist formerly alone trained to give first-aid to the injured, we now have local visiting physicians who are in attendance at special hours. In some plants the first-aid room provided only with a single cot for emergencies has developed into the emergency hospital where cases of injury or acute illness can be treated upon occasion for long periods. At one plant in a community which had no hospital of its own, a small hospital with attending surgeon and resident nurse was provided, and later on at the request of the municipal authorities this was transferred to the town and extended to serve as the town hospital as well as the hospital for our works. At several plants the services of trained nurses in attendance have sup- plemented the services of attending physicians; and in the period of war stress, where the employment of women workers was found necessary, the services of these trained nurses were most helpful in adapting women employees for the positions for which they were best fitted. Separate accommodations for these women employees were provided and matrons were employed to look out for their needs.
All this work is under the direction of the medical director of the Service Department.
SANITATION AND SERVICE BUILDINGS
This same director is charged with overseeing the sanitation of plants and the conditions of healthfulness of the employees. The old crude and casual accommodations for employees of a decade or two ago have gradually given place to modern facilities, until now with the increased size of plants and the increased numbers of
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people employed, special service buildings have been erected, some of them accommodating as many as 600 men in one unit.
The facilities include shower baths, locker rooms with individual steel lockers and individual wash basins. In isolated plants where amusement places are not available, bowling alleys and moving picture machines are supplied. In some plants booths have been provided at which hot coffee, milk and sandwiches may be purchased. In others separate rooms are equipped as cafeterias or separate buildings have been constructed as boarding houses to accommodate 200 or 300 men at a sitting.
PHYSICAL EXAMINATION OF EMPLOYEES
The creation of a medical staff has led to a physical examina- tion of all employees on application for employment and to re- examinations at least annually. It is thus possible for each employee to secure the best medical advice as to his general condi- tion, and to check in their early stages tendencies toward disease or impairment. These examinations disclose the fact that many men have weaknesses of which they themselves are unaware, which unfit them for certain forms of work while leaving them perfectly capable of rendering other forms of work, that are useful.
ATHLETIC AND SOCIAL ACTIVITIES
Athletic activities have been encouraged at the various plants. Prior to the war, company baseball, tennis and bowling were carried on, and the concluding contest for the baseball cham- pionship of the teams of the General Chemical Company for the year 1916 was made the occasion for a company outing attended by several hundred of the employees, where the game itself was rounded out by athletic contests and a shore dinner.
These social activities and the increasing interest on the part of the employees in the general welfare of their particular plant or of the company have led by natural steps to the gradual organiza- tion throughout the company of an Employees' Association, open to the membership of any employee acceptable to the association, on the payment of the small monthly dues fixed by it.
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EMPLOYEES' ASSOCIATION
This association as formed by and among the employees at first had to do solely with those features of sickness and death benefits neither covered by the compensation acts nor coming within the definition of "works' casualties." But this field of activity has been gradually broadened to include safety and sanitation, conditions of employment, collective purchasing, vocational education, efficiency, athletics, amusements, social gatherings, etc. And thus developed, the Association, having hitherto financed itself, presented its well-founded claim to the company for company help and encouragement in this extension of its activities. It asked that the company supplement the employees' dues by contributing an equal amount of its own. This request has been gladly granted.
By means such as these our employees are now insured against illness as well as against accident: with an assurance of compensa- tion in either case.
The formation of this Employees' Association has led to formal gatherings or conventions of delegates chosen by the employees of all the works. Such conventions are held at the New York office where they meet to discuss their various problems and where distant works may thus be brought into closer touch with the head office and with one another.
PROBLEMS OF PENSIONS AND PROFIT SHARING
The Service Department has not yet been able to formulate any definite pension system. A careful investigation of existing systems has led to the conviction that the formula has not yet been found by following which one could hope to solve this intricate problem. The policy of the company up to now and at present is to treat each case on its own merits; but the general policy of in some form pensioning aged or incapacitated employees long in our service may be considered as established in principle and practice though not formulated in detail.
We may say that hitherto the experience of the Service Department in regard to profit-sharing has been similar. Theoret- ically, a system of profit-sharing with the employees established
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on a fair basis is one of the best means of securing that interest in the work that is so much to be desired both on the company's account and on the men's. But workmen do not yet appear to be interested in receiving a portion of their compensation in that way. Furthermore, it is difficult to establish standards of individual accomplishment and sufficiently definite factors of manufacturing cost directly and mainly influenced by the effort and intelligence exerted by the several workmen, upon which to base calculations of their individual shares of profit. Our feeling is that at the pres- ent time, at least, the inauguration of this very natural means of securing identity of interest and a heartier cooperation would be premature. As with that splendid idea of the League of Nations, it is an essential prerequisite that all parties concerned shall unite in desiring it.
XII THE HOUSING PROBLEM: OVERLOOK COLONY
DIFFICULT sub-problem in the larger problem of relations with workmen, rendered particularly acute during the war, has been the housing problem.
American workmen appreciate good homes and are gradually becoming willing to pay for them. If forced to live in squalid environments as has often happened in war conditions, they readily become dissatisfied and lose both for themselves and for society much of their effectiveness. Workmen who properly consider their families will not for long live in centers which do not provide for their health, education and comfort. Well designed towns attract the best workers, and it makes a great difference in a Company's effectiveness, as we know by experience, whether it be able to attract the best workers or be forced to accept the worst.
At the more isolated locations where Company operations are conducted such as the mines in Canada and Virginia, all, or a large proportion of the houses required to accommodate the workmen, have been erected and maintained under company ownership. The same is true to a less degree at certain of the manufacturing plants of the company, notably, at Bay Point, California, at Capelton and at Sulphide, Canada, and at Pulaski, Virginia.
The most important of the Company's undertakings in the way of workmen's homes has been
OVERLOOK COLONY
The housing problem at the Marcus Hook plant was already difficult before the war owing to the rapid manufacturing growth in this region, but it was rendered peculiarly acute by the War itself. The facilities of the neighboring cities of Chester and Mar-
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cus Hook were wholly inadequate to accommodate all the workers drawn to the region by war conditions, and this Company found itself obliged to resort to all sorts of makeshift and unsatisfactory arrangements to provide temporary shelter even the most unsatis- factory.
