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.