Political and commercial geology and the world's mineral resources

by Unknown

Ammonia oxidation, it will be observed from the foregoing sketch, gives a means of supplying the military requirement from the direct line of agricultural efficiency. From the strictly military viewpoint, it has the objection of being a roundabout procedure. The dotted line of direct military procedure, however, has no peace-time function, and consequently cannot be maintained in time of peace in trim for war, but must instead be built up expressly to meet wartime exigencies. We have had an illustration of what this means in the way of time and money, and this one ought to suffice. The agricultural channel, once built up on a basis of economic efficiency, is open at all times. At the most, all that is required is to keep an eye to the emergency needs in the way of oxidation equipment, a relatively simple matter. Thus, instead of the precarious procedure of trusting to luck which characterized our pre-war attitude toward nitrogen on the one hand, or of attempting the impossible in the way of maintaining a military program of industrial procedure in time of peace on the other, all that is needed is a constructive program devoted expressly to the interests of economic efficiency.

THE NITROGEN OUTLOOK

There is no import duty on nitrogen, nor is there likely to be any, for nitrogen is an important cog in the mechanism of food supply, and the peacetime emphasis, reversing the wartime order, is primarily on cheapness and only secondarily on the point of origin. Accordingly, looking ahead, the American market conditions, once world trade is fully restored, are due to reflect the world conditions. As indicated in [Figure 18], the sudden ending of the war, with its calling off of the military requirement which had been building up steadily since even before the outbreak of hostilities in 1914, left the world with a producing capacity 30 to 40 per cent. above normal. To what extent this apparent overproduction, amounting to some half million tons of nitrogen, will prove real is impossible to foretell; not all of it certainly, for under the stimulus of a food shortage the curve of normal consumption will doubtless bend upward. On the other hand, however, there is the producing capacity of the plants not yet in operation to be taken into consideration. Whatever may be the capacity of agriculture to absorb from the surplus, it cannot be expected to take up the full amount immediately or without special inducement. The inference follows that price and production will come down, to stimulate and co-ordinate with the increase in demand. Where the meeting point will be between the upcurve of demand and the downcurve of production it is impossible to predict. It is of interest, however, to figure in review on how the three types of industrial source, the natural, the by-product, and the fixation types, are equipped for the very evident strife of competition implied in the situation.

With the development of fixation, there have been a lot of unfounded statements to the effect that the day of Chile nitrate is passing. Whenever a synthetic development comes to the fore, a peculiar fallacy of reasoning is indulged in which ignores the fact of inherent natural worth, disregards the inescapable cost of its duplication, and regards the synthetic achievement as giving open sesame to the natural treasure. By way of substantiation in the case of nitrogen, the cost of producing Chile nitrate is high, amounting to around $30 per ton. This, however, is largely contributed to by the unsystematized crudity of the operations, by the high export tax, and by overcapitalization. But these, it will be observed, are variable factors, susceptible of indefinite modification in keeping with the need. Chile nitrate has never made any pretense of competing against by-product nitrogen, with its advantages in the way of low incidental producing costs and proximity to the market. The discrepancy between the by-product supply and the total demand for nitrogen has all along comprised the field of opportunity opening to Chile nitrate. In this its only noteworthy competitor is the fixation industry.

The fixation sources are impossible of analysis on a definite basis of cost. Too many variable factors and uncertainties are involved. Repeated attempts have been made, but all they have served to bring out is that under certain conditions, as for instance of power supply, and for certain express purposes, one form of project has an apparent margin of advantage over another, and vice versa for other conditions; but that at best the cost of production, if not actually prohibitive, is dangerously close to the normal pre-war price of fixed nitrogen. Back of it all is the fact that fixation has to deal with the problem of overcoming the native chemical inertia of nitrogen, and the problem has not yet been solved at all convincingly. Always the solution advanced has called for some special measure of relief from industrial competition, whether natural, as in the case of the Scandinavian power supply, or political, as in the case of the American and German projects.

Fixation has been widely heralded of recent years as due not only to emancipate the world from its dependence upon the Chilean source, but to reduce materially the cost of nitrogenous fertilizer, hence the cost of food production, to the marked betterment of living conditions as well. In its promise of political and economic betterment in one, it has claimed the attention of all. However, the claim of special economic advantage coming from an industry barely, if at all, able to meet conditions even as they are, has been overdrawn.

This does not aim to imply that there is nothing but failure ahead for fixation in the test of competition. It has its possibilities of development into something commercially and economically as well as politically worth while, but the existing hothouse order of upgrowth is unquestionably due for a lot of training down, and much that is worthless is as certainly due to go. The American developments have a particularly inauspicious economic setting in the prevailing scale of costs. The only saving alternative for them would seem to be in one form or another of federal provision for their continued support on some such basis as that on which they were projected, and this is unlikely, for there is no apparent reason. True, lowered nitrogen costs tend to make for a lowering in the cost of foodstuffs, but so, for that matter, would a lowering in the cost of agricultural implements, and any arguments that apply in the case of nitrogen apply as equally for potash, for phosphate, for agricultural implements, for coal—in fact for industry in general.

With reference to by-product nitrogen the situation is very different. In general, the by-product sources are of an order such that they were not materially affected one way or the other by the war, and consequently are not due to be materially affected in the process of readjustment, except in the case of coke-oven ammonia, where the temporary slump in the steel industry will result in a temporary slump of probably 15 to 20 per cent. from the 1918 output. Of special significance in connection with what lies on beyond for the by-production of nitrogen is its relationship to the progress of industrial co-ordination. The whole current trend of industrialism, as represented in integration, volume production, and the like, is actuated in the interests of co-ordination and the overcoming of lost motion; and nitrogen comes in for an important share in these developments.

With reference to the organic group of compounds, the outlook for the future is as uncertain as are the actual conditions of today. The centralized development of meat packing, of animal-rendering establishments, and of cotton ginning gave rise in their time to highly important recoveries of nitrogenous waste; but with the forward progress of developments this usage in turn is giving way to a more advanced order. Cottonseed as a fertilizer is giving place to a cottonseed-products industry; tankage as a fertilizer is giving place to the artificial compounding of animal food; horses, an important contributor of agricultural nitrogen in times past, are yielding much of their place in the sun to the automotive engine. Meanwhile, with the factor of dilution to be overcome, our sewage disposal is employed to pollute streams and destroy the fish supply instead of being put to useful ends. So it goes. Developments are on foot that lead in both directions, and there is no telling how the balance is due to shift. Probably the best guess is that relatively at least it will be downward rather than upward.

The outlook for by-product ammonia is more definite. Ammonia is the end point of material refinement; so here the nitrogen developments hold all they get, rather than go on to lose out again in a further refinement of usage, as in the case of the organic group. The output has increased consistently and rapidly, owing to the transition from beehive to by-product coking operations, to the progress of centralization and co-ordination; in other words, with reference to coke manufacture. Even now, less than half of the coal coked is treated in the retort oven; but the beehive oven is out of the line of progress and is due to be entirely displaced. Also, the industry is still expanding as the process of transition, with its separate potentiality for doubling the present output of coal-product ammonia, goes forward.