It was finally seen that it would be impossible to solve this problem in a manner suitable to these very important works without a comprehensive building scheme of our own involving a large outlay.
The problem presented was either to utilize vacant property in the cities of Marcus Hook and Chester; or to construct a new village in the country. A careful consideration of all the elements of this problem finally led to the decision to found a new com- munity, with modern facilities, with ample recreational spaces and one affording an opportunity for the residents to exercise their imagination and their initiative in the development of their educational facilities, their amusements and their local government.
A majority of the employees favored a location somewhat remote from the works. The idea of getting entirely away from the scene of the day's labor appealed to them. In order to provide for a complete little municipality, and to allow for streets, open spaces, shops, public buildings and all of the features of com- munity life, it was deemed necessary to acquire at least 200 acres of land, and in April, 1916, we acquired a tract of 213 acres about one mile distant from the works and half a mile back from the Delaware River of which it has a view. We have given our enter- prise the name of Overlook Colony. The property is undulating, having elevations of eighty feet. There are spots that are pre- cipitous and rocky, with great boulders. A splendid creek with all the variety of a mountain stream and woods of splendid old oaks, maples, chestnuts and sycamores, complete the outline of 3 site that is truly picturesque.
In laying out the streets the judgment of a landscape architect was sought. The sizes and shapes of the lots vary greatly depend- ing upon the location of roads and the topography.
War costs changed our plans somewhat and constrained us to
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the block or row type of houses; but these are of practical design without monotony, and of durable construction arranged to furnish good light and ventilation, heated from a central station, economical of maintenance and operation, and entailing the minimum of effort on the part of the housewife. Adequate space has been laid off for play grounds, schools and public buildings. Moving pictures and other popular forms of amusements can thus be provided and community meetings arranged in a proper manner.
The School Board of the District which includes our colony in its circumscription is having plans drawn for the erection of a twelve to sixteen room schoolhouse, modern in every respect, which will include equipment for the teaching of the household arts and vocational training. It is proposed that the school building shall constitute the most important community center of the region. The Board has determined that Overlook Colony occupies the most accessible point in the district for the purpose and so the Company has deeded to the Board sufficient property for the erection of such a building. The Board meanwhile has purchased other lands adjoining the Colony, which, together with public play- grounds will afford ample acreage for large community activities.
A complete system of sewers, water supply, gas, electricity and telephones has been provided. For those residents who have not sufficient yard space to provide gardens, permission may be obtained to cultivate plots of land 100 x 100 feet square.
For single men a spacious boarding house and dormitory has been built in which single and double furnished rooms are available either singly or in groups of two or three. Shower baths and abundant toilet facilities have been arranged. Meals may be obtained at the boarding house.
The importance of the housing problem is expressed but partly in the money investment — although this has now attained an out- lay of $2,000,000, when all the works are considered, — but rather in its effect in attracting and holding the best men and contributing to their health, contentment and efficiency.
There is no direct income inducement for the Company to build these homes as the rents are kept so low as to furnish only modest rates of interest on the investment.
XIII
SALES, CUSTOMERS AND TRADE RELATIONS
the days before the General Chemical Company was formed the chemical trade, like other trades, varied between periods of intense competition and periods of £ peace through trade agreements. It soon became the policy of this Company to avoid both all forms of trade agreement and all conduct that could be construed as in any way unfair towards competitors; and what- ever may be true as to other chemical concerns, the General Chemical Company has no trade agreements whatsoever with any competitors and the entire chemical field is on a basis of real com- petition. And the business is very highly competitive. Not only are there large numbers of chemical concerns in the same business as ourselves manufacturing and selling to others, but in addition we have to meet the competition on the one hand of by-product acids so-called, such as the zinc acid of the West, amounting to several hundred thousand tons a year, and the acid made in Ten- nessee and other places from fumes of sulphur formerly going to waste and now turned into acid; and on the other hand we have to meet the tendency among some of the largest consumers of sul- phuric and nitric acids — like the fertilizer concerns, the oil com- panies and the munition concerns — to manufacture to a large extent their own supply which they formerly purchased from manufac- turers like ourselves. Fortunately for us, by-product acid does not answer all requirements of purity and strength; and fortunately also many large consumers in the industries mentioned have found it more economical to abandon their own production of acid, or at least to restrict it and to purchase their requirements in whole or in part. Nevertheless the manufacturer of heavy chemicals is more or less between the upper and the nether millstones; and if any chemical
79
8O THE GENERAL CHEMICAL COMPANY
concern is meeting with a fair measure of success this is the best possible proof that it has been a well managed one.
It has always been the aim of this Company to reach the highest standard of quality and of service. At the close of 1916 we were able to report that, notwithstanding the great strain imposed by the world war, we had been able to meet all contract demands without a single default. And this statement is measurably true for the still more difficult years 1917 and 1918, if we make excep- tion of the delays and interferences due to railway breakdowns, labor shortage and the failure in importation of raw materials — all causes absolutely beyond our control. In the year 1917 the company, by reason of the U-boat campaign and the cessation of the importation of Spanish pyrites, was confronted with the necessity of adopting one of two courses: either to invoke the war clauses in its sulphuric contracts and suspend deliveries, or to purchase high priced brimstone, and install for burning it apparatus wholly unsuited to normal times. The latter course was adopted, the facts were laid before our contract customers whose prices had been based on peace conditions, and without an exception every consumer joined us in a cooperative effort to keep our plants operat- ing and assented to the moderate advance in prices which we asked.
These remarks apply equally to many of our other products and customers. And we desire particularly to record here our tribute to the patriotic cooperation of those customers who voluntarily made sacrifices under their contracts whenever the Government suggested or required some sacrifice or change in order to keep its war program going to a successful issue.
