Nitrate Trust

One hundred years ago Chile exported its first ton of nitrate of soda. The ton was shipped to New York, where no buyer appeared, no one knew exactly what to do with it. By now the U. S. (and every one else) knows well enough what to do with Chilean nitrate. In peacetimes one throws it on the ground as fertilizer. In wartimes one must have nitrogen to make explosives. Out of Germany's War-time need for nitrates came various processes for making synthetic nitrogen. And out of these processes came ever-increasing synthetic competition for the natural Chilean nitrates.

Last week Chile celebrated its nitrate centennial with a drastic and complete reorganization of its most valuable in- dustry. The nitrate trust foreshadowed for several months (TIME, May 26) materialized as a $375,000,000 corporation: Chile Nitrate Co. According to the terms of a bill passed in the Chilean legislature and already agreed to by 91% of the producers, the Chilean government owns 50% of the trust's 300,000,000 shares. The Guggenheim interests, which dominate Chilean nitrates as they dominate Chilean copper, will hold the largest block of the remaining 50%. The present export tax on nitrate, which brought in $30,000,000 revenue last year, will be abolished, and the government will take dividends instead. This will probably mean less revenue for the government, lower overhead For the producers, who must cut prices to meet synthetic competition.

Man v. Nature. As in many another industry, time was when Nature had a monopoly on nitrates, which meant that Chile had a monopoly. For practically all the world's natural nitrate comes from a certain desolate plateau high up in the Andes in northern Chile, a 450-mi. stretch utterly barren of water and vegetation.* But since the War, synthetic nitrogen has been steadily rolling up tonnage, while Chilean nitrate has remained almost stationary. Thus, in the "Fertilizer Year" (which begins June 1) of 1927-1928, synthetic production of pure nitrogen was 1,267,000 metric tons, Chilean 390,300. Chemically, Chilean nitrate is superior to synthetic because of its high iodine content. Other distinctions between the two are of little commercial import. Hence competition is largely a matter of price, which in turn depends on production costs. So far nitrogen fixation plants like that of the Allied Chemical and Dye Corp. at Hopewell, Va., have been able to make nitrate more economically than it can be dug out of the Chilean plateau.

To Nature's aid in recent years, however, has come a deus ex machina: U. S. capital and U. S. industrial methods in the persons of the four potent Brothers Guggenheim. Originally focused on Chile by copper, their gaze wandered in 1924 to nitrates. Their key company, Anglo- Chilean Consolidated Nitrate Corp., has bulked larger and larger in the industry. Last fall it clinched its leadership by buying control of Lautaro Nitrate Co. Ltd., biggest producer of Chilean nitrate. Even before that, however, the Guggenheims had started their Oficina Maria Elena Plant working in 1926 with the epochal Guggenheim Process.

Mass Production. When the speculative gaze of the Guggenheim brothers was arrested by Chilean nitrate, that commodity was, and most of it still is, extracted from the earth by the antiquated, piddling Shanks process. The "caliche," or nitrate-bearing earth, is broken up with explosives, loaded into cars by hand. At the plant it is boiled in small tanks to leach out the nitrate, which is then run off as liquor and dried into commercial form. The Guggenheims were not en- thusiastic about the Shanks process. Undoubtedly they thought of Daniel Cowan Jackling and his mass production methods in copper mining (TIME, April 28). They set a staff of engineers and scientists to work. They applied their process in 1926, had it running at full speed in the Oficina Maria Elena plant by 1928, saw Maria Elena production rise until today it is by far the biggest producing unit in the industry.

The Guggenheim Process starts out with electric shovels, progresses through concrete tanks with 7,500-ton capacity to mechanical refrigeration and centrifugal driers. Like the Jackling copper process, it permits the use of much lower grade ores--as low as 8%, which is less than half the minimum required by the Shanks process. It cuts labor costs 75%, fuel costs 72%. It means that mass produc- tion has come to Chilean nitrate, that the Guggenheims are even more the masters of the show. For the new Chile Nitrate Co. into which the entire industry has been merged will use the Guggenheim. Process. Gradually the many small Shanks process plants will be eliminated. With mass production working on the 400,000,000 metric ton nitrate reserve still left in Chile (enough to supply world consumption for many centuries), Chile nitrate producers last week were more hopeful than they have been in many a year of strenuous competition with synthetic producers.

*In Africa there may well develop a second great nitrate region. Last year a British professor roamed about over 10,000 sq. mi. of southwest Africa, found traces of nitrate throughout his journey, "a strong resemblance to the conditions prevalent in Chile." Should anything come of this, Africa may threaten Chile's nitrates as seriously as it is now threatening Chile's copper. Last year copper and nitrates together formed 88% of total Chilean exports, copper coming to $105,489,000, nitrates to $114,872,000.

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