In the Fall of 1915 and early in 1916, when demand both from the domestic and foreign market for nearly all chemical products was phenomenal, and when prices were often quoted from five to ten times above the normal, this company refrained from swelling its profits in a scramble for those high prices, and, to avoid an acid and chemical famine and disaster, deliberately proceeded to protect its regular customers with three and five year contracts at prices only slightly above those existing before the war. The result of this policy is that, now that the war is practically over, a sentiment of great good-will has been created toward us and
THE GENERAL CHEMICAL COMPANY 8 1
customers realize that their ability to operate during the war period almost at maximum capacity, was very largely due to our helpful consideration of their difficulties. There has in fact been between us and our customers mutual consideration of one another's difficulties with resultant advantage to both.
The great value of the good-will thus established, and of the high class of the trade attracted to us, by methods such as these, is shown in our extremely small losses through bad debts. For a period of five years these losses have averaged less than o . 00071% — that is to say, but $71 . in every $100,000 of sales, and for the year 1917 but 0.00004% — that is, $4.00 in every $100,000. If these figures were applied in a chemical analysis to express the existence of an undesirable impurity they would be deemed to amount to but little more than a trace.
XIV FINANCIAL
IHE Treasurer is assisted in performing the work of his department in the various places where the Company transacts business and maintains bank accounts by various assistant treasurers and cashiers in addition to the force at the home office. The average cash balances of about $2,000,000 are distributed among thirty-seven banks. He is assisted in determining matters of policy or of special importance by a Finance Committee, upon which the bank members of the Board find a place, and also by the express directions of the Executive Committee or the Board.
ACCOUNTING METHODS
Innumerable changes have taken place in the Company's modes of accountancy since 1899. In that year the system gener- ally used was the double entry method by the use of pen and ink, debits and credits being separately posted into individual books. Today most of this is disposed of by the simple use of typewriters and carbon, the two entries being made simultaneously on a book- keeping machine. This change has effected a great saving of labor as both entries are made at the same time; and accuracy is assured because the one entry is a carbon copy of the other. The effect of this has been to do away with almost all bound books; cards and loose-leaf systems having taken their place.
Hundreds of the most up-to-date mechanical devices are now in use at all branches. Adding machines, multiplying and dividing machines, comptometers and the like have superseded the old mental labor required for computations. Mechanical letter openers, sealing and stamping machines, mimeographs, multi- graphs and addressographs also are now in operation, many of
83
84 THE GENERAL CHEMICAL COMPANY
them not having been imagined at the time of the Company's formation.
Formerly ordinary checks were issued in payment of bills and receipts were obtained from the payees. Now checks contain a statement of the items which they pay and themselves con- stitute receipts.
The use of the outlook envelope has made a prodigious saving in clerical labor. Practically all invoices, checks and notices to stockholders, and many letters are mailed in these envelopes which save the expense of writing out addresses a second time.
In the early years there was no relation whatever between the cost system and the accounting system, the former being merely a statistical record of the profits and costs as derived from reports sent in by the factories. But in 1909 a method was evolved where- by the cost and statistical systems could be linked together, so that now this Company is able to, and actually does, issue to its directors within three weeks after the close of each month a complete report of its profits and losses for the month previous in each and all of its works, branches and departments and as to each of the major products of manufacture separately, together with a statement of its assets and liabilities.
FINANCIAL POLICY FOR EXTENSIONS
From the very beginning the Company has followed the con- sistent policy of avoiding permanent loans or mortgage issues to finance the extensions necessitated by the business. This policy was written into the charter in a provision that the Company " shall have no power to mortgage its property or any portion there- of without the consent of the holders of at least two-thirds of the preferred stock outstanding at the time."
Such control by preferred stockholders and such a policy so consistently followed have had the effect of imparting to the cumu- lative 6% preferred stock of this Company the advantages of the ordinary corporate mortgage bond without the disadvantages of the latter in its lack of voting privileges and its exposure to local taxation.
THE GENERAL CHEMICAL COMPANY 85
Accordingly, all extensions of the Company have been financed either by surplus earnings or the emission of additional stock — preferred or common, or both. Extensions are never undertaken excepting after painstaking examination of their need and estimated cost, and after authorization and appropriation by the Executive Committee, preceded usually by a recommendation by the Finance Committee.
An amendment to the charter in March, 1915, further secured the rights of shareholders by providing that new issues must be first offered for subscription to the stockholders of the class of stock offered — new preferred to preferred stockholders, new common to common stockholders.
RESERVED FUNDS FOR INSURANCE AND PROTECTIVE METHODS AGAINST FIRE AND OTHER RISKS
The Insurance Committee responsible to the Treasurer has general charge of this subject.
The Insurance Fund was begun in 1902 by the setting aside of $100,000 and by adopting the policy of charging certain amounts monthly to expense account for insurance risks and adding the net surplus, together with interest on investments, to the Fund. In this way the Fund has now attained the sum of $1,268,000.
Prior to 1902 fire insurance was placed by special coverage on each risk. After that, and with the new policy, all the works were covered by a general schedule and this Fund was made to carry part of the risk.
This Fund has indeed become a sort of insurance company. It carries large risks, but they are divided among twenty-six works and stations.
Great precautions are taken against fire, first in the construc- tion of all new works and next by a thorough system of inspection and reports and recommendations, by fire drills and through safety committees of the employees.
The Fund has greatly lowered the net cost for insurance and the protective methods have reduced fire losses to an almost insig- nificant amount. These losses amounted in ten years to but $194,-
86 THE GENERAL CHEMICAL COMPANY
712, or $19,471 per year, and a part even of this sum was covered and has been repaid by the outside fire insurance companies.
The protection of this fund and the jurisdiction of the Insurance Committee have been extended over the kindred subjects of auto- mobile, boiler and fly wheel insurance, the bonding of employees, hold up pay roll insurance, safe burglary insurance and compensa- tion insurance (formerly employees liability insurance) and during the war certain special war risks were covered out of it. It has likewise become the fund to be drawn upon for pensions and for maintaining the medical department and hospitals and for work- men's relief generally.
The Fund produces an income of nearly 6% per annum and is growing in a substantial manner. Its investment constitutes one of the duties of the Treasurer.
GROWTH AND SURPLUS
Some tables in the appendix will show the growth of the Company from its balance sheet of March I, 1899, to its consoli- dated balance sheet of December 31, 1918, and an intermediate table will serve as a connecting link to give year by year the steps by which the latest figures were attained.
On December 3ist last the preferred stock outstanding was $15,208,000. The current quick assets of the Company, together with the insurance fund, less the cash liabilities of all kinds was $12,517,763.31.
Junior to the preferred stock and buttressing it, is the issue of common stock, now amounting to $16,519,200 to which should be added the surplus of $17,117,805.90, in order to determine the book value of the latter stock.
This surplus represents the self-denial of stockholders extend- ing over twenty years. Had it been distributed as earned, stock- holders would have received somewhat larger annual returns, but what they would have gained in this way they would have more than lost in the strength and growth and earning power that this accumulation has enabled the Company to attain.
This surplus belongs to the common stockholders — whether distributed to them as stock dividend in whole or in part, or main-
THE GENERAL CHEMICAL COMPANY 87
tained as at present. It is a part of their Invested Capital and as such is as much entitled to a profitable return as any other part of that capital.
DIVIDENDS
The Company's dividend policy has been conservative, as the accumulation of its surplus attests. Its record of preferred stock dividends has been unbroken from the beginning. Common stock dividends were commenced after the first year at the rate of 4%. These were interrupted during the industrial depression of 1904- 1905 not for lack of earnings from which to pay them, but out of abundant caution. They were resumed in 1906 and a 10% stock dividend was later distributed to cover the omission of those two years; and these common dividends have been gradually increased until now the Company is paying 2% quarterly with occasionally an extra dividend either in cash or in stock.
As the issue of common stock is small in comparison to the total Invested Capital, an erroneous impression may be produced by the percentage of some of the dividends of the Company when based on the par value of this stock. When the dividends are computed, as they should be, on the Invested Capital, they will appear very modest indeed. Taking the years 1915, 1916, 1917 and 1918 the amounts paid on the preferred and common stock in regular and extra cash and stock dividends were IOT¥CT%, I2i$fr%, 7^%, and 5^%, respectively of the invested capital. The total was $13,625,762. As the average amount of invested capital for those four years, including the preferred stock and surplus, was about $39,000,000, the net return thereon averaged but 8^% per annum. A computation similarly made for the ten years previously, shows that the dividends paid on invested capital were but 5 . 2%. Taking the whole period of twenty years together, and averaging the total dividends paid into the average amount of all invested capital, the rate was but 6r&% per annum. While the amount of dividends paid in those four best years was $13,625,762; the amount paid to workmen and salaried staff as wages and compensa- tion in the same period was $30,366,161.
88 THE GENERAL CHEMICAL COMPANY
It is true that in these same years considerable amounts were added to surplus and invested in new construction and more particularly so during these years of war. But in dealing with these enlarged figures of wartime, we must be on our guard against mistaken inferences from figures expressed in an inflated currency.
SURPLUS AND DEDUCTIONS
The Company's surplus of $17,117,805 as at December 3 ist last is not only exclusive of the Reserves mentioned below, but also of some $14,020,719 expended in the last twenty years for repairs and charged to Expense Account and some $7,599,125 charged against Surplus Account for plant reductions and dismantlements.
RESERVES
The Company had on December 3 ist last in its Insurance Reserve $1,268,348 and in its General Reserves for plants and sundry depreciations, $4,349,288.90 which amounts, in one aspect, could be regarded as additions to the invested capital: for the insurance fund is held not against actual liability but to guard against the possibility of future losses; and the General Reserves are held largely as a guaranty against sudden disaster or obsolescence growing out of rapid or unforeseen changes in the business. The need of such a guaranty is very great in a business that finds itself obliged to rebuild its entire plant within a space of twenty years.
If the Insurance Reserve be added to the surplus, the book value of the Common stock will be found to be $211 per share and upwards — a price, however, which inadequately represents the present cost of reproducing the Company's assets, since it neither takes into account the General Reserves nor the greatly increased cost of building at this time.
SO-CALLED WAR PROFITS
While it is true that the years of the World War have brought to this Company in common with so many others a large apparent increase in profits (and this increase is for taxing purposes deemed "war profits"), the increase in our case is much more apparent than real. In the first place the Company began about 1915 to
THE GENERAL CHEMICAL COMPANY 89
reap the benefit of the thorough-going outlays made in the rebuild- ing for several years past of its plants, and of the improvements in its methods and processes; and greatly increased profits would have accrued without the war. And while the war produced an extraordinary demand for many products, it cut off a very large demand on the part of peace consumers.
Another consideration is that already touched upon, that the increased profits especially of the last two years of war are based upon a currency that is clearly inflated; and the enormously reduced purchasing power of these profits must be borne in mind. Our invested capital standing for the most part on our books at pre- war figures, when a dollar meant a dollar and not fifty cents, is now remunerated by dividends that are paid in money that is today not worth much more than half as much as the money that origi- nally went to form this invested capital, or most of it. Whether this seeming inflation is due to an excess of gold and paper currency and credits, or to a scarcity of all necessary commodities, the result is the same.
STOCK DIVIDENDS AND UNWISE TAXATION
For a number of years past it has been the policy of this Company, as earnings justified it, to capitalize into common stock a part of the earnings put back into plant in extensions, and to distribute a part of the amount in stock dividends. The recent policy of Congress, and as we believe the erroneous policy, of levying a tax on stock dividends as though they were cash income has necessitated a suspension of that policy. Stockholders will own their share of any surplus reinvested in extensions even though it be not represented by additional stock certificates. As the Company will have paid the great war taxes on all its earn- ings including those so reinvested, it seems unfair that stockholders should have to pay an income tax on them a second time when these earnings, if represented by stock dividends, are not distributed to them, but merely certified to them in the form of a stock repre- senting what they already own and carrying no cash with which to pay the so-called income tax levied on them.
9O THE GENERAL CHEMICAL COMPANY
Our legislators may argue that stockholders should sell their dividend stock and so provide the tax money; but why should they be compelled to sell invested property in order to pay an income tax especially when they may wish to retain their old pro rata interest in the Company which they would lose by sale. And if all stockholders should attempt to sell their dividend stocks in order to pay these unjust taxes, what sort of a price would they get for them?
XV
MOBILIZATION FOR WAR AND DEMOBILIZATION
;OON after the outbreak of the World War in 1914 this Company, as the largest single producer of oleum, was called upon to furnish great quantities of this product to manufacturers of explosives and was soon obliged greatly to enlarge its oleum capacity. Fortunately, these early extensions were made before the cost of building had increased unduly. War demands so begun for material and for increased capacity to produce continued year by year and extended to other articles.
As it was impossible for ourselves alone to furnish the great quantities of strong sulphuric acid required, especially after our entry in the war, other manufacturers who had previously secured license rights on contact acid greatly extended their works; and in order to help in satisfying the Government's demand we licensed still others under our patents and agreed to waive all royalties for the period of the war on acids furnished to, or at the direction of, the United States Government.
Mobilization for war in a short space of time undid much of the good work laboriously accomplished by us in the preceding years in the way of efficiency and economy. Through those years of effort the Company had succeeded in attracting to itself a body of excellent workmen as well as in improving methods. It had greatly reduced costs and this despite gradual though steady increases in wages. These increases in wages had been accom- panied by a still more marked decrease in our prices — so marked that had the costs of 1899 continued in 1914, the Company would have failed at those lower prices even to earn its preferred dividend. That it actually was able to earn and pay in 1914 both preferred dividends and considerably higher dividends on its common stock
91
92 THE GENERAL CHEMICAL COMPANY
than had been done in the years of highest prices was entirely owing to those long preceding years of effort toward economy and efficiency.
The war changed all that. Economy and low prices were no longer the aims of business. Production and ever-greater pro- duction were the need — no matter at what cost. Our best work- men were frequently taken away from us by other industries whose needs may have seemed to them more imperative than ours. We soon found ourselves obliged not only to add to our former staff of workmen but to take on new raw recruits to replace many of the old efficient men who had gone away. Wages advanced by leaps and bounds. Small wonder that the labor cost increased enormously — that more men were required to do the same work than formerly; that plants forced to produce beyond their designed capacity developed enormous repair charges. In every direction economy of production had given place to speed and quantity, and the old standards and conditions established after so many years were completely reversed. Vastly increased prices in our products became a necessity to the avoidance of loss.
The demobilization of this situation will largely consist in the getting back as speedily as possible to pre-war principles if not to pre-war figures. It may be that wages and prices will never go back to the old figures — but at some level of prices and of wages conditions must be stabilized again and a sort of equilibrium established similar to the old between costs based upon efficiency and selling prices, made as low as can be consistent with sound business principles.
Cancellation of most war contracts has been made or is being rapidly made. This has affected us both directly and indirectly — and indirectly at least we are suffering considerable losses — to be recouped in part from peace demand.
Apart from the coal tar branch of the business, our industry has little to fear from foreign post-war competition. Home competition on the other hand is likely to be more formidable than before.
It is not to be expected that on a peace basis the country will at once be able to consume all the sulphuric acid and other products
THE GENERAL CHEMICAL COMPANY 93
that the war-enlarged capacity of the country is capable of produc- ing. A check in the hectic, excessive, uneconomical speed of pro- duction will cut off a part of this excess. The stoppage of the out- put of that very considerable mushroom growth that sprang up in disadvantageous localities merely to make money out of the war will help. The return of normal peace demand will help still more.
Whatever befall, this Company is fortunate in the fact that all of its new construction has been of the very best type built for permanence and for economy of production.
Prophecy is both outside of our competency and outside of our practice, yet it seems safe and reasonable to follow the views of those who expect that with the deflation in the currency and in prices there will come a shrinkage at least in paper profits and possibly in intrinsic profits also during the period of readjust- ment— be that time long or be it short. But when we look about us at home upon all the enterprises and needs postponed for want of labor and for want of capital, and when we contemplate the colossal destruction that war has wrought abroad and that calls for replacement, we cannot feel that the new prosperity will long halt for want of demand; but only for want of that demobilization from war conditions which is in this case synonymous with readjust- ment.
APPENDIX A.
GENERAL CHEMICAL COMPANY
ASSETS AND LIABILITIES OPENING ENTRIES MARCH I, 1899 Assets
Manufacturing Investment. . . $13,395,194.95
Inventory — Merchandise 925,348.03
Cash 801,057.02
Accounts Receivable None
Liabilities
Accounts Payable None
Capital Stock
Preferred g 8,151,300.00
Common 6,970,300.00
$15,121,600.00 $15,121,600.00
95
APPENDIX B.
DISTRIBUTION
II
III
IV
VI
|
'REDUCTION OF |
|||||
|
PLANTS AND |
|||||
|
SUNDRY IN- |
EXTRA |
BALANCE |
6% |
||
|
GROSS |
COMPENSATION |
||||
|
pTjniTTTQ |
VESTMENTS; |
ETr^TTT? AT |
NET |
PREFERRED |
|
|
*r l\\JSr .119 |
DEPRECIATIONS |
r tit DCj K t\L/ |
EARNINGS |
DIVIDENDS |
|
|
TAXES, ETC. |
|||||
|
AND |
|||||
|
AMORTIZATIONS |
|||||
|
Dec. 31, 1899n£, |
$959,696 |
$84,923 |
$874,773 |
$396,063 |
|
|
1900 |
1,258,945 |
69,470 |
1,189,475 |
493,715 |
|
|
1901 |
1,358,347 |
195,228 |
1,163,119 |
520,440 |
|
|
1902 |
1,507,552 |
269,143 |
1,238,409 |
564,960 |
|
|
1903 |
1,187,076 |
215,978 |
971,098 |
600,000 |
|
|
1904 |
1,314,747 |
285,609 |
1,029,138 |
600,000 |
|
|
1905 |
1,662,410 |
320,425 |
1,341,985 |
600,000 |
|
|
1906 |
1,365,789 |
181,963 |
1,183,826 |
645,000 |
|
|
1907 |
1,400,894 |
320,171 |
1,080,723 |
660,000 |
|
|
1908 |
1,227,837 |
236,312 |
991,525 |
660,000 |
|
|
1909 |
2,139,692 |
246,102 |
$124,346 |
1,769,244 |
705,000 |
|
1910 |
2,341,339 |
159,755 |
158,343 |
2,023,241 |
750,000 |
|
1911 |
2,361,880 |
185,944 |
156,979 |
2,018,957 |
750,000 |
|
1912 |
2,608,582 |
432,688 |
155,976 |
2,019,918 |
778,125 |
|
1913 |
2,809,441 |
438,446 |
163,065 |
2,207,930 |
825,000 |
|
1914 |
2,857,898 |
452,509 |
139,336 |
2,266,053 |
825,000 |
|
1915 |
5,958,746 |
1,155,197 |
J 724,276 |
4,079,273 |
912,498 |
|
1916 |
12,286,826 |
1,044,363 |
1,547,275 |
9,695,188 |
912,498 |
|
1917 |
11,394,686 |
1,018,072 |
2,705,433 |
7,671,181 |
912,498 |
|
1918 |
9,580,260 |
2,984,621 |
2,550,000 |
4,045,639 |
912,498 |
|
Totals, 20 yrs. (19 yrs.. 10 mos.) |
$67,582,643 |
S$10,296,919 |
$8,425,029 |
$48,860,695 |
$14,023,295 |
*In addition to repairs aggregating $14,020,719.47. **Including amounts carried to Depreciation Reserve Account.
96
OF EARNINGS
VII VIII
IX
X
XI
XII
|
RATE OF |
|||||||
|
COMMON |
COMMON |
TOTAL AMOUNT |
DIVI- |
||||
|
DIVIDENDS |
DIVIDENDS |
TOTAL AMOUNT |
OF INVESTED |
DENDS |
ADDED |
||
|
PAID IN CASH |
PAID IN STOCK |
OF ALL |
CAPITAL |
ON IN- |
TO |
||
|
DIVIDENDS |
ON |
VESTED |
SURPLUS |
||||
|
JANUARY 1 |
CAPITAL Per |
||||||
|
RATE |
|||||||
|
RATE Per Cent |
AMOUNT |
Per Cent. |
AMOUNT |
Cent. |
|||
|
.... |
.... |
. . |
$396,063 |
$15,121,600 |
2.62 |
$478,710 |
|
|
4 |
$285,364 |
. . |
.... |
779,079 |
15,327,610 |
5.08 |
410,396 |
|
4 |
293,348 |
. . |
813,788 |
16,317,006 |
4.99 |
349,331 |
|
|
4 |
296,412 |
. . |
861,372 |
18,059,937 |
4.77 |
377,037 |
|
|
5 |
370,515 |
. . |
970,515 |
18,441,774 |
5.26 |
583 |
|
|
.... |
.... |
. . |
600,000 |
19,026,357 |
3.15 |
429,138 |
|
|
.... |
. . |
.... |
600,000 |
19,455,495 |
3.08 |
741,985 |
|
|
4 |
296,412 |
. . |
941,412 |
20,197,480 |
4.66 |
242,414 |
|
|
4 |
296,412 |
. . |
956,412 |
21,439,894 |
4.46 |
124,311 |
|
|
4 |
296,412 |
. . |
.... |
956,412 |
21,564,205 |
4.44 |
35,113 |
|
4 |
296,412 |
. . |
.... |
1,001,412 |
21,599,318 |
4.64 |
767,832 |
|
5 |
398,302 |
10 |
$741,030 |
1,889,332 |
23,867,150 |
7.91 |
133,909 |
|
6 |
489,078 |
5 |
407,600 |
1,646,678 |
24,742,059 |
6.65 |
372,279 |
|
6 |
529,562 |
5 |
427,900 |
1,735,587 |
25,521,938 |
6.80 |
284,331 |
|
11 |
1,124,716** |
. . |
.... |
1,949,716 |
27,925,169 |
6.98 |
258,214 |
|
11 |
1,194,350** |
. . |
.... |
2,019,350 |
29,613,633 |
6.82 |
246,703 |
|
6 |
684,030 |
15 |
1,710,075 |
3,306,603 |
31,652,556 |
10.45 |
772,670 |
|
26 |
3,408,636** |
. . |
.... |
4,321,134 |
34,342,831 |
12.58 |
5,374,054 |
|
IOH |
1,651,913 |
5 |
786,610 |
3,351,021 |
42,338,910 |
7.91 |
4,320,160 |
|
10H |
1,734,506 |
|
2,647,004 |
47,445,680 |
5.58 |
1,398,635 |
|
|
$13,646,380 |
$4,073,215 |
$31,742,890 |
6.45 |
$17,117,805 |
**NoxE : — In these years instead of a stock dividend the extra dividends were paid in cash and a right to subscribe to new stock in the same amount was given.
97
APPENDIX C.
GROWTH OF
II
III
IV
|
1ST OF YEAR PREFERRED |
1ST OF YEAR COMMON |
SURPLUS |
TOTAL INVESTED CAPITAL JANUARY 1 |
|
|
•1899 |
$8,151,300 |
$6,970,300 |
$15,121,600 |
|
|
1900 |
**8,088,700 |
6,760,200 |
$478,710 |
15,327,610 |
|
1901 |
8,260,000 |
7,167,900 |
889,106 |
16,317,006 |
|
1902 |
9,416,000 |
7,405,500 |
1,238,437 |
18,059,937 |
|
1903 |
9,416,000 |
7,410,300 |
1,615,474 |
18,441,774 |
|
1904 |
10,000,000 |
7,410,300 |
1,616,057 |
19,026,357 |
|
1905 |
10,000,000 |
7,410,300 |
2,045,195 |
19,455,495 |
|
1906 |
10,000,000 |
7,410,300 |
2,787,180 |
20,197,480 |
|
1907 |
11,000,000 |
7,410,300 |
3,029,594 |
21,439,894 |
|
1908 |
11,000,000 |
7,410,300 |
3,153,905 |
21,564,205 |
|
1909 |
11,000,000 |
7,410,300 |
3,189,018 |
21,599,318 |
|
1910 |
12,500,000 |
7,410,300 |
3,956,850 |
23,867,150 |
|
1911 |
12,500,000 |
8,151,300 |
4,090,759 |
24,742,059 |
|
1912 |
12,500,000 |
8,558,900 |
4,463,038 |
25,521,938 |
|
1913 |
13,536,300 |
9,641,500 |
4,747,369 |
27,925,169 |
|
1914 |
13,750,000 |
10,858,050 |
5,005,583 |
29,613,663 |
|
1915 |
15,000,000 |
11,400,270 |
5,252,286 |
31,652,556 |
|
1916 |
15,207,300 |
13,110,575 |
6,024,956 |
34,342,831 |
|
1917 |
15,207,300 |
15,732,600 |
11,399,010 |
42,338,910 |
|
1918 |
15,207,300 |
16,519,210 |
15,719,170 |
47,445,680 |
*Began business March 1st.
**These figures after correction by stock cancelled as per columns VI and VII in italics.
98
INVESTED CAPITAL
VI
VII
VIII
IX
|
INCREASES IN CAPITAL THROUGH |
ADDITIONS TO SURPLUS |
TOTAL INVESTED CAPITAL DECEMBER 31 |
||
|
PREFERRED STOCK SOLD |
COMMON STOCK SOLD |
COMMON STOCK DIVIDENDS |
||
|
**$62,600 171,300 1,156,000 584,000 1,000,000 1,500,000 1,036,300 213,700 1,250,000 207,300 700 |
**$2IO,IOO 407,700 237,600 4,800 |
$478,710 410,396 349,331 377,037 583 429,138 741,985 242,414 124,311 35,113 767,832 133,909 372,279 284,331 258,214 246,703 772,670 5,374,054 4,320,160 1,398,635 |
$15,327,610 16,317,006 18,059,937 18,441,774 19,026,357 19,455,495 20,197,480 21,439,894 21,564,205 21,599,318 23,867,150 24,742,059 25,521,938 27,925,169 29,613,633 31,652,556 34,342,831 42,338,910 47,445,680 48,845,005 |
|
|
$741,000 407,600 427,900 |
||||
|
654,700 1,216,550 542,220 205 |
||||
|
1,710,100 2,622,025 786,610 10 |
||||
|
$7,056,700 |
$2,853,675 |
$6,695,225 |
$17,117,805 |
**Decreases in italics.
RESUME OF INVESTED CAPITAL:
Original capital $15,121,600.00
Preferred stock since issued 7,056,700.00
Common stock since issued for dividends and cash 9,548,900.00
Surplus earnings 17,117,805.90
TOTAL INVESTED CAPITAL, December 31, 1918 48,845,005.90
Add insurance reserve investments 1,268,348.00
JTOTAL RESOURCES $50,113,353.90
J NOTE— Exclusive of the General Plant and Investment Reserves of $4,349,288.90.
99
APPENDIX D.
CONSOLIDATED GENERAL BALANCE SHEET
OF THE
GENERAL CHEMICAL COMPANY AND SUB-COMPANIES
DECEMBER 31, 1918
ASSETS PERMANENT INVESTMENTS:
Manufacturing investment taken at cost, less the annual reductions for dismantle- ments $40,122,043 . 1 1
Miscellaneous investments and assets . . . 3,204,608 . 59
Total permanent investments $43,326,651 .70
CURRENT ASSETS:
Merchandise on hand, at factory cost .... 10,614,389 . 10 Active customers accounts and bills re- ceivable 4,517,417.26
Cash in banks and trust companies 1,913,088 . 23
Total current assets 17,044,894.59
RESERVED FUNDS FOR INSURANCE:
Cash and securities at market value, December 31, 1918 1,268,348.60
$61,639,894.89 LIABILITIES SUNDRY LIABILITIES:
Accounts payable, current $2,416,597. 18
Extra compensation and federal taxes
estimated ...... 2,737,788 . 20
Preferred stock dividend payable January
2, 1919 228,124.50
Extra Com. stock dividend payable Feb- ruary i, 1919 412,970.00
Total sundry liabilities #5»795»479-88
RESERVES:
Funded reserves for insurance as above. . 1,268,348.60
Package liability . 1,381,761.61
Reserves for plants and sundry deprecia- tions 4,349,298.90
Total reserves 6.999,409. II
INVESTED CAPITAL (Net):
Capital Stock, Preferred , . . . 15,208,000.00
Capital Stock, Common 16,519,200.00
Surplus 17,117,805.90
Total Invested Capital above all
liabilities 48,845,005 .90
$61,639,894.89 100
APPENDIX E.
GENERAL CHEMICAL COMPANY
PLANTS
Baltimore Works Baltimore, Md.
Bay Point " Bay Point, Cal.
Bayonne Bayonne, N. J.
British Columbia Works Barnet, B. C.
Buffalo " Buffalo, N. Y.
Calumet " Hegewisch, 111.
Camden " Camden, N. J.
Capelton Capelton, Quebec
Cleveland (Nat'l) " Willow, Ohio
Delaware " Marcus Hook, Penn.
Dundee " Passaic, N. J.
E. St. Louis " East St. Louis, III.
Easton " Easton, Pa.
Hudson River " Edgewater, N. J.
Illinois " Chicago Heights, 111.
Laurel Hill " Laurel Hill, L. I., N. Y.
Newell " Newell, Fayette Co., Pa.
Pulaski " Pulaski, Va.
Sulphide " Sulphide, Ont.
MINES
Gossan Mine Monarat, Va.
Goudreau Mine Goudreau, Ont.
Northern Mine Northpines, Ont.
STATIONS
Bridgeport Station Bridgeport, Conn.
Chicago " Chicago, 111.
Los Angeles " Los Angeles, Cal.
Montreal " Montreal, P. Q.
Pittsburgh " Pittsburgh, Pa.
Providence " Providence, R. I.
San Francisco " San Francisco, Cal.
St. Louis " St. Louis, Mo.
Syracuse " Syracuse, N. Y.
Toronto " Toronto, Ont.
101
APPENDIX F.
OFFICERS AND DIRECTORS 1919
DIRECTORS
GEORGE BLUMENTHAL JAMES L. MORGAN
EVERETT B. BRAGG LANCASTER MORGAN
HENRY W. CHAPPELL WILLIAM A. NASH
ALBERT W. HAWKES WILLIAM H. NICHOLS
NELSON A. HOWARD W. H. NICHOLS, JR.
WILLIAM M. JOHNSON C. W. NICHOLS
WILLIAM M. KERR CHAS. ROBINSON SMITH
WILLIAM J. MATHESON SANFORD H. STEELE HENRY WIGGLESWORTH
OFFICERS
Chairman of the Board, WILLIAM H. NICHOLS
General Counsel, SANFORD H. STEELE
President, W. H. NICHOLS, JR.
Vice-President, JAMES L. MORGAN
Vice-President, CHAS. ROBINSON SMITH
Vice-President, EVERETT B. BRAGG
Vice-President, ALBERT W. HAWKES
Vice-President, NELSON A. HOWARD
Secretary, JAMES L. MORGAN
Treasurer, . . . LANCASTER MORGAN
Assistant Treasurer, CLINTON S. LUTKINS
Assistant Secretary, CHARLES W. MILLARD
Assistant Secretary, THOMAS F. BURGESS
Assistant Treasurer, Philadelphia, .... WILLIAM M. KERR
Assistant Treasurer, Philadelphia, . . . . J. R. KERR
Assistant Treasurer, Cleveland, THOMAS P. HOWELL
Assistant Treasurer, San Francisco, .... WILLIAM D. GRAY
General Auditor, CLAUDE F. WRIGHT
EXECUTIVE COMMITTEE
Chairman, . . . C. W. NICHOLS
LANCASTER MORGAN ALBERT W. HAWKES HENRY WIGGLESWORTH
Secretary, . . . JAMES L, MORGAN
and Chairman of the Board, General Counsel and President and Pice-Presidents, ex-officio
103
APPENDIX G.
NECROLOGY
J. Herbert Bagg, Secretary. . . . 1900-1905 . . Died 1905
Robert N. Hall, Director 1900-1902 . . " 1907
Frederick Phillips, Director. . . 1899-1900. . 1900
Edward H. Rising, Director. . . 1899-1917 \
President. . 1907-1909 >• " 1917 Vice-Pres. . 1910-1913 *
Clarence P. Tiers, Director.. . . 1899-1905. . " 1910
105
CHARACTERISTIC VIEWS
BAY POINT WORKS
BAY POINT WORKS
MARCUS HOOK WORKS
MARCUS HOOK WORKS
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P^ O
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ANCIENT HISTORY
THE HUDSON RIVER WORKS IN 1875
-&*
CALUMET WORKS
THE LABORATORY
GENERAL LIGHTERAGE COMPANY
SEA-GOING BARGE VITRIC
RBMMMRHI
GENERAL LIGHTERAGE COMPANY
STEAM LIGHTER, JAMES L. MORGAN
u 53 f*s H
P* O H O
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w
TRANSPORTATION
5-TON TANK MOTOR TRUCK
TRANSPORTATION
5O-TON TANK CAR
TRANSPORTATION (WITHIN PLANTS)
THE OLD WAY
TRANSPORTATION (WITHIN PLANTS)
THE NEW WAY
UNLOADING A LIGHTER
THE NEW WAY
LOADING BARRELS INTO A FREIGHT CAR
THE OLD WAY
LOADING A FREIGHT CAR
THE NEW WAY
-
BAG CONVEYOR
FILLING CARBOYS
CALUMET WORKS — CHICAGO
LOADING DOCK AND CRANE — CALUMET RIVER
CALUMET WORKS
CRANE AND DOCK
CAM DEN WORKS
POTTERY PLANT AND WOMEN WORKERS
RYZON
THE PERFECT BAKING POWDER
TRANSPORTATION
RYZON DELIVERY SERVICE
> *•
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* i
AMMONIA PLANT
POWER HOUSE
OUR ATMOSPHERIC NITROGEN PROCESS
U. S. PLANT AT SHEFFIELD, ALABAMA
< s
A. O *- £
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K
GOSSAN MINES, NEAR PULASKI, VIRGINIA
HUIE CUT
GOSSAN MINES
BIG BOMBARGER OPEN CUT
NORTHERN MINE
AERIAL TRAMWAY FROM THE MINE TO THE RAILROAD
NORTHERN MINE
RAILWAY TERMINAL
NORTHERN MINE
UNDERGROUND SHAFT STATION
GOUDREAU, ONTARIO, CANADA
THE PLANT AND THE VILLAGE
GOUDREAU MINE EMPLOYEES' CLUB HOUSE
NORTHERN MINE
MESS HALL
CALUMET WORKS
A GROUP OF OUR MEN
PULASKI WORKS
CHAMPION BASE BALL TEAM
SULPHIDE WORKS (ONTARIO) EMPLOYEES' BRASS BAND
PULASKI, VA.
EMPLOYEES' CLUB HOUSE
GOSSAN MINES, VIRGINIA
THE SCHOOL HOUSE AND COMMUNITY CENTER
BAY POINT, CALIFORNIA
GENERAL VIEW
BAY POINT, CALIFORNIA
THE SCHOOL HOUSE
GENE R_A L P LA N
OVERLOOK COLONY
BRANDY W INF. H V N D k_L D
N K VV C A 5 T L E. C C) V N TY
D f. L A VV A R F.
OVERLOOK COLONY
THE GLEN IN THE PARK
^^
OVERLOOK COLONY
A WAR GARDEN
*™^M>^ <OT"VlaMH|JMl^M
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OVERLOOK COLONY
ONE TYPE OF HOUSES
OVERLOOK COLONY
THE MODERN BOARDING HOUSE
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23
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